diff --git a/parsed_sections/prospectus_summary/2012/ACHC_acadia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/ACHC_acadia_prospectus_summary.txt
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+Prospectus Summary 3
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diff --git a/parsed_sections/prospectus_summary/2012/APTV_aptiv-plc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/APTV_aptiv-plc_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/BGI_birks_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/BGI_birks_prospectus_summary.txt
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+Table of Contents SUMMARY The following summary is qualified in its entirety by reference to the more detailed information and consolidated financial statements appearing elsewhere or incorporated by reference in this prospectus. This prospectus relates to the non-transferable subscription rights to purchase up to [ ] Class A voting shares that we are distributing, at no charge, to holders of our Class A voting shares and Class B multiple voting shares. We refer to this offering as the rights offering. The Company Birks & Mayors Inc. is a leading North American luxury jewelry brand which designs, develops, manufactures and retails fine jewelry, time pieces, sterling silver and gifts. Further details concerning our business, including information with respect to our assets, operations and development history, are provided in our Annual Report on Form 20-F, and the other documents incorporated by reference into this prospectus. See Incorporation of Certain Documents by Reference. You are encouraged to thoroughly review the documents incorporated by reference into this prospectus as they contain important information concerning our business and our prospects. Our principal executive offices are located at 1240 Phillips Square, Montreal, Qu bec, Canada H3B 3H4. Our telephone number is (514)-397-2501. The Rights Offering The following summary describes the principal terms of the rights offering, but is not intended to be complete. See the information in the section entitled The Rights Offering in this prospectus for a more detailed description of the terms and conditions of the rights offering. Total number of Class A voting shares available for subscription [ ] Securities offered We are distributing to you, at no charge, one non-transferable subscription right for every Class A voting share and Class B multiple voting share that you own as of 5:00 p.m., Eastern Standard time, on the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks or other nominees on your behalf, as a beneficial owner of such shares. Basic subscription privilege For every [ ] subscription rights you receive, you will be entitled to purchase one Class A voting share at a subscription price of $[ ] per share. We will not issue fractional Class A voting shares in the rights offering, and holders will only be entitled to purchase a whole number of Class A voting shares, rounded down to the nearest whole number a holder would otherwise be entitled to purchase. Subscription price $[ ] per share. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. Over-subscription privilege If you purchase all of the Class A voting shares available to you pursuant to your basic subscription privilege, you may also choose to subscribe for Class A voting shares that are not purchased by other holders through the exercise of their basic subscription privileges. You may subscribe for Class A voting shares pursuant to your over-subscription privilege, subject to certain limitations and proration of available shares. Table of Contents Record date 5:00 p.m., Eastern Standard time, on [ ], 2012. Expiration date 5:00 p.m., Eastern Standard time, on [ ], 2012, unless we extend the rights offering period. Use of proceeds Although the actual amount will depend on participation in the rights offering, if the rights offering is fully subscribed for we expect the gross proceeds from the rights offering to be approximately $5.0 million. We intend to use the net proceeds of the rights offering to repay interest bearing debt under our Amended and Restated Cash Advance Agreements, dated June 8, 2011, between the Company and Montrovest. All expenses associated with this rights offering will be borne by us. Transferability of rights The subscription rights are non-transferable during the course of the subscription period. No Board Recommendation Our board of directors makes no recommendation to you about whether you should exercise any rights. You are urged to make an independent investment decision about whether to exercise your rights based on your own assessment of our business and the rights offering. Please see the section of this prospectus entitled Risk Factors for a discussion of some of the risks involved in investing in our Class A voting shares. No minimum subscription There is no minimum subscription requirement as a condition to accepting subscriptions. Maximum offering size Unless our board of directors waives or changes the offering amount, we will raise no more than $5.0 million of subscription proceeds in this rights offering. No revocation Any exercise of subscription rights is irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your rights. You should not exercise your subscription rights unless you are certain that you wish to purchase additional Class A voting shares at a subscription price of $[ ] per share. Material U.S. federal income tax considerations For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of subscription rights. You should consult your own tax advisor as to your particular tax consequences resulting from the rights offering. For a detailed discussion, see Material U.S. Federal Income Tax Considerations. Purchase Intention Montrovest, our majority shareholder, has advised us that it intends to purchase up to $3.5 million Class A voting shares in the rights offering pursuant to its basic subscription privilege and, subject to the availability of shares, its over-subscription privilege. However, Montrovest is not obligated to do so. As of the record date, Montrovest would be entitled to purchase [ ] Class A voting shares pursuant to its basic subscription privilege. Table of Contents Extension, Cancellation, and Amendment We have the option to extend the rights offering and the period for exercising your subscription rights, although we do not presently intend to do so. Our board of directors or a committee designated by our board of directors may cancel the rights offering at any time for any reason. If the rights offering is cancelled, all subscription payments received by the subscription agent will be returned promptly, without interest or penalty. We also reserve the right to amend or modify the terms of the rights offering. Procedure for exercising rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our Class A voting shares or Class B multiple voting shares, you may deliver payment and a properly completed rights certificate to the subscription agent before 5:00 p.m., Eastern Standard time, on [ ], 2012. You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments before 5:00 p.m., Eastern Standard time, on [ ], 2012. Subscription agent Computershare Trust Company, N.A. Information agent Georgeson Inc. Questions Questions regarding the rights offering should be directed to the information agent, Georgeson Inc., toll-free in the United States and Canada at 1 (800) 279-6913, or outside the United States and Canada or if you are a bank or broker, (212) 440-9800. Shares outstanding before the rights offering 3,673,615 Class A voting shares as of June 30, 2012. Shares outstanding after completion of the rights offering Assuming no outstanding options for our Class A voting shares are exercised prior to the expiration of the rights offering and the full $5.0 million is subscribed for, we expect [ ] Class A voting shares will be outstanding immediately after completion of the rights offering.
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diff --git a/parsed_sections/prospectus_summary/2012/CDZIP_cadiz-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CDZIP_cadiz-inc_prospectus_summary.txt
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+UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CADIZ INC. (Exact name of registrant as specified in its charter) Delaware 77-0313235 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 550 South Hope Street Suite 2850 Los Angeles, California 90071 (213) 271-1600 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Timothy J. Shaheen Chief Financial Officer 550 South Hope Street Suite 2850 Los Angeles, California 90071 (213) 271-1600 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of communications to: Howard J. Unterberger, Esq. Theodora Oringher PC 10880 Wilshire Boulevard, Suite 1700 Los Angeles, California 90024 (310) 557-2009 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: o If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Unit Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, Par Value $0.01 Per Share 888,889 Shares(1) $ 9.73(2) $ 8,648,889.97 $ 991.16 (1) This registration statement is being used to register for resale (i) 666,667 shares of common stock issued to investors pursuant to a private placement which closed in 2011 ( Private Placement ) and (ii) 222,222 shares of common stock issuable upon the exercise of warrants, which were issued to investors pursuant to the Private Placement. This registration statement shall also cover an indeterminate number of additional shares of common stock that may become issuable by virtue of any stock dividend, stock split, recapitalization or other similar transaction. (2) Estimated solely for the purpose of calculating the registration fee, and based, pursuant to Rule 457(c), on the average of the high and low prices of the Registrant's common stock as reported by the Nasdaq Global Market for March 22, 2012, which date is within five business days prior to the initial filing date of this registration statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. DATED MARCH 28, 2012, SUBJECT TO COMPLETION PROSPECTUS CADIZ INC. 888,889 Shares of Common Stock The selling stockholders identified in this prospectus may offer from time to time up to 888,889 shares of our common stock, par value $0.01 per share, including 666,667 shares of common stock purchased by the selling stockholders in our 2011 private offering ( Private Placement ) and 222,222 shares of common stock issuable upon the exercise of warrants issued to those stockholders in the Private Placement. We are contractually obligated under the subscription agreements with the selling stockholders in our Private Placement to register the shares acquired, or which may be acquired pursuant to the warrants, which the selling stockholders may resell. We will not receive any of the proceeds from the resale of the shares of our common stock by the selling stockholders, other than payment of the exercise price of the warrants. We have agreed to pay for expenses of this offering. We do not know when or how the selling stockholders intend to sell their shares or what the price, terms or conditions of any sales will be. The selling stockholders may offer and sell their respective shares in transactions on the Nasdaq Global Market, in negotiated transactions, or both. These sales may occur at fixed prices that are subject to change, at prices that are determined by prevailing market prices, or at negotiated prices. The selling stockholders may sell shares to or through broker-dealers, who may receive compensation in the form of discounts, concessions or commissions from the selling stockholders, the purchasers of the shares or both. Our common stock is traded on the Nasdaq Global Market under the symbol "CDZI". On March 27, 2012, the last reported sale price of our common stock on Nasdaq was $9.67. We may amend or supplement this prospectus from time to time to update the disclosures set forth herein. Investing in our common stock involves a high degree of risk. You should carefully read and consider the Risk Factors beginning on page 6. ___________ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is ________, 2012. i TABLE OF CONTENTS NOTICE ABOUT FORWARD-LOOKING STATEMENTS 3 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000016614_camco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000016614_camco_prospectus_summary.txt
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@@ -0,0 +1 @@
+This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000036506_mackinac_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000036506_mackinac_prospectus_summary.txt
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+This summary highlights selected information contained elsewhere or incorporated by reference in this preliminary prospectus supplement and the accompanying prospectus and may not contain all the information that you need to consider in making your investment decision to purchase the Preferred Shares. You should carefully read this entire preliminary prospectus supplement and the accompanying prospectus, as well as the information incorporated by reference herein and therein, before deciding whether to invest in the Preferred Shares. You should carefully consider the sections entitled Risk Factors in this preliminary prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein to determine whether an investment in the Preferred Shares is appropriate for you. Company Information Mackinac Financial Corporation (the Corporation ) was incorporated under the laws of the state of Michigan on December 16, 1974. The Corporation changed its name from First Manistique Corporation to North Country Financial Corporation on April 14, 1998. On December 16, 2004, the Corporation changed its name from North Country Financial Corporation to Mackinac Financial Corporation. The Corporation owns all of the outstanding stock of its banking subsidiary, mBank ( mBank ). The Corporation also owns three (3) non-bank subsidiaries: First Manistique Agency, presently inactive; First Rural Relending Company, a relending company for nonprofit organizations; and North Country Capital Trust, a statutory business trust which was formed solely for the issuance of trust preferred securities. mBank represents the principal asset of the Corporation. mBank has one wholly owned subsidiary, mBank Title Insurance Agency, LLC, which provides title insurance services throughout Michigan. The Corporation and mBank are engaged in a single industry segment, commercial banking, broadly defined to include commercial and retail banking activities, along with other permitted activities closely related to banking. Like all banks, mBank remains subject to legal and regulatory limitations on the amount of dividends it can pay to the Company. Under Michigan law, mBank may not pay dividends except out of net income after deducting its losses and bad debts and may not declare or pay a dividend unless mBank has a surplus amounting to at least 20% of its capital after paying the dividend. Federal law generally prohibits a depository institution from making a capital distribution (including payment of a dividend) if the depository institution would thereafter be undercapitalized. The FDIC may prohibit mBank from paying dividends if the FDIC determines, based on the financial condition of mbank, that paying the dividend would be an unsafe or unsound banking practice. Similarly, the amount of dividends the Company can pay to its shareholders is subject to various legal and regulatory limitations. As a participant in the CPP, the Company was prohibited from paying cash dividends on its common stock without prior government approval for a period of three years from the date of participation, which was April 24, 2009, unless the Preferred Shares were no longer held by Treasury. As of April 24, 2012, the third anniversary of Treasury s purchase of the Preferred Shares, this limitation lapsed. Additionally, the terms of the Preferred Shares prohibit the Company s payment of dividends on its common stock unless and until all accrued and unpaid dividends for all past dividend periods owed to Treasury on the Preferred Shares are fully paid. We have paid all dividends on the Preferred Shares when due since their original issuance. Table of Contents On March 27, 2012, the Company announced that it intended to conduct a $7 million rights offering (the Rights Offering ) to shareholders of record as of April 6, 2012. In the Rights Offering, the Company distributed to its shareholders as of the record date, non-transferable subscription rights to purchase up to 1,217,391 shares of its common stock at a subscription price of $5.75 per share. The Company subsequently filed a prospectus with the Securities and Exchange Commission on May 31, 2012 pursuant to which the Company launched the Rights Offering. The Rights Offering expired on July 16, 2012, and shareholders purchased 1,217,390 shares in the Rights Offering, resulting in aggregate proceeds to the Company of $7.0 million. The Company is in the process of distributing these shares. Commensurate with the announcement of the Rights Offering, on March 27, 2012, the Company entered into a Securities Purchase Agreement with Steinhardt Capital Investors, LLLP ( SCI ), which was amended and restated on May 23, 2012 and further amended on May 31, 2012 (as amended, the Securities Purchase Agreement ). Pursuant to the Securities Purchase Agreement and contingent upon receipt of approval from the Federal Reserve, SCI agreed to purchase a number of shares of the Company s common stock, depending on the outcome of the Rights Offering at the same $5.75 per share price as offered to the Company s shareholders in the Rights Offering (the SCI Investment ). SCI received approval from the Federal Reserve on August 3, 2012. Based upon the results of the rights offering, SCI purchased 922,788 shares of the Company s common stock on August 10, 2012 at $5.75 per share, for an aggregate purchase price of $5,306,031. The proceeds to the Company from the Rights Offering and the SCI Investment totaled approximately $12.3 million. Our principal executive offices are located at 130 South Cedar Street, Manistique, Michigan 49854, and our telephone number is (906) 341-8401. For additional information about our business, see our annual and quarterly reports and the other documents we file with the SEC, which are incorporated into this registration statement by reference. See Where You Can Find More Information on page S-iv of this preliminary prospectus supplement. Table of Contents The Offering The following summary contains basic information about the Preferred Shares and the auction process and is not intended to be complete and does not contain all of the information that is important to you. For a more complete understanding of the Preferred Shares and the auction process, you should read the sections of this preliminary prospectus supplement entitled Description of Preferred Shares and Auction Process and any similar sections in the accompanying prospectus. We intend to submit one or more bids to purchase Preferred Shares in the auction and have received the approval of the Federal Reserve to do so. Our bids may range from a small percentage of the Preferred Shares to the full 11,000 Preferred Shares outstanding and may be made at a price or prices per share that is or are less than the liquidation preference per share. We may attempt to purchase the Preferred Shares from the successful bidders or redeem the remaining outstanding shares in such amounts and at such times as we deem prudent. Issuer: Mackinac Financial Corporation Preferred Shares Offered by Treasury: 11,000 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A, no par value per share. The number of Preferred Shares to be sold will depend on the number of bids received in the auction described below and whether Treasury decides to sell any Preferred Shares in the auction process. See the section entitled Auction Process in this preliminary prospectus supplement. Liquidation Preference: If we liquidate, dissolve or wind up (collectively, a liquidation ), holders of the Preferred Shares will have the right to receive $1,000 per share, plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to, but not including, the date of payment, before any payments are made to holders of our common stock or any other capital stock that ranks, by its terms, junior as to rights upon liquidation to the Preferred Shares. Dividends: Dividends on the Preferred Shares are payable quarterly in arrears on each February 15, May 15, August 15 and November 15. The initial dividend rate is 5% per annum through May 14, 2014, and will increase to 9% per annum on and after May 15, 2014, if not otherwise redeemed earlier for cash by us. As of the date of this preliminary prospectus supplement, we have paid in full all of our quarterly dividend obligations on the Preferred Shares. Holders of Preferred Shares sold by Treasury in the auction, if any, that are record holders on the record date for the November 15, 2012 dividend payment date will be entitled to any declared dividends payable on such date. Maturity: The Preferred Shares have no maturity date. Rank: The Preferred Shares rank: (i) senior to common stock or any other capital stock that ranks, by its terms, junior to the Preferred Shares as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation (collectively, the Junior Stock ); (ii) equally with any shares of our capital stock whose terms do not expressly provide that such class or series will rank senior or junior to the Preferred Shares as to dividend rights and/or rights on liquidation, dissolution or winding up of the Corporation (collectively, the Parity Stock ); and (iii) junior to all of our existing and future indebtedness and any future senior securities, in each case as to dividend rights and/or rights upon liquidation, dissolution or winding up of the Corporation. Table of Contents Priority of Dividends: So long as any of the Preferred Shares remain outstanding, we may not declare or pay a dividend or other distribution on our common stock or any other shares of Junior Stock (other than dividends payable solely in common stock) or Parity Stock (other than dividends paid on a pro rata basis with the Preferred Shares), and we generally may not directly or indirectly purchase, redeem or otherwise acquire any shares of common stock, Junior Stock or Parity Stock unless all accrued and unpaid dividends on the Preferred Shares for all past dividend periods are paid in full. Redemption: We may redeem the Preferred Shares, at any time, in whole or in part, at our option, subject to prior approval by the appropriate federal banking agency, for a redemption price equal to 100% of the liquidation preference amount per Preferred Share plus any accrued and unpaid dividends (including, if applicable, dividends accrued on any unpaid dividends) to, but excluding, the date of redemption. We intend to submit one or more bids to purchase Preferred Shares in the auction and have received the approval of the Federal Reserve to do so. Our bids may range from a small percentage of the Preferred Shares to the full 11,000 Preferred Shares outstanding and may be made at a price or prices per share that is or are less than the liquidation preference per share. We may attempt to purchase the Preferred Shares from the successful bidders or redeem the remaining outstanding shares in such amounts and at such times as we deem prudent. Voting Rights: Holders of the Preferred Shares generally have no voting rights. However, if we do not pay dividends on the Preferred Shares for six or more quarterly periods, whether or not consecutive, the authorized number of directors then constituting our board will be automatically increased by two, and the holders of the Preferred Shares, voting as a single class together with the holders of any outstanding Parity Stock with like voting rights, will be entitled to elect the two additional members of our board of directors until all accrued and unpaid dividends (including dividends accrued on any unpaid dividends) on the Preferred Shares for all past dividend periods are paid in full. There is no limit on the number of nominations and a plurality of eligible voters would determine the election of the two new directors. In addition, the affirmative vote of the holders of at least 66-2/3% of the outstanding Preferred Shares is required for us to authorize, create or increase the authorized number of shares of our capital stock ranking, as to dividends or amounts payable upon liquidation, senior to the Preferred Shares, to amend, alter or repeal any provision of our Articles of Incorporation or the Certificate of Designations for the Preferred Shares in a manner that adversely affects the rights of the holders of the Preferred Shares or to consummate a binding share exchange or reclassification of the Preferred Shares or a merger or consolidation of us with another entity unless (x) the Preferred Shares remain outstanding or are converted into or exchanged for preference shares of the surviving entity or its ultimate parent and (y) the Preferred Shares remain outstanding or such preference shares have such terms that are not materially less favorable, taken as a whole, than the rights of the Preferred Shares immediately prior to such transaction, taken as a whole. Table of Contents Auction Process: The public offering price and the allocation of the Preferred Shares in this offering will be determined through an auction process conducted by Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P., the joint book-running managers in this offering, in their capacity as the auction agents. The auction process will entail a modified Dutch auction mechanic in which bids may be submitted through the auction agents or one of the other brokers that is a member of the broker network, which are collectively referred to in this preliminary prospectus supplement as the network brokers, established in connection with the auction process. Each broker will make suitability determinations with respect to its own customers wishing to participate in the auction process. The auction agents will not provide bidders with any information about the bids of other bidders or auction trends, or with advice regarding bidding strategies, in connection with the auction process. We encourage you to discuss any questions regarding the bidding process and suitability determinations applicable to your bids with your broker. We intend to submit one or more bids in the auction. Assuming we successfully bid for the maximum number of Preferred Shares for which we have obtained approval from our regulators to bid (the entirety of the 11,000 Preferred Shares outstanding) and taking into account the pro forma impact of the shares sold in the Rights Offering and the shares issued in connection with the SCI Investment, our pro forma capital ratios, as well as those of mBank (in each case, based on financial information and the method of calculation at and for the six months ended June 30, 2012), would be as follows: Assuming a clearing price equal to the minimum bid price of $918.80 per share: Ratio Company mBank Tier 1 Risk-Based Capital Ratio 11.95 % 10.86 % Total Risk-Based Capital Ratio 13.11 % 12.01 % Leverage Ratio 10.46 % 9.52 % The Company s pro forma capital ratios will be lower than those reflected in the preceding paragraph if the clearing price exceeds the minimum bid price. For instance, assuming the Company acquires all of the Preferred Shares at a clearing price equal to the liquidation preference amount of $1,000 per share, and taking into account the pro forma impact of the shares sold in the Rights Offering and issued in connection with the SCI Investment: Ratio Company mBank Tier 1 Risk-Based Capital Ratio 11.75 % 10.86 % Total Risk-Based Capital Ratio 12.91 % 12.01 % Leverage Ratio 10.28 % 9.52 % Table of Contents The assumed clearing prices and the number of shares purchased set forth above are used solely for illustrative purposes; the actual clearing price for the Preferred Shares sold in the auction and the number of Preferred Shares purchased by the Company may differ. If we do not successfully bid for the maximum number of Preferred Shares in the auction, we may attempt to purchase the Preferred Shares from the successful bidders or redeem the remaining outstanding shares at such times as we deem prudent. As of June 30, 2012, as reported and without giving effect to any purchase by us of the Preferred Shares, the Rights Offering, or the SCI Investment, our capital ratios were: Ratio Company mBank Tier 1 Risk-Based Capital Ratio 11.61 % 10.86 % Total Risk-Based Capital Ratio 12.77 % 12.01 % Leverage Ratio 10.16 % 9.52 % For more information about the auction process, see Auction Process in this preliminary prospectus supplement. Minimum Bid Size and Price Increments: This offering is being conducted using an auction process in which prospective purchasers are required to bid for the Preferred Shares. During the auction period, bids may be placed for Preferred Shares at any price at or above the minimum bid price of $918.80 per share (such bid price to be in increments of $0.01) with a minimum bid size of one Preferred Share. See Auction Process in this preliminary prospectus supplement. Bid Submission Deadline: The auction will commence at 10:00 a.m., New York City time, on the date specified in a press release issued on such day, and will close at 6:30 p.m., New York City time, on the second business day immediately thereafter, which is referred to as the submission deadline. Network brokers and other brokers will impose earlier submission deadlines than those imposed by the auction agents. Please see page S-30 of this preliminary prospectus supplement for more information regarding the bid submission deadline. Irrevocability of Bids: Bids that have not been modified or withdrawn by the time of the submission deadline are final and irrevocable, and bidders who submit bids that are accepted by Treasury will be obligated to purchase the Preferred Shares allocated to them. The auction agents are under no obligation to reconfirm bids for any reason, except as may be required by applicable securities laws; however, the auction agents, in their sole discretion, may require that bidders confirm their bids before the auction process closes. See Auction Process in this preliminary prospectus supplement. Table of Contents Clearing Price: The price at which the Preferred Shares will be sold to the public will be the clearing price plus accrued dividends thereon. The clearing price will be determined as follows: If valid, irrevocable bids are received for 100% or more of the offered Preferred Shares at the submission deadline, the clearing price will be equal to the highest price at which all of the offered Preferred Shares can be sold in the auction; If valid, irrevocable bids are received for at least half, but less than all, of the offered Preferred Shares at the time of the submission deadline, the clearing price will be equal to the minimum bid price of $918.80 per share. Even if bids are received for at least half of the offered Preferred Shares, Treasury may decide not to sell any Preferred Shares in the auction process or, in the case where bids are received for at least half, but less than all, of the Preferred Shares, may decide only to sell a portion (but not less than half) of the offered Preferred Shares in the auction process. If Treasury decides to sell Preferred Shares in the auction, after Treasury confirms its acceptance of the clearing price and the number of Preferred Shares to be sold, the auction agents and each network broker that has submitted a successful bid will notify successful bidders that the auction has closed and that their bids have been accepted by Treasury (subject, in some cases, to pro-ration, as described below). The clearing price and number of Preferred Shares to be sold are also expected to be announced by press release on the business day following the end of the auction. See Auction Process in this preliminary prospectus supplement. Number of Preferred Shares to be Sold: If bids are received for 100% or more of the offered Preferred Shares, Treasury must sell all of the offered Preferred Shares if it chooses to sell any Preferred Shares. If bids are received for at least half, but less than all, of the offered Preferred Shares, then Treasury may, but is not required to, sell at the minimum bid price in the auction (which will be deemed to be the clearing price) the number of Preferred Shares it chooses to sell up to the number of bids received in the auction, so long as at least half of the offered Preferred Shares are sold. If bids are received for less than half of the offered Preferred Shares, Treasury will not sell any Preferred Shares in this offering. Even if bids are received for at least half of the offered Preferred Shares, Treasury may decide not to sell any Preferred Shares or, in the case where bids are received for at least half, but less than all, of the offered Preferred Shares, may decide only to sell a portion (but not less than half) of the offered Preferred Shares in the auction process. If Treasury elects to sell any Preferred Shares in the auction, Treasury must sell those shares at the clearing price plus accrued dividends thereon. In no event will Treasury sell more Preferred Shares than the number of Preferred Shares for which there are bids. See Auction Process in this preliminary prospectus supplement. Allocation; Pro-Ration: If bids for 100% or more of the offered Preferred Shares are received and Treasury elects to sell Preferred Shares in the offering, then any accepted bids submitted in the auction above the clearing price will receive allocations in full, while any accepted bids submitted at the clearing price may experience pro-rata allocation. If bids for at least half, but less than all, of the offered Preferred Shares are received, and Treasury chooses to sell fewer Preferred Shares than the number of Preferred Shares for which bids were received, then all bids will experience equal pro-rata allocation. See Auction Process in this preliminary prospectus supplement. Use of Proceeds: We will not receive any proceeds from the sale of any Preferred Shares sold by Treasury. See Use of Proceeds in this preliminary prospectus supplement. Listing: The Preferred Shares will not be listed for trading on any stock exchange nor will they be available for quotation on any national quotation system. Table of Contents Risk Factors: See Risk Factors and other information included or incorporated by reference in this preliminary prospectus supplement and the accompanying prospectus for a discussion of factors you should consider carefully before making a decision to invest in the Preferred Shares. Auction Agents: Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P. Network Brokers: See page S-30 of this preliminary prospectus supplement for a list of brokers participating as network brokers in the auction process. Table of Contents
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+TABLE OF CONTENTS Venture Agreement in Management s Discussion and Analysis of Financial Condition and Results of Operation below). Chandalar and Thazzik Mountain are located within the remote Arctic Circle region and exploration and production activities may be limited by climate and location. While we have conducted test mining and minor gold mining production in recent years, our current focus remains on exploration of our Chandalar property. With our current infrastructure at Chandalar, the arctic climate limits exploration activities to a summer field season that generally starts in early May and lasts until freeze-up in mid-September. The remote location of both our Chandalar and Thazzik Mountain properties limits access and increases exploration expenses. Costs associated with such activities are estimated to be between 25% and 50% higher than costs associated with similar activities in the lower 48 states in the United States. Transportation and availability of qualified personnel is also limited because of the remote location. Higher costs associated with exploration activities and limitations for the annual periods in which we can carry on exploration activities will increase the costs and time associated with our planned activities and could negatively affect the value of our property and securities. We are required to raise additional capital to fund our exploration and production programs on the Chandalar and Thazzik Mountain properties. We are an early stage company and currently do not have sufficient capital to fully fund any long-term plan of operation at the Chandalar or Thazzik Mountain gold properties. We will require additional financing in the future to fund exploration of and production on our properties, if warranted, to attain self-sufficient cash flows. We have obtained some financing through a joint venture agreement and expect to obtain additional financing through various means including, but not limited to, private or public placement offerings of debt or our equity securities, the exercise of outstanding warrants, the sale of a production royalty, the sales of gold from future production, or a combination of the above. The level of additional financing required in the future will depend on the results of our exploration work and recommendations of our management and consultants compared to cash received from the joint venture agreement. (See Joint Venture Agreement in Management s Discussion and Analysis of Financial Condition and Results of Operation below). Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration or even a loss of some property interest. Additional capital or other types of financing may not be available if needed or, if available, may not be available on favorable terms or terms acceptable to us. Failure to raise such needed financing could result in us having to discontinue our mining and exploration business. Market events and conditions, including disruptions in the U.S. and international credit markets and other financial systems and the deterioration of the U.S. and global economic conditions, could, among other things, impede access to capital or increase the cost of capital, which would have an adverse effect on our ability to fund our working capital and other capital requirements. Beginning in late 2007, the U.S. credit markets began to experience serious disruption due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market (particularly, subprime and non-prime mortgages) and a decline in the credit quality of mortgage backed securities. These problems led to a slow-down in residential housing market transactions, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence. These conditions caused a loss of confidence in the broader U.S. and global credit and financial markets, resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and created a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions. Notwithstanding various actions by the U.S. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions caused the broader credit markets to further deteriorate and stock markets to decline substantially. In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment and declining economic growth and uncertainty about corporate earnings. These unprecedented disruptions in the current credit and financial markets have had and continue to have a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for us to obtain, or increase our cost of TABLE OF CONTENTS obtaining, capital and financing for our operations. Our access to additional capital may not be available on terms acceptable to us or at all. Our mineralized material estimate at Chandalar is based on a limited amount of drilling completed to date. The internal report of Paul L. Martin on the mineralized material estimate and data analysis for the Little Squaw Creek Alluvial Gold Deposit on our Chandalar property is based on a limited amount of drilling completed during our 2006 and 2007 drilling programs. These estimates have a high degree of uncertainty. While we plan on conducting further drilling programs on the deposit, we cannot guarantee that the results of future drilling will return similar results or that our current estimate of mineralized materials will ever be established as proven and probable reserves as defined in SEC Industry Guide 7. Any mineralized material or gold resources that may be discovered at Chandalar through our drilling programs may be of insufficient quantities to justify commercial operations. Our exploration activities may not be commercially successful. Our operations are focused on mineral exploration, which is highly speculative in nature, involves many risks and is frequently non-productive. Unusual or unexpected geologic formations and the inability to obtain suitable or adequate machinery, equipment or labor are risks involved in the conduct of exploration programs. The focus of our current exploration plans and activities is conducting mineral exploration and deposit definition drilling at Chandalar. The success of this gold exploration is determined in part by the following factors: identification of potential gold mineralization based on analysis; availability of government-granted exploration permits; the quality of our management and our geological and technical expertise; and capital available for exploration. Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to determine metallurgical processes to extract metal, and to establish commercial mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit at Chandalar would be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. Any mineralized material or gold resources that may be discovered at Chandalar may be of insufficient quantities to justify commercial operations. Actual capital costs, operating costs, production and economic returns may differ significantly from those anticipated and there are no assurances that any future development activities will result in profitable mining operations. We have limited operating history on which to base any estimates of future operating costs related to any future development of our properties. Capital and operating costs, production and economic returns, and other estimates contained in pre-feasibility or feasibility studies may differ significantly from actual costs, and there can be no assurance that our actual capital and operating costs for any future development activities will not be higher than anticipated or disclosed. Exploration activities involve a high degree of risk. Our operations on our properties will be subject to all the hazards and risks normally encountered in the exploration for deposits of gold. These hazards and risks include, without limitation, unusual and unexpected geologic formations, seismic activity, rock bursts, pit-wall failures, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and legal liability. Milling operations, if any, are subject to various hazards, including, without limitation, equipment failure and failure of retaining dams around tailings disposal areas, which may result in environmental pollution and legal liability. TABLE OF CONTENTS The parameters that would be used at our properties in estimating possible mining and processing efficiencies would be based on the testing and experience our management has acquired in operations elsewhere. Various unforeseen conditions can occur that may materially affect estimates based on those parameters. In particular, past mining operations at Chandalar indicate that care must be taken to ensure that proper mineral grade control is employed and that proper steps are taken to ensure that the underground mining operations are executed as planned to avoid mine grade dilution, resulting in uneconomic material being fed to the mill. Other unforeseen and uncontrollable difficulties may occur in planned operations at our properties which could lead to failure of the operation. If we make a decision to exploit our Chandalar property and build a large gold mining operation based on existing or additional deposits of gold mineralization that may be discovered and proven, we plan to process the resource using technology that has been demonstrated to be commercially effective at other geologically similar gold deposits elsewhere in the world. These techniques may not be as efficient or economical as we project, and we may never achieve profitability. We may be adversely affected by a decrease in gold prices. The value and price of our securities, our financial results, and our exploration activities may be significantly adversely affected by declines in the price of gold and other precious metals. Gold prices fluctuate widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the relative value of the United States dollar against foreign currencies on the world market, global and regional supply and demand for gold, and the political and economic conditions of gold producing countries throughout the world. The price for gold fluctuates in response to many factors beyond anyone s ability to predict. The prices that would be used in making any economic assessment estimates of mineralized material on our properties would be disclosed and would probably differ from daily prices quoted in the news media. Percentage changes in the price of gold cannot be directly related to any estimated resource quantities at any of our properties, as they are affected by a number of additional factors. For example, a ten percent change in the price of gold may have little impact on any estimated quantities of commercially viable mineralized material at Chandalar and would affect only the resultant cash flow. Because any future mining at Chandalar would occur over a number of years, it may be prudent to continue mining for some periods during which cash flows are temporarily negative for a variety of reasons, including a belief that a low price of gold is temporary and/or that a greater expense would be incurred in temporarily or permanently closing a mine there. Mineralized material calculations and life-of-mine plans, if any, using significantly lower gold and precious metal prices could result in material write-downs of our investments in mining properties and increased reclamation and closure charges. In addition to adversely affecting any of our mineralized material estimates and its financial aspects, declining metal prices may impact our operations by requiring a reassessment of the commercial feasibility of a particular project. Such a reassessment may be the result of a management decision related to a particular event, such as a cave-in of a mine tunnel or open pit wall. Even if any of our projects may ultimately be determined to be economically viable, the need to conduct such a reassessment may cause substantial delays in establishing operations or may interrupt on-going operations, if any, until the reassessment can be completed. Title to our properties may be defective. We hold certain interests in our Chandalar and Thazzik Mountain properties in the form of State of Alaska unpatented mining claims. We hold no interest in any unpatented U.S. federal mining claims at Chandalar or elsewhere. Alaska state unpatented mining claims are unique property interests, in that they are subject to the paramount title of the State of Alaska, and rights of third parties to uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 86.600. The validity of all State of Alaska unpatented mining claims is dependent upon inherent uncertainties and conditions. These uncertainties relate to matters such as: TABLE OF CONTENTS The existence and sufficiency of a discovery of valuable minerals Proper posting and marking of boundaries in accordance state statutes; Making timely payments of annual rentals for the right to continue to hold the mining claims in accordance with state statutes Whether sufficient annual assessment work has been timely and properly performed and recorded; and Possible conflicts with other claims not determinable from descriptions of records. The validity of an unpatented mining claim also depends on (1) the claim having been located on Alaska state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting corner stakes in the ground, (2) compliance with all applicable state statutes in terms of the contents of claim location notices or certificates and the timely filing and recording of the same, (3) timely payment of annual claim rental fees, and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable minerals, the ground covered by an unpatented mining claim is open to location by others unless the owner is in actual possession of and diligently working the claim. We are diligently working and are in actual possession of all of our mining claims comprising our Chandalar, Alaska property. The unpatented state mining claims we own or control there may be invalid, or the title to those claims may not be free from defects. In addition, the validity of our claims may be contested by the Alaska state government or challenged by third parties. Title to our property may be subject to other claims. There may be valid challenges to the title to properties we own or control that, if successful, could impair our exploration activities on them. Title to such properties may be challenged or impugned due to unknown prior unrecorded agreements or transfers or undetected defects in titles. A major portion of our mineral rights on our flagship Chandalar property consists of unpatented lode mining claims created and maintained on deeded state lands in accordance with the laws governing Alaska state mining claims. We have no unpatented mining claims on federal land in the Chandalar mining district, but do have unpatented state mining claims. Unpatented mining claims are unique property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of complex federal and state laws and regulations. Also, unpatented mining claims are always subject to possible challenges by third parties or validity contests by the federal and state governments. In addition, there are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims. We have attempted to acquire and maintain satisfactory title to our Chandalar mining property, but we do not normally obtain title opinions on our properties in the ordinary course of business, with the attendant risk that title to some or all segments our properties, particularly title to the State of Alaska unpatented mining claims, may be defective. We do not carry title insurance on our patented mining claims. See the Legal Proceedings section of this document for current status of these appeals. Estimates of mineralized material are subject to evaluation uncertainties that could result in project failure. Our exploration and future mining operations, if any, are and would be faced with risks associated with being able to accurately predict the quantity and quality of mineralized material within the earth using statistical sampling techniques. Estimates of any mineralized material on any of our properties would be made using samples obtained from appropriately placed trenches, test pits and underground workings and intelligently designed drilling. There is an inherent variability of assays between check and duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. Additionally, there also may be unknown geologic details that have not been identified or correctly appreciated at the current level of accumulated knowledge about our Chandalar property. This could result in uncertainties that cannot be reasonably eliminated from the process of estimating mineralized material. If these estimates were to prove to be unreliable, we could implement a plan that may not lead to commercially viable operations in the future. TABLE OF CONTENTS Government regulation may adversely affect our business and planned operations. Our mineral exploration activities are subject to various laws governing prospecting, mining, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters in the United States. New rules and regulations may be enacted or existing rules and regulations may be applied in a manner that could limit or curtail exploration at our Chandalar property. The economics of any potential mining operation on our properties would be particularly sensitive to changes in the federal and State of Alaska's tax regimes. The generally favorable state tax regime could be reduced or eliminated. Such an event could materially hinder our ability to finance the future exploitation of any gold deposit we might prove-up at Chandalar, or elsewhere on State of Alaska lands. Amendments to current laws, regulations and permits governing our operations and the general activities of mining and exploration companies, or more stringent implementation thereof, could cause unanticipated increases in our exploration expenses, capital expenditures or future production costs, or could result in abandonment or delays in establishing operations at our Chandalar property. Our activities are subject to environmental laws and regulation that may materially adversely affect our future operations, in which case our operations could be suspended or terminated. We are subject to a variety of federal, state and local statutes, rules and regulations in connection with our exploration activities. We are required to obtain various governmental permits to conduct exploration at and development of our property. Obtaining the necessary governmental permits is often a complex and time-consuming process involving numerous federal, state and local agencies. The duration and success of each permitting effort is contingent upon many variables not within our control. In the context of permitting, including the approval of reclamation plans, we must comply with known standards, existing laws, and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations implemented by the permitting authority. The failure to obtain certain permits or the adoption of more stringent permitting requirements could have a material adverse effect on our business, plans of operation, and property in that we may not be able to proceed with our exploration programs. Compliance with statutory environmental quality requirements may require significant capital investments, significantly affect our earning power, or cause material changes in our intended activities. Environmental standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities. As a result of these matters, our operations could be suspended or cease entirely. Minerals exploration and mining are subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Insurance against environmental risk (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) is not generally available to us (or to other companies in the minerals industry) at a reasonable price. To the extent that we become subject to environmental liabilities, the remediation of any such liabilities would reduce funds otherwise available to us and could have a material adverse effect on our financial condition. Laws and regulations intended to ensure the protection of the environment are constantly changing, and are generally becoming more restrictive. Federal legislation and regulations adopted and administered by the U.S. Environmental Protection Agency, Forest Service, Bureau of Land Management ( BLM ), Fish and Wildlife Service, Mine Safety and Health Administration, and other federal agencies, and legislation such as the Federal Clean Water Act, Clean Air Act, National Environmental Policy Act, Endangered Species Act, and Comprehensive Environmental Response, Compensation, and Liability Act, have a direct bearing on U.S. exploration and mining operations within the United States. These regulations will make the process for preparing and obtaining approval of a plan of operations much more time-consuming, expensive, and uncertain. Plans of operation will be required to include detailed baseline environmental information and address how detailed reclamation performance standards will be met. In addition, all activities for which plans of operation are required will be subject to review by the BLM, which must make a finding that the conditions, practices or activities do not cause substantial irreparable harm to significant scientific, cultural, or environmental resource values that cannot be effectively mitigated. TABLE OF CONTENTS U.S. federal initiatives are often administered and enforced through state agencies operating under parallel state statutes and regulations. Although some mines continue to be approved in the United States, the process is increasingly cumbersome, time-consuming, and expensive, and the cost and uncertainty associated with the permitting process could have a material effect on exploring and mining our properties. Compliance with statutory environmental quality requirements described above may require significant capital investments, significantly affect our earning power, or cause material changes in our intended activities. Environmental standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities. As a result of these matters, our operations could be suspended or cease entirely. At this time, neither our Chandalar nor Thazzik Mountain properties include any federal lands; therefore, we do not file plans of operations with the BLM. However, we are subject to obtaining watercourse diversion permits from the U.S. Army Corp of Engineers. Future legislation and administrative changes to the mining laws could prevent us from exploring and operating our properties. New Alaska state and U.S. federal laws and regulations, amendments to existing laws and regulations, administrative interpretation of existing laws and regulations, or more stringent enforcement of existing laws and regulations, could have a material adverse impact on our ability to conduct exploration and mining activities. Any change in the regulatory structure making it more expensive to engage in mining activities could cause us to cease operations. We are at this time unaware of any proposed Alaska state or U.S. federal laws and regulations that would have an adverse impact on the future of our Alaska mining properties. We do not insure against all risks. Our insurances will not cover all the potential risks associated with our operations. We may also be unable to maintain insurances to cover these risks at economically feasible premiums. Insurance coverages may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurances against risks such as environmental pollution or other hazards as a result of exploration and production are not generally available to us or to other companies in the mining industry on acceptable terms. We might also become subject to liability for pollution or other hazards for which we may not be insured against or for which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial condition and results of operations. We compete with larger, better capitalized competitors in the mining industry. The mining industry is acutely competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of exploration stage properties, or properties capable of producing precious metals. Many of these companies have greater financial resources, operational experience and technical capabilities than us. As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable or at all. Consequently, our revenues, operations and financial condition and possible future revenues could be materially adversely affected by actions by our competitors. At our property at Chandalar, Alaska, we face no other competitors at this time. Our ability to operate as a going concern is in doubt. The audit opinion and notes that accompany our consolidated financial statements for the year ended December 31, 2011, disclose a going concern qualification to our ability to continue in business. The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company is an exploration stage company and has incurred losses since its inception. In connection with management s election to complete the full 2011 exploration program, together with staking additional mining claims, management re-evaluated its cash position and has determined that as of the date of this report, the Company does not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. The Company raised $285,666 net cash proceeds from the exercise of warrants and $4,794,098 net cash from the issuance of common stock during the year ended TABLE OF CONTENTS December 31, 2011. The Company believes that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of operations through continuing operations is more assured. The Company currently has no historical recurring source of revenue and its ability to continue as a going concern is dependent on the Company s ability to raise capital to fund its future exploration and working capital requirements or its ability to profitably execute its mining plan. The Company s plans for the long-term return to and continuation as a going concern include financing the Company s future operations through sales of its common stock and/or debt and the eventual profitable exploitation of its mining properties. Additionally, the current capital markets and general economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial doubt about the Company s ability to continue as a going concern. We are dependent on our key personnel. Our success depends in a large part on our key executives: William Schara, our President and CEO, and Ted Sharp, our Corporate Secretary and Chief Financial Officer. These officers are the management personnel and the loss of their services could have a material adverse effect on us. Mr. Sharp is a licensed Certified Public Accountant and an independent contractor, with business management and consulting interests that are independent of the consulting agreements he currently has in place with the Company he is not an employee of the Company. Richard R. Walters, our former Vice-President and COO, retired for health and other personal reasons from his executive position held with us effective on January 1, 2011. He continues as a director of the Company and remains available on a consulting basis to continue to perform functions critical to our operations until such time as a replacement officer is found. Any negative effect of his resignation is anticipated to be minimal. At the point in time that we again undertake mineral exploration activities, we will need to fill positions such as Vice President of Exploration, Vice President of Operations and Chandalar Project Manager with persons possessing requisite skills. Our ability to manage our mineral exploration activities at our Chandalar gold property or other locations where we may acquire mineral interests will depend in large part on the efforts of these individuals. We may face competition for qualified personnel, and we may not be able to attract and retain such personnel. Certain of our executive officers do not dedicate 100% of their time on our business. William V. Schara, our Chief Executive Officer, devotes 100% of his time to company business. Ted Sharp, our Chief Financial Officer, provides services under a consulting arrangement, which permits him to provide services to other companies. Mr. Sharp dedicates approximately 50% of his business time to Goldrich, and currently provides consulting services to a variety of small business clients, which may detract from the time Mr. Sharp can spend on our business. Mr. Sharp often conducts business remotely by internet communication. In the event of a failure of laptop or telecommunications, or at times of internet connection disruption, Mr. Sharp s ability to communicate with other company personnel or conduct company transactions may be obstructed. Our officers and directors may have potential conflicts of interest due to their responsibilities with other entities. The officers and directors of the Company serve as officers and/or directors of other companies in the mining industry, which may create situations where the interests of the director or officer may become conflicted. The consulting arrangements of Mr. Walters and Mr. Sharp allow them to provide services to other companies. The companies to which Mr. Walters and Mr. Sharp provide services may be potential competitors with the Company at some point in the future. The directors and officers owe the Company fiduciary duties with respect to any current or future conflicts of interest. The market for our common shares has been volatile in the past, and may be subject to fluctuations in the future. The market price of our common stock has ranged from a high of $0.35 and a low of $0.12 during the twelve month period ended December 31, 2011. The market price for our common stock closed at $0.14 on December 30, 2011, the last trading day of 2011. The market price of our common stock may fluctuate significantly from its current level. The market price of our common stock may be subject to wide fluctuations in response to quarterly variations in operating TABLE OF CONTENTS results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of the operating results of certain companies to meet market expectations that have particularly affected the market prices of equity securities of many exploration stage companies that have often been unrelated to the operating performance of such companies. These broad market fluctuations, or any industry-specific market fluctuations, may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company s securities, class action securities litigation has been instituted against such a company. Such litigation, whether with or without merit, could result in substantial costs and a diversion of management s attention and resources, which would have a material adverse effect on our business, operating results and financial condition. We have convertible securities outstanding, which if fully exercised could require us to issue a significant number of shares of our common stock and result in substantial dilution to existing shareholders. As of December 4, 2012, we had 95,506,719 shares of common stock issued and outstanding. We may be required to issue the following shares of common stock upon exercise of options and warrants or conversion of convertible securities: 3,670,000 shares of common stock issuable upon exercise of vested options outstanding as of D ecember 4, 2012; 1,050,000 shares of common stock issuable upon conversion of preferred shares outstanding as of December 4, 2012; and 33,542,130 shares of common stock issuable upon exercise of warrants outstanding as of December 4, 2012. If these convertible and exercisable securities are fully converted or exercised, we would issue an additional 38,262,130 shares of common stock, and our issued and outstanding share capital would increase to 133,768,849 shares. The convertible securities are likely to be exercised or converted at the time when the market price of our common stock exceeds the conversion or exercise price of the convertible securities. Holders of such securities are likely to sell the common stock upon conversion which could cause our share price to decline. Broker-dealers may be discouraged from effecting transactions in our common stock because they are considered a penny stock and are subject to the penny stock rules. Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a penny stock. Subject to certain exceptions, a penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. The market price of our common stock on the FINRA OTCBB during the twelve month period ended December 31, 2011, ranged between a high of $0.35 and a low of $0.12, and our common stock is deemed penny stock for the purposes of the Exchange Act. The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of the stock and impede the sale of our stock in the secondary market. A broker-dealer selling penny stock to anyone other than an established customer or accredited investor, generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the United States Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer s account and information with respect to the limited market in penny stocks. TABLE OF CONTENTS In the event that your investment in our shares is for the purpose of deriving dividend income or in expectation of an increase in market price of our shares from the declaration and payment of dividends, your investment will be compromised because we do not intend to pay dividends, except as required by the terms of the Series A Convertible Preferred Shares. We have never paid a dividend to our shareholders, and we intend to retain our cash for the continued growth of our business. We do not intend to pay cash dividends on our common stock in the foreseeable future. As a result, your return on investment will be solely determined by your ability to sell your shares in a secondary market. The terms of the Series A Convertible Preferred Shares require payment of a dividend to the holders at the time they convert their shares; however, this dividend can and likely will be paid in the form of additional shares of common stock sufficient to satisfy the dividend provision. USE OF PROCEEDS We will not receive any proceeds from the sale or distribution of the common stock by the Selling Security Holders. DETERMINATION OF OFFERING PRICE Our common stock is quoted on the FINRA OTCBB. The actual offering price of the shares of common stock covered by this prospectus will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the Selling Security Holders. The offering price will thus be determined by market factors and the independent decisions of the Selling Security Holders. SELLING SECURITY HOLDERS This prospectus covers the offering of up to 37,612,858 shares of our common stock by Selling Security Holders. The shares issued to the Selling Security Holders are restricted shares under applicable federal and state securities laws and are being registered to give the Selling Security Holders the opportunity to sell their shares. The registration of such shares does not necessarily mean, however, that any of these shares will be offered or sold by the Selling Security Holders. The Selling Security Holders may from time to time offer and sell all or a portion of their shares in the over-the-counter market, in negotiated transactions, or otherwise, at market prices prevailing at the time of sale or at negotiated prices. The registered shares may be sold directly or through brokers or dealers, or in a distribution by one or more underwriters on a firm commitment or best efforts basis. To the extent required, the names of any agent or broker-dealer and applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in an accompanying prospectus supplement. See the section entitled Plan of Distribution below in this document. Each of the Selling Security Holders reserves the sole right to accept or reject, in whole or in part, any proposed purchase of the registered shares to be made directly or through agents. The Selling Security Holders and any agents or broker-dealers that participate with the Selling Security Holders in the distribution of their registered shares may be deemed to be underwriters within the meaning of the Securities Act, and any commissions received by them and any profit on the resale of the registered shares may be deemed to be underwriting commissions or discounts under the Securities Act. We will receive no proceeds from the sale of the registered shares. We have agreed to bear the expenses of registration of the shares, other than commissions and discounts of agents or broker-dealers and transfer taxes, if any. Selling Security Holder Information The following sets forth information related to the Selling Security Holders who own or have the right to acquire an aggregate of 82,362,828 shares of our common stock, 37,612,858 of which are covered in this prospectus. At December 4, 2012, we had 95,506,719 shares of common stock issued and outstanding. TABLE OF CONTENTS Before Offering After Offering Total Number of Shares Beneficially Owned (a) Percentage of Shares Owned (a) Number of Shares Offered Shares Owned After Offering (b)(c) Percentage of Shares owned (a)(c) Alchemy Securities Pty Ltd (1) Level 14, 19-31 Pitt Street Sydney, NSW 2000 Australia 2,957,260 3.10% 736,749 2,220,511 2.32% Anton, Koller Bundesplatz 14 CH-6300 Zug Switzerland 360,000 0.38% 84,000 276,000 0.29% Barrett, Andrew 24324 Tum Tum Dr. Liberty Lake, WA 99019 60,000 0.06% 30,000 30,000 0.03% Bowring, Christopher & Fiona PO Box 1641 Grand Cayman, Cayman Islands KY1-1109 60,000 0.06% 30,000 30,000 0.03% Bret A. Dirks Retirement Trust (2) 850 W. Ironwood Dr. Coeur d'Alene, ID 83814 500,000 0.52% 250,000 250,000 0.26% Brian Cook Roth IRA (3) 203 S. Commercial St. Clark, SD 57225 200,000 0.21% 100,000 100,000 0.10% Butcher, William, Jr. 1583 McGraw Lane Howell, MI 48843 100,000 0.10% 50,000 50,000 0.05% Cell, Robert 840 Hamilton Ave. Palo Alto, CA 94301 300,000 0.31% 150,000 150,000 0.16% Church, David Samuel Flat 303 Queen's Garden 9 Old Peak Road Mid-Levels, Hong Kong 952,381 1.00% 476,191 476,190 0.50% Cobach Partners, LLC (4) C/O Terry A. Lynner, Member 6505 Shawnee Circle Edina, MN 55439 375,000 0.39% 125,000 250,000 0.26% Cook, Brian A. 203 S. Cmmercial St. Clark, South Dakota 57225 100,000 0.10% 50,000 50,000 0.05% Cougar Valley, LLC (5) 905 S. Jarvis Rd. Coeur d'Alene, ID 83814 400,000 0.42% 200,000 200,000 0.21% Crombie, Alexander West Hall, Cupar, Fife, Scotland KY15 4NA 444,444 0.47% 222,222 222,222 0.23% CSM Investment Partnership (6) 4567 American Boulevard West Minneapolis, MN 55437 714,288 0.75% 166,667 547,621 0.57% Davycrest Nominees (7) 49 Dawson St Dublin 2 Ireland 333,334 0.35% 166,667 166,667 0.17% DBJ 2001 Holdings LLC (8) 5408 Stouder Circle Edina, MN 55436 476,192 0.50% 238,096 238,096 0.25% Detjens, Sharon F. 230 Willow Lake Dr. Martinez, CA 94553 100,000 0.10% 50,000 50,000 0.05% Dodson, Biff 807 Escondido Dr. Umpqua, OR 97486 100,000 0.10% 50,000 50,000 0.05% Duncan, Malcolm Jr. PO Box 8052 Waco, TX 76714 100,000 0.10% 50,000 50,000 0.05% Eagle Point Investments LLP (9) 13 Skillman Lane North Oaks, MN 55127 1,428,570 1.50% 333,333 1,095,237 1.15% Forsyth, Nathan 61528 New South Head Road Double Bay, NSW 2028 Australia 75,000 0.08% 17,500 57,500 0.06% Gales, Robert 10653 Wayzata Blvd #250 Hopkins, MN 55305 124,999 0.13% 41,666 83,333 0.09% Gallinetti, Dante 137 Ortega Ave. Mt. View, CA 94040 200,000 0.21% 100,000 100,000 0.10% Galloway Limited (10) 4th Floor, Viking House Nelson St. Douglas, Isle of Man 1M12AH 952,380 1.00% 476,190 476,190 0.50% Gervais, Greg 4773 W. Mill River Ct. Coeur d'Alene, ID 83814 100,000 0.10% 50,000 50,000 0.05% Gibson, Jamie Suite 1001, Henley Building 5 Queen's Road Central, Hong Kong 952,380 1.00% 476,190 476,190 0.50% Godde, Anthony PO Box 1152 Lancaster, CA 93584 100,000 0.10% 50,000 50,000 0.05% Godde, Gary M. 1793 Bitterbrush Ct. Gardnerville, NV 89410 100,000 0.10% 50,000 50,000 0.05% Greene, Jeff 2850 Williams Rd. Walla Walla, WA 99362 60,000 0.06% 30,000 30,000 0.03% Hauptman, Ronald J. & Valerie J. Hauptman10825 N. 55th St.Scottsdale, AZ 85254 600,000 0.63% 140,000 460,000 0.48% Heckler, Robert 4616 Tello Path Austin, TX 78749 100,000 0.10% 50,000 50,000 0.05% Heldridge, Barbara PO Box 948 Llano, TX 78643 100,000 0.10% 50,000 50,000 0.05% Higdem, Gene 5526 Cynthia Coeur d'Alene, ID 83815 100,000 0.10% 50,000 50,000 0.05% Holzinger, Walter & Ofelia 19455 Kilfinan St. Northridge, CA 91326 100,000 0.10% 50,000 50,000 0.05% Irish, Simon 1 Union Sq. South Apt 14L New York, NY 10003 211,500 0.22% 55,500 156,000 0.16% James K, and Holly Duff Trust (11) 3882 N. Player Dr. Coeur d'Alene, ID 83815 642,903 0.67% 17,500 625,403 0.65% Jeffrey A. Beuche IRA (12) 1118 Quince Ave. Boulder, CO 80304 60,000 0.06% 30,000 30,000 0.03% Keegan, Morgan FBO (13) Michael J. Griffith Attn: Acat Dept. 50 N. Front Street Memphis, TN 38103 714,284 0.75% 166,666 547,618 0.57% Kennedy, Don PO Box 823170 Vancouver, WA 98682 100,000 0.10% 50,000 50,000 0.05% Knotfloat & Co (14) 55 Water Street New York, NY 10041 2,380,952 2.49% 1,190,476 1,190,476 1.25% Kocyba, David A. 10417 SE 219th St. Kent, WA 98031 60,000 0.06% 30,000 30,000 0.03% Ladner, James Alte Landstrassel CH-8802 Kilchberg, Switzerland 800,000 0.84% 400,000 400,000 0.42% Ladner, Marguerite Alte Landstrassel CH-8802 Kilchberg, Switzerland 200,000 0.21% 100,000 100,000 0.10% Lane, Benjamin Nicholas 17 Ryde Rd Hunters Hill, NSW 2110 Australia 380,952 0.40% 190,476 190,476 0.20% Marchione, James 310 Lakewood Drive Stoughton, MA 02072 200,000 0.21% 100,000 100,000 0.10% McIver, Christopher 7030 East Sierra Morena Circle Mesa, AZ 85207 166,666 0.17% 166,666 - 0.00% Meithke, Adam Sebastian PO Box 754 Mareeba, Queensland 4880 Australia 190,476 0.20% 95,238 95,238 0.10% Mendham, Garrick PO Box 668 Kingsford, NSW 2032 Australia 714,284 0.75% 166,666 547,618 0.57% NGB Nominees (15) 5 Churchfields The K Club Straffan Kildare, Ireland 8,891,663 9.31% 1,000,000 7,891,663 8.26% Northland Securities (16) 45 S. 7th St #2500 Minneapolis, MN 55402-1654 1,077,429 1.13% 764,742 312,687 0.33% Nyac Mining Company (17) 1634 West 13th Anchorage, AK 99501 2,364,864 2.48% 2,364,864 - 0.00% Oakland, Chad 3808 Cicloview Ct. Coeur d'Alene, ID 83814 60,000 0.06% 30,000 30,000 0.03% Olson, Paul 9814 Wellington Lane Woodbury, MN 55125-8443 600,000 0.63% 140,000 460,000 0.48% Pesek, Tom & Maureen 2610 Ashley Torrence New Brighton, MN 55112 83,333 0.09% 83,333 - 0.00% PFL Ventures, LLP (18) PO Box 1889 Coeur d'Alene, ID 83816 60,000 0.06% 30,000 30,000 0.03% Pring, John A. 15404 E. Springfield Ave. #200 Spokane Valley, WA 99037 300,000 0.31% 150,000 150,000 0.16% Raymond E. Goff Rev. Trust dated 2/16/1983 (19) PO Box 313 Sims, MT 59477 300,000 0.31% 150,000 150,000 0.16% RBC Capital Markets LLC (20) Custodian FBO Gary M Petrucci Alternative Investments Operations M09 510 Marquette Ave. S M09 Minneapolis, MN 55402 714,284 0.75% 166,666 547,618 0.57% Regent Pacific Group Limited (21) Suite 1001, Henley Building 5 Queen's Road Central, Hong Kong 36,899,141 38.64% 21,245,707 15,653,434 16.39% Renfert, Tad S. 3722 Arapaho Court Verona, WI 53593 222,222 0.23% 111,111 111,111 0.12% Rittenhouse, Stan 236 Northview Circle Warrenton, VA 20186 100,000 0.10% 50,000 50,000 0.05% Robert B. Stewart, Jr. Separate Property Trust (22) 2007 Altura Dr. Corona del Mar, CA 92625 476,189 0.50% 238,095 238,094 0.25% Robert Rosenthal Rev. Trust (23) PO Box 673001 Dallas, TX 75267-3001 41,666 0.04% 41,666 - 0.00% Roger J. Ciapara Trust (24) PO Box 399 Fruitport, MI 49415 119,700 0.13% 59,850 59,850 0.06% Ron Nicklas IRA (25) E. 6307 Garwood Rd. Hayden Lake, ID 83835 300,000 0.31% 150,000 150,000 0.16% Rosenthal, Joel 15416 Elm Rd. Maple Grove, MN 55311 1,051,863 1.10% 83,332 968,531 1.01% Rudnicki, Laurence A. 14232 Straight Path Lane Larkspur, CO 80118 200,000 0.21% 100,000 100,000 0.10% Saffold, Stephen 1999 13th Ave. Sacramento, CA 95831 500,000 0.52% 250,000 250,000 0.26% Schara, William (26) 3221 S. Rebecca St. Spokane, WA 99223 2,700,833 2.83% 867,000 1,833,833 1.92% Sharp, Ted R. (27) 714 Whisperwood Ct. Nampa, ID 83686 808,182 0.85% 272,000 536,182 0.56% Sheldon, John 705 Sunrise Cheney, WA 99004 100,000 0.10% 50,000 50,000 0.05% Simizo, Reiko PO Box 668 Kingsford, NSW 2032 Australia 200,000 0.21% 100,000 100,000 0.10% St. Gemain Partners, Ltd. (28) 11942 Riverview Dr. Houston, TX 77077 100,000 0.10% 50,000 50,000 0.05% Starr, Suzannah 16 Tecoma Street Duncraig, WA 6023 Australia 71,430 0.07% 16,667 54,763 0.06% Swab, James 1215 Harper Ave. Woodlyn, PA 19094 400,000 0.42% 200,000 200,000 0.21% Thysell, Fred 1416 Jesica Drive Selah, WA 98942 100,000 0.10% 50,000 50,000 0.05% TIS Group (29) 100 Village Center Drive North Oaks, MN 55127 360,000 0.38% 84,000 276,000 0.29% Town, Gaylord & Wandee 45-116 Halliday Place Kanoche, Hawaii 98744 97,500 0.10% 97,500 - 0.00% Velde, Andrea 20100 Lakeview Ave. Deephaven, MN 55331-9356 714,284 0.75% 166,666 547,618 0.57% Warmack, James 1609 Manana St. Austin, TX 78730 100,000 0.10% 50,000 50,000 0.05% Worrell, Robert J. PO Box 2150 Thompson Falls, MT 59873 200,000 0.21% 100,000 100,000 0.10% Yeung, Jackie Au GPO Box 12218 General Post Office Central District, Hong Kong 1,500,000 1.57% 350,000 1,150,000 1.20% Total 82,362,828 86.15% 37,612,858 44,749,970 46.75% TABLE OF CONTENTS (a) All percentages are based on 95,506,719 shares of common stock issued and outstanding on December 4, 2012. Beneficial ownership is calculated by the number of shares of common stock that each Selling Security Holder owns or controls or has the right to acquire within 60 days of December 4, 2012. (b) This table assumes that each shareholder will sell all of its shares available for sale during the effectiveness of the prospectus that includes this prospectus. Selling Security Holders are not required to sell their shares. (c) Assumes that all shares registered for resale by this prospectus have been issued and sold. (1) Alchemy Securities Pty Ltd is an investment advisory company. Stephen Robert Weir has sole investment and voting control over these securities. (2) Bret A. Dirks Retirement Trust is a private trust fund. Bret A. Dirks has sole investment and voting control over these securities. (3) Brian A. Cook has sole investment and voting control over these securities. (4) Cobach Partners, LLC is a private limited liability company. Terry A. Lynner has sole investment and voting control over these securities. (5) Cougar Valley, LLC is a limited liability company. John Swallow has sole investment and voting control over these securities. (6) CSM Investment Partnership is a private investment company. Michael D. Erickson has sole investment and voting control over these securities. (7) Davycrest Nominees is a private trust fund. Aidan O'Carroll has sole investment and voting control over these securities. (8) DBJ 2001 Holdings LLC is a broker/dealer. David B. Johnson has sole investment and voting control over these securities. (9) Eagle Point Investments LLLP is a limited partnership. M. Allen Hatfield has sole investment and voting control over these securities. (10) Galloway Limited is an investment holding company. Denham Hervey Newall Eke has sole investment and voting control over these securities. (11) The James K. and Holly Duff Trust is a private trust fund. James and Holly Duff have joint investment and voting control over these securities. Mr. Duff is Chairman of the Board of the Company. (12) Jeffrey A. Beuche has sole investment and voting control over these securities. (13) Morgan Keegan FBO Michael J. Griffith is a private trust fund. Dee Dee Rehm has sole investment and voting control over these securities. (14) Knotfloat & Co is an investment company. Alexander Dyson has sole investment and voting control over these securities. (15) Nicholas Gallagher has sole investment and voting control over these securities. (16) Northland Securities is a broker-dealer and acted as agent for the Company in private placements completed in 2010 for which it received 139,945 shares and 599,772 Class F warrants in compensation for brokerage activities. Northland Securities also received 71,428 Class I warrants and 71,428 Class J warrants for acting as agent for the Company in a private placement completed in July 2011 to bring its total beneficial holdings to 882,573 shares. Northland Securities is acting as an underwriter under this prospectus in reselling under this prospectus 739,717 common shares purchased and/or received from the Company. The Company and Northland Securities do not have any agreements relating to the distribution of the securities being offered under this prospectus. Steve Vincent has sole investment and voting control over these securities. (17) Nyac Mining Company is a privately held limited liability company. J.M. James has sole investment and voting control over these securities. (18) PFL Ventures, LLP is a limited liability partnership. John Worrell has sole investment and voting control over these securities. (19) Raymond E. Goff Rev. Trust dated 2/16/1983 is a private trust fund. Raymond E. Goff has sole investment and voting control over these securities. (20) Gary M. Petrucci is a broker-dealer employed and registered with RBC Capital Markets, LLC. RBC Capital Markets LLC and Gary Petrucci are acting as underwriters under this prospectus in reselling under this prospectus the 179,669 common shares it purchased from the Company. The Company and RBC Capital Markets LLC and Gary Petrucci do not have any agreements relating to the distribution of the securities being offered under this prospectus. Gary Petrucci s beneficial ownership interest includes 238,095 common shares, 119,047 Class H warrants and 119,047 Class I warrants. Any one person of a designated 38 persons may make investment and voting decisions over these securities. (21) Regent Pacific Group Limited acted as agent for the Company, outside the United States, in its private placements completed in 2011 for which it received 68,333 common shares, 82,976 Class H warrants, 424,096 Class I warrants and 341,121, Class J warrants as compensation. Regent Pacific Group Limited s beneficial ownership of 31,592,714 shares includes 15,281,427 common shares, 2,702,023 Class H warrants, 8,155,643 Class I warrants and 5,453,621 Class J warrants. Of the total securities issued to Regent Pacific Group Limited,8,707,406 common shares were registered in our Registration Statement No. 333-171550 and 9,975,000 are being registered in this Form S-1. Regent Pacific Group Limited is acting as an underwriter under this prospectus in reselling under this prospectus 9,975,000 of the common shares it purchased from the Company. The Company and Regent Pacific Group Limited do not have any agreements relating to the distribution of the securities being offered under this prospectus. David Church has sole investment and voting control over these securities. (22) Robert B. Stewart, Jr. Separate Property Trust is a private trust. Robert B. Stewart, Jr. has sole investment and voting control over these securities. (23) Robert Rosenthal Rev. Trust is a private trust fund. Robert Rosenthal has sole investment and voting control over these securities. (24) Roger J. Ciapara Trust is a private trust fund. Roger J. Ciapara has sole investment and voting control over these securities. (25) Ron Nicklas has sole investment and voting control over these securities. (26) Mr. Schara is the Chief Executive Officer and a director of the Company. (27) Mr. Sharp is the Chief Financial Officer of the Company. (28) St. Germain Partners, Ltd. is a limited partnership. James Kirkham has sole investment and voting control over these securities. (29) TIS Group is a private investment company. Larry Jeddeloh has sole investment and voting control over these securities. Except as noted above and based on information provided to us, none of the Selling Security Holders are affiliated or have been affiliated with any broker-dealer in the United States. Except as otherwise provided in this prospectus, none of the Selling Security Holders are affiliated with or have been affiliated with us or any of our predecessors or affiliates during the past three years. Transactions with Selling Security Holders Unit Private Placements On May 4, 2012, as part of a joint venture agreement, the Company issued 2,364,864 common shares at a price of $0.148 per share for gross proceeds to the Company of $350,000. The proceeds of the private placement will be used to finance the Company s general operating expenses in 2012. In addition, the Company issued 300,000 options to purchase a like number of the Company s common shares at a price of $0.20. The options expire five years from the date of grant. TABLE OF CONTENTS These units were issued solely to accredited investors (as defined in Rule 501(a) of Regulation D of the Securities Act) pursuant to an exemption from the registration requirements of the Securities Act provided by Rule 506 thereof. On November 21, 2011 the Company closed a private placement of 2,500,000 units at a price of $0.20 per unit for net proceeds to the Company of $461,394. The Company issued an additional 175,000 units and an additional 250,000 warrants to satisfy commissions due on the placement. The Company intends to use the proceeds of the private placement to complete the analysis of assays taken during the Company s 2011 hard-rock drilling gold exploration program at its Chandalar property in Alaska, and fund general operating expenses. Each unit issued pursuant to the private placement consists of one share of the Company s common stock, one half of a Series J warrant and one half of a Series I warrant. Each full Series J warrant is exercisable for a period of five years following the date of issue to purchase one additional share of common stock of the Company at the greater of $0.30 or the closing market price of the Company s stock on the closing date of the private placement, as quoted on the OTCBB. Each full Series I warrant is exercisable for a period of five years following the date of issue to purchase one additional common share of the Company at $0.40. The terms of the private placement include a call option for the Company. In the event that the shares of common stock trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the J warrants and I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company intends to grant resale registration rights to investors in such private placement as permitted by rules of the United States Securities and Exchange Commission. These units were placed solely outside the United States pursuant to 1933, as amended (the Securities Act ) under Rule 903 of Regulation S of the Securities Act on the basis that the sale of the units was completed in an offshore transaction , as defined in Rule 902(h) of Regulation S. In determining the availability of this exemption, the Registrant relied on representations made by the investors in the subscription agreements pursuant to which the units were purchased under the private placement. On July 29, 2011 the Company closed a private placement of 13,810,860 units at a price of $0.21 per unit for net proceeds to the Company of $2,380,932 and non-cash settlement of debt of $291,629. The Company used the proceeds of the private placement to complete the financing of the Company s 2011 hard-rock drilling gold exploration program at its Chandalar property in Alaska, completely satisfy the Company s notes payable in gold of approximately $960,000, repay a related party account payable of approximately $263,000 and fund general operating expenses. Each unit issued pursuant to the private placement consists of one share of the Company s common stock, one half of a Series J warrant and one half of a Series I warrant. Each full Series J warrant is exercisable for a period of five years following the date of issue to purchase one additional share of common stock of the Company at the greater of $0.30 or the closing market price of the Company s stock on the closing date of the private placement, as quoted on the OTCBB. Each full Series I warrant is exercisable for a period of five years following the date of issue to purchase one additional common share of the Company at $0.40. The terms of the private placement include a call option for the Company. In the event that the shares of common stock trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the Series J warrants and Series I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company intends to grant resale registration rights to investors in such private placement as permitted by rules of the SEC. These units were placed solely outside the United States pursuant to an exemption from the registration requirements of the Securities Act pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the units was completed in an offshore transaction , as defined in Rule 902(h) of Regulation S. In determining the availability TABLE OF CONTENTS of this exemption, the Registrant relied on representations made by the investors in the subscription agreements pursuant to which the units were purchased under the private placement. On May 31, 2011, the Company closed a private placement of 9,859,284 units at a price of $0.21 per unit for gross proceeds to the Company of $1,981,772. The proceeds of the private placement were used to finance the Company s 2011 hard-rock drilling gold exploration program at its Chandalar property in Alaska and general operating expenses. Of the total issuance, officers and directors of the Company purchased 695,000 units, contributing $145,850 of the total proceeds of the private placement. Such units were purchased on the same terms and conditions as the purchase of units by other investors in the private placement. Each unit issued pursuant to the private placement consists of one share of the Company s common stock, one half of a Series H warrant and one half of a Series I warrant. Each full Series H warrant and Series I warrant is exercisable to purchase one additional common share of the Company at $0.30 and $0.40, respectively, for a period of five years following the date of issue. The terms of the private placement include a call option for the Company. In the event that the common shares trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the Series H warrants and Series I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company granted resale registration rights to such investors. These units were issued solely to accredited investors (as defined in Rule 501(a) of Regulation D of the Securities Act) pursuant to an exemption from the registration requirements of the Securities Act provided by Rule 506 thereof. The proceeds of the private placements were used for general corporate working capital purposes. Securities Registered for Re-Sale by the Selling Security Holders The 37,612,858 shares of common stock registered for resale under this prospectus consist of 2,364,864 shares of common stock underlying the units issued pursuant to the private placement completed on May 4, 2012, 2,675,000 shares of common stock issued pursuant to the private placement completed on November 21, 2011, 11,780,952 shares of common stock issued as part of the private placement completed on July 29, 2011, and 5,976,427 shares of common stock issued to affiliates as part of the private placement completed May 31, 2011. This prospectus also covers 5,125,936 and 4,260,394 shares of common stock acquirable upon exercise of Class H and Class I warrants, respectively, 4,169,850 shares of common stock acquirable upon exercise of the Class G warrants, 659,663 shares of common stock acquirable upon exercise of Class F warrants, and 599,772 shares of common stock issuable upon exercise of the Class F-2 warrants, PLAN OF DISTRIBUTION We are registering the shares of common stock on behalf of the Selling Security Holders. When we refer to Selling Security Holders, we intend to include donees and pledgees selling shares received from a named Selling Security Holder after the date of this prospectus. All costs, expenses and fees in connection with this registration of the shares offered under this registration statement will be borne by us. Brokerage commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the Selling Security Holders. Sales of shares may be effected by the Selling Security Holders from time to time in one or more types of transactions (which may include block transactions) on the over-the-counter market, in negotiated transactions, through put or call options transactions relating to the shares, through short sales of shares, or a combination of such methods of sale, at market prices prevailing at the time of sale, or at negotiated prices. Such transactions may or may not involve brokers or dealers. The Selling Security Holders have advised us that they have not entered into any agreements, understandings or TABLE OF CONTENTS arrangements with any underwriters or broker-dealers regarding the sale of their securities, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the Selling Security Holders. The Selling Security Holders may effect such transactions by selling shares directly to purchasers or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Security Holders and/or purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). The Selling Security Holders and any broker-dealers that act in connection with the sale of shares might be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act. Any commissions received by such broker-dealers and any profit on the resale of shares sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. The Selling Security Holders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares against some liabilities arising under the Securities Act. Gary Petrucci, RBC Capital Markets, LLC, Northland Securities, Ron Nicklas, and Regent Pacific Group Limited are each individually acting as underwriters under this prospectus. Gary Petrucci is a broker-dealer employed and registered with RBC Capital Markets, LLC, which is a registered broker-dealer, and is acting as an underwriter in offering 238,095 shares pursuant to this prospectus. Northland Securities is a registered broker-dealer and is acting as an underwriter in offering 599,772 shares pursuant to this prospectus. Ron Nicklas is a registered broker-dealer and is acting as an underwriter in offering 150,000 shares pursuant to this prospectus. Regent Pacific Group Limited is acting as an underwriter in offering 9,570,776 shares pursuant to this prospectus. At the time of this prospectus, the Company has no agreements with Gary Petrucci, RBC Capital Markets, LLC, Northland Securities, Ron Nicklas, or Regent Pacific Group Limited regarding the distribution of the shares being offered by them under this prospectus or otherwise. There are no material relationships between the Company and any of Gary Petrucci, RBC Capital Markets, LLC, Northland Securities, Ron Nicklas, or Regent Pacific Group Limited, except that the Company may engage Northland Securities to act as its agent in future financings. The relationship between the Company and Northland Securities in connection with any such financings shall be disclosed at the time of the financings. Because the Selling Security Holders may be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act, the Selling Security Holders will be subject to the prospectus delivery requirements of the Securities Act. We have informed the Selling Security Holders that the anti-manipulative provisions of Regulation M promulgated under the Exchange Act may apply to their sales in the market. In the event that the registration statement is no longer effective, the Selling Security Holders may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet the criteria and conform to the requirements of such Rule, including the minimum six-month holding period. Upon being notified by any Selling Security Holder that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, under Rule 424(b) of the Act, disclosing: the name of each Selling Security Holder(s) and of the participating broker-dealer(s), the number of shares involved, the price at which the shares were sold, the commissions paid or discounts or concessions allowed to the broker-dealer(s), where applicable, that the broker-dealer(s) did not conduct any investigation to verify information set out or incorporated by reference in this prospectus; and other facts material to the transaction. TABLE OF CONTENTS DESCRIPTION OF SECURITIES TO BE REGISTERED Goldrich Mining Company is authorized to issue 200,000,000 shares of common stock, $0.10 par value, and 10,000,000 shares of preferred stock, no par value. Common Stock Each holder of our common stock is entitled to one vote per share in the election of directors and on all other matters submitted to the vote of shareholders. No holder of our common stock may cumulate votes in voting for our directors. Subject to the rights of the holders of any our preferred stock that may be outstanding from time to time, each share of our common stock will have an equal and ratable right to receive dividends as may be declared by the our board of directors out of funds legally available for the payment of dividends, and, in the event of liquidation, dissolution or winding up of our corporation, will be entitled to share equally and ratably in the assets available for distribution to our shareholders. No holder of our common stock will have any preemptive right to subscribe for any of our securities. Our common stock is quoted on the Over the Counter Bulletin Board under the trading symbol GRMC. Other Securities Preferred Stock Our directors are authorized by our Articles of Incorporation to issue, by resolution and without any action by our shareholders, up to 10,000,000 shares of preferred stock, no par value , in one or more series, and our directors may establish the designations, dividend rights, dividend rate, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms and all other preferences and rights of any series of preferred stock, including rights that could adversely affect the voting power of the holders of our common stock. One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board of directors authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock. As of the date of this filing, the directors have designated 1,000,000 shares of Series A Preferred Stock, no par value, with the following rights and preferences: Liquidation Preference: Upon a liquidation event, an amount in cash equal to $2.00 per share (adjusted appropriately for stock splits, stock dividends and the like) together with declared but unpaid dividends to which the holders of outstanding shares of Series A Preferred Stock are entitled shall be paid prior to liquidation payments to holders of Company securities junior to the Series A Preferred Stock. Voting: Each holder of Series A Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder s shares of Series A Preferred Stock could be converted. Conversion: Any share of Series A Preferred Stock may, at the option of the holder, be converted at any time into such number of fully-paid and non-assessable shares of common stock as is equal to $1.00 divided by $0.16667 per share. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the third anniversary of its issuance if the weighted average trading price of the common stock exceeds $1.00 per share for ten consecutive trading days. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the tenth anniversary from the date of issuance. TABLE OF CONTENTS Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from the surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividends shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year. Preferential and Cumulative. The Series A dividends shall be payable before any dividends will be paid upon, or set apart for, the common stock of the Company and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company. Payment of Dividend: If the Company shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by the Board in compliance with the Alaska Code and the Company s Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if the Company is producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from the Company s Chandalar property. INTEREST OF NAMED EXPERTS AND COUNSEL None. TABLE OF CONTENTS DESCRIPTION OF THE BUSINESS Overview We are a minerals company in the business of acquiring and advancing mineral properties to the discovery point, where we believe maximum shareholder returns can be realized. Although we have conducted limited production of gold on one of our gold prospects, Goldrich is an exploration stage company as defined by the U.S. Securities and Exchange Commission ( SEC ). Incorporated in 1959, Goldrich Mining Company (OTCBB trading symbol GRMC ) (formerly Little Squaw Gold Mining Company) has been a publicly traded company since October 9, 1970. Our executive offices are located at 2607 Southeast Blvd, Suite B211, Spokane, WA 99223, and our phone number there is (509) 535-7367. Our website address is www.goldrichmining.com. Information contained on our website is not part of this annual report. At this time, our major mineral exploration prospects are contained within our wholly owned Chandalar property, located approximately 190 air miles north of Fairbanks, Alaska, and 48 air miles north-northeast of Coldfoot, in the Chandalar mining district. The center of the district is approximately 70 miles north of the Arctic Circle at latitude 67 30 . Access to our Chandalar mining camp at Squaw Lake is either by aircraft from Fairbanks, or during the winter season via a 100-mile-long ice road from Coldfoot through the community of Chandalar Lake to Squaw Lake. The Chandalar property is approximately 22,858 acres, consisting of 426.5 acres of patented federal mining claims (21 lode claims, one placer claim and one mill site) and 22,432 acres of unpatented State of Alaska mining claims (197 claims). The claims are contiguous, comprising a block covering approximately 35.7 square miles. Both patented federal mining claims and Alaska state mining claims provide exploration and mining rights to lode and placer mineral deposits. Goldrich has established a substantial exploration infrastructure at its Chandalar property, including a 25-person camp, heavy and light-duty equipment, a 4,400-foot airstrip, and a network of roads that offer all-weather access to all of the major gold prospects. Current surface access to the camp from the Dalton Highway is restricted to the winter months via a winter trail from Coldfoot along the Dalton Highway. The State of Alaska has a right-of-way to construct a permanent all-season road along this trail which, when built, will allow year-around surface access to the project site. We are not aware of any plans to build this road at the present time. The Chandalar property contains both our Chandalar hard-rock (lode) gold project and the Little Squaw Creek alluvial gold mine. The area has a long prospecting and mining history dating to the discovery of placer gold deposits in 1905, soon followed by the discovery of more than 30 separate high-grade lode gold mineralization prospects. Over the next 80 years the lode gold mineralization occurrences were intermittently explored or mined by various small operators, but because of the district s remote location the readily mineable alluvial gold deposits received the most attention. As a result of our exploration, we have discovered gold mineralization disseminated in schist and in prolific micro-fractures within schist in many places and have defined a drilling target for a stratabound gold mineralization at Chandalar. The Chandalar lode occurrences are part of a regionally mineralized schist belt that extends east-west across the 600-mile width of Alaska along the south flank of the Brooks Range. The geology and mineralization of the Chandalar lode gold systems are quite similar to many important productive gold deposits which have been variously categorized as greenstone-hosted, orogenic, shear-zone related, low-sulfide, mesothermal, amongst other names and which, collectively, account for a major part of the world s gold production. Although there is a history of past lode and alluvial production on our Chandalar property, it currently does not contain any known probable or proven ore reserves as defined in SEC Industry Guide 7. The probability that ore reserves that meet SEC guidelines will be discovered on an individual hard rock prospect at Chandalar cannot be determined at this time. Although we have done some work developing the alluvial gold mine, our main focus is to develop the Chandalar lode gold mineralization exploration targets, as we believe this will maximize shareholder value. Our primary focus during 2012 is to continue exploration of our Chandalar property where we have discovered and identified drilling targets for a potentially large sedimentary-type bulk tonnage hard-rock gold deposit. A secondary focus, contingent upon financing, is continued gold production from a substantial alluvial gold deposit that has been discovered on the TABLE OF CONTENTS property through a possible joint venture with a third-party. We produced approximately 500 and 1522 ounces of fine gold in 2009 and 2010, respectively, from the Little Squaw alluvial gold mine. We had no gold production in 2011. In addition to major exploration projects on our Chandalar property, during 2011 we staked a new and separate 25,600-acre block of state mining claims known as Thazzik Mountain, located 30 miles southeast of Chandalar. An archived United States Geological Survey ( U.S.G.S. ) geophysical and geochemical data provided the basis for acquiring the new property. Records show the U.S.G.S. reconnaissance sampling identified geochemically anomalous gold, arsenic and antimony associated with a large positive aeromagnetic anomaly similar to that associated with the Chandalar district. Geologically, Thazzik Mountain lies within the same schist belt as Chandalar on the south flank of the Brooks Range. Fieldwork has identified a multitude of quartz-bearing structures, including sheeted quartz veinlets. We have taken approximately 100 reconnaissance samples for geochemical analyses and are awaiting the results. At this stage in exploration, management believes the Thazzik Mountain property to be immaterial to the Company s property holdings and operations and will therefore defer full disclosures as required by SEC Guide 7 to a future filing when we have acquired sufficient data to analyze the property to determine its standing in our portfolio. During the last several years, weak financial markets have been an important factor affecting the level of our exploration activities. While we were able to secure some financing, through the sale of gold future contracts, preferred shares, and private placements, the proceeds of financing were primarily used for the development of the Little Squaw alluvial gold mine with reduced emphasis on exploration on the Chandalar hard-rock gold project. We believe that the improvement in U.S. financial markets since 2008 and the dramatic rise in the price of gold have increased interest in companies that explore for gold. In 2011, we began to refocus our efforts on exploration on the Chandalar lode or hard-rock project. We intend to list our shares on a recognized stock exchange in Canada in addition to maintaining our listing on the FINRA OTCBB in the United States. We believe these factors will increase our access to financial markets and positively affect our ability to raise the funds necessary to add value to our property and increase shareholder value. History Gold was discovered in the Chandalar district in 1905, and over the years various operators have produced small amounts of gold mainly from placer deposits, and also from bedrock lodes consisting of high-grade gold-quartz veins. We were incorporated in 1959 for the purpose of acquiring and consolidating diversely owned gold mining claims in the Chandalar mining district. Our operations during the 1960s resulted in the establishment of a mining camp, a mill, several airstrips, and exploitation of a small amount of gold from underground workings, which was marginally profitable. Total recorded gold production from the Chandalar property, as contained in the Company s historical records, currently stands at about 86,581 ounces of fine gold, although actual historic production was probably much greater than the recorded production. Of this total, recorded lode gold production from high-grade gold-quartz vein-shear zone deposits is 8,192 ounces of fine gold from 11,884 tons processed in the Mikado mill by lessees after 1970. Historical records in the Company s files contain engineering reports showing the amount of remaining mineralized material in the lodes to be at least 17,646 tons at a grade of 1.50 ounces of gold per ton. These are not ore reserves as defined in the SEC Industry Guide 7. Approximately 78,412 ounces of the total gold production came from placer deposits of which 2,022 ounces were from gold production in the last two years from the Little Squaw Creek alluvial gold mine. Most of the remaining placer production was mined by lessees and derived from the Big Creek, Tobin Creek and Little Squaw Creek drainages. Between 1929 and 1938 previous owners obtained U.S. patents to federal mining claims totaling 426.5 acres. In 1972 and 1976, we acquired all of the patented and unpatented federal lode mining claims in the Chandalar district except for seven unpatented federal lode mining claims held by the Anderson Partnership. The patented federal claims are fee simple land. In 1978, we acquired all of the unpatented federal placer mining claims in the Chandalar district. In 1987 the federal government deeded all the land in the Chandalar district to the State of Alaska in partial fulfillment of a land conveyance quota established in the Alaska Statehood Act. During 1987, all of the 105 unpatented federal lode and placer mining claims were re-staked as State of Alaska Traditional mining claims. Unlike the federal government, the State of Alaska does not distinguish between lode and placer mining claims and accordingly all state mining claims are treated the same under the state s mining statutes. TABLE OF CONTENTS The Company relinquished 86 of its State of Alaska mining claims during 2000 and 2001 due to financial constraints. Starting the year 2003, we owned nineteen 40-acre Traditional mining claims at Chandalar. During 2003, we purchased the seven Traditional mining claims, which had also been re-staked as State of Alaska mining claims, from the Anderson Partnership for $35,000. In September of 2003 we staked fifty-five 160-acre MTRSC (meridian, township, range, section, and claim location system) state mining claims. In 2004, we staked one Traditional 40-acre claim and another eight 160-acre MTRSC claims. In 2005, we staked one more 160-acre MTRSC claim. In 2006, we staked twenty-nine more 160-acre MTRSC claims of which five were subsequently dropped after being evaluated in 2007. In 2007, we staked five more 160-acre MTRSC claims, with twelve more 160-acre MTRSC claims and two 40-acre MTRSC claims in 2008. In 2009, we staked an additional 40-acre MTRSC claim and were awarded twenty 40-acre MTRSC claims by a Superior Court for the State of Alaska. These claims had been located and held by Gold Dust Mines, Inc. In 2010, we purchased nine more 40-acre MTRSC claims at a public auction. In 2011, we staked additional claims to expand our Chandalar mining claims based on recent exploration results and aeromagnetic data published by the U.S.G.S. The aeromagnetic survey shows that all known gold prospects in the Chandalar district are associated with a large, northeast-trending, magnetic high. As a result, we located new mining claims covering 4,800 acres, completing our coverage of this northeast mineral trend. With the new acquisition, our total land area at Chandalar increased to approximately 22,858 acres, consisting of 23 patented Federal mining claims and 197 unpatented State of Alaska mining claims. Based on the same survey, we also staked a new and separate 25,600 acre block of state mining claims known as Thazzik Mountain, located 30 miles southeast of Chandalar, which significance of which is discussed above. During the 1970s and early 1980s the lode and placer properties were leased to various parties for exploration and gold production. The quartz lodes were last worked from 1970 to 1983, when about 8,192 ounces of fine gold were recovered from the milling of 11,884 tons which averaged about one ounce of gold per ton. The material was extracted from surface and underground workings on three mineralized quartz veins lying mostly on our patented federal mining claims. Between 1979 and 1999, our lessees produced 15,735.5 ounces of raw gold (impure or unrefined gold, i.e. not pure or 1000 fine gold) from placer operations, which is equivalent to about 13,287 ounces of fine gold. We estimate that approximately another 1,400 ounces of raw gold were produced by a lessee between 2004 and 2009 that was not reported to us. All past production of raw gold on the property has been previously reported as being 848 fineness. Analyses from our recent production indicate that the gold produced averaged 844 fineness, or 84.45%, and contained 13.88 % silver plus 1.68% impurities such as copper and iron. During 1988, a consulting mining engineer was hired to compile historical information on the entire placer and lode gold district. His comprehensive report was completed in January 1990, and is available for review at the Company s office. A few conclusions from that report are incorporated in this section. In November of 1989, we entered into a ten year mining lease, extendable for an additional forty years, with Gold Dust Mines, Inc. for all our Chandalar placer mining interests located on the Big Creek, St. Mary's Creek, Little Squaw Creek, Big Squaw Creek, and Tobin Creek. The mining lease provided for annual advance lease payments of $22,500 plus a ten percent (10%) royalty of all raw (placer) gold production to be paid in kind. Twenty percent (20%) of the 10% royalty, two percent (2%) overall, were to be paid directly to the underlying royalty interest holders (i.e. Anderson Partnership), and was to consist of the coarsest and largest particles of all gold produced. Goldrich received the remaining eight percent (8%) of the gold royalty. During the spring of 1990, Gold Dust Mines, Inc. (the lessee) transported about $2.6 million in capital equipment to our Chandalar mining claims over the winter haul road from the town of Coldfoot, located on the Alaska pipeline highway, also known as the Dalton highway. This machinery included a large gravity-type alluvial mineral treatment plant (an IHC-Holland wash plant) together with a Bucyrus-Erie dragline, two big Caterpillar tractors, front end loaders, a churn drill and other large pieces of placer gold mining equipment. During the last part of the 1993 season, Gold Dust Mines moved its placer operations to the Big Creek and St. Mary's Creek drainages. In 1994, placer mining operations were concentrated on the St. Mary's Creek drainage. During 1995, placer mining operations were conducted on the St. Mary's Creek and Big Creek drainages. During 1996 to 1999, placer mining operations were conducted only on the St. Mary s Creek and Big Creek drainages. An amendment to the mining lease in 1996 reduced Gold Dust s Chandalar placer mining rights to only Big Creek and its tributary, St. Mary s Creek, and accordingly the annual advance lease payment was reduced to $7,500. During 1996 TABLE OF CONTENTS to 1999, placer mining operations were conducted only on the St. Mary s Creek and Big Creek drainages. There was no mining conducted in 2000, 2001 or 2003. Since 1999, however, Gold Dust failed to pay the $7,500 annual lease fee and failed to make the annual rental payments on the state mining claims it was mining on, as required by the mining lease, in all a sum of $32,380. A portion of the 1999 production royalties owed to us in the amount of eleven ounces of gold nuggets was also not paid. In February 2000, the owners of Gold Dust, Mr. and Mrs. Delmer Ackels (guarantors of Gold Dust s obligations to us) declared a Chapter 7 bankruptcy, which the court discharged in May of 2000. Our mining lease with Gold Dust was the sole asset of Gold Dust. In the late summer of 1997, we executed a placer mining lease with Day Creek Mining Company, Inc., an Alaskan corporation. The lease included the placer mining claims only for the Tobin Creek, Big Squaw Creek and Little Squaw Creek drainages. It did not include the Big Creek and St. Mary s Creek drainages, which were leased to Gold Dust Mines, Inc. The lessee was to have performed minimum exploratory drilling during each year of the lease. Only a minimum amount of drilling was performed the first year, with some good results downstream from the Mello Bench on upper Little Squaw Creek. Due to lack of financing, the lessee could not comply with the drilling requirements in 1998, and the lease was terminated by us giving a declaration of forfeiture to the lessees in February of 1999. The lessee did not contest the declaration of forfeiture. We allowed most of our state mining claims on Big Creek and Little Squaw Creek to lapse in 2000 for lack of funds to pay the State of Alaska annual rental fees required to maintain them. That financial crisis was precipitated by the failure of Gold Dust Mines to make its 1999 annual mining lease payment to us and their failure to have paid the annual state mining claim rental on the claims covered by the mining lease as required by the lease. The individuals who own Gold Dust Mines, Inc. continued to do the annual assessment work on the remaining claims on behalf of us through the year 2002 on the basis of a verbal agreement between our former management and Gold Dust to extend its mining lease. The existence of this extension of the lease was later contested by the Gold Dust, Inc. in civil court proceedings whereby a trial jury determined in favor of Goldrich that the lease had been extended by the course of conduct of the parties from October 1999 to October 2003. Consequently and subsequently, a Final Ruling by the civil court awarded title to the 20 claims Gold Dust, Inc. staked in this interim on Big Creek and Little Squaw Creek to us. In 2010, Gold Dust, Inc. appealed the civil court s Final Ruling in the Alaska Supreme Court. See the Legal Proceedings section of this document. We did not accomplish any physical work on our Chandalar property during 2003 other than the location of additional state mining claims. These new claims include all of the area previously covered by those claims dropped in 2000, and expanded our coverage of the mining district as well. All of our pre-2003 state mining claims were maintained in good standing by carrying forward and applying to their 2003/2004 annual state mandated assessment work requirements the value in excess of the minimum annual labor requirements built up from previous years. Any values in excess of the required annual amount can be carried forward as a credit for up to four years. Since 2003 we have accomplished work on all of our Chandalar mining claims sufficient to meet all annual state assessment work requirements, and assessment work affidavits for such have been duly and timely recorded in the appropriate recording district (Fairbanks, AK). In 2003, Goldrich Mining Company came under new control, with Richard R. Walters taking over as our President. Since then, new board members have been elected and a new management team has been assembled, with William V. Schara replacing Mr. Walters as President and Chief Executive Officer in late 2009. Mr. Walters retired at the beginning of 2011 but continues as a director of the Company and a technical consultant to the Chandalar project. Chandalar Exploration Project Background In 2004 we contracted an independent geological consulting company to review and analyze previous work done on Chandalar. The consultants concluded that the gold mineralization at Chandalar is mesothermal, which can be described as formed at moderate to high temperatures and moderate to high pressures by deposition from hydrothermal fluids. A technical report produced by the consultants recommended an initial exploration program to better assess the gold lodes and the placer gold deposits. TABLE OF CONTENTS In 2004 we also commissioned a remote sensing technical study of the Chandalar district by another independent contractor who studied high altitude air photography available for the region. The purpose of the study was to identify geological structures that may be associated with gold occurrences in a schist belt containing greenstones. Numerous geological features, mostly linear and curvilinear, were identified. Major linears, especially where they may form a regional rift, are an excellent exploration tool in the search for gold. The consultant recommended making field examinations of known gold occurrences associated with the linears and other structural features identified by the study. During the 2004 summer field season at Chandalar, using independent certified professional geologists, we followed up on the work recommended by the remote sensing consultant s studies. This program ended a twenty-year hiatus of hard-rock exploration on the property. It involved a photo geologic lineament study, expansion of the claim block to cover outlying vein showings and reconnaissance sampling of rocks, soils and stream sediments for geochemical analyses. The lineament study identified fifty-nine sites thought to be favorable for discovery of mineralization. The objective of the field program was to assess the validity of historic records, refine known drilling targets and identify new drilling targets. Several prospects of previously unevaluated or unknown gold mineralization were found. During 2005 we completed a modest prospecting and geologic mapping program at Chandalar, which was limited by our lack of funds. In all, 189 exploratory samples of stream sediments, soils and rock chips were taken, and mapping was completed on a series of ten prospects. That work was successful in identifying additional gold prospects within our claim block, and also in developing specific drilling targets on several of the prospects. During early 2006, we acquired sufficient funds to undertake a substantial exploration program on the Chandalar property. During the 2006 summer field season, a geological contractor completed a 1:20,000 scale geologic map of the Chandalar district, and we drilled 39 reverse circulation drill holes for 7,763 feet on nine of some thirty gold prospects within our Chandalar claim block. In the process, several miles of old roads were repaired and three miles of new roads were constructed. We established an exploration base camp (Mello Bench camp) capable of housing 20 people, and accomplished environmental clean ups of two abandoned mining camp sites that predate our management takeover in 2003. The 2007 Chandalar exploration program expanded our understanding of several hard-rock gold prospects through trenching and associated sampling. In all, forty prospect areas were mapped in detail and 1,342 samples of rock (including trench and placer drill hole bedrock) and soil were collected and analyzed. Forty-five trenches for 5,927 feet were accomplished using an excavator, of which 4,954 feet cut into bed rock and were sampled. Some 534 trench samples were taken continuously along the lengths of all trenches. Additionally, ground magnetic surveys on fifteen of the prospects were conducted with survey lines totaling 28 miles. Also in 2007, we conducted a reverse circulation drilling program on the Little Squaw Creek drainage. A total of 15,304 feet were drilled. Of 107 holes collared, 87 were completed to their targeted depths. We engaged an independent geological contractor to conduct all sampling in our drilling program, complete all drill sample gold recovery, ore valuation, and report the results of their work. The independent contractor was also charged with the drill sample security. The analytical processing of the 3,031 drill samples and report on the final results of the samples gold contents was completed by March of 2008. From these results, we concluded we have discovered a relatively large alluvial gold deposit of sufficient grade to be potentially economic to mine under prevailing gold prices. In 2009 we successfully completed an alluvial gold mining test on Little Squaw Creek. The pilot program involved a mining test that produced approximately 594 raw ounces of placer gold, equivalent to about 500 ounces of fine gold. The test mining yielded valuable geologic, mining and engineering data that encouraged us to ramp-up the project into production in the spring of 2010. During the summer of 2010 we were able to start a small mining operation at our Little Squaw Creek alluvial deposit, the site of our previous test mining operation, known as the Little Squaw Creek Gold Mine. This was a major milestone for the Company, although full realization of the intended project was inhibited by a shortage of working capital. By the end of the 2010 mining season we had produced 1,906 ounces of gold concentrate from which TABLE OF CONTENTS approximately 1,522 ounces of fine gold and 259 ounces of fine silver were produced, bringing us gross sales proceeds of $1,904,124. In 2011, we suspended production of the Little Squaw Creek Gold Mine to refocus our efforts on hard-rock exploration at Chandalar. We are reviewing several possibilities, including the engagement of a joint venture partner or lessor, to restart production at the Little Squaw Creek Gold Mine to eventually achieve production of up to 30,000 ounces of gold per year. To accomplish future production, we will be required to obtain additional permits and resolve the current non-compliance with our Small Mines permit, as described below in Environmental Risks. We do not anticipate that this will delay or limit our ability to execute any of our mining plans in the future. During the 2011 exploration season completed in October, we successfully completed an exploratory drilling program at Chandalar. We drilled 25 HQ size core holes totaling approximately 14,500 feet in five target areas. The drilling contractor completed the last hole on September 30, 2011, and drill results are presented in 2011 Exploration Activities section below. The soil sampling conducted during the 2011 exploratory season, prioritized to first cover known mineralized trends, consisted of over 1,100 samples collected on a reconnaissance scale grid over approximately 65 percent of the 23,000-acre Chandalar property. In the airborne geophysical survey, approximately 750 line miles (1,246 line kilometers) were flown by an international geophysical contractor over the entire Chandalar property along flight lines 100 meters apart. Preliminary magnetic data reveals known mineralized structures with good clarity and, more importantly, identifies sharp new prospect-scale and district-scale anomalies and mineralized trends. The 2011 exploration season was successful in significantly expanding our existing body of geological knowledge about our Chandalar property. The combination of core, soil and magnetic data is expected to provide a solid foundation for going forward with a thorough exploration and evaluation of the numerous gold occurrences on the property. Competition There is aggressive competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. We compete for the opportunity to participate in promising exploration projects with other entities. In addition, we compete with others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration equipment and hire qualified mineral exploration personnel. Specific to our Chandalar project, we compete in mining claims staking with local miners and entrepreneurs for prospective ground. One of those miners, Mr. Delmer Ackels, a lessee of the property at the time, overstaked four of our Traditional state mining claims in his own name. We filed a civil suit to clear title to those claims and were successful. We were also awarded title to 20 other claims Mr. Ackels had staked during his mining lease with us. Employees In October 2009, William Schara began employment as President and Chief Executive Officer of the Company. He voluntarily elected to defer 100% of his salary until such time as the Company had sufficient cash to pay it and did not receive a salary until November 2010. We rely on consulting contracts for some of our management and administrative personnel needs, including for our Chief Financial Officer, Mr. Ted Sharp. The contract for Mr. Sharp expired on December 31, 2009, however Mr. Sharp continues to provide services to the Company under the same terms provided in the contract. A new contract will be negotiated and approved by the Board when the success of the current financing efforts has been determined during coming months. The terms of the contract may be revised to reflect our ability to pay for services from cash resources. We employ individuals and contractors on a seasonal basis to conduct exploration, mining and other required company activities, mostly during the late spring through early fall months. During the summer season of 2011, we had as many as 25 employees and contractors on site at Chandalar. Seasons We conduct exploration activities at Chandalar between late Spring and early Autumn. Access during that time is exclusively by airplane. All fuel is supplied to the camp site by air transport. Access during winter months is by ice road, snowmobile and ski-plane. All heavy supplies and equipment are brought in by trucking over the ice road from Coldfoot. Snow melt generally occurs toward the end of May, followed by an intensive, though short, 90-day growing season with 24 hours of daylight and daytime temperatures that range from 60 to 80 Fahrenheit. Freezing temperatures return in late August and freeze-up typically occurs by early October. Winter temperatures, particularly TABLE OF CONTENTS in the lower elevations, can drop to -50 F or colder for extended periods. Annual precipitation is 15 to 20 inches, coming mostly in late summer as rain and during the first half of the winter as snow. Winter snow accumulations are modest. The area is essentially an arctic desert. Regulation Our mineral exploration activities are subject to various federal, state, and local laws and regulations governing prospecting, exploration, production, labor standards, occupational health and mine safety, control of toxic substances, land use, water use, land claims of local people and other matters involving environmental protection and taxation. New rules and regulations may be enacted or existing rules and regulations may be applied in a manner which could limit or curtail exploration at our property. It is possible that future changes in these rules or regulations could have a significant impact on our business, causing those activities to be economically re-evaluated at that time. Taxes Pertaining to Mining Alaska has a tax and regulatory policy that is widely viewed by the mining industry as offering the most favorable environment for establishing new mines in the United States. The mining taxation regimes in Alaska have been stable for many years. There is regular discussion of taxation issues in the legislatures but no changes have been proposed that would significantly alter their current state mining taxation structures. The economics of any potential mining operation on our properties would be particularly sensitive to changes in the State of Alaska's tax regimes. Amendments to current laws, regulations and permits governing our operations and the general activities of mining and exploration companies, or more stringent implementation thereof, could cause unanticipated increases in our exploration expenses, capital expenditures or future production costs, or could result in abandonment or delays in establishing operations at our Chandalar property. Although management has no reason to believe that new mining taxation laws which could adversely impact our Chandalar property will materialize, such event could and may happen in the future. At present, Alaska has a 7% net profits mining license tax on all mineral production (AS 43.65), a 3% net profits royalty on minerals from state lands (AS 38.05.212) (where we hold unpatented state mining claims), and a graduated annual mining claim rental beginning at $0.50/acre. Alaska state corporate income tax is 9.4% if net profit is more than a set threshold amount. Alaska has an exploration incentive credit program (AS 27.30.010) whereby up to $20 million in approved accrued exploration credits can be deducted from the state mining license tax, the state corporate income tax, and the state mining royalty. All qualified new mining operations are exempt from the mining license tax for 3 years after production begins. Environmental Risks Our Chandalar property contains an inactive small mining mill site on Tobin Creek with tailings impoundments, last used in 1983. The mill was capable of processing 100 tons of ore per day. A total of 11,884 tons were put through the mill, and into two small adjacent tailings impoundments. A December 19, 1990 letter from the Alaska Department of Environmental Conservation (the Alaska DEC ) to the Alaska Division of Mining of the Department of Natural Resources (the Alaska DNR ) states: Our samples indicate the tailings impoundments meet Alaska DEC standards requirements and are acceptable for abandonment and reclamation. The Alaska DNR conveyed acknowledgement of receipt of this report to us in a letter dated December 24, 1990. We subsequently reclaimed the tailings impoundments, and expect that no further remedial action will be required. Vegetation has established itself on the tailings impoundments, thereby mitigating erosional forces. In 1990, the Alaska DEC notified us that soil samples taken from a gravel pad adjacent to our Tobin Creek mill site contained elevated levels of mercury. In response to the notification, we engaged a professional mineral engineer to evaluate procedures for remediating contamination at the site. In 1994, the engineer evaluated the contamination and determined that it consists of approximately 160 cubic yards of earthen material that could be cleansed by processing it through a simple gravity washing plant. This plan was subsequently approved by the state. In 2000, the site was listed in the Alaska DEC s contaminated sites database as a medium priority contaminated site. We are not aware of any changes in state environmental laws that would affect our state approved cleanup plan or impose a time table for it to be done. During 2008, our employees took a suite of samples at the contamination site to check the readings taken in TABLE OF CONTENTS 1990 or prior. The results of this sampling re-confirm the earlier findings, and also suggest that some attenuation of the mercury contamination has occurred. An independent technical consultant assessed those results and believes that proper procedures for sampling and testing were followed. During 2011, we took additional samples which showed an overall reduction of mercury in the previously sampled area. However, one sample on the margin of the sampled area yielded high mercury content, and that may necessitate continued expansion of the area to be sampled in the future. These 2011 sample results will be submitted to the State for analysis and determination of what additional sampling the State may require on the area around the mill. At December 31, 2011, we have accrued a liability of $50,000 in our financial statements to remedy this site. During 2009 and 2010 the Company engaged in permitted open pit mining operations on Little Squaw Creek. The Small Mines permit restricts ground disturbance to a total maximum of ten acres and requires a specified reclamation plan for the disturbed area to be completed prior to additional acreage being disturbed. The Company joined the State of Alaska reclamation bond pool to assure the minimum legal reclamation requirements could be met. During the 2010 mining operations, we experienced a situation where it was not practical to concurrently mine and reclaim without wasting (or sacrificing) a significant portion of the mineralized material we intended to mine. Our mining operations have to date disturbed approximately forty-six acres. Consequently, we have self-determined that we are currently not in compliance with our issued permits. In order to restart production at the Little Squaw Creek Gold Mine, the Company will need to convert the Small Mines permit to an Individual Permit. An Individual Permit would allow for as much mining ground disturbance as needed but requires a more elaborate application and lengthy process, including public hearings, to obtain. This could delay any restart of the Little Squaw Creek Gold Mine. We do not believe the permit will be unreasonably withheld and will apply to beginning mining activities. In 2011, we suspended production at the Little Squaw Creek Gold mine to focus our efforts on hard rock exploration at Chandalar. Title to Properties We hold 220 mining claims of which 23 are patented claims and 197 are State of Alaska unpatented mining claims. Alaska state unpatented mining claims are unique property interests, in that they are subject to the paramount title of the State of Alaska, and rights of third parties to non-interfering uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. There are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims and possible conflicts with other claims are not always determinable from descriptions contained in them. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 86.600. The validity of an Alaska state unpatented mining claim depends on (1) the claim having been located on state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting stakes in the ground, (2) compliance with all applicable state statutes in terms of the contents of claim location notices or certificates and the timely filing and recording of the same, (3) timely payment of annual claim rental fees, and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable minerals, the ground covered by an unpatented mining claim is open to location by others unless the owner is in actual possession of and diligently working the claim. We are diligently working and are in actual possession of all our claims at Chandalar. Although we have no cause to believe so, the unpatented state mining claims we own or control may be invalid or the title to those claims may not be free from defects. Our claims may be contested by the Alaska state government or challenged by third parties. We have attempted to acquire and maintain satisfactory title to our Chandalar mining property, but we do not normally obtain title opinions on our properties in the ordinary course of business, with the attendant risk that title to some or all segments our Chandalar property, particularly title to the State of Alaska unpatented mining claims, may be defective. An important part of our Chandalar property is patented federal mining claims owned by us, subject to a 2% mineral production royalty held by our former management (Anderson Partnership). Patented mining claims, which are real property interests that are owned in fee simple, are subject to less risk than unpatented mining claims. We have done a title chain search of our patented federal mining claims and believe we are the owner of the private property, and that the property is free and clear of liens and other third party claims except for the 2% mineral production royalty. We hold an option to purchase that 2% royalty for $250,000 cash on or before June 23, 2013. TABLE OF CONTENTS The locator of a mining claim on land belonging to the State of Alaska does not have an option to patent the claim. Instead, rights to deposits of minerals on Alaska state land that is open to claim staking may be acquired by discovery, location and recording as prescribed in Alaska state statutes, as previously noted. The locator has the exclusive right of possession and extraction of the minerals in or on the claim, subject to state statutes governing mining claims. We are not in default of any annual assessment work filing or annual claim rental payment required by the state of Alaska to keep our title to the mining rights at Chandalar in good standing. Map 1 Location of the Chandalar, Alaska Mining District DESCRIPTION OF PROPERTY Chandalar Property, Alaska The Chandalar gold property is currently our main mineral property. It is an exploration stage property. We were attracted to the Chandalar district because of its similarities to productive mining districts, its past positive exploration results, and the opportunity to control multiple attractive gold quartz-vein prospects and adjacent unexplored target areas for large sediment hosted disseminated gold deposits. The gold potential of the Chandalar district is enhanced by similarities to important North American mesothermal gold deposits, a common attribute being a tendency for the mineralization to continue for up to a mile or more at depth, barring structural offset. We believe that our dominant land control eliminates the risk of a potential competitor finding ore deposits located within adjacent claims. Summarily, the scale, number and frequency of the Chandalar district gold-bearing exposures and geochemical anomalies compare favorably to similar attributes of productive mining districts. Going forward, our primary focus is development of our hard-rock (lode) exploration targets at Chandalar. Subject to sufficient financing, we plan an aggressive diamond-core drilling program on the hard-rock exploration targets which are believed to be the sources of the alluvial gold. The plan calls for about 40 to 45 drill holes totaling about 20,000 feet. Drill hole depths would range from 300 to 700 feet, and the holes would be spread along a five-mile-long TABLE OF CONTENTS mineralized trend that our geological work has identified. The drilling targets are embodied in concepts developed from the technical data that point to the discovery potential for huge, low grade orogenic gold deposits. The Chandalar mineralization can best be classified as orogenic owing to the finely disseminated nature of the gold, close association with sulfides and deposition within an original bedded organic rich (carbon) sedimentary host (Mikado phyllite). The phyllite is highly deformed as a result of tectonic processes. The original sedimentary rocks have been successively altered by multiple phases of metamorphic and hydrothermal alteration which has remobilized gold within the original carbonaceous sediments and into axial fold structures, faults and quartz veins above and peripheral to them. The Company maintains an extensive file of the prospecting and exploration of the Chandalar Mining district, cataloging documents dated as early as 1904. Most previous work was by mining companies and individuals who were focused on mining the gold placers and quartz veins but who conducted little organized geologically based exploration. Even less attention was given beyond existing vein exposures. There is no reliable accounting of the exploration expenditures over the entire hundred-year period; however, since we (new management) acquired the Company in 2003, $2.468 million of qualifying assessment work has been accomplished (excludes infrastructure, capital equipment, transport cost, and office support). In addition to work performed in the 2011 field season noted below, we completed two drill programs, a 7,763-foot reverse circulation, 39-hole reconnaissance-level lode exploration drill program in 2006 and a 15,304-foot, 107-hole reverse circulation placer evaluation drill program in 2007. We also accomplished local mapping of about 40 identified prospect areas; collection and geochemical analyses of approximately 1,400 soil, 1,400 rock, 70 stream sediment and 11 water samples, and preparation of anomaly maps; a trenching program of 45 trenches consisting of 5,937 feet, of which 4,954 feet was exposed bedrock, and collection of about 550 trench-wall channel samples; ground magnetometer survey grids of 15 prospect areas, and survey lines totaling 28 miles. We have collected and assayed a total of 3,431 surface samples at Chandalar. In addition, approximately 4,500 drill samples have been analyzed. The Chandalar district has a history of prior production, but there has been no significant recurrent production over the years. Our 2007 exploration work discovered and partially drilled out a large placer gold deposit in the Little Squaw Creek drainage. In 2009, we opened the Little Squaw Creek Gold Mine as a test project. Favorable results led to the expansion of the mine in 2010. So far, start-up production of the Little Squaw Creek Gold Mine amounts to 2,022 ounces of fine gold. This deposit is geologically characterized as an aggradational placer gold deposit. It is unusual in the sense that it is the only such known alluvial, or placer, gold deposit in Alaska, although many exist in Siberia. Our discovery contrasts to others in Alaska that are commonly known as bedrock placer gold deposits. Aggradational alluvial gold deposits contain gold particles disseminated through thick sections of unconsolidated stream gravels in contrast to bedrock placer deposits where thin but rich gold-bearing gravel pay streaks rest directly on bedrock surfaces. Aggradational placer gold deposits are generally more uniform and thus more conducive to bulk mining techniques incorporating economies of scale. This contrasts with bedrock placer gold deposits where gold distribution tends to be erratic and highly variable. The plan view of our discovery is somewhat funnel-shaped, and as such has been divided into two distinct geomorphological zones: a Gulch, or narrower channel portion, and a Fan, or broad alluvial apron portion. During the summer of 2009, we permitted and successfully completed a test mining operation on the upper end of the Gulch portion of the Little Squaw Creek alluvial gold deposit. We mined about 40,000 bank cubic yards of glacial overburden and processed through our wash plant about 9,875 bank cubic yards of gold-bearing paleo-stream alluvium, yielding approximately 594 ounces of placer gold which was then converted into about 500 ounces of fine gold. During the following winter of 2009/2010, we raised additional funds to ramp-up the Little Squaw Creek Gold Mine into production. That involved substantial infrastructure upgrades, including building a new 30-man mining camp located about two miles from the exploration camp that had been in use since 2004. The 2010 seasonal mining operation involved stripping an estimated 130,000 bank cubic yards of waste material and also the mining and processing through our wash plant of about 31,680 bank cubic yards of gold bearing gravels. This process yielded about 1,522 ounces of fine gold, making it one of the largest of the approximately 250 placer gold mines in Alaska. Location, Access & Geography of Chandalar Our Chandalar property essentially envelops the entire historic Chandalar mining district, and lies approximately 70 miles north of the Arctic Circle at a latitude of about 67 30 . It is about 190 air miles north of Fairbanks, Alaska and 48 air miles east-northeast of the town of Coldfoot (Map 1). Access to our Chandalar Squaw Lake mining camp and TABLE OF CONTENTS nearby Little Squaw Creek Gold Mine is either by aircraft from Fairbanks, or overland during the winter season via a 100-mile-long ice road from Coldfoot through the community of Chandalar Lake to Squaw Lake. Geographically, our Chandalar property is situated in rugged terrain just within the south flank of the Brooks Range where elevations range from 1,900 feet in the lower valleys to just over 5,000 feet on the surrounding mountain peaks. The region has undergone glaciation due to multiple ice advances originating from the north and, while no glacial ice remains, the surficial land features of the area reflect abundant evidence of past glaciation. The property is characterized by deeply incised creek valleys that are actively down-cutting the terrain. The steep hill slopes are shingled with frost-fractured slabby slide rock, which is the product of arctic climate mass wasting and erosion. Consequently, bedrock exposure is mostly limited to ridge crests and a few locations in creek bottoms. Vegetation is limited to the peripheral areas at lower elevations where there are relatively continuous spruce forests in the larger river valleys. The higher elevations are characterized by arctic tundra. Snow melt generally occurs toward the end of May, followed by an intensive, though short, 90-day growing season with 24 hours of daylight and daytime temperatures that range from 60 to 80 Fahrenheit. Freezing temperatures return in late August and freeze-up typically occurs by early October. Winter temperatures, particularly in the lower elevations, can drop to -50 F or colder for extended periods. Annual precipitation is 15 to 20 inches, coming mostly in late summer as rain and during the first half of the winter as snow. Winter snow accumulations are modest. The area is essentially an arctic desert. Map 2 Chandalar Mining Claim Block Chandalar Mining Claims We have a block of contiguous mining claims at Chandalar that cover a net area of about 22,858 acres (approximately 35.7 square miles) (Map 2), and which are maintained by us specifically for the exploration and possible exploitation of placer and lode gold deposits. The mining claims were located to secure most of the known gold bearing zones TABLE OF CONTENTS occurring within an area approximately five miles by eight miles. Within the claim block, we own in fee simple 426.5 acres as twenty-one federal lode claims, one patented federal placer claim, and one patented federal mill site. The 23 federal patented claims cover the most important of the known gold-bearing structures. In addition, there are 197 Traditional and MTRSC 40-acre State of Alaska. The 197 Traditional and MTRSC state mining claims provide exploration and mining rights to both lode and placer mineral deposits on an additional 22,432 acres of unpatented claims. Unlike federal mining claims, State of Alaska mining claims cannot be patented, but the locator has the exclusive right of possession and extraction of the minerals in or on the claim. Chandalar Geology and Mineralization Refer to Maps 3 and 4 for graphic representation of both the hard-rock prospects and alluvial fans on which we are focusing varying degrees of exploration effort, as determined by exploration activities already completed in prior years. Interpretation of Exploratory Findings at Chandalar A spatial relation between the Mikado phyllite unit and the gold placer on Little Squaw Creek is evident. The northeast plunge (about 14 NE) of the altered (+/- mineralized) phyllite unit beginning near the Summit Mine intercepts bedrock of the creek in the vicinity of the head of the placer deposit and continues northward, forming the bedrock below the creek and underlying the placer gold deposit. The placer gold deposit extends along the creek at least a mile to the north as confirmed by drilling. There is evidence that relatively small masses of Pleistocene age ice high in the valley had selectively gouged highly altered zones of the phyllite unit, which the ice followed as a path of least resistance (i.e. the altered phyllite), to an apparent terminal moraine site immediately upstream of the open pit of our Little Squaw Creek Gold Mine. Auriferous stream sediments have since been re-worked into placer deposits perched in thick sequences of glaciofluvial sediments. Map 3 Gold Prospects and Geologic Structure of Chandalar TABLE OF CONTENTS The Little Squaw Creek placer, in addition to being a significant gold deposit, is also a substantial geochemical anomaly that indicates the existence of a substantial lode source(s). In 2007, we conducted a reverse circulation drill program on the placer that identified about 10.5 million cubic yards of mineralized material. The placer gold deposit is open to the north and west, and gravel bench deposits remain unevaluated on the east, thereby suggesting to us a reasonable alluvial resource discovery potential of one-half million ounces of fine gold. The placer gold deposit represents only the coarser fraction of the original in-situ resource in the portion of the lode source that has been eroded to generate it. Diamond-core drilling during the 2011 mining season was conducted to evaluate the degree of mineralization occurring as a large, folded strata-bound rock unit over five miles in length. The drill program explored the correlation of the overlying magnetic schist and quartz muscovite chlorite schist, locally hematite-spotted, to the underlying Mikado phyllite and possible mineralization, as well as to the orogenic gold-quartz veins that rise through it. We postulate that feeder zones through which ore-forming fluids rose are associated with dilation zones developed by periodic differential off-set movement between the deep-seated NE and WNW fault zones. Also, multitudes of tension microfractures along the axis of the fold are thought to be variously mineralized with gold. These zones represent primary targets for drilling. Map 4 depicts the core drilling targets zone. Map 4 Chandalar Exploratory Gold Deposit Drill Target with Proposed Drill Holes Chandalar Exploration Programs Our 2011 exploration program included a diamond-core drilling exploration program on a series of hard-rock gold targets on our Chandalar claims. These targets contain numerous gold showings and we believe they are the source areas of the alluvial gold deposits in the creek drainages. We believe we have accumulated a body of knowledge on the Chandalar claims which points us toward significant areas of interest for discovery of very large tonnages of mineralization, and our drilling program has been designed to further qualify those targets for potential TABLE OF CONTENTS commercialization. Our 2011 hard-rock drilling plan was extrapolated from a 2007 exploration plan that was not undertaken previously due to financial limitations. The property currently does not contain any known probable or proven ore reserves under the definition of ore reserves within SEC Industry Guide 7. Management has engaged independent geologists to evaluate drill exploration data through 2008, and has received specific recommendations to: 1. Continue the hard-rock trenching program, specifically on the St. Mary s Pass, Aurora Gulch, Summit (including Bonanza), Pioneer, and Chiga prospects. A detailed program totaling 7,440 feet is recommended. ( Budget- $131,325 ) 2. Design a diamond-core drilling program based on trench results from 2007 and the trenching recommended above. Evaluate the tonnage potential at Mikado-St. Mary s Pass, Aurora Gulch, Pioneer, and Summit prospects; the results will be the basis for future recommendations of mineralized material delineation drilling. Scout holes should be considered at the Rock Glacier, Ratchet, Pallasgreen, Chiga, Little Squaw west, and possible Northern Lights west extension prospects. 3. Plan and execute laboratory and on-site bulk sample testing of vein-hosted mineralization zones to obtain repeatable estimates of gold grade where coarse gold grains are present. 4. Continue exploration for potential bulk minable tonnage deposit(s) based on including lenses or ore shoots of gold-quartz veins with subparallel sheeted and stockwork quartz vein systems and metasediment-hosted disseminated gold mineralization. 5. Expand the regional exploration program to include gold occurrences between Myrtle Creek on the west and the Middle Fork of the Chandalar River on the east. Continue to evaluate the numerous outlying gold-quartz prospects and unevaluated shear zones throughout the district, particularly under the sediment cover in the north part of the district. 6. Continue a mineralized material evaluation program and develop, as warranted, a placer gold mine capable of processing 400 cubic yards of gravel per hour and producing 15,000 to 30,000 oz of fine gold per year. Phase 1: Mineralized material drilling of the Little Squaw Creek alluvial fan. (Budget - $985,600) Determine the northern, eastern and western limits of placer mineralization in the paleo fan. Formulate drill plans for a continuing, future placer exploration program based on seasonal logistical constraints limiting drilling to about 15,000 feet per year. Contingent on the results of the Phase 1 drilling, select the highest priority of Phase 2 options; 2-A (in-fill drilling on the Little Squaw Fan), 2-B (resource evaluation of the Little Squaw gulch), and 2-C (Resource drilling on Big Squaw and Spring Creeks). 7. Conduct seismic surveys, define the geomorphic classification of the Chandalar placer deposits in comparison to other deposits worldwide, assess marketability for coarse size fraction of placer gold, and present specific recommendations based on the 2007 drilling program. Beginning with the 2009 placer gold test mining operation on Little Squaw Creek, we started to execute on the recommendations above. Some exploration of the various other placer gold creeks on the Chandalar property took place. Prospecting work on the hard-rock gold deposit possibilities was also accomplished. That work led to some key understandings of the geology. It also generated an internal Company memorandum by Mr. Barker proposing an exploratory diamond-core drill program of about 40 drill holes aggregating 20,000 feet. Map 4 shows the proposed lay out of the drilling, which is designed to test for large low-grade bulk mineable gold deposits. It would evaluate the degree of mineralization occurring as a large strata-bound unit nearly 5 miles in length, as explained in the report Interpretation of Exploratory Findings at Chandalar. We anticipate this proposed drilling plan would require a stand-alone (not integrated with the placer gold mine) budget of approximately $1.5 to $2.0 million dollars. TABLE OF CONTENTS 2009 Test Mining Our exploration activities of previous years defined a substantial alluvial gold deposit on Little Squaw Creek. The limits and magnitude of this body of mineralized material remain to be determined by continued drilling. An independent registered professional mining engineer, Mr. Paul Martin, calculated it to be at least 10.5 million bank cubic yards containing 0.0246 ounces of fine gold per bank cubic yard, with an overburden to mineralized material stripping ratio of 0.89 to 1. The grade was subsequently adjusted to 0.0238 ounces of fine gold per bank cubic yard to account for a reduced gold fineness when a certified independent assay laboratory bias was discovered. We believe that with continued drilling, the mineralized body may ultimately prove to be twice this size at roughly the same grade. In 2009, we accomplished a major step in assessing the economic potential of this mineralized body by completing a test mining operation on it. The major findings of the test mining are explained in Item 2 Properties under the section called Results of Test Mining Operation of our Form 10-K for the year ended December 31, 2009. Most importantly, we found that the mineralized material is a continuous but variably mineralized horizon. There are specific horizons within it that are up to 20 feet thick containing the richest gold grades. The mineralized material is about forty percent composed of gravel, cobbles and boulders set in a sixty percent matrix of fine silt. It is not frozen below twelve to fifteen feet of depth, but is nicely compacted and stands well when opened up. Because of the high silt content, the mineralized material, and the overburden as well, expands by over forty percent in volume when it is mined and converted into loose cubic yards. During 2009 mining test, we stripped approximately 40,000 bank cubic yards of waste material and processed about 9,875 bank cubic yards of gold bearing gravels through our wash plant. About 593.5 ounces of alluvial gold were recovered which, when smelted, yielded 497.5 ounces of fine gold. 2010 Mining The 2009 alluvial gold test mining operation successfully yielded valuable geological, mining and engineering data that lead us to the decision to ramp-up the project into gold production in the spring of 2010. Infrastructure and mining development at the Little Squaw Creek alluvial gold mine was initiated in late May 2010, with the first gold production being delivered to a smelter-refinery on July 15, 2010. The mining operation ultimately involved stripping an estimated 131,000 bank cubic yards of waste material and the mining and processing of about 31,680 bank cubic yards of gold bearing gravels, from which about 1,522 ounces of fine gold and 259 ounces of fine silver were produced at the refinery. Our gross precious metal sales in 2010 came to $1,904,124. The 2010 gold production was limited by the lack of capital to get a second wash plant on line. The 2009 wash plant was re-modeled with improvements (primarily an enlarged hopper with a wet grizzly style in-feed) and put on line for the 2010 production. Unfortunately, the plant turned out to be capable of processing only about 29 bank cubic yards per hour on a consistent basis. Attempts at higher processing rates led to overloading the machine and frequent break downs. The plant ran for 1,094 hours, producing at an average rate of about 1.45 ounces of fine gold per hour. While there were no drill holes within 400 feet of the perimeter of the 2009 test pit, there was mineralized material exposed in three walls of the pit which encouraged management s decision to expand the mine by following the mineralized material, using in-pit grade control, and mining material to the physical and economic extent possible. No estimate of metallurgical recovery balances can be made regarding the mined mineralized material in 2010 for lack of sufficient prior data about the gold content in the block of ground that was mined. The gold recovery performance of the plant was checked on a consistent basis by panning its tailings. No significant gold was ever found in the tailings, leading management to conclude that the wash plant, albeit undersized for the job, was working properly. In 2010, 1,914.102 ounces of raw gold concentrates were shipped to the same smelter as used to process to 2009 gold concentrates. This yielded, after melt loss of impurities, 1,779.380 ounces of dor (or bullion) bars from which 1,503.323 ounces of fine gold and 259.356 ounces of silver were won at the refinery. Additionally, 24.1345 ounces of gold nuggets estimated to contain 19.2178 ounces of fine gold were produced and either sold to jewelers or retained by the Company. No assays were made of the placer gold shipped to the smelter. Without this data, no calculations of the purity of the placer, or raw, gold that was mined in 2010 can be made. The calculated gold and silver fineness of the 2010 dor bars is 844.49 (84.449 %) and 145.8 (14.58 %), respectively. This compares favorably with the foregoing 2009 smelter representations, with the gold fineness being 0.74 percent higher and the silver fineness being 6.28 percent higher. These small differences may be due to natural viabilities within the body of mineralized material, or more likely due to lack of consistent sampling procedures. TABLE OF CONTENTS For the combined 2009 and 2010 mining seasons, the Company mined a total of about 213,000 bank cubic yards of which about 171,000 bank cubic yards was rejected as waste and an aggregate of about 41,500 bank cubic yards of mineralized material was processed through the wash plant, yielding 2,500 ounces of raw gold in concentrates which was further reduced to about 2,022 ounces of fine gold at the refinery. The average grade of the processed material was about 0.060 ounces of fine gold per bank cubic yard. Only higher grade horizons within the thick section of lower grade mineralized material were targeted for mining. Consequently, the overall stripping ratio of the portion of the Little Squaw Creek Gold deposit mined to date is approximately 4 of waste to 1 of processed mineralized material. Going forward, our primary focus is development of our hard-rock (lode) exploration targets at Chandalar but a secondary goal is to continue to ramp up production at the Little Squaw Creek alluvial gold mine, with the goal of achieving full production of 30,000 ounces of gold per year. The capital cost to do so is currently estimated to be approximately $20 million. We will also explore to see if it is possible to begin production at any of the other six known alluvial gold deposit targets at Chandalar. Prior to continuing production, we will be required to resolve the existing violation of our permit as it applies to reclamation activities as described in Environmental Risks above. We do not expect this resolution to be difficult nor do we expect it to delay or limit production in the future. 2011 Exploration Activities We completed our 2011 diamond core drilling campaign at Chandalar, Alaska along with a property-wide, grid-based soil sampling and a detailed airborne magnetometer survey. We completed a 25-hole, 4,404-meter (14,444-foot) exploratory program, using HQ size core, tested six prospect areas (see map below) located along a 4-km (2.5-mile) long northeast trending belt of gold showings. The drilling contractor completed the last hole on September 30, 2011. The HQ diameter diamond drill holes were generally sampled using a five-foot sample length and overall core recovery averaged greater than 90%. Six quality control samples (one blank and five standards) were inserted into each batch of 120 samples. The drill core was sawn, with half sent to the ALS Minerals sample preparation in Fairbanks, Alaska, where the samples were prepared for assay and then sent to the ALS Minerals Lab in Sparks, Nevada for analyses. Gold was analyzed by fire assay and Atomic Absorption Spectrometry finish and a four acid sample digestion with Inductively Coupled Plasma Spectrometry method was used to analyze a full suite of elements. Samples were securely transported from the project site to the ALS Minerals preparation laboratory in Fairbanks via chartered aircraft hired by the Company. Donald G. Strachan, Certified Professional Geologist and Goldrich s contracted project manager for Chandalar, managed the drill program and confirmed that all procedures, protocols and methodologies used in the drill program conform to industry standards. The results of this first diamond core exploration drilling on the Company s Chandalar gold property have exposed what the Company believes is a wide-spread system of gold mineralization at intervals from surface to depths of up to 120 meters (about 400 feet). The Company also believes the mass of rock affected by the mineralizing system to be large, as more than 50 gold showings are scattered over about six square miles (fifteen square kilometers), only a fraction of which has yet been drill-tested. The drill cores contain a total of 56 mineralized intervals of 0.5 or greater grams per tonne gold (g/t Au) that average 2.3 meters (7.5 feet) in length and have a weighted average grade of 1.66 g/t Au (see table below). Gold-bearing intercepts were obtained in 72% of the holes, with many having multiple intercepts. Drilling results draw the Company to focus particularly on two prospects Aurora and Rock Glacier which the Company believes are geologically associated and related to the same controlling mineralizing features. Intercepts include: 1.5 meters (5.0 feet) at 6.57 g/t Au in Hole LS11-0063 on the Aurora prospect; 2.1 meters (7.0 feet) at 6.02 g/t Au in Hole LS11-0041 on Rock Glacier These and other intercepts listed in the table below are associated with much longer core runs of strongly anomalous gold (> 0.10 g/t Au) between 4.3 meters (14 feet) and 21.3 meters (70 feet) in length. Also worth noting, while constructing a road to a proposed drill site, the Company encountered two zones of shearing with sheeted and TABLE OF CONTENTS stockwork quartz veinlets, approximately 5 meters (16 feet) and 15 meters (49 feet) wide. These zones are located 135 meters vertically above and 200 meters southwest of Aurora drill holes #61 to #64. Representative continuous chip sampling of these zones yielded assays of 2.8 g/t gold and 2.1 g/t gold, respectively. The Company believes the mineralized Aurora drill hole intercepts may represent an extension of these zones and that additional drilling could extend these zones even further. While the silver (Ag) values associated with these and most of the other gold intercepts are generally less than 2 g/t, unusually, native silver is observed in one core interval of 0.46 meters (1.5 feet) from 80.01 meters (262.5 feet) to 80.47 meters (264.0 feet) in Hole LS11-0042, which assays greater than 690 g/t Ag (> 20.1 oz/st Ag [st = short ton]) with only a trace of gold. A second curious silver rich interval occurs in Hole LS11-0040 for 2.1 meters (7.0 feet) from 23.47 meters (77.0 feet) to 25.60 meters (84.0 feet), which returned 397 g/t (11.6 oz/st Ag), again accompanied with only a trace of gold. The Company believes this silver mineralization may represent a separate mineralizing event within a large and complex precious metals bearing mineral system. Chandalar s wide-spread precious metal system is hosted by carbonaceous, pyrrhotite-arsenopyrite-pyrite bearing schist. Significantly, extensive intercepts of hydrothermal alteration manifested by massive chloritization and strong silicification of the schist are associated with the mineralization, and are often geochemically anomalous (> 0.05 g/t) in gold as well. The gold mineralization is believed to be mainly controlled by fractures and shears of various orientations within the schist. Mineralized intercepts have now been intersected by drilling over a vertical elevation difference of 550 meters (1,800 feet), with the lowest exposure being in the northeast at the Aurora prospect which is close to the Little Squaw alluvial gold deposit. The metamorphic strata hosting the gold are severely eroded at the higher elevations and either dip to the north or are down faulted, or both. Additional core drilling is necessary to assess the continuity and extent of outcropping and any projection from the gold-mineralized intercepts as well as determine the limits of the mineralizing system. In addition to drilling, the 2011 Chandalar gold exploration program included a grid soil sampling survey consisting of 1,150 samples for multi-element analyses. All of these analytical results are pending. Map 5 Location of the 2011 Core Drilling Campaign at Chandalar, Alaska TABLE OF CONTENTS Chart 1 Chandalar, Alaska Core Drilling Results TABLE OF CONTENTS Chart 1 Chandalar, Alaska Core Drilling Results (continued_) TABLE OF CONTENTS Table 1 Chandalar, Alaska Core Drilling Results The soil sampling, prioritized to first cover known mineralized trends, consisted of over 1,100 samples collected on a reconnaissance scale grid over approximately 65 percent of the 22,858-acre Chandalar property. In the airborne geophysical survey, approximately 750 line miles (1,246 line kilometers) were flown by an international geophysical contractor over the entire Chandalar property along flight lines 100 meters apart. Preliminary magnetic data reveals known mineralized structures with good clarity and, more importantly, identifies sharp new prospect-scale and district-scale anomalies and mineralized trends. The 2011 exploration season was successful in significantly expanding our existing body of geological knowledge about our Chandalar property. The combination of core, soil and magnetic data is expected to provide a solid foundation for going forward with a thorough exploration and evaluation of the numerous gold occurrences on the property. Thazzik Mountain, Alaska Property As noted above in the overview section, we staked a new and separate 25,600-acre block of 160 state mining claims known as Thazzik Mountain, located 30 miles southeast of Chandalar. Management believes the Thazzik Mountain property to be immaterial to it property holdings and operations, therefore will defer full disclosure as required by SEC Industry Guide 7 to a future filing when we have sufficiently analyzed the property and the initial samples taken to determine the standing of this property in our portfolio. The Thazzik Mountain property does not contain any reserves as defined by SEC Industry Guide 7. TABLE OF CONTENTS Map 6 Location of Chandalar and Thazzik Mountain Claim Blocks LEGAL PROCEEDINGS Other than routine litigation incidental to our business, there are no pending legal proceedings in which the Company is a party or any of their respective properties is subject, with the exception of the following. Since 2008, we have been involved in legal proceedings as the plaintiff with a single party, Delmer and Gail Ackels and their company Gold Dust Mines, Inc. The principal legal proceeding were ruled in our favor by a trial court, but that ruling and certain issues in the case were appealed by the defendant. On October 1, 2012, we reported the Alaska Supreme Court, in a unanimous decision, has ruled in favor of Goldrich in its court case against the degendant. The Alaska Supreme Court ruling upheld all major issues in a previous ruling by the Superior Court of the State of Alaska that, amongst other things, awarded 20 mining claims to Goldrich that had been staked by Gold Dust and required Gold Dust to move off of mining claims held by Goldrich. There are no pending legal proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficiary of more than 5% of the common stock of the Company, or any security holder of the Company is a party adverse to the Company or has a material interest adverse to the Company. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Our common stock is quoted on the Over the Counter (OTC) Bulletin Board which is sponsored by the Financial Industry Regulatory Authority (FINRA). The OTC Bulletin Board is a network of security dealers who buy and sell TABLE OF CONTENTS stock. The dealers are connected by a computer network which provides information on current bids and asks as well as volume information. The OTC Bulletin Board is not considered a national exchange. Our common stock is quoted on the FINRA OTC Bulletin Board under the symbol GRMC . The following table shows the high and low bid information for our common stock for each full quarter of our fiscal years ended 2010, 2011 and 2012. Fiscal Year High Closing Low Closing 2010 First Quarter $0.45 $0.30 Second Quarter $0.44 $0.27 Third Quarter $0.40 $0.13 Fourth Quarter $0.38 $0.21 2011 First Quarter $0.35 $0.19 Second Quarter $0.25 $0.17 Third Quarter $0.35 $0.20 Fourth Quarter $0.22 $012 2012 First Quarter $0.17 $0.11 Second Quarter $0.18 $0.11 Third Quarter $0.15 $0.08 Fourth Quarter-to-date $0.11 $0.09 The above quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. The closing price for our common stock on the FINRA OTCBB was $0.14 on December 30, 2011, the last trading day of 2011. On November 27 , 2012, the closing price for our common stock on the FINRA OTCBB was $0.11. Goldrich intends to seek a listing of its shares on a recognized stock exchange in Canada, but has not yet filed application to do so as of the date of this report. Holders of Record As of December 4, 2012 there were 2,956 shareholders of record of our common stock and an unknown number of additional shareholders whose shares are held through brokerage firms or other institutions. Dividends We have not paid any dividends and do not anticipate the payment of dividends on our common stock in the foreseeable future. Our Series A Convertible Preferred Stock earns dividends as follows: Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from the surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year. o Preferential and Cumulative. The Series A Dividends shall be payable before any dividends will be paid upon, or set apart for, the common stock of the Company and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company. TABLE OF CONTENTS Payment of Dividend: If the Company shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by the Board in compliance with the Alaska Code and the Company s Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if the Company is producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from the Company s Chandalar property. The Company has total dividends in arrears of $112,416 as of December 31, 2011. Total dividends of $22,083 were declared and payable as a result of conversion of preferred stock during 2011. The Company issued Series A Preferred Stock to two U.S. Persons (as defined in Regulation S of the Securities Act of 1933, as amended (the Securities Act )) who are accredited investors, relying on the exemptions from registration provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act. The Company issued Series A Preferred Stock to one person who is an accredited investor and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act. Securities Authorized for Issuance under Equity Compensation Plans During 2011, we issued 545,000 options to purchase shares of our Company s common stock under our Restated 2008 Equity Incentive Plan (the Plan ), of which 40,000 were forfeited prior to the end of the year. At December 31, 2011, we have the following options outstanding and available for issuance: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance (c) Equity compensation plans approved by security holders 3,570,000 $0.29 1,780,000 Equity compensation plans not approved by security holders 0 0 0 Total 3,570,000 $0.29 1,780,000 The Restated 2008 Equity Incentive Plan permits the grant of (i) incentive stock options, (ii) nonqualified stock options, (iii) restricted stock or restricted stock units, and (iv) stock appreciation rights. The Board administers the Plan and has the authority to interpret the Plan and the awards granted under the Plan and establish rules and regulations for the administration of the Plan. The Compensation Committee of the Board makes recommendations to the Board regarding the administration of the 2008 Plan. The aggregate number of shares of the Company s common stock that may be issued as awards under the Plan is 5,400,000 shares. Unless otherwise provided in the applicable award agreement or any severance agreement, vested awards are granted under the 2008 Plan will expire, terminate, or otherwise be forfeited as follows: Ninety (90) days after the date of termination of a participant s continuous status as a participant, other than in the circumstances described below; Immediately upon termination of a participant s continuous status as a participant for cause as defined in a Company subplan or award agreement; Twelve (12) months after the date on which a participant ceased performing services as a result of his or her Disability (as defined in the Plan); and Twelve (12) months after the death of a participant who was a participant whose continues status as a participant terminated as a result of their death. TABLE OF CONTENTS Issuer Purchase of Equity Securities During 2010 and 2011, neither the Company nor any of its affiliates repurchased shares of common stock of the Company registered under Section 12 or Section R of the Securities Exchange Act of 1934, as amended. Sale of Unregistered Securities Series A Convertible Preferred Stock In 2008, the Company completed the offer and sale of 225,000 shares of Series A Preferred stock in the Company, and in 2009, completed the offer and sale of an additional 250,000 shares of preferred stock, resulting in net proceeds of $475,000 to the Company. On February 2, 2011, a preferred shareholder exercised his right to convert 250,000 Series A Preferred Stock for 1,500,000 shares of common stock, purchased during the Company s 2008 and 2009 offer and sale of a total of 550,000 shares of Series A Preferred stock. This resulted in no proceeds to the Company. The exercise of preferred stock left a remaining balance of 175,000 shares of preferred stock outstanding at December 31, 2011, which are convertible into 1,050,000 shares of common stock. These shares were issued from the designated 1,000,000 shares of Series A Preferred Stock, no par value, with the following rights and preferences: Liquidation Preference: Upon a liquidation event, an amount in cash equal to $2.00 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $350,000 at December 31, 2011, together with declared but unpaid dividends to which the holders of outstanding shares of Series A Preferred Stock are entitled shall be paid prior to liquidation payments to holders of Company securities junior to the Series A Preferred Stock. Voting: Each holder of Series A Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder s shares of Series A Preferred Stock could be converted. Conversion: Any share of Series A Preferred Stock may, at the option of the holder, be converted at any time into six shares of common stock. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the third anniversary of its issuance if the weighted average trading price of the common stock exceeds $1.00 per share for ten consecutive trading days. The Company also has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the tenth anniversary from the date of issuance. Dividend Rate: See Dividends above for rate and terms of dividends on Series A Preferred Stock. The shares of preferred stock were issued to accredited investors (as defined in Rule 501(a) of Regulation D) in private placement transactions pursuant to Section 4(2) of the Securities Act. Unit Private Placement On November 21, 2011 the Company closed a private placement of 2,500,000 units at a price of $0.20 per unit for net proceeds to the Company of $461,394. The Company issued an additional 175,000 units and an additional 250,000 warrants to satisfy commissions due on the placement. The Company intends to use the proceeds of the private placement to complete the analysis of assays taken during the Company s 2011 hard-rock drilling gold exploration program at its Chandalar property in Alaska, and fund general operating expenses. Each unit issued pursuant to the private placement consists of one share of the Company s common stock, one half of a Series J warrant and one half of a Series I warrant. Each full Series J warrant is exercisable for a period of five years following the date of issue to purchase one additional share of common stock of the Company at the greater of $0.30 or the closing market price of the Company s stock on the closing date of the private placement, as quoted on the OTCBB. Each full Series I warrant is exercisable for a period of five years following the date of issue to purchase one additional common share of the Company at $0.40. TABLE OF CONTENTS The terms of the private placement include a call option for the Company. In the event that the shares of common stock trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the J warrants and I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company intends to grant resale registration rights to investors in such private placement as permitted by rules of the United States Securities and Exchange Commission. These units were placed solely outside the United States pursuant to 1933, as amended (the Securities Act ) under Rule 903 of Regulation S of the Securities Act on the basis that the sale of the units was completed in an offshore transaction , as defined in Rule 902(h) of Regulation S. In determining the availability of this exemption, the Registrant relied on representations made by the investors in the subscription agreements pursuant to which the units were purchased under the private placement. On July 29, 2011 the Company closed a private placement of 13,810,860 units at a price of $0.21 per unit for net proceeds to the Company of $2,380,932 and non-cash settlement of debt of $291,629. The Company used the proceeds of the private placement to complete the financing of the Company s 2011 hard-rock drilling gold exploration program at its Chandalar property in Alaska, completely satisfy the Company s notes payable in gold of approximately $960,000, repay a related party account payable of approximately $263,000 and fund general operating expenses. Each unit issued pursuant to the private placement consists of one share of the Company s common stock, one half of a Series J warrant and one half of a Series I warrant. Each full Series J warrant is exercisable for a period of five years following the date of issue to purchase one additional share of common stock of the Company at the greater of $0.30 or the closing market price of the Company s stock on the closing date of the private placement, as quoted on the OTCBB. Each full Series I warrant is exercisable for a period of five years following the date of issue to purchase one additional common share of the Company at $0.40. The terms of the private placement include a call option for the Company. In the event that the shares of common stock trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the Series J warrants and Series I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company intends to grant resale registration rights to investors in such private placement as permitted by rules of the SEC. These units were placed solely outside the United States pursuant to an exemption from the registration requirements of the Securities Act pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the units was completed in an offshore transaction , as defined in Rule 902(h) of Regulation S. In determining the availability of this exemption, the Registrant relied on representations made by the investors in the subscription agreements pursuant to which the units were purchased under the private placement. On May 31, 2011, the Company closed a private placement of 9,859,284 units at a price of $0.21 per unit for gross proceeds to the Company of $1,981,772. The proceeds of the private placement were used to finance the Company s 2011 hard-rock drilling gold exploration program at its Chandalar property in Alaska and general operating expenses. Of the total issuance, officers and directors of the Company purchased 695,000 units, contributing $145,850 of the total proceeds of the private placement. Such units were purchased on the same terms and conditions as the purchase of units by other investors in the private placement. Each unit issued pursuant to the private placement consists of one share of the Company s common stock, one half of a Series H warrant and one half of a Series I warrant. Each full Series H warrant and Series I warrant is exercisable to purchase one additional common share of the Company at $0.30 and $0.40, respectively, for a period of five years following the date of issue. The terms of the private placement include a call option for the Company. In the event that the common shares trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the Series H warrants and Series I TABLE OF CONTENTS warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company granted resale registration rights to such investors. These units were issued solely to accredited investors (as defined in Rule 501(a) of Regulation D of the Securities Act) pursuant to an exemption from the registration requirements of the Securities Act provided by Rule 506 thereof. Notes Payable in Gold During the year ended December 31, 2011, we settled all notes payable in gold as described below. After settlement, we have no further obligations under the notes payable in gold except $22,555 of accrued interest due under notes satisfied by delivery of gold. Conversion of Certain Notes Payable in Gold During January and February, 2011, we entered into a series of conversion agreements (the Conversion Agreements ) in respect to certain notes payable in gold, including all of the notes payable in gold requiring delivery of fine gold by October 31, 2010. Under the Conversion Agreements, we converted 769.59 ounces of alluvial gold and 628.23 ounces of fine gold due under the Converted Notes into 10,931,982 shares of common stock of the Company. Accordingly, by issuing shares of common stock pursuant to the Conversion Agreements, the Converted Notes were satisfied in full and we were released from any and all liabilities for default under the notes payable in gold requiring delivery of fine gold by October 31, 2010 and certain of the notes payable in gold requiring delivery of alluvial gold by November 1, 2010. We recognized a loss on settlement of debt of $1,623,489 on these conversions. The common shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 3(a)(9) thereof. Amendment of Certain Notes Payable in Gold During February 2011, we amended those notes payable in gold requiring delivery of alluvial gold by November 1, 2010 that were not converted as described above to extend the delivery date of the required quantity of alluvial gold from November 1, 2010 to November 1, 2012. In consideration for amending the gold delivery date, we agreed to (i) continue paying interest on the value of the alluvial gold that was due November 1, 2010 until (A) the required quantity of gold was delivered or (B) all amounts due under the Amended Notes were paid in full and (ii) increase the interest rate by four percent to a rate equal to the lesser of prime plus eight percent (8%) per annum or twelve percent (12%) compounded annually. By entering into the Amended Notes, we cured any remaining default under the notes payable in gold requiring delivery of gold in 2010. Settlement of Remaining Notes Payable in Gold Following the conversion and amendment of certain of the notes payable in gold as described above, our delivery obligations under the outstanding notes payable in gold consisted of the delivery of 219.9 ounces of alluvial gold by November 1, 2012 and 628.23 ounces of fine gold by November 30, 2011. At June 30, 2011, the carrying value of outstanding notes payable in gold was $622,184. On or about July 29, 2011, we settled all of these outstanding notes payable in gold. After settlement, we have no further obligations under the notes payable in gold except $22,555 of accrued and unpaid interest to certain holders who had previously amended their notes payable in gold as described above, $11,317 of which is owed to a related party. Three holders converted their notes payable in gold into 2,029,908 units with a fair value of $426,281 pursuant to the private placement that closed on July 29, 2011 and are included in the description of such private placement in Note 8 Stockholders Equity (Deficit). The balance of these notes payable in gold was reduced by $291,629, and represented 266.426 ounces of fine gold. We recognized a loss on settlement of debt of $134,652 for these notes payable in gold. TABLE OF CONTENTS One holder was paid cash for the fair value of the gold required to be delivered under his note, as measured by the market value of fine gold on the date of settlement. This note payable in gold represented 117.647 ounces of fine gold and had a carrying value of $135,235. The fair value of the fine gold was $190,941, or $1,623 per fine ounce of gold. We recognized a loss on settlement of debt of $55,706 for this note payable in gold. Three holders were paid in fine gold ounces due under their notes payable in gold, as measured by the market value of fine gold on the date of settlement. These notes payable in gold represented 213.413 ounces of fine gold with a carrying value of $233,851. The fair value of the gold purchased to settle these notes payable in gold was $358,641, or $1,680.50 per fine ounce of gold. We purchased the gold on the open market and transferred the gold to a custodial account with an independent third party. We recognized a loss on settlement of debt of $124,790 for these notes payable in gold. Unamortized discounts of $8,047 on warrants issued with the notes payable in gold at inception were recognized to the loss on settlement of debt, bringing the total loss recognized for settlement for the year ended December 31, 2011 to $1,946,684. Exercise of Class E and Class F Warrants On December 20, 2010, the Board of Directors approved a temporary reduction in exercise price for the Class E and Class F warrants to the lesser of $0.20 per share of common stock or 30% discount of market price of the Company s stock. The reduction was effective through January 31, 2011, later amended to February 18, 2011. No warrants were exercised during 2010 under these terms, and in the six months ended June 30, 2011, a total of 35,000 Class E Warrants and 1,393,332 Class F Warrants were exercised for 1,428,332 common shares, resulting in net cash proceeds to the Company of $285,666. TABLE OF CONTENTS FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Financial Statements and Notes Thereto For the years ended December 31, 2011 and 2010 TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm 58 Consolidated Balance Sheets, December 31, 2011 and 2010 59 Consolidated Statements of Operations for the years ended December 31, 2011 and 2010 and from inception (March 26, 1959) through December 31, 2011 60 Consolidated Statements of Changes in Stockholders Equity (Deficit) from inception (March 26, 1959) through December 31, 2011 61-62 Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010 and from inception (March 26, 1959) through December 31, 2011 63-64 Notes to the Consolidated Financial Statements 65-84 TABLE OF CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Goldrich Mining Company We have audited the accompanying consolidated balance sheets of Goldrich Mining Company, (An Exploration Stage Company) ( the Company ) as of December 31, 2011 and 2010, and the related consolidated statements of operations, changes in stockholders equity and cash flows for the years then ended and from inception (March 26, 1959) through December 31, 2011. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Goldrich Mining Company as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended and from inception (March 26, 1959) through December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses since inception and does not have sufficient cash at December 31, 2011 to fund normal operations for the next 12 months, and no recurring source of revenue. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ DeCoria, Maichel & Teague, P.S. DeCoria, Maichel & Teague P.S. Spokane, Washington March 19, 2012 TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Balance Sheets December 31, 2011 and December 31, 2010 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 585,694 $ 342,871 Prepaid expenses 83,489 116,580 Other current assets 78,692 90,162 Total current assets 747,875 549,613 Property, plant, equipment, and mining claims: Equipment, net of accumulated depreciation 1,978,730 2,303,667 Mining properties and claims 611,272 583,172 Total property, plant, equipment and mining claims 2,590,002 2,886,839 Total assets $ 3,337,877 $ 3,436,452 LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued liabilities $ 250,944 $ 195,924 Related party payable 30,405 380,801 Deferred compensation - 171,290 Dividend payable on preferred stock 22,083 - Current portion of equipment notes payable 237,873 220,915 Current portion of notes payable in gold, net of discounts - 260,079 Current portion of notes payable in gold, net of discounts, related parties - 109,871 Total current liabilities 541,305 1,338,880 Long-term liabilities: Equipment notes payable 193,565 431,438 Notes payable in gold, net of discounts - 734,496 Notes payable in gold, net of discounts, related parties - 847,511 Remediation liability and asset retirement obligation 314,282 304,118 Total long-term liabilities 507,847 2,317,563 Total liabilities 1,049,152 3,656,443 Commitment and contingencies (Note 11) Stockholders' equity (deficit): Preferred stock; no par value, 9,000,000 shares authorized; no shares issued or outstanding - - Convertible preferred stock series A; 5% cumulative dividends, no par value, 1,000,000 shares authorized; 175,000 and 425,000 shares issued and outstanding, respectively, $350,000 and $850,000 liquidation preferences, respectively 175,000 425,000 Common stock; $.10 par value, 200,000,000 shares authorized; 93,141,855 and 52,936,397 issued and outstanding, respectively 9,314,185 5,293,640 Additional paid-in capital 14,519,949 9,673,743 Deficit accumulated during the exploration stage (21,720,409) (15,612,374) Total stockholders equity (deficit) 2,288,725 (219,991) Total liabilities and stockholders' equity (deficit) $ 3,337,877 $ 3,436,452 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Operations From Inception (March 26, 1959) Year Ended Year Ended Through December 31, December 31, December 31, 2011 2010 2011 Income earned during the exploration stage: Gold sales and other $ - $ 1,904,124 $ 2,542,079 Costs of gold sales - (1,261,830) (1,858,843) Gross profit on gold sales - 642,294 683,236 Operating expenses: Mine preparation costs - 1,034,573 1,034,573 Exploration expense 2,869,963 211,997 8,291,805 Depreciation, mining and exploration 404,044 477,278 1,510,291 Management fees and salaries 288,288 562,747 3,226,638 Professional services 132,413 161,907 1,914,477 Other general and admin expense 236,409 271,333 2,169,004 Office supplies and other expense 18,924 17,514 388,261 Directors' fees 25,900 13,100 770,275 Mineral property maintenance 38,351 32,728 177,970 Reclamation and miscellaneous 7,662 1,225 128,989 Loss on partnership venture - - 53,402 Equipment repairs - - 25,170 Loss (gain) on disposal of mining properties and equipment (1,991) - 195,290 Total operating expenses 4,019,963 2,784,402 19,886,145 Other (income) expense: Gain on legal judgment - (127,387) (127,387) Royalties, net - - (398,752) Lease and rental income - - (99,330) Interest income (2,626) (4,691) (286,574) Interest expense and finance costs 147,347 366,607 1,408,782 Loss on settlement of debt 1,946,684 - 1,946,684 Loss (gain) on foreign currency translation (3,333) (495) 74,077 Total other (income) expense 2,088,072 234,034 2,517,500 Net loss 6,108,035 2,376,142 $ 21,720,409 Preferred dividends 17,142 21,885 Net loss available to common stockholders $ 6,125,177 $ 2,398,027 Net loss per common share basic and diluted $ 0.08 $ 0.05 Weighted average common shares outstanding-basic and diluted 77,627,617 47,329,149 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Changes in Stockholders' Equity From Inception (March 26, 1959) Through December 31, 2011 Shares Issued for Basis of Assignment of Amount Common Stock Preferred Stock Additional Deficit Accumulated During the Cash Non-cash Consideration for Non-cash Consideration Shares Par Value Shares Par Value Paid-in Capital Exploration Stage Total Cumulative Activity from Inception (March 26, 1959( through December 31, 2008 39,214,913 $ 3,921,491 225,000 $ 225,000 $ 7,855,197 $ (11,721,281) $ 280,407 Issuance of shares by Private Placement, net X 250,000 250,000 250,000 Discount on preferred stock for beneficial conversions feature Discount Intrinsic method (55,000) 55,000 - Deemed dividend on vested convertible feature of preferred stock Dividend Intrinsic method 55,000 (55,000) - Issuance of shares for fees Corp mgmt & Director fees Fair value of shares issued 116,308 11,631 (4,071) 7,560 Correction of shares issued for interest in 2008 (183,836) (18,384) 18,384 - Issuance of shares for conversion of convertible debenture 5,000,000 500,000 500,000 1,000,000 Issuance of shares Interest expense Fair value of shares issued 72,328 7,233 7,233 14,466 Issuance of shares for conversion of preferred shares 150,000 15,000 (25,000) (25,000) 10,000 - Issuance of options Corp mgmt & Director fees Fair value of options issued 123,500 123,500 Surrender of shares (107) (11) 11 - Discount of notes payable in gold for detached warrants issued Discount Fair value of warrants issued 42,224 42,224 Net Loss (1,514,951) (1,514,951) Balance, December 31, 2009 44,369,606 $ 4,436,960 450,000 $ 450,000 $ 8,552,478 $ (13,236,232) $ 203,206 Issuance of shares by Private Placement, net X 8,416,791 841,680 920,761 1,762,441 Issuance of shares for conversion of preferred shares 150,000 15,000 (25,000) (25,000) 10,000 - Vested option expense under ASC 718 Corp mgmt & Director fees Fair value of options issued 123,500 123,500 Discount of notes payable in gold for detached warrants issued Discount Fair value of warrants issued 67,004 67,004 Net Loss (2,376,142) (2,376,142) Balance, December 31, 2010 52,936,397 $ 5,293,640 425,000 $ 425,000 $ 9,673,743 $ (15,612,374) $ (219,991) The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Changes in Stockholders' Equity From Inception (March 26, 1959) Through December 31, 2011 Shares Issued for Basis of Assignment of Amount Common Stock Preferred Stock Additional Deficit Accumulated During the Cash Non-cash Consideration for Non-cash Consideration Shares Par Value Shares Par Value Paid-in Capital Exploration Stage Total Balance, December 31, 2010 52,936,397 $ 5,293,640 425,000 $ 425,000 $ 9,673,743 $ (15,612,374) $ (219,991) Issuance of common shares by Private Placement, net X 24,315,236 2,431,524 2,362,574 4,794,098 Notes payable in gold converted to common shares 12,961,890 1,296,189 2,162,605 3,458,794 Issuance of common shares for conversion of preferred shares 1,500,000 150,000 (250,000) (250,000) 100,000 - Dividend payable at conversion of preferred shares (22,083) (22,083) Vested option expense under ASC 718 Corp mgmt & Director fees Fair value of options issued 100,278 100,278 Issuance of shares by exercise of Class E Warrants X 35,000 3,500 3,500 7,000 Issuance of shares by exercise of Class F Warrants X 1,393,332 139,333 139,333 278,666 Net Loss (6,108,035) (6,108,035) Balance, December 31, 2011 93,141,855 $ 9,314,185 175,000 $ 175,000 $ 14,519,949 $ (21,720,409) $ 2,288,725 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Cash Flows From Inception (March 26, 1959) Years Ended Through December 31, December 31, 2011 2010 2011 Cash flows from operating activities: Net loss $ (6,108,035) $ (2,376,142) $ (21,720,409) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 407,220 477,278 1,513,960 Loss on disposal of mining property - - 196,276 Loss (gain) on sale of equipment (1,991) - 2,397 Stock based compensation 100,278 123,500 1,690,834 Compensation paid with equipment 1,803 - 1,803 Common stock issued for interest - - 196,110 Amortization of discount on notes payable in gold and associated warrants 80,396 371,298 780,519 Amortization of discount on convertible debenture for beneficial conversion feature - - 150,000 Amortization of deferred financing costs - - 130,000 Gold delivered to satisfy notes payable - - (273,974) Gold delivered in exchange for equipment - - (10,966) Loss on settlement of debt 1,946,684 - 1,946,684 Accretion of asset retirement obligation 10,164 - 10,164 Change in: Prepaid expenses 33,090 (65,409) (83,490) Other current assets 11,470 (41,729) (78,692) Accounts payable and accrued liabilities 65,020 (10,279) 260,944 Related party payable (321,058) 187,895 59,743 Deferred compensation (171,290) 135,000 - Accrued commission payable - - 277,523 Convertible success award, Walters LITS - - 88,750 Remediation liability and asset retirement obligation 55,000 Net cash used - operating activities (3,946,249) (1,198,588) (14,806,824) Cash flows from investing activities: Receipts attributable to unrecovered promotional, exploratory, and development costs - - 626,942 Proceeds from the sale of equipment - 1,500 64,624 Purchases of equipment, and unrecovered promotional and exploratory costs (88,919) (708,751) (2,295,495) Additions to mining properties and claims - direct costs for claim staking and acquisition (31,276) (1,200) (536,366) Net cash used - investing activities (120,195) (708,451) (2,140,295) The accompanying notes are an integral part of these consolidated financial statements TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Cash Flows Continued: From Inception (March 26, 1959) Years Ended Through December 31, December 31, 2011 2010 2011 Cash flows from financing activities: Proceeds from related party debt $ - $ - $ 100,000 Payments on related party debt - - (100,000) Proceeds from issuing convertible debenture, net - - 900,000 Proceeds from issuance of common stock in connection with exercise of options and warrants 285,666 - 3,101,498 Proceeds from issuance of common stock and warrants, net of offering costs 4,794,098 1,762,441 12,638,584 Proceeds from notes payable in gold - 625,037 1,785,037 Payments on notes payable in gold (190,941) - (190,941) Purchases of gold to satisfy notes payable in gold (358,641) - (358,641) Proceeds from issuance of preferred stock - - 475,000 Payments on capital leases and equipment notes payable (220,915) (439,582) (809,550) Acquisitions of treasury stock - - (8,174) Net cash provided - financing activities 4,309,267 1,947,896 17,532,813 Net increase in cash and cash equivalents 242,823 40,857 585,694 Cash and cash equivalents, beginning of period 342,871 302,014 - Cash and cash equivalents, end of period $ 585,694 $ 342,871 $ 585,694 Supplemental disclosures of cash flow information: Cash paid for interest $ 46,251 $ 44,471 $ 136,175 Non-cash investing and financing activities: Mining claims purchased - common stock $ - $ - $ 43,000 Additions to property, plant and equipment acquired through capital lease and notes payable - 1,091,935 1,240,988 Additions to property, plant and equipment paid in gold - - 10,966 Accounts payable satisfied with equipment 10,000 - 10,000 Related party liability converted to common stock - - 301,086 Issuance of warrants for deferred financing costs of convertible debenture - - 30,000 Issuance of common stock upon conversion of convertible debenture - - 1,000,000 Issuance of common stock upon conversion of preferred shares 250,000 25,000 300,000 Issuance of common stock upon conversion of notes payable in gold 3,458,794 - 3,458,794 Issuance of common stock for finders fees 149,640 - 149,640 Warrants issued with notes payable in gold - 67,004 109,228 Notes payable satisfied with gold 358,641 - 632,615 Capital lease satisfied with equipment notes payable - 335,190 335,190 Dividend payable on preferred stock 22,083 - 22,083 The accompanying notes are an integral part of these consolidated financial statements TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Goldrich Mining Company ( Company ) was incorporated under the laws of the State of Alaska on March 26, 1959. The Company is engaged in the business of acquiring and exploring mineral properties throughout the Americas, primarily those containing gold and associated base and precious metals. During 2011 all of the Company s activities were focused on the Chandalar property in Alaska. The Company s common stock trades on the FINRA OTCBB exchange under the ticker symbol GRMC. The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company is an exploration stage company and has incurred losses since its inception. In connection with management s election to complete the full 2011 exploration program, together with staking additional mining claims, management re-evaluated its cash position and has determined that as of the date of this report, the Company does not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. The Company raised $285,666 net cash proceeds from the exercise of warrants and $4,794,098 net cash from the issuance of common stock during the year ended December 31, 2011. The Company believes that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured. The Company currently has no historical recurring source of revenue and its ability to continue as a going concern is dependent on the Company s ability to raise capital to fund its future exploration and working capital requirements or its ability to profitably execute its business plan. The Company s plans for the long-term return to and continuation as a going concern include financing the Company s future operations through sales of its common stock and/or debt and the eventual profitable exploitation of its mining properties. Additionally, the current capital markets and general economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial doubt about the Company s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Instruments Our financial instruments consist principally of cash and cash equivalents and equipment notes payable, the carrying value of which approximate their fair value at December 31, 2011. Exploration Stage Enterprise Since the Company is in the exploration stage of operation, the Company s financial statements are prepared in accordance with the provisions of ASC 915 Development Stage Enterprises, as it devotes substantially all of its efforts to acquiring and exploring mining interests that management believes should eventually provide sufficient net profits to sustain the Company s existence. Until such interests are engaged in commercial production, the Company will continue to prepare its consolidated financial statements and related disclosures in accordance with this standard. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: Consolidation of and Accounting for Subsidiary During the years ended December 31, 2011 and 2010, the Company operated a subsidiary in Mexico to account for winding up expenses related to an exploration property formerly held by the Company in that country. This subsidiary, Minera LSG, is included in the accompanying financial statements by consolidation of the Statements of Operations for the years then ended and the Balance Sheets as of December 31, 2011 and December 31, 2010, with all intercompany balances and investment accounts eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these financial statements include those assumed in estimating the recoverability of the cost of mining claims, accrued remediation costs, and deferred tax assets and related valuation allowances. Actual results could differ from those estimates. Derivative Financial Instruments The Company accounts for derivative financial instruments in accordance with ASC 815 Derivatives and Hedging, This guidance requires recognition of all derivatives as either assets or liabilities on the balance sheet and measurement of those instruments at fair value. Appropriate accounting for changes in the fair value of derivatives held is dependent on whether the derivative instrument is designated and qualifies as an accounting hedge and on the classification of the hedge transaction. The Company has no derivative financial instruments at December 31, 2011 and 2010. Reclassifications Certain reclassifications have been made to conform prior periods data to the current presentation. These reclassifications have no effect on the results of reported operations or stockholders equity (deficit). Cash and Cash Equivalents For the purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be a cash equivalent. Cash or cash equivalents which secure debt instruments, credit facilities, reclamation or environmental bonds, or that are otherwise limited or restricted in their usage, are reported separately and not included in cash and cash equivalents. Gold Inventory The Company values gold inventory at the lower of net production cost or net realizable value. For the period ended December 31, 2010, direct costs of production plus indirect costs reasonably allocable to the production of gold in the mining operation were allocated to the cost of gold ounces produced. These costs were charged against cost of sale or inventory based upon ounces of alluvial gold sold or remaining in inventory, respectively. There was no gold inventory from production during the year ended and at December 31, 2011. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: Plant, Equipment, and Accumulated Depreciation Plant and equipment are stated at cost, which is determined by cash paid or fair value of the shares of the Company s common stock issued. The Company s mill buildings and equipment are located on the Company s unpatented state mining claims located in the Chandalar mining district of Alaska. All mill buildings and equipment purchased prior to 2006 are fully depreciated. The Company s equipment is located at the Chandalar property in Alaska, with a small amount of office equipment located at Company offices in Spokane, Washington. Assets are depreciated on a straight line basis. Improvements which significantly increase an asset s value or significantly extend its useful life are capitalized and depreciated over the asset s remaining useful life. Mining Properties and Claims The Company capitalizes costs for acquiring mineral properties and expenses costs to maintain mineral rights and leases as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations. Mine Preparation Costs Mine preparation costs are expenditures incurred in the exploration stage that may ultimately benefit production are expensed due to the lack of proven and probable reserves, which would indicate future recovery of these expenses. These costs are expensed in the period in which they occur. Exploration Costs Exploration costs are expensed in the period in which they occur. Foreign Currency Translation Assets and liabilities denominated in a foreign currency are translated to U.S. dollars at the exchange rate on the balance sheet date. Revenues, costs, and expenses are translated using an average rate during the period. Realized and unrealized foreign currency transaction gains and losses are included in the consolidated statement of operations. Income Taxes Income taxes are recognized in accordance with ASC 740 Income Taxes, whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized. ASC 740 prescribes a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has assessed its tax positions and has determined that it has not taken a position that would give rise to an unrecognized tax liability being reported. In the event that the Company is assessed penalties and or interest; penalties will be charged to other operating expense and interest will be charged to interest expense. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: Net Loss Per Share Basic EPS is computed as net income available to common shareholders after dividends to preferred shareholders, divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible debt and securities. The dilutive effect of vested convertible and exercisable securities would be: For years ended December 31, 2011 2010 Convertible preferred stock 1,050,000 2,550,000 Stock options 3,570,000 2,815,000 Warrants 33,542,130 7,280,135 Total possible dilution 38,162,130 12,645,135 At December 31, 2011 and 2010, the effect of the Company s outstanding options and common stock equivalents would have been anti-dilutive. Accordingly, only basic EPS is presented. Revenue Recognition Revenue from the sale of gold is recorded net of smelter or refinery treatment and refining charges. Revenue is recognized when persuasive evidence of an arrangement exists, title and risk passes to the buyer, collection is reasonably assured and price is reasonably determinable. When alluvial gold is placed with the smelter, revenue is recognized and cash is remitted for any ounces of alluvial gold sold to the smelter, converted to ounces of fine gold at an assumed smelting loss percentage. Pricing of the sale is at the market price of gold on the date of sale. The number of gold ounces sold at deposit is limited to a certain percentage of the ounces of alluvial gold deposited, as agreed in each case with the smelter. Ounces not sold are smelted and retained in the Company s inventory in a secured metals account at the smelter. Subsequent sales of gold from inventory are made at then-current market prices, with smelter treatment and refining charges deducted, and net cash proceeds are remitted to the Company. Share-Based Compensation The Company periodically issues common shares or options to purchase shares of the Company s common shares to its officers, directors or other parties. These issuances are recorded at fair value for both the common shares issued and options granted. The Company uses a Black Scholes valuation model for determining fair value of options to purchase shares, and compensation expense is recognized ratably over the vesting periods on a straight line basis. Compensation expenses for grants that vest upon issue are recognized in the period of grant. Deferred Financing Costs Financing costs incurred in connection with the Company s financing activities are deferred and amortized using the effective interest method over the life of the related financing. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: Reclamation and Remediation The Company s operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible long-lived assets. A corresponding asset is also recorded and depreciated over the life of the asset. After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation. Determination of any amounts recognized upon adoption is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates. For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on management s estimate of amounts expected to be incurred when the remediation work is performed. Fair Value Measures Accounting principles requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1: applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2: applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Our financial instruments consist principally of cash and cash equivalents. The table below sets forth our assets and liabilities measured at fair value, on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category. Balance December 31, 2011 Balance December 31, 2010 Input Hierarchy level Cash and cash equivalents $ 585,694 $ 342,871 Level 1 TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: Financial Instruments Potentially Settled in Shares of Company Stock From time to time, the Company enters into transactions which contain conversion privileges, the settlement of which may entitle the holder or the Company to settle obligations by issuance of Company securities. These transactions, the value of which may be derived from the fair value of Company securities, are accounted for in accordance with ASC 470. Fair value considerations required by this pronouncement are estimated using the Black-Scholes option pricing model. When the Company enters into transactions that contain beneficial conversion features or warrants, the proceeds of those transactions are allocated between the components of the transaction, with beneficial conversion features (a conversion price which is less than the market price at the date of issue) charged to additional paid-in capital and amortized over the life of the vesting period of the conversion feature as a deemed dividend, and warrants are recorded at their fair value at the date of issue. In 2009, the Company issued Convertible Preferred Stock with a beneficial conversion feature and entered into notes payable in gold which had a warrant attached to the gold contract. The valuation of the Preferred Stock was reduced by the beneficial conversion feature and charged to additional paid-in capital. Because the right to convert the Preferred Stock was immediately available to the purchasers of the stock, the beneficial conversion feature was immediately recorded as a deemed dividend, which was also credited to additional paid-in capital to increase the carrying value of the Preferred Stock. The warrants issued as part of the notes payable in gold were charged to additional paid-in capital at their fair value on the date of issuance calculated using a Black Scholes fair value model. This charge decreased the notes payable in gold liability and was amortized over the term of the note payable as interest expense. New Accounting Pronouncements Management has reviewed and evaluated new accounting pronouncements and determined that none apply to the Company at this time. 3. PROPERTY, PLANT, EQUIPMENT AND MINING CLAIMS Plant and Equipment Located on the Company s unpatented state mining claims in the Chandalar District are certain buildings, including milling buildings and other mining equipment that are fully depreciated and have no book value. Accordingly, the Company has removed its cost basis and the associated accumulated depreciation from its financial statements. Equipment At December 31, 2011 and 2010, the Company s equipment classifications were as follows: 2011 2010 Exploration and mining equipment $ 3,033,714 $ 2,996,184 Vehicles and rolling stock 377,190 355,540 Office and other equipment 61,905 49,389 Total 3,472,809 3,401,113 Accumulated depreciation and amortization (1,494,079) (1,097,446) Equipment, net of depreciation and amortization $ 1,978,730 $ 2,303,667 TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 3. PROPERTY, PLANT, EQUIPMENT AND MINING CLAIMS, CONTINUED: Equipment, continued: Of the Company s assets, $1,498,939 are being depreciated over lives of three and five years and $1,973,870 are being depreciated over seven and ten years, resulting in total depreciation expense of $404,044 for 2011. Assets of $1,433,914 and $1,967,199 being depreciated over corresponding periods, respectively, resulted total depreciation of $477,278 for 2010. Mining Properties and Claims At December 31, 2011 and 2010, the Company s mining properties and claims were as follows: 2011 2010 Chandalar property and claims $ 264,000 $ 264,000 2003 purchased claims 35,000 35,000 Unpatented state claims staked 66,330 35,054 Asset retirement obligations 245,942 249,118 Total $ 611,272 $ 583,172 4. RELATED PARTY TRANSACTIONS In connection with the employment of the President and Chief Executive Officer ( CEO ) in October 2009, the Company issued 750,000 options as described in Note 8, which vested in three equal tranches, the final of which vested in October 2011. The CEO elected to defer his salary until the Company was successful in securing financing sufficient to fund future operations. Near the end of the fourth quarter of 2010, the Company began to pay accrued amounts, and at December 31, 2010, a total of $171,290 of deferred salary had been accrued and remained unpaid. During 2011, the total was paid in full. Pursuant to terms of his contract, the Company s now-former Chief Operating Officer ( COO ) elected to accrue fees owed to him until such time as the Company had sufficient cash reserves to pay them. Near the end of the fourth quarter of 2010, the Company began to pay accrued amounts, and at December 31, 2010, a total of $294,372 of deferred salary included in related party payable had been accrued and remained unpaid. During 2011, the total was paid in full. Additionally, there is $11,338 interest payable to this former officer in connection with the settlement of notes payable in gold, as described in Note 5 below and $4,800 payable to this officer in connection with consulting work that he provided during 2011. These amounts are included in related party payable at December 31, 2011. An amount of $69,980 had been accrued for fees due to the Company s Chief Financial Officer ( CFO ) at December 31, 2010. This total was paid in cash during 2011, and at December 31, 2011, $11,628 has been accrued for fees for services performed in 2011 and is included in the related party payable. A total of $16,499 had been accrued for directors and related party consultants at December 31, 2010. This total was paid in cash during 2011 and at December 31, 2001, $2,638 had been accrued for services performed in 2011; these amounts are included in the related party payable. 5. NOTES PAYABLE IN GOLD During the year ended December 31, 2011, the Company settled all notes payable in gold as described below. After settlement, the Company has no further obligations under the notes payable in gold except $22,555 of accrued interest due under notes satisfied by delivery of gold. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 5. NOTES PAYABLE IN GOLD, CONTINUED: Notes Payable in Gold as at December 31, 2010. At December 31, 2010, the Company had total outstanding notes payable in gold of $2,094,840, less unamortized discounts of $142,882 for a net liability of $1,951,957, which notes payable in gold required the delivery of 989.49 ounces of alluvial gold by November 1, 2010, 424.43 ounces of fine gold by October 31, 2010, and 611.98 ounces of fine gold by November 30, 2011. While the Company mined sufficient gold to meet its obligations under the notes payable in gold requiring gold deliveries in 2010, the Company chose to sell the mined gold to fund its operations. The non-delivery of gold due on October 31, 2010 and November 1, 2010 constituted default on the required 2010 gold deliveries on notes payable in gold. Conversion of Certain Notes Payable in Gold During January and February, 2011, the Company entered into a series of conversion agreements (the Conversion Agreements ) in respect to certain of the notes payable in gold (the Converted Notes ), including all of the notes payable in gold requiring delivery of fine gold by October 31, 2010. Under the Conversion Agreements, the Company converted 769.59 ounces of alluvial gold and 628.23 ounces of fine gold due under the Converted Notes into 10,931,982 shares of common stock of the Company. Accordingly, by issuing shares of common stock pursuant to the Conversion Agreements, the Converted Notes were satisfied in full and the Company was released from any and all liabilities for default under the notes payable in gold requiring delivery of fine gold by October 31, 2010 and certain of the notes payable in gold requiring delivery of alluvial gold by November 1, 2010. The Company recognized a loss on settlement of debt of $1,623,489 on these conversions. Amendment of Certain Notes Payable in Gold During February 2011, the Company amended those notes payable in gold (the Amended Notes ) requiring delivery of alluvial gold by November 1, 2010 that were not converted as described above to extend the delivery date of the required quantity of alluvial gold from November 1, 2010 to November 1, 2012. In consideration for amending the gold delivery date, the Company agreed to (i) continue paying interest on the value of the alluvial gold that was due November 1, 2010 until (A) the required quantity of gold was delivered or (B) all amounts due under the Amended Notes were paid in full and (ii) increase the interest rate by four percent to a rate equal to the lesser of prime plus eight percent (8%) per annum or twelve percent (12%) compounded annually. By entering into the Amended Notes, the Company cured any remaining default under the notes payable in gold requiring delivery of gold in 2010. Settlement of Remaining Notes Payable in Gold Following the conversion and amendment of certain of the notes payable in gold as described above, the Company s delivery obligations under the outstanding notes payable in gold consisted of the delivery of 219.9 ounces of alluvial gold by November 1, 2012 and 628.23 ounces of fine gold by November 30, 2011. At June 30, 2011, the carrying value of outstanding notes payable in gold was $622,184. On or about July 29, 2011, the Company settled all of these outstanding notes payable in gold. After settlement, the Company has no further obligations under the notes payable in gold except $22,555 of accrued and unpaid interest to certain holders who had previously amended their notes payable in gold as described above, $11,317 of which is owed to a related party. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 5. NOTES PAYABLE IN GOLD, CONTINUED Settlement of Remaining Notes Payable in Gold, continued: Three holders converted their notes payable in gold into 2,029,908 units with a fair value of $426,281 pursuant to the private placement that closed on July 29, 2011 and are included in the description of such private placement in Note 8 Stockholders Equity (Deficit). The balance of these notes payable in gold was reduced by $291,629, and represented 266.426 ounces of fine gold. The Company recognized a loss on settlement of debt of $134,652 for these notes payable in gold. One holder was paid cash for the fair value of the gold required to be delivered under his note, as measured by the market value of fine gold on the date of settlement. This note payable in gold represented 117.647 ounces of fine gold and had a carrying value of $135,235. The fair value of the fine gold was $190,941, or $1,623 per fine ounce of gold. The Company recognized a loss on settlement of debt of $55,706 for this note payable in gold. Three holders were paid in fine gold ounces due under their notes payable in gold, as measured by the market value of fine gold on the date of settlement. These notes payable in gold represented 213.413 ounces of fine gold with a carrying value of $233,851. The fair value of the gold purchased to settle these notes payable in gold was $358,641, or $1,680.50 per fine ounce of gold. The Company purchased the gold on the open market and transferred the gold to a custodial account with an independent third party. The Company recognized a loss on settlement of debt of $124,790 for these notes payable in gold. Unamortized discounts of $8,047 on warrants issued with the notes payable in gold at inception were recognized to the loss on settlement of debt, bringing the total loss recognized for settlement for the year ended December 31, 2011 to $1,946,684. 6. CAPITAL LEASE During 2010, the Company acquired equipment totaling $678,500 under a capital lease, making down payments of $169,625 in cash and financing $508,875 through a lease. The lease carried interest at 9.0% per annum payable in 6 monthly installments of $30,000 and a final purchase option payment of approximately $351,000 payable on or before October 15, 2010. In accordance with criteria established by ASC 840, this lease qualified as a capital lease. The lease was collateralized by the leased equipment with all minimum lease payments due within one year. On September 29, 2010 the Company refinanced the lease. The refinancing resulted in a termination of the capital lease and the establishment of two equipment notes payable. See Note 7 Equipment Notes Payable. 7. EQUIPMENT NOTES PAYABLE During the second quarter of 2010, the Company purchased equipment totaling $559,550, making down payments of $134,891 in cash and financing $424,660 through notes payable to two equipment vendors. On September 29 and 30, 2010 the Company entered into two notes payable of $246,678 and $88,511, respectively, to satisfy the capital lease (See Note 6 Capital Lease). All of the notes are collateralized by a security interest in the respective equipment. Note Payable Original Balance Interest Rate Length of Note Monthly Payment Balance at December 31, 2011 $ 258,380 4.72% 48 months $ 5,918 $ 151,299 166,280 7.90% 36 months 5,204 74,048 246,678 8.75% 36 months 7,816 151,669 88,511 8.75% 36 months 2,804 54,422 Total $ 21,742 $ 431,438 TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 7. EQUIPMENT NOTES PAYABLE, CONTINUED: The principal amounts of the equipment notes due over coming years are as follows: Year Principal Due December 31, 2012 $ 237,873 2013 175,957 2014 17,608 2015 and thereafter - Total $ 431,438 8. STOCKHOLDERS EQUITY Private Placements Between March 19, 2010 and August 29, 2010, the Company issued 4,106,998 units, at a price of $0.30 per unit, for net proceeds of $1,127,015 in a private placement to investors. Each unit consists of one share of common stock and one-half Class F common stock purchase warrant. Each whole warrant is exercisable to purchase one additional common share at $0.55 per share for a period of two years following the date of issue. The terms of the warrants include a call option for the Company. In the event that the common shares trade at a weighted volume average price of greater than $0.80 per share for a period of 20 consecutive trading days at any time following the issuance of the warrants, the Company may, in its sole discretion, accelerate the expiration date of the warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. In relation to these placements, the Company issued 139,945 common shares and 599,772 Class F-2 Warrants for commissions to an agent for $30,788 in services in private placement activities. Terms of the F-2 warrant are identical to the class F warrant except the exercise price to purchase a common share is $0.22. On December 17, 2010, the Company issued 4,169,850 units, at a price of $0.18 per unit, for net proceeds of approximately $635,423 in a private placement to investors. Each unit consists of one share of common stock and one Class G common stock purchase warrant. Each warrant is exercisable to purchase one additional common share at $0.36 per share for a period of two years following the date of issue. The terms of the warrants include a call option for the Company. In the event that the common shares trade at a weighted volume average price of greater than $0.72 per share for a period of 20 consecutive trading days at any time following the issuance of the warrants, the Company may, in its sole discretion, accelerate the expiration date of the warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company granted resale registration rights to such investors, which will require the Company to file a registration statement with the SEC regarding the resale of the common shares issued as part of the units and the common shares issuable upon exercise of the warrants within 60 days of the final closing date of the unit offering. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: On May 1, 2010, an employee of the Company was issued 100,000 shares of the Company s stock. At the grant date fair value price of $0.44 per share. The shares were to be fully vested after the completion of nine months of service. The Company had expensed the cost of the shares on a straight-line basis over the terms of the employee s service until the shares were expected to be fully vested in January 2011. However, on September 24, 2010, the employee resigned his position with the Company, forfeiting his stock grant. Because the employee terminated his employment prior to the vesting of the share grant, the Company reversed $33,934 compensation expense previously recognized for this stock grant. On December 20, 2010, the Board of Directors approved a temporary reduction in exercise price for the Class E and Class F warrants to the lesser of $0.20 per share of common stock or 30% discount of market price of the Company s stock. The reduction was effective through January 31, 2011, later amended to February 18, 2011. No warrants were exercised during 2010 under these terms, and in the quarter ended June 30, 2011, a total of 35,000 Class E Warrants and 1,393,332 Class F Warrants were exercised for 1,428,332 common shares, resulting in net cash proceeds to the Company of $285,666. On January 31, 2011 and February 1, 2011, the Company issued a total of 10,931,982 common shares for conversion of certain notes payable in gold. On July 29, 2011, the Company issued a total of 2,029,908 common shares for conversion of additional notes payable in gold. See Note 5 Notes Payable in Gold. On February 2, 2011, a holder of 250,000 Series A Convertible Preferred shares exercised his conversion right to 1,500,000 shares of common stock. This resulted in no proceeds to the Company, and after conversion, there are 175,000 shares of Series A Convertible Preferred outstanding which are convertible into 1,050,000 shares of common stock. On May 31, 2011, the Company closed a private placement of its common stock and warrants to purchase shares of its common stock. The private placement consisted of 9,859,284 units at a price of $0.21 per unit and resulted in net proceeds to the Company of $1,981,772. Each unit consists of one share of the Company s common stock, one half of a Class H warrant and one half of a Class I warrant. Each full Class H warrant and Class I warrant is exercisable to purchase one additional common share of the Company at $0.30 and $0.40, respectively, for a period of five years following the date of issue. Of the total issuance, officers and directors of the Company purchased 695,000 units, contributing $145,850 of the total proceeds of the private placement. Such units were purchased on the same terms and conditions as the purchase of units by other investors in the private placement. The Company issued 5,125,936 Class H warrants and 5,125,935 Class I warrants. The terms of the warrants include a call option for the Company. In the event that the common shares trade at a weighted volume average price of greater than $0.50 or $0.60, respectively for the H warrants and I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. The Company granted resale registration rights to such investors. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: On July 29, 2011, the Company closed a private placement of 13,810,860 units of the Company at a price of $0.21 per unit and resulted in net proceeds to the Company of $2,380,932 and non-cash settlement of debt of $291,629. Each unit consists of one share of the Company s common stock, one half of a Class J warrant and one half of a Class I warrant. Each full Class J warrant is exercisable for a period of five years following the date of issue to purchase one additional share of common stock of the Company at the greater of $0.30 or the closing market price of the Company s stock on the closing date of the private placement, as quoted on the Over-The-Counter Bulletin Board (the OTCBB ). Each full Class I warrant is exercisable for a period of five years following the date of issue to purchase one additional common share of the Company at $0.40. The Company issued 7,317,978 warrants of each class, including 412,549 warrants of each class for commissions and finder s fees. The terms of the warrants include a call option for the Company. In the event that the shares of common stock trade at a weighted volume average price of greater than $0.50 or $0.60, respectively, for the Class J warrants and Class I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. On November 21, 2011, the Company closed a private placement of 2,500,000 units of the Company at a price of $0.20 per unit and resulted in net proceeds to the Company of $461,394. The Company also issued 175,000 units valued at $35,000 for commissions and finder s fees in relation to the placement. Each unit consists of one share of the Company s common stock, one half of a Class J warrant and one half of a Class I warrant. Each full Class J warrant is exercisable for a period of five years following the date of issue to purchase one additional share of common stock of the Company at the greater of $0.30 or the closing market price of the Company s stock on the closing date of the private placement, as quoted on the Over-The-Counter Bulletin Board (the OTCBB ). Each full Class I warrant is exercisable for a period of five years following the date of issue to purchase one additional common share of the Company at $0.40. The Company issued 1,462,500 warrants of each class, including 212,500 warrants of each class for commissions and finder s fees. The terms of the warrants include a call option for the Company. In the event that the shares of common stock trade at a weighted volume average price of greater than $0.50 or $0.60, respectively, for the Class J warrants and Class I warrants, for a period of 20 consecutive trading days at any time following the issuance of the respective warrants, the Company may, in its sole discretion, accelerate the expiration date of the respective warrants by giving written notice to the holders thereof within 10 business days of the occurrence thereof, and in such case, the warrants will expire on the 20th business day after the date on which such notice is given by the Company. Series A Convertible Preferred Stock: In 2008, the Company completed the offer and sale of 225,000 shares of Series A Preferred stock in the Company, and in 2009, completed the offer and sale of an additional 250,000 shares of preferred stock, resulting in net proceeds of $475,000 to the Company. During 2009, and again in 2010, a preferred shareholder exercised his right to convert 50,000 Series A Preferred Stock for 300,000 shares of common stock, leaving a remaining balance of 425,000 shares of preferred stock outstanding at December 31, 2010. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: During 2011, a preferred shareholder exercised his right to convert 250,000 Series A Preferred Stock for 1,500,000 shares of common stock, leaving a remaining balance of 175,000 shares of preferred stock outstanding at December 31, 2011. These shares were issued from the designated 1,000,000 shares of Series A Preferred Stock, no par value, with the following rights and preferences: Liquidation Preference: Upon a liquidation event, an amount in cash equal to $2.00 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $350,000 at December 31, 2011, together with declared but unpaid dividends to which the holders of outstanding shares of Series A Preferred Stock are entitled shall be paid prior to liquidation payments to holders of Company securities junior to the Series A Preferred Stock. Voting: Each holder of Series A Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder s shares of Series A Preferred Stock could be converted. Conversion: Any share of Series A Preferred Stock may, at the option of the holder, be converted at any time into six shares of common stock. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the third anniversary of its issuance if the weighted average trading price of the common stock exceeds $1.00 per share for ten consecutive trading days. The Company also has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the tenth anniversary from the date of issuance. Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from the surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year. Preferential and Cumulative. The Series A Dividends shall be payable before any dividends will be paid upon, or set apart for, the common stock of the Company and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company. Payment of Dividend: If the Company shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by the Board in compliance with the Alaska Code and the Company s Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if the Company is producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from the Company s Chandalar property. As of December 31, 2011 and December 31, 2010, the Company had total dividends in arrears of $112,416 and $95,274, respectively. Total dividends of $22,083 were declared and payable as a result of conversion of preferred stock during 2011. Conversion of outstanding shares of Series A Preferred stock would have resulted in dilution of 1,050,000 and 2,550,000 common shares for the years ended December 31, 2011 and 2010, respectively. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: Stock Warrants: For the years ended December 31, 2011 and 2010, the Company had the following types of stock purchase warrants outstanding: Class D Warrants The Class D Warrants were issued in connection with the Company s private placement of its common stock on April 8, 2008 and expired two years from the date of issuance in 2010. The Class D Warrants were exercisable at $0.85 per common share in the first year and $1.25 per common share in the second year. These warrants contained no mandatory conversion provision. The Class D Warrants expired in 2010. Class E Warrants The Class E Warrants were issued in connection with notes payable in gold contracts entered into during 2009 and 2010 and expire two years from the date of issuance in 2011 and 2012. The Class E Warrants are exercisable at $0.65 per common share. The Class E Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the market price of the Company s common shares was sustained at or above $1.00 per share for ten consecutive trading days. At December 31, 2011 and December 31, 2010, there were 300,018 and 457,518 Class E Warrants issued and outstanding, respectively. Class F Warrants The Class F Warrants were issued in connection with private placements of the Company s common stock from March through August 2010, are exercisable at $0.55 per common share and expire in 2012, two years from the date of issuance. The Class F Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the market price of the Company s common shares is sustained at or above $0.80 per share for twenty consecutive trading days. At December 31, 2011 and 2010, there were 659,663 and 2,052,995 Class F Warrants issued and outstanding, respectively. Class F-2 Warrants The Class F-2 Warrants were issued to an agent for commissions in connection with private placements of the Company s common stock from March through August 2010, are exercisable at $0.22 per common share and expire on December 3, 2012, two years from the date of issuance. The Class F-2 Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the weighted volume average price of the Company s common shares is sustained above $0.80 per share for twenty consecutive trading days. At December 31, 2011 and 2010, there were 599,772 and 599,772 Class F-2 Warrants issued and outstanding, respectively. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: Class G Warrants The Class G Warrants were issued in connection with private placements of the Company s common stock in December 2010, are exercisable at $0.36 per common share and expire in December 2012, two years from the date of issuance. The Class G Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the weighted volume average price of the Company s common shares is sustained above $0.72 per share for twenty consecutive trading days. At December 31, 2011 and 2010, there were 4,169,850 and 4,169,850 Class G Warrants issued and outstanding, respectively. Class H Warrants The Class H Warrants were issued in connection with private placements of the Company s common stock in April and May 2011, are exercisable at $0.30 per common share and expire five years from the date of issuance. The Class H Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the weighted volume average price of the Company s common shares is sustained above $0.50 per share for twenty consecutive trading days. At December 31, 2011 and 2010, there were 5,125,936 and nil Class H Warrants issued and outstanding, respectively. Class I Warrants The Class I Warrants were issued in connection with private placements of the Company s common stock in May, July and November of 2011, are exercisable at $0.40 per common share and expire five years from the date of issuance. The Class I Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the weighted volume average price of the Company s common shares is sustained above $0.60 per share for twenty consecutive trading days. At December 31, 2011 and 2010, there were 13,906,413 and nil Class I Warrants issued and outstanding, respectively. Class J Warrants The Class J Warrants were issued in connection with private placements of the Company s common stock in July and November of 2011, are exercisable at $0.30 per common share and expire five years from the date of issuance. The Class J Warrants contain a mandatory conversion provision which grants the Company, at the Company s option, the ability to force conversion of the warrants in whole or in part, if the weighted volume average price of the Company s common shares is sustained above $0.50 per share for twenty consecutive trading days. At December 31, 2011 and 2010, there were 8,780,478 and nil Class J Warrants issued and outstanding, respectively. There were no warrants issued in 2011 of a nature that required fair value estimates. The fair value of warrant issues in 2010 in connection with Notes payable in gold were estimated on the grant date using the following weighted average assumptions: 2010 Low High Risk-free interest rate 0.82% 1.82% Expected dividend yield -- -- Expected term 2 years 2 years Expected volatility 140.4% 198.8% TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: The following is a summary of warrants for December 31, 2011: Shares Exercise Price ($) Expiration Date Class D Warrants: Outstanding and exercisable at December 31, 2008 485,833 0.85-1.25 Outstanding and exercisable at December 31, 2009 485,833 Warrants expired April 8, 2010 (485,833) Outstanding and exercisable at December 31, 2010 - Class E Warrants: (Issued for Notes payable in gold) Outstanding and exercisable at January 1, 2010 145,000 0.65 Warrants issued in 2010 312,518 0.65 Feb to Jun 2012(5) Outstanding and exercisable at December 31, 2010 457,518 Warrants exercised February 18, 2011 (35,000) 0.20 Warrants expired in 2011 (122,500) Outstanding and exercisable at December 31, 2011 300,018 Class F Warrants: (Issued for Private Placement) Warrants issued in 2010 2,052,995 0.55 Mar to Aug 2012(5) Outstanding and exercisable at December 31, 2010 2,052,995 Warrants exercised February 18, 2011 (1,393,332) 0.20 Outstanding and exercisable at December 31, 2011 659,663 Class F-2 Warrants: (Issued for Commissions) Warrants issued in 2010 599,772 0.20 Dec 3, 2012(5) Outstanding and exercisable at December 31, 2010 599,772 Outstanding and exercisable at December 31, 2011 599,772 Class G Warrants: (Issued for Private Placement) Warrants issued in 2010 4,169,850 0.36 Dec 3 to 16, 2012(5) Outstanding and exercisable at December 31, 2010 4,169,850 Outstanding and exercisable at December 31, 2011 4,169,850 Class H Warrants: (Issued for Private Placement) Warrants issued May 31, 2011 (1) 5,125,936 0.30 May 31, 2016 Outstanding and exercisable at December 31, 2011 5,125,936 Class I Warrants: (Issued for Private Placement) Warrants issued May 31, 2011 (2) 5,125,935 0.40 May 31, 2016 Warrants issued July 29, 2011 (3) 7,317,978 0.40 July 29, 2016 Warrants issued November 21, 2011 (4) 1,462,500 0.40 November 21, 2016 Outstanding and exercisable at December 31, 2011 13,906,413 Class J Warrants: (Issued for Private Placement) Warrants issued July 29, 2011 (3) 7,317,978 0.30 July 29, 2016 Warrants issued November 21, 2011 (4) 1,462,500 0.30 November 21, 2016 Outstanding and exercisable at December 31, 2011 8,780,478 Weighted average exercise of warrants outstanding and weighted average exercise price at December 31, 2011 33,542,130 0.29 (1) Includes 196,297 warrants issued for commissions and finder s fees. (2) Includes 196,296 warrants issued for commissions and finder s fees. (3) Includes 412,549 warrants issued for commissions and finder s fees for each of Class I and J Warrants. (4) Includes 212,500 warrants issued for commissions and finder s fees for each of Class I and J Warrants. (5) In March of 2012, subsequent to the end of the year ended December 31, 2011, the expiration dates of warrants set to expire in 2012 were extended for one year beyond their original expiration dates. No other terms were modified. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: Stock Options and Stock-Based Compensation: Under the Company s 2008 Equity Incentive Plan (the Plan ), options to purchase shares of common stock may be granted to key employees, contract management and directors of the Company. The Plan permits the granting of nonqualified stock options, incentive stock options and shares of common stock. Upon exercise of options, shares of common stock are issued from the Company s treasury stock or, if insufficient treasury shares are available, from authorized but unissued shares. Options are granted at a price equal to the closing price of the common stock on the date of grant. The stock options are generally exercisable immediately upon grant and for a period of 10 years. In the event of cessation of the holder s relationship with the Company, the holder s exercise period terminates 90 days following such cessation, compared with 6 months in the case of options issued under the Restated 2003 Share Incentive Plan in effect until May of 2008. The 2008 Plan authorizes the issuance of up to 5,400,000 shares of common stock which includes the 1,200,000 shares reserved for issuance under the Restated 2003 Share Incentive Plan, subject to adjustment for certain events, such as a stock split or other dilutive events. As of December 31, 2011, there were a total of 1,780,000 shares available for grant in the 2008 Plan, and 3,570,000 options outstanding. On October 19, 2009, the Company issued 750,000 options with a 5-year life in connections with the appointment of a new Chief Executive Officer, 250,000 of which vested immediately, with 250,000 vesting on October 19, 2010 and the final 250,000 vesting on October 19, 2011. The fair value of options was determined using a Black Scholes model, resulting in a total fair value of $285,000 for these options. This value was recognized ratably over the vesting period. At December 31, 2011 and 2010, the Company recognized share-based compensation for this key employee of $38,000 and $123,500, respectively, which represents the total weighted average grant-date fair value of the options granted and vested during the year. During 2011, the Company issued 545,000 options to employees and contractors working at our Chandalar property. Vesting milestones occurred in the Company s fourth quarter of 2011 at which time 40,000 options were forfeited. The fair value of these options was determined using a Black Scholes model, resulting in a total fair value of $85,191 for these options. Of this value, $62,279 was recognized in the fourth quarter of 2011, when service and vesting milestones were reached. Unrecognized compensation of $22,912 relating to these options will be recognized in 2012. For the year ended December 31, 2011, the fair value of stock options was estimated at the date of grant using the Black-Scholes option pricing model, which requires the use of highly subjective assumptions, including the expected volatility of the stock price, which may be difficult to estimate for small reporting companies traded on micro-cap stock exchanges. There were no options granted in the year ended December 31, 2010. The fair value of each option grant was estimated on the grant date using the following weighted average assumptions: 2011 Low High Risk-free interest rate 1.75% 1.75% Expected dividend yield -- -- Expected term 2 years 10 years Expected volatility 101.3% 107.6% The risk-free interest rate is based on the U.S. Treasury yield curve at the time of the grant. The expected term of stock options granted is from the date of the grant. The expected volatility is based on historical volatility. The Company has evaluated previous low occurrences of option forfeitures and believes that current holders of the option will hold them to maturity as has been experience historically; therefore, no variable for forfeiture was used in the calculation of fair value. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 8. STOCKHOLDERS EQUITY, CONTINUED: A summary of stock option transactions for the years ended December 31, 2011 and 2010 are as follows: Shares Weighted- Average Exercise Price (per share) Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Options outstanding at January 1, 2009 2,415,000 $ 0.30 $0 Granted 750,000 $ 0.40 Forfeited (100,000) $ 0.55 Options outstanding at January 1, 2010 3,065,000 $ 0.29 Options outstanding at December 31, 2010 3,065,000 $ 0.29 $0 Granted 545,000 $ 0.24 Forfeited (40,000) $ 0.24 Options outstanding at December 31, 2011 3,570,000 $ 0.29 5.14 $0 Options exercisable at December 31, 2011 3,370,000 $ 0.29 5.44 $0 Options available for future grants 1,780,000 The weighted average grant-date fair value of stock options granted during the year ended December 31, 2011 was $0.19 per share, respectively. There were no options issued or exercised during 2010, and no options exercised in 2011. 9. REMEDIATION LIABILITY AND ASSET RETIREMENT OBLIGATION Remediation, reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties as well as remediation costs for inactive properties. The Company uses assumptions about future costs, capital costs and reclamation costs. Such assumptions are based on the Company s current mining plan and the best available information for making such estimates. In calculating the present value of the asset retirement obligation the Company used a credit-adjusted risk free interest rate of 4% and a projected mine life of 20 years. On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ from those based on such estimates and assumptions. Changes to the Company s asset retirement obligation on its Chandalar property are as follows: December 31, December 31, 2011 2010 Asset Retirement Obligation beginning balance $ 254,118 $ 5,000 Incurred - 249,118 Accretion 10,164 - Addition and changes in estimates - - Settlements - - Asset Retirement Obligation - ending balance $ 264,282 $ 254,118 Accrual for environmental remediation 50,000 50,000 Total Remediation liability and asset retirement obligation $ 314,282 $ 304,118 The accrual of $50,000 at December 31, 2011 and 2010 is for anticipated costs to remedy a small environmental contamination caused by activities of a previous operator next to an inactive mill site. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 10. INCOME TAXES The Company did not recognize a tax provision for the years ended December 31, 2011 and 2010. At December 31, 2011 and 2010, the Company had deferred tax assets which were fully reserved by valuation allowances due to the likelihood of expiration of these deferred tax benefits prior to the Company generating future taxable income sufficient to utilize the deferred tax benefits. The deferred tax assets were calculated based on an expected combined federal and state tax rate of 43%. Following are the components of such assets and allowances at December 31, 2011 and 2010: 2011 2010 Deferred tax assets arising from: Capitalized exploration and development costs $ 504,000 $ 254,000 Unrecovered promotional and exploratory costs 161,000 161,000 Non-deductible accrued remediation costs 28,000 24,000 Non-deductible share based compensation 355,000 311,000 Net operating loss carryforwards 7,906,000 5,587,000 Total deferred tax assets 8,954,000 6,337,000 Less valuation allowance (8,954,000) (6,337,000) Net deferred tax assets $ - $ - At December 31, 2011 and 2010, the Company had federal tax-basis net operating loss carryforwards totaling $18,376,248 and $12,978,323 respectively, which will expire in various amounts from 2019 through 2031. The Company also had state tax-basis net operating loss carryforwards totaling $18,424,705 and $13,047,289, respectively, which will expire in various amounts from 2012 through 2031. For federal and state taxes, the Company uses depreciation methods and asset lives comparable to methods and lives used for financial statement presentation, therefore no deferred tax asset or liability for property, plant and equipment is recognized. 2011 2010 Federal income tax benefit based on statutory rate $ (2,077,000) 34.0% $ (808,000) 34.0% State income tax benefit net of federal taxes (550,000) 9.0% (213,000) 9.0% Effect of change in state tax status 6,000 (0.1)% (969,000) 40.4% Permanent differences 4,000 (0.1)% 4,000 (0.2)% Increase in valuation allowance 2,617,000 (42.8)% 1,986,000 (83.2)% Total taxes on income (loss) $ - -% $ - -% The Company s tax years from 2008 through 2011 remain open for examination. 11. COMMITMENTS AND CONTINGENCIES The Company has a royalty commitment on claims purchased from the Anderson family. The Company is obligated to pay 2% of gold it mines from these claims to the Anderson partnership. For the 2010 mining season the Company owed the Andersons 4.55 ounces of alluvial gold, which the Company had in inventory and delivered to the Andersons in 2011. The Company may, at its election, purchase the royalty from the Anderson Partnership no later than June 23, 2013 for a payment of $250,000. If the Company elects to purchase the royalty once notice has been given, payment is due within 30 days. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements 11. COMMITMENTS AND CONTINGENCIES, CONTINUED: During 2009 and 2010 the Company engaged in permitted open pit mining operations on Little Squaw Creek. The Small Mines permit on Little Squaw Creek restricts ground disturbance to a total maximum of ten acres and requires a specified reclamation plan for the disturbed area to be completed prior to additional acreage being disturbed. Reclamation bonding is mandatory for mines involving ground disturbances of more than five acres. The Company s mining operations, including all associated infrastructures, have to-date disturbed approximately forty-six acres. The Company participates in the State Wide Bonding Pool for small miners, and has posted bonds for twenty acres of disturbance. Consequently, the Company is currently not in compliance with its Small Mines permit for Little Squaw Creek. The Company intends to achieve mining permit compliance by getting the Small Mines permit upgraded to, or re-issued as, an Individual Permit, which is required for all mining operations covering more than ten acres. An Individual Permit allows for as much mining ground disturbance as needed but the application process is more costly and time consuming and there is no guarantee that the Company will be granted an Individual Permit. The Company does not anticipate incurring any penalty for no longer being in compliance with the Small Mines permit. However, further expansion of Little Squaw Creek will be delayed until the Company obtains an Individual Permit. Until the Company obtains an Individual Permit for the Little Squaw Creek, the Company s ability to produce gold at Little Squaw Creek will be restricted. This could impact the 2012 mining season. 12. SUBSEQUENT EVENTS In March of 2012, subsequent to the end of the year ended December 31, 2011, the expiration dates of warrants set to expire in 2012 were extended for one year beyond their original expiration dates. No other terms were modified. TABLE OF CONTENTS Consolidated Financial Statements and Notes Thereto For the three-month periods ended September 30, 2012 and 2011 TABLE OF CONTENTS Page Consolidated Balance Sheets, September 30, 2012 and December 31, 2011 86 Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2012 and 2011 and from inception (March 26, 1959) through September 30, 2012 87 Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2012 and 2011 and from inception (March 26, 1959) through September 30, 2012 88-89 Notes to the Consolidated Financial Statements 90-96 TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Balance Sheets (Unaudited) September 30, December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 15,104 $ 585,694 Prepaid expenses 114,537 83,489 Other current assets 79,289 78,692 Total current assets 208,930 747,875 Property, plant, equipment, and mining claims: Equipment, net of accumulated depreciation 1,749,279 1,978,730 Mining properties and claims 611,272 611,272 Total property, plant, equipment and mining claims 2,360,551 2,590,002 Other assets: Investment in joint venture 55,300 - Total other assets 55,300 - Total assets $ 2,624,781 $ 3,337,877 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable and accrued liabilities $ 424,651 $ 250,944 Related party payable 108,322 30,405 Deposit on equipment sale or lease 35,000 - Dividend payable on preferred stock 22,083 22,083 Current portion of equipment notes payable 242,383 237,873 Total current liabilities 832,439 541,305 Long-term liabilities: Equipment notes payable 76,706 193,565 Remediation liability and asset retirement obligation 322,211 314,282 Total long-term liabilities 398,917 507,847 Total liabilities 1,231,356 1,049,152 Commitments and contingencies (Note 8) Stockholders' equity: Preferred stock; no par value, 9,000,000 shares authorized; no shares issued or outstanding - - Convertible preferred stock series A; 5% cumulative dividends, no par value, 1,000,000 shares authorized; 175,000 and 175,000 shares issued and outstanding, respectively, $350,000 and $350,000 liquidation preferences, respectively 175,000 175,000 Common stock; $.10 par value, 200,000,000 shares authorized; 95,506,719 and 93,141,855 issued and outstanding, respectively 9,550,672 9,314,185 Additional paid-in capital 14,692,570 14,519,949 Deficit accumulated during the exploration stage (23,024,817) (21,720,409) Total stockholders equity 1,393,425 2,288,725 Total liabilities and stockholders' equity $ 2,624,781 $ 3,337,877 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Operations (unaudited) From Inception (March 26, 1959) Three Months Ended Nine Months Ended September 30, Through September 30, September 30, 2012 2011 2012 2011 2012 Income earned during the exploration stage: Gold sales and other $ - $ - $ - $ - $ 2,542,079 Cost of gold sales - - - - (1,858,843) Gross profit on gold sales - - - - 683,236 Operating expenses: Mine preparation costs - - - - 1,034,573 Exploration expense 48,626 1,871,800 422,713 2,431,668 8,714,518 Management fees and salaries 53,619 72,279 171,488 227,740 3,398,125 Professional services 44,282 19,778 105,587 83,351 2,020,065 Other general and admin expense 73,218 55,285 236,535 151,677 2,405,539 Office supplies and other expense 2,977 3,238 9,402 13,555 397,663 Directors' fees 1,800 3,000 8,200 21,800 778,475 Mineral property maintenance 14,482 8,499 38,269 25,821 216,238 Depreciation 92,723 139,933 284,799 414,964 1,795,089 Reclamation and miscellaneous 2,677 440 5,093 6,537 134,083 Loss on partnership venture - - - - 53,402 Equipment repairs - - - - 25,170 Loss (gain) on disposal of mining properties and equipment - - - (1,991) 195,290 Total operating expenses 334,404 2,174,252 1,282,086 3,375,122 21,168,230 Other (income) expense: Gain on legal judgment - - - - (127,387) Royalties, net - - - - (398,752) Lease and rental - - - - (99,330) Interest income (1) (1,111) (33) (2,327) (286,607) Interest expense and finance costs 6,473 87,373 22,960 169,601 1,431,742 Loss on settlement of debt - 323,195 - 1,946,684 1,946,684 Loss (gain) on foreign currency translation - 1,340 (605) (3,333) 73,473 Total other (income) expense 6,472 410,797 22,322 2,110,625 2,539,823 Net loss 340,876 2,585,049 1,304,408 5,485,747 $ 23,024,817 Preferred dividends 8,895 2,236 20,003 14,906 Net loss available to common stockholders $ 349,771 $ 2,587,285 $ 1,324,411 $ 5,500,653 Net loss per common share basic and diluted $ 0.01 $ 0.03 $ 0.01 $ 0.08 Weighted average common shares outstanding-basic and diluted 95,506,719 86,217,360 94,427,858 72,908,899 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) From Inception Consolidated Statements of Cash Flows (March 26, 1959) (Unaudited) Nine Months Ended Through September 30, September 30, 2012 2011 2012 Cash flows from operating activities: Net loss $ (1,304,408) $ (5,485,747) $ (23,024,817) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 284,799 418,252 1,798,759 Loss on disposal of mining property - - 196,276 Loss (gain) on sale of equipment - (1,991) 2,397 Stock based compensation 8,371 35,527 1,699,205 Compensation paid with equipment - 1,803 1,803 Common stock issued for interest - - 196,110 Amortization of discount on notes payable in gold - 64,858 561,314 Amortization of discount on notes payable in gold for value of warrant - 15,538 219,205 Amortization of discount on convertible debenture for beneficial conversion feature - - 150,000 Amortization of deferred financing costs - - 130,000 Gold delivered to satisfy notes payable - - (273,974) Gold delivered in exchange for equipment - - (10,966) Loss on settlement of debt - 1,946,684 1,946,684 Accretion of ARO liability 7,929 7,623 18,093 Change in: Prepaid expenses (31,048) (127,820) (114,538) Other current assets (597) 12,282 (79,289) Accounts payable and accrued liabilities 173,707 939,153 434,651 Related party payable 77,917 (487,393) 137,660 Accrued commission payable - - 277,523 Convertible success award, Walters LITS - - 88,750 Accrued remediation costs - - 55,000 Net cash used - operating activities (783,330) (2,661,231) (15,590,154) Cash flows from investing activities: Receipts attributable to unrecovered promotional, exploratory, and development costs - - 626,942 Investment in joint venture Goldrich Nyac Placer, LLC (1,000) - (1,000) Proceeds from the sale of equipment - - 64,624 Proceeds from deposit on sale or lease of equipment 35,000 - 35,000 Purchases of equipment, and unrecovered promotional and exploratory costs (55,347) (81,069) (2,350,842) Additions to mining properties and claims - direct costs for claim staking and acquisition - (31,276) (536,366) Net cash used - investing activities (21,347) (112,345) (2,161,642) The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Consolidated Statements of Cash Flows Continued Unaudited From Inception (March 26, 1959) Nine Months Ended Through September 30, September 30, 2012 2011 2012 Cash flows from financing activities: Proceeds from related party debt $ - $ - $ 100,000 Payments on related party debt - - (100,000) Proceeds from issuing convertible debenture, net - - 900,000 Proceeds from issuance of common stock in connection with exercise of options and warrants - 255,666 3,101,498 Proceeds from issuance of common stock and warrants, net of offering costs 346,436 4,362,704 12,985,020 Proceeds from notes payable in gold - - 1,785,037 Payments on notes payable in gold - (190,941) (190,941) Purchase of gold to satisfy notes payable in gold - (358,641) (358,641) Proceeds from issuance of preferred stock - - 475,000 Payments on capital leases and notes payable (112,349) (164,148) (921,899) Acquisitions of treasury stock - - (8,174) Net cash provided - financing activities 234,087 3,904,640 17,766,900 Net increase (decrease) in cash and cash equivalents (570,590) 1,131,064 15,104 Cash and cash equivalents, beginning of period 585,694 342,871 - Cash and cash equivalents, end of period $ 15,104 $ 1,473,935 $ 15,104 Supplemental disclosures of cash flow information: Non-cash investing and financing activities: Mining claims purchased - common stock $ - $ - $ 43,000 Additions to property, plant and equipment acquired through capital lease and notes payable $ - $ - $ 1,240,988 Additions to property, plant and equipment paid in gold $ - $ - $ 10,966 Issuance of options for investment in joint venture $ 54,300 $ - $ 54,300 Accounts payable satisfied with equipment $ - $ 10,000 $ 10,000 Related party liability converted to common stock $ - $ - $ 301,086 Issuance of warrants for deferred financing costs of convertible debenture $ - $ - $ 30,000 Issuance of common stock upon conversion of convertible debenture $ - $ - $ 1,000,000 Issuance of common stock upon conversion of preferred shares $ - $ 250,000 $ 300,000 Issuance of common stock upon conversion of notes payable in gold $ - $ 3,458,794 $ 3,458,794 Issuance of common stock for finders fees $ - $ 14,640 $ 149,640 Warrants issued with notes payable in gold $ - $ - $ 109,228 Notes payable satisfied with gold $ - $ 358,641 $ 632,615 Capital lease satisfied with equipment notes payable $ - $ - $ 335,190 Dividend payable on preferred stock $ - $ 22,083 $ 22,083 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 1. BASIS OF PRESENTATION The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the nine-month period ended September 30, 2012 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2012. For further information refer to the financial statements and footnotes thereto in the Company s Annual Report on Form 10-K for the year ended December 31, 2011. Principles of Consolidation At September 30, 2012, the consolidated financial statements include the accounts of the Company and the accounts of its 100% owned subsidiaries Minera LSG S.A. and Goldrich Placer LLC. Intercompany items and transactions between companies included in the consolidation are eliminated. Accounting for Investments in Joint Ventures For joint ventures in which the Company does not have joint control or significant influence, the cost method is used. Under the cost method, these investments are carried at the lower of cost or fair value. For those joint ventures in which there is joint control between the parties, the equity method is utilized whereby the Company s share of the ventures earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. Goldrich has no significant control over its joint venture described in Note 3 Joint Venture , and therefore accounts for its investment using the cost method. For joint ventures where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of a non-controlling interest. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the venture s management committee. Goldrich currently has no joint venture of this nature. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these financial statements include those assumed in estimating the recoverability of the cost of mining claims, accrued remediation costs and deferred tax assets and related valuation allowances. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to conform prior periods presentation to the current presentation. These reclassifications have no effect on the results of operations or stockholders equity . TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 1. BASIS OF PRESENTATION, CONTINUED Net Loss Per Share Basic Earnings Per Share ( EPS ) is computed as net income available to common shareholders after dividends to preferred shareholders, divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible debt and securities. The dilutive effect of vested convertible and exercisable securities would be: September 30, September 30, For periods ended 2012 2011 Convertible preferred stock 1,050,000 1,050,000 Stock options 3,670,000 3,090,000 Warrants 33,542,130 30,739,630 Total possible dilution 38,262,130 34,879,630 For the three and nine-month periods ended September 30, 2012 and 2011, the effect of the Company s outstanding options and common stock equivalents would have been anti-dilutive, therefore only Basic EPS is presented. Fair Value Measures Our financial instruments consist principally of cash and equipment notes. These instruments do not require recurring re-measurement at fair value. Cash and Cash Equivalents For the purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be a cash equivalent. 2. GOING CONCERN The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company is an exploration stage company and has incurred losses since its inception and does not have sufficient cash at September 30, 2012 to fund normal operations and meet debt obligations for the next 12 months. The Company currently has no historical recurring source of revenue and its ability to continue as a going concern is dependent on the Company s ability to raise capital to fund its future exploration and working capital requirements or its ability to profitably execute its mining plan. The Company s plans for the long-term return to and continuation as a going concern include financing the Company s future operations through sales of its common stock and/or debt and the eventual profitable exploitation of its mining properties. Additionally, the current capital markets and general economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial doubt about the Company s ability to continue as a going concern. On November 5, 2012, The Company reported Goldrich NyacAU Placer, LLC, a 50/50 joint-venture company owned by Goldrich and NyacAU, LLC and operated by NyacAU, has successfully completed the work necessary to begin production at Goldrich s Alaskan Chandalar Property at the start of the 2013 field season. A successful mining operation may provide the long-term financial strength for the Company to remove the going concern condition in future years. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 2. GOING CONCERN, CONTINUED The joint venture agreement provides approximately $900,000 of financing to Goldrich in the form of purchase or lease of capital equipment currently owned by the Company. The Company received a $35,000 cash deposit toward this financing during the quarter ended September 30, 2012. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis was not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used. 3. JOINT VENTURE On May 7, 2012, the Company entered into a joint venture ( the JV ) with NyacAU, LLC ( NyacAU ), an Alaskan private company, to bring Goldrich s Chandalar placer gold properties into production. As part of the agreement, Goldrich and NyacAU formed a 50:50 joint venture company, Goldrich NyacAU Placer LLC ( GNP ), to operate the Chandalar placer mines, with NyacAU acting as managing partner. Goldrich has no significant control over the JV, and therefore accounts for its investment using the cost method. Under the terms of the joint venture agreement (the Agreement ), NyacAU provided a funding package of loans and equity to the JV that, subject to the timing of production, are estimated to eventually total approximately $10.45 million. The loans are to be repaid from future production. Once all loans have been repaid and working capital and budgeted reserves have been established, profits from the placer production will be paid out on a 50:50 basis to each of the JV partners. NyacAU s funding to the JV is anticipated to be sufficient in amount to bring the placer deposits at Chandalar into commercial production. The loans will earn interest at an agreed short-term federal rate, currently 0.25%, but are effectively non-interest bearing loans as Goldrich will receive a special payment from the JV equal to the interest paid to NyacAU on this loan. NyacAU has also agreed to lease or purchase $1.2 million of equipment currently owned by Goldrich at a discount, netting $900,000 to the Company, and to advance Goldrich $950,000 at the greater of prime plus 2% or 10% interest for direct exploration drilling costs at the Company s Chandalar property to be performed by Blackrock Drilling, a drilling company in which the owners of NyacAU have a majority interest. NyacAU also purchased 2,364,864 shares of Goldrich common stock for $350,000 ($0.148 per share) during the quarter ended June 30, 2012, in accordance with the agreement. In addition to the funding noted above, NyacAU had the option to lend the JV $0.25 million to purchase an existing 2% royalty agreement on all production from certain Goldrich mining claims. The loan would carry interest at the greater of prime plus 2% or 10% and would be repaid from Goldrich s portion of production. Goldrich would also have the exclusive right to purchase the royalty at any time. The royalty would be extinguished upon payback of the loan or purchase by Goldrich. The JV exercised the option to purchase the royalty on August 13, 2012, and the 2% royalty was purchased for the contracted $0.25 million, funded by the loan from NyacAU. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 3. JOINT VENTURE, CONTINUED A summary of funding provided by or estimated to be funded by NyacAU is as follows: Estimated 2012 Start-up Costs for GNP $5,000,000 Estimated Capital Expenditures for of NyacAU affiliate(1) 3,000,000 Estimated Loan to Purchase or Lease Equipment from Goldrich(1) 900,000 Loan from NyacAU to Joint Venture with Interest at 0.25% 8,900,000 Loan from NyacAU to GRMC with Interest at greater of prime plus 2% or 10% 950,000 Loan to GNP to Purchase 2% Royalty Interest 250,000 To Be Paid Back to NyacAU From Production 10,100,000 Equity Financing - Purchase of Goldrich Common Stock (Received during the nine- month period ended September 30, 2012) 350,000 Total $10,450,000 (1) Equipment will be leased to GNP by a NyacAU affiliate over a five year term. The NyacAU affiliate has paid a deposit to purchase certain mining equipment from Goldrich for $900,000 but the transaction has not been finalized. The timing of repayment of the amount to be paid back from production will be affected by timing of gold production by the joint venture. The JV will commence payments to NyacAU as soon as production begins. At September 30, 2012, not all of the funding provisions have been activated. The Company did not initiate a drilling program for 2012, and the $950,000 funding for the drilling costs were not advanced by NyacAU to the Company or the drilling company. In addition, NyacAU s loan to GNP and the associated equipment lease/purchase from Goldrich has not been consummated. The manager of NyacAU, in negotiating the joint venture agreement, was granted 300,000 five-year stock options at an exercise price of $0.20 per share from Goldrich s employee stock incentive program. The options were issued during the quarter ended June 30, 2012. The options were determined to have a fair value of $54,300 and were accounted for as an increase in our investment in the joint venture. Goldrich s investment in the joint venture included $1,000 cash remitted to GNP to fund GNP s bank account, for a total investment of $55,300 in the joint venture. In the operating agreement for GNP between Goldrich and NyacAU, NyacAU was granted an option to lend GNP $250,000 to purchase the 2% royalty interest payable on all production from certain Goldrich mining claims at the Chandalar, Alaska property from Jumbo Basin Corporation. On August 13, 2012, GNP purchased the royalty interest. The loan to GNP from NyacAU for the royalty carries interest at the greater of prime plus 2% or 10% and will be repaid from Goldrich s portion of future production. Goldrich will also have the exclusive right to purchase the royalty from GNP at any time. The royalty will be extinguished upon payback of the loan or purchase by Goldrich. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 4. RELATED PARTY TRANSACTIONS During the three and nine-month periods ended September 30, 2012, the Company s President and Chief Executive Officer ( CEO ) elected to defer his salary until the Company has sufficient cash reserves to pay it. A total of $35,000 of salary has been deferred. The Company also owes this officer $35,465 for expenses paid during the quarter ended September 30, 2012, under normal expense reimbursement procedures. These amounts are included in related party payable. A total of $11,338 interest is payable at September 30, 2012 to a director of the Company in connection with the settlement of notes payable in gold settled in 2011 and $0 and $11,414, respectively, is payable to this person in connection with consulting work that he provided during the three and nine months ended September 30, 2012. These amounts are included in related party payable. An amount of $11,628 had been accrued for fees due to the Company s Chief Financial Officer at December 31, 2011. This total was paid in cash during 2012, and at September 30, 2012, $15,106 had been accrued for services performed entirely during the three months ended September 30, 2012. This amount is included in related party payable. A total of $28,900 had been accrued for directors fees at December 31, 2011. For the three and nine months ended September 30, 2012, an additional $1,800 and $8,200, respectively, has been accrued for services performed during the period, for a total of $37,100, which is included in accounts payable. 5. NOTES PAYABLE IN GOLD During the year ended December 31, 2011, the Company settled all notes payable in gold. After settlement, the Company had no further obligations under the notes payable in gold except $22,555 of accrued interest due under notes satisfied by delivery of gold. The total loss recognized for settlement for the year ended December 31, 2011 was $1,946,684, of which $1,623,489 was recognized in the nine month period ended September 30, 2011. 6. EQUIPMENT NOTES PAYABLE The principal amounts of the equipment notes due over coming years are as follows: Year Principal Due September 30, 2013 $ 242,383 2014 76,706 2015 and thereafter - Total $ 319,089 TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 7. STOCKHOLDERS EQUITY On May 3, 2012, the Company closed a private placement of its common stock as part of the joint venture agreement with NyacAU. The private placement consisted of 2,364,864 shares at a price of $0.148 per share and resulted in net proceeds to the Company of approximately $350,000. The following is a summary of warrants for September 30, 2012: Shares Exercise Price ($) Expiration Date Class E Warrants: (Issued for Notes payable in gold) Outstanding and exercisable at January 1, 2011 457,518 0.65 Feb to June 2013 (5) Warrants exercised February 18, 2011 (35,000) 0.20 Warrants expired in 2011 (122,500) Outstanding and exercisable at December 31, 2011 300,018 Outstanding and exercisable at September 30, 2012 300,018 Class F Warrants: (Issued for Private Placement) Outstanding and exercisable at January 1, 2011 2,052,995 0.55 March to August 2013 (5) Warrants exercised February 18, 2011 (1,393,332) 0.20 Outstanding and exercisable at December 31, 2011 659,663 Outstanding and exercisable at September 30, 2012 659,663 Class F-2 Warrants: (Issued for Commissions) Outstanding and exercisable at January 1, 2011 599,772 0.20 December 3, 2013 (5) Outstanding and exercisable at December 31, 2011 599,772 Outstanding and exercisable at September 30, 2012 599,772 Class G Warrants: (Issued for Private Placement) Outstanding and exercisable at January 1, 2011 4,169,850 0.36 December 3 to 16, 2013 (5) Outstanding and exercisable at December 31, 2011 4,169,850 Outstanding and exercisable at September 30, 2012 4,169,850 Class H Warrants: (Issued for Private Placement) Warrants issued May 31, 2011 (1) 5,125,936 0.30 May 31, 2016 Outstanding and exercisable at December 31, 2011 5,125,936 Outstanding and exercisable at September 30, 2012 5,125,936 Class I Warrants: (Issued for Private Placement) Warrants issued May 31, 2011 (2) 5,125,935 0.40 May 31, 2016 Warrants issued July 29, 2011 (3) 7,317,978 0.40 July 29, 2016 Warrants issued November 21, 2011 (4) 1,462,500 0.40 November 21, 2016 Outstanding and exercisable at December 31, 2011 13,906,413 Outstanding and exercisable at September 30, 2012 13,906,413 Class J Warrants: (Issued for Private Placement) Warrants issued July 29, 2011 (3) 7,317,978 0.30 July 29, 2016 Warrants issued November 21, 2011 (4) 1,462,500 0.30 November 21, 2016 Outstanding and exercisable at December 31, 2011 8,780,478 Outstanding and exercisable at September 30, 2012 8,780,478 Weighted average exercise of warrants outstanding and weighted average exercise price at September 30, 2012 33,542,130 0.29 (1) Includes 196,297 warrants issued for commissions and finder s fees. (2) Includes 196,296 warrants issued for commissions and finder s fees. (3) Includes 412,549 warrants issued for commissions and finder s fees for each of Class I and J Warrants. (4) Includes 212,500 warrants issued for commissions and finder s fees for each of Class I and J Warrants. (5) On March 21, 2012, the expiration dates of warrants set to expire in 2012 were extended for one year beyond their original expiration dates. No other terms were modified. TABLE OF CONTENTS Goldrich Mining Company (An Exploration Stage Company) Notes to the Consolidated Financial Statements for the Quarter Ended September 30, 2012 7. STOCKHOLDERS EQUITY, CONTINUED Stock-Based Compensation: During the quarter ended June 30, 2012, the Company issued 300,000 options, with a fair value of $54,300, to the manager of NyacAU as part of the JV Agreement described in Note 3 Joint Venture . There were no other options issued during the nine-month period ended September 30, 2012. For the nine-month period ended September 30, 2012, the fair value of stock options was estimated at the date of grant using the Black-Scholes option pricing model, which requires the use of highly subjective assumptions, including the expected volatility of the stock price, which may be difficult to estimate for small reporting companies traded on micro-cap stock exchanges. The fair value of each option grant was estimated on the grant date using the following weighted average assumptions: 2012 Risk-free interest rate 1.75% Expected dividend yield -- Expected term 5 years Expected volatility 146.6% The risk-free interest rate is based on the U.S. Treasury yield curve at the time of the grant. The expected term of stock options granted is from the date of the grant. The expected volatility is based on historical volatility. The Company evaluated previous low occurrences of option forfeitures and, at the most recent computations of fair valued, believed that current holders of the option would hold them to maturity as has been experienced historically; therefore, no variable for forfeiture was used in the calculation of fair value. In light of the subsequent forfeiture in 2012 of 200,000 options by one holder, the Company s future fair value computations may include a forfeiture variable. For the nine-month periods ended September 30, 2012 and 2011, the Company recognized share-based compensation for employees of $8,371 and $35,527, and share-based compensation in relation to the joint-venture with NyacAU of $54,300 and $nil respectively. One holder forfeited 200,000 stock options as a result of termination of employment during the nine months ended September 30, 2012. 8. COMMITMENTS AND CONTINGENCIES During 2009 and 2010 the Company engaged in permitted open pit mining operations on Little Squaw Creek. The Small Mines permit on Little Squaw Creek restricted ground disturbance to a total maximum of ten acres and required a specified reclamation plan for the disturbed area to be completed prior to additional acreage being disturbed. The Company s mining operations, including all associated infrastructures, have to-date disturbed approximately forty-six acres. The joint venture partner NyacAU, LLC, obtained the General Permit and performed remediation activities during the third quarter of 2012 to satisfy the Company s compliance requirements. 9. SUBSEQUENT EVENTS Subsequent to September 30, 2012, we received additional cash deposits totaling $78,475 toward the sale or lease of capital equipment currently owned by us, bringing total deposits to $113,475. The Company expects to complete this agreement prior to the end of 2012 to provide approximately $900,000 of financing to Goldrich through the sale or lease of equipment with a net book value of approximately $1,200,000 as described in Note 3, Joint Venture. Subsequent to September 30, 2012, the Chief Executive Officer loaned cash totaling $25,000 to the Company to make payments on certain accounts payable pending the consummation of the sale or lease of assets described above. TABLE OF CONTENTS MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains
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+PROSPECTUS SUMMARY
+ 1
+
+ THE OFFERING
+ 3
+
+ RISK FACTORS
+ 4
+
+ STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
+ 20
+
+ USE OF PROCEEDS
+ 22
+
+ DIVIDEND POLICY
+ 22
+
+ MARKET FOR COMMON EQUITY
+ 23
+
+ MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
+ 24
+
+ OUR BUSINESS
+ 37
+
+ MANAGEMENT
+ 50
+
+ CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+ 57
+
+ SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+ 63
+
+ SELLING SECURITYHOLDERS
+ 67
+
+ PLAN OF DISTRIBUTION
+ 73
+
+ DESCRIPTION OF SECURITIES
+ 75
+
+ MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
+ 85
+
+ DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
+ 95
+
+ LEGAL MATTERS
+ 95
+
+ EXPERTS
+ 95
+
+ WHERE YOU CAN FIND MORE INFORMATION
+ 95
+
+ INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
+ F-1
+
+ 
+
+ i
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000704384_biovest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000704384_biovest_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information that we present more fully in the rest of this prospectus and does not contain all of the information you should consider before investing in our securities. This summary contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including the Risk Factors section and our consolidated financial statements and related notes. Overview Unless the context requires otherwise, as used in this prospectus, the terms Biovest, we, us, our, the Company, our company, and similar references refer to Biovest International, Inc. and its subsidiaries. As a result of our collaboration with the National Cancer Institute ( NCI ), Biovest International, Inc. is developing BiovaxID as a personalized therapeutic cancer vaccine for the treatment of non-Hodgkin s lymphoma ( NHL ), specifically follicular lymphoma ( FL ), mantle cell lymphoma ( MCL ) and potentially other B-cell cancers. Both FL and MCL are generally considered to be incurable with currently approved therapies. These generally fatal diseases arise from the lymphoid tissue and are characterized by an uncontrolled proliferation and spread throughout the body of mature B-cells, which are a type of white blood cell. Three clinical trials conducted under our Investigational New Drug Application ( IND ) have studied BiovaxID in NHL. These studies include a Phase 2 clinical trial and a Phase 3 clinical trial in patients with FL, as well as a Phase 2 clinical trial in MCL patients. BiovaxID has demonstrated statistically significant Phase 3 clinical benefit by prolonging disease-free survival in FL patients treated with BiovaxID . We believe that these clinical trials demonstrate the safety and efficacy of BiovaxID . To support our planned commercialization of BiovaxID , we developed an automated cell culture instrument called AutovaxID . We believe that AutovaxID has significant potential application in the production of a broad range of patient-specific medicines, such as BiovaxID , and potentially for various vaccines, including vaccines for influenza and other contagious diseases. We are collaborating with the U.S. Department of Defense to further develop AutovaxID and to explore potential production of additional vaccines, including vaccines for viral indications such as influenza. AutovaxID is automated and computer controlled to improve cell production reliability and to maximize cell production. AutovaxID uses a disposable production unit which provides for robust and dependable manufacturing while complying with the industry current good manufacturing practices standards. AutovaxID has a small footprint and supports scalable production. We also manufacture instruments and disposables used in the hollow-fiber production of cell culture products. Our hollow-fiber cell culture products and instruments are used by biopharmaceutical and biotechnology companies, medical schools, universities, research facilities, hospitals and public and private laboratories. We also produce mammalian and insect cells, monoclonal antibodies, recombinant and secreted proteins and other cell culture products using our unique capability, expertise and proprietary advancements in the cell production process known as hollow-fiber perfusion. Our business consists of three primary business segments: development of BiovaxID and potentially other B-cell blood cancer vaccines; the manufacture and sale of AutovaxID and other instruments and consumables; and commercial production of cell culture products and services. We completed a reorganization of our Company, which we believe prepares our Company for our commercialization of BiovaxID . On November 10, 2008, we and our wholly-owned subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Our reorganization case was jointly administered with the reorganization case of our parent company, Accentia Biopharmaceuticals, Inc., under Case No. 8:08-bk-17795-KRM. On August 16, 2010, we filed our First Amended Joint Plan of Reorganization, and, on October 25, 2010, we filed the First Modification to the First Amended Joint Plan of Reorganization (collectively and as amended and supplemented, the Plan ). On November 2, 2010, the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division (the Bankruptcy Court ) entered an Order Confirming Debtors First Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the Confirmation Order ). We emerged from Chapter 11 protection, and our Plan became effective, on November 17, 2010 (the Effective Date ). Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 30, 2012 Units, Each Consisting of One Share of Common Stock and 0.5 of a Warrant to Purchase One Share of Common Stock We are offering up to units, each unit consisting of one share of our common stock, par value $0.01 per share, and 0.5 of a warrant to purchase one share of our common stock. Each full warrant entitles its holder to purchase one share of our common stock at an exercise price of $ per share. The units will separate immediately, the common stock and the warrants will be issued separately, and the common stock will trade separately. For a more detailed description of our units, our common stock, and our warrants, see the section entitled DESCRIPTION OF SECURITIES beginning on page 79 of this prospectus. We are not required to sell any specific dollar amount or number of units, but we will use our best efforts to sell all of the units being offered. Our common stock is currently quoted on the OTCQB under the symbol BVTI . We do not intend to apply to list the warrants on any securities exchange or market. On March 29, 2012, the last reported sale price of our common stock on the OTCQB was $0.58 per share. Investing in the offered securities involves risks. See RISK FACTORS beginning on page 4 of this prospectus. Per Unit Total Price to Public $ 5,000,000 Placement Agent s Fees Proceeds, Before Expenses, to Biovest International, Inc. has agreed to act as our exclusive placement agent in connection with this offering. may engage one or more sub placement agents or selected dealers. The placement agent is not purchasing the securities offered by us, and is not required to sell any specific number or dollar amount of units, but will assist us in this offering on a best efforts basis. We have agreed to pay the placement agent a cash fee equal to % of the gross proceeds of the offering of units by us, as well as Placement Agent Warrants to purchase shares of our common stock equal to % of the aggregate number of units sold in the offering. The Placement Agent Warrants will be substantially on the same terms as the warrants offered hereby, except as required by the Financial Industry Regulatory Authority, Inc. We estimate the total expenses of this offering, excluding the placement agent fees, will be approximately $ . Because there is no minimum offering amount required as a condition to closing in this offering, the actual public offering amount, placement agent fees, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above. See PLAN OF DISTRIBUTION beginning on page 85 of this prospectus for more information regarding this offering and the placement agent arrangements. All costs associated with the offering will be borne by us. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Brokers or dealers effecting transactions in these securities should confirm that the securities are registered under the applicable state law or that an exemption from registration is available. The date of this prospectus is , 2012. Table of Contents Corporate Information Our principal executive offices are located at 324 South Hyde Park Avenue, Suite 350, Tampa, Florida 33606, and our telephone number is (813) 864-2554. Our website is www.biovest.com. Information contained on our website is not incorporated by reference into this prospectus, and such information should not be considered to be part of this prospectus. Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000737210_lnb_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000737210_lnb_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not contain all the information that you need to consider in making your investment decision to purchase the series B preferred shares. You should carefully read this entire prospectus, as well as the information incorporated by reference herein, before deciding whether to invest in the series B preferred shares. You should carefully consider the sections entitled Risk Factors in this prospectus and the documents incorporated by reference herein to determine whether an investment in the series B preferred shares is appropriate for you. Business We are a diversified banking services company headquartered in Lorain, Ohio and organized as a bank holding company under the Bank Holding Company Act of 1956, as amended (the BHC Act ). We engage in lending and depository services, investment services, and other traditional banking services offered through our wholly-owned subsidiary, The Lorain National Bank (the Bank ). The primary business of the Bank is providing personal, mortgage and commercial banking products, along with investment management and trust services. The Lorain National Bank operates through 20 retail-banking locations and 29 automated teller machines ( ATMs ) in Lorain, Erie, Cuyahoga and Summit counties in the Ohio communities of Lorain, Elyria, Amherst, Avon, Avon Lake, LaGrange, North Ridgeville, Oberlin, Olmsted Township, Vermilion, Westlake and Hudson, as well as a business development office in Cuyahoga County. The Company s management team ( Management ) believes that the Bank is well positioned to compete successfully in its market area. Management believes that the commitment of the Bank to provide quality personal service and its local community involvement give the Bank a competitive advantage over other financial institutions operating in its markets. For a complete description of our business, financial condition, results of operations and other important information, we refer you to our filings with the SEC that are incorporated by reference in this prospectus, including our Annual Report on Form 10-K for the year ended December 31, 2011 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. For instructions on how to find copies of these documents, see Where You Can Find More Information. Table of Contents ABOUT THIS PROSPECTUS SUPPLEMENT You should read this prospectus supplement, the accompanying prospectus and the additional information described under the headings Where You Can Find More Information and Incorporation of Certain Information by Reference before you make a decision to invest in the Preferred Shares. In particular, you should review the information under the heading Risk Factors set forth on page S-9 of this prospectus supplement, the information set forth under the heading Risk Factors set forth on page 5 in the accompanying prospectus and the information under the heading Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2011, which is incorporated by reference herein. You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any related free writing prospectus required to be filed with the SEC. Neither we nor Treasury nor the underwriters are making an offer to sell the Preferred Shares in any manner in which, or in any jurisdiction where, the offer or sale thereof is not permitted. We have not authorized any person to provide you with different or additional information. If any person provides you with different or additional information, you should not rely on it. You should assume that the information in this prospectus supplement, the accompanying prospectus, any such free writing prospectus and the documents incorporated by reference herein and therein is accurate only as of its date or the date which is specified in those documents. Our business, financial condition, capital levels, cash flows, liquidity, results of operations and prospects may have changed since any such date. In this prospectus supplement, we frequently use the terms we, our, us and the Company to refer to LNB Bancorp, Inc. and its subsidiaries, unless the context indicates otherwise. References to the Bank or our subsidiary bank refer to The Lorain National Bank, a wholly owned subsidiary of LNB Bancorp, Inc. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus supplement and the accompanying prospectus, and the documents incorporated by reference into them, contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Terms such as will, should, plan, intend, expect, continue, believe, anticipate and seek, as well as similar comments, are forward-looking in nature. Actual results and events may differ materially from those expressed or anticipated as a result of risks and uncertainties which include but are not limited to: a worsening of economic conditions or slowing of any economic recovery, which could negatively impact, among other things, business activity and consumer spending and could lead to a lack of liquidity in the credit markets; changes in the interest rate environment which could reduce anticipated or actual margins; increases in interest rates or further weakening of economic conditions that could constrain borrowers ability to repay outstanding loans or diminish the value of the collateral securing those loans; market conditions or other events that could negatively affect the level or cost of funding, affecting the Company s ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth, and new business transactions at a reasonable cost, in a timely manner and without adverse consequences; changes in political conditions or the legislative or regulatory environment, including new or heightened legal standards and regulatory requirements, practices or expectations, which may impede profitability or affect the Company s financial condition (such as, for example, the Dodd-Frank Act and rules and regulations that have been or may be promulgated under the Dodd-Frank Act); persisting volatility and limited credit availability in the financial markets, particularly if market conditions limit the Company s ability to raise funding to the extent required by banking regulators or otherwise; S-i Table of Contents The Offering Issuer LNB Bancorp, Inc. Fixed Rate Cumulative Perpetual Preferred Stock, Series B, offered by us None Fixed Rate Cumulative Perpetual Preferred Stock, Series B, offered by selling securityholders Up to 25,223 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B Use of proceeds We will not receive any proceeds from the sale of the shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B. Listing Our Fixed Rate Cumulative Perpetual Preferred Stock, Series B is not listed on any exchange. Risk factors You should consider carefully the matters set forth under Risk Factors beginning on page 5 of this prospectus before deciding to purchase any shares of the Fixed Rate Cumulative Perpetual Preferred Stock, Series B. Table of Contents significant increases in competitive pressure in the banking and financial services industries, particularly in the geographic or business areas in which the Company conducts its operations; limitations on the Company s ability to return capital to shareholders, including the ability to pay dividends, and the dilution of the Company s common shares that may result from, among other things, the terms of the TARP Capital Purchase Program ( CPP ), pursuant to which the Company issued securities to Treasury; adverse effects on the Company s ability to engage in routine funding transactions as a result of the actions and commercial soundness of other financial institutions; general economic conditions becoming less favorable than expected, continued disruption in the housing markets and/or asset price deterioration, which have had and may continue to have a negative effect on the valuation of certain asset categories represented on the Company s balance sheet; increases in deposit insurance premiums or assessments imposed on the Company by the Federal Deposit Insurance Corporation (the FDIC ); a failure of the Company s operating systems or infrastructure, or those of its third-party vendors, that could disrupt its business; risks that are not effectively identified or mitigated by the Company s risk management framework; and difficulty attracting and/or retaining key executives and/or relationship managers at compensation levels necessary to maintain a competitive market position; as well as the risks and uncertainties described from time to time in the Company s reports as filed with the SEC. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and file with the SEC proxy statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as required of a U.S. listed company. You may read and copy any document we file at the SEC s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Please call the SEC at 1-888-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC s web site at www.sec.gov or on our website at www.4lnb.com. However, the information on, or that can be accessible through, our website does not constitute a part of, and is not incorporated by reference in, this prospectus supplement or the accompanying prospectus. Written requests for copies of the documents we file with the SEC should be directed to LNB Bancorp, Inc., 457 Broadway, Lorain, Ohio 44052, Attention: Gary J. Elek, Chief Financial Officer, telephone: (440) 244-6000. This prospectus supplement and the accompanying prospectus are part of a registration statement on Form S-1 filed by us with the SEC under the Securities Act. As permitted by the SEC, this prospectus supplement and the accompanying prospectus do not contain all the information in the registration statement filed with the SEC. For a more complete understanding of this offering, you should refer to the complete registration statement, including exhibits, on Form S-1 that may be obtained as described above. Statements contained in this prospectus supplement and the accompanying prospectus about the contents of any contract or other document are not necessarily complete. If we have filed any contract or other document as an exhibit to the registration statement or any other document incorporated by reference in the registration statement, you should read the exhibit for a more complete understanding of the contract or other document or matter involved. Each statement regarding a contract or other document is qualified in its entirety by reference to the actual contract or other document. S-ii Table of Contents RISK FACTORS An investment in our series B preferred shares is subject to risks inherent in our business and risks relating to the structure of the series B preferred shares. The material risks and uncertainties that management believes affect your investment in the series B preferred shares are described below and in the section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011 incorporated by reference herein. Before making an investment decision, you should carefully consider the risks and uncertainties described below and in the information included or incorporated by reference in this prospectus. If any of these risks or uncertainties are realized, our business, financial condition, capital levels, cash flows, liquidity, results of operations and prospects, as well as our ability to pay dividends on the series B preferred shares, could be materially and adversely affected and the market price of the series B preferred shares could decline significantly and you could lose some or all of your investment. Risks Associated with Our Business For the risks associated with our business and industry, as well as the risks related to legislative and regulatory events, see the section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011, which is incorporated in this prospectus by reference. Risk Factors Related to an Investment in the Series B Preferred Shares We rely on dividends we receive from our subsidiary and are subject to restrictions on our ability to declare or pay dividends. As a bank holding company, our ability to pay dividends depends primarily on the receipt of dividends from our wholly-owned bank subsidiary. Dividend payments from the Bank are subject to legal and regulatory limitations, generally based on retained earnings, imposed by bank regulatory agencies. The ability of the Bank to pay dividends is also subject to financial condition, regulatory capital requirements, capital expenditures and other cash flow requirements. An investment in the series B preferred shares is not an insured deposit. The series B preferred shares are not bank deposits and, therefore, are not insured against loss by the FDIC or any other public or private entity. Investment in the series B preferred shares is inherently risky for the reasons described in this Risk Factors section and elsewhere in this prospectus and is subject to the same market forces that affect the capital stock in any company. As a result, if you acquire the series B preferred shares you may lose some or all of your investment. An active trading market for the series B preferred shares may not develop or be maintained. The series B preferred shares are not currently listed on any securities exchange or available for quotation on any national quotation system, and we do not anticipate listing the series B preferred shares. There can be no assurance that an active trading market for the series B preferred shares will develop or, if developed, will be maintained. If an active market is not developed and maintained, the market value and liquidity of the series B preferred shares may be materially and adversely affected. The series B preferred shares may be junior in rights and preferences to our future preferred stock. Subject to approval by the holders of at least 66 2/3% of the series B preferred shares then outstanding, voting as a separate class, we may issue preferred stock in the future the terms of which are expressly senior to the series B preferred shares. The terms of any such future preferred stock expressly senior to the series B preferred shares may prohibit or otherwise restrict dividend payments on the series B preferred shares. For Table of Contents INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The SEC allows us to incorporate by reference the information that we file with it, which means that we can disclose important information to you by referring you to other documents. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus. We incorporate by reference the following documents (other than information furnished rather than filed in accordance with SEC rules): the Company s Annual Report on Form 10-K for the fiscal year ended December 31, 2011; the Company s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012; the Company s Current Report on Form 8-K filed on May 3, 2012; and the Company s Definitive Proxy Statement related to its 2012 annual meeting of shareholders, as filed with the SEC on March 13, 2012. We will provide without charge, upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus supplement and the accompanying prospectus and a copy of any or all other contracts or documents which are referred to in this prospectus supplement or the accompanying prospectus. Requests should be directed to: LNB Bancorp, Inc., 457 Broadway, Lorain, Ohio 44052, Attention: Gary J. Elek, Chief Financial Officer, telephone: (440) 244-6000. S-iii Table of Contents example, the terms of any such senior preferred stock may provide that, unless full dividends for all of our outstanding preferred stock senior to the series B preferred shares have been paid for the relevant periods, no dividends will be paid on the series B preferred shares, and no series B preferred shares may be repurchased, redeemed, or otherwise acquired by us. In addition, in the event of our liquidation, dissolution or winding-up, the terms of any such senior preferred stock would likely prohibit us from making any payments on the series B preferred shares until all amounts due to holders of such senior preferred stock are paid in full. Holders of the series B preferred shares have limited voting rights. Unless and until we are in arrears on our dividend payments on the series B preferred shares for six quarterly periods, whether or not consecutive, the holders of the series B preferred shares will have no voting rights except with respect to certain fundamental changes in the terms of the series B preferred shares and certain other matters and except as may be required by applicable law. If dividends on the series B preferred shares are not paid in full for six quarterly periods, whether or not consecutive, the total number of positions on the Company s board of directors will increase by two and the holders of the series B preferred shares, acting as a class with any other shares of our preferred stock with parity voting rights to the series B preferred shares, will have the right to elect two individuals to serve in the new director positions at the next annual meeting (or at a special meeting called for this purpose). This right and the terms of such directors will end when we have paid in full all accrued and unpaid dividends for all past dividend periods. See Description of Preferred Shares Voting Rights in this prospectus. We are subject to extensive regulation, and ownership of the series B preferred shares may have regulatory implications for holders thereof. We are subject to extensive federal and state banking laws, including the BHC Act, and federal and state banking regulations, that impact the rights and obligations of owners of the series B preferred shares, including, for example, our ability to declare and pay dividends on, and to redeem, the series B preferred shares. Although the Company does not believe the series B preferred shares are considered voting securities currently, if they were to become voting securities for the purposes of the BHC Act, whether because the Company has missed six dividend payments and holders of the series B preferred shares have the right to elect directors as a result, or for other reasons, a holder of 25% of more of the series B preferred shares, or a holder of a lesser percentage of our series B preferred shares that is deemed to exercise a controlling influence over us, may become subject to regulation under the BHC Act. In addition, if the series B preferred shares become voting securities , then (a) any bank holding company or foreign bank that is subject to the BHC Act may need approval to acquire or retain more than 5% of the then outstanding series B preferred shares, and (b) any holder (or group of holders acting in concert) may need regulatory approval to acquire or retain 10% or more of the series B preferred shares. A holder or group of holders may also be deemed to control us if they own one-third or more of our total equity, both voting and non-voting, aggregating all shares held by the investor across all classes of stock. Holders of the series B preferred shares should consult their own counsel with regard to regulatory implications. The United States Department of Treasury is a federal agency and your ability to bring a claim against the United States Department of Treasury under the federal securities laws in connection with a purchase of series B preferred shares may be limited. The doctrine of sovereign immunity, as limited by the Federal Tort Claims Act (the FTCA ), provides that claims may not be brought against the United States of America or any agency or instrumentality thereof unless specifically permitted by act of Congress. The FTCA bars claims for fraud or misrepresentation. At least one federal court, in a case involving a federal agency, has held that the United States may assert its sovereign immunity to claims brought under the federal securities laws. In addition, the United States Department of Treasury and its officers, agents, and employees are exempt from liability for any violation or alleged violation of the anti-fraud provisions of Section 10(b) of the Exchange Act by virtue of Section 3(c) thereof. Accordingly, Table of Contents any attempt to assert such a claim against the officers, agents or employees of the United States Department of Treasury for a violation of the Securities Act or the Exchange Act resulting from an alleged material misstatement in or material omission from this prospectus, the registration statement of which this prospectus or the documents incorporated by reference in this prospectus are a part or resulting from any other act or omission in connection with the offering of the series B preferred shares by the United States Department of Treasury would likely be barred. Table of Contents USE OF PROCEEDS We will not receive any proceeds from any sale of the series B preferred shares by the selling securityholders. RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The following table sets forth our ratios of earnings to fixed charges and preferred stock dividends for the periods indicated. No series B preferred shares were outstanding during the year ended December 31, 2007, and we did not repay preferred dividends during that period. Consequently, the ratio of earnings to fixed charges and preferred dividends are the same as the ratio of earnings to fixed charges for that period. Quarter Ended March 31, 2012 Quarter Ended March 31, 2011 Year Ended December 31, 2011 Year Ended December 31, 2010 Year Ended December 31, 2009 Year Ended December 31, 2008 Year Ended December 31, 2007 (unaudited) Ratios of Earnings to Fixed Charges and Preferred Stock Dividends(1) Excluding interest on deposits 3.40x 2.53x 2.69x 2.66x (0.05)x 1.90x 3.01x Including interest on deposits 1.83x 1.44x 1.51x 1.45x 0.79 x 1.13x 1.25x (1) The ratio of earnings to fixed charges is calculated by adding income before income taxes plus fixed charges and dividing that sum by fixed charges. Table of Contents DESCRIPTION OF PREFERRED SHARES The following is a brief description of the terms of the series B preferred shares that may be resold by the selling securityholders. This summary does not purport to be complete in all respects. This description is subject to and qualified in its entirety by reference to our Second Amended Articles of Incorporation, as amended, including the Certificate of Amendment with respect to the series B preferred shares, copies of which have been filed with the SEC and are also available upon request from us. General Under our Second Amended Articles of Incorporation, as amended, we have authority to issue up to one million preferred shares, no par value per share. Of such number of preferred shares, 150,000 shares have been designated as series A voting preferred shares, and 25,223 shares have been designated as series B preferred shares, all of which series B preferred shares were issued to the initial selling securityholder in a transaction exempt from the registration requirements of the Securities Act. The issued and outstanding shares of series B preferred shares are validly issued, fully paid and nonassessable. Dividends Payable on Series B Preferred Shares Holders of series B preferred shares are entitled to receive if, as and when declared by our board of directors or a duly authorized committee of the board, out of assets legally available for payment, cumulative cash dividends at a rate per annum of 5% per share on a liquidation preference of $1,000 per series B preferred share with respect to each dividend period from December 12, 2008 to, but excluding, February 15, 2014. From and after February 15, 2014, holders of series B preferred shares are entitled to receive cumulative cash dividends at a rate per annum of 9% per share on a liquidation preference of $1,000 per series B preferred share with respect to each dividend period thereafter. Dividends are payable quarterly in arrears on each February 15, May 15, August 15 and November 15, each a dividend payment date, starting with February 15, 2009. If any dividend payment date is not a business day, then the next business day will be the applicable dividend payment date, and no additional dividends will accrue as a result of the applicable postponement of the dividend payment date. Dividends payable during any dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable with respect to the series B preferred shares are payable to holders of record of series B preferred shares on the date that is 15 calendar days immediately preceding the applicable dividend payment date or such other record date as the board of directors or any duly authorized committee of the board determines, so long as such record date is not more than 60 nor less than 10 days prior to the applicable dividend payment date. If we determine not to pay any dividend or a full dividend with respect to the series B preferred shares, we are required to provide written notice to the holders of series B preferred shares prior to the applicable dividend payment date. Since the dividends on the series B preferred shares are cumulative, we will still remain obligated to pay the unpaid portion of the dividend for that period and the unpaid dividend will compound on each subsequent dividend date (meaning that dividends for future dividend periods will accrue on any unpaid dividend amounts for prior dividend periods). Since issuing the series B preferred shares, we have declared and paid all accrued dividends on the series B preferred shares to the date of this prospectus. We are subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The Board of Governors of the Federal Reserve System, or the Federal Reserve Board, is authorized to determine, under certain circumstances relating to the financial condition of a bank holding company, such as us, that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. In addition, we are subject to Ohio state laws relating to the payment of dividends. Table of Contents We are not obligated to pay holders of the series B preferred shares any dividend in excess of the dividends on the series B preferred shares that are payable as described above. There is no sinking fund with respect to dividends on the series B preferred shares. Priority of Dividends With respect to the payment of dividends and the amounts to be paid upon liquidation, the series B preferred shares will rank: senior to our common shares and all other equity securities designated as ranking junior to the series B preferred shares; and at least equally with all other equity securities designated as ranking on a parity with the series B preferred shares, or parity stock, including our series A voting preferred shares (of which, as of the date of this prospectus, 150,000 shares are designated, but none are issued), with respect to the payment of dividends and distribution of assets upon any liquidation, dissolution or winding-up of LNB. So long as any series B preferred shares remain outstanding, unless all accrued and unpaid dividends for all prior dividend periods have been paid or are contemporaneously declared and paid in full, no dividend whatsoever shall be paid or declared on LNB s common shares or other junior stock, other than a dividend payable solely in common shares. We and our subsidiaries also may not purchase, redeem or otherwise acquire for consideration any of our common shares or other junior stock unless we have paid in full all accrued dividends on the series B preferred shares for all prior dividend periods, other than: purchases, redemptions or other acquisitions of our common shares or other junior stock in connection with the administration of our employee benefit plans in the ordinary course of business pursuant to a publicly announced repurchase plan up to the increase in diluted shares outstanding resulting from the grant, vesting or exercise of equity-based compensation; purchases or other acquisitions by broker-dealer subsidiaries of LNB solely for the purpose of market-making, stabilization or customer facilitation transactions in junior stock or parity stock in the ordinary course of its business; purchases or other acquisitions by broker-dealer subsidiaries of LNB for resale pursuant to an offering by LNB of our stock that is underwritten by the related broker-dealer subsidiary; any dividends or distributions of rights or junior stock in connection with any shareholders rights plan or repurchases of rights pursuant to any shareholders rights plan; acquisition of record ownership of junior stock or parity stock for the beneficial ownership of any other person who is not LNB or a subsidiary of LNB, including as trustee or custodian; and the exchange or conversion of junior stock for or into other junior stock or of parity stock for or into other parity stock or junior stock but only to the extent that such acquisition is required pursuant to binding contractual agreements entered into before December 12, 2008 or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for common shares. If we repurchase series B preferred shares from a holder other than the initial selling
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+PROSPECTUS SUMMARY Our Company Firstbank Corporation ( We or the Corporation ) is a bank holding company. We own all of the outstanding stock of Firstbank Alma, Firstbank (Mt. Pleasant), Firstbank West Branch, Keystone Community Bank, Firstbank West Michigan, and FBMI Risk Management Services, Inc. (a captive insurance company). Our business is concentrated in a single industry segment commercial banking. Each subsidiary bank is a full-service community bank. Our subsidiary banks offer all customary banking services, including the acceptance of checking, savings, and time deposits and the making of commercial, mortgage (principally single family), home improvement, automobile, and other consumer loans. Trust services are offered to customers through Citizens Bank Wealth Management in the Firstbank Alma main office. Our principal sources of revenues are interest and fees on loans and non-interest revenue resulting from banking and non-bank subsidiary activity. Beginning in 2001, each of our subsidiary banks established mortgage company subsidiaries. Each of our subsidiary banks also offers securities brokerage services at their main offices through arrangements with third party brokerage firms. Firstbank Alma is a Michigan state chartered bank. It and its predecessors have operated continuously in Alma, Michigan since 1880. Its main office and one branch are located in Alma. Firstbank Alma also has two full service branches located in St Johns, and one full service branch located in each of the following communities near Alma: Ashley, Dewitt, Ithaca, Merrill, Pine River Township, St. Charles, St. Louis and Vestaburg. Firstbank Alma Mortgage Company, a subsidiary of the bank, was established in 2001. Firstbank (Mount Pleasant) is a Michigan state chartered bank which was incorporated in 1894. Its main office and one branch are located in Mount Pleasant, Michigan. Firstbank (Mount Pleasant) also has two full service branches in each of Union Township and Lakeview, and one full service branch located in each of the following communities near Mount Pleasant: Clare, Shepherd, Cadillac, Howard City, Morley, Remus, Canadian Lakes, and Winn. Firstbank Mortgage Company, a subsidiary of the bank, was established in 2001. Firstbank West Branch is a Michigan state chartered bank which was incorporated in 1980. Its main office and two branches are located in West Branch, Michigan. Firstbank West Branch also has one full service branch located in each of the following communities near West Branch: Fairview, Hale, Higgins Lake, Prescott, Rose City, St. Helen and West Branch Township. Firstbank West Branch owns Firstbank - West Branch Mortgage Company (a subsidiary of the bank, established in 2001). Firstbank West Branch also owns 48% of First Investors Title, LLC which is a title insurance provider. Keystone Community Bank is a Michigan state chartered bank which was established in 1997 and acquired by us on October 1, 2005. Its main office and three branches are located in Kalamazoo with two additional branches in Portage and one branch in Paw Paw. Firstbank West Michigan (formerly Ionia County National Bank of Ionia) is a Michigan state chartered bank which was established in 1934 and acquired by us on July 1, 2007. Its main office and two branches are located in Ionia, with two additional branches in Belding, and one branch each in Hastings, Lowell, Sunfield, and Woodland. As a bank holding company, we are a legal entity separate and distinct from our subsidiaries. Firstbank coordinates the financial resources of the consolidated enterprise through financial, operational and administrative systems and coordination of various policies and activities. Firstbank s operating revenues and net income are derived primarily from its subsidiary banks through dividends and fees for services performed. Our principal executive offices are located at 311 Woodworth Avenue, Alma, Michigan 48801, and our telephone number at that address is (989) 463-3131. We maintain an Internet website at www.firstbankmi.com. We are not incorporating the information on our website into this prospectus, and neither this website nor the information on this website is included or incorporated in, or is a part of, this prospectus. Investing in the Preferred Shares involves risks. You should read the Risk Factors section beginning on page S-7 of this prospectus supplement and page 7 of the accompanying prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2011 before making a decision to invest in the Preferred Shares. Per Share Total Public offering price(1) $ $ Underwriting discounts and commissions to be paid by Treasury(2) $ $ Proceeds to Treasury(1) $ $ The Offering The following summary contains basic information about the Preferred Shares and the auction process and is not intended to be complete and does not contain all the information that is important to you. For a more complete understanding of the Preferred Shares and the auction process, you should read the sections of this prospectus entitled Description of Preferred Shares and Auction Process . Issuer Firstbank Corporation Preferred Shares Offered by Treasury 33,000 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A The number of Preferred Shares to be sold will depend on the number of bids received in the auction described below and whether Treasury decides to sell any Preferred Shares in the auction process. See the section entitled Auction Process in this prospectus. Liquidation Preference If we liquidate, dissolve or wind up (collectively, a liquidation ), holders of the Preferred Shares will have the right to receive $1,000 per share, plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to, but not including, the date of payment, before any payments are made to holders of our common stock or any other capital stock that ranks, by its terms, junior as to rights upon liquidation to the Preferred Shares. Dividends Dividends on the Preferred Shares are payable quarterly in arrears on each February 15, May 15, August 15 and November 15. The initial dividend rate is 5% per annum for the first five years, and will increase to 9% per annum on and after February 15, 2014 for the Series A Preferred Shares if not otherwise redeemed earlier for cash by us. Holders of Preferred Shares sold by Treasury in the auction, if any, that are record holders on the record date for the August 15, 2012 dividend payment date will be entitled to any declared dividends payable on such date. Maturity The Preferred Shares have no maturity date. Rank The Preferred Shares rank (i) senior to common stock or any other capital stock that ranks, by its terms, junior as to dividend rights and/or rights upon liquidation to the Preferred Shares (collectively, the Junior Stock ), (ii) equally with any shares of our capital stock whose terms do not expressly provide that such class or series will rank senior or junior to the Preferred Shares as to dividend rights and/or rights upon liquidation (collectively, the Parity Stock ) and (iii) junior to all of our existing and future indebtedness and any future senior securities, in each case as to dividend rights and/or rights upon liquidation. Priority of Dividends So long as any of the Preferred Shares remain outstanding, we may not declare or pay a dividend or other distribution on our common stock or any other shares of Junior Stock (other than dividends payable solely in common stock) or Parity Stock (other than dividends paid on a pro rata basis with the Preferred Shares), and we generally may not directly or indirectly purchase, redeem or otherwise acquire any shares of common stock, Junior Stock or Parity Stock unless all accrued and unpaid dividends on the Preferred Shares for all past dividend periods are paid in full. Redemption We may redeem the Preferred Shares, at any time, in whole or in part, at our option, subject to prior approval by the appropriate federal banking agency, for a redemption price equal to 100% of the liquidation preference amount per Preferred Share plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to but excluding the date of redemption. We intend to submit one or more bids to purchase up to 16,000 of the Preferred Shares in the auction and have received approval of the Federal Reserve to do so. We will not require any additional capital to complete the purchase of up to 16,000 Preferred Shares for which we are authorized to bid. Other than the up to 16,000 Preferred Shares for which we are authorized to bid, we do not have the current intention to redeem Preferred Shares in the near future or before February 15, 2014. (1) Plus accrued dividends from and including May 15, 2012. (2) Treasury has agreed to pay all underwriting discounts and commissions and transfer taxes. We have agreed to pay all transaction fees, if any, applicable to the sale of the Preferred Shares and certain fees and disbursements of counsel for Treasury incurred in connection with this offering. None of the Securities and Exchange Commission (the SEC ), the Federal Deposit Insurance Corporation (the FDIC ), the Board of Governors of the Federal Reserve System (the Federal Reserve ), any state or other securities commission or any other federal or state bank regulatory agency has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense. The Preferred Shares are not savings accounts, deposits or other obligations of any bank, thrift or other depositary institution and are not insured or guaranteed by the FDIC or any other governmental agency or instrumentality. The underwriters expect to deliver the Preferred Shares in book-entry form through the facilities of The Depository Trust Company and its participants against payment on or about , 2012. Voting Rights Holders of the Preferred Shares generally have no voting rights. However, if we do not pay dividends on the Preferred Shares for six or more quarterly periods, whether or not consecutive, the holders of the Preferred Shares, voting as a single class together with the holders of any other Parity Stock upon which like voting rights have been conferred and are exercisable, will be entitled to vote for the election of two additional directors to serve on our board of directors until all accrued and unpaid dividends (including dividends accrued on any unpaid dividends) on the Preferred Shares are paid in full; provided, that no person may be elected as a preferred director who would cause the Company to violate any corporate governance requirements of any securities exchange or other trading facility on which its securities may then be listed or traded. Our Articles of Incorporation state that nominations for the election of directors may be made by either the Company s board of directors or by any shareholder entitled to vote for the election of such directors. All such nominations must be made by notice in writing, delivered or mailed to the secretary of the Company not less than 10 days nor more than 50 days prior to the date of the meeting of shareholders called for the election of such directors. There is no limit on the number of nominations and a plurality of eligible voters would determine the election of the two new directors. Upon any termination of the right of the holders of the Preferred Shares and voting parity stock as a class to vote for directors as described above, such directors will cease to be qualified as directors, the terms of office of such directors then in office will terminate immediately and the authorized number of directors will be reduced by the number of directors which had been elected by the holders of the Preferred Shares and the voting parity stock. In addition, the affirmative vote of the holders of at least 66-2/3% of the outstanding Preferred Shares is required for us to authorize, create or increase the authorized number of shares of our capital stock ranking, as to dividends or amounts payable upon liquidation, senior to the Preferred Shares, to amend, alter or repeal any provision of our Restated Articles of Incorporation or the Certificate of Designations for the Preferred Shares in a manner that adversely affects the rights of the holders of the Preferred Shares or to consummate a binding share exchange or reclassification of the Preferred Shares or a merger or consolidation of us with another entity unless (x) the Preferred Shares remain outstanding or are converted into or exchanged for preference shares of the surviving entity or its ultimate parent and (y) the Preferred Shares remain outstanding or such preference shares have such terms that are not materially less favorable, taken as a whole, than the rights of the Preferred Shares immediately prior to such transaction, taken as a whole. Auction Process The public offering price and the allocation of the Preferred Shares in this offering will be determined through an auction process conducted by the joint book-running managers, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P., in this offering, in their capacity as auction agents. The auction process will entail a modified Dutch auction mechanic in which bids may be submitted through the auction agents or one of the other brokers that is a member of the broker network, which are collectively referred to in this prospectus as the network brokers, established in connection with the auction process. Each broker will make suitability determinations with respect to its own customers wishing to participate in the auction process. The auction agents will not provide bidders with any information about the bids of other bidders or auction trends, or with advice regarding bidding strategies, in connection with the auction process. We encourage you to discuss any questions regarding the bidding process and suitability determinations applicable to your bids with your broker. For more information about the auction process, see Auction Process in this prospectus. Minimum Bid Size and Price Increments This offering is being conducted using an auction process in which prospective purchasers are required to bid for the Preferred Shares. During the auction period, bids may be placed for Preferred Shares at any price at or above the minimum bid price of $842.00 per share (such bid price to be in increments of $0.01), with a minimum bid size of one Preferred Share. See "Auction Process" in this prospectus. Bid Submission Deadline The auction will commence at 10:00 a.m., New York City time, on the date specified by the auction agents in a press release issued on such day, and will close at 6:30 p.m., New York City time, on the second business day immediately thereafter which is referred to as the submission deadline. Irrevocability of Bids Bids that have not been modified or withdrawn by the time of the submission deadline are final and irrevocable, and bidders who submit bids that are accepted by Treasury will be obligated to purchase the Preferred Shares allocated to them. The auction agents are under no obligation to reconfirm bids for any reason, except as may be required by applicable securities laws; however, the auction agents, in their sole discretion, may require that bidders confirm their bids before the auction process closes. See Auction Process in this prospectus. Joint Book-Running Managers BofA Merrill Lynch Sandler O Neill + Partners, L.P. Clearing Price The price at which the Preferred Shares will be sold to the public will be the clearing price plus accrued dividends thereon. The clearing price will be determined as follows: If valid, irrevocable bids are received for 100% or more of the offered Preferred Shares at the submission deadline, the clearing price will be equal to the highest price at which all of the offered Preferred Shares can be sold in the auction; If valid, irrevocable bids are received for at least half, but less than all, of the offered Preferred Shares at the time of the submission deadline, the clearing price will be equal to the minimum bid price of $842.00 per share. Even if bids are received for at least half of the offered Preferred Shares, Treasury may decide not to sell any Preferred Shares in the auction process, or, in the case where bids are received for at least half, but less than all, of the Preferred Shares, may decide only to sell a portion (but not less than half) of the offered Preferred Shares in the auction process. If Treasury decides to sell Preferred Shares in the auction, after Treasury confirms its acceptance of the clearing price and the number of Preferred Shares to be sold, the auction agent and each network broker that has submitted a successful bid will notify successful bidders that the auction has closed and that their bids have been accepted by Treasury (subject, in some cases, to pro-ration, as described below). The clearing price and number of Preferred Shares to be sold are also expected to be announced by press release on the business day following the end of the auction. See "Auction Process" in this prospectus. Number of Preferred Shares to be Sold If bids are received for 100% or more of the offered Preferred Shares, Treasury must sell all of the offered Preferred Shares if it chooses to sell any Preferred Shares. If bids are received for at least half, but less than all, of the offered Preferred Shares, then Treasury may, but is not required to, sell at the minimum bid price in the auction (which will be deemed to be the clearing price) the number of Preferred Shares it chooses to sell up to the number of bids received in the auction, so long as at least half of the offered Preferred Shares are sold. If bids are received for less than half of the offered Preferred Shares, Treasury will not sell any Preferred Shares in this offering. Even if bids are received for at least half of the offered Preferred Shares, Treasury may decide not to sell any Preferred Shares or, in the case where bids are received for at least half, but less than all, of the offered Preferred Shares, may decide only to sell a portion (but not less than half) of the offered Preferred Shares in the auction process. If Treasury elects to sell any Preferred Shares in the auction, Treasury must sell those shares at the clearing price plus accrued dividends thereon. In no event will Treasury sell more Preferred Shares than the number of Preferred Shares for which there are bids. See Auction Process in this prospectus. Allocation; Pro-Ration If bids for 100% or more of the offered Preferred Shares are received and Treasury elects to sell Preferred Shares in the offering, then any accepted bids submitted in the auction above the clearing price will receive allocations in full, while any accepted bids submitted at the clearing price may experience pro-rata allocation. If bids for at least half, but less than all, of the offered Preferred Shares are received, and Treasury chooses to sell fewer Preferred Shares than the number of Preferred Shares for which bids were received, then all bids will experience equal pro-rata allocation. See "Auction Process" in this prospectus. Use of Proceeds We will not receive any proceeds from the sale of any Preferred Shares sold by Treasury. See Use of Proceeds. Listing The Preferred Shares will not be listed for trading on any stock exchange nor will they be available for quotation on any national quotation system. Risk Factors See Risk Factors and other information included or incorporated by reference in this prospectus for a discussion of factors you should consider carefully before making a decision to invest in the Preferred Shares. Auction Agents Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P. Network Brokers See page 23 of this prospectus for a list of brokers participating as network brokers in the auction process. Co-Managers Great Pacific Securities Loop Capital Markets Ramirez & Co., Inc. Securities Being Offered On January 30, 2009, pursuant to the Troubled Asset Relief Program Capital Purchase Program of Treasury, we sold to Treasury 33,000 shares of our Series A Preferred Stock, liquidation preference amount $1,000 per share, for an aggregate purchase price of $33.0 million, and concurrently issued to Treasury the ten-year Warrant to purchase up to 578,947 shares of our common stock at an exercise price of $8.55 per share. The issuance of the Series A Preferred Stock and the Warrant were completed in a private placement to Treasury exempt from the registration requirements of the Securities Act of 1933. Under the terms of the related Purchase Agreement between us and Treasury, Treasury may require us to register for resale the shares of the Series A Preferred Stock, the Warrant and the shares of our common stock underlying the Warrant. The terms of the Series A Preferred Stock, the Warrant and our common stock are described under Description of Series A Preferred Stock, Description of Warrant, and Description of Common Stock. RISK FACTORS Before you invest in our securities, in addition to the risk factors set forth below and other information, documents or reports included or incorporated by reference in this prospectus and, if applicable, any prospectus supplement or other offering materials, you should carefully consider the risk factors in the section entitled Risk Factors in any prospectus supplement, as well as our most recent Annual Report on Form 10-K, and in any of our subsequent reports that we have incorporated by reference into this prospectus and any prospectus supplement in their entirety, as the same may be amended, supplemented or superseded from time to time by other reports we file with the SEC and incorporate by reference in the future. Each of the risks described in these sections and documents could materially and adversely affect our business, financial condition, results of operations and prospects, and could result in a partial or complete loss of your investment. Risks Related to Our Business Because of our participation in Treasury s Capital Purchase Program, we are subject to several restrictions including restrictions on our ability to declare or pay dividends and repurchase our shares as well as restrictions on our executive compensation. On January 30, 2009, pursuant to the Purchase Agreement, the Company issued to Treasury for aggregate consideration of $33,000,000 (i) 33,000 shares of the Series A Preferred Stock, no par value per share and liquidation preference $1,000 per share and (ii) the Warrant to purchase 578,947 shares of the Company s common stock, no par value per share. Pursuant to the terms of the Purchase Agreement, our ability to declare or pay dividends on any of our shares is limited. Specifically, we are unable to declare dividend payments on common, junior preferred or pari passu preferred shares if we are in arrears on the dividends on the Series A Preferred Stock. Further, without Treasury approval, we are not permitted to increase dividends on our common stock above the amount of the last quarterly cash dividend per share declared prior to January 30, 2009 without Treasury s approval until the third anniversary of the investment unless all of the Series A Preferred Stock has been redeemed or transferred by Treasury. In addition, our ability to repurchase our shares is restricted. Treasury consent generally is required for us to make any stock repurchase until the third anniversary of the investment by Treasury unless all of the Series A Preferred Stock has been redeemed or transferred by Treasury to a third party. Further, common, junior preferred or pari passu preferred shares may not be repurchased if we are in arrears on the Series A Preferred Stock dividends. In addition, pursuant to the terms of the Purchase Agreement, we adopted Treasury s standards for executive compensation and corporate governance for the period during which Treasury holds the equity issued pursuant to the Purchase Agreement, including the common stock which may be issued pursuant to the Warrant. These standards generally apply to our Chief Executive Officer, Chief Financial Officer and the three next most highly compensated senior executive officers. The standards include (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) required clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate; (3) prohibition on making golden parachute payments to senior executives; and (4) agreement not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive. In particular, the change to the deductibility limit on executive compensation may increase the overall cost of our compensation programs in future periods. Since the Warrant has a ten year term, we could potentially be subject to the executive compensation and corporate governance restrictions for a ten year time period. The date of this prospectus supplement is , 2012. Risks Related to the Series A Preferred Shares Risk Factors Related to an Investment in the Preferred Shares The Preferred Shares are equity and are subordinated to all of our existing and future indebtedness; we are highly dependent on dividends and other amounts from our subsidiaries in order to pay dividends on, and redeem at our option, the Preferred Shares, which are subject to various prohibitions and other restrictions; and the Preferred Shares place no limitations on the amount of indebtedness we and our subsidiaries may incur in the future. The Preferred Shares are equity interests in the Company and do not constitute indebtedness. As such, the Preferred Shares, like our common stock, rank junior to all existing and future indebtedness and other non-equity claims on the Company with respect to assets available to satisfy claims on the Company, including in a liquidation of the Company. Additionally, unlike indebtedness, where principal and interest would customarily be payable on specified due dates, in the case of perpetual preferred stock like the Preferred Shares, there is no stated maturity date (although the Preferred Shares are subject to redemption at our option) and dividends are payable only if, when and as authorized and declared by our board of directors and depend on, among other matters, our historical and projected results of operations, liquidity, cash flows, capital levels, financial condition, debt service requirements and other cash needs, financing covenants, applicable state law, federal and state regulatory prohibitions and other restrictions and any other factors our board of directors deems relevant at the time. The Preferred Shares are not savings accounts, deposits or other obligations of any depository institution and are not insured or guaranteed by the FDIC or any other governmental agency or instrumentality. Furthermore, the Company is a legal entity that is separate and distinct from its subsidiaries, and its subsidiaries have no obligation, contingent or otherwise, to make any payments in respect of the Preferred Shares or to make funds available therefor. Because the Company is a holding company that maintains only limited cash at that level, its ability to pay dividends on, and redeem at its option, the Preferred Shares will be highly dependent upon the receipt of dividends, fees and other amounts from its subsidiaries, which, in turn, will be highly dependent upon the historical and projected results of operations, liquidity, cash flows and financial condition of its subsidiaries. In addition, the right of the Company to participate in any distribution of assets of any of its subsidiaries upon their respective liquidation or reorganization will be subject to the prior claims of the creditors (including any depositors) and preferred equity holders of the applicable subsidiary, except to the extent that the Company is a creditor, and is recognized as a creditor, of such subsidiary. Accordingly, the holders of the Preferred Shares will be structurally subordinated to all existing and future obligations and preferred equity of the Company s subsidiaries. There are also various legal and regulatory prohibitions and other restrictions on the ability of the Company s depository institution subsidiaries to pay dividends, extend credit or otherwise transfer funds to the Company or affiliates. Such dividend payments are subject to regulatory tests, generally based on current and retained earnings of such subsidiaries and other factors, and, as of December 31, 2011, are currently prohibited without regulatory approval. Dividend payments to the Company from its depository institution subsidiaries may also be prohibited if such payments would impair the capital of the applicable subsidiary and in certain other cases. In addition, regulatory rules limit the aggregate amount of a depository institution s loans to, and investments in, any single affiliate in varying thresholds and may prevent the Company from borrowing from their depository institution subsidiaries and require any permitted borrowings to be collateralized. The Company also is subject to various legal and regulatory policies and requirements impacting the Company s ability to pay dividends on, or redeem, the Preferred Shares. Under the Federal Reserve s capital regulations, in order to ensure Tier 1 capital treatment for the Preferred Shares, the Company s redemption of any of the Preferred Shares must be subject to prior regulatory approval. The Federal Reserve also may require the Company to consult with it prior to increasing dividends. In addition, as a matter of policy, the Federal Reserve may restrict or prohibit the payment of dividends if (i) the Company s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the Company s prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; (iii) the Company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios; or (iv) the Federal Reserve otherwise determines that the payment of dividends would constitute an unsafe or unsound practice. Recent and future regulatory developments may result in additional restrictions on the Company s ability to pay dividends. In addition, the terms of the Preferred Shares do not limit the amount of debt or other obligations we or our subsidiaries may incur in the future. Accordingly, we and our subsidiaries may incur substantial amounts of additional debt and other obligations that will rank senior to the Preferred Shares or to which the Preferred Shares will be structurally subordinated. An active trading market for the Preferred Shares may not develop or be maintained. The Preferred Shares are not currently listed on any securities exchange or available for quotation on any national quotation system, and we do not anticipate listing the Preferred Shares. There can be no assurance that an active trading market for the Preferred Shares will develop or, if developed, will be maintained. If an active market is not developed and maintained, the market value and liquidity of the Preferred Shares may be materially and adversely affected. The Preferred Shares may be junior in rights and preferences to our future preferred stock. Subject to approval by the holders of at least 66 2/3% of the Preferred Shares then outstanding, voting as a separate class, we may issue preferred stock in the future the terms of which are expressly senior to the Preferred Shares. The terms of any such future preferred stock expressly senior to the Preferred Shares may prohibit or otherwise restrict dividend payments on the Preferred Shares. For example, the terms of any such senior preferred stock may provide that, unless full dividends for all of our outstanding preferred stock senior to the Preferred Shares have been paid for the relevant periods, no dividends will be paid on the Preferred Shares, and no Preferred Shares may be repurchased, redeemed, or otherwise acquired by us. In addition, in the event of our liquidation, dissolution or winding-up, the terms of any such senior preferred stock would likely prohibit us from making any payments on the Preferred Shares until all amounts due to holders of such senior preferred stock are paid in full. Holders of the Preferred Shares have limited voting rights. Unless and until we are in arrears on our dividend payments on the Preferred Shares for six quarterly periods, whether or not consecutive, the holders of the Preferred Shares will have no voting rights except with respect to certain fundamental changes in the terms of the Preferred Shares and certain other matters and except as may be required by applicable law. If dividends on the Preferred Shares are not paid in full for six quarterly periods, whether or not consecutive, the total number of positions on the Company s board of directors will automatically increase by two and the holders of the Preferred Shares, acting as a class with any other shares of our preferred stock with parity voting rights to the Preferred Shares, will have the right to elect two individuals to serve in the new director positions. This right and the terms of such directors will end when we have paid in full all accrued and unpaid dividends for all past dividend periods. See Description of Preferred Shares Voting Rights in this prospectus supplement. We are subject to extensive regulation, and ownership of the Preferred Shares may have regulatory implications for holders thereof. We are subject to extensive federal and state banking laws, including the Bank Holding Company Act of 1956, as amended (the BHCA ), and federal and state banking regulations, that impact the rights and obligations of owners of the Preferred Shares, including, for example, our ability to declare and pay dividends on, and to redeem, the Preferred Shares. Although the Company does not believe the Preferred Shares are considered voting securities currently, if they were to become voting securities for the purposes of the BHCA, whether because the Company has missed six dividend payments and holders of the Preferred Shares have the right to elect directors as a result, or for other reasons, a holder of 25% of more of the Preferred Shares, or a holder of a lesser percentage of our Preferred Shares that is deemed to exercise a controlling influence over us, may become subject to regulation under the BHCA. In addition, if the Preferred Shares become voting securities , then (a) any bank holding company or foreign bank that is subject to the BHCA may need approval to acquire or retain more than 5% of the then outstanding Preferred Shares, and (b) any holder (or group of holders acting in concert) may need regulatory approval to acquire or retain 10% or more of the Preferred Shares. A holder or group of holders may also be deemed to control us if they own one-third or more of our total equity, both voting and non-voting, aggregating all shares held by the investor across all classes of stock. Holders of the Preferred Shares should consult their own counsel with regard to regulatory implications. ABOUT THIS PROSPECTUS SUPPLEMENT You should read this prospectus supplement, the accompanying prospectus and the additional information described under the headings Where You Can Find More Information and Incorporation of Certain Information by Reference before you make a decision to invest in the Preferred Shares. In particular, you should review the information under the heading Risk Factors set forth on page S-7 of this prospectus supplement, the information set forth under the heading Risk Factors set forth on page 7 in the accompanying prospectus and the information under the heading Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2011, which is incorporated by reference herein. You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any related free writing prospectus required to be filed with the SEC. Neither we nor Treasury nor the underwriters are making an offer to sell the Preferred Shares in any manner in which, or in any jurisdiction where, the offer or sale thereof is not permitted. We have not authorized any person to provide you with different or additional information. If any person provides you with different or additional information, you should not rely on it. You should assume that the information in this prospectus supplement, the accompanying prospectus, any such free writing prospectus and the documents incorporated by reference herein and therein is accurate only as of its date or the date which is specified in those documents. Our business, financial condition, capital levels, cash flows, liquidity, results of operations and prospects may have changed since any such date. In this prospectus supplement, we frequently use the terms we, our and us to refer to Firstbank Corporation (the Company ) and its subsidiaries. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Except for historical information contained herein, the discussion in this prospectus supplement and the accompanying prospectus (including any information we incorporate by reference in this prospectus supplement and the accompanying prospectus) and information incorporated by reference includes certain forward-looking statements based upon management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and about the Company itself. Actual results and experience could differ materially from the anticipated results. Words such as anticipate , believe , determine , estimate , expect , forecast , intend , is likely , plan , project , opinion , variations of such terms, and similar expressions are intended to identify such forward looking statements. The presentations and discussions of the provision and allowance for loan losses and determinations as to the need for other allowances presented or incorporated by reference in this report are inherently forward looking statements in that they involve judgments and statements of belief as to the outcome of future events. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward looking statements. Internal and external factors that may cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition of traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior and customer ability to repay loans; software failure; errors or miscalculations; changes in accounting principles, policies and guidelines; and the vicissitudes of the national economy. We undertake no obligation to update, amend or clarify forward looking statements, whether as a result of new information, future events, or otherwise. S-i USE OF PROCEEDS The Preferred Shares offered by this prospectus supplement are being sold for the account of Treasury. Any proceeds from the sale of these Preferred Shares will be received by Treasury for its own account, and we will not receive any proceeds from the sale of any Preferred Shares offered by this prospectus supplement. RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The following table sets forth our ratios of earnings to combined fixed charges and preferred stock dividends for the periods indicated. Three Months Ended March 31, 2012 Three Months Ended March 31, 2011 Year Ended December 31, 2011 Year Ended December 31, 2010 Year Ended December 31, 2009 Year Ended December 31, 2008 Year Ended December 31, 2007 Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends excluding interest on deposits (1) 4.15 x 2.23 x 2.63 x 1.69 x 1.40 x 0.97 x 2.18 x Including interest on deposits 2.15 x 1.36 x 1.48 x 1.23 x 1.13 x 0.99 x 1.30 If we redeem the Preferred Shares, you may be unable to reinvest the redemption proceeds in a comparable investment at the same or greater rate of return. We have the right to redeem the Preferred Shares, in whole or in part, at our option at any time, subject to prior regulatory approval. If we choose to redeem the Preferred Shares in part, we have been informed by DTC that it is their current practice to determine by lot the amount of the interest of each direct participant (through which beneficial owners hold their interest) to be redeemed. If we choose to redeem the Preferred Shares, we are likely to do so if we are able to obtain a lower cost of capital. If prevailing interest rates are relatively low if or when we choose to redeem the Preferred Shares, you generally will not be able to reinvest the redemption proceeds in a comparable investment at the same or greater rate of return. Furthermore, if we redeem the Preferred Shares in part, the liquidity of the outstanding Preferred Shares may be limited. If we do not redeem the Preferred Shares prior to February 15, 2014, the cost of this capital to us will increase substantially and could have a material adverse effect on our liquidity and cash flows. We have the right to redeem the Preferred Shares, in whole or in part, at our option at any time. If we do not redeem the Preferred Shares prior to February 15, 2014, the cost of this capital to us will increase substantially on and after that date, with the dividend rate increasing from 5.0% per annum to 9.0% per annum, which could have a material adverse effect on our liquidity and cash flows. See Description of Preferred Shares Redemption and Repurchases in this prospectus supplement. Any redemption by us of the Preferred Shares would require prior regulatory approval from the Federal Reserve. We do not currently have regulatory approval to redeem the Preferred Shares at liquidation value, and have no present intention to redeem the Preferred Shares, although, in the future, we may seek such approval and, if such approval is obtained (as to which no assurance can be given), redeem the Preferred Shares for cash. Treasury is a federal agency and your ability to bring a claim against Treasury under the federal securities laws in connection with a purchase of Preferred Shares may be limited. The doctrine of sovereign immunity, as limited by the Federal Tort Claims Act (the FTCA ), provides that claims may not be brought against the United States of America or any agency or instrumentality thereof unless specifically permitted by act of Congress. The FTCA bars claims for fraud or misrepresentation. At least one federal court, in a case involving a federal agency, has held that the United States may assert its sovereign immunity to claims brought under the federal securities laws. In addition, Treasury and its officers, agents, and employees are exempt from liability for any violation or alleged violation of the anti-fraud provisions of Section 10(b) of the Exchange Act by virtue of Section 3(c) thereof. The underwriters are not claiming to be agents of Treasury in this offering. Accordingly, any attempt to assert such a claim against the officers, agents or employees of Treasury for a violation of the Securities Act or the Exchange Act resulting from an alleged material misstatement in or material omission from this prospectus supplement, the accompanying prospectus, the registration statement of which this prospectus supplement and the accompanying prospectus or the documents incorporated by reference in this prospectus supplement and the accompanying prospectus are a part or resulting from any other act or omission in connection with the offering of the Preferred Shares by Treasury would likely be barred. Risks Related to Our Common Stock We may issue additional shares of common or preferred stock, which may dilute the ownership and voting power of our shareholders and the book value of our common stock. We are currently authorized to issue up to 20,000,000 shares of common stock of which 7,893,298 shares are currently outstanding and up to 300,000 shares of preferred stock of which 33,000 shares are outstanding. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares and to establish the terms of any series of preferred stock. These authorized but unissued shares could be issued on terms or in circumstances that could dilute the interests of other stockholders. Provisions of our Articles of Incorporation could deter takeovers. Our amended and restated articles of incorporation contain certain provisions that make it more difficult to acquire control of us by means of a tender offer, open market purchase, a proxy fight or otherwise. As a result, our board of directors may decide not to pursue transactions that would otherwise be in your best interests as a holder of our common stock. See Anti-takeover Effects of Certain Articles of Incorporation Provisions.
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+PROSPECTUS SUMMARY This summary highlights information contained throughout this prospectus and is qualified in its entirety to the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all of the information that should be considered before investing in our common stock. Investors should read the entire prospectus carefully, including the more detailed information regarding our business, the risks of purchasing our common stock discussed in this prospectus under Risk Factors beginning on page 3 of this prospectus and our consolidated financial statements and the accompanying notes beginning on page F-1 of this prospectus. Our Company Patient Safety Technologies, Inc., focuses on the development, marketing and sale of products designed to improve patient outcomes and reduce costs in the healthcare industry. We conduct our business through our wholly owned subsidiary, SurgiCount Medical, Inc. Our proprietary Safety-Sponge System is a patented solution designed to eliminate one of the most common errors in surgery, retained surgical sponges, and the human and economic costs associated with this surgical mistake. The Safety-Sponge System is comprised of a line of uniquely identified surgical sponges and towels and a turnkey hardware and software offering integrated to form a comprehensive accounting and documentation system. We estimate that over 90 million of our Safety-Sponges have been successfully used in more than 4.3 million surgical procedures as of the date of this prospectus. We sell our Safety-Sponge System to hospitals through our direct sales force and by leveraging the sales and marketing capabilities of our distribution partners. Our proprietary line of surgical sponges and towels are manufactured for us by our exclusive manufacturer, A Plus International Inc., or A Plus, a leading, China-based manufacturer of disposable medical and surgical supplies. Our sponge and towel products are distributed through Cardinal Health, Inc., or Cardinal Health, who provides us sales, marketing and logistics support and the fulfillment of our products to our end-user hospitals by both delivering our products directly to our end-user hospitals and where appropriate through alternative distributors. As of the date of the date of this prospectus, we had approximately 201 facilities using the Safety-Sponge System all of which are located in the U.S. Additionally, we have an additional 63 facilities with signed agreements and scheduled implementation as of the date of this prospectus. Although not necessarily proportionally related to future revenue, growth in the number of hospitals using our products is a good indicator of our underlying business. Once implemented, the vast majority of our end-user hospitals use the Safety-Sponge System across all of their relevant surgical and OB/GYN procedures. We generated revenues of $3.1 million and $2.0 million during the fiscal quarters ended March 31, 2012 and 2011, respectively, and $9.5 million and $14.8 million during the fiscal years ended December 31, 2011 and 2010, respectively. Our first quarter of 2012 and 2011 included zero and approximately $0.6 million of revenue, respectively, from the fulfillment of a $10.0 million stocking order in accordance with the terms of our exclusive distributor arrangement with Cardinal Health (the Forward Order ). Our 2011 revenues of $9.5 million include approximately $1.1 million of revenues from the fulfillment of a $10.0 million stocking order in accordance with the terms of our exclusive distributor arrangement with Cardinal Health (the Forward Order ). Also during 2011 we generated approximately $8.4 million of revenue, separate from the Forward Order, from the delivery of products to Cardinal Health to meet customer demand from end-user hospitals. Our 2010 revenues of $14.8 million included approximately $8.9 million of revenues from the fulfillment of the Forward Order. Under certain circumstances the Forward Order may negatively impact our future revenues and cash flows. See Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Future Results Cardinal Health Supply Agreement . The U.S. patient safety market is a multi-billion dollar industry that includes a wide range of medical devices, technologies and equipment. We estimate there are approximately 32 million surgical procedures performed annually in the U.S. in which our products can be used and that our average revenue per procedure opportunity is currently approximately $12 to $15 dollars, implying an immediate market opportunity in the U.S. for us of more than $450 million annually. In addition, we estimate that the total applicable procedures for our products outside the U.S. to be approximately two times those done domestically, bringing the worldwide market opportunity for us to be over $1.3 billion annually. We believe that the U.S. healthcare industry is increasingly receptive to products like our Safety-Sponge System that can enable providers to increase their standards of patient care and lower their costs. We believe drivers of this demand include growing evidence as to the clinical efficacy and cost effectiveness of products like ours, an increased focus by both federal and state level regulatory agencies to hold hospitals more accountable for preventable errors, increasing legal costs associated with these events and the underlying desire by providers to provide improved outcomes for their patients and protect their staff from the ramifications of these event. Table of Contents ABOUT THIS PROSPECTUS You should rely only on the information contained in this prospectus. We have not authorized any person to provide you with different or inconsistent information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the selling stockholders are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of their respective dates. The Company's business, financial condition, results of operations and prospects may have changed since such dates. Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus to the Company, the registrant, we, us, and our mean Patient Safety Technologies, Inc., a Delaware corporation, together with our consolidated subsidiary, SurgiCount Medical Inc., a California corporation, unless the context otherwise requires. Unless otherwise indicated, all statements presented in this prospectus regarding the medical patient safety market, the market for our products, our market share, the cumulative number of Safety-Sponges used and number of procedures in which the Safety-Sponge System have been used are internal estimates only. Safety-Sponge , SurgiCounter and SurgiCount360 (formerly called Citadel ), among others, are registered or unregistered trademarks of Patient Safety Technologies, Inc. (including its subsidiary). Table of Contents Patient Safety Technologies, Inc. is a Delaware corporation that currently conducts its operations through a single, wholly-owned subsidiary, SurgiCount Medical, Inc., a California corporation. Today our sole focus is providing hospitals with products focused on improving patient outcomes and reducing healthcare costs. We were incorporated on March 31, 1987 and from July 1987 through March 2005, operated as an investment company registered pursuant to the Investment Company Act of 1940, as amended. In February 2005, we began operations in our current field, the medical patient safety market, through the acquisition of SurgiCount Medical, Inc., the developer of our proprietary Safety-Sponge System, and in April 2005 changed our name from Franklin Capital Corporation to Patient Safety Technologies, Inc. to more appropriately reflect the focus of our operations. Our principal executive offices are located at 2 Venture Plaza, Suite 350, Irvine, California 92618. The telephone number at our principal executive offices is (949) 387-2277. Our website address is www.surgicountmedical.com. Information contained on our website is not deemed part of this prospectus. The Offering This prospectus relates to the resale from time to time by the selling stockholders identified in this prospectus of up to 2,499,998 shares of our common stock. No shares are being offered for sale by us. Common stock outstanding prior to offering 36,523,253 (1) Common stock equivalents outstanding prior to offering 45,604,320 (2) Common stock offered by the selling stockholders 2,499,998 Common stock to be outstanding after the offering 36,523,253 (3) Use of Proceeds We will not receive any proceeds from the sale of the 2,499,998 shares of common stock offered by the selling stockholders under this prospectus. OTC Bulletin Board symbol PSTX (1) As of May 31, 2012. (2) As of May 31, 2012. Based on 36,523,253 outstanding shares of our common stock and 9,081,067 shares of common stock issuable upon conversion of our outstanding shares of Series B Preferred Stock (based on dividing the $100 per share stated value of the Series B Preferred Stock by the current conversion price of $0.75 per share). The Series B Preferred Stock is convertible by the holder into shares of our common stock so long as the number of shares of our common stock beneficially owned (as defined in Rule 13d-3(d)(i) under the Securities Exchange Act of 1934, as amended) by the holder, its affiliates and any persons acting as a group with such holder or its affiliates, following such conversion, does not exceed 4.9% of our outstanding common stock (after giving effect to such conversion) (the Beneficial Ownership Limitation ). Holders of our Series B Preferred Stock may, upon not less than 61 days prior notice, increase or decrease the Beneficial Ownership Limitation provided that such Beneficial Ownership Limitation in no event exceeds 9.9% of the shares of common stock outstanding immediately after giving effect to such conversion. As filed with the Securities and Exchange Commission on June 29, 2012 No. 333- WHERE YOU CAN FIND MORE INFORMATION We file annual reports, quarterly reports, current reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. You may read or obtain a copy of these reports at the SEC, public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, on official business days during the hours of 10:00 am to 3:00 pm. You may obtain information on the operation of the public reference room and its copy charges by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains registration statements, reports, proxy information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov. We have filed with the SEC a Registration Statement on Form S-1 under the Securities Act with respect to the shares of common stock being offered by this prospectus. This prospectus is part of that registration statement. This prospectus does not contain all of the information set forth in the registration statement or the exhibits to the registration statement. For further information with respect to us and the shares offered by the selling stockholders pursuant to this prospectus, you should refer to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete, and you should refer to the copy of that contract, agreement or other document filed as an exhibit to the registration statement. You may read or obtain a copy of the registration statement at the SEC s public reference room and website referred to above. Table of Contents (3) Based on the number of shares of common stock outstanding as of May 31, 2012. Assumes there are no conversions of our issued and outstanding shares of Series B Preferred Stock into shares of common stock (which Series B Preferred Stock is currently convertible into 9,081,067 shares of common stock) and further assumes all outstanding warrants and options are not exercised. Background In connection with a private placement of our common stock that closed on May 18, 2012, or the May 2012 Private Placement, we entered into a registration rights agreement, or the 2012 Registration Rights Agreement, with the purchasers in the May 2012 Private Placement. Pursuant to the 2012 Registration Rights Agreement, we agreed to file within 45 days of the closing date of the May 2012 Private Placement, a registration statement to register the shares of our common stock acquired by the purchasers in the May 2012 Private Placement together with any other shares of common stock held by the purchasers on such date and not previously registered by us. In the May 2012 Private Placement, we raised $3.5 million through the issuance of 2,499,998 shares of our common stock, par value $0.33 per shares, at a selling price of $1.40 per share. The shares of common stock sold in the May 2012 Private Placement shares were issued in reliance upon the exemption from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D thereof. The offer, sale and issuance of the common stock in the May 2012 Private Placement was made without general solicitation or advertising and the shares were offered and issued only to accredited investors as such term is defined in Rule 501 of Regulation D under the Act. Plan of Distribution This offering is not being underwritten. The selling stockholders will sell their shares of our common stock at prevailing market prices or privately negotiated prices. The selling stockholders themselves directly, or through their agents, or through their brokers or dealers, may sell their shares from time to time, in (i) privately negotiated transactions, (ii) in one or more transactions, including block transactions in accordance with the applicable rules of the OTC Bulletin Board or any other stock exchange, market or trading facility on which our shares are traded or (iii) otherwise in accordance with the section of this prospectus entitled Plan of Distribution. To the extent required, the specific shares to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, broker or dealer and any applicable commission or discounts with respect to a particular offer will be described in an accompanying prospectus supplement. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus. For additional information on the methods of sale, you should refer to the section of this prospectus entitled Plan of Distribution, beginning on page 18.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000822662_fidelity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000822662_fidelity_prospectus_summary.txt
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+Table of Contents SUMMARY The following summary contains material information about us and this offering. Because it is a summary, it may not contain all of the information that is important to you. Before making a decision to invest in the preferred shares, you should read this prospectus supplement and the accompanying prospectus carefully, including the sections entitled Risk Factors, and the information incorporated by reference therein, including our audited consolidated financial statements and the accompanying notes in our Annual Report on Form 10-K for the year ended December 31, 2011. The Company Overview Fidelity Southern Corporation is a bank holding company headquartered in Atlanta, Georgia. We conduct operations primarily though Fidelity Bank, a state chartered wholly-owned subsidiary bank. Fidelity Bank was organized as a national banking corporation in 1973 and converted to a Georgia chartered state bank in 2003. LionMark Insurance Company is a wholly-owned subsidiary of Fidelity Southern Corporation and is an insurance agency offering consumer credit related insurance products. Fidelity Southern Corporation also owns five subsidiaries established to issue trust preferred securities. The Company , we or our , as used herein, includes Fidelity Southern Corporation and its subsidiaries, unless the context otherwise requires. At December 31, 2011, we had total assets of $2.235 billion, total loans of $1.757 billion, total deposits of $1.872 billion, and shareholders equity of $167.3 million. In addition, in October 2011 we acquired Decatur First Bank, with approximately $79.4 million in loans and $169.9 million in deposits, in a Federal Deposit Insurance Corporation-assisted acquisition. Market Area, Products and Services Fidelity Bank provides an array of financial products and services for business and retail customers primarily through 28 branches in Fulton, Dekalb, Cobb, Clayton, Gwinnett, Rockdale, Coweta, Henry, Morgan, Greene, and Barrow Counties in Georgia, a branch in Jacksonville, Duval County, Florida, and on the Internet at www.lionbank.com. Fidelity Bank s customers are primarily individuals and small and medium sized businesses located in Georgia. Mortgage and construction loans are also provided through a branch in Jacksonville, Florida. Mortgage loans, automobile loans, and Small Business Administration loans are provided through employees located throughout the Southeast. Fidelity Bank is primarily engaged in attracting deposits from individuals and businesses and using these deposits and borrowed funds to originate commercial and industrial loans, commercial loans secured by real estate, Small Business Administration loans, construction and residential real estate loans, direct and indirect automobile loans, residential mortgage and home equity loans, and secured and unsecured installment loans. Fidelity Bank offers business and personal credit card loans through a third party agency relationship. Internet banking, including on-line bill pay, and Internet cash management services are available to individuals and businesses, respectively. Additionally, Fidelity Bank offers businesses remote deposit services, which allow participating companies to scan and electronically send deposits to Fidelity Bank for improved security and funds availability. Fidelity Bank also provides international trade services. Trust services and merchant services activities are provided through agreements with third parties. Investment services are provided through an agreement with an independent broker-dealer. We have generally grown our assets, deposits, and business internally by building on our lending products, expanding our deposit products and delivery capabilities, opening new branches, and hiring experienced Table of Contents bankers with existing customer relationships in our market. We do not purchase loan participations from any other financial institution. We have participated in a Federal Deposit Insurance Corporation-assisted transaction and will continue to review the opportunities. Corporate Information Our principal executive offices are located at 3490 Piedmont Road, Suite 1550, Atlanta, Georgia 30305. Our telephone number is (404) 240-1504. Our website is www.lionbank.com. Information on our website is not incorporated into this prospectus supplement by reference and is not part of this prospectus supplement. The Offering Issuer Fidelity Southern Corporation, a Georgia corporation Preferred Shares; Offering Process 48,200 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A, no par value per share. The number of preferred shares to be sold will depend on the number of bids received in the auction described below and whether Treasury decides to sell any preferred shares in the auction process. See Auction Process in this prospectus supplement. Liquidation Preference If we liquidate, including as part of a liquidation, dissolution or winding up, holders of the preferred shares will have the right to receive $1,000 per share, plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to, but not including, the date of payment, before any payments are made to holders of our common stock or any other capital stock that ranks, by its terms, junior as to rights upon liquidation to the preferred shares. Dividends Dividends on the preferred shares are payable quarterly in arrears on each February 15, May 15, August 15 and November 15. The initial dividend rate is 5% per annum through February 14, 2014, and will increase to 9% per annum on and after February 15, 2014 if not otherwise redeemed earlier for cash by us. Holders of preferred shares sold by Treasury in the auction, if any, that are record holders on the record date for the August 15, 2012 dividend payment date will be entitled to any declared dividends payable on such date. Maturity The preferred shares have no maturity date. Rank The preferred shares rank (1) senior to junior stock, which is common stock or any other capital stock that ranks, by its terms, junior as to dividend rights and/or rights upon liquidation to the preferred shares, (2) equally with parity stock, which is any shares of our capital stock whose terms do not expressly provide that such class or series will rank senior or junior to the preferred shares as to dividend rights and/or rights upon liquidation and (3) junior to all of our existing and future indebtedness and any future senior securities, in each case as to dividend rights and/or rights upon liquidation. Table of Contents Priority of Dividends So long as the preferred shares remain outstanding, we may not declare or pay a dividend or other distribution on our common stock or any other shares of junior stock (other than dividends payable solely in common stock) or parity stock (other than dividends paid on a pro rata basis with the preferred shares), and we generally may not directly or indirectly purchase, redeem or otherwise acquire any shares of common stock, junior stock or parity stock unless all accrued and unpaid dividends on the preferred shares for all past dividend periods are paid in full. Redemption We may redeem the preferred shares, at any time, in whole or in part, at our option, subject to prior approval by the appropriate federal banking agency, for a redemption price equal to 100% of the liquidation preference amount per share plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to but excluding the date of redemption. In order to have sufficient funds to redeem all of the outstanding shares, the Company would be required to either (1) obtain approval from its regulators to permit Fidelity Bank to make an extraordinary distribution to the Company, (2) obtain additional funding via either the issuance of equity or debt to one or more third parties, or (3) obtain funding via a combination of (1) and (2). While Fidelity Bank could make a special distribution to the Company to redeem the preferred shares and still meet the regulatory minimum capital thresholds currently, such a material depletion in its capital base would likely adversely affect the Company s strategic objectives, and there is no assurance Fidelity Bank s regulators would grant approval for such a large distribution. The Company does not intend to place a bid in the auction and does not have any current intention to redeem the preferred shares in the near future or before February 15, 2014. Voting Rights Holders of the preferred shares generally have no voting rights. However, if we do not pay dividends on the preferred shares for six or more quarterly periods, whether or not consecutive, the holders of the preferred shares, voting as a single class with the holders of any other parity stock upon which like voting rights have been conferred and are exercisable, will be entitled to vote for the election of two additional preferred directors to serve on our Board of Directors until all accrued and unpaid dividends (including dividends accrued on any unpaid dividends) on the preferred shares are paid in full. These directors may be nominated by any holder of the preferred shares by submission to the Company s Nominating Committee of the proposed nominee s name and qualifications and a statement to the effect that the proposed nominee has agreed to the submission of his/her name as a candidate for nomination as a director. There is no limit on the number of nominations that may be made and a plurality of the eligible voters would determine the election of the new directors. Table of Contents In addition, the affirmative vote of the holders of at least 662/3% of the outstanding preferred shares is required for us to authorize, create or increase the authorized number of shares of our capital stock ranking, as to dividends or amounts payable upon liquidation, senior to the preferred shares, to amend, alter or repeal any provision of our charter or the Certificate of Designation for the preferred shares in a manner that adversely affects the rights of the holders of the preferred shares or to consummate a binding share exchange or reclassification of the preferred shares or a merger or consolidation of us with another entity unless (a) the preferred shares remain outstanding or are converted into or exchanged for preference shares of the surviving entity or its ultimate parent and (b) the preferred shares remain outstanding or such preference shares have such terms that are not materially less favorable, taken as a whole, than the rights of the preferred shares immediately prior to such transaction, taken as a whole. Auction Process The public offering price and the allocation of the preferred shares in this offering will be determined through an auction process conducted by Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P., the joint book-running managers in this offering, in their capacity as the auction agents. The auction process will entail a modified Dutch auction mechanic in which bids may be submitted through the auction agents or one of the other brokers that is a member of the broker network, which are collectively referred to in this prospectus supplement as the network brokers, established in connection with the auction process. Each broker will make suitability determinations with respect to its own customers wishing to participate in the auction process. The auction agents will not provide bidders with any information about the bids of other bidders or auction trends, or with advice regarding bidding strategies, in connection with the auction process. We encourage you to discuss any questions regarding the bidding process and suitability determinations applicable to your bids with your broker. We do not intend to submit any bids in the auction. For more information about the auction process, see Auction Process in this prospectus supplement. Minimum Bid Size and Price Increments This offering is being conducted using an auction process in which prospective purchasers are required to bid for the preferred shares. During the auction period, bids may be placed for shares at any price at or above the minimum bid price of $782.75 per share (such bid price to be in increments of $0.01) with a minimum size for any bid of one preferred share. See Auction Process in this prospectus supplement. Bid Submission Deadline The auction will commence at 10:00 a.m., New York City time, on the date specified by the auction agents in a press release issued on such day, and will close at 6:30 p.m., New York City time, on the second business day immediately thereafter, which is referred to as the submission deadline. Table of Contents Irrevocability of Bids Bids that have not been modified or withdrawn by the time of the submission deadline are final and irrevocable, and bidders who submit bids that are accepted by Treasury will be obligated to purchase the preferred shares allocated to them. The auction agents are under no obligation to reconfirm bids for any reason, except as may be required by applicable securities laws; however, the auction agents, in their sole discretion, may require that bidders confirm their bids before the auction process closes. See Auction Process in this prospectus supplement. Clearing Price The price at which the preferred shares will be sold to the public will be the clearing price plus accrued dividends. The clearing price will be determined as follows: If valid, irrevocable bids are received for 100% or more of the offered preferred shares at the submission deadline, the clearing price will be equal to the highest price at which all of the offered preferred shares can be sold in the auction; If valid, irrevocable bids are received for at least half, but less than all, of the offered preferred shares at the time of the submission deadline, the clearing price will be equal to the minimum bid price of $782.75 per share. Even if bids are received for at least half of the offered preferred shares, Treasury may decide not to sell any preferred shares in the auction process or, in the case where bids are received for at least half, but less than all, of the preferred shares, may decide only to sell a portion (but not less than half) of the offered preferred shares in the auction process. If Treasury decides to sell preferred shares in the auction, after Treasury confirms its acceptance of the clearing price and the number of preferred shares to be sold, the auction agents and each network broker that has submitted a successful bid will notify successful bidders that the auction has closed and that their bids have been accepted by Treasury (subject, in some cases, to pro-ration, as described below). The clearing price and number of preferred shares to be sold are also expected to be announced by press release on the business day following the end of the auction. See Auction Process in this prospectus supplement. Number of Shares to be Sold If bids are received for 100% or more of the offered preferred shares, Treasury must sell all of the offered preferred shares if it chooses to sell any preferred shares. If bids are received for at least half, but less than all, of the offered preferred shares, then Treasury may, but is not required to, sell at the minimum bid price in the auction (which will be deemed to be the clearing price) the number of preferred shares it chooses to sell up to the number of bids received in the auction, so long as at least half of the offered preferred shares are sold. If bids are received for less than half of the offered preferred shares, Treasury will not sell any preferred shares in this offering. Even if bids are received for at least half of the offered preferred shares, Treasury may decide not to sell any preferred shares or, in the case where bids are received for at least half, but less than all, of the offered preferred Table of Contents shares, may decide only to sell a portion (but not less than half) of the offered preferred shares in the auction process. If Treasury elects to sell any preferred shares in the auction, Treasury must sell those shares at the clearing price plus accrued dividends thereon. In no event will Treasury sell more preferred shares than the number of preferred shares for which there are bids. See Auction Process in this prospectus supplement. Allocation; Pro-Ration If bids for 100% or more of the offered preferred shares are received and Treasury elects to sell preferred shares in the offering, then any accepted bids submitted in the auction above the clearing price will receive allocations in full, while any accepted bids submitted at the clearing price may experience pro-rata allocation. If bids for at least half, but less than all, of the offered preferred shares are received, and Treasury chooses to sell fewer preferred shares than the number of preferred shares for which bids were received, then all bids will experience equal pro-rata allocation. See Auction Process in this prospectus supplement. Use of Proceeds We will not receive any proceeds from the sale of any shares sold by Treasury. See Use of Proceeds in this prospectus supplement. Listing The preferred shares will not be listed for trading on any stock exchange nor will they be available for quotation on any national quotation system.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000880177_peregrine_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000880177_peregrine_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our consolidated financial statements and related notes, and our risk factors beginning on page 9, before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, we use the terms Peregrine, the company, we, us, and our in this prospectus to refer to Peregrine Semiconductor Corporation and its subsidiaries. Overview We are a fabless provider of high performance radio frequency integrated circuits, or RFICs. Our solutions leverage our proprietary UltraCMOS technology, which enables the design, manufacture, and integration of multiple radio frequency, or RF, mixed signal, and digital functions on a single chip. We believe our products deliver an industry leading combination of performance and monolithic integration. Our solutions target a broad range of applications in the aerospace and defense, broadband, industrial, mobile wireless device, test and measurement equipment, and wireless infrastructure markets. We have shipped over one billion RFICs based on our UltraCMOS technology since January 1, 2006. Our UltraCMOS technology combines the ability to achieve the high levels of performance of traditional specialty processes, with the fundamental benefits of standard complementary metal oxide semiconductor, or CMOS, the most widely used semiconductor process technology. UltraCMOS technology utilizes a synthetic sapphire substrate, a near-perfect electrical insulator, providing greatly reduced unwanted electrical interaction between the RFIC and the substrate (referred to as parasitic capacitance), which enables high signal isolation and excellent signal fidelity with low distortion over a broad frequency range (referred to as broadband linearity). These two technical attributes result in RF devices with excellent high-frequency performance and power handling performance, and reduced crosstalk between frequencies. In addition, increased broadband linearity provides for faster data throughput and greater subscriber capacity over a wireless network, resulting in enhanced network efficiency. UltraCMOS technology also provides the benefits of standard CMOS, such as high levels of integration, low power consumption, reusable circuit libraries, widely available design tools and outsourced manufacturing capacity, and the ability to scale to smaller geometries. We own fundamental intellectual property, or IP, in UltraCMOS technology consisting of more than 125 U.S. and international issued and pending patents, and over 300 documented trade secrets covering basic circuit elements, RF circuit designs, manufacturing processes, and design know-how. We leverage our extensive RF design expertise and systems knowledge to develop RFIC solutions that meet the stringent performance, integration, and reliability requirements of the rapidly evolving wireless markets. As of June 30, 2012, we offer a broad portfolio of more than 160 high performance RFICs including switches, digital attenuators, mixers / upconverters, prescalers, digitally tunable capacitors, or DTCs, and DC-DC converters, and we are currently developing power amplifiers, or PAs. During the year ended December 31, 2011, our products were sold to more than 1,500 module manufacturers, original equipment manufacturers, or OEMs, contract manufacturers, and other customers, including such companies as Ericsson AB, Flextronics International Ltd., Hitachi Metals, Ltd., Itron, Inc., Jabil Circuit Inc., LG Innotek Co., Ltd., Mini-Circuits, Inc., Motorola Solutions, Inc., Murata Manufacturing Company, Ltd., Northrop Grumman Corporation, Planet Technology Corp., Rockwell Collins, Inc., Rohde & Schwarz, Inc., SIPAT Co., Ltd., Skyworks Solutions, Inc., Sony Corporation, Source Photonics, Inc., TDK-EPC Corporation, Thales Alenia Space, and TriQuint Semiconductor, Inc. We believe our RFICs are included in products sold by many of the leading mobile handset OEMs. For the years ended December 25, 2010 and December 31, 2011, we generated net revenue of $91.1 million and $107.8 million, respectively, representing year-over-year growth of 18%. We generated net income of $3.8 million for the year ended December 25, 2010 and a net loss of $9.7 million for the year ended Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION. DATED JULY 25, 2012. 5,500,000 shares Common Stock This is our initial public offering of shares of common stock of Peregrine Semiconductor Corporation. The selling stockholders named in this prospectus are offering an additional 159,220 shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $14.00 and $16.00. We have applied to list our common stock on the Nasdaq Global Market under the symbol PSMI. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 9. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to selling stockholders $ $ To the extent that the underwriters sell more than 5,500,000 shares of common stock, the underwriters have the option to purchase up to an additional 825,000 shares from us at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2012. Deutsche Bank Securities J.P. Morgan RBC Capital Markets Needham & Company Oppenheimer & Co. Pacific Crest Securities , 2012 Table of Contents December 31, 2011. We recorded net revenue of $80.3 million and a net loss of $3.1 million for the six months ended June 30, 2012. As of June 30, 2012, we had an accumulated deficit of $231.3 million. Industry Overview Proliferation of wireless devices coupled with rapid advances in RF technologies have significantly enhanced wireless connectivity and revolutionized the mobile wireless, wireless infrastructure, broadband, and satellite communications markets. In addition, an array of other consumer, public safety, aerospace and defense, and industrial markets are increasingly incorporating advanced RF functionality into a wide variety of applications, resulting in increased demand for high performance RFICs in these markets. According to Frost & Sullivan, the worldwide market for RFICs across the aerospace and defense, broadband, industrial, mobile wireless device, test and measurement equipment, and wireless infrastructure industries is expected to grow from $12.2 billion in 2010 to $29.2 billion in 2015, representing a compound annual growth rate, or CAGR, of 19.1%. The need for higher performance wireless solutions, combined with the increased demand for integrated components that reduce costs, overall power consumption, and size, has significantly increased the performance demands on the RF front-end subsystems used in wireless devices. However, the fundamental physical limitations of silicon have prevented standard CMOS solutions from meeting the high frequency and power handling requirements of high performance RF front-ends. As a result, RF front-end semiconductor manufacturers have historically utilized traditional specialty process technologies such as gallium arsenide, or GaAs, heterojunction bipolar transistor, or GaAs HBT, GaAs pseudomorphic high electron mobility transistor, or GaAs pHEMT, silicon-germanium, or SiGe, or bipolar junction transistor and CMOS, or BiCMOS. While discrete RF components produced with these processes may attain sufficient levels of performance, these technologies lack the ability to monolithically integrate multiple discrete components and digital logic, cannot leverage existing high volume standard CMOS manufacturing infrastructure, and are inherently limited in their ability to scale to smaller geometries as compared to standard CMOS. Our Solution and Competitive Strengths We design, develop, market, and sell high performance RFICs based on our patented UltraCMOS technology. Our UltraCMOS technology enables us to monolithically integrate multiple RF and mixed signal components and digital circuitry into high performance RFICs. Our UltraCMOS technology provides the fundamental benefits of standard CMOS, including high levels of integration, low power consumption, reusable circuit libraries, widely available design tools and outsourced manufacturing capacity, and the ability to scale to smaller geometries. Our strengths that distinguish us from the competition include: Unique, Proprietary UltraCMOS Technology. We pioneered the development of UltraCMOS technology for production of high performance RFICs and believe we are the only high volume commercial supplier of RFICs based on silicon-on-sapphire, or SOS. Broad, System Level Integration Capabilities. Our extensive RFIC design experience allows us to approach the challenges of RF integration at the system level, as well as the component level. We have created a proprietary design platform that includes a comprehensive portfolio of cell libraries, reference designs, design tools, and other IP that allows the design, production, and integration of highly scalable RFICs. Broad, Highly Differentiated IP Portfolio. We have more than 125 U.S. and international issued and pending patents encompassing a broad range of technologies that include basic materials processing, fundamental building block circuit elements enabled by our UltraCMOS material system, and higher-level circuit designs comprised of these unique circuit elements. In addition, we have substantial materials, process, design, packaging, and testing know-how that we retain as documented trade secrets. Table of Contents Table of Contents Proven and Efficient Fabless Model. Our UltraCMOS manufacturing process is highly portable to third-party foundries and allows us to scale our business, utilize established and proven standard CMOS production technologies, and transition to smaller geometries and larger wafer sizes relative to specialty process technologies. Broad Markets and Diverse Customer Base. Our products address broad end markets, including aerospace and defense, broadband, industrial, mobile wireless device, test and measurement equipment, and wireless infrastructure markets. We offer over 160 different products across eight product families, and in 2011, our products were sold to more than 1,500 customers worldwide. Our Strategy Our goal is to be the market leader in large and growing markets where our UltraCMOS technology can provide a superior RFIC solution. Key elements of our strategy include: Drive Integration Across RF Applications. We intend to continue to integrate additional discrete RF components and digital circuits into comprehensive single-chip solutions. Expand our Served Addressable Market. We intend to continue to invest in the development of future generations of our products to meet the evolving performance, form factor, and cost demands of customers in our existing markets, while also expanding our product offerings to address the requirements of new products and markets. Deepen Relationships with Existing Customers and Expand our Customer Base. We intend to enhance our global reach and increase our penetration of key customers in our target markets and continue to develop and broaden our relationships with key players in the wireless ecosystem, including wireless network operators, leading device and equipment OEMs, and reference design partners. Leverage our Flexible, Scalable Outsourced Manufacturing Model. We have rapidly scaled our business by leveraging the high-volume manufacturing expertise and capacity of our third-party partners involved in the supply of key raw materials, wafer foundry, and assembly and testing services. We intend to continually expand and improve our efficient and robust global supply chain utilizing a variety of business partners located around the world. Risks Affecting Us Our business is subject to numerous risks, which are highlighted in the section titled Risk Factors immediately following this prospectus summary. These risks represent challenges to the successful implementation of our strategy and to the growth and future profitability of our business. Some of these risks are: our operating results may fluctuate significantly and our future results are difficult to predict, which may cause us to fail to meet the expectations of investors; we have incurred significant losses and may incur losses in the future; we may be unable to sustain our historical net revenue growth rate and if net revenue growth falls short of our expectations, we may not be able to immediately reduce our operating expenses proportionately, which could eliminate our profitability; changes in our product mix and in our manufacturing operations utilization may adversely affect our gross margins and operating results; we rely on a small number of customers for a significant percentage of our net revenue, and the loss of, or a reduction in, orders from these customers could result in a significant decline in our net revenue; if we fail to develop new or enhanced products that achieve market acceptance in a cost-effective and timely manner, our operating results could be adversely affected; Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0000932699_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0000932699_american_prospectus_summary.txt
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+PROSPECTUS SUMMARY GREENMAN TECHNOLOGIES, INC. 11,553,282 SHARES OF COMMON STOCK
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001002422_ceres_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001002422_ceres_prospectus_summary.txt
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+Prospectus
+Summary
+
+ 
+
+This summary highlights information
+that we present more fully in the rest of this prospectus. This summary does not contain all of the information you should consider
+before buying shares in this offering. This summary contains forward-looking statements that involve risks and uncertainties,
+such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking
+statements by terminology such as "anticipate," "estimate," "plan," "project,"
+"continuing," "ongoing," "expect," "we believe," "we intend," "may,"
+"should," "could," and similar expressions. These statements involve estimates, assumptions, known and
+unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances
+or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including
+the "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations"
+and our financial statements and related notes included elsewhere in this prospectus, before making an investment decision.
+
+ 
+
+Except where the context otherwise
+requires and for purposes of this prospectus only "we," "us," "our," and "the Company,"
+refer to Ceres Ventures, Inc., a Nevada corporation and its consolidated subsidiaries.
+
+ 
+
+About
+Us and Our Business
+
+ 
+
+We were incorporated
+in the State of Nevada on July 25, 2001, under the name "Enterprise Technologies, Inc." and have focused our efforts
+on the development of new technologies and, where warranted, acquire rights to obtain licenses to technologies and products that
+are being developed by third-parties, primarily universities and government agencies, through sponsored research and development
+agreements. On November 21, 2011, we changed our name to Ceres Ventures, Inc.
+
+ 
+
+Our current strategy
+is, together with our wholly-owned subsidiaries, to identify, acquire and develop a comprehensive portfolio of technologies relating
+to clean resources technologies which we believe have potential for global commercialization and application.
+
+ 
+
+Our Industry
+
+ 
+
+Water is essential for life and, unlike
+most other resources, has no substitutes. Even though more than two-thirds of our planet is covered with water, less than 1% of
+that water is freshwater suitable for human consumption and that amount is quickly declining due to the draining of aquifers,
+increased pollution, climate change and other factors. In addition to this declining supply, demand is rapidly rising due to population
+growth, industrial expansion and increased agricultural development, with overall water consumption estimated to double every
+20 years.
+
+ 
+
+Governments across the world are grappling
+with the challenge of promoting economic growth while trying to manage the accompanying industrial and agricultural contamination
+of the world s freshwater supplies. It is estimated that by 2025 up to 60 % of the world s
+population will live in areas without adequate water supply.
+
+ 
+
+These strains
+on the water supply ultimately translate into more stringent government regulations that drive demand for new water treatment
+solutions. These challenges are driving opportunities for growth in the global water industry, which
+is currently estimated at $500 billion worldwide annually and is estimated to increase to $1 trillion by 2020.
+
+ 
+
+ 3
+
+ 
+
+ 
+
+ 
+
+Our Technologies
+
+ 
+
+In response to the global water issue,
+we, through our agreement with Applied Power Concepts, Inc. ("APC"), a California based bio-chemical engineering
+firm, have developed the patent pending BluFlowTM Treatment System, a first of its kind clean tech water treatment
+solution, which incorporates intellectual property ("IP") directly or indirectly controlled by us, including
+a nanoparticle based purifying agent ("BluFlowTM Pure") and the BluFlowTM Advanced
+Ultrafiltration Technology (the "BluFlowTM AUT") to target and remove valuable elements, compounds
+and pollutants from water, and to purify water so that it may be suitable for reuse.
+
+ 
+
+Unlike conventional wastewater treatment
+technologies that utilize multiple systems and processes to remove target pollutants or target constituents, the patent pending
+BluFlowTM Treatment System provides a unique single integrated system that simultaneously permits the removal of target
+chemicals/pollutants or valuable elements and compounds while purifying the remaining water with minimal reject wastewater (5-15%
+compared to 40-50% for conventional systems such as reverse osmosis).
+
+ 
+
+We anticipate rolling out a commercially
+ready BluFlowTM Treatment System within the next 18 months, subject to additional financing, pilot studies, and performance
+and field testing evaluations.
+
+ 
+
+Our Strategic Advantages
+
+ 
+
+The patent pending BluFlowTM
+Treatment System is technically and economically superior to conventional water and wastewater purification and treatment technologies,
+both with respect to the variety and nature of the contaminants (organic or inorganic) or valuable elements and compounds it may
+remove as well as the cost associated with treatment and purification.
+
+ 
+
+Even though nanotechnology has been around
+for decades, nanoparticles have encountered several obstacles to making them commercially viable for water treatment, purification
+and reuse. These obstacles include: high production costs; difficulty to manufacture in large quantities or volumes; and challenges
+to customize them to target for removal of individual contaminants in wastewater or industrial processes. Therefore, until the
+advent of the patent pending BluFlowTM Treatment System, nanoparticles have not been used to treat water or waste water
+using the techniques and methods being developed by us.
+
+ 
+
+We have developed a proprietary system
+for precisely formulating, producing and deploying customizable absorbent nanoparticles. BluFlowTM Pure is a specific
+formulation that has the unique functionality for contaminant and chemical, as well as the capability to extract valuable elements
+and compounds from water based solutions. Additionally, BluFlowTM Pure has the advantage of being able to be recovered
+and reused multiple times without loss of efficiency, thereby providing a technical, economical and cost effective means of utilizing
+nanoparticles.
+
+ 
+
+We have also developed the BluFlowTM
+AUT that utilizes a proprietary process to recover water, or target elements or compounds from waste, wastewater, or impure
+streams. This technology, which can effectively incorporate BluFlowTM Pure, will significantly increase the amount
+of usable water of higher purity than conventional water treatment technologies such as reverse osmosis or multistage reverse
+osmosis with chemical treatment, while using less energy. The BluFlowTM AUT purifies 85 -95% of treated water as opposed
+to conventional systems such as reverse osmosis that only purifies 50-60% of the water it treats.
+
+ 
+
+ 4
+
+ 
+
+ 
+
+ 
+
+Thus, the overall value proposition of
+the patent pending BluFlowTM Treatment System for customers is:
+
+ 
+
+ lower
+ operating costs;
+
+ lower
+ maintenance costs;
+
+ low
+ energy input or
+ demand;
+
+ easy/safe
+ handling;
+
+ operated
+ to comply with occupational
+ safety & health
+ standards;
+
+ tailored
+ engineering by substance,
+ customizable clean
+ treatment systems;
+
+ supply
+ price stability;
+ and
+
+ attractive
+ return on investment.
+
+ 
+
+Our milestones to date are:
+
+ 
+
+ developing
+ our proprietary
+ patent pending BluFlowTM
+ Treatment
+ System through our
+ agreement with APC
+
+ developing,
+ through APC, the
+ BluFlowTM
+ AUT;
+
+ developing
+ proprietary patent
+ pending equipment
+ and process to produce
+ customized absorbent
+ BluFlow 
+ Pure particles
+ at commercial scales;
+
+ obtaining
+ an exclusive worldwide
+ license from the
+ University of California,
+ Santa Barbara to
+ certain technologies
+ relating to highly
+ specialized nanoparticles,
+ initially developed
+ at the University
+ of California, Santa
+ Barbara for potential
+ water treatment
+ applications, which
+ are the subject
+ of three patent
+ applications ;
+
+ developing,
+ through APC, the
+ BluFlowTM
+ Pure particles,
+ which are highly
+ customizable, boutique,
+ treatment and purification
+ agents that are
+ designed to treat
+ targeted contaminants
+ such as organic
+ pollutants, inorganic
+ pollutants, or specific
+ valuable elements
+ or compounds from
+ water sources;
+
+ preparing
+ a patent application
+ for the regeneration
+ process of the BluFlow 
+ Pure particles –
+ an important step
+ for economical reuse
+ of the BluFlow 
+ Pure particles;
+
+ ongoing
+ development of new
+ intellectual property
+ during the course
+ of its research
+ and development
+ and intends to file
+ additional patent
+ applications to
+ protect its intellectual
+ property; and
+
+ entering
+ into a Treatability
+ Study Agreement
+ with a major United
+ States Professional
+ Engineering &
+ Consulting Firm
+ serving numerous
+ clients, including
+ Fortune 50 &
+ 100 clients, to
+ evaluate the technical
+ and economic feasibility
+ of using the BluFlow 
+ Treatment System
+ for the cleanup
+ of contaminated
+ groundwater –
+ a necessary step
+ in anticipation
+ of upcoming field
+ tests of the BluFlow 
+ Treatment System
+ at sites to be designated
+ by the engineering
+ firm.
+
+ 
+
+Corporate Background and History
+
+ 
+
+We were incorporated
+in the State of Nevada on July 25, 2001, under the name "Enterprise Technologies, Inc." and have focused our efforts
+on the development of new technologies.
+
+ 
+
+In 2008 we obtained
+exclusive license, granted pursuant to a license agreement dated September 1, 2008 (the "Dartmouth License Agreement"),
+between us and the Dartmouth Trustees, to develop, market and distribute a novel class of synthesized compounds known as bis-intercalators.
+However, in June 2010, our Board of Directors (the "Board") determined that it was in our stockholders best
+interest to refocus our business in activities in a manner which may more fully enhance stockholder value, and as a result we
+terminated the Dartmouth License Agreement and initiated our search for a commercially viable business or asset.
+
+ 
+
+ 5
+
+ 
+
+ 
+
+ 
+
+In
+order to facilitate our efforts, on November 21, 2011, we changed our name to Ceres Ventures, Inc. and implemented a one-for-fifty
+reverse share consolidation (the "Reverse Split"). The Reverse Split was declared effective by the Financial
+Industry Regulatory Authority ("FINRA") on December 12, 2011. All shares and share prices have been retroactively
+changed to reflect the Reverse Split.
+
+ 
+
+On December 29, 2011,
+we completed a reverse merger (the "Reverse Merger") with BluFlow Technologies, Inc., a Delaware corporation
+("BluFlow"). Pursuant to the terms of the Reverse Merger, BluFlow became a wholly owned subsidiary of Ceres.
+
+ 
+
+As a precondition
+to the Reverse Merger, certain of our creditors holding an aggregate of $840,683 of our debt agreed to convert the principal amount
+of the debt into an aggregate of 8,406,825 shares of our common stock at a conversion price of $0.10 per share and forgave a total
+of $488,054 in accrued and unpaid interest.
+
+ 
+
+Upon completion of
+the Reverse Merger, the former stockholders of BluFlow held approximately 84% of our issued and outstanding shares of capital
+stock. Accordingly, the Reverse Merger represents a change in control of Ceres. As of August 31, 2012, there were 85,501,557 shares
+of our common stock issued and outstanding and no shares of our preferred stock issued and outstanding.
+
+ 
+
+BluFlow Offerings
+
+ 
+
+From November 2010
+through May 2011, BluFlow conducted a private placement of up to 60,000,000 units of its securities at a price of $0.033 per unit.
+Each unit consisted on one share of common stock, $0.00001 par value per share and one-half of one Series C Warrant. Each Series
+C Warrant entitles the holder to purchase one additional share of common stock at an exercise price of $0.16 per share, expiring
+on December 31, 2012. As of the termination date of
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001017616_tonner_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001017616_tonner_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..41e2f3aa68aae8642a7341704f9204a82c7b5efc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001017616_tonner_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all of the information you should consider. As such, before you decide to buy our common stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our common stock as discussed under Risk Factors. In this Prospectus, the terms we, us, our, Company, One World and One World Holdings refer to One World Holdings, Inc., a Nevada corporation. Common Stock refers to the common stock, par value $0.0025 per share, of One World Holdings, Inc. On July 21, 2011, we entered into and closed a Share Exchange Agreement (the Exchange Agreement ) with The One World Doll Project, Inc. ("OWDP"), a Texas corporation, and the persons owning 100% of the outstanding capital stock of OWDP (the OWDP Stockholders ). At closing, the OWDP Stockholders transferred all of their shares of common stock to us in exchange for newly issued shares of our common stock, which shares represented 90.55% of our voting securities. As a result of this transaction, OWDP became our wholly-owned subsidiary, we abandoned all of our previous business plans involving environmental remediation and recycling, and the business of OWDP became our sole business. Our principal executive offices are located at 418 Bridge Crest Boulevard, Houston, Texas 77082. We are a development stage company engaged in the development and production of different lines of multi-cultural dolls. We maintain a website at http://oneworlddolls.com. The information on, or that may be accessed through, our website is not incorporated by reference into this Prospectus and should not be considered a part of this Prospectus. We have a limited operating history and are subject to all of the risks inherent to the development of a new business in the highly competitive environment in which we will operate. We are not a blank check company as defined by Rule 419 promulgated under the Securities Act of 1933, as amended (the Securities Act ) and we have no plans to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. As of September 30, 2012, we had $1,157,007 in outstanding liabilities, and since formation, through September 30, 2012, we had incurred losses totaling $2,448,454. From January 2011 to October 2012, we sold seventeen 14% convertible debentures in the aggregate principal amount of $365,500. The outstanding principal and interest on the debentures are convertible into shares of our common stock at the conversion price of $0.04 per share, and accordingly, the principal amount of the debentures currently outstanding (approximately $364,718) is convertible into an aggregate of approximately 9,117,950 shares of our common stock, exclusive of interest. Included in that total are 14% Convertible Debentures held by Michael and Jacquelyn Emmers in the principal amount of $100,000 (due August 24, 2011, and currently past due, provided that the holder has not provided us notice of default); Heath O Neal Redwine in the principal amount of $10,000 (due September 27, 2012, and currently past due, provided that the holder has not provided us notice of default); Carolyn Austin in the principal amount of $25,000 (due October 10, 2012, and currently past due, provided that the holder has not provided us notice of default); and William and Barbara Pharr in the amount of $6,000 (due December 20, 2011, and currently past due, provided that the holder has not provided us notice of default). Each of the debentures bears interest at the rate of 14% per annum (16% upon the occurrence of an event of default); contains a provision prohibiting the Company from consolidating or merging with another person or entity, unless the Company is the surviving entity or the surviving entity expressly assumes the obligations under the debenture; and is convertible into shares of the Company s common stock at a conversion price of $0.04 per share, which shares are being registered in this Prospectus. As of the date hereof, we have limited assets and no revenues. Furthermore, we believe that operating as a reporting company, which is our plan following the effectiveness of our Registration Statement, of which this Prospectus is a part, will significantly increase our accounting, legal, managerial and filing expenses. We plan to seek out additional debt and/or equity financing; however, we do not currently have any specific plans to raise such additional financing at this time. The sale of additional equity securities, if undertaken and if accomplished, may result in dilution to our stockholders. We cannot assure you, however, that future financing will be available in amounts or on terms acceptable to us, or at all. There is substantial doubt about our ability to continue as a going concern. To date, we have not yet achieved profitable operations and expect to incur losses in the development of our business. Accordingly, our independent registered public accounting firm has indicated in its report on our consolidated financial statements, as of December 31, 2011, that there exists substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. This summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus. The securities offered hereby are speculative and involve a high degree of risk. See "Risk Factors," below. Penny Stock Rules Our common stock will be considered a penny stock , and subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act ). Penny stock is generally defined as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. The required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired. As filed with the Securities and Exchange Commission on December 19, 2012 Registration No. 333-177992
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001019272_empire_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001019272_empire_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001019272_empire_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001020646_erf_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001020646_erf_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..49c22b25673b15dd8de7c5997d2a9ad35fb667dd
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001020646_erf_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in each case included elsewhere in this prospectus. Unless otherwise stated or the context requires otherwise, references in this prospectus to "ERF Wireless", the "Company", "we", "us", or "our" refer to ERF Wireless, Inc. and its subsidiaries. The Company Business Overview We are a provider of terrestrial wireless broadband access solutions for the energy industry. Our primary business strategy is to develop and provide a long-term terrestrial wireless broadband solution for the exploration, drilling, and production sectors of the energy industry in rural and remote locations in North America that lack existing communications infrastructure. We offer our oil and gas customers a comprehensive and integrated package of wellsite information technology ("IT") communications services, including high-speed low-latency terrestrial broadband connectivity utilizing both licensed and unlicensed spectrum, voice over Internet Protocol ("VOIP") telephone, facsimile service, wireless intercom systems, computer and other IT equipment rental, IT support services, and video security solutions. Our current focus is to expand our network in the middle-United States region, including Texas, Oklahoma, Arkansas, New Mexico, Louisiana, Colorado, Kansas, North Dakota, and Montana. While our focus is on providing broadband connectivity to the drilling sector of the oil and gas industry, we also provide wireless broadband services to a broad range of other enterprise customers including banking, healthcare, and educational customers utilizing the same wireless network assets and personnel used in our oil and gas services business. Market Opportunity Oil and Gas Industry. As demand for energy produced in North America continues to grow, we believe that exploration and production will continue to move further away from civilization and into more remote environments. In particular, the recent discovery of certain new extraction techniques such as "fracking" has opened up multiple oil and gas shale regions in extremely remote areas of North America. As a result, oil and gas companies have been forced to change the way they communicate. One such approach is to achieve a "digital oilfield." In a digital oilfield, new technologies such as process digitization, real time data collection, and intelligent controls are combined to improve recovery, accelerate production, reduce downtime, and reduce the number of on-site engineers and geologists required to oversee the operation. At the heart of a digital oilfield is a reliable, low latency, cost-effective means of communication. Oil and gas companies have historically relied on cellular and satellite communication to transmit data from the well site to the home office but these very remote locations are typically not within range of cellular communication and satellite communication suffers from extremely high latency - a delay of almost one second in data transmission. High latency can interrupt the fluency of voice communications and make machine to machine communications complex, ineffective and unreliable. Currently, we believe that the terrestrial wireless broadband network we offer in these remote areas is the only fully workable solution. In addition to the increased rate of utilization by oil and gas companies of our low latency, terrestrial wireless broadband communications service, our business growth is also driven by the increased level of oil and gas drilling activities in North America, particularly in shale plays in Eagle Ford and Bakken. We believe the following economic factors will positively impact our business strategy in the near future: The continued need for higher bandwidth, low latency communications to support the digital oilfield. This need is continually driven by the more bandwidth intensive software being developed by the major oil and gas service providers. We believe that the traditional satellite communications (very small aperture terminal, or VSAT) solution is no longer a workable communications path for these real time software applications due to the high latency of VSAT s and the only current practical solution is the use of a low latency terrestrial wireless broadband. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Proposed maximum aggregate offering price Amount of registration fee Common Stock (2) (3) $11,500,000(1) $1,568.60 Representative's Common Stock Purchase Warrant — (4) Shares of Common Stock underlying Underwriter's Common Stock Purchase Warrant (2)(5) $625,000 $85.25 Total $12,125,000 $1,653.85 (1) Estimated solely for the purpose of calculating the amount of the registration in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes an estimated $1,500,000 proposed maximum aggregate offering price from the sale of shares of common stock which may be issued pursuant to the exercise of a 45-day option granted by the registrant to the underwriters to cover over-allotments, if any. (2) Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions. (3) Includes shares the underwriters have the option to purchase to cover over-allotments, if any. (4) No fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended. (5) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended, based on an estimated proposed maximum aggregate offering price of $625,000, or 125% of $500,000 (5% of $10,000,000). The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. Increased oil drilling activity and sustained higher oil prices. The average West Texas Intermediate oil price has increased 268.2% from an average price per barrel of $26.11 in 2002 to an average price per barrel of $96.16 for the nine months ended September 30, 2012. The average number of drilling rigs in the United States dedicated to drilling for crude oil has increased 889% from an average of 137 during 2002 to an average of 1,351 for the nine months ended September 30, 2012. We believe that this increasing demand for crude oil is reflected in the sharp increase in crude oil prices and utilization of oil drilling rigs. We further believe that sustained domestic drilling activity for crude oil will continue as exploration and production companies contend with constrained supply and increased demand. To satisfy this increased demand, we believe oil and gas drilling operations likely will continue to grow in rural, undeveloped areas that lack communications infrastructure. We believe our solution addresses both the undeveloped market as well as areas where existing technologies may not be competitive. Favorable domestic natural gas drilling outlook. Domestic natural gas exploration and production companies are trending toward development of unconventional natural gas basins such as shale. These basins are known for large inventories of drilling locations and wells with high initial decline rates. These high initial decline rates typically result in more wells drilled over time in order to maintain production and lease positions. As producers gain experience in the nation s shale gas plays, the efficiency of their drilling operations has improved immensely. Today, operators sink wells at a much quicker pace and have optimized their drilling and hydraulic fracturing techniques to maximize output. We believe these factors should result in high levels of domestic natural gas drilling activity, in particular in the Eagle Ford Shale and Bakken Shale plays. We also believe that our market knowledge and strategic position will enable us to benefit from opportunities resulting from increased drilling in North American shale areas including the Eagle Ford Shale and Bakken Shale. As a result of the above factors, we expect that there will continue to be a tight supply of, and high demand for, natural gas and oil in North America in the near future. We believe these trends will continue to support high levels of drilling activity which should equate to increased demand for our services. Banking/Healthcare/Education Many rural areas of the United States that need point-to-point broadband communications do not have any alternative other than to lease these services from the local telephone company. Because of the rural nature of these leased services, there is very little competition and thus higher than average pricing in many locations. We have developed a wireless model for replacing these leased wireline circuits with terrestrial wireless circuits that are typically owned by the customer and monitored and maintained by us. In particular, for the regional banking industry, we utilize our already owned terrestrial wireless networks to build fixed point-to-point spur networks from our towers to the individual bank branch locations up to twenty-five miles away. The banks typically purchase these spur networks and pay us to build the networks. In addition, we provide our patented security device CryptoVueTM to satisfy the regulatory requirements of a bank using a wireless network outside of the bank s physical location. These new bank networks allow a bank to communicate voice and data among their various branches as well as the parent bank. Following the construction and commissioning of a bank network, we typically enter into a long term monitoring and maintenance contract with the bank. The advantage that the bank receives, in addition to higher transmission speeds, is a reduction of their communication costs as compared to leasing such services from the telephone company. To date we have constructed four such banking networks that serve almost one hundred branch locations across Texas and Louisiana. The healthcare and educational application of our wireless technology is very similar to the banking model, except that we typically own the spur networks and the security requirements are not as stringent as compared to banks. Over the past five years we have completed such networks for four large school districts in Texas and are serving three healthcare facilities, most located in the State of Texas. Commercial and Residential Wireless Broadband The rural areas of the United States have not historically enjoyed the advantages of broadband that is now available in most urban areas. Currently many rural areas still receive their Internet service by way of a dial up telephone connection, a local cable company, or if they live near a more urban region, by DSL. Even though they are connected to the Internet they cannot enjoy its advantages because their connection speed is limited in bandwidth. For those who want or need an increased bandwidth offered by broadband, the only viable and economic solution is to purchase wireless broadband. The costs associated with providing connectivity these customers are directly related to the number of customers per square mile, and as a result, the margins for rural commercial and residential broadband can be quite small even when delivered in a wireless fashion. We have, however, been able to utilize our existing networks shared with oil and gas customers, banks, healthcare, and educational entities to deliver wireless broadband to customers in these rural areas. We currently have approximately 3,500 residential and commercial customers sharing our rural networks with our banking/healthcare/educational/ and oil and gas customers. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED [__], 2012 ___________ Shares Common Stock This is a firm commitment public offering of [__] shares of our common stock. Our common stock is presently quoted on the OTC Bulletin Board ("OTCBB") under the symbol "ERFB.OB". We intend to apply to have the common stock listed on The NASDAQ Capital Market under the symbol "ERF". No assurance can be given that our application will be approved. On December 14, 2012, the last reported sale price for our common stock on the OTCBB was $1.08 per share. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 9 of this prospectus for a discussion of information that you should consider before investing in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds before expense to us $ $ (1) Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Aegis Capital Corp. See "Underwriting" for a description of compensation payable to the underwriter. We have granted a 45-day option to the underwriter to purchase up to [__] additional shares of common stock solely to cover over-allotments, if any. The underwriter expects to deliver our shares to purchasers in the offering or about [__], 2013. Aegis Capital Corp Our Services Oil & Gas Industry Wireless Bandwidth and Related Support Services. Through our oil and gas industry division, we provide a wide range of wireless Internet bandwidth connectivity service solutions as well as a number of related products and services, which include the following: Nomadic terrestrial wireless broadband circuit connectivity to the wellsite: the term "nomadic" refers to our ability to provide portable trailer mounted fifty foot erectable communication (such mobile broadband trailers being referred to as "MBT s") directly to the wellsite and to wirelessly connect these MBT s back to one of our fixed site network towers. Using this approach to broadband communications delivery we are able to provide one or more symmetrical 1.5 Mb/s circuits to our oil and gas customer wellsite locations anywhere within up to twenty five miles from a fixed tower location depending on the local terrain. Wellsite communications equipment rental: rental of computers, printers, fax machines, monitors, and similar communications equipment directly to the wellsite customers. Wellsite IT support services: software and driver loading, computer problem resolution, and IT troubleshooting. Wellsite IT services over broadband: IT support services to allow wellsite customers to operate remote software and data solutions over the broadband connection. Network monitoring and maintenance: monitoring of various customer devices over the broadband network and troubleshooting either remotely or in person at the wellsite. Layer 2 secure communications connectivity products rental and services: secure Internet protocol layer 2 routing of customer circuits to improve security and reliability of broadband connection. Fixed site terrestrial wireless broadband connectivity: wireless broadband circuit connectivity directly from our fixed network towers to customer fixed sites such as remote field offices. Network design and construction: design of wireless networks for customers for implementation anywhere in the world. Implementation of our network designs for customers anywhere in North America. Production field SCADA: connection of our fixed tower wireless networks via wireless circuits directly to oil and gas customer production fields to monitor and control the production process. Midstream communications, monitoring, and security: connection of our fixed tower wireless networks via wireless circuits directly to gathering and transport pipeline facilities for monitoring and security purposes. Enterprise-Level Wireless Bandwidth Product and Services. Through our enterprise network services division we provide a wide range of terrestrial wireless Internet bandwidth service solutions and related products to the regional banking, healthcare, and educational sectors primarily in the rural areas of North America within our existing coverage areas, including: Turnkey design and implementation of custom Internet wireless bandwidth solutions, including long-term maintenance and network monitoring; Reselling arrangements, under which banks may sell wireless broadband services to private entities, cities, municipalities, and private citizens in specific coverage areas; and Secure connectivity using our patented CryptoVueTM product. Commercial and Residential Wireless Bandwidth Products and Services. Through our commercial and residential wireless bundled services division we provide a full range of terrestrial wireless Internet connectivity service solutions and products to commercial businesses and residential customers using our existing wireless networks. These services include high-speed Internet, VOIP service, network monitoring and maintenance, and video service. The bulk of our current commercial and residential customer base reside in Texas and Louisiana. TABLE OF CONTENTS Page Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001025536_taylor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001025536_taylor_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fcf98c8e505d7fb5478199fdf908c7fb65c3d5a1
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001025536_taylor_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not contain all the information that you need to consider in making your investment decision to purchase the securities offered hereby. You should carefully read this entire prospectus, as well as the information incorporated by reference herein, before deciding whether to invest in the securities. You should carefully consider the sections entitled RISK FACTORS in this prospectus and the documents incorporated by reference herein to determine whether an investment in the securities offered hereby is appropriate for you. The Company We are a bank holding company headquartered in Rosemont, Illinois, a suburb of Chicago. We derive substantially all of our revenue from the Bank, our wholly-owned subsidiary. We provide a range of products and services primarily to closely-held commercial customers and their owner operators in the Chicago area. We also provide services related to asset-based lending, mortgage banking and commercial equipment financing through offices in Chicago and other geographic markets. At March 31, 2012, we had assets of $4.7 billion, deposits of $3.0 billion and stockholders equity of $416.8 million. Our primary businesses are commercial banking, including commercial real estate lending, asset-based lending, mortgage banking, commercial equipment financing and retail banking. Our target commercial lending customers are businesses in industries such as manufacturing, wholesale and retail distribution, transportation, construction contracting and professional services. Our clients are generally closely-held, middle-market companies with annual revenues between $5 million and $250 million. Our commercial lending activities primarily consist of providing loans for working capital, business expansion or acquisition, owner-occupied commercial real estate financing, revolving lines of credit and stand-by and commercial letters of credit. We also offer treasury cash management services, including repurchase agreements, interest rate swap agreements, internet balance reporting, remote deposit capture, positive pay, automated clearing house products, imaged lock-box processing, controlled disbursement and account reconciliation. Our commercial and industrial lending group operates primarily in the Chicago area. In addition, through offices located across the United States, we also offer asset-based lending through Cole Taylor Business Capital, including revolving lines of credit supported by receivables and inventory and term loans supported by equipment and real estate. We also originate, sell and service mortgage loans through Cole Taylor Mortgage. This line of business, launched in early 2010, is a source of noninterest fee income and provides earnings and geographic diversification. We currently originate, sell or service mortgage loans in 32 states and the District of Columbia. Loan production is sourced through a national broker network, retail offices across the United States, and from the Bank s banking centers (branches), which are located in the Chicago area. As previously announced, in mid-June 2012, we launched a major expansion of our retail mortgage operations through the hiring of more than 60 new mortgage retail professionals located in Michigan, Indiana and Ohio. This expansion nearly doubled the number of our retail mortgage origination offices and represented a 20% increase in Cole Taylor Mortgage s staffing. As previously announced, we recently launched Cole Taylor Equipment Finance, our new commercial equipment finance division. This line of business offers a full range of equipment finance options and will specialize in originating and syndicating commercial equipment leases for U.S. companies. In addition to our lending activities, we offer deposit products, such as checking, savings and money market accounts, as well as time deposits through nine banking centers located in the Chicago area and through our on-line banking application. We also cross-sell products and services to the owners and executives of our business customers to help them meet their personal financial goals, including personal credit. In addition to commercial clients, we provide deposit and credit services to our community-based customers, typically individuals and small, local businesses located near one of our banking centers. We use third-party providers to offer investment management and brokerage services. Our commercial and retail banking and deposit products are delivered by a single operations area located in Rosemont, Illinois. Our mortgage unit is based in Ann Arbor, Michigan. We have two separate and discrete operating segments, Banking and Mortgage Banking. Our principal executive office is located at 9550 West Higgins Road, Rosemont, Illinois 60018, and our phone number is (847) 653-7978. Table of Contents Additional information about us is included in our filings with the Commission, which are incorporated by reference into this prospectus. See WHERE YOU CAN FIND ADDITIONAL INFORMATION and DOCUMENTS INCORPORATED BY REFERENCE in this prospectus. Securities Being Registered This prospectus relates to the potential resale from time to time by the selling securityholders, or their respective successors, including transferees, of some or all of the following: 1,282,674 shares of our Nonvoting Preferred originally issued by us to the Prairie Capital Entities on March 29, 2012, in exchange for a total of 405,330 shares of our Nonvoting Convertible Preferred Stock, Series D (the Series D Preferred ), and 877,344 shares of our Non-Voting Convertible Preferred Stock, Series G (the Series G Preferred ), held by the Prairie Capital Entities to simplify our capital structure; 1,282,674 shares of Common Stock issuable from time to time upon conversion of such shares of Nonvoting Preferred; 919,190 shares of Common Stock (the Series C Conversion Shares ) originally issued on December 31, 2011, upon conversion of shares of our 8% Non-Cumulative, Convertible Perpetual Preferred Stock, Series C (the Series C Preferred ), that have not previously been registered for resale; 235,869 total shares of Common Stock originally issued to holders of Series C Preferred in lieu of cash dividends on April 15, July 15 and October 15, 2011 (the Series C Dividend Shares ); 2,280,000 shares of Common Stock (the Series F Conversion Shares ) originally issued on March 29, 2011, upon the conversion of shares of our Non-Voting Contingent Convertible Preferred Stock, Series F (the Series F Preferred ); 6,794,670 shares of Common Stock (the Series A Conversion Shares ) originally issued on May 13, 2010, pursuant to an exchange offer to holders of our 8.0% Non-Cumulative Convertible Perpetual Preferred Stock, Series A (the Series A Preferred ); 219,794 shares of Common Stock (the 2008 Warrant Shares ) issued upon exercise of certain warrants (or to be issued upon surrender of warrants already exercised in accordance with their terms) to acquire such stock (the 2008 Warrants ), which such 2008 Warrants were originally issued by us pursuant to the Securities Purchase Agreement, dated as of September 29, 2008, by and among us and various investors party thereto; 500,000 shares of Common Stock (the FIC Warrant Shares ) issuable upon exercise of a warrant to acquire such stock at an exercise price of $20.00 per share (the FIC Warrant ), which such FIC Warrant was originally issued by us to Financial Investments Corporation ( FIC ) pursuant to the Management Services Agreement, dated as of September 29, 2008, by and among us and FIC; 414,000 shares of Common Stock purchased by Harrison I. Steans, Jennifer W. Steans and other members of their extended family in various open market transactions (the Market Shares ); 4,888 shares of restricted stock held by each of Harrison I. Steans, Jennifer W. Steans and Jeffrey W. Taylor awarded to them November 6, 2008 in conjunction with their service on the Company s board of directors (the Restricted Shares ); 1,497,912 shares of Common Stock purchased by Harrison I. Steans, Jennifer W. Steans and other members of their extended family, 142,225 shares of Common Stock purchased by various members of the Taylor family and entities controlled thereby (including the Voting Trust, as described below), and 278,130 shares of Common Stock purchased by the Prairie Capital Entities, each pursuant to a rights offering commenced by the Company on November 23, 2011 (together, the Rights Offering Shares ); Table of Contents 4,632,364 shares of Common Stock issued to various members of the Taylor family in connection with the split-off of the Company from Reliance Acceptance Group, Inc. (formerly known as Cole Taylor Financial Group) on February 12, 1997, which shares are held of record by various trusts, including a voting trust established November 30, 1998 (the Voting Trust ), of which Bruce W. Taylor, Jeffrey W. Taylor and Cindy Taylor Robinson serve as trustees, for the benefit of members of the Taylor family; 16,253 shares of Common Stock issued to Bruce W. Taylor through the Company s prior Employee Stock Ownership Plan (which Employee Stock Ownership Plan was terminated effective May 31, 2008) (the ESOP ) as compensation for his services to the Company; 16,151 shares of Common Stock issued to Jeffrey W. Taylor through the ESOP as compensation for his services to the Company; 41,500 shares of Common Stock acquired by members of the Taylor family in various other transactions, including in open market transactions and upon exercise of options held by members of the Taylor family; 20,000 shares of Common Stock issuable upon exercise of options held by Bruce W. Taylor with an exercise price of $20.00 per share, which were originally issued to Bruce W. Taylor on March 19, 2003, and 20,000 shares of Common Stock issuable upon exercise of options held by Bruce W. Taylor with an exercise price of $26.08 per share, which were originally issued to Bruce W. Taylor on March 17, 2004; and 20,000 shares of Common Stock issuable upon exercise of options held by Jeffrey W. Taylor with an exercise price of $20.00 per share, which were originally issued to Jeffrey W. Taylor on March 19, 2003, and 20,000 shares of Common Stock issuable upon exercise of options held by Jeffrey W. Taylor with an exercise price of $26.08 per share, which were originally issued to Jeffrey W. Taylor on March 17, 2004. Table of Contents
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+Prospectus summary This summary highlights information about CafePress Inc. and the offering contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. You should carefully read the entire prospectus before making an investment decision, including the information presented under the headings Risk factors and Management s discussion and analysis of financial condition and results of operations and the consolidated financial statements and related notes included elsewhere in this prospectus. In this prospectus, except as otherwise indicated or as the context may otherwise require, all references to CafePress , CafePress.com , we , us and our refer to CafePress Inc. Company overview We believe we are a leading e-commerce platform enabling customers worldwide to create, buy and sell a wide variety of customized and personalized products. We serve our customers, including both consumers and content owners, through our portfolio of e-commerce websites, including our flagship website, CafePress.com. Our consumers include millions of individuals, groups, businesses and organizations who leverage our innovative and proprietary print-on-demand services to express personal and shared interests, beliefs and affiliations by customizing a wide variety of products. These products include clothing and accessories, art and posters, stickers, home accents and stationery. Our content owners include individual designers as well as artists and branded content licensors who leverage our platform to reach a mass consumer base and share and monetize their content. We believe we are a leading e-commerce platform for customization of consumer products based on our more than a decade of experience of providing high-quality customized products in single unit and small quantity orders on a when-ordered basis. We have developed a strong brand with a growing community that, as of December 31, 2011, had more than 15 million members and more than three million shops, and we shipped over 7.8 million products in 2011 from a catalog of over 320 million unique products, as measured by the number of different combinations of designs and types of merchandise. Our mission is to offer an unrivaled platform that is the world s premier source for self-expression through product customization and personalization. We benefit from the network effect created when millions of customers are attracted to our catalog of content and are often inspired to contribute and share their own content. By enabling communities to share their interests, beliefs and affiliations through customized and personalized merchandise, we believe we drive social commerce. Our expansive content catalog covers topics our customers are deeply passionate about, as well as relevant current events. As a result, we believe our catalog serves as a cultural barometer reflecting the latest topics, ideas, trends, moods and opinions. For the year ended December 31, 2011, we had nearly 130,000 new images uploaded to our retail e-commerce websites on average per week. We have built a state-of-the-art facility in Louisville, Kentucky with innovative technology and manufacturing processes that enable us to provide high-quality customized products that are individually built to order at mass scale. Our proprietary, vertically integrated processes enable us to produce a broad range of merchandise efficiently, and cost effectively and quickly. We have an art print production facility in Portland, Oregon and as a result of our acquisition of Canvas On Demand LLC, we also have a custom canvas production facility in Raleigh, North Carolina. Our recent acquisition of substantially all of the assets of L&S Retail Ventures, Inc., including the e-commerce website InvitationBox.com, adds further print production facilities in North Carolina. We also recently entered into an agreement to acquire substantially all of the assets of Logo d Softwear, Inc., which, if and when consummated, will add further print production facilities in Connecticut. We may not be able to close this acquisition as planned or at all, and may be unable to successfully integrate this business or realize the anticipated benefits of the acquisition. Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated March 28, 2012 Prospectus 4,500,000 shares Common stock We are offering 2,500,000 shares of our common stock and the selling stockholders identified in this prospectus are offering 2,000,000 shares of our common stock. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. This is our initial public offering and no public market currently exists for our common stock. We expect the initial public offering price to be between $16.00 and $18.00 per share. We have applied to list our common stock on The NASDAQ Global Select Market under the symbol PRSS. Per share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds to CafePress Inc., before expenses $ $ Proceeds to selling stockholders, before expenses $ $ Certain of the selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to an additional 675,000 shares of our common stock solely to cover overallotments. Certain entities associated with Institutional Venture Partners and Glynn Capital Management, each of which is associated with certain of our existing stockholders, as well as certain of our directors and officers, including Bob Marino, our Chief Executive Officer, have indicated an interest in purchasing up to 300,000 shares of our common stock in this offering at the initial public offering price. Because these indications of interest are not binding agreements or commitments to purchase, these persons may elect not to purchase shares in this offering. The underwriters will receive the same discount from any shares of our common stock purchased by such persons as they will from any other shares of our common stock sold to the public in this offering. Any shares sold to these persons will be subject to the lock-up agreements described under Shares Eligible for Future Sale Lock-Up Agreements. Investing in our common stock involves a high degree of risk. Please read Risk factors beginning on page 11. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the shares is expected to be made on or about , 2012. J.P. Morgan Jefferies Cowen and Company Janney Montgomery Scott Raymond James , 2012 Table of Contents The majority of our net revenues is generated from sales of customized products through our e-commerce websites and associated charges. In addition, we generate revenues from fulfillment services, including print and production services provided to third parties. Fulfillment revenues were less than 2% and 1% of net revenues during the years ended December 31, 2010 and 2011, respectively. Consumers purchase customized products directly from our website or through storefronts hosted by CafePress. Customized products include user-designed products as well as products designed by our content owners. We pay royalties to content owners for the use of their content on our products and royalty payments are included in cost of net revenues. In 2010, we generated net revenues of $127.9 million. In 2011, net revenues were $175.5 million, an increase of 37% from 2010. For information on how we define and tabulate our number of members and customers, see Overview and Key operating metrics in Management s discussion and analysis of financial condition and results of operations. Industry overview Customization of consumer products is undergoing an enormous transformation which is being driven by the following trends: Consumer demand for long tail selection and customization. Consumers increasingly expect a broader selection of both design choices and content to create or customize products. We refer to the array of choices beyond what is typically in high demand or widely available as long tail selection. E-commerce. Online shopping and e-commerce have become mainstream. According to Forrester, United States online retail sales were expected to be $197 billion in 2011.(1) According to eMarketer, in 2011, approximately 179 million consumers ages 14 and older in the United States were expected to research products online and 83% of them were expected to make an online purchase. With the rise of e-commerce, the user experience has improved with easy-to-use interfaces, broad selection, enhanced search, rich media and streamlined payment options. Internet tools and do-it-yourself empowerment. Historically, consumers have needed help from third-party vendors to customize apparel and other products, but with the widespread availability of easy-to-use digital tools, today people can design products themselves. The ability to use do-it-yourself design tools reduces the need to visit a local artisan, further disrupting the traditional way products have been customized. Advances in mass customization technologies. Historically, customizing products often required either large production runs with complex and expensive set-ups or allowed for only minimal customization through basic engraving or monogramming. With recent innovations in digital printing technology, the ability to digitally print in a cost effective, flexible volume and high-quality manner on a variety of mass market products has only recently emerged. Market opportunity Our services address multiple large adjacent markets which include, but are not limited to: Screen printing and garment printing. According to Freedonia, the U.S. screen printing and garment printing market is expected to grow from $7.2 billion in 2009 to $8.1 billion in 2014. (1) Source: U.S. Online Retail Forecast, 2010-2015 , Forrester Research, Inc., February 28, 2011 Table of Contents Table of Contents Creative photo merchandise. IDC estimates that the market for creative photo merchandise will grow from $2.8 billion in 2010 to $6.6 billion in 2014. Creative photo merchandise encompasses all products that are customized with photos including, but not limited to, cards, calendars, posters, photobooks and scrapbook pages, wall art and home d cor. Promotional products. According to Promotional Products Association International, the promotional products industry grew 5.9% to $16.6 billion in 2010, up from $15.6 billion in 2009. This includes $2.7 billion in online sales of promotional products in 2010, up 11.1% from $2.4 billion in 2009. Customization services for product manufacturers. From tablet cases to water bottles and beyond, our product diversity suggests a large opportunity encompassing ever-expanding retail merchandise categories. Based on 2009 U.S. Census Bureau data, we estimate the U.S. market for customizable retail goods is approximately $1.0 trillion. We believe traditional printing models are not optimized to satisfy individual consumers and smaller constituencies due to long lead times, costly set-up, limited printing capabilities and minimum quantities needed to achieve efficiency. Our strengths We believe our business model provides us with the following competitive advantages: Viral network effect. We enjoy a network effect that attracts new users to our various services. We attract new customers when new sales channels are launched and when new designs are added to our content catalog, where they are socially shared and made discoverable online. These new customers then often add their own new designs to our content catalog. Trusted premium brands. We believe we have built strong relationships with our customers who are passionate about the products they create. In addition to our flagship brand, CafePress.com, we operate a portfolio of vertically targeted brands that individually target specific consumers, products and use cases, and collectively expand the reach of the CafePress platform. Broad product assortment. We offer a wide variety of products across many different categories as diverse as t-shirts, hats, canvas art prints, banners, stickers, iPhone and iPad cases, mugs, water bottles, GPS units, cards and calendars. We believe this product assortment makes us a more compelling one-stop solution for our customers. Innovative and efficient operations. Our workflow automation enables us to schedule and produce items and efficiently merge them into a single shipment. We generally process and ship orders within three business days after a customer places an order and in many instances can ship orders within 24 hours after an order is placed. Transforming blank materials into finished goods in real-time minimizes inventory and capital requirements. Long tail marketing expertise. We believe our experience in data and analytics allows us to make effective marketing decisions across a continuously updated product catalog with sparse data. Comprehensive online offering. We believe our tools satisfy our users diverse needs, including finding the perfect unique gift, creating customized items or selling custom creations to their own communities or for profit through our online marketplace. The CafePress platform We have developed services and production capabilities that allow us to offer users the ability to find, make, buy and sell a wide variety of expressive customized products. Our platform consists of front-end design and Table of Contents Table of Contents sales channels and a back-end services platform. Our front-end design and sales channels include our branded e-commerce websites, CafePress.com, CanvasOnDemand.com, Imagekind.com, GreatBigCanvas.com and InvitationBox.com, as well as resellers and co-brands which include content owners, branded product manufacturers, other retailers and retail brands and distributors and resellers. Our back-end services platform includes user-generated content, licensed fan content, design tools, our turn-key online shops platform and fulfillment and manufacturing capabilities. Our strategy Our goal is to be the world s customization platform. Key elements of our strategy to achieve this goal include the following: Expand customer base. We intend to expand our customer base and continue to promote our portfolio of e-commerce websites through existing marketing channels, which include word of mouth referrals from existing customers, trade publications, catalogs, online advertising, search engine marketing and social media. Expand content partners. We intend to expand our licensed content partners to increase the range of content accessible on our site and attract new users. Expand product partners. We believe we can partner with branded product manufacturers to help them offer customized designs on their products. Expand product and service offerings. We intend to continue to innovate to enable us to expand our products and services. Increase sales to existing customers. We seek to increase both our average order size and the lifetime value we receive from a customer by increasing retention rates, up-selling and cross-selling efforts and continuing to improve and streamline our design and ordering processes. Offer customization through additional brands. We intend to leverage our platform by developing new brands and seeking co-branding opportunities to provide rich customer experiences along a range of industries. Seek acquisition and international expansion opportunities. We intend to develop additional business opportunities through selected acquisition and international expansion, targeting customers in key geographies where Internet usage and e-commerce are widespread and targeting key verticals where we can leverage our technology and catalog of content. We currently have localized websites for the United States, Australia, Canada, Germany and the United Kingdom. Risks and challenges Investing in our common stock involves substantial risks, including, but not limited to, the following: Fluctuations in our operating results. Our revenues and operating results may fluctuate from period to period, which could cause our stock price to decline. Factors that may contribute to these fluctuations include major social or political events or developments resulting in a short term demand for products, macroeconomic cycles and consumer spending and demand for our user-designed products and services. Seasonality of our business. The seasonality of our business places increased strain on our operations. A significant portion of our net revenues and operating cash flows have historically been realized during the period from November through December each year. Any disruption in, or failure to scale, our business Table of Contents I refuse to quit EAT SLEEP BIKE I Walk for my mom MS awareness Support free expression Learn to Be Zen fun facts at a glance 2007 2008 2009 2010 150,000,000 100,000,000 200,000,000 250,000,000 350,000,000 300,000,000 products created Over 150,000 new images uploaded on average per week* our members 2007 2008 2009 2010 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 We define members as visitors to our websites who register with us and provide their email address. of customers total number 2007 2008 2009 2010 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 We track the total number of customers by unique member number or email address. As a result, an individual who creates multiple accounts using different email addresses will be counted as multiple unique customers. Over 315 million unique products 6 million products shipped in 2010 * from January 1, 2011 through June 30, 2011 Over 2 million orders shipped in 2010 Table of Contents operations during this period or any other period of peak demand could have a disproportionate effect on our operating results and our stock price could decline. User-generated content. Our business model focuses on user-generated content and as a result, controversial political and social expressions appear on our site with which current or potential customers or business partners may not wish to be associated. In addition, as a service provider that prints and distributes user-generated content, we face allegations related to, and potential liability for, negligence, copyright or trademark infringement or other claims based on the nature and content of materials that we print or distribute. If we lose or alienate current or potential customers or business partners due to the content on our websites, or become subject to liability, we risk damage to our brands, reputation and our business and results of operations. Proper functioning of our websites, systems and infrastructure. The satisfactory performance, reliability and availability of our websites, our marketing activities, our transaction-processing systems and our network infrastructure are critical to our success. Any failure to maintain the satisfactory performance, security and integrity of our websites, system or infrastructure could materially and adversely affect our business, reputation, financial condition and results of operations. Production and fulfillment operations. A significant portion of our production, inventory management, packaging, labeling and shipping processes are performed in a single production and fulfillment center located in Louisville, Kentucky. If our production and fulfillment operations are interrupted for any significant period of time, it could damage our brands and reputation and substantially harm our business and results of operations. Corporate information CafePress Inc., a Delaware corporation, was incorporated as CafePress.com, Inc. in California on October 15, 1999, and reincorporated in Delaware on January 19, 2005. Our corporate headquarters are located at 1850 Gateway Drive, Suite 300, San Mateo, California 94404 and our telephone number is (650) 655-3000. We maintain numerous e-commerce websites including those found at www.cafepress.com, www.canvasondemand.com, www.imagekind.com and www.invitationbox.com. The information contained in or connected to our websites is not a part of, and is not incorporated into, this prospectus and should not be relied on in determining whether to make an investment decision. In March 2012, we entered into an agreement to acquire substantially all of the assets of Logo d Softwear, Inc., an e-commerce provider of personalized apparel and merchandise for groups and organizations. The asset purchase agreement provides for a total initial purchase price of $8.3 million, consisting of $7.5 million in cash and $0.8 million in shares of CafePress common stock priced as of the closing date, as well as contingent rights for the principal stockholder to receive up to $8.6 million in future performance-based cash consideration. In addition, in connection with, and upon closing of, the acquisition, the principal stockholder will receive CafePress stock options to purchase shares of our common stock with an aggregate value of up to $2.1 million, with vesting based on the achievement of certain performance milestones. The contingent right to future earn-out payments will expire either March 31, 2016, or June 30, 2016, depending on the closing date of the acquisition. The acquisition is anticipated to close during the second quarter of 2012, subject to obtaining the requisite approvals and other customary closing conditions. We may not be able to close this acquisition as planned or at all, and may be unable to successfully integrate this business or realize the anticipated benefits of the acquisition. CAFEPRESS, CANVAS ON DEMAND, IMAGEKIND and INVITATIONBOX are among the trademarks or service marks owned by CafePress. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. Table of Contents Table of contents Page Prospectus summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and does not contain all the information that you need to consider in making your investment decision. You should carefully read this entire prospectus before deciding whether to invest in the common stock. You should pay special attention to the Risk Factors section of this prospectus to determine whether an investment in the common stock is appropriate for you. This registration statement, including the exhibits and schedules thereto, contains additional relevant information about us and our capital stock. We file annual, quarterly, and current reports, proxy statements, and other information with the SEC. You may read and copy any document we file at the SEC s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can also request copies of the documents, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. These SEC filings are also available to the public from the SEC s web site at www.sec.gov. About Dais Analytic Corporation We have developed and are commercializing specialty nano-structured polymer materials (Aqualyte ). Using Aqualyte materials we are creating value added products which are designed to: (i) improve the energy efficiency in Heating, Ventilation and Air Conditioning (HVAC) equipment, (ii) replace the chemical refrigerants used in today s HVAC systems as well as most all forms of refrigeration systems; (iii) remove impurities in contaminated water (such as waste water and seawater); and (iv) allow the storage of electrical energy in a device called an ultracapacitor. Dais first commercial product, ConsERV, is a fixed plate energy recovery ventilator unit that attaches to most all forms of HVAC equipment. Through use of the Aqualyte materials, ConsERV assists building and home-owners to increase ventilation thereby improving indoor air quality while often saving energy, lowering CO2 emissions, and allowing for smaller HVAC systems to be installed through the management of moisture and temperature content in the air. Several applications that use the Aqualyte platform are under development. These potential applications include: NanoAir , a water based packaged HVAC system that is potentially capable of achieving improvements in energy efficiency over traditional AC and refrigeration systems, NanoClear , a water clean-up process that has been demonstrated to provide parts per billion potable water from most forms of contaminated water, including salt, brackish or wastewater1, and NanoCap , an energy storage device (ultracapacitor) we are currently researching and developing that uses the attributes of the Aqualyte material to potentially provide significantly greater energy density and power than conventional capacitors or batteries. We are a New York corporation established on April 8, 1993 as Dais Corporation. We subsequently changed our name to Dais Analytic Corporation on December 13, 1999. Our principal executive offices are located at 11552 Prosperous Drive, Odessa, FL 33556. Our telephone number is (727) 375-8484. Our website can be accessed at www.daisanalytic.com and www.conserv.com. Information contained in our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. Our Proprietary Technologies We have multiple pending and issued patents in the U.S., China, Hong Kong and Europe, and under the Patent Cooperation Treaty (PCT). In addition, we co-own two PCT applications with Aegis Biosciences LLC, a biomaterials drug delivery technology company. These patents relate to, or are applications of, our nano-structured polymer materials that perform functions such as ion exchange and modification of surface properties. The polymers are selectively permeable to polar materials, such as water, in molecular form. Selective permeability allows these materials to function as a nano-filter in various transfer applications. These materials are made from base polymer resins available from commercial firms worldwide and possess what we believe to be some unique and controllable properties, such as: Selectivity: Based on our research, we believe that when the polymer is made there are small channels created that are 5 to 30 nanometers in diameter. There are two types of these channels: hydrophilic (water permeable), and hydrophobic (water impermeable). The channels can be chemically tuned to be selective for the ions or molecules they transfer. The selectivity of the polymer can be adjusted to efficiently transfer water molecules from one face to the other using these channels. 1 Testing performed by the Pasco County Water District as reported 3/8/10, and Constellation Technology laboratory as reported 1/5/10 and 1/7/10 TABLE OF CONTENTS Page No. Cautionary Statement Regarding Forward-Looking Statements 1 Prospectus Summary 2
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our common stock. You should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our common stock, including the information discussed under Risk Factors and our financial statements and related notes appearing elsewhere in this prospectus. Unless otherwise indicated herein, the terms we, our, us, or the Company refer to Rib-X Pharmaceuticals, Inc. Overview We are a biopharmaceutical company developing new antibiotics to provide superior coverage, safety and convenience for the treatment of serious and life-threatening infections. Our proprietary drug discovery platform, which is based on Nobel Prize-winning science, provides an atomic-level, three-dimensional understanding of interactions between drug candidates and their bacterial targets and enables us to systematically engineer antibiotics with enhanced characteristics. Our most advanced product candidate, delafloxacin, is intended for use as an effective and convenient first-line therapy primarily in hospitals prior to the availability of a specific diagnosis. Unlike currently available first-line treatments, delafloxacin has the potential to offer broad-spectrum coverage as a monotherapy for serious Gram-negative and Gram-positive bacterial infections, including for methicillin-resistant Staphylococcus aureus, or MRSA, with both intravenous and oral formulations. Most bacteria are broadly categorized as either Gram-positive, meaning that they possess a single membrane and a thick cell wall and turn dark-blue or violet when subjected to a laboratory staining method known as Gram s method, or Gram-negative, meaning that they have two membranes with a thin cell wall and, when subjected to Gram s method of staining, lose the stain or are decolorized. Delafloxacin has completed four Phase 2 clinical trials, including a Phase 2b clinical trial for the treatment of acute bacterial skin and skin structure infections, or ABSSSI. We received results from this Phase 2b trial in December 2011 and plan to commence the first of two planned Phase 3 trials for the treatment of ABSSSI in the second half of 2012. The timing of our second planned Phase 3 clinical trial will depend upon obtaining additional funding beyond the proceeds of this contemplated offering. Based on our current expectations regarding the availability of such funding and subject to the results of these two trials, we anticipate submitting a New Drug Application for delafloxacin for the treatment of ABSSSI as early as the fourth quarter of 2014 and for additional indications thereafter. Our second product candidate, radezolid, is a next-generation, IV/oral oxazolidinone designed to be a potent antibiotic with a safety profile permitting long-term treatment of resistant infections, including those caused by MRSA. We have completed two Phase 2 clinical trials of radezolid. We are also pursuing development of RX-04, our preclinical program partnered with Sanofi, S.A., which has produced new classes of antibiotics that attach to a location on the bacterial ribosome to which no other approved class of antibiotics bind and are designed to combat the most difficult-to-treat, multi-drug resistant Gram-positive and Gram-negative bacteria. Because its protein building function is essential for the life of infection-causing bacteria, the bacterial ribosome is the target of most marketed antibiotics, which work by binding to the ribosome and inhibiting its function. In addition, our pipeline includes RX-05, an antibacterial discovery program, and RX-06, an antifungal discovery program, both of which target newly discovered binding sites within ribosomes. We believe one of our key competitive advantages is our focus on the three-dimensional properties of antibiotics, which is enabled by our proprietary drug discovery platform. Unlike traditional approaches to antibiotic discovery, which generally rely on random screening of Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell securities, and we are not soliciting offers to buy these securities, in any state where the offer or sale is not permitted. Subject to Completion, Dated May 8, 2012 PRELIMINARY PROSPECTUS 10,000,000 Shares Common Stock This is the initial public offering of shares of the common stock of Rib-X Pharmaceuticals, Inc. We are offering shares of our common stock. We anticipate the initial public offering price will be between $6.00 and $7.00 per share. Our common stock has been approved for listing on the NASDAQ Global Market under the symbol RIBX. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors beginning on page 12. Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to us $ $ We have granted the underwriters the right to purchase up to 1,500,000 additional shares of common stock to cover over-allotments. Certain of our existing stockholders and their affiliated entities have indicated an interest in purchasing up to approximately $20.0 million in shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these existing stockholders and any of these existing stockholders could determine to purchase more, less or no shares in this offering. The underwriters expect to deliver the shares on , 2012. Deutsche Bank Securities William Blair & Company Lazard Capital Markets Needham & Company The date of this prospectus is , 2012 Table of Contents chemical libraries to identify potential compounds, our discovery team utilizes sophisticated, customized computer software to simulate and predict in three-dimensions both inter- and intra- molecular reactions and resulting properties of compounds including absorption, distribution, metabolism, excretion and toxicology. We combine these exclusive computational tools with our patent-protected, atomic-level insights into the structure of the ribosome to systematically engineer novel antibiotics to avoid resistance and optimize potency, spectrum, efficacy and safety. As a result, we have created a highly efficient and productive drug development engine based on our unique design strategy that effectively leverages structure-based drug design, preparative medicinal chemistry, ribosome biochemistry, molecular biology and pharmacology. According to Datamonitor, in the seven major pharmaceutical markets, which consist of the United States, Japan, the United Kingdom, Germany, France, Italy and Spain, antibiotic product sales totaled approximately $20 billion in 2009 and, within the hospital market, approximately $8 billion was generated from antibiotic sales in 2006. Staphylococcus skin and soft tissue infections in the United States alone accounted for on average nearly 12 million physician and emergency department visits annually in the years from 2001 to 2003 according to the Centers for Disease Control, or CDC. In addition, the Infectious Disease Society of America, or IDSA, estimated in 2004 that nearly two million infections are developed in the hospital setting annually in the United States, resulting in the deaths of 90,000 patients each year. Of these infections, 70% are caused by bacteria that are resistant to one or more antibiotics used to treat them, including those caused by MRSA. The CDC estimated that MRSA alone caused 94,000 life-threatening infections and almost 19,000 deaths in 2005 in the United States, exceeding the number of deaths caused by HIV/AIDS in that year. Based on data provided by GlobalData for the U.S. pharmaceutical market and the global pharmaceutical market, we estimate that the use of antibiotics to treat MRSA has increased at a compounded annual growth rate of 18% for the years from 2005 to 2010 and is forecasted to continue growing through 2017. The three major branded antibiotics used for the treatment of serious infections, Zyvox (linezolid), Cubicin (daptomycin) and Tygacil (tigecycline), generated U.S. sales in 2011 of $640 million, $699 million and $148 million, respectively. In addition, there were over four million courses of vancomycin, a generic drug used to treat serious infections caused by resistant Gram-positive bacteria like MRSA, dosed in 2009. According to the Joint Commission, formerly the Joint Commission on Accreditation of Healthcare Organizations, hospitals are generally required to begin administering antibiotics to patients with serious infections within six hours of presentation to the hospital, well in advance of the up to 48 hours required to diagnose the particular bacteria causing the infection. As a result, this first-line antibiotic therapy needs to offer a broad spectrum of antibacterial coverage that includes MRSA. Because there is no single broad-spectrum antibiotic available that is safe for first-line use and also has potency against MRSA, according to Datamonitor, the current first-line standard of care for serious infections is an antibiotic cocktail consisting of the twice-daily intravenous, or IV, administration of vancomycin for MRSA coverage, and one or more additional antibiotics to broaden the overall spectrum of coverage. The use of vancomycin, a narrow-spectrum Gram-positive treatment, may be increasingly limited due to its risk of adverse side effects and the rise of vancomycin-resistant bacterial strains in recent years. According to Datamonitor, these limitations often require the use of a second-line treatment, such as Cubicin or Zyvox, for MRSA and other resistant Gram-positive bacteria. However, as indicated in its prescribing information, Cubicin is only available in an IV form and requires laboratory monitoring at least weekly for toxic side effects. Although Zyvox has an available oral form, as indicated in its prescribing information, it requires active monitoring for use beyond two weeks Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY Our Business We are a leading provider of digital marketing software solutions that help organizations engage with their customers across multiple interactive channels. Our solutions empower marketers to design, automate, and optimize data-driven campaigns that generate superior engagement, increased business value through greater customer conversions, and measurable return on marketing investment. Our Lyris HQ and Lyris ListManager platforms improve marketing efficiency by providing campaign management and automated message delivery, using robust segmentation and analytics of real-time social, mobile, and web interactions. Lyris HQ is offered as a Software-as-a-Service ("SaaS") solution for enterprises, while Lyris ListManager is offered as an on-premises solution primarily for the small and medium business ("SMB") market. We make our solutions available through annual and multi-year subscriptions based on messaging volume, platform fees, and professional services. During the three months ended March 31, 2012, over 5,000 organizations worldwide were actively using our solutions. Our solutions help companies increase customer conversions and grow revenues by automating targeted message flows that facilitate superior customer experiences. Our private cloud technology stack is architected for "big data" to consolidate and analyze large amounts of vital behavioral and transactional information from online activities in order to increase the relevance of every customer message. With more than ten years' experience, and billions of digital messages processed by our solutions, we are continuously creating new ways for companies to deliver value to their customers. Our sales and marketing activities are based in our Emeryville, California headquarters, with additional direct sales personnel located throughout the United States, Europe, Latin America, and Australia. We extend our sales reach through a large network of marketing service providers who use our solutions to serve their customers. Our dedicated customer success team focuses on retaining and growing existing customers. We deliver services and support that help organizations maximize the value of their digital marketing efforts driven by Lyris solutions. Our customers operate in many industries, including technology, retail, publishing, entertainment, and telecommunications, and include over 800 leading organizations such as American Public Media, Carter's, Christie's, Collier's, ESPN, Expedia Cruise Ship Centers, Harvey Nichols, McAfee (Intel), Morgan Stanley, NBCUniversal Media, Nvidia, PennWell, Ryanair, Smith Micro Software, Telstra, Viewsonic, and many others. Over 4,200 additional organizations utilize our solutions through their relationships with our marketing service provider customers. Highlights of our recent financial performance include: Recurring revenue, consisting of subscription and support and maintenance revenue, represented 84% of total revenues during the nine months ended March 31, 2012. Sales of Lyris HQ grew from $9.3 million in fiscal 2009 to $18.5 million in fiscal 2011, a 41% CAGR, and from $13.9 million during the nine months ended March 31, 2011, to $15.1 million during the nine months ended March 31, 2012, an increase of 9%. In July 2011, we intensified our new product development activities associated with our Lyris HQ Enterprise, which we expect to release in September, 2012. We increased our operating expenses, excluding non-cash impairment charges, by $0.1 million, or 1%, from $19.8 million during the nine months ended March 31, 2011, to $19.9 million during the nine months ended March 31, 2012. We returned to profitability for the three months ended March 31, 2012, due to a tighter focus on our core business and expense management, recording $0.6 million of net income. For the nine months ended March 31, 2012, we achieved Adjusted EBITDA of $2.1 million. For more AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (1)Email Statistics Report, 2012-2016, The Radicati Group, Inc., April 10, 2012. (2)Facebook, Inc. Form S-1 Registration Statement, as amended, filed May 15, 2012. (3)"Twitter Hits Nearly 200M Accounts, 110M Tweets Per Day," Oliver Chang, Forbes, January 19, 2011. (4)Forrester US Interactive Marketing Forecast, 2011 to 2016, Forrester Research, Inc., August 24, 2011. Table of Contents Inability to connect with customers across multiple interactive channels, where they are most likely to engage and execute a buying decision or activity; Significant time and expense of coordinating consistent message delivery across disparate point solutions that are built around specific interaction channels (e.g., email, social, web, etc.), and not around the complete customer buying process; Complex and expensive infrastructure technology and security requirements to enable multi-channel digital marketing programs; and Difficulty satisfying existing and new regulatory standards such as those related to deliverability and online permissioning. Our Solutions Our cross-channel marketing solutions help organizations engage with their customers and prospects in relevant and meaningful ways. We enable users to process real-time data in order to deliver targeted, relevant message flows, and are continuously expanding the ways organizations can deliver value to their customers. In the evolving digital communications market, key benefits of our solutions include: Behavioral targeting powered by tightly integrated analytics: Our platform integrates real-time analytics with email and social media messaging, which empowers marketers to engage with audiences relevantly across multiple channels using personalized information. Automation and real-time communications: Our solutions offer sophisticated automation capabilities that integrate real-time message delivery, including triggered drip campaigns, transactional email messages, and web behavioral events (such as web bounce, cart abandon, and transaction completion). Unified, modular, scalable cloud-based architecture: Our platform brings together multiple digital marketing capabilities that may be accessed and used as needed and can scale to meet existing and new customers' data storage, processing, and performance requirements. Flexible and secure infrastructure: Our infrastructure is designed and developed for secure access and extensibility. Our SaaS solutions enable direct data and functional integrations from external systems to our platform to extend value across the enterprise. Regulatory compliance and best practice message deliverability: We support customer delivery of messages using sophisticated monitoring and management tools, and our deliverability specialists facilitate compliance with commercial standards and industry regulations. Advanced next generation solutions: Lyris HQ Enterprise, which is currently in beta testing, combines marketing analytics with real-time segmentation to deliver relevant messages at every interaction. Lyris HQ Enterprise has been developed on a "big data" architecture that enables massively parallel data processing from any relevant data source, and helps marketers identify actionable insights and execute precision targeting across previously inaccessible revenue opportunities. Our Competitive Strengths We have a deep heritage of pioneering the digital marketing industry and a proven history of innovating new solutions that help marketers develop meaningful connections with their customers. We address a broad spectrum of digital marketing automation requirements, and are constantly developing new features and capabilities to help organizations execute high-impact digital campaigns. 6401 Hollis Street, Suite 125 Emeryville, CA 94608 (800) 768-2929 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents Technology: We developed the first digital marketing solution to natively integrate web analytics. All of our SaaS solutions are designed to support cross-channel marketing automation, customer data management, and real-time analytics in order to increase engagement, drive conversion, and maximize revenue. Intellectual Property: The intellectual property we hold as a result of our investment in technology development allows us to offer a broader and more defensible suite of solutions in the competitive marketplace. Team: We have built sales, marketing, and service capabilities, including international research and development, to quickly deliver our solutions worldwide. We have assembled an exceptional leadership team of industry veterans that have helped their prior organizations scale and succeed globally. Experience: We have deep domain expertise and a proven ability to understand the needs of our customers. We have successfully partnered with organizations ranging from Global 1000 to upper mid-market, educational, government, and other organizations to deliver measurable value. We complement all of our software solutions with professional services to help our customers consistently realize value from their marketing initiatives. Flexible, scalable platform: Our multi-tenant cloud-based infrastructure allows our customers to cost-effectively access sophisticated digital messaging capabilities and manage large amounts of data and transaction volumes while maintaining high availability. Our solutions are designed so customers can easily add new data sources and functionality as they expand their marketing programs across digital interaction channels. Our Growth Strategy We seek to provide the best on-demand digital marketing solutions for our customers. To achieve our objective, we are focused on the following key strategies: Grow our customer base: We intend to add direct sales personnel to expand our customer base and nurture our network of business partners, agencies, and marketing service providers to drive new customer and revenue growth. Increase revenue from existing customers: We seek to expand revenues from our existing customer base by cross-selling and up-selling new products and services. Strengthen our technology solutions: We believe that continued investment in research and development is critical to our ability to develop and enhance our solutions and technologies. We recently added significant new functions to Lyris HQ, including a mobile application and enhanced platform usability. We have also made a major investment in the design, development, and customer testing of our new Lyris HQ Enterprise platform. Invest in the best people: We plan to hire and retain a highly talented and productive workforce, and continue to be a great place to work where our employees are inspired to contribute their best efforts towards Lyris' future success. Gain mindshare in the digital marketing sector: We intend to strengthen our position in the digital marketing industry by introducing differentiated offerings and launching sophisticated content marketing initiatives, such as industry guides, webinars, whitepapers, and best practice studies to generate market demand and global brand awareness. Wolfgang Maasberg President and Chief Executive Officer Lyris, Inc. 6401 Hollis Street, Suite 125 Emeryville, CA 94608 (800) 768-2929 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Selected Risks Associated with Our Business Our business is subject to many risks and uncertainties, which you should be aware of before making an investment decision. These risks and uncertainties are discussed more fully in the section of this prospectus entitled "Risk Factors" and include, but are not limited to, the following: We have a recent history of losses, and we may not return to or sustain profitability in the future. The markets in which we compete are highly competitive, and some of our competitors have significantly more resources than we have. We may not be able to sustain or manage future growth effectively. We may not be able to attract new customers, retain existing customers or sell additional functionality and services to existing customers. We have been dependent on our customers' use of email as a channel for digital marketing. Corporate Information Lyris, Inc. is incorporated under the laws of the State of Delaware. Our global headquarters are located at 6401 Hollis Street, Suite 125, Emeryville, CA 94608, and our telephone number is (800) 768-2929. We conduct our business in over 35 countries, with subsidiaries in Argentina, Australia, Brazil, Canada, and the United Kingdom. Our foreign subsidiaries are generally engaged in providing sales, account management, and support. Our website address is www.lyris.com. The information on, or that can be accessed through, our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. Unless otherwise indicated, the terms "Lyris," "we," "us" and "our" refer to Lyris, Inc., together with its consolidated subsidiaries. Lyris is our registered trademark in the United States, and the Lyris logo and all of our product names are our trademarks. Other trademarks appearing in this prospectus are the property of their respective holders. Copies to: Horace Nash, Esq. Niki Fang, Esq. Fenwick & West LLP 801 California Street Mountain View, CA 94041 (650) 988-8500 Leib Orlanski, Esq. Melissa Brown, Esq. K&L Gates, LLP 10100 Santa Monica Blvd., 7th Floor Los Angeles, CA 90067 (310) 552-5000 Table of Contents THE OFFERING Common stock offered 2,000,000 Shares Common stock to be outstanding after this offering 11,411,083 Shares Over-allotment option 300,000 Shares Use of proceeds We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be approximately $ million (or approximately $ million if the underwriter's over-allotment option to purchase additional shares in this offering is exercised in full), based upon an assumed public offering price of $ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable. We expect to use the net proceeds from this offering for hiring sales and marketing personnel, product development, and general working capital and other general corporate purposes. We may also use a portion of the net proceeds to invest in or acquire complementary businesses, products, services, technologies or other assets. See "Use of Proceeds." Over-the-Counter Bulletin Board trading symbol "LYRI.OB" Proposed NASDAQ Stock Market symbol "LYRI" The number of shares of our common stock to be outstanding after this offering is based upon 9,411,083 shares of common stock outstanding as of March 31, 2012 and does not include: 114,132 shares of common stock issuable upon the exercise of stock options outstanding as of March 31, 2012 with a weighted-average exercise price of $5.35 per share; 564,127 shares of common stock issuable upon the exercise of stock options granted after March 31, 2012, with a weighted-average exercise price of $1.80 per share; 187,500 shares of common stock issuable upon the settlement of outstanding restricted stock units ("RSUs") as of March 31, 2012; and 814,626 shares of common stock reserved for future issuance under our 2005 Equity Incentive Plan. All share and per share amounts presented in this prospectus have been adjusted to give effect to the 15-to-1 reverse stock split for our common stock that took effect on March 12, 2012. Except as otherwise indicated, all information in this prospectus assumes the filing of our amended and restated certificate of incorporation, which will occur upon the completion of this offering, and no exercise by the underwriter of its option to purchase up to an additional 300,000 shares of our common stock in this offering. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act"), check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents SUMMARY CONSOLIDATED FINANCIAL DATA The following tables summarize our consolidated financial data. We derived the summary consolidated statements of operations data for the years ended June 30, 2010, and 2011 from our audited consolidated financial statements included elsewhere in this prospectus. We derive the summary consolidated statement of operations data for the year ended June 30, 2009, from our audited consolidated financial statements which are not included in this prospectus. We derived the unaudited summary consolidated statements of operations data for the nine months ended March 31, 2011 and 2012, and the unaudited summary consolidated balance sheet data as of March 31, 2012 from our unaudited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future, and our results for the nine months ended March 31, 2012 are not necessarily indicative of the operating results to be expected for the full year ending June 30, 2012 or any other period. You should read the following summary consolidated financial data in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements, related notes and other financial information included elsewhere in this prospectus. Years Ended June 30, Nine Months Ended March 31, 2009 2010 2011 2011 2012 (unaudited) (in thousands, except per share data) Revenues: Recurring revenue: Subscription revenue: Lyris HQ $ 9,332 $ 17,375 $ 18,535 $ 13,861 $ 15,071 Legacy products 23,243 16,508 11,899 9,357 6,894 Total subscription revenue 32,575 33,883 30,434 23,218 21,965 Support and maintenance revenue 5,156 4,185 3,649 2,748 2,829 Total recurring revenue 37,731 38,068 34,083 25,966 24,794 Professional services revenue 1,865 3,491 4,150 3,209 3,344 Software revenue 3,692 2,687 1,892 1,368 1,354 Total revenues 43,288 44,246 40,125 30,543 29,492 Cost of revenues(1)(2) 18,761 20,632 20,705 15,011 10,741 Gross profit 24,527 23,614 19,420 15,532 18,751 Operating expenses:(1)(2) Sales and marketing 14,511 13,484 14,584 10,485 7,024 General and administrative 6,318 6,921 8,233 6,362 6,817 Research and development 3,563 3,246 2,032 1,765 4,784 Amortization and impairments 18,731 1,999 1,857 1,192 10,672 Total operating expenses 43,123 25,650 26,706 19,804 29,297 Loss from operations (18,596 ) (2,036 ) (7,286 ) (4,272 ) (10,546 ) Interest and other income (expense), net (469 ) (231 ) 150 (111 ) (303 ) Loss before income tax provision and non-controlling interest (19,065 ) (2,267 ) (7,136 ) (4,383 ) (10,849 ) Income tax provision (benefit) (45 ) 474 (161 ) (54 ) 61 Net loss (19,020 ) (2,741 ) (6,975 ) (4,329 ) (10,910 ) Less: Net loss attributable to non-controlling interest (2 ) (9 ) Net loss attributable to Lyris, Inc (19,020 ) (2,741 ) (6,973 ) $ (4,329 ) (10,901 ) Basic and diluted: Net loss per share $ (2.76 ) $ (0.39 ) $ (0.86 ) $ (0.54 ) $ (1.25 ) Weighted average shares used in calculating net loss per common share(3) 6,881 7,097 8,084 8,087 8,742 Other Non-GAAP financial measures: Adjusted EBITDA(4) $ 3,605 $ 3,245 $ (1,461 ) $ (223 ) $ 2,109 The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. (1)The pro forma column reflects the receipt of $ in net proceeds from our sale of shares of common stock in this offering at an assumed public offering price of $ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable. A $1.00 increase or decrease in the assumed public offering price of $ per share would increase or decrease our pro forma cash and cash equivalents, working capital, total assets and total stockholders' equity by $ million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions payable. Table of Contents EXPLANATORY NOTE Lyris, Inc. is filing this Amendment No. 1 to its Registration Statement on Form S-1, to reclassify expenses between cost of revenues and research and development. Because this is a change in the classification of expenses, our revenue, total expense, income (loss) from operations, net income (loss), or earnings (loss) per share will not be affected by the reclassification. All prior year amounts remain unchanged. In July 2011, we shifted the focus of the engineering team away from product support, to product development. Our engineers are now primarily focused on the development of our next generation product line, and increasing the functionality and enhancing the ease of use of our on-demand software. As a result of this shift, engineering expenses that previously were considered cost of revenues are now reclassified as research and development to better reflect this change in our engineering focus at the time that change occurred. Our Audit Committee, after considering all the relevant quantitative and qualitative measures, determined that the change in classification was not material. However, it concluded that our financial statements for the quarters ended September 30, 2011, December 31, 2011, March 31, 2012 and for the nine months ended March 31, 2012 should be reclassified to reflect the reclassification of engineering expenses as a result of this change in our engineering focus. Table of Contents Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA We calculate Adjusted EBITDA as net income (loss) before interest and other (income) expense, net, which includes interest income, interest expense, and other income and expense, income tax provision (benefit), depreciation and amortization of property & equipment, impairment of goodwill, impairment of capitalized software, gain on disposal of discontinued operation, reorganization and severance, reversal of balance sheet reserve, and stock-based compensation. We believe that Adjusted EBITDA, provides useful, supplemental information regarding our operating performance and is often used by investors and analysts in their evaluation of companies such as ours. We also believe that Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use similar Non-GAAP financial measures to supplement their GAAP results. In addition, we use Adjusted EBITDA as a measurement of our operating performance because it assists us in comparing our operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. It is useful to exclude certain non-cash charges, such as amortization of intangible assets and stock-based compensation and non-core operational charges, such as goodwill impairments, from Adjusted EBITDA because the amount of such expenses in any specific period may not be directly correlated to the underlying performance of our business operations and these expenses can vary significantly between periods. We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to determine incentive compensation for our executive officers, to evaluate the effectiveness of our business strategies, to verify compliance with the covenants of our credit facility, and to communicate with our board of directors ("Board") concerning our financial performance. We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using Non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. The following table provides a reconciliation from net income (loss) to Adjusted EBITDA for the years ended June 30, 2009, 2010, and 2011 and the nine months ended March 31, 2011 and 2012: Year Ended December 31, Nine Months Ended March 31, 2009 2010 2011 2011 2012 (unaudited) (in thousands) Net loss (19,020 ) (2,741 ) (6,975 ) (4,329 ) (10,910 ) Interest and other (income) expense net 469 231 (150 ) 111 303 Income tax expense (benefit) (45 ) 474 (161 ) (54 ) 61 Depreciation and amortization of property & equipment 1,178 1,085 1,563 813 918 Amortization of intangibles 3,618 3,751 2,264 1,856 1,882 Impairment of goodwill 17,042 9,000 Impairment of capitalized software 408 385 Gain on disposal of discontinued operation (284 ) Reorganization and severance 1,062 1,062 Reversal of balance sheet reserve (325 ) (325 ) Stock-based compensation 647 445 853 643 470 Adjusted EBITDA 3,605 3,245 (1,461 ) (223 ) 2,109 Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Dated July 26, 2012 Shares COMMON STOCK Table of Contents
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment in our common stock. Company Overview Proofpoint is a pioneering security-as-a-service vendor that enables large and mid-sized organizations worldwide to defend, protect, archive and govern their most sensitive data. Our security-as-a-service platform is comprised of an integrated suite of on-demand data protection solutions, including threat protection, regulatory compliance, archiving and governance, and secure communication. Our solutions are built on a flexible, cloud-based platform and leverage a number of proprietary technologies, including big data analytics, machine learning, deep content inspection, secure storage and advanced encryption, to address today's rapidly changing threat landscape. A fundamental shift in the sources of cyber crime, from hackers to organized crime and governments, combined with the emergence of international data trafficking, are driving an unprecedented wave of targeted, malicious attacks designed to steal valuable information. At the same time, the growth of business-to-business collaboration, as well as the consumerization of IT and the associated adoption of mobile devices and unmanaged Internet-based applications, have proliferated sensitive data and reduced the effectiveness of many existing security products. These factors have contributed to an increasing number of severe data breaches and expanding regulatory mandates, all of which have accelerated demand for effective data protection and governance solutions. Our platform addresses this growing challenge by not only protecting data as it flows into and out of the enterprise via on-premise and cloud-based email, instant messaging, social media and other web-based applications, but also securely archiving these communications for compliance and discovery. We address four important problems for the enterprise: Keeping malicious content out; Preventing the theft or inadvertent loss of sensitive information and, in turn, ensuring compliance with regulatory data protection mandates; Collecting, retaining, governing and discovering sensitive data for compliance and litigation support; and Securely sharing sensitive data with customers, partners and suppliers. Our platform and its associated solutions are sold to customers on a subscription basis and can be deployed through our unique cloud-based architecture that leverages both our global data centers as well as optional points-of-presence behind our customers' firewalls. Our flexible deployment model enables us to deliver superior security and compliance while maintaining the favorable economics afforded by cloud computing, creating a competitive advantage for us over legacy on-premise and cloud-only offerings. Our solutions are used by approximately 2,400 customers worldwide, including 26 of the Fortune 100, protecting tens of millions of end-users. We market and sell our solutions worldwide both directly through our sales teams and indirectly through a hybrid model where our sales organization actively assists our network of distributors and resellers. We also distribute our solutions through strategic partners including International Business Machines Corp. (IBM), Microsoft Corporation and VMware, Inc. AMENDMENT NO. 6 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Industry Background A number of trends are leading to a significant shift in the nature and severity of data security threats and the measures required to address them: Data security attacks are becoming more sophisticated and targeted. Professional criminals, governments and "hacktivists" are increasingly pursuing sensitive information, causing threats to shift from generic malware and high-volume spam to more targeted attacks, including "spear phishing" attacks, focused on high-value financial data. Consumerization of IT and growth of business-to-business collaboration increases risk of data loss. The widespread adoption of consumer technologies in the enterprise and the increasing need for business partners to exchange sensitive data make it more challenging for enterprises to control and govern their data. Consequences of data breaches have become more severe. The monetary and reputational cost of data breaches, whether malicious or inadvertent, is increasing rapidly. An ongoing wave of high profile breaches in multiple industries has exposed a broad range of data, including personal information, diplomatic communications, online banking credentials, financial accounts and health care records. Regulatory mandates create additional data protection and governance requirements. Governments around the world and at all levels of jurisdiction are continuing to enact new laws regarding data protection and privacy as well as new regulations to mandate closer oversight over all aspects of regulatory compliance. To protect their data assets, organizations have typically employed a number of disparate on-premise security products. However, these solutions are not well suited to addressing today's challenges and many organizations are still unable to adequately protect their data assets for a variety of reasons, including: Legacy threat protection products are increasingly vulnerable to modern targeted attacks. Widely deployed threat protection products are often ineffective against today's more advanced, targeted attacks. Siloed, reactive security and compliance offerings provide inadequate data protection. Legacy security architectures lack the integration and common policy framework to effectively protect and govern data across the enterprise. Traditional security architectures assume data is behind corporate firewalls. With the consumerization of IT and the associated adoption of mobile devices and cloud-based applications, valuable corporate data is now widely distributed. Legacy systems are unable to provide adequate data protection in this new environment because they are not designed to apply data loss prevention technologies to webmail, Internet-based collaboration applications or social networking sites. Inflexible, cumbersome security and compliance systems are often bypassed by end-users. Most existing solutions are inflexible, cumbersome to use, and hinder end-users' day-to-day business activities, all of which lead end-users to bypass them. Discrete, hardware-based offerings have high total cost of ownership. Traditional on-premise security and archiving products are time consuming to deploy and manage, require redundancy and excess capacity to handle peak-level workloads, and are difficult and expensive to upgrade. *See "Industry and Market Data." The Proofpoint Solution Our integrated suite of on-demand security-as-a-service solutions enables large and mid-sized organizations to defend, protect, archive and govern their sensitive data. Our comprehensive platform provides threat protection, regulatory compliance, archiving and governance, and secure communication. These solutions are built on a cloud-based architecture, protecting data not only as it flows into and out of the enterprise via on-premise and cloud-based email, instant messaging, social media and other web-based applications, but also securely archiving these communications for compliance and discovery. We have pioneered the use of innovative technologies to deliver better ease-of-use, greater protection against the latest advanced threats, and lower total cost of ownership than traditional alternatives. The key elements of our solution include: Superior protection against advanced, targeted threats. We use a combination of proprietary technologies for big data analytics, machine learning and deep content inspection to detect and stop targeted "spear phishing" and other sophisticated attacks. By processing and modeling billions of requests per day, our technology can recognize anomalies in traffic flow to detect targeted attacks, distinguish between valid messages and "phishing" messages, and detect targeted "zero-hour" attacks in realtime and quarantine them appropriately. Comprehensive, integrated data protection suite. We offer a comprehensive solution for data protection and governance through an integrated, security-as-a-service platform that improves an organization's ability to detect and mitigate inbound and outbound threats and securely archive and discover communication across all major communication channels including email, instant messaging, social media and other web-based applications. Designed to empower end-users. Our solutions actively enable secure, business-to-business and business-to-consumer communications and make it easy for end-users to share information. Security optimized cloud architecture. Our multi-tenant security-as-a-service solution enables us to leverage the benefits of the cloud to cost-effectively deliver superior security and compliance while optimizing each deployment for the customer's unique threat environment. Extensible security-as-a-service platform. Our security-as-a-service platform integrates with internally developed applications as well as with those developed by third parties while also providing a means to integrate with the other security and compliance components deployed in our customers' infrastructures. 892 Ross Drive Sunnyvale, CA 94089 (408) 517-4710 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents Our Business Strategy Our objective is to be the leading security-as-a-service provider of next-generation data protection and governance solutions. The key elements of our strategy include: Grow our customer base; Broaden the adoption of our platform with existing customers; Grow and further expand our international presence; Extend our channel partner network; Leverage and extend the capabilities of our security-as-a-service platform; and Protect against threats from established and emerging communication and collaboration platforms. Recent Developments The following financial information for the quarter ended March 31, 2012 is preliminary, based upon our estimates and subject to completion of our quarter-end financial closing procedures. This data has been prepared by and is the responsibility of management and has not been reviewed or audited by our independent registered public accounting firm. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect to this preliminary data. This summary is not a comprehensive statement of our financial results for the quarter and our actual results may differ from these estimates. Total revenue for the quarter ended March 31, 2012 is expected to be between $23.5 million and $24.5 million, which would represent an increase of between 25.0% and 30.3% from total revenue of $18.8 million for the quarter ended March 31, 2011. We expect our total expenses for the quarter ended March 31, 2012, including cost of revenue and operating expense, to be consistent with the quarter ended December 31, 2011, primarily as a result of certain non-recurring marketing expenses and legal and acquisition costs that occurred in the quarter ended December 31, 2011, offset by an increase in cost of revenue and research and development expenses in the quarter ended March 31, 2012. Therefore, we expect a modest improvement in our operating loss in the quarter ended March 31, 2012 relative to the quarter ended December 31, 2011. These preliminary results should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," in particular " Components of Our Results of Operations" and " Quarterly Results of Operations" therein, and our consolidated financial statements and the related notes included elsewhere in this prospectus. Risks Affecting Us Our business is subject to numerous risks, as highlighted in the section entitled "Risk Factors" immediately following this prospectus summary. Some of these risks include: We have a history of losses, and we may not achieve profitability in the future; We operate in a highly competitive environment with large established competitors; If we are unable to maintain high subscription renewal rates or sell additional solutions to current subscribers, our future revenue and operating results will be harmed; If our solutions fail to protect our customers from security breaches, our brand and reputation could be harmed; If our customers experience data losses, our brand, reputation and business could be harmed; and Gary Steele Chief Executive Officer Proofpoint, Inc. 892 Ross Drive Sunnyvale, CA 94089 (408) 517-4710 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents If enterprises continue to migrate to cloud-based email systems, and we fail to develop, market, or enhance our solutions so that they are valued by either our existing customers currently using these cloud-based systems or by new prospects, our ability to grow or maintain our revenue could be harmed. Corporate Information We were incorporated in Delaware in 2002. Our principal executive offices are located at 892 Ross Drive, Sunnyvale, California 94089, and our telephone number is (408) 517-4710. Our website address is www.proofpoint.com. The information on, or that can be accessed through, our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. Unless otherwise indicated, the terms "Proofpoint," "we," "us" and "our" refer to Proofpoint, Inc., a Delaware corporation, together with its consolidated subsidiaries. "Proofpoint" is our registered trademark in the United States, and the Proofpoint logo and all of our product names are our trademarks. This prospectus contains additional trade names, trademarks, and service marks of ours and of other companies. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with these other companies, or endorsement or sponsorship of us by these other companies. Other trademarks appearing in this prospectus are the property of their respective holders. Copies to: Matthew P. Quilter, Esq. Jeffrey R. Vetter, Esq. Fenwick & West LLP 801 California Street Mountain View, CA 94041 (650) 988-8500 Michael T. Yang, Esq. Proofpoint, Inc. 892 Ross Drive Sunnyvale, CA 94089 (408) 517-4710 Jeffrey D. Saper, Esq. Robert G. Day, Esq. Michael E. Coke, Esq. Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304 (650) 493-9300 Table of Contents The Offering Common stock offered by us 5,000,000 shares Common stock offered by the selling stockholders 1,199,421 shares Total common stock offered 6,199,421 shares Common stock to be outstanding after this offering 29,527,817 shares Use of proceeds We expect to use the net proceeds that we receive from this offering for working capital and other general corporate purposes. We may also use a portion of the net proceeds to acquire or invest in complementary businesses, products, services, technologies or other assets. We will not receive any proceeds from the sale of shares by the selling stockholders. See "Use of Proceeds."
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001221910_iwatt-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001221910_iwatt-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. Because this is only a summary, it does not
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001222552_wlh_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001222552_wlh_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001232521_vecast-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001232521_vecast-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information and does not contain all the information that may be important to you. You should carefully read this prospectus, any related prospectus supplement and the documents we have referred you to in "Where You Can Find More Information" on page 42 before making an investment in our common stock, including the Risk Factors section beginning on page 10. In this prospectus, references to "Company," "we," "us" and "our" refer to Vecast Inc. and our subsidiaries including Vecast China Co., Ltd., Vecast Software Co., Ltd., and Vecast Info. Co., Ltd., a Vecast China Co., Ltd. subsidiary incorporated in May, 2012.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001270418_blackstrat_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001270418_blackstrat_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained in this prospectus and should be read in conjunction with the more detailed information contained in this prospectus and the consolidated financial statements and related notes appearing elsewhere in this prospectus. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including the "Risk Factors" section in this prospectus. Unless the context otherwise requires, we use the terms "BlackStratus," the "Company," "we," "us" and "our" in this prospectus to refer to BlackStratus, Inc. and its subsidiaries. Unless the context requires otherwise or we specifically indicate otherwise, the information in this prospectus assumes that the underwriters do not exercise their over-allotment option. Unless otherwise indicated, all share and per share numbers in the prospectus have been retroactively adjusted to reflect a 1-for- reverse stock split of our common stock, which was effective on , 2012. BLACKSTRATUS, INC. Business Overview We are a leading provider of cloud-based security information and event management (SIEM) software solutions deployed and operated by "Security as a Service" (SECaaS) providers of all sizes, government agencies and individual enterprises. Our SIM One technology is used by organizations worldwide to detect, prevent and defend against both major and minor IT security breaches from the end point to the data center, to the "Cloud." The SIM One technology delivers a correlated and centralized, real-time view of alerts, status messages and a variety of security events generated by disparate third-party security products (such as firewalls, anti-virus products, intrusion detection software, etc.), allowing security professionals to identify and stop potential threats in real time. Specifically, our technology allows our SECaaS partners to sell multiple types of cloud-based security services to their customers, including security event analysis and notifications about real-time threats to the customer's IT infrastructure, in addition to providing continuous and secure logging of all of their customer's security event data for compliance and audit purposes. Further, our own direct enterprise and government customers deploy our technology within their own private clouds for multiple location and agency use, or deploy it within their individual data centers for use by their security operations team. Formed in 1999 selling into enterprise security operations centers, BlackStratus changed its market focus beginning in late 2008 to service the rapid growing cloud-based SECaaS market. Since changing our focus we have achieved the following: Transformed our revenue mix from primarily enterprise SIM One deployments in 2008 to a majority of SECaaS partners and logging sales in 2011 (52%). Architected our technology to address unique cloud security requirements such as multi-tenancy and the ability to have multiple customers managed off of a single platform. Signed and partnered with three multinational telecommunication carriers on three separate continents all with revenues in excess of $20B US. Had our technology adopted by over fifteen SECaaS partners worldwide. In 2009, completed the successful acquisition of HighTower Software expanding our product offerings and market reach. BlackStratus technology plays an important role in managing the growing big data security challenges and scale issues created by the rise of three interrelated market forces, cloud computing, mobile device proliferation, and the rise of social networks. Whether placing their customer Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Table of Contents information into the Cloud through SalesForce.com, allowing employees access to email on their iPhones, or having employees post to Facebook from the company network, IT administrators are now overwhelmed by the serious security exposure these trends have unleashed on their networks. BlackStratus technology actively and in real time, detects, prevents and defends against the growing and challenging multitude of security challenges wrought by these productive but disruptive technology trends. Our ability to consume and correlate millions of events at a time through the Cloud or a network and identify and prevent security breaches in real time is a mission critical component of our customers and partners ability to manage through these market forces and to meet the legal obligations of their service level agreements (SLAs) with their customers. Our Industry Managed Security Service Partners (MSSPs) offer end-user customers their expertise to manage security on-site in the customer's environment and, increasingly, off-site and in the Cloud through SECaaS offerings. The rapid growth of and demand for MSSP providers and SECaaS solutions is primarily the result of companies and enterprises responding to increasing regulatory requirements, decreasing IT budgets, the capital expense involved in deploying security technology and the difficulty and expense of hiring and retaining qualified IT personnel with the requisite security expertise. According to the November 2011 Gartner Magic Quadrant report, MSSPs realized North American revenue of $2.3 billion in 2010, up from $1.8 billion in 2009. The report estimated that MSSP revenue would increase to $2.8 billion in 2011. The report also states that the global economic environment continues to drive businesses to limit hiring and increase demand for managed services. Gartner expects growth to continue at a compound annual growth rate of 14% from 2011 to 2015, which suggests that it will be one of the higher growth sectors in the IT industry. Our Solutions and Products Our SIM One platform detects, prevents and defends against security breaches at the local network level as well as in the Cloud. It identifies in real-time both potential and actual high severity security events presenting the data in a rich, consolidated graphical view for security professionals to prioritize responses to threats and risks in their, or their customer's, cloud and IT infrastructure. The platform collects security event data from diverse sources including firewalls, intrusion prevention systems, servers and desktops as well as many others. It then applies through its patented engine technology, multiple levels of sophisticated correlation that identify potential and real security problems that a single point product with no correlation, such as a firewall, might miss. Once a threat has been identified an operator can prevent the occurrence and or remediate the security breach through the use of our Incident Response Manager. Our Cinxi One appliance is a fully integrated as well as stand alone component of the SIM One platform that provides an efficient and scalable storage solution for the preservation of security event logs which are often required by regulatory agencies for compliance purposes and for creating a legal chain of custody in the case of a prosecution of a hacker. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED APRIL 13, 2012 Table of Contents We have designed our products to provide a comprehensive solution to meet the challenge of identifying and resolving security threats. The principal ways in which our solutions address these challenges include: Carrier Class Technology and Architecture. We designed our solutions to perform in the largest and most demanding IT environments in the world where "up time" and quality of service are paramount to meet increasingly stringent service level agreements. Interoperability. Our ability to identify, collect and normalize data from a broad range of disparate and heterogeneous third-party devices allows us to rapidly deploy our platform inside our MSSP and enterprise customers' IT infrastructures. Scalability. We designed our SIM One platform and Cinxi One appliance to consume thousands of security events per second and hundreds of millions of security events per day. Real-Time Correlation and Actionable Security Intelligence. Our multi-level correlation processes network security events through multiple levels of memory filtering to identify security breaches and policy violations as the events occur, allowing organizations to take preventive action prior to a violation as opposed to corrective action after the violation has occurred. Multi-Tenant Architecture. In order to provide SECaaS offerings to their customers, our MSSP partners must be able to manage hundreds of multiple customers through a single instance of our platform. Our multi-tenant architecture provides this capability. In late 2008, we strategically realigned to focus on the emerging MSSP and SECaaS markets. We redesigned our platform to provide additional and expanded capabilities to address the unique requirements associated with providing real-time security event correlation in and through the Cloud. Our 2009 acquisition of the High Tower Software gave us an appliance-based logging and SIEM application and added both customer premise and cloud-based logging to our platform. Shares Common Stock Table of Contents Our Strategy Our objective is to be the premier provider of cloud-based SECaaS through our MSSP and Managed Service Partners (MSP) partners worldwide. We characterize SECaaS offerings to include Logging, Monitoring, Management, Auditing and Proactive Prescription, and we intend to make SECaaS readily available to individual enterprises by providing our solution to power our partners' multi-tenant SECaaS platforms. We have segmented our partner market into three tiers to better address their distinct needs: 1. Tier 1 partners include broad based telecommunication companies, large MSSPs and other hosting companies. 2. Tier 2 partners include geographic and industry specific MSSPs. 3. Tier 3 partners include MSPs who primarily offer network management services to their customers today as opposed to security management services. Key elements of our strategy include: Growing Our MSSP Partner Base. We plan to increase our presence globally by expanding our sales and marketing team with the objective of adding additional MSSP and MSP partners to our existing base. Deepening Our Penetration With Our Existing Tier 1 and Tier 2 Partners. We intend to facilitate expanded deployments within our existing partners through the introduction of new products and services. We expect the virtualization of our Cinxi One logging appliance to generate opportunities for additional sales through our partners. Expanding Our Tier 1 and Tier 2 Partner Base. We intend to aggressively add new MSSP specific partners to our distribution reach through the expanded use of our modular deployment methodology including the release of a "turnkey" customer-facing portal and reporting package which will further reduce the time to market for our partners. Extending Our Partner Network to the Tier 3 Partners Through A "White Label" SECaaS. For many potential MSSP and MSP partners the expense of deploying and operating our platform inside their own data centers is a barrier to using our platform. We intend to deploy our This is a firm commitment initial public offering of shares of common stock of BlackStratus, Inc. No public market currently exists for our shares. We anticipate that the initial public offering price of our shares of common stock will be between $ and $ per share. We intend to apply to list our shares of common stock for trading on the NASDAQ Capital Market under the symbol "BLKS." No assurance can be given that our application will be approved. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 12 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock. Neither the Securities and Exchange Commission nor any state or foreign securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ (1)Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Aegis Capital Corp., the underwriter. See "Underwriting" for a description of compensation payable to the underwriter. We have granted a 45-day option to the underwriter to purchase up to additional shares of common stock solely to cover over-allotments, if any. The underwriters expect to deliver our shares to purchasers in the offering on or about , 2012. Aegis Capital Corp Table of Contents platform via the Cloud, utilizing our own labor and expertise, and provide it as a SECaaS offering to MSSP and MSP partners who can resell it under their own label and brand. Deepening Our Penetration With Our Existing Enterprise Customers. We intend to facilitate expanded deployments within our existing enterprise customers by introducing new product offerings including a SECaaS based offering of our SIM One product. Expanding Our Portfolio Of Offerings And Capabilities. We will continue to add products and services that enhance our platform's capability to deliver the full range of SECaaS offerings required by our partners, their customers and our enterprise customers. Table of Contents Risks Affecting Us Our business is subject to numerous risks. These risks may affect our future sales and related profitability. These risks may affect our operating margins and the future success of our business. Some of these risks include: We have shifted our business focus in the last three years away from direct sales to the enterprise customer in favor of sales through MSSP and MSP partners. We have a limited operating history in this new market and face unknown challenges. Our operating history has been turbulent. We are a small business with less than 100 employees and we have struggled in response to market conditions and macro-economic events. We have incurred significant losses since our inception and have an accumulated deficit of approximately $58.9 million at December 31, 2011. Our management team and employees may not be able to execute on our business plan which could continue our losses. Without the funding from this offering or other events effecting our liquidity (including the conversion of promissory notes to common stock, restructuring of debt instruments or other funding events), we may have difficulty continuing as a going concern. Our quarterly operating results are likely to vary significantly and be unpredictable due to the length and unpredictability of our sales cycle as well as the purchasing and budget practices of our partners within the context of the macro economy and IT market sector. We will rely on channel partners (MSSPs) for a significant portion of our revenue and growth, and our ability to retain and manage these partners will impact our ultimate success. If we are unsuccessful in developing deeper penetration into our existing MSSP partner base or fail to attract more MSSP customers, our revenues could decline and our growth prospects could suffer. The market in which we operate is highly competitive and many of our established competitors have significantly greater resources then we do. Our customers and partners may choose to develop and customize their own solutions rather then purchase our products and services, and new technology also may emerge which may diminish the utility of our products and negatively impact our sales and operating results. Recent Developments In January and February 2012, we borrowed an aggregate of $1.5 million principal amount under convertible notes, obtained a $700,000 line of credit from (together, the Sigma Convertible Notes and Line of Credit), and sold at $0.0001 per share 1,500,000 shares of our common stock to, entities affiliated with Sigma Capital Partners, in a bridge financing under the terms of a purchase and credit agreement. Pursuant to the agreement, if we consummate an offering of our equity securities, including this offering, by September 30, 2012, Sigma is permitted to elect to (i) convert the Sigma Convertible Notes and Line of Credit into shares of common stock at a 20% discount from the offering price, or (ii) be repaid in full. Sigma has indicated that it intends to elect to be repaid in full in connection with this offering, and such election is reflected in this prospectus. The Sigma Convertible Notes and Line of Credit bears interest at a rate of 18% per annum and any interest accrued shall be repayable in cash to Sigma. We also entered into (i) an advisory services agreement pursuant to which we sold to Sigma 250,000 additional shares of our common stock at $0.0001 per share and (ii) an escrow agreement which requires us to issue to Sigma up to 700,000 additional shares of our common stock at $0.0001 per share in connection with borrowings from the Sigma Line of Credit. Sigma is permitted to put to us for $0.10 per share up to 2,450,000 (assuming the issuance of the 700,000 shares subject to the escrow agreement) of our shares of common stock owned by Sigma upon the earlier to occur of February 28, 2013 and a "deemed liquidation event," as such term is defined in the purchase and credit agreement, which includes this offering. You should rely only on the information contained in this prospectus. Neither we nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus. We and the underwriters are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where such offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. We own, have rights to or have applied for the trademarks and trade names that we use in conjunction with our business, including our logo. All other trademarks and trade names appearing in this prospectus are the property of their respective holders. In this prospectus we rely on and refer to information and statistics regarding our industry. We obtained this market data from independent industry reports or other publicly available information. Some data is also based on our good faith estimates, which are derived from our review of internal surveys and studies, as well as independent industry reports. Our Corporate History and Information BlackStratus, Inc. was originally incorporated as netForensics.com, Inc. on August 4, 1999 in the State of New Jersey. On January 7, 2002, netForensics, Inc., a wholly-owned subsidiary of netForensics.com, Inc., was incorporated in the State of Delaware. On April 30, 2002, netForensics.com, Inc. was merged into netForensics, Inc., in a tax-free reorganization and netForensics, Inc. became the surviving entity. In April 2003, netForensics, Inc. formed a wholly-owned subsidiary in the United Kingdom named netForensics Limited, which was dissolved in January 2011. On March 5, 2012, netForensics, Inc. changed its name to BlackStratus, Inc. Our corporate headquarters are located at 1551 South Washington Avenue, Piscataway, New Jersey 08854, and our telephone number is (732) 393-6000. Our website address is www.blackstratus.com. The information on, or that can be accessed through, our website is not part of this prospectus. Table of Contents THE OFFERING Common stock offering by BlackStratus shares Common stock to be outstanding after this offering shares Use of proceeds We expect to receive net proceeds from this offering of approximately $ million, based on an initial public offering price of $ , which is the midpoint of the range listed on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses that we must pay. We intend to use the net proceeds as follows: up to $ for the repayment of the Sigma Convertible Notes and Line of Credit, to the extent not converted (See " Recent Developments"); and the remaining proceeds for general corporate purposes, including the potential funding of strategic acquisitions or investments, the continued expansion of our sales and marketing activities and the expanded funding of our research and development efforts. See the section entitled "Use of Proceeds." NASDAQ Capital Market symbol "BLKS"
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+Prospectus summary 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case included in this prospectus. Unless the context otherwise requires, we use the terms Ruckus, company, we, us and our in this prospectus to refer to Ruckus Wireless, Inc. and, where appropriate, our consolidated subsidiaries. Company Overview Ruckus is a leading provider of carrier-class Wi-Fi solutions. Our solutions, which we call Smart Wi-Fi, are used by service providers and enterprises to solve network capacity and coverage challenges associated with the rapidly increasing traffic and number of users on wireless networks. Our Smart Wi-Fi solutions offer carrier-class enhanced reliability, consistent performance, extended range and massive scalability. Our products include gateways, controllers and access points. These products incorporate our proprietary technologies, including Smart Radio, Smart QoS, Smart Mesh, SmartCell and Smart Scaling, to enable high performance in a variety of challenging operating conditions faced by service providers and enterprises. We sell our products to service providers and enterprises globally and have sold our products to over 18,700 end-customers worldwide. We added over 7,100 new end-customers in the first nine months of 2012. We sell to enterprises through a worldwide network of more than 6,000 value-added resellers and distributors, which we refer to as our channel partners. Our enterprise end-customers are typically mid-sized organizations in a variety of industries, including hospitality, education, healthcare, warehousing and logistics, corporate enterprise, retail, state and local government and public venues, such as stadiums, convention centers, airports and major outdoor public areas. We also sell directly and indirectly to a range of service providers, including mobile operators, cable companies, wholesale operators and fixed-line carriers. We have over 55 service provider end-customers, including Bright House Networks, The Cloud (a BSkyB Company), KDDI, Tikona Digital Networks, Time Warner Cable and Towerstream. Our revenue increased 93%, from $79.0 million for the first nine months of 2011 to $152.5 million for the first nine months of 2012. Our revenue increased from $44.4 million in 2009 to $75.5 million in 2010 and to $120.0 million in 2011, representing a compound annual growth rate of 64%. Our performance improved from a net income of $1.0 million for the first nine months of 2011 to net income of $29.8 million for the first nine months of 2012, which included $18.0 million of income related to the release of the valuation allowance on our net deferred tax assets. Our performance improved from a net loss of $10.0 million in 2009 to a net loss of $4.4 million in 2010 and to a net income of $4.2 million in 2011. Industry Background The increased adoption and use of mobile devices, such as smartphones, tablets and laptops, is causing significant growth in wireless traffic. Mobile users expect to be able to connect to wireless networks for work, personal communications and entertainment from virtually anywhere and at anytime. As a result, mobile service providers and enterprises are struggling to address both the increased demands on their networks and the significant investment required to upgrade network capacity and provide ubiquitous wireless connectivity. Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued November 5, 2012 8,400,000 Shares Common Stock This is an initial public offering of shares of common stock of Ruckus Wireless, Inc. Ruckus is offering 7,000,000 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering 1,400,000 additional shares. Ruckus will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $13.00 and $15.00. We have applied to have our common stock listed on the New York Stock Exchange under the symbol RKUS. We are an emerging growth company as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors on page 11 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to Ruckus $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than 8,400,000 shares of common stock, the underwriters have the option to purchase up to an additional 1,260,000 shares from the selling stockholders at the initial public offering price less the underwriting discount. Ruckus will not receive any of the proceeds from the sale of such shares by the selling stockholders. The underwriters expect to deliver the shares to purchasers on , 2012. Goldman, Sachs & Co. Morgan Stanley Deutsche Bank Securities Needham & Company Oppenheimer & Co. William Blair Craig-Hallum Capital Group Prospectus dated , 2012. Table of Contents These capacity and coverage challenges will continue to escalate as users increase their use of mobile devices and access bandwidth-intensive and latency-sensitive applications, such as those for viewing streaming multimedia, video conferencing, downloading video content, viewing and sharing photos and interactive social media. The heaviest demands tend to be clustered in high density metropolitan areas and public venues during peak usage hours when many users are trying to access the network at the same time. Service providers and enterprises need solutions that meet these capacity and coverage demands. According to Signals Research Group, mobile data traffic in the United States alone is expected to grow between 53x and 153x from 2010 to 2020. To meet this demand, mobile service providers are adding macro network capacity by increasing cell site density, investing in new cellular technology, such as long term evolution, or LTE and LTE Advanced, and acquiring additional spectrum. However, Signals Research Group also projects that U.S. cellular network capacity will grow by only approximately 25x over the same time period. There will therefore be a significant gap between the expected traffic volume and the expected capacity of conventional cellular infrastructure in the United States. While this capacity gap is significant in itself, it actually does not factor in capacity deficits outside the United States or the peak usage demands that must be considered when designing and upgrading networks. As a result of this capacity gap, mobile service providers must find new ways to inject capacity into their wireless networks. The capacity gap is also opening up new business opportunities for other service providers, such as cable companies, wholesale operators and fixed-line carriers, to add reliable wireless access services to their traditional access services. Capacity challenges are also experienced by enterprises in a variety of industries, including hospitality, education, healthcare, warehousing and logistics, corporate enterprise, retail, state and local government and public venues, such as stadiums, convention centers, airports and major outdoor public areas. In addition to significant traffic growth, these enterprises experience widely fluctuating network load, both in number of users and amount of traffic, and are faced with a range of operating conditions. These enterprises also typically do not have sufficient IT staff to cost-effectively address these issues. Enterprises thus need wireless solutions that are reliable and easy to manage. Wi-Fi is a conceptually attractive solution to increase capacity, improve wireless network performance, expand coverage footprint, deliver new services and better accommodate traffic growth. Mobile devices are increasingly equipped with Wi-Fi, and many devices now rely on Wi-Fi as their primary Internet connection. Wi-Fi also operates over an unlicensed, widely available spectrum and functions well both indoors and outdoors. However, the ability of service providers and enterprises to deliver robust and pervasive connectivity over Wi-Fi has been constrained by the limitations of what we refer to as basic, or conventional, Wi-Fi technology. Wi-Fi standards and Wi-Fi network equipment were originally designed to allow simple, easy-to-use and low cost connectivity in the lower interference environment of the home. As a result, basic Wi-Fi products suffer from a number of inadequacies for addressing today s wireless challenges. These include an inability to handle interference in crowded circumstances, degradation in performance under load, inconsistent coverage as users move around while connected to the network and an inability to deliver rich content such as voice over IP, or VoIP, without choppy or interrupted transmission. In addition, basic Wi-Fi does not provide service providers needed integration with their existing networks, adequate scalability for the hundreds of thousands of access points required and the extensible and flexible platform needed to offer new revenue-generating services and applications. Table of Contents Prospectus Unavailable Searching for a reliable Wi-Fi network Searching for a reliable Wi-Fi network 55::2255 PM Table of Contents To address the increasing capacity and coverage challenges, service providers and enterprises need a new class of Wi-Fi that offers enhanced reliability, consistent performance, extended range and massive scalability. We refer to this as carrier-class Wi-Fi. Carrier-class Wi-Fi combines the cost and ease of use benefits offered by basic Wi-Fi technology with an advanced level of adaptability, performance and integration with existing networks that addresses the challenges faced by service providers and enterprises. According to Infonetics Research, Inc., or Infonetics, the market for Wi-Fi solutions for carriers is expected to grow from $296 million in 2011 to $2.8 billion in 2016, representing a 57% compound annual growth rate. According to Gartner, Inc., or Gartner, the market for Wi-Fi networking solutions for enterprises is expected to grow from $3.4 billion in 2011 to $6.9 billion in 2016, representing a 15% compound annual growth rate. Carrier-class Wi-Fi addresses the needs of both of these markets. Our Solution Our carrier-class Smart Wi-Fi solutions enable service providers and enterprises to benefit from advanced levels of performance and integration capabilities that are not possible with basic Wi-Fi. We offer a wide-range of Smart Wi-Fi products, including a number of advanced Wi-Fi controllers and gateways, a broad portfolio of indoor and outdoor access points and Wi-Fi infrastructure management software. These products incorporate our proprietary technologies, including: Smart Radio, which leverages our patented antenna technology and our proprietary software capabilities to avoid interference and dynamically direct Wi-Fi signals to maximize throughput; Smart QoS, which provides real-time prioritization of traffic to optimize quality of transmission and manage traffic load dynamically as usage demands and operating environments change; Smart Mesh, which uses advanced self-organizing network principles to create highly resilient, high-speed Wi-Fi links between access points to extend coverage without the cost of cabling each access point; SmartCell, which integrates our proprietary software and specialized hardware deployed at the edge of service provider networks to facilitate the integration of Wi-Fi and mobile networks; and Smart Scaling, which enables service providers to support hundreds of thousands of access points and millions of mobile devices across a Wi-Fi network. Our solutions deliver the following benefits for both service providers and enterprises: Enhanced reliability, by automatically adapting to interference and environmental changes to maximize performance; Consistent performance under load, by performing consistently in high load environments, such as stadiums, convention centers, airports and major outdoor public areas; Extended coverage, by enabling up to a 4x increase in signal range over basic Wi-Fi, allowing our end-customers to deploy fewer access points; and Optimized for rich content, by enabling consistent and reliable transmission of rich content over Wi-Fi. Our solutions provide the following benefits to meet the additional needs of service providers: Integrated networks, by enabling service providers to integrate their Wi-Fi and existing network infrastructures with an enhanced level of visibility and control not possible with basic Wi-Fi. This Table of Contents It s no secret that performance and capacity represent major challenges as the world becomes increasingly mobile There will be more than 7 billion mobile subscriptions by 2015 Hotspot use projected to increase from 4 billion connects in 2010 to 120 billion connects in 2015 Wi-Fi enabled mobile devices shipped annually is projected to rise to nearly 1.7 billion in 2015 Mobile data traffic in the US is expected to grow 153x from 2010 to 2020 while US cellular network capacity is expected to grow 25x over the same period The carrier Wi-Fi market is expected to grow from $296 million in 2011 to $2.8 billion in 2016[1] while the enteprise Wi-Fi market is expected to grow from $3.4 billion in 2011 to $6.9 billion in 2016.[2] Here s our little secret there is a solution to the performance and capacity conundrum, and we re letting the cat out of the bag. Smart Wi-Fi Designed and Built for Pervasive Performance Available Only from Ruckus Wireless. Table of Contents capability enables service providers to improve subscriber ease of use and enhance the revenue opportunity by incorporating Wi-Fi usage into their service offerings and subscriber data plans; Flexible deployment, by being designed and sized for a range of site, application and management requirements, our solutions are suitable for different types of service providers including mobile operators, cable companies, wholesale operators and fixed-line carriers; Massive scalability, by being designed to accommodate the scalability requirements of service provider networks; and Extensible platform architecture, by serving as platforms for incorporation of additional functions and technologies in the future to serve the evolving needs of service providers. Our Strategy Our goal is to lead and expand the market for carrier-class Wi-Fi networking solutions. The key elements of our growth strategy are: continue to innovate and extend our leadership role in providing Smart Wi-Fi solutions; leverage products across service provider and enterprise markets; expand our service provider-focused sales and support teams; extend the reach and productivity of our network of enterprise-focused channel partners; and increase the uses of Wi-Fi in service provider and enterprise networks.
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, the Company, we, our, and us refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, Parent refers to William Lyon Homes, and California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent. Our Company The Company is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada. Since the founding of the Company s predecessor in 1956, the Company and its joint ventures have sold over 74,000 homes. The Company conducts its homebuilding operations through four reportable operating segments (Southern California, Northern California, Arizona and Nevada). For the three months ended March 31, 2012, 37% of home closings were derived from the Company s California operations. For the three months ended March 31, 2012, on a combined basis, the Company had revenues of $43.9 million and delivered 128 homes. For the year ended December 31, 2011, approximately 59% of the home closings of the Company and its joint ventures were derived from its California operations. For the year ended December 31, 2011, on a consolidated basis, the Company had revenues from home sales of $207.1 million and delivered 614 homes. The Company designs, constructs and sells a wide range of homes designed to meet the specific needs of each of its markets, although it primarily emphasizes sales to the entry-level and first time move-up home buyer markets. At December 31, 2011, the Company marketed its homes through 19 sales locations. In 2011, the average sales price for consolidated homes delivered by the Company was $337,200. Base sales prices for actively selling projects in 2011, including affordable projects, ranged from $103,000 to $690,000. Bankruptcy Reorganization On December 19, 2011, Parent and certain of its subsidiaries filed voluntary petitions, or the Chapter 11 Petitions, under Chapter 11 of Title 11 of the United States Code, as amended, or the Bankruptcy Code, in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, to seek approval of the Prepackaged Joint Plan of Reorganization, or the Plan, of Parent and certain of its subsidiaries. The Chapter 11 Petitions are jointly administered under the caption In re William Lyon Homes, et al., Case No. 11-14019, or the Chapter 11 Cases. The sole purpose of the Chapter 11 Cases was to restructure the debt obligations and strengthen the balance sheet of Parent and certain of its subsidiaries. On February 10, 2012, the Bankruptcy Court confirmed the Plan. On February 25, 2012, Parent and certain of its subsidiaries consummated the principal transactions contemplated by the Plan, including: the issuance of 44,793,255 shares of Parent s new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, and $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, issued by California Lyon, in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon; the amendment of California Lyon s loan agreement with ColFin WLH Funding, LLC and certain other lenders, or the Amended Term Loan Agreement, which resulted, among other things, in the increase in the principal amount outstanding under the prior loan agreement, the reduction in the interest rate payable under the prior loan agreement, and the elimination of any prepayment penalty under the prior loan agreement; Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Class A Common Stock, par value $0.01 per share 182,937,294(1) $1.05(2) $107,094,852 $12,274 Class C Common Stock, par value $0.01 per share 80,942,197(3) $1.05(2) $16,915,885 $1,939 Convertible Preferred Stock, par value $0.01 per share 64,831,831(4) $0.77(2) $49,920,510 $5,721 12% Senior Subordinated Secured Notes due 2017 $91,433,103(5) 100% $91,433,103 $10,479 Guarantees (6) Total $30, 413 (1) Represents (a) 44,793,255 shares of Class A Common Stock issued in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes and certain of its subsidiaries, (b) the maximum number of shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock issued in connection with the Plan at a conversion rate of one share of Class A Common Stock for each share of Class B Common Stock, or the Class B Conversion Rate, which is 31,464,548 shares of Class A Common Stock, (c) the maximum number of shares of Class A Common Stock issuable upon conversion of the Class B Common Stock issuable pursuant to the outstanding warrant issued in connection with the Plan to purchase Class B Common Stock at the Class B Conversion Rate, which is 15,737,294 shares of Class A Common Stock, (d) the maximum number of shares of Class A Common Stock issuable upon conversion of Class C Common Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Class C Common Stock, which is 16,110,366 shares of Class A Common Stock, (e) the maximum number of shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Stock registered hereby at a conversion rate of one share of Class A Common Stock for each share of Convertible Preferred Stock (or Class C Common Stock issued upon conversion of Convertible Preferred Stock), which is 64,831,831 shares of Class A Common Stock and (f) 10,000,000 shares issued in connection with a real estate purchase transaction that took place on June 28, 2012. Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the registrants are also registering such indeterminate number of shares of Class A Common Stock as may be issued from time to time as a result of the anti-dilution provisions applicable to stock splits, stock dividends and similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. (3) Represents (a) 12,966,366 shares of Class C Common Stock issued in connection with the Plan, (b) the maximum number of shares of Class C Common Stock issuable upon conversion of Convertible Preferred Stock registered hereby at a conversion rate of one share of Class C Common Stock for each share of Convertible Preferred Stock, which is 64,831,831 shares of Class C Common Stock and (c) 3,144,000 shares of Class C Common Stock issued pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. (4) Represents 64,831,831 shares of Convertible Preferred Stock issued in connection with the Plan. (5) Equals $75,000,000 in aggregate principal amount of notes being registered and up to an additional $16,433,102.07 in aggregate principal amount of notes that may be issued as paid-in-kind interest, compounded semi-annually. (6) The notes are guaranteed by William Lyon Homes and the guarantors named in the Table of Additional Co-Registrants. No separate consideration will be paid in respect of the guarantees pursuant to Rule 457(n) of the Securities Act. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the issuance, in exchange for aggregate cash consideration of $25 million, of 31,464,548 shares of Parent s new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock; the issuance of 64,831,831 shares of Parent s new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of Parent s new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million; and the issuance of an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of shares of Class C Common Stock and shares of Convertible Preferred Stock in connection with the Plan. Recent Events On June 28, 2012, the Company consummated the purchase of certain real property (comprising of approximately 165 acres) in San Diego County, California, San Bernardino County, California, Maricopa County, Arizona and Clark County, Nevada, representing seven separate residential for sale developments, comprising of over 1,000 lots. The aggregate purchase price of the property was $21,500,000. The Company paid $11,000,000 cash, and issued 10,000,000 shares of Class A Common Stock of Parent, to investment vehicles managed by affiliates of Colony Capital, LLC as consideration for the property. Risks Affecting the Company The Company s business is subject to numerous risks, as more fully described in the section of this prospectus entitled Risk Factors, including the following: Adverse changes in general economic conditions could reduce the demand for homes and, as a result, could negatively impact the Company s results of operations. Increases in the Company s cancellation rate could have a negative impact on the Company s home sale revenue and home building margins. Limitations on the availability of mortgage financing can adversely affect demand for housing. The Company s high level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company cannot be certain that the bankruptcy proceedings will not adversely affect the Company s operations going forward. Concentration of ownership of the voting power of the Company s capital stock may prevent other stockholders from influencing corporate decisions and create perceived conflicts of interest. There is currently no public trading market for the Company s capital stock or the Notes and a trading market may not develop, making it difficult for the Company s securityholders to sell their capital stock or the Notes, as applicable. General Corporate Information The Company s principal executive offices are located at 4490 Von Karman Avenue, Newport Beach, California 92660 and its telephone number is (949) 833-3600. The Company s website address is www.lyonhomes.com. Information contained on the Company s website is not a part of this prospectus and the inclusion of the website address in this prospectus is an inactive textual reference only. Parent was incorporated in the State of Delaware on July 15, 1999. California Lyon was incorporated in the State of California on August 25, 1987. Table of Contents Table of Additional Co-Registrants Exact Name as specified in its charter State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. California Equity Funding, Inc. California 33-0830016 PH-LP Ventures California 33-0799119 Duxford Financial, Inc. California 33-0640824 Sycamore CC, Inc. California 33-0981307 Presley CMR, Inc. California 33-0603862 William Lyon Southwest, Inc. Arizona 86-0978474 PH-Rielly Ventures California 33-0827710 HSP, Inc. California 33-0636045 PH Ventures-San Jose California 33-0785089 Presley Homes California 33-0905035 Lyon East Garrison Company I, LLC California 41-2065692 WLH Enterprises California 33-0013333 Table of Contents The Offering The following summary contains basic information about the capital stock and the Notes registered hereby and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of these securities, please refer to the sections of this prospectus entitled Description of Capital Stock and Description of the Notes and the indenture governing the Notes. Solely for purposes of the summary below, unless otherwise specified, references to the Company, us, we and our refer only to William Lyon Homes and do not include our subsidiaries. California Lyon refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company. Offering of Capital Stock Summary Description of Capital Stock Issuer of Capital Stock William Lyon Homes, a Delaware corporation Capital Stock of William Lyon Homes Offered by the Selling Stockholders Class A Common Stock, par value $0.01 per share, Class C Common Stock, par value $0.01 per share and Convertible Preferred Stock, par value $0.01 per share. Conversion Rights of the Holders of Class B Common Stock and Class C Common Stock All shares of Class B Common Stock will be converted into an equal number of shares of Class A Common Stock on or after the Conversion Date if a majority of the holders of shares of Class B Common Stock vote in favor of such conversion. If, at any time (whether before, on or after the Conversion Date), any share of Class B Common Stock is not owned, beneficially or of record, by William Lyon and William H. Lyon, their sibling, spouses and lineal descendants, any entities wholly owned by one or more of the foregoing persons, or any trusts or other estate planning vehicles for the benefit of any of the foregoing, then such share of Class B Common Stock will automatically convert into one share of Class A Common Stock. All shares of Class C Common Stock will automatically convert into shares of Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class C Common Stock at the Conversion Date, which occurs upon the earlier of: the closing of a sale of at least $25,000,000 in shares of Class A Common Stock at a price that equals or exceeds 130% of the then-prevailing base price; the date on which the majority of the holders of Class A Common Stock, voting together as a separate class, and the majority of the holders of Class C Common Stock and Convertible Preferred Stock, voting together as a separate class, vote in favor of the mandatory conversion of the shares of Class C Common Stock and the shares of Convertible Preferred Stock; or Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated August 10, 2012 PROSPECTUS William Lyon Homes William Lyon Homes, Inc. Shares of Class A Common Stock Shares of Class C Common Stock Convertible Preferred Stock 12% Senior Subordinated Secured Notes due 2017 On February 25, 2012, in connection with the Prepackaged Joint Plan of Reorganization, or the Plan, of William Lyon Homes, or the Company, and certain of its direct and indirect wholly-owned subsidiaries, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on February 10, 2012, the Company, among other things, issued (i) 44,793,255 shares of its new Class A Common Stock, $0.01 par value per share, or Class A Common Stock, (ii) 31,464,548 shares of its new Class B Common Stock, $0.01 par value per share, or Class B Common Stock, and a warrant to purchase 15,737,294 shares of Class B Common Stock, in exchange for aggregate cash consideration of $25 million, and (iii) 64,831,831 shares of its new Convertible Preferred Stock, $0.01 par value per share, or Convertible Preferred Stock, and 12,966,366 shares of its new Class C Common Stock, $0.01 par value per share, or Class C Common Stock, in exchange for aggregate cash consideration of $60 million. The Company issued an additional 3,144,000 shares of Class C Common Stock pursuant to an agreement with certain selling securityholders to backstop the offering of Class C Common Stock and Convertible Preferred Stock in connection with the Plan. This agreement required such securityholders to purchase any and all of the shares of Class C Common Stock and Convertible Preferred Stock that were not subscribed upon at the specified subscription expiration date. As more fully described elsewhere in this prospectus, the Class B Common Stock and Class C Common Stock may be converted into Class A Common Stock and the Convertible Preferred Stock may be converted into either Class A Common Stock or Class C Common Stock. Pursuant to the Plan, the Company s wholly-owned subsidiary, William Lyon Homes, Inc., or California Lyon, issued $75 million aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, or the Notes, which, along with the issuance of the Class A Common Stock described above, were issued in exchange for the claims held by the holders of the formerly outstanding notes of California Lyon. The Notes bear interest at a rate of 12% per annum and will mature on February 25, 2017. Cash interest of 8% on the outstanding principal amount of the Notes, or $6 million per year, is due in semi-annual installments in arrears on June 15 and December 15 of each year. The remaining interest of 4% on the outstanding principal amount of the Notes is payable in kind semi-annually in arrears by increasing the principal amount of the Notes. On June 28, 2012, the Company issued an additional 10,000,000 shares of Class A Common Stock to investment vehicles managed by affiliates of Colony Capital, LLC, as partial consideration in a real property purchase transaction, or the Colony Transaction. We are registering the Class A Common Stock, Class C Common Stock, Convertible Preferred Stock and the Notes to satisfy registration rights that we granted in connection with the Plan and the Colony Transaction. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of the securities by the selling securityholders. The securities to which this prospectus relates may be offered and sold from time to time directly by the selling securityholders or alternatively through underwriters or broker dealers or agents. The securities may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Please read Plan of Distribution. You should read this prospectus carefully before you invest in our securities. You should read this prospectus together with additional information described under the headings Where You Can Find More Information before you make your investment decision. There is currently no public trading market for the capital stock of the Company and the Notes of California Lyon and they are not presently traded on any market or securities exchange. We intend to have a registered broker-dealer apply to have the securities registered hereby quoted on the Over-the-Counter Bulletin Board. Investing in our securities involves a high degree of risk. Before investing in any of our securities, you should read the discussion of material risks in the section entitled Risk Factors beginning on page 8 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2012. Table of Contents the date on which the 30-day volume weighted average trading price on a national exchange equals or exceeds 130% of the then-prevailing base price and the aggregate dollar trading volume for such 30-day period is at least $4,000,000. Holders of Class B Common Stock and Class C Common Stock may at any time elect to convert any or all of their shares into Class A Common Stock at the rate of one share of Class A Common Stock for each share of Class B Common Stock or Class C Common Stock. The number of shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock and Class C Common Stock is subject to customary adjustments for stock splits, stock dividends and transactions with similar effect. Conversion Rights of the Holders of Convertible Preferred Stock Holders of our Convertible Preferred Stock may elect to convert any and all of their Convertible Preferred Stock into such number of fully paid and non-assessable shares of Class C Common Stock as determined by the then-prevailing conversion ratio. Upon the occurrence of the Conversion Date, each share of Convertible Preferred Stock will automatically convert into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by the then applicable conversion ratio. See Description of Capital Stock. Redemption of Convertible Preferred Stock on Maturity Date To the extent not previously converted to Class A Common Stock or Class C Common Stock, the Company is obligated to redeem all of the then outstanding shares of Convertible Preferred Stock on the fifteenth anniversary of the first issuance of Convertible Preferred Stock. See Description of Capital Stock. Voting Rights; Dividends Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock have identical powers, preferences, qualifications and limitations, except that so long as shares of Class B Common Stock remain outstanding, (i) each share of Class A Common Stock and Class C Common Stock are entitled to one vote per share and (ii) each share of Class B Common Stock is entitled to two votes per share. Following both the Conversion Date and the conversion of all Class B Common Stock, each share of Class A Common Stock is entitled to one vote per share. The voting, dividend and liquidation rights of the holders of the Company common stock are subject to and qualified by the rights, powers and preferences of the holders of the Company s preferred stock. See Management and Directors Board of Directors for a discussion of voting rights with respect to the election of directors. Each share of Convertible Preferred Stock has the right to one vote for each share of Class C Common Stock into which such share could be converted. Table of Contents We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors. Except as described below, the payment of cash dividends is restricted under the terms of the Amended Term Loan Agreement, and the indenture governing the Notes registered hereby. Holders of our Convertible Preferred Stock are entitled to receive cumulative dividends at a rate of 6% per annum consisting of (i) cash dividends at the rate of 4% paid quarterly in arrears, and (ii) accreting dividends accruing at the rate of 2% per annum. National Securities Exchange; Initial Public Offering On or prior to the third anniversary of the date of first issuance of our Class A Common Stock, we are required to use best efforts to cause our Class A Common Stock to become listed on a national securities exchange, and subject to certain exceptions, to complete a qualifying initial public offering. Use of Proceeds We will not receive any of the proceeds from the sale by the selling securityholders of our capital stock. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the capital stock registered hereby, see Material United States Federal Income Tax Considerations. Absence of a Public Market for the Capital Stock There is currently no established market for our capital stock. We intend to have a registered broker-dealer apply to have our capital stock registered hereby quoted on the Over-the-Counter Bulletin Board. However, we cannot assure you as to the development or liquidity of any market for our capital stock. Offering of the Notes Summary of the Principal Terms of the Notes Maturity Date The fifth anniversary of the issue date of the Notes. Interest The Notes bear interest at a fixed annual rate of 12%, consisting of an 8% cash interest component and a 4% paid-in-kind, or PIK, interest component. The cash interest component will be payable semi-annually in arrears. The PIK interest component will accrete and be added to principal semi-annually in arrears. Ranking The Notes are senior second lien debt obligations of California Lyon, ranking ratably with any other unsubordinated indebtedness of California Lyon (but structurally senior due to the second lien), but will be effectively subordinated to the Senior Secured Term Loan due 2015, or the Amended Term Loan, to the extent of the collateral securing such first lien indebtedness. Table of Contents CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 182 ABOUT THIS PROSPECTUS 183 WHERE YOU CAN FIND MORE INFORMATION 183 FINANCIAL STATEMENTS F-1 EX-10.6 EX-10.21 EX-12.1 EX-16.1 EX-21.1 EX-23.1 Table of Contents Guarantees The Notes are guaranteed on a joint and several basis by the following entities (which will be the same guarantors that guaranty the Amended Term Loan, or the Guarantors): the Company; California Equity Funding, Inc., a California corporation; PH-LP Ventures, a California corporation; Duxford Financial, Inc., a California corporation; Sycamore CC, Inc., a California corporation; Presley CMR, Inc., a California corporation; William Lyon Southwest, Inc., an Arizona corporation; PH-Reilly Ventures, a California corporation; HSP, Inc., a California corporation; PH Ventures-San Jose, a California corporation; Presley Homes, a California corporation; WLH Enterprises, a California General Partnership formerly The Ranch Golf Club Co., formerly Carmel Mountain Ranch Lyon Waterfront, LLC, a Delaware limited liability company; and Lyon East Garrison Company I, LLC, a California limited liability company. Collateral Security The Notes are secured by second priority liens on substantially all assets of California Lyon and the Guarantors, other than Excluded Assets that are also excluded from the Amended Term Loan security interests. The collateral for the Notes will be the same as the collateral for the Amended Term Loan. Release of Collateral Upon the release of the lien on any collateral securing the Amended Term Loan during the term of the Amended Term Loan, the lien on that collateral securing the Notes will be automatically released without the necessity of any consent from the holders of the Notes. Sinking Fund None. Optional Redemption The Notes are redeemable at California Lyon s option at any time without penalty or premium, at the outstanding principal amount thereof plus any accrued and unpaid interest thereon. Trading The Notes are eligible for trading in the PORTAL market. Use of Proceeds California Lyon does not expect to receive any net cash proceeds from the issuance of the Notes. Table of Contents Material Covenants The indenture governing the Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur or guarantee additional indebtedness or issue certain preferred stock; declare or pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness; transfer or sell certain assets; make investments; create certain liens; consolidate, merge or transfer all or substantially all of our assets; engage in transactions with affiliates; and create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications as described under Description of the Notes Material Covenants. Intercreditor and Subordination Agreement The Notes are subject to an Intercreditor and Subordination Agreement between us, ColFin WLH Funding, LLC, as administrative agent under the Amended Term Loan, and U.S. Bank National Association, as note trustee and collateral trustee, with respect to collateral and certain other matters. See Description of the Notes Security Documents and Intercreditor Agreement. Material United States Federal Income Tax Considerations For a discussion of United States federal income tax considerations for holders of the Notes registered hereby, see Material United States Federal Income Tax Considerations. Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. In this prospectus, unless the context requires otherwise, references to the Company, we, our or us refer to Gulf United Energy, Inc. GULF UNITED ENERGY, INC. We are an international, development-stage oil and gas exploration company. We have initially concentrated our efforts in Colombia and Peru, where we believe we have acquired attractive oil and gas interests. Our strategy is to develop a portfolio of non-operated oil and gas assets, primarily focused in South America, by balancing an inventory of near-term drilling projects with oil and gas development activities requiring extended lead times. Our asset portfolio includes participation in two hydrocarbon exploration blocks operated by SK Innovation Co, Ltd. (formerly SK Energy Co, Ltd., referred to herein as SK Innovation ). SK Innovation is a subsidiary of SK Group, one of South Korea s larger industrial conglomerates. SK Innovation is Korea s largest petroleum refiner and is currently active in 29 blocks in 16 countries. In Colombia, we have acquired, subject to regulatory approval, a 12.5% working interest in the 345,592 gross acre (43,200 net) CPO-4 block in the Llanos Basin. Block CPO-4 is near existing production and immediately adjacent to and on trend with the Apiay Complex operated by Ecopetrol S.A. (NYSE:EC) and the Guatiquia block operated by Petrominerales Ltd. (TSX:PMG). Block CPO-4 is the near-term focus of the Company. In Peru, we have acquired, subject to regulatory approval, a 40% working interest in the 2,803,411 gross acre (1,211,411 net) Z-46 offshore block in the Trujillo Basin. Recent re-processed 2-D seismic data suggests a submarine fan deposition on the block and multiple leads have been identified. Based on the results of the new 2-D seismic data, we plan to acquire 3-D seismic data in 2012 to be used in the selection of drilling locations. Two wells previously drilled on the block by Repsol reported oil, indicating an active hydrocarbon system. Also in Peru we have acquired, subject to regulatory approval, a 5% participating interest in Block XXIV, an approximately 276,137 gross acre (13,807 net) concession, and a 2% participating interest in the Peru Technical Evaluation Area (the Peru TEA ). The Peru TEA consists of four contiguous blocks totaling approximately 40 million gross acres onshore (approximately 800,000 net acres) on the western flank of the Andes Mountains. Block XXIV and Peru TEA are both operated by Upland Oil & Gas, LLC ( Upland ). Two exploratory wells have been drilled on Block XXIV and both wells are considered dry holes. On Block XXIV, Upland has indicated that they have completed the field work and a 200 kilometer seismic shoot and that the data is currently being processed and reviewed. The current plan calls for further geological and seismic studies with plans to drill two wells onshore on Block XXIV during fiscal 2012. With respect to the Peru TEA, during 2012, Upland plans to conduct additional geological and seismic studies on selected areas to be determined based on the previous aeromagnetic and satellite imaging. We expect to engage in additional investment opportunities in oil and gas exploration and development as our resources permit. The scope of our activities in this regard may include, but may not be limited to, the acquisition or assignment of rights to develop exploratory acreage under concessions with government authorities and other private or public exploration and production companies, the purchase of oil and gas producing properties, farm-in and farmout opportunities (i.e., the assumption or assignment of obligations to fund the cost of drilling and development). We may turn to opportunities in other countries if we deem the relevant considerations merit our investment. We plan to focus on early-stage exploration of hydrocarbons through a variety of transactions aimed at building a resource base. An integral part of our strategy is to build a competent and professional management and operations team to enable us to successfully carry out our business plan. Our Properties The following is a brief summary of our properties: Property Gross Acres Net Acres Working Interest(1) Operator Colombia Property Block CPO-4 345,592 43,200 12.5% SK Innovation Peru Properties Block Z-46 2,803,411 1,121,411 40.0% SK Innovation Block XXIV 276,137 13,807 5.0% Upland TEA Area I, II, III, IV 40,321,163 806,423 2.0% Upland (1) The assignment to the Company of the working interests in Block Z-46, Block XXIV, and the Peru TEA are subject to the approval of Perupetro, and the assignment to the Company of the interests in Block CPO-4 is subject to the approval of the National Hydrocarbon Agency of Colombia and the Republic of Korea. See The Company Colombia: Block CPO-4, The Company Peru: Block Z-46, and The Company Other Assets and Activities for a discussion of our farmout agreements. Block CPO-4. Block CPO-4 is located in the Llanos Basin of Colombia. Block CPO-4 consists of 345,592 gross acres (43,200 net) and is located approximately 70 miles southeast of Bogot . This block is operated by SK Innovation. Gulf United and our Block CPO-4 partners have reprocessed 1,350 kilometers of 2-D seismic data and 530 square kilometers of 3-D seismic data shot on the northern portion of acreage. Interpretation and study of this seismic data is ongoing. Tamandua-1 was the first well drilled on CPO-4. Due to conditions in the wellbore, the working interest partners elected to abandon the bottom section of the well and discontinue testing of the well after inconclusive results in the C-7 and C-9 sands. In April 2012, Tamandua-1 was temporarily abandoned to allow re-entry for future testing and evaluation. The Cachirre #1, the second well on CPO-4, was drilled to a measured depth of 9,486 feet in the southeast corner of Block CPO-4. An evaluation of the initial test results collected from the wellbore indicated that the primary targeted zones below a measured depth of 8,750 feet were water-wet. In June 2012, SK Innovation and the Company elected to abandon the Cachirre #1 well. Block Z-46. Block Z-46 is located in the Trujillo Basin offshore Peru. Block Z-46 consists of 2,803,411 gross acres (1,121,411 net) and is located in northern Peru. Water depths on the block range from 50 meters to 1000 meters. This block is operated by SK Innovation. Gulf United and our Block Z-46 partner have reprocessed 5,600 kilometers of 2-D seismic data. On December 31, 2010, we began acquiring an additional 2,904 kilometers of infill 2-D seismic data focused in the southern portion of the block where several 2-D defined Tertiary prospects are stacked with 2-D defined Paleozoic prospects. Based on the results of the new 2-D seismic data, we plan to acquire 3-D seismic data in calendar year 2012 to be used in the selection of drilling locations. No independent engineering estimates have been prepared at this time. In December 2011, the joint venture partners approved the work plan and budget for Z-46. Pursuant to existing agreements, under the work plan and budget, our current obligation on Z-46 during fiscal year 2012 is approximately $4.1 million, and during fiscal year 2013 will be approximately $13.1 million. Block XXIV. Block XXIV is located in the Sechura/Talara Basin in Peru. Block XXIV consists of 276,137 gross acres (13,807 net) of which approximately 80,000 are offshore and 196,000 are onshore. The offshore portion of the block is highly prospective. During 2011, Upland acquired 200 km of 2D seismic data on Block XXIV which is currently in processing. Going forward, we understand that Upland will conduct further geologic studies to prepare to drill two onshore wells during fiscal 2012 in seismically defined locations. TEA I, II, III, IV. Technical Evaluation Areas I, II, III, and IV of the Peru TEA are contiguous blocks that together comprise 40,321,163 gross acres (806,423 net). The Peru TEA runs south on the western flank of the Andes Mountains from the border with Ecuador to near Lima. This greenfield opportunity will require geological evaluation, including the acquisition of aeromagnetic survey and 2-D seismic data, before we evaluate drilling opportunities. During 2011, Upland completed a gravity aeromagnetic and satellite imaging study on the TEA which will be used to narrow the areas of interest for further geologic study. For a full discussion of our exploration projects, including maps setting forth the locations of each project, please see the section of this prospects entitled Business Our Exploration Projects beginning on page 28. Recent Events Equity Financings On April 19 and April 20, 2012, we sold to accredited investors an aggregate of 88,250,000 shares our common stock in a private placement at a purchase price of $0.08 per share for gross proceeds of $7,060,000 (the 2012 Private Placement ). At the closing of the offering, the Company paid to Wunderlich Securities, Inc. ( Wunderlich ), the exclusive placement agent in the offering, a cash commission of $211,800, and also paid $86,952 towards the reimbursement of out-of-pocket expenses and legal fees, resulting in net proceeds of $6,761,248. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (Amendment No. 1) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Gulf United Energy, Inc. (Exact name of registrant as specified in its charter) Nevada 1090 20-5893642 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I. R. S. Employer Identification Number) P.O. Box 22165 Houston, Texas 77227-2165 (713) 942-6575 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) John B. Connally III Chief Executive Officer P.O. Box 22165 Houston, Texas 77227-2165 (713) 942-6575 (Name, address, including zip code, and telephone number, including area code, of agent for service) With copy to: Thomas C. Pritchard, Esq. Brewer & Pritchard, P.C. Three Riverway, Suite 1800 Houston, Texas 77056 Tel: (713) 209-2950 Fax: (713) 659-5302 As soon as practicable after this Registration Statement becomes effective (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filed, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filed and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x In February 2011, we sold to accredited investors 83,388,726 shares of our common stock in a private placement at a purchase price of $0.30 per share for gross proceeds of $25,016,618 (the 2011 Private Placement ). At the closing of the February 2011 financing, we issued the Warrants to Pritchard Capital Partners, LLC, as placement agent ( Pritchard ), which allows Pritchard to purchase up to 1 million shares of Company common stock at an exercise price of $0.30 per share. The Warrants may be exercised on a cashless or net exercise basis. We used the proceeds from this financing as follows: (i) $1.9 million was paid towards commissions, legal fees, and other offering expenses, (ii) $9.4 million was used towards the repayment of outstanding debt, (iii) $9.7 million was paid pursuant to existing contractual arrangements under farmout agreements, and (iv) $4.2 million has been used for general working capital purposes. We are registering the resale of 75,125,000 shares issued in the 2012 Private Placement pursuant to this Registration Statement. We registered the resale of the shares of common stock and the shares of common stock underlying the Warrants issued in the 2011 Private Placement pursuant to a registration statement on Form S-1 (File No. 333-172918), which was initially filed with the Securities and Exchange Commission ( SEC ) on March 18, 2011 and became effective on April 8, 2011 (the Prior Registration Statement ). This Registration Statement constitutes Post-Effective Amendment No. 1 to the Prior Registration Statement, and also updates certain information relating to the selling stockholders described in the Prior Registration Statement. Employment Agreements and Incentive Plan Awards In June 2012, the Board of Directors authorized the Company to amend the employment agreements for each of the Company s executive officers. In connection therewith, the employment agreement by and between the Company and John Connally III, our president, chief executive officer, and chairman, was amended and restated to extend the term of his agreement for an additional three years. Additionally, the employment agreements by and between the Company, Jim Ford, Ernest B. Miller, James C. Fluker III, and David Pomerantz, each of whom are named executive officers of the Company, were each extended for an additional one year. Also in June 2012, the Compensation Committee of the Board of Directors awarded Mr. Connally a cash bonus of $450,000 and a ten-year option to purchase up to 3 million shares of common stock at an exercise price of $0.08 per share pursuant to Mr. Connally s employment agreement. The Compensation Committee also awarded each of Messrs. Ford, Miller, and Fluker cash bonuses of $100,000 and ten-year options to purchase up to 1 million shares of common stock at an exercise price of $0.08 per share pursuant to their respective employment agreements. Mr. Pomerantz was awarded a cash bonus of $84,000 and a ten-year option to purchase up to 1 million shares of common stock at an exercise price of $0.08 per share pursuant to his employment agreement. Each of the Company s independent directors, John N. Seitz and Thomas G. Loeffler, were also each awarded ten-year options to purchase up to 1 million shares of common stock at an exercise price of $0.08 per share. All of the options awarded described above were made under the Company s 2011 Stock Incentive Plan, and vest equally over a period of three years beginning on June 4, 2013. Effective June 4, 2012, the Company entered into a one-year consulting agreement with a third party consultant, pursuant to which the consultant will provide advice to the Board, at a high level, relating to certain of the Company s strategic and business development activities. In consideration for entering into the consulting agreement, the Company issued the consultant 500,000 shares of the Company s restricted common stock. Pursuant to Rule 429 under the Securities Act, the prospectus contained in this Registration Statement will be used as a combined prospectus in connection with this Registration Statement and the Registration Statement on Form S-1 (File No. 333-172918), which was initially filed on March 18, 2011 and became effective on April 8, 2011 (the Prior Registration Statement ). This Registration Statement is a new registration statement and also constitutes Post-Effective Amendment No. 1 to the Prior Registration Statement. Such post-effective amendment shall hereafter become effective concurrently with the effectiveness of this Registration Statement in accordance with Section 8(c) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to Be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(1) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.001 (2) See note(2) See note(2) See note(3) Common Stock, par value $0.001 75,125,000(4) $0.08(5) $6,010,000 $697.76 TOTAL 75,125,000 $6,010,000 $697.76(6) (1) Pursuant to Rule 429 under the Securities Act of 1933, as amended, and as further described herein, shares of common stock previously registered on the registrant s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 18, 2011, File No. 333-172918, which became effective on April 8, 2011 (the Prior Registration Statement ) are being included in this Registration Statement. Pursuant to Rule 416 under the Securities Act of 1933, the Registrant is also registering such additional indeterminate number of shares as may become necessary to adjust the number of shares as a result of a stock split, stock dividend or similar adjustment of its outstanding common stock. (2) Consists of (i) 83,388,726 shares of common stock issued and outstanding and (ii) 1,000,000 shares of common stock issuable upon the exercise of certain warrants. These shares of common stock were previously registered on the Prior Registration Statement. (3) An aggregate registration fee of $5,566.34 was previously paid in connection with the filing of the Prior Registration Statement. (4) Represents outstanding shares of common stock offered by certain of the selling stockholders. (5) Calculated pursuant to Rule 457(a) promulgated under the Securities Act of 1933, as amended, based upon the fixed price at which the common stock will initially be sold by the selling stockholders. The selling stockholders are offering these shares of common stock. The selling stockholders will offer their shares at a price of $0.08 per share until such time as the Company's common stock is listed on a national securities exchange after which time such selling stockholders may sell their shares at prevailing market or privately negotiated prices, in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale. The selling stockholders will receive all proceeds from the sale of the common stock. (6) Previously paid in connection with the initial filing of this Registration Statement on June 19, 2012. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. About This Offering Common stock offered by selling stockholders 157,847,060 shares, consisting of (i) 156,847,060 shares of common stock and (ii) 1,000,000 shares of common stock underlying the Warrants(1). Shares outstanding prior to the offering 551,517,726 shares(2) as of June 26, 2012 Shares to be outstanding after the offering 552,517,726 shares(3) Use of proceeds We will not receive any proceeds from the sale of the common stock. However, we will receive the sale price of any common stock we sell to a selling stockholder upon exercise of the Warrants (assuming the Warrants are not exercised on a cashless basis). We expect to use the proceeds received from the exercise of the Warrants, if any, for general working capital purposes.
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+PROSPECTUS SUMMARY 1
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+Prospectus summary 1
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+This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not contain all the information that you need to consider in making your investment decision to purchase the Preferred Shares. You should carefully read this entire prospectus, as well as the information incorporated by reference herein, before deciding whether to invest in the Preferred Shares. You should carefully consider the section entitled Risk Factors in this prospectus and the information in the documents incorporated by reference herein to determine whether an investment in the Preferred Shares is appropriate for you. The Company First Capital Bancorp, Inc. was organized as a Virginia corporation in 2006 for the sole purpose of becoming a holding company for First Capital Bank, our wholly-owned subsidiary, which began operating as a Virginia chartered commercial bank in 1998. Financial information in this prospectus for periods before the date First Capital Bancorp became a holding company for First Capital Bank reflects the results of operations of First Capital Bank. Our principal executive offices are located at 4222 Cox Road, Glen Allen, Virginia 23060, and our telephone number is (804) 273-1160. Our Internet address is www.1capitalbank.com. The information contained on our website is not part of this prospectus. First Capital Bank operates seven full service branch offices (alternatively referred to herein as branches and offices ) throughout the greater Richmond metropolitan area. Our bank engages in a general commercial banking business, with a particular focus on the needs of small and medium-sized businesses and their owners and key employees and the professional community. We emphasize personalized service, access to decision makers and a quick turn around time on lending decisions. We have a management team, officers and other employees with extensive experience in our primary market, which is the greater Richmond, Virginia metropolitan area. We strive to develop personal, knowledgeable relationships with our customers, while at the same time offering products comparable to those offered by larger banks in our market area. Recent Developments On May 11, 2012, we closed a stockholder rights offering in which we raised a total of $17.8 million through the sale of 8,913,513 shares of common stock and warrants to purchase an additional 4,456,756 shares of common stock. In the rights offering, we offered holders of record of our common stock as of February 10, 2012 (the Record Date ) the nontransferable right to purchase up to 8,913,513 units for a price of $2.00 per unit, with each unit consisting of one share of common stock and a warrant to purchase one-half of a share of common stock for a price equal to $2.00 per whole share. For each share of common stock held as of the Record Date, a stockholder received a nontransferable right to subscribe for up to three units in the offering (the Basic Subscription Privilege ). Stockholders who exercised their Basic Subscription Privilege in full were given the opportunity to purchase units that were not either purchased by other stockholders who exercised their Basic Subscription Privilege or by the Standby Purchaser (as defined below). In conjunction with the rights offering, we entered into a standby purchase agreement (the Standby Purchase Agreement ) with Kenneth R. Lehman (the Standby Purchaser ), a private investor from Arlington, Virginia. The Standby Purchase Agreement allowed the Standby Purchaser to purchase 350,000 units if such Table of Contents units were available after existing stockholders exercised their Basic Subscription Privilege. The Standby Purchaser s obligation was conditioned on the Company s receipt of valid subscriptions for a minimum of $5.0 million, including $1.0 million from executive officers and directors. Each condition was satisfied. The Standby Purchase Agreement granted the Standby Purchaser a right of first refusal to purchase up to 4,902,432 units, which was exercised in full. The Standby Purchase Agreement limits the Standby Purchaser s ability to vote more than 45% of the Company s outstanding shares should he acquire greater ownership in the future. We intend to use the net proceeds from the offering to capitalize our subsidiary, First Capital Bank, and for other general corporate purposes, including the allocation of a portion of the net proceeds toward the purchase of some of the Preferred Shares to the extent we submit a successful bid in the auction. The Offering The following summary contains basic information about the Preferred Shares and the auction process and is not intended to be complete and does not contain all the information that is important to you. For a more complete understanding of the Preferred Shares and the auction process, you should read the sections of this prospectus entitled Description of Preferred Shares and Auction Process. Issuer First Capital Bancorp, Inc. Preferred Shares Offered by Treasury 10,958 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A. The number of Preferred Shares to be sold will depend on the number of bids received in the auction described below and whether Treasury decides to sell any Preferred Shares in the auction process. See the section entitled Auction Process in this prospectus. Liquidation Preference If we liquidate, dissolve or wind up (collectively, a liquidation ), holders of the Preferred Shares will have the right to receive $1,000 per share, plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to, but not including, the date of payment, before any payments are made to holders of our common stock or any other capital stock that ranks, by its terms, junior as to rights upon liquidation to the Preferred Shares. Dividends Dividends on the Preferred Shares are payable quarterly in arrears on each February 15, May 15, August 15 and November 15. The initial dividend rate is 5% per annum through May 14, 2014, and will increase to 9% per annum on and after May 15, 2014, if not otherwise redeemed earlier for cash by us. Holders of Preferred Shares sold by Treasury in the auction, if any, that are record holders on the record date for the August 15, 2012 dividend payment date will be entitled to any declared dividends payable on such date. We currently must receive regulatory approval in order to make dividend payments. As of the date of this prospectus, the Company has paid all of its quarterly dividend obligations. Maturity The Preferred Shares have no maturity date. Rank The Preferred Shares rank (i) senior to common stock or any other capital stock that ranks, by its terms, junior as to dividend rights Table of Contents and/or rights upon liquidation to the Preferred Shares (collectively, the Junior Stock ), (ii) equally with any shares of our capital stock whose terms do not expressly provide that such class or series will rank senior or junior to the Preferred Shares as to dividend rights and/or rights upon liquidation (collectively, the Parity Stock ) and (iii) junior to all of our existing and future indebtedness and any future senior securities, in each case as to dividend rights and/or rights upon liquidation. Priority of Dividends So long as any of the Preferred Shares remain outstanding, we may not declare or pay a dividend or other distribution on our common stock or any other shares of Junior Stock (other than dividends payable solely in common stock) or Parity Stock (other than dividends paid on a pro rata basis with the Preferred Shares), and we generally may not directly or indirectly purchase, redeem or otherwise acquire any shares of common stock, Junior Stock or Parity Stock unless all accrued and unpaid dividends on the Preferred Shares for all past dividend periods are paid in full. Redemption We may redeem the Preferred Shares, at any time, in whole or in part, at our option, subject to prior approval by the Federal Reserve, for a redemption price equal to 100% of the liquidation preference amount per Preferred Share plus any accrued and unpaid dividends (including dividends accrued on any unpaid dividends) to but excluding the date of redemption. Except with respect to our intent to submit one or more bids in the auction, we have no current intention to redeem the Preferred Shares in the near future, but may seek to redeem some or all of the Preferred Shares at a future date if we deem such redemption to be in our interest. The Federal Reserve evaluates redemption requests on a case-by-case basis and considers a variety of factors, including a company s current and prospective capital position and its ability to serve as a continued source of strength to its banking subsidiaries during stressed market conditions. We cannot predict whether the Federal Reserve would approve any future redemption request we were to make. Voting Rights Holders of the Preferred Shares generally have no voting rights. However, if we do not pay dividends on the Preferred Shares for six or more quarterly periods, whether or not consecutive, the authorized number of directors of the Company will automatically increase by two and the holders of the Preferred Shares will have the right, with the holders of shares of any other classes or series of voting parity stock outstanding at the time, voting together as a class, to elect two directors to fill such newly created directorships at our next annual meeting of shareholders (or at a special meeting called for that purpose prior to the next annual meeting) and at each subsequent annual meeting of shareholders until all accrued and unpaid dividends (including dividends accumulated on any unpaid dividends) for all past dividend periods on all outstanding Preferred Shares have been paid in full; provided, that no person may be elected as a preferred director who would cause the Company to violate any corporate Table of Contents governance requirements of any securities exchange or other trading facility on which its securities may then be listed or traded. There is no limit on the number of nominations and a plurality of votes would determine the election of the two new directors. Upon any termination of the right of the holders of the Preferred Shares and voting parity stock as a class to vote for directors as described above, such directors will cease to be qualified as directors, the terms of office of such directors then in office will terminate immediately and the authorized number of directors will be reduced by the number of directors which had been elected by the holders of the Preferred Shares and the voting parity stock. In addition, the affirmative vote of the holders of at least 66 2/3% of the outstanding Preferred Shares is required for us to authorize, create or increase the authorized number of shares of our capital stock ranking, as to dividends or amounts payable upon liquidation, senior to the Preferred Shares, to amend, alter or repeal any provision of our articles of incorporation in a manner that adversely affects the rights of the holders of the Preferred Shares or to consummate a binding share exchange or reclassification of the Preferred Shares or a merger or consolidation of us with another entity unless (x) the Preferred Shares remain outstanding or are converted into or exchanged for preference shares of the surviving entity or its ultimate parent and (y) the Preferred Shares remain outstanding or such preference shares have such terms that are not materially less favorable, taken as a whole, than the rights of the Preferred Shares immediately prior to such transaction, taken as a whole. Auction Process The public offering price and the allocation of the Preferred Shares in this offering will be determined through an auction process conducted by Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P., the joint book-running managers in this offering, in their capacity as the auction agents. The auction process will entail a modified Dutch auction mechanic in which bids may be submitted through the auction agent or one of the other brokers that is a member of the broker network, which are collectively referred to in this prospectus as the network brokers, established in connection with the auction process. Each broker will make suitability determinations with respect to its own customers wishing to participate in the auction process. The auction agents will not provide bidders with any information about the bids of other bidders or auction trends, or with advice regarding bidding strategies, in connection with the auction process. We encourage you to discuss any questions regarding the bidding process and suitability determinations applicable to your bids with your broker. For more information about the auction process, see Auction Process in this prospectus. We intend to submit one or more bids in the auction and have received approval from the Federal Reserve to do so. Our bids may be made at a price or prices per share that is less than the liquidation Table of Contents preference per share, and our bids will be for less than all of the Preferred Shares. Depending on whether and the extent to which we are a successful bidder, our capital levels will be affected based on the aggregate purchase paid for the Preferred Shares, after taking into account any gain recognized on the difference, if any, between the clearing price and the liquidation preference of $1,000 per share. The capital ratios for the Company and First Capital Bank at March 31, 2012, and as adjusted to reflect the $17.8 million in Tier 1 capital raised in our stockholder rights offering that closed on May 11, 2012, are set forth in the table below. We do not intend to submit any bids for the purchase of Preferred Shares that, if successful, would result in the reduction of our capital ratios below the projected pro forma levels set forth in the table below. Company First Capital Bank Pro Forma Projected Minimum Capital Ratios After Purchase Ratio March 31, 2012 As Adjusted March 31, 2012 As Adjusted(1) Company First Capital Bank (Unaudited) Tier 1 risk-based capital 11.44 % 15.75 % 11.29 % 11.29 % 12.50 % 12.25 % Total risk-based capital 13.00 % 17.31 % 12.85 % 12.85 % 14.00 % 13.75 % Leverage 8.53 % 11.74 % 8.41 % 8.41 % 9.00 % 8.75 % (1) We plan to use a portion of the net proceeds from the stockholder rights offering to capitalize First Capital Bank. The amount of the net proceeds that we contribute to First Capital Bank will not be determined until after the completion of the auction process. Until that time, the entire amount of the net proceeds will be retained at the Company level. There can be no assurance that one or more of our bids will be successful. For more information about the auction process, see Auction Process in this prospectus. Minimum Bid Size and Price Increments This offering is being conducted using an auction process in which prospective purchasers are required to bid for the Preferred Shares. During the auction period, bids may be placed for Preferred Shares at any price at or above the minimum bid price of $819.25 per share (such bid price to be in increments of $0.01), with a minimum bid size of one Preferred Share. See Auction Process in this prospectus. Bid Submission Deadline The auction will commence at 8:30 a.m., New York City time, on the date specified by the auction agent in a press release issued prior to the opening of the equity markets on such day, and will close at 6:30 p.m., New York City time, on the second business day immediately thereafter which is referred to as the submission deadline. Irrevocability of Bids Bids that have not been modified or withdrawn by the time of the submission deadline are final and irrevocable, and bidders who submit bids that are accepted by Treasury will be obligated to purchase the Preferred Shares allocated to them. The auction agents Table of Contents are under no obligation to reconfirm bids for any reason, except as may be required by applicable securities laws; however, the auction agents, in their sole discretion, may require that bidders confirm their bids before the auction process closes. See Auction Process in this prospectus. Clearing Price The price at which the Preferred Shares will be sold to the public will be the clearing price, plus accrued dividends thereon. The clearing price will be determined as follows: If valid, irrevocable bids are received for 100% or more of the offered Preferred Shares at the submission deadline, the clearing price will be equal to the highest price at which all of the offered Preferred Shares can be sold in the auction; If valid, irrevocable bids are received for at least half, but less than all, of the offered Preferred Shares at the time of the submission deadline, the clearing price will be equal to the minimum bid price of $819.25 per share. Even if bids are received for at least half of the offered Preferred Shares, Treasury may decide not to sell any Preferred Shares in the auction process or, in the case where bids are received for at least half, but less than all, of the Preferred Shares, may decide only to sell a portion (but not less than half) of the offered Preferred Shares in the auction process. If Treasury decides to sell Preferred Shares in the auction, after Treasury confirms its acceptance of the clearing price and the number of Preferred Shares to be sold, the auction agent and each network broker that has submitted a successful bid will notify successful bidders that the auction has closed and that their bids have been accepted by Treasury (subject, in some cases, to pro-ration, as described below). The clearing price and number of Preferred Shares to be sold are also expected to be announced by press release on the business day following the end of the auction. See Auction Process in this prospectus. Number of Preferred Shares to be Sold If bids are received for 100% or more of the offered Preferred Shares, Treasury must sell all of the offered Preferred Shares if it chooses to sell any Preferred Shares. If bids are received for at least half, but less than all, of the offered Preferred Shares, then Treasury may, but is not required to, sell at the minimum bid price in the auction (which will be deemed to be the clearing price) the number of Preferred Shares it chooses to sell up to the number of bids received in the auction, so long as at least half of the offered Preferred Shares are sold. If bids are received for less than half of the offered Preferred Shares, Treasury will not sell any Preferred Shares in this offering. Even if bids are received for at least half of the offered Preferred Shares, Treasury may decide not to sell any Preferred Shares or, in the case where bids are received for at least half, but less than all, of the offered Preferred Shares, may decide only to sell a portion (but not less than half) of the offered Preferred Shares in the auction process. If Treasury elects to sell any Preferred Shares in the auction, Treasury Table of Contents must sell those shares at the clearing price, plus accrued dividends thereon. In no event will Treasury sell more Preferred Shares than the number of Preferred Shares for which there are bids. See Auction Process in this prospectus. Allocation; Pro-Ration If bids for 100% or more of the offered Preferred Shares are received and Treasury elects to sell Preferred Shares in the offering, then any accepted bids submitted in the auction above the clearing price will receive allocations in full, while any accepted bids submitted at the clearing price may experience pro-rata allocation. If bids for at least half, but less than all, of the offered Preferred Shares are received, and Treasury chooses to sell fewer Preferred Shares than the number of Preferred Shares for which bids were received, then all bids will experience equal pro-rata allocation. See Auction Process in this prospectus. Use of Proceeds We will not receive any proceeds from the sale of any Preferred Shares sold by Treasury. See Use of Proceeds. Listing The Preferred Shares will not be listed for trading on any stock exchange nor will they be available for quotation on any national quotation system. Risk Factors See Risk Factors and other information included or incorporated by reference in this prospectus for a discussion of factors you should consider carefully before making a decision to invest in the Preferred Shares. Auction Agents Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O Neill & Partners, L.P. Network Brokers See page 37 of this prospectus for a list of brokers participating as network brokers in the auction process. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Common Stock. You should read the entire prospectus, including "Risk Factors" and the consolidated financial statements and the related notes before making an investment decision. Contents from our website, www.chinainternetcafe.com, are not part of this prospectus. Except as otherwise specifically stated or unless the context otherwise requires, the "Company," "we," "our" and "us" refers collectively to China Internet Cafe Holdings Group, Inc. THE COMPANY Business Overview We operate a chain of 62 internet caf s in Shenzhen, Guangdong, PRC that are generally open 24 hours a day, seven days a week. We provide internet caf facilities to our customers and we believe we are the largest internet caf chain in Shenzhen. We provide internet access at prices that we believe are affordable to both students and migrant workers. Although we sell snacks, drinks, and game access cards, over 95% of our revenue comes from selling access time to our computers. We sell internet caf memberships to our customers. Members purchase prepaid IC cards (a pocket-sized card with embedded integrated circuits that can be used for identification, authentication, data storage and application processing), which include stored value that will be deducted based on time usage of a computer at the internet caf . The cards are only sold at our caf s. We deduct the amount that reflects the access time used by a customer when the customer s IC card is inserted into the IC card slot on the computer. Our History China Internet Cafe Holdings Group, Inc. ("we", "us", or the "Company") is a Nevada holding company for our direct and indirect subsidiaries in the British Virgin Islands ("BVI") and the People s Republic of China ("PRC"). We own all of the issued and outstanding capital stock of Classic Bond, a BVI corporation. Classic Bond is a holding company that owns 100% of the outstanding capital stock of Shenzhen Zhonghefangda Network Technology Co., Limited ("Zhonghefangda"), a PRC company. Current PRC laws and regulations impose substantial restrictions on foreign ownership of the internet caf business in the PRC. Therefore, our principal operations and sales and marketing activities in the PRC are conducted through Shenzhen Junlong Culture Communications Co., Ltd ("Junlong"), our variable interest entity ("VIE"), which holds the licenses and approvals for conducting the internet caf business in the PRC. Junlong was incorporated in the PRC in December 2003. It obtained its license to operate internet caf s in 2005. Our effective control over the VIE is contingent on a series of contractual arrangements. These contracts include a Management and Consulting Services Agreement, an Option Agreement, an Equity Pledge Agreement, and a Voting Rights Proxy Agreement. The Management and Consulting Services Agreement, dated June 11, 2010, is between our indirect, wholly owned subsidiary, Zhonghefangda, and our VIE. The rest of the agreements, also dated June 11, 2010, are among Zhonghefangda, our VIE and its shareholders. These contracts are summarized below. Please also refer to the full text of the contracts, which are filed as exhibits to this report. Management and Consulting Services Agreement. Under the Management and Consulting Services Agreement between Junlong and Zhonghefangda, Zhonghefangda provides management and consulting services to the VIE in exchange for service fees up to 100% of the VIE s Aggregate Net Profits (as defined in the agreement). In consideration for its right to receive the VIE s aggregate net profits, Zhonghefangda will reimburse to the VIE the full amount of Net Losses (as defined in the Agreement) incurred by the VIE. During the term of the agreement, the VIE may not contract with any other party to provide services that are the same or similar to the services to be provided by Zhonghefangda pursuant to the agreement. The term of this agreement is 20 years, renewable for succeeding periods of the same duration until terminated pursuant to terms of the agreement. Option Agreement. Under the Option Agreement, the shareholders of the VIE, Mr. Dishan Guo, Mr. Jinzhou Zeng and Ms. Xiaofen Wang (the "VIE Shareholders"), who collectively own 100% of the equity interest in the VIE, granted Zhonghefangda an exclusive, irrevocable option to purchase all or part of their equity interests in the VIE, exercisable at any time and from time to time, to the extent permitted under PRC law. The purchase price of the equity interest will be equal to the original paid-in registered capital of the transferor, adjusted proportionally if less than all of the equity interest owned by the transferor is purchased. Equity Pledge Agreement. The VIE Shareholders have pledged their entire equity interest in the VIE to Zhonghefangda pursuant to the Equity Pledge Agreement. The equity interests are pledged as collateral to secure the obligations of the VIE under the Management and Consulting Services Agreement and the VIE Shareholders obligations under the Option Agreement and the Proxy Agreement. Voting Rights Proxy Agreement. Pursuant to the Voting Rights Proxy Agreement, each of the VIE Shareholders has irrevocably granted and entrusted Zhonghefangda with all of the voting rights as a shareholder of the VIE for the maximum period of time permitted by law. Each VIE Shareholder has also covenanted not to transfer his or her equity interest in the VIE to any party other than Zhonghefangda or a designee of Zhonghefangda. We believe that the terms of these agreements are no less favorable than the terms that we could obtain from disinterested third parties. According to our PRC counsel, China Commercial Law Firm, our conduct of business through these agreements complies with existing PRC laws, rules and regulations. As a result of these contractual arrangements, Junlong became our controlled VIE. A variable interest represents a contractual or ownership interest in another entity that causes the holder to absorb the changes in fair value of the other entity s net assets. Potential variable interests include: holding economic interests, voting rights, or obligations to an entity; issuing guarantees on behalf of an entity; transferring assets to an entity; managing the assets of an entity; leasing assets from an entity; and providing financing to an entity. In such cases consolidation of the VIE is required by the enterprise that controls the economic risks and rewards of the entity, regardless of ownership. We have consolidated Junlong s historical financial results in our financial statements as a variable interest entity pursuant to U.S. generally accepted accounting principles ("GAAP"). Acquisition of Classic Bond On July 2, 2010, we completed a reverse acquisition transaction through a share exchange with Classic Bond and its shareholders, whereby we acquired 100% of the issued and outstanding capital stock of Classic Bond, in exchange for 19,000,000 shares of our Common Stock, which shares constituted 94% of our issued and outstanding shares on a fully-diluted basis, as of and immediately after the consummation of the reverse acquisition. As a result of the reverse acquisition, Classic Bond became our wholly owned subsidiary and the former shareholders of Classic Bond, became our controlling shareholders. The share exchange transaction with Classic Bond was treated as a reverse acquisition, with Classic Bond as the acquirer and China Internet Cafe Holdings Group, Inc. as the acquired party. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Classic Bond and its consolidated subsidiaries. Upon the closing of the reverse acquisition, Xuezheng Yuan, our sole director and officer, submitted a resignation letter pursuant to which he resigned, with immediate effect, from all offices that he held and from his position as our sole director that became effective on the August 13 2010, ten days following the mailing by us of an information statement to our stockholders complying with the requirements of Section 14f-1 of the Exchange Act (the "Information Statement"). Also upon the closing of the reverse acquisition, our board of directors (the "Board of Directors") increased its size from one to five members and appointed Dishan Guo, Zhenquan Guo, Lei Li, Wenbin An and Lizong Wang to fill the vacancies created by the resignation of Xuezheng Yuan and such increase. Mr. Dishan Guo's appointment became effective upon closing of the reverse acquisition, while the remaining appointments became effective on August 23, 2010. In addition, our executive officers were replaced by the Classic Bond executive officers upon the closing of the reverse acquisition as indicated in more detail below. As a result of our acquisition of Classic Bond, we now own all of the issued and outstanding capital stock of Classic Bond. Classic Bond was incorporated in the British Virgin Islands on November 2, 2009 to serve as an investment holding company. Junlong was incorporated in the PRC in December 2003. It obtained its first licenses from the Ministry of Culture to operate an internet caf chain in 2005 and opened its first internet caf in April 2006. The following chart represents our organizational structure as of the date of this report: On July 2, 2010, our Board of Directors approved a change in our fiscal year end from June 30 to December 31, which was effectuated in connection with the reverse acquisition transaction described above. On January 20, 2011, the Company filed with the Nevada Secretary of State a Certificate of Amendment to Articles of Incorporation to give effect to a name change from "China Unitech Group, Inc." to "China Internet Cafe Holdings Group, Inc." The Certificate of Amendment was approved by our Board of Directors on July 30, 2010 and was approved by a stockholder holding 59.45% of our outstanding Common Stock by written consent on July 30, 2010. In connection with the name change, on January 25, 2011, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting a name change from "China Unitech Group, Inc." to "China Internet Cafe Holdings Group, Inc." as well as an OTC voluntary symbol change from "CUIG" to "CICC." These changes became effective on February 1, 2011. Our Common Stock began trading under the Company s new name on the Over-the Counter Bulletin Boards on Tuesday, February 1, 2011 under our new trading symbol "CICC." On February 22, 2011, in connection with a security purchase agreement between the Company and certain investors (collectively, the "Investors"), we closed a private placement of approximately $6.4 million from offering a total of 474,967 units (the "Units") at a purchase price of $13.50 per Unit, each consisting of:(i) nine shares of the Company s 5% Series A Convertible Preferred Stock, par value $0.00001 per share (the "Preferred Shares "), convertible on a one to one basis into nine shares of the Company s Common Stock; (ii) one share of Common Stock; (iii) two three-year Series A Warrants, each exercisable for the purchase of one share of Common Stock, at an exercise price of $2.00 per share; and (iv) two three-year Series B Warrants, each exercisable for the purchase of one share of Common Stock, to purchase one share of Common Stock, at an exercise price of $3.00 per share. Our Corporation Information We maintain our corporate offices at #1707, Block A, Genzon Times Square, Longcheng Blvd, Centre City, Longgang District, Shenzhen, Guangdong Province, People s Republic of China. Our telephone number is 86-755-89896008 and our facsimile number is 86-755-89896018. We also have a website at http://www.chinainternetcafe.com/ THE OFFERING The Offering This prospectus relates to (i) 474,967 shares of Common Stock, (ii) 1,899,868 shares of Common Stock underlying certain convertible warrants, and (iii) 4,274,703 shares of Common Stock underlying Preferred Shares. Common Stock outstanding prior to offering 21,414,821 Common Stock offered by Company 0 Total shares of Common Stock offered by selling shareholders 6,649,538 (comprising 1,899,868 shares of Common Stock underlying certain warrants, 4,274,703 shares of Common Stock underlying certain convertible preferred stock, and 474,967 shares of Common Stock) Common Stock to be outstanding after the offering (assuming all the warrants have been either exercised or converted and all Preferred Shares have been converted) 28,187,850 Use of proceeds of sale We will not receive any of the proceeds of sale of the shares of Common Stock by the selling stockholders. However, we will receive proceeds from any exercise or conversion of the warrants into and up to 1,899,868 shares of our Common Stock, which are presently offered under this prospectus unless the warrants are exercised on a cashless basis, in which case we will not receive any proceeds from the exercise of the warrants. We intend to use any proceeds received from the exercise or conversion, as the case may be, for working capital and other general corporate purposes. We, however, cannot assure you that any of the warrants will be exercised or converted. Risk Factors See "Risk Factors" beginning on page 10 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our Common Stock. Background On February 22, 2011( the "Closing Date"), in connection with a security purchase agreement between the Company and the Investors, we closed a private placement (the "Offering") of approximately $6.4 million from offering a total of 474,967 units (the "Units") at a purchase price of $13.50 per Unit, each consisting of:(i) nine shares of the Company s Preferred Shares, convertible on a one to one basis into nine shares of the Company s Common Stock; (ii) one share of Common Stock; (iii) two three-year Series A Warrants, each exercisable for the purchase of one share of Common Stock, at an exercise price of $2.00 per share; and (iv) two three-year Series B Warrants, each exercisable for the purchase of one share of Common Stock, to purchase one share of Common Stock, at an exercise price of $3.00 per share. As a condition to the Offering, we agreed to grant certain registration rights to the Investors pursuant to a Registration Rights Agreement dated February 22, 2011. We agreed to register for resale with the Securities and Exchange Commission (i) the shares of Common Stock issuable upon conversion of the Preferred Shares (4,274,703); (ii) the Common Shares (474,967); (iii) the shares of Common Stock issuable upon exercise of the Warrants (1,899,868); and (iv) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing. For more information on the Offering, please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 23, 2011 and in the "Recent Sales of Unregistered Securities" section below. Plan of Distribution This offering is not being underwritten. The selling stockholders directly, through agents designated by them from time to time or through brokers or dealers also to be designated, may sell their shares from time to time, in or through privately negotiated transactions, or in one or more transactions, including block transactions, on the OTC Bulletin Board or on any stock exchange on which the shares may be listed in the future pursuant to and in accordance with the applicable rules of such exchange or otherwise. The selling price of the shares may be at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. To the extent required, the specific shares to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any such agent, broker or dealer and any applicable commission or discounts with respect to a particular offer will be described in an accompanying prospectus. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus. We will keep this prospectus current until the expiration dates of the convertible warrants, even if the convertible warrants which underlie certain shares of our Common Stock subject to this prospectus are out of the money. The selling security holders and any other persons participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions of the Exchange Act, and the rules and regulations under that act, including Regulation M. These provisions may restrict activities of, and limit the timing of purchases and sales of any of the shares by, the selling security holders or any other person. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares. We will not receive any proceeds from sales of shares by the selling stockholders. However, if any of the selling stockholders decide to exercise their warrants, we will receive the net proceeds of the exercise of such security held by the selling stockholders. We intend to use any proceeds we receive from the exercise or conversion of warrants for working capital and other general corporate purposes. We cannot assure you that any of the warrants will ever be exercised or converted. To the extent that the warrants are exercised on a cashless basis, we will not receive any proceeds from the exercise of the warrants. We will pay all expenses of registration incurred in connection with this offering (estimated to be $68,262), but the selling stockholders will pay all of the selling commissions, brokerage fees and related expenses. The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the distribution of any of the shares may be deemed to be "underwriters" within the meaning of the Securities Act, and any commissions received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms Lithium Exploration Group , the Company, we, us, and our refer to Lithium Exploration Group, Inc. We are an exploration stage company that engages principally in the acquisition, exploration, and development of resource properties. Prior to June 25, 2009, we had the right to conduct exploration work on 20 mineral mining claims in Esmeralda County, Nevada. On July 31, 2009, we acquired an option to enter into a joint venture for the management and ownership of the Jack Creek Project, a mining project located in Elko County, Nevada. On September 25, 2009, the joint venture was terminated and we entered into an agreement with Beeston Enterprises Ltd., under which we were granted an option to acquire an undivided 50% interest in eight mineral claims located in the Clinton Mining District of British Columbia, Canada. At this time we do not own any interests related to claims in Nevada or British Columbia. On December 16, 2010, we entered into an Assignment Agreement to acquire an undivided 100% right, title and interest in and to certain mineral permits located in the Province of Alberta, Canada known as our Valleyview Project. To date, we have made a $60,000 payment in December 2011 and will have to make the following payments: $100,000 due in December 2012; and $300,000 due in December 2013. Costs associated with the exploration of the Alberta property totaled $175,000 in 2011 and included a 12 week test sampling program, a hydrogeological reservoir study and 43-101 technical report, and a mineral processing technique design from the University of Alberta. On January 18, 2011, we entered into a Purchase Option Agreement to acquire an undivided 60% interest in certain mineral claims known as the Salta Aqua Claims located in Salta Province, Argentina. We paid $75,000 due on this Option in the first quarter of 2011. A payment of $100,000 was to become due in January 2012 and another payment was to become due in 2013 and 2014. Two hydrogeologists went to the Salta site from December 27, 2011 to December 29, 2011. On that trip, photos were taken of the properties as well as 15 surface water samples which were sent to local laboratories for testing on January 5, 2012. On January 18, 2012, we elected not to pursue our option to purchase the property at its Salta Project in Argentina. The decision was made after reviewing the geological findings, evaluating both the short- and long-term financial commitments of the option agreement, considering the recent political unrest in Argentina, and most importantly the decision to focus our attention on our Valleyview Project in Alberta, Canada. As a result, no further payments are due on this option. The substantive steps and timeline for our Valleyview Project for the recent past and coming months are as follows: January 1 to January 15, 2012: Receive and integrate aquifer data into APEX technical report and Micromine. Commence block modeling and in-situ resource estimate. January 16 to February 28, 2012: Complete resource estimation and create preliminary draft of Resource Technical Report, and upon review complete resource Technical Report. Review of draft of Resource Technical Report and complete final draft of Resource Technical Report. This portion of the project has been completed. April 1 to August 31, 2012: The following studies were commissioned to expand upon the results of the initial Resource Technical Report. All of the following studies have been commissioned with results to be provided periodically but to be finalized by the end of August 2012. A QA/QC study was commissioned to define the parameters used for the initial testing program by Maxxam Analytics to ensure accuracy of those tests and future results using the same program. This study will also include duplicate sampling of wells that were tested in 2011 to ensure consistency and accuracy of the 2011 results. A study from Niven Fischer in Calgary, Alberta was commissioned to identify the ideal location for a pilot plant including pricing of land leases and environmental considerations for building the plant to process the brine which we are targeting for mineral production. The University of Alberta has been commissioned to begin lab testing of their mineral processing techniques that were designed in their 2011 study to produce lithium carbonate, potassium chloride, and magnesium hydroxide. A study was commissioned with the assistance of a former government official with the minerals and mining branch of the Alberta Government to outline the required steps and timelines to obtain the proper approvals for moving the Valleyview Project to a pilot scale project and eventually to full commercial production September 1 to December 31, 2012: Upon completion of all of the studies we will compile all of the data into a business plan and solicit input on next steps with the required firms to build an initial facility to house our pilot plant and ultrasonic technology unit. The planning can begin immediately even if the technology is not ready for delivery to the site on September 1. We have generated no revenues since May 31, 2006 (inception) and have incurred $25,774,698 in expenses as of March 31, 2012 (of which $17,595,000 relates to the value of stock issued to our officer and directors). As of December 31, 2011, we have incurred $25,541,696 in expenses (of which $17,595,000 relates to the value of stock issued to our officer and directors). During a short time span, including the format approved to date, the shares were trading well outside (higher than) its normal trading ranges due to market activities over which management had no control and which had no connection to the company s operations or actions of its officers or directors. As at March 31, 2012, we had a working capital deficiency of $2,746,108 and an accumulated deficit of $29,241,738 (of which $17,595,000 relates to the value of stock issued to our officer and directors). We have funded operations since inception thought private placements. As of March 31, 2012, we had cash and cash equivalents of $208,192 and as further described below, in May 2012, we received gross proceeds of $1,500,000 from the sale of a convertible debenture. Accordingly, we will use our cash on hand to fund our operations for the next 12 months. Our ability to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development and sale of ore reserves. We do not have any current funding agreements and there cannot be any assurance that we will be able to raise additional funding. These factors, among others, have led our auditors to include a going concern paragraph in their audit report. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. Lithium Exploration Group, Inc. (formerly Mariposa Resources, Ltd.) was incorporated on May 31, 2006 in the State of Nevada. We are based in Scottsdale, Arizona. Effective November 30, 2010, we changed our name to Lithium Exploration Group, Inc., by way of a merger with our wholly-owned subsidiary Lithium Exploration Group, Inc., which was formed solely for the change of name. There are currently three employees of the Company: Alexander Walsh as Chief Executive, Alex Koretsky as Chief Operating Officer, and Shanon Chilson is as an administrative assistant and controller. Bryan Kleinlein is a consultant to our company and is serving as our Chief Financial Officer. Mr. Walsh will visit our Alberta, Canada property quarterly. To date, Mr. Walsh has visited the Alberta property two times but has made five trips to Alberta to meet with various consultants to oversee and discuss the plans for developing the Valleyview Project. There are outside consultants that have been engaged for industry specialties. There are two other directors in the company, Jon Jazwinski and Brandon Colker, who spend approximately 15 hours per month on various company activities. Mr. Jazwinski s primary role is to review the geological findings and exploration strategies taken by management at the direction of consultants. Mr. Colker s primary role is to work with management on research and networking with global industry partners and capital sources. Mr. Jazwinski and Mr. Colker are both responsible for shaping the direction of the Company and assist with the submission of corporate filings. Our executive offices are located at 3200 N. Hayden Road, Suite 235, Scottsdale, Arizona 85251, and our telephone number is (480) 641-4790. The Offering Common stock outstanding prior to the offering 54,349,908 shares* Common stock offered by selling stockholder 7,999,999** shares of common stock, including 4,666,666 shares of common stock issuable upon conversion of a debenture based on $.36 (which is 65% of $.55 which was the lowest reported sales price of our common stock within 20 trading days of May 22, 2012 and which is a discount to market), 3,333,333 shares of common stock issuable upon exercise of the warrants at an exercise price of $0.45 per share, which is a discount to the current market price our common stock. Common stock to be outstanding after the offering 62,349,907 shares 1 Use of proceeds We will not receive any proceeds from the sale of the common stock hereunder. We may receive the exercise price of any common stock issued to the selling stockholder upon exercise of outstanding warrants. See Use of Proceeds for a complete description. Over-The Counter Bulletin Board Symbol LEXG.OB (1) Assumes full conversion of the debentures, full exercise of the warrants and issuance of all the shares upon payment of interest on the convertible debentures. *Based on shares issued and outstanding as of June 25, 2012. ** This amount is 29% of the shares of our common stock held by non-affiliates of ours. Selling Stockholder Financing Transaction On March 28, 2012 we entered into a securities purchase agreement with one investor, Hagen Investments Ltd. Pursuant to the terms of the agreement, on May 15, 2012, the investor acquired a convertible debenture with an aggregate total principal of $1,680,000 and a warrant to purchase 3,333,333 shares of our Common Stock and we received gross proceeds of $1,500,000. Section 4(b) of the debenture provides that the conversion price of the debenture is (i) the lesser of 65% of the lowest reported sale price of the Common Stock for the twenty trading days immediately prior to the date of conversion or (ii) $0.45 per share (which may be at a discount to the market price of our common stock at the time of maturity), subject to various prescribed conditions. On May 15, 2012, we entered into an amendment to the securities purchase agreement to adjust the exercise price of the warrant to be issued in conjunction with the closing of the SPA from $0.69 per share to $0.45 per share. The debenture matures on May 15, 2013 and except as otherwise provided in the debenture no regularly scheduled interest payments are to be made on the debenture. The investor may not convert the debenture at any time if upon such conversion the investor would become the beneficial owner of more than 4.99% of the outstanding shares of our Common Stock. The debenture includes anti-dilution protection with respect to lower priced issuances of common stock or securities convertible or exchangeable into common stock. The total dollar value of the securities underlying the convertible debenture that we have registered for resale (using the number of underlying securities that we have registered for resale and the market price per share for those securities on May 21, 2012) is $2,893,332.92. Along with the debenture, we also issued a warrant to acquire a total of 3,333,333 shares of our common stock for a period of five years at a price of $.45 per share, subject to certain adjustments. The warrant may also be exercised on a cashless basis. The investor may not exercise the warrant at any time if upon such exercise the investor would become the beneficial owner of more than 4.99% of the outstanding shares of our Common Stock. The warrants include anti-dilution protection with respect to lower priced issuances of common stock or securities convertible or exchangeable into common stock. No payments are or will be payable by us to any broker, financial advisor or consultant, finder, placement agent, investment banker or bank with respect to the transaction. After bank transaction fees we received $1,499,827.50 from the sale of the debentures. It is our understanding that the selling stockholder intends to convert the debenture, in which case we would not be required to make payments on the overlying securities. In the event that the selling stockholder does not convert the debenture, we will be unable to make payments on the overlying securities. The selling shareholder has no existing short position in the Company s common stock. The following table lists the total possible profit (discount to the market price) the selling shareholder could realize as a result of the conversion discount for the securities underlying the debenture and the warrant, using the market price and conversion price (exercise price) of the underlying securities as of the date of sale of the debenture and the warrant (May 15, 2012): Market Conversion Underlying Total Market Conversion Price Price/Share Price/Share Shares Price of Total Shares Total Discount Debenture $ .62 $ 0.45 3,733,333 $ 2,314,666 $ 1,680,000 $ 634,666 Warrant $ .62 $ 0.45 3,333,333 $ 2,066,666 $ 1,500,000 $ 566,666 Total Discount $ 1,201,332 The debenture was issued at a $180,000 discount to the total amount of the debenture and (other than with respect to a default) does not require regular interest payments. The discount of $180,000 plus the total discount to the market price of the shares underlying the debenture ($634,466), as a percentage of our net proceeds from the sale of the debenture ($1,499,827.50) is 54%. This equals a percentage of 4.5% per month averaged over the 12 month term of the debentures, and 54% per year. The debenture is also convertible, in whole or in part, into shares of Common Stock at a price equal to (i) the lesser of 65% of the lowest reported sale price of the Common Stock for the twenty trading days immediately prior to the date of conversion or (ii) $0.45 per share (which may be at a discount to the market price of our common stock at the time of maturity), subject to various prescribed conditions. The following table lists the total possible profit (discount to the market price) the selling shareholder could realize as a result of the conversion discount for the securities underlying the (i) debenture (using a price of $.36 which is 65% of $.55 which was the lowest price of our common stock within 20 days of May 15, 2012 and (ii) the warrant, using the market price and the exercise price of the underlying security as of the date of the sale of the warrant (May 15, 2012): Market Conversion Underlying Total Market Conversion Price Price/Share Price/Share Shares Price of Total Shares Total Discount Debenture $ .62 $ 0.36 4,666,666 $ 2,893,333 $ 1,680,000 $ 1,213,333 Warrants $ .62 $ 0.45 3,333,333 $ 2,066,666 $ 1,500,000 $ 566,666 Total Discount $ 1,779,999 The debenture was issued at a $180,000 discount to the total amount of the debenture and (other than with respect to a default) does not require regular interest payments. The discount of $180,000 plus the total discount to the market price of the shares underlying the debenture ($1,213,333), as a percentage of our net proceeds from the sale of the debenture ($1,499,827.50) is 92.9%. This equals a percentage of 7.74% per month averaged over the 12 month term of the debentures, and 81% per year. As of July 31, 2012, of the 6,350,711 shares registered pursuant to the Registration Statement on Form S-1 (File Number 333-175883), Hagen Investments continues to hold 1,260,000 shares and is entitled to sell another 104,635 shares upon conversion of an outstanding debenture (including interest on the debenture) issued to Hagen in July 2011. Additionally, there are 1,807,229 registered shares issuable upon the exercise of a warrant issued to Hagen. The following table details all prior securities transactions between us and Hagen Investments Ltd. the selling shareholder (including any affiliates of Hagen Investments or any person with whom Hagen Investments has a contractual relationship regarding the transaction (or any predecessors of those persons): Date of Transaction Number of shares of the class of securities Subject to the transaction that were outstanding prior to the transaction Number of shares of the class of securities subject to the transaction that were outstanding prior to the transaction and held by persons other than the selling shareholder, affiliates of the company or affiliates of the selling shareholder Number of shares of the class of securities subject to the transaction that were issued or issuable in connection with the transaction Percentage of total issued and outstanding securities that were issued or issuable in the transaction (assuming full issuance) (with the percentage calculated by taking the number of shares issued and outstanding prior to the applicable transaction and held by persons other than the selling shareholder and dividing that number by the number of shares issued or issuable in connection with the applicable transaction. Market price of the class of securities subject to the transaction immediately prior to the transaction Current market price per share of the class of securities subject to the transaction June 29, 2011 50,815,476 23,515,476 6,350,711 shares of Common Stock(1) 27% $1.86 (as of June 28, 2011) $.45(as of July 30, 2012) May 15, 2012 54,349,908 26,749,908 7,999,999(2) 29.9% $.64 (as of May 14, 2012) $.45(as of June 30, 2012) (1) Includes 2,218,181 shares of common stock issuable upon conversion of debentures at a conversion price of $.4125 (which is based on 55% of $.75 which was the lowest reported sales price of our common stock within 20 trading days of January 9, 2012 and which is a discount to the market price of our common stock) 1,807,229 shares of common stock issuable upon exercise of the warrants at an exercise price of $0.913 per share, 2,000,000 shares which were issued upon conversion of $585,000 of the debentures at a conversion price of $.2925, which was determined by using $.45 which was the lowest sales price of our common stock during the twenty days prior to November 22, 2011 and multiplying that by 65% and 325,301 shares of common stock issuable upon payment of interest on the debentures (which is based on a conversion price of $.83, which may be at a discount to the market price of our common stock at the time of maturity of the debentures). (2) includes 4,666,666 shares of common stock issuable upon conversion of a debenture based on $.36 (which is 65% of $.55 which was the lowest reported sales price of our common stock within 20 trading days of May 22, 2012 and which is a discount to market) and 3,333,333 shares of common stock issuable upon exercise of the warrants at an exercise price of $0.45 per share, which is a discount to the current market price our common stock. The following table details the information noted below regarding the shares registered for resale by the Hagen Investments Ltd. Number of shares outstanding prior to the convertible note transaction that are held by persons other than the selling shareholders, affiliates of the Company and affiliates of the selling shareholder Number of shares registered for resale by the selling shareholder or affiliates of the selling shareholder in prior registration statement The number of shares registered for resale by the selling shareholder or affiliates of the selling shareholder that continue to be held by the selling shareholder or affiliates of the selling shareholder The number of shares that have been sold in registered resale transaction by the selling shareholder or affiliates of the selling shareholder The number of sharesto be registered for resale on behalf of the selling shareholder or affiliates of the selling shareholder in the current transaction. 26,749,908 6,350,711 shares of Common Stock(1) As of July 31, 2012, of the 6,350,711 shares registered for resale pursuant to the Registration Statement on Form S-1 (file no. 333-175883) Hagen Investments continues to hold 1,260,000 shares and is entitled to sell another 104,635 shares upon conversion of the debenture (including interest on the debenture) issued to Hagen in July 2011. Additionally, there are 1,807,229 registered shares issuable upon the exercise of a warrant issued to Hagen. 3,178,032 7,999,999(2) (1) Includes 2,218,181 shares of common stock issuable upon conversion of debentures at a conversion price of $.4125 (which is based on 55% of $.75 which was the lowest reported sales price of our common stock within 20 trading days of January 9, 2012 and which is a discount to the market price of our common stock) 1,807,229 shares of common stock issuable upon exercise of the warrants at an exercise price of $0.913 per share, 2,000,000 shares which were issued upon conversion of $585,000 of the debentures at a conversion price of $.2925, which was determined by using $.45 which was the lowest sales price of our common stock during the twenty days prior to November 22, 2011 and multiplying that by 65% and 325,301 shares of common stock issuable upon payment of interest on the debentures (which is based on a conversion price of $.83, which may be at a discount to the market price of our common stock at the time of maturity of the debentures). The aforementioned shares were registered for resale by Hagen Investments pursuant to the Registration Statement on Form S-1 file no. 333-175883. (2) includes 4,666,666 shares of common stock issuable upon conversion of a debenture based on $.36 (which is 65% of $.55 which was the lowest reported sales price of our common stock within 20 trading days of May 22, 2012 and which is a discount to market) and 3,333,333 shares of common stock issuable upon exercise of the warrants at an exercise price of $0.45 per share, which is a discount to the current market price our common stock.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001383871_lifelock_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001383871_lifelock_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001384145_restoratio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001384145_restoratio_prospectus_summary.txt
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+PROSPECTUS SUMMARY
+
+To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 8 and the financial statements.
+
+General
+
+Restoration Industries, Inc. (the registrant) was incorporated under the laws of the state of Florida in October 2006. 
+
+Operations
+
+The registrant is engaged in the production and sale of a Wall Cavity Drying System for the water damage industry. This piece of equipment is called the Bear Cave, and is patent pending.
+
+Common Shares 
+
+Outstanding prior 
+
+to the Offering 
+
+1,450,000
+
+Common Shares 
+
+being sold in 
+
+this offering
+
+2,000,000
+
+Terms of Primary
+
+Offering 
+
+This is a self-underwritten public offering with no minimum purchase requirement. Common shares will be offered on a best efforts basis and we do not intend to use an underwriter for this offering. We do not have an arrangement to place the proceeds from this offering in an escrow, trust, or similar account. Any funds raised from the offering will be immediately available to us for our immediate use.
+
+Termination of the 
+
+ Offering 
+
+The primary offering will commence on the effective date of this prospectus and will terminate on or before August __, 2013. In management s sole discretion, we may terminate the offering before all of the common shares are sold. 
+
+6
+
+Market for our common 
+
+ stock 
+
+Our common stock is not quoted on a market or securities exchange. We cannot provide any assurance that an active market in our common stock will develop. We intend to quote our common shares on a market or securities exchange.
+
+Use of proceeds
+
+We will use the proceeds of this offering to expand our business and add personnel as required. Should we be unable to raise at least $40,000, we would give priority to allocating capital to complete everything necessary to be ready to meet our SEC reporting requirements. Any remaining capital would be used to fund working capital needs, including the employment of additional personnel.
+
+7
+
+RISK FACTORS
+
+Our business is subject to numerous risk factors, including the following.
+
+1. We cannot offer any assurance as to our future financial results. 
+
+We were incorporated in October 2006 for the purpose of producing and selling a Wall Cavity Drying System for the water damage industry. Although we have been in business for 5 years and have generated revenue, there is no assurance that we will be able to generate revenues in the future in a manner that will be sufficient for us to become profitable. There can be no assurance that we will ever achieve profitability. 
+
+We do not have a profitable operating history, and as a result, there is a high level of risk in investing in our company. There is a potential absence of liquidity since there is currently no established public trading market for our securities and an active trading market in our securities may not develop or, even if it is developed, may not be sustained.
+
+2. Our auditors have expressed a going concern issue that notes our need for capital and/or revenues to survive as a business. You may lose your entire investment.
+
+Our ability to continue as a going concern is dependent on our ability to further implement its business plan and raise capital. If we cannot raise sufficient capital with this offering, we do not know if we will be able to continue business operations. Further, without additional capital, we may have difficulties in meeting the ongoing costs of being a reporting company. We do not have any reserves set aside for meeting these ongoing costs, and will be using company revenues and funds to meet these costs.
+
+3. We may not receive enough funding from this offering and may have difficulty obtaining additional funds in the future.
+
+The registrant may require additional financing in the future and a failure to obtain such required financing will inhibit its ability to grow. The continued growth of its business may require additional funding from time to time. Funding would be used for general corporate purposes, which may include acquisitions, investments, repayment of debt and capital expenditures.
+
+Obtaining additional funding would be subject to a number of factors, including market conditions, operational performance and investor sentiment. These factors may make the timing, amount terms and conditions of additional funding unattractive, or unavailable, to us. The terms of any future financing may adversely affect the interests of stockholders.
+
+4. If we lose the services of any of our key personnel, we may not be able to operate our business effectively.
+
+8
+
+Restoration Industries success depends on its management team and other key personnel, the loss of any of whom could disrupt its business operations. Restoration Industries future success will depend in substantial part on the continued service of its senior management and sales managers. Thomas Geer, our key executive, has over fifteen years of experience as an owner and manager and his participation in the management of the company is crucial to our success. The loss of the services of Thomas as our key executive could impede implementation of Restoration Industries business plan and result in reduced profitability.
+
+Restoration Industries does not carry key person life insurance in respect to any of its officers or employees. Restoration Industries future success will also depend on its continued ability to attract, retain and motivate a sales force as well as drivers who want to join our time. The company cannot assure that it will be able to retain its key personnel or that it will be able to attract, assimilate or retain qualified personnel in the future.
+
+5. Future regulations may negatively affect our profitability and our ability to continue operations.
+
+There is no assurance that future regulatory, judicial and legislative changes will not have a materially adverse effect on Restoration Industries business or that regulators or third parties will not raise material issues with regard to the company s business or operation, or Restoration Industries compliance or non-compliance with applicable regulations. Furthermore, any changes in applicable laws or regulations may have a materially adverse effect on Restoration Industries.
+
+6. Our principal executive officer owns 62% of Restoration Industries outstanding common stock, and as a result, stockholder rights may be adversely affected.
+
+Thomas Geer, and the other Officers and Directors of Restoration Industries own 63.72% of the company s common stock, giving them influence or control in corporate transactions and other matters and their interests could differ from those of other stockholders. Restoration Industries principal executive officer, Mr. Thomas Geer, owns directly and beneficially, approximately 62% of Restoration Industries outstanding common stock. As a result, he is in a position to significantly influence or control the outcome of matters requiring a stockholder vote, including the election of directors, the adoption of any amendment to its Certificate of Incorporation or bylaws, and the approval of significant corporate transactions. His control may delay or prevent a change of control on terms favorable to other stockholders and may adversely affect voting and other stockholders rights.
+
+9
+
+7. It is uncertain how potential clients will view our services in light of economic turmoil, and as a result, we may lose business.
+
+Restoration Industries generates its revenues based on the perceived need that commercial and residential clients need cleaning and restoration services. Although the business has been consistent for the last several years, there exists the possibility that a recession or other harsh economic conditions could cause business owners to see our services as a luxury rather than a necessity.
+
+8. We may be unsuccessful in implementing required internal controls over financial reporting.
+
+We are not currently required to comply with the SEC s rules implementing Section 404 of the Sarbanes-Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC s rules implementing Section 302 of the Sarbanes-Oxley Act of 2002, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. We will not be required to make our first assessment of our internal control over financial reporting until the year following our first annual report required to be filed with the SEC. To comply with the requirements of being a public company, we will need to create information technology systems, implement financial and management controls, reporting systems and procedures and contract additional accounting, finance and legal staff.
+
+Our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an emerging growth company as defined in the JOBS Act if we take advantage of the exemptions available to us through the JOBS Act.
+
+Any failure to develop or maintain effective controls, or any difficulties encountered in our implementation of our internal controls over financial reporting could result in material misstatements that are not prevented or detected on a timely basis, which could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. Ineffective internal controls could cause investors to lose confidence in our reported financial information.
+
+9. We may sell additional shares of the company in the future, which may dilute the value of your shares.
+
+The registrant may issue equity and debt securities in the future. These issuances and any sales of additional common shares may have a depressive effect upon the market price of 
+
+10
+
+the registrant s common shares and investors in this offering. There is no guarantee that shares sold in this offering will maintain the same value as when they were purchased.
+
+10. We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our results of operations.
+
+As a public company, we will incur legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting and corporate governance requirements. These requirements include compliance with Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules implemented by the Securities and Exchange Commission and other applicable securities or exchange-related rules and regulations. In addition, our management team will also have to adapt to the requirements of being a public company. We expect complying with these rules and regulations will substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
+
+The increased costs associated with operating as a public company will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. Additionally, if these requirements divert our management s attention from other business concerns, our results of operations could be adversely effected.
+
+However, for as long as we remain an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an emerging growth company. 
+
+We will remain an emerging growth company for up to five years, although we would cease to be an emerging growth company prior to such time if we have more than $1 billion in annual revenue, more than $700 million in market value of our common stock is held by non-affiliates or we issue more than $1 billion of non-convertible debt over a three-year period.
+
+11
+
+11. We are an emerging growth company and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
+
+We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+
+In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001385190_glori_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001385190_glori_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2f1f0428c00578e432ae353cd974723e8b40e9c4
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements included elsewhere in this prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations . For convenience in this prospectus, Glori Energy , the Company , we , us and our refer to Glori Energy Inc. and its subsidiaries, taken as a whole, unless otherwise noted. Our Company We are a clean-technology energy company that uses biotechnology designed to release potentially large quantities of oil that remain trapped in oil reservoirs after implementation of conventional oilfield technologies. We deploy our technology to increase oil recovery for oil company customers and for our own oil fields that we acquire and redevelop. Only about one-third of the oil discovered in a typical reservoir is recoverable using conventional oil production technology, leaving the remaining two-thirds trapped in the reservoir rock. Our AEROtm System (Activated Environment for the Recovery of Oil) technology stimulates the native microorganisms that reside in the reservoir to improve the recoverability of this trapped oil. Our AERO System incorporates a dedicated field deployment unit designed to work with the customer s existing waterflood operations. Waterflooding is a commonly used process of injecting water into the reservoir in order to increase oil recovery. Our AERO System does not have any significant new impact on the environment because it utilizes existing production equipment and infrastructure and does not introduce environmental risks into the reservoir. We believe that traditional enhanced oil recovery techniques, consisting of the injection of gas, steam or chemicals into the reservoir, introduce new environmental risks and are more expensive. Implementation of our AERO System does not change the nature of the customer s oil production operations and does not require the drilling of new wells nor does it require other significant new capital investment. Our AERO System economically increases the oil production rate and the ultimate quantity of oil recovered over the life of the oil field, and extends the life of the field by integrating sophisticated biotechnology with traditional oil production techniques. Results from the first commercial and longest running field deployment of our AERO System, as reported in a Society of Petroleum Engineers paper we published with Merit Energy Company and Statoil Petroleum AS, or Statoil, in July 2011, derived from one oil producing well indicate that our AERO System may recover up to 20% of the oil that would otherwise be left behind at the end of the economic life of the well. This project also demonstrates a 60% to 100% improvement in total production rate, and we estimate that our cost for this project, excluding minimum upfront capital costs, will be approximately $5 per incremental barrel of oil. We expect that the costs for future full scale commercial implementations of our technology would not be higher than $5 per barrel, particularly if the size of the project is larger than our first AERO System commercial field deployment. We have performed extensive laboratory and field testing to validate, integrate and advance technology transferred from three different scientific groups that collectively represents decades of funded research and development. Our technology is protected by several patents and patent applications. We and our technology partners, Statoil, in Norway, The Energy and Resources Institute, or TERI, in India, and Bio Topics S.A., or Biotopics, in Argentina, have applied our predecessor technologies and the AERO System in more than 100 wells throughout the world. For more information about our technology partners, see Prospectus Summary Our History . We estimate that these predecessor technology implementations have recovered over 6 million barrels of oil that would not have otherwise been recovered. We estimate that the first commercial application of our AERO System, starting in May 2010, had produced more than 26,000 incremental barrels of oil by May 2011; and it continues to yield positive results. We currently have commercial projects with 11 international and domestic exploration and production, or E P, companies. We anticipate continuing to demonstrate results with AERO System technology and expanding our customer base as well as utilizing AERO System technology on our own oil fields. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 2, 2012 Shares Glori Energy Inc. Common Stock We are selling shares of our common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We have applied to list our common stock on The Nasdaq Global Market under the symbol GLRI . The underwriters have an option to purchase a maximum of additional shares to cover over-allotment of shares. We are an emerging growth company under the federal securities laws and are eligible for reduced public company reporting requirements. Investing in our
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001386885_linc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001386885_linc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..93d38f141ec2865d10bc20f3fc6d467f78ba30a1
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001386885_linc_prospectus_summary.txt
@@ -0,0 +1 @@
+this prospectus. This summary may not contain all of the information that may be important to you. You should read this summary together with the entire prospectus, including the more detailed information regarding us and the common stock being sold
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001387632_manhattan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001387632_manhattan_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6442a684202ba871f1b99f8c6c4a09b24221219c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001387632_manhattan_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that may be important to you. Therefore, you should carefully read this entire prospectus and other documents to which we refer herein before making a decision to invest in our common stock, including the risks discussed under the "Risk Factors" section and our financial statements and related notes which are incorporated by reference into this prospectus. Company Information Overview We are a bank holding company organized under the laws of the state of California. Our principal subsidiary, Bank of Manhattan, N.A., is a national banking association that serves the personal and business banking needs of businesses in the Los Angeles metropolitan area, with an emphasis on companies located throughout the South Bay, San Gabriel Valley and the Tri-Cities area. We offer relationship banking services to entrepreneurs, family owned and closely-held middle market businesses, real estate investors and professional service firms. Through a wholly-owned subsidiary, MBFS Holdings, Inc. ("MBFS"), we also indirectly owned until November 9, 2012, a 70% interest in Manhattan Capital Markets LLC ("MCM"), which, either directly or through its wholly-owned subsidiaries, generates revenues primarily from trading income, facilitating trades in whole loans between institutional clients, and advisory services regarding the evaluation and packaging of bond portfolios of other institutions. As discussed in more detail below under "Recent Developments Sale of MBFS," we sold our entire interest in MBFS, including our indirect interest in MCM, on November 9, 2012. At September 30, 2012, Manhattan Bancorp had consolidated total assets of $469.3 million, total net loans of $353.5 million, total deposits of $373.8 million and total shareholders' equity of $55.0 million. At September 30, 2012, MCM had $5.0 million in assets primarily in cash and cash equivalent balances. We and our affiliates are extensively regulated and supervised under both federal and state law. As a bank holding company, we are subject to regulation and examination by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended (the "BHCA"). We are required to file with the Federal Reserve Board reports and other information regarding our business operations and the business operations of our subsidiaries. As a national banking association, Bank of Manhattan is subject to primary supervision, examination, and regulation by the Office of the Comptroller of the Currency ("OCC"). To a lesser extent, Bank of Manhattan is also subject to certain regulations promulgated by the Federal Reserve Board and the Federal Deposit Insurance Corporation ("FDIC"), as administrator of the federal deposit insurance fund. This regulatory framework is intended primarily for the protection of depositors and the federal deposit insurance fund and not for the protection of our security holders. Our principal executive offices and those of Bank of Manhattan are located at 2141 Rosecrans Avenue, Suite 1100, El Segundo, California 90245, and our telephone number is (310) 606-8000. Our website can be accessed at http://www.bankofmanhattan.com. Information contained on our website does not constitute part of, and is not incorporated into, this prospectus. Our common stock is traded on the over-the-counter market under the symbol "MNHN." Additional information about us is included in documents incorporated by reference in this prospectus. See "Information Incorporated by Reference." Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 18, 2012 PRELIMINARY PROSPECTUS Up to 2,212,389 Shares of Common Stock We are distributing to our shareholders, at no charge, nontransferable subscription rights to purchase up to an aggregate of 2,212,389 shares of our common stock. The holders of record of our common stock as of 5:00 p.m., Eastern Time, on November 28, 2012, referred to as the record date, will receive one nontransferable subscription right for every two shares of common stock owned on the record date. However, neither Carpenter Fund Manager GP, LLC, nor any of its affiliated investment funds, which collectively own a total of 75.6% of our outstanding common stock, will receive any subscription rights or be entitled to purchase shares of common stock in this offering. We will not issue fractional rights and will round the number of subscription rights issued to each shareholder down to the nearest whole number. Each subscription right entitles you to a basic subscription right and an over-subscription privilege. Under the basic subscription right, you will be entitled to purchase one share of our common stock at a subscription price of $4.52 per share. Under the over-subscription privilege, upon exercise of all of your basic subscription rights, you will be entitled to subscribe, at the same subscription price, for an unlimited number of additional shares of common stock, provided that (i) no shareholder may own more than 4.9% of our common stock, and (ii) the aggregate subscription price of all shares of common stock purchased in the rights offering shall not exceed $10 million. If the rights offering is oversubscribed, we will allocate the additional shares on a discretionary basis, after giving consideration to both the number of shares each rights holder subscribed for under his or her basic subscription rights and the number of shares requested through the exercise of the over-subscription privilege. We estimate that if all eligible shareholders exercise their basic subscription rights, a total of 702,811 shares will be available to purchase by way of over-subscription privileges. To the extent you exercise your over-subscription privilege and pay for an amount of shares that exceeds the number of the unsubscribed shares available to you, any excess subscription payment received by the subscription agent will be returned to you, without interest, as soon as practicable. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [ ], 2013. We may extend the offering period for up to 30 days in our sole discretion but we have no current plans to do so. You should carefully consider, prior to the expiration of the rights offering, whether to exercise your subscription rights. All exercises of subscription rights are irrevocable. The subscription rights are nontransferable and may not be sold, transferred or assigned. We may extend, cancel, modify or amend the rights offering at any time prior to the expiration of the rights offering for any reason. In the event that we cancel the rights offering, all subscription payments received by the subscription agent will be returned, without interest, as soon as practicable. This is not an underwritten offering. The shares are being offered directly by us without the services of an underwriter or selling agent. Our board of directors is making no recommendation regarding your exercise of the subscription rights. Although our common stock is quoted on the OTCQB Marketplace under the symbol "MNHN," there has been a very limited trading market in our common stock, and it is not anticipated that an active market will develop as a result of this rights offering. As of [ ], 2012, the last reported sales price of our common stock was $[ ]. This investment in our common stock involves risks. You should carefully consider all of the information set forth in this prospectus, including the risk factors beginning on page 13 of this prospectus, as well as the risk factors and other information contained in any documents we incorporate by reference into this prospectus before exercising your subscription rights. See "Information Incorporated by Reference." Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. These securities are not deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other governmental agency or fund. The date of this prospectus is , 2012. Table of Contents Recent Developments Acquisition of Professional Business Bank On May 31, 2012, we completed our acquisition of Professional Business Bank through the merger of Professional Business Bank with and into Bank of Manhattan, with Bank of Manhattan as the surviving institution. Immediately prior to the Merger, Professional Business Bank completed a transaction in which its holding company, CGB Holdings, was merged into Professional Business Bank and accounted for using the historical balances as entities under common control. In the Merger, we issued an aggregate of 8,195,469 shares of our common stock to the shareholders of Professional Business Bank, representing a ratio of 1.7991 shares of our common stock for each share of Professional Business Bank common stock outstanding at the effective time of the Merger. The shares of our common stock issued to the Professional Business Bank shareholders in the Merger constituted approximately 67.2% of the our outstanding common stock after giving effect to the Merger. Accounting principles generally accepted in the United States of America ("GAAP") require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. Accordingly, the Merger was accounted for as a reverse acquisition whereby Professional Business Bank was treated as the acquirer for accounting and financial reporting purposes. As a result of the Merger, we acquired four branches in central and east Pasadena, Montebello and Glendale, additional assets with an estimated fair value of $233.1 million and additional deposits with an estimated fair value of $200 million. Sale of MBFS On November 9, 2012, we entered into a Securities Purchase Agreement (the "Purchase Agreement") with Carpenter Community Bancfund, L.P. and Carpenter Community Bancfund-A, L.P. (the "Carpenter Lenders"), which provided for (i) the sale of all of the shares of capital stock (the "MBFS Shares") of our wholly owned subsidiary, MBFS, and (ii) the assignment of our entire right in and to a promissory note dated as of July 25, 2011 (the "MCM Note"), made by MCM in favor of us in the aggregate principal amount of $5.0 million, in each case to the Carpenter Lenders for an aggregate purchase price of $5.0 million (the "Purchase Price"). The consummation of the transactions contemplated by the Purchase Agreement was completed simultaneously with the signing of the Purchase Agreement on November 9, 2012. Prior to the consummation of such transactions, we received an opinion from our financial advisor, Sandler O'Neill & Partners, L.P., confirming that the portion of the Purchase Price attributable to the sale of the MBFS Shares is fair, from a financial point of view, to us. The value of consideration received exceeded the carrying amount of the assets exchanged by $1.3 million, which was recognized as additional paid in capital. Pursuant to the terms of the Purchase Agreement, we used a portion of the Purchase Price to repay $516,667 of accrued but unpaid interest and $4,283,333 of the outstanding principal balance of the loans outstanding under a Credit Agreement dated as of June 25, 2011 with the Carpenter Lenders and Carpenter Fund Management Company, LLC, as administrative agent (as amended, the "Credit Agreement"). In addition, and pursuant to and in accordance with the terms of the Credit Agreement, the Carpenter Lenders converted the remaining $716,667 of the outstanding principal balance of the loans outstanding under the Credit Agreement into an aggregate of 169,424 shares of our common stock. The number of shares of our common stock issued to the Carpenter Lenders was determined by dividing the sum of the unpaid principal balance by the book value per share of our common stock (as defined in the Merger Agreement), or $4.23 per share. As a result of the consummation of these transactions, the principal balance and all accrued interest under the Credit Agreement has been repaid in full. Table of Contents Controlling Shareholder As of the date of this prospectus, the Carpenter Funds collectively owned 9,336,700 shares of our common stock or approximately 75.6% of our outstanding common shares. Pursuant to a Stock Purchase Agreement dated as of May 14, 2008 by and between us and Fund Manager, Fund Manager has the right to appoint one representative to our board of directors for so long as its beneficially owns at least 10% of our issued and outstanding shares of the Company. Two of our directors and our interim chief financial officer are affiliated with Fund Manager. Deregistration We currently intend to deregister our common stock with the SEC and terminate our reporting obligations under the Exchange Act during the first quarter of 2013. Our board of directors decided to deregister our common stock after carefully considering the advantages and disadvantages of having our common stock registered with the SEC, including the significant costs of preparing and filing periodic reports with the SEC; the substantial audit, legal and other costs and expenses associated with such filings; and the additional demands placed on management and other personnel to comply with SEC reporting requirements. Deregistration of our common stock would reduce the amount and frequency of publicly-available information about the Company and Bank of Manhattan because we would no longer be required to file Exchange Act reports with the SEC, such as annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements. We will, however, continue to be required to file these Exchange Act reports with respect to our entire 2012 fiscal year, including our annual report on Form 10-K for the year ended December 31, 2012, which we expect will be filed in March 2013. The Company and Bank of Manhattan make regulatory filings that are available at http://www.ffiec.gov and https://cdr/ffiec.gov, respectively, which would continue to be available after the Exchange Act deregistration. Our common stock is quoted on the OTCQB Marketplace, which does not require Exchange Act registration or that we meet the reporting requirements of the Exchange Act. It is therefore possible that our common stock will continue to trade on the OTCQB Marketplace following deregistration, but there is no assurance that it will continue to do so. Available Information We currently file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. The SEC also maintains an internet website, at http://www.sec.gov, that contains our filed reports, proxy and information statements and other information that we file electronically with the SEC. Additionally, we make these filings available, free of charge, on our website at http://www.bankofmanhattan.com as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. Except for those SEC filings incorporated by reference in this prospectus, none of the information contained on, or that may be accessed through, our website is a prospectus or constitutes part of, or is otherwise incorporated into, this prospectus. Table of Contents Rights Offering Summary Securities Offered Up to 2,212,389 shares of common stock on a best efforts basis. All 2,212,389 shares being offered pursuant to nontransferable subscription rights that we are distributing, without charge, to our shareholders of record as of 5:00 p.m., Eastern Time, on November 28, 2012. The subscription rights include both basic subscription rights and over-subscription privileges to purchase shares for $4.52 per share. Neither Fund Manager nor the Carpenter Funds will be permitted to purchase shares in this offering. Subscription Price $4.52 per share. Basic Subscription Rights The basic subscription rights will entitle you to purchase one share of our common stock for every two shares you owned as of the record date, at a subscription price of $4.52 per share. We will not issue fractional rights and will round the number of subscription rights issued to each shareholder down to the nearest whole number. Over-subscription Privilege If you purchase all shares available to you pursuant to your basic subscription rights, you may also choose to subscribe, at the same subscription price of $4.52 per share, for an unlimited number of additional shares of common stock, provided that (i) no shareholder may own more than 4.9% of our common stock, and (ii) the aggregate subscription price of all shares of common stock purchased in the rights offering shall not exceed $10 million. If the rights offering is oversubscribed, we will allocate the additional shares on a discretionary basis, after giving consideration to both the number of shares each rights holder subscribed for under his or her basic subscription rights and the number of shares requested through the exercise of the over-subscription privilege. We estimate that if all shareholders exercise their basic subscription rights, a total of 702,811 shares will be available for purchase pursuant to the over-subscription privileges. Record Date for Subscription Rights 5:00 p.m., Eastern Time on November 28, 2012 Minimum Investment None. We may complete this offering and accept your subscription regardless of the number of shares we sell in the offering. Common Stock Outstanding As of November 9, 2012 we had 12,355,857 shares of common stock outstanding. Assuming the sale of all shares offered in the offering, we would have approximately 14,568,246 shares outstanding upon completion of the offering. OTCQB Marketplace Symbol MNHN Table of Contents Plan of Distribution The shares are being offered to existing shareholders only on a subscription rights basis. Neither Fund Manager nor the Carpenter Funds will be permitted to purchase shares in the offering. Participation of Directors and Executive Officers We will issue subscription rights to our officers and director based on their ownership of common stock on the record date. It is possible that such individuals may purchase shares under their subscription rights in their discretion, but they have made no commitments to do so. Our board of directors is not making a recommendation regarding your exercise of the subscription rights or purchase of shares in the offering. You should make your decision to invest based on your assessment of our business and the offering. Please see "Risk Factors" beginning on page 13 for a discussion of some of the risks involved in investing in our common stock. How to Subscribe If you are a holder of record, you must properly complete the enclosed subscription rights certificate and deliver it, along with the full subscription price, to the subscription agent, Computershare Trust Company, N.A., before the expiration date of the rights offering. Your payment must also clear prior to the expiration date. You may deliver the documents and payments by first class mail or courier service. If you use first class mail for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. Please follow the instructions of your nominee, who may require that you meet a deadline earlier than the expiration date of the rights offering. Use of Proceeds We intend to use the net proceeds from this offering to increase our capital and for general corporate purposes. Expiration Dates Subscription rights will expire, if not exercised, by 5:00 p.m., Eastern Time, on [ ], 2013, unless the expiration date is extended. Dividends Historically, we have not paid any cash dividends to our shareholders. Our only source of income for future cash dividends, if any, will be dividends paid by Bank of Manhattan to us. Federal banking law limits Bank of Manhattan's ability to pay dividends to us. We do not anticipate paying any cash dividends for the foreseeable future. See "Market Information and Dividend Policy and Related Matters." Table of Contents Best Efforts Offering We are offering the shares on a "best efforts" basis through our directors and officers, who will not receive any discounts or commissions for selling such shares. There is no minimum number of shares that must be sold in order to close this offering and accept your subscription. Subscription Agent Computershare Trust Company, N.A. Information Agent Georgeson Inc. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001391594_ceva_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001391594_ceva_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..678fd765c726ce611ab063485ffbd9ff82c33982
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@@ -0,0 +1 @@
+The following summary highlights certain information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that may be important to you in making a decision to invest in our ordinary shares. Unless otherwise indicated, the information in this prospectus assumes (i) an initial public offering price of $ per ordinary share (the mid-point of the price range set forth on the cover
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001394120_anhui_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001394120_anhui_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2f9562577df63758fd75866db3fc12b8e2032e3e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001394120_anhui_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. ANHUI TAIYANG POULTRY CO., INC. We are private breeder and seller of ducks and duck parts in the People s Republic of China ( China or PRC ). Our wholly-owned subsidiary, Dynamic Ally Limited ( Dynamic ) was incorporated in the British Virgin Islands on March 2, 2010. Dynamic owns 100% of the issued and outstanding capital stock of Ningguo Taiyang Incubation Plant C., Ltd. ( Ningguo ), a wholly foreign owned enterprise ( WFOE ) established under the laws of the PRC. On May 26, 2010, Ningguo entered into a series of contractual agreements with Anhui Taiyang Poultry Co., Ltd. ( Taiyang ), a company incorporated under the laws of the PRC, and its three owners, in which Ningguo effectively assumed management of the business activities of Taiyang and has the right to appoint all executives and senior management and the members of the board of directors of Taiyang. The contractual arrangements are comprised of a series of agreements, including a Consulting Services Agreement and Operating Agreement, through which Ningguo has the right to advise, consult and manage Taiyang and its business operations for a quarterly consulting fee equal to all of Taiyang s quarterly net profit. We will receive distributions from our consolidated affiliates only to the extent service fees are paid to Ningguo under these series of agreements and further distributed as dividends or other shareholder distributions by Ningguo. To secure payment of the service fees, Taiyang s shareholders have pledged their rights, titles and equity interest in Taiyang as security for Ningguo to collect the consulting fee from Taiyang through an Equity Pledge Agreement. In order to further reinforce Ningguo s rights to control and manage Taiyang, Taiyang s shareholders have granted Ningguo the exclusive right to exercise their voting rights pursuant to a Voting Rights Proxy Agreement, as well as the exclusive right and option to acquire all of their equity interests in Taiyang through an Option Agreement. All of the business operations are carried out by Taiyang, which we control through contractual arrangements between Ningguo and Taiyang. Through Taiyang, we raise, process and market ducks and duck related food products through three business lines: o Breeding Unit breeds, hatches, and cultivates ducklings for resale and processing by Food Processing Unit o Feed Unit produces duck feed for internal use and external sale o Food Processing Unit processes ducklings into frozen raw food product for commercial resale. All of the business operations are in Ninnguo City, located in the province of Anhui, in southern-central China. TABLE OF CONTENTS Page About this Prospectus 1 Cautionary Note Regarding Forward-Looking Statements and Other Information Contained in this Prospectus 1 Prospectus Summary 2
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001419852_mattress_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001419852_mattress_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..cdf44a428917e51f175092a77a1132ecef0d5773
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus, including the more detailed information and the financial statements appearing elsewhere in this prospectus. Unless the context otherwise requires, the terms "Mattress Firm," "our company," "the Company," "we," "us," "our" and the like refer to Mattress Firm Holding Corp. and its consolidated subsidiaries. Unless otherwise indicated, (i) the term "our stores" refers to our company-operated stores and our franchised stores; (ii) when used in relation to our company, the terms "market" and "markets" refer to the metropolitan statistical area or an aggregation of the metropolitan statistical areas in which we or our franchisees operate; and (iii) the information provided in this prospectus assumes that the underwriters' over-allotment option is not exercised. In this prospectus, we refer to earnings before interest, taxes, depreciation and amortization and other adjustments (such as goodwill impairment charges, loss on store closings and acquisition expenses), or "Adjusted EBITDA." Adjusted EBITDA is not a performance measure under accounting principles generally accepted in the United States, or "U.S. GAAP." See " Summary Historical and Unaudited Pro Forma Consolidated Financial and Operating Data" for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income. We report on the basis of a 52- or 53-week fiscal year, which ends on the Tuesday closest to January 31. Each fiscal year is described by the period of the calendar year that comprises the majority of the fiscal year period. For example, the fiscal year ended January 31, 2012 is described as "fiscal 2011." Fiscal 2009, fiscal 2010 and fiscal 2011 each contained 52 weeks. Our Company We are a leading specialty retailer of mattresses and related products and accessories in the United States. As of July 31, 2012, we and our franchisees operated 957 and 141 stores, respectively, primarily under the Mattress Firm name, in 76 markets across 28 states. In 2011, we ranked first among the top 100 U.S. furniture stores for both growth in store count and percentage increase in sales and second in total sales among specialty retailers according to Furniture Today. Based on our analysis of information published to date in Furniture Today and Company data, which gives effect to our recent acquisitions, we believe that, among multi-brand mattress specialty retailers in the United States, we have the largest geographic footprint, the greatest number of stores nationwide and the highest net sales on an aggregate basis. We believe that, in our markets, Mattress Firm is a highly recognized brand known for its broad selection, superior service and compelling value proposition. Based on our analysis of public store information for our competitors and our Company data, we believe more than 90% of our company-operated stores are located in markets in which we had the number one market share position as of July 31, 2012. Since our founding in 1986 in Houston, Texas, we have expanded our operations across four time zones, with the goal of becoming the premier national mattress specialty retailer. We believe our destination retail format provides our customers with a convenient, distinctive and enjoyable shopping experience. Key highlights that make us a preferred destination and that differentiate our brand and services include our: extensive product selection of the top name brands; contemporary, easy-to-navigate store design utilizing our unique Comfort By Color merchandising approach that organizes mattresses by comfort style; price, comfort and service guarantees; Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MATTRESS FIRM HOLDING CORP. (Exact name of registrant as specified in its charter) Delaware 5712 20-8185960 (State or other jurisdiction of incorporation or organization) (Primary standard industrial classification code number) (I.R.S. employer identification number) 5815 Gulf Freeway Houston, Texas 77023 (713) 923-1090 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents NOTE REGARDING TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include "Mattress Firm ," "Comfort By Color ," "Mattress Firm Red Carpet Delivery Service ," "Hampton & Rhodes ," "YuMe ," "Mattress Firm SuperCenter ," "Happiness Guarantee ," "Replace Every 8 ," "Save Money. Sleep Happy ," "Sleep Happy ," "Dream It's Possible ," "Side by side before you decide ," "Nobody Sells for Less, Nobody! " and "All the best brands...All the best prices! ." Trademarks, trade names or service marks of other companies appearing in this prospectus are, to our knowledge, the property of their respective owners. NOTE REGARDING MARKET AND INDUSTRY DATA Industry and market data included in this prospectus were obtained from our own internal data, data from industry trade publications and groups (primarily Furniture Today and the International Sleep Products Association, or "ISPA"), consumer research and marketing studies and, in some cases, are management estimates based on industry and other knowledge and experience in the markets in which we operate. Our estimates have been based on information obtained from our suppliers, customers, trade and business organizations and other contacts in the markets in which we operate. We believe these estimates and the third party information mentioned above to be accurate as of the date of this prospectus. OUR INITIAL PUBLIC OFFERING In November 2011, we issued and sold 6,388,888 shares of common stock at a price of $19.00 per share in our initial public offering. Upon the completion of the initial public offering, our common stock became listed on the NASDAQ Global Select Market under the symbol "MFRM." In connection with the initial public offering, we effected a 227,058-for-one stock split on November 3, 2011. Unless otherwise indicated, all share data gives effect to the stock split. Table of Contents superior customer service by our educated, extensively-trained and commissioned sales associates of whom over 93% are full-time employees; Mattress Firm Red Carpet Delivery Service , which includes a three-hour delivery window; and highly visible and convenient store locations in major retail trade areas. Our stores carry both a broad assortment of leading national mattress brands and our exclusive brands. With a wide range of styles, sizes, price points and unique features, we provide our customers with their choice of traditional mattresses, including Sealy, Stearns & Foster and Simmons, as well as specialty mattresses, such as Tempur-Pedic (for which we are the largest retailer in the United States), Serta's iComfort line and Sealy's Optimum line. We also offer a variety of bedding-related products and accessories. We drive profitability in the markets in which we operate by penetrating a market with stores and leveraging fixed and discretionary costs, such as occupancy and advertising, as we gain sales volume, grow our brand presence and advance our operational scale. We have a proven track record of growing our store base through organic new store openings and acquisitions that typically include rebranding of the acquired stores to Mattress Firm . In fiscal 2011, we generated net sales, Adjusted EBITDA and net income of $703.9 million, $87.5 million and $34.4 million, respectively. (Adjusted EBITDA is not a performance measure under U.S. GAAP. See " Summary Historical and Unaudited Pro Forma Consolidated Financial and Operating Data" for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.) For the twenty-six weeks ended July 31, 2012, we generated net sales, Adjusted EBITDA and net income of $471.8 million, $55.0 million and $19.8 million, respectively. From February 4, 2009 to July 31, 2012, we added 493 stores, which included 269 stores added through strategic acquisitions. The majority of these additional stores were located in markets where we had existing stores, allowing us to increase our advertising spend per person and grow our net sales as well as Adjusted EBITDA at compound annual rates of 30.7% and 40.2%, respectively, while achieving 11 consecutive fiscal quarters of positive comparable-store sales growth through July 31, 2012. We believe we have a compelling opportunity to further penetrate the fragmented specialty retail mattress industry through strategic acquisitions and continue profitable growth into the future. One example of this is our recent acquisition of substantially all of the operations and assets of Mattress XPress, Inc. and Mattress XPress of Georgia, Inc. (which entities operate Mattress X-Press stores), including 30 mattress specialty stores located primarily in South Florida and five stores in Georgia, states in which we operated 307 stores as of July 31, 2012. Our Industry Overall Market We operate in the U.S. mattress retail market, in which net sales amounted to $11.4 billion in 2011, the most recent year for which industry retail sales data has been published. The market is highly fragmented, with no single retailer holding more than an 8% market share and the top ten participants accounting for less than 30% of the total market. According to Furniture Today, in 2010, mattress specialty retailers had a market share in excess of 43%, which represented the largest share of the market, having more than doubled their share over the past 15 years. According to the information released in March 2012 by ISPA, the industry is expected to grow wholesale dollar sales by 7.2% in 2012. We believe that several trends support the positive outlook for long-term growth of the U.S. mattress retail market: First, with increased advertising that focuses on the benefits of a better night's sleep, consumers have shown an increasing willingness to spend more money on mattresses and related products that are of a higher quality and provide extra comfort. The average price for a mattress at Kindel L. Elam Vice President and General Counsel Mattress Firm Holding Corp. 5815 Gulf Freeway Houston, Texas 77023 (713) 923-1090 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents wholesale has increased from $92 in 1990 to $259 in 2011, representing an average annual growth rate of 5%. This increasing price point trend is primarily the result of: (1) an industry shift towards specialty mattresses, such as foam and air mattresses, which were sold at wholesale for an average of $559 per mattress in 2011 compared to $210 for a traditional innerspring mattress and (2) consumers desiring more expensive innerspring mattresses that have enhanced technology and comfort features. Second, there have been recent technological improvements made to mattresses that are leading people to replace their old mattresses. We believe Mattress Firm is at the forefront of these technological changes, as demonstrated by the variety of specialty mattresses we offer. Specialty product sales comprised 32.4%, 45.3% and 49.6% of our net sales for fiscal 2010, fiscal 2011 and the first half of fiscal 2012, respectively. Our growth in this area has outpaced that of the mattress retail industry as a whole. For example, our sales of specialty products nearly doubled in fiscal 2011 over the prior year compared with an increase of only 30% in the industry during the comparable period. Third, as "baby boomers" (which refers in this prospectus to people born between 1946 to 1964) age and begin to spend the income that they have saved during their time in the workforce, it is our belief that they will spend a disproportionate amount compared to the overall population on products that improve their comfort for example, luxury mattresses and related products. Distribution Channels Wholesale. The U.S. wholesale mattress industry, which includes mattresses and their supporting box springs (also referred to as foundations), as tracked by ISPA, was a $6.3 billion market in 2011. The U.S. wholesale mattress segment (which excludes foundations) accounted for $5.0 billion of the total and has grown at an average annual rate of 6.0% since 1990. The mattress segment has historically experienced stable growth, as 2008-2009 was the only period in over 30 years during which the segment experienced a multi-year decline in mattress sales, as wholesale mattress sales dropped from $5.3 billion in 2007 to $5.0 billion in 2011. We believe that the industry has the potential to return to its pre-2008 levels, and that we are poised to take advantage of that future growth. Retail. The U.S. retail mattress market is made up primarily of mattress specialty retailers, traditional furniture retailers and department stores. Retailers compete based on product selection, customer experience and service, price, store location and brand recognition. Mattress Specialty Retailers focus primarily on mattresses and related products and accessories and typically have a broader product selection and quicker availability as compared to other mattress retail channels. Consumers have shown a preference to purchase their mattresses in this channel due to the broad merchandise assortment and higher quality service they receive. As a result, this channel has gained considerable market share relative to traditional furniture stores and department stores, having experienced a market share increase from 19% in 1993 to 43% in 2010 (the most recent year for which retail distribution channel data has been published). Traditional Furniture Retailers typically dedicate a majority of their retail floor space to home furnishings other than mattresses. While this channel comprised the majority of the U.S. mattress retail industry prior to 1993, it has lost significant market share since that time, decreasing from 56% in 1993 to 38% in 2010. Department Stores include many of the larger national chains selling a variety of products from clothing to home furnishings. Like traditional furniture stores, department stores have lost market share in the mattress category, decreasing from 11% in 1993 to 5% in 2010. Other distributors of mattress products generally include big box retailers, warehouse clubs, catalogs, telemarketing, direct marketing, the internet, discount department stores, furniture Copies to: Andrew J. Terry Ropes & Gray LLP 111 South Wacker Drive, 46th Floor Chicago, Illinois 60606 Telephone: (312) 845-1200 Facsimile: (312) 845-5500 Gene G. Lewis Charles L. Strauss Fulbright & Jaworski L.L.P. Fulbright Tower 1301 McKinney, Suite 5100 Houston, Texas 77010 Telephone: (713) 651-5151 Facsimile: (713) 651-5246 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one). Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents rental stores and factory direct operators. While the constituents within this category have shifted somewhat since 1993, their aggregate market share constituted approximately 14% in both 1993 and 2010. Bedding Sales by Retail Distribution Channels Source: Furniture Today Brand Overview There are nearly 500 manufacturers in the bedding industry, with the four largest manufacturers, Serta, Sealy, Simmons and Tempur-Pedic, representing approximately 66% of the dollar value of the mattress market in 2011 and the 15 largest manufacturers accounting for approximately 86% during the same period. In general, the bedding industry has faced little competition from imported products as a result of the short lead times required by mattress retailers, high shipping costs and relatively low direct labor expenses in mattress manufacturing. Manufacturers sell traditional innerspring products and specialty products across a wide range of styles, sizes, price points and technologies. While conventional mattresses still accounted for approximately 70% of total bedding sales by manufacturers in the United States in 2011, in recent years, specialty mattresses, which use foam and air technology, have grown at a much faster rate than the industry as a whole. In 2011, specialty bedding producer Tempur-Pedic accounted for approximately 14% of total bedding sales. As new research emerged showing the link between proper sleep and good health, Mattress Firm responded to the growing demand for specialty mattresses by expanding its product selection. Our Competitive Strengths Although the retail bedding industry in the United States is highly competitive and we may face intense competition in the future that could impact our planned growth and results of operations, we believe the following competitive strengths differentiate us from our competitors and favorably position us to execute our growth strategy: Distinctive retail format. We believe our proven and effective operating model combines broad selection, superior customer service by educated, extensively-trained associates, a compelling value proposition and highly visible and convenient store locations, resulting in a unique shopping experience at an attractive store destination. The key attributes of the Mattress Firm experience include: Extensive and differentiated product assortment. We offer an extensive assortment of mattresses and related products and accessories, making us a preferred choice for our customers. The breadth of our merchandise offering includes a wide range of comfort choices, styles, sizes and price points. Furthermore, we focus our offering on the best known national brands, providing The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. Table of Contents our customers the choice of conventional mattresses, such as Sealy, Stearns & Foster and Simmons, as well as specialty mattresses, such as Tempur-Pedic (for which we are the largest retailer in the United States), Serta's iComfort line and Sealy's Optimum line. In addition to the best-known national brands, we also offer our Hampton & Rhodes private label mattresses to provide our customers with a broad range of value choices and YuMe , our exclusive, proprietary brand with heating and cooling technology. We have a dedicated retail concepts team that focuses on creating new products and accessories that are exclusive to our company. Our strong vendor relationships and product development capabilities enable us to offer our customers many products with exclusive features and allow us to maintain a competitive advantage while offering a compelling value proposition to our customers. Contemporary, easy-to-navigate store layout. We implemented our unique Comfort By Color merchandising approach that groups all of our mattresses into distinct comfort categories, each represented by its own color, to help simplify the purchasing decision for customers. As stores adopted the Comfort By Color approach, we observed favorable customer responses. We have converted substantially all of our company-operated stores, including those acquired in the Mattress Giant acquisitions, to this merchandising format and expect to convert the Mattress X-Press stores that we acquired in September 2012 to this merchandising format during the fourth quarter of fiscal 2012. Compelling customer value proposition. Our compelling price and value proposition is a critical element of our merchandising strategy. With our low price guarantee, we promise to beat the lowest advertised price on a comparable product by 10% at any time up to 100 days after purchase and refund the customer the difference. Our Happiness Guarantee policy enables our customers to return their mattress for a full refund within 100 days of purchase if they are not fully satisfied with their product. Our consumer financing options, which are provided by third party financial institutions and are non-recourse to us, are also an important element of our service and value proposition. We believe that these services and guarantees build lasting trust and loyalty with our customers and lead to better ticket average, conversion rates and customer referrals. Strong customer service. We believe we enhance our customers' shopping experience with a superior level of service. Our educated, extensively-trained sales associates are required to participate in a comprehensive, on-going training program that we believe exceeds industry standards. We have implemented performance-monitoring programs to ensure that our sales associates are customer-focused and are effectively educating our customers on the various features and benefits of our products. As of September 7, 2012, over 93% of our sales associates were full-time employees, supporting our goal of hiring highly motivated, career-oriented individuals. Our sales associates receive a significant portion of their compensation in the form of commissions, which aligns their goals with those of our company. Another key element of our industry-leading customer service is our Mattress Firm Red Carpet Delivery Service , through which we offer a three-hour guaranteed delivery window and same-day delivery, which we believe is distinctive in the industry. Attractive, highly visible and convenient store locations. We have a dedicated and disciplined real estate team that helps us select store locations that are convenient to our target customers, are generally highly visible from the road and have high impact signage opportunities. A typical Mattress Firm location is a freestanding or "end-cap" (corner) location in a high-traffic shopping center in a major retail trade area. We believe that our stores have a distinctive and fresh feel that is inviting to our customers. Economies of scale and strong market share positions in key markets. We operate in 76 markets across 28 states through company-operated or franchised stores. In 2011, we ranked second in total Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated October 1, 2012 PROSPECTUS Table of Contents sales among mattress specialty retailers, according to Furniture Today. Based on our analysis of information published in Furniture Today and Company data, which gives effect to our recent acquisitions, we believe that, among multi-brand mattress specialty retailers in the United States, we now have the largest geographic footprint, the greatest number of stores nationwide and the highest total sales on an aggregate basis. We believe our strong market share positions and economies of scale provide us with a number of competitive advantages, including: Strong supplier relationships. Given our significant scale and the scope of our retail network, we are a very important customer for many of the leading vendors. This includes both traditional mattress product brands, including Sealy, Stearns & Foster and Simmons, as well as specialty mattress brands, such as Tempur-Pedic (for which we are the largest retailer in the United States). We believe that the strength of our supplier relationships enables us to source our merchandise in a more cost-effective manner than our mattress specialty retailer competitors, as well as receive higher vendor incentives and advertising support. Importantly, we believe that our significant scale gives us priority access to a wide range of styles and sub-brands and enables us to develop and source our private label and proprietary brands cost-effectively. Strong landlord relationships. We have developed strong relationships with real estate developers and landlords across the country due to our extensive store network and strong operating performance. We believe that our history and size position us favorably compared to our mattress specialty retailer competitors, as real estate companies prefer to lease to large, well-capitalized and established retailers. Highly attractive and scalable economic model. We are able to leverage our strong brand awareness, our local marketing campaigns and our regional administrative and supervisory professionals as we increase the number of stores within our existing and surrounding markets. A new store averages approximately 5,200 square feet in size and typically requires an upfront net capital investment in the average amount of approximately $200,000, consisting of gross capital expenditures of approximately $257,000, less tenant improvement allowances received from our landlords of approximately $80,000, and our investment in inventory floor samples of approximately $23,000. We typically recoup our initial net capital investment from the store's 4-wall profitability in its first year of operations. We measure store 4-wall profitability based on store revenues, store product costs and all direct costs of operating the store. We expect new stores to generate on average approximately $1.1 million of net sales in the first twelve months of operations and approximately $1.3 million in the second twelve months. We expect 4-wall profitability that averages approximately 30% of sales for each of the first two years, with results in the first year that are inclusive of funds received from vendors upon the opening of a new store. Market-level profitability represents the aggregation of 4-wall profitability and the addition of costs that are incurred and managed at the market level, consisting primarily of advertising, warehousing and market-level management and overhead. We strive to grow our market-level profitability by gaining market share in a given market primarily through the addition of stores, which provides the scale to support increased advertising investment while also improving leverage over other market-level costs. In markets where we believe we have the highest level of penetration (markets where we have at least one store for every 90,000 people), our weighted average EBITDA margin and weighted average sales per store were approximately 21% and $1.3 million, respectively, for fiscal 2011. During this same period, our weighted average EBITDA margin and weighted average sales per store, with respect to our Mattress Firm stores located in markets in which we have operated for over a year, were approximately 17% and $1.1 million, respectively. Therefore, as our level of penetration in our other markets increases, we expect to see an increase in EBITDA margin and sales per store in those markets. 4,726,682 Shares Common Stock Table of Contents Additionally, we expect the profitability of new markets to be initially lower than more mature markets, with improvement to a comparable level of a mature market over a two to three year period. A new market typically requires a dedicated distribution center within the first two years of operation, which averages approximately 20,000 to 30,000 square feet in size and requires an upfront net capital investment of approximately $20,000 to $60,000. We believe that our new store economic model and our infrastructure, which give us the ability to add new stores, to enter new markets and to improve market-level results, are distinctive in the industry. Efficient fulfillment model with lower working capital requirements. We currently operate 45 distribution centers that service all of the markets in which we have company-operated stores. Most of our mattress suppliers deliver to most of our distribution centers within 48 hours following our placement of a purchase order, which enables us to maintain reasonable inventory levels but still offer our customers a three-hour delivery window as a feature of our Mattress Firm Red Carpet Delivery Service . Furthermore, we typically receive payment from our customers in advance of paying suppliers, which further minimizes our working capital requirements and results in a highly attractive cash flow model. Experienced management team. Our experienced senior management team has an average of 16 years of experience with Mattress Firm and an average of 26 years of experience in the retail and mattress industries. Steve Stagner, our President and Chief Executive Officer, has over 20 years of experience in the mattress industry and originally was a top-performing Mattress Firm franchisee before Mattress Firm purchased his company in December 2004. Steve Fendrich, our Chief Strategy Officer, was a co-founder of Mattress Firm and has 26 years of experience in the mattress industry across various retail and wholesale companies (most recently as chief executive officer at Simmons, one of our largest vendors), including 19 years of experience with Mattress Firm . Jim Black, our Chief Financial Officer, has 12 years of experience with Mattress Firm and 20 years of public accounting experience at two leading national accounting firms. We believe our management's breadth of experience in the industry has enabled us to anticipate and respond effectively to industry trends and competitive dynamics while driving superior customer service and cultivating long-standing relationships with our vendors. Proven track record of strong financial performance. We have a proven track record of success, even in challenging economic environments, as evidenced by 11 consecutive fiscal quarters of positive comparable-store sales growth through July 31, 2012. Over the most recent recessionary period, our management team demonstrated an ability to outperform the industry, with Mattress Firm being the only leading mattress specialty retail brand to avoid a sales decline in 2009, versus the average leading mattress specialty retailer decline of 9.6%, according to Furniture Today. Our flexible financial model allows us to manage discretionary operating expenses through slower sales periods. Our Growth Strategies We seek to enhance our position as a leading specialty retailer of mattresses and related products and accessories with the goal of driving profitable sales growth and becoming the premier national specialty retailer. To achieve these objectives, we plan on executing the following key strategies: Expand our company-operated store base. The highly fragmented U.S. retail mattress market provides us with a significant opportunity to expand our store base. From February 4, 2009 to July 31, 2012, we grew our store base by 106% by adding 493 company-operated stores through a combination of new store openings and acquisitions. More specifically, during this period, we opened 286 new stores, including 106 new stores in fiscal 2011 and 57 new stores in the twenty-six weeks ended July 31, 2012, and acquired 269 stores, including 55 stores acquired in fiscal 2011 and 181 stores acquired in the twenty-six weeks ended July 31, 2012. During this same period, we closed 62 stores in the ordinary The selling stockholders named in this prospectus, which collectively hold a majority of our outstanding shares of common stock and certain of whom are management or affiliated with directors of our company, are selling 4,726,682 shares of our common stock. We will not receive any proceeds from the sale of our common stock by the selling stockholders. Our common stock is listed on the NASDAQ Global Select Market under the symbol "MFRM." On September 27, 2012, the last sale price of our common stock as reported on the NASDAQ Global Select Market was $29.02 per share. Investing in our common stock involves risks. See "Risk Factors" beginning on page 19 to read about factors you should consider before buying shares of our common stock. Per share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to the selling stockholders $ $ The selling stockholders identified in this prospectus have granted the underwriters a 30-day option to purchase up to an additional 709,002 shares of common stock on the same terms and conditions as set forth above if the underwriters sell more than 4,726,682 shares of common stock in this offering. See the section of this prospectus entitled "Underwriting." We will not receive any of the proceeds from the sale of shares by these selling stockholders if the underwriters exercise their option to purchase additional shares of common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to investors on or about , 2012. Table of Contents course as we took opportunities to reposition underperforming stores. Since February 4, 2009, stores we have acquired include 13 stores that were Mattress Firm franchised locations. As of July 31, 2012, we operated 957 company-operated stores. We plan to continue to expand our store base through a combination of new stores and acquisition opportunities in both existing and new markets, such as the 35 stores that we acquired through the Mattress X-Press acquisition. We estimate that, based on our historical experience, the competitive landscape and a market penetration rate of one Mattress Firm store per 80,000 to 100,000 in population, we could operate over 2,500 Mattress Firm store locations in the United States. We believe that attractive opportunities in the real estate market will help us execute our expansion strategy. New and existing markets. We continually research and survey the geographic landscape and have highlighted several markets with characteristics that we believe are attractive opportunities to gain leading market share and strong profitability over a reasonable time period. Outside of our existing markets, there are many markets that we believe we can enter. We plan to open at least 100 new company-operated stores in fiscal 2012 and, if we accomplish this plan, by the end of fiscal 2012, we will operate at least 1,000 stores nationwide more than doubling the number of our company-operated stores existing at the beginning of fiscal 2009. In addition, we will seek to strengthen our relative market share with the goal of achieving the number one position in each of our markets. Given our highly attractive new store economic model and our improving market level profitability as we continue to open stores, we believe we are well-positioned to expand our presence and achieve economies of scale across regions. Acquisition opportunities. We have a strong track record over the last decade of supplementing our organic growth through acquisitions by acquiring retail mattress chains on an opportunistic basis. Most recently, since 2010, we have acquired an aggregate of 269 store locations, including 13 former franchisee-operated locations, through four separate transactions, including the acquisition of MGHC Holding Corporation (the entity that operated former Mattress Giant stores) in May 2012, and acquired 35 Mattress X-Press stores on September 25, 2012. We acquire mattress specialty retailers that we believe further strengthen our position in an existing market or that accelerate our penetration and achieve a desired market share in a new market. Given our established infrastructure and track record, we believe that we can acquire retailers, integrate them, implement our operating model and generate synergies. Additionally, as we revitalize and rebrand acquired stores as Mattress Firm , we expect to see an increase in sales growth as these stores benefit from our greater advertising efforts and overall presence in the market. For example, in November 2011, we acquired 55 Mattress Giant stores in three markets: Minneapolis, Atlanta and St. Louis. At the time of the acquisition, we operated 68 stores in these markets. We completed the rebranding of these former Mattress Giant stores during the first quarter of fiscal 2012 and have observed year-over-year sales growth for these stores in excess of 50% for the thirteen weeks ended July 31, 2012 as compared to the thirteen weeks ended August 2, 2011. Over the same period, our company-operated stores in these markets have generated comparable-store sales growth of approximately 16%. Increase sales and profitability within our existing network of stores. Our strategy is to drive comparable-store sales growth within our existing portfolio of stores by: Increasing customer traffic. Consistent with our expectations, as we have increased our presence in a market and deployed additional advertising, we have observed an increase in customer traffic and sales in stores where we track customer traffic levels during fiscal 2011 and the twenty-six weeks ended July 31, 2012. Further, we will continue to undertake advertising and marketing initiatives that are aimed at efficiently and effectively improving our customer traffic. One example of this strategy is our marketing campaign designed to educate consumers on the recommended replacement cycle of a mattress. With an average mattress life across the industry exceeding 10 years, our campaign has focused on the health benefits of replacing a mattress Barclays UBS Investment Bank Citigroup Table of Contents after eight years. This campaign has successfully fostered our brand awareness and driven increased customer traffic into our stores. Improving customer conversion. We will continue to focus on the training of our sales associates, who are our primary points of contact with our customers. In addition, we continually strive to improve our merchandising approach so that the customer shopping experience is optimized. An example of our merchandising improvements is our Comfort By Color initiative that has been introduced to substantially every company-operated store in our network, including the recently acquired former Mattress Giant stores. We believe our continued improvements in customer service and merchandising will lead to improved customer conversion in the future. Increasing the average sales price of a transaction. Through effective sales techniques and the increasing demand for specialty mattresses, we expect the average price of a customer transaction to increase over time. We have strategically focused and built a strong market position in the specialty mattress category and are well-positioned to capture increasing sales and profitability as this category continues to demonstrate attractive growth rates. As a result of our established infrastructure within our existing markets, improvements in comparable-store sales should drive expansion in our operating profit margins over time. In addition, we will continue to focus on improving the efficiencies of our information systems and distribution infrastructure, which should further benefit our operating margins. Continue to target additional channels of distribution and expand our proprietary product offering. We seek alternative distribution channels to further leverage our core competencies, enhance the Mattress Firm brand and increase our market presence. For example, our website, www.mattressfirm.com, features our full line of products and provides useful information to consumers on the features and benefits of our products, store locations and hours of operation. We offer on-line shopping with nationwide delivery. In the first two quarters of fiscal 2012, our total sales that were generated on-line increased 131% over the comparable period in fiscal 2011. We also use the internet as an important customer information resource to drive in-store purchases. In addition, we have created a new temporary "pop-up" store format that we introduced at various special event venues, including state fairs, home and garden shows, conventions and rodeos. We expect to drive additional growth through alternative distribution channels in the future. We believe another strong growth avenue for Mattress Firm is to partner with manufacturers to create innovative proprietary products to further differentiate us from our competition. An example is our exclusive brand, YuMe , our proprietary temperature-controlled mattress, which was introduced in 2010. YuMe , which was created through a partnership among Mattress Firm , Amerigon Inc. and Sleep Inc., is a proprietary concept that allows the individual to control the sleep surface temperature on each side of the mattress. Selectively expand our franchise network. Our franchise program is a low cost, high return model for us to expand our store footprint and leverage the Mattress Firm brand name. We partner with qualified franchisee operators to open stores in markets where we do not currently plan to operate. After our franchisee partners achieve a sufficient and sustainable market share position in a particular market, we may negotiate with them to repurchase their stores, which we believe is a viable, efficient and productive approach to entering certain markets. We include buyback options in our franchise agreements, where appropriate, and maintain the right of first refusal over any sale of stores by a franchisee. Throughout our history as a company, the acquisition of our franchises from time to time has played a significant role in furthering our strategic growth and we expect that such opportunities will continue to be advantageous in the future. William Blair Table of Contents Recent Acquisitions On May 2, 2012, we acquired all of the equity interests of MGHC Holding Corporation, which operated Mattress Giant stores, for approximately $44.0 million in cash, subject to customary post-closing adjustments. Prior to this transaction, we acquired 55 Mattress Giant stores in the Minneapolis, Atlanta and St. Louis markets in November 2011, and have completed the integration of those stores. In connection with the closing of the May acquisition, we acquired 181 additional Mattress Giant specialty retail stores in Texas and Florida, which represent the two largest states in which Mattress Firm currently operates. The stores are located in seven metropolitan markets including Miami, Naples/Ft. Myers, Orlando, Tampa and Jacksonville in Florida and Houston and Dallas in Texas, representing markets where we operated Mattress Firm stores prior to the acquisition. As of July 31, 2012, we operated a total of 493 company-operated stores in Texas and Florida, including the former Mattress Giant stores. By the end of fiscal 2012, we expect to complete the rebranding of the former Mattress Giant stores that were acquired in May 2012. On September 25, 2012, we acquired substantially all of the operations and assets of Mattress XPress, Inc. and Mattress XPress of Georgia, Inc. (which entities operate Mattress X-Press stores), including 30 mattress specialty stores located primarily in South Florida and five stores in Georgia, for approximately $15.8 million, subject to customary post-closing adjustments. Prior to the acquisition, we operated stores in South Florida and Georgia and intend to rebrand the Mattress X-Press stores as Mattress Firm within one month of closing. As a result, we expect to see the benefits of future advertising on all Mattress Firm stores in these markets. The average sales per store of the Mattress X-Press stores are comparable to the Company's overall average for Mattress Firm stores nationwide. As part of our business strategy, we continue to evaluate potential acquisition opportunities that are or may become available to us and may pursue such opportunities that support our strategic growth plan from time to time. Risks Associated with Our Business While we believe our company benefits from the competitive strengths and market opportunities described above, our ability to successfully operate our business and execute our business strategy is subject to numerous risks. You should carefully consider all of the information set forth in this prospectus and, in particular, you should evaluate the risk factors in the "Risk Factors" section of this prospectus before deciding whether to invest in our common stock. Risks relating to our business and our ability to successfully execute our business strategy, include, but are not limited to, the following: Our business is directly impacted by general economic conditions and discretionary spending by our customers. If there is a deterioration of the economy or financial markets and consumer confidence or ability or willingness to spend remains low, our sales and results of operations could be negatively impacted. We operate in a highly competitive industry and there is no assurance that we will be able to continue to effectively compete with our competitors, some of which have substantially greater financial and other resources than us. As the barriers to entry into the retail bedding market are relatively low, new or existing bedding retailers could enter our markets and increase the competition we face. Any of the developments described above could have a material adverse effect on our planned growth and future results of operations. Our central long-term objective is to increase sales and profitability through market share leadership. Our aggressive expansion plans (including our plan to open at least 100 new company-operated stores in fiscal 2012 and the integration of the Mattress X-Press stores we KeyBanc Capital Markets SunTrust Robinson Humphrey Prospectus dated , 2012 Table of Contents recently acquired) will require us to overcome various uncertainties and challenges, including those relating to our ability to: obtain sufficient financing; secure favorable store locations; advertise in an effective and cost-efficient manner; achieve operating results in new stores at the same level as our similarly situated current stores; attract a strong customer base in the new markets that we enter as well as additional customers in the current markets in which we operate; successfully compete with established mattress retailers in the markets where our new stores will be located; effectively manage our personnel and other resources, which may become overextended during expansion periods; and obtain a waiver or amendment to our credit facility to revise the limitation on capital expenditures. There can be no assurance that we will be able to successfully overcome the uncertainties and challenges relating to our growth, including those described above. If we fail to successfully manage the challenges that our planned growth poses, our net sales and profitability could be materially adversely impacted. We rely on four main suppliers for acquiring the majority of our branded inventory. Because of the large volume of our business with these manufacturers and our use of their branding and marketing initiatives, our success depends on our continued relationship with, and the reputation and popularity of, these manufacturers. A deterioration of our relationship with these manufacturers, a reduction in vendor incentives or a dilution of their brands could result in reduced sales and operating results of our company. The successful operation of our business depends on retention of key employees. Therefore, losing one or more of these key employees could impair our ability to effectively run our business. We have a substantial amount of debt, the terms of which limit our ability to obtain additional financing. Our indebtedness could make us vulnerable to adverse economic and industry conditions and could place us at a competitive disadvantage compared to competitors with less debt. If we determine that our goodwill or other acquired intangible assets are impaired, we may have to write off all or a portion of the impaired assets. As of July 31, 2012, we had goodwill and intangible assets, net of accumulated amortization, of $331.8 million and $90.1 million, respectively. In fiscal 2007 and fiscal 2008, as a result of the global economic crisis, we incurred goodwill and intangible impairments totaling $43.6 million and $105.0 million, respectively. Additionally, we recorded an impairment charge of $0.5 million in fiscal 2010 related to two reporting units. We may incur goodwill and intangible asset impairments in the future, which may have a material adverse effect on our business, results of operations and financial condition. Historically, we have experienced significant losses on store closings and impairment of store assets. In fiscal 2009, fiscal 2010 and fiscal 2011, we experienced losses on store closings and impairment of store assets of $5.2 million, $2.5 million and $0.8 million, respectively. There can be no guarantee that we will not experience similar or greater losses of this kind in the future Table of Contents due to general economic conditions, competitive or operating factors or other reasons, which may have a material adverse effect on our results of operations. In addition, if we are unsuccessful in our expansion strategy and close a large number of stores, the risk of incurring losses on store closings may increase. The risks described above and other risks we face are described in further detail under the "Risk Factors" section of this prospectus, which you should carefully review. Corporate Information Mattress Firm Holding Corp. was incorporated in Delaware on January 5, 2007 and commenced operations on January 18, 2007 through the acquisition of Mattress Holding Corp., or "Mattress Holding." Mattress Holding acquired the Mattress Firm retail operations on October 18, 2002 and, together with its subsidiaries, owns substantially all of the assets and conducts the operations of our retail business. Mattress Firm commenced operations in 1986 through a predecessor entity. Our principal executive offices are located at 5815 Gulf Freeway, Houston, TX 77023 and our telephone number at that address is (713) 923-1090. Our internet address is www.mattressfirm.com. Please note that any references to www.mattressfirm.com in this prospectus are inactive references only and that our website, and the information contained on our website, is not part of this prospectus. Related Transactions Immediately prior to our initial public offering, Mattress Holdings, LLC, a Delaware limited liability company, held 100% of our issued and outstanding shares of common stock. Immediately after our initial public offering, Mattress Holdings, LLC held 22,399,952 shares, which represented 66.3% of our issued and outstanding shares of common stock. On September 27, 2012, Mattress Holdings, LLC distributed the shares of our common stock held by it to its unitholders, which include members of management and investment funds. Certain of the unitholders of Mattress Holdings, LLC are the selling stockholders referenced in this prospectus. For more information, please see "Principal and Selling Stockholders." Table of Contents The Offering Common stock offered by the selling stockholders 4,726,682 shares Selling stockholders The selling stockholders in this offering include (i) funds associated with Neuberger Berman Group, LLC, which collectively beneficially owned approximately 8.98% of our outstanding common stock as of September 27, 2012; (ii) funds associated with J.W. Childs Associates, L.P. ("J.W. Childs"), which collectively beneficially owned approximately 59.92% of our outstanding common stock as of September 27, 2012 and are affiliated with directors of our company; and (iii) certain members of management. See "Principal and Selling Stockholders." Over-allotment shares Up to 709,002 shares Use of proceeds We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders but will be paying certain expenses related to this offering. See "Use of Proceeds."
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It may not contain all of the information that is important to you. You should read the entire prospectus carefully, especially the discussion regarding the risks of investing in WestMountain Index Advisor, Inc. common stock under the heading Risk Factors, before investing in WestMountain Index Advisor, Inc. common stock. In this prospectus, WestMountain, WMTN, Company, we, us, and our refer to WestMountain Index Advisor, Inc. The Offering This prospectus covers the resale of up to (i) 873,000 shares of common stock issued and 52,000 shares of common stock to be issued upon the exercise of a Warrant granted to WestMountain Asset Management, Inc. dated February 18, 2011; (ii) 400,000 shares of common stock issued to BOCO Investments LLC related to a February 28, 2011 re-issuance of WMTN common stock, 2011; (iii) 300,000 shares of common stock issued to Capital Peak Partners LLC under the exercise of a Warrant dated February 18, 2011; (iv) 1,000,000 shares of common stock issued to BOCO Investments LLC related to the conversion of Terra Mining Corp Demand Promissory Notes on February 18, 2011; (v) 100,000 shares of common stock issued to BOCO Investments LLC related to the a Subscription Agreement dated February 18, 2011; (vi) 300,000 shares of common stock to be issued upon the exercise of a Warrant granted to Sterling Group dated April 1, 2011; (viii) 300,000 shares of common stock to be issued upon the exercise of a Warrant granted to Logic International Consulting Group LLC dated April 7, 2011and (vii) 3,361,095 shares of common stock to be issued upon the exercise of Warrants dated April 18, 2011. Information regarding our common stock is included in the section of this prospectus entitled Description of Securities. The Company and our Business We originally planned to act as a developer of indexes that allow investors to access specific market niches or sub-markets. It had planned to earn income by helping investors identify and access specific market niches or sub-markets using its index products. In previous filings, we disclosed that if it were not successful in its operations, it would be faced with several options: 1. Cease operations and go out of business; 2. Continue to seek alternative and acceptable sources of capital; 3. Bring in additional capital that may result in a change of control; or 4. Identify a candidate for acquisition that seeks access to the public marketplace and its financing sources As it became apparent that its original plans were not developing as hoped, we began looking at these options. During this effort, we identified an opportunity to take advantage of option 4. On September 17, 2010, we executed a non-binding term sheet with Terra Mining Corporation ( TMC ), a private British Columbia, Canada corporation, whereby WMTN would acquire TMC in a reverse merger transaction. We acquired TMC on February 28, 2011 (the Share Exchange ) and the Share Exchange has been accounted for as a reverse acquisition using the purchase method of accounting, whereby TMC is deemed to be the accounting acquirer (legal acquiree) and WMTN to be the accounting acquiree (legal acquirer). The Company s financial statements before the date of Share Exchange are those of TMC with the results of WMTN being consolidated from the date of Share Exchange. The equity section and earnings per share have been retroactively restated to reflect the reverse acquisition and no goodwill has been recorded. We adopted TMC s fiscal year which is October 31. WMTN is an exploration and development company that explores, acquires, and develops advanced stage properties. We have a high-grade gold system in the resource definition phase with 168,000 oz of inferred gold which in total offers potential of greater than 1,000,000 ounces that is owned by our wholly owned subsidiary, Terra Mining Corp. ( TMC ). The property consists of 240 Alaska state mining claims covering approximately 130 square kilometers. All Government permits and reclamation plans for continued exploration through 2014 were renewed in 2010. We refer to this project as the TMC project . We have budgeted expenditures for the next twelve months of approximately $3,500,000, depending on additional financing, for general and administrative expenses and exploration and development to implement the business plan as described below. For further details see Cash Requirements below. WMTN believes we will have to raise substantial additional capital in order to fully implement the business plan. If economic reserves of gold and/or other minerals are proven, additional capital will be needed to actually develop and mine those reserves. As described in Item 1.01 above and discussed under Cash Requirements below, we must expend $9,050,000 over the next four years as our earn in on the TMC project to own rights to 80% of the project. Even if economic reserves are found, if we are unable to raise this capital, we will not be able to complete our earn in on this project. Our principal source of liquidity for the next several years will need to be the continued raising of capital through the issuance of equity or debt. WMTN plans to raise funds for each step of the project and as each step is successfully completed, raise the capital for the next phase. WMTN believes this will reduce the cost of capital as compared to trying to raise all the anticipated capital at once up front. However, since WMTN s ability to raise additional capital will be affected by many factors, most of which are not within our control (see Risk Factors ), no assurance can be given that WMTN will in fact be able to raise the additional capital as it is needed. Our primary activity will be to proceed with the TMC project and other mining opportunities that may present themselves from time to time. We cannot guarantee that the TMC project will be successful or that any project that we embark upon will be successful. Our goal is to build our Company into a successful mineral exploration and development Company. Summary Financial Results During the fiscal year ended October 31, 2011 and the period from inception of March 25, 2010 to October 31, 2010, we had no revenues. Net loss for the year ended October 31, 2011 was $4,035,000 as compared to a net loss of $495,000 for the period from inception of March 25, 2010 to October 31, 2010. The net loss included $900,000 of non-cash expenses related to the reverse merger transaction. This prospectus includes the registration of 4,013,095 shares to be issued by the Company upon the exercise of outstanding warrants as described in this prospectus. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1/A (Amendment No. 5) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WESTMOUNTAIN INDEX ADVISOR, INC. (Exact name of registrant as specified in charter) Colorado 000- 53028 26-1315498 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 6799 (Primary Standard Industrial Classification Number) 2186 S. Holly St., Suite 104, Denver, CO 80222 (Address of principal executive offices including zip code) (303) 800-0678 (Registrant's telephone number, including area code) (Former Name or Former Address, if Changed Since Last Report) Gregory Schifrin, Chief Executive Officer WestMountain Index Advisor, Inc. 120 Lake Street, Suite 401 Sandpoint, ID 83864 (208)-265-5858, (208)-265-0328 (fax) (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: James F. Biagi, Jr. Monahan & Biagi, PLLC 701 5th Avenue, Suite 2800 Seattle, WA 98104-7023 (206) 587-5700, (206) 587-5710 (fax) As soon as practicable and from time to time after this registration statement becomes effective. (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o If this Form is post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company. See the definitions of large accelerated filer, accelerated filer and smaller reporting Company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting Company (Do not check if a smaller reporting Company) Reverse Stock Split Effective with the commencement of trading on October 12, 2010, the Company reverse split its Common Shares. New Common Shares were issued to shareholders in exchange for their Old Common Shares in the ratio of one New Common Share for each four Old Common Shares held, thus effecting a one-for-four reverse stock split. Fractional shares, if any, were rounded up to the next whole number. There was no change in the par value of the Common Shares. All stock amounts have been retroactively restated to reflect the reverse split. Liquidity and Going Concern With the acquisition of TMC, we expect that compared to the historic expenses incurred by TMC and, subject to raising additional capital, expenditures will ramp up for exploration and development. We have budgeted expenditures for the next twelve months of approximately $3,500,000, depending on additional financing, for general and administrative expenses and exploration and development. We may choose to scale back operations to operate at break-even with a smaller level of business activity, while adjusting overhead depending on the availability of additional financing. In addition, we expect that we will need to raise additional funds if the Company decides to pursue more rapid expansion, the development of new or enhanced services or products, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if it must respond to unanticipated events that require it to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all. Our accountants have expressed doubt about our ability to continue as a going concern as a result of our history of net loss. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully execute the plans to pursue the TMC project as described in this Prospectus. The outcome of these matters cannot be predicted at this time. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue its business. Risks Factors We are subject to a number of risks, which the reader should be aware of before deciding to purchase the securities in this offering. These risks are discussed in the summary below and in the section titled Risk Factors beginning on page 3 of this prospectus. Corporate Information We were incorporated in the state of Colorado on October 18, 2007. Our principal executive office is located at 2186 S. Holly St., Suite 104, Denver, CO 80222, and our telephone number is (303) 800-0678. The Company s principal website address is located at www.terraminingcorp.com. The information on our website is not incorporated as a part of this prospectus. The Company s Common Stock Our common stock currently trades on the Over the Counter Bulletin Board ( OTCBB ) under the symbol WMTN. Dilution This offering includes the offering of 4,013,095 shares by the Company to holders of certain warrants as listed above at an average exercise price of $0.739 per share. We expect the following dilution related to the sale of these shares to the warrant holders, assuming all warrants are exercised: 1. Initial offering price (average warrant exercise price) $ 0.739 2. Net tangible book value per share before the offering $ 0.04 3. Increase in net tangible book value per share attributable to new investors $ 0.12 4. Pro forma net tangible book value per share after the offering $ 0.17 5. Dilution per share to new investors $ 0.57 For the 2,970,873 shares of Company common stock that are being offered by existing shareholders under this offering, the Company will receive no proceeds. Assuming that all of the warrants are exercised as is anticipated by the Company, and assuming such shares are sold at $.739 per share, purchasers of shares from selling shareholders will be paying a premium of $0.57 per share over the Company s book value. Assuming that all of the warrants are exercised as is anticipated by the Company, purchasers of shares from selling shareholders will be paying a premium over the Company s book value equal to their purchase price minus $0.17 per share. If all of the warrants are not exercised, the premium will increase accordingly up to a maximum premium of their purchase price minus $0.04 per share.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001430174_oro-east_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001430174_oro-east_prospectus_summary.txt
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us , Oro East or Oro East Mining, Inc. refer to Oro East Mining, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. OUR COMPANY Oro East Mining, Inc., a Delaware corporation ( Oro East ), is an exploration stage mining company that has acquired rights to develop certain tenement lands in the Republic of Philippines for the mining of gold, copper, and other precious or industrial mineral deposits. We have no operating history, no customers and no revenues and expect to begin operations in before the end of 2012. As of March 31, 2012, we had $46,030 in cash reserves. In the past, our monthly expenses have equaled, on average, approximately $20,000. Presently, we believe that our present capital will last until August 31, 2012. Our business may not materialize in the event we are unable to execute on our plan described on this and the following pages. The events or circumstances that may prevent the accomplishment of our business objectives, include, without limitation, (i) the fact that the assignment of claims to the Company will revert back to Oro East Mining Company LTD should we fail to become a publicly listed company, as required by Section 3 of our Assignment of Rights Agreement with Oro East Mining Company LTD, (ii) minerals prices could be lower than the cost of development and sale of those minerals, (iii) the possibility that exploration efforts will not yield economically recoverable quantities of minerals, (iv) accidents resulting in physical injuries that give rise to claims associated with mineral exploration and development operations, (v) the risk that the Company will encounter unanticipated geological factors, (vi) the Company s need for and ability to obtain additional financing, (vii) the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company s exploration and development plans, and (viii) the exercise of voting control the Company s officers and directors collectively hold of the Company s voting securities. The Company will initially focus on its sole asset that was assigned to the Company by Ore East Mining Company LTD. ( Assignor ), a privately-held corporation organized under the laws of the Republic of the Philippines to further explore, extract and process ore within the guild lines of our Mineral Right Sharing Agreement (MPSA) with the Philippine Government granted in March of 2010. The claim is named MPSA 320-2010-XI and is comprised of 7,855 hectares (19,401 acres) of mining rights on Mindanao Island in the Davao region of the Philippines. The Company s claim is with respect to all applicable permits obtained to erect infrastructure, refining, smelting plants and power stations for extraction and production of gold and copper as primary targets, and iron ore and other metals as secondary. The Company will continue exploration on MPSA 320-2010-XI as it transitions itself from an exploration company with the intention to become a gold, silver and copper production company with plans to advance the identified MPSA 320-2010-XI deposits through to production by as early as 2012. The Company has not identified any mineral reserves in connection with MPSA 320-2010-XI. The principals of Assignor, controlled by our CEO, Tian Qing Chen, acquired a controlling interest in the Company for the purpose of operating as a publicly-reporting company and determined that it is in their best interests to assign Assignor s rights to the claims. Assignor receives a benefit from the assignment of the claim to Assignee because the Company plans to finance the exploration and development of the Company s business, the cornerstone of which is the claim, for the benefit of its shareholders. To identify the mineral resources on MPSA 320-2010-XI, the Assignor conducted a semi-detailed geological mapping using compass and tape method backed by Global Positioning System (GPS) and manual test-pitting, artisanal tunneling and trenching activities which indicated a weighted-average Copper (CU) grades of 2.763% Cu based on length (from 18 laboratory assays on rock samples collected). Based on the 18 samples analysis, the Au (gold) weighted-average analysis content was from 1.528 grams/ton based on length. This was conducted by Agetro Davao Mapping Team from June 29, 2008 to August 27, 2008 on 4,939 hectares of Oro East Mining Claim dominated as MPSA 320-2010-XI Parcel II (approximately two thirds of the fully permitted claim MPSA 320-2010-XI). The Company now plans on taking a two phase approach. In Phase I the Company will analyze the exploration data that was completed and provided by Assignor followed by expanded prospecting, mapping, sampling and ultimately diamond drilling, effective mine planning and implementation will be facilitated. In Phase II the Company will identify and implement the mining method(s) best adapted to maximize production, including: (i) effective extraction of ore delineated by the exploration, mine geology and grade control department., (ii) proper handling of ore and blending method to attain an economical grade without sacrificing the quality of the ore, (iii) proper, effective and economical milling plant operation that can recover the gold at the highest percentage possible, and (iv) proper disposal of plant tails. - 4 - Our current plans, predicated on raising $15,000,000 from the sale of 5,000,000 shares of common stock is to begin with Phase I, which will consist of validation of previous exploration programs completed by Assignor that will include road repairs, expanded prospecting, mapping, sampling and ultimately diamond drilling, effective mine planning and implementation will be facilitated of at a cost of $2,500,000 to the Company. If Phase I is favorable, we would then Phase II that transitions the Company into a gold, silver and copper production company at an estimated total cost of $12,500,000, which is a reflection of local costs for the type of work program planned. We will proceed to Phase II only if we are successful in being able to secure the capital funding required to complete Phase II. Therefore, we expect to expend $2,500,000 on Phase I. We plan a two-phase program to properly evaluate the potential of the property to determine if there are commercially exploitable deposits of gold, silver and copper. We must conduct exploration to determine to validate deposits and determine if they can be economically extracted and profitably processed. We do not claim to have any ores or reserves whatsoever at this time. We anticipate Phase I planned geological exploration program will cost $2,500,000. Phase I may require up to sixteen weeks for the base work and an additional two to three months for analysis, evaluation of the work completed and the preparation of a report. Costs for Phase I consist of wages, fees, geological and geochemical supplies, assaying, equipment, diamond drilling and operation costs. It is our intention to carry the work out in 2011 and early 2012, predicated on completion of the offering described in this registration statement. The Company has four employees and has not hired any engineers or geoscientists and will not do so until funds are available to proceed with the first phase of exploration on the property. We will assess the results of this program upon receipt of an appropriate engineering or geological report. It is our intention to retain a U.S.-educated geoscientist to evaluate and conform to American standards the phase I work program and to author a report to American standards for future capital raising. Phase II is not planned to be carried out until 2012 and will be contingent upon favorable results from phase I and specific recommendations of a professional geoscientist based on those results. Favorable results means that a geoscientist, engineer or other recognized professional states that there is a strong likelihood of value being added by transitioning into a gold, silver and copper production company, makes a written recommendation that we proceed to the next phase of production, a resolution is approved by the Board of Directors of the Company indicating such work should proceed and that it is feasible to finance the next phase of production. A detailed outline of the proposed timetable can be found on page 38 under the heading Management s Discussion, Analysis of Financial Condition and Results of Operations . Emerging Growth Company We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see Risk Factors Risks Related to this Offering and our Common Stock We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors on page 14 of this prospectus. Recent Developments During the first nine months of 2011, Oro East spent $641,701 on general infrastructures including paving roads and building improvements in the Philippines to facilitate the exploration of mining properties. About Oro East Mining, Inc. We were incorporated in the State of Delaware on February 15, 2008, and established an end of December fiscal year end. Our corporate headquarters is located at 1127 Webster Street, Suite 28, Oakland, CA 946076 and our telephone number is +1 (510) 544-1516. Our business plans for the current fiscal year through February 28, 2012, are detailed in the Management Discussion and Analysis on page 38. - 5 - THE OFFERING The Offering Securities offered: We are offering up to 5,000,000 of our common stock. The selling stockholders are hereby offering up to 1,866.440 shares of our common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $3.00 per share until our shares are quoted on the OTC Bulletin Board or other US trading exchange, if our shares of common stock are ever quoted on the OTC Bulletin Board or other US trading exchange, and thereafter at prevailing market prices or privately negotiated prices. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from February 15, 2008 (Inception) to December 31, 2011, and our unaudited financial statements for the quarter ended March 31, 2012. December 31, 2011 ($) Financial Summary Cash and Deposits 83,633 Total Assets 337,988 Total Liabilities 416,161 Total Stockholder s Equity (Deficit) (78,173) Accumulated From February 15, 2008 (Inception) to December 31, 2011 ($) Statement of Operations Total Expenses 1,900,978 Net Loss for the Period ( 1,910,151 ) - 6 - March 31, 2012 ($) Financial Summary (Unaudited) Cash and Deposits 46,030 Total Assets 290,248 Total Liabilities 501,985 Total Stockholder s Equity (Deficit) (211,737) Accumulated From February 15, 2008 (Inception) to March 31, 2012 ($) Statement of Operations Total Expenses 2,091,563 Net Loss for the Period ( 2,103,748 ) Shares outstanding prior to offering: 27,916,440 Shares outstanding after offering: 32,916,440 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the Over The Counter Bulletin Board or other U.S. trading exchange. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 5,000,000 shares (after deducting estimated offering expenses payable by us) for professional fees, general business development, administration expenses, option fees and geological survey fees. See Use of Proceeds on page 20 for more information on the use of proceeds. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders who are simultaneously offering 1,866,440 shares of common stock under this prospectus. We will not receive any proceeds from the sale of shares by the selling stockholders. - 7 - Glossary of Exploration Terms The following terms, when used in this registration statement, have the respective meanings specified below: Andesite An extrusive usually dark grayish rock consisting essentially of oligoclase or feldspar. Dacite A fine-grained light gray volcanic rock consisting primarily of quartz, plagioclase, and potassium feldspar, and also containing biotite, hornblende, or pyroxene. Assay A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained. Dendrite A branching treelike figure produced on or in a mineral by a foreign mineral. Dendritic Resembling or having dendrites. Branching like a tree. Deposit When mineralized material has been systematically drilled and explored to the degree that a reasonable estimate of tonnage and economic grade can be made. Development Preparation of a mineral deposit for commercial production, including installation of plant and machinery and the construction of all related facilities. The development of a mineral deposit can only be made after a commercially viable mineral deposit, a reserve, has been appropriately evaluated as economically and legally feasible. Diamond drill A type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock, which is recovered in long cylindrical sections an inch or more in diameter. Diorite A granular crystalline igneous rock commonly of acid plagioclase and hornblende, pyroxene, or biotite. Exploration The prospecting, trenching, mapping, sampling, geochemistry, geophysics, diamond drilling and other work involved in searching for mineral bodies a mining prospect which has not yet reached either the development or production stage. Mafic Mafic-ultramafic Of, relating to, or being a group of usually dark-colored minerals rich in magnesium and iron. Mafic and untramafic minerals together. Mineral A naturally occurring inorganic element or compound having an orderly internal structure and characteristic chemical composition, crystal form and physical properties. Mineral Reserve A mineral reserve is that part of a deposit which could be economically and legally extracted or produced at the time of the reserve determination. Mineralization Rock containing an undetermined amount of minerals or metals. Miocene Of, relating to, or being an epoch of the Tertiary between the Pliocene and the Oligocene or the corresponding series of rocks. Paleogene Of, relating to, or being the earlier part of the Tertiary including the Paleocene, Eocene, and Oligocene or the corresponding series of rocks. Ultramafic Minerals that are very low in silica and rich in iron and magnesium. Trenching The digging of long, narrow excavation through soil, or rock, to expose potential mineralization for geological examination or assays. Waste Material that is too low in grade to be mined and milled at a profit. - 8 -
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001433147_superfund_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001433147_superfund_prospectus_summary.txt
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+referred to in this Prospectus as a Series gold position or the dollar for dollar gold position. The net asset value of each Series Units will be quoted in ounces of gold, as described below under Summary The Offering, as well as in dollars. You should note, however, that the Series are not gold funds, and Series performance will not necessarily track the price of gold. Likewise, the net asset value of the Series will not be determined solely by the price of gold. To obtain its dollar for dollar gold position, the Series enter into futures contracts to purchase gold in a dollar amount approximately equal to the amount of capital invested in each Series. Prior to November 1, 2011 the General Partner adjusted each Series gold position at the beginning of each month to reflect additions to and redemptions of Series capital, as well as to reflect profits and losses from the Series futures and forward trading activities and interest income, as of the end of the preceding month so as to maintain a gold futures position with a notional, or face, value approximately equal to the Series net asset value at the beginning of each month. Commencing November 1, 2011, the General Partner began adjusting each Series dollar for dollar gold position periodically throughout the month to reflect profits and losses from the Series futures and forward trading activities and interest income, so as to maintain a long gold futures position with a nominal, or face, value approximately equal to the Series net asset value throughout the month. These adjustments are in addition to the adjustments made to the dollar for dollar gold position by the General Partner at the beginning of each month to reflect additions to and redemptions of Series capital. The General Partner may in the future determine to adjust the Series dollar for dollar gold position on a more or less frequent basis but in no event will such adjustment take place less frequently than monthly. You should note, however, that because the Series gold positions are not adjusted on a real-time basis to account for the Series net asset value, profits or losses incurred on a Series gold position or from a Series speculative futures and forward trading and interest income earned by a Series between any such adjustment may cause the notional, or face, value of a Series gold position at any time during a month to be greater than or less than the Series net asset value at that time. In addition to maintaining an investment in gold, each Series trades speculatively in the U.S. and international futures and currency forward markets using Superfund s automated computerized trading systems. The Superfund trading systems generate buy and sell trading signals and monitor relevant technical indicators on over 120 markets traded in the United States, Canada, Europe and Asia. The primary sectors in which each Series trades are: stock indices, currencies, bonds, grains, energies, metals (including gold), agricultural markets and livestock, and trades are entered on U.S. and, to a substantial extent, non-U.S. markets. Each Series attempts to emphasize instruments with low correlation to each other and high liquidity for trade order execution. Series B implements the Fund s futures and forward trading program at a leverage level equal to approximately 1.5 times that implemented on behalf of Series A, and, accordingly, is expected to have more volatile performance than Series A. Effective July 1, 2010, the General Partner integrated a systematic, technical short-term trading strategy into the Fund s primary trend-following methodology. This short-term strategy seeks trading opportunities arising out of short term changes in futures and forward market prices, with trades lasting from less than a day to more than a week, and has exhibited low correlation to the trend-following methodology historically utilized by the Fund. The General Partner Superfund Capital Management, Inc., a Grenada corporation, serves as the general partner and trading advisor of the Fund and each Series and is responsible for the trading and administration of each Series. The General Partner s offices, and the office of the Fund where its books and records are kept, are located at Superfund Office Building, P.O. Box 1479, Grand Anse, St. George s, Grenada, West Indies. Table of Contents SUPERFUND GOLD, L.P. $79,665,429 SERIES A AND $84,482,522 SERIES B UNITS OF LIMITED PARTNERSHIP INTEREST The Offering Superfund Gold, L.P., a Delaware limited partnership (the Fund ), is offering two separate series of limited partnership units ( Units ), designated Series A and Series B. The primary objective of Superfund Gold, L.P. is to maintain the approximate equivalent of a dollar for dollar investment in gold while seeking appreciation of its assets over time by trading and investing in a portfolio of futures and forward contracts on stock indices, currencies, bonds, grains, energies, metals (including gold), agricultural markets and livestock. The two Series are traded and managed the same way except for the degree of leverage, and the assets and liabilities of each Series are segregated from the assets and liabilities of the other Series. Superfund USA, Inc., and additional selling agents, which serve as underwriters, are offering the Units on the last day of each month at a price of month-end net asset value per Unit. As of February 29, 2012, the net asset value per Unit of Series A-1 was $1,667.76, the net asset value per Unit of Series A-2 was $1,818.08, the net asset value per Unit of Series B-1 was $1,399.06, and the net asset value per Unit of Series B-2 was $1,470.74. Units are continuously offered as of the last day of each month at their net asset value, stated in dollars, for transaction purposes, and ounces of gold for reference. Regardless of the net asset value at which Units are issued, the initial aggregate net asset value of an investor s Units will equal the dollar amount of the investor s subscription, and no up-front underwriting discount or commission will be taken, although, as described herein, certain Units will pay an installment selling commission of up to 10% of the gross offering proceeds of the Units in monthly installments of 1/12 of 2% of the month-end net asset value of such Units. There is no scheduled termination date for the offering of the Units. If the total amount offered pursuant to this Prospectus is sold, the proceeds to Superfund Gold, L.P. will be $164,147,951. Subscription proceeds are held in escrow at HSBC Bank USA until released to Superfund Gold, L.P. at the end of each month, and there is no minimum number or dollar amount of Units that must be sold for Units to be issued as of the end of any month. Subscriptions for Units become irrevocable five business days after submission to your selling agent. The General Partner Superfund Capital Management, Inc., a professional futures trading advisor and member of the Superfund group of affiliated companies, serves as the general partner and trading advisor of Superfund Gold, L.P. Minimum Investment The minimum initial investment in a Series is $10,000; $1,000 for existing investors in such Series. The Risks These are speculative securities. You could lose all or substantially all of your investment in a Series. Before you decide whether to invest, read this entire Prospectus carefully and consider THE RISKS YOU FACE on page 11. Each Series has only a limited performance history. The Fund is speculative and highly leveraged. The Series acquire positions with face amounts substantially greater than their total equity. Leverage magnifies the impact of both gains and losses. Performance is expected to be volatile; the net asset value per Unit may fluctuate significantly in a single month. Superfund Capital Management, Inc. is the sole trading advisor for the Fund. The use of a single advisor could mean lack of diversification and, consequently, higher risk. There is no secondary market for the Units. You may redeem your Units only as of a month-end. Transfers of Units are subject to limitations. A Series trading operations may be successful and yet the Series may still sustain losses if the value of the Series gold position declines by more than the amount of profits generated by the Series trading operations. Likewise, a Series gains, if any, from its gold position may be offset by losses incurred in its futures and forward trading. A Series may fail to achieve its objective of maintaining a dollar for dollar investment in gold if gold futures margins increase substantially, in which case the Series may reduce its gold position and continue its futures and forward trading activities. You will sustain losses if the substantial expenses of a Series are not offset by trading and/or gold investment profits and interest income. To invest, you will be required to represent and warrant, among other things, that you have received a copy of this Prospectus and that you satisfy the minimum net worth and income requirements for residents of your state to invest in a Series. You are encouraged to discuss your investment decision with your individual financial, tax and legal advisors. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. This Prospectus is in two parts: a disclosure document and a statement of additional information. These parts are bound together, and both contain important information. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. SUPERFUND CAPITAL MANAGEMENT, INC. General Partner Prospectus dated [ ], 2012 Table of Contents The General Partner is a professional futures trading advisor and a member of the Superfund group of affiliated companies. As of February 29, 2012, the General Partner and its affiliates had approximately $800 million in assets under management in the futures and forward markets. The General Partner has delegated certain administrative functions, including calculation of the Series net asset values and distribution of reports to investors, to SS&C Fund Services, Inc. ( SS&C ), a leading fund administration services provider and a business unit of SS&C Technologies, Inc. Certain Fund records are located at the offices of SS&C at 80 Lamberton Road, Windsor, CT 06095. The General Partner contributed $1,000,000 to the capital of each Series prior to the commencement of trading and will maintain an investment in each Series of not less than the greater of $25,000 or 1% of the net asset value of the Series, including the General Partner s investment; provided, however, that the General Partner may withdraw any excess above such level in a Series at any month-end if the aggregate net asset value of the outstanding Units of the Series exceeds $2,000,000. As of February 29, 2012, the value of the General Partner s investment in Series A-1 was $858,763.07, in Series A-2 was $0.00, in Series B-1 was $607,550.60 and in Series B-2 was $0.00. The Offering Superfund USA, Inc., an affiliate of the General Partner, and additional selling agents, which serve as underwriters, are offering the Units as of the end of each month at the then current net asset value per Unit which will be stated both in ounces of gold, reflecting the U.S. dollar price per ounce of gold established at the London A.M. fixing on the last business day of the month, and in dollars. For example, assume the net asset value per Unit stated in dollars is $1,500 and further assume that the U.S. dollar price per ounce of gold, established at the London A.M. fixing, is $1,400. The net asset value per Unit stated in gold would be 1.07 ounces of gold (1,500 1,400). The foregoing example is for illustrative purposes only. There can be no assurance that the U.S. dollar price of gold will rise or not decline or that a Series will not incur losses from its futures and forward trading. The U.S. dollar price for gold established at the London A.M. fixing, and the closing price for the gold futures contracts to be traded by the Series will normally be different from each other, although the differences are expected to be insignificant as a percentage of the per ounce price of gold. Series and Sub-Series of Units Within each Series, Units are issued in two sub-Series (each a Sub-Series ). Series A-1 Units and Series B-1 Units are subject to the selling commissions described below under Summary Charges to Each Series. Series A-2 Units and Series B-2 Units are not subject to selling commissions but are available exclusively to: (i) investors participating in selling agent asset-based or fixed-fee investment programs or a registered investment adviser s asset-based fee or fixed-fee advisory program through which an investment adviser recommends a portfolio allocation to the Fund and for which Superfund USA, Inc. serves as selling agent, (ii) investors who purchased the Units through Superfund USA, Inc. or an affiliated broker and who are commodity pools operated by commodity pool operators registered as such with the Commodity Futures Trading Commission ( CFTC ), and (iii) investors who have paid the maximum selling commission on their Series A-1 or Series B-1 Units (by redesignation of such Units as Series A-2 Units or Series B-2 Units as described herein). Minimum Investment The minimum initial investment is $10,000 per Series; existing investors in a Series may make additional investments in $1,000 minimums. Fractional Units will be issued calculated to three decimal places. Major Risks of the Fund An investment in a Series is a speculative investment. You must be prepared to lose all or substantially all of your investment. Table of Contents COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGES 4 THROUGH 6 AND 42 THROUGH 45 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGES 6 THROUGH 8. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 11. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. SWAPS TRANSACTIONS, LIKE OTHER FINANCIAL TRANSACTIONS, INVOLVE A VARIETY OF SIGNIFICANT RISKS. THE SPECIFIC RISKS PRESENTED BY A PARTICULAR SWAP TRANSACTION NECESSARILY DEPEND UPON THE TERMS OF THE TRANSACTION AND YOUR CIRCUMSTANCES. IN GENERAL, HOWEVER, ALL SWAPS TRANSACTIONS INVOLVE SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTY CREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL RISK. HIGHLY CUSTOMIZED SWAPS TRANSACTIONS IN PARTICULAR MAY INCREASE LIQUIDITY RISK, WHICH MAY RESULT IN A SUSPENSION OF REDEMPTIONS. HIGHLY LEVERAGED TRANSACTIONS MAY EXPERIENCE SUBSTANTIAL GAINS OR LOSSES IN VALUE AS A RESULT OF RELATIVELY SMALL CHANGES IN THE VALUE OR LEVEL OF AN UNDERLYING OR RELATED MARKET FACTOR. IN EVALUATING THE RISKS AND CONTRACTUAL OBLIGATIONS ASSOCIATED WITH A PARTICULAR SWAP TRANSACTION, IT IS IMPORTANT TO CONSIDER THAT A SWAP TRANSACTION MAY BE MODIFIED OR TERMINATED ONLY BY MUTUAL CONSENT OF THE ORIGINAL PARTIES AND SUBJECT TO AGREEMENT ON INDIVIDUALLY NEGOTIATED TERMS. THEREFORE, IT MAY NOT BE POSSIBLE FOR THE COMMODITY POOL OPERATOR TO MODIFY, TERMINATE, OR OFFSET THE POOL S OBLIGATIONS OR THE POOL S EXPOSURE TO THE RISKS ASSOCIATED WITH A TRANSACTION PRIOR TO ITS SCHEDULED TERMINATION DATE. Table of Contents The Fund is recently formed and thus has only a limited performance history. The past performance of gold or of the General Partner s trading program is not necessarily indicative of the future results of either Series. The Fund is speculative and leveraged. The Series acquire positions with face amounts substantially greater than their total equity. Leverage magnifies the impact of both gains and losses. Performance is expected to be volatile; the net asset value per Unit may fluctuate significantly in a single month. The General Partner is the sole trading advisor for the Fund. The use of a single advisor could mean lack of diversification and, consequently, higher risk. There is no secondary market for the Units. You may redeem your Units only as of a month-end. Transfers of Units are subject to limitations. A Series trading operations may be successful and yet the Series may still sustain losses if the value of the Series gold position declines by more than the amount of profits generated by the Series trading operations and interest income. Likewise, a Series gains, if any, from its gold position may be offset by losses incurred in its futures and forward trading. A Series may fail to achieve its objective of maintaining a dollar for dollar investment in gold or may reduce its normal level of futures and forward trading activities if gold futures margins increase substantially, in which case the Series may reduce its gold position and maintain its normal level of futures and forward trading activities or maintain its gold position and reduce its futures and forward trading activities, depending on the General Partner s assessment of market conditions at that time. You will sustain losses if the substantial expenses of a Series are not offset by trading and/or gold investment profits and interest income. Each Series is subject to numerous conflicts of interest. Investment Considerations The Fund is designed to maintain a long position in gold in a U.S. dollar amount approximately equal to the total capital of each Series as of the beginning of each month and as periodically readjusted during each month to reflect profits and losses from the Series futures and forward trading activities and interest income during the month. The gold investment of each Series is intended to de-link the Series net asset value, which is denominated in U.S. dollars, from the value of the U.S. dollar relative to gold, essentially denominating the Series net asset value in terms of gold. However, if the U.S. dollar value of gold declines resulting in dollar losses for the Series, there can be no assurance that there will be a corresponding increase in the value or purchasing power of the U.S. dollar for goods (other than gold) or services priced in dollars. Further, there can be no assurance that trading losses incurred in the Fund s speculative futures and forward trading will not result in overall losses for the Series or that the Series will not reduce its gold position if gold futures margin requirements increase significantly. The Fund is a leveraged investment fund, managed by an experienced, professional trading advisor, which trades in a wide range of futures and forward markets. Table of Contents This Prospectus does not include all of the information or exhibits in Superfund Gold, L.P. s Registration Statement. You can read and copy the entire Registration Statement at the Public Reference Facilities maintained by the Securities and Exchange Commission ( SEC ) in Washington, D.C. Superfund Gold, L.P. will file quarterly and annual reports with the SEC. You can read and copy these reports at the SEC Public Reference Facility in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information. Superfund Gold, L.P. s filings will be posted at the SEC website at http://www.sec.gov. SUPERFUND CAPITAL MANAGEMENT, INC. General Partner SUPERFUND OFFICE BUILDING PO BOX 1479 GRAND ANSE ST. GEORGE S, GRENADA WEST INDIES (473) 439-2418 Table of Contents The General Partner utilizes a proprietary, systematic trading system for each Series. Trading decisions are not discretionary and thus do not involve human emotional responses to changing market conditions. An investment in the Units has the potential to help diversify traditional securities portfolios. A diverse portfolio consisting of assets that perform in an unrelated manner, or non-correlated assets, may increase overall return and/or reduce the volatility (a widely used measure of risk) of a traditional portfolio of stocks and bonds. However, for a non-correlated asset to increase a traditional portfolio s overall returns, the non-correlated asset must outperform either stocks or bonds over the period being measured. There can be no assurance that a Series will outperform other sectors of an investor s portfolio over any given time period or not produce losses. The Fund holds substantially all of its assets (including those assets used as margin deposits for trading activities) in U.S. government securities and/or non-interest bearing deposit accounts, segregated by Series. Accordingly, each Series, in addition to its potential to profit from its gold investment and active trading operations, earns interest on all or almost all of its assets. However, as interest rates on U.S. government securities and interest bearing deposit accounts are at historically low levels, it is possible that any interest earned by each Series from such securities or accounts could be nominal. The Series in which you invest must experience certain levels of trading profits in order for you to break even on your investment. Based on an initial investment of $10,000 (and assuming no changes in net asset value and interest income of 0.05%), the break even points for each Series are as follows: Series A-1 6.95% ($695.00); Series A-2 4.95% ($495.00); Series B-1 7.95% ($795.00); Series B-2 5.95% ($595.00). A more detailed break even analysis begins at page 6. Limited Liability Investors cannot lose more than the amount of their investments and undistributed profits, if any. Thus, investors receive the advantage of limited liability in a highly leveraged trading vehicle. Redemptions, Distributions, Transfers and Exchanges The Fund is intended to be a medium- to long-term, i.e., 3- to 5-year, investment. However, monthly redemptions are permitted, without penalty or any redemption charge, upon five (5) business days written notice to the General Partner. Redemption proceeds will be paid in U.S. dollars. Due to the availability of monthly redemptions, the General Partner does not intend to make any distributions, and the trading profits of a Series, if any, will be reinvested in the Series. Upon written request, an investment in either Series may be exchanged for an investment in the other Series by a simultaneous redemption and reinvestment at the then applicable respective net asset values of each Series. Units are transferable with the consent of the General Partner. Charges to Each Series The Fund s charges are substantial and must be offset by trading gains and/or gold investment profits and interest income in order to avoid depletion of each Series assets. The fees and expenses applicable to each Series are as follows: The General Partner 2.25% of net assets annual management fee (1/12 of 2.25% payable monthly) for each Series. A performance fee of 25% of new appreciation (if any) in each Series net assets, computed on a monthly basis, excluding interest income and changes in the value of the Series dollar for dollar investment in gold and adjusted for subscriptions and redemptions. New appreciation is the increase in a Series net asset value since the last time a performance fee was paid. Please see Charges to Each Series Performance Fee for a more detailed discussion of new appreciation and the performance fee. Table of Contents TABLE OF CONTENTS Part One Disclosure Document SUMMARY 1
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+S-1/A 1 d411600ds1a.htm FORM S-1 AMENDMENT NO. 2 Form S-1 Amendment No. 2 Table of Contents As filed with the Securities and Exchange Commission on October 11, 2012 Registration No. 333-183881 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ORYON TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Nevada 3640 26-2626737 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 4251 Kellway Circle Addison, Texas 75001 (214) 267-1321 (Address, including zip code, and telephone number, including area code, or registrant s principal executive offices) Thomas P. Schaeffer President and Chief Executive Officer Oryon Technologies, Inc. 4251 Kellway Circle Addison, Texas 75001 (214) 267-1321 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: David R. Earhart Looper Reed & McGraw PC 1601 Elm Street Suite 4600 Dallas, Texas 75201 (214) 237-6393 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The Registrant hereby amends this Registration Statement on such date or date as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents TABLE OF CONTENTS Page No. SUMMARY 1
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us , Accelera or Accelera Innovations, Inc. refer to Accelera Innovations, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. OUR COMPANY Accelera Innovations, Inc. ( Accelera ), a Delaware corporation, is a healthcare service company which will initially focus on its technology assets that were licensed to the Company by our majority shareholder Synergistic Holdings, LLC ( Licensor ), a privately-held company organized under the laws of Illinois, pursuant to which the Company was granted a thirty (30) year exclusive, non-transferrable worldwide license for proprietary Internet-based, software platform that is fully functional in its current state ( Accelera Technology ) that is designed to provide interoperable technology that is intended to improve the quality of care while reducing the cost as described below. LICENSED TECHNOLOGY OVERVIEW 1. Data Forms - Topical Network Data Warehouse Architecture 2. Axiom Healthcare Specific Business Rules Engine. 3. Kinetic Forms A Dynamic Web Page Generator. 4. VT Secure Enterprise Security Framework 5. Patient Portal 6. Self-Management Disease Modules 7. Provider Portal 8. Private Label Applications SOFTWARE DESCRIPTION The Accelera Health Care Framework / Multi Vertical Health Care (MVHC) Technology comprises a suite of eight separate technologies described below; Health Care Framework, Security, Business Rules, Data Integration, Patient Assessment, Medical Alerts, Biometric integration, Secure communication and networking, Data Mining on Large Data Sets (Mega Data). Security Framework, Integrated into the Accelera s Healthcare Framework is designed to provide enterprise level application and data security. Assessment Engine: For clinical and self-health care and Wellness management. Parallel Processing Data Mining Engine: Patient Identification, Medical Informatics, Content Personalization. Suite of Products: Data Forms Topical Network, a data forming technology and framework that is designed to organize and efficiently deliver relevant information for large data sets (Mega Data) and which can ingest any data format into well-organized data structure designed specifically to communicate the other components of the Accelera Framework. Axiom Business Rules Engine is designed specifically for Healthcare which is data mining engine. Axiom is a parallel or simultaneous processing rules engine designed to apply complex rule-sets on very large dimensional data input to produce multiple result outputs. Kinetic Forms Dynamic Webpage Generator, a dynamic web based assessment engine that is intended to interfaces with data forms and Axiom. VT Secure Integrated into the Accelra Healthcare Framework, is designed to provide enterprise level security and is intended to protect applications and data and is designed to provide performance and scalability for secure medical data mining. Patient Portal - Consumer-facing internet-based technology that is designed to encompass the following: Connect between patient and providers through a fully secure two-way Patient Portal, including After Visit Summaries, patient messaging and care plan adherence alerts based on relevant health care protocols. Display relevant patient and care plan information in easy-to-understand onscreen and printable displays for patients and triaged formatting for caregivers. Provide patient behavior modifications self-management modules. Allow third party access into the patient portal. Create Personal Health Records (PHR) that are personalized based on patient condition for patient care and messaging. Self-Management Disease Modules - Provider and Consumer-facing internet-based technology that is designed to encompass the following: Interactive disease management tools that focus on chronic health conditions. It includes content indexed to specific triggers within a disease state Personalized based on ICD-9 (ICD-10), National Drug Code (NDC), and Current Procedural Terminology (CPT4) codes Proprietary messaging based on CMS Medicare/Medicaid established triggers Valid and reliable behavioral health triggers that facilitate care plan adherence and compliance Provider Portal - Provider-facing internet-based technology that encompasses the following: Dashboard access to Patient Portal inputs at the patient level Summary access to disease management adherence & compliance messaging alerts Direct input into patient health records Direct recommendations to the patient Private Label Applications Accelera EMR- A certified Electronic Medical Record application designed to be used primarily in physician offices to automate the patient s clinical chart and meet the ARRA (Federal Mandated Meaningful Use) criteria. Accelera PM -The Practice Management application designed to be used primarily in physician offices to automate the physician s revenue cycle management system. Accelera Patient Portal - The Patient Portal application designed to be used as a communication tool between patient and physician office staff. This application is intended to allow the patient to access their medical record information in a secure environment. Accelera HIE - The Health Information Exchange application is intended to allow providers and payors of healthcare to exchange secure data by creating the continuum of care for the patient, and decreasing healthcare cost. Accelera ACO - The Accountable Care Organization application needed to operate an ACO environment. This application is designed to offers the ACO business the ability to report to CMS the usage of Medicare benefits and is intended to provide tools to lower the cost of patient care. Accelera HIS - The Hospital Information System application is designed to includes all applications to manage most hospital information systems. The department applications included in the HIS are as follows: Patient Master; Appointments, Outpatient Management; Inpatient Management; Emergency Department; Patient Billing; Claims Management; Provider Fee Management; Accounts Receivable; Duplicate Registration; Medical Records; System Master; System Configuration, Resource Scheduler; CPOE; Clinical Decision Support System; Clinical Documentation; Barcode Medication Administration; Laboratory Management System; Radiology System; PACS; Pharmacy Management System; Materials/Supply Management System; Operating Room Management System; Nursing Management; Blood Bank System; Dietary Management System; Hospital Patient Portal. Accelera, intends to provide its cloud based healthcare services through monthly or yearly subscription agreements ( software-as-a-service also known as SaaS ) to the healthcare industry. The Company intends on positioning itself as a technology and service solution for providers and payers such as the hospitals, medical offices, medical insurance companies, Accountable Care Organizations, Patient Centered Medical Homes, and Provider Service Networks who are seeking to create an interoperable technology platform that is patient-centric. The coordinated care would begin with the office visit using the Accelera Practice Management and Electronic Medical Record applications. The provider may also access disparate patient consults and share the patient s record using the Accelera Health Information Exchange and Portal. When the patient is admitted to the hospital setting, all of the functions are intended tobe automated using the Accelera Hospital Information System. The physician would continue to have full access to the patient s information to receive accurate and efficient information. If the primary care physician is part of an Accountable Care Organization, then those reports required by Center for Medicare and Medicaid will be created and distributed using the Accelera Accountable Care Organization application. The Accelera Patient Management Record is designed to identify patients with preventable, yet escalating associated costs, then directs intense online self-management services to improve the quality-of-life for the patient and deliver more effective health information. Patients would be electronically triaged using the Center for Medicare and Medicaid (CMS) rule-set for disease management, as well as proprietary evidence-based disease management rules. These rules are based on clinical standards from major health organizations.. This is intended to allow providers, as well as patients, to monitor care through targeted interventions. The technology platform is intended to allow healthcare providers to anticipate patient care needs, motivate patient compliance, activate evidence-based standards of care, and improve efficiency. The Accelera Analytic product is designed for potential customers that include healthcare payers, provider organizations, government entities worldwide, and employer groups. Accelera products are designed to identify, analyze, and minimize healthcare risk by data mining and predictive analysis while containing costs and improving the quality of care. Accelera also intends to develop modeling software to predict medical costs and help improve the financing, organization, and delivery of health services. The Accelera Security solution is designed to reduce or stop the security breach at the point of care, by auditing the user and encasing the applications in a discrete shell. Without proper access, the application will separate the data elements from each other, patient name will not be associated with demographic or clinical information. Patient data is split into two parts, the patient identifier is separated from the clinic/medical data and both are encrypted. An encrypted data key unlocks the dual encryption bringing the information together and is intended to increase patients confidence in the information technology utilized. The Accelera Solution is designed to improve patient care, reduce costs, eliminate redundant data entry, improve operational efficiency, but most importantly, bring together long term needs of the caregivers and is intended to satisfy the business requirements of the healthcare enterprise. The intended benefits of our solutions for potential customers include: Lowereadministration costs through a less invasive call-back system - email alerts, text messages, online alerts A benefit of batch health care analytics is the use of "predictive modeling across multiple clinical conditions. This process is designed to identify undiagnosed conditions for patients within an insurer's patient population, or suggest interventions to prevent conditions from developing. Reducing occurrences and cost related to a healthcare data breaches. Reducing the hardware environment and cost by using our cloud technology. Increased Mobility. Improving patient care and safety. Helping healthcare organizations maintain their market positions and meet their financial commitments. Our current plans predicated on raising $35,000,000 from the sale of 5,000,000 shares of common stock in this offering and will allow the Company to meet the milestones and requirements of its Business Plan and avoid discontinuation of the license. Funding would be required for staffing, marketing, public relations and the necessary research precedent to expanding the scope of its offering to include the global market. The Company intends to approach Hedge Funds, Venture Capital Groups, Private Investment Groups and other Institutional Investment Groups in its efforts to achieve future funding. It is estimated that $9,874,940 will be used for management, sales and marketing, $17,680,122 will be used for infrastructure and software fees and an estimated $4,417,978 will be spent on legal, accounting, rent and other payables leaving $3,026,960 in reserve for increased working capital. We expect to use the proceeds from this offering for infrastructure and software, sales and marketing, employee compensation, legal fees, accounting fees, rent and other payables to deploy our technology. The Company s technology platform is fully functional in its current state and is anticipated to be marketed into metropolitan markets with an estimated expenditure of approximately $16 million through December 31, 2012, and approximately $19 million through December 31, 2013 for general corporate purposes, for which proceeds we have an estimated plan. In detail, over the first twelve months after financing it is estimated that the Company will utilize an estimated $24 million of this offering for the following milestones: Infrastructure; Transfer our licensed software technology from internal Company servers to a data center facility with redundant backup systems, it is estimated this will take three months at an estimated cost of $3 million and an estimated $250,000 per month thereafter for expansion and service fees totaling $5.2 million over the first twelve months from financing. Software Fees: Under our Licensing Agreement with Synergistic Holdings LLC, the Company is to pay $5 million on January 1, 2013 and $7.5 million on April 13 2013 for a total of $12.5 million in licensing fees over the next twelve months. Sales and Marketing: The Company intends to provide its cloud based healthcare services through monthly or yearly subscription agreements ( Software-as-a-Service ) also known as SaaS ) to the healthcare industry. It is estimated that the Company will grow from the current three full time employees marketing the product to twenty-three within the next six months including management, advertising, tradeshows and travel expenses at an estimated cost of 2.2 million and growing to fifty-seven people including management and all sales and marketing activity within the next twelve months totaling an estimated cost of $5.3 million. Legal fees, Accounting fees, Rent and other payables: The Company estimates these fee to be $950,000 over the next twelve months. The above mentioned expenditures meet the Company s requirement under the Licensing Agreement to advance the licensed technology as agreed. It s estimated that if the Company cannot accomplish the milestones described above due to lack of financing the Company s product offering will be delayed. The minimum amount of capital the Company needs to raise over the next twelve months is $1 million to continue operations. There is no guarantee that the Company will be able to raise this or any amount of additional capital and a failure to do so would have a significant adverse effect on the Company s ability, or would cause significant delays in its ability to address the market for content delivery and achieve its Business Plan. Neither the Company nor any of its advisors or consultants has significant experience in raising funds similar to the $35,000,000 estimated to be required. Our business may not materialize in the event we are unable to execute on our plan described in this prospectus. The events or circumstances that may prevent the accomplishment of our business objectives, include, without limitation, (i) the fact that, if we do not raise a minimum of US $5,000,000 of additional funding by July 13, 2012 that was verbally extended by Licensor to January 1, 2013 , an additional $7,500,000 by April 13, 2013, an additional $10,000,000 April 13, 2014 and an additional $7,500,000 by April 13, 2015 equaling the minimum funding requirement of $30,000,000 for the deployment of its licensed technology over the next three years we will lose the rights to the licensed technology, (ii) If physicians and hospitals do not accept our products and services, or delay in deciding whether to purchase our products and services. (iii) If we are forced to reduce our prices, our business, financial condition and results of operations could suffer, (iv) we are subject to a number of existing laws, regulations and industry initiatives, non-compliance with certain of which could materially adversely affect our operations, (v) the Company s need for and ability to obtain additional financing, (vii) the possibility that the Company may not be able to secure approvals and other governmental clearances necessary to carry out the Company s deployment and development plans, and (viii) the exercise of voting control the Company s officers and directors collectively hold of the Company s voting securities. The principal purposes of this offering are to obtain additional capital, to create a public market for our common stock, facilitate future access to public equity markets, increase awareness of our company among potential customers, enter into metropolitan markets, broaden our scope of care, and create our competitive position. We believe that the net proceeds from this offering, our existing cash resources and interest on these funds will be sufficient to meet our projected operating requirements. Pending use as described above and any remaining net proceeds, we plan to invest the net proceeds in a variety of capital preservation instruments, including short-term, interest bearing obligations, investment grade instruments, certificates of deposit or direct or guaranteed obligations of the United States. The goal with respect to the investment of these net proceeds is capital preservation and liquidity so that such funds are readily available to fund the development and expansion of our business. The principals of our Licensor, including our CEO, John F. Wallin, acquired a controlling interest in the Company for the purpose of operating as a publicly-reporting company and determined that it is in their best interests to license the Licensor s rights to the technology. Licensor receives a benefit from the license of the technology to Licensee because the Company plans to finance $30 million over three years for further development and deployment of the technology. The Licensor will receive a royalty of fifteen percent (15%) of all gross revenues resulting from the use of the technology by Licensee in the first year, ten percent (10%) the second year and one quarter of one percent (.025%) of all gross revenues resulting from the use of the technology by Licensee for the remainder of the License Agreement. About Accelera Innovations, Inc. We were incorporated in the State of Delaware on April 29, 2008, and established an end of December fiscal year end. Our corporate headquarters is located at 20511 Abbey Drive, Frankfort, Illinois 60423 and our telephone number is (866) 920-0758. Our business plans for the current fiscal year through April 30, 2013, are detailed in the Management Discussion and Analysis on page 41. THE OFFERING The Offering Securities offered: We are offering up to 5,000,000 of our common stock. The selling stockholders are hereby offering up to 4,456,880 shares of our common stock. Offering price: The Company is selling shares at a fixed price of $7.00 per share for the duration of the offering, and the selling stockholders are selling shares at a fixed price of $7.00 per share for the duration of the offering which is a period of 16 months from the effective date of this prospectus, unless our shares are quoted on the Over The Counter Bulleti Board or other U.S. trading exchange, in which case the selling stockholders may thereafter sell their shares at prevailing market prices or privately negotiated prices. December 31, 2011 ($) Financial Summary Cash and Deposits 5,874 Total Assets 5,874 Total Liabilities - Total Stockholder s Equity 5,874 Accumulated From April 29, 2008 (Inception) to December 31, 2011 ($) Statement of Operations Total Expenses 176,081 Net Loss for the Period (176,081) ) Net Loss per Share 0.00 Shares outstanding prior to offering: 21,311,812 Shares outstanding after offering: 26,311,812 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over The Counter Bulletin Board or other U.S. trading exchange. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 5,000,000 shares (after deducting estimated offering expenses payable by us) for professional fees, general business development, administration expenses, option fees and software fees. See Use of Proceeds on page 23 for more information on the use of proceeds. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders who are simultaneously offering 4,456,880 shares of common stock under this prospectus. We will not receive any proceeds from the sale of shares by the selling stockholders, furthermore the selling shareholders holding 4,104,068 of the 4,456,800 shares for resale have entered into a 180 day lockup agreement. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from April 29, 2008 (Inception) to December 31, 2011. Our working capital as at December 31, 2011 was $5,874. Financial Summary (audited) December 31, 2011 ($) Cash and Deposits $ 5,874 Total Assets 5,874 Total Liabilities - Total Stockholder s Equity (Deficit) $ 5,874 September 30, 2012 ($) Financial Summary (Unaudited) Cash and Deposits $ 200 Total Assets 200 Total Liabilities 0 Total Stockholder s Equity $ 200 Accumulated From April 29, 2008 (Inception) to September 30, 2012 ($) Statement of Operations (Unaudited) Total Expenses $ (4,539,415 ) Net Loss for the Period $ 4,539,415 September 30, 2011 ($) Financial Summary (Unaudited) Cash and Deposits $ 4,116 Total Assets 4,116 Total Liabilities 0 Total Stockholder s Equity $ 4,116 Accumulated From April 28, 2008 (Inception) to September 30,u 2011 ($) Statement of Operations (Unaudited) Total Expenses $ 38,289 Net Loss for the Period $ 38,289
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001445831_newpoint_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001445831_newpoint_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following prospectus summary is qualified in its entirety by, and should read in conjunction with, the more detailed information and our Financial Statements and Notes thereto appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully. Our Company - Classic Rules Judo Championships, Inc. Classic Rules Judo Championships, Inc. ( We or the Company ) was originally formed as Blue Ribbon Pyrocool, Inc. a Delaware corporation November 16, 2005, as a wholly owned subsidiary of Puritan Financial Group, Inc., a company traded on the Pink OTC Markets, Inc. On March 24, 2008 a majority of the shareholders approved the spin-off of the Company to the shareholders of record as of December 26, 2005. The payment date was not determined at that time, but subsequently will be set upon the declaration of the effectiveness of this registration statement. Subsequent to its formation and prior to being renamed, the Company had no revenues or operations. Our Company, Classic Rules Judo Championships, Inc. created a subsidiary which was incorporated in the state of Connecticut called Classic Rules World Judo Championships, Inc. There are no other subsidiaries. On July 15, 2008 the Company executed a Memorandum of Understanding entitled Management's Global Agreement (the MOU ) with Classic Rules Judo Championships, Inc. and Mr. Chris Angle. Under such MOU the Company would change its name and pursue the business of Classic Rules Judo Championships. We intend to establish and promote tournaments for the sport of classical judo and have, so far, done two tournaments, one in 2010 and one in 2011. Contestants pay a fee to enter the contest and vie to become the winner of this yearly tournament which is known as the Classic Rules World Judo Championships. We plan to apply through a FINRA member broker dealer for OTC-Bulletin Board listing after our Registration Statement is declared effective. Management believes that listing on the OTC-Bulletin will position the Company to find financing to progress its business plan forward. However, there is no assurance that the Company will find a market maker and no assurance that our share will be approved for listing in the OTC Bulletin Board. The first tournament was held in March of 2010, had 15 competitors each paying a $100 entry fee generating revenue of $1,500. With miscellaneous revenue such as from entrance fees, total revenue was $2,087. Expenses for the first contest were $405 for Trophies, $150 for Facilities Rental, $350 for the Facilities Custodial, $100 for Advertising, $150 for Supplies, $200 for Transportation of Tournament mats totalling $1,355. The second tournament was held in May of 2011, but attendance of athletes dropped to only 11 competitors that paid $75 except for one competitor who paid $50 totalling $850. With miscellaneous revenue, such as from entrance fees, total revenue was $1,010. Expenses for the second contest were $405 for Trophies, $150 for Facilities Rental, $350 for the Facility Custodial, $392 for Transportation of Tournament mats, $296 for printing, totalling $1,593. In the judo contest world the results for the attendance at both of the Classic Rules tournaments would be considered small. We cannot predict if the Classic Rules type of tournament will become successful and attract athletes to a greater extent. We have generated little revenues to date; we have minimal assets, and have incurred losses since inception. From inception through the year ending September 30, 2011 we experienced a net loss of ($53,373). This net loss was contributed to by the organizational expenses and professional fees. For the twelve months ended December 31, 2010 and 2009, we experienced net losses of $16,481 and $8,319, respectively. These losses are attributable to organizational expenses and professional fees. In our December 31, 2010 and 2009 year-end financials, our auditor issued an opinion that our financial condition raises substantial doubt about the Company's ability to continue as a going concern. In 2010, the company experienced the start of operations and took in revenue of $2,087; and through September 2011, the Company took in total revenue of $1,010. Further, without a further injection of cash from the founders or other investors the Company will deplete its cash within the next ninety days since it is using funds at a rate of approximately $175 per month ($2,100 yearly) and as a result may have to close. In addition, the yearly audit and review fees are estimated to be approximately $10,000; our accounts payable is $5,000, and the estimated costs for the 2012 tournament is $3,000 totalling about $20,100. We expect to only take in revenue from the 2012 tournament of $7,500 leaving an expected deficit for the coming one year of $12,600. Our principal executive office is located at 100 Research Drive, Suite 16, Stamford, CT 06906 and our telephone number is (203) 327-6665. The terms Classic Rules, The Company, we, us and our as used in this prospectus refer to Classic Rules Judo Championships, Inc. About The Offering The following is a brief summary of the offering: Securities being offered: 10,882,103 common stock being held by current shareholders at par value $0.001 per share. The shares being registered in this prospectus are held by shareholders. We issued shares to these shareholders via private placements in exchange for an investment in our Company or as payment for assets or services. Offering price per share: The offering price of the common stock is $0.01 per share. We plan to ask a broker dealer to apply on our behalf with the Over-the-Counter Bulletin Board electronic quotation service to allow the trading of our common stock after this prospectus is declared effective by the U. S. Securities and Exchange Commission. If our common stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transaction negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. Offering Period: As soon as practical after approval of Registration Our Common Stock: This is our initial registration. There is not currently a market for our common stock. We intend to list our shares on the Over-the-Counter Bulletin Board, or OTCBB, but our stock has not been approved for trading on the OTCBB as of the date of this prospectus. We cannot determine if an active market will develop for our common stock. Additionally, we cannot determine or predict the price at which our common stock will initially trade. The selling shareholders will sell at a price of $0.01 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Use of Proceeds: We will not receive any proceeds from the sale by selling shareholders of our common stock.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001449447_entest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001449447_entest_prospectus_summary.txt
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+Prospectus Summary This summary highlights certain information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Before investing in our common stock, you should read this entire prospectus carefully, especially the sections entitled Risk Factors beginning on page 9 and Management s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 75, as well our financial statements and related notes included elsewhere in this prospectus. In this prospectus, the terms Entest Biomedical, Entest Company, we, us and our refer to Entest Biomedical, Inc. About Us We were incorporated in the State of Nevada on September 24, 2008 as JB Clothing Corporation. Until July 10, 2009, our principal business objective was the offering of active/leisure fashion design clothing. On July 10, 2009 we abandoned our efforts in the field of active/leisure fashion design clothing when we acquired 100% of the share capital of Entest BioMedical, Inc., a California corporation, ( Entest CA ). Upon acquisition of Entest CA, we abandoned our efforts in the field of active/leisure fashion design clothing. Our business is currently the business of Entest CA, and we are currently a development stage company which intends to develop and commercialize therapies, medical devices and medical testing procedures. On July 12, 2009 we adopted the name of Entest CA when we changed our name to Entest BioMedical, Inc. We intend to develop and commercialize therapies, medical devices and medical testing procedures. Our current strategy is to develop and commercialize therapies, medical devices and medical testing procedures for the veterinary market. We are currently focusing our research and development efforts toward the successful development and commercialization of the ImenVax family of canine cancer vaccines as well as the acquisition of existing veterinary clinics / hospitals to be utilized as potential distribution channels for our ImenVax family of canine cancer vaccines. We believe that, in addition to serving as distribution channels for the Company s immuno-therapeutic cancer vaccine for canines, these clinics will be able to generate revenue for us from current operations. As of May 17, 2012 none of the Company s products in development , including the ImenVax family of canine cancer vaccines, has received the required regulatory approvals which would enable the Company to market the products commercially. On January 4, 2011, 2010, Entest CA acquired from Pet Pointers, Inc. (a California corporation doing business as McDonald Animal Hospital) and Dr. Gregory McDonald DVM all the goodwill from Dr. McDonald and assets of Pet Pointers, Inc except cash and accounts receivables used in connection with the operation of a veterinary medical clinic located at 225 S. Milpas Street, Santa Barbara, CA 93103 which conducts business under the name McDonald Animal Hospital . If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] We generated net losses of $3,203,632 during the period from August 22, 2008 (inception) through May 31, 2012. This condition raises substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to meet our obligations, to obtain additional financing as may be required and ultimately to attain profitability. Our auditor's report dated October 31, expressed substantial doubt about our ability to continue as a going concern. At May 31, 2012 May 31 , 2011 Selected Balance Sheet Information: unaudited unaudited Cash $ 14,659 55,936 Current assets 103,673 139,872 Total assets $ 521,485 587,756 Current liabilities $ 461,389 282,179 Total liabilities 501,600 368,299 Total stockholders' equity (deficit) $ 19,885 219,457 As of May 31, 2012 we had $14,659 cash on hand and current liabilities of $461,389 (exclusive of convertible debt discount attributable to a beneficial conversion feature) such liabilities consisting of Accounts Payable, Notes Payable, Convertible Notes Payable, Amounts due to Affiliates / Others and Accrued Expenses. We feel we will not be able to satisfy its cash requirements over the next twelve months and shall be required to seek additional financing. We currently plan to raise additional funds primarily by offering securities for cash and acquiring existing veterinary clinics with the ability to generate cash flow to fund operations. About This Offering This offering relates to the resale of up to 37,640,314 shares of our common stock by Southridge which are the Put Shares that we will put to Southridge pursuant to the Purchase Agreement. The Put Shares included in this prospectus represent a portion of the aggregate shares issuable to Southridge under the Purchase Agreement. The 37,640,314 common shares to which this registration relates are calculated as approximately 33% of our public float as of June 1, 2012. On June 1, 2012, we entered into an equity purchase agreement with Southridge Pursuant to the Purchase Agreement: Southridge agreed to purchase from us, from time to time at our discretion (subject to the conditions set forth therein), for a period of up to 24 months commencing on the effective date of the Purchase Agreement up to $10,000,000 of our common stock . CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share(1) Proposed Maximum Aggregate Offering Price (2) Amount of Registration fee Common Stock, $0.001 par value per share 37,640,314 $ 0.0026 $ 97,865 $ 11.12 We are registering 37,640,314 shares of our common stock (the Put Shares ) that we will put to Southridge Partners II, LP ( Southridge ) pursuant to an Equity Purchase Agreement (the Purchase Agreement ), dated as of June 1, 2012 by and between Southridge and the Registrant. In the event of stock splits, stock dividends, or similar transactions involving the common stock, the number of shares of common shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended (the Securities Act ). In the event that adjustment provisions of the Equity Purchase Agreement require the registrant to issue more shares than are being registered in this registration statement, for reasons other than those stated in Rule 416 of the Securities Act, the registrant will file a new registration statement to register those additional shares of common stock. 1) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c) of the Securities Act on the basis of the average of the high and low prices of the common stock of the registrant as reported on the OTCQB Tier operated by OTC Markets Group, Inc. (the OTCQB ) on August 9, 2012 . 2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rules 457(c) under the Act. The offering price per share and aggregate offering price are based on the average of the high and low prices of the Registrant s Common Stock on August 9, 2012, as reported on the OTCQB . The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. On February 27, 2012, we entered into an agreement with Southridge whereby Southridge agreed to purchase from us, from time to time at our discretion (subject to the conditions set forth therein), for a period of up to 24 months commencing on the effective date of that agreement up to $10,000,000 of our common stock ( February Purchase Agreement ). The February Purchase Agreement was terminated On June 1, 2012. Pursuant to a registration rights agreement between us and Southridge, entered into in connection with the February Purchase Agreement, we agreed to file a registration statement for the resale of not less than the maximum number of shares of common stock allowable pursuant to Rule 415 under the Securities Act of 1933, as amended, of shares of common stock issuable under the February Purchase Agreement, within ninety days of February 27, 2012. We have consented that those registration rights may be applied to the Purchase Agreement and agreed to file a registration statement for the resale of not less than the maximum number of shares of common stock allowable pursuant to Rule 415 under the Securities Act of 1933, as amended, of shares of common stock issuable under the February Purchase Agreement, within ninety days of June 1, 2012. The purchase price for the shares of common stock sold under the Purchase Agreement will be equal to 91% of the average of the two lowest closing bid price of our common stock for the five (5) trading days immediately following the clearing date associated with the applicable Put Notice.. The maximum amount of common stock that Southridge shall be obligated to purchase with respect to any single closing under the Purchase Agreement will be the lesser of $250,000 or 250% of the average dollar trading volume of the Company s common stock for the 20 trading days immediately preceding the date on which we provide a put notice under the Purchase Agreement. On each Closing Date, the number of common shares then to be purchased by Southridge shall not exceed the number of such shares that, when aggregated with all other common shares then beneficially owned by Southridge or deemed beneficially owned by Southridge, would result in Southridge owning more than 9.99% of our common shares outstanding on such Closing Date. In the event that, during a Valuation Period, the Closing Price on any Trading Day falls more than twenty five percent (25%) below the average of closing trade prices for the five (5) trading days immediately preceding the date of our Put Notice (a Low Bid Price ), for each such Trading Day, the parties shall have no right and shall be under no obligation to purchase and sell one fifth (1/5th) of the Investment Amount (the dollar amount to be invested by Southridge to purchase Put Shares with respect to any Put) specified in the Put Notice, and the Investment Amount shall accordingly be deemed reduced by such amount. In the event that during a Valuation Period there exists a Low Bid Price for any two (2) Trading Days-not necessarily consecutive-then the balance of each party s right and obligation to purchase and sell the Investment Amount under such Put Notice shall terminate on such second Trading Day ( Termination Day ), and the Investment Amount shall be adjusted to include only one-fifth (1/5th) of the initial Investment Amount for each Trading Day during the Valuation Period prior to the Termination Day that the Bid Price equals or exceeds the Low Bid Price Capital Path Securities, LLC ( CPS ) was retained as the placement agent in connection with the Purchase Agreement. We agreed to pay CPS a cash placement fee equal to 5% of the gross proceeds of all cash received by us from the sale of our common shares to Southridge pursuant to the Purchase Agreement. We also paid to CPS as consideration for their services as the placement agent in connection with the February Purchase Agreement: (a) The amount of $6,000 (b) 3,000,000 of our common shares which were issued to Christopher E. Shufeldt and (b) 900,000 to CPS on March 14, 2012. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS DATED ____, 2012 ENTEST BIOMEDICAL, INC. 37,640,314 Shares of Common Stock This prospectus relates to the resale of up to 37,640,314 shares of our common stock, par value $0.001 per share, by Southridge Partners II, LP ( Southridge or ), which are Put Shares that we will put to Southridge pursuant to the Purchase Agreement. Southridge may also be referred to in this document as the Selling Security Holder. The Purchase Agreement with Southridge provides that Southridge is committed to purchase up to $10 million of our common stock. We may draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Purchase Agreement. The Put Shares included in this prospectus represent a portion of the shares issuable to Southridge under the Purchase Agreement. This portion was calculated as approximately 33% of the Company s public float as of June 1, 2012. Southridge is an underwriter within the meaning of the Securities Act in connection with the resale of our common stock under the Purchase Agreement. No other underwriter or person has been engaged to facilitate the sale of shares of our common stock in this offering. This offering will terminate twenty-four (24) months after the registration statement to which this prospectus is made a part is declared effective by the SEC. Southridge will pay us 91% of the average of the two lowest closing price of our common stock for the five (5) trading days immediately following the clearing date associated with the applicable Put Notice. We will not receive any proceeds from the sale of these shares of common stock offered by Selling Security Holders. However, we will receive proceeds from the sale of our Put Shares under the Purchase Agreement. The proceeds will be used for working capital or general corporate purposes. We will bear all costs associated with this registration. Our common stock is quoted on the OTCQB under the symbol ENTB. The shares of our common stock registered hereunder are being offered for sale by Selling Security Holders at prices established on the OTCQB during the term of this offering. On August 10, 2012 , the closing price of our common stock was $0.0029 per share. These prices will fluctuate based on the demand for our common stock. This investment involves a high degree of risk. You should purchase shares only if you can afford a complete loss. See Risk Factors beginning on page 9. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is____, 2012. Pursuant to the February Purchase Agreement, we became obligated to issue to Southridge a newly designated convertible preferred stock with a stated value of $50,000 convertible at the option of Southridge into shares of the Company s common stock at a conversion price equal to 70% of the lowest Closing Price for the five trading days immediately preceding a conversion notice. In order to satisfy this requirement, on March 13, 2012 we amended Article 4 of our Articles of Incorporation to authorize 200,000 shares of Non Voting Convertible Preferred Stock having a $1.00 par value. The Non Voting Convertible Preferred Stock is convertible at the option of the holder into shares of our common stock at a conversion price equal to seventy percent (70%) of the lowest Closing Price for the five trading days immediately preceding written receipt by us of the holder s intent to convert. Pursuant to the February Purchase Agreement, we became obligated to pay a fee to Southridge in the amount of $25,000, payable in cash or Non Voting Convertible Preferred Stock to cover Southridge s expenses in connection with the preparation of the Purchase Agreement and performance of its obligations thereunder. On March 27, 2012 we issued 75,000 shares of its Non Voting convertible preferred stock to Southridge in accordance with the terms of the February Purchase Agreement. At an assumed purchase price under the Purchase Agreement of $0.0027 (equal to 91% of the average closing bid price of our common stock of $0.003 for the five (5) trading days prior to August 9, 2012), we will be able to receive up to $103,443 in gross proceeds, assuming the sale of the entire number of shares of our common stock being registered hereunder pursuant to the Purchase Agreement. At an assumed purchase price of $0.0027 under the Purchase Agreement, we would be required to register additional shares to obtain the balance of $10,000,000 under the Purchase Agreement. No assurance may be given that the entire amount of $10,000,000 of our common stock which may be put to Southridge pursuant to the Purchase Agreement will be put to Southridge. The ability of the Company to put shares to Southridge pursuant to the terms and conditions of the Purchase Agreement is contingent on filing and maintaining effective one or more Registration Statements registering the shares to be put to Southridge under the Securities Act of 1933, as amended during the term of the Purchase Agreement. The total number of shares which would be required to be registered at an assumed purchase price of $0.0027 (equal to 91% of the average closing bid price of our common stock of $0.003 for the five trading days prior to August 9, 2012) is calculated to be 3,703,703,704 common shares. Our Certificate of Incorporation authorizes us to issue no more than 1,000,000,000 shares of common stock of which 223,492,927 are issued and outstanding as of August 9, 2012. The Company feels it is improbable that all $10,000,000 of our common stock which may be put to Southridge pursuant to the Purchase Agreement will be put to Southridge. We currently estimate that we will require an additional $6,369,500 to bring our proposed products to commercialization and an additional $2,600,000 in order to purchase a minimum of two additional veterinary clinics. To date, the Company s operations have not generated cash flow sufficient to fund our capital requirements and there can be no assurance given that the Company s operations will do so in the future. Neither the Purchase Agreement nor any rights or obligations of the parties under the Purchase Agreement may be assigned by either party to any other person. There are substantial risks to investors as a result of the issuance of shares of our common stock under the Purchase Agreement. These risks include dilution of stockholders, significant decline in our stock price and our inability to draw sufficient funds when needed. Southridge will periodically purchase our common stock under the Purchase Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to Southridge to raise the same amount of funds, as our stock price declines. There are substantial risks to investors as a result of the issuance of shares of our common stock under the Purchase Agreement. These risks include dilution of stockholders, significant decline in our stock price and our inability to draw sufficient funds when needed. Table of Contents Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained throughout this prospectus and is qualified in its entirety to the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all of the information that should be considered before investing in our common stock. Investors should read the entire prospectus carefully, including the more detailed
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to buy our ADSs. AdChina Ltd. Overview We operate a leading integrated internet advertising platform in China, according to research conducted in April 2011 by iResearch Consulting Group, or iResearch, a third-party market research firm. Our online platform reached 486 million monthly unique visitors in December 2011 according to a report issued in February 2012 by DCCI, an internet data search agency in China, and our mobile platform provided our advertisers with access to 249 million monthly unique visitors in December 2011. Our online publisher base comprised 409 publishers in China, including 20 of the top 50 websites in China based on rankings from Alexa.com, a third-party website, as of February 1, 2012. We provide advertisers with targeted nationwide access to Chinese consumers, and we enable publishers who use our platform to better monetize their traffic. Based on our industry knowledge, advertisers historically have had few options to reach a nationwide audience in China due to its highly fragmented media distribution system and underdeveloped advertising services sector. As consumers have increasingly migrated online, the wide range of activities they pursue across millions of websites has led to increasing diversification of user traffic, which we believe prevents advertisers from realizing the promise of internet advertising: targeted, nationwide consumer reach. As a result, internet advertising spending as a percentage of total advertising spending in China lagged behind consumer time spent online as a percentage of time spent on all media platforms. We believe that a lack of reliable, third-party tools for advertisers to measure their return on investment and for publishers to offer effectively targeted advertising solutions have further contributed to this lag in internet advertising growth. Our mission is to become the indispensable platform for internet advertising in China. We offer a differentiated value proposition to advertisers that enables them to achieve a higher return on investment by matching individual advertising campaigns to their target audiences across a variety of formats and access points, enabling advertisers to realize the interactivity and precision targeting capabilities of the internet at scale. In doing so, we also help participating publishers better monetize their traffic and improve the liquidity of their advertising inventory. As a result, we provide internet users with value-added advertising content that is tailored to their interests. Our integrated internet advertising platform comprises software and related technical support services that automatically deliver targeted advertisements from advertisers to websites or mobile apps or sites of publishers with whom we have contractual arrangements. Our platform effectively integrates advertisers with publishers and delivers advertisements across different ad formats and different types of internet access devices. The core component of our platform, our AdChina AdManager system, tracks available advertising space from publishers, processes orders from advertisers, analyzes audience data and matches advertisements to their target audience almost instantaneously across the entire range of our publisher base. We have extended the reach of AdChina AdManager system by providing a hosted demand platform for advertising agencies and advertisers and a separate hosted supply platform for internet publishers that operate online websites or mobile apps or sites addressing mobile device access. We derive substantially all of our revenues from the provision of internet advertising services and solutions. We believe that our differentiated value proposition has contributed to the rapid FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents increase in our advertisers, from 139 in 2009 to 264 in 2010 and 452 in 2011, at a three-year compound annual growth rate, or CAGR, of 80.3%. Our net revenues increased from US$10.8 million in 2009 to US$27.3 million in 2010 and US$50.7 million in 2011, at a three-year CAGR of 116.6%. Due to the significant cost of revenues and operating expenditures required to ramp up our business and operations at the early stage of development of our company, we incurred losses from continuing operations of US$2.2 million, US$2.0 million and US$18.6 million in 2009, 2010 and 2011, respectively. Our net losses reflected non-cash share-based compensation expenses in an aggregate amount of US$0.6 million in 2009, US$1.4 million in 2010 and US$21.2 million in 2011. Our Industry China had the second largest advertising market in Asia and the third largest in the world in 2010, according to a report issued in December 2011 by ZenithOptimedia, a media market analysis company, and internet advertising has emerged as a viable advertising channel in China as a result of a growing internet user base and increasing time spent online per user. In China, internet advertising represented 18.2% of the overall advertising market in 2010 and is estimated to have surpassed newspaper and become the second largest ad spending category in 2011. By 2013, total internet advertising spending in China is expected to reach US$11.8 billion, representing a three-year CAGR of 35.7%, according to ZenithOptimedia. Internet advertising mainly involves display advertising and search advertising. Brand advertising represents the vast majority of display advertising, spanning from static display ads to rich media ads to in-video ads. Performance-based advertising, mainly represented by search ads, delivers measurable internet advertising results to advertisers. Display advertising, unlike search, is monetized based on display time or advertising impressions delivered rather than user clicks or other user actions. We believe that brand advertising will continue to represent the majority of spending on internet advertising in China due to an emerging branding economy, which is fueled by rapid growth in disposable income for a significant portion of the Chinese population. In the meantime, new categories of sites, such as online video, social networking sites and microblogs, open up new possibilities for display advertising as they attract increasing internet traffic. However, internet advertising has not yet achieved its full potential. As internet usage has grown in China, online traffic has become more fragmented, which we believe makes it increasingly difficult for advertisers to reach their target audience. Based on our industry knowledge, advertisers have historically found it challenging to define and accurately measure the impressions actually delivered to target consumers. On the other hand, many mid- and small-sized publishers in China lack the scale or sales force on a standalone basis to adequately engage with large advertisers, and the sales forces of large publishers normally focus on their premium inventory. At the same time, there is an absence of reliable third-party audience analytics for publishers. We believe that few intermediaries provide deep audience insight or robust technology-driven internet advertising services or solutions and there is an opportunity for intermediaries who can provide broad access to advertising space across leading publisher websites and advertising formats with the technological expertise to target and deliver advertisements in real time. Our Strengths As we further discuss in "Business Our Strengths," we believe that the following competitive strengths contribute to our success and differentiate us from our competitors: platform scale driving strong network effects for advertiser brand exposure and publisher inventory monetization; end-to-end platform deeply embedded on both the demand side and the supply side; Table of Contents robust, proprietary technologies supporting our internet advertising platform; strategic positioning to collect consumer data and apply proprietary insights; and experienced management team with market knowledge and operational expertise. Our Strategies Our goal is to become the indispensable platform for internet advertising in China. Specifically, we plan to achieve this objective by pursuing the following strategies: attract new advertisers and increase per advertiser spend on our platform; deepen and expand our relationships with publishers; promote the adoption of our demand platform for advertising agencies and advertisers and our supply platform for publishers; extend the functionality of our integrated platform; and pursue strategic investments, acquisitions and alliances. Our Challenges Our ability to realize our business objective and execute our strategies is subject to risks and uncertainties, including the following: our limited operating history in a rapidly developing and evolving industry; our history of net losses; our ability to retain existing customers and publishers and attract new customers and publishers; the prospects for the continued development of the internet advertising industry; our ability to introduce new or enhanced services and solutions; and our ability to manage our growth. See
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+Summary Prospective investors are urged to read this prospectus in its entirety. We intend to commence operations in the business of mineral property exploration. To date, we have not conducted any exploration on our sole mineral property, the Portage Bay claim located in Rathbun Township in the Sudbury Mining District, Ontario. On December 10, 2009, we purchased this claim from Terry Loney for $10,000. Our objective is to conduct mineral exploration activities on the Portage Bay claim in order to assess whether it possesses economic reserves of copper, nickel and platinum group elements. We have not yet identified any economic mineralization on the property. Our proposed exploration program is designed to search for an economic mineral deposit. We were incorporated on June 23, 2009 under the laws of the state of Nevada. Our principal offices are located at 4759 Kester Avenue, Sherman Oaks, CA, 91403. Our telephone number is 310-780-1558. The Offering: Securities Being Offered Up to 2,800,000 shares of common stock. Offering Price The selling shareholders will sell our shares at $0.05 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price based upon the price of the last sale of our common stock to investors. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude when all of the 2,800,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144(k) or we decide at any time to terminate the registration of the shares at our sole discretion. In any event, the offering shall be terminated no later than two years from the effective date of this registration statement. Securities Issued And to be Issued 6,800,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information Balance Sheet December 31, 2011 December 31, 2010 (derived from audit) (derived from audit) Cash $ 2,457 $ 3,426 Total Assets $ 13,631 $ 13,426 Liabilities $ 24,092 $ 10,620 Total Stockholders Equity $ (10,461) $ 2,806 Statement of Operations From Incorporation on June 23, 2009 to December 31, 2011 (audited) Revenue $ 0 Net Loss $ (45,461)
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001476638_rackwise_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001476638_rackwise_prospectus_summary.txt
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+SUMMARY The following summary highlights information contained elsewhere in this prospectus. Potential investors should read the entire prospectus carefully, including the more detailed information regarding our business provided below in the "Description of Business" section, the risks of purchasing our common stock discussed under the "Risk Factors" section, and our consolidated financial statements and the accompanying notes to the consolidated financial statements. Unless the context indicates otherwise, all references in this registration statement to "Rackwise" "the Company," "we," "us" and "our" refer to Rackwise, Inc. and its subsidiaries. Overview We are a software development, sales and marketing company. We create Microsoft applications for network infrastructure administrators that provide for the modeling, planning and documentation of data centers. Our executive offices are currently located in Folsom, California, and we have a software development and data center in the Research Triangle Park in Raleigh, North Carolina. Our flagship Data Center Management (DCM) software product, Rackwise , is used by over 130 companies worldwide to track, manage, plan, optimize and provide cost analysis of IT infrastructure. Our product is a multi-layered software that provides a suite of solutions to managing the multiple dimensions of a company s IT infrastructure, including power consumption, power efficiency, carbon footprint, green grid and density requirements. Our product provides the functionality for optimizing a data center by locating servers with low CPU utilization, recognizing top power/space/heat consumption devices, and correlating those devices to the applications and business services they support. This improved reporting allows a company to plan data center expansions and reductions and equipment usage more energy efficiently and cost effectively. As reflected in our financial statements for the years ended December 31, 2011 and 2010, we have generated significant losses, which raise substantial doubt that we will be able to continue operations as a going concern. Our independent registered public accounting firm included an explanatory paragraph in their report for the years ended December 31, 2011 and 2010 on the accompanying financial statements describing conditions that raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. While our expectation is that our business strategy will begin to increase revenues and generate cash from operations, we may not be successful in implementing our business strategy. If we cannot continue as a going concern, our stockholders may lose their entire investment in our securities. Organizational History We were incorporated under the name MIB Digital, Inc., in Florida on September 23, 2009, to develop and operate an advertising and subscription supported content management platform. On August 24, 2010, pursuant to an agreement and plan of merger with our special purpose wholly-owned subsidiary, Cahaba Pharmaceuticals, Inc., a Nevada corporation ("Cahaba"), we merged with and into Cahaba, with Cahaba as the surviving corporation. The purpose of the merger was to re-domicile our company from Florida to Nevada, to change our corporate name and to effect a recapitalization. Cahaba was incorporated on August 20, 2010, for the sole purpose of effecting the merger, with an authorized capital stock of 300,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of "blank check" preferred stock, par value $0.0001 per share. In the merger, each share of common stock, par value $0.0001 per share, of MIB Digital, Inc. was automatically converted into eight and one-third (8 ) shares of common stock, par value $0.0001 per share, of Cahaba Pharmaceuticals, Inc. On July 8, 2011, in anticipation of a business combination with Visual Network Design, Inc., a Delaware corporation ("VNDI"), Cahaba merged with its newly formed, wholly-owned subsidiary, Visual Network Design, Inc., a Nevada corporation ("VNDI Nevada"). Upon the consummation of the merger, the separate existence of VNDI Nevada ceased and shareholders of Cahaba became shareholders of the surviving company named "Visual Network Design, Inc." On September 21, 2011, a wholly-owned Delaware subsidiary of the Company merged with and into VNDI, with VNDI as the surviving corporation (the "Merger"). In connection with the Merger, each share of VNDI common stock was cancelled and converted into the right to receive approximately 1.27 shares of our common stock and approximately 1.27 warrants, each to purchase one-half share of our common stock. As a result of the Merger, we acquired the business of VNDI, and continued the existing business operations of VNDI as a software development, sales and marketing company. On September 29, 2011, pursuant to an agreement and plan of merger, we merged with a newly formed, wholly owned subsidiary, Rackwise, Inc., a Nevada corporation. The sole purpose of the merger was to change our corporate name to "Rackwise, Inc." Business Developments As part of the execution of our business strategy, we have taken the following steps: We have divided the U.S. into five sales regions: Northeast, Southeast, North Central, South Central and West. Furthermore, we have targeted sales outside of the U.S. and have established a Latin America region. Each sales region will be staffed by an experienced, professional Regional Sales Director and a Regional Sales Engineer. To date, we have hired all six Regional Sales Directors and six Regional Sales Engineers. We have commenced the development and execution of a Professional Services organization to offer new services to our existing and prospective clients. The new service offerings will consist of more extensive training for our existing and new products, analysis and recommendation on how to optimize the management of the client s data center, and creation of Centers of Excellence. These Centers will concentrate on advanced training to help expedite the clients realizing maximum efficiency of their data centers while also meeting the standards published by the Green Grid (a collaborative organization committed to improving the resource efficiency of data centers and business computing ecosystems) for achieving Green Grid certification. We have appointed an Executive VP to supervise the program as well as hiring a Managing Principal Consultant. We have appointed a VP Strategic Partners to assist our sales program described above, who is in the process of developing multiple strategic relationships for us. These partners will be involved in reselling and supporting Rackwise products worldwide. To further our marketing and sales efforts, we have significantly revamped our website (www.rackwise.com). We have contracted two new professional relations firms to help us update and disseminate current information about us as well as publishing on our website, including information about new contracts for the sales of our products. We have entered into a series of agreements with Intel Corporation to effect a licensing model incorporating a standard license agreement to Intel together with Intel s standard feedback agreement calling for a collaborative exchange of information between us and Intel over an extended period to develop and implement innovative additions to our software in connection with Intel s current and future Data Center Infrastructure Management (DCiM) software platform needs. We discounted the fees payable by Intel under the license agreement. In exchange for our providing the licensed technology to Intel, we anticipate incorporating the additions, together with other functionality and features of the Intel DCM middleware product, in future revisions and iterations of our standard DCM product over time, beginning with our release scheduled for the second quarter of 2012. Although we expect Intel to provide us with feedback on our licensed technology, the agreements do not obligate Intel to provide us with products or information for evaluation. Further, there can be no assurance that our collaborative exchange with Intel will result in any innovative modifications to our product or that the functions or features of the Intel DCM middleware product will be effectively integrated into our future product and services. Intel has no further payment obligations under the agreements. See "DESCRIPTION OF BUSINESS – Intel Agreements." Capital Needs Our business strategy requires capturing additional market share and growing sales to achieve profitability. We expect that with the infusion of additional capital and with additional management we will be able to increase sales and professional services and expand the breadth of our product offerings through the following actions: Continue to add interfaces to our existing product offerings, which would make us a differentiator in the market. Establish industry partners, "value added resellers" (VARs), and strategic services partners to perform some of the services we are being asked to perform post sales cycles. Initiate specific new marketing efforts to coordinate and lead our initiatives for greater market recognition with special emphasis on contacting and educating industry analysts to spread the word of our capabilities. Expand the current sales model of one team to six teams covering six regions and build a vertical sales model to address data center centric industry segments. Expand our product offerings to include monitoring and managing the balance of our customer s IT infrastructure. As further discussed below under "Management s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources," due to our brief operating history and historical operating losses, our operations have not been a source of liquidity, and our primary sources of liquidity have been debt and proceeds from the sale of our equity securities in several private placements. Our current business plan requires us to raise additional capital in order to fund a rapid build-up of infrastructure. As a result, we expect revenue expansion will lag spending on investment in infrastructure, which will initially exacerbate our operating deficit and use of cash in operations. Based on our current forecasted sales and anticipated build-up of infrastructure, we believe that we do not have enough cash on hand to sustain operations for the next twelve months. Our ability to achieve or maintain profitability is subject to economic and competitive uncertainties that are largely outside of our control, including those associated with emerging enterprises. About This Offering This prospectus relates to the public offering, which is not being underwritten, of up to 40,803,384 shares of our common stock, consisting of 28,580,454 issued and outstanding shares of common stock and 12,222,930 shares of common stock underlying presently exercisable common stock purchase warrants, by the selling stockholders listed in this prospectus. The shares offered by this prospectus may be sold by the selling stockholders from time to time in the open market, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. We will receive none of the proceeds from the sale of the shares by the selling stockholders. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them. The number of shares being offered by this prospectus (including the shares issuable upon exercise of outstanding warrants) represents approximately 36.6% of our outstanding shares of common stock as of May 21, 2012. Summary Financial Information The following tables summarizes historical financial data regarding our business and should be read together with the information in the section titled "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included in this prospectus. Year Ended December 31, Three Months Ended March 31, 2011 2010 2012 2011 (unaudited) (unaudited) Statement of Operations Data Revenues $2,020,048 $2,608,809 $684,149 $536,475 Loss from Operations $(8,109,270 $(2,492,595) $(2,237,505) $(495,465) Net Loss $(8,880,725) $(4,089,658) $(2,229,115) $(899,127) Net Loss Per Common Share – Basic and Diluted $(0.17) $(0.10) $(0.02) $(0.02) Statement of Cash Flows Data Net Cash Used in Operating Activities $(4,968,228) $(1,155,071) $(1,656,637) $(105,481) Net Cash Used in Investing Activities $(201,724) $(249,726) $(213,140) $(3,188) Net Cash Provided by Financing Activities $5,736,029 $1,447,273 $1,446,501 $61,303 Cash, End of Period $613,443 $47,366 $190,167 $- At December 31, At March 31, 2011 2010 2012 2011 Balance Sheet Data Total Current Assets $899,957 $1,131,418 $552,105 $899,957 Total Assets $1,214,613 $1,431,708 $1,063,557 $1,214,613 Total Current Liabilities $4,844,830 $8,375,044 $3,415,995 $4,844,830 Total Liabilities $4,866,480 $8,503,887 $3,528,935 $4,866,480 Total Stockholders Deficiency $(3,651,867) $(7,072,179) $(2,465,378) $(3,651,867)
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001487920_usa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001487920_usa_prospectus_summary.txt
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+Prospectus summary This summary highlights selected information contained elsewhere in this prospectus. Because this section is only a summary, it does not contain all of the information that may be important to you or that you should consider before making an investment decision. Before making an investment decision, you should read this entire prospectus, including the information contained in the section entitled Risk Factors. You should read the following summary together with the more detailed information and the consolidated financial statements and the notes thereto included elsewhere in this prospectus. Except as otherwise indicated or required by the context, references in this prospectus to we, us, our, USA Synthetic Fuel Corporation, USASF or the Company refer to the combined businesses of USA Synthetic Fuel Corporation and its subsidiaries. Summary Our company USA Synthetic Fuel Corporation ( USASF or the Company ) is an environmentally focused alternative energy company pursuing clean energy solutions based on gasification and other proven Btu conversion technologies. USASF is a development stage company and, as of September 30, 2011, had $720 of cash on hand, no inception to date revenues, and there are substantial doubts about the Company s ability to continue as a going concern. We intend to develop, finance, construct, own and operate gasification, synthetic natural gas, and Fischer Tropsch liquid production facilities, to convert lower value, solid hydrocarbons such as coal, petroleum coke and biomass into higher value, environmentally cleaner energy sources. These solid hydrocarbons are one class of feedstock that may be used in gasification processes in order to produce synthetic gas. Other classes of feedstock that may be used as feedstock to produce synthetic gas include petroleum liquids, petroleum byproducts, asphaltenes, natural gas and other similar gases. For the purposes of this prospectus, hereinafter the terms solid hydrocarbon(s) , feedstock(s) , and solid hydrocarbon feedstock(s) are used interchangeably in the remainder of the prospectus. For this discussion, the terms lower value and higher value refer to the approximate market cost of the sources on a barrel of oil equivalent basis, which equals an equivalent energy content basis of 5.8 million British thermal units. For lower value feed sources like coal or petroleum coke, this market cost is in the range of approximately $4.87 - $10.14 per barrel of oil equivalent. As examples of higher value energy sources, synthetic natural gas has a current market cost of approximately $24.15 and projected market cost in 2018 of $39.96 per barrel of oil equivalent, and liquid transportation fuels have a market cost of approximately $142.61 per barrel of oil equivalent. A presentation of back up calculations for these values is presented below in Business: Our Company. The produced energy sources such as synthetic natural gas and liquid transportation fuels are considered to be environmentally cleaner compared with the coal or petroleum coke feed sources because they produce significantly reduced emissions of materials of concern such as sulfur oxides, nitrogen oxides, and particulates when burned compared with coal or petroleum coke. Sulfur and other contaminants in solid hydrocarbon create emissions when combusted. The United States Environmental Protection Agency has established New Source Performance Standards limits on coal combustion stack emissions of criteria pollutants, including sulfur, particulate and nitrous oxide. These limits are established with consideration of the age of the technology. Similarly, there are New Source Performance Standards limits on the combustion of natural gas in stationary combustion turbines. Also, the Environmental Protection Agency is increasingly tightening the limits on automotive emission (diesel fuel, for example has a current sulfur limit of 15 parts per million). In a catalytic manufacturing process for the manufacture of synthetic natural gas and synthetic liquid transportation fuels (also known as Fischer Tropsch fuels, FT Liquids, etc.), sulfur is an unacceptable poison that is harmful to the catalyst. Therefore, sulfur must be removed from the synthetic gas feedstock to the synthetic natural gas or synthetic liquid transportation fuel conversion unit to very low, single digit parts per billion levels before the synthetic gas is introduced into that process unit. Parts per billion is on the order of one thousand times lower than the parts per million allowed by current Environmental Protection Agency regulations. Consequently, it is inherent in the manufacturing process that synthetic fuel products will be environmentally superior to conventional fuels and certainly to the conventional combustion of fossil fuels. We believe this characterization is reasonable. An example of environmentally superior fuels was provided by Rentech, Inc. in a public presentation to the State of Wyoming, Office of the Governor, on April 14, 2005, entitled The Economic Viability of an FT Facility Using PRB Coals , where studies by National Renewable Energy Laboratory and Southwest Research Institute showed that automotive emissions of FT Diesel fuel significantly reduced: 42% less hydrocarbon, 33 % less carbon monoxide, 9 percent less NOx, and 28% less particulate matter compared to emissions from conventional petroleum based diesel fuel. A discussion of the lower emissions profile of a synthetic gas fueled power plant (the Wabash gasification facility) versus a traditional coal derived power plant also is included later in this prospectus (see Business: Gasification, SNG, Fischer Tropsch liquids, and IGCC production Technologies: Clean energy source of the disclosure). Based on the knowledge, expertise and operational experience of our technical and management team, as well as our focus on gasification technology as a business, we believe we have the team in place to become an experienced gasification and alternative energy company. The Company plans to utilize the knowledge, expertise and operational experience base of its management and technical team in addition to licensing third party technology rights in order to develop its projects in the United States and to market cost-competitive products such as synthetic natural gas, as well as electricity, and possibly hydrogen, diesel, and related products. The Company will seek to secure profitable off-take agreements and to operate its projects such that its product sales will produce attractive returns and cash flows, thereby creating shareholder value. USASF has entered into agreements and acquired major project and solid hydrocarbon energy assets to launch its integrated business strategy to control its solid hydrocarbon feed supply and costs, with flexibility in sourcing, to ensure continued low-cost production to satisfy sales commitments and create acceptable margins from its operations. The Lima Energy Project and the Cleantech Energy Project (both described more fully below) are being developed to produce a total of up to 38.6 million Barrels of Oil Equivalent ( BOE ) of synthetic natural gas annually, or 8.0 million BOE and 30.6 million BOE, respectively, as well as up to 516 megawatt of electric power from the Lima Energy Project. Our strategy is to be an integral part of United States energy policy aimed at energy independence while, at the same time, providing for the ethical stewardship of the earth and its resources and creating shareholder value. It is management s belief that we were among the first in the gasification and energy industries to advocate for carbon capture and storage of carbon dioxide at our facilities. While we cannot guarantee complete success in our carbon capture and storage plans, to the extent possible, we intend to bring pre-combustion carbon capture and storage technology to our projects in the United States. Our projects include: Lima Energy Project: On June 11, 2010, the Company entered into an agreement and acquired from Global Energy, Inc. ( GEI ), a related party, all of the outstanding stock of Lima Energy Company ( Lima Energy ), the project company for the Lima Energy Project. GEI is considered a related party to the Company since our executive officer and chairman of our Board of Directors, Harry H. Graves, is also an executive officer and is beneficial holder of 46% of the stock of GEI. In exchange for Lima Energy stock, the Company paid GEI $6.4 million which represents the book value of construction-in-progress to date, and GEI has retained a 50% equity interest in Gas 1, the first phase of the Lima Energy Project. Payment of this consideration was made with a senior secured note to GEI dated as of June 11, 2010, as amended (the Note ). The Note carried a 7% per annum accrued interest, which was payable at the first to occur of $400 million in Lima Energy financing, an equity offering by the Company of $75 million or more, or September 30, 2011. The Company negotiated with GEI to clear the Note balance as of the September 30, 2011 due date. GEI agreed to accept 1,004,356 shares of the Company s common stock to clear the Note balance and accrued interest. Accordingly, the Note has been paid in full as of September 30, 2011 and the security on Lima Energy Company has been released. The construction in progress is located on land owned by the City of Lima and will only become available for use by the Company when funding for the project is obtained and certain other conditions are met; therefore the entire investment in the asset is considered impaired by the Company s management. The Company has recognized an impairment charge of $6.4 million. Lima Energy has agreed that it will complete the project site purchase prior to engaging in any further construction activities at the project site. The Lima Energy Project will be developed in three phases: Gas 1, Gas 2 and Combined Cycle Gas Turbine, as described in more detail below. The project costs for these three phases of the Lima Energy Project are expected to be approximately $497.0 million (Gas 1), $1,020 million (Gas 2) and $627.3 million (Combined Cycle Gas turbine), for a total for all three phases of approximately $2.15 billion. Note that project costs include capital, engineering, procurement and construction ( EPC ) and other owner costs incurred up to commencement of operations (such as interest during construction and development fees), but do not include annual fixed or variable facility operations and maintenance costs, including the cost of purchasing solid hydrocarbon feedstock which itself reflects the cost of extraction and delivery of the solid hydrocarbon. The Lima Energy Project was fully permitted, the initial contracts awarded for certain site preparation work, and foundation work began in 2004 and 2005. The Lima Energy Project received a Permit to Construct from Ohio Environmental Agency (OEPA) in March 2002. The project also received a Certificate of Need and Environmental Compatibility from the Ohio Power Siting Board (OPSB), an arm of Public Utility Commission of Ohio (PUCO) in May 2002. The project was issued a Stormwater Construction permit by Ohio EPA in February 2005. These are the only permits affecting the ability of the project to engage in field construction. The project was issued a technology license for the gasification process by Gasification Engineering Corporation in April 2003, which was subsequently novated to ConocoPhillips upon their purchase of the technology in July 2003. As time and the project scope have evolved, we will modify the permits to reflect current regulatory requirements. The Lima Energy project issued a contract to Roberts & Schaefer to design and build the solid material handling portion of the facility in September 2004. Following design work, the project issued a contract to Industrial Construction Company, not a related party, in the third quarter of 2005 to construct the foundation for the Fuel Storage Building. Construction of the 100,000 square foot pile supported foundation was completed in the first half of 2006. During work on the foundation, the project evaluated Industrial Construction Company s performance and qualifications and awarded a design-build contract to them for the entire project. The design-build team consists of Industrial Construction Company plus two engineering firms, SSOE Group and Sega, Inc., none of which are related parties to USASF or GEI. The design-build team has advanced the engineering design and planning for the project, and regularly supported meetings and due diligence briefings with various financial institutions on an on-going basis. In addition to construction of the foundation, the Industrial Construction Company contract included site clearing and preparation, demolition of buildings and foundations remaining from earlier use on the 63 acre brownfield site. Industrial Construction Company, SSOE Group and Sega, Inc. are discussed more fully in Business; Project Descriptions; Lima Energy Project; Engineering, procurement and construction. Demolition was halted and Industrial Construction Company demobilized from field construction, but not engineering support, in the fourth quarter of 2006 pending availability of further financing. We expect to commence commercial operation of Gas 1 within approximately 37 months from the date of Gas 1 project financing and of Combined Cycle Gas Turbine within approximately 24 months from date of that project financing. Successfully financing these two phases will enable us to resume field work on both while facilitating financing for Gas 2. The Lima Energy Project has been seeking financing for the project since 2006. The economic downturn commencing in 2007 has provided challenging circumstances for the project financing. However, management is attempting to secure financing for the project in 2012, although we acknowledge that this is not certain, especially in light of the required financing which has not been received. We can give no assurances that such funding will be secured in 2012 or at all. Cleantech Energy Project: This project is being developed by our subsidiary, Cleantech Energy Company. The project cost for this Cleantech Energy Project is expected to be approximately $2.3 billion. Note that project costs include capital, engineering, procurement and construction ( EPC ) and other owner costs incurred up to commencement of operations (such as interest during construction and development fees), but do not include annual fixed or variable facility operations and maintenance costs, including the cost of purchasing solid hydrocarbon feedstock which itself reflects the cost of extraction and delivery of the solid hydrocarbon. Financing for this project has not yet been secured. The Cleantech Energy Project will be located in Wyoming, and we plan to use the energy asset of approximately 1.02 billion BOE of solid hydrocarbons. On June 18, 2010, Cleantech Energy Company purchased all of the right, title and interest in and to the energy asset, and all solid hydrocarbon BOE contained therein, and all other rights in and to the energy asset, including but not limited to the rights to produce the solid hydrocarbon from the property for commercial use from Interfuel E&P Ltd. pursuant to the Barrel of Oil Equivalent Energy Purchase & Sale Agreement between Interfuel E&P Ltd, an unrelated party, and Cleantech Energy Company. Interfuel E&P Ltd. is a private company with stockholders from Europe, North America, and Asia Pacific regions, focused on solid hydrocarbon energy resource transitions worldwide. Current focus is in China, U.S. Australia, European, and South American markets. Mr. Graves, the Company s Chairman and CFO, is a 17% shareholder in Interfuel E&P Ltd. This solid hydrocarbon BOE energy asset is located adjacent to Cleantech Energy s proposed Cleantech Energy Project, an ultra clean Btu conversion project that is being designed to produce 30.6 million BOE/yr of pipeline quality SNG and capture and fully utilize the CO2 produced during the SNG manufacture. The Company believes this solid hydrocarbon energy asset consists of over 700 million gross tons and over 400 million net tons of Powder River Basin coal. Cleantech Energy Company issued 714,041 shares of its no par value preferred stock and assigned an aggregate value of $1.00 for the shares issued. In future periods when the BOE asset is utilized in the gasification process, Cleantech Energy Company will record an expense of $0.70 per BOE with a corresponding increase in the Company s paid in capital. Once commercial operations have begun, the preferred stock will earn a 5% annual dividend, commencing on the commercial operations date, payable on a quarterly basis. Annual redemptions of preferred stock will be dependent on the net income of Cleantech Energy Company. Provided there is net income in a given year, Cleantech Energy Company has the option to redeem such amount of preferred shares that is equal to not less than 7% and not more than 10% of net income in that year. Any preferred stock remaining after 20 years from the date of commercial operations may either be redeemed at that time, or, at the option of Cleantech Energy Company, may be converted to Cleantech Energy Company s common shares, according to this formula: for every one percent (1%) of the original estimated value of preferred shares (1,020,058,000 BOE X $.70=$714,040,600) that is remaining at that time, Interfuel will be entitled to one-half of one percent (0.5%) of common shares then issued and outstanding in Cleantech Energy Company. Additionally, Cleantech Energy will pay $70 million to Interfuel upon receipt of financing and start of construction for the proposed Cleantech Energy Project facility and related solid hydrocarbon BOE production. In the event Cleantech Energy Company does not commence construction of the Cleantech Energy Project for any reason other than willful misconduct by June 18, 2012 (or, if extended for one year, by June 18, 2013), Interfuel E&P Ltd. may terminate the contract resulting in an unwinding of the transaction pursuant to the Barrel of Oil Equivalent Energy Purchase & Sale Agreement whereby Cleantech Energy Company would re-convey the energy asset to Interfuel E&P Ltd., which then would return the preferred shares to Cleantech Energy Company. While we believe the parties intend to mutually extend the agreement if necessary, we can give no assurances of that or that the construction of the Cleantech Energy Project will commence by this deadline and, as a result, we may not be able to receive commercially feasible quantities of the solid hydrocarbon which may have a negative impact on this project as discussed below. We do not own proven or probable reserves in connection with any of our projects nor do we know if it is commercially feasible to receive a sufficient quantity of BOE from our solid hydrocarbon energy asset to support the development and operation of our Cleantech Energy Project. Construction of the Cleantech Energy Project will depend, in part, upon our confirmation that it is economically feasible to extract a sufficient quantity of BOE from the solid hydrocarbon energy asset and upon future delivery of the solid hydrocarbon energy asset to support the development and operation of that project. If we determine that we will be unable to extract a sufficient quantity of BOE from the energy asset or if we are unable to receive a sufficient quantity of solid hydrocarbons from this energy asset to justify the construction of the Cleantech Energy Project, we may decide to redesign, relocate, develop alternate feedstock supplies, delay, or elect not to proceed on the development of this, or another, project. Furthermore, if we determine that it is not commercially feasible to receive our solid hydrocarbon energy asset, we may be required to write off the value of the asset or to record an impairment or other charge on our consolidated financial statements that could have a material adverse effect on our business, financial condition and results of operations. Cleantech Energy Company plans to engage a contract production company to permit, finance, own and operate a facility to extract the solid hydrocarbon and deliver it to Cleantech Energy Company. The third party solid hydrocarbon production operation, once permitted by the State of Wyoming, will essentially be a surface mining operation. There are three seams of solid hydrocarbon, each overlain by overburden soil of varying depths ranging from zero to over 100 feet. The method and sequencing of overburden removal and stockpiling will be developed by the production company and described in detail in its application to the State of Wyoming. While the initial operation of the facility will utilize the shallowest seam of coal, the production plan will seek to avoid or minimize repeated handling of overburden, and to optimize production of all seams in a given area methodically and optimally across the over 8600 acre leasehold. As the facility currently is planned to be located at a suitable location within the leasehold site area, transport of solid hydrocarbon to the facility will most likely be by conveyor, backed up by large capacity truck, as appropriate. Our current plan calls for feedstock to be delivered into covered structures in accordance with state requirements, for weather protection and to facilitate blending for optimum feedstock composition. We have not yet identified or engaged a contract production company to permit, finance, own and operate a facility to extract the solid hydrocarbon and deliver it to the Cleantech Energy Project. Preliminary discussions with potential production companies have indicated an estimated extraction cost of between $7.50 and $10.00 per ton for the Powder River Basin coal of the solid hydrocarbon energy asset. This is consistent with the $9.23 per ton and $10.68 per ton costs for extraction of Powder River Basin coal as reported by Arch Coal, Inc. in its press releases announcing its results for the second quarter of 2010 and third quarter of 2011, respectively(52, 53). This is an estimate only, and we cannot guarantee that the extraction costs we incur will be consistent with this estimate. The Cleantech Energy Project is being designed to produce 30.6 million BOE per year of pipeline quality synthetic natural gas and to capture and fully utilize the carbon dioxide produced during the synthetic natural gas manufacture. Engineering, technology licensing, and permit planning for this facility are progressing as described below and elsewhere in this prospectus. Gasification Engineering Corporation ( GEC ), a related party, is leading the development effort with respect to technical and project tasks. GEC is considered a related party because our executive officer and chairman of our Board of Directors, Harry H. Graves, is also the chairman and is the sole shareholder of GEC. The following list of development tasks have been completed, are in draft, or otherwise in progress. A Draft License Agreement between Cleantech Energy Company and a confidential gasification technology provider, which is not a related party to either USASF or GEI. We believe this agreement will be ready to execute upon Cleantech Energy Company funding, although we can give no assurances that this will occur and may find it necessary to locate an alternative gasification technology supplier. A Draft Technology Support Agreement between Cleantech Energy Company and a confidential gasification technology provider which , which we believe will also be ready to execute as a companion to the license agreement, although we can give no assurances that this will occur and may find it necessary to locate an alternative gasification technology supplier. This document provides for long-term support during design, construction, commissioning and start-up; with the intent of ensuring successful operations. A confidential gasification technology provider has submitted a technical description of its scope of supply, to facilitate design. GEC has begun discussions with a firm to provide general contracting and steel fabrication services for the Cleantech Energy Project. GEC issued a request for proposal to its permitting consultant, and has received the requested proposal for development of a permit application package for the facility. The three key elements of this effort are the air permit, the industrial siting permit and water rights. Preparation of these applications is estimated to require six to nine months. Normal agency approval and public comment periods are in the range of 9-12 months. Permitting is therefore approximately a one and one-half year process, following notice to proceed for the consultant. Based on data provided by a confidential gasification technology provider in its scope of supply, GEC has developed a process material balance and solid hydrocarbon feedstock requirement analysis for the complete facility that will support the current quantity design production of synthetic natural gas. GEC has drafted a preliminary Cleantech Energy Development Plan for the facility, to facilitate design and permit preparation activities. This will be continually refined as project development continues. GEC has prepared a configuration and major equipment analysis to facilitate engineering activities. Based on information provided by a confidential gasification technology provider, GEC has prepared a preliminary capital and operating cost estimate for use in the pro forma economic analysis. These will be refined as further development occurs. GEC has prepared a manpower plan for the Cleantech Energy facility, including preliminary wage and benefit analysis, and is comparing these to standard US Bureau of Labor Statistics for the Wyoming Region. These will be refined as project development continues. GEC has begun drafting a training plan, to ensure timely hiring and training of operators prior to commissioning, start up and operation of the facility. Providing a specific timeline at this time is not feasible until sufficient funding is made available to support the gasification technology provider process design tasks, and for GEC to engage the engineer and permitting consultant to enable development of the permit applications. The technologies Gasification processes, methanation processes for production of synthetic natural gas, catalytic Fischer Tropsch processes, and Integrated Gasification Combined Cycle production processes are proven processes. Gasification has been in world-wide commercial use for more than 50 years, (1), (2) and world gasification capacity has grown to 56,238 megawatt thermal of synthetic gas output.(3) In its 2004 Survey, the Department of Energy stated, the reason for this long-term and continuing growth is clear: modern, high temperature slagging gasifiers have the ability to convert low value feedstocks into higher value products - chemicals, fuels and electricity - while meeting the most demanding environmental standards for air emissions, solids, water use and carbon dioxide removal from the product gas. (4) By converting low cost, solid hydrocarbon feeds into higher value products, these technologies have distinct cost advantages and pricing stability over traditionally sourced liquid or gas fuels, such as petroleum derived fuels or natural gas. According to the United States Energy Information Administration s 2010 Annual Energy Outlook, the average price of United States coal is expected to decline slowly from $1.55 per million British thermal units in 2008 to $1.44 per million British thermal units in 2035, for an average decline of 0.3 percent per year over the entire period.(5) During the same period, the price of Western United States coal is expected to increase slowly by approximately 0.5 percent per year from $0.80 per million British thermal units in 2008 to approximately $1.00 per million British thermal units in 2035.(6) According to New York Mercantile Exchange projections as of May 5, 2011,(7) the market price of natural gas is expected to range between $5.43 and $7.19 per million British thermal units from 2013 to 2019, a range higher than the projected cost to produce synthetic natural gas via our gasification and synthetic natural gas production technologies. Gasification products represent an economic alternative to the historically high and volatile costs of liquid and gas-based fuel sources, particularly natural gas. These technologies are flexible and have been able to convert different lower value solid hydrocarbon fuel sources with relatively stable price structures into various higher value energy products, which are environmentally superior to the original fuels. The produced energy sources such as synthetic natural gas and liquid transportation fuels are considered to be environmentally superior compared with the coal or petroleum coke feed sources because they produce significantly reduced emissions of materials of concern such as sulfur oxides, nitrogen oxides, and particulates when burned compared with coal or petroleum coke. We believe that the most significant application of gasification is the conversion of coal and petroleum coke into alternate energy sources at costs that compare favorably to current market prices for natural gas. Of equal importance is our belief that gasification projects address the environmental concerns associated with traditional carbon-based fuel sources, particularly coal. The environmental benefits result from the capability to produce energy with extremely low sulfur oxides, nitrogen oxides, and particulate emissions compared to burning coal and other solid fuels in conventional boilers. Gasification also addresses concerns over the atmospheric buildup of carbon dioxide. Through gasification and downstream gas cleanup processes, we believe that carbon dioxide can be captured more cost-efficiently than in conventional coal power systems. The carbon dioxide then can be compressed and injected into deep saline aquifers or other secure geologic formations or used for Enhanced Oil Recovery projects. Due to the abundant domestic supply of solid hydrocarbons such as coal, these technologies represent a potentially large scale alternative to conventional natural gas and power generation. The United States Energy Information Administration estimates, as of January 2008, that recoverable coal reserves in the United States are 262.7 billion tons.(8) Based on current annual production of nearly 1.1 billion tons,(9) the United States has at least an approximate 250-year supply of coal. Renewable feedstock, such as biomass and municipal waste, are readily available in the United States as well. We believe that development of these domestic resources in an environmentally responsible format is an essential element of our national energy goal of reducing dependence on foreign sources of energy. Our markets We intend to sell pipeline quality synthetic natural gas into the domestic natural gas market. We believe the production of hydrogen from the gasification of solid hydrocarbon will have ready acceptance in the emerging automotive and fuel cell markets and we may decide to produce and sell hydrogen in the future if this market develops further. Prospectively, we also may produce and sell ultra clean Fischer Tropsch liquids (i.e. diesel, gasoline and jet) into the transportation fuels markets, especially targeting the Department of Defense supply requests. Additionally, we intend to sell electricity, derived from co-production of these energy products, into power markets. Natural gas is an abundant, clean-burning fuel used primarily as a fuel for residential use (heating, air conditioning, cooking, etc), to produce chemicals, to generate electricity, and to heat buildings. Our business strategy Our goal is to be the leader in the development, construction, ownership and profitable operation of environmentally responsible gasification and synthetic natural gas production and integrated gasification combined cycle facilities in the United States. We believe that development of domestic solid hydrocarbon resources in an environmentally responsible format is an essential part of our national energy goal of reducing dependence on foreign sources of energy. In order to achieve this goal, we intend to: Finance and complete our near-term major gasification projects. Operate our facilities to maximize the environmental benefits of the gasification process. Implement effective carbon capture and storage systems. Enter into long-term off-take agreements and commercial merchant opportunities. Utilize the knowledge, expertise and operational experience of our management and technical team in addition to licensing third party technology rights in order to bring our projects to commercial operation. Leverage our fuel sourcing capabilities to efficiently capitalize on the feedstock flexibility of our projects. Expand our commercial product offerings over time to capitalize on the conversion flexibility of our gasification facilities. Develop, construct, own and operate additional gasification and synthetic gas production projects, including large scale gasification facilities to produce synthetic natural gas, electricity and other products. Competitive strengths We believe the gasification and synthetic natural gas production technologies the Company intends to utilize together with the knowledge, expertise and operational experience of our management and technical team give us several potential competitive strengths in the natural gas and electricity markets, including the following: We believe our management and technical team has significant knowledge, expertise and operational experience of gasification facilities, has been instrumental in the advancement of gasification and synthetic natural gas production technologies and has over 300 years of combined experience in the development, construction, ownership and operation of gasification and other energy facilities. We have arrived at this figure by adding up the years of relevant industrial knowledge, expertise and operations of USASF personnel and personnel we will have direct access to from Global Energy as needed. As some of our personnel have peripheral experience, their years of experience have not been included. We have two gasification and synthetic natural gas production projects currently under development, the Lima Energy Project (in 3 phases) and the Cleantech Energy Project. Our management believes the Lima Energy Project represents one of the earliest commercial projects to receive the permits necessary to begin construction work on a gasification facility. Our projects will use proven technologies. Our projects are being equipped to capture the carbon dioxide produced in the pre-combustion stage, while being designed to allow us to implement technology to separate and isolate carbon dioxide in the post-combustion stage from combustion exhaust streams. Our projects are being designed to produce synthetic natural gas that we believe will provide cost advantages over traditionally sourced natural gas. Our projects are being designed to produce environmentally superior fuels compared to the combustion of coal or petroleum coke, because our fuel products produce significantly reduced emissions of materials of concern such as sulfur oxides, nitrogen oxides, and particulates when burned compared with coal or petroleum coke. Our projects are being designed to flexibly convert a broad and dynamic range of energy sources, including renewables, into a variety of different fuel outputs. Our projects are able to run on a variety of abundant domestic resources, such as coal, petroleum coke and renewables. We have acquired a 1.02 billion BOE energy asset which we plan to use for our projects.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001498286_plaster_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001498286_plaster_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..034f705d08dd10dc62a8ccde2206addcf513791e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001498286_plaster_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our, us or Plaster refer to Plaster Caster, Inc., unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. Corporate Background Plaster Caster, Inc. was incorporated on April 17, 2007 under the laws of the State of Michigan. From the date of our formation until May 1, 2010 we did not have any business activity except for the development of our website and organizational activities. We do not have revenues, have minimal assets and have incurred losses since inception. We are a development-stage company. We currently have no employees other than our officer who is also our sole director. We have never intended and do not intend to be a blank check company. We have a specific business plan and do not intend to engage in any merger, acquisition or business reorganization with any entity. Our auditors have issued a going concern opinion. This means that that there is substantial doubt that we can continue as an ongoing business for the next twelve months. Although we do not currently maintain a physical office, our mailing address is 1000 Country Club Road in Ann Arbor, MI 48103 which is a residential home owned by our majority shareholder, Barton PK, LLC and our telephone number is 734-719-0867. Our website address is www.bidforjets.com. Information contained on our website, or which can be accessed through the website, does not constitute a part of this registration statement. The Offering Securities offered: 178,000 shares of common stock, par value $0.0001 per share Offering price : The selling shareholders purchased their shares of common stock from us at $0.10 per share and will be offering their shares of common stock at an arbitrarily determined price of $0.15 per share, which includes an increase, from the price at which it was purchased. The shares will be offered at the fixed price of $0.15 per share for the duration of this offering. The selling shareholders are underwriters, within the meaning of Section 2(11) of the Securities Act, and as such, are subject to the prospectus delivery requirements of the Securities Act. We have agreed to bear the expenses relating to the registration of the shares for the selling shareholders. Shares outstanding prior to offering: 678,000 shares of common stock. Shares outstanding after offering: 678,000 shares of common stock. One of our primary shareholder currently owns 73.7% of our outstanding common stock. As a result, it has substantial control over all matters submitted to our shareholders for approval. Market for the common shares: There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the FINRA for our common stock to eligible for trading on the OTC Bulletin Board.We do not yet have a market maker who has agreed to file such application. There is no guarantee that our common stock will be eligible for trading or quoted on the OTC Bulletin Board. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling shareholders. We have agreed to bear the expenses relating to the registration of the shares for the selling shareholders. Going Concern Considerations: The Company has a net loss of $8,414 for the year ended December 31, 2011 and a net loss of $10,466 from April 17, 2007 (inception) through December 31, 2011. The ability of the Company to continue as a going concern is dependent on management's plans which include raising additional funds for further implementation of the Company s business plan and continuing to raise funds through debt or equity raises. The Company will likely rely upon related party debt or equity financing in order to ensure the continuing existence of the business. We currently do not have in place any arrangements or plans to obtain any financing. Although our officers and directors have orally agreed to lend us funds if capital is required for the operations of the Company, there is no guarantee that our officers and directors will lend us sufficient funds to adequately fund operations. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001502749_tiaa-fsb_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001502749_tiaa-fsb_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001502749_tiaa-fsb_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001504136_liquid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001504136_liquid_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001504136_liquid_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001506742_texas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001506742_texas_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6e5e653a3da52a6ce57422b9fb5f7f7deed57cc6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001506742_texas_prospectus_summary.txt
@@ -0,0 +1,234 @@
+Summary
+ This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. The terms "Inka Productions" "we," "us" and "our" as used in this prospectus refer to Inka Productions Corp.
+ We are a development stage company. We do not have revenues. We have minimal assets, and have incurred losses since inception. We intend to commence business operations by producing and performing traditional Peruvian dances both in Peru and the United States. Peruvian music consists of sounds from Andean panpipes and colorful Inca dancers. This unique musical tradition blends Spanish, indigenous, and especially African influences into a dynamic, percussive dance style with amazing character and energy.
+ 
+
+ There are several types of Peruvian dances. The primary focus of our shows will be to incorporate the following dances into our performances:
+ 
+ Festejo a dance of celebration, which includes a competition between men;
+ 
+ Lando slower tempo dance, derived from matrimonial dance with Angloan roots;
+ 
+ Zamacueca heavily Spanish influenced version of the Lando; and
+ 
+ Alcatraz tells a humorous story with two dancers trying to light a piece of cloth on their back ends, or avoid being lit.
+ 
+
+ We have no revenues, have achieved significant losses since inception, have had only limited operations and have been issued a going concern opinion by our auditors. We have incurred a net loss of $22,816 since March 15, 2010 (date of inception) to October 31, 2011 and a net loss of $9,627 for the year ended October 31, 2011. Our significant expenses from inception (March 15, 2010) to October 31, 2011 consist of $21,380 for professional fees and $1,436 for office and general expenses. As of January 14, 2012 , we have cash on hand in the amount of $9,555. We intend to generate revenue mainly through ticket sales from our performances as well as fees earned from people hiring our dancers to perform (i.e. private performances). We have a monthly burn rate of approximately $400. At present, our current capital will allow us to last another 23 months without obtaining any additional funding. We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. We estimate the costs of our training program which we will be the first step of our business plan that we need to compete will be $80,000. Therefore, we will need to raise at least an additional $70,445 in additional funds to be able to continue our operations and execute our business plan and attempt to make our business profitable. To date, we have not yet taken any steps to secure these additional funds and currently have no plans to do so. We intend to seek this additional financing once we become a publicly traded entity; however, there is no guarantee that we will ever become publicly traded or that the financing we need will be available when needed. Even if this financing is available, it may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences or other terms. Our inability to obtain financing will inhibit our ability to implement our development strategy, which could require us to diminish or suspend our operations and possibly cease our operations.
+ 
+ We were incorporated on March 15, 2010 under the laws of the state of Nevada. Our principal office is located at IV Etapa Pachacamac, MZ H2 Lot 31 Barrio 2, Sector 1, Villa el Salvador, Lima, Peru. Our telephone number is 886 963 080 887.
+ 
+ 
+ 
+ 5 
+ 
+
+ The Offering: 
+ Securities Being Offered 
+ Up to 3,000,000 shares of common stock. 
+
+ Offering Price 
+ The selling shareholders will sell our shares at $0.03 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined the offering price arbitrarily by adding a $0.029 premium to the last sale price of our common stock to investors. 
+
+ Terms of the Offering 
+ The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. 
+
+ Termination of the Offering 
+ The offering will conclude when all of the 3,000,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. In any event, the offering shall be terminated no later than two years from the effective date of this registration statement. 
+
+ Securities Issued And to be Issued 
+ 8,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. 
+
+ Use of Proceeds 
+ We will not receive any proceeds from the sale of the common stock by the selling shareholders. 
+
+ Market for the common stock
+ There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-the-Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to become eligible for quotation on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so.
+
+ 
+ 
+ 
+ 6 
+ 
+
+ Summary Financial Information 
+ The following financial information summarizes the more complete historical financial information at the end of this prospectus.
+ 
+ 
+ October 31, 2011 (Audited)
+ 
+ As of October 31, 2010
+ (Audited)
+
+ Balance Sheet 
+ 
+ 
+ 
+ 
+
+ Total Assets 
+ $
+ 7,903
+ $ 
+ 1,312
+
+ Total Liabilities 
+ $
+ 27,719
+ $ 
+ 11,501
+
+ Stockholders Deficit 
+ $
+ (19,816)
+ $ 
+ (10,189)
+
+ 
+ 
+ For the year ended October 31, 2011 (Audited)
+ 
+ Results of operations from March 15, 2010
+ (date of inception) to
+ October 31, 2011 (unaudited)
+
+ Income Statement 
+ 
+ 
+ 
+ 
+
+ Revenue 
+ $
+ -
+ $ 
+ -
+
+ Total Expenses 
+ $
+ 9,627
+ $ 
+ 22,816
+
+ Net Loss 
+ $
+ (9,627)
+ $ 
+ (22,816)
+
+ 
+ 
+ Risk Factors 
+ 
+ An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
+ RISKS RELATED TO OUR BUSINESS
+ OUR LACK OF OPERATING HISTORY MAKES IT DIFFICULT FOR US TO EVALUATE OUR FUTURE BUSINESS PROSPECTS AND MAKE DECISIONS IN IMPLEMENTING OUR BUSINESS PLAN. YOU ARE UNABLE TO DETERMINE WHETHER WE WILL EVER BECOME PROFITABLE, WHICH INCREASES YOUR INVESTMENT RISK.
+ We did not begin operations until March 15, 2010. We have no operating history. Our business plan is speculative and unproven. There is no assurance that we will be successful in executing our business plan or that, even if we successfully implement our business plan, we will ever generate revenues or profits, which makes it difficult to evaluate our business. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues, or expenses. If we make poor operational decisions in implementing our business plan, we may never generate revenues or become profitable or incur losses, which may result in a decline in our stock price. 
+ 
+ 
+ 7 
+ 
+
+ WE HAVE NOT CONDUCTED A FEASIBILITY STUDY TO DETERMINE THE POSSIBLE MARKET FOR THE KIND OF DANCE ENTERTAINMENT THAT WE INTEND TO PROVIDE.
+ We did not conduct a feasibility study to help determine the kind of dance entertainment that we intend to provide, As a consequence, it is difficult, to forecast the market we intend on entering. Because of this uncertainty, we may never generate revenues or becomeprofitable or incur losses, which may result in a decline in our stock price.
+ THERE IS A VERY LIKELY POSSIBILITY THAT A MORE WELL CAPITALIZED FIRM COULD HIRE OUR DANCERS AWAY FROM US OR HIRE BETTER DANCERS THAN THE ONES WE ARE ABLE TO.
+ We are susceptible to losing our dancers to rival and competing firms that are better capitalized than us. This will put us in a very precarious position, as we would need to begin the recruitment process all over again, as well as provide the proper and training. We may not be able to replace the dancers we lose with dancers of similar skills, abilities and qualifications.
+ Because of our lack of financing, we may not be able to hire the best dancers available. Other firms that are better capitalized will be able to outbid us for their services and provide a greater financial incentive for the dancers to work for their company, rather than ours.
+ WE ARE AN UNDERCAPITALIZED FIRM, THUS WE MAY LACK SUFFICIENT FUNDS FOR EFFECTIVE ADVERTISING.
+ We may not have the sufficient funds for effective advertising, which may hinder our ability revenues or become profitable. This would result in a decline in our stock price. Without effective advertising, our main source of revenue, ticket sales, will suffer greatly, as awareness and promotion of our shows will be very minimal. 
+ THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE, AS A GOING CONCERN, AS A RESULT OF OUR LACK OF REVENUES AND FINANCIAL RESOURCES, AND IF WE ARE UNABLE TO GENERATE SIGNIFICANT REVENUE OR SECURE FINANCING, WE MAY BE REQUIRED TO CEASE OR CURTAIL OUR OPERATIONS.
+ Our lack of operating history and financial resources raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations. If we do not or commence our operations, secure financing, and related activities or if we do not secure funding to implement our business plan, we estimate current available financial resources will sustain our operations only through the next few months, and then only if continued funding by the management of the company.
+ Because we will need additional capital to implement our business plan and may not be able to obtain sufficient capital, we may be forced to limit the scope of our operations, and our revenues may be reduced.
+ In connection with implementing our business plans, we will experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including the following:
+ -our profitability;
+ -our ability to secure financing;
+ -our ability to generate revenues; and
+ -our ability to attract and retain customers.
+ 
+ We cannot assure you that we will be able to obtain capital in the future to meet our needs. We have no sources of financing identified. If we cannot obtain additional funding, we may be required to:
+ -limit our ability to implement our business plan;
+ -limit our marketing efforts; or
+ -decrease or eliminate capital expenditures.
+ 
+ Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our Common Stock. Any additional financing may not be available to us, or if available, may not be on terms favorable to us.
+
+ WE ARE A DEVELOPMENT STAGE COMPANY THAT HAS LIMITED OPERATING HISTORY AND HAS EARNED NO REVENUES. 
+ Since our inception, we have devoted our activities to the following: developing our business plan, determining the market for our services, developing a business marketing plan and capital formation. We have generated no revenues since inception. There is substantial doubt about our ability to continue, as a going concern, over the next twelve months. We intend to generate revenue mainly through ticket sales from our performances. The Company is in the initial development stage and has incurred losses since inception totaling $22,816 through October 31, 2011. 
+ 
+ 8 
+ 
+
+ 
+IF ROXANA GLORIA CANDELA CALIXTO, OUR SOLE OFFICER, SHOULD RESIGN OR DIE, WE WILL NOT HAVE A CHIEF EXECUTIVE OFFICER. THIS COULD RESULT IN OUR OPERATIONS SUSPENDING, AND YOU COULD LOSE YOUR INVESTMENT.
+ 
+ We depend on the services of our sole officer and director, Roxana Gloria Candela Calixto, for the future success of our business. The loss of the services of Ms. Calixto could have an adverse effect on our business, financial condition and results of operations. If she should resign or die we will not have a chief executive officer. If that should occur, until we find another person to act as our chief executive officer, our operations could be suspended. In that event it is possible you could lose your entire investment. We do not carry any key personnel life insurance policies on Ms. Calixto and we do not have a contract for her services. 
+ 
+
+ BECAUSE WE HAVE ONLY ONE OFFICER WHO HAS NO FORMAL TRAINING IN FINANCIAL ACCOUNTING AND MANAGEMENT, WHO IS RESPONSIBLE FOR OUR MANAGERIAL AND ORGANIZATIONAL STRUCTURE, IN THE FUTURE, THERE MAY NOT BE EFFECTIVE DISCLOSURE AND ACCOUNTING CONTROLS TO COMPLY WITH APPLICABLE LAWS AND REGULATIONS WHICH COULD RESULT IN FINES, PENALTIES AND ASSESSMENTS AGAINST US.
+ We have only one officer. She has no formal training in financial accounting and management; however, she is responsible for our managerial and organizational structure, which will include preparation of disclosure and accounting controls. While Ms. Calixto has no formal training in financial accounting matters, she has been reviewing the financial statements that have been audited and reviewed by our auditors and included in this prospectus. When the disclosure and accounting controls referred to above are implemented, she will be responsible for the administration of them. Should she not have sufficient experience, she may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment, however, because of the small size of our expected operations, we believe that she will be able to monitor the controls she will have created and will be accurate in assembling and providing information to investors.
+ 
+WE MAY HAVE DIFFICULTY ATTRACTING AND RETAINING SKILLED PERSONNEL. OUR FAILURE TO DO SO COULD CAUSE US TO GO OUT OF BUSINESS.
+ 
+Our future success will depend in large part on our ability to attract and retain highly skilled management, sales, marketing, and finance personnel. Competition for such personnel is intense, and there can be no assurance that we will be successful in attracting or retaining such personnel. Failure to attract and retain such personnel could have a material adverse effect on our operations and financial condition or cause us to go out of business.
+ 
+WE WILL NEED SIGNIFICANT CAPITAL REQUIREMENTS TO CARRY OUT OUR BUSINESS PLAN, AND WE WILL NOT BE ABLE TO FURTHER IMPLEMENT OUR BUSINESS STRATEGY UNLESS SUFFICIENT FUNDS ARE RAISED, WHICH COULD CAUSE US TO DISCONTINUE OUR OPERATIONS.
+ 
+We will require significant expenditures of capital in order to acquire and develop our planned operations. We may not be able to raise sufficient amounts from our planned sources. In addition, if we drastically underestimate the total amount needed to fully implement our business plan, our ability to continue our business will be adversely affected.
+ 
+ 9 
+ 
+
+ Our ability to obtain additional financing is subject to a number of factors, including market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If we are unable to raise additional financing, we will have to significantly reduce our spending, delay or cancel planned performances or substantially change our current corporate structure. In such an event, we intend to implement expense reduction plans in a timely manner. However, these actions would have material adverse effects on our business, revenues, operating results and prospects, resulting in a possible failure of our business.
+ 
+WE HAVE NO EXPERIENCE AS A PUBLIC COMPANY. OUR INABILITY TO SUCCESSFULLY OPERATE AS A PUBLIC COMPANY COULD CAUSE YOU TO LOSE YOUR ENTIRE INVESTMENT.
+ 
+We have never operated as a public company. We have no experience in complying with the various rules and regulations, which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations, which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment.
+ 
+BECAUSE THE COMPANY S HEADQUARTERS AND ASSETS ARE LOCATED OUTSIDE THE UNITED STATES, U.S. INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO EFFECT SERVICE OF PROCESS AND TO ENFORCE JUDGMENTS BASED UPON U.S. FEDERAL SECURITIES LAWS AGAINST THE COMPANY AND ITS SOLE NON-U.S. RESIDENT OFFICER AND DIRECTOR.
+ 
+While we are organized under the laws of State of Nevada, our sole officer and director is a non-U.S. resident. In addition, our office is established in Peru. Consequently, it may be difficult for investors to affect service of process on Ms. Calixto in the United States and to enforce in the United States judgments obtained in United States courts against Ms. Calixto based on the civil liability provisions of the United States securities laws. Since all our assets will be located in Peru it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us may not be enforceable in the United States.
+ 
+WE MAY BE SUSCEPTIBLE TO AN ADVERSE EFFECT ON OUR BUSINESS DUE TO THE CURRENT WORLDWIDE ECONOMIC CRISIS
+ 
+Our market and sales results could be greatly impacted by the current worldwide economic crisis, making it difficult to reach sales goals, and thus we may not be able to attain profitability and may have to cease or discontinue operations.
+ 
+ 
+ WE MAY IN THE FUTURE ISSUE ADDITIONAL SHARES OF COMMON STOCK, WHICH WOULD REDUCE INVESTORS PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.
+ 
+ Our Articles of Incorporation authorize the issuance of 75,000,000 shares of common stock, par value $0.001 per share, of which 8,000,000 shares are issued and outstanding. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis and below market value. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
+ 
+ 
+ 
+ 10 
+ 
+
+ RISKS RELATED TO OUR OFFERING 
+ 
+OUR SHARES OF COMMON STOCK ARE SUBJECT TO THE PENNY STOCK RULES OF THE SECURITIES AND EXCHANGE COMMISSION AND THE TRADING MARKET IN OUR SECURITIES WILL BE LIMITED, WHICH WILL MAKE TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
+ 
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
+ 
+THERE IS NO CURRENT TRADING MARKET FOR OUR SECURITIES AND IF A TRADING MARKET DOES NOT DEVELOP, PURCHASERS OF OUR SECURITIES MAY HAVE DIFFICULTY SELLING THEIR SHARES.
+ 
+There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained. We intend to have a market maker apply for admission to quotation of our securities on the Over-the-Counter Bulletin Board after the Registration Statement relating to this prospectus is declared effective by the SEC. We do not yet have a market maker who has agreed to file such application. If for any reason our common stock is not quoted on the Over-the-Counter Bulletin Board or a public trading market does not otherwise develop, purchasers of the share may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so.
+ 
+ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL RESULT IN DILUTION TO EXISTING SHAREHOLDERS.
+ 
+We must raise additional capital in order for our business plan to succeed. Our most likely source of additional capital will be through the sale of additional shares of common stock. Such stock issuances will cause stockholders' interests in our company to be diluted. Such dilution will negatively affect the value of investors shares.
+ 
+ 
+ 
+ 11 
+ 
+
+ YOUR PERCENTAGE OWNERSHIP IN US MAY BE DILUTED BY FUTURE ISSUANCES OF CAPITAL STOCK, WHICH COULD REDUCE YOUR INFLUENCE OVER MATTERS ON WHICH STOCKHOLDERS VOTE. 
+ 
+Our Board of Directors has the authority, without action or vote of our stockholders, to issue all or any part of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options or shares that may be issued to satisfy our payment obligations. Issuances of additional common stock would reduce your influence over matters on which our stockholders vote. 
+ 
+WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE WHICH MAY MAKE IT MORE DIFFICULT FOR YOU TO EARN A RETURN ON YOUR INVESTMENT WITH US. 
+ 
+We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock. Therefore, you may have difficulty earning a return on your investment with us.
+
+ BECAUSE WE HAVE NOMINAL ASSETS AND NO SIGNIFICANT REVENUE, WE ARE CONSIDERED A "SHELL COMPANY" AND WILL BE SUBJECT TO MORE STRINGENT REPORTING REQUIREMENTS. ALL SHAREHOLDERS WITH RESTRICTED SHARES OF COMMON STOCK OF THE COMPANY WILL BE SUBJECT TO THE LIMITATIONS OF USING RULE 144 AS DESCRIBED IN RULE 144(I) OF THE SECURITIES ACT 
+ 
+ Pursuant to Rule 144 of the Securities Act of 1933, as amended ( Rule 144 ), a shell company is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. As such, we are a shell company pursuant to Rule 144, and as such, sales of our securities pursuant to Rule 144 are not able to be made until (1) we have ceased to be a shell company"; (2) we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; and, (3) have filed all of our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of at least twelve months has elapsed from the date Form 10 information has been filed with the Commission reflecting the Company s status as a non- shell company. If less than 12 months has elapsed since the Company ceases being a shell company , then only registered securities can be sold pursuant to Rule 144. Therefore, any restricted securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until a year after we cease to be a shell company and have complied with the other requirements of Rule 144, as described above. As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our status as a shell company could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless. Lastly, any shares held by affiliates will be subject to the resale restrictions of Rule 144(i).
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001507196_dakota_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001507196_dakota_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..43750c6162079e3f758192c049450da9ce396788
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001507196_dakota_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to Dakota Creek Minerals Inc. CORPORATE BACKGROUND AND INFORMATION DAKOTA CREEK MINERALS INC. Dakota Creek Minerals Inc. was organized under the laws of the State of Nevada on September 29, 2010, to explore mineral properties in North America. Dakota Creek Minerals Inc. is engaged in the exploration for molybdenum and other minerals. The Company's Venus Molybdenum Property is located approximately 35 kilometers north of Vancouver BC, and about 2 kilometers north of the community of Britannia Beach, BC. The property is crossed by Highway 99, "The Sea to Sky Highway" and the CN Railroad. The Venus Molybdenum Property comprises one mineral claim totaling 62.12 hectares in area. The Venus molybdenum occurrence was discovered in the late 1960's and developed by a company known as Squamish Silica and Stone Co. Ltd. The occurrence is located about 250 meters northwest of Highway 99. We require an estimated total of $250,000 to implement the three phases of our exploration plan. We currently have not taken any concrete steps to implement our business plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Dakota's financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2012 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by Spring 2012 in order to conducts its operations. Our offices are located at: 10019 107 Avenue, Westlock, AB, T7P 2C8 THE OFFERING Securities offered 10,000,000 shares of common stock Selling stockholder Kathy Sloan Offering price $0.001 per share Shares outstanding prior to the offering 30,000,000 shares of common stock Shares to be outstanding after the offering 30,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." <TABLE> <CAPTION> Quarter Ended Quarter Ended Year Ended February 29, November 30, August 31, 2012 2011 2011 ------------ ------------ ------------ <S> <C> <C> <C> Revenues $ 0 $ 0 $ 0 Operating expenses $ 0 $ 0 $ 16,503 Net loss from operations $ 0 $ 0 $ (16,503) Net loss before taxes $ 0 $ 0 $ (16,503) Loss per share - basic and diluted $ 0 $ 0 $ (0.001) Weighted average shares outstanding basic 30,000,000 30,000,000 30,000,000 BALANCE SHEET DATA At February 29, At November 30, At August 31, 2012 2011 2011 ------------ ------------ ------------ Cash and cash equivalents $ 13,497 $ 13,497 $ 13,497 Total current assets $ 13,497 $ 13,497 $ 13,497 Total assets $ 13,497 $ 13,497 $ 13,497 Stockholders' equity $ 30,000 $ 30,000 $ 30,000 Additional paid-in capital $ (0) $ (0) $ 0 Deficit accumulated during exploration period $ (16,503) $ (16,503) $ (16,503) Total stockholders' equity $ 13,497 $ 13,497 $ 13,497 Total liabilities $ 13,497 $ 13,497 $ 13,497 </TABLE>
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001507374_ameri_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001507374_ameri_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..423da6199452349a0a44ed1a510d2a4b057fec6b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001507374_ameri_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. History The Company was incorporated in the State of Delaware in September 2011 and was formerly known as Yellowwood Acquisition Corporation. In June 2012, Ameri Metro, Inc. (Ameri Metro 2010), a Delaware corporation, merged with Yellowwood Acquisition Corporation. As part of the merger, Yellowwood Acquisition Corporation, the surviving entity, changed its name to Ameri Metro, Inc. and changed its fiscal year end to July 31. Yellowwood has an authorized capitalization of 1,000,000,000 shares of common stock and 20,000,000 shares of preferred. Prior to the Merger, Yellowwood had no ongoing business or operations and was established for the purpose of completing mergers and acquisitions with a target company, such as Ameri Metro (2010). As a result of filing a Form 10 pursuant to the Securities Exchange Act of 1934, Yellowwood Acquisition Corporation is a reporting company with the Securities and Exchange Commission. The merger was effectuated as a statutory merger, and a certificate of merger was filed in the State of Delaware effecting the transaction. Hereinafter the term the "Company" or "Ameri Metro" refers to the entity existing as a result of the merger of Ameri Metro (2010) with Yellowwood, unless otherwise noted. The Company The Company is a developmental-stage company focused on the development of efficient transportation systems, primarily high-speed rail networks for passenger and freight and the ancillary transportation projects related to such high speed rail systems. The Company is also engaged in development of other transportation projects, specifically the development of a toll road in the State of Alabama. The Company anticipates that it will, directly or through subsidiaries, develop plans, and then coordinate and supervise the financing, construction and development of such transportation projects by bringing together the resources, plans, financing, approvals and technology needed to implement such transportation systems. The original Ameri Metro, Inc. prior to the merger (Ameri Metro 2010) was incorporated on April 13, 2010 in Delaware. with an authorized capital of 1,500 shares of common stock. On April 30, 2010, Ameri Metro (2010) amended its certificate of incorporation to authorize 100,000,000 shares of common stock with a par value of $.0001 per share and 20,000,000 shares of preferred stock with a par value of $.0001 per share. As a consequence of the merger, the Company has an authorized capitalization of 1,000,000,000 shares of common stock and 20,000,000 shares of preferred stock. The Company has no revenue producing operations to date. The Company intends to develop numerous projects as opportunities are presented primarily in the transportation or transportation-related fields. The Company believes that the need, demand and usage of alternative transportation such as high speed rail are increasingly important as the United States adopts policies to attempt to reduce its dependency on fossil fuels, particularly the automobile. The Company intends to develop and prepare the designs and concepts for feasible and profitable regional high-speed rail projects utilizing existing and new railbeds, stations, and equipment. The Company will prepare the complete project package including appraisals and estimates and will obtain contracts for the development of the railbeds and purchase of the equipment. The Company will present the complete project, working as project supervisor and coordinator, to municipalities and regional government agencies. In addition to high speed rail projects, the Company will also develop other selected transportation-related projects that promote efficient and improved transportation structures or plans. Funding for individual projects of the Company will occur from bond offerings organized through various non-profit entities and organizations sponsored or affiliated with municipal and government agencies. Certain of these non-profit entities or organizations may themselves be affiliated with, or related to, the Company and assist, or work in conjunction with, the Company in securing contracts and funds to develop projects. On December 1, 2010, the Company formed its wholly-owned subsidiary, Global Transportation & Infrastructure, Inc. (GTI). in the state of Delaware with an authorized capital of 100,000,000 shares of common stock with a par value of $.0001 and 20,000,000 shares of preferred stock with a par value of $.0001. GTI was formed to provide development and construction services for the Alabama highway project including securing financing for the design, planning, engineering and related costs for its construction and to engage in the construction of high-speed rail for passenger and freight transportation and related transportation projects for the Company. The Business Through its subsidiary, GTI, the Company is also involved in the development of a new toll road in the State of Alabama. The Company acquired from Penndel Land Company (a company solely owned by the president of the Ameri Metro) the contract rights to a construction agreement with the Alabama Toll Facilities, Inc. ("ATFI", a non-profit company designated by the State of Alabama to act as the project developer for such a toll road and on which the president of Ameri Metro serves as one of its four directors). As such the Company has the development rights for such toll road. The Company will need to secure the financing for the design, planning, engineering and related costs for the construction of the toll road. As the Company is able to secure such financing, ATFI will effect a bond offering to purchase the land on which the toll road is to be located. The Company believes that the United States suffers from an overburdened transportation infrastructure and that a fundamental overhaul of the national transportation structure is needed. The Company anticipates that it will be able to assist in this "fundamental overhaul" by providing both the hands-on expertise and investment resources to establish an intermodal grid comprised of transportation and support services extending to urban and outlying areas alike. The Company will largely focus on projects related to high speed rail, but will also concentrate its efforts on other transportation projects that improve transportation infrastructure. The Company intends to prepare a feasibility study and locate contractors and manufacturers that would complete the work and will provide cost estimates. Because high-speed rail travel is already in-place in much of Europe and Asia, the Company anticipates working with European companies to furnish the high-speed equipment, such as locomotives and passenger cars. The Company will put the proposed contracts together with the supporting feasibility study, appraisals, cost/benefit analysis, TEMS study, transportation history and other data to create a complete regional project proposal. The Company will then present such project proposals to the municipalities (state or local) as a complete and finished project. The Company anticipates that upon approval, the local municipality will effectuate a bond offering for the funding of the high-speed rail project. The Company intends that the projects will be financed by bonds or indentures offered by sponsored or affiliated non-profit organizations of the applicable local or municipal government or agency. Such non-profit entities may also be affiliates or companies related to the Company. Risks and Uncertainties facing the Company As a development stage company, the Company has no operating history and has continuously experienced losses since its inception. The Company s independent auditors have issued a report questioning the Company s ability to continue as a going concern. That is, the Company needs to create a source of revenue or locate additional financing in order to continue its developmental plans. As a development stage company, management of the Company has no prior experience in building and selling projects similar to that planned by the Company and in marketing and distributing such projects on a broad scale. One of the biggest challenges facing the Company is the ability to raise adequate capital to develop and execute project opportunities in the transportation sector. Due to financial constraints, the Company has to date conducted limited operations. If the Company were unable to develop strong and reliable sources of funding for project opportunities, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s efforts are met with customer satisfaction in the marketplace and exhibit steady adoption of its solutions amongst the potential base of customers, neither of which are currently known or guaranteed. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. If not successful, the Company will apply for listing of its securities on the OTC Pink Markets. There is no assurance that the Company will be able to qualify for quotation on the OTC Bulletin Board . The Offering Fifty-one shareholders of the Company are offering up to 3,849,487 shares of common stock held by them ("the Shares"). These Shares are offered at a sales price of $by the selling shares from time to time at privately negotiated prices, in one or more transaction that may take place on the over-the-counter market including ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling shareholders in connection with such sales. Common stock outstanding before the offering 14,167,431 Common stock offered by the selling shareholders 3,849,487 Offering Price To be negotiated by selling shareholder Proceeds to the Company Ameri Metro will not receive any proceeds from the sale of the shares by selling shareholders In the future, following the completion of this offering, the Company will most likely need to raise capital for the projects which it anticipates to develop. The Company anticipates that it may raise such capital by an offering of its shares of common stock. If the Company does effect an equity offerings of its securities and if the shares offered in those offerings are less than paid by the investors in this offering for their Shares, then investors in this offering will suffer a dilution in the value of their shares. Furthermore the issuance of such additional may impact the ability of the investors to sell their Shares once such shares are eligible for sale. The Company cannot anticipate that it will be able to effect such offerings of its securities and then failure of it to do so may severely impact its available capital to develop any transportation systems or further its business plan. Summary Financial Information The statements of operations data and the balance sheet data for the year ended July 31, 2011 and the period ended April 30, 2012 are extracted from the financial statements included elsewhere in this prospectus. The following summary financial data should be read in conjunction with additional discussions of the financial status and the Financial Statements and Notes thereto included elsewhere in this prospectus. The following information is derived from the audited financial statements. Balance Sheet For the Period from April 13, Nine months ended 2010 (Inception) to April 30, 2012 April 30, 2012 Statement of operations data Revenue $34,238 $38,811 Total operating expenses 95,937 293,993 Loss from operations (61,699) (255,182) Total other income (expense) 292,684 (862,970) Net (loss) income $230,985 (1,118,152) Weighted average number of shares outstanding, weighted and diluted 11,695,431 10,164,348 As of As of April 30, 2012 July 31, 2011 Balance sheet data Total current assets $3,353 $1,907 Other assets 4,379,324 4,085,320 Total assets 4,383,557 4,087,227 Total liabilities 158,457 158,457 Additional paid in capital 5,388,993 5,276,794 Deficit accumulated during the development stage (1,118,152) (1,349,137) Total stockholders equity 4,225,100 3,928,770
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001513161_home-loan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001513161_home-loan_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our ordinary shares, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and The Business appearing elsewhere in this prospectus. Unless otherwise stated, all references to us, our, we, the Company and similar designations refer to Home Loan Servicing Solutions, Ltd. and its consolidated subsidiaries. Our Company We are a Cayman Islands exempted company that acquires mortgage servicing assets consisting of mortgage servicing rights, rights to mortgage servicing rights, associated servicing advances and other related assets. We launched our operations on March 5, 2012 using the proceeds from our initial public offering and a concurrent private placement with our founder and Chairman of our Board of Directors to acquire mortgage servicing assets relating to a portfolio of subprime and Alt-A mortgage loans with an unpaid principal balance of $15.2 billion from Ocwen Loan Servicing, LLC, or Ocwen Loan Servicing. As of March 31, 2012, our total assets and total liabilities were $546 million and $368 million, respectively. As of September 30, 2012, our total assets and total liabilities increased to $1,703 million and $1,285 million, respectively. Since completing our initial acquisition of mortgage servicing assets, we have purchased additional mortgage servicing assets from Ocwen Loan Servicing, and as of September 30, 2012, we had acquired mortgage servicing assets with an unpaid principal balance of approximately $48.0 billion from Ocwen Loan Servicing. We do not originate or purchase mortgage loans, and as a result we are not subject to the risk of loss related to the origination or ownership of mortgage loans. We have engaged Ocwen Loan Servicing, a high quality residential mortgage loan servicer, to service the mortgage loans underlying our mortgage servicing assets and therefore have not and do not intend to develop our own mortgage servicing platform. While we have only completed two full quarters of operations, we believe that our revenue and expense structure is predictable and will generate a stable income stream and that the quality of our assets is and will continue to be strong. We believe this combination will accomplish our primary objective of delivering attractive and consistent risk-adjusted returns to our shareholders. We intend to distribute at least 90% of our net income over time to our shareholders in the form of a monthly cash dividend. In addition, unlike many income-oriented investment alternatives, we believe that our income stream and the valuation of our assets are not substantially correlated to movements in interest rates. Our results of operations for the quarter ended September 30, 2012 reflect consistent earnings that were in line with our expectations. We reported net income of $6.6 million, or $0.37 per ordinary share, for the third quarter of 2012. Our third quarter business performance highlights include the following: declaration of dividends of $0.10 per share per month totaling $5.9 million for the quarter. receipt of net proceeds of $236.0 million in connection with our public offering of 16,387,500 shares at $15.25 per ordinary share that closed on September 12, 2012. The net proceeds from the offering were used to acquire mortgage servicing assets from Ocwen Loan Servicing with an unpaid principal balance of $27.8 billion. completion of the acquisition of mortgage servicing assets with an unpaid principal balance of $2.1 billion from Ocwen Loan Servicing on August 1, 2012. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated December 18, 2012 PROSPECTUS 22,000,000 Ordinary Shares We are offering ordinary shares. The public offering price of our ordinary shares is $ per share. Our ordinary shares are listed for trading on The NASDAQ Global Select Market under the symbol HLSS. The last reported sale price of our ordinary shares on December 17, 2012 was $18.37 per share. Investing in our ordinary shares involves risks that are described under Risk Factors beginning on page 21. Per Share Total Price to public $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to us $ $ We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional 3,300,000 ordinary shares from us, at the public offering price, less the underwriting discounts and commissions. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ and the total proceeds to us, before expenses, will be $ . Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the ordinary shares to purchasers on or about , 2012. Wells Fargo Securities Barclays BofA Merrill Lynch Citigroup Keefe, Bruyette & Woods Sterne Agee Prospectus dated , 2012. Table of Contents On September 13, 2012, we amended and restated the servicing advance facility agreements that we originally entered into simultaneously with the closing of our initial public offering and the Initial Ocwen Purchase to (i) add Wells Fargo Securities, LLC as an administrative agent, (ii) create a master trust (the Trust ) that can issue multiple series of notes with varying maturity dates and credit ratings ranging from AAA to BBB, including 2a-7 money market eligible notes and medium term notes and (iii) allow for deferred servicing fees to be included in the borrowing base as principal and interest advances for pooling and servicing agreements that meet certain conditions. This resulted in a reduced cost of our financing. The servicing advance facility agreements, as amended and restated, are referred to throughout this prospectus as the Servicing Advance Facility Agreements. Our executive management team has extensive experience in the mortgage servicing industry and each of our executive managers was formerly in a senior management role at Ocwen. We believe our executive management team s extensive experience provides us with the ability to assess the vital characteristics of the mortgage loans underlying the mortgage servicing assets we have acquired and may seek to acquire and evaluate the quality of our current and potential mortgage servicers. We believe this experience further enables us to accurately value mortgage servicing assets and better forecast future asset performance and servicing cash flows. In addition, our management team has demonstrated historical success in arranging cost-effective servicing advance financing through a variety of economic cycles. Under the terms of our professional services agreement with Ocwen, which we refer to as the Ocwen Professional Services Agreement throughout this prospectus, the Company and its management team provide Ocwen valuation and analysis services for mortgage servicing rights, advance financing management, treasury management, legal services and other similar services. See The Business Description of Ocwen Professional Services Agreement for a detailed description of the Ocwen Professional Services Agreement. None of our officers or employees holds positions at Ocwen or its affiliates. Nonetheless, because of our management team s past or current relationships with Ocwen, conflicts of interest could occur with respect to the services performed under the Ocwen Professional Services Agreement or the other agreements the Company has with Ocwen. Matters that could give rise to conflicts include pricing, valuation and quality of assets or services that Ocwen and the Company purchase from one another, including Mortgage Servicing Assets (as defined below) or services under the Ocwen Professional Services Agreement. In addition, William C. Erbey, the Chairman of our Board of Directors, is the Chairman of the Board of Directors of Ocwen. See Risk Factors We could have conflicts of interest with Ocwen, and our officers and directors could have conflicts of interest due to their relationships with us and Ocwen, that could be resolved in a manner adverse to us and We are highly dependent upon our senior management team for a description of the risks associated with the Company providing services to Ocwen, and Ocwen providing services to the Company, under the Ocwen Professional Services Agreement and other agreements. We will seek to mitigate these potential conflicts through oversight by the independent members of our Board of Directors. Our business strategy is focused on acquiring mortgage servicing rights. In many cases, however, the transfer of legal ownership of mortgage servicing rights requires the prior approval or consent of various third parties, including rating agencies. If the seller from whom we have agreed to purchase mortgage servicing rights has not obtained the necessary approvals and consents to transfer legal ownership of the mortgage servicing rights to us, we will instead seek to acquire the rights to receive the servicing fees that the current servicer is entitled to receive, and the current servicer will continue to service the mortgage loans and receive compensation from us for its servicing activities. We refer to these rights, along with the right to acquire legal ownership of the related mortgage servicing rights automatically upon obtaining the necessary approvals and consents to transfer the mortgage servicing rights, as Rights to MSRs. Acquiring Rights to MSRs results in the Company recording assets such as Notes Receivable Rights to MSRs and match funded advances, and liabilities such as match funded liabilities. It also entitles us to collect the contractual servicing fees related to such Rights to MSRs, which are typically 50 basis points annually of the unpaid principal balance of the related mortgage loans. Servicing fees collected are reduced by the Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001513847_loyalty_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001513847_loyalty_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001514324_i_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001514324_i_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..819bac1a3973eefe80b037cf7973f61e88541129
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+Prospectus Summary 2
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001516076_monte_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001516076_monte_prospectus_summary.txt
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+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to Monte Resources Inc. CORPORATE BACKGROUND AND INFORMATION MONTE RESOURCES INC. Monte Resources Inc., was organized under the laws of the State of Nevada on April 19, 2010 to explore mineral properties in North America. Monte Resources Inc. is engaged in the exploration for molybdenite and other minerals. The Company has acquired sixteen (16) claim units located about three (3) kilometers southwest of the town of Westwold, British Columbia, Canada. The total claim area is approximately 617 hectares. We refer to these mining claims as the Monte Property. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Monte's financial prospects and the Company's ability to continue as a going concern. We require an estimated total of $334,925 to implement the three phases of our business plan. We currently have not implemented our business plan. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a pre-exploration stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2013 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the Winter of 2012 in order to conducts its operations. The founder of the company, Mr Morrow, is under no obligation to provide any funding to the company. Our offices are located at 1002 Ermine Court, South Lake Tahoe, CA 96158 USA. Our telephone number is 530-577-4141. THE OFFERING Securities offered 7,000,000 shares of common stock Selling stockholder Edwin Morrow Offering price $0.001 per share Shares outstanding prior to the offering 14,750,000 shares of common stock Shares to be outstanding after the offering 14,750,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME <TABLE> <CAPTION> Period From Nine Months Inception Ended Year Ended April 19, 2010 to August 31, 2012 November 30, 2011 November 30, 2011 --------------- ----------------- ----------------- <S> <C> <C> <C> Revenues $ 0 $ 0 $ 0 Operating expenses $ 8,637 $ 7,295 $ 16,936 Net loss from operations $ (8,637 $ (7,295) $ (16,936) Loss per share - basic and diluted $ (0.000) $ (0.000) $ (0.000) Weighted average shares outstanding basic and diluted 14,750,000 14,750,000 1,912,111 BALANCE SHEET DATA At At At August 31, 2012 November 30, 2011 November 30, 20110 --------------- ----------------- ------------------ Cash and cash equivalents $ 408 $ 2,186 $ 5,109 Total current assets $ 408 $ 2,186 $ 5,109 Total assets $ 408 $ 2,186 $ 5,109 Total liabilities $ 11,231 $ 4,372 $ 0 Common stock $ 14,750 $ 14,750 $ 14,750 Deficit accumulated during pre-exploration period $ (25,573) $ (16,936) $ (9,641) Total stockholders' equity $ (10,823) $ (2,186) $ 5,109 </TABLE>
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+PROSPECTUS SUMMARY This summary highlights material information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making an investment decision. We urge you to read this entire prospectus carefully, including the "Risk Factors" section and our financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Our Business We produce, distribute and sell organic-based, natural and environmentally responsible products for the continual care of the urban and suburban landscape through our wholly owned subsidiary, Organic Plant Health, LLC (OPH), a North Carolina Limited Liability Corporation located in Charlotte, North Carolina. Our products consist of granular and liquid fertilizers, soil conditioners, pest control products and select garden tools. Certain of those products promote and support soil health and plant health in a variety of residential and commercial landscape applications. Our products are formulated and blended from raw materials brought in from around the United States. Our products and our education oriented, business practices are designed to appeal to green-minded consumers and businesses, as well as homeowners with do-it-yourself tendencies. We currently service over 4,500 residential customers, and over 100 commercial landscapers located throughout the region, which includes the trading areas surrounding Charlotte, Raleigh and Greensboro in North Carolina and Greenville/Spartanburg in South Carolina. We have a limited history of operations upon which we evaluate our business and prospects. As of February 2, 2012, we had total assets of $263,545, available cash and cash equivalents of $28,559 on hand. For the nine months ended September 30, 2011, we generated revenues of $687,421 and net loss of $298,419. For the fiscal year of 2010, we generated revenues of $1,009,078 and net loss of $353,974. For the fiscal year of 2009, we generated revenues of $1,062,163 and net loss of $482,437. We may not be successful in our efforts to grow our business and to generate revenues due to declining revenues since inception. Our business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. As a result, management may be unable to adjust its spending in a timely manner to compensate for any unexpected revenue shortfall. This inability could cause net losses in a given period to be greater than expected. An investment in our securities represents significant risk and you may lose all or part your entire investment. With no guarantee that any funds will be raised in this offering, our auditor has expressed substantial doubt about our ability to continue as a going concern. As of February 9, 2012, we had approximately 7 full time employees, and 3 part time employees to support production and sales for seasonal peaks. Our operating facilities consist of 1) an 11,000 sq. ft. office and production facility on Monroe Road in Charlotte, NC where production of the proprietary granular and liquid products occurs; 2) a retail store located in downtown Matthews, North Carolina servicing residential Do-It-Yourselfers and commercial landscapers. We distribute products through our retail store in Matthews, NC, as well as through master retail partners, which mirror the Matthews store, and through independent retail partners such as Ace Hardware locations and garden centers throughout the region. We anticipate we will need a minimum of $500,000 additional funds for the year of 2012 to meet our expansion objectives. If we do not receive this additional funding it will be unlikely for us to meet our expansion objectives as planned, on the same schedule. In the event this occurs, we will continue to refine our operations to maximize sales through existing channels, while placing additional focus on growing our online market presence and sales, (already part of our growth strategy for 2012). This will support our efforts to maximize revenue streams across multiple channels, while reducing operating expenses where possible. Another such way to reduce overhead and streamline operating costs is to outsource some or all of the manufacturing of our products. In a scenario where we might anticipate receiving little or no funding from this offering, we will have to execute our expansion plan more slowly, pushing it into the future, using the available operating capital from existing retail and wholesale operations. In the event that this occurs, utilizing an outsourcing manufacturer will quickly and efficiently allow us to keep up with demand for our products without over-taxing our current facility. In the past several months our company management has undertaken a proactive strategy to ensure our ability to meet current and future demand for our fertilizers and soil conditioners. We have researched several outsourcing fertilizer manufacturers in the United States and Canada that can and will produce fertilizers and soil conditioners to our exact specifications as the need arises, providing us with redundancy of production capability. This further ensures a consistent supply of our products for our customers. Additionally, in the past three months, we have completed formula models of our products that meet our exact specifications, using components available from these manufacturers and have negotiated acceptable pricing, and minimum order quantities for production and delivery. Having completed our research, we have selected a primary outsourcing manufacturer of our products in the event that we feel it prudent to begin outsourcing some, or all of our production. In the past month we have reached the point of "order-at-will" status with this manufacturer and can order and receive products within the industry standard delivery schedule of 2-4 weeks. In the event that little or no funding is received from this offering, we have identified two strategies, both of which ensure the continued operation of the basic business model, which is that of a fertilizer manufacturer, and or distributor. 1. Manufacturer / Distributor: This strategy represents the current mode of operations. Again, assuming that little or no funds are received from this offering, we plan to relocate our manufacturing facility to a more rural location, taking advantage of cheaper lease rates, where we can either rent a larger space for the same expense to run manufacturing and distribution out of one facility, or to a smaller space for manufacturing only, utilizing bonded warehousing to hold and stage inventory for future shipping and distribution to our partners. As demand outpaces our ability to produce, we have identified outsourcing manufacturers that will produce our products for us, to our exact specifications. We have researched and negotiated favorable production costs, minimum order quantities, and timely production and delivery schedules that will allow us to take advantage of this option with no loss of continuity in distributing to our partners and customers. 2. Outsourcing Manufacturing / In-House and Bonded Warehouse Distribution This strategy represents a leaner, more efficient mode of operations that likely will be the future of our business. We believe there are many advantages and efficiencies to be realized from outsourcing our production, including, but not limited to: (i) increase the ability to meet large order demands in a shorter time from, (ii) (i) reduced overhead expense related to operating and maintaining a production facility and equipment, (ii) reduced labor cost, and (iii) reduced rental fees for other equipment required for operating a production facility. As noted, this strategy also includes closing our existing manufacturing facility, and either (i) locating and leasing a facility in a more rural location, taking advantage of cheaper lease rates, that we can use for inventory storage and distribution to our partners and for online order processing, or (ii) make suitable arrangements with a bonded regional or national warehouse that will allow us to store excess product inventory, and stage inventory for shipping and distribution to our partners, or for online order processing. Although we have identified such bonded warehouses, and have negotiated favorable rental rates, we will likely transition into this distribution channel more slowly, after we have had the opportunity to test the processes, short-term and long-term effects on the products and packaging, as well as any logistics issues that might arise. Since we have already explored options for outsourcing our manufacturing functions, none of these expense reductions would cause an interruption in our current business. In fact, if we receive only 25% or 50% of the proceeds from this offering, utilizing an outsourcing manufacturer will quickly and efficiently allow us to keep up with demand for our products without over-taxing our current facility. It should also be noted that our most efficient path forward likely will include aspects of both alternative strategies, as we continually strive to increase operational efficiencies. For example, maintaining a smaller production facility in the Charlotte, NC area will make sufficient to efficiently supply those retail partners in the Carolina s region, while still taking advantage of the outsourcing of production, and utilization of bonded warehouses in those regions where it makes sense to reduce shipping costs and increase efficiency with distribution of our products outside of the Carolina s region. As we expand our foot print of distribution up and down the east coast, it makes good financial sense to use existing manufacturers nearer those distribution areas, rather than build our own manufacturing plants in those regions, or produce all products in Charlotte and spend significant resources shipping products to distribution facilities further away from the Carolinas, nearer the end use market. If we receive only 25% or 50% of the proceeds from this offering, utilizing an outsourcing manufacturer will quickly and efficiently allow us to keep up with demand for our products without over-taxing our current facility or resources. If we are 75% or 100% funded from the proceeds of this offering, we will have the capital resources to move our manufacturing operation to a new, larger facility where we can produce our products, and have ample room available to store excess inventory, stage products for delivery and distribution, and fulfill online sales orders. The latter strategy at full or near full funding is preferred because it allows the company to expand with greater flexibility and control of production and delivery schedules as it relates to our retail partners in and around the North and South Carolina region. Outside of the region, we ll use some outsourcing of our manufacturing along with bonded warehouses for storage of excess inventory, staging for localized delivery and distribution, and potentially, online sales order processing in those markets where it creates a cost savings for us. Management believes that the above costs savings, and outsourcing of some or all our production will enable the business to remain viable using, and building on, revenue from existing operations and the expanded sales from existing retail and distribution partners, as well as increased online sales from our website. Further we do not believe that pursuing either of these strategies, or even a combination of the two, present any unique risks to production since redundant manufacturing facilities are located in different parts of the country, providing us with the ability to ensure consistent delivery of our products to our customers. However, there is no assurance that stability, and ultimate profitability will occur as a result from our efforts. The management of Organic Plant Health, Inc. considers the business a part of the "new" Green Economy because many of the products we manufacture and distribute support sustainable plant growth, have less impact on the environment than traditional chemical fertilizers, and support conservation of water if used consistently. As a relatively new business in this economy, much of our potential consumer base is unaware of our company or the products we develop and offer for sale. Although we plan to market the company to prospective customers in all areas in which we plan to sell our products, it may take several years, if ever, before our brand is widely recognized across highly populated regions, or nationwide. (6) Table of Contents After achieving some success with a basic retail model in 2007 and 2008, we began to feel the delayed effects from the recession in early 2009, and by June of 2009, we recognized that the recession would be protracted and would likely continue to have a negative impact on our business. In July of 2009 we brought on minor investors, and jointly decided that our best opportunity for prolonged growth and expansion with the least amount of capital was to change the business model from basic retail to a more traditional manufacturer/distributor model. This growth strategy change would lessen our cost of expansion, otherwise, (appx. $250,000.00 $300,000.00 annually, per retail store if we had stayed with the previous business model), and allow us to expand faster, and over a larger area by selling our exclusive products through independent retail partners. These retail partners, existing businesses with built-in consumer traffic, consist of hardware stores, garden centers and nurseries. The company was profitable in 2007 and 2008, however, it was not profitable in 2009 and 2010, and it is likely to sustain another net loss in 2011. The company currently sells its exclusive products through more than 20 retail partners. We have not added as many retail partners as initially planned due to the limited cash flow available to support an experienced sales staff. We have experienced some measure of success with the new business model and believe it is viable and will become profitable in the 1-3 years, if partially or fully funded from this offering. Without receiving any funding from this offering, management will have to make significant changes in its operations to sustain the business. Management further believes that the company will need to receive a minimum of $500,000.00 in this offering over the next 6 to 10 months to achieve our initial expansion goals. However, even if we receive a minimum of $500,000.00 in the next 6-10 months, there is no assurance that we will achieve our initial expansion goals. This new business model presents challenges to growth, but we do not believe they are insurmountable. These challenges consist of attracting and successfully hiring the right sales and support staff, new branding and packaging designs to help our products compete head-to-head on the shelf with national brands, and significant marketing and point of purchase materials to support the education process required with new retailers and their customers. However, even if we are able to hire the right personnel, and update our branding and packaging, there is no assurance that we will be able to compete head-to-head with widely known national brands. The funds from this offering will be used, in part, to hire additional sales and support staff to speed our expansion into additional markets. This new staff will increase the number of retail partners selling our products at a substantially higher rate and faster pace than is currently being achieved. Past sales efforts were hindered by the lack of funding to support adequate sales and support staff. The new staff hired with funds from this offering will, after having been trained by company management, possess adequate sales and communication skills to identify prospective retail partners and communicate to them the benefits of offering the company s products to their end-use customers. The new support staff planned will provide the sales staff the opportunity to focus their efforts and spend more time developing new prospective retail partners, and less time managing the day-to-day tasks of managing any given account. This simple division of labor will provide greater resources to be available to increase the number of retail partners offering the company s products. We plan to hire additional sales people and support staff as we extend our expansion outside the Carolinas. Although management plans to hire additional sales and support staff with funds received from this offering, there is no assurance that they will be successful in achieving the retail partner goals established for them. Additional funds received from the offering will be used to update our branding and packaging design for our 23 exclusive products. We plan to have new packaging developed and produced for all exclusive products, depending upon the amount of the initial offering received. If less than full funding is received, we plan to adjust the number of product packaging revisions performed until such time as the company can afford to complete the packaging revisions. A detailed review of our Use of Funds can be found later in this document. Concentration on Organic-Based and Natural Fertilizers Industry Demand for organic-based and natural fertility products and soil conditioners has been growing steadily, although slightly behind that of demand for organic foods and other items marketed as more natural, earth friendly, or energy efficient. We attribute this to greater media attention on organically grown produce and foods used in restaurants. According to marketresearch.com, consumer packaged goods in the lawn and garden sector are estimated to grow at roughly 3.5-4% each year through 2014. Growth will be led by fertilizers and growing media posting above average gains. At present, Organic fertilizer products represent a small share of the approximately $9 billion consumer packaged lawn and garden market in the U.S., roughly 10%, or $900 million. Since 2007 organic fertilizers and growing media revenues have grown at over 10%, annually, over the past several years, which is greater than twice the average rate for the category of about 4% over the same time periods. Demand for these types of products has increased as consumers are generally becoming more aware of the environment and the negative effects from using synthetic fertilizers and pesticides, such as contamination of waterways attributed to chemical fertilizers. The same study notes that Baby-boomers are just coming in to their gardening years, and this will support continued growth in the sector. According to the same source, a growing segment of the population is looking for simpler and complete solutions for lawn and landscape care. The green movement has consumers thinking more about the environment and realizing the benefits of supporting sustainability through the use of more natural plant care products. As a result, demand for earth-friendly fertilizers and soil conditioners like ours may see an increase in the years to come. As we expand our company we anticipate taking advantage of these trends. To balance this discussion about the growing popularity of organic based products, it is important to note that fertilizers and fertilizer materials, organic or synthetic, are commodity based to some extent and subject to price volatility. In the past several years we have seen increases and decreases in the raw materials we use to produce our products. We anticipate that this volatility will continue, and if and when it does occure, this volatility may have an adverse affect our expenses and profitability. (7) Table of Contents Our Competitive Advantages We position ourselves as developers of organic-based, natural and hybrid-organic products that support sustainability in the landscape. We evaluate our product offerings frequently and make formula adjustments or improvements as needed, or when appropriate, as science and agronomy advance, and allow for easier and more affordable use of organic components and materials. We believe we have the following competitive advantages over our competitors: Strengths Internal Passion/vision: Billy Styles ("Mr. Styles"), our President and Chief Executive Officer, and Alan Talbert ("Mr. Talbert"), our Vice President and Chief Operating Officer, have been working in their fields of expertise for more than thirty, and twenty years, respectively. They founded the company and are dedicated to its success, which is different than being "hired" to manage a company. Products deliver maximize benefit: The fertilizers and soil conditioners we produce are designed to deliver the maximum benefit to the consumer. Traditional lawn and garden fertilizers are developed to perform one primary function: Increase plant growth. Organic Plant Health fertilizers and soil conditioners are developed to achieve many goals and to address the entire growing experience. These include: improving the soil structure with consistent use (ie. the growing environment), supporting healthy, more efficient plant growth, (our products include organic acids that release bound nutrients in the soil, which increases the efficacy of fertility inputs. Our products also improve water and nutrient penetration and retention in the soil, when used consistently, which reduces the need for supplemental watering over time. However, it is important to note that regardless of how effective our products are, or how packed the products are with beneficial components, there is no assurance that customers will use the products consistently, thereby fully realizing the fullest potential of the available benefits. Timely and competitive product line: Organic Plant Health developed a complete line of organic-based lawn, ornamental and garden fertilizers and soil conditioners early in the time line of the organic and natural category (with in the Lawn and Garden Consumer Packaged Goods category). This product experience, combined with our extensive field experience, provides us with an advantage in developing new, more advanced and more efficient fertility products moving forward. Diverse and complimentary management team: Our management team members compliment each others strengths and weaknesses very well. Billy Styles has significant experience in the field, seeing and understanding plant needs and product needs first hand. Alan Talbert has been involved in business operations, as well as developing and executing marketing plans on the local and regional levels for many years. Paul DiFraia ("Mr. DiFraia"), our Vice President, has extensive experience with manufacturing products on a large scale, with great attention to detail. Media Exposure: We belief that very few companies of our size have had the level of local and, in some cases, national exposure on radio and television. The company currently has it's own radio show, "Backyard Styles", hosted by Billy Styles, and airing on WBT-AM 1110, a 50,000 watt radio station located in Charlotte, NC. We have also developed marketing agreements with production companies that allow Mr. Styles to be the resident Organic Gardener appearing on frequent episodes of the nationally syndicated "For Your Home" television show, which airs in 90 million homes across the country. Strengths External Organic-based approach is riding green movement: The green economy is in its infancy. According to marketresearch.com, as it relates to organic based fertilizers and soil conditioners, these types of products in the consumer packaged lawn and garden sector are expected to continue to grow at more than twice the rate of traditional fertilizer sales through 2014. Consumer awareness and acceptance of organic-based products: Sales of organic based fertilizers and soil conditioners in the consumer packaged lawn and garden sector are expected to continue to grow at twice the rate of traditional fertilizer sales through 2014. This exhibits growing acceptance and predilection to purchase these types of products over their traditional counterparts. Sales of organic based fertilizers and soil conditioner have experienced 5%-10% growth annually in the past 4 years, and it is expected to continue to grow at more than twice the average growth rate of traditional fertilizers (3.5% - 4% through 2014). (Source: http://www.marketresearch.com/Freedonia-Group-Inc-v1247/Lawn-Garden-Consumables-2688161. (8) Table of Contents Our Strengths Marketing Strategy The marketing strategy is designed to increase market share and sales of OPH branded products in the Eastern United States by promoting our exclusive organic based and natural landscape care products. Our marketing will always include an emphasis on educating the consumer and the general public about the true nature of plant health. We will achieve this through the use of traditional as well as new media venues, where information and education are a primary factor in the consumer buying process. In addition we will implement grass roots efforts to create new strategic alliances with municipalities, community organizations, regional and national foundations, universities and industry trade/buying groups. We will further forge relationships with like-minded companies including other fertilizer manufacturers, botanical gardens, agricultural entities, plant material companies and possibly even organic food producers, We plan to average the combined marketing efforts and public relations initiatives to bring about and reinforce positive change in the minds of our every-day consumer resulting in an increase in consumer confidence, brand integrity and purchases. Our creative strategy will continue to feature Billy Styles as the visionary behind Organic Plant Health, a new provider of organic based and natural fertility and soil conditioner products for the green minded do-it-yourselfer. Our focus has been and will continue to be one of education, first, whereby we teach our customers about the true nature of soil and plant health to help them understand fertilizer and soil conditioning needs and their affect on soil and plant health, and sustainability. We will continue to insert a straight-talk dialogue into the general discussion conveyed with Billy Styles' ability to sharethe benefits of adherence to our annual program schedules, proper maintenance practices and the homeowner's personal responsibility for the success and pride of their landscape. Sales Strategy Our strategy for increasing sales includes: Increased purchase volume from existing retail partners through continual acceptance of our products. Adding regional sales staff and support staff to expand sales efforts into regional markets up and down the east coast and certain points in the Midwest. This will increase the number of independent retail partners purchasing products from OPH and significantly increase revenues and profits that will be used for further expansion efforts. Management has identified several "hub" markets that are planned to be the focus of our expansion over the next 2-3 years. Our first priority is to maximize our market penetration around the cities of Charlotte, NC, Raleigh, NC, Greensboro, NC and Winston-Salem/High Point, NC, and Greenville / Spartanburg, SC, Columbia, SC and Charleston, SC. Additionally we have identified the following "hub" markets, to include in our expansion as we move outward from the Carolinas: Georgia: Atlanta Florida: Jacksonville; Tampa; Miami Virginia: Roanoke; Richmond Maryland: Baltimore; Columbia Tennessee: Knoxville; Nashville; Memphis Kentucky: Lexington Ohio: Columbus; Cleveland Pennsylvania: Pittsburgh; Philadelphia; Harrisburg Connecticut: New Haven New York: Syracuse; Albany Massachusetts: Boston; Worchester Michigan: Grand Rapids Indiana: Indianapolis; Southbend Illinois: Chicago; Springfield We also anticipate adding more independent retail partners through expansion into other regions, and the promotion of the business model on the OPH web site. The OPH website will continue to be developed in 2012, as we broaden our resource materials and video library. E-commerce function was added to the website in Q2 2011 to provide for an additional revenue stream. OPH is not forecasting appreciable online sales in 2011, however increases should begin to occur as the company begins to allocate online-marketing dollars targeted to building the online revenue stream in Spring 2012. OPH anticipates no sales growth and in some cases, declines from existing retail outlets for 2011 and the first half of 2012, in light of the current economic climate and our non-competitive product packaging. However, company management believes that the introduction of new packaging in early 2012, afforded by partial or full funding from this offering, will increase consumer interest in our exclusive products and spur an increase in sales compared to current and past revenues. Although management believes the new branding and packaging design will significantly improve the company s ability to compete, head-to-head, with national branded fertilizer manufacturers, there is no assurance that any such advantage will be realized. Sales increases are expected in late 2012 through 2014 as the company rolls out additions to the OPH product line to strategically fill gaps in the product offering. These are planned to be higher volume, lower priced products for the retail market and online community, as well as bulk products sold to the commercial landscape industry and agricultural markets. It is managements belief that these enhancements to the product offering will provide the company with a competitive advantage. (9) Table of Contents Office Location Our executive offices are located at 9206 Monroe Road, Charlotte, NC 28270, and our telephone number is (704) 841-1066. Our website is www.organicplanthealth.com. Information on our website or any other website is not a part of this prospectus. Corporate History and Organizational Structure Organic Plant Health Inc. (the "Company") was incorporated in the State of Nevada on September 5, 2007 and subsequently changed its name to QX Bio-Tech Group, Inc. on October 17, 2007. The Company further changed its name to Acumedspa Holdings, Inc. on July 30, 2009, and to Organic Plant Health Inc. on December 15, 2010. On July 1, 2009, the Company entered into a Plan of Exchange between the Company, Acumedspa Group LLC ("AcuMed"), a Florida corporation, and Consumer Care of America LLC ("CCA"), a Florida corporation, pursuant to which the Company acquired 100% of the capital stock of AcuMed and 100% of the capital stock of CCA in exchange for an issuance by the Company of 6,200,000 new shares of Common Stock of the Company to the Shareholders of AcuMed and CCA. The Plan of Exchange was approved by the Board of Directors and the Majority Shareholders of the Company on July 1, 2009. AcuMed and CCA were subsequently vended out after the stock exchange transaction (the "Transaction") between the Company and OPH was completed, The Transaction between the Company and OPH was completed has been accounted for as a reverse acquisition and recapitalization of the Company and resulted in the change of control in the Company. Pursuant to an Agreement (the "Agreement"), dated December 11, 2010, between and among the Company and Mr. Brian Sperber, an prior director and prior majority shareholder of the Company ("Mr. Sperber"), Mr. Sperber acquired 100% interest in the common shares of AcuMed, as well as assumed any and all liabilities of AcuMed in exchange for the payment of good and valuable consideration of not less than One Hundred dollars ($100), and acquired 100% interest in the common shares of CCA, as well as assumed any and all liabilities of Consumer Care Of America LLC in exchange for the payment of good and valuable consideration of not less than One Hundred dollars ($100). As a result of the transactions consummated at the closing, the purchase gave Mr. Sperber a 'controlling interest' in Acumedspa LLC and Consumer Care Of America LLC, and Acumedspa LLC and Consumer Care Of America LLC were no longer wholly-owned subsidiaries of the Company. The Agreement was approved by the Board of Directors of the Company on December 11, 2010. On December 10, 2010, the Company entered into a Plan of Exchange agreement (the "Plan of Exchange") with the members of Organic Plant Health, LLC, (referred to herein as "OPH"), a North Carolina Limited Liability Company and Mr. Sperber. Pursuant to the terms of the Plan of Exchange, the Company acquired 100% of the membership interests of OPH in exchange for a transfer of 3,985,000 shares of the Company s Convertible Preferred Stock to OPH Members, which gave OPH Members a controlling interest in the Company, representing approximately 76.47% of the then issued and outstanding shares on a dilutive basis. OPH and the Company were hereby reorganized, such that the Company acquired 100% of the ownership of OPH, and OPH became a wholly-owned subsidiary of the Company. The stock exchange transaction has been accounted for as a reverse acquisition and recapitalization of the Company whereby OPH is deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer). The accompanying consolidated financial statements are in substance those of OPH, with the assets and liabilities, and revenues and expenses, of the Company being included effective from the date of stock exchange transaction. The Company is deemed to be a continuation of the business of OPH. OPH was originally founded in Charlotte, NC in 2007 by Billy Styles and Alan Talbert. The business produces and distributes organic based fertilizers and soil conditioners for use in the continual care of residential and commercial landscapes. (10) Table of Contents The following chart reflects our organizational structure as of the date of this prospectus: Common Stock Being Offered Primary Offering 10,000,000 shares of Common Stock. Secondary Offering 10,456,375 shares of Common Stock. Initial Offering Price $0.20 Terms
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+PROSPECTUS SUMMARY The following is only a summary of the information, financial statements, and notes included in this prospectus. You should read the entire prospectus carefully, including Risk Factors and our financial statements and notes to the financial statements, before making an investment in Fuel Technology Products, Inc. OUR COMPANY Fuel Technology Products, Inc. ( Fuel Technology ) is the exclusive distributor of MPG3 fuel enhancer. MPG3 fuel enhancer is a solid form fuel additive that dissolves completely in motor fuel to improve mileage and vehicle performance. It is a combustion catalyst which basically means it helps deliver a more complete burn of the fuel in the engine. It is made from 100% active ingredients and eliminates the packaging and handling costs associated with traditional bottle products. Fuel Technology Products, Inc. distributes its products in a multi-level marketing program using the name Fuel Saver Group. RISK FACTORS Fuel Technology Products, Inc. is a new start-up company with no operating history. Operations to date have been primarily getting set up to do business. There is no history of profitable operations. Fuel Technology Products, Inc. does not have adequate capital to develop its business plan. It must raise additional capital in the public market by selling its securities. Our securities are not traded on any market or securities exchange.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001520527_value_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001520527_value_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..55526853400f2a740447626dbe6c954396b125b1
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001520527_value_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History The Company is a development stage company whose objective is to build, operate and manage e-commerce websites. The Company was incorporated in the State of Delaware in June 2009. On April 8, 2010, the Company and Value Suisse Investments AG, a Swiss corporation ("Value Suisse AG") entered into an asset exchange agreement (the "Asset Exchange"). Pursuant to the Asset Exchange, certain assets of Value Suisse AG were transferred to the Company in exchange for shares of common stock of the Company. The assets of Value Suisse AG transferred to the Company pursuant to the Asset Exchange included: (a) the complete and fully operating online messaging system named Joy-Vita.com, including all right and title and interest to the domain name ownership and source code ownership and all information and references concerning such messaging system including, but not limited to, operational manuals, research logs and materials, instructions, design information, computer, internet and intellectual data, drawings, drafts, hardware, ancillary software, reference materials, memoranda, and all and any related or associated document, drawing, intellectual information data, design or other related information. (www.joy-vita.com); (b) the complete and fully operating online marketing system named V-points.com, including all right and title and interest to the domain name ownership and source code ownership and all information and references concerning such marketing system including, but not limited to, operational manuals, research logs and materials, instructions, design information, computer, internet and intellectual data, drawings, drafts, hardware, ancillary software, reference materials, memoranda, and all and any related or associated document, drawing, intellectual information data, design or other related information. (www.v-points.com); and (c) the complete and fully operating online industrial and agricultural directory, currently under development, including the domain name, data, and source code ownership and all information and references concerning such directory including, but not limited to, operational manuals, research logs and materials, instructions, design information, computer, internet and intellectual data, drawings, drafts, hardware, ancillary software, reference materials, memoranda, and all and any related or associated document, drawing, intellectual information data, design or other related information. (www.exactapages.com) Business The Company plans to build, operate and manage e-commerce websites. The basis of the Company s overall business is founded on the ability to connect parties using the internet to facilitate commercial transactions. The Company s potential customers include internet users, manufacturers, retailers, wholesalers and service providers. The Company is in the process of launching its first three (3) websites: V-Points (www.v-points.com), JoyVita (www.joy-vita.com) and Exacta Pages (www.exactapages.com). In the future, the Company may build and launch additional e-commerce websites, however, no plans currently exist to launch additional websites. V-Points is a program that connects loyal customers with a selected group of online retailers. Customers receive an opportunity to save money by redeeming shopping points for cash, while retailers can benefit from a promotional tool that gives access to a new and motivated target market. The Company aims to foster a community of small and medium size businesses that share a large customer base while developing a loyal community of shoppers. JoyVita is an online communication platform, designed to connect experts with those who need their help. The JoyVita platform has been tailored in order to make the transaction of knowledge between the parties by attempting to simulate a face-to-face meeting and personalizing the overall user experience. With experts ranging from mental health counselors to information technology experts, and from cardiologists to fortune tellers, JoyVita aims to be a one-stop resource for any professional advice that one may need. Exacta Pages is an online shopping environment that provides consumers direct access to manufacturers and suppliers. With direct connections between buyers and sellers from all over the world for interactive trade, Exacta Pages will strive to provide opportunities for better pricing, selection and choices of goods for consumers. Exacta Pages aims to host an online shopping environment that provides users with convenience, speed, selection and confidence. VALUE SUISSE INTERNATIONAL INVESTMENTS, INC. (A Development Stage Company) CONSOLIDATED STATEMENT OF OPERATIONS From June 4, 2009 From June 4, 2009 For the year ended (inception) to (inception) to December 31, 2010 December 31, 2009 December 31, 2010 Revenues $- $- $- Cost of revenues - - - Gross profit - - - Operating expenses Selling, general and administration 137,926 70,000 207,926 Total operating expenses 137,926 70,000 207,926 Loss from operations (137,926) (70,000) (207,926) Other income Interest income 190 - 190 Total other income 190 - 190 Net loss $(137,736) $(70,000) $(207,736) Basic and diluted loss per common share $(0.01) $- $(0.01) Basic and diluted weighted average common shares outstanding 19,057,300 - 19,057,300 Page VALUE SUISSE INTERNATIONAL INVESTMENTS, INC. (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION Value Suisse International Investments, Inc. ("the Company") was incorporated in the State of Delaware on June 4, 2009 (inception date), and is focused on being a provider of an online engagement solution that facilitates real-time assistance, advice, direct source information and consumer targeted money saving online rewards program. By connecting third party merchants with customers seeking help, services or products on the Web, the Company s platform creates a compelling and personalized online experience. The Company offers three diverse products: JoyVita's goal is to use the internet's reach to bring together experts and those who need their help. JoyVita's platform is tailored to make the user's experience as close as possible to a face to face meeting. Experts range from mental health counselors to IT experts and from cardiologists to fortune tellers. JoyVita is a new brand and a new product, aimed at enabling patients and experts to connect from anywhere in the world. An emphasis will be placed on the mental health sector. V-Points goal is to provide not only smaller vendors and merchants with reaching a larger consumer base and offer products and specials, but to also provide consumers with more choices, savings and online rewards for their loyalty. Furthermore, V-Points goal is to sell the concept of the Company and eventually replace advertising. Exacta Pages' goal is to provide small to medium-sized businesses with direct connections to manufacturers, wholesalers and suppliers with the most updated and accurate information possible. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies presented below is designed to assist in understanding the Company s financial statements. Such financial statements and accompanying notes are the representations of the Company s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America ("GAAP") in all material respects, and have been consistently applied in preparing the accompanying financial statements. The Company is classified as a development stage enterprise under GAAP and has not generated significant revenues from its principal operations. Risks and Uncertainties facing the Company As a development stage company, the Company has no operating history and has continuously experienced losses since its inception. The Company needs to create a source of revenue or locate additional financing in order to continue its developmental plans. As a development stage company, management of the Company has no prior experience in building and marketing online solutions and services similar to that of the Company and in marketing and distributing such solutions and services on a broad scale. One of the biggest challenges facing the Company is identifying and targeting effective sales, marketing and distribution strategies. As a developing company, the Company is in the process of identifying and targeting potential distributors and marketers of its solutions and services in order to reach the intended end users for the same. To reach potential end customers, the Company will need to have an effective sales, marketing and distribution strategy. Due to financial constraints, the Company has to date conducted limited advertising and marketing to reach end customers. If the Company is unable to develop strong and reliable sources of potential end users and a means to efficiently reach buyers and customers for its solutions and services, it is unlikely that the Company will be able to develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s solutions and services are met with satisfaction by all relevant parties in the online marketplace and exhibit steady adoption of the Company s solutions and services by potential customer base, neither of which is currently known or guaranteed. The Company s independent auditors have issued a report questioning the Company s ability to continue as a going concern. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible which may be while this offering is still in process. There can be no
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001521077_safedox_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001521077_safedox_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..616e9daf5e621e3543bf158d4e14f6985dd19d94
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001521077_safedox_prospectus_summary.txt
@@ -0,0 +1,3840 @@
+PROSPECTUS SUMMARY
+
+ The following summary highlights material information contained in this Prospectus. This summary does not
+contain all of the information you should consider before investing in our common stock. Before making an investment
+decision, you should read this Prospectus carefully, including the section entitled Risk Factors and the financial
+statements and the notes thereto. You should also review the other available information referred to under Where You
+Can Find More Information , as well as any amendment or supplement hereto. Unless otherwise indicated, the terms
+ we , us and our refer and relate to SafedoXTM, Inc., a Wyoming corporation.
+
+The Issuer
+
+ We incorporated in the State of Wyoming on May 2, 2011, under the name SafedoXTM, Inc. On May 3, 2011,
+we acquired our predecessor company, mind3power Inc., a California corporation ( M3P ), pursuant to a Plan and
+Agreement of Merger that has been accounted for as a reorganization, whereby M3P merged with and into SafedoXTM,
+Inc. and ceased its separate existence. M3P and SafedoXTM are considered to be entities under common control at the
+time of the merger and the financial data presented herein encompasses the period from inception of M3P (January 4,
+2011) through our fiscal year end of July 31, 2011. SafedoXTM, Inc. carries on the business operations of M3P
+uninterrupted. Further, the plan of business of M3P has been adopted as the plan of business of SafedoXTM, Inc.
+
+Our Business and Products
+
+ We
+are in the business of selling our Internet-based, subscription-based SafedoXTM security software products to businesses
+of all sizes and institutions who are in need of securing sensitive digital files, as well as to individuals for home and business
+use. 
+
+ We have designed our SafedoXTM security software products such that they can be employed by any user of any
+computer skill level. The overriding objective behind the design of our SafedoXTM security software products is to
+provide content owners direct control over the distribution and use of their intellectual property.
+
+ As more fully described under Business below, we believe our SafedoXTM security software has the following
+competitive strengths:
+
+ A
+subscriber is able to control third-party access to, and manipulation of, digital files created by the subscriber, at any time,
+from time to time, and in real time, on the subscriber s computer, even after the digital file has been delivered to
+a third party. 
+
+ 
+
+ The security software s design includes current state-of-the-art, peer-reviewed encryption algorithms.
+
+ 
+
+ The security software is simple in its utility, being no more complex than standard e-mail applications.
+
+ 
+
+ The security software is affordable.
+
+ We believe our SafedoXTM security software has the following competitive weaknesses:
+
+ 
+
+ The security software products are new and have not been focus-group, or otherwise, tested for
+potential consumer acceptance.
+
+ 
+
+ The security software products do not yet enjoy brand name recognition.
+
+ 
+
+ The Internet-based platform upon which the security products operate has not yet been challenged to
+sustain a high level of subscriber activity.
+
+ From
+December 2011 through early February 2012, we advertised our security software products on the radio in the Los Angeles market.
+We have suspended our radio advertising campaign through at least June 2012, due to a lack of sales success associated therewith.
+We advertise on the Internet as a means of driving Internet traffic to the sales web page of our website, as well as directly
+through our website, www.safedox.com. In addition, we employ traditional face-to-face sales efforts to potential enterprise-level
+customers and our small network of independent resellers has recently begun to market our SafedoXTM security software
+directly to potential users, using their own methods. There is no assurance that these marketing efforts will result in our achieving
+profitable operations. (See Risk Factors ). 
+
+Securities Offered
+
+ This
+Prospectus relates to the resale of 3,037,671 shares of our common stock by the Selling Shareholders. (See Plan of Distribution ). 
+
+ Non-affiliate
+Selling Shareholders. Non-affiliate Selling Shareholders are offering a total of 2,037,671 shares and will sell such shares
+at a fixed price of $3.00 per share, until our common stock is quoted on the OTCBB and, thereafter, at prevailing market prices
+or privately negotiated prices. 
+
+ Affiliate Selling Shareholders. Affiliate Selling Shareholders (both of our officers and promoters) are offering
+a total of 1,000,000 shares at a fixed price of $3.00 per share. As these Affiliate Selling Shareholders are considered
+underwriters, they are required to offer their shares at the fixed price of $3.00 per share, even after our common stock
+is quoted on the OTCBB.
+
+No Public Market
+
+ There is no public market for our common stock. We cannot give any assurance that the shares being offered
+will have a market value, or that they can be resold at the offered price if and when an active secondary market might
+develop, or that a public market for our securities may be sustained even if developed. The absence of a public market
+for our common stock will make it difficult to sell your shares. Delaney Equity Group, LLC has filed an application with
+FINRA for our common stock to become eligible for trading on the OTCBB. There is no assurance that this application
+will be approved by FINRA. (See Risk Factors ).
+
+Duration of Offering
+
+ This offering by the Selling Shareholders will terminate on the earlier of the date on which the shares are eligible
+for resale without restrictions pursuant to Rule 144 under the Securities Act and the date on which all shares offered by
+this Prospectus have been sold by the Selling Shareholders.
+
+Shares Outstanding
+
+ There
+are 28,396,976 shares of our common stock issued and outstanding as of the date of this Prospectus. Following this offering, there
+will be 28,396,976 shares of our common stock issued and outstanding. 
+
+Offering Proceeds
+
+ Our company will not derive any funds from sales of common stock by the Selling Shareholders.
+
+Use of Proceeds
+
+ Our company will not derive any funds from sales of common stock by the Selling Shareholders.
+
+Risk Factors
+
+ An investment in our common stock involves a high degree of risk. You should carefully consider the
+information included in the Risk Factors section of this Prospectus, as well as the other information contained in this
+Prospectus, prior to making an investment decision regarding our common stock.
+
+SUMMARY FINANCIAL INFORMATION
+
+ The following summary financial data should be read in conjunction with Management s Discussion and
+Analysis of Financial Condition and Results of Operations , as well as the financial statements and notes thereto,
+beginning on page F-1 of this Prospectus. The Balance Sheet Data and the Statement of Operations Data presented
+below is derived from our audited financial statements.
+
+ 
+
+ Balance Sheet Data 
+
+ 
+
+ As
+ at 1/31/12 (unaudited) 
+
+ 
+
+ As at 7/31/11 
+
+ 
+
+ 
+
+ Current assets 
+
+ Total assets 
+
+ Total liabilities 
+
+ Stockholders equity 
+
+ 
+
+ $127,125 
+
+ $131,537 
+
+ $54,431 
+
+ $77,106 
+
+ 
+
+ $339,183 
+
+ $340,295 
+
+ $38,145 
+
+ $302,150 
+
+ 
+
+ 
+
+ 
+
+ Statement of Operations Data 
+
+ 
+
+ Six Months Ended 1/31/12 (unaudited) 
+
+ 
+
+ Period
+ from Inception (1/4/11) through 1/31/12 (unaudited) 
+
+ 
+
+ 
+
+ Revenues 
+
+ Operating expenses 
+
+ Net loss 
+
+ Net loss per share 
+
+ 
+
+ $ --- 
+
+ $656,179 
+
+ $655,972 
+
+ $(0.023) 
+
+ 
+
+ $ --- 
+
+ $1,016,743 
+
+ $1,016,473 
+
+ $(0.053) 
+
+ 
+
+RISK FACTORS
+
+ An investment in our common stock involves a high degree of risk. You should carefully consider the risks
+described below and the other information in this Prospectus before investing in our common stock. The occurrence of
+any of the following risks could have a material adverse effect on our business, financial condition and results of
+operations.
+
+General Risks
+
+Uncertainty about future political and economic conditions and other adverse changes in general political conditions
+could adversely affect our operating results.
+
+ Uncertainty about future political and economic conditions makes it difficult for us to forecast operating results.
+If economic growth in the U.S. and other countries slows further or does not improve or gets worse, many potential
+customers may delay or reduce purchases on products such as our SafedoXTM security software products. This could
+result in a reduction in our sales. Also, political instability in any of the major countries in which we might do future
+business would also likely harm our future results of operations and financial condition.
+
+Risks Concerning Our Business
+
+The report of our independent auditors indicates uncertainty concerning our ability to continue as a going concern
+and this may impair our ability to raise capital to fund our business plan.
+
+ In
+its opinion on our financial statements for the period ended July 31, 2011, our independent auditors raised substantial doubt
+about our ability to continue as a going concern. We cannot assure you that this will not impair our ability to raise capital
+on attractive terms. Additionally, we cannot assure you that we will ever achieve significant revenues and therefore remain a
+going concern. Our financial statements do not include any adjustments relating to the recoverability and classification of asset
+carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a
+going concern. 
+
+Our lack of operating history makes it difficult to predict our future operating results.
+
+ Neither our company nor our predecessor, mind3power, Inc., has an operating history in the computer software
+industry upon which you can evaluate our business, which makes a purchase of our common stock speculative in nature.
+
+There are risks and uncertainties encountered by early-stage companies in rapidly evolving markets, such as the
+computer software market.
+
+ We cannot assure you that, in the rapidly evolving and highly competitive computer software industry, we will
+be able to overcome our lack of brand name recognition and be successful in preventing our SafedoXTM security software
+products from becoming obsolete.
+
+We may not be successful in establishing our security software sales business model.
+
+ We have recently begun to market our SafedoXTM security software products. We cannot assure you that we
+will be successful in these efforts. Should we fail to implement successfully our business plan, that is, to garner a
+significant number of subscribers to our security software products, purchasers of common stock can expect to lose their
+entire investments.
+
+We may never earn a profit.
+
+ Because we lack a long-term operating history, we cannot assure you that we will ever earn a profit from our
+operations.
+
+ At January 31, 2012, we had an accumulated deficit of $1,016,476,
+working capital of $72,694 and cash on hand of $127,125, which is not sufficient to permit us to pursue our growth strategy in
+full. 
+
+ From
+our inception through January 31, 2012, we incurred an accumulated deficit of $1,016,476. Through January 31, 2012, we had not
+generated revenues from sales of subscriptions to our SafedoXTM software security products, our accumulated deficit
+increased during the three months ended January 2012 and we expect that our accumulated deficit will again increase during the
+three months ending April 30, 2012. 
+
+ As
+of January 31, 2012, we had working capital of $72,694, including cash on hand of $127,125. Currently, we possess cash on hand
+of approximately $10,000. We require additional funds with which to conduct our business operations and to implement our marketing
+plan. There is no assurance that we will be able to generate revenues that are sufficient to sustain our operations, nor can we
+assure you that we will be able to obtain additional sources of financing in order to satisfy our working capital needs. 
+
+ During
+the next 12 months, it will be necessary for our company to obtain additional funds with which to sustain our operations in the
+approximate amount of $600,000, based on our expected future burn rate . We expect that our operations will provide
+an ever-increasing level of funds from subscription fees. However, as we are unable to predict accurately our future revenues,
+or the timing thereof, we are currently exploring numerous third-party funding sources. In this regard, our management has held
+face-to-face meetings with numerous potential funding sources, over the past three months. To date, we have not entered into any
+binding obligation to obtain funds from a third party. Any funds obtained by us may be in the form of loans, equity investments
+or a combination thereof. Should we fail to obtain needed capital, we may be forced to cease operations. 
+
+We currently depend on our two officers; the loss of either of these officers could disrupt our operations and adversely
+affect the development of our business.
+
+ Our success in establishing our business plan will depend on the continued service and on the performance of
+our President, Manoj Patel, and our Executive Vice President, James F. Lay, and, as we grow, other executive officers
+and key employees. We have entered into an employment agreement with each of Messers. Patel and Lay. The loss of
+services of these key personnel for any reason could seriously impair our ability to execute our business plan, which
+could have a materially adverse effect on our business and future results of operations. We have not purchased any key-man life insurance.
+
+If we are unable to recruit and retain key personnel, our business may be harmed.
+
+ Much of our future success depends on the continued service and availability of our senior management. These
+individuals possess specialized knowledge and skills with respect to our SafedoXTM security software products. The loss
+of these individuals could harm our business. In the future, our business may become dependent on our ability to retain,
+hire and motivate talented, highly-skilled personnel. Experienced personnel in the information technology industry are
+in high demand and competition for their talents is intense. If we are unable to attract and retain key personnel, our
+business may be harmed. Our failure to enable the effective transfer of knowledge and facilitate smooth transitions with
+regards to our key employees could adversely affect our long-term strategic planning and execution.
+
+Our business plan is not based on independent market studies, so we cannot assure you that our strategy will be
+successful.
+
+ We have not commissioned any independent market studies concerning the computer software industry. Rather,
+our plans for implementing our business strategy and achieving profitability are based on the experience, judgment and
+assumptions of our management and upon other available information concerning the computer software industry. If
+our management s assumptions prove to be incorrect, we will not be successful in establishing our computer software
+business.
+
+We may not be able to compete effectively in our industry.
+
+ The computer software industry, including the security software market segment, is highly competitive. As there
+are few barriers to entry, the industry has a high number of product offerings, including those within the security software
+market segment. Many of our expected competitors possess substantially greater resources, financial and otherwise, than
+do we. We cannot assure you that we will be able to compete successfully in our markets.
+
+Introduction of new products by competitors could harm our competitive position and results of operations.
+
+ The market for our security software products is characterized by intense competition, evolving industry
+standards and business and distribution models, disruptive software and hardware technology developments, frequent
+new product introductions, short product life cycles, price cutting, with resulting downward pressure on gross margins,
+and price sensitivity on the part of consumers. Our future success will depend, first, on our ability to gain name brand
+recognition and user subscriptions, and, next, on our ability to enhance our existing products, introduce new products
+and services on a timely and cost-effective basis, meet changing customer needs and anticipate and respond to emerging
+standards, business models, software delivery methods and other technological changes. If we fail to satisfy such
+standards of operation, our operating results could suffer. Further, recent intra-industry consolidations may result in
+stronger competitors and may, therefore, impair our ability to expand our current operations and harm our future results
+of operations.
+
+Revenue from our product sales may be difficult to predict.
+
+ We sell our SafedoXTM security software products on a subscription basis, which subscription periods are
+generally one month to one year in length. While our subscriptions contain automatic renewal terms, our customers have
+no obligation to renew their subscriptions for our SafedoXTM security software products after the expiration of their initial
+subscription periods and there is no assurance that these subscriptions will be renewed. It is possible that our customers 
+renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction
+with our SafedoXTM security software products, the prices of our subscriptions, the prices of products offered by our
+competitors, reductions in our customers spending levels or declines in consumer Internet activity as a result of
+economic downturns or uncertainty in financial markets. If our customers do not renew their subscriptions for our
+SafedoXTM security software products or if they renew on less favorable terms to us, our revenues may decline.
+
+It is likely that we will be required to obtain an export license for our products.
+
+ Due to the strength of the encryption technology associated with our products, we expect that our products will
+be subject to export control laws and regulations. Specifically, in such circumstance, we will be required to apply for
+an export license from the Bureau of Industry and Security within the U.S. Department of Commerce. While we expect
+that we will be able to obtain an export license with respect to our products, there is no assurance that such will be the
+case. Our inability to obtain an export license with respect to our products can be expected to have a negative effect on
+our future operating results.
+
+We may incur substantial costs enforcing intellectual property rights and/or defending against third-party claims,
+as a result of litigation or other proceedings.
+
+ In connection with the enforcement of our own intellectual property rights or disputes relating to the validity
+or alleged infringement of third-party intellectual property rights, including patent rights, we may, in the future, be subject
+to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation are typically very
+costly and can be expected to be disruptive to our business operations by diverting the attention and energies of
+management and key technical personnel. We may not prevail in any such future litigation and disputes.
+
+We may not be able to protect our intellectual property rights from third-party infringers or unauthorized copying,
+use or disclosure.
+
+ Although we are committed to defending our intellectual property rights and combating unlicensed copying and
+use of our software and intellectual property rights, preventing unauthorized use or infringement of our rights is
+inherently difficult. If our SafedoXTM security software products are victimized by piracy activities, our business would
+be harmed.
+
+ Additionally, we take significant measures to protect the secrecy of our confidential information and trade
+secrets, including our source codes. If unauthorized disclosure of our confidential information and trade secrets occurs
+through security breach or attack, or otherwise, we could potentially lose future trade secret protection for that source
+code. The loss of trade secret protection could make it easier for third-parties to compete with our products by copying
+functionality, which could adversely affect our future revenue and operating margins. We also seek to protect our
+confidential information and trade secrets through the use of non-disclosure agreements with our customers, contractors
+and vendors. However, there is a risk that our confidential information and trade secrets may be disclosed or published
+without our authorization, and, in these situations, it may be difficult and/or costly for us to enforce our rights.
+
+Security vulnerabilities in our products and systems could lead to reduced revenues or to liability claims.
+
+ Maintaining the security of computers and computer networks is a critical issue for us and our customers.
+Hackers may develop and deploy viruses, worms and other malicious software programs that are designed to attack our
+products and systems, including our internal network. This is an industry-wide problem that affects computers and
+products across all information technology platforms. Any vulnerabilities that might exist in our products could cause
+the application to crash and could potentially allow an attacker to take control of the affected system.
+
+ We take significant steps to address potential security vulnerabilities in our security software products. The
+cost of these steps could, in the future, reduce our operating margins. Despite our efforts, actual or perceived security
+vulnerabilities in our security software products may lead to claims against us and harm our reputation, and could lead
+some customers to seek to cancel their subscriptions for our security software products, to reduce or delay future
+purchases of our products or to use competing products. Any of these actions by customers could adversely affect our
+revenue.
+
+Application of our SafedoXTM security software products provides us with access to our subscribers computers.
+
+ Because our SafedoXTM security software products provide us access to our subscribers computers, it could
+be perceived by potential customers as a means of obtaining confidential and secret information from such customers 
+computers. Although we do not seek to obtain such information from our customers, this perception could have a
+material adverse affect on our ability to market successfully our SafedoXTM security software products.
+
+Risks Related to this Offering
+
+Investing in our company is a highly speculative investment and could result in the loss of your entire investment.
+
+ A purchase of our common stock is highly speculative and involves significant risks. The common stock should
+not be purchased by any person who cannot afford the loss of his entire purchase price. The business objectives of our
+company are also speculative, and we may be unable to satisfy those objectives. Our shareholders may be unable to
+realize a substantial, or any, return on their investments and may lose their entire investments.
+
+For the foreseeable future, we will not have a class of our securities registered under Section 12 of the Securities
+Exchange Act of 1934 (the Exchange Act ); thus, we will not be a fully-reporting company.
+
+ Following the effective time of the Registration Statement of which this Prospectus forms a part, we will be
+required to comply only with the reporting requirements imposed by Section 15(d) of the Exchange Act, which are less
+rigorous than the reporting requirements imposed by Section 12 of the Exchange Act. For so long as we do not have a
+class of our securities registered under Section 12 of the Exchange Act, we will not be a fully-reporting company.
+
+ Section 15(d)-reporting companies are required to file periodic financial reports on Form 10-K (annual report)
+and Form 10-Q (quarterly report), as well as current reports on Form 8-K, which report material events affecting a
+company. Section 12-reporting companies, or fully reporting companies, in addition to being required to file the same
+reports as Section 15(d)-reporting companies, are also subject to the proxy requirements of Section 14 of the Exchange
+Act and the short-swing profit rules of Section 16 of the Exchange Act. Further, officers, directors and 10%-owners
+are required to file ownership reports (Forms 3, 4 and 5), and other persons are required to file certain ownership reports
+required by Section 13 of the Exchange Act.
+
+It is likely that our reporting obligations under Section 15(d) of the Exchange Act will be suspended under that
+statutory section, beginning for Fiscal 2013 reporting periods.
+
+ Inasmuch as it appears reasonably likely that we will have less than 300 shareholders at the end of our current
+fiscal year ending July 31, 2012, there is a significant risk that, following the filing of our Form 10-K for our fiscal year
+ending July 31, 2012, we will no longer be required to file periodic reports with the SEC. Were we to cease the filing
+of periodic reports, it is likely that any trading market for our common stock would be dramatically and negatively
+affected, to the severe detriment of our shareholders.
+
+ However,
+our board of directors has the current intention of causing our company to continue to file all Section 15(d)-required reports
+in the future, including periods during which we are not statutorily required to do so. Notwithstanding this current intention,
+our board of directors may, nevertheless, determine to discontinue voluntary reporting. Current and potential future shareholders
+should note that, although any reports provided are required to be accurate and not misleading, the information provided by us
+might be less extensive that the information required of mandatory filers. 
+
+Our management has not performed an assessment of the effectiveness of our disclosure controls and procedures,
+nor has an assessment of our internal controls over financial reporting been made by our independent auditor.
+
+ To
+date, our management has not been required to report on our disclosure controls and procedures or on our internal controls over
+financial reporting. Further, for so long as we are considered a smaller reporting company , we will be exempt from
+the auditor attestation requirement concerning any of our periodic reports. 
+
+ Without
+effective current controls and procedures relating to disclosure and financial reporting, there is a greater likelihood that our
+disclosure and financial reporting procedures will, in fact, fail to yield timely and accurate reporting, than if our management
+and auditor were required to assess our controls and procedures on a regular basis. In addition, without effective controls and
+procedures, there exists an increased possibility that our management would be unable to detect and correct operating inefficiencies
+or discrepancies. This circumstance could cause us to report reduced profits or greater losses, depending on the overall strength
+of our then operations. 
+
+Risks Related to Our Common Stock
+
+Currently, there is no public market for our common stock; there can be no assurance that any public market will
+ever develop or that our common stock will be quoted for trading.
+
+ Prior to the date of this Prospectus, there has not been any established trading market for our common stock,
+and there is currently no public market whatsoever for our securities. Delaney Equity Group, LLC has filed an
+application with FINRA for the quotation of our common stock on the OTCBB maintained by FINRA. There can be
+no assurance as to whether such application will be accepted by FINRA. If the application is accepted, there can be no
+assurances as to whether any market for our shares will develop or the prices at which our common stock will trade. If
+the application is accepted, we cannot predict the extent to which investor interest in us will lead to the development of
+an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient
+execution of buy and sell orders for investors.
+
+The market price for our common stock may be volatile.
+
+ Our common stock is unlikely to be followed by any market analysts and it can be expected that there may be
+few institutions that will act as market makers for our common stock. The existence of either of these circumstances
+could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed
+and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate
+significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors,
+including the depth and liquidity of the market for shares of our common stock, developments affecting our business,
+including the impact of the factors referred to elsewhere in these Risk Factors, investor perception and general economic
+and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of
+our common stock. Because of the anticipated low price of our common stock, many brokerage firms may not be willing
+to effect transactions therein.
+
+ In addition, the securities markets have, from time to time, experienced significant price and volume fluctuations
+that are unrelated to the operating performance of particular companies. These market fluctuations may also materially
+and adversely affect the market price of our common stock.
+
+Our Board of Directors is authorized to issue shares of preferred stock, which may have rights and preferences
+detrimental to the rights of the holders of our common stock.
+
+ We are authorized to issue up to 5,000,000 shares of preferred stock, $.0001 par value. As of the date of this
+Prospectus, we have not issued any shares of preferred stock. Our preferred stock may bear such rights and preferences,
+including dividend and liquidation preferences, as the Board of Directors may fix and determine from time to time. Any
+such preferences may operate to the detriment of the rights of the holders of the common stock being offered hereby.
+
+We do not intend to pay dividends on our common stock.
+
+ We intend to retain earnings, if any, to provide funds for the implementation of our business strategy. We do
+not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders
+of our common stock will receive any cash, stock or other dividends on their shares of our common stock, until we have
+funds which our Board of Directors determines can be allocated to dividends.
+
+If you purchase shares of our common stock, you should expect to experience substantial dilution of your investment.
+
+ In the event that you do not purchase shares of our common stock from an Affiliate Selling Shareholder, we are
+unable to predict the exact dilution of your investment in our common stock. However, you will suffer substantial and
+immediate dilution, due to the lower book value per share of our common stock compared to the expected market price
+per share of our common stock. (See Dilution ).
+
+Purchasers of common stock hereunder will suffer dilution in their ownership, should our currently outstanding
+warrants be exercised by their holders.
+
+ Currently, we have outstanding 3,057,520 currently exercisable warrants to purchase a like number of shares
+of our common stock. Purchasers of common stock hereunder will suffer dilution in their ownership, to the extent any
+of these warrants are exercised by their holders. However, the exact dilution in ownership cannot be predicted by us.
+
+As a public company, we will incur audit fees and legal fees in connection with the preparation of our required
+financial reporting under the Exchange Act, which costs could reduce or eliminate our ability to earn a profit.
+
+ Following the effective date of our registration statement of which this Prospectus is a part, we will be required
+to file periodic reports with the SEC pursuant to the Exchange Act, including the rules and regulations promulgated
+thereunder. In order to comply with these requirements, our independent registered public accounting firm will be
+required to review our financial statements on a quarterly basis and audit our financial statements on an annual basis.
+Moreover, our legal counsel will be required to review and assist in the preparation of such reports. While the fees
+charged by these professionals for their services cannot be accurately predicted at this time, it can be expected that these
+fees will have a significant impact on our ability to earn a profit. We may be exposed to potential risks resulting from
+new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports
+or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported
+financial information and the trading price of our common stock, if a market ever develops, could drop significantly.
+
+FINRA sales practice requirements may limit a shareholder s ability to buy and sell our common stock.
+
+ FINRA has adopted rules that relate to the application of the SEC s penny stock rules in trading our securities
+and require that a broker-dealer have reasonable grounds for believing that the investment is suitable for that customer,
+prior to recommending the investment. Prior to recommending speculative, low-priced securities to their non-institutional
+customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax
+status, investment objectives and other information.
+
+ Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low-priced
+securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers
+to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading
+activity and liquidity of our common stock. Further, many brokers-dealers charge higher transactional fees for penny
+stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, thereby
+reducing a shareholder s ability to resell shares of our common stock.
+
+We anticipate our common stock being quoted on the OTCBB, which may result in limited liquidity and the inability
+of our shareholders to maintain accurate price quotations of the common stock.
+
+ Until our shares of common stock qualify for inclusion in the NASDAQ system, if ever, the trading of our
+common stock, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB, as
+maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to,
+the price of our common stock.
+
+If a market develops for our common stock, sales of our common stock in reliance upon Rule 144 may depress prices
+in that market by a material amount.
+
+ All of the outstanding shares of our common stock are restricted securities within the meaning of Rule 144
+under the Securities Act of 1933, as amended (the Securities Act ). As restricted shares, these shares may be resold
+only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions
+from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides, in
+essence, that a person who has held restricted securities for a prescribed period may, under certain conditions, sell every
+three months, in brokerage transactions, a number of shares that does not exceed 1% of a company s outstanding common
+stock. The alternative amount of permissible sales, average weekly trading volume during the four calendar weeks prior
+to the sale, is not available to our shareholders in that the OTCBB (if and when listed thereon) is not an automated
+quotation system . Market based volume limitations are not available for securities quoted only over the OTCBB. As
+a result of the 2008 revisions to Rule 144, there is no limit on the amount of restricted securities that may be sold by a
+non-affiliate (i.e., a shareholder who has not been an officer, director or control person for at least 90 consecutive days)
+after the restricted securities have been held by the owner for a period of one year. A sale under Rule 144 or under any
+other exemption from the Securities Act, if available, or pursuant to registration of shares of common stock of present
+shareholders, may have a depressive effect upon the price of the common stock in any market that may develop.
+
+Any trading market that may develop for our common stock may be restricted by virtue of state securities Blue Sky 
+laws, which prohibit trading absent compliance with individual state laws; these restrictions may make it difficult or
+impossible to sell shares of our common stock in those states.
+
+ There is no public market for our common stock and there can be no assurance that any public market will
+develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities laws or
+securities regulations promulgated by various states and foreign jurisdictions (commonly referred to as Blue Sky laws).
+Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because
+the securities registered hereunder have not been registered for resale under the Blue Sky laws of any state, the holders
+of such shares and persons who desire to purchase them in any trading market that might develop in the future, should
+be aware that there may be significant state Blue Sky law restrictions upon the ability of investors to sell the securities
+and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock.
+We currently do not intend and may not be able to qualify our common stock for resale in the approximately 17 states
+which do not offer manual exemptions and require shares to be qualified before they can be resold by our shareholders.
+Accordingly, investors should consider the secondary market for our securities to be a limited one.
+
+Any market that develops in shares of our common stock will be subject to the penny stock restrictions which will
+create a lack of liquidity and make trading difficult or impossible.
+
+ SEC Rule 15g-9 establishes the definition of a penny stock , for purposes relevant to us, as any equity security
+that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a
+limited number of exceptions. It is likely that our common stock will be considered a penny stock for the immediately
+foreseeable future. This classification severely and adversely affects the market liquidity for our common stock. For any
+transaction involving a penny stock, unless exempt, the penny stock rules require that a broker-dealer approve a person s
+account for transactions in penny stocks and the broker-dealer receive from the investor a written agreement to the
+transaction setting forth the identity and quantity of the penny stock to be purchased.
+
+ In order to approve a person s account for transactions in penny stocks, the broker-dealer must obtain financial
+information and investment experience and objectives of the person and make a reasonable determination that the
+transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in
+financial matters to be capable of evaluating the risks of transactions in penny stocks.
+
+ The broker-dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared
+by the SEC relating to the penny stock market, which, in highlight form, sets forth:
+
+ the basis on which the broker-dealer made the suitability determination; and
+
+ 
+
+ that the broker-dealer received a signed, written agreement from the investor prior to the transaction.
+
+ Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in
+secondary trading and commissions payable to both the broker-dealer and the registered representative, current
+quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock
+transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the
+account and information on the limited market in penny stocks.
+
+ Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary
+paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which
+may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the
+effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure
+requirements could impede the sale of our common stock, if and when our common stock becomes publicly traded. In
+addition, the liquidity for our common stock may decrease, with a corresponding decrease in the price of our common
+stock. Our common stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our
+shareholders will, in all likelihood, find it difficult to sell their common stock. (See Penny Stock under Plan of
+Distribution ).
+
+The elimination of monetary liability against our directors, officers and employees under Wyoming law and the
+existence of indemnification rights in favor of our directors, officers and employees may result in substantial
+expenditures by our company and may discourage lawsuits against our directors, officers and employees.
+
+ Our Articles of Incorporation contain a specific provision that eliminates the liability of directors for monetary
+damages to our company and our shareholders. Further, we intend to give such indemnification to our directors and
+officers to the extent provided by Wyoming law. We also have contractual indemnification obligations under indemnity
+agreements with our executive officers. The foregoing indemnification obligations could result in our incurring
+substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may
+be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit
+against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative
+litigation by our shareholders against our directors and officers, even though such actions, if successful, might otherwise
+benefit our company and our shareholders.
+
+ We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal
+securities laws is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event
+that a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or
+paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted
+by a director, officer or controlling person in connection with the securities being registered, we will (unless, in the
+opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction,
+the question whether indemnification by us is against public policy as expressed in the Securities Act and will be
+governed by the final adjudication of such issue. The legal process relating to this matter, if it were to occur, is likely
+to be very costly and may result in us receiving negative publicity, either of which factors are likely to materially reduce
+the market for, and price of, our common stock, if such a market ever develops.
+
+THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION
+OF THE RISKS INVOLVED IN THIS OFFERING. PROSPECTIVE INVESTORS SHOULD READ THE ENTIRE
+PROSPECTUS BEFORE DECIDING TO INVEST IN SAFEDOX, INC.
+
+DETERMINATION OF OFFERING PRICE
+
+ As a result of there being no established public market for our common stock, the offering price and other terms
+and conditions relative to our common stock have been arbitrarily determined and do not bear any relationship to assets,
+earnings, book value or any other objective criteria of value. In addition, no investment banker, appraiser or other
+independent third party has been consulted concerning the offering price for the common stock or the fairness of the
+offering price used for the common stock.
+
+USE OF PROCEEDS
+
+ We
+will not receive any of the proceeds from the sale of the common stock offered by the Selling Shareholders. We are registering
+3,037,671 of our 28,396,976 currently outstanding shares for resale to provide the holders thereof with freely tradable securities,
+but the registration of such shares does not necessarily mean that any of such shares will be offered or sold by the holders thereof. 
+
+PLAN OF DISTRIBUTION
+
+ In May 2011, we issued a total of 26,000,000 shares of our common stock for consideration other than cash,
+as follows:
+
+ 
+
+ 21,100,000 shares were issued to our officers and directors, Manoj Patel (10,550,000 shares) and
+James F. Lay (10,550,000 shares), pursuant to the merger of mind3power, Inc. into our company,
+which shares were valued for financial reporting purposes at $2,110 ($.0001 per share);
+
+ 
+
+ 900,000 shares were issued in payment of an existing $300 loan ($.0003 per share); and
+
+ 
+
+ 4,000,000 shares were issued to third-party consultants under four separate agreements, in payment
+of $11,000 ($0.002 and $0.005 per share) of consulting services.
+
+ Also in May 2011, we issued 350,000 shares to nine persons for a total of $105,000 ($.30 per share) in cash.
+These shares were issued under ten separate stock purchase agreements.
+
+ In June 2011, we issued 1,287,600 shares to seven persons for a total of $386,280 ($.30 per share) in cash.
+These shares were issued in a private offering pursuant to Rule 506 of Regulation D under the Securities Act. Each
+investor therein represented in writing that he was acquiring the shares for his own account and for investment.
+
+ In August 2011, we issued 35,000 shares to two third-party consultants under separate consulting agreements,
+in payment of a total of $10,500 ($.30 per share) of consulting services. In addition, we issued a total of 10,376 shares
+to two persons as finder s fees under written agreements, which shares were valued, in the aggregate, at $31,128 ($3.00
+per share). The persons who were issued shares as finder s fees made an introduction of our company to certain
+investors. No further services were performed by these persons in this regard, the introductions constituting the entirety
+of their duties. As of the date of filing of the Registration Statement of which this Prospectus forms a part, these persons
+were no longer providing such services.
+
+ In September 2011, we issued 143,000 shares to four persons for a total of $143,000 ($1.00 per share) in cash.
+These shares were issued under four separate stock purchase agreements. In addition, we issued 21,000 shares to a
+consultant under a consulting agreement, in payment of a total of $6,300 ($.30 per share) of consulting services.
+
+ In October 2011, we issued 250,000 shares to two third-party consultants under separate consulting agreements,
+in payment of a total of $80,000 ($.30 per share) of consulting services.
+
+ In November 2011, we issued 100,000 shares to a third-party consultant under a consulting agreement, in
+payment of $30,000 ($.30 per share) of consulting services, and we issued 100,000 shares to one person for $100,000
+($1.00 per share) in cash under a stock purchase agreement.
+
+ As described in the foregoing paragraphs, during September, October and November 2011, our board of
+directors authorized issuances of our common stock at varying prices. Specifically, all sales of our common stock for
+cash were made at a price of $1.00 per share, while all issuances of our common stock in payment of consulting services
+were valued at $.30 per share. The lower value assigned to the shares issued for consulting services was the direct result
+of our negotiations with these third parties, each of whom refused to be compensated with shares valued at any higher
+price. Having determined that the services of these consultants were important to our continued operations and in our
+company s and our shareholders best interests, our board of directors authorized these issuances.
+
+ No underwriter participated in the foregoing transactions, and no underwriting discounts or commissions were
+paid, nor was any general solicitation or general advertising conducted. The securities bear a restrictive legend and stop
+transfer instructions are noted on our stock transfer records.
+
+ The common stock offered under this Prospectus by the Selling Shareholders may be sold from time to time
+for the account of the Selling Shareholders named in the following table. The table also contains information regarding
+each Selling Shareholder s beneficial ownership of shares of our common stock as of the date of this Prospectus, and
+as adjusted to give effect to the sale of the shares offered hereunder.
+
+ Other than the relationships described below, none of the Selling Shareholders had or has any material
+relationship with our company. Except as stated in the table below, none of the Non-affiliate Selling Shareholders is a
+family member of the current officers and directors of our company.
+
+ The following table sets forth certain information regarding the beneficial ownership of shares of common stock
+by the Selling Shareholders as of the date of this Prospectus, as well as the number of shares of common stock covered
+by this Prospectus.
+
+ 
+
+ Prior
+ to this Offering 
+
+ 
+
+ After
+ this Offering 
+
+ Name of Selling Shareholder 
+
+ Position, Office 
+
+ or Other 
+
+ Material 
+
+ Relationship 
+
+ # of Shares 
+
+ Beneficially 
+
+ Owned 
+
+ % 
+
+ Bene-ficially Owned (1) 
+
+ #
+ of
+ Shares 
+
+ to be Offered 
+
+ for the Account 
+
+ of the Selling 
+
+ Shareholder 
+
+ # of Shares Beneficially Owned 
+
+ % 
+
+ Bene-ficially Owned (1) 
+
+ Manoj Patel 
+
+ James F. Lay 
+
+ Vern C. Moter 
+
+ David Loflin 
+
+ Newlan & Newlan, Ltd. (2) 
+
+ Global Interactive Network 
+
+ Services, Inc. (3) 
+
+ Gerald Harms 
+
+ IAM&W Services, LLC (4) 
+
+ JATN Family Limited 
+
+ Partnership(5) 
+
+ James Parker 
+
+ Gaylene J. Smith and 
+
+ Donald A. Smith 
+
+ Larry S. Thomas 
+
+ New Beginnings Life Center, 
+
+ LLC, dba Imperial Heights (6) 
+
+ Dawn E. Graeff 
+
+ Bharatkumar D. Patel (8) 
+
+ Mahesh S. Patel (7) 
+
+ Jack Domet and Angela Domet 
+
+ Leala M. Anajafi 
+
+ Matthew S. Quesada 
+
+ Mukesh S. Patel (7) 
+
+ Daffron Marketing (17) 
+
+ Justin Beauchane 
+
+ Tom Powell and Susan Powell 
+
+ Ryan Rafferty 
+
+ Jim Belanger 
+
+ Daniel S. Jacoby V 
+
+ Gumption Enterprises (18) 
+
+ Officer/Director 
+
+ Officer/Director 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ N/A 
+
+ 11,100,000(9) 
+
+ 11,100,000(9) 
+
+ 1,200,000(10) 
+
+ 1,200,000(10) 
+
+ 1,200,000(10) 
+
+ 198,000(11) 
+
+ 150,000(12) 
+
+ 417,120(13) 
+
+ 182,500(14) 
+
+ 120,000(15) 
+
+ 180,000(14) 
+
+ 300,000(16) 
+
+ 116,667 
+
+ 33,333 
+
+ 33,333 
+
+ 50,000 
+
+ 33,333 
+
+ 16,667 
+
+ 16,667 
+
+ 33,333 
+
+ 25,000 
+
+ 117,876 
+
+ 43,000 
+
+ 21,000 
+
+ 100,000 
+
+ 1,000,000 
+
+ 100,000 
+
+ 35.29% 
+
+ 35.29% 
+
+ 3.83% 
+
+ 3.83% 
+
+ 3.83% 
+
+ * 
+
+ * 
+
+ 1.33% 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ 3.18% 
+
+ * 
+
+ 500,000 
+
+ 500,000 
+
+ 500,000 
+
+ 500,000 
+
+ 500,000 
+
+ 13,200 
+
+ 7,500 
+
+ 52,140 
+
+ 60,000 
+
+ 30,000 
+
+ 30,000 
+
+ 100,000 
+
+ 11,667 
+
+ 6,667 
+
+ 6,667 
+
+ 5,000 
+
+ 10,000 
+
+ 5,000 
+
+ 5,000 
+
+ 6,667 
+
+ 25,000 
+
+ 5,363 
+
+ 8,600 
+
+ 4,200 
+
+ 20,000 
+
+ 100,000 
+
+ 25,000 
+
+ 10,600,000(9) 
+
+ 10,600,000(9) 
+
+ 700,000(10) 
+
+ 700,000(10) 
+
+ 700,000(10) 
+
+ 184,800(11) 
+
+ 142,500(12) 
+
+ 364,980(13) 
+
+ 122,500(14) 
+
+ 90,000(15) 
+
+ 150,000(14) 
+
+ 200,000(16) 
+
+ 105,000 
+
+ 26,666 
+
+ 26,666 
+
+ 45,000 
+
+ 23,333 
+
+ 11,667 
+
+ 11,667 
+
+ 26,666 
+
+ -0- 
+
+ 112,513 
+
+ 34,400 
+
+ 16,800 
+
+ 80,000 
+
+ 900,000 
+
+ 75,000 
+
+ 33.70% 
+
+ 33.70% 
+
+ 2.23% 
+
+ 2.23% 
+
+ 2.23% 
+
+ * 
+
+ * 
+
+ 1.16% 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ 0% 
+
+ * 
+
+ * 
+
+ * 
+
+ * 
+
+ 2.86% 
+
+ * 
+
+ 
+
+ TOTALS 
+
+ 29,087,829(19) 
+
+ 92.48% 
+
+ 3,037,671 
+
+ 26,050,158(19) 
+
+ 82.82% 
+
+*
+
+(1)
+
+(2)
+
+(3)
+
+(4)
+
+(5)
+
+(6)
+
+(7)
+
+(8)
+
+(9)
+
+(10)
+
+(11)
+
+(12)
+
+(13)
+
+(14)
+
+(15)
+
+(16)
+
+(17)
+
+(18)
+
+(19)
+
+Less than 1%. 
+
+Based on 31,454,496 shares outstanding, including a total of 3,057,520 unissued shares that underlie currently exercisable warrants.
+
+Lee Newlan and Eric Newlan possess voting and investment control with regard to the securities owned by this entity.
+
+Brian Baschnagel possesses voting and investment control with regard to the shares owned by this entity.
+
+Justin Beauchane possesses voting and investment control with regard to the shares owned by this entity.
+
+John A. King possesses voting and investment control with regard to the shares owned by this entity.
+
+Derek King possesses voting and investment control with regard to the shares owned by this entity.
+
+This Selling Shareholder is a first cousin of our President, Manoj Patel.
+
+This Selling Shareholder is a brother-in-law of our President, Manoj Patel.
+
+1,000,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+200,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+33,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+25,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+69,520 of these shares are unissued, but underlie currently exercisable warrants.
+
+30,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+20,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+50,000 of these shares are unissued, but underlie currently exercisable warrants.
+
+This business name is an assumed name of Angela Daffron, who possesses voting and investment control with regard to the securities
+owned by Daffron Marketing.
+
+David G. Smith and Brenda Maetzold possess voting and investment control with regard to the securities owned by this entity.
+
+2,857,520 of these shares are unissued, but underlie currently exercisable warrants.
+
+ None of the Selling Shareholders is a broker-dealer or an affiliate of a broker-dealer.
+
+ Manoj Patel and James F. Lay, our officers and directors, are Affiliate Selling Shareholders and will be
+considered to be underwriters for purposes of this offering; the Non-affiliate Selling Shareholders may be deemed to be
+underwriters. Messrs. Patel and Lay s intentions are to remain associated with our company regardless of whether or
+not they sell all or a substantial portion of their holdings in our company. As officers, control persons, promoters or
+affiliates of SafedoXTM, Inc., these persons may not avail themselves of the provisions of Rule 144(d) which otherwise
+would permit a non-affiliate to sell an unlimited number of restricted shares provided that Rule 144 s one-year holding
+period requirement is met.
+
+ The Non-affiliate Selling Shareholders will sell their shares of common stock at a fixed price of $3.00 per share
+until our common stock is quoted on the OTCBB or another quotation medium and, thereafter, at prevailing market
+prices, or privately negotiated prices. The Affiliate Selling Shareholders will sell their shares at the fixed price of $3.00
+per share, even after our common stock is quoted on the OTCBB.
+
+ The Selling Shareholders may offer their shares at various times in one or more of the following transactions:
+
+ in any market that might develop;
+
+ in transactions other than market transactions;
+
+ by pledge to secure debts or other obligations;
+
+ 
+
+ purchases by a broker-dealer as principal and resale by the broker-dealer for its account; or
+
+ in a combination of any of the above.
+
+ The Selling Shareholders may use broker-dealers to sell shares. Should this occur, a broker-dealer would either
+receive discounts or commissions from Selling Shareholders or receive commissions from purchasers of shares for whom
+they shall have acted as agents. To date, no discussions have been held or agreements reached with any broker-dealer.
+No broker dealer participating in the distribution of the shares covered by this Prospectus may charge commissions in
+excess of 8% on any sales made hereunder.
+
+ The Affiliate Selling Shareholders who are offering their shares for resale hereunder and any broker-dealers
+who act in connection with the sale of the shares hereunder will be considered underwriters of this offering, within the
+meaning of the Securities Act, and any commissions they receive and proceeds of any sale of the shares may be deemed
+to be underwriting discounts and commissions under the Securities Act.
+
+ The Selling Shareholders and any purchasers of our common stock should be aware that any market that
+develops in our common stock will be subject to penny stock restrictions.
+
+ We will pay all expenses incident to the registration, offering and sale of our common stock, other than
+commissions or discounts of underwriters, broker-dealers or agents. We have also agreed to indemnify the Selling
+Shareholders against certain liabilities, including liabilities under the Securities Act.
+
+ This offering by the Selling Shareholders will terminate on the earlier of:
+
+ 
+
+ the date on which the shares are eligible for resale without restrictions pursuant to Rule 144 under the
+Securities Act; and
+
+ 
+
+ the date on which all shares offered by this Prospectus have been sold by the Selling Shareholders.
+
+ Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
+officers and controlling persons, we have been advised that, in the opinion, of the SEC, such indemnification is against
+public policy as expressed in the Securities Act and is, therefore, unenforceable.
+
+ If any of the Selling Shareholders enter into an agreement after the effectiveness of the registration statement
+of which this Prospectus is a part to sell all or a portion of their shares to a broker-dealer as principal and the
+broker-dealer is acting as underwriter, we will file a post-effective amendment to our registration statement of which this
+Prospectus is a part identifying the broker-dealer, providing the required information on the plan of distribution, revising
+disclosures in the registration statement as required and filing the agreement as an exhibit to the registration statement.
+
+ Until our shares of common stock qualify for inclusion in the NASDAQ system, if ever, the trading of our
+common stock, if any, will be in the over-the-counter markets, including the OTCBB, as maintained by FINRA. As a
+result, investors may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our common stock.
+
+Penny Stock
+
+ SEC Rule 15g-9 establishes the definition of a penny stock , for purposes relevant to us, as any equity security
+that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a
+limited number of exceptions. It is likely that our common stock will be considered to be a penny stock for the
+immediately foreseeable future. For any transaction involving a penny stock, unless exempt, the penny stock rules
+require that a broker-dealer approve a person's account for transactions in penny stocks and the broker-dealer receive
+from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be
+purchased.
+
+ In order to approve a person's account for transactions in penny stocks, the broker-dealer must obtain financial
+information, investment experience and objectives of the investor and make a reasonable determination that the
+transactions in penny stocks are suitable for that investor and that the investor has sufficient knowledge and experience
+in financial matters to be capable of evaluating the risks of transactions in penny stocks.
+
+ The broker-dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared
+by the SEC relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker-dealer
+made the suitability determination, and that the broker-dealer received a signed, written agreement from the investor prior
+to the transaction.
+
+ Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in
+secondary trading and commissions payable to both the broker-dealer and the registered representative, current
+quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock
+transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the
+account and information on the limited market in penny stocks. The above-referenced requirements may create a lack
+of liquidity, making trading difficult or impossible, and accordingly, shareholders may find it difficult to dispose of our
+common stock. (See Risk Factors ).
+
+STATE SECURITIES (BLUE SKY) LAWS
+
+ There is no public market for our common stock, and there can be no assurance that any market will develop
+in the foreseeable future. Transfer of our common stock may also be restricted under the securities laws and regulations
+of various states, commonly referred to as "Blue Sky" laws. Absent compliance with such individual state laws, our
+common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been
+registered for resale under the Blue Sky laws of any state, the holders of such shares and persons who desire to
+purchase them in any trading market that might develop in the future should be aware that there may be significant state
+ Blue Sky law restrictions upon the ability of investors to sell the common stock and of purchasers to purchase the
+common stock. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold
+the common stock for an indefinite period of time.
+
+ The Selling Shareholders may contact us directly to ascertain procedures necessary for compliance with Blue
+Sky laws in the applicable states relating to sellers and/or purchasers of our common stock.
+
+ We intend to apply for listing in a nationally recognized securities manual which, once published, would provide
+us with "manual" exemptions in 33 states, as indicated in CCH Blue Sky Law Desk Reference at Section 6301 entitled
+"Standard Manuals Exemptions".
+
+ 33 states have what is commonly referred to as a "manual exemption" for secondary trading of securities, such
+as those to be resold by the Selling Shareholders pursuant to this Prospectus. In these states, so long as we obtain and
+maintain a listing in an acceptable manual, secondary trading of our common stock can occur without any filing, review
+or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado,
+Connecticut, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts,
+Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
+Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, West Virginia and Wyoming. We cannot secure this
+listing, and, thus, this qualification, until after the registration statement of which this Prospectus is a part is declared
+effective. Once we secure this listing, secondary trading can occur in these states without further action.
+
+ We currently do not intend to and may not be able to qualify securities for resale in other states which require
+shares to be qualified before they can be resold by our shareholders.
+
+DILUTION
+
+ At
+January 31, 2012, the net tangible book value per share of our common stock was $.002. Purchasers of our common stock will incur
+significant dilution in their investments, due to the lower book value per share of a purchaser s common stock compared
+to the offering price per share. 
+
+ With respect to the common stock offered and sold by the Affiliate Selling Shareholders hereunder, purchasers
+of common stock will incur substantial dilution in their investments, due to the Affiliate Selling Shareholders being
+required to sell their shares of common stock at the fixed price of $3.00. The table below depicts the dilution to new
+investors, upon their purchasing shares of our common stock from Affiliate Selling Shareholders.
+
+ 
+
+ Affiliate Selling Shareholder offering
+ price per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3.00 
+
+ Net tangible book value per share as of January 31, 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.002 
+
+ Dilution in net tangible book value per share to new investors. . . . . . . . . . . . . . . . . . . . . . .$2.998 
+
+ With
+respect to the common stock offered and sold by the Non-affiliate Selling Shareholders hereunder, purchasers of common stock will
+incur substantial dilution in their investments, $2.998 per share, during the period that the Non-affiliate Selling Shareholders
+are required to sell their shares of common stock the fixed price of $3.00. After our common stock is quoted on the OTCBB, and
+thereafter, Non-affiliate Selling Shareholders may sell their shares at prevailing market prices or in privately negotiated prices.
+While the dilution to be suffered by purchasers in such transactions will, in all likelihood, be significant, a purchaser s
+exact dilution cannot be predicted. 
+
+DESCRIPTION OF SECURITIES
+
+General
+
+ 
+
+ Our authorized capital stock consists of 100,000,000 shares of common stock, $.0001 par value per share, and
+5,000,000 shares of preferred stock, $.0001 par value per share. As of the date of this Prospectus, there were 28,396,976
+shares of our common stock issued and outstanding, held by 36 holders of record; a total of 5,000,000 shares are reserved
+for issuance upon the exercise of a like number of currently exercisable warrants; and there are no shares of preferred
+stock issued and outstanding.
+
+Common Stock
+
+ The following is a summary of the material rights and restrictions associated with our common stock. This
+description does not purport to be a complete description of all of the rights of our shareholders and is subject to, and
+is qualified in its entirety by, the provisions of our most current Articles of Incorporation and Bylaws, which are included
+as exhibits to the registration statement of which this Prospectus is a part.
+
+ The holders of our common stock currently have (i) equal ratable rights to dividends from funds legally
+available therefore, when, as and if declared by our Board of Directors; (ii) are entitled to share ratably in all of our assets
+available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of our
+company; (iii) do not have preemptive, prescriptive or conversion rights and there are no redemption or sinking fund
+provisions or rights applicable thereto; and (iv) are entitled to one non-cumulative vote per share on all matters on which
+shareholders may vote.
+
+ Our Bylaws provide that, at all meetings of the shareholders for the election of directors, a plurality of the votes
+cast shall be sufficient to elect.
+
+ On all other matters, except as otherwise required by Wyoming law or our Articles of Incorporation, a majority
+of the votes cast at a meeting of the shareholders shall be necessary to authorize any corporate action to be taken by vote
+of the shareholders.
+
+ A plurality means the excess of the votes cast for one candidate over any other. When there are more than
+two competitors for the same office, the person who receives the greatest number of votes has a plurality.
+
+ Please refer to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Wyoming for
+a more complete description of the rights and liabilities of holders of our common stock.
+
+Preferred Stock
+
+ 
+
+ The following is a summary of the material rights and restrictions associated with our preferred stock. This
+description does not purport to be a complete description of all of the rights of our shareholders and is subject to, and
+qualified in its entirety by, the provisions of our most current Articles of Incorporation and Bylaws, which are included
+as exhibits to the registration statement of which this Prospectus is a part.
+
+ Our Board of Directors is authorized to determine or alter any or all of the rights, preferences, privileges and
+restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations or
+restrictions stated in any resolution or resolutions of our Board of Directors originally fixing the number of shares
+constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding)
+the number of shares comprising any such series subsequent to the issue of shares of that series, to set the designation
+of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation
+preferences of the shares of any such series.
+
+Anti-Takeover Effects of Our Articles of Incorporation and Bylaws
+
+ Our
+Articles of Incorporation and Bylaws contain certain provisions that may have anti-takeover effects, making it more difficult
+for, or preventing, a third party from acquiring control of our company or changing our Board of Directors and management. According
+to our Articles of Incorporation and Bylaws, the holders of our common stock do not have cumulative voting rights in the election
+of our directors. The combination of the present ownership by a few shareholders of a significant portion of our issued and outstanding
+common stock and lack of cumulative voting makes it more difficult for other shareholders to replace our Board of Directors or
+for a third party to obtain control of our company by replacing our Board of Directors. 
+
+Anti-Takeover Effects of Wyoming Law
+
+ The Wyoming anti-takeover law contains certain provisions that may have anti-takeover effects, making it
+difficult for, or preventing a third party from, acquiring control of our company or changing our Board of Directors. The
+law requires that any person acquiring controlling shares of our company stock must give notice to our company of
+acquisition of, or a proposal to so acquire, control shares. Shares of our company acquired for the purpose of gaining
+control are denied voting rights, unless approved by a majority of shares not included in the control shares. If voting
+rights are denied, the company may redeem the shares acquired in the control share acquisition at fair value, which value
+may be determined without regard to any increase or proposal for increase in the price of the share following the
+announcement or commencement of the control share acquisition or proposal.
+
+Dividend Policy
+
+ We have never declared or paid any dividends on our common stock. We currently intend to retain future
+earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends
+in the foreseeable future.
+
+Warrants
+
+ We currently have outstanding 1,528,760 warrants to purchase a like number of shares our common stock at
+an exercise price $1.00 and 1,528,760 warrants to purchase a like number of shares our common stock at an exercise
+price $2.00. All of these warrants are exercisable for two years from their respective dates of issuance, and expire
+variously from May 2013 to June 2013.
+
+BUSINESS
+
+General
+
+ We incorporated in the State of Wyoming on May 2, 2011, under the name SafedoXTM, Inc. Effective May 3,
+2011, pursuant to an agreement and plan of merger, we acquired 100% of the common stock of our predecessor
+company, M3P, in a transaction that has been accounted for as a reorganization, by issuing 21,100,000 shares of its
+common stock. SafedoXTM, Inc. carries on the business operations of M3P uninterrupted. Further, the plan of business
+of M3P has been adopted as the plan of business of SafedoXTM, Inc.
+
+ Our corporate office is located at 11801 Pierce Street, Second Floor, Riverside, California 92505; our telephone
+number is (951) 710-3090; and our corporate web site is www.safedox.com.
+
+The SafedoXTM Paradigm
+
+Real Security Through Real-Time Control Over All Aspects of a Digital File
+
+ We
+are in the business of selling our Internet-based, subscription-based SafedoXTM security software products to businesses
+of all sizes and institutions who are in need of securing sensitive digital files, as well as to individuals for home and business
+use. 
+
+ Our
+SafedoXTM security software allows subscribers to control the use and functionality of digital files, even after the
+digital file has been delivered to its intended recipient. 
+
+ We have designed our SafedoXTM security software products such that they can be employed by any user of any
+computer skill level. The overriding objective behind the design of our SafedoXTM security software products is to
+provide content owners direct control over the distribution and use of their intellectual property.
+
+Current Status
+
+ Through
+January 31, 2012, we had no revenues from sales of subscriptions to our SafedoXTM security software products. Currently,
+we market our software security products through traditional face-to-face sales efforts to potential enterprise-level customers.
+We also market our security software products on the Internet, directly through our website, www.safedox.com. In addition, our
+independent resellers have recently begun to market our security software products. Early in February 2012, we suspended our radio
+advertising campaign through at least June 2012, due to a lack of sales success associated therewith. 
+
+ Our SafedoXTM Security Software Technology and Products 
+
+ In
+General. Our SafedoXTM security software technology is an Internet-based, subscription-based computer software
+application that allows a subscriber to control third-party access to, and manipulation of, digital files created by the subscriber,
+even after the digital file has been delivered to a third party. 
+
+ What
+is SafedoXTM? SafedoX is a security software technology, a dynamic method of securing any digital file. The first
+embodiment of the SafedoX technology is a secure document distribution system that operates in a manner similar to standard e-mail
+programs. However, the SafedoX security software does not send e-mails. Rather, our security software carries a
+subscriber s digital file to its intended recipient. The following diagrams depict the process of securing and sending a
+digital file via the SafedoX document distribution system. 
+
+ Step
+1: Sending Digital File 
+
+ 
+
+ Encrypt Digital
+ File with SafedoX Shell 
+
+ 
+
+ Send Digital
+ File to SafedoX Server via SSL 
+
+ 
+
+ Digital File
+ Reaches SafedoX Server 
+
+ Step
+2: SafedoX Server Processing 
+
+ 
+
+ Digital File
+ Encrypted Uniquely for Intended Recipient 
+
+ 
+
+ SafedoX Server
+ Sends Encrypted Digital File to Intended Recipient
+ via SSL 
+
+ 
+
+ 
+
+ Step
+3: Receiving Encrypted Digital File 
+
+ 
+
+ Encrypted
+ Digital File Delivered to Intended Recipient via
+ SSL 
+
+ 
+
+ Encrypted
+ Digital File is Decrypted Using Recipient s
+ SafedoX key 
+
+ 
+
+ Encrypted
+ Digital File is Displayed in SafedoX Viewer 
+
+ Step
+4: Example of Sender Control Post-Delivery 
+
+ 
+
+ Sender Inputs
+ Instruction into SafedoX On-Screen Dashboard to
+ Terminate Recipient s Access Rights to Digital
+ File 
+
+ 
+
+ SafedoX Server
+ Receives Sender s Instruction and Applies
+ to Digital File in Real-Time 
+
+ 
+
+ Immediately,
+ Recipient s Access Rights to Digital File
+ Are Terminated 
+
+ The
+following diagrams depict the process of securing and sending a digital file via the SafedoX document distribution system. 
+
+ Typical SSL Protection 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ SSL: Secure Socket Layer 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Cryptographic protocols that 
+
+ 
+
+ 
+
+ Digital
+ File 
+
+ 
+
+ provide communication security 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ over the Internet. 
+
+ 
+
+ 
+
+ Normal
+ SSL Wrapper 
+
+ 
+
+ 
+
+ SSL Coupled with SafedoX 
+
+ 
+
+ 
+
+ 
+
+ Normal SSL
+ Wrapper 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ SafedoX 
+
+ 
+
+ SafedoX 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Hard Shell 
+
+ Digital
+ File 
+
+ Hard Shell 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Scalable Encryption 
+
+ 
+
+ Scalable Encryption 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Normal SSL
+ Wrapper 
+
+ 
+
+ 
+
+ 
+
+ An
+ armored car service analogy demonstrates the essence of our security software technology: 
+
+ 
+
+ As an armored car service is hired to transport
+an item, usually of significant value, from the owner s location to another location specified by the item s owner
+for delivery, the SafedoX security software securely delivers a subscriber s digital file, the item of significant value,
+to its intended recipient s computer. In both scenarios, the transported item is protected from theft, in the case of the
+armored car, and from hacking and unauthorized use, in the case of the SafedoX security software, while it is in transport. The
+item then reaches its destination, free from tampering. 
+
+ As
+when the armored car service delivers the owner s item to its intended recipient, many competing security software products
+will have fully performed its security service, to the extent capable, upon the digital file s having been delivered to
+its intended recipient s computer. Other competing security software products also permit subscribers to set access parameters
+with respect to the use of their digital files. 
+
+ Our
+SafedoX security software, on the other hand, not only allows a subscriber to deliver digital files in a secure manner and to
+set access parameters with respect to the use of a digital file, it also permits a subscriber to alter access parameters at any
+time, from time to time, and in real time, all from the SafedoX program s dashboard , or program window, on
+the subscriber s computer. 
+
+ Encryption.
+In all facets of the SafedoXTM security software products, we employ current state-of-the-art, peer-reviewed encryption
+algorithms and, as technology changes over time, we will continue to develop ever-stronger encryption capability. We view our
+encryption technology as our armored car . 
+
+ Product
+Subscriptions. We currently market the SafedoX security software technology as a customizable solution for an enterprise s
+unique security needs, including security needs relating to internal communications. Of the SafedoXTM security software
+products listed below, we currently market the Personal Edition and the Business Edition. The Free Edition and the Professional
+Edition will be added to our product offering, with the release of the next software version expected in early May 2012. 
+
+ 
+
+ Key Features 
+
+ Free 
+
+ Edition 
+
+ Personal
+ Edition 
+
+ Business
+ Edition 
+
+ Professional
+ Edition 
+
+ 
+
+ Number of Digital Files
+ per Month 
+
+ 100 
+
+ 100 
+
+ 1,000 
+
+ 100,000 
+
+ 
+
+ Number
+ of
+ Authorized
+ Users 
+
+ 1 
+
+ 1 
+
+ Up
+ to
+ 5 
+
+ Up
+ to 99 
+
+ 
+
+ Mac / PC Compatible 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Receipt
+ on
+ Delivery
+ /
+ Read 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Read Once / Allow Printing 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Receipt
+ on
+ Delete 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Set Time Window for
+ Viewing 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Track
+ Time
+ on
+ Digital
+ File 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Secondary Authentication 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ eBooks
+ Control
+ Page
+ View 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ eCommerce / Billing 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Import
+ Addresses 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ eSignature / Bates Stamping 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Advertisements 
+
+ 
+ (1) 
+
+ 
+
+ 
+
+ 
+ (2) 
+
+ 
+
+ Integration
+ API 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Monthly
+ Subscription
+ Fee 
+
+ $-0- 
+
+ $9.95 
+
+ $49.95 
+
+ $995.95 
+
+ (1) 
+
+ (2) 
+
+ SafedoX would place in the recipients notification e-mails
+ and in the SafedoX program download packet stream. 
+
+ Subscribers would be able to place advertisements in the recipients notification
+e-mail and within the SafedoX viewer of the recipient. 
+
+ 
+
+ Enterprise-Level
+ Sales 
+
+ 
+
+ Our
+ enterprise-level
+ products
+ offer
+ standard
+ per-user
+ subscription
+ options
+ and
+ a
+ corporate
+ purchasing
+ plan
+ that
+ offers
+ a
+ customized,
+ enterprise-specific
+ package
+ of
+ our
+ SafedoXTM
+ security
+ software
+ products.
+ Enterprise
+ circumstances
+ that
+ demand
+ special
+ purchasing
+ requirements
+ and
+ integration
+ of
+ our
+ products
+ into
+ a
+ particular
+ IT
+ environment
+ are
+ readily
+ programmed
+ into
+ our
+ SafedoXTM
+ security
+ software
+ products. 
+
+ SafedoXTM
+Security Features. All digital files prepared and sent utilizing the SafedoXTM security software technology
+share two features: (1) each digital file is encrypted with the best available encryption technology; and (2) each digital file
+is forever associated with the recipient the digital file cannot be transferred to, or opened by, any other SafedoX user. 
+
+ Once
+a digital file has been prepared for sending to a recipient, the final step in the process permits the SafedoXTM subscriber
+to select access parameters with respect to the digital file, which selected access parameters will govern the recipient s
+use of the digital file. Our security software provides subscribers the ability to set access parameters, as follows: 
+
+ 
+
+ the
+number of times a recipient may open the digital file; 
+
+ the
+number of times, if any, a recipient may print (to file or a printer) the digital file; 
+
+ the
+ window of time during which the digital file may be opened; and 
+
+ secondary
+authentication (another layer of security, this feature permits a subscriber to require a password for access to the document,
+though the use of this feature is not required to be employed for a subscriber to enjoy the other security features). 
+
+ In
+addition to the foregoing capabilities of our security software technology, there remains the capability that our company believes
+to be our security software technology s greatest capability: 
+
+ 
+
+ Our SafedoXTM security software technology
+allows a subscriber the ability to change access parameters with respect to a digital file that has already been delivered
+to a third party, in real time, from time to time and at any time, all from the SafedoX program s dashboard ,
+or program window, on the subscriber s computer or other device. 
+
+ We
+are unaware of another product that has the capability of permitting users to change access parameters in the manner of our SafedoXTM
+security software technology. 
+
+ Other
+SafedoXTM Product Features. Our SafedoXTM security software products also include several features that,
+when activated by a subscriber, provide useful information to its subscribers, including the following: 
+
+ 
+
+ Notice
+when a digital file is delivered to the recipient; 
+
+ Notice
+when a digital file is opened by the recipient; 
+
+ Notice
+when a digital file deleted by the recipient; and 
+
+ Reports
+that track the recipient s time on the opened digital file, including information regarding which pages of the digital file
+were opened and the time spent on each page. 
+
+ Other
+user-friendly features of our SafedoXTM security software products include: 
+
+ 
+
+ Simplicity
+of use; 
+
+ Complete
+and secure control over documents in PDF format; 
+
+ Prevents
+unauthorized editing, copying or saving of digital file; 
+
+ Real-time
+digital file access revocation; 
+
+ Complete
+off-line protection; 
+
+ AES
+256 bit encryption; and 
+
+ Free
+viewer software (SafedoXTM App). 
+
+ Uses of SafedoXTM Security Software Products. The potential uses of our SafedoXTM security software products
+are numerous and varied. For example, with our security software, medical service providers are able to protect all
+patient information, attorneys are able to shield a client s sensitive documents from unwanted viewing, accountants are
+able to protect a client s confidential financial information and home users are able to protect their personal records.
+
+ At the enterprise level, our SafedoXTM security software is capable of being integrated into nearly any business
+in any industry, permitting subscribers to address today s ever-increasing privacy concerns.
+
+ SafedoXTM for eBooks. SafedoXTM for eBooks provides a full range of document security options, allowing
+content owners to assert control over the use and distribution of electronic versions of their intellectual properties, that
+is, their eBooks. By setting parameters of use with the SafedoXTM security software, following the download, whether
+by purchase or otherwise, of an eBook by a third party, the third party is unable to print, copy or transmit the eBook.
+Through the use of this SafedoXTM security feature, content owners can better assure that they are compensated each time
+their content is accessed, by eliminating a third party s ability to make unauthorized copies or make unauthorized
+distributions of such eBook.
+
+ SafedoXTM App. Our SafedoXTM App (application) software product is required to be installed on a person s
+computer, in order for that person to read documents that have been created with SafedoXTM security software. Our
+SafedoXTM App is available for download from our website at no charge.
+
+ Future Products.
+
+ Hand-held
+Devices. We are nearing completion of SafedoXTM security software applications, or apps , for use on hand-held
+devices, including smart phones. It is our intention to introduce these products in third quarter of 2012. 
+
+ Audio and Video. We have begun to design enhanced features into our SafedoXTM security software, such that
+subscribers would be able to control the distribution and use of audio and video content in much the same manner as is
+currently possible with documents. However, it is not expected that these enhancements would be ready for market prior
+to the second half of 2012.
+
+ Foreign Language Versions. It is our intention to develop foreign language versions of our SafedoXTM security
+software. It is expected that the first several of these foreign language versions will be produced for use in markets
+located in the Far East. As there are significant costs associated with the development and introduction of foreign
+language versions, we have not set a time line for accomplishing objective, and there is no assurance that we will ever
+possess sufficient capital with which to do so.
+
+Our Competitive Strengths and Weaknesses
+
+ In Particular. We believe our SafedoXTM security software has the following competitive strengths:
+
+ 
+
+ A
+subscriber is able to control third-party access to, and manipulation of, digital files created by the subscriber, at any time,
+from time to time, and in real time, on the subscriber s computer or other device, even after the digital file has been
+delivered to a third party. 
+
+ 
+
+ The security software s design includes current state-of-the-art, peer-reviewed encryption algorithms.
+
+ 
+
+ The security software is simple in its utility, being no more complex than standard e-mail applications.
+
+ 
+
+ The security software is affordable.
+
+ We believe our SafedoXTM security software has the following competitive weaknesses:
+
+ 
+
+ The security software products are new and have not been focus-group, or otherwise, tested for
+potential consumer acceptance.
+
+ 
+
+ The security software products do not yet enjoy brand name recognition.
+
+ 
+
+ The Internet-based platform upon which the security products operate has not yet been challenged to
+sustain a high level of subscriber activity.
+
+ In General. We believe our company has the following competitive strengths:
+
+ 
+
+ Our SafedoXTM security software products are unique and provide an affordable means by which to
+secure documents;
+
+ 
+
+ We have low overhead costs; and
+
+ 
+
+ We have implemented a strong customer service program.
+
+ We believe our company has the following competitive weaknesses:
+
+ 
+
+ We possess relatively limited capital; and
+
+ 
+
+ We have limited personnel.
+
+Competition
+
+ The market for our SafedoXTM security software products is characterized by intense competition, evolving
+industry standards and business and distribution models, disruptive software and hardware technology developments,
+frequent new product introductions, short product life cycles, price cutting with resulting downward pressure on gross
+margins and price sensitivity on the part of consumers.
+
+ Products that offer similar security features as our SafedoXTM software security products include FileOpen ,
+Adobe Content Server and Adobe Digital Publishing. In comparing these software security products to our
+SafedoXTM software security products, it is helpful to recall the armored car service analogy discussed above under
+ What is SafedoXTM? and the distinctions made between competing products and our SafedoXTM software security
+products, to wit:
+
+ 
+
+As when the armored car service delivers the owner s item to its intended recipient, many competing security
+software products will have fully performed their security service, to the extent capable, upon the digital files 
+having been delivered to their intended recipients computers. Other competing security software products also
+permit subscribers to set access parameters with respect to the use of their digital files.
+
+ 
+
+Our SafedoX security software, on the other hand, not only allows a subscriber to deliver digital files in a secure
+manner and to set access parameters with respect to the use of a digital file, it also permits a subscriber to alter
+access parameters at any time, from time to time, and in real time, all from the SafedoX program s
+ dashboard , or program window, on the subscriber s computer.
+
+ In general, a majority of the security software products against which we compete enjoy significant brand name
+recognition and are owned by large, multi-national companies with greater resources than does our company. Our future
+success will depend on our ability to enhance our existing security software products, introduce new products on a timely
+and cost-effective basis, meet changing customer needs and anticipate and respond to emerging standards, business
+models, software delivery methods and other technological changes.
+
+ Primary competitive factors in the software industry are: name recognition, price and functionality. While we
+believe our SafedoXTM security software products to be unique in their utility, i.e., to alter access parameters at any time,
+from time to time, and in real time, even after a document has been delivered to its intended recipient, there are many
+software products that enjoy greater name recognition and that offer apparently similar functions. It is possible that we
+may be unable to compete effectively in our industry, which would negatively impact our future operating results.
+
+Distribution and Marketing
+
+ Traditional Methods. We employ traditional sales efforts, particularly face-to-face meetings, to potential
+enterprise-level customers. Currenlty, we are attempting to attract independent sales consultants who are capable of
+consummating enterprise-level sales through traditional sales methods. We cannot assure you that these efforts will be
+successful.
+
+ Internet. Currently, we market our SafedoXTM security software products on the Internet, directly through our
+web site, www.safedox.com. Recently, we began to advertise our security software products on the Internet, as a means
+of driving Internet traffic to the sales web page of our website. We will increase expenditures in this advertising medium
+as results warrant.
+
+ Also, in the near future, we will begin to market our SafedoXTM security software products through one or more
+Internet-based resellers. These resellers will be paid a per-subscriber commission.
+
+ Independent Resellers. We have engaged several persons who are commission-based independent resellers of
+our SafedoXTM security software products. It is expected that these persons will market our SafedoXTM security software
+products directly to potential users, using their own methods. Each of these independent resellers will be paid a per-subscriber commission on subscriptions to our SafedoXTM security software products resulting from their marketing
+efforts.
+
+ Radio.
+From December 2011 through early February 2012, we ran our first large-scale marketing efforts through a planned six-month radio
+advertising campaign in the Southern California area. We have suspended this radio advertising campaign through at least June
+2012, due to a lack of sales success associated therewith. At such time as we re-instate this radio campaign, the ultimate duration
+of this campaign will depend on the level of success we achieve. We cannot make any predictions in this regard. 
+
+Regulatory Matters
+
+ In general, the software industry is not heavily regulated in the United States and, overall, we do not believe
+that our business will be significantly impacted by governmental regulation.
+
+ However, the export of encryption technologies, such as the encryption technology associated with our products,
+is strictly regulated by the Bureau of Industry and Security within the U.S. Department of Commerce.
+
+ Due to the strength of the encryption technology associated with our products, it is possible that our products
+would be subject to export control laws and regulations. Should such be the case, our management intends to apply for
+an export license. While we expect that we will be able to obtain an export license with respect to our products should
+such be necessary, there is no assurance that such will be the case. (See Risk Factors ).
+
+Intellectual Property
+
+ In General. We regard our intellectual property pertaining to our SafedoXTM products, our trademarks and our
+business know-how as having significant value and as being an important factor in the marketing of our SafedoXTM
+security software products. Our policy is to establish, enforce and protect our intellectual property rights using the
+intellectual property laws.
+
+ Patents.
+In April 2012, we filed a patent application with respect to our SafedoXTM software security technology, which is titled
+ Secure Digital Document Distribution with Real-time Sender Control of Recipient Document Content Access Rights .
+It is possible that additional patent applications will be filed with respect to our technology. 
+
+ Trademarks. We are the owner of the SafedoXTM trademark. In the near future, we intend to file for
+registration of this trademark with the U.S. Patent and Trademark Office.
+
+Description of Property
+
+ We lease a small office at 11801 Pierce Street, Second Floor, Riverside, California 92505. Should additional
+space be required as we expand our operations, we expect that such space would be available at reasonable rates. We
+do not own any real property.
+
+Employees
+
+ We currently have no employees other than our President and Executive Vice President. Our business
+development, corporate administration and business operations are overseen directly by our President. Our President
+also oversees record keeping functions. We intend to hire a small number of employees, at such times as our business
+development warrants. We have used, and, in the future, expect to use, the services of certain outside consultants and
+advisors as needed on a consulting basis.
+
+Company Website
+
+ Our company s corporate website can be found at www.safedox.com. As a public company, we will make
+available free of charge at our website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of the
+Securities Exchange Act of 1934, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q and
+our current reports on Form 8-K. These reports will be made available on our website as soon as reasonably practicable
+after their filing with, or furnishing to, the SEC.
+
+MANAGEMENT S DISCUSSION AND ANALYSIS OF
+
+FINANCIAL CONDITION AND RESULTS OF OPERATIONS
+
+Cautionary Statement
+
+ Effective May 3, 2011, pursuant to an agreement and plan of merger, we acquired 100% of the common stock
+of our predecessor company, mind3power, Inc. (M3P), a California corporation incorporated on January 4, 2011
+( Inception ), in a combination that has been accounted for as a reorganization.
+
+ The
+following discussion and analysis should be read in conjunction with the unaudited balance sheet as of January 31, 2012, and the
+unaudited financial statements for the six month period ended January 31, 2012, as well as the audited balance sheet as of July
+31, 2011, and the financial statements for the period from Inception to July 31, 2011, included elsewhere in this Prospectus.
+The results shown herein are not necessarily indicative of the results to be expected for any future periods. 
+
+ This discussion contains forward-looking statements. These forward-looking statements are based on our
+management s current expectations with respect to future events, financial performance and operating results, which
+statements are subject to risks and uncertainties, including, but not limited to, those discussed below and elsewhere in
+this Prospectus. The risks and uncertainties discussed herein could cause our actual results to differ from the results
+contemplated by these forward-looking statements. We urge you to consider carefully the information set forth in this
+Prospectus under Note Regarding Forward Looking Statements and Risk Factors .
+
+Overview
+
+ While
+we are a business in the early-stage of development, we have recently begun to derive a small level of revenues from our operations.
+In order to accelerate the growth of our business, we will, over time, need to obtain additional capital. We intend to apply additional
+capital, as and if obtained, to the expansion of our business, primarily through Internet marketing strategies and expansion of
+traditional marketing channels, including direct sales. 
+
+Principal Factors Affecting Our Financial Performance
+
+ Our operating results are primarily affected by the following factors: our ability to expand the channels of
+distribution for our products; our ability to attract new customers to our products; and our ability to contain our sales
+costs and maintain a low overheard.
+
+ Based
+on our current business plan, we expect to incur operating losses for all of Fiscal 2012 and at least the first two quarters of
+Fiscal 2013. However, because our products are new, we cannot predict the levels of our sales during the remainder of Fiscal 2012. 
+
+Recent Developments
+
+ In
+April 2012, we filed a patent application with respect to our SafedoXTM software security technology, which is titled
+ Secure Digital Document Distribution with Real-time Sender Control of Recipient Document Content Access Rights . 
+
+ From
+December 2011 through early February 2012, we advertised our software security products on the radio in the Southern California
+area. While the first weeks of this campaign yielded promising results, this radio campaign has been suspended through at least
+June 2012, due to a lack of sales success associated therewith. Upon resumption of this campaign, we cannot predict the ultimate
+duration of this radio advertising campaign. 
+
+ Since
+Inception, we have sold a total of 1,880,600 shares of our common stock for a total of $734,280 in cash. 1,637,600 of these shares
+were sold for $.30 per share, for a total of $491,280; 243,000 of these shares were sold for $1.00 per share, for a total of $243,000.
+We are currently seeking additional funds, as our current cash position is approximately $127,000. 
+
+ Results of Operations 
+
+ For
+the Six Months Ended January 31, 2012. During the six months ended January 31, 2012 (the Current Period ),
+we generated no revenues from sales of our SafedoXTM security software products. While we did not generate revenues
+during the Current Period, we continued the implementation of the marketing plan for our SafedoXTM security software
+products. In this regard, our efforts were focused on redesigning our web site, to make it more user-friendly and establishing
+Internet-based and traditional product reseller marketing relationships. Subsequent to the Current Period, we have begun to derive
+small revenues from sales of our SafedoXTM security software products. 
+
+ For
+the Current Period, we incurred a net loss of $655,972. Of the $656,179 in expenses for the Current Period, $187,928 is attributable
+to the issuance of shares of our common stock in payment of services to third parties. By issuing common stock in payment of these
+necessary services, we were able to preserve our available cash. While we do not expect that we will issue common stock in payment
+of third-party consulting services in the future, it is possible that, if we lack the cash needed to obtain necessary services,
+we would issue shares of common stock in payment therefor. Our cash expenses during the Current Period related to normal start-up
+and operating costs, costs associated with the marketing of our SafedoXTM security software products and, to a lesser
+degree, costs associated with our becoming a publicly-traded company. 
+
+ For the Period from Inception to July 31, 2011. During the Period from Inception to July 31, 2011 (the Initial
+Period ), we generated no revenues from sales of our SafedoXTM security software products. While we did not generate
+revenues during the Initial Period, we were, in response to the shifting dynamics of the current U.S. economy, able to
+finalize and begin to implement the marketing plan for our SafedoXTM security software products. In this regard, our
+efforts were focused on redesigning our web site, to make it more user-friendly, and establishing Internet-based
+marketing relationships. Subsequent to the Initial Period, we have begun to derive small revenues from sales of our
+SafedoXTM security software products.
+
+ For the Initial Period, we incurred a net loss of $360,504. Of the $360,564 in expenses for the Initial Period,
+$11,000 is attributable to the issuance of shares of our common stock in payment of services to third parties and
+$157,964 is attributable to the issuance of warrants for services to our officers and to third parties. A total of 3,000,000
+shares of common stock, valued at $6,000 for financial reporting purposes, were issued to third-party consultants and
+1,000,000 shares of common stock, valued at $5,000 for financial reporting purposes, were issued in payment of legal
+services. By issuing common stock in payment of these necessary services, we were able to preserve our available cash.
+Subsequent to the Initial Period, we issued shares of common stock have been issued to third-party consultants in
+payment of their respective services. While we do not expect that we will issue common stock in payment of third-party
+consulting services in the future, it is possible that, if we lack the cash needed to obtain necessary services, we would
+issue shares of common stock in payment therefor. Our cash expenses during the Initial Period related to normal start-up
+costs, costs associated with the marketing of our SafedoXTM security software products and costs associated with our
+becoming a publicly-traded company.
+
+Plan of Operations
+
+ For
+the next 12 months, our Plan of Operations is centered around the marketing of our SafedoXTM security software products,
+as we attempt to acquire subscribers. We currently market the SafedoX security software technology as a customizable solution
+for an enterprise s unique security needs, including security needs relating to internal communications. Of the SafedoXTM
+security software products listed below, we currently market the Personal Edition and the Business Edition. The Free Edition
+and the Professional Edition will be added to our product offering, with the release of the next software version expected in
+early May 2012. 
+
+ 
+
+ Key Features 
+
+ Free 
+
+ Edition 
+
+ Personal
+ Edition 
+
+ Business
+ Edition 
+
+ Professional
+ Edition 
+
+ 
+
+ Number of Digital Files
+ per Month 
+
+ 100 
+
+ 100 
+
+ 1,000 
+
+ 100,000 
+
+ 
+
+ Number
+ of
+ Authorized
+ Users 
+
+ 1 
+
+ 1 
+
+ Up
+ to
+ 5 
+
+ Up
+ to 99 
+
+ 
+
+ Mac / PC Compatible 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Receipt
+ on
+ Delivery
+ /
+ Read 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Read Once / Allow Printing 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Receipt
+ on
+ Delete 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Set Time Window for
+ Viewing 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Track
+ Time
+ on
+ Digital
+ File 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Secondary Authentication 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ eBooks
+ Control
+ Page
+ View 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ eCommerce / Billing 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Import
+ Addresses 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ eSignature / Bates Stamping 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Advertisements 
+
+ 
+ (1) 
+
+ 
+
+ 
+
+ 
+ (2) 
+
+ 
+
+ Integration
+ API 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Monthly
+ Subscription
+ Fee 
+
+ $-0- 
+
+ $9.95 
+
+ $49.95 
+
+ $995.95 
+
+ (1) 
+
+ (2) 
+
+ SafedoX would place in the recipients notification e-mails
+ and in the SafedoX program download packet stream. 
+
+ Subscribers would be able to place advertisements in the recipients notification
+e-mail and within the SafedoX viewer of the recipient. 
+
+ 
+
+ Enterprise-Level
+ Sales 
+
+ 
+
+ Our
+ enterprise-level
+ products
+ offer
+ standard
+ per-user
+ subscription
+ options
+ and
+ a
+ corporate
+ purchasing
+ plan
+ that
+ offers
+ a
+ customized,
+ enterprise-specific
+ package
+ of
+ our
+ SafedoXTM
+ security
+ software
+ products.
+ Enterprise
+ circumstances
+ that
+ demand
+ special
+ purchasing
+ requirements
+ and
+ integration
+ of
+ our
+ products
+ into
+ a
+ particular
+ IT
+ environment
+ are
+ readily
+ programmed
+ into
+ our
+ SafedoXTM
+ security
+ software
+ products. 
+
+ From
+December 2011 through early February 2012, we advertised our software security products on the radio in the Southern California
+area. While the first weeks of this campaign yielded promising results, this radio campaign has been suspended through at least
+June 2012, due to a lack of sales success associated therewith. Upon resumption of this campaign, we cannot predict the ultimate
+duration of this radio advertising campaign. Currently, we market our SafedoXTM security software products on the Internet,
+directly through our web site, www.safedox.com. Recently, we began to advertise our security software products on the Internet,
+as a means of driving Internet traffic to the sales web page of our website. We will increase expenditures in this advertising
+medium as results warrant. We have engaged several persons who are independent resellers of our SafedoXTM security
+software products. It is expected that these persons will market our SafedoXTM security software products directly
+to potential users, using their own methods. Each of these independent resellers will be paid a per-subscriber commission on subscriptions
+to our SafedoXTM security software products resulting from their marketing efforts. Also, in the near future, we will
+begin to market our SafedoXTM security software products through one or more Internet-based resellers. These resellers
+will be paid a per-subscriber commission. 
+
+ A significant portion of the funds that we obtain in the future, whether derived from our operations or from
+outside parties, will be applied to the expansion of our overall marketing efforts. In addition to seeking an ever-increasing number of third-party sales agents, we will increase our Internet marketing designed to drive Internet traffic
+to our sales web page located on our web site, www.safedox.com.
+
+ While our level of future funding will determine the potential rate of growth for our business, our Plan of
+Operations will be the same, that is, a singular focus of marketing our SafedoXTM security software products. There is,
+of course, no assurance that our operations will be successful, in this regard. As with any start-up company that offers
+unproven products, there is no assurance that our company will be successful with any level of additional funding.
+
+Liquidity
+
+ As
+of January 31, 2012, we had working capital of $72,694, including cash on hand of $127,125. At July 31, 2011, we had working capital
+of $301,038, including cash on hand of $339,183. 
+
+ Since
+Inception, we have raised a total of $734,280 from private sales of our common stock. Currently, we possess approximately $75,000
+in cash. Given our current burn rate , our current cash position is adequate to support our current level of operations
+at least through May 2012. 
+
+ During
+the 12 months to end March 31, 2013, it will be necessary for our company to obtain additional funds with which to sustain our
+operations, in the approximate amount of $600,000, based on our expected future burn rate . We expect that our operations
+will provide an ever-increasing level of funds from subscription fees. However, as we are unable to predict accurately our future
+revenues, or the timing thereof, we are currently exploring numerous third-party funding sources. In this regard, our management
+has held face-to-face meetings with numerous potential funding sources, over the past three months. To date, we have not entered
+into any binding obligation to obtain funds from a third party. 
+
+ Historically,
+we have not obtained funds on a serial basis. Rather, we have been able to secure funds in relatively large amounts at irregular
+intervals. During the next twelve months, we expect that any funds obtained by us will be done at irregular intervals, not equally
+across the twelve-month period. Any funds obtained by us may be in the form of loans, equity investments or a combination thereof.
+Should we fail to obtain needed capital, we may be forced to cease operations. 
+
+Summary of Cash Flows
+
+ Six
+Months Ended January 31, 2012. For the six months ended January 31, 2012, we used $451,346 in our operating activities; our
+investing activities used $3,712 for equipment purchases; and our financing activities provided $243,000 in cash, which we obtained
+from private sales of our common stock. 
+
+ Period from Inception to July 31, 2011. For the Period from Inception to July 31, 2011, we used $150,985 in
+our operating activities; our investing activities used $1,112 for equipment purchases; and our financing activities
+provided $491,280 in cash, which we obtained from private sales of our common stock.
+
+Contractual Obligations
+
+ In October 2011, we entered into a radio advertising contract with a radio station located in Southern California.
+This advertising contract commits us to a total of approximately $800,000 in radio advertisement purchases beginning
+in December 2011 and continuing through April 2012. However, we have suspended this radio advertising campaign
+through at least June 2012, which has also served to suspend our commitment.
+
+Critical Accounting Policies
+
+ Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the
+notes to our financial statements included in this Prospectus. We have consistently applied these policies in all material
+respects. We do not believe that our operations to date have involved uncertainty of accounting treatment, subjective
+judgment or estimates, to any significant degree.
+
+Uncertainties and Trends
+
+ Our operations and revenues are dependent, now and in the future, upon the following factors:
+
+ 
+
+ whether we successfully commercialize our security software products;
+
+ 
+
+ whether we compete effectively in the highly competitive information technology industry; and
+
+ 
+
+ whether the continuing economic recession in the United States will adversely affect our ability to
+attract customers to our security software products.
+
+ There is no assurance that we will be able to accomplish our objectives. Our failure to do so would likely cause
+purchasers of our common stock to lose their entire investments in our company.
+
+Inflation
+
+ Inflation can be expected to have an impact on our operating costs. A prolonged period of inflation could cause
+interest rates, wages and other costs to increase which would adversely affect our results of operations. In the current
+economic and political climate, no predictions can be made with respect to the future effects of inflation on or business.
+
+Off-Balance Sheet Arrangements
+
+ We do not have any off-balance sheet arrangements that would have any current or future effect on our financial
+condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
+capital resources.
+
+Capital Expenditures
+
+ During
+the six months ended January 31, 2012, we made capital expenditures in the amount of $3,712. During the period from Inception
+to July 31, 2011, we made capital expenditures in the amount of $1,112. We cannot predict future levels of our capital expenditures. 
+
+NOTE REGARDING FORWARD-LOOKING STATEMENTS
+
+ This Prospectus contains forward-looking statements, which relate to future events or our future financial
+performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should",
+"expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these
+terms or other comparable terminology. These statements are only predictions and involve known and unknown risks,
+uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our
+industry's actual results, levels of activity, performance or achievements to be materially different from any future results,
+levels of activity, performance or achievements expressed or implied by these forward-looking statements.
+
+ While these forward-looking statements, and any assumptions upon which they are based, are made in good faith
+and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes
+materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
+Except as required by applicable law, including the securities laws of the United States, we do not intend to update any
+of the forward-looking statements to conform these statements to actual results.
+
+DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
+
+Directors and Executive Officers
+
+ The following table sets forth the names and ages of our current directors and executive officers.
+
+ 
+
+Name
+
+ 
+
+Age
+
+ 
+
+Position(s)
+
+ 
+
+ 
+
+Manoj Patel
+
+James F. Lay
+
+ 
+
+47
+
+50
+
+ 
+
+President and Director
+
+Executive Vice President, Secretary and Director
+
+ 
+
+ Our current officers and directors serve until the next annual meeting of our board of directors or until their
+respective successors are elected and qualified. All officers serve at the discretion of our board of directors. There exist
+no family relationships between our officers and directors. Certain information regarding the backgrounds of each of
+the officers and directors is set forth below.
+
+ Manoj Patel is a founder of our company and serves as our President, on a full-time basis. Mr. Patel served
+our predecessor company, mind3power, Inc. (M3P), as its President and director from January through May 2011. From
+1989 through 2010, Mr. Patel was the owner of Dhobhi Inc., a dry cleaners business located in Antelope Valley,
+California. From 2003 through 2010, Mr. Patel worked as an independent consultant to numerous information
+technology companies with respect to corporate training strategies, organizational behavior matters, business
+development strategies and product deployment strategies.
+
+ James F. Lay is a founder of our company and serves as our Executive Vice President and Secretary, on a full-time basis. Mr. Lay served our predecessor company, mind3power, Inc. (M3P), as its lead software engineer from
+January through May 2011. From 2001 through the present, Mr. Lay has been the owner of Software Factory, LLC, a
+Georgia-based firm focused on the design of business software solutions and business analysis. Also, from 2004 through
+the present, Mr. Lay has been the owner of Tri-State Associates, LLC, a Georgia-based real estate development firm.
+
+Corporate Governance
+
+ Committees; Meetings of the Board. We do not have a separate Compensation Committee, Audit Committee
+or Nominating Committee. These functions are to be conducted by our Board of Directors meeting as a whole.
+
+ To date, our Board of Directors has taken action by unanimous written consent in lieu of a meeting on 16
+occasions; our Board of Directors has not yet held a meeting.
+
+ Audit Committee. Our Board of Directors has not established an audit committee. The functions of an audit
+committee are currently performed by our entire Board of Directors. We are under no legal obligation to establish an
+audit committee and our Board of Directors has elected not to do so. This decision was made so as to avoid the time and
+expense of identifying independent directors willing to serve on the audit committee. We may establish an audit
+committee in the future, if our Board of Directors determines it to be advisable or we are otherwise required to do so by
+applicable law, rule or regulation.
+
+Independence of Board of Directors
+
+ Neither of our directors is independent , within the meaning of definitions established by the SEC or any
+self-regulatory organization. We are not currently subject to any law, rule or regulation requiring that all or any portion
+of our Board of Directors include independent directors.
+
+Shareholder Communications with Our Board of Directors
+
+ Our company welcomes comments and questions from our shareholders. Shareholders should direct all
+communications to our President, Manoj Patel, at our executive offices. However, while we appreciate all comments
+from shareholders, we may not be able to respond individually to all communications. We attempt to address shareholder
+questions and concerns in our press releases and documents filed with the SEC, so that all shareholders have access to
+information about us at the same time. Mr. Patel collects and evaluates all shareholder communications. All
+communications addressed to our directors and executive officers will be reviewed by those parties, unless the
+communication is clearly frivolous.
+
+Code of Ethics
+
+ As of the date of this Prospectus, our Board of Directors has not adopted a code of ethics with respect to our
+directors, officers and employees.
+
+EXECUTIVE COMPENSATION
+
+Employment Agreements
+
+ Manoj Patel. We have entered into an employment agreement with Manoj Patel, who is our President. Mr.
+Patel s employment agreement has an initial term of five years, with a renewal term of three years. Mr. Patel s annual
+salary is $240,000. Until such time as our company possesses adequate capital with which to pay Mr. Patel s salary, Mr.
+Patel s monthly salary will be accrued; provided, however, that, until our company shall have earned gross revenues in
+excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Patel s monthly salary as is unpaid shall be
+accrued, and that, upon our company s earning such level of monthly gross revenues, up to $20,000 in unpaid monthly
+salary may be accrued each month. Further, as a signing bonus, Mr. Patel was paid $50,000 in cash and was issued (1)
+500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00 per share and (2)
+500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00 per share. In
+connection with his employment agreement, Mr. Patel executed an indemnity agreement and a confidentiality agreement.
+
+ James F. Lay. We have entered into an employment agreement with James F. Lay, who is our Executive Vice
+President and Secretary. Mr. Lay s employment agreement has an initial term of five years, with a renewal term of three
+years. Mr. Lay s annual salary is $240,000. Until such time as our company possesses adequate capital with which to
+pay Mr. Lay s salary, Mr. Lay s monthly salary will be accrued; provided, however, that, until our company shall have
+earned gross revenues in excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Lay s monthly salary as
+is unpaid shall be accrued, and that, upon our company s earning such level of monthly gross revenues, up to $20,000
+in unpaid monthly salary may be accrued each month. Further, as a signing bonus, Mr. Lay was paid $50,000 in cash
+and was issued (1) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00
+per share and (2) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00
+per share. In connection with his employment agreement, Mr. Lay executed an indemnity agreement and a confidentiality
+agreement.
+
+Summary Compensation Table
+
+ The
+following table sets forth certain compensation information for our executive officers since the inception of our company. 
+
+ Name and 
+
+ Principal Position(s) 
+
+ Year 
+
+ Salary 
+
+ ($) 
+
+ Bonus 
+
+ ($) 
+
+ Stock Awards ($) 
+
+ Option Awards ($) 
+
+ Non-Equity
+ Incentive
+ Plan
+ Compen-sation 
+
+ ($) 
+
+ Non-qualified
+ Deferred
+ Compen-sation
+ Earnings 
+
+ ($) 
+
+ All Other Compen-sation 
+
+ ($) 
+
+ Total 
+
+ ($) 
+
+ Manoj
+ Patel 
+
+ 2011 
+
+ 16,857(1) 
+
+ 50,000 
+
+ --- 
+
+ ---(2) 
+
+ --- 
+
+ --- 
+
+ --- 
+
+ 66,857(1) 
+
+ President
+ and
+ Acting
+ Chief
+ Financial
+ Officer 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ James
+ F.
+ Lay 
+
+ 2011 
+
+ 16,857(1) 
+
+ 50,000 
+
+ --- 
+
+ ---(2) 
+
+ --- 
+
+ --- 
+
+ --- 
+
+ 66,857(1) 
+
+ Executive
+ Vice
+ President,
+ Secretary
+ and
+ Treasurer 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ (1) 
+
+ (2) 
+
+ $16,857
+ ($15,000
+ in
+ salary
+ and
+ $1,857
+ in
+ payroll
+ tax
+ liability)
+ has
+ been
+ accrued
+ as
+ of
+ July
+ 31,
+ 2011.
+ Pursuant
+ to
+ the
+ employment
+ agreements
+ of
+ Messrs.
+ Patel
+ and
+ Lay,
+ until
+ our
+ company
+ shall
+ have
+ earned
+ gross
+ revenues
+ in
+ excess
+ of
+ $50,000
+ for
+ a
+ calendar
+ month,
+ a
+ maximum
+ of
+ $5,000
+ of
+ such
+ persons 
+ $20,000
+ monthly
+ salaries
+ as
+ is
+ unpaid
+ shall
+ be
+ accrued
+ each
+ month.
+ Upon
+ our
+ company s
+ achieving
+ $50,000
+ in
+ monthly
+ gross
+ revenues,
+ up
+ to
+ $20,000
+ of
+ such
+ persons 
+ monthly
+ salaries
+ as
+ is
+ unpaid
+ may
+ be
+ accrued
+ each
+ month.
+ Messrs.
+ Patel
+ and
+ Lay
+ have
+ advised
+ our
+ company
+ that
+ they
+ do
+ not
+ intend
+ to
+ seek
+ the
+ payment
+ of
+ accrued
+ salary
+ amounts,
+ until
+ such
+ time
+ as
+ we
+ possess
+ adequate
+ capital
+ for
+ such
+ purpose. 
+
+ This person was issued a total of 1,000,000 warrants, 500,000 warrants with an exercise
+price of $1.00 per share and 500,000 warrants with an exercise price of $2.00 per share, which warrants had an intrinsic value
+of $-0-, on their date of issuance. In determining the fair value of these warrants, we employed a Black-Scholes option-pricing
+model that uses assumptions regarding expected volatility concerning our common stock, dividend yield and risk free interest rates.
+Please refer to Note 6 of our financial statements on page F-19, for further information on our valuation method. 
+
+ As of the date of this Prospectus, there are no annuity, pension or retirement benefits proposed to be paid to
+officers, directors or employees of our company, pursuant to any presently existing plan provided or contributed to by
+our company.
+
+Outstanding Equity Awards Since Inception
+
+ 
+
+Option Awards
+
+Stock Awards
+
+Name
+
+Number of
+Securities
+Underlying
+Unexercised
+Options (#)
+Exercisable
+
+Number of
+Securities
+Underlying
+Unexer-cised
+Options (#)
+Unex-ercisable
+
+Equity
+Incentive
+
+Plan Awards:
+Number of
+Securities
+Underlying
+Unexercised
+Unearned
+Options (#)
+
+Option
+Exercise
+Price ($)
+
+Option
+Expir-ation Date
+
+Number of
+Shares or
+Units of
+Stock That
+Have Not
+Vested (#)
+
+Market
+Value of
+Shares or
+Units of
+Stock
+That
+Have Not
+Vested
+($)
+
+Equity
+Incentive
+Plan
+Awards:
+Number of
+Un-earned
+Shares,
+Units or
+Other
+Rights
+That Have
+Not Vested
+(#)
+
+Equity
+Incentive
+Plan
+Awards:
+Market or
+Payout
+Value of
+Unearned
+Shares,
+Units or
+Other
+Rights That
+Have Not
+Vested ($)
+
+Manoj Patel
+
+James R. Lay
+
+500,000 sh.
+
+500,000 sh.
+
+500,000 sh.
+
+500,000 sh.
+
+---
+
+---
+
+---
+
+---
+
+---
+
+---
+
+---
+
+---
+
+$1.00
+
+$2.00
+
+$1.00
+
+$2.00
+
+5/2013
+
+5/2013
+
+5/2013
+
+5/2013
+
+---
+
+---
+
+---
+
+---
+
+n/a
+
+n/a
+
+n/a
+
+n/a
+
+---
+
+---
+
+---
+
+---
+
+---
+
+---
+
+---
+
+---
+
+Long-Term Incentive Plans
+
+ We currently have no long-term incentive plans.
+
+Director Compensation
+
+ Our directors receive no compensation for their serving as directors.
+
+SECURITY OWNERSHIP OF CERTAIN
+
+BENEFICIAL OWNERS AND MANAGEMENT
+
+Ownership of Common Stock
+
+ The
+following table sets forth certain information as of the date of this Prospectus, with respect to the beneficial ownership of
+shares of our common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of common
+stock, (ii) each of our directors, (iii) each of our executive officers and (iv) all of our executive officers and directors as
+a group. Unless otherwise indicated, each shareholder has sole voting and investment power with respect to the shares shown. As
+of the date of this Prospectus, we had 28,396,976 shares of common stock issued and outstanding. Unless otherwise indicated, the
+address for each of the shareholders in the table below is c/o SafedoXTM, Inc., 11801 Pierce Street, 2nd Floor, Riverside,
+California 92505. 
+
+ 
+
+ 
+
+ Prior
+ to This Offering 
+
+ 
+
+ After
+ This Offering 
+
+ Name
+ and
+ Address 
+
+ of Beneficial Owner 
+
+ 
+
+ Shares Owned 
+
+ 
+
+ % (1) 
+
+ 
+
+ Shares Owned 
+
+ 
+
+ % (1) 
+
+ Manoj Patel 
+
+ 
+
+ 11,100,000(2) 
+
+ 
+
+ 35.29% 
+
+ 
+
+ 10,600,000 
+
+ 
+
+ 33.70% 
+
+ James F. Lay 
+
+ 
+
+ 11,100,000(2) 
+
+ 
+
+ 35.29% 
+
+ 
+
+ 10,600,000 
+
+ 
+
+ 33.70% 
+
+ Officers and directors
+ as a group (2 persons) 
+
+ 
+
+ 22,200,000(3) 
+
+ 
+
+ 70.58% 
+
+ 
+
+ 21,200,000 
+
+ 
+
+ 67.40% 
+
+ (1) 
+
+ (2) 
+
+ (3) 
+
+ Based on 31,454,496 shares outstanding, including 3,057,520
+ shares underlying currently exercisable warrants. 
+
+ 1,000,000 of these shares are unissued, but underlie currently exercisable warrants. 
+
+ 2,000,000 of these shares are unissued, but underlie currently exercisable warrants. 
+
+Shares Eligible for Future Sale
+
+ As of the date of this Prospectus, there were 28,396,976 shares of our common stock issued and outstanding.
+
+ Shares Covered by this Prospectus. As of the date of this Prospectus, all 3,037,671 shares being offered
+hereunder by the Selling Shareholders may be sold without restriction under the Securities Act.
+
+ Rule 144. A person who has beneficially owned restricted shares of our common stock or warrants for at least
+six months would be entitled to sell their common stock provided that (1) such person is not deemed to have been one
+of our affiliates at the time of, or at any time during the three months preceding, a sale, (2) we had been subject to the
+Exchange Act reporting requirements for at least 90 days before the sale and, (3) if the sale occurs prior to satisfaction
+of a one-year holding period, we provide current information at the time of sale.
+
+ Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months,
+but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to
+additional restrictions, by which such person would be entitled to sell within any three-month period only a number of
+shares of common stock that does not exceed the greater of:
+
+ 
+
+ 1% of the total number of shares of common stock then outstanding, which, as of the date of this
+Prospectus, equals approximately 283,000 shares; and
+
+ 
+
+ the average weekly trading volume of such securities during the four calendar weeks preceding the
+filing of a notice on Form 144 with respect to such sale;
+
+ provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three
+months before the sale.
+
+ However, since we anticipate that our shares will be quoted on the OTC Bulletin Board, which is not an
+ automated quotation system , our shareholders will not be able to rely on the market-based volume limitation described
+in the second item above. If, in the future, our common stock is listed on an exchange or quoted on NASDAQ, then our
+shareholders would be able to rely on the market-based volume limitation. Unless and until our common stock is so
+listed or quoted, our shareholders are able to rely only on the percentage-based volume limitation described in the first
+item above.
+
+ Such sales by affiliates must also comply with the manner of sale, current public information and notice
+provisions of Rule 144. The Selling Shareholders will not be governed by the foregoing restrictions when selling their
+shares pursuant to this Prospectus.
+
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+
+mind3power Inc. Transaction
+
+ On May 3, 2011, we consummated a plan and agreement of merger (the Merger Agreement ) with our
+predecessor company, mind3power, Inc., a California corporation (M3P), pursuant to which M3P merged with and into
+our company. Pursuant to the Merger Agreement, we issued a total of 21,100,000 shares of our common stock to the
+M3P shareholders. Pursuant to the Merger Agreement, Manoj Patel, our President, and James F. Lay, our Executive
+Vice President, each were issued 10,550,000 shares of our common stock. M3P and SafedoXTM are considered to be
+entities under common control at the time of the merger.
+
+ In determining the number of shares of our common stock to be issued under the Merger Agreement, our board
+of directors did not employ any standard valuation formula or any other standard measure of value.
+
+Employment Agreements
+
+ Manoj Patel. We have entered into an employment agreement with Manoj Patel, who is our President. Mr.
+Patel s employment agreement has an initial term of five years, with a renewal term of three years. Mr. Patel s annual
+salary is $240,000. Until such time as our company possesses adequate capital with which to pay Mr. Patel s salary, Mr.
+Patel s monthly salary will be accrued; provided, however, that, until our company shall have earned gross revenues in
+excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Patel s monthly salary as is unpaid shall be
+accrued, and that, upon our company s earning such level of monthly gross revenues, up to $20,000 in unpaid monthly
+salary may be accrued each month. Further, as a signing bonus, Mr. Patel was paid $50,000 in cash and was issued (1)
+500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00 per share and (2)
+500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00 per share. In
+connection with his employment agreement, Mr. Patel executed an indemnity agreement and a confidentiality agreement.
+
+ James F. Lay. We have entered into an employment agreement with James F. Lay, who is our Executive Vice
+President and Secretary. Mr. Lay s employment agreement has an initial term of five years, with a renewal term of three
+years. Mr. Lay s annual salary is $240,000. Until such time as our company possesses adequate capital with which to
+pay Mr. Lay s salary, Mr. Lay s monthly salary will be accrued; provided, however, that, until our company shall have
+earned gross revenues in excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Lay s monthly salary as
+is unpaid shall be accrued, and that, upon our company s earning such level of monthly gross revenues, up to $20,000
+in unpaid monthly salary may be accrued each month. Further, as a signing bonus, Mr. Lay was paid $50,000 in cash
+and was issued (1) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00
+per share and (2) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00
+per share. In connection with his employment agreement, Mr. Lay executed an indemnity agreement and a confidentiality
+agreement.
+
+LEGAL MATTERS
+
+ The validity of the shares to be sold by us under this Prospectus will be passed upon for us by Newlan &
+Newlan, Ltd., Flower Mound, Texas. Newlan & Newlan, Ltd. owns 1,000,000 shares of our common stock and 200,000
+warrants to purchase a like number of shares.
+
+EXPERTS
+
+ Our financial statements for the period from Inception to July 31, 2011, included in this Prospectus have been
+audited by PMB Helin Donovan, LLP, as set forth in its report of independent registered public accounting firm included
+in this Prospectus. Its report is given upon its authority as an expert in accounting and auditing.
+
+COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
+
+ Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including
+a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best
+interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is
+successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses
+incurred, including attorney s fees. With respect to a derivative action, indemnity may be made only for expenses actually
+and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order.
+The indemnification is intended to be to the fullest extent permitted by the laws of the State of Wyoming.
+
+ Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
+officers and controlling persons pursuant to the foregoing provisions, we have been advised that, in the opinion of the
+SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
+
+WHERE YOU CAN FIND MORE INFORMATION
+
+ We have filed with the SEC a registration statement on
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001521222_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001521222_china_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001526689_generation_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001526689_generation_prospectus_summary.txt
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", Green 4 Media and Company are to Green 4 Media, Inc. A Cautionary Note on Forward-Looking Statements This Prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors, that may cause our industry s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001526726_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001526726_horizon_prospectus_summary.txt
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+Prospectus Summary The following summary highlights selected material information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. Our Company We were incorporated in Delaware on May 11, 2011 and are a development stage company. On June 13, 2011, we entered into an exclusive worldwide patent sale agreement (the "Patent Transfer and Sale Agreement ") with Orit Tsaban, (the Seller ), in relation to a patented technology (U.S. Patent Number: 7,589,434) (the Patent ) for an anti-theft vehicle ignition system for an automobile. The patent and technology were transferred to us in exchange of payment to Orit Tsaban (the Seller) of US $15,000 (Fifteen thousands United States Dollars), according to the terms and conditions specified in the Patent Transfer and Sale Agreement related to the U.S. Patent Number: 7,589,434. The invention that is the subject of the Patent is for an anti-theft vehicle ignition system for an automobile. The invention includes several components, including a control box which requires a series of steps to be completed by the driver before the ignition system is unlocked and the vehicle able to be operated. The product also includes a magnetic card swipe, a touch screen, and a hinged lid. We plan to license the Patent to one or more third-parties to design, manufacture and market a product based on the Patent, in exchange for payment to us of an initial one-time license fee and of percentage royalty payments on future sales of products based on the Patent. We did not conduct due diligence regarding the inventor s experience nor regarding what was involved in designing and patenting the technology. We have not to date developed a working product and do not plan to develop the product but rather seek licensees to license the patented technology. It will be up to the licensees to develop the product and / or manufacture and sell the related patented technology. We are not aware at this time the cost of the development of the product and / or the cost to the related end user and have not yet discussed the costs with potential licensees. The Company s business model is to seek royalty payments from the licensee / manufacturer upon the sale of the product to the end user. The Company will seek approximately 10% in royalty fees. Our burn rate is on a quarterly basis rather than monthly basis. Our current expenses are mainly corporate governance which is legal, auditing, transfer agent fees and other misc fees. These fees are payable on a quarterly basis and are approximately $7,000 a quarter. The Company will need to raise the maximum amount of the offering of net proceeds of $53,500 in order to meet its current expenditures for the next twelve months (Corporate Governance of $33,500) whereby $20,000 is set aside for the costs of seeking the third parties licensees. These costs will include the costs of head-hunters and travel expenditures if and when necessary. The Co will initiate to seek third party licensees once it has raised the related funds from the offering. As soon as we have raised sufficient funds to start to implement the business plan we will seek the third parties. We anticipate these costs to be approximately $20,000. We believe it will take approximately three to six months to find a licensee during which period we believe the $20,000 will be expended. We will try and obtain an upfront 1 time license fee from the Licensee and / or future royalty payments of approximately 10%. Our recent losses amounted to $34,516 which is the loss incurred from inception to December 31, 2011. As of December 31, 2011 the Company has accrued expenses of $33,386 (besides $21,130 of Officer loans) of which $20,000 are accrued offering expenses and $13,386 of miscellaneous liabilities. These liabilities are too be repaid from the offering (see Page 16 paragraph 7). Immediate payables that must be paid are funded by the Directors. The Directors have under taken (on unenforceable undertaking) to fund the immediate and necessary payables upto $75,000 until the Company has the financial ability to Repay the Directors loans. An exhibit 99.2 of the undertaking is attached to the prospectus. We believe it will take the Licensee approximately One and a half years to bring the product to market (1 year production and 6 months to market) whereby the Company will not generate revenues from Royalties for at least two years (taking into account three to six months to find the appropriate Licensee) from when it raises the proceeds from the Offering unless an upfront licensing fee is agreed upon between the Company and the Licensee whereby then the Co will generate revenues earlier All costs of the product (prototype) development and other related costs to bring the product to market will be on the bearing of the related Licensee. Our principal offices are located at 26 HaShlosha Street, Bnei Brak 51363, Israel. Our registered office in Delaware is located at 113 Barksdale Professional Center, Newark, DE 19711, and our registered agent is Delaware Intercorp. All references to "we," "us," "our," or similar terms used in this prospectus refer to Safe Dynamics Corp. Our fiscal year end is December 31. Our auditors have issued an audit opinion which includes a statement describing our going concern status. Our financial status creates substantial doubt whether we will continue as a going concern. Investors should note that we have not generated any revenues to date, that we do not yet have any products available for sale, and that we have not entered into any license agreements with licensees for the development and manufacture of a proposed product based on our Patent. As of December 31, 2011, our company has minimal cash reserves of $300 and we will need to raise additional capital within the next twelve months, even if we are able to sell the maximum number of shares in order to continue its operations after the twelve months .The company has no full time employees and our two current officers/directors intend to devote approximately five hours per week to Safe Dynamics business activities. Our Direct Public Offering We are offering for sale up to a maximum of 2,500,000 shares of our common stock directly to the public. There is no underwriter involved in this offering. We are offering the shares without any underwriting discounts or commissions. The purchase price is $0.03 per share. If all of the shares offered by us are purchased, the gross proceeds before deducting expenses of the offering will be $75,000. There is no minimum offering and we can use the proceeds even before we raise a sufficient amount of offering proceeds to pay our current liabilities. Because we can use the proceeds even before we raise a sufficient amount of offering proceeds to delay a bankruptcy filing, investors may lose their entire investment before they know whether we have raised sufficient proceeds to pay our current liabilities. The expenses associated with this offering are estimated to be $21,500 or approximately 28.7% of the gross proceeds of $75,000 if all the shares offered by us are purchased. Thus, the net proceeds from the offering if all of the shares offered are purchased would be $53,500. If all the shares offered by us are not purchased, then the percentage of offering expenses to gross proceeds will be higher and a lower amount of proceeds will be realized from this offering. This is our initial public offering and no public market currently exists for shares of our common stock. We can offer no assurance that an active trading market will ever develop for our common stock. The offering will terminate six months after this registration statement is declared effective by the Securities and Exchange Commission. However, we may extend the offering for up to 90 days following the six month offering period. The Offering Total shares of common stock outstanding prior to the offering 3,000,000 shares Shares of common stock being offered by us 2,500,000 shares Total shares of common stock outstanding after the offering 5,500,000 shares Gross proceeds: Gross proceeds from the sale of all of the 2,500,000 shares of our common stock being offered pursuant to this registration statement will be $75,000. Use of Proceeds The proceeds from the sale of our shares will be used as general operating capital to help create and maintain a marketing effort to identify and contract with third party licensees interested in developing a product based on our Patent and bringing such product to market. Risk Factors There are substantial risk factors involved in investing in our Company. For a discussion of certain factors you should consider before buying shares of our common stock, see the section entitled "Risk Factors." Primary Market We intend to locate and contract with licensees that will sell a product based on our Patent in the US market. This is a self-underwritten public offering, with no minimum purchase requirement. Shares will be offered on a best efforts basis and we do not intend to use an underwriter for this offering. We do not have an arrangement to place the proceeds from this offering in an escrow, trust, or similar account. Any funds raised from the offering will be immediately available to us for our immediate use. As used in this prospectus, references to the "Company," "we," "our," or "us" refer to Safe Dynamics Corp., unless the context otherwise indicates. A Cautionary Note on Forward-Looking Statements This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors, that may cause our or our industry s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Selected Summary Financial Data This table summarizes our operating and balance sheet data as of the periods indicated. You should read this summary financial data in conjunction with the "Plan of Operations" and our audited financial statements and notes thereto included elsewhere in this prospectus. For the date of Inception May 11 ,2011 to (December 31, 2011) Statement of Operations: Total revenues $ - Total operating expenses $ 34,516 (Loss) from operations $ (34,516 ) Net (loss) $ (34,516 ) (Loss) per common share $ (0.01 ) Weighted average number of common shares outstanding - Basic and diluted 2,757,447 As of (December 31, 2011) Balance Sheet: Cash in bank $ 300 Deferred Offering Costs $ 20,000 Total current assets $ 20,300 Total assets $ 20,300 Total current liabilities $ 54,516 Total liabilities $ 54,516 Total stockholders' (deficit) $ (34,216 ) Total liabilities and stockholders' (deficit) $ 20,300 RISK FACTORS This investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment. RISKS
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001526959_tvax_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001526959_tvax_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights key information contained elsewhere in this prospectus. It may not contain all of the information that is important to you in making your investment decision. You should read the entire prospectus, including Risk Factors and the consolidated financial statements and the related notes thereto, appearing elsewhere herein, before making an investment decision. Certain technical terms used in this prospectus are defined in the Glossary contained at the end of this prospectus. Overview We are a biotechnology company focused on the development of targeted cell-based immunotherapies for the treatment of cancer. We use two cell-based technologies: cancer cell vaccination and the activation and infusion of killer T cells, specialized immune cells, to treat cancer. Our proprietary immunologic treatment, TVAX Immunotherapy , uses a patient s cells to create activated, genetically unique cancer-killing T cells that can destroy the patient s cancer cells, including cancer stem cells, which are widely believed to be responsible for cancer growth, spread and metastasis. Our clinical data show that our proprietary treatment, either alone or combined with surgical tumor removal, can improve patient outcomes by destroying cancer cells and, in some cases, eliminating any detectable evidence of cancer. Although those data suggest that TVAX Immunotherapy can improve median overall patient survival, we have not demonstrated that our immunotherapy is a cure for cancer. Upon completion of this offering, we plan to initiate patient enrollment in a pivotal 396 patient Phase III randomized, multicenter clinical trial of our lead treatment candidate, TVI-Brain-1, in patients with newly-diagnosed grade 4 astrocytoma, a type of glioma, the most prevalent form of brain cancer. We intend to seek regulatory approval for the use of TVI-Brain-1 following surgery and radiotherapy in newly diagnosed grade 4 astrocytoma patients. We believe TVAX Immunotherapy may be effective against a wide range of cancers, including renal cell carcinoma, the most prevalent form of kidney cancer. Our TVAX Immunotherapy candidate, TVI-Kidney-1, is intended to be used following surgery alone in the treatment of stage 4 renal cell carcinoma. TVAX Immunotherapy TVAX Immunotherapy is a proprietary method for treating cancer using large numbers of activated, genetically unique cancer-specific killer T cells. We vaccinate a patient with his or her irradiated cancer cells and an immunological adjuvant, a chemical or biological agent that enhances the immune response. This vaccination generates an immune response in the patient, which produces a large number of cancer-specific T cells. In the body of a vaccinated patient, these cancer-specific T cells can recognize, but generally cannot kill, cancer cells. We harvest these cancer-specific T cells from the vaccinated patient s blood and convert them into activated killer T cells which are then infused back into the patient. The activated killer T cells trigger the body s immune system to destroy cancer cells, including cancer stem cells. Our treatment has a favorable safety profile compared to chemotherapy. Our immunologic therapy has been tested and well tolerated in approximately 200 patients. Treatment-related adverse events generally have consisted of inflammatory responses resulting in flu-like symptoms, including fever, chills, headache and nausea that typically lasted only one to two days. None of the patients treated with TVAX Immunotherapy have experienced CTC Grade 4 serious adverse events and only two have experienced CTC Grade 3 adverse events. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 1, 2012 PROSPECTUS TVAX BIOMEDICAL, INC. 2,000,000 Shares of Common Stock TVAX Biomedical, Inc. is offering 2,000,000 shares of its common stock. This is our initial public offering. We anticipate that the initial public offering price will be between $9.00 and $11.00 per share. Prior to this offering, there has been no public market for our common stock. Our common stock has been approved for listing on the NASDAQ Capital Market under the symbol TVAX, subject to official notice of issuance. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 10 of this prospectus to read about factors you should consider before buying shares of our common stock. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions1 $ $ Proceeds, before expenses, to us $ $ 1 We have agreed to reimburse the underwriters for certain expenses. See Underwriting for a description of the underwriting arrangements for this offering. We have granted the underwriters an option to purchase up to an additional 300,000 shares of our common stock from us at the public offering price, less underwriting discounts and commissions, within 30 days from the date of this prospectus, to cover over-allotments of the shares. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock on or about , 2012. Sole Book-Running Manager Roth Capital Partners Co-Managers Cantor Fitzgerald & Co. Aegis Capital Corp The date of this prospectus is , 2012. Table of Contents Treatment candidate Indication Clinical Trial Status TVI-Brain-1 Grade 4 astrocytoma (brain cancer) Planned pivotal Phase III with initiation of enrollment expected following completion of the offering Grade 4 glioma (brain cancer) Phase II ongoing TVI-Kidney-1 Stage 4 renal cell carcinoma (kidney cancer) Phase III ready TVI-Brain-1 TVI-Brain-1 is intended to be used following surgery and radiotherapy in the treatment of newly diagnosed grade 4 astrocytoma, which is a type of glioma, the most prevalent form of brain cancer. In Phase I/II clinical trials, a single course of our immunologic therapy delivered following surgery alone improved patient outcomes by destroying cancer cells and, in some cases, eliminating any detectable evidence of cancer in patients with advanced grade 3 and 4 gliomas. Those trials, which were not randomized or compared to control groups, included patients with recurrent glioma that had failed standard of care treatments. Patients in those trials had increased median overall survival of more than six months compared to historical controls, including several patients who were alive at the time data were collected for publication. Although these data suggest that TVAX Immunotherapy can improve median overall patient survival, we have not demonstrated that our immunotherapy is a cure for cancer. In our clinical studies, our immunologic therapy was well tolerated in approximately 75 brain cancer patients, none of whom experienced a treatment-related serious adverse event. Treatment-related adverse events generally consisted of inflammatory responses resulting in flu-like symptoms, including fever, chills, headache and nausea, that typically lasted only one to two days. Our subsidiary, TVAX Biomedical I, LLC, filed an investigational new drug application (IND) for TVI-Brain-1 with the Food and Drug Administration, or FDA, which became effective on February 2, 2007. Following the completion of this offering, we intend to commence a pivotal 396-patient Phase III randomized, multicenter clinical trial of TVI-Brain-1 in newly diagnosed grade 4 astrocytoma patients. Patients in our Phase III trial will be randomly selected for treatment with surgery and radiotherapy followed by two courses of TVAX Immunotherapy. Median overall survival of this group will be compared to a control group that is treated with surgery, radiotherapy and traditional chemotherapy. Patients in our Phase III clinical trial will be treated earlier in the progression of their disease, when their cancers are relatively small and their immune systems are not compromised by chemotherapy. Those patients will continue to be exposed to the risks associated with surgery and radiotherapy, which will not be affected by subsequent treatment with TVI-Brain-1. However, those patients will not be subjected to the toxicities associated with chemotherapy. We expect this trial to be completed approximately four years after initiation of enrollment. We expect to have the first interim analysis of data approximately 24-30 months following commencement of enrollment. The American Cancer Society estimates that approximately 17,000 primary brain tumors will be diagnosed in the United States in 2011. According to the National Cancer Institute, approximately 60% will be gliomas, of which approximately 75% will be astrocytomas, according to a February 2011 report of the Central Brain Tumor Registry of the United States. While overall survival time varies with grade, gliomas are aggressive cancers, and even when detected very early and/or at low-grade, cannot be cured. Based on a published study, the median survival of glioblastoma patients is approximately 12 months, with between 3-5% of patients surviving for more than three years. Although surgery, radiotherapy and cytotoxic chemotherapy result in a modest increase in overall survival, the benefit is limited. Our treatment will be delivered following surgery and radiotherapy, which have significant risks. Patients receiving TVAX Immunotherapy in our trial will be required to have surgery to Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001527102_evergreen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001527102_evergreen_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms Home Treasure Finders the Company, we, us, and our refer to Home Treasure Finders, Inc. HOME TREASURE FINDERS INC. This offering shall commence upon the date first declared effective and continue for a period of one year. We are a development stage company with minimal operations and may be deemed a Shell Company as defined by Rule 405. We have incurred substantial losses since inception and our auditor s report notes that there is substantial doubt of our ability to continue as a going concern. We were initially incorporated on July 28, 2008 in the State of Colorado. We are focused on providing real estate agents with buyer leads thereby obtaining referral commissions from their subsequent sale. Under Colorado law we must hold a real estate license to be paid such commissions. Accordingly, we plan to: 1. Cause our executive officer to complete a certified course entitled Brokerage Administration 2. Obtain Errors and Omissions Insurance 3. File an application for our company to be licensed in Colorado as a real estate broker We believe we can complete these three tasks without delay but there is no guarantee that will happen We have a web site under development, but as of the date of this prospectus, only a portion of the site is activated. The address is www.hometreasurefinders.com. A portion of the funds we are raising in this offering will be used to complete our website which is a key element of our business plan. In connection with our present financial position and with the activation of those portions of our business plan which we believe will generate revenue, we have identified the completion of our website as a priority. It is important to note: 1. Our company s planned operations, which we believe will generate revenue, as more specifically detailed in this prospectus in the sections entitled Management s Discussion and Analysis or Plan of Operation cannot be initiated until the internal features of our website are operational. 2. Going forward, we will apply cash from this funding, if any, to executive salary and the completion of tasks to be carried out by our technical consultants to activate our website s internal features. We believe the cash we expect to receive in this IPO, possible loans from management together with possible investments from outside parties, will be sufficient to activate our business and maintain operations for the next year. We presently have no plan to raise additional capital from management to support our business plan. As we have no commitments for additional finance, should planned revenues fail to materialize, our business could fail for lack of cash. - 4 - Our auditor's report states that there is substantial doubt that we will be able to continue as a going concern, however, we plan to continue all of the day to day activities and public company reporting during the next year. More detail regarding our business plan can be found starting on page 27 of this document. We have had substantial losses since inception and we may be unable to continue as a going concern and in the event that we are forced to reduce operations or in any way curtail our business, an investor will lose all money invested. The activation of our website, and issuance our license as a real estate broker within the State of Colorado are events which we cannot offer any assurance will be actualized, We intend to focus our initial sales efforts in Colorado, where President, Corey Wiegand can personally recruit buyer agents and personally negotiate with listing agents. We plan to post our signs at listings that other agents have procured and post our advertisements on the internet at minimal cost to us. We anticipate that our customers will be buyers who intend to purchase real estate within the next year. There is currently no public market for our common stock. We plan to open a discussion with market makers in order to arrange for an application for our common stock to be approved for quotation on the Over-The-Counter Bulletin Board, or alternately, the OTCQB, upon the effectiveness of this prospectus. There is no guarantee that we will be approved for quotation. We are not a blank check company. We do not have any intention to engage in a reverse merger with any entity in an unrelated industry. Our offices are located in the home of our president at 3412 West 62nd Avenue, Denver Colorado 80221. Our telephone number is: (720-273-2398) and our fax number is 720-890-8885. We are a Colorado corporation. Common stock outstanding before the offering Prior to this Offering, we have 11,425,800 shares of Common Stock outstanding. Maximum number of shares offered by us Up to 600,000 shares of our common stock Securities offered by selling shareholders Up to 3,425,800 shares of common stock. This number represents 30% of our current outstanding stock. Common stock to be outstanding after the offering Up to 12,025,800 shares of our common stock. Use of proceeds We will receive proceeds from the sale of our shares to the public under this prospectus to be use for the payment of costs and expenses we incur in the startup of our business. The above information regarding common stock to be outstanding after the offering is based on 11,425,800 shares of common stock outstanding as of September 30, 2011 and as of the date of this prospectus. All of the shares of common stock that are being registered for resale pursuant to this prospectus have been issued. - 5 - Summary Financial Information The following information as of September 30, 2011 and as of the date of this prospectus has been derived from our financial statements which appear elsewhere in this prospectus. We are a development stage company with minimal operations and may be deemed a Shell Company as defined by Rule 405. We have incurred substantial losses since inception. Our auditor notes in their report that there is substantial doubt of our ability to continue as a going concern. Nine Months Ended September 30, 2011 July 28, 2008 (inception) thru September 30, 2011 Revenues $ 0 $ 0 Total Operating Expenses $ 41,530 $ 121,986 Net income (loss) $ (41,530 ) $ (121,786 ) Income (loss) per share (basic and diluted) $ (**) $ (**) Weighted average shares of common stock outstanding (basic and diluted) 11,412,660 ______________ ** Less than $(.01) per share Balance Sheet Information: September 30, 2011 Unaudited Dec 31, 2010 Audited Working capital $ (9,698 ) $ 11,942 Total assets $ 3,009 $ 14,982 Total liabilities $ 12,707 $ 3,040 Accumulated deficit during development stage $ (121,786 ) $ (80,256) Stockholders equity (deficit) $ (9,698 ) $ 11,942 DILUTION As of September 30, 2011, our net tangible book value (total tangible assets less total liabilities) was $(9,698) or approximately $(0.001) per share. The following table sets forth the dilution to persons purchasing shares in this offering without taking into account any changes in our net tangible book value after September 30, 2011, except the sale of the minimum and maximum number of shares offered at the public offering price and receipt of the net proceeds therefrom. Assuming Minimum Shares Sold Assuming Maximum Shares sold Public offering price per share $ 0.10 $ 0.10 Net tangible book value before offering (1) $ (0.001 ) $ (0.001 ) Increase attributable to purchase of shares by new investors $ 0.003 $ 0.005 Pro forma net tangible book value after offering (2) $ 0.002 $ 0.004 Dilution per share to new investors $ 0.098 $ 0.096 Percent dilution to new investors 98.00 % 96.00 % 1 Determined by dividing the number of shares of common stock outstanding into the net tangible book value. 2 These figures do not take into account any events after September 30, 2011. - 6 -
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001527132_dream_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001527132_dream_prospectus_summary.txt
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+Copies to: Christopher H. Dieterich, Esq. Dieterich & Associates, LP 11835 West Olympic Blvd., Suite 1235E Los Angeles, California 90064 (310) 312-6888 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated file, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) The Company believes that it qualifies as an "emerging growth company" under the JOBS Act, executed by the President on April 5, 2012, and is electing to be treated as such under the Act as it now stands. We should maintain this status until such time as we have gross revenues of more than $1,000,000,000 in a fiscal year, or 5 years have passed since the first sale of shares under this registration statement or have issued $1,000,000,000 in debt or become a "large accelerated filer", whichever occurs first. CALCULATION OF REGISTRATION FEE Proposed Maximum Proposed Maximum Title of Each Class of Amount to Offering Price Aggregate Amount of Securities to be Registered be Registered (1) Per Share(2) Offering Price Registration Fee Common Stock, $0.001 par value per share 5,000,000 $1.00 $5,000,000 $580.50 This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information or to make any representation on behalf of the Company that is different from that contained in this prospectus. You should not rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities offered by this prospectus under circumstances and in jurisdictions where it is lawful to do so. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the date of delivery of this prospectus or of any sales of these securities. Our business, financial condition, results of operations and prospects may have changed since the date of this prospectus. This prospectus may be used only in jurisdictions where it is legal to sell these securities. 3 EXPLANATORY NOTE In this Registration Statement, "the Company", "we", "us", and "our" refer to Dream Homes Limited. CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS Some of the statements contained or incorporated by reference in this prospectus are "forward-looking statements" These statements are based on the current expectations, forecasts, and assumptions of our management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are sometimes identified by language such as "believe," "may," "could," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "appear," "future," "likely," "probably," "suggest," "goal," "potential" and similar expressions and may also include references to plans, strategies, objectives, and anticipated future performance as well as other statements that are not strictly historical in nature. The risks, uncertainties, and other factors that could cause our actual results to differ materially from those expressed or implied in this prospectus include, but are not limited to, those noted under the caption "Risk Factors" beginning on page 8 of this prospectus. Readers should carefully review this information as well the risks and other uncertainties described in other filings we may make after the date of this prospectus with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. They reflect opinions, assumptions, and estimates only as of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements in this prospectus, whether as a result of new information, future events or circumstances, or otherwise. DREAM HOMES LIMITED (Exact name of Registrant as specified in its charter) Nevada 1520 26-1917476 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number) 314 Route Vincent Simonelli Chief Executive Officer Dream Homes Limited 314 Route 4 PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that you should consider before buying shares of our common stock. You should read the entire prospectus and any prospectus supplements
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our securities. You should carefully read the prospectus in its entirety before investing in our securities, including the information discussed under
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001527424_seville_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001527424_seville_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. Company Overview Seville Ventures Corp. (the Company ) was incorporated in the State of Nevada on February 14, 2011 and is currently headquartered in Byron, Illinois. Initially, we intend to provide specialized luxury vacation packages for those discriminating consumers looking for a unique experience. Our initial target market will be the country of Spain. However, as our company grows, we plan to offer luxury vacation packages throughout Europe. Through our first website currently accessible at www.MySpanishGetaway.com, travelers will be able to research, plan, and book seven different luxury vacations in different cities and/or regions throughout Spain, and each vacation will include round-trip first class airfare, 5-star accommodations, Michelin-starred restaurants, luxurious sightseeing tours or entertainment and other unique features. Initially, the features of the luxury vacations will be pre-selected by the Company, but our vacation packages will also be customizable, upon request, to meet the needs of the most discriminating traveler. The long-term goal of the Company is to establish itself as an internationally recognized provider of top-of-the-line luxury travel. Within the growing travel industry, the Company will focus on the niche market of luxury travel, foremost in Spain and as the Company begins to expand, throughout Europe. Our intended clients will be individuals, couples and groups of moderate to high net worth, who travel for leisure at least once per year. We will initially target American travelers, but as we expand we will target a broader range of travelers outside of the United States. Seeking the ultimate luxury travel experience, our target clients will demand the finest quality travel and lodging accommodations, entertainment and other luxury features accompanied by a superior level of service. The Company seeks to distinguish itself in the luxury travel market and to be recognized for its exceptional service, professionalism, comprehensiveness, and client satisfaction. The Company will strive to gain a competitive advantage in the luxury vacation market by offering hand-selected, elite vacation packages to potential clients and by interacting one-on-one with these clients to assist them with various aspects of their vacations from the beginning planning stage through the completion of their trips. Further, the Company plans to cultivate this competitive edge by developing close relationships with airlines, hotels, restaurants, tour companies and other businesses whose products and services we intend to include in our vacation packages, in order to develop mutually beneficial relationships whereby the Company will feature these businesses in our luxury vacation packages in exchange for certain benefits, such as exclusive offers or deals that the Company can then offer to our potential clients. Above all, we will strive to ensure that clients are worry-free and fully satisfied before, during and after their trip. As of the date of this filing, we are in the development stage and are working to implement our business plan; accordingly we have not acquired a client base. Our sole officer and director has only recently become interested in creating a travel service company and does not have any professional training or technical credentials in the development of such a company or the development of an interactive website that offers such services. Nevertheless, Mr. Hall has prior experience in website design and management, and is committed to devote approximately 15 to 20 hours per week to the Company. He will be in charge of supervising development projects that we carry out including supervision of any consultants, marketing agents, employees or website developers that we may engage to assist in carrying out the Company s plan of operations. Although we were only recently incorporated, have not yet commenced business operations, and are in the development stage, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's unsteady financial climate. There can be no assurance that we will be successful in our attempt to sell 100% of the shares being registered hereunder; however, we believe that investors in today's markets demand full transparency and by our registering this Offering and becoming a reporting company, we will strive to meet this demand. Currently, there is no public trading market for our Common Stock and no such market may ever develop, which may limit the Company s ability to raise funds through equity financings or to use its shares as consideration. However, management believes that the Company will be able to meet all requirements to be quoted on the OTC Bulletin Board including being current in all required filings with the Securities and Exchange Commission ( SEC ) following the declared effectiveness of this Offering. Further, even though the Company s Common Stock will likely be considered a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater opportunity to provide liquidity to our shareholders. SEVILLE VENTURES CORP. (A Development Stage Company) Condensed Financial Statements For the period ended April 30, 2012 (unaudited) and October 31, 2011 Condensed Balance Sheets (unaudited) 2 Condensed Statement of Operations (unaudited) 3 Condensed Statement of Cash Flows (unaudited) 4 Notes to the Condensed Financial Statements (unaudited) We intend to retain qualified personnel on a contract basis to help us fine-tune the details of the luxury vacation packages that we intend to sell, to identify additional features to include in our packages, to help expand and maintain our current and future websites, to provide customer support to our future clients, to market our future products and services, and much more. To date, we do not have any verbal or written agreements regarding the retention of any qualified personnel to assist us with our business development activities. We are currently a development stage company and to date we have recorded no revenue. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations sufficient to sustain our operations, the successful implementation of our business plan is dependent upon receiving sufficient funds from this Offering and/or additional funding from management, the issuance of equity or debt, or through obtaining a credit facility. Our current cash and working capital is not sufficient to cover our current estimated offing expenses of $45,000, which include those fees associated with obtaining a Notice of Effectiveness from the SEC for this Registration Statement. Upon obtaining effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to market and grow our Company. After the completion of this Offering, if the maximum amount of funds is generated, after deducting offering expenses, we believe that we will have enough proceeds to fund our plan of operations for up to twelve months. If 75%, 50%, 35% or 20% of the offered shares are sold under this Offering, after deducting offering expenses, we believe that we will have enough proceeds to fund our plan of operations for up to nine, six, four and three months, respectively. We will need a minimum of $49,000 to commence our business operations. This amount will allow us to repay our offering expenses and to develop our current website located at www.MySpanishGetaway.com to be able to sell our vacation packages. We hope that we will be able to complete the Offering within the coming months and anticipate commencing our business operations within approximately one to three months after the completion of this Offering. If we are unable to generate the maximum amount of funds under this Offering to finance our plan of operations for twelve months, we will seek additional funding from management, the issuance of equity or debt, or through obtaining a credit facility. We do not currently have any arrangements for obtaining additional financing and there is no assurance that any additional financing will be available or, if available, on terms that will be acceptable to us. We will seek such funds from friends, family, and business acquaintances; however, we have not received any firm commitments or indications of interest from our friends, family members, or business acquaintances regarding potential investments in our Company and cannot predict when such funding may be available to us. Failure to raise additional financing will cause us to go out of business. As we are a start-up company in the development stage, it is unclear how much revenue our operations will generate, however, it is our hope that our revenues will exceed our costs. Our potential to generate revenue can be affected by the strength of our proposed vacation packages, our marketing and advertising strategies, our ability to meet the expectations and demands of our intended clients, the number of employees and consultants we will retain, and several other factors. These factors will be directly affected by the amount of proceeds we receive from this Offering, as the greater amount of proceeds we receive, the greater amount of capital we can use towards our business operations (see Use of Proceeds chart). Neither the Company nor Mr. Hall, or any other affiliated or unaffiliated entity of the Company has any plans to use the Company as a vehicle for a private company to become a reporting company once Seville Ventures Corp. becomes a reporting company. Additionally, we do not believe that the Company is a blank check company as defined in Section a(2) of Rule 419 under the Securities Act of 1933, as amended, because the Company has a specific business plan and has no plans or intentions to engage in a merger or acquisition with an unidentified company, companies, entity or person. For a further discussion of our initial activities, proposed products and services, plan of operations, growth strategy, marketing strategy and anticipated milestones, see the below section entitled Description of Business . By the term products , we are referring to our vacation packages and by the term services , we are referring to the services that the Company will provide to future clients as part of the vacation packages (e.g. booking hotels, organizing activities, obtaining travelers insurance, etc.), although such terms may be used interchangeably herein. SUMMARY OF THIS OFFERING The Issuer Seville Ventures Corp. Securities being offered Up to 3,500,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001527516_statewide_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001527516_statewide_prospectus_summary.txt
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+COMPETITION The insurance agency business, particularly in the life and health categories in which the Company is engaged, is highly competitive and there are many insurance brokerage and service organizations as well as individuals who actively compete with the Company in one or more areas of its business. We complete with many companies that are significantly larger than the Company. In addition, there are various other competing firms that operate nationally or that are strong in a particular region or locality. Our competitors include general agencies as well as call center driven companies such as I Can Benefit Group, LLC, Premier Health Plans, Inc. and Insurance Care Direct.com. The Company believes that the primary factors determining its competitive position with other organizations in its industry are the quality of the services rendered and the professionalism of the sales agents. DESCRIPTION OF PROPERTIES Our corporate offices are located at 1489 Palmetto Park Road, Suite 467, Boca Raton, Florida 33486. The Company is the lessee or sub lessee of approximately 2,500 square feet of office space on a month-to-month basis The monthly rent is $5,225. The leases may be terminated upon 30 days prior written notice. It is anticipated that we will need additional space as we continue our growth. LEGAL PROCEEDINGS We are currently not subject to any material proceedings. MANAGEMENT Executive Officers and Directors The following table sets forth certain information regarding our executive officers and directors as of the date of this registration statement Directors are elected annually and serve until the next annual meeting of shareholders or until their successors are elected and qualify. Officers are elected by our board of directors and their terms of office are at the discretion of the Board. The name, address, age and position of our officers and directors are forth below: Name and Address(1) Age Positions Warren K. Trowbridge 60 President, Chief Executive Officer, Chief Financial Officer and Chairman Diana Palladino 45 Director Mary Jo Thiboult 48 Vice President, Secretary, Chief Compliance Officer Merrewilned Mondesir 26 Comptroller (1) The address for each of these persons is 1489 Palmetto Park Road, Suite 467, Boca Raton, Florida 33486. Warren K. Trowbridge, President, CEO and Director Mr. Trowbridge became the President and Chief Executive Officer of the Company in November 2011. Mr. Trowbridge is an accomplished executive in the healthcare industry with over 30 years of experience. From June 2011 to present he is the owner of Trusted USA Insurance, Inc., a Florida based full line insurance agency. Trusted USA Insurance, Inc. began operating in August 2011 and employs two agents. Trusted USA may be deemed a competitor to the Company. He also acquired R&J Medical Sales, Inc. in April 2010 and in January 2010 he acquired Maxxon Home Health, Inc., two durable medical equipment companies specializing in providing orthotic products to Medicare beneficiaries. Prior to this, Mr. Trowbridge was the Chairman, Chief Executive Officer and President of Support Plus Medical, Inc., from 2006 to 2010, which provides diabetes supplies and respiratory medication to seniors. Prior to Support Plus Medical, Mr. Trowbridge worked with two different private equity funds as a resident Chief Executive Officer for their portfolio companies in regulated healthcare industries. From February 1999 to January 2004 he was a vice president of Polymedica (Nasdaq: PLMD) and President of Liberty Medical Supply, Inc., Polymedica s home delivery subsidiary and current industry leader in diabetic mail order supplies with nearly 900,000 active patients. Mr. Trowbridge is a Florida licensed insurance agent since June 2011. He is also a certified pedorthist and holds the designation of CHC, granted by Health Care Compliance Certification Board recognizing him as a certified compliance professional. Mr. Trowbridge will devote his full time and effort to the Company during normal working hours. He will engage in his other business endeavors outside of normal working hours. Diana Palladino, Secretary and Director Mrs. Palladino served as the Chairman of the Board and Chief Executive Office of the Company from its inception until November 2011 and currently serves as a member of its Board of Directors. From 2002 to 2009 she was a store manager for Nutrition World, a seven store chain of retail nutrition stores. Ms. Palladino was not employed from 2009 to 2011. Mary Jo Thiboult, Chief Compliance Officer Ms. Thiboult joined the Company as the Chief Compliance Officer in November 2011. As chief compliance officer Ms. Thiboult updates and maintains all federal, state and local licenses and is responsible for compliance with insurance rules and regulations. Trusted USA may be deemed a competitor to the Company. She has over 10 years of experience in operations, call center management and compliance at medical supply companies. From March 1999 to March 2004 Ms. Thiboult served as the Senior Vice President of Compliance and Regulatory Affairs at Liberty Medical Supply, a Polymedica subsidiary. In this role, Ms. Thiboult was responsible for creating and implementing a national class Medicare compliance and privacy program. From January 2007 to March 2008 she was a Chief Compliance Officer and Vice President of Operations at ActivStyle, Inc., a Medicare provider of incontinence products. At ActivStyle her responsibilities included document acquisition, claims management and collections, reorder and customer service and product distribution. From April 2006 to April 2010 she was Senior Vice President of Operations and Chief Compliance Officer of a Medicare Part B provider, Support Plus Medical. Most recently, she is the Executive Vice President and Chief Compliance Officer for R&J Medical Sales, Inc. and Maxxon Home Health Care, Inc., two durable medical equipment companies and Vice President for Trusted USA Insurance, Inc., a full service Florida insurance agency. Ms. Thiboult supervises two agents at Trusted USA. She also maintains certification through the HealthCare Certification Board as a certified compliance professional. She is also the president of Accu-White International, a mail order teeth-whitening company. Ms. Thiboult will devote her full time and effort to the Company during normal working hours. She will engage in her other business endeavors outside of normal working hours. Merrewilned Mondesir, Comptroller Ms. Mondesir became associated with the Company as its comptroller in November 2011. Ms. Mondesir has over five years experience in the public accounting industry. From 2009 to 2011 she was a financial reporting accountant with Universal Property and Casualty Insurance (NYSE: UHL). From 2006 to 2009, she was a senior auditor with Harvey, Covington and Thomas, a CPA firm. Ms. Mondesir received her B.A. in Accounting from the University of South Florida and her MBA from Nova Southeastern University. Key Employee Daniel Mignone, Vice President of SIM Mr. Mignone has been Vice President at the Company since June 2011 and in that capacity, he oversees the sale of life and health insurance products. From April 2008 to June 2011, he was associated with National Securities as a financial consultant and from October 2006 to April 2008, he was associated with Bertael Fisher as a financial consultant. Employment Agreements On November 14, 2011, the Company entered into a three year employment agreement with Warren K. Trowbridge to serve as its Chief Executive Officer. Base compensation is $125,000 per year and he is be entitled to an annual bonus of 1% of the Company s EBITA. He is also entitled to participate in the Company s Executive Bonus Plan. Mr. Trowbridge is also entitled to restricted stock grants as follows: (a) on the one year anniversary, five percent of the issued and outstanding shares of the Company s common stock; and (b) an additional five percent on the second anniversary. In addition, Mr. Trowbridge is granted stock options to acquire one million shares at an exercise price of $0.25 per share and one million shares at an exercise price of $0.35 per share. The sale of the restricted stock and the shares issued upon exercise of the options shall be subject to limitations on resale. Mr. Trowbridge shall also be entitled to participate in the Company s benefit plans. On November 14, 2011, the Company entered into a three year employment agreement with Mary Jo Thiboult to serve as Vice President and Chief Compliance Officer of the Company. The Company shall pay Ms. Thiboult a salary of $80,000 per annum and she is entitled to participate in the Company s Executive Bonus Plan. Ms. Thiboult is also entitled to restricted stock grants of 50,000 shares on the first anniversary date and 50,000 shares on the second anniversary date. In addition, Ms. Thiboult is also granted stock options to acquire 100,000 shares at $0.25 per share and 100,000 shares at $0.35 per share. The sale of the restricted stock and the shares issued upon exercise of the options shall be subject to limitations on resale. Ms. Thiboult shall also be entitled to participate in the Company s benefit plans. On November 14, 2011, the Company entered into a two-year employment agreement with Merrewilned Mondesir to serve as Comptroller of the Company. The Company shall pay Ms. Mondesir a salary of $80,000 per year. Ms. Mondesir shall also be entitled to participate in the Company s benefit plans. Board of Directors Our Board of Directors currently consists of two directors. Our Bylaws provide that our board shall consist of not less than one or more than ten individuals. The terms of directors expire at the next annual shareholders meeting unless their terms are staggered as permitted in our Bylaws. Each shareholder is entitled to vote the number of shares owned by him for as many persons as there are directors to be elected. Shareholders do not have a right to cumulate their votes for directors. Director Compensation Currently, we do not pay our directors any cash or other compensation for their services as director. In the future, we may consider appropriate forms of compensation. Committees To date, we have not established a compensation committee, nominating committee or an audit committee. Our board of directors review the professional services provided by our independent auditors, the independence of our auditors from our management, our annual financial statements and our system of internal accounting controls. None of the members of our board of directors are considered financial experts as defined under Regulation S-K. EXECUTIVE COMPENSATION The following table sets forth the compensation paid by us from inception on May 3, 2011, through September 30, to our two officers and directors. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. Summary Compensation Table Long-Term Compensation Payouts Annual Compensation Awards Securities Restricted Shares or Restricted Share/Units (US$) Names Executive Officer and Principal Position From Inception through September 30, 2011 Salary (US$) Bonus (US$) Other Annual Compensation (US$)(1) Under Options/ SARs Granted (#) LTIP Payouts (US$) Other Annual Compensation (US$) Dianna Palladino, President 2011 Daniel Mignone 2011 The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officers. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole officer and director other than as described herein. Our directors do not receive any compensation for serving as a member of our board of directors. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of December 31, 2011, the total number of shares of common stock owned beneficially by our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The table also reflects their ownership assuming the sale of all of the shares in this offering. The stockholders listed below have direct ownership of their shares and possess sole voting and dispositive power with respect to the shares beneficially owned. Unless otherwise noted below, the address of each shareholder is 1489 Palmetto Park Road, Suite 467, Boca Raton, Florida 33486. Name and Address Beneficial Owner Number of Shares Before the Offering Percentage of Ownership Before the Offering Number of Shares After Offering Assuming all of the Shares are Sold Percentage of Ownership After the Offering Assuming all of the Shares are Sold Warren Keith Trowbridge(1) Mary Jo Thiboult(2) Diana Palladino(3) 7,000,000 23.3% 7,000,000 18% Merrewilned Mondesir James Palladino(4) 9,000,000 29% 9,000,000 23% Lauren Ann Palladino (5) 5,000,000 16% 5,000,000 13% James Palladino, Jr. UGMA (6) 5,000,000 16% 5,000,000 13% Peter Palladino (7) 2,000,000 6% 2,000,000 5% Alfonso Palladino (7) 2,000,000 6% 2,000,000 5% All current officers and directors as a group (4 persons) 16,000,000 52% 16,000,000 42% (1) Does not include restricted stock grants for 2,000,000 shares and stock options to purchase 2,000,000 shares. (2) Does not include restricted stock grants for 100,000 shares and stock options to purchase 200,000 shares. (3) Diana Palladino is the wife of James Palladino. Ms. Palladino disclaims any interest in the shares held by Mr. Palladino. (4) Mr. Palladino disclaims any interest in the shares owned by Ms. Palladino. (5) Lauren Ann Palladino is an adult daughter of Diana Palladino and James Palladino. (6) James Palladino Jr. is a minor child of Diana Palladino and James Palladino. (7) Peter Palladino and Alfonso Palladino are the brothers of James Palladino. Mr. James Palladino disclaims any interest in the shares held by Messrs. Peter and Alfonso Palladino. DESCRIPTION OF SECURITIES Common Stock Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.001 per share. As of the date of this prospectus there are 30,400,000 shares issued and outstanding. The holders of our common stock: have equal ratable rights to dividends from funds legally available if and when declared by our board of directors; are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and are entitled to one non-cumulative vote per share on all matters on which stockholders may vote. All shares of common stock now outstanding are fully paid and non-assessable and all shares of common stock that are the subject of this offering, when issued, will be fully paid for and non-assessable. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Florida for a more complete description of the rights and liabilities of holders of our securities. Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. After this offering is completed, assuming the sale of all of our shares of common stock, present stockholders will own approximately 80% of our outstanding shares (excluding shares to be issued upon exercise of the Warrants). Convertible Notes During the period September through October 2011, the Company accepted an aggregate of $1 million from three investors to subscribe for convertible promissory notes (the Notes ) under a private placement memorandum. The Notes bear interest at 15% per annum, are convertible at $0.50 per share and are due one year from the date of issuance. The Notes were issued under the exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended. The investors were accredited and received information concerning the Company prior to making their investment decision. The certificates representing the Notes contain legends restricting transferability absent registration or applicable exemption. The proceeds were used for working capital purposes. Cash dividends As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and financial position and our general economic condition. It is our intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Anti-takeover provisions There are no Florida anti-takeover provisions that our Board of Directors has adopted which may have the affect of delaying or preventing a change in control. Stock transfer agent Our stock transfer agent is Empire Stock Transfer Company, Henderson, NV. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS OTC Bulletin Board Considerations As discussed elsewhere in this registration statement, the Company s Units, Common Stock or Warrants are not currently included for quotation on the Over the Counter Bulletin Board (OTCBB), and there is no public trading market. To be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our Common Stock. As part of the application we must show that we file periodic and annual reports with the Securities and Exchange Commission and that we have sufficient shareholders to facilitate a trading market. We anticipate that a minimum of 40 new shareholders will participate in this offering, which should be adequate for us to be quoted on the OTCBB. We have engaged a FINRA Market Maker to file our application on Form 211 with FINRA, but as of the date of this prospectus, no filing has been made. We also intend to file an application to become DTC eligible. Holders As of the date of this prospectus, there were 38,000,000 shares of Common Stock outstanding. As of the date of this prospectus, the approximate number of stockholders of record of the Common Stock was 10 shareholders. Penny Stock Considerations Broker-dealer practices in connection with transactions in penny stocks are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. Dividend Policy We have not declared any cash dividends on our common stock. Our Board of Directors will make any future decisions regarding dividends. We currently intend to retain and use any future earnings, if any, for the development and expansion of our business and do not anticipate paying any cash dividends in the near future. Our Board of Directors has complete discretion on whether to pay dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant. Certain Transaction In May 2011 the Company issued an aggregate of 30,000,000 shares of its common stock to James Palladino, the husband of Diana Palladino, as the founder of the Company. Mr. Palladino thereafter transferred a portion of the shares to his wife, children and his brothers. The shares were issued at $0.001 per share. The shares were issued pursuant to the exemption from registration provided by Section 4(2) under the Securities Act. The shares contain a legend restricting their transferability absent registration or applicable exemption. In October 2011, the Company issued 200,000 shares of its common stock to Daniel Mignone in consideration for $0.001 per share. In October 2011, the Company issued 100,000 shares of its common stock to Elena Atlas in consideration for consulting services valued at $850.00. In October 2011, the Company issued 100,000 shares of its common stock to Jose Torres in consideration for services valued at $1,500. In October 2011, the Company issued 7,600,000 shares to Kenneth Saluk which were later returned to the Company and cancelled. In September 2011, we entered into an agreement with a company controlled by the mother of Diana Palladino to provide advertising and marketing services. In October we prepaid advertising expenses for services in the amount of $127,000 which were used to pay lead development expenses, media advertising and other marketing expenses. The agreement has since been terminated. From inception to September 30, 2011, Mr. James Palladino advanced, directly and indirectly, $264,319 to the Company. From October 1, 2011, through November 30, 2011, additional advances of $65,885 were made to the Company. The advances were used to assist with development costs and for working capital, including payroll. All advances have been contributed to the capital of the Company. THE OFFERING We are offering, on a best efforts basis, a maximum of 8,000,000 Units at $0.05 per Unit. Each Unit consists of one share of our common stock and a warrant exercisable to purchase one share of common stock at $0.10 per share. The Units are separable sixty days from the date of this registration statement. The minimum subscription is $10,000 or 200,000 Units. Common Stock Purchase Warrants Each Warrant entitles the holder to purchase one share of common stock at an exercise price of $0.10 per share. The Warrants become exercisable six months from the date of this prospectus and will expire at 5:00 p.m., Eastern Standard Time, three years after the date of this prospectus or earlier upon redemption. On the exercise of any Warrant, the Warrant exercise price will be paid directly to us. The Warrants are being issued pursuant to a Warrant Agreement. The Warrants will not be issued separately from the Common Stock included in the Units until six months from the date of this prospectus. Exercise and Duration of Warrants Warrants may be exercised by delivering, not later than 5:00 p.m., Eastern Standard Time, on any business day during the exercise period to the Company the certificate representing the Warrant, along with a completed election to purchase and the payment of the exercise price for each Warrant to be exercised by certified or official bank check or by bank wire transfer in immediately available funds. We are registering the shares of Common Stock underlying the Warrants that comprise the Units. Although each Warrant offered in this Offering is exercisable to purchase one share of Common Stock, no Warrant will be exercisable unless at the time of the exercise a prospectus relating to Common Stock issuable upon exercise of the Warrants is current and Common Stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Warrants. We intend to use our best efforts to maintain a current prospectus relating to the Common Stock issuable upon exercise of the Warrants until the expiration of the Warrants. If we are unable to maintain the effectiveness of such registration statement until the expiration of the Warrants, and therefore are unable to deliver registered shares of Common Stock, the Warrants may become worthless. Certain Adjustments The exercise price and number of shares of Common Stock issuable on exercise of the Warrants is subject to adjustment in the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization or similar transaction. However, the Warrants will not be adjusted for issuances of shares of Common Stock at a price below their respective exercise prices. In the event of a fundamental transaction involving our consolidation or merger with or into another entity where we are not the surviving entity, the sale or all or substantially all of our properties or assets or the reorganization, recapitalization or reclassification of our Common Stock, it is a condition to such fundamental transaction that any successor to us whose common stock is traded on an eligible market assume or remain bound by the Warrants to deliver in exchange for the Warrants a written instrument substantially similar to the Warrants entitling the holder to acquire the successor capital stock at an exercise price that reflects the terms of the transaction. Redemption of Warrants Once the Warrants become exercisable, we may redeem the Warrants: In whole and not in part; At a price of $0.01 per Warrant; If, and only if, the last sale price of our Common Stock equals of exceeds $____ per share for any 20 trading days within a 30 trading day period ending on the third business day before we send the notice of redemption to the Warrant Holders. We will not redeem the Warrants unless an effective registration statement covering the Common Stock issuable upon exercise of the Warrants is current and available throughout the 30-day redemption period. No Rights as Shareholders Warrant holders do not have the rights or privileges of holders of Common Stock, including voting rights, until they exercise their Warrants and receive shares of Common Stock. After the issuance of shares of Common Stock, upon exercise of the Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders. Amendments The Warrants provide that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity, to cure, correct or supplement any defective provision, or to add or change any other provisions that do not adversely affect the interest of the Warrant holders. All other changes require the written consent of the holders of a majority of the then outstanding Warrants. Fractional Shares No fractional shares will be issued upon exercise of the Warrants. If a holder exercises Warrants and would be entitled to receive a fractional interest of a share, we will round up or down the number of common stock to be issued to the Warrant holder to the nearest whole number of shares. PLAN OF DISTRIBUTION We will sell the Units in this offering through our executive officers, who will receive no commission from the sale of any shares. They will not register as a broker-dealer under section 15 of the Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer s securities and not be deemed to be a broker/dealer. The conditions are that: 1. The person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Act, at the time of her participation; and, 2. The person is not compensated in connection with her participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; 3. The person is not at the time of their participation, an associated person of a broker/dealer; and, 4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that she (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the Issuer otherwise than in connection with transactions in securities; and (B) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding twelve months; and (C) does not participate in selling and offering of securities for any Issuer more than once every twelve months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii). We will receive all proceeds from the sale of the 8,000,000 Units being offered. The price per Unit is fixed at $0.05 for the duration of this offering. Although our Units, Common Stock and Warrants are not listed on a public exchange or quoted over-the-counter, we intend to seek to have our Units, shares of Common Stock and Warrants quoted on the Over-the-Counter Bulletin Board. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Securities. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved. However, sales by the Company must be made at the fixed price of $0.05. We will not offer our Securities for sale through underwriters, dealers, agents or anyone who may receive compensation in the form of underwriting discounts, concessions or commission from the Company and/or the purchasers of the Securities for whom they may act as agents. Offering Period and Expiration Date This offering will start on the date that this registration statement is declared effective by the SEC and continue for a period of 60 days, or sooner if the offering is completed or otherwise terminated by us. We will not accept any subscriptions until this registration statement is declared effective by the SEC. Procedures for Subscribing Once the registration statement is declared effective by the SEC, if you decide to subscribe for any shares in this offering, you must: (1) Execute and deliver a subscription agreement, a copy of which is included with the prospectus; and (2) Deliver a check, wire transfer, bank draft or money order to us for acceptance or rejection. All checks for subscriptions must be made payable to STATEWIDE LIFE & HEALTH, INC. We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them. INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our Bylaws, as amended, provide to the fullest extent permitted by Florida law that our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our Articles of Incorporation, as amended, is to eliminate our rights and our shareholders (through shareholders' derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our Articles of Incorporation, as amended, are necessary to attract and retain qualified persons as directors and officers. The Florida Business Corporation Act provides that a corporation may indemnify a director, officer, employee or agent made a party to an action by reason of that fact that he or she was a director, officer employee or agent of the corporation or was serving at the request of the corporation against expenses actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to any criminal action, had no reasonable cause to believe his or her conduct was unlawful. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. INTEREST OF NAMED EXPERTS AND COUNSEL No expert or counsel named in this prospectus as having prepared or certified any part thereof or having given an opinion upon the validity of the Securities being registered or upon other legal matters in connection with the registration or offering of our Common Stock was employed on a contingency basis or had or is to receive, in connection with the offering, a substantial interest, directly our indirectly, in our Company. Additionally, no such expert or counsel was connected with us as a promoter, managing or principal underwriter, voting trustee, director, officer or employee. LEGAL MATTERS The validity of the Units, Common Stock and Warrants offered hereby will be passed upon by Quintairos, Prieto, Wood & Boyer, P.A., Fort Lauderdale, Florida. EXPERTS The financial statements of Statewide Life & Health, Inc. at September 30, 2011, and for the fiscal period then ended, appearing as an Exhibit to this registration statement have been audited by L J Sullivan Certified Public Accountant, LLC, an independent registered public accounting firm, on the authority of such firm as experts in accounting and auditing. No opinion is rendered in whole or in part on the prospectus or registration statement. WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information in the registration statement or the exhibits and schedules that were filed therewith. For further information about us and the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules that were filed thereto. Statements contained in this prospectus regarding the contents of any contract, agreement or other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified by reference to the full text of such contract or other document filed as an exhibit to the registration statement. Following this offering, we will be required to file period reports, proxy statements and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is http://www.sec.gov. PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses of the offering all of which are to be paid by the registrant are as follows: SEC Registration Fee $ 137.50 Printing Expenses Accounting Fees and Expenses 10,000.00 Legal Fees and Expenses 25,000 Blue Sky Fees/Expenses 20,000.00 Transfer Agent Fees 2,500 TOTAL $ 40,137.50 ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS Our articles of incorporation, as amended, and bylaws, provide to the fullest extent permitted by Florida law, our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director's or officer's fiduciary duty. The effect of these provisions of our articles of incorporation, as amended, and bylaws, is to eliminate our rights and our shareholders (through shareholders' derivative suits on behalf of our Company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our articles of incorporation, as amended, and bylaws, are necessary to attract and retain qualified persons as directors and officers. Under the Florida Corporation Law and our articles of incorporation, as amended, and bylaws, our directors will have no personal liability to us or our stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his duty of care. This provision does not apply to the directors' (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (iii) approval of any transaction from which a director derives an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the corporation or its shareholders, (v) acts or omissions that constituted an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders, or (vi) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for negligence in the performance of duties, including gross negligence. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. II-1 ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. During the past three years, the registrant has sold the following securities which were not registered under the Securities Act of 1933, as amended. In connection with the foregoing issuances, the Company relied upon the exemption from securities registration afforded by Section 4(a) of the Securities Act of 1933, as amended (the Securities Act) and/or Section 4(2) of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of our Company or executive officers of our Company. In May 2011 the Company issued an aggregate of 30,000,000 shares of its common stock to James Palladino, the husband of Diana Palladino, as the founder of the Company. The shares were issued at $0.001 per share. The shares were issued pursuant to the exemption from registration provided by Section 4(2) under the Securities Act. The shares contain a legend restricting their transferability absent registration or applicable exemption. In October 2011, the Company issued 200,000 shares of its common stock to Daniel Mignone in consideration for $0.001 per share. In October 2011, the Company issued 100,000 shares of its common stock to Alena Atlas in consideration for consulting services valued at $850.00. In October 2011, the Company issued 100,000 shares of its common stock to Jose Torres in consideration for services valued at $1,600. During the period September through October 2011, the Company accepted an aggregate of $1 million from three investors to subscribe for convertible promissory notes (the Notes ) under a private placement memorandum. The Notes bear interest at 15% per annum, are convertible at $0.50 per share and are due one year from the date of issuance. The Notes were issued under the exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended. The investors were accredited and received information concerning the Company prior to making their investment decision. The certificates representing the Notes contain legends restricting transferability absent registration or applicable exemption. The proceeds were used for working capital purposes. II-2 EXHIBITS The following Exhibits are filed as part of this Registration Statement: Exhibit No. Document Description 2.1 Plan of Merger ** 3.1(i) Articles of Incorporation ** 3.2(ii) Bylaws ** 4.1 Specimen Stock Certificate ** 5.1 Opinion and Consent of Quintairos, Prieto, Wood and Boyer, P.A. * 10.1 Employment Agreement for Warren K. Trowbridge* 10.1(a) Exhibit A to Employment Agreement for Warren K. Trowbridge ** 10.2 Employment Agreement for Mary Jo Thiboult* 10.2(a) Exhibit A to Employment Agreement for Mary Jo Thiboult ** 10.2(b) Amendment to Employment Agreement for Mary Jo Thiboult** 10.3 Employment Agreement for Merrewilned Mondesir* 10.4 Gerflo Agreement ** 10.5 Warrant Agreement* 10.6 General Agency Agreement with Patriot Health, Inc. ** 10.7 General Agency Agreement with Time Insurance Company ** 10.8 General Agency Agreement with Homeland HealthCare ** 21. Subsidiaries of Registrant** 23.1 Consent of LJ Sullivan Certified Public Accountant, LLC** * Filed with Registration Statement on Form S-1 filed on December 28, 2011 ** Filed herewith II-3 UNDERTAKINGS A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) Intentionally omitted. (5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: (i) Intentionally omitted. (ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424. II-4 (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. B. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-5 SIGNATURES In accordance with the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized this Prospectus on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton, Florida, on the 13th day of February 2012. STATEWIDE LIFE & HEALTH, INC. By: /s/ W. Keith Trowbridge W. Keith Trowbridge, CEO, CFO and Member of the Board of Directors By: /s/ Diana Palladino Diana Palladino, Member of the Board of Directors By: /s/ Merrewilned Mondesir Merrewilned Mondesir, Comptroller II-6 TABLE OF CONTENTS PAGE NO.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. In this prospectus, unless otherwise specified, all monetary amounts are in U.S. dollars. All renminbi, or RMB, amounts have been translated into U.S. dollars at the December 31,2011 U.S. Treasury reporting rate of exchange of; U.S. $1.00 = RMB 6.3360. Our Company Business Overview We are an e-commerce and IT solutions provider to small and medium sized enterprises (SMEs) in the PRC, however, substantially all of our business to date has been generated in the Province of Zhejiang. We commenced operations in 2007 providing a range of e-commerce services, such as website and application development, server hosting, enterprise resource planning (ERP) and customer relationship management (CRM). In 2008, we began developing a B2B search engine, called China Bobotong (www.4006009090.com). In the first quarter of 2009, we commercially launched the China Bobotong platform. The platform integrates three network search technologies of telephony, internet and short message service (text). For a fee, clients register key words emblematic of their business, such as a company name, brand, or a trademark, so that client information receive priority ranking on our search results page for prospective buyers. Our Bobtong platform and e-commerce services are directed towards the SMEs in China ( SMEs ) who do not have the internal IT departments and who are seeking new and innovative methods to promote their businesses. For the nine month period ended September 30, 2012, we generated revenues of $ 5,848,783 , as compared with revenues of $ 3,520,546 for the comparable period in 2011, an increase of approximately 66 %. Our pre tax, net income for the nine month period ended September 30, 2012 was $ 1,398,807 , which represents an improvement from the pre tax, net income of $ 384,057 for the corresponding period in 2011. For fiscal 2011, we generated $4,967,098 in gross revenues, which represents a 37.1% increase from gross revenues of $3,621,943 for fiscal 2010. Our fiscal year 2011 pre tax, net income was $578,925, which represents a 2.3% increase from pre tax, net income of $565,662 for fiscal year 2010. Our headquarters are located at 10/Floor, Weixing Building, No. 252 Wensan Road, Hangzhou China, our phone number is 0086-571-28188199. Our company web-site is www.4006009090.cn/en/ and our Bobotong web-site is www.4006009090.com. Our web-sites do not form part of this Prospectus. The Industry Our target market consists of small and medium sized enterprises (SMEs) located generally in the PRC and more specifically within the Province of Zhejiang. Generally, SMEs have employees totaling between 50 and 250. SMEs in the PRC are an outgrowth of the economic reform and the resulting business privatization which began over 25 years ago in China. Today, SMEs account for approximately 99% of all business in the PRC and collectively contribute 60% of the PRC s GDP. According to the published data from Zhejiang Province Business Bureau, in 2009 there were more than 2.6 million businesses in the Province of Zhejiang alone, of which 99% were SMEs. We believe that SMEs in the Zhejiang Province alone represent a significant market for our product and services. (Address including zip code, and telephone number of registrant s principal executive offices) Mr. Norm Klein Eastbridge Investment Group Corporation 8040 E. Morgan Trail Unit 18 Scottsdale, Arizona 85258 Organizational History Dwarf USA was organized under the laws of Arizona on January 12, 2011. Dwarf Management was organized under the laws of the PRC on March 1, 2011. Dwarf Technology was organized under the laws of the PRC on March 28, 2007. Dwarf USA owns 100% of the issued and outstanding capital stock of Dwarf Management. On March 11, 2011, Dwarf Management entered into a series of contractual agreements with Dwarf Technology, and its shareholders, in which Dwarf Management assumed management of the business activities of Dwarf Technology and has the right to appoint all executives and senior management and the members of its board of directors. Corporate Structure Our organization structure is depicted below:
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+PROSPECTUS SUMMARY The following summary highlights selected information about our business and our common stock being sold in this offering, but does not contain all of the information that may be important to you. For a more complete understanding of our business and our common stock being sold in this offering, you should read this entire prospectus, including the section entitled Risk Factors and the Consolidated Financial Statements and related notes. In this prospectus, unless the context requires otherwise, the terms we , our , us and the Company refer to BRS Group, Inc., a Delaware corporation, as well as our direct and indirect subsidiaries, and our principal operating business, Walker Resources Recycling Co., Ltd. ( Walker Resources ), a company organized under the laws of the People s Republic of China ( China or the PRC ), which we control via a series of variable interest entity contractual agreements (the VIE Agreements ) more fully described below. We conduct our business through our subsidiaries, principally our wholly-owned subsidiary BRS (Tianjin) Investment Management Co., Ltd. ( BRS Tianjin or the WFOE ), a wholly foreign owned enterprise incorporated as a limited liability company under the laws of the People s Republic of China ( PRC or China ). The Company operates and controls Walker Resources through BRS Tianjin and in connection with the VIE Agreements. In this prospectus, RMB and Renminbi refer to the legal currency of China and $ , US dollar and US$ refer to the legal currency of the United States. For convenience, certain amounts in Chinese Renminbi ( RMB ) have been converted to United States dollars at an exchange rate in effect at the date of the related financial statements. Assets and liabilities are translated at the exchange rate as of balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Overview of our Business Through our operating business, Walker Resources, we believe we are one of a limited number of authorized Chinese importers of electrolytic and scrap copper into China as the importation of electrolytic copper requires a combination of approvals from six government authorities, although we believe there is no official data published by relevant Chinese authorities regarding the specific number of authorized importers of electrolytic and scrap copper in China. Electrolytic Copper is refined copper (i.e., mined or scrap copper that has been refined through conventional smelting and refining processes to at least 97.5% purity) that undergoes an electro-chemical process to remove impurities resulting in copper that is between 99.77% and 99.99% pure. Scrap Copper is copper derived from discarded metal suitable for reprocessing with purity levels below 94%. In 2011, we imported approximately 48,200 metric tons, or Tonnes, of electrolytic and scrap copper from worldwide copper suppliers. The copper we import into China is distributed to copper processing and fabrication companies as well as manufacturers who serve customers in a variety of Chinese industries, including the commercial construction, infrastructure, and manufacturing industries. According to a research report issued by the Financial Institute of Green Futures, China consumes approximately 38% of available copper and its use is greater than the combined use of the European Union and the United States, which consume approximately 17% and 9% of global refined copper supplies, respectively. The copper supply chain is highly dependent on global trade and China s lack of copper resources requires it to import an amount sufficient to satisfy its needs from Chile and Japan, the dominant sources of China s copper supply. Therefore, we believe there is a substantial disparity between the large and growing demand for copper products in China and the available supply. Background and Corporate Structure We were incorporated on September 15, 2010 under the laws of the State of Delaware. We own 100% of the issued and outstanding capital stock of BRS Tianjin, a wholly foreign owned entity recently incorporated in China. In December 2010, BRS Tianjin entered into a series of variable interest entity contractual agreements, or VIE Agreements, with Walker Resources and Walker Resources three shareholders, Miao Huang, Gangyi Wang and Changrui Yang, whom we refer to as the Walker Resources Shareholders . Pursuant to the VIE Agreements, BRS Tianjin does not directly own the equity of Walker Resources, our operating business, but rather effectively assumed management and control of the business activities of Walker Resources and has the right to appoint all of the directors, executive officers and senior management personnel of Walker Resources. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 VIE Agreements The VIE Agreements are comprised of a series of agreements, including an Entrusted Management Agreement, Shareholders Voting Proxy Agreement, Exclusive Technology Service Agreement and Share Equity Pledge Agreement through which BRS Tianjin has the right and responsibility to advise, consult with, manage, operate and control and provide exclusive technology services to Walker Resources. The Entrusted Management Agreement provides, among other things, that BRS Tianjin is entitled to all profits (and will bear all losses) arising from Walker Resources operations. Additionally, the Walker Resources Shareholders pledged their rights, titles and equity interest in Walker Resources to BRS Tianjin in order to secure the performance of the Walker Resources Shareholders obligations under the VIE Agreements, through an Equity Pledge Agreement. In order to further reinforce BRS Tianjin s rights to control and operate Walker Resources, the Walker Resources Shareholders granted BRS Tianjin an exclusive right and option to acquire all of their equity interests in Walker Resources through an Exclusive Option Agreement. Accordingly, we have consolidated Walker Resources historical financial results in our financial statements as a variable interest entity pursuant to U.S. GAAP following the date of the VIE agreements. Slow Walk Arrangement and Call Option Agreement On December 15, 2010, Mr. Guang Yang, Ms. Xuehui Shang, Mr. Chunming Li, Mr. Guowei Liang, and Ms. Miao Huang, whom we refer to collectively as the Option Holders , entered into a Call Option Agreement and later an Amended and Restated Call Option Agreement on July 21, 2011 (referred to as the Call Option Agreement ) with Sherry Li, the Grantor and the nominee holder of record of a majority of our outstanding common stock. Pursuant to the Call Option Agreement the Grantor agreed to transfer an aggregate of 15,120,000 shares of our common stock, which we refer to as the Option Shares , to the Option Holders as further described below. The options granted pursuant to the Call Option Agreements will be exercisable for $.001 per share and may be exercised, (i) with respect to 40% of the Option Shares, at any time on or after December 31, 2012; (ii) with respect to 30% of the Option Shares on or after December 31, 2013; and (iii) with respect to 30% of the Option Shares, on or after December 31, 2014. If such options are exercised in full, the Option Holders will own approximately 68.8% of our common stock, based on the number of shares of our common stock currently outstanding and assuming we do not issue any common stock between the date of this prospectus and the date the options are exercised in full. The Call Option Agreement provides that the Option Holders have control over the company as well as dispositive power and beneficial ownership over the Option Shares, as Ms. Sherry Li is the nominee shareholder who has no power to dispose any of the Option Shares without the Option Holder s prior written consent and is obligated to transfer the Option Shares to those Option Holders at nominal consideration. The Option Holders have indicated they intend to exercise their rights under the Call Option Agreements when they are permitted to do so. For additional information regarding the Call Option Agreements and the beneficial owners of the Option Shares, see Description of Business Recent Event Slow Walk Arrangement and Call Option Agreement and Security Ownership of Certain Beneficial Owners and Management . Private Placements On May 11 2011, we sold an aggregate of 5,391,064 shares of our common stock to four foreign purchasers for an aggregate purchase price of $60,000,000, or $11.13 per share, in a private placement, or the May 2011 Private Placement , pursuant to Regulation S under the Securities Act of 1933, as amended, or the Securities Act . The purchasers in the Private Placement were Best Investment Management Co., Ltd., Rebecca Investment Management Co., Ltd., Lotus Investment Management Co., Ltd and Worker Investment Management Co., Ltd (collectively the May 2011 Purchasers ), each of which is identified as a selling stockholder in this prospectus. Each of the May 2011 Purchasers is organized under the laws of the PRC. AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 The shares sold in the May 2011 Private Placement were sold pursuant to a Common Stock Purchase Agreement, or the May 2011 Purchase Agreement , among the Company and each of the four May 2011 Purchasers. Pursuant to the May 2011 Purchase Agreement, we granted the May 2011 Purchasers the right to include the shares acquired in the May 2011 Private Placement in any registration statement that we file to register any of our securities after the closing date of the May 2011 Private Placement. Pursuant to the May 2011 Purchase Agreement, we also granted the May 2011 Purchasers a right of first refusal to participate in any subsequent funding by the Company on a pro rata basis at 100% of the offering price. For a period of 60 months from the closing of the May 2011 Private Placement, we are prohibited from effecting, or agreeing to effect, a subsequent financing involving (i) the issuance of any securities that are convertible, exchangeable or exercisable for common stock at a conversion or exchange rate or an exercise price based on trading prices following the date of such issuance or subject to being reset following the initial issuance based on events related to the our business or the market for our common stock or (ii) a transaction that allows us to issue securities to subsequent investors providing the right to receive additional shares of common stock with terms more favorable than those provided to the May 2011 Purchasers in the May 2011 Private Placement. On July 29, 2011, we sold an aggregate of 16,140 shares of our common stock and common stock purchase warrants, or the Warrants , entitling the holders to purchase up to an aggregate of 72,000 shares of our common stock to four accredited investors for an aggregate purchase price of $179,961, or $11.15 per share in a private placement, or the July 2011 Private Placement , pursuant to Regulation D under the Securities Act. The purchasers in the July 2011 Private Placement were T Squared Investments LLC, T Squared China Fund LLC, Silver Rock II Ltd. and Valuegrowth Consulting LLC (collectively the July 2011 Purchasers ), each of which is identified as a selling stockholder in this prospectus. We refer to the July 2011 Purchasers and the May 2011 Purchasers collectively as the Private Placement Investors . The shares and Warrants sold in the July 2011 Private Placement were sold pursuant to a Common Stock Purchase Agreement, or the July 2011 Purchase Agreement , among the Company and each of the four July 2011 Purchasers. Pursuant to the July 2011 Purchase Agreement, we granted the July 2011 Purchasers the right to include the shares acquired, and the shares underlying the Warrants acquired, in the July 2011 Private Placement in any registration statement that we file to register any of our securities after the closing date of the July 2011 Private Placement. Pursuant to the July 2011 Purchase Agreement, we also agreed, among other things, not to issue preferred stock or convertible debt for a period of three years from the completion of the July 2011 Private Placement, to list our common stock on a U.S. securities exchange within twelve months following the closing of the July 2011 Private Placement, to appoint a majority of independent directors to our board and to establish audit and compensation committees consisting of independent directors. We also agreed, for a period of two years following the July 2011 Private Placement, not to borrow amounts in excess of three times our earnings before interest, taxes, depreciation and amortization from recurring operations. For additional information regarding the July 2011 Private Placement and the terms of the July 2011 Purchase Agreement, see Description of Business Recent Events Private Placements . The Warrants are exercisable for $11.15 per share until the second anniversary of our initial public offering. In the event that the shares underlying the Warrants, or the Warrant Shares , are not registered within one year following the closing of the July 2011 Private Placement, the Warrants may be exercised on a cashless basis. The Warrants may not be exercised on a cashless basis so long as a registration statement with respect to the Warrant Shares is effective. The exercise price of the Warrants is subject to adjustment to reflect any stock splits, stock dividends, share combinations, reclassifications or recapitalizations affecting the number of outstanding shares of our common stock or securities. In addition, in the event of a merger, consolidation or similar reorganization in which we will not be the surviving entity, holders of the Warrants will be entitled to receive, in lieu of the Warrant Shares, the stock, securities or other property (including cash) to which such holders would have been entitled if the Warrants had been exercised immediately prior to the reorganization transaction. BRS GROUP, INC. (Exact Name of Registrant as Specified in its Charter) The following illustration depicts our corporate structure following the events described above: Delaware 5050 80-06453328 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) No. 1307, Building 5, Sunshine Apartment, East Shui Shang Liang Li Road, Nankai District, Tianjin Province, People s Republic of China 300381 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) The Offering Common stock outstanding immediately before this offering: 21,968,115 shares Common stock offered by the selling stockholders: 6,920,115 shares, including 72,000 shares underlying the Warrants Common stock outstanding immediately after this offering: 22,040,115 shares, assuming the exercise in full of the Warrants Trading Market: No active market for our common stock presently exists. We have not applied for listing or quotation of our common stock on any securities exchange or inter-dealer quotation system. We plan to apply for quotation of our common stock on a securities exchange or an inter-dealer quotation system upon the effectiveness of our S-1 Registration Statement, however, there is no guarantee that our common stock will be approved listing on a securities exchange or quotation on an inter-dealer quotation system. Price per share: The selling stockholders may sell their shares of our common stock at a fixed price of $11.15 per share (the offering price per share of common stock in our most recent private placement completed in July 2011) until our common stock is listed on a national securities exchange or quoted on an automated quotation system or in the over-the-counter market (such as the OTC Bulletin Board), and thereafter at prevailing market prices, prices related to prevailing market prices or privately negotiated prices. Use of proceeds: We will not receive any proceeds from the sale of the common stock offered hereby. However, upon any exercise of the warrants, we would receive cash in the amount of the exercise price of $11.15 per share of common stock, or an aggregate of $802,000, if the warrants are exercised for cash in full, subject to any adjustments. No assurances can be given that the Warrants will be exercised in full or at all.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001527709_mid-con_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001527709_mid-con_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e1660b1aefca9a2e1c25ace8762a54daf1ddc247
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1 MID-CON ENERGY PARTNERS, LP 1 OUR PRINCIPAL BUSINESS RELATIONSHIPS 6 RISK FACTORS 7 OWNERSHIP AND ORGANIZATIONAL STRUCTURE OF
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001527795_meganet_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001527795_meganet_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..c430a7422485b453a2bef343a4b70345177049da
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under Risk Factors and our consolidated financial statements and accompanying notes. Any references to Meganet , we , us or our refer to Meganet Corporation, a Nevada corporation. All disclosure in this prospectus is the responsibility of management. Neither the SEC nor any other regulatory authority has certified or otherwise approved the offering or the offering disclosure documents including this prospectus. Explanations by management of the registration process, including the fact that a registration statement is declared effective by the SEC, do not mean that the SEC has approved the offering or has determined that the disclosure in the registration statement is truthful or complete. Our Business Meganet is in the business of inventing, developing, producing and marketing data security, intelligence/counter-intelligence and military operational devices. Meganet s products include among other things encryption devices, bomb jammers, communication interceptors, devices that render communications secure and spy phones. Meganet s success is largely dependent upon selling products to the U.S. military and the U.S. intelligence agencies. The purchasers of our products are predominantly governments and militaries which can create sporadic sales cycles typified by large purchases separated by low or quiet periods in between. For example, during times of war which can happen quickly, a country will have immediate need of products for military defense such as bomb jammers. During times of peace, bomb jammers may not be needed for many years. To the contrary, as a country develops and implements a long term homeland security strategy, it may put out bids for certain types of intelligence and counter-intelligence products that may stay out to bid for one to two years. These sales dynamics create times when the Company markets its products for many months without monthly revenue or cash flow. It also creates the potential circumstance of a large sale on the spur of the moment. Accordingly, sales and cash flow are difficult to predict with large sales always being a possibility with periods of low or no sales also being a possibility. Our Offices Meganet Corporation is a Nevada corporation organized on March 26, 2009. Our principal executive offices are located at 2510 E. Sunset Rd. Unit 5-777, Las Vegas, NV 89120. The telephone number of our principal executive offices is (702) 987-0087. Our Website Our Internet address is www.meganet.com. Information contained on our website is not part of this prospectus. Emerging Growth Company Status We are an "emerging growth company", as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting requirements which are applicable to other public companies which are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligation regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. At this time, we shall not take advantage of any of these exemptions. If at any time we do take advantage of any of these exemptions, we do not know if some investors will find our common stock less attractive as a result. The result may be a less active trading market for our common stock and our stock price may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to "opt out" of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We could remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date upon which we become a "large accelerated filer" as defined in Rule 12B-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date upon which we have issued more than $1 billion in non-convertible debt during the preceding three year period. - 5 - The Offering Shares of common stock offered by us: None. Shares of common stock that may be sold by the selling stockholders: 10,000,000. At the present time our common stock is currently not quoted on any exchange or listed in any listing venue. Until such time as our common stock is quoted on the OTC Bulletin Board or other quotation or trading or listing venue, all selling stockholders will sell at the stated fixed price of $10.00 per share. Thereafter the shares will be sold at prevailing market prices or privately negotiated prices. Use of proceeds: We will not receive any proceeds from the resale of the shares offered hereby, all of which proceeds will be paid to the selling stockholders.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001528103_eurosite_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001528103_eurosite_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..f84a7ff037377d2c9e94290929025f85c472ce9f
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus or incorporated by reference herein. This summary does not contain all of the information that you should consider before investing in our securities. Before making an investment decisions, you should carefully read the entire prospectus, including the "Risk Factors" section, starting on page 7 of this prospectus, as well as the financial statements and the other information incorporated by reference herein. Overview We distribute, own and operate clean, on-site energy systems that produce electricity, hot water, heat and cooling in the United Kingdom and Europe. Our business model is to own the equipment that we install at customers facilities and to sell the energy produced by these systems to the customers on a long-term contractual basis at prices guaranteed to the customer to be below conventional utility rates. Because our systems may operate at up to 90% efficiency, according to the Environmental and Energy Study Institute, Energy Generation and Distribution Efficiency, (versus less than 33% for the existing power grid), we expect to be able to sell the energy produced by these systems to our customers at prices below their existing cost of electricity (or air conditioning), heat and hot water. We offer natural gas powered cogeneration systems that are highly reliable and energy efficient. Our cogeneration systems produce electricity from an internal combustion engine driving a generator, while the heat from the engine and exhaust is recovered and typically used to produce heat and hot water for use at the site. We also distribute and operate water chiller systems for building cooling applications that operate in a similar manner, except that the engine s power drives a large air-conditioning compressor while recovering heat for hot water. Cogeneration systems reduce the amount of electricity that the customer must purchase from the local utility and produce valuable heat and hot water for the site to use as required. By simultaneously providing electricity, hot water and heat, cogeneration systems also have a significant positive impact on the environment by reducing the carbon or CO2 produced by offsetting the traditional energy supplied by the electric grid and conventional hot water boilers. Distributed generation of electricity, or DG, often referred to as cogeneration systems, or combined heat and power systems, or CHP, is an attractive option for reducing energy costs and increasing the reliability of available energy. DG has been successfully implemented by others in large industrial installations over 10 Megawatts, or MW, where the market has been growing for a number of years, and is increasingly being accepted in smaller size units because of technology improvements, increased energy costs and better DG economics. We believe that our target market (users of up to 1 MW) has been barely penetrated and that the reduced reliability of the utility grid, increasing cost pressures experienced by energy users, advances in new, low-cost technologies and DG-favorable legislation and regulation at the state and federal level will drive our near-term growth and penetration into our target market. We believe that our primary near-term opportunity for DG energy and equipment sales is where commercial electricity rates exceed $0.12 per kWh. Attractive DG economics in the United Kingdom and Europe are currently attainable in applications that include hospitals, nursing homes, multi-tenant residential housing, hotels, schools and colleges, recreational facilities, food processing plants, dairies and other light industrial facilities. Early in 2010, American DG Energy Inc., or American DG Energy, which is the Company s parent, performed a feasibility study of the European market to determine the viability of expanding its On-Site Utility business into Europe. This study and business plan report reached the conclusions that: (a) there is untapped customer demand to provide small-scale CHP packages in the commercial sector through a fully financed, output-based electricity and hot water contract, (b) there is a lack of competition in this space in the target customer segments (hotel, healthcare and multi-tenant residential) and (c) the underlying economic fundamentals are attainable, with a combination of sufficient spark spreads and government fiscal support. The study analyzed the entire European market; however, it focused on the United Kingdom, Spain and Belgium as the primary markets to start operations. The study estimated that there are over 13,700 sites in those three countries providing a $900 million annual electricity market plus a $600 million heat and hot water energy market, for a combined market potential of $1.5 billion. The data used to calculate the Company s market potential is derived by Company estimates. We purchase energy equipment from various suppliers. The primary type of equipment used is a natural gas-powered, reciprocating engine provided by Tecogen Inc., or Tecogen, an affiliate of the Company. Tecogen is a leading manufacturer of natural gas, engine-driven commercial and industrial cooling and cogeneration systems suitable for a variety of applications, including hospitals, nursing homes and schools. The internal combustion reciprocating engine is provided to Tecogen by General Motors Corporation. Corporate Information We were organized as a Delaware corporation in July 2010. Our principal executive offices are located at 45 First Avenue, Waltham, Massachusetts 02451, and our telephone number is (781) 522-6000. Our website address is www.eurositepower.co.uk. The information on, or that may be accessed through, our website is not incorporated by reference into this prospectus and should not be considered a part of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001528234_abc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001528234_abc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bc6d454b66a6ef179b592aec3a70e59936d2a309
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001528234_abc_prospectus_summary.txt
@@ -0,0 +1 @@
+Summary Prospective investors are urged to read this prospectus in its entirety. We intend to commence the building, and subsequent operation, of a full-service, computerized records management company providing secure storage and indexing of paper records, digital media and other business-critical information, including computer disks and tapes, optical disks, microfilm, audio and video tapes, medical records, and blueprints. It is our intention that our personalized service will include retention schedules, data conversion and ORC, and records relocation. We will provide our customers, at no additional charge, specially designed boxes and other supplies which make handling records easier. We plan to purchase these boxes, providing them to our customers without charge. As a new entrant in this market, our initial focus will be exclusively on paper records management. Paper records will remain the our focus until such time as current revenues cover operating costs. We intend to focus our initial marketing efforts on small and medium size businesses. Our initial focus will be providing storage of paper records only. The hard copy business records stored by our potential customers are inactive. Inactive records consist of those records that are not needed for immediate access but which must be retained for legal, regulatory and compliance reasons or for occasional reference in support of ongoing business operations. Within three to five years our goal is to provide our customers the competitive edge through state-of-the-art technology, unprecedented security and quick-response service. Our facility will be strategically located in the New Territories within easy reach of Central Hong Kong and Kowloon via the MTR rail line. It is our belief that in today's business environment, quick and easy access to critical information will give our customers a competitive advantage. By outsourcing their records management and storage to us, our customers can store their records in an organized environment and improve the speed and ease of access to those records. To date, we have not commenced business operations, but we have leased premises for our initial storage operations at Workshop 7, 1/F., Shui Sum Industrial Building, 8-10 Kwai Sau Road, Kwai Chung, NT, Hong Kong. The lease agreement is dated August 23, 2011, it is for a 2 year term commencing Sept 1, 2011 and terminating August 31, 2013. The rent is $3,000 HK per month, and covers 600 sq feet. Our plan of operation for the twelve months following the date of this prospectus is to install the necessary leasehold improvements to our leased premises, to purchase the equipment and materials necessary to commence operations, to commence our initial marketing programs, and to begin actual operations. We estimate that the cost of this entire program will be approximately $170,300. Currently our only fixed monthly expense, and therefore our monthly burn rate, is the rent for our leased premises. That expense is $384.89 USD ($3,000 HKD) per month and as at September 27, 2012 we had $2,581.79 USD in cash assets on deposit and available to meet that monthly expense. However, while we have enough funds on hand to cover our monthly lease costs, and only our monthly lease costs, for approximately 6 months, based upon the funding requirements noted under Description Of Business, and the anticipated timeline of those funding requirements, we only have enough funds on hand to take us to approximately the end of September of 2012, and then we will require additional funding to cover our administrative expenses, to commence installing leasehold improvements, and to complete our equipment purchases, and initial marketing programs. See section entitled Description Of Business: Anticipated Expense Timeline. Additional funding will be required in the form of equity financing from the sale of our common stock. However, we do not have any arrangements in place for any future equity financing. Potential investors should note that Ms. Wai Yin Marcia Pong, our sole officer and director, has no professional training or technical credentials in the field of records management. The Report of Independent Registered Public Accounting Firm to our financial statements for the period ended June 30, 2012, indicates that because of our losses, our current status and our limited operations, there is substantial doubt about our ability to continue as a going concern. If we are not able to continue as a going concern, it is likely investors will lose all of their investment. We were incorporated on August 23, 2010 under the laws of the state of Nevada. Our principal business offices are located at Flat A, 22F, Block 11, Wonderland Villas, Kwai Chung, Hong Kong, China. Our telephone number is 852-6677-3973. The Offering: Securities Being Offered Up to 1,960,000 shares of common stock. Offering Price The selling shareholders will sell our shares at $0.01 per share, which was the price originally paid by the selling shareholders, until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. There is no assurance of when, if ever, our stock will be listed on an exchange. We determined this offering price based upon the price of the last sale of our common stock to investors, and this price prohibits our selling shareholders from making any profit on sales unless and until there is an active trading market for these shares. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock. Termination of the Offering The offering will conclude when all of the 1,960,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. Our issued shares of common stock are not currently available for resale to the public in accordance with the volume and trading limitations of Rule 144 of the Act because we are a shell company. Our shareholders cannot rely on Rule 144 for the resale of our common stock until certain events have occurred. See section entitled Market For Common Equity and Related Stockholders Matters: Rule 144 Shares. In any event, the offering shall be terminated no later than two years from the effective date of this registration statement. Securities Issued and to be Issued 6,960,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information Balance Sheet June 30, 2012 March 31, 2012 (unaudited) (audited) Cash $2,076 $252 Prepaid Expense $9,561 $858 Rent Deposit $770 $770 Total Assets $12,407 $1,880 Liabilities $22,535 $4,000 Total Stockholders Equity $(10,128) $(2,120) Statement Of Loss and Deficit From Incorporation on August 23, 2010 to June 30, 2012 (unaudited) Revenue $0 Net Loss ($34,728)
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001528467_dynamic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001528467_dynamic_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001528521_enerkem_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001528521_enerkem_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3df462a4a5c1de9e3114f8cbe5a2b246578dfe7e
--- /dev/null
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+F-1/A 1 a2208516zf-1a.htm F-1/A Table of Contents As filed with the U.S. Securities and Exchange Commission on April 2, 2012 Registration No. 333-179332 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission. Neither we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus filed with the Securities and Exchange Commission. We and the underwriters are offering to sell, and seeking offers to buy, our common shares only in jurisdictions where offers and sales are permitted. For investors outside the United States and Canada: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States and Canada. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. Our consolidated financial statements are presented in Canadian dollars. All references in this prospectus to "$," "US$," "U.S.$," "U.S. dollars," "dollars" and "USD" mean U.S. dollars and all references to "C$," "Canadian dollars," "CAD" and "CDN$" mean Canadian dollars, unless otherwise noted. All references to "$" in our consolidated financial statements mean Canadian dollars. Amendment No. 3 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CURRENCY TRANSLATION The following table presents, for each period presented, the high and low exchange rates, the exchange rates at the end of the period and the average of the exchange rates on the last day of each month during the period indicated for one Canadian dollar, expressed in U.S. dollars, based on the inverse of the noon buying rate in New York City for cable transfers in U.S. dollars as certified for customs purposes by the Federal Reserve Bank of New York (the "noon buying rate"). Month Ended September 30, 2011 October 31, 2011 November 30, 2011 December 31, 2011 January 31, 2012 February 29, 2012 High $ 1.0255 $ 1.0068 $ 0.9877 $ 0.9895 $ 1.0272 $ 1.0016 Low 0.9626 0.9430 0.9536 0.9613 0.9986 0.9866 End of Period 0.9626 1.0068 0.9805 0.9835 1.0050 0.9866 Average 0.9975 0.9806 0.9758 0.9770 1.0130 0.9964 Year Ended December 31, 2007 2008 2009 2010 2011 High $ 1.0908 $ 1.0291 $ 0.9719 $ 1.0040 $ 1.0584 Low 0.8437 0.7710 0.7695 0.9280 0.9430 End of Period 1.0120 0.8170 0.9559 0.9991 0.9835 Average 0.9316 0.9381 0.8763 0.9711 1.0114 On March 9, 2012, the inverse of the noon buying rate was C$1.00 = US$1.0107. Unless otherwise specified herein, all U.S. dollar amounts have been converted to Canadian dollar amounts based on the noon buying rate on March 9, 2012, which was US$1.00 = C$0.9894. MARKET, INDUSTRY AND OTHER DATA Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size estimates, is based on information from independent industry analysts, third-party sources and management estimates. Management estimates are derived from publicly-available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us based on such data and our knowledge of such industry and market, which we believe to be reasonable. In addition, while we believe the market opportunity information included in this prospectus is generally reliable and is based on reasonable assumptions, such data involves risks and uncertainties and are subject to change based on various factors, including those
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+PROSPECTUS SUMMARY You should read the following summary together with the entire prospectus, including the more detailed information regarding us, the ADSs being distributed in this distribution and our consolidated financial statements and related notes appearing elsewhere in this prospectus. You should consider carefully, among other things, the matters discussed in the section entitled "Risk Factors," in evaluating our company, our Class A ordinary shares and the ADSs. This prospectus contains information from a March 2012 report prepared by Analysys International, an independent market research firm, or the Analysys Report. The Analysys Report was commissioned by us and provides information on the mobile game market in China and our position in such market. Overview We are a leading and profitable mobile game company in China with the largest market share among mobile game developers in terms of revenues in 2010 and 2011, according to the Analysys Report. Our market share reached 18.7% in terms of revenues generated by all mobile game developers in China compared to the 4.9% market share of our nearest competitor in 2011, and was greater than the combined market share of our nearest five competitors, according to the Analysys Report. We have integrated capabilities in the development, operation, sale and distribution of mobile games in China. Our mobile handset design business complements our game development business as we pre-install our mobile games and game platforms in the handsets we design, and enhances our knowledge of user habits and preferences and industry trends. Our total paying user accounts during 2011 and the first three months of 2012 were approximately 29.0 million and 12.1 million, respectively, for feature phone single-player games, 69,000 and 30,000, respectively, for feature phone mobile social games and 741,000 and 134,000, respectively, for smartphone mobile social games. Our total subscriptions for smartphone single-player games during 2011 and the first three months of 2012 were 9.6 million and 2.0 million, respectively. Total paying user accounts are calculated based on the total number of user accounts that paid to download our games or purchase in-game items during the period (adjusted to eliminate double-counting of the same user accounts). Total subscriptions are calculated based on the total number of monthly subscriptions to our game bundles offered through mobile network operators or the number of games downloaded through application stores. We have a large and diversified portfolio of games for feature phones and smartphones. We have strong development capabilities, evidenced by the fact that we develop single-player games and mobile social games for both types of handsets. As of March 31, 2012, our portfolio included 450 mobile games, of which 130 of our 136 feature phone games were developed in-house; we licensed 302 of our 314 smartphone games from third parties and we developed all of our smartphone mobile social games in-house. Certain of our games are also among the most popular (as measured by downloads) and highest grossing (as measured by revenues) mobile games in China. For example, Kangri Yingxiong Zhuan, a single-player smartphone game that we launched in 2011, was the most downloaded single-player game among users of China Mobile, the largest mobile network operator in China, during January 2012. Paopao Xiyou, a smartphone mobile social game we developed internally, received the Golden Plume Award as the Best Mobile Platform Online Game in China for 2011. Golden Plume Awards are awarded by 7yx.com.cn annually across a number of categories to recipients chosen by online and mobile game players using their mobile phones to vote for their favorite games. We did not pay any fee for our games to be nominated. Paopao Xiyou was also named as one of the ten most popular national mobile games during the 2011 China Game Industry Annual Conference, an award determined by industry experts and for which we did not pay any fee for our games to be nominated. YY Three Kingdoms, Thumb Monopoly and Creation Song, all smartphone mobile social games that we developed in-house, won the Golden Phoenix Award from the General Administration China Mobile Games and Entertainment Group Limited (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands (State or other jurisdiction of incorporation or organization) 7372 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) Block A, 15/F Huajian Building 233 Tianfu Road, Tianhe District Guangzhou, PRC (86) 20 8561-3455 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents of Press and Publications of China, or GAPP, being among the ten most popular original mobile games in 2008, 2009 and 2010, respectively. Golden Phoenix Awards are issued by GAPP to popular online games in China. The annual award event provides rankings of top ten games across a number of different categories, and voting is held online and any user may nominate his or her favorite games. As such, we do not pay any fee for our games to be nominated. According to the Analysys Report, Creation Song was also the top-grossing mobile social game available through China Mobile in 2010. Xiao'ao Jianghu, one of our internally-developed feature phone mobile social games, was the top-grossing game in the Maopao application store, one of the most popular mobile application stores in China, from January to April of 2011, according to the Analysys Report. We have a strong pipeline of games offering a variety of themes, cultural characteristics and features designed to appeal to different users. We plan to launch 33 feature phone single-player games, one feature phone mobile social game, 112 smartphone single-player games and two smartphone mobile social games during the last nine months of 2012. We develop mobile games primarily using our proprietary game engines and development platform, which we believe allow us to create mobile games with consistent quality and system stability, and protect us from potential interruptions in our operations due to loss of development personnel. Our integrated capabilities across the mobile game value chain allow us to cross-sell mobile games among feature phone and smartphone users, and complements our strategy to build a user community that will reach users across different platforms and play methods. We are also able to identify and source popular mobile games, and we are able to attract developers of those games to partner with us due to our strong market reputation, scale of our business and distribution capability. For example, we are working with the developers of popular mobile games such as "Angry Birds" and "Fruit Ninja" to develop and distribute these games on feature phones in China. We believe our leading market position, diverse game offerings catering to both feature phones and smartphones and strong technical capabilities have enabled us to become a preferred game developer for many handset companies in China, a strategic partner with various chipset manufacturers and mobile platform providers, and a recognized content provider to China Mobile, the largest mobile network operator in China. We pre-installed our mobile games onto over 28.2 million feature phone handsets in 2011, compared to 25.1 million and 14.5 million in 2010 and 2009, respectively, of which 1.5 million were designed by our own handset design house in 2011. For the first three months of 2012, we pre-installed our mobile games onto over 7.4 million feature phone handsets, compared to 7.0 million for the first three months of 2011. We have a strategic cooperative relationship with China Mobile and have been granted access to fee-collection codes from China Mobile, which enables us to collect proceeds without having to use service providers as intermediaries. Because of our strong revenues and performance since the fourth quarter of 2011, China Mobile deemed us a "Grade A Business Partner" and we expect they will allocate to us more marketing resources and services such as giving greater prominence to our games in search results and on page displays and allowing us to publish more new games each month while expediting the approval and launch process for those games. We also formed strategic cooperations with the other two major mobile network operators in China. For example, in 2011 we entered into an agreement with China Telecom which allows us to offer games to mobile phone end users through their network. We have comprehensive capabilities in the mobile game value chain, spanning from handset design to mobile game development, operations and distribution as a result of the integration of three different businesses acquired during 2009 and 2010. Since the acquisition of our feature phone mobile game business in October 2009, our handset design business in October 2010, and our smartphone mobile game business in December 2010, the synergies created by the integration of these three businesses have allowed us to increase market share, reduce costs and operate with improved efficiency. Corporation Service Company 1180 Avenue of the Americas, Suite 210 New York, New York 10036-8401 800-927-9800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents We believe we are well-positioned to capture opportunities along the mobile game value chain as a result of our integrated capabilities. Our revenues were RMB52.8 million in 2009 on a pro forma basis, RMB125.4 million in 2010, RMB268.8 million in 2010 on a pro forma basis, RMB243.5 million (US$38.7 million) in 2011 and RMB54.3 million (US$8.6 million) for the first three months of 2012. Our net income was RMB24.9 million in 2009 on a pro forma basis, RMB40.7 million in 2010, RMB62.6 million in 2010 on a pro forma basis, RMB163.3 million (US$25.9 million) in 2011 and RMB18.8 million (US$3.0 million) for the first three months of 2012. See "Management's Discussion and Analysis of Financial Condition and Results of Operation Unaudited Pro Forma Consolidated Financial Information" for a discussion of our pro forma consolidated financial information for 2009 and 2010. Our Industry China is the world's largest mobile subscriber market, and the number of mobile subscriptions in China increased from 461 million as of the end of 2006 to 986 million as of the end of 2011, representing a CAGR of 16.4%, according to reports released by the Ministry of Industry and Information Technology, or the MIIT, in February 2007 and January 2011, respectively. Given the relatively low mobile penetration rate and low 3G penetration rate in China compared to more developed countries, the number of mobile subscriptions in China is expected to continue to increase rapidly in the next few years. The mobile game market in China has grown substantially, from RMB0.63 billion in 2007 to RMB3.96 billion (US$628.8 million) in 2011, and is expected to grow to RMB13.57 billion in 2014, according to the Analysys Report. Young users in relatively affluent areas in China make up most of the current mobile game player population in China. According to the Analysys Report, revenues from single-player mobile games and mobile social games constituted 69.5% and 30.5% of the mobile game market in terms of total revenues in China in 2011, respectively, compared to 80.4% and 19.6%, respectively, in 2010. Key players in the mobile game industry in China include: content providers with product development capabilities; mobile game operators and publishers that introduce games to market through pre-installation or other promotional means; network operators that act as both payment channels and distribution channels; mobile service providers that provide payment channels through their contractual relationships with network operators; and payment processing agents that collect payment independent of channels provided by network operators. Strengths and Strategies We believe the following strengths enable us to compete effectively and capture opportunities in the rapidly growing mobile game market in China: leading mobile game developer in the China mobile game market; strong game development and sourcing capabilities with in-depth market knowledge; established distribution network; strong technology platform with deep understanding of handset technical requirements; and experienced management team with proven track record. Copies to: David T. Zhang, Esq. Benjamin Su, Esq. Kirkland & Ellis International LLP c/o 26th Floor, Gloucester Tower The Landmark 15 Queen's Road Central Hong Kong (852) 3761-3300 Table of Contents Our objective is to become a leading mobile game developer globally by solidifying our leading market position and increasing our market share in China, as well as strategically expanding our reach into international markets. We intend to achieve our objective by pursuing the following strategies: continue to expand and enhance our game portfolio; increase paying user accounts, subscriptions and user activity; grow our user base by expanding our distribution network and installed base; continue to invest in and enhance our research and development capabilities; expand international user base to enhance our business and profitability; and pursue strategic acquisitions and partnerships. Challenges and Risks The successful execution of our strategies is subject to certain risks and uncertainties that may materially affect us, including those relating to: technical, operational and strategic challenges that may prevent us from successfully integrating our acquired businesses; our limited operating history; our ability to maintain a cooperative relationship with our agent in dealing with mobile handsets manufacturers; our dependence on network operators; our ability to compete effectively; and our ability to continue to attract new and retain existing users. Please see "Risk Factors" for a more detailed discussion of these and other risks and uncertainties we face. Our Corporate History In 2009 and 2010, VODone Limited, a company listed on the Main Board of the Hong Kong Stock Exchange, or VODone, completed a series of transactions to acquire three business units that focus on key sectors of the mobile game market in China. In October 2009, VODone acquired a 70% equity interest in Dragon Joyce Limited, or Dragon Joyce, which focuses on developing, operating and marketing feature phone mobile games through its PRC subsidiaries. In October 2010, OWX Hong Kong Limited, or OWX HK, acquired substantially all of the assets of Bright Way Technology (Hong Kong) Limited, or Bright Way, and OWX (Beijing) Technology Co., Ltd., or OWX Beijing, acquired substantially all of the assets of Shenzhen Tastech Electronics Co., Ltd., or Tastech. OWX Holding Co. Ltd., or OWX Holding, a holding company, that was 70% held by VODone, was incorporated in the British Virgin Islands in December 2009 to hold 100% equity interests in OWX HK and OWX Beijing, focusing on operating a handset design business through its subsidiaries in China. In December 2010, Action King Limited, or Action King, VODone's wholly-owned subsidiary incorporated in the British Virgin Islands, acquired 70% equity interest in 3GUU Mobile Entertainment Industrial Co., Ltd., or 3GUU BVI, which focuses on developing, operating and marketing smartphone mobile games through its subsidiaries and a variable interest entity, or VIE, in China. On August 23, 2011, we entered into a series of share swap agreements with VODone and the minority shareholders of Dragon Joyce, OWX Holding and 3GUU BVI. Pursuant to these agreements, among other things, we acquired (1) the feature phone mobile game business operated by Beauty Wave Limited, or Beauty Wave, and China Wave Group Limited, or China Wave, from Dragon Joyce; (2) the handset design business operated by OWX HK from OWX Holding; and (3) the smartphone mobile If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents game business operated by 3GUU BVI from Action King and Trilogic Investments Limited, or Trilogic. Immediately after this series of transactions, VODone owned 70.2% of our equity interests through its 100% equity interests in each of Dragon Joyce, OWX Holding and Action King; and the former minority shareholders of Dragon Joyce, OWX Holding and 3GUU BVI collectively owned 29.8% of our equity interests. Our Corporate Structure We were incorporated under the laws of the Cayman Islands on January 20, 2011 and formed by VODone as its wholly-owned subsidiary. VODone, a company incorporated in Bermuda with limited liability, is a state-affiliated leading new media company in China which operates a nation-wide audio-video broadband transmission platform, delivering a range of cross media telecommunications contents and valued-added services through the Internet. In addition to self-produced programs and contents, such as news clippings, VODone also engages in content management, provision of advertising services and lottery related businesses in China. Our business was formed through three separate acquisitions by VODone in 2009 and 2010 and was operated by VODone through various subsidiaries until our reorganization by way of share swap agreements among our holding company, VODone, and the former minority shareholders of Dragon Joyce, OWX Holding and 3GUU BVI on August 23, 2011. See " Our Recent Consolidation" above for information on the three acquisitions by VODone. Immediately after the reorganization, (1) VODone owned 70.2% of our equity interests through its 100% equity interests in each of Dragon Joyce, OWX Holding and Action King; and (2) the former minority shareholders of Dragon Joyce, OWX Holding and 3GUU BVI collectively owned 29.8% of our equity interests. Foreign ownership of mobile and Internet-based businesses is subject to significant restrictions under current PRC laws and regulations. The PRC government regulates the distribution of content over mobile and online platforms through strict business licensing requirements and other government regulations. We are a Cayman Islands company and our PRC operating subsidiaries are considered to be foreign-invested enterprises in China. Guangzhou Yitongtianxia Software Development Co., Ltd., or Yitongtianxia, one of our PRC operating entities and a foreign-invested enterprise, is restricted from holding the licenses necessary to operate our smartphone mobile game business in China. See "Regulations." Accordingly, 3GUU BVI conducts business activities relating to the development, operation and marketing of smartphone mobile games primarily through Guangzhou Yingzheng Information Technology Co., Ltd., or Yingzheng, our VIE, which, as a non-foreign-invested PRC enterprise, can hold these licenses. The current registered shareholders of Yingzheng are our officers or employees, namely, Yongchao Wang, De Liang and Feng Zheng. 3GUU BVI and Yitongtianxia have entered into contractual arrangements with Yingzheng and its registered shareholders, which enable us to (1) exercise effective control over Yingzheng; (2) receive substantially all of the economic benefits from Yingzheng as if we were its sole shareholder; and (3) have an exclusive option to purchase all of the equity interests in Yingzheng when and to the extent permitted by PRC law. Although we do not have any equity interest in Yingzheng, as a result of these contractual arrangements, we are considered the primary beneficiary of Yingzheng, and we account for it as our consolidated affiliated entity under the generally accepted accounting principles in the United States, or U.S. GAAP. We have consolidated the financial results of these companies in our consolidated financial statements in accordance with U.S. GAAP as we are determined to be the primary beneficiary in these arrangements. We believe consolidation is necessary to fairly present the financial position and results of operations of our company, because of the existence of a parent-subsidiary relationship through contractual arrangements. In addition, Huiyou Digital (Shenzhen) Ltd., or Huiyou, one of our PRC operating entities and a foreign-invested enterprise, is restricted from holding the licenses necessary to operate online feature phone business in China. Huiyou has entered into a cooperation contract with Yingzheng, pursuant to which Huiyou licenses the right to operate games that it has developed to Yingzheng, which operates the games in its own name and pays royalties to Huiyou. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amounts to be registered(2) Proposed maximum aggregate offering price(3) Amount of registration fee(4) Class A Ordinary Shares, par value US$0.001 per share(1) 22,046,374 US$8,637,836 US$990 (1)American depositary shares issuable upon deposit of the Class A ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-183539). Each American depositary share represents 14 Class A ordinary shares. (2)This relates to shares of Class A ordinary shares, par value US$0.001 per share, of China Mobile Games and Entertainment Group Limited ("CMGE"), which will be distributed to the holders of ordinary shares, par value HK$0.01 per share, of VODone Limited ("VODone"). The amount of CMGE Class A ordinary shares ("CMGE Class A Ordinary Shares") to be registered represents the maximum number of shares of CMGE Class A Ordinary Shares, which are represented by American depositary shares, that will be distributed to the holders of VODone ordinary shares ("VODone Ordinary Shares"). 22,046,374 shares of CMGE Class A Ordinary shares will be distributed to holders of VODone Ordinary Shares outstanding on the record date of this distribution. (3)Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(f)(2) of the Securities Act. (4)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. (1)On August 24, 2011 and March 16, 2012, we issued 1,220,000 and 639,000 ordinary shares, respectively, to certain of our directors and officers, which shares contain transfer restrictions. In October 2011, we, Dragon Joyce and OWX Holding issued or transferred a total of 553,042, of our ordinary shares to each of Dr. Lijun Zhang, our chairman, and Mr. Hendrick Sin, our vice chairman, as consideration for the repurchase of share options held by Dr. Zhang and Mr. Sin in certain of our subsidiaries as part of our restructuring. See "Management Compensation of Directors and Executive Officers Share Options" for more information. Table of Contents The information in this prospectus is not complete and may be changed. We may not distribute these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities. Subject to Completion Preliminary Prospectus Dated , 2012 1,574,741 American Depositary Shares China Mobile Games and Entertainment Group Limited Representing 22,046,374 Class A ordinary shares Table of Contents (2)Yingzheng is our VIE in China. Its current registered shareholders are Yongchao Wang, De Liang and Feng Zheng, both 3GUU BVI's officers, holding 76.0%, 4.0% and 20.0% of shares in Yingzheng, respectively. To manage our relationship with Yingzheng more effectively, we are in the process of transferring all of the equity interests in Yingzheng to Dr. Zhang and entering into contractual arrangements with Dr. Zhang and Yingzheng. See "Our Corporate History and Structure" for more information. The following diagram illustrates our shareholding structure immediately following this distribution. Our Relationship with VODone We are currently a subsidiary of VODone. VODone first reported its mobile game business as one of its business segments in its annual report submitted to the Hong Kong Stock Exchange for the year ended December 31, 2009. On October 21, 2011, in an effort to more clearly delineate our relationship with VODone, we entered into a Non-Compete Agreement with VODone under which VODone agreed not to engage in or allow any of its subsidiaries to engage in the mobile game development and operation business or the handset design business in China without our consent. Also, although VODone may purchase or acquire up to 20% of any class of securities of any enterprise that is in business competition with us, it may not participate in the activities of that enterprise if such securities are listed on a stock exchange. In addition, VODone agreed not to, and to procure its subsidiaries not to, solicit our employees and clients. The Non-Compete Agreement will terminate on the earliest of (i) five years after the completion of this distribution and listing, (ii) when VODone owns less than 30% of our outstanding share capital on a fully diluted basis, or (iii) the date on which our shares or ADSs cease to be listed on a stock trading market anywhere in the world. As a result, we are the sole mobile game company in the VODone group. Upon the completion of this distribution, VODone will continue to be our controlling shareholder, with a shareholding of 57.2% of the combined total of our outstanding Class A and Class B ordinary shares, and control of 87.0% of the voting power of the combined total of our outstanding Class A and Class B ordinary shares. Corporate Information Our principal executive office is located at Block A, 15/F Huajian Building, 233 Tianfu Road, Tianhe District, Guangzhou, PRC. Our telephone number is (86) 20 8561-3455. Our registered address in the Cayman Islands is located at the offices of Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. Our agent for service of process in the This prospectus is being furnished in connection with VODone Limited's, or VODone's, distribution, or this distribution, of 1,574,741 ADSs, representing 22,046,374 Class A ordinary shares, par value US$0.001 per share, of our company, or approximately 6.7% of our total shares outstanding of our company to VODone's shareholders. The shares will be deposited with the custodian, as agent of The Bank of New York Mellon, as depositary. The Bank of New York Mellon, as depositary, will deliver the ADSs, which initially will be evidenced by ADRs. Each ADS represents an ownership interest in 14 Class A ordinary shares deposited with the custodian under the deposit agreement among us, the depositary and owners and beneficial owners of ADSs. At the time of this distribution, VODone will distribute the ADSs on a pro rata basis to holders of VODone's ordinary shares. Holders of VODone's ordinary shares will be entitled to receive one ADS, representing 14 Class A ordinary shares, for every 2,000 VODone ordinary shares held on the record date. All entitlements will be rounded down to a whole number of ADSs, and fractional entitlements will be disregarded. Prior to this distribution, the ordinary shares being distributed by VODone have not been traded on a shares exchange or other regulated trading market. The principal market for trading in the ADSs is expected to be the Nasdaq Global Market. In this regard, we will apply for the ADSs to be listed on the Nasdaq Global Market. It is currently anticipated that trading on the Nasdaq Global Market will commence on or about September 25, 2012 under the symbol "CMGE"on the Nasdaq Global Market. No action will be required of VODone shareholders to receive ADSs representing the Class A ordinary shares of our company. We are an "emerging growth company" as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, and are therefore subject to reduced reporting requirements. Investing in the ADSs involves risks. See "Risk Factors" beginning on page 17. Neither the United States Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. VODone expects to distribute ADSs representing our Class A Ordinary Shares to VODone's shareholders on or about September 21, 2012. The date of this prospectus is , 2012 Table of Contents United States is Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, New York 10036-8401. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our corporate website address is www.cmge.com. The information contained on our website is not a part of this prospectus. Table of Contents Table of Contents THE DISTRIBUTION Distributing company VODone Limited, a company incorporated under the laws of Bermuda and listed on the Main Board of the Hong Kong Stock Exchange. Distributed company China Mobile Games and Entertainment Group Limited, a company incorporated under the laws of the Cayman Islands. Securities to be distributed 1,574,741 ADSs, each representing 14 of our Class A ordinary shares, par value US$0.001 per share, which in total constitutes approximately 6.7% of our outstanding ordinary shares. The ADSs will initially be evidenced by American depositary receipts, or ADRs. The depositary will hold the Class A ordinary shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and holders of ADSs from time to time. You may surrender your ADSs to the depositary to withdraw the Class A ordinary shares underlying your ADSs. The depositary will charge you a fee for such an exchange. We may amend or terminate the deposit agreement for any reason without your consent. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs. To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares." You should also read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. Primary purposes of the distribution The board of directors of VODone believes that the partial distribution of our ADSs will allow our management and management of VODone to each focus on their own respective businesses as public companies, as we and VODone have different business strategies and growth prospects, allow for our own equity-based options in order to enable us to provide incentives for management and other key employees that are directly related to the market performance of our publicly traded shares, allow us direct access to U.S. capital markets to finance our product and research development activities, enhance our access to financing by allowing the financial community to focus separately on our business, facilitate acquisitions, joint ventures and partnerships by VODone and us with other companies focusing on the same or complementary businesses and technologies, allow VODone to return value to its shareholders, and Table of Contents Table of Contents provide VODone shareholders with a direct ownership interest in us in addition to the indirect interest in us that they have as VODone shareholders. Distribution ratio Holders of VODone's ordinary shares will be entitled to receive one ADS for every 2,000 VODone ordinary shares held on the record date. All entitlements will be rounded down to a whole number of ADSs, and fractional entitlements will be disregarded. For the avoidance of doubt, registered holders of less than 2,000 Shares on the record date will not be entitled to the distribution. Record date The record date is September 5, 2012. Distribution date The distribution date is expected to be September 21, 2012. Use of proceeds We will not receive any proceeds in connection with this distribution. The distribution On the distribution date, VODone will effect a distribution of 1,574,741 ADSs to the holders of its ordinary shares. The distribution will be made in book-entry form. Prior to the distribution, a direction form will be dispatched to holders of VODone's ordinary shares. Any VODone shareholder will be able to receive the ADSs if the shareholder specifies a DTC participant account or the details of a broker or dealer who is a DTC participant. Any registered shareholder whose address on the VODone's register on the record date is in a jurisdiction outside Hong Kong and is not permitted to receive ADSs, or who has filled out an invalid direction form, will not receive ADSs. Instead, the ADSs will be sold by one or more brokers designated by VODone on the shareholder's behalf as soon as reasonably practicable after the commencement of dealings in the ADSs on the Nasdaq Global Market and the shareholder will receive a cash amount equal to the net proceeds of such sale. Fractional ADSs As a result of this distribution ratio, no fractional ADS of the Company will be distributed to VODone shareholders. Stock exchange listing There is not currently a public market for the ADSs. We have applied for listing of our ordinary shares and the ADSs on the Nasdaq Global Market under the symbol "CMGE." We anticipate that trading will commence on or about September 25, 2012. We cannot predict the trading prices for the ADSs before or after the distribution date. Ordinary shares outstanding immediately after this distribution 331,074,511 shares, comprised of: (i) 141,457,419 Class A ordinary shares, par value US$0.001 per share, including 22,046,374 Class A ordinary shares that will be distributed in this distribution; and (ii) 189,617,092 Class B ordinary shares, par value US$0.001 per share. Table of Contents Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Only VODone and its affiliates, namely Dragon Joyce, OWX Holding and Action King, will hold our Class B ordinary shares. In respect of matters requiring shareholders' vote, each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to five votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time upon the Class B shareholder's request. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale, pledge, transfer, assignment or disposition of Class B ordinary shares by a holder thereof to any person or entity that is not an affiliate of such holder, those Class B ordinary shares shall be automatically and immediately converted into an equal number of Class A ordinary shares. Relationship with VODone after this distribution Upon the completion of this distribution, VODone will continue to be our controlling shareholder, with a shareholding of 57.2% of the combined total of our outstanding Class A and Class B ordinary shares, and control of 87.0% of the voting power of the combined total of our outstanding Class A and Class B ordinary shares. Dividend policy We intend to declare and pay dividends in the future. The payment and the amount of any dividends will depend on the results of our operations, cash flow, financial condition, statutory and regulatory restrictions on the payment of dividends, future prospects and other factors that we may consider relevant. For additional information, see "Dividend Policy." U.S. federal income tax consequences to holders of VODone ordinary shares For a discussion of the U.S. federal income tax consequences to VODone shareholders of this distribution, see the section of this prospectus entitled "Taxation." VODone shareholders should consult with their own individual tax advisors regarding the tax consequences of this distribution. Depositary The Bank of New York Mellon
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001528903_avg_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001528903_avg_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001528903_avg_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001529133_chatand_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001529133_chatand_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..33094b8589c72977a2078989e36f3061878ff890
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the information set forth under the headings Risk Factors" and Management s Discussion and Analysis of Financial Condition and Results of Operations," and the financial statements and the notes to the financial statements included in this prospectus. As used throughout this prospectus, the terms CHAT", Chat&," Company", we," us," or our" refer to chatAND, Inc., a Nevada corporation, together with its subsidiaries. Our Company chatAND, Inc. intends to provide online assistance, engagement and conversion solutions to e-commerce businesses by allowing real-time assistance to website visitors utilizing Video Conferencing, Screen Sharing and Collaborative Co-Browsing to increase sales conversion rates. The proposed technology platform connects businesses and their sales associates and customer service representatives (CSR s), with website visitors and online shoppers seeking assistance while browsing their respective websites. The Chat& software is a 100% hosted no download application that will allow a company s live sales and support staff to connect directly with customers via 1-to-1 real-time sessions. Utilizing the powerful tools of Video-Chat and Co-Browsing (the joint navigation through the Internet by two or more people accessing the same web pages at the same time) Chat& aims to redefine the online shopping experience by recreating virtually all of the benefits of a live showroom environment. This Virtual e-showroom" will allow both customers and sales support staff to navigate the website together in real time while in a video conference. Our technology will allow our clients and their websites to offer a more personalized and relevant sales environment. The face-to-face component of Video-Chat alone is an incredibly powerful conversion tool; with the addition of Co-Browsing, Chat& aims to change the landscape of e-commerce. Chat& s proposed video technology, online co-browsing and collaboration tools together with our e-commerce knowledge and internet marketing expertise, will help our clients by increasing sales, as well as customer satisfaction. Bridging the gap between visitor traffic and desired sales conversion goals, our proposed technology aims to deliver precise and measurable returns by empowering our clients to: Reduce shopping abandonment and increase sales conversion rates by intelligently interacting and engaging customers ased upon their specific behavior Increase average order values Increase customer satisfaction Reduce attrition rates of existing customers Increase quantity of line items per order Increase average total shopping cart value With the emergence of Apple s facetime, Skype Video-Chat and other similar Video-Chat applications into the mainstream, and the increase in internet bandwidth (Wimax, 4G) sales and support has moved from a two-dimensional experience. Simple text chat, which currently dominates the support market, will no longer be enough to satisfy the marketplace. We believe it is only a matter of time until Video-Chat becomes the standard form of communication. With that in mind, Chat& intends for its application to be at the forefront of this new method of commerce, communication and collaboration. The Company has no operating history and has not generated any revenues to date, and accordingly investors will be unable to assess the Company s profitability to perform. The Company is in the midst of its initial phase of development. We continue to develop the technology that will allow video support and chat based co-browsing to our clients. The initial version of the platform is a basic scaled down version that will allow a customer and sales representative to conduct a 1-1 video session and they will both be allowed to view the same browsing screen simultaneously. There are additional features that we anticipate that will be required for us to add in later development phases that are not currently part of our platform, and that some of our competitors currently offer. The Company has assigned all of its intellectual property rights to its wholly owned subsidiary, chatAND Tech, LLC, a Nevada limited liability company. chatAND Tech LLC s sole activity and assets are the ownership of our intellectual property. The Securities Purchase Agreement with the Senior Secured Note Holders provides that in the event the holders of the Senior Secured Notes declare a default for certain reasons, Messrs. Lebor and Rosenberg shall have the right to acquire up to 60% of the interest in chatAND Tech, LLC in exchange for cancellation by the Company of the shares issued to Messrs. Lebor and Rosenberg: In such event, there will be a change in control of the Company. Additionally, the Company is dependent on Messrs. Lebor and Rosenberg for the further development of the technology. While we have had discussions with the holders of the Senior Secured Notes regarding a waiver or extension of these dates, we have not reached a definitive agreement and there is no assurance that a waiver or extension agreement will be entered into.(See " Risk Factors- Risks Related to Ownership of our Common Stock and Warrants"). We expect to utilize between $1.2 million (minimum) and $2.4 million (maximum) of the proceeds for technology development, and up to $400,000 for investor relations. The balance of the proceeds we expect to use for general working capital. The shares of common stock will be sold by the Selling Stockholders at a fixed price of $0.33 per share, until the shares are quoted on the Over The Counter Bulletin Board. Thereafter, they may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices, See Plan of Distribution" beginning on page 51 of this prospectus. We intend to apply for our common stock to be quoted on the OTC Bulletin Board under the symbol "CHAT". All costs incurred in the registration of the Units and Shares are being borne by the Company. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for future filings. Prior to this offering, there has been no public market for the Company s common stock. No assurances can be given that a public market will develop following completion of this offering or that, if a market does develop, it will be sustained. The offering price for the Shares has been arbitrarily determined by the Company and does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company. The Shares will become tradeable on the effective date of the registration statement of which this prospectus is a part. Investing in our common stock involves risk. You should carefully consider the Risk Factors beginning on page 5 of this prospectus before making a decision to invest in our common stock. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is ______, 2012. There are myriad potential circumstances that could be impediments to our success, including: our ability to be competitive in attracting qualified developers and key personnel, our ability to respond to the rapid technological change and changing client preferences, and the fact that we will be dependent on technology systems and third-party content that are beyond our control. Corporate Information Our executive office is located at 321 West 44th Street, New York, New York 10036. Our telephone number 212-245-1444 and our website is www.chatand.com. THE OFFERING On June 17, 2011, we completed an offering of $850,000 of our 5% Convertible Senior Secured Notes (the Senior Secured Notes") to five accredited investors pursuant to Regulation D under the Securities Act of 1933. The Senior Secured Notes are initially convertible at a conversion price of $.10 per share, subject to adjustment, as provided therein. The Notes mature on June 30, 2012 with interest payable quarterly. In addition, the Company is offering through its officers and directors, the sale of a minimum of 7,500,000 shares of Common Stock and a maximum of 20,000,000 shares of Common Stock, $0.0001 par value, in Units consisting of one share of Common Stock and a five year warrant to purchase one-half share of Common Stock (at an initial exercise price of $0.50) at a price of $.40 per unit (the Company Shares"). A minimum of $3,000,000 must be raised in the Company Offering. Common stock outstanding before the offering 17,750,001 shares Common stock being offered Up to 30,000,000 shares of common stock being offered by the Company, in Units consisting of one share of Common Stock and a five year warrant to purchase one-half share of Common Stock (at an initial exercise price of $0.50) at a fixed price of $.40 per share and up to 12,750,000 shares of common stock held by the selling stockholders or in respect of underlying securities held by the selling stockholders. We do not expect a public market to develop for the warrants . Common stock to be outstanding after the offering Up to 60,500,001 shares, assuming full exercise of the warrants. OTCBB Symbol __________ Use of proceeds We expect to receive gross proceeds of $3,000,000 if the minimum number of shares are sold by the Company, and $8,000,000 if the maximum number of shares are sold by the Company in the Company Offering. We also may retain placement agents, where permitted by law, to assist us in the offering and selling of the shares of our common stock. In the event we elect to utilize placement agents for sale of the shares of our common stock, we will amend this prospectus.We will not receive any proceeds from the sale of shares by the Selling Stockholders other than the exercise price of any warrants that are exercised by the applicable Selling Stockholders who do not conduct cashless exercises. If all of the warrants held by the Selling Stockholders , and the 10 million warrants issued in the Company Offering are exercised for cash, then we will receive gross proceeds of approximately $5,637,500. No assurances can be given, however, that all or any portion of such warrants will ever be exercised. See Use of Proceeds" at page 21.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001529557_icon-oil_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001529557_icon-oil_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001529557_icon-oil_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001529573_icon-oil_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001529573_icon-oil_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001529573_icon-oil_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001529692_icon-oil_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001529692_icon-oil_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001529692_icon-oil_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001531774_efactor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001531774_efactor_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..bfe4cdb67d382a64894c2202a036e7c8cf42436b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001531774_efactor_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider relating to ownership of our common stock. You should read the entire prospectus carefully, including the "Risk Factors" beginning on page 4, and our financial statements and the notes to the financial statements included elsewhere in this prospectus. As used throughout this prospectus, the terms "EHI", "Company", "we," "us," or "our" refer to EFactor Holdings, Inc. Our Business History and Development of the Company EHI was formed in September 2011 as a subsidiary of Triton Distribution Systems, Inc. To better understand EHI s business focus, it may help to know more about Triton. Triton Triton is a development stage Web-based electronic catalog primarily focused on travel services distribution. The travel marketplace is a global arena in which millions of buyers such as travel agents and consumers and sellers such as airlines, hotels, car rental agencies, cruise ship lines, tour operators and entertainment companies come together. Among the systems available to buyers in their search for travel options, availability and rates are Global Distribution Systems companies, known as GDSs, which are accessed primarily by travel agents and Internet travel Web site companies such as Cendant Corp.'s Orbitz, Expedia, Inc.'s Expedia.com and Sabre Holdings Corp.'s Travelocity, which are accessed by consumers. These systems electronically connect a vast network of travel product sellers and globally dispersed travel agents and consumers. Triton s core business is the electronic distribution of travel inventory from travel sellers to travel agencies and their clients. Unlike Orbitz, Expedia and Travelocity, which are targeted to consumers we operate solely as a vendor to travel agents through our business-to-business, or B2B, Web-based distribution system. Triton favors the B2B market because Triton s management estimates that 80% of global airline tickets are issued by travel agents and an estimated 70% of all travel is booked through travel agents. Moreover, the Cruise Line International Association estimates that more than 90% of cruises are booked through travel agents. Triton plans to offer a broad array of proprietary products and services in various target markets. These products and service offerings can be divided into three categories: (1) B2B products, (2) portal products and (3) Web services. Triton s products are distributed over the Internet from the Triton portal, lowering the cost of distribution. Travel inventory is made available to agencies through the Triton network. With only a personal computer, a broadband Internet connection and a printer, a travel agent can securely connect to a Triton operations center. In September 2011, EHI entered into negotiations with EFactor, Corp. ( EFactor ), an entrepreneurial community organization, described briefly below and in more detail on page 17 of this Registration Statement. Our negotiations with EFactor related to and resulted in a share exchange agreement pursuant to which we obtained all of the issued and outstanding shares of common stock of EFactor, in exchange for an aggregate of 14,000,000 shares of our common stock. Additionally in September 2011, Triton granted to EHI a non-exclusive right and license (the License ) to use, reproduce and market the Reservation Expert (the Software ), solely for the purpose of servicing EHI s members. The License Agreement and the Share Exchange Agreement are described in more detail below. EFactor, Corp. EFactor, an entrepreneurial community with approximately 900,000 members as of January 2011, assists entrepreneurs by providing resources that every small business owner needs: gaining access to funding; building knowledge; increasing revenue; and decreasing costs. At EFactor, entrepreneurs can: - exchange ideas with experts; - receive exclusive discounts on business tools; - interact with potential partners or clients; and - discover funding opportunities for their startups. With close to a million users in 185 countries, EFactor offers a unique mix of online and offline E.vents in the United States and internationally. Members join EFactor to make relevant connections, which can help them take their businesses to the highest level. EFactor is headquartered in San Francisco, California, and founded by a team of successful serial entrepreneurs.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001533932_worldpay_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001533932_worldpay_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b8944542be556b9076064e03b48f221b1f8b2b01
--- /dev/null
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@@ -0,0 +1 @@
+The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the risk factors, the financial statements and related notes thereto, and the other documents to which this prospectus refers before making an investment decision. Unless otherwise stated in this prospectus, or as the context otherwise requires, references to "Vantiv," "we," "us" or "our company" refer to Vantiv, Inc. and its subsidiaries. Vantiv is a leading, integrated payment processor differentiated by a single, proprietary technology platform. According to the Nilson Report, we are the third largest merchant acquirer and the largest PIN debit acquirer by transaction volume in the United States. We efficiently provide a suite of comprehensive services to merchants and financial institutions of all sizes. Our technology platform offers our clients a single point of service that is easy to connect to and use in order to access a broad range of payment services and solutions. Our integrated business and single platform also enable us to innovate, develop and deploy new services and provide us with significant economies of scale. Our varied and broad distribution provides us with a large and diverse client base and channel partner relationships. We believe this combination of attributes provides us with competitive advantages and has enabled us to generate strong growth and profitability. We believe our single, proprietary technology platform is differentiated from our competitors' multiple platform architectures. Because of our single point of service and ability to collect, manage and analyze data across the payment processing value chain, we can identify and develop new services more efficiently. Once developed, we can more cost-effectively deploy new solutions to our clients through our single platform. Our single scalable platform also enables us to efficiently manage, update and maintain our technology, increase capacity and speed and realize significant operating leverage. We offer a broad suite of payment processing services that enable our clients to meet their payment processing needs through a single provider. We enable merchants of all sizes to accept and process credit, debit and prepaid payments and provide them supporting services, such as information solutions, interchange management and fraud management, as well as vertical-specific solutions in sectors such as grocery, pharmacy, retail, petroleum and restaurants, including, quick service restaurants, or QSRs. We also provide mission critical payment services to financial institutions, such as card issuer processing, payment network processing, fraud protection, card production, prepaid program management, ATM driving and network gateway and switching services that utilize our proprietary Jeanie PIN debit payment network. We provide small and mid-sized clients with the comprehensive solutions that we have developed to meet the extensive requirements of our large merchant and financial institution clients. We then tailor these solutions to the unique needs of our small and mid-sized clients. In addition, we take a consultative approach to providing services that help our clients enhance their payments-related services. We are also well positioned to provide payment solutions for high growth markets, such as prepaid, ecommerce and mobile payment offerings, because we process payment transactions across the entire payment processing value chain on a single platform. We distribute our services through direct and indirect distribution channels using a unified sales approach that enables us to efficiently and effectively target merchants and financial institutions of all sizes. Our direct channel includes a national sales force that targets financial institutions and national merchants, regional and mid-market sales teams that sell solutions to merchants, financial institutions and third-party reseller clients and a telesales operation that targets small and mid-sized merchants. Our indirect channel to merchants includes relationships with a broad range of independent sales organizations, or ISOs, merchant banks, value-added resellers and trade associations that target Table of Contents merchants, including difficult to reach small and mid-sized merchants. Our indirect channel to financial institutions includes relationships with third-party resellers and core processors. We have a broad and diversified merchant and financial institution client base. Our merchant client base has low client concentration and is heavily weighted in non-discretionary everyday spend categories, such as grocery and pharmacy, and includes large national retailers, including eight of the top 25 national retailers by revenue in 2011, and over 200,000 small and mid-sized merchant locations. Our financial institution client base is also well diversified and includes over 1,300 financial institutions. We generate revenues based primarily on transaction fees paid by merchants or financial institutions. Our revenue increased from $884.9 million for the year ended December 31, 2008 to $1.6 billion for the year ended December 31, 2011. Our revenue, less network fees and other costs, which we refer to as net revenue, increased from $451.4 million for the year ended December 31, 2008 to $865.7 million for the year ended December 31, 2011. Our net income decreased from $152.6 million for the year ended December 31, 2008 to $84.8 million for the year ended December 31, 2011. Our pro forma adjusted EBITDA increased from $278.7 million for the year ended December 31, 2008 to $438.8 million for the year ended December 31, 2011. See our reconciliation of pro forma adjusted EBITDA to net income on page 16 of this prospectus. Industry Background Electronic payments is a large and growing market, and according to The Nilson Report, personal consumption expenditures in the United States using cards and other electronic payments reached $4.48 trillion in 2009 and are projected to reach $7.23 trillion in 2015, representing a compound annual growth rate of approximately 8% during that period. This growth will be driven by favorable secular trends, such as the shift from cash and checks towards card-based and other electronic payments due to their greater convenience, security, enhanced services and rewards and loyalty features. Payment processors help merchants and financial institutions develop and offer electronic payment solutions to their customers, facilitate the routing and processing of electronic payment transactions and manage a range of supporting security, value-added and back office services. In addition, many large banks manage and process their card accounts in-house. This is collectively referred to as the payment processing value chain and is illustrated below: Many payment processors specialize in providing services in discrete areas of the payment processing value chain, such as merchant acquiring, payment network or issuer processing services. A limited number of payment processors have capabilities or offer services in multiple parts of the payment processing value chain. Many processors that provide solutions targeting more than one part of the payment processing value chain utilize multiple, disparate technology platforms requiring their clients to access payment processing services through multiple points of contact. 8500 Governor's Hill Drive Symmes Township, Ohio 45249 (513) 900-5250 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Nelson F. Greene, Esq. Chief Legal Officer and Secretary 8500 Governor's Hill Drive Symmes Township, Ohio 45249 (513) 900-5250 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Table of Contents The payment processing industry will continue to adopt new technologies, develop new products and services, evolve new business models and experience new market entrants and changes in the regulatory environment. In the near-term, we believe merchants and financial institutions will seek services that help them enhance their own offerings to consumers, provide additional information solution services to help them run their businesses more efficiently and develop new products and services that provide tangible, incremental revenue streams. Over the medium- to long-term, we believe that emerging, alternative payment technologies, such as mobile payments, electronic wallets, mobile marketing offers and incentives and rewards services, will be adopted by merchants and other businesses and represent an attractive growth opportunity for the industry. Our Competitive Strengths Single, Proprietary Technology Platform We have a single, proprietary technology platform that provides our clients with differentiated payment processing solutions and provides us with significant strategic and operational benefits. Our clients access our processing solutions through a single point of access and service, which is easy to use and enables our clients to acquire additional services as their business needs evolve. Our platform also allows us to collect, manage and analyze data that we can then package into information solutions for our clients. It also provides insight into market trends and opportunities as they emerge, which enhances our ability to innovate and develop new value-added services. Our single platform allows us to more easily deploy new solutions that span the payment processing value chain, such as prepaid, ecommerce and mobile, which are high growth market opportunities. Since we operate one scalable technology platform, we are able to efficiently manage, update and maintain our technology and increase capacity and speed, which provide significant operating leverage. Integrated Business We operate as a single integrated business using a unified sales and product development approach. Our integrated business and established client relationships across the payment processing value chain enhance our ability to cross-sell our services, develop new payment processing services and deliver substantial value to our clients. By operating as a single business, we believe we can manage our business more efficiently resulting in increased profitability. Our integrated business differentiates us from payment processors that are focused on discrete areas of the payment processing value chain or that operate multiple payment processing businesses. Comprehensive Suite of Services We offer a broad suite of payment processing services that enable our merchant and financial institution clients to address their payment processing needs through a single provider. Our solutions include traditional processing services as well as a range of innovative value-added services. We provide small and mid-sized clients with the comprehensive solutions originally developed for our large clients that we have adapted to meet the specific needs of our small and mid-sized clients. We have developed industry specific solutions with features and functionality to meet the specific requirements of various industry verticals, market segments and client types. Diverse Distribution Channels We sell our services to merchants, financial institutions and third-party reseller clients of all types and sizes through diverse distribution channels, which has resulted in low client concentration. Our direct channel includes a national sales force that targets financial institutions and national retailers, regional and mid-market sales teams that sell solutions to merchants and third-party reseller clients and a telesales operation that targets small and mid-sized merchants. Our indirect channel includes Copies to: Alexander D. Lynch, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000 (Phone) (212) 310-8007 (Fax) Richard J. Sandler, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 (Phone) (212) 701-5224 (Fax) Table of Contents relationships with a broad range of ISOs, merchant banks, value-added resellers and trade associations that target merchants, including difficult to reach small and mid-sized merchants, as well as arrangements with core processors that sell our solutions to small and mid-sized financial institutions. Strong Execution Capabilities Our management team has significant experience in the payment processing industry and has demonstrated strong execution capabilities. Since we created a stand-alone company in 2009, we have invested substantial resources to enhance our technology platform, deepened our management organization, expanded our sales force, completed four acquisitions, introduced several new services, launched the Vantiv brand and built out and moved into our new corporate headquarters. We executed all of these projects while delivering substantial revenue growth and strong profitability. Our Strategy We plan to grow our business over the course of the next few years, depending on market conditions, by continuing to execute on the following key strategies: Increase Small to Mid-Sized Client Base We are focused on increasing our small to mid-sized client base to capitalize on the growth and margin opportunities provided by smaller merchants and financial institutions, which outsource all or a significant portion of their payment processing requirements and are generally more profitable on a per transaction basis. We plan to continue to identify and reach these small to mid-sized merchants and financial institutions through our direct sales force, ISOs, partnership and referral arrangements and third-party resellers and core processors. Develop New Services We seek to develop additional payment processing services that address evolving client demands and provide additional cross-selling opportunities by leveraging our single technology platform, industry knowledge and client relationships across the payment processing value chain. For example, we intend to expand our prepaid card services and customized fraud management services and introduce data-rich information solutions to provide our merchant and financial institution clients with new opportunities to generate incremental revenue or lower their costs. Expand Into High Growth Segments and Verticals We believe there is a substantial opportunity for us to expand further into high growth payment segments, such as prepaid, ecommerce, mobile and information solutions, and attractive industry verticals, such as business-to-business, healthcare, government and education. We intend to further develop our technology capabilities to handle specific processing requirements for these segments and verticals, add new services that address their needs and broaden our distribution channels to reach these potential clients. Broaden and Deepen Our Distribution Channels We intend to broaden and deepen our direct and indirect distribution channels to reach potential clients and sell new services to our existing clients. We plan to grow our direct sales force, including telesales, add new referral partners, such as merchant banks, and grow our indirect channels through new ISOs, partnership and referral arrangements, third-party resellers and core processors. We will also continue to develop additional support services for our distribution channels, provide sales and product incentives and increase our business development resources dedicated to growing and promoting our distribution channels. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offer Price Per Share(2) Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee Class A common stock, $0.00001 par value per share 13,250,000 $20.54 $272,088,750 $37,113(3) (1)Includes shares of Class A common stock that may be issuable upon exercise of an option to purchase additional shares granted to the underwriters. (2)Estimated solely for purposes of calculating the amount of the registration fee. In accordance with Rule 457(c) of the Securities Act of 1933, as amended, the price shown is the average of the high and low sales prices of the Class A common stock on December 4, 2012, as reported on the New York Stock Exchange. (3)$33,481 previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Enter New Geographic Markets When we operated as a business unit of Fifth Third Bank we had a strong market position with large national merchants, and we focused on serving small to mid-sized merchants in Fifth Third Bank's core market in the Midwestern United States. We are expanding our direct and indirect distribution channels and leveraging our technology platform to target additional regions. In the future, we will also look to augment our U.S. business by selectively expanding into international markets through strategic partnerships or acquisitions that enhance our distribution channels, client base and service capabilities. Pursue Acquisitions We have recently completed four acquisitions, and we intend to continue to seek acquisitions that provide attractive opportunities to increase our small to mid-sized client base, enhance our service offerings, target high growth payment segments and verticals, enter into new geographic markets and enhance and deepen our distribution channels. We also will consider acquisitions of discrete merchant portfolios that we believe would enhance our scale and client base and strengthen our market position in the payment processing industry. Risks Affecting Our Business Investing in our Class A common stock involves substantial risk. Before participating in this offering, you should carefully consider all of the information in this prospectus, including risks discussed in "Risk Factors" beginning on page 17. Some of our most significant risks are: If we cannot keep pace with rapid developments and change in our industry and provide new services to our clients, the use of our services could decline, reducing our revenues. The payment processing industry is highly competitive, and we compete with certain firms that are larger and that have greater financial resources. Such competition could adversely affect the transaction and other fees we receive from merchants and financial institutions. Unauthorized disclosure of data, whether through cybersecurity breaches, computer viruses or otherwise, could expose us to liability, protracted and costly litigation and damage our reputation. Our systems and our third party providers' systems may fail due to factors beyond our control, which could interrupt our service, cause us to lose business and increase our costs. Any acquisitions, partnerships or joint ventures that we make could disrupt our business and harm our financial condition. If we fail to comply with the applicable requirements of the Visa, MasterCard or other payment networks, those payment networks could seek to fine us, suspend us or terminate our registrations through our financial institution sponsors. We rely on financial institution sponsors to access Visa, MasterCard and other payment networks, which have substantial discretion with respect to certain elements of our business practices, and financial institution clearing service providers, in order to process electronic payment transactions. If these sponsorships or clearing services are terminated and we are unable to secure new bank sponsors or financial institutions, we will not be able to conduct our business. If Fifth Third Bank fails or is acquired by a third party, it could place certain of our material contracts at risk, decrease our revenue, and would transfer the ultimate voting power of a significant amount of our common stock to a third party. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion, dated December 6, 2012 12,050,000 Shares Class A Common Stock Table of Contents We are subject to extensive government regulation, and any new laws and regulations, industry standards or revisions made to existing laws, regulations, or industry standards affecting the electronic payments industry and other industries in which we operate may have an unfavorable impact on our business, financial condition and results of operations. Because we are deemed to be controlled by Fifth Third Bank and Fifth Third Bancorp for purposes of federal and state banking laws, we are subject to supervision and examination by federal and state banking regulators, and our activities are limited to those permissible for Fifth Third Bank and Fifth Third Bancorp. We may therefore be restricted from engaging in new activities or businesses, whether organically or by acquisition. We are also subject to supervision and examination by the new federal Consumer Financial Protection Bureau. We may not be able to successfully manage our intellectual property and may be subject to infringement claims. We have a limited operating history as a stand-alone company upon which you can evaluate our performance, and accordingly, our prospects must be considered in light of the risks that any newly stand-alone company encounters. Furthermore, we maintain many relationships with our former parent entity, Fifth Third Bank. Our History and Organizational Structure We have a 40 year history of providing payment processing services. We operated as a business unit of Fifth Third Bank until June 2009 when certain funds managed by Advent International Corporation acquired a majority interest in Fifth Third Bank's payment processing business unit with the goal of creating a separate stand-alone company. Since the separation, we established our own organization, headquarters, brand and growth strategy. As a stand-alone company, we have made substantial investments to enhance our single, proprietary technology platform, recruit additional executives with significant payment processing and operating experience, expand our sales force, reorganize our business to better align it with our market opportunities and broaden our geographic footprint beyond the markets traditionally served by Fifth Third Bank and its affiliates. In addition, we made three strategic acquisitions in 2010. We acquired NPC Group, Inc., or NPC, to substantially enhance our access to small to mid-sized merchants, certain assets of Town North Bank, N.A., or TNB, to broaden our market position with credit unions, and certain assets of Springbok Services Inc., or Springbok, to expand our prepaid processing capabilities. In March 2012, we completed our initial public offering of our Class A common stock. In connection with our initial public offering, we effected several reorganization transactions, which are described further under the heading "Certain Relationships and Related Person Transactions Reorganization and Offering Transactions." We are a holding company, and our principal asset is equity interests in Vantiv Holding, LLC, or Vantiv Holding. As the majority unitholder of Vantiv Holding, we operate and control the business and affairs of Vantiv Holding. Our control and the control of Vantiv Holding is subject to the terms of our amended and restated certificate of incorporation and the Amended and Restated Vantiv Holding Limited Liability Company Agreement, each of which includes consent rights for Fifth Third Bank with respect to specified matters. See "Description of Capital Stock Consent Rights" and "Description of Capital Stock Vantiv Holding." Through Vantiv Holding and its operating subsidiaries, we conduct the business conducted by the operating entities included in our historical financial statements. We conduct all of our operations through Vantiv Holding and its subsidiaries. The units of Vantiv Holding held by Fifth Third Bank or its affiliates are treated as a non-controlling interest in our financial statements. Vantiv, Inc.'s Class B common stock gives voting rights, but no economic interests, to Fifth Third Bancorp. The total value and voting power of the Class A common stock and the Class B common stock that Fifth Third Bancorp holds (not including, for the avoidance of doubt, any ownership interest The selling stockholders named in this prospectus are offering 12,050,000 shares of our Class A common stock. We will not receive any proceeds from the sale of shares of Class A common stock to be offered by the selling stockholders. Our Class A common stock is listed on the New York Stock Exchange under the symbol "VNTV." On December 5, 2012, the last sale price of our Class A common stock as reported on the New York Stock Exchange was $20.99 per share. Table of Contents in units of Vantiv Holding) is limited to 18.5% at any time other than in connection with a stockholder vote with respect to a change of control. Principal Stockholders Our principal equity holders are (i) funds managed by Advent International Corporation, which we refer to as Advent, which hold shares of our Class A common stock and (ii) Fifth Third Bank and its subsidiary, FTPS Partners, LLC, which we refer to, together with their affiliates, as the Fifth Third investors, which will hold the shares of Class A common stock they are selling in this offering, and which hold the Class B common stock as well as Class B units of, and a warrant issued on June 30, 2009 by, Vantiv Holding. After the completion of this offering, we expect that FTPS Partners, LLC, will no longer be one of our equity holders as it is selling its entire holdings hereby. In June 2009, Advent acquired a majority interest in Fifth Third Bank's payment processing business which became Vantiv Holding. At the same time JPDN Enterprises, LLC, or JPDN, an affiliate of Charles D. Drucker, our chief executive officer, acquired a 0.14% equity interest in Vantiv Holding. JPDN subsequently sold its equity interest in our initial public offering. Certain of our principal equity holders may acquire or hold interests in businesses that compete directly with us, or may pursue acquisition opportunities which are complementary to our business, making such an acquisition unavailable to us. Advent, through one of its equity investments, owns an equity interest in WorldPay US, Inc., one of our direct competitors. For further information, see "Risk Factors Risks Related to Our Company and Our Organizational Structure Certain of our investors have interests and positions that could present potential conflicts with our and our stockholders' interests" and "Business Competition." Advent Since 1984, Advent has raised $37 billion in private equity capital and completed over 279 transactions in 35 countries. Advent's current portfolio is comprised of investments in 54 companies across five sectors Retail, Consumer & Leisure; Financial and Business Services; Industrial; Technology, Media & Telecoms; and Healthcare. The Advent team includes more than 170 investment professionals across Western and Central Europe, North America, Latin America and Asia. Fifth Third Bancorp and Fifth Third Bank Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of September 30, 2012, Fifth Third Bancorp had $117 billion in assets and operated 15 affiliates with 1,320 full-service Banking Centers, including 104 Bank Mart locations open seven days a week inside select grocery stores and 2,404 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third Bancorp operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third Bancorp is among the largest money managers in the Midwest and, as of September 30, 2012, had $300 billion in assets under care, of which it managed $26 billion for individuals, corporations and not-for-profit organizations. Fifth Third Bancorp's common stock is traded on the NASDAQ National Global Select Market under the symbol "FITB." Additional Information We are a Delaware corporation. We were incorporated as Advent-Kong Blocker Corp. on March 25, 2009 and changed our name to Vantiv, Inc. on November 8, 2011. Our principal executive offices are located at 8500 Governor's Hill Drive, Symmes Township, Ohio 45249. Our telephone number at our principal executive offices is (513) 900-5250. Our corporate website is www.vantiv.com. The information that appears on our website is not part of, and is not incorporated into, this prospectus. Investing in our Class A common stock involves a high degree of risk. See "Risk Factors" beginning on page 17. Table of Contents Recent Developments On November 30, 2012, we acquired ecommerce payment processor Litle & Co. for approximately $361.0 million in cash. This acquisition will strengthen our capabilities in ecommerce, expand our customer base of online merchants and enable the delivery of Litle & Co.'s innovative ecommerce solutions to our merchant and financial institution clients. In connection with this acquisition, we will generate a tax asset with a present value of approximately $60 million, which will be recognized over time. Additionally, we expect to record a charge of approximately $5 million related to the acquisition and integration costs during the quarter ending December 31, 2012. On November 30, we received an exchange notice from the Fifth Third investors requesting that we exchange Class B units in Vantiv Holding held by the Fifth Third investors pursuant to the terms of the Exchange Agreement, in connection with this offering. We will issue 12,050,000 shares of our Class A common stock, in the aggregate, to the Fifth Third investors (or 13,250,000 shares of Class A common stock, in the aggregate, if the underwriters exercise in full their option to purchase additional shares) in exchange for 12,050,000 Class B units in Vantiv Holding, in the aggregate, held by the Fifth Third investors (or 13,250,000 Class B units, in the aggregate, if the underwriters exercise in full their option to purchase additional shares), which we refer to as the Fifth Third exchange, prior to and in connection with the consummation of this offering. The shares of Class A common stock to be received by the Fifth Third investors are being offered pursuant to this prospectus. In connection with the Fifth Third exchange, we expect to record a liability of approximately $140 million during the quarter ending December 31, 2012 under the tax receivable agreement we entered into with the Fifth Third investors at the time of our initial public offering. The approximate liability under the tax receivable agreement assumes the underwriters exercise in full their option to purchase additional shares and is based on the closing share price indicated on the cover of this prospectus. The liability under the tax receivable agreement will not have an impact on our statements of income. The liability recorded is subject to change depending on the actual closing share price on the date of the exchange. See "Risk Factors Risks Related to Our Company and Our Organizational Structure We are party to four tax receivable agreements with our pre-initial public offering investors and the amounts we may be required to pay under these agreements could be significant" and "Management's Discussion and Analysis of Financial Condition and Results of Operations Contractual Obligations Tax Receivable Agreements." Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds to selling stockholders, before expenses $ $ One of the selling stockholders named in this prospectus has granted the underwriters an option, for a period of 30 days from the date of this prospectus, to purchase up to 1,200,000 additional shares of our Class A common stock to cover over-allotments, if any. We will not receive any proceeds from the sale of shares of Class A common stock to be offered by the selling stockholders. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of Class A common stock to investors on or about , 2012. J.P. Morgan Credit Suisse , 2012 Table of Contents The Offering Class A common stock offered by the selling stockholders 12,050,000 shares of Class A common stock (13,250,000 shares if the underwriters exercise in full their option to purchase additional shares). Class A common stock to be outstanding after this offering 140,630,746 shares of Class A common stock (141,830,746 shares if the underwriters exercise in full their option to purchase additional shares). Class B common stock to be outstanding after this offering 71,869,136 shares of Class B common stock (70,669,136 shares if the underwriters exercise in full their option to purchase additional shares). The Fifth Third investors hold one share of our Class B common stock for each Class B unit of Vantiv Holding that they hold. Option to purchase additional shares of Class A common stock The underwriters have an option to purchase up to a maximum of 1,200,000 additional shares of Class A common stock from one of the selling stockholders named in this prospectus. The underwriters can exercise this option at any time within 30 days from the date of this prospectus. Selling stockholders The Fifth Third investors currently own 18.5% of the aggregate voting power of Vantiv, Inc. and approximately 39.5% of the aggregate voting power and economic interests in Vantiv Holding. In connection with the separation transaction from Fifth Third Bank in 2009, Fifth Third Bank and its affiliates entered into various agreements with us that provide for, among other things, the provision of various business and operational services by Fifth Third Bank and its affiliates to us as well as rights to appoint members of the board of directors of Vantiv Holding and registration rights. We entered into new agreements or amended existing agreements with Fifth Third investors and paid certain expenses on behalf of the Fifth Third investors in connection with the reorganization transactions and the initial public offering. For more information regarding equity ownership and agreements with the selling stockholders, see "Certain Relationships and Related Person Transactions," "Principal and Selling Stockholders" and "Description of Capital Stock." Use of proceeds We will not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders. See "Use of Proceeds." Dividend policy We do not anticipate paying any dividends on our common stock in the foreseeable future. See "Dividend Policy." Voting rights Each share of Class A common stock entitles the holder to one vote in all matters. Table of Contents TABLE OF CONTENTS Page Summary 1
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+PROSPECTUS SUMMARY 
+
+4
+
+THE COMPANY
+
+4
+
+THE OFFERING
+
+4
+
+RISK FACTORS 
+
+5
+
+WHERE YOU CAN FIND MORE INFORMATION
+
+11
+
+CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS 
+
+11
+
+TAX CONSIDERATIONS 
+
+12
+
+USE OF PROCEEDS 
+
+12
+
+DETERMINATION OF OFFERING PRICE 
+
+12
+
+DILUTION 
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+12
+
+SELLING SHAREHOLDERS 
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+12
+
+PLAN OF DISTRIBUTION 
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+14
+
+MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS 
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+18
+
+DESCRIPTION OF SECURITIES 
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+19
+
+INTERESTS OF NAMED EXPERTS AND COUNSEL 
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+21
+
+LEGAL REPRESENTATION 
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+21
+
+EXPERTS 
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+21
+
+TRANSFER AGENT 
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+22
+
+DESCRIPTION OF BUSINESS 
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+22
+
+MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
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+CONDITION AND RESULTS OF OPERATIONS 
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+30
+
+REPORTS TO SECURITY HOLDERS
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+31
+
+DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS & CONTROL PERSONS 
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+31
+
+EXECUTIVE COMPENSATION 
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+33
+
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
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+34
+
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
+
+34
+
+SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
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+34
+
+WHERE YOU CAN FIND ADDITIONAL INFORMATION 
+
+34
+
+FINANCIAL STATEMENTS 
+
+36
+
+CONSOLIDATED BALANCE SHEETS FOR THE PERIODS ENDED OCTOBER 31, 2010 
+
+AND OCTOBER 31, 2011 (AUDITED) 
+
+ 
+
+38
+
+CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED 
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+OCTOBER 31, 2010 AND OCTOBER 31, 2011 (AUDITED)
+
+39
+
+CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 
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+OCTOBER 31, 2010 AND OCTOBER 31, 2011 (AUDITED)
+
+40
+
+CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY FOR THE 
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+YEAR ENDED OCTOBER 31, 2011 AND 2010 (AUDITED) 
+
+41
+
+FOOTNOTES TO FINANCIAL STATEMENTS
+
+42
+
+3
+
+GENERAL
+
+As used in this prospectus, references to "Gysan Holdings", "Gysan", "Company", "we", "our", "ours" and "us" refer to Gysan Holdings, Inc., a Nevada corporation, unless the context otherwise requires. In addition, any references to "financial statements" are to our financial statements contained herein, except as the context otherwise requires and any references to "fiscal year" refers to our fiscal year ending October 31. Unless otherwise indicated, the terms "Common Stock", "common stock" and "shares" refer to shares of our $.0001 par value, common stock.
+
+PROSPECTUS SUMMARY
+
+THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE DETAILED INFORMATION CONTAINED UNDER THE HEADING "RISK FACTORS", THE FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES TO THOSE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS.
+
+THE COMPANY
+
+Our principal executive offices are located at Unit 7, 833-1st Avenue N.W., Calgary, AB T2N 0A4. Our telephone number is (403) 229-2351. Gysan Holdings acquired 100 percent of the common stock of Gysan Enterprises, Ltd. on June 13, 2011. Gysan Holdings, Inc. now acts as the holding company for Gysan Enterprises, Ltd., and all the operations of the combined group are carried on in Gysan Enterprises, Ltd.
+
+Gysan Holdings is not a blank check company, and management has no intention at the current time to engage in a business combination.
+
+Gysan Enterprises Ltd., a wholly-owned subsidiary of the Company, began its operations in November, 2009 by providing support services to an auction company to establish a new flooring division. In 2010 Gysan Enterprises began its operations as a retail seller of floor covering, and it is now focused on selling and marketing various types of floor coverings, including, hardwood, engineered flooring. Our sales are made at the retail level to homeowners and at the wholesale level to business owners and custom builders located in Calgary, Alberta, Canada and the surrounding area. 
+
+CORPORATE BACKGROUND
+
+Gysan Holdings, Inc. ("Company") was incorporated in the State of Nevada on March 11, 2011.
+
+THE OFFERING
+
+ 
+
+Securities Being Offered 
+
+Up to 4,366,000 shares of common stock.
+
+Offering Price
+
+The selling shareholders will sell their shares at $.05 per share. This price was arbitrarily determined by our board of directors and it may not be indicative of the real value of a share of our common stock.
+
+Terms of the Offering
+
+The selling shareholders will determine when and how they will sell their common stock offered in this prospectus.
+
+Termination of the Offering 
+
+The offering will conclude when all of the 4,366,000 shares of common stock have been sold or we, in our sole discretion, decide to terminate the registration of the shares. We may decide to terminate the registration if it is no longer necessary due to the operation of the resale provisions of Rule 144 promulgated under the Securities Act of 1933. We also may terminate the offering for no reason whatsoever.
+
+Risk Factors 
+
+The securities offered hereby involve a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See "Risk Factors" beginning on page 5.
+
+ 
+ 
+ 
+ 
+
+ 
+ Earnings to Date 
+
+ For the year ended October 31, 2010 the Company had net income of $34,647 and for the year ended October 31, 2011, the Company nad a net loss of $42,213.
+
+ Thus, the Company's accumalated loss to date is $19,890. 
+
+ 
+
+ 
+ Common Stock Issued and Outstanding Before Offering 
+
+ 13,616,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by the selling shareholders.
+
+ 
+
+ 
+ Use of Proceeds 
+
+ We will not receive any proceeds from the sale of the common stock by the selling shareholders.
+
+ 
+
+4
+
+RISK FACTORS
+
+PLEASE CONSIDER THE FOLLOWING RISK FACTORS BEFORE DECIDING TO INVEST IN OUR COMMON STOCK
+
+This offering and any investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and all of the information contained in this prospectus before deciding whether or not to purchase our common stock. The risks and uncertainties described below are those that our management currently believes may significantly affect us. If any of the following risks actually occur, our business, financial condition and results of operations could be harmed and investors in our common stock could lose part or all of their investment in our shares. 
+
+WE DO NOT HAVE AN INDEPENDENT AUDIT OR COMPENSATION COMMITTEE, THE ABSENCE OF WHICH COULD LEAD TO CONFLICTS OF INTEREST OF OUR OFFICERS AND DIRECTORS AND WORK AS A DETRIMENT TO OUR SHAREHOLDERS
+
+We do not have an independent audit or compensation committee. The absence of an independent audit and compensation committee could lead to conflicts of interest of our officers and directors, which could work as a detriment to our shareholders.
+
+WE HAVE A VERY LIMITED OPERATING HISTORY AND THERE IS NO ASSURANCE THAT OUR FUTURE OPERATIONS WILL RESULT IN REVENUES OR PROFITS. IF WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE PROFITABLY, THEN WE MAY SUSPEND OR CEASE OUR OPERATIONS AND YOU COULD EVEN LOSE YOUR ENTIRE INVESTMENT IN OUR COMMON STOCK
+
+We were incorporated on March 11, 2011 and generated minimal revenues or profits through October 31, 2011. We also have very little operating history upon which an evaluation of our future success or failure can be made. The success of our future operations is dependent upon our ability to carry out our planned activities, fund our operations and compete effectively with other similar businesses. We cannot guarantee that we will ever be successful in generating revenues sufficient to cover our operating costs and overhead or achieve profitability. Our failure to achieve profitability may cause us to suspend or cease our operations.
+
+THERE MAY BE CONFLICTS OF INTEREST BETWEEN OUR MANAGEMENT AND OUR NON-MANAGEMENT STOCKHOLDERS
+
+Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. A conflict of interest may arise between our management's personal pecuniary interest and its fiduciary duty to our stockholders. Further, our management's own pecuniary interest may at some point compromise its fiduciary duty to our stockholders. In addition, our management is involved in other businesses and they may not devote their full attention to the business of the Company. 
+
+OUR OFFICERS HAVE NO EXPERIENCE IN OPERATING A COMPANY IN THE FLOOR COVERING SALES BUSINESS AND THIS COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS AND ON OUR ABILITY TO ATTAIN PROFITABILITY
+
+Our officers have no prior experience as officers of a company involved in the sale of floor covering. As a result, our chances of successfully implementing our business plan are reduced and this could have a material adverse impact on the Company s ability to operate profitably.
+
+5
+
+WE DEPEND HEAVILY ON OUR MANAGEMENT TEAM AND CONSULTANTS AND THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS COULD SIGNIFICANTLY WEAKEN OUR MANAGEMENT EXPERTISE AND ABILITY TO RUN OUR BUSINESS
+
+Our business strategy and success is dependent on the skills and knowledge of our management team and consultants. As of the date of this prospectus, Grace Weisgerber is our President and Chief Executive Officer, and Winnie W.L. Fung is our Treasurer and Secretary. Both Ms. Weisgerber and Ms. Fung are directors. We have no other officers or directors and rely on third party consultants to assist with management and, therefore, have little backup capability for their activities. The loss of the services of Ms. Weisgerber or Ms. Fung could weaken significantly our management expertise and our ability to efficiently run our business. We do not maintain key man life insurance policies on the life of Ms. Weisgerber or Ms. Fung.
+
+OUR COMMON STOCK IS NOT CURRENTLY TRADED ON ANY STOCK EXCHANGE OR QUOTED ON THE OVER-THE-COUNTER BULLETIN BOARD OR THE PINK SHEETS. WHEN AND IF TRADED, OUR COMMON STOCK WILL LIKELY BE CONSIDERED TO BE A "PENNY STOCK" AND, AS SUCH, THE MARKET FOR OUR COMMON STOCK MAY BE LIMITED BY CERTAIN SEC RULES APPLICABLE TO PENNY STOCKS
+
+As long as our common stock trades below $5.00 per share, our shares of common stock are likely to be subject to certain "penny stock" rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally, an institution with assets in excess of $5,000,000 or an individual with a net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices of penny stocks, disclosure of the compensation to the brokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations may make it more difficult for brokers to sell shares of our common stock and limit the liquidity of our shares.
+
+TRADING IN OUR SECURITIES COULD BE SUBJECT TO EXTREME PRICE FLUCTUATIONS THAT COULD ADVERSELY AFFECT YOUR INVESTMENT
+
+Historically speaking, the market prices for securities of small publicly traded companies have been highly volatile. Publicized events and announcements may have a significant impact on the market price of our common stock.
+
+In addition, the stock market from time to time experiences extreme price and volume fluctuations that particularly affect the market prices for small publicly traded companies and which are often unrelated to the operating performance of the affected companies.
+
+Following the effectiveness of this offering we plan to seek the listing of our common stock on the OTC Bulletin Board. However, we cannot assure you that following such a transaction, we will be able to meet the initial listing standards of the OTC Bulletin Board or any other stock exchange, or that we will be able to maintain a listing of our common stock on an exchange. In addition, we would be subject to an SEC rule that, if we failed to meet the criteria set forth in such rule, imposes various practice requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination.
+
+SUBSTANTIAL SALES OF OUR COMMON STOCK MAY IMPACT THE MARKET PRICE OF OUR COMMON STOCK
+
+Future sales of substantial amounts of our common stock, including shares that we may issue upon exercise of options and warrants, and the resale of shares by investors who may have registration rights, could adversely affect the market price of our common stock. Furthermore, if we raise additional funds through the issuance of common stock or securities convertible into our common stock, the percentage ownership of our shareholders will be reduced and the price of our common stock may fall.
+
+6
+
+WE DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE
+
+We will use any earnings generated from our operations to finance our business and we do not expect to pay any cash dividends to our shareholders in the foreseeable future.
+
+ISSUING PREFERRED STOCK WITH RIGHTS SENIOR TO THOSE OF OUR COMMON STOCK COULD ADVERSELY AFFECT HOLDERS OF COMMON STOCK
+
+Our charter documents grant our board of directors the authority to issue various series of preferred stock without a vote or action by our shareholders. Our board also has the authority to determine the terms of preferred stock, including price, preferences and voting rights. The rights granted to holders of preferred stock may adversely affect the rights of holders of our common stock. For example, a series of preferred stock may be granted the right to receive a liquidation preference that would reduce the amount available for distribution to holders of our common stock. In addition, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock. As a result, common shareholders could be prevented from participating in transactions that would offer an optimal price for their shares.
+
+WE WILL BE SUBJECT TO THE PERIODIC REPORTING REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934 WHICH WILL REQUIRE US TO INCUR AUDIT FEES AND LEGAL FEES IN CONNECTION WITH THE PREPARATION OF SUCH REPORTS. THESE COSTS COULD REDUCE OR ELIMINATE OUR ABILITY TO EARN A PROFIT
+
+Following the effective date of the registration statement, we will be required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. In order to comply with these regulations, our independent registered public accounting firm must review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel has to review and assist in the preparation of such reports. The fees charged by these professionals for their services cannot be accurately predicted at this time, because of factors which are unavailable to us such as the number and type of transactions that we may engage in and the complexity of our reports. These issues cannot be determined at this time and they will have a major effect on the amount of time to be spent by our auditors and attorneys and the fees they charge. The incurrence of such fees will obviously be an expense to our future operations and could have a negative effect on our ability to meet our overhead requirements and earn a profit. 
+
+SHAREHOLDERS MAY BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING AND SATISFY OBLIGATIONS THROUGH THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK
+
+We have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of our authorized, but unissued, shares of our common stock. Future issuances of shares of our common stock will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value and that dilution may be material.
+
+OUR CERTIFICATE OF INCORPORATION PROVIDES FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY, WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFITS OF OFFICERS AND/OR DIRECTORS
+
+Our certificate of incorporation and applicable Nevada laws provide for the indemnification of our directors, officers, employees and agents under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees or agents, upon such person's written promise to repay us, therefore, even if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we may be unable to recoup.
+
+We have been advised that, in the opinion of the Securities and Exchange Commission, indemnification for liabilities arising under federal securities laws is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question of whether indemnification by us is against public policy as expressed by the Securities and Exchange Commission and will be governed by the final adjudication of such issue. The legal process relating to this matter, if it were to occur, is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market price for our shares, if such a market ever develops.
+
+7
+
+ALL 4,366,000 SHARES OF OUR COMMON STOCK BEING REGISTERED IN THIS OFFERING MAY BE SOLD BY SELLING SHAREHOLDERS SUBSEQUENT TO THE EFFECTIVENESS OF OUR REGISTRATION STATEMENT, OF WHICH THIS PROSPECTUS IS A PART. A SIGNIFICANT VOLUME OF SALES OF THESE SHARES OVER A SHORT OR CONCENTRATED PERIOD OF TIME IS LIKELY TO DEPRESS THE MARKET FOR AND PRICE OF OUR SHARES IN ANY MARKET THAT MAY DEVELOP
+
+All 4,366,000 shares of our common stock held by the selling shareholders that are being registered in this offering may be sold subsequent to the date of this prospectus, either at once or over a period of time. See also "Selling Shareholders" and "Plan of Distribution" elsewhere in this prospectus. The ability to sell these shares of common stock and/or the sale thereof reduces the likelihood of the establishment and/or maintenance of an orderly trading market for our shares at any time in the near future.
+
+THERE ARE RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS
+
+This prospectus contains certain forward looking statements regarding management's plans and objectives for future operations including plans and objectives relating to our planned marketing efforts and future economic performance. The forward looking statements and associated risks set forth in this prospectus include or relate to, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our ability to obtain and retain sufficient capital for future operations and (e) our anticipated needs for working capital. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Description of Business," in this prospectus, as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this prospectus, generally. In light of these risks and uncertainties, there can be no assurance that the forward looking statements contained in this prospectus will, in fact, occur.
+
+WE WILL NEED ADDITIONAL CAPITAL FINANCING IN THE FUTURE
+
+We have experienced losses from past operations. As a result, it is likely that we will be required to seek additional financing in the future to respond to increased expenses or shortfalls in anticipated revenues, respond to competitive pressures, develop new or enhanced products, or take advantage of unanticipated acquisition opportunities. We may not be able to find such additional financing on reasonable terms, or at all. If we are unable to obtain additional financing when needed, we could be required to modify our business plan in accordance with the extent of available financing.
+
+RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS
+
+As part of our business strategy, we may make acquisitions of, or investments in, companies, businesses, products or technologies. Any such future acquisitions would be accompanied by the risks commonly encountered in such acquisitions. Those risks include, among other things: 
+
+- the difficulty of assimilating the operations and personnel of the acquired companies, 
+
+- the potential disruption of our business or business plan, 
+
+- the diversion of resources from our existing businesses, and products, 
+
+- the inability of management to integrate acquired businesses or assets into our business plan, and
+
+- additional expense associated with acquisitions.
+
+We may not be successful in overcoming these risks or any other problems encountered with such acquisitions, and our inability to overcome such risks could have a material adverse effect on our business, financial condition and results of operations. 
+
+8
+
+INABILITY TO ATTRACT MARKET MAKERS
+
+There is currently no public trading market for our Common Stock. The development of a public trading market depends on not only the existence of willing buyers and sellers, but also on market makers. Following the completion of this offering it is contemplated that certain broker-dealers may become market makers for our Common Stock. Under these circumstances, the market bid and asked prices for our Common Stock may be significantly influenced by decisions of the market makers to buy or sell the Common Stock for their own account, which may be critical for the establishment and maintenance of a liquid public market in the Common Stock. Market makers are not required to maintain a continuous two-sided market and are free to withdraw firm quotations at any time. We currently have no market makers. We may not be able to obtain any market makers in the future, and the failure to obtain such market makers could have an adverse impact on the market price of the shares. 
+
+WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING BUSINESS OPERATIONS
+
+We have a limited history of revenues from operations and limited tangible assets, and we must be considered in the development stage. There can be no assurance that we will operate in a profitable manner. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.
+
+OUR DIRECTORS AND OFFICERS ARE RESIDENTS OF COUNTRIES OTHER THAN THE UNITED STATES AND INVESTORS MAY HAVE DIFFICULTY ENFORCING ANY JUDGMENTS AGAINST SUCH PERSONS WITHIN THE UNITED STATES
+
+Our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
+
+OUR OFFICERS AND DIRECTORS HAVE OTHER TIME COMMITMENTS THAT WILL PREVENT THEM FROM DEVOTING FULL-TIME TO OUR OPERATIONS, WHICH MAY AFFECT OUR OPERATIONS
+
+Our officers and directors anticipate that they will devote only about 50% of their working time to our operation and management, and therefore, the implementation of our business plans may be impeded. Our officers and directors have other obligations and time commitments, which may slow our operations and impact our financial results. Additionally, we may not be able to hire additional qualified personnel to replace our officers and directors in a timely manner. If our officers or directors should be unable to fulfill their duties, we may not be able to implement our business plan in a timely manner or at all.
+
+FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) SALES PRACTICE REQUIREMENTS MAY LIMIT YOUR ABILITY TO BUY AND SELL OUR COMMON STOCK, WHICH COULD DEPRESS THE PRICE OF OUR SHARES
+
+FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
+
+ WE HAVE NO LONG TERM CONTRACTS WITH OUR CLIENTS 
+
+ We place the orders for our products through short term contracts, consisting of purchase orders. We have no long term contracts with our suppliers, and therefore we are exposed to the risk that we may be unable to obtain products we seek in a timely manner or at all. 
+
+ 
+
+9
+
+OUR SECURITY HOLDERS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR SECURITIES DUE TO STATE BLUE SKY LAWS
+
+Each state has its own securities laws, often called blue sky laws, which (i) limit sales of securities to a state s residents unless the securities are registered in that state or qualify for an exemption from such registration, and (ii) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or the transaction must be exempt from registration. If any broker is involved in the sale that broker must be registered in the state. 
+
+We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as the market-makers for our common stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities in a particular state. You should therefore consider the resale market for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.
+
+INVESTING IN THE COMPANY IS A HIGHLY SPECULATIVE INVESTMENT AND COULD RESULT IN THE LOSS OF YOUR ENTIRE INVESTMENT
+
+A purchase of the offered shares is significantly speculative and involves significant risks. The offered shares should not be purchased by any person who cannot afford the loss of his or her entire purchase price. The business objectives of the Company are also speculative, and we may be unable to satisfy those objectives. The stockholders of the Company may be unable to realize a substantial return on their purchase of the offered shares, or any return whatsoever, and may lose their entire investment in the Company. For this reason, each prospective purchaser of the offered shares should read this prospectus and all of its exhibits carefully and consult with their attorney, business advisor and/or investment advisor.
+
+AS A PUBLIC COMPANY, WE WILL INCUR SUBSTANTIAL EXPENSES
+
+Upon the effectiveness of the registration of our shares we will become subject to the information and reporting requirements of U.S. securities laws. The U.S. securities laws require, among other things, review, audit, and public reporting of our financial results, business activities, and other matters. Recent SEC regulation, including regulation enacted as a result of the Sarbanes-Oxley Act of 2002, has also substantially increased the accounting, legal, and other costs related to becoming and remaining an SEC reporting company. If we do not have current information about our company available to market makers, they will not be able to trade our stock. As a public company, the costs of preparing and filing annual and quarterly reports, and other information with the SEC and furnishing audited reports to stockholders, will cause our expenses to be higher than they would be if we were privately-held. In addition, we are incurring substantial expenses in connection with the preparation of this Registration Statement. These increased costs may be material and may include the hiring of additional advisors and professionals. Our failure to comply with the federal securities laws could result in private or governmental legal action against us and/or our officers and directors, which could have a detrimental effect on our business, on the value of our stock and on the ability of shareholders to resell the stock. 
+
+IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO SELL THEIR SHARES
+
+There is currently no market for our common stock and no market may develop. We currently plan to apply for listing of our common stock on the OTC Bulletin Board upon the effectiveness of the registration statement, of which this prospectus forms a part. However, our shares may not be traded on the bulletin board or, if traded, a public market may not materialize. If no market is ever developed for our shares, it will be difficult for shareholders to sell their stock. In such a case, shareholders may find that they are unable to achieve benefits from their investment. 
+
+YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. NO ONE HAS BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION
+
+THE SECURITIES ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED.
+
+YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF SUCH DOCUMENTS.
+
+ 
+
+10
+
+WHERE YOU CAN FIND MORE INFORMATION
+
+This prospectus is part of a registration statement on
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001534298_zenovia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001534298_zenovia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..49ac69f99e5d98024aa68754ce821c84fb96ec52
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001534298_zenovia_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 4
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001536544_quicksilve_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001536544_quicksilve_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..106caf088a8242745cb6f1c810610f4e2a3833a8
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001536544_quicksilve_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including Risk factors beginning on page 24 and the historical carve out financial statements and the notes to those financial statements. The information presented in this prospectus assumes (i) an initial public offering price of $ per common unit (the midpoint of the price range set forth on the cover of this prospectus) and (ii) that the underwriters do not exercise their option to purchase additional common units, unless otherwise indicated. We include a glossary of some of the oil and gas industry terms used in this prospectus in Appendix B. The proved reserve information for the Partnership Properties as of December 31, 2011, 2010, 2009 and 2008 contained in this prospectus is based on reserve reports relating to our assets in the Barnett Shale prepared by the independent petroleum engineers of Schlumberger Data & Consulting Services, or Schlumberger, summaries of which are included in this prospectus as Appendix C. We refer to these reports as our reserve report. The proved reserve information for Quicksilver s U.S. oil and gas properties as of December 31, 2011 contained in this prospectus is based on a reserve report relating to those properties prepared by Schlumberger. Quicksilver Production Partners LP
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001536897_contempora_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001536897_contempora_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4507f04c2a2e74f428a26752fcb5d23962fb0850
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001536897_contempora_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the risks described under Risk Factors" beginning on page 5. All references to we," us," our," Contemporary Signed Books, Inc.," Company" or similar terms used in this prospectus refer to Contemporary Signed Books Inc. Unless otherwise indicated, the term fiscal year" refers to our fiscal year ending August 31. Unless otherwise indicated, the term common stock" refers to shares of our common stock. Corporate Background and Business Overview We were incorporated in the state of Delaware on June 10, 2010. Our office is currently located at 600 Lexington Avenue, 10th Floor, New York, NY 10022. Our telephone number is (212) 319-0503. Our primary website is www.contemporarysignedbooks.com and the information that is or will be contained on our website does not form a part of the registration statement of which this prospectus is a part. We are a development stage company that has had limited operations. We have begun to generate minimal revenues from the sale of autographed books published in 2010. As of November 30, 2011, we had total assets of $25,475 and total liabilities of $7,550. From June 10, 2010 (inception) to November 30, 2011, we sustained cumulative losses of $13,575. We focus on contemporary fiction and non-fiction books, primarily printed in the United States and only autographed first editions. We have purchased 44 autographed books published in 2010 and 15 autographed books published in 2011. Currently only those books published in 2010 are offered for sale on our website and we have sold six (6) books as of the date of this prospectus. We will primarily derive revenue from the sale of our books. We currently do not have sufficient capital to enable us to continue to execute our business plan for the next twelve (12) months. We can offer no assurance that we will be successful in offering our products. In addition, any number of factors may impact our ability to further develop and expand our products, including our ability to obtain financing if and when necessary; market acceptance of our products; and our ability to gain a sufficient market share. Our business will fail if we cannot successfully implement our business plan or if we cannot develop or successfully market our products. Going Concern Consideration The report of our independent registered accounting firm expresses concern about our ability to continue as a going concern based on the absence of an established source of revenue, recurring losses from operations, and our need for additional financing in order to fund our operations in 2012. Please see footnote 6 to our financial statements for additional information. Summary Financial Information The following summary financial data are derived from our unaudited financial statements for the three months ended November 30, 2011 and 2010 and for the period from June 10, 2010 (Inception) to November 30, 2011, and our audited financial statements for the year ended August 31, 2011 and 2010. The information below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations," our unaudited interim period financial statements and audited financial statements and the related notes thereto, each of which is included in this prospectus. For the Three Months Ended For the November 30, Year Ended STATEMENT OF OPERATIONS 2011 August 31, 2011 Revenues $ 0 $ 495 Operating Expenses $ 1,114 $ 18,884 Net income (loss) $ 8,886 $ (18,511 ) As of November 30, BALANCE SHEET DATA 2011 Total Assets $ 25,475 Total Liabilities $ 7,550 Stockholders Equity $ 17,925 The information in this prospectus is not complete and may be amended. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED APRIL 3, 2012 PRELIMINARY PROSPECTUS CONTEMPORARY SIGNED BOOKS, INC. 5,200,000 SHARES OF COMMON STOCK OFFERING PRICE OF $0.05 PER SHARE This prospectus relates to the sale of up to 2,200,000 shares of our common stock which may be offered by the selling stockholders identified in this prospectus on page 16 at a fixed price of $0.05 per share until our shares are quoted on the Over-the-Counter Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. All such shares being sold by the selling stockholders are presently issued and outstanding. The selling stockholders may sell up to 2,200,000 shares during the ninety (90) day period beginning after the date of this prospectus, which period maybe extended by the Company for up to an additional ninety (90) day period. This prospectus also relates to the sale of up to 3,000,000 shares of our common stock that we are offering on a best efforts basis for up to ninety (90) days following the date of this prospectus at a fixed price of $0.05, which may be extended by the company for up to an additional ninety (90) day period. If all shares being offered by the company are sold, we will receive an aggregate of $150,000, less approximately $20,445 in expenses. In addition to cash payment, we may accept payment for the shares in the form of promissory notes. The terms of such promissory notes have not been determined as of the date hereof and is subject to negotiations between the Company and a prospective purchaser. However, we intend that the price for the shares purchased through promissory notes will also be $0.05 per share, that the promissory notes will be limited to 25% of the aggregate purchase proceeds, and that the duration of the promissory notes will not exceed six months. The promissory notes will bear no interest. No public market currently exists for the shares being offered. We are offering the 3,000,000 shares of our common stock on a self-underwritten basis and there will be no underwriter involved in the sale of the shares. We intend to offer the shares through the efforts of our officers and directors and it is intended that such officers and directors will not be paid any commission for such sales. The Company s officers and directors may be deemed underwriters" within the meaning of the Securities Act of 1933, as amended, and any commissions and discounts given to any such officers and directors, if any, may be regarded as underwriting commissions or discounts under the Securities Act of 1933. We will pay all expenses incurred in this offering (other than transfer taxes), and we will not receive any proceeds from sales of shares of our common stock by the selling stockholders. Underwriting public offering discount and price commissions Proceeds to us* Per share of common stock $ 0.05 $ 0.00 0.0432 Total amount of common stock $ 150,000 $ 0.00 $ 129,555 *reflects offering expenses of an aggregate of $20,445 Our business is subject to many risks and an investment in our common stock will also involve a high degree of risk. You should carefully consider the factors described under the heading Risk Factors" beginning on page 5 before investing in our common stock. There is currently no public market for our common stock and we have not applied for listing or quotation on any public market. We have arbitrarily determined the offering price of $ 0.05 per share offered hereby. The offering price bears no relationship to our assets, book value, earnings or any other customary investment criteria. We intend to seek a market maker to file an application with the Financial Industry Regulatory Authority (FINRA") to have our common stock quoted on the Over-the-Counter Bulletin Board. We currently have no market maker who is willing to list quotations for our stock. There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained. Summary of the Offering Number of shares outstanding before the offering: 3,150,000 Shares of common stock being offered by 31 selling stockholders: 2,200,000 (1) Shares of common stock being offered on a best efforts basis on behalf of the Company: 3,000,000 Offering price: $ 0.05 per share of common stock. Number of shares outstanding after the offering, if all the shares are sold: 6,150,000 Offering Period The shares are being offered for a period of up to ninety (90) days following the date of this prospectus at a fixed price of $0.05, which period may be extended by the company for up to an additional ninety (90) day period. Market for the common stock: There is no public market for our common stock. We intend to seek a market maker to file an application on our behalf to have our common stock quoted on the OTC Bulletin Board. In order for such applicable to be accepted, we will have to satisfy certain criteria in order for our common stock to be quoted on the OTC Bulletin Board. There can be no assurance that our common stock will ever be quoted on the OTC Bulletin Board or that any market for our common stock will develop. We currently have no market maker that is willing to list quotations for our common stock. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Use of Proceeds: We will not receive any proceeds from the sale of the common stock by the selling stockholders pursuant to this prospectus. The selling stockholders named herein will receive the proceeds from the sale of their shares of our common stock in this offering. Please see Selling Stockholders" beginning on page 16. We are offering the 3,000,000 shares of common stock on a best efforts basis at a fixed price of $0.05 per share, and accordingly we would receive gross proceeds of up to $150,000 assuming that all 3,000,000 shares are sold. In addition to cash payment, we may accept payment for the shares in the form of promissory notes. The terms of such promissory notes have not been determined as of the date hereof and is subject to negotiations between the Company and a prospective purchaser. However, we intend that the price for the shares purchased through promissory notes will also be $0.05 per share, that the promissory notes will be limited to 25% of the aggregate purchase proceeds, and that the duration of the promissory notes will not exceed six months. The promissory notes will bear no interest. We intend to use the net proceeds received from the sale of the 3,000,000 shares of common stock pursuant to the best efforts offering towards the execution of our business plan, which includes marketing and advertising of our business, website enhancements, purchase of additional contemporary signed books, and hiring of employees. Any remaining proceeds will be used for working capital and general corporate purposes. There can be no assurance that we will sell any of such shares and accordingly we may receive no proceeds from the offering. Please see Use of Proceeds" beginning on page 13. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. No underwriter or other person has been engaged to facilitate the sale of shares of common stock in this offering. You should rely only on the information contained in this prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this offering, Contemporary Signed Books, Inc. or the shares of our common stock offered hereby that is different from the information included in this prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is April __, 2012
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. To understand this offering fully, you should read the entire prospectus carefully, including the risk factors and the financial statements and notes to those statements. Unless otherwise indicated, all information in this prospectus assumes (1) no exercise of the underwriters over-allotment option and (2) the termination of the net profits interest on December 31, 2021. Whiting USA Trust II was formed in December 2011 by Whiting Petroleum Corporation to own a term net profits interest in certain long-lived, predominantly producing properties located primarily in the Rocky Mountains, Permian Basin, Gulf Coast and Mid-Continent regions of the United States. The net profits interest will entitle the trust to receive 90% of the net proceeds (calculated as described below) from Whiting s interests in the underlying properties after the effective date of the conveyance of the net profits interest to the trust. The trust will make quarterly cash distributions of substantially all of its quarterly cash receipts of net proceeds attributable to the trust, after deduction of fees and expenses for administration of the trust, to holders of its trust units during the term of the net profits interest. Please read Computation of net proceeds beginning on page 73. The net profits interest will terminate on the later to occur of (1) December 31, 2021, or (2) the time when 11.79 MMBOE have been produced from the underlying properties and sold (which is the equivalent of 10.61 MMBOE in respect of the trust s right to receive 90% of the net proceeds from such reserves pursuant to the net profits interest), subject to certain specified exceptions. Please see Description of the trust agreement Termination of the trust; sale of the net profits interest on page 80. As of December 31, 2011, the estimated proved reserves attributable to the underlying properties for the full economic life of the underlying properties, as estimated in the reserve report, were 18.28 MMBOE with a pre-tax PV10% value of $408.5 million. For an explanation of pre-tax PV10% value and a comparison of pre-tax PV10% value to the standardized measure of oil and gas, please read Major producing areas beginning on page 3. Based on the reserve report, the net profits interest would entitle the trust to receive net proceeds from the sale of production of an estimated 10.61 MMBOE of proved reserves during the term of the net profits interest, calculated as 90% of the proved reserves attributable to the underlying properties expected to be produced during the term of the net profits interest. Based on the reserve report, the total estimated proved reserves attributable to the net profits interest had a pre-tax PV10% value of $323.6 million as of December 31, 2011. The exact rate of production attributable to the underlying properties cannot be predicted. However, because the term of the trust continues until the later of December 31, 2021, or the time when the terminal production amount has been produced and sold, trust unitholders will have the right to participate in additional proceeds attributable to the underlying properties in excess of 10.61 MMBOE in the event such amount is produced and sold prior to December 31, 2021. As of December 31, 2011 and assuming its continued ownership of the underlying properties, the total estimated proved reserves attributable to Whiting s remaining interest in the underlying properties at the termination of the net profits interest, as estimated in the reserve report, are expected to be 6.49 MMBOE, or approximately 35.5% of total estimated proved reserves attributable to the underlying properties. The underlying properties include interests in 1,300 gross (390.3 net) producing wells located in 49 predominantly mature fields with established production profiles in 10 states. As of December 31, 2011, approximately 96.4% of estimated proved reserves attributable to the underlying properties during the estimated term of the net profits interest were classified as proved developed producing reserves, 2.3% were classified as proved developed non-producing reserves and 1.3% were classified as proved undeveloped reserves. For the three months ended December 31, 2011, the average daily net production from the underlying properties was approximately 4,988 BOE/d (or 4,489 BOE/d attributable to the net profits interest) and was comprised of approximately 72% oil, 25% natural gas and 3% natural gas liquids. Based on the reserve report, production attributable to the underlying properties is expected to decline at an average year-over-year rate of approximately 8.4% between 2012 and 2021, assuming no additional development drilling or other development expenditures are made on the underlying properties after 2014. Whiting operates approximately 59% and 56% of the estimated proved reserve volumes and pre-tax PV10% value, respectively, of these properties based on the reserve report. Table of Contents EXPLANATORY NOTE This Amendment No. 3 to the Registration Statement on Forms S-1 and S-3 (Registration Nos. 333-178586 and 333-178586-01) (the Registration Statement ) of Whiting USA Trust II and Whiting Petroleum Corporation is being filed solely to include pages 104 through 110, which contained a portion of the Underwriting section and all of the Legal Matters , Experts , Where You Can Find More Information and Glossary of Certain Definitions sections. These pages were inadvertently omitted from Amendment No. 2 to the Registration Statement due to a printer error. Table of Contents Whiting believes that its retained interest in the underlying properties, which entitles it to 10% of the net proceeds from the sale of production attributable to the underlying properties during the term of the net profits interest and all of the net proceeds thereafter, together with its ownership of trust units, if any, will provide incentive for it to operate (or cause to be operated) the underlying properties in an efficient and cost-effective manner. In addition, Whiting has agreed to operate the properties for which it is the operator as a reasonably prudent operator in the same manner that it would operate if these properties were not burdened by the net profits interest. Furthermore, for those properties that it is not the operator, Whiting has agreed to use commercially reasonable efforts to cause the operator to operate the property in the same manner; however, Whiting s ability to cause other operators to take certain actions is limited. Please see Risk factors Whiting has limited control over activities on the underlying properties that Whiting does not operate, which could reduce production from the underlying properties, increase capital expenditures and reduce cash available for distribution to trust unitholders beginning on page 22. The trust will make quarterly cash distributions of substantially all of its quarterly cash receipts of net proceeds attributable to the trust, after deduction of fees and expenses for the administration of the trust, to holders of its trust units during the term of the net profits interest. The first quarterly distribution is expected to be made on or prior to May 30, 2012 to trust unitholders owning trust units on May 20, 2012. The trust s first quarterly distribution will consist of an amount in cash paid by Whiting equal to the amount that would have been payable to the trust had the net profits interest been in effect during the period from January 1, 2012 through the day prior to close of this offering plus the amount payable under the net profits interest for the period from the day of closing of the offering through March 31, 2012, less any general and administrative expenses and reserves of the trust. Because payments to the trust will be generated by depleting assets and the trust has a finite life with the production from the underlying properties diminishing over time, a portion of each distribution will represent a return of your original investment. The gross proceeds from the underlying properties used to calculate the net profits interest will fluctuate and will be based on prices realized for oil, natural gas and natural gas liquids attributable to the underlying properties for each calendar quarter during the term of the net profits interest and calculated on an aggregate basis for all these properties. In calculating the net proceeds to be attributed to the trust, Whiting will deduct from the gross proceeds from oil, natural gas and natural gas liquids sales all production and development costs and amounts that may be reserved for future development, maintenance or operating expenses (which reserve amounts may not exceed $2.0 million at any time), all calculated on an aggregate basis for all of these properties. The production and development costs will be reduced by hedge payments received by Whiting, if any, under the hedge contracts described below and other non-production revenue. If at any time production and development costs should exceed gross proceeds, neither the trust nor the trust unitholders would be liable for the excess costs; the trust, however, would not receive any net proceeds until future net proceeds exceed the total of those excess costs, plus interest at the prevailing money market rate. Whiting has entered into hedge contracts, which are structured as costless collar arrangements, to hedge approximately 50% of the anticipated oil production from the estimated proved reserves attributable to the underlying properties in the reserve report for the period from April 1, 2012 through December 31, 2014. The hedge contracts provide a fixed floor price of $80.00 and a fixed ceiling price of $122.50 for this oil production during this period. During the term of the hedge contracts, Whiting expects these contracts will reduce the oil price-related risks inherent in holding interests in oil properties, although they will also limit the potential for upside during the hedged period if oil prices increase. Trust unitholders will be exposed to fluctuations in prices of natural gas and natural gas liquids throughout the term of the trust; and after the hedge contracts terminate on December 31, 2014, trust unitholders exposure to fluctuations in oil prices will increase. Because the trust is intended to qualify as a grantor trust for U.S. federal income tax purposes, it is generally prohibited from varying or reinvesting its assets. Permitting Whiting to enter into additional hedge arrangements after the closing of this offering relating to production from the underlying properties could be treated as the trust constructively Table of Contents The information in this preliminary prospectus is not complete and may be changed. Whiting may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion dated March 13, 2012 PRELIMINARY PROSPECTUS Whiting USA Trust II 16,000,000 Trust Units This is an initial public offering of units of beneficial interest in Whiting USA Trust II. Whiting Petroleum Corporation has formed the trust and, immediately prior to the closing of this offering, will contribute a term net profits interest in oil and natural gas properties to the trust in exchange for 18,400,000 trust units. Whiting is offering all of the trust units to be sold in this offering and will receive all proceeds from the offering. Whiting is an independent oil and gas company engaged in acquisition, development, exploitation, production and exploration activities. Whiting s common stock is traded on the New York Stock Exchange under the symbol WLL. There is no current public market for the trust units. Whiting expects that the public offering price will be between $19.00 and $21.00. The trust units have been approved for listing on the New York Stock Exchange under the symbol WHZ, subject to official notice of issuance. The trust units. Trust units are units of beneficial interest in the trust and represent undivided interests in the trust. They do not represent any interest in Whiting. The trust. The trust will own the net profits interest, which represents the right to receive 90% of the net proceeds from the sale of production from oil and gas properties located in the Rocky Mountains, Permian Basin, Gulf Coast and Mid-Continent regions of the United States held by Whiting. The net profits interest will terminate on the later to occur of (1) December 31, 2021, or (2) the time when 11.79 MMBOE have been produced from such underlying properties and sold (which is the equivalent to 10.61 MMBOE attributable to the net profits interest), and the trust will soon thereafter wind up its affairs and terminate. The trust unitholders. As a trust unitholder, you will receive quarterly distributions of cash from the proceeds that the trust receives from Whiting pursuant to the net profits interest. The trust s ability to pay such quarterly cash distributions will depend on its receipt of net proceeds attributable to the net profits interest, which will depend upon, among other things, production quantities, sale prices of oil, natural gas and natural gas liquids, costs to produce and develop the oil, natural gas and natural gas liquids and the amount and timing of trust administrative expenses. Investing in the trust units involves a high degree of risk. Before buying any trust units, you should read the discussion of material risks of investing in the trust units in Risk factors beginning on page 18 of this prospectus. These risks include the following: The amounts of cash distributions by the trust are subject to fluctuation as a result of changes in oil, natural gas and natural gas liquids prices. Estimates of future cash distributions to unitholders are based on assumptions that are inherently subjective. Actual reserves and future production may be less than current estimates, which could reduce cash distributions by the trust and the value of the trust units. Risks associated with the production, gathering, transportation and sale of oil, natural gas and natural gas liquids could adversely affect cash distributions by the trust. The processes of drilling and completing wells are high risk activities. The trust and the trust unitholders will have no voting or managerial rights with respect to the underlying properties. As a result, trust unitholders will have no ability to influence the operation of the underlying properties. Whiting has limited control over activities on the underlying properties that Whiting does not operate, which could reduce production from the underlying properties, increase capital expenditures and reduce cash available for distribution to trust unitholders. The reserves attributable to the underlying properties are depleting assets and production from those reserves will diminish over time. The trust is precluded from acquiring other oil and natural gas properties or net profits interests to replace the depleting assets and production. The amount of cash available for distribution by the trust will be reduced by the amount of any costs and expenses related to the underlying properties and other costs and expenses incurred by the trust. There has been no public market for the trust units and no independent appraisal of the value of the net profits interest has been performed. The market price for the trust units may not reflect the value of the net profits interest held by the trust and, in addition, over time will decline to zero at termination of the trust. Conflicts of interest could arise between Whiting and the trust unitholders. Trust unitholders have limited ability to enforce provisions of the net profits interest. The trust has not obtained a ruling from the IRS regarding the tax treatment of ownership of the trust units. If the IRS were to determine that the trust is not a grantor trust for federal income tax purposes, or that the net profits interest is not properly treated as a production payment (and thus could fail to qualify as a debt instrument) for federal income tax purposes, the trust unitholders may receive different and potentially less advantageous tax treatment than that described in this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Trust Unit Total Initial public offering price $ $ Underwriting discounts(1) $ $ Proceeds, before expenses, to Whiting(1) $ $ (1) Excludes a structuring fee equal to 0.50% of the gross proceeds of this offering, or approximately $ million, payable to Raymond James & Associates, Inc. for evaluation, analysis and structuring of the trust. Please read Underwriting beginning on page 101 of this prospectus. The underwriters may also exercise their option to purchase from Whiting up to 2,400,000 additional trust units to cover over-allotments, if any, at the initial public offering price, less the underwriting discounts, within 30 days of the date of this prospectus. The underwriters are offering the trust units as set forth under Underwriting beginning on page 101 of this prospectus. Delivery of the trust units will be made on or about , 2012. RAYMOND JAMES MORGAN STANLEY J.P. MORGAN BAIRD OPPENHEIMER & CO. RBC CAPITAL MARKETS STIFEL NICOLAUS WEISEL MORGAN KEEGAN WUNDERLICH SECURITIES The date of this prospectus is , 2012 Table of Contents retaining the right to vary its assets. Accordingly, under the terms of the conveyance, Whiting will be prohibited from entering into hedging arrangements covering the production from the underlying properties following the completion of this offering. MAJOR PRODUCING AREAS The following table summarizes the estimated proved reserves by region attributable to the net profits interest according to the reserve report, the corresponding pre-tax PV10% value as of December 31, 2011 and the average daily net production attributable to the net profits interest for three months ended December 31, 2011. Region Reserve Category(1) Number of Fields Estimated Proved Reserves as of December 31, 2011 Three Months Ended December 31, 2011 Average Daily Net Production (BOE/d) Oil(2) (MBbl) Natural Gas (MMcf) Total (MBOE) (3)(4) % Oil % of Total Reserves Pre-Tax PV10% Value (3)(5) (In Millions) % of Total Pre- Tax PV10% Value Rocky Mountain PD 4,312 715 4,432 PUD 41 41 Total 14 4,353 715 4,473 97.3% 42.2% $ 146.2 45.2% 1,734 Permian Basin PD 2,807 9,855 4,450 PUD 62 170 90 Total 17 2,869 10,025 4,540 63.2% 42.8% 128.1 39.6% 1,991 Gulf Coast PD 700 2,897 1,182 PUD Total 8 700 2,897 1,182 59.2% 11.1% 35.6 11.0% 617 Mid-Continent PD 356 345 413 PUD 10 356 345 413 86.1% 3.9% 13.7 4.2% 147 Total PD 8,175 13,812 10,476 PUD 103 170 132 Total 49 8,278 13,982 10,608 78.0% 100.0% $ 323.6 100.0% 4,489 (1) PD refers to proved developed reserves and PUD refers to proved undeveloped reserves. (2) Includes 318 MBbl of natural gas liquids in the proved developed reserve category. (3) The amounts in the table reflect the trust s 90% net profits interest in the reserves attributable to the underlying properties during the term of the trust. Proved reserves reflected in the table above for the net profits interest are derived from oil and natural gas prices calculated using an average of the first-day-of-the month prices for each month within the 12 months ended December 31, 2011, pursuant to current SEC and FASB guidelines, which equal $96.19 per Bbl of oil and $4.12 per MMBtu of natural gas adjusted for a field transportation, quality and basis differential of $8.94 per Bbl of oil and a premium of $1.88 per Mcf of natural gas resulting in average field adjusted prices of $87.25 per Bbl of oil (which includes the effects of natural gas liquids) and $6.00 per Mcf of natural gas. The average first-day-of-the month price for the 12 months ended December 31, 2011 applied to natural gas liquids was $69.61 per Bbl. (4) The percentage of cumulative past production from the underlying properties through December 31, 2011 relative to (a) cumulative past production from the underlying properties through December 31, 2011 together with (b) the proved reserves attributable to the underlying properties as of December 31, 2011 from the underlying properties was 86.1%, and by region was: Rocky Mountains 85.0%, Permian Basin 89.1%, Gulf Coast 88.3% and Mid-Continent 97.5%. As of December 31, 2011, the percentage of the remaining proved reserves expected to be produced during the term of the net profits interest was 64.5% and by region basis was: Rocky Mountains 60.7%, Permian Basin 68.5%, Gulf Coast 69.1% and Mid-Continent 54.8%. (5) Pre-tax PV10% value is considered a non-GAAP financial measure as defined by the SEC and is derived from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP financial measure. Pre-tax PV10% value is computed on the same basis as the standardized measure of discounted future net cash flows but without deducting future income taxes. However, as of December 31, 2011, no provision for federal or state income taxes has been provided because taxable income is passed through to the unitholders of the trust. Therefore, the standardized measure of discounted future net cash flows attributable to the net profits interest is equal to the pre-tax PV10% value. The pre-tax PV10% value and the standardized measure of discounted future net cash flows do not purport to present the fair value of the oil and natural gas reserves attributable to the net profits interest. Table of Contents Table of Contents The underlying properties are located in several major onshore producing basins in the continental United States. Whiting believes this broad distribution provides a buffer against regional trends that may negatively impact production or prices. The underlying properties are located in mature fields with established production profiles. The net profits interest excludes Whiting s interests in the Bakken and Three Forks formations in all regions. See The underlying properties Major producing areas and The underlying properties Capital expenditure activities, respectively, for more detailed descriptions of the underlying properties and the anticipated development plans and capital expenditures relating thereto. Rocky Mountains Region. The underlying properties in the Rocky Mountains region are located in Colorado, Wyoming, North Dakota and Montana. These properties consist of 14 fields of which Whiting operates wells in five of these fields. The major fields in this region include the Rangely field (operated by Chevron Corporation and Whiting) that produces from the Weber Sand zone; the Garland field (operated by Marathon Oil Corporation) that produces from the Madison and Tensleep zones; the Cedar Hills field (operated by Continental Resources Inc. and ConocoPhillips) that produces from the Red River zone; and the Whiting-operated Torchlight field that produces from the Madison and Tensleep zones. Whiting operates approximately 18% of the Rocky Mountains region properties based on average daily net production attributable to the net profits interest of 1,734 BOE/d for the three months ended December 31, 2011 from 832 gross (109.2 net) wells. Whiting estimates that the aggregate amount of capital expenditures in the Rocky Mountains region allocated to the underlying properties will be $3.2 million (or $2.9 million attributable to the trust) for 2012 and $17.4 million in aggregate (or $15.7 million attributable to the trust) thereafter. Permian Basin Region. The underlying properties in the Permian Basin region are located in Texas and New Mexico. These properties consist of 17 fields of which Whiting operates wells in 12 of these fields. The major fields in this region, all of which are completely or partially operated by Whiting, include the Keystone, South field that produces from the Clear Fork, Wichita Albany and Ellenberger zones; the Martin field that produces from the Clear Fork and Wichita Albany zones; the DEB field that produces from the Wolfcamp zone; the Signal Peak field that produces from the Wolfcamp zone; and the Sable field that produces from the San Andres zone. Whiting operates approximately 86% of these properties based on average daily net production attributable to the net profits interest of 1,991 BOE/d for the three months ended December 31, 2011 from 372 gross (233.4 net) wells. Whiting estimates that the aggregate amount of capital expenditures in the Pemian Basin region allocated to the underlying properties will be $3.1 million (or $2.8 million attributable to the trust) for 2012 and $1.7 million in aggregate (or $1.5 million attributable to the trust) thereafter. Gulf Coast Region. The underlying properties in the Gulf Coast region are located in Texas and Mississippi. These properties consist of eight onshore fields of which Whiting operates wells in four of these fields. The major field in this region is the Lake Como field that produces from the Smackover formation and is operated by Whiting. Whiting operates approximately 91% of these properties based on average daily net production attributable to the net profits interest of 617 BOE/d for the three months ended December 31, 2011 from 50 gross (18.7 net) wells. Whiting estimates that the aggregate amount of capital expenditures in the Gulf Coast Region allocated to the underlying properties will be none for 2012 and $0.4 million in aggregate (or $0.3 million attributable to the trust) thereafter. Mid-Continent Region. The underlying properties in the Mid-Continent region are located in Michigan, Arkansas, Oklahoma and Texas. These properties consist of 10 fields of which Whiting operates wells in five of these fields. The major field in this region is the Wesson field that produces from the Hogg Sand zone and is operated by Whiting. Whiting operates approximately 85% of these properties based on average daily net production attributable to the net profits interest of 147 BOE/d for the three months ended December 31, 2011 from 46 gross (29.1 net) wells. Whiting estimates no capital expenditures in the Mid-Continent Region during the term of the net profits interest. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+This summary highlights information contained in this prospectus, but may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus carefully, including the risk factors and the financial statements. Our Company We offer a broad range of investors the opportunity to participate in the enjoyment and excitement of an equity investment in a company owning thoroughbred racehorses at a minimum level of financial commitment that is significantly lower than ordinarily accompanies such opportunity. We currently own 20 thoroughbred racehorses, which we acquired from Alpen House in exchange for a promissory note. Each thoroughbred racehorse was a yearling when purchased and is currently a two-year old. Alpen House began training our thoroughbred racehorses in the fourth quarter of 2011 and we intend to continue training them, and to race those that are determined to be suitable for racing, until November 2013. We refer to the period during which we train and race our thoroughbred racehorses as our operating period. We intend to liquidate our assets following the end of our operating period and distribute the net proceeds from the liquidation to our stockholders. Only stockholders of record as of the close of business on November 2, 2013, which we refer to as our end date, will receive a liquidating distribution. There will be no trading in our common stock after the completion of our operating period. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. We refer to the date of our liquidating distribution as the Distribution Date. We and the other Racing Companies were formed at the direction of affiliates of Golden Pegasus. The decision to form six Racing Companies rather than one larger company was driven by several factors. The Racing Companies believe that a pool of 20 horses provides a degree of diversification as well as a potential for returns under scenarios where sufficient purses are won by one or more of our horses. In addition, the Racing Companies believe that racehorse investors seek the excitement and enjoyment of racehorse ownership in addition to an investment opportunity, and that a pool of 20 horses will permit investors to retain a sense of ownership and intimacy that would be lacking in a pool of 120 horses. However, the risks attendant to an investment in a pool of 20 horses may be greater than an investment of the same size in a pool of 120 horses because of the greater degree of diversification that would be achieved in a pool of 120 horses. The Racing Companies expect that the enjoyment and excitement related to an investment in the Racing Companies will be enhanced by the ability of investors to not only compare the performance of a racehorse owned by a Racing Company to other racehorses but also to compare the overall performances of the Racing Companies to one another. We were incorporated in Delaware on November 18, 2011. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. The Horse Racing League We and our sister corporations refer to ourselves collectively, and intend to brand ourselves, as The Horse Racing League. Although the full extent of this branding initiative will be subject to further definition on an ongoing basis, we expect to campaign one or more of our horses as Horse Racing League horses and that The Horse Racing League will appear on marketing collateral and merchandise offered for sale at racetracks owned by The Stronach Group. The Horse Racing League will also be used for branding purposes in connection with Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated , 2012 Prospectus GHOSTZAPPER RACING CORPORATION 405,000 SHARES Common Stock, $.001 par value We are a recently formed corporation that has acquired 20 thoroughbred racehorses. We are offering 405,000 shares of our common stock, $.001 par value, at $10.00 per share on a best efforts, all or none basis. If we sell the total number of shares being offered by us, we will receive gross proceeds of $4,050,000, less the costs and expenses related to the offering. Funds received from the offering will be deposited by us into an escrow account pending the closing of the offering. The offering will terminate within 60 days from the date of this prospectus. If less than all of the shares offered hereby are sold during the offering period, we will not conduct a closing of the offering and amounts deposited by investors will be returned promptly without interest or deduction, except that no refund will be made of the $3.50 per transaction convenience fee associated with a debit card transaction. Golden Pegasus Racing Incorporated, an entity controlled by The Stronach Group, is currently our sole stockholder and, upon consummation of a previously negotiated private placement to it (which will close simultaneously with the offering), will own 45,000 shares of our common stock. Golden Pegasus Racing Incorporated, our officers or directors or one of our other affiliates (which may be an entity controlled by or included in The Stronach Group) may, but will not be required to, purchase additional shares in the offering. Shares purchased in this offering by our affiliates, including Golden Pegasus Racing Incorporated, our officers and directors and their respective affiliates, will be counted in determining whether the offering is fully subscribed. The minimum investment in the offering is $100. Investors tendering funds online by debit card will be required to pay a non-refundable convenience fee of $3.50 per transaction. Investors will be required to satisfy the suitability requirements described in the prospectus in order to invest in the offering. Without limitation of the foregoing, Pennsylvania and Kentucky residents will be required to represent that they have (i) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home, and home furnishings; or (ii) a minimum net worth of $250,000, exclusive of automobile, home, and home furnishings, plus, in the case of Pennsylvania residents, estimated gross income of $65,000 during the current tax year, and in addition, in either case, that their investment does not exceed 10% of their net worth. California, Oregon and New Jersey residents will be required to represent that they have (i) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $250,000, plus estimated $65,000 gross income during the current tax year; or (ii) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $500,000, and in addition, in either case, that their investment does not exceed 10% of their net worth. Our certificate of incorporation provides that our corporate duration will end on November 2, 2013. Following such date, there will be no trading in our common stock and our activities will be limited to liquidating and winding up our business. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. There currently is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. We may seek to have our shares traded on the OTCQB market, although no assurance can be given that our shares will trade on the OTCQB or any other market. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. You should read the Risk Factors section beginning on page 23 of this prospectus before investing in our common stock. Per share Total Common Stock Offered Hereby $ 10.00 $ 4,050,000 In connection with our selling efforts in the offering, none of our officers, directors, employees or independent contractors will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. There are no underwriters involved in the offering and no underwriting commissions will be paid in connection with the sale of the common stock to the public. We have engaged Aegis Capital Corp. as a nonexclusive sales agent and have agreed to pay a sales fee of four percent (4%) in connection with sales to investors who invest in the offering through Aegis. We may engage additional registered broker-dealers to sell some or all of the shares offered hereby and may pay a commission of up to ten percent (10%) in connection with such sales. Commissions paid to selling agents will be paid through an additional capital contribution to us to be made by Golden Pegasus Racing Incorporated in consideration for which Golden Pegasus Racing Incorporated will not receive any additional shares of our common stock. As a consequence, commissions paid to selling agents will not reduce proceeds received from investors in the offering and will not dilute the equity ownership of investors in the offering. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements in future filings. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 2012 Table of Contents Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to our director, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. Introduction In this prospectus, the terms company, we, us and our refer and relate to Ghostzapper Racing Corporation . In this prospectus, the term Golden Pegasus refers to Golden Pegasus Racing Incorporated, a Delaware corporation, and the term Alpen House refers to The Alpen House Racing ULC, an unlimited liability company organized under the laws of Alberta that is part of The Stronach Group. The Stronach Group is a consortium of companies that owns, among other businesses, horse racetracks and other horseracing-related assets. In this prospectus, the term Adena Springs refers to the Adena Springs horse farms owned and operated by Alpen House. Concurrently with this offering, other companies organized at the direction of affiliates of Golden Pegasus and having business plans substantially similar to ours are conducting public offerings of their equity securities. We refer to these other companies (Macho Uno Racing Corporation , Ginger Punch Racing Corporation , Perfect Sting Racing Corporation , Red Bullet Racing Corporation and Awesome Again Racing Corporation ) as our sister companies and, together with us, as the Racing Companies. Market and Industry Data Some of the market and industry data contained, or incorporated by reference, in this prospectus are based on independent industry publications or other publicly available information that we believe is reliable. Glossary Throughout this prospectus, we use terms associated with the thoroughbred horseracing industry. The following glossary of terms is intended to assist prospective investors who may not be familiar with these terms. Barn Foreman A person who handles the grooms and hot walkers and implements the horse s day-to-day routine. Blacksmithing Equine hoof care, including the trimming and balancing of horses hooves and the placing of shoes on their hooves. Board The term commonly used when a horse lives at a third party facility where the owner pays money to the facility owner to take care of the horse. Breaking To train a young horse to wear a bridle and saddle, carry a rider and respond to a rider s commands. Broodmare A filly or mare that has been bred and is used to produce foals. Campaigned To race in a number or series of competitions. Champion Any Eclipse Award winner is referred to as a champion in the United States. Table of Contents the offering and is intended to convey the spirit of sportsmanlike competition we hope to foster among the Racing Companies. It is anticipated that racing results, aggregate winnings and other information about the Racing Companies will be disclosed on an HRL website to be launched following the completion of the offering once such information, to the extent material, has been disclosed in a manner compliant with Regulation FD. Competitive Considerations We believe the following to be our significant competitive strengths: Experienced Horse Selection Team. The thoroughbred racehorses we acquired from Alpen House were selected for purchase by Alpen House predominantly at auction by a team that included owners and veterinary professionals with extensive experience in the thoroughbred horseracing industry. This team, which we refer to as the thoroughbred selection team, consisted of: Frank Stronach, who, through various entities, has owned and raced thoroughbred horses since 1962, including approximately 380 stakes winners. The Adena Springs horse farm, which is owned by Alpen House, has been the recipient of numerous awards, including four Eclipse Awards from the Thoroughbred Racing Associations as outstanding owner; Dan Hall, who has participated in the selection and purchase of prize winning horses and is a managing partner of Hidden Brook Farm, a 600-acre thoroughbred nursery specializing in the breeding, raising, breaking and rehabilitation of horses; Mark Roberts, also a partner in Hidden Brook Farm, who has been involved in many facets of the thoroughbred industry over a 37-year period; Dr. Robert McMartin, a thoroughbred industry veterinarian, consultant and advisor; and Dr. Peter A. Kazakevicius, a full-time veterinarian for the Adena Springs horse farms. Professional Management. Golden Pegasus will supervise all aspects of the training and racing development of our horses. Michael Rogers, the chief executive officer of Golden Pegasus, has over 27 years of experience in the thoroughbred horseracing industry. Mark Roberts, a member of the thoroughbred selection team, is the President of Golden Pegasus. Jack Brothers, our chief executive officer, is a managing partner of Hidden Brook Farm and has over 36 years of experience in the industry. Access to High Quality Trainers, Training Facilities and Personnel. The day-to-day care, training and racing management of our horses will be subcontracted to Adena Springs pursuant to an agreement between Adena Springs and Golden Pegasus. Adena Springs owns approximately 900 of its own thoroughbred racehorses and has an extensive network of relationships with trainers. Because of its relationship with Adena Springs, we believe that Golden Pegasus is well positioned to seek out trainers who are favorably recognized in the thoroughbred racing industry to work with our horses (although its ultimate ability to engage such trainers will be influenced by market forces and there can be no assurance that it will be successful in doing so). We believe, based on Adena Springs high level of recognition in the thoroughbred horseracing industry and our officers direct experience with Adena Springs, that Adena Springs permanent staff, and its training tracks, barns and other facilities, to which our thoroughbreds will have access when they are not being stabled at racetracks or other remote facilities, are of high quality standards within the industry. Our Strategy We intend to pursue opportunities to realize revenues from two principal activities: racing our horses during our operating period and selling our horses in claiming races or in connection with the liquidation of our assets or otherwise. Table of Contents Table of Contents Claiming The process by which a licensed person may purchase a horse entered in a race designated as a claiming race for a predetermined price. When a horse has been claimed, its new owner assumes title after the starting gate opens although the former owner is entitled to all purse money earned in that race. Colt An ungelded male horse four years old or younger. Conformation The shape and correctness of the anatomy of a horse. Consignor The person offering a horse for sale through an auction either as or on behalf of the owner or vendor of the horse. Dam The mother of a horse. Eclipse Award The Eclipse Award of Merit is the thoroughbred racing industry s highest honor and is co-sponsored by the National Thoroughbred Racing Association, Daily Racing Form and the National Turf Writers Association. The Eclipse Awards are year-end awards honoring the top horses in 11 separate categories; the leading owner, trainer, jockey, apprentice jockey and breeder; and members of the media who have demonstrated excellence in their coverage of the sport. Entry Fee The money paid to enter a horse in a stakes race. Exercise Rider A rider who is licensed to exercise a horse during its morning training session. Filly A female horse four years old or younger. Foal A horse of either sex in its first year of life. The term foal can also denote the offspring of either a male or female parent. Full Field When a race is filled to capacity. Gelding A surgical procedure to remove both testicles from a male horse. Grade I, II and III Stake Races The top level for stakes races is the graded stakes race, which can have no restrictions other than age or sex. There are three grades, and the grade assigned a race is controlled by the Graded Stakes Committee, which is a committee of the Thoroughbred Owners and Breeders Association that insures the equivalence of Grade I, II and III stakes races regardless of the track being run. Grade I level races are the top tier, Grade II are the second tier and Grade III are the third tier. Groom A person who cares for a horse in a stable. Horseman A racehorse owner or trainer. Hot Walkers A person who walks horses to cool them out after workouts or races. Table of Contents We expect to begin racing those of our thoroughbreds that we believe to be promising in the third quarter of 2012. We intend to train and race our horses until November of 2013 and sell the horses we own at such time as three-year olds. After the horses are sold, the net proceeds from our liquidation will be distributed to our stockholders of record as of the close of business on our end date. Our business plan may be considered unique because of the short duration of our expected operating period and our plan to sell our horses as three-year olds, principally in all ages horse auctions, which are held in November through February each year. The opportunity to receive a return of capital or any profit from an investment in us will depend on, among other factors, our ability to generate net proceeds from the sale of our horses as three-year olds. Most thoroughbred horses are sold as yearlings or two-year olds and there is no widely recognized auction or other market for the sale of three-year old horses. Three-year olds are included in all ages horse auctions but currently constitute only a small percentage of the horses sold in those auctions. The sales of successful, and therefore higher priced, in form three-year olds that occur take place principally by way of privately negotiated sales. Conversely, owners wishing to sell three-year olds at price points up to $100,000 may do so by entering the horses in claiming races (which, as discussed in detail under Business Potential Sources of Racing Revenues, are races in which all horses entered are eligible to be purchased by licensed owners or trainers who put in a bid at the claiming price). Many owners, however, are reluctant to sell in form three-year olds because of the racing opportunities that are available during the horse s remaining racing career and because of the emotional bonds that tend to form over time between owners and their thoroughbreds. The risk of purchasing an in form thoroughbred is lower than the risk of purchasing a horse that has not commenced its racing career because there is more certainty about future racing potential. At the end of a horse s three-year old status, it will have completed the major races in which it was eligible to be entered as a two- or three-year old. Prospective purchasers will therefore be in a good position to evaluate both the potential future racing performance of the horse and its potential for generating breeding fees as a broodmare or stallion, which are the most significant factors influencing sale price for a mature horse. Accordingly, we believe that the sale prices of our horses at auction at this point in their careers are likely to reflect fully informed and market-efficient valuations. Although our business model is untested and there can therefore be no assurance, we believe, for the foregoing reasons, that our planned approach to realizing value from our horses may prove superior to syndications in which there is no fixed end date and that an operating period ending at the time our horses can be entered into all ages horse auctions as three-year olds is preferable to a shorter or longer operating period. However, our plan to sell our horses as three-year olds is an untested business model that may not maximize returns to investors and that may result in our investors failing to realize any return on invested capital or losing some or all of their invested capital. Frank Stronach, our Chairman, has indicated a potential desire to bid for our horses when they are sold at auction. Mr. Stronach was integral to the process of identifying, bidding on and financing the purchase of our horses and may enjoy an informational advantage concerning the racing and breeding potential of our horses that could permit Mr. Stronach to assess the value of the horses more accurately than other potential purchasers at the time of our liquidation. Furthermore, Mr. Stronach s fiduciary duties to the company could potentially conflict with his desire to purchase horses at auction at the best possible price. In order to ameliorate these risks, we have adopted procedures that will substantially limit Mr. Stronach s involvement in the process of liquidating our horses. See Conflicts of Interest Liquidation. We do not believe that investors will be adversely impacted by these limitations on Mr. Stronach s involvement in the liquidation process because our other officers and directors and those of Golden Pegasus, many of whom also have long histories and extensive experience in the thoroughbred industry, will be directly and substantially involved in all aspects of the liquidation of our horses. However, there can be no assurance that we will be as successful in liquidating our horses as would be the case if Mr. Stronach were directly involved in the liquidation process on our behalf. Table of Contents In Form A horse that has previously been entered in at least one race. International Stud Book Committee An international organization of stud book authorities that meets annually to establish standards of stud book operation in order to ensure the integrity and future development of the thoroughbred breed. Among other things, the International Stud Book Committee establishes standards for operating and maintaining a thoroughbred stud book, breeding and identification of thoroughbreds and the movement of thoroughbreds between stud book authorities. Live horse races When horses are racing live at a track. Live Racing Day A day when there is live racing at a track. Mare A female horse five years old or older. Nomination A fee paid to make a horse eligible to enter a stakes race. Pari Mutuel Wagering A form of wagering in which all money bet is divided up among those who have winning tickets after taxes and other deductions are made. Purse winnings The monetary amount distributed after a race to the owners of the entrants who have finished in (typically) the top four or five positions. Racing Card The schedule of races at a racetrack on a specific day giving information about races, particularly the horses running in each race and their riders and trainers. Racing Secretary The racetrack official who drafts conditions of races and assigns weights for handicap horse races, which are races in which varying amounts of weight are added to the horse saddles in an attempt to even out the competition in case some horses are clearly more dominant than others. Runners The horses participating in a race. Sire The father of a horse. Stakes Race A horse race in which the prize offered is made up at least in part from the stake, or entry fee, that the horse owners must pay. Stakes Winners Horses that have won stakes races. Stallion A male horse used for breeding. Stallion Season The right to breed a mare to a particular stallion during one breeding season. Stud Book A registry and genealogical record that ensures the correct pedigree and identification of every thoroughbred. Table of Contents Because the ability to sell our horses is central to our business plan, we will seek to implement a racing strategy that develops our horses to a profitable sale position by November of 2013, although there can be no assurance that we will be successful in doing so. We will seek opportunities to generate racing revenues during our operating period. Our Organizational Structure The following chart shows the relationship between us and our principal affiliates at April 2, 2012. Table of Contents Stud Fee The price paid by the owner of a female horse to the owner of a stallion for the right to breed to it. The Jockey Club The Jockey Club is the breed registry for all thoroughbred horses in North America. It is responsible for maintaining The American Stud Book, which is a stud book that includes all thoroughbreds foaled in the United States, Canada and Puerto Rico as well as thoroughbreds imported into the United States, Canada and Puerto Rico from other nations that maintain similar thoroughbred registries. Thoroughbred A horse whose parentage traces back to any of three founding sires. To be considered a thoroughbred for racing or breeding purposes, a thoroughbred must have satisfied the rules and requirements of The Jockey Club and be registered in The American Stud Book or in a foreign stud book recognized by The Jockey Club and the International Stud Book Committee. Thoroughbred Owners and Breeders Association A national trade organization formed in 1961 for thoroughbred owners and breeders. The Thoroughbred Owners and Breeders Association is based in Lexington, Kentucky and its stated mission is to improve the economics, integrity and pleasure of the sport on behalf of thoroughbred owners and breeders. Three-Year olds A horse between three and four years of age. Two-Year olds A horse between two and three years of age. Yearling A horse in its second calendar year of life, beginning Jan. 1 of the year following its birth. Table of Contents Emerging Growth Company Status We are an emerging growth company as defined under the Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act. We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. As an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to: not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act (we also will not be subject to the auditor attestation requirements of Section 404(b) as long as we are a smaller reporting company, which includes issuers that had a public float of less than $ 75 million as of the last business day of their most recently completed second fiscal quarter); reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Under this provision, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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+This summary highlights information contained in this prospectus, but may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus carefully, including the risk factors and the financial statements. Our Company We offer a broad range of investors the opportunity to participate in the enjoyment and excitement of an equity investment in a company owning thoroughbred racehorses at a minimum level of financial commitment that is significantly lower than ordinarily accompanies such opportunity. We currently own 20 thoroughbred racehorses, which we acquired from Alpen House in exchange for a promissory note. Each thoroughbred racehorse was a yearling when purchased and is currently a two-year old. Alpen House began training our thoroughbred racehorses in the fourth quarter of 2011 and we intend to continue training them, and to race those that are determined to be suitable for racing, until November 2013. We refer to the period during which we train and race our thoroughbred racehorses as our operating period. We intend to liquidate our assets following the end of our operating period and distribute the net proceeds from the liquidation to our stockholders. Only stockholders of record as of the close of business on November 2, 2013, which we refer to as our end date, will receive a liquidating distribution. There will be no trading in our common stock after the completion of our operating period. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. We refer to the date of our liquidating distribution as the Distribution Date. We and the other Racing Companies were formed at the direction of affiliates of Golden Pegasus. The decision to form six Racing Companies rather than one larger company was driven by several factors. The Racing Companies believe that a pool of 20 horses provides a degree of diversification as well as a potential for returns under scenarios where sufficient purses are won by one or more of our horses. In addition, the Racing Companies believe that racehorse investors seek the excitement and enjoyment of racehorse ownership in addition to an investment opportunity, and that a pool of 20 horses will permit investors to retain a sense of ownership and intimacy that would be lacking in a pool of 120 horses. However, the risks attendant to an investment in a pool of 20 horses may be greater than an investment of the same size in a pool of 120 horses because of the greater degree of diversification that would be achieved in a pool of 120 horses. The Racing Companies expect that the enjoyment and excitement related to an investment in the Racing Companies will be enhanced by the ability of investors to not only compare the performance of a racehorse owned by a Racing Company to other racehorses but also to compare the overall performances of the Racing Companies to one another. We were incorporated in Delaware on November 18, 2011. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. The Horse Racing League We and our sister corporations refer to ourselves collectively, and intend to brand ourselves, as The Horse Racing League. Although the full extent of this branding initiative will be subject to further definition on an ongoing basis, we expect to campaign one or more of our horses as Horse Racing League horses and that The Horse Racing League will appear on marketing collateral and merchandise offered for sale at racetracks owned by The Stronach Group. The Horse Racing League will also be used for branding purposes in connection with Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated , 2012 Prospectus MACHO UNO RACING CORPORATION 405,000 SHARES Common Stock, $.001 par value We are a recently formed corporation that has acquired 20 thoroughbred racehorses. We are offering 405,000 shares of our common stock, $.001 par value, at $10.00 per share on a best efforts, all or none basis. If we sell the total number of shares being offered by us, we will receive gross proceeds of $4,050,000, less the costs and expenses related to the offering. Funds received from the offering will be deposited by us into an escrow account pending the closing of the offering. The offering will terminate within 60 days from the date of this prospectus. If less than all of the shares offered hereby are sold during the offering period, we will not conduct a closing of the offering and amounts deposited by investors will be returned promptly without interest or deduction, except that no refund will be made of the $3.50 per transaction convenience fee associated with a debit card transaction. Golden Pegasus Racing Incorporated, an entity controlled by The Stronach Group, is currently our sole stockholder and, upon consummation of a previously negotiated private placement to it (which will close simultaneously with the offering), will own 45,000 shares of our common stock. Golden Pegasus Racing Incorporated, our officers or directors or one of our other affiliates (which may be an entity controlled by or included in The Stronach Group) may, but will not be required to, purchase additional shares in the offering. Shares purchased in this offering by our affiliates, including Golden Pegasus Racing Incorporated, our officers and directors and their respective affiliates, will be counted in determining whether the offering is fully subscribed. The minimum investment in the offering is $100. Investors tendering funds online by debit card will be required to pay a non-refundable convenience fee of $3.50 per transaction. Investors will be required to satisfy the suitability requirements described in the prospectus in order to invest in the offering. Without limitation of the foregoing, Pennsylvania and Kentucky residents will be required to represent that they have (i) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home, and home furnishings; or (ii) a minimum net worth of $250,000, exclusive of automobile, home, and home furnishings, plus, in the case of Pennsylvania residents, estimated gross income of $65,000 during the current tax year, and in addition, in either case, that their investment does not exceed 10% of their net worth. California, Oregon and New Jersey residents will be required to represent that they have (i) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $250,000, plus estimated $65,000 gross income during the current tax year; or (ii) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $500,000, and in addition, in either case, that their investment does not exceed 10% of their net worth. Our certificate of incorporation provides that our corporate duration will end on November 2, 2013. Following such date, there will be no trading in our common stock and our activities will be limited to liquidating and winding up our business. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. There currently is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. We may seek to have our shares traded on the OTCQB market, although no assurance can be given that our shares will trade on the OTCQB or any other market. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. You should read the Risk Factors section beginning on page 21 of this prospectus before investing in our common stock. Per share Total Common Stock Offered Hereby $ 10.00 $ 4,050,000 In connection with our selling efforts in the offering, none of our officers, directors, employees or independent contractors will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. There are no underwriters involved in the offering and no underwriting commissions will be paid in connection with the sale of the common stock to the public. We have engaged Aegis Capital Corp. as a nonexclusive sales agent and have agreed to pay a sales fee of four percent (4%) in connection with sales to investors who invest in the offering through Aegis. We may engage additional registered broker-dealers to sell some or all of the shares offered hereby and may pay a commission of up to ten percent (10%) in connection with such sales. Commissions paid to selling agents will be paid through an additional capital contribution to us to be made by Golden Pegasus Racing Incorporated in consideration for which Golden Pegasus Racing Incorporated will not receive any additional shares of our common stock. As a consequence, commissions paid to selling agents will not reduce proceeds received from investors in the offering and will not dilute the equity ownership of investors in the offering. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements in future filings. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 2012 Table of Contents Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to our director, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. Introduction In this prospectus, the terms company, we, us and our refer and relate to Macho Uno Racing Corporation . In this prospectus, the term Golden Pegasus refers to Golden Pegasus Racing Incorporated, a Delaware corporation, and the term Alpen House refers to The Alpen House Racing ULC, an unlimited liability company organized under the laws of Alberta that is part of The Stronach Group. The Stronach Group is a consortium of companies that owns, among other businesses, horse racetracks and other horseracing-related assets. In this prospectus, the term Adena Springs refers to the Adena Springs horse farms owned and operated by Alpen House. Concurrently with this offering, other companies organized at the direction of affiliates of Golden Pegasus and having business plans substantially similar to ours are conducting public offerings of their equity securities. We refer to these other companies (Red Bullet Racing Corporation , Ginger Punch Racing Corporation , Perfect Sting Racing Corporation , Awesome Again Racing Corporation and Ghostzapper Racing Corporation ) as our sister companies and, together with us, as the Racing Companies. Market and Industry Data Some of the market and industry data contained, or incorporated by reference, in this prospectus are based on independent industry publications or other publicly available information that we believe is reliable. Glossary Throughout this prospectus, we use terms associated with the thoroughbred horseracing industry. The following glossary of terms is intended to assist prospective investors who may not be familiar with these terms. Barn Foreman A person who handles the grooms and hot walkers and implements the horse s day-to-day routine. Blacksmithing Equine hoof care, including the trimming and balancing of horses hooves and the placing of shoes on their hooves. Board The term commonly used when a horse lives at a third party facility where the owner pays money to the facility owner to take care of the horse. Breaking To train a young horse to wear a bridle and saddle, carry a rider and respond to a rider s commands. Broodmare A filly or mare that has been bred and is used to produce foals. Campaigned To race in a number or series of competitions. Champion Any Eclipse Award winner is referred to as a champion in the United States. Claiming The process by which a licensed person may purchase a horse entered in a race designated as a claiming race for a predetermined price. When a horse has been claimed, its new owner assumes title after the starting gate opens although the former owner is entitled to all purse money earned in that race. Table of Contents the offering and is intended to convey the spirit of sportsmanlike competition we hope to foster among the Racing Companies. It is anticipated that racing results, aggregate winnings and other information about the Racing Companies will be disclosed on an HRL website to be launched following the completion of the offering once such information, to the extent material, has been disclosed in a manner compliant with Regulation FD. Competitive Considerations We believe the following to be our significant competitive strengths: Experienced Horse Selection Team. The thoroughbred racehorses we acquired from Alpen House were selected for purchase by Alpen House predominantly at auction by a team that included owners and veterinary professionals with extensive experience in the thoroughbred horseracing industry. This team, which we refer to as the thoroughbred selection team, consisted of: Frank Stronach, who, through various entities, has owned and raced thoroughbred horses since 1962, including approximately 380 stakes winners. The Adena Springs horse farm, which is owned by Alpen House, has been the recipient of numerous awards, including four Eclipse Awards from the Thoroughbred Racing Associations as outstanding owner; Dan Hall, who has participated in the selection and purchase of prize winning horses and is a managing partner of Hidden Brook Farm, a 600-acre thoroughbred nursery specializing in the breeding, raising, breaking and rehabilitation of horses; Mark Roberts, also a partner in Hidden Brook Farm, who has been involved in many facets of the thoroughbred industry over a 37-year period; Dr. Robert McMartin, a thoroughbred industry veterinarian, consultant and advisor; and Dr. Peter A. Kazakevicius, a full-time veterinarian for the Adena Springs horse farms. Professional Management. Golden Pegasus will supervise all aspects of the training and racing development of our horses. Michael Rogers, the chief executive officer of Golden Pegasus, has over 27 years of experience in the thoroughbred horseracing industry. Mark Roberts, a member of the thoroughbred selection team, is the President of Golden Pegasus. Jack Brothers, our chief executive officer, is a managing partner of Hidden Brook Farm and has over 36 years of experience in the industry. Access to High Quality Trainers, Training Facilities and Personnel. The day-to-day care, training and racing management of our horses will be subcontracted to Adena Springs pursuant to an agreement between Adena Springs and Golden Pegasus. Adena Springs owns approximately 900 of its own thoroughbred racehorses and has an extensive network of relationships with trainers. Because of its relationship with Adena Springs, we believe that Golden Pegasus is well positioned to seek out trainers who are favorably recognized in the thoroughbred racing industry to work with our horses (although its ultimate ability to engage such trainers will be influenced by market forces and there can be no assurance that it will be successful in doing so). We believe, based on Adena Springs high level of recognition in the thoroughbred horseracing industry and our officers direct experience with Adena Springs, that Adena Springs permanent staff, and its training tracks, barns and other facilities, to which our thoroughbreds will have access when they are not being stabled at racetracks or other remote facilities, are of high quality standards within the industry. Our Strategy We intend to pursue opportunities to realize revenues from two principal activities: racing our horses during our operating period and selling our horses in claiming races or in connection with the liquidation of our assets or otherwise. We expect to begin racing those of our thoroughbreds that we believe to be promising in the third quarter of 2012. We intend to train and race our horses until November of 2013 and sell the horses we own at such time as Table of Contents Table of Contents Colt An ungelded male horse four years old or younger. Conformation The shape and correctness of the anatomy of a horse. Consignor The person offering a horse for sale through an auction either as or on behalf of the owner or vendor of the horse. Dam The mother of a horse. Eclipse Award The Eclipse Award of Merit is the thoroughbred racing industry s highest honor and is co-sponsored by the National Thoroughbred Racing Association, Daily Racing Form and the National Turf Writers Association. The Eclipse Awards are year-end awards honoring the top horses in 11 separate categories; the leading owner, trainer, jockey, apprentice jockey and breeder; and members of the media who have demonstrated excellence in their coverage of the sport. Entry Fee The money paid to enter a horse in a stakes race. Exercise Rider A rider who is licensed to exercise a horse during its morning training session. Filly A female horse four years old or younger. Foal A horse of either sex in its first year of life. The term foal can also denote the offspring of either a male or female parent. Full Field When a race is filled to capacity. Gelding A surgical procedure to remove both testicles from a male horse. Grade I, II and III Stake Races The top level for stakes races is the graded stakes race, which can have no restrictions other than age or sex. There are three grades, and the grade assigned a race is controlled by the Graded Stakes Committee, which is a committee of the Thoroughbred Owners and Breeders Association that insures the equivalence of Grade I, II and III stakes races regardless of the track being run. Grade I level races are the top tier, Grade II are the second tier and Grade III are the third tier. Groom A person who cares for a horse in a stable. Horseman A racehorse owner or trainer. Hot Walkers A person who walks horses to cool them out after workouts or races. In Form A horse that has previously been entered in at least one race. International Stud Book Committee An international organization of stud book authorities that meets annually to establish standards of stud book operation in order to ensure the integrity and future development of the thoroughbred breed. Among other things, the International Stud Book Committee establishes standards for operating and maintaining a thoroughbred stud book, breeding and identification of thoroughbreds and the movement of thoroughbreds between stud book authorities. Live horse races When horses are racing live at a track. Live Racing Day A day when there is live racing at a track. Mare A female horse five years old or older. Table of Contents three-year olds. After the horses are sold, the net proceeds from our liquidation will be distributed to our stockholders of record as of the close of business on our end date. Our business plan may be considered unique because of the short duration of our expected operating period and our plan to sell our horses as three-year olds, principally in all ages horse auctions, which are held in November through February each year. The opportunity to receive a return of capital or any profit from an investment in us will depend on, among other factors, our ability to generate net proceeds from the sale of our horses as three-year olds. Most thoroughbred horses are sold as yearlings or two-year olds and there is no widely recognized auction or other market for the sale of three-year old horses. Three-year olds are included in all ages horse auctions but currently constitute only a small percentage of the horses sold in those auctions. The sales of successful, and therefore higher priced, in form three-year olds that occur take place principally by way of privately negotiated sales. Conversely, owners wishing to sell three-year olds at price points up to $100,000 may do so by entering the horses in claiming races (which, as discussed in detail under Business Potential Sources of Racing Revenues, are races in which all horses entered are eligible to be purchased by licensed owners or trainers who put in a bid at the claiming price). Many owners, however, are reluctant to sell in form three-year olds because of the racing opportunities that are available during the horse s remaining racing career and because of the emotional bonds that tend to form over time between owners and their thoroughbreds. The risk of purchasing an in form thoroughbred is lower than the risk of purchasing a horse that has not commenced its racing career because there is more certainty about future racing potential. At the end of a horse s three-year old status, it will have completed the major races in which it was eligible to be entered as a two- or three-year old. Prospective purchasers will therefore be in a good position to evaluate both the potential future racing performance of the horse and its potential for generating breeding fees as a broodmare or stallion, which are the most significant factors influencing sale price for a mature horse. Accordingly, we believe that the sale prices of our horses at auction at this point in their careers are likely to reflect fully informed and market-efficient valuations. Although our business model is untested and there can therefore be no assurance, we believe, for the foregoing reasons, that our planned approach to realizing value from our horses may prove superior to syndications in which there is no fixed end date and that an operating period ending at the time our horses can be entered into all ages horse auctions as three-year olds is preferable to a shorter or longer operating period. However, our plan to sell our horses as three-year olds is an untested business model that may not maximize returns to investors and that may result in our investors failing to realize any return on invested capital or losing some or all of their invested capital. Frank Stronach, our Chairman, has indicated a potential desire to bid for our horses when they are sold at auction. Mr. Stronach was integral to the process of identifying, bidding on and financing the purchase of our horses and may enjoy an informational advantage concerning the racing and breeding potential of our horses that could permit Mr. Stronach to assess the value of the horses more accurately than other potential purchasers at the time of our liquidation. Furthermore, Mr. Stronach s fiduciary duties to the company could potentially conflict with his desire to purchase horses at auction at the best possible price. In order to ameliorate these risks, we have adopted procedures that will substantially limit Mr. Stronach s involvement in the process of liquidating our horses. See Conflicts of Interest Liquidation. We do not believe that investors will be adversely impacted by these limitations on Mr. Stronach s involvement in the liquidation process because our other officers and directors and those of Golden Pegasus, many of whom also have long histories and extensive experience in the thoroughbred industry, will be directly and substantially involved in all aspects of the liquidation of our horses. However, there can be no assurance that we will be as successful in liquidating our horses as would be the case if Mr. Stronach were directly involved in the liquidation process on our behalf. Because the ability to sell our horses is central to our business plan, we will seek to implement a racing strategy that develops our horses to a profitable sale position by November of 2013, although there can be no assurance that we will be successful in doing so. We will seek opportunities to generate racing revenues during our operating period. Table of Contents Nomination A fee paid to make a horse eligible to enter a stakes race. Pari Mutuel Wagering A form of wagering in which all money bet is divided up among those who have winning tickets after taxes and other deductions are made. Purse winnings The monetary amount distributed after a race to the owners of the entrants who have finished in (typically) the top four or five positions. Racing Card The schedule of races at a racetrack on a specific day giving information about races, particularly the horses running in each race and their riders and trainers. Racing Secretary The racetrack official who drafts conditions of races and assigns weights for handicap horse races, which are races in which varying amounts of weight are added to the horse saddles in an attempt to even out the competition in case some horses are clearly more dominant than others. Runners The horses participating in a race. Sire The father of a horse. Stakes Race A horse race in which the prize offered is made up at least in part from the stake, or entry fee, that the horse owners must pay. Stakes Winners Horses that have won stakes races. Stallion A male horse used for breeding. Stallion Season The right to breed a mare to a particular stallion during one breeding season. Stud Book A registry and genealogical record that ensures the correct pedigree and identification of every thoroughbred. Stud Fee The price paid by the owner of a female horse to the owner of a stallion for the right to breed to it. The Jockey Club The Jockey Club is the breed registry for all thoroughbred horses in North America. It is responsible for maintaining The American Stud Book, which is a stud book that includes all thoroughbreds foaled in the United States, Canada and Puerto Rico as well as thoroughbreds imported into the United States, Canada and Puerto Rico from other nations that maintain similar thoroughbred registries. Thoroughbred A horse whose parentage traces back to any of three founding sires. To be considered a thoroughbred for racing or breeding purposes, a thoroughbred must have satisfied the rules and requirements of The Jockey Club and be registered in The American Stud Book or in a foreign stud book recognized by The Jockey Club and the International Stud Book Committee. Thoroughbred Owners and Breeders Association A national trade organization formed in 1961 for thoroughbred owners and breeders. The Thoroughbred Owners and Breeders Association is based in Lexington, Kentucky and its stated mission is to improve the economics, integrity and pleasure of the sport on behalf of thoroughbred owners and breeders. Three-Year olds A horse between three and four years of age. Two-Year olds A horse between two and three years of age. Yearling A horse in its second calendar year of life, beginning Jan. 1 of the year following its birth. Table of Contents Our Organizational Structure The following chart shows the relationship between us and our principal affiliates at April 2, 2012. Table of Contents Emerging Growth Company Status We are an emerging growth company as defined under the Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act. We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. As an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to: not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act (we also will not be subject to the auditor attestation requirements of Section 404(b) as long as we are a smaller reporting company, which includes issuers that had a public float of less than $ 75 million as of the last business day of their most recently completed second fiscal quarter); reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Under this provision, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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+This summary highlights information contained in this prospectus, but may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus carefully, including the risk factors and the financial statements. Our Company We offer a broad range of investors the opportunity to participate in the enjoyment and excitement of an equity investment in a company owning thoroughbred racehorses at a minimum level of financial commitment that is significantly lower than ordinarily accompanies such opportunity. We currently own 20 thoroughbred racehorses, which we acquired from Alpen House in exchange for a promissory note. Each thoroughbred racehorse was a yearling when purchased and is currently a two-year old. Alpen House began training our thoroughbred racehorses in the fourth quarter of 2011 and we intend to continue training them, and to race those that are determined to be suitable for racing, until November 2013. We refer to the period during which we train and race our thoroughbred racehorses as our operating period. We intend to liquidate our assets following the end of our operating period and distribute the net proceeds from the liquidation to our stockholders. Only stockholders of record as of the close of business on November 2, 2013, which we refer to as our end date, will receive a liquidating distribution. There will be no trading in our common stock after the completion of our operating period. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. We refer to the date of our liquidating distribution as the Distribution Date. We and the other Racing Companies were formed at the direction of affiliates of Golden Pegasus. The decision to form six Racing Companies rather than one larger company was driven by several factors. The Racing Companies believe that a pool of 20 horses provides a degree of diversification as well as a potential for returns under scenarios where sufficient purses are won by one or more of our horses. In addition, the Racing Companies believe that racehorse investors seek the excitement and enjoyment of racehorse ownership in addition to an investment opportunity, and that a pool of 20 horses will permit investors to retain a sense of ownership and intimacy that would be lacking in a pool of 120 horses. However, the risks attendant to an investment in a pool of 20 horses may be greater than an investment of the same size in a pool of 120 horses because of the greater degree of diversification that would be achieved in a pool of 120 horses. The Racing Companies expect that the enjoyment and excitement related to an investment in the Racing Companies will be enhanced by the ability of investors to not only compare the performance of a racehorse owned by a Racing Company to other racehorses but also to compare the overall performances of the Racing Companies to one another. We were incorporated in Delaware on November 18, 2011. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. The Horse Racing League We and our sister corporations refer to ourselves collectively, and intend to brand ourselves, as The Horse Racing League. Although the full extent of this branding initiative will be subject to further definition on an ongoing basis, we expect to campaign one or more of our horses as Horse Racing League horses and that The Horse Racing League will appear on marketing collateral and merchandise offered for sale at racetracks owned by The Stronach Group. The Horse Racing League will also be used for branding purposes in connection with Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated , 2012 Prospectus RED BULLET RACING CORPORATION 405,000 SHARES Common Stock, $.001 par value We are a recently formed corporation that has acquired 20 thoroughbred racehorses. We are offering 405,000 shares of our common stock, $.001 par value, at $10.00 per share on a best efforts, all or none basis. If we sell the total number of shares being offered by us, we will receive gross proceeds of $4,050,000, less the costs and expenses related to the offering. Funds received from the offering will be deposited by us into an escrow account pending the closing of the offering. The offering will terminate within 60 days from the date of this prospectus. If less than all of the shares offered hereby are sold during the offering period, we will not conduct a closing of the offering and amounts deposited by investors will be returned promptly without interest or deduction, except that no refund will be made of the $3.50 per transaction convenience fee associated with a debit card transaction. Golden Pegasus Racing Incorporated, an entity controlled by The Stronach Group, is currently our sole stockholder and, upon consummation of a previously negotiated private placement to it (which will close simultaneously with the offering), will own 45,000 shares of our common stock. Golden Pegasus Racing Incorporated, our officers or directors or one of our other affiliates (which may be an entity controlled by or included in The Stronach Group) may, but will not be required to, purchase additional shares in the offering. Shares purchased in this offering by our affiliates, including Golden Pegasus Racing Incorporated, our officers and directors and their respective affiliates, will be counted in determining whether the offering is fully subscribed. The minimum investment in the offering is $100. Investors tendering funds online by debit card will be required to pay a non-refundable convenience fee of $3.50 per transaction. Investors will be required to satisfy the suitability requirements described in the prospectus in order to invest in the offering. Without limitation of the foregoing, Pennsylvania and Kentucky residents will be required to represent that they have (i) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home, and home furnishings; or (ii) a minimum net worth of $250,000, exclusive of automobile, home, and home furnishings, plus, in the case of Pennsylvania residents, estimated gross income of $65,000 during the current tax year, and in addition, in either case, that their investment does not exceed 10% of their net worth. California, Oregon and New Jersey residents will be required to represent that they have (i) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $250,000, plus estimated $65,000 gross income during the current tax year; or (ii) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $500,000, and in addition, in either case, that their investment does not exceed 10% of their net worth. Our certificate of incorporation provides that our corporate duration will end on November 2, 2013. Following such date, there will be no trading in our common stock and our activities will be limited to liquidating and winding up our business. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. There currently is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. We may seek to have our shares traded on the OTCQB market, although no assurance can be given that our shares will trade on the OTCQB or any other market. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. You should read the Risk Factors section beginning on page 21 of this prospectus before investing in our common stock. Per share Total Common Stock Offered Hereby $ 10.00 $ 4,050,000 In connection with our selling efforts in the offering, none of our officers, directors, employees or independent contractors will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. There are no underwriters involved in the offering and no underwriting commissions will be paid in connection with the sale of the common stock to the public. We have engaged Aegis Capital Corp. as a nonexclusive sales agent and have agreed to pay a sales fee of four percent (4%) in connection with sales to investors who invest in the offering through Aegis. We may engage additional registered broker-dealers to sell some or all of the shares offered hereby and may pay a commission of up to ten percent (10%) in connection with such sales. Commissions paid to selling agents will be paid through an additional capital contribution to us to be made by Golden Pegasus Racing Incorporated in consideration for which Golden Pegasus Racing Incorporated will not receive any additional shares of our common stock. As a consequence, commissions paid to selling agents will not reduce proceeds received from investors in the offering and will not dilute the equity ownership of investors in the offering. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements in future filings. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 2012 Table of Contents company will be subject to applicable provisions, rules and regulations under the Securities Exchange Act of 1934, as amended (the Exchange Act ), with regard to securities transactions during the period of time when this Registration Statement is effective. For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to our director, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. Introduction In this prospectus, the terms company, we, us and our refer and relate to Red Bullet Racing Corporation . In this prospectus, the term Golden Pegasus refers to Golden Pegasus Racing Incorporated, a Delaware corporation, and the term Alpen House refers to The Alpen House Racing ULC, an unlimited liability company organized under the laws of Alberta that is part of The Stronach Group. The Stronach Group is a consortium of companies that owns, among other businesses, horse racetracks and other horseracing-related assets. In this prospectus, the term Adena Springs refers to the Adena Springs horse farms owned and operated by Alpen House. Concurrently with this offering, other companies organized at the direction of affiliates of Golden Pegasus and having business plans substantially similar to ours are conducting public offerings of their equity securities. We refer to these other companies (Macho Uno Racing Corporation , Ginger Punch Racing Corporation , Perfect Sting Racing Corporation , Awesome Again Racing Corporation and Ghostzapper Racing Corporation ) as our sister companies and, together with us, as the Racing Companies. Market and Industry Data Some of the market and industry data contained, or incorporated by reference, in this prospectus are based on independent industry publications or other publicly available information that we believe is reliable. Table of Contents the offering and is intended to convey the spirit of sportsmanlike competition we hope to foster among the Racing Companies. It is anticipated that racing results, aggregate winnings and other information about the Racing Companies will be disclosed on an HRL website to be launched following the completion of the offering once such information, to the extent material, has been disclosed in a manner compliant with Regulation FD. Competitive Considerations We believe the following to be our significant competitive strengths: Experienced Horse Selection Team. The thoroughbred racehorses we acquired from Alpen House were selected for purchase by Alpen House predominantly at auction by a team that included owners and veterinary professionals with extensive experience in the thoroughbred horseracing industry. This team, which we refer to as the thoroughbred selection team, consisted of: Frank Stronach, who, through various entities, has owned and raced thoroughbred horses since 1962, including approximately 380 stakes winners. The Adena Springs horse farm, which is owned by Alpen House, has been the recipient of numerous awards, including four Eclipse Awards from the Thoroughbred Racing Associations as outstanding owner; Dan Hall, who has participated in the selection and purchase of prize winning horses and is a managing partner of Hidden Brook Farm, a 600-acre thoroughbred nursery specializing in the breeding, raising, breaking and rehabilitation of horses; Mark Roberts, also a partner in Hidden Brook Farm, who has been involved in many facets of the thoroughbred industry over a 37-year period; Dr. Robert McMartin, a thoroughbred industry veterinarian, consultant and advisor; and Dr. Peter A. Kazakevicius, a full-time veterinarian for the Adena Springs horse farms. Professional Management. Golden Pegasus will supervise all aspects of the training and racing development of our horses. Michael Rogers, the chief executive officer of Golden Pegasus, has over 27 years of experience in the thoroughbred horseracing industry. Mark Roberts, a member of the thoroughbred selection team, is the President of Golden Pegasus. Jack Brothers, our chief executive officer, is a managing partner of Hidden Brook Farm and has over 36 years of experience in the industry. Access to High Quality Trainers, Training Facilities and Personnel. The day-to-day care, training and racing management of our horses will be subcontracted to Adena Springs pursuant to an agreement between Adena Springs and Golden Pegasus. Adena Springs owns approximately 900 of its own thoroughbred racehorses and has an extensive network of relationships with trainers. Because of its relationship with Adena Springs, we believe that Golden Pegasus is well positioned to seek out trainers who are favorably recognized in the thoroughbred racing industry to work with our horses (although its ultimate ability to engage such trainers will be influenced by market forces and there can be no assurance that it will be successful in doing so). We believe, based on Adena Springs high level of recognition in the thoroughbred horseracing industry and our officers direct experience with Adena Springs, that Adena Springs permanent staff, and its training tracks, barns and other facilities, to which our thoroughbreds will have access when they are not being stabled at racetracks or other remote facilities, are of high quality standards within the industry. Table of Contents Table of Contents Glossary Throughout this prospectus, we use terms associated with the thoroughbred horseracing industry. The following glossary of terms is intended to assist prospective investors who may not be familiar with these terms. Barn Foreman A person who handles the grooms and hot walkers and implements the horse s day-to-day routine. Blacksmithing Equine hoof care, including the trimming and balancing of horses hooves and the placing of shoes on their hooves. Board The term commonly used when a horse lives at a third party facility where the owner pays money to the facility owner to take care of the horse. Breaking To train a young horse to wear a bridle and saddle, carry a rider and respond to a rider s commands. Broodmare A filly or mare that has been bred and is used to produce foals. Campaigned To race in a number or series of competitions. Champion Any Eclipse Award winner is referred to as a champion in the United States. Claiming The process by which a licensed person may purchase a horse entered in a race designated as a claiming race for a predetermined price. When a horse has been claimed, its new owner assumes title after the starting gate opens although the former owner is entitled to all purse money earned in that race. Colt An ungelded male horse four years old or younger. Conformation The shape and correctness of the anatomy of a horse. Consignor The person offering a horse for sale through an auction either as or on behalf of the owner or vendor of the horse. Dam The mother of a horse. Eclipse Award The Eclipse Award of Merit is the thoroughbred racing industry s highest honor and is co-sponsored by the National Thoroughbred Racing Association, Daily Racing Form and the National Turf Writers Association. The Eclipse Awards are year-end awards honoring the top horses in 11 separate categories; the leading owner, trainer, jockey, Table of Contents Our Strategy We intend to pursue opportunities to realize revenues from two principal activities: racing our horses during our operating period and selling our horses in claiming races or in connection with the liquidation of our assets or otherwise. We expect to begin racing those of our thoroughbreds that we believe to be promising in the third quarter of 2012. We intend to train and race our horses until November of 2013 and sell the horses we own at such time as three-year olds. After the horses are sold, the net proceeds from our liquidation will be distributed to our stockholders of record as of the close of business on our end date. Our business plan may be considered unique because of the short duration of our expected operating period and our plan to sell our horses as three-year olds, principally in all ages horse auctions, which are held in November through February each year. The opportunity to receive a return of capital or any profit from an investment in us will depend on, among other factors, our ability to generate net proceeds from the sale of our horses as three-year olds. Most thoroughbred horses are sold as yearlings or two-year olds and there is no widely recognized auction or other market for the sale of three-year old horses. Three-year olds are included in all ages horse auctions but currently constitute only a small percentage of the horses sold in those auctions. The sales of successful, and therefore higher priced, in form three-year olds that occur take place principally by way of privately negotiated sales. Conversely, owners wishing to sell three-year olds at price points up to $100,000 may do so by entering the horses in claiming races (which, as discussed in detail under Business Potential Sources of Racing Revenues, are races in which all horses entered are eligible to be purchased by licensed owners or trainers who put in a bid at the claiming price). Many owners, however, are reluctant to sell in form three-year olds because of the racing opportunities that are available during the horse s remaining racing career and because of the emotional bonds that tend to form over time between owners and their thoroughbreds. The risk of purchasing an in form thoroughbred is lower than the risk of purchasing a horse that has not commenced its racing career because there is more certainty about future racing potential. At the end of a horse s three-year old status, it will have completed the major races in which it was eligible to be entered as a two- or three-year old. Prospective purchasers will therefore be in a good position to evaluate both the potential future racing performance of the horse and its potential for generating breeding fees as a broodmare or stallion, which are the most significant factors influencing sale price for a mature horse. Accordingly, we believe that the sale prices of our horses at auction at this point in their careers are likely to reflect fully informed and market-efficient valuations. Although our business model is untested and there can therefore be no assurance, we believe, for the foregoing reasons, that our planned approach to realizing value from our horses may prove superior to syndications in which there is no fixed end date and that an operating period ending at the time our horses can be entered into all ages horse auctions as three-year olds is preferable to a shorter or longer operating period. However, our plan to sell our horses as three-year olds is an untested business model that may not maximize returns to investors and that may result in our investors failing to realize any return on invested capital or losing some or all of their invested capital. Frank Stronach, our Chairman, has indicated a potential desire to bid for our horses when they are sold at auction. Mr. Stronach was integral to the process of identifying, bidding on and financing the purchase of our horses and may enjoy an informational advantage concerning the racing and breeding potential of our horses that could permit Mr. Stronach to assess the value of the horses more accurately than other potential purchasers at the time of our liquidation. Furthermore, Mr. Stronach s fiduciary duties to the company could potentially conflict with his desire to purchase horses at auction at the best possible price. In order to ameliorate these risks, we have adopted procedures that will substantially limit Mr. Stronach s involvement in the process of liquidating our horses. See Conflicts of Interest Liquidation. We do not believe that investors will be adversely impacted by these limitations on Mr. Stronach s involvement in the liquidation process because our other officers and directors and those of Golden Pegasus, many of whom also have long histories and extensive experience in the Table of Contents apprentice jockey and breeder; and members of the media who have demonstrated excellence in their coverage of the sport. Entry Fee The money paid to enter a horse in a stakes race. Exercise Rider A rider who is licensed to exercise a horse during its morning training session. Filly A female horse four years old or younger. Foal A horse of either sex in its first year of life. The term foal can also denote the offspring of either a male or female parent. Full Field When a race is filled to capacity. Gelding A surgical procedure to remove both testicles from a male horse. Grade I, II and III Stake Races The top level for stakes races is the graded stakes race, which can have no restrictions other than age or sex. There are three grades, and the grade assigned a race is controlled by the Graded Stakes Committee, which is a committee of the Thoroughbred Owners and Breeders Association that insures the equivalence of Grade I, II and III stakes races regardless of the track being run. Grade I level races are the top tier, Grade II are the second tier and Grade III are the third tier. Groom A person who cares for a horse in a stable. Horseman A racehorse owner or trainer. Hot Walkers A person who walks horses to cool them out after workouts or races. In Form A horse that has previously been entered in at least one race. International Stud Book Committee An international organization of stud book authorities that meets annually to establish standards of stud book operation in order to ensure the integrity and future development of the thoroughbred breed. Among other things, the International Stud Book Committee establishes standards for operating and maintaining a thoroughbred stud book, breeding and identification of thoroughbreds and the movement of thoroughbreds between stud book authorities. Live horse races When horses are racing live at a track. Table of Contents thoroughbred industry, will be directly and substantially involved in all aspects of the liquidation of our horses. However, there can be no assurance that we will be as successful in liquidating our horses as would be the case if Mr. Stronach were directly involved in the liquidation process on our behalf. Because the ability to sell our horses is central to our business plan, we will seek to implement a racing strategy that develops our horses to a profitable sale position by November of 2013, although there can be no assurance that we will be successful in doing so. We will seek opportunities to generate racing revenues during our operating period. Our Organizational Structure The following chart shows the relationship between us and our principal affiliates at April 2, 2012. Table of Contents Live Racing Day A day when there is live racing at a track. Mare A female horse five years old or older. Nomination A fee paid to make a horse eligible to enter a stakes race. Pari Mutuel Wagering A form of wagering in which all money bet is divided up among those who have winning tickets after taxes and other deductions are made. Purse winnings The monetary amount distributed after a race to the owners of the entrants who have finished in (typically) the top four or five positions. Racing Card The schedule of races at a racetrack on a specific day giving information about races, particularly the horses running in each race and their riders and trainers. Racing Secretary The racetrack official who drafts conditions of races and assigns weights for handicap horse races, which are races in which varying amounts of weight are added to the horse saddles in an attempt to even out the competition in case some horses are clearly more dominant than others. Runners The horses participating in a race. Sire The father of a horse. Stakes Race A horse race in which the prize offered is made up at least in part from the stake, or entry fee, that the horse owners must pay. Stakes Winners Horses that have won stakes races. Stallion A male horse used for breeding. Stallion Season The right to breed a mare to a particular stallion during one breeding season. Stud Book A registry and genealogical record that ensures the correct pedigree and identification of every thoroughbred. Stud Fee The price paid by the owner of a female horse to the owner of a stallion for the right to breed to it. The Jockey Club The Jockey Club is the breed registry for all thoroughbred horses in North America. It is responsible for maintaining The American Stud Table of Contents Emerging Growth Company Status We are an emerging growth company as defined under the Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act. We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. As an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to: not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act (we also will not be subject to the auditor attestation requirements of Section 404(b) as long as we are a smaller reporting company, which includes issuers that had a public float of less than $75 million as of the last business day of their most recently completed second fiscal quarter); reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Under this provision, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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+This summary highlights information contained in this prospectus, but may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus carefully, including the risk factors and the financial statements. Our Company We offer a broad range of investors the opportunity to participate in the enjoyment and excitement of an equity investment in a company owning thoroughbred racehorses at a minimum level of financial commitment that is significantly lower than ordinarily accompanies such opportunity. We currently own 20 thoroughbred racehorses, which we acquired from Alpen House in exchange for a promissory note. Each thoroughbred racehorse was a yearling when purchased and is currently a two-year old. Alpen House began training our thoroughbred racehorses in the fourth quarter of 2011 and we intend to continue training them, and to race those that are determined to be suitable for racing, until November 2013. We refer to the period during which we train and race our thoroughbred racehorses as our operating period. We intend to liquidate our assets following the end of our operating period and distribute the net proceeds from the liquidation to our stockholders. Only stockholders of record as of the close of business on November 2, 2013, which we refer to as our end date, will receive a liquidating distribution. There will be no trading in our common stock after the completion of our operating period. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. We refer to the date of our liquidating distribution as the Distribution Date. We and the other Racing Companies were formed at the direction of affiliates of Golden Pegasus. The decision to form six Racing Companies rather than one larger company was driven by several factors. The Racing Companies believe that a pool of 20 horses provides a degree of diversification as well as a potential for returns under scenarios where sufficient purses are won by one or more of our horses. In addition, the Racing Companies believe that racehorse investors seek the excitement and enjoyment of racehorse ownership in addition to an investment opportunity, and that a pool of 20 horses will permit investors to retain a sense of ownership and intimacy that would be lacking in a pool of 120 horses. However, the risks attendant to an investment in a pool of 20 horses may be greater than an investment of the same size in a pool of 120 horses because of the greater degree of diversification that would be achieved in a pool of 120 horses. The Racing Companies expect that the enjoyment and excitement related to an investment in the Racing Companies will be enhanced by the ability of investors to not only compare the performance of a racehorse owned by a Racing Company to other racehorses but also to compare the overall performances of the Racing Companies to one another. We were incorporated in Delaware on November 18, 2011. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. The Horse Racing League We and our sister corporations refer to ourselves collectively, and intend to brand ourselves, as The Horse Racing League. Although the full extent of this branding initiative will be subject to further definition on an ongoing basis, we expect to campaign one or more of our horses as Horse Racing League horses and that The Horse Racing League will appear on marketing collateral and merchandise offered for sale at racetracks owned by The Stronach Group. The Horse Racing League will also be used for branding purposes in connection with Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated , 2012 Prospectus GINGER PUNCH RACING CORPORATION 405,000 SHARES Common Stock, $.001 par value We are a recently formed corporation that has acquired 20 thoroughbred racehorses. We are offering 405,000 shares of our common stock, $.001 par value, at $10.00 per share on a best efforts, all or none basis. If we sell the total number of shares being offered by us, we will receive gross proceeds of $4,050,000, less the costs and expenses related to the offering. Funds received from the offering will be deposited by us into an escrow account pending the closing of the offering. The offering will terminate within 60 days from the date of this prospectus. If less than all of the shares offered hereby are sold during the offering period, we will not conduct a closing of the offering and amounts deposited by investors will be returned promptly without interest or deduction, except that no refund will be made of the $3.50 per transaction convenience fee associated with a debit card transaction. Golden Pegasus Racing Incorporated, an entity controlled by The Stronach Group, is currently our sole stockholder and, upon consummation of a previously negotiated private placement to it (which will close simultaneously with the offering), will own 45,000 shares of our common stock. Golden Pegasus Racing Incorporated, our officers or directors or one of our other affiliates (which may be an entity controlled by or included in The Stronach Group) may, but will not be required to, purchase additional shares in the offering. Shares purchased in this offering by our affiliates, including Golden Pegasus Racing Incorporated, our officers and directors and their respective affiliates, will be counted in determining whether the offering is fully subscribed. The minimum investment in the offering is $100. Investors tendering funds online by debit card will be required to pay a non-refundable convenience fee of $3.50 per transaction. Investors will be required to satisfy the suitability requirements described in the prospectus in order to invest in the offering. Without limitation of the foregoing, Pennsylvania and Kentucky residents will be required to represent that they have (i) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home, and home furnishings; or (ii) a minimum net worth of $250,000, exclusive of automobile, home, and home furnishings, plus, in the case of Pennsylvania residents, estimated gross income of $65,000 during the current tax year, and in addition, in either case, that their investment does not exceed 10% of their net worth. California, Oregon and New Jersey residents will be required to represent that they have (i) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $250,000, plus estimated $65,000 gross income during the current tax year; or (ii) a minimum liquid net worth (exclusive of home, home furnishings and automobile) of $500,000, and in addition, in either case, that their investment does not exceed 10% of their net worth. Our certificate of incorporation provides that our corporate duration will end on November 2, 2013. Following such date, there will be no trading in our common stock and our activities will be limited to liquidating and winding up our business. We intend to distribute the net proceeds from the liquidation of our assets, after establishing any required reserves, no later than March 31, 2014. There currently is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. We may seek to have our shares traded on the OTCQB market, although no assurance can be given that our shares will trade on the OTCQB or any other market. Investing in thoroughbred racehorses is a speculative activity and involves a high degree of risk. The most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoroughbred racehorse is the partial or total loss of invested capital. You should read the Risk Factors section beginning on page 22 of this prospectus before investing in our common stock. Per share Total Common Stock Offered Hereby $ 10.00 $ 4,050,000 In connection with our selling efforts in the offering, none of our officers, directors, employees or independent contractors will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. There are no underwriters involved in the offering and no underwriting commissions will be paid in connection with the sale of the common stock to the public. We have engaged Aegis Capital Corp. as a nonexclusive sales agent and have agreed to pay a sales fee of four percent (4%) in connection with sales to investors who invest in the offering through Aegis. We may engage additional registered broker-dealers to sell some or all of the shares offered hereby and may pay a commission of up to ten percent (10%) in connection with such sales. Commissions paid to selling agents will be paid through an additional capital contribution to us to be made by Golden Pegasus Racing Incorporated in consideration for which Golden Pegasus Racing Incorporated will not receive any additional shares of our common stock. As a consequence, commissions paid to selling agents will not reduce proceeds received from investors in the offering and will not dilute the equity ownership of investors in the offering. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements in future filings. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 2012 Table of Contents Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to our director, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. Introduction In this prospectus, the terms company, we, us and our refer and relate to Ginger Punch Racing Corporation . In this prospectus, the term Golden Pegasus refers to Golden Pegasus Racing Incorporated, a Delaware corporation, and the term Alpen House refers to The Alpen House Racing ULC, an unlimited liability company organized under the laws of Alberta that is part of The Stronach Group. The Stronach Group is a consortium of companies that owns, among other businesses, horse racetracks and other horseracing-related assets. In this prospectus, the term Adena Springs refers to the Adena Springs horse farms owned and operated by Alpen House. Concurrently with this offering, other companies organized at the direction of affiliates of Golden Pegasus and having business plans substantially similar to ours are conducting public offerings of their equity securities. We refer to these other companies (Macho Uno Racing Corporation , Awesome Again Racing Corporation , Perfect Sting Racing Corporation , Red Bullet Racing Corporation and Ghostzapper Racing Corporation ) as our sister companies and, together with us, as the Racing Companies. Market and Industry Data Some of the market and industry data contained, or incorporated by reference, in this prospectus are based on independent industry publications or other publicly available information that we believe is reliable. Glossary Throughout this prospectus, we use terms associated with the thoroughbred horseracing industry. The following glossary of terms is intended to assist prospective investors who may not be familiar with these terms. Barn Foreman A person who handles the grooms and hot walkers and implements the horse s day-to-day routine. Blacksmithing Equine hoof care, including the trimming and balancing of horses hooves and the placing of shoes on their hooves. Board The term commonly used when a horse lives at a third party facility where the owner pays money to the facility owner to take care of the horse. Breaking To train a young horse to wear a bridle and saddle, carry a rider and respond to a rider s commands. Broodmare A filly or mare that has been bred and is used to produce foals. Campaigned To race in a number or series of competitions. Champion Any Eclipse Award winner is referred to as a champion in the United States. Table of Contents the offering and is intended to convey the spirit of sportsmanlike competition we hope to foster among the Racing Companies. It is anticipated that racing results, aggregate winnings and other information about the Racing Companies will be disclosed on an HRL website to be launched following the completion of the offering once such information, to the extent material, has been disclosed in a manner compliant with Regulation FD. Competitive Considerations We believe the following to be our significant competitive strengths: Experienced Horse Selection Team. The thoroughbred racehorses we acquired from Alpen House were selected for purchase by Alpen House predominantly at auction by a team that included owners and veterinary professionals with extensive experience in the thoroughbred horseracing industry. This team, which we refer to as the thoroughbred selection team, consisted of: Frank Stronach, who, through various entities, has owned and raced thoroughbred horses since 1962, including approximately 380 stakes winners. The Adena Springs horse farm, which is owned by Alpen House, has been the recipient of numerous awards, including four Eclipse Awards from the Thoroughbred Racing Associations as outstanding owner; Dan Hall, who has participated in the selection and purchase of prize winning horses and is a managing partner of Hidden Brook Farm, a 600-acre thoroughbred nursery specializing in the breeding, raising, breaking and rehabilitation of horses; Mark Roberts, also a partner in Hidden Brook Farm, who has been involved in many facets of the thoroughbred industry over a 37-year period; Dr. Robert McMartin, a thoroughbred industry veterinarian, consultant and advisor; and Dr. Peter A. Kazakevicius, a full-time veterinarian for the Adena Springs horse farms. Professional Management. Golden Pegasus will supervise all aspects of the training and racing development of our horses. Michael Rogers, the chief executive officer of Golden Pegasus, has over 27 years of experience in the thoroughbred horseracing industry. Mark Roberts, a member of the thoroughbred selection team, is the President of Golden Pegasus. Jack Brothers, our chief executive officer, is a managing partner of Hidden Brook Farm and has over 36 years of experience in the industry. Access to High Quality Trainers, Training Facilities and Personnel. The day-to-day care, training and racing management of our horses will be subcontracted to Adena Springs pursuant to an agreement between Adena Springs and Golden Pegasus. Adena Springs owns approximately 900 of its own thoroughbred racehorses and has an extensive network of relationships with trainers. Because of its relationship with Adena Springs, we believe that Golden Pegasus is well positioned to seek out trainers who are favorably recognized in the thoroughbred racing industry to work with our horses (although its ultimate ability to engage such trainers will be influenced by market forces and there can be no assurance that it will be successful in doing so). We believe, based on Adena Springs high level of recognition in the thoroughbred horseracing industry and our officers direct experience with Adena Springs, that Adena Springs permanent staff, and its training tracks, barns and other facilities, to which our thoroughbreds will have access when they are not being stabled at racetracks or other remote facilities, are of high quality standards within the industry. Our Strategy We intend to pursue opportunities to realize revenues from two principal activities: racing our horses during our operating period and selling our horses in claiming races or in connection with the liquidation of our assets or otherwise. Table of Contents Table of Contents Claiming The process by which a licensed person may purchase a horse entered in a race designated as a claiming race for a predetermined price. When a horse has been claimed, its new owner assumes title after the starting gate opens although the former owner is entitled to all purse money earned in that race. Colt An ungelded male horse four years old or younger. Conformation The shape and correctness of the anatomy of a horse. Consignor The person offering a horse for sale through an auction either as or on behalf of the owner or vendor of the horse. Dam The mother of a horse. Eclipse Award The Eclipse Award of Merit is the thoroughbred racing industry s highest honor and is co-sponsored by the National Thoroughbred Racing Association, Daily Racing Form and the National Turf Writers Association. The Eclipse Awards are year-end awards honoring the top horses in 11 separate categories; the leading owner, trainer, jockey, apprentice jockey and breeder; and members of the media who have demonstrated excellence in their coverage of the sport. Entry Fee The money paid to enter a horse in a stakes race. Exercise Rider A rider who is licensed to exercise a horse during its morning training session. Filly A female horse four years old or younger. Foal A horse of either sex in its first year of life. The term foal can also denote the offspring of either a male or female parent. Full Field When a race is filled to capacity. Gelding A surgical procedure to remove both testicles from a male horse. Grade I, II and III Stake Races The top level for stakes races is the graded stakes race, which can have no restrictions other than age or sex. There are three grades, and the grade assigned a race is controlled by the Graded Stakes Committee, which is a committee of the Thoroughbred Owners and Breeders Association that insures the equivalence of Grade I, II and III stakes races regardless of the track being run. Grade I level races are the top tier, Grade II are the second tier and Grade III are the third tier. Groom A person who cares for a horse in a stable. Horseman A racehorse owner or trainer. Hot Walkers A person who walks horses to cool them out after workouts or races. Table of Contents We expect to begin racing those of our thoroughbreds that we believe to be promising in the third quarter of 2012. We intend to train and race our horses until November of 2013 and sell the horses we own at such time as three-year olds. After the horses are sold, the net proceeds from our liquidation will be distributed to our stockholders of record as of the close of business on our end date. Our business plan may be considered unique because of the short duration of our expected operating period and our plan to sell our horses as three-year olds, principally in all ages horse auctions, which are held in November through February each year. The opportunity to receive a return of capital or any profit from an investment in us will depend on, among other factors, our ability to generate net proceeds from the sale of our horses as three-year olds. Most thoroughbred horses are sold as yearlings or two-year olds and there is no widely recognized auction or other market for the sale of three-year old horses. Three-year olds are included in all ages horse auctions but currently constitute only a small percentage of the horses sold in those auctions. The sales of successful, and therefore higher priced, in form three-year olds that occur take place principally by way of privately negotiated sales. Conversely, owners wishing to sell three-year olds at price points up to $100,000 may do so by entering the horses in claiming races (which, as discussed in detail under Business Potential Sources of Racing Revenues, are races in which all horses entered are eligible to be purchased by licensed owners or trainers who put in a bid at the claiming price). Many owners, however, are reluctant to sell in form three-year olds because of the racing opportunities that are available during the horse s remaining racing career and because of the emotional bonds that tend to form over time between owners and their thoroughbreds. The risk of purchasing an in form thoroughbred is lower than the risk of purchasing a horse that has not commenced its racing career because there is more certainty about future racing potential. At the end of a horse s three-year old status, it will have completed the major races in which it was eligible to be entered as a two- or three-year old. Prospective purchasers will therefore be in a good position to evaluate both the potential future racing performance of the horse and its potential for generating breeding fees as a broodmare or stallion, which are the most significant factors influencing sale price for a mature horse. Accordingly, we believe that the sale prices of our horses at auction at this point in their careers are likely to reflect fully informed and market-efficient valuations. Although our business model is untested and there can therefore be no assurance, we believe, for the foregoing reasons, that our planned approach to realizing value from our horses may prove superior to syndications in which there is no fixed end date and that an operating period ending at the time our horses can be entered into all ages horse auctions as three-year olds is preferable to a shorter or longer operating period. However, our plan to sell our horses as three-year olds is an untested business model that may not maximize returns to investors and that may result in our investors failing to realize any return on invested capital or losing some or all of their invested capital. Frank Stronach, our Chairman, has indicated a potential desire to bid for our horses when they are sold at auction. Mr. Stronach was integral to the process of identifying, bidding on and financing the purchase of our horses and may enjoy an informational advantage concerning the racing and breeding potential of our horses that could permit Mr. Stronach to assess the value of the horses more accurately than other potential purchasers at the time of our liquidation. Furthermore, Mr. Stronach s fiduciary duties to the company could potentially conflict with his desire to purchase horses at auction at the best possible price. In order to ameliorate these risks, we have adopted procedures that will substantially limit Mr. Stronach s involvement in the process of liquidating our horses. See Conflicts of Interest Liquidation. We do not believe that investors will be adversely impacted by these limitations on Mr. Stronach s involvement in the liquidation process because our other officers and directors and those of Golden Pegasus, many of whom also have long histories and extensive experience in the thoroughbred industry, will be directly and substantially involved in all aspects of the liquidation of our horses. However, there can be no assurance that we will be as successful in liquidating our horses as would be the case if Mr. Stronach were directly involved in the liquidation process on our behalf. Because the ability to sell our horses is central to our business plan, we will seek to implement a racing strategy that develops our horses to a profitable sale position by November of 2013, although there can be no assurance that we will be successful in doing so. We will seek opportunities to generate racing revenues during our operating period. Table of Contents In Form A horse that has previously been entered in at least one race. International Stud Book Committee An international organization of stud book authorities that meets annually to establish standards of stud book operation in order to ensure the integrity and future development of the thoroughbred breed. Among other things, the International Stud Book Committee establishes standards for operating and maintaining a thoroughbred stud book, breeding and identification of thoroughbreds and the movement of thoroughbreds between stud book authorities. Live horse races When horses are racing live at a track. Live Racing Day A day when there is live racing at a track. Mare A female horse five years old or older. Nomination A fee paid to make a horse eligible to enter a stakes race. Pari Mutuel Wagering A form of wagering in which all money bet is divided up among those who have winning tickets after taxes and other deductions are made. Purse winnings The monetary amount distributed after a race to the owners of the entrants who have finished in (typically) the top four or five positions. Racing Card The schedule of races at a racetrack on a specific day giving information about races, particularly the horses running in each race and their riders and trainers. Racing Secretary The racetrack official who drafts conditions of races and assigns weights for handicap horse races, which are races in which varying amounts of weight are added to the horse saddles in an attempt to even out the competition in case some horses are clearly more dominant than others. Runners The horses participating in a race. Sire The father of a horse. Stakes Race A horse race in which the prize offered is made up at least in part from the stake, or entry fee, that the horse owners must pay. Stakes Winners Horses that have won stakes races. Stallion A male horse used for breeding. Stallion Season The right to breed a mare to a particular stallion during one breeding season. Stud Book A registry and genealogical record that ensures the correct pedigree and identification of every thoroughbred. Table of Contents Our Organizational Structure The following chart shows the relationship between us and our principal affiliates at April 2, 2012. Table of Contents Stud Fee The price paid by the owner of a female horse to the owner of a stallion for the right to breed to it. The Jockey Club The Jockey Club is the breed registry for all thoroughbred horses in North America. It is responsible for maintaining The American Stud Book, which is a stud book that includes all thoroughbreds foaled in the United States, Canada and Puerto Rico as well as thoroughbreds imported into the United States, Canada and Puerto Rico from other nations that maintain similar thoroughbred registries. Thoroughbred A horse whose parentage traces back to any of three founding sires. To be considered a thoroughbred for racing or breeding purposes, a thoroughbred must have satisfied the rules and requirements of The Jockey Club and be registered in The American Stud Book or in a foreign stud book recognized by The Jockey Club and the International Stud Book Committee. Thoroughbred Owners and Breeders Association A national trade organization formed in 1961 for thoroughbred owners and breeders. The Thoroughbred Owners and Breeders Association is based in Lexington, Kentucky and its stated mission is to improve the economics, integrity and pleasure of the sport on behalf of thoroughbred owners and breeders. Three-Year olds A horse between three and four years of age. Two-Year olds A horse between two and three years of age. Yearling A horse in its second calendar year of life, beginning Jan. 1 of the year following its birth. Table of Contents Emerging Growth Company Status We are an emerging growth company as defined under the Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act. We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. As an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to: not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act (we also will not be subject to the auditor attestation requirements of Section 404(b) as long as we are a smaller reporting company, which includes issuers that had a public float of less than $ 75 million as of the last business day of their most recently completed second fiscal quarter); reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Under this provision, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. Our Company ZEONS Global was incorporated in the State of Delaware on April 29, 2010 as a combination of an international trade company and company run by a team of people with a mission to provide people with clean, affordable clean energy. Our founders are part of an extensive family history of experience in international trade, clean environmental programs and promotion of United States made products. ZEONS changed its name from Khanstellation Group, Inc. to its current name, ZEONS Global, Inc. on November 30, 2010. ZEONS primary business purpose will be the cost-effective production and distribution of sustainable, environmentally friendly and health conscious health and alternative energy products and services. This will be achieved through; i) partnerships with refineries to produce biofuel, ii) the continued development of ZEONS in-house fast moving consumer goods and national brands, iii) delivery of biofuels and consumer products to locations where ZEONS controls the pump and product sales mix to optimize economics, iv) consulting other U.S. manufacturers on developing their international expansion requirements, and v) partnering with real estate investors and developers who want to sell or lease properties to ZEONS. To avoid the fluctuation and risk that is associated with the consumer goods and energy industry, we will be a diversified company with multiple product lines and services to meet consumer and market needs. Biofuels or biodiesels are fuels that are, in essence, biodegradable and non-toxic. They are manufactured from vegetable oils, waste cooking oils, animal fats or tall oil (a by-product of the pulp and paper industry). These oils undergo a process called transesterification whereby they are subjected to a reaction with an alcohol (usually methanol or ethanol) using a catalyst such as sodium hydroxide. The resulting chemical reaction produces an ester called biodiesel and a by-product called glycerin. We plan to be an integrated enterprise characterized by substantial inter-group and inter-sector cooperation in research and development, manufacturing and marketing of products incorporating similar or complimentary component products manufactured at common internal sources. Our business will be developed from proprietary knowledge, research, products and technologies in sustainable alternative energy, agribusiness and the food chain. We believe that we will be the leading producers and marketers of eco-friendly and socially responsible consumer products for many of the markets we serve. ZEONS will operate in four industry sectors to address three market segments where opportunities have been defined, measured and monetized formally with sales activity and informally with strategic alliances. ZEONS addresses these integrated three market segments with operations supporting services. For the next twelve months (beginning March 2012), we plan to complete the purchase of business and commercial real estate assets, NAFTA Corridor Jobberships in Texas and Louisiana, retrofit convenience stores for additional income, position the Company to be at the forefront of renewable energy, agribusiness and food chain and expand the management team with operational and divisional leadership. Over the next twelve months we plan to spend approximately $25,000,000 to fully carry out our business plan. We have incurred net losses since our inception, and have not been able to reach the break-even point for the last two fiscal years. We will rely upon the sale of our securities to fund operations. We believe that increased revenues from our services will add new capital resources over the coming year, but we believe that our revenues will not provide sufficient capital resources to sustain our operations and fund product development over the next 12 months. We expect that our total expenses will increase over the next year as we increase our marketing and promotional activities and build brand awareness. Therefore, we expect to incur substantial losses over the next year. We will be dependent on future financing in order to maintain our operations and carry out our business plan. We currently do not have sufficient financing to carry out our business plan and there is no guarantee that we will be able to obtain the necessary financing. Accordingly, there is uncertainty about our ability to continue our operations. If we cease our operations, you may lose your entire investment in our stock. Risks Associated with Our Business Our business is subject to numerous risks, as more fully described in the section entitled Risk Factors. We are a development stage company and we have limited operating history for investors to evaluate the potential of our business development. We may be unable for many reasons, including those that are beyond our control, to implement our current business strategy. Where You Can Find Us Our principal executive office is located at 2961 W. MacArthur Blvd., Ste. 131, Santa Ana, CA 92704and our telephone number is (888) 582-1118. Our website is www.zeonsglobal.com. The information found on, or accessible through, the website does not contain all of the information necessary to evaluate this offering and is not part of this prospectus. The Offering Common stock offered by ZEONS 1,000,000 shares of common stock Common stock offered by Shareholders 0 shares of common stock Common stock outstanding before the offering 29,105,600 common shares as of September 30, 2011. Common stock outstanding after the offering 31,105,600 shares. Terms of the Offering We want to enlist a market maker to sell our shares on the OTC BB as part of the Offering We may use the internet and other electronic methods to sell our shares if our shares do not get listed on the OTC BB. The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Use of proceeds The net proceeds to the Company from this offering are estimated to be $25,000,000. We will use the proceeds for business expansion, potential strategic acquisitions, development of corporate branding and identity, marketing and operational needs. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page __.
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+PROSPECTUS SUMMARY 5
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+Table of Contents EXPLANATORY NOTE This Pre-Effective Amendment No. 1 to the Registration Statement contains a prospectus relating to the initial public offering of shares of limited liability company interests of Greenbacker Renewable Energy Company LLC (the Company ), a newly created Delaware limited liability company. Prior to the filing of this Pre-Effective Amendment No. 1, the Company acquired all of the outstanding shares of common stock of Greenbacker Renewable Energy Corporation ( GREC ), a Maryland corporation and the registrant that made the initial filing of this Registration Statement on December 28, 2011 under File No. 333-178786. As a result of the acquisition, GREC became a wholly owned subsidiary of the Company. The Company will file any future pre-effective amendment filings to this Registration Statement under File No. 333-178786-01. The original filing of this Registration Statement may be reviewed on the Commission s EDGAR system by referencing GREC under File No. 333-178786. Subsequent filings and related comment and response letters between us and the Securities and Exchange Commission may be reviewed by referencing the Company s filings under File No. 333-178786-01. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 11, 2012 PRELIMINARY PROSPECTUS Maximum Offering of $500,000,000 in Shares Minimum Offering of $2,000,000 in Shares Greenbacker Renewable Energy Company LLC Greenbacker Renewable Energy Company LLC is a newly organized, externally managed energy company that intends to acquire and manage income-generating renewable energy and energy efficiency projects and other energy-related businesses as well as finance the construction and/or operation of these projects and businesses. We will be externally managed and advised by Greenbacker Capital Management LLC, our advisor, a renewable energy, energy efficiency and sustainability related project acquisition, consulting and development company that intends to register as an investment adviser under the Investment Advisers Act of 1940. We expect to engage Greenbacker Administration LLC, our Administrator, to provide the administrative services necessary for us to operate. We are offering up to 50,000,000 shares of our limited liability company interests, or the shares, on a best efforts basis at an initial offering price of $10.00 per share through SC Distributors, LLC, the dealer manager for this offering. The dealer manager is not required to sell any specific number or dollar amount of shares but will use its best efforts to sell the shares offered. If our net asset value increases above our net proceeds per share as stated in this prospectus, we will sell our shares at a higher price as necessary to ensure that shares are not sold at a net price, after deduction of selling commissions, dealer manager fees, and organization and offering expenses, that is below our net asset value per share. In the event of a material decline in our net asset value per share, which we consider to be a 5% decrease below our current net offering price, and subject to certain conditions, we will reduce our offering price accordingly. Subscriptions for this offering will be for a specific dollar amount rather than a specified quantity of shares, which may result in subscribers receiving fractional shares rather than full share amounts. The minimum permitted purchase is $2,000 in shares. We have adopted a distribution reinvestment plan pursuant to which you may elect to have the full amount of your cash distributions from us reinvested in additional shares. We reserve the right to reallocate the shares we are offering between this offering and our distribution reinvestment plan. We will not sell any shares unless we have raised gross offering proceeds of $2.0 million by the date that is one year from the date of this prospectus. We refer to this threshold as the minimum offering requirement. See Plan of Distribution. All subscription payments will be held in an escrow account by UMB Bank, N.A., or UMB Bank, as escrow agent, for our subscribers' benefit pending release to us upon satisfaction of the minimum offering requirement. If we do not satisfy the minimum offering requirement within one year from the date of this prospectus, we will arrange for our escrow agent to promptly return all funds in the escrow account (including interest), and we will stop offering shares. We will not receive any fees or expenses out of any funds returned to investors. We may sell our shares in this offering until , , which is two years from the date of this prospectus; however, we may decide to extend this offering, which may be for up to an additional 18 months. In some states, we will need to renew our registration annually in order to continue offering our shares beyond the initial registration period. This is our initial public offering, and no public market exists for our shares. We do not currently intend to list our shares on an exchange and do not expect a public trading market to develop for the shares in the foreseeable future, and therefore, our shares are illiquid. Although we intend to explore a potential liquidity event between five and seven years following the completion of our offering stage, we may determine to explore or complete a liquidity event sooner than between five and seven years following the completion of our offering stage. However, there can be no assurance that we will complete a liquidity event during that period or at all. Therefore, if you purchase shares you will likely have limited ability to sell your shares. Furthermore, if you sell your shares in the initial years following your purchase, you will most likely receive less than the price you paid. See Share Repurchase Program and Liquidity Strategy. Investing in our shares may be considered speculative and involves a high degree of risk, including the risk of a substantial loss of investment. See Risk Factors beginning on page 19 for a discussion of the risks you should consider before investing in shares. An investment in our shares is not suitable for all investors. See Suitability Standards for information on the suitability standards that investors must meet in order to purchase shares in this offering. This prospectus contains important information about us that a prospective investor should know before investing in our shares. Please read this prospectus before investing and keep it for future reference. Upon completion of this offering, we will file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission, or the SEC, as required. This information will be available free of charge by contacting us at or by telephone at or on our website at www.greenbackerrenewableenergy.com. The SEC also maintains a website at www.sec.gov that contains such information. Neither the SEC, the Attorney General of the State of New York nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The use of projections or forecasts in this offering is prohibited. Any representation to the contrary and any predictions, written or oral, as to the amount or certainty of any future benefit or tax consequence that may flow from an investment in our shares is not permitted. Maximum Aggregate Price to Public Maximum Selling Commissions Maximum Dealer Manager Fee Proceeds, Before Expenses, to Us(1)(2) Offering Maximum Offering $ 500,000,000 $ 35,000,000 $ 13,750,000 $ 451,250,000 Minimum Offering $ 2,000,000 $ 140,000 $ 55,000 $ 1,805,000 Per Share $ 10.00 $ 0.70 $ 0.275 $ 9.025 Distribution Reinvestment Plan Per Share (1) The proceeds are calculated before deducting certain organization and offering expenses to us. In addition to selling commissions and dealer manager fees, we estimate that we will incur in connection with this offering approximately $100,500 of expenses (approximately 5.025% of the gross proceeds) if the minimum number of shares is sold and approximately $7.5 million of expenses (approximately 1.5% of the gross proceeds) if the maximum number of shares is sold. To the extent that all other organization and offering expenses exceed 5.025% of the gross offering proceeds, the excess expenses will be paid by our advisor with no recourse to us. See Compensation of the Advisor. (2) We are offering certain volume discounts resulting in reductions in selling commissions and dealer manager fees payable with respect to sales of shares for certain minimum aggregate purchase amounts to a purchaser. See Plan of Distribution Volume Discounts. The date of this prospectus is , 2012. Table of Contents ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that we have filed with the SEC to register a continuous offering of our shares. Periodically, as we make material investments or have other material developments, we will provide a prospectus supplement or amend this prospectus that may add, update or change information contained in this prospectus. We will endeavor to avoid interruptions in the continuous offering of our shares, but may, to the extent permitted or required under the rules and regulations of the SEC, supplement the prospectus or file an amendment to the registration statement with the SEC if our net asset value per share: (1) declines more than 5% below our current net offering price or (2) increases to an amount that is greater than the net proceeds per share as stated in the prospectus. There can be no assurance, however, that our continuous offering will not be suspended while the SEC reviews any such amendment and until it is declared effective. Any statement that we make in this prospectus may be modified or superseded by us in a subsequent prospectus supplement. The registration statement we have filed with the SEC includes exhibits that provide more detailed descriptions of certain matters discussed in this prospectus. You should read this prospectus and the related exhibits filed with the SEC and any prospectus supplement, together with additional information described in the section entitled Available Information in this prospectus. In this prospectus, we use the term day to refer to a calendar day, and we use the term business day to refer to any day other than Saturday, Sunday, a legal holiday or a day on which banks in New York City are authorized or required to close. In addition, we use certain industry-related terms in this prospectus, which are described in a Glossary of Certain Industry Terms, included in this prospectus as Appendix B. You should rely only on the information contained in this prospectus. Neither we nor the dealer manager has authorized any other person to provide you with different information from that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the dealer manager is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is complete and accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or sale of our shares. If there is a material change in the affairs of our company, we will amend or supplement this prospectus. For information on the suitability standards that investors must meet in order to purchase shares in this offering, see Suitability Standards. - 1 - Table of Contents PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus, and does not contain all of the information that you may want to consider when making your investment decision. To understand this offering fully, you should read the entire prospectus carefully, including the section entitled Risk Factors, before making a decision to invest in our shares. Greenbacker Renewable Energy Company LLC is a Delaware limited liability company formed on December 4, 2012. Unless the context requires otherwise or as otherwise noted, the terms we, us, our, and our company refer to Greenbacker Renewable Energy Company LLC, together with its consolidated subsidiaries, including Greenbacker Renewable Energy Corporation, a Maryland Corporation, which we refer to as GREC ; the term GCM and our advisor refer to Greenbacker Capital Management LLC, our external advisor; the term GGIC and strategic investor refers to Guggenheim Global Infrastructure Company Limited; the term Special Unitholder refers to GREC Advisor LLC, a Delaware limited liability company, which is a subsidiary of our advisor; special unit refers to the special unit of limited liability company interest in us entitling the Special Unitholder to an incentive allocation and distribution; the term SC Distributors and our dealer manager refer to SC Distributors, LLC, our dealer manager; the term Greenbacker Administration and our Administrator refer to Greenbacker Administration, LLC, our Administrator; the term LLC Agreement refers to the limited liability company agreement of our company, a copy of which is attached as Appendix C to this prospectus. Greenbacker Renewable Energy Company LLC We are a newly organized, externally managed energy company that intends to acquire and manage income-generating renewable energy and energy efficiency projects and other energy-related businesses as well as finance the construction and/or operation of these projects and businesses. We refer to these projects and businesses, collectively, as our target assets. We will be externally managed and advised by Greenbacker Capital Management LLC, or GCM, a renewable energy, energy efficiency and sustainability related project acquisition, consulting and development company that intends to register as an investment adviser under the Investment Advisers Act of 1940, or the Advisers Act. We expect to engage Greenbacker Administration to provide the administrative services necessary for us to operate. We will seek to capitalize on the significant investing experience of our advisor's management team, including the 26 years of investment banking and renewable energy expertise of Charles Wheeler, our Chief Executive Officer and President, and the Chief Investment Officer and a managing director of GCM. Mr. Wheeler has held various senior positions with Macquarie Group, including Head of Financial Products for North America and Head of Renewables for North America. While serving as Head of Renewables for North America, Mr. Wheeler's experience included completing wind project developments, solar asset acquisitions, assisting in the development of wind and solar greenfield projects, and assisting in the preparation of investment analyses for a biomass facility. Before moving to the United States to serve as Head of Financial Products for Macquarie Group in North America, Mr. Wheeler was a Director of the Financial Products Group in Australia with responsibility for the development, distribution and ongoing management of a wide variety of retail financial products, including real estate investment trusts, or REITs, infrastructure bonds, international investment trusts and diversified domestic investment trusts. We expect Mr. Wheeler will bring his extensive background in renewable energy and project and structured finance to help us effectively execute our strategy. We are organized as a Delaware limited liability company. We will conduct a significant portion of our operations through GREC, of which we are the sole shareholder. We intend to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940, as amended, the Investment Company Act. - 2 - Table of Contents Our Market Opportunity The market for renewable energy has grown rapidly over the past decade. According to the U.S. Department of Energy s 2011 Renewable Energy Data Book, or the Renewable Energy Data Book, global renewable energy capacity has nearly doubled between 2000 to 2011. Renewable electricity represented nearly 13% of total installed capacity and more than 12% of total electric power generation in the United States in 2011. Since 2000, renewable electricity installations in the United States have more than tripled, and in 2011 represent 146 GW of installed U.S. capacity, according the Renewable Energy Data Book. We believe that demand for alternative forms of energy from traditional fossil-fuel energy will continue to grow as countries seek to reduce their dependence on outside sources of energy and as the political and social climate continues to demand social responsibility on environmental matters. According to the Renewable Energy Data Book, the US Energy Administration anticipates in its base case that generation from renewable energy sources will grow by 77% from 2010 to 2035. Notwithstanding this growing demand, we believe that a significant shortage of capital currently exists in the market to satisfy the demands of the renewable energy sector in the United States and around the world, particularly with respect to small and mid-sized projects and businesses that are newly developed. Many of the traditional sources of equity capital for the renewable energy marketplace were attracted to renewable energy projects based on their ability to utilize investment tax credits, or ITCs, and tax deductions. We believe that due to changes in their taxable income profiles that have made these tax incentives less valuable, these traditional sources of equity capital have withdrawn from the market. In addition, much of the capital that is available is focused on larger projects that have long-term off-take contracts in place, and does not allow project owners to take any merchant or investment risk with respect to renewable energy certificates, or RECs. We believe many project developers are not finding or are encountering delays in accessing capital for their projects. As a result, we believe a significant opportunity exists for us to provide new forms of capital to meet this demand. We also believe that the market for energy efficiency projects is showing growth and opportunity. According to the submission of Steven Nadel to the House Energy and Commerce Committee for the Hearing on Smart Energy Act in 2012, the American Council for an Energy-Efficient Economy has estimated that by 2050, energy efficiency measures and practices could reduce U.S. energy use by 42% to 59% relative to current projections. As a result, we believe that a significant opportunity exists for us to finance projects which enhance the efficiency of energy assets, primarily in the United States. Our Competitive Strengths We believe that the following key strengths and competitive advantages will enable us to capitalize on the significant opportunities for growth in renewable energy projects. Significant Experience of GCM. The senior management team of our advisor, GCM, has a long track record and broad experience in acquiring, operating and managing income-generating renewable energy and energy efficiency projects and other energy-related businesses as well as financing the construction and/or operation of these projects and businesses. Attractive Return Profile of Asset Class. We believe that investments in renewable energy assets present the opportunity to generate significant and dependable cash flows and deliver attractive risk-adjusted returns over time. Unique Focus, Structure, and Early Mover Advantage. We believe that we are one of the first non-bank public companies focused on providing capital in the renewable energy sector. Upon completion of this offering, we expect to be a well capitalized public company and, as a result, we believe that we will be uniquely positioned to address the capital shortage problem in the renewable energy sector. Our organizational structure and tax profile is expected to allow us to capture the premium risk-adjusted returns otherwise demanded by third party tax credit equity providers. - 3 - Table of Contents Strategic Relationships and Access to Deal Flow. GCM's senior executives have extensive experience in the renewable energy, capital markets and project finance sectors and as a result have an extensive network of contacts in these sectors. We believe the breadth and depth of GCM's relationships will generate a continual source of attractive investment opportunities for us, which will enable it to enhance our ability to utilize our growth capital in an efficient timeframe. Alignment of Interests. We have taken multiple steps to structure our relationship with GCM so that our interests and those of GCM are closely aligned including the fact that GCM will not offer its shares for repurchase as long as GCM remains our advisor, as well as the structure of the incentive distribution to which an affiliate of GCM may be entitled. In considering our competitive strengths and advantages, you should also consider that an investment in us involves a high degree of risk. See Risk Factors. In addition, our advisor and its affiliates, including certain of our officers and directors, will face conflicts of interest including conflicts that may result from compensation arrangements with us. See Management Conflicts of Interest. Our Business Objective and Policies Our business objective is to generate attractive risk-adjusted returns for our members, consisting of both current income and long-term capital appreciation, by acquiring, managing and financing the construction and/or operation of income-generating renewable energy, energy efficiency and sustainable development projects, primarily within but also outside of North America. We expect the size of our investments to generally range between approximately $1 million and $100 million. We will seek to maximize our risk-adjusted returns by: (1) capitalizing on underserviced markets; (2) focusing on hard assets that produce significant and dependable cash flows; (3) efficiently utilizing government incentives where available; (4) employing creative deal structuring to optimize capital, tax and ownership structures; (5) partnering with experienced financial, legal, engineering and other professional firms; (6) employing sound due diligence and risk mitigation processes; and (7) monitoring and managing our assets on an ongoing basis. Our board of directors may change our operating policies and strategies without prior notice or member approval. See Our board of directors may change our operating policies and strategies without prior notice of member approval, the effects of which may be adverse. in Risk Factors Risks Related to Our Business and Structure for greater detail. Our goal is to assemble a diversified portfolio of renewable energy, energy efficiency and other sustainability related projects and businesses. Renewable energy projects earn revenue through the sale of generated electricity as well as frequently through the sale of other commodities such as RECs and energy efficiency certificates, or EECs, which are generated by the projects. We expect initially to focus on solar energy and wind energy projects. We believe solar energy projects generally offer more predictable power generations characteristics, due to the relative predictability of sunlight over the course of time compared to other renewable energy classes and therefore we expect they will provide more stable income streams. However, technological advances in wind turbines and government incentives make wind energy projects attractive as well. Solar energy projects provide maximum energy production during the middle of the day and in the summer months when days are longer and nights shorter. Generally, the demand for power tends to be higher at those times due to the use of air conditioning and as a result energy prices tend to be higher. In addition, solar projects are eligible to receive significant government incentives at both the federal and state levels which can be applied to offset project development costs or supplement the price at which power generated by these projects can be sold. Solar energy projects also tend to have minimal environmental impact enabling such projects to be developed close to areas of dense population where electricity demand is highest. Solar technology is scalable and well-established and it will be a relatively simple process to integrate new acquisitions and projects into our portfolio. Over time, we expect to broaden our strategy to include other types of renewable energy projects and businesses, which may include wind farms, hydropower assets, geothermal plants, biomass and biofuel assets, combined heat and power - 4 - Table of Contents technology assets, fuel cell assets and other energy efficiency assets, among others, and to the extent we deem the opportunity attractive, other energy related assets and businesses. Our primary investment strategy is to acquire controlling equity stakes, which we define as ownership of 25% or more of the outstanding voting securities of a company or having greater than 50% representation on a company's board of directors, in our target assets and to oversee and supervise their power generation and distribution processes. However, we will also provide project financing to projects owned by others, including through the provision of secured loans which may or may not include some form of equity participation. We may also provide projects with senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, and preferred equity, and make minority equity investments. We may also participate in projects by acquiring contractual payment rights or rights to receive a proportional interest in the operating cash flow or net income of a project. Our strategy will be tailored to balance long-term energy price certainty, which we can achieve through long-term power purchase agreements, with shorter term arrangements that allow us to potentially generate higher risk-adjusted returns. Our Corporate Structure Our anticipated organizational structure upon completion of the offering will be as follows: About Greenbacker Capital Management GCM will manage our investments. GCM is a newly formed renewable energy, energy efficiency and sustainability related project acquisition, consulting and development company that intends to register under the Advisers Act. GCM is led by its Chief Executive Officer, David Sher, who has four years of experience in the - 5 - Table of Contents energy infrastructure and project finance sector and 22 years of experience in the financial services sector, its President and Chief Investment Officer, Charles Wheeler, who has 20 years of experience in the energy infrastructure and project finance sector and 26 years of experience in the financial services sector, its General Counsel, Robert Lawsky, who has six years of experience in the energy infrastructure and project finance sector and six years of experience in the financial services sector, and Managing Directors, Robert Sher, who has four years of experience in the energy infrastructure and project finance sector and 22 years of experience in the financial services sector, and Todd Coffin, who has seven years of experience in the energy infrastructure and project finance sector and 23 years of experience in the financial services sector. Collectively, GCM's management team has 41 years of experience in the energy, infrastructure, and project finance sectors and 99 years of experience in the financial services sector. Over this time, they have developed significant commercial relationships across multiple industries that we believe will benefit us as we implement our business plan. GCM will also be required to provide us with a Chief Financial Officer, who will be seconded exclusively to us pursuant to a secondment agreement with GCM. GCM maintains comprehensive renewable energy, project finance, and capital markets databases and has developed proprietary analytical tools and due diligence processes that will enable GCM to identify prospective projects and to structure transactions quickly and effectively on our behalf. Neither GCM, Greenbacker Group LLC nor our senior management team have previously sponsored any other programs, either public or non-public, or any other programs with similar investment objectives as us. GCM is a joint venture between Greenbacker Group LLC and Strategic Capital Advisory Services, LLC, or Strategic Capital. The purpose of the joint venture is to permit our advisor to capitalize upon the expertise of the GCM management team as well as the experience of the executives of Strategic Capital in the structuring of investment programs and providing administrative and operational services with respect to those programs. Strategic Capital will provide certain services to, and on behalf of, our advisor, including but not limited to consulting and advisory services related to our formation and the structure of this offering, communications with existing investors, selecting and negotiating with third party vendors and other administrative and operational services. Our Strategic Investor GGIC is a strategic investor in GCM. Two representatives of GGIC are members of GCM s investment committee. As such, leveraging GGIC s expertise, global deal origination capabilities, and existing investment and monitoring processes, they will assist GCM with identifying and evaluating investment opportunities and monitoring investments. GGIC, an affiliate of Guggenheim Partners, LLC, focuses on investments in the global infrastructure sector. It has developed, invested in and managed energy and infrastructure projects in Asia, Latin America and the US. In addition, GGIC's principals have extensive experience in the acquisition, management and disposition of US power and utility assets. Guggenheim Partners, LLC, is a privately held global financial services firm with more than $160 billion in assets under management. The firm provides asset management, investment banking and capital markets services, insurance, institutional finance and investment advisory solutions to institutions, governments and agencies, corporations, investment advisors, family offices and individuals. Our Dealer Manager SC Distributors, LLC, a Delaware limited liability company formed in March 2009, is an affiliate of our advisor and Strategic Capital and will serve as our dealer manager for this offering. Our dealer manager is a member firm of the Financial Industry Regulatory Authority, or FINRA, and is located at 610 Newport Center Drive, Suite 350, Newport Beach, California 92660. - 6 - Table of Contents The Offering Maximum Offering Amount: 50,000,000 shares Maximum Amount Issuable Pursuant to Our Distribution Reinvestment Plan: shares Price at Which Shares Initially Will Be Offered in This Offering: $10.00 per share Price at Which Shares Initially Will Be Offered in Our Distribution Reinvestment Plan: $9.50 per share Suitability Standards: (1) Net worth (not including home, home furnishings and personal automobiles) of at least $70,000 and annual gross income of at least $70,000; or (2) Net worth (not including home, home furnishings and personal automobiles) of at least $250,000. Suitability standards may vary from state to state and by broker-dealer to broker-dealer. See Suitability Standards for more details. Estimated Use of Proceeds: Approximately 88.75% (maximum offering) or approximately 85.25% (minimum offering) to acquire our target assets. Approximately 11.25% (maximum offering) or approximately 14.75% (minimum offering) to pay fees and expenses of the offering, including the payment of fees to our dealer manager and the payment of fees and reimbursement of expenses to our advisor. These estimates assume we incur no leverage. We will not sell any shares unless we have raised gross offering proceeds of $2.0 million by the date that is one year from the date of this prospectus. We refer to this threshold as the minimum offering requirement. After meeting the minimum offering requirement and holding our initial closing, except as described in this prospectus, we will sell our shares on a continuous basis at a price of $10.00 per share. However, if our net asset value per share increases above our net proceeds per share as stated in this prospectus, we will sell our shares at a higher price when necessary to ensure that shares are not sold at a net price, after deduction of selling commissions, dealer manager fees, and organization and offering expenses, that is below our net asset value per share. In the event of a material decline in our net asset value per share, which we consider to be a 5% decrease below our current net offering price, and subject to certain conditions, we will reduce our offering price accordingly. See Plan of Distribution. Corporate Governance and Restrictions on Ownership of Our Shares We are organized as a Delaware limited liability company under the Delaware Limited Liability Company Act. Our business and affairs are managed under the direction of our board of directors. The board of directors has retained GCM as our advisor, to manage our overall portfolio, acquire and manage our renewable energy and energy efficiency projects, subject to the board's supervision. Our board of directors is not staggered and all of our directors are subject to re-election annually. Holders of our shares have authority (with the requisite minimum number of votes) to call special meetings of members, to elect and remove our directors, consent to certain amendments to the LLC Agreement, and to take certain other actions and exercise certain other rights. - 7 - Table of Contents The directors owe substantially similar fiduciary duties to us and our members as the directors of a Delaware business corporation owe to the corporation and its stockholders. Our board of directors intends to establish an audit committee and a nominating and corporate governance committee, all of the members of which will be independent. We will also adopt a code of ethics relating to the conduct of business by our officers and directors. In addition, in general, we are not permitted, without the approval of holders of at least a majority of the outstanding shares, to take any action that a Delaware corporation could not take under the mandatory provisions of the Delaware Business Corporation Law without obtaining the approval of its stockholders. In order to reduce the risk that our subsidiary, GREC, will be classified as a closely held C corporation for tax purposes, our LLC Agreement generally prohibits, with certain exceptions, any person or group (other than GCM and its affiliates, or a direct or subsequently approved transferee of GCM and its affiliates) from actually or constructively owning more than 9.8% of any class of our shares then outstanding. We refer to this restriction as the ownership limit. In addition, our LLC Agreement provides that any ownership or purported transfer of our shares in violation of the ownership limit will result in that person or group losing its voting rights on all of its shares and the shares may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of members, calculating required votes, determining the presence of a quorum or for other similar purposes. However, our board of directors may, in its sole discretion, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or an excepted holder limit, for a particular person or group. See Our LLC Agreement Meetings and Voting Rights of Our Members.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus, including our financial statements and related notes included in this prospectus and the information set forth under the headings "Risk factors" and "Management's discussion and analysis of financial condition and results of operations," before making an investment decision. This prospectus contains statistical data extracted from a report commissioned by us and issued by Roland Berger, a third-party consulting firm, in 2012. Our business We are the largest car rental company in China, commanding a leading position in the industry as measured by fleet size, network coverage and number of customers, according to Roland Berger. We also command the largest market share in terms of revenue in China's car rental market, according to Roland Berger. We believe we are the first and only car rental company with a rental fleet of more than 10,000 vehicles in China's nascent but fast-growing car rental industry. Our fleet, comprising 25,845 vehicles covering most of the popular models in China, was as large as the aggregate fleet size of the next eight largest car rental companies and over three times that of the second largest car rental company in China as of December 31, 2011, according to Roland Berger. We are dedicated to providing customers with enjoyable, affordable and reliable car rental services. Our network of 520 service locations covers 66 cities in all provinces and provincial-level municipalities of China. We strive to provide superior car rental services to our customers with 24/7 service at 52 major airports in China and in every city where we operate. Our products include short-term rentals, long-term rentals and leasing. As of December 31, 2011, we had a customer base of over 450,000. Over 920,000 members registered with us through our loyalty program for short-term rentals as of December 31, 2011, of whom approximately 48.5% had rented cars from us. Our brand " ," or "China Auto Rental," has become the most recognized car rental brand in China, according to a consumer survey conducted by Roland Berger in 2011. According to Baidu Index and Google Trends, two major keyword search popularity indices, our brand had the highest search volume among car rental companies in China and our total search volume on Baidu and Google was over four times and twice, respectively, that of our closest competing brand in China in 2011. Leveraging our strong brand, we employ a direct sales strategy and market through targeted Internet and traditional advertising. We believe our direct sales approach lowers our customer acquisition costs by bypassing third-party intermediaries and enhances service quality and customer retention by providing us with in-depth understanding of customer needs. We have established a highly reliable and scalable information technology, or IT, platform, which fully integrates all aspects of our operations including transaction processing, customer management, fleet management and payment processing. Our IT platform allows us to collect, monitor and analyze vast amounts of customer, fleet and financial data on a real-time basis, which enables us to improve our operational efficiency and service quality. Our IT platform effectively supported our operations as our fleet expanded from 692 vehicles as of December 31, 2009 to 25,845 vehicles as of December 31, 2011, and we believe our IT platform is highly scalable for our future business expansion. We have achieved substantial growth over the past three years. We derive our revenues primarily from short-term rentals of our vehicles. Our revenues increased from RMB54.0 million in 2009 to RMB143.0 million in 2010 and RMB775.8 million (US$123.3 million) in 2011. We incurred net losses of RMB3.2 million, RMB43.3 million and RMB151.4 million (US$24.1 million) in 2009, 2010 and 2011. Our adjusted EBITDA for 2009, 2010 and 2011 was RMB17.3 million, RMB26.3 million and RMB275.7 million Amendment No. 9 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents (US$43.8 million), respectively. For a reconciliation of our adjusted EBITDA to our net loss, see footnote 2 on pages 9 and 10 of this prospectus. Our industry China's car rental industry is at an early stage of development and has experienced substantial growth in recent years. According to Roland Berger, total revenues in China's car rental industry grew from approximately RMB5 billion in 2005 to approximately RMB17 billion (US$2.5 billion) in 2010, representing a compound annual growth rate, or CAGR of 27%, and are expected to further increase to approximately RMB39 billion (US$6.1 billion) in 2015, representing a CAGR of 18% from 2010 to 2015. As of December 31, 2011, there were over 10,000 car rental companies in China with an average fleet size of no more than 50 vehicles, according to the same source. The car rental penetration rate, which is the number of rental vehicles as a percentage of the total number of registered passenger vehicles, is still low in China and has considerable room for growth, according to Roland Berger. Further, in contrast to more mature markets, the majority of car rentals in China is for business use, while leisure use and replacement rentals constitute a smaller yet growing percentage of the total market, according to Roland Berger. Growth in China's car rental industry is driven largely by the rapid growth of China's economy, the urbanization of China's population, the increase in disposable income of China's consumers, improvement in China's road infrastructure, the increasing burden of car ownership and a favorable policy environment. China's car rental market is divided into two segments: short-term rentals, or rentals of 30 days or less, and long-term rentals, or rentals of over 30 days. Sustained disparity between numbers of licensed drivers and car owners is expected to contribute to the growth in the short-term rental market in China, according to Roland Berger. China had approximately 151.3 million licensed drivers and 61.2 million registered passenger vehicles as of December 31, 2010, according to the National Bureau of Statistics of China, or the NBSC. Growth of the short-term rental market in China is also expected to be driven by the development of the replacement rental market and improved credit verification systems, according to Roland Berger. We believe that an increase in the amount of local travel by Chinese consumers and the growth of the domestic travel industry also indicate a growing demand for short-term rentals. Growth of the long-term rental market in China is expected to be driven by demand for car use by institutional customers that prefer not to incur large capital expenditures or dedicate significant resources to fleet management, as well as government agencies resorting to long-term rentals due to policy reform limiting car ownership by government agencies, according to Roland Berger. Our strengths We believe the following strengths have contributed to our success and differentiated us from our competitors: leading position in China's nascent but fast-growing car rental market; quality services and leading brand; strong business partnerships; diversified business mix; highly reliable and scalable IT platform; and experienced management team. China Auto Rental Holdings Inc. (Exact name of registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands (State or other jurisdiction of incorporation or organization) 7510 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) 2F, Lead International Building 2A Zhonghuan South Road, Wangjing Chaoyang District Beijing, PRC 100102 +86-10-5820-9999 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Corporation Service Company 1180 Avenue of the Americas, Suite 210 New York, New York 10036-8401 +1-800-927-9800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our strategy Our goal is to solidify and strengthen our leadership position in China's car rental market. To achieve this goal, we intend to: enhance market leadership position; further expand customer base and improve customer loyalty; continue to improve operational efficiency; and develop and enhance our used car sale business. Our challenges Our business is subject to numerous risks, as more fully described in the section entitled "Risk factors" and other information included in this prospectus. These risks include: our limited operating history in an emerging and rapidly evolving market; our ability to be profitable in the future; our ability to manage our growth or execute our strategies effectively; our ability to maintain or improve certain of our key operating metrics since our average daily rental rate, utilization rate and RevPAC decreased from 2009 to 2011 as our business expanded and our ability to comply with certain restrictive covenants relating to utilization rate. Please see "Summary consolidated financial and operating data" on pages 10 and 11 for the definition and the calculation of our average daily rental rate, utilization rate and RevPAC; the sustainability of our growth; our ability to manage our liquidity and cash flows, retain existing financial resources or raise additional capital; the effect of restrictive covenants on our ability to incur additional indebtedness and capital expenditures and conduct our business and our ability to comply with these restrictive covenants as we may not be able to maintain the required asset-liability ratio for our borrowings from Hua Xia Bank Co., Ltd. during the year ending December 31, 2012 and certain of our other credit facilities contain cross-default or cross-acceleration provisions; our ability to maintain and enhance our reputation and market recognition of our brand; the substantial control of our directors, executive officers and principal shareholders, who will beneficially own approximately 79.6% of our outstanding ordinary shares after this offering assuming no exercise of option to purchase additional ADSs by the underwriters, over our corporate actions; and uncertainties in the PRC car rental industry. Copies to: David T. Zhang, Esq. Fan Zhang, Esq. Kirkland & Ellis International LLP c/o 26/F, Gloucester Tower, The Landmark 15 Queen's Road Central Hong Kong +852-3761-3318 James C. Lin, Esq. Li He, Esq. Davis Polk & Wardwell LLP 2201, China World Office 2 1 Jian Guo Men Wai Avenue Chaoyang District Beijing 100004, China +86-10-8567-5000 Table of Contents Our corporate structure The following diagram illustrates our corporate structure as of the date of this prospectus: In September 2007, Mr. Charles Zhengyao Lu, our chairman and chief executive officer, founded Beijing China Auto Rental Co., Ltd., or CAR Beijing, and we commenced our car rental business. Legend Holdings Limited, or Legend Holdings, a leading investment holding company in China with investments in a broad array of industries, and its affiliate LC Fund III, L.P., became our shareholders in November 2010 and August 2010, respectively, owning approximately 64.49% of our company. In January 2012, Legend Holdings and LC Fund III, L.P. transferred all of their equity interests in us to their affiliate Grand Union Investment Fund, L.P., or Grand Union. For more detailed disclosure of our corporate structure, see "Corporate structure and history Corporate history and reorganization" and "Principal and selling shareholders." Legend Holdings has provided strong financial support for our efforts to replenish and expand our rental fleet, including loans and guarantees to secure our borrowings from financial institutions. As of March 31, 2012, the outstanding principal amount of loans from Legend Holdings totaled RMB908.0 million (US$144.3 million). The aggregate outstanding amount of borrowings from financial institutions guaranteed by Legend Holdings totaled RMB2,281.2 million (US$362.4 million) as of December 31, 2011, RMB368.3 million (US$58.5 million) of which were also secured by certain of our rental vehicles. For more detailed disclosure of Legend Holdings' financial support and related risks, see "Management's discussion and analysis of financial condition and results of operations Liquidity and capital resources," "Risk factors Risks related to our business and industry Loans extended by Legend Holdings may be declared void by PRC authorities, which may adversely affect our financial condition and results of operations," and "Risk factors Risks related to our business and industry Our business and results of operations may be adversely affected if Legend Holdings fails to comply with the terms of guarantees for our borrowings or ceases to provide similar guarantees in the future." Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering. Table of Contents Our corporate information Our principal executive offices are located at 2F, Lead International Building, 2A Zhonghuan South Road, Wangjing, Chaoyang District, Beijing 100102, People's Republic of China. Our telephone number at this address is +86-10-5820-9999 and our fax number is +86-10-5820-9966. Our registered office in the Cayman Islands is located at the offices of Offshore Incorporations (Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman KY1-1112, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our website is www.zuche.com. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, New York 10036-8401. Conventions that apply to this prospectus Unless otherwise indicated, references in this prospectus to: "we," "us," "our," "our company" or "China Auto Rental Holdings Inc." are to China Auto Rental Holdings Inc., a Cayman Islands company and its subsidiaries; "shares" or "ordinary shares" are to our ordinary shares, par value US$0.00005 per share; "Share Incentive Plan" are to our 2012 share incentive plan; "ADSs" are to our American depositary shares, each of which represents four ordinary shares; "ADRs" are to the American depositary receipts, which, if issued, evidence our ADSs; "China" or the "PRC" are to the People's Republic of China, excluding Taiwan and the special administrative regions of Hong Kong and Macau for the purposes of this prospectus only; "RMB" or "Renminbi" are to the legal currency of China; and "US$" are to the legal currency of the United States. This prospectus contains translations of certain Renminbi amounts into U.S. dollars at specified rates. For amounts not recorded in our consolidated combined financial statements included elsewhere in this prospectus, unless otherwise stated, all translations of financial data from Renminbi into U.S. dollars has been made at RMB6.2939 to US$1.00, the noon buying rate in effect on December 30, 2011 as set forth in the H.10 Statistical Release of the Federal Reserve Board. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On April 20, 2012, the noon buying rate was RMB6.3080 to US$1.00. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered(1)(2) Amount to be registered(1) Proposed maximum offering price per ordinary share Proposed maximum aggregate offering price(3) Amount of registration fee Ordinary shares, par value US$0.00005 per share 50,600,000 US$3.125 US$158,125,000 US$18,121(4) (1)Includes ordinary shares that may be purchased by the underwriters pursuant to an option to purchase additional ADSs. Also includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These ordinary shares are not being registered for the purposes of sales outside of the United States. (2)American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-180627). Each American depositary share represents four ordinary shares. (3)Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act. (4)Previously paid. Table of Contents THE OFFERING The following assumes that the underwriters will not exercise their option to purchase additional ADSs in the offering, unless otherwise indicated. Offering price We currently estimate that the initial public offering price will be between US$10.50 and US$12.50 per ADS. ADSs offered by us 11,000,000 ADSs. ADSs outstanding immediately after this offering 11,000,000 ADSs (or 12,650,000 ADSs if the underwriters exercise their option to purchase additional ADSs in full). Ordinary shares outstanding immediately after this offering 294,760,000 ordinary shares (or 298,060,000 ordinary shares if the underwriters exercise their option to purchase additional ADSs in full). NASDAQ Global Select Market symbol CARH. The ADSs Each ADS represents four ordinary shares. The ADSs may be evidenced by ADRs. The depositary will hold the shares underlying your ADSs and you will have rights as provided in the deposit agreement. We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares, after deducting its fees and expenses. You may turn in your ADSs to the depositary in exchange for ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs, you agree to be bound by the deposit agreement as amended. To better understand the terms of the ADSs, you should carefully read the "Description of American depositary shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. Option to purchase additional ADSs We and the selling shareholder have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an additional 1,650,000 ADSs. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. Table of Contents Use of proceeds We estimate that we will receive net proceeds of approximately US$112.5 million from this offering (or US$121.3 million if the underwriters exercise their option to purchase additional ADSs in full), after deducting the underwriting discounts, commissions and estimated offering expenses payable by us and assuming an initial public offering price of US$11.50 per ADS, being the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus. We plan to use the net proceeds we receive from this offering for the following purposes: US$90.0 million for vehicle acquisition to further expand our rental fleet; and the balance for working capital and other general corporate purpose. See "Use of proceeds" for additional information. We will not receive any proceeds from the sale of ADSs by the selling shareholder. Lock-up Mr. Charles Zhenyao Lu, our chairman and chief executive officer, and Grand Union, our principal shareholder, have agreed with the underwriters not to sell, transfer or otherwise dispose of any ADSs, ordinary shares and similar securities for a period of 360 days after the date of this prospectus. We and all of our other directors, executive officers and existing shareholders have agreed with the underwriters not to sell, transfer or otherwise dispose of, and not to announce an intention to sell, transfer or otherwise dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. See "Underwriting" for more information.
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to Introbuzz .
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to Ultimate Rack, Inc. Overview We were incorporated in the State of Nevada on July 19, 2010 as Ultimate Rack, Inc. and are based in Wenatchee, WA. We are a development stage company and have not yet commenced operations. However, we are proceeding with our stated business plan to build and market for sale a vehicle mounted rack for bicycles. We have begun taking certain steps in furtherance of our business plan, including the design of the Company s main product, the ultimate rack. An ultimate rack is designed to hold up to four bicycles at one time. The rack is designed to fit into 1/4 , 2 , or 2 1/2 trailer hitch receivers, which are the three most common trailer hitch receiver sizes used on cars and light trucks. The Company intends to have its bicycle racks made in China and then shipped to a U.S. warehouse located in the state of Washington. The Company has received price quotes from Chinese manufacturers to produce its product. Our present stage of product development is limited to the design and manufacture of a prototype and the writing of our business plan. In order to implement our business plan and commence operations, we must take the following chronological steps: i) raise an additional $132,616, ii) draft and execute agreements with a manufacturer; iii) lease approximately 1,500 square feet of warehouse space, iv) create and design a website, v) create and design business cards and brochures, vi) market our website, vii) market our product to wholesalers. We do not consider ourselves to be a blank check company and we do not have any plan, arrangement, or understanding to engage in a merger or acquisition with any other entity. Additionally, we have a specific business plan and have moved forward with our business operations. Specifically, while in the development stage, we are proceeding with our business plan by perfecting the design of our main product, the ultimate rack. As of July 31, 2012 we had $21,036 in cash. We currently require $1,100 per month to sustain our minimal operations. At this rate, absent revenues or additional financing, we expect to have enough cash on hand to be able to sustain operations for approximately the next eighteen (18) months. In order to implement our business plan and fund our business operations, we estimate needing an additional $132,616 over the next twelve months and $24,000 each year thereafter in order to sustain our operations as a public company. We expect to fund our business operations by generating revenue. If we are unable to generate revenue, it is unlikely that we will be able to implement our business plan effectively. After this registration statement goes effective, we hope to raise additional capital by selling equity in additional offerings to investors. However, we do not have any plans in place to raise capital through additional offerings and we do not have any additional prospective investors at this time. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Where You Can Find Us Our principal executive office is located at 331 Valley Mall Pkwy #215, East Wenatchee, Washington 98802 and our telephone number is 509-393-3526. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.03 was determined by the price shares were sold to our shareholders in a private placement memorandum and is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Summary of Consolidated Financial Information The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data as of and for the fiscal year ended October 31, 2011 are derived from our audited financial statements. The statement of operations and balance sheet data as of and for the interim period ended July 31, 2012 are derived from our unaudited interim financial statements. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our financial statements and the related notes included in this prospectus. Statement of Operations: For the fiscal year ended October 30, 2011 Nine Months ended July 31, 2012 For the period from July 16, 2010 (Inception) to July 31, 2012 Revenues $ -- $ -- $ -- Professional fees -- 26,292 26,292 Salary & wages officers -- 252 15,252 General & administrative 713 226 939 Total operating expenses 713 26,770 42,483 Net loss $ (713 ) $ (26,770 ) $ (42,483 ) Net loss per common share - basic and diluted $ (0.00 ) $ (0.00 ) $ (0.00 ) Balance Sheet Data: October 31, 2011 July 31, 2012 Cash $ 32,045 $ 21,036 Prepaid expenses $ 12,000 $ -- Total assets $ 44,045 $ 21,036 Total current liabilities $ -- $ 1,261 Total stockholders' equity $ 44,045 $ 19,775 RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business WE HAVE A LIMITED OPERATING HISTORY IN WHICH TO EVALUATE OUR BUSINESS. We were incorporated in Nevada on July 19, 2010. We have no revenue to date and have a limited operating history upon which an evaluation of our future success or failure can be made. We estimate needing approximately $132,616 in order to fund our business operations for the next twelve months. In addition, we estimate needing approximately $24,000 each year thereafter in order to be able to sustain our continued business operations as a public company. If we are unable to generate the sufficient revenues needed to sustain our business operations, we may have to delay or cease the implementation of our business strategy. OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated no revenue. Specifically the Company, while in the development stage, is proceeding with its business plan by working on the design of the Company s main product, the ultimate rack. . If we cannot obtain sufficient funding, we may have to delay or cease the implementation of our business strategy. WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANIES. We are a development stage company, and to date, our development efforts have been focused primarily on the development and marketing of our business model. We have limited operating history for investors to evaluate the potential of our business development. We have not built our customer base and our brand name. In addition, we also face many of the risks and difficulties inherent in gaining market share as a new company: Develop an effective business plan; Meet customer standards; Attain customer loyalty; Our future will depend on our ability to bring our service to the market place, which requires careful planning of providing a product that meets industry standards without incurring unnecessary cost and expense. WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS. IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN. The development of our services will require the commitment of substantial resources to implement our business plan. Currently, we have no established bank-financing arrangements. Therefore, it is likely that we will need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. At this time, we do not have any plans in place to raise capital through additional offerings and we do not have any prospective investors. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. OUR OFFICERS AND DIRECTORS HOLD APPROXIMATELY 77.52% OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY AND HAVE SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS THAT MAY NOT BE IN THE BEST INTEREST OF ALL OTHER STOCKHOLDERS Our officers and directors control approximately 77.52% of our current outstanding shares of voting common stock. They may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may expedite approvals of company decisions, or have the effect of delaying or preventing a change in control or be in the best interests of all our stockholders. WE MAY ENCOUNTER SUBSTANTIAL COMPETITION IN OUR BUSINESS AND OUR FAILURE TO COMPETE EFFECTIVELY MAY ADVERSELY AFFECT OUR ABILITY TO GENERATE REVENUE. We believe that existing and new competitors will continue to improve their products and to introduce new products with competitive price and performance characteristics. We expect that we will be required to continue to invest in our product to compete effectively in our markets. Our competitors could develop a more efficient product which could have a material adverse effect on our business, results of operations and financial condition. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered (1) Proposed Maximum Aggregate Offering Price per share (2) Proposed Maximum Aggregate Offering Price Amount of Registration fee (3) Common Stock, $0.001 par value per share 4,350,000 $ 0.03 $ 130,500.00 $ 14.96 (1) This Registration Statement covers the resale by our selling shareholders of up to 4,350,000 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(a). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.03 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTCBB at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. (3) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our Chief Executive Officer ( CEO ) lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. OUR PRESIDENTAND SECRETARY HAVE FULL TIME JOBS WHICH MAY INTERFERE WITH THEIR RESPONSIBILITIES TO US. Sean Arizmendi, our President, and Fabian Arizmendi, our Secretary, each have full-time jobs elsewhere. Sean Arizmendi devotes 10 hours per week to the Company and Fabian Arizmendi devotes 5 hours per week to the Company. It is possible that our plan of operations may be materially delayed due to their limited work schedule with us. OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF SHAWN ARIZMENDI. WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS. We are presently dependent to a great extent upon the experience, abilities and continued services of Shawn Arizmendi, our President and Chief Executive Officer and Fabian Arizmendi, our Secretary. We currently do not have an employment agreements with either Shawn Arizmendi or Fabian Arizmendi. The loss of their services could have a material adverse effect on our business, financial condition or results of operation. OUR PRESIDENT AND SECRETARY DO NOT HAVE ANY EXPERIENCE IN THE BICYCLE RACK OR RELATED INDUSTRIES. Sean Arizmendi, our President, and Fabian Arizmendi, our Secretary, do not have any experience in the bicycle rack or related industries. Accordingly, they do not have certain skills or business contacts that would be useful for running such a business. They may have difficulty implementing the Company s business plan, and even if they are able to implement such plan, the Company may never become profitable due to such lack of experience. THE COMPANY MAY DEPEND ON COMPONENT AND PRODUCT MANUFACTURING PROVIDED BY THIRD PARTIES LOCATED OUTSIDE OF THE U.S. The Company is contemplating entering into a manufacturing agreement with a third-party manufacturer located in China. While this arrangement may lower operating costs, it also may reduce the Company s direct control over production and distribution. It is uncertain what effect such diminished control will have on the quality or quantity of products, or the Company s flexibility to respond to changing conditions. In addition, the Company will rely on the third-party manufacturer to properly assemble its product. However, the Company may remain responsible to the consumer for warranty service in the event of product defects. Any unanticipated product defect or warranty liability, whether pursuant to arrangements with contract manufacturers or otherwise, could materially adversely affect the Company s reputation, financial condition and operating results. Further, if manufacturing or logistics in the China location is disrupted for any reason, including but not limited to, natural disasters, information technology system failures, military actions or economic, business, labor, environmental, public health, or political issues, the Company s financial condition and operating results could be materially adversely affected. WE COULD BE SUBJECT TO PERSONAL INJURY, PROPERTY DAMAGE, PRODUCT LIABILITY, WARRANTY, ENVIRONMENTAL AND OTHER CLAIMS INVOLVING ALLEGEDLY DEFECTIVE PRODUCTS THAT WE SUPPLY. From time to time the Company may be involved in lawsuits or other claims arising in the course of business, including those related to products liability, relating to the design, manufacture or distribution of our products. Actual or claimed defects in the products we supply may result in our being named as a defendant in lawsuits asserting potentially large claims. We may incur losses relating to these claims, including costs associated with defending against them. Commencement of these lawsuits against us could reduce our sales and decrease our profitability. We may be unable to retain adequate liability insurance to cover such claims. WE HAVE NOT FILED FOR PATENTS OR ANY OTHER INTELLECTUAL PROPERTY PROTECTION. The Company has not applied for or obtained patents, or any form of intellectual property protection for its products. Therefore competitors may copy or replicate our product without any legal ramifications. If we do not file for IP protection, we increase the risk that competitors may copy our product, resulting in increased competition which could have a material adverse effect on the Company s financial condition and operating results. PRELIMINARY PROSPECTUS Subject to completion, dated October 12, 2012 Ultimate Rack, Inc. 4,350,000 SHARES OFCOMMON STOCK The selling security holders named in this prospectus are offering all of the shares of common stock offered through this prospectus. We will not receive any proceeds from the sale of the common stock covered by this prospectus. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.03 per share until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 2 to read about factors you should consider before buying shares of our common stock. Please note that the Company is a shell company in accordance with the Securities Act of 1933. Accordingly, the securities sold in this offering can only be resold through registration under the Securities Act of 1933; Section 4(l), if available, for non-affiliates; or by meeting the conditions of Rule 144(i). NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The Date of This Prospectus is: ________, 2012 Risk Related To Our Capital Stock WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.03 per share for the shares of common stock was determined based on the price of our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. WE ARE DEEMED A "SHELL COMPANY" AND AS SUCH OUR SHARES MAY NOT BE SALEABLE UNDER RULE 144 AND WE ARE SUBJECT TO ADDITIONAL REPORTING AND DISCLOSURE REQUIREMENTS. The Securities and Exchange Commission ("SEC") adopted Rule 405 of the Securities Act and Exchange Act Rule 12b-2 which defines a shell company as a registrant that has no or nominal operations, and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets. As we have limited assets and no revenues, we are considered to be a shell company. As a shell company, our shares of common stock cannot be resold under Rule 144 of the Securities Act of 1933. Our shares would only be able to resold through a registration statement declared effective by the SEC or by meeting the conditions of Rule 144(i). Shell companies are prohibited from using a Form S-8 registration statement pursuant to employee compensation plans. Additionally, shell companies are required to provide more detailed disclosure on a Form 8-K upon completion of a transaction that causes it to cease being a shell company. If an acquisition is undertaken (of which we have no current intention of doing), we must file a current report on Form 8-K containing the information required pursuant to Regulation S-K within four business days following completion of the transaction together with financial information of the acquired entity. In order to assist the SEC in the identification of shell companies, we are also required to check a box on Form 10-Q and Form 10-K indicating that we are a shell company. To the extent that we are required to comply with additional disclosure because we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 400,000,000 shares of capital stock consisting of 200,000,000 shares of common stock, par value $0.001 per share, and 200,000,000 shares of preferred stock, par value $0.001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are currently quoted on the OTCBB. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur costs totaling approximately $13,200 per year related to our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. WE ARE AN EMERGING GROWTH COMPANY, AND ANY DECISION ON OUR PART TO COMPLY ONLY WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. We are an emerging growth company, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to opt in to the extended transition period for complying with the revised accounting standards. BECAUSE WE HAVE ELECTED TO DEFER COMPLIANCE WITH NEW OR REVISED ACCOUNTING STANDARDS, OUR FINANCIAL STATEMENT DISCLOSURE MAY NOT BE COMPARABLE TO SIMILAR COMPANIES. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates. OUR STATUS AS AN EMERGING GROWTH COMPANY UNDER THE JOBS ACT OF 2012 MAY MAKE IT MORE DIFFICULT TO RAISE CAPITAL AS AND WHEN WE NEED IT. Because of the exemptions from various reporting requirements provided to us as an emerging growth company and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes quoted in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. WE MAY BE EXEMPT FROM THE REPORTING OBLIGATIONS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT AND THEREFORE MAY NOT HAVE TO PROVIDE INVESTORS WITH PERIODIC REPORTS AS MAY BE REQUIRED PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT, FOLLOWING THE FORM 10K REQUIRED FOR THE FISCAL YEAR IN WHICH OUR REGISTRATION STATEMENT IS EFFECTIVE. The requirement for an issuer that has filed a registration statement to file pursuant to Section 15(d) of the Securities Exchange Act is suspended for any fiscal year, except for the fiscal year in which such registration statement becomes effective, if, at the beginning of the fiscal year, the issuer has fewer than 300 shareholders. We currently have fewer than 300 shareholders and expect to maintain a fewer than 300 shareholder base. If we do continue to have fewer than 300 shareholders, we will be exempt from the filing requirements as required pursuant to Section 13 of the Securities Exchange Act and will not be required to file any periodic reports, including Form 10Q and 10K filings, with the SEC subsequent to the Form 10K required for the fiscal year in which our registration statement is effective. Further, disclosures in our Form 10K that we will be required to file for the fiscal year in which our registration statement is effective, is less extensive than the disclosures required of fully reporting companies. Specifically, we are not subject to disclose in our Form 10K risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B, 6, respectively. UNTIL WE REGISTER A CLASS OF OUR SECURITIES UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, WE WILL ONLY BE SUBJECT TO THE PERIODIC REPORTING OBLIGATIONS IMPOSED BY SECTION 15(D) OF THE EXCHANGE ACT. Until such time as we register a class of our securities under Section 12 of the Securities Exchange Act, we will only be subject to the periodic reporting obligations imposed by Section 15(d) of the Exchange Act. Accordingly, we will not be subject to the proxy rules, Section 16 short-swing profit provisions, beneficial ownership reporting, the bulk of the tender offer rules and the reporting requirements of Section 13 of the Exchange Act. AS A SMALLER REPORTING COMPANY, OUR MANAGEMENT WILL BE REQUIRED TO PROVIDE A REPORT ON THE EFFECTIVENESS OF OUR INTERNAL CONTROLS OVER FINANCIAL REPORTING, BUT WILL NOT BE REQUIRED TO PROVIDE AN AUDITOR S ATTESTATION REGARDING SUCH REPORT AND MANAGEMENT S REPORT NEED NOT BE PROVIDED UNTIL OUR SECOND ANNUAL REPORT. THEREFORE POTENTIAL INVESTORS MAY NOT BE MADE AWARE OF ANY ASSESSED WEAKNESS THAT COULD RESULT IN A MISSTATEMENT TO OUR FINANCIAL STATEMENTS. As a smaller reporting company, our management will be required to provide a report on the effectiveness of our internal controls over financial reporting, but will not be required to provide an auditor s attestation regarding such report and management s report need not be provided until our second annual report. Investors should be aware of the risk that management may assess and render the Company s internal controls ineffective which could have a material adverse effect on the Company s financial condition or result of operations and such information is not required to be disclosed to investors. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The information contained in this report, including in the documents incorporated by reference into this report, includes some statement that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our and their management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments. There can be no assurance that future developments actually affecting us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the following forward-looking statements involve a number of risks, or other assumptions. Item 4. Use of Proceeds The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Item 5. Determination of Offering Price Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. Item 6. Dilution The common stock to be sold by the selling shareholders are provided in the Selling Security Holders section is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. Item 7. Selling Security Holders The common shares being offered for resale by the selling security holders consist of the 4,350,000 shares of our common stock held by 39 shareholders. Such shareholders include the holders of the 4,350,000 shares sold in our private offering pursuant to Regulation D Rule 506 completed in March 2011 at an offering price of $0.01. The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of October 11, 2012 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior To Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering Maria Arizmendi (1) 150,000 150,000 0 * Jasen Bertram 80,000 80,000 0 * Cami Bilderback 80,000 80,000 0 * Ronald Bruneau 100,000 100,000 0 * Debbie Denig 125,000 125,000 0 * Cameron Dunnett 150,000 150,000 0 * Adam D. Easley (2) 100,000 100,000 0 * Cory Easley (2) 125,000 125,000 0 * Leonardo Esparza 125,000 125,000 0 * Zachery Faulkner 100,000 100,000 0 * Sinoma Finch 125,000 125,000 0 * Shelley Fonville 100,000 100,000 0 * Shanna M. Forney 150,000 150,000 0 * Rachelle R. Grk 100,000 100,000 0 * Kristyl L. Heath 100,000 100,000 0 * Eric Hernandez 100,000 100,000 0 * Duane Holzerland 150,000 150,000 0 * Christina K. Hull 150,000 150,000 0 * Tonee R. Jackson 150,000 150,000 0 * Gerilyn Kaye 150,000 150,000 0 * Jennifer Lee 100,000 100,000 0 * Adan Longoria Jr. (3) 80,000 80,000 0 * Elias J. Longoria (3) 100,000 100,000 0 * Sophia D. Longoria (3) 80,000 80,000 0 * Marco Martinez 100,000 100,000 0 * Andrew Mercer (4) 100,000 100,000 0 * Dorothy Mercer (4) 150,000 150,000 0 * Jeffrey N. Moore 100,000 100,000 0 * Feliz M. Morgan 100,000 100,000 0 * Dena Mullin 100,000 100,000 0 * Shawn O Flaherty 100,000 100,000 0 * Shemnon Patterson 100,000 16,000 0 * Barbara M. Rawson 100,000 100,000 0 * Irma Reyes 80,000 80,000 0 * Richard Ryan 50,000 50,000 0 * Jill Sundberg 100,000 100,000 0 * Teresa Thomas 100,000 100,000 0 * Heng Touch 150,000 150,000 0 * Bruce Wright 150,000 150,000 0 * (1) Maria Arizmendi is the mother of the Company s president, Shawn Arizmendi, and the Company s secretary, Fabian Arizmendi (2) Adam D. Easley and Cory Easley are brothers (3) Adan Longoria Jr., Elias J. Longoria, and Sophia D. Longoria are brothers and sister (4) Andrew Mercer and Dorothy Mercer are husband and wife There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued. To our knowledge, none of the selling shareholders or their beneficial owners: - has had a material relationship with us other than as a shareholder at any time within the past three years; or - has ever been one of our officers or directors or an officer or director of our predecessors or affiliates - are broker-dealers or affiliated with broker-dealers. Item 8. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.03 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.03 until a market develops for the stock. ================================== AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ================================== ULTIMATE RACK, INC. (Exact Name of Registrant in its Charter) Nevada 3949 45-4078710 (State or other Jurisdiction of Incorporation) (Primary Standard Industrial Classification Code) (IRS Employer Identification No.) 331 Valley Mall Pkway #215 East Wenatchee, Washington 98802 Phone: 509-393-3526 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) CSC Services of Nevada, Inc. 502 East John Street Carson City, NV 89706 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: Gregg E. Jaclin, Esq. Anslow & Jaclin, LLP 195 Route 9 South, Suite204 Manalapan, NJ 07726 Tel. No.: (732) 409-1212 Fax No.: (732) 577-1188 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales; transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading; through direct sales to purchasers or sales effected through agents; through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); or any combination of the foregoing; In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $20,000.00. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Item 9. Description of Securities to be Registered General We are authorized to issue an aggregate number of 400,000,000 shares of capital stock, of which 200,000,000 shares are common stock, $0.001 par value per share, and there are 200,000,000 preferred shares, $0.001 par value per share authorized. Common Stock We are authorized to issue 200,000,000 shares of common stock, $0.001 par value per share. Currently we have 19,350,000 shares of common stock issued and outstanding. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock We are authorized to issue 200,000,000 shares of preferred stock, $0.001 par value per share. Currently we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar Currently we do not have a stock transfer agent. Item 10. Interests of Named Experts and Counsel The financial statements included in this prospectus and the registration statement have been audited by Li & Company, PC to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. The validity of the common stock offered by this prospectus will be passed upon for us by Anslow & Jaclin, LLP, Manalapan, New Jersey. No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, New Jersey 07726, telephone (732) 409-1212 has acted as our legal counsel. Item 11. Information about the Registrant DESCRIPTION OF BUSINESS Overview We were incorporated in the State of Nevada on July 19, 2010 as Ultimate Rack, Inc. and are based in Wenatchee, WA. We are a development stage company and have not yet commenced operations. However, we are proceeding with our stated business plan to build and market for sale a vehicle mounted rack for bicycles. We have begun taking certain steps in furtherance of our business plan, including the design of the Company s main product, the ultimate rack. We have reserved the domain name ultimaterack.net, but have not yet created our website. An ultimate rack is designed to hold up to four bicycles at one time. The rack is designed to fit into 1/4 , 2 , or 2 1/2 trailer hitch receivers, which are the three most common trailer hitch receiver sizes used on cars and light trucks. The Company intends to have its bicycle racks made in China and then shipped to a U.S. warehouse located in the state of Washington. The Company has received price quotes from Chinese manufacturers to produce its product. Our present stage of product development is limited to the design and manufacture of a prototype and the writing of our business plan. In order to implement our business plan and commence operations, we must take the following chronological steps: i) raise an additional $132,616, ii) draft and execute agreements with a manufacturer; iii) lease approximately 1,500 square feet of warehouse space, iv) create and design a website, v) create and design business cards and brochures, vi) market our website, vii) market our product to wholesalers. Of the $132,616 needed in additional capital, $25,016 is related to COGS, $18,000 for rent, $18,000 for marketing, $29,500 for professional fees, and $42,100 for SG&A. We do not consider ourselves to be a blank check company and we do not have any plan, arrangement, or understanding to engage in a merger or acquisition with any other entity. Additionally, we have a specific business plan and have moved forward with our business operations. Specifically, while in the development stage, we are proceeding with our business plan by perfecting the design of our main product, the ultimate rack. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Business Strategy and Objectives The company intends to have its bicycle racks made in China and ship them to Washington State to a warehouse the company intends to lease for distribution to stores and to direct buyer's. The company has received estimates from manufacturers in China to manufacture its bicycle racks but has not yet entered into any agreements with any manufacturers. Products and Services An ultimate rack is designed to hold up to four bicycles at one time. The rack is designed to fit into 1/4 , 2 , or 2 1/2 trailer hitch receivers, which are the three most common trailer hitch receiver sizes used on cars and light trucks. The Company intends to have its bicycle racks made in China and then shipped to a U.S. warehouse located in the state of Washington. The Company has received price quotes from Chinese manufacturers to produce its product. The 6" long cradle that secures a bicycle to the rack by its top bar is padded with a durable foam padding to prevent scratches to the bicycle. A bicycle is placed on the lower portion of the cradle which is a rounded shaped channel and then the top portion of the cradle which also has rounded shaped channels is placed on top of the top bar of the bicycle and then secured down by hand with four giant winged bolts. This process does not require tools and is very fast. The winged bolt design is one with very large "t-handles" that offer comfort as well as good leverage to ensure that the bike do not come loose during transport. The lower horizontal bar (tow bar) that fits into the vehicles tow receiver folds down to allow access to the rear of the vehicle and to make it easier to store. We have designed the tow bar to have a capacity tongue weight of 400lbs. The tow bar extends past the bicycles to allow it to act as an extension of the vehicles receiver so a vehicle can tow a trailer and use the bike rack at the same time. The tow bar will have a rating of 3,500 lbs. The tow bar is 30" long has a 3/4" hole for a tow ball to be mounted. The main frame of the bicycle rack is made of strong 2" hollow round steel. Our product design has been completed. Through research and observation, we were able to discern that the vast majority of tow bars manufactured have identical measurements and steel gauge. We designed our tow bars comparable to those of other manufacturers and tested it internally by suspending heavy bikes having overweight people bouncing on them, onto the racks. We will not take further testing, nor will we seek independent certification. We have not have and currently do not have plans to obtain intellectual property protection for our products. Material State and Local Regulations We do not expect any governmental regulations to have an impact on any of our planned business operations. New laws or regulations may impact our ability to market our bicycle racks in the future. However, we are not aware of any pending laws or regulations that would presently have an impact on our business. Competition We currently have no operations and are not yet competing with any of the companies in our industry. If we commence operations, we will have many competitors. Most of our competitors are large well established companies. The following companies are some of the largest well known in the business that we would have to compete against: Thule Inc., Yakima Products Inc., Sport Rack Inc., Bell Sports Inc. Since we have designed and built our prototype based on research of industry norms, we believe that our product will be competitive with the products offered by our competitors. However, since we are a startup company and do not have comparable resources available to us, we expect our competitors to have an extreme competitive advantage over us due to their more substantial means, market recognition and stage of business development. Employees As of October 12, 2012, we have two (2) employees. Our President spends approximately 10 hours per week on Company matters and our Secretary, Fabian Arizmendi, spends approximately 5 hours per week on Company matters. DESCRIPTION OF PROPERTY Our principal executive office is located at 331 Valley Mall Pkway #215, East Wenatchee, Washington 98802. Our telephone number is 509-393-3526. We have not yet leased warehouse space. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. Pursuant to Item 401 (f) of Regulation S-K there are no events that occurred during the past ten (10) years that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant: No petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; The registrant has not been convicted in a criminal proceeding and is not named subject of a pending criminal proceeding Such registrant was not the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: o Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; o Engaging in any type of business practice; or o Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; Such registrant was not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in Regulation S-K, Item 401 paragraph (f)(3)(i) entitled Involvement in Certain Legal Proceedings , or to be associated with persons engaged in any such activity; Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; Such registrant was not the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: o Any Federal or State securities or commodities law or regulation; or o Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or o Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or Such registrant was not the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTCBB or, if quoted, that a public market will materialize. Holders of Capital Stock As of October 11, 2012 we have 41 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants We do not have any stock option plans. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Overview We were incorporated in the State of Nevada on July 19, 2010 as Ultimate Rack, Inc. and are based in Wenatchee, WA. We are a development stage company and have not yet commenced operations. However, we are proceeding with our stated business plan to build and market for sale a vehicle mounted rack for bicycles. We have begun taking certain steps in furtherance of our business plan, including the design of the Company s main product, the ultimate rack. JOBS Act On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an emerging growth company we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. To the extent we do so, our financial statements may not be comparable to companies that comply with such new or revised accounting standards. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company , we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an emerging growth company, whichever is earlier. Plan of Operation Our present stage of product development is limited to the design and manufacture of a prototype and the writing of our business plan. In order to implement our business plan and commence operations, we must take the following chronological steps: i) raise an additional $132,616, ii) draft and execute agreements with a manufacturer; iii) lease approximately 1,500 square feet of warehouse space, iv) create and design a website, v) create and design business cards and brochures, vi) market our website, vii) market our product to wholesalers. Of the $132,616 needed in additional capital that we seek to raise, $25,016 is related to COGS, $18,000 for rent, $18,000 for marketing, $29,500 for professional fees, and $42,100 for SG&A. We currently do not have any financing arranged. If we are able to become a public company, we may seek to raise additional capital through the use of broker dealers or of other means of financing. However, we have not spoken to any broker dealers about raising capital and we do not know if we will able to do so once we are public. At this time, we do not know what kind of financing we would attempt through a broker dealer, if such financing is ever feasible. Given the current state of our business, we do not know if we will ever be able to raise additional funds through any means at all. If we are not able to raise an additional $132,616, we will not be able to implement our business plan and we may be force to cease operations. We have not received any indication from retailers that they are interested in purchasing our projects. We will attempt to solicit purchasers throughout North America. However, at this time, we do not have any contacts in the industry and we do not currently have a plan for seeking out purchasers. We do not know if we will ever be able to find any retailers willing to purchase our product. The Company intends to manufacture and sell racks to retailers who will sell the racks at a recommended retail sales price of approximately $189.99 per rack. However, retailers may decide to sell the rack at a higher or lower price than this recommended figure. At this time, we do not know how many racks we will attempt to manufacture and be able to sell, and there is a significant possibility that we are not able to sell any racks at all. We do not know when we will be able to begin manufacturing the racks and we will not be able to sell the racks to retailers and generate revenues until after we have begun the manufacturing process. The Company's President, Shawn Arizmendi and Secretary, Fabian Arizmendi have agreed to not take a salary in the first three years of business operations. During this time, if the Company receives any revenues, such revenues will be directed at the other costs of operations of the company, such as the costs of manufacturing and distributing the racks as well as the costs associated with the Company being public. We currently have not entered into any agreements with a manufacturer to manufacture our product but have had discussions with a Chinese manufacturer. If we are able to obtain additional financing, we anticipate entering into an agreement with a manufacturer within one week obtaining such necessary additional financing. If we are in a position to enter into a manufacturing agreement, we expect such terms to require us to pay a 25% deposit as soon as each order is placed and the balance to be paid once the goods are shipped to our warehouse. We currently do not have any arrangements with any retailers or other third parties to sell our racks. If we are able to obtain additional financing, secure a manufacturer and lease warehouse space, we will seek to enter into agreements with retailers who will sell our products. We intend to ship our products directly from a warehouse location to be secured, to the retailer via a common carrier. We will require all re-sellers and retail purchasers to pay for their entire order prior to the order being shipped to the retailer from our warehouse. Results of Operations For the interim period ended July 31, 2012 and the fiscal year ended October 31, 2011, we had no revenues. Expenses for the interim period ended July 31, 2012 and for the fiscal year ended October 31, 2011 were $26,770 and $713, respectively, resulting in a net loss of $26,770 and $713, respectively. The Company had a deficit accumulated during the development stage of $42,483 at July 31, 2012. Expenses for the fiscal year ended October 31, 2010 totaled $15,000, resulting in the net loss of $15,000. Capital Resources and Liquidity As of July 31, 2012 we had $21,036 in cash. We received proceeds equal to $43,500 related to the sale of 4,350,000 common shares of stock through our private offering which ended on March 15, 2011. In addition, we received $1,258 of contributed capital from a founder, Shawn Arizmendi and incurred $713 in expenses and $12,000 in prepaid expenses for the fiscal year ended October 31, 2011. Our management anticipates utilizing $18,000 of the capital raised for marketing expenses and approximately $105,116 towards other operational expenses, excluding legal and accounting fees. We anticipate our legal, auditing, and filing costs to increase as a result of being a public company. We expect our legal, accounting and various filing fees will amount to approximately $27,500 in our first year as a result of being a public company. We anticipate that we will need approximately $132,616 in the first twelve months in order to maintain our day to day operations. We believe that if our customers combined are able to achieve on average 672 sales at average revenue to us equal to $189.99 per sale, we will be able to meet our long term and short term cash flow needs. If we are unable to meet our short term or long term cash flow needs, we may have to delay or cease the implementation of our business strategy. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While we believe in the viability of its strategy to increase revenues, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company s ability to further implement its business plan and generate revenues. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On May 31, 2012, the Company dismissed Rosenberg Rich Baker Berman & Company ( RRBB ) as the Company s independent registered public accounting firm. Concurrently with the dismissal of RRBB, the Company engaged Li & Company, PC ( Li&Co ) as its registered public accounting firm, effective May 31, 2012. The decision to change registered public accounting firms and the appointment of the new registered public accounting firm was made by the Company s Board of Directors. The reports of RRBB on the financial statements of the Company since the Company s inception on July 19, 2010, and contained in the Company s Registration Statement on Form S-1 filed with the SEC on January 21, 2012, did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles except an explanatory paragraph as to an uncertainty with respect to the Company s ability to continue as a going concern. Since the Company s inception on July 19, 2010, there were no disagreements with RRBB on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of RRBB, would have caused them to make reference thereto in their reports on the financial statements for such years. Since the Company s inception on July 19, 2010 and through May 31, 2012, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. Since the Company s inception on July 19, 2010 through May 31, 2012, the Company did not consult with Li&Co with respect to any of (i) the application of accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company s financial statements; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or an event of the type described in Item 304(a)(1)(v) of Regulation S-K. The Company provided RRBB a copy of the foregoing disclosures and requested RRBB to furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made therein. A copy of that letter dated July 30, 2012, furnished by RRBB is filed as Exhibit 16.1 to this Amendment to the Registration Statement on Form S-1. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of our officers and directors as of October 12, 2012. Our Executive officers are elected annually by our Board of Director. Our executive officers holds office until they resign, are removed by the Board, or her successor is elected and qualified. Name Age Position Shawn Arizmendi 32 Chief Executive Officer, President, Chief Financial Officer, Treasurer and Director Fabian Arizmendi 30 Secretary and Director Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years. Shawn Arizmendi, Chief Executive Officer, President, Chief Financial Officer, Treasurer and Director. Our President, Shawn Arizmendi was born in Wenatchee, Washington on January 25, 1980. Shawn resides in Wenatchee with his wife of seven years and two children. Shawn graduated from Quincy High School in Wenatchee in June 1999. Shawn works as a pit boss in the casino of the Buzz Inn located in Wenatchee and has for the last six years. Prior to working at the Buzz Inn Shawn worked at Keglers Casino in Wenatchee. Fabian Arizmendi, Secretary, Director Our Secretary, Fabian Arizmendi is Shawn's brother. Fabian was born in Wenatchee, Washington on January 19, 1982. Fabian graduated from Quinsy High School in June of 2000. Fabian presently works for Les Schwab and has for the past seven years. Prior to working at Les Schwab Fabian worked at Aikens Market in Wenatchee for three years. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us for the period from July 19, 2010 (Inception) through October 31, 2011. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Shawn Arizmendi, President, Chief Financial Officer, Treasurer, Director 2010 $ 0 0 $ 10,000(1) 0 0 0 0 $ 10,000 Fabian Arizmendi, Secretary, Director $5,000(2) $ 5,000 (1) 10,000,000 shares have been issued to our Chief Executive Officer at par value $0.001 per share for compensation upon formation of the Company. The shares were issued for services and are not stock options and therefore there is no black-scholes assumption. (2) 5,000,000 shares have been issued to our Secretary at par value $0.001 per share for compensation upon formation of the Company. The shares were issued for services and are not stock options and therefore there is no black-scholes assumption. Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table for the period from inception through October 31, 2011. Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised since inception through October 31, 2011 by the executive officers named in the Summary Compensation Table. Long-Term Incentive Plan ( LTIP ) Awards Table. There were no awards made to a named executive officers in the last completed fiscal year under any LTIP. Compensation of Directors Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. Employment Agreements The Company currently has no employment agreements. Compensation Committee Interlocks and Insider Participation The Board of Directors has no nominating, auditing or compensation committees or any committee performing a similar function. The functions of those committees are being undertaken by the entire board as a whole. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions. TABLE OF CONTENTS PAGE Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary provides a brief overview of information contained elsewhere in this prospectus. Because it is abbreviated, this summary does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully before making an investment decision, including the information presented under the headings "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical and pro forma financial statements and the notes thereto included elsewhere in this prospectus. Unless otherwise stated in this prospectus, references to "Three Rivers," "we," "us" or "our company" refer to Three Rivers Operating Company LLC and its subsidiaries prior to the completion of our corporate reorganization, and Three Rivers Operating Company Inc. and its subsidiaries as of the completion of our corporate reorganization and thereafter. References to "Riverstone" refer to Riverstone/Carlyle Global Energy and Power Fund IV, L.P. and affiliated entities, including Riverstone Holdings LLC. Unless otherwise indicated, information presented in this prospectus assumes that the underwriters' option to purchase additional shares of our common stock is not exercised. We have provided definitions for some of the industry terms used in this prospectus in the "Glossary of Selected Oil and Natural Gas Terms." Overview We are an independent exploration and production company engaged in the exploration, development, production and acquisition of oil and natural gas in the Permian Basin of West Texas and Southeast New Mexico. Our drilling activity is primarily focused in the Bone Spring formation in New Mexico and the Wolfberry formation in West Texas. Both plays are characterized by high oil and liquids-rich natural gas content, multiple target horizons, long-lived resources, and high drilling success rates. In total we have accumulated 200,598 net acres in the Permian Basin, of which 65.4% is held-by-production, providing a multi-year inventory of 2,863 gross (2,212 net) identified future drilling locations and an additional 266 gross (212 net) identified recompletion opportunities. Since our inception in March 2010, we have increased our average daily production from 2,834 Boe/day in the month ended April 30, 2010 to 7,961 Boe/day for the three months ended September 30, 2011 through acquisitions and development drilling. For the three months ended September 30, 2011, 61% of our average daily production was oil or liquids volumes. The increase in our production includes the effects of sales of non-core assets that contributed approximately 340 Boe/day of production prior to their sale during the first five months of 2011. Cawley, Gillespie & Associates, Inc., our independent reserve engineers, estimated our net proved reserves to be 73.9 MMBoe as of September 30, 2011, an increase of 14.2% from our estimated pro forma net proved reserves as of December 31, 2010 of 64.7 MMBoe. As of September 30, 2011, 51.4% of our estimated proved reserves were classified as proved developed. As a result of our focus on oil and liquids-rich natural gas opportunities, we have increased the percentage of our estimated net proved reserves that constitute oil and natural gas liquids to 68% as of September 30, 2011 from 54% on a pro forma basis as of December 31, 2010. Our business is concentrated in the Permian Basin of West Texas and Southeast New Mexico. The Permian Basin is one of the most prolific and largest producing oil and gas natural regions in the United States. We have three core operating areas within the Permian Basin: the Bone Spring formation, which occurs in the Delaware Basin; the Wolfberry, targeting the Spraberry and Wolfcamp formations, which occur primarily in the Midland Basin; and Conventional Permian, where we target conventional Permian Basin oil and natural gas formations primarily in the Central Basin Platform. Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated January 27, 2012 P R O S P E C T U S Shares Three Rivers Operating Company Inc. Common Stock (1)Approximately 17% of our total gross identified drilling locations are attributable to proved undeveloped reserves. For additional information regarding our identified drilling locations, including the processes and criteria we used to identify these drilling locations, see "Business Our Operations Identified Drilling Locations." Amounts do not include our 266 gross (212 net) recompletion opportunities. (2)PV-10 is a non-GAAP financial measure. For additional information about PV-10 and how it differs from the Standardized Measure, see " Summary Historical Reserve and Operating Data." Since our inception in March 2010, we have completed two significant, complementary acquisitions of oil and natural gas properties in the Permian Basin. In April 2010 we acquired interests in oil and natural gas properties from Chesapeake Energy Corporation, which we refer to as the Chesapeake Acquired Properties, and in January 2011 we acquired interests in oil and natural gas properties from Samson Resources Company, which we refer to as the Samson Acquired Properties. These acquisitions included complementary and overlapping acreage positions, similar target formations, and jointly-owned wells, which have allowed us to achieve significant post-acquisition operational and cost efficiencies. Together, at the time of each respective acquisition, these purchases consisted of approximately 131,000 net held-by-production acres, 62.4 MMBoe of estimated proved reserves and interests in 1,450 producing wells in the Permian Basin in West Texas and Southeast New Mexico. Following these acquisitions, we have leased an additional approximately 14,707 acres in and around our core operating areas to add scale to our existing properties. We commenced drilling operations in September 2010. In the nine months ended September 30, 2011, we drilled a total of 23 operated gross wells (of which one was awaiting completion at September 30, 2011), participated in the drilling of 31 additional non-operated gross wells and performed 26 recompletions. As of December 31, 2011, we had a total of three operated rigs running, with two rigs operating in our Wolfberry core area and one rig operating in our Conventional Permian core area. Our estimated 2011 capital expenditures were approximately $110.1 million, approximately $96.0 million of which was dedicated to drilling, completions and recompletions. During 2011, we drilled a total of 71 gross wells, 36 of which are operated by us. Our total 2012 capital expenditure budget is approximately $266.1 million, $254.2 million of which is dedicated to drilling, completions and recompletions. All of our operated 2012 drilling, completion and recompletion capital expenditure budget is targeted towards oil and liquids-rich natural gas reserves and resource opportunities, with 39% of our drilling, completion and recompletion capital expenditure budget targeting the Bone Spring and 51% targeting the Wolfberry. The following table provides information regarding our estimated Three Rivers Operating Company Inc. is offering shares of its common stock and the selling stockholder is offering shares of common stock. We will not receive any proceeds from the sale of the common stock by the selling stockholder. This is the initial public offering of our common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of the common stock is expected to be between $ and $ per share. We intend to apply to list our common stock on the New York Stock Exchange under the symbol "TROC." Investing in our common stock involves risks. See "Risk Factors" beginning on page 17. Price to Public Underwriting Discounts and Commissions Proceeds to Us Proceeds to Selling Stockholder Per Share $ $ $ $ Total $ $ $ $ To the extent the underwriters sell more than shares of common stock, the underwriters have an option to purchase up to an additional shares of common stock from the selling stockholder at the initial price to the public less the underwriting discount. The underwriters can exercise this option at any time within 30 days from the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the shares of common stock will be made on our about . Goldman, Sachs & Co. J.P. Morgan Credit Suisse The date of this prospectus is (1)Represents locations drilled and recompletions performed during the year ended December 31, 2011. (2)Represents locations expected to be drilled, including operated and non-operated, and recompletions expected to be performed during the year ending December 31, 2012. The ultimate amount of capital we will expend and the identified drilling locations we will drill may fluctuate materially based on market conditions and the success of our drilling operations as the year progresses. Please read "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources" and "Business Our Operations Capital Expenditures" for further detail. Our Strengths We believe we are well positioned to successfully execute our business strategies and achieve our business objectives because of the following competitive strengths: Oil-Focused Operations in the Permian Basin. Our operations are 100% focused in the Permian Basin of West Texas and Southeast New Mexico. Our operations are specifically focused on areas of the Permian Basin with proven oil and liquids-rich natural gas reserves and resource opportunities, and all of our operated 2012 capital expenditure budget for drilling, completion and recompletion activities is targeted towards those opportunities. The Permian Basin is one of the most prolific and largest producing oil and natural gas regions in the United States and underlies an area approximately 250 miles wide and 300 miles long, and commercial accumulations of hydrocarbons occur in multiple stratigraphic horizons, at depths ranging from approximately 1,000 feet to over 25,000 feet. The stacked horizons of the Permian Basin allow significant opportunity for multiple completions in a single well bore and the potential for both vertical and horizontal completions. The Permian Basin is the largest oil and natural gas producing basin in the United States based on total proved reserves, according to the most recent Energy Information Administration report regarding the Permian Basin. Reserves in the Permian Basin are generally characterized as long lived, and the basin has substantial existing infrastructure and well-developed network of oilfield service providers, which we believe reduces the risk of production delays and generally lowers commodity price basis differentials. As of December 29, 2011, 479 rigs were operating in the Permian Basin, which represents a 37% increase compared to the prior year, according to Baker Hughes Interactive Rig Counts. We believe this increase is primarily attributable to higher commodity prices and advancements in technology being utilized to exploit stacked pay potential. Large, Multi-Year Project Inventory in Existing and Emerging Plays. We have assembled a sizable inventory of 2,377 operated and 486 non-operated gross identified future drilling locations and an Table of Contents additional 266 gross identified recompletion opportunities targeting multiple well-defined zones. The majority of our locations target the higher impact Bone Spring and the lower risk Wolfberry formations with crude oil as the primary objective for both. We plan to drill or recomplete 191 gross (153 net) locations in 2012, which would represent 6.1% of our 3,129 combined gross identified drilling locations and recompletion opportunities. Our portfolio of drilling locations is based on an extensive dataset of geologic, engineering and operational information and includes stacked horizontal locations targeting the first, second, and third Bone Spring formations and 20-acre infill drilling in the Wolfberry. In addition, we have accumulated leasehold positions that are prospective for recently emerging plays, such as the Wolfcamp Shale, Cline Shale, Avalon Shale, horizontal Yeso, Cisco and Wolfbone, that are not included in the 2,863 gross identified drilling locations and represent incremental opportunities for potential development. Substantial, Geographically-Focused Leasehold Position with Significant Operational Control and Strategic Flexibility. Our current leasehold position includes 200,598 net acres in the Permian Basin. We are focused on accumulating and maintaining high working interests and operatorship in our properties in order to maximize financial returns and operating efficiency. We have an average working interest of 77% across our portfolio, operate approximately 83% of our 2,863 gross identified drilling locations and have operational control of 75% of the production from our proved developed reserves. As operator, we control the selection of specific drilling locations, timing of development and the drilling and completion techniques utilized to efficiently develop our significant resource base. Additionally, 65.4% of our acreage is held-by-production, providing us with substantial time and optionality in executing our development plan. We expect that the scale and geographic focus of our acreage will enhance operational efficiencies with respect to drilling, production, operating and administrative functions enabling us to continue to reduce our drilling and completion costs. Our geographic focus also allows us to leverage our base of technical expertise and the extensive dataset of geologic, engineering and operational information available to us throughout this region. Experienced and Incentivized Management Team with Proven Track Record. Our senior management team has extensive expertise and operational experience in the oil and natural gas industry and a track record of successfully executing and integrating acquisitions. Members of management have previously held management positions with major and large independent oil and natural gas companies, including Exxon Mobil Corporation, Texaco Inc., Shell Oil Company, Mobil Corporation, Seagull Energy Corp, Mariner Energy Inc., Mitchell Energy & Development Corp, XTO Energy Inc. and Ocean Energy, Inc. The members of our executive and technical team have an average of more than 29 years of experience in the oil and natural gas industry and significant experience in the Permian Basin. We believe our management and technical team is one of our principal competitive strengths due to our team's vast level of experience and proven track record in the identification and execution of acquisitions and profitable drilling programs. Additionally, we believe our management team's equity interest in us provides substantial incentive to grow the value of our business for the benefit of our stockholders. Supportive Sponsor with Significant Industry Expertise. Riverstone, our principal owner, has substantial experience as a private equity investor in the energy sector, including upstream oil and natural gas companies, with current or prior investments in Mariner Energy Inc., Kinder Morgan Energy Partners, L.P., Cobalt International Energy, Inc., Buckeye Partners, L.P. and Magellan Midstream Partners, L.P. Riverstone's management has substantial experience in identifying, evaluating, negotiating and financing acquisitions and investments. We believe our relationship with Riverstone will enhance our ability to grow our asset base and cash flow. Table of Contents Our Business Strategy Our strategy is to increase stockholder value by economically and sustainably growing our reserves, production and cash flow. We intend to execute this strategy as follows: Drill and Develop Our Oil-Focused, Multi-Year Inventory of Drilling Locations and Recompletion Opportunities. We intend to aggressively drill and develop our acreage position to maximize the value of our resource base. We have an inventory of 464 gross (250 net) Bone Spring identified drilling locations, 1,995 gross (1,646 net) Wolfberry identified drilling locations and 404 gross (316 net) Conventional Permian identified drilling locations. Our inventory of identified drilling locations includes stacked horizontal locations targeting the first, second and third Bone Spring formations and infill locations to 20-acre spacing in the Wolfberry. In 2012, subject to market conditions and rig availability, we plan to increase the number of drilling rigs we operate from three to seven and drill approximately 109 gross (98 net) operated wells and recomplete an additional 47 gross (44 net) wells. We believe that we will have the ability to add additional rigs if market conditions and program results warrant. Balance Capital Allocation Between Our Lower Risk Development Opportunities and Our Higher Impact Drilling Inventory. We believe that our Wolfberry and Conventional Permian project areas possess geologic and reservoir characteristics that make them well suited for production increases through what we believe to be relatively low-risk, repeatable drilling and development programs. We intend to balance these lower risk programs with our higher impact opportunities in our horizontal Bone Spring project area. Our drilling, completion and recompletion capital expenditure budget for 2012 contemplates 39% of our expenditures in the Bone Spring and 51% of our expenditures in the Wolfberry. Our current leasehold position also provides exposure to other recently emerging plays within the basin, such as the Wolfcamp Shale, Cline Shale, Avalon Shale, horizontal Yeso, Cisco and Wolfbone, which we believe provides significant additional upside. Optimize Recovery Rates on Our Existing Acreage Through Continuous Evaluation and Early Adoption of Leading Drilling and Completion Technology and Techniques. We focus on maximizing recovery rates by adopting and employing enhanced drilling and completion techniques that have a demonstrated record of success. We continuously evaluate our internal drilling results and monitor the results of other operators to improve our operating practices, and we expect our drilling and completion techniques to continue to evolve. This continued evolution may significantly enhance our ultimate recovery factors and rate of return on invested capital. By adopting and employing the latest, proven techniques, rather than expending capital on experimental or developmental techniques, we believe we will be able to optimize recovery rates on our existing acreage in a cost-efficient manner. We will continue to utilize technology as other leading operators establish optimal drilling and completion methodologies, such as stacked horizontal wells in the Bone Spring play and infill drilling in the Wolfberry. Evaluate and Pursue Long-Lived, Complementary, Oil-Focused Acquisitions. While our principal strategy will be to continue to develop our inventory of identified drilling locations and recompletion opportunities, we will continue to actively evaluate the acquisition of additional oil-weighted Permian targets that include existing production with a high proportion of operated, low-risk drilling opportunities and a large share of held-by-production acreage. We believe by acquiring assets with high components of held-by-production acreage we can maintain our capital flexibility and limit our lease expirations in challenging commodity price environments. We have an experienced team of engineering and geoscience professionals to identify and evaluate acquisition opportunities, and have successfully integrated our two large acquisitions to date. Maintain Financial Strength and Flexibility. We expect the proceeds from this offering, internally generated cash flow and borrowings under our revolving credit facility to provide us with the financial resources to pursue our drilling and development program. As of September 30, 2011 and giving effect Table of Contents to the completion of this offering, we would have had $ million in borrowing capacity available under our revolving credit facility. We intend to continue to actively manage our exposure to commodity price risk. As part of this strategy, we have entered into a series of hedging arrangements for each year through 2015. For this period, we have entered into hedges with respect to approximately 79% of our anticipated oil production from proved developed producing properties at an average price of $92.31 per Bbl and approximately 51% of our anticipated natural gas production from proved developed producing properties at an average price of $5.38 per MMBtu. Our Core Project Areas Our assets are primarily distributed in three core areas of the greater Permian Basin. Bone Spring. We have approximately 39,732 net acres and an inventory of 464 gross identified drilling locations in the Bone Spring formation in Southeast New Mexico. The Bone Spring trend encompasses the Avalon Shale, the first, second and third Bone Spring formations, and the Wolfcamp Shale. Our Bone Spring drilling locations include 425 horizontal locations and 39 vertical locations. Much of our acreage has multiple horizontal locations. The gross Bone Spring section consists of approximately 2,500 feet of alternating organic rich limestone, sand-to-siltstone and shale, which is found at depths ranging from 6,000 feet to 12,000 feet across the basin. We commenced an operated drilling program in this area in January 2012 and plan to operate two drilling rigs to drill 17 gross (14 net) wells. Our average net daily production in this area for the nine-month period ended September 30, 2011 was approximately 319 Boe/day. Wolfberry. We have approximately 45,227 net acres and an inventory of 1,995 gross identified drilling locations in the Wolfberry trend. "Wolfberry" refers generally to the combined Spraberry and Wolfcamp formations in the Permian Basin, and our Wolfberry core area encompasses the Dean, Spraberry, Clear Fork, Wolfcamp, Canyon and Strawn intervals. The Wolfberry play encompasses the entire southern Midland Basin. Our primary development in the Wolfberry play is located in Irion County, Texas along the Eastern Shelf where the Wolfcamp and Spraberry formations (4,000-7,000 feet) were deposited during the Permian Era. We operated two drilling rigs, drilled 30 gross (30 net) wells and performed 27 gross (27 net) recompletions in 2011. In 2012, we plan to operate four drilling rigs, drilling 83 gross (77 net) wells and recompleting 43 gross (42 net) wells targeting the Wolfberry. Our average net daily production in this area for the nine-month period ended September 30, 2011 was approximately 3,087 Boe/day. Conventional Permian. We have approximately 115,639 net acres containing both oil and natural gas resources within our Conventional Permian core area. Of this acreage, we have approximately 38,035 net acres that we consider to be oil-focused. The conventional oil area is primarily located in the Central Basin Platform, and targets multiple objective formations, including the San Andres, Yeso, Queen, Clearfork, and Devonian Sands. Most of the reservoirs in the area are platform carbonates composed of limestone and dolomite. We have identified 247 gross (217 net) potential vertical drilling locations in this area. In 2010, we commenced a drilling program in this area and completed five gross wells. In the fourth quarter of 2011, we drilled an additional seven gross wells in this area. We plan to operate one drilling rig to drill nine gross (seven net) wells and perform four gross (two net) recompletions in 2012. Our average net daily production in this area for the nine-month period ended September 30, 2011 was approximately 1,770 Boe/day. We have approximately 77,604 net acres in our Conventional Permian core area that we consider to be natural gas-focused. The conventional natural gas area is primarily located in Chaves County, New Mexico and Reeves and Pecos Counties, Texas. We have identified 157 gross (99 net) potential vertical drilling locations in this area. Our average net daily production in this area for the nine-month period ended September 30, 2011 was approximately 2,701 Boe/day. Our 2012 capital expenditure budget does not include material expenditures for our conventional natural gas area. Table of Contents The following table summarizes, for each of our core operating areas, our net acreage as of December 31, 2011, identified drilling locations as of September 30, 2011, estimated total proved reserves and related PV-10 as of September 30, 2011, and average daily production for the nine-month period ended September 30, 2011: Identified Drilling Locations(1) Estimated Total Proved Reserves (MBoe) % of Net Acreage Held-by- Production Average Daily Production (Boe/day) Net Acreage Gross Net % Operated PV-10(2) (in thousands) % Proved Developed Bone Spring 39,732 52.1 % 464 250 64.7 % 4,636 $ 56,307 35.9 % 319 Wolfberry 45,227 60.0 % 1,995 1,646 86.2 % 36,254 524,309 33.9 % 3,087 Conventional Permian 115,639 72.1 % 404 316 88.4 % 33,009 401,917 72.8 % 4,471 Total 200,598 65.4 % 2,863 2,212 83.0 % 73,899 $ 982,533 51.4 % 7,877 Table of Contents Our Relationship with Riverstone Upon completion of this offering, Riverstone will beneficially own % of our outstanding common stock. Riverstone, a global energy- and power-focused private equity firm founded in 2000, has approximately $17 billion of assets under management across six investment funds. Riverstone conducts buyout and growth capital investments in the midstream, exploration and production, energy services, power and renewable sectors of the energy industry. With offices in New York, London and Houston, Riverstone has committed approximately $16 billion to 78 investments in North America, South America, Europe and Asia. Riverstone currently has, and may make in the future, investments in other similar companies that compete with us. See "Certain Relationships and Related Party Transactions Historical Transactions with Three Rivers Holdings and Riverstone." Corporate Reorganization We were recently incorporated pursuant to the laws of the State of Delaware as Three Rivers Operating Company Inc. to become a holding company for Three Rivers Operating Company LLC. Three Rivers Operating Company LLC was formed as a Delaware limited liability company on March 8, 2010. Prior to completion of our corporate reorganization described below, all of the equity interests in Three Rivers Operating Company LLC are owned, directly or indirectly, by Three Rivers Natural Resource Holdings LLC, which we refer to as Three Rivers Holdings. Three Rivers Holdings is owned by Riverstone and members of our management. Pursuant to the terms of a corporate reorganization that will be completed simultaneously with the closing of this offering, Three Rivers Holdings will contribute all of the outstanding equity interests in Three Rivers Operating Company LLC to its wholly-owned subsidiary Three Rivers Operating Company Inc. in exchange for shares of common stock of Three Rivers Operating Company Inc. As a result of the reorganization, Three Rivers Operating Company LLC will become a wholly-owned subsidiary of Three Rivers Operating Company Inc. For more information on our reorganization and the ownership of our common stock by our principal and selling stockholders, see "Corporate Reorganization" and "Principal and Selling Stockholders." Table of Contents The following diagram indicates our ownership structure after giving effect to our reorganization and this offering. Principal Executive Offices and Internet Address Our principal executive offices are located at 1122 South Capital of Texas Highway, Suite 325, Austin, Texas 78746, and our telephone number at that address is (512) 600-3190. Our website address is http://www.3rnr.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider the information contained on our website to be part of this prospectus.
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. Company Overview FTL Ventures Corp. (the Company ) was incorporated in the State of Nevada on October 7, 2011, and its headquarters are currently located in Central, Hong Kong, China. To date, our business activities have been limited to organizational activities. Our business plan is to become an independent film production company and to produce and distribute films, primarily but not limited to, action films. An independent film is any film that has not been financed, produced or distributed by a major Hollywood studio, such as Warner Bros. Pictures, 20th Century Fox, etc. The target market for our films will be young adult to mature male audiences. We will initially seek to produce and distribute films primarily throughout Asia, with a focus on China. Currently, we are a development stage company. Our sole officer and director has only recently become interested in independent film production and distribution and does not have any professional training or expertise in developing, producing, or distributing films. Nonetheless, Mr. Edmund Kam Cheong Leong has been an entrepreneur since 1997, during which time he developed and managed a variety of businesses. He will be in charge of handling all planning and development strategies, overseeing all filming, editing and distribution, and supervising any and all future personnel, including any actors, directors, editors, producers, distributors, marketers, or other contractors or employees that we will engage to pursue our plan of operations. Although we were only recently incorporated and have not yet commenced business operations, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's unsteady financial climate. There can be no assurance that we will be successful in our attempt to sell 100% of the shares being registered hereunder; however, we believe that investors in today's markets demand full transparency and by our registering this Offering and becoming a reporting company, we will be able to meet this demand. Currently, there is no public trading market for our Common Stock and no such market may ever develop, which may limit the Company s ability to raise funds through equity financings or to use its shares as consideration. However, management believes that the Company will be able to meet all requirements to be quoted on the OTC Bulletin Board including being current in all required filings with the SEC following the declared effectiveness of this Offering. Further, even though the Company s Common Stock will likely be considered a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater opportunity to provide liquidity to our shareholders. We are currently a development stage company and to date we have recorded no revenue. Additionally, it could take years to develop, finance and produce a film before we are able to release it to the general public. During this gestation period, we will not generate any revenues from the project. Through the nine months ended July 31, 2012, we incurred a net loss of $67,833. During the three month period ended July 31, 2012, our net loss was $24,749. Since our inception, we incurred cumulative net losses of $85,059. As of July 31, 2012, we had $85,059 in total liabilities and no assets. We currently incur expenses of approximately $5,000 - $7,000 per month. Unfortunately, there can be no assurance that the actual expenses incurred will not materially exceed our estimates. Additionally, without an immediate source of revenues, we generate no cash flows from operating activities with which to satisfy our operating requirements. To date, we have relied upon our sole officer and director loaning us cash to finance our activities, and expect to continue to rely upon such for the foreseeable future, at least until we begin to raise proceeds from this registered public offering. In consideration of the foregoing risks, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern in the independent registered public accounting firm s report to the financial statements. Until such time that we are able to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs, management intends to rely primarily upon debt financing to supplement cash flows, if any, generated from our films and services. We will seek out such financings as necessary to allow the Company to continue to grow our business operations and to cover such costs, including legal and professional fees, associated with being a reporting Company with the SEC. We estimate such costs to be approximately $45,000 for 12 months following this Offering. The Company has included such costs to become a publicly reporting company in its targeted expenses for working capital expenses. Our current cash and working capital is not sufficient to cover our current estimated expenses of $45,000, which include those fees associated with obtaining a Notice of Effectiveness from the SEC for this Registration Statement. If we are unable to raise any capital in this offering, we may be unable to implement our long-term business plan, take advantage of future opportunities or respond to competitive pressures on a timely basis, if at all. We believe that the maximum amount of funds generated from the Offering will provide us with enough proceeds to fund our plan of operations for up to twelve months after the completion of this Offering. If we raise $45,000 or less from this Offering, we will have to seek out additional capital from alternate sources to repay our $19,575 related party note payable owed to an officer and execute our business plan. If we receive nominal proceeds from this Offering, we will need a minimum of $50,000 from additional financing sources to commence our business operations. This amount will allow us to repay our related party note payable within six months of receiving receipt of such additional amount to cover our offering expenses, develop and launch our website and enter into the development and finance stage of production of a film. We do not currently have any arrangements for obtaining additional financing and there is no assurance that any additional financing will be available or, if available, on terms that will be acceptable to us. We will seek such funds from friends, family, and business acquaintances; however, we have not received any firm commitments or indications of interest from our friends, family members, or business acquaintances regarding potential investments in our Company and cannot predict when such funding may be available to us. Failure to raise additional financing will cause us to go out of business. As we are a start-up company, it is unclear how much revenue our operations will generate, if any; however, it is our hope that our revenues will exceed our costs. Our potential to generate revenue will be affected by the quality of the screenplays that we receive from independent writers, our marketing and advertising strategies, the talent, contractors and employees we will retain to produce films, and several other factors. These factors are directly related to the amount of proceeds we receive from this Offering, as the greater amount of proceeds we receive, the greater amount of capital we can use towards our business operations (see Use of Proceeds chart). Neither the Company, Mr. Leong, nor any other affiliated nor unaffiliated entity of the Company or Company promoters has any plans to use the Company as a vehicle for a private company to become a reporting company once FTL Ventures Corp. becomes a reporting company. Additionally, we do not believe that the Company is a blank check company as defined in Section a(2) of Rule 419 under the Securities Act of 1933, as amended, because the Company has a specific business plan and has no plans or intentions to engage in a merger or acquisition with an unidentified company, companies, entity or person. For a further discussion of our initial operations, plan of operations and marketing strategy see the below section entitled Description of Business . SUMMARY OF THIS OFFERING The Issuer FTL Ventures Corp. Securities being offered Up to 6,250,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES - Common Stock. Offering Type
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001542261_kolasco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001542261_kolasco_prospectus_summary.txt
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+SUMMARY PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. OUR BUSINESS We are a development stage company. We have generated $800 in revenues and incurred $6,529 in operating expenses during the period from inception to May 31, 2012. We are in the business of translation and interpretation. The company will undertake translation and interpretation projects for various fields from business, economics, to science issues. All operating projects are customer tailored with four working languages: English, Spanish, Russian, and Ukrainian. In our translation projects we utilize Human Translation and Machine Translation--computer software translation. Our Machine Translation is performed by special computer translation software: MT PROMT SYSTEM. Our Machine Translation analyzes sentences based on the grammar rules of the language and translates the words and phrases in the context of the original document. Because the Machine Translation is not perfect we supplement it with Human Translation to increase the level of accuracy and reader comprehension. In our interpretation projects we offer services of simultaneous interpretation in such fields as tourism, business, trials, conferences, marketing, and classroom settings. Our revenue is earned by charging a fee for our services. We may also receive commissions from other translation/interpretation companies to which we will refer our potential clients. We are currently developing a website (www.kolasco.com/) which will include our contact info, pricing and detailed description of our services. The website will allow our clients to review our services and place translation or interpretation orders online. To date, we have developed our business plan, purchased a translation program, registered a domain name for our new website and completed a translation project for our first client. Our principal executive office is located at 1005-63 Callowhill Dr., Toronto, ON, M9R 3L6. Canada. Our telephone number is (416) 249 0334, and our registered agent for service of process is the INCORP SERVICES, INC, located at 2360 CORPORATE CIRCLE STE 400, HENDERSON, Nevada, 89074-7722. We were incorporated in the State of Nevada on December 28, 2010. Our fiscal year end is November 30. THE OFFERING: Securities Being Offered Up to 1,600,000 shares of common stock. Offering Price The selling shareholders will sell our shares at $0.03 per share. Sales price for the duration of the offering from the selling shareholders will be fixed for the duration of the offering. We determined this offering price arbitrarily by adding a $0.01 premium to the last sale price of our common stock to investors. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude when all of the 1,600,000 shares of common stock have been sold, the shares no longer need to be registered or to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. Securities Issued and to be Issued 1,600,000 shares of our common stock to be sold in this prospectus are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Market for the common stock There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-the-Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to become eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so. SUMMARY FINANCIAL INFORMATION The following financial information summarizes the more complete historical financial information at the end of this prospectus. As of May 31, 2012 ------------------ BALANCE SHEET Total Assets $ 16,274 Total Liabilities $ 973 Stockholders' Equity $ 15,301 Period from December 28, 2010 (date of inception) to May 31, 2012 ------------ INCOME STATEMENT Revenue $ 800 Total Expenses $ 7,499 Net Loss $ (6,699)
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001542576_goldeo-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001542576_goldeo-inc_prospectus_summary.txt
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+Prospectus Summary , Risk Factors , Plan of Operation , Our Business , and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may , should , expects , plans , anticipates , believes , estimated , predicts , potential , or continue or the negative of such terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. These factors include, among other things, those listed under Risk Factors and elsewhere in this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this prospectus to conform forward-looking statements to actual results, except as required by the Federal securities laws or as required to meet our obligations set forth in the undertakings to this registration statement. Plan of Operations Over the 12 month period starting upon the effective date of this registration statement, the Company anticipates needing $150,000.00 of capital in order to operate the business. The Company's service offering functionality will be developed and released in stages for potential customers. First, the Company plans to complete the full launch of the website followed immediately by introducing basic mobile applications into the appropriate markets. Second, the Company plans to use user feedback to implement a more robust interface for both the web and mobile applications, what we call our second generation products. Lastly, we will begin implementation of social media integration into our web and mobile applications. After both offerings are launched, the Company will re-evaluate the market and determine future product/service offerings. During the initial phase, the Company plans to create a second generation and is expected to be completed within three (3) months after the additional capital of $150,000 is secured. Although the Company will use the initial applications to attract customers, the Company does not expect to start generating sizable revenues until twelve (12) months after the successful completion of this offering. The timeline for the second and third generations is subject to change and is based on securing the necessary financing and retaining qualified resources for the product development. The Company Plans to Achieve the Following Milestones Over the Next Twelve (12) Months Following the Completion of Selling 100% of This Offering: 1-2 Months The Company plans on hiring two technical consultants to work with Brandon Wynn to complete the business and financial plan and create the Company's second generation applications. Again, the Company expects to complete these plans in two months and it is expected to cost $10,000. 3-12 Months Once the second generation is successfully launched, we expect to see the exercise of warrants within three months. If we see no influx of capital from the exercise of warrants, we may seek an additional offering. After the additional capital is secured, the Company will hire two resources to complete the development of the third generation of applications. These resources include one part time resource for mobile device programming and one for server design, programming and engineering. The Company anticipates completing the third generation in 6 months after the additional capital is secured and is expected to cost approximately $50,000. The Company plans to complete the third generation to include social networks in six months after the launch of the second generation. The customer support will be handled internally initially, however based on growth the Company may outsource that capability. Once each application is completed, the Company will be positioned to market these offerings to potential customers and generate revenues. In the Event that the Company Only Sells 50% of this Offering, the Company Plans to Achieve the Following Milestones Over the Next Twelve (12) Months: 1-4 Months The Company plans on hiring two consultants part time for marketing and financial work. Brandon Wynn will perform the strategic planning and detailed operational tasks to complete the business and financial plan. Under these circumstances, the Company plans to complete these plans in four months and is expected to cost $10,000.00. The Company will not create any product prototype during this phase. 5-12 Months Once the second generation is successfully launched, we expect to see the exercise of warrants within three months. If we see no influx of capital from the exercise of warrants, we may seek an additional offering. After the additional capital is secured, the Company will hire two resources to complete the second generation of applications, and to commence the development of the third generation of website and mobile apps. These resources include one part time resource service offering and mobile device programming, and the other resource for application design, programming / engineering (ex. technical work). The Company anticipates completing the second generation products in six months after the additional capital is secured and is expected to cost approximately $20,000.00. The Company plans to complete improvements to the applications to include social networks the following year. The customer support will be handled internally initially, however based on growth the Company may outsource that capability. Note: The amounts allocated to each line item in the above milestones are subject to change at the sole discretion of Brandon Wynn. The Company will either hire or work with consultants to complete the milestones. In the event that the Company is not successful selling all the securities in this offering, Brandon Wynn will perform the necessary tasks, however that will delay the Company's business up to nine months. And in the event that the Company is not able to secure the follow on capital of $150,000.00, the Company will ask Brandon Wynn to perform the necessary tasks of planning, marketing, technical design, and financial analysis to complete the product and service offering. If all the work must be performed solely by Brandon Wynn, the Company cannot provide any assurances as to if or when this work will be completed. The Company believes finding experienced employees and consultants in the software programming, mobile applications, and social networking is critical to ensure the success of the Company's development and implementation plans. The future staffing requirements of the Company are unknown at this time. As we develop our business, we will assess the necessary resources to properly staff our business or outsource those services if warranted. XIX. Facilities We currently maintain an office at 5100 Washington Street, Suite 202, Hollywood, Florida We have no monthly rent, nor do we accrue any expense for monthly rent. Brandon Wynn, our sole officer and director, and our full time employee provides us a facility in which we conduct business on our behalf. Brandon Wynn does not receive any remuneration for the use of this facility or time spent on behalf of us. We do not believe that we will need to obtain additional office space at any time in the foreseeable future, approximately 12 months, until our business plan is more fully implemented. As a result of our method of operations and business plan we do not require personnel other than Brandon Wynn to conduct our business. In the future we anticipate requiring additional office space and additional personnel; however, it is unknown at this time how much space or how many individuals will be required. XX. Certain Relationships and Related Party Transactions The Company utilizes office space provided at no cost from Brandon Wynn, our sole officer and director. Office services are provided without charge by the Company s director. Such costs are immaterial to the financial statements and, accordingly, have not been reflected. XXI. Market for Common Equity and Related Stockholders Matters We intend to file for inclusion of our common stock on the Over-the-Counter Bulletin Board; however, there can be no assurance that FINRA or NASDAQ will approve the inclusion of the common stock. Prior to the effective date of this offering, our common stock was not traded. XXII. Dividends The Board anticipates that, following the Offering, the Company s cash resources will be used for investment in the development of the Company s business and will not be available for distribution until such time as the Company has an appropriate level of distributable profits. The declaration and payment by the Company of any dividends and the amount thereof will depend on the results of the Company s operations, its financial position, anticipated cash requirements, prospects, profits available for distribution, and other factors deemed to be relevant at the time. As at the date of this document, the Company has not declared, made or paid any dividends. XXIII. Executive Compensation The following table sets forth the cash compensation of our directors and executives from inception October 31, 2011 to December 31, 2011 Annual Compensation Long Term Compensation Name and Principal Position YTD Salary Bonus Other Annual Compensation Restricted Stocks Options Director/President $ 0.00 $ 12,000.00 $ 12,000.00 $ 0.00 $ 0.00 $ 0.00 XXIV. Shares Eligible for Future Sale Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely affect market prices prevailing from time to time. Furthermore, since we are registering shares issued to our founder in exchange for services and start-up capital, sales of substantial amounts of our common stock in the public market could adversely affect the prevailing market price and our ability to raise equity capital in the future. Upon completion of this Offering and subsequent exercise of the warrants, we will have outstanding an aggregate of 40,250,000 shares. Of these shares, 25,750,000 will be freely tradable without restriction or further registration under the Securities Act, unless such shares are purchased by individuals who become affiliates as that term is defined in Rule 144 under the Securities Act, as the result of the securities they acquire in this offering which provide them, directly or indirectly, with control or the capacity to control us. No officer or director will be purchasing shares in this offering. The remaining 14,500,000 shares of common stock held by our Officer/Directors are also being registered and as a result will be freely tradable without further registration under the Securities Act. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144. As a result of the provisions of Rules 144, additional shares will be available for sale in the public market as follows: no restricted shares will be eligible for immediate sale on the date of this prospectus; and the remainder of the restricted shares will be eligible for sale from time to time thereafter upon expiration of their respective holding periods, subject to restrictions on such sales by affiliates and as restricted by the lock-up agreement. Sales pursuant to Rule 144 are subject to certain requirements relating to manner of sale, notice, and the availability of current public information about us. A person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of Goldeo at any time during the 90 days immediately preceding the sale and who has beneficially owned restricted shares for at least two years is entitled to sell such shares under Rule 144(k) without regard to the resale limitations. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver to the prospective purchaser a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the prospective purchaser and receive the purchaser s written agreement to the transaction. Furthermore, subsequent to a transaction in a penny stock, the broker-dealer will be required to deliver monthly or quarterly statements containing specific information about the penny stock. It is anticipated that our common stock will be traded on the OTC Bulletin Board at a price of less than $5.00. In this event, broker-dealers would be required to comply with the disclosure requirements mandated by the penny stock rules. These disclosure requirements will likely make it more difficult for investors in this offering to sell their common stock in the secondary market. XXV. Future Compensation No future compensation for the executives have been determined at this time. XXVI. Board Committees Currently we have no Board Committees and have no intention to charter any committee at this time. XXVII. Transfer Agent Currently we have not identified and determined in anyway a Transfer Agent. XXXV. Information Not Required in the Prospectus Item 24. Indemnification of Directors and Officers. The statutes, charter provisions, bylaws, contracts or other arrangements under which controlling persons, directors or officers of the issuer are insured or indemnified in any manner against any liability which they may incur in such capacity are as follows: 1. Under section 607.0850 of the Florida Business Corporation Act (the Act ) a corporation shall have power to indemnify any person who was or is a party to any proceeding (other than an action by, or in the right of, the corporation), by reason of the fact that he or she is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against liability incurred in connection with such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. The Act further states that a corporation shall have power to indemnify any person, who was or is a party to any proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof. Such indemnification shall be authorized if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made under this subsection in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such proceeding was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. The Company s Certificate of Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Section 607.0850 of the Florida Business Corporation Act, as amended from time to time, each person that such section grants us the power to indemnify. Section 607.0850(7) of the Act provides that any director , officer, employee or agent shall not be the beneficiary of any indemnification or advancement of expenses if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and constitute: A violation of a criminal law, unless the party had a reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful; A transaction from which the party derived improper personal benefit; In the case of a director, a circumstance defined as an Unlawful Distribution under Section 607.0834 of the Act; or Willful misconduct or a conscious disregard for the best interest of the Company in a proceeding by or in the right of the Company to procure a judgment in its favor or in a proceeding by or in the right of a shareholder. The Company shall indemnify to the fullest extent permitted by Section 607.0850 of the Act, as may be amended from time to time, any director or officer of the Company who is a party or who is threatened to be made a party to any proceeding which is a threatened, pending or completed action or suit brought against said officer or director in his official capacity. This Company shall not indemnify any director or officer in any action or suit, threatened, pending or completed, brought by him against the Corporation, in the event the officer or director is not the prevailing party. Indemnification of any other persons, such as employees or agents of the Corporation, or serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, shall be determined in the sole and absolute discretion of the Board of Directors of the Corporation. 2. The Issuer s Certificate of Incorporation limit liability of its Officers and Directors to the full extent permitted by the Florida General Corporation Law. The bylaws provide for indemnification in accordance with the foregoing statutory provisions. Item 25. Other Expenses of Issuance and Distribution The following table sets forth all estimated costs and expenses, other than underwriting discounts, commissions and expense allowances, payable by the issuer in connection with the maximum offering for the securities included in this registration statement: Item Amount SEC registration fee $ 518.57 Blue Sky fees and expenses $ 0.00 Legal fees and expenses $ 6000.00 Accounting fees and expenses $ 3000.00 Total $ 9518.57 Item 26. Recent Sales of Unregistered Securities. The following sets forth information relating to all previous sales of common stock by the Registrant which sales were not registered under the Securities Act of 1933.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001542761_nrt-west_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001542761_nrt-west_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase notes and shares of Class A Common Stock issuable upon conversion of the notes. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States ("GAAP"). Our Company Realogy is a wholly-owned subsidiary of Intermediate, which is a wholly-owned subsidiary of Holdings. Intermediate does not conduct any operations other than with respect to its ownership of Realogy. Holdings does not conduct any operations other than with respect to its indirect ownership of Realogy. We are one of the preeminent and most integrated providers of real estate and relocation services. We are the world's largest real estate brokerage franchisor, the largest U.S. residential real estate brokerage firm, the largest U.S. provider and a leading global provider of outsourced employee relocation services and a provider of title and settlement services. Through our portfolio of leading brands and the broad range of services we offer, we have established our company as a leader in the residential real estate industry, with operations that are dispersed throughout the U.S. and in various locations worldwide. We derive the vast majority of our revenues from serving the needs of buyers and sellers of existing homes, rather than serving the needs of builders and developers of new homes. Realogy was incorporated on January 27, 2006 in the State of Delaware and Holdings was incorporated on December 14, 2006 in the State of Delaware. We report our operations in four segments: Real Estate Franchise Services, Company Owned Real Estate Brokerage Services, Relocation Services and Title and Settlement Services. Segment Overview Real Estate Franchise Services. Through our Real Estate Franchise Services segment, or RFG, we are a franchisor of some of the most recognized brands in the real estate industry. As of December 31, 2011, our franchise system had approximately 14,000 offices (which included approximately 725 of our company owned and operated brokerage offices) and 245,800 independent sales associates (which included approximately 42,100 independent sales agents working with our company owned brokerage offices) operating under our franchise and proprietary brands in the U.S. and 100 other countries and territories around the world (internationally, generally through master franchise agreements). In 2011, we were involved, either through our franchise operations or company owned brokerages, in approximately 26% of all existing homesale transaction volume (homesale sides, each side representing either the buy side or the sell side of a homesale transaction, times average sales price) for transactions involving a real estate brokerage firm in the U.S. As of December 31, 2011, we had approximately 3,300 domestic franchisees, none of which individually represented more than 1% of our franchise royalties (other than our subsidiary, NRT LLC, or NRT, which operates our company owned brokerages). We believe this reduces our exposure to any one franchisee. On average, our franchisee s tenure with our brands is 18 years as of December 31, 2011. Our franchise revenues in 2011 included $204 million of royalties paid by our company owned brokerage operations, or approximately 37% of total franchise revenues, which are eliminated in consolidation. As of December 31, 2011, our real estate franchise brands were: Century 21 One of the world s largest residential real estate brokerage franchisors, with approximately 7,500 franchise offices and approximately 107,800 independent sales associates located in the U.S. and 71 other countries and territories; Coldwell Banker One of the world's largest residential real estate brokerage franchisors, with approximately 3,100 franchise and company owned offices and approximately 84,800 independent sales associates located in the U.S. and 50 other countries and territories; ERA A residential real estate brokerage franchisor, with approximately 2,400 franchise and company owned offices and approximately 30,500 independent sales associates located in the U.S. and 35 other countries and territories; Table of Contents SCHEDULE A The address for each of the guarantors listed below is One Campus Drive, Parsippany, New Jersey 07054. The primary standard industrial classification code number for each of the guarantors listed below is 6531. The guarantors, the states of incorporation or organization for each guarantor and the IRS employer identification number for each guarantor is listed below. Exact name of registrant as specified in its charter State of incorporation or organization IRS employer identification no. Burrow Escrow Services, Inc. California 33-0876967 Coldwell Banker Real Estate LLC California 95-3656885 Coldwell Banker Residential Brokerage Company California 95-3140237 Coldwell Banker Residential Real Estate LLC California 95-3522685 Coldwell Banker Residential Referral Network California 33-0196250 Cornerstone Title Company California 33-0955745 Equity Title Company California 95-3415676 Guardian Title Company California 95-2951502 National Coordination Alliance LLC California 33-0477770 NRT West, Inc. California 45-3744709 Realogy Operations LLC California 95-2699378 Referral Network Plus, Inc. California 26-2299918 Valley of California, Inc. California 94-1615655 West Coast Escrow Company California 95-4037858 Colorado Commercial, LLC Colorado 84-1539312 Guardian Title Agency, LLC Colorado 84-1300104 NRT Colorado LLC Colorado 84-1474328 Referral Network, LLC Colorado 84-1541495 Better Homes and Gardens Real Estate Licensee LLC Delaware 26-1483161 Better Homes and Gardens Real Estate LLC Delaware 26-1439164 Burgdorff LLC Delaware 26-0376660 Career Development Center, LLC Delaware 20-5782611 Cartus Asset Recovery Corporation Delaware 26-3108651 Cartus Corporation Delaware 94-1717274 Cartus Partner Corporation Delaware 26-1545145 CB Commercial NRT Pennsylvania LLC Delaware 37-1653141 CDRE TM LLC Delaware 20-5122543 Century 21 Real Estate LLC Delaware 95-3414846 CGRN, Inc. Delaware 22-3652986 Coldwell Banker LLC Delaware 33-0320545 Coldwell Banker Real Estate Services LLC Delaware 26-0376845 Coldwell Banker Residential Brokerage LLC Delaware 33-0722736 Domus Holdings Corp. Delaware 20-8050955 Equity Title Messenger Service Holding LLC Delaware 14-1871488 ERA Franchise Systems LLC Delaware 22-3419810 First California Escrow Corp Delaware 20-2923040 Franchise Settlement Services LLC Delaware 20-0922030 Global Client Solutions LLC Delaware 26-3051498 Guardian Holding Company Delaware 20-0597637 Gulf South Settlement Services, LLC Delaware 20-2668391 Table of Contents STATE SECURITIES LAWS CONSIDERATIONS The securities represented hereby have not been registered under any state securities commission or regulatory authority and may be offered, sold or otherwise transferred only if so registered or in a manner exempt from registration under such state securities commission or regulatory authority. See "State Securities Laws Considerations." TRADEMARKS AND SERVICE MARKS We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this prospectus include the CENTURY 21 , COLDWELL BANKER , ERA , THE CORCORAN GROUP , COLDWELL BANKER COMMERCIAL , SOTHEBY'S INTERNATIONAL REALTY and BETTER HOMES AND GARDENS marks, which are registered in the United States and/or registered or pending registration in other jurisdictions, as appropriate, to the needs of our relevant business. Each trademark, trade name or service mark of any other company appearing in this prospectus is owned by such company. MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. As noted in this prospectus, the National Association of Realtors ("NAR"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") were the primary sources for third-party industry data and forecasts. While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because they use survey data in their historical reports and forecasting models whereas we use data based on actual reported results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR's utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Additionally, NAR data is subject to periodic review and revision. On December 21, 2011, NAR issued a press release disclosing that it had completed a review of its sampling and methodology processes with respect to existing homesales and as a result has issued a downward revision to their previously reported homesales and inventory data for the period from 2007 through November 2011. The revision did not affect NAR's previously reported median or average price data. These revisions had no impact on our reported financial results or key business driver information. While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. Forecasts regarding rates of home ownership, median sales price, volume of homesales, and other metrics included in this prospectus to describe the housing industry are inherently uncertain or speculative in nature and actual results for any period may materially differ. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding industry data provided herein, our estimates involve risks and uncertainties and are subject to change based upon various factors, including those discussed under the headings "Risk Factors" and "Forward-Looking Statements." Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Table of Contents Sotheby s International Realty A luxury real estate brokerage brand. In February 2004, we acquired Sotheby s company owned offices and the exclusive license for the rights to the Sotheby s Realty and Sotheby s International Realty trademarks. Since that time, we have grown the brand from 15 company owned offices to approximately 600 franchise and company owned offices and approximately 12,000 independent sales associates located in the U.S. and 44 other countries and territories; Better Homes and Gardens Real Estate We launched the Better Homes and Gardens Real Estate brand in July 2008 under an exclusive long-term license from Meredith Corporation ( Meredith ) and have approximately 210 franchise offices and approximately 6,700 independent sales associates located in the U.S. and Canada; and Coldwell Banker Commercial A commercial real estate brokerage franchisor, with approximately 175 franchise offices and approximately 1,800 independent sales associates worldwide. The number of offices and independent sales associates in our commercial franchise system does not include our residential franchise and company owned brokerage offices and the independent sales associates who work out of those brokerage offices that also conduct commercial real estate brokerage business using the Coldwell Banker Commercial trademarks. We derive substantially all of our real estate franchising revenues from royalty fees received under long-term franchise agreements with our franchisees (typically ten years in duration for new domestic agreements). The royalty fee is based on a percentage of the franchisees sales commission earned from real estate transactions, which we refer to as gross commission income. Our franchisees pay us royalty fees for the right to operate under one of our trademarks and to utilize the benefits of the franchise system. These royalty fees enable us to have recurring revenue streams. In exchange, we license our marks for our franchisees' use and provide them with certain systems and tools that are designed to help our franchisees to serve their customers and attract new or retain existing independent sales associates. We support our franchisees with servicing programs, technology, training and education, as well as branding-related marketing which is funded through contributions by our franchisees and us (including our company-owned and operated brokerages). We believe that one of our strengths is the strong relationships that we have with our franchisees, as evidenced by our franchisee retention rate of 97% in 2011. Our retention rate represents the annual gross commission income as of December 31 of the previous year generated by our franchisees that remain in the franchise system on an annual basis, measured against the annual gross commission income of all franchisees as of December 31 of the previous year. Company Owned Real Estate Brokerage Services. Through our subsidiary, NRT, we own and operate a full-service real estate brokerage business in more than 35 of the largest metropolitan areas of the U.S. Our company owned real estate brokerage business operates principally under our Coldwell Banker brand as well as under the ERA and Sotheby s International Realty franchised brands, and proprietary brands that we own, but do not currently franchise to third parties, such as The Corcoran Group and Citihabitats. In addition, under NRT, we operate a large independent real estate owned ( REO ) residential asset manager, which focuses on bank-owned properties. At December 31, 2011, we had approximately 725 company owned brokerage offices, approximately 4,700 employees and approximately 42,100 independent sales associates working with these company owned offices. Acquisitions have been, and will continue to be, part of our strategy and a contributor to the growth of our company owned brokerage business. Our company owned real estate brokerage business derives revenues primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2011, our average homesale broker commission rate was 2.50% which represents the average commission rate earned on either the buy side or the sell side of a homesale transaction. Generally in U.S. homesale transactions, the broker for the home seller instructs the closing agent to pay a portion of the sales commission to the broker for the buyer and keeps the remaining portion of the homesale commission. In addition, as a full-service real estate brokerage company, in compliance with applicable laws and regulations, including the Real Estate Settlement Procedures Act ( RESPA ), we actively promote the services of our relocation and title and settlement services businesses, as well as the products offered by PHH Home Loans, LLC ( PHH Home Loans ), our home mortgage joint venture with PHH Corporation ( PHH ) that is the exclusive recommended provider of mortgages for our real estate brokerage and relocation service customers. All mortgage loans originated by PHH Home Loans are sold to PHH or other third party investors, and PHH Home Loans does not hold any mortgage loans for investment purposes or perform servicing functions for any loans it originates. Accordingly, our home mortgage joint venture structure insulates us from mortgage servicing risk. We own 49.9% of PHH Home Loans and PHH owns the remaining 50.1%. The Company is not the primary beneficiary and therefore our financial results only reflect our proportionate share of the joint venture s results of operations which are Table of Contents Jack Gaughen LLC Delaware 26-0376973 Keystone Closing Services LLC Delaware 23-2930568 NRT Arizona Commercial LLC Delaware 20-3697457 NRT Arizona LLC Delaware 20-3392792 NRT Arizona Referral LLC Delaware 20-3697479 NRT Columbus LLC Delaware 31-1794070 NRT Commercial LLC Delaware 52-2173782 NRT Commercial Utah LLC Delaware 87-0679989 NRT Development Advisors LLC Delaware 20-0442165 NRT Devonshire LLC Delaware 26-2333684 NRT Hawaii Referral, LLC Delaware 20-3574360 NRT LLC Delaware 33-0769705 NRT Mid-Atlantic LLC Delaware 26-0393458 NRT Missouri LLC Delaware 64-0965388 NRT Missouri Referral Network LLC Delaware 26-0393293 NRT New England LLC Delaware 04-2154746 NRT New York LLC Delaware 13-4199334 NRT Northfork LLC Delaware 26-0840964 NRT Philadelphia LLC Delaware 27-3478613 NRT Pittsburgh LLC Delaware 26-0393427 NRT Referral Network LLC Delaware 80-0506617 NRT Relocation LLC Delaware 20-0011685 NRTREO Experts LLC Delaware 26-2707374 NRT Settlement Services of Missouri LLC Delaware 26-0006000 NRT Settlement Services of Texas LLC Delaware 52-2299482 NRT Sunshine Inc. Delaware 51-0455827 NRT Utah LLC Delaware 87-0679991 ONCOR International LLC Delaware 20-5470167 Real Estate Referral LLC Delaware 26-0393629 Real Estate Referrals LLC Delaware 26-0393668 Real Estate Services LLC Delaware 22-3770721 Realogy Franchise Group LLC Delaware 20-4206821 Realogy Global Services LLC Delaware 22-3528294 Realogy Licensing LLC Delaware 22-3544606 Realogy Services Group LLC Delaware 20-1572338 Realogy Services Venture Partner LLC Delaware 20-2054650 Secured Land Transfers LLC Delaware 26-0184940 Sotheby's International Realty Affiliates LLC Delaware 20-1077136 Sotheby's International Realty Licensee LLC Delaware 20-1077287 Sotheby's International Realty Referral Company, LLC Delaware 20-4568253 Title Resource Group Affiliates Holdings LLC Delaware 20-0597595 Title Resource Group Holdings LLC Delaware 22-3868607 Title Resource Group LLC Delaware 22-3680144 Title Resource Group Services LLC Delaware 22-3788990 Title Resources Incorporated Delaware 76-0594000 TRG Services, Escrow, Inc. Delaware 26-1512603 World Real Estate Marketing LLC Delaware 26-3623204 WREM, Inc. Delaware 27-1798705 Table of Contents recorded using the equity method. Relocation Services. Through our subsidiary, Cartus Corporation ( Cartus ), we are a leading global provider of outsourced employee relocation services and the largest provider in the U.S. We offer a broad range of world-class employee relocation services designed to manage all aspects of an employee s move to facilitate a smooth transition in what otherwise may be a difficult process for both the employee and the employer. Our relocation services business primarily offers its clients employee relocation services such as homesale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household moving services, visa and immigration support, intercultural and language training and group move management services. In 2011, we assisted in over 153,000 relocations in over 165 countries for approximately 1,500 active clients, including over 70% of the Fortune 50 companies as well as affinity organizations. In January 2010, our relocation business acquired Primacy Relocation LLC ("Primacy"), a relocation and global assignment management services company headquartered in Memphis, Tennessee with international locations in Canada, Europe and Asia. The acquisition enabled Cartus to re-enter the U.S. government relocation business, increase its domestic operations, as well as expand the Company s global relocation capabilities. Effective January 1, 2011, the Primacy business began operating under the Cartus name. Cartus has offices in the U.S. as well as internationally in the United Kingdom, Canada, Hong Kong, Singapore, China, Germany, France, Switzerland and the Netherlands. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends. Clients pay a fee for the services performed and we also receive commissions from third-party service providers, such as real estate brokers and household goods moving service providers. The majority of our clients pay interest on home equity advances and nearly all clients reimburse all other costs associated with our services, including, where required, repayment of home equity advances and reimbursement of losses on the sale of homes purchased. We believe we provide our relocation clients with exceptional service which leads to client retention. As of December 31, 2011, our top 25 relocation clients had an average tenure of 16 years with us. In addition, our relocation services business generates revenue for our other businesses because the clients of our relocation services business often utilize the services of our franchisees and company owned brokerage offices as well as our title and settlement services. Title and Settlement Services. In most real estate transactions, a buyer will choose, or will be required, to purchase title insurance that will protect the purchaser and/or the mortgage lender against loss or damage in the event that title is not transferred properly and to insure free and clear ownership of the property to the buyer. Our title and settlement services business, which we refer to as Title Resource Group ( TRG ), assists with the closing of a real estate transaction by providing full-service title and settlement (i.e., closing and escrow) services to customers, real estate companies, including our company owned real estate brokerage and relocation services businesses as well as a targeted channel of large financial institution clients including PHH. In addition to our own title settlement services, we also coordinate a nationwide network of attorneys, title agents and notaries to service financial institution clients on a national basis. Our title and settlement services business earns revenues through fees charged in real estate transactions for rendering title and other settlement and non-settlement related services. We provide many of these services in connection with transactions in which our company owned real estate brokerage and relocation services businesses are participating. During 2011, approximately 38% of the customers of our company owned brokerage offices where we offer title coverage also utilized our title and settlement services. Fees for escrow and closing services are generally separate and distinct from premiums paid for title insurance and other real estate services. We also derive revenues by providing our title and settlement services to various financial institutions in the mortgage lending industry. Such revenues are primarily derived from providing our services to their customers who are refinancing their mortgage loans. We also serve as an underwriter of title insurance policies in connection with residential and commercial real estate transactions. Our title insurance underwriter is licensed in 26 states and Washington, D.C. Our title underwriting operation generally earns revenues through the collection of premiums on policies that it issues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on our reportable segments, including financial information. Table of Contents Referral Network LLC Florida 59-2541359 St. Joe Title Services LLC Florida 59-3508965 The Sunshine Group (Florida) Ltd. Corp. Florida 13-3329821 Coldwell Banker Commercial Pacific Properties LLC Hawaii 99-0335507 Coldwell Banker Pacific Properties LLC Hawaii 99-0323981 NRT Insurance Agency, Inc. Massachusetts 04-3332208 Referral Associates of New England LLC Massachusetts 04-3079542 Mid-Atlantic Settlement Services LLC Maryland 52-1851057 Sotheby's International Realty, Inc. Michigan 38-2556952 Burnet Realty LLC Minnesota 41-1660781 Burnet Title LLC Minnesota 41-1926464 Burnet Title Holding LLC Minnesota 41-1840763 Home Referral Network LLC Minnesota 41-1685091 Market Street Settlement Group LLC New Hampshire 02-0505642 The Sunshine Group, Ltd. New York 13-3329821 Coldwell Banker Residential Referral Network, Inc. Pennsylvania 25-1485174 TRG Settlement Services, LLP Pennsylvania 25-1810204 Lakecrest Title, LLC Tennessee 38-3682041 Alpha Referral Network LLC Texas 33-0443969 American Title Company of Houston Texas 75-2477592 ATCOH Holding Company Texas 76-0452401 NRT Texas LLC Texas 75-2412614 Processing Solutions LLC Texas 76-0006215 TAW Holding Inc. Texas 76-0593996 Texas American Title Company Texas 74-1909700 Waydan Title, Inc. Texas 76-0443701 Table of Contents 2012 Senior Secured Notes Offering On February 2, 2012, the Company issued $593 million aggregate principal amount of 7.625% Senior Secured First Lien Notes due 2020 and $325 million aggregate principal amount of 9.000% Senior Secured Notes due 2020 to repay amounts outstanding under its senior secured credit facility. The First Lien Notes and the New First and a Half Lien Notes are senior secured obligations of the Company and will mature on January 15, 2020. The First Lien Notes and the New First and a Half Lien Notes bear interest at a rate of (i) 7.625% per annum for the First Lien Notes and (ii) 9.000% per annum for the New First and a Half Lien Notes, in each case payable semi-annually on January 15 and July 15 of each year, commencing July 15, 2012. The First Lien Notes and the New First and a Half Lien Notes were issued in a private offering exempt from the registration requirements of the Securities Act. The Company used the proceeds from the offering, of approximately $918 million, to: (i) prepay $629 million of its non-extended term loan borrowings under its senior secured credit facility which were due to mature in October 2013, (ii) repay all of the $133 million in outstanding borrowings under its non-extended revolving credit facility which was due to mature in April 2013 and (iii) repay $156 million of the outstanding borrowings under its extended revolving credit facility which is due to mature in April 2016. In conjunction with the repayments of $289 million described in clauses (ii) and (iii), the Company reduced the commitments under its non-extended revolving credit facility by a like amount, thereby terminating the non-extended revolving credit facility. The First Lien Notes and the New First and a Half Lien Notes are guaranteed on a senior secured basis by Intermediate and each domestic subsidiary of Realogy that is a guarantor under its senior secured credit facility and certain of its outstanding securities. The First Lien Notes and the New First and a Half Lien Notes are also guaranteed by Holdings, on an unsecured senior subordinated basis. The First Lien Notes and the New First and a Half Lien Notes are secured by substantially the same collateral as Realogy's existing obligations under its senior secured credit facility. The priority of the collateral liens securing the First Lien Notes is (i) equal to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and (ii) senior to the collateral liens securing Realogy's other secured obligations that are not secured by a first priority lien, including the First and a Half Lien Notes, and Realogy's second lien obligations under its senior secured credit facility. The priority of the collateral liens securing the New First and a Half Lien Notes is (i) junior to the collateral liens securing Realogy's first lien obligations under its senior secured credit facility and the First Lien Notes, (ii) equal to the collateral liens securing the Existing First and a Half Lien Notes and (iii) senior to the collateral liens securing Realogy's second lien obligations under its senior secured credit facility. * * * * Our headquarters are located at One Campus Drive, Parsippany, New Jersey 07054 and our general telephone number is (973) 407-2000. We maintain an Internet website at http://www.realogy.com. Our website address is provided as an inactive textual reference. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this prospectus. Table of Contents EXPLANATORY NOTE This Registration Statement contains a combined prospectus under Rule 429 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), that relates to each of the series of notes issued by Realogy Corporation, the related guarantees thereof and the Class A Common Stock issuable upon conversion of the notes by Domus Holdings Corp. that previously have been registered with the Securities and Exchange Commission on the registration statement bearing File No. 333-173250. This Registration Statement is filed pursuant to Rule 429 to add registrants to such registration statement and to reflect the guarantees of each of the series of notes by such additional registrants. Pursuant to Rule 429, upon effectiveness, this Registration Statement shall act as Post-Effective Amendment No. 3 to Form S-1 Registration Statement (File No. 333-173250). Table of Contents OUR OWNERSHIP AND DEBT STRUCTURE The following diagram sets forth our ownership and debt structure as of December 31, 2011. The diagram does not display all of our subsidiaries. _______________ (1) Consists of investment funds affiliated with Apollo (as defined below) and an investment fund of co-investors managed by Apollo that invested an aggregate of $1,978 million of equity in Holdings upon consummation of the Merger (as defined below). (2) In connection with the Debt Exchange Offering, Paulson & Co. Inc., on behalf of the several investment funds and accounts managed by it (together with such investment funds and accounts, "Paulson"), and Apollo received notes. On a fully diluted basis, assuming that all of the notes issued in the Debt Exchange Offering are converted into Class A Common Stock of Holdings, Paulson and Apollo would own approximately 21.52% and 66.26%, respectively, of the outstanding common stock of Holdings ("Common Stock") immediately following such conversion, and the remaining 12.22% of the outstanding Common Stock would be held by our directors, officers and employees (0.2%) and other holders of the notes. (3) Certain members of our management also contributed rollover equity of $23 million to finance a portion of the Merger. As of December 31, 2011, management owned 2,730,000 shares of Common Stock, options to purchase 17,894,675 shares of Common Stock and 105,000 shares of restricted stock of Holdings. On January 5, 2011, the Board of Directors of Realogy approved the Realogy Corporation Phantom Value Plan and made initial grants of Incentive Awards of approximately $21.8 million to our CEO, the other named executive officers and three additional executive officers who directly report to the CEO. These grants are subject to the terms and conditions of the Phantom Value Plan which is intended to provide certain participants, including the Company's named executive officers, with an incentive to remain in the service of the Company, to increase their interest in the success of the Company and to receive compensation based upon the Company's success. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated March 5, 2012 PROSPECTUS Realogy Corporation Up to $1,143,706,000 11.00% Series A Convertible Senior Subordinated Notes due 2018 Up to $291,424,196 11.00% Series B Convertible Senior Subordinated Notes due 2018 Up to $675,111,000 11.00% Series C Convertible Senior Subordinated Notes due 2018 and Domus Holdings Corp. Class A Common Stock Issuable upon Conversion of the Notes _____________________________________ Realogy Corporation ("Realogy") issued $2,110,241,196 aggregate principal amount of 11.00% Convertible Senior Subordinated Notes due 2018, consisting of (i) $1,143,706,000 aggregate principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018 (the "Series A Convertible Notes"), (ii) $291,424,196 aggregate principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 (the "Series B Convertible Notes") and (iii) $675,111,000 aggregate principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018 (the "Series C Convertible Notes" and, together with the Series A Convertible Notes and the Series B Convertible Notes, the "notes") on January 5, 2011 in connection with Realogy's private debt exchange offers (the "Debt Exchange Offering") as more fully described herein. The Series A Convertible Notes, Series B Convertible Notes and Series C Convertible Notes were issued under the same indenture (the "indenture"), dated as of January 5, 2011, by and among, Realogy, Domus Holdings Corp., Realogy's indirect parent corporation ("Holdings"), the note guarantors party thereto (the "Note Guarantors") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee), and are treated as a single class for substantially all purposes under the indenture. This prospectus will be used by the selling securityholders named herein to resell their notes up to a total principal amount of $2,110,241,196 and the Class A Common Stock of Holdings, par value $0.01 per share ("Class A Common Stock"), issuable upon conversion of the notes. We are registering the offer and sale of the notes up to a total principal amount of $2,110,241,196 and the shares of Class A Common Stock issuable upon conversion of the notes to satisfy registration rights we have granted. The Series A Convertible Notes bear interest at a rate of 11.00% per annum. The Series B Convertible Notes bear interest at a rate of 11.00% per annum. The Series C Convertible Notes bear interest at a rate of 11.00% per annum. Interest is payable semi-annually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year. The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes (as defined below). Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. Holdings also guarantees the notes on an unsecured junior subordinated basis. The notes are convertible into Class A Common Stock at any time prior to April 15, 2018. Every $1,000 aggregate principal amount of Series A Convertible Notes or Series B Convertible Notes is convertible into 975.6098 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.025 per share, and every $1,000 aggregate principal amount of Series C Convertible Notes is convertible into 926.7841 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $1.079 per share, in each case subject to adjustments under certain conditions as set forth in the indenture. Upon the occurrence of a Qualified Public Offering (as defined below), and at any time thereafter, Realogy may, at its option, redeem the notes, in whole or in part, at a redemption price, payable in cash, equal to 90% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. If Realogy undergoes a Change of Control (as defined below), it must offer to repurchase the notes at 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the repurchase date. We are not selling any notes or shares of Class A Common Stock pursuant to this prospectus and will not receive any proceeds from sales of the securities registered herein by the selling securityholders. The selling securityholders may sell all or a portion of their notes and the Class A Common Stock issuable upon conversion thereof from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the prevailing market price or at negotiated prices. For more information regarding the sales of the notes and Class A Common Stock issuable upon conversion of the notes by the selling securityholders pursuant to this prospectus, please read "Plan of Distribution." There is no public market for the notes or Class A Common Stock and we do not intend to apply for listing of the notes or the Class A Common Stock on any securities exchanges or for quotation of these securities through any automated quotation systems. Because there is no public market for our Class A Common Stock, the selling securityholders will sell their shares of our Class A Common Stock at a fixed price until shares of our Class A Common Stock are quoted on the OTC Bulletin Board or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. The offering price is between $1.00 to $2.00 per share of Class A Common Stock. Investing in the notes and the Class A Common Stock issuable upon conversion of the notes involves risks. See "Risk Factors" beginning on page 15. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ____________________________________ The date of this prospectus is , 2012. Table of Contents (4) After giving effect to the 2012 Senior Secured Notes Offering, as of December 31, 2011, the first priority obligations under our senior secured credit facility, on a pro forma basis, would have consisted of a $1,822 million term loan facility, $97 million of outstanding borrowings under a $363 million revolving credit facility, and $170 million of letters of credit outstanding under a $187 million synthetic letter of credit facility. The available capacity under our revolving credit facility is reduced by outstanding letters of credit drawn thereunder. As of February 27, 2012, we had $55 million outstanding on the revolving credit facility and $81 million of outstanding letters of credit. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources." (5) The First Lien Notes and the New First and a Half Lien Notes are guaranteed by Intermediate, Holdings and each of our U.S. direct or indirect restricted subsidiaries that guarantees our senior secured credit facility, our Existing First and a Half Lien Notes and our Unsecured Notes or that guarantees certain indebtedness in the future, subject to certain exceptions. Each of the First Lien Notes and the New First and a Half Lien Notes and the related guarantees (other than the guarantees by Holdings) is secured by a lien, subject to certain exceptions and permitted liens, on substantially all of our and our guarantors' existing and future assets. The guarantees of the First Lien Notes and the New First and a Half Lien Notes by Holdings are unsecured senior subordinated obligations of Holdings. In the event of enforcement of any of the liens securing the First Lien Notes and the New First and a Half Lien Notes and the related guarantees, the proceeds thereof will be first applied to repay, on a pro rata basis, the obligations secured by first priority liens, including our first lien obligations under our senior secured credit facility and the First Lien Notes, and second to repay, on a pro rata basis, the obligations under the New First and a Half Lien Notes, the Existing First and a Half Lien Notes and any other obligations secured by a lien of equal priority to the New First and a Half Lien Notes and the Existing First and a Half Lien Notes, before being applied to repay our second lien obligations, including our Second Lien Loans (as defined below) under our senior secured credit facility. (6) Consists of $700 million of Existing First and a Half Lien Notes which are secured by liens that are effectively junior in priority to our first priority senior secured indebtedness, which includes the First Lien Notes, effectively equal in priority to indebtedness secured by a pari passu lien, including the New First and a Half Lien Notes, and effectively senior in priority to our second priority senior secured indebtedness, including the Second Lien Loans. (7) Consists of $650 million of second lien term loans under the incremental loan feature of the senior secured credit facility (the "Second Lien Loans"). (8) Guarantors include each wholly-owned subsidiary of Realogy other than subsidiaries that are (a) foreign subsidiaries, (b) securitization entities that are subsidiaries of Cartus Corporation, (c) insurance underwriters that are subsidiaries of Title Resource Group LLC and (d) qualified foreign corporation holding companies. (9) Certain subsidiaries of Cartus Corporation are borrowers under the securitization facilities. These special purpose entities were created for financing relocation receivables and advances and other related assets and issuing notes secured by such receivables and other assets. At December 31, 2011, $327 million of securitization obligations were outstanding under our securitization facilities which were collateralized by $366 million of securitization assets that are not available to pay our general obligations. (10) Other bank indebtedness consists of $133 million of revolving credit facilities that are supported by letters of credit under our senior secured credit facility a portion of which are issued under our synthetic letter of credit facility, with $75 million due in July 2012, $8 million due in August 2012 and $50 million due in January 2013. Our Equity Sponsor On December 15, 2006, Realogy entered into an agreement and plan of merger (the "Merger") with affiliates of Apollo. The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly-owned subsidiary of Holdings and our principal stockholders are investment funds affiliated with, or co-investment vehicles managed by, Apollo Management VI, L.P. or one of its affiliates (together with Apollo Global Management, LLC and its subsidiaries, "Apollo"). Founded in 1990, Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Hong Kong and Mumbai. As of December 31, 2011, Apollo had assets under management of $75 billion in its private equity, capital markets and real estate businesses. Companies owned or controlled by Apollo or its affiliates or in which Apollo or its affiliates have a significant equity investment include, among others, Affinion Group Holdings, Inc., AMC Entertainment, Inc., Berry Plastics Group, Inc., CEVA Group Plc, Metals USA Holdings Corp., Momentive Performance Materials LLC, NCL Corporation Ltd., Noranda Aluminum Holding Corporation, Rexnord Holdings, Inc. and Verso Paper Company. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents our summary historical consolidated financial data and operating statistics. The consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011 and 2010 have been derived from our audited consolidated financial statements included in this prospectus. The consolidated balance sheet date as of December 31, 2009 has been derived from our consolidated and combined financial statements not included in this prospectus. Holdings, the indirect parent of Realogy, does not conduct any operations other than with respect to its indirect ownership of Realogy. Intermediate, the parent of Realogy, does not conduct any operations other than with respect to its ownership of Realogy. Any expenses related to stock options issued by Holdings or franchise taxes incurred by Holdings are recorded in Realogy's financial statements. As a result, there are no material differences between Holdings' and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009 and no material differences between Intermediate's and Realogy's financial statements for the years ended December 31, 2011, 2010 and 2009. The summary historical consolidated financial data should be read in conjunction with the sections of this prospectus entitled "Capitalization," and "Selected Historical Consolidated and Combined Financial Statements." As of or For the Year Ended December 31, 2011 2010 2009 Statement of Operations Data: Net revenue $ 4,093 $ 4,090 $ 3,932 Total expenses 4,526 4,084 4,266 Income (loss) before income taxes, equity in earnings and noncontrolling interests (433 ) 6 (334 ) Income tax expense (benefit) 32 133 (50 ) Equity in (earnings) losses of unconsolidated entities (26 ) (30 ) (24 ) Net loss (439 ) (97 ) (260 ) Less: Net income attributable to noncontrolling interests (2 ) (2 ) (2 ) Net loss attributable to Realogy and Holdings $ (441 ) $ (99 ) $ (262 ) Other Data: Interest expense, net (1) $ 666 $ 604 $ 583 Cash flows provided by (used in): Operating activities (192 ) (118 ) 341 Investing activities (49 ) (70 ) (47 ) Financing activities 192 124 (479 ) EBITDA (2) 443 835 465 EBITDA before restructuring and other items (2) 476 534 427 Adjusted EBITDA Senior secured credit facility covenant compliance (3) 571 633 619 Balance Sheet Data: Cash and cash equivalents $ 143 $ 192 $ 255 Securitization assets (4) 366 393 364 Total assets 7,810 8,029 8,041 Securitization obligations 327 331 305 Long-term debt, including short-term portion 7,150 6,892 6,706 Equity (deficit) (5) (1,508 ) (1,072 ) (981 ) Table of Contents _______________ (1) We estimate that our annual cash interest will increase by approximately $46 million on a pro forma annualized basis after giving effect to the 2012 Senior Secured Notes Offering, based on our debt balances as of December 31, 2011 and assuming LIBOR rates as of December 31, 2011. (2) EBITDA is defined by us as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net,and gain (loss) on the early extinguishment of debt. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation. EBITDA and EBITDA before restructuring and other items should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results. EBITDA and EBITDA before restructuring and other items have limitations as analytical tools, and you should not consider EBITDA and EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are: these measures do not reflect changes in, or cash requirement for, our working capital needs; these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt; these measures do not reflect our income tax expense or the cash requirements to pay our taxes; these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and other companies may calculate these EBITDA measures differently so they may not be comparable. EBITDA and EBITDA before restructuring and other items are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation (3) Adjusted EBITDA-Senior Secured Credit Facility Covenant Compliance corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA is presented to demonstrate Realogy's compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP. In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods. We present Adjusted EBITDA for the trailing twelve month period. Table of Contents A reconciliation of net loss attributable to Realogy to EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA for the years ended December 31, 2011, 2010 and 2009 as calculated in accordance with the senior secured credit facility and presented in certificates delivered to the lenders under the senior secured credit facility is set forth in the following table: For the Year Ended December 31, 2011 2010 2009 Net loss attributable to Realogy $ (441 ) $ (99 ) $ (262 ) Income tax expense (benefit) 32 133 (50 ) Income (loss) before income taxes (409 ) 34 (312 ) Interest expense (income), net 666 604 583 Depreciation and amortization 186 197 194 EBITDA 443 835 465 Merger costs, restructuring costs and former parent legacy costs (benefit), net (3 ) (a) (301 ) (b) 37 (c) Loss (gain) on the early extinguishment of debt 36 (75 ) EBITDA before restructuring and other items 476 534 427 Pro forma cost savings 11 (d) 20 (e) 33 (f) Pro forma effect of business optimization initiatives 52 (g) 49 (h) 38 (i) Non-cash charges 4 (j) (4 ) (k) 34 (l) Non-recurring fair value adjustments for purchase accounting (m) 4 4 5 Pro forma effect of acquisitions and new franchisees (n) 7 13 5 Apollo management fees (o) 15 15 15 Proceeds from WEX contingent asset (p) 55 Incremental securitization interest costs (q) 2 2 3 Expenses incurred in debt modification activities (r) 4 Adjusted EBITDA Senior secured credit facility covenant compliance $ 571 $ 633 $ 619 Total senior secured net debt (s) $ 2,536 $ 2,905 $ 2,886 Senior secured leverage ratio 4.44 x (t) 4.59 x 4.66 x _______________ (a) Consists of $11 million of restructuring costs and $1 million of merger costs offset by a benefit of $15 million of former parent legacy items. (b) Consists of $21 million of restructuring costs and $1 million of merger costs offset by a benefit of $323 million of former parent legacy items. (c) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a net benefit of $34 million for former parent legacy items. (d) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2011. From this restructuring, we expect to reduce our operating costs by approximately $21 million on a twelve-month run-rate basis and estimate that $10 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2011 through the time they were put in place, had those actions been effected on January 1, 2011. (e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2010. From this restructuring, we expect to reduce our operating costs by approximately $34 million on a twelve-month run-rate basis and estimate that $14 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2010 through the time they were put in place, had those actions been effected on January 1, 2010. (f) Represents actual costs incurred that were not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expected to reduce our operating costs by approximately $103 million on a twelve-month run-rate basis and estimated that $70 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009. (g) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $1 million related to our Relocation Services integration costs and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $41 million for employee retention accruals and $4 million of Table of Contents other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (h) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $12 million related to our Relocation Services, integration costs, new business start-ups and acquisition related non-cash adjustments, $6 million related to vendor renegotiations, $23 million for employee retention accruals and $8 million of other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (i) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million for employee retention accruals, and $14 million related to other initiatives. The employee retention accruals reflect the employee retention plans that have been implemented in lieu of our customary bonus plan, due to the ongoing and prolonged downturn in the housing market in order to ensure the retention of executive officers and other key personnel, principally within our corporate services unit and the corporate offices of our four business units. (j) Represents the elimination of non-cash expenses, including $7 million of stock-based compensation expense and $4 million of other items less $7 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2011 through December 31, 2011. (k) Represents the elimination of non-cash expenses, including $6 million of stock-based compensation expense, less $8 million for the change in the allowance for doubtful accounts and notes reserves from January 1, 2010 through December 31, 2010 and $2 million of other non-cash items. (l) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts. (m) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2011, 2010 and 2009. (n) Represents the estimated impact of acquisitions and new franchisees as if they had been acquired or signed on January 1st. Franchisee sales activity is comprised of new franchise agreements as well as growth acquired by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1st. (o) Represents the elimination of annual management fees payable to Apollo for the years ended December 31, 2011, 2010 and 2009. (p) Wright Express Corporation ("WEX") was divested by Cendant in February 2005 through an initial public offering. As a result of such IPO, the tax basis of WEX's tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay Cendant 85% of any tax savings related to the increase in basis utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax-savings payments received from WEX to us. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA. (q) Reflects the incremental borrowing costs incurred as a result of the securitization facilities refinancing for the years ended December 31, 2011, 2010 and 2009. (r) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009. (s) Pursuant to the terms of our senior secured credit facility, total senior secured net debt does not include the Existing First and a Half Lien Notes, the New First and a Half Lien Notes offered hereby, other indebtedness secured by a lien on our assets that is pari passu or junior in priority to the Existing First and a Half Lien Notes, including our Second Lien Loans, securitization obligations or the Unsecured Notes. (t) After giving effect to the 2012 Senior Secured Notes Offering, our senior secured leverage ratio would have been 3.87 to 1.0 at December 31, 2011. Table of Contents (4) Represents the portion of relocation receivables and advances and other related assets that collateralize our securitization obligations. The following table represents key business drivers for the periods set forth below: Year Ended December 31, 2011 2010 2009 Operating Statistics: Real Estate Franchise Services (1) Closed homesale sides (2) 909,610 922,341 983,516 Average homesale price (3) $ 198,268 $ 198,076 $ 190,406 Average homesale broker commission rate (4) 2.55 % 2.54 % 2.55 % Net effective royalty rate (5) 4.84 % 5.00 % 5.10 % Royalty per side (6) $ 256 $ 262 $ 257 Company Owned Real Estate Brokerage Services (7) Closed homesale sides (2) 254,522 255,287 273,817 Average homesale price (3) $ 426,402 $ 435,500 $ 390,688 Average homesale broker commission rate (4) 2.50 % 2.48 % 2.51 % Gross commission income per side (8) $ 11,461 $ 11,571 $ 10,519 Relocation Services Initiations (9) 153,269 148,304 114,684 Referrals (10) 72,169 69,605 64,995 Title and Settlement Services Purchase title and closing units (11) 93,245 94,290 104,689 Refinance title and closing units (12) 62,850 62,225 69,927 Average price per closing unit (13) $ 1,409 $ 1,386 $ 1,317 _______________ (1) These amounts include only those relating to third-party franchisees and do not include amounts relating to the Company Owned Real Estate Brokerage Services segment. (2) A closed homesale side represents either the "buy" side or the "sell" side of a homesale transaction. (3) Represents the average selling price of closed homesale transactions. (4) Represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction. (5) Represents the average percentage of our franchisees' commission revenue (excluding NRT) paid to the Real Estate Franchise Services segment as a royalty. The net effective royalty rate does not include the effect of non-standard incentives granted to some franchisees. (6) Represents net domestic royalties earned from our franchisees (excluding NRT) divided by the total number of our franchisees' closed homesale sides. (7) Our real estate brokerage business has a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. The real estate franchise business has franchised offices that are more widely dispersed across the United States than our real estate brokerage operations. Accordingly, operating results and homesale statistics may differ between our brokerage and franchise businesses based upon geographic presence and the corresponding homesale activity in each geographic region. (8) Represents gross commission income divided by closed homesale sides. (9) Represents the total number of transferees served by the relocation services business. (10) Represents the number of referrals from which we earned revenue from real estate brokers. (11) Represents the number of title and closing units processed as a result of a home purchases. (12) Represents the number of title and closing units processed as a result of homeowners refinancing their home loans. (13) Represents the average fee we earn on purchase title and refinancing title units. Table of Contents THE OFFERING The summary below describes the principal terms of the notes and the Class A Common Stock issuable upon conversion of the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms and conditions of these securities, please refer to the sections entitled "Description of the Notes" and "Description of the Common Stock." Issuer of the Notes Realogy Corporation, a Delaware corporation. Issuer of the Class A Common Stock Domus Holdings Corp., a Delaware corporation and the indirect parent of Realogy. Securities Offered by the Selling Stockholders Up to $1,143,706,000 principal amount of 11.00% Series A Convertible Senior Subordinated Notes due 2018, up to $291,424,196 principal amount of 11.00% Series B Convertible Senior Subordinated Notes due 2018 and up to $675,111,000 principal amount of 11.00% Series C Convertible Senior Subordinated Notes due 2018, which were issued under the same indenture and are treated as a single class for substantially all purposes under the indenture, and Class A Common Stock issuable upon conversion of the notes. Maturity April 15, 2018, if not earlier repurchased, redeemed or converted. Realogy will be obligated to pay the outstanding aggregate principal amount in cash on the maturity date of the notes. Interest Cash interest on the Convertible Notes accrues at a rate of 11.00% per annum. Realogy will pay interest on overdue principal, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful, and will pay interest on overdue installments of interest, if any, from time to time on demand at a rate that is 2% per annum in excess of 11.00% to the extent lawful. Interest Payment Dates Interest on the notes is payable semi-annually in arrears on April 15 and October 15. Guarantees The notes are guaranteed on an unsecured senior subordinated basis by each of Realogy's U.S. direct or indirect restricted subsidiaries that is a guarantor under the 13.375% Senior Subordinated Notes. Subject to certain exceptions, any subsidiary that in the future guarantees the 13.375% Senior Subordinated Notes will also guarantee the notes. In addition, Holdings also guarantees the notes on an unsecured junior subordinated basis. Except in certain circumstances, each guarantee will be released upon the release of the guarantor from its guarantee under the 13.375% Senior Subordinated Notes. If Realogy fails to make payments on the notes, the guarantors, including Holdings, must make them instead. Each entity, other than Holdings, that guarantees Realogy's obligations under the notes and the indenture is referred to in this prospectus as a Note Guarantor. As of and for the year ended December 31, 2011, our subsidiaries that are not Note Guarantors represented 7.3% of our total assets (2.8% of our total assets excluding assets of our non-guarantor securitization entities), 4.2% of our total liabilities 0.7% of our total liabilities excluding liabilities of our non-guarantor securitization entities), 6.5% of our net revenue (6.4% of our net revenue excluding net revenue of our non-guarantor securitization entities), (11.1)% of our income before income taxes, equity in earnings and noncontrolling interests ((10.6)% of our income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of our non-guarantor securitization entities) and 16.5% of our EBITDA (16.1% of our EBITDA excluding EBITDA of our non-guarantor securitization entities), in each case after intercompany eliminations. Table of Contents As of and for the year ended December 31, 2010, Realogy's subsidiaries that are not Note Guarantors represented 7.2% of its total assets (2.4% of its total assets excluding assets of its non-guarantor securitization entities), 4.6% of its total liabilities (1.0% of its total liabilities, excluding liabilities of its non-guarantor securitization entities), 5.1% of its net revenue (5.1% of its net revenue excluding net revenue of its non-guarantor securitization entities), 600% of its income before income taxes, equity in earnings and noncontrolling interests (850% of its income before income taxes, equity in earnings and noncontrolling interests excluding income before income taxes, equity in earnings and noncontrolling interests of its non-guarantor securitization entities) and 7.9% of its EBITDA (7.7% of its EBITDA excluding EBITDA of its non-guarantor securitization entities), in each case after intercompany eliminations. Ranking The notes and the guarantees thereof are Realogy's and the Note Guarantors' unsecured senior subordinated obligations and: are subordinated in right of payment to all of Realogy's and the Note Guarantors' existing and future senior debt, including the senior secured credit facility, the First and a Half Lien Notes, the Senior Notes, and the related guarantees; are equal in right of payment with all of Realogy's and the Note Guarantors' existing and future senior subordinated debt, including the Senior Subordinated Notes; and rank senior in right of payment to all of Realogy's and the Note Guarantors' existing and future debt that is by its terms subordinated to the notes. The guarantee by Holdings is Holdings' unsecured senior subordinated obligation, is equal in right of payment to all existing and future subordinated indebtedness of Holdings and is junior in right of payment to all existing and future senior indebtedness of Holdings. In addition, the guarantees of the notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of Realogy's subsidiaries that is not a Note Guarantor. As of December 31, 2011, after giving effect to the 2012 Senior Secured Notes Offering, Realogy and the Note Guarantors would have had: approximately $2,512 million of first lien senior secured indebtedness, including approximately $1,919 million of first lien indebtedness under the senior secured credit facility (without giving effect to $94 million of outstanding letters of credit under the senior secured credit facility and $172 million of undrawn availability under the revolving credit facility), $593 million of First Lien Notes, $1,025 million of First and a Half Lien Notes and $650 million of Second Lien Loans, all of which are effectively senior to the notes, to the extent of the value of the assets securing such debt; Realogy and the Note Guarantors would have had approximately $867 million of senior indebtedness, including senior secured indebtedness, other bank indebtedness and the Senior Notes, all of which would have been senior to the notes; Realogy and the Note Guarantors had approximately $2,307 million of senior subordinated indebtedness, including the notes; and our non-Note Guarantor subsidiaries had approximately $391 million of total liabilities (approximately $327 million of which consisted of obligations under our securitization facilities), all of which are structurally senior to the notes. In addition, our securitization subsidiaries were permitted to incur approximately $135 million of additional secured relocation obligations under our securitization facilities, subject to maintaining sufficient relocation assets for collateralization, all of which are structurally senior to the notes. Table of Contents Optional Conversion The notes are convertible at any time at the option of the holders thereof, in whole or in part, into shares of Class A Common Stock, at the conversion rates described below. Conversion Rates 975.6098 shares of Class A Common Stock per $1,000 aggregate principal amount of Series A Convertible Notes and Series B Convertible Notes, which is equivalent to an initial conversion price of approximately $1.025 per share and 926.7841 shares of Class A Common Stock per $1,000 aggregate principal amount of Series C Convertible Notes, which is equivalent to an initial conversion price of approximately $1.079 per share. The conversion rates are subject to adjustment as provided in Anti-Dilution Provisions below. Optional Redemption Upon a Qualified Public Offering and thereafter, the notes will be redeemable at the option of Realogy at a price equal to 90% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. Holders will be provided with notice of an upcoming Qualified Public Offering and will have a period of time to convert prior to a Qualified Public Offering as described in Description of the Notes. A Qualified Public Offering means an underwritten public offering of Class A Common Stock by Holdings or any selling stockholders pursuant to an effective registration statement filed by Holdings with the Securities and Exchange Commission (other than (a) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (b) a registration incidental to an issuance of securities under Rule 144A, (c) a registration on Form S-4 or any successor form, or (d) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Class A Common Stock (by Holdings and/or other selling stockholders) sold in such offering (together with the aggregate offering prices from any prior such offerings) is at least $200 million and the listing of Class A Common Stock on the NASDAQ Global Select Market, NASDAQ Global Market, or the New York Stock Exchange or any successor exchange to the foregoing. Mandatory Offer to Purchase Upon a Change of Control, each holder of the notes shall have the right to require Realogy to repurchase its notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. Anti-Dilution Provisions Customary anti-dilution protections are provided for mergers, reorganizations, consolidations, stock splits, extraordinary stock dividends, combinations, recapitalizations, reclassifications, distribution of assets (including cash) and similar events. Covenants The indenture does not contain any restrictive covenants. Common Stock Dividends The notes do not participate in any Common Stock dividends or distributions of Holdings. Use of Proceeds We will not receive any proceeds from the sale of the notes or the Class A Common Stock by the selling securityholders.
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+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND GILAX, CORP. REFERS TO GILAX, CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. GILAX, CORP. We are a development stage company and intend to commence operations in the distribution of wooden (Pinus Sylvestris) railway ties in North America. Gilax, Corp. was incorporated in Nevada on May 17, 2011. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $25,000 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate revenues during months 6-12 after completion of this offering. At the beginning the revenues will be insignificant but we believe that once we start our marketing campaign it will gradually rise. However, there is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue. Being a development stage company, we have a limited operating history. After twelve months period we may need additional financing. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 42A Krygina Street, Suite 133, Vladivostok, Russia 690065. Our phone number is 011-74232001890. From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (May 17, 2011) through July 31, 2012, reports no revenues and a net loss of $4,893. Our independent registered public accounting firm has issued an audit opinion for Gilax, Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we our business operations have been limited to primarily, the development of a business plan, discussing the supply of railway ties with potential customers, and the signing of a Sales and Marketing Distribution Agreement with DalLes Ltd., a private Russian supplier of wooden (Pinus Sylvestris) railway ties. DalLes, Ltd is not a related party. We plan to sell both new and reclaimed wooden railroad ties in North America. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The company is publicly offering its shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success. THE OFFERING The Issuer: GILAX, CORP. Securities Being Offered: 2,500,000 shares of common stock. Price Per Share: $0.03 Duration of the Offering: The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 2,500,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 2,500,000 shares registered under the Registration Statement of which this Prospectus is part. Gross Proceeds $75,000 Securities Issued and Outstanding: There are 2,500,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Aleksandr Gilev Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $8,000.
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+PROSPECTUS SUMMARY Our Company New Global Energy, Inc. ( NGE or the Company ) is focused on the development of it Global Energy Plantation ( GEP ) using its Global Cell concept which combines alternative energy (source of usable energy intended to replace fuel sources without the undesired consequences of the replaced fuels) production, sustainable agriculture (practice of farming using principles of ecology, the study of relationships between organisms and their environment) and aquaculture (the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants). It uses non centralized power plants, primarily concentrated solar power (CSP), Jatropha (Jatropha curcas, a genus of plants shrubs or trees, the oil from which can be used for biodiesel production) based biofuels and aquaculture operations to produce power for its own use and to feed into the power grid serving local power needs while producing farm grown fish and shrimp as food products all grown on mainly undeveloped land. NGE is a development stage company with executive offices located in Brevard County, Florida. The Global Energy Plan concept has not been completely developed. Operations to produce power for our own use or to feed into the power grid have not yet commenced. Further, the Company has not produced revenues and does not expect to generate revenues until such time that its first energy plantation is under way and sells products which its expects to produce (food fish, power, jatopha oil and associated products See Business ) into the market. There is no assurance that sufficient funding will be received by the Company to complete the development and construction of its Energy Plantation or that its products will be produced or the Company receive revenues. The Company is currently pursuing the planning stage of its business plan with a current rate of cash outlays for operating expenses ( burn rate ) of about $1,000 per month. Non cash contributions are being made by management and it would expect to continue at this rate of operation for more than twelve months without raising any additional capital. These non cash contributions include administrative services, office space, telephone, computer use and other ordinary and necessary business services involved in company operations. There are no written agreements in place to continue these contributions and the Company believes that it could continue its rate of operations for more than twelve months with or without further management contributions. Management has negotiated a loan agreement (see below) which would provide funds for it to continue at an increased rate of operation for up to 12 months without additional funding. As of April 30, 2012 the Company had drawn down $90,000 of the $100,000 in proceeds from the loan. The Company s expected rate of cash outlays for operating expenses or burn rate is subject to the availability of capital received from this offering or other sources and directly impacts the speed with which it will implement its business plan. In the event that the Company receives half of the total proceeds from this offering it would expect its monthly burn rate to be approximately $15-20,000 plus third party project expenditures referred to below. In the event that it receives all of the proceeds from this offering, it would expect this expenses to be $20-30,000 per month plus third party project expenditures. (See Use of Proceeds ) As of April 30, 2012, the Company had $43,745 in cash on hand, having drawn down on a portion of the proceeds of the loan referenced above, sufficient funds to continue beyond 12 months at the present burn rate. The Company s current burn rate includes some but limited progress toward its business plan and in the event that no or limited funds are raised from this offering or from other sources, the Company will likely not be able to complete its business plan or generate revenues. In the event we raise $375,000 from this offering, the company will increase the level of operations over the current pace that it is pursuing in its planning stage. It will satisfy our cash requirements at an increased level of operation for the next 12 months. With this minimum capital, we intend to complete the design of the Energy Cell Concept including specification of software and equipment, site selection for the first energy cell operation and website development used in conjunction with its operation. These development steps are expected to take from six to twelve months subject to the availability of funds. Final layout and design will be dependent upon selection of a suitable site with acceptable climate and cost. There is no assurance that we will receive these funds and the failure to receive these funds or other investment or loan proceeds may result in the operation of the company being delayed or cease. The Company expects its basic Energy Cell to consist of 40 acres of land, of which approximately 10 acres of land will be utilized by aquaculture and support operations composed of 36 2000 gallon tanks. We expect to begin production in these tanks with one or more of the following: talapia; catfish; trout and or shrimp. The remaining 30 acres are allocated to the growing of jatropha curcas along with support operations and a small solar power generation system. Initial Planning and Construction/Development elements include following along with the approximate funds taken up by each element; the length of time to complete each element and the percentage of that element completed to date: 1. Planning and layout of its Energy Cell. Cost: approximately $125,000 requiring 2-6 months to complete of which 15% is complete. This phase require the assistance from industry consultants. To the extent that these consultants are not available when needed, this phase may be delayed. 2. Investigate and review land prospects including water availability. Cost: approximately $30,000 requiring 1-3 months to complete of which 10% is complete 3. Negotiate land lease or purchase (subject to capital available and prevailing prices in suitable areas) Cost: approximately 40,000 per year to lease or $140-600,000 to purchase of which 0% is complete. To the extent the Company is not able to raise sufficient funds from this offering it may be necessary to obtain borrowed funds for the purchase of suitable land In the event that capital, borrowed or other mortgage funds are not available, the company may be required to enter into lease arrangement for suitable land. To the extent that it proceeds with development on leased land, it will fact the requirement to future rental payments. There is no assurance that sufficient funds will be available to pay these future payments in which case the Company could lose funds invested in the property. 4. Investigate available sources of local farm help and farm managers and negotiate farm management contract(s). Cost: approximately $10,000 requiring from 1-6 months of which 0% is complete. This phase is related to the location of the land used and is subject to the Company being able to identify the property to be used before this phase can begin. 5. Identify and obtain initial equipment and negotiate construction and fabrication contacts for farm components and address any land mediation required: Cost: $25,000 requiring from 3-6 months of which 0% is complete. This phase subject to identification of the particular land to be used. 6. Proceed with land preparation and construction of fish tanks and supporting infrastructure Cost: $300,000 requiring from 3-6 month of which 0% is complete. This phase is the principal construction phase of the first energy cell project and may require local building permits. To the extent such permitting process is delayed by the local government, the completion of the Energy Cell project will be delayed. 7. Identify and acquire initial plants or seeds for jatropha planting and initial feedstock for the aquaculture operation. Identify initial fish food sources and proceed with initial planting and stocking of fish ponds. Cost: $200,000 requiring 2-4 months to complete of which 5% is complete. 8. Negotiate initial solar power system and generator equipment contracts. Cost: $20,000 (excluding the cost of the system) requiring 2-5 months of which 5% is complete. This phase is not required to initiate planting or aquaculture operations and will not delay the other phases. To some degree, the cost of these systems is dependent on the particular location and the availability of agreements with the local power company for the purchase of excess power. Power generally can be generated for internal use without grid connection or can be connected to the grid allowing excess power to be sold to the power company. There is no assurance that the property that is utilized will be located in an area where power can be sold to the power company. In such case the Company would receive no revenue from the sale of power directly and would end up generating power for its own use only. These Solar power systems would cost $500-800,000. To the extent that funds are not available, this element of the company s business may be delayed. Management expects that a single energy cell will cost at least $717,250 more than what has been done. This figure assumes that the energy cell is created on leased land and without a solar energy component. Management expects that the cost of a single energy cell on purchased land with a solar energy component would be $1,367,250. The Company expects to be able to complete these steps and begin and continue operations for from 12-18 months assuming the receipt of the maximum proceeds from this offering or like amounts from other sources. There is no assurance that funds in this amount will be available to the Company and in that event, the Company may not be able to complete its first energy cell operation or to earn revenue. The completion of each of the steps set out above is dependent upon receipt of funds in the amounts stated from this offering or equivalent amounts from other sources. To the extent that receipt of funds if delayed or to the extent that they are not received, completion of the business plan may be delayed or not completed at all. To the extent that the Company is able to complete these development stages at or below the cost set out, it should be able to complete its first energy cell with the proceeds from this offering on leased land (or purchased land using third party mortgage financing to the extent it can be obtained by the company) and utilizing jatropha oil fueled power generation or power from the grid. To the extent that costs of development exceed the amount the Company receives from the offering or equivalent amounts from other sources, it will be necessary to the Company to raise additional capital. There is no assurance that adequate money will be raised from the offering or that the Company will be able to complete the development of its energy cell at the lower end of the cost ranges set out above. To the extent that funds are not available for this offering or other sources, the Company will not be able to complete its business plan. Subject to funding as described above, the Company expect to complete the development of its first energy cell with 18 months of the date funds first become available. The Company s business plan can be successful without the completion of the solar power system component through the use of electricity from the grid or through jatropha oil fueled diesel power generation. To the extent that funds are not available, the Company may elect to complete its energy cell development without the solar energy component of the plan. The Company expects to begin selling cuttings from its jatropha plants beginning 12 months from planting with revenues in the initial year of approximately $60,000 or more subject to the market with additional sales of Jatropha oil beginning the third year after planting of $54-144,000 per year. (see Business ) In addition, the Company expects to begin receiving revenue from the sale of fish during this same period beginning 12 months from completion and stocking of the ponds, in the approximate amount of $ 75-150 ,000 . There are presently no sales of either of these products and there is not assurance that the Company will be successful in earning revenue from either source. The Company expects direct operating costs of $60-70,000 per year for operations on the fish farm portion of the Energy Cell and from $36-50,000 in cultivation costs per year for Jatropha farming. The Company has not operated an Energy Cell as of the date of this Prospectus and there is no assurance that it will be able to achieve these results or receive any revenue from operations. In order for the Company to expand operations beyond the first energy cell, when and if it is completed, it will be necessary for the Company to raise additional capital. There is no assurance that either the first energy cell will be successful or that the Company will be able to raise any additional capital. As part of the initial planning and construction/development phases for the Company s business, the Company s officers and directors have gathered data and reviewed material from industry experts, reviewed designs and operations of facilities in aquaculture, jatropha and solar power operation. The Company expects during the initial planning phase to hire on a contract basis a farm manager/consultant and or industry consultant and a fish farm manger/consultant. The Company does not presently have any of these individuals under contract and there is not assurance that they will be available when required by the Company, in which cash its jatropha planting and fish farming operations and the revenue therefrom may be delayed. Our officers and directors, and have other outside business activities and may be devoting approximately 10-25 hours per week to our operations. Our operations may be sporadic and occur at times which are not convenient management which may result in periodic interruptions or suspensions of our business plan. Such delays could have a significant negative effect on the success of the business. From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (January 24, 2012) through April 30, 2012, report no revenues and a net loss of $1,708. New Global Energy, Inc. is a development stage company and has had limited operations. Any investment in the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a loss of your investment. Since there is no minimum amount of shares that must be sold by the Company, we may receive no proceeds or very minimal proceeds from the offering and potential investors may end up holding shares in a company that: has not received enough proceeds from the offering to begin operations; and has no market for its shares. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our units, common stock, or warrants are not traded on any exchange or quoted on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not expect to file any such application with FINRA for our units or warrants. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. The Company has no plan, agreement, arrangement or understanding to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. Similarly, the Company s officer and directors, the Company promoters, and their affiliates, do not intend for the Company, once it is reporting, to be used as a vehicle for a private company to become a reporting issuer under the Securities Exchange Act of 1934, as amended. As of the date of this prospectus, there is no public trading market for our units, common stock or warrants and no assurance that a trading market for our securities will ever develop. The Offering Securities offered by us: Up to 200,000 Units including one share of common Stock and two warrants, one at $5.50 and one at $6.00 Price: $5.00 per unit Common stock outstanding prior to registration 1,750,000 Statement: Common stock outstanding after the offering: 1,800,000 if 25% of offering is sold 1,850,000 if 50% of offering is sold 1,950,000 if 100% of offering is sold Percentage of common stock outstanding after 97.2% if 25% of offering is sold the offering to be held by executive 94.59% if 50% of offering is sold officers- directors: 89.74% if 100% of offering is sold As a result, existing shareholders will exercise control over our direction. Terms: No minimum amount required to be sold before we use the offering proceeds. The offering will terminate no later than June 30, 2013 Plan of distribution: We will attempt to sell our securities without an underwriter. They will be offered for sale by our Officer and directors. Unless otherwise specifically stated, information throughout this prospectus assumes 200,000 Units will be sold . There is no public market for our units, common shares or warrants and there can be no assurance that a public market for our units, common stock or warrants will ever develop. Without a public market, there will be no liquidity in your investment in our securities which means that you may be unable to resell your common shares and warrants, and if you are able to resell them, you may not be able to recover your investment. Use of Proceeds For development expenses for aquaculture and jatropha farming operations including general and overhead expenses; and assuming all shares are sold, for acquisition of equipment and location leases. (See Use of Proceeds) Summary Financial Data The following summary nancial data should be read in conjunction with our nancial statements, including notes, and other nancial information included elsewhere in this prospectus. The nancial information as of April 30, 2012 is not necessarily indicative of results that may be expected for the entire year. The following table sets forth our selected nancial data for the period ending April 30, 2012. Statement of operations data For the period January 20, 2012 (inception) through April 30, 2012 Revenue from operations $ 0 Total costs and expenses 1,708 Net loss (1,708) Net loss per common share outstanding (NIL) Weighted average shares outstanding 1,750,000 Balance sheet data As of April 30, 2012 Current assets $90,645 Working capital 90,645 Total assets 90,645 Total liabilities 90,603 Total stockholders' equity 42 Mailing Address: The mailing address of the Company is Post Office Box 427, Cocoa, Florida 32923 Telephone Number: 321-636-5804 RISK FACTORS Please carefully consider these risks. Our securities should only be considered for purchase if you can afford the risk of losing your entire investment. Prior to purchasing our securities, prospective investors should carefully consider the following risk factors: As an emerging growth company under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements. We qualify as an emerging growth company under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to: - have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; - comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); - submit certain executive compensation matters to shareholder advisory votes, such as say-on-pay and say-on-frequency; and - disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive s compensation to median employee compensation. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we become registered with the SEC, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest and similar matters. The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and NYSE AMEX Equities exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than necessary, we have not yet adopted these measures. We do not currently have independent audit or compensation committees. As a result, the director has the ability, among other things, to determine his own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations. Any significant fluctuation in price of feed, water and or electric power may have a material adverse effect on the cost of our products and the profitability of our operations. The prices for the raw materials, fertilizer products, electric power and water that are used in our fish farming and in our Jatropha farming operations are subject to market forces largely beyond our control. The prices for these raw materials and energy may fluctuate significantly based upon changes in these forces. If we are unable to pass any raw material price increases through to our customers, we could incur significant losses and a diminution of the market price of our common stock. Adverse weather conditions could reduce production of our products. The amount of production from our agricultural operations fluctuates significantly with weather conditions in any given growing season resulting in varying revenue. If any natural disasters, such as snowstorm, flood, drought, hail, tornadoes or earthquakes, occur, production of our products would likely be reduced. We are a development stage company and have not generated revenue, and our business will not succeed if we are unable to successfully commercialize our renewable biofuel feedstock. We are a development stage company with a limited operating history. We have not yet commercialized our renewable fuels and have not generated revenue. We are subject to the substantial risk of failure facing businesses seeking to develop new products. Certain factors that could, alone or in combination, prevent us from successfully commercializing our products include: a. technical challenges developing our commercial-scale production platform and processes that we are unable to overcome; b. our ability to finance the acquisition and/or construction of our first facility, as well as any other future commercial production facilities, including securing private or public debt and/or equity financing, project financing and/or federal, state and local government incentives; c. our ability to fully integrate all elements of our technology and achieve commercial-scale production of renewable fuels and power on a cost-effective basis and in the time frame we anticipate; d. our ability to secure and maintain customers to purchase any renewable fuels, power and aquaculture products we produce from our planned commercial production facilities; e. our ability to enter into licensing agreements or joint ventures on favorable terms, or at all; f. actions of direct and indirect competitors that may seek to enter the renewable fuels in competition with us; and g. our ability to obtain, maintain and protect the intellectual property rights necessary to conduct our business. Management has limited experience in renewable energy, agriculture, aquaculture or the production of renewable fuels at a commercial-scale or in building the facilities necessary for such production and if we are unable to successfully implement it would result in our inability to generate revenue. Management has limited experience in renewable energy, agriculture or aquaculture which may affect the ability of the Company to complete its first energy cell. To the extent we are unable to complete the first energy cell facility (see Energy Cell Concept ), our ability to continue development would be adversely affected. In addition, we must integrate and apply our plan to produce renewable fuels, power and aquaculture products on an economically viable basis. Such production will require that our technology platform design be scalable from our single Energy Cell facility to commercial-scale or multiple Energy Cell facilities. We have not yet identified sites, begun construction of or operated a facility implementing our strategy, and our technology may not perform as expected when applied at the scale that we plan or we may encounter operational challenges for which we are unable to devise a workable solution. In particular, we cannot assure you that any multiple Energy Cell facility will be completed on the schedule or within the budget that we intend, or at all. If and when we are able to complete our first facility, it may not produce and process power or aquaculture products at anticipated levels or produce our renewable fuels at acceptable volumes. As a result of these risks, we may be unable to achieve commercial-scale production in a timely manner, or at all. If these risks materialize, our business and ability to commercialize our technology would be adversely affected. Management expects that a single Energy Cell will cost at least 730,000. The results from the operation of this Energy Cell will be necessary before management can determine an optimum size and therefore cost of the most productive and efficient multiple cell facility. To the extent that management is unable to complete this first facility or the facility does not perform as expected, the Company may not be able to proceed with its business plan or to produce revenue. Managements experience in renewable energy, agriculture or aquaculture has included review of existing operations owned by other companies including site visits and review of operational numbers; review of trade and academic publications and discussions with industry professionals as well as preliminary discussions with various component providers and manufacturers. The Company has not previously operated such facilities and has no operating facilities now. Management may not be in a position to devote a majority of available time to our operations which may result in periodic operations or even business failure. Mr. John Potter and Mr Perry West are our officers and directors, and have other outside business activities and may be devoting approximately 10-25 hours per week to our operations. Our operations may be sporadic and occur at times which are not convenient to Mr. Potter or Mr. West which may result in periodic interruptions or suspensions of our business plan. Such delays could have a significant negative effect on the success of the business. After this Offering Mr. Potter and Mr. West will own in total 89.74% to 97.2% of the outstanding stock of the Company. Invstors may find dthat their decisions are contrary to their interests. You should not purchase Units unless your are willing to entrust all aspects of mangement to Mr. Potter and Mr. West or their successors. Mr. Potter and Mr. West own 1, 750,000 shares of common stock representing 100% of our outstanding stock. After this Offering Mr. Potter and Mr. West will own in total 89.74% to 97.2% of the outstanding stock of the Company. As a result, they will have control of us even if the full offering is subscribed for and will be able to choose all of our directors. Their interests may differ from the ones of other stockholders. Factors that could cause their interests to differ from the other stockholders include the impact of corporate transactions on the timing of business operations and his ability to continue to manage the business given the amount of time they are able to devote to us. Management has limited experience in managing a public company and because of the limited size and budget of the Company may have difficulty in establishing and maintaining acceptable internal controls over financial reporting. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Management is responsible for establishing and maintaining disclosure controls and procedures for our company. The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements. Competitors and potential competitors who have greater resources and experience than we do may develop products and technologies that compete with ours or may use their greater resources to gain market share at our expense. Our ability to compete successfully will depend on our ability to develop proprietary technologies that produce renewable fuels, power and aquaculture products at commercial-scale and at costs below the prevailing market prices. Some of our competitors have substantially greater production, financial, research and development, personnel and marketing resources than we do. In addition, certain of our competitors may also benefit from local government programs and incentives that are not available to us. As a result, our competitors may be able to develop competing and/or superior technologies and processes, and compete more aggressively and sustain that competition over a longer period of time than we could. Our technologies and products may be rendered uneconomical or otherwise obsolete by technological advances or entirely different approaches developed by one or more of our competitors. As more companies develop new intellectual property in our markets, the possibility of a competitor acquiring patent or other rights that may limit our products or potential products increases, which could lead to litigation. In addition, various governments have recently announced a number of spending programs focused on the development of clean technology, including alternatives to petroleum-based fuels and the reduction of carbon emissions. Such spending programs could lead to increased funding for our competitors or the rapid increase in the number of competitors within those markets. Our limited resources relative to some of our competitors may cause us to fail to anticipate or respond adequately to new developments and other competitive pressures. This failure could reduce our competitiveness and market share, adversely affect our results of operations and financial position, and prevent us from achieving or maintaining profitability. We may not be successful in protecting our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others. The Company expects to rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality agreements with employees and consultants, customers and suppliers to protect our know-how and trade secrets. However, these methods may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets or develop better production methods than us. Further, we may not be able to deter current and former employees, contractors and other parties from breaching confidentiality agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology licensed, without authorization or otherwise infringe on our intellectual property rights. Additionally, may license in the future, trade secrets, and similar proprietary rights to third parties. While we attempt to ensure that our intellectual property and similar proprietary rights are protected when entering into business relationships, third parties may take actions that could materially and adversely affect our rights or the value of our intellectual property, similar proprietary rights or reputation. In the future, we may also rely on litigation to enforce our intellectual property rights and contractual rights, and, if not successful, we may not be able to protect the value of our intellectual property. Any litigation could be protracted and expensive and funds may not be available to pursue it. We may require additional financing to become Commercially viable While we believe that we will have the capital upon completion of this offering to sustain operations and development for the next 12 months, the development and expansion of our business to commercially viable levels will require the commitment of additional resources to implement our business plan which we may not have anticipated. Currently, we have no established bank-financing arrangements. Therefore, if we are unable to realize proceeds from this offering, it is likely that we may need to seek additional financing through loans, subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. The Company is currently pursuing the planning stage of its business plan with a current rate of cash outlays for operating expenses ( burn rate ) of about $1,000 per month. The Company s current burn rate includes little progress toward its business plan and in the event that no or limited funds are raised from this offering or from other sources, the Company will likely not be able to complete its business plan or generate revenues. As of April 30 , 2012, the Company had $ 43,745 in cash on hand. The Company s expected rate of cash outlays for operating expenses or burn rate is subject to the availability of capital received from this offering or other sources and directly impacts the speed with which it will implement its business plan. In the event that the Company receives half of the total proceeds from this offering it would expect its monthly burn rate to be approximately $15-20,000 plus third party project expenditures referred to below. In the event that it receives all of the proceeds from this offering, it would expect this expenses to be $20-30,000 per month plus third party project expenditures. (See Use of Proceeds ). Management expects to require $ 717,250 to execute its business plan during the 1 8 months following the receipt of funds from this offering of which, $500,000 of which it expects to use during the 12 months following receipt of funds from the offering and $217,500 which it expects to use from 12 months through 18 months after the offering. This assumes that the first energy cell is developed on leased land without a solar energy component. (see Plan of Operation ). We cannot give any assurance that additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. Changes in government regulations, including mandates, tax credits, subsidies and other incentives, could have a material adverse effect upon our business, financial condition and results of operations. The market for renewable fuels is heavily influenced by federal, state, local and foreign government regulations and policies. Changes to existing, or adoption of new, federal, state, local and foreign legislative and regulatory initiatives that impact the production, distribution or sale of renewable fuels may harm our business. We have a very short operating history upon which you can evaluate our company. We are a newly organized development stage corporation, having been incorporated on January 24, 2012, and have no operating history from which to evaluate our business and prospects. There is no assurance that our future proposed operations will be implemented, let alone successfully, or that we will ever have profits. We face all the risks inherent in a new business, including the expenses, difficulties, complications and delays frequently encountered in connection with the formation and commencement of operations, including, but not limited to, operational difficulties and capital requirements and management's potential underestimation of initial and ongoing costs. In evaluating our business and prospects, these and other difficulties should be considered. Because we are selling the offering without making any arrangements for escrow of the proceeds, if we only sell a small number of units, our ability to pursue our business plan would be significantly diminished and it would be very difficult, if not impossible, for us to be profitable. There is no minimum-offering amount that we must sell before we use the proceeds of the offering. Funds tendered by prospective purchasers will not be placed in escrow, but will be available for use by us immediately upon acceptance, for the purposes and in the amounts as estimated in the section of this prospectus entitled "Use of Proceeds." But will be subject to creditors claims, if any. Lack of an escrow arrangement could cause greater risk to the investors in the event that insufficient capital is raised in the offering. No commitment exists by anyone to purchase all or any part of this offering. There is no underwriter for this offering so we cannot be sure as to the amount of capital we will raise. There is no underwriter for this offering. Therefore, you will not have the benefit of an underwriter's due diligence efforts which would typically include underwriter involvement in the preparation, investigation and verification of the information for disclosure and in the pricing of the securities being offered, as well as other matters. Because we do not have any experience in the public sale of our common stock, investors may not be able to rely on our ability to consummate this offering. Accordingly, there can be no assurance as to the number of units that may be sold or the amount of capital that may be raised by this offering. Because of state securities registration requirements, the transferability of our securities may be affected. The purchasers of our securities will be able to resell such securities in the public market only if securities are qualified for sale or exempt from qualification under applicable state securities laws of the jurisdictions in which the proposed purchasers reside. The value and transferability of our securities may be significantly adversely impacted if the securities are not qualified or exempt from qualification in the jurisdictions in which any prospective purchaser of the securities then resides. In the event our common stock share price is less than $5.00, penny stock regulation may restrict the marketability of our securities and cause the price of our securities to decline. The Securities and Exchange Commission has adopted regulations which generally define a "penny stock" to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share. If our stock price declines to below $5.00, our common stock will be subject to rules that impose additional sales practice requirements on broker-dealers. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase and a risk disclosure document relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Also, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our securities and may affect the ability of investors to sell our securities in the secondary market and may affect the price at which such purchasers can sell any such securities. Because our management at its discretion may borrow funds for us without stockholder approval, the value of our shares may decline. Our management has the right, in his sole discretion, to borrow funds on our behalf and does not require stockholder approval prior to borrowing. Our assets may be used as collateral for borrowings. If we have difficulty repaying these borrowings out of our working capital, we may be forced to liquidate assets at an inappropriate time or default. In the event of a default, our lender may dispose of collateral to the detriment of our business and the value of our shares may decline and the equity of our stockholders may be reduced or eliminated. Management has entered into a Loan Agreement with BioGlobal Resources, Inc, an unrelated third party which will enable the Company to borrow up to $100,000 (See Note 4 to Notes to Financial Statements). As of April 30 , 2012, the company has drawn and is obligated to the repayment of $ 9 0,000.00 of this amount. The Note is convertible into the Company s common stock at the rate of $1 per share. In the event the Company draws the maximum of $100,000, the holder will be able to convert the underlying note into 100,000 shares of the company s common stock. In addition the holder is entitled to receive one warrant for the purchase of one common share at $1 for each dollar drawn under the agreement. We expect to rely to a significant extent on third parties to design, engineer and construct our commercial production facilities and to provide certain technologies, and actions by these third parties may adversely affect the commercialization and market acceptance of our technology platform. Our use of third parties reduces our control over our facilities and exposes us to certain risks. For example, our operations could be materially disrupted if we lose one of these third parties or if one of our third-party service or technology providers experiences a significant interruption in its business and is unable to perform. If it is necessary to replace any third-party service or technology provider, we may need to incur additional costs. If any of these third-party service or technology providers do not fulfill their contractual duties, meet expected deadlines or provide quality technologies, we may not be able to meet our obligations to our future customers, joint venture partners or licensees, which could result in damage to our reputation and adversely affect our business and results of operations. We may also rely on other third parties to assist in the sale of our renewable fuels and chemicals. These third parties may not be effective at selling our products. If the third parties we rely on to sell our renewable fuels and chemicals do not fulfill their contractual duties or perform effectively, our business, results of operations and financial condition could be materially and adversely affected. Further, if we rely on a single or small number of third-party service or technology providers, we will be exposed to the credit risk of those third parties. Loss of key personnel, including key management personnel, engineers and other technical personnel, or failure to attract and retain additional personnel could harm our product development programs, delay the commercialization of our technology platform and harm our research and development efforts and our ability to meet our business objectives. Our business spans a variety of disciplines and requires a management team and employee workforce that is knowledgeable in the many areas necessary for our operations. The loss of or inability to find and hire any key member of our management, or key scientific, engineering, technical or operational employees, or the failure to attract or retain such employees, could prevent us from developing and commercializing our technology platform and executing our business strategy. We may be unable to attract or retain qualified employees in the future due to the intense competition for qualified personnel among refining, alternative and renewable fuel and chemical businesses, or due to the unavailability of personnel with the qualifications or experience necessary for our business. In particular, our process development endeavors depend on our ability to attract and retain highly skilled technical and operational personnel with particular experience and backgrounds. Competition for such personnel from numerous industries, companies and academic and other research institutions may limit our ability to hire individuals with the necessary experience and skills on acceptable terms. In addition, we expect that the successful execution of our strategy of constructing multiple commercial production facilities, including through joint ventures, to bring our products to market will require the expertise of individuals experienced and skilled in managing complex, first-of-kind capital development projects. Severe weather, natural or man-made disasters and accidents could disrupt normal business operations at our future commercial production facilities, which could have a material adverse effect on our business, financial condition and results of operations. Our facilities may also be located in areas susceptible to natural disasters, such as hurricanes, wildfires, earthquakes and floods. Natural or man-made disasters could damage our production facilities, require us to temporarily shut down our facilities or otherwise significantly disrupt our operations, including the supply of feedstock to our facilities and the transportation of our renewable fuels or chemicals from our facilities. In addition, environmental pollution could result from any such natural disasters. We may not carry sufficient business insurance to compensate us for losses that may occur as a result of natural disasters. Any resulting losses, damages or claims could have a material adverse effect on our business, financial condition and results of operations. Our operations are subject to risks inherent in the production of renewable fuels, and we could be subject to liabilities for which we are not fully insured or that are not otherwise mitigated. We expect to maintain property, general liability, casualty and other types of insurance that we believe will be in accordance with customary industry practices. However, we may not be fully insured against all potential hazards incident to our business, including losses resulting from natural disasters, war risks or terrorist acts, and we are not insured against environmental pollution. Changes in insurance market conditions have caused, and may in the future cause, premiums and deductibles for certain insurance policies to increase substantially and, in some instances, for certain insurance to become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, we might not be able to finance the amount of the uninsured liability on terms acceptable to us or at all, and might be obligated to divert a significant portion of our cash flow from normal business operations. Further, our business strategy involves the licensing of our technology platform. Hazardous incidents involving our licensees, if they result or are perceived to result from use of our technologies, may harm our reputation, threaten our relationships with other licensees and/or lead to customer attrition and financial losses. While we expect to limit these risks through contractual limitations of liability and indemnities and through insurance coverage, we may not always be successful in doing so. If a hazardous incident involving one of our licensees occurs, our financial condition and results of operation would be adversely affected, and other companies with competing technologies may have the opportunity to secure a competitive advantage. Joint ventures, joint development arrangements and other strategic collaborations could result in operating difficulties, dilution to stockholders, liabilities and other adverse consequences. Our business strategy contemplates the possibility of employing joint ventures to drive market penetration of our technologies and strategic partnerships to accelerate the development of our technology. In that context, we expect to evaluate and consider a wide array of potential strategic transactions. At any given time, we may be engaged in discussions or negotiations with respect to one or more of these types of transactions. Any of these transactions could be material to our financial condition and results of operations. We may face difficulties with respect to these transactions, including: a. diversion of management time, including a shift of focus from operating our first commercial production, to issues related to administering and operating our strategic transactions; b. the lack of full control over aspects of our strategic transactions, particularly with respect to any production facilities that we do not wholly own; c. the need to implement controls, procedures and policies appropriate for a public company at joint ventures and other strategic partnerships; and d. liability for activities of joint ventures, including violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities. Moreover, we may not realize the anticipated benefits of any or all of our strategic transactions, or we may not realize them in the time frame expected. Future strategic transactions may require us to issue additional equity securities, spend a substantial portion of our available cash, or incur debt or liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders. Our commercialization strategy relies in part on third parties, and therefore the successful commercialization of our technology platform will be dependent on such third parties performing satisfactorily. We expect to collaborate with third parties to fund, build, develop and operate future commercial-scale facilities that use the proprietary technology platform that we expect to develop. This technology platform is in the initial stages of development and while the Company expects to complete the development of the trade secrets and technology that it will require during the development of its first energy cell and within the cost ranges that it has disclosed herein, there is no assurance the this will be completed. Failure or delays with regard to the technology which the Company believes that it will use, may result in delays in completion of the first energy cell and/or a negative impact on the output of the energy cell and the ability of the Company to be successful. Our reliance on third parties would reduce our control over the funding and construction of these facilities and the production and sale of the renewable fuels produced using our technology, including the operating costs of the facilities, which will expose us to certain risks. These facilities will be first-of-kind projects, and we cannot assure you that our collaborators will be able to complete construction on schedule, effectively operate our proprietary technology platform or produce renewable fuels and chemicals of sufficient quality at high enough yields and low enough costs to be profitable. If and when these facilities are completed, we may have limited or no control over the amount or timing of resources that our collaborators commit to our collaboration. Our collaborators may experience a change of policy or priorities or may fail to perform their obligations as expected. These collaborators may breach or terminate their agreements with us or otherwise fail to conduct their collaborative activities successfully and in a timely manner. Further, our collaborators may not devote sufficient resources to the manufacturing, marketing or sale of renewable fuels and chemicals produced using our proprietary technology platform. Moreover, disagreements with a collaborator regarding strategic direction, economics of our relationship, intellectual property or other matters could develop, and any such conflict could reduce our ability to enter into future collaboration agreements and negatively impact our relationships with one or more existing strategic collaborators. In addition, our collaborators may also pursue competing technologies that may ultimately prove more compelling than ours. If any of these events occur, we may not be able to successfully commercialize our technology platform. Additionally, our business could be negatively impacted if any of our collaborators undergoes a change of control. If any of our collaborators fails to perform up to the obligations set forth in our agreements with them, our business and prospects could be materially and adversely affected. We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as related rules implemented by the Securities and Exchange Commission, impose various requirements on public companies. Compliance with reporting and other requirements applicable to public companies will create additional costs for us and will require the time and attention of management. Our limited management resources may exacerbate the difficulties in complying with these reporting and other requirements while focusing on executing our business strategy. Management does not know the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management s attention to these matters will have on our business. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures, including system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. We incur substantial accounting expense and expend significant management time on compliance-related issues. Management estimates that the cost of this compliance during the first three years will be from $35-100,000 per year depending upon the size and stage of development of Company operations. To the extent that the Company is unable to achieve revenues or raise sufficient capital to pay these expenses, it may not be able to meet public disclosure requirements and your ability to trade your shares may be decreased or lost.
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+This summary highlights information contained elsewhere in this prospectus, but it does not contain all of the information that you may consider important in making your investment decision. Therefore, you should read the entire prospectus carefully, including, in particular, "Risk Factors," "Cautionary Statement Concerning Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes thereto included elsewhere in this prospectus. Prior to this offering, we conducted our business solely through Edwards Group plc and its subsidiaries. Prior to the consummation of this offering, and in accordance with and as contemplated by the scheme of arrangement described in this prospectus, Edwards Group Limited, a newly formed Cayman Islands exempted company with limited liability, resident in the United Kingdom for tax purposes, consummated a corporate reorganization whereby Edwards Group plc became a wholly owned subsidiary of Edwards Group Limited. The purpose of the corporate reorganization is to facilitate a listing of the ADSs on the NASDAQ Global Select Market. Edwards Group Limited acts as a holding company for our business and its ADSs are offered hereby. See "Corporate Reorganization and Recapitalization" included elsewhere in this prospectus for more on our corporate reorganization. In addition, as contemplated by the scheme of arrangement and corporate reorganization described in this prospectus, Edwards Group plc was re-registered as a private company with the name Edwards Holdco Limited. In this prospectus, unless the context otherwise requires or indicates, references to "Edwards," "the Group," "Company," "we," "our," and "us" refer to Edwards Group Limited and its consolidated subsidiaries. References to "Edwards Group plc" refer to Edwards Group plc prior to the corporate reorganization or Edwards Holdco Limited following the corporate reorganization, as the context requires. All references to our shares or our ordinary shares refer to our ordinary shares held in the form of ADSs unless the context requires otherwise. We state our financial statements in United Kingdom Pounds Sterling. In this prospectus, unless otherwise indicated, all references in this document to "sterling," "Pounds Sterling," "GBP," " ," or "pence" are to the lawful currency of the United Kingdom, references to Euro or are to the lawful currency of the members of the European monetary union, and references to "U.S. Dollars," "US$" or "$" are to the lawful currency of the United States of America. Solely for convenience and unless otherwise indicated, this prospectus contains a translation of certain Pounds Sterling amounts into equivalent U.S. Dollar amounts based on the closing mid-point spot rate of 1.00 to US$1.5541 at 4:00 p.m. (London time) on December 31, 2011, derived from WM/Reuters and as published by the Financial Times. This translation rate should not be construed as a representation that the Pounds Sterling amounts have been, could have been or could be converted into U.S. Dollars at that or any other rate. See "Exchange Rate Information." In addition, certain information in this prospectus relating to the application of the net proceeds to us from our sale of 12,500,000 ADSs in this offering has been translated from U.S. Dollar amounts into equivalent Pounds Sterling amounts based on the closing mid-point spot rate of 1.00 to US$1.5978 at 4:00 p.m. (London time) on March 31, 2012, derived from WM/Reuters and as published by the Financial Times. This translation rate should not be construed as a representation that the U.S. Dollar amounts have been, could have been or could be converted into Pounds Sterling at that or any other rate. See "Exchange Rate Information." Various market statistics set forth in this prospectus are based on data from the International Statistics on Vacuum Technology ("ISVT"), an internationally recognized body that researches and collects data in relation to all principal areas of vacuum technology, and VLSI Research, Inc. ("VLSI"), a provider of market research and economic analysis on the technical, business and economic aspects within the semiconductor and related industries. Both ISVT and VLSI define market sectors differently from our definitions. Throughout this prospectus, references to market data for the Semiconductor, General Vacuum (Translation of Registrant's name into English) Cayman Islands (State or other jurisdiction of Incorporation or organization) 3561 (Primary standard industrial classification code number) Not Applicable (I.R.S. Employer Identification No.) Manor Royal Crawley West Sussex RH10 9LW Telephone: +44 (0) 1293 528844 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Puglisi & Associates 850 Library Avenue, Suite 204 P.O. Box 885, Newark, Delaware 19715 (302) 738-6680 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Alexander D. Lynch, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue, New York, NY 10153 Telephone: 212-310-8971 Facsimile: 212-310-8007 Alan F. Denenberg, Esq. Davis Polk & Wardwell LLP 1600 El Camino Real, Menlo Park, CA 94025 Telephone: 650-752-2004 Facsimile: 650-752-3604 Approximate date of commencement of proposed sale to public: As soon as practicable after the Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Calculation of Registration Fee Title of Each Class of Securities to be Registered(1) Amount to be Registered(2) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price(2)(3) Amount of Registration Fee(4) Ordinary shares, par value 0.002 per share 14,375,000 $10.00 $143,750,000 $16,474 Table of Contents and Emerging Technologies market sectors represent market data for various sub-sectors reported by ISVT or VLSI that coincide with our market sectors but are reported under different sector names by ISVT and VLSI. In addition, the market statistics have some inherent limitations. For example, ISVT market size estimates include vacuum-related services but exclude the abatement market. In addition, VLSI abatement market size estimates exclude abatement-related services. Also, ISVT market data are derived from self-reported financial information and exclude those companies in the vacuum market that choose not to report information to ISVT, including companies in growth markets such as China, South Korea and India, among others. As of the date of this prospectus, key parts of the 2011 market data were unavailable. Our Business Edwards, a global industrial technology company, is a leading manufacturer of sophisticated vacuum products and abatement systems and a leading provider of related value-added services. We sell our products, systems and services across several targeted market sectors that we define as Semiconductor, General Vacuum and Emerging Technologies, each of which contains several sub-sectors. In the year ended December 31, 2010, we derived approximately 70% of our equipment revenue from market sub-sectors where, according to VLSI data, we have the leading market share position. In Semiconductor and certain sub-sectors within Emerging Technologies, our market share in 2010, according to VLSI data, was more than two times that of our current nearest competitor. Our vacuum products include a broad range of dry pumps, turbomolecular pumps and other vacuum pumps used to create highly-controlled, low-pressure, particle-free environments for a diverse set of manufacturing processes. Our abatement systems include stand-alone and customized solutions which integrate vacuum and exhaust management technologies. Abatement products are used to manage exhaust gases and other process byproducts extracted by dry pumps. Abatement is required both to prevent adverse chemical reactions within production processes and to comply with strict regulatory emissions controls. Our value-added services include equipment monitoring, repair and overhaul, remanufacturing, service upgrades and provision of spare parts. We sell our products and services to a diverse group of more than 20,000 customer accounts. This group includes many blue chip companies that are global leaders in their respective markets and some of which have been our customers for as long as 20 years. Our research and development teams utilize our deep technology expertise to facilitate collaborative innovation with our customers. Through our ongoing customer relationships, many of which are fostered by our on-site sales and service personnel, we gain early insight into our customers' technology roadmaps. By creating new products that are linked to our customers' development needs, our solutions become essential to their products and manufacturing processes. New products typically represent a large portion of our revenues in a given period. For example, we derived 33% of our revenues in 2011 from sales of products launched during the three years ended December 31, 2011. Our business benefits from strong secular trends, such as the increasing miniaturization and sophistication of electronic devices, proliferation of consumer electronics, increasing demand for greenhouse gas and other air emission abatement technology and related services and industrialization of growth economies. In addition, the increasing use of vacuum and abatement products in new applications, such as the transitioning of wet to dry pumps in steel degassing, glass coating and industrial thin-film deposition applications, has enabled us to achieve strong growth. Following our separation from The BOC Group plc in 2007, we began a multi-year operational improvement program. This program has resulted in a more variable, lower cost operating model, better alignment with our customers' needs and a more efficient global supply chain. For example, from January 1, 2008 to December 31, 2011, we reduced the number of our manufacturing facilities from 17 to 11. Further, from January 1, 2008 to December 31, 2011, we increased our overall variable cost base from 73% to 77% of total costs, reduced our variable costs from 63% to 59% of revenue and increased (1)American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-180263). Each American depositary share represents one ordinary share. (2)Includes ordinary shares underlying American depositary shares issuable upon exercise of the underwriters' over-allotment option, if any. (3)Estimated solely for purposes of computing the amount of the registration fee pursuant to Section 457(a) under the Securities of Act of 1933, as amended. (4)The Registrant previously paid $21,416. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the low-cost country sourcing of our raw materials and components from 11% to 25%. Furthermore, since 2007, our operational restructuring program, particularly our investment in low-cost manufacturing facilities in South Korea and the Czech Republic, which are strategically located in close proximity to our customers, the development of low-cost supply chains and our focus on the development of new higher value products has allowed us to achieve strong growth and enhance our margins. Our 114.2 million investment in our restructuring through December 31, 2011 has enhanced our operating income, margins, cash flow and cash conversion rate. We estimate that our restructuring program has led to a 50.3 million improvement in operating profit for the year ended December 31, 2011. We also believe these initiatives will enhance our profitability and cash flow generation through industry cycles and will significantly increase our flexibility to quickly respond to changes in customer demands. We are a global business with a diverse revenue mix by geography, customer and end-markets. We generated revenue of 700.5 million (US$1,088.6 million), gross profit of 257.9 million (US$400.8 million), profit after taxation of 56.2 million (US$87.5 million), adjusted EBITDA of 160.9 million (US$250.1 million), adjusted EBITDA margin of 23.0% and adjusted net income of 84.8 million (US$131.8 million), for the year ended December 31, 2011, and in that period, we recorded 55% of our revenue from Asia, 28% from the Americas and 17% from Europe. Our goal is to continue to deliver consistent and strong growth, profitability and cash conversion through, and across, industry cycles. For the year ended December 31, 2010, we generated revenue of 641.0 million, gross profit of 245.6 million, profit after taxation of 51.8 million, adjusted EBITDA of 151.8 million, adjusted EBITDA margin of 23.7% and adjusted net income of 85.1 million. For the year ended December 31, 2009, we generated revenue of 371.2 million, gross profit of 112.2 million, loss after taxation of 32.4 million, adjusted EBITDA of 21.6 million, adjusted EBITDA margin of 5.8% and adjusted net loss of 28.8 million. For the year ended December 31, 2008, we generated revenue of 509.8 million, gross profit of 164.4 million, loss after taxation of 17.6 million, adjusted EBITDA of 72.1 million, adjusted EBITDA margin of 14.1% and adjusted net income of 33.1 million. Our Market Opportunity Manufacturers of semiconductors, scientific instruments, research and development ("R&D") equipment, flat panel display ("FPD") and solar products have driven development of vacuum and abatement technologies, as their manufacturing processes have required increasingly demanding materials and vacuum environments. As demand for their end products increases, manufacturers have required new, more advanced vacuum and abatement technologies to enable more complex and sophisticated production processes and support compliance with heightened regulatory requirements. According to combined VLSI and ISVT data, the total size of the vacuum, vacuum-related services and abatement market was US$5.4 billion in 2010, of which, US$2.6 billion came from Semiconductor and Emerging Technologies (FPD, Solar PV and LED) and US$2.8 billion came from General Vacuum. We believe that the increasing use of vacuum and abatement products in new general vacuum applications, such as the transitioning from wet to dry pumps in steel degassing, glass coating and industrial thin-film deposition applications, is increasing the portion of the $2.8 billion General Vacuum market that we compete in. The total size of the Service sector, which is included in each of the General Vacuum, Semiconductor and Emerging Technologies market sectors, was approximately US$1.0 billion in 2010, excluding abatement services. Table of Contents EXPLANATORY NOTE Prior to this offering, our business was conducted solely through Edwards Group plc and its subsidiaries. On April 5, 2012, and in accordance with and as contemplated by the scheme of arrangement relating to our corporate reorganization, the holders of each series of ordinary shares and preference shares of Edwards Group plc had their shares cancelled and shares in the capital of Edwards Group Limited, a newly formed Cayman Islands exempted company with limited liability, resident in the United Kingdom for tax purposes, having substantially the same rights attaching to them as the shares held in the capital of Edwards Group plc were issued to such holders. The purpose of the scheme of arrangement is to reorganize our corporate structure in order to facilitate a listing of our American depositary shares on the NASDAQ Global Select Market. For a more detailed description, see "Corporate Reorganization and Recapitalization" in the accompanying prospectus. This registration statement, including the prospectus contained herein, includes the audited consolidated financial statements, consolidated selected financial data and other financial information of Edwards Group plc, which holds all of our operating subsidiaries and, following the corporate reorganization and this offering, became a wholly owned subsidiary of Edwards Group Limited, as well as the audited balance sheet of Edwards Group Limited. Prior to the corporate reorganization and this offering, Edwards Group Limited held no material assets and did not engage in any operations. Table of Contents Our Competitive Strengths We believe our key competitive strengths include: Worldwide Leadership Position Our innovative products, long-term customer relationships, value-added services and highly experienced management team have led to our position as a leader in the global vacuum and abatement market. In the year ended December 31, 2010, we derived approximately 70% of our equipment revenue from market sub-sectors where, according to VLSI data, we have the leading market share position. Our leadership position in the industry allows us to leverage our scale and installed base to introduce technological innovations and new products. Business Breadth and Diversity Provide Stability and Multiple Growth Opportunities Our business is characterized by the breadth of our products, systems and services and the diversity of our revenue across customers, market sectors and geographies. In the last three years, we have sold more than 6,000 different vacuum products to more than 20,000 customer accounts across our target markets on a global basis. In the year ended December 31, 2011, we generated approximately 47% of our revenue from General Vacuum and Service, our target markets that are relatively more stable. We believe that the diversity of our products, customers, geographies, target sectors and applications provides us with multiple growth opportunities and enhances the stability of our operating results through industry cycles. Deep Technology Expertise and Commitment to Collaborative Innovation We believe our installed base of products and systems, broad intellectual property portfolio and history of collaboration with customers reinforce our position as a leading supplier of sophisticated vacuum and abatement solutions. Over our long history, we have developed a significant portfolio of intellectual property relating to the manufacture of vacuum pumps and abatement systems, and as of December 31, 2011, we had approximately 780 patents and approximately 775 patent applications pending, together comprising approximately 400 patent families. From January 1, 2008 to December 31, 2011, we have spent 96.8 million, or 4.4% of our revenue, on R&D. Diversified, Blue Chip and Long-term Customer Base We have a diversified customer base of approximately 900 Semiconductor customer accounts, 20,000 General Vacuum customer accounts and 800 Emerging Technologies customer accounts across more than 100 countries. Our original equipment manufacturers ("OEM") and end-user customers include global leaders such as Agilent Technologies, Inc. ("Agilent"), Aixtron SE ("Aixtron"), Applied Materials, Inc. ("Applied Materials"), ASML Holding N.V. ("ASML"), Bharat Heavy Electricals Limited ("BHEL"), Chongqing Iron and Steel Company Limited ("CISC"), General Electric Company ("GE"), GlobalFoundries Inc. ("GlobalFoundries"), IBM Corporation ("IBM"), Lam Research Corp. ("Lam Research"), LG Display Co., Ltd. ("LG Display"), Roth & Rau AG ("Roth & Rau"), Shimadzu Corporation ("Shimadzu"), Samsung Electronics Co., Ltd ("Samsung"), TCL Multimedia Technology Holdings Limited ("TCL"), Tokyo Electron Ltd. ("Tokyo Electron"), Taiwan Semiconductor Manufacturing Co. Ltd. ("TSMC") and Waters Corp. ("Waters"). Some OEMs and end-user customers have been our customers for as long as 20 years. Leading Global Service Platform Our broad range of value-added services supports our products across each of our market sectors, affords technical support, directs feedback to enhance our new product introduction process and Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated May 10, 2012 PROSPECTUS 12,500,000 American Depositary Shares Edwards Group Limited Representing 12,500,000 Ordinary Shares Table of Contents provides a stable, recurring revenue stream. Approximately 10% of our employees are located on customers' premises to monitor the performance of our products and systems, arrange for regular maintenance and remanufacturing and provide insight into our customers' evolving needs. We service our customers from more than 100 locations worldwide in our customers' key regions. Operational Efficiency and World-Class Global Manufacturing Capabilities Over the past several years, we have enhanced our operations and increased the variability of our cost structure through a continuous process of migration to strategically-located low-cost manufacturing facilities, transformation of our supply chain through low-cost country sourcing, product design improvements, investments in high tolerance machining and ongoing productivity-enhancing initiatives, such as our shared service center in the Czech Republic. We estimate that our restructuring program has led to a 44.8 million and 50.3 million improvement in operating profit for the years ended December 31, 2010 and 2011, respectively, and will enhance our operating results and cash flow in the future. Our Strategy We intend to enhance our global leadership position and scale in vacuum products and abatement systems and further develop our market position for related value-added services. The key elements of our growth strategy are as follows: Leverage Technology Leadership and Continue Product Innovation to Capture Growth We have a long history of innovation and technology leadership and we have developed a pipeline of new products expected to launch in the next five years. New products typically represent a large portion of our revenues in a given period. For example, we derived 33% of our revenues in 2011 from sales of products launched during the three years ended December 31, 2011. We strive to anticipate our customers' needs and tailor our products, systems and services to create unique solutions. We intend to continue to generate a significant portion of our revenue from new product introductions and grow our business, enabled by our focused R&D investment and our close cooperation with customers. Grow Share in General Vacuum by Focusing on High Growth, High Margin Applications We will continue to focus significant business development efforts on expanding our share of the US$2.8 billion General Vacuum market sector, as defined by ISVT for 2010, by focusing on what we believe will be the fastest-growing new applications and product opportunities in this market sector. We believe that we are well positioned to benefit from the anticipated rapid growth and proliferation of vacuum applications that are transitioning from wet to dry pumps, such as steel degassing, glass coating and industrial thin-film deposition. Leverage Installed Base, Global Footprint and Leading Service Platform to Grow Service Revenue Throughout 2012, we plan to expand our service infrastructure, create a dedicated service management team, create diagnostic tools for preventative maintenance, increase our service related marketing and promote green initiatives, such as upgrades for enhanced efficiency that lead to an overall lower carbon footprint. We believe these initiatives can significantly increase our share of Service revenue for our products and add recurring, higher margin revenue streams without requiring significant capital investment. In addition, we intend to leverage our existing customer relationships to grow our share in the Service market sector associated with vacuum pumps and abatement systems produced by others. During 2010 and 2009, we estimate that we captured approximately 35% of the This is the initial public offering of American depositary shares, or ADSs, by Edwards Group Limited. Each ADS represents one ordinary share of Edwards Group Limited, par value 0.002 per share. We are offering 12,500,000 ADSs. No public market currently exists for the ADSs. We have been approved for listing the ADSs on the NASDAQ Global Select Market under the symbol "EVAC." All of our ordinary shares will be issued in the form of ADSs. We anticipate that the initial public offering price will be between $9.00 and $10.00 per ADS. Investing in the ADSs involves risks. See "Risk Factors" beginning on page 20 of this prospectus. Per ADS Total Price to the public $ $ Underwriting discounts and commissions $ $ Proceeds to us (before expenses) $ $ Proceeds to the selling shareholders (before expenses) $ $ The selling shareholders identified in this prospectus have granted the underwriters the option to purchase up to 1,875,000 additional ADSs on the same terms and conditions set forth above if the underwriters sell more than 12,500,000 ADSs in this offering. We will not receive any proceeds from the ADSs sold by the selling shareholders, which include entities affiliated with members of our board of directors. Nick Rose, the Chairman of our board of directors, has indicated an interest in purchasing up to 50,000 ADSs in this offering at the initial public offering price. Because this indication of interest is not a binding agreement or commitment to purchase, Mr. Rose may elect not to purchase ADSs in this offering. The underwriters will receive the same discount from any ADSs purchased by Mr. Rose as they will from any ADSs sold to the public in this offering. Any ADSs sold to Mr. Rose will be subject to a lock-up agreement described under "Shares Eligible for Future Sale Lock-Up Arrangements." Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. No offer or invitation to subscribe for ADSs may be made to the public in the Cayman Islands. The underwriters expect to deliver the ADSs on or about , 2012. Table of Contents Service revenue from the recommended services of our own installed base of vacuum and abatement systems. We believe we have one of the largest installed bases of vacuum pumps and abatement systems in the industry in 2011 and increasing our share of the Service market sector within our installed base represents a significant growth opportunity in the Service market sector, which was approximately US$1.0 billion in 2010. Capitalize on Growth in the Emerging Technologies Market Sector We plan to use our technological strength, expertise in chemical vapor deposition ("CVD") and physical vapor deposition ("PVD") processes and leading position in the Semiconductor and General Vacuum market sectors to develop new products and customized solutions for attractive, high growth applications within the Emerging Technologies market sector, which includes FPD, Solar PV and LED. Revenue from Emerging Technologies, which was less than 1% of total revenue ten years ago, was approximately 17% of total revenue in 2011. In FPD technology, the transition from liquid crystal display ("LCD") technology to active-matrix organic light-emitting diode ("AMOLED") technology is increasing vacuum intensity in the manufacturing process. We have been able to leverage our existing customer relationships with leading producers of AMOLED technology, such as Samsung, and gain a significant share of these customers' AMOLED vacuum-related opportunities. We believe that the long-term growth of the FPD, Solar PV and LED markets will enable us to continue to diversify and expand our addressable markets. Grow Market Share in Growth Geographies We believe that the continued industrialization of growth markets such as China, India, Russia and Brazil represents a substantial growth opportunity for our products, systems and services. We believe our presence in these geographies provides us with a significant opportunity for future growth as manufacturing continues to transition to low-cost regions. We have had a local presence in Asia for more than 40 years. As of December 31, 2011, we had over 200 permanent and temporary employees located in facilities in Beijing, Shanghai and Shenzhen and we intend to continue investing in local engineering, sales talent and manufacturing capability to build our presence with both multinational and local customers. Enhance Operating Efficiencies We are nearing completion of our comprehensive, multi-year operational improvement program to accelerate revenue growth, expand margins, enhance free cash flow generation and improve overall profitability through better operational execution and streamlining of our cost structure. We believe these initiatives will provide us with a significant competitive advantage as we believe they will enable us to maintain a higher level of profitability and cash flow generation through industry cycles and the flexibility to quickly respond to changes in customer demands. We intend to continue to invest selectively in attractive growth and margin enhancing opportunities. Recent Developments While complete financial information and operating data are not available, based on information currently available, we preliminarily estimate that for the three months ended March 31, 2012, our revenue will be in the range of 158 million to 161 million, gross profit in the range of 57 million to 59 million, operating profit in the range of 19 million to 21 million and profit after taxation from continuing operations in the range of 11 million to 13 million. For the three months ended March 31, 2012, we currently anticipate reporting interest expense in the range of 5.0 million to 5.5 million, taxation expense in the range of 2.0 million to 2.5 million, depreciation expense in the range of 3.5 million to 4.0 million, amortization expense in the range of 4.0 million to 4.5 million, Barclays Goldman, Sachs & Co. Deutsche Bank Securities Table of Contents restructuring and transaction costs in the range of 2.5 million to 3.0 million and profit/(loss) on the sale of property, plant and equipment of (0.5) million. We also currently anticipate reporting currency translation losses in the range of (1.4) million to (2.4) million, purchase price accounting amortization of 2.6 million and tax shield on adjustments expense in the range of (1.0) million to (1.5) million for the three months ended March 31, 2012. Having assessed the individual line items, we currently anticipate reporting adjusted EBITDA in the range of 30.0 million to 32.0 million and adjusted net income in the range of 14.2 million to 14.7 million for the three months ended March 31, 2012, which amounts will be greater than the 27.8 million and 14.2 million, respectively, reported for the three months ended December 31, 2011. As of March 31, 2012, we had approximately 93 million of cash and cash equivalents and approximately 443 million of borrowings and finance leases outstanding. Adjusted EBITDA and adjusted net income/(loss) are non-IFRS financial measures. For a definition of adjusted EBITDA and adjusted net income/(loss) and, for the 2011 data referred to above, a reconciliation to profit/(loss) after taxation, the most comparable IFRS item, as well as reasons why management believes the inclusion of adjusted EBITDA and adjusted net income/(loss) is appropriate to provide additional information to investors about our performance, see "Summary Consolidated Financial Data." The estimates above are unaudited and represent the most current information available to management. Since we have not completed our closing procedures for the three months ended March 31, 2012, these estimates are preliminary and our actual financial results could be different and those differences could be material. Accordingly, you should not place undue reliance on these estimates. See "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements." The preliminary financial data included in this prospectus has been prepared by, and is the responsibility of, our management and has not been reviewed or audited or subject to any other procedures by our independent registered public accounting firm. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect to this preliminary data. We expect our closing procedures with respect to the three months ended March 31, 2012 to be completed in May 2012. Accordingly, our consolidated financial statements as of and for the three months ended March 31, 2012 will not likely be available until after this offering is completed. Risks Affecting Us Our business is subject to a number of risks as discussed more fully in the section entitled "Risk Factors" beginning on page 20 of this prospectus, which you should read in its entirety. In particular: Conditions in the global economy, including volatile conditions in Europe, and in the credit markets may materially and adversely affect us; Our business, financial condition and results of operations are significantly impacted by the capital expenditure cycles in the semiconductor and emerging technologies (FPD, Solar PV and LED) manufacturing industries; Our operational and production plan is based on our assessment of expected demand for our products, systems and services and, due to the nature of the order process in many of our market sectors, including customer cancellation, reduction or postponement of purchase orders, we may be unable to accurately forecast demand for our products, systems and services, which could materially and adversely affect us; RBC Capital Markets Piper Jaffray Lazard Capital Markets Prospectus dated , 2012 Table of Contents Growth in our markets is driven by several factors that are outside of our control and if such growth is delayed, is less than anticipated or fails to materialize, our business, financial condition and results of operations could be materially and adversely affected; If we fail to maintain our existing customer relationships, including those with long-term customers, or if we lose any significant customer as a result of customer consolidation or otherwise, our business, financial condition and results of operations would be materially and adversely affected; Our growth and overall business success is substantially dependent on our ability to timely and successfully develop and commercialize, new products that provide value to customers and coincide with significant trends in the industries in which we operate; If our products become obsolete, or others introduce technology and processes that decrease the importance of vacuum products or abatement systems, our business, results of operations and prospects could be materially and adversely affected; Our reputation and profitability could be damaged if we fail to meet our customers' quality standards, specifications, process-related performance requirements or delivery schedules or if our products are defective; Our manufacturing operations depend upon the efficiency of our supply chain, the prices of components and the capacity of our manufacturing operations and any failure to adjust our supply chain volume or manufacturing volume and logistics and cost structure could materially and adversely affect us; and The costs associated with our restructuring program or potential future investments may exceed expectations, and we may not realize the expected benefits. Nick Rose, the Chairman of our board of directors, has indicated an interest in purchasing up to 50,000 ADSs in this offering at the initial public offering price. Because this indication of interest is not a binding agreement or commitment to purchase, Mr. Rose may elect not to purchase ADSs in this offering. The underwriters will receive the same discount from any ADSs purchased by Mr. Rose as they will from any ADSs sold to the public in this offering. Any ADSs sold to Mr. Rose will be subject to a lock-up agreement described under "Shares Eligible for Future Sale Lock-Up Arrangements." Our Principal Shareholders In May 2007, CCMP Capital Advisors, LLC ("CCMP"), through its entities CCMP Capital Investors (Cayman) II, L.P. and CCMP Capital Investors II (AV-3), L.P. (collectively, the "CCMP Principal Shareholders"), together with Unitas Capital Ltd. ("Unitas"), through its entity Unitas Capital Investors (Cayman) Ltd. (the "Unitas Principal Shareholder" and, together with the CCMP Principal Shareholders, the "Principal Shareholders"), acquired all of the ordinary shares of Edwards Group plc, some of which were subsequently sold to our management. Following our Corporate Reorganization, as described below, and after giving effect to our Corporate Recapitalization, as described below, and this offering, the CCMP Principal Shareholders will collectively own approximately 41.3% and the Unitas Principal Shareholder will own approximately 41.3% of our outstanding ordinary shares. CCMP is a private equity firm specializing in middle market buyouts and growth equity investments of US$100 million to US$500 million in the United States and Europe. With offices in New York, Houston and London, CCMP focuses on four primary industries: consumer, industrial, energy and healthcare. Investments under management in its current fund, CCMP Capital Investors II, L.P., include, in addition to the investment in Edwards, ARAMARK Holdings Corporation, Chaparral Energy Inc., Francesca's Holdings Corporation, Generac Holdings Inc., Infogroup Inc., Medpace Inc., LHP Hospital Group Inc. and Newark Energy LLC. Table of Contents Unitas is one of the most experienced dedicated regional private equity firms in Asia, with US$4.0 billion in capital commitments under management. Since 1999, Unitas has advised on investments exceeding US$2.6 billion into 30 companies. Unitas targets control investments in market-leading industrial, branded consumer and retail companies. Unitas has a successful track record of investing in growth-oriented global businesses, in particular those with a large market in Asia but headquarters based outside the region. Corporate Reorganization and Recapitalization Prior to this offering, our business was conducted solely through Edwards Group plc and its subsidiaries. On April 5, 2012, and in accordance with and as contemplated by the scheme of arrangement (the "Scheme of Arrangement") relating to our corporate reorganization (the "Corporate Reorganization"), the holders of each series of ordinary shares and preference shares of Edwards Group plc had their shares cancelled and shares in the capital of Edwards Group Limited, a newly formed Cayman Islands exempted company with limited liability, resident in the United Kingdom for tax purposes, having substantially the same rights attaching to them as the shares held in the capital of Edwards Group plc were issued to such holders. The purpose of the Scheme of Arrangement is to reorganize our corporate structure in order to facilitate a listing of the ADSs on the NASDAQ Global Select Market ("NASDAQ"). For a more detailed description, see "Corporate Reorganization and Recapitalization." In connection with our Corporate Reorganization, Edwards Group plc was re-registered as a private company with the name Edwards Holdco Limited. Following the Corporate Reorganization and immediately prior to the consummation of this offering, we will effect a corporate recapitalization (the "Corporate Recapitalization"), whereby all of our A ordinary shares, B ordinary shares, C ordinary shares and preference shares will be reclassified and converted into a new series of ordinary shares and ordinary deferred shares, and any accrued and unpaid dividends on preference shares will be converted into a number of ordinary shares equivalent in value to such accrued and unpaid dividends at the time of the conversion, based on the midpoint of the price range set forth on the cover of this prospectus, as described further under "Corporate Reorganization and Recapitalization." As a result of the conversion of the aggregate principal amount of the outstanding preference shares into ordinary shares, a US$1.00 increase (decrease) in the assumed initial public offering price of US$9.50 per ADS would (decrease) increase the aggregate number of ordinary shares outstanding after this offering by (2,972,072) or 3,671,382 shares, respectively. See "Corporate Reorganization and Recapitalization." A US$1.00 increase (decrease) in the assumed initial public offering price of US$9.50 per ADS would (decrease) increase the aggregate number of ordinary shares into which any accrued and unpaid dividends on preference shares will convert by (372,375) or 459,992 shares, respectively. Corporate Information We are a Cayman Islands exempted company with limited liability incorporated on February 10, 2012 and resident in the United Kingdom for tax purposes. Exempted companies are Cayman Islands companies whose operations are conducted mainly outside the Cayman Islands. Our business was founded in 1919 and we were acquired by The BOC Group plc in 1968. In 2007, our business was acquired by the Principal Shareholders. Our principal executive offices are located at Manor Royal, Crawley, West Sussex RH10 9LW. Our website is www.edwardsvacuum.com and our main telephone number is +44 (0) 1293 528844. Information on our website is not part of or incorporated by reference into this prospectus and should not be relied upon in determining whether to make an investment in our ordinary shares. (1)Includes ordinary shares underlying ADSs to be outstanding after this offering. Assumes an initial public offering price of US$9.50 per ADS and accrued and unpaid dividends on preference shares through May 10, 2012. See the sensitivity analysis on page 12 of this prospectus for information regarding the impact of the offering price on the number of ordinary shares to be outstanding after this offering. Table of Contents ADSs The Bank of New York Mellon, as depositary, will register and deliver ADSs. Each ADS will represent one ordinary share (or a right to receive one ordinary share) deposited with the principal London, United Kingdom office of The Bank of New York Mellon, as custodian for the depositary. Each ADS will also represent any other securities, cash or other property which may be held by the depositary. You will have the rights as provided in the deposit agreement among us, the depositary and the holders of ADSs from time to time. Although we do not expect to pay dividends in the foreseeable future, if we declare dividends on our ordinary shares underlying the ADSs, the depositary has agreed to pay you the cash dividends or other distributions it or the custodian receives on our ordinary shares underlying the ADSs or other deposited securities, net of its fees and expenses, in accordance with the terms of the deposit agreement, subject to any other applicable laws and regulations. You may surrender your ADSs to the depositary in exchange for ordinary shares underlying your ADSs. The depositary collects fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-based services until its fees for these services are paid. We may amend or terminate the deposit agreement without your consent. Any amendment which imposes or increases any fees or charges (other than taxes and other governmental charges, registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or which otherwise prejudices any substantial existing right of holders of ADSs, shall, however, not become effective as to outstanding ADSs until the expiration of 30 days after notice of such amendment shall have been given to the holders of outstanding ADSs. You should carefully read the section in this prospectus entitled "Description of American Depositary Shares" to better understand the terms of the ADSs. You should also read the deposit agreement, which is an exhibit to the registration of which this prospectus forms a part. Depositary The Bank of New York Mellon. Table of Contents Listing Our ordinary shares and the ADSs are not currently listed on any national securities exchange. We intend to apply to list the ADSs on NASDAQ under the symbol "EVAC." We do not intend to list our ordinary shares on any national securities exchange. Risk Factors Investing in the ADSs involves a high degree of risk. See "Risk Factors" beginning on page 20 of this prospectus for a discussion of factors you should carefully consider before investing in the ADSs. Unless otherwise noted, the information in this prospectus: gives effect to the Corporate Reorganization and Corporate Recapitalization, as described further under "Corporate Reorganization and Recapitalization"; excludes 1,250,000 ordinary shares underlying options to be issued pursuant to the Edwards Group Limited 2012 Equity Incentive Plan (the "Equity Plan") contemporaneously with this offering; excludes approximately 8,600,000 ordinary shares reserved for future issuance under the Equity Plan and the Edwards Group Sharesave Scheme; assumes no exercise of the underwriters' option to purchase up to 1,875,000 additional ADSs from the selling shareholders; and assumes an initial public offering price of US$9.50 per ADS (the midpoint of the price range set forth on the cover of this prospectus). Following the Corporate Reorganization and immediately prior to the consummation of this offering, we will effect a corporate recapitalization (the "Corporate Recapitalization"), whereby all of our A ordinary shares, B ordinary shares, C ordinary shares and preference shares will be reclassified and converted into a new series of ordinary shares and ordinary deferred shares, and any accrued and unpaid dividends on preference shares will be converted into a number of ordinary shares equivalent in value to such accrued and unpaid dividends at the time of the conversion, based on the midpoint of the price range set forth on the cover of this prospectus, as described further under "Corporate Reorganization and Recapitalization." As a result of the conversion of the aggregate principal amount of the outstanding preference shares into ordinary shares, a US$1.00 increase (decrease) in the assumed initial public offering price of US$9.50 per ADS would (decrease) increase the aggregate number of ordinary shares outstanding after this offering by (2,972,072) or 3,671,382 shares, respectively. See "Corporate Reorganization and Recapitalization." A US$1.00 increase (decrease) in the assumed initial public offering price of US$9.50 per ADS would (decrease) increase the aggregate number of ordinary shares into which any accrued and unpaid dividends on preference shares will convert by (372,375) or 459,992 shares, respectively, assuming this offering is effective on May 10, 2012. Table of Contents SUMMARY CONSOLIDATED FINANCIAL DATA The following tables set forth the summary consolidated financial data of Edwards Group plc for the periods and as of the dates indicated. The summary consolidated income statement data and cash flow data for each of the years ended December 31, 2009, 2010 and 2011 are derived from, and qualified by reference to, the audited consolidated financial statements of Edwards Group plc included elsewhere in this prospectus. The summary consolidated income statement data and cash flow data for the year ended December 31, 2008 are derived from the audited consolidated financial statements of Edwards Group plc not included in this prospectus. The unaudited selected quarterly results of operations for the years ended December 31, 2010 and 2011 have been prepared on the same basis as the audited consolidated financial statements of Edwards Group plc and include all adjustments necessary for the fair presentation of the information for the quarters presented. Our quarterly results of operations will vary in the future. The results of operations for any quarter are not necessarily indicative of results for the entire year and are not necessarily indicative of any future results. The pro forma earnings/(loss) per share from continuing operations attributable to our equity holders and the pro forma weighted average shares outstanding data presented below is unaudited and gives effect to the Corporate Recapitalization whereby all of our outstanding A ordinary shares, B ordinary shares, C ordinary shares and preference shares will be reclassified and converted into ordinary shares and ordinary deferred shares as described under "Corporate Reorganization and Recapitalization" and to give effect to the sale of ADSs in this offering and the application of net proceeds as described under "Use of Proceeds," as if each such transaction had occurred on January 1, 2011. The balance sheet data of Edwards Group plc as of December 31, 2011 is derived from, and qualified by reference to, the audited consolidated financial statements of Edwards Group plc included elsewhere in this prospectus. The unaudited pro forma balance sheet data as of December 31, 2011 gives effect to the Corporate Reorganization and the Corporate Recapitalization and the unaudited Pro Forma as adjusted balance sheet data as of December 31, 2011 gives effect to (i) the Corporate Reorganization and the Corporate Recapitalization and (ii) the sale by us of 12,500,000 ADSs in this offering at an assumed initial public offering price of US$9.50 per ADS, the midpoint of the price range set forth on the cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and (iii) the application of the net proceeds we receive from this offering as described under "Use of Proceeds," as if each such transaction had occurred on December 31, 2011. Solely for convenience, the table of income statement, cash flow and other financial data, and the table of balance sheet data, contain a translation of certain Pounds Sterling amounts into equivalent U.S. Dollar amounts based on the closing mid-point spot rate of 1.00 to US$1.5541, at 4:00 p.m. (London time) on December 31, 2011 derived from WM/Reuters and as published by the Financial Times. This translation rate should not be construed as a representation that the Pounds Sterling amounts have been, could have been or could be converted into U.S. Dollars at that or any other rate. See "Exchange Rate Information." In addition, certain information in this prospectus relating to the application of the net proceeds to us from our sale of 12,500,000 ADSs in this offering has been translated from U.S. Dollar amounts into equivalent Pounds Sterling amounts based on the closing mid-point spot rate of 1.00 to US$1.5978 at 4:00 p.m. (London time) on March 31, 2012, derived from WM/Reuters and as published by the Financial Times. This translation rate should not be construed as a representation that the U.S. Dollar amounts have been, could have been or could be converted into Pounds Sterling at that or any other rate. See "Exchange Rate Information." In addition, the summary consolidated financial data does not include financial statements of Edwards Group Limited because it has been formed recently for the purpose of effecting the offering Table of Contents and until the consummation of the Corporate Reorganization described more fully in "Corporate Reorganization and Recapitalization," it will hold no material assets and will not engage in any operations. Upon completion of the Corporate Reorganization, Edwards Group Limited will become the parent of Edwards Group plc and its subsidiaries and will have no other assets or operations. See "Corporate Reorganization and Recapitalization." Our historical results are not necessarily indicative of our future performance. You should read this information together with "Use of Proceeds," "Capitalization," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. Table of Contents Year ended December 31, 2008 2009 2010 2011 2011 ( in millions, except per share data) ($ in millions, except per share data) Income Statement Data: Revenue 509.8 371.2 641.0 700.5 1,088.6 Cost of sales (345.4 ) (259.0 ) (395.4 ) (442.6 ) (687.8 ) Gross profit 164.4 112.2 245.6 257.9 400.8 Administration expenses before R&D, restructuring and transaction costs and amortization (84.7 ) (67.2 ) (95.2 ) (99.1 ) (154.0 ) R&D excluding amortization (18.1 ) (12.5 ) (15.1 ) (18.3 ) (28.4 ) Restructuring and transaction costs (17.4 ) (22.6 ) (43.7 ) (23.7 ) (36.8 ) Amortization (18.8 ) (16.5 ) (18.0 ) (17.9 ) (27.8 ) Total administrative expenses (139.0 ) (118.8 ) (172.0 ) (159.0 ) (247.0 ) Other gains/(losses) net (3.1 ) (23.8 ) 2.4 3.4 5.3 Operating profit/(loss) 22.3 (30.4 ) 76.0 102.3 159.1 Finance income and costs (61.4 ) 5.7 (11.5 ) (32.5 ) (50.5 ) Profit/(loss) before taxation (39.1 ) (24.7 ) 64.5 69.8 108.6 Taxation 21.5 (7.7 ) (12.7 ) (13.6 ) (21.1 ) Profit/(loss) after taxation from continuing operations (17.6 ) (32.4 ) 51.8 56.2 87.5 Profit for the period from discontinued operations 0.7 2.4 0.3 Profit/(loss) for the period (16.9 ) (30.0 ) 52.1 56.2 87.5 Basic and diluted earnings/(loss) per share from continuing operations attributable to the equity holders of the Company (expressed in pence per share) (29.87 ) (46.98 ) 22.59 30.95 48.10 Share capital 0.2 0.2 0.2 0.3 0.4 Ordinary dividend per share 0.0 0.0 0.0 0.0 0.0 Preference dividend per share (expressed in pence or cents per share) 0.00 0.00 0.00 27.37 42.54 Pro forma earnings/(loss) per share from continuing operations attributable to equity holders of the Company (expressed in pence or cents per share)*(1)(2) : Basic 56.13 87.23 Diluted 55.47 86.21 Pro forma weighted average shares outstanding (in millions)*(1)(2): Basic 106.3 Diluted 107.5 Cash Flow Data: Net cash generated/(consumed) from operating activities 73.8 (5.1 ) 143.8 85.9 133.5 Total cash flow from investing activities (13.9 ) (11.6 ) (44.9 ) (50.6 ) (78.6 ) Total cash flow from financing activities (32.5 ) (19.4 ) (17.2 ) (103.0 ) (160.1 ) Change in cash and cash equivalents 27.4 (36.1 ) 81.7 (67.7 ) (105.2 ) Other Financial Data: Adjusted EBITDA(3) 72.1 21.6 151.8 160.9 250.1 Adjusted net income/(loss)(3) 33.1 (28.8 ) 85.1 84.8 131.8 Management operating cash flow(3) 76.3 11.9 138.1 92.6 143.9 *Unaudited. (1)Pro forma to give effect to the Corporate Reorganization and Corporate Recapitalization, as if each such transaction had occurred on December 31, 2011. On April 5, 2012, and in accordance with and as contemplated by the Scheme of Arrangement relating to our corporate reorganization (the "Corporate Reorganization"), the holders of each series of ordinary shares and preference shares of Edwards Group plc had their shares cancelled and shares in the capital of Edwards Group Limited, a newly formed Cayman Islands exempted company with limited liability, resident in the United Kingdom for tax purposes, having substantially the same rights attaching to them as the shares held in the capital of Edwards Group plc were issued to such holders, set out as follows: For each A Ordinary Share, one A ordinary share in the capital of Edwards Group Limited For each B Ordinary Share, one B ordinary share in the capital of Edwards Group Limited For each C Ordinary Share, one C ordinary share in the capital of Edwards Group Limited For each Preference Share, one preference share in the capital of Edwards Group Limited Table of Contents Following the Corporate Reorganization and immediately prior to the consummation of this offering, we will effect a corporate recapitalization (the "Corporate Recapitalization"), whereby all of our A ordinary shares, B ordinary shares, C ordinary shares and preference shares will be reclassified and converted into a new series of ordinary shares and ordinary deferred shares, and any accrued and unpaid dividends on preference shares will be converted into a number of ordinary shares equivalent in value to such accrued and unpaid dividends at the time of the conversion, based on the midpoint of the price range set forth on the cover of this prospectus, as described further under "Corporate Reorganization and Recapitalization." As a result of the conversion of the aggregate principal amount of the outstanding preference shares into ordinary shares, a US$1.00 increase (decrease) in the assumed initial public offering price of US$9.50 per ADS would (decrease) increase the aggregate number of ordinary shares outstanding after this offering by (2,972,072) or 3,671,382 shares, respectively. See "Corporate Reorganization and Recapitalization." A US$1.00 increase (decrease) in the assumed initial public offering price of US$9.50 per ADS would (decrease) increase the aggregate number of ordinary shares into which any accrued and unpaid dividends on preference shares will convert by (372,375) or 459,992 shares, respectively. (2)Pro forma basic and diluted earnings per share have been computed to give effect to the Corporate Recapitalization and Reorganization and adjusted to give effect to the sale by us of 12,500,000 ADSs in this offering and the application of the net proceeds we receive from this offering as described under "Use of Proceeds," as if each such transaction had occurred on January 1, 2011. (3)We present adjusted EBITDA, adjusted net income/(loss) and management operating cash flow in this prospectus because we believe they are useful indicators of our operating performance. We present adjusted EBITDA in this prospectus because, in addition to management's use as a performance measure, we understand that it is a measure used by certain investors and because it is used in the calculation of applicable interest rates, mandatory prepayments and certain covenant baskets under the First Lien Credit Agreement. Adjusted EBITDA differs from the term "EBITDA" as it is commonly used. Adjusted EBITDA, as used in this prospectus, means profit/(loss) after taxation adjusted to add back or deduct, as appropriate: (i) finance income and costs; (ii) taxation; (iii) depreciation; (iv) amortization; (v) restructuring and transaction costs; and (vi) profit or loss on sale of property, plant and equipment ("PP&E"). Following this offering, we intend to add back any non-cash compensation expense calculated with respect to our omnibus equity incentive plan and sharesave plan (the "Employee Share Schemes") in our calculation of adjusted EBITDA. Management uses adjusted net income/(loss) as a measure of operating performance for planning purposes, including the preparation of budgets and projections, as well as to facilitate analysis of the allocation of resources and to evaluate the effectiveness of business strategies. For the periods presented, adjusted net income/(loss) represents profit/(loss) after taxation adjusted for: (i) restructuring and transaction costs; (ii) currency translation gain/(loss) on external and intra-group debt; (iii) accretion of the unsecured loan notes that were originally issued (collectively, the "Vendor Loan Note") as part of the consideration payable pursuant to the acquisition of the Edwards business from The BOC Group plc in 2007; (iv) purchase price accounting ("PPA") amortization of the value of intangible assets acquired and recognized on the acquisition of the Edwards business from The BOC Group plc in 2007; and (v) the tax shield on adjustments, which represents the impact of tax on the adjustments and is calculated using the effective tax rates for the original entries that have been adjusted. Following this offering, we intend to add back any non-cash compensation expense calculated with respect to our Employee Share Schemes in our calculation of adjusted Net Income. The Vendor Loan Note was repaid on February 24, 2011. In addition to the measures discussed above, our management uses management operating cash flow, which is derived from adjusted EBITDA, to understand the factors that impact cash flow generated by operations, absent various exceptional items that effect cash generation, for purposes of determining management bonuses, as well as a measure to help allocate resources. In addition, management believes management operating cash flow is useful to investors as it provides them with additional information about our performance. Management operating cash flow is defined as adjusted EBITDA less (i) change in trade working capital, (ii) net cash payments for capital expenditures and (iii) other cash movements and non-cash items. Management believes the inclusion of adjusted EBITDA, adjusted net income/(loss) and management operating cash flow is appropriate to provide additional information to investors about performance which is adjusted for certain material non-cash items and unusual items that are material due to their nature, size or incidence. Restructuring costs include exceptional items that vary by period and have included business optimization expenses, restructuring charges and reserves (including retention, severance, systems establishment costs, excess pension charges, contract termination costs, costs to consolidate facilities and relocate employees). Transaction costs include management consulting, monitoring, transaction and advisory fees and related expenses paid to Principal Shareholders and transactions costs and cash expenses incurred directly in connection with investments, equity issuances, debt issuances or refinancings and other non cash charges. Non-cash items include unrealized currency translation gains or losses on external loans and intra-group debt, the gain or loss on which will not be realized until the loan is repaid. Adjusted EBITDA, adjusted net income/(loss) and management operating cash flow are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit/(loss) or profit/(loss) after taxation, as indicators of our operating performance or any other measure of performance derived in accordance with IFRS. Further, because adjusted EBITDA, adjusted net income/(loss) and management operating cash flow (or similar measures) may vary among companies and industries, they may not be comparable to other similarly titled measures used by other companies. *Unaudited. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001544322_exponentia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001544322_exponentia_prospectus_summary.txt
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001544458_bensata_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001544458_bensata_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in "Risk Factors." Bensata Corp. Bensata Corp., which operates the social networking site www.HelpInventIt.com is an emerging social network focused on open source invention. We deliver a collaborative platform that allows users from around the world to work together to develop new inventions and technologies on an open source platform. All of the products and devices developed on www.HelpInventIt.com are open source, which means no one owns the patent to the new invention so it can be used or built by anyone. We provide tools that inventors from anywhere in the world can use to work together to develop and improve new inventions. Our collaborative site also serves as a social media site for users seeking social connections centered on inventions. We are a development stage company that is currently operating its social network Web site, www.HelpInventIt.com in its initial release. We have not yet generated any revenues since inception. We expect to generate revenue by delivering advertising on our web pages alongside our content and in the future by selling plans and instructions for people to build inventions developed on the Web site. In the future we will generate revenue from pay-per-click advertising as well as from fee based advertising programs and promotions that we may offer to our advertisers. We do not currently have agreements with any advertisers. Our mission is to serve as a platform for the development and communication of new inventions. We have a disruptive business model. This business model has the potential to transform the development of intellectual property from the purview of major universities and major corporations to a democratized platform. When intellectual property becomes public property, the related economics are changed. We expect to provide a high quality user experience combined with innovative and important content that revolves around the important new technologies. We are building on three key promises to our users: We strive to provide a positive and effective platform where your inventions can be developed in a collaborative environment aimed at delivering real innovation. Open innovation using open source platforms delivers transformational opportunities by democratizing legacy industries. The most notable example is what happened with software starting with Linux which led to MySQL, Apache and Php which allowed developers to create thousands of Internet businesses without having to pay costly license fee for software. We believe this will happen with technology development as well using www.HelpInventIt.com. We will aim to deliver tools for collaboration that allow innovators from diverse geographical locations to jointly work on refining ideas into inventions. We believe that collaboration is central to innovation. By inviting creative minds from any part of the world to participate together to solve technological challenges and improve new technologies, we expect to see meaningful innovation occur. We will continue to work to improve the effectiveness of our user experience so that user s inventions can find the most effective path to implementation with the help of all of our users. Our site provides a platform for collaborative innovation. We expect out users to identify ways we can improve functionality and provide more tools that will be useful to inventors in later versions of our software. We believe that our focus on the democratization of invention on an open collaborative platform controlled by our users is a foundational value to our company. We also believe that this focus is critical for the creation of long-term value. Corporate Information We were incorporated in Wyoming on November 9, 2007. Our principal executive offices are located at 2500 CityWest Boulevard, Suite 300, Houston, Texas 77042, and our telephone number is (713) 267-2371. We maintain a web site: www.HelpInventIt.com. The information on our web sites is not part of this prospectus. The Offering Common Stock offered: 10,000,000 Common Shares Shares Offered by Selling Shareholders None Common Stock Outstanding Before the Offering: 22,802,000 Common Stock to be outstanding after this offering Between 22,802,000 and 32,802,000 Class A Preferred Stock 5 million share of Class A Preferred Stock is outstanding which may be converted at any time into 50 million shares of common stock. Use of proceeds The proceeds of this offering are expected to be deployed by management for the development of the next generation of our core Web site, for operational and administrative costs The number of shares of common stock that will be outstanding after this offering is based on the number of shares outstanding at June 30, 2012 and includes no warrants or options since none are outstanding. There are no contingent rights to common stock or other classes of securities convertible into common stock other than the Class A Preferred Stock. Summary Consolidated Financial Data The following table summarizes financial data regarding our business and should be read together with "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus. Summary Results of Operations Inception to Date Years Ended December 31, Period Ended June 30 Statement of Operations Data 2011 2010 2012 Revenue - - - — Costs and Expenses General and Administrative (78,774 ) (34,829 ) (13,728 ) (30,217 ) Total Expenses (78,774 ) (34,829 ) (13,728 ) (30,217 ) Loss from Operations (78,774 ) (34,829 ) (13,728 ) (30,217 ) Interest Income 113 113 — — Interest Expense (2,800 ) (2,800 ) — — Loss on Sale of Assets (205,000 ) (205,000 ) Net Income (Loss) (286,461 ) (37,516 ) (13,728 ) (235,217 ) Net Loss per Common Share (0.09 ) (0.002 ) (0.006 ) (0.001 ) Number of Share Outstanding 22,750,000 4,000,000 22,802,000 The following table presents a summary of our balance sheet data at December 31, 2010 and 2011 and as of June 30,2012: Summary Balance Sheet Data: Years Ended December 31, Period Ended June 30 2011 2010 2012 Cash 35,244 70,581 2,364 Intangible Property 23,700 20,000 23,700 Accounts Receivable 1,400 10,000 Investment Assets 680,000 — — Note Receivable 475,000 Prepaid Expense 243 Equipment 1,883 — 1,883 Total Assets 740,807 91,981 513,190 Accounts Payable 6,595 2,453 11,595 Share Capital - Common 2,275 400 2,280 Share Capital - Preferred 500 — 500 Paid in Capital 782,681 102,856 785,276 Accumulated Deficit (51,244 ) (13,728 ) (286,461 ) Total Liabilities & Stockholder's Equity $ 740,807 $ 91,981 $ 513,190
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001545236_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001545236_american_prospectus_summary.txt
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+(1) Ingrid Allen is the mother of Loretta Allen (2) Aaron Morley and Taneka Morley are brother and sister. Each of the above Selling Stockholders is over 18 years old and beneficially owns and has sole voting and investment rights over all shares or rights to the shares registered in his or her name. The numbers in this table assume that none of the Selling Stockholders sells shares of Common Stock not being offered in this prospectus or purchases additional shares of Common Stock, and assumes that all shares offered are sold. The percentages are based on 72,750,000 shares of common stock outstanding on the date of this prospectus. 17 None of the selling shareholders: (1) has had a material relationship with us other than as a shareholder at any time within the past three years; (2) has ever been one of our officers or directors; or (3) is a broker-dealer or affiliate of a broker dealer. To the best of our knowledge, none of the Selling Stockholders holds any other stock of our Company and if they were to sell all of the shares listed above, they would hold no equity interest in our Company. There was no private placement agent or others who were involved in placing shares with the Selling Stockholders. If a Selling Stockholders transfers any of the Secondary Shares and the transferee wishes to be included in this offering, we will file a prospectus supplement which includes the change pursuant to Rule 424 of the Securities Act. PLAN OF DISTRIBUTION We are registering the shares currently held by our Selling Stockholders to permit them and their transferees or other successors in interest to offer the shares from time to time. We will not offer any shares on behalf of Cumberland, and we will not receive any of the proceeds from any sales of shares by such Selling Stockholders. The price at which the Selling Stockholders may sell the shares pursuant to this prospectus has arbitrarily been determined by the Selling Stockholders to be at $0.001 per share. The Selling Stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their registered shares of common stock on any stock exchange market or trading facility on which our shares may be traded or in private transactions. The Selling Stockholders are "underwriters" within the meaning of the Securities Act of 1933, as amended, with respect to the shares being offered by them. The Selling Stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a Selling Stockholders as a gift, pledge, partnership distribution or other transfer, may, from time to time sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions, if our shares are ever approved for trading on an exchange or by other means. In the event that any donee, pledgee, transferee or other successor-in-interest sells shares received from a person set forth on the "Selling Stockholders" table after the date of this prospectus, we will amend this prospectus by filing a post effective amendment to include the names of such donee, pledgee, transferee or other successor-in-interest selling such shares and disclose the applicable compensation arrangements. If our shares are approved for such trading, as to which we cannot provide any assurance, these dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The Selling Stockholders may use any one or more of the following methods when disposing of shares or interests therein if our shares are approved for listing on an exchange or for trading on the OTC Bulletin Board: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principle and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated transaction; broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; specified number of such shares at a stipulated price per share; a combination of any such methods of sale; and any other method permitted pursuant to applicable law. As of the date of this prospectus, we have no information on the manner or method by which the Selling Stockholders may intend to sell shares. The Selling Stockholders have the sole and absolute discretion not to accept any purchase offer or make or not make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time. 18 If a trading market for our common stock develops, the Selling Stockholders may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Stockholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal, or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that the Selling Stockholders will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which, pursuant to this prospectus, may be below the then market price. We cannot assure you that all or any of the shares offered by this prospectus will be sold by the Selling Stockholders. The Selling Stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered by this prospectus, will be deemed "underwriters" as that term is defined under the Securities Act or the Securities Exchange Act of 1934, or the rules and regulations thereunder. The Selling Stockholders, alternatively, may sell all or any part of the shares offered by this prospectus through an underwriter. No Selling Stockholders has entered into an agreement with a prospective underwriter. If a Selling Stockholders enters into such an agreement or agreements, the relevant details will be set forth in a supplement or revision to this prospectus. Under the regulations of the Securities Exchange Act of 1934, any person engaged in a distribution of the shares offered by this prospectus may not simultaneously engage in market making activities with respect to our common stock during the applicable "cooling off" periods prior to the commencement of such distribution. In addition, and without limiting the foregoing, the Selling Stockholders will be subject to applicable provisions, rules and regulations of the Securities Exchange Act of 1934 and the rules and regulations thereunder, which provisions may limit the timing of future purchases and sales of common stock by the Selling Stockholders. We have advised the Selling Stockholders that, during such time as they may be engaged in a distribution of any of the shares we are registering on their behalf in this registration statement, they are required to comply with Regulation M as promulgated under the Securities Exchange Act of 1934. In general, Regulation M precludes any Selling Stockholders, any affiliated purchasers and any broker-dealer or other person who participates in such distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a "distribution" as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a "distribution participant" as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution. Our officers and directors, along with affiliates, will not engage in any hedging, short, or any other type of transaction covered by Regulation M. Regulation M prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security, except as specifically permitted by Rule 104 of Regulation M. These stabilizing transactions may cause the price of the common stock to be higher than it would otherwise be in the absence of those transactions. We have advised the Selling Stockholders that stabilizing transactions permitted by Regulation M allow bids to purchase our common stock so long as the stabilizing bids do not exceed a specified maximum, and that Regulation M specifically prohibits stabilizing that is the result of fraudulent, manipulative, or deceptive practices. The Selling Stockholders and distribution participants will be required to consult with their own legal counsel to ensure compliance with Regulation M. Prior to the date of this prospectus, there has not been any established trading market for our common stock. Following the consummation of this offering, we do not anticipate that any such trading market will develop. Accordingly, purchasers of our shares in this offering should be prepared to hold those shares indefinitely. We will seek a market maker to sponsor our common stock on the OTC Bulletin Board. Application will then be made by the market maker to sponsor our shares of common stock on the OTC Bulletin Board. No market maker has yet undertaken to sponsor our common stock on the OTC Bulletin Board, and there can be no assurance that any market maker will make such an application or if a market does develop for our common stock as to the prices at which the our common stock will trade, if at all. Until our common stock is fully distributed and an orderly market develops in our common stock, the price at which it trades may fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock,
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001546154_abington_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001546154_abington_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..13c920f538bce846a7cc444ecfed43cce7fdc5d7
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to Abington Resources, Ltd. See Cautionary Note Regarding Forward Looking Statements on page 33. Our Company Abington Resources Ltd. (the Company ) was incorporated on June 10, 1999 under the laws of the Province of British Columbia and is in the business of acquisition, development and exploration of oil, gas and mineral properties. The Company owns working interests of 8% and 10% in two oil and gas producing wells in Saskatchewan, Canada The Company is a reporting issuer in British Columbia and Alberta and its shares are listed on the TSX Venture Exchange under the symbol ABL.V. We currently occupy office space at 125A-1030 Denman Street, #402, Vancouver, B.C. V6G 2M6. The Offering This prospectus covers up to 300,000 common shares to be issued by the company at a price of $0.40 per share in a direct public offering and 7,779,027 shares held by selling shareholders to be sold at $0.40 per share as detailed herein. ABOUT THIS OFFERING Securities Being Offered Up to 200,000 shares of common stock of Abington Resources, Ltd. to be issued by the company at a price of up to $0.40 per share and 7,779.027 shares of common stock of Abington Resources, Ltd. to be sold by selling shareholders at a price of $0.40 per share. Initial Offering Price Up to 200,000 shares of common stock of Abington Resources, Ltd. to be issued by the company at a price of up to $0.40 per share and 7,779.027 shares of common stock of Abington Resources, Ltd. to be sold by selling shareholders at a price of $0.40 per share. Terms of the Offering Up to 200,000 shares of common stock of Abington Resources, Ltd. to be issued by the company at a price of up to $0.40 per share and 7,779.027 shares of common stock of Abington Resources, Ltd. to be sold by selling shareholders at a price of $0.40 per share. Termination of the Offering The offering will conclude when the company has sold all 300,000 of the shares registered hereunder. The company may, in its sole discretion, decide to terminate the registration of the shares offered by the company.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001546623_commonweal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001546623_commonweal_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..de71a7c5bbcf2a078ceaa174d2395c172c7f8ed0
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+Borrowing Policies We may incur nonrecourse debt in an amount of up to 30% of the total cost of the equipment in the portfolio at the time of purchase. However, we may not borrow to acquire equipment unless, at the time of any such borrowing, the net proceeds of the offering received to date are fully invested, or committed to investment, in equipment. We have not entered any commitments or arrangements with potential lenders to provide us with debt financing as of the date of this prospectus. Debt, for purposes of this prospectus, means debt incurred with respect to acquiring or investing in equipment, or refinancing non-term debt, but not debt incurred with respect to refinancing existing partnership term debt. We will incur only non-recourse debt, which will be secured by equipment and lease income. This debt will permit us to increase the amount of our depreciable assets, and should increase both our lease revenues and our federal income tax deductions above those levels which would be achieved without borrowing. There is no limit on the amount of debt which may be incurred in connection with the acquisition of any single item of equipment. Any debt incurred will be fully amortized over the term of the initial lease for the equipment securing the debt. The amount we borrow will depend on a number of factors, including: the types of equipment we acquire; the creditworthiness of the lessee; the availability of suitable financing; and prevailing interest rates. We intend to be flexible in the degree of leverage we employ, within the permissible limit. We will purchase some items of equipment without debt. If we purchase an item of equipment without debt and then suitable financing becomes available, we may then obtain the financing, secure the financing with the equipment purchased previously and invest any proceeds from financing in additional items of equipment. We will attempt to borrow funds, to the fullest extent possible, at interest rates fixed at the time of borrowing. Any debt we incur must be non-recourse. Non-recourse debt means that the lender providing the funds can look for security only to the equipment pledged as security for the loan, including the proceeds derived from leasing or selling the equipment. Neither we nor any partner (including the general partner) would be liable for repayment of any non-recourse debt. To the extent we borrow on a non-recourse basis, the limited partners tax basis in their units will increase, although there may not be a corresponding increase in the partners At-Risk amount. See United States Federal Income Tax Considerations Limitations on Utilization of Partnership Losses. The general partner and its affiliates may make loans to CIGF8 on a short-term basis, if necessary. If the general partner or any of its affiliates does so, the general partner or affiliate may not charge interest at a rate greater than the interest rate charged by unrelated lenders on comparable loans. We will not pay interest on a loan at an annual rate greater than three percent over the prime rate published in The Wall Street Journal. All payments of principal and interest on any financing provided by the general partner or any of its affiliates shall be due and payable by CIGF8 within 12 months after the date of the loan. See Compensation to the General Partner and Affiliates on page 40. If the general partner or any of its affiliates purchases equipment in its own name and with its own funds in order to facilitate ultimate purchase by us, the general partner or any such affiliate will be entitled to receive interest on the funds. See Conflicts of Interest Acquisitions on page 44. Refinancing Policies We may refinance our debt, subject to borrowing restrictions. The general partner will take into consideration factors such as the amount of appreciation in value to be realized, the possible risks of continued ownership and the anticipated advantages, as compared to selling such equipment. We may retain an item of equipment, through refinancing, to generate additional funds for reinvestment in additional equipment or for distribution to the limited partners. A refinancing will not be taxable to a limited partner unless it exceeds the tax basis of the limited partner s units (after any increase of the tax basis as a result of CIGF8 s incurring any additional non-recourse debt). See United States Federal Income Tax Considerations Limitations on Utilization of Partnership Losses Tax Basis. Liquidation Policies We will begin to dispose of our equipment after an operational phase of approximately six years. The general partner may begin to dispose of all our equipment at such time as the general partner believes will allow for an orderly, business-like disposition of all of the equipment by the end of approximately the tenth year of our existence. If not sooner terminated upon complete liquidation of the portfolio, CIGF8 will automatically terminate and dissolve on December 31, 2024. However, the general partner retains the ability, pursuant to our limited partnership agreement, to extend the term of CIGF8 in additional increments of one year, if it determines that such extension will benefit investors and allow for a more advantageous liquidation process. Also, the general partner may, at any time, decide to dispose of all our equipment and dissolve CIGF8 upon the approval of limited partners holding a majority in interest of units. Particular items of equipment may be sold at any time if, in the judgment of the general partner, it is in our best interest to do so. The determination of whether particular items of partnership equipment should be sold will be made by the general partner after consideration of all relevant factors (including prevailing economic conditions, lessee demand, the general partner s views of current and future market conditions, our cash requirements, potential capital appreciation, cash flow and federal income tax considerations), with a view toward achieving our principal investment objectives. The residual value of equipment sold is determined by the market for such equipment at the time of liquidation. It may be equal to, less than or more than the depreciated book value, depending on the marketability of the particular item of equipment at the time it is sold. To determine such value, the general partner uses third-party residual value analysis and/or as multiple outside bids collected prior to each equipment sale. As partial payment for equipment sold, we may receive purchase money obligations secured by liens on such equipment. Management of Equipment Equipment management services for our equipment will be provided by the general partner and its affiliates, consisting of one or more of the following: collection of income from the equipment; negotiation and review of leases and sales agreements; releasing and leasing-related services; payment of operating expenses; periodic physical inspections and market surveys; servicing indebtedness secured by equipment; general supervision of lessees to assure that they are properly utilizing and operating equipment; and related services with respect to equipment, supervising, monitoring and reviewing services performed by others in respect to equipment and the preparation of monthly equipment operating statements and related reports. Certain of these services may be provided initially by lease brokers as part of their agreement to sell the equipment to CIGF8. See Compensation of General Partner and Affiliates. Competition The equipment leasing industry is highly competitive. We will compete with leasing companies, equipment manufacturers and their affiliated financing companies and entities similar to CIGF8 (including other programs sponsored by the general partner), some of which will have greater financial resources and more experience in the equipment leasing business than the general partner. Other leasing companies and equipment manufacturers or their affiliated financing companies may be in a position to offer equipment to prospective lessees on financial terms which are more favorable than those which we can offer. As a result of these advantages, we may be unable to lease our equipment on terms as favorable as some of our competitors can offer. The technology equipment industry is also extremely competitive. Competitive factors include pricing, technological innovation and methods of financing. Manufacturer-lessors could maintain advantages through policies which combine service and hardware with payment accomplished through a single monthly charge. Preliminary Investments We do not now own, and have made no commitment to purchase, any equipment. The general partner or its affiliates may purchase equipment prior to the completion of this offering, which equipment and the related leases, if any, to which it is subject, could be sold and assigned to us after we commence our business operations. No such purchase shall commence until the minimum offering level has been reached. See Conflicts of Interest Acquisitions on page 44. It is not possible to determine the date when the net offering proceeds, less working capital reserves, if any, will be fully invested in equipment, or the terms of any purchases of equipment. We will invest the net offering proceeds prior to the acquisition of equipment in short-term, highly liquid investments where there is appropriate safety of principal, such as United States Treasury Bills and other investments that will not cause us to be treated as an Investment Company under the Investment Company Act of 1940, as amended. If all of the net proceeds of this offering are not invested in equipment or committed to such investment or otherwise utilized for proper partnership purposes prior to the expiration of 12 months from the completion of this offering, the net proceeds not so invested, committed, or set aside as working capital reserves will thereupon be promptly returned to the limited partners with a proportionate share of interest at the rate earned by CIGF8 on the investment of such proceeds, based upon their respective number of units and time of purchase. For such purpose, funds will be deemed to be committed to investment and will not be returned to the limited partners to the extent written agreements in principle, commitment letters, letter of intent or understanding, option agreements, or any similar contracts or understandings exist, whether or not any such investment is ultimately consummated. Funds will also be deemed to be committed to the extent: any funds may have been reserved to make contingent payments in connection with any equipment already acquired, whether or not any such payments are ultimately made; as a condition of obtaining financing, we are required to maintain funds as a compensating balance; or the general partner decides that an addition to the working capital reserve is necessary in connection with any equipment. In the event any such uninvested funds are distributed to the limited partners, such distribution will be treated as a return of capital. See United States Federal Income Tax Considerations Cash Distributions. Reserves Because all of our leases are expected to be on a triple-net basis, we will establish no permanent reserve for maintenance and repairs with offering proceeds. However, the general partner has the ability retain a portion of the offering proceeds, cash flow and net disposition proceeds for maintenance, repairs and working capital if the general partner determines it to be necessary, which we expect to be highly unlikely. There are no limitations on the amount of cash flow and net disposition proceeds that may be retained as reserves, and up to 15% of offering proceeds may be retained as reserves. General Restrictions Under the partnership agreement, we are not permitted to: invest in junior trust deeds unless received in connection with the sale of an item of equipment in an amount which does not exceed 30% of value of our assets on the date of investment; acquire any equipment for units; issue senior securities (except that the issuance to lenders of notes in connection with the financing or refinancing of equipment or our business shall not be senior securities); make loans to any person, including the Sponsor; sell or lease any equipment to, lease any equipment from, or enter into any sale-leaseback transactions with, the general partner or any of its affiliates; give the Sponsor an exclusive right or employment to sell our equipment; or engage in any type of reciprocal business arrangement, rebates or give-ups which would circumvent these prohibitions against dealing with affiliates. However, we may invest in joint venture arrangements with other equipment programs formed by the general partner or its affiliates, if those investments or arrangements meet certain conditions. See Conflicts of Interest Joint Ventures with Affiliates of the General Partner on page 45. The general partner has also agreed to use its best efforts to assure that we will not be deemed an investment company as such term is defined in the Investment Company Act of 1940. The general partner and its affiliates may engage in other activities, whether or not competitive with CIGF8. The partnership agreement also indicates that neither the general partner nor any of its affiliates may receive any rebate or give up in connection with our activities. See Conflicts of Interest, (page 42) Compensation to the General Partner and Affiliates, (page 40) and Management (page 26). We may invest in general partnerships or joint ventures with persons other than equipment programs formed by the general partner or its affiliates, which partnerships or joint ventures own specific equipment, if: We have or acquire a controlling interest in ventures or partnerships; the non-controlling interest is owned by a non-affiliate; and there are no duplicate fees. We may not, however, invest in limited partnership interests of another program formed by the general partner or its affiliates. COMPENSATION TO THE GENERAL PARTNER AND AFFILIATES The following table summarizes the types, estimated amounts and recipients of the compensation we will pay directly or indirectly to the general partner and its affiliates in connection with this offering and our operation. These payments will result from non-arm s-length bargaining. See Conflicts of Interest on page 42. Unless of a type that is disclosed in this prospectus, we will not engage in transactions with the Sponsor. As described below, the maximum front-end fees (which include fees and expenses incurred by any person in connection with our organization and acquisition of equipment during the initial organization and acquisition phase) that could be paid during the first fiscal year of operations without deduction of expenses are $8,837,500 (assuming the maximum number of units are sold and the maximum amount of leverage is incurred excluding fees earned with retained proceeds). Fees and expenses set forth in the table below will not be reclassified to avoid any applicable caps on such fees and expenses. Entity Receiving Compensation Type of Compensation Estimated Amount Assuming Minimum of 57,500 Units Are Sold Estimated Amount Assuming Maximum of 2,500,000 Units Are Sold OFFERING AND ORGANIZATION STAGE Commonwealth Capital Securities Corp. and participating broker-dealers Selling Commissions and Dealer-Manager Fees. We will pay to the dealer manager an amount of up to nine percent of capital contributions as underwriting commissions after and only if the required $1,150,000 minimum subscription amount is sold. The dealer manager will reallow to participating broker-dealers out of underwriting commissions a selling commission of up to seven percent of the capital contributions from units sold by such participating brokers. We will pay the remaining two percent to the dealer manager as a Dealer Manager Fee. The actual amount of the underwriting commissions may vary due to the volume discounts available to investors purchasing certain quantities of units. See Plan of Distribution. $ 103,500 $ 4,500,000 Commonwealth Capital Securities Corp. and participating broker-dealers Marketing Reallowance. We will pay a marketing reallowance of up to 1% of capital contributions to our dealer manager, all of which is expected to be reallowed to certain participating broker-dealers. The reallowance is designed to reimburse those broker-dealers that meet certain requirements for marketing expenses, such as bona fide training and education seminars and related conferences, or other marketing expenses. The actual amount of marketing reallowance paid will depend upon the percentage fee negotiated with each firm, the number of firms earning the reallowance and the number of units sold by such firms. Not all firms earning the reallowance will earn the full 1%. In no circumstances are any amounts paid to our dealer manager as a marketing reallowance to be retained by the dealer manager. Any amount of this fee not paid out to participating broker-dealers will be returned by the dealer manager to CIGF8. $ 11,500 $ 500,000 The General Partner Organizational Expenses. Organization expenses equal to three percent of the first $25,000,000 of limited partners capital contributions and two percent of the limited partners capital contribution in excess of $25,000,000, as reimbursement for the organization of CIGF8. These organizational and offering expenses include legal, accounting and printing expenses, various registration and filing fees, miscellaneous expenses related to the organization and formation of CIGF8, bona fide due diligence expenses, other costs of registration and costs incurred in connection with the preparation, printing and distribution of this prospectus and related sales literature. The general partner will pay these expenses out of its organizational expense payments it receives as units are sold. We will pay any costs above $1,250,000 out of offering proceeds. If costs are below $1,250,000, the general partner will reimburse us for any payments it received during the offering that exceed this amount. $ 34,500 $ 1,250,000 OPERATIONAL AND SALE OR LIQUIDATION STAGES The General Partner and its Affiliates Reimbursement of Expenses. The general partner and its affiliates are entitled, under Section 5.2 of the partnership agreement, to reimbursement for the cost of goods, supplies or services obtained from third parties unaffiliated with the general partner and used in connection with the administration and operation of CIGF8. The amounts set forth on this table are approximations of reimbursable expenses for the first year of our operation and do not include expenses incurred in the offering of units. $ 30,000 $ 400,000 The General Partner Equipment Acquisition Fee. An equipment acquisition fee of up to three and one-half percent of the purchase price of each item of equipment purchased as compensation for the negotiation of the acquisition of the equipment and the lease. The fee will be paid upon each escrow closing of the offering, and will be earned with respect to the equipment we purchase with the net proceeds of the offering available for investment in equipment except for fees on the leveraged portion of the purchase price which are paid when the equipment is purchased. The fee paid for finance leases will be two percent of the purchase price. If we do not purchase equipment with all the net proceeds of the offering, the general partner will return a pro rata portion of the fee to us. If we acquire equipment after all of the available net proceeds of the offering have been invested in equipment, the fee will be paid when such equipment is acquired. The amount of such fees will depend on the total value of equipment purchased and will be affected by the amount of leverage used, proceeds from equipment sold, interest rates and lease rates at the time of acquisition. For example, the amount of fees will increase as we increase equipment turnover in our portfolio or increase the amount of leverage we use. $50,025 assuming we invest the full amount of proceeds available for investment in operating leases, and use a maximum of 30% leverage in the first year of operations. $2,187,500 assuming we invest the full amount of proceeds available for investment in operating leases, and use a maximum of 30% leverage in the first year of operations. The General Partner Equipment Management Fee. A monthly fee equal to the lesser of (a) the fees which would be charged by an independent third party in the same geographic market for similar services and equipment or (b) the sum of (i) two percent of gross lease revenues attributable to equipment subject to full payout net leases which contain net lease provisions and (ii) five percent of the gross lease revenues attributable to equipment subject to operating leases. Our general partner, based on its experience in the equipment leasing industry and current dealings with others in the industry, will use its business judgment to determine if a given fee is competitive, reasonable and customary. The amount of the fee will depend upon the amount of equipment we manage, which in turn will depend upon the amount we raise in this offering. Reductions in market rates for similar services would also reduce the amount of this fee we will receive. Not determinable at this time Not determinable at this time INTEREST IN THE PARTNERSHIP The General Partner Partnership Interest. The general partner will have a present and continuing one percent carried interest of $1,000 in CIGF8 s items of income, gain, loss, deduction, credit, and tax preference. The value of this partnership interest will depend upon the performance of our business and the value of our assets. Not determinable at this time Not determinable at this time The General Partner Distributions. The general partner will receive a promotional interest of one percent of cash available for distribution until the limited partners have received distributions of cash available for distribution equal to their capital contributions plus a 9% cumulative return and thereafter, the general partner will receive 10% of cash available for distribution. The amounts available for distribution will depend upon the performance of our business and the amount of future lease revenues. Not determinable at this time Not determinable at this time We estimate that the total amount of expenses we will reimburse to our general partner and its affiliates for administrative services provided and/or incurred on our behalf during our first full year of operations, assuming we sell the maximum number of Units, will be approximately $400,000, as set forth in the table above. Summary of Administrative Expense Reimbursements of Recent Commonwealth-Sponsored Funds, as of December 31, 2011 (unaudited)(1) For the Year Ended December 31, Commonwealth Fund Name 2011 2010 2009 2008 2007 Income & Growth Private Fund III $ 1,034,000 $ 1,309,000 $ 1,401,000 $ 1,445,000 $ 1,214,000 Income & Growth Fund VI 1,354,000 1,601,000 1,321,000 1,517,000 438,000 Income & Growth Private Fund IV 1,172,000 1,488,000 891,000 107,000 - Opportunity Fund 518,000 280,000 - - - Income & Growth Fund VII 784,000 380,000 - - - (1) These expense reimbursements are related to our general partner s or Sponsor s legal, accounting, investor relations and operations personnel, as well as professional fees and other costs, that are charged to individual funds based upon the percentage of time such personnel dedicate to the individual funds listed. Excluded are salaries and related costs, travel expenses and other administrative costs incurred by individuals who we consider to be controlling persons of our Sponsor. Historically, we have considered only Kimberly A. Springsteen-Abbott to be a controlling person, but as noted above, Henry Abbott is transitioning into a controlling position. See Management on page 26. CONFLICTS OF INTEREST We will face conflicts of interest arising out of our relationships with the general partner and its affiliates. These relationships are depicted in the chart below: The same individuals that manage our general partner also manage CCC (see Management ) and therefore the conflicts discussed below apply to both the general partner and CCC, unless otherwise specified. References to the general partner and its affiliates include CCC. Nothing below shall relieve the general partner and its affiliates from their general fiduciary obligations to us as set forth under Responsibilities of the General Partner. Regardless of whether the general partner is faced with a conflict of interest, Article 9.4 of our partnership agreement requires that the general partner shall have fiduciary responsibility for the safekeeping and use of all our funds and assets, and must employ our funds or assets only for our exclusive benefit. Further, Article 17.2 of our partnership agreement requires that, regardless of any conflict, the general partner must act in good faith, with a course of conduct that is reasonable and in our best interest and such course of conduct must not constitute negligence or misconduct of the general partner or its affiliates. These conflicts include the following: Competition for General Partner s Time The general partner and its affiliates have sponsored other investor programs, which will be in potential competition with CIGF8. Although these programs have acquired all of the equipment which they will acquire with the proceeds of offerings to investors, each program may reinvest undistributed cash in additional equipment. The general partner and its affiliates may also form additional investor programs, which may be competitive with CIGF8. Certain senior executives of the general partner and its affiliates also serve as officers and directors of the other programs and are required to apportion their time among these programs. We will, therefore, be in competition with the other programs for the attention and management time of the general partner and its affiliates. The general partner and its affiliates will devote the time to our affairs as they, within their sole discretion, exercised in good faith, determine to be necessary for our benefit and that of the limited partners. The officers and directors of the general partner are not required to devote all or substantially all of their time to our affairs. See Management. Competition with Affiliates If CIGF8 and one or more affiliated programs are in a position to acquire the same equipment, conflicts may arise as to which of the programs acquire the available items of equipment. In addition, in order to promote diversification of equipment and lessees when two or more programs are in a position to acquire the same equipment, the general partner may acquire equipment in joint ventures with affiliated programs. If CIGF8 and one or more other programs are in a position to enter into leases with the same lessee or to sell equipment to the same purchaser conflicts may arise as to which program shall lease or sell its equipment. The general partner may not, however, invest our funds in other funds or partnerships in which the general partner or any of its affiliates has an interest. Acquisitions Commonwealth Capital Corp. and the general partner or other affiliates of the general partner may acquire equipment for us provided that (i) we have insufficient funds at the time the equipment is acquired, (ii) the acquisition is in our best interest and (iii) no benefit to the general partner or its affiliates arises from the acquisition except for compensation paid to CCC, the general partner or such other affiliate as disclosed in this prospectus. CCC, the general partner or their affiliates will not hold equipment for more than 60 days prior to transfer to us. If sufficient funds become available to us within such 60 day period, the equipment may be resold to us for a price not in excess of the sum of the cost of the equipment and any accountable expense relating to the selection and acquisition of equipment, or acquisition expenses payable to third parties which are incurred and interest on the purchase price from the date of purchase to the date of transfer to us. Except as described above, there will be no sales of equipment to or from any affiliate of CCC. We may also find it necessary to make advances to manufacturers or vendors with funds borrowed from the general partner for acquisitions. We will not borrow money from the general partner or any of its affiliates for a term in excess of twelve months. Interest will be paid on loans or advances (in the form of deposits with manufacturers or vendors of equipment or otherwise) from the general partner or its affiliates from their own funds at a rate equal to that which would be charged by third party financing institutions on comparable loans for the same purpose in the same geographic area, but in no event in excess of the general partner s or affiliate s own cost of funds. If the general partner or its affiliates borrow money and loan or advance it on a short-term basis to us or on our behalf, the general partner or such affiliates shall receive no greater interest rate and financing charges from us than that which unrelated lenders charge on comparable loans. See Investment Objectives and Policies on page 32. Receipt of Compensation by the General Partner and its Affiliates Partnership transactions involving the acquisition, lease and/or sale of equipment will result in compensation to the general partner and its affiliates. The general partner has absolute discretion with all decisions related to such transactions. Because the amount and timing of such fees depends, in part, on the debt structure of equipment acquisitions and the timing of such transactions, the general partner and its affiliates may be subject to conflicts of interest to the extent the acquisition, retention or release of equipment and the terms and conditions thereof may be less advantageous to us and more advantageous to the general partner. For example, (i) if we do not make timely acquisitions with our offering proceeds, we generate less lease revenue and distributions will be lower, but acquisition the acquisition fees payable at the time of acquisitions will be the same; (ii) we can time equipment sales based on market conditions to improve cash the sale price, which increases fees payable to the general partner; (iii) we have control over the timing of operational expenses, the payment of which decreases cash available for distribution; and (iv) if we do not efficiently manage and collect lease receivables, cash available for distribution could decrease. Lack of Independent Investigation by Underwriter Since Commonwealth Capital Securities Corp. is an affiliate of the general partner, this offering will not be subject to an independent investigation of the type normally performed by an underwriting firm in connection with the public offering of securities. However, the participating retail brokers that will sell the units to investors will have the opportunity to conduct their own due diligence investigation of Commonwealth Capital Securities Corp., CIGF8 and the Sponsor, and our general partner may retain one or more independent third parties to provide due diligence reports for participating brokers to review. Loans from the General Partner The general partner and its affiliates may make loans to us on a short-term basis, if necessary. The payment of interest by us on any such loans may cause a conflict of interest to the general partner, as such loans would be an additional source of income for the general partner. However, if the general partner or any of its affiliates does make such a loan, the general partner or affiliate may not charge interest at a rate greater than the interest rate charged by unrelated lenders on comparable loans. We will not pay interest on a loan at an annual rate greater than three percent over the prime rate published in The Wall Street Journal. All payments of principal and interest on any financing provided by the general partner or any of its affiliates shall be due and payable by us within 12 months after the date of the loan. See Compensation to the General Partner and Affiliates on page 40. Non-Arms-Length Agreements Any agreements and arrangements relating to compensation between us and the general partner or any of its affiliates will not be the result of arms-length negotiations and the performance thereof by the general partner and its affiliates will not be supervised or enforced at arms-length. However, the general partner believes that such compensation and fees are comparable to those which would be charged by an unaffiliated entity or entities for similar services. The general partner, based on its experience in the industry and current dealing with others in the industry, uses its business judgment to determine if a given fee or sales commission is competitive, reasonable and customary. See Compensation to the General Partner and Affiliates. Expenses for the management of the day-to-day affairs of CIGF8 and other public and private funds sponsored by Commonwealth Capital Corp. are also allocated according to the General Partner s non-arms-length determination of the appropriateness of the expense allocated to a particular fund. The General Partner has, however, developed a method for expense allocations among funds and affiliates that is based upon a careful and rigorous study that had been developed by an outside auditing form. The expense allocation methods are also reviewed by the auditors of each fund annually. Several accounting firms hired by Commonwealth Capital Corp. have analyzed the expense allocation methodology and agreed with its applicability, and the methodology is subject to change from time to time to reflect new funds, the completion of funds, changes in policy, and appropriateness of certain allocations due to operational phases of particular funds. While not arms-length, the allocation of management expenses among funds is rationally based and proportionate to the activity of the particular funds involved. Joint Ventures with Affiliates of the General Partner We may enter into joint ownership or joint venture agreements for the acquisition and leasing of equipment with other persons, including joint ventures controlled by the general partner. Should any such joint ventures be done, the general partner may face conflicts of interest as it may control and owe fiduciary duties to both CIGF8 and, through such affiliates, the affiliated co-venturer. We may invest in joint venture arrangements with other equipment leasing programs formed by the general partner or its affiliates if such action is in the best interest of all programs and if all the following conditions are met: all the programs have substantially similar investment objectives; there are no duplicate fees; the sponsor compensation is substantially similar in each program; CIGF8 has a right of first refusal to buy another program s interest in a joint venture if the other program wishes to sell equipment held in the joint venture; the investment of each program is on substantially the same terms and conditions; and the joint venture is formed either for the purpose of effecting appropriate diversification for the programs or for the purpose of relieving the general partner or its affiliates from a commitment entered into pursuant to Section 9.5.3 of the partnership agreement. See Risk Factors - CIGF8 will face conflicts of interest arising out of its relationships with the general partner and its affiliates, which could adversely affect our performance and your returns. For example, because of the differing financial positions of the co-venturing programs, it may be in the best interest of one program to sell the jointly-held equipment at a time when it is in the best interest of the other program to hold such equipment. There is a potential risk of impasse in joint venture decisions since neither program may control the venture and while one program may wish to purchase equipment from its co-joint venturer, it may not have sufficient resources to do so. Nevertheless, such joint ventures are restricted to circumstances where the co-venturer s investment objectives are similar to CIGF8 s, CIGF8 s investment is on substantially the same terms as the co-venturer and the compensation to be received by the general partner and its affiliates from each co-venturer is substantially the same. Off-Balance Sheet Arrangements The general partner and its affiliates do not, and CIGF8 will not engage in any off-balance sheet arrangements. Organization of General Partner We will do business with the general partner and its affiliates CCC, Commonwealth Capital Securities Corp., and Commonwealth of Delaware, Inc. The general partner is owned by Commonwealth of Delaware, Inc., which is owned by CCC. Persons investing in CIGF8 will not have an interest in these corporations solely as a result of their investment in CIGF8. Referral of Leases to Others From time to time our General Partner or its affiliates may present a lease opportunity to another lease funding source (companies from which we purchase leases) instead of purchasing it for us. The General Partner or its affiliates may request a referral fee from these lease funding sources for the referral of the lease. To alleviate any potential conflicts of interest posed by this practice, the General Partner or its affiliates will be restricted to this practice only in instances where the lease in question does not match one of the potential criteria for our leases: 1) Lease Term. The lease might be too long (or to short) in length to fit our needs. 2) Equipment. The General Partner decides that the equipment on the lease either (i) does not fit the needs of this fund, (ii) falls outside of the equipment guidelines stated in this Prospectus or (iii) is of a type that would cause us to be over-exposed to a particular sector at the time the lease opportunity presents itself, and would therefore adversely affect our diversification. 3) Lessee Credit Worthiness. The General Partner determines that the financial state of the Lessee poses too much of a risk for us. 4) Lease Structure. The financial implications of the lease are such that they do not match the Description of Leases as stated in this Prospectus, or the General Partner determines that the lease structure is not suitable for us. PRIOR OFFERINGS BY AFFILIATES Our general partner has previously sponsored seven public equipment leasing programs, Commonwealth Income & Growth Fund I (Fund I), Commonwealth Income & Growth Fund II (Fund II), Commonwealth Income & Growth Fund III (Fund III), Commonwealth Income & Growth Fund IV (Fund IV), Commonwealth Income & Growth Fund V (CIGF V), Commonwealth Income & Growth Fund VI (Fund VI) and Commonwealth Income & Growth Fund VII (Fund VII), whose securities are registered under the Securities Act of 1933. Each of these public funds was structured as a limited partnership, and they have varying structures and investment objectives from those of CIGF8. Our general partner has also previously sponsored seven private placements, Commonwealth Income & Growth Private Fund I, LLC (CIGPF I), Commonwealth Income & Growth Private Fund II, LLC (CIGPF II), Commonwealth Income & Growth Private Fund III, LLC (CIGPF III), Commonwealth Income & Growth Private Fund IV (CIGPF IV), Commonwealth Income & Growth Private Fund 5 (CIGPF5), Commonwealth Opportunity Fund (COF) and Commonwealth Opportunity Fund 2 (COF 2). The overall goal at the outset of each prior public fund and private placement was to return all of an investor s capital, plus a 10% cumulative return target, or, in the case of COF and COF 2, an 8% cumulative return target. This overall goal has not always been met in all prior funds. Our overall goal is to achieve a cumulative return target of 9%. The terms cumulative return target and target distributions refer to a distribution rate that, in the general partner s opinion, would have allowed each fund to reach its cumulative return goal. For example, Fund VI s cumulative return goal is to return each investor s initial capital contribution plus a 10% return on investment, on an annualized basis. The target rate discussed for Fund VI was therefore 10% per annum distributions. However, the fund s cumulative return target includes both a return of initial capital, plus a 10% annualized return on investment. Therefore, we are not able to determine if the fund will achieve its cumulative return target until the end of the fund s lifecycle, when total distributions and returns to investors can be calculated. When we state that a fund met its target distributions during a given period, we do not imply that the target distribution rate was an actual yield, or overall return on the investment for that period, but rather that distributions were being paid at a rate that would, if sustained, ultimately allow the fund to meet its cumulative return target. Actual distributions during the operational phase of the fund will be made at a lower rate. The actual rate paid in any particular calendar quarter will vary and depends upon the fund s performance and cash flow. Distributions during the liquidation phase will be based on cash flow and the amount of equipment sale proceeds at the time of liquidation, and may or may not be sufficient to achieve the overall cumulative return goal. Prior to a fund achieving its cumulative return target, ninety-nine percent of distributions are distributed to investors, and the remaining one percent are distributed to each fund s general partner (or manager). One or more lump-sum distributions, representing a return of capital, are intended to be made during each fund s winding-up period when equipment is sold. At such time, only if the investors have received a return of their full original investment plus the cumulative return target, remaining funds will be distributed 10% to the respective general partners and 90% to investors (or 85%/15% in the case of COF and COF 2). You will receive a Schedule K-1 each year that can be used to calculate the amounts of income and return of capital to you for income tax purposes, but we consider all distributions to be income to you for performance measurement purposes until the sale of assets phase of the Company. CIGF I, CIGF II and CIGF III have sold their assets and wound up operations (see detail below). Due to accounting principles generally accepted in the United States of America and the nature of the equipment financing business, each prior fund has shown a net loss on its financial statements in most years. This net loss is due to the immediate depreciation charge taken with respect to the equipment purchased. The amount of cash outlay plus depreciation exceeds lease revenues, and thus a net loss is reflected on the books of the funds. However, lease revenues are generally sufficient to make distributions to investors as anticipated, as well as pay fees to the general partner/manager and invest additional cash in new equipment. We expect CIGF8 to operate in a similar manner as the prior programs, and thus to show a net loss for accounting purposes, while generating sufficient cash flow to make distributions, pay fees and purchase additional equipment. We expect, based on the past experience of our general partner, to be able to acquire income-producing equipment within 90 days of receiving offering proceeds. Therefore, it is likely that the initial distributions to you will be partially income, as well as partially a return of capital, or even solely a return of capital. The funds for which CCSC served as the dealer manager from the inception of the fund are the public funds CIGF IV, CIGF V, CIGF VI and CIGF VII, and the private funds CIGPF I, CIGPF II, CIGPF III, CIGPF IV, CIGPF 5, COF and COF 2. The general partner believes that these funds may have achieved or may achieve somewhat better results than the earlier funds due in part to the fact that the dealer manager for each of these funds is our affiliate, CCSC, and that the operational and syndication control that Commonwealth was therefore able to exert over the structuring and offering of these funds reduced offering costs. Details regarding each of these funds (based on an investment of $1,000 at commencement of operations) are below: Commonwealth Income & Growth Fund IV Fund IV, a public limited partnership, began July 2, 2002 and terminated its offering of Units on September 20, 2003 with approximately $15,000,000 raised from 682 investors. One hundred percent of all interests offered in Fund IV were sold. Fund IV s net offering proceeds were fully utilized for the purchase of information technology equipment by December 31, 2003. All of the equipment acquired was new when acquired. Fund IV paid distributions at an annualized rate of 10% of initial capital contributions from inception in 2002 through the 2007. Fund IV paid distributions at an annualized rate of 7.4% of initial capital contributions during 2008, and 2.5% during 2009, 2010 and 2011. All of Fund IV s distributions to date represent a return of capital to investors. Due to the reduction of distributions, Fund IV is not currently on track to meet its cumulative return goals by its expected liquidation date. For the life of Fund IV through December 31, 2010, investors received total distributions in an amount equal to approximately 66% of their initial capital contributions, of which total, for federal income tax purposes, approximately 18% represented investment income, and approximately 82% represented a return of capital. For the life of Fund IV through December 31, 2011, investors received total distributions in an amount equal to approximately 67% of their initial capital contributions, of which total approximately 67% were funded by Cash Flow from Operating Activities. Fund IV is currently in its operational phase. Commonwealth Income & Growth Fund V Fund V, a public limited partnership, was organized in the Commonwealth of Pennsylvania on May 19, 2003. Fund V reached the minimum amount in escrow and commenced operations on March 14, 2005. The offering period ended in March 2006, with the full $25,000,000 offering amount subscribed. As of March 31, 2010, Fund V s net offering proceeds were fully utilized or committed to the purchase of equipment. Fund V has paid distributions at an annualized rate of 10% of initial capital contributions from inception through the first quarter of 2011. Distributions were then suspended beginning in the second quarter of 2011 due to costs associated with litigation involving a lessee. For the life of Fund V through December 31, 2010, investors received total distributions in an amount equal to approximately 53% of their initial capital contributions, of which total, for federal income tax purposes, approximately 12% represented investment income, and approximately 88% represented a return of capital. For the life of Fund V through December 31, 2011, investors received total distributions in an amount equal to approximately 54% of their initial capital contributions, of which total approximately 86% were funded by Cash Flow from Operating Activities. Fund V is currently in its operational phase. Commonwealth Income & Growth Fund VI Fund VI, a public limited partnership, was organized in the Commonwealth of Pennsylvania on January 6, 2006. Fund VI commenced its $50,000,000 offering of limited partnership Units on March 6, 2007, and reached the minimum amount in escrow on May 10, 2007. The offering period ended in March 2010, with $36,160,879 raised from investors. Approximately 100% of Fund VI s net offering proceeds had been committed to investment through December 31, 2011. Investors in Fund VI have received 100% of target distributions since inception. For the life of Fund VI through December 31, 2010, investors received total distributions in an amount equal to approximately 29% of their initial capital contributions, of which total, for federal income tax purposes, approximately 0% represented investment income, and approximately 100% represented a return of capital. For the life of Fund VI through December 31, 2011, investors received total distributions in an amount equal to approximately 33% of their initial capital contributions, of which total approximately 68% were funded by Cash Flow from Operating Activities. Fund VI is currently in its operational phase. Commonwealth Income & Growth Fund VII Fund VII, a public limited partnership, was organized in the Commonwealth of Pennsylvania on November 14, 2008. Fund VII commenced its $50,000,000 offering of limited partnership Units on November 13, 2009, and reached the minimum amount in escrow on March 31, 2010. As of November 13, 2011, Fund VII had raised approximately $31,424,574 from investors. Approximately 47% of Fund VII s net offering proceeds have been committed to investment in equipment through December 31, 2011. Fund VII made its first distribution to its limited partners on June 30, 2010 at the targeted annualized rate of 10%, and has continued to make quarterly distributions at that rate through the date of this Memorandum. For the life of Fund VII through December 31, 2010, investors received total distributions in an amount equal to approximately 3% of their initial capital contributions, of which total, for federal income tax purposes, approximately 0% represented investment income, and approximately 100% represented a return of capital. For the life of Fund VII through December 31, 2011, investors received total distributions in an amount equal to approximately 3% of their initial capital contributions, of which total approximately 88% were funded by Cash Flow from Operating Activities. Fund VII is currently in its offering phase. Commonwealth Income & Growth Private Fund I Private Fund I began its offering on January 13, 2004. As of September 14, 2005, Private Fund I had raised $20,000,000 from investors, representing the sale of 100% of the interests offered. As of March 31, 2008, Private Fund I s net offering proceeds were fully utilized for the purchase of information technology equipment, all of which was new when acquired. Investors in Private Fund I received 100% of target distributions from inception through March 31, 2010. The June 30, 2010 distribution was reduced to 2.5% due to a reduction in available cash flow. Distributions were then suspended beginning in the second quarter of 2011 due to costs associated with litigation involving a lessee. For the life of Private Fund I through December 31, 2010, investors received total distributions in an amount equal to approximately 57% of their initial capital contributions, of which total, for federal income tax purposes, approximately 17% represented investment income, and approximately 83% represented a return of capital. For the life of Private Fund I through December 31, 2011, investors received total distributions in an amount equal to approximately 58% of their initial capital contributions, of which total approximately 65% were funded by Cash Flow from Operating Activities. Private Fund I is currently in its operational phase. Commonwealth Income & Growth Private Fund II Private Fund II began its offering on September 26, 2005 and as of August 10, 2006 has raised $20,000,000 from investors, representing the sale of 100% of the interests offered. As of September 30, 2011, Private Fund II s net offering proceeds were fully committed to investment in information technology equipment, all of which was new when acquired. Investors in Private Fund II have received 100% of target distributions from inception through March 31, 2011. Distributions were then suspended beginning in the second quarter of 2011 due to costs associated with litigation involving a lessee. For the life of Private Fund II through December 31, 2010, investors received total distributions in an amount equal to approximately 48% of their initial capital contributions, of which total, for federal income tax purposes, approximately 2% represented investment income, and approximately 98% represented a return of capital. For the life of Private Fund II through December 31, 2011, investors received total distributions in an amount equal to approximately 50% of their initial capital contributions, of which total approximately 63% were funded by Cash Flow from Operating Activities. Private Fund II is currently in its operational phase. Commonwealth Income & Growth Private Fund III Private Fund III began its offering on August 15, 2006 and as of May 29, 2008 has raised $30,000,000 from investors, representing the sale of 100% of the interests offered. As of September 30, 2011, approximately 93% of Private Fund III s net offering proceeds were committed to investment in information technology equipment, all of which was new when acquired. Investors in Private Fund III have received 100% of target distributions since inception. For the life of Private Fund III through December 31, 2010, investors received total distributions in an amount equal to approximately 39% of their initial capital contributions, of which total, for federal income tax purposes, approximately 0% represented investment income, and approximately 100% represented a return of capital. For the life of Private Fund III through December 31, 2011, investors received total distributions in an amount equal to approximately 49% of their initial capital contributions, of which total approximately 63% were funded by Cash Flow from Operating Activities. Private Fund III is currently in its operational phase. Commonwealth Income & Growth Private Fund IV Private Fund IV began its $35,000,000 offering on June 10, 2008 and closed the offering on June 9, 2010, having raised $33,539,000 from investors, representing the sale of 95.3% of the interests offered. As of December 31, 2011, approximately 69% of Private Fund IV s net offering proceeds were committed to investment in information technology equipment, all of which was new when acquired. Investors in Private Fund IV have received 100% of target distributions since inception. For the life of Private Fund IV through December 31, 2010, investors received total distributions in an amount equal to approximately 20% of their initial capital contributions, of which total, for federal income tax purposes, approximately 0% represented investment income, and approximately 100% represented a return of capital. For the life of Private Fund IV through December 31, 2011, investors received total distributions in an amount equal to approximately 37% of their initial capital contributions, of which total approximately 31% were funded by Cash Flow from Operating Activities. Private Fund IV is currently in its operational phase. Commonwealth Income & Growth Private Fund 5 Private Fund 5 began its $35,000,000 offering on February 4, 2011 and remains in its offering phase. Private Fund 5 had raised the minimum amount required to break escrow on September 7, 2011, and as of June 1, 2012 has raised $8,014,027 and has acquired interests in 14 schedules of leased equipment, for an aggregate purchase price of $3,206,728, representing approximately 46% of net proceeds available for investment. As of December 31, 2011, investors received total distributions in an amount equal to approximately 1% of their initial capital contributions, of which total 100% were funded by Cash Flow from Operating Activities. Private Fund 5 is currently in its operational phase. Commonwealth Opportunity Fund Commonwealth Opportunity Fund is a shorter-term, smaller fund designed to take advantage of what its manager (our general partner) sees as unique opportunities in equipment leasing that may not fit into the investment parameters of the other public and private funds it manages. COF began its $20,000,000 offering on July 20, 2009 and as of June 24, 2011 had raised $20,000,000 from investors, fully subscribing its offering. As of December 31, 2011, approximately 35% of COF s net offering proceeds were committed to investment in information technology equipment, all of which was new when acquired. Investors in COF have received 100% of target distributions since inception. For the life of COF through December 31, 2011, investors received total distributions in an amount equal to approximately 11% of their initial capital contributions, of which total approximately 88% were funded by Cash Flow from Operating Activities. COF is currently in its operational phase. Commonwealth Opportunity Fund 2 COF 2 began its $35,000,000 offering on November 30, 2011 and remains in its offering phase. As of March 1, 2012, COF 2 had not yet reached its minimum offering amount, and therefore has not yet commenced operations, invested in any equipment or paid any distributions. The prior funds for which CCSC did not serve as the dealer manager for the full organization, offering and lifecycle of the fund are the public funds CIGF I, CIGF II and CIGF III. Details regarding each of these funds are below: Commonwealth Income & Growth Fund I Fund I, a public limited partnership, terminated its offering of Units on May 11, 1995 with $12,623,682raised from 713 investors. Eighty-four percent of the total interests offered in Fund I were sold. On December 8, 1995, Fund I s net offering proceeds were fully utilized for the purchase of information technology equipment. All of the equipment was new when acquired. Fund I paid distributions at an annualized rate of 10% of initial capital contributions from inception in 1994 through 1998. In 1999, 2000 and 2001 Fund I paid distributions at annualized rates of 9.4%, 6.2% and 2.4%, respectively. For the years 2002 through 2004 distributions were suspended. During 2005 and 2006 (year of liquidation), Fund I paid distributions at annualized rates of approximately 2.1% and 3.3% of initial capital contributions, respectively. Distributions were reduced due to litigation with one significant lessee that began in 1999. The general partner believed that at the end of its lease term, this lessee returned equipment in an unsatisfactory condition and with some inconsistent serial numbers, and as a result, Fund I filed suit against the lessee. Therefore, Fund I was unable to resell such equipment and reinvest the proceeds in new equipment. The general partner deemed it advisable to reduce distributions during 1999, 2000, and 2001, and suspend distributions in 2002 through 2004, due to the cost of the continuing litigation. This litigation severely affected equity loss for the fund. On August 3, 2005, Commonwealth lost its legal proceedings in the United States Court of Appeals for the Third Circuit, when the court upheld the lower court s grant of a summary judgment. In light of legal expenses incurred by Fund I, the general partner deemed a further appeal to be too costly, and unlikely to have a positive outcome. Due to the outcome of the litigation, the general partner felt it was in the best interest of the investors in Fund I to start the liquidation process as soon as possible, after certain expenses were satisfied. On December 31, 2006 its operations were concluded and in January 2007, the fund made its final distribution of $15,000 to close out operations. For the life of Fund I, investors received total distributions in an amount equal to approximately 67% of their initial capital contributions, of which total, for federal income tax purposes, approximately 18% represented investment income, and approximately 82% represented a return of capital. Of the total distributions paid, approximately 77% were funded by Cash Flow from Operating Activities. Commonwealth Income & Growth Fund II Fund II, a public limited partnership, began its offering on February 7, 1995 and terminated its offering of Units on May 12, 1997 with $9,235,185 raised from 689 investors. Sixty-two percent of all interests offered in Fund II were sold. As of June 30, 1997, Fund II s net offering proceeds were fully utilized for the purchase of information technology equipment. All of the equipment was new when acquired. Fund II paid distributions at an annualized rate of 10% of initial capital contributions from inception in 1996 through 1998. Fund II paid distributions an annualized rate of 9.5% of initial capital contributions in 1999, 9.9% in 2000, 7.4% in 2001, 5.6% in 2002, 6.2% in 2003, 4.3% in 2004, 1.7% in 2005 and 0.26% in 2006 (year of liquidation). The level of distributions was reduced due to significant litigation issues with two lessees that adversely affected Fund II s reinvestment ability. The litigation was resolved in 2003 in Fund II s favor. On December 31, 2006, its operations were concluded and in January 2007, the fund made its final distribution of $10,000 to close out operations. For the life of Fund II, investors received total distributions in an amount equal to approximately 78% of their initial capital contributions, of which total, for federal income tax purposes, approximately 24% represented investment income, and approximately 76% represented a return of capital. Of the total distributions paid, approximately 81% were funded by Cash Flow from Operating Activities. Commonwealth Income & Growth Fund III Fund III, a public limited partnership, began its offering on January 27, 1998 and terminated its offering of Units on July 25, 2000 with $3,085,801 raised from 283 investors. During the course of Fund III s offering, CCSC became the Dealer Manager for the offering, thereby replacing the firm initially used by Fund III as Dealer Manager at the commencement of the offering. Fund III thus became the first fund for which CCSC served as Dealer Manager. Twenty-one percent of all interests offered in Fund III were sold. As of July 30, 2000, Fund III s net offering proceeds were fully committed to investment in information technology equipment. All of the equipment was new when acquired. Fund III paid distributions at an annualized rate of 10% of initial capital contributions from inception in 1997 through 2004. Fund III paid distributions at an annualized rate of 4.6% of initial capital contributions during 2005, at a rate of 2.0% from 2006 through June 2011, at an annualized rate of approximately 11% in September 2011, and made its final liquidating distribution as of December 31, 2011 at an annualized rate of approximately 9%. Due to the reduction of distributions, Fund III did not meet its cumulative return goals by its expected liquidation date. For the life of Fund III, investors received total distributions in an amount equal to approximately 87% of their initial capital contributions, of which total, for federal income tax purposes, approximately 13% represented investment income, and approximately 87% represented a return of capital as of the tax year ended December 31, 2010. Of the total distributions paid, approximately 79% were funded by Cash Flow from Operating Activities. Please refer to Appendix 4 of the prior performance tables for more specific details on operating results for certain of these prior programs. The information presented in this section of the prospectus concerning our prior programs, as well as the information and data included in the attached Appendices for our prior programs, represents our sponsor s experience in the prior programs and is not audited. IF YOU PURCHASE UNITS IN CIGF8, YOU WILL NOT HAVE ANY OWNERSHIP INTEREST IN ANY OTHER PROGRAM. AS A RESULT OF YOUR PURCHASE, YOU SHOULD NOT ASSUME THAT YOU WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN THE SPONSOR S PRIOR PROGRAMS. The following is a summary of equipment acquired, from their inception through March 31, 2012, by prior public limited partnerships and private limited liability companies which were sponsored by Commonwealth Capital Corp., as well as certain current portfolio data: Summary of Equipment Acquired Through March 31, 2012 Historical Currently Billing Rent Fund Number of Leases Acquired1 Cost of Equipment Acquired Avg. Lease Size No. of Leases Avg. Lease Term No. of States PV as % of Purch. Price CIGF I 85 $ 27,600,868.35 $ 324,716.10 - - - - CIGF II 131 $ 20,820,879.94 $ 158,938.01 - - - - CIGF III 88 $ 5,047,598.30 $ 57,359.07 10 23 6 98.17 % CIGF IV 375 $ 17,773,405.16 $ 47,395.75 114 28 39 95.46 % CIGF V 231 $ 28,906,332.42 $ 125,135.64 106 28 37 92.89 % CIGF VI 351 $ 31,672,510.50 $ 90,235.07 300 31 48 96.38 % CIGF VII 90 $ 12,346,952.04 $ 137,188.36 89 34 44 92.50 % CIGPF I 198 $ 20,980,704.85 $ 105,963.16 79 32 34 92.47 % CIGPF II 207 $ 17,949,574.62 $ 86,712.92 87 30 40 92.64 % CIGPF III 331 $ 25,302,226.20 $ 76,441.77 228 32 50 94.14 % CIGPF IV 262 $ 19,244,112.62 $ 73,450.81 211 32 50 93.11 % CIGPF 5 9 $ 1,424,510.00 $ 158,278.88 9 36 19 86.63 % COF 112 $ 6,744,967.93 $ 60,222.93 102 27 49 93.69 % Total 2,470 $ 235,814,642.70 $ 95,471.52 1,335 31 50 94.13 % (1) A Lease for purposes of this table may be a complete lease, or may be a particular schedule of equipment representing a portion of a larger lease. We will provide you, upon request and without fee, the most recent Form 10-K annual report filed with the SEC by any of the prior public programs listed above and, for a reasonable fee to cover our expenses, any exhibits to each such Form 10-K that you may request. When entering into a lease with a lessee, we forecast a residual value for the equipment being financed. Whether through rent received past the original term or through equipment sales, both types of activity represent a realization of residual value. For the past four years through December 31, 2011, our realization rate has been 112% of our forecast. This means that overall, the Commonwealth funds have had a residual realization rate that has outperformed our forecast by 12%. The table below shows the average historical amount of residual value realized on equipment sold at the end of lease term, compared to the amount of residual value we forecasted at the beginning of the lease term. Data is through December 31, 2011. The table below shows, as of March 31, 2012, how a portfolio s average return of equity is positively impacted by our ability to achieve a forecasted or better-than-forecasted residual value of equipment at the end of the lease term. Historical Residual Realization vs. Return of Equity Period Residual Forecast Forecast Achieved ROE 2008 $ 1,328,324.25 $ 1,553,226.15 117 % 133 % 2009 $ 1,103,962.78 $ 1,405,047.49 127 % 148 % 2010 $ 3,244,818.22 $ 4,047,619.89 125 % 112 % 2011 $ 3,987,482.44 $ 3,647,332.02 91 % 120 % 1Q12 $ 982,984.21 $ 1,028,197.92 105 % 139 % Historical $ 10,647,571.90 $ 11,681,423.47 110 % 122 % On a gross basis, present value vs. equity shows the relation of the present value of the lessee s lease payments to Commonwealth s the total cost of the assets acquired, less the present value of the lease payments (the equity ). Therefore, on average as of December 31, 2011, Commonwealth needs to realize approximately 6% of the purchase price of equipment at the end of a lease term, through sale, re-lease, MTM extensions, etc., in order for Commonwealth to recover its entire investment in the lease. Back-end recovery in excess of this percentage represents gain on the transaction. TRANSFERABILITY OF UNITS General Limitations Limited partners must conform to the restrictions on transferability of their Units in accordance with the provisions contained in the Limited Partnership Agreement. Limited partners must also receive approval of the general partner, in its sole discretion, of such transfer. In addition, pursuant to the provisions of the Securities Act and the Limited Partnership Agreement, the Units offered hereby may not be transferred or sold unless they are registered under the Securities Act and applicable state securities laws, or an exemption from such registration is available and a favorable opinion of counsel to CIGF8 to that effect is obtained. Our Limited Partnership Agreement provides that the general partner shall have reasonable cause to withhold such consent if the above conditions are not satisfied, and if the transfer is not an exempt transfer as discussed below. The general partner intends to monitor transfers of Units in an effort to ensure that any permitted transfers will be within certain safe harbors promulgated by the IRS to furnish guidance regarding entities considered to be publicly traded partnerships. These safe harbors limit the number of transfers that can occur in any one year. The general partner intends to cause CIGF8 to comply with the safe harbor that permits nonexempt transfers and redemptions of Units of up to two percent of the total outstanding interests in CIGF8 s capital or profits in any one year. In deciding whether a proposed transfer can be made, the general partner will consider whether the transfer will have an adverse effect on CIGF8 s federal tax status as an entity taxed as a partnership. The general partner may charge a transaction fee, not to exceed $100, to cover the administrative cost of transfers of Units, in its discretion. Redemption Provision Upon the conclusion of the offering we may, at the sole discretion of the general partner, repurchase a number of the outstanding units. On a quarterly basis, the general partner may establish an amount of funds available for redemption, so long as not more than two percent of the outstanding units are redeemed per year, subject to the general partner s good faith determination that such redemptions will not: cause us to be taxed as a corporation under Section 7704 of the Code; or impair our capital or operations. We may redeem units in excess of the two percent limitation if, in the good faith judgment of the general partner, the conditions above would remain satisfied. The redemption price for units will be determined as of the date of redemption. The redemption price for outstanding Units will be equal to the lesser of: (i) the balance of your Capital Account in respect of such Units determined as of the end of the prior year under the Limited Partnership Agreement, and (ii) the amount you paid for the Units in this offering, net of the offering fees and expenses attributable to the Units, less the amount of cash distributions you have received relating to such Units. During the liquidation period, no redemption requests will be granted. While the partnership is in liquidation, all limited partners will receive the proceeds of the sale of our assets on the same terms. Any redemption requests outstanding at the time liquidation begins will be considered denied. All requests for redemption must be made in writing to the general partner and must be on file as of the record date for such redemption. Upon receipt of such notification, the general partner will provide detailed forms and instructions to complete the request. The general partner will maintain a master list of requests for redemption with priority being given to units owned by estates, followed by IRAs and qualified plans, which are trusts established pursuant to the terms of a pension, profit sharing or stock bonus plan, including Keogh Plans, meeting the requirements of Section 401 of the Code, or in other exceptional circumstances. All other requests will be considered in the order received. Where redemption requests exceed funds available for redemption, there will be no pro-rata allocation of funds available among requesting limited partners. Redemption requests made by or on behalf of limited partners who are not affiliated with the general partner or its affiliates will be given priority over those made by limited partners who are affiliated with the general partner or its affiliates. All redemption requests will remain in effect until and unless canceled, in writing, by the requesting limited partner(s). The general partner has complete discretion in deciding whether to establish an amount for redemption, based upon the amount of operating revenue available to fund redemptions. Neither the general partner nor the Sponsor are obligated to redeem or repurchase any Units. Therefore, there can be no assurance that any units for which redemption is requested will ever be redeemed. We will accept redemption requests following the termination of the offering. There will be no limitations on the period of time that a redemption request may be pending prior to its being granted. Limited partners will not be required to hold their interest in CIGF8 for any specified period prior to their making a redemption request. Substituted limited partners may also make redemption requests, and their units will retain their transferor s adjusted capital account balance. The making of a request for redemption is completely voluntary on the part of the investor, and the general partner is not obligated to grant any such request. Limited partners will receive notification concerning the general partner s decision on their request. The general partner may withhold consent to the transfer of units for which redemption has been requested during the pendency of the request. The redemption price is based on a percentage of the selling limited partner s adjusted capital contributions and is, therefore, not calculated with reference to the fair market value of a unit. For tax consequences relating to the redemption of units, see United States Federal Income Tax Considerations -- Disposition of Units. Exempt Transfers The following seven categories of transfers are exempt transfers for purposes of calculating the volume limitations imposed by the IRS and will generally be permitted by the general partner: transfers in which the basis of the unit in the hands of the transferee is determined, in whole or in part, by reference to its basis in the hands of the transferor (for example, units acquired by corporations in certain reorganizations, contributions to capital, gifts of units, units contributed to another partnership, and non-liquidating as well as liquidating distributions by a parent partnership to its partners of interests in a sub-partnership); transfers at death; transfers between members of a family (which include brothers and sisters, spouses, ancestors, and lineal descendants); transfers resulting from the issuance of units by CIGF8 in exchange for cash, property, or services; transfers resulting from distributions from a retirement plan qualified under Section 401(a) of the Code or an individual retirement plan; any transfer by a limited partner in one or more transactions during any 30-day period of units representing in total more than two percent (2%) of the total outstanding interests in capital or profits of CIGF8; and transfers by one or more partners representing in the aggregate fifty percent (50%) or more of the total interests in partnership capital or profits in one transaction or a series of related transactions. Additional Restrictions on Transfer Limited partners who wish to transfer their units to a new beneficial owner will be required to pay our transfer agent up to $100 for each transfer to cover its cost of processing the transfer application and will take such other actions and execute such other documents as may be reasonably requested by the general partner. In addition, the following restrictions will apply to each transfer: (i) our general partner may prohibit any acquisition or transfer if it would cause 25% or more of the outstanding units to be owned by Benefit Plan Investors; and (ii) no transfer will be permitted unless the transferee obtains such governmental approvals as may reasonably be required by the general partner, including without limitation, the written consents of the Pennsylvania Securities Commissioner and of any other state securities agency or commission having jurisdiction over the transfer. Further, a limited partner may transfer or assign part or all of his units if, and only if: (a) the assignor and the assignee execute, acknowledge and deliver to the general partner such instruments of transfer and assignment and other documents as may be required by the general partner; (b) either (i) at least 125 units are assigned to each assignee and at least 125 units are retained by the assignor or (ii) the Units being assigned are all the units of the assignor (except that the general partner, in its discretion, may waive this requirement for transfers by gift, inheritance or family dissolution or transfers to affiliates of the assignor). Substituted Limited Partners (including persons holding Units by assignment from entities holding Units for the purpose of assigning all or a portion of such Units to limited partners (an Assignor ), shall be granted the same rights as if they are Limited Partners, except as prohibited by applicable law, including, but not limited to, all rights granted by the North American Securities Administrators Association s (NASAA) Statement of Policy regarding Equipment Programs and by this Agreement. An Assignor s management shall have the fiduciary responsibility for the safekeeping and use of all funds and assets of the assignees, whether or not in the Assignor management s possession or control, and the management of an Assignor shall not employ, or permit another to employ such funds or assets in any manner except for the exclusive benefit of the assignees. Assignees may not contract away the fiduciary duty owed to them by an Assignor s management under the common law of agency. DISTRIBUTIONS AND ALLOCATIONS Between the General Partner and the Limited Partners Cash distributions, if any, will be made quarterly. We expect to make the first distribution at the end of the first full quarter after the first escrow closing date, which will take place when the minimum offering amount of Units has been purchased by investors. Thereafter, any distributions will be made on a quarterly basis as of December 31, March 31, June 30, and September 30 of each year. Investors should note that we pay quarterly distributions in arrears for the first quarter after each investor is admitted. During the offering period, therefore, newly admitted limited partners will receive their first distribution at the end of the first full calendar quarter following the date on which they are admitted to CIGF8. If you invest mid-quarter, you will not receive a distribution until the end of the first full quarter after you invest. This means that if you invest early in a quarter, you may not receive a distribution for up to six months (the remainder of the quarter in which you invest, plus the next full quarter). The amount you receive, however, will be the amount payable from your admission date through the date of payment, so you will receive all distributions to which you are entitled. Cash distributions will be made after the payment of expenses of CIGF8, including the payment of fees to the general partner. CIGF8 will make distributions of its cash available for distribution that the general partner, in its sole and absolute discretion, determines is available for distribution. Therefore, no actual amount or percentage rate is ensured or guaranteed, and the general partner may change the distribution rate, or suspend distributions altogether, in its discretion based upon the cash flow of CIGF8 or other factors impacting CIGF8 s cash needs. Distribution rates are expressed as a percentage of capital contributions of investors, and do not imply a yield on investment at those rates. We expect to begin paying initial distributions at a rate of 6.0% of capital contributions, and plan to be able to increase this rate in later years of CIGF8 s operations, if cash flow permits, with our overall goal being to pay an average of 9% over the life of CIGF8. We will not know until CIGF8 liquidates whether we have been able to achieve this goal. Distributions of cash available for distributions will be made 99% to the limited partners and one percent to the general partner until each limited partner has received an amount equal to his capital contributions plus the targeted cumulative return. The cumulative return is an amount equal to a return at a rate of 9% per annum, compounded daily, on the adjusted capital contribution (defined in the next paragraph), for all outstanding Units held by a particular limited partner, which amount begins accruing when the limited partner is admitted as a limited partner in CIGF8. Once the adjusted capital contributions of all outstanding Units have been reduced to zero, cash distributions will be made 90% to the limited partners and 10% to the general partner. Investors should note that the 9% cumulative return target is an overall goal for the life of the fund, and actual quarterly distributions in any particular quarter, and actual distributions over the life of the fund, may be at a lower or higher rate. We can not and do not guaranty that investors will receive a 9% cumulative return, or any particular level of return. Distributions made in connection with the dissolution of CIGF8 or a limited partner s Units will be made in accordance with the limited partner s positive capital account balance as determined under the Limited Partnership Agreement and Treasury Regulations. The cumulative return is calculated on the limited partners adjusted capital contributions for their Units. According to CIGF8 s Limited Partnership Agreement, the adjusted capital contributions will initially be equal to the amount paid by the limited partners for their Units. For example Adjusted Capital Contribution is initially equal to your capital contribution, and is reduced to the extent that any distribution exceeds the 9% rate. The reduction consists of the number of dollars in distributions in excess of that required to satisfy the cumulative return requirement for year one, and therefore constitutes a return of capital to the extent that capital has not previously been fully returned. See United States Federal Income Tax Considerations Cash Distributions. Cash distributions that represent a return of capital also decrease an investor s Adjusted Capital Contribution. For example (without taking into account the effect of compounding), on a $100 investment, a $12 distribution in year one would result in a $3 reduction in adjusted capital contribution, leaving a $97 base on which the 9% return would be calculated in year two. The $3 reduction consists of $3 in distributions in excess of that required to satisfy the cumulative return requirement for year one. However, the general partner has historically computed the cumulative return threshold based only upon the initial capital contribution amount, and not on a declining capital account balance. This causes the amount distributed to you to be higher than is required by the terms of our Limited Partnership Agreement for purposes of meeting the threshold. The general partner has historically done so in order to keep distributions at a steady dollar amount, and therefore to return capital to investors at a faster pace than required. Also, calculating the cumulative return on the initial capital contribution amount will delay the increase in sharing of cash available for distribution to the general partner. The general partner expects to continue calculating its distribution rate based upon initial capital contributions in order to determine the threshold for increased sharing of distributions, although reserves the right to calculate distributions on a declining capital account balance in the future. If the proceeds resulting from the sale of any equipment are reinvested in equipment, sufficient cash will be distributed to the partners to pay the additional federal income tax resulting from such sale for a partner in a 35% federal income tax bracket or, if different, the maximum federal income tax rate in effect for individuals for that taxable year. The general partner will be allocated net profits equal to its cash distributions (but not less than one percent of net profits) and the balance will be allocated to the limited partners. Net profits arising from transactions in connection with the termination or liquidation of CIGF8 will be allocated in the following order: first, to each partner in an amount equal to the negative amount, if any, of his capital account; second, an amount equal to the excess of the proceeds from the liquidation or termination which would be distributed to the partners as operating distributions over the total capital accounts of all the partners (after adjusting those capital accounts to give effect to allocations of operating profits and as if all other cash available for distribution has been distributed), to the partners in proportion to their respective shares of such excess, and third, with respect to any remaining net profits, to the partners in the same proportions as if the distributions were operating distributions. Net losses, if any, will generally be allocated 99% to the limited partners and one percent to the general partner, except to the extent that any such losses are required to be allocated in a different manner under applicable federal income tax law. Net profits and net losses will be computed without taking into account, in each taxable year of CIGF8, any items of income, gain, loss or deduction required to be specially allocated pursuant to Section 704(b) or Section 704(c) of the Code and the Treasury Regulations promulgated thereunder. No limited partner will be required to contribute cash to the capital of CIGF8 in order to restore a closing capital account deficit, and the general partner has only a limited deficit restoration obligation under the partnership agreement. Income and Return of Capital As equipment values decrease over the term of our existence, a portion of each distribution will be considered a return of capital, rather than income. Therefore, the dollar amount of each distribution should not be considered as being all income to you. Because your capital in the units is reduced for tax purposes over the life of your investment, you will not receive a lump sum distribution upon liquidation that equals the purchase price you paid for units, as you might expect if you had purchased a bond. Also, payments made upon liquidation will be taxable to the extent they are not a return of capital. As you receive distributions throughout the life of your investment, you will not know at the time of the distribution what portion of the distribution represents a return of capital and what portion represents income. The Schedule K-1 statement you receive from us each year will specify your capital account balance as of the end of the year, and the amount of total distributions you received during the year. Please consult your tax advisor with respect to your individual tax situation. We can not predict at what point during our lifecycle, if ever, that distributions will be fully funded from operations, rather than a partial return of capital, and therefore you will likely be unable to determine your ultimate return on investment until we are fully liquidated and the program has terminated. Distribution Reinvestment You may elect to have your distributions in CIGF8 reinvested in additional units during the offering period, rather than receiving your distributions in cash. To make this election, mark the appropriate section of the attached subscription agreement, which reads You wish Distributions of the Partnership to be reinvested in additional Units during the Offering Period. When the offering period is complete, you will receive all subsequent distributions in cash. Also, because you will not receive your first distribution until the end of the first full calendar quarter after you are admitted to the partnership, investors who subscribe during the last two calendar quarters of the offering period will not be eligible to reinvest their distributions. This is because distribution reinvestment is only available during the offering period, and the first distribution to these investors will not be made until after the offering period has ended. All units purchased for you through distribution reinvestment will be newly issued units purchased directly from CIGF8. The number of units to be purchased for you through a reinvestment purchase will depend upon the amount of the distributions being reinvested. The purchase price of all units purchased through reinvestment will be $20.00 per unit. All distributions paid on units acquired through reinvestment will also be reinvested in additional units. The distributions paid on such units will continue to be reinvested unless you elect to have them paid in cash by changing your investment option. All units that you purchase through the reinvestment of distributions are recorded in your name on our books. We reserve the right to prohibit qualified plan investors from reinvesting their distributions if such participation would cause our underlying assets to constitute plan assets. See ERISA Considerations Plan Assets. The reinvestment of distributions does not relieve you of any income tax which may be payable on your share of CIGF8 s taxable income. Please see United States Federal Income Tax Considerations -- Distribution Reinvestment for further information about the taxability of reinvested distributions. Allocation of Profits and Losses and Distributions of Cash Among the Limited Partners Except during the offering period, and with respect to net profits and losses, during periods when units are redeemed, cash available for distribution, net profits and net losses allocable to the limited partners will be distributed to them solely with reference to the number of units owned by each as of the record date for each such distribution. During the offering period, cash available for distribution will be distributed to the limited partners with reference to both (i) the number of units owned by each as of each record date and (ii) the number of days since the previous record date (or, in the case of the first record date, the commencement of the offering period) that the limited partner has owned the units. During the offering period and in the event units are redeemed other than on December 31 of a taxable year, net profits and net losses shall be allocated among the limited partners in proportion to the number of units each holds from time to time during the year in accordance with Section 706 of the Code, using such permissible conventions as the general partner may select. Limited partners will start sharing in net profits, net losses, and cash distributions on the day following the date the capital contributions are received. If some limited partners are admitted to CIGF8 after others, those limited partners admitted later may receive a smaller portion of each item of CIGF8 s net profits and net losses than the limited partners who were admitted earlier. Nevertheless, those limited partners still will be obligated to make the same capital contributions to CIGF8 for their interests as the limited partners who were admitted previously. In addition, where a limited partner transfers units during a taxable year, the limited partner may be allocated net profits for a period for which such limited partner will not receive a corresponding cash distribution. Net profits and net loss shall be computed for each taxable year or shorter period with the following adjustments: any income of CIGF8 that is exempt from federal income tax and not otherwise taken into account in computing net profits and net loss shall be added to such net income or shall reduce such net loss; any expenditure of CIGF8 described in Section 1.704-1(b)(2)(iv)(I) of the Treasury Regulations and not otherwise taken into account in computing net profits and net loss shall be subtracted from such net profit or increase such net loss; items of income, gain, loss and deduction specially allocated pursuant to Section 7.3 of the partnership agreement shall not be included in the computation of net profits and net loss; and if equipment is reflected on the books of CIGF8 at a book value that differs from the adjusted tax basis of the equipment in accordance with Section 1.704-1(b)(2)(iv)(d) or (f) of the Treasury Regulations, depreciation, amortization and gain or loss with respect to such equipment shall be determined by reference to such book value in a manner consistent with Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations. The terms net profits or net losses shall include CIGF8 s distributive share of the profit or loss of any partnership or joint venture in which it is a partner or joint venturer. UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the material federal income tax considerations concerning an investment in CIGF8. (This summary does not address any applicable state and local tax considerations.) In this section, when we refer to the Code we mean the Internal Revenue Code of 1986, as amended and in effect at the time. This summary is not exhaustive of all possible tax considerations and is not tax advice. Moreover, this summary does not deal with all aspects that might be relevant to you, as a particular prospective limited partner in light of your personal circumstances; nor does it deal with particular types of limited partners that are subject to special treatment under the Code, such as insurance companies, financial institutions and broker-dealers. The Code provisions governing the federal income tax treatment of limited partnerships are highly technical and complex. We urge prospective investors to consult their own tax advisors about the tax consequences of an investment in CIGF8 in their own particular circumstances. The following discussion is based on current law, and we assume no duty to inform you regarding changes in the tax law. THE WRITTEN ADVICE IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN THIS PROSPECTUS WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTION OR MATTER ADDRESSED BY THE WRITTEN ADVICE. THE TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. Subject to the qualifications and assumptions set forth herein, and certain representations of the general partner, our counsel, Greenberg Traurig, LLP, has opined on certain tax matters concerning an investment in CIGF8. An opinion of counsel represents only such counsel s best legal judgment, and has no binding effect or official status of any kind, so that no assurance can be given that the opinions of counsel would be sustained by a court, if contested, or that legislative or administrative changes or court decisions may not be forthcoming which would require modifications of the statements and conclusions expressed herein. Counsel s opinion is not binding on the IRS, and neither we nor counsel have requested a ruling from the IRS on any of the tax matters discussed in this prospectus. Except for the opinions specifically mentioned herein, counsel has not opined as to the probable outcome on the merits of any issue discussed below. Neither the general partner, CIGF8, nor counsel can guarantee that any federal income tax advantages described in this summary will be available. Final disallowance of all or any portion of such tax advantages could adversely affect an investment in CIGF8. Counsel will not prepare or review our income tax information returns, which will be prepared by management and our independent accountants. We will make a number of decisions on such tax matters as the expensing or capitalizing of particular items, the property characterization of each lease transcation as a true lease or financing arrangement, the proper period over which capital costs may be depreciated or amortized and many other similar matters. Such matters are handled by us often with the advice of independent accountants and are usually not reviewed with counsel. The following discussion is not intended as a substitute for individualized tax planning by prospective investors. The income tax consequences of an investment in a partnership such as CIGF8 are often uncertain and complex and will not be the same for all investors. Details of significance to a particular taxpayer may not be present in this discussion, as it is impractical to set forth in a discussion of acceptable length all aspects of federal income tax law that may be relevant to an investment in CIGF8. The discussion below considers the federal income tax considerations associated with an investment in CIGF8 by individuals who are citizens of the United States or resident aliens and is not intended to deal with matters which may be relevant to other investors, such as corporations, partnerships or trusts. The discussion, however, does describe some, but not all, of the material federal income tax considerations associated with an investment in CIGF8 by non-resident alien and foreign corporations and Keogh plans and pension and profit-sharing plans qualifying under Section 401(a) of the Code (collectively, qualified plans) and individual retirement accounts described in Section 408 of the Code. A corporate investor should be aware that the tax consequences of its investment in CIGF8 will differ in several material respects from those applicable to individuals. Classification as a Partnership Counsel has opined that so long as the sum of the percentage interests in CIGF8 capital or profits transferred during a given taxable year of CIGF8 does not exceed 2% of the total interests in CIGF8's capital or profits, CIGF8 will be classified as a partnership under existing tax law, and not as an association taxable as a corporation, for federal income tax purposes for such taxable year. This opinion is based upon certain representations by the general partner, including the following representations: 1. CIGF8 will be operated in accordance with the provisions of the Pennsylvania Revised Uniform Limited Partnership Act and with CIGF8 s partnership agreement. 2. CIGF8 s partnership agreement will remain in substantially its current form, and will not be further amended in any material respect. 3. The activities and operations of CIGF8 will be conducted in the manner described in this Prospectus. 4. The general partner will prohibit any transfer of Units which, in the Corporation s good faith judgment, will result in more than 2% of capital or profits in CIGF8 being sold or otherwise disposed of in any one taxable year in a manner which would violate the 2% safe harbor set forth in Treasury Regulation Section 1.7704-1(j). However, CIGF8 may redeem, or allow the transfer of, additional units, resulting in more than 2% of capital or profits in CIGF8 being sold or otherwise disposed of in a single taxable year, in certain circumstances. Sections 301.7701-1 through 301.7701-3 of the Treasury Regulations (known as the Check-the-Box rules) provide that certain unincorporated entities having more than one owner may generally elect to be treated as a partnership or a corporation for federal income tax purposes. In the absence of a specific election, any such entities, that are formed under United States law (i.e., domestic entities), through default are treated as partnerships for federal income tax purposes. CIGF8 does not intend to elect to be treated as a corporation. Consequently, subject to the discussion below, we will qualify as a partnership for federal income tax purposes. Counsel s opinion takes into account Section 7704 of the Code, which provides, with certain exceptions that are not relevant to this discussion, that publicly traded partnerships are taxable as corporations. Section 7704(b) of the Code defines the term publicly traded partnership to mean any partnership if: (i) interests in the partnership are traded on an established securities market, or (ii) interests in the partnership are readily tradable on a secondary market (or the substantial equivalent thereof). Section 1.7704-1 of the Treasury Regulations and the legislative history of Section 7704 of the Code provides that a secondary market for interests in a partnership or the substantial equivalent thereof exists if investors are readily able to buy, sell or exchange their partnership interests in a manner that is comparable, economically, to trading on established securities markets. A secondary market is generally indicated by the existence of a person standing ready to make a market in the interests. The substantial equivalent of a secondary market will be deemed to exist if (i) interests in the partnership are regularly quoted by any person, such as a broker or dealer, making a market in the interests; (ii) any person regularly makes available to the public (including customers and subscribers) bid or offer quotes with respect to interests in the partnership and stands ready to effect buy or sell transactions at the quoted prices for itself or on behalf of others; (iii) if the holders of interests in the partnership have a readily available, regular, and ongoing opportunity to sell or exchange their interests through a public means of obtaining or providing information of offers to buy, sell, or exchange interests, or (iv) prospective buyers and sellers have the opportunity to buy, sell, or exchange interests in the partnership in a time frame that a market-maker would provide and prospective buyers have similar opportunities to acquire such interests. The legislative history of Section 7704 of the Code also indicates that a regular plan of redemptions or repurchases by a partnership may constitute public trading where holders of interests have readily available, regular, and ongoing opportunities to dispose of their interests. Our partnership agreement provides that no transfer or assignment of any unit will be recognized or otherwise given effect (including recognizing any right of the transferee, such as the right of the transferee to receive directly or indirectly partnership distributions or to acquire an interest in the capital or profits of the partnership) for any purpose to the extent it is determined by the general partner to be effectuated through an established securities market or a secondary market (or the substantial equivalent thereof), within the meaning of Section 7704 of the Code and the Treasury Regulations applicable with respect thereto, so as to adversely affect the tax status of the partnership as a partnership rather than as an association taxable as a corporation. The general partner will also prohibit any transfer or assignment of units which, in the general partner s good faith judgment, will cause us to fall outside of the safe harbors of Section 1.7704-1 of the Treasury Regulations, discussed below. See Risk Factors - There will be no public market for the units, and you may be unable to sell or transfer your units at a time and price of your choosing. Under Section 1.7704-1(e) of the Treasury Regulations, certain types of limited, non-public transfers ("Exempt Transfers") will be disregarded in determining whether a partnership is publicly traded (unless transferred on an established securities market). The general partner anticipates permitting seven categories of these Exempt Transfers. See Transferability of Units --Exempt Transfers. In addition to providing for the Exempt Transfers, Section 1.7704-1 (f), (g), (h) and (j) of the Treasury Regulations states that partnership interests will not be deemed readily tradable on a secondary market (or the substantial equivalent thereof) if any one of several other safe harbors provided for in such Treasury Regulation is satisfied. One of these is the two percent safe harbor. It provides that a secondary market or its equivalent will not exist if the sum of the interests in partnership capital or profits attributable to those partnership interests that are sold, redeemed, or otherwise disposed of during the partnership s taxable year does not exceed two percent of the total interests in partnership capital or profits. Exempt Transfers, among other items, do not count towards the two percent ceiling. In determining whether we satisfy the two percent safe harbor, redemption of units pursuant to Article 12 of the partnership agreement will be counted. The seven categories of Exempt Transfers listed above (see Transferability of Units --Exempt Transfers ) are not counted toward the two percent safe harbor ceiling because they are considered to be situations not involving trading on a secondary market, even though they may permit trading of more than two percent of the partnership s interests. One of the seven categories of Exempt Transfers is the block transfers" category. Under Section 1.7704-1(e)(2) of the Treasury Regulations, block transfers are defined as transfers of 2% or more of the total interests in partnership capital or profits within a 30 day period by a single transferor or certain related transferors. There is an additional private transfer safe harbor for transfers of partnership interests representing 50% or more of partnership interests in capital and profits in one transaction or a series of related transactions. (But, note that the partnership agreement prohibits a transfer of units if it would cause a termination of the partnership for tax purposes. See "United States Federal Income Tax Considerations Termination of the Partnership for Tax Purposes. ). While the general partner will use its good faith judgment to prohibit the type and number of transfers of units to those which will allow us to remain within the two percent safe harbor, the general partner does not warrant that we will satisfy this safe harbor during each of its taxable years. It is conceivable that transfers of units could occur which would cause us to fall outside the safe harbor. In this regard, Section 1.7704-1(c)(3) of the Treasury Regulations states that failure to meet any of the safe harbors will not create a presumption that a secondary market or its equivalent exists for partnership interests. No assurances can be offered, however, that, if the amount and type of trading in the units were to fall outside the safe harbor, the IRS would not assert publicly traded partnership status with respect to CIGF8. If, for any reason, we were treated for federal income tax purposes as a corporation, our income, deductions, gains, losses and credits would be reflected only on our income tax return rather than being passed through to limited partners, and we would be required to pay income tax at corporate tax rates on our net taxable income. Any amounts available (after corporate taxes) for distribution to the limited partners would be treated as dividends to the extent of current or accumulated earnings and profits. In addition, distributions from CIGF8 would be classified as portfolio income rather than passive activity income and thus would not be eligible to be offset by passive activity losses attributable to CIGF8 or other activities giving rise to passive losses. See United States Federal Income Tax Considerations Limitations on Utilization of Partnership Losses Passive Activity Losses Limitations. Certain Principles of Partnership Taxation A partnership is not subject to federal income tax, but is required to file a partnership information tax return each year. Each limited partner will be required to take into account, in computing the limited partner s income tax liability, the limited partner s distributive share (as determined by the partnership agreement and reported on Schedule K-1 to Form 1065) of all items of our net profits, losses, credits and items of tax preference for any of our taxable years ending within or with the taxable year of the limited partner without regard to whether the limited partner has received or will receive any cash distributions from us. Thus, a limited partner may be subject to tax if we have net income even though no corresponding cash distribution is made. To the extent a limited partner s tax liability attributable to his investment in CIGF8 exceeds his cash distributions from CIGF8 in any year, such partner will be required to pay the excess tax liabilities from other sources. Any cash received by a limited partner from CIGF8 in his capacity as a partner generally will not cause recognition of taxable income (or tax loss) for federal income tax purposes. Instead, such distributions generally will reduce the limited partner s basis in his units (but not below zero). However, cash distributions (and certain distributions of "marketable securities," as defined by the Code) in excess of a limited partner s adjusted basis in his units will result in the recognition of taxable income to the extent of any such excess. Any taxable income recognized upon such distributions may be treated as ordinary income to the extent the distribution is deemed to be in exchange for a share of the limited partner's interest in our "substantially appreciated" inventory and "unrealized receivable" (which includes depreciation recapture) and any excess gain will be characterized as capital gain income and will be long-term or short-term depending upon the limited partner s holding period for his units. With respect to a partner subject to the at risk rules, if the partner s share of partnership losses or distributions reduces his at risk amount to zero, subsequent distributions of cash or other property to him will cause him generally to recapture as ordinary income an amount equal to the partnership losses previously deducted by him to the extent of such distributions. No loss will be recognized by a limited partner upon distributions, other than a loss recognized upon a distribution in liquidation of his partnership interest. A limited partner s distributive share of any taxable income we generate will not be deemed to be net earnings from self employment. Accordingly, such income will not be subject to the tax imposed on self-employed persons by Sections 1401 through 1403 of the Code, commonly referred to as social security taxes. Prospective investors who receive social security benefits should be aware that, although income generated by CIGF8 will not be deemed to be net earnings from self employment, such income will be included in a limited partner s modified adjusted gross income under Section 86 of the Code for purposes of determining whether a limited partner s social security benefits, if any, are subject to taxation. Code Section 1411, added by the Health Care and Education Reconciliation Act of 2010 (the 2010 Act ), expands FICA taxes to include a new 3.8% tax on certain investment income, effective for taxable years beginning after December 31, 2012. In general, in the case of an individual, this new tax will be 3.8% of the lesser of (i) the taxpayer s net investment income or (ii) the excess of the taxpayer s adjusted gross income over the applicable threshold amount ($250,000 for taxpayers filing a joint return, $125,000 for married individuals filing separate returns and $200,000 for other taxpayers). In the case of an estate or trust, the new 3.8% tax will be imposed on the lesser of (x) the undistributed net investment income of the estate or trust for the taxable year, and (y) the excess of the adjusted gross income of the estate or trust for such taxable year over beginning dollar amount (currently $7,500 of the highest tax bracket for such year. Prospective investors should note that for tax years beginning in 2013 and thereafter a limited partner s distributive share of CIGF8 s taxable income or gain will be included as investment income in the determination of net investment income under Code section 1411(c). From that point in time, a limited partner will be subject to the new 3.8% tax (on at least some, and potentially all, of its net investment income) if such limited partner s adjusted gross income is in excess of the limited partner s applicable threshold amount. Further, in the case of a limited partner s disposition of Units after 2012, any taxable gain will be taken into account by the limited partner, for purposes of determining the limited partner s net investment income under Code Section 1411(c), as if CIGF8 had sold all its properties immediately for fair market value immediately before such disposition. Timing of Income Recognition. Our tax returns will be prepared using the accrual method of accounting. Under the accrual method, we will recognize as income items such as rentals and interest as and when earned, whether or not they are received. In certain circumstances, where a lease provides for varying rental payments, increasing (or decreasing) in the later years of the lease, known as step rentals, the Code generally requires the lessor to take the rentals into income as if the rent accrued at a constant level rate, with certain exceptions. This provision also applies to sale-leaseback transactions, in which property is leased to the person from whom it was purchased. An additional consequence of a step rental lease would be a conversion of a portion of our rental income (passive) from such lease to interest income (portfolio). If step rentals are provided for in a lease, the general partner anticipates that the lease will fall within one of the exceptions to such treatment and, therefore, we should recognize such income as it is earned under the lease rather than at a constant level rate as otherwise required under the Code. Allocation of Partnership Income, Gains, Losses, Deductions and Credits In General. Generally, the general partner will be allocated net profits equal to its cash distributions (but not less than one percent of net profits) and the balance will be allocated to the limited partners. Net profits arising from transactions in connection with the dissolution of CIGF8 will be allocated in the following order: (i) first, to each limited partner in an amount equal to the negative amount, if any, of his capital account; (ii) second, an amount equal to the excess of the proceeds which would be distributed to the limited partners based on the operating distributions to the limited partners over the aggregate capital accounts of all the limited partners, to the limited partners in proportion to their respective shares of such excess, and (iii) third, with respect to any remaining net profits, to the limited partners in the same proportions as if the distributions were operating distributions. Net losses, if any, will be allocated 99% to the limited partners and one percent to the general partner. The above allocations, however, are subject to several special allocations designed in part to prevent a partner s capital account (particularly a limited partner s capital account) from going below zero and to allow the partner s capital account accurately to reflect the above-described sharing ratios. Although a partnership may make a special allocation of certain partnership items, or overall profit and loss, in a manner disproportionate to the partners respective capital contributions, such an allocation will be recognized for federal income tax purposes only if it has substantial economic effect or otherwise is respected for tax purposes as discussed below. Substantial Economic Effect. Under Treasury Regulations, an allocation will be respected by the IRS only if it meets any one of the following: (i) the allocation has substantial economic effect ; (ii) the allocation is in accordance with the partners interests in the partnership; or, (iii) the allocation is deemed to be in accordance with the partners interests in the partnership. Any allocation which fails to satisfy at least one of these three tests will be reallocated in accordance with the partners interests in the partnership as defined in the Treasury Regulations. The Treasury Regulations set forth a two-part analysis to determine whether an allocation has substantial economic effect. First, the allocation must have economic effect. In other words, the allocation must be consistent with the underlying economic arrangement of the partners. If there is an economic benefit or burden that corresponds to the allocation, the partner receiving such an allocation should benefit from the economic benefit or bear the economic burden. Normally, economic effect will be present only if the partners capital accounts are determined and maintained as required by the Treasury Regulations. Liquidation proceeds must be distributed in accordance with the partners positive capital account balances (after certain adjustments). Additionally, if partners are not required to restore any deficit capital account balance, no loss or deduction may be allocated to a partner if such allocation would create a deficit balance in such partner s capital account in excess of the amount such partner is obligated to restore to the partnership or is treated as required to restore to the partnership, and the partnership agreement must contain a qualified income offset, requiring that if a partner who unexpectedly receives an adjustment, allocation, or distribution described in subparagraphs (4), (5) or (6) of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations which creates or increases a deficit in such partner s capital account, such partner will be allocated items of net profits and gain (consisting of a pro rata portion of each item of partnership income, including gross income, and gain for such year) in an amount and manner sufficient to eliminate such deficit balance as quickly as possible. Second, the economic effect must be substantial. Substantiality is present if there is a reasonable possibility that the allocation will substantially affect the dollar amounts to be received by a partner independent of his tax consequences. If a shifting of tax attributes results in little or no change to the partner s capital accounts, or if the shift is merely transitory, they will not be recognized. Thus, if the allocation causes a shift in tax consequences that is disproportionately large in relation to the shift in economic consequence, there is a presumption that the economic effect of the allocation is not substantial and such allocation will be disregarded (and the partnership items will therefore be apportioned according to the partners respective interests). The Treasury Regulations contain several exceptions and qualifications. For example, if a partnership allocation fails the above economic effect test, it may still be recognized if it meets the economic effect equivalence test. An allocation will be viewed as having economic effect if the agreement among the partners would in all cases produce the same results as the requirements outlined above. Further, there are also several exceptions, which come into play where the partner does not have an absolute obligation to restore a negative capital account. Pursuant to the partnership agreement, net profits, net losses and cash distributions allocated to a partner will be reflected by appropriate adjustments to the partner s capital account. Furthermore, the partnership agreement contains provisions, which would in all cases produce distributions of liquidation proceeds on dissolution on the basis of the relative amounts of the partners capital accounts to the extent of the balances of such capital accounts. The tax allocations, however, are predicated on the assumption that the management fees payable to the general partner will be treated as deductible guaranteed payments, rather than as partnership distributions. See United States Federal Income Tax Considerations -- Fees and Reimbursements to the General Partner and Affiliates. Retroactive Allocations. Under Section 706(d) of the Code, retroactive allocations, i.e., allocations of items to partners before they became partners, are prohibited. Section 706(d) of the Code and the Treasury Regulations thereunder accomplish this prohibition by providing that if there is a change in any partner s interest in any taxable year of the partnership, each partner s distributive share of a partnership s tax items is to be determined by use of any method prescribed by the Secretary of the Treasury in Treasury Regulations which take into account the varying interests of the partners in the partnership during such taxable year. The partnership agreement provides that income or loss allocable to the limited partners will, to the extent partners are admitted under the offering during the course of the taxable year other than on January 1 or are redeemed other than on December 31, be allocated among the limited partners in proportion to the number of units each holds from time to time during the course of the year, in accordance with Section 706 of the Code, using any convention permitted by law selected by the general partner. Thus, if some limited partners are admitted to CIGF8 after others, those limited partners admitted later may receive a smaller portion of each item of our net profits and net losses than the limited partners who were admitted earlier. Nevertheless, those limited partners still will be obligated to make the same capital contributions to CIGF8 for their interests as the limited partners who were admitted previously. In addition, where a limited partner transfers units during a taxable year, the limited partner may be allocated net profits for a period for which such limited partner will not receive a corresponding cash distribution. Based on the Treasury Regulations, the legislative history and existing case law, counsel has opined that the allocations contained in the partnership agreement of our net profits and net losses should be respected for federal income tax purposes. Limitations on Utilization of Partnership Losses Tax Basis. A limited partner may not deduct losses in excess of his tax basis in his units, but may carry forward such excess losses to such time, if ever, as his basis is sufficient to absorb them. A limited partner s tax basis in his units also determines the tax consequences of his distributions, as well as the amount of the gain or loss he may realize upon any sale of his units. See United States Federal Income Tax Considerations Disposition of Units. Initially, the tax basis of a limited partner s units will be equal to the amount of cash contributed by the limited partner to CIGF8 or the amount paid to a transferor limited partner, plus the limited partner s share of our non-recourse liabilities, if any. A limited partner s initial tax basis will then be (i) increased by his allocable share of any net profits for each year, contributions made to CIGF8 by the limited partner, and any increase in his share of non-recourse liabilities, and (ii) reduced by his allocable share of any net losses, the amount of any distributions made to him during the year, and any reduction in his share of non-recourse liabilities. The IRS has ruled that a partner acquiring multiple interests in a partnership in separate transactions at different prices must maintain an aggregate adjusted tax basis in a single partnership interest consisting of the partner s combined interests. Possible adverse tax consequences could result from the application of this ruling upon a sale of some but not all of a limited partner s units. See United States Federal Income Tax Considerations - Disposition of Units. Amounts at Risk. The Code limits the deductions that an individual or a closely held C corporation may claim from an activity to the aggregate amount with respect to which such taxpayer is at risk for such activity as of the close of the taxable year. Except as otherwise provided below, a limited partner will be considered to be at risk with respect to the amount of money and the adjusted basis of other property the limited partner contributes to CIGF8. A limited partner will be at risk with respect to amounts borrowed by CIGF8 only to the extent that the limited partner is personally liable for their repayment or the net fair market value of the limited partner s personal assets (other than units) that secure the indebtedness. A limited partner will not be considered at risk with respect to any amounts that are protected against loss through non-recourse financing, guarantees, stop loss agreements or similar arrangements. Because the limited partners will not be personally liable for partnership indebtedness, any such indebtedness will not augment the limited partners amounts at risk. A limited partner s amount at risk will be reduced by (i) net losses which are allowed as a deduction to the limited partner under the at-risk rules and (ii) cash distributions received by a limited partner with respect to the limited partner s units, and increased by that limited partner s distributive share of net profits. Investors should note that net losses that may be allowable as a deduction under the at-risk rules may be disallowed currently under the passive activity loss limitations. See United States Federal Income Tax Considerations Limitations on Utilization of Partnership Losses Passive Activity Losses Limitations. If a limited partner s at risk amount is reduced below zero (due to a cash distribution to a limited partner), the limited partner must recognize income to the extent of the deficit at risk amount. Losses of CIGF8 that have been disallowed as a deduction in any year because of the at-risk rules will be allowable, subject to other limitations, as a deduction to the limited partner in subsequent years to the extent that the limited partner s amount at-risk has been increased. The Code will allow us to aggregate our equipment leasing activities only with respect to equipment placed in service during the same taxable year. Therefore, the at risk rules will be applied to the net taxable income or loss resulting from leasing equipment which was placed in service during the same taxable year. This could result in a partner s deduction for losses with respect to certain items of equipment being limited by the at risk rules, even though he must recognize income with respect to other items of equipment. Counsel has given its opinion that the sum of the amounts for which a limited partner will be considered at-risk, for purposes of Section 465 of the Code, in any taxable year with respect to equipment placed in service in that taxable year and in each prior year (treating all equipment placed in service in the same year as a single activity separate from the activities represented by equipment placed in service in other years) will be equal to (i) the capital contributions (as such term is defined in the partnership agreement) of such limited partner (provided that funds for such capital contributions are not from borrowed amounts other than amounts: (A) for which the limited partner is personally liable for repayment, or (B) for which property other than units is pledged as security for such borrowed amounts, but only to the extent of the fair market value of such pledged property and provided further that such capital contributions are invested in the equipment or otherwise expended in connection with our organization or leasing activities (or are subject to the rights of our creditors for amounts incurred by us with respect to same)), less: (ii) the sum determined on a cumulative basis of (A) the total net losses with respect to such equipment which have been allowed as deductions to the limited partner under the at risk rules and (B) cash distributions received by the limited partner, plus (iii) the limited partner s distributive share, determined on a cumulative basis, of total net profits with respect to such equipment. Passive Activity Losses Limitations. The Code prohibits an individual, estate, trust, closely-held C corporation, or personal service corporation from using losses and credits from a business activity in which the taxpayer does not materially participate, or a rental activity, to offset other income, including salary and active business income as well as portfolio income (such as dividends, interest and royalties, whether derived from property held directly or through a pass-through entity such as a partnership). Interest income derived by CIGF8 from the interim investment of offering proceeds or reserves (and any income derived by CIGF8 from leases treated as loans for federal income tax purposes) will be treated as portfolio income and, thus, will not be offset for those purposes by partnership deductions such as depreciation or cost recovery deductions. Losses from a passive activity that are not allowed currently will be carried forward indefinitely, and are allowed in subsequent years against passive activity income or in full upon complete disposition of the taxpayer s interest in that passive activity to an unrelated party in a fully taxable transaction. Special passive activity loss rules apply to publicly traded partnerships. Our income or losses may not be used to offset any losses or income you may derive from another partnership that is classified as a publicly traded partnership. If a limited partner incurs indebtedness in order to acquire or carry units, interest paid by the limited partner on the indebtedness will be subject to the limitations for passive activity losses, except to the extent that the indebtedness relates to portfolio income, if any, of CIGF8. Interest expense of a limited partner attributable to portfolio income may be subject to other limitations on its deductibility. See United States Federal Income Tax Considerations Interest Deduction Limitations. Counsel has opined, based on the above discussion and assuming that all leases we enter into are considered true leases for federal income tax purposes, and that the net profits, net losses, and credits derived from CIGF8 with respect to our leasing activities will be subject to the passive activity rules. Thus, any income we produce from leasing property should be income from a passive activity, provided that such leasing income is not classified as income from a significant participation passive activity pursuant to Regulations Section 1.469-2T(f)(2)(ii), in which case that income would be recharacterized, under those regulations, as non-passive income in certain circumstances. In general, a limited partner s participation in CIGF8 (i) would not in itself constitute participation in a significant participation passive activity , and (ii) would not be aggregated with any other activities of that limited partner for purposes of this determination. However, the extent to which a taxpayer s participation in pass-through entities, such as CIGF8, is aggregated with other activities of the taxpayer for purposes of the passive loss rules is determined at the investor level taking into account that investor s individual circumstances, and not at the level of the pass-through entity, in accordance with Regulations Section 1.469-4. Accordingly, prospective investors should consult their own tax advisors regarding the applicability of the income recharacterization provisions of Regulations Section 1.469-2T(f)(2)(ii). In any event, however, any CIGF8 income attributable to (i) the investment of partnership funds in liquid investments prior to the purchase of equipment, (ii) the investment, in interest- bearing accounts or otherwise, of amounts held by CIGF8 as working capital, security deposits, or in reserve, or (iii) equipment with respect to which we are determined not to be the owner for federal income tax purposes, will not be passive activity income. Hobby Losses. Section 183 of the Code limits deductions attributable to activities not engaged in for profit. The phrase activities not engaged in for profit means any activity other than one that constitutes a trade or business, or one that is engaged in for the production or collection of income or for the management, conservation or maintenance of property held for the production of income. The Treasury Regulations provide that the determination of whether an activity is engaged in for profit is to be made by reference to objective standards, taking into account all of the facts and circumstances in each case. The Treasury Regulations also provide that, although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the objective of making a profit. The Treasury Regulations enumerate a number of nonexclusive factors that should be taken into account in determining whether an activity is engaged in for profit. The IRS has ruled that this test will be applied at the partnership level. Based upon these Treasury Regulations and our investment goals, we intend to manage CIGF8 so that our activities will constitute an activity engaged in for profit within the meaning of Section 183 of the Code. However, the test of whether an activity is deemed to be engaged in for profit is based on the facts and circumstances applicable from time to time including the motives of the investors, and no assurance can be given that Section 183 of the Code may not be applied in the future to disallow the deductions. Cash Distributions Cash distributions (including reductions in a limited partner's proportionate share of partnership non-recourse liabilities, if any) to a limited partner, other than those in exchange for, or redemption of, all or part of his units, reduce a limited partner s adjusted basis in his units and may represent both a return of capital and income. To the extent distributions of cash reduce a limited partner s adjusted basis in his units to zero, such distributions will be treated as returns of capital which generally do not result in any recognition of gain or loss for federal income tax purposes. To the extent such distributions or reductions in liabilities exceed a limited partner s adjusted basis in his units immediately prior thereto, such limited partner will recognize gain to the extent of such excess. Such gain may be treated as ordinary income to the extent the distribution is deemed to be in exchange for a share of the limited partner s interest in our substantially appreciated inventory and unrealized receivables (which includes depreciation recapture); any excess gain will be treated as capital gain. The gain that a limited partner will recognize as a result of a reduction of liabilities in excess of such limited partner s adjusted tax basis in his units immediately prior thereto will result in a tax liability to the limited partner without any cash distribution. To the extent a limited partner s federal tax liabilities exceed cash distributions, such federal tax liabilities would have to be paid from other sources. It is possible that your tax liability for a given year will exceed your cash distributions for that year. For example, we may borrow money to finance the purchase of some of our equipment. Depending on the amortization schedule for payment of such loans, it is possible in some years, most likely the later years of such loans, that the nondeductible payments of principal which we will have to make will exceed our depreciation deductions. In such years, our taxable income will be greater than the cash flow produced from our leasing activities. Depending on how big this difference is, your tax liability for a year could be greater than your cash distributions for that year. Similarly, because of such borrowings, your tax liabilities arising from a sale or other disposition of units or equipment could exceed the cash proceeds therefrom. To the extent a limited partner's federal tax liabilities exceed such limited partner's cash distributions, such federal tax liabilities would have to be paid from other sources and, in effect, would be a nondeductible cost to such limited partner. Distribution Reinvestment If you elect to have your distributions reinvested in additional units during the offering period, you re your Schedule K-1 (the information return we send to you and the IRS at the end of the year) will show the amount of your distributions without taking into account any such reinvestment, and (b) the amount of such distributions will be includable in your cost basis of units purchased. If you are a foreign unitholder whose share of taxable income is subject to United States income tax withholding, the appropriate amount will be withheld and the balance will be used to purchase additional shares. If you are considering electing to reinvest your distributions, we urge you to consult with your own tax advisors regarding the specific tax consequences (including the federal, state and local tax consequences) that may result from your election and of potential changes in applicable tax laws. The income tax consequences for investors in units who do not reside in the United States may vary from jurisdiction to jurisdiction. Fees and Reimbursements to the General Partner and Affiliates General. There is no assurance that the IRS will not challenge our position with respect to the amount, character, time of deduction or tax treatment of any of the fees discussed herein or, if challenged, that our position would be sustained. In any year such fees are incurred, the disallowance of the deductibility of such fees would result in a proportionate increase in the taxable income (or reduction in the loss) of the limited partners with no associated increase in cash distributions with which to pay any resulting increase in tax liabilities. Organizational and Offering Expenses. The general partner will be paid an organizational fee for its expenses incurred for its services in organizing CIGF8 and preparing the offering. The general partner plans to allocate such fees entirely to start-up expenses, which may be amortized over a 60-month period, and no portion of such fees to syndication expenses, which must be capitalized. The general partner believes that such allocation is reasonable, but no assurance can be given that the IRS will accept that allocation. The range of the fee based on the minimum and maximum amounts sold will be between $34,500 and $1,250,000. In addition, we will incur underwriting commissions of up to 10% (consisting of 7% selling commission, 2% dealer manager fee and up to 1% marketing reallowance). These commissions will be nondeductible syndication expenses, which are charged against the capital accounts of limited partners. Equipment Acquisition Fees. The cost of acquisition fees will be capitalized to the cost of the equipment. The Equipment Management Fee. The equipment management fee should be deductible as an ordinary and necessary business expense under Section 162 of the Code, to the extent that its amount is commercially reasonable. Ownership of Equipment Tax Treatment of Leases. Your depreciation and cost recovery deductions with respect to any item of partnership equipment depend, in part, on the tax classification of the rental agreement under which it leased. These deductions are only available if the rental agreement is a true lease of equipment, meaning we retain ownership of it. Depreciation and cost recovery deductions are not available if the transaction is classified as a sale, financing or refinancing arrangement where ownership shifts to a purchaser, the nominal lessee. Whether a company is the owner of any particular item of equipment, and whether a lease is a true lease for federal income tax purposes, depends upon both factual and legal considerations. The IRS has published Revenue Procedure 2001-28, 2001-1 C.B. 1156, which provides guidelines on the tax treatment of leveraged leases. Revenue Procedure 2001-28 provides that, unless other facts and circumstances indicate a contrary intent, and for advance ruling purposes only, the Service will consider the lessor in a leveraged lease transaction to be the owner of the property and the transaction a valid lease if all of the following guidelines (the Lease Guidelines ) are met: (i) the lessor must make a minimum unconditional at risk investment in the property when the lease begins, must maintain such minimum unconditional investment throughout the entire lease term, and such minimum unconditional investment must remain at the end of the lease term; (ii) the lessee group may not have a contractual right to purchase the property for less than its fair market value when the right is exercised; (iii) when property is first placed in service, the lessor may not have a contractual right to cause any party to purchase the property and the lessor must represent that it has no present intention to acquire such a contractual right; (iv) with certain limited exceptions, no part of the cost of the property or any improvement, modification, or addition to the property may be furnished by any member of the lessee group; (v) no member of the lessee group may lend the lessor funds to acquire the property, or guarantee any indebtedness created in connection with the acquisition of the property; (vi) the lessor must represent and demonstrate that it expects profits from the transaction, aside from tax benefits; and (vii) the lessor must represent and demonstrate that the lease does not transfer the use of the property for substantially its entire useful life. The Lease Guidelines are commonly viewed as a safe harbor. We anticipate that a substantial portion of our leases will comply with the Lease Guidelines. We also reserve the right to enter into some leases that do not comply with the Lease Guidelines. Whether any lease will meet the relevant requirements to be characterized as a true lease and whether we will be treated for tax purposes as the owner of each item of equipment we acquire will depend on the specific facts in each case. Since these facts cannot now be determined with regard to leases that will be entered into in the future, counsel has rendered no opinion on this issue. The 2010 Act added a new provision, section 7701(o), to the Code, effective for transactions after March 30, 2010. This new provision relates to the common law doctrine under which tax benefits with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose, known as the economic substance doctrine. Section 7701(o) requires that a transaction have both a meaningful economic effect and a substantial business purpose apart from the tax benefits for the tax treatment to be respected. The impact of this law is unclear and whether (and to what extent) it may apply to mainstream equipment leasing transactions in general is unknown. This law s relationship to the Lease Guidelines is also unknown. However, an additional element of uncertainty may be added by this law to the tax treatment of lease transactions which do not comply with the Lease Guidelines. Furthermore, the 2010 Act changed various relevant Code sections to impose a penalty for the disallowance of tax benefits from a transaction failing the test of economic substance (or any similar rule of law). This penalty is imposed on a strict-liability basis and at a rate of 20 percent, which is increased to 40 percent if the transaction is not adequately disclosed in the tax return or in a statement attached to the return. In general, a pass-through entity such as the Company is eligible to make this disclosure on its partnership tax return. We will consider the advisability of making such disclosure at the time we file our partnership returns, taking into account, among other factors, then-current industry practice in the equipment leasing industry. Cost Recovery and Depreciation Cost Recovery Rules. The equipment we plan to acquire and lease generally is classified as 5-year property, and may be written off for federal income tax purposes, through cost recovery or depreciation deductions, over its respective recovery period. The amount deductible in each year generally may be calculated using the 200 percent declining-balance depreciation method, switching to the straight-line method at a time that maximizes the deduction. Recent legislation provides for an elective bonus depreciation of 50% (resulting in 50% expensing) of the adjusted basis of certain qualified property placed in service before January 1, 2013. Property is qualified property for this purpose if, among other things, its original use began with the taxpayer. A taxpayer may, however, choose to use a straight line method of depreciation for the entire recovery period. In order to elect out of the bonus depreciation with respect to property in a class, however, the election must apply to all property in that class placed in service during the taxable year. We will allocate all or part of the acquisition fees, which are fees paid to the general partner in connection with the selection and purchase of equipment, to the cost basis of equipment. We cannot assure you that the IRS will agree that cost recovery deductions calculated on a cost basis that includes acquisition fees are properly allowable. The IRS might assert that the acquisition fees are attributable to items other than the equipment, or are not subject to cost recovery at all. If the IRS were successful in making that claim, the cost recovery deductions available to us would be reduced accordingly. Because the determination of this issue depends on the magnitude and type of services performed for the acquisition fees, which is presently undeterminable and may vary for each piece of equipment we acquire, counsel is unable to render an opinion about whether our cost recovery deductions for acquisition fees would be upheld if challenged by the IRS. In some circumstances, a taxpayer will be required to recover the cost of an asset over longer periods of time than described above. These circumstances include the use of equipment predominately outside the United States and the use of equipment by a tax-exempt entity. Recapture of Cost Recovery Deductions. All or part of our cost recovery, depreciation or amortization deductions may be recaptured as ordinary income upon a subsequent disposition of the equipment or, with respect to a partner s share of such deductions, upon the disposition of the partner s units. See United States Federal Income Tax Considerations Disposition of Units below. Our cost recovery, depreciation or amortization deductions will be recaptured to the extent of any gain on disposition. This recapture amount will be recognized in full as ordinary income in the year of sale even if we have made an installment sale of the equipment. See United States Federal Income Tax Considerations Sale of Equipment. If we have not made a basis adjustment election under Section 754 of the Code, a purchaser of units also may be required to recapture amounts attributable to cost recovery or depreciation claimed during the period a prior owner held such units when we dispose of equipment subject to recapture or when the purchaser subsequently sells his units. Interest Deduction Limitations The Code restricts the ability of non-corporate taxpayers to deduct interest on funds borrowed to acquire or carry investment assets. Such taxpayers may deduct investment interest only to the extent of the net investment income of the taxpayer for the taxable year. Any interest disallowed under this provision in one year may be carried forward indefinitely and claimed at such time as the taxpayer has sufficient investment income. Interest expense that is allocable to a passive activity is subject to the passive loss limitations, and is not subject to the investment interest limitations. The general partner anticipates that CIGF8 will be deemed a passive activity with respect to the income, gains, losses, deductions and credits passed through to the limited partners and, therefore, will not figure in a limited partner s investment interest limitations calculation. However, because we will enter into net leases, any interest expense that we pay might be considered to be investment interest expense and, as such, would be subject to the limitations described herein. Because the amount of any limited partner s investment interest that would be subject to disallowance in any year will depend upon the other investment income and expenses of that limited partner, the extent, if any, of such disallowance will depend upon that limited partner s particular tax situation. Additionally, the IRS might argue that all or some portion of any interest incurred in connection with the acquisition or maintenance of a unit in CIGF8 is investment interest. As noted above, however, it is anticipated that any interest in CIGF8 as a limited partner will be deemed a passive activity (unless current law is modified by Treasury Regulations or legislation). To the extent the investment in a unit is treated as a passive activity, any interest incurred in acquiring or maintaining such an interest would not be subject to the investment interest limitations of the Code but instead would be subject to the passive activity limitations. Section 265(a)(2) denies any deduction for interest paid by a taxpayer on indebtedness incurred or continued for purchasing or carrying tax -exempt obligations. Denied interest may not be deducted in any year. In the case of a taxpayer who borrows to purchase a portfolio investment at a time when such taxpayer holds tax-exempt obligations, Revenue Procedure 72-18, 1972-1 C.B. 740, establishes a rebuttable presumption that such borrowing is made "at least in part, to...carry the existing investment in tax-exempt obligations". "Portfolio investment" is specially defined for purposes of Revenue Procedure 72.18. An investment in units constitutes a portfolio investment in that context, and therefore falls within Revenue Procedure 72-18's presumption in the hands of a purchaser owning tax-exempt obligations at the time of purchase. The presumption established by Revenue Procedure 72-18 is rebuttable by establishing that "the taxpayer could not have liquidated his holdings of tax-exempt obligations in order to avoid incurring indebtedness": a mere showing "that the tax-exempt obligations could only have been liquidated with difficulty, or at a loss" is insufficient to rebut the presumption. Thus, in the case of a limited partner who borrows funds to purchase units and at the time of purchase owns tax exempt obligations, the IRS may take the position, depending on the composition of such limited partner's assets at the time of purchase that interest paid by the limited partner on such loan should be viewed in part as incurred on loans which enable him to continue carrying his tax-exempt obligations. If this position were upheld, the IRS would disallow a portion of the interest on the indebtedness incurred to purchase units. Under Revenue Procedure 72-18, the disallowed portion would "be determined by multiplying the total interest on such indebtedness by a fraction, the numerator of which is the average amount during the taxable year of the taxpayer's tax-exempt obligations (valued at their adjusted basis) and the denominator of which is the average amount during the taxable year of the taxpayer's total assets (valued at their adjusted basis) minus the amount of any indebtedness the interest on which is not subject to disallowance to any extent" under Revenue Procedure 72-18. Prospective investors owning tax-exempt obligations and wishing to incur indebtedness to buy units should consult with their individual tax advisers regarding the application of Revenue Procedure 72-18 and Section 265(a)(2) of the Code to their particular circumstances. Sale of Equipment Because of the different individual tax rates for capital gains and ordinary income, the tax code provides various rules classifying income as ordinary income or capital gains, and for distinguishing between long-term and short-term gains and losses. The distinction between ordinary income and capital gains is relevant for other purposes as well. For example, there are limits on the amount of capital losses that an individual may offset against ordinary income. Upon a sale or other disposition of equipment, we will realize gain or loss equal to the difference between the basis of the equipment at the time of disposition and the price received for it upon disposition. Any foreclosure of a security interest in equipment would be considered a taxable disposition and we would realize gain if the face amount of the debt being discharged were greater than the tax basis of the equipment, even though we would receive no cash. In the case of a disposition of equipment at a gain, the income first would be ordinary income to the extent of recapture, as discussed below. Because the equipment is tangible personal property, upon its disposition, all of the depreciation and cost recovery deductions we take will be subject to recapture to the extent of any realized gain. Recapture means that the depreciation, previously deducted, is reversed by recognizing the depreciated amounts as ordinary income, in the year of the sale. Recapture cannot be avoided by holding the equipment for any specified period of time. If a partnership were to sell property on an installment basis, all depreciation recapture income is recognized at the time of sale, even though the payments are received in later taxable years. Certain gains and losses are grouped together to determine their tax treatment. The gains on the sale or exchange of some assets, including equipment used in a trade or business and held for more than one year are added to the gains from some compulsory or involuntary conversions; if these gains exceed the losses from such sales, exchanges, and conversions, the excess gains will be taxed as capital gains (subject to the recapture of depreciation and cost recovery deductions discussed above and a special recapture rule described below). If the losses exceed the gains, however, the excess losses will be treated as ordinary losses. Under a special recapture provision, any net gain under this aggregation rule will be treated as ordinary income rather than capital gains if the taxpayer has non-recaptured net losses, which are net losses under this aggregation rule from the five preceding taxable years which have not yet been offset against net gains in those years. Disposition of Units In General. A partner who sells or otherwise disposes of his units, including redemptions of a limited partner s units pursuant to Article 12 of the partnership agreement, will realize taxable gain or loss measured by the difference between the selling or redemption price and the adjusted tax basis of his units. See United States Federal Income Tax Considerations Limitations on Utilization of Partnership Losses Tax Basis. Gain or loss, in general, will be taxed as short-term or long-term capital gain or loss, depending on the period the units have been held (provided the partner is not a dealer in the units). However, gain attributable to the partner s share of substantially appreciated inventory items and unrealized receivables of CIGF8, as those terms are defined in the Code, will be taxed as ordinary income. Unrealized receivables include any cost recovery, depreciation and amortization deductions of CIGF8 that would have been recaptured upon a hypothetical sale of the equipment. The requirement that recapture amounts be recognized in full in the year of sale even if the sale qualifies as an installment sale, may apply to an installment sale of units. See United States Federal Income Tax Considerations Cost Recovery and Depreciation Recapture of Cost Recovery Deductions. In determining the amount realized upon the sale or exchange of units, a limited partner must include, among other things, his allocable share of partnership indebtedness included in his basis in such units. See United States Federal Income Tax Considerations Limitations on Utilization of Partnership Losses Tax Basis. A partner s gain on the sale or exchange of units should be treated as income from the activity of leasing the equipment. As a result, suspended losses, if any, from prior years could offset the gain realized on the sale or exchange of units. See United States Federal Income Tax Considerations Limitation on Utilization of Partnership Losses Passive Activity Losses Limitations. A partner who sells or otherwise disposes of his units must also report his share of the taxable income or loss of CIGF8 for the portion of the taxable year of CIGF8 during which he owned his units. Gift of Units. In general, no gain or loss should be recognized on a gift of units, although there may be federal gift tax imposed on such gift. However, a gift of units encumbered by debt (including debt incurred by the gifting partner to acquire the units and debt incurred by the company that is included in the gifting partner's basis in his units) can result in the recognition of gain, but never loss, and federal income tax (as well as federal gift tax) liability to the donor. A gift of units encumbered by debt generally results in a decrease in the gifting partner's allocable share of liabilities if the donee accepts the units subject to the debt or assumes the liabilities of the gifting partner. If the amount of the decrease in liabilities exceeds the partner's adjusted basis in his units, the transaction should be treated as a part gift and part sale transaction, resulting in taxable gain to the extent the amount of liabilities exceeds adjusted basis in the units. To the extent some of the gain is attributable to the partner's share of "substantially appreciated inventory items" and "unrealized receivables" of CIGF8, such gain will be taxed as ordinary income. Since the tax consequences of any gift or transfer will depend upon the particular circumstances and upon the individuals or organizations involved in the transaction, before making any gift of units, a limited partner should consult his tax advisor as to the consequences of such a gift and as to the basis of the units in the hands of his successor. Death of Partner. If a limited partner dies, the fair market value of his units at death (or, if elected, at the alternate valuation date) will be subject to federal estate taxation. Under present law, the death of a limited partner does not result in a sale or exchange giving rise to a federal income tax. The cost or other basis of the units inherited from the decedent generally is stepped up or stepped down to its fair market value for federal income tax purposes. Notice of Transfer. The Code requires that a limited partner who transfers an interest in a partnership, whether by sale, gift or otherwise, must notify us of such transfer within 30 days of the transfer or, if earlier, by January 15 of the calendar year following the calendar year in which transfer occurs. In addition, the Code requires a partnership to file a separate information return with the partnership s federal information return, for the tax year in which the transfer occurs whenever there is a transfer of a partnership interest involving a sale or exchange where there are inventory items or unrealized receivables as defined by the Code. A limited partner who fails to inform the partnership of a transfer of the limited partner s units in accordance with the rules described in this paragraph is liable for a penalty of $50 per unreported transfer with an annual maximum penalty of $100,000. Each such return must contain the following: (a) the names, addresses and taxpayer identification numbers of the transferee and transferor involved in the exchange and (b) the date of the sale or exchange. Once notified, the Code requires a partnership to provide the transferee and the transferor with a copy of the completed information return reporting transfers, and to include the name, address and telephone number of the partnership required to make the return. Termination of the Partnership for Tax Purposes The Code provides that if 50% or more of the capital and profits interests in a partnership is sold or exchanged within a single twelve-month period, the partnership will terminate for tax purposes. The partnership agreement prohibits the transfer of any unit if such transfer would result in the termination of CIGF8 for federal income tax purposes. However, certain involuntary transfers might result in termination of CIGF8 for federal income tax purposes. If we should terminate for tax purposes, the terminated partnership ( Old Par ) will be treated (i) as having transferred all of its assets subject to its liabilities to a new partnership ( New Par ) in exchange for partnership interests therein, and then (ii) as having distributed such partnership interests in New Par to the partners of Old Par in liquidation of Old Par. In addition, upon a partnership termination, the partnership s taxable year would terminate. If the limited partner s taxable year were other than the calendar year, the inclusion of more than one year of partnership income in a single taxable year of the limited partner could result. Because the new partnership would be treated as a separate entity for federal income tax purposes, the tax elections of the prior partnership would not generally remain valid. Thus, new federal income tax elections would generally be required to be made. In addition, depreciation periods for assets held by the partnership will restart. No Section 754 Election Due to the burdensome and costly record keeping requirements that a Code Section 754 Election entails, it is unlikely that the general partner will exercise its discretion in favor of making this election to adjust the basis of partnership property in the case of transfers of units. If the general partner does not make a Code Section 754 Election, a subsequent limited partner s share of gain or loss upon the sale of our assets will be determined by taking into account our tax basis in the assets and without reference to the cost associated with acquiring the units. Thus, the absence of a Code Section 754 Election may reduce the marketability of units and the price a purchaser would be willing to pay. Nor do we anticipate being required to make adjustments for substantial basis reductions under changes to Section 734 and Section 743 of the Code, as amended by the 2004 American Jobs Creation Act, P.L. 108-357. Investment by Tax Exempt Entities The income earned by a tax exempt entity, including a qualified employee pension or profit sharing trust or an individual retirement account, is generally exempt from taxation. However, gross Unrelated Business Taxable Income, or UBTI, of a tax exempt entity is subject to tax to the extent that, when combined with all other gross UBTI of the tax exempt entity for a taxable year, it exceeds all deductions attributable to the UBTI plus $1,000 during the taxable year. Such UBTI will be taxable at ordinary income rates and may be subject to the alternative minimum tax. See United States Federal Income Tax Considerations Alternative Minimum Tax. The leasing of tangible personal property is treated for purposes of the Code as an unrelated trade or business. See Revenue Ruling 78-144, 1978-1 C.B. 168, Revenue Ruling 69-278, 1969-1 C.B. 148, and Revenue Ruling 60-206, 1960-1 C.B. 201. The IRS has ruled that a partner s distributive share of income or gain from a partnership engaged in the leasing of tangible personal property is treated in the same manner as if such income or gain were realized directly by the partner. Therefore, a tax exempt entity that invests in CIGF8 will be subject to the tax on UBTI for any taxable year of the tax exempt entity to the extent CIGF8 generates income from the leasing of the equipment and the total of the tax exempt entity s share of that income for the taxable year plus its UBTI from all other sources for the taxable year exceeds the sum of all deductions attributable to the UBTI plus $1,000. Although CIGF8 s portfolio income (e.g., interest income from the investment of partnership cash balances) generally will not produce UBTI for a tax exempt entity that invests in CIGF8, a portion of such tax exempt entity s portfolio income from CIGF8 will constitute UBTI pursuant to the debt-financed property rules if the tax exempt entity finances its acquisition of units with debt or to the extent that debt of the partnership is considered to be attributable to the assets producing such portfolio income. Furthermore, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans that are exempt from taxation under paragraphs (7), (9), (17), and (20), respectively, of Section 501(c) of the Code are subject to different UBTI rules, which generally will require them to characterize all income from CIGF8 as UBTI. Except to the extent of gain or loss from the sale, exchange, or other disposition of acquisition indebtedness property and except to the extent the equipment constitutes inventory or property held primarily for sale to customers in the ordinary course of a trade or business, gains from the sale or exchange of the equipment generally will be excludable from the scope of UBTI. However, any gain on the disposition of equipment that is characterized as ordinary income as a result of the recapture of cost recovery or depreciation deductions will constitute UBTI for tax exempt entities. If the gross income taken into account in computing UBTI exceeds $1,000, the tax exempt entity is obligated to file a tax return for such year on IRS Form 990-T. Neither we nor the general partner expect to undertake the preparation or filing of IRS Form 990-T for any tax exempt entity in connection with an investment by such tax exempt entity in the units. Penalties may be imposed by the IRS for failing to file this tax return when required, and, if tax is due, additional penalties and interest may be imposed if the tax is not paid. Investment by Nonresident Alien Individuals and Foreign Corporations Nonresident alien individuals and foreign corporations that become limited partners will, like CIGF8, be deemed to be engaged in the conduct of a trade business within the United States. Under the Code, nonresident aliens individuals and foreign corporations, respectively, will be required to file United States income tax returns and will be subject to United States income tax on their allocable shares of any partnership taxable income. A failture to timely file United States income tax returns may result in the disallowance of the non-resident alien's allocable share of deductions from CIGF8, as well as penalties and interest. Nonresident alien individuals and closely held foreign corporations that acquire units will also be subject to the same limitations on the deduction of partnership losses that apply to domestic limited partners. See United States Federal Income Tax Considerations -- Certain Principles of Partnership Taxation, and -- Limitations on Utilization of Partnership Losses. Foreign corporations may also be subject to the branch profits tax. Such tax is equal to 30% of a foreign corporation s earnings and profits effectively connected with a United States business that are withdrawn (or deemed withdrawn) from investment in the United States. This tax is payable in addition to the regular United States corporate tax. In certain circumstances, the imposition of the branch profits tax may be overridden by the nondiscrimination provisions of applicable United States tax treaties or subject to a lower rate of tax pursuant to such treaties. We will be required to withhold from distributions to each foreign limited partner an amount equal to a percentage of our taxable income that is allocable to the limited partner. The Code provides that the amount of tax to be withheld is the applicable percentage of our taxable income allocable to foreign limited partners. The applicable percentage is equal to the highest appropriate tax rate, currently 35% for individual and corporate foreign limited partners. Such withheld amounts will be credited against the limited partners federal income tax liabilities for the taxable year in which withheld, and any excess will be refundable. Foreign limited partners may be entitled to tax credits for United States taxes in their countries of residence, and should consult with their local and United States tax advisors with regard to the tax consequences of an investment in units. FATCA Withholding Requirements The Treasury Department has recently issued proposed regulations on the Foreign Account Tax Compliance Act ("FATCA"). FATCA, contained in Sections 1471 through 1474 of the Code, was originally enacted in 2010 as part of the Hiring Incentives to Restore Employment Act. FATCA will impose a U.S. withholding tax at a 30% rate on certain withholdable payments to U.S. limited partners who own their interests through foreign accounts or foreign intermediaries and certain non-U.S. limited partners if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. (Such potentially withholdable payments under FATCA include certain interest, dividends, rents, and other gains or income from U.S. sources, but exclude income derived from the active conduct of a business.) If payment of withholding taxes is required, non-U.S. limited partners that are otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect to such payments will be required to seek a refund from the IRS to obtain the benefit of such exemption or reduction. We will not pay any additional amounts in respect of any amounts withheld. The new FATCA withholding rules will be implemented in a phased approach. The rules with respect to withholding on interest, dividends, rents, and other fixed or determinable gains or income from U.S. sources will be effective for payments made after December 31, 2013, and the rules with respect to withholding on the proceeds of the sale other dispositions of property of a type which can produce interest or dividends from sources within the U.S. will be effective after December 31, 2014. Alternative Minimum Tax This discussion only addresses the alternative minimum tax as it applies to non-corporate taxpayers (and to shareholders of an S corporation). The first step in determining a taxpayer s alternative minimum tax liability, if any, is calculation of the taxpayer s alternative minimum taxable income. Alternative minimum taxable income is computed by adjusting the taxpayer s taxable income in accordance with the rules set forth in Sections 55, 56 and 58 of the Code, and by increasing the resulting amount by the taxpayer s items of tax preference described in Section 57 of the Code. Alternative minimum taxable income is then reduced by a specified exemption amount and by the taxpayer s alternative minimum tax foreign tax credit for the taxable year. Under the current law, for taxable years beginning in 2011, the exemption amounts are $74,450 for married couples filing joint returns, $48,450 for single individuals, and $37,225 for married persons filing separate returns, and $22,000 for estates and trusts. The exemption is phased out above certain alternative minimum taxable income levels: $150,000 for married taxpayers filing joint returns, $112,500 for single taxpayers, and $75,000 for married taxpayers filing separate returns and estates and trusts. The alternative minimum tax rate is 26% on the amount of the taxpayer s alternative minimum taxable income, which does not exceed $175,000 (after taking into account the exemption amount) and 28% on the amount exceeding $175,000. A taxpayer is only required to pay an alternative minimum tax liability to the extent that the amount of that liability exceeds the liability which the taxpayer would otherwise have for the regular federal income tax. One of the adjustments to taxable income established by Section 56 of the Code relates to the amount of cost recovery deduction claimed on personal property. To derive a taxpayer s alternative minimum taxable income, the taxpayer s taxable income must be adjusted by an amount equal to the difference between (i) the amount of cost recovery deductions claimed by the taxpayer with respect to personal property and (ii) the amount which would have been allowable over the asset depreciation range class life of the property using the 150% declining balance method, converting to straight-line when necessary to maximize the remaining deductions. The adjustment results in a basis in the depreciated property for alternative minimum tax purposes, which may differ from its basis for regular tax purposes. Thus, upon disposition of the property, the taxpayer will generally recognize less gain (or a greater loss) for alternative minimum tax purposes than for regular tax purposes. Items of tax preference include other items which are not anticipated to be generated by CIGF8, but may apply in the case of certain limited partners due to their particular facts and circumstances unrelated to CIGF8. Partnership Tax Returns and Tax Information The general partner will file our tax returns using the accrual method of accounting and will adopt the calendar year as our taxable year. See United States Federal Income Tax Considerations Certain Principles of Partnership Taxation. We will provide tax information to the limited partners within 75 days after the close of each taxable year. If a limited partner is required to file its tax return on or before March 15, it may be necessary for the limited partner to obtain an extension to file if the tax information referred to above is not distributed until the end of the 75-day period. Limited partners will be required to file their returns consistently with the information provided on our informational return or notify the IRS of any inconsistency. A failure to notify the IRS of an inconsistent position allows the IRS automatically to assess and collect the tax, if any, attributable to the inconsistent treatment. Limited partners may also receive from us a copy of IRS Form 8886, used to disclose Reportable Transactions to IRS, and they should consult with their own tax advisor as to the reporting on their own returns of that form and the information it contains. Failure of the limited partner to report this information may result in a penalty to the limited partner. IRS Audit of the Partnership The tax return we file may be audited by the IRS. Adjustments, if any, from such audit may result in an audit of the limited partners own returns. Any such audit of the limited partners tax returns could result in adjustments of non-partnership as well as partnership items of income, gain, loss, deduction and tax preference. Partnership audit proceedings are conducted at the partnership level and, if the IRS initiates an administrative proceeding or makes a final adjustment at the partnership level, it must notify each partner of the beginning and completion of the partnership administrative proceedings. Notice need not be given, however, to a partner who has less than a one percent interest in a partnership which has more than 100 partners, although a group of such partners having at least a five percent interest in partnership profits in the aggregate may designate a member of the group to receive notice. Because we will have more than 100 limited partners, the IRS will not notify individual limited partners if we are audited. The general partner is the tax matters partner who will normally have the authority to negotiate with the IRS with respect to any partnership tax matter; the general partner will also have the right to initiate judicial proceedings. A limited partner will thus be unable to control either an audit of CIGF8 or any subsequent litigation. If, in such event, the general partner does not go to court, any limited partner entitled to receive notice of the proceedings may bring an action to challenge any proposed audit findings by the IRS. A special statute of limitations exists in connection with the IRS s right to audit matters at the partnership level. Please review ERISA Considerations and get advice from a qualified tax advisor for potential realization of unrelated business taxable income (UBTI). Reporting Requirements Treasury Regulations require the CIGF8 to complete and file IRS Form 8886 ("Reportable Transaction Disclosure Statement") with its tax return for any taxable year in which it participates in a "reportable transaction." A "reportable transaction" is one of the following: A "listed transaction," which is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a "listed transaction." A "confidential transaction," which is a transaction that is offered to a taxpayer under conditions of confidentiality and for which the taxpayer has paid an advisor a minimum fee. A "transaction with contractual protection," which is a transaction for which the taxpayer or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences from the transaction are not substained, or a transaction for which fees are contingeny on the taxpayer's realization of tax benefits from the transaction. A "loss transaction," which is any transaction resulting in the taxpayer claiming a loss under Section 165 of the Code. A "transaction of interest," which is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS had identified by notice, regulation, or other form of published guidance as a transaction of interest. Each partner treated as participating in a reportable transaction of the CIGF8 is required to file IRS Form 8886 with his tax return. CIGF8 and any such partner, respectively, must also submit a copy of the completed form with the Service's Office of Tax Shelter Analysis. CIGF8 intends to notify the partners if and when it believes (based on information available to it) that the partners are required to report a transaction of CIGF8 and intends to provide the partners with any available information needed to complete and submit IRS Form 8886 with respect to CIGF8's transactions. In certain situations, there may also be a requirement that a list be maintained of persons participating in such reportable transactions that could be made available to the IRS at its request. A partner's recognition of a loss upon his disposition of units could also constitue a "reportable transaction" for such partner, requiring such partner to file IRS Form 8886. Under the Code, a significant penalty is imposed on taxpayers who participate in a "reportable transaction" and fail to make the required disclosures. The penalty is generally $10,000 for natural persons and $50,000 for other persons (increased to $100,000 and $200,000, respectively, if the reportable transaction is a "listed transaction"). Prospective investors should consult with their own advisors concerning the application of these reporting obligations to their specific situations. Interest and Penalties With certain exceptions, a penalty will be assessed for each month or fraction thereof (up to a maximum of twelve months) that a partnership return is filed either late or incomplete. The monthly penalty is equal to $89 multiplied by the number of partners in the partnership during the year for which the return is due. With certain exceptions, a penalty will be assessed if we fail to furnish to the limited partners a correct Schedule K-1 to our federal income tax return on or before the prescribed due date (including any extension thereof). The penalty is equal to $50 multiplied by the number of partners not furnished a correct Schedule K-1 on or before the prescribed due date (including any extension thereof), with a maximum penalty of $100,000 per calendar year. The Code establishes a penalty equal to 20% (40% in certain gross valuation misstatements) on underpayment of tax attributable to substantial valuation over-statements. This penalty applies only if (i) the value or adjusted basis of any property as claimed on an income tax return exceeds 200% of the correctly determined amount of its value or adjusted basis and (ii) the underpayment of tax attributable to the substantial overvaluation exceeds $5,000 ($10,000 in the case of a corporation other than an S corporation or personal holding company). All or any part of the penalty may be waived by the IRS upon the taxpayer s showing that a reasonable basis existed for the valuation claimed on the return and that the claim was made in good faith. If we were to overstate the value of equipment, a limited partner might be liable for this penalty. There is a 20% penalty on the amount of an underpayment of tax attributable to a taxpayer s negligent disregard of applicable rules and regulations or to the substantial understatement of a tax liability. A substantial understatement is defined as an under-statement for the taxable year that exceeds the greater of 10% of the required tax or $5,000 ($10,000 for corporations other than personal holding companies and S corporations). The penalty can be avoided either by disclosing the questionable item on the return or by showing that there was substantial authority for taking the position on the return. If a questionable item is related to a tax shelter, the understatement penalty can only be avoided by showing that the taxpayer reasonably believed that the treatment of the item was more likely than not the proper treatment. Based upon the representations of the general partner, counsel believes we will not be characterized as a tax shelter for these purposes. It should also be noted that the general partner will not cause us to claim a deduction unless the general partner believes, based upon the advice of its accountants or counsel that substantial authority exists to support the deduction. As stated above, you may be required to report any reportable transaction on your tax return and may be penalized if you fail to do so. The 2010 Act changed various relevant Code sections to impose a penalty for the disallowance of tax benefits from a transaction failing the test of economic substance (or any similar rule of law). This penalty is imposed on a strict-liability basis and at a rate of 20 percent, which is increased to 40 percent if the transaction is not adequately disclosed in the tax return or in a statement attached to the return. See Tax Treatment of Leases. All interest payable with respect to a deficiency is compounded daily. Interest rates are re-determined quarterly and are based on the federal short-term interest rate (the average rate of interest on Treasury obligations maturing in less than three years) for the first month of the preceding quarter plus three percent. Foreign Tax Considerations As noted above, we may acquire equipment which is operated outside the United States. As a consequence, limited partners may be required to file returns and pay taxes in foreign jurisdictions with respect to our foreign source income. The income taxed by the foreign jurisdiction would in such a case be calculated according to the tax laws of the foreign jurisdiction, which may or may not correspond with applicable United States standards. Limited partners who have foreign tax liabilities as a result of their investment in CIGF8 may be entitled to a foreign tax credit or to a deduction for foreign taxes paid which can be utilized to reduce their United States tax liabilities or taxable income, respectively. The calculation of the foreign tax credit is quite complex and no assurance can be given that a credit will be available in the amount of any foreign tax paid. In particular, prospective limited partners should be aware that United States law does not generally allow a foreign tax credit greater than the taxpayer s United States federal income tax liability with respect to the foreign source income of the taxpayer calculated separately for passive income and other income. In the event we earn both types of income, a limited partner must compute separately the foreign tax credit for each type of income. The foreign source income of a taxpayer is calculated according to United States rather than the foreign jurisdiction s tax law. It is possible that a foreign country might impose a tax in an amount greater than the allowable foreign credit under United States law. In such a case, limited partners would be subject to a higher effective rate of taxation than if no foreign tax had been imposed. To the extent that all income taxes paid to a foreign country on a certain type of income exceed the amount of foreign tax credit allowable in any year for such type of income, the excess foreign tax credits generally may be carried back one year or forward ten years to offset United States income taxes on that certain type of foreign source income in those tax years. If we were to suffer an overall foreign loss in one year and incur foreign taxes in a subsequent year, the amount of foreign tax credit allowable in that subsequent taxable year could be reduced on account of the prior foreign loss, regardless of whether the loss resulted in a United States tax benefit to the limited partners. Each limited partner should consult his own tax advisor regarding the applicability of foreign taxes to his own situation. Prior to our entering into an arrangement which contemplates the use of equipment outside the United States, the general partner will consult with its counsel and with special counsel located in the foreign jurisdiction concerning the possibility of structuring the transaction in a manner which will enable the limited partners to avoid being required to file income tax returns in the foreign jurisdiction. The general partner has discretion to cause us to enter into any such arrangement. Partnership Anti-Abuse Rules Treasury Regulations known as the Anti-Abuse Rules purportedly grant authority to the IRS to re-characterize certain transactions to the extent that it is determined that the utilization of partnerships is inconsistent with the intent of the federal partnership tax rules. Under these Anti-Abuse Rules, the IRS may, under certain circumstances, (i) recast transactions which attempt to use the partnership form of ownership, or (ii) otherwise treat the partnership as an aggregation of its partners rather than a distinct separate entity, as appropriate in order to carry out the purposes of the partnership tax rules. The Anti-Abuse Rules also provide that the authority to re-characterize transactions is limited to circumstances under which the tax characterization by the taxpayer is not, based on all facts and circumstances, clearly contemplated under the Code or the applicable Treasury Regulations. These Anti-Abuse Rules are intended to impact only a small number of transactions, which improperly utilize partnership tax rules. It is therefore not anticipated that we and/or the transactions contemplated herein will be affected by the promulgation or administration of these Anti-Abuse Rules. In light of the broad language incorporated in these Regulations, however, no assurance can be given that the IRS will not attempt to utilize the Anti-Abuse Rules to alter, in whole or part, the tax consequences described herein with regard to an investment in CIGF8. State and Local Taxes In addition to the federal income tax considerations described above, prospective investors should consider applicable state and local taxes, which may be imposed by various jurisdictions. A limited partner s distributive share of our income or loss generally will be required to be included in determining the limited partner s reportable income for state or local tax purposes in the jurisdiction in which the limited partner is a resident. Moreover, Pennsylvania and a number of other states in which we may do business generally impose state income tax on a nonresident and foreign limited partner s distributive share of partnership income which is derived from such states. Pennsylvania and a number of other states have adopted a withholding tax procedure in order to facilitate the collection of taxes from nonresident and foreign limited partners on partnership income derived from such states. Any amounts withheld would be deemed distributed to the nonresident or foreign limited partner and would, therefore, reduce the amount of cash actually received by the nonresident or foreign limited partner as a result of such distribution. Nonresidents may be allowed a credit for the amount so withheld against income tax imposed by their state of residency. We cannot, at present, estimate the percentage of our future income that will be from states, that have adopted such withholding tax procedures and it cannot, therefore, estimate the required withholding tax, if any. In addition, while we intend to apply to the applicable taxing authority of such states for a waiver (or a partial waiver), if any, of such withholding requirements, no assurance can be given that such waiver will ultimately be granted. In addition, many states have inheritance or estate taxes that may be imporsed on a decedent's interest in a partnership. Potential investors who are individuals should consult with their own tax advisor regarding the potential impact of state inheritance and estate taxes on a transfer of units upon the death of the limited partner. Future Federal Income Tax Changes Neither the general partner nor counsel can predict what future legislation, if any, may be proposed by members of Congress, by the current administration, or by any subsequent administration, nor can either predict which proposals, if any, might ultimately be enacted. In particular, as a result of the debt-ceiling extension agreement reached by Congress and the Obama Administration in August 2011, and the recent failure of the Joint Select Committee on Deficit Reduction to reach agreement on a budget reduction package, certain federal spending cuts are scheduled to be automatically implemented beginning in 2013. Rather than allowing the scheduled spending reductions to take place, Congress may enact an alternative package or packages that include a blend of spending cuts and tax increases. At this time it is not possible to predict what form such alternatives might take, but it is possible that significant changes to the Code, either by increases in tax rates, elimination of existing tax benefits and/or otherwise unknown changes, may be enacted. Any such changes could significantly affect the tax treatment of investments in CIGF8 and the ultimate returns to investors. In addition, neither the general partner nor counsel can predict what changes may be made to existing Treasury Regulations, or what revisions may occur in the IRS ruling policy. Consequently, no assurance can be given that the income tax consequences of an investment in CIGF8 will continue to be as described herein. Any changes adopted into law may have retroactive effect. ERISA CONSIDERATIONS The following is a summary of the material non-tax considerations associated with an investment in CIGF8 by a Benefit Plan Investor. (See Investment in CIGF8 by certain benefit plans may impose additional burdens on CIGF8 for the definitions of Benefit Plan Investor and Plan. ) This summary is based on provisions of fiduciary and prohibited transaction provisions of ERISA and the prohibited transaction provisions of the Code, as amended through the date of this prospectus, and relevant regulations and opinions issued by the Department of Labor. No assurance can be given that legislative or administrative changes or court decisions may not be forthcoming which would significantly modify the statements expressed herein. Any changes may or may not apply to transactions entered into prior to the date of their enactment. Fiduciaries Under ERISA A fiduciary of an employee benefit plan subject to Part 4 of Title I of ERISA (an ERISA Plan ) should consider whether an investment in the Units is consistent with his or her ERISA fiduciary responsibilities. Generally, the term fiduciary with respect to an ERISA Plan includes any person who has any authority or control over the investment, management or disposition of the assets of the ERISA Plan. In particular, the fiduciary requirements under Part 4 of Title I of ERISA require the discharge of duties solely in the interest of, and for the exclusive purpose of providing benefits to, the ERISA Plan s participants and beneficiaries. A fiduciary is required to perform the fiduciary s duties with the skill, prudence, and diligence of a prudent man acting in like capacity, to diversify investments so as to minimize the risk of large losses unless it is clearly prudent not to do so, and to act in accordance with the ERISA Plan s governing documents, provided that the documents are consistent with ERISA. Among other considerations, the fiduciary of an ERISA Plan should take into account the composition of the Plan s portfolio with respect to diversification by type of asset, the cash flow needs of the Plan and the effects thereon of the liquidity of the investment in Units, the Plan s funding objectives, the tax effects of the investment and the tax and other risks described under United States Federal Income Tax Considerations Investment by Tax Exempt Entities , the fact that the limited partners will consist of a diverse group (including both taxable and tax-exempt entities) and that the management of CIGF8 will not take the particular objectives of any limited partner or class of limited partners into account, the fact that CIGF8 is not intended to hold plan assets of any of the Plans and, therefore, that neither CIGF8, nor any of its respective affiliates, agents or employees will be acting as a fiduciary under ERISA to the Plan, either with respect to the Plan s purchase or retention of its investment or with respect to the management and operation of the business and assets of CIGF8. A person subject to ERISA s fiduciary rules with respect to an ERISA Plan should consider those rules in the context of the particular circumstances of the ERISA Plan before authorizing an investment of a portion of the ERISA Plan s assets in Units. The fiduciary of an IRA or a Plan not subject to Title I of ERISA (because it is a governmental or church plan or because it does not cover any common law employees) should consider that such an IRA or non-ERISA Plan may only make investments that are authorized by the appropriate governing documents and under applicable state law. Prohibited Transactions Under ERISA and the Code Any fiduciary of an ERISA Plan or a person making an investment decision for a non-ERISA Plan or an IRA should consider the prohibited transactions provisions of Section 4975 of the Code and Section 406 of ERISA when making their investment decisions. These rules prohibit Plans from engaging in certain transactions involving Plan assets with parties that are disqualified persons described in Section 4975(e)(2) of the Code or parties in interest described in Section 3(14) of ERISA. Prohibited transactions include, but are not limited to, any direct or indirect transfer or use of a Plan s assets to or for the benefit of a disqualified person (or party in interest), any act by a fiduciary that involves the use of a Plan s assets in the fiduciary s individual interest or for the fiduciary s own account, and any receipt by a fiduciary of consideration for his or her own personal account from any party dealing with a Plan. A disqualified person (or party in interest) who engaged in a prohibited transaction must unwind the transaction to the extent possible, thus losing any profits made in connection with the transaction, and will be required to compensate any Plan that was a party to the prohibited transaction for any losses sustained by the Plan. Section 4975 of the Code imposes excise taxes on a disqualified person that engages in a prohibited transaction with a Plan. With respect to an IRA, if the disqualified person who engages in the prohibited transaction is the IRA owner (or the IRA owner s beneficiary), the IRA may lose its tax exempt status, and the assets will be deemed to be distributed to the IRA owner in a taxable transaction. In order to avoid the occurrence of a prohibited transaction, Units may not be purchased by a Plan for which the general partner or any of its affiliates have investment discretion with respect to the Plan s assets, or with respect to which they have regularly given individualized investment advice that serves as the primary basis for the investment decisions made with respect to such Plan s assets. Neither the general partner nor CIGF8 shall have any liability or responsibility to any Benefit Plan Investor or any other limited partner, including any limited partner that is a tax exempt entity, for any tax, penalty or other sanction or costs or damages arising as a result of there being a prohibited transaction or as a result of partnership assets being deemed plan assets of the limited partner under the Code or ERISA or other applicable law. Plan Assets Under the Department of Labor regulations governing the determination of what constitutes the assets of a Plan in the context of investment securities such as Units, an undivided interest in the underlying assets of a collective investment entity such as CIGF8 will be treated as plan assets of Benefit Plan Investors if (i) the securities are not publicly offered, (ii) 25% or more by value of any class of equity securities of the entity is owned by Benefit Plan Investors, (iii) the interests of the Benefit Plan Investors are equity interests, and (iv) the entity is not an operating company. In order for securities to be treated as publicly offered, they have to be either (a) part of a class of securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 or (b) sold as part of an offering registered under the Securities Act of 1933, and must also meet certain other requirements, including a requirement that they be freely transferable. In counsel s view, CIGF8 is not an operating company and the restrictions on transferability of Units (see Transferability of Units ) prevent the Units from being freely transferable for purposes of the DOL s regulations. Consequently, in order to ensure that the assets of CIGF8 will not constitute plan assets of Benefit Plan Investors, the general partner will take such steps as are necessary to ensure that ownership of Units by Benefit Plan Investors is at all times less than the 25% limitation (as described in the section entitled Investment in CIGF8 by certain benefit plans may impose additional burdens on CIGF8 . In calculating this 25% limit, the general partner shall disregard the value of any Units held by a person who has discretionary authority or control with respect to the assets of CIGF8, or any person who provides investment advice for a fee (direct or indirect) with respect to the assets of CIGF8, or any affiliate of any such a person, as required by ERISA. See Investor Suitability Standards. However, neither the general partner nor CIGF8 shall have any liability or responsibility to any tax exempt entity limited partner or any other limited partner for any tax, penalty or other sanction or costs or damages arising as a result of partnership assets being deemed plan assets of a tax exempt entity limited partner under the Code or ERISA or other applicable law. Each prospective purchaser and transferee will be required to represent whether it is a Benefit Plan Investor, and CIGF8 reserves the right to reject subscriptions for any reason, including that the prospective purchaser is a Benefit Plan Investor or non-Benefit Plan Investor. So that participation by Plans is not significant within the meaning of ERISA and the DOL regulation, CIGF8 will have the right to (i) restrict any transfer of interests in CIGF8 so as to prevent investment by Benefit Plan Investors from becoming significant and (ii) require that existing Plans redeem Units if investment in Units by Plans has become significant because of a redemption of Units or an erroneous representation as to the non-Benefit Plan Investor status of another limited partner. If CIGF8 s assets were determined under ERISA to be plan assets of a limited partner that is a Benefit Plan Investor: The ERISA fiduciary responsibilities would apply to any transactions involving CIGF8 s assets; persons who exercise any authority or control over CIGF8 s assets, or who provide investment advice to CIGF8, would (for purposes of the fiduciary responsibility provisions of ERISA) be fiduciaries of each ERISA Plan that acquires a Unit, and transactions involving CIGF8 s assets undertaken at their direction or pursuant to their advice might violate their fiduciary responsibilities under ERISA, especially with regard to conflicts of interest; a fiduciary exercising his investment discretion over the assets of an ERISA Plan to cause it to acquire or hold the Unit could be liable under Part 4 of Title I of ERISA for transactions entered into by CIGF8 that do not conform to ERISA standards of prudence and fiduciary responsibility; and certain transactions that CIGF8 might enter into in the ordinary course of its business and operations might constitute prohibited transactions under ERISA and the Code. The Plan s fiduciaries might, under certain circumstances, be subject to liability for actions taken by the general partner or its affiliates, and certain of the transactions described in this prospectus in which CIGF8 might engage, including certain transactions with affiliates, may constitute prohibited transactions under the Code and ERISA with respect to such Plan, even if its acquisition of Units did not originally constitute a prohibited transaction. Other ERISA Considerations In addition to the above considerations in connection with the plan assets issue, a decision to cause a Plan to acquire Units should involve considerations, among other factors, of whether: the investment is in accordance with the documents and instruments governing the Plan, the purchase is prudent in light of the diversification of assets requirement and the potential difficulties that may exist in liquidating Units, the investment will provide sufficient cash distributions in light of the Plan s required benefit payments or other distributions, the evaluation of the investment has properly taken into account the potential costs of determining and paying any amounts of federal income tax that may be owed on UBTI derived from CIGF8, the investment is made solely in the interests of the Plan s participants, and the fair market value of Units will be sufficiently ascertainable, and with sufficient frequency, to enable the Plan to value its assets in accordance with the rules and policies applicable to the Plan. Prospective ERISA Plan investors should note that, with respect to the diversification of assets requirement, the legislative history of ERISA and a DOL advisory opinion indicate that the determination of whether the assets of a ERISA Plan that has invested in an entity such as CIGF8 are sufficiently diversified may be made by looking through the ERISA Plan s interest in the entity to the underlying portfolio of assets owned by the entity. Special Limit on Ownership of Units by Benefit Plan Investors To avoid classification of a pro rata portion of CIGF8 s underlying assets as plan assets of Plans, CIGF8 intends to restrict the ownership of Units by Benefit Plan Investors to less than the 25% limitation at all times. See ERISA Considerations - Plan Assets. Special Considerations for Benefit Plan Investors If a subscriber is (i) an individual retirement account ( IRA ), (ii) a Plan, in which only members of the entities or a sole proprietor are plan participants, or (iii) a corporate employee benefit plan, in which the only plan participants are the individual stockholder and his or her spouse, then all plan participants must be accredited investors in order for the subscriber to be an accredited investor. In considering a purchase of Units, the fiduciaries of an ERISA Plan, should take into account (i) the facts and circumstances of the ERISA Plan (e.g., the plan s funding assumptions, the participants ages, compensation and accrued benefits, the Plan s amount and diversity of assets, and the percentage of the ERISA Plan s assets applicable to an investment in Units), (ii) whether the investment satisfies the diversification requirements of ERISA, and (iii) whether the investment is prudent and suitable for the Plan, considering the risky nature of CIGF8 s business and that there is not expected to be a market created in which the Plan can sell or otherwise dispose of the Units, or the securities comprising the Units. Each Benefit Plan Investor considering an investment in the Units is urged to consult his or its own legal, financial or tax advisors. It should be noted that an investment in the Units will not, in and of itself, create a Plan for any potential investor and that, in order to create a Plan, a potential investor must comply with the applicable provisions of the Internal Revenue Code. YOU ARE STRONGLY URGED TO CONSULT YOUR OWN TAX ADVISORS WITH SPECIFIC REFERENCE TO YOUR OWN TAX SITUATION. ERISA Valuations Equipment leasing funds are required to provide annual valuations of their securities to custodians and other third parties, which usually occurs once annually at year end. The purpose of this is to assist fiduciaries of qualified accounts to fulfill their annual tax obligations under ERISA. The annual valuation provided for this purpose is known as an ERISA value. The ERISA value of an equipment fund investment is not necessarily the same as its fair market value. Fair market value appraisals for entities taxed as partnerships, such as CIGF8, have been a challenging task for program sponsors. The potential inefficiencies of the secondary market make program valuations difficult to calculate. Discounts on the secondary market vary from 10% to 80% and equipment leasing complexities are particularly acute because depreciation figures are taken into consideration when valuing each piece of equipment from year to year. Fund Sponsors have provided a range of values to their investors, from secondary market prices to net asset values. While the IRS has been somewhat flexible with valuation rules in this grey area, it is clear that the valuation cannot be based solely on the initial investment price for the life of the investment. Our general partner utilizes the GP Estimate Formula. Under this formula, the ERISA value is assumed to be the investor s purchase price for the first three years after the offering s effective date. We do this because the offering period of a fund could last as long as 24 months, and we then assume all offering proceeds will be invested within 12 months thereafter. After this period, front-end expenses begin to be recovered and excess cash flow can be reinvested in revenue-producing leases, and an ERISA value based upon the actual asset portfolio can be estimated. After reducing the value by the front-end fees, the general partner makes additional adjustments, based upon: Any material changes to the credit of the existing lessees; Accounts receivable issues that require a reserve position; Equipment residual value assumptions; Remaining lease terms; and The anticipated yield and cash flow from the lease contracts. We adjust down for future depreciation and we adjust up for equipment sales above our residual value assumption. Additional factors, such as current cash flow, assumptions for reinvestment, distribution levels, expenses, etc. are also taken into account. MANAGEMENT S DISCUSSION OF CERTAIN FINANCIAL DATA The following discussion includes forward looking statements. Forward looking statements, which are based on certain assumptions, describe our future plans, strategies and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievement to be materially different from the results of operations or plan expressed or implied by these forward looking statements. Accordingly, this information should not be regarded as representations that the results or condition described in these statements or objectives and plans will be achieved. Forward Looking Statements Certain statements within this prospectus, including, but not limited to, the sections entitled Summary, Risk Factors, Investment Objectives and Policies and Management s Discussion of Certain Financial Data may constitute forward-looking statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as may, will, could, anticipate, believe, estimate, expect, intend, predict, continue, further, seek, plan or project and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from those projected. Actual results may differ materially from those in any forward-looking statements because any such statements involve risks and uncertainties and are subject to change based upon various important factors, including, but not limited to, nationwide economic, financial, political and regulatory conditions; the health of debt and equity markets, including interest rates and credit quality; the level and nature of spending in the information, medical and telecommunications technologies markets; the successful sale of our securities in this offering; and the effect of competitive financing alternatives and lease pricing. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we cannot assure investors that our expectations will be attained or that any deviations will not be material. Readers are cautioned that forward-looking statements speak only as of the date they are made and that, except as required by law, we undertake no obligation to update these forward-looking statements to reflect any future events or circumstances. All subsequent written or oral forward-looking statements attributable to us or to individuals acting on our behalf are expressly qualified in their entirety by this paragraph. Overview We are a newly formed Pennsylvania limited partnership with no operating history. With the net proceeds of this offering we intend to acquire various types of equipment, such as information technology equipment; medical technology equipment; telecommunications equipment; and other types of business-essential capital equipment. We intend to lease such equipment predominantly under operating leases. We may also lease equipment under full payout net leases or enter into conditional sales contracts with respect to equipment. We note that the Financial Accounting Standards Board has proposed changes to lease accounting that would eliminate the "operating lease" classification, which may alter the way we account for our leases if such proposals are ultimately adopted, which may take place during the life of CIGF8. In order to purchase equipment we anticipate using a substantial portion of the proceeds of this offering, excess cash flow, debt financing and net disposition proceeds received by CIGF8 prior to our liquidation phase. See Investment Objectives and Policies Information Technology Equipment, and Investment Objectives and Policies Description of Leases. Our operating revenues will be generated primarily from leasing activities. Operating revenues will be utilized to pay expenses and provide cash distributions to limited partners. See Investment Objectives and Policies Description of Leases. As of the date of this prospectus, we have not yet commenced operations. Until receipt and acceptance of subscriptions for the minimum amount Units and the admission of subscribers as limited partners on the initial closing date, we will not begin to acquire equipment or incur indebtedness. Offering proceeds will be placed in an escrow account at Branch Banking & Trust Company ( BB&T ) until the minimum amount of $1,150,000 is reached. No commissions will be paid until the minimum amount is reached. If the minimum amount has not been reached during the offering period, offering proceeds will be promptly returned to investors, with interest and without deduction. At the time of its formation CIGF8 received an initial capital contribution of $1,000 from its General Partner. The Partnership intends to use the offering proceeds to purchase and lease information technology, telecommunications, medical technology and other similar types of equipment. On November 29, 2011, CIGF8 sold a limited partnership interest to the Chief Executive Officer of Commonwealth Capital Corp., the initial limited partner of CIGF8, for $500. We determined the issuance of such interest to be exempt from registration under the Securities Act of 1933, as amended, by virtue of the provisions of Section 4(2) thereof exempting transactions by an issuer not involving any public offering. The level of our future indebtedness cannot be predicted, but is limited to 30% of our aggregate portfolio value. If we require additional cash or our general partner determines that it is in our best interests to obtain additional funds to increase cash available for investment or for any other proper business need, we may borrow funds on a secured or unsecured basis. We currently have no arrangements with, or commitments from, any lender with respect to any such borrowings. We expect to make quarterly distributions. There can be no assurance, however, as to the exact date on which distributions will begin or the amount of any distributions. After our initial escrow closing takes place, we expect that you will begin receiving distributions at the end of the first full calendar quarter after you are admitted to the fund, if sufficient cash is deemed to be available for distributions at that time by the general partner. See Distributions and Allocations. Our general partner anticipates that we will commence the sale of all of our assets beginning approximately eight years after the commencement of this offering. The timing of the sale(s) is subject to the general partner s discretion, and may be extended if in the general partner s determination such extension will enable us to dispose of our assets on more favorable terms. CIGF8 will dissolve on December 31, 2024 or sooner, unless the portfolio has not been liquidated by that date and our general partner deems it necessary to extend CIGF8 s term in order to facilitate an orderly and efficient strategy for the sale of all of CIGF8 s assets. See Investment Objectives and Policies Liquidation Policies. Because our leases will be on a triple-net (or equivalent) basis, we anticipate that no permanent reserve for maintenance and repairs will be established from the offering proceeds. However, our general partner is authorized to establish reserves in the future if and to the extent it deems necessary for maintenance, repairs and working capital. If our general partner or any of our affiliates makes a short-term loan to us, our general partner or affiliate may not charge interest at a rate greater than the interest rate charged by unrelated lenders on comparable loans for the same purpose in the same locality. In no event will we be required to pay interest on any such loan at an annual rate greater than three percent over the U.S. Prime Rate from time to time listed in the Wall Street Journal. All payments of principal and interest on any financing provided by our general partner or any of its affiliates shall be due and payable by us within 12 months after the date of the loan. See Compensation to the General Partner and Affiliates. If available cash flow or net disposition proceeds are insufficient to cover our expenses and liabilities, we will obtain additional funds by disposing of or refinancing equipment or by borrowing within our permissible limits. There is currently no litigation pending or ongoing involving CIGF8 or our general partner, or any of their affiliated individuals, connected to this offering. PARTNERSHIP AGREEMENT SUMMARY The rights and obligations of the partners in CIGF8 will be governed by the partnership agreement, which is attached in its entirety as Appendix 2 hereto. The following statements, and other statements in this prospectus concerning the partnership agreement and related matters, are merely an outline, in no way modify or amend the partnership agreement and are qualified in all respects and in each case by the language of the partnership agreement. All material aspects of the partnership agreement are included in this summary. The Units A maximum of $50,000,000 worth of units are authorized for issuance and sale in the offering. Subscribers who are accepted as limited partners by the general partner on or before the initial closing will be admitted as limited partners on the day of the initial closing. Thereafter, subscribers who are accepted as limited partners by the general partner will be admitted into the partnership as limited partners in one or more closings per week, as subscription volume permits. Transferees of units will be recognized as substituted limited partners on or before the first day of the calendar month following the calendar month in which the general partner receives a completed transfer application and approves the transferee as a substituted limited partner. Our records shall be amended to reflect the substitution of limited partners at least once in each calendar quarter. Non-assessability of Units The units are non-assessable, which means that the unit holder is not liable, solely by virtue of the unit holder s status, for additional assessments or calls on the units by CIGF8 or its creditors. When a unit has been paid for in full, the holder of the unit has no obligation to make additional contributions to CIGF8 s capital. CIGF8 is a limited partnership organized under the Pennsylvania Revised Uniform Limited Partnership Act. While the units are not assessable as described above, under Section 8558 of the Pennsylvania Revised Uniform Limited Partnership Act, a limited partner may be liable to the partnership if the partner has received the return of any part of the partner s contribution in violation of the partnership agreement or the Pennsylvania Revised Uniform Limited Partnership Act. Liability of Limited Partners Limited partners are not personally liable for the obligations of CIGF8, but their investments are subject to the risks of our business and the claims of our creditors. A limited partner, under certain circumstances, may be liable to return any distributions received from us to the extent that, after giving effect to the distribution, all of our liabilities (other than non-recourse liabilities and liabilities to partners on account of their interests in CIGF8) exceed the fair value of our assets, including assets serving as security for non-recourse liabilities. In accordance with the Pennsylvania Revised Limited Partnership Act, as amended, a limited partner may be required to return to the partnership amounts previously distributed to such limited partner for a two year period after the distribution to the extent that the distribution includes a return of the partner s contribution to the partnership, but only if the distribution is made in violation of the partnership agreement or the provisions of the Pennsylvania Revised Uniform Limited Partnership Act. Also, a limited partner who participates in the control of the business of the partnership may be liable to persons who transact business with the partnership reasonably believing, based upon the conduct of the limited partner, that the limited partner is a general partner of the partnership. Allocations and Distributions The provisions of the partnership agreement governing the allocation of tax items and the apportionment of cash distributions are summarized under the caption Allocations and Distributions. Responsibilities of the General Partner The general partner has the exclusive responsibility for the management and control of all aspects of our business. In the course of its management, the general partner may, in its absolute discretion, cause us to purchase, own, lease, sell and/or make future commitments to purchase, lease and/or sell the equipment and interests therein when and upon such terms as it determines to be in our best interests and as it deems necessary for our efficient operation, except that limited partners holding more than 50% of the outstanding units held by all limited partners, referred to as a majority in interest, must approve the sale of substantially all of our assets, except when such sales occur in the orderly liquidation and winding up of our business. A majority in interest of the limited partners may, at any time after the last time at which subscribers for units are admitted as limited partners, remove the general partner. Upon the removal of the general partner, we will be dissolved and liquidated unless, within 60 days of such removal, a majority in interest of the limited partners elects a successor general partner to continue the partnership. Records and Reports The general partner will keep at our principal place of business adequate books of account and partnership records. You will have the right, upon reasonable notice and within normal working hours, and at your expense, to inspect and copy true and full information regarding the state of our business and financial condition, our federal, state and local tax returns, a list of the partners and other information regarding our affairs as you may reasonably request. You will also receive an annual account statement setting forth a current estimated value of your investment. See Reports to Limited Partners for a description of the reports and financial statements, which the general partner will provide to you during the term of CIGF8. Meetings of the Partners The general partner may call a meeting of the limited partners at any time, or call for a vote, without a meeting, of the limited partners on matters on which they are entitled to vote. The general partner is required to call such a meeting, or for such a vote, on the written request of limited partners holding 10% or more of the total units held by all limited partners. Any vote of a limited partner may be made in person or by proxy. We are not required to hold annual or other regular meetings of the partners. Voting Rights of Limited Partners Your voting rights are set forth in the partnership agreement. By a vote of limited partners holding more than one-half of the outstanding units, the limited partners may vote to: approve or disapprove a sale of all or substantially all of our assets; dissolve the partnership; remove or approve the withdrawal of the general partner; prior to the removal, withdrawal or dissolution of the general partner, elect a successor general partner; and amend the partnership agreement except that without the consent of the partner adversely affected, no amendment may be made which: converts a limited partner into a general partner; modifies the limited liability of a limited partner; alters the interest of the general partner or limited partners in net profits, net losses or distributions or alters the general partner s compensation; or adversely affects our status as a partnership for federal income tax purposes. With respect to any units owned by the general partner or its affiliates, the general partner and its affiliates may not vote or consent on matters submitted to the limited partners regarding removal of the general partner or any transaction between CIGF8 and the general partner or its affiliates. In determining the required percentage in interest of units necessary to approve a matter on which the general partner and its affiliates may not vote or consent, any units owned by the general partner or its affiliates shall not be included. Roll-Ups and Conversions We will not enter into any roll-up without the approval of the general partners and the holders of at least 66-2/3% of all outstanding units. A roll-up is defined in the partnership agreement to mean any transaction involving the acquisition, merger, conversion, or consolidation, either directly or indirectly, of CIGF8 and the issuance of securities of a roll-up entity. A roll-up does not include: a transaction involving securities if the securities have been listed for at least twelve months on a national securities exchange, including the NASDAQ Stock Market or a transaction involving the conversion to corporate, trust or association form of only CIGF8 if, as a consequence of the transaction, there will be no significant adverse change in the limited partners voting rights, the term of existence of CIGF8, compensation of the general partner or its affiliates, or CIGF8 s investment objectives. Limited partners who do not consent to an approved roll-up shall be given the option of (i) remaining as limited partners in CIGF8, and preserving their interests therein on the same terms and conditions as existed previously; or (ii) one of (a) remaining limited partners and preserving their interests in CIGF8 on the same terms and conditions as existed previously, or (b) receiving cash in an amount equal to the non-consenting limited partner s pro rata share of the appraised value of the net assets of CIGF8. In the event a roll-up is proposed, an appraisal of our net assets shall be performed by a competent independent expert engaged for the benefit of the partnership and the limited partners. Such appraisal shall be made on the basis of an orderly liquidation of our assets over a 12-month period as of a date immediately prior to the announcement of the proposed roll-up. If the appraisal will be included in a prospectus used to offer the securities of a roll-up entity, the appraisal shall be filed with the Securities and Exchange Commission and the states as an exhibit to the registration statement for the offering. We shall not reimburse the sponsor of a proposed roll-up for the costs of an unsuccessful proxy contest in the event the roll-up is not approved by the limited partners. By the vote of a majority in interest of the limited partners we are permitted to engage in a conversion of CIGF8 into another form of business entity which does not result in a significant adverse change in: the voting rights of the limited partners, the partnership s termination date (currently, December 31, 2024, unless terminated earlier or extended in accordance with the partnership agreement), the compensation payable to the general partner or its affiliates, or the ability to meet our investment objectives without materially impairing the rights of the limited partners. The general partner will make the determination as to whether or not any such conversion will result in a significant adverse change in any of the provisions listed in the preceding paragraph based on various factors relevant at the time of the proposed conversion, including an analysis of our historic and projected operations; the tax consequences (from the standpoint of the limited partners) of the conversion and of an investment in a limited partnership as compared to an investment in the type of business entity into which we would be converted; and the performance of the equipment industry in general, and of the information technologies segment of the industry in particular. In general, the general partner would consider any material limitation on the voting rights of the limited partners or any substantial increase in the compensation payable to the general partner or its affiliates to be a significant adverse change in the listed provisions. Power of Attorney Pursuant to the terms of our partnership agreement, each purchaser of a unit and each transferee of a unit appoints the general partner, acting alone, as the purchaser s or transferee s attorney-in-fact to make, execute, file, and/or record: documents relating to CIGF8 and its business operations requested by or appropriate under the laws of any appropriate jurisdiction; instruments with respect to any amendment; instruments or papers required to continue the business of CIGF8 pursuant to the partnership agreement; instruments relating to the admission of any partner to CIGF8; a master list in accordance with Section 6112 of the Code (or any successor provision), relating to our tax shelter registration (see Income Tax Considerations - Partnership Tax Returns and Tax Information ); and all other instruments deemed necessary or advisable to carry out the provisions of the partnership agreement. The power of attorney is irrevocable, will survive the death, incompetency, dissolution, disability, incapacity, bankruptcy, or termination of the granting purchaser or transferee, and will extend to such person s heirs, successors, and assigns. The general partner will be designated as the Tax Matters Partner who shall have authority to make certain elections on our behalf and that of the limited partners, including extending the statute of limitations for assessment of tax deficiencies against the limited partners with respect to partnership items, and to enter into a settlement agreement with the IRS. See United States Federal Income Tax Considerations IRS Audit of the Partnership. Partnership Term Our term of existence will expire on December 31, 2024, though we may be terminated and dissolved earlier after any of the following events: The vote or written consent of a majority in interest of the limited partners; The dissolution of CIGF8 by judicial decree; The expiration of 60 days following the removal, withdrawal, involuntary dissolution, or bankruptcy (or, in the case of an individual, the death or appointment of a conservator for the person or any of the assets) of the last remaining general partner (or a majority in interest of the limited partners if the terminating event is the removal, bankruptcy, or involuntary dissolution of the last remaining general partner) vote to continue CIGF8 and a successor general partner is elected; The determination by the general partner that it is necessary to commence the liquidation of the equipment in order for the liquidation of all the equipment to be completed in an orderly and business-like fashion prior to December 31, 2024; or The sale or disposition of all our equipment. PLAN OF DISTRIBUTION General The units are offered through Commonwealth Capital Securities Corp., Inc. as dealer manager. The dealer manager may offer the units through other broker-dealers who are members of the Financial Industry Regulatory Authority, or FINRA. The units are being offered on a best efforts basis, which means that the dealer manager and the other broker-dealers are not obligated to purchase any units and are only required to use their best efforts to sell units to investors. The offering of the units is intended to be in compliance with Rule 2310 of FINRA s Rules of Conduct. The maximum underwriting compensation payable under this offering will not exceed 10% of the gross offering proceeds. Total compensation of up to 10% of the gross offering proceeds is expected to be allocated to the following items: Item of Compensation Amount in Dollars(1) As a Percentage of Gross Offering Proceeds Retail Commissions $ 3,500,000 7.0 % Dealer Manager Fee 1,000,000 2.0 % Marketing Reallowance 500,000 1.0 % Total $ 5,000,000 10.0 % (1) Assumes the maximum gross offering proceeds of $50,000,000. The 2% Dealer Manager Fee, above, is used by the Dealer Manager to pay all other costs and expenses associated with the sale, distribution and marketing of the units, as detailed below: Item of Compensation Amount in Dollars(1) As a Percentage of Gross Offering Proceeds Wholesale Commissions $ 462,500 0.925 % Wholesale Salaries 222,872 0.446 % Wholesale Expense Reimbursements 198,000 0.396 % Wholesale Sales Incentives 63,628 0.127 % Retail Sales Seminars 50,000 0.100 % Legal Expenses 3,000 0.006 % Total $ 1,000,000 2.000 % (1) Assumes the maximum gross offering proceeds of $50,000,000. We will pay directly any additional organization and offering expenses. See Prospectus Summary - Estimated Use of Proceeds. We will pay to the dealer manager an aggregate amount of up to seven percent of capital contributions as selling commissions and up to one percent of capital contributions as a marketing reallowance after and only if the required $1,150,000 minimum subscription amount is sold. The dealer manager may reallow all of such selling commissions and marketing reallowance to other participating broker-dealers. The amount of the selling commissions will be determined based upon the quantity of units sold to a single investor. The selling commission and purchase price for all units purchased by an investor will be reduced in accordance with the following schedule: Transaction Size Purchase Price Per Unit Selling Commission $ 1,000 to $249,980 $ 20.00 7 % $ 250,000 to $349,980 $ 19.80 6 % $ 350,000 to $499,980 $ 19.60 5 % $ 500,000 to $749,980 $ 19.40 4 % $ 750,000 to $999,980 $ 19.20 3 % $ 1,000,000 and over $ 19.00 2 % General - Continued The marketing reallowance will be paid to those firms that that provide certain minimum amounts of sales and marketing support to the dealer manager, as set forth in each firm s participating broker agreement with the dealer-manager. The amount of marketing reallowance earned by any firm is subject to a separately negotiated agreement with the dealer manager, and will in no event be greater than one percent. We will also pay the dealer manager a Dealer Manager Fee equal to 2% of the capital contributions received in the offering. The dealer manager agreement, under which the dealer manager will offer the units, which is terminable without penalty by any party on 60 days notice, contains cross-indemnity clauses with respect to certain liabilities between the general partner and the dealer manager, including liabilities under the Securities Act and liabilities arising out of misleading or untrue statements attributable to either party in this prospectus or other materials sent to investors in connection with this offering, and breaches of the underwriting agreement. The dealer manager and participating brokers participating in the offering may be deemed to be underwriters as that term is defined in the Securities Act. Other Expenses of the Offering In addition to the fees and other compensation described above, we will incur additional expenses in connection with the issuance and distribution of the units. The maximum expected amounts of such expenses are as follows: Securities and Exchange Commission Registration Fee $ 5,730 Financial Industry Regulatory Authority Filing Fee $ 5,500 Blue Sky Fees and Expenses $ 100,000 Bona Fide Due Diligence Expenses $ 344,395 Printing Costs $ 200,000 Accounting Costs $ 125,000 Legal Fees and Expenses $ 200,000 Sales Literature Costs $ 120,000 Seminar Attendance $ 129,375 (1) Escrow Fees $ 20,000 Total $ 1,250,000 Except for the SEC Registration Fee and the FINRA Filing Fee, the amounts listed above are estimates. (1) Seminar attendance represents the cost of travel to and attendance at educational workshops and conferences which one or more employees of the sponsor attend. Offering of Units Provided the general partner does not terminate the offering of units earlier, the offering may continue until the full 2,500,000 units are sold, or until the second anniversary of the effectiveness of our registration statement, of which this prospectus is a part (assuming that we properly renew our registration of securities in states that provide for only a one-year, renewable offering period). See Plan of Distribution Escrow Arrangements and Funding. The general partner and its affiliates will not be prohibited from purchasing units, although it is not their present intention to make such purchases. Any units purchased by the general partner or its affiliates would be purchased for their own account and for investment and not for resale. For purposes of satisfying the minimum offering requirement, the general partner or its affiliates may purchase not more than 4.99% of the number of Units needed to meet such minimum requirement. If the general partner or its affiliates purchase any units, the voting rights of the general partner with respect to the units will be as described in the last paragraph of Summary of the Partnership Agreement Voting Rights of Limited Partners . Any purchase of units in connection with this offering must be accompanied by tender of the sum of $20 per unit (subject to the quantity discounts referred to above), which is the full purchase price of a unit; provided, however, that the dealer manager or Participating Brokers may waive the selling commission with respect to the purchase of units by employees of the dealer manager, Participating Brokers, the general partner and its affiliates, so long as those employees are purchasing units for their own accounts. If such fees are so waived, such employees will tender no less than $18.60, for the purchase of each unit. Escrow Arrangements and Funding All funds received by the general partner, the dealer manager or the Participating Broker will be held in the escrow account at Branch Banking and Trust Company, whose address is 223 West Nash Street, Wilson, NC 27893, until an escrow closing, at which time funds collected from multiple investors will be transferred to us and units will be issued. While held in escrow, subscriptions will be held in a BB&T money market account. Thereafter, and prior to proceeds being invested in equipment, proceeds will be held in either short-term United States government securities or interest bearing bank accounts. Any interest (other than de minimis interest, which the general partner deems to be an amount less than the cost associated with the allocation, distribution and tax withholding and reporting thereof) earned on the subscriptions while in escrow will be distributed, net of any tax withholding required by law, directly to the investors promptly following the funding, allocated in accordance with the amount of subscriptions held for each investor and the length of time such subscriptions were held. Any de minimis interest will be retained by CIGF8 and used for equipment acquisitions or other general expenses. After the initial escrow closing, we expect to hold escrow closings approximately once per week, and therefore any escrow interest earned between each closing is expected to be de minimis. The offering may be terminated, in the general partner s discretion, at any time after the minimum subscription amount has been received and accepted by the general partner on our behalf. The general partner also has the discretion to terminate the offering prior to receiving the minimum subscription amount. In such event, we would be dissolved and subscriptions held in escrow, together with any interest actually earned thereon net of any tax withholding required by law would be returned to the subscribers. It is anticipated that the offering of units will terminate no later than the second anniversary of the effectiveness of our registration statement. Subscriptions will be released from the escrow account and returned to the subscribers together with any interest actually earned thereon, net of any tax withholding required by law, in the event the minimum subscription amount has not been received by the second anniversary of the commencement of this offering. Subscribers will be admitted to CIGF8 and receive units at one or more closings. Limited partners will be admitted not later than 15 days after the release from the escrow account to us of the subscriber s funds. Additional closings will be held from time to time during the offering period as subscriptions are accepted by the general partner, but no less often than weekly if subscription volume permits. Subsequent subscriptions will be accepted or rejected by the general partner within 30 days of their receipt. Funds received from rejected subscriptions will be returned to the subscribers immediately upon rejection of their subscription. The final closing will be held shortly after the termination of the offering period or, if earlier, upon the sale of all the units. After the initial closing, limited partners will be admitted to CIGF8 no later than the last day of the calendar week following the date their Subscriptions are accepted by the general partner. After the first escrow closing, any interest earned on subscription amounts held pending subsequent escrow closings is expected to be de minimis, and will be retained by us for investment in equipment or general partnership purposes. Subscription for Units If you satisfy the qualifications described under Investor Suitability Standards and desire to purchase units, you must: (a) Review the subscription agreement attached as Appendix 1 to this prospectus to insure that you are aware of the representations and warranties you will make or be deemed to have made by subscribing for units; and (b) Deliver to the dealer manager a check made payable to BB&T as Escrow Agent for CIGF8, in the amount of $20.00, or such other amount as set forth in the table above, for each unit that you are seeking to purchase. Investments must be made in $20.00 increments. The Sponsor will not complete a sale of units until at least five business days after the date you receive a final prospectus and shall send you a confirmation of your purchase. Subscriptions may be withdrawn prior to the completion of the sale of the Units subscribed for, which completion cannot take place until at least five business days after the date the investor receives a final prospectus. After completion of the sale, the subscription may not be withdrawn without the consent of the general partner. Prospective investors that are not natural persons may be required to deliver evidence of their authority to subscribe for units, or opinions of counsel as to their authority to subscribe for units and the binding effect of their subscriptions. No sales will be made to discretionary accounts without the prior specific written approval of the transaction by the customer. The general partner has the right to reject your subscription for any reason whatsoever, including your failure to satisfy the suitability standards described under Investor Suitability Standards. Subscribers Representations and Warranties If you decide to purchase units, you must execute or authorize the execution of a subscription agreement to be submitted to the general partner. In the States of Florida, Iowa, Maine, Michigan, Minnesota, Missouri, Nebraska, North Carolina, Oregon, Tennessee and Texas, you are required to personally sign the subscription agreement. You will make certain representations and warranties to the general partner in your subscription agreement or by paying for your units, including that you: have received this prospectus, including the form of partnership agreement attached hereto as Appendix 2; meet the applicable requirements as to suitability and net worth and recognize that an investment in units is an illiquid investment; are subscribing for units in your own account or for the account or benefit of a family member or members or in a fiduciary capacity for the account of another person; accept and adopt the provisions of CIGF8 s Limited Partnership Agreement; and authorize the general partner, as your attorney-in-fact, to execute the partnership agreement and such other documents as may be required to carry out the business of CIGF8. You are also instructed that you should not rely upon any information not specifically set forth in this prospectus or any supplements thereto in making a decision to invest in CIGF8, and the general partner, the dealer manager and CIGF8 accept no responsibility for information provided to an investor that is not clearly marked as being prepared and authorized by them for use with the public. Also, an investment in CIGF8 involves certain risks including the matters set forth under the captions Risk Factors, Conflicts of Interest, Management and Income Tax Considerations in this prospectus. Special Limit on Ownership of Units by Benefit Plans To avoid classification of a pro rata portion of our underlying assets as plan assets of investors which are benefit plans, we intend to restrict the ownership of units by benefit plans to less than 25% of the total value of outstanding units at all times. See ERISA Considerations Plan Assets. Benefits Plans include qualified plans, tax exempt entities and certain other entities included in the definition of benefit plans in this prospectus. Sales Material Sales material may be used in connection with the offering only when accompanied or preceded by the delivery of this prospectus, unless an item is permitted by applicable regulations to be used independently of the prospectus. Only sales material which indicates that it is distributed by the general partner or dealer manager may be distributed to prospective investors. Material regarding an investment in CIGF8 may include a question and answer sales booklet, brochures, a speech for public seminars or webinars, an invitation to attend public seminars, slide and video presentations, prospecting letters, mailing cards, fact sheets, handouts, offering summaries, folders and tombstone advertisements; all of which would provide information regarding the general partner and CIGF8. In certain jurisdictions, such sales material will not be available. Sales material must present a balanced discussion of the risks and rewards of investing in CIGF8. Use of any materials will be conditioned on the provision of such materials to the SEC and the filing with, and if required, approval by, other appropriate regulatory authorities. Such clearance does not mean, however, that the agency allowing use of the sales literature has passed on the merits of this offering or the accuracy of the material contained in such literature. Other than as described herein, we have not authorized the use of sales material. Although the information contained in such sales material will not conflict with any of the information contained in this prospectus, such material does not purport to be complete and should not be considered as part of this prospectus or the registration statement of which this prospectus is a part, or as incorporated in this prospectus or the registration statement by reference, or as forming the basis of the offering. The offering is made only by this prospectus. ESTIMATED USE OF PROCEEDS The following table explains the estimated use of proceeds of the offering of units. Except as otherwise disclosed in this prospectus, we will not engage in transactions with the general partner or any of its affiliates and all items of compensation are disclosed in the table below or under the caption Compensation of General Partner and Affiliates. Minimum Proceeds (57,500 Units) Maximum Proceeds (2,5000,000 units) Amount Percent Amount Percent Gross Offering Proceeds $ 1,150,000 100.00 % $ 50,000,000 100.00 % Selling Commissions 80,500 7.00 % 3,500,000 7.00 % Dealer Manager Fee 23,000 2.00 % 1,000,000 2.00 % Marketing Reallowance 11,500 1.00 % 500,000 1.00 % Organizational and Offering Expenses 34,500 3.00 % 1,250,000 2.50 % Total Offering Expenses 149,500 13.00 % 6,250,000 12.50 % Net Proceeds to Partnership Available for Investment 1,000,500 87.00 % 43,750,000 87.50 % Equipment Acquisition Fees 39,100 3.40 % 1,531,250 3.06 % Proceeds to be Invested in Equipment $ 961,400 83.60 % $ 42,218,750 84.44 % The amount of the underwriting commissions will range between two percent and seven percent of capital contributions based upon the quantity of units sold to a single investor. Commissions are calculated as if all units are sold at $20.00 per unit and do not take into account any reduction in selling commissions for certain large volume purchases and for purchases by certain employees of the general partner, dealer manager, participating brokers and their affiliates. See Plan of Distribution, on page 89. A marketing reallowance may be paid to broker-dealers that meet certain sales targets, to reimburse them for permissible marketing expenses, such as bona fide training and education seminars and to cover the cost of conferences held by such broker-dealers in connection with our offering. This fee will vary by firm, and will be up to 1%, depending upon the specific terms separately negotiated with each selling dealer. Organizational and offering expenses consist of estimated legal, accounting and printing expenses, registration fees, bona fide due diligence expenses (on a fully-accountable basis based upon detailed and itemized invoices only), and other expenses related to the formation of the partnership and costs incurred in connection with the preparation of sales literature. These expenses will be paid by the general partner using funds it receives for organizational expenses as units are sold, which will be equal to three percent of capital contributions up to $25,000,000, and two percent of capital contributions in excess of $25,000,000 up to a maximum of $1,250,000. We will pay any expenses above $1,250,000, if any, out of offering proceeds. If actual expenses are less than $1,250,000, the general partner will reimburse us for any amounts it received for such expenses in excess of the actual expenses. An equipment acquisition fee of three and one-half percent (3.5%) of the purchase price of equipment we purchase will be payable by us to the general partner. Equipment acquisition fees are capitalized, and are considered a part of the purchase price of equipment acquired. Proceeds to be invested in equipment represents the amount of investor funds we expect to invest in equipment, excluding the equipment acquisition fees. This does not include equipment acquired with leverage or with undistributed proceeds from the sale of equipment, because such monies are not offering proceeds. Because our leases are expected to be on a triple-net basis (meaning all maintenance, insurance and taxes must be paid by the lessee), we will not establish any permanent reserve for maintenance and repairs. However, the general partner, in its sole discretion, may retain a portion of either the offering proceeds, cash flow or net equipment sale proceeds for maintenance, repairs and for any other currently unanticipated working capital needs, if such a need arises. The maximum front-end fees (which include fees and expenses incurred by any person in connection with our organization and acquisition of equipment during the initial organization and acquisition phase) that could be paid during the first fiscal year of operations without deduction of expenses are $8,837,500 (assuming the maximum number of units are sold and the maximum amount of leverage is incurred excluding fees earned with retained proceeds). REPORTS TO LIMITED PARTNERS The general partner will deliver to each limited partner, within 120 days after the end of each year, our balance sheet dated as of December 31 of such year, together with statements of operations, partners capital, and cash flows for such year, prepared on an accrual basis in accordance with generally accepted accounting principles and accompanied by a report of independent registered public accounting firm from our independent registered public accounting firm. A reconciliation of the financial statements with respect to information furnished to you for income tax purposes will be included in the Notes to Financial Statements of our audited financial statements included in our annual report on Form 10-K. The general partner will within such period also furnish limited partners with an annual report that describes (a) the activities of CIGF8 for the year, (which will include for each item of equipment acquired by CIGF8 which individually represents at least 10% of the total investment in equipment, (i) condition of equipment, (ii) how equipment is being utilized as of the end of year (leased, operated, held for lease, repair, or sale), (iii) remaining term of leases, (iv) projected use of equipment for next year (renew lease, lease, retire, or sell), and (v) such other information relevant to the value or utilization of the equipment as the general partner deems appropriate including the method used or basis for valuation), (b) distributions to the limited partners during the year, separately identifying distributions from (1) cash flows from operations, (2) reserves, (3) proceeds from the disposition of equipment and investments, and (4) reserves from the gross proceeds of the offering originally obtained from investors, and (c) any costs incurred by the general partner and its affiliates in performing administrative services which are reimbursed by CIGF8 during the year. Within 60 days after the end of each calendar quarter, the general partner will also furnish a report of all services rendered and all fees received by the general partners and its affiliates from us, an unaudited balance sheet, a statement of income, a statement of changes in financial position and a report on our activities. The unaudited balance sheet, statements of operations, partners' capital and cash flows, each of which will be included in our Form 10-Q filed with the Securities and Exchange Commission, will be prepared on an accrual basis in accordance with accounting principles generally accepted in the United States. Until the net proceeds of the offering of units are fully invested, the general partner will furnish to the limited partners, within 60 days after the end of each calendar quarter, a report of equipment acquisitions during the quarter, including the type and manufacturer of each item of equipment, the purchase price of the equipment, and any other material terms of purchase, a statement of the total amount of cash expended by CIGF8 to acquire the equipment (including an itemization of all commissions, fees, and expenses and the name of each payee), and a statement of the amount of net proceeds in CIGF8 which remain unexpended or uncommitted at the end of the quarter. The general partner will also furnish to all limited partners within 75 days after the end of the year other information regarding CIGF8 necessary for the preparation of their tax returns. LEGAL MATTERS In connection with the units offered hereby Greenberg Traurig LLP, Philadelphia, Pennsylvania, counsel to the dealer manager, the general partner and CIGF8, has passed upon legal matters for CIGF8 and the general partner regarding the valid issuance of the units and the United States federal income tax consequences of an investment in the units. EXPERTS The consolidated financial statements of CCC as of February 28, 2011 and 2010 and for the years then ended, the balance sheet of the general partner, Commonwealth Income & Growth Fund, Inc. as of February 28, 2011 and the balance sheet of CIGF8 as of March 31, 2012, respectively, appearing in this prospectus and registration statement, have been audited by Asher & Company, Ltd., independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. WHERE YOU CAN FIND ADDITIONAL INFORMATION We will provide, at no cost, upon the request of an interested investor, a copy of the most recent annual report on Form 10-K, filed with the Securities and Exchange Commission for Fund I, Fund II, Fund III, Fund IV, Fund V, Fund VI and Fund VII. You can request Form 10-Ks or 10-Qs for Funds I through VII by calling 1-800-249-3700 and asking to speak to an investor relations representative. You may also make your request in writing to: Chief Compliance Officer, Commonwealth Capital Securities Corp., 400 Cleveland Street, Seventh Floor, Clearwater, Florida 33755. This prospectus does not contain all the information set forth in the registration statement and the exhibits relating thereto, which the sponsor has filed with the Securities and Exchange Commission, Washington, D.C., under the Securities Act of 1933, as amended, and to which reference is hereby made. You may read and copy any materials we file with the SEC at the SEC Public Reference Room at 100 F. Street, N.E., Washington DC 20549. Further information on the operation of the Public Reference Room is available by contacting the SEC at 1-800-SEC-0330. The Commission also maintains a website that contains reports, proxy statements, registration statements and other information regarding registrants that file electronically at http://www.sec.gov. Your subscription must be accepted by the general partner. Once accepted, this will constitute the investor s agreement to the terms of the limited partnership agreement and the authority of the general partner. APPENDIX 1 SUBSCRIPTION AGREEMENT COMMONWEALTH INCOME & GROWTH FUND 8, LP (A Pennsylvania Limited Partnership) SUBSCRIPTION AGREEMENT SIGNATURE PAGE POWER OF ATTORNEY $50,000,000 Maximum (2,500,000 Units) and $1,150,000 Minimum (57,500 Units) Commonwealth Capital Securities Corp. 400 Cleveland Street 7th Floor Clearwater, FL 33755 2,500,000 Units - ($20 per Unit) Minimum Initial Investment: $5,000 (250 Units) or $3,000 (150 Units) for IRAs, Keoghs and Pension Plans Minimum purchase may be higher in certain states. INSTRUCTIONS Please be sure to complete and submit all four (4) original pages of this agreement. All pertinent areas MUST be filled in or your application will be delayed or returned for further documentation. Please pay particular attention to the shaded areas. A. INVESTMENT: Please enter the number of units purchased. The minimum purchase is 250 units or 150 units for IRAs, Keoghs and Pension Plans. Each unit is $20.00. Indicate if this is an initial or additional investment. Enter the total dollar amount of the investment. MAKE ALL CHECKS PAYABLE TO BB&T AS ESCROW AGENT FOR CIGF8. B. TYPE OF OWNERSHIP: Indicate whether ownership is non-custodial or custodial. If the ownership is custodial, the custodian information must be completed. (See notice to investors on bottom of page 2.) C. INVESTOR INFORMATION: Please complete this section in full. Enter subscriber s and, if applicable, co-subscriber s name, date(s) of birth, social security number(s) AND address(es). Check citizenship status and, if applicable, origin of corporation or partnership. All subscribers must sign application. D. BROKER/DEALER INFORMATION: Please include branch and home office information. The financial consultant and branch manager must sign this agreement. E. TERMS AND CONDITIONS: Please read the terms and conditions. All investors MUST initial in the areas provided. F. SPECIAL PAYMENT INSTRUCTIONS: Please complete if payments are to be made to an entity other than to the subscriber. For brokerage accounts, check with your Broker Dealer for payee and mailing address information. PLEASE DIRECT ALL QUESTIONS TO: 877-654-1500 FAX INQUIRIES TO: 727-450-0673 SECTION A. INVESTMENT Subscriber Name Units Purchased Co-Subscriber Name Total Investment $ (If Subscriber is a Trust or other entity, the full legal name of the Trust or entity should be entered here.) This is an: Initial Investment; OR Additional Investment NAV Purchase: Are you an employee of a selected agent? Yes No $5,000 Minimum ($3,000 for an IRA) in $20 increments. Total capital must be in increments of $20.00. MAKE CHECKS PAYABLE TO: BB&T AS ESCROW AGENT FOR CIGF8 We do not accept cash or currency due to Anti-Money Laundering considerations. SECTION B TYPE OF OWNERSHIP NON-CUSTODIAL OWNERSHIP Individual Ownership (one signature required) TOD (Transfer on Death); Include name of beneficiary Joint Tenants with Right of Survivorship (all parties must sign) Community Property (all parties must sign) Tenants in Common (all parties must sign) Corporate Ownership (authorized signature required and copy of corporate resolution with corporate seal is required) Partnership Ownership (authorized signature required) Uniform Gift to Minors Act (custodian signature required), State of _____, as Custodian for _________________ Trust (specify type) ______________________________Under agreement dated (required) ____________ Trusts MUST submit a complete copy of trust or a signed Trust Certificate (required for processing). Other (please specify) ______________________________________________________ CUSTODIAL OWNERSHIP (it is the financial consultant s responsibility to set up the custodial account.) Traditional IRA or Individual Retirement Annuity (custodian signature required) Roth IRA (custodian signature required) Pension or Profit-Sharing Plan or other Employee Welfare Benefit Plan (trustee signature(s) required) KEOGH (trustee signature required) Simplified Employee Pension/Trust (trustee signature required) Name of custodian or other administrator: ____________________ A trust, plan or account which forms a part of, or has been determined by the IRS to be, any of the above Other (Please specify) ______________________________________________________ custodian information: Name of Custodian or Trustee __________________________________________________ Mailing Address _____________________________________________________________ Tax ID No. ____- _____________________________ Custodial Account No. _________________________ Custodian Telephone (_____) _______________ Custodian Signature Date SECTION C INVESTOR INFORMATION SUBSCRIBER Tax I.D. No. or Name: ______________________________ Date of Birth ___________ Social Security No. _________________ CO-SUBSCRIBER: Tax I.D. No. or Name: ______________________________ Date of Birth ___________ Social Security No. _________________ Physical Street Address_______________________________________________________________________________________ City ______________________________________ State _______________ Zip Code _______________ Preferred Mailing Address ______________________________City ______________State_______ Zip_____ Home Telephone No.(______) ____________________ E-mail address______________________________ Please indicate citizenship status: (Please review Investor Suitability Standards in the Prospectus) U.S. Citizen (MUST Attach IRS Form W9) Resident Alien (MUST Attach IRS Form W9) Non-Resident Alien (MUST Attach IRS Form W8) If Corporation or Partnership: U.S. (MUST Attach IRS Form W9) Foreign (MUST Attach IRS Form W8) SECTION D BROKER/DEALER INFORMATION Broker/Dealer Name_____________________________________________________________________ Financial Consultant s Name(s)___________________________________ E-mail Address _______________ Branch Office Address ________________________________ City _______________ State____ Zip_____ Preferred Mailing Address_____________________________ City________________ State_____ Zip_____ Home Office Address ________________________________ City ________________ State____ Zip_____ Branch Phone (______) ______________________Fax (______) __________________________ By selling financial consultant: In compliance with Rule 2310 of FINRA s Conduct Rules, I represent that I have reasonable grounds to believe, based on information from the investor(s) concerning investment objectives, other investments, financial situation and needs, and any other information known by me, that investment in the Limited Partnership is suitable for such investor(s) and that I have informed the investor(s) of the lack of liquidity and marketability of the investments and confirm that the investor(s) signatures appear above. (Signatures of both representatives required if joint account.) Customer Identification Program (REQUIRED) At the time of subscription I verified one of the following (check one): Driver s License Government-Issued ID X _________________________________________________________________________________________________________ Financial Consultant s Signature Print Name Date X _________________________________________________________________________________________________________ Branch Manager s Signature Print Name Date SECTION E TERMS AND CONDITIONS Each person or entity named as a registered owner on the Subscription Agreement (the Subscriber ) desires to become a Limited Partner of Commonwealth Income & Growth Fund 8, LP, (the Partnership ) and to purchase units of partnership interest (the Units ) of the Partnership in accordance with the terms and conditions of the final Prospectus, as supplemented or amended (the Prospectus ), and the Partnership s Limited Agreement (the Partnership Agreement ), attached as Appendix 2 to the Prospectus. BY EXECUTING THIS AGREEMENT, A SUBSCRIBER DOES NOT WAIVE ANY RIGHTS HE, SHE OR IT MAY HAVE UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 or any State securities law. In connection herewith, the Subscriber represents, warrants, and agrees as follows: 1. Subscription. The Subscriber agrees to purchase the number of Units set forth in the space provided on the Signature Page of this Subscription Agreement and delivers herewith the full amount required to purchase such Units. 2. Acceptance. The Subscriber hereby acknowledges and agrees that the General Partner of the Partnership (the General Partner ) may in its sole and absolute discretion accept or reject the Subscriber s subscription, in whole or in part, and that, if rejected, the amount of the Subscriber s subscription which is rejected will be promptly returned to the Subscriber, without interest. The General Partner may not complete the sale of a Unit to a Subscriber until at least five business days after the date the Subscriber has received the final Prospectus. 3. No Revocation. The Subscriber hereby irrevocably acknowledges and agrees that he will not be entitled to revoke or withdraw his subscription, except during the five business days following the Subscriber s receipt of the final Prospectus. 4. Adoption of Partnership Agreement. The Subscriber hereby accepts the provisions of the Partnership Agreement and agrees to become a Limited Partner thereunder. 5. Representation and Warranties. The Subscriber represents and warrants to the Partnership, the General Partner, the affiliates, agents and representatives of the Partnership of the General Partner, and any broker-dealer involved in the offering of Units for sale that: * By signing this Subscription Agreement below, Subscribers are making the following representations (investors must initial each representation below). _____ (a) The Subscriber has received the final Prospectus and the Limited Partnership Agreement; _____ (b) The Subscriber agrees to the provisions in this Subscription Agreement, and by executing this Subscription Agreement, is entering into a Limited Partnership Agreement, agreeing to invest money; _____ (c) The Subscriber meets the minimum net worth and financial suitability requirements set forth in the Prospectus under Investor Suitability Standards, as well as any additional minimum financial standards required by state securities authorities which are applicable to the Subscriber; _____ (d) The Subscriber is subscribing for Units in his, her or its own account or for the account or benefit of a family limited partner or limited partners or in a fiduciary capacity for the account of another person; _____ (e) The Subscriber has received no representations or warranties from the Partnership, the General Partner, or any affiliates, agents or representatives of the Partnership other than those contained in the Prospectus; _____ (f) The subscriber acknowledges that this investment is not liquid; _____ (g) The subscriber represents that the information set forth in this Subscription Agreement, Signature Page and Power of Attorney is true and correct; and _____ (h) By executing this Subscription Agreement, the Subscriber is not waiving any rights he or she may have under the Securities Act of 1933, as amended. The Partnership reserves the right to assert these representations as a defense in any subsequent litigation in which one or more of the representations is in issue. The Office of the Kansas Securities Commissioner recommends that Kansas investors should limit their investment in CIGF8 units and similar direct participation programs to not more than 10% of their liquid net worth. Liquid net worth is that portion of total net worth (total assets minus total liabilities) that is comprised of cash, cash equivalents and readily marketable securities. Kentucky and Oregon investors shall not invest more than 10% of their liquid net worth in CIGF8 units. Alabama investors may not invest more than 10% of their net worth in CIGF8 and its affiliates. SECTION F- SPECIAL PAYMENT INSTRUCTIONS Payment to individual or entity other than legal registrant: Payee Name For Account of Street Address City, State, Zip Account Number I wish distributions of the partnership to be reinvested in additional units during the offering period. SECTION G POWER OF ATTORNEY By signing this Subscription Agreement below, the Subscriber hereby makes, constitutes and appoints the General Partner, with full power of substitution and ratification, its true and lawful attorney-in-fact for the purposes and in the manner provided herein and in the Partnership Agreement. Pursuant to the terms of the Partnership Agreement, each purchaser of a Unit and each transferee of a Unit appoints the General Partner, acting alone, as the purchaser s or transferee s attorney-in-fact to make, execute, file, and/or record (a) documents relating to the Partnership and its business operations requested by or appropriate under the laws of any appropriate jurisdiction; (b) instruments with respect to any amendment of the Partnership Agreement or its Certificate of Limited Partnership; (c) instruments or papers required to continue the business of the Partnership pursuant to the Partnership Agreement; (d) instruments relating to the admission of any Partner to the Partnership; (e) a master list in accordance with Section 6112 of the Code (or any successor provision), relating to the Partnership s tax shelter registration; and (f) all other instruments deemed necessary or advisable to carry out the Partnership s business or the provisions of the Partnership Agreement. The power of attorney is irrevocable, will survive the death, incompetency, dissolution, disability, incapacity, bankruptcy, or termination of the granting purchaser or transferee, and will extend to such person s heirs, successors, and assigns. Each Limited Partner authorizes such attorney-in-fact to take any further action which such attorney-in-fact shall consider necessary or advisable in connection with any of the foregoing, hereby giving such attorney-in-fact power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in and about the foregoing as fully as such Limited Partner might or could if personally present, hereby ratifying and confirming all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. The power of attorney granted hereby and pursuant to Section 16.1 of the Partnership Agreement, (a) is a special power of attorney coupled with an interest and is irrevocable; (b) may be exercised by the attorney-in-fact by listing all of the Limited Partners executing any document with the signature of the attorney-in-fact acting as attorney-in-fact for all of them; and (c) shall survive the delivery of an assignment by a Limited Partner of the whole or a portion of his interest in the Partnership, except that where the assignee is admitted as a substituted Limited Partner, the power of attorney shall survive the delivery of such assignment for the sole purpose of enabling such attorney-in-fact to execute, acknowledge and file any document necessary to effect such substitution. INVESTOR SIGNATURES Each Subscriber and Co-subscriber must sign and date below: X _______________________________________________________________________________ Subscriber s (or Trustee s) Signature Date X _______________________________________________________________________________ Co-subscriber s Signature or Authorized Representative Date FOR OFFICE USE ONLY This subscription agreement, signature page and power of attorney will not be an effective agreement until it is accepted by the General Partner of Commonwealth Income & Growth Fund 8, LP. Agreed to and accepted by ____________________________________________________ General Partner CCSC Receipt Date Date into Escrow Closing Number Closing Date APPENDIX 2 LIMITED PARTNERSHIP AGREEMENT IN WITNESS WHEREOF, the parties have executed, or have caused their duly authorized officer to execute, this Amended and Restated Limited Partnership Agreement of Commonwealth Income & Growth Fund 8, LP on the date first written above. GENERAL PARTNER: COMMONWEALTH INCOME & GROWTH FUND, INC. By: /s/ Henry J. Abbott Henry J. Abbott, President INITIAL LIMITED PARTNER: /s/ Kimberly A. Springsteen-Abbott Kimberly A. Springsteen-Abbott APPENDIX 3 FINANCIAL STATEMENTS APPENDIX 4 PRIOR PERFORMANCE TABLES ANY SUPPLEMENTS AND/OR STICKERS WHICH UPDATE THIS PROSPECTUS ARE CONTAINED ON THE INSIDE BACK COVER SUPPLEMENT FOR ALABAMA, MINNESOTA AND OHIO INVESTORS Although this partnership uses the word Growth in its title, the assets to be acquired by the partnership will not appreciate in value and will in fact lose value rapidly after acquisition. By using the term Growth, the sponsor of this partnership means that the sponsor will purchase additional equipment with money that otherwise could be distributed to investors as a return on their investment. Alabama investors please take note of the following: The Issuer of these securities is Commonwealth Income & Growth Fund 8, LP, a Pennsylvania Limited Partnership ( CIGF8 ). The General Partner of CIGF8 is Commonwealth Income & Growth Fund, Inc., a Pennsylvania corporation. The Sponsor of CIGF8 is Commonwealth Capital Corp., a Pennsylvania corporation, which is the 100% owner of the General Partner. In the State of Alabama, you are required to personally sign the subscription agreement. You will make certain representations and warranties to the general partner in your subscription agreement or by paying for your units, including that you have received the final prospectus. SUPPLEMENT FOR PENNSYLVANIA INVESTORS Because the minimum closing amount is less than $2,000,000, you are cautioned to carefully evaluate the program s ability to fully accomplish its stated objectives and to inquire as to the current dollar volume of program subscriptions. Pennsylvania law generally requires that in offerings such as ours, the ratio of the maximum amount offered to the minimum amount offered be no greater than 20 to 1. Because our maximum amount offered is $50,000,000, the minimum amount required to meet the ratio is $2,500,000. The minimum offering amount for this offering is $1,150,000. Therefore, until a minimum of $2,500,000 is raised from investors, we must either (i) create a separate escrow account for Pennsylvania investors, which will not release funds from escrow until a minimum of $2,500,000 has been raised, or (ii) prohibit sales in Pennsylvania until a minimum of $2,500,000 has been raised. To avoid the expense associated with a separate escrow account, we have elected to delay selling our units in Pennsylvania until at least $2,500,000 has been raised. Please be advised that any information represented that is not contained in this prospectus has not been authorized by CIGF8, the general partner or the dealer manager. If any material change in the prospectus occurs, this prospectus will be appropriately amended or supplemented. The use of forecasts in this offering is also prohibited and not permitted. Until 90 days after the effective date of this prospectus, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. You should carefully review and consider this information before making your investment decision. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the partnership since the date hereof. However, if any material change occurs while this prospectus is required by law to be delivered, this prospectus will be amended or supplemented accordingly. [LOGO] Table of Contents Page Investor Suitability Standards 1 Prospectus Summary 4
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+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to US-LBJ Husbandry Industry Int l, Inc. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on October 22, 2010 in the State of California. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. Business Strategy We are a development stage company. The Company will be a dairy farm equipment exporter. We will sell production equipment to buyers on an international basis. We have a twenty year contract with Shuangcheng Ke ao Animal Husbandry Co., Ltd., and will work towards modernizing production technology to make sure that individuals and producers the world over may economically produce quality dairy product. The agreement merely creates a trading relationship with our potential joint venture partner and lays out the intent of the partners for the terms of a joint venture. The Company has not yet generated any revenues. The agreement confirms their mutual intent to identify and work for certain projects together in the next 20 years. There is no time limit for the start of the Joint Venture and the agreement merely creates a trading relationship at this time. If the parties enter into a formal Joint Venture in the future the registrants percentage will be 21.65% of the Joint Venture. The trading partner is a well established entity in the PRC operating and generating revenue for a number of years. On August 8, 2011, California State Senate Republican Caucus Chairman Bob Huff sent a letter to Wen Hua Zhao of the PRC Heilongjiang Province Department of Commercial Affairs, inviting an official delegation from Heilongjiang Province, China to visit California in the Fall of 2011. The letter made explicit that the invitation was extended to twenty-four listed individuals. Mr. Huff made clear that the delegation's purpose was to encourage culture, trade, economic and business exchange between the United States and China, and that the letter could be used for visa applications at a consulate. As the company would benefit from the fostering of culture, trade, economic and business exchange to which Mr. Huff referred, it was decided that the company would take part in sponsoring the delegation's visit. Such sponsorship is hoped to improve the name-recognition of the company, and to encourage goodwill among potential customers, vendors, etc., in the future. To that end, the company has helped pay for a portion of the expenses incurred by the delegation. Several U.S. cities were visited, including New York, Buffalo, Pittsburgh, Los Angeles, and San Francisco. Members of the delegation learned much useful information about local culture, entrepreneurial practices, and academics. The company paid for portions of the travel costs, including airfare and automobile expenses. The company has helped pay for a portion of the costs of boarding. In certain cities, dinner receptions were held in honor of the delegation members. In San Francisco, for example, a dinner reception was held on October 26, 2011. Officers and/or representatives of the company were present at that event. The corporation paid for a portion of the cost involved in renting the space, and preparing for the event: food, planning, decorations, etc. Additionally, there was an important meeting on March 26, 2012 in Hong Kong discussing the development of the company, and of commerce with Heilongjiang Province. The meeting discussed cooperation between US-based companies and China-based companies. Heilongjiang Province government officials attended, as did officers of the company, flying to Hong Kong. Airfare, other travel expenses, and lodging, were borne by the corporation. Officials from the registrant attended these events which lead the to signing of the cooperation agreement. These events were costly formal official ceremonies and heavily attended. The registrant can provide the commission with pictures of its officials at these events should the Commission deem it necessary. The Company has continued to foster these relationships to narrow down the types and specifications of products which will have the greatest interest and revenue generation possibilities in the PRC. Other companies with relations to our promoter were and who are funded by our shareholder, Monica Dong among the companies participating including but not limited to US-Ruquan Dairy Production Int l, Inc., US-Feiwo Agricultural Industry International, Inc., US-BLH Bio-Engineering Int l. Inc., US-DADI Fertilizer Industry International, Inc., US- PS Energy Save Construction Material Int l, Inc., US-HM Straw Construction Material Intl, Inc., US-Lujia Pharmaceutical Industry International, Inc., US-TH Energy Science & Technology Int l, Inc., US-Tianxia Software Technology International, Inc., US-TQ Beverage Products Int l, Inc. all of whom have filed registration statements with the SEC. The Company has an accumulated deficit of $83,379 since inception and our auditors issued a going concern opinion in its December 31, 2011 audit. We will work hard to scour the United States and elsewhere for companies producing the very best in the industrial-scale equipment used in dairy farming. It may take us several months to build a network of business contacts to facilitate the commencement of purchase of equipment. Once adequate efficiencies are achieved in logistics and supply, we may begin an international marketing campaign, at first maximizing the personal contacts of our founders, to guarantee a suitable market for our products. Our executive offices are located at 699 Serramonte Blvd. Ste 212, Daly City, CA 94015. Our telephone number is (650) 530-0699. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivilant of Form 10 information by the Company with the SEC. The Offering This prospectus covers up to 19,500,000 shares to be sold by our selling shareholders who will sell at a fixed price of $0.02 per share until the prices of our common stock are quoted on the OTCPK and thereafter at prevailing market prices or privately negotiated prices. ABOUT THIS OFFERING Securities Being Offered Up 19,500,000 shares of common stock of US-LBJ Husbandry Industry Int l, Inc. to be sold by selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders in this offering are underwriters. Initial Offering Price Up 19,500,000 shares of common stock of US-LBJ Husbandry Industry Int l, Inc. to be sold by selling shareholders at a fixed price of $0.02 per share. Terms of the Offering The selling shareholders will sell at a fixed price of $0.02 per share. Termination of the Offering The offering will conclude when the selling shareholder have sold all of the 19,500,000 shares of common stock offered by them.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001547014_us-lujia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001547014_us-lujia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c25c05ecd6fd649561231382f5c2851e76740c42
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001547014_us-lujia_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to US-Lujia Pharmaceutical Industry International, Inc. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on August 11, 2010 in the State of California. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. Business Strategy We are a development stage company. The Company will be a pharmaceutical products and equipment exporter. We will sell pharmaceutical production equipment to buyers on an international basis. We have a twenty year joint venture with Heilongjiang Liufu Pharmaceutical Sales Co., Ltd., and will work towards modernizing production technology to make sure that individuals and producers the world over may economically produce various pharmaceutical products. The agreement merely creates a trading relationship with our potential joint venture partner and lays out the intent of the partners for the terms of a joint venture. The Company has not yet generated any revenues. The agreement confirms their mutual intent to identify and work for certain projects together in the next 20 years. There is no time limit for the start of the Joint Venture and the agreement merely creates a trading relationship at this time. If the parties enter into a formal Joint Venture in the future the registrants percentage will be 21.65% of the Joint Venture. The trading partner is a well established entity in the PRC operating and generating revenue for a number of years. On August 8, 2011, California State Senate Republican Caucus Chairman Bob Huff sent a letter to Wen Hua Zhao of the PRC Heilongjiang Province Department of Commercial Affairs, inviting an official delegation from Heilongjiang Province, China to visit California in the Fall of 2011. The letter made explicit that the invitation was extended to twenty-four listed individuals. Mr. Huff made clear that the delegation's purpose was to encourage culture, trade, economic and business exchange between the United States and China, and that the letter could be used for visa applications at a consulate. As the company would benefit from the fostering of culture, trade, economic and business exchange to which Mr. Huff referred, it was decided that the company would take part in sponsoring the delegation's visit. Such sponsorship is hoped to improve the name-recognition of the company, and to encourage goodwill among potential customers, vendors, etc., in the future. To that end, the company has helped pay for a portion of the expenses incurred by the delegation. Several U.S. cities were visited, including New York, Buffalo, Pittsburgh, Los Angeles, and San Francisco. Members of the delegation learned much useful information about local culture, entrepreneurial practices, and academics. The company paid for portions of the travel costs, including airfare and automobile expenses. The company has helped pay for a portion of the costs of boarding. In certain cities, dinner receptions were held in honor of the delegation members. In San Francisco, for example, a dinner reception was held on October 26, 2011. Officers and/or representatives of the company were present at that event. The corporation paid for a portion of the cost involved in renting the space, and preparing for the event: food, planning, decorations, etc. Additionally, there was an important meeting on March 26, 2012 in Hong Kong discussing the development of the company, and of commerce with Heilongjiang Province. The meeting discussed cooperation between US-based companies and China-based companies. Heilongjiang Province government officials attended, as did officers of the company, flying to Hong Kong. Airfare, other travel expenses, and lodging, were borne by the corporation. Officials from the registrant attended these events which lead the to signing of the cooperation agreement. These events were costly formal official ceremonies and heavily attended. The registrant can provide the commission with pictures of its officials at these events should the Commission deem it necessary. The Company has continued to foster these relationships to narrow down the types and specifications of products which will have the greatest interest and revenue generation possibilities in the PRC. Other companies with relations to our promoter and who are funded by our shareholder, Monica Dong were among the companies participating including but not limited to US-Ruquan Dairy Production Int l, Inc., US-Feiwo Agricultural Industry International, Inc., US-BLH Bio-Engineering Int l. Inc., US-DADI Fertilizer Industry International, Inc., US- PS Energy Save Construction Material Int l, Inc., US-HM Straw Construction Material Intl, Inc., US- LBJ Husbandry Industry Int l, Inc., US-TH Energy Science & Technology Int l, Inc., US-Tianxia Software Technology International, Inc., US-TQ Beverage Products Int l, Inc. all of whom have filed registration statements with the SEC. The Company has an accumulated deficit of $83,380 since inception and our auditors issued a going concern opinion in its December 31, 2011 audit. Our executive offices are located at 699 Serramonte Blvd. Ste 212, Daly City, CA 94015. Our telephone number is (650) 530-0699. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivilant of Form 10 information by the Company with the SEC. The Offering This prospectus covers up to 19,500,000 shares to be sold by our selling shareholders who will sell at a fixed price of $0.02 per share until the prices of our common stock are quoted on the OTCPK and thereafter at prevailing market prices or privately negotiated prices. ABOUT THIS OFFERING Securities Being Offered Up 19,500,000 shares of common stock of US-Lujia Pharmaceutical Industry International, Inc. to be sold by selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders in this offering are underwriters. Initial Offering Price Up 19,500,000 shares of common stock of US-Lujia Pharmaceutical Industry International, Inc. to be sold by selling shareholders at a fixed price of $0.02 per share. Terms of the Offering The selling shareholders will sell at a fixed price of $0.02 per share. Termination of the Offering The offering will conclude when the selling shareholder have sold all of the 19,500,000 shares of common stock offered by them.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001547021_us-blh_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001547021_us-blh_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6b7a8c7c20cfb5ca797544371bc18200ff4e6ccd
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001547021_us-blh_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to US-BLH BIO-ENGINEERING INT L, INC. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on AUGUST 6, 2010 in the State of California. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. Business Strategy We are a development stage company. The Company will be a medicinal production equipment exporter. We will sell production equipment to buyers on an international basis. We will be working closely with Longshengbeiyao Bio-Engineering Co., Ltd., in Harbin, PRC, and will work towards modernizing production technology to make sure that individuals and producers the world over may economically produce certain medical products. Much of our early success will depend on our relationship with Longshengbeiyao Bio-Engineering Co., Ltd., which currently occupied 50,000 square meters of land, has 30,000,000 RMB in registered capital, and total assets of 100,000,000. Total plant square footage is currently 16,000 square meters. The main product of said company is antihypertensive drugs based on tortoise shell extracts. The agreement between the Company and Longshengbeiyao Bio-Engineering Co., Ltd merely creates a trading relationship with our potential joint venture partner and lays out the intent of the partners for the terms of a joint venture The Company has not yet generated any revenues. The agreement confirms their mutual intent to identify and work for certain projects together in the next 20 years. There is no time limit for the start of the Joint Venture and the agreement merely creates a trading relationship at this time. If the parties enter into a formal Joint Venture in the future the registrants percentage will be 21.65% of the Joint Venture. The trading partner is a well established entity in the PRC operating and generating revenue for a number of years. On August 8, 2011, California State Senate Republican Caucus Chairman Bob Huff sent a letter to Wen Hua Zhao of the PRC Heilongjiang Province Department of Commercial Affairs, inviting an official delegation from Heilongjiang Province, China to visit California in the Fall of 2011. The letter made explicit that the invitation was extended to twenty-four listed individuals. Mr. Huff made clear that the delegation's purpose was to encourage culture, trade, economic and business exchange between the United States and China, and that the letter could be used for visa applications at a consulate. As the company would benefit from the fostering of culture, trade, economic and business exchange to which Mr. Huff referred, it was decided that the company would take part in sponsoring the delegation's visit. Such sponsorship is hoped to improve the name-recognition of the company, and to encourage goodwill among potential customers, vendors, etc., in the future. To that end, the company has helped pay for a portion of the expenses incurred by the delegation. Several U.S. cities were visited, including New York, Buffalo, Pittsburgh, Los Angeles, and San Francisco. Members of the delegation learned much useful information about local culture, entrepreneurial practices, and academics. The company paid for portions of the travel costs, including airfare and automobile expenses. The company has helped pay for a portion of the costs of boarding. In certain cities, dinner receptions were held in honor of the delegation members. In San Francisco, for example, a dinner reception was held on October 26, 2011. Officers and/or representatives of the company were present at that event. The corporation paid for a portion of the cost involved in renting the space, and preparing for the event: food, planning, decorations, etc. Additionally, there was an important meeting on March 26, 2012 in Hong Kong discussing the development of the company, and of commerce with Heilongjiang Province. The meeting discussed cooperation between US-based companies and China-based companies. Heilongjiang Province government officials attended, as did officers of the company, flying to Hong Kong. Airfare, other travel expenses, and lodging, were borne by the corporation. Officials from the registrant attended these events which lead the to signing of the cooperation agreement. These events were costly formal official ceremonies and heavily attended. The registrant can provide the commission with pictures of its officials at these events should the Commission deem it necessary. The Company has continued to foster these relationships to narrow down the types and specifications of products which will have the greatest interest and revenue generation possibilities in the PRC. Other companies with relations to our promoter and who are funded by our shareholder, Monica Dong, were among the companies participating including but not limited to US-Ruquan Dairy Production Int l, Inc., US-Feiwo Agricultural Industry International, Inc., US-DADI Fertilizer Industry International, Inc., US-PS Energy Save Construction Material Int l, Inc., US-HM Straw Construction Material Int l, Inc., US-LBJ Husbandry Industry Int l, Inc., US-Lujia Pharmaceutical Industry International, Inc., US-TH Energy Science & Technology Int l, Inc., US-Tianxia Software Technology International, Inc., US-TQ Beverage Products Int l, Inc. all of whom have filed registration statements with the SEC. The Company has an accumulated deficit of $83,362 since inception and our auditors issued a going concern opinion in its December 31, 2011 audit. Our executive offices are located at 699 Serramonte Blvd. Ste 212, Daly City, CA 94015. Our telephone number is (650) 530-0699. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivilant of Form 10 information by the Company with the SEC. The Offering This prospectus covers up to 19,500,000 shares to be sold by our selling shareholders who will sell at a fixed price of $0.02 per share until the prices of our common stock are quoted on the OTCPK and thereafter at prevailing market prices or privately negotiated prices. ABOUT THIS OFFERING Securities Being Offered Up 19,500,000 shares of common stock of US-BLH BIO-ENGINEERING INT L, INC. to be sold by selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders in this offering are underwriters. Initial Offering Price Up 19,500,000 shares of common stock of US-BLH BIO-ENGINEERING INT L, INC. to be sold by selling shareholders at a fixed price of $0.02 per share. Terms of the Offering The selling shareholders will sell at a fixed price of $0.02 per share. Termination of the Offering The offering will conclude when the selling shareholder have sold all of the 19,500,000 shares of common stock offered by them.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001547022_us-feiwo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001547022_us-feiwo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d5312fe8cdcc6b1988c12fd7ec67c7d3b29e6334
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001547022_us-feiwo_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to US-FEIWO Agricultural Industry International, Inc. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on August 11, 2010 in the State of California. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. Business Strategy We are a development stage company. The Company will be a microbial-fertilizer production equipment exporter. We will sell production equipment to buyers on an international basis. We have a twenty year contract with Harbin Henghua Compound Fertilizer Co., Ltd., and will work towards modernizing production technology to make sure that individuals and producers the world over may economically produce various microbial-fertilizer products. The agreement merely creates a trading relationship with our potential joint venture partner and lays out the intent of the partners for the terms of a joint venture. The Company has not yet generated any revenues. The agreement confirms their mutual intent to identify and work for certain projects together in the next 20 years. There is no time limit for the start of the Joint Venture and the agreement merely creates a trading relationship at this time. If the parties enter into a formal Joint Venture in the future the registrant s percentage will be 21.65% of the Joint Venture. The trading partner is a well established entity in the PRC operating and generating revenue for a number of years. On August 8, 2011, California State Senate Republican Caucus Chairman Bob Huff sent a letter to Wen Hua Zhao of the PRC Heilongjiang Province Department of Commercial Affairs, inviting an official delegation from Heilongjiang Province, China to visit California in the Fall of 2011. The letter made explicit that the invitation was extended to twenty-four listed individuals. Mr. Huff made clear that the delegation's purpose was to encourage culture, trade, economic and business exchange between the United States and China, and that the letter could be used for visa applications at a consulate. As the company would benefit from the fostering of culture, trade, economic and business exchange to which Mr. Huff referred, it was decided that the company would take part in sponsoring the delegation's visit. Such sponsorship is hoped to improve the name-recognition of the company, and to encourage goodwill among potential customers, vendors, etc., in the future. To that end, the company has helped pay for a portion of the expenses incurred by the delegation. Several U.S. cities were visited, including New York, Buffalo, Pittsburgh, Los Angeles, and San Francisco. Members of the delegation learned much useful information about local culture, entrepreneurial practices, and academics. The company paid for portions of the travel costs, including airfare and automobile expenses. The company has helped pay for a portion of the costs of boarding. In certain cities, dinner receptions were held in honor of the delegation members. In San Francisco, for example, a dinner reception was held on October 26, 2011. Officers and/or representatives of the company were present at that event. The corporation paid for a portion of the cost involved in renting the space, and preparing for the event: food, planning, decorations, etc. Additionally, there was an important meeting on March 26, 2012 in Hong Kong discussing the development of the company, and of commerce with Heilongjiang Province. The meeting discussed cooperation between US-based companies and China-based companies. Heilongjiang Province government officials attended, as did officers of the company, flying to Hong Kong. Airfare, other travel expenses, and lodging, were borne by the corporation. Officials from the registrant attended these events which lead the to signing of the cooperation agreement. These events were costly formal official ceremonies and heavily attended. The registrant can provide the commission with pictures of its officials at these events should the Commission deem it necessary. The Company has continued to foster these relationships to narrow down the types and specifications of products which will have the greatest interest and revenue generation possibilities in the PRC. Other companies with relations to our promoter and who are funded by our shareholder, Monica Dong, were among the companies participating including but not limited to US-Ruquan Dairy Production Int l, Inc., US-BLH Bio-Engineering Int l, Inc., US-DADI Fertilizer Industry International, Inc., US-PS Energy Save Construction Material Int l, Inc., US-HM Straw Construction Material Int l, Inc., US-LBJ Husbandry Industry Int l, Inc., US-Lujia Pharmaceutical Industry International, Inc., US-TH Energy Science & Technology Int l, Inc., US-Tianxia Software Technology International, Inc., US-TQ Beverage Products Int l, Inc. all of whom have filed registration statements with the SEC. The Company has an accumulated deficit of $83,374 since inception and our auditors issued a going concern opinion in its December 31, 2011 audit. Our executive offices are located at 699 Serramonte Blvd. Ste 212, Daly City, CA 94015. Our telephone number is (650) 530-0699. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The Offering This prospectus covers up to 19,500,000 shares to be sold by our selling shareholders who will sell at a fixed price of $0.02 per share until the prices of our common stock are quoted on the OTCPK and thereafter at prevailing market prices or privately negotiated prices. ABOUT THIS OFFERING Securities Being Offered Up 19,500,000 shares of common stock of US-FEIWO Agricultural Industry International, Inc. to be sold by selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders in this offering are underwriters. Initial Offering Price Up 19,500,000 shares of common stock of US-FEIWO Agricultural Industry International, Inc. to be sold by selling shareholders at a fixed price of $0.02 per share. Terms of the Offering The selling shareholders will sell at a fixed price of $0.02 per share. Termination of the Offering The offering will conclude when the selling shareholder have sold all of the 19,500,000 shares of common stock offered by them.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001547253_advantage_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001547253_advantage_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY SUMMARY INFORMATION AND RISK FACTORS. The following summary contains basic information about our company and this offering. It does not contain all the information that is important to you in making an investment decision. You should read this Prospectus summary together with the entire Prospectus, including the more detailed information in our financial statements and accompanying notes appearing elsewhere in this Prospectus. Unless otherwise indicated, all information contained in this Prospectus is based upon information as of July 24 , 2012.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001547716_sunvault_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001547716_sunvault_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..c6787ac124ad7100568cad5aaad6f5a0f4deda92
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@@ -0,0 +1 @@
+S-1/A 1 organictreehouseamendtwo.htm ORGANIC TREEHOUSE S-1 AMENDMENT TWO organictreehouseamendtwo.htm As filed with the Securities and Exchange Commission on June 26 , 2012 Registration No. 333-181040 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________ FORM S-1/A (Amendment No. 2 ) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ORGANIC TREEHOUSE LTD. (Exact name of registrant as specified in its charter) Nevada 448130 27-4198202 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 120 Somerset Drive Suffern, NY 10901 (845) 641-8534 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) ____________________________ Gary R. Henrie, Attorney at Law 2510 E. Sunset Rd. Unit 5-779, Las Vegas, NV 89120 (801) 310-1419 (Names, addresses and telephone numbers of agents for service) ____________________________ ____________________________ Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1)(3) Proposed maximum offering price per unit (2) Proposed maximum aggregate offering price(2) Amount of registration fee Common stock, $0.001 par value 1,080,000 $0.05 $54,000 $6.18 (1) In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. (2) Estimated pursuant to Rule 457 of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee, based on the price per share paid by the selling stockholders named herein in connection with their acquisition from the issuer of the securities being registered in the in the issuer s recent private placement of common stock, which was consummated at a price per share of $0.05 in April 2012. (3) Represents shares of the Registrant s common stock being registered for resale that have been issued to the selling stockholders named in this registration statement. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS Subject to completion, dated , 2012 ORGANIC TREEHOUSE LTD. 1,080,000 Shares of Common Stock This prospectus relates to 1,080,000 shares of common stock of Organic Treehouse Ltd. that may be sold from time to time by the selling stockholders named in this prospectus. We will not receive any proceeds from the sales by the selling stockholders. Our common stock is presently not traded on any market or securities exchange. The 1,080,000 shares of our common stock will be sold by the selling stockholders at a fixed price of $0.05 per share for total net proceeds to the selling shareholders of $54,000 or when and if our shares are quoted on the OTC Bulletin Board at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with The Financial Industry Regulatory Authority, or FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling stockholders. We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 or the JOBS Act. Any participating broker-dealers and any selling stockholders who are affiliates of broker-dealers may be deemed to be underwriters within the meaning of the Securities Act of 1933, as amended, or the Securities Act, and any commissions or discounts given to any such broker-dealer or affiliates of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 8 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is , 2012. TABLE OF CONTENTS Page SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001548592_maxum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001548592_maxum_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001548805_barrier-4_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001548805_barrier-4_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..836434e47a3038b57e0e855b5e1537db81ad8610
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms BARRIER 4 Company, we, us and our refer to Barrier 4, Inc. Overview We were incorporated in the State of Nevada on February 17, 2012, under the name of Barrier 4, Inc. Barrier 4, Inc. is a development stage company with a limited history of development stage operations. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of: (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company Barrier 4 is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company Barrier 4 is also is exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. Barrier 4 has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. Where You Can Find Us Our principal executive office is located at Barrier 4, Inc., 6200 E. Canyon Rim Road, # 204 Anaheim, California 92807-4315. Our telephone number is 714-731-8867. Our Internet site is located at: www.barrier4.com. We maintain our statutory registered agent's office at Paracorp, Incorporated 318 North Carson Street, Suite 208 Carson City, Nevada 89032. GENERAL INTRODUCTION Barrier 4, Inc. is a marketing and sales company that intends to provide one (1) product to consumers. An antimicrobial fabric conditioner called Barrier 4 . Barrier 4 is an mPact Environmental Solutions (mPact) antimicrobial product provided to consumers and commercial users in the aftermarket applications. Barrier 4, Inc. is operating under a relabeling contract with mPact. The contract allows Barrier 4 to purchase finished antimicrobial fabric treatment products from MPact that are then sold under the Barrier 4 brand name by relabeling the antimicrobial fabric treatment product with an alternate brand name (Barrier 4). MPact s technology platform is based on a Silane Quaternary Ammonium Salt with an active ingredient of 3 (trihydroxysilyl) propyldimethyl octadecyl ammonium chloride (0.84%) with inert ingredients at 99.16%. One16 ounce bottle of Barrier 4 will be sold to the customers and commercial users, at a price of approximately $22 per bottle. Since our inception on February 17, 2012 we have incurred cumulative losses of $612 to March 31, 2012. Barrier 4, Inc. is presently marketing for sale one product Barrier 4 (an antimicrobial fabric conditioner) in Orange County, California area. Barrier 4 has not commenced its major operations of having its one product, an antimicrobial fabric conditioner, named Barrier 4, manufactured by an unaffiliated outside provider, mPact Environmental Solutions ( mPact ), and the Company has not distributed the product to anyone. The Company is presently marketing Barrier 4 in the Orange County, California area. The Company will not have its Barrier 4 product manufactured until the company has sold the product to an end user. Barrier 4 is considered a development stage company because it has not commenced its major operations. In addition the Company has not achieved any revenue in connection with its business to date. As a result we are a startup company, that is, we have no operating history or revenue, and are at a competitive disadvantage. We expect to continue to incur losses for at least the next 12 months. We do not expect to generate revenue that is sufficient to cover our expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next twelve months. We will need to obtain additional financing, through equity security sales, debt instruments and private financing, to conduct our day-to-day operations, and to fully execute our business plan. We plan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. (See Plan of Operation ) Taking into account that our company is a new startup and is without an established income stream and/or profit & loss statement and has not yet sold any product the estimated annual burn rate for the operating plan is projected during the first fiscal year, without due consideration for adjustment is $75,000. This includes a three month burn, in cash, of $13,500 (at $4,500 per month) considering the Company encounters a bad quarter during its first year in business. In addition to the $75,000 need for the operating plan the company will need approximately $18,000 for completing this registration. Mrs. Scarpello has agreed to fund the Company, through an oral agreement until such time as the Company raises $75,000 for the operating plan and $18,000 for registration expenses. Mrs. Scarpello, however, is under no legal obligation and/or duty to do so. Additionally, although there is an oral agreement between the Company and Mrs. Scarpello to fund the Company until such time as the Company raises $75,000 for the operating plan and $18,000 for registration expenses Mrs. Scarpello has not agreed to fund any specific amount to the Company. Our independent auditors have added an explanatory paragraph to their report of our audited financial statements for the period from February 17, 2012 (inception) to March 31, 2012, stating that our net loss of ($612), lack of revenues and dependence on our ability to raise additional capital to continue our business, raise substantial doubt about our ability to continue as a going concern. Our financial statements and their explanatory notes included as part of this prospectus do not include any adjustments that might result from the outcome of this uncertainty. There is no guarantee that we will be able to raise funds through equity security sales, debt instruments, and private financing. Currently, we have no agreements in place to raise money through debt instruments or private financing. If we fail to obtain additional financing, either through an offering of our securities or by obtaining loans, we may be forced to cease our planned business operations altogether. Presently, other than Mrs. Scarpello, no other sources of financing have been identified and it is unknown if any other sources will be identified. There is no assurance that the Company will be able to obtain any bank loans or private financing. BUSINESS DEVELOPMENT Initial Sales Strategy: We have established a two -prong sales approach; our approach utilizes direct sales to athletic programs through Judith Scarpello, and the Company will use its website to sell to the general public. Our direct sales will be conducted by Judith Scarpello. She will market the product locally in the Orange County, California area to all forms of athletic teams. Her current marketing strategy consists of various Point of Sale materials, including posters and flyers developed by Mrs. Scarpello in the past several months. The Company will utilize the second prong of its sales approach through the internet when funds become available to complete the website. We intend to derive income from these sales and our goal is to establish brand recognition. Subsequent Sales Strategy Barrier 4, Inc. will commence marketing its one product, Barrier 4 , an antimicrobial fabric conditioner to the general public. The Company is presently developing its marketing program to sell Barrier 4 an antimicrobial fabric conditioner to the general public through direct sales and through our website: www.barrier4.com which is currently under development/construction. The Company has not sold its one product to anyone at this time. Barrier 4, Inc. is considered a development stage company because it has not commenced its major operations and has not recognized any revenues in connection with its business to date. As a result, we are a startup company, that is, we have no operating history or revenue, and are at a competitive disadvantage. We have no operating history and expect to incur losses for the foreseeable future. Should we continue to incur losses for a significant amount of time, the value of your investment in the common shares could be affected downward, and you could even lose your entire investment. We have not yet received any revenues from our development stage operations, nor have we otherwise engaged in any business operations. Barrier 4, Inc. is a development stage company and in the absence of revenues and operations as indicated in the Independent Auditor s Report dated May 4, 2012, cites a going concern issue. The going concern statement opinion issued by the independent auditors is the result of a lack of operations and working capital. The Company will need to raise capital which concerned the independent auditors because there is insufficient cash for operations for the next twelve months. We will have to seek other sources of capital through equity security sales, debt instruments and private financing. We established the minimum amount of $75,000 for the operating plan and an additional $18,000 to complete this registration that the Company will need to raise through debt instruments such as bank loans, or private financing so that operations could start, in order to generate some type of revenue. Presently no other sources have been identified and it is unknown if any other sources will be identified. There is no assurance that the Company will be able to obtain any bank loans or private financing. Over the next twelve months, Barrier 4, Inc. plans to build out and establish its reputation and network in the sports programs in Orange County, California. The Company aims to form long term working relationships with sports programs that can use the Company s one product, Barrier 4 antimicrobial fabric conditioner. Mrs. Judith Scarpello is the Chief Executive Officer, President, (Principal Executive Officer) and Director. Currently the Company has one employee; Judith Scarpello however as it grows, it plans to employ additional employees as needed. DESCRIPTION OF PROPERTY Our corporate office is located at 6200 E. Canyon Rim Road. #204, Anaheim, California 92807-4315. We currently sub-lease office space on a master lease held by an independent 3rd party. Barrier 4, Inc., occupies office space that is being provided to the Company on a sublease basis for $3,400 over a 12 month period beginning April 1, 2012. There are currently no proposed programs for renovation, improvement or development of the facility currently in use. PRINCIPAL OPERATIONS AND PRODUCTS OF THE COMPANY Barrier 4, Inc. also referred to as Barrier 4 and the Company , was incorporated in the State of Nevada on February 17, 2012. Barrier 4, Inc. is presently marketing for sale one product Barrier 4 (an antimicrobial fabric conditioner) in Orange County, California area. Barrier 4, Inc. is a development stage company with a limited history of development stage operations. We presently do not have the funding to execute our business plan. Achievement of our business objective is basically dependent upon the judgment, skill and knowledge of our management. Mrs. Scarpello is currently our sole executive officer and director. There can be no assurance that a suitable replacement could be found for any of our officers upon their retirement, resignation, inability to act on our behalf, or death. RISK FACTORS The Company's financial condition, business, operation and prospects involve a high degree of risk. You are urged to carefully read and consider the risks and uncertainties beginning on page 9 of this prospectus entitled Risk Factors as well as the other information in this report before deciding to invest in our Company. All known materials risks are discussed in the Risk Factors section of this prospectus. If any of the risks beginning on Page 9 of this Prospectus entitled Risk Factors are realized, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means that our stockholders could lose all or a part of their investment.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001549796_simple_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001549796_simple_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..71a058be96b4c44e89009e644967e64fc443fbbb
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Except as otherwise indicated, as used in this prospectus, references to the Company, Simple Products, we, us, or our refer to Simple Products Corporation and its wholly-owned subsidiaries. The following summary highlights selected information contained in this prospectus, and it may not contain all of the information that is important to you. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. Before making an investment decision, you should read the entire prospectus carefully, including Risk Factors and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. Corporate Background Since its founding in September of 2003, Simple Products Corporation has taken dozens of products to the marketplace in a timely and profitable manner, specializing in all aspects of product development, from concept to manufacturing to sales. and has made a name for itself as a business development company. The Company specializes in all aspects of product development, from concept to manufacturing to sales. The company operates as a distributor and manufacturer, selling to retailers in the United States and Canada. A low-cost manufacturing strategy combined with distribution systems in place has allowed the Company to expand its market reach. The Company has fostered manufacturing relationships in China, resulting in products made at low prices. The Company also has in-house capacity to provide fulfillment and distribution to its customers, and can take products from concept to marketplace, managing each step in that process. The Company sells a wide variety of products and has varying roles and obligations for each product. Its products include: Lux Pro Flashlights are bright, LED flashlights available in a variety of styles, models and colors. The LUXPRO brand is owned by Simple Products as well as all of its designs. The manufacturing takes place in China through third party manufacturers and Simple Products imports and sells the product to distributors, wholesalers, retail outlets, and direct to consumers through various websites. Flirty Aprons are aprons available in a wide variety of fabrics, colors and styles . The Flirty Apron brand is owned by Simple Products as well as all of its designs. The manufacturing takes place in China through third party manufacturers and Simple Products imports and sells the product to distributors, wholesalers, retail outlets, and direct to consumers through various websites. On February 6, 2012, the Company acquired, through an asset purchase agreement, all of the operations, and certain assets and liabilities, of Hansen & Taylor Investment Group LLC, a Utah limited liability company doing business as Flirty Aprons , and Apron Central, LLC, a Utah limited liability company doing business as Apron Central . Lullabibs are bibs for children and are affiliated with the Flirty Aprons brand . The Lullabib brand is owned by Simple Products as well as all of its designs. The manufacturing takes place in China through third party manufacturers and Simple Products imports and sells the product to distributors, wholesalers, retail outlets, and direct to consumers through various websites. Mossie Build-A-Watch es are interchangeable watch faces and decorative bands . The Mossie and Build-A-Watch brands are owned by Simple Products as well as all of its designs. The manufacturing takes place in China through third party manufacturers and Simple Products imports and sells the product to distributors, wholesalers, retail outlets, and direct to consumers through various websites. Applecore is a product that organizes headphones and other electronic cords and prevents tangles and knots . The Applecore brand is owned by Applecore International and Simple Products is the exclusive distributor of the product to the US and Canada. EZ Wind is a cord organizer to be used for heavy cords. This product is intended for contractors, landscapers, garages and other commercial use purposes . The EZ Wind and EZ Wind II branded products are owned by a supplier to Simple Products. Simple acts as a distributor of these products. The product is manufactured in the USA. This product is sold to various retail outlets and direct to consumers via various websites. This product has a patented lock system and comfort grip handles. Tuf Shine is a product that seals, shines and protects tires permanently with little mess. It is dry to the touch, repels dirt, and will not sling onto paint or wheels. It protects against sun damage, seals in factory lubricants and provides shine once applied. The Tuf Shine brand is owned by a supplier to Simple Products. Simple is a distributor of the product. Fiber Fix Super Tape is repair tape made of carbon fiber . Fiber Fix Super Tape brand is owned by a supplier to Simple. Simple Products sells and distributes the product. Simple Snap cameras are ready-to-use flash cameras preloaded with film . Simple Snap brand is owned by Simple Products as well as all of its designs. Simple Snap is a disposable camera which uses standard 35mm 400 ISO film with 27 exposures. The manufacturing takes place in China through a third party. The product is sold to retail outlets and as a promotional item to large and small service industry customers. Battery Storage Boxes keep multiple sizes of batteries organized and in ones place . These containers have see-through plastic cases, lock-tight lids, and inner dividers. Simple Products is a distributor for this product which is purchased from a supplier. This is a common scenario for Simple to test products from other suppliers to identify their viability in the marketplace. Products deemed viable for manufacturing by Simple Products are given a brand owned by Simple and eventually manufactured through Simple s manufacturing partners. Bombshell Gear hats are retro bombshell style hats with collegiate logos on them. The Bombshell Gear brand is owned by Simple Products. Manufacturing takes place in China through Simple s manufacturing partners and the product is sold to retail outlets. FunPak Promotional and Personalized Products can be special ordered based on a customer s need. These include the items listed above customized with a customer s logo or name on the product. Where You Can Find Us Our offices are currently located at Simple Products Corporation, 9314 South 370 West, Sandy, Utah. Our telephone number is 801-553-8886, and our website is www.simpleproductscorp.com. Summary of the Offering Securities being registered by the Selling Security Holders: 875,000 shares of common stock Offering price: $2.00 per share until a market develops and thereafter at market prices or prices negotiated in private transactions Newly issued common stock being registered pursuant to the Primary Offering: 1,000,000 shares of common stock Offering price: $2.00 Number of shares outstanding prior to the Offering: 4,125,000 shares of common stock Number of shares outstanding after the Offering (assuming all shares of the Offering are sold, something that may not occur): 5,125,000 shares of common stock Market for the common stock: There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-The-Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: There is no guarantee that we will receive any proceeds in connection with the offering, as this is dependent on how many shares we sell in the offering. We will receive approximately $2,000,000 in gross proceeds if we sell all of the shares in the Primary Offering, and we will receive estimated net proceeds of approximately $1,976,558 if we sell all of those shares. We will receive none of the proceeds from the sale of shares by the Selling Security Holders. See Use of Proceeds for a more detailed explanation of how the proceeds from the Primary Offering will be used. The shares of common stock issued according to this Offering will be issued by the Company through the Company s transfer agent.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001550066_taylor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001550066_taylor_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001550066_taylor_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001550880_maxclean_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001550880_maxclean_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..f1654ad213ea7eb7e77a750dc7888c4fcffaadaa
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information about us and our ordinary shares that we and the selling shareholders are offering. Before investing in the ordinary shares, you should read this entire prospectus carefully for a more complete understanding of our business and this offering, including our audited annual consolidated financial statements and the related notes, and the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. Our Company Mr. Yu Chunming ( ), our chairman and director, is one of the pioneers in the development and manufacture of contamination control supplies and critical cleaning products in China, with over 20 years of success in the industry. Mr. Yu started his career in the cleanroom industry as a manager of Hang Kai Plastic Manufacturing Company Limited ( ) from 1992 to 1994 where he was primarily responsible for the operation of the cleanroom plastic bag production lines and held some senior management responsibilities. Mr. Yu then set up his own factory, Zhao Run Plastic Manufacturing Company Limited ( ), in 1994. In 2002, Maxclean (China) Holdings Limited ( Maxclean (China) ) was founded in Hong Kong, and in the same year, Mr. Yu joined the company as executive director. Mr. Yu and his team have been actively developing, manufacturing and distributing for sale products used for contamination control in highly controlled and critical environments, or clean-rooms. Our comprehensive range of disposable clean-room consumable products includes wipes, polyethylene bags ( PE bags ), sticky mats, face masks and other clean-room consumables, including swabs and caps, which we supply to our customers in the PRC domestic and overseas markets. Our products are marketed under our trade name Maxclean and are employed in high-technology manufacturing industries, which require certain manufacturing and assembly processes to be carried out in highly controlled, dust-free and electrostatic-free critical environments. In particular, we seek to maximize purity levels for clean-room environments for customers in the hard disk drive, optics, semi-conductor, TFT-LCD, electronics, biotechnology, pharmaceutics and food processing industries. All of our products are manufactured at our modern facilities located in Wuxi. Our production lines have been certified to international ISO9001 and ISO14001 standards. Our products are sold through our four sales and marketing offices located in Hong Kong, Wuxi, Shenzhen and Chengdu. Our Competitive Strengths We believe that the following strengths enable us to compete successfully in the clean-room and controlled-environment supply industry: l we are well positioned to benefit from strong market fundamentals driven by growing Chinese and international industrial production capacities across a range of sectors; l we have established an increasingly diversified, high-quality customer base; l our ability to provide high-quality products enables us to increase our sales and enhance our brand recognition; l we are led by a strong management team with demonstrated execution capabilities; and l we have an integrated and diversified manufacturing structure. Our Competitive Weakness We believe that the following factors are risks and challenges we face when we compete in the clean-room and controlled-environment supply industry: l We are dependent on our major customers and delays, claims, reductions or cancellations of orders from our major customers can adversely affect our financial results. l We may face difficulties in meeting our short-term debt obligations and other funding needs. l Any disruption to the supply of and any increase in the prices of our raw materials could adversely affect our production, turnover and profitability. Our Business Strategy In order to achieve our goal of becoming a leading supplier of clean-room consumable products, we intend to pursue the following principal strategies: continue to improve the quality and range of our products through enhanced research and development capabilities; continue to expand and update our production capacity to improve our manufacturing processes; establish and strengthen our brand; expand our sales and marketing network and enhance our sales and marketing channels both in China and internationally; and diversify and strengthen our customer relationships while securing raw material supplies at competitive costs. Recurring Losses and Going Concern We have suffered recurring losses from our operations, experienced negative cash flows, and incurred an accumulated deficit for each of the three years ended December 31, 2011. We incurred a comprehensive loss of RMB30,630.5 thousand, RMB9,383.6 thousand and RMB4,289.6 thousand for the years ended December 31, 2011, 2010 and 2009, respectively. This trend is expected to continue. Our auditor has expressed their view that these conditions indicate the existence of an uncertainty which may cast doubt on our ability to continue as a going concern. Corporate Structure Maxclean Holdings Ltd ( Maxclean Holdings , we , the Company ) is the holding company for our group and was established on May 30, 2011 as an exempted company incorporated with limited liability under the laws of the Cayman Islands. Our directly wholly-owned subsidiary Maxclean (China) was incorporated as a limited liability company on September 6, 2002 under the laws of Hong Kong and conducts substantially all of its business through its wholly-owned subsidiaries, Maxclean (Wuxi) Technology Co.Ltd ( Maxclean (Wuxi) ), incorporated in the PRC and Maxclean Global Enterprises Company Limited ( Maxclean Global ), incorporated in Hong Kong. Maxclean (Wuxi) is a limited liability company incorporated under the laws of the PRC on December 16, 2002 and is mainly engaged in the business of manufacturing and production of clean-room products. Maxclean Global is a limited liability company incorporated under the laws of Hong Kong on August 16, 2002 and is mainly engaged in the business of distributing our clean-room products in the overseas markets. Maxclean Shenzhen was established by Maxclean (Wuxi) as a branch company (without separate legal personality) under the laws of the PRC on June 13, 2006 to carry on the sales and marketing of our business. Maxclean (Wuxi) also established a sales and marketing office in Chengdu in 2011. On July 12, 2011, we entered into a share swap agreement with Maxclean (China) and all of its shareholders. Pursuant to the share swap agreement, the shareholders of Maxclean (China) exchanged an aggregate of 48,786,000 shares of Maxclean (China), representing all of the issued and outstanding shares of Maxclean (China), for an aggregate of 48,786,000 of our newly issued shares, representing all of our issued and outstanding shares at an exchange rate of 1-for-1. As a result of the share swap, Maxclean (China) became our wholly-owned subsidiary and the former shareholders of Maxclean (China), including several of our directors and officers, became our shareholders. In August 2011, we issued an aggregate of 177,184,000 shares at US$0.0001 per share for an aggregate of US$17,718.40 to our directors and controlling shareholders (Mr. Yu Chunming, Mr. Lo Chung Ling and Ms. Hua Xiafen) as well as to Dodi Limited (which is owned by Mr. Yu Chunming), Ace Achiever Limited (which is owned by Mr. Lo Chi Wai, our employee and the son of our Director, Mr. Lo Chung Ling), and Time King Holdings (which is owned by Mr. Lo Chi Wong, who is also the son of Mr. Lo Chung Ling). In August 2011, we also issued 8,210,000 shares at US$0.0001 per share for US$821 to Value Kingdom Limited (which is owned by Ms. Chen Fu Mei, our employee). The aforementioned share issuances are collectively referred to as the August 2011 Equity Issuance . The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. The preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER 20, 2012 MAXCLEAN HOLDINGS LTD 100,284,700 Shares We are an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act ("JOBS Act"). This prospectus registers for resale by our selling shareholders up to 100,284,700 of our shares. The selling shareholders may be deemed to be underwriters. Our shares are not now nor have they ever been listed or quoted on any stock exchange or quotation system. We intend to have our shares quoted on the OTC Bulletin Board or another quotation system, such as OTCQX. The selling shareholders may sell the shares at a fixed price of US$0.12 per share, until our shares are quoted on the OTC Bulletin Board or another quotation system, such as OTCQX, and thereafter at prevailing market prices or privately negotiated prices. If we are successful in having our shares quoted on the OTC Bulletin Board or another quotation system, such as OTCQX, the selling shareholders subsequently may offer to sell the shares being offered in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices We will not receive any proceeds from the resale of our shares by the selling shareholders. We will pay for all costs associated with this registration statement and prospectus. The selling shareholders will receive the proceeds from the sale of the shares being registered in this registration statement and prospectus. The selling shareholders purchased their shares through various private placements with us between August 2011 to October 2011. Please see section headed Principal and Selling Shareholders of this prospectus for further details. As of the date hereof, there is no established public market for the shares being registered. If the selling shareholders sell all of their shares at US$0.12 per share, they may be expected to receive approximately US$12,034,164 estimated as follows: Proceeds to Selling Shareholders Per share US$0.12 Total US$12,034,164 An investment in our shares involves a high degree of risk. You should invest in our shares only if you can afford to lose your entire investment. You should carefully consider the various risk factors described under Risk Factors beginning on page 9 of this prospectus before investing in our shares. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. The date of this prospectus is ____, 2012. In a series of private placement transactions between August 2011 and October 2011, we issued a total of 70,998,500 shares (the October 2011 Equity Financing ) for an aggregate of US$6,121,050 in cash (approximately RMB39.2 million), of which RMB39 million represented a share premium. The October 2011 Equity Financing was conducted in three tranches: l Between August 11, 2011 to September 23, 2011, we issued an aggregate of 6,926,000 shares at US$0.05 per share for aggregate proceeds of US$346,300 (approximately RMB2,216,117). l Between September 26, 2011 to October 11, 2011, we issued an aggregate of 25,300,000 shares at US$0.075 per share for aggregate proceeds of US$1,897,500 (approximately RMB12,109,234). l On October 21, 2011, we issued an aggregate of 38,772,500 shares at US$0.10 per share for aggregate proceeds of US$3,877,250 (approximately RMB24,748,021). The following chart summarizes our corporate structure as of the date of this prospectus: * branch company ** representative office Our Industry We operate in a specialized industry in the manufacture of clean-room consumable products such as clean-room wipes, non-woven face masks and other clean-room products. We also produce, to a lesser extent, clean-room hardware products such as static control eliminators. Clean-room products such as wipes, polyethylene bags ( PE bags ), sticky mats and face masks have to be manufactured in a clean-room environment in which factors such as temperature, humidity, pressure, particle count and air velocity are strictly controlled and monitored. Such products are typically used in industries that are sensitive to dust, particles and electrostatic charges and are used to minimize contamination caused by particles and dissipate electrostatic charges. Such industries include the high-technology manufacturing industries such as the electronics industry which include the hard drive disk, semiconductor, flat panel display and consumer electronics sectors, as well as the medical device technology, biotechnology, pharmaceutical and aerospace industries. Clean-room consumable products are essential in the clean-room environment where they are used to reduce contamination by dust, chemical residue, impurities or particles during the manufacturing process. In addition, certain processes within the hard disk drive and semiconductor sectors also need clean-room hardware such as static control eliminators to dissipate electrostatic charges effectively. Any contamination and electrostatic charges may damage electronic components. Asia is a large and fast growing region for both clean-room consumables and hardware. Nearly all the flat panel display production clean-rooms are located in Asia. Although the U.S. and Europe are more technologically advanced in the world, China is a fast growing semiconductor producer in the world. Recent Developments Capacity Expansion In the first quarter of year 2012, we further invested in our Wuxi plant by expanding its manufacturing capacity and product range, in order to meet expected demand from high-end customers; the investment is expected to enhance our competitive advantage in the clean room products market. We have not further expanded our manufacturing capacity since the first quarter of 2012. The breakdown of the investments made during the first quarter of 2012 is illustrated in table below: Machine / Equipment Quantity Investment Amount (RMB 000) Wiper Cutting Machine 8 341.9 Washing/Drying Machine 6 789.7 Cleaning Room (Class 1001) 1 2,626.9 Cleaning Room (Class 10002) 1 844.2 Total 4,602.7 Capacity expansion after the above investments: Process Before Investment After Investment % Capacity increase by Cutting 20,000 pcs per 8 hours 23,000 pcs per 8 hours 15 Washing 720,000 pcs per 8 hours 1,500,000 pcs per 8 hours 108 Drying 1,010,000 pcs per 8 hours 1,670,000 pcs per 8 hours 65 Liquidity As of July 31, 2012, we held cash and cash equivalents of approximately RMB7.7 million (RMB22.9 million at December 31, 2011), our net current liabilities position was approximately RMB17.9 million (RMB9.9 million at December 31, 2011) and our accumulated deficit was approximately RMB76.2 million (RMB68.3 million at December 31, 2011). For the seven months ended July 31, 2012, our net cash used in operating activities was approximately RMB8.9 million. The following table sets forth our financial obligations, contractual obligations and capital commitments as of July 31, 2012. Payments due by period Total On demand Less than 3 months 3-12 months 2-5 Years RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Bank borrowings 42,000.0 - - 42,000.0 - Due to a related party - - - - - Due to directors 3,909.5 - - 3,909.5 - Trade payables 8,280.5 - 8,280.5 - - Operating lease commitments 110.0 - 36.7 73.3 - Capital commitments 775.9 - 775.9 - - Total 55,075.9 - 9,093.1 45,982.8 - We expect to satisfy our liquidity needs related to our operations through our existing cash balance and additional bank loans. As of July 31, 2012, we had outstanding bank borrowings in the amount of RMB42 million (excluding expected interest of approximately RMB2.3 million) due within a year. Of the RMB42 million in bank borrowings, RMB32 million is due in November 2012, and the remaining RMB10 million is due in June 2013. We believe we are able to renew these bank borrowings from the lending banks because these outstanding amounts are secured by the Company s buildings and land use rights or otherwise guaranteed by independent third parties. Historically, we were able to obtain renewal for such secured bank borrowings before the maturity date. In addition, we will require additional borrowings in order to continue our operations. Our Corporate Information Our principal executive offices are located at 88 Yu Feng Road, Shuo Fang Town, New District, Wuxi City, Jiangsu Province, P.R. China. The telephone number is 86 510 8526 1996. Our registered office is located at the offices of Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands, or at such other place within the Cayman Islands as our Directors may decide. Our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011. Investors should contact us with any inquiries through the address and telephone number of our principal executive offices. _____________________ 1 clean-room which has no more than 100 particles/ft3 of a size 0.5um and larger as set out in Federal Standard 209E Airborne Particulate Cleanliness Classes in Clean-rooms and Clean Zones approved by the U.S. General Services Administration 2 clean-room which has no more than 1000 particles/ft3 of a size 0.5um and larger as set out in Federal Standard 209E Airborne Particulate Cleanliness Classes in Clean-rooms and Clean Zones approved by the U.S. General Services Administration
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+S-1/A 1 d364761ds1a.htm PRE EFFECTIVE AMENDMENT #2 TO FORM S-1 Pre Effective Amendment #2 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on August 8, 2012 Registration No. 333-182151 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 2 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Hamilton Bancorp, Inc. and Hamilton Bank 401(k) Profit Sharing Plan (Exact Name of Registrant as Specified in Its Charter) Maryland 6712 Being applied for (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 5600 Hartford Road Baltimore, Maryland 21214 (410) 254-9700 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. Robert DeAlmeida President and Chief Executive Officer 501 Fairmount Ave., Suite 200 Towson, Maryland 21286 (410) 823-4510 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Lawrence M. F. Spaccasi, Esq. Michael J. Brown, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, N.W., Suite 780 Washington, D.C. 20015 (202) 274-2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $0.01 par value per share 3,703,000 shares $10.00 $37,030,000 (1) $4,244(2) Participation interests 141,120 interests (3) (3) (1) Estimated solely for the purpose of calculating the registration fee. (2) Previously paid. (3) The securities of Hamilton Bancorp, Inc. to be purchased by the Hamilton Bank 401(k) Profit Sharing Plan are included in the amount shown for the common stock. Accordingly, no separate fee is required for the participation interests. In accordance with Rule 457(h) of the Securities Act of 1933, as amended, the registration fee has been calculated on the basis of the number of shares of common stock that may be purchased with the current assets of such Plan. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents TABLE OF CONTENTS Page SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001551887_duesenberg_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001551887_duesenberg_prospectus_summary.txt
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+SUMMARY As used in this prospectus, unless the context otherwise requires, we, us, our, the Company and Venza refers to Venza Gold Corp. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated. You should read the entire prospectus before making an investment decision to purchase our common shares. About Us We were incorporated on August 4, 2010 under the laws of the State of Nevada under the name SOS Link Corporation . On April 15, 2011, we continued into the Province of British Columbia, Canada and concurrently changed our name to Venza Gold Corp. Our principal executive office is located at Suite 610, 1100 Melville Street, Vancouver, British Columbia, Canada, V6E 4A6 and our telephone number is (604) 306-2525. Overview of Business We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We currently hold a 100% interest in the OS Gold Claim and the Quad Gold Claim. The OS Gold Claim, being our lead mineral project, is comprised of one mineral claim totaling 1,292.5 acres located approximately 7 kilometres west of Osoyoos, British Columbia, Canada. The Quad Gold Claim is comprised of one mineral claim totaling 408.9 acres and is located approximately 16 kilometres north of the City of Campbell River, British Columbia, Canada. See sections titled Our Business and Properties for additional information. We have not earned any revenues to date and do not anticipate earning revenues until such time as we enter into commercial production of our properties. We are presently in the exploration stage of our business and we can provide no assurance that commercially viable minerals exist on our properties or that we will discover commercially exploitable levels of mineral resources on our properties, or if such deposits are discovered, that we will enter into further substantial exploration programs. The Offering Common Shares Offered by Us: 1,500,000 common shares at a fixed price of $0.10 per share. Common Shares Offered by the Selling Security Holders: 4,943,328 common shares at prices at a fixed price of $0.10 per share until such time as our shares are quoted on the OTC Bulletin Board, after which, the selling security holders may sell their shares at prevailing market prices, prices related to prevailing market prices or at privately negotiated prices. Minimum Number of Common Shares To Be Sold in This Offering: None. Common Shares Outstanding Before and After the Offering: 6,916,661 common shares are issued and outstanding as of the date of this prospectus. Upon completion of the offering, if all shares being offered are sold, there will be 8,416,661 common shares issued and outstanding. Use of Proceeds: Any proceeds that we receive from this offering will be used by us to implement Phase II of our exploration program on the OS Gold Claim, pay for the expenses of this offering and as general working capital.
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001553210_personalit_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001553210_personalit_prospectus_summary.txt
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to Personality Software Systems, Inc. .
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diff --git a/parsed_sections/prospectus_summary/2012/CIK0001554054_amperico_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001554054_amperico_prospectus_summary.txt
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+SUMMARY PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. OUR BUSINESS We are a development stage company. We do not have revenues or operations; we have minimal assets and have incurred losses since inception. We are in the business of developing On-site WebState analytical software designed to capture customer's behavior and customer's feedback on the visited Web Sites. This behavior and feedback will be analyzed and compared against key performance indicators, like marketing, in terms of a commercial context. We are also going to develop an analytical service process which allows comparing and ranking different websites within different categories of websites based on a customer experience and likeness of the websites visited. The behavior analysis and the ranking results will be submitted to website owners for optimization and improvement of their website. Our revenue will be earned by charging a fee for our services. We may also receive commissions from other On-site WebState analytical companies to which we will refer our potential clients. We are currently developing a website (www.amperico.com ) which will include a detailed description of our services. The website will allow our potential clients to have a 3 month period of trial and place orders online. To date, we have developed a business plan and registered domain name for our new website. We are an "emerging growth company" within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see "RISK FACTORS--RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN `EMERGING GROWTH COMPANY' AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS" on page 12 of this prospectus. Our auditor have expressed concern about our ability to continue as a going concern. We have not yet developed our on-site analytical software product. We estimate approximately 12 months and total expenditures of $29,456 to develop our product for commercial use. We currently do not have sufficient funding to execute on our business plan. Below are the steps necessary to develop and commercialize our product. 1. Beginning of the planning process. Purchase Microsoft Project Software. 2. Complete project plan 3. Collecting business requirements 4. High Level System design 5. Detailed System design by components 6. Developing simplified P.O.C. system 7. Testing P.O.C. 8. Developing full system by components 9. Testing, Packaging, Delivering to production Our principal executive office is located at 42 Rockwood Crescent, Thornhill, ON, L4J 7T2, Canada. Our telephone number is (775) 461 5130. We were incorporated in the State of Nevada on December 20, 2011. Our fiscal year end is May 31. MANAGEMENT'S REASONS FOR BECOMING A PUBLIC COMPANY AT THIS TIME. PROS AND CONS OF DOING SO, INCLUDING MANAGEMENT'S ESIMATE OF THE INCREASED EXPENSES OF PUBLICITY REPORTING. The management reasons for becoming public at this time are to increase its visibility to future potential investors, and to increase shareholders value by making their shares more marketable. Below we discuss other pros and cons of publicly reporting company. PROS * Stock in the company can be used in part to finance future business activities. * The company may increase its prestige and visibility * Shareholders of the company benefit from holding shares that are, (subject to certain restrictions), freely marketable. * Shares that are publicly traded generally command higher prices than shares that are not publicly traded which may increase our shareholders' value. * Shareholders are able to diversify their investment portfolios, due to the increased marketability of their shares. CONS * When a company goes public, management loses some of its freedom to act without board approval and approval of a majority of the shareholders in certain matters. * The cost of an initial public offering is substantial, including, legal and accounting, and registration fees. The expenses of this offering are approximately $10,000. Thereafter complying with reporting obligations will cost us a minimum of $10,000 per year. * When a company becomes publicly held, the SEC requires it to reveal sensitive information on an ongoing basis, including business strategies, financial results, and executive salaries and compensation arrangements. * The company is required to have its financial statements audited on a regular basis. * A substantial portion of management time must be dedicated to initial and ongoing reporting requirements of regulatory agencies rather than to management of the company's operations. THE OFFERING: Securities Being Offered Up to 1,480,000 shares of common stock by selling shareholders. Offering Price The selling shareholders will sell our shares at $0.03 per share until our shares are quoted on the OTC Bulletin Board. Sales price will be fixed for the duration of the offering. We determined this offering price arbitrarily by adding a $0.01 premium to the last sale price of our common stock to Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude when all of the 1,480,000 shares of common stock have been sold, the shares no longer need to be registered or to be sold due to the operation of Rule 144 or two years from the date of this prospectus. Securities Issued and to be Issued 1,480,000 shares of our common stock to be sold in this prospectus are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Market for the common stock There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-the-Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to become eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so. SUMMARY FINANCIAL INFORMATION The following financial information summarizes the more complete historical financial information at the end of this prospectus. As of August 31, 2012 --------------------- (Unaudited) BALANCE SHEET Total Assets $ 16,641 Total Liabilities $ 325 Stockholders' Equity $ 16,641 Period from December 20, 2011 (date of inception) to August 31, 2012 --------------- (Unaudited) STATEMENT OF OPERATIONS Revenue $ -- Total Expenses $ 4,957 Net Loss $ (4,957) RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL. While at August 31, 2012, we had cash on hand of $16,641 we have accumulated a deficit of $4,957 in business organization and administrative expenses. At this rate, we expect that we will only be able to continue operations for one year without additional funding. We anticipate that additional funding will be needed for general administrative expenses and marketing costs. We have not generated any revenue from operations to date. In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the capital necessary to fund our business objectives, we may have to delay the implementation of our business plan. Currently we do not have enough cash on hand to execute our business plan over the next 12 months, including development of our on-site analytical software product. We do not currently have any arrangements for financing. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. The most likely source of future funds available to us is through the sale of additional shares of common stock or advances from our director, and majority stockholder. WE LACK AN OPERATING HISTORY AND HAVE NOT GENERATED ANY REVENUES OR PROFITS TO DATE. THERE IS NO ASSURANCE OUR FUTURE OPERATIONS WILL RESULT IN PROFITABLE OPERATIONS. IF WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE PROFITABLY, WE MAY HAVE TO CEASE OPERATIONS. We were incorporated in December 2011 and we have not started our proposed business operations or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. Our net loss since inception is $5,484 of which $5,159 is for bank charges and fees and $325 is for organizational costs. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to earn profit by attracting enough clients who will use our services. We cannot guarantee that we will be successful in generating revenues and profit in the future. Failure to generate revenues and profit will cause us to suspend or cease operations. BECAUSE OUR DIRECTOR HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS, CAUSING OUR BUSINESS TO FAIL. Our director, Alex Norton, will only be devoting limited time to our operations. Mr. Norton intends to devote 20% to 25% of his business time to our affairs. Because our director will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to them. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a possible cessation of operations. It is possible that the demands on Alex Norton from his other obligations could increase with the result that he would no longer be able to devote sufficient time to the management of our business. In addition, Mr. Norton may not possess sufficient time for our business if the demands of managing our business increase substantially beyond current levels. BECAUSE WE HAVE HAVE ONLY TWO OFFICERS AND ONE DIRECTOR WHO MAY HAVE NOT ENOUGH EXPERIENCE AND FORMAL TRAINING IN FINANCIAL ACCOUNTING AND MANAGENENT, OUR BUSINESS HAS A HIGH RISK OF FAILURE. We have only two officers and one director. He has no formal training in financial accounting and management; however, he is responsible for our managerial and organizational structure, which will include preparation of disclosure and accounting controls. When the disclosure and accounting controls referred to above are implemented, he will be responsible for the administration of them. Should he not have sufficient experience, he may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment. However, because of the small size of our expected operations, we believe that he will be able to monitor the controls he will have created and will be accurate in assembling and providing information to investors. In addition, Alex Norton has no professional training in any aspects of our business. As a result, he may not be able to recognize and take advantage of potential acquisition and exploration opportunities in the sector without the aid of qualified consultants. Consequently our operations, earnings and ultimate financial success may suffer irreparable harm as a result. BECAUSE OUR CONTINUATION AS A GOING CONCERN IS IN DOUBT, WE WILL BE FORCED TO CEASE BUSINESS OPERATIONS UNLESS WE CAN GENERATE PROFITABLE OPERATIONS IN THE FUTURE. We have incurred losses since our inception resulting in an accumulated deficit of $5,484 at August 31, 2012. Further losses are anticipated in the development of our business. As a result, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. We will require additional funds in order to provide proper service to our potential clients. At this time, we cannot assure investors that we will be able to obtain financing. If we are unable to raise needed financing, we will have to delay or abandon our business operations. If we cannot raise financing to meet our obligations, we will be insolvent and will be forced to cease our business operations. BECAUSE OUR DIRECTOR OWNS 67% OF OUR ISSUED AND OUTSTANDING COMMON STOCK, HE CAN MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO MINORITY SHAREHOLDERS. Our director, Alex Norton, owns approximately 67% of the outstanding shares of our common stock. Accordingly, he will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all of our assets. He will also have the power to prevent or cause a change in control. The interests of our director may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. IF ALEX NORTON, OUR DIRECTOR, SHOULD RESIGN OR DIE, WE WILL NOT HAVE A CHIEF EXECUTIVE OFFICER. THIS COULD RESULT IN OUR OPERATIONS SUSPENDING, AND YOU COULD LOSE YOUR INVESTMENT. We depend on the services of our director Alex Norton for the future success of our business. The loss of the services of Mr. Norton could have an adverse effect on our business, financial condition and results of operations. If he should resign or die we will not have a chief executive officer. If that should occur, until we find another person to act as our chief executive officer, our operations could be suspended. In that event it is possible you could lose your entire investment. We do not carry any key personnel life insurance policies on Mr. Norton and we do not have a contract for his services. U.S. INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO EFFECT SERVICE OF PROCESS AND TO ENFORCE JUDGMENTS BASED UPON U.S. FEDERAL SECURITIES LAWS AGAINST THE COMPANY AND ITS NON-U.S. RESIDENT OFFICER AND DIRECTOR. While we are organized under the laws of State of Nevada, our director is non-U.S. resident. Consequently, it may be difficult for investors to affect service of process on Mr. Norton in the United States and to enforce in the United States judgments obtained in United States courts against Mr. Norton based on the civil liability provisions of the United States securities laws. Since all our assets will be located outside of U.S., it may be difficult or impossible for U.S. investors to collect a judgment against us. OUR BUSINESS CAN BE AFFECTED BY CURRENCY RATE FLUCTUATIONS AS WE MAY RECEIVE PAYMENTS AND INCUR EXPENSES IN FOREIGN CURRENCY. We will receive some of our earnings in US currency. However, some of our clients may pay us in foreign currency. Also, as our operations are based in Canada, some of our expenses will be incurred in Canadian dollars. If we are not able to successfully protect ourselves against currency fluctuations, then our profits will also fluctuate and could cause us to be less profitable or incur losses, even if our business is doing well. IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO SELL THEIR SHARES. There is currently no market for our common stock and we can provide no assurance that a market will develop. We plan to apply for listing of our common stock on the over the counter bulletin board upon the effectiveness of the registration statement, of which this prospectus forms a part. However, we can provide investors with no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize. If no market is ever developed for our shares, it will be difficult for shareholders to sell their stock. In such a case, shareholders may find that they are unable to achieve benefits from their investment. OUR SHARES OF COMMON STOCK ARE SUBJECT TO THE "PENNY STOCK' RULES OF THE SECURITIES AND EXCHANGE COMMISSION AND THE TRADING MARKET IN OUR SECURITIES WILL BE LIMITED, WHICH WILL MAKE TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares. IF AND WHEN OUR SHARES OF COMMON STOCK COMMENCE TRADING ON THE OTC BULLETIN BOARD, THE TRADING PRICE MAY FLUCTUATE SIGNIFICANTLY AND STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING THEIR SHARES. As of the date of this Registration Statement, our common stock does not yet trade on the Over-the-Counter Bulletin Board. If our shares of common stock commence trading on the Bulletin Board, there is a volatility associated with Bulletin Board securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends. ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL RESULT IN DILUTION TO EXISTING SHAREHOLDERS. We must raise additional capital in order for our business plan to succeed. Our most likely source of additional capital will be through the sale of additional shares of common stock. Such stock issuances will cause stockholders' interests in our company to be diluted. Such dilution will negatively affect the value of investors' shares. WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEBLE FUTURE. We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, a return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock. WE ARE AN "EMERGING GROWTH COMPANY" AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. We are an "emerging growth company," as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. Under the Jumpstart Our Business Startups Act, "emerging growth companies" can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not "emerging growth companies." We will also cease to be an "emerging growth company" if your total annual gross revenue exceeds $1 billion or we issue more than $ 1 billion in non-convertible debt in three years. WE INCUR COSTS ASSOCIATED WITH SEC REPORTING COMPLIANCE, WHICH MAY SIGNIFICANTLY AFFECT OUR FINANCIAL CONDITION. We incur certain costs of compliance with applicable SEC reporting rules and regulations including, but not limited to attorneys fees, accounting and auditing fees, other professional fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount estimated at approximately $25,000 per year. On balance, the Company determined that the incurrence of such costs and expenses was preferable to the Company being in a position where it had very limited access to additional capital funding. However, for as long as we remain an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an "emerging growth company." We will remain an "emerging growth company" for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an "emerging growth company" as of the following . After, and if ever, we are no longer an "emerging growth company," we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not "emerging growth companies," including Section 404 of the Sarbanes-Oxley Act. WE MAY HAVE POTENTIAL IMPACT OF "DO NOT TRACK" LEGISLATION ON OUR PROPOSED BUSISS OPERATIONS. Even though the United States has not yet adopted "Do Not Track" legislation, various proposals being discussed would restrict internet companies from collecting and selling data relating to consumer behavior on the internet. Thus, it appears that this potential legislation could affect our proposed products, including our On-site WebState analytical software designed to capture customer's behavior and customer's feedback on the visited Web Sites. ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF NEVADA STATE LAW HINDER A POTENTIAL TAKEOVER OF THE COMPANY. Though not now, we may be or in the future we may become subject to Nevada's control share law. A corporation is subject to Nevada's control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a "controlling interest" which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others. The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law. If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled to demand fair value for such stockholder's shares. Nevada's control share law may have the effect of discouraging takeovers of the corporation. In addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and "interested stockholders" for three years after the "interested stockholder" first becomes an "interested stockholder," unless the corporation's board of directors approves the combination in advance. For purposes of Nevada law, an "interested stockholder" is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term "business combination" is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquiror to use the corporation's assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders. The effect of Nevada's business combination law is to potentially discourage parties interested in taking control of us from doing so if it cannot obtain the approval of our board of directors. OUR BUSINESS IS AFFECTED BY SOFTWARE RELATED PROBLEMS SUCH AS PROGRAM BUGS AND CHASHES. Because our business is related to software development industry we can be affected by software related problems, such as unforeseen program bugs and crashes. Our proposed business operation can be affected by internet glitches and discrepancies of different operating systems and browsers that our clients may use. For an example, users of Mini Opera browser may have not be able to fully integrated to our service. WE HAVE NO EXPERIENCE AS A PUBLIC COMPANY. We have never operated as a public company. We have no experience in complying with the various rules and regulations, which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations, which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us. FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the "Risk Factors" section and elsewhere in this prospectus. USE OF PROCEEDS We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholders. DETERMINATION OF OFFERING PRICE The selling shareholders will sell our shares at $0.03 per share until our shares are quoted on the OTC Bulletin Board. Sales price will be fixed for the duration of the offering. We determined this offering price arbitrarily, by adding a $0.01 premium to the last sale price of our common stock to investors. There is no assurance of when, if ever, our stock will be listed on an exchange. DILUTION Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders. SELLING SHAREHOLDERS The selling shareholders named in this prospectus are offering all of the 1,480,000 shares of common stock offered through this prospectus. These shares were acquired from us in private placements that were exempt from registration provided under Regulation S of the Securities Act of 1933. All shares were acquired outside of the United States by non-U.S. persons. The shares include the following: 1,480,000 shares of our common stock that the selling shareholders acquired from us in an offering that was exempt from registration under Regulation S of the Securities Act of 1933 that was completed on February 9, 2012. The following table provides as of the date of this prospectus, information regarding the beneficial ownership of our common stock held by each of the selling shareholders, including: 1. the number of shares owned by each prior to this offering; 2. the total number of shares that are to be offered for each; 3. the total number of shares that will be owned by each upon completion of the offering; and 4. the percentage owned by each upon completion of the offering. <TABLE> <CAPTION> Total Number Of Shares To Be Offered For Total Shares to Percentage of Shares Owned Selling Be Owned Upon Shares owned Upon Name Of Prior To This Shareholders Completion of This Completion of This Selling Shareholder Offering Account Offering Offering ------------------- -------- ------- -------- -------- <S> <C> <C> <C> <C> KSENIA TOMSKAIA 60,000 60,000 Nil Nil ILIA TOMSKI 60,000 60,000 Nil Nil BORIS AKSMAN 60,000 60,000 Nil Nil INNA AKSMAN 60,000 60,000 Nil Nil SERGUEI FENEV 60,000 60,000 Nil Nil TATIANA FENEVA 60,000 60,000 Nil Nil MARIA TOMSKAIA 60,000 60,000 Nil Nil MAXIM KOUDACHKINE 60,000 60,000 Nil Nil TATIANA KOUDACHKINE 60,000 60,000 Nil Nil TAMARA BEREZOVSKY 60,000 60,000 Nil Nil VITALI KOUDACHKINE 60,000 60,000 Nil Nil VALERIAN GOUMBERIDZE 60,000 60,000 Nil Nil ELENA GOUMBERIDZE 60,000 60,000 Nil Nil VLADISLAV GOUMBERIDZE 60,000 60,000 Nil Nil VALENTINA GOUMBERIDZE 60,000 60,000 Nil Nil ALEXANDER BER 60,000 60,000 Nil Nil VLADIMIR KOLOSSOVSKI (1) 60,000 60,000 Nil Nil MARINA KONEVETSKY 60,000 60,000 Nil Nil ANNA URBANSKA 50,000 50,000 Nil Nil VICTOR SOUTYRINE 50,000 50,000 Nil Nil TATIANA SHULMAN 50,000 50,000 Nil Nil EVGENIA GONIKMAN 50,000 50,000 Nil Nil ANNA PROKOFEVA 50,000 50,000 Nil Nil RICCARDO GONCALVES 50,000 50,000 Nil Nil KYLE RAATS 50,000 50,000 Nil Nil EKATERINA RAATS 50,000 50,000 Nil Nil </TABLE> ---------- (1) Treasurer of the Company. The named party beneficially owns and has sole voting and investment power over all shares or rights to these shares. The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold. The percentages are based on 4,480,000 shares of common stock issued and outstanding on the date of this prospectus. Except with respect to Vladimir Kolossovski, our current Treasurer (who is also not an affiliate of a broker-dealer), none of the selling shareholders: 1. has had a material relationship with us other than as a shareholder at any time within the past three years; 2. has ever been one of our officers or directors; 3. is a broker-dealer; or a broker-dealer's affiliate. PLAN OF DISTRIBUTION The selling shareholders may sell some or all of their common stock in one or more transactions, including block transactions. There are no arrangements, agreements or understandings with respect to the sale of these securities. The selling shareholders will sell our shares at a fixed price $0.03 per share for the duration of the offering. We determined this offering price arbitrarily. There is no assurance of when, if ever, our stock will be listed on an exchange or quotation system. We are a "shell company" within the meaning of Rule 405, promulgated pursuant to Securities Act, because we have nominal assets and nominal operations. Accordingly, the securities sold in this offering can only be resold through registration under Section 5 the Securities Act of 1933, Section 4(1), if available, for non-affiliates or by meeting the conditions of Rule 144(i). If applicable, the selling shareholders may distribute shares to one or more investors who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. If these shares being registered for resale are transferred from the named selling shareholders and the new shareholders wish to rely on the prospectus to resell these shares, then we must first file a prospectus supplement naming these individuals as selling shareholders and providing the information required concerning the identity of each selling shareholder and his or her relationship to us. There is no agreement or understanding between the selling shareholders and any investors with respect to the distribution of the shares being registered for resale pursuant to this registration statement. We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders. We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock. The selling shareholders must comply with the requirements of the Securities Act and the Securities Exchange Act in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable law and may, among other things: 1. Not engage in any stabilization activities in connection with our common stock; 2. Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and 3. Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Securities Exchange Act. The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which contains: a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements; a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price; a toll-free telephone number for inquiries on disciplinary actions; a definition of significant terms in the disclosure document or in the conduct of trading penny stocks; and such other information and is in such form (including language, type, size, and format) as the Commission shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: bid and offer quotations for the penny stock; the compensation of the broker-dealer and its salesperson in the transaction; the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities. DESCRIPTION OF SECURITIES GENERAL Our authorized capital stock consists of 75,000,000 shares of common stock at a par value of $0.001 per share. COMMON STOCK As of August 31, 2012, there were 4,480,000 shares of our common stock issued and outstanding that is held by 27 stockholders of record. Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation. Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock. PREFERRED STOCK We do not have an authorized class of preferred stock. DIVIDEND POLICY We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. SHARE PURCHASE WARRANTS We have not issued and do not have any outstanding warrants to purchase shares of our common stock. OPTIONS We have not issued and do not have any outstanding options to purchase shares of our common stock. CONVERTIBLE SECURITIES We have not issued and do not have any outstanding securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock. INTERESTS OF NAMED EXPERTS AND COUNSEL No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, an interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. Law Offices of Thomas E. Puzzo, PLLC has provided an opinion on the validity of our common stock. The financial statements included in this prospectus and the registration statement have been audited by D. Brooks and Associates CPA's, P.A., to the extent and for the periods set forth in their report appearing elsewhere in this document and in the registration statement filed with the SEC, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. DESCRIPTION OF BUSINESS PRODUCTS/SERVICES We will offer our clients an On-site WebState analytical tool which will allow clients to perform web analytics including measurement, collection, analysis and reporting of internet data for purposes of optimizing and improving of web usage by potential customers. Currently there are two categories of WebState analytics; Off-site and On-site. Off-site web analytics refers to web measurement and analysis regardless of whether you own or maintain a website. It includes the measurement of a website's potential audience (opportunity), share of voice (visibility), and buzz (comments) that is happening on the Internet as a whole. On-site web analytics measure a visitor's journey once on a specific website. This includes its drivers and conversions; for example, which landing pages encourage people to make a purchase. In online marketing a landing page is a single web page that appears in response to clicking on an advertisement. The landing page will usually display directed sales copy that is a logical extension of the advertisement or link. Our On-site web analytical tool measures and collects data of the performance of a clients' website in terms of a commercial context. This data is compared against key performance indicators for performance, and used to improve the client's web site. Our analytical tool includes a small program - applet, that is embedded in our client's website to collect several parameters like traffic, stay time (the time a visitor spend looking at one page), number of clicks, number of returns to the same page, number of returns to the website, an active sales per 1,000 visits. Also the visitor will be able to provide structural and free form feedback on each page of the website. The small and not intrusive applet embedded on all pages of our client's website will provide the means for sending the feedback to the Amperico database for WebState analytics and anonymous storage. Information then will be analyzed, compared to the other websites in term of commercial context and a report with recommendations will be generated and sent back to the website owner. The report will contain an area of required improvements and recommendations based on the visitors' feedback. By following our recommendations clients' websites will get more visibility, traffic and eventually will lead to more sales. Currently we do not have this database; at this point it is a technical proposal. We're planning to build and host the database by ourselves and use 3rd party for backup. MARKETING OUR SERVICES Our plan in the next 12 months is to advertise our services on the Internet as well as by sending out regular e-letters and special promotions to our new and existing clients. We also plan referral agreements with various Internet analyzing companies in order to generate an additional revenue. CONTRACT FOR WEBPAGE ANALYTICAL SERVICES We have executed a Contract for WebPage Analytical Services with Telvid Inc based in Thornhill, ON, Canada (www.frbo.ca "Telvid"). Telvid specializes in rental property advertisement and owns a network of several hundreds websites. Under the terms of the agreement we will provide Telvid a Website Feedback Applet to be integrated with applet ID for each Webpage where the applet is installed. We will send monthly report of customer feedback to the Telvid at the end of each calendar month. Other material terms of the agreement are as follows: 1. Telvid shall pay us a monthly fee $ 0.99 USD per webpage where the applet is installed. 2. Payment is due within 30 days since invoice issue date. 3. The applet is a property of the Amperico. 4. All knowledge and information acquired during the term of this Contract with respect to the business and products of the client will be treated by Amperico as confidential until and unless stipulated by Tlvid. 5. This contract can be modified orally or in writing by agreement of both parties. 6. Either party may terminate this contract by giving a 30 days' notice in writing. 7. Contract is in effect since March 24, 2012. We have not delivered any services or products to Telvid to date. WEBSITE MARKETING STRATEGY We plan to develop a website to market and display our services. To accomplish this, we plan to contract an independent web designing company. Our website will describe our services in detail, show our contact information, and include some general information and description of our services. We intend to promote our website by displaying it on our business cards. We intend to attract traffic to our website by a variety of online marketing tactics such as registering with top search engines and advertising on related websites. REVENUE There are several ways how the company will generate its profit. REVENUE FROM DIRECT SALES OF THE SERVICE TO THE WEBSITE OWNERS Direct sales of the services to the Website owners will be a primary source of the company revenue. Special information collecting applets will be sold to website owners who desire to increase web traffic and improve web site appearance. There are three versions of the applet: Basic, Professional and Enterprise--depending on the needs of the customer. The selling price of the basic version is $0.99 USD per web page per month Basic version includes visitor activity statistics, page navigation tracing, number of clicks and mouse movement topography. The selling price of the Professional version is $2.99 USD per page per month. Professional version includes all features of the basic version plus visitor feedback. The selling price of the Enterprise version is $14.99 USD per page per month. Professional version includes all features of the professional version plus analysis of the traffic including geographical locations of the customers. Also comparison repost with other similar website will be issued monthly. REFERRAL COMMISSIONS REVENUE Referral commissions will be the secondary source of the revenue. Some perspective customers, who wish to use services of other providers, will be referred to those companies. The company receiving the referral will pay a commission to Amperico Corp. for each referral and additional fees if a customer actually subscribes to their services. The commission may range from 5% to 10% of the total amount paid by the customer. WEB ADVERTISING REVENUE Web advertising will be an additional source of Company revenue. The basic applet will contain a certain amount of space allocated for advertising. The applet works on a background gathering information about user actions on the specific web page and normally not visible to the public until feedback button is clicked. Once it is clicked the applet becomes visible with the several feedback options. The frame (bezel) of the applet has space for small advertisements. The applet size is about a quarter of the whole screen. It has two buttons: "Send feedback" and "Cancel" by clicking "Cancel" button the applet window becomes closed. This space may be sold according to the current market price for similar products. COMPETITION The On-site WebState analytical service market is highly competitive. We expect competition to continue to intensify in the future. Our major competitors include companies with substantial customer bases and working history. They are Google, Adobe, Mixpanel, Unilytics and the like. Google offers number of web analytical tools: Analysis Tools; Content Analytics; Social Analytics; Mobile Analytics; Conversion Analytics; Advertising Analytics. Adobe offers Adobe SiteCatalyst Real-time, high-performance analytics and reporting. This tool provides marketers with actionable, real-time web analytics intelligence about digital strategies and marketing initiatives. Mixpanel provides mobile analytics and special tools to analyze the data. Unilytics provides a package for Web Analytics and Optimization Solutions. There can be no assurance that we can obtain and maintain a competitive position against current or future competitors, particularly those with greater financial, marketing, service, support, technical and other resources. Our failure to obtain and maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our business, financial condition and results of operations. INSURANCE We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations. EMPLOYEES; IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES We are a development stage company and currently have no employees, other than our director. We intend to hire employees on an as needed basis. OFFICES Our offices are located at 42 Rockwood Crescent, Thornhill, ON, L4J 7T2, Canada. Our telephone number is (775) 461 5130. This is the office of our President, Alex Norton. We do not pay any rent to Mr. Norton and there is no agreement to pay any rent in the future. Upon the completion of our offering, we intend to establish an office elsewhere. As of the date of this prospectus, we have not sought or selected a new office sight. EMPLOYEES We are a development stage company and we have no employees as of the date of this prospectus, other than our director. RESEARCH AND DEVELOPMENT EXPENDITURES We have not incurred any research or development expenditures since our incorporation. SUBSIDIARIES We do not have any subsidiaries. PATENTS AND TRADEMARKS We do not own, either legally or beneficially, any patents or trademarks. LEGAL PROCEEDINGS We are not currently a party to any legal proceedings. Our address for service of process in Nevada is 2360 Corporate Circle STE 400, Henderson, Nevada 89074-7722. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS NO PUBLIC MARKET FOR COMMON STOCK There is presently no public market for our common stock. We anticipate applying for trading of our common stock on the over the counter bulletin board upon the effectiveness of the registration statement of which this prospectus forms a part. However, we can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize. STOCKHOLDERS OF OUR COMMON SHARES As of the date of this registration statement, we have 27 registered shareholders. RULE 144 SHARES Currently, none of our securities may be resold pursuant to Rule 144. We are a "shell company" within the meaning of Rule 405, promulgated pursuant to Securities Act, because we have nominal assets and nominal operations. Accordingly, the securities sold in this offering can only be resold through registration under Section 5 the Securities Act of 1933, Section 4(1), if available, for non-affiliates or by meeting the conditions of Rule 144(i). A holder of our securities may not rely on the safe harbor from being deemed statutory underwriter under Section 2(11) of the Securities Act, as provided by Rule 144, to resell his or her securities. Only after we (i) are not a shell company, and (ii) have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that we may be required to file such reports and materials, other than Form 8-K reports); and have filed current "Form 10 information" with the SEC reflecting our status as an entity that is no longer a shell company for a period of not less than 12 months, can our securities be resold pursuant to Rule 144. "Form 10 information" is, generally speaking, the same type of information as we are required to disclose in this prospectus, but without an offering of securities. These circumstances regarding how Rule 144 applies to shell companies may hinder your resale of your shares of the Company. STOCK OPTION GRANTS To date, we have not granted any stock options. REGISTRATION RIGHTS We have not granted registration rights to the selling shareholders or to any other persons. DIVIDENDS There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 1 we would not be able to pay our debts as they become due in the usual course of business; or 2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future. PLAN OF OPERATION We will rely on our president's educational background and work experience in the software design industry to service our clients and develop our business. As our business expands, we may hire additional representatives and analytical consultants. Below are the main steps and milestones the company plans for this fiscal year. STEP BY STEP COST OF OPERATION (US DOLLARS) <TABLE> <CAPTION> <S> <C> <C> Aug-Sep 2012 Register domain name and begin to develop company's website. $ 200 Create a database of potential clients $ 200 Begin to Deveop Project plan. Purchase Microsoft Project Software $ 356 The expected cost for this step is: $ 756 $ 756 Oct-Nov 2012 Begin meeting prospective clients and negotiating referral agreements. Costs include telephone and travel expenses. $ 600 Begin advertising campaign. Printing, fliers. Placing online adds. Advertising will be an ongoing activity throughout the lifetime of our operations. $ 1,000 Complete project plan $ 200 Collect business requirements $ 200 The expected cost for this step is: $ 2,000 $ 2,000 </TABLE> <TABLE> <CAPTION> <S> <C> <C> Dec-Jan 2012- Attract new clients and continue executing agreements with existing 2013 clients. Costs include telephone and travel expenses. $ 600 Launch our website. $ 300 High Level System design using Microsoft Project $ 700 Detailed System design by components. $ 1,000 The expected cost for this step is: $ 2,600 $ 2,600 Feb-Mar 2012 Continue improving/updating website $ 200 Develop and set up additional programs for analytical process to expand the range of analytical services offered. $ 1,500 Developing simplified POC (Proof Of Concept) System $ 1,000 The expected cost for this step is: $ 2,700 $ 2,700 Apr-May 2013 Hire 1-2 analytical service consultants to help us serve our clients. The number of consultants will depend on our level of business activity. Their salary will be commission based. $ 0 Testing POC System $ 300 Developing full System by Components $ 1,500 The expected cost for this step is: $ 1,800 $ 1,800 Jun-Jul 2013 Continue to advertise our business. $ 500 Continue to expand client's database. $ 0 QA (Quality Assurance) Testing, Packaging, Delivering to production $ 600 The expected cost for this step is: $ 1,100 $ 1,100 Subtotal for all steps is: $10,956 $15,400 General administrative costs: office electronics and utilities, network technical assistance and computer maintenance work $ 8,500 Total: $19,456 $19,456 Professional fees, including fees payable in connection with the filing of this registration statement and complying with reporting obligations. $10,000 ------- Grand Total: $29,456 ======= </TABLE> The total cost of operation is: $29,456. We have $14,285 available and we still have deficit of $15,171. Based on our current operating plan, we do not expect to generate revenue that is sufficient to cover our expenses for the next 12 months. In addition, we do not have sufficient cash and cash equivalents to execute our operations and will need to obtain additional financing to operate our business for the next 12 months. Additional financing, whether through public or private equity or debt financing, arrangements with the security holder or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us. Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital. If we issue additional equity securities to raise funds, the ownership percentage of our existing security holder would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. Debt incurred by us would be senior to equity in the ability of debt holders to make claims on our assets. The terms of any debt issued could impose restrictions on our operations. If adequate funds are not available to satisfy either short or long-term capital requirements, our operations and liquidity could be materially adversely affected and we could be forced to cease operations. At the present time, we have not received any confirmation from any party of their willingness to loan or invest funds to the company but will seek funding advances from sources such as our director or from the sale of our common stock. Currently the Company does not employ any employees, however as the Company grows, it plans to employ additional employees, as required. If we cannot generate sufficient revenues to continue operations, we may be forced to suspend or cease operations. RESULTS OF OPERATIONS FOR PERIOD ENDING AUGUST 31, 2012 We did not earn any revenues from our incorporation on December 20, 2011 to August 31, 2012. We incurred operating expenses in the amount of $5,484 for the period from our inception on December 20, 2011 to August 31, 2012. These operating expenses were comprised of incorporation expenses of $325 and bank charges and fees of $5,159. We have not attained profitable operations and are dependent upon obtaining financing to pursue activities. For these reasons, there is substantial doubt that we will be able to continue as a going concern. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS We have had no changes in or disagreements with our accountants. AVAILABLE INFORMATION We have filed a registration statement on Form S-1 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company, and the statements we have made in this prospectus are qualified in their entirety by reference to these additional materials. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission's principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street NE, Washington, D.C. 20549. D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. Our registration statement and the referenced exhibits can also be found on this site. DIRECTORS, EXECUTIVE OFFICER, PROMOTERS AND CONTROL PERSONS Our executive officer and director and his age as of the date of this prospectus is as follows: DIRECTOR: Name of Director Age ---------------- --- Alex Norton 55 EXECUTIVE OFFICER: Name of Officer Age Office --------------- --- ------ Alex Norton 55 President, Chief Executive Officer, Secretary, Chief Financial Officer and Chief Accounting Officer Vladimir Kolossovski 58 Treasurer BIOGRAPHICAL INFORMATION Set forth below as a brief background and business experience description of our President for the last ten years. Since our inception on December 20, 2011, Alex Norton has been our President, Chief Executive Officer, Secretary, and Chief Financial Officer. From 2000 to present his practical work and background has been closely tightened with software consulting work for IT companies (Sybertek Dallas, TX; Sprint Kansas city, MO) and financial institutions in The USA (Pacific Life, NY Life) and Canada. He has been leading multiple large software projects. In 2009 Mr. Norton completed a Project Management program at Ryerson University of Toronto, Canada. Alex Norton holds a bachelor degree in computer science and economics from University of Economics and Law, Irkutsk, Russia. Our director has strong background in software development and management. He is certified Project Manager Professional (PMP) with over 20 years of IT experience. Currently hi is a team leader and is managing system analysis and software development and we believe that qualifies him as an expert in software development industry. Vladimir Kolossovski is our treasurer. For the past 10 years Mr. Kolossovski has been working as a QA Engineer for Isoted Ground Inc. in Ashdod, Israel. His duties include testing the quality of the road building materials and quality of the road constructions. Vladimir Kolossovski, is our Treasurer. None of our other selling shareholders has: 1. has had a material relationship with us other than as a shareholder at any time within the past three years; 2. has ever been one of our officers or directors; 3. is a broker-dealer; or a broker-dealer's affiliate. Neither Mr. Norton or Mr. Kolossovski has been a member of the board of directors of any corporations during the last ten years. During the past ten years, Mr. Norton and Mr. Kolossovski have not been the subject to any of the following events: Mr. Norton has not been a member of the board of directors of any corporations during the last ten years. During the past ten years, Mr. Norton has not been the subject to any of the following events: 1. Any bankruptcy petition filed by or against any business of which Mr. Norton was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. 2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding. 3. An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Norton's involvement in any type of business, securities or banking activities. 4. Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. TERM OF OFFICE Our director is appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. SIGNIFICANT EMPLOYEES We have no significant employees other than our officers and director. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The table below summarizes all compensation awarded to, earned by, or paid to our executive officer by any person for all services rendered in all capacities to us for the period from our incorporation on December 20, 2011 to August 31, 2012 and subsequent thereto to the date of this prospectus. SUMMARY COMPENSATION TABLE <TABLE> <CAPTION> Change in Pension Value and Non-Equity Nonqualified Name and Incentive Deferred Principal Stock Option Plan Compensation All Other Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($) -------- ---- --------- -------- --------- --------- --------------- ----------- --------------- --------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> Alex Norton 2011 None None None None None None None None President, CEO, 2012 None None None None None None None None CFO, Secretary, Chief Accounting Officer, and director Vladimir 2012 None None None None None None None None Kolossovski Treasurer </TABLE> STOCK OPTION GRANTS We have not granted any stock options to our executive officers since our inception. CONSULTING AGREEMENTS We do not have an employment or consulting agreement with Alex Norton and Vladimir Kolossovski. We do not pay them for acting as a director or officer. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding common stock as of the date of this prospectus, and by our director, individually at August 31, 2012. Except as otherwise indicated, all shares are owned directly. Amount of Title of Name and address beneficial Percent Class of beneficial owner ownership of class ----- ------------------- --------- -------- Common Alex Norton 3,000,000 67.0% Stock President, Chief Executive Officer, Chief Financial Officer, Secretary, Chief Accounting Officer and Director 42 Rockwood Crescent Thornhill, ON, L4J 7T2, Canada Common Vladimir Kolossovski 60,000 1.3% Stock Treasurer 42 Rockwood Crescent Thornhill, ON, L4J 7T2, Canada The percent of class is based on 4,480,000 shares of common stock issued and outstanding as of the date of this prospectus. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us: * Any of our directors or officers; * Any person proposed as a nominee for election as a director; * Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock; * Our sole promoter, Alex Norton; * Any relative or spouse of any of the foregoing persons who has the same house as such person; * Immediate family members of directors, director nominees, executive officers and owners of 5% or more of our common stock. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our director is indemnified as provided by the Nevada Revised Statutes and our Bylaws. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to court of appropriate jurisdiction. We will then be governed by the court's decision. AMPERICO CORP. (A DEVELOPMENT STAGE COMPANY) TABLE OF CONTENTS MAY 31, 2012 Report of Independent Registered Public Accounting Firm F-1 Balance Sheet as of May 31, 2012 F-2 Statement of Operations for the Period from December 20, 2011 (Date of Inception) to May 31, 2012 F-3 Statement of Stockholders' Equity for the Period from December 20, 2011 (Date of Inception) to May 31, 2012 F-4 Statement of Cash Flows for the Period from December 20, 2011 (Date of Inception) to May 31, 2012 F-5 Notes to the Financial Statements F-6
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+Summary Financial Information 
+ 
+
+ The following audited financial information summarizes the more complete historical financial information at the end of this prospectus.
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ July 31, 2012
+ 
+ 
+ As of April 30, 2012
+ 
+
+ Balance Sheet 
+ 
+ 
+ 
+ 
+
+ Total Assets 
+ $
+ 2,687
+ $ 
+ 14,440
+
+ Total Liabilities 
+ $
+ 5,579
+ $ 
+ 5,579
+
+ Stockholders Equity (Deficit)
+ $
+ (2,892)
+ $ 
+ 8,861
+
+ 
+ 
+ For the three months ended July 31, 2012
+ 
+ 
+ Period from August 8, 2011
+ (date of inception) to
+ July 31, 2012
+
+ Income Statement 
+ 
+ 
+ 
+ 
+
+ Revenue 
+ $
+ -
+ $ 
+ -
+
+ Total Expenses 
+ $
+ 11,753
+ $ 
+ 27,892
+
+ Net Loss 
+ $
+ (11,753)
+ $ 
+ (27,892)
+
+ 
+ Risk Factors 
+ 
+
+ In addition to the other information provided in this Prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock. 
+ 
+
+ Our lack of operating history makes it difficult for us to evaluate our future business prospects and make decisions in implementing our business plan. You are unable to determine whether we will ever become profitable, which increases your investment risk.
+ 
+
+ We were incorporated on August 8, 2011. We have no operating history. Our business plan is speculative and unproven. There is no assurance that we will be successful in executing our business plan or that, even if we successfully implement our business plan, we will ever generate revenues or profits, which makes it difficult to evaluate our business. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues, or expenses. If we make poor operational decisions in implementing our business plan, we may never generate revenues or become profitable or incur losses, which may result in a decline in our stock price. 
+ 
+
+ 
+
+ 7 
+
+ 
+
+ 
+
+ 
+
+ There is substantial doubt about our ability to continue, as a going concern, as a result of our lack of revenues and financial resources, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.
+ 
+
+ Our lack of operating history and financial resources raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations. If we do not commence our operations, open retail stores, secure financing, and related activities or if we do not secure funding to implement our business plan, we estimate current available financial resources will sustain our operations only through the next few months, and then only if continued funding by the management of the company. 
+ 
+
+ Because we will need additional capital to implement our business plan and may not be able to obtain sufficient capital, we may be forced to limit the scope of our operations, and our revenues may be reduced.
+ 
+
+ In connection with implementing our business plans, we will experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including the following:
+ 
+ 
+
+ 
+ - our profitability;
+
+ 
+ - our ability to secure financing and acquire inventory and open new stores;
+
+ 
+ - the ability to generate revenues from the sale of product
+
+ 
+ - The ability to attract and retain customers.
+
+ 
+
+ We cannot assure you that we will be able to obtain capital in the future to meet our needs. We have no sources of financing identified. If we cannot obtain additional funding, we may be required to:
+ 
+ 
+
+ 
+ - limit our ability to implement our business plan;
+
+ 
+ - limit our marketing efforts; and
+
+ 
+ - decrease or eliminate capital expenditures. 
+
+ 
+
+ Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our Common Stock. Any additional financing may not be available to us, or if available, may not be on terms favorable to us.
+ 
+
+ 
+
+ 8 
+
+ 
+
+ 
+
+ 
+
+ We will require financing to achieve our current business strategy and our inability to obtain such financing could prohibit us from executing our business plan and cause us to slow down our expansion or cease our operations.
+ 
+
+ We will need to raise a minimum of $143,000 over the next twelve months through public or private debt or sale of equity to execute our business plan to become a revenue generating company. Such financing may not be available as needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences or other terms. If we are unable to obtain this financing on reasonable terms, we would be unable to hire the additional employees needed to execute our business plan and we would be forced to delay or scale back our plans for expansion. This would delay our ability to get our operations to profitability and could force us to cease operations. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results or financial condition.
+ 
+
+ Moreover, in addition to monies needed to commence operations over the next twelve months, we anticipate requiring additional funds in order to execute any future plans for growth. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if or when it is needed on terms we deem acceptable.
+ 
+
+ Because we face competition from other retailers, we may not be successful in generating revenues or becoming profitable.
+ 
+
+ There is one comparable massage therapy clinic ten miles from Carson offering 80% of the range of products we will be offering. We will face competition from this and other massage therapy clinics which may hinder our ability to generate revenues or become profitable. 
+ 
+
+ Dependence on consumer spending and customers.
+ 
+
+ Consumer spending and a healthy economy drive sales of massage therapy services. Consumers are more likely to not spend money on massage therapy services during tough economic times. Our success depends on our ability to attract customers on cost-effective terms. If we are unsuccessful at attracting a sufficient number of clients, our ability to get repeat customers and our financial condition will be harmed.
+ 
+
+ Our lack of an established brand name and relative lack of resources could negatively impact our ability to effectively compete in the massage therapy clinic industry, which could reduce the value of your investment.
+ 
+
+ We do not have an established brand name or reputation in the business of providing massage therapy services. We also have a relative lack of resources to conduct our business operations. Thus, we may have difficulty effectively competing with companies that have greater name recognition and financial resources than we do. Our inability to promote and/or protect our brand name may have an adverse effect on our ability to compete effectively in the market.
+ 
+
+ Because our auditors have issued a going concern opinion, there is substantial uncertainty we will continue operations in which case you could lose your investment. 
+ 
+
+ Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months as we lack an operating history. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+ 
+
+ If we do not make a profit, we may have to suspend or cease operations. 
+ 
+
+ Because we are small and do not have much capital, we must limit our marketing to the existing business relationships of our CEO, Mrs. Yong Ok Cho. Because we will be limiting our marketing activities, we may not be able to attract enough vendors and customers to operate profitably. If we cannot operate profitably, we may have to suspend or cease our operations.
+ 
+ We do not expect to pay dividends in the foreseeable future.
+ 
+ We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, a return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
+ 
+ 
+ We are dependent on our CEO, Mrs. Yong Ok Cho, to guide our initial operations and implement our plan of operations. If we lose such services we will have to change our business plan/direction or cease operations. 
+ 
+
+ Our success will depend on the ability and resources of our CEO & President. If we lose the services of our CEO, we will be forced to either change our business plan and direction or cease operations. We have no written employment agreement with our CEO. We have not obtained any key man life insurance relating to our CEO. If we lose such services, we may not be able to hire and retain another CEO with comparable experience. As a result, the loss of Mrs. Yong Ok Cho s services could reduce our revenues. We have no written employment agreement or covenant not to compete with Mrs. Yong Ok Cho. 
+
+ Because our sole officer and director owns 60% of our issued and outstanding common stock, she could make and control corporate decisions that may be disadvantageous to minority shareholders.
+ 
+ Our sole officer and director, Ms. Yong Ok Cho, owns approximately 60% of issued and outstanding shares of our common stock. Accordingly, she will be able to determine the outcome of all corporate transactions or other matters that require shareholder approval, including but not limited to, the election of directors, mergers, consolidations, and the sale of all or substantially all of our assets. She will also have the power to prevent or cause a change in control. The interests of our sole officer and director may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
+ 
+ The recently enacted JOBS Act will allow us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the sec, which could undermine investor confidence in our company and adversely affect the market price of our common stock. 
+ 
+ For so long as we remain an emerging growth company as defined in the JOBS Act, we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not emerging growth companies including: 
+ 
+ the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;
+ the say on pay provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the say on golden parachute provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer; 
+ the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Securities Exchange Act of 1934, and instead provide a reduced level of disclosure concerning executive compensation; and 
+ any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor s report on the financial statements. 
+ We may take advantage of these exemptions until we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest of: (i) the first fiscal year following the fifth anniversary of this offering; (ii) the first fiscal year after our annual gross revenues are $1 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. 
+ 
+ Although we are still evaluating the JOBS Act, we currently intend to take advantage of some, but not all, of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an emerging growth company. For example, we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company, we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile and may decline.
+ 
+ We will incur significant increased costs as a result of operating as a public company, and we may be unable to absorb the costs associated with being a public company. 
+ 
+ We have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. So far from our inception on August 8, 2012, we have spent $26,749 on professional fees (accountants, auditors and lawyers fees). We estimate that we will spend an additional $20,000 on accounting and legal fees over the next 12 months.
+ 
+ In addition, related rules implemented by the Securities and Exchange Commission impose various requirements on public companies. Our sole director and officer will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In particular, will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements in a timely manner, our stock price could decline, and we could face sanctions, delisting or investigations or other material effects on our business, reputation, results of operations, financial condition or liquidity.
+ 
+ Because we have nominal assets and no significant revenue, we are considered a "shell company" and will be subject to more stringent reporting requirements. All shareholders with restricted shares of common stock of the company will be subject to the limitations of using Rule 144 as described in Rule 144(i) of the Securities Act. 
+ 
+ Pursuant to Rule 144 of the Securities Act of 1933, as amended ( Rule 144 ), a shell company is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. As such, we are a shell company pursuant to Rule 144, and as such, sales of our securities pursuant to Rule 144 are not able to be made until (1) we have ceased to be a shell company"; (2) we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; and, (3) have filed all of our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of at least twelve months has elapsed from the date Form 10 information has been filed with the Commission reflecting the Company s status as a non- shell company. If less than 12 months has elapsed since the Company ceases being a shell company , then only registered securities can be sold pursuant to Rule 144. Therefore, any restricted securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until a year after we cease to be a shell company and have complied with the other requirements of Rule 144, as described above. As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our status as a shell company could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless. Lastly, any shares held by affiliates will be subject to the resale restrictions of Rule 144(i).
+ 
+ 
+ There is no current trading market for our securities, and if a market for our common stock does not develop, shareholders may be unable to sell their shares. 
+ 
+ There is currently no market for our common stock and we can provide no assurance that a market will develop. We plan to apply for quotation of our common stock on the Over-The-Counter Bulletin Board upon the effectiveness of this Registration Statement, of which this prospectus forms a part. However, we can provide investors with no assurance that our shares will be traded on the Over-The-Counter Bulletin Board or, if traded, that a public market will materialize. If no market is ever developed for our shares, it will be difficult for shareholders to sell their stock. In such a case, shareholders may find that they are unable to achieve benefits from their investment.
+ 
+ Our shares of common stock are subject to the penny stock rules of the Securities and Exchange Commission and the trading market in our securities will be limited, which will make transactions in our stock cumbersome and may reduce the value of an investment in our stock.
+ 
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares. 
+9 
+
+ 
+
+ 
+
+ Forward Looking Statements.
+ 
+ Some of the statements in this Prospectus are forward-looking statements. These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the factors set forth above under Risk Factors. The words believe, expect, anticipate, intend, plan, and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a penny stock issuer and thus we may not rely on the statutory safe harbor from liability for forward-looking statements. 
+
+ 
+Use of Proceeds
+ 
+ The selling stockholders are selling shares of common stock covered in the prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. We have agreed to bear the expenses relating to the registration of the shares for the selling stockholders. 
+ 
+Determination of Offering Price 
+ 
+ The selling stockholders may offer their shares through public or private transactions, on or off OTCBB, at a fixed price of $0.01 per share. We determined the price of our public offering by arbitrarily adding a $0.009 per share premium to the last sale price of our common stock to investors. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company.
+ 
+
+ Dilution
+ 
+
+ The common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing shareholders. 
+ 
+ 
+ Selling Shareholders
+ 
+ The selling shareholders named in this prospectus are offering all of the 10,000,000 shares of common stock offered for resale through this prospectus. The 10,000,000 shares that were previously issued were acquired from us in private placements that were exempt from registration provided under Regulation S of the Securities Act of 1933. Our reliance upon the exemption under Rule 903 of Regulation S of the Securities Act was based on the fact that the sale of the securities was completed in an "offshore transaction, as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the securities. Each investor was not a US person, as defined in Regulation S, and was not acquiring the securities for the account or benefit of a US person.
+ 
+
+ The following table provides as of the date of this prospectus, information regarding the beneficial ownership of our common stock held by each of the selling shareholders, including: 
+ 
+
+ 
+ the number of shares owned by each prior to this offering;
+ 
+
+ 
+ the total number of shares that are to be offered for each;
+ 
+
+ 
+ the total number of shares that will be owned by each upon completion of the offering; and
+ 
+
+ 
+ the percentage owned by each upon completion of the offering.
+ 
+
+ 
+ 
+ Name Of Selling
+ Shareholder
+ Shares Owned Prior
+ To This Offering
+ Total Number Of Shares To Be Offered
+ For Selling Shareholders Account
+ Total Shares to Be Owned Upon
+ Completion Of This Offering
+ Percentage of Shares owned Upon
+ Completion of This Offering
+
+ Arturo Aranjuez
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Carmelita Torres
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Eduardo Blanco
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Elaine Aymes Ordonez
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Gionda Udtog
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Gloria Aranjuez
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Herminigildo Torres
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ John Christian Torres
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Jovielyn Aranjuez
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Lorenza Torres
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Manolito Torres
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Ronilo Cruz
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Michael Cominguez
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Philip Cominguez
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Wilfredo Cabaobao Jr
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Zamora Lasam
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Jesus Cominguez Jr
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Ralph Vidal
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Joel Mangelen
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Elmo Mangindalat
+ 350,000
+ 350,000
+ Nil
+ Nil
+
+ Severino Sarigumba Jr
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Rosendo Eltagon Jr
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Fatima Mama
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Maligayak Udtog
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Norodin Dimapalao
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Michael Manalo
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Rogelio Siaotong Jr
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Maricel Lleva
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Monica Andes
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Melody Buena
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Rubidina Magpayo
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Grathel Morados
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Alberto Ordanel
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Omar Maquiling
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ Amina Sambolawan
+ 200,000
+ 200,000
+ Nil
+ Nil
+
+ TOTAL
+ 10,000,000
+ 10,000,000
+ 
+ 
+
+ 
+The named party beneficially owns and has sole voting and investment power over all shares or rights to these shares. The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold. The percentages are based on 25,000,000 shares of common stock outstanding on the date of this prospectus. 
+ 
+ None of the selling shareholders: 
+
+ 1.
+ has had a material relationship with us other than as a shareholder at any time within the past three years; 
+ 2.
+ has ever been one of our officers or directors; or
+ 3.
+ is a broker-dealer; or broker-dealer's affiliate.
+ 
+
+ 10 
+
+ 
+Plan of Distribution 
+ 
+ Timing of Sales
+ 
+
+ The selling stockholders may offer and sell the shares covered by this prospectus at various times. The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. 
+ 
+
+ Offering Price
+
+ The selling stockholders will sell their shares at a fixed offering price of $0.01 for the duration of the offering. 
+ 
+ Our common stock is not currently listed on any national exchange or electronic quotation system. To date, no actions have been taken to list our shares on any national exchange or electronic quotation system. 
+ 
+ Manner of Sale
+ 
+
+ The selling stockholders may sell their shares directly to purchasers or may use brokers, dealers, underwriters or agents to sell their shares. Brokers or dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions, discounts or concessions from the selling stockholders, or, if any such broker-dealer acts as agent for the purchaser of shares, from the purchaser in amounts to be negotiated immediately prior to the sale. The compensation received by brokers or dealers may, but is not expected to, exceed that which is customary for the types of transactions involved. Broker-dealers may agree with a selling stockholder to sell a specified number of shares at a stipulated price per share, and, to the extent the broker-dealer is unable to do so acting as agent for a selling stockholder, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to the selling stockholder. Broker-dealers who acquire shares as principal may thereafter resell the shares from time to time in transactions, which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above, in the over-the-counter market or otherwise at prices and on terms then prevailing at the time of sale, at prices then related to the then-current market price or in negotiated transactions. In connection with resales of the shares, broker-dealers may pay to or receive from the purchasers of shares commissions as described above. 
+ 
+
+ If our selling stockholders enter into arrangements with brokers or dealers, as described above, we are obligated to file a post-effective amendment to this registration statement disclosing such arrangements, including the names of any broker dealers acting as underwriters.
+ 
+
+ The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the sale of the shares are deemed to be "underwriters" within the meaning of the Securities Act. In that event, any commissions received by broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. 
+ 
+ 
+ Sales Pursuant to Rule 144
+ 
+ Currently, we are a shell company as defined in Rule 12b-2 of the Exchange Act, as amended and Rule 144 is not available for the resale of securities issued by any issuer that is or has been at any time previously a shell company unless the following conditions have been met:
+ 
+ the issuer of the securities that was formerly a shell company has ceased to be a shell company; 
+ the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; 
+ the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and 
+ at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
+ 11 
+
+ 
+
+ Regulation M
+ 
+
+ We have advised the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for, or purchasing for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Accordingly, the selling stockholder is not permitted to cover short sales by purchasing shares while the distribution is taking place. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. In addition, we will make copies of this prospectus available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. 
+ 
+
+ State Securities Laws
+ 
+
+ Under the securities laws of some states, the shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares may not be sold unless the shares have been registered or qualified for sale in the state or an exemption from registration or qualification is available and is complied with. 
+ 
+
+ Expenses of Registration
+ 
+
+ We are bearing all costs relating to the registration of the common stock. These expenses are estimated to be $60,000, including, but not limited to, legal, accounting, printing and mailing fees. The selling stockholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.
+ 
+ 
+
+ Description of Securities 
+ 
+ General
+ 
+
+ The following description as a
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001556375_newlife_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001556375_newlife_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5c1f3a25e7cb95ec4b863991e7b3559637135275
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001556375_newlife_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us, and NewLife Bikes, refer to NewLife Bikes, Inc. NewLife Bikes, Inc. is a development stage company incorporated in the State of Nevada in July of 2012. NewLife Bikes s address and phone number is: NewLife Bikes, Inc. 6411 Boykin Spaniel Road Charlotte, NC 28277 704-846-8709 Telephone Operating History NewLife Bikes, Inc. is a recently incorporated development stage company with no operating results to date other than organizational activities. The purpose of the company is to provide clients with individualized, cycling-specific assessments, diagnosis, treatment, and training programs in both online and brick-and-mortar settings. To date, operations have been on an extremely limited basis. Company Assets NewLife Bikes s principal assets ( Assets ) consisted of cash totaling $10,935 as of August 31, 2012. Company Cash Flow The Company has cash assets derived from a private placement of its stock. For the period from its inception through the period ending July 31,2012 the Company had Gross Revenues of $0. From inception to the period ending August 31, 2012, the Company had Total Operating Expenses of $0, Net Profit of $0, Total Current Assets of $10,935, Total Assets of $10,935, Total Current Liabilities of $0, and Total Stockholders Equity (Deficit) of $10,935. Future Assets and Growth Over the next year, we will do our best to develop both the online and brick-and-mortar aspects of our business. We will first need to develop our website, which will earn revenue both through paid membership accounts and advertising revenue. We will develop a multitude of content such as articles, manuals, and blogs that will drive organic traffic to the site. Additionally, we will develop videos, a membership module, and articles written specifically for the membership section. After development of the website, we will seek out targeted advertising to start generating revenue in that manner. We hope to open our first brick-and-mortar location in October of 2012 and begin hiring expert personnel to help develop our various cycling programs at which point we will open to the public. The Company has yet to develop a website or marketing presence, but over the next year we will continue to develop our marketing strategy and website as described above. We hope to differentiate ourselves from other training facilities by focusing on the cycling niche, which will have particular appeal to those engaged in cycling. Our marketing will focus on highlighting our expertise in the realm of cycling and our focus thereto. The Company had a Net Profit of $0 for the period from inception to August 31 2012 and anticipates it will operate at a deficit for its next fiscal year and may expend most of its available capital. The Company s cash on hand is, primarily, budgeted to cover the anticipated operating costs for the development of our marketing plan and legal, accounting, and Transfer Agent services. We believe the Company will have sufficient capital to operate its businesses over the next twelve months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from existing assets will be adequate to maintain our businesses. We will look to provide a relatively new service to online merchants, focusing on positioning our service as one that is focused acutely on cycling, those engaged in the sport both competitively and recreationally, and the surrounding culture. The Company may lose money in its first, full year of operation and it shall require raising additional capital to develop its services. The Company currently has one manager, J. Stephen Keller, and no employees. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.05 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be liquid and registered. $0.05 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001556544_lake-play_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001556544_lake-play_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d901ddf99cb562f47b2cdeb8bab68ae01810327e
--- /dev/null
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+Prospectus Summary This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us, and Lake Play, refer to Lake Play, Inc. Lake Play, Inc. is a development stage company incorporated in the State of North Carolina in August of 2012. Lake Play s address and phone number is: Lake Play, Inc. 2710 Oxborough Drive Matthews, NC 28105 704-708-9284 Telephone Operating History Lake Play, Inc. is a recently incorporated development stage company with no operating results to date other than organizational activities. The purpose of the company is to offer houseboat rentals on Lake Norman in Lake Norman in Charlotte, North Carolina. To date, operations have been on an extremely limited basis. Company Assets Lake Play s principal assets ( Assets ) consisted of cash totaling $10,935 as of August 31, 2012. Company Cash Flow The Company has cash assets derived from a private placement of its stock. For the period from its inception through the period ending August 31, 2012 the Company had Gross Revenues of $0. From inception to the period ending August 31, 2012, the Company had Total Operating Expenses of $0, Net Profit of $0, Total Current Assets of $10,935, Total Assets of $10,935, Total Current Liabilities of $0, and Total Stockholders Equity (Deficit) of $10,935. Future Assets and Growth Over the next year, we hope to find favorable land on Lake Norman to rent on which we will place our marina and facilities and establish relationships with owners of eight houseboats located in Lake Norman who have an interest in renting them out and having us facilitate such rentals. From this point we will begin operations and hope to see a steady increase of revenues over the next three years. Maintaining a 50% retention rate from year two to year three will be paramount to meeting this goal as we grow. The Company has yet to develop a website or marketing presence, but over the next year we will continue to develop our marketing strategy and web presence. We hope to position ourselves uniquely in the marketplace, by targeting families with young children and young couples at the lower end of the market in terms of income. Our marketing will focus on facilitating fun activities such as waterskiing, fishing, hiking, camping, and swimming. The Company had a Net Profit of $0 for the period from inception to August 31 2012 and anticipates it will operate at a deficit for its next fiscal year and may expend most of its available capital. The Company s cash on hand is, primarily, budgeted to cover the anticipated operating costs for the development of our marketing plan and legal, accounting, and Transfer Agent services. We believe the Company will have sufficient capital to operate its businesses over the next twelve months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from existing assets will be adequate to maintain our businesses. We will look to provide a relatively less expensive option for families with young children and young couples interested in renting small, private, houseboats. The Company may lose money in its first, full year of operation and it shall require raising additional capital to develop its services. The Company currently has one manager, Marion Palmer, and no employees. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.05 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be liquid and registered. $0.05 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations. CHAMPIONSHIP CANS A Subsidy of Golden Industries Inc. Overview Business Description and Vision Championship Cans has been collecting drink cans for years. We started by collecting grandpas beer cans that he drank with his friends at his shop. The name Championship Cans was thought of April 17th 2012. Previously we were known as Cash Cans. Definition of the Market The can collection industry is represented. There is already one collector in York and many more around the region. The can collecting industry is prevalent throughout the world. The critical need of the existing market is knowledge. The market can grow if more people save their cans. The target market is everyone and the profile of targeted clients is anyone because those who buy plastic drinks can be swayed to buying cans. Once they buy the cans they can save their cans for recycling. It is that simple and easy. Basically everyone can drink their beverages from aluminum cans. We anticipate near the whole market share because we can buy the cans from those who already collect. And we pay more for the cans that everyone else guaranteed. Shortcomings of the Industry The act of collecting the cans from the seller is one dimensional. We will offer both drop off sales and pick up sales. This will add the extra dimension to even further our competitive advantage even if offering more money wasnt enough. When asked who the best can recycler is what would you say? The truth is that no name is readily recognizable to collecting cans. Championship Cans will fill this void and will be the readily thought of name and the go to place for recycling cans. Marketing and Sales Strategy Championship Cans market is everyone. First and foremost its those who drink beverages from cans. For those who drink bottles and those who dont buy drinks at all, they can be persuaded. The channels of distribution will be both drop off and pickup-delivery. This is another way to gain an edge over the competition. We will actually pick up the cans from the sellers. Championship Cans sales strategy is stated as follows: The pricing is better than anyone else backed by a guarantee. Promotion will be a never ending process of new gimmicks and schemes such as contests, advertising and coupons. The products are the simple part, only aluminum cans. That is our only product. Our growth plan is to start in York, then branch to Lincoln and reevaluate from there. We will be global. Selected Risks Associated with Our Business Our business is subject to a number of risks and uncertainties, including those highlighted it the section titled Risk Factors immediately following this prospectus summary. Some of these risks are: We have a limited history of operating profits and we have limited experience dealing with the growth of the company. ? Corporate Information We were incorporated as Golden Industries Inc. in Nebraska on January 11, 2012. Our principal executive offices are located at 613 N Grant Ave Apt 3C, York Nebraska, 68467, and our telephone number is (402) 366-1374. Our website address is www.tumblr.com/blog/goldenindustriesinc. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Investors should not rely on any such information in deciding whether to purchase our common stock. We have included our website address in this prospectus solely as an inactive textual reference. Unless the context indicates otherwise, as used in this prospectus, the terms Golden Industries, we, us, and our refer to Golden Industries Inc., a Nebraska corporation, and its subsidiaries taken as a whole, unless otherwise noted. Our fiscal year ends December 31. ? SUMMARY CONSLIDATED FINANCIAL DATA The following consolidated financial data should be read together with our consolidated financial statements and related notes. For the time before our incorporation in January 11, 2012, the accounting methods were primitive. But, due to our limited history, they were included. During this time we were known as Golden Industries. We started as Golden Industries on July 15, 2010. Our historical results are not necessarily indicative of our results to be expected for any future period. Fiscal Year Ended December 31, Three Months Ended March 31, 2010 2011 2012 Consolidated Statements of Operations Data: Revenues: Internet auctions $760 $1552 $50 Total revenues 760 1552 50 Cost of revenues: Internet auctions 0 583 11 Total cost of revenues 0 583 11 Gross profit 760 969 39 Operating expenses Sales and marketing 0 0 101 Research and development 0 0 0 General and administrative 0 0 17 Total operating expenses 0 0 118 Interest and other income (expense), net 0 0 0 Income (loss) before provision for income taxes 0 0 0 Provision for income taxes 0 0 0 Net income (loss) 760 969 (79) Net income (loss) per share attributable to common stockholders: Basic 0 0 Diluted 0 0 Weighted-average shares used to compute net income (loss) per share attributable to common stockholders: Basic 0 0 Diluted 0 0 Pro forma net income (loss) per share attributable to common stockholders: Basic 0 0 Diluted 0 0 Pro forma weighted-average shares used to compute pro forma net income (loss) per share attributable to common stockholders: Basic 0 0 Diluted 0 0 ? Fiscal Year Ended December 31, Three Months Ended March 31, 2010 2011 2012 Consolidated Balance Sheet Data: Cash and cash equivalents $107.10 Working capital, excluding deferred revenue 0 Total assets 107.10 Deferred revenue, current and non- current portion 0 Convertible preferred stock 0 Total stockholders equity (deficit) $107.10 ? RISK FACTORS Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be harmed. In that event, the market price of our common stock could decline and you could lose part or even all of your investment. Risks Related to Our Business and Industry We have a limited history of operating profits. We have not been consistently profitable for long doing our trade. Our two previous annuls, 2010 and 2011, we were in the internet retail trade. Although we have been able to be profitable in the past, we may not be able to sustain or increase our growth or return profitability in the future. We plan to continue to invest for future growth, and our goal is to grow as big as possible. In addition, as a public company, we may incur significant accounting, legal and other expenses that we did not incur as a private company. As a result of these increased expenditures, we will have to generate and sustain increased revenues to achieve future profitability. We may incur significant losses in the future for a number of reasons, including without limitation the other risks and uncertainties described in this prospectus. Additionally, we may encounter unforeseen operating expenses, difficulties, complications delays and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future periods, our financial performance will be harmed. We are transitioning. We may not be able to manage our growth and expansion. We have yet to sell any aluminum that we have collected. Previously we were retail internet auctions. While we still may engage in this, our focus is in can recycling. Our ability to manage our operations and growth will require us to continue to refine our operational, financial and management controls, human resource policies, and reporting systems and procedures. For instance, during the rest of this quarter, we plan on setting up a corporate bank account, throwing a seminar to establish a base clientele, and to trademark both the names of Championship Cans and Golden Industries Inc. If we fail to efficiently expand our sales force, operations or IT and financial systems, or if we fail to implement or maintain effective internal controls and procedures, our costs and expenses may increase more than we plan and we may lose the ability to close customer opportunities, enhance our existing service, develop new applications, satisfy customer requirements, respond to competitive pressures or otherwise execute our business plan. Additionally, as our operating expenses increase in anticipation of the growth of our business, if such growth does not meet our expectations, our financial results likely would be harmed. ? A mistake or delay could diminish demand for our service and subject us to substantial liability. Like many metal trading companies, we are subject to the market value of our metal and we have to ship our metal. Errors could happen in any line of work and we are not immune to mistakes of math, clarity and logistics. If any mistakes occur, our customers may delay or withhold payment to us, elect not to renew, make claims against us, and we could lose future sales. The occurrence of any of these events could result in an increase in our bad debt expense, an increase in collection cycles for accounts receivable, require us to incur the expense or risk of litigation. Further, if we are unable to meet the stated service level commitments we have guaranteed to our customers or suffer extended periods of unavailability for our service, we may be contractually obligated to provide these customers with credits for future service. We do not carry insurance sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business that may result from interruptions in our service. The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed. The market for metal trading is fragmented, rapidly evolving and highly competitive, with relatively low barriers to entry in some segments. Many of our competitors and potential competitors are larger and have greater name recognition, much longer operating histories, more established customer relationships, larger marketing budgets and significantly greater resources than we do. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. With the introduction of new technologies, the evolution of our service and new market entrants, we expect competition to intensify in the future. If we fail to compete effectively, our business will be harmed. Some of our principal competitors offer their products or services at a lower price, which has resulted in pricing pressures. If we are unable to achieve our target pricing levels, our operating result would be negatively impacted. In addition, pricing pressures and increased competition generally could result in reduced sales, reduced margins losses or the failure of our service to achieve or maintain more widespread market acceptance, any of which could harm our business. ? Our business depends substantially on our customers renewing their contracts and purchasing additional contracts from us. Any decline in our customer renewals would harm our future operating results. In order for us to maintain or improve our operating results, it is important that our customers renew their contract when the initial contract term expires. Our customers have no obligation to renew their contracts, and we cannot assure you that our customers will renew their contract with a similar contract period or with the same or greater amounts. Our renewal rates may decline or fluctuate as a result of a number of factors, including satisfaction with our service, our customer support, our prices, the prices of competing solutions, mergers and acquisitions affecting our customer base, the effects of global economic conditions, or reductions in our customers spending levels. Our future success also depends on our ability to sell more contracts to our customers. If our customers do not renew their contracts, renew on less favorable terms or fail to purchase additional services, our revenues may decline, and we may not realize improved operating results from our customer base. We may not timely and effectively scale and adapt our existing technology to meet the performance and other requirements of our large global enterprise customers. Our future growth is dependent upon our ability to continue to meet the expanding needs of our large enterprise customers as their use of our service grows. As these customers gain more experience with our service, the number of users and transactions managed by our service, the amount of data transferred, processed and stored by us, the number of locations where our service is being accessed, and the number of processes and systems managed by our service on behalf of these customers have in some cases, and may in the future, expand rapidly. In order to ensure that we meet the performance and other requirements of these large enterprise customers, we intend to continue to make significant investments to develop and implement new technologies in our service. These technologies, which include databases, applications and server optimizations, and automation, are often advanced, complex, new and untested. We may not be successful in developing or implementing these technologies. To the extent that we do not effectively scale our service and operations to maintain performance as our customers expand their use of our service, our business and operating results may be harmed. ? Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our service. Increasing our customer base and achieving broader market acceptance of our service will depend, to a significant extent, on our ability to effectively expand our sales and marketing operations and activities. We are substantially dependent on our direct sales to obtain new customers. We plan to expand our direct sales force. We believe that there is significant competition for direct sales personnel with the sales skills and technical knowledge that we require. Our ability to achieve significant revenue growth in the future will depend, in large part, on our success in recruiting, training and retaining a sufficient number of direct sales personnel. New hires require significant training and time before they achieve full productivity, particularly in new sales territories. Our planned hires may not become as productive as quickly as we would like, and we may be unable to hire or retain sufficient numbers of qualified individuals in the future in the markets where we do business. Because we do not have history of expansion in our sales force, we cannot predict whether or to what extent our sales will increase as we expand our sales force or how long it will take for sales personnel to become productive. Moreover, we do not have significant experience as an organization developing and implementing overseas marketing campaigns, and such campaigns may be expensive and difficult to implement. Our business will be harmed if our expansion efforts do not generate a significant increase in revenues. If we are unable to attract and retain the executives and employees we need to support our operations and growth, our business may be harmed. As we grow and expand we will need to add more executive officers. The changes in our executive management team may be disruptive to our business. Our success will depend substantially on this new group of executive officers, who are critical to our vision, strategic direction, culture, services and technology. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives. The loss of one or more of our executive officers or the failure by our executive team to effectively work with our employees and lead our company could do harm to our business. In the twenty first century, there is substantial and continuous competition for employees with high levels of experience in designing, developing and managing software and Internet-related solutions, as well as competition for sales executives and operations personnel. We may not be successful in attracting and retaining qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospect could be harmed. ? Our quarterly results may fluctuate, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially. Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control. If our quarterly financial results fall below the expectations of investors or any securities analysts who follow our stock, the price of our common stock could decline substantially. Some of the important factors that may cause our revenues, operating results and cash flows to fluctuate from quarter to quarter include: *	Our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers requirements; *	The number of new employees added; *	The rate of expansion and productivity of our sales force; *	Changes in the relative and absolute levels of professional services we provide; *	The cost, timing and management effort for the development of new services; *	The length of the sales cycle for our service; *	Changes in our pricing policies whether initiated by us or as a result of competition; *	The amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; *	Significant technical difficulties, fluctuations in the market or interruptions with our service; *	New solutions, products or changes in pricing policies introduced by our competitors; *	Changes in foreign currency exchange rates; *	Changes in effective tax rates; *	General economic conditions that my adversely affect either our customers ability or willingness to purchase additional contracts, delay a prospective customers purchasing decision, or reduce the value of new contracts, or affect renewal rates; *	Changes in deferred revenue balances due to the seasonal nature of our customer invoicing, changes in the average duration of our customer agreements, the rate of renewals and the rate of business growth; *	The timing of customer payments and payment defaults by customers; *	Extraordinary expenses such as litigation or other dispute-related settlement payments; *	The impact of new accounting pronouncements; and *	The timing of stock awards to employees and the related adverse financial statement impact of having to expense those stock awards ratably over their vesting schedules. Many of these factors are outside of our control, and the occurrence of one or more of them might cause our operating results to vary widely. As such, we believe that quarter-to-quarter comparisons of our revenues, operating results and cash flows may not be meaningful and should not be relied upon as an indication of future performance. ? If we are unable to successfully manage the growth of our business and improve our profit margin, our operating results may be harmed. Our recycling business, which performs a service of buying aluminum cans from buyers, has grown as from the beginning. As a result, our efforts have been focused in large on spreading the word of us recycling cans rather than the profitability of our service. In the future, we intend to price our services based on the anticipated cost of those services and, as a result, expect to improve the gross profit percentage of our services. If we are unable to successfully manage the growth of our business, our operating results, including our profit margins, will be harmed. We may be sued by third parties for alleged infringement of their proprietary rights. There is considerable patent and other intellectual property development activity in our industry. Our success depends in part on not infringing upon the intellectual property rights of others. From time to time, our competitors or other third parties may claim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. We may be unaware of the intellectual property rights of others that may cover some or all of our technology or services. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our service, or require that we comply with other unfavorable terms. We may also be obligated to indemnify our customers or business partners in connection with any such litigation and to obtain licenses, modify our service or refund fees, which could further exhaust our resources. Even if we were to prevail in the event of claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and key personnel from our business operations. Such disputes could also disrupt our service, causing an adverse impact to our customer satisfaction and related renewal rates. ? Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand. Our success depends to a significant degree on our ability to protect our proprietary technology and our brand. We rely on a combination of trade secret and other intellectual property laws and confidentiality procedures to protect our proprietary rights. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology and our business may be harmed. In addition, defending our intellectual property rights might entail significant time and expenses. Any of out intellectual property rights may be challenged by others or invalidated through administrative process or litigation. We have only recently begun to develop a strategy to seek, and may be unable to obtain, patent protection for our technology. In addition, any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our service is available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property. We may be required to spend significant resources to monitor and protect our intellectual property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel. Weakened global economic conditions may harm our industry, business and results of operations. Our overall performance depends in part on worldwide economic conditions, which may remain challenging for the foreseeable future. Global financial developments seemingly unrelated to us or our industry may harm us. The United States and other key international economies have been impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy. These conditions affect the rate of information technology spending and could adversely affect our customers ability or willingness to purchase our service, delay prospective customers purchasing decisions, or reduce the value or duration of their contracts, all of which could harm our operating results. Natural disasters and other events beyond our control could harm our business. Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our service to our customers, and could decrease demand for our service. The majority of our research and development activities, corporate headquarters, and other critical business operations are located in tornado alley in Nebraska. Customer data could be lost, significant recovery time could be required to resume operations and our financial condition and operating results could be harmed in the event of a tornado or catastrophic event. ? We will incur increased costs as a result of operating as a public company and our management will have to devote substantial time to public company compliance obligations. As a public company and particularly after we cease to be an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission, or SEC and our stock exchange, has imposed various requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance requirements and any new requirements that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may impose on public companies. Moreover, these rules and regulations, along with compliance with accounting principles and regulatory interpretations of such principles, have increased and will continue to increase our legal, accounting and financial compliance costs and have made and will continue to make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees, or as executive officers. ? We may acquire or invest in companies, which may divert our managements attention, result in additional dilution to our stockholders, and we may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions. We may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. We also may enter into relationships with other businesses to expand our service offerings or our ability to provide services in international locations, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing or investments in other companies. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their methods are not easily adapted to work with ours, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise. Acquisitions may also disrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our existing business. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown risks or liabilities. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close. For one or more of those transactions, we may: *	Issue additional equity securities that would dilute our stockholders; *	Use cash that we may need in the future to operate our business; *	Incur debt on terms unfavorable to us or that we are unable to repay; *	Incur large charges or substantial liabilities; *	Encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; and *	Become subject to adverse tax consequences, substantial depreciation or deferred compensation charges. ? Risks Relating to Ownership of Our Common Stock and this Offering The market price of our common stock is likely to be volatile and could subject us to ltigation. Prior to this offering, there has not been a public market for our common stock. We cannot assure you that an active trading market for our common stock will develop following this offering. You may not be able to sell your shares quickly or at the market price if trading in our common stock is not active. The initial public offering price for the shares will be determined by negotiations between us and representatives of the underwriters and may not be indicative of prices that will prevail in the trading market following the offering. In addition, the trading prices of the securities of recycling companies in general have been volatile. Accordingly, the market price of our common stock is likely to be subject to wide fluctuations. Factors affecting the market price of our common stock include: *	Variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue, and other financial metrics and non-financial metrics, and how those results compare to analyst expectations; *	Forward-looking statements related to future revenues and earnings per share; *	The net increases in the number of customers, either independently or as compared with published expectations of industry, financial or other analysts that cover our company; *	Changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock; *	Announcements of technological innovations, new solutions or enhancements to services, strategic alliances or significant agreements by us or competitors; *	Announcements of customer additions and customer cancellations or delays in customer purchases; *	Recruitment or departure of key personnel; *	Disruptions in our service due to computer hardware, software or network problems, security breaches, or other man-made or natural disasters; *	The economy as a whole, market conditions in our industry, and the industries of our customers; *	Trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock; *	The size of our market float; and *	Any other factors discussed herein. In addition, if the market for recycling stocks or the stock market in general experiences uneven investor confidence, the market price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The market price of our common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have the subject of securities class action litigation. If we are the subject of such litigation it could result in substantial costs and a diversion of our managements attention and resources. ? We have broad discretion in the use of the net proceeds from this offering and may not use them effectively. Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section titled Use of Proceeds, and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. We do not intend to pay dividends on our common stock so any returns will be limited to changes in the value of our common stock. We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, our ability to pay cash dividends on our common stock may be prohibited or limited by the terms of any future debt financing arrangement. Any return to stockholders will therefore be limited to the increase, if any, of our stock price. Future sales and issuances of our common stock or rights to purchase common stock could result in dilution of the percentage of ownership of our stockholders and could cause our stock price to decline. We may need additional capital in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in subsequent transactions, investors may be materially diluted. New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of our common stock, including shares of common stock sold in this offering. ? Sales of a substantial number of shares of our common stock in the public market following this offering could cause our stock price to fall. Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. All of our officers and directors and the holders of substantially all of our capital stock are subject to lock-up agreements with the underwriters of this offering that restrict the stockholders ability to transfer shares of our common stock for at least 180 days from the date of this prospectus. The lock-up agreements limit the number of shares of common stock that may be sold immediately after this initial public offering. Shares issued or issuable upon exercise of options vested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of stock by these stockholders could have material adverse effect on the trading price of our common stock. Certain holders of shares of our common stock are entitled to rights with respect to the registration of their shares under the Securities Act of 1933, as amended, or the Securities Act, subject to the 180-day lock-up arrangement described above. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock. ? SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements. All statements, other that statements of historical fact, contained in this prospectus, including statements regarding our future results of operations, financial position and cash flows, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words believe, may, will, estimate, continue, anticipate, would, could, should, intend, and expect and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Risk Factors. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward- looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of these forward-looking statements after the date of this prospectus or to conform these statements to actual results or revised expectations. ? INDUSTRY AND MARKET DATA Unless otherwise indicated, information contained in this prospectus concerning our industry and the market in which we operate, including our general expectations, market position, market opportunity and market size, is based on information from various sources, including independent industry publications. In presenting this information, we have also made assumptions based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets for our service and related solutions. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Although neither we nor the underwriters have independently verified the accuracy or completeness of any third-party information, we believe the market position, opportunity and market size information included in this prospectus is reliable and the conclusions contained in the third-party information are reasonable. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in Risk Factors and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. ? USE OF PROCEEDS We estimate that our net proceeds from the sale of the shares of common stock offered by us will be approximately $9,000 because the initial public offering price is $1 per share. We will not receive any proceeds from the sale of common stock by the selling stockholders. The principal purposes of this offering are to create a public market for our common stock, obtain additional capital, facilitate our future access to the public equity markets, increase awareness of our company among potential customers and improve our competitive position. While we have no specific plans at this time, we may use some of the proceeds from this offering to fund advertising, and for manufacturing machinery such as a ball mill to turn the aluminum into a powder and a wood chipper to shred the cans. We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes. Additionally, we may choose to expand our current business through acquisitions of, or investments in, other businesses, products or technologies, using cash or shares of our common stock. However, we have no commitments with respect to any such acquisitions or investments at this time. DIVIDEND POLICY We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our board of directors. ? CAPITALIZATION The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2012: *	On an actual basis; *	On a pro forma basis; *	On a pro forma as adjusted basis; The information below is illustrative only. You should read the information in this table together with the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes appearing elsewhere in this prospectus. As of March 31, 2012 Actual Pro Forma Pro Forma as Adjusted Cash and cash equivalents - Common stock $10,000 Additional paid-in capital - Accumulated other comprehensive income - Accumulated deficit - Total stockholders equity (deficit) - Total capitalization $10,000 ?
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001559119_silex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001559119_silex_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e5f3c4797731e049f403786212c4f22493bc4da7
--- /dev/null
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@@ -0,0 +1,262 @@
+PROSPECTUS SUMMARY
+ 
+
+ To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 8 and the financial statements.
+ 
+
+ General
+ The registrant was incorporated under the laws of the State of Oklahoma in February 2006.
+ 
+
+ Operations
+ The registrant is an emerging company that imports semi-finished building materials, which are then finished locally by subcontractors and sold to end users through a chain of stores. 
+ 
+
+ Common Shares 
+ Outstanding prior 
+ to the Offering 
+ 2,581,180
+ 
+
+ Common Shares 
+ being sold in 
+ this offering
+ 20,000,000
+ 
+
+ Terms of 
+ Offering 
+ This is a self-underwritten public offering with no minimum purchase requirement. Common shares will be offered on a best efforts basis and we do not intend to use an underwriter for this offering. We do not have an arrangement to place the proceeds from this offering in an escrow, trust, or similar account. Any funds raised from the offering will be immediately available to us for our immediate use.
+ 
+
+ Termination of the 
+ Offering 
+ The primary offering will commence on the effective date of this prospectus and will terminate on or before October 31, 2013. In management s sole discretion, we may terminate the offering before all of the common shares are sold. 
+ 
+
+ 6
+ 
+
+ Market for our common 
+ stock 
+ Our common stock is not quoted on a market or securities exchange. We cannot provide any assurance that an active market in our common stock will develop. We intend to quote our common shares on a market or securities exchange.
+ 
+
+ 
+
+ Use of proceeds
+ We will use the proceeds of this offering to expand our current business operations and make acquisitions that restructure the company into a holding company for recession resistant business opportunities. Should we be unable to raise at least $40,000, we would give priority to allocating capital to complete everything necessary to be ready to meet our SEC reporting requirements. All remaining capital would be used to fund working capital needs, and then to fund acquisitions as they occur.
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 7
+ 
+
+ 
+
+ RISK FACTORS
+ 
+
+ Our business is subject to numerous risk factors, including the following.
+ 
+
+ 1. We cannot offer any assurance as to our future financial results. 
+ 
+
+ We were incorporated in February 2006 for the purpose of engaging in the retail and wholesale distribution and installation of kitchen builder products, including granite and other counter tops, cabinets, and other related products. Although we have been in business for six years and have generated revenue, there is no assurance that we will be able to generate revenues in the future in a manner that will be sufficient for us to become profitable. There can be no assurance that we will ever achieve profitability. 
+ 
+
+ We do not have a profitable operating history, and as a result, there is a high level of risk in investing in our company. There is a potential absence of liquidity since there is currently no established public trading market for our securities and an active trading market in our securities may not develop or, even if it is developed, may not be sustained.
+ 
+
+ 2. Our auditors have expressed a going concern issue that notes our need for capital and/or revenues to survive as a business. You may lose your entire investment.
+ 
+
+ Our ability to continue as a going concern is dependent on our ability to further implement its business plan and raise capital. If we cannot raise sufficient capital with this offering, we do not know if we will be able to continue business operations. Further, without additional capital, we may have difficulties in meeting the ongoing costs of being a reporting company. We do not have any reserves set aside for meeting these ongoing costs, and will be using company revenues and funds to meet these costs.
+ 
+
+ 3. We may not receive enough funding from this offering and may have difficulty obtaining additional funds in the future.
+ 
+
+ The registrant may require additional financing in the future and a failure to obtain such required financing will inhibit its ability to grow. The continued growth of this business model may require additional funding from time to time. Funding would be used for general corporate purposes, which may include acquisitions, investments, repayment of debt and capital expenditures.
+ 
+
+ Obtaining additional funding would be subject to a number of factors, including market conditions, operational performance and investor sentiment. These factors may make the timing, amount terms and conditions of additional funding unattractive, or unavailable, to us. The terms of any future financing may adversely affect the interests of stockholders.
+ 
+
+ 8
+ 
+
+ 4. If we lose the services of any of our key personnel, we may not be able to operate our business as effectively.
+ 
+
+ Our success depends on its management team and other key personnel, the loss of any of whom could affect its business operations. Our future success will depend in substantial part on the continued service of its senior management. 
+ 
+
+ The registrant does not carry key person life insurance in respect to any of its officers or employees. Our future success will also depend on our continued ability to attract, retain and motivate key staff. The company cannot assure that it will be able to retain its key personnel or that it will be able to attract, assimilate or retain qualified personnel in the future.
+ 
+
+ 5. Future regulations may negatively affect our profitability and our ability to continue operations.
+ 
+
+ There is no assurance that future regulatory, judicial and legislative changes will not have a materially adverse effect on our business or those regulators or third parties will not raise material issues with regard to the company s business or operation, or our compliance or non-compliance with applicable regulations. Furthermore, any changes in applicable laws or regulations may have a materially adverse effect on the registrant.
+ 
+
+ 6. Sustained uncertainty regarding current economic conditions and other factors beyond our control could adversely affect demand for our products and services, our costs of doing business and our financial performance.
+ 
+
+ Our financial performance depends significantly on the stability of the housing, residential construction and home improvement markets, as well as general economic conditions, including changes in gross domestic product. Adverse conditions in or sustained uncertainty about these markets or the economy could adversely impact consumer confidence, causing our customers to delay purchasing or determine not to purchase home improvement products and services. Other factors including high levels of unemployment and foreclosures, interest rate fluctuations, fuel and other energy costs, labor and healthcare costs, the availability of financing, the state of the credit markets, including mortgages, home equity loans and consumer credit, weather, natural disasters and other conditions beyond our control could further adversely affect demand for our products and services, our costs of doing business and our financial performance.
+ 
+
+ 7. Strong competition could adversely affect prices and demand for our products and services and could decrease our market share.
+ 
+
+ We operate in markets that are highly competitive. We compete principally based on customer service, price, store location and appearance, and quality, availability and assortment of merchandise. In each market we serve, there are a number of other home 
+ 
+
+ 9
+ 
+
+ improvement stores, electrical, plumbing and building materials supply houses and lumber yards. With respect to some products and services, we also compete with specialty design stores, showrooms, discount stores, local, regional and national hardware stores, mail order firms, warehouse clubs, independent building supply stores and other retailers, as well as with installers of home improvement products. In addition, we face growing competition from online and multichannel retailers. Intense competitive pressures from one or more of our competitors could affect prices or demand for our products and services. If we are unable to timely and appropriately respond to these competitive pressures, including through maintenance of superior customer service and customer loyalty, our financial performance and our market share could be adversely affected.
+ 
+
+ 8. We may not timely identify or effectively respond to consumer needs, expectations or trends, which could adversely affect our relationship with customers, the demand for our products and services and our market share.
+ 
+
+ It is difficult to successfully predict the products and services our customers will demand. The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics, consumer preferences, expectations and needs and unexpected weather conditions, while also managing inventory levels. Failure to maintain attractive stores and to timely identify or effectively respond to changing consumer preferences, expectations and home improvement needs could adversely affect our relationship with customers, the demand for our products and services and our market share.
+ 
+
+ 9. The inflation or deflation of commodity prices could affect our prices, demand for our products, our sales and our profit margins.
+ 
+
+ Prices of certain commodity products, including lumber and other raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations and periodic delays in delivery. Rapid and significant changes in commodity prices may affect the demand for our products, our sales and our profit margins.
+ 
+
+ 10. Our offering price is arbitrary and bears no relationship to our assets, earning, or book value.
+ 
+
+ There is no present public trading market for the Company s common shares and the price at which the shares are being offered bears no relationship to conventional criteria such as book value or earnings per share. There can be no assurance that the offering price bears any relation to the current fair market value of the common stock.
+ 
+
+ 10
+ 
+
+ 11. Our cash flows from operations may become insufficient to pay our operating expenses.
+ 
+
+ We cannot assure you that we will be able to maintain sufficient cash flows to fund operating expenses and dividend at any particular level, if at all. As we continue to raise proceeds from this offering, the sufficiency of cash flow to fund future dividend payments with respect to an increased number of outstanding shares will depend on the pace at which we are able to generate profits.
+ 
+
+ 12. We may be unsuccessful in implementing required internal controls over financial reporting.
+ 
+
+ We are not currently required to comply with the SEC s rules implementing Section 404 of the Sarbanes-Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC s rules implementing Section 302 of the Sarbanes-Oxley Act of 2002, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. We will not be required to make our first assessment of our internal control over financial reporting until the year following our first annual report required to be filed with the SEC. To comply with the requirements of being a public company, we will need to create information technology systems, implement financial and management controls, reporting systems and procedures and contract additional accounting, finance and legal staff.
+ 
+
+ Our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an emerging growth company as defined in the JOBS Act if we take advantage of the exemptions available to us through the JOBS Act.
+ 
+
+ Any failure to develop or maintain effective controls, or any difficulties encountered in our implementation of our internal controls over financial reporting could result in material misstatements that are not prevented or detected on a timely basis, which could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. Ineffective internal controls could cause investors to lose confidence in our reported financial information.
+ 
+
+ 13. We may sell additional shares of the registrant in the future, which may dilute the value of your shares.
+ 
+
+ The registrant may issue equity and debt securities in the future. These issuances and any sales of additional common shares may have a depressive effect upon the market price of 
+ 
+
+ 11
+ 
+
+ he registrant s common shares and investors in this offering. There is no guarantee that shares sold in this offering will maintain the same value as when they were purchased.
+ 
+
+ 14. We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our results of operations.
+ 
+
+ As a public company, we will incur legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting and corporate governance requirements. These requirements include compliance with Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules implemented by the Securities and Exchange Commission and other applicable securities or exchange-related rules and regulations. In addition, our management team will also have to adapt to the requirements of being a public company. We expect complying with these rules and regulations will substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
+ 
+
+ The increased costs associated with operating as a public company will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. Additionally, if these requirements divert our management s attention from other business concerns, our results of operations could be adversely affected.
+ 
+
+ However, for as long as we remain an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an emerging growth company. 
+ 
+
+ We will remain an emerging growth company for up to five years, although we would cease to be an emerging growth company prior to such time if we have more than $1 billion in annual revenue, more than $700 million in market value of our common stock is held by non-affiliates or we issue more than $1 billion of non-convertible debt over a three-year period.
+ 
+
+ 12
+ 
+
+ 15. We are an emerging growth company and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
+ 
+
+ We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+ 
+
+ In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
+ 
+
+ 16. You may not have the opportunity to evaluate our investments before we make them, which makes your investment more speculative.
+ 
+
+ You will be unable to evaluate the economic merit of any environmental, energy, or construction industries before we invest in them and will be entirely relying on the ability of our officers in selecting well-performing industries. This increases the risk that your investment may not generate returns comparable to our competitors.
+ 
+
+ 17. The profitability of attempted acquisitions is uncertain.
+ 
+
+ We intend to acquire environmental, energy, or construction industries selectively. Acquisition of such industries entails risks that these entities will fail to perform in accordance with expectations. In undertaking these acquisitions, we will incur certain risks, including the expenditure of funds on, and the devotion of management s time to, transactions that may not come to fruition.
+ 
+
+ 13
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CIK0001559687_chum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CIK0001559687_chum_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..39b8ba003c7d121adbd3eb9de5779a26a930f4c0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CIK0001559687_chum_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to CHUM MINING GROUP INC. CORPORATE BACKGROUND AND INFORMATION CHUM MINING GROUP INC. Chum Mining Group Inc. was organized under the laws of the State of Nevada on June 1, 2012, to explore mineral properties in North America. Chum Mining Group Inc. is engaged in the exploration for uranium and other minerals. The Company has acquired one MTO mineral claim totaling 382.01 hectares. It is located in the Region of central British Columbia, about 20 km southwest of the Town of Prince George, BC, on NTS Sheet 93G (Latitude: 51(0)39' 12 "N and Longitude: 123(0)1' 13" W). The property can be accessed via Highway 16 and by the dense network of logging roads in the area. We refer to these mining claims as the PRWC Property. This property is without known reserves. The PRWC Property comprises one MTO mineral claim containing twenty cell claim units totaling 382.01 hectares. BC Tenure # Work Due Date Staking Date Total Area (Ha.) ----------- ------------- ------------ ---------------- 981629 April 21, 2013 April 21, 2012 382.01 We require an estimated total of $360,000 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Chum Mining Group Inc.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2013 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2013 in order to conducts its operations. Our offices are located at: 14727 - 129th Street, Edmonton, Alberta T6V 1C4. Telephone: (780) 887-4998 THE OFFERING Securities offered 10,000,000 shares of common stock Selling stockholder Wayne Cadence Offering price $0.002 per share Shares outstanding prior to the offering 18,000,000 shares of common stock Shares to be outstanding after the Offering 18,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME Period Ended July 31, 2012 ------------- Revenues 0 Operating expenses 10,175 Net loss from operations 10,175 Net loss before taxes 10,175 Loss per share - basic and diluted 0.000 Weighted average shares outstanding basic 18,000,000 BALANCE SHEET DATA At July 31, 2012 ---------------- Cash and cash equivalents 19,825 Total current assets 19,825 Total assets 19,825 Common stock 18,000 Additional paid-in capital 12,000 Deficit accumulated during exploration period (10,175) Total stockholders' equity 19,825 Total liabilities 0
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2012/CPAC_cementos_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/CPAC_cementos_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4adeed0614e3ddac78ceeea6cbfdfd31ca34bed2
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2012/CPAC_cementos_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights selected information contained in this prospectus and may not include all of the information that is important to you. For a more complete understanding of our company, our business and this offering, you should read this entire prospectus, including "Risk factors," "Management's discussion and analysis of financial condition and results of operations" and our financial statements in this prospectus. Overview We are a leading Peruvian cement company, and the only cement manufacturer in the northern region of Peru. We are among the most profitable publicly-listed cement manufacturers in the world, based on operating margins over the past three years. With more than 54 years of operating history, we produce, distribute and sell cement and cement-related materials, such as concrete blocks and ready-mix concrete. Our products are primarily used in construction, which has been one of the fastest growing segments of the Peruvian economy in recent years. We also produce and sell quicklime for use in mining operations. In 2010, we sold approximately 1.8 million metric tons of cement, representing an estimated 21.3% share of Peru's total domestic cement shipments, and substantially all the cement consumed in the northern region. From 2006 to 2010, our cement sales volume grew at a compound annual growth rate ("CAGR") of 12.8%. Our performance during this period was driven primarily by growth in the construction sector which over the past five years has expanded, on average, at approximately two times the growth in Peru's annual gross domestic product ("GDP"). We believe the construction sector will continue to grow with the expected expansion of the economy and the continued housing deficit in the country. We own two cement production facilities, our flagship Pacasmayo facility located in the northwest of Peru and our smaller Rioja facility located in the northeast. Our facilities have total installed annual cement production capacity of approximately 3.1 million metric tons. We also have installed annual production capacity of 240,000 metric tons of quicklime. We own concession rights to several quarries with reserves of limestone and other raw materials located near our facilities. We estimate that our existing quarries have sufficient reserves to supply us with limestone for approximately 70 years, based on our 2010 cement production levels. We have three projects to increase our cement production capacity: (i) we are installing two new vertical kilns as well as upgrading one of our horizontal rotary kilns at our Pacasmayo facility, which we expect will begin production in the first quarter of 2012, to increase our installed annual clinker production capacity by 200,000 metric tons; (ii) we are more than doubling the cement production capacity of our Rioja facility, which is currently operating at near full capacity, by installing a new production line that will add 240,000 metric tons of installed annual cement production capacity by mid-2012; and (iii) we plan to undertake pre-feasibility and engineering studies to build a new cement plant in Piura, the third largest city in northern Peru. These developments will allow us to meet projected increases in demand for cement in coming years. We provide consumers with high-quality and value-added cement products and, as a result, we believe we have developed strong brand recognition in our market. We have developed one of the largest independent retail distribution networks for construction materials in Peru. Through PRE-EFFECTIVE AMENDMENT No. 7 FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents our network of more than 130 independent retailers, we distribute our cement products as well as other construction materials manufactured by third parties, such as steel rebar, cables and pipes, in the northern region of Peru. We also sell our cement products directly to other retailers that are not part of our distribution network and to private construction companies and government entities. In addition to our core cement business, we are undertaking two non-metallic mining projects, which we believe present significant growth opportunities for our company. We have discovered phosphate deposits in one of our fields, which contain an estimated 541.4 million metric tons of mineralized material. We also have concessions for fields with identified brine deposits. We believe that, if we are able to extract these minerals in a profitable manner, these projects could provide us substantial new revenue streams, diversify our portfolio of products and improve our profitability. Cementos Pacasmayo and Hochschild Mining plc are each majority owned and controlled, directly and indirectly, by Mr. Eduardo Hochschild and together constitute the businesses of the Hochschild group (the "Hochschild Group"), which has operated in Latin America for the past 100 years. Hochschild Mining plc has been listed on the London Stock Exchange since 2006 and Cementos Pacasmayo has been listed on the Lima Stock Exchange since 1995. CEMENTOS PACASMAYO S.A.A. (Exact name of Registrant as specified in its charter) PACASMAYO CEMENT CORPORATION (Translation of Registrant's name into English) Republic of Peru (State or other jurisdiction of incorporation or organization) 3241 (Primary Standard Industrial Classification Code Number) 98-0632353 (I.R.S. Employer Identification No.) Cementos Pacasmayo S.A.A. Calle La Colonia 150, Urbanizaci n El Vivero Surco, Lima Peru (+51-1-317-6000) (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Presentation of financial and other information Certain definitions All references to "we," "us," "our," "our company" and "Cementos Pacasmayo" in this prospectus are to Cementos Pacasmayo S.A.A., a publicly-held corporation (sociedad an nima abierta) organized under the laws of Peru, and, unless the context requires otherwise, its consolidated subsidiaries. The term "U.S. dollar" and the symbol "US$" refer to the legal currency of the United States; and the term "nuevo sol" and the symbol "S/." refer to the legal currency of Peru. Financial information Our consolidated financial statements included in this prospectus have been prepared in nuevos soles and in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Historically, our financial statements have been prepared in accordance with generally accepted accounting principles in Peru ("Peruvian GAAP") and audited in accordance with generally accepted auditing standards in Peru. In accordance with Peruvian law, we will be required to present our financial statements under IFRS beginning with our financial statements for the year ended December 31, 2011. Peruvian GAAP differs in material respects from IFRS. For this reason, our financial information presented in accordance with Peruvian GAAP, which we publish in Peru, is not directly comparable to our financial information prepared in accordance with IFRS included in this prospectus. For a description of the principal adjustments made to our Peruvian GAAP consolidated financial statements to transition to IFRS, see note 2 to our annual audited consolidated financial statements in this prospectus. In this prospectus, we present Adjusted EBITDA, a non-GAAP financial measure. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We present Adjusted EBITDA because we believe it provides investors with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Our management also uses Adjusted EBITDA from time to time, among other measures, for internal planning and performance measurement purposes. Adjusted EBITDA should not be construed as an alternative to profit or operating profit, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with IFRS). Adjusted EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies, including those in the cement industry. For a calculation of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to the most directly comparable IFRS financial measure, see "Selected financial and operating data." We have translated some of the nuevos soles amounts contained in this prospectus into U.S. dollars for convenience purposes only. Unless the context otherwise requires, the rate used to translate nuevos soles amounts to U.S. dollars was S/.2.773 to US$1.00, which was the exchange rate reported on September 30, 2011 by the Peruvian Superintendency of Banks, Insurance and Private Pension Fund Administrators (Superintendencia de Banca, Seguros y AFPs, or "SBS"). The Federal Reserve Bank of New York does not report a noon buying rate for nuevos soles. The Table of Contents The following table sets forth certain macroeconomic data for Peru and operating and financial data for our company for the periods indicated. As of and for the year ended December 31, As of and for the nine months ended September 30, 2009 2010 2010 2011 Economic data(1): GDP growth in Peru 0.9 % 8.8 % 8.7 % 7.4 % Construction sector growth in Peru 6.1 % 17.4 % 18.2 % 3.3 % Operating data: Capacity (thousands metric tons per year): Installed cement capacity 2,090 3,100 2,100 3,100 Installed clinker capacity 1,500 1,500 1,500 1,500 Production (thousands metric tons): Cement production 1,545 1,811 1,289 1,405 Clinker production 1,128 1,278 880 939 Utilization rate at Pacasmayo plant(2): Cement 72.9 % 55.7 % 80.1 % 58.1 % Clinker 76.8 % 86.0 % 78.0 % 84.7 % Utilization rate at Rioja plant(2): Cement 83.8 % 98.2 % 97.8 % 94.0 % Clinker 65.2 % 79.9 % 79.3 % 75.4 % Selected financial data (amounts in millions of S/.): Net sales 756.6 898.0 648.1 717.7 Growth in net sales (versus prior period) N/A 18.7 % N/A 10.7 % Gross profit 351.1 419.1 279.3 302.4 Gross profit margin 46.4 % 46.7 % 43.1 % 42.1 % Adjusted EBITDA(3) 259.4 296.7 207.1 198.2 Adjusted EBITDA margin(3) 34.3 % 33.0 % 32.0 % 27.6 % Profit(4) 148.0 223.1 172.5 39.4 Profit margin(4) 19.6 % 24.8 % 26.6 % 5.5 % (1)Source: Central Bank of Peru. 2011 data is preliminary. (2)Utilization rate is calculated by dividing production for the specified period by installed capacity. The utilization rate for the nine months ended September 30, 2010 and 2011 assumes annualized production, which is calculated by multiplying the nine months actual production by four-thirds. (3)For a calculation of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our profit, see "Selected financial and operating data." (4)Profit for 2010 and for the nine months ended September 30, 2010 includes a net gain of S/.75.9 million from the sale in March 2010 of the Raul copper mine concessions in the central region of Peru that we previously leased to the buyer. In addition, profit for the nine months ended September 30, 2011 includes a non-cash loss of S/.96.1 million due to an impairment with respect to our zinc mining assets. Peruvian cement market Peru has experienced sustained economic growth over the past decade. From 2006 to 2010, GDP grew at a CAGR of 7.0%. Despite the global economic recession, which slowed GDP growth in Peru to 0.9% during 2009, the economy rebounded in 2010 and recorded GDP growth of 8.8%. Growth during the 2006 to 2010 period was accompanied by low inflation, CT Corporation System 111 Eighth Avenue New York, New York 10011 (1-800-223-7567) (Name, address, including zip code, and telephone number, including area code, of agent for service) With copies to: Jaime Mercado, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-3066 Javier Durand, Esq. General Counsel Cementos Pacasmayo S.A.A. Calle La Colonia 150 Urb. El Vivero Lima, Peru (+51-1-317-6000) Nicolas Grabar, Esq. Cleary Gottlieb Steen & Hamilton LLP 1 Liberty Plaza New York, New York 10016 (212) 225-2414 Table of Contents U.S. dollar equivalent information presented in this prospectus is provided solely for convenience of investors and should not be construed as implying that the nuevos soles amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. See "Exchange rates" for information regarding historical exchange rates of nuevos soles to U.S. dollars. Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures that precede them. Market information We make estimates in this prospectus regarding our competitive position and market share, as well as the market size and expected growth of the construction sector and cement industry in Peru. We have made these estimates on the basis of our management's knowledge and statistics and other information from the following sources: the Central Bank of Peru (Banco Central de Reserva del Per ); the National Statistical Institute of Peru (Instituto Nacional de Estad stica e Inform tica, or "INEI"); the Association of Cement Producers in Peru (Asociaci n de Productores de Cemento, or "ASOCEM"); Fondo Mi Vivienda S.A. ("Fondo Mi Vivienda"), a housing fund owned and administered by the government of Peru; ADUANET, a website administered by the Peruvian Tax Superintendency (Superintendencia Nacional de Administraci n Tributaria, or "SUNAT"); the Peruvian Chamber of Construction (C mara Peruana de la Construcci n); The International Cement Review, a website that provides cement manufacturing information; the World Business Council for Sustainable Development, an association of approximately 200 companies worldwide focused on sustainability and development matters; and the U.S. Geological Survey, a U.S. government science organization. We believe these estimates to be accurate as of the date of this prospectus. Offering information All amounts contained in this prospectus that have been adjusted to reflect the estimated net proceeds of the global offering are based upon the sale of ADSs at an assumed public offering price of US$12.25 per ADS (the mid-point of the price range set forth on the cover page of this prospectus). Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the underwriters' option to purchase up to 3,000,000 additional ADSs, representing 15,000,000 common shares, to cover over-allotments, if any. Unless otherwise indicated, information contained in this prospectus also assumes no purchase of up to 13,574,929 non-voting investment shares (based on the issuance of 115,000,000 common shares in this offering, including full exercise of the underwriters' over-allotment option) to be offered in the preemptive rights offer that we are required to undertake pursuant to Peruvian law following this offering. Table of Contents which averaged 2.8% per year. In addition, at December 31, 2010, the government had accumulated foreign exchange reserves of approximately US$44.1 billion, and the sovereign debt achieved an investment grade rating from each of the three major international credit rating agencies. This economic growth has resulted, among other key trends, in significant poverty reduction, with a decrease in the percentage of the country's population living below the poverty line from approximately 48.6% in 2004 to approximately 31.3% in 2010. According to the Central Bank of Peru, the Peruvian economy is estimated to have grown at a rate of 7.4% through September 2011 and is projected to grow at a rate of 6.3% in 2011 and 5.7% in 2012. We sell substantially all our cement in the northern region of Peru, which in 2010 accounted for approximately 23.3% of the country's population and 15.5% of national GDP. Two other groups sold substantially all the cement consumed in each of the central and southern regions of Peru, with less than 5% of all the cement consumed in the country coming from imports. From 2006 to 2010, total cement consumption in Peru grew at a CAGR of 13.6%, according to the INEI, driven by the country's overall economic growth and, to a lesser extent, by infrastructure spending. In the northern region, cement consumption grew at a CAGR of 12.8% over the same period. Despite this recent growth, Peru continues to have a significant housing deficit, estimated by Fondo MiVivienda at two million homes nationwide. In Peru, cement is mainly sold to a highly fragmented consumer base, consisting primarily of households that buy cement in bags to gradually build or improve their own homes without professional technical assistance, a segment known in our industry as auto-construcci n. We estimate that in 2010 sales to the auto-construcci n segment accounted for approximately 59% of our total sales of cement, private construction projects accounted for 25% and public construction projects accounted for the remaining 16%. Approximately 92% of our total cement shipments in 2010 were in the form of bagged cement, substantially all of which was sold through retailers. Our phosphate and brine projects In the process of securing quarries of raw materials for our cement operations, in 2007 we acquired a diatomite concession in a field located in Bay var in the northwest of Peru where our geologists have discovered significant deposits of phosphate rock. According to an independent study prepared by Golder Associates Peru S.A. in August 2011, this field contains an estimated 541.4 million metric tons of mineralized material based on wet density, with an average grade of 18.5% of P2O5 (phosphorus pentoxide). Phosphate concentrates are primarily sold as a fertilizer nutrient in agriculture, which we believe will continue to benefit from rising global food consumption driven by the growing per capita income in emerging countries. In December 2011, we sold a 30.0% equity interest in our subsidiary Fosfatos del Pac fico S.A. ("Fosfatos"), which focuses on our phosphate operations, to an affiliate of Mitsubishi Corporation & Co., Ltd. ("Mitsubishi"), a global integrated business enterprise listed on the Tokyo Stock Exchange that develops and operates businesses across multiple industries, for an aggregate purchase price of approximately US$46.1 million. Mitsubishi is a world leading marketer of phosphate-derived products. In connection with the sale, Mitsubishi has entered into an off-take agreement to purchase Fosfatos' production of phosphate ore. Under the off-take agreement, Mitsubishi agreed to purchase, once we begin production, 2.0 million metric tons of phosphate ore annually, and has the option to purchase an additional Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, please check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. Table of Contents Forward-looking statements This prospectus contains forward-looking statements. Forward-looking statements convey our current expectations or forecasts of future events. These statements involve known and unknown risks, uncertainties and other factors, including those listed under "Risk factors," which may cause our actual results, performance or achievements to differ materially from the forward-looking statements that we make. Forward-looking statements typically are identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "project," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. Any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including: general economic, political and social risks inherent to conducting business in Peru; exchange rates, inflation and interest rates; the entry of new competitors into the market we serve; construction activity levels, particularly in the northern region of Peru; private investment and public spending in construction projects; unpredictable natural disasters, such as floods and earthquakes affecting the northern region of Peru; availability and prices of energy, admixtures and raw materials; changes in the regulatory framework, including tax, environmental and other laws; the successful expansion of our production capacity; our ability to compete with potential substitutes of cement products that may be introduced in the Peruvian construction industry; our ability to maintain and expand our distribution network; our ability to retain and attract skilled employees; our ability to develop successfully the phosphate rock and brine deposits in our fields; our ability to obtain financing for our phosphate and brine projects; and
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+S-1/A 1 customers-s1a.htm CUSTOMERS BANCORP, INC. FORM S-1/A customers-s1a.htm As filed with the Securities and Exchange Commission on May 1 , 2012 Registration No. 333-180392 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Customers Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Pennsylvania (State or other jurisdiction of incorporation or organization) 6022 (Primary Standard Industrial Classification Code Number) 27-2290659 (l.R.S. Employer Identification Number) 1015 Penn Avenue Suite 103 Wyomissing PA 19610 (610) 933-2000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Jay S. Sidhu Customers Bancorp, Inc. 1015 Penn Avenue Suite 103 Wyomissing PA 19610 (610) 933-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) With a Copy to: Eric D. Schoenborn, Esq. Stradley Ronon Stevens & Young, LLP LibertyView 457 Haddonfield Road, Suite 100 Cherry Hill, NJ 08002-2223 Scott Brown, Esq. Kilpatrick Townsend & Stockton LLP Suite 900, 607 14th Street, NW Washington, DC 20005-2018 Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated Filer o Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company o The Registrant hereby amends this Registration Statement on such date as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated May 1, 2012 PROSPECTUS 7,142,858 Shares Customers Bancorp, Inc. Voting Common Stock This prospectus relates to the initial public offering of our Voting Common Stock. We are offering 7,142,858 shares of our Voting Common Stock. We will bear all expenses of registration incurred in connection with this offering, which expenses will be deducted from the proceeds of the offering. Prior to this offering, there has been no established public market for our Voting Common Stock. It is currently estimated that the public offering price per share of our Voting Common Stock will be between $13.00 and $15.00 per share. We have applied to list our Voting Common Stock on the Nasdaq Global Market concurrently with this offering under the symbol CUBI . See Risk Factors beginning on page 16 to read about risk factors you should consider before making an investment decision to purchase our Voting Common Stock. The shares of our Voting Common Stock that you purchase in this offering will not be savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts $ $ Proceeds, before expenses, to us $ $ We have granted the underwriters the option to purchase up to an additional 1,071,429 shares of our Voting Common Stock from us at the initial public offering price less the underwriting discounts. The underwriters expect to deliver the shares of our Voting Common Stock against payment in New York, New York on ______________ ___, 2012. Joint Book-Running Managers Macquarie Capital Keefe, Bruyette & Woods Co-Manager Janney Montgomery Scott Prospectus dated ________, 2012 Unless we state otherwise or the context otherwise requires, references in this prospectus to "Customers Bancorp" refer to Customers Bancorp, Inc., a Pennsylvania corporation and references in this prospectus to Customers Bank or the Bank refer to Customers Bank, a Pennsylvania-chartered bank and wholly-owned subsidiary of Customers Bancorp. All share and per share information have been restated to reflect the Reorganization (as defined below), including that three shares of Customers Bank were exchanged for one share of Customers Bancorp in the Reorganization. Unless we state otherwise or the context otherwise requires, references in this prospectus to "we," "our," "us" and the "Company" refer to Customers Bancorp and its consolidated subsidiary for all periods on or after September 17, 2011 and refer to Customers Bank for all periods before September 17, 2011. About this Prospectus We have not, and the underwriters have not, authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If anyone provides you with different or inconsistent information you should not rely on it. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus. Our business, financial condition, results of operations or prospects may have changed since that date. No action is being taken in any jurisdiction outside the United States to permit a public offering of our securities or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about, and to observe, any restrictions as to the offering and the distribution of this prospectus applicable to those jurisdictions. Unless otherwise expressly stated or the context otherwise requires, all information in this prospectus assumes that the underwriters have not exercised their option to purchase additional shares of Voting Common Stock. Market Data Market data used in this prospectus has been obtained from independent industry sources and publications as well as from research reports prepared for other purposes. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified the data obtained from these sources, and we cannot assure you of the accuracy or completeness of the data. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus. - ii - PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before making an investment decision to purchase Voting Common Stock in this offering. Before making an investment decision to purchase our Voting Common Stock, you should read the entire prospectus carefully, including the section entitled "Risk Factors," our consolidated financial statements, and the related notes thereto and management's discussion and analysis of financial condition and results of operations included elsewhere in this prospectus. Company Overview Customers Bancorp was incorporated in Pennsylvania in April 2010 to facilitate a reorganization into a bank holding company structure pursuant to which Customers Bank became a wholly-owned subsidiary of Customers Bancorp (the Reorganization ) on September 17, 2011. Pursuant to the Reorganization, all of the issued and outstanding shares of Voting Common Stock and Class B Non-Voting Common Stock of Customers Bank were exchanged on a three-to-one basis for shares of Voting Common Stock and Class B Non-Voting Common Stock, respectively, of Customers Bancorp (i.e., each three shares of Customers Bank being exchanged for one share of Customers Bancorp). In December 2010, Customers Bank changed its name from New Century Bank. New Century Bank was incorporated in 1994 and is a Pennsylvania state chartered bank and a member of the Federal Reserve System. Customers Bancorp, through its wholly-owned subsidiary Customers Bank, provides financial products and services to small businesses, not-for-profits and consumers through its fourteen branches in Southeastern Pennsylvania (Bucks, Berks, Chester and Delaware Counties), Rye, New York (Westchester County) and Hamilton, New Jersey (Mercer County). Customers Bank also provides liquidity to the mortgage market nationwide through the operation of its mortgage warehouse business. We have experienced significant growth since 2009. At December 31, 2009, we had total assets of $349.8 million, including net loans of $220.3 million, total deposits of $313.9 million and shareholders equity of $21.5 million. At December 31, 2011, we had total assets of $2.08 billion, including net loans (including held for sale loans) of $1.50 billion, total deposits of $1.58 billion and shareholders equity of $147.8 million. This growth began after we built a solid foundation from June 2009 through the first quarter of 2010, which included recruiting and hiring an experienced management team, increasing our capital position, improving the liquidity of the Bank, enhancing our policies and procedures, improving systems and other infrastructure improvements. We also recruited an experienced board of directors during this infrastructure building period. We raised approximately $106 million since June 2009 through private offerings of our stock, including $67 million from June 2009 through March 31, 2010, to improve liquidity and to bolster our capital position to provide support for our strategic growth plan. Our growth plan includes organic growth and growth by acquisition. See Our Strategy below for more detail. Most of our asset growth since 2009 has come from organic growth. Our organic growth has been driven by improving branch performance via our High Touch, High Tech strategy, which resulted in a significant increase in deposits at our existing branches, along with the opening of four new branches in 2010. See Our Strategy and Our Competitive Strengths below. We have also experienced significant increases in loans, much of which has come from warehouse lending. We started our warehouse lending business in 2009, which has been a profitable line of business that has grown to $794.3 million as of December 31, 2011, including loans held for sale. See Business Specialty Lending for more details on our warehouse lending business. We have also experienced growth in our multi-family and commercial real estate lending business, which increased from $133.4 million at December 31, 2009 to $404.3 million at December 31, 2011, and by acquiring a portfolio of manufactured housing loans, which totaled $104.6 million at December 31, 2011. We also grew as a result of two acquisitions in 2010 and one in 2011. While the two FDIC-assisted acquisitions in 2010 provided limited assets, these added significant earnings and capital ($40 million in pretax bargain purchase gains). See Our Acquisitions below. While we have grown significantly, a cornerstone of our strategy is to focus on profitability and a strong balance sheet by emphasizing asset quality and risk management. See Our Strategy below. We increased profits from a net loss of $13.2 million for 2009 to net income of $4.0 million for 2011 by achieving scale in our operations after building out our infrastructure and improving branch performance, along with completing acquisitions on favorable terms which have been accretive to earnings. Our organic strategy has resulted in a significant growth in deposits and loans, which has been a driver of our increase in net interest income. - 1 - When new management joined the Bank in 2009 in an effort to address existing non-performing and distressed loans, they hired a consultant to coordinate and assist in collection, workout and foreclosure of distressed loans. We subsequently hired this consultant, who now manages a team of over 10 employees dedicated to problem loans, including loans that were assumed as part of acquisitions. New management also rewrote all of the underwriting policies in 2009, which management believes are much more conservative and less risky than prior practices. These policies have resulted in a relatively low rate of delinquencies for new loans originated after this change in policy. We do not currently have any brokered deposits, sub-prime, Alt-A or other non-conforming loans although we hold manufactured housing loans (approximately $104 million as of December 31, 2011) which were opportunistic purchases acquired with substantial cash reserves or at a significant discount. Our management team consists of experienced banking executives. The team is led by our Chairman and Chief Executive Officer Jay Sidhu, who joined Customers Bank in June 2009. Mr. Sidhu brings 36 years of banking experience, including 17 years as the Chief Executive Officer of Sovereign Bancorp, Inc. and Sovereign Bank and 4 years as Chairman of Sovereign Bancorp, Inc. and Sovereign Bank. In addition to Mr. Sidhu, most of the members of our current management team joined us following Mr. Sidhu s arrival in 2009 and have extensive experience working together at Sovereign with Mr. Sidhu. This team has significant experience in building a banking organization, in completing and integrating mergers and acquisitions, as well as developing existing valuable community and business relationships in our core markets. Our Strategy Our strategic plan is to become a leading regional bank holding company through organic growth and value-added acquisitions. We differentiate ourselves from our competitors through our focus on and understanding of the banking needs of small businesses, not-for-profits and consumers. We will also focus on certain low-cost, low-risk specialty lending segments such as warehouse lending. Our lending is funded by our branch model, which seeks higher deposit levels than a typical branch, combined with lower branch operating expenses, without sacrificing customer service. We also create franchise value through our approach to acquisitions, both in terms of identifying targets and structuring transactions, including Federal Deposit Insurance Corporation ( FDIC )-assisted transactions of troubled financial institutions. Risk management practices are an important part of the strategies we initiate. A central part of this strategy is generating core deposit customers to support growth of a strong and stable loan portfolio. We believe we can achieve this through convenience and pricing flexibility for deposits while remaining more responsive to our customers needs and providing a high level of personal and specialized service. We will strive for flexibility and responsiveness in operating and growing our franchise, while maintaining tight internal controls and adhering to the following Critical Success Factors: Talent - Attract, retain and develop a seasoned and innovative executive management team, experienced high-producing relationship managers to accelerate organic growth and experienced business development officers; Profitability - Create a culture that focuses on profitability and delivering services in a cost-effective, efficient manner with the goal of increasing our revenues significantly faster than our expenses; Asset Quality - Develop and adhere to conservative underwriting policies while maintaining diversified portfolios of earning assets and a conservative level of loan loss reserves; Risk Management - Manage other enterprise-wide risks, including minimizing interest rate risk through positioning the balance sheet so as to not place directional speculation on interest rate movements; and Capital - Maintain an adequate capital cushion that insulates us from adverse economic climates. We intend to achieve our objectives under these guidelines by adhering to a combination of the following strategies: Organic growth through High Touch, High Tech Strategy. We focus our customer service efforts on relationship banking, personalized service and the ability to quickly make credit and other business decisions. Relationship managers, available 12 hours a day, seven days a week, are assigned for all customers, establishing a single point of contact for all issues and products. This concierge banking approach allows Customers Bank to provide services in a convenient and expeditious manner, delivered by experienced bankers, and enhances the overall customer - 2 - experience, offering pricing flexibility, speed and convenience. This approach is supplemented with technology services, such as remote deposit capture and mobile banking, collectively creating virtual branch banks. We can open accounts at the location of the customer and remote account opening is also available via our web site. To ensure functionality across the customer base, Customers Bank will not only provide the technology, but also set up and train customers on how to benefit from this technology. We believe that the combination of our concierge banking approach and creation of a more inexpensive network of virtual branches, which require less staff and smaller branch locations, provides greater convenience and cost savings. We believe this allows us to capture market share from and have a competitive advantage over larger institutions, which we expect will continue to contribute to the profitability of our franchise and allows us to generate core deposits. Value-Added Acquisitions. We plan to take advantage of acquisition opportunities that will add immediate value to our core franchise. The recent U.S. recession and the related crisis in the financial services industry present an opportunity for us to execute our acquisition strategy. Many banks are trading at historically low multiples and are in need of capital at a time when traditional sources of capital have diminished. The current weakness in the banking sector and the potential duration of any recovery provide us with an opportunity to successfully execute our strategy. Our management team has a long history of identifying targets, assessing and pricing risk and executing acquisitions. We believe our acquisition strategy will deliver transactions that add substantial value while minimizing potential risks. Our acquisition strategy focuses on community banks, primarily in Pennsylvania, New Jersey, New York, Maryland, Connecticut and Delaware. We seek to achieve sufficient scale in each market that we enter by acquiring healthy, distressed, undercapitalized and weakened banking institutions that have stable core deposit franchises, local market share, quantifiable risks or that are acquired from the FDIC with federal assistance, and that offer synergies through add-on acquisitions, expense reduction and organic growth opportunities. We also seek to purchase assets and banking platforms, as well as assumptions of deposits from the FDIC and possibly enter into loss mitigation arrangements with the FDIC in connection with such purchases. While we are continually assessing various acquisition opportunities, we currently do not have any agreements, arrangements or understandings for any acquisitions. Creative and Efficient Integration. We will seek to integrate acquired banks into our existing model, where our operational strategies and systems will have already proven themselves in our core banking franchise. Our strategy includes maximizing customer retention, improving on the products and services offered to new customers, and a seamless integration and conversion focusing on achieving appropriate cost savings. As we grow our franchise, we will seek to capitalize on the existing goodwill, customer loyalty and brand values. We intend to actively manage banks we acquire, integrate and reposition existing management to maximize the use of their talents and evaluate the competitive models of our acquired franchises to determine how best our overall company can profit from the strongest features of each business. Lending initiatives focused on small business and specialty lending. We maintain a specialty lending line, warehouse lending, that is relatively low risk and low cost. Warehouse lending is a national business where we provide liquidity to non-depository mortgage companies to fund their mortgage pipelines. We have also established a multi-family and commercial real estate segment that is focused in the Mid-Atlantic region, which targets the refinancing of existing loans utilizing conservative underwriting standards. Expand fee-based services and products. We will provide fee-based services for core retail and small business customers including cash management, deposit services, merchant services and asset management. We are working with vendors to expand our suite of fee-based services. Our management team has significant experience in building these capabilities and creating sales processes to increase fee revenue. Maintain strong risk management culture. We are very focused on maintaining a strong risk management culture. We employ conservative underwriting in our lending, with a loan committee chaired by our Chief Credit Officer. Customers Bank s Risk Management Committee performs an independent review of all risks at Customers Bank, and the Bank s Management Risk Committee, chaired by the Head of Enterprise Risk Management, reviews all risks. We intend to maintain strong capital levels and utilize our investment portfolio to primarily manage liquidity and interest rate risk. - 3 - Our Competitive Strengths Experienced management team. An integral element of our business strategy is to capitalize on and leverage the prior experience of our executive management team. The management team is led by our Chairman and Chief Executive Officer, Jay Sidhu, who is the former Chief Executive Officer and Chairman of Sovereign Bancorp. In addition to Mr. Sidhu, most of the members of our current management team have extensive experience working together at Sovereign with Mr. Sidhu, including Richard Ehst, President and Chief Operating Officer of Customers Bancorp, Warren Taylor, President of Community Banking for Customers Bank, and Thomas Brugger, Chief Financial Officer of Customers Bancorp. During their tenure at Sovereign, the team established a track record of producing positive financial results, integrating acquisitions, managing risk, working with regulators and achieving organic growth and expense control. In addition, our warehouse lending group is led by Glenn Hedde, who brings more than 23 years of experience in this sector. This team has significant experience in successfully building a banking organization as well as existing community and business relationships in our core markets. Asset Generation Strategy. We focus on local market lending combined with relatively low-risk specialty lending segments. Our local market asset generation provides consumer lending products, such as mortgage loans and home equity loans. We have also established a multi-family and commercial real estate product line that is focused on the Mid-Atlantic region. The strategy is to focus on refinancing existing loans with conservative underwriting and to keep costs low. Through the multi-family and commercial real estate product, we earn interest income, fee income and generate commercial deposits. We also maintain a specialty lending business, warehousing lending, which is a national business where we provide liquidity to non-depository mortgage companies to fund their mortgage pipelines. Through the warehouse lending business, we earn interest income and generate fees. Risk Management. We have sought to maintain strong asset quality and moderate credit risk by using conservative underwriting standards and early identification of potential problem assets. We have also formed a special assets department to both manage our covered assets portfolio and to review our other classified and non-performing assets. As shown below, a significant portion of our loan portfolio has been subjected to acquisition accounting adjustments and, in some cases, is also subject to loss sharing agreements with the FDIC ( Loss Sharing Agreements ): as of December 31, 2011, approximately 22.87% of our loans (by dollar amount) were acquired loans and all of those loans were adjusted to their estimated fair values at the time of acquisition; and as of December 31, 2011, 8.32% of our loans and 45.74% of our other real estate owned ( OREO ) (each by dollar amount) were covered by a loss sharing arrangement with the FDIC in which the FDIC will reimburse us for 80% of our losses on these assets. Please refer to the Asset Quality disclosure and tables regarding legacy and acquired loans beginning on page 60 in the Management s Discussion and Analysis section. Community Banking Model. We expect to drive organic growth by employing our concierge banking strategy, which provides specific relationship managers for all customers, delivering an appointment banking approach available 12 hours a day, seven days a week. This allows us to provide services in a personalized, convenient and expeditious manner. We believe this approach, coupled with our modern technology, including remote account opening, remote deposit capture and mobile banking, results in a competitive advantage over larger institutions, which we also believe contributes to the profitability of our franchise and allows us to generate core deposits. Our high tech, high touch, model requires less staff and smaller branch locations to operate, thereby significantly reducing our operating costs. Acquisition Expertise. The depth of our management team and their experience working together and completing acquisitions provides us with valuable insight in identifying and analyzing potential markets and acquisition targets. Our team s experience, which includes the acquisition and integration of over 20 institutions, as well as several branch acquisitions, provides us a substantial advantage in pursuing and consummating future acquisitions. Additionally, we believe our strengths in structuring transactions to limit our risk, our experience in the financial reporting and regulatory process related to troubled bank acquisitions, and our ongoing risk management expertise, particularly in problem loan workouts, collectively enable us to capitalize on the potential of the franchises we - 4 - acquire. With our depth of operational experience in connection with completing merger and acquisition transactions, we expect to be able to integrate and reposition acquired franchises cost-efficiently and with a minimum disruption to customer relationships. We believe our ability to operate efficiently is enhanced by our centralized management structure, our access to relatively low labor and real estate costs in our markets, and an infrastructure that is unencumbered by legacy systems. Furthermore, we anticipate additional expense synergies from the integration of our recent acquisitions, which we believe will enhance our financial performance. Our Markets Market Criteria We look to grow organically as well as through selective acquisitions in our current and prospective markets. We believe there is significant opportunity to both enhance our presence in our current markets and enter new complementary markets that meet our objectives. We focus on markets that we believe are characterized by some or all of the following: Population density Concentration of business activity Attractive deposit bases; large market share held by large banks Advantageous competitive landscape that provides opportunity to achieve meaningful market presence Lack of consolidation in the banking sector and corresponding opportunities for add-on transactions Potential for economic growth over time Management experience in the applicable markets Current Markets Our current markets are broadly defined as the greater Philadelphia region and Berks County in Pennsylvania, Mercer County, New Jersey and Southeastern New York. The table below describes certain key statistics regarding our presence in these markets as of June 30, 2011: Market Deposit Market Share Rank Offices Deposits (in millions) Deposit Market Share Philadelphia-Camden-Wilmington, PA, NJ, DE, MSA 27 8 $947.6 0.23% Berks County, PA(1) 9 6 271.9 3.07 Mercer County, NJ 19 1 141.7 1.17 Westchester County, NY 26 1 170.7 0.37 _________________ (1) Includes deposits and offices of Berkshire Bank. See Berkshire Bank Acquisition. Source: FDIC Website as of June 30, 2011 - 5 - We believe that these markets have highly attractive demographic, economic and competitive dynamics that are consistent with our objectives and favorable to executing our organic growth and acquisition strategy. The table below describes certain key demographic statistics regarding these markets. Market Environment Market Deposits ($bn) # of Businesses (thousands) Market Population (millions) Population Density Current (#/sq. mi.) Population Growth (%) (2000 to 2011) Median Household Income ($) 2011 Top 3 Competitor Combined Deposit Market Share (%) Philadelphia Camden Wilmington, PA-NJ-DE-MD 417.2 219 6.0 1,228.9 5.2 58,051 53 Berks, PA 8.8 14 0.4 482.0 10.5 54,769 59 Mercer, NJ 12.1 16 0.4 1,638.2 4.9 71,646 49 Westchester, NY 46.5 41 0.9 2,203.0 2.7 81,147 53 U.S. 88.0 10.4 50,227 33 Source: SNL Financial; Deposit data as of June 30, 2011 Prospective Markets Our organic growth strategy focuses on expanding market share in our existing and contiguous markets by generating deposits through personalized service and taking advantage of technology and through our commercial, consumer and specialized lending products. Our acquisition strategy primarily focuses on undervalued and troubled community banks in Pennsylvania, New Jersey, New York, Maryland, Connecticut and Delaware, where such acquisitions further our objectives and meet our critical success factors. As we evaluate potential acquisition opportunities, we believe there are many banking institutions that continue to face credit challenges, capital constraints and liquidity issues and that lack the scale and management expertise to manage the increasing regulatory burden. Our Acquisitions Since July 2010, we have completed three acquisitions, two of which were FDIC-assisted transactions. On September 17, 2011, we acquired Berkshire Bancorp, Inc. and its subsidiary, Berkshire Bank, which served Berks County, Pennsylvania. On the closing date, Berkshire Bancorp had total assets of approximately $132.5 million, including total loans of $98.4 million, and total liabilities of approximately $122.8 million, including total deposits of $121.9 million. The transaction was immediately accretive to earnings. On July 9, 2010, Customers Bank acquired substantially all of the assets and assumed all of the non-brokered deposits and substantially all other liabilities of USA Bank from the FDIC, as receiver. The transaction consisted of assets with a fair value of $221.1 million, including $124.7 million of loans (with a corresponding unpaid principal balance ( UPB ) of $153.6 million), a $22.7 million FDIC loss sharing receivable and $3.4 million of foreclosed assets. Liabilities with a fair value of $202.1 million were also assumed, including $179.3 million of non-brokered deposits. Customers Bank also received cash consideration from the FDIC of $25.6 million. Furthermore, Customers Bank recognized a bargain purchase gain before taxes of $28.2 million, which represented 12.2% of the fair value of the total assets acquired. Customers Bank entered into this transaction to expand its franchise into a lucrative new market, accrete its book value per share and add significant capital. - 6 - On September 17, 2010, Customers Bank acquired substantially all of the assets and assumed all of the non-brokered deposits and substantially all other liabilities of ISN Bank from the FDIC, as receiver. The transaction consisted of assets with a fair value of $83.9 million, including $51.3 million of loans (with a corresponding UPB of $58.2 million), a $5.6 million FDIC loss sharing receivable and $1.2 million of foreclosed assets. Liabilities with a fair value of $75.8 million were also assumed, including $71.9 million of non-brokered deposits. Customers Bank received cash consideration from the FDIC of $5.9 million. Furthermore, Customers Bank recognized a bargain purchase gain before taxes of $12.1 million, which represented 14.4% of the fair value of the total assets acquired. Customers Bank entered into this transaction to enhance book value per share, add capital and enter the New Jersey market in a more efficient manner than de novo expansion. We believe we have structured acquisitions that limit our credit risk, which has positioned us for positive risk-adjusted returns. Recent Developments Set forth below is a discussion of our financial information at and for the three months ended March 31, 2012. This data was not audited, but in the opinion of management, reflects all adjustments necessary for a fair presentation. All of the adjustments are normal and recurring. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results of operations that may be expected for the entire year. We expect net income of $3.1 million for the first quarter of 2012 compared to $3.2 million in the fourth quarter of 2011 and a net loss of $1.7 million for the first quarter of 2011. Diluted earnings per share were $0.27 in the first quarter of 2012 as compared to $0.28 per share in the fourth quarter of 2011 and a diluted loss per share of $0.18 in the first quarter of 2011. Return on average equity was 8.4% and return on average assets was 0.7% in the first quarter of 2012 as compared to negative 6.1% and negative 0.5%, respectively, for the same period in 2011. Net interest income was $13.5 million for the first quarter of 2012 compared to $14.1 million for the fourth quarter of 2011 and $6.3 million for the first quarter of 2011. Net interest margin increased 114 basis points to 2.98% in the first quarter of 2012 from 1.84% in the first quarter of 2011. Increases in income and margin were related to reductions in cash and growth in the loan portfolio, along with planned runoff of high cost CDs being replaced with lower cost core deposits and demand deposits. Net interest margin in the first quarter of 2012 fell 5 basis points relative to the fourth quarter of 2011 due to normal seasonal reductions in warehouse loans outstanding, continued growth in deposits and increases in cash balances. Provision for loan loss in the first quarter of 2012 fell to $1.8 million, which is $1.1 million lower than the fourth quarter of 2011 and $1.0 million lower than the first quarter of 2011. Reductions in the level of non-performing loans coupled with loan growth in lower risk loan portfolios, such as warehouse lending and multi-family lending, contributed to this reduction in expense. Non-interest income for the first quarter of 2012 increased $436,000 over the first quarter of 2011 to $3.7 million. This increase was primarily from fees related to warehouse lending and investment security gains offset by lower FDIC indemnification asset income. Non-interest income for the first quarter of 2012 decreased $644,000 over the fourth quarter of 2011 due to a reduction in investment security gains of $1.1 million offset by increases in warehouse lending fees of $0.3 million. Non-interest expense for the first quarter of 2012 was up $1.5 million over the first quarter of 2011 to $10.6 million. This increase was caused by additional staffing and occupancy costs from the Berkshire Bank acquisition along with infrastructure and technology spending to support loan and deposit growth. Expenses decreased slightly from the fourth quarter 2011. Total loans at March 31, 2012 fell slightly from December 31, 2011 due to a seasonal decline of $57 million in warehouse loans offset by $25 million of growth in multi-family and commercial lending. Total non-covered loans increased by $668.6 million to $1.19 billion at March 31, 2012 compared to $523.8 million at March 31, 2011, largely due to increases in warehouse lending loans and secondarily due to growth from the Berkshire acquisition and growth in multi-family lending. Total deposits at March 31, 2012 grew by $221.3 million in the first quarter as compared to year end 2011. Approximately one-third of the growth was in core deposits. Most of the growth came from the New York and Berks County markets. The average cost of deposits fell 7 basis points in the first quarter to 1.23% as compared to the fourth quarter of 2011. Total - 7 - deposits grew by $414.9 million from $1.39 billion at March 31, 2011 to $1.80 billion at March 31, 2012. Approximately one-quarter of the growth came from the Berkshire acquisition with the remainder coming from organic growth. Investments at March 31, 2012 were $309.4 million, a decrease of $89.3 million from December 31, 2011, due to the sale of approximately $49 million of available-for-sale investments and normal repayments. Total investments fell by $288.7 million from $598.0 million at March 31, 2011 to $309.4 million at March 31, 2012 due to sales of available-for-sale investments and repayments. Borrowings at March 31, 2012 fell by $320.0 million as compared to December 31, 2011 due to $221.3 million of deposit growth coupled with a $102.6 million reduction in total assets. Borrowings were unchanged at March 31, 2012 as compared to March 31, 2011. Total non-performing loans in the non-covered portfolio fell by $10.2 million to $34.9 million at March 31, 2012 as compared to December 31, 2011. Total non-performing loans in the covered portfolio were essentially flat quarter over quarter at $45.3 million. Other real estate owned declined to $12.3 million at March 31, 2012 from $13.5 million at December 31, 2011. Customers Bancorp, Inc. and Subsidiary Summary Selected Consolidated Financial Information (Unaudited) (Dollars in 000s) Three Months Ended (1) March 31, 2012 Dec. 31, 2011 March 31, 2011 Interest income $ 18,695 $ 19,493 $ 11,839 Interest expense 5,226 5,422 5,555 Net interest income 13,469 14,070 6,284 Provision for loan losses 1,800 2,900 2,800 Total non-interest income 3,652 4,296 3,217 Total non-interest expense 10,606 10,707 9,072 Income (loss) before taxes 4,715 4,759 (2,372 ) Income tax expense (benefit) 1,603 1,535 (696 ) Net income (loss) $ 3,112 $ 3,223 $ (1,676 ) Net income (loss) attributable to common shareholders $ 3,112 $ 3,185 $ (1,676 ) Basic earnings (loss) per share (2) $ 0.27 $ 0.29 $ (0.18 ) Diluted earnings (loss) per share (2) $ 0.27 $ 0.28 $ (0.18 ) Return/(loss) on average assets 0.66 % 0.66 % (0.47 )% Return/(loss) on average equity 8.36 % 8.47 % (6.10 )% Book value per share (2) 13.26 13.02 12.18 Tangible book value per common share (2)(5) 13.07 12.88 12.18 Common shares outstanding (2) 11,347,683 11,347,683 9,786,464 Net charge offs $ 1,431 $ 1,894 $ 631 Annualized net charge offs to average non-covered loans (4) 0.60 % 0.90 % 0.58 % - 8 - At or for the Three Months Ended (1) March 31, 2012 Dec. 31, 2011 March 31, 2011 At Period End Total assets $ 1,974,905 $ 2,077,532 $ 1,607,526 Cash and cash equivalents 90,824 73,569 86,160 Investment securities (3) 309,368 398,684 598,042 Loans held for sale 175,868 174,999 175,010 Loans receivable not covered under FDIC loss sharing agreements, net (4) 1,192,414 1,216,265 523,820 Allowance for loan and lease losses 15,400 15,032 17,298 Loans receivable covered under FDIC loss sharing agreements (4) 120,559 126,276 158,194 FDIC loss sharing receivable (4) 14,149 13,077 16,229 Deposits 1,804,190 1,582,917 1,389,340 Other borrowings 13,000 333,000 13,000 Shareholders equity 150,491 147,748 119,235 Tangible common equity (5) 148,284 146,150 119,235 Selected Ratios & Share Data Net interest margin 2.98 % 3.04 % 1.84 % Equity to assets 7.62 % 7.11 % 7.42 % Tangible common equity to tangible assets (5) 7.52 % 7.04 % 7.42 % Tier 1 leverage ratio - Customers Bank 7.46 % 7.33 % 8.28 % Tier 1 leverage ratio - Customers Bancorp 7.68 % 7.59 % - Tier 1 risk-based capital ratio - Customers Bank 10.55 % 9.97 % 16.08 % Tier 1 risk-based capital ratio - Customers Bancorp 10.85 % 10.32 % - Total risk-based capital ratio - Customers Bank 11.72 % 11.08 % 17.51 % Total risk-based capital ratio - Customers Bancorp 12.02 % 11.43 % - Asset Quality Non-performing, non-covered loans (4) $ 34,963 $ 45,137 $ 30,053 Non-performing, non-covered loans to total non-covered loans (4) 2.55 % 3.71 % 5.55 % Other real estate owned - non-covered (4) $ 5,935 $ 7,316 $ 3,261 Non-performing, non-covered assets (4) 40,898 52,453 33,314 Non-performing, non-covered assets to total non-covered assets (4) 2.21 % 2.70 % 2.31 % Allowance for loan losses to total non-covered loans (4) 1.29 1.24 3.30 Allowance for loan losses to non-performing, non-covered loans (4) 44.05 33.30 57.56 Covered non-performing loans (4) $ 45,300 $ 45,213 $ 47,781 Covered other real estate owned (4) 6,363 6,166 4,394 Covered non- performing assets (4) 51,663 51,379 52,175 - 9 - (1) On September 17, 2011, we completed our acquisition of Berkshire Bancorp, Inc. All transactions since the acquisition date are included in our consolidated financial statements. (2) Effective September 17, 2011, Customers Bancorp, Inc. and Customers Bank entered into a plan of merger and reorganization pursuant to which all of the issued and outstanding common stock of the Bank was exchanged on a three to one basis. All share and per share information has been restated retrospectively to reflect the reorganization. (3) Includes available-for-sale and held-to-maturity investment securities. (4) Certain loans and other real estate owned (described as covered) acquired in the two FDIC assisted transactions are subject to loss sharing agreements between Customers Bank and the FDIC. If certain provisions within the loss sharing agreements are maintained, the FDIC will reimburse Customers Bank for 80% of the unpaid principal balance and certain expenses. A loss sharing receivable was recorded based upon the credit evaluation of the acquired loan portfolio and the estimated periods for repayments. Loans receivable and assets that are not subject to the loss sharing agreement are described as non-covered to provide comparability to previous periods presented. (5) Our selected financial data contains non-GAAP financial measures calculated using non-GAAP amounts. These measures include tangible common equity and tangible book value per common share and tangible common equity to tangible assets. Managementuses these non-GAAP measures to present historical periods comparable to the current period presentation. These disclosures should not be viewed as substitutes for results determined to be in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. We calculate tangible common equity by excluding preferred stock and goodwill from total shareholders' equity. Tangible book value per common share equals tangible common equity divided by common shares outstanding. A reconciliation of each of these non-GAAP financial measures against the most directly comparable GAAP measure is set forth below. March 31, 2012 Dec. 31, 2011 March 31, 2011 Shareholders equity $ 150,491 $ 147,748 Less: Preferred stock Intangible assets (2,207 ) (1,598 ) Tangible common equity $ 148,284 $ 146,150 Shares outstanding 11,348 11,348 9,786 Book value per share $ 13.26 $ 13.02 $ 12.18 Less: effect of excluding intangible assets and preferred stock (0.19 ) (0.14 ) Tangible book value per share $ 13.07 $ 12.88 $ 12.18 Total assets $ 1,974,905 $ 2,077,532 $ 1,607,526 Less: intangible assets (2,207 ) (1,598 ) Total tangible assets $ 1,972,698 $ 2,075,934 $ 1,607,526 Equity to assets 7.62 % 7.11 % 7.42 % Less: effect of excluding intangible assets and preferred stock (0.10 ) (0.07 ) Tangible common equity to tangible assets 7.52 % 7.04 % 7.42 % Additional Information Our principal executive offices are located at 1015 Penn Avenue, Suite 103, Wyomissing, Pennsylvania, 19610. Our telephone number is (610) 993-2000. Our Internet address is www.customersbank.com. Information on, or accessible through, our web site is not part of this prospectus. - 10 - The Offering Voting Common Stock offered by us 7,142,858 shares of Voting Common Stock. Option of underwriters to purchase additional shares of Voting Common Stock from us 1,071,429 shares of Voting Common Stock. Common stock to be outstanding after this offering 15,646,399 shares of Voting Common Stock and 2,844,142 shares of Class B Non-Voting Common Stock. (1) Holdings of Voting Common Stock by Directors, Officers and 5% Shareholders The beneficial ownership and percentage of ownership of each of the (a) executive officers and directors of Customers Bank and Customers Bancorp as a group and (b) holders of more than 5% of our outstanding Voting Common Stock who are not directors or executive officers, as a group, are set forth below as of April 20, 2012 and as expected after the offering: 4/20/12 Post-Offering Officers and Directors 1,884,321 (21.3%) 1,884,321 (11.8%) 5% Shareholders 1,736,026 (20.3%) 1,736,026 (11.1%) For additional information, see Security Ownership of Certain Beneficial Owners and Management and Risk Factors - Our directors and executive officers may influence the outcome of shareholder votes and, in some cases, shareholders may have no opportunity to evaluate and affect the decision regarding a potential investment or acquisition transaction. Use of proceeds Assuming an initial public offering price of $14 per share, which is the midpoint of the offering price range set forth on the cover page of this prospectus, we estimate that the net proceeds to us from the sale of our Voting Common Stock in this offering will be $91,800,011 (or $105,750,017 if the underwriters exercise in full their option to purchase additional shares of Voting Common Stock from us), after deducting estimated underwriting discounts and offering expenses. We intend to use our net proceeds from this offering (a) to fund our organic growth; (b) to fund the acquisition of depository and non-bank institutions; and (c) for working capital and other general corporate purposes. For additional information, see Use of Proceeds. Regulatory ownership restrictions We are a bank holding company. A holder of shares of Voting Common Stock (or group of holders acting in concert) that (a) directly or indirectly owns, controls or has the power to vote more than 5% of the total voting power of the Company, (b) directly or indirectly owns, controls or has the power to vote 10% or more of any class of voting securities of the Company, (c) directly or indirectly owns, controls or has the power to vote 25% or more of the total equity of the Company, or (d) is otherwise deemed to control the Company under applicable regulatory standards, may be subject to important restrictions, such as prior regulatory notice or approval requirements and applicable provisions of the FDIC Statement of Policy on Qualifications for Failed Bank Acquisitions. For a further discussion of regulatory ownership restrictions, see Supervision and Regulation. Voting Common Stock and Class B Non-Voting Common Stock The Voting Common Stock possesses all of the voting power for all matters requiring action by holders of our common stock, with certain limited exceptions. Our articles of incorporation provide that, except with respect to voting rights, the Voting Common Stock and Class B Non-Voting Common Stock are treated equally. - 11 - Dividend Policy We have never paid cash dividends to holders of our common stock. We do not expect to declare or pay any cash or other dividends on our common stock in the foreseeable future after the completion of this offering. For additional information, see Dividend Policy. Recent Prices There is no established public trading market for our Voting Common Stock. Bid quotations for the Voting Common Stock occur on the Pink Sheets. The last reported sale on the Pink Sheets of our Voting Common Stock on April 24, 2012 was $12.25 per share. See Market Price of Common Stock and Dividends for additional information. Listing We have applied to list our Voting Common Stock on the Nasdaq Global Market concurrently with this offering under the trading symbol CUBI.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. ENPHASE ENERGY, INC. We deliver microinverter technology for the solar industry that increases energy production, simplifies design and installation, improves system uptime and reliability, reduces fire safety risk and provides a platform for intelligent energy management. To date, the solar industry has relied on the traditional central inverter approach that has largely remained unchanged for the past two decades. We have built from the ground up a semiconductor-based microinverter system that converts direct current (DC) electricity to alternating current (AC) electricity at the individual solar module level, and bring a system-based, high technology approach to solar energy generation leveraging our design expertise across power electronics, semiconductors, networking and embedded and web-based software technologies. We are the market leader in the microinverter category and have grown rapidly since our first commercial shipment in mid-2008, with more than 1,700,000 units sold to date, representing over an estimated 42,000 solar installations. Given significant advantages over traditional central inverters, we believe that microinverter solutions will become the standard for residential and commercial solar. Our microinverter systems have been installed in all 50 U.S. states and eight Canadian provinces. We sell our microinverter systems primarily to distributors who resell them to solar installers. Over 3,700 installers in North America have installed our microinverters through March 1, 2012, and this number is increasing by approximately 100 new installers per month. We also sell directly to large installers as well as through original equipment manufacturers, or OEMs, and strategic partners. A substantial majority of our revenue has been generated by sales within the United States. Sales to customers in Canada commenced in 2009 and accounted for approximately 12% of our total net revenues in 2011. In the fourth quarter of 2011, we began selling our microinverter systems in France, Italy and the Benelux region. Market Opportunity The global solar PV market witnessed rapid growth from 18 gigawatts (GW), or $75.3 billion, of installed capacity coming online during 2010 to 25 GW, or $86.3 billion, in 2011. While global solar PV installations are expected to decline 7% to 23 GW in 2012, in future years growth is expected to remain robust, with new solar installations expected to reach 48 GW, or $105.8 billion, in 2015, according to IHS iSuppli. The solar PV market consists of two primary on-grid solar markets: distributed solar systems for residential and commercial buildings, and centralized large scale solar PV installations owned and operated by utilities. The global market for inverter technology in 2011 was almost 27 GW, or $6.8 billion, and the market is expected to grow to 46 GW, or $10.1 billion, by 2015, according to IMS Research. Historically, traditional central inverters have been the only inverter technology used for solar PV installations. As compared to microinverter systems, we believe that traditional central inverters have a number of design and performance challenges limiting innovation and their ability to reduce cost of solar systems, including the following: Productivity limits. If solar modules are wired using a traditional central inverter such that a group or string of modules are wired in series an entire string s output is limited by the output of the lowest-performing module. Because of its string design, there is a single point of failure risk with the traditional central inverter approach. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued March 28, 2012 7,272,727 Shares COMMON STOCK Enphase Energy, Inc. is offering 7,272,727 shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price of our common stock will be between $6.00 and $7.00 per share. We have applied for the listing of our common stock on the NASDAQ Global Market under the symbol ENPH. Investing in our common stock involves substantial risks. See Risk Factors beginning on page 10. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions Proceeds to Enphase Per Share $ $ $ Total $ $ $ We have granted the underwriters the right to purchase up to an additional 1,090,909 shares of common stock to cover over-allotments. Entities affiliated with Third Point LLC ( Third Point ), Madrone Partners, L.P. ( Madrone ), KPCB Holdings, Inc., as nominee ( KPCB ), RockPort Capital Partners II, L.P. ( RockPort ) and Bay Partners have indicated an interest in purchasing up to an aggregate of $15.0 million of shares of our common stock in this offering at the price offered to the public. As of March 1, 2012, each of Third Point, Madrone, KPCB, RockPort and Bay Partners beneficially owned more than 5% of our common stock and each is affiliated with a member of our board of directors. Because indications of interest are not binding agreements or commitments to purchase, these stockholders may elect not to purchase shares in this offering or the underwriters may elect not to sell any shares in this offering to such stockholders. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2012. MORGAN STANLEY BofA MERRILL LYNCH DEUTSCHE BANK SECURITIES JEFFERIES LAZARD CAPITAL MARKETS THINKEQUITY LLC , 2012 Table of Contents Reliability issues. Traditional central inverters are the single most common component of solar installations to fail, resulting in system downtime and adversely impacting total energy output. As a result, central inverters typically carry warranties of only 5 to 10 years. Complex design and installation requirements. The central inverter-based solar PV installation requires greater effort on the part of the installer, both in terms of design and on-site labor. Central inverter installations require string design and calculations for safe and reliable operation, as well as specialized equipment such as DC combiners, conduits and disconnects. In addition, the use of high-voltage DC requires specialized knowledge and training and safety precautions to install central inverter technology. Lack of monitoring. The majority of solar installations with central inverter technology offer limited monitoring capabilities. A failure of the central inverter will often go unnoticed for days or even weeks. If a module fails or is not performing to specification, the resulting loss of energy can go unnoticed for an extended period of time. Safety issues. Central inverter solar PV installations have a wide distribution of high-voltage (600 volts in the United States and 1,000 volts in Europe) DC wiring. If damaged, DC wires can generate sustained electrical arcs, reaching temperatures of more than 5,000 F. This creates the risk of fire for solar PV installation owners and injury for installers and maintenance personnel. These challenges of traditional central inverters have a direct impact on the cost and expected return on investment of solar installations to both installers and system owners: Installer. Solar PV installers aim for simple installation design, fast installation times and maximum system performance and predictability. The installation of high-voltage DC central inverter technology, however, requires significant preparation, precautionary safety measures, time-consuming string calculations, extensive design expertise and specialized installation equipment, training and knowledge. Together, these factors significantly increase complexity and cost of installation and limit overall productivity for the installer. System owner. Solar system owners aim for high energy production, low cost, high reliability and low maintenance requirements, as well as reduced fire risks. With traditional central inverters, owners often are unable to optimize the size or shape of their solar PV installations due to string design limitations. As such, they experience performance loss from shading and other obstructions, can face frequent system failures and lack the ability to effectively monitor the performance of their solar PV installation. In addition, central inverter installations operate at high-voltage DC which bears significant fire risks. Further, due to their large size, central inverter installations can affect architectural aesthetics of the house or commercial building. Our Solution Our microinverter solution brings a system-based, high technology approach to solar energy generation leveraging our design expertise across power electronics, semiconductors, networking, and embedded and web-based software technologies. Our microinverter system consists of three key components: our Enphase microinverter, Envoy communications gateway and Enlighten web-based software: Our Enphase microinverter delivers efficient and reliable power conversion at the individual solar module level by introducing a digital architecture that incorporates custom application specific integrated circuits, or ASICs, specialized power electronics devices and an embedded software subsystem that optimizes energy production from each module and manages the core ASIC functions. A residential solar installation consists of 5 to 50 microinverters; a small commercial solar installation consists of 50 to 500 microinverters. Table of Contents Table of Contents Our Envoy communications gateway is installed in the system owner s home or business and serves as a networking hub that collects data from the microinverter array and sends the information to our hosted data center. One Envoy is typically sold with each solar installation and can support up to 100 Enphase microinverters. Our Enlighten web-based software collects and analyzes this information to enable system owners to monitor and realize the highest performance of their solar PV system and also provides an online portal specifically designed for installers to enable them to track and manage all of their Enphase enabled projects and monitor and analyze the performance of their installed systems. Historically, Enlighten service revenue has represented less than 1% of total revenues in each reporting period. Together, our Enphase microinverter, Envoy communications gateway and Enlighten web-based software function as a single unified system that enhances energy production, simplifies design and installation, reduces costs, increases system uptime and reliability, reduces fire safety risk and provides the ability to monitor performance at the individual module level in real-time. With an Enphase microinverter system, we believe solar system owners can achieve a higher return on investment over the lifetime of the solar system than would be achieved using a traditional central inverter approach. Key elements of our solution include: Productive Superior Energy Production. Our microinverter system enables the maximum possible energy production from each module, overcoming a fundamental design limitation of central inverters which are limited by the lowest performing module. Reliable Longer Life and No Single Point of Failure. Reduction of component count, primarily through semiconductor integration in our microinverter, and the distributed architecture of our microinverter system, allow us to design a reliable system that can withstand harsh environmental conditions and offer system owners a 100% system uptime guarantee. Simple Ease of Design and Installation. Using microinverter technology, an installer can design a system of any size and any roof configuration with a simple modular approach, with minimal impact to the aesthetics of a home or building. Smart Module-Level Monitoring and Analytics. Our microinverter system allows us to collect energy production information in real-time on a per solar module basis, offering installers and system owners visibility into how their system is performing and the ability to continuously optimize energy production. Safe All AC Solution. Important to both installers and system owners, microinverters are safer because they process low DC voltages relative to central inverters. Competitive Strengths We believe the following combination of capabilities and features of our business model distinguish us from our competitors and position us well to capitalize on the expected growth in the solar market and to become a global leader in the broader solar power industry: Market Leader and Rapid Adoption. We are the market leader in the microinverter product category, and believe that our proven ability to innovate quickly will continue to allow us to build on our leading market position. System Approach. By integrating the Enphase microinverter technology with Envoy, our proprietary communications gateway, and our Enlighten web-based software, we offer significant design and operating benefits beyond the core power conversion functionality. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+This summary does not contain all of the information you should consider before investing in our Common Stock. This prospectus includes or incorporates by reference information about the Shares the Selling Stockholders are offering as well as information regarding our business and financial condition. Before you decide to invest in our Common Stock, you should read the entire prospectus carefully, including the Risk Factors section and any information incorporated by reference herein. OUR COMPANY Founded in 1948, First BanCorp. is a diversified financial holding company headquartered in San Juan, Puerto Rico offering a full range of financial products to consumers and commercial customers through various subsidiaries. We are subject to regulation, supervision and examination by the Federal Reserve Bank of New York (the FED or Federal Reserve ) and the Board of Governors of the Federal Reserve System. First BanCorp. was incorporated under the laws of the Commonwealth of Puerto Rico to serve as the bank holding company for FirstBank Puerto Rico ( FirstBank or the Bank ). We are a full-service provider of financial services and products with operations in Puerto Rico, the mainland United States (the U.S. ), the United States Virgin Islands (the USVI ) and the British Virgin Islands (the BVI and together with the USVI, the Virgin Islands ). As of September 30, 2011, we had total assets of $13.5 billion, total deposits of $10.7 billion and total stockholders equity of $986.8 million. On a pro forma basis reflecting the sale of 150 million shares of Common Stock on October 7, 2011, the conversion of the Corporation s outstanding Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series G (the Series G Preferred Stock ) into 32,941,797 shares of Common Stock on October 7, 2011, and our sale of 888,781 shares of Common Stock in our rights offering that expired on November 29, 2011, we had total assets of $13.9 billion and total stockholders equity of $1.5 billion. We provide a wide range of financial services for retail, commercial and institutional clients. We control two wholly owned subsidiaries: FirstBank, a Puerto Rico-chartered commercial bank, and FirstBank Insurance Agency, Inc., a Puerto Rico-chartered insurance agency ( FirstBank Insurance Agency ). FirstBank is subject to the supervision, examination and regulation of the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico ( OCIF ) and the FDIC. Deposits are insured through the FDIC Deposit Insurance Fund. In addition, within FirstBank, the operations in the USVI are subject to regulation and examination by the United States Virgin Islands Banking Board and, in the BVI, operations are subject to regulation by the British Virgin Islands Financial Services Commission. FirstBank Insurance Agency is subject to the supervision, examination and regulation of the Office of the Insurance Commissioner of the Commonwealth of Puerto Rico and operates six offices in Puerto Rico. The Corporation entered into an agreement with the FED dated June 3, 2010 (the Written Agreement ) and our subsidiary, FirstBank, agreed to an order issued by the FDIC and the OCIF dated June 2, 2010 (the FDIC Order, and together with the Agreement, the Agreements ). Pursuant to these Agreements, the Corporation and FirstBank agreed to take certain actions designed to improve our financial condition. These actions include the adoption and implementation of various plans, procedures and policies related to our capital, lending activities, liquidity and funds management and strategy. In addition, the Order requires FirstBank to develop and adopt a plan to attain a leverage ratio of at least 8%, a Tier 1 capital to risk-weighted assets ratio of at least 10%, and a total capital to risk-weighted assets ratio of at least 12%, and obtain FDIC approval prior to issuing, increasing, renewing or rolling over brokered deposits. The Agreement also requires the Corporation to obtain the approval of the FED prior to paying dividends, receiving dividends from FirstBank, incurring, increasing or guaranteeing any debt, or purchasing or redeeming any stock; to comply with certain notice provisions prior to appointing any new directors or senior executive officers; and to comply with certain restrictions on severance payments and indemnification. We have taken the following actions to comply with the Agreements: In July 2010, the Corporation and FirstBank jointly submitted to the FDIC, OCIF and the FED a capital plan, which was revised in March 2011, setting forth how we planned to improve our capital positions to comply with the Agreements. Our issuance of Common Stock in exchange for shares of the Corporation s preferred stock held by the U.S. Treasury and by public investors and our issuance of Common Stock in private transactions in October 2011, which implemented our capital plan, have significantly improved our capital position, which allows us to continue to pursue strategic initiatives and business objectives that will improve our financial condition. We have deleveraged our balance sheet in order to preserve capital, principally by selling investments and loans and reducing the size of the loan portfolio through the non-renewal of matured commercial loans, mostly temporary loan Table of Contents TABLE OF CONTENTS Page ABOUT THIS PROSPECTUS 1 ADDITIONAL INFORMATION 1 INCORPORATION BY REFERENCE 1 SUMMARY 2
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+Prospectus summary 1
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+PROSPECTUS SUMMARY This entire Prospectus and our consolidated financial statements and related notes should be read carefully. There is more detailed information in other places of the Prospectus. Unless the context requires otherwise, 'we,' 'us,' 'our,' and similar terms refer to FreeFlow, Inc.
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+S-1/A Noninterest Expense. Noninterest expense increased $1,000 to $12.0 million for the year ended December 31, 2011 compared to the year ended December 31, 2010. The following table provides an analysis of the changes in the components of noninterest expense: At or For the Years Ended December 31, Increase (Decrease) 2011 2010 Amount Percent (Dollars in thousands) Salaries and benefits $ 5,616 $ 5,117 $ 499 9.8% Operations 1,733 2,122 (389) (18.3) Occupancy 1,103 941 162 17.2 Data processing 890 739 151 20.4 OREO fair value write-downs, net of(gain) loss on sales 601 (79) 680 NM OREO expenses 138 503 (365) (72.6) Loan costs 459 847 (388) (45.8) Professional fees 485 556 (71) (12.8) FDIC insurance 391 556 (165) (29.7) Marketing and advertising 236 344 (108) (31.4) ATM costs 216 238 (22) (9.2) Board Fees 146 148 (2) (1.4) Impairment loss on mortgage servicing rights 19 --- 19 NM Total noninterest expense $ 12,033 $ 12,032 $ As filed with the Securities and Exchange Commission on May 3, 2012 Registration No. 333-177125 FS Bancorp, Inc. 6920 220th Street SW Mountlake Terrace, Washington 98043 (425) 771-5299 FS Bancorp is a newly formed Washington corporation that will hold all of the outstanding shares of 1st Security Bank of Washington following the conversion to stock ownership. FS Bancorp is conducting the stock offering in connection with the conversion of 1st Security Bank of Washington from the mutual to the stock form of organization. Upon completion of the offering, FS Bancorp will be a bank holding company and its primary regulator will be the Board of Governors of the Federal Reserve System. 1st Security Bank of Washington 6920 220th Street SW Mountlake Terrace, Washington 98043 (425) 771-5299 1st Security Bank of Washington is a relationship-driven community bank. We deliver banking and financial services to local families, local and regional businesses and industry niches within distinct Puget Sound area communities. We emphasize long-term relationships with families and businesses within the communities we serve, working with them to meet their financial needs. We are also actively involved in community activities and events within these market areas, which further strengthens our relationships within these markets. We have been serving the Puget Sound area since 1936. Originally chartered as a credit union, previously known as Washington s Credit Union, we served various select employment groups. On April 1, 2004, we converted from a credit union to a Washington state-chartered mutual savings bank. Upon completion of the conversion and public stock offering, 1st Security Bank of Washington will be a Washington state-chartered stock savings bank and the wholly owned subsidiary of FS Bancorp. Since our conversion to a mutual savings bank in 2004, our institution has faced numerous operational and economic challenges. At the time of our conversion to a mutual savings bank we operated 14 branch locations in the Puget Sound area, along with our Mountlake Terrace headquarters, and had 132 full-time equivalent employees. Our assets at December 31, 2004 totaled $261.4 million. As of December 31, 2011, our assets totaled $283.8 million, and we were conducting operations through 6 locations, along with our Mountlake Terrace headquarters, with 86 full-time equivalent employees. Our branch network and high level of employee overhead, which were an outgrowth of our credit union roots, resulted in inefficiencies and an extremely high operating cost for an institution our size. Beginning in 2007, adverse economic conditions, including increased levels of unemployment, depressed real estate values and the loss of major employers in our market area, such as Washington Mutual, also reduced our rate of growth, affected our customers ability to repay loans and adversely impacted our financial condition and earnings. As a result of the foregoing, we experienced net losses of $4.6 million, $3.8 million and $4.1 million during the years ended December 31, 2009, 2008 and 2007, respectively. In comparison, during the years ended December 31, 2011 and 2010, we recorded net earnings of $1.5 million and $1.6 million, respectively. We attribute our return to profitability, in large part, to the following: We restructured the board of trustees (hereafter referred to throughout this document as the board of directors), adding individuals with attributes more suited for the banking industry than those members who previously sat on the board of the institution as a credit union. A new executive management team was put in place and a number of other seasoned bankers were hired since our conversion to a mutual savings bank. Aggressive cost cutting measures were put in place, including (i) salary reductions or freezes for a number of our senior staff, (ii) reduced employee benefits; (iii) staff reductions and (iv) consolidation of our branch network. Active management of our delinquent loans and non-performing assets. See Management s Discussion and Analysis of Financial Condition and Results of Operations for additional information. 1st Security Bank of Washington is a diversified lender with a focus on the origination of home improvement loans, commercial real estate mortgage loans, commercial business loans and second mortgage/home equity loan products. Consumer loans, in particular indirect home improvement loans to finance window replacement, gutter replacement, siding replacement, and other improvement renovations, represent the largest portion of the loan portfolio and have traditionally been the mainstay of our lending strategy. As of December 31, 2011, consumer loans represented 51.7% of our total portfolio, with indirect home improvement loans representing 71.0% of the total consumer loan portfolio. Our indirect home improvement lending is reliant on our relationships with home improvement contractors and dealers. Our indirect home improvement contractor/dealer network is currently comprised of approximately 150 active contractors and dealers with businesses located throughout Washington and Oregon, with approximately 10 contractors/dealers responsible for more than half of this loan volume. As a result of the recent economic downturn and contraction of credit to both contractors/dealers and their customers, there has been an increase in business closures and our existing contractor/dealer base has experienced decreased sales and loan volume. In order to maintain our indirect home improvement loan volume, we are considering expanding this line of business into the State of California. We are currently testing the California market with a limited number of contractors/dealers with whom our lenders have had previous experience. To the extent we determine to expand our indirect home improvement lending program in California, we anticipate that these California loans will represent no more than 20% of the total consumer loan portfolio. See Our business could suffer if we are unsuccessful in making, continuing and growing relationships with home improvement contractors and dealers. Going forward, an emphasis will be placed on diversifying our lending products by expanding our commercial real estate, commercial business and residential construction lending, while maintaining the current size of our consumer loan portfolio. Further, as a result of demand by depository customers, we reintroduced in-house originations of residential mortgage loans during the fourth quarter of 2011, primarily for sale into the secondary market, through a mortgage banking program. Our lending strategies are intended to take advantage of: (1) our historical strength in indirect consumer lending, (2) recent market dislocation that has created new lending opportunities and the availability of experienced bankers, and (3) our strength in relationship lending. Retail deposits will continue to serve as an important funding source. See Risk Factors - Risks Related to Our Business. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FS BANCORP, INC Operating Strategy Our primary objective is to operate 1st Security Bank of Washington as a well-capitalized, profitable, independent, community-oriented financial institution, serving customers in our primary market area. Our strategy is to provide innovative products and superior service to small businesses, industry and geographic niches, and individuals in our primary market area. Our primary market area is defined generally as the greater Puget Sound market area. After the conversion and offering, we plan to continue our strategy of: Growing and diversifying our loan portfolio and revenue streams by expanding our commercial real estate, commercial business and residential construction lending operations, and reintroducing in-house originations of residential mortgage loans through a mortgage banking program. Maintaining and improving asset quality, including actively managing our delinquent loans and non-performing assets by aggressively pursuing the collection of consumer debts and marketing saleable properties upon which we foreclosed or repossessed. Emphasizing lower cost core deposits to reduce the costs of funding our loan growth. In order to build our core deposit base, we provide sales promotions on savings and checking accounts and diligently attempt to recruit all commercial loan customers to maintain a deposit relationship with us, generally a business checking account relationship, for the term of their loan. Capturing our customers full relationship by offering a wide range of products and services. As part of our commercial lending process we cross-sell the entire business banking relationship, including deposit relationships and business banking products, such as online cash management, treasury management, wires, direct deposit, payment processing and remote deposit capture. Our mortgage banking program also will provide us with opportunities to cross-sell products to new customers. Expanding our reach by leveraging our well-established involvement in the community and by selectively emphasizing products and services designed to meet our customers banking needs. We also intend to pursue expansion in our market area through selective growth of our branch network. We recently signed a notice of intent for a new branch location in the Capitol Hill area of Seattle, which is expected to open during the third quarter of 2012. For a more detailed description of our products and services, as well as our business operating strategy and goals, see Business of 1st Security Bank of Washington beginning on page 64. The Conversion and Stock Offering We do not have shareholders in our current mutual form of ownership. The conversion is a series of transactions by which we are reorganizing from a mutual savings bank structure to a stock holding company which will be 100% owned by public shareholders. As a result of the conversion, 1st Security Bank of Washington will be owned directly by FS Bancorp. Voting rights in FS Bancorp will be vested solely in the public shareholders following the conversion. The chart below shows our structure before the conversion and offering: The chart below shows our structure after the conversion and offering: Terms of the Offering We are offering between 2,082,500 and 2,817,500 shares of common stock to those with subscription rights in the following order of priority: (1) Depositors who held at least $50 with us as of the close of business on June 30, 2007. (2) The FS Bancorp, Inc. employee stock ownership plan. (3) Depositors who held at least $50 with us as of the close of business on ________ __, 2012. (4) Depositors with us as of the close of business on ________ __, 2012 to the extent not already included in a prior category. We may increase the maximum number of shares that we sell in the offering by up to 15% to 3,240,125 shares with the approval of the Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation and without any notice to you as a result of market demand, regulatory considerations or changes in financial conditions. If we increase the offering up to 3,240,125 shares, you will not have the opportunity to change or cancel your stock order. The offering price is $10.00 per share. All purchasers will pay the same purchase price per share. No commission will be charged to purchasers in the offering. If we receive subscriptions for more shares than are to be sold in the subscription offering, shares will be allocated in order of the priorities described above under a formula outlined in the plan of conversion. Shares of common stock not subscribed for in the subscription offering will be offered to the general public in a direct community offering with a preference to natural persons residing in King, Kitsap, Pierce and Snohomish Counties, Washington and, if necessary, a syndicated community offering. The direct community offering, if any, shall begin at the same time as, during or promptly after the subscription offering. See The Conversion and Stock Offering - Subscription Offering and Subscription Rights, - Direct Community Offering and - Syndicated Community Offering. (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Joseph C. Adams, Chief Executive Officer 1ST Security Bank of Washington 6920 220th Street SW, Suite 200, Mountlake Terrace, Washington 98043; (425) 771-8840 Keefe, Bruyette & Woods, our financial advisor and selling agent in connection with the offering, will use its best efforts to assist us in selling our common stock in the offering. Keefe, Bruyette & Woods is not obligated to purchase any shares of common stock in the offering. For further information about the role of Keefe, Bruyette & Woods in the offering, see The Conversion and Stock Offering - Marketing Arrangements. Reasons for the Conversion and Offering The primary reasons for the conversion and our decision to conduct the offering are to: increase our capital to support future growth; and provide us with greater operating flexibility and allow us to better compete with other financial institutions. The conversion and the capital raised in the offering are expected to: give us the financial strength to grow our bank; better enable us to serve our customers in our market area; enable us to increase lending and support our emphasis on commercial business and commercial real estate lending and the development of new products and services; help us attract and retain qualified management through stock-based compensation plans; and structure our business in a form that will enable us to access the capital markets. We recently signed a notice of intent for a new branch location in the Capitol Hill area of Seattle, which is expected to open during the third quarter of 2012; otherwise, we do not have any specific plans or arrangements for expanding our branch network and/or any specific acquisition plans. How We Determined the Offering Range and the $10.00 Price Per Share Valuation Range and Background. The amount of common stock we are offering is based on an independent appraisal by RP Financial, LC. ( RP Financial ) of the estimated pro forma market value of FS Bancorp, assuming the conversion and offering are completed. The appraisal was based in part on our consolidated financial condition and results of operations, the pro forma effect of the additional capital raised by the sale of shares of our common stock in the offering, and an analysis of a peer group of publicly-traded companies utilized by RP Financial in its appraisal that RP Financial considers comparable to FS Bancorp. RP Financial concluded that, as of February 17, 2012, the estimated pro forma market value of FS Bancorp was $24.5 million. This pro forma market value is the midpoint of a valuation range established by regulation with a minimum of $20.8 million and a maximum of $28.2 million. Based on this market value and a $10.00 per share purchase price, the number of shares of our common stock that will be offered for sale will range from 2,082,500 to 2,817,500 with a midpoint of 2,450,000. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. If a greater demand for shares of our common stock or a change in financial or market conditions warrant, the offering range may be increased by 15.0%, which would result in an adjusted maximum pro forma market value of $32.4 million and total shares offered of 3,240,125. RP Financial advised the board of directors that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based on an analysis of trading prices of comparable companies whose stocks have traded for at least one year prior to the valuation date. RP Financial selected a group of comparable public companies for this analysis. (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Michael S. Sadow, P.C. Martin L. Meyrowitz, P.C. Silver, Freedman & Taff, L.L.P. 3299 K Street, N.W., Suite 100 Washington, D.C. 20007 (202) 295-4500 Steven T. Lanter, Esq. Luse Gorman Pomerenk & Schick 5535 Wisconsin Avenue, NW, Suite 780 Washington, D.C. 20015 (202) 274-4000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: : If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-acclerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price(1) Amount of registration fee Common Stock, par value $.01 per shares 3,240,125 shares $10.00 $32,401,250 $3,762(1) (1) Previously paid. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. In preparing its appraisal, RP Financial considered the information in this prospectus, including our financial statements. RP Financial also considered the following factors, among others. the present results and financial condition of 1st Security Bank of Washington, and the projected results and financial condition of FS Bancorp; the economic and demographic conditions in our existing market area; certain historical, financial and other information relating to 1st Security Bank of Washington; a comparative evaluation of the operating and financial characteristics of 1st Security Bank of Washington with the peer group companies, which are headquartered in the states of Washington (two companies), Louisiana (two companies), Michigan (two companies), and Tennessee, Montana, Illinois and Ohio (one company); the impact of the conversion and the offering on FS Bancorp s shareholders equity and earnings potential; the proposed dividend policy of FS Bancorp; and the trading market for the securities of the peer group institutions and general conditions in the stock market for the peer group institutions and all publicly traded thrift institutions. Furthermore, RP Financial had various discussions with management. RP Financial did not perform a detailed analysis of the separate components of our assets and liabilities. We did not impose any limitations on RP Financial in connection with its appraisal. RP Financial relied primarily on a comparative market value methodology in determining the pro forma market value of our common stock. In applying this methodology, RP Financial analyzed financial and operational comparisons of 1st Security Bank of Washington with a selected peer group of publicly traded savings institutions. The peer group used by RP Financial consists of ten companies listed in the table below. The pro forma market value of FS Bancorp s common stock was determined by RP Financial based on the market pricing ratios of the peer group, subject to certain valuation adjustments based on fundamental differences between 1st Security Bank of Washington and the institutions comprising the peer group. RP Financial took into account the significant volatility in the broader stock market and the after market pricing characteristics of recently converted savings institutions. RP Financial utilized the results of this overall analysis to establish pricing ratios that resulted in the determination of the pro forma market value. PROSPECTUS Up to 2,817,500 Shares of Common Stock (Subject to increase to up to 3,240,125 shares) FS BANCORP, INC. (Proposed Holding Company for 1st Security Bank of Washington) We are offering up to 2,817,500 shares of our common stock for sale in connection with our conversion from a mutual savings bank structure to a stock holding company structure. As part of the conversion, 1st Security Bank of Washington will become our wholly owned subsidiary. We may increase the maximum number of shares that we sell in the offering by up to 15%, to 3,240,125 shares, as a result of the demand for shares or changes in market and financial conditions. The shares of our common stock are being offered for sale at a price of $10.00 per share. We expect our common stock will be listed on the Nasdaq Capital Market under the symbol FSBW. We cannot predict, however, whether an active and liquid trading market for our common stock will develop. We are offering these shares for sale first to our depositors and other eligible subscribers in a subscription offering. Concurrently with or immediately after the subscription offering, any shares not subscribed for in the subscription offering will be offered to the general public in a direct community offering and/or a syndicated community offering (collectively referred to as the offering ). In order to complete the offering, we must sell, in the aggregate, at least 2,082,500 shares. The minimum purchase is 25 shares. The subscription offering is scheduled to end at 12:00 Noon, Pacific time, on _________ __, 2012. However, we may extend this expiration date, without notice to you, until _________ __, 2012, unless the Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation approve a later date, which may not be extended beyond _________ __, 2014. Once submitted, orders are irrevocable unless the offering is terminated or extended beyond _________ __, 2012. If the offering is extended beyond _________ __, 2012, subscribers will have the right to modify or rescind their purchase orders. FS Bancorp, Inc. will hold all subscribers funds received before the completion of the conversion in a segregated account at 1st Security Bank of Washington until the conversion is completed or terminated. We will pay interest on all funds received at a rate equal to 1st Security Bank of Washington s passbook (statement savings) rate, which is currently ___% per annum. Funds will be returned promptly with interest if the conversion is terminated. Investing in our common stock involves risks. See Risk Factors beginning on page 18. TERMS OF THE OFFERING Price Per Share: $10.00; Minimum Subscription: 25 shares or $250 Minimum Maximum Maximum as adjusted Number of Shares 2,082,500 2,817,500 3,240,125 Gross Offering Proceeds $ 20,825,000 $ 28,175,000 $ 32,401,250 Estimated Selling Agent Fees and Expenses(1) $ 339,750 $ 429,750 $ 481,750 Estimated Other Expenses(2) $ 1,765,000 $ 1,765,000 $ 1,765,000 Estimated Net Proceeds to FS Bancorp, Inc. $ 18,720,250 $ 25,980,250 $ 30,154,500 Estimated Net Proceeds Per Share $ 8.99 $ 9.22 $ 9.31 The selection criteria for the peer group included consideration of geographic location, earnings and asset size. The peer group companies are: Peer Group (Ticker Symbol) City and State Assets (In millions) First Financial NW, Inc. (FFNW) Renton, WA $ 1,059 Timberland Bancorp, Inc. (TSBK) Hoquiam, WA 736 Eagle Bancorp Montana, Inc. (EBMT) Helena, MT 332 Louisiana Bancorp, Inc. (LABC) Metairie, LA 316 Jacksonville Bancorp, Inc. (JXSB) Jacksonville, IL 307 Wolverine Bancorp, Inc. (WBKC) Midland, MI 294 Athens Bancshares Corp. (AFCB) Athens, TN 284 Home Federal Bancorp, Inc. of LA (HFBL) Shreveport, LA 252 FFD Financial Corp. (FFDF) Dover, OH 235 First Federal of N. Michigan Bncp, Inc. (FFNM) Alpena, MI 222 Two of the measures investors use to analyze whether a stock might be a good investment are the ratio of the offering price to the issuer s book value and the ratio of the offering price to the issuer s annual net income. RP Financial considered these ratios, among other factors, in preparing its appraisal. Book value is the same as total shareholders equity, and represents the difference between the issuer s assets and liabilities. Tangible book value is equal to total shareholders equity less intangible assets. Reported earnings reflect net income recorded by 1st Security Bank of Washington for the year ended December 31, 2011. Core earnings represent 1st Security Bank of Washington s earnings, adjusted for non-operating items. RP Financial s appraisal also incorporates an analysis of a peer group of publicly traded companies that RP Financial considered to be comparable to us. The following table presents a summary of selected pricing ratios for the peer group companies and 1st Security Bank of Washington (on a pro forma basis). The pricing ratios are based on book value, earnings and other information as of and for the year ended December 31, 2011, stock price information as of February 17, 2012 as reflected in RP Financial s appraisal report, dated February 17, 2012, and the number of shares assumed to be outstanding as described in Pro Forma Data. Compared to the average pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 16.1% on a price-to-reported earnings basis, a premium of 1.8% on a price-core earnings basis, a discount of 17.3% on a price-to-book value basis, and a discount of 18.5% on a price-to-tangible book value basis. Price-to- earnings multiple Price-to-core earnings multiple Price-to-book value ratio Price-to-tangible book value ratio FS Bancorp, Inc. Minimum of offering range 15.88 x 14.40 x 48.45 % 48.47 % Midpoint of offering range 19.26 x 17.42 x 53.05 % 53.05 % Maximum of offering range 22.85 x 20.61 x 57.08 % 57.08 % Maximum of offering range, as adjusted 27.28 x 24.51 x 61.09 % 61.05 % Valuation of peer group companies using stock market prices as of February 17, 2012 Average 22.44 x 17.75 x 69.00 % 70.02 % Median 21.06 x 17.05 x 71.39 % 72.28 % (1) For additional information regarding selling agent fees, including the assumptions regarding the number of shares sold in the offering that we used to determine the estimated offering expenses, see Pro Forma Data and The Conversion and Stock Offering - Marketing Arrangements. If shares are sold in a syndicated community offering, we have agreed to pay Keefe, Bruyette & Woods, Inc. and any other broker-dealers participating in the syndicated community offering selling commission in an amount up to 5.50% of the aggregate amount of common stock sold in the syndicated community offering, which would result in higher selling commissions and lower net proceeds and net proceeds per share. If all shares were sold in the syndicated community offering (excluding shares purchased by the employee stock ownership plan, directors and executive officers), the maximum commission payable to participating members would be $1.0 million, $1.4 million and $1.6 million at the minimum, maximum and adjusted maximum of the offering range. (2) Includes $853,000 of deferred conversion-related costs. Keefe, Bruyette & Woods will use its best efforts to assist us in our selling efforts, but is not required to purchase any of the common stock that is being offered for sale. Subscribers will not pay any commissions to purchase shares of common stock in the offering. THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. NEITHER THE SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, THE WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONS, NOR ANY OTHER FEDERAL AGENCY OR STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. For information on how to subscribe, call the stock information center at (___) ___-____. Our board of directors reviewed the appraisal report of RP Financial, including the methodology and the assumptions used, and determined that the valuation range was reasonable and adequate. Given that the shares are to be sold at $10.00 per share in the offering, the estimated number of shares would be between 2,082,500 at the minimum of the valuation range and 2,817,500 at the maximum of the valuation range, with a midpoint of 2,450,000. The independent appraisal does not indicate per share market value. Do not assume or expect that the valuation of FS Bancorp as indicated above means that, after the conversion and the offering, the shares of common stock will trade at or above the $10.00 offering price. Furthermore, the pricing ratios presented above were utilized by RP Financial to estimate our market value and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location. For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, including a comparison of selected pro forma pricing ratios compared to pricing ratios of the peer group, see The Conversion and Offering Share Pricing and Number of Shares to be Issued. RP Financial will update its appraisal before we complete the offering. If, as a result of demand for the shares or changes in market conditions, RP Financial determines that our pro forma market value has increased, we may sell up to 3,240,125 shares in the offering without notice to you. If our pro forma market value at that time is either below $20.8 million or above $32.4 million, then, after consulting with the Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation, we may: set a new offering range; take such other actions as may be permitted by the Washington Department of Financial Institutions, the FDIC and the Securities and Exchange Commission; or terminate the offering and promptly return all funds. If we set a new offering range, we will be required to cancel your stock order and promptly return your subscription funds, with interest calculated at the statement savings rate, and cancel any authorization to withdraw funds from your deposit accounts for the purchase of shares of common stock. You will have the opportunity to place a new stock order. After-Market Performance Information Provided by the Independent Appraiser The following table, prepared by our independent appraiser, presents for all full stock conversions that began trading from January 1, 2011 to February 17, 2012 the percentage change in the trading price from the initial trading date of the offering to the dates shown in the table. The table also presents the average and median trading prices and percentage change in trading prices for the same dates. This information relates to stock performance experienced by other companies that may have no similarities to us with regard to market capitalization, offering size, earnings quality and growth potential, among other factors. KEEFE, BRUYETTE & WOODS
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+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes and schedules thereto included elsewhere in this prospectus. Overview Aquasition Corp. is a blank check company formed on January 26, 2012, pursuant to the laws of the Republic of the Marshall Islands for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, or similar acquisition transaction, one or more operating businesses or assets. Although our Amended and Restated Articles of Incorporation and by-laws do not limit us to a particular geographic region or industry, we intend to focus on operating businesses and assets in the international maritime transportation, offshore and related maritime services industries, especially those requiring energy, commodity, transportation or logistics expertise. To date, our efforts have been limited to organizational activities and financing activities. The address of the Company s principal executive office is c/o Seacrest Shipping Co. Ltd., 8-10 Paul Street, London EC2A 4JH, England. We do not have any specific acquisition transaction under consideration or contemplation, and we have not, nor has anyone on our behalf, contacted any prospective acquisition target or holder of assets, or had any discussions, formal or otherwise, with respect to such a transaction. We have not, in any capacity (nor has any of our agents or affiliates) been approached by, any candidates (or representative of any candidates), with respect to a possible acquisition transaction with our company. We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and will continue to be an emerging growth company until: (i) the last day of our fiscal year following the fifth anniversary of this prospectus, (ii) the date on which we become a large accelerated filer, or (iii) the date on which we have issued an aggregate of $1 billion in non-convertible debt during the preceding 3 years. As an emerging growth company, we are entitled to rely on certain scaled disclosure requirements and other exemptions, including an exemption from the requirement to provide an auditor attestation to management s assessment of its internal controls as required by Section 404(b) of the Sarbanes-Oxley Act of 2002. We may at any time voluntarily elect to cease to avail ourselves of the scaled disclosure and other exemptions available to us as an emerging growth company, and have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. See the risk factor entitled We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. Investment Objective Based on the collective investment and acquisition experiences of our management team, our management will seek to identify acquisition targets in which our management can assist with the growth and development. Our management intends to acquire an acquisition target or businesses that it believes can create significant value through the structure of the acquisition or long-term appreciation. We will seek to capitalize on the strength and expertise of our management team, which collectively has over 85 years of experience in the maritime transportation, offshore and related maritime services industries. Through their family businesses, they have collectively owned and managed over 80 vessels in the past 20 years through several market cycles. Due to this experience, the members of the management team have established strong reputations, relationships and track records which they expect to result in access to high-quality charterers and off-market acquisition opportunities for us. Our management team also has extensive experience in advising, acquiring, financing, managing and selling assets and private companies in a variety of industries. We believe that our contacts and sources, ranging from private and public company contacts, private equity funds, and investment bankers to attorneys, accountants and business brokers, will allow us to generate acquisition opportunities. TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED OCTOBER 24, 2012 $50,000,000 5,000,000 Units Aquasition Corp. is a blank check company formed on January 26, 2012, pursuant to the laws of the Republic of the Marshall Islands for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, or similar acquisition transaction, one or more operating businesses or assets. Although our Amended and Restated Articles of Incorporation and by-laws do not limit us to a particular geographic region or industry, we intend to focus on operating businesses and assets in the international maritime transportation, offshore and related maritime services industries, especially those requiring energy, commodity, transportation or logistics expertise. We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act. This is the initial public offering of our units. Each unit has a public offering price of $10.00 per unit and consists of one share of common stock, par value $0.0001 per share, and one redeemable warrant. Each redeemable warrant entitles the holder to purchase one share of common stock at a price of $11.50. Each redeemable warrant will become exercisable on the later of our consummation of an acquisition transaction or ___________, 2013, and expire on the earlier of five years from the consummation of an acquisition transaction or the date of redemption or liquidation of the trust account described below. We have granted the underwriters a 45-day option to purchase up to 750,000 additional units (in addition to the 5,000,000 units referred to above) solely to cover over-allotments, if any. We have also agreed to sell to the underwriters of this offering, for $100, as additional compensation, an option to purchase up to a total of 250,000 units at $12.50 per unit. The underwriters option is exercisable at any time, in whole or in part, commencing on the later of the consummation of our initial acquisition transaction, or _______ and expiring on the earlier of _______ and the day immediately prior to the day on which we and all of our predecessors and successors have been dissolved. The units issuable upon exercise of this option are identical to those offered by this prospectus, except that the underlying warrants will expire five years from the effective date of the registration statement of which this prospectus forms a part and for certain differences in redemption rights as described in this prospectus. Our founding stockholders and their designees have committed to purchase 337,750 units at a price of $10.00 per unit, for an aggregate purchase price of $3,377,500, in a private placement that will occur immediately prior to the closing of this offering. In addition, our founders have agreed to purchase up to 41,250 additional units, at a price of $10.00 per unit, to the extent that the over-allotment option is exercised by the underwriters, such that the total amount of the proceeds of this offering and the sale of the placement units placed in our trust account will be $10.30 per unit sold in this offering. We refer to these units as the placement units. All of the proceeds we receive from the purchases will be placed in the trust fund described below. The placement units will be identical to the units being offered by this prospectus except that the warrants included in the placement units may be exercised on a cashless basis at any time after an acquisition transaction even if there is not an effective registration statement relating to the shares underlying the warrants so long as such warrants are held by these individuals or their affiliates. With certain exceptions, the placement units will not be sold or transferred by them until 30 days after we have completed an acquisition transaction. There is presently no public market for our units, shares of common stock or redeemable warrants. We applied to have our units, shares of common stock and redeemable warrants listed on the NASDAQ Capital Market under the symbols AQUUU, AQU, and AQUUW on or promptly after the date of this prospectus. We cannot assure you that our units, shares of common stock or redeemable warrants will be approved for listing on the NASDAQ Capital Market. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 26 for a discussion of information that should be considered in connection with investing in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Proceeds Public offering price $ 10.00 $ 50,000,000 Underwriting discounts and commissions 1 2 $ 0.50 $ 2,500,000 Proceeds, before expenses, to us $ 9.50 $ 47,500,000 (1) Includes $1,250,000, or $0.25 per unit, equal to 2.5% of the gross proceeds of this offering (or $1,437,500 if the underwriters over-allotment option is exercised in full) payable to the underwriters for deferred underwriting discounts and commissions from the funds to be placed in the trust account described below. Such funds will be released to the underwriters only upon consummation of an initial acquisition transaction, as described in this prospectus. If the acquisition transaction is not consummated, such deferred discount will be forfeited by the underwriters. The underwriters will not be entitled to any interest accrued on the deferred underwriting discount. The underwriters will not receive the deferred underwriting discount with respect to those units as to which the component shares have been redeemed for cash. (2) The underwriters will receive compensation in addition to the underwriting discount. See Underwriting beginning on page 143 of this prospectus for a description of compensation payable to the underwriters. We will deposit into a trust account at Barclays in London, with American Stock Transfer & Trust Company as trustee, $51,500,000. Such amount includes (i) $1,250,000, or $0.25 per unit, of underwriting discounts and commissions payable to the underwriters upon consummation of an acquisition transaction and, (ii) additional aggregate proceeds of $3,377,500 that we will receive from the sale of placement units described above (or $10.30 per unit sold to the public in the offering). These funds will not be released to us until the earlier of the consummation of an acquisition transaction or our liquidation (which may not occur until _________, 2014 as described herein). Prior to an acquisition transaction or our liquidation if we are unable to consummate an acquisition transaction within the allotted time, amounts in trust may not be released, except for (i) interest earned on the trust account that may be released to us to pay any taxes we incur, and (ii) interest earned by the trust account that may be released to us from time to time to fund our working capital and general corporate requirements (any amounts in the trust account in excess of $10.30 per public share). We are offering the units on a firm commitment basis. The underwriters expect to deliver the units to purchasers on or about , 2012. Lazard Capital Markets The date of this prospectus is , 2012 TABLE OF CONTENTS Our directors and officers will play a key role in identifying, evaluating, and selecting target businesses, and structuring, negotiating and consummating our initial acquisition transaction. Except as described below and under Conflicts of Interest, none of these individuals is currently a principal of or affiliated with a public company or blank check company that executed a business plan similar to our business plan. We believe that the skills and experience of these individuals, their collective access to acquisition opportunities and ideas, their contacts, and their transaction expertise should enable them to identify successfully and effect an acquisition transaction, although we cannot assure you that they will, in fact, be able to do so. While we intend to focus on potential acquisition targets in the maritime transportation industry, we are not committed to do so and may attempt to acquire an acquisition target in another industry if an attractive acquisition opportunity is identified in such other industry and if we believe that such opportunity is in the best interest of our stockholders. Competitive advantage and investment insight We believe our specific competitive strengths to be the following: Status as a public company. As an existing public company, we offer an acquisition target an alternative to the traditional initial public offering. For example, the owners of the acquisition target could exchange their shares of stock in the acquisition target for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe acquisition targets might find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, roadshow and public reporting efforts that will likely not be present to the same extent in connection with an acquisition transaction with us. Furthermore, once the acquisition transaction is consummated, the acquisition target will have effectively become public, whereas an initial public offering is always subject to the underwriters ability to complete the offering, as well as general market conditions, that could prevent the offering from occurring. Once public, we believe the acquisition target would then have greater access to capital and an additional means of providing management incentives consistent with stockholders interests than it would have as a privately-held company. It can offer further benefits by augmenting a company s profile among potential new customers and vendors and aid in attracting talented employees. Financial position. With funds available for our initial acquisition transaction initially in the amount of approximately $50,250,000 (or approximately $57,787,500 if the over-allotment option is exercised in full), we offer an acquisition target a variety of options such as providing the owners of an acquisition target with shares in a public company and a public means to sell such shares, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial acquisition transaction using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the acquisition target to fit its needs and desires. Public, Private Equity and Mergers and Acquisitions Contacts. Within the shipping industry, our management team has a base of contacts in the public and private equity markets and mergers and acquisitions industry that they have developed through their collective experience. We believe that the members of our management team have strong working relationships with principals as well as intermediaries who constitute our most likely source of identifying prospective business transactions within the shipping industry. In addition, our management team, through its present and historical membership on various boards of directors, has developed a network of business relationships within the shipping industry with members on the board of directors of other businesses, which extends our access to privately held companies. We believe that these contacts will be important in generating acquisition opportunities for us within the shipping industry. Management Operating and Investing Experience. Collectively our executive officers and directors have over 85 years of experience within the shipping and transportation industry founding, advising, acquiring, financing, managing and selling assets and private and public companies. Furthermore, TABLE OF CONTENTS our management team has experience working together closely. Our management s experience with sourcing, due diligence, structuring, negotiating and closing acquisition and growth financing transactions spans both the public and private markets. Our management team also has acquisition and operating experience in a number of businesses other than the shipping industry, such as aviation, manufacturing, hospitality, and real estate. We believe that this breadth of experience provides us with a competitive advantage in evaluating businesses and acquisition opportunities over management teams who have little or no direct operating experience. Notwithstanding these strengths, there are various competitive weaknesses that we may face in consummating our business transaction, including, among others: Public Company Status. While we believe that our status as a public company will make us an attractive business partner, some potential acquisition targets may view the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect an acquisition transaction with a more established entity or with a private company. Conflicts of Interest. In the course of their other business activities, our officers and directors may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. They may have conflicting fiduciary duties in determining to which entity a particular business opportunity should be presented. Such officers and directors may become subject to conflicts of interest regarding us and other business ventures in which they may be involved. For a discussion of these conflicts of intent, see Management Conflicts of Interest. Competition. We may encounter intense competition from other entities having a business objective similar to ours including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions. These entities may be well established and have extensive experience identifying and effecting business transactions. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger acquisition targets will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of an acquisition target. Investment strategy We believe that there is significant value in structuring transactions in the current market environment, where market tightness, volatility and disruptions create geographical, time and quality arbitrage and investment opportunities. Our insights from in depth knowledge about what industry participants are doing and need allow us to move fast to capitalize on opportunities. We believe that we can both acquire assets at attractive prices and generate significant value from combining assets that will eliminate inefficiencies or improve margins. In the currently weak environment, we will seek to acquire operations that are profitable at current market levels and able to overcome the weakness that we see continuing in the near term and that will capitalize on the future growth of developing nations. We will look for businesses that have one or more of the following characteristics: Motivated sellers that are seeking liquidity. Businesses that are ready to be public. Growing businesses that are seeking and have accretive use of additional capital. Companies that are being divested by conglomerates or multinational companies. Poorly valued private or public companies or assets that can benefit from our management s experience and expertise for their profitability improvement. Assets which we can use under a certain contractual agreement that will create value through a sustainable cash flow stream which we would expect the market to value in addition to the asset acquired. TABLE OF CONTENTS Effecting an acquisition transaction We are not required to have a stockholder vote to approve our initial acquisition transaction, unless the nature of the acquisition transaction would require stockholder approval under applicable Marshall Islands law. Stockholders approval would normally only be required under Marshall Islands law where the acquisition transaction involved: (i) a statutory merger of our company with another company where our stockholders would give up or transfer their shares in our company in consideration of the issue of shares in another company, (ii) amendments to our Articles of Incorporation, (iii) a change in the par value of our shares or (iv) a change in the amount of our authorized share capital. A merger of our wholly-owned subsidiary with another company would not normally require stockholders approval under our Articles of Incorporation and by-laws or the BCA. Accordingly, we will have a high degree of flexibility in structuring and consummating our initial acquisition transaction, and currently intend to structure our initial acquisition transaction so that a stockholder vote is not required. Notwithstanding, our Amended and Restated Articles of Incorporation and by-laws provide that public stockholders will be entitled to cause us to redeem their shares of common stock for cash equal to the pro rata share of the aggregate amount then in the trust account (initially $10.30 per share), including the deferred underwriting discounts and commissions and accrued but undistributed interest, net of (i) interest earned on the trust account that may be released to us to pay any taxes we incur, and (ii) interest earned by the trust account that may be released to us from time to time to fund our working capital and general corporate requirements (any amounts in the trust account in excess of $10.30 per public share) in connection with our initial acquisition transaction. In the event that we do hold a stockholder vote to approve our initial acquisition transaction, public stockholders will be entitled to cause us to redeem their shares of common stock for a pro rata portion of the trust account as long as the acquisition transaction is approved and consummated, regardless of whether they vote in favor of or against our initial acquisition transaction. A stockholder is not required to vote against the initial acquisition transaction in order to exercise redemption rights. We will proceed with an acquisition transaction only if public stockholders owning no more than 90% of the shares sold in this offering exercise their redemption rights. The redemption threshold was set at 90% so that we would have a minimum of approximately $5,000,000 in stockholder s equity post initial public offering, which permits us to not comply with Rule 419 of the Securities Act. See the section entitled Proposed Business Comparison of This Offering to those Blank Check Companies Subject to Rule 419. However, a potential target may make it a closing condition to our acquisition transaction that we have a certain amount of cash in excess of the minimum amount we are required to have pursuant to our organizational documents available at the time of closing, effectively reducing the number of stockholders who can redeem their shares in connection with such acquisition transaction or requiring us to obtain an alternative source of funding. If the number of our stockholders electing to exercise their redemption rights has the effect of reducing the amount of money available to us to consummate an acquisition transaction below such minimum amount and we are not able to locate an alternative source of funding, we will not be able to consummate such acquisition transaction and we may not be able to locate another suitable target within the applicable time period, if at all. As a result, public stockholders may have to wait the full 18 months (or 24 months pursuant to the automatic period extension) in order to be able to receive a pro rata portion of the trust account in connection with our dissolution and liquidation. See the risk factor entitled Even though we have a redemption threshold of 90%, we may be unable to consummate an acquisition transaction if a target business requires that we have cash in excess of the minimum amount we are required to have at closing and public stockholders may have to remain stockholders of our company and wait until our liquidation to receive a pro rata share of the trust account or attempt to sell their shares in the open market. In order to redeem the public shares for cash upon the consummation of an acquisition transaction, we will initiate an issuer tender offer by filing tender offer documents with the SEC prior to such acquisition transaction in accordance with Rule 13e-4 and Regulation 14E of the Securities and Exchange Act of 1934, as amended, or the Exchange Act. The tender offer documents will comply with the disclosure required by Regulations 14A and 14C of the Exchange Act even if we are not at the time required to comply with such regulations by virtue of our status as a foreign private issuer. The closing of the acquisition transaction will be cross-conditioned with the closing of the tender offer. However, if we are no longer a foreign private issuer and stockholder approval of the transaction is required by Marshall Islands law or the NASDAQ Capital Market or we decide to obtain stockholder approval for business reasons, we will: TABLE OF CONTENTS conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. In connection with redemption, we are required to offer redemption rights to all holders of our shares of common stock. Our founders have agreed to not redeem their securities, so that the per share amount of $10.30 reserved for redemption of the public shares will not be reduced due to payments to our founders. Conflicts of Interest Certain of our officers and directors may in the future become affiliated with entities, including other blank check companies, that are engaged in business activities similar to those intended to be conducted by us. Furthermore, each of our principals may become involved with subsequent blank check companies similar to us. Additionally, our officers and directors may become aware of business opportunities that may be appropriate for presentation to us and the other entities to which they owe fiduciary duties. For a list of the entities to which our officers and directors owe fiduciary duties, see Management Conflicts of Interest. Accordingly, they may have conflicts of interest in determining to which entity time should be allocated or a particular business opportunity should be presented. We cannot assure you that these conflicts will be resolved in our favor. As a result, a potential acquisition target may be presented to another entity with which our officers and directors have a pre-existing fiduciary obligation and we may miss out on a potential transaction. It is possible that our initial acquisition transaction may be with an acquisition target that is a portfolio company of, or has otherwise received a financial investment from, our founders or their affiliates, or that is affiliated with our founders or our directors, or officers. While we are not prohibited from acquiring such a target, we would be required to obtain a fairness opinion from an unaffiliated, independent investment banking firm that is a member of FINRA. The acquisition of such a target would result in a conflict of interest for any founder that has a direct or indirect financial interest in such target. See the Risk Factor entitled We will not be required to obtain a fairness opinion from an independent investment banking firm as to the fair market value of the acquisition target unless the board of directors is unable to independently determine the fair market value. It is also possible that, concurrently with our initial acquisition transaction, some of the entities with which our officers and directors are affiliated could purchase a minority interest in the acquisition target, subject to the requirement that we must acquire a portion of the acquisition target with a value that is equal to at least 80% of the amount in the trust account (excluding deferred underwriting discounts and commissions and taxes payable) and that we acquire a majority of the voting rights of the acquisition target and control of the majority of any governing body of the acquisition target. An investment by one of these entities would result in a conflict of interest for our officers and directors since they would be determining what portion of the acquisition target we would be purchasing and the amount that these other companies would purchase. See the Risk Factor entitled It is possible that, concurrently with our initial acquisition transaction, some of the entities with which our officers and directors are affiliated could purchase a minority interest in the acquisition target, which may result in conflicts of interest. Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and the search for an acquisition transaction on the one hand and their other businesses on the other hand. We do not intend to have any full-time employees prior to the consummation of our initial acquisition transaction. While each of our executive officers has indicated that they intend to devote approximately 40% of their time to our affairs, each of our executive officers is engaged in several other business endeavors in the maritime transportation industry for which he or she is entitled to substantial compensation and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. See Management Directors and Executive Officers, for a discussion of our management s current business endeavors. If our executive officers and directors other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to consummate our initial acquisition transaction. TABLE OF CONTENTS Other Information Because we are incorporated under the laws of the Marshall Islands, you may face difficulty protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited. Please refer to the section entitled Risk Factors Because we are incorporated under the laws of the Marshall Islands, you may face difficulty protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited for more information. Our executive offices are located at c/o Seacrest Shipping Co. Ltd., 8-10 Paul Street, London EC2A 4JH, England, and our telephone number at that office is +44-207-426-1155. TABLE OF CONTENTS
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+Prospectus summary 1
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+Prospectus Summary 1
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+SUMMARY GENERAL INFORMATION You should read the following summary together with the more detailed business information and the financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we", "us", "our", "the Company" and "AO&G" are to American Oil & Gas Inc. American Oil & Gas, Inc. was incorporated in the State of Nevada on January 23, 2012 to engage in the acquisition, exploration and development of oil and gas properties. We intend to use the net proceeds from this Offering to develop our business operations. (See "Business of the Company" and "Use of Proceeds".) We are an exploration stage company with no revenues or operating history. The principal executive offices are located at Suite 400 - 601 West Broadway, Vancouver, BC V5Z 4C2. The telephone number is 888-609-1173. We received our initial funding of $10,000 through the sale of common stock to our officer, Mr. Robert Gelfand, who purchased 10,000,000 shares of our common stock at $0.001 per share on January 23, 2012. From inception until the date of this filing we have had limited operating activities. Our financial statements from inception (January 23, 2012) through the year ended January 31, 2012 report no revenues and a net loss of $565. Our independent auditor has issued an audit opinion for AO&G which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our business is the location and leasing of existing wells for reactivation for the production of oil and gas that we will then, through an operator, sell to oil and gas brokers and gatherers. Reactivating wells involves locating once producing wells that have been shut-in because the well did not produce enough oil or gas at the time to be profitable. Due to the higher price of crude oil and natural gas and utilizing new technology to increase flow rates these wells can be reworked with the intent of making production profitable; however there is no guarantee that our well will be profitable. Our first lease is a one hundred percent interest in 40 acres located in Caddo Parrish, Louisiana. There is currently one drilled well bore, the Cecil Barlow #1, on the property. We have a report on the Caddo Parish Louisiana area prepared by a consulting geologist which outlines the reservoir potential of the Caddo Pine Island Field, in which our lease exists. We have not yet realized any revenues from the lease and it may not contain any reserves and funds that we spend on exploration will be lost. There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid. OFFERING Securities Being Offered: 10,000,000 shares of common stock. Price per Share: $0.005 Offering Period: The shares are offered for a period not to exceed 180 days, unless extended by our board of directors for an additional 90 days. Net Proceeds: $50,000 Securities Issued And 10,000,000 shares of common stock were issued Outstanding: and outstanding as of the date of this prospectus. Registration Costs: We estimate our total Offering registration costs to be $6,000.
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+PROSPECTUS SUMMARY The following summary highlights certain information contained elsewhere in this prospectus or in the documents incorporated by reference herein. It may not contain all of the information that is important to you or that you should consider before investing in the Preferred Stock. For a more complete discussion of the information you should consider before investing in the Preferred Stock, you should carefully read this entire prospectus and the incorporated documents. Unless the context suggests otherwise, references in this prospectus to Oriental, the Company, we, us, and our refer to Oriental Financial Group Inc. and its consolidated subsidiaries. References in this prospectus to BBVAPR and the BBVAPR Companies refer collectively to BBVAPR Holding Corporation, its wholly-owned subsidiaries, Banco Bilbao Vizcaya Argentaria Puerto Rico and BBVA Seguros, Inc., and to BBVA Securities of Puerto Rico, Inc. (see Recent Developments ). Certain capitalized terms used elsewhere in this prospectus are defined in this summary. About Oriental Financial Group Inc. Oriental Financial Group Inc. is a diversified financial holding company headquartered in San Juan, Puerto Rico, offering a full range of financial services through its wholly-owned subsidiaries Oriental Bank and Trust ( Oriental Bank or the Bank ), Oriental Financial Services Corp. ( Oriental Financial Services ), Oriental Insurance, Inc. ( Oriental Insurance ) and Caribbean Pension Consultants, Inc. As of June 30, 2012, we had total assets of $6.4 billion, total loans (net of allowance for loan and lease losses) of $1.6 billion, total investment securities of $3.5 billion, total deposits of $2.2 billion, and stockholders equity of $692 million. We also had $4.5 billion of trust and brokerage assets managed as of June 30, 2012. We currently operate through a network of 28 financial centers located throughout Puerto Rico and one location in Boca Raton, Florida, which serves as the headquarters of our wholly-owned subsidiary Caribbean Pension Consultants, Inc., a pension and retirement plan administrator. Oriental provides comprehensive banking and wealth management services to its clients through a complete range of banking and financial solutions, including commercial, consumer and mortgage lending; auto leasing; checking and savings accounts; financial planning, insurance, wealth management, and investment brokerage; and corporate and individual trust and retirement services. Oriental operates through three major business segments: Banking, Wealth Management, and Treasury, and seeks to distinguish itself based on quality service and marketing efforts focused on mid and high net worth individuals and families, including professionals and owners of small and mid-sized businesses, primarily in Puerto Rico. Oriental s long-term goal is to strengthen its banking and wealth management franchise by expanding its lending businesses, increasing the level of integration in the marketing and delivery of banking and wealth management services, maintaining effective asset-liability management, growing non-interest revenues from banking and wealth management services, and improving operating efficiencies. Oriental s strategy includes: Strengthening its banking and wealth management franchise by expanding its ability to attract deposits and build relationships with individual customers and professionals and mid-market commercial businesses through aggressive marketing and expansion of its sales force; Focusing on greater growth in commercial, consumer and mortgage lending; trust and wealth management services, insurance products; and increasing the level of integration in the marketing and delivery of banking and wealth management services; Matching its portfolio of investment securities with the related funding to achieve favorable spreads, primarily investing in U.S. government agency obligations; Improving operating efficiencies, and continuing to maintain effective asset-liability management; and Implementing a broad ranging effort to instill in employees and make customers aware of Oriental s determination to effectively serve and advise its customer base in a responsive and professional manner. Table of Contents Index to Financial Statements The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED OCTOBER 31, 2012 PRELIMINARY PROSPECTUS 800,000 Shares ORIENTAL FINANCIAL GROUP INC. Series D Non-Cumulative Perpetual Preferred Stock We are offering 800,000 shares of our non-cumulative perpetual preferred stock, Series D, with a liquidation preference of $25.00 per share. We will pay dividends on the preferred stock, when, as, and if declared by our board of directors and to the extent that we have lawfully available funds to pay dividends. Dividends will be payable quarterly, in arrears, on January 15, April 15, July 15 and October 15 of each year, beginning on January 15, 2013, at a rate of % per annum. Dividends on the preferred stock will not be cumulative. If for any reason our board of directors does not declare a dividend on the preferred stock for any dividend period, such dividend will not accrue or be payable, and we will have no obligation to pay dividends for such dividend period, whether or not dividends on the preferred stock are declared for any future dividend period. Dividends on the preferred stock will not be declared, paid or set aside for payment to the extent such act would cause us to fail to comply with applicable laws and regulations, including applicable capital adequacy guidelines. We currently intend to declare and pay quarterly dividends on the preferred stock. We may redeem the preferred stock, in whole or in part, from time to time, on any dividend payment date after November , 2017, or in whole, but not in part, within 90 days upon the occurrence of certain changes related to the regulatory capital treatment of the preferred stock, at a redemption price of $25 per share, plus any declared and unpaid dividends to, but excluding, the redemption date. Upon termination of the BBVAPR Acquisition Agreement (as defined herein), we must, subject to regulatory approval if required under 12 CFR 225.4, redeem all (but not less than all) the shares of preferred stock pursuant to a notice of redemption given on or prior to the third business day after September 30, 2013, in cash, at a redemption price equal to 101% of the liquidation preference of the shares of preferred stock, plus accrued and unpaid dividends for such dividend period (whether or not declared). We intend to apply for the preferred stock to be listed on the New York Stock Exchange ( NYSE ) under the symbol OFGPrD . If the application for listing is approved, trading of the preferred stock on the NYSE is expected to begin within 30 days after the date of initial issuance of the preferred stock. Investing in our preferred stock involves a high degree of risk. See Risk Factors beginning on page 12 of this prospectus and similar sections in our filings with the Securities and Exchange Commission ( SEC ) incorporated by reference herein. The securities offered hereby are not savings accounts, deposits, or other obligations of any bank or non-bank subsidiary of ours and are not insured by the Federal Deposit Insurance Corporation (the FDIC ) or any other governmental agency. Neither the SEC, any state securities commission, the FDIC, the Board of Governors of the Federal Reserve System (the Federal Reserve Board ), nor any other regulatory body, has approved or disapproved the issuance of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PER SHARE TOTAL Public offering price $ $ Underwriting discount $ $ Proceeds to us (before expenses) $ $ Delivery of the shares of preferred stock is expected to be made on or about , 2012. Jefferies Stifel Nicolaus Weisel Oriental Financial Services Prospectus dated , 2012 Table of Contents Index to Financial Statements Together with a highly experienced group of senior and mid-level executives and the FDIC-assisted acquisition of Eurobank in April 2010, this strategy has resulted in growth in Oriental s commercial, consumer and mortgage lending and wealth management activities over the past seven years, allowing Oriental to distinguish itself in a highly competitive industry. Oriental Bank and Trust Our main operating subsidiary is Oriental Bank, a Puerto Rico chartered commercial bank subject to examination by the FDIC and the Office of the Commissioner of Financial Institutions of Puerto Rico (the OCFI ). The Bank offers banking services such as commercial, consumer and mortgage lending, auto leasing, savings and time deposit products, financial planning, and corporate and individual trust services, and capitalizes on its branch network to serve its clients. The Bank also operates an international banking entity subsidiary, Oriental International Bank Inc., which offers the Bank certain Puerto Rico tax advantages, and its services are limited under Puerto Rico law to persons and assets/liabilities located outside Puerto Rico. Borrowings are the Bank s largest interest-bearing liability component. Borrowings consist mainly of diversified funding sources including repurchase agreements, and advances from the Federal Home Loan Bank of New York. As of June 30, 2012, total borrowings amounted to $3.4 billion. Deposits are the Bank s second largest category of interest-bearing liabilities. At June 30, 2012, total deposits amounted to $2.2 billion. Of the Bank s total deposits, approximately 89.6% are retail deposits, approximately 3.8% are institutional deposits, and approximately 6.6% are brokered deposits. The Bank s lending activities are primarily with clients located in Puerto Rico. The Bank s loan and lease transactions include a diversified number of industries and activities, all of which are encompassed within four main categories: commercial, consumer, mortgage and auto leasing. Residential mortgage loans comprise the largest component of the Bank s loan portfolio. Such loans represent approximately 66.8% of the gross loan portfolio that was not covered by the FDIC loss sharing arrangements described below at June 30, 2012 (such loan portfolio, the non-covered loan portfolio ). The second largest component is commercial loans, which represent approximately 27.3% of the gross non-covered loan portfolio. The remaining components are consumer loans, which represent approximately 3.3% of the gross non-covered loan portfolio, and leasing, which represents approximately 2.5% of the gross non-covered loan portfolio. Effective April 30, 2010, the Bank assumed all of the retail deposits and other liabilities, and acquired certain assets and substantially all of the operations, of Eurobank from the FDIC, as receiver for Eurobank, pursuant to the terms of a purchase and assumption agreement entered into by the Bank and the FDIC on April 30, 2010. Certain acquired loans are subject to loss sharing arrangements (each, a shared-loss agreement and collectively, the shared-loss agreements ), pursuant to which the FDIC will bear 80% of qualifying losses, beginning with the first dollar amount of qualifying losses. The shared-loss agreement applicable to single-family residential mortgage loans provides for FDIC loss sharing to last for ten years, and the shared-loss agreement applicable to commercial and other assets provides for FDIC loss sharing to last for five years, with additional recovery sharing for three years thereafter. The present value of the anticipated future payments by the FDIC pursuant to the loss sharing arrangements, also referred to as the FDIC shared-loss indemnification asset, amounted to $359.8 million as of June 30, 2012. Oriental Trust, the Bank s trust department, is a leader in Puerto Rico s retirement planning market. We offer Keogh and 401(k) retirement plans, deferred compensation plans, asset protection trusts, custodial services and other trust services. Our trust department had $2.4 billion of trust assets managed as of June 30, 2012. Table of Contents Index to Financial Statements We are responsible for the information contained in this prospectus and in any related free writing prospectus we may prepare or authorize to be delivered to you. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. We are not, and the underwriters are not, making an offer of our non-cumulative perpetual preferred stock, Series D, $25.00 liquidation preference per share (the Preferred Stock ), in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. For investors outside the United States: Neither we nor the underwriters have taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. Table of Contents Index to Financial Statements Oriental Financial Services Oriental Financial Services is our securities brokerage and investment banking subsidiary with approximately $2.1 billion of total assets under management as of June 30, 2012. Oriental Financial Services offers its customers a wide array of investment alternatives such as tax-advantaged fixed income securities, mutual funds, and various other equity and fixed income securities. In addition, Oriental Financial Services provides financial planning services to individuals and investment banking services, encompassing both public and corporate finance, to the Puerto Rico government and corporations. It also manages and participates in public offerings of debt and equity securities in Puerto Rico. Oriental Financial Services has a clearing agreement with Pershing LLC pursuant to which Pershing LLC clears and executes the brokerage transactions of Oriental Financial Services customers on a fully disclosed basis with Oriental Financial Services assuming the obligations of any defaulting customer. Oriental Financial Services is a Puerto Rico corporation and a full service broker-dealer registered with the SEC, the Financial Industry Regulatory Authority ( FINRA ), the Commonwealth of Puerto Rico and six other U.S. states and territories. Oriental Insurance Oriental Insurance is a Puerto Rico corporation and a licensed insurance producer that offers, as agent for unaffiliated insurance companies, annuities and life insurance products, property and casualty insurance, and title insurance for individual and commercial clients. Oriental Insurance s licensed personnel have increasingly partnered with various business groups within the Company to develop new insurance business opportunities and to better serve our clients. Caribbean Pension Consultants Caribbean Pension Consultants, Inc. is a Florida corporation headquartered in Boca Raton, Florida. It is engaged in the business of pension and retirement plan administration, focused on 401(k) and Keogh retirement plans in Puerto Rico, the United States and the Bahamas. Caribbean Pension Consultants, Inc. is one of the largest independent third-party administrators of pension and retirement accounts in Puerto Rico. Recent Developments Pending Acquisition of BBVAPR On June 28, 2012, Oriental and Banco Bilbao Vizcaya Argentaria, S.A. ( BBVA ) entered into a definitive acquisition agreement (the BBVAPR Acquisition Agreement ), pursuant to which BBVA agreed to sell to Oriental, and Oriental agreed to purchase from BBVA, all of the outstanding common stock of each of BBVAPR Holding Corporation (the sole shareholder of Banco Bilbao Vizcaya Argentaria Puerto Rico ( BBVAPR Bank ), a Puerto Rico chartered commercial bank, and BBVA Seguros, Inc. ( BBVA Seguros ), a subsidiary offering insurance services) and BBVA Securities of Puerto Rico, Inc. ( BBVA Securities ), a registered broker-dealer (the BBVAPR Acquisition ). The BBVAPR Companies are privately held companies wholly owned by BBVA. Oriental has no affiliation with the BBVAPR Companies, BBVA or any of its other subsidiaries. In the BBVAPR Acquisition, Oriental will acquire all of the outstanding common stock of each of BBVAPR Holding Corporation and BBVA Securities for an aggregate purchase price of $500 million, payable in cash. Oriental intends to use the net proceeds from this offering to fund a portion of the purchase price. Following the BBVAPR Acquisition, Oriental will continue to operate under the Oriental Financial Group name and the acquired branches will be rebranded. Oriental does not expect any change to the composition of its board of directors as a result of the BBVAPR Acquisition. Immediately following the closing of the BBVAPR Acquisition (the Closing ), Oriental will merge BBVAPR Bank with and into Oriental Bank, with Oriental Bank continuing as the surviving entity. Oriental also intends to merge BBVA Securities with and into Oriental Financial Services, with Oriental Financial Services as the surviving broker-dealer, and to combine the business of BBVA Seguros and Oriental Insurance. Oriental expects to retain most of the officers and employees of BBVAPR. In connection with the BBVAPR Acquisition, BBVAPR has offered bonuses to certain of its executives if they remain with BBVAPR through the Closing. Table of Contents Index to Financial Statements On July 3, 2012, Oriental closed a private placement of $84 million of its 8.75% Non-Cumulative Convertible Perpetual Preferred Stock (the Series C Convertible Preferred Stock ), the proceeds of which Oriental intends to use to finance, in part, the BBVAPR Acquisition. In addition to the foregoing, Oriental agreed in the BBVAPR Acquisition Agreement to use its reasonable best efforts to raise at least an additional $66 million through the sale of additional equity (the Buyer Capital Raise ). Oriental plans to finance the BBVAPR Acquisition through: the consummation of this offering; the net proceeds of its recent offering of its common stock, par value $1.00 per share (the Common Stock ); the net proceeds of the Series C Convertible Preferred Stock; and the remaining amount from cash on its balance sheet. See The BBVAPR Acquisition Additional Financing. Consummation of the BBVAPR Acquisition is subject to the satisfaction of certain customary conditions, including the receipt of all required regulatory approvals without the imposition of a materially burdensome regulatory condition, as described in the BBVAPR Acquisition Agreement. On October 10, 2012, the OCFI approved Oriental s acquisition of BBVAPR Bank and the merger of BBVAPR Bank with and into Oriental Bank, with Oriental Bank as the surviving entity. See The BBVAPR Acquisition Regulatory Considerations. The consummation of this offering is not contingent on the closing of the BBVAPR Acquisition. Related Transactions On October 25, 2012, Oriental priced an underwritten public offering of 4,390,243 shares of its Common Stock at a per share offering price of $11.10, which it expects to close on October 31, 2012, subject to certain customary closing conditions. In addition, Oriental granted the underwriters of the Common Stock offering a 30-day option to purchase up to 439,024 additional shares of Common Stock, which was exercised in full on October 26, 2012. The Common Stock was offered pursuant to a separate prospectus. The closing of this offering of Preferred Stock is not conditioned upon the closing of Oriental s offering of the Common Stock. In addition, in connection with the BBVAPR Acquisition, Oriental plans to sell approximately $1.6 billion of its and BBVAPR Bank s investment securities and to use the proceeds from such sales as well as approximately $200 million of cash to repay approximately $1.8 billion of wholesale funding. The planned deleveraging is expected to reduce the sensitivity of Oriental s balance sheet to interest rates and improve Oriental s capital ratios by reducing the size of its balance sheet. Oriental expects that the $1.8 billion planned deleveraging will result in a one-time charge to income before income taxes of approximately $10 million (or $7.6 million after giving effect to income taxes), in the aggregate, which includes the expected securities mark-to-market gains or losses and the expected cost on the termination of the wholesale funding agreements. There is no expected one-time charge from the planned deleveraging of BBVAPR Bank s securities portfolio and wholesale funding since the purchase accounting fair value adjustments will reflect the sales price of the securities and the liquidation value of the liabilities being deleveraged. The $1.8 billion planned deleveraging is also expected to result in a reduction to pre-tax income of approximately $6.2 million in 2013 and approximately $4.0 million in 2014 (or $4.3 million and $2.8 million, respectively, after giving effect to income taxes). Actual amounts will depend on market prices for the investment securities to be sold and the remaining term under the wholesale funding agreements at the time of the deleveraging transactions. See The BBVAPR Acquisition and Capitalization for more information on the expected deleveraging transactions. Table of Contents Index to Financial Statements Preliminary Third Quarter Results On October 24, 2012, we announced our preliminary financial results as of and for the nine-month period ended September 30, 2012. In our earnings release, we announced: Net interest income for the nine-month period ended September 30, 2012 decreased 0.4%, or approximately $416 thousand, to approximately $112.1 million compared to the same period in 2011. Total interest income for the nine-month period ended September 30, 2012 decreased 15.3%, or approximately $35.4 million, to approximately $196.4 million, primarily reflecting a decrease in interest income from investment securities related to lower yields and a lower balance in the investment securities portfolio as a result of the sale of approximately $1.0 billion in mortgage-back securities during the nine-month period ended September 30, 2012. Total interest expense for the nine-month period ended September 30, 2012 decreased 29.3%, or approximately $35.0 million, to $84.3 million compared to the same period in 2011, primarily as a result of lower cost of both securities sold under agreements to repurchase and deposits, which reflects continuing progress in the repricing of the Company s core retail deposits and further reductions in its cost of funds. In addition, the reduction in interest expense is also due to the decrease of $403.9 million in securities sold under agreements to repurchase from December 31, 2011. Total banking and wealth management revenue for the nine-month period ended September 30, 2012 increased 9.8%, or approximately $3.1 million, to approximately $34.2 million compared to the same period in 2011, primarily reflecting an increase of 21.8% in wealth management revenues due to increased brokerage, trust and insurance business and transactions. Non-interest expenses for the nine-month period ended September 30, 2012 decreased 3.6%, or approximately $3.2 million, to approximately $88.0 million compared to the same period in 2011, largely as a result of effective cost controls. Retail deposits as of September 30, 2012 decreased 1.8%, or approximately $36.0 million, to approximately $2.0 billion compared to the same period in 2011, primarily reflecting a $57.8 million decrease in retail certificates of deposit. Wholesale deposits as of September 30, 2012 decreased 44.8%, or approximately $174.6 million, to approximately $214.9 million compared to the same period in 2011, as a result of a decrease of $64.3 million in brokered deposits and $110.4 million in institutional deposits, as higher cost wholesale deposits continue to mature. Mortgage production and purchases for the nine-month period ended September 30, 2012 decreased 14.7%, or approximately $24.3 million, to approximately $140.9 million, and commercial loan production for the nine-month period ended September 30, 2012 increased 46.0%, or approximately $42.5 million, to approximately $134.8 million, in each case compared to the nine-month period ended September 30, 2011. We sell most of our conforming mortgages, which represented approximately 90% of our mortgage production during the nine-month period ended September 30, 2012, into the secondary market, retaining servicing rights. Net credit losses, excluding loans covered under shared-loss agreements with the FDIC, for the nine-month period ended September 30, 2012 increased 19.1%, or approximately $1.3 million, to approximately $8.3 million compared to the same period in 2011. The allowance for loan and lease losses on non-covered loans stood at approximately $39.1 million as of September 30, 2012, compared to approximately $35.9 million as of September 30, 2011. We maintain regulatory capital ratios well above the requirements for a well-capitalized institution. At September 30, 2012, the leverage capital ratio was 10.91%, the Tier-1 risk-based capital ratio was 36.52% and the total risk-based capital ratio was 37.81%. Our independent registered public accounting firm has not audited, reviewed or performed any procedures with respect to the information presented above and does not express an opinion or any other form of assurance with respect thereto. This information was prepared by and is the sole responsibility of our management and has been based only on preliminary financial information available to us as of the date of this prospectus. Table of Contents Index to Financial Statements Accordingly, you should not place undue reliance on these preliminary estimates as there can be no assurance that they will not vary materially from our actual financial results as of and for the nine months ended September 30, 2012.
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diff --git a/parsed_sections/prospectus_summary/2012/PANW_palo-alto_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/PANW_palo-alto_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ec7aebc62b7aeb45b6ef06a2225d8669a036c05a
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including Risk Factors, Selected Consolidated Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, Business, and our consolidated financial statements and related notes before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, the terms Palo Alto Networks, the company, we, us, and our in this prospectus refer to Palo Alto Networks, Inc. and its subsidiaries. Our fiscal year end is July 31, and our fiscal quarters end on October 31, January 31, April 30, and July 31. Our fiscal years ended July 31, 2010, 2011, and 2012 and our fiscal year ending July 31, 2013 are referred to herein as fiscal 2010, 2011, 2012, and 2013, respectively. PALO ALTO NETWORKS, INC. Overview We have pioneered the next generation of network security with our innovative platform that allows enterprises, service providers, and government entities to secure their networks and safely enable the increasingly complex and rapidly growing number of applications running on their networks. The core of our platform is our Next-Generation Firewall, which delivers application, user, and content visibility and control integrated within the firewall through our proprietary hardware and software architecture. Our platform offers a number of compelling benefits for our end-customers, including the ability to identify, control, and safely enable applications while inspecting all content for all threats in real time. We believe our platform also offers superior performance compared to legacy approaches and reduces the total cost of ownership for organizations by simplifying their network security infrastructure and eliminating the need for multiple, stand-alone security appliances. Our products and services can address a broad range of our end-customers network security requirements, from the data center to the network perimeter, as well as the distributed enterprise, which includes branch offices and a growing number of mobile devices. Our platform is based on an innovative traffic classification engine that identifies network traffic by application, user, and content. As a result, it provides in-depth visibility into all traffic and all applications, at the user level, at all times, and at the full speed of the network in order to control usage, content, risks, and threats. This enables our end-customers to transform their organizations by safely enabling applications through a positive security model with fine-grained policy implementation capabilities. Our platform is delivered in the form of a hardware appliance and includes a suite of subscription services as well as support and maintenance. Our subscription services can be easily activated on any of our appliances without requiring additional hardware or processing resources, thereby providing a seamless implementation path for our end-customers. All of our appliances incorporate our PAN-OS operating system and are based on our proprietary identification technologies, App-ID, User-ID, and Content-ID, which allow security policies to be defined within the context of applications, users, and content. We deliver these capabilities through an innovative, single-pass parallel processing architecture that simultaneously performs multiple identification, security, and networking functions. As a result, our end-customers achieve safe application enablement and advanced levels of security, while maintaining high network performance. Our team has substantial experience in network security. As a result, we understand the architectural limitations of legacy network security approaches and have designed our platform to avoid these limitations in order to address current network security requirements. We released our Next-Generation Firewall in 2007, and since then, we have grown significantly faster than industry growth rates. We have been recognized as a Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued October 15, 2012 4,800,000 Shares COMMON STOCK Certain stockholders of Palo Alto Networks, Inc. are offering 4,800,000 shares of common stock. We will not receive any proceeds from the sale of shares in this offering. Our common stock is listed on the New York Stock Exchange under the symbol PANW. On October 12, 2012, the last reported sale price of our common stock on the New York Stock Exchange was $62.96 per share. We are an emerging growth company under the federal securities laws. Investing in our common stock involves risks. See Risk Factors beginning on page 11. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions Proceeds to Selling Stockholders Per Share $ $ $ Total $ $ $ Certain of the selling stockholders have granted the underwriters the right to purchase up to an additional 720,000 shares of common stock at the public offering price less the underwriting discount. We will not receive any proceeds from the sale of shares in this offering. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2012. MORGAN STANLEY GOLDMAN, SACHS & CO. CITIGROUP CREDIT SUISSE BARCLAYS UBS INVESTMENT BANK RAYMOND JAMES , 2012 Table of Contents technology and market leader. Gartner categorized us as a market leader in its 2011 Magic Quadrant for Enterprise Network Firewalls based on our ability to execute and completeness of vision. As of July 31, 2012, we had over 9,000 end-customers in more than 100 countries. We serve the enterprise network security market, which consists of Firewall, Unified Threat Management (UTM), Web Gateway, Intrusion Detection and Prevention (IDS/IPS), and Virtual Private Network (VPN) technologies. According to IDC, the worldwide enterprise network security market, defined as IDC s Network Security market and Web Security market, is estimated to be $10.0 billion in 2012 and is projected to grow to $13.4 billion by 2016. We sell our platform through a high touch, channel fulfilled sales model. Our business is geographically diversified, with 64% of our total revenue from the Americas, 24% from Europe, the Middle East, and Africa (EMEA), and 12% from Asia Pacific and Japan (APAC) in fiscal 2012. We have experienced rapid growth in recent periods. For fiscal 2010, 2011, and 2012, revenues were $48.8 million, $118.6 million, and $255.1 million, respectively, representing year-over-year growth of 143% for fiscal 2011 and 115% for fiscal 2012, and our net income (loss) was $(21.1) million, $(12.5) million, and $0.7 million, respectively. We have generated positive cash flow provided by operating activities in each of our last nine fiscal quarters. Our Industry Fundamental Shifts in the Application Landscape, User Behavior, and IT Infrastructure Have Led to Increased Network Vulnerability Organizations are transforming the way they do business as a result of IT innovation. New technology trends, such as the adoption of web-based applications, including Software-as-a-Service (SaaS), the consumerization of IT, the proliferation of mobile devices, virtualization, and cloud computing, are changing the way employees consume and organizations manage IT. By embracing these new technology trends, organizations have become more susceptible to security breaches and compromised data. Legacy approaches to network security have significantly limited the ability of organizations to adopt many of the new applications that leverage new technology trends. Organizations can have thousands of enterprise and consumer applications running on their networks that can be either safe or unsafe depending on the user and usage. In today s complex application landscape, organizations need the ability to selectively enable certain applications for certain users, while protecting against a wide array of security threats. The Legacy Network Security Model Prevents Organizations from Safely Enabling Modern Web Applications Despite the rapidly changing application and threat landscape, the firewall, the mainstay of network security that serves as the barrier between an organization s trusted, internal network and the Internet, has remained largely unchanged for decades. These legacy firewalls examine the network port and protocol of the data packets through a classification approach known as stateful inspection, which was designed to decide whether or not to let traffic associated with the inspected packets pass into the network. This approach worked well for basic email and web browsing applications, which behaved in a predictable fashion and adhered to standard network ports and protocols. However, a growing number of applications, such as Web 2.0, social media, and SaaS, are allowing users to collaborate and share information on the Internet in ways that previously were not possible. These applications are becoming increasingly and often deliberately more complex and unpredictable and are therefore challenging to the legacy firewall. Table of Contents Table of Contents Because the relationship between applications and network ports and protocols is becoming less standardized and less predictable, legacy stateful inspection firewall technology can no longer provide the level of security, control, and intelligence required by organizations to safely enable and control today s applications. In an attempt to compensate for the limitations of the stateful inspection firewall, three approaches have evolved, including stateful inspection helpers (such as web filters and intrusion detection and prevention systems), UTM appliances, and application control blades that supplement legacy firewalls. However, these approaches still fundamentally rely on stateful inspection technology at their core and are unable to truly identify and safely enable applications. As a result, by using legacy approaches, organizations have to either unsafely allow or completely block many of today s applications, such as Web 2.0, social media, SaaS, and other productivity enhancing applications. Organizations Need a Fundamentally New Approach to Network Security We believe organizations require a next-generation network security platform that can safely enable applications for certain users while protecting against a wide array of security threats. Such a platform must incorporate the following key elements: improved application visibility and control; protection against threats, vulnerabilities, data leakage, abusive use, and targeted malware; high performance and low latency; simplified security infrastructure and lower total cost of ownership; and deployment flexibility for any point in the network. Our Solution Our platform offers a fundamentally new approach to network security and allows organizations to secure their networks and safely enable the increasingly complex and rapidly growing number of applications running on their networks. The core of our platform is our Next-Generation Firewall, which delivers application, user, and content visibility and control integrated within the firewall through our proprietary hardware and software architecture. The key benefits of our next-generation network security platform include its ability to: Identify, Control, and Safely Enable Applications. Our platform provides visibility and control over applications, users, and content, regardless of network port, protocol, evasive tactics, or encryption. This allows our end-customers to safely enable almost any application. Inspect All Content for All Threats in Real Time. Our platform allows end-customers to limit traffic to approved applications and scan it in real time and in context for threats, including exploits, viruses, spyware, confidential data leaks, and other targeted malware. Deliver High Throughput and Performance. Our platform examines all network traffic only once, using hardware with dedicated processing resources for security, networking, content scanning, and management to provide real-time performance at the full speed of the network with very low latency. Simplify Network Security Infrastructure and Reduce Total Cost of Ownership. Our platform provides our end-customers a broad range of network security functionality delivered through a single platform, allowing them to simplify their network security infrastructure and achieve a substantially lower total cost of ownership, eliminating the need for multiple, stand-alone security appliances. Enable Diverse Deployment Scenarios. Our platform can be broadly deployed in the enterprise network environment, including in the data center, at the network perimeter, through the distributed enterprise, and in the evolving environments of cloud computing, virtualization, and mobility. Table of Contents Table of Contents Our Strategy Our goal is to be the global leader of network security solutions for enterprises, service providers, and government entities. The key elements of our growth strategy are: Extend Our Network Security Technology Leadership through Continued Innovation. We intend to extend our technology leadership in network security by continuing to innovate and invest in research and development to enhance our products and services. Promote Our Disruptive Platform to Grow Our End-Customer Base. We intend to grow our base of end-customers by promoting our disruptive platform, increasing our investment in direct sales and marketing, leveraging our network of motivated channel partners, furthering our international expansion, and entering into strategic partnerships. Increase Sales to Existing End-Customers. We intend to expand deployment of our platform within existing end-customers by expanding our product footprint to other areas of our end-customers networks and by selling additional subscription services to provide increasing levels of network security. Focus on Customer Satisfaction. We intend to continue to prioritize end-customer satisfaction. This typically results in new sales opportunities as well as receiving valuable feedback from our end-customers on the direction of our customer support and development roadmap. Competitive Strengths We believe we have a number of competitive advantages that will enable us to maintain and expand our leadership position in next-generation network security. Our competitive strengths include: Next-Generation Network Security Platform Built from the Ground Up. Our approach to network security focuses on integrating application visibility and control within the firewall. We integrate our application, user, and content classifications in our single-pass software with purpose-built hardware to deliver a comprehensive security platform while also maximizing performance. Industry Leading Application and Threat Expertise. Our internal application and threat research capabilities position us as an IT security thought leader and differentiate us from other network security companies that cannot identify applications and simply repackage threat technologies from one or more security vendors. Experienced Technology Team. We have assembled a team of leading technology experts from well-established network and security companies who are focused on developing our proprietary technologies. Large and Growing End-Customer Base. We focus on serving enterprises, service providers, and government entities, and we have seen significant momentum in the adoption of our platform as our end-customer base has increased from approximately 1,800 as of July 31, 2010 to over 9,000 as of July 31, 2012. Clear Leadership Position. We were the first company to define and lead the industry s transition from the legacy stateful inspection approach to the next-generation firewall paradigm, and we believe that our position as a technology and market leader contributes to our ability to maintain and grow our leadership position in the network security market. Table of Contents Table of Contents Our Go-to-Market Strategy In addition to redesigning the fundamental architecture of the firewall, we have also redesigned the traditional go-to-market approach in the network security industry. Key elements of our go-to-market strategy include: Targeting New End-Customers through Multiple Initial Insertion Points. We can target initial sales opportunities as either a firewall replacement or as a replacement of any of the firewall helper technologies. As our end-customers realize the benefits of our platform, we believe that we can accelerate refresh cycles for the existing firewall and its helpers and can replace the core firewall over time. Promoting Our Platform s Capabilities to Upsell to Existing End-Customers. Our architecture enables our end-customers to easily activate additional subscription services without requiring additional hardware, software, or processing resources. This seamless upsell capability offers us significant recurring revenue opportunities from subscription services over time. Leveraging Our Highly Incentivized Channel Model. We incentivize our accredited channel partners on both the initial products and services sale, as well as on subsequent product and subscription sales, by allowing them to purchase our products and services at a discount to our list prices and then reselling them to our end-customers. This motivates our channel partners to maintain high levels of end-customer satisfaction and to promote products and services upsell. Risks Affecting Us Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled Risk Factors immediately following this prospectus summary. These risks include, but are not limited to, the following: our limited operating history makes it difficult to evaluate our current business and future prospects; our business and operations have experienced rapid growth in recent periods, and if we do not effectively manage any future growth or are unable to improve our systems and processes, our operating results will be adversely affected; our operating results are likely to vary significantly from period to period and be unpredictable; we are involved in litigation in which Juniper Networks, Inc. alleges that our appliances infringe seven of its patents; this litigation may be costly and time-consuming to defend and, if we are unable to prevail, it could result in a material adverse effect on our business; our revenue growth rate in recent periods may not be indicative of our future performance; we have a history of losses, anticipate increasing our operating expenses in the future, and may not be able to achieve or maintain profitability on a consistent basis; if we are unable to sell additional products and services to our end-customers, our future revenue and operating results will be harmed; we face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position; if functionality similar to that offered by our products is incorporated into existing infrastructure products, organizations may decide against adding our appliances to their network; if we are unable to hire, retain, train, and motivate qualified personnel and senior management, our business could suffer; and our directors, executive officers, and each of our stockholders who own greater than 5% of our outstanding common stock and their affiliates, in the aggregate, will beneficially own approximately % of the outstanding shares of our common stock after this offering, which could limit your ability to influence the outcome of key transactions, including a change of control. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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@@ -0,0 +1 @@
+Prospectus Summary 1
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@@ -0,0 +1 @@
+Prospectus Summary 1
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2012/VNJA_vanjia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2012/VNJA_vanjia_prospectus_summary.txt
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@@ -0,0 +1,212 @@
+PROSPECTUS SUMMARY
+
+ 
+
+As used in this prospectus, references to Vantone Realty
+Corporation. , the Company, we our or us refer to Vantone Realty
+Corporation, unless the context otherwise indicates.
+
+ 
+
+THE FOLLOWING SUMMARY HIGHLIGHTED SELECTED INFORMATION CONTAINED
+IN THIS PROSPECTUS. BEFORE MAKING AN INVESTMENT DECISION, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "
+RISK FACTORS" SECTION, THE FINANCIAL STATEMENTS AND THE NOTES TO THE FINANCIAL STATEMENTS.
+
+ 
+
+Vantone
+Realty Corporation, is a start-up company incorporated in Texas on August 19, 2011. We intend to provide affordable housing to
+low and moderate-income families. We provide affordable housing options for low and middle income families. Our future homes will
+enrich the communities of Houston and revitalize the local economy. We seek to raise up to $100,000 from investors for this offering.
+
+PRODUCTS and SERVICES
+
+Our product is to build affordable homes
+in Houston's designated Houston Hope and Work Force Neighborhoods. The Houston Hope and Work force neighborhoods were created by
+the Houston Housing and Community Development Department (HHCD). The Houston HOPE Program strives to build strong and stable communities.
+Houston HOPE provides financial assistance to potential home buyers who are in designated Houston HOPE areas. We believe our future
+homes would be available for down payment assistance to potential clients who meet the specific criteria outlined by the HHCD.
+
+In order to qualify for the program,
+applicants must demonstrate the ability to obtain a mortgage loan, demonstrate credit worthiness. The family's combined income
+must be at or below 80% of the area's median income. Approved applicants must also complete eight hours of home buyer education
+from a HUD-approved Housing Counseling Agency. The applicant must buy a new or existing home from a list of approved structures,
+invest at least $500 into the home-buying transaction, and live in the home for 10 years to satisfy the program eligibility criteria.
+Mortgage financing options through various selected lenders make it easier for new home buyers to get the assistance they need.
+Families are eligible for up to $30,000 in down payment assistance if they are not currently a property owner.
+
+We will conduct affordable housing seminars
+to educate and draw publicity to our future homes build in those designated neighborhoods. We will be able to draw the attention
+of first-time buyers to buy homes in the Hope of Workforce neighborhoods. The regular seminars will focus on home buyer education
+and related topics. Home Buyer Education classes will strive to provide first time and repeat home buyers the information they
+need to make decisions when buying a home.
+
+ 
+
+Our independent registered public accounting
+firm included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability
+to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that
+lead to this disclosure by our registered independent auditors. The audited financial statements included with this annual report
+have been prepared on the going-concern basis which assumes that adequate sources of financing will be obtained as required and
+that our assets will be realized and liabilities settled in the ordinary course of business.
+
+ 
+
+Our principal office is currently located at 12520 A1 Westheimer
+#139, Houston, Texas 77077. Our telephone number is 281-575-0636. Our fax number is: 281-575-6983. Our fiscal year end is December
+31.
+
+ 
+
+NUMBER OF SHARES OUTSTANDING
+
+ 
+
+As of December 31, 2011, There were 3,500,000 shares of our common
+stock issued and outstanding.
+
+ 
+
+OUR DIRECT PUBLIC OFFERING
+
+ 
+
+We are offering for sale up to a maximum of
+5,000,000 shares of our common stock directly to the public. There is no underwriter involved in this offering. We are offering
+the shares without any underwriting discounts or commissions. The purchase price is $0.02 per share. The expenses associated with
+this offering are estimated to be $4,512, or approximately 4.5% of the gross proceeds of $100,000, if all the shares offered by
+us are purchased.
+
+ 
+
+This is our initial public offering and no
+public market currently exists for shares of our common stock. We can offer no assurance that an active trading market will ever
+develop for our common stock.
+
+ 
+
+BLANK CHECK ISSUE
+
+ 
+
+We are not a blank check corporation. Section
+7(b)(3) of the Securities Act of 1933, as amended defines the term blank check company to mean, any development stage
+company that is issuing a penny stock that, (A) has no specific plan or purpose, or (B) has indicated that its business
+plan is to merge with an unidentified company or companies. We have a specific plan and purpose. Our business purpose is
+to build affordable homes in Houston, Texas. In Securities Act Release No. 6932 which adopted rules relating to blank check offerings,
+the Securities and Exchange Commission stated in II DISCUSSION OF THE RULES, A. Scope of Rule 419, that, Rule 419 does not
+apply to start-up companies with specific business plans even if operations have not commenced at the time of the offering. 
+Further, we have not indicated in any manner whatsoever, that we plan to merge with an unidentified company or companies, nor do
+we have any plans to merge with an unidentified company or companies.
+
+ 
+
+We have no plans or intentions to be acquired
+or to merge with an operating company nor do we have plans to enter into a change of control or similar transaction or to change
+our management.
+
+ 
+
+EMERGING GROWTH COMPANY
+
+ 
+
+We are an "emerging Growth Company"
+or "EGCs" as defined in the Jumpstart Our Business Startups Act. An EGC is defined as:
+
+ 
+ 
+ had less than $1 billion in total annual gross revenues during its most recently completed fiscal year; and 
+
+ 
+
+ 
+ 
+ had the first sale of its common equity securities pursuant to an effective registration statement occur after December 8, 2011
+
+ 
+
+We will ceased to be an EGC upon the earliest
+of the following to occur:
+
+ 
+
+ 
+ 
+ The last day of the fiscal year in which our total annual gross revenues $1 billion or more;
+
+ 
+
+ 
+ 
+ On the last day of the fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement;
+
+ 
+
+ 
+ 
+ the date on which we have during the previous 3-year period, issued more than $1 billion in non-convertible debt;
+
+ 
+
+ 
+ 
+ the date on which our company becomes a " large accelerated filer" for purposes of SEC reporting.
+
+During the period of our EGC eligibility, we will enjoy
+the following relief from reporting, disclosure and auditing requirements:
+
+ 
+ 
+ We will be exempt from the auditor attestation on internal control requirements under Section 404(b) of the Sarbanes-Oxley Act of 2002. 
+
+ 
+
+ 
+ 
+ the advisory vote on executive compensation required under Section 14A(a) of the Exchange Act;
+
+ 
+
+ 
+ 
+ 
+ the Section 14A(b) requirements relating to shareholder advisory
+ votes on golden parachute compensation;
+
+ 
+
+ 
+
+We have elected to opt out the extended transition period
+for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. We understand that our decision
+is irrevocable.
+
+We believe that the disclosure provisions in the Jumpstart Our Business
+Startups Act, the" JOBS" Act, supersede, in certain existing rules and regulations. The "JOBS" Act allows the
+EGC' to comply with Item 402 of Regulation S-K by providing only the information required of a smaller reporting company and exempts
+an EGC from compliance with Section 404(b) of the Sarbanes-Oxley Act. However, the EGC's compliance with these "JOBS"
+Act provisions will not invalidate the CEO and CFO Sarbanes-Oxley certifications that the EGC's periodic report fully complies
+with the requirements of Section 13(a) or 15(d) of the Exchange Act. Furthermore, our ability to provide scaled financial statements
+and scaled MD& A disclosures and our ability to used scaled executive compensation disclosure requirements for smaller reporting
+companies are some of the benefits available to us.
+
+ 
+
+ 
+
+Following is a brief summary of this offering:
+
+ 
+
+ Securities being offered
+ Up to 5,000,000 shares of common stock, par value $0.0001
+
+ Offering price per share
+ $ 0.02
+
+ Offering period
+ The shares are being offered for a period not to exceed 180 days.
+
+ Gross Proceeds to us
+ $100,000 assuming the maximum number of shares is sold.
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+Prospectus Summary 1
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+The following summary highlights information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. This summary is not complete and may not contain all of the information that may be important to you. You should read the entire prospectus, including the Risk Factors section and our consolidated financial statements and notes to those statements, before making an investment decision. Unless otherwise noted, Rexnord, we, us, our and the Company mean Rexnord Corporation (formerly known as Rexnord Holdings, Inc.) and its predecessors and consolidated subsidiaries, including RBS Global, Inc. ( RBS Global ) and Rexnord LLC, and Rexnord Corporation means Rexnord Corporation and its predecessors but not its subsidiaries. As used in this prospectus, fiscal year refers to our fiscal year ending March 31 of the corresponding calendar year (for example, fiscal year 2011 or fiscal 2011 means the period from April 1, 2010 to March 31, 2011). Unless otherwise indicated, the information contained in this prospectus assumes that (i) the underwriters option to purchase up to 3,552,631 additional shares will not be exercised, (ii) each share of common stock outstanding immediately prior to the 4.1627-for-one stock split will have been split into 4.1627 shares of common stock and (iii) the number of our authorized shares of capital stock will have been increased to 200,000,000 shares of common stock and 10,000,000 shares of preferred stock pursuant to our amended and restated certificate of incorporation. Our Company Rexnord is a growth-oriented, multi-platform industrial company with what we believe are leading market shares and highly trusted brands that serve a diverse array of global end-markets. Our heritage of innovation and specification have allowed us to provide highly engineered, mission critical solutions to customers for decades and affords us the privilege of having long-term, valued relationships with market leaders. We operate our company in a disciplined way and the Rexnord Business System ( RBS ) is our operating philosophy. Grounded in the spirit of continuous improvement, RBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of our business. Our strategy is to build the Company around multiple, global strategic platforms that participate in end-markets with sustainable growth characteristics where we are, or have the opportunity to become, the industry leader. We have a track record of acquiring and integrating companies and expect to continue to pursue strategic acquisitions within our existing platforms that will expand our geographic presence, broaden our product lines and allow us to move into adjacent markets. Over time, we anticipate adding additional strategic platforms to our company. Currently, our business is comprised of two platforms, Process & Motion Control and Water Management. We believe that we have one of the broadest portfolios of highly engineered, mission and project critical Process & Motion Control products in the industrial and aerospace end-markets. Our Process & Motion Control product portfolio includes gears, couplings, industrial bearings, aerospace bearings and seals, FlatTop chain, engineered chain and conveying equipment, and are marketed and sold globally under several brands, including Rexnord , Rex , Falk and Link-Belt . Our Water Management platform is a leader in the multi-billion dollar, specification-driven, commercial construction market for water management products and, through recent acquisitions, has entered the municipal water and wastewater treatment markets. Our Water Management product portfolio includes professional grade specification drainage products, flush valves and faucet products, backflow prevention pressure release valves, PEX piping and engineered valves and gates for the water and wastewater treatment markets. These products are marketed and sold through widely recognized brand names, including Zurn , Wilkins , VAG , GA , Rodney-Hunt and Fontaine . Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated March 19, 2012 PROSPECTUS 23,684,211 Shares Rexnord Corporation Common Stock This is Rexnord Corporation s initial public offering. We are selling all of the shares being offered hereby. We expect the public offering price to be between $18.00 and $20.00 per share. Currently, no public market exists for our common stock. We have applied to list our common stock on the New York Stock Exchange under the symbol RXN. Following this offering, we will remain a controlled company as defined under the New York Stock Exchange listing rules, and Apollo Management, L.P. and its affiliates will beneficially own 69.1% of our shares of outstanding common stock, assuming the underwriters do not exercise their option to purchase up to 3,552,631 additional shares.
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+PROSPECTUS SUMMARY This summary does not contain all of the information you should consider before buying our common stock. You should read the entire prospectus carefully, especially the Risk Factors section beginning on page 11 and our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. Overview We are a clinical-stage biotechnology company focused on discovering and developing novel gene therapies to transform the lives of patients with sight-threatening ophthalmic diseases. We have leveraged our next generation gene therapy platform, the Ocular BioFactory , to create a robust pipeline of product candidates. Our product candidates are designed to provide long-term benefit or a functional cure for these diseases by inducing a sustained expression of a therapeutic protein with a one-time administration in the eye. We are targeting a variety of prevalent and rare genetic ophthalmic diseases with significant unmet medical need. Set forth below is a table summarizing our development programs: Our lead product candidate is AVA-101 for the treatment of wet age-related macular degeneration (AMD). Standard-of-care therapies include the anti-VEGF class, which inhibit vascular endothelial growth factor (VEGF), a protein that causes abnormal blood vessel growth in wet AMD. Anti-VEGF therapies, such as Lucentis , marketed by Genentech, Inc. and Novartis AG, and EYLEA , marketed by Regeneron Pharmaceuticals, Inc. in the United States and Bayer HealthCare LLC outside the United States, represented over $6.0 billion in worldwide sales in 2013, and we believe 65%-80% of those sales were for the treatment of wet AMD. Due to a variety of factors, including inconvenience and discomfort associated with frequent injections in the eye, patient compliance is a significant concern with anti-VEGF therapies. These treatments require injections every four to eight weeks to maintain efficacy and patients often experience vision loss with reduced frequency of treatment. By contrast, AVA-101 is designed to enable retinal cells to continuously produce therapeutic levels of a naturally occurring anti-VEGF protein with a single administration. Accordingly, we believe that AVA-101 could transform the treatment paradigm and address a significant unmet need in this large wet AMD market. Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated January 5, 2015 PRELIMINARY PROSPECTUS 2,000,000 Shares Avalanche Biotechnologies, Inc. Common Stock We are offering 1,762,500 shares of our common stock in this offering. The selling stockholders identified in this prospectus are offering 237,500 shares of our common stock in this offering. We will not receive any proceeds from the sale of any shares by the selling stockholders. Our common stock is listed on The NASDAQ Global Market under the symbol AAVL. On January 2, 2015, the last reported sale price of our common stock was $58.92 per share. We are an emerging growth company as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves a high degree of risk. Please see Risk Factors beginning on page 11 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PER SHARE TOTAL Public Offering Price $ $ Underwriting Discounts and Commissions (1) $ $ Proceeds to Avalanche Biotechnologies, Inc., before expenses $ $ Proceeds to selling stockholders $ $ (1) The underwriters will also be reimbursed for certain expenses incurred in this offering. See Underwriting for details. Delivery of the shares of common stock is expected to be made on or about , 2015. We have granted the underwriters an option for a period of 30 days to purchase an additional 147,500 shares of common stock, and certain selling stockholders have granted the underwriters an option for a period of 30 days to purchase an additional 152,500 shares of our common stock. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses, will be $ . Joint Book-Running Managers Jefferies Cowen and Company Piper Jaffray Co-Manager William Blair Prospectus dated , 2015 Table of Contents We have generated human proof-of-concept data for AVA-101 in a Phase 1 trial with eight wet AMD subjects conducted at Lions Eye Institute Limited (LEI) in Australia. In that Phase 1 trial, AVA-101 was well tolerated with no drug-related adverse events. In addition, subjects treated with AVA-101 showed meaningful improvement in their visual acuity test scores (up to 15 letter improvement on an eye chart from baseline), and most subjects did not receive any rescue injections of standard-of-care therapy (required for subjects exhibiting disease progression) during the one-year trial period. We are currently conducting a Phase 2a trial for AVA-101 at LEI with 32 additional wet AMD subjects. Interim drug safety surveillance data received in June 2014 from this ongoing study suggests that AVA-101 continues to be well tolerated. Most adverse events that have been observed to date are mild and not related to AVA-101 or the procedures used in the study. Adverse events related to study procedures include subconjunctival, vitreous and retinal hemorrhage, cataract progression and eye pain. Other infrequent adverse events may be related to study procedures, including retinal tears or holes and falls. A small number of adverse events may be possibly related to AVA-101, including inflammation and light chain analysis increase, but these were considered mild and transient and have not been associated with vision loss. We expect to receive top-line data from this ongoing Phase 2a trial in mid-2015. We own exclusive rights to develop and commercialize AVA-101 worldwide. In addition to AVA-101, our Ocular BioFactory platform has generated other promising product candidates for the treatment of severe ophthalmic diseases, including: AVA-201 for the prevention of wet AMD. AVA-201 produces the same anti-VEGF protein as AVA-101 using a proprietary, customized delivery mechanism, or vector, that can be administered earlier in the disease progression and before the onset of wet AMD. Up to 7.3 million patients in the United States are at high risk of developing wet AMD, and we believe that the highest risk patients can be identified through a combination of clinical and genetic biomarkers. We own exclusive rights to develop and commercialize AVA-201 worldwide. AVA-311 for juvenile X-linked retinoschisis (XLRS). AVA-311 is being developed in collaboration with our partner Regeneron for the treatment of XLRS, a rare genetic disease of the retina with no approved therapy. There are approximately 10,000 boys and young men in the United States suffering from the disease. XLRS is caused by mutation of the RS1 gene and results in splitting of retinal layers and corresponding loss of vision. Based on preclinical studies in animals to date, AVA-311 has delayed the progression of XLRS and improved vision by delivering functional copies of the RS1 gene in retinal cells of mice. In order to accelerate the pace of generating and developing product candidates for our pipeline, we entered into a broad research collaboration and license agreement with Regeneron in May 2014. Under the terms of the collaboration, we intend to jointly discover novel product candidates based on our Ocular BioFactory platform for up to eight therapeutic targets including AVA-311. We have received an initial payment of $8.0 million and are eligible for reimbursement of additional collaboration research costs. In addition, we are eligible to receive up to $80.0 million in development and regulatory milestone payments for product candidates directed toward each therapeutic target, for a combined total of up to $640 million in potential milestone payments for product candidates directed toward all eight therapeutic targets, and low-to mid-single-digit royalties on worldwide net sales of collaboration product candidates. For any two therapeutic targets, we have an option to share up to 35% of the worldwide product candidate development costs and profits. Our Ocular BioFactory Platform Our Ocular BioFactory platform is designed to treat the cause of ophthalmic diseases by enabling patients own cells to express a therapeutic protein for a sustained period of time. We use a vector derived from adeno-associated virus (AAV), which is a small, non-pathogenic virus. DNA encoding the AAV viral genes are removed and replaced with a therapeutic gene to treat a disease. The resulting vector is used to deliver and express, or transduce, the therapeutic gene to the cells of the eye to promote continuous protein production. Although Table of Contents AAVs are widely used for gene therapy due to their safety, stability and sustained protein expression, our Ocular BioFactory platform has distinct characteristics that provide advantages over competing gene therapy technologies using AAVs as well as other viral and non-viral vectors. Our Ocular BioFactory platform features two key proprietary components: a novel vector screening and optimization system referred to as directed evolution, and an industrialized manufacturing process. Through directed evolution, we generate a diverse library of millions of AAV variants and subsequently screen the variants in multiple in vitro and in vivo tests to identify the optimal variant for a specific disease. Our directed evolution technology allows us to create proprietary vectors and optimize them to target cells in different layers of the retina. Each of these cell layers constitutes a potential therapeutic target for currently unmet medical needs, providing us with multiple opportunities to apply our directed evolution technology. Our industrialized manufacturing process, based on our proprietary system, is highly efficient and stable. It uses the baculovirus expression system (BVES), which is a technology for producing high levels of recombinant protein in insect-derived cells. Production yields are up to one hundred times greater than those obtained using conventional AAV production systems. Therefore, we are able to manufacture commercial grade production for large markets such as wet AMD. Experience in Ophthalmology and Gene Therapy Our senior management team and board of directors have significant experience in the biotechnology industry, specifically in the areas of ophthalmology and gene therapy. Our Chief Executive Officer and co-founder, Thomas W. Chalberg, Jr., Ph.D., was a member of the ophthalmology team at Genentech that was responsible for the successful launch and commercialization of Lucentis. Dr. Chalberg was also a Howard Hughes Medical Institute Fellow at Stanford University, where his research focused on retinal diseases and novel technologies for gene therapy. Our Chairman and co-founder, Mark S. Blumenkranz, M.D., is an ophthalmologist, a trained vitreoretinal surgeon and the Chairman of the Byers Eye Institute at Stanford University. Dr. Blumenkranz was also a founding member of the Eyetech scientific advisory board. Dr. Blumenkranz currently serves on the boards of directors of Vantage Surgical Systems Inc., Oculogics, Inc., Presbia Holdings, Digisight Technologies Inc. and Oculeve, Inc. Our director and co-founder, Steven D. Schwartz, M.D., is an ophthalmologist and a trained vitreoretinal surgeon at the UCLA Jules Stein Eye Institute, where he has served as principal investigator in a number of early-stage clinical trials for retinal diseases, including the initial studies for Lucentis and novel product candidates in gene and cell therapy. Dr. Schwartz held various key positions at Eyetech, and has served on a number of scientific advisory boards, including Genentech and Ophthotech Corporation. Other members of our executive management team also have significant experience in the discovery and development of gene therapies including expertise and/or prior experience at gene therapy companies in the following areas: regulatory, led by Samuel Barone, our Chief Medical Officer with prior experience at the Office of Cellular, Tissue and Gene Therapies at the Food and Drug Administration (FDA); translational medicine, led by Roman Rubio, our Senior Vice President and Head of Translational Medicine; manufacturing and technical operations, led by Mehdi Gasmi, our Vice President, Pharmaceutical Development, with prior experience at Ceregene, Inc. and G n thon; finance, led by Linda Bain, our Chief Financial Officer with prior experience at bluebird bio, inc., Genzyme Corporation and AstraZeneca plc; and legal and business operations, led by Hans Hull, our Senior Vice President, Business Operations, with prior experience at Second Genome, Inc. and Aprecia Pharmaceuticals Company and as an attorney at Heller Ehrman White & McAullife LLP. Table of Contents Strategy Our goal is to transform the lives of patients suffering from blinding and sight-threatening diseases by discovering, developing and commercializing potentially curative therapies. The key elements of our strategy to achieve this goal are: Successfully advance AVA-101 through clinical development and commercial launch for wet AMD. Global sales of Lucentis and EYLEA were over $6.0 billion in 2013 with approximately $3.3 billion in the United States and $2.8 billion in territories outside of the United States, of which we believe a significant portion occurred in the European Union, Japan and Australia. We believe 65%-80% of those sales were for the treatment of wet AMD. We intend to pursue a worldwide development and commercialization strategy of advancing AVA-101 in the United States and these international markets. Pursue additional indications for AVA-101. There are other diseases in which VEGF plays a central role in disease biology, including diabetic macular edema (DME) and retinal vein occlusion (RVO). Since patient compliance presents the same challenge in these indications, we believe that AVA-101 may offer an attractive alternative to the existing therapies in these markets. Continue to identify and target ophthalmic diseases using our Ocular BioFactory platform. We are focusing on both prevalent and rare ophthalmic diseases for which the disease biology is well characterized and for which the diseases themselves can be better treated by the sustained delivery of a therapeutic protein. We will continue to identify the most appropriate target indications based on emerging data from our platform, by leveraging our internal expertise and through relationships with thought leaders in ophthalmology. Continue to invest in our Ocular BioFactory platform. Our Ocular BioFactory platform has been validated by both preclinical and clinical data from our product candidates. We will continue to invest in our platform and employ directed evolution to create and manufacture vectors with higher efficiency and greater specificity that can potentially treat previously untreatable diseases. Build a balanced portfolio of proprietary and partnered programs. We plan to develop and commercialize multiple product candidates independently. For targets outside our core areas of interest or where a partner can contribute specific expertise, we intend to evaluate potential collaborations with strategic partners who can augment our industry-leading expertise in gene therapy for the eye. Risks Associated with Our Business Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in the section entitled Risk factors immediately following this prospectus summary. These risks include, among others: We have incurred significant operating losses since inception, and we expect to incur significant losses for the foreseeable future. We may never become profitable or, if achieved, be able to sustain profitability. If we fail to obtain the capital necessary to fund our operations, we will be unable to successfully develop and commercialize AVA-101 and our other product candidates. Our business currently depends substantially on the success of AVA-101, which is still under development. If we are unable to obtain regulatory approval for, or successfully commercialize, AVA-101, our business will be materially harmed. We are conducting, and may in the future conduct, clinical trials for AVA-101 and other product candidates in sites outside the United States and the U.S. Food and Drug Administration may not accept data from trials conducted from such locations. Our Ocular BioFactory is based on a novel gene therapy technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval. Table of Contents At the moment, no gene therapy products have been approved in the United States and only one gene therapy product has been approved in Europe. All of our product candidates are still in preclinical or early-stage clinical development. If we are unable to commercialize our product candidates or if we experience significant delays in obtaining regulatory approval for, or commercializing, any or all of our product candidates, our business will be materially and adversely affected. Although AVA-101 produced in a mammalian-cell based manufacturing system is currently being evaluated in a Phase 1/2a clinical trial, neither AVA-101 manufactured in the BVES nor our other product candidates have ever been evaluated in human clinical trials. We rely on third parties to conduct our clinical trials. If these third parties do not meet our deadlines or otherwise conduct the trials as required, our clinical development programs could be delayed or unsuccessful and we may not be able to obtain regulatory approval for or commercialize our product candidates when expected or at all. Our rights to develop and commercialize our product candidates are subject in part to the terms and conditions of licenses granted to us by other companies and universities, and unless the licensor solely owns any intellectual property it licenses to us, our licensed rights do not extend to any co-owner s undivided interest in such rights unless we also obtain a license from such co-owner. For example, The Regents of the University of California (Regents) co-own certain patent rights with Chiron Corporation (Chiron), and the Regents have licensed to us their undivided interest in these rights while Chiron retains its interest in these rights. Any adverse events in our clinical trials or those conducted by other parties, even if not ultimately attributable to our product candidates, or any public perception that such adverse events may occur based on claims that using virus particles to deliver gene therapy may be unsafe, could delay or halt commercialization of AVA-101 or further advancement of our clinical trials, which would have a material adverse effect on our business and operations. Our success depends on our ability to protect our intellectual property and our proprietary technologies. We have identified material weaknesses in our internal control over financial reporting which could, if not remediated, result in material misstatements in our consolidated financial statements. If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely consolidated financial statements could be impaired, which could harm our operating results, investors views of us and, as a result, the value of our common stock. Corporate Information We were incorporated in Delaware in 2006. Our principal executive offices are located at 1035 O Brien Drive, Suite A, Menlo Park, CA 94025, and our telephone number is (650) 272-6269. Our website address is http://avalanchebiotech.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. Implications of Being an Emerging Growth Company We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). We will remain an emerging growth company until the earlier of the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering, the last day of the fiscal year in which we have total annual gross revenue of at least $1.0 billion, the last day of the fiscal year in which we are deemed to be a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (Exchange Act), which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such fiscal year, or the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and Table of Contents is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, we may present only two years of audited consolidated financial statements, plus unaudited condensed consolidated financial statements for any interim period, and related management s discussion and analysis of financial condition and results of operations; we may avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley); we may provide less extensive disclosure about our executive compensation arrangements; and we may not require shareholder non-binding advisory votes on executive compensation or golden parachute arrangements. However, we have chosen to opt out of the extended transition periods available under the JOBS Act for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition periods for complying with new or revised accounting standards is irrevocable. Table of Contents THE OFFERING Issuer Avalanche Biotechnologies, Inc. Common stock offered by us in this offering 1,762,500 shares of our common stock Common stock offered by the selling stockholders 237,500 shares of our common stock Underwriters option to purchase additional shares We have granted the underwriters an option for a period of 30 days to purchase an additional 147,500 shares of our common stock, and certain selling stockholders have granted the underwriters an option for a period of 30 days to purchase an additional 152,500 shares of our common stock. Common stock to be outstanding after this offering 24,232,799 shares (or 24,380,299 shares if the underwriters option to purchase additional shares is exercised in full) Use of proceeds We estimate that the net proceeds to us from this offering will be approximately $96.7 million, or approximately $104.9 million if the underwriters exercise in full their option to purchase additional shares of common stock, at the assumed public offering price of $58.92 per share, the last reported sale price of our common stock on The NASDAQ Global Market on January 2, 2015, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We currently expect to use substantially all of our net proceeds from this offering to fund (i) research and development activities for AVA-101, (ii) manufacturing and process development for AVA-101 and our other product candidates, and (iii) pre-clinical and clinical activities to accelerate the advancement of our other product candidates in our development program. We will use any remaining proceeds for capital expenditures, working capital and other general corporate purposes. See Use of Proceeds. We will not receive any proceeds from the sale of any shares by the selling stockholders. Ticker symbol on The NASDAQ Global Market AAVL The number of shares of our common stock outstanding immediately following this offering set forth above is based on 22,470,299 shares of our common stock outstanding as of September 30, 2014. The number of shares of common stock issued and outstanding immediately following this offering set forth above excludes: 4,837,496 shares of common stock issuable upon exercise of stock options outstanding as of September 30, 2014 under our Amended and Restated 2006 Equity Incentive Plan, at a weighted-average exercise price of $2.82 per share; and 2,421,815 shares of common stock reserved for issuance pursuant to future awards under our 2014 Equity Incentive Plan as of September 30, 2014; and 208,833 shares of common stock reserved for issuance pursuant to future awards under our 2014 Employee Stock Purchase Plan as of September 30, 2014. Table of Contents Except as otherwise indicated, all information contained in this prospectus (including the above discussion of the number of shares of common stock to be outstanding after this offering) assumes the following: no exercise of outstanding options described above; and that the underwriters do not exercise their option to purchase additional shares of common stock. Table of Contents SUMMARY CONSOLIDATED FINANCIAL DATA The following summary consolidated financial data for the years ended December 31, 2012 and 2013 are derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The summary consolidated financial data for the nine months ended September 30, 2013 and 2014 and as of September 30, 2014 are derived from our unaudited consolidated financial statements appearing elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position as of September 30, 2014 and the results of operations for the nine months ended September 30, 2013 and 2014. You should read this summary consolidated financial data together with our consolidated financial statements and related notes appearing elsewhere in this prospectus and the information under the caption Management s Discussion and Analysis of Financial Condition and Results of Operations. Our historical results are not necessarily indicative of our future results and interim results are not necessarily indicative of results to be expected for the full year. YEARS ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30, 2012 2013 2013 2014 (In thousands, except per share data) (unaudited) (unaudited) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS DATA: Revenue: Collaboration and license revenue from related-party $ $ $ $ 339 License revenue 30 Government grant revenue 30 480 480 Total revenue 30 480 480 369 Operating expenses: Research and development 1,310 2,151 1,412 9,750 General and administrative 536 1,783 593 4,618 Total operating expenses 1,846 3,934 2,005 14,368 Operating loss (1,816 ) (3,454 ) (1,525 ) (13,999 ) Other (expense) income: Interest expense (8 ) (73 ) (61 ) (18 ) Other (expense) income, net (6 ) (4 ) 6 (32 ) Change in fair value of embedded derivative 6 18 18 Changes in fair value of warrant liabilities 13 (92 ) (21 ) (760 ) Loss on extinguishment of related-party convertible notes (1,671 ) (204 ) Total other (expense) income, net 5 (1,822 ) (58 ) (1,014 ) Net loss (1,811 ) (5,276 ) (1,583 ) (15,013 ) Deemed dividend (3,230 ) Net loss attributable to common stockholders (1,811 ) (5,276 ) (1,583 ) (18,243 ) Foreign currency translation adjustment 8 19 (11 ) (16 ) Comprehensive loss $ (1,803 ) $ (5,257 ) $ (1,594 ) $ (15,029 ) Net loss per share attributable to common stockholders basic and diluted $ (0.50 ) $ (1.44 ) $ (0.43 ) $ (2.29 ) Weighted-average common shares outstanding basic and diluted 3,643 3,673 3,673 7,960 Table of Contents The table below presents our balance sheet as of September 30, 2014: on an actual basis; and on an as adjusted basis to give further effect to the sale of 1,762,500 shares of our common stock offered by us in this offering at an assumed public offering price of $58.92 per share (the last reported sale price of our common stock on The NASDAQ Global Market on January 2, 2015), and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of any shares by the selling stockholders; accordingly, there is no impact upon the adjusted balance sheet for these sales. AS OF SEPTEMBER 30, 2014 ACTUAL AS ADJUSTED(1) (In thousands) (unaudited) CONSOLIDATED BALANCE SHEET DATA: Cash $ 165,329 $ 262,045 Working capital 161,872 258,588 Total assets 167,239 263,955 Accumulated deficit (26,324 ) (26,324 ) Total stockholders equity 155,735 252,451 (1) Each $1.00 increase (decrease) in the assumed public offering price of $58.92 per share, the last reported sale price of our common stock on The NASDAQ Global Market on January 2, 2015, would increase (decrease) the as adjusted amount of cash, working capital, total assets and total stockholders equity by approximately $1.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of one million shares in the number of shares offered by us would increase (decrease) the as adjusted amount of cash, working capital, total assets and total stockholders equity by approximately $55.4 million, assuming that the assumed public offering price remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained or incorporated by reference elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing or incorporated by reference in this prospectus, including our consolidated financial statements and related notes, and in Risk Factors beginning on page 8, before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, we use the terms Aldeyra, the company, we, us and our in this prospectus to refer to Aldeyra Therapeutics, Inc. ALDEYRA THERAPEUTICS, INC. Overview Aldeyra was formed as a Delaware corporation in 2004, and from inception until December 20, 2012, we operated as Neuron Systems, Inc. and from December 2012 until March 2014 we operated as Aldexa Therapeutics, Inc. Since our incorporation, we have devoted substantially all of our resources to the preclinical and clinical development of our product candidates. Our ability to generate revenues largely depends upon our ability, alone or with others, to complete the development of our product candidates to obtain the regulatory approvals for and to manufacture, market and sell our product candidates. The results of our operations will vary significantly from year-to-year and quarter-to-quarter and depend on a number of factors, including risks related to our business and industry, risks relating to intellectual property and other legal matters, risks related to our common
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/ASND_ascendis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/ASND_ascendis_prospectus_summary.txt
new file mode 100644
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/ATRA_atara_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/ATRA_atara_prospectus_summary.txt
new file mode 100644
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+PROSPECTUS SUMMARY This summary highlights information contained or incorporated by reference in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should read the entire prospectus carefully, including the section titled Risk Factors and the information in our filings with the Securities and Exchange Commission, or SEC, incorporated by reference in this prospectus. Unless the context suggests otherwise, references in this prospectus to Atara, Atara Biotherapeutics, we, us and our refer to Atara Biotherapeutics, Inc. and, where appropriate, its subsidiaries. Atara Biotherapeutics, Inc. We are a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions, oncology and viral-associated diseases. We have two groups of product candidates: molecularly targeted biologics and allogeneic, or third-party derived, antigen-specific T-cells, a type of white blood cell. Our molecularly targeted product candidates are biologics that inhibit myostatin and activin, members of the Transforming Growth Factor-Beta, or TGF- , protein superfamily, which play roles in the growth and maintenance of muscle and many other body tissues. Our lead molecularly targeted product candidate, PINTA 745, is in a Phase 2 clinical trial for protein energy wasting, a condition affecting many end-stage renal disease patients. Our second molecularly targeted product candidate is STM 434. We commenced a Phase 1 clinical study of STM 434 for ovarian cancer and other solid tumors in 2014. We have five additional molecularly targeted product candidates that modulate the TGF- pathway in preclinical development. Our T-cell product candidates arise from a platform technology designed to produce off-the-shelf, partially human leukocyte antigen matched cellular therapeutics. We licensed these product candidates from Memorial Sloan Kettering Cancer Center, or MSK, in June 2015. Our initial T-cell product candidates target viral- or cancer-specific antigens and are designed to harness the body s immune system to counteract specific viral infections and cancers. Our most advanced T-cell product candidate, EBV-CTL, is in Phase 2 clinical trials for malignancies associated with Epstein-Barr Virus, including EBV-associated lymphoproliferative diseases, or EBV-LPD. EBV-LPD is a cancer affecting some patients who have received an allogeneic hematopoietic cell transplant, or HCT, or a solid organ transplant, or SOT, or are otherwise immunocompromised. In February 2015, the US Food and Drug Administration, or the FDA, granted Breakthrough Therapy designation for EBV-CTL in the treatment of rituximab-refractory EBV-LPD after HCT, commonly known as bone marrow transplant. Our second T-cell product candidate, CMV-CTL, is in Phase 2 clinical trials for cytomegalovirus, or CMV, an infection that occurs in some patients who have received an HCT, SOT, or are otherwise immunocompromised. Our third T-cell product candidate, WT1-CTL, targets cancers expressing the antigen Wilms Tumor 1 and is currently in Phase 1 clinical studies. Our Novel Approach to Treat Protein Energy Wasting in ESRD Patients: PINTA 745 Our lead molecularly targeted product candidate, PINTA 745, is a peptibody that binds to and inhibits myostatin, a protein that down regulates muscle growth and maintenance. In a Phase 1 study, PINTA 745 was found to increase muscle mass compared to placebo after one month of weekly dosing, an increase that was statistically significant, indicating that it is more likely than not that the benefit observed in the study was due to drug treatment rather than chance. We are enrolling a US-based Phase 2 clinical trial to further establish the role of PINTA 745 in building muscle mass, as well as to collect data from corresponding functional muscle tests. This trial is being conducted in patients with end-stage renal disease, or ESRD, who are also suffering from protein-energy wasting, or PEW, a condition characterized by muscle wasting, inflammation and malnutrition. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated July 9, 2015. $150,000,000 Common Stock We are offering $150,000,000 of shares of our common stock or, assuming a public offering price of $48.83 per share, the last reported sale price of our common stock on The Nasdaq Global Select Market on July 8, 2015, 3,071,882 shares of our common stock. Our common stock is listed on The Nasdaq Global Select Market under the symbol ATRA. We are an emerging growth company under applicable Securities and Exchange Commission rules and are subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 12 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ (1) We refer you to Underwriting beginning on page 131 for additional information regarding total underwriting compensation. We have granted the underwriters an option to purchase up to an additional $22,500,000 of shares of common stock at the public offering price, less underwriting discounts and commissions. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. Goldman, Sachs & Co. Citigroup William Blair Canaccord Genuity JMP Securities Prospectus dated , 2015 Table of Contents PEW is a major complication of ESRD. A recent study we completed with DaVita Clinical Research, a division of DaVita Healthcare Partners Inc., concluded that more than half of the patients in DaVita s dialysis population met the conditions for PEW and, in comparison to the rest of the group, exhibited worse morbidity and mortality. Based on data from the US Renal Data System, we estimate that the current total US dialysis population, excluding patients who had successfully received kidney transplants, is 460,000 patients. Of these patients, we estimate that approximately 250,000 patients suffer from PEW. Worldwide, we believe that more than 800,000 patients suffer from PEW. There is currently no approved therapy for patients suffering from PEW. We believe PINTA 745 is the only therapeutic in clinical development to treat this patient population. In clinical studies conducted of PINTA 745 in men with prostate cancer and in mouse studies in a model of chronic kidney disease, or CKD, conducted with PINTA 745/s, a version of PINTA 745 that was customized for use in mice, several properties well suited for a potential therapeutic for PEW were observed, including: Reversing muscle loss PINTA 745 not only stopped muscle wasting, it significantly increased muscle mass after four weeks of treatment. Anti-inflammatory properties In an animal model of renal disease, PINTA 745/s exhibited significant anti-inflammatory properties, a factor that we believe will be important due to the critical role that inflammation plays in PEW and the overall declining health of ESRD patients. Dosing schedule PINTA 745 is dosed weekly, which conveniently aligns with dialysis treatment schedules. Our ongoing US-based Phase 2 trial is a 48-patient, randomized, double-blind, placebo-controlled trial that, in addition to providing us with assessments of change in muscle mass and muscle strength, will give us insight into potential additional markets for PINTA 745. These could include: orthopedic indications; inflammation and inflammatory diseases; age-related sarcopenia, or loss of muscle; and cancer cachexia, a syndrome of progressive weight loss. In each of these conditions, muscle loss prevention, muscle growth and reduction in inflammation resulting from treatment with PINTA 745 could lead to improved physical function and therefore better outcomes. As of June 30, 2015, we had enrolled 34 of the planned 48 patients, and we expect to release preliminary top-line data from this Phase 2 clinical trial in the fourth quarter of 2015. Our Novel Approach to Treat Ovarian Cancer: STM 434 Our second molecularly targeted product candidate, STM 434, is in a Phase 1 clinical study that will enroll approximately 66 patients with ovarian cancer and other solid tumors. STM 434 is a soluble ActR2B receptor that binds Activin A. Activin has been shown to be involved in the growth and proliferation of ovarian cancer and other tumors, with published evidence of its role at both the genetic, or messenger RNA, and protein levels. Activin expression is one of a few biomarkers associated with larger tumor volume and poorer outcomes, including shortened survival, in a variety of tumors including ovarian tumors. Published data has shown that serum Activin A levels in ovarian cancer subjects are elevated in relation to levels in normal subjects. We are testing the potential use of Activin A as a biomarker in our Phase 1 clinical study. Ovarian cancer is the fifth leading cause of cancer death in women in the United States. According to the National Cancer Institute, there were an estimated 22,240 new ovarian cancer cases and 14,030 ovarian cancer deaths in the United States in 2013. Surgery and cytotoxic chemotherapies are widely used to treat ovarian cancer; however, the outcomes have changed little in 40 years. The Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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@@ -0,0 +1,3858 @@
+PROSPECTUS SUMMARY 
+ 
+
+ This summary highlights information contained elsewhere in this prospectus. This summary does not contain all
+of the information you should consider before investing in our common stock. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including the "Risk
+Factors" section and our consolidated financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless otherwise stated or the context otherwise indicates,
+references to "Axsome," "we," "us," and "our" refer to Axsome Therapeutics, Inc.
+
+Overview 
+
+ We are a clinical stage biopharmaceutical company developing novel therapies for the management of pain and other central nervous
+system, or CNS, disorders. By focusing on this therapeutic area, we are addressing significant and growing markets where current treatment options are limited or inadequate. Our product candidate
+portfolio includes two late-stage candidates, AXS-02 and AXS-05, which we are developing for multiple indications. We recently initiated a Phase 3 trial with AXS-02 in complex regional pain
+syndrome and plan to initiate a Phase 3 trial in knee osteoarthritis associated with bone marrow lesions in or before the first quarter of 2016 pursuant to a Special Protocol Assessment, or
+SPA. We also plan to initiate a Phase 3 trial with AXS-05 in treatment resistant depression in or before the first quarter of 2016. We aim to become a fully integrated biopharmaceutical company
+that develops and commercializes differentiated therapies that expand the treatment options available to caregivers and improve the lives of patients living with pain and other CNS disorders.
+
+ 
+
+ Our
+first product candidate, AXS-02 (disodium zoledronate tetrahydrate), is a potentially first-in-class, oral, targeted, non-opioid therapeutic for chronic pain. AXS-02 is a potent
+inhibitor of osteoclasts, which are bone remodeling cells that break down bone tissue. We are initially developing AXS-02 for the treatment of pain in the following three conditions: complex regional
+pain syndrome, or CRPS; knee osteoarthritis, or OA, associated with bone marrow lesions, or BMLs; and chronic low back pain, or CLBP, associated with Modic changes, or MCs. These conditions exhibit
+target lesions or specific pathology that we believe may be addressed by the mechanisms of action of AXS-02, such as inhibition of osteoclast activity. These mechanisms may result in a reduction of
+pain in these conditions. We have successfully completed a Phase 1 trial of AXS-02. In this trial, oral administration of AXS-02 tablets resulted in rapid absorption of zoledronic acid, which
+is the active molecule in AXS-02 and the free acid form of disodium zoledronate tetrahydrate, and substantial suppression of bone resorption markers, which are proteins indicative of bone tissue
+breakdown. We selected the dose for our ongoing and planned Phase 3 trials based on the pharmacokinetic and pharmacodynamic results of our Phase 1 trial. We intend to seek U.S. Food and
+Drug Administration, or FDA, approval for AXS-02 utilizing the 505(b)(2) regulatory development pathway. Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FDCA, enables a
+potentially shorter development timeline for our product candidates by allowing us to rely, in part, upon published literature or the FDA's previous findings of safety and efficacy for an approved
+product with the active molecules in our product candidates and potentially forego conducting certain clinical trials and certain lengthy and costly preclinical studies. 
+
+ Our
+second product candidate, AXS-05, is an innovative fixed-dose combination of dextromethorphan, or DM, and bupropion. We are developing AXS-05 initially for the treatment of the
+following two conditions: treatment resistant depression, or TRD; and agitation in patients with Alzheimer's disease, or AD. DM is active at multiple CNS receptors but is rapidly and extensively
+metabolized in humans. As a result, it is difficult to attain potential therapeutic plasma levels of DM when it is dosed as a single agent. AXS-05 uses bupropion, which is itself active at distinct
+CNS receptors, as a novel drug delivery method to inhibit DM metabolism and increase its bioavailability. We have demonstrated in two Phase 1 trials that DM plasma levels are substantially
+increased into a potentially therapeutic range with the co-administration of bupropion. We intend to seek FDA approval for AXS-05 utilizing the 505(b)(2) regulatory development pathway. 
+
+ 
+
+ 
+
+ 
+
+Table of Contents
+
+ 
+
+ We
+have one active program, AXS-06, in preclinical development. We are developing AXS-06 for the treatment of chronic pain disorders. 
+
+ Our
+product candidates are protected through a combination of patents, trade secrets, and proprietary know-how. Our intellectual property portfolio includes U.S. patents with claims
+extending to 2034 for AXS-02 and AXS-05, as well as corresponding foreign patent applications. Our U.S. and E.U. orphan designations for AXS-02 for the treatment of CRPS potentially provide 7 and up
+to 12 years of marketing exclusivity in the respective geographies for the orphan indication. 
+
+Our Strategy 
+
+ Our goal is to cost-effectively and efficiently develop and commercialize novel, differentiated therapies for the management of pain
+and other CNS disorders. The primary elements of our strategy to achieve this goal are the following: 
+
+ Pursue novel pain and other CNS indications with high unmet medical
+need. We are initially developing our product candidates for pain and CNS indications that have no or few FDA-approved pharmacological
+treatments. By focusing on novel indications, we aim to develop products that have the potential to change current medical practice, and that are highly relevant to patients, physicians, and
+regulatory bodies because they address unmet medical needs. 
+
+ Use biomarkers to define specific patient subsets for our pain
+indications. We are using biomarkers, which are visible on magnetic resonance imaging, or MRI, to define specific subsets of patients
+who we believe are more likely to respond to the mechanisms of action of AXS-02. We believe that our targeted biomarker approach may result in a less heterogeneous patient population in our clinical
+trials, which may improve our ability to demonstrate a treatment effect and, if approved, enable treatment of more appropriate patient populations. 
+
+ Develop products with differentiated
+profiles. We aim to develop products with novel mechanisms of action for the intended indications that may yield differentiated product
+profiles. We believe that products meeting this criteria will be attractive to patients and their physicians, and will provide us with a competitive commercial advantage. 
+
+ Reduce clinical and regulatory risk, limit development costs, and
+accelerate time to market. Our product candidates incorporate chemical entities with long histories of clinical use and
+well-characterized safety profiles. We can therefore seek FDA approval for our product candidates using the 505(b)(2) regulatory pathway. This pathway permits us to leverage previous preclinical and
+clinical experience with the active molecules in our product candidates and potentially forego conducting certain clinical trials and certain lengthy and costly preclinical studies. 
+
+ Retain commercial rights in the United States, where appropriate, and selectively partner outside of the
+United States. We intend to establish our own focused, cost-effective sales and marketing organization in the United States, and to selectively partner commercial rights
+outside of the United States, to maximize the value of our product candidates.
+
+ 
+
+ 
+
+ 2
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+Our Pipeline 
+
+ Our current product candidate pipeline is summarized in the table below: 
+
+ 
+
+AXS-02 
+
+ AXS-02 is a novel, targeted investigational pain therapeutic. It is an orally administered, non-opioid agent with a new mechanism of
+action for the treatment of pain. We believe that, if successfully developed, AXS-02 may overcome many of the limitations of current treatments for pain, and may be attractive to patients and their
+physicians, based on the following differentiating features:
+
+ Novel osteoclast-inhibiting mechanism of action for the treatment of pain 
+
+ Targeted therapy approach that utilizes radiographic biomarkers to identify appropriate patients 
+
+ Oral administration 
+
+ Convenient weekly dosing and short course of treatment 
+
+ Potential for extended duration of pain relief 
+
+ Lack of opioid-related side effects and abuse and addiction potential 
+
+Complex Regional Pain Syndrome 
+
+ AXS-02 is currently in a Phase 3 trial for the treatment of pain associated with CRPS. There is currently no drug approved by
+the FDA or the European Medicines Agency, or EMA, to treat CRPS. CRPS is a debilitating condition characterized by severe pain in a limb, accompanied by autonomic, sensory, motor, and trophic changes.
+CRPS is often triggered by minor trauma, such as wrist fracture, surgery, or needle stick injury, but can occur spontaneously. The extreme nature of the pain is disproportionate to these inciting
+events. For many patients, the pain and associated loss of function result in significant and sometimes permanent disability. It has been estimated that approximately 80,000 individuals in the United
+States are diagnosed with CRPS annually. 
+
+ AXS-02
+has been granted FDA Fast Track designation for the treatment of pain associated with CRPS. The FDA's Fast Track program is designed to expedite the development and review of
+drugs that are intended to treat serious or life-threatening conditions by providing greater access to, and more frequent communication with, the FDA throughout the drug development process. AXS-02
+has also been granted Orphan Drug Designation by the FDA and Orphan Medicinal Product Designation by the EMA for the treatment of CRPS. 
+
+ 
+
+ 3
+
+ 
+
+Table of Contents
+
+ 
+
+ The
+rationale for the use of AXS-02 for the treatment of pain associated with CRPS is supported by the pharmacological action of AXS-02. Increased bone resorption is seen in the affected
+limbs of the majority of CRPS patients. In our completed Phase 1 trial, oral administration of AXS-02 to healthy human volunteers resulted in substantial reductions in markers of bone
+resorption, suggesting the ability of AXS-02 to address a common finding in CRPS patients. Furthermore, zoledronic acid, the active molecule in AXS-02, localizes preferentially to regions of high bone
+turnover suggesting it may be able to preferentially target CRPS-affected limbs. Results of several small clinical trials with other less potent bisphosphonate compounds have shown a reduction in pain
+in CRPS patients treated with these agents. The rationale for using AXS-02 in CRPS is also supported by positive results of preclinical studies we conducted with orally administered AXS-02 in the rat
+tibia fracture model, a well-validated animal model of CRPS. In one study, 20 rats underwent a right distal tibia fracture with casting to induce CRPS-like symptoms and signs, and were then orally
+administered either placebo or AXS-02. Oral administration of AXS-02 reduced pain by 77% and edema by 60%, and resulted in a 56% improvement in weight bearing as compared to placebo. 
+
+ In
+July 2015, we initiated the CREATE-1 study, a Phase 3, randomized, double-blind, placebo-controlled trial to assess the efficacy and safety of AXS-02 in the treatment of pain
+associated with CRPS. The design of this study is informed by feedback from a June 2014 meeting with the FDA and by subsequent ongoing communications with the FDA. The trial is enrolling patients with
+recently diagnosed CRPS, and the primary endpoint is the change in pain intensity from baseline to week 12. We anticipate that the study will enroll a total of approximately 190 patients. An interim
+analysis for efficacy is planned on the first approximately 50% of patients who are enrolled and who complete the double-blind treatment phase, and is anticipated around the end of 2016. We expect to
+complete this trial by the end of 2017. 
+
+Knee Osteoarthritis Associated with Bone Marrow Lesions 
+
+ We plan to initiate a Phase 3 clinical trial with AXS-02 for the treatment of pain in patients with knee OA associated with BMLs
+in or before the first quarter of 2016. There is currently no therapy specifically approved by the FDA or the EMA to treat this subset of knee OA. BMLs are regions of increased signal intensity on MRI
+of the knee. Results from cross-sectional and longitudinal studies have shown that BMLs are strongly associated with the presence and severity of pain in patients with knee OA, and that new or
+enlarging BMLs are associated with increased pain and diminishing BMLs with decreased pain. These studies therefore suggest that BMLs are a source of knee pain and a potential target for
+pharmaceutical intervention. We believe the mechanisms of action of AXS-02 may preferentially target BMLs. We estimate that there are as many as 7 million patients 50 years of age or
+older in the U.S. with symptomatic knee OA and BMLs, based on results of epidemiological studies. 
+
+ Intravenously administered zoledronic acid, the active molecule in AXS-02, was tested in an investigator-initiated, single-center, randomized, double-blind, placebo-controlled trial in
+59 patients with knee OA and BMLs. In this trial, zoledronic acid treatment resulted in a statistically significant reduction of pain and BML size at six months, demonstrating an effect on symptom and
+structure. The term statistically significant denotes an experimental result, such as one derived from a clinical or non-clinical trial, that is unlikely to have occurred by chance.
+
+ 
+
+ We have reached agreement with the FDA regarding an SPA on the design of a Phase 3 clinical trial with AXS-02 for the treatment of the pain of knee OA associated with BMLs, which
+we refer to as the COAST-1 study. The SPA provides agreement that the design and planned analysis of the COAST-1 study adequately address objectives that, if met, would support a regulatory submission
+for approval of AXS-02 for the treatment of the pain of knee OA associated with BMLs. COAST-1 is a Phase 3, randomized, double-blind, placebo-controlled trial in subjects with knee OA and BMLs.
+The primary endpoint will be the change in average pain intensity from baseline to week 24. We anticipate that the trial will enroll a total of approximately 346 subjects.
+
+ 
+
+ 
+
+ 4
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+Chronic Low Back Pain Associated with Modic Changes 
+
+ We plan to initiate a Phase 3 clinical trial with AXS-02 for the treatment of CLBP associated with type 1 or mixed
+type 1 and type 2 MCs in the first half of 2016. There is currently no therapy specifically approved by the FDA or the EMA to treat this subset of CLBP. CLBP is defined as persistent or
+fluctuating low back pain lasting at least three months. It is a disabling and costly condition that is associated with increased healthcare utilization. MCs are vertebral bone marrow changes that are
+visible on MRI of the spine. Findings from various studies suggest that MCs, especially type 1 MCs, are correlated with low back pain, predict persistent symptoms and sick leaves, and are
+associated with poor outcomes. These studies therefore suggest that MCs are a potential target for pharmaceutical intervention. We believe the mechanisms of action of AXS-02 may preferentially target
+MCs. We estimate that as many as 1.6 million individuals in the United States suffer from CLBP associated with type 1 MCs, based on results of epidemiological studies.
+
+ Intravenously administered zoledronic acid, the active molecule in AXS-02, was tested in an investigator-initiated, single-center, randomized, double-blind, placebo-controlled trial in
+40 patients with CLBP associated with MCs. In this trial, zoledronic acid treatment resulted in statistically significant reductions in pain at 1 month and non-steroidal anti-inflammatory drug,
+or NSAID, use at 12 months.
+
+ 
+
+AXS-05 
+
+ AXS-05 is an innovative fixed-dose combination of DM and bupropion under development for the treatment of CNS disorders. DM is active
+at multiple CNS receptors but is rapidly metabolized when dosed alone. Our combination uses bupropion as a novel drug delivery method to inhibit DM metabolism and increase its bioavailability. We have
+demonstrated in two Phase 1 trials that co-administration of bupropion and DM leads to substantially increased DM plasma levels. This positive pharmacokinetic interaction between bupropion and
+DM therefore potentially enables DM's clinical utility by increasing DM's plasma levels into a potentially therapeutic range. In addition to its ability to inhibit DM metabolism, bupropion is also
+active at distinct CNS receptors. The activity of the two components may provide an additive or synergistic effect. 
+
+ Bupropion
+is a well-characterized antidepressant. DM is a well-known CNS-active agent that is used in over-the-counter cough and cold preparations. DM, in combination with quinidine, was
+approved in 2010 for the treatment of pseudobulbar affect, also known as emotional lability. Like bupropion in our product candidate, quinidine is used to inhibit the metabolism of DM and increase its
+plasma concentrations. Unlike bupropion, however, the quinidine in the preparation does not have CNS activity. AXS-05 is potentially applicable to the treatment of a variety of CNS disorders, based on
+the mechanisms of action of its two components. 
+
+Treatment Resistant Depression 
+
+ We plan to initiate a Phase 3 trial of AXS-05 in TRD in or before the first quarter of 2016. Currently, only one product is
+approved in the United States for the treatment of TRD. Patients diagnosed with major depressive disorder are defined as having TRD if they have failed two or more antidepressant therapies. We
+estimate that approximately 3 million individuals in the United States suffer from TRD. 
+
+ The
+potential utility of AXS-05 in TRD is supported by DM's mechanisms of action which encompass those of several currently marketed antidepressant drugs, and the established efficacy of
+bupropion as an antidepressant. DM administration has also resulted in dose-dependent antidepressant-like effects in two widely used preclinical models of antidepressant effect. Preliminary clinical
+evidence with DM and an inhibitor of its metabolism also supports the rationale of using AXS-05 in TRD. Administration of DM with quinidine, which inhibits DM metabolism, resulted in a 
+
+ 
+
+ 5
+
+ 
+
+Table of Contents
+
+ 
+
+statistically
+significant reduction in depressive symptoms in patients with pseudobulbar affect, as shown in a third-party study. The plasma concentrations of DM achieved with AXS-05 in our
+Phase 1 trials are in the range of those associated with the DM and quinidine dose that resulted in a reduction in depressive symptoms, based on data published by the FDA. 
+
+Agitation in Patients with Alzheimer's Disease 
+
+ We intend to develop AXS-05 for the treatment of agitation in patients with AD, and plan to request a meeting with the FDA in 2016 to
+discuss our development plans. There is currently no FDA-approved pharmacological treatment for the indication of agitation in patients with AD. Agitation in patients with AD has been associated with
+increased caregiver burden, decreased functioning, earlier nursing home placement, and death. It has been estimated that AD afflicts approximately 5 million individuals in the United States,
+with agitation being reported in as many as 40% of those afflicted. 
+
+ Preliminary clinical evidence with DM and an inhibitor of its metabolism supports the rationale of using AXS-05 for the treatment of agitation in patients with AD. Administration of DM
+with quinidine, which inhibits DM metabolism, resulted in a statistically significant reduction in agitation in patients with probable AD, as shown in a randomized, double-blind, placebo-controlled,
+third-party clinical trial. The plasma concentrations of DM achieved with AXS-05 in our Phase 1 trials are in the range of those associated with the DM and quinidine doses that resulted in a
+reduction in agitation in patients with probable AD, based on data published by the FDA.
+
+ 
+
+Our Team 
+
+ Our management and scientific teams possess considerable experience in clinical development and regulatory matters. Our founder, Chief
+Executive Officer, and Chairman of the Board, Dr. Herriot Tabuteau, is uniquely suited to guide Axsome in strategic planning and operational and commercial matters as a result of his medical
+background and his extensive investment experience in the healthcare field. Our Chief Medical Officer, Dr. Randall Kaye, has more than 20 years of clinical, regulatory, and medical affairs
+leadership experience, most recently as Chief Medical Officer of Avanir Pharmaceuticals, Inc., where his efforts culminated in the approval and launch of Nuedexta, a DM / quinidine combination
+product. Dr. Robert Niecestro, our Head of Regulatory, has more than 25 years of experience in regulatory affairs and project management. His leadership has resulted in the approval of
+11 new drug applications and the successful filing of over 45 investigational new drug applications over the course of his career. We also benefit from the significant executive, financial, and
+medical expertise of the members of our board of directors, as well as the key scientific, clinical, and strategic guidance of our scientific advisors. Our Depression Scientific Advisory Board
+includes leading experts in the areas of depression, FDA regulations, and CNS clinical trial design. We also benefit from the guidance of our other scientific advisors in the areas of CRPS, knee OA,
+CLBP, and pain clinical trial design.
+
+ 
+
+Risks Associated with Our Business 
+
+ Our business and our ability to implement our business strategy are subject to numerous risks and uncertainties, as more fully
+described in the section entitled "Risk Factors" beginning on page 13. You should read these risks before you decide to invest in our common stock. If any of these risks actually occurs, our
+business, financial condition, results of operations, or prospects would likely be materially and adversely affected. In such case, the trading price of our common stock would likely decline, and you
+may lose all or part of your investment. The following is a summary of some of the principal risks we face:
+
+ We have incurred significant losses since our inception, anticipate that we will incur substantial and increasing losses for the
+foreseeable future, and may never achieve or maintain profitability. 
+
+ 
+
+ 6
+
+ 
+
+Table of Contents
+
+ 
+
+ We will need additional funding to conduct our future clinical trials and to complete development and commercialization of our product
+candidates. Even if this offering is successful, if we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our product development programs or commercialization
+efforts. 
+
+ We have a limited operating history and no history of commercializing products, which may make it difficult to evaluate our business
+and prospects. 
+
+ We are substantially dependent on the success of our lead product candidates, AXS-02 and AXS-05, and cannot guarantee that these
+product candidates will successfully complete our planned Phase 3 clinical trials, receive regulatory approval, or be successfully commercialized. 
+
+ If safety and efficacy data for our product candidates, a reference listed drug, or published literature does not satisfactorily
+demonstrate safety and efficacy to the FDA, or if the FDA and other regulators do not permit us to rely on the data of a reference listed drug or published literature, we may incur additional costs or
+experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. 
+
+ We face significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies, and
+other research organizations. Our operating results will suffer if we fail to compete effectively. 
+
+ We rely, and expect to continue to rely, on third parties to conduct, supervise, and monitor our preclinical studies and clinical
+trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with regulatory requirements. 
+
+ It is difficult and costly to protect our proprietary rights and as a result we may not be able to ensure their protection. In
+addition, patents have a limited lifespan and will eventually expire. 
+
+ If we fail to comply with federal and state healthcare laws, including fraud and abuse and health and other information privacy and
+security laws, we could face substantial penalties and our business, financial condition, results of operations, and prospects could be adversely affected. 
+
+ We will need to significantly increase the size of our organization, and we may experience difficulties in managing growth. 
+
+ There is no established public market for our common stock and a public market may not be obtained or be liquid and therefore you may
+not be able to sell your shares. 
+
+Corporate Information 
+
+ We were incorporated under the laws of the State of Delaware in January 2012. Our offices are located at 25 Broadway, 9th Floor, New
+York, New York 10004, and our telephone number is (212) 332-3241. Our website address is www.axsome.com. The information contained on our website is not incorporated by reference into this
+prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. 
+
+ We have proprietary rights to a number of trademarks used in this prospectus which are important to our business, including "Axsome Therapeutics." Solely for convenience, the trademarks
+and trade names in this prospectus are referred to without the and symbols, but such references should not be construed as any indicator that their respective owners will
+not assert, to the fullest extent under applicable law, their rights thereto. All other trademarks, trade names, and service marks appearing in this prospectus are the property of their respective
+owners.
+
+ 
+
+ 
+
+ 7
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+Implications of Being an Emerging Growth Company 
+
+ We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth
+company may take advantage of relief from certain reporting requirements and other burdens that are otherwise generally applicable to public companies. These provisions
+include:
+
+ only two years of audited financial statements, in addition to any required unaudited interim financial statements, with
+correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure; 
+
+ exemption from the auditor attestation requirement on the effectiveness of our internal controls over financial reporting; 
+
+ reduced disclosure about our executive compensation arrangements; and
+
+ no requirements for non-binding advisory votes on executive compensation or golden parachute arrangements. 
+
+ We
+may take advantage of these provisions for up to five years or such earlier time that we no longer qualify as an emerging growth company. We would cease to be an emerging growth
+company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than
+$1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced reporting requirements and other burdens. For example, we
+have taken advantage of the reduced reporting requirements with respect to disclosure regarding our executive compensation arrangements, have presented only two years of audited consolidated financial
+statements, have presented reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure, and have taken the exemption from auditor attestation on the
+effectiveness of our internal controls over financial reporting. To the extent that we take advantage of these reduced reporting requirements, the information that we provide stockholders may be
+different than you might obtain from other public companies in which you hold equity interests. 
+
+ 
+
+ 8
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+ 
+
+ The Offering 
+ 
+
+ 
+
+ Common stock offered by us
+ 
+4,250,000 shares
+
+ Common stock to be outstanding immediately after this offering
+ 
+ 17,720,477 shares
+
+ Option to purchase additional shares
+ 
+ We have granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to
+an additional 637,500 shares from us to cover over-allotments.
+
+ Use of proceeds
+ 
+ We estimate that the net proceeds to us from this offering, after deducting estimated underwriting discounts and commissions
+and estimated offering expenses payable by us, will be approximately $45.4 million, assuming an initial public offering price of $12.00 per share, which is the midpoint of the price range set forth on the cover page of this
+prospectus.
+
+ 
+ 
+ We anticipate that the majority of the net proceeds from this offering will be used to fund the ongoing clinical development
+of our two main product candidates, AXS-02 and AXS-05. The remaining proceeds will be used for working capital and general corporate purposes. See "Use of Proceeds" for additional information.
+
+ Risk factors
+ 
+ You should read the "Risk Factors" section of this prospectus for a discussion of factors to consider carefully before
+deciding to invest in shares of our common stock.
+
+ Proposed NASDAQ Capital
+
+Market symbol
+ 
+ AXSM
+
+ 
+
+ 
+
+ The number of shares of our common stock that will be outstanding immediately after this offering includes 11,108,144 shares of common stock outstanding as of September 30, 2015,
+and 2,362,333 shares of common stock issuable upon conversion of all currently outstanding convertible notes upon the completion of this offering. This calculation
+excludes:
+
+ any shares of common stock issuable upon exercise of the over-allotment option granted to the underwriters; 
+
+ 960,815 shares of common stock issuable upon exercise of stock options outstanding as of September 30, 2015, at a weighted
+average exercise price of $3.15 per share; 
+
+ 230,409 shares of common stock issuable upon the exercise of outstanding warrants as of September 30, 2015, at an exercise
+price of $1.30 per share; 
+
+ 42,059 shares of common stock issuable upon the exercise of outstanding warrants as of September 30, 2015, with a current
+exercise price of $5.94 per share. The warrant price will automatically adjust to a 10% premium to the conversion price of the convertible notes we issued from September 2014 through November 2014
+during a mandatory conversion, defined in the notes as the occurrence of an equity financing of at least $2,000,000 in gross aggregate cash proceeds, in which the conversion price would be equal to
+$5.40 per share, as adjusted for any capitalization changes; provided, however, if the initial public offering price per share is less than
+
+ 
+
+ 9
+
+ 
+
+Table of Contents
+
+ 
+
+$5.40 per share, then the note conversion price will equal 75% of the initial public offering price; and
+
+ 3,538,960 shares of common stock available for future grant under our 2015 Omnibus Incentive Compensation Plan, or the 2015 Plan,
+which will become effective on the business day immediately preceding the effective date of the registration statement for this offering (including the 38,960 shares of common stock reserved for
+issuance under our 2013 Equity Compensation Plan, as of September 30, 2015, which shares will be added to the shares reserved under the 2015 Plan upon its effectiveness).
+
+ Unless
+otherwise indicated, all information in this prospectus reflects and assumes the following:
+
+ the filing and effectiveness of our amended and restated certificate of incorporation and the adoption of our amended and restated
+bylaws, each of which will occur immediately prior to the completion of this offering; 
+
+ the automatic conversion upon the closing of the offering of (1) the aggregate principal amount of approximately
+$4.1 million and interest accrued as of October 30, 2015, under our outstanding convertible notes at an assumed conversion price of $5.40 per share into 831,997 shares of common stock,
+and (2) the aggregate principal amount of approximately $8.7 million and interest accrued as of October 30, 2015, under our outstanding convertible notes at an assumed conversion
+price of $5.94 per share into 1,530,336 shares of common stock. The number of shares of our common stock to be issued upon conversion of the convertible notes depends on the initial public offering
+price of our common stock. Each convertible note will convert at a conversion price equal to its respective assumed conversion price listed above, as adjusted for any capitalization changes; provided,
+however, if the initial public offering price per share is less than the assumed conversion price, then the note conversion price will equal 75% of the initial public offering price. For a description
+of the convertible notes, see "Capitalization" and Note 8 to our consolidated financial statements included elsewhere in this prospectus; 
+
+ no exercise of the underwriters' option to purchase additional shares; 
+
+ no exercise of outstanding options or warrants after September 30, 2015; and
+
+ a 7.3445-for-1 forward stock split of our common stock effected on October 30, 2015.
+
+ 
+
+ 
+
+ 10
+
+ 
+
+ Table of Contents 
+
+ 
+
+ Summary Consolidated Financial Data 
+
+ The following table summarizes our consolidated financial data. We have derived the following consolidated statements of operations
+data for the years ended December 31, 2013 and 2014 from our audited consolidated financial statements, included elsewhere in this prospectus. We have derived the consolidated statements of
+operations data for the nine months ended September 30, 2014 and 2015, and the consolidated balance sheet data as of September 30, 2015, from our unaudited consolidated financial
+statements included elsewhere in this prospectus. The unaudited consolidated financial data include, in the opinion of management, all adjustments, consisting of normal recurring
+adjustments, that are necessary for a fair statement of our consolidated financial position and results of operations for these periods. Our historical results for any prior period are not necessarily
+indicative of results to be expected in any future period, and our results for any interim period are not necessarily indicative of the results to be expected for a full fiscal year. The following
+summary consolidated financial data should be read in conjunction with the information under "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and
+Results of Operations," and our consolidated financial statements and related notes included elsewhere in this prospectus.
+
+ 
+
+ 
+
+ 
+
+ 
+Year ended
+
+December 31, 
+ 
+Nine months ended
+
+September 30, 
+ 
+
+ 
+
+ 
+2013 
+ 
+2014 
+ 
+2014 
+ 
+2015 
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+
+ 
+
+ Statements of operations data:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Operating expenses:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Research and development 
+ 
+
+$
+1,535,255
+ 
+
+$
+4,279,200
+ 
+
+$
+2,931,673
+ 
+
+$
+4,569,072
+ 
+
+ General and administrative 
+ 
+ 
+304,183
+ 
+ 
+1,392,830
+ 
+ 
+791,993
+ 
+ 
+1,472,671
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ Total operating expenses
+ 
+ 
+1,839,438
+ 
+ 
+5,672,030
+ 
+ 
+3,723,666
+ 
+ 
+6,041,743
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ Loss from operations
+ 
+ 
+(1,839,438
+)
+ 
+(5,672,030
+)
+ 
+(3,723,666
+)
+ 
+(6,041,743
+)
+
+ Interest and amortization of debt discount/premium (expense) income
+ 
+ 
+(327,192
+)
+ 
+2,233,338
+ 
+ 
+1,899,140
+ 
+ 
+(619,645
+)
+
+ Tax credit
+ 
+ 
+ 
+ 
+ 
+184,139
+ 
+ 
+184,139
+ 
+ 
+ 
+ 
+
+ Change in fair value of warrant liability
+ 
+ 
+ 
+ 
+ 
+(57,106
+)
+ 
+ 
+ 
+ 
+(14,563
+)
+
+ Change in fair value of embedded derivative liabilities
+ 
+ 
+ 
+ 
+ 
+182,000
+ 
+ 
+ 
+ 
+ 
+274,800
+ 
+
+ Loss on extinguishment of debt
+ 
+ 
+ 
+ 
+ 
+(2,870,903
+)
+ 
+(2,870,903
+)
+ 
+(2,444,516
+)
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ Net loss
+ 
+
+$
+(2,166,630
+)
+
+$
+(6,000,562
+)
+
+$
+(4,511,290
+)
+
+$
+(8,845,667
+)
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ Weighted average basic and diluted common shares outstanding
+ 
+ 
+7,690,572
+ 
+ 
+9,099,188
+ 
+ 
+8,459,106
+ 
+ 
+11,108,144
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ Net loss per common share basic and diluted
+ 
+
+$
+(0.28
+)
+
+$
+(0.66
+)
+
+$
+(0.53
+)
+
+$
+(0.80
+)
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 11
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+ 
+
+ 
+As of September 30, 2015 
+ 
+
+ 
+
+ 
+Actual 
+ 
+Pro forma(1) 
+ 
+Pro forma
+
+as adjusted(2)(3) 
+ 
+
+ 
+
+ 
+(unaudited) 
+ 
+
+ Balance sheet data:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ 
+
+$
+4,620,867
+ 
+
+$
+4,620,867
+ 
+
+$
+50,050,867
+ 
+
+ Total assets
+ 
+ 
+6,137,598
+ 
+ 
+6,137,598
+ 
+ 
+51,567,598
+ 
+
+ Total current liabilities
+ 
+ 
+2,384,769
+ 
+ 
+2,233,971
+ 
+ 
+2,233,971
+ 
+
+ Convertible notes, net of discounts, non-current portion
+ 
+ 
+15,137,820
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Interest payable, non-current portion
+ 
+ 
+42,333
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total stockholders' (deficit) equity
+ 
+ 
+(11,427,324
+)
+ 
+3,903,627
+ 
+ 
+49,333,627
+ 
+
+ 
+
+ 
+
+(1)Pro
+forma amounts reflect (a) the automatic conversion of all of our outstanding convertible notes, together with any accrued and unpaid interest
+thereon, into an aggregate of 2,362,333 shares of our common stock upon the closing of this offering, assuming an initial public offering price of $12.00 per share (the midpoint of the price range set
+forth on the cover page of this prospectus), and (b) in conjunction with the conversion of the convertible notes: (i) the accelerated amortization of $1.7 million of unamortized
+debt premium; and (ii) the reclassification of the warrant liability to additional paid-in capital as, upon the closing of this offering, it is not subject to remeasurement.
+
+ 
+
+(2)Pro
+forma as adjusted amounts reflect the pro forma conversion adjustments described in footnote (1) above, as well as the sale of 4,250,000 shares
+of our common stock in this offering at an assumed initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover page of this prospectus), and after
+deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
+
+ 
+
+(3)A
+$1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) cash, total assets, and total stockholders' (deficit)
+equity by $4.0 million, assuming the number of shares offered by us as stated on the cover page of this prospectus remain unchanged and after deducting the estimated underwriting discounts and
+commissions and estimated offering expenses payable by us. Similarly, a 1,000,000 share increase (decrease) in the number of shares offered by us, as set forth on the cover page of this prospectus,
+would increase (decrease) cash, total assets, and total stockholders' (deficit) equity by $11.2 million, assuming the assumed initial public offering price remains the same, and after deducting
+the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
+
+ 
+
+ 
+
+ 12
+
+ 
+
+Table of Contents 
+
+ 
+ 
+
+ RISK FACTORS 
+ 
+
+ Investing in our common stock involves a high degree of risk. You should consider carefully the risks and
+uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase
+shares of our common stock. If any of the following risks is realized, our business, financial condition, results of operations, and prospects could be materially and adversely affected. In that
+event, the price of our common stock could decline, and you could lose all or part of your investment.
+
+ RISKS RELATED TO OUR FINANCIAL CONDITION AND CAPITAL REQUIREMENTS 
+
+We have incurred significant losses since our inception, anticipate that we will incur substantial
+and increasing losses for the foreseeable future, and may never achieve or maintain profitability. 
+
+ We are a clinical stage biopharmaceutical company with a limited operating history. For the last several years, we have focused our
+efforts primarily on developing AXS-02 and AXS-05, with the goal of achieving regulatory approval. Since inception, we have incurred significant operating losses. Our net losses were
+$2.2 million, $6.0 million, and $8.8 million for the years ended December 31, 2013 and 2014, and the nine months ended September 30, 2015, respectively. As of
+September 30, 2015, we had an accumulated deficit of $17.1 million. To date, we have not received regulatory approvals for any of our product candidates or generated any revenue from the
+sale of products, and we do not expect to generate any revenue in the foreseeable future. We expect to continue to incur substantial and increasing expenses and operating losses over the next several
+years, as we continue to develop AXS-02, AXS-05, and our other current and future product candidates. In addition, we expect to incur significant sales, marketing, and manufacturing expenses related
+to the commercialization of AXS-02, AXS-05, and our other current and future product candidates, if they are approved by the U.S. Food and Drug Administration, or FDA. As a result, we expect to
+continue to incur significant losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:
+
+ conduct our Phase 3 clinical trial with AXS-02 for the treatment of pain associated with complex regional pain syndrome, or
+CRPS; 
+
+ initiate and enroll patients in our Phase 3 clinical trials in other indications for AXS-02 and for AXS-05; 
+
+ in-license or acquire additional product candidates; 
+
+ conduct late-stage clinical trials for any product candidates that successfully complete early-stage clinical trials; 
+
+ seek regulatory approval for any product candidates that successfully complete late-stage clinical trials; 
+
+ conduct additional non-clinical studies with any product candidates; 
+
+ conduct preclinical studies with AXS-06 or any additional product candidates; 
+
+ increase manufacturing batch sizes of AXS-02 to satisfy FDA requirements for a marketing application submission; 
+
+ establish a sales, marketing, and distribution infrastructure, and scale up external manufacturing capabilities to commercialize any
+products for which we may obtain regulatory approval and that we choose not to license to a third party; 
+
+ require larger quantities of product; 
+
+ maintain, expand, and protect our intellectual property portfolio; 
+
+ hire additional clinical, quality control, and scientific personnel; 
+
+13
+
+ 
+
+Table of Contents
+
+ add operational, financial, and management information systems and personnel, including personnel to support our product candidate
+development and planned future commercialization efforts; and
+
+ add product candidates to our pipeline in the future. 
+
+ To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. We do not expect to generate significant revenue
+unless and until we are able to obtain marketing approval for and successfully commercialize one or more of our product candidates. This will require us to be successful in a range of challenging
+activities, including completing preclinical testing and clinical trials of our product candidates, discovering additional product candidates, potentially entering into collaboration and license
+agreements, obtaining regulatory approval for product candidates and manufacturing, marketing, and selling any products for which we may obtain regulatory approval, achieving market acceptance of our
+products, satisfying any post-marketing requirements, maintaining appropriate distribution, setting prices, and obtaining reimbursement for our products from private insurance or government payors. We
+are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never achieve profitability.
+
+ 
+
+ Because
+of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses we may
+incur or when, or if, we will be able to achieve profitability. If we are required by the FDA or comparable foreign regulatory authorities to perform studies in addition to those currently expected,
+or if there are any delays in completing our clinical trials or the development of any of our product candidates, our expenses could increase. 
+
+ Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the
+value of our
+company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product offerings, or even continue our operations. A decline
+in the value of our company could also cause you to lose all or part of your investment.
+
+We will need additional funding to conduct our future clinical trials and to complete development
+and commercialization of our product candidates. Even if this offering is successful, if we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our product
+development programs or commercialization efforts. 
+
+ Conducting clinical trials, pursuing regulatory approvals, establishing outsourced manufacturing relationships, and successfully
+manufacturing and commercializing our product candidates, including AXS-02 and AXS-05, is, and will be, a very time-consuming, expensive, and uncertain process that takes years to complete. We will
+need to raise additional capital to:
+
+ fund our future clinical trials for our current product candidates, especially if we encounter any unforeseen delays or difficulties
+in our planned development activities; 
+
+ fund our operations and continue our efforts to hire additional personnel and build a commercial infrastructure to prepare for the
+commercialization of AXS-02, AXS-05, and our other current and future product candidates, if approved by the FDA; 
+
+ qualify and outsource the commercial-scale manufacturing of our products under current good manufacturing practices, or cGMP; 
+
+ develop additional product candidates, including AXS-06; and
+
+ in-license other product candidates. 
+
+ We believe that with our available cash as of September 30, 2015, along with the net proceeds from this offering, we will have sufficient funds to meet our projected operating
+requirements through
+
+ 
+
+14
+
+ 
+
+Table of Contents
+
+at
+least the third quarter of 2017. We have based this estimate on assumptions that may prove to be wrong and we could spend our available financial resources faster than we currently expect. Further,
+we may not have sufficient financial resources to meet all of our objectives if AXS-02 or AXS-05 is approved, which could require us to postpone, scale back, or eliminate some, or all, of these
+objectives, including our potential launch activities relating to AXS-02 and AXS-05. Our future funding requirements will depend on many factors, including, but not limited
+to:
+
+ the potential for delays in our efforts to seek regulatory approval for AXS-02 and AXS-05, and any costs associated with such delays; 
+
+ the costs of establishing a commercial organization to sell, market, and distribute AXS-02 and AXS-05; 
+
+ the rate of progress and costs related to our Phase 3 development of AXS-02 and AXS-05; 
+
+ the rate of progress and costs of our efforts to prepare for the submission of a new drug application, or NDA, for any product
+candidates that we may in-license or acquire in the future, and the potential that we may need to conduct additional clinical or preclinical trials to support applications for regulatory approval; 
+
+ the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights associated with
+our product candidates; 
+
+ the cost and timing of manufacturing sufficient supplies of AXS-02 and AXS-05 in preparation for commercialization; 
+
+ the effect of competing technological and market developments; 
+
+ subject to receipt of regulatory approval, revenue, if any, received from commercial sales of our product candidates; 
+
+ the terms and timing of any collaborative, licensing, co-promotion, or other arrangements that we may establish;
+and
+
+ the success of the commercialization of AXS-02, AXS-05, and any other of our current or future product candidates. 
+
+ Future
+capital requirements will also depend on the extent to which we acquire or invest in additional businesses, products, and technologies. Until we can generate a sufficient amount
+of product revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings,
+royalties, and corporate collaboration and licensing arrangements, as well as through interest income earned on cash and investment balances. We cannot be certain that additional funding will be
+available on acceptable terms, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our development programs or our
+commercialization efforts. 
+
+We have a limited operating history and no history of commercializing products, which may make it
+difficult to evaluate our business and prospects. 
+
+ We commenced operations in 2012, and our operations to date have been limited to organizing and staffing our company, business
+planning, raising capital, and developing our product candidates, including undertaking preclinical studies and conducting clinical trials of our lead product candidates, AXS-02 and AXS-05, and our
+other product candidates. We have not yet demonstrated an ability to obtain regulatory approval for, or successfully commercialize, a product candidate. In addition, as a relatively nascent business,
+we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown difficulties. If our product candidates are approved by the FDA, we will need to expand our
+capabilities to support commercial activities. We may not be successful in adding such capabilities. Consequently, any predictions about our future performance may not be as accurate 
+
+15
+
+ 
+
+Table of Contents
+
+as
+they could be if we had a history of successfully developing and commercializing pharmaceutical products. 
+
+ RISKS RELATED TO OUR BUSINESS AND THE DEVELOPMENT OF OUR PRODUCT CANDIDATES 
+
+We are substantially dependent on the success of our lead product candidates, AXS-02 and AXS-05, and
+cannot guarantee that these product candidates will successfully complete our planned Phase 3 clinical trials, receive regulatory approval, or be successfully commercialized. 
+
+ We currently have no products approved for commercial distribution. We have invested a significant portion of our efforts and financial
+resources in the development of our most advanced product candidates, AXS-02 and AXS-05. Our business depends entirely on the successful development and commercialization of our product candidates,
+and in particular, AXS-02 and AXS-05, which may never occur. Our ability to generate revenues in the near term is substantially dependent on our ability to develop, obtain regulatory approval for, and
+then successfully commercialize AXS-02 and AXS-05. We currently generate no revenues from sales of any products, and we may never be able to develop or commercialize a marketable product. 
+
+ Our
+lead product candidates, AXS-02 and AXS-05, will require additional clinical and non-clinical development, regulatory approval, commercial manufacturing arrangements, establishment
+of a commercial organization, significant marketing efforts, and further investment before we generate any revenues from product sales. We initiated our Phase 3 trial with AXS-02 for the
+treatment of pain in patients with CRPS in July 2015, which we expect to complete by the end of 2017. However, we cannot assure you that we will meet this timeline. Further, we plan to initiate a
+Phase 3 clinical trial with AXS-05 for the treatment of treatment resistant depression, or TRD, in or before the first quarter of 2016. Our Phase 1 trial with AXS-05 was initially
+conducted with two tablets, one tablet consisting of dextromethorphan, or DM, and one tablet consisting of bupropion. However, we intend to conduct our Phase 3 clinical trial using one tablet
+containing both DM and bupropion. This change in formulation may delay the filing of our investigational new drug application, or IND, and thereby delay the start of our clinical trial with AXS-05 for
+the treatment of TRD. 
+
+ We
+are not permitted to market or promote any of our product candidates, including AXS-02 or AXS-05, before we receive regulatory approval from the FDA or comparable foreign regulatory
+authorities, and we may never receive such regulatory approval for any of our product candidates. Even if AXS-02 or AXS-05 is approved, they may be subject to limitations on the indicated uses for
+which they may be marketed, distribution restrictions, or to other conditions of approval, may contain significant safety warnings, including boxed warnings, contraindications, and precautions, may
+not be approved with label statements necessary or desirable for successful commercialization, or may contain requirements for costly post-market testing and surveillance, or other requirements,
+including the submission of a risk evaluation and mitigation strategy, or REMS, to monitor the safety or efficacy of the products. If we do not receive FDA approval for, and successfully
+commercialize, AXS-02 or AXS-05, we will not be able to generate revenue from these product candidates in the United States in the foreseeable future, or at all. Any significant delays in obtaining
+approval for and commercializing AXS-02 or AXS-05 will have a material adverse impact on our business and financial condition. 
+
+ We have not previously submitted an NDA to the FDA, or similar drug approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that AXS-02,
+AXS-05, or any other of our current or future product candidates will be successful in clinical trials or receive regulatory approval. In addition, we have not submitted an IND for AXS-05. AXS-02 has
+only
+completed one Phase 1 clinical trial. We also have not yet submitted our planned clinical trial protocol for AXS-02 for the treatment of chronic low back pain, or CLBP, with Modic changes, or
+MCs. Furthermore, our product candidate AXS-06 is only in the early stages of product development and additional preclinical work is required before we may submit an IND and begin clinical trials.
+
+16
+
+ 
+
+Table of Contents
+
+ Our
+product candidates are susceptible to the risks of failure inherent at any stage of product development, including the appearance of unexpected adverse events or failure to achieve
+its primary endpoints in subsequent clinical trials, including our initiated and planned Phase 3 clinical trials. Further, our product candidates, including AXS-02 and AXS-05, may not receive
+regulatory approval even if they are successful in clinical trials. 
+
+ If
+approved for marketing by applicable regulatory authorities, our ability to generate revenues from AXS-02 or AXS-05 will depend on our ability
+to:
+
+ create market demand for AXS-02 and AXS-05 through our own marketing and sales activities, and any other arrangements to promote these
+product candidates that we may otherwise establish; 
+
+ receive regulatory approval for claims that are necessary or desirable for successful marketing; 
+
+ hire, train, and deploy a sales force to commercialize AXS-02 and AXS-05 in the United States; 
+
+ manufacture AXS-02 and AXS-05 in sufficient quantities and at acceptable quality and manufacturing cost to meet commercial demand at
+launch and thereafter; 
+
+ establish and maintain agreements with wholesalers, distributors, and group purchasing organizations on commercially reasonable terms; 
+
+ create partnerships with, or offer licenses to, third parties to promote and sell AXS-02 in foreign markets where we receive marketing
+approval; 
+
+ maintain patent and trade secret protection and regulatory exclusivity for AXS-02 and AXS-05; 
+
+ launch commercial sales of AXS-02 and AXS-05, whether alone or in collaboration with others; 
+
+ achieve market acceptance of AXS-02 and AXS-05 by patients, the medical community, and third-party payors; 
+
+ achieve appropriate reimbursement for AXS-02 and AXS-05; 
+
+ effectively compete with other therapies; and
+
+ maintain a continued acceptable safety profile of AXS-02 and AXS-05 following launch. 
+
+ As
+we continue to develop our other product candidates, including AXS-06, we expect to face similar risks related to our ability to develop, obtain regulatory approval for, and
+successfully commercialize such product candidates as we face with AXS-02 and AXS-05. 
+
+Potential conflicts of interest exist with respect to the intellectual property rights that we
+license from an entity owned by our Chief Executive Officer and Chairman of the Board, and it is possible that our interests and their interests may diverge. 
+
+ In 2012, we entered into three exclusive license agreements with Antecip Bioventures II LLC, or Antecip, an entity owned by our
+Chief Executive Officer and Chairman of the Board, Herriot Tabuteau, M.D., in which we were granted exclusive licenses to develop, manufacture, and commercialize Antecip's patents and applications
+related to the development of our current product candidates. See "Business Material License Agreements." Although Dr. Tabuteau dedicates all of his working time to us because
+Antecip is an inactive intellectual property holding company, he may face potential conflicts of interest regarding these licensing transactions as a result of his ownership of Antecip. The license
+agreements provide that, subject to the reasonable consent of Antecip, we have the right to control the prosecution or defense, as the case may require, of a patent infringement claim involving the
+licensed intellectual property. Our interests with respect to pleadings and settlements in such cases may be at odds with those of Antecip. If there is a dispute between us and Antecip,
+Dr. Tabuteau will have a conflict of interest because he may, at the time of a prospective dispute, simultaneously have a financial interest in and owe a fiduciary duty to Antecip and
+simultaneously have 
+
+17
+
+ 
+
+Table of Contents
+
+a
+financial interest in and owe a fiduciary duty to us. For example, if a contractual dispute arises between us and Antecip under any of the license agreements we have with Antecip,
+Dr. Tabuteau may be in a position where he would benefit if Antecip prevails, to the detriment of our business or our investors, even though he is an officer and director of our company,
+because he is the sole owner of Antecip. Similarly, if we have a claim of any kind against Antecip, Dr. Tabuteau may be, even as our Chief Executive Officer and Chairman of the Board, reluctant
+to assert a claim by us against Antecip because of his financial interest in Antecip. We cannot assure you that any conflicts will be resolved in our favor, and as a result, our business could be
+impeded or materially harmed. 
+
+We may expend our limited resources to pursue a particular product candidate or indication and fail
+to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. 
+
+ Because we have limited financial and managerial resources, we focus on developing product candidates for specific indications that we
+identify as most likely to succeed, in terms of both its regulatory approval and commercialization. As such, we are currently primarily focused on the development of AXS-02 for the treatment of pain
+associated with CRPS and knee osteoarthritis, or OA, associated with bone marrow lesions, or BMLs, and AXS-05 for the treatment of TRD. As a result, we may forego or delay pursuit of opportunities
+with other product candidates or for other indications that may prove to have greater commercial potential. Additionally, as more fully described in "Business Material License Agreements,"
+we are required to pay to an entity owned by our Chief Executive Officer and Chairman of the Board certain royalty payments related to the development of AXS-02 and AXS-05, as well as AXS-04, a
+product candidate that is currently in early-stage development, but not with respect to the development of other product candidates, which may influence management's decision concerning which product
+candidates or indications to pursue. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and
+future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or
+target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would
+have been more advantageous for us to retain sole development and commercialization rights to such product candidate. 
+
+Our future growth may depend on our ability to identify and develop product candidates and if we do
+not successfully identify and develop product candidates or integrate them into our operations, we may have limited growth opportunities. 
+
+ A component of our business strategy is to continue to develop a pipeline of product candidates by developing products that we believe
+are a strategic fit with our focus on pain therapeutics and central nervous system, or CNS, therapeutics. However, these business activities may entail numerous operational and financial risks,
+including:
+
+ difficulty or inability to secure financing to fund business activities for such development; 
+
+ disruption of our business and diversion of our management's time and attention; 
+
+ higher than expected development costs; 
+
+ exposure to unknown liabilities; 
+
+ difficulty in managing multiple product development programs; and
+
+ inability to successfully develop new products or clinical failure. 
+
+ For
+instance, our prior efforts have resulted in our decision not to further develop certain product candidates that, at one time, appeared to be promising. We have limited resources to
+identify and execute the developments of products. Moreover, we may devote resources to potential development 
+
+18
+
+ 
+
+Table of Contents
+
+that
+are never completed, or we may fail to realize the anticipated benefits of such efforts. If we do not successfully develop and commercialize product candidates, we may not be able to obtain
+product revenues in future periods. 
+
+If safety and efficacy data for our product candidates, a reference listed drug, or published
+literature does not satisfactorily demonstrate safety and efficacy to the FDA, or if the FDA and other regulators do not permit us to rely on the data of a reference listed drug or published
+literature, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. 
+
+ We are not permitted to commercialize, market, promote, or sell any product candidate in the United States without obtaining marketing
+approval from the FDA. Comparable foreign regulatory authorities, such as the European Medicines Agency, or EMA, impose similar restrictions. 
+
+ In
+the United States, we currently plan to at least initially seek approval of our product candidates using the 505(b)(2) pathway. The FDA interprets Section 505(b)(2) of the
+Federal Food, Drug, and Cosmetic Act, or FDCA, for purposes of approving an NDA, to permit the applicant to rely, in part, upon published literature or the FDA's previous findings of safety and
+efficacy for an approved product. The FDA, though, requires companies to perform additional clinical trials or preclinical studies to support any deviation from the previously approved product and to
+support reliance on the FDA's prior findings of safety and efficacy or published literature. 
+
+ Under
+the 505(b)(2) pathway, the FDA may approve our product candidates for all or some of the label indications for which the referenced product has been approved, as well as for any
+new indication sought pursuant to the Section 505(b)(2) process. The label, however, may require all or some of the limitations, contraindications, warnings, or precautions included in the
+reference product's label, including a black box warning, or may require additional limitations, contraindications, warnings, or precautions, including class-wide warnings. For instance,
+antidepressants, including bupropion, include a class-wide black box warning regarding the increased risk of suicidal thoughts and behavior. 
+
+ Based
+on the side effects disclosed in FDA product labels for marketed drugs that contain the same active molecule as our product candidate, AXS-02 may result in nausea, fatigue, anemia,
+bone pain, constipation, fever, vomiting, dyspnea, hypersensitivity reactions, osteonecrosis of the jaw, renal toxicity, musculoskeletal pain, atypical fractures, hypocalcemia, bronchoconstriction, or
+other adverse events or potential adverse events reported or discussed in the product labels for zoledronic acid-containing products including Zometa, Reclast, and Aclasta. 
+
+ Based
+on the side effects disclosed in FDA product labels for marketed drugs that contain the same active molecules as our product candidate, AXS-05 may result in dry mouth, nausea,
+insomnia, dizziness, pharyngitis, abdominal pain, agitation, anxiety, tremor, seizure, increase in blood pressure and heart rate, hepatoxicity, hypoglycemia, thrombocytopenia or other hypersensitivity
+reactions, QT prolongation, left ventricular hypertrophy or left ventricular dysfunction, palpitation, sweating, tinnitus, myalgia, anorexia, urinary frequency, rash, seizure, hypertension, activation
+of mania or hypomania, psychosis and other neuropsychiatric reactions, suicidal ideation, suicide attempt, completed suicide, angle closure glaucoma, allergic or anaphylactoid or anaphylactic
+reactions, diarrhea, cough, vomiting,
+asthenia, peripheral edema, urinary tract infection, influenza, increased gamma-glutamyltransferase, flatulence, or other adverse events or potential adverse events reported or discussed in the
+product labels for bupropion-containing products or dextromethorphan-containing products including Wellbutrin, Wellbutrin SR, Wellbutrin XL, Zyban, Contrave, and Nuedexta. 
+
+ In
+addition, because we plan to file our product candidates under an NDA submitted pursuant to 505(b)(2), we will rely, at least in part, upon a reference listed drug and published
+literature. For example, we intend to rely on data collected in certain investigator-initiated Phase 2 clinical trials and other third-party studies in the published literature as well as FDA
+findings of safety and efficacy for approved drug products containing the same active molecules in AXS-02 and AXS-05. If the FDA 
+
+19
+
+ 
+
+Table of Contents
+
+disagrees
+with our conclusions regarding the appropriateness of our reliance on a reference listed drug or published literature, we could be required to conduct additional clinical trials or other
+studies to support our NDA, which could lead to unanticipated costs and delays or to the termination of our development program. If we are unable to obtain approval for our pharmaceutical formulations
+through the 505(b)(2) NDA process, we may be required to pursue the more expensive and time-consuming 505(b)(1) approval process, which consists of full reports of investigations of safety and
+effectiveness conducted by or for the applicant. In addition, because we plan to submit NDAs for AXS-02 and AXS-05 pursuant to the 505(b)(2) process, we have not conducted Phase 2 clinical
+trials for these product candidates and, as such, we will have less experience with actual testing of the product candidate. 
+
+ There
+may also be circumstances under which the FDA would not allow us to pursue a 505(b)(2) application. For instance, should the FDA approve a pharmaceutically equivalent product to
+our product candidates, we would no longer be able to use the 505(b)(2) pathway. In that case, it is the FDA's policy that the appropriate submission would be an Abbreviated New Drug Application, or
+ANDA, for a generic version of the approved product. We may, however, not be able to immediately submit an ANDA, as we could be blocked by others' periods of patent and regulatory exclusivity
+protection. 
+
+ Notwithstanding
+the approval of a number of products by the FDA under 505(b)(2) over the last few years, pharmaceutical companies and others have objected to the FDA's interpretation of
+Section 505(b)(2). If the FDA's interpretation of Section 505(b)(2) is successfully challenged, the FDA may change its policies and practices with respect to Section 505(b)(2)
+regulatory approvals, which could delay or even prevent the FDA from approving any NDA that we submit pursuant to the 505(b)(2) process. Moreover, our inability to pursue a 505(b)(2) application could
+result in new competitive products reaching the market more quickly than our product candidates, which could hurt our competitive position and our business prospects. 
+
+ We
+may never receive approval for any of our product candidates, and even if our product candidates are approved under 505(b)(2), the approval may be subject to limitations on the
+indicated uses for which the products may be marketed, distribution restrictions, or to other conditions of approval; may contain significant safety warnings, including boxed warnings,
+contraindications, and precautions; may not be approved with label statements necessary or desirable for successful commercialization; or may contain requirements for costly post-market testing and
+surveillance or other requirements, including REMS, to monitor the safety or efficacy of the products. Moreover, any future actions or inquiries by the FDA with respect to the reference listed drug
+may require that we make changes to our labeling or, possibly, withdraw the product from the market. 
+
+An NDA submitted under Section 505(b)(2) subjects us to the risk that we may be subject to a
+patent infringement lawsuit or regulatory actions that would delay or prevent the review or approval of our product candidate. 
+
+ Applicants submitting NDAs under Section 505(b)(2) of the FDCA must provide a patent certification with the application for all
+reference listed drugs and for all brand name products identified in published literature upon which the 505(b)(2) applicant relies. One such certification is known as a paragraph IV
+certification, which certifies that any patents listed in the FDA's publication, the Approved Drug Products with Therapeutic Equivalence Evaluations,
+commonly known as the Orange Book, are invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the product that is the subject of the 505(b)(2) NDA.
+
+ 
+
+ Under
+the Hatch-Waxman Act, the holder of patents or NDAs that the 505(b)(2) application references may file a patent infringement lawsuit after receiving notice of the
+paragraph IV certification. Filing of a patent infringement lawsuit against the filer of the 505(b)(2) applicant within 45 days of the patent or NDA owner's receipt of notice triggers a
+one-time, automatic, 30-month stay of the FDA's ability to approve the 505(b)(2) NDA. In such a case, the FDA may not approve the 
+
+20
+
+ 
+
+Table of Contents
+
+505(b)(2)
+NDA until the earlier of 30 months from the receipt of the notice of the paragraph IV certification, the expiration of the patent, when the infringement case concerning each
+such patent was favorably decided in the applicant's favor or settled, or such shorter or longer period as may be ordered by a court. Accordingly, we may invest a significant amount of time and
+expense in the development of one or more product candidates only to be subject to significant delay and patent litigation before such product candidates may be commercialized, if at all. In addition,
+a 505(b)(2) application will not be approved until any existing non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, or NCE, or exclusivities for changes to
+NCEs listed in the Orange Book for the referenced product have expired or, if possible, are carved out from the label. 
+
+ Companies that produce branded reference listed drugs routinely bring litigation against applicants that seek regulatory approval to manufacture and market generic and reformulated forms
+of their branded products. These companies often allege patent infringement or other violations of intellectual property rights as the basis for filing suit. Likewise, patent holders may bring patent
+infringement suits against companies that are currently marketing and selling their approved generic or reformulated products. Litigation to enforce or defend intellectual property rights is often
+complex and often involves significant expense and can delay or prevent introduction or sale of our product candidates. If patents are held to be valid and infringed by our product candidates in a
+particular jurisdiction, we may be required to cease selling, relinquish or destroy existing stock, or pay monetary damages in that jurisdiction unless we can obtain a license from the patent holder.
+There may also be situations where we use our business judgment and decide to market and sell our approved products, notwithstanding the fact that allegations of patent infringement(s) have not been
+finally resolved by the courts, which is known as an "at-risk launch." The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may
+include, among other things, damages measured by the profits lost by the patent owner which may be greater than the profits earned by the infringer. In the case of willful infringement, such damages
+may be increased up to three times. An adverse decision in patent litigation could have a material adverse effect on our business, financial position, and results of operations and could cause the
+market value of our common stock to decline. While, at this time, we believe that we will not need to file a paragraph IV certification for AXS-02 or AXS-05, should circumstances change,
+should the FDA disagree or should we be required to file a paragraph IV certification in the future for other product candidates, we may risk patent litigation and substantial delays.
+
+The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time
+consuming, and inherently unpredictable. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates
+as expected, and our ability to generate revenue will be materially impaired.
+
+ 
+
+ The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years
+following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the
+type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and may vary among jurisdictions, and may require us to amend our
+clinical trial protocols or conduct additional studies that require regulatory or institutional review board, or IRB, approval, or otherwise cause delays in the approval or rejection of an
+application. We have not obtained regulatory approval for any product candidate and it is possible that none of our existing product candidates, including AXS-02 and AXS-05, or any product candidates
+we may seek to develop in the future, will ever obtain regulatory approval. Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability or that of any
+of our collaborators to generate revenue from the particular product candidate, which likely would result in significant harm to our financial position and adversely impact our stock price. 
+
+21
+
+ 
+
+Table of Contents
+
+ Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping,
+labeling, storage, approval, advertising, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States, and by the EMA and
+similar regulatory authorities outside the United States and Europe. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We have no
+experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party clinical research organizations, or CROs, and consultants to assist us in
+this process. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to
+establish the product candidate's safety and efficacy for that indication. Securing marketing approval also requires the submission of information about the product manufacturing process to, and
+inspection of manufacturing facilities and clinical trial sites by, the regulatory authorities.
+
+ 
+
+ Clinical
+testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results
+of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials
+may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. Preclinical studies may also reveal unfavorable product
+candidate characteristics, including safety concerns. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or
+adverse safety profiles, notwithstanding promising results in earlier trials. Our future clinical trial results may not be successful. Moreover, should there be a flaw in a clinical trial, it may not
+become apparent until the clinical trial is well advanced. 
+
+ We
+may also experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our
+product candidates, including:
+
+ regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective
+trial site or amend trial protocols; 
+
+ we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols
+with prospective trial sites and our CROs; 
+
+ clinical trials of our product candidates may produce negative or inconclusive results, or our studies may fail to reach the necessary
+level of statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs. For instance, as CRPS may
+spontaneously resolve on its own, our studies in recently diagnosed patients may fail to show a treatment effect; 
+
+ the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these
+clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; 
+
+ our third-party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or meet their contractual
+obligations to us in a timely manner, or at all, or we may be required to engage in additional clinical trial site monitoring; 
+
+ we, the regulators, or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons,
+including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects, or other unexpected characteristics of
+the product candidate, or due to findings of undesirable effects caused by a chemically or mechanistically similar drug or drug candidate; 
+
+ changes in marketing approval policies during the development period rendering our data insufficient to obtain marketing approval; 
+
+22
+
+ 
+
+Table of Contents
+
+ changes in or the enactment of additional statutes or regulations; 
+
+ changes in regulatory review for each submitted product application; 
+
+ the cost of clinical trials of our product candidates may be greater than we anticipate or we may have insufficient funds for a
+clinical trial or to pay the substantial user fees required by the FDA upon the filing of an NDA; 
+
+ the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may
+be insufficient or inadequate; 
+
+ we may decide, or regulators may require us, to conduct additional clinical trials, analyses, reports, data, or preclinical trials, or
+we may abandon product development programs. For instance, for the development of AXS-02, the FDA has indicated that we will need to file a new IND for each indication to supplement the initial IND
+that we filed in 2013 for the treatment of pain associated with CRPS, and that we will need to conduct additional preclinical studies and clinical trials, such as non-clinical oral toxicology studies
+and clinical trials to further assess the safety and duration of effect of AXS-02, AXS-02 food effects, and possibly repeat dosing. For our planned Phase 3 clinical trial with AXS-02 for the
+treatment of the pain of knee OA associated with BMLs, although we have received a Special Protocol Assessment, or SPA, the FDA stated that if there is a recurrence of knee OA pain, we will need to
+explore repeat dosing, which would require additional preclinical studies. Also, as part of our clinical plan for AXS-02 for the treatment of the pain of knee OA associated with BMLs, we will need to
+conduct two preclinical chronic toxicology studies with AXS-02. For AXS-05, we will need to conduct additional clinical and preclinical studies in addition to our planned Phase 3 trials in
+order to file an NDA for this product candidate. The outcome of our studies may further necessitate additional clinical or preclinical work; 
+
+ we may fail to reach an agreement with regulators regarding the scope or design of our clinical trials; 
+
+ we may have delays in adding new investigators or clinical trial sites, or we may experience a withdrawal of clinical trial sites; 
+
+ patients that enroll in our studies may misrepresent their eligibility or may otherwise not comply with the clinical trial protocol,
+resulting in the need to drop the patients from the study or clinical trial, increase the needed enrollment size for the study or clinical trial, or extend the study's or clinical trial's duration; 
+
+ there may be regulatory questions regarding interpretations of data and results, or new information may emerge regarding our product
+candidates; 
+
+ the FDA or comparable foreign regulatory authorities may disagree with our study design or our interpretation of data from preclinical
+studies and clinical trials or find that a product candidate's benefits do not outweigh its safety risks. For instance, in our communications with the FDA, the FDA has raised questions and had
+comments regarding our preclinical studies and clinical trials, such as comments on the acceptability of the proposed trial designs for our product candidates, the number of patients planned for our
+studies, our data analysis plans, the applicability of the serum biomarkers studied in our Phase 1 study of AXS-02, the species and doses used in our preclinical studies, and the results of our
+preclinical studies; 
+
+ the FDA or comparable foreign regulatory authorities may not accept data from studies with clinical trial sites in foreign countries; 
+
+ the FDA or comparable foreign regulatory authorities may disagree with our intended indications. For instance, the FDA has raised
+questions regarding the relevance of only studying knee OA with BMLs as well as the pathophysiology of the pain of knee OA associated with BMLs, and CLBP associated with MCs; 
+
+23
+
+ 
+
+ Table of Contents 
+
+ the FDA or comparable foreign regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes
+or our manufacturing facilities for clinical and future commercial supplies; 
+
+ the FDA or comparable foreign regulatory authorities may take longer than we anticipate to make a decision on our product candidates;
+and
+
+ we may not be able to demonstrate that a product candidate provides an advantage over current standards of care or current or future
+competitive therapies in development. 
+
+ Moreover,
+if we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully
+complete clinical trials or other testing of our product candidates, if the results of these trials or tests are not positive, or are only modestly positive or if there are safety concerns, we
+may:
+
+ be delayed in obtaining marketing approval for our product candidates; 
+
+ not obtain marketing approval at all; 
+
+ obtain approval for indications or patient populations that are not as broad as intended or desired or are not covered by our
+intellectual property; 
+
+ obtain approval with labeling that includes significant use or distribution restrictions, including restrictions on the intended
+patient population, or safety warnings, including boxed warnings, contraindications, and precautions, or may not include label statements necessary or desirable for successful commercialization; 
+
+ be subject to additional post-marketing testing and surveillance requirements, including REMS;
+or
+
+ have the product removed from the market after obtaining marketing approval. 
+
+ Our product candidate development costs will also increase if we experience delays in testing or approvals and we may not have sufficient funding to complete the testing and approval
+process for any of our product candidates. We may be required to obtain additional funds to complete clinical trials and prepare for possible commercialization of our product candidates. We do not
+know whether any preclinical tests or clinical trials will be required, will begin as planned, will need to be restructured, or will be completed on schedule, or at all. Significant delays relating to
+any preclinical studies or clinical trials also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors, or the
+competitors of our collaborators, to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of
+operations. In addition, many of the factors that cause, or lead to, such delays may ultimately lead to the denial of marketing approval of any of our product candidates. If any of this occurs, our
+business, financial condition, results of operations, and prospects will be materially harmed.
+
+ 
+
+ Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require
+additional preclinical studies, clinical trials, or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit, or prevent
+marketing approval of a product candidate. Furthermore, there is the possibility that the FDA has not previously reviewed product candidates for the indications we are pursuing, such as
+bisphosphonates for the treatment of pain. As a result, we may experience delays in regulatory approval due to uncertainties in the approval process.
+
+ 
+
+ Finally,
+even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications or uses than we request, may contain
+significant safety 
+
+24
+
+ 
+
+Table of Contents
+
+warnings,
+including black box warnings, contraindications, and precautions, may grant approval contingent on the performance of costly post-marketing clinical trials, surveillance, or other
+requirements, including REMS to monitor the safety or efficacy of the product, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the
+successful commercialization of that product candidate. Any of these scenarios could compromise the commercial prospects for our product candidates. 
+
+ If
+we experience delays in obtaining approval, if we fail to obtain approval of a product candidate or if the label for a product candidate does not include the labeling claims necessary
+or desirable for the successful commercialization of that product candidate, the commercial prospects for such product candidate may be harmed and our ability to generate revenues from that product
+candidate will be materially impaired. 
+
+The FDA may determine that AXS-02, AXS-05, or any other of our current or future product candidates
+have undesirable side effects that could delay or prevent their regulatory approval or commercialization. 
+
+ Undesirable side effects caused by our product candidates could cause us, IRBs, and other reviewing entities or regulatory authorities
+to interrupt, delay, or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. For example,
+if concerns are raised regarding the safety of a new drug as a result of undesirable side effects identified during clinical or preclinical testing, the FDA may order us to cease further development,
+decline to approve the drug, or issue a letter requesting additional data or information prior to making a final decision regarding whether or not to approve the drug.
+
+ 
+
+ The
+number of requests for additional data or information issued by the FDA in recent years has increased, and resulted in substantial delays in the approval of several new drugs.
+Undesirable side effects caused by AXS-02, AXS-05, or any other of our current or future product candidates could also result in denial of regulatory approval by the FDA or other comparable foreign
+authorities for any or all targeted indications or the inclusion of unfavorable information in our product labeling, such as limitations on the indicated uses for which the products may be marketed or
+distributed, a label with significant safety warnings, including boxed warnings, contraindications, and precautions, a label without statements necessary or desirable for successful commercialization,
+or may result in requirements for costly post-marketing testing and surveillance, or other requirements, including REMS, to monitor the safety or efficacy of the products, and in turn prevent us from
+commercializing and generating revenues from the sale of AXS-02, AXS-05, or any other of our current or future product candidates. 
+
+ To
+date, the most commonly reported adverse events observed in the completed clinical trial of AXS-02 include headache, fever, musculoskeletal pain, diarrhea, abdominal pain, nausea,
+myalgia, and chills. Some reported adverse events led to discontinuation from our trial of AXS-02. These adverse events included abdominal pain. 
+
+ To
+date, the most commonly reported adverse events observed in a completed clinical trial with zoledronic acid, the active molecule in AXS-02, for the treatment of the pain of knee OA
+associated with BMLs include acute phase reactions, primarily cold or flu-like symptoms and headaches. 
+
+ To date, the most commonly reported adverse events observed in a completed clinical trial with zoledronic acid, the active molecule in AXS-02, for the treatment of CLBP associated with
+MCs include fever, headache, myalgia, arthralgia, pain, nausea, and flu-like symptoms. Sinusitis requiring temporary hospitalization following zoledronic acid infusion was reported in one patient and
+was therefore classified as a serious adverse event.
+
+ 
+
+ To
+date, the most commonly reported adverse events observed in the completed clinical trials of the combination of DM, one of the active molecules in AXS-05, and quinidine for the
+treatment of 
+
+25
+
+ 
+
+Table of Contents
+
+pseudobulbar
+affect and agitation in patients with probable AD include falls, dizziness, headache, nausea, diarrhea, and urinary tract infection. 
+
+ To
+date, the most commonly reported adverse events observed in the completed clinical trials of AXS-05 include headache, nausea, dizziness, insomnia, dry mouth, fatigue, hypoesthesia,
+disturbance in attention, hyperhidrosis, increased heart rate, palpitation, constipation, diarrhea, increased blood pressure, and tremor. Some reported adverse events resulted in discontinuations from
+our trials of AXS-05. These adverse events included chest pain, headache, abdominal pain, diarrhea, signs of potential allergic reactions, atrial tachycardia, disturbance in attention, metamorphosia,
+tremor, feeling hot, dizziness, dyspnea, and increased respiratory rate. 
+
+ If any of our other product candidates is associated with serious adverse events or undesirable side effects or have properties that are unexpected, we may need to abandon development or
+limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe, or more acceptable from a
+risk-benefit perspective. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any
+of these occurrences may significantly harm our business, financial condition, results of operations, and prospects.
+
+ 
+
+If we experience delays or difficulties in the enrollment of patients in clinical trials, our
+receipt of necessary regulatory approvals could be delayed or prevented. 
+
+ We may not be able to initiate or continue conducting clinical trials for our product candidates if we are unable to locate and enroll
+a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States. Some of our competitors have ongoing
+clinical trials for product candidates that treat the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical
+trials of our competitors' product candidates. Patient enrollment is affected by other factors including:
+
+ the size and nature of the patient population; 
+
+ the severity of the disease under investigation; 
+
+ the eligibility criteria for, and design of, the clinical trial in question, including factors such as frequency of required
+assessments, length of the study, and ongoing monitoring requirements; 
+
+ the perceived risks and benefits of the product candidate under study, including the potential advantages or disadvantages of the
+product candidate being studied in relation to other available therapies; 
+
+ competition in recruiting and enrolling patients in clinical trials; 
+
+ the efforts to facilitate timely enrollment in clinical trials; 
+
+ the patient referral practices of physicians; 
+
+ effectiveness of publicity created by clinical trial sites regarding the trial; 
+
+ patients' ability to comply with the specific instructions related to the trial protocol, proper documentation, and use of the drug
+product; 
+
+ inability to obtain or maintain patient informed consents; 
+
+ risk that enrolled patients will drop out before completion; 
+
+ the ability to monitor patients adequately during and after treatment; and
+
+ the proximity and availability of clinical trial sites for prospective patients. 
+
+26
+
+ 
+
+Table of Contents
+
+ Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.
+For instance, because we are seeking regulatory approval for certain indications that may have a narrow or small patient population, it may be difficult to find patients eligible to participate in our
+clinical studies at a sufficient rate or in a sufficient quantity. Our current development plan for AXS-02 contemplates recruiting and enrolling more than 475 patients for our Phase 3 clinical
+trials for the treatment of pain associated with CRPS. We may encounter difficulties or delays in completing our planned enrollments for these trials. In addition, because of some of our other entry
+criteria for our Phase 3 clinical trials with AXS-02 for the treatment of pain associated with CRPS, such as the requirement that patients cease any usage of previous opioid therapy, we may
+further limit our potential patient population. For
+our planned Phase 3 clinical trials with AXS-02 for the treatment of the pain of knee OA associated with BMLs and CLBP associated with type 1 or mixed type 1 and type 2
+MCs, enrollment will require the existence of radiographic biomarkers and we may require patients to discontinue use of their existing medication before participating in our clinical trials. We may
+also exclude patients who have been treated with opioids or other classes of medications. For our planned Phase 3 clinical trial with AXS-05 for the treatment of TRD, we will require patients
+to have previously failed one or two, or perhaps more, antidepressant treatments, which further limits our potential patient population. As a result, these entry criteria may make it difficult for us
+to enroll patients in any of our clinical trials. Moreover, patients in our clinical trials, especially patients in our control groups, may be at risk for dropping out of our studies if they are not
+experiencing relief of their symptoms. A significant number of withdrawn patients would compromise the quality of our data.
+
+ 
+
+ Enrollment
+delays in our clinical trials may result in increased development costs for our product candidates, or the inability to complete development of our product candidates, which
+would cause the value of our company to decline, limit our ability to obtain additional financing, and materially impair our ability to generate revenues. 
+
+One of our lead product candidates, AXS-05, if approved, will compete in the marketplace with other
+bupropion products that are subject to restrictive marketing and distribution regulations, which if applied to our product candidates would restrict their use and harm our ability to generate profits. 
+
+ Some of the currently approved bupropion products require REMS. REMS programs may require medication guides for patients, special
+communication plans to healthcare professionals, or elements to assure safe use, such as restricted distribution methods, distribution only to certain medical professionals, training for medical
+professionals prescribing our product candidates, patient registries, or other risk minimization tools. The FDA may determine that AXS-05 will require a REMS program. We cannot predict whether REMS
+will be required as part of the FDA's approval of our product candidates and, if required, what those requirements might be. Any limitations on approval or marketing could restrict the commercial
+promotion, distribution, prescription, or dispensing of our product candidates, if approved. If a REMS program is required, depending on the extent of the REMS requirements, the program might
+significantly increase our costs to commercialize these product candidates or could place a substantial burden on medical professionals, discouraging their use of our product candidates, if approved.
+Furthermore, risks of our product candidates that are not adequately addressed through proposed REMS for such product candidates may also prevent or delay their approval for commercialization.
+
+Changes in product candidate manufacturing or formulation may result in additional costs or delay. 
+
+ As product candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization,
+it is common that various aspects of
+the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results. For instance, our initial studies in AXS-05 were
+completed with two separate tablets 
+
+27
+
+ 
+
+Table of Contents
+
+containing DM and bupropion. Our Phase 3 studies, however, will be conducted using a single tablet containing both active ingredients. Such changes carry the risk that they will not achieve
+these intended objectives. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted
+with the altered materials. Such changes may also require additional testing, FDA notification, or FDA approval. This could delay completion of clinical trials; require the conduct of bridging
+clinical trials or studies, or the repetition of one or more clinical trials; increase clinical trial costs; delay approval of our product candidates; and jeopardize our ability to commence product
+sales and generate revenue.
+
+ 
+
+Failure to obtain marketing approval in international jurisdictions would prevent our product
+candidates from being marketed abroad. 
+
+ In order to market and sell our products in the European Union and many other jurisdictions, we or our third-party collaborators must
+obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to
+obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with
+obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that
+country. We or these third parties may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by
+regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or
+jurisdictions or by the FDA. However, the failure to obtain approval in one jurisdiction may compromise our ability to obtain approval elsewhere. We may not be able to file for marketing approvals and
+may not receive necessary approvals to commercialize our products in any market. 
+
+A Fast Track product designation or other designation to facilitate product candidate development
+may not lead to faster development or regulatory review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval. 
+
+ We have received a Fast Track product designation for AXS-02 for the treatment of pain associated with CRPS, and we may seek Fast Track
+designation for other of our current or future product candidates. Receipt of a designation to facilitate product candidate development is within the discretion of the FDA. Accordingly, even if we
+believe one of our product candidates meets the criteria for a designation, the FDA may disagree. In any event, the receipt of such a designation for a product candidate may not result in a faster
+development process, review, or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate marketing approval by the FDA. In addition, the FDA
+may later decide that the products no longer meet the designation conditions.
+
+ 
+
+Regulatory approval is limited by the FDA to those specific indications and conditions for which
+clinical safety and efficacy have been demonstrated, and we may be subject to fines, penalties, injunctions, or other enforcement actions if we are determined to be promoting the use of our products
+for unapproved or "off-label" uses, resulting in damage to our reputation and business. 
+
+ We, and any of our collaborators, must comply with requirements concerning advertising and promotion for any of our product candidates
+for which we or they obtain marketing approval. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and continuing review by the
+FDA, Department of Justice, Department of Health and Human Services' Office of Inspector General, state attorneys general, members of Congress, and the public. When the FDA or comparable foreign
+regulatory authorities issue regulatory 
+
+28
+
+ 
+
+Table of Contents
+
+approval
+for a product candidate, the regulatory approval is limited to those specific uses and indications for which a product is approved. If we are not able to obtain FDA approval for any desired
+uses or indications for our products and product candidates, we may not market or promote our products for those indications and uses, referred to as off-label uses, and our business may be adversely
+affected. We further must be able to sufficiently substantiate any claims that we make for our products including claims comparing our products to other companies' products. 
+
+ While
+physicians may choose to prescribe drugs for uses that are not described in the product's labeling and for uses that differ from those tested in clinical studies and approved by
+the regulatory authorities, we are prohibited from marketing and promoting the products for indications and uses that are not specifically approved by the FDA. These off-label uses are common across
+medical specialties and may constitute an appropriate treatment for some patients in varied circumstances. Regulatory authorities in the United States generally do not restrict or regulate the
+behavior of physicians in their choice of treatment within the practice of medicine. Regulatory authorities do, however, restrict communications by pharmaceutical companies concerning off-label use. 
+
+ If
+we are found to have impermissibly promoted any of our product candidates, we may become subject to significant liability and government fines. The FDA and other agencies actively
+enforce the laws and regulations regarding product promotion, particularly those prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted a product may be
+subject to significant sanctions. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in
+off-label promotion. The FDA has also requested that companies enter into consent decrees of permanent injunctions under which specified promotional conduct is changed or curtailed. Thus, we and any
+of our collaborators will not be able to promote any products we develop for indications or uses for which they are not approved. 
+
+ In
+the United States, engaging in the impermissible promotion of our products, following approval, for off-label uses can also subject us to false claims and other litigation under
+federal and state statutes, including fraud and abuse and consumer protection laws, which can lead to civil and criminal penalties and fines, agreements with governmental authorities that materially
+restrict the manner in which we promote or distribute drug products and do business through, for example, corporate integrity agreements, suspension or exclusion from participation in federal and
+state healthcare programs, and debarment from government contracts and refusal of future orders under existing contracts. These false claims statutes include the federal civil False Claims Act, which
+allows any individual to bring a lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims, or causing others to present such false
+or fraudulent claims, for payment by a federal program such as Medicare or Medicaid. If the government decides to intervene and prevails in the lawsuit, the individual will share in the proceeds from
+any fines or settlement funds. If the government declines to intervene, the individual may pursue the case alone. These False Claims Act lawsuits against pharmaceutical companies have increased
+significantly in volume and breadth, leading to several substantial civil and criminal settlements, up to $3.0 billion, pertaining to certain sales practices and promoting off-label drug uses.
+This growth in litigation has increased the risk that a pharmaceutical company will have to defend a false claim action; pay settlement fines or restitution, as well as criminal and civil penalties;
+agree to comply with burdensome reporting and compliance obligations; and be excluded from Medicare, Medicaid, or other federal and state healthcare programs. If we or our collaborators do not
+lawfully promote our approved products, if any, we may become subject to such litigation and, if we do not successfully defend against such actions, those actions may have a material adverse effect on
+our business, financial condition, results of operations, and prospects. 
+
+ In
+the United States, the distribution of product samples to physicians must further comply with the requirements of the U.S. Prescription Drug Marketing Act. If the FDA determines that
+our promotional activities violate its regulations and policies pertaining to product promotion, it could 
+
+29
+
+ 
+
+Table of Contents
+
+request
+that we modify our promotional materials or subject us to regulatory or other enforcement actions, including issuance of warning letters or untitled letters, suspension or withdrawal of an
+approved product from the market, requests for recalls, payment of civil fines, disgorgement of money, imposition of operating restrictions, injunctions, or criminal prosecution. These regulatory and
+enforcement actions could significantly harm our business, financial condition, results of operations, and prospects. 
+
+Even if AXS-02 or AXS-05 receive regulatory approval, we will be subject to ongoing obligations and
+continued regulatory review, which may result in significant additional expense. Additionally, any of our product candidates, if approved, could be subject to labeling and other restrictions and
+market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products. 
+
+ Any product candidate for which we obtain marketing approval will be subject to extensive and ongoing requirements of and review by the
+FDA and other regulatory authorities, including requirements related to the manufacturing processes, post-approval clinical data, labeling, packaging, distribution, adverse event reporting, storage,
+recordkeeping, export, import, advertising, marketing, and promotional activities for such product. These requirements further include submissions of safety and other post-marketing information,
+including manufacturing deviations and reports; registration and listing requirements; the payment of annual fees for our product candidates, if approved, and the establishments at which they are
+manufactured; continued compliance with cGMP requirements relating to manufacturing, quality control, quality assurance, and corresponding maintenance of records and documents; requirements regarding
+the distribution of samples to physicians and recordkeeping; and good clinical practices, or GCPs, for any clinical trials that we conduct post-approval. Even if marketing approval of a product
+candidate is granted, the approval may be subject to limitations on the indicated uses and populations for which the product may be marketed or to the conditions of approval, including significant
+safety warnings, including boxed warnings, contraindications, and precautions that are not desirable for successful commercialization and any requirement to implement a REMS that render the approved
+product not commercially viable or other post-market requirements or restrictions. Any such restrictions could limit sales of the product.
+
+ 
+
+ We
+and any of our collaborators, including our contract manufacturers, could be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance with cGMPs.
+Application holders must further notify the FDA, and depending on the nature of the change, obtain FDA pre-approval for product and manufacturing changes. Application fees may apply to certain
+changes. 
+
+ In addition, later discovery of previously unknown adverse events or that the drug is less effective than previously thought or other problems with our products, manufacturers, or
+manufacturing processes, or failure to comply with regulatory requirements both before and after approval, may yield various results, including:
+
+ restrictions on manufacturing or distribution, or marketing of such products; 
+
+ restrictions on the labeling, including required additional warnings, such as black box warnings, contraindications, precautions, and
+restrictions on the approved indication or use; 
+
+ modifications to promotional pieces; 
+
+ requirements to conduct post-marketing studies or clinical trials; 
+
+ clinical holds or termination of clinical trials; 
+
+ requirements to establish or modify a REMS or a comparable foreign authority may require that we establish or modify a similar
+strategy, that may, for instance, require us to create a 
+
+30
+
+ 
+
+Table of Contents
+
+Medication
+Guide outlining the risks of the previously unidentified side effects for distribution to patients, or restrict distribution of the product, if and when approved, and impose burdensome
+implementation requirements on us; 
+
+ changes to the way the drug is administered; 
+
+ liability for harm caused to patients or subjects; 
+
+ reputational harm; 
+
+ the drug becoming less competitive; 
+
+ warning, untitled, or cyber letters; 
+
+ suspension of marketing or withdrawal of the products from the market; 
+
+ regulatory authority issuance of safety alerts, Dear Healthcare Provider letters, press releases, or other communications containing
+warnings or other safety information about the drug; 
+
+ refusal to approve pending applications or supplements to approved applications that we submit; 
+
+ recall of products; 
+
+ fines, restitution, or disgorgement of profits or revenues; 
+
+ suspension or withdrawal of marketing approvals; 
+
+ refusal to permit the import or export of our products; 
+
+ product seizure or detention; 
+
+ FDA debarment, debarment from government contracts, and refusal of future orders under existing contracts, exclusion from federal
+healthcare programs, consent decrees, or corporate integrity agreements; or
+
+ injunctions or the imposition of civil or criminal penalties, including imprisonment. 
+
+ Any
+of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, or could substantially increase the costs and
+expenses of commercializing such product, which in turn could delay or prevent us from generating significant revenues from its sale. Any of these events could further have other material and adverse
+effects on our operations and business and could adversely impact our stock price and could significantly harm our business, financial condition, results of operations, and prospects. 
+
+ The FDA's policies may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates or that could impose
+additional regulatory obligations on us if our product candidates are approved. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies,
+or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and be subject to regulatory enforcement action.
+
+ 
+
+ Should
+any of the above actions take place, they could adversely affect our ability to achieve or sustain profitability. Further, the cost of compliance with post-approval regulations
+may have a negative effect on our operating results and financial condition. 
+
+If we obtain approval to commercialize our product candidates outside of the United States, a
+variety of risks associated with international operations could materially adversely affect our business. 
+
+ If any of our product candidates are approved for commercialization, we may enter into agreements with third parties to market them on
+a worldwide basis or in more limited geographical 
+
+31
+
+ 
+
+Table of Contents
+
+regions.
+We expect that we will be subject to additional risks related to entering into international business relationships, including:
+
+ different regulatory requirements for approval of drugs in foreign countries; 
+
+ the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices,
+opts to import goods from a foreign market (with low or lower prices) rather than buying them locally; 
+
+ challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and
+protect intellectual property rights to the same extent as the United States; 
+
+ unexpected changes in tariffs, trade barriers, and regulatory requirements and in the health care policies of foreign jurisdictions; 
+
+ economic weakness, including inflation, or political instability in particular foreign economies and markets; 
+
+ compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; 
+
+ foreign taxes, including withholding of payroll taxes; 
+
+ foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident
+to doing business in another country; 
+
+ difficulties staffing and managing foreign operations; 
+
+ workforce uncertainty in countries where labor unrest is more common than in the United States; 
+
+ costs of compliance with U.S. laws and regulations for foreign operations, including the Foreign Corrupt Practices Act or comparable
+foreign regulations, and the risks and costs of noncompliance; 
+
+ production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and 
+
+ business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes,
+typhoons, floods, and fires. 
+
+ These
+and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations. 
+
+We will need to obtain FDA approval of any proposed product names, and any failure or delay
+associated with such approval may adversely affect our business. 
+
+ Any name we intend to use for our product candidates will require approval from the FDA regardless of whether we have secured a formal
+trademark registration from the U.S. Patent and Trademark Office, or USPTO. The FDA typically conducts a review of proposed product names, including an evaluation of the potential for confusion with
+other product names. The FDA may also object to a product name if it believes the name inappropriately implies medical claims or contributes to an overstatement of efficacy. If the FDA objects to any
+of our proposed product names, we may be required to adopt alternative names for our product candidates. If we adopt alternative names, we would lose the benefit of any existing trademark applications
+for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product name that would qualify under applicable trademark laws, not
+infringe the existing rights of third parties, and be 
+
+32
+
+ 
+
+Table of Contents
+
+acceptable
+to the FDA. We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our ability to commercialize our product candidates. 
+
+RISKS RELATED TO THE COMMERCIALIZATION OF OUR PRODUCT CANDIDATES 
+
+We face significant competition from other pharmaceutical and biotechnology companies, academic
+institutions, government agencies, and other research organizations. Our operating results will suffer if we fail to compete effectively. 
+
+ The development and commercialization of new drug products is highly competitive. We face competition with respect to our current
+product candidates, and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty
+pharmaceutical companies, and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the
+development of products for the treatment of pain and central nervous system disorders. Potential competitors also include academic institutions, government agencies, and other public and private
+research organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and commercialization. 
+
+ Specifically,
+there are a large number of companies developing or marketing therapies for the treatment and management of pain and other CNS disorders, including many major
+pharmaceutical and biotechnology companies. Among the companies that currently market or are developing therapies that, if approved, our product candidates would potentially compete with include:
+Alkermes plc; Allergan plc; Carbylan Therapeutics, Inc.; Eli Lilly and Company; Flexion Therapeutics, Inc.; Grunenthal GmbH; Janssen Research &
+Development, LLC; Levolta Pharmaceuticals, Inc.; Merrion Pharmaceuticals plc; Otsuka Pharmaceutical Co. Ltd.; Thar Pharmaceuticals, Inc.; and Transition
+Therapeutics Inc. 
+
+ Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, are more effective, have fewer or less severe side
+effects, are more convenient, or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may
+obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in
+many cases by insurers or other third-party payors seeking to encourage the use of generic products. If our product candidates achieve marketing approval, we expect that they will be priced at a
+significant premium over competitive generic products, which would further impact our commercialization efforts.
+
+ 
+
+ We
+are not aware of any generic products currently available on the market that are approved for the specific indications that we are pursuing; however, generic forms of the active
+ingredients of our product candidates, including zoledronic acid, DM, and bupropion, are available and could be used off-label. Any such off-label use could adversely affect our profitability and have
+a negative effect on our operating results and financial condition. For example, even though zoledronic acid is not currently approved for the treatment of pain, we would not be able to prevent a
+physician from prescribing zoledronic acid in intravenous form for such treatment. 
+
+ Many
+of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and
+development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical
+and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Early stage companies may also prove to be significant competitors,
+particularly through collaborative arrangements with large and established companies. These third 
+
+33
+
+ 
+
+Table of Contents
+
+parties
+compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in
+acquiring technologies complementary to, or necessary for, our programs. 
+
+If the FDA or comparable foreign regulatory authorities approve generic or similar versions of any
+of our products that receive marketing approval, or such authorities do not grant our products appropriate periods of data exclusivity before approving generic or similar versions of our products, the
+sales of our products could be adversely affected. 
+
+ Once an NDA is approved, the covered product becomes a "reference listed drug" in the FDA's Orange Book. Manufacturers may seek
+approval of generic versions of reference listed drugs through submission of ANDAs in the United States. In support of an ANDA, a generic manufacturer need not conduct full clinical studies. Rather,
+the applicant generally must show that its product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use or labeling, among other commonalities, as
+the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning it is absorbed in the body at the same rate and to the same extent. Generic products may
+be significantly less costly to bring to market than the reference listed drug and companies that produce generic products are generally able to offer them at lower prices, and are generally preferred
+by third-party payors. Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug is typically lost to the generic
+product. 
+
+ Moreover,
+in addition to generic competition, we could face competition from other companies seeking approval of drug products that are similar to ours using the 505(b)(2) pathway. Such
+applicants may be able to rely on our product candidates, if approved, or other approved drug products or published literature to develop drug products that are similar to ours. The introduction of a
+drug product similar to our product candidates could expose us to increased competition. 
+
+ Further, if we do not file a patent infringement lawsuit against a generic manufacturer within 45 days of receiving notice of its paragraph IV certification, the
+ANDA or 505(b)(2) applicant would not be subject to a 30-month stay. Litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be
+expensive and time consuming, may divert our management's attention from our core business, and may result in unfavorable results that could adversely impact our ability to prevent third parties from
+competing with our products. Accordingly, upon approval of our product candidates we may be subject to generic competition or competition from similar products, or may need to commence patent
+infringement proceedings, which would divert our resources.
+
+ We
+currently anticipate that we may be eligible for three years of non-patent marketing exclusivity for our product candidates if they are approved. These three years, however, would
+only protect against modifications in formulation or approved uses in comparison to the reference listed drug and would not prevent other companies from submitting full NDAs. Moreover, a 505(b)(2)
+applicant could rely on a reference listed drug that is not one of our product candidates, or published literature, in which case any periods of patent or non-patent protection may not prevent FDA
+approval. We may also be eligible in the United States for seven years of orphan exclusivity for AXS-02 for the treatment of CRPS, which is further discussed below. 
+
+ Competition
+that our products may face from generic or similar versions of our products could materially and adversely impact our future revenue, profitability, and cash flows and
+substantially limit our ability to obtain a return on the investments we have made in those product candidates. 
+
+34
+
+ 
+
+ Table of Contents 
+
+AXS-02 has received Orphan Drug Designation from the FDA. However, there is no guarantee that we
+will be able to maintain this designation for AXS-02, receive this designation for any of our other product candidates, or receive or maintain any corresponding benefits, including periods of
+exclusivity. 
+
+ AXS-02 has received Orphan Drug Designation from the FDA for the treatment of CRPS. We may also seek Orphan Drug Designation for our
+other product candidates, as appropriate. 
+
+ Orphan Drug Designation, however, may be lost if the indication for which we develop AXS-02 or the indications for which we develop any of our future product candidates do not meet the
+orphan drug criteria. Moreover, following product approval, orphan drug exclusivity may be lost if the FDA determines, among other reasons, that the request for designation was materially defective or
+if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition. Even if we obtain orphan drug exclusivity for AXS-02,
+AXS-05, or any other of our current or future product candidates, that exclusivity may not effectively protect the product from competition because different products can be approved for the same
+condition. Even after an orphan product is approved, the FDA can subsequently approve a product containing the same principal molecular features for the same condition if the FDA concludes that the
+later product is
+clinically superior in that it is shown to be safer or more effective or makes a major contribution to patient care.
+
+ 
+
+ The
+FDA or the EMA may grant orphan exclusivity to two different sponsors for the same compound or active molecule and for the same indication. For example, subsequent to our Orphan Drug
+Designation, the FDA granted Orphan Drug Designation to Thar Pharmaceuticals, Inc. for a zoledronic acid-containing product for the treatment of CRPS. If Thar Pharmaceuticals or another sponsor
+receives FDA approval for a zoledronic acid-containing product for the treatment of CRPS before we obtain FDA approval for AXS-02 for the treatment of pain associated with CRPS, we would be prevented
+from launching our product in the United States for this indication for a period of at least 7 years. If another sponsor receives EMA approval for a zoledronic acid-containing product for the
+treatment of CRPS before we obtain EMA approval for AXS-02 for the treatment of pain associated with CRPS, we would be prevented from launching our product in the European Union for this indication
+for a period of at least 10 to 12 years. 
+
+ In
+response to a recent court decision regarding the plain meaning of the exclusivity provision of the Orphan Drug Act, the FDA may undertake a reevaluation of aspects of its orphan drug
+regulations and policies. We do not know if, when, or how the FDA may change the orphan drug regulations and policies, and it is uncertain how any changes might affect our business. Depending on what
+changes the FDA may make to its orphan drug regulations and policies, our business, financial condition, results of operations, and prospects could be harmed. 
+
+If we are unable to establish effective marketing and sales capabilities or enter into agreements
+with third parties to market and sell our product candidates, if they are approved, we may be unable to generate product revenues.
+
+ 
+
+ We currently do not have a commercial infrastructure for the marketing, sale, and distribution of pharmaceutical products. If approved,
+in order to commercialize our products, we must build our marketing, sales, and distribution capabilities or make arrangements with third parties to perform these services. We may not be successful in
+doing so. If one of our product candidates is approved by the FDA, we plan to build a commercial infrastructure, including the creation of a specialty sales force to launch that product candidate
+throughout the United States. In the future, we may seek to further penetrate the U.S. market by expanding our sales force or through collaborations with other pharmaceutical or biotechnology
+companies or third-party manufacturing and sales organizations. If approved for marketing outside the United States, we intend to commercialize our product candidates outside the United States with a
+marketing and sales collaborator or collaborators, rather than with our own sales force. 
+
+35
+
+ 
+
+Table of Contents
+
+ We
+have no prior experience in the marketing, sale, and distribution of pharmaceutical products, and there are significant risks involved in the building and managing of a commercial
+infrastructure. The establishment and development of our own sales force and related compliance plans to market any products we may develop will be expensive and time consuming and could delay any
+product launch, and we may not be able to successfully develop this capability. We, or our future collaborators, will have to compete with other pharmaceutical and biotechnology companies to recruit,
+hire, train, manage, and retain marketing and sales personnel. In the event we are unable to develop a marketing and sales infrastructure, we may not be able to commercialize AXS-02, AXS-05, or any
+other of our current or future product candidates, which would limit our ability to generate product revenues. Factors that may inhibit our efforts to commercialize AXS-02, AXS-05, or any other of our
+current or future product candidates on our own include:
+
+ our inability to recruit, train, manage, and retain adequate numbers of effective sales and marketing personnel; 
+
+ the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe AXS-02,
+AXS-05, or any other of our current or future product candidates; 
+
+ our inability to effectively oversee a geographically dispersed sales and marketing team; 
+
+ the costs associated with training sales and marketing personnel on legal and regulatory compliance matters and monitoring their
+actions; 
+
+ an inability to secure adequate coverage and reimbursement by government and private health plans; 
+
+ the clinical indications for which the product is approved; 
+
+ limitations or warnings, including distribution or use restrictions, contained in the product's approved labeling; 
+
+ any distribution and use restrictions imposed by the FDA or to which we agree as part of a mandatory REMS or voluntary risk management
+plan; 
+
+ liability for sales or marketing personnel who fail to comply with the applicable legal and regulatory requirements; 
+
+ the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to
+companies with more extensive product lines; and
+
+ unforeseen costs and expenses associated with creating an independent sales and marketing organization or engaging a contract sales
+organization. 
+
+ Although
+our current plan is to hire most of our sales and marketing personnel only if a product candidate is approved by the FDA, we will incur expenses prior to product launch in
+recruiting this sales force and developing a marketing and sales infrastructure. If a commercial launch is delayed as a result of FDA requirements or other reasons, we would incur these expenses prior
+to being able to
+realize any revenue from sales of our product candidates. Even if we are able to effectively hire a sales force and develop a marketing and sales infrastructure, our sales force and marketing teams
+may not be successful in commercializing AXS-02, AXS-05, or any other of our current or future product candidates. 
+
+ In
+the event we are unable to collaborate with a third-party marketing and sales organization to commercialize any approved product candidates outside the United States, our ability to
+generate product revenues may be limited. To the extent we rely on third parties to commercialize any products for which we obtain regulatory approval, we may receive less revenues than if we
+commercialized these products ourselves. In addition, we would have less control over the sales efforts of any other third 
+
+36
+
+ 
+
+Table of Contents
+
+parties
+involved in our commercialization efforts, and could be held liable if they failed to comply with applicable legal or regulatory requirements. 
+
+If AXS-02 or AXS-05 does not achieve broad market acceptance, the revenues that we generate from
+their sales will be limited. 
+
+ We have never commercialized a product candidate for any indication. Even if AXS-02 or AXS-05 is approved by the appropriate regulatory
+authorities for marketing and sale, it may not gain acceptance among physicians, patients, third-party payors, and others in the medical community. If any product candidates for which we obtain
+regulatory approval do not gain an adequate level of market acceptance, we may not generate significant product revenues or become profitable. Market acceptance of AXS-02 or AXS-05 by the medical
+community, patients, and third-party payors will depend on a number of factors, some of which are beyond our control. For example, physicians are often reluctant to switch their patients from existing
+therapies even when new and potentially more effective or convenient treatments enter the market. Further, patients often acclimate to the therapy that they are currently taking and do not want to
+switch unless their physicians recommend switching products or they are required to switch therapies due to lack of reimbursement for existing therapies.
+
+ 
+
+ Efforts
+to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful. If any of our
+product candidates is approved but does not achieve an adequate level of market acceptance, we may not generate significant revenues and we may not become profitable. The degree of market acceptance
+of
+any of our product candidates, and in particular AXS-02 and AXS-05, will depend on a number of factors, including:
+
+ the efficacy of our product candidates; 
+
+ the prevalence and severity of adverse events associated with such product candidate; 
+
+ the clinical indications for which the product is approved and the approved claims that we may make for the product; 
+
+ limitations or warnings contained in the product's FDA-approved labeling, including potential limitations or warnings for such product
+candidate, that may be more restrictive than other competitive products; 
+
+ changes in the standard of care for the targeted indications for such product candidate, which could reduce the marketing impact of
+any claims that we could make following FDA approval, if obtained; 
+
+ the relative convenience and ease of administration of such product candidate; 
+
+ cost of treatment versus economic and clinical benefit in relation to alternative treatments or therapies; 
+
+ the availability of adequate coverage or reimbursement by third parties, such as insurance companies and other healthcare payors, and
+by government healthcare programs, including Medicare and Medicaid; 
+
+ the extent and strength of our marketing and distribution of such product candidate; 
+
+ the safety, efficacy, and other potential advantages over, and availability of, alternative treatments already used or that may later
+be approved for any of our intended indications; 
+
+ distribution and use restrictions imposed by the FDA with respect to such product candidate or to which we agree as part of a
+mandatory risk evaluation and mitigation strategy or voluntary risk management plan; 
+
+ the timing of market introduction of such product candidate, as well as competitive products; 
+
+37
+
+ 
+
+Table of Contents
+
+ our ability to offer such product candidate for sale at competitive prices, including prices that are competitive with generic
+products; 
+
+ the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; 
+
+ the clinical indications for which such product candidate is approved; 
+
+ the extent and strength of our third-party manufacturer and supplier support; 
+
+ the approval of other new products for the same indications; 
+
+ adverse publicity about the product or favorable publicity about competitive products;
+and
+
+ potential product liability claims. 
+
+ Our
+efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful. Even if the
+medical community accepts that one of our product candidates is safe and effective for its approved indications, physicians and patients may not immediately be receptive to such product candidate and
+may be slow to adopt it as an accepted treatment of the approved indication. It is unlikely that any labeling approved by the FDA will contain claims that one of our product candidates is safer or
+more effective than competitive products or will permit us to promote such product candidate as being superior to competing products. Further, the availability of inexpensive generic forms of pain
+management products for acute pain may also limit acceptance of certain of our product candidates among physicians, patients, and third-party payors. If AXS-02, AXS-05, or any other of our current or
+future product candidates is approved but does not achieve an adequate level of acceptance among physicians,
+patients, and third-party payors, we may not generate meaningful revenues from our product candidates, and we may not become profitable. 
+
+ The
+ability of patients to purchase certain of the active ingredients of our product candidates in generic form could put us at a competitive disadvantage. For example, in some foreign
+jurisdictions, generic oral forms of DM and bupropion are currently available individually for consumer purchase. In addition, physicians may prescribe generic zoledronic acid for the treatment of
+pain off-label. Any use of these generic forms of the active molecules of our product candidates could adversely affect our business and our results of operations. 
+
+ The potential market opportunities for our product candidates are difficult to precisely estimate. Our estimates of the potential market opportunities are predicated on many assumptions
+including industry knowledge and publications, third-party research reports, and other surveys. While we believe that our internal assumptions are reasonable, these assumptions involve the exercise of
+significant judgment on the part of our management and are inherently uncertain, and the reasonableness of these assumptions has not been assessed by an independent source. If any of the assumptions
+proves to be inaccurate, the actual markets for our product candidates could be smaller than our estimates of the potential market opportunities.
+
+We face potential product liability exposure, and if successful claims are brought against us, we
+may incur substantial liability for AXS-02, AXS-05, or any other of our current or future product candidates and may have to limit their commercialization. 
+
+ The use of AXS-02, AXS-05, or any other of our current or future product candidates in clinical trials, and the sale of any of our
+product candidates for which we obtain regulatory approval, exposes us to the risk of product liability claims. We face inherent risk of product liability related to the testing of our product
+candidates in human clinical trials and will face an even greater risk if we commercially sell any product candidates that we may develop. For example, we may be sued if any product candidate we
+develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing, or sale. Any such product liability claims may include allegations of
+
+ 
+
+38
+
+ 
+
+Table of Contents
+
+defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state
+consumer protection acts. Product liability claims might be brought against us by consumers, healthcare providers, or others using, administering, or selling our products. If we cannot successfully
+defend ourselves
+against these claims, we will incur substantial liabilities or be required to limit commercialization of our product candidates. Even successful defense would require significant financial and
+management resources. Regardless of merit or eventual outcome, liability claims may result in:
+
+ loss of revenue from decreased demand for our products and/or product candidates; 
+
+ impairment of our business reputation or financial stability; 
+
+ costs of related litigation; 
+
+ substantial monetary awards to patients or other claimants; 
+
+ diversion of management attention; 
+
+ loss of revenues; 
+
+ withdrawal of clinical trial participants and potential termination of clinical trial sites or entire clinical programs; 
+
+ the inability to commercialize our product candidates; 
+
+ significant negative media attention; 
+
+ decrease in our stock price; 
+
+ initiation of investigations and enforcement actions by regulators; and
+
+ product recalls, withdrawals, or labeling, marketing, or promotional restrictions.
+
+ 
+
+ We
+have obtained limited product liability insurance coverage for our products and our clinical trials with a $8 million annual aggregate coverage limit. However, our insurance
+coverage may not reimburse us or may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we
+may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. We intend to expand our insurance coverage to include the
+sale of commercial products if we obtain FDA approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products
+approved for marketing, or at all. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or
+series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business and our prospects. 
+
+RISKS RELATED TO OUR DEPENDENCE ON THIRD PARTIES 
+
+We rely, and expect to continue to rely, on third parties to conduct, supervise, and monitor our
+preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with
+regulatory requirements. 
+
+ We rely on third-party CROs to conduct, supervise, and monitor our preclinical studies and clinical trials for our product candidates,
+including AXS-02 and AXS-05, and do not currently plan to independently conduct preclinical studies or clinical trials of any other potential product candidates. We expect to continue to rely on third
+parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct our preclinical studies and clinical trials. While we have agreements
+governing their activities, we have limited influence over their actual performance and control only certain aspects of their activities. The failure of these third parties to
+
+ 
+
+39
+
+ 
+
+Table of Contents
+
+successfully carry out their contractual duties or meet expected deadlines could substantially harm our business because we may not obtain marketing approval for or commercialize our product
+candidates in a timely manner or at all. Moreover, these agreements might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative
+arrangements, that would delay our product development activities and adversely affect our business.
+
+ 
+
+ Our
+reliance on these third parties for development activities will reduce our control over these activities. Nevertheless, we are responsible for ensuring that each of our studies is
+conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. For example, we
+will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial and for ensuring that our preclinical
+trials are conducted in accordance with good laboratory practice, or GLP, as appropriate. Moreover, the FDA and comparable foreign regulatory authorities require us to comply with standards, commonly
+referred to as good clinical practices, or GCPs, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the
+rights, integrity, and confidentiality of trial participants are protected. Regulatory authorities enforce these requirements
+through periodic inspections of trial sponsors, clinical investigators, and trial sites. If we or any of our CROs fail to comply with applicable GCPs, we or our CROs may be subject to enforcement or
+other legal actions, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical
+trials. 
+
+ In
+addition, once we have an approved product, we will be required to report certain financial interests of our third-party investigators if these relationships exceed certain financial
+thresholds or meet other criteria. The FDA or comparable foreign regulatory authorities may question the integrity of the data from those clinical trials conducted by investigators who previously
+served or currently serve as scientific advisors or consultants to us from time to time and receive cash compensation in connection with such services or otherwise receive compensation from us that
+could be deemed to impact study outcome, proprietary interests in a product candidate, certain company equity interests, or significant payments of other sorts. 
+
+ We
+cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies with GCP regulations. In
+addition, our clinical trials must be conducted with product candidates that were produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical
+trials, which would delay the regulatory approval process. We also are required to register certain clinical trials and post the results of certain completed clinical trials on a government-sponsored
+database, ClinicalTrials.gov, within specified timeframes. Failure to do so can result in enforcement actions and adverse publicity. 
+
+ Our CROs may also have relationships with other entities, some of which may be our competitors, for whom they may also be conducting clinical trials or other drug development activities
+that could harm our competitive position. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not
+they devote sufficient time and resources to our ongoing clinical, non-clinical, and preclinical programs. If these third parties do not successfully carry out their contractual duties, meet expected
+deadlines or conduct our preclinical studies or clinical trials in accordance with regulatory requirements or our stated protocols, if they need to be replaced or if the quality or accuracy of the
+clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed, or
+terminated and we may not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully
+commercialize our product candidates, or we or they may be subject to regulatory enforcement actions. As a result, our results of operations and the commercial prospects for our product candidates
+would be harmed, our costs could increase and our ability to generate revenues could be delayed. To the extent we are unable to successfully identify and
+
+40
+
+ 
+
+Table of Contents
+
+manage the performance of third-party service providers in the future, our business may be materially and adversely affected.
+
+ 
+
+ If
+any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms.
+Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result,
+delays could occur, which could compromise our ability to meet our desired development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not
+encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects, and results of
+operations. 
+
+If the manufacturers upon whom we rely fail to produce our product candidates in the volumes that we
+require on a timely basis, or to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the development and commercialization of, or be unable to meet
+demand for, our products and may lose potential revenues. 
+
+ We do not manufacture any of our product candidates, and we do not currently plan to develop any capacity to do so. We currently
+outsource all manufacturing of our product candidates to third parties typically without any guarantee that there will be sufficient supplies to fulfill our requirements or that we may obtain such
+supplies on acceptable terms. Any delays in obtaining adequate supplies with respect to our product candidates may delay the development or commercialization of our product candidates. Moreover, we do
+not yet have agreements established regarding commercial supply of our product candidates, and we may not be able to establish or maintain commercial manufacturing arrangements on commercially
+reasonable terms for AXS-02, AXS-05, or any other of our current or future product candidates for which we obtain approval in the future. 
+
+ We
+may not succeed in our efforts to establish manufacturing relationships or other alternative arrangements for any of our existing or future product candidates and programs. Our
+product candidates may compete with other products and product candidates for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and
+that are both capable of manufacturing for us and willing to do so. If our existing third-party manufacturers, or the third parties that we engage in the future to manufacture a product for commercial
+sale or for our clinical trials, should cease to continue to do so for any reason, we likely would experience delays in obtaining sufficient quantities of our product candidates for us to meet
+commercial demand or to advance our clinical trials while we identify and qualify replacement suppliers. If for any reason we are unable to obtain adequate supplies of our product candidates or the
+drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively. Further, even if we do establish such collaborations or
+arrangements, our third-party manufacturers may breach, terminate, or not renew these agreements. 
+
+ Any
+problems or delays we experience in preparing for commercial-scale manufacturing of a product candidate may result in a delay in FDA approval of the product candidate or may impair
+our ability to manufacture commercial quantities or such quantities at an acceptable cost, which could result in the
+delay, prevention, or impairment of clinical development and commercialization of our product candidates and could adversely affect our business. For example, our manufacturers will need to produce
+specific batches of our product candidates to demonstrate acceptable stability under various conditions and for commercially viable lengths of time. We and our contract manufacturers will need to
+demonstrate to the FDA and other regulatory authorities that this is acceptable stability data for our product candidates, as well as validate methods and manufacturing processes, in order to receive
+regulatory approval to commercialize AXS-02, AXS-05, or any of our other current or future product candidates. Furthermore, if our commercial manufacturers fail to deliver the required commercial
+quantities of bulk drug substance or finished product on a timely basis and at commercially reasonable 
+
+41
+
+ 
+
+Table of Contents
+
+prices,
+we would likely be unable to meet demand for our products and we would lose potential revenues. 
+
+ We only have one contract manufacturer for each of AXS-02 and AXS-05 for use in our clinical trials. In addition, we do not have any long-term commitments from our suppliers of clinical
+trial material or guaranteed prices for our product candidates. The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced
+manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up initial production. These problems
+include difficulties with production costs and yields; quality control, including stability of the product candidate and quality assurance testing; shortages of qualified personnel; and compliance
+with strictly enforced federal, state, and foreign regulations. Our manufacturers may not perform as agreed. If our manufacturers were to encounter any of these difficulties, our ability to provide
+product candidates to patients in our clinical trials and for commercial use, if approved, would be jeopardized.
+
+ 
+
+ In addition, all manufacturers of our product candidates must comply with cGMP requirements enforced by the FDA that are applicable to both finished drug products and active
+pharmaceutical ingredients used both for clinical and commercial supply, through its facilities inspection program. Our manufacturers must be approved by the FDA pursuant to inspections that will be
+conducted after we submit our marketing applications to the agency. The cGMP requirements include quality control, quality assurance, and the maintenance of records and documentation. Manufacturers of
+our product candidates may be unable to comply with our specifications, these cGMP requirements and with other FDA, state, and foreign regulatory requirements. If our contract manufacturers cannot
+successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, they will not be able to secure or maintain
+regulatory approval for their manufacturing facilities. While we are ultimately responsible for the manufacture of our product candidates, other than through our contractual arrangements, we have
+little control over our manufacturers' compliance with these regulations and standards. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of
+our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain
+regulatory approval for, or market our product candidates, if approved. A failure to comply with these requirements may result in regulatory
+enforcement actions against our manufacturers or us, including fines and civil and criminal penalties, including imprisonment; suspension or restrictions of production; suspension, delay, or denial of
+product approval or supplements to approved products; clinical holds or termination of clinical studies; warning or untitled letters; regulatory authority communications warning the public about
+safety issues with the drug; refusal to permit the import or export of the products; product seizure, detention, or recall; suits under the civil False Claims Act; corporate integrity agreements;
+consent decrees; or withdrawal of product approval. If the safety of any quantities supplied is compromised due to our manufacturers' failure to adhere to applicable laws or for other reasons, we may
+not be able to obtain regulatory approval for or successfully commercialize our product candidates.
+
+ 
+
+ Any failure or refusal to supply our product candidates or components for our current or future product candidates that we may develop could delay, prevent, or impair our clinical
+development or commercialization efforts. Any change in our manufacturers could be costly because the commercial terms of any new arrangement could be less favorable and because the expenses relating
+to the transfer of necessary technology and processes could be significant.
+
+42
+
+ 
+
+Table of Contents
+
+We may rely on third parties to perform many essential services for any products that we
+commercialize, including services related to warehousing and inventory control, distribution, government price reporting, customer service, accounts receivable management, cash collection, and adverse
+event reporting. If these third parties fail to perform as expected or to comply with legal and regulatory requirements, our ability to commercialize AXS-02, AXS-05, or any other of our current or
+future product candidates will be significantly impacted and we may be subject to regulatory sanctions. 
+
+ We may retain third-party service providers to perform a variety of functions related to the sale and distribution of AXS-02, AXS-05,
+or any other of our current or future product candidates, key aspects of which will be out of our direct control. These service providers may provide key services related to warehousing and inventory
+control, distribution, government price reporting, customer service, accounts receivable management, and cash collection, and, as a result, most of our inventory may be stored at a single warehouse
+maintained by one such service provider. If we retain a service provider, we would substantially rely on it as well as other third-party providers that perform services for us, including entrusting
+our inventories of products to their care and handling. If these third-party service providers fail to comply with applicable laws and regulations, fail to meet expected deadlines, or otherwise do not
+carry out their contractual duties to us, or encounter physical or natural damage at their facilities, our ability to deliver product to meet commercial demand would be significantly impaired and we
+may be subject to regulatory enforcement action. 
+
+ In
+addition, we may engage third parties to perform various other services for us relating to adverse event reporting, safety database management, fulfillment of requests for medical
+information regarding our product candidates and related services. If the quality or accuracy of the data maintained by these service providers is insufficient, or these third parties otherwise fail
+to comply with regulatory requirements related to adverse event reporting, we could be subject to regulatory sanctions. 
+
+ Additionally,
+if a third party errs in calculating government pricing information from transactional data in our financial records, it could impact our discount and rebate liability. 
+
+Any collaboration arrangements that we are a party to or may enter into in the future may not be
+successful, which could adversely affect our ability to develop and commercialize our product candidates. 
+
+ Our business model is to commercialize our product candidates in the United States and generally to seek future collaboration
+arrangements with pharmaceutical or biotechnology companies for the development or commercialization of our product candidates in the rest of the world. We currently have not entered into any
+sub-license agreements. Our future collaboration arrangements may not be successful, and the success of them will depend heavily on the efforts and activities of our collaborators. Collaborators
+generally have significant discretion in determining the efforts and resources that they will apply to these collaboration arrangements. Disagreements between parties to a collaboration arrangement
+regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the
+collaboration arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision making authority. 
+
+ We
+may license the right to market and sell our product candidates under our collaborators' labeler codes. Alternatively, we may enter into agreements with collaborators to market and
+sell our product candidates under our own labeler code, in which case errors and omissions by collaborators in capturing and transmitting transactional data may impact the accuracy of our government
+price reporting. 
+
+ Collaborations
+with pharmaceutical companies and other third parties often are terminated or allowed to expire by the other party. Any such termination or expiration would adversely
+affect us 
+
+43
+
+ 
+
+Table of Contents
+
+financially
+and could harm our business reputation. Any future collaborations we might enter into may pose a number of risks, including the
+following:
+
+ collaborators may not perform their obligations as expected; 
+
+ collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect
+not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators' strategic focus or available funding, or external factors, such as an
+acquisition, that divert resources or create competing priorities; 
+
+ collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a
+product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; 
+
+ collaborators could fail to make timely regulatory submissions for a product candidate; 
+
+ collaborators may not comply with all applicable regulatory requirements or may fail to report safety data in accordance with all
+applicable regulatory requirements; 
+
+ collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our
+products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically
+attractive than ours; 
+
+ product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product
+candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; 
+
+ a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may
+not commit sufficient resources to the marketing and distribution of such product candidate or product; 
+
+ disagreements with collaborators, including disagreements over proprietary rights, contract interpretation, or the preferred course of
+development, might cause delays or termination of the research, development, or commercialization of product candidates, might lead to additional responsibilities for us with respect to product
+candidates, or might result in litigation or arbitration, any of which would be time consuming and expensive; 
+
+ collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a
+way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; and 
+
+ collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential
+liability. 
+
+ If
+any collaborations we might enter into in the future do not result in the successful development and commercialization of products or if one of our collaborators subsequently
+terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under the
+agreements, our development of our product candidates could be delayed and we may need additional resources to develop our product candidates and our product platform. 
+
+ Additionally,
+if any future collaborator of ours is involved in a business combination, the collaborator might deemphasize or terminate development or commercialization of any product
+candidate licensed to it by us. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our reputation in the business and
+financial communities could be adversely affected. 
+
+44
+
+ 
+
+ Table of Contents 
+
+ For AXS-02, AXS-05, and any other current or future product candidates, we may in the future determine to collaborate with additional pharmaceutical and
+biotechnology companies for their development and potential commercialization. We face significant competition in seeking appropriate collaborators. Our ability to reach a definitive agreement for
+collaboration will depend upon, among other things, our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration, and the proposed
+collaborator's evaluation of a number of factors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the
+development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or
+marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization
+activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms, or at all. If we fail to enter into collaborations and
+do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bring them to market
+or continue to develop our product platform and our business may be materially and adversely affected.
+
+We are dependent on third parties to decide to utilize AXS-02 and AXS-05 to make them readily
+available at the point of care throughout their networks of pharmacies. 
+
+ In addition to extensive internal efforts, the successful commercialization of AXS-02 and AXS-05 will require many third parties, over
+whom we have no control, to decide to utilize AXS-02 and AXS-05, and to make them readily available at the point of care throughout their networks of pharmacies. These third parties include HMOs, long
+term care facilities, and pharmacy benefit managers, or PBMs, which use pharmacy and therapeutics committees, commonly referred to as P&T committees, to make purchasing and reimbursement decisions.
+Generally, before an HMO or long-term care facility will acquire AXS-02 or AXS-05 for its own pharmacies, or a PBM will pay retail network pharmacies on behalf of its health plans, AXS-02 and AXS-05
+must be approved for addition to that organization's list of approved drugs, or formulary list, by the organization's P&T committee. An institutional P&T committee typically governs all matters
+pertaining to the use of medications within the institution, including review of medication formulary data and recommendations for the appropriate use of drugs within the institution to the medical
+staff. PBM P&T committees develop the criteria for plan beneficiaries to access prescription medication, including such cost control measures as step therapy and prior authorization. The frequency of
+P&T committee meetings varies considerably, and P&T committees often require additional information to aid in their decision-making process, so we may experience substantial delays in obtaining
+formulary approvals. Additionally, P&T committees may be concerned that the cost of acquiring AXS-02 or AXS-05 for use in their institutions or reimbursing retail pharmacies outweighs clinical
+benefits and will resist efforts to add AXS-02 or AXS-05 to the formulary, or implement restrictions on the usage of the drug in order to control costs. We cannot guarantee that we will be successful
+in getting the approvals we need from enough P&T committees quickly enough to maintain and grow sales of AXS-02 or AXS-05. 
+
+We are dependent upon our license agreements with an entity owned by our Chief Executive Officer and
+Chairman of the Board related to the development of our current product candidates, and if the agreements are terminated for any reason our business will be materially harmed. 
+
+ In 2012, we entered into three exclusive license agreements with Antecip Bioventures II LLC, or Antecip, an entity owned by our
+Chief Executive Officer and Chairman of the Board, Herriot Tabuteau, M.D., in which we were granted exclusive licenses to develop, manufacture, and commercialize Antecip's patents and applications
+related to the development of AXS-02 and AXS-05, as well as AXS-04, a product candidate that is currently in early stage development, anywhere in the 
+
+45
+
+ 
+
+Table of Contents
+
+world for veterinary and human therapeutic and diagnostic use. The agreements were amended in August 2015 to update the schedule of patents and applications subject to the license agreements. Pursuant
+to the agreements, we are required to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize AXS-02, AXS-05, and AXS-04. Under the terms of the agreements,
+we are required to pay to Antecip a royalty equal to 4.5% for AXS-02, 3.0% for AXS-05, and 1.5% for AXS-04, of net sales of products containing the licensed technology by us, our affiliates, or
+permitted sublicensees. These royalty payments are subject to reduction by an amount up to 50.0% of any required payments to third parties. Unless earlier terminated by a party for cause or by us for
+convenience, the agreements remain in effect on a product-by-product and country-by-country basis until the later to occur of (1) the applicable product is no longer covered by a valid claim in
+that country or (2) 10 years from the first commercial sale of the applicable product in that country. Upon expiration of the agreements with respect to a product in a country, our
+license grant for that product in that country will become a fully paid-up, royalty-free, perpetual non-exclusive license. If Antecip terminates any of the agreements for cause, or if we exercise our
+right to terminate any of the agreements for convenience, the rights granted to us under such terminated agreement will revert to Antecip. To date, we have not been required to make any payments to
+Antecip under any of the license agreements. If any of the license agreements with Antecip are terminated for any reason, our business, financial condition, results of operations, and prospects will
+be materially harmed.
+
+ 
+
+RISKS RELATED TO INTELLECTUAL PROPERTY 
+
+It is difficult and costly to protect our proprietary rights and as a result we may not be able to
+ensure their protection. In addition, patents have a limited lifespan and will eventually expire. 
+
+ Market exclusivity awarded by the FDA upon the approval of an NDA is limited in scope and duration. Our commercial success will depend
+in part on obtaining, maintaining, enforcing, and defending against third-party challenges, our patent and trade secret protection for AXS-02, AXS-05, and any other of our current and future product
+candidates that we may develop, license, or acquire, and the related manufacturing methods. We will only be able to fully protect our technologies from unauthorized use by third parties to the extent
+that valid and enforceable patents or trade secrets cover them. 
+
+ The
+patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a
+timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, should we enter
+into additional collaborations we may be required to consult with or cede control to collaborators regarding the prosecution, maintenance, and enforcement of our patents. Therefore, these patents and
+applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. The patent positions of pharmaceutical and biotechnology companies can be highly
+uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in pharmaceutical or
+biotechnology patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent
+laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents
+or in third-party patents. The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or
+permit us to gain or keep our competitive advantage. Moreover, the patent application process is also subject to numerous risks and uncertainties, and there can be no assurance that we or any of our
+future development partners will be 
+
+46
+
+ 
+
+Table of Contents
+
+successful in protecting AXS-02, AXS-05, or any other of our current or future product candidates that we may develop, license, or acquire by obtaining and defending patents. For
+example:
+
+ we may not have been the first to make the inventions covered by each of our pending patent applications and issued patents; 
+
+ we may not have been the first to file patent applications for these inventions; 
+
+ others may independently develop similar or alternative technologies or duplicate any of our product candidates or technologies; 
+
+ it is possible that none of the pending patent applications will result in issued patents; 
+
+ the issued patents may not cover commercially viable active products, may not provide us with any competitive advantages, or may be
+successfully challenged by third parties; 
+
+ we may not develop additional proprietary technologies that are patentable; 
+
+ patents of others may have an adverse effect on our business; 
+
+ noncompliance with governmental patent agencies requirements can result in abandonment or lapse of a patent or patent application,
+resulting in partial or complete loss of patent rights in the relevant jurisdiction, potentially allowing competitors to enter the market earlier than would otherwise have been the case; 
+
+ our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in
+competing technologies, may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use, and sell our potential product candidates;
+or
+
+ there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of available patent
+protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns. 
+
+ Patents
+have a limited lifespan. In most countries, including the United States, the expiration of a patent is typically 20 years from the date that the application for the patent
+is filed. Various extensions of patent term may be available in particular countries; however, in all circumstances the life of a patent, and the protection it affords, has a limited term. If we
+encounter delays in obtaining regulatory approvals, the period of time during which we could market a product under patent protection could be reduced. We expect to seek extensions of patent terms
+where these are available in any countries where we are prosecuting patents. Such possible extensions include those permitted under the Drug Price Competition and Patent Term Restoration Act of 1984
+in the United States, which permits a patent term extension of up to five years to cover an FDA-approved product. The actual length of the extension will depend on the amount of patent term lost while
+the product was in clinical trials. However, the applicable authorities, including the USPTO and the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree
+with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors
+may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data, and then may be able to launch their product earlier than might
+otherwise be the case. 
+
+Recent patent reform legislation could increase the uncertainties and costs surrounding the
+prosecution of our patent applications and the enforcement or defense of our issued patents. 
+
+ On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act
+includes a number of significant changes to United States patent 
+
+47
+
+ 
+
+Table of Contents
+
+law.
+These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The United States Patent Office recently developed new regulations and
+procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only
+became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its
+implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a
+material adverse effect on our business, financial condition, results of operations, and prospects. 
+
+ Patent applications in the United States are maintained in confidence for at least 18 months after their earliest effective filing date. Consequently, we cannot be certain we were
+the first to invent or the first
+to file patent applications on AXS-02, AXS-05, or any other of our current or future product candidates that we may develop, license, or acquire. In the event that a third party has also filed a U.S.
+patent application relating to our product candidates or a similar invention, we may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office to determine
+priority of invention in the United States. The costs of these proceedings could be substantial and it is possible that our efforts would be unsuccessful, resulting in a material adverse effect on our
+U.S. patent position. The results of these types of proceedings may reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete
+directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of
+protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize current or future product
+candidates. Such results could have a material adverse effect on our business, financial condition, results of operations, and prospects.
+
+ In
+addition, the patentability of claims in pending patent applications covering AXS-02, AXS-05, or any other of our current or future product candidates can be challenged by third
+parties during prosecution in the U.S. Patent and Trademark Office, for example by third-party observations and derivation proceedings, and the validity of claims in issued patents can be challenged
+by third parties in various post-grant proceedings such as post-grant review, reexamination, and inter-partes review proceedings. 
+
+ Furthermore,
+we may not have identified all United States and foreign patents or published applications that affect our business either by blocking our ability to commercialize our drugs
+or by covering similar technologies that affect our drug market. In addition, some countries, including many in Europe, do not grant patent claims directed to methods of treating humans, and in these
+countries patent protection may not be available at all to protect our product candidates. Even if patents issue, we cannot guarantee that the claims of those patents will be valid and enforceable or
+provide us with any significant protection against competitive products, or otherwise be commercially valuable to us. 
+
+ We
+also rely on trade secrets to protect our technology, particularly where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to
+protect. While we use reasonable efforts to protect our trade secrets, our licensors, employees, consultants, contractors, outside scientific collaborators, and other advisors may unintentionally or
+willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is
+unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods, and
+know-how. 
+
+48
+
+ 
+
+Table of Contents
+
+Obtaining and maintaining our patent protection depends on compliance with various procedural,
+documentary, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements. 
+
+ The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment,
+and other similar provisions during the patent prosecution process. Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents or patent applications will be
+due to be paid to the USPTO and various patent agencies outside of the United States in several stages over the lifetime of the patents and applications. We have systems in place to remind us to pay
+these fees, and we employ and rely on reputable law firms and other professionals to effect payment of these fees to the USPTO and non-U.S. patent agencies for the patents and patent applications we
+own and those that we in-license. We also employ reputable law firms and other professionals to help us comply with the various documentary and other procedural requirements with respect to the
+patents and patent applications that we own and those that we in-license. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable
+rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the
+relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business. 
+
+If we or any future collaboration partner are sued for infringing intellectual property rights of
+third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business. 
+
+ Our ability to develop, manufacture, market, and sell AXS-02, AXS-05, and any other of our current and future product candidates
+depends upon our ability to avoid infringing the proprietary rights of third parties, and our commercial success depends upon our ability, and the ability of our collaborators, to develop,
+manufacture, market, and sell our product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. There is considerable intellectual property
+litigation in the biotechnology and pharmaceutical industries. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the general field of
+treatment and management of pain and other CNS disorders and cover the use of numerous compounds and formulations in our targeted markets. Third parties may assert infringement claims against us based
+on existing patents or patents that may be granted in the future. Because of the uncertainty inherent in any patent or other litigation involving proprietary rights, we and our licensors may not be
+successful in defending intellectual property claims by third parties, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Regardless
+of the outcome of any litigation, defending the litigation may be expensive, time consuming, and distracting to management. In addition, because patent applications can take many years to issue, there
+may be currently pending applications, unknown to us, which may later result in issued patents that AXS-02, AXS-05, or any other of our current or future product candidates may infringe. There could
+also be existing patents of which we are not aware that AXS-02, AXS-05, or any other of our current or future product candidates may inadvertently infringe. 
+
+ If
+a third party claims that we infringe on their products or technology, we could face a number of issues, including:
+
+ infringement and other intellectual property claims which, whether meritorious or not, can be expensive and time consuming to litigate
+and can divert management's attention from our core business; 
+
+ substantial damages for past infringement which we may have to pay if a court decides that our product infringes on a competitor's
+patent; 
+
+49
+
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+
+Table of Contents
+
+ a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it would not be
+required to do; 
+
+ if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents;
+and
+
+ redesigning our product candidates and processes so they do not infringe, which may not be possible or could require substantial funds
+and time. 
+
+ If
+we are found to infringe a third party's intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products
+and technology.
+However, we may not be able to obtain any required license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our
+competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found
+liable for monetary damages, including treble damages and attorneys' fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our
+product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of
+third parties could have a similar negative impact on our business, financial condition, results of operations, and prospects. 
+
+We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors,
+which could be expensive, time consuming, and unsuccessful.
+
+ 
+
+ Competitors may infringe our issued patents, our in-licensed patents, or other intellectual property that we own or in-license. Under
+the terms of our license agreements with Antecip, if we believe a third party is infringing on the patents subject to the licenses, we are obligated, at our own expense, to initiate suit against those
+third parties. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming. Any claims we assert against perceived infringers
+could provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is
+invalid or unenforceable, in whole or in part; construe the patent's claims narrowly; or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover
+the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the
+substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this
+type of litigation. 
+
+ Most
+of our competitors are larger than we are and have substantially greater resources than we do. They are, therefore, likely to be able to sustain the costs of complex patent
+litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical
+trials, continue our internal research programs, in-license needed technology, or enter into development partnerships that would help us bring our product candidates to market. 
+
+We may need to license certain intellectual property from third parties, and such licenses may not
+be available or may not be available on commercially reasonable terms. 
+
+ A third party may hold intellectual property, including patent rights that are important or necessary to the development or
+commercialization of our products. It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our products, in which case we would be required to obtain
+a license from these third parties. Such a license may not be available on 
+
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+Table of Contents
+
+commercially
+reasonable terms, or at all, which could materially harm our business, financial condition, results of operations, and prospects. 
+
+We may be subject to claims that our employees, independent contractors, or consultants have
+wrongfully used or disclosed alleged trade secrets of their former employers or other third parties. 
+
+ As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other
+biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these individuals
+or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we
+are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. 
+
+We may be unable to adequately prevent disclosure of trade secrets and other proprietary
+information. 
+
+ We rely on trade secrets to protect our proprietary technological advances and know-how, especially where we do not believe patent
+protection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, contractors, outside scientific
+collaborators, sponsored researchers, and other advisors, including the third parties we rely on to manufacture our product candidates, to protect our
+trade secrets and other proprietary information. However, any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade
+secrets. Accordingly, these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential
+information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. In addition, others may independently discover our trade secrets and
+proprietary information. Further, the FDA, as part of its Transparency Initiative, a proposal to increase disclosure and make data more accessible to the public, is currently considering whether to
+make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present
+time how the FDA's disclosure policies may change in the future, if at all. Failure to obtain or maintain trade secret protection could enable competitors to use our proprietary information to develop
+products that compete with our products or cause additional, material adverse effects upon our competitive business position and financial results. 
+
+We or our licensors may not be able to protect our intellectual property rights throughout the
+world. 
+
+ Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively
+expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do
+not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in
+all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in
+jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but
+enforcement rights are not as strong as those in the United States. These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or
+sufficient to prevent them from competing. 
+
+ Many
+companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries do not
+favor the 
+
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+
+enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents generally. Proceedings to enforce our patent rights in
+foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted
+narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may
+not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our or our licensors'
+intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
+
+RISKS RELATED TO LEGAL AND COMPLIANCE MATTERS 
+
+If we fail to comply with federal and state healthcare laws, including fraud and abuse and health
+and other information privacy and security laws, we could face substantial penalties and our business, financial condition, results of operations, and prospects could be adversely affected. 
+
+ As a pharmaceutical company, we are subject to many federal and state healthcare laws, including those described in the
+"Business Government Regulation and Product Approval" section of this prospectus, such as the federal Anti-Kickback Statute, the federal civil and criminal False Claims Act, the civil
+monetary penalties statute, the Medicaid Drug Rebate statute and other price reporting requirements, the Veterans Health Care Act of 1992, the federal Health Insurance Portability and Accountability
+Act of 1996 (as amended by the Health Information Technology for Economics and Clinical Health Act), the Foreign Corrupt Practices Act of 1977, the Patient Protection and Affordable Care Act of 2010,
+and similar state laws. Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid, or other third-party payors, certain federal and state
+healthcare laws and regulations pertaining to fraud and abuse and patients' rights are and will be applicable to our business. We would be subject to healthcare fraud and abuse and patient privacy
+regulation by both the federal government and the states in which we conduct our business. 
+
+ If we or our operations are found to be in violation of any federal or state healthcare law, or any other governmental regulations that apply to us, we may be subject to penalties,
+including civil, criminal, and administrative penalties, damages, fines, disgorgement, debarment from government contracts, refusal of orders under existing contracts, exclusion from participation in
+U.S. federal or state health care programs, corporate integrity agreements, and the curtailment or restructuring of our operations, any of which could materially adversely affect our ability to
+operate our business and our financial results. If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, is found not to be
+in compliance with applicable laws, it may be subject to criminal, civil, or administrative sanctions, including but not limited to, exclusions from participation in government healthcare programs,
+which could also materially affect our business.
+
+ 
+
+ Although
+an effective compliance program can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Moreover, achieving
+and sustaining compliance with applicable federal and state privacy, security, and fraud laws may prove costly. Any action against us for violation of these laws, even if we successfully defend
+against it, could cause us to incur significant legal expenses and divert our management's attention from the operation of our business. 
+
+If the government or third-party payors fail to provide adequate coverage and payment rates for
+AXS-02, AXS-05, or any other of our current or future product candidates, or if HMOs or long-term care facilities choose to use therapies that are less expensive, our revenue and prospects for
+profitability will be limited. 
+
+ In both domestic and foreign markets, sales of our future products will depend in part upon the availability of coverage and
+reimbursement from third-party payors. Such third-party payors include 
+
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+
+government
+health programs such as Medicare and Medicaid, managed care providers, private health insurers, and other organizations. Coverage decisions may depend upon clinical and economic standards
+that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. If reimbursement is not available, or is available
+only to limited levels, our product candidates may be competitively disadvantaged, and we, or our collaborators, may not be able to successfully commercialize our product candidates. Even if coverage
+is provided, the approved reimbursement amount may not be high enough to allow us, or our collaborators, to establish or maintain a market share sufficient to realize a sufficient return on our or
+their investments. Alternatively, securing favorable reimbursement terms may require us to compromise pricing and prevent us from realizing an adequate margin over cost. 
+
+ There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs. Marketing approvals, pricing, and reimbursement for new drug products
+vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining
+approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is
+granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing
+approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods, which may negatively impact the
+revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability or the ability of our collaborators to recoup our or their investment
+in one or more product candidates, even
+if our product candidates obtain marketing approval. Our ability, and the ability of our collaborators, to commercialize our product candidates will depend in part on the extent to which coverage and
+reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations. Regulatory authorities
+and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will cover and establish reimbursement levels. The healthcare industry is
+acutely focused on cost containment, both in the United States and elsewhere. Several third-party payors are requiring that drug companies provide them with predetermined discounts from list prices,
+are using preferred drug lists to leverage greater discounts in competitive classes, are disregarding therapeutic differentiators within classes, and are challenging the prices charged for drugs.
+Brand drugs without generic equivalents are often included in therapeutic classes with other brands that have generic versions and may be similarly disadvantaged by the availability of low cost
+alternatives within the class, particularly if a generic version of the same agent is available in another form.
+
+ 
+
+ Third-party
+payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the
+United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for drug products can differ significantly from
+payor to payor. Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the United States and in international markets. Third-party coverage
+and reimbursement for our products or product candidates for which we receive regulatory approval may not be available or adequate in either the United States or international markets, which could
+have a negative effect on our business, financial condition, results of operations, and prospects. 
+
+ Assuming
+coverage is approved, the resulting reimbursement payment rates might not be adequate. If payors subject our product candidates to maximum payment amounts, or impose limitations
+that make it difficult to obtain reimbursement, providers may choose to use therapies which are less expensive when compared to our product candidates. Additionally, if payors require high copayments,
+beneficiaries may decline prescriptions and seek alternative therapies. We may need to conduct 
+
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+
+post-marketing studies in order to demonstrate the cost-effectiveness of any future products to the satisfaction of hospitals and other target customers and their third-party payors. Such studies
+might require us to commit a significant amount of management time and financial and other resources. Our future products might not ultimately be considered cost-effective. Adequate third-party
+coverage and reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development.
+
+ 
+
+ In
+addition, federal programs impose penalties on manufacturers of drugs marketed under an NDA, including 505(b)(2) drugs, in the form of mandatory additional rebates and/or discounts if
+commercial prices increase at a rate greater than the Consumer Price Index-Urban, and these rebates and/or
+discounts, which can be substantial, may impact our ability to raise commercial prices. Regulatory authorities and third-party payors have attempted to control costs by limiting coverage and the
+amount of reimbursement for particular medications, which could affect our ability or that of our collaborators to sell our product candidates profitably. These payors may not view our products, if
+any, as cost-effective, and coverage and reimbursement may not be available to our customers, or those of our collaborators, or may not be sufficient to allow our products, if any, to be marketed on a
+competitive basis. Cost-control initiatives could cause us, or our collaborators, to decrease, discount, or rebate a portion of the price we, or they, might establish for products, which could result
+in lower than anticipated product revenues. If the realized prices for our products, if any, decrease or if governmental and other third-party payors do not provide adequate coverage or reimbursement,
+our prospects for revenue and profitability will suffer. 
+
+ There
+may also be delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the indications for which the drug is approved by the FDA
+or comparable foreign regulatory authorities. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research,
+development, manufacture, sale, and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement
+rates may vary, by way of example, according to the use of the drug and the clinical setting in which it is used. Reimbursement rates may also be based on reimbursement levels already set for lower
+cost drugs or may be incorporated into existing payments for other services. 
+
+ Prices
+paid for a drug also vary depending on the class of trade. Prices charged to government customers are subject to price controls, including ceilings, and private institutions
+obtain discounts through group purchasing organizations. Net prices for drugs may be further reduced by mandatory discounts or rebates required by government healthcare programs and demanded by
+private payors. Drugs approved under NDAs, including 505(b)(2) drugs, are subject to greater discounts and reporting obligations under federal programs than drugs approved under ANDAs, and the
+inflation penalty applicable to these products can equal the selling price. It is also not uncommon for market conditions to warrant multiple discounts to different customers on the same unit, such as
+purchase discounts to institutional care providers and rebates to the health plans that pay them, which reduces the net realization on the original sale. 
+
+ In addition, increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new technologies and are challenging the prices charged.
+We, and our collaborators, cannot be sure that coverage will be available for any product candidate that we, or they, commercialize and, if available, that the reimbursement rates will be adequate.
+Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at
+lower prices than in the United States. An inability to promptly obtain coverage and adequate payment rates from both government-funded and private payors for any our product candidates for which we
+obtain marketing approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.
+
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+
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+
+We are subject to new legislation, regulatory proposals, and healthcare payor initiatives that may
+increase our costs of compliance, and adversely affect our ability to market our products, obtain collaborators, and raise capital.
+
+ 
+
+ In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed
+changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities, and affect our ability, or the ability
+of our collaborators, to profitably sell any products for which we obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the
+future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we, or our collaborators, may receive for any approved products.
+
+ 
+
+ For
+example, legislative changes have been proposed and adopted since President Obama signed into law the Affordable Care Act, or ACA, in 2010. These changes include, among other things,
+aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went effective on April 1, 2013. In addition, in January 2013, President Obama signed into law the
+American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover
+overpayments to providers from three to five years. Changes imposed by recent legislative actions are further described in the "Business Governmental Regulation and Product Approval"
+section of this prospectus. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if
+approved, and, accordingly, on our results of operations. 
+
+ While the full effect that the ACA may have on our business remains unclear, we expect that the ACA, as well as other federal and state healthcare reform measures that may be adopted in
+the future, may result in more rigorous coverage criteria, increased regulatory burdens and operating costs, decreased net revenue from our pharmaceutical products, decreased potential returns from
+our development efforts, and additional downward pressure on the price that we receive for any approved drug. Any reduction in reimbursement from Medicare or other government healthcare programs may
+result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain
+profitability or commercialize our drugs.
+
+ Legislative and regulatory proposals may also be made to expand post-approval requirements and restrict sales and promotional activities for drugs. We cannot be sure whether additional
+legislative changes will be enacted, or whether the FDA regulations, guidance, or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product
+candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA's approval process may significantly delay or prevent marketing approval, as well as subject us to more
+stringent product labeling and post-marketing testing and other requirements.
+
+ In addition, there have been a number of other legislative and regulatory proposals aimed at changing the pharmaceutical industry. For instance, the recently enacted Drug Quality and
+Security Act imposes new obligations on manufacturers of pharmaceutical products related to product tracking and tracing. Among the requirements of this new legislation, manufacturers will be required
+to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records
+regarding the drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to
+verify that purchasers of the manufacturers' products are appropriately licensed. Further, under this new legislation, manufactures will have drug product investigation, quarantine, disposition, and
+FDA and trading partner notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products that would result in serious adverse health consequences of death
+to humans, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health
+consequences or death.
+
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+
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+
+ Table of Contents 
+
+ Compliance with the federal track and trace requirements may increase our operational expenses and impose significant administrative burdens. As a result of these
+and other new proposals, we may determine to change our current manner of operation, provide additional benefits, or change our contract arrangements, any of which could have a material adverse effect
+on our business, financial condition, and results of operations.
+
+ 
+
+Governments outside the United States tend to impose strict price controls, which may adversely
+affect our revenues, if any. 
+
+ In international markets, reimbursement and health care payment systems vary significantly by country, and many countries have
+instituted price ceilings on specific products and therapies. In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to
+governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain coverage and
+reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. There
+can be no assurance that our products will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be available, or that the third-party payors' reimbursement
+policies will not adversely affect our ability to sell our products profitably. If
+reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed, possibly materially.
+
+ 
+
+Our employees, independent contractors, consultants, commercial partners, principal investigators,
+or CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business. 
+
+ We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, independent contractors, consultants,
+commercial partners, principal investigators, or CROs could include intentional, reckless, negligent, or unintentional failures to comply with FDA regulations, comply with applicable fraud and abuse
+laws, provide accurate information to the FDA, report financial information or data accurately, or disclose unauthorized activities to us. This misconduct could also involve the improper use or
+misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and
+deter this type of misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from
+governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not
+successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, and results of operations, including the imposition of
+significant fines or other sanctions.
+
+ 
+
+Our third-party manufacturers may use hazardous materials in the production of our product
+candidates and if so, they must comply with environmental laws and regulations, which can be expensive and restrict how we or they do business. 
+
+ Manufacturing activities for the production of our product candidates involve the controlled storage, use, and disposal of hazardous
+materials, including the components of our product candidates, and other hazardous compounds. Our third-party manufacturers and we are subject to federal, state, and local laws and regulations
+governing the use, manufacture, storage, handling, release, and disposal of, and exposure to, these hazardous materials. Violation of these laws and regulations could lead to substantial fines and
+penalties. Although we believe that our safety procedures, and those of our third-party manufacturers, for handling and disposing of these materials comply with the standards prescribed by these laws
+and regulations, we cannot eliminate the risk of accidental contamination or 
+
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+
+injury
+from these materials. In the event of an accident, state or federal authorities may curtail our use of these materials and interrupt our business operations. In addition, we could become
+subject to potentially material liabilities relating to the investigation and cleanup of any contamination, whether currently unknown or caused by future releases. 
+
+ Although we maintain workers' compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this
+insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection
+with our storage or disposal of biological, hazardous, or radioactive materials.
+
+ 
+
+ In addition, we may incur substantial costs in order to comply with current or future environmental, health, and safety laws and regulations. These current or future laws and regulations
+may impair our research, development, or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions.
+
+ RISKS RELATED TO EMPLOYEE MATTERS, MANAGING GROWTH AND BECOMING A PUBLIC COMPANY 
+
+We will need to significantly increase the size of our organization, and we may experience
+difficulties in managing growth. 
+
+ As of October 30, 2015, we had only 9 full-time employees and 2 key consultants. We will need to substantially expand our
+managerial, commercial, financial, manufacturing, and other personnel resources in order to manage our operations and prepare for the commercialization of AXS-02 and AXS-05, if approved. Our
+management, personnel, systems, and facilities currently in place may not be adequate to support this future growth. In addition, we may not be able to recruit and retain qualified personnel in the
+future, particularly for sales and marketing positions, due to competition for personnel among pharmaceutical businesses, and the failure to do so could have a significant negative impact on our
+future product revenues and business results. Our need to effectively manage our operations, growth and various projects requires that we:
+
+ continue the hiring and training of personnel for an effective commercial organization in anticipation of the potential approval of
+AXS-02 and AXS-05, and establish appropriate systems, policies and infrastructure to support that organization; 
+
+ ensure that our consultants and other service providers successfully carry out their contractual obligations, provide high quality
+results, and meet expected deadlines; 
+
+ continue to carry out our own contractual obligations to our licensors and other third parties;
+and
+
+ continue to improve our operational, financial, and management controls, reporting systems, and procedures. 
+
+ We
+may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our development and commercialization goals. 
+
+We may acquire businesses or products, or form strategic alliances in the future, and we may not
+realize the benefits of such acquisitions or alliances. 
+
+ We may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe
+will complement or augment our existing business. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are
+unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in developing, manufacturing, and marketing any new products resulting
+from a strategic alliance or acquisition that delay or prevent us 
+
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+
+from
+realizing their expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify the transaction. 
+
+We may not be able to manage our business effectively if we are unable to attract and retain key
+personnel. 
+
+ We may not be able to attract or retain qualified management and commercial, scientific, and clinical personnel due to the intense
+competition for qualified personnel among biotechnology, pharmaceutical, and other businesses. If we are not able to attract and retain necessary personnel to accomplish our business objectives, we
+may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy. 
+
+ Our industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on the skills and leadership of our management team, including
+Dr. Herriot Tabuteau, our Chief Executive Officer and Chairman of the Board. We do not have formal employment agreements with any of our management team. However, we typically enter into offer
+letters with our executive officers and key personnel. Our senior management may terminate their employment with us at any time. If we lose one or more members of our senior management team, our
+ability to successfully implement our business strategy could be seriously harmed. Replacing these employees may be difficult and may take an extended period of time because of the limited number of
+individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of, and commercialize products successfully. Competition to hire from this limited
+pool is intense, and we may be unable to hire, train, retain, or motivate additional key personnel. We do not maintain "key person" insurance for any of our executives or other employees.
+
+We will incur increased costs as a result of operating as a public company. 
+
+ As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting,
+and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The NASDAQ
+Capital Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial
+controls and corporate governance
+practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and
+financial compliance costs and will make some activities more time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to
+obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our board of directors.
+
+ 
+
+ We
+are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are
+often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory
+and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. 
+
+If we fail to maintain proper and effective internal controls, our ability to produce accurate
+financial statements on a timely basis could be impaired. 
+
+ After the completion of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, the
+Sarbanes-Oxley Act of 2002 and the rules and regulations of The NASDAQ Capital Market. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to
+furnish a report by our management on our internal control over financial
+
+ 
+
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+Table of Contents
+
+reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent
+registered public accounting firm. Commencing with our fiscal year ending December 31, 2016, we must perform system and process evaluation and testing of our internal control over financial
+reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 10-K filing for that year, as required by Section 404.
+
+ 
+
+ To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which
+is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document
+the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and
+implement a continuous reporting and
+improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our
+internal control over financial reporting is effective as required by Section 404. Prior to this offering, we have never been required to test, nor have we tested, our internal controls within
+a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.
+
+ We may discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our
+internal control over financial reporting will not prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute,
+assurance that the control system's objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due
+to error or fraud will not occur or that all control issues and instances of fraud will be detected. If we are not able to comply with the requirements of Section 404 in a timely manner, or if
+we identify one or more material weaknesses in our internal controls, investors could lose confidence in the reliability of our financial statements, the market price of our stock could decline and we
+could be subject to sanctions or investigations by The NASDAQ Capital Market, the SEC, or other regulatory authorities.
+
+ 
+
+Our business and operations would suffer in the event of system failures. 
+
+ Despite our implementation of security measures, our internal computer systems and those of our CROs and other contractors and
+consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. If such an event were to occur and
+cause interruptions in our operations, it could result in a material disruption of our product candidate development programs. For example, the loss of clinical trial data from completed, ongoing, or
+planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security
+breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of personal, confidential, or proprietary information, we could incur liability and the further
+development of any of our product candidates could be delayed.
+
+ RISKS RELATED TO THIS OFFERING AND OWNERSHIP OF OUR COMMON STOCK 
+
+There is no established public market for our common stock and a public market may not be obtained
+or be liquid and therefore you may not be able to sell your shares. 
+
+ Prior to this offering, there has not been a public market for our common stock. If an active trading market for our common stock does
+not develop following this offering, you may not be able to sell your shares quickly or at the market price. The initial public offering price for the shares will be determined by negotiations between
+us and the representative of the underwriters and may not be indicative of prices that will prevail in the subsequent trading market. 
+
+59
+
+ 
+
+Table of Contents
+
+The market price of our common stock may be highly volatile, and you may not be able to resell your
+shares at or above the initial public offering price. 
+
+ The trading price of our common stock is likely to be volatile. As a result of this volatility, investors may not be able to sell their
+common stock at or above the price paid for the shares. The market price for our common stock may be influenced by many factors, including:
+
+ delays in the commencement, enrollment, and ultimate completion, of our planned Phase 3 clinical trials for AXS-02 and AXS-05; 
+
+ any delay or refusal on the part of the FDA in approving an NDA for AXS-02, AXS-05, or any other of our current and future product
+candidates; 
+
+ the commercial success of AXS-02, AXS-05, and any other of our current and future product candidates, if approved by the FDA; 
+
+ results of clinical trials of AXS-02, AXS-05, and any other of our current and future product candidates or those of our competitors; 
+
+ actual or anticipated variations in quarterly or annual operating results; 
+
+ failure to meet or exceed financial projections we provide to the public, if any; 
+
+ failure to meet or exceed the estimates and projections of the investment community, including securities analysts; 
+
+ introduction of competitive products or technologies; 
+
+ changes or developments in laws or regulations applicable to our product candidates; 
+
+ the perception of the pharmaceutical industry by the public, legislatures, regulators, and the investment community; 
+
+ general economic and market conditions and overall fluctuations in U.S. equity markets; 
+
+ developments concerning our sources of manufacturing supply, warehousing, and inventory control; 
+
+ disputes or other developments relating to patents or other proprietary rights; 
+
+ additions or departures of key scientific or management personnel; 
+
+ announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; 
+
+ capital commitments; 
+
+ investors' general perception of our company and our business; 
+
+ announcements and expectations of additional financing efforts, including the issuance of debt, equity or convertible securities; 
+
+ sales of our common stock, including sales by our directors and officers or significant stockholders; 
+
+ changes in the market valuations of companies similar to us; 
+
+ announcements by us or our competitors of significant acquisitions, strategic partnerships, or divestitures; 
+
+ general conditions or trends in our industry; and
+
+ the other factors described in this "Risk Factors" section. 
+
+60
+
+ 
+
+Table of Contents
+
+ In
+addition, the stock market in general, and the market for small pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that
+have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless
+of our actual operating performance. 
+
+ Further,
+in the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology companies following periods of volatility in the market prices of these
+companies' stocks.
+Such litigation, if instituted against us, could cause us to incur substantial costs and divert management's attention and resources from our business. 
+
+If equity research analysts do not publish research or reports, or publish unfavorable research or
+reports, about us, our business, or our market, our stock price and trading volume could decline.
+
+ 
+
+ The trading market for our common stock will be influenced by the research and reports that equity research analysts publish about us
+and our business. We do not currently have and may never obtain research coverage by equity research analysts. Equity research analysts may elect not to provide research coverage of our common stock
+after the completion of this offering, and such lack of research coverage may adversely affect the market price of our common stock. In the event we do have equity research analyst coverage, we will
+not have any control over the analysts or the content and opinions included in their reports. The price of our stock could decline if one or more equity research analysts downgrades our stock or issue
+other unfavorable commentary or research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which
+in turn could cause our stock price or trading volume to decline. 
+
+Our quarterly operating results may fluctuate significantly. 
+
+ We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by
+numerous factors, including:
+
+ whether the FDA requires us to complete additional, unanticipated studies, tests, or other activities prior to approving AXS-02,
+AXS-05, or any other of our current and future product candidates, which would likely further delay any such approval; 
+
+ if AXS-02, AXS-05, or any other of our current or future product candidates is approved, our ability to establish the necessary
+commercial infrastructure to launch this product candidate without substantial delays, including hiring sales and marketing personnel and contracting with third parties for warehousing, distribution,
+cash collection, and related commercial activities; 
+
+ our ability to identify and enter into third-party manufacturing arrangements capable of manufacturing AXS-02, AXS-05, or any other of
+our current or future product candidates in commercial quantities; 
+
+ our execution of other collaborative, licensing, or similar arrangements and the timing of payments we may make or receive under these
+arrangements; 
+
+ variations in the level of expenses related to our future development programs; 
+
+ any product liability or intellectual property infringement lawsuit in which we may become involved; 
+
+ regulatory developments affecting AXS-02, AXS-05, and our other current and future product candidates, or the product candidates of
+our competitors; and
+
+ if AXS-02, AXS-05, or any other of our current or future product candidates receive regulatory approval, the level of underlying
+demand for such product candidate and wholesaler buying patterns. 
+
+61
+
+ 
+
+Table of Contents
+
+ If
+our quarterly or annual operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any
+quarterly or annual fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially. We believe that quarterly comparisons of our financial results are not
+necessarily meaningful and should not be relied upon as an indication of our future performance. 
+
+Raising additional funds by issuing securities may cause dilution to existing stockholders and
+raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights. 
+
+ Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of
+equity offerings, debt financings, grants, and license and development agreements in connection with any collaborations. We do not have any committed external source of funds. To the extent that we
+raise additional capital by issuing equity securities, our existing stockholders' ownership will be diluted, and the terms of these securities may include liquidation or other preferences that
+adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to
+take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.
+
+ 
+
+ If we raise additional funds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable
+rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. Any debt financing we enter into may involve
+covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our
+ability to create liens, pay dividends, redeem our stock, or make investments. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay,
+limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market
+ourselves.
+
+Our principal stockholders and management own a significant percentage of our stock and will be able
+to exert significant control over matters subject to stockholder approval. 
+
+ Upon completion of this offering, assuming an initial public offering price of $12.00 per share, which is the midpoint of the
+price range set forth on the cover page of this prospectus, our executive officers, directors, and 5% stockholders and their affiliates will beneficially own an aggregate of approximately 45.5% of our
+outstanding common stock, excluding any shares of common stock that our existing stockholders may purchase in this offering. As a result, these stockholders will have significant influence and may be
+able to determine all matters requiring
+stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other
+major corporate transaction. This concentration of ownership could delay or prevent any acquisition of our company on terms that other stockholders may desire, and may adversely affect the market
+price of our common stock.
+
+ 
+
+ Some
+of these persons or entities may have interests different than yours. For example, because many of these stockholders purchased their shares at prices substantially below the price
+at which shares are being sold in this offering and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want
+us to pursue strategies that deviate from the interests of other stockholders. 
+
+62
+
+ 
+
+Table of Contents
+
+Sales of a substantial number of shares of our common stock in the public market by our existing
+stockholders could cause our stock price to fall. 
+
+ Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could
+depress the market price of our common stock and could impair our ability to raise adequate capital through the sale of additional equity securities. We are unable to predict the effect that sales may
+have on the prevailing market price of our common stock. 
+
+ Upon completion of this offering, we will have outstanding 17,720,477 shares of common stock, assuming no exercise of the underwriters' over-allotment option or of outstanding
+options or warrants. Of these shares, the 4,250,000 shares sold in this offering will be freely tradable, 13,470,477 additional shares of common stock will be available for sale in the public
+market beginning 180 days after the date of this prospectus following the expiration of lock-up agreements between some of our stockholders and the underwriters, subject, in the case of our
+affiliates, to the volume, manner of sale, and other limitations of Rule 144, and 811,019 shares issued or issuable upon exercise of options and warrants vested as of the expiration of the
+lock-up period will be eligible for sale at that time, subject, in the case of our affiliates, to the volume, manner of sale and other limitations of Rule 144. The representative of the
+underwriters may release these stockholders from their lock-up agreements with the underwriters at any time and without notice, which would allow for earlier sales of shares in the public market.
+Sales of stock by these stockholders could have a material adverse effect on the market price of our common stock.
+
+ 
+
+ In addition, promptly following the completion of this offering, we intend to file one or more registration statements on Form S-8 registering the issuance of approximately
+4,491,507 shares of common stock subject to options or other equity awards issued or reserved for future issuance under our 2015 Omnibus Incentive Compensation Plan. Shares registered under these
+registration statements on Form S-8 will be available for sale in the public market subject to vesting arrangements and exercise of options, the lock-up agreements described above and the
+restrictions of Rule 144 in the case of our affiliates.
+
+ 
+
+Our management will have broad discretion in the use of the net proceeds from this offering and may
+not use them effectively. 
+
+ Our management will have broad discretion in the application of the net proceeds from this offering and our stockholders will not have
+the opportunity as part of their investment decision to assess whether the net proceeds are being used appropriately. You may not agree with our decisions, and our use of the proceeds may not yield
+any return on your investment. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their
+currently intended use. Our failure to apply the net proceeds of this offering effectively could compromise our ability to pursue our growth strategy and we might not be able to yield a significant
+return, if any, on our investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering. Pending their use, we may
+invest the net proceeds from this offering in short-term, investment-grade, interest-bearing instruments and U.S. government securities. These temporary investments are not likely to yield a
+significant return. 
+
+If you purchase our common stock in this offering, you will incur immediate and substantial dilution
+in the book value of your shares. 
+
+ The initial public offering price of our common stock is substantially higher than the pro forma net tangible book value per share of
+our common stock as of September 30, 2015, after giving effect to this offering. Investors purchasing common stock in this offering will pay a price per share that substantially exceeds the
+book value of our tangible assets after subtracting our liabilities. Based on an assumed initial public offering price of $12.00 per share, which is the midpoint of the price range set forth on
+
+63
+
+ 
+
+Table of Contents
+
+the cover page of this prospectus, you will experience immediate dilution of $9.22 per share, or $8.93 per share if the underwriters exercise their over-allotment option in full, representing the
+difference between our pro forma net tangible book value per share, after giving effect to this offering, and the assumed initial public offering price. In addition, purchasers of common stock in this
+offering will have contributed approximately 75% of the aggregate price paid by all purchasers of our stock, but will own only approximately 24% of our common stock outstanding after this offering.
+See "Dilution." In addition, as of September 30, 2015, options and warrants to purchase an aggregate of 1,233,283 shares of our common stock at a weighted average exercise price of $2.90 per
+share were outstanding. The exercise of any of these options or warrants would result in additional dilution. As a result of the dilution to investors purchasing shares in this offering, investors may
+receive significantly less than the purchase price paid in this offering, if anything, in the event of a liquidation or sale of our company.
+
+We are an "emerging growth company" and as a result of the reduced disclosure and governance
+requirements applicable to emerging growth companies, our common stock may be less attractive to investors. 
+
+ We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and we intend to take
+advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the
+auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
+requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting
+exemptions until we are no longer an emerging growth company. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find
+our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 
+
+ We
+will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering,
+(b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common
+stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
+during the prior three-year period. To the extent we are no longer eligible to use exemptions from various reporting requirements under the JOBS Act, we may be unable to realize our anticipated cost
+savings from these exemptions, which could have a material adverse impact on our operating results. 
+
+The use of our net operating loss carryforwards and research tax credits may be limited. 
+
+ Our net operating loss carryforwards and any future research and development tax credits may expire and not be used. As of
+December 31, 2013 and 2014, we had U.S. net operating loss carryforwards of approximately $2.2 million and $6.6 million, respectively. Our net operating loss carryforwards will
+begin expiring in 2033 if we have not used them prior to that time. Additionally, our ability to use any net operating loss and credit carryforwards to offset taxable income or tax, respectively, in
+the future will be limited under Internal Revenue Code Sections 382 and 383, respectively, if we have a cumulative change in ownership of more than 50% within a three-year period. The
+completion of this offering, together with private placements and other transactions that have occurred, may trigger, or may have already triggered, such an ownership change. In addition, since we
+will need to raise substantial additional funding to finance our operations, we may undergo further ownership changes in the future. We have never completed an analysis as to whether such a change of
+ownership has occurred, but in such an event, we will be limited regarding the amount of net operating loss carryforwards and research tax credits that could be utilized annually in the future to
+offset taxable income or tax, respectively. Any such annual limitation may significantly reduce the utilization of the
+
+ 
+
+64
+
+ 
+
+Table of Contents
+
+net
+operating loss carryforwards and research tax credits before they expire. In addition, certain states have suspended use of net operating loss carryforwards for certain taxable years, and other
+states are considering similar measures. As a result, we may incur higher state income tax expense in the future. Depending on our future tax position, continued suspension of our ability to use net
+operating loss carryforwards in states in which we are subject to income tax could have an adverse impact on our results of operations and financial condition. 
+
+Because we do not intend to pay dividends on our common stock, your returns will be limited to any
+increase in the value of our stock. 
+
+ We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any
+future earnings to support our operations and finance the growth and development of our business and do not anticipate declaring or paying any cash dividends on our common stock for the foreseeable
+future. Any return to stockholders will therefore be limited to the appreciation of their stock, if any. Investors seeking cash dividends should not purchase our common stock. 
+
+Provisions in our corporate charter documents and under Delaware law may prevent or frustrate
+attempts by our stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result. 
+
+ There are provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as will be in effect
+following the completion of this offering, that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change in control was considered favorable
+by you and other stockholders. For example, our board of directors will have the authority to issue up to 10,000,000 shares of preferred stock and to fix the price, rights, preferences, privileges,
+and restrictions of the preferred stock without any further vote or action by our stockholders. The issuance of shares of preferred stock may delay or prevent a change in control transaction. As a
+result, the market price of our common stock and the voting and other rights of our stockholders may be adversely affected. An issuance of shares of preferred stock may result in the loss of voting
+control to other stockholders.
+
+ 
+
+ Our
+charter documents will also contain other provisions that could have an anti-takeover effect, including:
+
+ our board of directors will be divided into three classes, with only one class of directors elected each year; 
+
+ our stockholders will be entitled to remove directors only for cause upon a 662/3% vote; 
+
+ our stockholders will not be permitted to take actions by written consent; 
+
+ our stockholders will not be permitted to call a special meeting of stockholders;
+and
+
+ our stockholders must give us advance notice of their intent to nominate directors or submit proposals for consideration at
+stockholder meetings. 
+
+ In
+addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions by prohibiting Delaware
+corporations from engaging in specified business combinations with particular stockholders of those companies. These provisions could discourage potential acquisition proposals and could delay or
+prevent a change in control transaction. They could also have the effect of discouraging others from making tender offers for our common stock, including transactions that may be in your best
+interests. These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock. 
+
+65
+
+ 
+
+Table of Contents
+
+Our amended and restated certificate of incorporation designates the state or federal courts located
+in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a
+favorable judicial forum for disputes with us or our directors, officers or employees. 
+
+ Our amended and restated certificate of incorporation that will become effective upon the closing of this offering provides that,
+subject to limited exceptions, the state and federal courts located in the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our
+behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a
+claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or (4) any
+other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be
+deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder's
+ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our
+directors, officers, and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of,
+one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and
+financial condition.
+
+ 
+
+66
+
+ 
+
+ 
+
+Table of Contents
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/AXTA_axalta_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/AXTA_axalta_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/AXTA_axalta_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/BANR_banner_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/BANR_banner_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/BANR_banner_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/BOOT_boot-barn_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/BOOT_boot-barn_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/BOOT_boot-barn_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/BOX_box-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/BOX_box-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ea433f5b6da3db585f9f1ae810f886b9f1c895b6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/BOX_box-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/BSQKZ_block-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/BSQKZ_block-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8630f3d6a287c21a0fd01376578f9bd53b2a1140
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/BSQKZ_block-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our Class A common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes, and the information in the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Unless otherwise indicated, references to our common stock include our Class A common stock and Class B common stock. SQUARE, INC. Our First Sellers The story of Square is best told through the stories of our sellers, the customers we serve. As soon as we had a working prototype of our first credit card reader, we went out to talk to sellers. We met owners of a wide range of businesses, and they shared with us many of the challenges they faced. We met Cheri, the owner of a flower cart called Lilybelle, who lost a sale when a customer did not have any cash and Cheri had no way to accept credit cards. We met Jerad and Justin, brothers and co-owners of Sightglass Coffee, who were forced to stitch together disparate systems and processes to handle their basic business operations. We met Andrei, a flight instructor, who depended on checks from his customers and never knew when the checks would clear and the money would be available in his bank account. We met Kiya, the owner of a clothing store called Self Edge, who was declined by his traditional payment processor when he tried to expand his business from California to a second location in New York. Cheri, Jerad and Justin, Andrei, and Kiya signed up for Square and became our first sellers. We learned a great deal from them: the value of accessibility, the power of integrated services, the importance of speed, and the necessity of trust. What they taught us helped make Square what it is today and inspired our mission to make commerce easy. These sellers are only four of the over 30 million businesses in the United States, with millions of entrepreneurs starting more each year. Each has its own story to tell. We measure our success by their success. We listen to them, learn from them, and help them grow into their ambitions. Our Business We started Square in February 2009 to enable anyone with a mobile device to accept card payments, anywhere, anytime. While we found early success providing easy access to card payments, commerce extends beyond Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated November 16, 2015 PROSPECTUS 27,000,000 Shares Class A Common Stock This is an initial public offering of shares of Class A common stock of Square, Inc. We are selling 25,650,000 shares of our Class A common stock and the selling stockholder named in this prospectus is selling 1,350,000 shares of our Class A common stock. We will not receive any proceeds from the sale of the shares by the selling stockholder. Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share of Class A common stock will be between $11.00 and $13.00. Our Class A common stock has been approved for listing on the New York Stock Exchange under the symbol SQ. We have two classes of authorized common stock: the Class A common stock offered hereby and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock. After the completion of this offering, our existing stockholders will continue to hold all of our issued and outstanding Class B common stock and will hold approximately 99.1% of the combined voting power of our common stock. As a result of their ownership, they will be able to control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of certain amendments to our certificate of incorporation and bylaws, the approval of any merger or sale of substantially all of our assets, and certain provisions that impact their rights and privileges as Class B common stockholders. See Description of Capital Stock. At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5.0% of the Class A common stock offered hereby to our existing sellers and Square Cash customers. The sales will be made under a directed share program through a platform administered by LOYAL3 Securities, Inc., which we refer to in this prospectus as the LOYAL3 Platform. The shares being made available for this program are being sold by the Start Small Foundation, a donor-advised fund held and administered by the Silicon Valley Community Foundation, the selling stockholder. The Start Small Foundation is a charitable fund created by our CEO and founder, Jack Dorsey. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our Class A common stock involves risks. See the section titled Risk Factors on page 26 to read about factors you should consider before buying shares of our Class A common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to the selling stockholder $ $ (1) We have agreed to reimburse the underwriters for certain expenses. See the section titled Underwriting (Conflicts of Interest). To the extent that the underwriters sell more than 27,000,000 shares of Class A common stock, the underwriters have the option to purchase up to an additional 4,050,000 shares from us at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2015. Goldman, Sachs & Co. Morgan Stanley J.P. Morgan Barclays Deutsche Bank Securities Jefferies RBC Capital Markets Stifel LOYAL3 Securities SMBC Nikko Prospectus dated , 2015 Table of Contents payments. In every transaction, we see opportunity for our sellers: to learn more about which products are selling best, to reinvest in their businesses, or to create and engage loyal buyers. Although we currently generate approximately 95% of our revenue from payments and point-of-sale (POS) services, which includes the impact of revenue generated from Starbucks, we have extended our product and service offerings to include financial services and marketing services, all to help sellers start, run, and grow their businesses. We work to democratize commerce leveling the playing field for sellers of all sizes. Our focus on technology and design allows us to create products and services that are accessible, intuitive, and easy-to-use. We set attractive and transparent pricing, and we accept approximately 95% of sellers who seek to process payments with Square. We provide a free software app with our affordable (often free) hardware to turn mobile devices into powerful POS solutions in minutes. Our insights into our sellers businesses have allowed us to develop services that are applicable to businesses of all types and sizes, from Square Analytics to digital receipts. We also continue to add advanced software features that tailor our POS solution to specific types of sellers, such as open tickets for bars and restaurants and inventory management for retailers. Because of our approach, we have grown rapidly. Millions of sellers accept payments with Square. They span all types of businesses: from cabs to coffee shops, lawyers to landscapers, retail stores to restaurants. Although substantially all of our revenue is currently generated in the United States, we also serve sellers throughout Canada and Japan. As this international base of sellers grows, so too should our Gross Payment Volume (GPV) and revenue in these regions. We serve sellers of all sizes, ranging from a single vendor at a farmers market to multinational businesses. Our products and services are built to scale, so sellers can stay with us over the life of their businesses. In the 12 months ended September 30, 2015, sellers using Square processed $32.4 billion of GPV, which was generated by 638 million card payments from approximately 180 million payment cards. GPV measures the total dollar amount of card payment transactions we process for our sellers (net of refunds), excluding card payments processed for Starbucks and our Square Cash peer-to-peer service. Since we generate transaction revenue as a percentage of payment volume, we believe GPV is a key indicator of our ability to generate revenue. In the 12 months ended September 30, 2015, over two million sellers accepted five or more payments using Square, accounting for approximately 97% of our GPV. The foundation of our business model is the millions of sellers processing payments with Square. We estimate that, to date, nearly half of our sellers have found us and signed up, rather than us having found them, adding efficiency to our sales and marketing efforts. We measure the effectiveness of our spending by evaluating the payback period, which we view as the number of quarters it takes for a quarterly cohort of sellers cumulative transaction revenue net of transaction costs to surpass our sales and marketing spending in the quarter in which we acquired that cohort. We define a quarterly cohort of sellers as the group of sellers that are approved to accept card payments with Square in a given quarter. On average, our payback period has been four to five quarters. Revenue from our sellers has grown consistently over time, resulting in strong dollar-based retention rates. Transaction revenue net of transaction costs for each of our 18 quarterly seller cohorts (dating back to the second quarter of 2010) has grown year over year in every quarter since the first quarter of 2012. Over the past four quarters, retention of transaction revenue net of transaction costs for our cohorts has, on average, exceeded 110% year over year. Table of Contents TOD WILSON MR. TOD S PIE FACTORY, ENGLEWOOD, NJ Table of Contents The size and strength of our payments and POS business have allowed us to develop a deep understanding of our sellers business performance and to build a cohesive commerce ecosystem. As such, we are well positioned to provide financial services and marketing services to sellers efficiently and intelligently. For example, one of our financial services, Square Capital, uses our deep understanding of our sellers businesses to proactively underwrite and extend cash advances to them. Although Square Capital is still in its early stages, we have already advanced over $300 million across over 50,000 advances since launching it in May 2014. Square Capital demonstrates how our services can rapidly reach significant scale through a combination of strong demand and our direct, ongoing interactions with our sellers. Although Square Capital currently does not contribute a significant amount of revenue to our business relative to our payments and POS services, our software and data product revenue, including revenue derived from Square Capital, has grown quickly, and we expect these products will contribute a larger portion of our total revenue over time. Marketing services, such as Square Customer Engagement, give sellers easy-to-use tools to help them close the loop between communication with a buyer and ultimately a new sale. We currently see more than 1.6 million monthly feedback communications sent by buyers to sellers through digital receipts. Together, our financial services and marketing services provide sellers with access to capital and access to customers, making it easier for them to accomplish their goals. We are making commerce easy for buyers too. Buyers can now use payment cards at millions of sellers whom we believe previously only accepted cash or checks. Digital receipts give buyers a way to connect directly with their favorite businesses and enable loyalty programs to reward them for their continued business. We provide readers that accept the latest and most secure forms of payment, including EMV and NFC, which enables payment via Apple Pay and Android Pay.1 We introduced Square Cash as a fast and easy way to make digital payments for both peer-to-peer transactions, such as splitting the bill at dinner, and business services, such as paying a contractor or accountant. Our buyer network strengthens our ecosystem by building meaningful connections between sellers and buyers. We have grown rapidly since our founding. For the nine months ended September 30, 2015, our total net revenue grew to $892.8 million, up 49% from the nine months ended September 30, 2014. In 2014, our total net revenue grew to $850.2 million, up 54% from the prior year. For the nine months ended September 30, 2015, our Adjusted Revenue grew to $317.6 million, up 63% from the nine months ended September 30, 2014. In 2014, our Adjusted Revenue grew to $276.3 million, up 73% from the prior year. Adjusted Revenue is a non-GAAP financial measure that we define as our total net revenue less transaction costs, adjusted to eliminate the effect of activity under our payment processing agreement with Starbucks. In the third quarter of 2012, we signed an agreement to process credit and debit card payment transactions for all Starbucks-owned stores in the United States. The agreement was amended in August 2015 to eliminate the exclusivity provision in order to permit Starbucks to begin transitioning to another payment processor starting October 1, 2015. Under the amendment, Starbucks also agreed to pay increased processing rates to us for as long as they continue to process transactions with us. Starbucks has announced that it will transition to another payment processor and will cease using our payment processing services altogether prior to the scheduled expiration of the agreement in the third quarter of 2016. For more information on Adjusted Revenue, see the section titled Key Operating Metrics and Non-GAAP Financial Measures. We intend to 1 Europay, MasterCard, and Visa (EMV) technology is a global payments standard that places microprocessor chips into credit and debit cards that store and protect cardholder data. Near Field Communication (NFC) is a technology that allows smartphones and other devices, such as payments readers, to communicate when they are close together, enabling transactions that require no physical contact between the payments device and the payments reader. Table of Contents You know why you re so great? It s that you help companies like ours be great too CHARLIE & MELANIE PORTER LAVENDER & HONEY, PASADENA, CA Table of Contents continue to make investments that will serve sellers and buyers over the long term even if a return on these investments is not realized in the short term. For the nine months ended September 30, 2015 and September 30, 2014, we generated a net loss of $131.5 million and $117.0 million, respectively. In 2014 and 2013, we generated a net loss of $154.1 million and $104.5 million, respectively. Trends in Our Favor Local businesses drive the economy According to the U.S. Census Bureau s 2012 and 2013 reports and the U.S. Small Business Administration s March 2014 report, the approximately 30 million small businesses in the United States generated 46% of the nation s private sector output in 2010. These figures likely underestimate significant parts of the American economy. For example, they do not include the millions of businesses run by freelancers, artists, hobbyists, and others. We believe small businesses will continue to drive the economy as entrepreneurial activity creates millions of businesses each year. The Kauffman Index 2015 report estimates that in 2014 approximately 530,000 new entrepreneurs started businesses each month. Local businesses engage in significant commerce and are essential to the economy and character of local communities, acting as an on-ramp for anyone of any background to participate in economic growth. Commerce is increasingly digital and mobile The transition from cash and checks to electronic payments is occurring rapidly. In 2013, U.S. consumer payments totaled $8.9 trillion, including 55% ($4.9 trillion) through payment cards, 17% ($1.6 trillion) through cash, and 12% ($1.0 trillion) through checks, according to The Nilson Report published in December 2014. In 2018, consumer payments are expected to reach $11.4 trillion, with payment cards growing to 66% ($7.6 trillion) and cash and checks declining in use, also according to The Nilson Report published in December 2014. Globally, according to The Nilson Report published in January 2015, global purchase volume on payment cards is expected to increase from $16 trillion in 2013 to $49 trillion in 2023 (a 12% compound annual growth rate). The rapid growth of mobile devices and associated app stores has provided freedom and accessibility to sellers and buyers, who can now engage in commerce anywhere. An estimated 438 million mobile devices in the United States accessed the internet in 2013, and this is expected to grow to over 690 million devices in 2018. The shift to authenticated payments technologies creates opportunities for disruption The shift to both EMV and contactless payments creates an opportunity for providers of more modern and lower cost POS solutions to displace legacy systems, as sellers upgrade to take advantage of increased security, lower financial loss, and an improved buyer experience. U.S. credit card companies set October 1, 2015, as the date for the national adoption of EMV or chip cards. While this technology is not new globally, and in fact is widely used in most countries, the United States is currently in the process of migrating to EMV technology. Businesses that cannot process chip cards are now held financially responsible for certain fraudulent transactions previously covered by the cardholder s issuing bank, effectively shifting the liability to sellers. In order to mitigate this liability shift, sellers must upgrade their payment card terminals to EMV Table of Contents TABLE OF CONTENTS Prospectus Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights important information about our business and about the common stock described herein. This summary does not contain all of the information that you may consider to be important to your decision whether to purchase any common stock offered hereby. You should carefully read this prospectus its entirety, including the reports and other documents incorporated by reference herein, before making an investment decision. In particular, you should read the section of this prospectus entitled Risk Factors, and the financial statements and related notes, and other information, included in our Annual Report on Form 10-K for the year ended December 31, 2014, as amended, which is incorporated by reference in this prospectus.
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY 1 RISK FACTORS 6 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 16 USE OF PROCEEDS 17 CAPITALIZATION 18 DILUTION 19 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 21 MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS 27 DESCRIPTION OF BUSINESS 29 MANAGEMENT 37 EXECUTIVE COMPENSATION 40 PRINCIPAL STOCKHOLDERS 43 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 44 DESCRIPTION OF SECURITIES 45 SHARES ELIGIBLE FOR FUTURE SALE 48 MATERIAL UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES FOR NON-U.S. HOLDERS 49 PLAN OF DISTRIBUTION 50 LEGAL MATTERS 53 EXPERTS 53 WHERE YOU CAN FIND MORE INFORMATION 53 INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus. Neither we nor the underwriter have authorized anyone to provide you with information that is additional or different. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Our business, prospects, financial condition and results of operations may have changed since that date. Information contained in, and that can be accessed through, our web site, www.nacglobaltechnologies.com, does not constitute part of this prospectus. The NAC Global Technologies, Inc. logo is a trademark of NAC Global Technologies, Inc. All other trademarks and service marks appearing in this prospectus are the property of their respective holders. This prospectus includes market and industry data that has been obtained from third party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management s estimates and assumptions relating to such industries based on that knowledge). Management s knowledge of such industries has been developed through its experience and participation in these industries. While our management believes the third party sources referred to in this prospectus are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this prospectus or ascertained the underlying economic assumptions relied upon by such sources. Internally prepared and third party market forecasts, in particular, are estimates only and may be inaccurate, especially over long periods of time. In addition, the placement agent has not independently verified any of the industry data prepared by management or ascertained the underlying estimates and assumptions relied upon by management. Furthermore, references in this prospectus to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this prospectus. TABLE OF CONTENTS PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements, before making an investment decision. Certain statements in this summary are forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements." All references to "we," "us," "our," and the "Company" mean NAC Global Technologies, Inc. Our Company Business Overview NAC Global Technologies, Inc. (referred to herein as the "Company," "we" and "our") is a development and manufacturing company. We manufacture and supply harmonic gearing technology ("HGT"), which is of key importance in the automation, robotics, and defense industries and is gearing technology for precision motion control applications. We have one operating subsidiary, NAC Drive Systems, Inc., and we are expanding our market reach into emerging clean energy and advanced robotic applications. Our corporate headquarters are located in Jacksonville, Florida, and we have manufacturing and warehousing facilities in Port Jervis, New York. HGT is a critical drive to many industries including robotics, semi-conductor, aerospace, and defense. Additionally, HGT is widely used in motion control applications where precision, long-life, compactness, and reliability are important features. We operate in both the commercial and defense industry segments. Within the commercial segment we currently sell to the following industries, among others: robotic, printing, corrugated products, semi-conductor, and health care. Currently, approximately 90% of our revenues are derived from the commercial market. We believe that the use of HGT will increase significantly into other industry segments over the next five (5) years. We believe that the use of HGT in wind turbines has the capability of being transformational to the industry by helping to resolve technical and reliability issues that have plagued the industry for decades. The global wind turbine gearbox market is expected to reach $8.1 billion by 2020 per PR Newswire (Source: Global Information Inc.). Additionally, we plan to expand into the health care market and have an intellectual property pipeline in both the health care and energy segments. We believe our health care initiative complements our defense related initiatives, specifically, because we believe there is a need for more natural and capable prosthetic limbs developed for disabled veterans. We are also exploring how our energy technologies may offer military and emergency power solutions for lightweight, portable power generators. As we further implement our growth strategy, we plan to strategically introduce new products that will diversify our current HGT platform, with a particular focus on new clean energy technologies. In executing on that strategy, we are planning a second product line for an environmentally friendly, non-volatile fuel cell product, suitable for use in aircraft, automotive, defense and portable power applications. We plan to establish production in the United States for new defense and aerospace applications while maintaining sub-contracted manufacturing in Beijing for the majority of commercial applications. Additionally, we intend to augment existing facilities and equipment in the Port Jervis, New York facility, which will be used to manufacture early 100KW wind turbine gearboxes with HGT for lab and field testing as well as to begin research and development of motorized drives for prosthetic limbs. To date, U.S. domestic sales have been handled directly, as are some international sales. We have established distributors in Korea, Brazil, and India with more planned throughout Eastern and Western Europe in particular. We have active customers in Asia, South America, Europe, and the United States — in markets ranging from industrial winches to robots to defense. Our current customers include fortune 500 companies and applications such as robots for inspection of nuclear reactors, communication antennas, and medical machinery. The sales cycle time for larger, higher volume and value applications ranges from 6 to 24 months. Some applications in the defense and aerospace markets require U.S. based manufacturing. Given the sales cycle time, we expect fairly linear growth in the near term with accelerated growth when larger applications in the sales pipeline start to reach full production phase. Business Opportunity HGT, in its most basic form, includes a flexible gear, elliptical ball bearing, and rigid outer spine. This design offers several advantageous properties that have made HGT useful in many applications. The Company believes that there are very high barriers to entry in the market, including proprietary designs and engineering, company history, product validation, customer access, metallurgical processing, work holding and tooling, vendor access, manufacturing know how and quality and testing know how. Our prime competitor in this market is Harmonic Drive Systems, Inc., a Japanese corporation ("HDS"), which commands a substantial market share on HGT in many of the more mature industry segments. We believe that our growth opportunity comes less from attacking HDS market share, but rather from building our own market share. We believe that the current focus on "Made in the USA" products in the defense and aerospace industries provides an ideal opportunity. We are also exploring introducing the precision and engineering discipline of HGT to new industries that may be able to utilize this technology. We believe emerging new applications in the U.S. automotive industry, which is also focused on buying and building American products for cam shaft phasing, variable pitch steering, and electric vehicle steering, may create an opportunity for this technology. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED: AUGUST 3, 2015 3,333,333 Units $0.15 per Unit NAC Global Technologies, Inc. is offering 3,333,333 Units ("Units" or each a "Unit"), each Unit consisting of one share of common stock, par value $0.001 per share, two Series A Warrants (the "Series A Warrants") each to purchase one share of common stock (and the shares of common stock issuable from time to time upon exercise of the offered Series A warrants), and one Series B warrant (the "Series B Warrant"; the Series A Warrants and the Series B Warrant, collectively, the "Warrants") to purchase one share of common stock (and the shares of common stock issuable from time to time upon exercise of the offered Series B Warrants) . Each Series A Warrant is exercisable for the purchase of one share of common stock at an exercise price of $0.15 per share, and will be exercisable upon separation of the Units and will expire five (5) years from the closing of this offering. The Series B Warrant is exercisable for the purchase of one share of common stock at an exercise price of 75% of the lowest volume weighted average price ("VWAP") during the twenty (20) trading days immediately prior to the applicable exercise date, and will be exercisable upon separation of the Units and will expire five (5) years from the closing of this offering. The Units may not be separated into the underlying shares of common stock and Warrants until the date of this prospectus; and thereafter the Units may be separable into the underlying shares of common stock and Warrants only upon the request of a holder. However, the Series A Warrants and the Series B Warrants may only be separated upon exercise of the Series A Warrants. A purchaser may not exercise any Series B Warrants until such purchaser has exercised all Series A Warrants that such purchaser holds. Our common stock is currently quoted on the OTC Bulletin Board ("OTCBB") under the symbol "NACG". There is no established trading market for the Units or the Warrants included in the Units. The last reported sale of our common stock on the OTCBB on July 30, 2015 was $0.15 per share. We are an "emerging growth company" as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 6 to read about factors you should consider before investing in shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public offering price $ $ Placement Agent Commissions(1) $ $ Offering proceeds to us, before expenses $ $ (1) See "Plan of Distribution" beginning on page 54. Alexander Capital, L.P. has agreed to act as our placement agent in connection with this offering and is arranging for the sale of the Units offered in this prospectus on a "reasonable best efforts" basis. There are no minimum purchase requirements. We may not sell the entire amount of securities being offered pursuant to this prospectus. The placement agent is not required to sell any specific number or dollar amount of the Units offered by this prospectus, but will use its best efforts to sell all such Units up to the maximum of $500,000. The offering will close no later than thirty (30) business days following the effectiveness of the registration statement. The Units being offered may be priced at a discount to the market price of our common stock, although as of the date hereof, there has been no definitive pricing of the securities. We have agreed to pay the placement agent a cash fee equal to 7% of the gross proceeds of the offering. Subject to compliance with FINRA Rule 5110(f)(2)(D), we have also agreed to pay the placement agent for out-of-pocket expenses related to the offering. We have also agreed to issue the placement agent common stock purchase warrants equal to 5% of the aggregate number of shares of common stock sold in the offering. Funds received will be held in escrow pending closing, and the offering will terminate on the earlier of the date on which all shares of common stock offered are sold, or , 2015. We may complete the offering even if we do not raise the entire maximum offering amount. The amount raised may be substantially less than the total maximum offering amount and any investor funds not placed in escrow may be used by the Company prior to the maximum offering being sold. If we are voluntarily or involuntarily placed into bankruptcy or receivership, any investor funds may be property of the estate and used for the benefit of creditors and not recoverable by the investors. Delivery of the Units will be made to the purchasers on or about , 2015, subject to customary closing conditions. The shares of common stock will be delivered in book-entry form through The Depository Trust Company, New York, New York. The Warrants shall be delivered in physical form by the Company to such persons, and shall be registered in such name or names and shall be in such denominations, as the Placement Agent may request by written notice to the Company at least one (1) business day before the closing date. Placement Agent Alexander Capital, L.P. The date of this prospectus is , 2015. TABLE OF CONTENTS There are several intersecting factors that we believe will work in our favor as we execute on our business plan. First, we have received requests and formal letters of intent from a variety of enterprises that are seeking out the Company, as both a primary vendor and as an additional vendor, to secure their supply chains and to eliminate reliance on a single source for their HGT needs. Second, as miniaturization in new industry segments, including health care, becomes the norm, companies are looking to new manufacturers and suppliers to provide them with new, miniaturized products to include in their applications, machinery and appliances. Management estimates the market for precision gearboxes to exceed $1.6 billion in 2015 and we believe that our HGT offers technical advantages over standard gearing technologies. The primary advantages of our HGT include: zero tooth backlash; precision motion capabilities that do not degrade for the life of the unit, whereas standard gearing begins to degrade and wear immediately with use; high ratios in a single stage; light weight; and small size. Management believes that the need for precision motion control in manufacturing is expanding as devices used industrially and personally are becoming more sophisticated. As such, we expect the demand for our HGT to increase and anticipate that we can address this market with competitively priced, high precision gearboxes incorporating our HGT. Our Corporate History and Background NAC Drive Systems, Inc. (formerly NAC Harmonic Drive, Inc.), our operating subsidiary, was formed in 2007 with a lineage dating to 1968. An affiliated company of the Company is Conic Systems, Inc. ("Conic"), which was formed in 1968 and introduced harmonic gearing to the printing industry and invented the harmonic differential, harmonic differential electronic tension control system, and the patented right angle harmonic differential. Vincent Genovese, the Company s President and Chief Executive Officer, is also President and Chief Executive Officer of Conic. We entered the market by developing a relationship with Beijing CTKM Harmonic Drive Co. LTD ("CTKM"), a Chinese company that manufactures products for the China Space Program. We are the exclusive sales representative and distributor for CTKM throughout the world for the sale and distribution of CTKM s harmonic drive gearing products and any other products that CTKM may offer for sale, except in the People s Republic of China. We entered into a five-year manufacturing and global distribution agreement with CTKM that includes the exclusive right to sell products produced at that factory outside of China and the exclusive right to manufacture, via subcontracting, at that factory products sold outside of China. The initial agreement was set to expire in October 2015. In October 2012, we entered into a new, longer-term agreement with CTKM that extends the term until 2022. The new agreement is for a period of ten (10) years with a 5-year cancellation notice. If the agreement is not terminated within five (5) years, the term extends for an additional ten (10) years. Our vendor for harmonic gearing component sets is CTKM. Conic was established in 1968 to bring harmonic differential gearboxes to the converting and printing markets. Overtime Conic developed closed loop tension control systems and tension transducers. Management believes that Conic developed an excellent reputation for having expertise in control of light materials in continuous web processing, and as a result, derived a significant portion of its income from the medical industry where light materials like gauze is prevalent. In addition to manufacturing harmonic gearboxes and controls, Conic designed and manufactured custom machinery, with a particular focus on the medical industry. Strategically in 1994, Conic chose to focus on building out its line of harmonic differentials and controls. It successfully introduced multiple harmonic gearbox product lines and tension control systems becoming the recognized industry leader in the printing industry. In 2000, Conic operated as a consolidated subsidiary to Nireco Corporation, a publically traded company of Japan ("Nireco"), which held a twenty-five percent (25%) ownership interest in Conic. During such ownership, Nireco had significant influence on Conic s activities. Conic expanded sales of the Nireco line of industrial controls in North and South America and collaborated in engineering, product design and global market development planning. In 2004 Conic fully acquired Datatran Labs ("Datatran"), a co-located vendor. Conic and Datatran had collaborated since 1991 on electronic controls design that were integrated with Conic s harmonic differential. In 2009, Conic repurchased the twenty-five percent (25%) ownership interest from Nireco and thereafter, neither company had any ownership interest in the other. Additionally, Conic retained distribution rights for portions of the Nireco product line. Since the acquisition from Nireco, Conic has been owned by Vincent Genovese, Conic s Chief Executive Officer, and has operated on a parallel but legal stand-alone basis. Mr. Genovese is also Chief Executive Officer of the Company. Co-managed and located in the same place, the Company and Conic share resources including but not limited to personnel, plant and equipment, quality inspection, engineering, accounting and information system platforms. In the fourth quarter of 2010, our board of directors decided to attempt to fully acquire Conic and merge the two companies in order to provide us with uninhibited access to Conic s harmonic gearbox manufacturing expertise and equipment. Today, the Company and Conic share facilities and equipment in Port Jervis, New York where small scale, specialized gearbox and electronic controls production are in place. On May 6, 2014, NAC Harmonic Drive, Inc. changed its name to NAC Drive Systems, Inc. After acquiring NAC Drive Systems, Inc. in April 2014, on July 15, 2014, we changed our name from LipidViro Tech, Inc. to NAC Global Technologies, Inc. to be more consistent with our wholly-owned subsidiary that conducts 100% of our operations. TABLE OF CONTENTS Recent Developments Private Placements On January 8, 2015, we completed a private offering of $109,000 aggregate principal amount of 3% Original Issue Discount Convertible Promissory Notes and warrants to purchase shares of the Company s common stock with accredited investors for total net proceeds to us of $91,000 after deducting placement agent fees and expenses. On May 1, 2015, we issued a secured promissory note to a third party for the principal amount of $30,000 for inventory financing, which such note is subject to an annual interest rate of 15%. The terms of the aforementioned private placements are further described in the "Management s Discussion and Analysis of Financial Condition and Results of Operation" in this prospectus. Establishment of a Sales Representation Network We commenced hiring of our first sales representatives for our HGT product line. Since May 2015, we hired seven sales representatives to cover territories in the states of Minnesota, Wisconsin, Illinois, Missouri, Indiana, North Dakota, South Dakota, and Iowa. Additionally, we are currently seeking sales representatives for the states of Maine, New Hampshire, Vermont, Rhode Island, Connecticut, Massachusetts, Ohio, Pennsylvania, Kentucky, Delaware, Maryland, Texas, and California. Recent Customer Adoptions of our HGT Drives In April 2015, we received a first production order for our HGT drives from an India based printing press manufacturer. This customer represents the eighth manufacturer of printing equipment to test, validate, and adopt our drives. In May 2015, we received a first production order for our HGT drives from a U.S. based semi-conductor machinery company, which was also successfully tested. This customer represents the second U.S. based company to test and validate our drives in the semi-conductor industry. In May 2015, we announced the successful test and approval of our HGT drives by a Swiss machine tool manufacturer specializing in machinery for the watch making, jewellery, and medical industries. Along with the approval on this first application, the manufacturer ordered additional components and commenced testing on a second application. In May 2015, we entered into a supply agreement to supply our HGT drives for a new generation helicopter application for landing gear drives. The first units are due to ship in June 2015 as part of the overall system validation. In May 2015, we received a first production order to supply our HGT drives to a European based manufacturer of advanced surveillance and security systems. The customer is utilizing our new HGT version, our SHF series, for precision pan and tilt functions. In May 2015, a U.S./India based manufacturer of advanced imaging systems commenced adoption of our HGT. The first units have shipped, and the customer s assemblies are in production for system validation.
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+Prospectus Summary This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including the section entitled Risk Factors and our financial statements and related notes, before you decide whether to invest in our common stock. If you invest in our common stock, you are assuming a high degree of risk. See the section entitled Risk Factors. References to Omega, our, our company, us, we, or the Company refer to Omega Commercial Finance Corp. and its subsidiaries, unless the context indicates otherwise. All share and per-share information relating to our common stock in this prospectus has been adjusted to give effect to a 20,000-for-one reverse stock split implemented in July 2014. About Us We were incorporated in the state of Wyoming on November 6, 1973 under the name DOL Resources, Inc. From inception until October 2002, our primary business activity was the acquisition, disposition, commercialization and/or exploration of interests in oil, gas and/or coal properties. In October 2002, we sold all of our oil and gas properties to Glauber Management Company whereupon we ceased any business operations and became a non-operating shell company with no revenue and minimal assets, whose activities were limited to that of seeking to merge with or acquire an operating business. On August 1, 2007 we changed our name to Omega Commercial Finance Corp. On September 14, 2007, we entered into a Stock Purchase Agreement and Share Exchange with Omega Capital Funding LLC, a Florida limited liability company ( Omega Capital ) pursuant to which we acquired 100% ownership of Omega Capital (the Reorganization ). After the Reorganization, our business operations consisted of those of Omega Capital. From October 2002 until the Reorganization we were a non-operating shell company with no revenue and minimal assets, whose activities were limited to seeking to merge with or acquire an operating business. As a result of the Reorganization, we were no longer considered a shell company. Since the Reorganization in September 2007, our business operations, through various subsidiaries, have been directed primarily at an offering financing to the real estate markets in the United States. We provide short and medium term loans to borrowers primarily consisting of commercial real estate developers and speculators, business owners, landlords, and owners of core and non-core assets. We focus on various alternative commercial real estate financings with an emphasis on loans secured by commercial real estate and also on financing non-core assets, including ground-up developments, as well as core assets, including office buildings, multi-family residences, shopping centers, and luxury residential estates. The loans consist of senior debt loans, mezzanine or subordinated loans, preferred equity, and other equity participation financing structures. Our operations are based primarily in Miami Beach, Florida. We have yet to generate significant revenues or achieve profitable operations since the Reorganization. We currently owe over $2.3 million in legal judgments against the Company. We have accumulated losses, a working capital deficiency and we expect to incur further losses in the development of our business, all of which, according to our accountants, casts substantial doubt about our ability to continue as a going concern,. Our common stock is quoted on the OTCPINK Tier operated by OTC Markets Group, Inc. (the OTCPINK ) and trades under the symbol OCFN . There have been minimal recent public quotations of our Shares and there has never been an active public market for our Shares. On February 9, 2015, the closing sale price for our common stock was $0.0004 on the OTCPINK. Our common stock is classified as a penny stock under applicable rules of the Securities and Exchange Commission (the SEC ), which could make it more difficult for investors to sell their Shares. Business Developments On February 20, 2012, CCRE Capital, LLC ( CCRE ), our wholly owned subsidiary entered into the Strategic Alliance Agreement (the Gardens Strategic Alliance ) with Gardens VE Limited, a British Company ( Gardens ). Gardens manager, Flavio Zuanier, is a seasoned and proven developer that brought along his vast background, knowledge, and professionalism in construction engineering and project development. The short-term goal of the Gardens Strategic Alliance is the acquisition of the La Posta Golf Club & Luxury Hotel ( La Posta ), while its long-term goal is the refurbishment of the acquired property to both enhance it and make it operational. Our responsibility within the Gardens Strategic Alliance is the arrangement and contribution of up to $58,000,000 based on the projected cost for the Gardens Strategic Alliance stemming over the course of the operation as needed, but not to exceed ten (10) years. Mr. Zuanier is responsible for the day-to-day operation for the entire duration of the project as it pertains to the future refurbishment phase and Gardens has currently placed the property under contract with a hard deposit, to which we are not a party. In addition, Mr. Zuanier is responsible for transferring free and clear with an unencumbered title of fixed assets in order to support future financing for all phases covering the acquisition on through the refurbishment of the property. The termination of the Gardens Strategic Alliance is at the discretion of both parties or upon the completion of the refurbishment and or disposition of the stabilized income-producing asset to date. Gardens has not completed the acquisition of the La Posta and we continue to work with Mr. Zuanier to continue our efforts under the Gardens Strategic Alliance to raise additional capital to meet our funding obligations to complete this transaction. In March 2013, CCRE and Mr. Zuanier entered into an amendment to the Gardens Strategic Alliance whereby Mr. Zuanier agreed to transfer an additional forty-six percent (46%) interest in Gardens to CCRE giving CCRE a 95% ownership interest in the capital of Gardens in exchange for 1,000,000 unregistered Shares. Mr. Zuanier retains a 75% profit participating interest pro rata for all mortgages, liens, operating expenses and or encumbrances on Garden s development/projects. As of the date of this prospectus, the details of the agreement implementing the amendment to the Gardens Strategic Alliance have not been finalized. On June 27, 2012, CCRE entered into a Strategic Alliance Agreement (the Strategic Alliance II ) with Towers Real Estate Limited, a British Company ( Towers ), and its management, which includes Flavio Zuanier, whereby the parties agreed to form a strategic alliance for the acquisition and construction of the Le Principesse real estate located in Mestre-Venice, Italy. Under the Strategic Alliance II, Towers agreed to transfer, free, clear, and unencumbered title to the fixed assets and issues equal to forty-nine (49%) percent of their ownership interests in Towers to CCRE in exchange for future fundraising for operating capital and related expenses. Omega is responsible for the arrangement and contribution of up to $375,000,000 over the course of the operation as needed per the budgeted projected cost for the Strategic Alliance II. We are seeking to raise additional capital to meet our funding obligations to complete this transaction. In March 2013, CCRE and Mr. Zuanier amended the Strategic Alliance II whereby Mr. Zuanier agreed to transfer an additional forty-six percent (46%) interest in Towers to CCRE giving CCRE a 95% ownership interest in the capital of Towers in exchange for 1,000,000 unregistered Shares. Mr. Zuanier retains a 75% profit participating interest pro rata for all mortgages, liens, operating expenses and or encumbrances on Tower s development/projects. As of the date of this prospectus, the details of the agreement implementing the amendment to the Strategic Alliance II have not been finalized. On October 16, 2012, we entered into a Definitive Agreement For The Share Exchange & Acquisition Of USA Tax & Insurance Services, Inc. ( USTIS ) and American Investment Services LLC ( AIS ) (the USTIS Agreement ). Pursuant to the USTIS Agreement, we agreed to purchase all of the outstanding equity and assets of both USTIS and AIS from Stephen Hand for a purchase price of $20,000,000. In accordance with the USTIS Agreement, we were required to create and authorize Series B Preferred Stock and conduct a registered offering of these shares to raise funds to pay the purchase price under the USTIS Agreement. The USTIS Agreement required a closing of the transaction on or before December 15, 2012. We have entered into several amendments to the USTIS Agreement: (i) on January 10, 2013, the first amendment extended the closing date to January 30, 2013; (ii) on January 23, 2013, the second amendment extended the closing date to April 30, 2013; and (iii) on February 8, 2013, the third amendment modified the Agreement by reducing the purchase price from $20,000,000 to $10,400,000 plus payment of certain stock-based compensation as part of a roll-up acquisition strategy. In addition, the Third Amendment eliminated the obligation for us to issue Series B Preferred Stock and conduct a registered offering of these shares. Further, we agreed to revise the scope of matters Mr. Hand may work on following completion of the acquisition, and Mr. Hand agreed to enter into a five year non-compete agreement with us following closing. The closing did not occur by April 30, 2013 and the USTIS Agreement was terminated in accordance with its terms. On January 3, 2014, we entered into an agreement to acquire certain assets of NuQuest Capital Matchpoint I, LLC, a Georgia limited liability company ( Matchpoint ), engaged in the development of a crowd funding web portal, Capital Match Point. Such assets included Matchpoint s fully operation web portal and its operating business services. In consideration therefor, on February 7, 2014, we issued to Matchpoint 1,000,000 shares of our Series G Convertible Preferred Stock, which is convertible into 25 Shares, subject to adjustment in certain circumstances. The transaction was valued at the price of the common stock shares at the close of trading on such date or $412,500. The asset was subsequently adjusted for fair value and written off as of June 30, 2014. During June, 2014, the current contractors operating the website resigned and we are currently in the process of restaffing and implementing a new business plan. On June 3, 2014, we entered into an agreement with AmericaVest CRE Mortgage Funding Trust, Inc., a Maryland corporation ( AmericaVest ), pursuant to which we acquired from AmericaVest a 51% equity interest therein, or 1,564,079 shares of AmericaVest s common stock for a purchase price of $2,000,000 (the AmericaVest Purchase Agreement ). The purchase price was initially payable by the issuance of a forty-five (45) day promissory note. We subsequently amended the AmericaVest Agreement to consummate the transaction in July 2014 by issuing 285,714 Shares to AmericaVest, which Shares are covered by the Registration Statement of which this prospectus makes a part. On November 11, 2014, the Company and AmericaVest mutually agreed to transfer back to AmericaVest, a total of 41% or 641,272 shares, thereby reducing our equity ownership in AmericaVest to less than 10%, pending completion of required audited financials by AmericaVest, at which time we will have an irrevocable option, exercisable at our sole discretion, to reacquire such AmericaVest shares for no additional consideration. AmericaVest is a recently formed corporation which intends to qualify as a real estate investment trust (a REIT ) for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the Code ). AmericaVest s intends to originate, through an affiliate, senior whole mortgage loans secured by commercial and multifamily real estate properties in the United States. AmericaVest will hold such mortgages for investment purposes and its investment strategy will be to generate current income and capital appreciation primarily through the origination of secured first position bridge loans collateralized by commercial real estate. On October 17, 2014, Omega entered in a definitive agreement (the VeriTrek Agreement ) withVeriTrek Inc., a Delaware corporation ( VeriTrek ) and Ronnie Hale and John Manno, VeriTrek s majority shareholders (the VeriTrek Shareholders ), pursuant to which we acquired a majority ownership stake of seventy-five percent (75%) of VeriTrek s common stock at a purchase price of $15-million ($15,000,000), payable by the Company issuing 15,000,000 shares of its restricted common stock to the VeriTrek Shareholders with the shares valued at $1.00. In addition, these shares were subject to a one year lock up. On October 30, 2014 the parties amended the VeriTrek Agreement, pursuant to which we transferred back 600,000 shares of VeriTek s common stock to the VeriTrek Shareholders and the VeriTrek Shareholders transferred back to us 6,750,000 of the shares of our common stock which we issued to them. As a result, our equity interest in VeriTrek was reduced to fifteen percent (15%). VeriTrek currently maintains seven operating companies branded as Summit Real Estate Group ( SRG ), which are licensed as full service 100% commission brokerage firms specializing in providing residential and commercial real estate services through the United States. The SRG companies are inspired by technological advancements and innovative marketing strategies. SRG was founded on the principal of developing an ecofriendly, cost efficient and cloud-based platform for conducting real estate brokerage services. SRG has evolved into an extremely efficient national real estate brand of 800 agents promoting a positive and professional culture. Overview of Corporate Structure: The following chart set forth, in schematic form, the Company s current corporate structure: Corporate Information We are a Wyoming corporation originally incorporated in 1973. Our executive offices are located at 1000 5th Street, Suite 200, Miami Beach, FL 33139 and our telephone number is (305) 704-3294. Our website is www.omegapublic.com. Information contained in our website shall not be deemed incorporated into this prospectus.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you, or that you should consider before deciding whether to invest in our securities. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our consolidated financial statements and the related notes, before making an investment decision. A glossary of shipping terms that can be used as a reference when reading this prospectus can be found in "Glossary" beginning on page A-1. Our Company We are a leading provider of ocean transportation services for crude oil and refined petroleum products, and the only major tanker company operating in both the U.S. Flag and International Flag markets. We own or operate a fleet of 80 double-hulled vessels, including 56 vessels that operate in the International Flag market and 24 vessels that operate in the U.S. Flag market. We serve a diverse group of customers, including major independent and state-owned oil companies, oil traders and refinery operators, and have a reputation in the industry for excellent service. We have a long history of operations in the markets that we serve, initiated in 1948 by our predecessor company, and were first listed on the New York Stock Exchange in 1970. We operate our vessels in two strategic business units: we serve the U.S. Flag market through our subsidiary OSG Bulk Ships, Inc. ("OBS") and the International Flag market through our subsidiary OSG International, Inc. ("OIN"): U.S. Flag. Through OBS, we are currently the largest operator of Jones Act vessels in our market by both number of vessels and deadweight tons ("dwt"), have a strong presence in all U.S. coastal regions and are the only operator of Jones Act shuttle tankers. Our 24-vessel U.S. Flag fleet includes tankers and articulated tug barges ("ATBs"), of which 22 operate under the Jones Act and two operate internationally in the U.S. Maritime Security Program (the "MSP"). The Jones Act requires all vessels transporting cargo between U.S. ports to be built in the United States, registered under the U.S. Flag, manned by U.S. crews, and owned and operated by U.S.-organized companies that are controlled, and at least 75% owned, by U.S. Citizens (as defined under the Jones Act), conditions that limit direct foreign competition. Revenues from our U.S. Flag fleet, derived predominantly from medium-term time charters, were $111 million in the first three months of 2015 and $414 million in 2014, or 50% and 54%, respectively, of our consolidated time charter equivalent ("TCE") revenues. International Flag. Our 56-vessel International Flag fleet includes ULCC, VLCC, Aframax and Panamax crude tankers and LR1, LR2 and MR product carriers, as well as the vessels operated by our international joint ventures (the "JVs"). Revenues from our International Flag fleet, derived predominantly through spot market voyage charters, were $110 million in the first three months of 2015 and $347 million in 2014, or 50% and 46%, respectively, of our consolidated TCE revenues. Through the JVs, we have ownership interests in two businesses two floating storage and offloading vessels ("FSOs") and four liquefied natural gas ("LNG") carriers (collectively, our "JV Vessels"). In 2014, we received $35 million in distributions from our interests in the JVs, who operate our JV Vessels under time charters expiring in 2017 and 2032 2033, respectively. We believe our unique position in both the U.S. Flag and International Flag markets enables us to pursue an overall chartering strategy that seeks an optimal blend of medium-term time charters and spot rate exposure. In addition, we seek to actively manage the composition of our U.S. Flag and International Flag fleets through acquisitions and dispositions while maintaining an appropriate scale and age profile, with a focus on acquiring high-quality secondhand vessels and Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents NOTICE TO INVESTORS Restrictions on Foreign Ownership U.S. laws, including 46 U.S.C. sections 50501 and 55101 (commonly known as the "Jones Act"), and the U.S. vessel documentation laws set forth in 46 U.S.C. section 12101 place a limit of 25% on foreign ownership or control of persons engaged in transporting merchandise by water or by land and water either directly or via a foreign port between points in the United States and certain of its island territories and possessions. For a summary of the definition of "U.S. Citizen" under the Jones Act, see "Underwriting Restrictions on Foreign Ownership." If we should fail to comply with the above described ownership requirements, our vessels could lose their ability to engage in U.S. coastwise trade. To facilitate our compliance with these requirements, our organizational documents: limit ownership by non-U.S. Citizens of any class or series of our capital stock (including our Class A common stock) to 23%; permit us to withhold dividends and suspend voting rights with respect to any shares held by non-U.S. Citizens; permit us to establish and maintain a dual stock certificate system under which different forms of certificates are used to reflect whether the owner is or is not a U.S. Citizen; permit us to redeem any shares held by non-U.S. Citizens so that our foreign ownership is less than 23%; and permit us to take measures to ascertain ownership of our stock. If a prospective purchaser or a proposed transferee cannot or does not certify that it is a U.S. Citizen before purchasing our Class A common stock, or a sale of stock to a prospective purchaser or a transfer of stock by any holder would result in the ownership by non-U.S. Citizens of 23% or more of our Class A common stock, such person may not be allowed to purchase or transfer our Class A common stock, or such purchase or transfer may be reversed, or the shares so purchased or transferred may be redeemed by us pursuant to our organizational documents. All certificates representing the shares of our Class A common stock will bear legends referring to the foregoing restrictions. For additional information regarding the restrictions on foreign ownership of our capital stock, see "Description of Capital Stock Qualification for Ownership and Transfer of Shares." MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we have prepared based, in part, on information obtained from industry publications and surveys and internal company surveys, including Drewry Maritime Advisors ("Drewry") and Navigistics Consulting ("Navigistics") that we commissioned for use in this prospectus. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We do not have any knowledge that the information provided by Drewry or Navigistics is inaccurate in any material respect. Drewry has advised us that its methodologies for collecting information and data may differ from those of other sources and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the oil tanker industry. Navigistics has advised us that: (1) some information in Navigistics' database is derived from its estimates or subjective judgments, (2) the information in the databases of other maritime data collection agencies may differ from the information in Navigistics' database and (3) while Navigistics has taken reasonable care in the compilation of the statistical and graphical information provided by it and believes it to be accurate and correct, data compilation is subject to limited audit and Table of Contents existing newbuild contracts. We plan to use the proceeds of this offering for general corporate purposes, including the further expansion and renewal of our fleet. Our Fleet We employ our fleet through a combination of medium-term time charters, fixed price/fixed volume contracts of affreightment ("COAs"), long-term charters and spot market voyage charters. For the year ending December 31, 2015, we expect our fleet to have approximately 26,100 available days for hire, of which approximately 40% are expected to be employed on fixed time charters (including one vessel on bareboat charter) and approximately 60% to be available for employment in the spot market. Time Charter Market. Our U.S. Flag vessels, JV Vessels and certain of our International Flag vessels are employed on time charters and fixed price/fixed volume COAs. Within a contract period, time charters provide a more predictable level of revenues. At present, our 24 U.S. Flag vessels are employed on medium-term time charters or fixed price/fixed volume COAs with an average remaining term of 2.5 years as of March 31, 2015, providing 96% coverage over the remaining nine months of 2015 and 68% coverage in 2016, excluding customer extension options. Coverage in each case represents the ratio of contracted days to total available days, after taking into account scheduled drydock periods. Our two FSO JV Vessels have charters that expire in mid-2017 (subject to renewal), and our four LNG JV Vessels are employed under 25-year time charters that expire in 2032 2033. We also recently placed our ULCC tanker on an 11-month time charter for storage, and may selectively seek to place other tonnage on time charters when we can do so at what we consider attractive rates. Time charters (including our bareboat charter), excluding fixed price/fixed volume COAs, constituted approximately 48% of our TCE revenues for the first quarter of 2015 and 51% of our 2014 TCE revenues. Spot Market. Our International Flag vessels are primarily employed in the spot market via market-leading commercial pools. A spot market voyage charter is a contract to carry a specific cargo from a load port to a discharge port for either an agreed rate per ton of cargo or a specified lump-sum dollar amount. Under spot charters, we pay (or the commercial pool in which our vessel is operating pays) voyage expenses such as port, canal and bunker costs. Spot rates have historically been volatile, and fluctuate due to seasonal changes and general supply and demand dynamics in the crude oil and refined products sectors. Although spot market revenue is less predictable, we believe our exposure to that market gives us the opportunity to capture enhanced cash flow and profit margins during periods when vessel demand exceeds supply, which typically leads to increases in vessel spot voyage charter rates. In addition, commercial pools allow shipowners to collectively achieve scale in a particular vessel class without requiring large capital commitments from any individual owner. We participate in commercial pools because we believe that combining vessels of similar size and capability in an integrated system creates scale and offers our customers greater flexibility and higher service levels. The size and scope of the commercial pools in which we operate enable us to secure greater utilization through more backhaul voyages and COAs, reduced waiting time and shorter ballast voyages, thereby generating higher TCE revenues than otherwise might be obtainable in the spot market. As of March 31, 2015, 41 of our 56 International Flag vessels participated in the spot market, with 34 vessels participating in five commercial pools and seven vessels managed through commercial management agreements ("CMAs"). Spot market voyage charters (including vessels operating in commercial pools), including fixed price/fixed volume COAs, constituted approximately 52% of our TCE revenues for the first quarter of 2015 and 49% of our 2014 TCE revenues. Overseas Shipholding Group, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 4412 (Primary Standard Industrial Classification Code Number) 13-2637623 (I.R.S.Employer Identification Number) 1301 Avenue of the Americas New York, New York 10019 (212) 953-4100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents validation procedures. We believe that, notwithstanding any such qualifications by Drewry and Navigistics, the industry data provided by Drewry and Navigistics is accurate in all material respects. Statements regarding our market position in this prospectus are based on information derived from the market studies and research reports noted above and elsewhere in this prospectus. Although some of the companies that compete in our markets are publicly held as of the date of this prospectus, some are not. Accordingly, only limited public information is available with respect to our relative market strength or competitive position. Unless we state otherwise, our statements about our relative market strength and competitive position in this prospectus are based on our management's beliefs, internal studies and our management's knowledge of industry trends. While we are not aware of any misstatements regarding our market, industry or other similar data presented herein, such data involve risk and uncertainties and are subject to change based on various factors, including those discussed in "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in this prospectus. (1)Includes both bareboat charters and time charters, but excludes vessels chartered-in where the duration of the charter was one year or less at inception. (2)Includes two owned shuttle tankers and two owned U.S. Flag product carriers that trade internationally under the MSP. (3)Under the terms of the related agreements, the charters for the 10 vessels that have been chartered-in can be extended at our option throughout the life of the vessels. (4)Includes vessels where we hold only partial ownership interests through JVs. See " Fleet List JV Vessels." We hold a 50% ownership interest in two FSO Vessels through a JV. (5)Includes vessels where we hold only partial ownership interests through JVs. See " Fleet List JV Vessels." We hold a 49.9% ownership interest in four LNG Carriers through a JV. (6)LNG Carrier capacity described in cubic meters ("cbm"). James D. Small III, Esq. Senior Vice President, Secretary and General Counsel 1301 Avenue of the Americas New York, New York 10019 (212) 953-4100 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents ABOUT THIS PROSPECTUS Throughout this prospectus, we provide a number of key operating metrics used by management and that we believe are used by our competitors. We also reference certain non-GAAP financial measures. See "Summary Financial and Other Data," "Selected Historical Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of these measures, as well as a reconciliation of these measures to the most directly comparable financial measures required by, or presented in accordance with, accounting principles generally accepted in the United States ("GAAP"). Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be equal to the arithmetic aggregation of the percentages that precede them. IF YOU ARE IN A JURISDICTION WHERE OFFERS TO SELL, OR SOLICITATIONS OF OFFERS TO PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS ARE UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT IS UNLAWFUL TO DIRECT THESE TYPES OF ACTIVITIES, THEN THE OFFER PRESENTED IN THIS PROSPECTUS DOES NOT EXTEND TO YOU. In this prospectus, unless otherwise specified or the context otherwise requires, we use the terms "Company," "OSG," "we," "our" and "us" to refer to Overseas Shipholding Group, Inc., a Delaware corporation, together with its consolidated subsidiaries and its interest in certain joint ventures to which its subsidiaries are a party. Table of Contents Positive Industry Fundamentals Jones Act Market According to Navigistics, in recent years, the demand for Jones Act vessels has grown due to several factors, including the dramatic increase of U.S. domestic oil production resulting from the significant increase in tight (shale) oil and increases in deepwater Gulf of Mexico production, which have created the need for product tankers to transport crude oil in addition to the continuing need for such vessels to transport refined products. This has resulted in stronger charter rates for vessels operating in the Jones Act market. Navigistics forecasts that demand for Jones Act product tankers and large ATBs will continue to increase. The current Jones Act fleet of product tankers and large ATBs includes 31 tankers (ranging in size from 30,000 dwt to 51,000 dwt) and 42 large ATBs (ranging in size from 19,990 dwt to 45,000 dwt). The Jones Act tanker and large ATB market is, however, somewhat constrained, and driven by key factors, including the size, age and likely retirement age of the existing Jones Act fleet, oil company vetting requirements, U.S. shipyard capacities, and future drydock and repair costs (including the need to address required environmental upgrades). Of the vessels currently on the water, we own or charter-in and operate 14 tankers (44% of all Jones Act tankers by number of vessels) and 10 large ATBs (24% of Jones Act large ATBs by number of vessels). Furthermore, the U.S. coastwise market for oceangoing transportation services for crude and refined products is legislatively protected from direct foreign competition by the Jones Act. See "Industry Overview The Jones Act Product Tanker and Large ATB Industry." International Market The international crude oil and product tanker market has in recent years experienced significant demand growth, driven by increases in the quantity of crude oil and refined products moved and increases in the distances these cargos are carried (together "ton-mile demand"). This rising demand, coupled with smaller increases in vessel supply, has led to increased utilization and a tighter balance between supply and demand, resulting in increased rates. Drewry estimates that total ton-mile demand has increased from 10.8 trillion ton-miles in 2009 to 12.2 trillion ton-miles in 2014, reflecting the improved fundamental condition of both the crude oil and refined products markets and resulting in part from increased demand originating with developing market importers such as China and India. The annual growth rate of the world tanker fleet, which has moderated since peaking at 9% in 2009, dropped off significantly to approximately 3% to 4% a year through 2012, and had net increases below 2% in 2013 and below 1% in 2014. Together these factors have led to significantly improved rates in certain sectors as demonstrated by spot VLCC rates of approximately $50,000 per day achieved in the Tankers International ("TI") pool during the first quarter of 2015. The refined petroleum products market, which represented about 22% of total 2014 worldwide tanker trade measured by ton-mile demand, has posted even higher ton-mile growth rates than crude oil, increasing at a compound annual growth rate of 6% in the period from 2004 to 2014. The United States has become the largest refined product exporter in the world, with most U.S. product exports moving on MR tankers into South America and Europe. Vessel earnings in both the crude and product markets are, however, highly sensitive to changes in the demand for, and supply of, shipping capacity, which has historically caused these market to be cyclical and volatile in nature. See "Industry Overview The International Oil Tanker Shipping Industry." Competitive Strengths Our competitive strengths position us as a leader in the U.S. and International Flag tanker markets, provide us with profitable and differentiated chartering and strategic opportunities due to Table of Contents Shipyard Owner Type Delivery Options Capacity (barrels in thousands) NASSCO Kinder Morgan (APT) Tanker 4q2015 330 NASSCO Kinder Morgan (APT) Tanker 1q2016 330 NASSCO Kinder Morgan (APT) Tanker 2q2016 330 NASSCO Kinder Morgan (APT) Tanker 3q2016 330 NASSCO Kinder Morgan (APT) Tanker 2q2017 330 Aker Crowley Tanker 3q2015 330 Aker Crowley Tanker 4q2015 330 Aker Crowley Tanker 2q2016 330 Aker Crowley Tanker 3q2016 330 NASSCO Seacor (Seabulk) Tanker 2q2016 330 NASSCO Seacor (Seabulk) Tanker 4q2016 330 NASSCO Seacor (Seabulk) Tanker 1q2017 330 Aker Philly Tanker Tanker 3q2016 330 Aker Philly Tanker Tanker 2q2017 330 Aker Philly Tanker Option Tanker 3q2017 330 Aker Philly Tanker Option Tanker 4q2017 330 VT Halter Bouchard ATB 2q2015 250 VT Halter Bouchard ATB 1q2016 250 DonJon Seacor (Seabulk) ATB 2q2016 1 185 Gunderson Kirby ATB 3q2015 185 Gunderson Kirby ATB 2q2016 185 Fincantieri (Bay) Kirby ATB 3q2016 155 Fincantieri (Bay) Kirby ATB 2q2017 1 155 Fincantieri (Bay) Moran ATB 2q2015 150 Fincantieri (Bay) Moran ATB 2q2016 1 150 Fincantieri (Bay) Undisclosed ATB 3q2017 1 155 Total Orderbook 26 (1) With copies to: Jeffrey D. Karpf, Esq. Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, New York 10006 (212) 225-2000 Michael J. Zeidel, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3259 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents our size and global presence, enable us to consistently generate cash flows across market cycles, and drive our primary objective of maximizing shareholder value. Leading operator of U.S. Flag and International Flag vessels. We are one of the largest and most experienced owners and operators of modern crude and refined product transport vessels in the world, the only major tanker company operating in both the U.S. Flag and International Flag markets, and the largest in our Jones Act market. Our 80-vessel fleet had an operating carrying capacity of 7.5 million dwt and 864,800 cbm as of March 31, 2015. Our U.S. Flag fleet comprises 14 MR tankers and 10 ATBs, including 22 Jones Act vessels and two tankers that participate in the MSP and trade in the international market. Our International Flag fleet comprises 21 MR tankers, 12 Panamax/LR1s, eight Aframaxes/LR2s, eight VLCCs and one ULCC. The weighted-average age (by carrying capacity) of our total owned and operated fleet was 9.8 years as of March 31, 2015. Our JV Vessels comprise a 49.9% ownership interest in four LNG Carriers and a 50.0% ownership interest in two FSO vessels, which are integral to their customers' operations and have historically had high levels of performance. Forty of our tankers (26 International Flag and 14 U.S. Flag) can be shifted between the crude oil and refined product trades depending on market conditions. This provides us with flexibility to employ our vessels in the most attractive market segments. We believe the scale, flexibility and diversity of our fleet enable us to capitalize on chartering opportunities that are not available to many vessel owners with smaller or less-diverse fleets. U.S. Flag fleet holds the leading position in our sector of the Jones Act market. We are the largest operator of Jones Act crude and refined product transport vessels in the coastwise trades by both number of vessels and dwt, with a strong presence in all U.S. coastal regions and the largest and most modern tanker fleet in the Jones Act market we serve. In addition, we are the only Jones Act operator of shuttle tankers and the sole licensed participant in the strategic Delaware Bay lightering trade. The Jones Act market is legislatively protected from direct foreign competition and has in recent years demonstrated a high level of stable revenue from fixed rate time charters. Our 24 U.S. Flag vessels are employed on such time charters or fixed price/fixed volume COAs with an average remaining term of 2.5 years as of March 31, 2015. We have a long history of providing the commercial and technical management for our U.S. Flag vessels, and our scale in the sector enables us to provide these vessels with high-quality management services on a cost-competitive basis. We believe our long-term commitment to the Jones Act market, large and differentiated fleet and exposure to all major U.S. coastwise trade routes (including the shuttle tanker and Delaware Bay lightering trades) provide significant value to our U.S. Flag customers and are a principal reason they use our services. Large and diverse International Flag fleet is well-positioned to benefit from improving market fundamentals. We own and operate one of the largest fleets of international crude and product tankers worldwide. Our International Flag fleet trades predominantly in the spot market, generally through commercial pools, which facilitate deployment of our vessels globally. Commercial pools allow shipowners to collectively achieve scale in a particular vessel class without requiring large capital commitments from any individual owner. We participate in commercial pools because we believe that combining vessels of similar size and capability in an integrated system creates scale and offers our customers greater flexibility and higher service levels, and were a founding member of two of the largest commercial pools in which we participate, TI and Panamax International ("PI"). The size and scope of these commercial pools enable us to secure greater utilization through more backhaul voyages and COAs, reduced waiting time and shorter ballast voyages, thereby generating CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Class A common stock, par value $0.01 per share $100,000,000 $11,620 (1)Includes shares subject to the underwriters' option to purchase additional shares, if any. (2)Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. (3)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents higher TCE revenues than otherwise might be obtainable in the spot market. As of March 31, 2015, 34 out of 56 of our International Fleet vessels participated in five commercial pools. The international spot charter market has recently shown significant improvement, with our International Flag fleet's spot charter rates increasing from an average blended TCE rate of $15,400/day for the first quarter of 2013 to $21,800/day for the first quarter of 2014, and $27,800/day for the first quarter of 2015. We believe that our exposure to the spot market and participation in leading commercial pools position us to take advantage of improving market fundamentals. Long-standing reputation for service excellence and high-quality customers. We believe we have a leading reputation in our industry for service excellence, vessel quality and expert technical operations. Our proven track record of safe, reliable and efficient operations and our diverse and versatile fleet enable us to retain and grow our long-term customer relationships and to attract high-quality customers. We maintain extensive long-term relationships with major independent and state-owned oil companies, oil traders and refinery operators, some of whom we have served for more than 20 years, including in some cases through commercial pools. Our blue-chip energy customers include Tesoro Corporation ("Tesoro"), Marathon Oil Corporation ("Marathon"), Petr leo Brasileiro S.A. ("Petrobras"), BP plc ("BP"), Phillips 66 and Royal Dutch Shell plc ("Royal Dutch Shell"). We believe our customers choose us based on our demonstrated capability to meet or exceed their expectations for service, transparency, safety and environmental compliance. Strong balance sheet, significant liquidity and flexible financial profile. We generate significant cash flows through our complementary mix of time charters and international spot rate exposure. Our contracted revenues, coupled with the spot rate exposure of our International Flag fleet, provide us with a significant opportunity to further strengthen our balance sheet. As of March 31, 2015, we had total debt outstanding of $1.67 billion and a total debt to total capitalization of 56%. Our debt profile reflects minimal amortization requirements before 2018. As of March 31, 2015, we had total liquidity on a consolidated basis of $720 million, comprised of $595 million of cash (including $118 million of restricted cash, of which approximately $78 million is designated for use to renew our fleet or to repay debt) and $125 million of undrawn revolver capacity. The net proceeds from this offering will further improve our liquidity position, and we expect to have $ million of total liquidity following this offering (assuming an initial public offering price of $ per share, the midpoint of the price range on the cover of this prospectus), a portion of which we may use to renew and expand our existing fleet. We generated $299 million of Adjusted EBITDA during 2014 and $114 million of Adjusted EBITDA during the first quarter of 2015, reflecting $761 million and $222 million of TCE revenues, respectively. See "Summary Financial and Other Data" below. We believe we can maintain our financial strength, flexibility and strong balance sheet, based on our contracted revenue and our conservative capital structure. Strong corporate governance and an experienced management team. We are led by long-tenured executives with significant experience. We are incorporated in Delaware, maintain what we consider to be industry-leading U.S. corporate governance practices, have a strong and independent Board of Directors and have been a public company in the United States since 1970. Our President and chief executive officer ("CEO"), Captain Ian T. Blackley, has over 40 years of maritime industry experience and 24 years of experience with us. He previously served as our chief financial officer ("CFO") and Senior Vice President and Head of International Shipping. Our Senior Vice President and CFO, Rick F. Oricchio, worked for 30 years at Deloitte, LLP prior to joining us in 2015, the last 23 years as a partner. During the last two years of his tenure at Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor a solicitation of offers to buy these securities in any jurisdiction where the offer or sale thereof is not permitted. Subject to Completion dated June 26, 2015 Shares Overseas Shipholding Group, Inc. Class A Common Stock Table of Contents Deloitte, Mr. Oricchio served as our senior tax advisor. Our U.S. Flag and International Flag fleets are headed by a team of seasoned employees with considerable shipping industry experience. Our Co-President and head of OIN, Lois K. Zabrocky, started her career at sea and has 23 years of experience with us, including previously serving as OIN's Chief Commercial Officer. Our Co-President and head of OBS, Henry P. Flinter, has 20 years of maritime experience and 13 years of experience with us, including previously serving as our Vice President of Corporate Finance and Vice President of Accounting. Before joining us in 2015, our Senior Vice President, Secretary and General Counsel, James D. Small III, worked at Cleary Gottlieb Steen & Hamilton LLP, where he developed significant experience over his 18-year career counseling on transactional and governance matters, including being an instrumental advisor to us during our bankruptcy process. We believe our management team's long and distinguished track record and our commitment to strong corporate governance practices represent a distinct competitive strength in the shipping industry. Strategy Our primary objective is to maximize shareholder value by generating strong cash flows through the combination of contracted time charter revenues with the higher returns available from time to time in the spot market and from our participation in commercial pools; actively managing our fleet over the course of market cycles to increase investment returns and available capital; and entering into value-creating strategic transactions. The key elements of our strategy are: Generate strong cash flows by capitalizing on our leading Jones Act market position, complementary time charter and spot market exposures, and long-standing customer relationships. We believe we are well-positioned to generate strong cash flows by identifying and taking advantage of attractive chartering opportunities in the U.S. and International Flag markets. We currently operate the largest and most modern tanker fleet in the U.S. Flag market, with a strong presence in all major U.S. coastwise trades, and our International Flag fleet maintains one of the largest global footprints in the tanker market. Our market position allows us to maintain our long-standing relationships with many of the largest multinational energy companies, which in some cases date back for more than 20 years. We will continue to pursue an overall chartering strategy which blends medium-term time charters that provide stable cash flows covering a majority of our fixed costs with spot rate exposure that provides us with higher returns when the more volatile spot market is stronger. Generate stable cash flows through time charters. We seek to employ our U.S. Flag vessels on medium-term time charters to maintain consistent and stable cash flows. The majority of our U.S. Flag vessels are employed on time charters or fixed price/fixed volume COAs. We also expect to continue to benefit from the strong cash flows provided by our MSP vessels and our JV ownership interests in two FSO vessels and four LNG Carriers. Additionally, the prevailing contango in crude oil pricing (when the future price of oil exceeds the current price of oil, encouraging the temporary storage of crude oil at sea) enabled us to place our ULCC, the Overseas Laura Lynn (the former TI Oceania), on an 11-month storage charter commencing April 2015, and we may seek to place other tonnage on time charters, for storage or transport, when we can do so at attractive rates. Significantly enhance cash flows through spot market exposure and participation in commercial pools. We expect to continue to deploy our International Flag fleet on a spot rate basis to benefit from market volatility and what we believe are the traditionally higher returns the spot market offers compared with time charters. We believe this strategy This is an initial public offering of the shares of Class A common stock of Overseas Shipholding Group, Inc. ("OSG"), for which no public market currently exists. We are offering to sell shares of Class A common stock in the offering. The selling stockholders identified in this prospectus are offering to sell an additional shares of Class A common stock in the offering. We will not receive any of the proceeds from the sale of the shares of Class A common stock by the selling stockholders. We expect the initial public offering price to be between $ and $ per share of Class A common stock. We intend to apply to list the shares of our Class A common stock on the New York Stock Exchange (the "NYSE") under the symbol "OSG." Investing in our Class A common stock involves a high degree of risk. See "Risk Factors" on page 20 of this prospectus. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Ownership of our Class A common stock by persons that are not U.S. Citizens (as defined herein) may be subject to limitations in certain circumstances. See "Notice to Investors." Table of Contents presently offers significant upside exposure to the strengthening spot market and an opportunity to capture enhanced profit margins at times when vessel demand exceeds supply. We also anticipate continuing to use commercial pools as our principal means of participation in the spot market. We currently participate in five commercial pools TI, Sigma Tankers ("SIGMA"), Handytankers ("HDT"), PI and Clean Products Tankers Alliance ("CPTA") each selected for specific expertise in its respective market. Our continued participation in these pools allows us to benefit from economies of scale and higher vessel utilization rates, resulting in TCE revenues that exceed those we believe could be achieved operating those vessels outside of a commercial pool. Actively manage our fleet to maximize return on capital over market cycles. We plan to actively manage our fleet through opportunistic acquisitions and dispositions as part of our effort to achieve above-market returns on capital for our vessel assets. Using our commercial, financial and operational expertise, we plan to opportunistically grow our fleet through the timely and selective acquisition of high-quality secondhand vessels or existing newbuild contracts when we believe those acquisitions will result in attractive returns on invested capital and increased cash flow. We also intend to engage in opportunistic dispositions where we can achieve attractive values for our vessels relative to their anticipated future earnings from operations as we assess the market cycle. Taken together, we believe these activities will help us to maintain a diverse, high-quality and modern fleet of U.S. Flag and International Flag crude oil and refined product vessels with an enhanced return on invested capital. We believe our diverse and versatile fleet, our experience and our long-standing relationships with participants in the crude and refined product shipping industry, position us to identify and take advantage of attractive acquisition opportunities in any vessel class and in either the international or Jones Act market. Maintain a strong and flexible financial profile. We intend to maximize our financial returns by actively managing the capital devoted to the markets in which we operate and the complementary mix of time charter and spot contracts through which we deploy our vessels. The substantial contracted cash flows from our time charters cover the majority of our fixed costs and provide a hedge against times when spot market rates are weaker. This helps us to maintain significant liquidity throughout the cycle. Conversely, spot market exposure provides a significant opportunity to benefit during periods when spot market rates are stronger, thereby offering the opportunity to generate additional cash flow. We believe this complementary chartering approach will provide us with the flexibility to pursue attractive acquisition or strategic transaction opportunities, particularly at times when the market values of fleet assets may be below long-term averages due to changes in industry fundamentals. Become a leader in the consolidation of the tanker industry. We expect the tanker industry to expand over the next several years as ton-mile demand for crude and product tankers grows and as the newbuilding orderbook is relatively low. Given the fragmented nature of the international tanker industry, we believe that we have an opportunity to complement the renewal and expansion of our fleet through selective transactions that will allow us to consolidate smaller owners into a larger and more efficient enterprise. Per Share Total Initial public offering price $ $ Underwriting discount $ $ Proceeds to us (before expenses) $ $ Proceeds to the selling stockholders (before expenses) $ $ To the extent that the underwriters sell more than shares of Class A common stock, the underwriters have the option to purchase up to an additional shares of Class A common stock from us at the initial public offering price, less the underwriting discount. The underwriters can exercise this right at any time and from time
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+PROSPECTUS SUMMARY
+ 
+ As used in this prospectus, references to the Company, we, our , us or GEZC refer to Go Ez Corporation and its directly or indirectly owned subsidiaries unless the context otherwise indicates.
+ 
+ The following summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that may be important to you. Before making an investment decision, you should read the entire prospectus carefully, including the
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+PROSPECTUS SUMMARY The following information is a summary of the prospectus and it does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus carefully, including the Risk Factors section and our financial statements and the notes relating to the financial statements incorporated by reference in this prospectus, before making an investment decision. Our Company We develop, manufacture, market and service systems to treat cancer and benign diseases using heat therapy delivered using focused microwave. Our business objectives are to continue to commercialize our products for the treatment of cancer and to further expand our products to treat other diseases and medical conditions. Our product line for cancer therapy has been created to offer hospitals and clinics a solution for thermal treatment of cancer. We have developed intellectual property for our products and we currently distribute them primarily in the United States and Europe. As part of our recently announced corporate realignment and re-branding which included our new corporate name, Perseon, we plan to focus our efforts on our flagship product, MicroThermX ( MicroThermX ) ablation system that employs precision-guided microwave energy to ablate soft tissue. Historically, our product offerings have included hyperthermia cancer treatment systems. On April 1, 2015, we sold the assets associated with our hyperthermia cancer treatment systems, including among other assets, certain contracts, inventory, intellectual property, and permits (the Hyperthermia Assets ) pursuant to an Asset Purchase Agreement (the Hyperthermia Purchase Agreement ) with Pyrexar Medical Inc. ( Pyrexar ). As consideration for the Hyperthermia Assets, we received (i) 19.9% of the Series A Preferred Stock of Pyrexar and (ii) a percentage of the gross revenues Pyrexar receives from its sale of hyperthermia cancer treatment systems. Pyrexar also assumed certain liabilities associated with the Hyperthermia Assets. With the sale of the Hyperthermia Assets we will focus our resources on expanding and commercializing our ablation product line. Our thermal ablation product line includes systems that have been strategically designed to offer minimally invasive thermal energy therapy for treating cancerous tumors. Studies have shown that ablation therapy effectively addresses and even kills certain cancerous tumors on a minimally invasive basis. Thermal ablation usually refers to heat treatments delivered at temperatures above 55 C for short periods of time. Thermal ablation is used to destroy local tumors using a short intense focus of heat on a specific area. Current and future cancer treatment sites for our systems may include cancers of the prostate, breast, head, neck, bladder, uterus, ovaries, esophagus, liver, kidney, brain, bone, stomach and lung. In addition to these market opportunities, we believe that our technology has application for a number of other medical purposes in addition to cancer. We recognize revenues from the sale of our ablation cancer treatment systems and related parts and accessories (collectively, product sales), the sale of disposable devices used with certain of our systems, training, service support contracts and other miscellaneous revenues. We also recognize revenues from equipment rental, including fee-per-use rental income from our MicroThermX. Information regarding our revenues, assets, and results of our operations is contained in our financial statements and notes thereto and in Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations, included in our Transition Report on Form 10-K that is incorporated by reference into this prospectus. Our current corporate strategy includes the possibility of entering into additional collaborative arrangements with third parties to expand and improve the commercialization of all our products. There can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or that, if completed, any agreements or transactions will be successful or on attractive terms. Our common stock trades on The NASDAQ Capital Market ( NASDAQ ) under the symbol PRSN. We have applied to list the warrants on The NASDAQ Capital Market under the trading symbol PRSNW. No assurance can be given that such listing will be approved or that a trading market will develop. Our Contributions to Cancer Therapy Cancer develops when abnormal cells in a part of the body begin to grow out of control and spread to other parts of the body. According the World Health Organization ( WHO ) cancer was the leading cause of death worldwide in 2012 accounting for 8.2 million deaths. The WHO also reported that the number of new cancer cases worldwide in 2012 was expected to increase by 70% from 14 million to 22 million over the next two decades. Our cancer treatment systems have been developed to both kill cancer directly with heat and to increase the effectiveness of the primary cancer treatments, which are used in conjunction with the heat therapy. Therapies currently used to treat cancer include radiation therapy, chemotherapy, biological therapy, surgery, ablation and hyperthermia. Because cancer remains a leading cause of death, the current primary cancer therapies are still inadequate, and there is a need for better treatments. We have engineered systems designed to increase the effectiveness of these cancer treatments through the use of precision-focused energy to selectively heat cancer. Our Products and Services MicroThermX Ablation System Our MicroThermX Ablation System ( MicroThermX ) is a compact, mobile, state-of-the-art, proprietary system that includes a microwave generator, single-patient-use disposable antennas with cooling circuit, and a thermistor-based temperature monitoring system. The innovative design of the MicroThermX is the first of its kind that allows delivery of higher power levels using a single generator. The MicroThermX utilizes innovative, proprietary, synchronous wave alignment technology that was developed by us to provide scalable and more uniform zones of ablation during a single procedure. The MicroThermX introduced into our product line an innovative SynchroWave disposable antenna that is used in each ablation treatment, which we believe will provide a significant ongoing revenue stream after the sale of the system. We expanded the MicroThermX market opportunity by introducing a new SynchroWave short tip ( ST ) antenna that can be used to deliver smaller, spherical ablation zones that more accurately target smaller tumors. The existing SynchroWave long tip ( LT ) antenna delivers larger ablation zones, reducing the need for multiple serial ablations on larger tumors. The multiple configurations of the SynchroWave antenna provide physicians the ability to precisely target the ablation zone to the numerous sizes and shapes of diseased tissue, significantly increasing the number of cases that can be treated with the MicroThermX. Perseon management estimates the soft tissue ablation world market potential will exceed $2.3 billion by 2020. Our Table Top MicroThermX Ablation System ( T2 ) is designed for our fee-per-use rental program, which is more fully described below. Portability and ease of use are keys to successful implementation of the equipment rental program. The T2 is a small, lightweight, tabletop configuration that has the same advanced features as the original MicroThermX configuration. The U.S. Food and Drug Administration ( FDA ) granted us a 510(k) clearance to market the MicroThermX for ablation of soft tissue. Clearance from the FDA of the 510(k) Premarket Notification submission authorizes the commercial sale of the MicroThermX in the United States. We have also received CE (Conformit Europ enne) Marking for the MicroThermX, which allows us to market the MicroThermX in the thirty countries that comprise the European Union ( EU ) and the European Free Trade Association ( EFTA ). CE Marking is also recognized in many countries outside of the EU, providing us the ability to market the MicroThermX to a number of international markets. The company recently received clearances from the U.S. Food and Drug Administration ( FDA ) to market the MicroThermX for the specific indications of ablation procedures requiring partial or complete ablation of non-resectable liver tumors and for laparoscopic ablation procedures using image guidance. As further discussed below, we have established distribution in a number of countries and have accepted purchase orders for and have shipped both MicroThermX systems and SynchroWave antennas. Clinicians have used ablation systems to treat patients with cancers of the liver, lung, bone, and kidneys. We have placed a select number of MicroThermX systems with pivotal, high-profile, interventional oncology opinion leaders in the United States and through our exclusive European distributor, Terumo Europe NV ( Terumo ). These medical facilities continue to reorder disposable SynchroWave antennas, validating the ongoing revenue stream we anticipate. Existing users of the MicroThermX continue to report positive clinical results in the treatment of cancerous tumors. These evaluations represent an important milestone in the MicroThermX sales cycle. However, with hospital capital budgeting, committee review and other approvals, the sales cycle for the MicroThermX may extend to well over six months. Political and economic uncertainty in the industry due to recent government healthcare reform and increasing regulatory requirements throughout the world are also slowing hospital acquisition of capital equipment at all levels. As filed with the Securities and Exchange Commission on July 28, 2015 Registration Statement No. 333-203592 Since May 2013, a significant part of our MicroThermX product s revenue has come from sales into Europe, to our distribution partner, Terumo. Because Terumo has expressed an interest in modifying the terms of their exclusive distribution agreement for our MicroThermX products, we are negotiating with Terumo to modify the agreement. Both Terumo and the Company are interested in extending the duration and purchase requirements of the contract. We cannot yet determine the total impact this may have on our future sales. With the initial success of our relationship with Terumo, we will continue our strategy to seek out other master distribution arrangements in other substantial geographic medical device markets. Domestically, we restructured our sales organization and efforts in 2014 by engaging independent, specialized distributors who sell and distribute medical products to healthcare providers. These specialized distributors typically have established relationships with interventional radiologists and other end users of cancer treatment products. Each of these distributors are overseen, trained and serviced by sales managers who are Perseon employees. We believe that we have now expanded our distributor network and direct sales efforts to cover all large metropolitan areas and states, with sales coverage throughout the entire United States. In February 2015, we initiated a new sales model for our domestic market. Customers have three ways in which they can purchase both our MicroThermX generators and antenna tips. The first is to purchase the generator, which is considered to be capital equipment expenditures, at a price of $45,000. Antenna tips, in this option, are sold at $2,700 average selling price ( ASP ) per case. With the second option, the MicroThermX generators are provided to customers at no charge. However, in this option, customers must commit to purchasing at least 36 antenna tips in a 12-month period at an ASP of $2,700 per antenna per case. In the final option, customers pay $2,500 each time they use the MicroThermX generator. Additionally, the customers buy antenna tips at $2,700 per antenna per case. With these three options in our sales model, we anticipate to have gross margins ranging from 75 85% for our direct (US-only) business, 65 70% for our US distribution revenues, and 50 55% for our outside of the United States ( OUS ) distribution sales. We are committed to personal service to new users of our ablation technique. We provide all of our customers with extensive hands-on training to ensure success in clinical use of the MicroThermX system. Our representatives are experienced interventional sales representatives with seasoned contacts in the field of interventional oncology. Our senior sales management team includes professionals with a long history in marketing medical devices and equipment worldwide. Marketing and Distribution MicroThermX. Our U.S. network of direct sales representatives and four domestic specialty distribution firms provide nationwide sales coverage for the MicroThermX line of products. In addition, in April 2013 we entered into an exclusive, long-term master distribution agreement with Terumo in 100 countries in Europe, Western Asia and Northern Africa. We have a Director of International Sales that manages this relationship, as well as agreements with other international specialty distribution firms. Our marketing and distribution strategy for our MicroThermX business includes seeking out and securing additional master distribution arrangements for our MicroThermX line of products in other parts of the world. Recent Developments Consistent with our current corporate strategy to seek collaborative arrangements with third parties to expand and improve the commercialization of all our products, in the first half of 2015, we engaged an investment banker to assist the Company in finding and evaluating potential strategic opportunities and possible transactions to buy assets to expand the Company, sell assets of the Company, or partner with other parties in an effort to maximize shareholder value. Although the Company is not currently in any active discussions with other parties, we plan to continue investigating potential opportunities as they become available to the Company. Also, during the first half of 2015, the Company executed on divesting its hyperthermia product line, changed 75% of its leadership team, installed new highly accomplished and proven leaders, replaced 50% of its outside directors, moved its fiscal year-end to December 31 and renamed, rebranded, and repositioned itself to move forward. Our Corporate Information Perseon Corporation, formerly BSD Medical Corporation, (the Company or Perseon ) was originally incorporated under the laws of the State of Utah on March 17, 1978. On July 3, 1986 the Company was reincorporated in the State of Delaware. In February 2015, we changed the name of the Company to Perseon Corporation. We changed our fiscal year end for financial reporting from August 31 to December 31, effective for the four months ended December 31, 2014. Our principal executive offices are located at 2188 West 2200 South, Salt Lake City, Utah 84119. Our telephone number is (801) 972-5555. Our website address is www.perseonmedical.com. The information contained on, or that can be accessed through, our website is not incorporated by reference in this prospectus and should not be considered a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment No. 4 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Perseon Corporation (Exact name of registrant as specified in its charter) Delaware 3845 75-1590407 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 2188 West 2200 South Salt Lake City, UT 84120 (801) 972-5555 (Address and telephone number of registrant s principal executive offices) Clinton E. Carnell Jr. President Perseon Corporation 2188 West 2200 South Salt Lake City, UT 84120 (801) 972-5555 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Nolan S. Taylor David Marx Dorsey & Whitney, LLP 136 South Main Street, Suite 1000 Salt Lake City, Utah 84101-1685 (801) 933-7363 Robert H. Cohen McDermott Will & Emery LLP 340 Madison Avenue New York, New York, 10173-1922 (212) 547-5400 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price (1)(2) Amount of Registration Fee (3)(4) Common stock, $0.001 par value per share $ 6,888,020.84 $ 800.39 Warrants to purchase common stock (5) Shares of common stock underlying warrants $ 15,153,645.84 $ 1,760.86 Warrants to be issued to the underwriters(5) Common Stock issuable upon exercise of underwriters warrants(6) $ 329,427.09 $ 38.28 Total Registration Fee $ 22,371,093.77 $ 2,599.53 (1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes offering price of securities that the underwriters have the option to purchase to cover over-allotments, if any. (2) Pursuant to Rule 416 under the Securities Act, the securities registered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or similar transactions. (3) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price of the securities registered hereunder to be sold by the registrant. (4) Paid previously. (5) No registration fee pursuant to Rule 457 under the Securities Act. (6) Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The warrants to be issued to the underwriters are exercisable at a per share exercise price equal to 110% of the public offering price. As estimated solely for the purpose of recalculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the Representative s Warrant is $329,427.09, which is equal to 110% of $299,479.17 (5% of $5,989,583.33). The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
\ No newline at end of file
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@@ -0,0 +1,576 @@
+Summary
+ 
+ The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless otherwise noted, the terms Company, we, us, and our refer to Elite Data Services, Inc., and its subsidiaries. All dollar amounts refer to United States dollars unless otherwise indicated.
+ 
+ Elite Data Services, Inc. was incorporated in the State of Florida on November 23, 1981 as Mammathetics Corp. On September 15, 2011, the Company changed its name to Dynamic Energy Alliance Corporation, and later on November 4, 2013, changed its name to Elite Data Services, Inc. 
+ 
+ Our registered office is located at 4447 N Central Expressway, Suite 110-135, Dallas, Texas 75205. Our telephone number is (972) 885-3981.
+ 
+ ABOUT THIS OFFERING
+ 
+ This offering relates to the resale of up to an aggregate of $5,000,000 (the Offering ) in shares of our common stock that we may put to Tarpon pursuant to the Purchase Agreement dated July 14, 2015. Assuming the resale of all 5,000,000 shares offered in this prospectus as Shares that we may put, which may also be referred to as (the Put Shares ) in this document, this would constitute approximately 19.6% of our outstanding common stock as of the date of this prospectus. It s highly likely that the number of shares offered in this registration statement is insufficient to allow us to receive the full amount of proceeds under the Purchase Agreement, and as such, we may need to amend this Offering or otherwise file a new offering, as may be required by the SEC.
+ 
+ At the closing price of $0.062 per share (the Closing Share Price ) of our common stock as reported on the OTCQB on September 14, 2015, we will be able to receive up to an estimated $310,000 in gross proceeds, assuming the sale of the entire 5,000,000 Put Shares being registered hereunder pursuant to the Purchase Agreement at the Closing Share Price. We would be required to register approximately 75,645,161 additional Put Shares to obtain the remaining balance of $4,690,000 if the additional Put Shares were also sold at the Closing Share Price.
+ 
+ The amount of $5,000,000 was selected based on our proposed use of funds over the effective time period to enable us to have adequate funds for general operations and to complete certain aspects of our business plan pursuant to our automotive platforms and our gaming license. Our ability to receive the full amount of this Offering is largely dependent on the daily dollar volume of our stock traded during the effective period of the Offering and the sale date of the Put Shares. Based strictly on the average current daily trading dollar volume for the past ninety (90) days prior to the date of this Offering, and assuming the a similar trading dollar volume during the effective period of this Offering, we believe it is unlikely that we will be able to receive the entire $5,000,000. We are not dependent on receiving the full amount to execute our business plan. We anticipate the ability to operate on the intended business plan in stages until we are able to raise the required funds needed to implement the entire business plan. However, there is no assurance that we will be able to raise enough funds from this Offering or from any other subsequent financing to implement all of the Company s plans.
+ 
+ Pursuant to the terms of the Purchase Agreement with Tarpon, we have the right to put to Tarpon the Put Shares being registered for resale in this Offering, for a two year period, commencing on the date of the Purchase Agreement, but not before the date in which the SEC first declares this registration statement effective (the Commitment Period ), as set forth in this prospectus. As a condition for the execution of the Purchase Agreement, on July 14, 2015, we paid to Tarpon a commitment fee in the form of a promissory note in the principal amount of $50,000, which is due and payable on January 31, 2016 (the Maturity Date ). 
+ 
+ 6
+ 
+ 
+
+ 
+
+ 
+ In order to sell Put Shares to Tarpon under the terms of the Purchase Agreement, during the Commitment Period, the Company must deliver to Tarpon a written put notice (the Put Notice ) on any trading day (the Put Date ), setting forth the dollar amount of the Put Shares being sold to Tarpon (the Investment Amount ). For each Put Share purchased, Tarpon will pay us ninety (90%) percent of the lowest closing bid price ( Closing Price ) of any trading day during the ten (10) trading days immediately following the date, also referred to as the Valuation Period elsewhere herein, on which we have transferred the estimated amount of Put Shares to Tarpon in the manner provided by the Purchase Agreement. We may, at our sole discretion, issue a Put Notice to Tarpon and Tarpon will then be irrevocably bound to acquire such shares, subject to certain terms and condition of the Purchase Agreement.
+ 
+ The Purchase Agreement provides that the number of Put Shares to be sold to Tarpon shall not exceed the number of shares that when aggregated together with all other shares of our common stock which Tarpon is deemed to beneficially own, would result in Tarpon owning more than 9.99% of our outstanding common stock. 
+ 
+ In the event that, during a Valuation Period, the closing price on any trading day falls to a price equal to seventy-five percent (75%) of the average of the closing trade prices for the ten (10) trading days immediately preceding the date of the Company's Put Notice (a "Low Bid Price"), then for each such Trading Day, the parties shall have no right to sell and shall be under no obligation to purchase one tenth (1/10th) of the Investment Amount specified in the Put Notice, and the Investment Amount shall accordingly be deemed reduced by such amount. In the event that during a Valuation Period there exists a Low Bid Price for any three (3) Trading Days not necessarily consecutive then the balance of each party's right and obligation to sell and purchase the Investment Amount under such Put Notice shall terminate on such second Trading Day ("Termination Day"), and the Investment Amount shall be adjusted to include only one-tenth (1/10th) of the initial Investment Amount for each Trading Day during the Valuation Period prior to the Termination Day that the Bid Price equals or exceeds the Low Bid Price.
+ 
+ If, during any Valuation Period, we (i) subdivide or combine our common stock; (ii) pay a dividend in shares of common stock or makes any other distribution of shares of common stock; (iii) issue any options or other rights to subscribe for or purchase shares of common stock and the price per share is less than closing price in effect immediately prior to such issuance; (iv) issue any securities convertible into shares of common stock and the consideration per share for which shares of common stock may at any time thereafter be issuable pursuant to the terms of such convertible securities shall be less that the closing price in effect immediately prior to such issuance; (v) issue shares of common stock otherwise than as provided in the foregoing subsections (i) through (iv) at a price per share less than the closing price in effect immediately prior to such issuance, or without consideration; or (vi) make a distribution of its assets or evidences of its indebtedness to the holders of common stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law (collectively, a Valuation Event ), then a new Valuation Period shall begin on the trading day immediately after the occurrence of such Valuation Event and end on the fifth trading day thereafter.
+ 
+ We are relying on an exemption from the registration requirements of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. This Offering does involve a private placement of shares of common stock of the Company, pursuant to the executed Purchase Agreement. To the best of our knowledge and as represented in the executed Purchase Agreement, Tarpon is an accredited investor and/or qualified institutional buyer and Tarpon has had access to information about the Company and the details related to the investment represented by this Offering. 
+ 
+ 7
+ 
+ 
+
+ 
+
+ 
+ Assuming the sale of the entire $5,000,000 in Put Shares being registered in this Offering, we will be able to receive $310,000 in gross proceeds. Neither the Purchase Agreement, nor any of the parties rights or obligations pursuant to the Purchase Agreement, may be assigned by either party to any other person.
+ 
+ There are substantial risks to investors as a result of the issuance of shares of our common stock under the Purchase Agreement. These risks include dilution of stockholders, significant decline in our stock price and our inability to draw sufficient funds when needed.
+ 
+ Tarpon will periodically purchase our common stock under the Purchase Agreement and will, in turn, sell such Shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to Tarpon to raise the same amount of funds, as our stock price declines.
+ 
+ The Offering
+ 
+ Shares of common stock offered by selling stockholder:
+ 
+ 5,000,000 shares of common stock
+
+ 
+ 
+ Common stock to be outstanding after the offering:
+ 
+ Up to 30,595,902 shares of common stock
+
+ 
+ 
+ Use of Proceeds
+ 
+ We will not receive any proceeds from the sale of the shares of common stock offered by the Selling Security Holder, except for the proceeds received from sale of our common stock being put to Tarpon pursuant to the terms of the Purchase Agreement. See Use of Proceeds. 
+
+ 
+ 
+ Risk factors:
+ 
+ You should carefully read and consider the information set forth under the caption Risk Factors beginning on page 9 and all other information set forth in this prospectus before investing in our common stock.
+
+ 
+ 
+ OTC Bulletin Board Symbol:
+ 
+ DEAC
+
+ 
+ Past Transactions With Selling Security Holder
+ 
+ We have not done any transactions with Tarpon Bay Partners LLC or its affiliates.
+ 
+ Capital Requirements
+ 
+ An analysis of our business acquisition and operations cost indicate a reasonable requirement of US $5,000,000 or less to execute on the Company s business plan. Based on market response to our products, services, and technologies, it is management s opinion that we will not require additional funding. 
+ 
+ 8
+ 
+ 
+
+ 
+
+ 
+ Summary Financial Information
+ 
+ The following financial information summarizes the more complete historical financial information at the end of this prospectus.
+ 
+ 
+ 12 Months 
+ 
+ 
+ 12 Months 
+ 
+ 
+ Six Months
+ 
+
+ 
+ Ended
+ 
+ 
+ Ended
+ 
+ 
+ Ended
+ 
+
+ 
+ December 31,
+ 
+ 
+ December 31,
+ 
+ 
+ June 30,
+ 
+
+ 
+ 2014
+ 
+ 
+ 2013
+ 
+ 
+ 2015
+ 
+
+ 
+ (audited)
+ 
+ 
+ (audited)
+ 
+ 
+ (unaudited)
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Assets 
+ 
+ $ 821,541 
+ 
+ $ 2,884 
+ 
+ $ 283,947 
+
+ Total Liabilities 
+ 
+ $ 2,063,351 
+ 
+ $ 1,408,200 
+ 
+ $ 1,617,573 
+
+ Stockholders Deficit
+ 
+ $ (1,241,810 ) 
+ $ (1,405,316 ) 
+ $ (1,333,626 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Statement of Operations 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Revenue
+ 
+ $ 15,015 
+ 
+ $ - 
+ 
+ $ 1,596 
+
+ Total Operating Expenses
+ 
+ 
+ (316,109 ) 
+ 
+ (430,969 ) 
+ 
+ 912,813 
+
+ Total Other Expense
+ 
+ $ (2,357,465 ) 
+ $ (41,185 ) 
+ $ (1,014,738 )
+ Net Loss
+ 
+ $ (2,357,465 ) 
+ $ (472,154 ) 
+ $ (1,925,955 )
+ 
+ Risk Factors
+ 
+ An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below as well as other information provided to you in this prospectus, including information in the section of this document entitled Information Regarding Forward Looking Statements. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline, and you may lose all or part of your investment. 
+ 
+ 9
+ 
+ 
+
+ 
+
+ 
+ Risks Related to Our Business 
+ 
+ We have a limited operating history upon which an evaluation of our prospects can be made.
+ 
+ Our business model is to market and advertise assets that the Company owns and controls. We have two sectors in which we are implementing our strategy: our automotive platforms and distribution of our gaming license in Honduras and Roatan. Our future operations are contingent upon raising capital and generating revenues for operations. Because we have a limited operating history, you will have difficulty evaluating our business and future prospects. This limited operating history, and the unpredictability of our ventures, makes it difficult for investors to evaluate our business and future operating results. An investor in our securities must consider the risks, uncertainties and difficulties frequently encountered by companies in our industries. The risks and difficulties we face include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from having had a limited time period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories.
+ 
+ Our business model is uncommon and there is no guarantee that our marketing campaigns to promote our assets will be successful. 
+ 
+ Our business model is to generate revenue by marketing and advertising assets that the Company owns and controls thereby profiting on sales from income related to our assets without reliance on income from vendor contracts. In order to capitalize under our business plan, we must have operating business assets to market and advertise. Even if we are able to achieve profitable operations with our assets, we cannot guarantee that our marketing and advertising efforts will allow us to reach our targeted audience or will result in new or additional consumers utilizing our assets, or recover such costs by attaining corresponding revenue growth. If we are unable to raise capital for a marketing and advertising budget upon operation and/or recover our marketing and advertising costs, it could have a material adverse effect on our business, results of operations and financial condition.
+ 
+ We have a history of losses, our accountants expressed doubts about our ability to continue as a going concern, and we need additional capital to execute our business plan.
+ 
+ As of June 30, 2015, we had not yet achieved profitable operations. We have accumulated losses, a working capital deficiency and we expect to incur further losses in the development of our business, all of which, according to our accountants, casts substantial doubt about our ability to continue as a going concern. We will require additional funds through the receipt of conventional sources of capital or through future sales of our common stock, until such time as our revenues are sufficient to meet our cost structure, and ultimately achieve profitable operations. We expect our current cash on hand to be sufficient for the three months. There is no assurance we will be successful in raising additional capital or achieving profitable operations. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. These actions will result in dilution of the ownership interests of existing stockholders and may further dilute common stock book value, and that dilution may be material.
+ 
+ If we are unable to attract, retain and motivate employees and/or consultants, we may not be able to execute our business plan.
+ 
+ Our success and execution are dependent, in part, on our ability to hire, retain and motivate sufficient numbers of talented people, with the increasingly diverse skills needed to expand our business. Competition for highly qualified, specialized technical and managerial, and particularly consulting personnel, is intense. Recruiting, training, retention and benefit costs place significant demand on our resources. Additionally, our substantial indebtedness and our limited budget makes recruiting executives to our business more difficult. Further, we may not have the cash available to retain such employees and/or consultants. The inability to attract qualified employees and/or consultants in sufficient numbers to meet particular demands or the loss of a significant number of our employees and/or consultants could have an adverse effect on us. 
+ 
+ 10
+ 
+ 
+
+ 
+
+ 
+ We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.
+ 
+ Our ability to make payments on, or to refinance our debt, including our convertible notes and outstanding loans, and to fund planned capital expenditures, including our planned expansions and development of gaming machines and online development, the Company will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
+ 
+ We cannot assure you that our business will generate sufficient cash flow or that future borrowings will be available to us at all, or in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs including our planned expansions, as well as maintenance needed for our automotive platforms, gaming license, and future developments. We may need to refinance all or a portion of our indebtedness, including these senior subordinated notes and the senior secured credit facility, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior subordinated notes and our senior secured credit facility, on commercially reasonable terms or at all.
+ 
+ Our substantial indebtedness could adversely affect our financial condition.
+ 
+ We have a substantial amount of indebtedness in one or more convertible debentures that if we are unable to pay, will convert into shares of our common stock at high discounts of the then market price of our common stock. Our substantial indebtedness could have negative consequences, including, but not limited to: diluting the holders of our common stock thereby making it more difficult for us to pay our debts; increasing our vulnerability to economic and industry conditions; substantially reducing our cash flow to service our indebtedness thereby reducing the amounts available for working capital, capital expenditures, property developments costs and other general corporate expenses; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; placing us at a competitive disadvantage compared to our competitors that have less debt; and limiting our ability to borrow additional funds. 
+ 
+ We incur increased costs as a result of being a public company, which could affect our profitability and operating results.
+ 
+ We are obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended. In addition, the Sarbanes-Oxley Act of 2002 and the new rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various new requirements on public companies and its registered accountant, including changes in a public company s corporate governance practices. These rules and regulations increase our legal and financial compliance costs and to make some activities of our more time-consuming and costly. These costs could affect profitability and our results of operations.
+ 
+ Our indebtedness may restrict our ability to pursue our business strategies, and our ability to comply with these restrictions depends on many factors beyond our control.
+ 
+ Our indebtedness includes convertible instruments which include certain covenants that, among other things, restrict our ability to loan money, create liens, make investments, sell assets, and merge, consolidate and sell substantially all of our assets. All of these restrictive covenants may restrict our ability to expand or to pursue our business strategies. Our ability to comply with these and other provisions of our agreements may be affected by changes in business conditions or results of operations, adverse regulatory developments or other events beyond our control. The breach of any of these covenants could result in a default under our indebtedness, which could cause those obligations to become due and payable in addition to other penalties. If we default, we could be prohibited from making payments with respect to the notes and may be forced to convert such notes at the conversion discount in addition to any such penalties upon default. 
+ 
+ 11
+ 
+ 
+
+ 
+
+ 
+ We do not pay dividends on our Common Stock.
+ 
+ We have not paid any dividends on our common stock since our inception and do not anticipate paying dividends in the foreseeable future. We plan to retain earnings, if any, to finance the development and expansion of our business.
+ 
+ We need additional capital in the future, which could dilute the ownership of current stockholders or make our cash flow vulnerable to debt repayment requirements.
+ 
+ Historically, we have raised equity and debt capital to support our operations. To the extent that we raise additional equity capital, debt or debt convertible into equity, existing stockholders will experience a dilution in the voting power and/or ownership of their common stock, and earnings per share, if any, would be negatively impacted. Our inability to use our equity securities to finance our operations could materially limit our growth. Any borrowings made to finance operations could make us more vulnerable to a downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings that are subject to interest rate fluctuations. If our cash flow from operations is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations, or dispose of assets in order to meet debt service requirements. There can be no assurance that any financing will be available to us when needed or will be available on terms acceptable to us. Our failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on our growth prospects and our business, financial condition and results of operations.
+ 
+ We may issue preferred stock, which could prevent a change in our control.
+ 
+ Our Articles of Incorporation authorize the issuance of preferred stock with such rights and preferences, as may be determined by our Board of Directors, from time to time. Accordingly, under the Articles of Incorporation, the Board of Directors, without shareholder approval, may issue preferred stock with dividend, liquidation, conversion, voting, redemption or other rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of any shares of preferred stock, having rights superior to our common stock, may result in a decrease in the value or market price of our common stock and could prevent a change in our control. We have no other anti-takeover provisions in our Articles of Incorporation or Bylaws, at present time. Holders of the preferred stock may also have the right to receive dividends, certain preferences in liquidation and conversion rights, which may supersedes similar rights granted to holders of common stock.
+ 
+ Risks Specific to Classifiedride.com and Autoglance.com ( Our Automotive Platforms )
+ 
+ We require additional capital to continue Our Automotive Platforms development, and this capital might not be available on acceptable terms, or at all. 
+ 
+ In order for us to be successful in Our Automotive Platforms, we will require additional funds to respond to developments and coding changes to improve existing features and develop new features and solutions in addition to enhancements to improve our operating infrastructure. In order to make such developments, we will require additional capital and there is no guarantee that capital will be made available to us on acceptable terms or at all. 
+ 
+ 12
+ 
+ 
+
+ 
+
+ 
+ If we fail to generate, sufficient unique, high-quality new and used car listings on our websites, our traffic and future revenues could be materially and adversely affected.
+ 
+ Our Automotive Platforms depend, in part, on our ability to generate, unique, high-quality car listings, particularly used car listings. In addition, our future growth is dependent in part on our ability to generate unique, high-quality car listings on our platforms that are paid for by subscribing dealers. To be able to utilize these revenue sources, we must be able to generate sufficient cash flow to be able to afford advertising campaigns and improve our existing platforms to handle traffic customizable to the end user s experience for reoccurring revenues.
+ 
+ If we fail to generate our user base of subscribing dealers and individual sellers who purchase listings on our websites, Our Automotive Platforms will not generate sufficient revenues for operations. 
+ 
+ Our ability to grow our business depends, in part, on the ability of a sales force to demonstrate the value and benefit of our premium classified listings packages and to persuade them to purchase listing packages. Many of the dealers that we will solicit for listings are smaller franchises and independent dealers, which generally sell fewer cars and have smaller advertising budgets. Thus, their size limits the amount they will be able to spend for our listing packages. Additionally, based on competitor s agreements, we do not obligate dealers to subscribe to long-term commitments to purchase listings on our websites or to remain at a specified tier for a specific amount of time. Even if our sales force, when hired, is successful, if we are unable to attract dealers, we will not be able to generate sufficient revenues for operations.
+ 
+ If we are able to generate capital to market Our Automotive Platforms, our marketing campaigns to promote Our Automotive Platforms may not be successful.
+ 
+ We must generate capital to be able to advertise Our Automotive Platforms through acceptable channels. In order to compete in this industry, high-profile television and radio marketing campaigns and sponsorship programs will be needed, the goal of which being to create strength, recognition and trust in our brands and drive consumer traffic to our websites and applications. If we are able to generate sufficient capital to advertise Our Automotive Platforms after the requisite development has been perfected, we cannot guarantee that our marketing efforts in traditional media will allow us to reach our targeted audience of in-market car shoppers or if continued marketing investments will result in new or additional consumers visiting our websites or using our mobile applications. We also may not be able to recover such costs by attaining corresponding revenue growth. If we are able to afford these marketing costs we believe necessary to compete in this sector and fail to recover such costs through an increase in the number of consumers, dealers and/or advertisers using or online solutions, it will make us reliant on external financing to maintain our operations. 
+ 
+ Our Automotive Platforms face intense competition, and we must be able to compete effectively or we will be unsuccessful to generate sufficient revenues. 
+ 
+ The markets in which we operate are intensely competitive, highly fragmented and rapidly changing. With the emergence of new technologies and new market entrants, competition is likely to intensify in the future. Our primary competitors include offline media companies, including newspaper publishers and television and radio broadcasters. We also compete directly with automobile-specific online service providers such as Autotrader.com, Cars.com, TRUECar.com, Edmunds.com, classified ad websites such as eBay Motors, Craigslist and newspaper websites and search engines such as Google, Bing and Yahoo!, social media networks such as Facebook and the websites of dealers who are not our customers. These competitors have long operating histories with established brands and have established developing and marketing online advertising solutions directly to dealers and brand advertisers. In addition, subscribing dealerships and private sellers that advertise may choose to purchase or use online advertising products and services from these or other competitors. We will also compete with these companies for the attention of consumers, and must have an advertising budget sufficient to experience decreases in both advertising and consumer traffic if our competitors offer more compelling environments to research or shop for automobiles. All of our competitors enjoy competitive advantages, such as greater name recognition, longer operating histories, substantially greater market share, larger existing customer bases and substantially greater financial, technical and other resources. As the online advertising and dealer software markets develop, new competitors, business models and solutions are likely to emerge. In addition, many of our current and potential competitors have established longstanding relationships with-and access to dealer and advertiser customer bases. For all of these reasons, we may be unable to generate the number of consumers and dealers who use Our Automotive Platforms and may face pressure to reduce the price of our solutions, in which case our business, may be unable to generate sufficient revenues for continued operations. 
+ 
+ 13
+ 
+ 
+
+ 
+
+ 
+ We may be unable to continue to use the domain names that we use in our business, or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brands and trademarks.
+ 
+ We registered domain names for our websites that we use in our business, such as classifiedride.com, classifiedride.net and autoglance.com. If we lose the ability to use a domain name, whether due to trademark claims, failure to renew the applicable registration or any other cause, we may be forced to market our products under a new domain name, which could cause substantial harm to our business, or cause us to incur significant expense in order to purchase rights to such domain name. In addition, our competitors and others could attempt to utilize our brand recognition by using domain names confusingly similar to ours. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights varies from jurisdiction to jurisdiction and is unclear in some jurisdictions. If we are unable to prevent third parties from acquiring and using domain names that infringe on, or are similar to, our domain names and trademarks, the value of our brands or trademarks could be materially and adversely affected. Protecting and enforcing our rights in our domain names may require litigation, which could result in substantial costs and diversion of management s attention. Any of the foregoing could materially and adversely affect our business, results of operations and financial condition.
+ 
+ We must raise sufficient capital to be able to generate sufficient mobile applications and implement security measures to prevent other companies from copying information from Our Automotive Platforms and publishing or aggregating it with other information for their own benefit.
+ 
+ We must be able to raise sufficient capital to be able to generate sufficient mobile applications that are comparable to our competitors. We also must implement security measures in the attempt to prevent the use of our other companies from copying information from Our Automotive Platforms through website scraping, robots or other means, and publishing or aggregating it with other information for their own benefit. When third parties copy, publish or aggregate content from our websites, it makes them more competitive, and decreases the likelihood that consumers will visit our websites or use our mobile applications to find the information they seek. While we try to prevent or limit these activities, we have experienced them in the past, and we cannot guarantee that we will be successful in preventing or properly detecting such activities in the future. We may not be able to detect such third-party conduct in a timely manner and, even if we could, we may not be able to prevent it. In some cases, particularly in the case of third parties operating outside of the United States, our available remedies may be inadequate to protect us against such activities. In addition, we may be required to expend significant financial or other resources to successfully enforce our rights. If any of these activities were to occur, it could adversely affect our operations and hinder our financial resources.
+ 
+ Our failure or inability to execute any element of our business strategy could result is a loss of your entire investment. 
+ 
+ The results of operations from Our Automotive Platforms depends on our ability to execute our business strategy, which includes raising capital that will be put to use on the development of our website platforms. Upon completion, such capital will be used for the marketing and advertising of Our Automotive Platforms to increase brand awareness and grow traffic. If we are able to raise capital, we may not succeed in implementing a portion or all of our business strategy and, even if we do succeed, our strategy may not have the favorable impact on operations that we anticipate. Our success depends on our ability to leverage our sales force and customer base; offer a broad and expanding array of solutions; provide convenient, high-quality solutions to consumers; maintain and expand our market position with dealers and brand advertisers; enter new markets; and implement other elements of our business strategy. We may not be able to effectively manage any expansion of our business or operations as a result of the execution of our strategy or achieve the rapid execution necessary to fully avail ourselves of the market opportunity for our solutions. If we are unable to successfully implement our business strategy, our business, you may lose all of your investment. 
+ 
+ 14
+ 
+ 
+
+ 
+
+ 
+ We may not timely and effectively scale and adapt our existing technologies and network infrastructure to ensure that our platform is accessible.
+ 
+ It is important to our success that consumers and customers be able to access our solutions at all time. We have previously experienced, and may experience in the future, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of consumers accessing our platform simultaneously and denial-of-service or fraud or security attacks. In some instances, we may not be able to identify the causes of these performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve the availability of our solutions, especially during peak usage times and as our solutions become more complex and our consumer traffic increases. For example, classifiedride.com has experienced technical problems resulting in the website crashing and displaying an error. If our solutions are unavailable when consumers or customers attempt to access them or if they do not load as quickly as they expect, consumers or customers may seek other services to obtain the information for which they are looking, and may not return to our solutions as often in the future, or at all. Dealers may also be less willing to pay for listings or our software solutions and advertisers may be less willing to advertise on our websites and mobile applications if our solutions are unavailable when they try to access them. This would negatively impact our ability to attract consumers and customers, and would impact our ability to increase the frequency with which they use our solutions. Our software solutions systems are redundant within their respective data centers, but are not redundant across data centers. Our core human resources and finance systems are supported through third-party hosts, but several functions are not fully redundant and would require a restore from backup in the event of a system or site failure. 
+ 
+ We may experience service disruptions to the extent that we do not effectively address capacity constraints, upgrade our systems and disaster recovery plan as needed and continually develop our technologies and network architecture to accommodate actual and anticipated changes in technology. We do not have business interruption insurance, so we are not covered for any losses we may incur when and if coverage would be available. Any such disruptions resulting from our inability to effectively scale and adapt our technology could have a material adverse effect on our business, results of operations and financial condition.
+ 
+ If our security measures are compromised, or if our solutions are subject to attacks that degrade or deny the ability of consumers to access our websites or software solutions, consumers may curtail or stop using Our Automotive Platforms.
+ 
+ Our solutions are vulnerable to computer viruses, break-ins, phishing attacks, attempts to overload our servers with denial-of-service or other attacks and similar disruptions from unauthorized use of our computer systems, any of which could lead to interruptions, delays or website or software shutdowns, causing loss of critical data or the unauthorized disclosure or use of confidential information. If we experience compromises to our security that result in performance or availability problems, the complete shutdown of Our Automotive Platforms or the loss or unauthorized disclosure of confidential information, consumers, dealers or advertisers may lose trust and confidence in us, decrease their use of our solutions or stop using our solutions entirely. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, often are not recognized until launched against a target and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or to implement adequate preventative measures. In addition, dealer and private sellers accounts and content could be hacked, hijacked, altered or otherwise claimed or controlled by unauthorized persons. Such issues could negatively impact our ability to attract new consumers, dealers or advertisers and could deter current consumers, dealers or advertisers from using our solutions, or subject us to lawsuits, regulatory fines or other action or liability, thereby having a material adverse effect on our business, results of operations and financial condition. 
+ 
+ 15
+ 
+ 
+
+ 
+
+ 
+ The software underlying our products and services may be subject to undetected errors, defects or bugs, which could adversely affect our business.
+ 
+ The software underlying our products and services is complex and may contain undetected errors, defects or bugs, such as missing advertisements, reporting errors or other user interface anomalies. We may discover significant errors, defects or bugs in the future that we may not be able to correct in a timely manner due to lack of funds or other reasons. Our solutions are integrated with products and systems developed by third parties. Third-party software programs and plug-ns may contain undetected errors, defects or bugs when they are first introduced or as new versions are released. It is possible that errors, defects or bugs will be found in our existing or future products and services or third-party products upon which our solutions are dependent, with the possible results of delays in, or loss of market acceptance of, our products and services, diversion of our resources, injury to our reputation, increased service and warranty expenses and payment of damages, any of which could have a material adverse effect upon our business, results of operations and financial condition.
+ 
+ We have not materially monetized our mobile advertising solutions to date and we may not be able to generate meaningful revenue from this platform for the foreseeable future.
+ 
+ We believe the number of people who access our digital media solutions through mobile devices, including smartphones, tablets and handheld computers, will increase over the next few years. We have not materially monetized our mobile advertising solutions to date and we may not be able to generate meaningful revenue from this platform for the foreseeable future. If consumers use our mobile solutions at the expense of our websites, our advertisers may reduce or stop advertising on our websites and may be unwilling to advertise on our mobile solutions unless we develop effective products and services that are compelling to them. Similarly, we may be unable to attract new advertisers unless we develop effective mobile solutions. At the same time, it is important that any mobile solutions that we develop do not adversely affect the consumer experience, even if that might result in decreased short-term monetization. If we fail to develop effective mobile advertising solutions, if our solutions alienate our dealer or advertiser customer base, or if our solutions are not widely adopted or are insufficiently profitable, our business, results of operations and financial condition may be materially and adversely affected.
+ 
+ We rely on the performance of our executives and highly skilled personnel, and if we are unable to attract, retain and motivate well-qualified employees, our business could be materially and adversely affected.
+ 
+ We believe our success will depend on the efforts and talents of our executives and employees, especially with to respect of programmers and coders needed on staff to improve and develop Our Automotive Platforms. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. In addition, the loss of any of these key personnel could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all. All of our executive officers and other United States employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees, our business could be materially and adversely affected. 
+ 
+ 16
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+
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+ If growth in the online automotive advertising market becomes stagnant or does not continue to increase, Our Automotive Platforms could be adversely affected. 
+ 
+ We believe future growth in the online automotive advertising market will be driven, in part, by private consumers and dealers increasingly shifting their advertising spending away from traditional media towards online advertising. To the extent that overall automotive related advertising does not continue to shift online, our business, results of operations and financial condition could be materially and adversely affected.
+ 
+ Our business is subject to the risks of tornadoes, earthquakes, fires, floods and other natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism.
+ 
+ Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. For example, a significant natural disaster, such as a tornado, earthquake, fire or flood, could have a material adverse effect on our business strategy. Our servers may also be vulnerable to computer viruses, break-ins, denial-of-service attacks and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, loss of critical data or the unauthorized disclosure of confidential client data. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters. As we rely heavily on our servers, computer and communications systems and the internet to conduct this part of our business and provide high-quality customer service, such disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt our dealers and other advertisers businesses, which could have a material adverse affect on our profitability and operations and financial condition.
+ 
+ Risks Related to Our Gaming License 
+ 
+ We will be operating in a foreign country in pursuit of our gaming expansion, which may lead to additional risks not inherent to domestic operations.
+ 
+ We will be operating gaming machines in a foreign country, which may prove to be unstable. As with any operations in a foreign country, there exist the risks of adverse political developments, including nationalization, acts of war or terrorism, and confiscation without fair compensation. Furthermore, any fluctuation in currency exchange rates will affect the value of investments in foreign currency or other assets and any restrictions imposed to prevent capital flight may make it difficult or impossible to exchange or repatriate foreign currency. In addition, laws and regulations of foreign countries may impose restrictions or approvals that would not exist in the United States and may require financing and structuring alternatives that differ significantly from those customarily used in the United States. Foreign countries also may impose taxes on us. We will analyze risks in the applicable foreign countries before undertaking specific operations, but no assurance can be given that a political or economic climate, or particular legal or regulatory risks, might not adversely affect our operations. Additional risks and challenges associated with doing business internationally include, but are not limited to, difficulties in adapting to differing technology standards, difficulty to with work with the language barrier, longer cycles and accounts receivable payment cycles and difficulties in collecting accounts receivables, difficulties in managing and staffing international operations, including differing legal and cultural expectations for employee relationships and increased travel, infrastructure and legal compliance costs associated with international operations; fluctuations in exchange rates that may increase the volatility of our foreign-based revenue and expenses; compliance with anti-bribery laws, including compliance with the Foreign Corrupt Practices Act; restrictions on the repatriation of earnings; and increased financial accounting and reporting burdens and complexities. 
+ 
+ 17
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+ 
+
+ 
+
+ 
+ Due to current management s limited experience in the gambling business sector, our business plan to set up and manage gaming machines will require key employees and/or consultants to be retained in order to operate efficiently.
+ 
+ Currently management does not have experience in the operating of gaming machines in Roatan and will have to hire key employees and/or consultants in order to operate efficiently. There is no guarantee that the Company will be able to retain such personnel, or if it does, that such personnel will be able develop the gaming business. The failure to retain such qualified personnel can lead to an adverse effect on the proposed gaming operations of the Company.
+ 
+ Our business in the gaming sector of Honduras (including Roatan) are particularly sensitive to energy prices and a rise in energy prices could harm our operating results.
+ 
+ We are a large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of operations. Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher electricity and gasoline prices, which affect our customers may result in reduced visitation and a reduction in our revenues. We may be indirectly impacted by regulatory requirements aimed at reducing the impacts of climate change directed at up-stream utility providers, as we could experience potentially higher utility, fuel, and transportation costs.
+ 
+ Because our directors and officers have no experience in gaming in Roatan, there is a higher risk our business will fail, absent being able to hire key employees or consultants.
+ 
+ Our directors and officers have no experience in gaming and the international gaming laws in Roatan. As a result of this inexperience there is a higher risk of our being unable to fully launch this new facet of our business. In addition, we will have to rely on the services of others in Roatan in order for us to carry out planned gaming operations. If we are unable to contract for the services of such individuals, it will make it difficult and maybe impossible to fully implement our gaming. There is thus a higher risk that our operations, earnings and ultimate financial success could suffer irreparable harm and our business will likely fail and you will lose your entire investment in our common stock.
+ 
+ Conducting business in Honduras (and, Roatan) includes various risks, which could materially affect our business.
+ 
+ Conducting business in the Honduras and Roatan includes various risks, which could materially affect our business. Although gaming is not highly regulated in Honduras as of the current date, laws and regulations are often subject to change and we may be required to obtain work permits and post bonds in order to comply with foreign law. There is a risk that current and new regulations could increase our costs of doing business and prevent us from carrying out planned gaming operations. Failure to comply with these rules and regulations once in effect can result in substantial penalties or result in us not being able to begin, or sustain our planned gaming operations. 
+ 
+ 18
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+ 
+
+ 
+
+ 
+ Our gaming operations are highly dependent on tourism and the local residents of the Honduras and Roatan. Weaker economies in these key areas could adversely affect our business.
+ 
+ We plan to set up and operate a total of 160 gaming machines in Roatan, 80 machines in Trujillo, and 80 machines in La Lima. Roatan is the largest of the bay islands of Honduras, located off the coast of Honduras. Both Honduras and Roatan are considered a third world country in Central America with underdeveloped infrastructure. Our operations will be primarily reliant on tourists who visit these areas. We cannot assure that the local population or tourism is economically stable in which for us to rely on any guaranteed success. Any economic downturn in the areas from which we draw our customers could materially adversely affect our business and results of operations.
+ 
+ We must rely on strategic vendor partners that allow us to distribute gaming machines on their property or establishment. There is no guarantee that these arrangements will be made by us or if they are made, that these partners continue in their business. 
+ 
+ We intend to deploy our gaming machines by placing such machines at the establishments of strategic partners or joint ventures throughout Roatan. There is no guarantee that we will be able to identify or secure such relationships, or if we do, that these relationships will be successful. Further, if we are able to secure such relationships, we cannot guarantee that these partners will have adequate operations to continue their operations which materially could have an adverse impact on our business, financial statements, and operations.
+ 
+ There is no guarantee that foreign local municipality will grant us authority to distribute machines in all proposed locations, and could impose additional restrictions or requirements upon us at any time. 
+ 
+ There is no guarantee that the foreign local municipality will allow us to distribute our gaming machines in all the locations in which we may establish relationships. Further, even with local municipality approval, we may still be unable to operate in certain locations without the requisite approval. Further, if the requisite approval is given to us, it could be revoked at any time or additional restrictions could be imposed on us at any time, in conjunction with the foreign policies of a third world country. 
+ 
+ We may incur impairments to the gaming license which could negatively affect our future profits.
+ 
+ In accordance with the authoritative accounting guidance for goodwill and other intangible assets, we test our goodwill and indefinite-lived intangible assets for impairment annually or if a triggering event occurs. We perform the annual impairment testing for goodwill and indefinite-lived intangible assets each year or at any appropriate time before so; however, if our estimates of projected cash flows related to these assets are not achieved, we may be subject to a future impairment charge, which could have a material adverse impact on our consolidated financial statements. In addition, in accordance with the provisions of the authoritative accounting guidance for the impairment or disposal of long-lived assets, we test long-lived assets for impairment if a triggering event occurs. 
+ 
+ 19
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+ 
+
+ 
+
+ 
+ Continuing effects of the terrorist attacks on New York and Washington and any future occurrences of terrorist or other destabilizing events could negatively affect our revenues and cash flow in the gaming sector.
+ 
+ On September 11, 2001, the World Trade Center buildings in New York City, and the Pentagon in Washington, D.C. were attacked by terrorists using hijacked airplanes. The effects of these events, and other acts of terrorism, which have occurred since then, have resulted in an unpredictable vacation travel and tourism market due to, among other factors, fears regarding additional acts of terrorism, new security directives and increased costs. The magnitude and duration of these effects are unknown and cannot be predicted. Declines in vacation travel and tourism may continue to adversely impact travel destinations in general and could affect future revenues as a result of lower hotel room occupancy rates and fewer customers for our gaming machines. Continued or worsening negative market conditions related to those terrorist actions, any future occurrences of terrorist or other destabilizing events, and other actions that perpetuate a climate of war could cause existing and potential customers to limit their travel, convention and vacation plans, resulting in decreased wagering and increased costs and this could, in turn, adversely affect the economy, including the Honduras and Roatan markets. These factors could adversely affect our revenues and cash flow in the future.
+ 
+ Risk Factors Related to Our Common Stock
+ 
+ Trading of our stock may be restricted by the SEC S Penny Stock Regulations and FINRA s Sales Practice Requirements, which may limit a stockholder s ability to buy or sell our stock. 
+ 
+ Our common stock is subject to the "Penny Stock" Rules of the Securities and Exchange Commission (the "SEC"), which will make transactions in our common stock cumbersome and may reduce the value of an investment in our common stock. 
+ 
+ Our common stock is currently quoted on the OTC Bulletin Board as regulated by the Financial Industry Regulatory Authority ("FINRA"), which is generally considered to be a less efficient market than other markets such as NASDAQ or the national exchanges, and which may cause difficulty in conducting trades and difficulty in obtaining future financing. There is no assurance of when, if ever, our stock will be listed on an exchange. Further, our securities will be subject to the "penny stock rules" adopted pursuant to Section 15(g) of the Securities Exchange Act of 1934, as amended. The penny stock rules apply generally to companies whose common stock trades at less than $5.00 per share, subject to certain limited exemptions. Such rules require, among other things, that brokers who trade "penny stock" to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade "penny stock" because of the requirements of the "penny stock rules" and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that we remain subject to the "penny stock rules" for any significant period, there may develop an adverse impact on the market, if any, for our securities. Because our securities are subject to the "penny stock rules, investors will find it more difficult to dispose of our securities. Further, it is more difficult: (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generally do not publish press releases about such companies, and (iii) to obtain needed capital.
+ 
+ In addition to the "penny stock" rules promulgated by the SEC, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. 
+ 
+ 20
+ 
+ 
+
+ 
+
+ 
+ Our Common Stock is quoted over-the-counter (OTC) on both the OTCQB and Other-OTC financial marketplaces, which may limit the liquidity and price of our Common Stock more than if our Common Stock were quoted or listed on the New York Stock Exchange, the Nasdaq Stock Market or a national exchange.
+ 
+ Our securities are currently quoted over-the-counter (OTC) on the OTC Bulletin Board ( OTCBB ), an interdealer quotation system (as defined by FINRA Rule 6530), and the Other-OTC financial marketplace, specifically the market referred to as (the OTCQB ), in which the securities are quoted on another interdealer quotation system offered by OTC Markets Group, Inc. ( OTC Markets Group ). Quotation of our securities on the OTCBB and OTCQB may limit the liquidity and price of our securities more than if our securities were quoted or listed on the New York Stock Exchange, the Nasdaq Stock Market or a national exchange. As an OTCBB and OTCQB listed company, we do not attract the extensive analyst coverage that accompanies companies listed on other exchanges. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded on the OTCBB and OTCQB. These factors may have an adverse impact on the trading and price of our Common Stock.
+ 
+ The trading price of our common stock may decrease due to factors beyond our control.
+ 
+ The stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for emerging growth companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our common stock. If our shareholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity, or equity-related securities, in the future at a price we deem appropriate.
+ 
+ Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss. 
+ 
+ The market price of our common stock may also fluctuate significantly in response to the following factors, most of which are beyond our control:
+ 
+ 
+ 
+ Variations in our quarterly operating results,
+
+ 
+ 
+ Changes in general economic conditions and in the real estate industry,
+
+ 
+ 
+ Changes in market valuations of similar companies,
+
+ 
+ 
+ Announcements by us or our competitors of significant new contracts, acquisitions, strategic partnerships or joint ventures, or capital commitments,
+
+ 
+ 
+ Loss of a major customer, partner or joint venture participant and
+
+ 
+ 
+ The addition or loss of key managerial and collaborative personnel.
+
+ 
+ 
+ 21
+ 
+ 
+
+ 
+
+ 
+ The market price for our common shares is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you. 
+ 
+ The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or risky investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products and services. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.
+ 
+ The registration and potential sale, pursuant to this prospectus, by the selling stockholder of a significant number of shares could depress the price of our common stock.
+ 
+ Because there is a limited public market for our common stock, there may be significant downward pressure on our stock price caused by the sale or potential sale of a significant number of shares pursuant to this prospectus, which could allow short sellers of our stock an opportunity to take advantage of any decrease in the value of our stock. The presence of short sellers in our common stock may further depress the price of our common stock.
+ 
+ If the selling stockholder sells a significant number of shares of common stock, the market price of our common stock may decline. Furthermore, the sale or potential sale of the offered shares pursuant to the prospectus and the depressive effect of such sales or potential sales could make it difficult for us to raise funds from other sources.
+ 
+ Risk Factors Related to this Offering
+ 
+ We are registering the resale of a maximum of 5,000,000 shares of common stock, which may be issued to Tarpon under the Purchase Agreement. The resale of such shares by Tarpon could depress the market price of our common stock.
+ 
+ We are registering for resale by Tarpon a maximum of 5,000,000 shares of common stock pursuant to the terms of the Purchase Agreement as set forth in this prospectus. The sale of the Shares into the public market by Tarpon could depress the market price of our common stock. As of September 28, 2015, there were 25,595,902 shares of our common stock issued and outstanding. The sale of those additional Shares into the public market by Tarpon could further depress the market price of our common stock. 
+ 
+ 22
+ 
+ 
+
+ 
+
+ 
+ We may not be able to access sufficient funds under the Purchase Agreement when needed.
+ 
+ Our ability to put the Shares to Tarpon and obtain funds when requested is limited by the terms and conditions in the Purchase Agreement, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to Tarpon at any one time, which is determined in part by the trading volume of our common stock, and a limitation on our ability to put the Shares to Tarpon to the extent that it would cause Tarpon to beneficially own more than 9.99% of our outstanding shares. 
+ 
+ Tarpon will pay less than the then-prevailing market price for our common stock under the Purchase Agreement.
+ 
+ Pursuant to the terms of the Purchase Agreement, the common stock to be issued to Tarpon will be purchased at a ten percent (10%) discount to the lowest closing bid price of the common stock for any single trading day during the ten (10) consecutive trading days, immediately following the date of our notice to Tarpon of our election to put shares, also referred to as the Valuation Period elsewhere herein. Tarpon has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Tarpon sells the shares, the price of our common stock could decrease. If our stock price decreases, Tarpon may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.
+ 
+ The market price for our common shares is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you. 
+ 
+ The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or risky investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products and services. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. 
+ The registration and potential sale, pursuant to this prospectus, by the selling stockholder of a significant number of shares could depress the price of our common stock.
+ 
+ Because there is a limited public market for our common stock, there may be significant downward pressure on our stock price caused by the sale or potential sale of a significant number of shares pursuant to this prospectus, which could allow short sellers of our stock an opportunity to take advantage of any decrease in the value of our stock. The presence of short sellers in our common stock may further depress the price of our common stock.
+ 
+ If the selling stockholder sells a significant number of shares of common stock, the market price of our common stock may decline. Furthermore, the sale or potential sale of the offered shares pursuant to the prospectus and the depressive effect of such sales or potential sales could make it difficult for us to raise funds from other sources. 
+ 
+ 23
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000715788_evio-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000715788_evio-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1eb4d168b59abff94077d7c41fe6f174a4c39436
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0000715788_evio-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 6
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000726513_tribune_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000726513_tribune_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3d8ff9045e8c540c26383d921bd234245cbb3b64
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, you should read the entire prospectus, including the consolidated financial statements and the related notes and the section entitled Risk Factors included elsewhere in this prospectus. Unless otherwise indicated or the context otherwise requires, in this prospectus, references to Tribune, Tribune Media, the Company, we, us and our mean Tribune Media Company and its consolidated subsidiaries. Company Overview Tribune Media Company is a diversified media and entertainment business. It is comprised of 42 television stations that are either owned by us or owned by others, but to which we provide certain services, which we refer to as our television stations, along with a national general entertainment cable network, a radio station, a production studio, a digital and data technology business, a portfolio of real estate assets and investments in a variety of media, websites and other related assets. We believe our diverse portfolio of assets distinguishes us from traditional pure-play broadcasters through our ownership of high-quality original and syndicated programming, our ability to capitalize on revenue growth from our digital and data assets, cash distributions from our equity investments and revenues from our real estate assets. Our business operates in the following two reportable segments: Television and Entertainment: Provides audiences across the country with news, entertainment and sports programming on Tribune Broadcasting local television stations and distinctive, high quality television series and movies on WGN America, including through content produced by Tribune Studios and its production partners. Digital and Data: Provides innovative technology and services that collect and distribute video, music and entertainment data primarily through wholesale distribution channels to consumers globally. We also currently hold a variety of investments in cable and digital assets, including equity investments in Television Food Network, G.P. ( TV Food Network ) and CareerBuilder, LLC ( CareerBuilder ). In addition, we report and include under Corporate and Other the management of certain of our real estate assets, including revenues from leasing office and production facilities, as well as certain administrative activities associated with operating our corporate office functions and managing our predominantly frozen company-sponsored defined benefit pension plans. Competitive Strengths We believe that we benefit from the following competitive strengths: Geographically diversified media properties in attractive U.S. markets. We are one of the largest independent station owner groups in the United States based on household reach, and we own or operate local television stations in each of the nation s top five markets and seven of the top ten markets by population. We have network affiliations with all of the major over-the-air networks, including American Broadcasting Company ( ABC ), CBS Corporation ( CBS ), FOX Broadcasting Company ( FOX ), National Broadcasting Company ( NBC ) and The CW Network, LLC ( CW ). We provide must-see programming, including the National Football League and other live sports, on many of our stations and local news to over 50 million U.S. households in the aggregate, as measured by Nielsen Media Research ( Nielsen ), representing approximately 44% of all U.S. households. Table of Contents In addition, we own a national general entertainment cable network, WGN America, which is distributed to approximately 73 million households nationally, as measured by Nielsen. WGN America provides us with a platform for launching original programming and exclusive syndication content. We believe that the combination of our broadcast stations and WGN America creates a differentiated distribution platform. Core competency in metadata. Our metadata powers the television listings and schedules for on-screen Electronic Program Guides ( EPG ) through cable and satellite providers via set-top boxes or other means and makes it possible to search for specific television episodes and series and set digital video recorder ( DVR ) recordings. It also powers the algorithms that make movie and music recommendations possible for popular on-demand video and streaming music services. The demand from consumers and, therefore, distributors has grown for the metadata that we provide through Gracenote Video and Gracenote Music. Data is becoming more vital to businesses as it is used to make smarter decisions about investing in content and to provide enhanced measurement tools to drive advertising efficiency and effectiveness. As consumer demand continues to increase, we believe we are well positioned to take advantage of this trend by adding scale to our existing business. The industry is highly fragmented by data set, region and service layer. Strong cash flow generation. Our core businesses have historically generated strong cash flows from operations. In 2014, our net cash provided by operating activities was $378 million, which includes $190 million of cash distributions received from our equity investments. In addition to the cash distributions accounted for within net cash provided by operating activities, cash flows from investing activities included $181 million of cash distributions from our equity investments, of which $160 million was from Classified Ventures, LLC ( CV ) related to the sale of its Apartments.com business. Our equity investments have historically provided substantial cash distributions annually. These strong cash flows provide us with the financial flexibility to pursue our strategies both through organic investments in our existing businesses and through accretive acquisition opportunities. We are making investments across our businesses, including in the acquisition of original content and the expansion of our digital and data businesses. Opportunistically deploying capital to drive stockholder returns. Our capital allocation policy is focused on driving returns for stockholders and investing in areas that are intended to drive growth in our profitability. In October 2014, we announced a $400 million stock repurchase program, under which we may repurchase from time to time up to a remaining $167 million of our outstanding Class A common stock. We have also announced an intention to pay regular quarterly cash dividends on our common stock of $0.25 per share, starting in the second fiscal quarter of 2015. See Dividend Policy. Valuable minority investments, spectrum and real estate holdings. We currently hold a variety of investments in cable and digital assets, including equity investments in TV Food Network and Career Builder. TV Food Network, of which we have a 31% interest, operates two 24-hour television networks, Food Network and Cooking Channel, as well as their related websites. Food Network is a fully distributed network in the United States with content distributed internationally. Cooking Channel is a digital-tier network, available nationally and airs popular off-Food Network programming as well as originally produced programming. Career Builder, of which we have a 32% interest, is a global leader in human capital solutions, helping companies target, attract and retain talent. Its website, CareerBuilder.com, is the largest job website in North America on the basis of both traffic and revenue. CareerBuilder operates websites in the United States, Europe, Canada, Asia and South America. Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000761238_rada_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000761238_rada_prospectus_summary.txt
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@@ -0,0 +1 @@
+F-1/A The Israeli Ministry of Defense has historically supported, and continues to support, our marketing efforts through its defense export assistance branch and through various projects for the IDF and its related divisions. There is no guarantee that this type of assistance will be available to us in the future. We take part in and present our tactical radars at the major land systems exhibitions on a regular basis, such as the Association of the United States Army (AUSA) Annual Meeting in Washington, D.C., Eurosatory in Paris, DSEI in London, and in regional exhibitions such as LAAD in Brazil, Seoul Aerospace & Defense, and DefExpo in India. Principal Customers Generally, we complete a few major transactions each year, each in an amount comprising more than 10% of our revenues for such year. As a result, each year a significant portion of our revenues is derived from a small number of customers. The following table sets forth the percentage of our revenues attributable to our principal customers in the three years ended December 31, 2014: Year ended December 31, 2014 2013 2012 Embraer S.A. 16 % 20 % 32 % Lockheed Martin Corporation 13 % 17 % 5 % Hindustan Aeronautics Ltd 22 % 17 % 6 % Israel Aerospace Industries 10 % 12 % 11 % A Latin America Customer - 11 % 9 % Israeli Ministry of Defense 5 % 1 % 5 % GE Aviation 4 % 2 % 4 % Russian Aircraft Corporation MiG 2 % 2 % 11 % Although we continually strive to increase the number of our customers, we anticipate that a significant portion of our future revenues will continue to be derived from a small number of customers. Because of our dependency on a small number of customers and on government contracts, we are subject to business risks, including changes in governmental appropriations and changes in national defense policies and priorities. Although many of the programs in which we participate as a contractor or subcontractor may extend for several years, our business is dependent upon annual appropriations and funding of new and existing contracts. Most of the contracts are subject to termination for the convenience of the customer, pursuant to which the customer pays only for reimbursement of costs incurred and the applicable profit on work performed. The Israeli government or any other government may discontinue funding purchases of our products over the long term. Geographical Markets We sell our products to various air forces and companies worldwide. The following table presents our revenues by geographical markets for the periods indicated: Year ended December 31, 2014 2013 2012 Israel 22 % 20 % 25 % South and Latin America 12 % 31 % 41 % Asia 29 % 25 % 21 % North America 36 % 23 % 11 % Europe 0 % 1 % SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to Form F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RADA ELECTRONIC INDUSTRIES LTD. (Exact Name of Registrant as Specified in its Charter) State of Israel 5065 Not Applicable (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 7 Giborei Israel Street Netanya 4250407, Israel Tel: (972)(9) 892-1111 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Puglisi & Associates 850 Library Avenue, Suite 204 P.O. Box 885 Newark, Delaware 19715 Tel. (302) 738-6680 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies of Communications including Communications sent to Agent for Service, should be sent to: Steven J. Glusband, Esq. Carter Ledyard & Milburn LLP Two Wall Street New York, NY 10005 Tel: 212-238-8605 Fax: 212-732-3232 Sarit Molcho, Adv. S. Friedman & Co., Advocates Amot Investment Tower 2 Weizman Street Tel Aviv 64239 Israel Tel: +972-3-693-1931 Fax: +972-3-693-1930 Yvan-Claude Pierre, Esq. Daniel I. Goldberg, Esq. Reed Smith LLP 599 Lexington Avenue New York, NY 10022 Tel: 212-549-0380 Fax: 212-521-5450 Adrian Daniels, Esq. Eric Spindel, Esq. Yigal Arnon & Co. 1 Azrieli Center Tel Aviv 6702101 Israel Tel: +972-3-608-7777 Fax: +972-3-608-7724 Approximate date of commencement of proposed sale to the public: As soon as practicable after effectiveness of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the Securities Act ), check the following box. o If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering. o If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, check the following box. o The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine. The information contained in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 15, 2015 $8,500,000 Ordinary Shares This is a public offering of the ordinary shares of Rada Electronic Industries Ltd. Our ordinary shares are listed on the NASDAQ Capital Market under the symbol RADA. The last reported sale price of our ordinary shares on July 14, 2015 was $1.94 per share. We are offering all of the ordinary shares offered by this prospectus. Investing in our ordinary shares involves a high degree of risk. See Risk Factors beginning on page 6 of this prospectus for a discussion of information that should be considered in connection with an investment in our ordinary shares. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discount and commissions (1) $ $ Proceeds to us (before expenses) $ $ (1) In addition, we have agreed to reimburse the underwriters for certain expenses. See the section captioned Underwriting in this prospectus for additional information. We have granted the underwriters an option to purchase up to additional ordinary shares from us at the public offering price, less the underwriting discount, within 45 days from the date of the final prospectus solely to cover over-allotments, if any. The underwriters expect to deliver the shares to purchasers in the offering on or about , 2015. Chardan Capital Markets, LLC , 2015 TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000767884_ceres-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000767884_ceres-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000802724_insite_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000802724_insite_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..701d826621a1c0452b12bafe707594433ee58e84
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0000802724_insite_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere, or incorporated by reference, in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus, including the section entitled Risk Factors and the risk factors incorporated by reference in this prospectus as described in that section, and our financial statements and the notes thereto and other information incorporated by reference in this prospectus from our other filings with the Securities and Exchange Commission, or the SEC. In this prospectus, unless the context indicates otherwise, the terms Company, we, us, and our refer to InSite Vision Incorporated, a Delaware corporation, and its subsidiaries. Our Company Overview We are an ophthalmic product development company advancing ophthalmic pharmaceutical products to address unmet eye care needs. Our current portfolio of products is based on our proprietary DuraSite sustained drug delivery technology. Our near term strategy is to primarily focus on filing New Drug Applications for BromSite and DexaSite with the United States Food and Drug Administration. Our principal executive offices are located at 965 Atlantic Avenue, Alameda, California 94501 and our telephone number is (510) 865-8800. Our website address is www.insitevision.com. Except for the documents referred to in the section Incorporation of Certain Information by Reference, which are specifically incorporated by reference in this prospectus, information contained on our website or that can be accessed through our website does not constitute a part of this prospectus. We have included our website address only as an interactive textual reference and do not intend it to be an active link to our website. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and the selling stockholders are not soliciting offers to buy these securities, in any state where the offer or sale of these securities is not permitted. (SUBJECT TO COMPLETION, DATED July 13, 2015) PROSPECTUS INSITE VISION INCORPORATED 3,464,456 Shares of Common Stock This prospectus covers the resale by the selling stockholders identified in this prospectus of up to an aggregate of 3,464,456 shares of our common stock issuable upon the exercise of outstanding warrants. The warrants were issued and sold to the selling stockholders in a private placement in April 2015. We are not offering any shares of common stock for sale under this prospectus, and we will not receive any of the proceeds from the sale or other disposition of the shares of common stock covered hereby. However, we will receive the exercise price of any warrants exercised for cash. To the extent that we receive cash upon exercise of any warrants, we expect to use that cash for general corporate purposes. The selling stockholders may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale or at negotiated prices. See Plan of Distribution for additional information. Our common stock is quoted on the OTC Bulletin Board under the symbol INSV. On July 9, 2015, the closing bid price per share of our common stock was $0.18 per share. We will pay the expenses related to the registration of the shares of common stock covered by this prospectus. The selling stockholders will pay any commissions and selling expenses they may incur. Our business and an investment in our securities involve significant risks. You should read the section entitled Risk Factors beginning on page 3 of this prospectus and the risk factors incorporated by reference in this prospectus as described in that section before investing in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2015. Table of Contents The Offering Common stock offered by the selling stockholders: 3,464,456 shares Common stock to be outstanding after the offering: 135,415,489 (1) OTC Bulletin Board symbol: INSV Use of Proceeds: We will not receive any of the proceeds from the sale or other disposition of the shares of common stock offered hereby. However, we will receive the exercise price of any Warrants exercised for cash. To the extent that we receive cash upon exercise of any Warrants, we expect to use that cash for general corporate purposes.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000859747_1pm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000859747_1pm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..89ba74a7bf79d1da4517e017f09f90c32842eb4b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0000859747_1pm_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where you can find more information in this prospectus and any amendment or supplement hereto. Unless otherwise indicated, the terms the Company, 1PM we, us, and our refer and relate to 1PM Industries, Inc.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000874792_green_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000874792_green_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ed21ea5f957aae53b46ab57284f1edee4e9c3c0e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0000874792_green_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information about us and the common stock offering. It is not complete and may not contain all of the information that you should consider before making your investment decision. We encourage you to read this prospectus and the documents to which we refer in their entirety before making a decision to invest, including the information set forth under the heading Risk Factors. In addition, certain statements contained in this prospectus include forward-looking information that involves many risks and uncertainties, including but not limited to those discussed under Cautionary Statements Regarding Forward-Looking Statements. Unless the context clearly indicates otherwise, references in this prospectus to the Company, we, us, our or other similar terms mean Green Technology Solutions, Inc. Overview Green Technology Solutions, Inc. ( GTSO , we , us , our or the Company ) was incorporated as XCL Sunrise, Inc. in the State of Delaware on April 1, 1991. We changed our name to Sunrise Energy Resources, Inc. on November 1, 2004. On October 26, 2010, we changed our name to Green Technology Solutions, Inc. On July 28, 2014, the Company reincorporated from Delaware to Nevada. Our board of directors and the owners of a majority of our outstanding voting stock approved the reincorporation. Each of our shareholders as of the record date received one share of the Nevada company s common stock for each 300 shares of our common stock they owned in the Delaware company, with fractional shares to be rounded up to the next whole share, and number of additional whole shares such that each shareholder will own at least five shares. The board of directors and officers of the Nevada company consists of the same persons who are directors and officers prior to the reincorporation. Our daily business operations will continue at the principal executive offices at 2880 Zanker Road, Suite 203, San Jose, California. GTSO is in the business of trying to keep the world a greener place to live. Having a greener environment is what we strive to provide so that we may live healthier lives. The corporate mission is to support the health and wellness sub-market of medical cannabis. Plan of Operations GTSO will be focusing directly on health and wellness. One of the fastest growing emerging markets in health and wellness is the medical cannabis market. It has experienced exponential growth and is expected to be a $6 billion market this year. With the medical cannabis market, our product focus within the subsidiary can be categorized into three parts: Business and Support services o Payment processing o Security o Transport Developing more efficient ways to utilize hemp delivery systems o Edibles o Topical treatments o Drinks Products, methods, or services supporting the actual producers of the product in this industry. o Specialty organic soils and fertilizers o Lighting systems o Methods to produce other cannabinoid products On November 3, 2014, we closed the acquisition of Mother Parker s Soil, LLC, a California limited liability company, ( Mother Parker ) for $125,000 to be paid in monthly increments. Mother Parker is a cultivator of organic soils. Through December 31, 2014, we have made payments of $60,000 toward this acquisition. The acquisition of Mother Parker has solidified the Company s mission to support the horticultural side of the medical cannabis industry. Form S-1 REGISTRATION STATEMENT Table of Contents In order to more fully support the horticultural market and medical cannabis markets, we plan to expand our operations by researching opportunities in the following areas: Develop more efficient lighting systems and growing mediums. This will require extensive testing with experienced horticulture groups. Assist the newly opened market for hemp products by bringing new delivery technologies to this industry. This would include oral, topical, drinks and vapor inhalants. Provide business support services to the medical cannabis industry, specifically providing secure payment processing services to make retail transactions quicker and safer. Explore the options to enhance security for medical cannabis suppliers in the areas of standard building security and mobile security units, among others. In addition, we plan to explore methods for providing secure transport of product and funds. On March 5, 2015 we signed an asset purchase agreement to acquire an approximately 1,300 square foot Class 5 clean room (the Clean Room ). We expect to install the Clean Room in Colorado where it will serve as a center for hygienic testing and quality control services to cannabis growers and retailer. The Company will pay a total of $2,500,000 for the Clean Room. $250,000 will be paid in cash installments of (i) $25,000 on the closing date; (ii) $25,000 payable 10 days after the closing date; and (iii) four monthly installments of $50,000 beginning 30 days after the second payment. The remaining $2,250,000 will be payable in common stock of the Company. The Company will issue 3,000,000 shares of its common stock immediately in satisfaction of this requirement. The 3,000,000 shares are registered for resale by prospectus. The Offering Securities offered This prospectus relates to the resale from time to time of up to 3,000,000 shares of our common stock, par value $0.001 per share, held by the selling stockholders named herein. Common stock outstanding 4,318,908 shares as of April 24, 2015 including the shares offered hereby. Use of Proceeds The selling stockholders will receive all net proceeds from the sale of the shares of common stock offered by this prospectus and any accompanying prospectus supplement. We will not receive any of the proceeds from the sale of our common stock by the selling stockholders. Listing of Common Stock Our common stock trades on the OTCQB Market under the symbol GTSO . Transfer Agent Pacific Stock Transfer Company, 4045 South Spencer Street, Suite 403, Las Vegas, Nevada 89119 Fees and Expenses We will pay the fees and expenses related to the offering.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000883980_first_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000883980_first_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0000883980_first_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000932352_vaneltix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000932352_vaneltix_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..b3238869f194250a4c8299a9782ba83f196e16b1
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing in the shares. You should read the entire prospectus carefully. THE COMPANY We specialize in developing innovative products to ameliorate the cause and symptoms associated with urological ailments, specifically Interstitial Cystitis/Bladder Pain Syndrome ("BPS" or "IC/BPS"). Urology represents a specialty pharmaceutical market of approximately 10,000 physicians in the United States. According to the American Urology Association (the "AUA"), urologists treat a variety of ailments of the urinary tract either surgically or medically. These include treating cancer, infections, stone disease, neurogenic bladder, overactive bladder, incontinence, prostate disease and IC/BPS. Many of these indications, we believe, represent significant, underserved therapeutic markets. We currently have one product candidate, URG101, in clinical development, and another product candidate, URG501, in pre-clinical development. URG101 generated approximately $651,000 in royalty income from compounding pharmacies in our fiscal year ended June 30, 2014 under licensing agreements with third party pharmacies in the United States. As URG101 has not been approved by the United States Food and Drug Administration, or the FDA, the product was not promoted by us. The primary use of proceeds from this offering will be to conduct the required clinical and regulatory studies to gain marketing approval for URG101 in the United States by the FDA, thereby permitting marketing and promotion which is anticipated to significantly expanding the product s revenue potential. We also aim to continue development of our pre-clinical pipeline product, URG501, which we believe, together with URG101, addresses an area of high unmet need in the large, growing benign (i.e. non-oncological) urology market. URG101 Our clinical stage product for IC/BPS., URG101, targets what we believe is an unmet medical need with significant market opportunity in urology. Approximately 10 million men and women in the United States have IC/BPS. URG101 is a unique, proprietary combination therapy of components that is locally delivered to the bladder for rapid relief of pain and urgency as demonstrated in our positive Phase II Pharmacodynamic Crossover study. Delaware Law We are incorporated under the laws of the State of Delaware. Section 145 of the DGCL provides that a Delaware corporation may indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation, or is or was serving at the request of such person as an officer, director, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation s best interests except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses which such officer or director has actually and reasonably incurred. Our amended and restated certificate of incorporation and amended and restated bylaws provide for the indemnification of our directors and officers to the fullest extent permitted under the DGCL. Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability for any: transaction from which the director derives an improper personal benefit; act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; unlawful payment of dividends or redemption of shares; or breach of a director s duty of loyalty to the corporation or its stockholders. Our amended and restated certificate of incorporation and amended and restated bylaws include such a provision. Expenses incurred by any officer or director in defending any such action, suit or proceeding in advance of its final disposition shall be paid by us upon delivery to us of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified by us. Section 174 of the DGCL provides, among other things, that a director who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approved, or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts. Indemnification We have an insurance policy covering its officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise. ABOUT THIS PROSPECTUS You should rely only on the information contained in this prospectus related to this offering prepared by us or on our behalf or otherwise authorized by us. We have not authorized anyone to provide you with different information and if anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate only as of the date of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. Before you invest in our common stock, you should read the registration statement (including the exhibits thereto and documents incorporated by reference therein) of which this prospectus forms a part. Throughout this prospectus, unless otherwise designated, the terms "we," "us," "our," "Urigen," "the Company" and "our Company" refer to Urigen Pharmaceuticals, Inc., a Delaware corporation, and our subsidiary, Urigen Pharmaceuticals, N.A. URG101 Licensing Royalties from Compounding Pharmacies We started licensing URG101 in November 2010 by entering into formulation and use agreements with third parties. As of the date of this prospectus, we currently have seven such agreements in place with pharmacies associated with physicians who are knowledgeable in the treatment of IC/BPS, and prescribe URG101 to their patients. Our licensees are pharmacies located in California, Georgia, Texas and Canada, which we refer to as "Centers of Excellence." Of the seven Centers of Excellence, three are actively manufacturing URG101 in small batches for patient prescriptions. We generated licensing royalties from compounding pharmacies of approximately $600,000 and $651,000, in 2013 and 2014, respectively. Since 2010, an estimated 140,000 doses of URG101 have been sold in compounding pharmacies throughout the United States by the Centers of Excellence. In October 2014, we entered into a license agreement with Imprimis Pharmaceuticals, Inc. (NASDAQ:IMMY). Under the terms of the agreement, Imprimis Pharmaceuticals, Inc. ("Imprimis") has the non-exclusive rights to our proprietary formulation of URG101 in the United States, with the right to convert to an exclusive license on April 24, 2015. Once exclusive, Imprimis will maintain its rights under the agreement until such time as URG101 is granted approval by the FDA, or the agreement is otherwise terminated by either party. Pursuant to the agreement, Imprimis has committed to invest up to $2 million in developing patient and physician education material to increase awareness of the prevalent debilitating nature of IC/BPS. Imprimis has further agreed to pay us a royalty of at least $10 per dose of URG101 sold under the agreement, with a minimum total annual royalty payment equal to 110% of our prior calendar year s royalty income derived under all formulation and use agreements for URG101 in the United States, until such time as the agreement ceases to be effective. In early 2014, we began discussions with several specialty pharmaceutical manufacturers and distributors in the United Kingdom, or UK, to explore the viability of making available URG101 under the UK Specials Pharmaceuticals program (a "Special"). In the UK, a Special is an unlicensed medicine prescribed to meet the individual clinical needs of a patient when a suitable licensed medicine is not available. According to the association of Specials Pharmaceuticals Manufacturers, Specials account for approximately 1% of all prescriptions in the UK, but account for more than 75,000 different formulations. Most Specials are produced by a small number of pharmaceutical companies who dedicate their resources and expertise to this very specialized area of medicines manufacturing. On October 17, 2014, we entered into an exclusive distribution agreement with Mawdsley-Brooks & Co. Ltd. ("Mawdsley") to distribute URG101 as a Special in the United Kingdom and Ireland (the "UK Territory"). Under the terms of the agreement, Mawdsley has agreed to receive, store and distribute URG101 to customers. We believe that ongoing sales of URG101 in compounding pharmacies throughout the United States and the United Kingdom demonstrate both the clinical relevance and revenue potential of an approved drug. As we strive for expedient regulatory approval of URG101 from the FDA, we are continually mindful of the millions of IC/BPS sufferers worldwide under the care of physicians that do not currently have immediate access to treatment with the drug. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Item 15. Recent Sales of Unregistered Securities . The information below lists all of the securities sold by us during the past three years which were not registered under the Securities Act: On October 6, 2011, we issued 300 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On October 6, 2011, we issued 80 shares of common stock to a former employee. On December 28, 2011, we issued 60 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On May 8, 2012, we issued 60 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On July 26, 2012, we issued 90 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On December 31, 2012, we issued 60 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On December 31, 2012, we issued 76 shares of common stock to a consultant, pursuant to a debt settlement agreement. In July and October of 2013, pursuant to a note and warrant purchase agreements with certain investors, we issued 10% convertible promissory notes in the aggregate amount of $856,000 to these investors, including $390,000 by Platinum,$162,500 by Dr. Parsons and Dan Vickery and $303,500 by unrelated parties (some of the notes subsequently exchanged in connection with the Restructuring). In connection with the issuance of the notes, we issued to the same investors five year warrants to purchase up to 1,712 shares of the common stock of the Company at an exercise price of $625 per share, subject to adjustment as set forth in the warrant agreements (subsequently reset to $500 in connection with the Restructuring). On January 31, 2014, we issued 1 shares of common stock to a consultant, pursuant to a debt settlement agreement. On January 31, 2014, we issued 25 shares of common stock to a consultant, pursuant to a debt settlement agreement. On January 31, 2014, we issued 49 shares of common stock to an individual, pursuant to a debt settlement agreement. On January 31, 2014, we issued 300 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On April 1, 2014, we issued 90 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement. On June 23, 2014, we issued 11,455 shares of common stock to all Lenders other than Platinum named in Schedule 1.6 of the Exchange and Waiver Agreement, in consideration of the waivers of defaults and Events of Defaults arising under the Surrendered Notes, the provisions of the Surrendered Note Related Documents and in consideration of the Note Exchange, pursuant to the Exchange and Waiver Agreement dated April 25, 2014. On June 23, 2014, we issued 6.183 shares of Series D Preferred Stock to Platinum, in consideration of and in express reliance upon the representation, warranties, covenants, terms and conditions of this Agreement, Platinum agrees to deliver any Existing Preferred Stock held by it to us, pursuant to the Exchange and Waiver Agreement dated April 25, 2014. On June 23, 2014, we issued 24.661 shares of Series D Preferred Stock to Platinum, in consideration of the waivers of defaults and Events of Defaults arising under the Surrendered Notes, the provisions of the Surrendered Note Related Documents and in consideration of the Note Exchange, pursuant to the Exchange and Waiver Agreement dated April 25, 2014. On June 23, 2014, we issued 64.625 shares of Series D Preferred Stock to Platinum, in consideration of the waivers of defaults and Events of Defaults arising under the Existing Preferred Stock and provisions of the Existing Preferred Stock Related Document, and in exchange for the commitment of Platinum to provide the Bridge Loan, pursuant to the Exchange and Waiver Agreement dated April 25, 2014. URG501 Our pre-clinical pipeline product, URG501, is an oral pentosan polysulfate sodium ("PPS") therapy for IC/BPS. URG501 is under development with the goal of delivering improved PPS bioavailability. We are also currently examining the application of heparinoids such as PPS in the therapeutic treatment of several disease states, such as cancer, cardio-circulatory, osteoarthritis, rheumatoid arthritis, atherosclerosis and sickle cell anemia. Our Strategy Our strategy is to pursue regulatory approval of our lead product, URG101, so as to significantly expand its global distribution and revenue potential. We also aim to continue development of our complimentary pre-clinical pipeline product, URG501. Our strategy, includes, among other things: Obtaining FDA approval of a 505(b)(2) new drug application ("NDA") for URG101; Filing an investigational new drug application ("IND") and commencing clinical and regulatory development of URG501; and Expanding our pipeline through potential in-house development, in-licensing and/or acquisitions of urology products and technologies. COMPANY HISTORY We were incorporated in Delaware on August 12, 1997 under the name Megabios Corp. In March 1999, we merged with GeneMedicine, Inc. and changed our name to Valentis, Inc. On October 5, 2006, we entered into an agreement and plan of merger with Urigen N.A., Inc., a Delaware corporation, and with Valentis Holdings, Inc., our newly formed wholly-owned subsidiary. On July 13, 2007, Valentis Holdings was merged with and into Urigen N.A., with Urigen N.A. surviving as our wholly-owned subsidiary. In connection with the merger, we subsequently changed our name to Urigen Pharmaceuticals, Inc. Prior to October 29, 2012, we were a reporting company with our common stock registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, on September 19, 2012, a decision was rendered in an administrative proceeding pursuant to Section 12(j) of the Exchange Act before the Securities and Exchange Commission (the "SEC"), revoking the registration of our registered securities, due to our inability for a period of two years, to timely file our periodic reports under the Exchange Act. From June 19, 2007 until October 22, 2010, our common stock was quoted on the OTC Bulletin Board under the symbol "URGP.OB." Our common stock was suspended from quotation on the OTC Bulletin Board and on October 23, 2010, our common stock commenced quotation in the OTC Pink Sheets under the symbol "URGP.PK." On May 24, 2012, the SEC announced the temporary suspension of trading in our securities on the OTC Pink Sheets through June 6, 2012. Subsequently, as a result of the revocation of our registration, our common stock was terminated from quotation and there is currently no trading market for our securities. RECENT DEVELOPMENTS Since our merger in 2007, we have had limited success in raising additional outside financing, particularly equity financing. We believe that this is because of, among other things: (i) our history of having been formed through a reverse merger, (ii) the large number of our shares outstanding and the associated history of low stock prices, (iii) the limited liquidity of our common stock on the OTC Bulletin Board before it was deregistered, (iv) the risks associated with a company in the pharmaceutical area without a drug product that has been approved by the FDA, (v) our limited infrastructure, management and personnel resources, (vi) the decline in general economic conditions nationally and internationally particularly in 2008 and thereafter, and (vii) in 2012, trading halts and the de-listing of our common stock from Nasdaq. Our strategy over the last four years has been to continue our development and seek FDA approval for URG101 and once again become a reporting company with our common stock listed on a national securities exchange. That strategy was dependent upon our achieving the milestones set forth below over the course of the last four years, which included: On June 23, 2014, pursuant to the Exchange Agreement, we issued the Exchange Notes with a principal amount equal to $2,347,052 to Platinum and Other Lenders. On June 23, 2014, we issued to C. Lowell Parsons a warrant to purchase up to 654 shares of our common stock, which was issued as consideration for the waiver by Dr. Parsons of certain adjustments that would otherwise be made to the warrants that we previously issued to him pursuant to that certain consulting agreement dated as of July 26, 2012 between Dr. Parsons and us. On January 26, 2015, we issued 282 shares of common stock to service provider BioEnsemble, Ltd., an entity controlled by our Chairman, pursuant to a consulting agreement.. Unless otherwise noted, the above securities were issued pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering. Item 16. Exhibits and Financial Statement Schedules. (a)The following exhibits are filed as part of this Registration Statement: 1.1Form of Underwriting Agreement 3.1Amended and Restated Certificate of Incorporation of the Registrant 3.2Certificate of Merger 3.3Certificate of Amendment 3.4Amended Bylaws of the Registrant 3.5Certificate of Designations of Series D Preferred Stock 4.1Form of Common Stock Certificate 4.3Warrant to purchase common stock issued to C. Lowell Parsons on June 23, 2014 4.4Warrants to purchase common stock issued to C. Lowell Parsons on November 1, 2011, as amended and restated on June 23, 2014 4.5Warrants to purchase common stock issued to C. Lowell Parsons on July 26, 2012, as amended and restated on June 23, 2014 4.6Warrants to purchase common stock issued to C. Lowell Parsons on July 3, 2013, as amended and restated on June 23, 2014 4.7Warrants to purchase common stock issued to C. Lowell Parsons on March 13, 2014, as amended and restated on June 23, 2014 4.8Warrants to purchase common stock issued to Dan Vickery on March 8, 2010 4.9Warrants to purchase common stock issued to Dan Vickery on November 1, 2011, as amended and restated on June 23, 2014 4.10Warrants to purchase common stock issued to Dan Vickery on October 3, 2013, as amended and restated on June 23, 2014 4.11Warrants to purchase common stock issued to Platinum-Montaur Life Sciences, LLC on August 1, 2007, as amended and restated on June 23, 2014 4.12Warrants to purchase common stock issued to Platinum-Montaur Life Sciences, LLC on April 19, 2010, as amended and restated on June 23, 2014 4.13Warrants to purchase common stock issued to Platinum-Montaur Life Sciences, LLC on October 5, 2011, as amended and restated on June 23, 2014 4.14Warrants to purchase common stock issued to Platinum-Montaur Life Sciences, LLC on March 3, 2011, as amended and restated on June 23, 2014 4.15Warrants to purchase common stock issued to Platinum-Montaur Life Sciences, LLC on July 3, 2013, as amended and restated on June 23, 2014 4.16Form of Amended and Restated 2013 Purchaser Series Warrant to purchase commons stock 4.17Form of Amended and Restated 2011 Purchaser Series Warrant to purchase commons stock 4.18Form of Exchange Note 4.19Amended and Restated Promissory Note issued to Platinum-Montaur Life Sciences, LLC on July 1, 2014 5.1Opinion of Loeb & Loeb, LLP 10.12014 Long-Term Incentive Plan 10.2Exchange and Waiver Agreement, dated April 25, 2014 10.3Security agreement, dated June 23, 2014 10.4Registration Rights Agreement, June 23, 2014 10.5Guaranty, June 23, 2014 10.6Employment Agreement with Ebrahim Versi dated February 6, 2015 raising $856,000 in a private placement which was used to fund the preparation of audited financial statements and legal services related to the Restructuring increasing the number of our Centers of Excellence from one to seven, with related gross licensing royalties to us of $651,000 for the fiscal year ended June 30, 2014; recapitalizing our corporate debt and equity as discussed in further detail below; raising $3,000,000 in non-dilutive debt financing to initiate the URG101-105 study and prepare for a public offering of our common stock; entering into an additional formulation and use agreement with Imprimis that has the potential to significantly grow licensed sales of URG101 in the United States; and initiating clinical development activities for URG501, our proprietary oral formulation employing oral administration of sodium pentosan polysulfate and other pentosan polysulfate salts. The Restructuring On April 25, 2014, we entered into an Exchange and Waiver Agreement (the "Exchange Agreement") with Platinum-Montaur Life Sciences, LLC ("Platinum") and other existing lenders to us (the "Other Lenders"). The Other Lenders include, among others, Dan Vickery, M.B.A., Ph.D., who then served as Chief Executive Officer, Chairman of the Board and Secretary, and C. Lowell Parsons, a member of our board of directors. Platinum and the Other Lenders were holders of an aggregate of $1,937,195 principal amount of our senior convertible promissory notes (the "Existing Notes"). In addition, Platinum was the holder of 210 shares and 552,941 shares, respectively, of our Series B and Series C Convertible Preferred Stock (the "Preferred Stock"). At the time, certain of the Existing Notes were in default as a result of the Existing Notes being past due and were further subject to earlier prepayment as a result of the de-registration of our common stock in October 2012. These defaults resulted in defaults under the other Existing Notes. The purpose of the Exchange Agreement was to allow us to restructure our outstanding debt and capital structure. The closing of the transactions contemplated by the Exchange Agreement was conditioned upon stockholder approval of the Exchange Agreement and other proposals, all of which were approved at our annual meeting of stockholders held on May 27, 2014. The Exchange Agreement provides for, among other things: (i) the forbearance by Platinum and the Other Lenders from exercising their default remedies under the Existing Notes and from the pursuit of the collection of accrued dividends under our Preferred Stock; (ii) the waiver of anti-dilution adjustments to outstanding common stock purchase warrants owned by Platinum, the Other Lenders and Dr. Parsons (the "Existing Warrants") and the reduction in the exercise price per share of the Existing Warrants to $500; (iii) the waiver of defaults under the agreements pursuant to which the Existing Notes, the Existing Warrants and the Preferred Stock were issued to Platinum and the Other Lenders; (iv) the exchange of the Existing Notes for new secured convertible promissory notes (the "Exchange Notes") with a principal amount equal to $2,347,052 and a maturity date of June 23, 2017; (v) the exchange of the issued and outstanding Series B & C Preferred Stock for shares of a newly-created series of series D convertible preferred stock (the "Series D Preferred Stock"); and (vi) the extension by Platinum to us of a loan in the amount of $3,000,000, which loan is evidenced by a senior secured promissory note due on the earlier of (x) the consummation of the sale by us of equity securities in a registered public offering with gross proceeds of not less than $10 million and (y) June 23, 2015 (the "Bridge Note"). The Exchange Notes and the Bridge Note are secured by a lien on all of our assets. 10.7Employment Agreement with Mark J. Rosenblum dated August 15, 2014 10.8Option Agreement between the Registrant and C. Lowell Parsons, dated November 29, 2012 10.9Option Agreement among the Registrant, C. Lowell Parsons and Michael Goldberg, dated December 12, 2013 10.10License Agreement with University of California, San Diego * 10.11Master Services Agreement between Registrant and Cato Research Ltd. dated September 1, 2014 * 10.12Product Development Agreement between Urigen Pharmaceuticals, Inc. and Farco-Pharma GmbH, dated October 13, 2014 * 10.13Licensing Agreement between Registrant and Imprimis Pharmaceuticals Inc. dated October 24, 2014 10.14Release Test Agreement with Aesica Pharmaceuticals Limited dated August 11, 2014, as subsequently amended in December 2014 and February 2015 * 10.15Exclusive Distribution Agreement between the Registrant and I Mawdsley-Brooks & Co., Ltd. dated October 17, 2014 * 10.16Form of Formulation and Use Agreement 10.17Lease Agreement with The New Jersey Economic Development Authority dated November 1, 2014 14.1Code of Business Conduct and Ethics 21.1Subsidiaries of the Registrant 23.1Consent of EisnerAmper LLP, Independent Registered Public Accounting Firm 23.2Consent of Loeb & Loeb LLP (included in Exhibit 5.1) 24.1Power of Attorney (included on signature page) To be filed by amendment * Confidential treatment will be requested with respect to portions of this exhibit. Item 17. Undertakings. The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. In consideration for the agreement by Platinum and the Other Lenders to the Restructuring, at the closing on June 23, 2014: (i) the per-share exercise price of the Existing Warrants was reduced from $625 to $500; (ii) we issued to Platinum 95.469 shares of Series D Preferred Stock, which are convertible into an aggregate of 95,469 shares of our common stock, which number of shares of common stock, when combined with the shares of common stock issuable upon conversion of the Exchange Notes to be issued to Platinum and upon exercise of the Existing Warrants held by Platinum, is expected to represent approximately 75% of the fully diluted shares of our common stock after giving effect to the Restructuring and before the reservation of shares for issuance under our 2014 Long-Term Incentive Plan (the "2014 Plan"); (iii) we issued to the Other Lenders 11,455 shares of our common stock (which number of shares of common stock, when combined with the shares of common stock issuable upon conversion of the Exchange Notes to be issued to the Other Lenders and upon exercise of (x) the Existing Warrants held by the Other Lenders and (y) the warrant issued to Dr. Parsons to purchase up to 654 shares of our common stock, is expected to represent approximately 11% of the fully diluted shares of our common stock after giving effect to the Restructuring and before the reservation of shares for issuance under the 2014 Plan); and (iv) we issued to C. Lowell Parsons, a member of our board of directors, a warrant to purchase up to 654 shares of our common stock, which was issued as consideration for the waiver by Dr. Parsons of certain adjustments that would otherwise be made to the warrants that we previously issued to him pursuant to that certain consulting agreement dated as of July 26, 2012 between Dr. Parsons and us. Bridge Note and Amended Note On June 23, 2014, Platinum provided a bridge financing ("Bridge Note") of $3,000,000 which matures on the earlier of (i) the consummation of the sale by us of equity securities in a registered public offering, with gross proceeds of not less than $10,000,000, and (ii) the first anniversary of the effective date of this registration statement of which this prospectus is a part. Interest is charged at a rate of 16% per annum, and the notes were secured by substantially all of our assets. The Bridge Note will be senior in priority to the Exchange Notes. At June 30, 2014, the balance outstanding under the Bridge Note was $3,000,000. On July 1, 2014, we agreed to return $2,000,000 owed under the Bridge Note and to exchange the Bridge Note for an Amended and Restated Promissory Note ("Amended Note") in the amount of $1,000,000. The Amended Note contains terms whereby we can draw up to $2,000,000 in additional funding with an interest rate of 12% per annum. Through February 9, 2015, we received an additional $1,500,000 under the terms of the Amended Note. . We have $500,000 available under the terms of the Amended Note. Reverse Split On June 23, 2014, we effected a 1-for-5,000 reverse stock split (the "Reverse Split") of our issued and outstanding shares of common stock, and in connection therewith, we increased the number of authorized shares of common stock to 30,000,000, consisting of 20,000,000 shares of common stock and 10,000,000 shares of preferred stock, and eliminated our Series A Convertible Preferred Stock. The approval of the Reverse Split was one of several steps in the Restructuring that required stockholder approval. All common share and common per share information in this prospectus has been retroactively adjusted to reflect the Reverse Split for all periods presented. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of North Brunswick, State of New Jersey, on February 11, 2015. URIGEN PHARMACEUTICALS, INC. By: /s/ Ebrahim Versi, M.D., Ph.D. Name: Ebrahim Versi, M.D., Ph.D. Title: Chief Executive Officer POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Mark Rosenblum and Luc Maasdorp his true and lawful attorney-in-fact, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this registration statement (and to any registration statement filed pursuant to Rule 462 under the Securities Act of 1933, as amended), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated. Signature Title Date Chief Executive Officer and Director (Principal Executive /s/ Ebrahim Versi, M.D., Ph.D. Officer) February 11, 2015 Ebrahim Versi, M.D., Ph.D. /s/ Mark J. Rosenblum Chief Financial Officer (Principal Financial and Accounting Officer) February 11, 2015 Mark J. Rosenblum /s/ Michael Goldberg, M.D., M.B.A. Chairman of the Board of Directors February 11, 2015 Michael Goldberg, M.D., M.B.A. /s/ C. Lowell Parsons, M.D. Director February 11, 2015 C. Lowell Parsons, M.D. /s/ Michael Nordlicht, J.D. Director February 11, 2015 Michael Nordlicht, J.D. /s/ Luc Maasdorp, M.B.A. Director February 11, 2015 Luc Maasdorp, M.B.A. COMPANY INFORMATION We are incorporated in the State of Delaware on August 12, 1997. Our principal executive offices are located at 675 Highway One B-206 North Brunswick, NJ 08902 and our telephone number is (732) 640-0160. Our web site is www.urigen.com. Information contained on our web site is not incorporated by reference into this prospectus. You should not consider information contained on our web site as part of this prospectus. Summary Consolidated Financial Data The following table summarizes our consolidated financial data. We derived the summary consolidated statement of operations data for the years ended June 30, 2014 and 2013 and the consolidated balance sheet data as of June 30, 2014 from our audited consolidated financial statements and related notes appearing elsewhere in this prospectus. We derived the summary consolidated statement of operations data for the three months ended September 30, 2014 and 2013 and the consolidated balance sheet data as of September 30, 2014 from our unaudited consolidated financial statements and related notes appearing elsewhere in this prospectus. Our historical results for any prior period are not necessarily indicative of the results to be expected in any future period, and our results for any interim period are not necessarily indicative of results to be expected for a full fiscal year. The summary consolidated financial data should be read together with our consolidated financial statements and related notes, as well as our "Management s Discussion and Analysis of Financial Condition and Results of Operations," beginning on page 33 of this prospectus. Our audited and unaudited consolidated financial statements have been prepared in U.S. dollars in accordance with GAAP. The unaudited pro forma consolidated balance sheet data as of September 30, 2014 presents our consolidated financial position giving pro forma effect to this offering and the use of the estimated net proceeds from this offering as described under "Use of Proceeds," as if such transactions occurred on September 30, 2014. Three Months Ended September 30, Year Ended June 30, 2014 2013 2014 2013 (unaudited) (unaudited) Revenue $ 169,277 $ 173,646 $ 650,526 $ 599,987 Operating Expenses Research and Development Expenses 339,053 42,624 760,787 56,938 General and Administrative Expenses 474,900 207,854 1,193,704 737,660 Total Operating Expenses 813,953 250,478 1,954,491 794,598 Loss from Operations (644,676 ) (76,832 ) (1,303,965 ) (194,611 ) Other Income (expense): Interest income 16 179 277 1,188 Interest expense (104,947 ) (236,767 ) (727,696 ) (549,257 ) Loss on extinguishment of convertible notes — — (8,728,161 ) — Other income, net — 99,712 127,674 52,302 Changes in fair value of derivative liabilities 263,286 (63,969 ) (972,359 ) 310,072 Total other income and expense, net 158,355 (200,845 ) (10,300,265 ) (185,695 ) Net Loss (486,321 ) (277,677 ) (11,604,230 ) (380,306 ) Coupon dividend on series B and C preferred stock — (37,230 ) (149,355 ) (144,378 ) Deemed dividend on extinguishment of series B and C preferred stock — — (12,587,881 ) — Net Loss applicable to Common Stockholders $ (486,321 ) $ (314,907 ) $ (24,341,466 ) $ (524,684 ) Net Loss per share, basic and diluted $ (16.18 ) $ (16.95 ) $ (1,281.20 ) $ (28.35 ) Weighted average number of shares outstanding, basic and diluted 30,052 18,580 18,999 18,506 As of September 30, 2014 (unaudited) Actual Pro Forma, As Adjusted(1) Balance Sheet Data: Cash $ 483,939 $ Total assets 977,808 Total liabilities (2) 10,201,249 7,854,197 Total shareholders deficiency (9,223,441 ) (1) Pro forma, as adjusted amounts give effect to the sale of the shares in this offering at the assumed public offering price of $ per share, which is based on the closing price of our common stock on , 2015, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. (2) Pro forma, an adjusted gives effect to the automatic conversion into shares of our Exchange Notes. The Offering Common stock we are offering [*] shares Public offering price $[*] per share Common stock outstanding before this offering (1) 30,330 shares Common stock to be outstanding after the offering (1) [*] shares Over-allotment option We have granted the representative a 45-day option to purchase up to [*] additional shares of common stock solely to cover over-allotments, if any. Use of proceeds We estimate that we will receive net proceeds from this offering, after deducting underwriting discount and estimated offering expenses payable by us, of approximately $[*]. We intend to use the proceeds of this offering to commence and complete single dose 4 arm contribution of components study, support the development of pipeline programs, initiate additional clinical trials, including a phase III pivotal trial, leading to the preparation and filing of a 505(b)(2) NDA with the FDA and for working capital and other general corporate purposes. Lock-up We, our directors and executive officers, as well as certain of our stockholders have agreed with the underwriter not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our securities for a period of [*] months following the closing of this offering. See "Underwriting" for more information. Proposed Nasdaq Capital Market Listing Symbol " "
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+S-1/A 1 t1501098_s1a.htm AMENDMENT NO. 2 TO FORM S-1 As filed with the Securities and Exchange Commission on May 7 , 2015 Registration No. 333-202694 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WELLS FINANCIAL CORP. (Exact Name of Registrant as Specified in Its Charter) Minnesota 6022 41-1799504 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 53 First Street, S.W. Wells, Minnesota 56097 (507) 553-3151 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. James D. Moll Interim President and Chief Executive Officer Wells Financial Corp. 53 First Street, S.W. Wells, Minnesota 56097 (507) 553-3151 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: John J. Spidi, Esq. James C. Stewart, Esq. Jones Walker LLP 1227 25th Street, N.W. Suite 200 West Washington, D.C. 20037 (202) 434-4660 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be Registered Proposed maximum offering price per share (1) Proposed maximum aggregate offering price (1) Amount of registration fee Common Stock, $0.10 par value per share 11 8 , 5 8 7 $2 5 . 65 $3,042,000 $353.48 (2) (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents SUMMARY The following summary highlights material information in this prospectus. It may not contain all the information that is important to you. For additional information before making an investment decision, you should read this entire prospectus carefully, including the financial statements, the
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0000948426_coates_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000948426_coates_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001008579_highlands_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001008579_highlands_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire prospectus carefully, including the section entitled Risk Factors, our financial statements and the notes thereto incorporated by reference in our annual report and quarterly reports, and the other documents we refer to and incorporate by reference in this prospectus for a more complete understanding of us and this offering before making an investment decision. In particular, we incorporate important business and financial information in this prospectus by reference. The Company We are a one-bank holding company, formed in 1995 and headquartered in Abingdon, Virginia. We conduct the majority of our business operations through our wholly-owned bank subsidiary, Highlands Union Bank (the Bank ). The Bank is a Virginia state-chartered bank that has been in operation since 1985. Through its fourteen full service banking offices, the Bank offers general retail and commercial banking services to individuals, businesses and local government unit customers. These products and services include accepting deposits in the form of checking accounts, money market deposit accounts, interest-bearing demand deposit accounts, savings accounts and time deposits; making residential 1-4 family loans, owner occupied and non-owner occupied commercial real estate loans, second mortgages and equity lines, consumer, commercial and industrial, credit card and agricultural loans; offering letters of credit; providing other consumer financial services, such as automatic funds transfer, collections, night depository, safe deposit, travelers checks and savings bond sales; and providing other miscellaneous services normally offered by commercial banks. The Bank also has two wholly-owned subsidiary corporations, Highlands Union Insurance Services, Inc. and Highlands Union Financial Services, Inc. Through Highlands Union Insurance Services, Inc., we joined a consortium of other financial institutions to form Bankers Insurance, LLC, through which we sell a wide range of insurance products and services, including commercial, personal, or life and health. Through Highlands Union Financial Services, Inc., we also offer financial service products. In addition to the Bank, we have only one other direct subsidiary, Highlands Capital Trust I, which is a statutory business trust formed in 1998 in connection with our issuance of trust preferred securities. Blue Ridge Hospitality, LLC and Russell Road Properties, LLC are also entities in which the Bank has a significant interest and were created to hold and manage certain properties acquired by the Bank through foreclosure or deed in lieu of foreclosure. Our common stock is quoted on the OTC Bulletin Board under the symbol HBKA. The last reported sales price of our common stock on June 5, 2015 was $4.20 per share. Corporate Information Our principal executive offices are located at 340 West Main Street, Abingdon, Virginia 24210 and our telephone number is (276) 628-9181. We maintain a website at www.hubank.com, which contains information relating to us. Unless specifically incorporated by reference, information on our website is not a part of this prospectus. The Offering Issuer Highlands Bankshares, Inc. Securities offered by us None. Securities offered by Selling Shareholders Common stock and Series A Preferred Stock. Maximum number of shares of common stock offered by Selling Shareholders 4,773,822 shares of our common stock, including 2,092,287 shares issuable upon conversion of 2,092,287 shares of our Series A Preferred Stock. Maximum number of shares of Series A Preferred Stock offered by Selling Shareholders 2,092,287 shares of our Series A Preferred Stock. Shares outstanding as of June 12, 2015 7,851,780 shares of common stock. 2,092,287 shares of Series A Preferred Stock. This prospectus only relates to the offering of 4,773,822 shares of common stock and 2,092,287 shares of Series A Preferred Stock. Voting rights of Series A Preferred Stock The holders of the Series A Preferred Stock will not have voting rights other than those described below, except to the extent specifically required by Virginia law. Under the Articles of Amendment, we must receive the approval of the holders of a majority of the number of shares of Series A Preferred Stock outstanding, voting as a separate class, for effecting or validating any amendment, alteration or repeal (including by means of a merger, consolidation or otherwise) of any provision of our articles of incorporation (including the Articles of Amendment) that would alter or change the rights, preferences or privileges of the Series A Preferred Stock so as to affect them adversely. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Dividends and liquidation rights of Series A Preferred Stock Holders of Series A Preferred Stock are entitled to receive dividends when, as and if declared by the board of directors or a duly authorized committee of the board of directors, out of funds legally available therefor, non-cumulative dividends in the same per share amount as the dividends paid on a share of common stock. The Company will not pay any dividends with respect to its common stock unless an equivalent dividend also is paid to the holders of the Series A Preferred Stock. The Series A Preferred Stock will rank subordinate and junior to all future issuances of preferred stock other than those which, by their respective terms, rank pari passu with or junior to the Series A Preferred Stock, and shall rank pari passu with the common stock with respect to all terms (other than voting), including, the payment of dividends or distributions, and payments and rights upon liquidation, winding up and dissolution. Convertibility of Series A Preferred Stock Each share of Series A Preferred Stock is convertible into one share of our common stock, subject to adjustment as set forth in the Articles of Amendment, automatically in the hands of a transferee (other than an affiliate of the transferor) immediately upon the consummation of a Permissible Transfer. A Permissible Transfer is a transfer by the holder either (i) to an affiliate of the holder or to the Company, (ii) in a widespread public distribution of common stock or Series A Preferred Stock, (iii) in which no transferee (or group of affiliated transferees) would, after giving effect to such transfer, own 2% or more of any class of voting securities of the Company, or (iv) to a transferee that would control more than a majority of the voting securities of the Company (not including voting securities such person is acquiring from the transferor). Whether or not a transaction in which you purchase shares of Series A Preferred Stock will be a Permissible Transfer and cause the Series A Preferred Stock to convert is largely dependent on the Selling Shareholder s actions and the number of other purchasers. Accordingly, when you purchase shares of Series A Preferred Stock, you may not be able to determine whether the transaction will cause the Series A Preferred Stock to convert into common stock and may have no ability to prevent the conversion. If the transaction in which you purchase shares of Series A Preferred Stock causes the conversion of the Series A Preferred Stock, you will receive shares of common stock rather than Series A Preferred Stock. Use of proceeds All Securities sold pursuant to this prospectus will be sold by the Selling Shareholders. We will not receive any proceeds from such sales. We received net proceeds of $15.7 million from the initial sale of the Securities to the Selling Shareholders in the Private Placements. We used a portion of the net proceeds from the Private Placements to fund the repayment in full of our loan with Community Bankers Bank and to repay our trust preferred securities, including accrued interest. We intend to use the remaining net proceeds for general corporate purposes, which may include improving our regulatory capital position, improving our cost structure and supporting future growth. Market for common stock and Series A Preferred Stock Our common stock is quoted on the OTC Bulletin Board under the symbol HBKA. Our shares of Series A Preferred Stock are not currently listed on any established securities exchange or quotation system, and we do not intend to seek such listing. In the event we were to seek such listing, there is no guarantee that any established securities exchange or quotation system would accept the Series A Preferred Stock for listing. Dividend policy In 2009, we suspended payment of dividends on our common stock. Under our written agreement with the Federal Reserve Bank of Richmond, we are prohibited from paying dividends without regulatory approval. Any decision made by our board of directors to declare dividends in the future will depend on termination of the written agreement, as well as our future earnings, financial condition, liquidity and capital requirements of both the Company and the Bank, applicable governmental regulations and policies and other factors deemed relevant by its board of directors. See Dividend Policy.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001011395_geospatial_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001011395_geospatial_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms "the "Company," "we," "us," and "our" refer to Geospatial Corporation and, where appropriate, our consolidated subsidiaries. About Our Company Geospatial Corporation (formerly known as Geospatial Holdings, Inc.) provides cloud-based geospatial solutions to accurately locate and digitally map in 3D, underground pipelines and other infrastructure. We provide two types of services to our clients. We provide data acquisition services utilizing various technologies to accurately locate the exact position and depth of underground pipelines and conduits along with information on existing aboveground infrastructure. We also provide data management services in which we securely manage our clients critical infrastructure data through the licensing of our cloud-based GeoUnderground GIS (Geographic Information System) software. We were incorporated in Nevada in 1995. We did not commence our current business, however, until 2008. The mailing address and telephone number of our principal executive offices are: 229 Howes Run Road, Sarver, Pennsylvania 16055; 724-353-3400. We maintain an internet site at www.geospatialcorporation.com which contains information concerning us. Our internet website and the information contained therein or connected thereto are not intended to be incorporated into this prospectus and should not be considered a part of this prospectus. Our common stock is considered a "penny stock" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which means that securities broker-dealers cannot recommend the common stock, which may make trading the common stock difficult. Risk Factors Investing in our securities involves significant risks. You should carefully read the section entitled "Risk Factors" below for an explanation of these risks before investing in our securities. About this Offering This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 108,358,470 shares of the Company s common stock. The selling stockholders may sell their shares of common stock from time to time at a price of $0.25 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board, the OTCQX or the OTCQB, after which the selling stockholders may sell their shares at prevailing market or privately negotiated prices. We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders. As of June 9, 2015, 137,806,264 shares of the Company s common stock were issued and outstanding. RISK FACTORS You should carefully consider the following risk factors and all other information contained in this prospectus. Our business and our securities involve a high degree of risk. The following summarizes material risks relating to our business and our common stock. If any of the following risks actually occur, they would likely harm our business, financial condition, and results of operations. RISK FACTORS RELATED TO OUR BUSINESS Our business is at an early stage of growth and we may not be able to develop the customer base necessary for success. Our business is still at an early stage of growth. We are still in the early stages of hiring and training our sales force and work force, and identifying and building customer relationships for the services that we expect to offer. We will have to carry out our business plan and generate significant revenues to achieve and sustain profitability in the future. Achieving and maintaining profitability is dependent upon certain factors which are outside of our control, including changes in business conditions, competition, and changes in applicable regulations. We may not be able to achieve our development goals in an efficient manner, or at all, which could have a material adverse effect on our business, financial condition or results of operations in the future. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED ___, 2015 PROSPECTUS 108,358,470 SHARES OF COMMON STOCK This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 108,358,470 shares of the Company s common stock. All of these shares, when sold, will be sold by these selling stockholders. The selling stockholders will offer these shares at a price of $0.25 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board, the OTCQX or the OTCQB, after which the selling stockholders may sell these shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or though agents designated from time to time or through underwriters or dealers. We will not control or determine any such market or privately negotiated price at which the selling stockholders decide to sell their shares. There are no minimum purchase requirements. The selling stockholders and any participating broker-dealers may be deemed "underwriters" of the shares of the Company s common stock which they are offering within the meaning of the Securities Act of 1933 (as amended, the "Securities Act"), and any commissions or discounts given to any such broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock. Brokers or dealers effecting transactions in shares of the Company s common stock should confirm the registration of these securities under the securities laws of the states in which transactions occur or the existence of an exemption from registration. The Company is not selling any shares of common stock in this offering and therefore will not receive any proceeds from the sale of the Company s common stock hereunder. The Company will pay the expenses of this offering relating to the filing and effectiveness of the resale registration statement of which this prospectus is a part (the "Registration Statement"). We will use our best efforts to maintain the effectiveness of the Registration Statement from the effective date until all securities registered under the Registration Statement have been sold or are otherwise able to be sold pursuant to Rule 144 promulgated under the Securities Act. Our common stock is traded in the OTC Pink Marketplace maintained by the OTC Markets Group under the symbol "GSPH". Our business and investment in these securities involves significant risks. See "Risk Factors" beginning on page 1, to read about factors you should consider before buying these securities. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is ________________, 2015 Our independent auditor has expressed doubts about our ability to continue as a going concern. Our Company has incurred net losses since inception. Our operations and capital requirements have been funded by sales of our common stock and preferred stock and advances from our chief executive officer. At March 31, 2015, our current liabilities exceeded our current assets by $4,684,516, and our total liabilities exceeded our total assets by $4,501,574. Those factors create uncertainty about our ability to continue as a going concern. We may have difficulty meeting our future capital requirements. If additional capital is not available, we may have to curtail or cease operations. We will require significant capital resources in order to profitably grow our business. We estimate that we will be able to conduct our planned operations for approximately one month using currently-available capital resources. We currently use funds in our operations at a rate of approximately $200,000 per month. We anticipate that we will need at least $5 million to fund our planned operations for the next twelve months. We may seek to obtain such capital resources through strategic collaborations, public or private equity or debt financings or other financing sources. The capital we need may not be available on favorable terms, or at all. Additional equity financings could result in significant dilution to our stockholders. If sufficient capital is not available to us, we may be required to reduce our workforce, reduce the scope of our marketing efforts, and/or customer service, sell all or part of our assets or terminate operations. If we are unable to adequately protect our proprietary technology from appropriation or imitation by competitors, our business, financial condition and results of operations may be adversely affected. Our business development will depend on unpatented proprietary know-how and trade secrets to establish and protect our intellectual property rights. We cannot assure you that any of our competitors will not independently develop equivalent or superior know-how, trade secrets or proprietary processes. If we are unable to maintain the proprietary nature of our technologies, our expected profit margins could be reduced as competitors imitating our technologies could compete aggressively against us in the pricing of certain services. As a result, our business, financial condition and results of operations may be materially adversely affected. In addition, several of our business markets and customers are expected to be located outside of the United States. The laws protecting intellectual property in some countries may not provide adequate protection to prevent our competitors from misappropriating our intellectual property. If we are not able to respond adequately to technological advances in the pipeline services industry, our business, reputation, results of operations and financial condition may be adversely affected. We compete in an industry that has seen the development of increasingly advanced technology to deliver state-of-the-art pipeline management service solutions to a variety of end-users. Our success may depend on our ability to respond to technological changes in the industry. If we are unable to respond to technological change, timely develop and introduce new products, or enhance existing products in response to changing market conditions or customer requirements or demands, we will not be able to serve our clients effectively. Moreover, the cost to modify our services, products or technologies in order to adapt to these changes could be substantial and we may not have the financial resources to fund these expenses. We cannot assure you that we will be able to replace outdated technologies, replace them as quickly as our competitors or develop and market new and better products and services in the future. We compete with many other resource providers and our failure to compete effectively with these providers may adversely affect our business, results of operations, financial condition and future prospects. Our business is characterized by competition for contracts within the government and private sectors in which service contracts are often awarded through competitive bidding processes. We compete with a large number of other service providers who offer the principal services that we offer. Many of our competitors have significantly greater marketing and sales resources than we do. In this competitive environment, we must provide technical proficiency, quality of service and experience to ensure future contract awards and revenue and profit growth. Our ability to recruit, train and retain professional personnel of the highest quality is a competitive necessity. Our future inability to do so would adversely affect our competitiveness. Services in our data acquisition and pipeline data management markets are performed by our staff of technical professionals, field services, and management personnel. A shortage of qualified technical professionals currently exists in the engineering and energy services industries in the United States and foreign markets. Our future growth requires the effective recruiting, training and retention of well-qualified personnel. Our inability to do so would adversely affect our business performance and limit our ability to perform new contracts. Table of Contents PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001037016_nii_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001037016_nii_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It does not contain all the information that may be important to you in making an investment decision. You should read this entire prospectus carefully, including the Explanatory Note and documents incorporated by reference which are described under Incorporation by Reference of Certain Documents and Where you Can Find Additional Information. You should also carefully consider, among other things, the matters discussed in the section titled Risk Factors. In this prospectus, unless the context requires otherwise, references to the Company, we, our or us refer to NII Holdings, Inc. and its consolidated subsidiaries, including for the period prior to our emergence from bankruptcy. Except as otherwise indicated, all amounts are expressed in United States, or U.S., dollars and references to dollars and $ are to U.S. dollars. All historical financial statements contained in this report are prepared in accordance with accounting principles generally accepted in the U.S. Our Business We provide wireless communication services under the NextelTM brand in Brazil and Argentina with our principal operations located in major business centers and related transportation corridors in these countries. We provide services in major urban and suburban centers with high population densities where we believe there is a concentration of the country s business users and economic activity. Historically, our services were targeted to meet the needs of business customers and individuals who used our services to meet both professional and personal needs. With the deployment of our wideband code division multiple access ( WCDMA ) network in Brazil and prepaid service offerings in Argentina, our target market also includes consumers. Our target subscribers generally exhibit above average usage, revenue and loyalty characteristics. In Brazil, we believe our target market is attracted to the services and pricing plans we offer, the quality of and data speeds provided by our WCDMA network and the quality of our customer service. We also offer long-term evolution, or LTE, services in Rio de Janeiro in Brazil. These technologies allow us to use our spectrum efficiently and offer multiple wireless services integrated into a variety of handset and data devices. We operated in Mexico until April 30, 2015, when we sold these operations to New Cingular Wireless Services, Inc., an indirect subsidiary of AT&T, Inc. We emerged from bankruptcy on June 26, 2015. For the quarter ended March 31, 2015, we generated $763.9 million in revenue, of which 48%, 39% and 13% was generated from our operations in Brazil, Mexico and Argentina, respectively. For the fiscal year ended December 31, 2014, we generated $3.7 billion in revenue, of which 50%, 38% and 12% was generated from our operations in Brazil, Mexico and Argentina, respectively. We were originally organized in 1995 as a holding company for the operations of Nextel Communications, Inc. in select international markets. The corporation that is currently known as NII Holdings, Inc., the common stock of which is being registered under the registration statement of which this prospectus is a part, was incorporated in Delaware in 2000 as Nextel International, Inc. In December 2001, we changed our name from Nextel International, Inc. to NII Holdings, Inc. Our Corporate Information Our principal executive offices are located at 1875 Explorer Street, Suite 800, Reston, Virginia 20190. Our telephone number is (703) 390-5100, and our website address is www.nii.com. The information posted on our website is not incorporated into this prospectus and is not part of this prospectus. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be registered Proposed Maximum Offering Price Per Share(1) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Common stock, par value $0.001 51,295,837 $ 15.75 $ 807,909,433 $ 93,879 (1) This per share price was estimated solely for the purpose of calculating the registration fee and is based on the average of the high and low sales prices of our common stock of $15.75 as of July 9, 2015 as reported on the NASDAQ Global Select Market, pursuant to Rule 457(c) under the Securities Act of 1933. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. FORWARD-LOOKING STATEMENTS This prospectus may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements regarding expectations, including forecasts regarding operating results, performance assumptions and estimates relating to capital requirements, as well as other statements that are not historical facts, are forward-looking statements. These forward-looking statements are generally identified by such words or phrases as we expect, we believe, would be, will allow, expects to, will continue, is anticipated, estimate, project or similar expressions. These forward-looking statements involve risk and uncertainty, and a variety of facts could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law. While we provide forward-looking statements to assist in the understanding of our anticipated future financial performance, we caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date that we make them. Forward-looking statements are based on current expectations and assumptions that are subject to significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Except as otherwise required by law, we undertake no obligation to publicly release any updates to forward-looking statements to reflect events after the date of this prospectus, including unforeseen events. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our operations and results of our wireless communications business include, but are not limited to: our ability to attract and retain customers; our ability to satisfy the requirements of our debt obligations; our ability to access sufficient debt or equity capital to meet any future operating and financial needs; our ability to meet the operating goals established by our business plan and generate cash flow; general economic conditions in the U.S. or in Latin America, including specifically in the countries in which we operate and in the market segments that we are targeting for our services, including the impact of uncertainties in global economic conditions; the political and social conditions in the countries in which we operate, including political instability, which may affect the economies of our markets and the regulatory schemes in these countries; the impact of foreign currency exchange rate volatility in our markets when compared to the U.S. dollar and related currency depreciation in countries in which our operating companies conduct business; reasonable access to and the successful performance of the technology being deployed in our service areas, and improvements thereon, including technology deployed in connection with the introduction of digital two-way mobile data or internet connectivity services in our markets; the availability of adequate quantities of system infrastructure and subscriber equipment and components at reasonable pricing to meet our service deployment and marketing plans and customer demand; Motorola Mobility s ability and willingness to provide handsets and related equipment for use on our iDEN network, including the availability of iDEN handsets, particularly in Argentina where we do not have the spectrum resources to deploy a WCDMA network; risks related to our WCDMA network in Brazil, including the potential need for additional funding to support enhanced coverage and capacity, and the risk that new services supported by the WCDMA network will not attract enough subscribers to support the related costs of deploying or operating the network; our ability to successfully scale our billing, collection, customer care and similar back-office operations to keep pace with customer growth as necessary, increased system usage rates and growth or to successfully deploy new systems that support those functions; future legislation or regulatory actions relating to our services, other wireless communications services or telecommunications generally and the costs and/or potential customer impacts of compliance with regulatory mandates; the ability to achieve and maintain market penetration and average subscriber revenue levels sufficient to provide financial viability to our network business; the quality and price of similar or comparable wireless communications services offered or to be offered by our competitors, including providers of cellular services and personal communications services; market acceptance of our new service offerings; The Offering Issuer NII Holdings, Inc. Common stock to be offered by the selling stockholders 51,295,837 shares of common stock Common stock to be outstanding immediately after this offering 100,564,303 Use of proceeds We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders.
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Before investing in our common stock, you should read this entire prospectus carefully, especially the sections entitled Risk Factors beginning on page 7 and Management s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 43, as well our financial statements and related notes included elsewhere in this prospectus. Overview Since 1996, Revolutions Medical Corporation ( Revolutions Medical, the Company, we, us or our ) has been endeavoring to design, develop and commercialize auto retractable vacuum safety syringes. Our present product development effort is focused on the RevVac Auto Retractable Vacuum Safety Syringe, which is designed specifically to reduce accidental needle stick injuries and lower the spread of blood borne diseases. The RevVac auto retractable vacuum safety syringe has international patents issued in China, Japan, and Mexico, and are pending issuance in Australia, Canada, Taiwan, and the European Union. The proprietary design feature which makes this product so unique is after a shot is administered, the needle will automatically retract into the plunger by pressing additional pressure with the thumb to break the seal of a robust vacuum which is created at the time of use, and this is all accomplished with one hand. On February 22, 2009, the Company announced that it had received notification from the Federal Drug Administration ( FDA ) that the 510(k) application for the 3ml RevVac safety syringe was cleared to begin marketing and selling this product in the United States. In 2010 this product won the prestigious Medical Design Excellence Award for innovation and advancement of design for medical products. After going through production cost reduction design changes and contract manufacturing searches, the Company signed Wuxi Yushou Medical Appliances Co., Ltd, (Yeso-med) as its contract manufacture and began production in 2011. The Company has been selling the 3ml RevVac safety syringe since 2012 and expects to complete the production process and begin selling the 1ml, 5ml, and 10ml RevVac safety syringes in 2015. Additional sizes of the same FDA 510K cleared RevVac auto retractable vacuum safety syringe will not need any additional FDA 510K clearance and can be marketed under our original FDA 510K. Our internal technical files will be updated and each size will pass all ISO standard tests prior to delivering to customer just like our 3ml size. The Company has developed a new vacuum auto retraction design which it believes will address the growing prefilled safety syringe market. This new design is proprietary and the Company has filed for patent protection. The Company expects to begin prototypes of the new prefilled syringe this year and have samples in 2015. The Company also is developing a suite of proprietary MRI software tools; RevColor , Rev3D , RevDisplay , and RevScan . MRI refers to Magnetic Resonance Imaging, a widely used imaging system that safely creates many different and detailed views of selected portions of the internal anatomy. These tools are designed to enhance general diagnostic confidence through education and research use and in the future we believe will have specific commercial applications. The Company s MRI software tools are not ready for commercialization, and we do not have a time table when this product will be available commercially. However, the Company expects to dedicate additional research and development funds in the current year to continue advancing the technology. The Company has not established significant sources of revenue to fund the development of its business and pay operating expenses, resulting in a cumulative net loss of $47,161,743 and a working capital deficit of $9,389,375 at September 30, 2014. Because of the foregoing, our auditors have raised a substantial doubt about our ability to continue as a going concern. Revolutions Medical Corporation is committed to developing and distributing new products and tools for the medical industry, whether internally or through acquisitions. Our goal is to make healthcare safer and less expensive by reducing risks, time and cost. Recent Developments On September 15, 2014, the Company entered into an Investment Agreement (the Investment Agreement ) with KVM Capital Partners ( KVM ), whereby the parties also agreed to enter into a registration rights agreement (the Registration Rights Agreement ). Pursuant to the terms of the Investment Agreement, for a period of thirty-six (36) months commencing on the trading day immediately following date of effectiveness of the Registration Statement (as defined below), KVM shall commit to purchase up to $1,500,000 of the Company s common stock, par value $0.001 per share (the Put Shares ), pursuant to Puts (as defined below), covering the Registrable Securities (as defined below). The purchase price of the Shares under the Investment Agreement is equal to a twenty-two and one half (22.5%) percent discount to the average of the three lowest closing bids as calculated using the average of the three lowest closing bids during the last seven (7) trading days after the Company delivers to KVM a Put notice in writing requiring KVM to purchase shares of the Company, subject to the terms of the Investment Agreement. The Registrable Securities include (i) the Put Shares and (ii) any shares of capital stock issued or issuable with respect to the Put Shares, if any, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, which have not been (x) included in the Registration Statement that has been declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the Securities Act. On September 15, 2014, the Company entered into the Registration Rights Agreement with KVM. Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file a registration statement (the Registration Statement ) with the U.S. Securities and Exchange Commission (the SEC ) to cover the Registrable Securities within twenty-one (21) days of closing. The Company must use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC. On June 11, 2013, the Company entered into an investment agreement (the Original Investment Agreement ) and a registration rights agreement (the Original Registration Rights Agreement and, together with the Original Investment Agreement, the Original Agreements ) with KVM whereby KVM was to purchase up to $1,500,000 of the Company s common stock. The Company and KVM desired to renegotiate certain terms in the Original Agreements and entered into a termination agreement, dated September 2, 2014 (the Termination Agreement ), to cancel the Original Agreements all of the transactions contemplated thereby. Notwithstanding the Termination Agreement, the 250,000 restricted shares of the Company s common stock issued to KVM under the Original Investment Agreement were fully earned when issued, and shall be retained by KVM. On October 6, 2014, the Company received notification from the Comision Federal Para La Proteccion Contra Riesgos Sanitarios (COFEPRIS) (Federal Commission for Protection against Health Risks) that the RevVac safety syringes have been registered and approved. This registration permits all sizes of the RevVac auto retractable vacuum safety syringes to be imported into Mexico. Legal Proceedings The Company is currently involved in a significant number of legal proceedings. As of the date of this Prospectus, there are nine actions pending that may have a material adverse effect on our financial condition or results of operation. As a result $520,832 of our expenses for the year ended December 31, 2013 relate to legal and consulting fees in connection with our legal proceedings. For more information, see Legal Proceedings beginning on page 38. Where You Can Find Us Our principal executive office is located at 1124 Park West Blvd. Suite #102, Mount Pleasant, SC 29466, and our telephone number (843) 971-4848. Our internet address is www.revolutionsmedical.com. The Offering Common Stock Offered by the Selling Security Holders 24,453,098 shares of common stock, including (i) 6,204,090 shares of common stock previously issued to certain shareholders pursuant to conversion of certain convertible promissory notes and/or other agreements; (ii) 11,750,000 shares of common stock that may be put to KVM; (iii) 250,000 shares previously issued to KVM and (iii) 6,249,008 shares of common stock underlying common stock purchase warrants. Common Stock Outstanding Before the Offering 278,833,931 shares of common stock as of December 31, 2014. (1) Common Stock Outstanding After the Offering 296,832,939 shares of common stock. (2) Terms of the Offering The selling security holder will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon such time as all of the common stock has been sold pursuant to the registration statement. Use of Proceeds We are not selling any shares of common stock in this offering and, as a result, will not receive any proceeds from this offering. See Use of Proceeds. Risk Factors The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 7. OTCQB Symbol RMCP (1) This total includes 6,204,090 shares being registered, previously issued to certain shareholders pursuant to conversion of certain convertible promissory notes and/or other agreements; and (2) 250,000 shares previously issued to KVM. (2) This total shows how many shares of common stock will be outstanding assuming (i) 11,750,000 shares of common stock to be put to KVM, and (ii) 6,249,008 shares of common stock underlying common stock purchase warrants, are issued
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. References to the "Company," "we," "us," "our" and similar words refer to Fresh Promise Foods, Inc. Overview Fresh Promise Foods is a consumer products and marketing company focused on the high-margin multi-billion dollar health and wellness food and beverage sectors. Under its wholly owned subsidiary, Harvest Soul Inc., the Company is building a production facility in Atlanta, GA and will be launching a new brand and category in the organic, all-natural juice category. TABLE OF CONTENTS PAGE Prospectus Summary 2
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001070523_community_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001070523_community_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in, or incorporated by reference into, this prospectus. As a result, it does not contain all of the information that may be important to you or that you should consider before investing in our common stock. Before making an investment decision, you should read this entire prospectus, including the "Risk Factors" section, and the documents incorporated by reference into this prospectus, which are described below under "Incorporation of Certain Information by Reference" on page 45. Overview Community Shores Bank Corporation (, ' ': , ' ': the Company ) is a Michigan corporation and is the holding company for Community Shores Bank (, ' ': , ' ': the Bank ). The Bank is a Michigan chartered bank that commenced operations on January 18, 1999 as a de novo operation with a single branch office. The Bank provides customary retail and commercial banking services to its customers, including checking and savings accounts, time deposits, safe deposit facilities, commercial loans, personal loans, real estate mortgage loans, installment loans, IRAs, ATM and night depository facilities, telephone, Internet and mobile banking, employee benefit and investment management services. The Bank now operates four branch locations in its primary service area, which is comprised of Muskegon and Northern Ottawa counties in Western Michigan. The Bank s deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") to applicable legal limits and the Bank is supervised and regulated by the FDIC and the Michigan Department of Insurance and Financial Services ("DIFS") Bank & Trust Division. As of June 30, 2015, we had total consolidated assets of approximately $189.5 million, total loans of approximately $127.1 million, total consolidated liabilities of approximately $181.6 million, including deposits of approximately $169.3 million, and consolidated shareholders equity of approximately $7.9 million. Background to the Offering Our Bank began to experience rising levels of nonperforming loans and higher provisions for loan losses in 2007, as the Michigan economy experienced economic stress ahead of national trends. The Bank incurred significant losses through 2011 that adversely affected its capital ratios. However, the Company had 13 consecutive years of profitability beginning in 2012. The increased retained earnings helped to reduce the amount of capital required to bring the Bank into compliance with its Consent Order (described below). In the first half of 2015, the Bank recorded a net loss stemming primarily from a derivative valuation recognition. In spite of the negative impact on net income, the core earnings of the Bank continue to strengthen. Upon issuance of the Consent Order in 2010, the Bank s assets were $238 million and slightly more than $10 million in capital was necessary to meet the tier one ratio of 8.50% required by its agreement with the regulators. Due to earnings improvement, a reduction in risk weighted assets and a change in the capital treatment for certain portions of deferred tax assets, the Bank has cut this required amount by 60%. As of June 30, 2015, the Bank required a capital injection of $3.54 million to meet the terms of the Consent Order. All other terms of the Consent Order have been met. Health of the Bank s Loan Portfolio Since the financial crisis, management has been making consistent progress in returning the Bank s loan portfolio to health. To illustrate the progress
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001073615_iasis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001073615_iasis_prospectus_summary.txt
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+Prospectus summary This summary highlights significant aspects of our business and this offering, but it is not complete and does not contain all of the information you should consider before making your investment decision. You should carefully read the entire prospectus, including the information presented under the section entitled Risk factors and the financial statements and related notes, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth in Risk factors and Forward-looking statements. As used herein, unless otherwise stated or indicated by context, references to the Company, IASIS, we, our or us refer to IASIS Healthcare Corporation and its affiliates. Unless the context otherwise implies, the term affiliates means direct and indirect subsidiaries of IASIS Healthcare Corporation and partnerships and joint ventures in which such subsidiaries are partners. The terms facilities or hospitals refer to entities owned and operated by affiliates of IASIS and the term employees refers to employees of affiliates of IASIS. Our company We are a healthcare services company delivering high-quality, cost-effective healthcare through a broad and differentiated set of capabilities and assets that includes acute care hospitals with related patient access points, and a diversified and growing managed care risk platform ( risk platform ). Our business model is centered on deploying our acute care expertise and risk platform, either separately or on an integrated basis, in attractive markets to manage population health, integrate the delivery and payment of healthcare services and ultimately expand our total market opportunities within our existing and new geographic markets. Our company is comprised of our acute care operations, which include 16 acute care hospitals, one behavioral hospital and multiple other access points, including 144 physician clinics, multiple outpatient surgical units, imaging centers, and investments in urgent care centers and on-site employer-based clinics, and our diversified and growing risk platform, Health Choice and its affiliated entities ( Health Choice ). Through Health Choice, we operate managed Medicaid and Medicare health plans, a health insurance exchange ( Exchange ) plan and a management services organization ( MSO ) that provides management and administrative services to third-party insurers, as well as accountable care networks in conjunction with our acute care facilities. Our facilities served 1.1 million patients and had adjusted admissions growth of 1.9% in calendar year 2014. In the first nine months of fiscal 2015, we had adjusted admissions growth of 3.5% and on a year-over-year basis our risk platform grew 50.0% to 389,900 covered lives as of June 30, 2015. Our business strategy and geographic market focus are designed to capitalize on the transition towards value-based care, the expansion of integrated healthcare delivery models, growth in managed care in government-sponsored health insurance programs, the growing need for cost-effective healthcare delivery models and the consolidation of physician groups and health systems. We believe that the growth of value-based care programs is accelerating and providers will assume increasing financial risk for the quality of care they deliver. We also believe traditional fee-for-service ( FFS ) reimbursement will become less prominent over time as the regulatory and business environment incentivizes better patient outcomes and increased cost efficiency. For Medicare spending alone, the Department of Health and Human Services (the Department ) has targeted 30% of all payments to be made through value-based care programs by 2016 and 50% of all payments by 2018. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated August 26, 2015 Preliminary prospectus shares IASIS Healthcare Corporation Common stock $ per share This is the initial public offering of our common stock. We are selling shares of our common stock. We currently expect the initial public offering price to be between $ and $ per share of common stock. After the completion of this offering, an investment vehicle affiliated with TPG Global, LLC will continue to own a majority of the voting power of our outstanding shares of common stock. As a result, we expect to be a controlled company within the meaning of the corporate governance standards of the New York Stock Exchange. See Principal and Selling Stockholders. We intend to apply to list our common stock on the New York Stock Exchange under the symbol IAS. Per share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds to us before expenses(1) $ $ (1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See Underwriting (conflicts of interest). The selling stockholders identified in this prospectus have granted the underwriters an option to purchase up to additional shares of common stock at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. Investing in our common stock involves risk. See Risk factors beginning on page 22. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to investors on or about , 2015. BofA Merrill Lynch Barclays J.P. Morgan Evercore ISI Goldman, Sachs & Co. Citigroup BMO Capital Markets TPG Capital BD, LLC Baird Prospectus dated , 2015. Table of Contents According to the Department, Medicare expenditures excluding Medicare Advantage and Part D totaled $362 billion in 2014. The nature of our presence in our existing markets, and how we have leveraged our delivery and risk platform in multiple markets, are reflective of our business strategy, as follows: Utah: We have built on the strength of our facility assets and physician relationships to expand our delivery and risk platform. Our integrated delivery network includes five acute care hospital campuses in the Salt Lake City metropolitan area including a new expandable inpatient and outpatient healthcare campus in fast-growing Lehi, Utah, that opened in June 2015, each supported by a diverse ambulatory footprint. Our growing Health Choice presence includes 7,100 managed Medicaid lives and an accountable care network, called Health Choice Preferred Utah, that includes 29,800 attributed lives and aligns approximately 1,000 physicians as of June 30, 2015. As of July 1, 2015, Health Choice s managed Medicaid lives in Utah totaled 16,000. Arizona: Our risk platform, Health Choice, which is headquartered in Phoenix, Arizona, continues to grow and expand and currently manages 246,900 total Medicaid and dual Medicare and Medicaid eligible lives ( Duals ) state-wide. As of June 30, 2015, we served 6,300 covered lives under our Exchange plan in Arizona, which predominantly serves the Phoenix market. Beginning on October 1, 2015, Health Choice, together with a joint venture partner, will begin operating an integrated acute and behavioral health plan in Northern Arizona. The joint venture, Health Choice Integrated Care LLC, will provide standalone behavioral health benefits for approximately 225,000 plan members in Northern Arizona, and acute and behavioral care on an integrated basis for approximately 6,000 members who are seriously mentally ill. We have leveraged our delivery assets in conjunction with Health Choice s risk platform to develop an accountable care network with 45,100 attributed lives and 1,100 aligned physicians as of June 30, 2015. Our delivery assets located in the cities of Phoenix and Mesa are core to our local accountable care network and include three acute care hospitals and a full-service, high-acuity behavioral hospital, a growing number of patient access points and an employed physician group. Florida: Applying the capabilities of our Health Choice risk platform in a market in which we do not own healthcare delivery assets, we manage the healthcare benefits and utilization of 97,700 managed Medicaid plan members as of June 30, 2015 for a large national insurer through the care management and administrative services of our MSO. Texas: We have developed a diverse healthcare delivery presence through acute care hospitals in Odessa, San Antonio, Houston, Port Arthur and Texarkana, 55 physician clinic sites, multiple outpatient access points, employed physician groups and additional satellite campuses in Houston and Hope, Arkansas. Our strategic focus, throughout our Texas market, centers on integration of our hospitals and physician operations through developing a more extensive network of primary care physicians, the expansion of our physician alignment strategies and extending the reach of our outpatient business, including both surgical and imaging services. Louisiana: Our expanding delivery network in the West Monroe area includes one acute care hospital, a related surgical hospital and a free-standing imaging center supported by employed physicians and a growing affiliated physician network designed to compete in a value-based environment. Colorado: We provide high-quality care through a critical access hospital in the Pikes Peak area of Woodland Park, Colorado. Table of Contents We believe we are well-positioned for the expected growth in value-based care because of our diverse and growing Health Choice risk platform, which is comprised of health plans, an MSO and accountable care networks that are enabled by our provider and patient-centric risk and integrated care model. Health Choice has been accredited by URAC, an independent healthcare accreditation agency that seeks to promote continuous improvement in the quality and efficiency of healthcare management. As of June 30, 2015, we experienced 50.0% year-over-year growth in Health Choice plan members, as total covered lives managed on our risk platform grew from 260,000 to 389,900. We believe our risk platform is well-positioned to respond to the healthcare industry s migration to cost efficiency and value-based reimbursement due to its breadth, ability to manage third-party, risk-based covered lives at scale, ability to deliver integrated care with owned and aligned hospitals and ambulatory assets, and ability to facilitate value-based physician alignment. Our Health Choice risk platform includes the following capabilities: Extensive medical management experience: Our 25-year history of continuously managing capitated covered lives includes a large cohort of managed Medicaid lives in Arizona, a population with historically lower reimbursement rates that requires intensive care coordination and sensitivity to cultural and linguistic needs. We believe that Health Choice s experience in managing Medicaid lives demonstrates its core competencies in care management, population health and global risk management. In recent years, through our Health Choice Preferred networks and MSO, we have applied our experience to new populations, including attributed lives in Medicare, Exchange and commercial health plans, which we believe has been effective in improving patient outcomes and cost efficiencies. We have deployed our risk platform in conjunction with our hospitals and physicians to enter into Bundled Payments for Care Improvement Initiative contracts with the Centers for Medicare and Medicaid Services ( CMS ). This value-based CMS initiative structures reimbursement on an episode-of-care basis and rewards providers for quality of outcomes and cost efficiency. Geographic and product diversification: As of June 30, 2015, Health Choice s related entities delivered healthcare services to 389,900 covered lives across three states. These covered lives included 244,300 managed Medicaid lives served primarily through Health Choice s core health plan business in Arizona, 9,700 Duals, 6,300 Exchange lives, 97,700 MSO lives and 74,900 lives attributed to our accountable care networks from multiple payors, whose care is managed by our network providers, of which 43,000 lives are included in Health Choice s managed Medicaid and Exchange plans. In addition, beginning on October 1, 2015, Health Choice, together with a joint venture partner, will manage the standalone behavioral health benefit for an estimated 225,000 plan members and acute and behavioral care on an integrated basis for approximately 6,000 members who are seriously mentally ill. Management services organization: Through our MSO services, we manage 97,700 managed Medicaid plan members of a large national insurer in Florida. In this relationship, we leverage Health Choice s administrative, medical risk and population health expertise in a manner that we believe is distinct among healthcare companies with significant acute care hospital operations. Risk-based, physician-centric managed care model: Our Health Choice risk platform, which includes Health Choice Preferred, allows us to align with physicians, build provider networks, integrate care across the delivery system and engage in value-based contracting. Health Choice Preferred organizes and partners with physicians to manage population health, enabling them to participate in the transition from FFS towards value-based payments. Through Health Choice Preferred, we have aligned with 2,100 physicians as of June 30, 2015 through accountable care networks that coordinate care for 74,900 attributed patient lives in two states, consisting of managed Medicaid, Medicare and commercial lives. These accountable care Table of Contents networks enter into contracts with insurance plans under which participating physicians and facilities are rewarded for effective clinical care and cost management. For instance, in some cases our networks make payments to health plans, or receive payments from health plans, based on whether or not target medical cost ratios are achieved. The network physicians then receive value-based incentive compensation generated from the pool of resulting cost savings, provided that such physicians have achieved agreed-to clinical quality benchmarks. We leverage common management, systems infrastructure and processes across our business operations to produce scale efficiencies, increase the consistency of clinical outcomes, and respond to existing market dynamics and new market opportunities. We believe our growing risk platform enables us to: (1) enter new markets by utilizing our managed care and risk capabilities without expending capital in facility assets, such as our MSO expansion into the Florida market; (2) grow our physician network and patient lives base through an organized response to the growth of value-based reimbursement; (3) increase our overall growth opportunity in risk-based contracting and government-sponsored programs; and (4) enter new markets on an integrated basis through investment in acute care facility assets and the deployment of our risk platform. Our accountable care networks integrate our acute care and managed care capabilities. These networks consist of local physicians and our hospitals, who work together to coordinate health plan member care in a cost-effective manner designed to achieve high-quality clinical results. This coordination involves Health Choice s medical management specialists working with our hospitals, network physicians and other network providers to ensure efficient sharing of clinical information to avoid unnecessary or duplicative care and to develop a care model that encourages communication among providers. Because of such collaboration among these local providers and the integration of our acute and managed care operations, our networks are able to enter into reimbursement arrangements that provide for financial incentives that reward cost-effective care. We believe Health Choice s population health management expertise allows us to develop a narrow network of providers and related provider offerings, with our hospitals serving as the preferred in-network facilities for these health plan offerings. In recent years, we have centered our growth strategy on a narrower set of geographies and the total healthcare services opportunity in each of our core markets. In support of this strategy, we have rationalized our business operations through the divestiture of non-core hospital operations and other related assets in Florida and Nevada and by raising capital for investment in our core markets. In our core markets, we seek to provide high-quality, cost-effective clinical care by expending capital on a disciplined basis to support and grow our delivery assets and using our risk platform where we believe it will enhance patient care. At the same time, we have also considered new market expansion that would be accretive to our core businesses. We have expanded our risk capabilities to cover new and emerging populations such as those covered by accountable care networks and Exchanges, broadened our facility portfolio to include a wider array of outpatient lines of business and access points, and created an MSO business to support new and existing market expansion. Our multi-pronged approach to the total healthcare services opportunity in a market is demonstrated in the following examples: Coordinated expansion of risk platform and delivery assets We have leveraged our existing delivery assets in conjunction with our risk platform to grow our market presence in Utah. We have developed an accountable care network that includes our five acute care hospital campuses in the Salt Lake City area and 1,000 aligned physicians who collectively manage 29,800 attributed lives. We have also extended our managed Medicaid capabilities to manage 7,100 lives through Health Choice Table of Contents Utah. To support our market growth and the expansion of our risk platform, we continue to invest in key service lines, including a new cancer center on our Jordan Valley campus, and expand our ambulatory network through investments in patient access points such as urgent care centers, on-site employer-based health clinics and a free-standing emergency department. In June 2015, we opened a new inpatient and outpatient healthcare campus south of Salt Lake City in Lehi, Utah (one of the fastest growing areas in Utah) that includes a hospital with 40 inpatient beds, full-service outpatient capabilities and a medical office building. The new healthcare campus is also expandable based on community need. By deploying the full breadth of our integrated healthcare services platform, including our healthcare delivery assets, aligned physicians and risk platform, we seek to create a collaborative, coordinated care delivery model that positions us to achieve incremental growth for both our network providers and the payors who contract with them. Since the beginning of our 2012 fiscal year, our Utah acute care revenues on average have grown faster than our company-wide acute care revenues. New market expansion with our MSO Leveraging our experience in providing cost-effective health plan services, we launched an MSO that is capable of providing services nationally to health plans and providers. In 2014, we began providing services for a large national insurer s managed Medicaid members in Florida and as of June 30, 2015, we are providing services for 97,700 lives, applying our risk capabilities in a market in which we do not own healthcare delivery assets. We were able to integrate our MSO with our client s systems, open a local office, and begin operations within 90 days of signing an agreement with our client. The ability to enter a new market through the expansion of our risk platform accounted for 55.4% of the year-over-year growth in our risk platform lives as of June 30, 2015. We believe this capability provides a different way for us to expand into new geographies and creates new opportunities for us to provide our distinct medical management services. Growing lines of business Since Health Choice was established in 1990, we have consistently grown our core Arizona managed Medicaid plan membership while building a statewide provider network. We have leveraged this core managed Medicaid experience to expand our risk platform in Arizona to cover 45,100 attributed accountable care network lives, establish an Exchange plan, and form an integrated behavioral health joint venture, under which we expect to manage the standalone behavioral health benefit for an estimated 225,000 plan members and acute and behavioral care on an integrated basis for approximately 6,000 members who are seriously mentally ill. We are also managing a growing number of complex care lives in Arizona through our Duals special needs plan, which grew 22.8% from 7,900 lives to 9,700 lives as of June 30, 2014 and 2015, respectively. Our multi-pronged approach has enabled us to accelerate our growth, as reflected in: (a) 9.5% annual revenue growth in fiscal 2014 as compared to fiscal 2013 and 10.6% growth in revenue in the first nine months of fiscal 2015 as compared to the first nine months of fiscal 2014; (b) 1.6% annual growth in Adjusted EBITDAR for fiscal 2014 as compared to fiscal 2013 and 6.9% growth in Adjusted EBITDA in the first nine months of fiscal 2015 as compared to the first nine months of fiscal 2014; (c) 0.8% growth in adjusted admissions for fiscal 2014 as compared to fiscal 2013 and 3.5% growth in adjusted admissions in the first nine months of fiscal 2015 as compared to the first nine months of fiscal 2014; (d) 50.0% year-over-year growth in Health Choice covered lives as of June 30, 2015, as total covered lives managed on our risk platform grew from 260,000 to 389,900; and (e) new types of contracts with governmental and other third-party payors, such as the integrated acute care and behavioral health contract under which our joint venture in Northern Arizona will begin serving members on October 1, 2015, and our Florida MSO relationship. Table of Contents For fiscal 2014, we generated revenues of $2.5 billion, net earnings from continuing operations of $2.6 million and Adjusted EBITDA of $239.8 million. For the first nine months of fiscal 2015, we generated revenues of $2.1 billion, net earnings from continuing operations of $9.7 million and Adjusted EBITDA of $193.6 million. For additional information regarding Adjusted EBITDA and Adjusted EBITDAR, which are non-GAAP measures, including a reconciliation of Adjusted EBITDA and Adjusted EBITDAR to the most directly comparable measure presented in accordance with U.S. generally accepted accounting principles ( GAAP ), see Summary financial data included elsewhere in this prospectus. Approximately $1.8 billion, or 72.1%, of our revenue for fiscal 2014 was derived from our acute care segment and approximately $699.3 million, or 27.9%, of our revenue for this period was derived from Health Choice. For the nine months ended June 30, 2015, approximately $1.4 billion, or 68.7%, of our revenue was derived from our acute care segment and approximately $642.3 million, or 31.3%, of our revenue for this period was derived from Health Choice. Healthcare industry overview and trends Cost-conscious healthcare environment and shift towards value-based healthcare The U.S. healthcare system is evolving in ways that favor cost-effective healthcare delivery, focusing on value-based payments and quality of outcomes. Many observers believe the traditional FFS reimbursement model is not effective or cost-efficient in coordinating patient care, and has therefore played a major role in elevating both the level and growth rate of healthcare spending. In response, both the public and private sectors are shifting away from the historical FFS models and moving towards value-based reimbursement methodologies, including capitation payment models, that are designed to incentivize value and quality. We believe that as governmental and private insurers seek to control healthcare costs and to increase quality of care, value-based payment methodologies and reimbursement trends, such as bundled payments, shared cost savings and other cost- and quality incentive-based arrangements, will continue to grow. We believe that these will include the continued growth of value-based payment methodologies tied to both quality and coordination of care, with incentives paid for the effective use of integrated electronic health records ( EHR ) technology and other programs that promote clinical integration and coordination of care, and movement more toward risk-based arrangements. We also believe that patient-centered and disease state medical home reimbursement models, in which a primary care or specialty physician serves as a care coordinator, will grow in prominence in certain markets. The number of people in the United States covered by risk-based payment programs has been increasing rapidly and, according to industry sources, is estimated to increase from approximately 108 million at the start of 2014 to approximately 155 million by 2019. This increase is expected to further drive the critical importance to accurately measure, analyze, report, and improve patient outcomes. We believe we are well-positioned to capitalize on these trends as we seek to integrate, and drive synergies among, the core competencies of our managed care and acute care businesses. Growth of healthcare spending CMS estimates that U.S. healthcare expenditures were $2.9 trillion in 2013, or more than 17% of the total U.S. gross domestic product ( GDP ). CMS projects that total U.S. healthcare expenditures are expected to grow by 5.6% in 2014 and by an average of 6.0% annually from 2015 to 2023. Because of this growth, total U.S. healthcare expenditures are estimated by CMS to be $5.2 trillion, or 19.3% of the total GDP, by 2023. The hospital services sector represents the single largest category of healthcare spending in the United States at $936.9 billion in 2013. CMS expects continued increases in hospital services based on the aging of the U.S. Table of Contents population, the expansion of Medicaid, advances in medical procedures, expansion of health coverage, increasing consumer demand for expanded medical services and increased prevalence of chronic conditions such as diabetes, heart disease and obesity. CMS estimates that hospital care expenditures will increase to approximately $1.6 trillion by 2023. We believe that these factors will drive long-term utilization increases for certain healthcare services and the need for hospital networks that can provide comprehensive healthcare services in a coordinated, cost-effective manner. Growth in government-sponsored healthcare Government-sponsored coverage is an important element of the U.S. healthcare system. According to CMS, federal and state spending on Medicaid, Children s Health Insurance Programs ( CHIPs ) and Medicare is expected to have exceeded $1.2 trillion and aided over 125 million people in 2014. By 2020, CMS anticipates spending on these three programs to grow to more than $1.8 trillion. Managed care solutions have a well-established track record of helping governments improve healthcare quality and access for beneficiaries while strengthening the fiscal sustainability of these programs. We believe that the enrollment in government-sponsored programs will continue to increase, driven by an aging population and expanded coverage from the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the Health Reform Law ). As a result, we expect that government value-based models will also expand to manage costs and incentivize providers to deliver high quality, cost-effective care. The programs that utilize these value-based models include Medicare Advantage, Managed Medicaid, Medicare Accountable Care Organizations ( Medicare ACOs ), Dual Eligible Pilot Programs and Medicare Value Based Purchasing. We believe our experience in managing government-insured lives positions us to benefit from the expected growth of these programs. Impact of Health Reform Law We believe that the Health Reform Law, which has expanded healthcare coverage through the growth of Exchanges, private sector coverage and expanded Medicaid coverage, has reduced the level of uncompensated care we provide to uninsured individuals. In its June 2015 King v. Burwell decision, the U.S. Supreme Court settled a significant challenge to the Health Reform Law. The court upheld the current subsidy model, which makes premium subsidies available for health insurance policies purchased through both state and federally-operated Exchanges. We believe the benefits realized from expanded healthcare coverage under the Health Reform Law have generally been offset by the reductions required by the law in the growth in Medicare payments and the decreases in disproportionate share hospital ( DSH ) payments, which have adversely affected our government reimbursement. Because of the many variables, including the law s complexity, continued delays or exceptions to employer mandates, possible amendments or changes, the possibility of future court challenges to the law, and possible reductions in funding by Congress and future reductions in Medicare and Medicaid reimbursement, the long-term effect of the Health Reform Law on our Company, including how individuals and businesses will respond to the new choices and obligations, is not yet fully known. We cannot predict the impact on our Company of these continuing developments with respect to the Health Reform Law. Table of Contents Our competitive strengths We believe our key competitive strengths position us as a provider-centric, payor-agnostic provider of broad and differentiated healthcare services, with flexibility for growth in new and existing markets. We believe these key competitive strengths include: High-quality, cost-effective care We seek to provide high-quality, high-value and cost-effective care for patients in collaboration with physicians, providers and payors. Central to our mission is a focus on clinical quality, including investments in patient care initiatives and information technology solutions that enable us to track and trend the quality of patient care, increase patient safety and increase the time our hospital staffs interact face-to-face with patients. In addition, we believe that our experience in operating and seeking to integrate delivery networks, including acute care hospitals, physician clinics and patient access points, enables us to provide our patients with the right level of care, in the right setting at the right time. As a result of our focus on the patient and delivering high quality, cost-effective care, we have achieved scores better than the national average across a broad variety of healthcare industry benchmarks, including CMS Core Measures and readmission rates. In addition, as of the date of this prospectus, all of our hospitals have met the Stage 2 meaningful use criteria specified by CMS for adoption and meaningful use of certified integrated EHR technology, and all of our hospitals have received ISO-9001 certification relating to the quality of our management systems and processes. Multi-pronged growth strategy that maximizes total market opportunity We believe our multi-pronged growth strategy enables us to pursue the total services opportunities in our existing geographic markets and provides us with greater optionality to enter new markets. The breadth of our services platform, including our acute care hospitals and a broad array of inpatient and outpatient lines of business and access points and a diversified and growing risk platform, is the key enabler of this strategy. We can offer delivery, health plan and risk management services on an individual or combined basis to each of our new and existing markets. Our MSO expansion in Florida to provide administrative and care management services for a national insurer s Medicaid beneficiaries highlights our ability to leverage our provider-centric, payor-agnostic platform to enter new markets quickly on a services-only basis. In Utah, we built on the strength of our facility assets and physician relationships to establish a managed Medicaid health plan and an accountable care network, which together cover 33,900 lives as of June 30, 2015, significantly increasing our presence in that market and enabling us to further align with local physician networks. A diversified and growing risk platform We have built a risk platform that we believe positions us to pursue the broad and growing risk and value-based care opportunity. The breadth of our platform s capabilities is reflected in the lives and relationships we manage, including, as of June 30, 2015: 244,300 managed Medicaid lives served primarily through Health Choice s core health plan business in Arizona; 9,700 Duals; 6,300 Exchange lives; 97,700 MSO lives and 74,900 lives attributed to our accountable care networks from multiple payors whose care is managed by our network providers, of which 43,000 lives are included in Health Choice s managed Medicaid and Exchange plans. In addition, beginning on October 1, 2015, our behavioral health joint venture will manage the standalone behavioral health benefit for an estimated 225,000 plan members and acute and behavioral care on an integrated basis for approximately 6,000 members who are seriously mentally ill. Table of Contents Our ability to operate a single platform for multiple government and commercial populations, deploy an MSO model at scale, develop and manage global risk accountable care relationships across our healthcare delivery system and successfully manage the high-risk portions of the population positions us to penetrate multiple new opportunities that are being created by a rapidly changing healthcare environment. Industry sources estimate these new opportunities to include: Medicaid and/or Duals procurement opportunities in multiple states, a $300 billion value-based care opportunity and a $34 billion MSO opportunity. Positions in higher-growth markets We have established a significant presence in attractive markets in seven states in the United States. We believe the markets in which we operate are attractive due to their favorable demographics, competitive landscape, larger size, diverse payor mix, and opportunities for expansion. According to the U.S. Bureau of Labor Statistics, our markets have experienced declining unemployment and most of our markets have populations that are growing faster than the national average. In addition, two of the states in which we operate have expanded Medicaid, which has measurably improved our payor mix in those states. Overall, we believe we are differentiated in our markets through our integrated care capabilities, creating opportunities to strategically deploy capital in projects that we believe will expand our capabilities and drive additional growth and market penetration. Experience with managing government-insured lives Our risk platform was launched in 1990, when our predecessor company began a managed Medicaid health plan in Arizona. We have extensive experience in working to contain medical costs of Medicaid and Duals populations, including the use of systems and processes intended to enable healthcare providers to improve efficiency and lower costs while increasing quality of care. We believe we benefit from an understanding of, and experience with, the cultural and linguistic needs of Medicaid populations and have developed specialized skills to manage their care. For instance, we communicate with Medicaid plan members who do not speak English or are hearing-impaired, coordinate plan member transportation, engage in extensive member outreach programs, and build relationships with schools and city and county health departments. We believe that our success in caring for the intensive needs of such government-insured populations gives our Health Choice operations deep, long-standing capabilities in care coordination and cost-effectiveness that are required of all health plans, regardless of member demographics. We believe our experience operating in a competitive and mature managed Medicaid and Duals market positions us to expand the types and number of governmental risk arrangements we offer. According to CMS, the number of total lives covered by government-sponsored healthcare programs is estimated to grow from approximately 134.4 million covered lives in 2014 to approximately 147.7 million covered lives by 2020. To service this growing number of government-insured lives, we have developed a cost-effective administrative structure, which benefits our entire risk platform. Our experience in managing government-insured lives and administrative efficiencies has created differentiated opportunities, such as our MSO expansion in Florida, and the ability to obtain capitated government contracts after competitive bid processes, such as the integrated acute care and behavioral risk contract for which our joint venture in Northern Arizona recently won a competitive bid. Table of Contents Our growth strategy We seek to provide high-quality, cost-effective healthcare services to the communities we serve, while positioning our Company for long-term growth and re-investment opportunities in a dynamic healthcare environment. To achieve these objectives, we are focusing on the following key components of our business strategy: Capture growth opportunities in existing markets We believe we are well-positioned in our existing markets given favorable demographics, including lower unemployment, growing government-sponsored plan members and faster-than-average population growth in most markets. In addition, there are multiple opportunities that are early in their life cycles that we believe could further accelerate our growth within our existing markets, as described below: In 2014, we deployed our MSO platform in Florida approximately 90 days after entering into an agreement with a large national insurer. As a result, in one year, we added 88,000 covered lives to our risk platform. As of June 30, 2015, this membership totaled 97,700. We believe our proven ability to quickly mobilize our MSO services and our establishment of an east coast operations hub that employs approximately 100 managed care professionals, positions us for additional MSO opportunities. On December 18, 2014, we and our joint venture partner, the Northern Arizona Behavioral Health Authority ( NARBHA ), won a competitive bid for an integrated acute care and behavioral healthcare contract for six counties in Northern Arizona. Under this contract, which begins October 1, 2015, we expect to manage the standalone behavioral health benefit for an estimated 225,000 plan members and acute and behavioral healthcare on an integrated basis for approximately 6,000 members who are seriously mentally ill. We have established our own Health Choice Exchange products in Arizona. As of June 30, 2015, we had 6,300 Exchange lives, including 5,800 total Exchange lives obtained through the 2015 open and special enrollment periods. By establishing an Exchange presence, we expect to be able to benefit from Medicaid beneficiaries who move to Exchange products, thereby leveraging our common Medicaid and Exchange brand, as well as the consumerization of health plan purchases. As of June 30, 2015, approximately 55% of our Exchange lives had chosen benefit plans through the Health Choice Preferred accountable care network, which includes our local hospitals and network physicians. Given the growth in covered lives we have experienced in Utah and fast-growing demographics in parts of this market, in June 2015 we opened a new integrated inpatient and outpatient healthcare campus and medical office building, south of Salt Lake City in Lehi, Utah. The new healthcare campus is also expandable based on community need. We also have recently expanded our patient access points in Utah to include multiple ambulatory sites, including a free-standing emergency department, urgent care centers and on-site employer-based health clinics. Through our accountable care networks in Arizona and Utah, we have aligned approximately 2,100 physicians with our local hospitals and other providers. We believe these networks provide a cost-effective physician alignment model that is expandable and creates additional opportunities to manage lives on our risk platform. We have benefited from expanded insurance coverage under the Health Reform Law for patients who previously were uninsured, which has improved our payor mix from self-pay to Medicaid and commercial insurance coverage for medical services provided by our hospitals. We believe the improvement in our uncompensated care as a percentage of acute care revenue and our self-pay admissions mix can be attributed primarily to this expanded coverage, including the impact of Medicaid expansion in the state of Table of Contents Arizona and improvements in employment and other economic factors in our markets, which has resulted in lower self-pay volume and revenue for fiscal 2014 compared to the prior fiscal year. During fiscal 2014 and the first nine months of fiscal 2015, our uncompensated care as a percentage of acute care revenue was 21.1% and 20.4%, respectively, compared to 23.0% and 21.5% in the corresponding prior year periods. During fiscal 2014 and the first nine months of fiscal 2015, our self-pay admissions represented 6.9% and 6.0%, respectively, of our total admissions, compared to 8.0% and 7.1% in the corresponding prior year periods. Expand MSO relationships We are in the early stages of deploying our MSO services. We have been able to expand our capabilities and markets in multiple ways, including: MSO services In 2014, we launched our MSO partnership with a large national insurer pursuant to which we provide administrative services to its managed Medicaid members in Florida. We established a local office that could service the insurer s 88,300 members approximately 90 days after entering into an agreement with the national insurer. As of June 30, 2015, we served 97,700 members through this MSO relationship. Accountable care networks Our accountable care networks in Arizona and Utah cover 74,900 Medicare, Medicaid and commercial managed care enrollees and have allowed us to align with approximately 2,100 physicians as of June 30, 2015. Through Health Choice Preferred, we believe we have the opportunity to expand our physician network and grow our attributed lives. Medicare Advantage We have deployed our medical management experience and population health services (some of which delegate risk to us) through our Health Choice Preferred accountable care networks in relationships with multiple third-party Medicare Advantage plans. We believe that an increasing number of health systems have begun adopting value-based care models to create increased financial stability by receiving more value for the coordinated care they deliver while maintaining and growing their patient volumes. Our expanded capabilities, including MSO services and risk-based reimbursement aligned with both hospitals and physicians, allow us to benefit from the growth of provider-led population health management. According to industry sources, the MSO market opportunity was $34 billion in 2014. In addition, the number of people in the United States covered by risk-based payment programs is expected by industry sources to grow from approximately 108 million at the start of 2014 to approximately 155 million by 2019, many under new accountable care network and population health models. Capture growth opportunities in government-sponsored lives We have used our experience in managed Medicaid to cover new populations, including Medicare, Exchanges, behavioral health and Duals. According to CMS, government-sponsored coverage is expected to continue to grow significantly, from 134.4 million persons and $1.2 trillion in 2014 to 147.7 million persons and more than $1.8 trillion in 2020. Through our diversified risk platform, we believe we will be able to capitalize on the multiple forms of growth in government-insured lives, such as increased penetration of Medicare Advantage, expansion of Medicaid, including where states use federal Medicaid money to purchase private insurance on the Exchanges for eligible enrollees, and additional risk arrangements such as accountable care networks and Medicare Shared Savings Programs ( MSSPs ). As the trend towards managing government-sponsored lives increases, we believe our care management capabilities, clinical integration, quality measures and demonstrated ability to implement value-based programs positions us to benefit from large scale government contracts. Table of Contents Selectively enter new markets Through our broad and differentiated set of capabilities and assets, there are multiple ways for us to enter markets, including by way of acute care hospitals, health plans, risk services or any combination of the three. For instance, our risk platform enables us to enter new markets to develop accountable care networks, launch health plans or provide MSO services, either in support of newly acquired provider assets or solely as a health insurer or MSO contracting with third-party payors and providers in the market. As a result, in addition to the acquisition or construction approaches pursued most often by pure acute care hospital systems, we have greater flexibility to enter new markets in a capital-efficient manner. Selectively pursue acquisitions There are multiple factors accelerating the need for providers and health plans to seek strategic partners, including lower reimbursements, expansion of government-sponsored programs and the growth of value-based care. We believe that our patient-centered, integrated healthcare services offerings make us an appealing strategic partner for payors, physicians and other healthcare providers in new and existing markets. In addition, our team has successfully executed on strategic acquisitions that have achieved strong operating results. We continue to monitor opportunities that strategically fit our vision and long-term strategies. Table of Contents
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+S-1/A 1 evus042715s1a.htm UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 3 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 EV CHARGING USA, INC. (Exact name of Registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 4911 (Primary Standard Industrial Classification Code Number) 91-1947658 (I.R.S. Employer Identification Number) 180 North LaSalle St., 37th Floor Chicago, IL 60601 Telephone: (312) 216-5106 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) Brian C. Howe Chief Executive Officer 180 North LaSalle St., 37th Floor Chicago, IL 60601 Telephone: (312) 216-5106 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: Barry J. Miller, Esq. 13321 Ludlow Street Huntington Woods, MI 48070 Telephone: (248) 232-8039 As soon as practicable after this Registration Statement becomes effective (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [x] (Do not check if a smaller reporting company) Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Share Proposed Maximum Offering Price Registration Fee 1 Common Stock, par value $0.001 per share 700,000,000 $0.02 $14,000,000 $1,626.802 1 Estimated pursuant to Rule 457(a) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee, based on the sales price for the common stock of the Registrant in the private placement described in this Registration Statement, as there is currently no public market price for the Registrant s Common Stock. 2 Previously paid. The Registrant hereby amends this Registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents EV CHARGING USA, INC. 700,000,000 Shares of Common Stock This Prospectus relates to the resale by the selling shareholders of up to 700,000,000 shares of common stock, par value $0.001 per share ("Common Stock"), of EV Charging USA, Inc., a Nevada corporation. The Common Stock is quoted on and traded over the market maintained by OTC Markets Group Inc. ("OMG") known as "OTCQB" tier ("OTCQB") under the symbol "EVUS." The Company filed an application with OMG to have the Common Stock continue to be quoted on OTCQB, which was accepted on January 29, 2015. However, the Company may not be able to comply with the requirements for ongoing quotation on the OTCQB tier. See the risk factor entitled "We may not be able to comply with the requirements for quotation on OTCQB" on page 14. There have been minimal recent public quotations of the Common Stock and for at least 10 years, there has been no active public market for the Common Stock. The shares of Common Stock will be offered in anticipation of the development of a secondary trading market. For information as to bid and trading prices for the Common Stock since June 30, 2012, see "Market Price, Dividends and Related Shareholder Matters" on page 33. The price to the public at which the selling shareholders will offer their shares of Common Stock will be prevailing market prices; the selling shareholders may also sell their shares of Common Stock in privately negotiated transactions. The selling shareholders reserve the right to accept or reject, in whole or in part, any proposed purchase of shares. The selling shareholders will pay any underwriting discounts and commissions. The Company will not receive any proceeds from sales the Common Stock by the selling shareholders and we will bear all costs associated with the registration of their shares under the Securities Act of 1933, as amended, (the "Securities Act"), other than any selling shareholder s legal or accounting costs or commissions. INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" IN THIS PROSPECTUS BEGINNING ON PAGE 6 FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT THEREIN. Table of Contents NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus. We have not authorized anyone to provide you with information that is different from that contained in this Prospectus. The selling shareholders are offering to sell and seeking offers to buy shares of the Common Stock only in jurisdictions where offers and sales are permitted. The information contained in this Prospectus is accurate only as of the date of this Prospectus. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this Prospectus nor any distribution of securities in accordance with this Prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this Prospectus. The date of this Prospectus is May ___, 2015. Table of Contents PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this Prospectus. This summary does not contain all of the information that you should consider before investing in the Common Stock. You should carefully read the entire Prospectus, including the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes, before you decide whether to invest in the Common Stock. If you invest in the Common Stock, you are assuming a high degree of risk. See the section entitled "Risk Factors." References to "our," "we," "us," or "the Company" "our Company," refer to EV Charging USA, Inc. and its subsidiary, unless the context requires otherwise. "Charging" refers to EV Charging USA, Corp., an Illinois corporation and our wholly owned subsidiary. Overview Through Charging, we offer electric vehicle ("EV") charging services and charging stations, enabling EV drivers to recharge their vehicles easily at commercial locations or in their own garages. Our headquarters are in Chicago, Illinois. We are initially offering these products and services in the metropolitan Chicago area and plan to expand nationally, starting in the Midwest, as we identify business opportunities and as our financing permits. We perceive, but cannot assure, that there will be an increasing demand for our products and services. During the fiscal year ended June 30, 2014, and the 6-month period ended December 31, 2014, we did not sell, install or services any electric vehicle charging stations. During the 3-month period ended March 31, 2015, we entered into agreement under which we will receive fees for referrals to a vendor of charging stations. We have sold a charging station pursuant to that agreement for which we will receive a referral fee and have entered into a contract for the sale of that charging station under which we will receive an installation fee during the quarter ending June 30, 2015. We anticipate entering into an agreement with a manufacturer from which we are purchasing charging stations for a line of credit under which we may purchase its products for resale. See "Business." While we will be able to continue generating revenue from referrals and acquire charging stations for resale within the limits imposed by the line of credit and conduct a number of the activities set forth in our plan of operations, we do not have the capital required to complete the portions of that plan that, among others, contemplate the purchase of certain equipment and service parts, increased staffing and office space, and advertising. Our ability to develop those aspects depends on our obtaining substantial capital and we can give no assurance that we will be able to do so. See "Management s Discussion and Analysis of Financial Condition and Results of Operations" and "Plan of Operations." For several years prior to the Merger, the Company had no operations, material assets or revenue and was a shell company. Upon the filing of articles of merger with the Secretary of State of the State of Illinois on October 27, 2014, pursuant to the Merger Agreement (see "Our History – The Merger," below), the Company acquired Charging as its wholly owned subsidiary, ceased being a shell company and became a development stage company engaged in the business described below. Although we have organized, have an office and have begun to develop our business as described in the previous paragraph, we are in the early stages of our development. An investment in the Company is highly speculative and we cannot assure that our business will continue to develop. We have a history of net losses and deficiencies in working capital. We incurred a net loss of $11,839 for our fiscal year ended June 30, 2014, and a net loss of $7,731 for the six-month period ended December 31, 2014. As of June 30, 2014, and December 31, 2014, our working capital deficiency was $8,839 and $391,691, respectively. As of June 30, 2014, and December 31, 2014, we had available cash of $320 and $353, respectively. As of April 27, 2015, we had $6,737 of available cash. Our long-term goals are to continue the development of our business conducted and to become a significant factor in the electric vehicle charging market. For further information respecting our development to date and our plans to continue with our development, see "Description of Business" and "Plan of Operations." Table of Contents1 Our offices are located at 180 North LaSalle St., Chicago, IL 60601 and our telephone number is (312) 216-5106. Our audited financial statements for the year ended June 30, 2014, include only the period commencing with the inception of Charging on August 27, 2013, and do not include any historical financial data of the Company, which was dormant for several years until it acquired Charging in the merger that is discussed under the caption "Prospectus Summary – Our History – The Merger" on page 3. Accordingly, these financial statements are those of Charging. Our unaudited financial statements for the 6-month period ended December 31, 2014, show our results for that period and have been prepared on the basis that Charging was the accounting acquirer in the merger. Potential investors should consider, in addition to the disclosures set forth above and the Risk Factors commencing on page 6, the fact that the Company has pledged all of the shares in its operating subsidiary, Charging, as security for the payment of a convertible promissory note in the principal amount of $400,000, of which $25,000 has been prepaid and of which $375,000 is due in full on March 31, 2016. We are presently unable to repay this convertible promissory note and, unless we are able to develop sufficient revenues and/or obtain sufficient financing, we will be unable to pay it when due. In that event, the lender could foreclose on and sell all of the shares in Charging, through which we are required to conduct all of our operations, in order to satisfy, as a whole or in part, the indebtedness outstanding under the convertible promissory note, with the result that the Company would be left with no operations and the shareholders would lose all, or substantially all, of their investment. This convertible promissory note also contains restrictive covenants which limit our ability to make acquisitions and issue publicly traded securities. For further information on the convertible promissory note, the circumstances under which it was issued, certain risks associated with it and the pledge, see "Directors, Executive Officers, Promoters and Control Persons – Related Party Transactions – Exchange Transaction" on page 35. Potential investors should also consider that while, as indicated under "Plan of Operations," we have commenced the plan, we need to raise capital of at least $120,000 in order to complete it. No assurance can be given as to when or whether we will receive any portion of that amount or the terms, if any, on which we will receive it. Until we begin to receive financing and/or revenues, it will cost approximately $1,500 per month to maintain our office and develop our business through the efforts of our president. We have $3,578 in available cash and our President has indicated that he is willing to loan the Company $1,500 per month for the next 6 months. Accordingly, if we do not receive additional financing or generate revenues within 8 months, we cannot not continue in business beyond that time and if we do not receive additional financing or generate sufficient revenue within 6 months, we may not be able to meet expenses in connection with our annual audit for the fiscal year ending on June 30, 2015, and our annual report on Form 10-K for that fiscal year. The payment of these costs, depends on the willingness of our president to advance funds to us. The development of our business depends on his willingness to continue to work without compensation. No assurance can be given that he will continue to advance funds or to work without compensation. Potential investors should also consider that our president sole director has 86.2% of the voting power of the Company and therefore will exercise significant control over the Company and all matters requiring the approval of shareholders. There is no established public trading market for the Common Stock. Our History Prior to the Merger The Company was incorporated in the State of Colorado in 1983, under the name Bugs, Inc., for the purpose of using microbial and other agents, including metallurgy, to enhance oil and natural gas production and to facilitate the recovery of certain metals. On August 17, 1999, it was redomiciled to the State of Nevada through a merger as Genesis Capital Corporation of Nevada, which was authorized to issue 50,000,000 shares of Common Stock, par value $0.001 per share and 10,000,000 shares of preferred stock, issuable in series. On September 17, 2001, the Company amended its articles of incorporation to increase the number of authorized shares of Common Stock to 500,000,000. On January 25, 2007, the Company filed with the Secretary of State of Nevada a certificate of designations designating 5,000,000 shares of Series A Preferred Stock ("Series A Preferred Stock") and amended the certificate on February 21, 2007. Table of Contents2 On February 21, 2007, the Company filed with the Secretary of State of Nevada a certificate of designations designating 5,000,000 shares of Series A Preferred Stock ("Series B Preferred Stock"). On March 12, 2007, the Company amended its articles of incorporation to provide for a 1-for-100 reverse split. On April 21, 2008, the Company amended its articles of incorporation to provide for a 1-for-500 reverse split. On February 9, 2010, the Company amended its articles of incorporation to change its corporate name to "Milwaukee Iron Arena Football, Inc." On July 15, 2010, the Company amended its articles of incorporation to provide for a 1-for-50 reverse split. On September 5, 2014, the Company filed with the Secretary of State of Nevada a certificate of designation designating 2,530,000 shares of Series C Preferred Stock, par value $0.001 per share ("Series C Preferred Stock"), which certificate of designation was withdrawn on October 13, 2013. On September 5, 2014, the Company filed with the Secretary of State of Nevada a certificate of withdrawing the certificate of designation of the Series A Preferred Stock, par value $0.001 per share ("Series A Preferred Stock"), which had been surrendered in satisfaction of a condition precedent to the merger described below. On October 13, 2014, the Company filed with the Secretary of State of Nevada a certificate of designation designating 2,530,000 shares of Series D Preferred Stock, par value $0.001 per share ("Series D Preferred Stock"). On October 21, 2014, the Company changed its corporate name from "Milwaukee Iron Arena Football, Inc." to "EV Charging USA, Inc." by merging a wholly owned subsidiary of the Company that had the latter name into the Company, with the Company as the surviving corporation and in connection with the merger, amending the articles of incorporation to effect the change of name without a vote of the Company s shareholders, as permitted by Nevada law. This subsidiary had no assets or operations. The Merger On August 20, 2014, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with MWKI Acquisition, Inc., an Illinois corporation and the Company s wholly owned subsidiary ("Acquisition"), and EV Charging USA, Corp., an Illinois corporation ("Charging"). This agreement was amended on August 28, 2014, October 2, 2014, and October 23, 2014, and, as so amended, is referred to as the "Merger Agreement." Under the Merger Agreement, the Company agreed to acquire Charging as its wholly owned subsidiary by merging Acquisition with and into Charging, such that the Company would acquire all of the outstanding shares of Charging and the sole holder of the shares of Charging immediately prior to the Merger would receive 2,180,000 shares of the Company s Series D Preferred Stock. Each share of Series D Preferred Stock was convertible into 2,000 shares of Common Stock or a total of 700,000,000 shares of Common Stock. However, the Company had only 498,000,000 shares of authorized and unissued shares of Common Stock available for such conversion. Accordingly, the certificate of designation for the Series D Preferred Stock permitted the conversion of only 249,000 shares of Series D Preferred Stock until the Company authorized the additional 202,000,000 shares of Common Stock required for the full conversion of the Series D Preferred Stock. The Company authorized these additional shares by filing an amendment to the Company s articles of incorporation providing for an additional 1,000,000,000 shares of authorized Common Stock on February 23, 2015, and, upon such filing, all of the shares of Series D Preferred Stock were automatically be converted into shares of Common Stock. Table of Contents3 The merger that occurred pursuant to the Merger Agreement is referred to as the "Merger." On October 27, 2014, the transactions contemplated by the Merger Agreement were closed and on the same day, the Merger was consummated by the filing of a certificate of merger with the Secretary of State of the State of Illinois, upon which the Company acquired Charging as its wholly owned subsidiary. Since we had no operations prior to the consummation of the Merger, our business will be that of Charging only. A description of our business appears below under the caption "Description of Business." Our long-term goals are to continue the development of the business conducted by Charging and to become a significant factor in the electric vehicle charging market. Prior to the consummation of the Merger, the Company had 155,892 shares of Common Stock, 5,000,000 shares of Series A Preferred Stock, and 5,000,000 shares of Series B Preferred Stock issued and outstanding. All of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock were held beneficially by Richard S. Astrom, the Company s president and sole director until the consummation of the Merger. In satisfaction of a condition precedent to the Merger, Mr. Astrom surrendered to the Company his shares of Series A Preferred Stock prior to the closing of the Merger and his shares of Series B Preferred Stock upon the closing of the Merger, extinguished the Company s indebtedness to him and agreed to indemnify the Company from and hold it harmless against certain other liabilities, all in exchange for (i) its issuance to him of a convertible promissory note in the principal amount of $400,000.00, secured by a pledge agreement and (ii) its prepayment to him of $25,000.00 of the principal amount of the promissory note. For further information about these transactions, see "Directors and Executive Officers – Related Party Transactions – Exchange Transaction" on page 35. After the shares of Series A Preferred Stock were surrendered, they were canceled and the Company filed with the Secretary of State of the State of Nevada a certificate withdrawing the certificate of designation establishing the Series A Preferred Stock, as indicated above. At the closing under the Merger Agreement, all of the outstanding shares of Series B Preferred Stock were surrendered and were canceled. On November 17, 2014, the Company filed with the Secretary of State of Nevada a certificate withdrawing the certificate of designation of this series. In satisfaction of a condition precedent to the Merger, the Company completed a private placement in which it received $25,000 and issued 350,000 shares of Series D Preferred Stock (the "Private Placement"). After the Merger and Private Placement, the Company had outstanding 155,892 shares of Common Stock and 2,530,000 shares of Series D Preferred Stock, which were convertible into 5,060,000,000 shares of Common Stock. By reason of the full conversion of the Series D Preferred Stock into shares of Common Stock on February 23, 2015, the Company now has 5,060,155,892 shares of Common Stock outstanding. One of the holders of Common Stock, Brian C. Howe, our president and sole director, owns 4,360,000,000 shares of Common Stock; thus, he has voting control of the Company. As a result of the Merger, we are in the business of providing electric vehicle ("EV") charging services and charging stations, enabling EV drivers to recharge their vehicles easily at commercial locations or in their own garages. For more detailed information as to our business and our plans to develop it, see "Description of Business," on page 25 and "Plan of Operations" on page 30. Following the Merger, the Company, the fiscal year of which ended September 30, adopted the fiscal year of Charging, which ends June 23. Table of Contents4 The Company s corporate structure is as follows:
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of AuraSource, Inc. (referred to herein as the "Company," "we," "our," and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements before making an investment decision. Business Overview AuraSource, Inc. ("AuraSource" or "Company") was incorporated on March 15, 1990 and is focused on the development and production of environmentally friendly and cost effective industrial energy and feedstock used for industrial applications. AuraCoal, AuraSource s core technology, includes ultrafine grinding and impurities removal. Initial industrial applications of AuraSource technology are ultra-fine coal water mixture for heavy oil substitution, and low grade iron ore fine and slimes beneficiation. AuraSource formed AuraSource Qinzhou Co. Ltd., a wholly owned subsidiary in China ("Qinzhou"), to acquire these types of Hydrocarbon Clean Fuel ("HCF") technologies, performing research and development related to the reduction of harmful emission and energy costs for HCF technology and products based on this technology, licensing HCF technology to third parties and selling services and products derived from this technology. We have developed seven patented technologies: 1) ultrafine grinding and 2) ultrafine separation. A more detailed discussion of this technology and its anticipated benefits is provided under the section "Description of Business". As discussed more fully in this Prospectus, as well as in our accompanying financial statements to this Registration Statement, we have incurred recurring losses from operations. For the six months ended September 30, 2015, we incurred a net loss of ($650,888) or ($0.01) per share. Additionally, for the year ended March 31, 2015, we incurred a net loss of ($1,454,906) or ($0.02) per share. Through September 30, 2015, we have incurred recurring losses from operations of ($13,047,044), primarily in connection with research and development activities; and, as of September 30, 2015 had a stockholders deficiency of ($1,077,578). Our Common Stock is traded on OTC QB Sheets; an OTC market tier for companies that report to the SEC. Investors can find quotes and market information for the Company at www.otcmarkets.com under the ticker symbol "ARAO" On September 15, 2015, we entered into an investment agreement (the "EP Agreement") with Southridge Partners II LP, a Delaware limited partnership ("Southridge"). Pursuant to the terms of the EP Agreement, Southridge shall commit to purchase up to five million ($5,000,000) Dollars of our common stock over a period of up to twenty-four (24) months. In connection with the EP Agreement, we also entered into a registration rights agreement (the "Registration Rights Agreement") with Southridge. Pursuant to the Registration Rights Agreement, we are obligated to file a registration statement with the Securities and Exchange Commission ("SEC") covering 5,000,000 shares of the common stock underlying the EP Agreement within 120 days after the closing of the EP Agreement. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement become effective within five business days after receiving notice from the SEC that the registration statement may be declared effective and to maintain the effectiveness of such registration statement until termination in accordance with the EP Agreement. Where You Can Find Us Our principal executive office location and mailing address is 1490 South Price Road, Suite 219, Chandler, AZ 85286, and our telephone number is (480) 292-7179.
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+S-1/A 1 vglife_s1a1.htm FORM S-1 AMENDMENT As filed with the Securities and Exchange Commission on February 11, 2015 Registration Statement No. 333- 201905 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment No. 1 to the FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 VG Life Sciences Inc. (Exact name of registrant as specified in its charter) Delaware 3845 33-0814123 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) VG Life Sciences Inc. John Tynan 121 Gray Avenue, Suite 200 Chief Executive Officer Santa Barbara, CA 93101 VG Life Sciences Inc. (805) 879-9000 121 Gray Avenue, Suite 200 Santa Barbara, CA 93101 (805) 879-9000 (Address and telephone number of registrant s principal executive offices) (Name, address, and telephone of agent for service) Copies of communications to: Amy M. Trombly, Esq. Trombly Business Law, PC 1434 Spruce Street, Suite 100 Boulder, CO 80302 Phone (617) 243-0060 Fax (617) 243-0066 Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share (2) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee Common Stock, par value $0.0001, to be sold by existing stockholders 5,000,000 $0.07255 $362,750 $42.15* * Previously paid. (1) Pursuant to Rule 416(a) of the Securities Act of 1933, as amended, this registration statement shall be deemed to cover additional securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 of the Securities Act. The price per share and aggregate offering prices for the shares registered hereby are calculated on the basis of $0.07255, which is the average of the high and low prices of the registrant s common stock as reported on the OTCQB marketplace on February 3, 2015. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS VG LIFE SCIENCES INC. OFFERING UP TO 5,000,000 COMMON SHARES This prospectus relates to the offer and resale of up to 5,000,000 shares of our common stock, par value $0.0001 per share, by the selling stockholder, Dutchess Opportunity Fund, II, which Dutchess has agreed to purchase pursuant to the investment agreement we entered into with Dutchess on March 28, 2014, as amended. Subject to the terms and conditions of the investment agreement, which we refer to in this prospectus as the "Investment Agreement," we have the right to "Put," or sell, up to $5.0 million in shares of our common stock to Dutchess. This arrangement is sometimes referred to as an "Equity Line." We will not receive any proceeds from the resale of these shares of common stock offered by Dutchess. We will, however, receive proceeds from the sale of shares to Dutchess pursuant to the Equity Line. When we Put an amount of shares to Dutchess, the per share purchase price that Dutchess will pay to us in respect of such put will be determined in accordance with a formula set forth in the Investment Agreement. Generally, in respect of each put, Dutchess will pay us a per share purchase price equal to 94% of the lowest volume weighted average price, or "VWAP," of our common stock during the five consecutive trading day period beginning on the trading day that Dutchess receives our put notice. Dutchess may sell the shares of common stock from time to time at the prevailing market price on the OTCQB marketplace, or on an exchange if our shares of common stock become listed for trading on such an exchange, or in negotiated transactions. Dutchess is an "underwriter" within the meaning of the Securities Act of 1933, as amended, in connection with the resale of our common stock under the Equity Line. Our common stock is quoted on the OTCQB marketplace under the symbol "VGLS". The last reported sale price of our common stock on the OTCQB marketplace on February 9, 2015 was $0.0785 per share. THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 3. You should rely only on the information provided in this prospectus or any supplement to this prospectus. We have not authorized anyone else to provide you with different information. Neither the delivery of this prospectus nor any distribution of the shares of common stock pursuant to this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Subject to Completion, the date of this Prospectus is February 11, 2015. TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001093207_crossroads_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001093207_crossroads_prospectus_summary.txt
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+information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that you should consider before deciding whether to exercise your subscription rights. You should carefully read this entire prospectus, including the information contained in the sections entitled "Risk Factors" and "The Rights Offering," our audited consolidated financial statements and the accompanying notes for the year ended October 31, 2014, and our unaudited consolidated financial statements for the quarter ended April 30, 2015, both of which are incorporated into this prospectus by reference, in their entirety before you decide to exercise your subscription rights. Overview Crossroads Systems, Inc. is a global provider of data storage solutions. Founded in 1996 and based in Austin, Texas, Crossroads develops technology and products that address specific IT challenges, such as cost-effectively storing and protecting business-critical data. Crossroads commitment to innovation is evident through our numerous industry recognitions for excellence in data storage and protection and the successful application of our technology throughout the industry. Our products are sold worldwide to Fortune 2000 companies. Additionally, technology leaders such as Hewlett Packard ("HP") and Fujifilm are among our original equipment manufacturer ("OEM") and strategic partners. Our strategic product focus is on long-term data preservation and protection in markets experiencing high data growth. We currently ship the following products: StrongBox , StrongBox DataManager, StrongBox VSeries Tape Libraries, SPHiNX , Read Verify Appliance , FileStor HSM, and routers. All of our solutions solve storage and data management problems and protect customers long-term investments by reducing both cost and complexity. Moreover, our products are designed with a scalable architecture, allowing companies to purchase additional storage capacity as needed and allowing Crossroads to deliver incremental capacity purchases quickly and with minimal service impact. We sell these products through a network of OEM and strategic partners in conjunction with our US and European operations. Our proprietary technology has resulted in strong intellectual property assets. Crossroads technological developments have produced industry-recognized patents that have been licensed extensively. Since 2000, Crossroads has received over $61 million in revenue from licensing activity. We expect that licensing activity to continue as Crossroads technological developments become even more widely used in data storage solutions. Our Direction and Strategy Crossroads fundamental purpose is to help customers simplify and improve IT operations where access to mission-critical data is key. Our commitment to solving complex problems provides ongoing value to our customers, partners and stockholders. Our objective is to deliver innovative, reliable, and affordable data protection solutions. By doing so, we expect to increase our product revenues and drive our business towards profitability. As we attempt to gain market acceptance of our newest products, we are concentrating on meeting the needs of select OEM and strategic partners that sell our products, while controlling operating expenses. Our strategy is to deliver solutions into focused markets where data is critical to the ongoing operations of the business. In today s business environment, improving the productivity and efficiency of data assets has become a top priority for organizations worldwide. Recent industry research indicates that organizations are required to store data that is estimated to grow at more than 40% annually, but IT budgets are forecasted to grow between 5% and 7%. As a result of these opposing forces, we believe that many companies find themselves lacking the essential resources to manage their information assets. Our comprehensive data storage and protection solutions present alternatives designed to enable IT managers to easily and cost-effectively store, share, and preserve data and to provide continuous access, while also providing replication for disaster recovery. As a result of our research and development efforts over the past 18 years, we have a unique and extensive knowledge of data storage technologies. Therefore, protecting our proprietary technology is an important component of our business strategy. We have made break-through advances in data storage solutions and have made our technology available to the industry through licensing. More than 50 storage industry providers have entered in licensing arrangements with Crossroads to access and utilize the technology we have developed and patented. Patent licensing is an important part of our business strategy and we will continue to offer licenses to storage industry providers. Net Operating Loss Carryforward Currently, Crossroads has approximately $128.7 million in federal NOLs. A change in ownership, as defined by Internal Revenue Code (the "Code") Section 382, could reduce the availability of net operating losses for federal and state income tax purposes. A change in ownership could result from the purchase of common stock by an existing or new 5% stockholder as defined by Section 382 of the Code, including as a result of this rights offering. Should a change in ownership occur, all NOLs incurred prior to the change in ownership would be subject to limitations imposed by Section 382 of the Code, which would substantially reduce the amount of NOLs currently available to offset taxable income. On May 23, 2014, the Board adopted the NOL Rights Plan. Stockholders approved the plan on April 24, 2015. For additional information on the NOL Rights Plan, see "Description of Capital Stock—NOL Rights Plan." In addition, on April 24, 2015, stockholders approved a protective amendment to our certificate of incorporation, designed to protect the significant potential long-term tax benefits presented by our NOLs. See "Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws—Transfer and 4.99% Ownership Limitation." Products Our products are mainly delivered as software via a hardware appliance. We also provide post-contract support and professional services. We currently sell the following products: StrongBox — a Network-Attached Storage ("NAS") appliance that delivers low cost data preservation with built in data protection; StrongBox DataManager — a software enhancement to the StrongBox NAS that provides transparent file migration from primary storage systems, such as NetApp, Windows, Linux, and other servers, into the StrongBox NAS. Users gain fluid data movement all from a single, integrated solution; StrongBox VSeries Tape Libraries — paired with the StrongBox NAS to provide customers a complete data storage solution. StrongBox VSeries libraries use LTO tape media, delivering the most scalable, cost-effective and reliable storage medium available. SPHiNX — a virtual tape system that provides complete data protection to reduce the cost and complexity of data backup and disaster recovery; ReadVerify Appliance (RVA) — proactively monitors tape media usage and the overall health of tape resources; FileStor HSM — a software solution that provides intelligent file management for policy-based data migration; and Fibre Channel (FC) Storage Routers — offer connectivity and protocol conversion from the FC Storage Area Network ("SAN") to Small Computer System Interface ("SCSI") tape and disk storage device interfaces. Principal Markets and Distribution Channels, Marketing and Customers We employ an OEM and strategic partner distribution strategy as a way to leverage our resources. Our distribution strategy is to focus on a smaller number of partners who have the potential to sell large quantities of our products, perform installation, and offer certain levels of ongoing support. Our approach is to work with partners who offer our products as part of an overall data protection and preservation solution to their customers. Our sales force is responsible for managing key OEM and strategic partner relationships. End user customers include small businesses, government agencies and large, multinational corporations. Our customers also include parties that we have entered into contracts with for the use of our patented technology through our licensing campaign. Our product sales are concentrated with several key customers. A large portion of our revenue comes from either our licensing campaign or OEM relationships. OEM relationships require several years to mature and must be considered in our time to market requirements. We are party to a software license and distribution agreement with HP whereby we license to HP certain software products and intellectual property rights for use in HP s products. HP pays us royalties and support fees pursuant to contractual formulas in the agreement. Sales to HP, which include IP license revenue, comprised 36.6% of revenue in fiscal 2014, compared to 45.0% of revenue in fiscal 2013. We expect our HP OEM product and maintenance revenue to continue to decline as HP transitions to HP-proprietary solutions. In August 2013, we announced an OEM relationship with FUJIFILM Recording Media U.S.A., Inc. where Crossroads allows Fujifilm to private label the Crossroads StrongBox product. Crossroads and Fujifilm began their strategic alliance in June 2009 through an agreement to offer Crossroads storage technologies to Fujifilm s customers. The private label relationship is designed to allow Fujifilm to offer its customers the StrongBox appliance, marketed by Fujifilm as Dternity, and technology for seamless integration with Fujifilm s Permivault, a cloud based storage service. StrongBox Since StrongBox is a disk and tape solution, it may face competition from both disk and tape vendors. Companies often use disk for archiving, but as data grows quickly, disk storage is becoming too expensive to scale and manage. Thus, StrongBox is a lower-cost alternative to continually increasing disk storage capacity. We compete with a variety of disk based storage companies,, however, we can also partner with these same providers in cases where their customers require lower-cost, long-term storage tiers in conjunction with high-performance disk systems. This cooperative competition occurs mostly in large data environments where the customer is defining the solution. Our competitive advantage is based on price, tunable performance, and the built-in data protection that disk-based solutions cannot deliver. There are LTFS tape-based solutions that leverage disk caching similar to StrongBox. However, we believe that none of them provide the ability for multiple users to write and read from the system simultaneously, without compromising performance. Furthermore, StrongBox offers customers a non-proprietary way to preserve and manage data. This is a key feature desired by our customers and valued by our OEMs and strategic partners. With StrongBox, our customers avoid what is known as , ' ': vendor lock-in, a term describing how customers can be trapped by a vendor because data is only accessible if used with certain proprietary software. SPHiNX Our SPHiNX product competes with traditional providers of tape-based storage systems and other virtual tape storage companies. Some of our competitors sell, or have announced plans to sell, products and services to connect, protect and secure business-critical data that compete directly with our offerings. RVA The main competitor for RVA is the built-in tape monitoring features that often come with enterprise libraries. There are storage system managers that monitor disk-based storage but the RVA is unique in that it monitors tape drives, media, and libraries. Some tape library manufacturers provide competing tools, for their own libraries, but the RVA works across multiple libraries and different manufacturers and also provides richer-content trending analysis and reporting details. Technology Licensing We generate revenue when companies using our technology agree to pay us either an upfront licensing fee, or a combination of upfront fees and on-going licensing fees for use of our intellectual property. Our licensing and litigation settlements sometimes include provisions to cross-license patents from other companies, further enhancing our intellectual property assets and product capabilities. Crossroads has developed intellectual property assets in two distinct categories. The first category, known as the 972 patent family, is wholly owned by Crossroads and consists of 31 patents and a pending patent application that are primarily concentrated around access controls. The second category, known as the non- 972 patents, consists of 129 patents and pending patent applications held in a limited partnership controlled by an affiliate of Fortress Investment Group. The patents, described more fully below, are primarily directed to five product families: optimizing command processing, enabling interoperability, managing networks, enhancing tape libraries, and improving data systems. The 972 Patent Family The 972 patent family has been the focus of years of litigation and is also the focus of our current licensing campaigns. As of October 31, 2014, approximately 50 companies have licensed 972 patents from Crossroads. Of these, 17 companies licensed our patents without litigation and the remaining companies took licenses as a result of litigation-related settlements. All lawsuits have been filed in the U.S. District Court for the Western District of Texas. One of the litigated cases in the Western District Court of Texas went through a jury trial. The jury reached a verdict that the asserted patents were valid and infringed by the defendant. The jury awarded damages to Crossroads that consisted of 3% and 5% of product sales as reasonable royalties on two different infringing products made by the defendant. The case was appealed to the U.S. Court of Appeals for the Federal Circuit, and the jury s verdict was affirmed. In another case, we received a default judgment against the defendant and were entitled to an award of royalties. In another case, the U.S. Patent and Trademark Office granted and conducted a defendant requested re-examination of certain patents within the 972 Patent Family. The U.S. Patent and Trademark Office examined over two hundred prior art references and ultimately re-certified the patentability of the claims of those patents. In the course of our lawsuits to date, the U.S. District Court has construed the meaning of several terms within the claims of the 972 patent family and in each instance the rulings were in favor of Crossroads. The Company is and may become involved in various lawsuits as well as other certain legal proceedings that have not been fully resolved and arise in the ordinary course of business. These are proceedings to which we are a party in our own name or proceedings that have been brought against the Company. Information regarding certain material proceedings is provided below and the possible effects on our business of proceedings we are defending is disclosed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended October 31, 2014, under the heading "Litigation, Regulation, and Business Risks Related to our Intellectual Property," and is incorporated by reference herein. Patent Litigation Proceedings We have a number of ongoing lawsuits and related proceedings as described below. In discussing these patent litigation proceedings, the following terms will be used: A "Markman hearing" in a patent infringement case is a pre-trial hearing in U.S. District Court, in which the court hears arguments regarding the meanings of key words used in a disputed patent claim. The outcome of a Markman hearing can play a significant role in whether findings of infringement and validity are made by the Court or by the jury at trial. An "Inter Partes Review" is a post-grant review of an issued patent in which the petitioner attempts to challenge the validity of a patent on certain grounds (e.g. novelty and obviousness). If successful during inter partes review, a petitioner could potentially invalidate some or all of the claims in the patents asserted against that petitioner in related litigation, and an adverse ruling in any of these proceedings would result in invalidation or other limitations on our patent rights. inter partes review, if granted, is typically a twelve- to eighteen-month process. Crossroads v. Dot Hill On September 11, 2013 we filed a lawsuit against Dot Hill Systems Corp. (Civil Action No. 1:13-CV-800-SS) in the United States District Court for the Western District of Texas in Austin, Texas alleging breach of the Amended Settlement and License Agreement dated June 27, 2006 between Crossroads and Dot Hill for failure to make royalty payments on licensed products, and alternatively for patent infringement. On June 28, 2006 Crossroads and Dot Hill announced a settlement of their disputes involving the , ' ': 972 patent family in which Dot Hill paid Crossroads $3.35 million for alleged past damages and agreed to pay ongoing royalties at specified rates. In the announcement, a third party was to also pay Crossroads an additional $7.15 million. In the breach of contract action on November 4, 2013, Dot Hill filed a motion to dismiss all claims but the Court denied that motion. On May 2, 2014, Dot Hill filed a motion requesting summary judgment that the accused products were licensed under the asserted patents. In response, Crossroads requested permission to take discovery on the issues and that motion was granted. We also moved for summary judgment that infringing products were sold for which payment was due. On August 4, 2014, the Court issued a ruling that granted in part and denied in part each party s request for summary judgment finding issues of fact existed. The case is still pending. We believe we have meritorious legal positions and will continue to represent our interests vigorously in this matter. Dot Hill has counterclaimed that each of the patents that we allege they infringe is invalid and/or unenforceable and an adverse ruling from the Court on these allegations could result in the invalidation, unenforceability or limitation of all of some our patent rights. The Markman hearing for this case occurred October 6 and 7, 2014. On December 19, 2014 the parties completed all briefing to the Court on those issues. The special master made a recommendation to the Court regarding claim construction on February 23, 2015. On June 16, 2015, the Court issued a Markman order adopting the special master s claim constructions. In a separate order issued on June 16, 2015, the Court issued a stay in the litigation against the defendant until the PTAB s final decision on inter partes review. Following a final determination by the Court on the meaning of the claim terms, the Court will set a schedule for a trial ready date and the parties will prepare this case for trial. Crossroads v. Oracle, Huawei, Cisco, NetApp and Quantum These related cases were filed on October 7, 2013, November 26, 2013, and February 18, 2014 in the United States District Court for the Western District of Texas alleging infringement by these parties of one or more patents in the , ' ': 972 patent family. The asserted patents (6,425,035, 7,934,041, 7,987,311 and 7,051,147) were subject to a re-examination of the patents conducted in 2005-2006 by the U.S. Patent Office or were issued after the re-examination. During the time Crossroads was pursuing the potential infringers of the , ' ': 972 patent family, we put companies with potentially infringing products on notice and gave them the opportunity to license our proprietary technology. For example, NetApp was first given notice of potential infringement in 2004. Cisco was first given notice of potential infringement in 2002. Quantum has been on notice of its potential infringement since 2006. Oracle acquired several companies that were given notice of potential infringement at least as early as 2009 and Oracle itself has been on notice since then. Despite repeated attempts by Crossroads throughout the years to negotiate licenses to the , ' ': 972 patent family, these companies refused and left Crossroads with no alternatives to litigation. Crossroads believes these companies (and companies they have acquired) have been illegally using Crossroads proprietary technology for years and that the potential compensatory damages could be in excess of 200 million dollars, which does not include enhanced damages or attorney fees. While the uncertainties and expense of litigation are great and we can provide no guarantees of success, we believe the infringement by most of these companies has been prolonged and potentially willful. On May 7, 2014 these cases and the Dot Hill case were consolidated for purposes of discovery and a Markman hearing occurred on October 6 and 7, 2014. On December 19, 2014 the parties completed all briefings to the Court on those issues. The special master made a recommendation to the Court regarding claim construction on February 23, 2015. On June 16, 2015, the Court issued a Markman order adopting the special master s claim constructions. In a separate order issued on June 16, 2015, the Court issued a stay in the litigation against the defendants until the PTAB s final decision on inter partes review. In retaliation for the lawsuits brought by Crossroads, these parties have so far sought inter partes review of the patents asserted in these lawsuits in a total of nineteen petitions before the U.S. Patent Office challenging the validity of the patents asserted by us in the lawsuits (despite the prior re-examination). The U.S. Patent Office has instituted review of six petitions, denied review of two petitions, with decisions on eleven petitions still pending. Oracle is a party in ten petitions; Huawei is a party in four petitions; NetApp is a party in eight petitions; Cisco and Quantum are parties to three petitions; and Dot Hill is a party to two petitions. The first of the petitions were filed only months after Crossroads filed lawsuits against these parties and years after they were made aware of their potential infringement. If the patents are found partially or entirely invalid during these inter partes review proceedings, Crossroads might be adversely impacted in the litigation proceedings against these companies, including potentially losing the ability to continue with its claims of infringement. Crossroads believes it has meritorious factual and legal defenses to the challenges presented in these petitions and will vigorously defend the validity of the patents. Based on the current schedule set by the U.S. Patent Office, Crossroads expects a final decision in the six instituted proceedings by March 17, 2016. In addition to seeking inter partes review proceedings, each of the defendants in the above lawsuits filed by Crossroads has counterclaimed that each of the patents that we allege they infringe is invalid and/or unenforceable and an adverse ruling from the Court on these counterclaims in any of these cases could result in the invalidation, unenforceability or limitation of all of some of our patent rights. Quantum v. Crossroads On September 23, 2014, Quantum filed a lawsuit in the U.S. District Court for the Northern District of California alleging that our StrongBox product infringes a patent owned by Quantum. This lawsuit was filed only months after Crossroads filed its lawsuit against Quantum claiming infringement of Crossroads patents. We believe we have meritorious legal positions and will represent our interest vigorously in this matter. If Quantum is successful in this lawsuit, it could result in us not having all of the patent rights necessary to conduct our business. A scheduling order has been entered in this case. Trial is scheduled in February 2016. In addition, Quantum has threatened to file additional inter partes review proceedings against other, as yet unidentified, non-, ' ': 972 patents. If Quantum files any such proceedings, and Quantum is successful in any of those proceedings, it could adversely affect our patent rights and result in us not having all of the patent rights necessary to conduct our business. NetApp v. Crossroads NetApp has threatened to file three lawsuits against us alleging that our SPHiNX virtual tape library, StrongBox, and RVA products infringe three NetApp patents. If NetApp files any of these three lawsuits, and if NetApp is successful in any of those lawsuits, it could adversely affect our patent rights and result in us not having all of the patent rights necessary to conduct our business. The Non- 972 Patent Family The non- 972 patent family comprises five distinct patent categories: "Optimized Command Processing" relating to techniques for ensuring that data and messages flow smoothly through the network; "Enabling Interoperability" relating to facilitating communication between different protocols and networks; "Managing the Network" relating to methods for diagnosing and correcting network errors; "Enhancing Tape Libraries" relating to enhancing and optimizing operation of tape storage for Storage Area Networks (SANs); and "Improving Data Systems" relating to techniques for optimizing file systems and database usage in SANs. In connection with a loan from CF DB EZ LLC, an affiliate of Fortress Credit Co LLC with its affiliates (collectively referred to as "Fortress") the non- 972 patents were assigned to a limited partnership controlled by Fortress, and are subject to a security interest granted to Fortress in connection with a secured credit agreement entered into with Fortress in July 2013. Certain terms in the Fortress agreement permit us to regain ownership and full control of the assets in return for the satisfaction of any outstanding indebtedness, payment of a $2 million monetization call option fee, and closing fees of approximately $280,000. We are evaluating strategic alternatives related to the non- 972 patent portfolio, including the possibility of exercising our rights in the agreement. In May 2014, Crossroads made an optional principal pre-payment to Fortress in the amount of $2 million. As of June 26, 2015, Crossroads had an outstanding principal balance of $2.91 million. In November 2013, the Company hired a third-party patent consulting firm to analyze the non- 972 patents. The firm was paid a flat fee and tasked to provide an unbiased, fact-based professional opinion on the monetization potential of the portfolio. This firm determined that the 117 patent assets reviewed comprise 78 distinct patent families and the average remaining life on these patents exceeds 10 years. Certain of the non- 972 patents likely apply to technology that complies with four industry standards. Because these industry standards are widely used, we believe that dozens of companies may have used, or may be using, the technology described in our patents without authority or properly being licensed by Crossroads. The third party analysis estimated that past and future revenues of products that may potentially infringe the non- 972 patents could exceed $82 billion. However, Crossroads can provide no assurance regarding the accuracy of the assumptions underlying this analysis or our ability to recover any royalties or licensing fees relating to these patents, and the timing for any such royalties or licensing fees. In August 2014, the Company hired an intellectual property law firm to provide consulting services related to Crossroads non- 972 patent portfolio. The work to be done by the firm validated key assumptions, proposed a monetization strategy and timeline, identified potentially infringing companies and products, and estimated revenue opportunities associated with each potentially infringing company. Crossroads is reviewing the findings and evaluating strategies related to a variety of monetization alternatives. Crossroads has not yet begun an active licensing program for the non- 972 patent family. We do not currently control the patents, have not developed a monetization strategy, and have not identified how to approach potentially infringing companies. We have also not created a budget for litigation or monetization of the non- 972 patent portfolio. Either in partnership with Fortress or acting alone (assuming we can regain control of the patents), various monetization alternatives include the following: Selling all or a portion of the patent family; Engaging in litigation against infringing companies to require such companies to take a license to our technology. This strategy would include an evaluation of various legal fee and expense structures, including some which might include contingency fee and revenue sharing arrangements, and may also involve us raising additional capital through the sale of equity or issuance of debt; Entering into strategic partnerships with other patent monetization companies to assist in the monetization of the portfolio. In these arrangements, Crossroads would share a portion of the license revenues in return for the strategic partner taking responsibility for all litigation expenses. In most cases, Crossroads would be responsible for out of pocket expenses including travel, expert witnesses, and other expenses not directly related to licensing activity; We are carefully reviewing these and other options to monetize the portfolio. Other options may become available to us and we will review those alternatives appropriately. Employees As of October 31, 2014, we had 48 employees. Of the total employees, 14 were engaged in sales, marketing, and business development; 23 in research and development; and 11 in general and administrative, support and operations functions. None of our employees are represented by a labor union, and we consider current employee relations to be good. Research and Development We incurred research and development costs of $5.7 million and $10.5 million in fiscal 2014 and 2013, representing 50.9% and 82.9% of total revenue, respectively. In fiscal 2014, we continued to augment our product lines by providing feature enhancements to our software and hardware platforms. In July 2014, we introduced new features and functionality that allowed us to re-launch our StrongBox product as a general purpose Network Attached Storage (NAS) appliance, with access to a broader market. Our plans for fiscal 2015 include enhancements across our product lines. A particular area of focus will be continued feature and performance evolution for our StrongBox product. Environmental Compliance Our business involves purchasing finished goods as components from different vendors and then assembling and configuring these components into finished products at our facilities. Accordingly, we are not involved in the actual manufacturing of components, which can often involve significant environmental regulations with respect to the materials used, as well as work place safety requirements. Our operations and properties, however, do remain subject in particular to domestic and foreign laws and regulations governing the storage, disposal and recycling of computer products. For example, our products are subject to the European Union s Directive 2002/96/EC Waste Electrical and Electronic Equipment and Directive 2002/95/EC on Restriction of the use of Certain Hazardous Substances in Electrical and Electronic Equipment. To date, we have not been the subject of any material investigation or enforcement action by either U.S. or foreign environmental regulatory authorities. Further, because we do not engage in primary manufacturing processes like those performed by our suppliers who are industrial manufacturers, we believe that costs related to our compliance with environmental laws should not materially adversely affect us. Competition During the 18 years Crossroads has been in business, we have faced continuous competitive pressures. We believe that several companies misappropriated our proprietary technology in the early formative years of the Company, thereby forcing Crossroads to engage in multiple legal actions to enforce its intellectual property rights. Today, the worldwide storage market is highly competitive. Competitors vary in size from small start-ups to large multi-national corporations with substantially greater financial, research and development and sales and marketing resources. From a customer and partner perspective, key competitive factors include product features, reliability, scalability, simplicity, and price. The markets for all of our products are characterized by significant price competition and we anticipate that our products will continue to face price pressure. Legal Proceedings The Company is and may become involved in various lawsuits as well as other certain legal proceedings that have not been fully resolved and arise in the ordinary course of business. These are proceedings to which we are a party in our own name or proceedings that have been brought against the Company. Information regarding certain material litigation proceedings is provided in Item 3. Legal Proceedings of our Annual Report on Form 10-K for the year ended October 31, 2014, as filed with the SEC on January 14, 2015. How You Can Contact Us Our principal executive offices are located at 11000 North Mo-Pac Expressway #150, Austin, Texas 78759, and our telephone number is (512) 349-0300. Our website is located at www.crossroads.com. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.
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+PROSPECTUS SUMMARY FROM $18,000,000 TO $20,000,000 OF SHARES OF COMMON STOCK AND WARRANTS TO PURCHASE SHARES OF COMMON STOCK ABOUT THIS PROSPECTUS This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. References in this prospectus to "we," "us," "our," and "Company" refer to Ominto, Inc. and its subsidiaries. You should read both this prospectus and any prospectus supplement together with additional information described below under the heading "Where You Can Find More Information." ABOUT OMINTO, INC Corporate Information Our principal executive office is located at 1110-112th Avenue NE, Suite 350, Bellevue, WA 98004. Our telephone number is (561) 362-2381. Company Overview We operate Global Cashback Shopping and Loyalty Sites Worldwide Ominto, Inc. ("Ominto" or the "Company") is a global e-commerce company that owns and operates global online Cashback shopping websites. Our Ominto platform powers a variety of Cashback and loyalty websites, including the DubLi.com site which we operate for our DubLi Network subsidiary. Ominto and our DubLi Network subsidiary currently serve customers in more than 100 countries, and serve 12 international markets in local language and currency. Each of our Cashback websites offer links to thousands of third party global, online merchants and travel booking sites as well as coupons, discounts and vouchers. The Company receives a commission each time customers make purchases through a Company referred website and a portion of those commissions is passed along to our customers in the form of Cashback. The merchants do this to acquire new customers and to incentivize them to make purchases online. Cashback amounts are usually expressed as a percentage of what is purchased and are clearly stated throughout the website. Merchants may change Cashback amounts at any time. Depending on the geographical market, Ominto s websites feature the world s most popular brands including Amazon.com , Wal-Mart , Nike , Hotels.com , Zalando , Groupon and Expedia . At Ominto owned and operated shopping websites, consumers can shop at the same online stores they normally frequent and earn Cashback with each purchase. Ominto also offers co-branded or white label Cashback shopping and loyalty websites for third party, Business Clients. These co-branded websites allow our Business Clients to offer their own customers the opportunity to shop and save money. We share our merchant commissions with our Business Clients. Our New Ominto.com Platform Personalizes Shopping the More You Visit and Shop on our Sites We will be launching our new more powerful Ominto.com platform in the fourth calendar quarter of 2015. Our new Ominto.com shopping site will offer a sophisticated level of personalization rarely seen in the online Cashback shopping industry. We already personalize our sites to the extent that all of our websites offer content that is determined by country, geography and language choices. Our new site will be able to personalize the customer s experience based on the customer s activities on the shopping site as well as the customer's indicated interest preferences. As the customer s activities increase on our shopping websites over time, the level of personalization of the customer s experience also increases. By offering a shopping experience that becomes more customized and personal with each subsequent activity on the site, we are able to increase customer loyalty which is paramount to differentiating ourselves in the increasingly competitive landscape of the Cashback industry. The new platform will also include a new mobile application which will allow us to offer discounts to shoppers on a real-time basis from most of the online merchants that we offer in each geographic region. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Proposed maximum aggregate offering price(1) Amount of registration fee Common stock, $0.001 par value(2) $ 20,000,000 $ 2,014.00 Warrants to purchase common stock (3) (4) Shares of common stock underlying warrants (2)(5) $ 12,000,000 $ 1208.40 Total $ 32,000,000 $ 3,222.40 (6) (1) Estimated solely for the purpose of calculating the registration fee under Rule 457(o) of the Securities Act of 1933, as amended (Securities Act). (2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions. (3) The offering price of the warrants to be issued to investors hereunder are included in the price of the common stock above. (4) No separate registration fee is required pursuant to Rule 457(g) promulgated under the Securities Act of 1933, as amended. (5) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act. For each share of common stock sold, investors will receive a warrant for 1/2 a share of common stock, estimated to be exercisable at a per share exercise price equal to 120% of the public offering price. The proposed maximum aggregate public offering price of the warrants is $12 million, which is equal to 120% of $10 million (one half of the gross proceeds). (6) $3222.40 previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE. Table of Contents We Obtain Cashback customers from our Business Clients and from DubLi Network We obtain customers for our shopping websites in two ways. Customers either come from our DubLi Network or from our business clients that we label our "Partners" or "Business Clients". We currently have over 1,000 Business Clients; they are for-profit companies and non-profit organizations. We provide each Business Client a co-branded shopping site for the benefit of their own customers or constituents. Our Business Clients are then able to offer their own customers or constituents a co-branded Cashback shopping website, in part to monetize their existing email database and in part to build their own customer loyalty by offering their customers a perceived benefit. Customers join our site with either a free or paid membership. Our current paid memberships--Premium and V.I.P. membership subscription packages-- allow shoppers on our sites to earn a higher percentage of Cashback on their purchases. For the Premium members, we charge a monthly subscription fee and for the V.I.P. members we charge an annual subscription fee. Beginning with the launch of Ominto.com in our fourth quarter, we will offer a single form of paid membership which will be purchased and renewed by members annually. We receive commissions from the third party merchants each time customers make a purchase through one of our Company referred portals. We share this commission income with shoppers in the form of Cashback. We also share a portion of the membership fees we receive as well as the merchant commissions arising from their own customers with our Business Clients. We offer our Business Clients Custom Shopping Websites We operate many websites, which will soon all be powered by our new Ominto.com platform. We currently offer three ways for our Partners to offer their own customers Cashback shopping: --DubLi Network, a network marketing company that is a wholly-owned subsidiary of Ominto, offers the DubLi.com Cashback website to consumers and is operated by Ominto. Our DubLi independent marketing representatives, called "Business Associates", market membership subscriptions to the DubLi.com site both to Business Clients for distribution to their own customers, and direct to consumers. We create revenue from membership fees, maintenance fees, and commissions from purchases linked to our website. DubLi.com is our oldest website; it was formerly our primary Cashback shopping website. --We now offer customized co-branded sites for our Business Clients which they in turn offer to their own customers. Typically, the custom website includes our Ominto (or DubLi) name next to the name of our Business Client. Our Business Clients offer this shopping website to their own customers. --For our larger Business Clients, typically with at least 500,000 emails in their database, we offer a custom "white-label" shopping site that does not include our name. White-label shopping sites are solely branded with our Business Client's name and logo. With the new platform we are launching, we can easily create a complete customized version of our shopping platform which will be powered by and otherwise operate just like Ominto.com. We believe that customers are more attracted to shop at white label sites due to their loyalty to our Business Clients. Both our co-branding and white label program allow us to benefit from our Business Client's own brand loyalty from their customers. With the proceeds from this offering, we will be positioned to accelerate the growth of developing our footprint in additional regions in the world by opening local offices in key growth centers which will develop both DubLi Network Business Associates and merchant relations, ensure our marketing efforts are compatible with local customs and assist with the marketing requirements of our locally-based business clients. Recent Developments In August 2015, we raised $2.5 million in a private placement, and converted $2.0 million of our debt to Michael Hansen into shares of our common stock at the private placement price. These transactions allowed us to repay $4.5 million of our then outstanding debt to our founder, Michael Hansen. On September 14, 2015, we entered into private placement agreements for convertible notes totaling $5 million, which notes automatically convert to shares of our common stock at such time as we have authorized common stock available. The proceeds will be used for working capital. $3.6 million of the convertible notes were issued on or before September 30, 2015; the balance was delayed by funding issues. The balance has since been received by the Company. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL AND IS NOT A SOLICITATION OF AN OFFER TO BUY IN ANY STATE IN WHICH AN OFFER, SOLICITATION, OR SALE IS NOT PERMITTED. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 13, 2015 FROM $18,000,000 TO $20,000,000 OF SHARES OF COMMON STOCK AND WARRANTS TO PURCHASE SHARES OF COMMON STOCK We are offering from $18,000,000 to $20,000,000 of shares of our common stock, $0.001 par value per share, together with warrants to purchase shares of our common stock that are issuable from time to time upon exercise of the warrants. For each share of our common stock purchased by an investor in this offering, the investor will receive a warrant to purchase one-half (1/2) of one share of our common stock with an exercise price of $[___] per full share (120% of the price of our common stock in this offering) and a term of exercise of 3 years. The shares of common stock and warrants will be sold at or at a discount to the market price and will be issued and trade separately. On November 12, 2015, the last reported sales price for our common stock on the OTC Pink Marketplace was $7.45 per share. This price will fluctuate based on the demand for our common stock. Our placement agent is not required to sell any of our shares and warrants, but will use its best efforts to sell all of the shares of common stock and warrants being offered. Prior to the closing of this offering, all funds delivered as payment for the securities offered hereby shall be held in escrow at Continental Stock Transfer and Stock Transfer Co as escrow agent. On August 15, 2015, our Board of Directors approved a reverse stock split in a range of 1-for-20 to 1-for-100 to be consummated, if at all, at the Board's discretion on or before March 31, 2016. On November 1, 2015, our Board of Directors approved a ratio of 1-for-50 and we effectuated the foregoing reverse stock split on November 6, 2015. All warrant, option, share and per share information in this prospectus give effect to the 1-for-50 reverse split retroactively. The Certificate of Change amending the Company's Articles of Incorporation was filed with the State of Nevada November 4, 2015. Our common stock is currently quoted on the OTC Pink Marketplace, operated by OTC Markets Group, under the symbol "OMNT". The reverse stock split was announced on November 5, 2015 and the common stock began trading under the temporary symbol "OMNTD" (indicating that a reverse stock split has occurred) on November 6, 2015, and will continue to have the "D" attached to its symbol through the earlier of (i) the date on which our stock begins to trade on the NASDAQ Capital Market or (ii) December 5, 2015. We have applied to list our common stock and warrants on The NASDAQ Capital Market under the symbols "OMNT" and "OMNTW", respectively. It is a condition to closing that our common stock and warrants be approved for issuance on The NASDAQ Capital Market. Per Share(1) Per Warrant(1) Minimum Total(2) Maximum Total(1)(3) Public offering price $ $ $ 18,000,000 $ 20,000,000 Placement agent commissions (4) $ $ $ 742,500 $ 825,000 Proceeds, before expenses, to us (5) $ $ $ 17,257,500 $ 19,175,000 (1) One share of common stock is being sold together with a warrant, with each warrant being exercisable for the purchase of one half (1/2) of a share of common stock. (2) Assumes the minimum number of shares in this offering are sold. (3) Assumes the maximum number of shares in this offering are sold. (4) We have also agreed to reimburse the placement agent for certain expenses in an amount not to exceed $115,000. See "Plan of Distribution" on page 63 of this prospectus for a description of these arrangements. (5) We estimate the total expenses of this offering will be between $1.8 million and $2 million. A condition to closing in this offering is gross proceeds of $18,000,000 million, which is the minimum needed for our common stock and warrants to be listed on The NASDAQ Capital Market. Although the gross proceeds may be between $18,000,000 and $20,000,000, the actual public offering amount and proceeds to us, if any, are not presently determinable and net proceeds may be between $1,835,000 to $2,000,000 less than the total maximum offering set forth above. Chardan Capital Markets, LLC has agreed to act as our placement agent ("Placement Agent") in connection with this offering. The Placement Agent is not purchasing the securities offered by us, and is not required to sell any specific number or dollar amount of securities, but will use its best efforts to arrange for the sale of the securities offered by us. We have agreed to pay the Placement Agent a cash placement fee equal to 4.125% of the gross proceeds of the offering, and a finder's fee equal to 4.125% of the gross proceeds of the offering, as well as to reimburse the Placement Agent its expenses in this offering in an amount not to exceed $115,000. See "Plan of Distribution" herein. This offering will terminate 30 days after the Effective Date of the Registration Statement unless the offering is fully subscribed before that date or we decide to terminate the offering prior to that date. In either event, the offering may be closed without further notice to you. All costs associated with the registration will be borne by us. All net proceeds will be available to us for use as set forth in "Use of Proceeds" herein following release from escrow at the closing of this offering. INVESTING IN THE OFFERED SECURITIES INVOLVES RISKS, INCLUDING THOSE SET FORTH IN THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON PAGE 4. INVESTORS SHOULD ONLY CONSIDER AN INVESTMENT IN THESE SECURITIES IF THEY CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. CHARDAN CAPITAL MARKETS, LLC The date of this prospectus is __________, 2015 Table of Contents SUMMARY OF THE OFFERING Securities offered: From $18,000,000 to $20,000,000 of shares of our common stock together with warrants to purchase one-half (1/2) of one share of our common stock at an exercise price per share of 120% of the price of our common stock in this offering. The warrants will be immediately exercisable and will expire 3 years after the issuance date. Common stock 11,107,071 shares outstanding before the offering (1): Common stock to __________ shares be outstanding after the offering assuming the sale of all shares offered hereby and the exercise of no warrants covered by this prospectus (1)(2): Common stock to __________ shares be outstanding after the offering assuming the sale of all shares offered hereby and the exercise of all warrants covered by this prospectus (1): Term of Offering: This offering will terminate 30 days after the effective date of this registration statement, unless the offering is fully subscribed before the date or we decide to terminate the offering prior to that date. In either event, the offering may be closed without further notice to you. OTC Pink Symbol: OMNT (temporary symbol "OMNTD" as of November 6, 2015 until the earlier of (i) the Company's common stock being listed on The NASDAQ Capital Market or (ii) December 5, 2015). Proposed Listing and Symbol: We have applied for listing of our common stock and the warrants sold in this offering on The NASDAQ Capital Market under the symbols "OMNT" and "OMNTW", respectively, and approval of these listings by the NASDAQ Capital Market is a condition to closing of the offering. Use of Proceeds: We intend to use the proceeds of this offering to invest in our planned global expansion, invest in product and localization technology, expand our business client support programs, expand our sales team and for working capital. Shareholder with Voting Control: Michael Hansen, our Founder, Director and Executive VP Development holds 2,795,571 shares of common stock and 185,000 shares of Super Voting Preferred Stock which preferred is entitled to 40 votes per share, collectively representing approximately 56% of the voting power of the Company s issued and outstanding voting securities. Reverse Stock Split: On August 15, 2015, our Board of Directors and a shareholder holding a majority of votes approved a reverse stock split in a ratio, to be determined by the Board of Directors, of not less than 1-for-20, nor more than 1-for-100. On November 1, 2015, our Board approved a reverse stock split of 1-for-50 and we effectuated the foregoing split on November 6, 2015.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read this entire prospectus carefully, especially the "Risk Factors" section of this prospectus and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. As used in this prospectus, unless the context otherwise requires, references to "we," "us," "our," "our company" and "USRE" refer to U.S. Rare Earths, Inc. and its consolidated subsidiaries. Overview We are a rare earth elements exploration company seeking to identify and ultimately mine commercially-viable sources of domestic rare earth elements. Currently, our operations are exploratory in nature. We hold approximately 1,250 unpatented lode mining claims that cover approximately 22,000 acres of land in Idaho, Montana and Colorado. In Idaho and Montana, our claims are located in the Lemhi Pass mineral trend in Lemhi County, Idaho, and Beaverhead and Ravalli Counties, Montana. These claims are grouped into projects that include the Last Chance and Sheep Creek Projects in Montana and the North Fork, Lemhi Pass and Diamond Creek Projects in Idaho. In Colorado, the claims include the Powderhorn Project in Gunnison County, and Wet Mountain Project in Fremont County. We are not producing rare earth elements from any of our claims and further exploration will be required in order to evaluate and identify the commercial viability of producing rare earth elements from any of our claims. As a result, we have no probable or proved reserves of rare earth elements. Our Market Opportunity Global demand for rare earth elements, or REEs, has experienced an upward trend. This is projected to continue to grow as a result of the developing rare earth elements supply chain as more high-tech and green industry applications come to market. During this time, China has been the primary producer and refiner of rare earth elements. With China's dominance of the production and refinement of REEs, the rest of the world is currently dependent on Chinese exports to meet its own growing needs specifically related to heavy rare earth elements and critical rare earth elements. According to Roskill Information Services Ltd., Roskill's estimated percentage of China's global demand and the USGS (Mineral Commodities Reports and Open File Report 2011 1042) provide for an estimate of global demand for rare earth oxides, or REOs, in 2014 to be at an estimated 130,000 metric tons, growing to between 140,000 and 150,000 metric tons in 2015. At the same time, estimates are that, with increasing global demand and continued current 2014 estimated global production (without additional production), an undersupply of certain rare earth will occur. We believe greater rare earth supply sources outside of China will be needed to make up the shortfall to meet global demand. While production from new operations such as Mountain Pass in California and Mt. Weld in Western Australia may be able to make up some of the shortfall between demand and supply, according to the Congressional Research Service Report entitled Rare Earth Elements: The Global Supply Chain by Marc Humphries dated December 16, 2013, or CRS Report, several forecasts show that there may be shortfalls of some rare earth elements. As we hold unpatented lode mining claims to nearly all of the historically known rare earth element mineralization occurrences in the Lemhi Pass District of East-Central Idaho and South-Western Montana, we believe we can play an important role in addressing this increasing supply/demand disparity. Nevada (State or other jurisdiction of incorporation or organization) 7310 (Primary Standard Industrial Classification Code Number) 87-0638338 (I.R.S. Employer Identification No.) 5600 Tennyson Parkway, Suite 240, Plano, Texas, 75024 (972) 294-7116 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Kevin Cassidy Chief Executive Officer U.S. Rare Earths, Inc. 5600 Tennyson Parkway, Suite 240, Plano, Texas, 75024 (972) 294-7116 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our Strategy Our goal is to become the leading rare earth elements supplier in the United States. We intend to achieve our goal by implementing the following strategies: expansion of our exploration activities at our Idaho, Montana and Colorado properties with a view to completing a feasibility study and developing a production plan; focus on heavy rare earth elements that command higher sales prices on a per kilogram basis; create a rare earth separation facility in the continental United States; assemble a world-class management team; and review opportunities and acquire additional rare earth mining claims with meaningful exploration potential. Our Mining Claims We hold approximately 1,250 unpatented lode mining claims that cover approximately 22,000 acres of land in Colorado, Idaho, and Montana. These claims have been filed pursuant to the General Mining Law of 1872, as amended, or General Mining Law, on lands where both the surface and mineral interest are owned by the United States government. Montana and Idaho We have more than 630 claims in Beaverhead and Ravalli Counties, Montana, and in Lemhi County, Idaho that cover more than 9,600 acres of land. These claims are grouped into projects that include the Last Chance and Sheep Creek Projects in Montana and the North Fork, Lemhi Pass and Diamond Creek Projects in Idaho. All of these claims are located on properties that are part of the Lemhi Pass mineral trend. This trend extends for approximately 60 miles through Montana and Idaho and contains known anomalous rare earth mineralization. Colorado Our mining claims in Colorado are located in Fremont, Gunnison, and Saguache Counties, and include over 600 unpatented claims that cover more than 12,000 acres of land, which we have identified as the Powderhorn and Wet Mountain Projects. The Powderhorn Project is in an area surrounding, but excluding, Iron Hill. Iron Hill is recognized as the largest exposed carbonatite mass in the United States. Carbonatite is a rock type known to be highly associated with rare earth element deposits worldwide. Given its proximity to Iron Hill, we believe our mining claims in the Powderhorn Project may contain rare earth element mineralized trends or veins. Risk That We Face Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus beginning on page 11. These risks include, but are not limited to, the following: We have incurred operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future. Our history of net losses has raised substantial doubt regarding our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment. Copies to: Jeffrey J. Fessler, Esq. Gary M. Emmanuel, Esq. Sichenzia Ross Friedman Ference LLP 61 Broadway, 32nd Floor New York, New York 10006 (212) 930-9700 Robert H. Cohen, Esq. Eric Orsic, Esq. McDermott Will & Emery LLP 340 Madison Avenue New York, New York 10173-1922 (212) 547-5400 Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents The mining industry is capital intensive, and we will require substantial additional financing to achieve our goals. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our exploration activities. The restatement of our financial statements may result in litigation or government enforcement actions. Any such action would likely harm our business, prospects, financial condition and results of operations. Our management has concluded that we have material weaknesses in our internal controls over financial reporting and that our disclosure controls and procedures are not effective. We recently settled litigation regarding the composition of our board of directors. Litigation or the actions of regulatory authorities may harm our business or otherwise distract our management. We may become subject to tax assessments, penalties and interest for historically processing compensation as independent contractors rather than as payroll. All of our projects are in the exploration stage. There is no assurance that we can establish the existence of any mineral reserve on any of our projects in commercially exploitable quantities. As a result, we do not know if our claims contain rare earth elements that can be mined at a profit and, consequently, we face a high risk of business failure. We are a junior exploration company with no operating mining activities, and we may never have any mining activities in the future. Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure. Conditions in the rare earth industry have been, and may continue to be, extremely volatile, which could have a material impact on our company. Our business is subject to extensive environmental regulations that may make exploring, mining or related activities prohibitively expensive, and which may change at any time. The government licenses and permits, which we need to explore on our property may take too long to acquire or cost too much to enable us to proceed with exploration. On December 16, 2014, we effected a l-for-3 reverse stock split of our outstanding common stock in order to meet the minimum bid price requirement of the NASDAQ Capital Market. There can be no assurance that we will be able to comply with the minimum bid price requirement of the NASDAQ Capital Market, in which case this offering may not be completed. Even if we are listed on the NASDAQ Capital Market, there can be no assurance that we will be able to comply with continued listing standards of the NASDAQ Capital Market. The reverse stock split may decrease the liquidity of the shares of our common stock. Following the reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve. Reverse Split Our board of directors and majority shareholders approved an amendment to our articles of incorporation to effect a reverse stock split of our common stock at a ratio between 1-for-2 and 1-for-3. Our stockholders further authorized the board of directors to determine the ratio at which the reverse stock split would be effected. On October 2, 2014, our board of directors authorized that the ratio of the reverse split be set at 1-for-3. On December 16, 2014, we amended our articles of incorporation to effect The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the reverse split at a ratio of 1-for-3. Unless otherwise indicated, all share and per share numbers included in this prospectus give effect to the reverse split. Our Corporate Information We were incorporated in the State of Delaware on July 27, 1999 and changed our domicile to the State of Nevada in December 2007. Our principal executive offices are located at 5600 Tennyson Parkway, Suite 240, Plano, Texas 75024. The telephone number is 972-294-7116. Our principal website address is located at www.usrareearths.com. The information contained on, or that can be accessed through, our website is not incorporated into and is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities or the solicitation of an offer to buy these securities in any state in which such offer, solicitation or sale is not permitted. Table of Contents The Offering Securities offered by us 3,900,000 shares of our common stock and warrants to purchase an aggregate of 3,900,000 shares of common stock. Description of warrants Each warrant will have an exercise price per share equal to 125% of the per share public offering price, will be exercisable upon issuance and will expire five years from the date of issuance. The securities issuable upon exercise of the warrants will be adjusted in certain circumstances. See "Description of Securities" beginning on page 113 of this prospectus. Common stock to be outstanding after this offering 15,227,050 shares Over-allotment option The underwriters have an option for a period of 45 days to purchase up to 585,000 additional shares of our common stock and/or warrants to purchase up to an aggregate of 585,000 shares of our common stock to cover over-allotments. Use of proceeds We expect to receive net proceeds from this offering of approximately $13.8 million at an assumed offering price of $4.00 per share, which is the midpoint of the range set forth on the cover page of this prospectus, and a per warrant price of $0.01, after deducting the underwriting discounts and commissions and estimated offering expenses. We intend to use the net proceeds from this offering for general corporate purposes, including working capital, as well as (i) $240,000 for the payment of certain share repurchase obligations described in the section of this prospectus entitled "Transactions with Related Persons", (ii) approximately $379,000 as reimbursement of certain costs incurred in connection with certain contingent agreements reached in the Settlement Agreement described in the section of this prospectus entitled "Transactions with Related Persons", (iii) $773,951 as payment to underwriters' counsel of legal fees and expenses related to the Settlement Agreement, (iv) approximately $324,000 for accrued IRS tax withholding obligations and associated penalties and interest, (v) $64,132 as repayment of a nine-month note that bears interest at 4.49% per annum, and (vi) approximately $464,000 for accrued liabilities to related parties and former officers. See "Use of Proceeds". We may also use a portion of the net proceeds to acquire or invest in complementary businesses, products and technologies. Although we have no specific agreements, commitments, or understandings with respect to any acquisition, we evaluate acquisition opportunities and engage in related discussions with other companies from time to time. Pending the use of the net proceeds of this offering, we intend to invest the net proceeds in short-term investment-grade, interest-bearing securities.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of Axxess Pharma, Inc. (referred to herein as "we," "our," "us," "Axxess Pharma, Inc." or the "Company"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying financial statements and the related notes to the Financial Statements before making an investment decision. Business Overview The Company, through its subsidiaries Axxess Pharma Canada, Inc. and Allstar Health Brands Inc., engages in the distribution of certain Health Canada approved pharmaceutical and natural health products in Canada, the United States, and other international markets. TapouT- branded Products We have in-licensed rights to manufacture and distribute the TapouT-branded products world-wide. In 2013 the Company acquired a World-Wide Exclusive License (the "License") from ABG TapouT, LLC ("ABG") pursuant to a license agreement for various TapouT branded products in return for a royalty rate of 5%. The license agreement was subsequently amended in September 2014. The license agreement provided for an initial term of eight (8) years from October 1, 2013 until December 31, 2020, renewable to two (2) consecutive terms of five (5) years each, at the options of the Company. The Company also paid to ABG a non-refundable license fee of $25,000 on or before January 1, 2015 and issued to ABG 500,000 shares of its common stock. The TapouT-branded products for which the Company received the License include: TapouT Spray Pain Relief, TapouT Pain Relief Towelettes, TapouT Hot & Cold Reusable Packs, TapouT Instant Cold Packs, TapouT Extreme Muscle Growth Supplement and TapouT Muscle Recovery Supplement, and TapouT turbo Blend Protein Powder in both a two-pound and one pound package, TapouT Omega-3 Fish Oil. In addition, the Company will launch: an all-natural testosterone boost, a line of RTD s (Ready-to-Drink) Protein meal replacement products. We use third party manufactures. We distribute the products through several channels including retail and online in Canada, the United States and other international markets. We are currently engaging in the distribution of TapouT Pain Relief Spray, TapouT Pain relief Wipes, TapouT Muscle Growth Supplement and TapouT Muscle Recovery Supplement TapouT Protein Powder, in a 2-lb. tub of TapouT protein powder, and a TapouT brand Omega-3 Fish oil. Depending on manufacturing constraints, we may also begin distribution of a TapouT Ready-to-Drink protein meal replacement line of products in three flavors: vanilla, chocolate and coffee. All products are currently and will be manufactured by FDA-compliant third party manufacturers, mainly Private Label Nutraceuticals, of Norcross, Georgia. We distribute the TapouT products through our subsidiaries. Soropon Medicated Shampoo We licensed the Drug Identification Number (DIN) in Canada pursuant to a license agreement with Blue Ivory Holdings Ltd. in 2012 so that we have the right to manufacture and distribute Soropon Medicated Shampoo. Soropon Medicated Shampoo is a treatment for both infants and adults for fungal infections of the scalp such as sebhorreic dermatitis and cradle cap in infants. There are currently several shampoos that treat similar conditions offered in the $20-24.00 price range. The Company plans to employ an aggressive pricing strategy in order to effectively compete with the other medicated shampoos currently offered in this market segment. This product was previously on the markets in Canada for a few years prior to 2010. We are currently focusing on the TapouT branded products therefore further development of the Soropon Medicated Shampoo is on hold. Regulations Our products are regulated under FDA Guidelines and Regulations. The ingredients used by the Company for the production of its products are classified as GRAS (Generally Regarded As Safe). To the best of the Company s knowledge all the new products under development conform to the FDA guidelines for safety, and quality manufacturing. In addition, The Company has obtained from Health Canada approval for the following products: TapouT Spray, Towellettes, Hot and Cold pack, Instant Cold Packs, and TapouT Muscle Growth Pre-Workout Supplement, Omega-3 Fish Oil, TapouT Protein Powder. Furthermore the Company has obtained from the Australian Regulatory Authority (TGA) approval for four of its products: TapouT Muscle Recovery Spray, TapouT Muscle Recovery Towelettes, TapouT Muscle Pre-Workout Supplement and TapouT Muscle Post-Workout Supplement. The Company believes other countries where it intends to sell its products may or may not require regulatory approvals, but in the event the products require these, the process will be fairly short, as the products contain no medicinal or controlled substances. CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount of Title of Each Class of Securities Amount to be Offering Price Aggregate Registration to be Registered Registered (1) Per Share Offering Price Fee Common Stock, par value $0.0001 per share, issuable to Beaufort pursuant to the Investment Agreement 7,142,858 (2) $ 0.20 (3) $ 1,428,571.60 $ 166.00 * Common Stock, par value $0.0001 per share, issued to Beaufort 200,000 (2) 0.20 (3) 40,000.00 4.65 * Common Stock, par value $0.0001 per share, issued to Seaside pursuant to the Securities Purchase Agreement 584,350 (4) 0.15 87,652.50 8.82 ** Common Stock, par value $0.0001 per share, issued to Seaside pursuant to the Securities Purchase Agreement 917,300 (4) 0.15 137,595.00 15.99 * Common Stock, par value $0.0001 per share, issued to Seaside pursuant to the Securities Purchase Agreement 840,520 (4) 0.1195 100,442.14 11.67 * Common Stock, par value $0.0001 per share, issued to Seaside pursuant to certain side letter 100,000 (5) 0.20 (3) 20,000.00 2.01 ** Common Stock, par value $0.0001 per share, issued to the Revive shareholders pursuant to the Asset Purchase Agreement 2,803,010 (6) 0.20 (3) 560,602.00 56.46 ** Total 12,588,038 $ 2,374,863.24 $ 275.96 The Registrant previously submitted $500.21 with the filing of a registration statement that was filed on July 21, 2014. The registration statement was withdrawn on January 16, 2015. The $500.21 remained in the accountant as credit for future filings. On January 21, 2015, a subsequent registration statement was filed on January 21, 2015, with filing fees of $210.82. *Aggregate of $210.82 which was paid from the credit of $500.21, which was applied with the filing of the registration statement on January 21, 2015. **Aggregate of 67.29 to be paid against the credit outstanding. (1)Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement shall be deemed to cover the additional securities (i) to be offered or issued in connection with any provision of any securities purported to be registered hereby to be offered pursuant to terms which provide for a change in the amount of securities being offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions and (ii) of the same class as the securities covered by this registration statement issued or issuable prior to completion of the distribution of the securities covered by this registration statement as a result of a split of, or a stock dividend on, the registered securities. (2)Includes 7,142,858 shares of our common stock that we will put to Beaufort Capital Partners LLC pursuant to that certain investment agreement dated December 24, 2014. Includes 200,000 shares of our common stock issued to Beaufort Capital Partners LLC for the extension of the $250,000 loan, pursuant to that certain amended promissory note dated January 20, 2015. (3)Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on the closing prices of the common stock of the registrant as reported on the Pink Sheet on January 15, 2015. (4)On May 19, 2014, the Company entered into a Securities Purchase Agreement with Seaside 88, LP, a Florida limited partnership, or Seaside, pursuant to which the Company will issue and sell to Seaside up to 5,000,000 shares of its common stock. The Company issued 584,350 shares at $0.15 per share on May 20, 2014, 917,300 shares at $0.15 per share on June 20, 2014, and 840,520 shares at $0.1195 per share on July 21, 2014, respectively. (5)On January 9, 2015, the Company entered into a side letter to the Securities Purchase Agreement with Seaside 88, LP to extend the reporting company requirement to March 30, 2015, pursuant to which the Company issued 100,000 shares to Seaside for the extension. (6) Includes 2,803,010 shares issued to the shareholders of Revive Bioscience Inc. pursuant to that certain assets purchase agreement dated September 13, 2013. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. Transaction with Beaufort Investment Agreement On December 24, 2014, the Company entered into an Investment Agreement with Beaufort which replaced the similar agreement dated June 9, 2014. The Investor Agreement provides that the Company may, from time to time in its sole discretion when it determines appropriate in accordance with the terms and conditions of the Investment Agreement, during the Commitment Period (defined below), deliver an advance notice (the "Advance Notice") to Beaufort, which states the dollar amount of securities that the Company intends to sell to Beaufort on a date specified in the Advance Notice (the "Advance"). The Company will be entitled to Advance to Beaufort (the "Advance Amount") the number of shares of common stock equal to a maximum of two hundred fifty percent (250%) of the average daily volume (U.S. market only) of our common stock for the ten (10) trading days prior to the applicable Advance Notice. The purchase price per share to be paid by Beaufort for each Advance Amount will be calculated at a 30% discount to the median price for the average of the ten (10) closing daily prices and the ten (10) closing bid prices of the Company s Common Stock immediately prior to Beaufort s receipt of the Advance Notice. The "Commitment Period" begins on the trading day after a registration statement is declared effective as to the common stock to be subject to the Advance, and ends 36 months after such date, unless earlier terminated in accordance with the Investment Agreement. The Company has the right, pursuant to the terms of the Investment Agreement to Advance up to $1,000,000 of common stock to Beaufort. If the Company was to draw down on the entire $1,000,000, then the Company would have to issue approximately 7,142,858 shares of common stock based upon an assumed purchase price under the Investment Agreement of $0.14 (equal to 70% of the closing price of our common stock of $0.20 on January 15, 2015), representing 11% of the outstanding common stock of the Company at the time the Company advances the maximum investment amount of $1,000,000 of shares of common stock. The current registration statement covers 7,142,858 shares of our Common Stock under the Investment Agreement that would raise $1,000,000 assuming our Common Stock s closing bid price remains unchanged from its price as of January 15, 2015. In the event our Common Stock s price decreases, we may receive substantially less than $1,000,000. In that case, the Company may have to prepare and file one or more additional registration statements registering the resale of these shares if this registration statement is unable to cover the remaining amount of shares. These subsequent registration statements may be subject to review and comment by the staff of the SEC, and will require the consent of our independent registered public accounting firm. In addition, Beaufort will not be obligated to purchase shares if Beaufort s total number of shares beneficially held at that time would exceed 4.99% of the number of shares of the Company s common stock as determined in accordance with Rule 13d-1 of the Securities Exchange Act of 1934, as amended. In addition, the Company is not permitted to draw on the facility unless there is an effective Registration Statement (as further explained below) to cover the resale of the shares. The Investment Agreement further provides that Beaufort and the Company are each entitled to customary indemnification from the other for any losses or liabilities they may suffer as a result of any breach by the other of any provisions of the Investment Agreement or Registration Rights Agreement (as defined below). Registration Rights Agreement In connection with the Investment Agreement, the Company and Beaufort entered into a registration rights agreement, or the Registration Rights Agreement. Under the Registration Rights Agreement, the Company will use its commercially reasonable efforts to file, within thirty (30) days of the date of the Investment Agreement, a Registration Statement on Form S-1 covering the resale of the common stock subject to the Investment Agreement. The Company has agreed to have the Registration Statement declared effective with the SEC. Beaufort has agreed to pay all legal costs and expenses associated with the Registration Rights Agreement. Promissory Note On June 9, 2014, the Company issued Beaufort a secured promissory note (the "Note") in the principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00). The Note is to be funded in two equal tranches of $125,000. The first tranche of $125,000 was funded at closing and the second tranche of $125,000 was funded on July 28, 2014.The Note matures on January 28, 2015 which is six months from the date the Company receives the full amount of the Note (the "Maturity Date"). On January 20, 2015, The Company and Beaufort entered into an amended and restated secured promissory note to extend the Maturity Date of the Note to February 13, 2015. As consideration of the loan extension, the Company issued 200,000 shares to Beaufort. Such shares are required to be registered in the registration statement. As collateral for the Note, Mr. Peter Daniel Bagi, President of the Company, has agreed to pledge 2,000,000 shares of common stock of the Company (subject to adjustment) to Beaufort as security for the payment in full of principal and performance under the Note ("Stock Pledge Agreement"). Depending on our cash position, we may not be able to repay the note. While we have been able to manage our working capital needs with current credit facilities, additional financing or commencement of revenue generating from operations will be required in order to repay the note. To date, we have not generated any revenue, and we cannot make any assurances that we will be successful in generating any in the future. Also, we cannot predict whether we will be able to obtain new financing, nor do we know if it will be in the form of equity or debt. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Moreover, the amount of indebtedness may not be reduced or relieved by the issuance of shares under the equity line agreement. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED October 5, 2015 12,588,038 Shares of Common Stock Axxess Pharma, Inc. This Prospectus covers up to (1) 7,142,858 shares of common stock of Axxess Pharma, Inc., or the Company, par value $0.0001 per share, issuable to Beaufort Capital Partners LLC, a New York limited liability company, or Beaufort, pursuant to that certain investment agreement, dated December 24, 2014, between the Company and Beaufort, or the Investment Agreement; (2) 200,000 shares of our common stock issued to Beaufort for the extension of the $250,000 loan, pursuant to that certain amended promissory note dated January 20, 2015; (3) 2,342,170 shares of common stock of the Company, issued to Seaside 88, LP pursuant to that certain securities purchase agreement, dated May 19, 2014; (4) 100,000 shares of common stock of the Company, issued to Seaside 88, LP pursuant to that certain side letter agreement dated January 9, 2015; and (5) 2,803,010 shares of common stock of the Company, issued to the shareholders of Revive Bioscience Inc. pursuant to that certain assets purchase agreement dated September 13, 2013. The Investment Agreement permits us to submit a drawdown notice of up to $1,000,000 in shares of our common stock to Beaufort over a period of up to thirty-six (36) months. We will receive proceeds from the sale of securities pursuant to our exercise of the drawdown right offered by Beaufort. Beaufort shall purchase the shares at a thirty percent (30%) discount from the median price for the average of the ten (10) closing daily prices and the ten (10) closing bid prices of the Company s common stock immediately prior to Beaufort s receipt of drawdown notice. Beaufort is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, or the Securities Act. The total amount of shares of common stock to be issued to the Investment Agreement which may be sold pursuant to this Prospectus would constitute approximately 11% of our issued and outstanding common stock as of January 16, 2015, assuming that the selling stockholder will sell all of the shares offered for sale. Beaufort is paying all of the registration expenses incurred in connection with the registration of the shares except for accounting fees and expenses and we will not pay any of the selling commissions, brokerage fees and related expenses. Our common stock is quoted on the OTC Pink, under the ticker symbol "AXXE." On September 9, 2015, the closing price of our common stock was $0.02 per share. We intend to seek quotation on the OTC Bulletin Board, or the OTCQX or OTCQB marketplaces; however, there is no guarantee that we will be successful. The shares held by the selling security holders may be sold at a fixed price of $0.20 per shares until they are quoted on the OTC Bulletin Board, or the OTCQX or OTCQB marketplaces, and that they will thereafter be sold at prevailing market prices or privately negotiated prices We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 5 to read about factors you should consider before investing in shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus Is: _____________, 2015 Transaction with WHC Capital On November 4, 2014, the Company entered into a securities purchase agreement with WHC Capital LLC, or WHC, pursuant to which the Company issued (1) a 10% convertible note of the Company having a face value of $312,500 and (2) a three year warrant to purchase 1,000,000 shares of the Company s common stock, at an exercise price of $0.25535 per share. The total purchase price of the note was $250,000. The note is secured by 3,500,000 shares of common stock of the Company beneficially owned by Peter Daniel Bagi, the Chief Executive Officer of the Company, pursuant to that certain stock pledge agreement dated as of the even date. The collateral shares shall be held in the office of Szaferman Lakind Blumstein & Blader, PC, as the escrow agent, pursuant to that certain escrow agreement dated as of the even date. WHC shall have full-recourse against the Company in the event that net proceeds from the sale of the collateral shares do not provide adequate coverage of amounts owed under the note. Upon termination of the note, any remaining collateral shares shall be immediately returned to the Company. The note may be converted only in the event that (a) the note is in default pursuant to the note, and (b) the net proceeds from the sale of collateral shares do not provide adequate coverage of all amounts owing thereunder, and (c) the Company cannot remedy the inadequate amount in five (5) business days. The conversion price of the note equals to 70% of the average of the three daily VWAPs, chosen by the Holder, during the twenty (20) trading days before the issue date, subject to adjustment. In the six months ending June 30, 2015, the note payable was assigned $175,000 to Ramos and Ramos Investments, Inc. and $175,000 to RBB Capital. The balance includes a penalty of $37,500 in the principal balance and the Company's CEO transferred 1,500,000, 1,000,000 and 1,000,000 of the pledge shares to WHC Investments, Inc., Ramos and Ramos Investments, Inc. and RBB Capital LLC, respectively. Transaction with Seaside On May 19, 2014, the Company entered into a Securities Purchase Agreement with Seaside 88, LP, a Florida limited partnership, or Seaside, pursuant to which the Company will issue and sell to Seaside up to 5,000,000 shares of its common stock. The per share purchase price shall be an amount equal to the lower of (a) the average of the high and low trading prices (measured to two decimal places) of the common stock for the ten (10) consecutive trading days immediately prior to a closing date, multiplied by 0.50 and (b) the average of the high and low trading prices (measured to two decimal places) of the common stock for the trading day immediately prior to a closing date, multiplied by 0.55. However, in no event the per share purchase price shall be less than the floor price equal to $0.14 per share in any subsequent closing, unless both parties agree to waive it. In addition, Seaside will not be obligated to purchase shares if Seaside s total number of shares beneficially held at that time would exceed 9.99% of the number of shares of the Company s common stock as determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended. Seaside is entitled to piggyback registration rights for all the shares issued or issuable under the Securities Purchase Agreement. The Company covenants and agrees to become a reporting company under the Exchange Act, subject to the reporting requirements of Section 13 or 15(d) thereof, no later than August 19, 2014, which was three (3) months following the date of the Securities Purchase Agreement, and thereafter to file all reports required to be filed by a reporting company pursuant to Section 13 or Section 15(d) of the Exchange Act. In the event there is a delay for any reason in the Company becoming a reporting company under the Exchange Act by August 19, 2014, the Company shall pay a liquidated damage of $20 per day until it becomes a reporting company. On January 9, 2015, the Company entered into a side letter to the Securities Purchase Agreement with Seaside 88, LP to extend the reporting company requirement to March 30, 2015, pursuant to which the Company issued 100,000 shares to Seaside for the extension. However, since the Company did not become a reporting company by March 30, 2015, the Company may begin to accrue liquidated damages starting from March 31, 2015 until it becomes a reporting company which may adversely affect our results of operations. The parties conducted the initial closing on May 20, 2014 and the Company issued a total of 584,350 shares at $0.15 per share. Two subsequent closings were took place on June 20, 2014 and July 21. The Company issued 917,300 shares at $0.15 per share and 840,520 shares at $0.1195 per share, respectively. The Company received total proceeds of $323,609.90 from these three closings. Transaction with RDW Capital, LLC. On February 5, 2015, the Company entered into a convertible note payable with RDW Capital, LLC. The $100,000 note payable includes $5,000 of original issuance discount and bears interest at a 10% per annum interest rate. The note matures on February 5, 2016 and is secured by 2,500,000 shares of Company common stock. The note is convertible into shares of common stock at a price equal to a variable conversion price of sixty-five percent (65%) of the volume-weighted averages the twenty (20) days preceding the date of conversion. In the six months ended June 30, 2015, the lender converted the $100,000 of principal into 2,713,164 shares of common stock. On February 23, 2015, the Company entered into a note payable with RDW Capital, LLC. The agreement exchanged notes of $200,000 bears interest at a 10% per annum interest rate. The note matures on February 23, 2016 and is secured by 7,500,000 shares of Company common stock. The note is convertible into shares of common stock at a price equal to a variable conversion price of sixty-five percent (65%) of the volume-weighted averages the twenty (20) days preceding the date of conversion. In the six months ended June 30, 2015, the lender converted the $200,000 of principal into 4,687,499 shares of common stock. In the six months ended June 30, 2015, the lender converted the $200,000 of principal into 4,687,499 shares of common stock. On April 22, 2015, the Company entered into a note payable with RDW Capital, LLC. The agreement exchanged notes of $175,000, includes $8,750 of original issuance discount and bears interest at a 10% per annum interest rate. The note matures on April 22, 2016 and is secured by 7,500,000 shares of Company common stock. The note is convertible into the Company s common stock at an initial conversion price at 60% of the volume-weighted averages during the 20 days before the issue date. The note is convertible into shares of common stock at a price equal to a variable conversion price of sixty percent (60%) of the volume-weighted averages the twenty (20) days preceding the date of conversion. In the six months ended June 30, 2015, the lender converted the $60,000 of principal into 1,616,523 shares of common stock. In the six months ended June 30, 2015, the lender converted $60,000 of principal into 1,616,523 shares of common stock. The principal balance of the convertible note payable at June 30, 2015 amounted to $115,000. Transaction with 18 River North Equity, LLC. On February 17, 2015, the Company entered into a convertible note payable with 18 River North Equity, LLC. in an aggregate principal amount of $75,000. The note payable bears interest at a 6% per annum. The note matures on February 17, 2016 and is secured by 800,000 shares of Company common stock. The note is convertible into shares of common stock at a price equal to a variable conversion price of seventy percent (70%) of the volume-weighted averages the twenty (20) days preceding the date of conversion. The principal balance of the convertible note payable at June 30, 2015 amounted to $75,000. On April 6, 2015, the Company entered into a convertible note payable with 18 River North Equity, LLC. in an aggregate principal amount of $77,500 including $4,375 of original issuance discount. The note payable bears interest at a 6% per annum. The note matures on February 17, 2016 and is secured by 800,000 shares of Company common stock. The note is convertible into shares of common stock at a price equal to a variable conversion price of seventy percent (70%) of the volume-weighted averages the twenty (20) days preceding the date of conversion. The principal balance of the convertible note payable at June 30, 2015 amounted to $77,500. Transaction with Ramos and Ramos On February 23, 2015, the Company entered into a convertible promissory note payable in an aggregate principal amount of $130,000 with Ramos and Ramos Investments, Inc. The note payable bears interest at a 10% per annum. The note matures on August 23, 2015. The note is convertible into shares of common stock at a price equal to a variable conversion price of sixty percent (60%) of the volume-weighted averages the five (5) days preceding the date of conversion. The principal balance of the convertible note payable at June 30, 2015 amounted to $130,000. On May 15, 2015, the Company entered into a convertible promissory note payable in an aggregate principal amount of $100,000 with Ramos and Ramos Investments, Inc. The note payable bears interest at a 12% per annum. The note matures on November 15, 2015. The note is convertible into shares of common stock at a price equal to a variable conversion price of sixty percent (60%) of the volume-weighted averages the five (5) days preceding the date of conversion. The principal balance of the convertible note payable at June 30, 2015 amounted to $100,000. Transaction with RBB Capital, LLC. On May 18, 2015, the Company entered into a convertible promissory note payable in an aggregate principal amount of $100,000 with RBB Capital, LLC. in exchange for the assumption of $100,000 of the Ramos and Ramos note payable dated June 12, 2011. The note payable bears interest at a 12% per annum. The note matures on February 18, 2016. The note is convertible into shares of common stock at a price equal to a variable conversion price of sixty-five percent (65%) of the volume-weighted averages the twenty (20) days preceding the date of conversion. In June 30, 2015, the lender converted $40,125 of the principal into 1,328,505 shares of common stock. The principal balance as of June 30, 2015 was $59,875. Asset Acquisition On September 13, 2013 the Company through its wholly owned subsidiary Allstar Health Brands, enter into an assets purchase agreement with Revive Bioscience Inc. The Company acquired assets related to the distribution of TapouT Products including DINS of TapouT pain relief products as well as trademarks, website, remaining finished goods inventory of TapouT products as well customer lists and intellectual products associated with the TapouT brand name. The purchase price included $52,000 cash used to pay-off outstanding accounts payable of Revive Bioscience as of the closing date and 6,450,000 shares of common stock valued at $0.48 per share at the closing date of the transaction. Where You Can Find Us Our principal executive offices are located at 3250 Bloor Street West, Suite 613, Toronto, ON, M8X 2X9. Our telephone number is (416) 410-6006. Unless the context provides otherwise, when we refer to "we," "our," "us," "Axxess Pharma, Inc." or the "Company" in this Prospectus, we are referring to Axxess Pharma, Inc. THE OFFERING Common stock offered by Selling Stockholder 12,588,038 shares of common stock.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the following summary together with the more detailed information appearing elsewhere in this prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and related notes before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, the terms eASIC, the Company, we, us, and our in this prospectus refer to eASIC Corporation. eASIC CORPORATION Overview We have pioneered a differentiated solution that enables us to rapidly and cost-effectively deliver custom integrated circuits (ICs), creating value for our customers hardware and software systems. Our eASIC solution consists of our eASIC platform which incorporates a versatile, pre-defined and reusable base array and customizable single-mask layer, our ASICs, delivered using either our easicopy or standard ASIC methodologies, and our proprietary design tools. Customers can efficiently migrate to our easicopy ASIC from the eASIC platform using our easicopy methodology. We believe our eASIC solution provides the optimal combination of fast time-to-market, high performance, low power consumption, low development cost and low unit cost for our customers. Our solution has broad applicability across a wide range of customers, applications and end markets including communications infrastructure, storage and data processing and industrial applications. Our solution should position us to address additional end markets in the future. As of March 31, 2015, we have leveraged our eASIC platform to develop four generations of eASIC products with increasingly smaller process nodes, and we have designed over 200 custom ICs and shipped over 21 million units. We believe the need for differentiation through custom ICs is driven by several megatrends, including the proliferation of mobile devices driving the deployment of high capacity and high bandwidth wireless infrastructure, the rapid transition to cloud computing and the emergence of big data analytics. We believe the ability to differentiate hardware and software systems through custom ICs is critical to helping our customers grow faster than their competitors and enhance their profit margins. Historical solutions for customized ICs have included Application Specific Integrated Circuits (ASICs), Application Specific Standard Products (ASSPs) and Field Programmable Gate Arrays (FPGAs). We believe our products avoid the painful tradeoffs associated with these historical solutions. For example, based on data provided by a majority of our customers for power consumption with respect to those customers designs using FPGAs, as well as our own internal analysis using the latest generation of custom ICs based on our eASIC platform, we believe that we can enable our customers to reduce power consumption by 50% to 80% compared to FPGAs at the same process node. In addition, in all five cases where customers have required that our design provide an increase in performance, as measured by clock speed of the chip, we have been able to improve performance by 60% to 120% compared to FPGAs at the same process node. With our eASIC platform, we believe our customers can significantly reduce non-recurring engineering (NRE) charges and lower design and manufacturing time by nine to 12 months or more when compared to traditional ASIC design and manufacturing processes. We believe our competitive advantages will increase over time as the costs and complexity associated with the development and manufacturing of future generations of ICs continue to rise. We estimate that our addressable market opportunity across ASIC, ASSP and FPGA applications is approximately $78 billion, based on data from Gartner Research (Gartner). During the year ended December 31, 2014 and the three months ended March 31, 2015, we sold our products and services to over 14 customers and 10 customers, respectively, including Ericsson, Fujitsu, Huawei, NEC, Omnivision, Seagate and Toshiba. The number of customers varies between different periods due to timing of orders from customers. In 2012, 2013, Table of Contents 2014 and the first three months of 2015, Ericsson and Seagate together accounted for 73%, 87%, 93% and 95%, respectively, of our total revenues. For the years ended December 31, 2013 and 2014, our total revenues were $29.8 million and $67.4 million, respectively, representing an annual growth rate of 126%. We do not expect our revenues to continue to grow at these historical rates in the future. Our net loss for 2013 and 2014 was $7.8 million and $1.1 million, respectively. For the three months ended March 31, 2014 and 2015, our revenues were $13.6 million and $20.1 million, respectively, and our net income was $0.4 million and $0.7 million, respectively. We may not be able to grow or sustain our revenues in the future and expect our expenses to increase substantially in the near term. We design our ICs and use third-party vendors for substantially all of our manufacturing production and operations. Industry Background Key technology megatrends driving massive growth in the demand for network bandwidth, computing resources and data storage The significant and growing demands on networking, compute and storage infrastructure have resulted in service providers, enterprises and datacenter operators requiring OEMs to rapidly introduce next generation networking, server and storage systems which deliver high return on investment with enhanced functionality and performance, while reducing power consumption and physical footprint. Challenges with historical IC solutions for OEMs In order to provide semiconductor-based differentiation and customization for their product offerings, OEMs have traditionally had to choose between ASICs, ASSPs and FPGAs. However, these solutions require increasingly painful tradeoffs among time-to-market, performance, power consumption, unit and development costs. As the costs and time required to develop ASICs and ASSPs have increased, we believe that OEMs have become increasingly receptive to finding a better solution to provide the custom ICs they desire. While FPGAs offer a time-to-market advantage, they consume significant amounts of power and are cost prohibitive to high-volume production. Our Solution We invented a way to customize ICs with a single mask layer base array that we believe better avoids the painful tradeoffs associated with traditional ASICs, ASSPs and FPGAs. Our eASIC platform utilizes a versatile, pre-defined and reusable base array, which is built using standard mask layers. One custom mask layer is then inserted into the base array, which customizes the IC to meet a specific customer s requirements. The ability to customize an IC with a single mask layer is achieved using our proprietary architecture and design tools. Once the IC design is completed, the custom mask layer is fabricated and added to the pre-manufactured base array to complete the manufacturing process. Our easicopy ASICs are customized using a full set of masks and are developed using our easicopy methodology. The final packaged and tested IC is then shipped to the customer for implementation into their specific application. We believe this approach provides the optimal combination of benefits including fast time-to-market, high performance, low power consumption, low unit cost and low development cost for our customers. Table of Contents Global Megatrends are driving the need for custom hardware Global Networks Mobility Cloud 101100110101011 Big Data Table of Contents Benefits to Our Customers Our customers are continuously developing new products in existing and new application areas as they look to differentiate themselves from their competitors, reduce time-to-market, increase market share and enhance margins. In our view, the key benefits of our solutions, as outlined below, help our customers to achieve their goals: Product Differentiation Through Custom ICs. Our custom ICs are designed to meet the specific technical requirements of our customers in their respective end-markets while balancing their time-to-market, performance, power consumption and overall cost needs. Fast Time-to-Market. Our eASIC platform offers a time-to-market advantage of up to 12 months or more over traditional ASICs. High Performance. Our eASIC platform is designed to meet the high performance requirements that our customers need. We believe that our solution has ASIC-comparable performance that is superior to that offered by FPGAs. Low Power Consumption. In most of our end markets, power consumption is a key consideration in system design and operation. Our solution is power-efficient and can considerably lower a system s overall operating cost and power consumption. Low Development Cost. The versatility of our pre-designed base array and the need to customize only one mask layer in our eASIC platform allows us to lower development cost by significantly reducing design and NRE expenses. Low Unit Cost. We are able to design and deliver ICs that have a smaller die size when compared with FPGAs. Due to the area efficient die and lower cost IC packaging, our solution offers an attractive cost per unit relative to FPGAs. Our Growth Strategy Our objective is to be the leading provider of custom and affordable ICs with fast time-to-market. We believe our solution enables our customers to differentiate their products, become more competitive in their markets and enhance their growth rates, market share and profit margins. Key elements of our strategy include: Exploit the Multiple Benefits of our eASIC Platform. We intend to leverage the multiple benefits of our versatile eASIC platform to expand our customer base across a variety of end products. Expand Market Share within Our Existing Customers. We intend to increase our market share by applying our differentiated design capabilities to new design programs and by continuing to foster deep customer relationships. We believe this will position us to expand into our customers adjacent and next generation products. Sell into New Customers in Existing Markets. We have successfully demonstrated a number of key benefits to top customers within certain applications and markets, such as wireless communications infrastructure and storage. We plan to work with other top OEMs in our existing markets to bring the same benefits to them. Expand into Adjacent Markets and Enhance Our Product Roadmap to Identify New Use Cases. We intend to leverage the versatility of our eASIC platform to develop new use cases and applications. As we deploy new capabilities including, but not limited to, higher-speed SerDes, increased logic and memory integration and lower power solutions, we plan to use our eASIC platform to expand into adjacent markets. Table of Contents Think Custom IC Think eASIC Custom ICs are essential to differentiate hardware in the marketplace Wireless Storage Wired eASIC nextremeTM eASIC provides breakthrough solutions for delivering Custom ICs Time-to-Market Performance Power Cost Table of Contents Invest in Key Sales and Technical Talent. As we grow, we intend to build upon our top tier customer base by increasing our geographic sales and technical resources to enable us to expand our market share with new and existing customers and in adjacent markets. Risks Associated With Our Business Our business is subject to numerous risks, as more fully described in the section entitled Risk Factors immediately following this prospectus summary. You should read these risks before you invest in our common stock. We may be unable, for many reasons, including those that are beyond our control, to implement our business strategy. In particular, risks associated with our business include: We depend on a limited number of customers for a substantial majority of our revenues. If we fail to retain or expand our customer relationships, our revenues would decline significantly. Our success and future revenues depend on our winning designs with our customers, and those customers designing our solutions into their product offerings and successfully selling and marketing such products. The design win process is generally a lengthy, expensive and competitive process, with no guarantee of revenue, and if we fail to generate sufficient revenues to offset our expenses, our business and operating results would suffer. Our customers may replace or substitute our custom IC solutions with different or lower cost solutions. The complexity of our custom IC solutions could result in unforeseen delays or expenses from undetected defects, erroneous spins or other bugs which could adversely affect our operating costs, reduce the market adoption of our solutions and damage our reputation with current or prospective customers. Our target markets may not grow or develop as we currently expect and if we fail to penetrate new markets and scale successfully within those markets, our revenues and financial condition would be harmed. We may experience difficulties demonstrating the value to customers of newer, higher priced and higher margin solutions if they believe existing solutions are adequate to meet end customer expectations, and our business would be harmed. Our VMI inventory strategy subjects us to risk of revenue volatility, which could negatively impact our operating results. Fluctuations in the mix of our custom IC products that we sell may adversely affect our financial results. We depend on third parties for substantially all of our manufacturing production and operations. We identified material weaknesses in our internal controls over financial reporting that were a result of the limited internal accounting resources available to us while we were a private company. If not properly remediated, these weaknesses could result in material misstatements in our financial statements in future periods and impair our ability to comply with the accounting and reporting requirements applicable to public companies. Corporate Information We were incorporated in Delaware in 1999. Our principal executive offices are located at 2585 Augustine Drive, Suite 100, Santa Clara, California 95054, and our telephone number is (408) 855-9200. Our corporate website address is www.easic.com. Information contained on or accessible through our website is not a part of this prospectus, should not be relied on in determining whether to make an investment decision, and the inclusion of our website address in this prospectus is an inactive textual reference only. We have obtained registered trademarks for eASIC, easicopy and eASICore, The Configurable Logic Company and eZ-IP based on use of the trademarks in the United States. This prospectus contains references to Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the sections titled Risk Factors, Special Note Regarding Forward-Looking Statements, and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case included in this prospectus. Unless the context otherwise requires, we use the terms Infraredx company, our, us, and we in this prospectus to refer to Infraredx, Inc. Overview We are a cardiovascular imaging company advancing the diagnosis and treatment of coronary artery disease, the world s leading cause of death according to the World Health Organization. In 2012, we completed a 13-year development effort and began commercializing a U.S. Food and Drug Administration, or FDA, cleared optical catheter that utilizes near-infrared spectroscopy, or NIRS, to determine if a patient has cholesterol-rich, lipid core coronary plaques, or LCPs. Our optical catheter also includes an intravascular ultrasound, or IVUS, that shows the structure of the plaque, while NIRS provides information on the lipid content of the plaque, including the presence or absence of a LCP in an individual patient. LCPs are known to complicate stenting procedures, and are suspected to be the vulnerable plaques that cause most heart attacks. Our dual-modality NIRS-IVUS True Vessel Characterization Imaging System, or TVC System, is designed to provide physicians with information that has the potential to improve patient clinical outcomes through more tailored treatments. Coronary artery disease, or CAD, is a major global health problem responsible for approximately 7.4 million deaths worldwide in 2012 according to the World Health Organization, and the worldwide frequency of the disease is increasing. There has been considerable progress in understanding the causes of heart attacks precipitated by CAD, specifically linking the accumulation of atherosclerotic plaques within the coronary arteries to coronary events. More specifically, autopsy findings and clinical studies in patients who have experienced a heart attack indicate that at least 60% of these events occur when an atherosclerotic LCP ruptures, leading to a thrombosis, which occludes the flow of blood to the heart muscle. Dr. James Muller, our founder and Chief Medical Officer, conducted studies on the relationship between lipid-rich plaques, or LRPs, of which LCPs are now known to be a subset, and heart attacks during his research as a professor of medicine at the Harvard Medical School. In 1989, along with two colleagues, Dr. Muller introduced the concept that heart attacks occur when a vulnerable or at-risk LRP ruptures, leading to a thrombosis. However, no prospective trial has confirmed this connection due, in part, to the historical absence of a means to identify LRPs in living patients. Leveraging the proven capabilities of our dual-modality NIRS-IVUS TVC System, we are currently conducting a number of prospective outcomes trials, which we believe, if successful, will conclusively show that LRPs are the vulnerable plaques that cause most coronary events. Our TVC Imaging System Our dual-modality NIRS-IVUS TVC Imaging System is the only FDA-cleared technology capable of rapidly, specifically and reliably identifying LCPs, and providing structural plaque information with IVUS. As a result of this capability, our TVC System is being used by physicians with increasing frequency to more fully-characterize coronary plaques. Our TVC System consists of the TVC Console, which includes the Nexus Controller, and our proprietary Insight Catheter. Our current TVC System, the MC8, features a 40 micron axial high resolution IVUS image as well as a NIRS-enabled, color-coded map of the artery being imaged, which we call a Chemogram. Our TVC System also shows the presence of a LCP as well as a vessel s lipid core burden index, or LCBI. Our next generation systems, the MC9 and integrated MC9i, which we anticipate commercializing in 2015, will feature an updated user interface and an enhanced IVUS image with 20 micron axial resolution. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated January 26, 2015 PRELIMINARY PROSPECTUS 4,000,000 Shares COMMON STOCK We are offering 4,000,000 shares of our common stock. This is our initial public offering, and no public market currently exists for our common stock. We expect the initial public offering price will be between $13.00 and $15.00 per share. We have applied to list our common stock on the NASDAQ Global Market under the symbol REDX. We are an emerging growth company, as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 12. Per Share Total Initial public offering price $ $ Underwriting discount and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option to purchase up to 600,000 shares of our common stock to cover over-allotments, if any, exercisable at any time until 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on or about , 2015. RBC CAPITAL MARKETS CANACCORD GENUITY BMO CAPITAL MARKETS OPPENHEIMER & CO. BTIG Prospectus dated , 2015. Table of Contents Ongoing Trials We are currently conducting four prospective outcomes-based studies which, if successful, we believe will conclusively show that LRPs, as detected by our dual-modality NIRS-IVUS TVC technology, are vulnerable plaques. We believe such detection will enhance efforts to prevent coronary events with the targeted use of existing and novel therapies. Current and Potential Markets According to Millennium Research Group, Inc., or Millennium Research, the coronary imaging market is estimated to be approximately $626 million in Western Europe, Japan and the United States, which we refer to as the Major Markets, in 2014, which includes IVUS, optical coherence tomography, or OCT, and fractional flow reserve, or FFR. We are currently in the early stages of penetrating this market and believe that our novel TVC System will continue to gain market share. Further, we believe that the benefits of our dual-modality NIRS-IVUS technology may expand the use of intracoronary imaging beyond the existing approximately 400,000 IVUS procedures performed annually in the Major Markets, according to Millennium Research. If our prospective outcomes-based studies are successful, we believe that we will conclusively show that LRPs, as detected by our dual-modality NIRS-IVUS TVC technology, are vulnerable plaques. We believe that such detection may enhance efforts to prevent additional coronary events in patients who undergo percutaneous coronary intervention, or PCI, with the targeted use of existing and novel therapies. According to Millennium Research, approximately 1.9 million patients undergo PCI annually in the Major Markets. We formally launched our NIRS-IVUS TVC System in the United States in mid-2012. As of December 31, 2014, we had an installed base of 143 TVC Systems, which includes TVC Systems that are sold, leased or placed without compensation. We market our TVC System through a direct sales organization of eight representatives in the United States and Europe, and through distributors in five other territories globally. In Japan, which represents an estimated 46% of the coronary imaging market in the Major Markets according to Millennium Research, we have partnered with Nipro Corporation, or Nipro, a leading medical device supplier, pursuant to a five-year exclusive distribution agreement that expires in August 2019. In August 2014, Nipro received Japanese Pharmaceuticals and Medical Device Agency, or Shonin, approval to market our TVC System in Japan. Nipro is currently awaiting a national Japanese reimbursement decision with respect to our TVC System, which it expects to receive in the first half of 2015. For the year ended December 31, 2013, our revenues were $2.7 million, and for the nine months ended September 30, 2014, our revenues were $3.7 million. Of these amounts, $2.2 million for the year ended December 31, 2013 and $2.8 million for the nine months ended September 30, 2014 were attributed to sales of our single-use catheters, which we view as our primary revenue driver. For the year ended December 31, 2013, our net loss was $32.1 million, and for the nine months ended September 30, 2014, our net loss was $24.5 million. Our accumulated deficit as of September 30, 2014 was $212.5 million. As of September 30, 2014, we had 130 employees, most of whom work in our corporate headquarters in Burlington, Massachusetts, which includes our vertically integrated manufacturing facility. As of September 30, 2014, we own 48 issued patents globally, of which 33 are issued U.S. patents, five are issued in Japan and 10 are issued in the European Union. As of September 30, 2014, we have eight patent applications pending globally, three of which are patent applications pending in the United States, two are pending in Japan, two are pending under the European Patent Convention and one is a pending Patent Corporation Treaty application. Table of Contents Table of Contents Limitations of Conventional Cardiovascular Diagnostic Imaging Technologies Since the inception of interventional cardiology over four decades ago, a variety of imaging technologies have been utilized to assess CAD and provide therapeutic guidance, including during PCI procedures such as stenting. The more commonly utilized technologies include external imaging modalities (such as traditional x-ray, computed tomography, or CT, and magnetic resonance, or MR), coronary angiography, and intravascular imaging. The use of these common imaging technologies allows the physician to visualize the coronary vessels with varying levels of accuracy, depending on the technology used, and identify regions of stenosis and restricted blood flow. However, these technologies have limited ability to determine the chemical composition of atherosclerotic plaques or detect potentially dangerous plaques that do not cause a narrowing of the coronary vessel. Our Solution Our dual-modality NIRS-IVUS TVC Imaging System is the only FDA-cleared technology capable of rapidly, specifically and reliably identifying LCPs, and providing structural plaque information with IVUS. As a result of this capability, our TVC System is being used by physicians with increasing frequency to more fully-characterize coronary plaques. Our optical catheter includes an IVUS capability that provides a high resolution image of the structure of the plaque. Our novel NIRS capability is able to detect LCPs, which are known to complicate stenting procedures, and are suspected to be the vulnerable plaques that cause most heart attacks. The resulting IVUS image and NIRS-enabled Chemogram can enable rapid, specific and informed clinical decision-making and enhance long-term treatment strategies. Benefits of Our Solution We believe that our TVC Imaging System provides the following benefits: Current Benefits Enhancement of the Stenting Procedure by IVUS. Our TVC System provides physicians with a high resolution IVUS image that clearly displays key structural details of a plaque, including its location, length and the degree of stenosis that it causes. The IVUS image shows the length and diameter of stent required to fully cover the plaque, and has the ability to confirm full stent expansion. Enhancement of the Stenting Procedure and Post-Stenting Management by NIRS. It has been shown that patients with a high lipid core burden index, as measured by NIRS, have an increased risk of subsequent coronary events relative to patients with fibrotic plaques. Therefore, we believe that the information provided by our NIRS technology can aid in selection of the intensity of anti-lipid and anti-thrombotic treatment in the months and years post-stenting. Potential Future Benefits Detection of Vulnerable Plaque in Patients Undergoing PCI. If our four prospective outcomes-based studies are successful, we believe that we will conclusively show that LRPs, as detected by our dual-modality NIRS-IVUS technology, are vulnerable plaques. We believe such detection will enhance efforts to prevent subsequent coronary events in the approximately 1.9 million patients undergoing PCI annually in the Major Markets with the targeted use of existing and novel therapies. Detection of Vulnerable Plaques in Patients Undergoing Coronary Angiography without PCI. There are approximately 3.3 million patients per year who undergo coronary angiography in the Major Markets, according to Millennium Research, but are found not to have a stenosis narrow enough to warrant PCI. Some of these patients are likely to have non-stenotic vulnerable plaques or stenotic plaques that may be dangerous but do not meet current stenting guidelines. If our TVC System is shown to be effective in the Table of Contents prevention of subsequent events in patients undergoing PCI, we believe that our TVC System will then be studied for its ability to prevent heart attacks in a portion of these patients by facilitating the preventive treatment of vulnerable plaques. Cost Effectiveness of Detection and Treatment of Vulnerable Plaques. If we are successful in demonstrating that LRPs are in fact vulnerable plaques, we believe that we can have a meaningful impact on both the diagnostic and treatment paradigms of CAD, which may eventually lead to the reduced incidence of spontaneous coronary events. Through early detection and intervention, and improved stent placement, we believe that our novel TVC System could reduce the direct and indirect expenses associated with coronary events, and reduce downstream consequences associated with such events, including other cardiovascular conditions such as heart failure and arrhythmia. Our Strategy Our initial goal is to expand the use of our TVC System for the optimization of coronary stenting as currently performed for coronary stenoses. Our longer term goal is to prove that LRPs, as detected by NIRS imaging, are vulnerable plaques and that such plaques can be treated before they cause a coronary event. Accordingly, we believe our technology can have a profound impact on the lives of many patients and is capable of reducing the overall costs to the healthcare system associated with coronary events and their consequences. Our strategy to achieve our goals includes: Expanding Our Sales and Distribution Capabilities. Continuing to Advance Our Product by Enhancing Our TVC System Capabilities. Entering the Japanese Market with Our Partner Nipro Corporation. Further Demonstrating the Clinical Utility of Our TVC System through Clinical Studies. Using Evidence of Clinical Benefit and Cost Effectiveness Data to Obtain Physician Payment and Hospital Reimbursement for TVC Imaging. Growing Our Market Opportunity by Expanding the Advanced Coronary Imaging Market. Risks Related to Our Business
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes, before you decide whether to invest in our common stock. If you invest in our common stock, you are assuming a high degree of risk. Unless the context otherwise requires, references to we, our, our company, us, the company or Xtera refer to Xtera Communications, Inc. and its consolidated subsidiaries. Some of the statements in this prospectus constitute forward-looking statements. See the section titled Forward-Looking Statements for more information. Xtera Communications, Inc. Overview We are a leading provider of high-capacity, cost-effective optical transport solutions, supporting the high growth in global demand for bandwidth. We sell our high-capacity optical transport solutions to telecommunications service providers, content service providers, enterprises and government entities worldwide to support their deployments of long-haul terrestrial and submarine optical cable networks. We believe that our proprietary Wise Raman optical amplification technology allows for capacity and reach performance advantages over competitive products that are based upon conventional Erbium-Doped Fiber Amplifier, or EDFA, technology. We believe that we differentiate ourselves from our competitors through our innovative, proprietary products and our industry-leading cost-efficient operating structure. We have developed a portfolio of intellectual property with more than 180 U.S. and foreign patents and patent applications. We have operations in the United States and the United Kingdom, with an engineering team that includes industry-recognized technical experts. Our solutions are capable of spanning over 1,500 kilometers with capacity of 64 Terabits per second, or Tbit/s. Our solutions are purpose-built for varying customer demands of capacity, reach and cost. The modular nature of our solutions allows for capital-efficient capacity expansion over time, as the customer s bandwidth needs grow. We believe our leadership in high-performance optical solutions positions us to continue to win new customers, expand our footprint within existing customers and, ultimately, assist our customers in preparing for increasing demand on their networks. Our capability and expertise as a turnkey solution provider, including the supply and installation of submerged infrastructure, has been a key differentiator for us in recent years, particularly in submarine projects. We have an extensive operating track record, having deployed our solutions for more than 10 years in 60 countries across five continents. Due to our outsourced manufacturing model, we believe that we have the capability to support high revenue growth, while controlling operating costs. Industry Background Optical networks are communications networks that carry voice, video and data traffic across optical fiber cables using multiple wavelengths of light. Through the use of light as a transmission medium, optical networks deliver significantly more data transport capacity and less external signal interference compared to traditional copper transport technology. Optical transport networks are classified into two segments: long-haul networks, including terrestrial and submarine networks that carry traffic between cities, countries and continents, and metro networks that carry traffic within cities or large metropolitan areas. Long-haul networks, also referred to as optical backbone networks, serve as the foundation for telecommunication and data transport services. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor are we seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 12, 2015 PRELIMINARY PROSPECTUS 5,000,000 Shares Xtera Communications, Inc. Common Stock We are offering 5,000,000 shares of our common stock. This is our initial public offering, and no public market currently exists for our common stock. We estimate that the initial public offering price will be $5.00 per share. We have applied to list our common stock on The NASDAQ Global Market under the symbol XCOM. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves risks. See Risk Factors beginning on page 10. Per Share Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds, Before Expenses, to Xtera Communications $ $ (1) See Underwriting for additional information regarding underwriting compensation. We have granted the underwriters the right to purchase up to 750,000 shares of our common stock to cover over-allotments. Entities affiliated with New Enterprise Associates, The Wellcome Trust, ARCH Venture Partners and Sevin Rosen Funds, which are each holders of more than 5% of our common stock, have indicated an interest in purchasing approximately $4 million, $3 million, $1 million and $1 million, respectively, of shares of our common stock in this offering. ARCH Venture Partners and Sevin Rosen Funds are also each affiliated with a member of our board of directors. However, because indications of interest are not binding agreements or commitments to purchase, these stockholders may determine to purchase fewer shares than they indicate an interest in purchasing or not to purchase any shares in this offering. It is also possible that these stockholders or certain of our other existing stockholders, including certain of our directors and executive officers and certain stockholders affiliated with our directors, could purchase more shares of our common stock than previously indicated or may purchase shares pursuant to the underwriters over-allotment option, if exercised. In addition, the underwriters could determine to sell fewer shares to any of these stockholders than the stockholders have indicated an interest in purchasing or not to sell any shares to these stockholders. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders as they will on any other shares sold to the public in this offering. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. It is illegal for any person to tell you otherwise. We anticipate that delivery of the shares of common stock will be made on or about , 2015. Needham & Company Cowen and Company BMO Capital Markets The date of this prospectus is , 2015 Table of Contents Over the past 30 years, data transmission technology has evolved considerably and, today, optical networks form the backbone infrastructure for data transmission, enabling content service providers, enterprises and consumers to send and receive data rapidly. As the demand for bandwidth has increased, so have the capabilities of optical backbone infrastructure, with standard data transmission rates rising from 2.5 Gigabits per second, or Gbit/s, to 100 Gbit/s. While more recent optical backbone network deployments have taken advantage of new technologies, much of the world s existing optical backbone infrastructure still relies heavily on older technologies. With growing demand for bandwidth, telecommunications service providers, content service providers, enterprises and government entities are actively seeking cost-efficient solutions to optimize existing fiber assets and for the development of new networks, which we believe we are well positioned to serve. Industry Trends We believe that a number of key trends in the optical networking industry are driving growth in demand for improved optical networking infrastructure. These trends include: Significant growth in bandwidth consumption. The continued proliferation of smart devices, the increased adoption of high-bandwidth applications, such as video and music streaming, video conferencing and big data initiatives, and the increasing prevalence of cloud computing are driving an increased demand for bandwidth. Rising prominence of content service providers. Content service providers are investing in and developing their own high-speed optical fiber network infrastructures instead of using traditional telecommunications service providers networks. Evolution of data center infrastructure. Global telecommunications network expansion has led to a shift towards multiple high-capacity distributed data centers and the development of new, dedicated data center interconnect optical networks. Significant growth of data communications in emerging markets. Bandwidth demand in emerging markets is expected to grow and outpace the existing infrastructure within these markets as connected devices become more affordable and broadband connectivity becomes more ubiquitous. Industry Challenges We believe telecommunications service providers face the following challenges as they attempt to remain responsive to the rapidly changing telecommunications landscape: Limited capacity. Telecommunications service providers are looking to maximize utilization of their existing optical cable networks in a cost-effective manner, and most of the products available to these service providers do not efficiently utilize available spectrum to provide sufficient capacity. Legacy infrastructure. Existing infrastructure was designed to support legacy voice applications and, as a result, often struggles to support more bandwidth-intensive and cloud-based applications. Architectural complexity. Optical communications network design, planning and engineering are intensive processes involving considerable complexity. This high level of complexity increases costs associated with the deployment and maintenance of optical networks, may slow network expansion and service delivery and could potentially result in lost revenue for telecommunications service providers. Increasing costs and price pressures. The high cost of building, maintaining and upgrading optical communications networks impacts the profitability of bandwidth provisioning for telecommunications service providers. In order to satisfy increasing bandwidth demand and improve current network infrastructure, telecommunications service providers must continue to invest in their network infrastructures, despite a low revenue growth environment with stringent capital expenditure policies. Table of Contents Table of Contents Our Solution Our fully-integrated Wise Raman amplification technology can dramatically increase line bandwidth, allowing us to offer nearly three times more data-carrying wavelengths, or channels, than what is currently supported by EDFA-based products, and at two times the distance. This allows us to offer higher line capacity, better noise performance and higher optical power efficiency than what is currently supported by EDFA-based products. We believe we are the only vendor that offers a single, point-to-point, terrestrial and submarine platform for long-haul optical transmission. We believe that our ability to monitor third-party submarine repeaters and our user-friendly network management system further differentiates our solutions. We believe that the key benefits of our optical solutions include: Flexible solutions. Our solutions are designed to enable our customers to determine their optimal network configuration across the variables of capacity, reach, cost and upgrade potential. Scalable, high throughput capacity. We combine modular design, built-in monitoring capabilities and software intelligence to provide our customers with scalable, automated networking infrastructures, which we believe offer the highest capacity and reach in the industry. Enhanced network reliability. Our optical networking capabilities help our customers manage services more easily, reduce operational complexity, increase service reliability and enable new applications, such as network virtualization. Cost effectiveness. Our products provide capacity that allows our customers to add to or upgrade their networks in a cost-effective manner. Ease of deployment and use. We have designed our solutions to allow us to have an organizational structure capable of deploying our solutions efficiently and in a timely manner. We believe that our key competitive differentiators include: Leading amplification technology solutions. Through our innovative Wise Raman technology, we believe that we offer the industry s leading submarine and terrestrial signal amplification solutions for high-capacity, long-haul optical networks. Innovative, field-proven technologies. Our high-capacity, long-reach and high-transmission performance solutions have been deployed in the field for over 10 years. Rapid response time. Our partners, trained engineers and customer support staff work together to provide our customers with timely service and support. Deep domain experience. We have deployed some of the highest capacity and longest networks and have the ability to manage challenging projects and environments. Ease of upgrades. Our solutions enable our customers to increase the capacity of their existing systems at a fraction of the cost in comparison to installing new networks. Our Strategy Our goal is to be a profitable, high-growth provider of high-capacity optical transmission technology to service providers, enterprises and government entities worldwide. Key elements of our strategy include efforts to: Capitalize on our leadership position in cost-effective optical technology. We intend to increase market share and drive revenue growth by leveraging our know-how and patented technology portfolio to provide cost-efficient solutions for new and existing networks. Expand installed capacity at existing customers. We intend to leverage our successful deployments to expand the footprint of our product portfolio within our existing customer base. Increase and diversify our global customer base. We intend to attract new customers and to continue to expand into new markets, such as the data center interconnect market. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1 Risk Factors 7 Cautionary Note Regarding Forward-Looking Statements 22 Use of Proceeds 25 MARKET FOR THE REGISTRANT S COMMON EQUITY AND OTHER STOCKHOLDER MATTERS 26 DIVIDEND POLICY 27 CAPITALIZATION 28 Management s Discussion and Analysis of Financial Condition and Results of Operations 29 BUSINESS 35 INDUSTRY 48 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 53 MANAGEMENT 54 EXECUTIVE COMPENSATION AND OTHER INFORMATION 59 Certain Relationships and Related Party Transactions and Director Independence 65 Description of Capital Stock 67 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 69 Shares Eligible For Future Sale 71 MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS 73 INVESTMENT IN ECO-STIM ENERGY SOLUTIONS, INC. BY EMPLOYEE BENEFIT PLANS 77 UNDERWRITING (CONFLICTS OF INTEREST) 79 LEGAL MATTERS 84 EXPERTS 84 WHERE YOU CAN FIND MORE INFORMATION 84 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA F-1 APPENDIX A – GLOSSARY OF SELECTED INDUSTRY TERMS A-1 You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on our behalf or to which we have referred you. We have not, and the underwriters have not, authorized anyone to provide you with information different from that contained in this prospectus and any free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Industry and Market Data A portion of the market data and certain other statistical information used throughout this prospectus is based on independent industry publications, government publications or other published independent sources. Although we believe these third-party sources are reliable and that the information is accurate and complete, we have not independently verified the information. Some data is also based on our good faith estimates and our management s understanding of industry conditions. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in this prospectus. These and other factors could cause results to differ materially from those expressed in these publications. Until , 2015, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. PROSPECTUS SUMMARY This summary provides a brief overview of information contained elsewhere in this prospectus. Because it is abbreviated, this summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our financial statements and the related notes and the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Overview Our Company We are a clinical stage biotechnology company focused on discovering and developing novel, small molecule drugs for diseases that represent large market opportunities where there are significant unmet medical needs. We are developing a robust and growing portfolio of novel product candidates generated by Contour , our proprietary structure-based drug discovery platform. Our team of accomplished scientists utilizes Contour to rapidly discover highly potent and selective product candidates for validated but difficult-to-drug targets in multiple disease areas. Our most advanced product candidates include VTP-34072, which commenced a Phase 2 clinical trial for the treatment of type 2 diabetes in July 2014, with data expected in the first half of 2015, and VTP-37948/BI1181181, or BI1181181, for the treatment and prevention of Alzheimer's disease, for which we announced positive top-line results for two Phase 1 clinical trials in the fourth quarter of 2014, and which is expected to complete a multiple rising dose Phase 1 clinical trial in the first half of 2015. Both product candidates are being exclusively developed and following regulatory approval, if any, commercialized by Boehringer Ingelheim GmbH, or BI, under separate collaborations. These collaborations have provided us with an aggregate of $158.4 million in funding as of September 30, 2014, including upfront license fees, research funding and success-based milestone payments as well as equity investments. In addition, we have multiple wholly-owned product candidates advancing in preclinical studies, including: VTP-43742 for the treatment of autoimmune disorders, where the immune system attacks normal tissues, with Phase 1 proof-of-concept data, which is the demonstration of therapeutic activity, expected by the end of 2015; VTP-38543 for the treatment of atopic dermatitis, an immune system mediated inflammation of the skin; and VTP-38443 for the treatment of acute coronary syndrome, which includes unstable angina and heart attacks. Our Contour Technology Platform We are a structure-based drug discovery company, which means we use computers to design drugs utilizing detailed target protein structures as the guide for design, and have leveraged our expertise to create a growing portfolio of novel, potent and selective product candidates. We utilize Contour to discover and develop product candidates for validated therapeutic targets, which are the proteins through which a drug mediates activity, against which the industry has traditionally struggled to develop drugs due to challenges related to potency, selectivity, pharmacokinetics, or the change in drug levels over time, or patentability issues. We refer to these targets as "difficult-to-drug." Contour's computational software uses artificial intelligence and sophisticated algorithms to model the assembly of molecular fragments into fully elaborated, drug-like structures that precisely fit each target's 3-dimensional binding site. These molecules are then assessed by Contour's state-of-the-art scoring function, which is a computer program that predicts how tightly a drug will bind to its active site, to identify the most promising and drug-like structures. Together, these functions allow us to rapidly focus on those structures with the highest potential from among hundreds of billions of possibilities for a given biologic target. We chemically synthesize, comprehensively test, and critically evaluate and modify these novel structures until we identify product candidates with demonstrable first-or best-in-class potential. Our scientists utilize our platform and approach to develop each of our product candidates to rapidly overcome discovery obstacles. We have Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. Table of Contents achieved animal proof-of-concept, which is the demonstration of activity in an animal, for each of our programs in less than 18 months from the initiation of a program. Our Most Advanced Product Candidates The following table summarizes key information about our most advanced product candidates. PRODUCT CANDIDATE INDICATION (TARGET) WORLDWIDE COMMERCIAL RIGHTS STAGE OF CLINICAL DEVELOPMENT AND ANTICIPATED MILESTONES VTP-34072 Type 2 diabetes and metabolic syndrome (11b HSD1) BI Phase 2 clinical trial initiated in July 2014 Results expected in first half of 2015 BI1181181 Alzheimer's disease (BACE) BI Positive top-line results for two Phase 1 clinical trials announced in the fourth quarter of 2014 Multiple rising dose Phase 1 clinical trial results expected in the first half of 2015 VTP-43742 Psoriasis, multiple sclerosis, other autoimmune diseases (RORgt) Vitae Phase 1 clinical trial expected to begin in first half of 2015 Phase 1 clinical trial results expected in middle of 2015 Phase 1 proof-of-concept results expected by end of 2015 Two Phase 2 clinical trials expected to begin in 2016 VTP-38543 Atopic dermatitis (LXRb) Vitae Phase 1 clinical safety and pharmacokinetics trial initiation and results expected in second half of 2015 Phase 1 proof-of-concept results expected in 2016 VTP-38443 Acute coronary syndrome (LXRb) Vitae IND filing expected in first half of 2016 VTP-34072 VTP-34072 is being developed for type 2 diabetes. We expect VTP-34072 to be differentiated from other oral anti-diabetic agents because, based on its mechanism of action and our preclinical data, it lowers glucose and also has a positive impact on multiple cardiovascular and metabolic risk factors associated with metabolic syndrome. Patients with metabolic syndrome, which afflicts approximately 85% of type 2 diabetics, are characterized by being overweight and having elevated glucose, blood pressure, cholesterol and triglycerides, while having decreased levels of high-density lipoprotein, or HDL, cholesterol, HDL-C or "good cholesterol." Cortisol plays a key role in the pathogenesis, or disease mechanism, of metabolic syndrome. VTP-34072 is designed to inhibit 11b hydroxysteroid dehydrogenase type 1, or 11b HSD1, the enzyme responsible for production of cortisol in tissues where active glucose metabolism takes place, including the liver and adipose, or fat, tissue. VTP-34072 is partnered with BI. In Phase 1 clinical trials in 142 patients, VTP-34072 was well tolerated and demonstrated highly potent and selective inhibition of 11b HSD1 in adipose tissue, and had a pharmacokinetic profile which we believe is consistent with once-a-day dosing in humans. VTP-34072 commenced a Phase 2 clinical trial involving 126 type 2 diabetic patients in July 2014 and is expected to report data in the first half of 2015. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject To Completion, Dated January 20, 2015 Preliminary Prospectus Table of Contents BI1181181 BI1181181 is being developed for treatment of Alzheimer's. Alzheimer's is characterized by the accumulation of extracellular protein deposits in the brain that are called amyloid plaques. The accumulation of these plaques is believed to directly damage neurons and to trigger additional responses that further contribute to the disease. Amyloid production begins with an enzyme in the brain known as b-Site Amyloid Precursor Protein Cleaving Enzyme 1, or BACE. There are significant genetic data that implicate BACE as playing a direct role in the disease process itself. We discovered and are developing BI1181181, a BACE inhibitor, in collaboration with BI. In two Phase 1 clinical trials in 100 patients, BI1181181 was generally well tolerated and demonstrated a half-life of between 16 and 19 hours, supporting a once-daily dosing profile. The trials also demonstrated the ability of intermediate doses of BI1181181 to lower cerebral spinal fluid, or CSF, Ab levels by more than 80%. Based on the results of both of these trials, BI is expected to complete a multiple rising dose Phase 1 clinical trial in the first half of 2015. VTP-43742 We are developing VTP-43742 for autoimmune disorders. Autoimmune disorders include commonly known diseases such as psoriasis, multiple sclerosis, or MS, and rheumatoid arthritis, or RA, as well as rarer conditions. Increased activity of a class of lymphocytes, which are a type of white blood cells called Th17 cells, is a critical part of the pathophysiology of many human autoimmune disorders. Inappropriately regulated Th17 cells can attack normal human tissues, and have been shown to play a significant role in multiple types of autoimmune diseases. Persistent secretion of cytokines, especially IL-17, by Th17 cells promotes chronic inflammation by activating other cells to make additional inflammatory mediators such as tumor necrosis factor alpha, or TNFa, and the interleukins IL-1b, IL-6, and IL-8. Therapies inhibiting the activity of IL-17 have the potential to transform treatment for various autoimmune diseases. Blockade of IL-17 activity by monoclonal antibodies has been shown to be clinically superior to Enbrel (ixekizumab and secukinumab) and Stelara (brodalumab and secukinumab) in human psoriasis clinical trials. RAR-Related Orphan Receptor gamma-t, or RORgt, is a protein that is essential for the formation and function of Th17 cells. Preclinical studies in animal models have demonstrated that inhibition of RORgt activity is beneficial for the treatment of multiple autoimmune disorders. In preclinical studies, VTP-43742 has been shown to inhibit the secretion of Interleukin 17, or IL-17, and other inflammatory proteins from Th17 cells, and has been demonstrated to be therapeutically beneficial in an animal model of MS, including demonstrating a superior response versus an IL-17 monoclonal antibody. These studies also show that VTP-43742 is well absorbed after oral administration in multiple animal species and has a long half-life in plasma, which we believe is consistent with once-a-day dosing in humans. We plan to file an Investigational New Drug application, or IND, with the U.S. Food and Drug Administration, or FDA, for VTP-43742 in the first half of 2015, with Phase 1 clinical trials commencing thereafter. We expect to have Phase 1 clinical trial results by the middle, and Phase 1 proof-of-concept data demonstrating clinical efficacy by the end, of 2015. Also in 2015, we expect to initiate work necessary to advance VTP-43742 beyond Phase 1 proof-of-concept, including manufacturing clinical supply and performing the necessary Phase 2 enabling non-clinical studies. In 2016, we are planning the initiation of two Phase 2 clinical trials. VTP-38543 We are developing VTP-38543 topically for atopic dermatitis, also known as eczema. Atopic dermatitis is characterized by a loss of barrier function of the skin and skin inflammation. Based on its mechanism, VTP-38543 is expected to improve barrier function and decrease inflammation, in this case in damaged skin tissue. VTP-38543, an LXRb selective agonist, has been shown in preclinical studies to stimulate mature skin cells to synthesize and secrete lipids to improve its barrier function, while also decreasing skin inflammation. In an animal model of skin inflammation, VTP-38543 has demonstrated equal or superior efficacy versus a high potency topical corticosteroid, the current standard of care. We anticipate 3,000,000 Shares Common Stock Table of Contents completing the necessary preclinical studies and filing an IND for VTP-38543, with initiation and results of Phase 1 clinical safety and pharmacokinetics trials expected in the second half of 2015. We anticipate completing a Phase 1 proof-of-concept clinical trial in 2016. VTP-38443 We are developing VTP-38443 for acute coronary syndrome, or ACS. Liver X receptors, or LXRs, which include, LXRa and LXRb, stimulate the production of proteins to transport cholesterol out of cells and inhibit the production of inflammatory proteins. Several studies have demonstrated that LXR agonists promote reverse cholesterol transport, or RCT, in vivo in mice and prevent the development of atherosclerosis. VTP-38443, an orally active LXRb selective agonist, works by augmenting RCT, helping remove cholesterol from the plaque in vessel walls and by inhibiting the production of pro-inflammatory proteins around the plaque. Both of these mechanisms make the plaque less inflamed and more stable, which we believe lowers the risk of plaque rupture and blood clot formation that may lead to a heart attack, and could make VTP-38443 a potential complement to current therapies for ACS. In preclinical studies, VTP-38443 decreased cholesteryl ester formation in plaques by more than 90% and lowered the plaque's inflammatory state. We anticipate completing the necessary preclinical studies and filing an IND for VTP-38443 in the first half of 2016, with Phase 1 clinical trials commencing thereafter. In addition to our existing product candidates, our team of scientists is currently utilizing Contour in our new discovery program in immuno-oncology for stimulating the immune system to attack the cancer cells. Our Collaborations We currently have two collaborations with BI relating to VTP-34072 for the treatment of type 2 diabetes and BI1181181 for the treatment of Alzheimer's. 11b HSD1 (VTP-34072) We entered into a research collaboration and license agreement with BI under which the companies agreed to combine their respective 11b HSD1 drug discovery programs and to give BI the exclusive right to identify, develop and commercialize compounds for treating patients with type 2 diabetes, which is sometimes called adult onset or non-insulin dependent diabetes, and certain related metabolic disease conditions, such as dyslipidemia, obesity and hypertension. As of September 30, 2014, we had received $80.2 million from BI related to the 11b HSD1 agreement, including a $15 million equity investment, $22.2 million in upfront license fees and research funding and $43 million in success-based development milestone payments. In addition, we are eligible to receive up to $272.0 million in additional milestone payments based on the first product to achieve certain pre-specified events, including up to $147.0 million in development and regulatory milestone payments and up to $125.0 million in commercialization milestone payments, as well as additional milestone payments for certain other products that achieve them. We are also eligible to receive tiered royalty payments from BI, ranging from the upper single digits up to the low double digits percentages, based on the net sales of potential future products. We have the option to participate in funding the Phase 3 clinical trials in exchange for increased royalties. BACE (BI1181181) We entered into a second research collaboration and license agreement with BI which allows them to exclusively identify, develop and commercialize BACE inhibitors for the treatment of certain indications, including Alzheimer's. As of September 30, 2014, we had received $78.2 million from BI related to BACE, including a $15 million equity investment, $34.2 million in upfront fees and research funding and $29 million in success-based development milestone payments. In addition, we are eligible to receive up to $326.0 million in additional milestone payments based on the first product to achieve certain pre-specified We are offering 3,000,000 shares of our common stock. Our common stock is listed on The NASDAQ Global Market under the symbol "VTAE." The last reported sale price of our common stock on January 16, 2015, as reported by The NASDAQ Global Market, was $12.95 per share. We are an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 and applicable Securities and Exchange Commission rules, and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See "Prospectus Summary Emerging Growth Company Status." Table of Contents events, including up to $176.0 million in development and regulatory milestone payments and up to $150.0 million in commercialization milestone payments, as well as additional milestone payments for certain other products that achieve them. We are also eligible to receive tiered royalty payments from BI, ranging from the upper single digits up to the low double digits percentages, based on the net sales of potential future products. We have the option to participate in funding the Phase 3 clinical trials in exchange for increased royalties. Our Strategy Our goal is to leverage our structure-based drug discovery platform to deliver first- or best-in-class small molecule compounds to patients in disease indications that represent large market opportunities where there are significant unmet medical needs. The key elements of our business strategy are to: advance our growing portfolio of product candidates; establish late stage development and commercialization capabilities for certain of our product candidates in the United States and potential other markets; selectively collaborate with large biotechnology and pharmaceutical companies to maximize the value of our product candidates; leverage Contour, our proprietary structure-based drug discovery platform, to rapidly discover novel small molecule product candidates for additional validated, difficult-to-drug targets; and continue investing in technology, people and intellectual property. Intellectual Property Each of our most advanced product candidates is the subject of patents and patent applications for composition of matter and methods of treatment in major markets worldwide. These patents and patent applications, if granted, are expected to provide us with intellectual property protection for all of our current product candidates until 2030 and beyond. We intend to continue to expand our intellectual property protections by seeking and maintaining domestic and international patents on inventions that are commercially important to our business. We will also rely on know-how and continuing technological innovation to develop and maintain our proprietary position. Financial Overview Our revenue to date has been generated primarily through our collaborations. We have not generated any commercial product revenue. As of September 30, 2014, we had $67.8 million of cash, cash equivalents and marketable securities and an accumulated deficit of $122.7 million. In addition, we received aggregate net proceeds of approximately $7.6 million upon the exercise in full by the underwriters of our initial public offering of their overallotment option in the fourth quarter of 2014. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our current and future product candidates from discovery through preclinical development and clinical trials, and to eventually seek regulatory approval and pursue commercialization. Risks Associated with Our Business Our ability to implement our business strategy is subject to numerous risks and uncertainties. As a clinical stage biopharmaceutical company, we face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 11. Table of Contents particular, the information under the heading "Risk Factors" in this prospectus prior to making an investment in our common stock. These risks include, among others, the following: We have incurred substantial operating expenses in every year since our inception and anticipate that we will continue to incur substantial operating expenses for the foreseeable future. We may never achieve profitability from product sales. We currently have no source of product sales revenue. We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts. We may not successfully identify, develop, commercialize or market potential product candidates. If we or our partners do not obtain regulatory approval for our current and future product candidates, our business will be adversely affected. We are dependent on BI for the successful development and commercialization of two of our most advanced product candidates, VTP-34072 and BI1181181. If BI does not devote sufficient resources to the development of these candidates, is unsuccessful in its efforts, or chooses to terminate any of its agreements with us, our business will be materially harmed. We and BI rely on third parties to conduct preclinical studies and clinical trials for our product candidates, and if they do not properly and successfully perform their obligations to us, we may not be able to obtain regulatory approvals for our product candidates. If we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively. If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop our product candidates, conduct our clinical trials and commercialize our product candidates. Corporate Information We were incorporated in Delaware in May 2001. Our principal executive offices are located at 502 West Office Center Drive, Fort Washington, Pennsylvania 19034 and our telephone number is (215) 461-2000. Our website address is www.vitaepharma.com. The inclusion of our website address in this prospectus is, in each case, intended to be an inactive textual reference only and not an active hyperlink to our website. The information contained in, or that can be accessed through, our website is not part of this prospectus. Emerging Growth Company Status We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to: presenting only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure in this prospectus; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; having reduced disclosure obligations regarding executive compensation in our periodic reports and proxy or information statements; being exempt from the requirements to hold a non-binding advisory vote on executive compensation or seek stockholder approval of any golden parachute payments not previously approved; and not being required to adopt certain accounting standards until those standards would otherwise apply to private companies. As an "emerging growth company" under the JOBS Act, we are permitted to delay the adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. However, we have elected not to take advantage of such extended transition period, and as a Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ Table of Contents result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable. Although we are still evaluating our options under the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an "emerging growth company" and thus the level of information we provide may be different than that of other public companies. If we do take advantage of any of these exemptions, some investors may find our securities less attractive, which could result in a less active trading market for our common stock, and our stock price may be more volatile. We could remain an "emerging growth company" until the earliest to occur of: December 31, 2019; the last day of the first fiscal year in which our annual gross revenues exceed $1 billion; the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700 million as of the last business day of the second fiscal quarter of such fiscal year; or the date on which we have issued more than $1 billion in non-convertible debt securities during the preceding three-year period. (1)See "Underwriting" beginning on page 160 for additional information regarding underwriting compensation. We have granted the underwriters a 30-day option to purchase up to 450,000 additional shares of common stock on the same terms and conditions set forth above. The underwriters expect to deliver the shares to purchasers on or about , 2015. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Table of Contents The Offering Common stock offered by us 3,000,000 shares Common stock to be outstanding after this offering 21,414,718 shares Underwriters' option The underwriters have an option for a period of 30 days to purchase up to 450,000 additional shares of our common stock. Use of proceeds We intend to use the net proceeds of this offering, together with our existing cash reserves to advance development of VTP-43742, VTP-38543 and VTP-38443, to fund our continued discovery efforts to identify additional drug candidates for new therapeutic molecular targets, including our immuno-oncology program, and for working capital, debt maintenance and general corporate purposes. See "Use of Proceeds" in this prospectus for a more complete description of the intended use of proceeds from this offering.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus, but is not complete and may not contain all of the information that is important to you or that you should consider before making an investment decision. To understand all of the terms of this offering and to attain a more complete understanding of our business and financial situation, you should read the entire prospectus carefully, including the Risk Factors section and the financial statements and related notes contained elsewhere in this prospectus. Our Company We are a leading provider of engineering solutions and services to the Federal Government for national defense, security and other critical government areas. Founded in 1936 as the Illinois Institute of Technology Research Institute, or IITRI, Alion and its highly skilled and educated employees have been among the leaders in the origination, development and application of innovative scientific, engineering, technology and research and development solutions to our customers most complex challenges. We operate in three core business areas: Naval Architecture and Marine Engineering. We provide technical expertise for ship and systems design as well as acquisition and production supervision, testing, delivery and engineering support to naval and commercial markets, both domestically and internationally. Systems Analysis, Design and Engineering. We provide services and technologies designed to enhance the performance and safety of complex systems and reduce costs. Modeling, Simulation, Training and Analysis. We leverage our proprietary software, services and technologies to improve mission effectiveness and readiness through the cost effective application of virtual training. A significant focus of our solutions and services is our agile engineering work, most of which is conducted currently in our systems analysis, design and engineering area. Agile engineering, a substantial and growing part of our business, is the design, rapid prototyping, testing and limited production of systems and components. Within our agile engineering service we provide a broad range of solutions that respond directly to product line managers needs. Our ability to progressively design, prototype, test and field solutions to emergent problems in close collaboration with (and often embedded in) customer teams results in effective, affordable and timely solutions. We distinguish ourselves by our ability to combine traditional services with technological and engineering expertise that is time-critical and cost-efficient. Our solutions and services span the entire lifecycle of key programs and facilitate long-standing, entrenched relationships with our customers. The long-term nature of our service offering also allows us to expand our footprint on existing programs and to use our capabilities and relationships to capture new growth opportunities. For fiscal year 2014, which ended on September 30, 2014, we generated revenue of $804.8 million, $68.0 million in Consolidated EBITDA and reported a net loss of $44.0 million. For the six months ended March 31, 2015 and 2014, we generated revenue of $469.6 million and $378.3 million, respectively, $38.6 million and $30.9 million in Consolidated EBITDA, respectively, and reported a net loss of $22.7 million and $35.2 million, respectively. This represents an increase in revenue and Consolidated EBITDA of 24.1% and 24.9%, respectively, and although Alion has not been profitable since it became a C Corporation in March 2010, it represents a decrease in net loss of 35.5%. For a discussion of our use of Consolidated EBITDA and a reconciliation to net loss, please refer to Summary Historical Consolidated Financial Data . As of September 30, 2014 and March 31, 2015, we had approximately $632.5 million and $618.2 million, respectively, in aggregate principal amount of outstanding debt. In connection with this offering, we intend to repay or refinance all of our currently outstanding debt. On a pro forma basis following consummation of the Transactions, including this offering of shares at the midpoint of the range on the front cover of this prospectus, the Company would have approximately Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated July 2, 2015. Shares Alion Science and Technology Corporation Common Stock This is our initial public offering. We are offering shares of common stock. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . We have applied to list the common stock on the New York Stock Exchange under the symbol ALON . We are an emerging growth company and we are eligible for, but have not elected to adopt in this prospectus, reduced reporting requirements other than with respect to the reduced disclosure in the section entitled Selected Consolidated Financial Data . See Prospectus Summary Implications of Being an Emerging Growth Company . See Risk Factors on page 17 to read about the factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting beginning on page 158 for additional information regarding underwriting compensation. To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from us at the initial price to the public less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. Credit Suisse Jefferies Wells Fargo Securities BofA Merrill Lynch UBS Investment Bank Cowen and Company Stifel Prospectus dated , 2015. Table of Contents Existing Revolving Credit Facility means our $65 million (subject to borrowing base limitations) revolving credit facility entered into as part of the 2014 Refinancing, with Wells Fargo Bank, National Association, as administrative agent and the lenders party thereto; Existing Second Lien Term Loan means our second lien term loan under the credit agreement entered into as part of the 2014 Refinancing, in an initial aggregate principal amount of $70 million, with ASOF and JLP Credit Opportunity Master Fund Ltd., an affiliate of Phoenix, as lenders; Existing Third Lien Notes means third lien notes (i) in initial aggregate principal amount of $208.1 million issued by the Company as part of the 2014 Refinancing, in exchange for approximately 90% of the Company s Unsecured Notes, plus (ii) $2.9 million in aggregate principal amount issued for cash at a discount; Existing Warrants means the 2010 Warrants and the 2014 Warrants; New Credit Agreements means the new credit agreements the Company expects to enter into pursuant to the IPO Refinancing; New First Lien Term Loan means our first lien term loan in an initial aggregate principal amount of $280 million to be entered into as part of the IPO Refinancing; New Revolving Credit Facility means our $40 million revolving credit facility to be entered into as part of the IPO Refinancing, with as administrative agent and the lenders party thereto; New Second Lien Term Loan means our second lien term loan in an initial aggregate principal amount of $120 million to be entered into as part of the IPO Refinancing; Phoenix means Phoenix Investment Adviser, LLC; Reverse Stock Split means the reverse stock split of of our common shares for of our common shares. Secured Notes means the 12% Senior Secured Notes due 2014, which were refinanced in their entirety in 2014; Series A Preferred Stock means shares of our outstanding Series A Preferred Stock, par value $0.01 per share, issued in August 2014, all of the outstanding shares of which, assuming the consummation of the Transactions, we expect will be eliminated in their entirety; Transactions means (a) our initial public offering and (b) the refinancing, or the IPO Refinancing, in full of our currently outstanding debt, a portion of which we expect to refinance through committed financing and the remainder of which will be repaid in full with the proceeds of this offering; U.S. GAAP means accounting principles generally accepted in the United States; and Unsecured Notes means the 10.25% Senior Notes due 2015, which are no longer outstanding. Table of Contents $ million of long-term debt outstanding. For a discussion of our indebtedness, please refer to Description of Certain Indebtedness , Capitalization and our audited annual and unaudited interim financial statements and notes. Our research and development capabilities, technical expertise and operational support is provided to a diverse group of U.S. government customers and, to a lesser degree, commercial and international customers. Our customers are in all branches of the U.S. military, a number of Cabinet-level U.S. government agencies, state and foreign governments and commercial customers. As of March 31, 2015, we had more than 185 distinct customers and over 500 active contracts. For the six months ended March 31, 2015, U.S. Department of Defense, or DoD, customers represented 94.6% of our revenue and other civilian agencies and commercial customers accounted for 5.4% of our revenue. As illustrated in the diagram below, our value proposition is based on the strength of our customer relationships, combined with the quality, depth and skills of our people. This blend of capability and experience enables us to provide innovative and cost-efficient solutions to our customers most pressing problems. Our relentless focus on client-centric innovation is rooted in our heritage as a spin-out of IITRI and the passion and commitment of our highly educated workforce. Our business model is built upon a foundation of high-visibility, long-term programs with our long-standing customers, enabling us to continuously expand our presence into high-growth areas, both by responding to our customers identified needs as well as current or future challenges that we identify and work to solve for our customers. We attribute our growth to being well-aligned with priorities in the Navy, the Army, the Air Force and other DoD customers, which accounted for 54.7%, 16.0%, 15.2% and 8.0%, respectively, of our calendar year 2014 revenues. The DoD base budget funds the majority of our revenues. Of our calendar year 2014 revenue, 93.7% was generated from cost reimbursable and time and material contracts, which carry lower risk, are more Table of Contents TABLE OF CONTENTS INDUSTRY AND MARKET DATA i TRADEMARKS i CERTAIN DEFINED TERMS i NON-GAAP FINANCIAL MEASURES AND OTHER FINANCIAL INFORMATION iii PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained in or incorporated by reference into this prospectus. This summary may not contain all of the information that you should consider before deciding whether or not you should invest in our securities. You should carefully read this prospectus, including the documents incorporated by reference, which are described under the heading "Incorporation by Reference" in this prospectus. References in this prospectus to "Cos ," "the Company," "we," "us" and "our" refer to Cos , Inc., and its consolidated subsidiaries. Our Company We are a company that owns, operates and franchises fast casual (or premium convenience) restaurants which sell high-quality, made-to-order hot and cold sandwiches on its signature crackly-crust flatbread, freshly-tossed salads, fresh soups, flatbread pizzas, Squagels , breakfast wraps, oatmeal, breakfast parfaits and other breakfast items, S mores and other snacks and desserts, and a variety of coffees, teas, and specialty beverages, along with soft drinks and other beverages, and in some locations alcoholic beverages. Our restaurants are located in a wide range of markets and trade areas, including business districts and residential communities in both urban and suburban locations. We believe that we have created significant brand equity in our markets and that we have demonstrated the appeal of our concept to a wide variety of customers. We are a Delaware corporation organized in 1998. Our principal executive offices are located at 294 Washington Street, Suite 510, Boston, Massachusetts 02108. Our phone number is (857) 415-5000. More comprehensive information about us and our products is available through our Internet website at www.getcosi.com. Except for the documents incorporated by reference into this prospectus as described under the heading "Incorporation by Reference", the information and other content contained on our website are not incorporated by reference in this prospectus, and you should not consider them to be a part of this prospectus. Recent Developments Private Placement Closed April 10, 2015 On April 10, 2015, we entered into a Stock Purchase Agreement, or the 2015 SPA, with Trishield Special Situations Master Fund Ltd., which Trishield fund is managed by Trishield Capital Management LLC, a fund managed by Janus Capital Management, LLC, or Janus, LKCM Micro-Cap Partnership L.P. and LKCM Private Discipline Master Fund, SPC, both of which LKCM funds are managed by Luther King Capital Management, Goose Hill Capital LLC, Bigger Capital Fund, LP, and Kenneth Vaughan, which we refer to collectively as the 2015 Purchasers, under which the Company sold to the 2015 Purchasers, and the 2015 Purchasers purchased from the Company, an aggregate of 7,160,766 unregistered shares of the Company s common stock, par value of $0.01 per share, at a purchase price of $2.16 per share, for aggregate gross proceeds of $15,467,255. We refer to this transaction as the 2015 Transaction. The closing of the 2015 Transaction occurred on April 10, 2015. Pursuant to that certain Senior Secured Note Purchase Agreement dated April 14, 2014, entered into between the Company and Milfam II L.P., or Milfam, Milfam had a right to participate in the 2015 Transaction on the same terms as the 2015 Purchasers. Lloyd I. Miller, III, is the manager of Milfam LLC, the general partner of Milfam, and Milfam LLC is also the investment advisor to the Lloyd I. Miller Trust C. Mr. Miller is a significant shareholder of the Company through a variety of entities that he manages. On April 24, 2015, Mr. Miller notified the Company that he would not be participating in the 2015 Transaction. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is prohibited. SUBJECT TO COMPLETION, DATED MAY 29 , 2015 PROSPECTUS 13,941,372 Shares of Common Stock This prospectus relates to the resale by the selling stockholders identified in this prospectus of a total of up to an aggregate of 13,941,372 shares of our common stock. These shares were issued to the selling stockholders pursuant to the agreements described in this prospectus. We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders. We do not know when or in what amount the selling stockholders may offer the shares for sale. We have agreed to pay certain expenses in connection with this registration statement and to indemnify the selling stockholders against certain liabilities. The selling stockholders will pay all underwriting discounts and selling commissions, if any, in connection with the sale of the shares of common stock. The selling stockholders (or their pledgees, donees, transferees, distributees or successors in interest) may offer and sell or otherwise dispose of the shares of common stock described in this prospectus from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. See "Plan of Distribution" beginning on page 20 for more information about how the selling stockholders may sell or dispose of their shares of common stock. The common stock is traded on the NASDAQ Capital Market ("NASDAQ") under the symbol "COSI". On May 4, 2015, the closing sales price of our common stock on NASDAQ was $2.57 per share. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 5 of this prospectus, in Item 1A of our Annual Report on Form 10-K for the year ended December 29, 2014, and all other information included or incorporated by reference in this prospectus in its entirety, before you decide whether or not to make an investment in the common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is May 29 , 2015. Table of Contents The Company relied on the exemption from registration provided for under Section 4(a)(2) of the Securities Act of 1933 based in part on the representations made by the 2015 Purchasers, including the representations with respect to each 2015 Purchaser s status as an accredited investor, as such term is defined in Rule 501(a) under the Securities Act, and the investment intent of each 2015 Purchaser with respect to the shares of common stock acquired by such 2015 Purchaser pursuant to the 2015 SPA. Concurrently with entering into the 2015 SPA, the Company and the 2015 Purchasers entered into a Registration Rights Agreement dated April 10, 2015, pursuant to which the Company agreed to file a registration statement within 30 days, subject to certain delays or extensions of time, covering the shares of the Company s common stock acquired by each of the 2015 Purchasers, as well as unregistered shares previously acquired by a fund managed by Janus from the Company in August 2014. See "Selling Security Holders – Securities Transactions– Janus August 2014 Private Placement and Trust C August 2014 Private Placement Transactions" below for more information about the 2014 Janus and Trust C private placement transactions. The Company has also granted substantially equivalent registration rights to other investors in the Company s securities, including the shares issued in August 2014 to each of Milfam and Lloyd I. Miller Trust C, as well as the shares issued in April 2015 in connection with the previously announced Hearthstone Merger. See "Selling Security Holders – Securities Transactions – Acquisition of Hearthstone Associates, LLC " below for more information about the Hearthstone Merger. The Company had also granted substantially equivalent registration rights to AB Value Partners, L.P., and AB Opportunity Fund LLC, or the AB Entities, for shares issued in 2014 upon exercise of $.01 warrants that were acquired by the AB Entities in connection with the previously-disclosed Senior Secured Promissory Notes issued by the Company to the AB Entities on May 20, 2014 ; however, those shares have been sold under an exemption from registration and will not be covered by this registration statement. See "Selling Security Holders – Securities Transactions – AB Entities May 2014 Note Purchase Transactions" for more information about the note purchase agreements entered into with the AB Entities. Acquisition of Hearthstone Associates, Inc. On April 1, 2015, we closed the previously announced merger of Hearthstone Associates, LLC, or Hearthstone Associates, with and into a wholly-owned subsidiary of the Company, with Hearthstone Associates continuing as the surviving entity. We refer to this transaction as the Hearthstone Merger. Upon completion of the Hearthstone Merger, Hearthstone Associates became a wholly-owned subsidiary of the Company, and Hearthstone Partners, LLC, or Hearthstone Partners, a wholly-owned subsidiary of Hearthstone Associates, became an indirect subsidiary of the Company. On April 1, 2015, upon completion of the Hearthstone Merger, we acquired through Hearthstone Associates and Hearthstone Partners an aggregate of approximately $10.8 million of indebtedness. Approximately $5.6 million of the indebtedness was paid after the closing of the Hearthstone Merger. In connection with the Hearthstone Merger, and as a condition of obtaining the consent of the lender to Hearthstone Partners, the Company agreed to guarantee the obligations of Hearthstone Partners under those certain loan documents (the "Loan Documents") entered into by Hearthstone Partners with First Franchise Corporation (the "Lender"), as previously disclosed in the Company s filings with the SEC. Accordingly, the Company entered into a guaranty in favor of the Lender, pursuant to which the Company placed $5 million in a control account as cash collateral to secure the Company s obligations under the guaranty and certain previously disclosed amendments to the Loan Documents. As of April 1, 2015, the principal balance outstanding under the Loan Documents was approximately $4.7 million. TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes thereto before making an investment decision. Unless otherwise stated in this prospectus, references to we, our, us, SIRVA and the Company and similar terms refer to SIRVA, Inc. and its consolidated subsidiaries. Our Company We are a leading provider of end-to-end relocation and moving services for multi-national corporations, government institutions and consumers, through a worldwide network of 1,475 locations in 170 countries. Our services are designed to provide our customers, typically large corporations, with the ability to efficiently and expeditiously relocate employees globally to execute their business strategies. We provide these services since relocation and moving are outside of our customers core competencies. We help manage all aspects of an employee s relocation and believe that our suite of over 50 distinct services provides an enhanced experience for our corporate and government customers, relocating employees and their families. According to the 2014 Workforce Management Relocation Hotlist (the Relocation Hotlist ), SIRVA held a 26% volume share globally in relocation services in 2014 among companies that self-report to the Relocation Hotlist. In 2014, we executed over 333,000 relocations and moves, 55% of these were relocations with our contracted corporate customers, 38% were moves with individual consumers and 7% were relocations with contracted government customers. We served more than 1,800 corporate customers in 2014, including approximately 25% of the Fortune 500 and 60% of the Dow Jones 30, and many government agencies. Our corporate contracts typically have terms ranging from one to four years. We have long-standing relationships with our corporate customers with average retention rates reaching 98% for the period from 2012 to 2014 in our Relocation Services segment. We have a diversified customer base, with no single customer accounting for more than 3.2% of our service revenue in 2014 and our top ten customers accounting for approximately 16.8% of our service revenue in 2014. Our approximately 2,700 employees, located both within our offices and on-site within our customers human resources departments, provide a customized solution for each relocating employee. We provide moving services through our leading moving network, which includes third-party providers and franchise staff members operating under our leading Allied and northAmerican brands. A transfer to a new location is a challenging time for the employee, their spouse/partner and their entire family, and can be even more difficult if the job is located in a new country with different languages, cultures, employment policies, visa rules, and tax laws. We assist corporations and employees with each aspect of the relocation process to ensure a smooth transition, generating revenue from each of the relocation and moving services that we provide. Our relocation services are provided directly by SIRVA and through our network of third-party providers, and our moving services are provided through our agent network in the United States and Canada, and through exclusive franchise relationships, agents and third-party relationships in the rest of the world. Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholder may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and neither we nor the selling stockholder are soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated October 2, 2015. Shares SIRVA, Inc. Common Stock This is an initial public offering of shares of common stock of SIRVA, Inc. SIRVA, Inc. is offering of the shares to be sold in this offering. The selling stockholder identified in this prospectus is offering an additional shares. SIRVA, Inc. will not receive any of the proceeds from the shares being sold by the selling stockholder. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . SIRVA, Inc. intends to list the common stock on the New York Stock Exchange (the NYSE ) or the NASDAQ Global Select Market ( Nasdaq ) under the symbol SRVA. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 23 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to SIRVA, Inc. $ $ Proceeds, before expenses, to the selling stockholder $ $ (1) We have agreed to reimburse the underwriters for certain expenses in connection with the offering. Please read Underwriting beginning on page 170 of this prospectus for additional information regarding underwriting compensation. We and the selling stockholder have granted the underwriters the option to purchase up to an additional shares from SIRVA, Inc. and shares from the selling stockholder, in each case at the initial price to public less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. Goldman, Sachs & Co. Prospectus dated , 2015. Table of Contents The following is an example of the transfer of an employee with a family from New York to Beijing and illustrates the relocation and moving services that we provide: Our expertise lies in our proprietary business processes, our technological capabilities and our knowledge of the complex logistical and regulatory components involved in moving employees on a global basis. Our technical knowledge in the key areas of employment law, policy adherence, domestic and expatriate tax support, compensation law, customs, immigration, cultural integration, logistics and global supply chain optimization help ensure successful transitions for the relocating employees and their families worldwide. We operate an asset-light agent/franchise moving network which has attributes similar to a traditional franchise model. Our network of third-party relocation and moving providers allows us to deliver specialized, local expertise in a wide range of countries. We provide our moving services, primarily consisting of interstate and international professional moves, through the majority of our 1,475 locations, including 55 company-operated locations and 1,420 agent/franchise locations, in 170 countries. Our agents and franchises operate in the United States and Canada under our nationally recognized moving brands Allied and northAmerican, and in the rest of the world under our Allied brand. Our moving operations were established over many decades, and allow us to deliver a quality customer experience and manage the move, while our agents and franchises provide the capital and labor to execute moves, including moving vehicles, warehouses and packaging and transportation support teams. Based on IBISWorld Inc. ( IBISWorld ) market data, we believe that the relocation and moving industries (collectively, mobility ) have attractive growth fundamentals, including a shift to outsourcing in international markets, corporate globalization and an increasing focus on global talent development and management. We have also witnessed growth in corporate activity which has driven demand for relocation services. Table of Contents We enable corporations to outsource their mobility needs relocating and moving their executives and staff globally. Table of Contents We believe we are well-positioned to benefit from an ongoing expansion of the global relocation industry as a result of our market leading position, scale, breadth of service offerings, recognizable brands and asset-light business model. Additionally, we have implemented a number of initiatives that we believe have significantly strengthened our operations and enhanced our ability to generate growth and continue to improve margins. We have reduced our operating costs by approximately $68 million since 2008 by streamlining business processes, investing in our technology infrastructure, implementing new policies intended to improve our risk management, focusing on an asset-light strategy and divesting non-core businesses that were not directly related to providing relocation services. We have also grown our franchise network, completed five strategic acquisitions and recruited an additional 19 sales professionals. Our Operating Segments We report our operations in four segments: Relocation Services, Moving Services, Growth Markets, and Australia. See Management s Discussion and Analysis of Financial Condition and Results of Operations for further information on our reportable segments. Relocation Services Through this segment we provide relocation services to corporations and government agencies including complete program management (e.g. expense management, reporting, relocation policy deployment and execution), and the supervision and implementation of all employee relocations. These services do not include the physical move of household goods provided by our Moving Services segment. We are a leading provider of end-to-end relocation services to corporate customers in North America. According to IBISWorld, our market share of relocation services in North America was 13.4% in 2014. Our services are designed to execute a corporation s relocation program and are predominantly contracted with the human resource departments at our corporate customers. We provide a variety of relocation packages from full service relocation packages managed by SIRVA that are typically offered to a corporate customer s more senior executives to more basic relocation benefit packages managed by SIRVA for all other employees. These full service relocation packages include home sale assistance, moving services, temporary accommodation, visa assistance services, cultural programs, domestic and expatriate compensation and tax support, expense management and spouse and partner support, among many other services available. The more basic relocation packages consist of only a few of these services. We earn revenue through program, service, and referral fees and through fees we earn from providing home sale assistance and mortgage services. In 2014, Relocation Services represented 33.5% of Net Service Revenue. Moving Services Through this segment we provide the movement of household goods for U.S.-based contracts. We are one of the leading providers of moving services in North America and globally. According to the American Moving and Storage Association ( AMSA ), we had a 28% U.S. market share for interstate consumer moves in 2014 among companies that self-report to AMSA. The Moving Services segment maintains contracts with corporate and government customers that are distinct from the contracts entered into by our Relocation Services segment. In addition, the Moving Services segment performs moves for corporate customers under contract and directly for consumers. In 2014, we completed 168,969 moves. Of these moves, 50% were generated from contracts with corporate and military customers and 50% were direct with consumers. The moves executed are primarily interstate and international professional moves. Moving Services receives a share of all moving revenue related to Table of Contents DUBAI, UNITED ARAB EMIRATES PARIS, FRANCE Table of Contents interstate and international moves. We manage a global agent network, akin to a franchise program, through which moves are executed. We own the Allied and northAmerican brands, and provide agents/franchisees with marketing, technology and revenue/expense services. The agents/franchisees are responsible for all asset purchases, including trucks and trailers, and employ the labor used to execute moves. In 2014, Moving Services represented 34.3% of Net Service Revenue. Growth Markets In our Growth Markets segment, we provide services similar to those provided by our Relocation Services and Moving Services segments, but in the growth markets of Asia, the Middle East, Europe, Africa and South America. The Growth Markets segment is a higher growth potential segment for us as we have only recently established sales operations in these markets to leverage our existing infrastructure. For example, historically we would move an executive from Frankfort, Germany to Beijing, China on behalf of a U.S.-based company and maintain branches and agent/franchise relationships in Germany and Beijing to offer this capability. To drive increased growth, we are now selling our capabilities to European, Asian, Middle Eastern and South American based companies directly, leveraging our existing operating infrastructure outside North America for corporations headquartered outside North America. In 2014, Growth Markets represented 14.6% of Net Service Revenue. Australia In our Australia segment, we offer relocation and moving services in Australia and New Zealand. This segment differs from our other segments because there is no agent moving network to utilize for moving operations. Therefore, we utilize a combination of third party franchises and our own operated moving locations. As a result, we operate a more asset-heavy model in this region, including direct ownership and operation of trucks, trailers and warehouses. In 2014, Australia represented 17.6% of Net Service Revenue. Between 2010 and 2014, we increased our service revenue from $1,201.6 million to $1,464.4 million, Net Service Revenue from $373.4 million to $485.1 million, Adjusted EBITDA from $34.1 million to $84.5 million and net income (loss) from $(52.8) million to $60.7 million. For fiscal years 2012, 2013 and 2014, our service revenue was $1,438.9 million, $1,452.0 million and $1,464.4 million, respectively, Net Service Revenue, which we define as service revenue less purchased transportation expense, was $444.3 million, $459.9 million and $485.1 million, respectively, Adjusted EBITDA was $60.9 million, $70.9 million and $84.5 million, respectively, and net income (loss) was $(1.4) million, $9.7 million and $60.7 million, respectively. For the six months ended June 30, 2015, our service revenue was $664.1 million, Net Service Revenue was $236.1 million, Adjusted EBITDA was $34.1 million and net income was $3.8 million. For information on how we define Adjusted EBITDA and Net Service Revenue and reconciliations of net income (loss) to Adjusted EBITDA and service revenue to Net Service Revenue, see Summary Historical Financial and Other Data. Industry Overview The global relocation and moving services markets are large and growing and consist of a range of diversified services that enable corporations and government institutions to deploy executives and key personnel to locations throughout the world. The talent needs of multi-national corporations are becoming increasingly global and complex. Strategic business decisions normally depend upon the deployment of employees to the most important projects with speed and agility, which drives demand Table of Contents HONG KONG, CHINA BANGKOK, THAILAND Table of Contents for relocation services. These services consist of managing numerous, distinct relocation and move events involving the relocation of the employee, their family and the employee s household goods from their originating location to a destination location, while also managing the related legal requirements, visa and immigration requirements, human resources policies and needs specific to the relocating employee. We compete against companies that solely provide relocation services, companies that solely provide moving services, companies that are primarily focused on real estate services and a limited group of companies that, similar to us, provide integrated relocation and moving services. Companies that provide only relocation services procure moving services and other services from third parties to complete the relocation for an employee and have limited control over the move. The majority of these companies are regional players and provide services in selected regions. Companies that solely provide moving services are typically regional companies that use partner companies if the destination of a move is not located in their covered area. Certain relocation companies are primarily focused on providing real estate services, such as broker services, and their relocation business is secondary to their primary business of real estate brokerage services. We believe integrating relocation and moving is the best model as it allows the relocation provider to exert a much greater level of control over the physical move itself. By combining relocation and moving, the relocating employee is offered the highest quality driver and crew to move and pack their home and is provided required relocation services before and after a move. SIRVA is the leading global provider for integrated relocation and moving services. U.S. Market In 2014, 89% of the U.S.-based corporations surveyed by Worldwide ERC outsourced their mobility services to an external provider. Although large corporations often have a relocation function or capability within their human resources departments, they do not typically possess the domain expertise or local resources across diverse geographies required to manage the numerous processes involved in a relocation. Accordingly, most corporations outsource these functions to relocation services providers to leverage the provider s scale, expertise and technology. Third-party research describes U.S. mobility services as consisting of various component services, with relocation services and moving services as the two largest component services. The U.S. mobility services market is well developed and is the largest mobility services market in the world: Relocation Services. IBISWorld estimates that the market for U.S. relocation services will be $13.1 billion for 2015 and is forecasted to grow at an annualized rate of 4.8% from 2015 to 2020 to a total of $16.4 billion. Relocation services include expatriate services, temporary housing, property management, realtor advice, home sale and purchasing assistance and other value-added services. According to IBISWorld, we had a 13.4% market share in the U.S. relocation services market in 2014. Moving Services. IBISWorld estimates that the market for U.S. moving services was $14.0 billion for 2014 and is forecasted to grow at an annualized rate of 1.1% from 2014 to 2019 to a total of $14.8 billion. Moving services include moving, valuables protection, records management and storage, integrated logistics and information services and other value-added services. According to AMSA, we had a 28% U.S. market share for interstate consumer moves in 2014 among companies that self-report to AMSA. Table of Contents TABLE OF CONTENTS Page Summary 1
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+Prospectus Summary 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001231864_syncardia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001231864_syncardia_prospectus_summary.txt
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+This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock, and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, before deciding to buy shares of our common stock. Unless the context requires otherwise, references in this prospectus to SynCardia, we, us and our refer to SynCardia Systems, Inc. Overview We are a medical technology company focused on developing, manufacturing and commercializing the SynCardia temporary Total Artificial Heart, or TAH-t, an implantable system designed to assume the full function of a failed human heart in patients suffering from advanced heart failure. The SynCardia TAH-t is the only total artificial heart that is commercially available in the United States, European Union and Canada for use as a bridge to heart transplantation. As a total artificial heart, the SynCardia TAH-t replaces the functionality of both the left and right ventricles of the heart as well as all four heart valves. In combination with an external driver that delivers precisely calibrated pulses of air, the SynCardia TAH-t provides blood flow of up to 9.5 liters per minute through each ventricle, lowering central venous pressure and promoting the recovery of other vital organs. We require each medical center to be trained and certified in the implantation of the SynCardia TAH-t and appropriate patient aftercare before we will sell our device to the center. We refer to centers that have successfully completed these certification programs as SynCardia Certified Centers. As of June 30, 2015, over 1,470 SynCardia TAH-ts (including predecessors) had been implanted across 120 medical centers globally. In our pivotal clinical study for the SynCardia 70cc TAH-t, the results of which were published in an article, co-authored by one of our directors, in The New England Journal of Medicine in August 2004, 81 patients suffering from irreversible biventricular heart failure were implanted with the SynCardia TAH-t. The rate at which study patients implanted with our SynCardia TAH-t survived long enough to receive a heart transplant, referred to as the bridge-to-transplant rate, was 79%, representing the highest bridge-to-transplant rate publicly reported for any mechanical circulatory support device. The one-year survival rate of patients who received the SynCardia TAH-t was 70%. We believe that the following recent and anticipated developments will help position our company for future growth: Approvals of our Freedom Portable Driver. Historically, we provided only two driver models, which were designed for hospital use only Big Blue, which weighs 416 pounds, and Companion 2, which weighs 57 pounds and is docked to a 185-pound cart or 15-pound caddy. In contrast, the Freedom Portable Driver, which received FDA approval in June 2014 and obtained the CE mark in March 2010, is designed for in-hospital or out-of-hospital use with stable SynCardia TAH-t patients, following an initial period in the hospital supported by the Companion 2 Driver System or Big Blue driver. Prior to the Freedom Portable Driver, patients with the SynCardia TAH-t were required to wait in the hospital for a transplant, with an average length of stay of 101 days. The Freedom Portable Driver weighs approximately 13.5 pounds and is designed to be carried by the patient in a backpack or shoulder bag. We believe the Freedom Portable Driver provides patients with both a quality of life enhancement and the opportunity to lead a healthier lifestyle with a more rigorous exercise regimen. For stable patients discharged with the Freedom Portable Driver, data collected from our IDE clinical trial, spanning from May 2010 to June 2014, indicated a bridge-to-transplant rate of 88%, higher than the 79% bridge-to-transplant rate for the population that was kept in the hospital on Big Blue in our PMA pivotal clinical study for the SynCardia TAH-t, which was initiated in 1993 and concluded Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated September 16, 2015 PRELIMINARY PROSPECTUS 2,500,000 SHARES OF COMMON STOCK SynCardia Systems, Inc. is offering 2,500,000 shares of its common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $10 and $12 per share. Prior to this offering, there has been no public market for our common stock. We have applied to have our common stock listed on The NASDAQ Global Market under the symbol TAHT. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, have elected to comply with certain reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in Risk Factors beginning on page 14 of this prospectus. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds to us, before expenses $ $ We have granted the underwriters an option for a period of 30 days from the date of the underwriting agreement relating to this offering to purchase up to an additional 375,000 shares of common stock. See Underwriting for more information. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to investors on or about , 2015. Sole Book-Running Manager Roth Capital Partners Co-Managers Maxim Group LLC Monarch Capital Group The date of this prospectus is , 2015. Table of Contents enrollment in 2002. Because stable patients can be discharged from the hospital on the Freedom Portable Driver after implant surgery to await a heart transplant, we anticipate that U.S. hospitals will be reimbursed for both the admission for the SynCardia TAH-t implant and the subsequent admission for a heart transplant. In addition, we believe that discharging stable patients will eliminate the financial risk that a hospital assumes by having to keep a SynCardia TAH-t patient in the hospital until a matching donor heart becomes available. Recent and Anticipated Approvals of our Smaller SynCardia 50cc TAH-t. We have developed a smaller, 50cc version of the SynCardia TAH-t to address the unmet need for an artificial heart that can be used in patients of smaller stature, including women and adolescents. To date, these patients have not had adequate medical options for treatment of end-stage heart failure, and many patients were ineligible for the SynCardia TAH-t because their chest sizes were too small for proper placement of the SynCardia 70cc TAH-t. A number of pediatric centers worldwide have contacted us regarding the availability of the SynCardia 50cc TAH-t, especially for individuals suffering from congenital heart defects, who often die before the age of 18. In addition, only 12% of our artificial hearts (including predecessors) have been implanted in women patients, while women represent 24% of patients on the heart transplant wait list, suggesting an additional unmet need. In March 2015, we received Investigational Device Exemption, or IDE, approval from the FDA to conduct a clinical study of the SynCardia 50cc TAH-t as a bridge to transplantation with a pediatric arm of 10 patients and an adult arm of 10 patients. An additional 10 patients may be enrolled in a secondary arm to further characterize the use of the device. This approval was expanded to the full protocol-specified enrollment goal of 24 pediatric and 24 adult patients (along with up to 24 patients of any age in a secondary arm) upon the FDA s July 15, 2015 approval of additional reliability data. We obtained the CE mark for the SynCardia 50cc TAH-t in December 2014. We intend to file for FDA approval of a Humanitarian Device Exemption, or HDE, for the 50cc TAH-t for pediatric bridge to transplantation. If approved, the HDE would allow up to 4,000 pediatric patients per year to receive the device as a bridge to transplantation prior to full FDA approval. For the adult population, we intend to file for approval of a PMA for the SynCardia 50cc TAH-t for adult bridge to transplantation. Initiation of an IDE Trial for Destination Therapy. In March 2012, we received a Humanitarian Use Device, or HUD, designation from the FDA for the use of the SynCardia 70cc TAH-t for patients who are not eligible for heart transplantation, or destination therapy. With the recent approval of the Freedom Portable Driver, we filed an IDE application with the FDA in September 2014 for a clinical study for use of the SynCardia 70cc TAH-t for destination therapy, for which we received approval in December 2014. This study, which is designed to support an application for an HDE, is expected to enroll 19 patients with biventricular heart failure who are ineligible for transplant. In addition, up to 19 patients may be enrolled in a secondary arm to further characterize the use of the device for destination therapy. Our Market The American Heart Association estimates that heart failure affects over 5.7 million people in the United States, while the European Society of Cardiology reports that at least 10 million people are affected in European countries. According to a study published by the American Heart Association in April 2013, the prevalence of heart failure in the United States is expected to grow 23% between 2012 and 2030. The SynCardia TAH-t is intended for patients suffering from end-stage heart failure. Of the estimated 5.7 million patients with heart failure in the United States, approximately 570,000 are estimated to have late- to end-stage heart failure. There is a continuum of treatment options for heart failure patients, with more limited therapies for patients with severe, end-stage heart failure. Treatment of heart failure has evolved significantly over the years. Table of Contents TABLE OF CONTENTS Page Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001271214_intersect_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001271214_intersect_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001272597_foundation_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001272597_foundation_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your investment decision. You should read carefully this entire prospectus, including the matters set forth in the section entitled Risk Factors, our consolidated financial statements and the related notes which are included in this prospectus and Management s Discussion and Analysis of Financial Condition and Results of Operations thereof included in or incorporated by reference into this prospectus, before deciding whether to invest in our securities. In this prospectus, unless otherwise expressly stated or the context otherwise requires, references in this prospectus to we, us, our, and the Company refer to Foundation Healthcare, Inc., an Oklahoma corporation, and its subsidiaries. Unless otherwise indicated, all share amounts and per share amounts in this prospectus reflect the reverse stock split of our outstanding shares of common stock at a ratio of 1-for-10 that we effected on January 8, 2015. Our Company We own and manage facilities which operate in the rapidly growing specialized surgical segment of the healthcare industry. Today, our network consists of five surgical hospitals, eight ambulatory surgical centers (ASCs) and three hospital outpatient departments (HOPDs) in the Southeastern United States. Our growth strategy involves increasing our footprint in our current markets by acquiring controlling interests in surgical hospitals, nearby ASCs and ancillary service facilities, including facilities where we currently own an interest. ASCs affiliated with surgical hospitals are known as HOPDs, and both the hospitals and affiliated outpatient surgery centers benefit from regional branding, increased operating efficiencies and lower costs through economies of scale. We believe that having the ability to perform procedures at surgical hospitals for more complex surgeries and at ASCs or HOPDs for same-day surgeries, coupled with the ability to provide other related non-surgical services will enable us to capture an increasing share of surgical volumes in the markets in which we serve and to generate strong patient outcomes and satisfaction. In addition to increasing our ownership interests in our network, opportunities exist for us to grow our business strategically and profitably through the following efforts: Leverage our existing staffing models, scheduling software, clinical systems, tracking software and medical protocols to improve operating efficiencies and patient outcomes at our facilities, Provide new high value pre- and post-surgical procedures to better meet patient needs and to drive our revenue growth, and Expand the number of mutually beneficial relationships with key physicians in our markets. The market for specialized surgical facilities is highly-fragmented with approximately 5,250 ambulatory surgical centers performing 22 million outpatient surgeries in the United States in 2012. As no companies currently control a meaningful share of the market, we believe there are many opportunities for us to acquire new surgical facilities and to improve their operating metrics using our proven systems. Our facilities currently provide general surgeries and in such specialties as orthopedics, neurosurgery, pain management, podiatry, gynecology, optometry, gastroenterology and pediatric ENT (tubes/adenoids), as well as wound care, sleep management, radiology, imaging and other ancillary services. We are expanding our service offering to include additional imaging, intraoperative monitoring, robotic surgery, and physical therapy services. A key component of our success has been our strong relationships with over 300 quality physicians partners. We believe our continued emphasis on physician satisfaction and productivity will continue to position us competitively in the future. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 10, 2015 Preliminary Prospectus Foundation Healthcare, Inc. 3,000,000 Units We are offering to sell 3,000,000 units in this offering (each, a Unit ) at a price per Unit of $ , with each Unit consisting of one share of our common stock (each, a Share ) and one warrant (each, a Warrant ) to purchase 0.5 of one share of our common stock (each whole share, a Warrant Share ) at an exercise price of $ per Warrant Share. 85% of the Shares included in the Units and of the Warrant Shares acquirable upon exercise of the Warrants will be newly issued shares of our common stock offered by us and 15% will be existing shares of our common stock offered by the selling stockholders named herein. We will not receive any of the proceeds from the sale of the Shares or Warrant Shares acquirable upon exercise of the Warrants being sold by the selling stockholders. The Warrants will expire on , 2018, three years from the date of the issuance. The Shares and the Warrants are immediately separable and will be issued separately. No fractional Warrants will be issued. Our common stock is quoted on the OTCQB marketplace under the symbol FDNHD until approximately February 6, 2015 as the result of our Reverse Split described below. Beginning on or around February 9, 2015, our common stock will resume trading on the OTCQB marketplace under the symbol FDNH. On January 8, 2015, we effected a 1-for-10 reverse stock split of our outstanding common stock (the Reverse Split ). The last reported sale price of our common stock on the OTCQB on February 5, 2015 was $4.00 per share. There is no established public trading market for the Warrants, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Warrants on any national securities exchange or other nationally recognized trading system. Investing in our securities involves a high degree of risk. You should carefully consider the information in the section entitled Risk Factors beginning on page 13 of this prospectus before making a decision to purchase our securities. Per Unit Total Public offering price $ $ Underwriter discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to selling stockholders $ $ (1) The underwriters will receive compensation in addition to the underwriting discount. See Underwriting beginning on page 113 for additional information regarding compensation payable to the underwriters by us. We and one of the selling stockholders have granted the underwriters a 30-day option, which may be exercised in whole or in part from time to time during such period, to purchase up to (i) 450,000 additional Units from us, (ii) 450,000 additional Shares from us and the selling stockholder and/or (iii) additional Warrants from us to purchase up to 225,000 Warrant Shares, with 85% of any such Shares and/or Warrant Shares to be sold by us and 15% of any such Shares and/or Warrant Shares to be sold by the selling stockholder. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the Units will be made on or about , 2015. Sole Book-Running Manager Roth Capital Partners Co-Managers Dougherty & Company National Securities Corporation The date of this prospectus is , 2015. Table of Contents In 2013, our facilities performed approximately 75,000 outpatient and 4,275 inpatient surgeries. Our procedure rates experienced strong growth as reflected in net patient services revenues of $80 million in 2013, up from $38 million in 2012. We anticipate demand for the types of surgeries performed at our facilities to grow in light of: An aging U.S. demographic, A preference for short-stay surgeries, Technology improvements allowing more surgeries to be performed less invasively, An expanding population of patients with health insurance who can now afford surgery, and Incentives provided by Medicare and private insurers to perform surgeries at facilities such as ours rather than general acute care hospitals given the lower relative costs. Our Surgical Facilities Today, we own at least 51% of two surgical hospitals located in San Antonio and El Paso, Texas which are reflected in our financials as our Consolidated Hospitals. We maintain minority interests in three hospitals in Texas and Oklahoma and eight ASCs in five states which are referred to as Equity Owned Hospitals, Equity Owned ASCs, Equity Owned Facilities or Affiliates. We also have an interest in three HOPDs through our investment in the Sherman and Edmond hospitals. We have a management contract with one ASC in Baton Rouge, Louisiana in which we have no ownership interest. We generate revenue through our ownership interests in these surgical facilities as well as management fees for providing a variety of administrative services to most of our Equity Owned Facilities. We manage our facilities by overseeing their business office, contracting, marketing, financial reporting, accreditation, clinical, regulatory and administrative operations. We work closely with our physician partners to increase the likelihood of successful patient and financial outcomes. Facility Location Number of Physician Partners Number of Operating Rooms Percentage Owned by Company Managed by Company Mgmt. Agreement Exp. Date Consolidated Hospitals: San Antonio, Texas 22 4 51.00 % Yes n/a El Paso, Texas 71 6 54.66 % Yes n/a Equity Owned Hospitals: Sherman, Texas 38 4 20.00 % Yes 6/1/2016 Houston, Texas 26 10 20.00 % No n/a Edmond, Oklahoma 42 3 8.00 % No n/a Equity Owned ASCs: Cumberland Valley, Maryland 14 1 30.30 % Yes 9/30/2017 Frederick, Maryland 20 4 20.00 % Yes 3/31/2017 Mercerville, New Jersey 25 3 10.00 % Yes 4/30/2020 Middleburg Heights, Ohio 13 4 10.00 % Yes 3/5/2016 Huntingdon Valley, Pennsylvania 22 4 20.00 % Yes Monthly Houston, Texas 15 4 10.00 % Yes 2/28/2016 Houston, Texas 19 4 10.00 % Yes 12/31/2018 Nacogdoches, Texas 9 3 12.50 % Yes Monthly Equity Owned HOPDs: Sherman, Texas (a) 4 (b) Yes 6/1/2016 Sherman, Texas (a) 2 (b) Yes 6/1/2016 Oklahoma City, Oklahoma (c) 5 (d) Yes 1/19/2018 Managed Only ASC: Baton Rouge, Louisiana 17 6 0.00 % Yes Monthly (a) The 38 physician partners in our hospital in Sherman also participate in these HOPDs through the hospital s 100% ownership of these HOPDs. Table of Contents TABLE OF CONTENTS Page Presentation of Certain Financial Measures i Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001290149_sierra_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001290149_sierra_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001311828_independen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001311828_independen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..259cdcb067141a4c9c4f2be9996a180c71baa23d
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+PROSPECTUS SUMMARY To understand this offering and its consequences to you, you should read the following summary along with the more detailed information and our consolidated financial statements and the notes to those statements set forth or incorporated by reference into this prospectus. Before making an investment decision, you should read the entire prospectus and the information incorporated into this prospectus, especially the information presented under the heading Risk Factors. General Independence Bancshares, Inc. is a South Carolina corporation organized to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of 1956 and the South Carolina Banking and Branching Efficiency Act of 1996, and to own and control all of the capital stock of Independence National Bank. The Bank is a national association organized under the laws of the United States and opened for business on May 16, 2005. It is primarily engaged in the business of banking and providing services related to banking including accepting demand deposits and savings deposits insured by the Federal Deposit Insurance Corporation (the FDIC ), and providing commercial, consumer and mortgage loans, principally in Greenville County, South Carolina. We began offering digital banking, payments and transaction services in October 2013 on a limited basis and are focused on expanding and growing this line of business (the digital banking business ). In addition to the online bill pay, person-to-person payments, ACH services, debit and credit cards, and merchant services, we now also offer mobile bill pay and person-to-person payments as well as mobile remote deposit capture. In conjunction with our efforts to pursue these opportunities, we have begun offering services under the trade name nD bancgroup and have taken steps to protect our intellectual property rights to that name. Series A Private Placement On May 14, 2015, we issued 8,425 Series A Shares to certain institutional investors and members of our management for cash proceeds of approximately $8,425,000, at a price of $1,000
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001316645_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001316645_american_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001318641_statera_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001318641_statera_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..b13996f82cdd631cf5098e83ffb8c1747fa78e1f
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+Prospectus Summary This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus especially "Risk Factors" and our consolidated financial statements and the related notes included in this prospectus, before deciding to buy our securities. The "Company," "CBLI", "we," "us" and "our" refer to Cleveland BioLabs, Inc. together with its consolidated subsidiary BioLabs 612, LLC and consolidated joint venture, Panacela Labs, Inc. The Company We are an innovative biopharmaceutical company seeking to develop first-in-class pharmaceuticals designed to address diseases with significant unmet medical need. We combine our proven scientific expertise and our depth of knowledge about our products mechanisms of action into a passion for developing drugs to save lives. Our programs are focused on the use of novel toll-like receptor agonists to activate the immune system for therapeutic benefit. Our proprietary drug candidates act via unique mechanisms that are designed to kill cancer and protect healthy cells. We conduct business in the United States and the Russian Federation. CBLI and our joint ventures, Panacela Labs, Inc., or Panacela, and Incuron, LLC, or Incuron each have worldwide development and commercialization rights to product candidates in development, subject to certain financial obligations to our current licensors. CBLI s most advanced product candidate is entolimod, which we are developing as a radiation countermeasure and an immunotherapy for oncology and other indications. Our primary product development programs and their respective development stages are illustrated below: (1) Mobilan is in development by Panacela. (2) CBL0137 is in development by Incuron. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee Class A Units (3) consisting of: (i) Common Stock, $0.005 par value (ii) Warrants to purchase Common Stock (2) — — Class B Units (3) consisting of: (i) Series B Preferred Stock (ii) Warrants to purchase Common Stock (2) — — Common Stock issuable upon exercise of Warrants to purchase Common Stock Common Stock issuable upon conversion of Series B Preferred Stock (2) — — Total $ 11,500,000 $ 1,336.30 * (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the "Securities Act"). (2) No additional registration fee is payable pursuant to Rule 457 under the Securities Act. (3) Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions. * Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Entolimod is a Toll-like receptor 5, or TLR5, agonist, which we are developing as a radiation countermeasure for prevention of death from Acute Radiation Syndrome, or ARS, and as an oncology drug. We believe that entolimod is the most efficacious radiation countermeasure currently in development. Following is a summary of the clinical development of entolimod to date and regulatory status: Entolimod is being developed under the U.S. Food & Drug Administration s, or FDA s, Animal Efficacy Rule, or the Animal Rule, for the indication of reducing the risk of death following exposure to potentially lethal irradiation occurring as a result of a radiation disaster (see "Government Regulation - Animal Rule"). We have completed two clinical studies designed to evaluate the safety, pharmacokinetics and pharmacodynamics of entolimod in a total of 150 healthy volunteers. We have completed a Good Laboratory Practices, or GLP, randomized, blinded, placebo-controlled, pivotal study designed to evaluate the dose- dependent effect of entolimod on survival and biomarker induction in 179 non-human primates exposed to 7.2 Gy total body irradiation when entolimod or placebo were administered at 25 hours after radiation exposure. We have completed a GLP, randomized, open-label, placebo-controlled, pivotal study designed to evaluate the dose- dependent effect of entolimod on biomarker induction in 160 non-irradiated non-human primates. We met with the FDA in July 2014 to present our human dose-conversion and to discuss our intent to submit a pre-Emergency Use Authorization, or pre-EUA. The FDA confirmed that our existing efficacy and safety data and animal-to- human dose conversion are sufficient to proceed with a pre-EUA submission and agreed to accept a pre-EUA submission for review. We are currently preparing the pre-EUA dossier, which we anticipate filing in the first half of 2015. If the FDA authorizes the application, then Federal agencies are free to procure drug product for stockpiling so that the drug is available to distribute in the event of an emergency, i.e. prior to the drug being formally approved by FDA under a Biologics License Application, or BLA. In January and April 2015, we announced the receipt of recommendations from the Department of Defense, or DoD, Congressionally Directed Medical Research Programs, or CDMRP in support of DoD funding for two CBLI proposals to support further development of entolimod as a medical radiation countermeasure. These proposals aim to conduct several pivotal animal efficacy studies and a clinical study to support a BLA. The Company s receipt of these awards is subject to successful negotiations and availability of funds. Additionally, we completed enrollment in a Phase 1 open-label, dose-escalation trial of entolimod in patients with advanced cancer in the United States and began dosing in a small expansion study in the Russian Federation, which is enrolling additional patients at the highest doses achieved in the US study. Both studies include evaluation of immune cell response to administrations of entolimod. Preliminary evaluations of the completed study in the United States indicate that the tolerability profile in patients with advanced cancer was similar to that observed in the two previously conducted studies in 150 healthy volunteers. Initial assessments of immunological response were consistent with TLR5 activation. Early analyses indicate that stable disease was observed in several patients with heavily pretreated cancers. Complete data for this study will be presented during the Developmental Therapeutics - Immunotherapy poster session at the 2015 annual meeting of the American Society of Clinical Oncology (ASCO) on May 30, 2015 in Chicago, IL. SA-702 is a new therapeutic approach with entolimod that employs the immunopotentiating properties of the drug together with alum (aluminum salts) as a vaccine adjuvant. In this context, entolimod s immune activity would be harnessed to enhance the efficacy of vaccines by eliciting a stronger immune response to the vaccine s particular antigen. Many vaccines require an adjuvant to induce sufficient immune response. It is estimated that about one half of 30 of the most common vaccines approved by FDA contain alum as an adjuvant. Until recently, alum was the only adjuvant approved by FDA, but often alum alone does not allow new vaccines to reach sufficient clinical potency. A shortage of effective and safe adjuvants is a major bottleneck in vaccine development. A newer generation of vaccine boosters combine classic adjuvants mixed with immunomodulators (like entolimod). We have collaborated with academic investigators who have performed preclinical studies that support the adjuvant potential of SA-702 in enhancing vaccine immune and wish to translate these data to clinical studies to document the immunopotentiating effect of the drug. CBLB612 is a proprietary compound based upon a natural activator of another tissue-specific component of the innate immune system, the TLR2/TLR6 heterodimeric receptor. CBLB612 is a pharmacologically optimized synthetic molecule that structurally mimics naturally occurring lipopeptides of Mycoplasma (a genus of parasitic bacteria) and activates NF-kB pro-survival and immunoregulatory signaling pathways via specific binding to TLR2 on a subset of body tissues and cell types that express this receptor. Preclinical studies have shown that CBLB612 stimulates white blood cell regeneration. More recent research indicates that stimulation of these toll-like receptors may also enhance anti-tumor efficacy. We believe an opportunity may exist for CBLB612 to offer a single-dose alternative to existing hemopoietic growth factors, such as filgrastim (Neupogen ), which comprises a multi-billion-dollar market in support of chemotherapy administration. FIlgrastim modestly shortens the duration of chemotherapy-related neutropenia, but does not improve thrombocytopenia or anemia, and does not provide antitumor efficacy. In October 2014, we initiated a Phase 1, single-center, blind, placebo-controlled, single ascending-dose study in the Russian Federation to evaluate the safety, tolerability, and pharmacodynamic effects of CBLB612 in healthy volunteers. The study was performed under a 139-million-ruble matching funds development contract that we received in July 2012 from The Russian Federation Ministry of Industry and Trade, or MPT. We announced that we had completed dosing in this study in March 2015. A maximum tolerated dose was established and changes in blood counts were observed, including neutrophilia. Induction of a variety of cytokines was also documented. Full results will be reported in 2015. We believe the Phase 1 data support a Phase 2 study in a clinical model of chemotherapy-induced myelosuppression. Plans for this study are already underway and will be supported by the same MPT contract. We licensed CBLB612 to Zhejiang Hisun Pharmaceutical Co., Ltd. for the territories of China, Taiwan, Hong Kong and Macau. We have rest-of-world development and commercialization rights to CBLB612. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED MAY 11, 2015 $10,000,000 of Class A Units consisting of Common Stock and Warrants and Class B Units consisting of Series B Preferred Stock and Warrants ( shares of Common Stock Underlying the Series B Preferred Stock and Warrants) Cleveland BioLabs, Inc. is offering $10,000,000 of shares of our common stock and warrants to purchase shares of our common stock (and the shares of common stock that are issuable from time to time upon exercise of the warrants). Each share of common stock is being sold together with a warrant to purchase [ ] shares of our common stock at an exercise price of $ per share. The shares of common stock and warrants are immediately separable and will be issued separately in this offering. We are also offering to those purchasers, whose purchase of shares of common stock in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 9.9% of our outstanding common stock following the consummation of this offering, the opportunity to purchase, in lieu of the shares of our common stock that would result in ownership in excess of 9.9%, Series B Preferred Stock convertible into shares of our common stock. Each share of Series B Preferred Stock will convert into [ ] share of common stock. Each Series B Preferred share is being sold together with the same warrants described above, with each warrant to purchase [ ] shares of our common stock for each share of common stock issuable upon conversion of the Series B Preferred Stock. The Series B Preferred shares and warrants are immediately separable and will be issued separately in this offering. Our common stock is listed on The NASDAQ Capital Market under the symbol "CBLI". On May 8, 2015, the last reported sale price of our common stock on The NASDAQ Capital Market was $2.04 per share. There is no established public trading market for the Series B Preferred Stock or warrants, and we do not expect a market to develop. In addition, we do not intend to apply for a listing of the Series B Preferred Stock or the warrants on any national securities exchange. The Series B Preferred Stock and the warrants will be issued in book-entry form pursuant to a preferred stock agency agreement between us and Continental Stock Transfer & Trust Company, as preferred stock agent, and a warrant agency agreement between us and Continental Stock Transfer & Trust Company, as warrant agent, respectively. Our business and an investment in our securities involve significant risks. These risks are described under the caption "Risk Factors" beginning on page 7 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Per Series B Preferred Share Per Warrant Total Public offering price $ $ $ $ Underwriting discounts and commissions (1) $ $ $ $ Proceeds, before expenses, to us $ $ $ $ (1) The underwriter will receive compensation in addition to the underwriting discount. See "Underwriting" on page 92 of this prospectus for a description of the compensation payable to the underwriter. The underwriter has the option, exercisable, in whole or in part, for a period of 45 days from the date of this prospectus, to purchase up to (i) additional shares of common stock, and/or (ii) additional warrants to purchase up to additional shares of common stock solely to cover over-allotments, if any, at the price to the public less the underwriting discounts and commissions. The over-allotment option may be used to purchase shares of common stock, or warrants, or any combination thereof, as determined by the underwriter, but such purchases cannot exceed an aggregate of 15% of the number of shares of common stock (on an as-converted basis with respect to any shares of Series B Preferred Stock sold) and warrants sold in the primary offering. The underwriter expects to deliver the securities against payment in New York, New York on or about _______________, 2015. Ladenburg Thalmann The date of this prospectus is , 2015. TABLE OF CONTENTS Mobilan is the lead product candidate of our consolidated joint venture Panacela. Mobilan is a nanoparticle- formulated recombinant non-replicating adenovirus that directs expression of TLR5 and its agonistic ligand, flagellin. In pre-clinical studies, delivery of Mobilan to tumor cells results in constitutive autocrine TLR5 signaling and strong activation of the innate immune system with subsequent development of adaptive anti-tumor immune responses. An IND was opened in the Russian Federation in March 2015 for a Phase 1 multicenter, randomized, placebo-controlled, single-blinded study evaluating single injections of ascending doses of Mobilan administered directly into the prostate of patients with prostate cancer. This study is being performed under a 149-million-ruble matching funds development contract that Panacela received in October 2013 from MPT. Panacela holds worldwide development and commercialization rights to Mobilan. As of April 30, 2015, we owned 60.47% of Panacela. CBL0137 is the lead product candidate of our unconsolidated joint venture Incuron. CBL0137 is a small molecule with a multi-targeted mechanism of action that may be broadly useful for the treatment of many different types of cancer. CBL0137 may offer greater efficacy and substantially lower risk for the development of drug resistance than conventional chemotherapeutic agents. CBL0137 inhibits Nuclear Factor kappa-B, or NF- kB, heat shock factor protein-1, or HSF-1, and hypoxia-inducible factor 1-alpha, or HIF1 alpha; these are transcription factors that are important for the viability of many types of tumors. The drug also activates tumor suppressor protein p53 by modulating intracellular localization and activity of chromatin remodeling complex facilitates chromatin transcription, or FACT. CBL0137 has been shown to be efficacious in pre-clinical models of colon, lung, breast, renal, pancreatic, head and neck and prostate cancers; melanoma; glioblastoma; and neuroblastoma. It has also been shown to be efficacious in pre-clinical models of hematological cancers, including lymphoma, leukemia and multiple myeloma. Incuron is currently enrolling patients with advanced, resistant solid tumors into two Phase 1 studies, one in the Russian Federation evaluating the oral administration of CBL0137 and one in the United States evaluating the intravenous administration of CBL0137. These studies are designed to investigate the safety, pharmacokinetics, pharmacodynamics, and antitumor activity of CBL0137. Incuron is conducting these parallel evaluations of oral and intravenous routes of administration and continuous low-dose versus interrupted high-dose schedules to reduce the company s developmental risk by fully characterizing the clinical pharmacology of CBL0137. Incuron holds worldwide development and commercialization rights to CBL0137. As of April 30, 2015, we owned 11.74% of Incuron. Our Partners In October 2011, we entered into our Panacela joint venture with Open Joint Stock Company "Rusnano" ("Rusnano") to carry out a complete cycle of development and commercialization in the Russian Federation for the treatment of oncological, infectious or other diseases. We invested $3.0 million in Panacela preferred shares and warrants, and, together with certain third-party owners, assigned and/or provided exclusive licenses, as applicable, to Panacela to provide Panacela with worldwide development and commercialization rights to five preclinical product candidates in exchange for Panacela common shares. Rusnano invested $9.0 million in Panacela preferred shares and warrants. In 2013, Rusnano loaned Panacela $1.5 million through a convertible term loan, or the Panacela Loan, and revised their original investment agreement to remove the predetermined development milestones and timelines for further investment and provide that Rusnano may invest an additional $15.5 million at their option. As of April 30, 2015, we had an ownership stake of 60.47% in Panacela. In December 2009, we entered into our Incuron joint venture with BioProcess Capital Partners, or BCP, to develop Curaxin compounds for treatment of oncological diseases. According to the terms of the agreement, we transferred rights in the Curaxin molecules to a new joint venture company, Incuron, in which BCP agreed to cause their affiliated fund, BCV, to contribute an aggregate of 549,497,000 Russian rubles (approximately $16.9 million) to support development of the compounds. As of September 30, 2014, Incuron had received all committed funding. On November 25, 2014, we transferred 3.05% of the Company s participation interest in Incuron to BCV. The transfer of 3.05% of our participation interest was made pursuant to the Participation Agreement dated December 9, 2009, as amended by the First and Third Amendments to Participation Agreement dated April 13, 2010 and June 17, 2014, respectively, that governs the joint ownership of Incuron by the Company and BCV. As described in the Form 8-K filed by the Company on December 2, 2014, as a result of the transfer of 3.05% of our participation interests to BCV, the Company s participation interest in Incuron decreased to 46.96%, BCV s participation interest increased to 53.04%. As described in the Form 8-K filed by the Company on May 4, 2015, on April 29, 2015 we entered into and closed an agreement to sell our equity stake in Incuron to Dr. Mikhail Mogutov, Chairman of the Board of Directors of Incuron, LLC and Chairman of the Investment Committee and founder of Bioprocess Capital Ventures. Pursuant to this agreement, we sold 75% of our equity stake in Incuron for approximately $3 million and granted Dr. Mogutov an option to purchase our remaining ownership interest in Incuron for approximately $1 million before the end of 2015. In addition, we have assigned our remaining intellectual property for CBL0137 to Incuron in exchange for a 2% royalty on the future commercialization, licensing or sale of the CBL0137 technology. TABLE OF CONTENTS TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including Risk Factors, Selected Consolidated Financial and Other Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, Business, and our consolidated financial statements and related notes before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, the terms Apigee, Apigee Corporation, the company, we, us and our in this prospectus refer to Apigee Corporation and its subsidiaries. Our fiscal year end is July 31, and our fiscal quarters end on October 31, January 31, April 30, and July 31. Our fiscal years ended July 31, 2012, 2013 and 2014 and our fiscal year ending July 31, 2015 are referred to herein as fiscal 2012, fiscal 2013, fiscal 2014 and fiscal 2015, respectively. APIGEE CORPORATION Overview At Apigee, our mission is to make every business a digital business. Unprecedented growth in mobile technologies, big data, cloud services and the connected devices that comprise the Internet of Things, or IoT, has disrupted or transformed the dynamics of business, changed consumer behavior and eroded the divide between the physical and digital worlds. To fully embrace the digital world, businesses must provide seamless customer experiences across a myriad of devices and channels, respond quickly to fast-changing customer expectations and market conditions, drive revenue through new business models and create or participate in digital ecosystems. A digital business creates value by unlocking its data and services to better serve customers in a real-time, anywhere-anytime fashion and uses data to continually improve the customer experience and drive additional revenue. We believe that application programming interfaces, or APIs, are a critical enabling technology for the shifts in mobile, cloud computing, big data and the IoT and that APIs are a foundational technology on which digital business operates. We believe that a new and expansive market opportunity exists to help enterprises adopt digital strategies and navigate the digitally driven economy. We provide an innovative software platform that allows businesses to design, deploy, and scale APIs as a connection layer between their core IT systems and data and the applications with which their customers, partners, employees and other users engage with their business. The foundations of our platform are Apigee Edge, a robust API-management solution, and Apigee Insights, our predictive analytics software solution. Our platform enables a comprehensive view of the enterprise data the user is consuming and generating, and data about the context in which the customer is using the digital product or service, or contextual data. In addition, our platform provides tools for businesses to drive usage and adoption of APIs by their business partners and developers. Using our platform, businesses in any industry can easily and securely connect their core services and data to developers to enable them to develop applications and experiences for customers, partners, employees and other users. Using our platform, businesses can forge new partnerships, build partner ecosystems, and participate fully in emerging digital business networks. Today, it is difficult for many businesses to fully participate and innovate in the digital world because traditional enterprise software is not designed to interact with and connect to the rapidly evolving digital economy. The IT architectures deployed at most businesses are based on thousands of application servers communicating with databases, other applications and numerous middleware layers, each using thousands of custom integrations and connectors. These legacy architectures generally cannot publish APIs in a way that can be used by application developers. Furthermore, they are not equipped to consume or leverage the data that flow Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued April 23, 2015 5,115,000 Shares COMMON STOCK Apigee Corporation is offering 5,115,000 shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $16.00 and $18.00 per share. We have been approved to list our common stock on The NASDAQ Global Select Market under the symbol APIC. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock includes risks. See Risk Factors beginning on page 14. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions(1) Proceeds to Apigee Per Share $ $ $ Total $ $ $ (1) See the section titled Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters the right to purchase up to an additional 767,250 shares of common stock to cover over-allotments. Certain entities associated with our existing stockholders, two of which hold greater than 5% of our common stock and one of which has a representative on our board of directors, have indicated an interest in purchasing up to 1.75 million shares of our common stock in this offering, at the initial public offering price. Because these indications of interest are not binding agreements or commitments to purchase, such entities may elect to purchase more shares or fewer shares than they indicate an interest in purchasing or not to purchase any shares in this offering. In addition, the underwriters may elect to sell more shares or fewer shares or not to sell any shares in this offering to such entities. The underwriters will receive the same discount from any shares sold to such entities as they will from any other shares sold to the public in this offering. Neither the Securities and Exchange Commission nor any state securities regulators have approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2015. MORGAN STANLEY J.P. MORGAN CREDIT SUISSE PACIFIC CREST SECURITIES JMP SECURITIES NOMURA , 2015 Table of Contents from digital interactions or the contextual data that exist in digital networks. A business with a legacy architecture will not have access to the data necessary to drive better business decisions nor to respond to customers in relevant and responsive ways. We believe that in order to build, manage and extract valuable insights from APIs and data that are needed for digital business, nearly all businesses will require a new layer within their core application software stack. To enable this new layer, we provide a single secure platform for APIs and predictive analytics, which can be deployed either in the cloud or on premises. By using our platform, an organization can securely share its data and services, enabling users to easily engage and transact with the business. Because we provide API publishing, operations, and data visibility in our integrated solution, our platform enables more informed predictive analytics to help the business anticipate and adapt to customer behavior. We have grown our paying customer base by 48% from January 31, 2013 to January 31, 2015. We define the number of paying customers at the end of any particular month as the number of customers for which we have recognized or deferred revenue during that month. Our customers include many leading businesses: 20 of the Fortune 100, five of the top 10 Global 2000 retail brands and six of the top 10 global telecommunications companies as of January 31, 2015. Our platform has been sold to customers in over 30 countries around the world. We have experienced rapid growth in recent periods. Our total revenue was $27.6 million, $43.2 million and $52.7 million in fiscal 2012, fiscal 2013 and fiscal 2014, respectively, and $23.4 million and $32.6 million in the six months ended January 31, 2014 and 2015, respectively. Our gross billings were $36.7 million, $43.1 million and $63.8 million in fiscal 2012, fiscal 2013 and fiscal 2014, respectively, representing growth rates of 18% from fiscal 2012 to fiscal 2013 and 48% from fiscal 2013 to fiscal 2014. Our gross billings were $23.7 million and $37.6 million in the six months ended January 31, 2014 and 2015, respectively, representing a growth rate of 59%. We define gross billings as our total revenue plus the change in our deferred revenue in a period. For fiscal 2014, 33% of our revenue was derived from customers located outside the United States, up from 16% in fiscal 2013. For the six months ended January 31, 2015, we derived 38% of our revenue from customers located outside of the United States, up from 33% in the six months ended January 31, 2014. We incurred net losses of $8.3 million, $25.9 million and $60.8 million in fiscal 2012, fiscal 2013 and fiscal 2014, respectively, and $32.2 million and $26.8 million in the six months ended January 31, 2014 and 2015, respectively. See Selected Consolidated Financial and Other Data Certain Key Non-GAAP Financial Metrics for information regarding the limitations of using gross billings as a financial measure and for a reconciliation of gross billings to total revenue, the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States, or GAAP. Our Industry Behind every mobile app, smart device and connected experience sits at least one API. An API is a set of programming instructions and standards that enables software applications to interact with other IT resources. APIs connect an enterprise s services, content and data to developers and partners in an easy and secure way, making it possible for developers to create powerful new applications and experiences. As an example, when someone uses Yelp to look for the closest Italian restaurant, APIs make it work. An API is the code that allows an application such as Yelp to interact with the maps data and show the restaurant on a map. Although the foregoing example does not involve our platform (in this case the Google Maps API is involved), we believe that this example is a good illustration of the integral and ubiquitous nature of APIs generally. Without APIs, a digital business would not be able to as effectively enhance existing assets and unlock the value of data. We believe that analyzing customer behavior to predict future actions is crucial for fostering business innovation in customer engagement and operational processes. By using predictive analytics, digital businesses have a unique opportunity to turn the significant volume of structured and unstructured data in their digital ecosystems Table of Contents Making every business a digital business apigee Table of Contents into actionable business insights. Every event is rich with contextual information such as user demographics, time, location and activities such as purchases. Using real-time, API-driven insights into individual user behavior and aggregate user activity, businesses can predict user actions and respond in a relevant way. The traditional approaches to integration, application architecture, data management and security make it difficult for a business to connect its customers, partners, employees and other users to its operations. As a result, businesses are not able to fully leverage the data streams generated by the user applications and experiences that characterize digital business. Fundamentally, these traditional approaches do not meet the technical demands of the modern digital experience the new systems of engagement, that are used by customers, partners, employees and other users to engage with businesses across multiple channels and locations. These systems of engagement represent a new layer in the enterprise IT architecture on top of its systems of record the enterprise resource planning systems companies rely on to run their business, such as databases, financial, manufacturing, customer relationship management and human resources software. We believe that the key IT requirements to support digital business capabilities are as follows: Speed: Legacy IT Integration Cannot Keep Up with Pace of Change. Traditional IT approaches to middleware demanded centralized planning and governance. Historically business decisions about the connectivity of systems required a lengthy planning process and the participation of specialists who were often removed from the business needs driving the projects. Today, modern adaptive IT processes are renouncing centralized planning and governance practices and embracing agile methodologies that allow the organization to more rapidly scale to meet the diverse and evolving demands of the digital business. Hyper-connectivity: Legacy IT Cannot Meet the Demands of a Mobile World. Legacy middleware systems were primarily designed for server-to-server communication and not for enabling the modern, user-facing digital experiences that businesses need to deliver across a variety of mobile and connected devices. Most middleware technologies were built around the expectation of reliable and high-bandwidth communications over networks within a company s data centers. However, the bandwidth constraints of mobile technologies place new constraints on the volume of data and latency between servers and applications. Data: Narrow View of Data Does Not Adequately Support Business Insights. In a digital business, analytics is not about delivering reports on last month s activity. Rather, it is about generating responsive actions based on predictive insights into individual and aggregate user behavior and activity. Most legacy architectures are unprepared for the enormous amount of contextual data that is generated through new digital channels. Security: Perimeter Models of Security Provide Only Limited Protection. Traditional information security architectures have presupposed that the applications and users exist within the firewalled perimeters of the enterprise network. Software that assumes and even requires a perimeter where the software can be installed, or that requires a company agent to be installed on all mobile devices is ineffective for digital businesses that must support a myriad of new applications and devices, as well as external developers and partners. Our Solution Our platform enables digital business by providing the following features: Purpose-built for People and Technology Across the Digital Value Chain. Our management tools, business and operational analytics, policy-based approach and advanced programmability provide a simple yet powerful platform that serves the entire digital value chain between the end user and the business backend systems. This digital value chain includes the applications, the developers who build them and the APIs that they use, all of which need to work together seamlessly, and each of which has requirements that can only be Table of Contents Apigee Intelligent API Platform Powers the Digital Value Chain Enabling companies to accelerate the pace at which they share, innovate and adapt. INTELLIGENT API PLATFORM APP API API TEAM USER DEVELOPER BACKEND API TEAM Apigee helps the API team create, secure, launch, analyze, even monetize their API-driven digital initiatives. DEVELOPER Using Apigee, enterprises create experiences that enable developers to explore and build apps using the enterprise s APIs, resulting in faster innovation and time to market. USER Apigee enables digital businesses to build and operate the systems at the speed necessary to engage and transact with customers on a myriad devices 24/7. BACKEND Apigee s Intelligent API Platform enables organizations to easily and securely expose services and data, unlocking the value from their back-end systems. API Using Apigee, companies quickly and securely publish intuitive APIs to share data and services, and onboard developers and partners with self-service provisioning. APP Modern mobile apps, smart devices, connected experiences and digital ecosystems are connected to the data and services that power them via APIs. Table of Contents addressed by an integrated platform. Pre-built and configurable policies enable organizations to control traffic on their APIs, enhance performance, enforce security, simplify customer self-service and reduce time-to-value all without coding or changing the backend systems of record. Enterprise-grade Software Enables Web Scale, Reliability and Security. Our platform is web scale and flexible and is offered as a cloud service or as an on-premises deployment. Our cloud service provides up to 99.99% availability and uptime, and a multi-region API delivery network enabling low latency worldwide. We enable organizations to control access to APIs and services and protect customers and the business from threats, backend system overload, service issues and sensitive data exposure. Built-in Developer Services to Foster Adoption and Enhance the Business Value of APIs. Our platform enables a business to provide a developer community experience that accelerates API adoption, simplifies learning, enables monetization and increases the business value of APIs. Using our platform, businesses can rapidly onboard developers and facilitate their secure interaction with their business data and systems. Our customizable developer portal helps businesses foster innovation among internal and external developers and partners by making it easy for developers to interact with the enterprise and with each other. Analytics for End-to-end Business Visibility. Our platform provides end-to-end visibility across the entire digital value chain with unified operational and business metrics and application monitoring. Operational metrics and application monitoring enable monitoring of the health and performance of APIs, applications and digital ecosystems. Business metrics enable businesses to track product, service, and customer usage and trends, respond quickly to customer and market changes, and make data-driven decisions. Predictive Analytics to Derive Actionable Insights at the Point of Engagement. With APIs positioned at the center of the application data stream, our platform enables businesses to gain actionable insights from the flow of data and effect a change of behavior that improves the customer experience. Our platform turns the intelligence derived from the enormous amount of data generated by increasingly connected customers into action, enabling the enterprise to deliver the right experience, at the right time, on the right device. Support for New Forms of Interaction and Connectivity, Such as the Internet of Things. Our platform powers the APIs, and captures and derives insights from the data generated by the applications and experiences through which customers, partners and employees engage with a business. We believe that our platform is positioned to power complex, distributed systems such as the IoT, including wearable technology, intelligent cars, smart energy grids, and other forms of emerging connected interaction. Our Growth Strategy Our goal is to be the provider of the leading software platform that enables digital business acceleration for enterprises worldwide. The key elements of our growth strategy include: Continue to Lead the Transformation to Digital Business Across Industries. We believe that the transformation of businesses in nearly every industry to digital business, enabled by APIs and big data analytics, is an emerging trend, and that we have a leadership position in this new market. We intend to extend our leadership position by continuing to innovate, bringing new technologies to market, and honing best practices and thought leadership by working closely with our global customer base. Expand our Platform and Continue Building Our Technology Leadership. We intend to continue building innovative software products that extend the value of our existing solutions and further help enterprises realize digital business success, through new growth and operational efficiencies. For example, we continue to invest in Apigee Insights, a self-service predictive analytics solution that helps enterprises build customer journey models and adaptive applications. In addition to continued investments in product development, we may also pursue acquisitions of technology that complement our platform. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights key information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. It may not contain all of the information that is important to you. You should read the entire prospectus, including , ' ': , ' ': Risk Factors, the consolidated financial statements and the related notes thereto and condensed consolidated financial statements and the related notes thereto, and the other documents to which this prospectus refers, before making an investment decision. In this prospectus, the terms the , ' ': , ' ': Cyalume, , ' ': , ' ': we, , ' ': , ' ': our and , ' ': , ' ': us refer to Cyalume Technologies Holdings, Inc., a Delaware corporation, and its subsidiaries. Overview Cyalume Technologies Holdings, Inc. ("Cyalume") is a holding company whose primary business operations are conducted through its wholly-owned subsidiaries Cyalume Technologies, Inc. and Cyalume Specialty Products, Inc. We refer to Cyalume Technologies, Inc. as , ' ': , ' ': CTI ; which includes its wholly-owned subsidiaries, Cyalume Technologies, S.A.S. (, ' ': , ' ': CTSAS ), Combat Training Solutions, Inc. ("CTS") and Cyalume Realty, Inc. ("CRI"). CTSAS is located in Aix-en-Provence, France while CTS is located in West Springfield and CRI is located in Colorado. We refer to Cyalume Specialty Products, Inc. as "CSP". CTI is a global, technology-based manufacturer primarily producing products where light is generated through a chemical reaction known as chemiluminescence. Our most popular product is a 6 inch light stick. A light stick is a translucent flexible plastic tube that is partly filled with one chemical ingredient and also with a glass container (, ' ': , ' ': ampoule ) that contains a complementary reactive chemical. When the tube is bent enough to break the glass ampoule, the chemicals contained within the plastic tube mix and light is generated. We also use chemiluminescent technology to make products providing day/night marking and illumination as components of ammunition. In addition, a variety of reflective products are produced that both reflect direct light back and retain energy for a short period of time so they continue to glow after the light source is removed. Reflective products include a variety of patches and safety belts. Both chemiluminescent and reflective products may employ infrared technology that allows observation of the product with proper night vision goggles. Products are manufactured at both the West Springfield and Aix-en-Provence locations. CSP is a researcher, developer and manufacturer of highly specialized chemical products to the pharmaceutical, military and other markets and, has expertise in the chemical light business. Products are manufactured in the New Jersey location. Corporate Information Our executive offices are located at 910 SE 17 th Street, Suite 300, Fort Lauderdale, FL 33316 and the telephone number is (954) 315-4939. Our website is www.cyalume.com . Information contained in the website does not constitute part of this prospectus. Risks Affecting Us In evaluating the resale of the shares of our common stock, you should carefully read this prospectus and especially consider the factors discussed in the section titled , ' ': , ' ': Risk Factors.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001336705_viewray_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001336705_viewray_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes before deciding to buy shares of our common stock. Unless the context requires otherwise, references in this prospectus to ViewRay, the company, we, us and our refer to ViewRay Incorporated. Overview We design, manufacture and market MRIdian, the first and only MRI-guided radiation therapy system that images and treats cancer patients simultaneously. Magnetic resonance imaging, or MRI, is a broadly used imaging tool which has the ability to differentiate between types of soft tissue clearly, unlike X-ray or computed tomography, or CT, which are the most commonly used imaging technologies in radiation therapy today. MRIdian integrates MRI technology, radiation delivery and our proprietary software to locate, target and track the position and shape of soft-tissue tumors while radiation is delivered. These capabilities allow MRIdian to deliver radiation to the tumor accurately while delivering less radiation to healthy tissue than existing radiation therapy treatments. We believe this leads to improved patient outcomes and reduced side effects from off-target radiation delivery. Physicians have used MRIdian to treat a broad spectrum of radiation therapy patients with more than 20 different types of cancer, as well as patients for whom radiation therapy was previously not an option. We received 510(k) marketing clearance from the U.S. Food and Drug Administration, or FDA, for MRIdian in May 2012 and received permission to affix the CE mark in November 2014. Patients are actively receiving treatment on MRIdian systems at three cancer centers located at Washington University in St. Louis, University of California, Los Angeles and the University of Wisconsin Madison. We generated revenue of $3.2 million in 2013 and $6.4 million in 2014 and had net losses of $27.2 million in 2013 and $33.8 million in 2014. At December 31, 2014, we had 10 signed sales contracts for MRIdian systems in backlog with a total value of $54.7 million, of which we expect to recognize approximately 40% to 60% as revenue in 2015 representing four to six MRIdian systems. The determination of backlog includes objective and subjective judgment about the likelihood of an order becoming revenue. We evaluate our backlog at least quarterly to determine if the orders continue to meet our criteria for inclusion in backlog. Our judgment and evaluation may be incorrect and orders may be delayed or cancelled for reasons beyond our control. Projects included in backlog may be removed if we determine the particular order no longer constitutes a valid order. We cannot assure you that our backlog will result in revenue on a timely basis or at all, or that any cancelled contracts will be replaced. Accordingly, our backlog is an uncertain indicator of our future earnings. See the section titled Management s Discussion and Analysis of Financial Condition and Results of Operations Backlog for additional information regarding our backlog. Cancer is among the leading causes of death worldwide, accounting for over eight million deaths per year globally. Radiation therapy is a common method used to treat cancer that uses lethal doses of ionizing energy to damage the genetic material in cells. Nearly two-thirds of all cancer patients in the United States will receive some form of radiation therapy during the course of their illness, according to estimates by the American Society for Radiation Oncology. Table of Contents Index to Financial Statements The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Dated March 25, 2015 4,000,000 Shares Common Stock This is an initial public offering of shares of our common stock. We are offering 4,000,000 shares of common stock. Prior to this offering, there has been no public market for our common stock. We have applied for listing of our common stock on The NASDAQ Global Market under the symbol VRAY. We expect that the initial public offering price will be between $12.00 and $14.00 per share. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements for this prospectus and future filings. Our business and an investment in our common stock involve significant risks. These risks are described under the caption Risk Factors beginning on page 11 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to ViewRay Incorporated $ $ (1) See Underwriting for additional information regarding underwriter compensation. Certain of our existing institutional investors, including investors affiliated with certain of our board members, have indicated an interest in purchasing an aggregate of approximately $17.0 million of the shares of common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase shares of common stock, these investors may determine to purchase more or fewer shares of common stock than they indicate an interest in purchasing or not to purchase any shares of common stock in this offering. In addition, the underwriters could determine to sell more or fewer shares of common stock to any of these investors than the investors indicate an interest in purchasing or not to sell any shares of common stock to these investors. The underwriters may also purchase up to an additional 600,000 shares from us at the initial public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2015. Cowen and Company Stifel Co-Managers BTIG Brean Capital , 2015 Table of Contents Index to Financial Statements In 2013, IMV Medical Information Division, Inc. reported that 93% of patients receiving radiation therapy in the United States were treated by an external-beam radiation therapy device called a linear accelerator, or linac. The global linac market was $2.8 billion in 2011 and was expected to grow to $3.7 billion by 2016, according to a 2012 Markets and Markets report. IAEA Human Health Campus reports that there are over 11,000 linacs installed at over 7,500 centers worldwide. We believe the addressable market for MRIdian is the annual market for linacs due to its ability to treat a broad spectrum of disease sites. However, we believe that MRIdian may be used more frequently for complex cancer cases that may be difficult to treat on a standard linac due to the location of the tumor in relation to the surrounding soft tissues. We currently estimate the annual market for linacs to be 1,100 units per year globally, the majority of which are replacement units. Current Radiation Therapy Process and Limitations We believe the key limitations of existing radiation therapy technologies are the following: Inability to accurately locate a tumor for treatment alignment. To locate a tumor, current radiation therapy systems rely on on-table CT scans that are unable to differentiate between types of soft tissue. Therefore, surrogate registration markers, including existing bone structures, external marks and surgically implanted fiducials, are frequently used to align a patient to the treatment beams prior to commencing treatment. By relying on a proxy for tumor location rather than the tumor itself, clinicians risk missing the tumor and risk hitting healthy tissue when they deliver treatment beams into a patient s body because the spatial relationship between the tumor, healthy tissues and these markers frequently changes. Inability to adapt treatment on table. A physician designs a treatment plan based on images that are captured at the beginning of therapy. Creating a treatment plan can take one to two weeks, and treatment itself can take up to seven weeks. However, during the course of therapy, tumors often change size, orientation or shape and patient anatomy can change for reasons including weight loss or gain. Adjusting for these changes would require replanning, which may take several days and is resource intensive. As a result of these limitations, replanning is infrequently performed. Inability to track tumor and organ motion accurately. In addition to difficulty locating a tumor accurately in a patient s body, a further challenge is accounting for ongoing tumor movement during treatment. Tumors have been shown to move multiple centimeters relative to surrogate registration markers over the course of only a few seconds. Although physicians use internal markers and external cameras and blocks to track respiratory and other motion, they are unable to track the tumor itself and its location relative to other soft tissues. This limitation increases the probability of missing the targeted treatment area. As a result, physicians usually enlarge the total region to be radiated, causing an additional risk of side effects. Inability to record cumulative radiation delivered. Currently, there are no methods to record the actual dose of radiation delivered to a tumor or surrounding healthy tissue during the course of treatment. Therefore, physicians must assume that the radiation is delivered according to plan, rather than making decisions based on actual dose delivered. Each of these limitations increases the risk of missing a tumor and hitting healthy tissue during treatment. If a tumor is insufficiently irradiated, it may not respond to treatment, resulting in a lower probability of survival for the patient. If organs and other healthy soft tissues are irradiated, side effects can be severe, including organ failure and secondary cancers. Table of Contents Index to Financial Statements Table of Contents Index to Financial Statements Our Solution We have developed MRIdian to address the key limitations of existing radiation therapy technologies. We believe that MRIdian provides the following clinical and commercial benefits to physicians, hospitals and patients: Improved tumor visibility and patient alignment. The soft-tissue contrast of MRIdian s on-board MRI enables clinicians to locate, target and track the tumor and healthy tissues and accurately align a patient to the treatment beams without the use of surrogate registration markers, X-rays or CT. On-table adaptive planning. Using an MR image captured at the beginning of each therapy session, MRIdian automatically maps the patient s soft tissue anatomy in 3D and calculates the dose that would be delivered using the current treatment plan. If the initial prescribed treatment is not clinically acceptable to the physician, MRIdian has the ability to automatically recalculate and adapt the plan to changing anatomy while the patient is on the table at the time of treatment, a capability unique to MRIdian. We believe hospitals will be able to bill incrementally for this replanning. Ability to track tumors and manage patient motion. MRIdian can capture multiple soft-tissue imaging planes concurrently during treatment and refresh the image multiple times per second. This real-time imaging enables the physician to track the movement of the tumor and the surrounding healthy tissue as treatment is delivered. If a tumor or critical organ moves beyond a physician-defined boundary, the treatment beam automatically pauses. This beam control becomes especially important in the situations where a tumor may be in close proximity to a critical organ. Record and evaluate the delivered dose. After each treatment MRIdian, calculates the dose delivered using a proprietary algorithm and advanced MR imaging, enabling the physician to review and re-optimize the patient s treatment sessions if needed. Fits into existing treatment paradigms and workflow. MRIdian can be used with standard planning methodologies and is used to treat a broad spectrum of disease sites. In addition, we believe MRIdian s increased target accuracy will allow physicians to treat with higher doses over fewer treatment fractions and potentially improve patient throughput and efficiency. MRIdian fits inside most standard radiation therapy vaults without significant modifications and is supported by existing codes that are available for linac reimbursement. We believe the ability to image with MRI and treat cancer patients simultaneously will lead to improved patient outcomes and reduced side effects from off-target radiation delivery. Our Strategy Our objective is to make MRI-guided radiation delivery the standard of care for radiation therapy. To achieve this goal, we intend to do the following: target top-tier hospitals in initial global sales efforts to influence and increase market adoption; commercialize MRIdian with a targeted sales force in the United States and through distributors in international markets; increase broader awareness of MRIdian s capabilities to expand our share of the radiation therapy market; maintain our competitive lead in MRI-guided radiation therapy through continued innovation; Table of Contents Index to Financial Statements TABLE OF CONTENTS Page Prospectus Summary 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001338095_nephrogene_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001338095_nephrogene_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our common stock. You should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our common stock, including the information discussed under "Risk Factors" and our financial statements and notes thereto that appear elsewhere in this prospectus. Unless otherwise indicated herein, the terms "we," "our," "us," or "the Company" refer to NephroGenex, Inc. We are a pharmaceutical company focused on the development of therapeutics to treat kidney disease, an area of significant unmet medical need. Since our inception, we have collaborated with the world's leading experts in kidney disease and leveraged our knowledge of pathogenic oxidative chemistries to build a strong portfolio of intellectual property and to advance the development of our drug candidates. We believe that our comprehensive effort to develop a new generation of therapeutics that target kidney disease provides us with a leadership position in this large and attractive market. Pathogenic oxidative chemistries are collectively a group of oxygen-based chemical reactions that occur in the body during stress, injury, or disease, to form compounds that can induce pathological changes in tissues that effect normal physiological function. These include (i) advanced glycation end-products (AGE's), which are oxidative end products of glucose-modified biomolecules which adversely affect their function; (ii) reactive oxygen species (ROS), which are chemically reactive molecules containing oxygen such as oxygen ions and peroxides that when elevated in the body can induce pathology; and (iii) toxic carbonyls which are reactive compounds that can modify biomolecules and affect their function. These chemistries are generally agreed to be involved in the etiology of diabetic nephropathy, a common complication of diabetes, and in cases of acute kidney injury (AKI). We are developing Pyridorin (Pyridorin), a small molecule drug that is a unique and broadly acting inhibitor of the pathogenic oxidative chemistries which are elevated in diabetic patients. We licensed patents covering methods of use and synthesis of Pyridorin from BioStratum, Inc. in May of 2006. We subsequently acquired Pyridorin-related patents from BioStratum through a Series A financing completed in May of 2007. At the time of acquisition, BioStratum, through its contracted investigators, contract research organizations, and collaborators had completed 5 preclinical efficacy studies, 36 preclinical safety studies, 4 Phase 1 studies and 5 Phase 2 studies with Pyridorin. After the acquisition, we conducted a multi-center, randomized, placebo-controlled Phase 2b study, namely PYR-210 and recently completed the Phase 1 QT/QTc (TQT) cardiac safety study. In addition, we worked with the FDA to establish a new regulatory pathway for Pyridorin approval, as well as received support from the European Medicines Agency (EMA) regarding the pivotal Phase 3 program with Pyridorin in diabetic nephropathy. Pyridorin has demonstrated preliminary evidence of efficacy in slowing the progression of diabetic nephropathy in relevant patient populations in three Phase 2 clinical studies. Based on these results, Pyridorin entered into a Phase 3 program in 2014 termed the PIONEER trial which was agreed to by the U.S. Food and Drug Administration (FDA), with fast track designation, under a Special Protocol Assessment (SPA). This Phase 3 program is using an events-based endpoint based on end stage renal disease (ESRD) or a 50% increase in serum creatinine (SCr). We believe this change will significantly reduce the cost and time for completion of our Phase 3 program compared to the traditional endpoint used in previous pivotal trials for diabetic nephropathy which is a 100% increase in SCr from baseline or end stage renal disease (ESRD). Based on an analysis of the Irbesartan Type II Diabetic Nephropathy Trial (IDNT) used for the approval of the drug irbesartan, the follow-up time required to reach the new endpoint of a 50% SCr increase would be approximately 50% less than the follow-up time required to reach the traditional endpoint in a similar patient population. We are also studying the application of an intravenous formulation of Pyridorin to specific types of AKI in patients at increased risk and where pathogenic oxidative chemistries have been identified as a Amendment No. 5 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents possible contributing factor to the severity of this condition. Our preclinical program has shown encouraging results in animal models of ischemia-reperfusion AKI including an observed treatment effect on post injury fibrosis. We expect to complete our preclinical program for an intravenous formulation of AKI in the third quarter of 2015. Corporate Objectives There is a large medical need and market opportunity for treatments that can (1) slow the progression of renal disease and thus delay or avoid the onset of ESRD; or (2) reduce the severity of AKI and its associated potential treatment costs and long term complications. Our principal corporate objective is the maximization of shareholder value by advancing Pyridorin through Phase 3 development and approval. In order to maximize the market potential of Pyridorin, we intend to consider entering into a partnership for the launch and marketing of the product at the end of Phase 3 or possibly earlier, based on interim clinical data. We also intend to consider acquisitions and the development of other clinical candidates as we see appropriate. We acquired commercial rights to Pyridorin in 2007 and, since then, have been investigating the safety and efficacy of Pyridorin therapy for diseases in which pathogenic oxidative chemistries are an established and/or causative and contributing factor in kidney disease. These include diabetic nephropathy and AKI. We anticipate seeking corporate partners to aid us in commercialization and market entry. Our Strategy We are committed to applying our leadership position in the field of kidney disease to transform the lives of patients with debilitating, costly diseases or conditions. Each of our ongoing and planned development projects addresses kidney diseases or conditions with high unmet medical need that presents a significant market opportunity. The core elements of our strategy include: advancing Pyridorin through Phase 3 development for the treatment of diabetic nephropathy in patients with type 2 diabetes; submission and approval of a new drug application (NDA) in the United States and a Market Authorization Application (MAA) in Europe; commercializing Pyridorin using a highly targeted sales force in the United States and the rest of the world; continued development of an intravenous formulation of Pyridorin for AKI, with an investigational new drug application (IND) filing and launch of the initial clinical study during the second half of 2015; and deploying capital strategically to develop our portfolio of product candidates and create shareholder value. Risks Relating to Our Business We are a biopharmaceutical company, and our business and ability to execute our business strategy are subject to a number of risks of which you should be aware before you decide to buy our common stock. In particular, you should consider the risks discussed in the "Risk Factors" section of this prospectus and in the documents incorporated by reference, including, but not limited to, the following: we have never been profitable, have no products approved for commercial sale and to date have not generated any revenue from product sales; NephroGenex, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 20-1295171 (IRS Employer Identification No.) 3200 Beechleaf Court Suite 900 Raleigh, NC 27604 (609) 986-1780 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents we will require substantial additional funding beyond this contemplated offering to complete the development and commercialization of Pyridorin and to continue to advance the development of the intravenous formulation of Pyridorin, and such funding may not be available on acceptable terms or at all; Pyridorin may not receive regulatory approval in a timely manner or at all; we face competition from other biotechnological and pharmaceutical companies and our operating results will suffer if we fail to compete effectively; we depend on third-party contractors for a substantial portion of our operations and may not be able to control their work as effectively as if we performed the function ourselves we may be subject to delays in our clinical trials, which could result in increased costs and delays or limit our ability to obtain regulatory approval for our product candidates; because the results of earlier studies and clinical trials of our product candidates may not be predictive of future clinical trial results, our product candidates may not have favorable results in future clinical trials, which would delay or limit their future development; and we may be unable to maintain and protect our intellectual property assets, which could impair the advancement of our pipeline and commercial opportunities. Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. See "Risk Factors Risks Relating to Our Common Stock and this Offering We are an 'emerging growth company' and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors." These provisions include: only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure; reduced disclosure about our executive compensation arrangements; no non-binding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We may take advantage of these provisions until December 31, 2019. However, if certain events occur prior to December 31, 2019, including if we become a "large accelerated filer," our annual gross revenues exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company before such date. We have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than the information you might receive from other public reporting companies in which you hold equity interests. We refer to the Jumpstart Our Business Startups Act of 2012 in this prospectus as the "JOBS Act," and references in this prospectus to "emerging growth company" have the meaning associated with it in the JOBS Act. Pierre Legault Chief Executive Officer NephroGenex, Inc. 3200 Beechleaf Court Suite 900 Raleigh, NC 27604 (609) 986-1780 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Notwithstanding the above, we are also currently a "smaller reporting company" meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company, at such time as we cease being an emerging growth company, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an emerging growth company or a smaller reporting company. Specifically, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Corporate Information We were incorporated in the State of Delaware on May 25, 2004. Our principal executive offices are located at 3200 Beechleaf Court, Suite 900, Raleigh, NC 27604 and our telephone number is (609) 986-1780. Our website address is www.nephrogenex.com. The information contained on, or that can be accessed through, our website is not part of this prospectus. We have obtained a registered trademark for Pyridorin in the United States. This prospectus contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the or symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company. With copies to: Joel I. Papernik, Esq. Kenneth R. Koch, Esq. Daniel A. Bagliebter, Esq. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 666 Third Avenue New York, NY 10017 (212) 935-3000 Yvan-Claude Pierre, Esq. William Haddad, Esq. Reed Smith LLP 599 Lexington Avenue New York, New York 10022 (212) 521-5400 (212) 521-5450 Facsimile The number of shares of our common stock to be outstanding after this offering is based on 8,863,614 shares of our common stock outstanding as of March 31, 2015 and excludes as of such date: 1,271,321 shares of our common stock issuable upon the exercise of stock options, with a weighted average exercise price of $4.16 per share; 15,500 shares of our common stock issuable upon the settlement of outstanding restricted stock units; 118,603 shares of our common stock issuable upon the exercise of outstanding warrants, with a weighted average exercise price of $9.86 per share; shares issuable upon exercise of warrants sold in this offering; any shares of our common stock issuable upon exercise of the underwriters' over-allotment option; and other shares of our common stock reserved for future issuance under our Amended and Restated 2007 Equity Incentive Plan, as amended. Unless otherwise indicated, all information contained in this prospectus assumes no exercise by the underwriters of their over-allotment option to purchase up to an additional 150,240 shares of our common stock or additional warrants to purchase up to 150,240 shares of our common stock. Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) (1)The as adjusted balance sheet data gives effect to our receipt of estimated net proceeds from this offering. A $1.00 increase (decrease) in the assumed public offering price of $6.24 per share, the last reported sale price of our common stock on the NASDAQ Capital Market on July 15, 2015, would increase (decrease) each of cash and cash equivalents, total assets and total stockholders' equity by approximately $1.0 million, assuming the number of shares offered by us as stated on the cover page of this prospectus remain unchanged and after deducting the estimated underwriting discounts and commissions and estimated offering CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, $.001 par value per share $ 7,187,500 $835.19 Warrants to purchase shares of common stock(4) Shares of common stock issuable upon exercise of the warrants $ 8,984,375 $1,043.98 Total $ 16,171,875 $1,879.17 (1)Estimated solely for the purpose of calculating the amount of registration fee pursuant to Rule 457(o) under the Securities Act, as amended. (2)Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions. (3)Previously paid. (4)No fee pursuant to Rule 457(g) under the Securities Act. Table of Contents expenses payable by us. Similarly, a one million share increase (decrease) in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, total assets and total stockholders' equity by approximately $6.1 million, assuming the public offering price of $6.24 per share, the last reported sale price of our common stock on the NASDAQ Capital Market on July 15, 2015, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001348649_colucid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001348649_colucid_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider when making your investment decision. You should read this entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the notes thereto accompanying this prospectus, before making an investment in our common stock. As used in this prospectus, the terms company, we, our, and us refer to CoLucid Pharmaceuticals, Inc., except where the context otherwise requires. Our Company We are a Phase 3 clinical-stage biopharmaceutical company that is developing an innovative and proprietary small molecule for the acute treatment of migraine headaches. Our product candidates utilize the first new mechanism of action in the last twenty years, which we believe could address the unmet needs of migraine patients, including those with cardiovascular risk factors or stable cardiovascular disease and those who are dissatisfied with existing therapies. Lasmiditan, our lead product candidate, is an oral tablet for the acute treatment of migraine headaches in adults that does not have the clinical limitations associated with the most commonly used therapies. In our Phase 2b clinical trial of lasmiditan, we met our primary endpoint of headache relief with statistical significance as well as our secondary endpoint of freedom from the associated symptoms of nausea, sensitivity to sound and sensitivity to light. Headache relief is defined as reducing a moderate or severe headache at baseline to mild or none two hours after dosing. In our completed clinical trials, lasmiditan was well tolerated and had a favorable patient global impression of change, an indicator of patient satisfaction. We are conducting our first pivotal Phase 3 randomized, double-blind, placebo-controlled clinical trial of lasmiditan, or SAMURAI, under a special protocol assessment, or SPA, agreement with the U.S. Food and Drug Administration, or FDA, with top-line data expected in the third quarter of 2016. We also plan to initiate a second pivotal Phase 3 clinical trial of lasmiditan in the first half of 2016. If we successfully complete our two pivotal Phase 3 clinical trials of lasmiditan, we expect to submit a new drug application, or NDA, to the FDA seeking marketing approval for lasmiditan in the United States with a product label that is differentiated from triptans. Triptan product labels include warnings and precautions against use in patients with cardiovascular risk factors or disease and triptans are not indicated to provide freedom from the most bothersome associated symptom. We are also developing intravenous lasmiditan, or IV lasmiditan, for the acute treatment of unspecified headache pain in adults in emergency room and other urgent care settings. We own or have exclusive rights to the intellectual property for lasmiditan and IV lasmiditan, including composition of matter protection. We have commercial exclusivity for lasmiditan and IV lasmiditan in the United States until 2025, which we expect will be extended up to five years to 2030 by obtaining a term extension under the provisions of the Hatch-Waxman Act. According to the American Migraine Foundation, migraine affects 12% of the population in the United States and is the leading cause of disability among neurological disorders in the United States. The direct and indirect costs of migraine in the United States are estimated at over $20 billion annually. We believe that lasmiditan will be a first line therapy for the acute treatment of migraine in patients with cardiovascular
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes, before deciding to buy shares of our common stock. Unless the context requires otherwise, references in this prospectus to Instructure, the company, we, us and our refer to Instructure, Inc. and its wholly-owned subsidiaries. INSTRUCTURE, INC. Mission and Vision Instructure s mission is to make software that makes people smarter. Our vision is to help organizations everywhere leverage technology to maximize the potential of their people. Overview We provide an innovative, cloud-based learning management platform for academic institutions and companies worldwide. We built our learning management applications, Canvas, for the education market, and Bridge, for the corporate market, to enable our customers to easily develop, deliver and manage engaging face-to-face and online learning experiences. Our platform combines powerful, elegant and easy-to-use functionality with the reliability, security, scalability and support required by our customers. In today s dynamic, knowledge-driven economy, quality education and constant learning are critical to compete and succeed. Academic institutions recognize that for students to reach their maximum potential, they require a learning environment that is interactive and accessible. Similarly, companies need to deliver seamless and easy learning experiences to better attract, develop and retain talent and compete more effectively. We develop software that millions of students, teachers and employees use to help achieve their education and learning goals. Our applications enhance academic and corporate learning by providing an engaging, easy-to-use platform for instructors and learners, enabling frequent and open interactions, streamlining workflow, and allowing the creation and sharing of content with anytime, anywhere access to information. Our open standards allow for integration with third-party publishers and software providers to deliver additional learning content and applications. Our platform also provides data analytics capabilities enabling real-time reaction to information and benchmarking in order to personalize curricula and increase the efficacy of the learning process. We offer our platform through a Software-as-a-Service, or SaaS, business model. Customers can rapidly deploy our applications with minimal upfront implementation. Customers also benefit from automatic software updates with virtually no downtime. We launched Canvas in February 2011 and have experienced rapid customer adoption in the education market. In addition, more than 100 corporate customers have implemented Canvas in order to deliver a more effective, simple way for their employees to learn. To better meet the needs of the corporate market, we leveraged our platform to develop Bridge, which launched in February 2015. As of September 30, 2015, we had more than 1,600 customers, representing colleges, universities, K-12 school districts, and companies in more than 25 countries. Table of Contents Index to Financial Statements For 2012, 2013 and 2014, revenue was $8.8 million, $26.1 million and $44.4 million, respectively, representing year-over-year growth of 197% and 70%. We have experienced net revenue retention rates of over 100% at each of December 31, 2012, 2013 and 2014. For 2012, 2013 and 2014, our net losses were $18.5 million, $22.5 million and $41.4 million, respectively, as we focused on growing our business. For the nine months ended September 30, 2015, revenue was $51.4 million and we incurred a net loss of $40.9 million. Industry Background The Markets for Learning are Large, Growing and Highly Strategic The market for academic and corporate learning management software is estimated to be $4.1 billion in 2015, and projected to grow to $7.8 billion in 2018, according to MarketsandMarkets. We attribute the rapid growth of this market, in part, to the migration of instructor-led training to online learning, which we believe will increase the adoption of learning management systems. Corporate learning management software is part of the broader human capital management market, which also includes the recruiting, workforce management, performance management and compensation management software markets. IDC estimates that these additional markets will be $5.1 billion in 2015, and projected to grow to $6.4 billion in 2018. We believe these additional markets may present opportunities for us to develop additional applications on our platform over time. Consumerization of Technology is Changing How People Interact, Learn, Train and Work Recent innovations in consumer-oriented technology are changing how people expect to interact, learn, train and work. In particular, the ubiquity of social media and highly intuitive consumer and mobile applications have led instructors, students and employees to expect the same rich functionality, availability and usability from a learning platform. Strong User Engagement Leads to Robust Data Analytics A learning management system has the potential to provide significant insight to educators and administrators on their students and employees progress toward meeting learning objectives and the factors impacting performance. High utilization enables the learning management system to capture more data and leads to more insightful analyses on user behavior, quality of individual courses and effectiveness of digital content. Better analytics enables instructors and administrators to make more informed decisions about instruction and materials that in turn drive improved learning outcomes and performance for individuals and companies. Legacy Learning Management Systems Do Not Meet the Needs of Today s Instructors, Students and Employees Many traditional learning management systems are based on legacy technology architectures that do not meet the expectations of today s users. We believe legacy learning management systems face the following key challenges: Poor User Experience. Learning management systems were first introduced over a decade ago. These systems often lack the features and interfaces to deliver a personalized, collaborative, engaging, mobile and always-on experience that users expect today. Not Mobile. Legacy learning management systems were not built for mobility and efforts to retrofit for use with mobile devices have often resulted in a poor user experience. Unreliable with Poor Uptime. Legacy learning management systems were not designed for cloud-based deployment. Traditional on-premise systems require downtime for maintenance, upgrades and unforeseen bug fixes, which can adversely impact instructors and students during critical times. Table of Contents Index to Financial Statements INSTRUCTURE Software that makes people smarter Focused on Higher Education, K12, and Corporate learning 700+ employees worldwide Over 1,600 institutions, districts and companies More than 10 million users1 1 Measured over the 12 months ended September 30, 2015. Table of Contents Index to Financial Statements Low Utilization. Legacy learning management systems have historically been plagued by user dissatisfaction resulting in low utilization rates. Lack of utilization adversely affects the investments these institutions have made in their learning management systems. 48% of users are looking to leave their current learning management system and move to a new provider, according to the Brandon Hall Group. Expensive. Legacy learning management systems require substantial upfront and ongoing investments in IT infrastructure to implement and maintain an on-premise solution. Organizations often choose not to deploy software or to delay upgrades to newer versions due to concerns regarding costs, lengthy implementation and customization cycles, and potential business disruptions. Limited Reach and Complexity of Data Analytics. While legacy learning management systems have historically enabled the capture of data, access has been generally limited to administrators and teachers and not to students. Further, analytics tools currently offered in existing on-premise solutions can be limited in capabilities making it difficult to translate the data into useful actionable information. Closed Ecosystem. Legacy learning management solutions are often closed systems, which can limit the number of third-party integrations into a platform. Customers are forced to spend time and often money to obtain separate integration contracts with third-party publishers and software providers. Our Platform We designed our platform to enable users to teach, learn and collaborate anytime, anywhere, across a wide variety of application environments, operating systems, devices and locations. We believe our platform offers the following key benefits: Intuitive User Experience. We provide elegant and intuitive user interfaces that leverage familiar, consumer web navigation techniques, such as drag and drop, to make it easy to use our platform. We designed our system from the ground up, with modern, web-based design features, to create a differentiated user experience. We enable seamless collaboration among instructors and learners to share feedback and encourage online discussion forums. Optimized for Mobile. Our mobile-optimized platform allows users to access their applications anytime and anywhere. We offer a mobile first responsive design to ensure an optimal experience on most devices and, for Canvas, we also have iOS and Android native mobile applications available for free download on both phones and tablets. High Availability and Uptime. Our software is mission-critical for our users and customers and we focus on maintaining enterprise-grade reliability at all times. Our standard contracts provide for guaranteed 99.9% annual uptime. We achieved 99.9% uptime during 2014 while our customer base grew over 75%. High Utilization. Over ten million instructors, students and employees have used our software over the 12 months ended September 30, 2015. According to self-reported data in an ECAR 2014 survey, 58% of faculty in higher education use a learning management system to share content with students, while our internal analysis of higher education institutions using Canvas shows that 71% of faculty use Canvas to share content with students. Native Cloud-based Software. Our cloud-based delivery model enables customers to rapidly deploy our applications to experience immediate benefit. Software updates are implemented regularly and transparently. Our single-instance, multi-tenant architecture is designed to scale to support our rapid growth. Table of Contents Index to Financial Statements INSTRUCTURE OUR PRODUCT 56 92 find import share INSIDE INSTRUCTURE INNOVATIVE TECHNOLOGY POWERFUL MISSION OPENNESS OUR CUSTOMER CONFERENCE OUR OFFICE COMPANY CULTURE Table of Contents Index to Financial Statements Open Access to Data Analytics. Our platform provides users with open API access to data analytics. We deliver the analytics in an easy to understand and consumable way, that is optimized for independent analysis. This open visibility allows learners to view their own progress in real-time, educators to adjust programs and personalize curricula for maximum effectiveness and organizations to benchmark user data internally and respond to patterns observed. Open Platform. We are committed to collaboration and openness. Our open standards allow organizations to easily deliver additional learning content and applications from third-party publishers and software providers through our EduAppCenter.com s growing catalog of approximately 200 integrations or through open APIs. Our Growth Strategy We are pursuing the following strategies to grow our business: Grow our U.S. Customer Base. We believe there is opportunity to substantially expand our base of U.S. academic and corporate customers. K-12 academic institutions have yet to widely adopt learning management systems, while most higher education institutions have adopted legacy systems with which they are often unsatisfied. In the corporate market, there are both greenfield opportunities and opportunities to displace legacy solutions that do not meet customer needs. Further Maximize our Existing Customer Base. The majority of our academic customers implement Canvas widely within their institutions and across school districts. We plan to increase revenue from this customer base by selling additional applications and services. We plan to further penetrate our existing corporate customer base by growing the number of users on our platform and expanding enterprise wide. We believe our user-based pricing model and innovative applications provide us with a substantial opportunity to increase the value of our existing customer base. Continue to Expand Internationally. We intend to expand our direct and indirect sales force to further penetrate international markets. We opened our international headquarters in London in June 2014, and for the nine months ended September 30, 2015, international customers accounted for 6% of our revenue. Continue to Innovate and Offer New Applications. We will continue to make significant investments to further enhance the functionality of our existing applications, expand the number of applications on our extensible learning platform and develop into adjacent markets that will benefit our customers. Risks Associated with Our Business Our business is subject to numerous risks and uncertainties including those highlighted in the section titled Risk Factors immediately following this prospectus summary. These risks include, among others, the following: We have a history of losses and anticipate that we will continue to incur losses for the foreseeable future and may not achieve or maintain profitability in the future. We have a limited operating history, which makes it difficult to evaluate our prospects and future operating results. We depend on new customer acquisition and expansion and customer renewals and given our limited operating history, we do not have a long history on which to base forecasts of customer renewal rates or future operating results. If our efforts to further increase the use and adoption of Canvas do not succeed, or if Bridge does not gain widespread market acceptance, our revenue will be harmed. We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating results to fall below expectations or our guidance. Table of Contents Index to Financial Statements OUR FOOTPRINT OUR CUSTOMER GROWTH1 CUSTOMERS IN 25 COUNTRIES 1,500 1,000 500 0 2011 2012 2013 2014 2015 1 Represents total number of customers. Measured as of month end, from January 2011 to September 2015. OUR LEARNING ECOSYSTEM Content PEARSON Mc Graw Hill Education OpenSesame Applications Microsoft coursera Q qualtrics Information Systems/Analytics PowerSchool CIVITAS LEARNING LEARNING MANAGEMENT SYSTEMS Canvas bridge Instructors Institutions Learners Table of Contents Index to Financial Statements If we fail to manage our growth effectively or our business does not grow as we expect, our operating results may suffer. We face significant competition from both established and new companies offering learning management systems. The success of our business depends in part on our ability to protect and enforce our intellectual property rights. Our executive officers, directors and holders of more than 5% of our outstanding common stock will beneficially own approximately 73.3% of our common stock upon the closing of this offering and will continue to have substantial control over us. If we are unable to adequately address these and other risks we face, our business, financial condition, operating results and prospects may be adversely affected. Emerging Growth Company Status We are an emerging growth company as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and therefore we intend to take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We may take advantage of these exemptions for up to five years or until we are no longer an emerging growth company, whichever is earlier. Corporate Information We were incorporated in Delaware in September 2008. Our principal executive offices are located at 6330 South 3000 East, Suite 700, Salt Lake City, UT 84121 and our telephone number is (800) 203-6755. Our corporate website address is www.instructure.com. Information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. Instructure, Canvas, the Instructure logo, Canvas logo and Bridge logo are trademarks of Instructure, Inc. We do not intend our use or display of other companies trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Table of Contents Index to Financial Statements TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, especially the "Risk Factors" section and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. As used in this prospectus, unless the context otherwise requires, references to "we," "us," "our," "our company" and "SurgiQuest" refer to SurgiQuest, Inc. Company Overview We are a commercial stage global medical technology company that is revolutionizing Minimally Invasive Surgery with AirSeal, our proprietary surgical access management system that we believe offers significant clinical benefits for patients and economic benefits for healthcare providers. We refer to the combination of our proprietary AirSeal technology and the surgical procedures that they enable as Low Impact Surgery. We believe Low Impact Surgery enables a wider range of surgical procedures to be performed with less invasive surgical access, thereby broadening the population of patients for whom Minimally Invasive Surgery, or MIS, may be applicable. As of September 30, 2015, more than 1,600 AirSeal systems were deployed in over 700 institutions worldwide, and we believe AirSeal disposable devices have been used in more than 340,000 surgical procedures worldwide since 2011. Quarterly sales of AirSeal disposables have grown from less than 4,000 disposables sets during the three months ended March 30, 2012 to more than 44,000 disposables sets during the three months ended September 30, 2015; and more than 135,000 disposables sets were sold during the 9 months ended September 30, 2015. Over the past 25 years, abdominal surgery has evolved from highly invasive open procedures to MIS approaches, which include techniques such as laparoscopic and robotic-assisted laparoscopic surgery. MIS relies on the creation of working space in the abdominal cavity to facilitate the manipulation of surgical instruments and the visualization of the surgical site by endoscopic cameras. This is done through the inflation and distension of the abdominal cavity using carbon dioxide, or CO2, under pressure. This process is known as insufflation and the resulting state of insufflation is referred to as pneumoperitoneum. It is critical that pneumoperitoneum remains stable throughout the procedure. However, fluctuations in intra-abdominal pressure can be caused by surgical suction, smoke evacuation, specimen removal, trocar dislodgement, moving the patient, applying pressure to the patient's body or over-pressurizing the surgical cavity after a loss of pneumoperitoneum. Conventional access devices, comprising trocars, insufflators and insufflation tubing, are designed to create and maintain pneumoperitoneum. Trocars are tubular devices inserted through a patient's abdominal wall that allow the passage of thin telescopes, tissue grasping/dissecting/retracting instruments, tissue cauterizing devices for bleeding control, sutures, clips and other prosthetic devices to remove or repair bodily tissue. Insufflators are pressure regulators that are used to inflate a patient's abdomen with gas to create a working space for the surgeon to remove or repair tissue. Insufflation tubing takes the gas from the pressure regulator and connects it to a trocar so that gas may enter and inflate the patient's abdomen to create the working space. However, these devices have numerous limitations which result in challenges in maintaining stable pneumoperitoneum. These limitations include intermittent pressure monitoring, delayed response to pressure changes and the inability to prevent loss of pneumoperitoneum during standard instrument exchange, use of suction, smoke evacuation or specimen removal. Conventional access devices also do not include integrated management of surgical smoke caused by thermal energy-based devices commonly used during surgery, which obstructs the view of the surgical field and poses potential health hazards for operating room occupants. The FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents combination of these limitations contributes to an environment in which intra-abdominal pressure often fluctuates between levels so low that the surgical working space collapses and so high that it can cause harm to the patient. Surgeries using conventional access devices may also require more invasive access in order to accommodate the safe removal of contaminated or cancerous surgical specimens from the body. We believe our AirSeal technology represents the first major innovation in minimally invasive surgical access since the introduction of the modern trocar. The AirSeal system replaces trocars that rely on mechanical valves to create and maintain pneumoperitoneum with a valve-free access port that has no moving parts. AirSeal instead employs a proprietary gaseous barrier to provide real-time sensing of intra-abdominal pressure, which enables dynamic adjustment of intra-abdominal pressure to maintain stable pneumoperitoneum. AirSeal also includes automatic and continuous smoke evacuation to provide a clear and constant field of vision. Accordingly, the improved surgical conditions enabled by AirSeal allow surgeons to perform MIS procedures with a more stable and less rigid state of pneumoperitoneum, and at approximately 50% lower intra-abdominal pressures than are typically used with conventional access devices. Laparoscopy performed at lower pressure has been clinically demonstrated to contribute to lower post-operative pain, reduced reliance on post-operative pain medication and shorter length of hospital stay. While we have not yet completed a clinical study comparing both AirSeal and conventional insufflation at low pressure, several studies have been completed comparing AirSeal at low pressure versus conventional insufflation at standard pressure. In these studies, AirSeal at low pressure did not demonstrate the challenges typically associated with conventional insufflation at low pressure (which include increased operating and a greater requirement to raise intra-abdominal pressure from low to standard levels). In addition, we believe AirSeal simplifies pulmonary ventilation and hemodynamic management by the anesthesiologist, enabling a minimally invasive approach in patients who have more complicated diseases and are traditionally poor candidates for MIS. The AirSeal system has received clearance from the U.S. Food and Drug Administration, or FDA, pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act. The cleared indications for use are (i) in diagnostic and/or therapeutic endoscopic procedures to distend a cavity by filling it with gas, to establish and maintain a path of entry for endoscopic instruments and to evacuate surgical smoke; (ii) to facilitate the use of various laparoscopic instruments by filling the abdominal cavity with gas to distend it, by creating and maintaining a gas sealed obstruction-free instrument path and by evacuating surgical smoke; and (iii) to insufflate the rectum and colon to facilitate endoscopic observation, diagnosis and treatment. In addition, the trocar of the AirSeal system is indicated for use with or without visualization of the surgical site by endoscopic cameras. Typically, our customers are reimbursed for surgical procedures utilizing our devices through bundled payments, rather than receiving direct reimbursement for the cost of the AirSeal system components. Our customers accept the bundled payments as reimbursement for all associated costs of the surgical procedure, including the products and supplies used. Facility and physician reimbursement levels can vary according to the type of surgical procedure performed, the setting in which the surgical procedure was performed (e.g., hospital inpatient or outpatient departments), the clinical condition of the patient and other factors. We have sponsored numerous post-market clinical studies within several surgical specialties to assess the clinical benefits of our AirSeal system for its cleared indications, and we are aware of five third-party studies of our system. All of these studies assessed the AirSeal system for its currently cleared indications for use. While we believe that these data support the benefits of the AirSeal system, the studies have certain limitations, such as the fact that some of these clinical studies were not designed as prospective, randomized trials and some of these clinical studies enrolled fewer than 100 patients. In addition, some of the data we present on reduced pressure laparoscopy comes from clinical SurgiQuest, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or other jurisdiction of incorporation or organization) 3841 (Primary Standard Industrial Classification Code Number) 20-4678848 (IRS Employer Identification Number) 488 Wheelers Farms Road Milford, Connecticut 06461 (203) 799-2400 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents studies not assessing, and unrelated to, the AirSeal system. Further, we lack long-term clinical data on the safety and efficacy of our AirSeal system. We have developed and maintain a portfolio of intellectual property to protect our technologies, which included 76 issued patents, of which 30 were issued U.S. patents, and 65 patent applications pending globally, of which 26 were patent applications pending in the United States, as of November 1, 2015. We continue to invest in the research and development necessary to design, develop and commercialize new surgical solutions that leverage our technologies to enable less invasive surgical techniques. We currently market and sell our products in the United States and internationally through a multi-channel sales organization comprised of sales managers, direct sales representatives, clinical education specialists and distributors. The majority of our revenues are generated from sales to hospital customers through our direct sales representatives. Our sales professionals have extensive training and experience in promoting, marketing and selling advanced laparoscopic technologies. We expect to continue to make investments in our global sales organization by increasing the number of our direct sales representatives and broadening our relationships with distributor partners. For the years ended December 31, 2013 and 2014, our total revenue was $19.1 million and $30.2 million, respectively, and our net losses were $8.3 million and $14.8 million, respectively. For the nine months ended September 30, 2014 and 2015, our total revenue was $20.6 million and $34.7 million, respectively, and our net losses were $11.4 million and $15.1 million, respectively. Market Opportunity According to reports by Millennium Research Group, approximately 33 million abdominal surgical procedures are expected to be performed in 2015 in major markets worldwide, of which approximately 10 million are currently addressable by our technology, representing an annual global opportunity for approximately $2 billion of AirSeal disposables. In 2015, approximately 15 million additional procedures are expected to be performed through more invasive conventional open surgical approaches in our target markets worldwide. We believe a significant number of these procedures can be performed with MIS approaches as continued development and increased adoption of techniques that leverage our technologies enable less traumatic access and improved surgical control. We believe one of the most advanced forms of MIS is robotic-assisted laparoscopic surgery, which combines the benefits of minimally invasive ports with the enhanced dexterity, accuracy and surgical control provided by a robot. There were approximately 570,000 robotic-assisted laparoscopic procedures performed worldwide in 2014. We believe AirSeal is currently the leading surgical access management system used in robotic-assisted MIS procedures globally. We intend to leverage our strong relationships with surgeons that perform robotic-assisted procedures using AirSeal to further penetrate the larger general laparoscopic procedure market and ultimately become the standard of care for surgical access utilized by surgeons worldwide. Limitations of Conventional Access Devices Conventional access devices are comprised of three components: trocars, insufflators and insufflation tubing. The limitations of conventional access devices result in several challenges that adversely impact the clinical outcomes and healthcare economics of MIS procedures, including: Unintended Loss of Intra-abdominal Pressure. Loss of intra-abdominal pressure can occur at critical times during a laparoscopic procedure utilizing conventional access devices. Many factors contribute to the loss of pneumoperitoneum, including tears in the mechanical valves, trocar dislodgement, the use of standard suction inside the pressurized body cavity and the venting of surgical smoke. Loss of intra-abdominal pressure results in Kurt Azarbarzin President and Chief Executive Officer 488 Wheelers Farms Road Milford, Connecticut 06461 (203) 799-2400 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents reduced or total loss of visibility of the surgical field and compromised working space. The potential consequences of losing pneumoperitoneum include conversion to open surgery, excessive blood loss, longer operating times, prolonged recovery times, higher post-operative pain and even death. Unintended Spikes in Intra-abdominal Pressure. Significant rises in intra-abdominal pressure above target levels are known as spikes in pneumoperitoneum. Pressure spikes can be induced by the surgeon exerting external pressure on the body cavity during trocar replacement or when maneuvering the patient or from over pressurization of the cavity from conventional insufflators after a loss of pneumoperitoneum. Conventional trocars do not automatically vent gas when the cavity is overpressurized. Significant pressure spikes can have serious cardiovascular consequences including pulmonary embolism, tachycardia and death. Due to the intermittent pressure monitoring and simple on/off mechanics of conventional insufflators, there may be a dangerous delay before intra-abdominal pressure returns to the target level. Impact of a High Level of Intra-abdominal Pressure. Conventional insufflators require surgeons to insufflate the abdominal cavity to pressures ranging from 12mmHg to 15mmHg. This elevation of intra-abdominal pressure has a negative impact on pulmonary compliance, hemodynamics and renal function in laparoscopic surgery. Clinical studies have shown that these pressure levels are associated with numerous side-effects, including post-operative pain, opioid use and extended length of hospital stay, all of which negatively impact hospital profitability. Challenging Management of Surgical Smoke. Surgical smoke is typically vented through the trocar into the operating room, which frequently leads to a loss of pneumoperitoneum because it involves the sudden removal of large volumes of gas from the body. In addition, surgical smoke can expose operating room occupants to potential biohazards. Limited Ability for Specimen Removal. Surgeons must often break specimens down into smaller pieces to allow them to fit through the mechanical valves of a conventional trocar. This may result in the release of unwanted material, such as cancerous tissue and fluids into the body cavity. The mechanical valves of trocars can also trap specimens, making them more difficult to extract from the body. Conventional Trocar Design. Conventional trocars are ports through which cameras and instruments are inserted into the body to visualize the surgical site and perform surgery, respectively. Conventional trocars rely on mechanical valves to create a physical barrier to maintain pneumoperitoneum. These mechanical valves limit the size, shape and number of instruments and prosthetic materials that may be inserted or withdrawn through them. In addition, the mechanical valves themselves cause friction with the instruments inserted through them, hindering the ability to add or remove instruments or surgical specimens through the trocar, contributing to the risk of trocar dislodgement and reducing the surgeon's tactile feedback when engaging tissues and organs. Conventional trocars also incorporate a type of valve called a stopcock which manually controls the flow of gas into or out of the trocar. Stopcocks have small diameters that limit the rate of gas inflow required to maintain stable pneumoperitoneum in the event of significant air leaks or when surgeons use standard suction to clear the surgical field. We believe the limitations of conventional trocar design commonly result in longer procedure times and complications from instability of pneumoperitoneum. With copies to: Marc D. Jaffe Wesley C. Holmes Ryan K. deFord Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212) 906-1200 Michael A. Hedge Damien A. Grierson K&L Gates LLP 1 Park Plaza Twelfth Floor Irvine, California 92614 (949) 253-0900 Table of Contents Our Solution We have developed AirSeal, the first and only integrated surgical access management system to address the limitations associated with conventional access devices, to provide improved clinical outcomes for patients and economic benefits for healthcare providers. The components of our proprietary AirSeal system are the AirSeal Valve-Free Access Port, Intelligent Flow System (iFS) unit and the AirSeal Filtered Tube Set (FTS). We believe Low Impact Surgery provides the following benefits as compared to conventional access devices: Stable, Less Rigid State of Pneumoperitoneum. AirSeal combines sophisticated real-time management of intra-abdominal pressure with a valve-free trocar that uses a proprietary gaseous pressure barrier to maintain pneumoperitoneum and dynamically responds to any pressure increases or decreases in real time. Lower Pressure Procedures. AirSeal enables procedures to be performed at up to 50% lower intra-abdominal pressure than conventional MIS procedures by decreasing fluctuation in intra-abdominal pressure and reducing the pressure spikes and drops associated with conventional insufflation that make lower pressure techniques, such as those achievable by the AirSeal system, more challenging to perform. The benefits of lower intra-abdominal pressure have been clinically demonstrated to include significantly reduced post-operative shoulder pain, need for post-operative pain medication and faster recovery times. Integrated and Continuous Smoke Evacuation. AirSeal continuously evacuates smoke from the abdominal cavity, providing uninterrupted visibility of the surgical field and reducing the risks of exposure to pathogen-laden surgical smoke among operating room occupants, while simultaneously maintaining stable pneumoperitoneum. Intact Specimen Removal. AirSeal access ports are valve-free, enabling surgeons to extract larger specimens without having to dissect them inside the body. We believe that intact specimen removal saves procedure time and reduces the risk of spreading unwanted material, such as cancerous tissue, inside the body cavity. Improved Surgical Ergonomics. AirSeal's patented valve-free access ports enable frictionless insertion or withdrawal of multiple small diameter instruments of both circular and non-circular geometries, implants, sutures and specimens without the risk of losing pneumoperitoneum. Faster Procedure Times. AirSeal has been clinically demonstrated to result in faster average operating times in various types of laparoscopic and robotic-assisted laparoscopic procedures. Our Strategy Our goal is to establish AirSeal as the standard of care for every laparoscopic and robotic-assisted laparoscopic procedure worldwide, increase the number of surgeries that can be performed with less invasive surgical approaches and broaden the population of patients for which MIS procedures may be applicable. To accomplish this goal, we are employing the following strategies: Leverage our leading position in robotic-assisted MIS to establish Low Impact Surgery as the standard of care for laparoscopic procedures. Surgeons that perform robotic-assisted laparoscopy are typically the opinion leaders in laparoscopic surgery. We believe AirSeal is already the leading access technology utilized in robotic-assisted MIS. We intend to leverage our strong relationships with surgeons that perform robotic-assisted surgery to further penetrate into the larger general laparoscopic procedure market and ultimately become the standard of care in access technology. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Expand our sales organization to support growth. We intend to expand our highly-trained direct sales organization and broaden our relationships with distributor partners to facilitate further adoption among existing hospital customers and broaden awareness of Low Impact Surgery in new hospitals. Leverage our AirSeal technology to enable Low Impact Surgery for procedures not currently performed using a minimally invasive approach. We intend to continue leveraging our AirSeal technology and extending the benefits of Low Impact Surgery to broader patient populations, including patients typically treated with surgical procedures performed via open access. Deliver cost-effective solutions that extend the clinical and economic benefits of our AirSeal to high-volume laparoscopic procedures. We intend to leverage the improved surgical working conditions and clinical outcomes enabled by AirSeal, and the less invasive access provided by our proprietary line of Low Impact micro-laparoscopic instruments to enable hospitals to perform higher volume procedures such as laparoscopic cholecystectomy more cost effectively. Conduct further clinical studies documenting the clinical and economic benefits of Low Impact Surgery. We intend to continue to invest in further clinical studies in order to support the publication of peer reviewed articles that validate the clinical and economic benefits of Low Impact Surgery. Selectively pursue opportunities to enhance our product offerings. We intend to continue to expand applications of our AirSeal technology and vigorously protect those innovations through patent applications. We may also opportunistically pursue the licensing or acquisition of complementary products and technologies to strengthen our market position or improve product margins. Risks Associated with Our Business Our business is subject to numerous risks, including: If we are unable to convince hospital facilities to approve the use of our devices, our sales may decrease; We must demonstrate to surgeons and hospitals the merits of our devices to facilitate greater adoption of our devices; Our ability to sell our devices at prices necessary to support our current business strategies depends on demonstrating that the benefits of devices incorporating our AirSeal technology outweigh the increased cost of such devices compared to other surgical access methods; We have a history of net losses, expect to incur net losses in the future and may never achieve or sustain profitability; Our business and products are subject to extensive governmental regulation and oversight, and our failure to comply with applicable regulatory requirements could harm our business; The safety and efficacy of some of our products is not yet supported by long-term clinical data, which could limit sales, and our products might therefore prove to be less safe or effective than initially anticipated; and If we are unable to adequately protect our proprietary technology or maintain issued patents that are sufficient to protect our intellectual property, others could compete against CALCULATION OF REGISTRATION FEE Title of each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, par value $0.001 per share $75,000,000 $7,552.50 (1)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the "Securities Act"). (2)Includes offering price of any additional shares that the underwriters have the option to purchase to cover over-allotments, if any. (3)Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price. Table of Contents us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects. Our Corporate Information We were incorporated under the laws of the state of Delaware in November 2005. Our principal executive offices are located at 488 Wheelers Farms Road, Milford, Connecticut 06461, and our telephone number is (203) 799-2400. Our website address is www.surgiquest.com. The information contained in, or accessible through, our website does not constitute part of this prospectus. Implications of Being an Emerging Growth Company As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An "emerging growth company" may take advantage of exemptions from some of the reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to: being permitted to present only two years of audited financial statements in addition to any required unaudited interim financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations in this prospectus; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act; reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the closing of this offering. However, if certain events occur prior to the end of such five-year period, including if we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, our annual gross revenue exceeds $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. We have elected to take advantage of certain of the reduced disclosure obligations in this prospectus and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents THE OFFERING Common stock offered by us shares Common stock to be outstanding after this offering shares (or shares, if the underwriters exercise in full their option to purchase additional shares). Option to purchase additional shares The underwriters have a 30-day option to purchase up to additional shares of common stock. Use of proceeds We estimate that our net proceeds from our issuance and sale of shares of our common stock in this offering will be approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase additional shares), based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering as follows: (i) $ to expand our sales and marketing efforts relating to our U.S. and international sales presence; (ii) $ to continue to invest in our research and development program; (iii) $ to continue clinical research documenting the benefits of our technology; (iv) $ to satisfy a royalty buyout obligation to IP Technologies, LLC triggered by this offering; and (v) the balance for working capital and general corporate purposes. We may also use a portion of our net proceeds to acquire and invest in complementary products, technologies or businesses; however, we currently have no agreements or commitments to complete any such transaction. See "Use of Proceeds." Directed share program At our request, the underwriters have reserved up to shares of common stock, or approximately % of the shares of common stock offered by this prospectus, for sale, at the initial public offering price, to our directors, officers, employees and other parties associated with us. The number of shares of common stock available for sale to the general public will be reduced by the number of directed shares purchased by participants in the program. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of our common stock offered by this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated November 10, 2015 Shares SURGIQUEST, INC. Common Stock $ per share Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001362703_theralink_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001362703_theralink_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights material information concerning our business and this offering. This summary does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus and the information incorporated by reference into this prospectus, including the information presented under the section entitled "
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001383097_naked_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001383097_naked_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ea17b1fe5313f76b528426de32701514d1d86917
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+PROSPECTUS SUMMARY This summary highlights certain information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information you should consider before investing in shares of our common stock. You should read the entire prospectus carefully, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and related notes included in this prospectus before deciding to invest in our common stock. On August 10, 2015, we effected a 1-for-40 reverse split of our issued and outstanding shares of common stock. All share and per share information in this prospectus gives effect to the 1-for-40 reverse split, retroactively. Our Business We are an apparel and lifestyle brand company that is currently focused on innerwear products for women and men. Under our flagship brand name and registered trademark Naked , we design, manufacture and sell men s and women s underwear, intimate apparel, loungewear and sleepwear through retail partners and direct to consumer through our online retail store, wwwwearnaked.com. We have a growing retail footprint for our men s innerwear products in premium department and specialty stores and internet retailers in North America, including accounts such as Nordstrom, Dillard s, Bloomingdales, Hudson Bay Company, Amazon.com, barenecessities.com and others. The Naked brand was founded on one basic desire: to create a new standard for how products worn close to the skin fit, feel and function. Our core brand philosophy for Naked is the freedom to be you and we endeavor to provide products that help people feel confident, attractive and empowered while being as comfortable as wearing nothing at all. In June 2014, renowned designer and sleepwear pioneer, Carole Hochman, joined us as our Chief Executive Officer, Chief Creative Officer and Chairwoman with the goal of growing our company into a global lifestyle brand. Since Ms. Hochman has joined our company, we have relocated our headquarters to New York City, expanded our men s collections and developed women s intimate apparel, sleepwear and loungewear collections. Our Fall 2015 women s sleep and lounge wear collection became available for retail sale online at wearnaked.com in September 2015 and will begin to be available at retail locations and other online retailers in late 2015 and early 2016. We expect to launch our women s intimate apparel products online and at retail during the first quarter of calendar 2016. In the future, we intend to expand the Naked brand on our own and through licensing partnerships into other apparel and product categories that exemplify the mission of our brand, such as athleisure apparel, swimwear, sportswear, hosiery, bedding and bath products and others. The U.S. innerwear market, which is the core focus of our current commercial strategy, represented an estimated $23.1 billion in retail sales in the twelve-month period ended March 2015 according to data from NPD Group, Inc. Our expansion into the women s sleepwear and intimate apparel market is a key part of our growth strategy given that these market segments represent $17.8 billion or over 77% of the overall innerwear market. Daywear products that address consumer demand for versatile athleisure apparel similar to several styles in our Fall 2015 women s collection have been the fastest growing segment of the women s market. Our ability to attract women customers for the Naked brand is also very important to our effort to penetrate the men s $4.3 billion U.S. innerwear market since a number of consumer research reports show that women purchase as much as 50% of men s underwear for their husbands, boyfriends or sons. In June 2015, we announced a collaboration and endorsement agreement with NBA Champion Dwyane Wade ( Wade ) whereby Wade agreed to act as a spokesperson for our brand and spearhead a brand ambassador marketing campaign that we initiated in November 2015. Wade also joined our corporate Advisory Board. Further, he is serving as Creative Director for the development of a Wade X Naked signature collection of men s innerwear that we expect to present at market to retailers in late calendar 2015 and launch commercially in calendar 2016. This collection will encompass underwear, undershirts, loungewear, sleepwear and robes for men and boys. We anticipate that our relationship with Wade will: assist us with building broader brand awareness with consumers and accelerating sales growth; help us attract additional distribution relationships in North America, Europe as well as Asia where basketball is a popular sport and Wade is well known to consumers; provide us a collaborative brand extension product platform to create new and differentiated products to attract new retail and wholesale customers; and strengthen our brand credibility to help attract future endorsements and consumer influencer relationships. We launched a brand awareness initiative, The Naked Truth campaign, with Wade in late November 2015. This campaign will seek to create long-term consumer awareness of, enthusiasm for, and engagement with the Naked brand by celebrating the character, experiences and life philosophy of accomplished individuals like Wade that exemplify our brand ideals of freedom and authenticity. We expect The Naked Truth campaign to grow over time to feature men and women with varying degrees of celebrity across a range of life stories and perspectives. From the outset, the campaign will include ways to engage consumers via social and digital media to explore the ideas underlying our brand and experience the products that express our brand mission. The campaign will also tie into The Naked Truth messages and catchphrases incorporated in our products and product packaging. As filed with the Securities and Exchange Commission on December 15, 2015 Registration Statement No. 333-207110 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Naked Brand Group Inc. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 2300 (Primary Standard Industrial Classification Code Number) 99-0369814 (I.R.S. Employer Identification Number) 10th Floor - 95 Madison Avenue New York, New York 10016 Telephone: (212) 851-8050 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Joel Primus President 10th Floor - 95 Madison Avenue New York, New York 10016 Telephone: (212) 851-8050 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy of all communications to: Nanette C. Heide, Esq. Joel D. Mayersohn, Esq. Duane Morris LLP Roetzel & Andress, LPA 1540 Broadway 350 East Las Olas Boulevard New York, New York 10036-4086 Las Olas Centre II, Suite 1150 (212) 692-1003 Fort Lauderdale, FL 33301 (954) 462-4150 Our products are currently targeted at men and women who are fashion and performance conscious, care about innovation and contemporary design, and desire comfort, quality and fit in their innerwear and apparel. We aim to provide an affordable luxury product for the successful and aspirational customer that enjoys the qualities of a premium garment at a price they feel delivers value. With growing awareness of our brand among these consumers and a broadening array of products, we expect to expand our U.S. and Canadian retail distribution through department stores, boutiques, online retail channels, hotels, spas, and other retailing channels over the next two years and beyond. We plan to also grow our direct to consumer business primarily through our online retail store, wearnaked.com, though which we will continue to commercially introduce new products as well as feature certain products, collections and styles exclusively. We are currently exploring international distribution relationships for our Naked and Wade X Naked products and we anticipate that we will commence selling a limited number of products in Europe, Asia, and Central and South America in 2017 or earlier. Recent Developments On July 3, 2015, we entered into separate warrant amendment agreements with Carole Hochman, our Chief Executive Officer and Chairwoman, David Hochman, Vice Chairman of our board of directors, and Nico Pronk, President and CEO of Noble Financial Capital Markets, an underwriter in this offering ( Noble ), to amend and exercise certain warrants to purchase shares of our common stock. In connection therewith, such holders tendered and exercised an aggregate of 205,248 warrants to purchase shares of our common stock for gross proceeds to our company of $821,000. On August 3, 2015, we consummated an issuer tender offer to amend and exercise certain warrants to purchase our common stock originally issued to investors in our private placement financing with respect to which closings occurred in June and July 2014 and issued to certain lenders in connection with certain Amendment to Promissory Note Agreements dated April 4, 2014. In connection therewith, the holders of an aggregate of 380,457 of such warrants agreed to amend their warrants, and tendered and exercised such warrants in connection therewith for gross proceeds to our company of $1,521,966. In total, an aggregate of 585,705 warrants were amended and exercised for gross proceeds to our company of $2,342,966. Effective August 3, 2015, we amended our 6% senior secured convertible debentures issued in connection with a private placement offering with respect to which closings occurred on June 10, 2014 and July 8, 2014 to provide, among other things, that (i) the debentures will automatically convert into shares of our common stock upon the closing, or any combination of closings, of any equity offerings or financings with aggregate gross proceeds to our company of at least $8,000,000; and (ii) the amount of principal and interest to be converted in connection with such an automatic conversion will include an additional amount of interest equal to six (6) months of interest that would have accrued under the terms of the debentures. The debentures will automatically convert into shares of our common stock upon the closing of this offering. As of December 15, 2015, $6,936,450 in aggregate principal amount of such debentures was outstanding. On August 10, 2015, we effected a 1-for-40 reverse split of our issued and outstanding shares of common stock.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001395848_adesto_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001395848_adesto_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001399587_blue_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001399587_blue_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001412347_westmorela_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001412347_westmorela_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001412347_westmorela_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001414295_oxford_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001414295_oxford_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..0639a6f3d0c41c997101ee2df46e310bf1b1f1d4
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms the "Company," "Oxford City Football Club,""we," "us," "our," and "our company" refer to Oxford City Football Club, Inc., a Florida corporation. Company Overview The First Portfolio (OXFC Sports Portfolio) As detailed more fully in Section titled "Description of Business" of this prospectus, we own five (5) professional sports teams that are currently active and the rights to two (2) other expansion teams. 1) We own 49% of Oxford City Football Club (Trading) Limited, which operates a professional outdoor soccer team, which competes in the "Conference North" of the English Football Association under the name Oxford City Football Club. The team has been in existence for 132 years, being established in 1882. The Conference North, and its member clubs, are collectively able to compete for the prestigious English FA Cup, competing against some of the best English teams in the world for this championship trophy. 2) Oxford City Nomads is our 2nd professional outdoor soccer team, which competes in the "Hellenic Premier League" of the English Football Association under the name Oxford City Nomads. The Hellenic Premier League, and its member clubs, are collectively able to compete for the prestigious English FA Vase, competing against some of the best English teams in the lower steps for this championship trophy. 3) Oxford City Futsal is our 1st professional indoor soccer team, which competes in the "Hellenic Premier League" of the English Football Association under the name Oxford City Futsal. The Premier League, and its member clubs, are collectively able to compete for the prestigious English FA Cup for Futsal, competing against some the best English Futsal teams for this championship trophy. 4) Oxford City FC of Texas is our 2nd professional indoor soccer team was purchased in July 2014 and competes in the "MASL" of the Major Arena Soccer League in the United States under the name Oxford City FC of Texas. The MASL and its member clubs are collectively able to compete for the prestigious MASL Cup, competing against the best American teams for this championship trophy. 5) Oxford City FC Basketball is our professional basketball team, which competes in the "EBL" of the English Basketball League under the name Oxford City Basketball. The EBL and its member clubs are collectively able to compete for the prestigious EBL Championship, competing against the best English Basketball teams for this championship trophy. We have reserved the rights to the home territories of Sioux Falls, South Dakota and Boca Raton/Detray Beach, Florida in the Premier Arena Soccer League. The Second Portfolio (OXFC Academic Portfolio) The OXFC Academic Portfolio owns a diversified portfolio of academic institutions. OXFC owns CIT University in the US, which has designed and completed their first Master s Degree Program in Sports Management, which they plan to partner with an accredited university to deliver the degree program globally online. The Company also owns Oxford City Sports College in Oxford England, which expects the strong ties in Oxford to strategically put the College in a tremendous position for the future. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED April 6, 2015 PROSPECTUS OXFORD CITY FOOTBALL CLUB, INC. 2,850,000 Shares of Common Stock This prospectus relates to the offer and resale of up to 2,850,000 shares of our common stock, par value $0.0001 per share, by the selling stockholder, Tarpon Bay Partners, LLC, a Florida limited liability company ("Tarpon"). All of such shares represent shares that Tarpon has agreed to purchase if put to it by us pursuant to the terms of the Equity Purchase Agreement we entered into with them on September 23, 2014, subject to the volume limitations and other limitations in the Equity Purchase Agreement. Subject to the terms and conditions of the Equity Purchase Agreement, which we refer to in this prospectus as the "Equity Purchase Agreement," we have the right to "put," or sell, up to $15,000,000 worth of shares of our common stock to Tarpon. This arrangement is sometimes referred to as an "Equity Line." For more information on the selling stockholder, please see the section of this prospectus entitled "Selling Security Holder" beginning on page 33. We will not receive any proceeds from the resale of these shares of common stock offered by Tarpon. We will, however, receive proceeds from the sale of shares directly to Tarpon pursuant to the Equity Line. When we put an amount of shares to Tarpon, the per share purchase price that Tarpon will pay to us in respect of the put will be determined in accordance with the formula set forth in the Equity Purchase Agreement. There will be no underwriter s discounts or commissions so we will receive all of the proceeds of our sale to Tarpon. We may draw upon the Equity Line periodically during the Term (a "Draw Down") by delivering to Tarpon a written notice (a "Draw Down Notice") requiring Tarpon to purchase a dollar amount in shares of common stock (a "Draw Down Amount"). Tarpon has committed to purchase up to $15,000,000 worth of shares of our common stock over a period of time terminating on the earlier of: (i) 24 months from the effective date of the registration statement filed in connection with the Equity Purchase Agreement; or (ii) the date on which Tarpon has purchased shares of our common stock pursuant to the Equity Line for an aggregate maximum purchase price of $15,000,000. In no event may the shares issuable pursuant to a Draw Down Notice, when aggregated with the shares then held by Tarpon on the date of the Draw Down, exceed 9.99% of the Company s outstanding common stock. As of the date hereof, Tarpon has 446,877 shares of our common stock outstanding. The purchase price per share of common stock purchased under the Equity Line will equal 90% of the lowest closing bid price during the Valuation Period (the "Purchase Price"). On the date that a Draw Down Notice is delivered to Tarpon, we are required to deliver an estimated amount of shares to Tarpon s brokerage account equal to 125% of the Draw Down Amount indicated in the Draw Down Notice divided by the closing bid price of our common stock for the trading day immediately prior to the date of the Draw Down Notice ("Estimated Shares"). The Valuation Period will begin the first trading day after the Estimated Shares have been delivered to Tarpon s brokerage account and have been cleared for trading, and terminates ten days thereafter. At the end of the Valuation Period, if the number of Estimated Shares delivered to Tarpon is greater than the shares issuable pursuant to a Draw Down, then Tarpon is required to return to us the difference between the Estimated Shares and the actual number of shares issuable pursuant to the Draw Down. If the number of Estimated Shares is less than the shares issuable under the Draw Down, then we are required to issue additional shares to Tarpon equal to the difference; provided that the number of shares to be purchased by Tarpon may not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by Tarpon, would exceed 9.99% of the outstanding number of shares of our common stock. Table of Contents The Third Portfolio (OXFC Media & Entertainment Portfolio) The OXFC Media & Entertainment Portfolio owns a diversified portfolio of media & entertainment companies. OXFC owns Oxford City Broadcasting Network, which is broadcasted online at 1882.tv. Oxford City anticipates this to become the global television platform for the company and their interests now and in the future. The Fourth Portfolio (OXFC Real Estate & Property Management Portfolio) The OXFC Real Estate & Property Management Portfolio controls a diversified portfolio of real estate including Oxford City Stadium, Oxford City Indoor Arena, and the Oxford City 3G Training Facility. OXFC benefits from these facilities both in usage and in rental income. Our Corporate headquarters is located at 10 Fairway Drive, Suite 302, Deerfield Beach, FL 33441. Our telephone number is 617.501.6766. Additional information about us is available on our website at http://www.oxfordcityfc.com. The information on our website is not incorporated herein by reference. The Offering Common stock that may be offered by selling stockholder 2,850,000 shares Common stock currently outstanding 26,667,653 shares Total proceeds raised by offering We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder. We will receive proceeds from the sale of shares to Tarpon. Tarpon has committed to purchase up to $15,000,000 worth of shares of our common stock over a period of time terminating on the earlier of: (i) 24 months from the effective date of the registration statement filed in connection with the Equity Purchase Agreement; or (ii) the date on which Tarpon has purchased shares of our common stock pursuant to the Equity Purchase Agreement (the "Equity Line") for an aggregate maximum purchase price of $15,000,000. The purchase price to be paid by Tarpon will be 90% of the lowest closing bid price during the Valuation Period. On the date the Draw Down Notice is delivered to Tarpon, we are required to deliver an estimated amount of shares to Tarpon s brokerage account equal to 125% of the Draw Down Amount indicated in the Draw Down Notice divided by the closing bid price of the trading day immediately prior to the date of the Draw Down Notice ("Estimated Shares"). The Valuation Period begins on the first trading day after the Estimated Shares have been delivered to Tarpon s brokerage account and have been cleared for trading and terminates on the tenth day thereafter. At the end of the Valuation Period, if the number of Estimated Shares delivered to Tarpon is greater than the shares issuable pursuant to a Draw Down, then Tarpon is required to return to us the difference between the Estimated Shares and the actual number of shares issuable pursuant to the Draw Down. If the number of Estimated Shares is less than the shares issuable under the Draw Down, then we are required to issue additional shares to Tarpon equal to the difference; provided that the number of shares to be purchased by Tarpon may not exceed the number of shares that, when added to the number of shares of our common stock then beneficially owned by Tarpon, would exceed 9.99% of our shares of common stock outstanding. As of the date hereof, Tarpon has 446,877 shares of our common stock outstanding. Risk Factors There are significant risks involved in investing in our company. For a discussion of risk factors you should consider before buying our common stock, see "Risk Factors" beginning on page 3. We will specify in each Draw Down Notice a minimum threshold market price under which no shares may be sold (the "Floor Price"). The Floor Price shall not be less than 75% of the average of the closing trade prices for the ten (10) trading days ending immediately prior to delivery of the Draw Down Notice. In the event that during a Valuation Period, the closing bid price on any trading day is below the Floor Price (the "Low Bid Price"), Tarpon is under no obligation to purchase and we are under no obligation to sell 1/10th of the Draw Down Amount for each such trading day, and the Draw Down Amount will be adjusted accordingly. In the event that during a Valuation Period there exists a Low Bid Price for any three trading days then our obligation to sell and Tarpon s obligation to purchase the Draw Down Amount under a Draw Down Notice will terminate on such third trading day (the "Termination Date") and the Draw Down Amount shall be adjusted to include only 1/10th of the initial Draw Down Amount for each day during the Valuation Period prior to the Termination Date that the bid price equals or exceed the Low Bid Price. Tarpon may sell any shares offered under this prospectus at prevailing market prices or privately negotiated prices. Tarpon is an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in connection with the resale of our common stock under the Equity Line. For more information, please see the section of this prospectus titled "Plan of Distribution" beginning on page 29. Our common stock is quoted on the OTCQB under the symbol "OXFC". The closing price of our stock on April 2, 2015, was $0.023 per share. You
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+Prospectus Summary 1
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+PRELIMINARY PROSPECTUS SUMMARY This preliminary prospectus summary highlights selected information contained or incorporated by reference in this preliminary prospectus and may not contain all the information that you need to consider in making your investment decision. To understand this offering fully, you should read this preliminary prospectus carefully. In particular, you should carefully read the sections titled "Risk Factors" in this preliminary prospectus and the documents identified in the section "Incorporation of Certain Information by Reference." The Company 1st Century Bancshares, Inc., a Delaware corporation, is registered with the Board of Governors of the Federal Reserve System as a bank holding company under the Bank Holding Company Act of 1956, as amended. We have one subsidiary, 1st Century Bank, National Association (the "Bank"). The Bank is subject to both the regulation of, and periodic examinations by the Office of the Comptroller of the Currency, which is the Bank's primary federal regulatory agency. Headquartered in the West Los Angeles area of Los Angeles, California, known as Century City, the Bank is a full service commercial bank. The Bank was organized as a national banking association on October 27, 2003 and opened for business on March 1, 2004. In addition to a full service branch in Century City, the Bank has relationship offices in Santa Monica and Beverly Hills, California. The Bank's primary focus is relationship banking to family and closely held middle market businesses, professional service firms, and high net worth individuals, real estate investors and entrepreneurs. The Bank also provides a wide range of banking services to meet the financial needs of the local residential community, with an orientation primarily directed toward owners and employees of our business client base. For the three and six months ended June 30, 2015, we reported net income of $515,000 and $830,000, respectively, and diluted earnings per common share of $0.05 and $0.08, respectively. As of June 30, 2015 we had stockholders' equity of $62.7 million. Our common stock is listed for trading on The NASDAQ Capital Market under the symbol "FCTY." As of , 2015 there were shares of our common stock outstanding. Our principal executive offices are located at 1875 Century Park East, Suite 1400, Los Angeles, California 90067, and our telephone number is (310) 270-9500. The Company maintains a website at http://www.1cbank.com. By including the foregoing website address, the Company does not intend to and shall not be deemed to incorporate by reference any material contained therein. Our Strategy We are focused on continuing to organically grow our community bank in a safe and sound manner. We believe that our commitment to providing our clients with premium personal banking services will continue to be the foundation of our success. To further grow our franchise, we intend to continue building on our existing strong core deposit base and high-quality loan portfolio in the West Los Angeles area through our relationship-based business banking model. We expect to deepen these client relationships while attracting new business and gaining market share through the efforts of our talented bankers and client-focused approach. Key elements of our strategy include: Organically grow our strong core deposit base. Our low-cost deposit base serves as the foundation of our franchise. Our total deposits increased 11.1% during 2014 and through June 30, 2015 have increased by 15.4% on a year-to-date basis. At June 30, 2015, our total deposits were approximately $580.9 million, $532.4 million, or 91.6%, of which were core Table of Contents deposits, which we define to include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings. Of those core deposits, approximately 59.2% were non-interest bearing. During both the three and six months ended June 30, 2015, cost of total deposits was 0.08%. The composition of our deposits provides a low-cost source of funding. Given the high percentage of non-interest bearing deposits in our deposit mix, we believe that our core deposit base provides a solid foundation for profitability in all interest rate environments. Strategically positioned to successfully serve the attractive West Los Angeles market. We have a single branch location and are headquartered in Century City. We also have relationship offices in Beverly Hills and Santa Monica. These offices are strategically located to attract and service our target customers in our market area of West Los Angeles. While we have no immediate plans and do not believe it necessary to execute on our growth strategy, we will continue to evaluate potential opportunities to expand our presence in and around our market area through additional relationship offices, de novo branching, acquisition or new product offerings and business lines. The West Los Angeles market includes, among others, such communities as Beverly Hills, Bel Air, Brentwood, Culver City, El Segundo, Marina del Rey, Pacific Palisades, Santa Monica and Venice Beach. Our market is dominated by small businesses, professional services, real estate and entertainment firms and includes a high concentration of high net worth individuals. West Los Angeles also represents one of the largest concentrations of deposits in the United States, with approximately $60 billion in total deposits as of June 30, 2014. There has been considerable consolidation within the Los Angeles banking market, which has decreased the number of locally-based banking options for customers in the West Los Angeles area. Due to the decline in the number of banks headquartered in West Los Angeles since we were organized, we believe that we are strategically well-positioned to increase our market share. Expand existing and develop new customer relationships with high quality service. At June 30, 2015, the Company had consolidated assets of $661.3 million and gross loans of $519.1 million. We see a large opportunity in our market area to continue to attract and grow our target customer base, which includes family and closely held middle market businesses, professional services firms, high net-worth individuals, real estate investors and entrepreneurs. Our relationship-based business model is built on providing an extraordinary level of personal service and building long-term relationships by acting as trusted advisors and client advocates. As a result, we maintain strong long-term relationships with our existing customers and intend to attract new customers through our client-centric personal banking strategy. A significant portion of our new customer relationships are established through referrals from customers and other sources such as accounting and law firms. We intend to continue to access those referral sources as we grow our business. Retain and attract talent. Our team has been a key driver in our ability to attract and retain clients and will be essential for executing on our growth plan. Our team's experience and strong reputation in the community will assist us in obtaining new business and key employees. Relationship managers, in particular, are critical to current and future success. We will focus on retaining our talented relationship managers who have deep knowledge of our current customer base and market area. We will continue to hire and develop bankers and relationship managers who will successfully build long-term client relationships. We believe that our culture and client-focused approach will attract such talented and experienced individuals. Maintain strong credit discipline. Credit quality remains a critical focus. As of June 30, 2015, our nonperforming assets (consisting of three loans) were approximately $712,000, or 0.11% of total assets. By adhering to rigorous underwriting standards, we have built a high-quality loan portfolio anchored by commercial real estate and commercial and industrial loans. We believe that our relationship-oriented approach to banking has allowed us to originate high quality Table of Contents assets. Our focus on the long term success of our business through maintaining strong credit quality has served us well through various market conditions. Leverage our management team and board of directors. We intend to leverage the experience of our management team and board of directors to support our growth. Our management team and board have deep knowledge of the West Los Angeles market and the businesses that operate in and serve the market and have contributed to developing long-term client relationships on behalf of the Company. Our directors and executive officers also maintain significant ownership of our common stock, and as of June 30, 2015, own approximately 22.67% of the outstanding shares of common stock. Make ongoing investment in infrastructure. We believe our current infrastructure provides a solid foundation to support our growth objectives. We intend to continue to make ongoing investments in our technology and infrastructure to support our growth and meet our clients' needs. While not necessary to execute on our growth strategy, we will also continue to assess enhancements and additions to our current product and service offerings, which may include, but is not limited to, expanding our loan offerings through participation in the Small Business Administration loan program or offering wealth management products. Notwithstanding any such ongoing investments, we believe that we have the ability to grow our assets, deposits and revenue more quickly than expenses. (1)The number of shares offered assumes that the underwriter's purchase option is not exercised. If the purchase option is exercised in full, we will issue and sell up to shares. (2)The number of shares outstanding after the offering is based on shares of common stock outstanding as of , 2015, and excludes shares issuable pursuant to the exercise of the underwriter's purchase option. It also excludes an aggregate of shares reserved as of , 2015 for issuance under our 2005 Equity Incentive Plan and 2013 Equity Incentive Plan subject to outstanding awards. Table of Contents SELECTED FINANCIAL DATA The following tables set forth selected historical consolidated financial data for the Company as of and for each of the five years ended December 31, 2014, which have been derived from our audited consolidated financial statements, and as of and for the six-month periods ending June 30, 2015 and June 30, 2014, which have been derived from our unaudited consolidated financial statements. You should read this table together with the historical consolidated financial information contained in our (i) consolidated financial statements and related notes, as well as our "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which is incorporated by reference in this preliminary prospectus; and (ii) consolidated financial statements and related notes, as well as our "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2015 and June 30, 2015, which are also incorporated by reference in this preliminary prospectus. The summary statement of operations data for the years ended December 31, 2014 and 2013, and the summary balance sheet information as of December 31, 2014 and 2013 have been derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which is incorporated by reference in this preliminary prospectus. The summary statement of operations data for the years ended December 31, 2012, 2011 and 2010 and the summary balance sheet information as of December 31, 2012, 2011 and 2010 have been derived from our audited consolidated financial statements that are not included nor incorporated by reference into this preliminary prospectus. At and for the six months ended June 30, At or for the year ended December 31, 2015 2014 2014 2013 2012 2011 2010 (dollars in thousands, except per share data) Balance Sheets Period End Securities $ 75,549 $ 78,060 $ 79,689 $ 106,272 $ 181,225 $ 129,906 $ 58,474 Loans 519,064 412,713 442,856 383,548 266,671 233,005 179,293 Allowance for loan losses (8,323 ) (7,367 ) (7,599 ) (7,236 ) (6,015 ) (5,284 ) (5,283 ) Total assets 661,305 554,413 585,218 538,145 499,173 405,274 308,364 Deposits 580,898 467,772 503,172 452,766 416,681 332,454 257,989 Borrowings 15,000 25,000 17,500 27,500 29,475 25,000 2,000 Total liabilities 598,616 495,253 523,525 482,757 450,000 360,223 264,026 Shareholders' equity 62,689 59,160 61,693 55,388 49,173 45,051 44,338 Statements of Operations Interest income $ 11,086 $ 9,234 $ 19,215 $ 17,016 $ 15,039 $ 12,207 $ 10,865 Interest expense 331 379 756 808 966 926 972 Provision for loan losses 725 100 100 100 275 2,775 Noninterest income 338 1,088 1,711 1,793 1,986 934 945 Noninterest expense 8,898 7,787 15,806 14,097 13,006 10,844 10,026 Income/(loss) before taxes 1,470 2,056 4,264 3,804 3,053 1,096 (1,963 ) Net income / (loss) 830 1,181 2,361 6,863 2,942 1,025 (1,963 ) Per Common Share Data Net income/(loss), basic $ 0.09 $ 0.13 $ 0.25 $ 0.79 $ 0.35 $ 0.12 $ (0.22 ) Net income/(loss), diluted 0.08 0.12 0.24 0.76 0.33 0.11 (0.22 ) Book value 6.07 5.83 6.08 5.84 5.38 4.97 4.77 Tangible book value 6.07 5.83 6.08 5.84 5.38 4.97 4.77 Common shares outstanding 10,321,702 10,142,048 10,140,441 9,480,808 9,137,128 9,071,785 9,302,291 Weighted average common shares outstanding, basic 9,563,456 9,370,900 9,431,727 8,660,641 8,520,420 8,772,331 8,897,520 Weighted average common shares outstanding, diluted 9,817,923 9,673,066 9,741,248 9,079,642 8,785,564 8,932,793 8,897,520 Table of Contents At and for the six months ended June 30, At or for the year ended December 31, 2015 2014 2014 2013 2012 2011 2010 (dollars in thousands, except per share data) Performance Ratios Net interest margin 3.55 % 3.29 % 3.28 % 3.19 % 3.12 % 3.21 % 3.62 % Net yield on interest-earning assets 3.66 % 3.43 % 3.41 % 3.35 % 3.33 % 3.48 % 3.97 % Efficiency ratio 80.75 % 85.04 % 83.22 % 82.06 % 80.99 % 88.78 % 92.50 % Return on average assets 0.27 % 0.43 % 0.41 % 1.33 % 0.64 % 0.29 % (0.70 )% Return on average common equity 2.68 % 4.10 % 4.00 % 13.07 % 6.26 % 2.29 % (4.18 )% Total capital (to risk weighted assets) 12.42 % 14.38 % 13.94 % 14.18 % 15.65 % 17.91 % 21.69 % Tier 1 capital (to risk weighted assets) 11.16 % 13.12 % 12.69 % 12.93 % 14.39 % 16.64 % 20.42 % Tier 1 capital (to average assets) 9.80 % 10.58 % 10.05 % 9.70 % 9.47 % 10.92 % 13.93 % Common equity Tier 1 (to risk weighted assets) 11.16 % N/A N/A N/A N/A N/A N/A Asset Quality Nonperforming assets $ 712 $ 731 $ 632 $ 825 $ 1,944 $ 7,606 $ 7,963 Nonperforming loans $ 712 $ 731 $ 632 $ 735 $ 1,854 $ 7,606 $ 7,118 Nonperforming assets to total assets 0.11 % 0.13 % 0.11 % 0.15 % 0.39 % 1.88 % 2.58 % Nonperforming loans to total loans 0.14 % 0.18 % 0.14 % 0.19 % 0.70 % 3.26 % 3.97 % Allowance for loan losses to loans 1.60 % 1.79 % 1.72 % 1.89 % 2.26 % 2.27 % 2.95 % Allowance for loan losses to nonperforming loans 1169.53 % 1008.46 % 1203.03 % 984.26 % 324.36 % 69.47 % 74.22 % Net charge-offs/(recoveries) $ 1 $ (31 ) $ (263 ) $ (1,121 ) $ (731 ) $ 274 $ 2,970 Net charge-offs/(recoveries) (annualized) to average loans 0.00 % (0.02 )% (0.07 )% (0.35 )% (0.31 )% 0.14 % 1.72 % Table of Contents RISK FACTORS An investment in our common stock involves various risks. Before making an investment decision you should carefully read and consider the risk factors described below, as well as other information included or incorporated by reference in this preliminary prospectus. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect us. This preliminary prospectus and the documents incorporated by reference in this preliminary prospectus also contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks noted below. If any of the matters included in the following information about risk factors were to occur, our business, financial condition, results of operations, cash flows or prospects could be materially and adversely affected. In any such case, you could lose all or a portion of your original investment. Risks Related to Our Business The Company may have difficulty managing its growth which may divert resources and limit the Company's ability to successfully expand its operations. The Company has grown since it began operations in March 2004. At June 30, 2015, the Company had $661.3 million in total assets, $510.7 million in net loans and $580.9 million in deposits. The Company's future success will depend on the ability of its officers and key employees to continue to implement and improve its operational, financial and management controls, reporting systems and procedures, and manage a growing number of customer relationships. The Company's future level of profitability will depend in part on its continued ability to grow; however, the Company may not be able to sustain its historical growth rate or even be able to grow at all, which would have a material and adverse effect on our business, financial condition, results of operations, cash flows and stock price. If the Company cannot attract deposits, its growth may be inhibited. The Company plans to increase the level of its assets, including its loan portfolio. The Company's ability to increase its assets depends in large part on its ability to attract additional deposits at competitive rates. The Company intends to seek additional deposits by continuing to establish and strengthen its personal relationships with its customers and by offering deposit products that are competitive with those offered by other financial institutions in its markets. The Company cannot ensure that these efforts will be successful. The Company's inability to attract additional deposits at competitive rates could have a material and adverse effect on its business, financial condition, results of operations, cash flows and stock price. Our 20 largest deposit clients account for 30.82% of our core deposits. As of June 30, 2015, our 20 largest bank depositors accounted for, in the aggregate, 30.82% of our core deposits, which we define to include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings. As a result, a material decrease in the volume of those deposits by a relatively small number of our depositors could reduce our liquidity, in which event it could became necessary for us to replace those deposits with higher-cost deposits, lower-yielding securities or Federal Home Loan Bank ("FHLB") borrowings, which would adversely affect our net interest income and, therefore, our results of operations. The Company relies heavily on its senior management team and other employees, the loss of whom could significantly harm its business. The Company's success depends heavily on the abilities and continued service of its executive officers, especially Alan I. Rothenberg, Chairman and Chief Executive Officer, Jason P. DiNapoli, President and Chief Operating Officer, Bradley S. Satenberg, Executive Vice President and Chief Table of Contents Financial Officer and J. Kevin Sampson, Executive Vice President and Chief Credit Officer. These four individuals are integral to implementing the Company's business plan. If the Company loses the services of any of these executive officers, the Company's business, financial condition, results of operations, cash flows and stock price may be materially and adversely affected. Furthermore, attracting suitable replacements may be difficult and may require significant management time and resources. The Company also relies to a significant degree on the abilities and continued service of our deposit generating, lending, administrative, operational, accounting and financial reporting, compliance, marketing and technical personnel. Competition for qualified employees in the banking industry is intense and there are a limited number of qualified persons with knowledge of, and experience in, the California independent banking industry. The process of recruiting personnel with the combination of skills and attributes required to carry out the Company's strategies is often lengthy. If the Company fails to attract and retain the necessary deposit generating, lending, administrative, operational, accounting and financial reporting, marketing and technical personnel, the Company's business, financial condition, results of operations, cash flows and stock price may be materially and adversely affected. If the Company's underwriting practices are not effective, the Company may suffer losses in its loan portfolio and its results of operations may be affected. The Company seeks to mitigate the risks inherent in its loan portfolio by adhering to specific underwriting practices. Depending on the type of loan, these practices include analysis of a borrower's prior credit history, financial statements, tax returns and cash flow projections, valuation of collateral based on reports of independent appraisers and verification of liquid assets. If the Company's underwriting criteria prove to be ineffective, the Company may incur losses in its loan portfolio, which could have a material and adverse effect on our business, financial condition, results of operations, cash flows and stock price. A significant source of risk arises from the possibility that losses could be sustained because borrowers, guarantors and related parties fail to perform in accordance with the terms of their loans. The underwriting and credit monitoring policies and procedures that the Company has adopted to address this risk may not prevent unexpected losses that could have a material and adverse effect on the Company's business, financial condition, results of operations, cash flows and stock price. Unexpected losses may arise for a wide variety of reasons, many of which are beyond the Company's ability to predict, influence or control. Some of these reasons could include a renewed economic downturn in the State of California or the United States, a renewed decline in the state or national real estate market, wars and acts of terrorism, and natural disasters. If the Company's allowance for loan losses is inadequate to cover actual losses, the Company's financial results would be affected. Like all financial institutions, the Company maintains an allowance for loan losses to provide for probable incurred losses. The Company's allowance for loan losses may not be adequate to cover actual loan losses, and future provisions for loan losses could materially and adversely affect the Company's business, financial condition, results of operations, cash flows and stock price. The Company's allowance for loan losses reflects the Company's best estimate of the losses incurred in the existing loan portfolio at the relevant balance sheet date and is based on management's evaluation of the collectability of the loan portfolio, which evaluation is based on historical loss experience, the loss experience of other financial institutions, and other significant factors. The determination of an appropriate level of loan loss allowance is an inherently difficult estimation process and is based on numerous assumptions. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond the Company's control, and these losses may exceed current estimates. While the Company believes that its allowance for loan Table of Contents losses is adequate to cover probable incurred losses, the Company cannot assure that it will not increase the allowance for loan losses further or that the allowance for loan losses will be adequate to cover probable incurred losses in any event. Future provisions for loan losses or losses in excess of the allowance for loan losses could materially and adversely affect the Company's business, financial condition, results of operations, cash flows and stock price. Bank regulators may require the Company to increase its allowance for loan losses, which could have a negative effect on the Company's financial condition and results of operations. Bank regulators, as an integral part of their respective supervisory functions, periodically review the Company's allowance for loan losses. The bank regulators may require the Company to increase its allowance for loan losses through additional provisioning or to recognize further loan charge-offs based upon their judgments, which may be different from the Company's. Any increase in the allowance for loan losses or further loan charge-offs required by bank regulators could have a material and adverse effect on the Company's business, financial condition, results of operations, cash flows and stock price. The Company's lending limit may adversely affect the Company's competitiveness. The Company's regulatory lending limit as of June 30, 2015 to any one customer or related group of customers was approximately $10.2 million. The Company's lending limit is substantially smaller than those of most financial institutions with which it competes and it may affect the Company's ability to attract or maintain customers or to compete with other financial institutions. Moreover, to the extent that the Company incurs losses and does not obtain additional capital, the Company's lending limit, which depends upon the amount of its capital, will decrease, which could have a material and adverse effect on the Company's business, financial condition, results of operations, cash flows and stock price. We may enter into new lines of business or offer new products and services which expose us to additional risk or which are not successful. We may enter into new lines of business or offer new products or services as new opportunities arise or as our business strategy changes. New lines of business or new products or services may involve significant business, reputational or regulatory risk, including increased regulatory scrutiny. The success of these efforts depends on many factors, including the competitive landscape, market adoption and successful implementation. We may experience significant losses to the extent that we invest significant time and resources to a new line of business, product or service and it is not successful. There can be no assurance that we can successfully manage these risks and failure to do so could have a material adverse effect on our financial condition or results of operations. Failure to successfully execute our strategic plan may adversely affect our performance. Our financial performance and profitability depend on our ability to execute our corporate strategies. Our near-term business strategy includes pursuing organic growth within our geographic footprint within the markets we currently serve. We cannot provide any assurance that we will continue to be able to maintain our rate of growth at acceptable risk levels and upon acceptable terms, while managing the costs and implementation risks associated with our growth strategy. We may be unable to continue to increase our volume of loans and deposits or to introduce new products and services at acceptable risk levels for a variety of reasons, including an inability to maintain capital and liquidity sufficient to support continued growth. If we are successful in continuing our growth, we cannot assure you that further growth would offer the same levels of potential profitability, or that it would be successful in controlling costs and maintaining asset quality. Other factors that may adversely affect our ability to attain our long-term financial performance goals include an inability to control non-interest expense, including, but not limited to, rising employee compensation, regulatory compliance and healthcare costs, limitations imposed on us through regulatory actions, and our inability to increase Table of Contents
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" in each case included elsewhere in this prospectus. Unless otherwise stated all references to "us," "our," "Amarantus," "we," the "Company" and similar designations refer to, Amarantus Bioscience Holdings , Inc., a Nevada corporation. Overview We are a California based biopharmaceutical company founded in January 2008. We own or have exclusive licenses to various product candidates in the biopharmaceutical and diagnostic areas of the healthcare industry. We are developing our diagnostic product candidates in the field of neurology, and our therapeutic product candidates in the areas of neurology, psychiatry, ophthalmology and regenerative medicine. Our business model is to develop our product candidates through various de-risking milestones that we believe will be accretive to shareholder value, and will position them to be strategically partnered with pharmaceutical companies, diagnostic companies and/or other stakeholders in order to more efficiently achieve regulatory approval and commercialization. We have three operating divisions: the diagnostics division; the therapeutics division; and the other drug discovery division. Diagnostics Division Within our diagnostics division, we are developing the following product candidates: LymPro Test The Lymphocyte Proliferation Test ("LymPro Test ", or "LymPro") is a diagnostic blood test for Alzheimer s disease originally developed by the University of Leipzig in Germany. The test works by evaluating the cell surface marker CD69 on peripheral blood lymphocytes following a mitogenic stimulation. The underlying scientific basis for LymPro is that Alzheimer s patients have a dysfunctional cellular machinery division process that inappropriately allows mature neurons in the brain to enter the mitotic process (cell division /cell cycle). When this happens the neurons start the cell division process, but cannot complete the process. As a result, a number of cytokines and other genes are up-regulated, ultimately leading to cell death by apoptosis. This inappropriate cell division activation process is also present in the lymphocytes of Alzheimer s patients, as lymphocytes share similar cellular division machinery with brain neurons. We measure the integrity of this cellular machinery division process by measuring CD69 up-regulation in response to the mitogenic stimulation. If CD 69 is up-regulated it means that the cellular machinery division process is correct and Alzheimer s is not present. If CD69 is not up-regulated, it means there is a dysfunctional cellular machinery division process, and Alzheimer s is more likely. Data has been published in peer-reviewed publications on LymPro with 160 patients, demonstrating 92% co-positivity and 91% co-negativity with an overall 95% accuracy rating for LymPro. In 2014, we completed a 'Fit-for-Purpose' assay validation for LymPro at Icon Central Laboratories in Farmingdale, NY, enabling LymPro to be offered to the pharmaceutical industry for diagnosis of patients entering clinical trials for Alzheimer s disease, as a means of mitigating the risk of selecting the wrong patients for inclusion in such clinical studies. Biomarker services using LymPro Test biomarker data are now available to the pharmaceutical industry for Investigational Use Only (IUO), in such pharmaceutical therapeutic clinical development programs. MSPrecise In January 2015, we acquired MSPrecise , which is a proprietary next-generation DNA sequencing (NGS) assay for the identification of patients with relapsing-remitting multiple sclerosis (RRMS) at first clinical presentation. MSPrecise utilizes next-generation sequencing to measure DNA mutations found in rearranged immunoglobulin genes in immune cells initially isolated from cerebrospinal fluid. If successful, MSPrecis should augment the current standard of care for the diagnosis of MS, by providing a more accurate assessment of a patient's immune response to a challenge within the central nervous system. MSPrecise offers a novel method of measuring changes in adaptive human immunity and may also be able to discern individuals whose disease is more progressive and requires more aggressive treatment. Final results from a pivotal clinical validation study demonstrated that MSPrecise met the primary study endpoint in patients suspected of having RRMS. MSPrecise provided a clear improvement in classifying early-stage RRMS patients when compared with the published performance for the current diagnostic standard of care by cerebrospinal fluid (CSF) analysis. In this study, MSPrecise not only performed well as a standalone test but, when combined with the current standard of diagnosis, oligoclonal banding (OCB), it demonstrated that it can substantially reduce the number of both false positives and false negatives as compared to use of OCB alone. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER 15, 2015 Up to 9,212,927 Shares of Common Stock We are registering an aggregate of 9,212,927 shares of common stock, $0.001 par value per share of Amarantus BioScience Holdings, Inc. (referred to herein as "we" ,"us", "our", "Amarantus", "Registrant", or the "Company") for resale by certain entities identified in this prospectus, including an aggregate of 6,076,556 shares issuable upon conversion of the Company s 12% Senior Secured Convertible Promissory Note and 2,597,224 shares of common stock issuable upon exercise of warrants issued by the Company. In addition, we are registering 539,147 shares of Common Stock held by one of our shareholders. Please see "Selling stockholders" beginning at page 46. The selling stockholders may offer to sell the shares included in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices, and will pay all brokerage commissions and discounts attributable to the sale of such shares. The selling stockholders will receive all of the net proceeds from the offering of their shares, except we may receive the exercise price of any shares we issue to the selling stockholders who hold the warrants included in this prospectus. The shares may be sold by the selling stockholders to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional information regarding the methods of sale you should refer to the section entitled "Plan of Distribution" in this Prospectus. Our common stock is currently quoted on the OTCQX under the symbol "AMBS". On October 14, 2015, the last reported sale price of our common stock on the OTCQX was $1.19. Our business and an investment in our securities involve a high degree of risk. See "Risk Factors" beginning on page 8 of this prospectus for a discussion of information that you should consider before investing in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is October , 2015 Additional Diagnostic Biomarkers In January 2015, we entered into a one-year, option agreement with Georgetown University for an exclusive license of patent rights related to certain blood based biomarkers for memory loss that Georgetown University and University of Rochester jointly developed and own (the "Georgetown Biomarkers"). In the event that we exercise this option, conditions and milestones will be defined; such as, providing Georgetown with development and commercialization plans for the biomarkers and recruiting a senior executive to lead our diagnostics division, as well as other requirements defined in the option agreement. The diagnostic technologies subject to this option agreement are based on metabolic, genetic and exosomal biomarkers. We believe these may hold additional potential for identifying distinguishing factors in dementia and Alzheimer's disease that will be complementary to our LymPro Test diagnostic for Alzheimer s disease. With the potential addition of the Georgetown Biomarkers to our Alzheimer's diagnostics portfolio, we are positioning ourselves to provide all three modalities (cell cycle dysregulation, lipidomics and exosomes) for diagnosis of Alzheimer s disease. In May 2013, we acquired the intellectual property rights to two diagnostic blood test platforms known as NuroPro and BC-SeraPro from the bankruptcy estate of Power3 Medical Products. NuroPro is a neurodegenerative disease diagnostic platform with a lead application in Parkinson s disease. BC-SeraPro is an oncology diagnostic platform with a lead application in breast cancer. Further development of our NuroPro and BC-SeraPro diagnostic platforms are on hold, as we apply our resources to the continuing development of our LymPro Test and MSPrecise diagnostics, as well as our planned development of the Georgetown Biomarkers. Therapeutics Division Within the therapeutics division, we are developing the following product candidates: Eltoprazine Eltoprazine is a small molecule 5HT1a/1b partial agonist in clinical development for the treatment of Parkinson's disease levodopa-induced dyskinesia (PD LID) and Adult Attention Deficit Hyperactivity Disorder ("Adult ADHD"). Eltoprazine has been evaluated in over 600 human subjects to date, with a very strong and well-established safety profile. Eltoprazine was originally developed by Solvay Pharmaceuticals for the treatment of aggression. Solvay out-licensed the Eltoprazine program to PsychoGenics. PsychoGenics licensed Eltoprazine to Amarantus following successful Phase 2a studies in both PD-LID and Adult ADHD, in which both primary and secondary endpoints were met. In September 2014, we submitted a request to the FDA for a review and written feedback of our Phase 2b program clinical trial design for Eltoprazine in PD LID. We have received feedback from the FDA on our trial design, and are in the process of preparing a full IND submission for this important therapeutic indication. Following initiation of our Phase 2b program clinical study of Eltoprazine in PD LID, we will submit a request to the FDA regarding further clinical development of Eltoprazine in Adult ADHD. In March 2015, the company received notification of approval from the FDA that IND 124224 was approved and allows the company to commence this clinical trial. MANF MANF (mesencephalic-astrocyte-derived neurotrophic factor) is believed to have broad potential because it is a naturally-occurring protein produced by the body for the purpose of reducing and preventing apoptosis (cell death) in response to injury or disease, via the unfolded protein response. MANF was discovered by the Company s Chief Scientific Officer, Dr. John Commissiong. By manufacturing MANF and administering it to the body, Amarantus is seeking to use a regenerative medicine approach to assist the body with higher quantities of MANF when needed. Amarantus is the front-runner and primary holder of intellectual property around MANF, and is focusing on the development of MANF-based protein therapeutics. MANF has demonstrated efficacy as a disease-modifying treatment in various animal models, including retinitis pigmentosa, Parkinson s disease, cardiac ischemia and stroke. We made a strategic decision to focus the development of MANF in orphan indications. The FDA Orphan Drug Designation program provides a special status to drugs and biologics intended to treat, diagnose or prevent so-called orphan diseases and disorders that affect fewer than 200,000 people in the U.S. This designation provides for a seven-year marketing exclusivity period against competition, as well as certain incentives, including federal grants, tax credits and a waiver of PDUFA filing fees. In December 2014, the FDA granted MANF orphan drug designation for the treatment of retinitis pigmentosa (RP). RP refers to a group of inherited diseases causing retinal degeneration often leading to blindness. Pre-clinical data showed that MANF provided protective functional effects in an animal model of RP. Moreover, toxicology studies have demonstrated that MANF was well tolerated following a single intravitreal administration of a therapeutically relevant dose. Our goal is to continue to build value in our MANF program by seeking other orphan drug designations for MANF, and by continuing work to advance this promising product candidate toward clinical testing in multiple therapeutic areas. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus or the documents incorporated by reference in this prospectus and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus and the documents incorporated by reference in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms "we," "our," "us" and "ServiceMaster," as used in this prospectus, refer to ServiceMaster Global Holdings, Inc. and its consolidated subsidiaries. The term "SvM" refers to The ServiceMaster Company, LLC, our indirect wholly-owned subsidiary. All operating and statistical data contained in this prospectus and the documents incorporated by reference in this prospectus give effect to the TruGreen Spin-off (as defined below), unless the context otherwise requires. Our Company ServiceMaster is a leading provider of essential residential and commercial services, operating through an extensive service network of more than 8,000 company-owned locations and franchise and license agreements. Our mission is to simplify and improve the quality of our customers' lives by delivering services that help them protect and maintain their homes or businesses, typically their most highly valued assets. We have leading market positions across the majority of the markets we serve, as measured by customer-level revenue. Our portfolio of well-recognized brands includes Terminix (termite and pest control), American Home Shield (home warranties), ServiceMaster Restore (disaster restoration), ServiceMaster Clean (janitorial), Merry Maids (residential cleaning), Furniture Medic (furniture repair) and AmeriSpec (home inspections). We serve our residential and commercial customers through an employee base of approximately 13,000 company associates. For the year ended December 31, 2014, we had revenue, Adjusted EBITDA and income from continuing operations of $2,457 million, $557 million and $43 million, respectively. For the three months ended March 31, 2015, we had revenue, Adjusted EBITDA and income from continuing operations of $571 million, $133 million and $28 million, respectively. Terminix, our largest segment, represented approximately 56% and 59% of our revenue in 2014 and the three months ended March 31, 2015, respectively. For a reconciliation of Adjusted EBITDA to net income, see " Summary Historical Consolidated Financial and Other Operating Data." We believe that our customers understand the financial and reputational risks associated with inadequate maintenance of their homes or businesses and that our high-quality, professional services are low-cost expenditures when compared to the alternative of failing to perform essential maintenance. We strive to be the service provider of choice and believe our customers have recognized our value proposition, as evidenced by our long-standing customer relationships and the high rate at which our customers renew their contracts from year to year. As of December 31, 2014 and March 31, 2015, in our Terminix segment, our customer retention rate for termite and other services was 85% and our pest control customer retention rate was 79%, and in our American Home Shield segment, our customer retention rate was 75%. We have significant size and scale, which we believe give us a number of competitive advantages. Terminix is the largest termite and pest control business in the United States, as measured by customer-level revenue, and serves approximately 2.7 million customers across 47 states and the District of Columbia through approximately 285 company-owned locations and approximately 25 franchise agreements. Additionally, we estimate American Home Shield to be approximately four to five times larger than its nearest competitors, as measured by revenue. American Home Shield serves approximately 1.5 million residential customers across all 50 states and the District of Columbia through a network of approximately 11,000 pre-screened independent home service contractor firms. Our Franchise Services Group serves both residential and commercial customers across all 50 states and the District of Columbia through approximately 4,300 franchise agreements and approximately Table of Contents Develop and Expand New Service Offerings. We intend to continue to leverage our existing sales channels and local coverage to deliver additional value-added services to our customers. Our product development teams draw upon the experience of our technicians in the field, combined with in-house scientific expertise, to create innovative customer solutions for both our existing customer base and identified service/category adjacencies. We have a strong history of new product introductions, such as Terminix's crawlspace encapsulation, mosquito control and wildlife exclusion services, that we believe will appeal to new potential customers as well as our existing customer base. As of March 31, 2015, mosquito, wildlife exclusion and crawl space encapsulation are being offered in substantially all U.S. geographic markets where we believe substantial market opportunity exists. We are now focusing our efforts on increasing our market share in these product lines. Expand Our Geographic Markets. Through detailed assessments of local economic conditions and demographics, we have identified target markets for expansion, both in existing markets, where we have capacity to increase our local market position, and in new markets, where we see opportunities. In addition to geographic expansion opportunities within the United States, we intend to grow our international presence through strategic franchise expansions and additional licensing agreements. Grow Our Commercial Business. Our revenue from commercial customers comprised approximately 13% of our 2014 revenue. We believe we are well positioned to leverage our national coverage, brand strength and broad service offerings to target large multi-regional accounts. We believe these capabilities provide us with a meaningful competitive advantage, especially compared to smaller local and regional competitors. We recognize that many of these large accounts seek to outsource or reduce the number of vendors used for certain services, and, accordingly, we have reenergized our marketing approach in this channel. At Terminix, for example, we have hired a dedicated sales team to focus on the development of commercial sales. Our commercial expansion strategy targets industries with a demonstrated need for our services, including healthcare, manufacturing, warehouses, hotels and commercial real estate. Enhance Our Profitability. We have and will continue to invest in initiatives designed to improve our margins and drive profitable growth. We have been able to increase productivity across our segments through actions such as continuous process improvement, targeted systems investments, sales force initiatives and technician mobility tools. We are also focusing on strategically leveraging the $1.4 billion that we have spent annually with our vendors to capitalize on purchasing power and achieve more favorable pricing and terms. In addition, we have rolled out tools and processes to centralize and systematize pricing decisions. These tools and processes enable us to optimize pricing at the geographic market and product level while creating a flexible and scalable pricing architecture that can grow with the business. We intend to leverage these investments as well as identify further opportunities to enhance profitability across our businesses. Pursue Selective Acquisitions. Since 2008, we have completed over 200 acquisitions. We anticipate that the highly fragmented nature of our markets will continue to create opportunities for further consolidation. As we have in the past, we will continue to take advantage of tuck-in as well as strategic acquisition opportunities, particularly in underserved markets where we can enhance and expand our service capabilities. We seek to use acquisitions to cost-effectively grow our customer count and enter high-growth geographies. We may also pursue acquisitions as vehicles for strategic international expansion. TruGreen Spin-Off On January 14, 2014, we completed a separation transaction, or the "TruGreen Spin-off," resulting in the spin-off of the assets and certain liabilities of the business that comprises the lawn, tree and shrub care services previously conducted by ServiceMaster primarily under the TruGreen brand name, or collectively, the "TruGreen Business," through a tax-free, pro rata dividend to our stockholders. As a ServiceMaster Global Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 8741 (Primary Standard Industrial Classification Code Number) 20-8738320 (I.R.S. Employer Identification Number) 860 Ridge Lake Boulevard Memphis, Tennessee 38120 (901) 597-1400 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Note: Percentages exclude Corporate. James T. Lucke, Esq. Senior Vice President and General Counsel ServiceMaster Global Holdings, Inc. 860 Ridge Lake Boulevard Memphis, Tennessee 38120 (901) 597-1400 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Terminix Segment Overview Terminix is the leading provider of termite and pest control services in the United States, with a market share of approximately 21% for 2014, as measured by customer-level revenue. In addition, Terminix is the most recognized brand in the industry with approximately 1.5x the unaided brand awareness of our next-largest competitor, based on a study by Decision Analyst, Inc. periodically commissioned by us as part of our ongoing marketing efforts. Terminix specializes in protection against termite damage, rodents, insects and other pests, including cockroaches, spiders, wood-destroying ants, ticks, fleas and bed bugs. Our services include termite remediation, annual termite inspection and prevention treatments with damage claim guarantees, periodic pest control services and insulation services. Our recent new product introductions include mosquito control, crawlspace encapsulation and wildlife exclusion. For the year ended December 31, 2014 and the three months ended March 31, 2015, 55% of our Terminix revenue was generated from pest control services, which includes mosquito control, and 40% and 42%, respectively, was generated from termite and other services, which includes crawlspace encapsulation, wildlife exclusion and insulation services, with the remaining 5% and 3%, respectively, from distribution of pest control products. A significant portion of our Terminix revenue base is recurring, with 72% of 2014 revenue derived from services delivered through annual contracts. Additionally, as of December 31, 2014 and March 31, 2015, our customer retention rate for termite and other services was 85%, and the pest control retention rate was 79%. We believe that the strength of the Terminix brand, along with our history of providing a high level of consistent service, allows us to enjoy a competitive advantage in attracting, retaining and growing our customer base. We believe our investments in systems and processes, such as routing and scheduling optimization, robust reporting capabilities and mobile customer management solutions, enable us to deliver a higher level of customer service when compared to smaller regional and local competitors. Our focus on attracting and retaining customers begins with our associates in the field, who interact with our customers every day. Our associates bring a strong level of passion and commitment to the Terminix brand, as evidenced by the 11-year and 7-year average tenure of our branch managers and technicians, respectively. Our field organization is supported by dedicated customer service and call center personnel. Our culture of continuous improvement drives an intense focus on the quality of the services delivered, which we believe produces high levels of customer satisfaction and, ultimately, customer retention and referrals. The Terminix national branch structure includes approximately 285 company-owned locations and approximately 25 franchise agreements, which serve approximately 2.7 million customers in 47 states and the District of Columbia. In 2014 and the three months ended March 31, 2015, substantially all of Terminix revenue was generated in the United States, with approximately 2% derived from international markets through subsidiaries, a joint venture and licensing arrangements. Franchise fees from Terminix franchisees represented less than 1% of Terminix revenue in 2014 and the three months ended March 31, 2015. For the year ended December 31, 2014 and the three months ended March 31, 2015, Terminix recorded revenue of $1,370 million and $336 million, respectively, and Adjusted EBITDA of $309 million and $89 million, respectively. Terminix Competitive Strengths #1 market position and #1 recognized brand in U.S. termite and pest control services Track record of high customer retention rates Passionate and committed associates focused on delivering superior customer service Expansive scale and deep market presence across a national footprint Effective multi-channel customer acquisition strategy with copies to: Peter J. Loughran, Esq. Debevoise & Plimpton LLP 919 Third Avenue New York, NY 10022 (212) 909-6000 John C. Ericson, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 (212) 455-2000 Table of Contents History of innovation leadership and introducing new products and services American Home Shield Segment Overview American Home Shield founded the home warranty industry in 1971 and remains the leading provider of home warranty plans for household systems and appliances in the United States, with approximately 42% market share, as measured by revenue. We estimate American Home Shield to be approximately four to five times larger than its nearest competitors, as measured by revenue. We believe that, as the market leader, American Home Shield can drive increasing use of home warranties given the low industry household penetration of approximately 3-4%. American Home Shield provides home warranty plans that cover the repair or replacement of up to 21 major household systems and appliances, including electrical, plumbing, central heating and air conditioning (HVAC) systems, water heaters, refrigerators, dishwashers and ovens/cook tops. Our warranty plans are generally structured as one-year contracts with annual renewal options and, as a result, a significant portion of our revenue base in this segment is recurring. As of December 31, 2014 and March 31, 2015, our retention rate was 75%. For the year ended December 31, 2014 and the three months ended March 31, 2015, 66% of our American Home Shield revenue was derived from existing contract renewals, while 20% and 14% were derived from sales made in conjunction with existing home resale transactions and direct-to-consumer sales, respectively. We believe that we have one of the largest contractor networks in the United States, comprised of approximately 11,000 independent home service contractor firms. We carefully screen our contractors and closely monitor their performance based on a number of criteria, including through feedback from customer satisfaction surveys. On an annual basis, our contractors respond to nearly three million service requests from approximately 1.5 million customers across all 50 states and the District of Columbia. Additionally, American Home Shield operates and takes service calls 24 hours a day, seven days a week. Furthermore, as a result of our large contractor network and sophisticated IT systems, approximately 90% of the time we successfully assign contractors to a job within 15 minutes or less. For the year ended December 31, 2014 and the three months ended March 31, 2015, American Home Shield recorded revenue of $828 million and $175 million, respectively, and Adjusted EBITDA of $179 million and $29 million, respectively. American Home Shield Competitive Strengths #1 market position in the industry with 42% market share, estimated to be four to five times the size of the next largest competitors Track record of high customer retention rates Large and pre-qualified national contractor network Strong partnerships with leading national residential real estate firms Core competency around direct-to-consumer marketing and lead generation Franchise Services Group Segment Overview ServiceMaster's Franchise Services Group consists of the ServiceMaster Restore (disaster restoration), ServiceMaster Clean (janitorial), Merry Maids (residential cleaning), Furniture Medic (furniture repair) and AmeriSpec (home inspection) businesses. Our businesses in this segment operate principally through franchisees. In 2014, we began converting company-owned Merry Maids locations to franchises. Approximately half of our revenue in this segment consists of ongoing monthly royalty fees based upon a percentage of our franchisees' customer-level revenue. We believe that each business holds a leading market position in its respective category and that our scale and national presence create competitive advantages for us in attracting and retaining franchisees. We are able to invest in best-in-class systems, training and process development, provide multiple levels of marketing support and direct new business leads to our franchisees through our relationships with major insurance carriers Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price Per Share(1)(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee Common stock, $0.01 par value per share 23,000,000 $36.04 $828,920,000 $96,321(3) (1)Includes shares/offering price of shares that may be sold upon exercise of the underwriters' option to purchase additional shares. (2)This amount represents the proposed maximum aggregate offering price of the securities registered hereunder. These figures are estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933. The price shown is the average of the high and low sales price for the registrant's common stock on March 18, 2015 as reported on the New York Stock Exchange. (3)Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents and national account customers. The depth of our franchisee support is evidenced by the long average tenure of our franchisees, many of whom have partnered with ServiceMaster for over 25 years. For the year ended December 31, 2014 and the three months ended March 31, 2015, the Franchise Services Group recorded revenue of $253 million and $59 million, respectively, and Adjusted EBITDA of $78 million and $19 million, respectively. Franchise Services Group Competitive Strengths Strong and trusted brands with leading market positions in their respective categories Attractive value proposition to franchisees Exceptional focus on customer service evidenced by strong net promoter scores, or "NPS" Infrastructure and scale supporting our ability to service national accounts National network and 24/7/365 service availability supports mission-critical nature of the ServiceMaster Restore business Long-standing and strong relationships with the majority of the top 20 insurance carriers Our Market Opportunity Overview of Termite and Pest Control Industry The outsourced market for residential and commercial termite and pest control services in the United States was approximately $7 billion in 2013, according to Specialty Products Consultants, LLC. We estimate that there are approximately 20,000 U.S. termite and pest control companies, nearly all of which have fewer than 100 employees. Termites are responsible for an estimated $5 billion in home damage in the United States annually, according to the National Pest Management Association's 2012 survey. The termite control industry provides treatment and inspection services to residential and commercial property owners for the remediation and prevention of termite infestations. We believe homeowners value quality and reliability over price in choosing professional termite control services, as the cost of most professional treatments is well below the potential cost of inaction or ineffective treatment. As a result, we believe the demand for termite remediation services is relatively insulated from changes in consumer spending. In addition to remediation services, the termite control industry offers periodic termite inspections and preventative treatments to residential and commercial property owners in areas with high termite activity, typically through annual contracts. These annual contracts may carry guarantees that protect the property owner against the cost of structural damage caused by a termite infestation. Termites can cause significant damage to a structure before becoming visible to the untrained eye, highlighting the value proposition of professional preventative termite services. As a result, the termite control industry experiences high renewal rates on annual preventative inspection and treatment contracts, and revenues from such contracts are generally stable and recurring. Pest infestations may damage a home or business while also carrying the risk of the spread of diseases. Moreover, for many commercial facilities, pest control is essential to regular operations and regulatory compliance (e.g., hotels, restaurants and healthcare facilities). As a result of these dynamics, the pest control industry experiences high rates of renewal for its pest inspection and treatment contracts. Pest control services are often delivered on a contracted basis through regularly scheduled service visits, which include an inspection of premises and application of pest control materials. According to the National Pest Management Association's 2014 survey, approximately 35% of U.S. households currently use a professional pest exterminator. Both termite and pest activity are affected by weather. Termite activity peaks during the springtime "swarm," the timing and intensity of which varies based on weather. Similarly, pest activity tends to accelerate in the spring months when warmer temperatures arrive in many U.S. regions. However, the high proportion of termite and pest control services which are contracted and recurring, as well as the Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and neither we nor the selling stockholders are soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 27, 2015 20,000,000 Shares ServiceMaster Global Holdings, Inc. Common Stock All of the 20,000,000 shares of ServiceMaster Global Holdings, Inc. common stock are being sold by the selling stockholders identified in this prospectus. ServiceMaster Global Holdings, Inc. will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. The common stock of ServiceMaster Global Holdings, Inc. is listed on the New York Stock Exchange under the symbol SERV. The last reported sale price of the common stock on May 26, 2015 was $35.48 per share. Investing in our common stock involves risks. See "Risk Factors" beginning on page 22 of this prospectus. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to the selling stockholders $ $ (1)We have agreed to reimburse the underwriters for certain FINRA-related expenses. The underwriters have agreed to reimburse us in an amount of $ for certain expenses of the offering. See "Underwriting (Conflicts of Interest)." To the extent the underwriters sell more than 20,000,000 shares of common stock, the underwriters have the option to purchase up to an additional 3,000,000 shares of common stock from the selling stockholders at the offering price less the underwriting discount. ServiceMaster Global Holdings, Inc. will not receive any of the proceeds from the shares of common stock sold by the selling stockholders pursuant to any exercise of the underwriters' option to purchase additional shares. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on or about , 2015. Joint Book-Running Managers J.P. Morgan Credit Suisse Goldman, Sachs & Co. Morgan Stanley Table of Contents high renewal rates for those services, limit the effect of weather anomalies on the termite and pest control industry in any given year. Overview of Home Warranty Industry We estimate that the U.S. home warranty market had total revenue of approximately $2 billion in 2014. The home warranty market is characterized by low household penetration, which we estimate to be approximately 3-4%. The home warranty industry offers plans that protect a homeowner against costly repairs or replacement of household systems and appliances. Typically having a one-year term, coverage varies based on a menu of plan options. The most commonly covered items include electrical, plumbing, central heating and air conditioning (HVAC) systems, water heaters, refrigerators, dishwashers and ovens/cook tops. The home warranty industry is characterized by a high level of customer interaction and service requirements. This combination of a high-touch/high-service business model and the peace of mind it delivers to the customer has led to high renewal rates in the home warranty industry. As consumer demand shifts towards more outsourced services, we believe that there is an opportunity for American Home Shield, a reliable, scaled service provider with a national, pre-screened contractor network, to increase market share and household penetration. Additionally, we believe that increasingly complex household systems and appliances may further highlight the value proposition of professional repair services and, accordingly, the coverage offered by a home warranty. One of the drivers of sales of new home warranties is the number of existing homes sold in the United States, since a home warranty is often recommended by a real estate sales professional or offered by the seller of a home in conjunction with a real estate resale transaction. According to the National Association of Realtors, existing home resales, as measured in units, increased by approximately 9% in 2013. Approximately 20% of the revenue of American Home Shield for the year ended December 31, 2014 and the three months ended March 31, 2015 was tied directly to existing home resale transactions. Overview of Key Franchise Services Group Industries Disaster Restoration (ServiceMaster Restore). We estimate that the U.S. disaster restoration market is approximately $39 billion, approximately two-thirds of which is related to residential customers and the remainder related to commercial customers. Most emergency response work results from emergency situations for residential and commercial customers, such as fires and flooding. Extreme weather events and natural disasters also provide demand for emergency response work. Critical factors in the selection of an emergency response firm are the firm's reputation, relationships with insurers, available resources, proper insurance and credentials, quality of service, timeliness and responsiveness. This market is highly fragmented, with two large players, including ServiceMaster Restore, and we believe there are opportunities for growth for scaled service providers. Janitorial (ServiceMaster Clean). We estimate that the U.S. janitorial services market was approximately $50 billion in 2013. The market is highly fragmented with more than 800,000 companies competing in the janitorial space, a significant majority of which have five or fewer employees. Residential Cleaning (Merry Maids). We estimate that the U.S. residential professional cleaning services market was approximately $3.7 billion in 2013. Competition in this market comes mainly from local, independently owned firms, and from a few national companies. Our Competitive Strengths #1 Market Positions in Large, Fragmented and Growing Markets. We are the leading provider of essential residential and commercial services in the majority of markets in which we operate. Our markets are generally large, growing and highly fragmented, and we believe we have significant advantages over smaller local and regional competitors. We have spent decades developing a reputation built on reliability and superior quality and service. As a result, we enjoy high unaided brand awareness BofA Merrill Lynch Jefferies Natixis RBC Capital Markets Baird Piper Jaffray Ramirez & Co., Inc. Prospectus dated , 2015 Table of Contents and a reputation for high-quality customer service, which serve as key drivers of our customer acquisition efforts. Our nationwide presence also allows our brands to effectively serve both local residential customers and large national commercial accounts and to capitalize on lead generation sources that include large real estate agencies, financial institutions and insurance carriers. We believe our significant size and scale also provide a competitive advantage in our purchasing power, route density, and marketing and operating efficiencies compared to smaller local and regional competitors. Our scale also facilitates the standardization of processes, shared learning and talent development across our entire organization. Diverse Revenue Streams Across Customers and Geographies. ServiceMaster is diversified in terms of customers and geographies. We operate in all 50 states and the District of Columbia. Our Terminix business, which accounted for 56% and 59% of our revenue in 2014 and the three months ended March 31, 2015, respectively, served approximately 2.7 million customers. American Home Shield, which accounted for 34% and 31% of our revenue in 2014 and the three months ended March 31, 2015, respectively, responded to nearly three million service requests from approximately 1.5 million customers. Our diverse customer base and geographies help to mitigate the effect of adverse market conditions and other risks in any particular geography or customer segment we serve. We therefore believe that the size and scale of our company provide us with added protection from risk relative to our smaller local and regional competitors. High-Value Service Offerings Resulting in High Retention and Recurring Revenues. We believe our high annual customer retention demonstrates the highly valued nature of the services we offer and the high level of execution and customer service that we provide. As of December 31, 2014 and March 31, 2015, in our Terminix segment, our customer retention rate for termite and other services was 85% and our pest control customer retention rate was 79%, and in our American Home Shield segment, our customer retention rate was 75%. Many of our technicians have built long-standing, personal relationships with their customers. We believe these personal bonds, often forged over decades, help to drive customer loyalty and retention. As a result of our strong retention rates and long-standing customer relationships, we enjoy significant visibility and stability in our business, and these factors limit the effect of adverse economic cycles on our revenue base. We experienced these advantages during the most recent downturn, when we were able to grow revenue in each year from 2008 to 2014. Multi-Channel Marketing Approach Supported by Sophisticated Customer Analytic Modeling Capabilities. Our multi-channel marketing approach focuses on building the value of our brands and generating revenue by understanding the decisions customers make at each stage in the purchase of residential and commercial services. The effectiveness of our marketing efforts is demonstrated by an increase in lead generation and online sales, as well as an improvement in close rates over the last few years. For example, in our direct-to-consumer channel at American Home Shield, new home warranty lead generation, marketing yield and close rates have benefited from increased spending on marketing as well as improved digital marketing. We have also been deploying increasingly sophisticated customer analytics models that allow us to more effectively segment our prospective customers and tailor campaigns towards them. In addition, we are seeing success with newer ways of reaching and marketing to consumers via content marketing, promotions and social media channels. Operational and Customer Service Excellence Driven by Superior People Development. We are constantly focused on improving customer service. The customer experience is at the foundation of our business model, and we believe that each employee is an extension of ServiceMaster's reputation. We employ rigorous hiring and training practices and continuously analyze our operating metrics to identify potential improvements in service and productivity. Technicians in our Terminix branches exhibit low levels of turnover, with an average tenure of seven years, creating continuity in customer relationships and ensuring the development of best practices based on on-the-ground experience. We also provide our field personnel with access to sophisticated data management and mobility tools which enable them to drive efficiencies, improve customer service and ultimately grow our customer base and profitability. Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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+PROSPECTUS SUMMARY AND RISK FACTORS This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results . Although management believes that the assumptions underlying the forward looking statements included in this filing are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this filing will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors" contained in this report. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Except as required by law, we expressly disclaim any obligation to update publicly any forward-looking statements for any reason after the date of this report, to conform these statements to actual results, or to changes in our expectations. You should, however, review the factors and risks we describe in the reports we will file from time to time with the United States Securities and Exchange Commission (the "SEC" or the "Commission") after the date of this statement. AMERICAN HOUSING INCOME TRUST, INC.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should read the entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes included elsewhere in this prospectus. Unless the context suggests otherwise, references in this prospectus to Aduro, Aduro Biotech, we, us and our refer to Aduro Biotech, Inc. ADURO BIOTECH, INC. Overview We are a clinical-stage immuno-oncology company focused on the development of first-in-class technology platforms designed to stimulate robust and durable immune responses against cancer, and our lead product candidate is in a randomized controlled Phase 2b clinical trial in metastatic pancreatic cancer. Immuno-oncology encompasses a class of therapies that leverage the patient s immune system to slow the growth and spread of, or eliminate, tumor cells. We believe a critical distinguishing factor in our approach to immuno-oncology is that our novel therapies initiate powerful innate immune responses and drive targeted, durable adaptive immune responses. The immunotherapy field is rapidly advancing with new immuno-oncology combinations that focus on strengthening therapeutic efficacy in a wide range of cancers. We intend to pursue a broad strategy of combining our technology platforms with conventional and novel immuno-oncology therapies, based on their mechanisms of action, safety profiles and versatility. Our pipeline of immuno-oncology product candidates is derived from two proprietary technology platforms: Live, Attenuated, Double-Deleted, or LADD, Listeria monocytogenes and cyclic dinucleotides, or CDNs. Our lead LADD product candidate, CRS-207, is currently being developed in metastatic pancreatic cancer and unresectable malignant pleural mesothelioma. In a completed randomized controlled Phase 2a clinical trial in metastatic pancreatic cancer patients, CRS-207 demonstrated a statistically significant improvement in overall survival when combined with GVAX Pancreas, a cellular vaccine product candidate. The 93-patient two-arm Phase 2a clinical trial was designed to compare the combination of CRS-207 and GVAX Pancreas versus GVAX Pancreas alone. The trial met the primary efficacy endpoint of overall survival at an interim analysis and was stopped upon recommendation from the Data Monitoring Committee. Based on the data from this study, our lead immuno-oncology regimen of CRS-207 and GVAX Pancreas was granted Breakthrough Therapy designation by the U.S. Food and Drug Administration, or FDA. Breakthrough Therapy designation is intended to expedite the development and review of products that treat serious or life-threatening conditions. We have obtained orphan drug designations from the FDA for CRS-207 and GVAX Pancreas for the treatment of pancreatic cancer and for CRS-207 for the treatment of mesothelioma. Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biologic intended to treat a rare disease or condition. Orphan drug designation entitles a party to certain financial incentives and can provide limited market exclusivity in certain circumstances. We are developing a pipeline of proprietary product candidates, including two product candidates in collaboration with Janssen Biotech, Inc., or Janssen, targeting prostate and lung cancers. In addition, we established a worldwide collaboration with Novartis Pharmaceuticals Corporation, or Novartis, for CDN product candidates in oncology. We have intellectual property protection on both of our technology platforms and each of our product candidates, which we believe we will maintain into the 2030s. Immuno-oncology is an emerging field of cancer therapy that aims to activate the immune system in the tumor microenvironment to create and enhance anti-tumor immune responses, as well as to overcome the immuno-suppressive mechanisms that cancer cells have developed against the immune system. Recent developments in the field of immuno-oncology, including checkpoint inhibitors therapies that have mechanisms focused on unmasking hidden cancer cells have shown the potential to provide dramatic efficacy responses and extended survival, even in cancers where conventional therapies, such as surgery, chemotherapy and radiotherapy, have failed. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject To Completion. Preliminary Prospectus dated April 14, 2015. PROSPECTUS 7,000,000 Shares Common Stock This is an initial public offering of shares of common stock of Aduro Biotech, Inc. We are selling 7,000,000 shares of our common stock in this offering. We expect the public offering price will be $17.00 per share. Currently, no public market exists for the shares. Our common stock has been approved for listing on the NASDAQ Global Select Market under the symbol ADRO. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. Investing in our common stock involves risks that are described in the Risk Factors section beginning on page 12 of this prospectus. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds to us, before expenses $ $ (1) We refer you to Underwriting beginning on page 164 for additional information regarding total underwriting compensation. The underwriters may also exercise their option to purchase up to an additional 1,050,000 shares from us, at the public offering price, less the underwriting discount for 30 days after the date of this prospectus. Johnson & Johnson Innovation-JJDC, Inc., an existing stockholder, has indicated an interest in purchasing up to approximately $30.0 million of shares of our common stock in this offering at the initial public offering price. Certain other of our existing stockholders, including stockholders affiliated with our directors, have indicated an interest in purchasing up to an additional approximately $12.5 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, fewer or no shares in this offering to any of these parties, or any of these parties may determine to purchase more, fewer or no shares in this offering. In addition, Novartis Institutes for BioMedical Research, Inc., an existing stockholder and an affiliate of Novartis Pharmaceuticals Corporation, a collaboration partner, has entered into a stock purchase agreement with us to purchase approximately $25.0 million of shares of our common stock at a price per share equal to the initial public offering price in a separate private placement transaction that would close concurrently with this offering. The sale of such shares will not be registered under the Securities Act of 1933, as amended. The closing of this offering is not conditioned upon the closing of such concurrent private placement. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares will be ready for delivery on or about , 2015. BofA Merrill Lynch Leerink Partners William Blair Canaccord Genuity The date of this prospectus , 2015. Table of Contents Product candidates from our two immuno-oncology technology platforms are engineered to prime and enhance a patient s innate and tumor-specific adaptive immune responses to deliver enhanced efficacy over current therapies. Since our product candidates act by stimulating the patient s own immune system, we believe they have the potential to be safer and more tolerable than existing therapies, such as chemotherapy and radiotherapy. Based on the mechanism of action and safety profile of our technology platforms, we intend to build a deep pipeline of LADD- and CDN-based product candidates that can be readily combinable and synergistic with both conventional and novel therapies, such as checkpoint inhibitors. Our vision is to leverage our scientific expertise and understanding of the body s natural defense systems, including the interplay between the innate and adaptive immune responses, to develop safe and effective therapies for the benefit of patients. Our Proprietary Technology Platforms and Pipeline Live, Attenuated, Double-Deleted Listeria Monocytogenes Our proprietary LADD product candidates have been engineered for safety and optimal efficacy. We seek to optimize tumor-specific immune responses by engineering our LADD product candidates to express encoded tumor-specific antigens and deliver them to antigen-presenting cells. Antigen-presenting cells, which include dendritic cells, lead to efficient priming of a class of immune cells known as T cells. Once primed, these T cells seek out and eliminate the targeted tumor cells. Our LADD product candidates have been engineered for safety in humans through the deletion of two genes critical for virulence of unmodified Listeria: actA and inlB. The deletion of the actA gene prevents the spread of our LADD product candidates from cell to cell, which controls the spread of infection. The deletion of the inlB gene prevents the infection of hepatocytes, or liver cells, which can lead to toxicity. We believe key attributes of our LADD technology platform include: Early Evidence of Efficacy. Our randomized controlled Phase 2a clinical trial in patients with metastatic pancreatic cancer who had received or refused prior therapy demonstrated improved overall survival. Novel Mechanism. Our LADD product candidates are designed to initiate a powerful innate immune response and drive a targeted, durable adaptive immune response. Early Evidence of Safety in Preclinical Studies and Clinical Trials. Through our proprietary deletion of two genes that contribute to Listeria s virulence, we substantially reduce the natural disease-causing properties of Listeria, creating stable product candidates suitable for therapeutic use. Versatility. Individual LADD product candidates can be engineered to target a wide range of cancers by promoting anti-tumor immune responses against antigens associated with specific tumors. Combinability. The mechanisms of action and safety profile of our LADD product candidates may give them the potential for combination with conventional and novel therapies, such as cellular vaccines, chemotherapy, radiotherapy and checkpoint inhibitors, among others. Repeatable Administration. Our LADD product candidates are not neutralized by the patient s immune system and are designed for repeat administration, thus allowing a chronic therapy for a sustained tumor antigen-specific response. Cost-effectiveness. Our LADD product candidates are not personalized for each patient and can be manufactured through a relatively simple and cost-effective fermentation process. Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights certain information contained in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of the information that you may consider important in making your investment decision, we encourage you to read this entire prospectus. Among the other information in this prospectus, you should carefully consider the information set forth under the heading "Risk Factors" and our financial statements and accompanying notes included elsewhere in this prospectus. Unless the context requires otherwise, the words "we," "us," "our," "Company" and "AutoGenomics" refer to AutoGenomics, Inc. Our Company We are a commercial stage molecular diagnostics company offering an innovative and proprietary technology platform to clinical reference laboratories, specialty clinics and hospital laboratories. Our platform consists of a family of multiplexing INFINITI analyzers, an extensive and expanding menu of genetic test panels, and proprietary microarrays, reagent modules and other related consumables. Our INFINITI analyzers, which include the INFINITI, the INFINITI PLUS and the recently introduced INFINITI HIGH THROUGHPUT SYSTEM, or INFINITI HTS, are easy to use and automate a number of the discrete processes of genetic analysis with minimal manual intervention, which reduces our customers' need for multiple, specialized instruments, and offer a variety of throughput capabilities together with a demonstrated high level of accuracy and reproducibility. Our genetic test panels are focused on large and growing markets primarily in the areas of personalized medicine, women's health, infectious diseases and genetic disorders. Genetic tests are performed on our INFINITI analyzers using our proprietary BioFilmChip microarrays, related Intellipac Reagent Management Modules and other related consumables. Our genetic tests provide tools to physicians, clinicians and other health care providers to improve detection, treatment and monitoring of a broad spectrum of diseases and conditions. We currently offer 62 test panels for use on our analyzers and have 16 additional test panels in development. In the area of personalized medicine, we offer test panels in pain management, cardiovascular health assessment, oncology and mental health. These test panels offer customers the ability to identify a patient's genetic information, which can assist in improving drug efficacy, identifying non-responders and ultra-, normal- and poor-metabolizers and reducing adverse patient response. In the area of women's health, we offer test panels in cervical cancer, sexually transmitted diseases, or STDs, and vaginal infections. These test panels identify a wide spectrum of specific organisms simultaneously, which can eliminate the need for laboratories to perform multiple tests. The depth and breadth of our menu of test panels, all of which are designed to run on any of our INFINITI analyzers, allows laboratories to utilize laboratory space, labor and capital investment efficiently and conduct genetic tests in less time, thereby improving laboratory economics. The proprietary design of our platform also allows us to introduce new and enhanced test panels to our menu of genetic tests without modifying our INFINITI analyzers. Based on our own research and customer demand, we intend to continue to increase the number of test panels offered in each of our target market segments, which we believe will further increase the utility of our platform to our customers. For example, we are developing several new test panels to guide the dosing and selection of statin drug therapies, to aid healthcare providers in the treatment of drug addiction and to assess risk and help guide therapy in the treatment of age-related macular degeneration. These test panels are currently in alpha trials and we expect to commercialize these test panels in the second half of 2015. We launched our INFINITI HTS during February 2014 to meet the demand for high test-volume capabilities from our customers, particularly in the areas of personalized medicine and women's health. Our INFINITI HTS is a scalable, automated system comprised of three separate operating modules that provides flexible configuration to maximize workflow efficiency, and has the capacity to process up to 6,912 patient results per day with a single laboratory technician utilizing the same consumables as our other INFINITI analyzers. We believe our INFINITI HTS has the highest processing and throughput capacity of any molecular diagnostics system available in our target markets today. Additionally, for customers who seek a UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________ Amendment No. 2 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____________________ AutoGenomics, Inc. (Exact name of registrant as specified in its charter) ______________________ Delaware 3826 80-0252299 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 2980 Scott Street Vista, California 92081 (760) 477-2248 (Address, including zip code and telephone number, including area code, of registrant s principal executive offices) ______________________ Fareed Kureshy President and Chief Executive Officer AutoGenomics, Inc. 2980 Scott Street Vista, California 92081 (760) 477-2248 (Name, address, including zip code and telephone number, including area code, of agent for service) Todd A. Hentges Morgan, Lewis & Bockius LLP 600 Anton Boulevard, 18th Floor Costa Mesa, California 92626-7653 (714) 830-0600 copy to: Charles S. Kim Sean M. Clayton David Peinsipp Cooley LLP 4401 Eastgate Mall San Diego, California 92121-1909 (858) 550-6000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price (1) (2) Amount of Registration Fee (3) (4) Common Stock, $0.01 par value $ 56,062,500 $ 6,515 (1) Estimated solely for the purpose of computing the amount of the registration fee, in accordance with Rule 457(o) promulgated under the Securities Act of 1933, as amended. (2) Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any. (3) Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as amended, based on an estimate of the proposed maximum aggregate offering price. (4) $7,449.00 was previously paid in connection with the withdrawn registration statement (registration no. 333-184121) of AutoGenomics, Inc. initially filed on September 27, 2012. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. Table of Contents fully automated and integrated solution, and have lower throughput requirements, we offer INFINITI and INFINITI PLUS analyzers designed to operate on a "load and go" basis, in which a technician only needs to load prepared samples along with the test-specific consumables into the analyzer to generate test results. The following table illustrates the test capabilities of our primary INFINITI analyzers: Instrument Capacity per run (1) Patient results (1) INFINITI HTS 384 samples up to 6,912 per day INFINITI PLUS 48 samples up to 192 per day INFINITI 24 samples up to 96 per day (1) Figures assume the use of our four-patient multiple patient array test panel over a 24-hour period. In late 2013, as we prepared to launch our INFINITI HTS, we began operating our CLIA-certified laboratory to complement and support our efforts to attract customers entering the molecular diagnostics market, and potential INFINITI HTS customers in particular. Our laboratory services allow our customers to more quickly offer new or additional tests during the period when they are awaiting delivery, installation, training and validation of an INFINITI analyzer. Our CLIA-certified laboratory also provides new and existing customers with an alternative source of capacity to assist with their overflow testing needs. In addition, our laboratory enhances our product development efforts and allows us to offer hands-on training opportunities to our customers. Since the launch of our INFINITI HTS, many of these customers have utilized the services of our laboratory to supplement and facilitate sales of medium- and high-volume test products to their physicians, clinicians and healthcare providers. We commenced sales of our INFINITI HTS in February 2014 through a small direct sales force in the United States. Our net revenue was $18.7 million for the nine months ended September 30, 2014, as compared to $13.3 million for the nine months ended September 30, 2013. Excluding net revenue from one historically large customer, Natural Molecular Testing Corporation, or NMTC, our net revenue for the nine months ended September 30, 2013 was $8.2 million. We had no revenue from NMTC in the nine months ended September 30, 2014. Excluding net revenue from NMTC, our net revenue grew 130% for the nine months ended September 30, 2014 as compared to the same period in 2013. Our net loss was $1.0 million for the nine months ended September 30, 2014, as compared to $6.8 million for the nine months ended September 30, 2013. Our accumulated deficit as of September 30, 2014 was $104.2 million. For a comparison of our net revenue, including net revenue from NMTC and excluding net revenue from NMTC, by period for the nine months ended September 30, 2014 and 2013, and the years ended December 31, 2013 and 2012, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - As Adjusted Financial Information for the Nine Months Ended September 30, 2014 and 2013 and Years Ended December 31, 2013 and 2012 (unaudited)." Our Market Opportunity Molecular diagnostics, or MDx, refers to the detection of DNA and RNA and their variations and mutations, and the use of such information to determine a patient s susceptibility to disease, diagnose disease and infection, evaluate response to therapy and drug efficacy, identify non-responders and ultra-, normal- and poor-metabolizers and reduce adverse events. Frost & Sullivan, a market research company, estimated in 2012 that the MDx market will reach $6.2 billion in the United States during 2014 and forecasted a compound annual growth rate for the market in excess of 11%. The Centers for Medicare and Medicaid Services of the Department of Health and Human Services, or CMS, estimated in June 2014 that there were more than 5,900 independent clinical reference laboratories and specialty clinics and more than 8,900 hospital-based laboratories in the United States. We believe that less than 10% of these laboratories are currently performing MDx testing, and that we have an opportunity to expand our customer base by enabling more laboratories to participate in this growing market. Table of Contents Our Target Markets Personalized medicine The optimal matching of treatment options to a patient's specific genetic profile has emerged as an important trend in medicine. More targeted and effective pharmacogenomic-based treatments have the potential to improve healthcare outcomes and lower healthcare costs, which we believe will lead to increased use of genetic testing. Many patients do not currently achieve the best possible outcome with the first drug that they are prescribed in treatment. Studies have linked the variation in efficacy of a patient's response to a prescribed drug treatment to patient-specific differences in the genes that code for drug-metabolizing enzymes, drug transporters or drug targets, which can be identified through the use of genetic testing. Our target markets in personalized medicine include: Pain management. More than 116 million adult Americans suffer from acute or chronic pain each year. Studies have shown that only 58% of patients taking prescription medication reported pain relief. Additionally, approximately 80% of post-operative patients experience adverse events from pain medications. As of December 31, 2014, we offered 11 test panels in the area of pain management, which detect multiple mutations in specific drug-metabolizing genes and can enable physicians to select optimal therapies for pain management. Cardiovascular health assessment. According to a report from the World Health Organization, or WHO, cardiovascular diseases were responsible for 30% of global deaths in 2008. The WHO estimates that by 2030 23.6 million people will die annually from some form of cardiovascular disease. As of December 31, 2014, we offered 20 test panels in the area of cardiovascular health assessment, five of which have received U.S. Food and Drug Administration, or FDA, 510(k) clearance, including our Plavix responder and Warfarin sensitivity test panels. Mental health. Drugs associated with mental health, including drugs focused on central nervous system disorders, and treatment of depression and anti-psychotic therapy, represent a major component of overall pharmaceutical sales. According to the Centers for Disease Control and Prevention, or CDC, as much as 11% of the U.S. population is taking antidepressants at a given time. Despite this prevalence, approximately 30 to 40% of patients do not respond to the first medication prescribed. The resulting trial-and-error process delays effective treatment for patients and increases healthcare costs. Genetic testing provides the information to allow physicians to select the most appropriate drug or combination of drugs specific to the patient's genetic makeup. As of December 31, 2014, we offered 12 test panels in the area of mental health, which identify mutations in drug-metabolizing genes that can enable healthcare providers to select optimal therapies. Women's health According to the CDC, approximately 79 million Americans are infected with Human papillomavirus, or HPV, and approximately 14 million become infected each year. Current regulations from the U.S. Preventive Services Task Force recommend that MDx HPV tests for women be utilized in conjunction with cytology (Pap test) in standard five year intervals. The CDC estimates that there are nearly 20 million new cases of STDs each year, costing the nation approximately $16 billion in healthcare costs annually. As of December 31, 2014, we offered 19 test panels in the area of women's health. Key tests in this segment include four test panels for HPV testing and nine test panels designed to identify various microorganisms related to STDs and vaginal infections. We believe our women's health test panels are the most comprehensive menu of test panels in the market currently. Other markets We also target the markets of: (i) oncology to help manage chemotherapy treatments for breast, colorectal, lung, melanoma and thyroid cancers; (ii) infectious diseases for detection of influenza, nontuberculous mycobacteria, respiratory viruses and tuberculosis; and (iii) genetic disorders including, but not limited to, tests for identification of carriers of gene mutations associated with Bloom disease, Canavan disease, cystic fibrosis and Familial Mediterranean fever. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 2, 2015 PRELIMINARY PROSPECTUS 3,750,000 Shares Common Stock $ per share Table of Contents Limitations of Traditional Testing Methods Traditional testing methods have a number of drawbacks and limitations, including: Throughput limitations. Traditional systems in the market have throughput constraints and typically process a limited number of patient samples simultaneously. High operating cost per reportable result. Many existing systems require specialized personnel and training, involve time-consuming protocols, require supplementary, discrete instrumentation and result in high labor costs. Limited testing menu. Many existing MDx systems have limited test menus, leading to a need for a laboratory to purchase many different systems, all which require their own training, use and maintenance, as well as their own laboratory bench space and inventory. Inability to multiplex. Many existing systems are only able to examine one biomarker at a time, and, in order to make a diagnosis, the laboratory must perform repeated tests on a sample. Serial testing is expensive, time-consuming and requires higher sample volumes. Limited automation. Many existing systems automate only certain steps in the MDx testing process and do not enable testing of multiple patient samples in a single microarray. Need for specialized labor. Many existing systems require specialized laboratory technicians and in some cases specialized training, adding to labor costs. Our Solution Our platform has been designed to enable a broad range of clinical reference laboratories, specialty clinics and hospital laboratories to start performing, or to more cost-effectively perform, genetic testing across a wide range of throughput levels, which we believe will drive adoption and use of our platform as well as expand the potential of the MDx testing market. Our platform has a number of key advantages, including: Significantly higher throughput and better workflow. Our broad offering of INFINITI analyzers is designed to address our target customers' varied throughput and workflow requirements. Using one INFINITI HTS, laboratories are capable of producing up to 6,912 patient results per day. Improved laboratory economics. Our INFINITI and INFINITI PLUS eliminate the need for complex protocols and manual intervention once a test is initiated, which is intended to improve the laboratory's economics by simplifying workflow and reducing the need for highly skilled technicians. Our INFINITI HTS allows individual components to remain active during the workflow process, which can significantly improve throughput time and reduce costs. Broad menu of tests. We currently offer 62 test panels as part of our platform and have an additional 16 test panels in development. We believe that this represents the broadest available test menu on a single system in the market today. Multiple patient array technology. Our proprietary multiple patient array, or MPA, technology is designed to test up to eight distinct patient samples on a single microarray. Ability to multiplex. Many diseases and patient responses to therapy are caused by multiple genetic mutations that necessitate testing for multiple biomarkers to diagnose those diseases or to predict or monitor therapy response. Increased accuracy of results. By reducing the risk of human error and contamination, we believe that our platform can provide more accurate and more reproducible test results compared to other less automated systems. Our Products and Technology Our platform is comprised of five key technological innovations: (1) our INFINITI analyzers; (2) our multiplexing test format; (3) our BioFilmChip microarrays; (4) our multiple patient array technology; and (5) our Intellipac Reagent Management Modules. AutoGenomics, Inc. is offering 3,750,000 shares of its common stock. This is our initial public offering, and no public market currently exists for our common stock. We expect the initial public offering price to be between $11.00 and $13.00 per share. We have applied to list our common stock on the NASDAQ Global Market under the symbol "AGMX." We are an "emerging growth company," as defined under federal securities laws, and have elected to comply with certain reduced public company reporting requirements available to such companies. Table of Contents Our INFINITI analyzers Our platform includes a family of analyzers, each of which is designed to address customer-specific needs based on the customer's workflow and throughput requirements, and automate the discrete processes in genetic analysis. Our INFINITI HTS is a scalable, multiplexing, random access, microarray-based system comprised of three independent operating modules. Our INFINITI and INFINITI PLUS analyzers integrate and automate the discrete processes of sample handling, reagent management, hybridization, detection, results analysis and reporting in a self-contained system. All of our INFINITI analyzers use similar underlying proprietary technology and the same consumables to generate consistent patient results presented in an identical format. Our multiplexing test methods and multiple patient microarray Our multiplexing technology allows our INFINITI analyzers to detect multiple biomarkers across multiple genes at the same time on a single microarray, eliminating the need to process multiple tests separately. For example, our pain management panel can detect multiple mutations associated with six different genes to determine the efficacy, toxicity and dosing of specific drugs. In addition, our test panel for HPV detects and genotypes all 14 high-risk types of HPV simultaneously on a single microarray from a single sample. Our proprietary MPA technology enables our INFINITI analyzers to process multiple patient samples on a single microarray, reducing our costs, increasing our test production capacity, and improving our customers' laboratory economics while increasing their throughput. For example, our MTBC OCTA (drug-resistant tuberculosis test panel) is designed to test up to eight patient samples on a single microarray, increasing throughput for our laboratory customers by up to 700%, while reducing their operating cost per reportable result by up to 87%, as compared to our single patient microarrays. Our BioFilmChip microarrays and Intellipac Reagent Management Modules Our proprietary BioFilmChip microarrays utilize our proprietary and patented manufacturing processes, and can be printed with up to 1,024 individual features of biochemical sensors, or biomarkers, depending on the requirements of the test. Our assay-specific Intellipac Reagent Management Modules provide the proprietary reagent used to complete our genetic tests. The reagent module is designed to communicate all relevant information about a test to the INFINITI analyzer without any intervention from the operator, saving time by automatically recording all pertinent test details, and reducing the possibility for human errors which could occur in manual systems by eliminating contamination risk. Sales and Marketing Our goal is to achieve broad adoption of our INFINITI analyzers in the market, and drive utilization to generate sales of our high-margin testing consumables. Our current sales and marketing strategy is focused on the broad introduction of our INFINITI HTS to customers in high-volume testing market segments, particularly personalized medicine and women's health, and emphasizes the high throughput testing capacity, ease of use, enhanced workflow, increased efficiency, low cost, high quality and consistent results of our platform as well as the potential versatility afforded by our broad menu of genetic test panels. In the United States, we offer our family of INFINITI analyzers either through direct sales, monthly rental plans or our Reagent Access Plan, or RAP. Under the RAP, an INFINITI analyzer is placed at the customer s location at no initial cost to the customer, and is subject to contractual minimum consumables purchasing thresholds. We have established a small direct sales force that is regionally deployed and performs market development as well as account management. We plan to significantly expand our sales force within the next 12 months. Internationally, we market and sell our platform through our network of distributors. We have established 12 distributor relationships to market our platform in 23 countries outside the United States. We plan to expand our distributor network outside the United States to enter new markets and capitalize on growing international demand. Investing in our common stock involves a high degree of risk. Please read "Risk Factors" beginning on page 15. Table of Contents Manufacturing and Research and Development We manufacture our family of INFINITI analyzers, BioFilmChips and Intellipac Reagent Management Modules at our facility in Vista, California. Our facility is registered with the FDA as a Medical Device Manufacturing Establishment. We have established a quality system that is in compliance with the FDA's Quality Systems Regulations and we have obtained ISO 13485:2003 certification for our facility. Our research and development efforts focus on developing additional genetic tests and INFINITI analyzers, improving or enhancing current tests and INFINITI analyzers, and supporting clinical trials for certain genetic tests. Our Strategy Our objective is to become a leading provider of genetic tests to clinical reference laboratories, specialty clinics and hospital laboratories in multiple growing market segments. One key element of our strategy is to focus on high-volume customers, particularly in the areas of personalized medicine and women s health. We plan to continue to expand into other market segments through the development of additional test panels. To achieve our objectives, we intend to: Increase placements of our recently launched INFINITI HTS analyzer and expand penetration in the highest-volume testing market segments. Target molecular diagnostics laboratories with high potential utilization of our INFINITI and INFINITI PLUS analyzers. Develop and launch test panels in new areas and enhance our current test panels. Significantly expand our domestic sales force, increase marketing expenditures and expand international distribution. Pursue additional regulatory clearances, approvals and certifications for products and facilities, as necessary. Utilize our CLIA-certified laboratory to enhance and complement our product offerings. Government Regulation We have received FDA 510(k) clearance for our INFINITI and INFINITI Plus analyzers and five of our genetic test panels: CYP450 2C19, Factor II, Factor V, Factor II/V and Warfarin. Products for which we have received 510(k) clearance accounted for 35%, 18% and 14% of our net revenue for the nine months ended September 30, 2014, and the years ended December 31, 2013 and 2012, respectively. We are currently in clinical trials collecting data to support a submission for 510(k) clearance for our INFINITI HTS, both of our CYP450 2C19 Plus test panels and all three of our CYP450 2D6 test panels. We intend to use a portion of the proceeds of this offering to conduct additional clinical trials for the collection of data, and to submit for 510(k) clearance, for an additional seven of our test panels that, together with our existing and in-process 510(k) cleared test panels, made up approximately 80% of consumables revenue for the nine months ended September 30, 2014. We expect to conduct additional clinical trials for the collection of data, and to submit for 510(k) clearance, for test panels based on a variety of factors, including: the regulatory environment for the use of genetic tests, in particular the FDA's requirements and limitations on marketing RUO tests, which may not be marketed as in vitro diagnostic products; the demand by our existing and target customers for particular genetic tests that have received regulatory approvals or clearances; the competitive environment for the use of genetic tests that have received regulatory approvals or clearances versus similar tests that have not; and the size of the available market for the particular test, given the significant expense and time required to obtain regulatory approvals or clearances. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds, before expenses, to us $ $ (1) We refer you to "Underwriting" beginning on page 131 of this prospectus for additional information regarding total underwriting compensation. RA Capital Management has indicated an interest in purchasing up to approximately $11 million of shares of our common stock in this offering at the initial public offering price. In addition, certain of our existing stockholders or their affiliates have indicated an interest in purchasing up to approximately $3 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, fewer or no shares in this offering to any of these parties, or any of these parties may determine to purchase more, fewer or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these entities as they will on any other shares sold to the public in this offering. Delivery of the shares of common stock is expected to be made on or about , 2015. We have granted the underwriters an option for a period of 30 days to purchase, on the same terms and conditions set forth above, up to an additional 562,500 shares of our common stock to cover over-allotments. If the underwriters exercise the option in full, the total underwriting discount payable by us will be $ and the total proceeds to us, before expenses, will be $ million. Internationally, we have obtained a Conformit Europ enne, or CE, mark for our INFINITI and INFINITI PLUS analyzers and a total of 24 of our tests. This designation is supported by completed clinical and validation studies that demonstrate the analytical performance of each CE marked test. The CE mark facilitates the marketing and sale of our CE marked analyzers and tests in the European Union and the European Economic Area as well as certain other international markets. Our test panels that are not 510(k) cleared are offered for sale in the United States under the RUO designation. These RUO tests are labeled "For Research Use Only. Not for use in diagnostic procedures." as required by FDA regulations. Sales of these test panels represented 65%, 82% and 86% of our net revenue for the nine months ended September 30, 2014, and the years ended December 31, 2013 and 2012, respectively. RUO test panels may only be used in the United States for clinical purposes by laboratories and other facilities certified under CLIA that have incorporated these products into their laboratory developed tests, or LDTs, pursuant to guidelines issued by the College of American Pathologists. We believe that nearly all of our RUO product sales are incorporated into LDTs. In order to develop an LDT utilizing our products, these certified laboratories and other facilities must develop and validate a test protocol that includes specimen collection, DNA extraction, polymerase chain reaction, or PCR, amplification, hybridization and detection, and data analysis, interpretation and reporting. Our products provide components that can be used by these certified laboratories and other facilities for the PCR amplification, hybridization and detection portions of these LDTs. We sell each of these components individually, as ordered by the customer in its discretion, and not as a kit or system. The validation process engaged in by these certified laboratories and other facilities can involve validation of the sample collection and extraction process, establishing limits of detection and analytical sensitivity, testing for specificity and cross-reactivity, including interfering substances, validation for assay accuracy, precision and reproducibility, and establishing reportable ranges of test results for the test system and reference values that will be measured against as controls. This validation process also requires verifying the result from the LDT against known standard samples or the results of a high-standard laboratory testing method such as sequencing, and can involve the testing of a large number of patient samples. This process may take from several weeks to several months or more to complete, and thus requires a significant investment by the customer. We believe that all sales of our RUO products in the United States are to customers that are either certified in the manner described above and have incorporated our products into their LDTs, or that use such products for research only. We are not permitted to represent our RUO products as in vitro diagnostic products. We therefore train our personnel to only market these products to laboratories for research or investigational use in the collection of research data, and to not promote any off-label uses of our products. We believe that we are in compliance with existing FDA rules and regulations governing our business, including those governing the marketing and sale of RUO tests; however, a significant change in existing laws, or their enforcement, may require us to change our business model or our business practices to maintain compliance with these laws. For instance, in June 2011, the FDA issued a Draft Guidance entitled "Commercially Distributed In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only: Frequently Asked Questions," and in November 2013 issued a guidance document entitled "Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only," or the RUO Guidance, which highlights the FDA's interpretation that distribution of RUO products with any labeling, advertising or promotion that suggests that clinical laboratories can validate the test through their own procedures and subsequently offer it for clinical diagnostic use as an LDT is in conflict with RUO status. The RUO Guidance further articulates the FDA's position that any assistance offered in performing clinical validation or verification, or similar specialized technical support, to clinical laboratories, is in conflict with RUO status. The FDA has generally exercised its enforcement discretion to not enforce applicable regulations with respect to LDTs. However, on October 3, 2014, the FDA announced the availability of a draft guidance entitled "Framework for Regulatory Oversight of Laboratory-Developed Tests," a risk-based oversight framework for LDTs. If the draft guidance is finalized as presently written, such oversight framework includes a premarket review for higher-risk LDTs, such as those that have the same intended use as an FDA-approved or cleared companion diagnostic currently on the market, as well as other high risk and moderate Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. risk LDTs over time. As a result of the draft guidance, we may be required to seek clearance or approval to offer our tests for clinical use earlier than we otherwise might have done. If the RUO Guidance were to be enforced, it would limit our marketing of RUO test panels to general discovery laboratories and require us to seek FDA clearance for our RUO test panels, which may require significant time and investment on our part and may reduce our revenues or increase our costs and adversely affect our business, prospects, results of operations or financial condition. Risks Affecting Us Our business is subject to numerous risks, as more fully described in the section entitled "Risk Factors" elsewhere in this prospectus, including the following: Financial risks. We have a history of net losses and negative cash flows with an accumulated deficit of $104.2 million as of September 30, 2014, and may not be able to achieve or maintain profitability in the current fiscal year or in future fiscal periods. Business risks. There is limited information available to evaluate our business, particularly with respect to our recently launched INFINITI HTS, and we face significant competition. Product and customer risks. Our financial results depend on commercial acceptance of our platform and tests and the development of additional tests. Regulatory risks. The majority of our net revenue is derived from the sale of products designated for research use only, or RUO; the FDA announced October 3, 2014 the availability of a draft guidance establishing a risk-based oversight framework for LDT's, which may adversely affect our ability to sell our RUOs; violations of these regulations by us could significantly limit our ability to sell our products to our target customers, or otherwise require us to obtain regulatory approvals for our products at considerable time and expense. Legal risks. Our success depends in part on our ability to operate without infringing or misappropriating the proprietary rights of others, our ability to own or license patents that are adequate to reduce competition and our ability to license intellectual property from third parties for certain tests and manufacturing processes needed for our business. Company Information We were incorporated as Neuron Technologies, Incorporated in California in April 1999, and changed our name to AutoGenomics, Incorporated in August 2000. We subsequently changed our name to AutoGenomics, Inc. in October 2002. We reincorporated in Delaware in November 2008. Our principal executive offices are located at 2980 Scott Street, Vista, California 92081. Our telephone number is (760) 477-2248. Our website address is www.autogenomics.com. Information contained in or that can be accessed through our website is not incorporated by reference into this prospectus and should not be considered to be part of this prospectus. INFINITI, BioFilmChip, Intellipac and QMatic are our trademarks. All other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners. Some of our trademarks are referred to in this prospectus from time to time, solely for convenience, without their associated and symbols. We retain, however, our rights to these trademarks notwithstanding such presentation, and we will assert, to the fullest extent under applicable law, our rights to our trademarks. Certain Recent Preliminary Financial Results We are finalizing our financial results as of and for the year ended December 31, 2014. Complete financial information and operating data as of and for such period are not available and we believe that this data will not be available prior to the completion of this offering. However, based on the preliminary information and data available, our management estimates that for the three months ended December 31, 2014, our net revenue will range approximately between $8.2 million and $8.4 million, as compared to net revenue of $4.8 million and $7.5 million for the three months ended December 31, 2013, and September 30, Stifel Canaccord Genuity Cantor Fitzgerald & Co. The date of this prospectus is , 2015. Table of Contents 2014, respectively, and our income/loss from operations for the three months ended December 31, 2014 will range approximately between a loss of $0.1 million and income of $0.3 million as compared to income from operations of $0.1 million and $1.5 million for the three months ended December 31, 2013 and September 30, 2014, respectively. Taken together with the statement of operations financial data for the nine months ended September 30, 2014 included elsewhere in this prospectus, these estimates would result in net revenue for the year ended December 31, 2014 of between approximately $27.0 million and $27.2 million, as compared to net revenue of $18.1 million for the year ended December 31, 2013, and would result in income from operations for the year ended December 31, 2014 of between approximately $1.6 million and $2.0 million, as compared to a loss from operations of $3.3 million for the year ended December 31, 2013. Our estimated increase in net revenue during the three months ended December 31, 2014 as compared to the three months ended December 31, 2013 is due to an increase in net service revenue generated by our CLIA-certified in-house laboratory, the substantial majority of which was derived from service to our INFINITI HTS customers. Our estimated income from operations during the three months ended December 31, 2014 did not materially change as compared to the three months ended December 31, 2013 as our estimated increase in net service revenue during the period was offset by higher estimated general and administrative and sales and marketing expenses during fiscal year 2014 as compared to 2013. Our management estimates that net loss for the three months ended December 31, 2014 will range between approximately $0.3 million and $0.7 million, as compared to a net loss of $0.3 million and net income of $1.0 million for the three months ended December 31, 2013 and September 30, 2014, respectively. Taken together with the statement of operations financial data for the nine months ended September 30, 2014 included elsewhere in this prospectus, these estimates would result in a net loss for the year ended December 31, 2014 of between approximately $1.3 million and $1.7 million, as compared to a net loss of $7.1 million for the year ended December 31, 2013, and a basic net loss per share attributed to common stockholders for the three months ended December 31, 2014 of between approximately $0.16 to $0.35 as compared to a basic net loss per share $0.15 and basic net earnings per share of $0.49 attributed to common stockholders for the three months ended December 31, 2013 and September 30, 2014, respectively. Taken together with the statement of operations financial data for the nine months ended September 30, 2014 included elsewhere in this prospectus, these estimates would result in basic net loss per share attributed to common stockholders for the year ended December 31, 2014 of between approximately $0.63 and $0.82 as compared to net loss per share of $3.98 for the year ended December 31, 2013. The preliminary financial data and accounting treatment information above has been prepared by, and is the responsibility of, our management. Our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to this preliminary financial data and accounting treatment information and does not express an opinion or any other form of assurance with respect thereto. Because the three months ended December 31, 2014 has recently ended, the unaudited net revenue, income/(loss) from operations and net income/(loss) information presented above for the three months and year ended December 31, 2014 has not yet been subject to our normal quarterly financial closing processes, reflects estimates based only upon preliminary information available to us as of the date of this prospectus, and is not a comprehensive statement of our financial results for the three months, or for the year, ended December 31, 2014. Our financial statements and operating data as of and for the three months and the year ended December 31, 2014 will not be available until after this offering is completed and may differ from the unaudited net revenue, income/ (loss) from operations and net income/(loss) information we have provided. Although we are not aware at this time of, and do not currently anticipate, any changes to the preliminary financial information and data available that we used to prepare our estimates presented above, any such differences may be material. Our net revenue, income/(loss) from operations and net income/(loss) information and accounting treatment information presented should not be viewed as a substitute for full interim financial statements prepared in accordance with GAAP, and undue reliance should not be placed on these preliminary estimates. These preliminary estimates are not necessarily indicative of any future period Table of Contents Table of Contents and should be read together with "Risk Factors," "Special Note Regarding Forward-looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Selected Financial Data" and our financial statements and related notes included elsewhere in this prospectus. Implications of Being an Emerging Growth Company We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we are eligible to comply with less stringent disclosure requirements than those applicable to larger, more established companies. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. So long as we qualify as an emerging growth company, we will, among other things, be exempted from (i) the auditor attestation requirement in the assessment of internal controls over financial reporting of Section 404(b) of the Sarbanes-Oxley Act; (ii) various existing and forthcoming executive compensation related disclosures, for example: "say-on-pay," "pay-for-performance" and "CEO pay ratio;" (iii) any rules that might be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or supplemental auditor discussion and analysis reporting; and (iv) having to solicit advisory say-on-pay, say-on-frequency and say-on golden-parachute shareholder votes on executive compensation under Section 14A of the Securities Exchange Act of 1934, as amended, and will be permitted to comply with the SEC's detailed executive compensation disclosure requirements on the same basis as a smaller reporting company. In addition, under Section 107(b) of the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Not all products have received all necessary domestic or international regulatory approvals or clearances for commercial sale. The vast majority of products sold by AutoGenomics are offered for sale to allow for the collection of research data, and may only be used for clinical purposes by laboratories certified under the Clinical Laboratory Improvements Amendments of 1988 and that have incorporated the products into laboratory-developed tests pursuant to guidelines issued by the College of American Pathologists. The U.S. Food and Drug Administration has not adopted these guidelines and AutoGenomics is not permitted to represent these products as in vitro diagnostic products. Table of Contents The Offering Common stock to be offered by us 3,750,000 shares Common shares to be outstanding immediately after this offering 10,262,755 shares Over-allotment option We have granted the underwriters an option for 30 days from the date of this prospectus to purchase up to 562,500 additional shares of our common stock at the initial public offering price to cover over-allotments. Use of proceeds We anticipate that we will use the net proceeds from this offering as follows: (i) to fund capital expenditures for expansion of manufacturing capabilities, (ii) to expand our sales and marketing efforts, (iii) to fund research and development, including regulatory efforts, (iv) to satisfy all of our outstanding notes payable and certain of our accounts payable and (v) the balance for working capital and general corporate purposes. NASDAQ Global Market listing We have applied to list our common stock on the NASDAQ Global Market under the symbol "AGMX."
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should
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+PROSPECTUS SUMMARY This summary highlights the information contained or incorporated by reference in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider before buying our common stock. Therefore, you should read the entire prospectus carefully, including the information in our filings with the Securities and Exchange Commission, or SEC, incorporated by reference in this prospectus, before deciding to invest in our common stock. Investors should carefully consider the information set forth under Risk Factors beginning on page 10 of this prospectus and those identified in our Annual Report on Form 10-K for the year ended December 31, 2014, or our 2014 Annual Report, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, or our March 2015 Quarterly Report. In this prospectus, unless the context otherwise requires, references to the Company, we, us, our, or Nevro refer to Nevro Corp. and its consolidated subsidiaries. Overview We are a medical device company that has developed and commercialized an innovative neuromodulation platform for the treatment of chronic pain. Our Senza system is the only spinal cord stimulation, or SCS, system that delivers our proprietary HF10 therapy. On May 8, 2015, our premarket approval, or PMA, application for our Senza SCS system, or Senza, was approved by the U.S. Food and Drug Administration, or FDA. Key highlights of our SENZA PMA are as follows: First U.S. commercial approval for an SCS system supported by a prospective, randomized, controlled, comparative study. HF10 therapy is the first and only SCS therapy approved by FDA with superiority labeling. HF10 therapy is the first and only SCS therapy that is approved by FDA to deliver paresthesia-free pain relief. HF10 therapy is the first and only SCS therapy approved by the FDA to be used without patient restrictions on motor vehicle operation while receiving therapy. Senza is the first fully implantable SCS system approved by the FDA with labeling for 3T conditional MRI compatibility. Outside of the United States, Senza is indicated for the treatment of chronic intractable pain of the trunk and limbs, is reimbursed under existing SCS codes, and has been commercially available in certain European markets since November 2010 and in Australia since August 2011. While traditional SCS therapy is indicated and reimbursed for treating back and leg pain, it has limited efficacy in treating back pain and is used primarily for treating leg pain, limiting its market adoption. In our pivotal study, HF10 therapy was demonstrated to provide significant and sustained back pain relief in addition to leg pain relief. We believe we are positioned to transform and grow the approximately $1.5 billion existing global SCS market under current reimbursement by treating back pain in addition to leg pain and by eliminating paresthesia, a constant tingling sensation that is the basis of traditional SCS therapy. Our SENZA-RCT U.S. pivotal study, a non-inferiority study, met its primary and secondary endpoints, and demonstrated the superiority of HF10 therapy over traditional SCS therapies for treating both leg and back pain. In our pivotal study, HF10 therapy was demonstrated to provide significant and sustained back pain relief in addition to leg pain relief. Additionally, HF10 therapy was demonstrated to provide pain relief without paresthesia. HF10 therapy is also designed to reduce variability in the operating procedure, providing meaningful benefits to both patients and physicians. We hold 76 issued patents globally and over 100 pending patent applications in the United States and international jurisdictions. Our revenue increased from $23.5 million for the year ended December 31, 2013 to $32.6 million for the year ended December 31, 2014, with a net loss of $26.0 million and $30.7 million in these Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated June 1, 2015 Prospectus 3,934,681 Shares Common Stock Nevro Corp. is offering 1,475,506 shares of its common stock. The selling stockholders identified in this prospectus are offering 2,459,175 shares of our common stock. We will not receive any proceeds from the sale of any shares by the selling stockholders. Our common stock is listed on the New York Stock Exchange under the symbol NVRO . The last reported sale price of our common stock on the New York Stock Exchange on May 29, 2015 was $50.83 per share. We are an emerging growth company, as that term is used in the Jumpstart Our Business Startups Act of 2012, and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 10. Per Share Totals Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to Nevro Corp., before expenses $ $ Proceeds to selling stockholders $ $ (1) See Underwriting for additional disclosure regarding underwriting discounts and commissions and estimated offering expenses. We have granted the underwriters an option for a period of 30 days to purchase from us up to an additional 590,202 shares of common stock. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2015. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. J.P. Morgan Morgan Stanley Leerink Partners JMP Securities , 2015 Table of Contents periods, respectively. We have a history of significant net losses and we expect to continue to incur losses for the foreseeable future. Due to market penetration in Europe and Australia, we expect that our future revenue growth, if any, will be largely from sales in the U.S. market. We believe we have built competitive advantages through our proprietary technology, clinical evidence base, strong track record of execution including over 3,000 patients implanted with Senza, and proven management team with substantial experience in the neuromodulation field. With what we believe are compelling efficacy data for both leg and back pain compared to traditional SCS therapy, we aim to drive adoption of Senza in the U.S. market, which represents the largest opportunity in SCS, and expand patient access to HF10 therapy by investing in the development of Senza for new indications. SENZA-RCT Pivotal Study We completed our SENZA-RCT pivotal study in March 2014, which was the first prospective randomized controlled pivotal study in the history of SCS and the first to directly demonstrate comparative effectiveness between SCS therapies. The SENZA-RCT study was designed as a non-inferiority trial comparing HF10 therapy to traditional commercially available SCS therapy and met its primary and secondary endpoints. Key highlights of our SENZA-RCT pivotal study are as follows: The SENZA-RCT study results demonstrated the non-inferiority of HF10 therapy to traditional SCS therapy on all primary and secondary endpoints. Additionally, the study results demonstrated the superiority of HF10 therapy over traditional SCS therapy in all primary and secondary endpoints. HF10 therapy was nearly twice as successful in treating back pain as traditional SCS therapy, with 84.3% of patients receiving HF10 therapy, as compared to 43.8% of patients receiving traditional SCS therapy, reporting 50% or more pain relief at three months, results that were statistically superior. HF10 therapy was 1.5 times as successful in treating leg pain as traditional SCS therapy, with 83.1% of patients receiving HF10 therapy, as compared to 55.5% of patients receiving traditional SCS therapy, reporting 50% or more pain relief at three months, results that were statistically superior. HF10 therapy provided a 69.2% reduction in back pain as measured by the Visual Analog Scale, or VAS, versus 44.2% for traditional SCS therapy, at three months, results that were statistically superior. HF10 therapy provided a 72.8% reduction in leg pain as measured by VAS, versus 51.5% for traditional SCS therapy, at three months, results that were statistically superior. The study results demonstrated the superiority of HF10 therapy for both back and leg pain at each measurement throughout the 12-month study. Patients receiving HF10 therapy did not report paresthesia or uncomfortable stimulation at three months. In comparison, 46.5% of patients receiving traditional SCS therapy reported uncomfortable stimulation at three months. Based on our analysis, two-thirds of HF10 therapy patients had a VAS pain score of less than or equal to 2.5 on a scale of 0 to 10 for back pain at three months (which we define as achieving remitter status), twice the number of traditional SCS therapy patients, results that were statistically superior. Based on our analysis, three-fourths of HF10 therapy patients had a VAS pain score of less than or equal to 2.5 on a scale of 0 to 10 for leg pain at three months, twice the number of traditional SCS therapy patients, results that were statistically superior. Safety outcomes were consistent across the control and test groups. The outcomes for HF10 therapy in our pivotal study are consistent with the outcomes from our European clinical study, the two year results of which have been published in the Pain Medicine journal of the American Academy of Pain Medicine. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001449278_tubemogul_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001449278_tubemogul_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations , our audited annual consolidated financial statements and the related notes included elsewhere in this prospectus, and our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms TubeMogul, the company, we, us and our in this prospectus refer to TubeMogul, Inc., a Delaware corporation, and our predecessor, TubeMogul, Inc., a California corporation, and where appropriate, their respective consolidated subsidiaries. TubeMogul, Inc. TubeMogul is an enterprise software company for brand advertising. By reducing complexity, improving transparency and leveraging real-time data, our platform enables brands to gain greater control of their video advertising spend and achieve their brand advertising objectives. Our customers can plan, buy, measure and optimize their global video advertising spend from our self-serve platform. By integrating programmatic technologies and disparate sources of inventory within a single platform, we enable our customers to launch sophisticated, scalable video advertising campaigns onto any digital device within minutes. This is in contrast to the still prevailing and inefficient approach to media buying that occurs through a manual campaign-by-campaign request for proposal, or RFP, process, which often involves multiple digital advertising service providers. Our customers primarily include brands, which generally refer to companies, or product lines within companies, that control advertising budgets for a single marketing brand or a group of marketing brands, and the advertising agencies that serve them. Agency trading desks, ad networks and publishers also use our platform. We refer to our customers and other businesses that are engaged in purchasing digital marketing as advertisers. Our platform is integrated with many public video ad inventory sources, where individual ad impressions can be purchased dynamically utilizing real-time bidding technology, or RTB. Our platform automates the real-time purchase of ad impressions based upon campaign objectives. Additionally, our customers can easily integrate the ad inventory they source directly from publishers and private exchanges. As a result, our platform enables holistic campaign management across public and private inventory using a single interface. As consumers are increasingly watching video content on digital devices, advertisers are shifting more of their video advertising spend from traditional TV to digital channels. As a result, advertisers want to plan, buy and measure TV and digital video advertising on an equivalent basis. Our platform enables advertisers to plan and buy video advertising using industry-standard metrics such as gross rating points, or GRPs, which are a measure of reach and frequency among a target audience, and verify the audience they reach using Nielsen reporting, thereby unifying the planning and measurement of TV and digital video advertising campaigns. Brand advertisers seek to optimize their media buys across all channels. While the importance of display and video advertising has become increasingly emphasized with the proliferation of Internet usage, TV advertising continues to comprise the majority of ad spend. In order to provide a more comprehensive purchasing platform for our clients, we introduced a solution to plan, buy and measure TV advertising through our software platform in December 2014. In 2015, we expect to launch the ability to buy display and social advertising using Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion. Dated June 8, 2015 5,263,246 Shares TubeMogul, Inc. Common Stock We are offering 3,500,000 shares of our common stock and the selling stockholders identified in this prospectus are offering an additional 1,763,246 shares of common stock. We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders. Our common stock is listed on The Nasdaq Global Select Market under the symbol TUBE. On June 5, 2015, the last reported sale price of our common stock on The Nasdaq Global Select Market was $16.57 per share. We are an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012 and, therefore, may comply with certain reduced public company reporting requirements under the federal securities laws. Investing in the common stock involves risks that are described in the Risk Factors section beginning on page 11 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Public Offering Price Underwriting Discount (1) Proceeds to Us Proceeds to Selling Stockholders Per share $ $ $ $ Total $ $ $ $ (1) See the section titled Underwriting for a description of the compensation payable to the underwriters. The underwriters may also exercise their option to purchase up to an additional 789,486 shares from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. The underwriters expect to deliver the shares against payment on or about June , 2015. J.P. Morgan BofA Merrill Lynch Citigroup JMP Securities Oppenheimer & Co. The date of this prospectus is , 2015. Table of Contents our software. Leveraging these platform enhancements, along with our existing video capabilities, brands will be able to plan, buy, and measure advertising campaigns across television and digital media, enhancing their ability to optimize marketing budgets on a single platform. Our platform measures key brand advertising metrics including brand lift, as measured by integrated brand surveys, as well as GRPs and engagement. As a result, advertisers can verify the success and impact of their video advertising campaigns by measuring the audience reached by the campaign, how the audience interacted with their advertisements and the impact the campaign had on the consumer s perception of the brand. Using these real-time insights, our platform dynamically optimizes spend based upon brand advertising objectives set by the advertiser. We offer advertisers unique visibility into the inventory they purchase, including enabling them to see video ad performance and viewability at any dimension of a campaign. Our platform also includes a suite of brand safety technologies designed to prevent unacceptable ad placements and to detect and block sites with inappropriate content, auto-play ad placements or fraudulent bot-driven traffic. We make our platform available through two offerings: Platform Direct, which allows advertisers to continuously run campaigns through a self-serve model, and Platform Services, which allows advertisers to specify campaign objectives and have our team execute on their behalf using our platform. We believe our customers value both of our offerings. For 2014, campaigns were executed through our platform for over 4,000 brands, usually through an agency but in some cases directly, up from over 2,000 at the time of our initial public offering, or IPO. For the years ended December 31, 2012, 2013 and 2014, our total revenue was $34.2 million, $57.2 million and $114.2 million, respectively, representing a compound annual growth rate, or CAGR, of 83%, and Total Spend through our platform was $53.8 million, $111.9 million and $254.3 million, respectively, representing a CAGR of 117%. For the three months ended March 31, 2014 and 2015, our total revenue was $22.0 million and $30.3 million, respectively, representing period-over-period growth of 38%, and Total Spend through our platform was $48.0 million and $71.3 million, respectively, representing period-over-period growth of 49%. We define Total Spend as the aggregate gross dollar volume that our Platform Direct customers and Platform Services customers spend through our platform, which includes cost of media purchases and our fees. Please see Selected Consolidated Financial and Other Data Non-GAAP Financial Measures for information regarding the limitations of using Total Spend as a financial measure and for reconciliations of Total Spend to revenue, the most directly comparable financial measure calculated in accordance with GAAP. For the years ended December 31, 2012, 2013 and 2014, our gross margin was 52%, 66% and 70%, respectively. For the three months ended March 31, 2014 and 2015, our gross margin was 72% and 73%, respectively. For the years ended December 31, 2012, 2013 and 2014, our net loss was $3.6 million, $7.4 million and $4.4 million, respectively. For the three months ended March 31, 2014 and 2015, our net loss was $0.8 million and $7.1 million, respectively. Market Overview The global advertising market is large, totaling $545.5 billion in 2014, according to eMarketer Inc., or eMarketer. Given the importance of branding to maintain and improve differentiation, market share and pricing power, a significant portion of global advertising dollars are spent on brand advertising. Brands rely on the sight, sound and motion of video advertising to establish an emotional connection with consumers that is critical to branding. Brands have primarily utilized traditional TV advertising to deliver video messages to the large audiences they require. As a result, the traditional TV market is the largest advertising market segment, reaching $202.6 billion globally in 2014, and is forecasted to grow to $220.3 billion globally in 2017, according to ZenithOptimedia. While TV advertising represents the largest single portion of today s advertising spend, consumers are shifting their consumption of media content from analog mediums, such as TV, print and radio, to digital Table of Contents Table of Contents mediums such as websites and mobile applications. Recognizing this trend, brands are increasingly shifting their advertising spend to digital mediums. ZenithOptimedia estimates that global online video grew 34% to $10.9 billion in 2014, and forecasts it to grow at an average of 29% a year to reach $23.3 billion in 2017. As brands shift advertising spend to digital mediums, they encounter increasing complexity in executing their digital video advertising campaigns. Brands, their agencies and other entities, which we refer to as advertisers, generally need to use dozens of digital advertising technology providers to execute a campaign. This has resulted in a complex, fragmented and inefficient system. Software s Impact on Brand Advertising Recently, cloud-based enterprise software solutions have been adopted to reduce operating costs, increase scalability, and provide better data for decision making across a multitude of functions within corporations. However, while specific solutions such as programmatic buying have begun to impact the digital advertising industry, advertisers have not yet fully realized the potential benefits that a comprehensive enterprise software solution offers. The adoption of programmatic technology to date has been driven by pressure to improve the performance of digital marketing campaigns. Challenges of Video Advertising for Brands As the video advertising market continues to develop and grow, advertisers are seeking alternatives to the highly manual, repetitive and uncoordinated processes that they have historically used to plan, execute and measure their video advertising campaigns. However, they continue to face several specific challenges including: Fragmented and Manual System for Buying Digital Media. Advertisers need to reach audiences on many websites to achieve campaign goals, and must do so across many types of digital devices. Advertisers also typically engage in repetitive manual RFP processes with multiple sources of inventory to select the video advertising inventory suitable to reach their target audience, resulting in significant inefficiencies. Challenging to Integrate and Leverage Multiple Technology Providers. Technologies needed to execute digital video advertising campaigns are generally offered by different providers and it is difficult for advertisers to make these technologies work well together. This impedes campaign performance, increases costs and lowers efficiency. Limited Options for Advertisers to Manage and Control Entire Buying Process. To reach audiences across thousands of websites, advertisers are often forced to purchase inventory through media aggregators, which generally do not allow advertisers to choose the websites on which their ads run, make adjustments during the course of a given campaign, or obtain the performance data necessary to evaluate and improve ongoing campaign decision making. TV Advertising and Digital Video Advertising are Purchased and Measured Differently. To date, TV and digital advertising campaigns have been executed separately and measured by different metrics, leading to inefficiencies. The separate processes and metrics make it difficult to effectively plan and measure video campaigns focused on reaching targeted audiences across TV and digital channels. Advertising Service Providers Have Conflicting Interests and Offer Limited Inventory and Economic Transparency. Many digital video advertising service providers offer services to both advertisers and publishers. This model can create conflicting interests. In particular, such service providers may have an economic incentive to favor their own inventory when fulfilling campaigns over equally effective or superior inventory that is otherwise available. Table of Contents Table of Contents Difficult to Measure Return on Investment. As consumers increasingly view content through a broader range of devices and channels, it is difficult for brands to verify a number of objectives important to brand advertising, such as reach and frequency among a target audience, engagement and brand lift. Challenging to Deploy and Manage Global Campaigns. Managing video advertising campaigns globally is currently a costly and inefficient process requiring brands to contract with multiple agencies, ad exchanges, ad networks, supply-side platforms, publishers and technology providers. Difficult to Identify and Eliminate Undesired Ad Placements and Fraudulent Traffic. Advertisers have limited control over the content alongside which their ad is placed, whether the ad is delivered in a user initiated video player, and whether it is viewable by the consumer. Advertisers are also concerned with the increasing proportion of fraudulent web traffic that is generated by computers, or bots, resulting in advertisers paying for impressions that are not viewed by consumers. Our Solution We enable advertisers to plan, buy, measure and optimize global video advertising spend from a single platform. We make our cloud-based platform available through two offerings: Platform Direct, which allows advertisers to continuously run campaigns through a self-serve model, and Platform Services, which allows advertisers to specify campaign objectives and have our team execute on their behalf using our platform. Integrated Software Platform. Our platform integrates with over 30 third-party technology providers who offer specific technologies for video campaigns, allowing advertisers to utilize a single control interface for campaign execution. Designed for Self-Serve Model. Through our Platform Direct offering, our platform is accessible through a cloud-based, self-serve model, which can provide customers with full control and transparency over their video advertising spend. Our intuitive user interface enables advertisers to manage an unlimited number of campaigns simultaneously on a single platform, thereby reducing cost, complexity and inefficiencies caused by intermediaries. Enable Advertisers to Buy Video Across Screens. Our platform enables advertisers to buy video advertising across desktop, mobile, television and out-of-home screens. Across desktop, mobile and television, we enable advertisers to buy using industry standard metrics such as GRPs, and verify the audience they reach using integrated Nielsen reporting, thereby unifying the planning and measurement of TV and video advertising campaigns and improving efficiencies. Independent and Transparent Buy-Side Positioning. We have built our business to serve only buyers of video advertising and have no incentive to favor specific inventory when fulfilling campaigns. We show our customers the specific sites where ads are displayed and our Platform Direct customers can see the price they pay for the media, providing them with greater economic transparency. Verifies and Measures Campaign Performance and Brand Lift. Our platform enables advertisers to verify audience reach and engagement and measure the impact of a video ad campaign on consumers through our integrated brand survey module. Purpose-Built for Global Video Advertising. Our platform has been designed for brands to manage and execute global video campaigns using a single integrated workflow. We currently enable campaigns in over 70 countries and our platform is currently available in four languages and supports 15 currencies. Integrated Brand Safety Tools. Our platform includes a suite of technologies designed to prevent unacceptable ad placements by detecting, categorizing and blocking sites with inappropriate content, fraudulent bot-driven traffic and auto-play ad placements. We integrate technology that scans the content of individual web pages prior to an ad being served to ensure the content is appropriate for the brand. Table of Contents TABLE OF CONTENTS Prospectus Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001450040_innolight_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001450040_innolight_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001452176_surepure_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001452176_surepure_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information that should be considered before investing in our Common Stock. Investors should read the entire prospectus carefully, including the more detailed information contained in this prospectus under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" and our consolidated financial statements and the notes to those financial statements. Our Company We design, manufacture, market, sell or license and maintain our proprietary Turbulator systems for innovative liquid photopurification technology in the global marketplace. We have been engaged in these activities since 2005. Our technology uses Ultraviolet light in the C band to process, preserve and sustain the natural quality of food and beverage products, such as dairy products, fruit juice and concentrates, sugar syrup bases and alcoholic beverages. In addition to beverage products, our SurePure Photopurification Technology can also be used to reduce the microbial loads in turbid liquids with industrial applications, such as diesel, bio-ethanol and ship bilge, as well as pharmaceutical applications such as eye preparations and saline drips. The Offering Common stock currently outstanding 58,533,992 shares (1) Common stock being offered by us None Common stock being offered by the selling shareholders 11,919,426 shares Use of Proceeds We will not receive any proceeds from the sale or other disposition of the shares of our common stock offered by the selling shareholders.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001454189_auspex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001454189_auspex_prospectus_summary.txt
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001455694_signpath_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001455694_signpath_prospectus_summary.txt
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+The following summary of the terms of this Offering is not complete and is subject to, and is qualified in its entirety by reference to, the information set forth in the balance of this Prospectus and the provisions of each of the documents attached hereto as Exhibits. Business SignPath is a clinical stage biotechnology company founded in May 2006 to develop synthesized proprietary formulations of curcumin, a naturally occurring compound found in the root of the Curcuma longa Linn (turmeric) plant, for applications in human diseases. The Company is a publicly held non-traded Delaware corporation. Curcumin has an extensive history as an oral medicinal product with safe human use, but its potential therapeutic benefits have been limited by its low absorption (the amount of active drug reaching lesioned tissue) when taken orally, as well as its inactivation in the liver (due to hepatic glucuronidation or sulfation) and hydro-phobic nature whereby it is not soluble in water or blood. SignPath has developed and received approval in June 2014 from the U.S. Food and Drug Administration (the FDA ) of its Investigational New Drug ( IND ) application, and in Europe for an Investigated Medical Product Dossier ( IMPD ) for parenterally (taken into the body in a manner other than the digestive tract) administered curcumin, allowing curcumin to be administered intravenously and delivered to diseased sites with minimal inactivation. We believe that the liposomes, liposomal curcumin, and liposomal-PLGA-curcumin formulations we have licensed based on management s experience and the opinions of our consultants may be useful in the treatment of cancer, diabetes and neurologic disorders. The Company is developing two different intravenous/subcutaneous nano-particle sized formulations and a specific liposome application. Proof of efficacy of these compounds against human tumor xenografts in mice and prevention of cardiac arrhythmias was patent submitted and published. During IND mandated pre-clinical toxicity trials in dogs with liposomal curcumin, a dose-dependent hemolysis was observed, allowing us to identify a safe dose level, hence, allowing specific dose/schedules of administration for clinical trials in dogs and humans. SignPath has licensed three proprietary intravenous formulations containing curcumin as the active therapeutic agent. The first is a liposomal version licensed from University of Texas MD Anderson Cancer Center ( UTMDACC ) which is currently in Phase Ib clinical trials in Salzburg, Austria; the second is a nanosized version licensed from the Johns Hopkins University ( JHU ); and the third is an extended release Liposomal-PLGA formulation (curcumin-ER) licensed from the University of North Texas Health Science Center. The Company s near term (next 12 months) goals are to complete preclinical development of curcumin-ER, to file a second IND and to begin Phase I trials for safety and dosage studies in patients with cancer under its initial IND approved in June 2014. The complete dossier for liposomal curcumin, our first formulation was submitted to the European Medicines Agency (the EMA ) on June 8, 2011 for Phase Ia clinical trials and was completed in October 2012. The Company believes its licensed synthetic chemical formulations of curcumin will replace the naturally occurring extract mixture of curcuminoids, and its discovery of the anti-arrythmia effects of its liposomes will render them potentially patentable; patents for liposomal curcumin and nanocurcumin have already been issued. The Company plans to develop these new products which potentially will give SignPath proprietary curcumin preparations with applications in the treatment for a broad spectrum of neoplastic, neurologic, and metabolic indications. The Company has assembled leaders experienced in pharmacologic development of natural products to advise it on the development of its curcumin formulations. This Scientific Advisory Board is comprised of individuals with specific experience with natural products, formulation development, neoplastic, metabolic and neurologic disorders. Expertise in analytical chemistry will come from commercially based product chemists. Drug development will be overseen by Lawrence Helson MD, Chief Executive Officer, an oncologist with 25 years of pharmaceutical development experience; Anirban Maitra, PhD, MPPH, of UTMDACC, who has expertise in nanotechnology, development of nano, and liposomal curcumin testing for antitumor effects; Judith A. Smith, PhD, director of the UTMDACC preclinical development group for the liposomal formulation and Jamboor Vishwanatha of University of North Texas Health Science Center who has experience with extended release formulations. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Aggregate Offering Price per Security(5) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $.001 1,257,500 $ 2.00 $ 2,515,000 $ 323.94 (2) Common Stock, par value $.001, issuable upon conversion of Series A Preferred Stock 3,382,357 $ 2.00 6,764,714 871.30 (3) Common Stock, par value $.001, issuable upon conversion of Series B Preferred Stock 2,525,842 $ 2.00 5,051,684 650.66 Common Stock, par value $.001, issuable upon conversion of Series C Preferred Stock 4,000,000 $ 2.00 8,000,000 1,030.40 Common Stock, par value $.001, issuable upon exercise of Class A Warrants 3,382,357 $ 2.00 6,764,714 871.30 (4) Common Stock, par value $.001, issuable upon exercise of Class B Warrants 2,525,842 $ 2.00 5,051,684 650.66 Common Stock, par value $.001, issuable upon exercise of Class C Warrants 2,000,000 $ 2.00 4,000,000 515.20 Common Stock, par value $.001, issuable upon full exercise of placement agent warrants 3,107,203 $ 2.00 6,214,406 800.42 Common Stock, par value $.001, issued for accrued dividends 1,206,387 $ 2.00 2,412,774 310.77 TOTAL 23,387,488 $ - $ 46,774,976 $ 6,024.65 (6) (1) Pursuant to Rule 416 under the Securities Act of 1933, these shares include an indeterminate number of shares of Common Stock issuable as a result of stock splits, stock dividends, recapitalizations or similar events. (2) $72.96 was paid on April 7, 2009 and August 6, 2009, upon the filing of Registration Statement No. 333-158474 and $14.26 was paid upon the filing of Registration Statement No. 333-169386. (3) $93.93 was paid on April 7, 2009 and August 6, 2009 upon the filing of Registration Statement No. 333-158474 and $45.89 was paid upon the filing of Registration Statement No. 333-169386 (4) $119.29 was paid on April 7, 2009 and August 6, 2009 upon the filing of Registration Statement No. 333-158474 and $58.28 was paid upon the filing of Registration Statement No. 333-169386. (5) Estimated solely for purposes of calculating the registration fee pursuant to Securities Act Rule 457(g), based on the exercise price of the warrants. (6) Of this amount, $5,633.93 was paid with the filing of this Registration Statement on August 12, 2014, and the balance ($390.72) was paid as set forth in Notes (2)(3) and (4) above. This Registration hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the commission, acting pursuant to said Section 8(a), may determine. Pursuant to Rule 429(b) under the Securities Act this Registration Statement shall also serve as a Post-Effective Amendment No. 1 to the Company s Registration Statement on Form S-1 (No. 333-158474) declared effective on August 10, 2009 and Form S-1 (No. 333-169386) declared effective on October 14, 2010. The Company s Scientific Advisory Board members all bring relevant experience to the Company. Professor Tauseef Ahmad, MD is an experienced principal investigator for lymphoma, myeloma and solid tumor studies. Dr. Peter P. Sordillo, who joined our Scientific Advisory Board in 2013, is on the Staff of Medical Oncology and Hematology at Lenox Hill Hospital, New York as an experienced Oncologist. See Management below for more information about our management team and Scientific Advisory Board members. Clinical application strategies will be based upon the advice of the individuals serving on the Scientific Advisory Board, all of whom have academic and practical experience in biopharmaceutical development. As described below, we expect that our Phase I and II clinical trials will be run by contract clinical research organizations in Europe and the United states. During the fiscal years ended December 31, 2012 and 2013, and the nine month period ended September 30, 2014, the Company expended $939,296, $841,502, and $1,546,500, respectively, for net research and development. None of these expenses were borne by customers as the final products are not commercially available. They consisted primarily of payments made to commercial and academic institutions. See Business below. Company Strategies and Status Business Concept SignPath is a clinical phase biotech company. We in-license formulated curcumin (API) compounds based upon intellectual property, manufacturing capability, acceptable toxicity, parenteral administration feasibility, unmet clinical needs, and extensive data documenting efficacy of curcumin in disease indications. Following in-licensing of these formulations of curcumin we expect to develop a robust IP profile. Our modus operandi is to demonstrate safety and efficacy of the formulated compounds in Phase I and II clinical trials in order to facilitate Phase III clinical trials and registration approvals. Following Phase II trials, we plan to partner, joint venture and/or independently complete Phase III clinical trials, and upon approval commercialize the products. The possibilities of selling or licensing territory for our liposome indication, or curcumin products, to other Pharma prior to completion of clinical Phase III of any of the products is not excluded. Goals and Objectives In June 2014, our IND application for liposomal curcumin in a Phase Ib trial was approved by the FDA. IND status assigned by the FDA allows a drug to be used in humans, exempting it from pre-marketing approval requirements so that experimental trials may be conducted. We plan to complete a second liposomal curcumin indication for a Phase Ib-II trial of advanced Parkinson s disease in the US. We have an approved Investigated Medical Product Dossier (IMPD) in Europe. Our immediate goals are to complete Phase Ib clinical trials with liposomal curcumin by December 2014 for omnibus cancer indications in Salzburg, Austria. A Phase II trial in patients with refractory metastatic or recurrent non-small cell lung cancers will follow in Germany and Austria. They will receive ascending doses of Lipocurc TM intravenous infusions once weekly for eight weeks (one cycle) in order to determine the optimal safe dosage schedule. The trial plans to enroll 20-24 patients with the same cancer, and secondarily observe objective tumor response rates, progression free survival, and overall survival. The analysis will include biomarkers, and the best overall improvement between pre-treatment and up to eight weekly treatments to determine optimal safe dosage. Additionally, the mean number of evaluable patients who exhibit overall tumor shrinkage (i.e., the disease control rate) will be determined. SignPath Pharma will also record partial responses, stable disease, and progressive disease by RECIST criteria. These data will allow the selection of dosage and clinical indications for Phase II and Phase III clinical trials. A separate indication, progressive Parkinson s disease will enroll 16 patients with progressive disease in order to determine the optimal safe dosage schedule, and will be followed by a Phase II clinical trial. The patients in this trial will receive eight (8) hour infusions twice weekly for four weeks in addition to L-DOPA their standard of care. We have completed pre-clinical studies of oral lysophosotidylglycerol (Lyso PG) mitigation of QTc prolongation induced by moxifloxicin. In related studies, intravenous liposome mitigates currently marketed NSCLC drugs, including nilotinib, and crizotinib. SignPath is a publicly held non-listed Delaware corporation with offices in Quakertown, Pennsylvania in a building owned by our CEO. The Company does not pay rent or have a lease for its space. SignPath s executive office is located at 3477 Corporate Parkway, Suite 100, Center Valley, PA 18034. Our telephone number is 215-538-9996. The Offering Securities Issued and Outstanding as of January 13, 2015: Common Stock 14,163,887 shares, $.001 par value ( Common Stock ) Series A Convertible Preferred Stock 3,255.375 shares, $.10 par value convertible at $.85 per share into 3,831,576 shares of Common Stock. (1) Series B Convertible Preferred Stock 2,146 shares, $.10 par value convertible at $.85 per share into 2,525,842 shares of Common Stock. Series C Convertible Preferred Stock 5,000 shares $.10 par value convertible at $1.25 per share into 4,000,000 shares of Common Stock Series D Convertible Preferred Stock 320 shares $.10 par value convertible at $2.00 per share into 160,000 shares of Common Stock Class A Warrants Exercisable at $1.27 per share into 3,831,576 shares of Common Stock (2) Class B Warrants Exercisable at $1.27 per share into 2,525,842 shares of Common Stock Class C Warrants Exercisable at $1.875 per share into 2,000,000 shares of Common Stock Class D Warrants Exercisable at $3.00 per share into 40,000 shares of Common Stock Placement Agent Warrants Warrants Exercisable at $.85 and $1.25 per share into an aggregate of 3,107,203 shares of Common Stock ( Placement Agent Warrants ). Options 855,000 shares Vendor Warrants 800,000 shares Common Stock Fully Diluted 37,840,926 shares ________________________________ (1) Includes 449,418 shares of common stock issuable upon conversion of an aggregate of 381.665 shares of Series A Preferred Stock owned by Meyers Investments Family Limited Partnership, an entity of which Bruce Meyers, a founder of the Company is General Partner, which shares are not being registered hereby. (2) Includes 449,220 Warrant shares not being registered hereby. Shares Offered Hereby: Between August 2007 and April 2008, the Registrant completed a Bridge Financing with 17 accredited investors pursuant to which it received total gross proceeds of $847,500 from the sale of 10% promissory notes and shares of Common Stock (the Bridge Shares ). An aggregate of 1,257,500 Bridge Shares (all except those held by Bruce Meyers, the principal of the placement agent for the Bridge Financing and the Registrant s founder), are being registered for resale hereby. Between November 25, 2008 and July 26, 2011, SignPath sold 3,255.375 units of its securities at a price of $1,000 per Unit for gross proceeds of $3,255,375. Each Unit consists of (i) one share of 6.5% Series A Convertible Preferred Stock ( Series A Preferred Stock ) convertible into 1,177 shares of common stock (equivalent to $.85 per share of common stock, hereinafter, the Conversion Rate ) following the effective date of this Registration Statement (the Effective Date ) subject to adjustment, and (ii) one Class A Warrant to purchase 1,177 shares of common stock at $1.27 per share (the Warrant Exercise Price ) for a seven-year period following the fifth anniversary date of when the Common Stock begins trading on a national securities exchange, the OTC Bulletin Board, or OTC Pier (the Expiration Date ). This registration statement includes an aggregate of approximately 1,206,387 shares issued and outstanding as per accrued dividends on Series A Preferred Stock, but does not include 449,220 shares of Common Stock issuable upon conversion of an aggregate of 381.665 shares of Series A Preferred Stock beneficially owned by Bruce Meyers, principal of the placement agent. Between September 2, 2011 and November 26, 2012, SignPath sold 2,146 units of its securities offered at $1,000 per Unit for gross proceeds of $2,146,000. Each Unit consists of (i) one share of 6.5% Series B Convertible Preferred Stock ( Series B Preferred Stock ) and one Class B Warrant convertible at an $.85 Conversion Rate and $1.25 Warrant Exercise Price the same as the Series A Units. Between March 3, 2013 and June 18, 2014, SignPath sold 5,000 Units of the securities offered at $1,000 per Unit, for gross proceeds of $5,000,000. Each Unit consists of (i) one share of 6.5% Series C Convertible Preferred Stock ( Series C Preferred Stock ) convertible into 800 shares of Common Stock (equivalent to $1.25 per share of Common Stock and one Class C Warrant to purchase 400 shares of Common Stock at $1.875 per share for a seven-year period following the Effective Date of this Registration Statement. The Preferred Stock shall be convertible following the Effective Date, at the Company s option, into common stock, and the Warrants shall be subject to redemption, upon 30 days written notice, if the Company s common stock trades above 200% of the $0.85 Conversion Rate in the case of the Series A Preferred Stock and Series B Preferred Stock and 300% of the $1.25 Conversion Rate in the case of the Series C Preferred Stock, and $1.70 per share in the case of the Class A and Class B Warrants, and $3.75 per share in the case of the Class C Warrants for 20 consecutive trading days ending within 15 days prior to the date notice of redemption is given. This registration statement also includes Placement Agent Warrants to purchase an aggregate of 3,107,203 Units issued in connection with the above-described Bridge Offering and Series A, B and C Private Placements. This registration statement of the Company is for the purpose of allowing Selling Stockholders to resell their shares at their own discretion. This registration statement also serves as a post-effective amendment to its two prior registration statements pursuant to Rule 429(b) under the Securities Act. The Company s initial registration statement on Form S-1 (No. 333-158474) was declared effective by the SEC on August 10, 2009. Its second registration statement on Form S-1 (No. 333-169386) was declared effective by the SEC on October 14, 2010. No founders shares or any other shares of common stock held by affiliates are being registered for resale. The selling stockholders are the retail accredited investors in the Company s Bridge Financing and Preferred Stock Offerings and the Placement Agent s Warrants, for whom the Company agreed to file this registration statement. None of the Units or Bridge Shares purchased by affiliates of the Company are being registered. Thus, an aggregate of 1,257,500 Bridge Shares, 11,114,557 shares of common stock issuable upon conversion of Preferred Stock and 7,908,199 shares of common stock issuable upon exercise of Warrants and 3,107,203 shares of Common Stock issuable upon exercise of placement agent warrants, or an aggregate of 23,387,488 shares of Common Stock are registered for resale hereby. The Company shall receive no consideration, directly or indirectly, in connection with the future sale of the shares registered under this registration statement by selling stockholders. Summary Financial Information The summary financial information set forth below is derived from the more detailed audited and unaudited financial statements of the Company appearing elsewhere in this prospectus. This information should be read in conjunction with such financial statements, including the notes to such financial statements. Statement of Operations Data: Nine Months Ended Years Ended September 30, December 31, 2014 2013 2013 2012 (Unaudited) (Unaudited) Revenue $ - $ - $ - $ - Total Operating Expenses 2,136,244 1,668,545 1,953,731 1,312,405 Gain (Loss) on derivative liability -- (3,926 ) (3,926 ) (8,154 ) Grant income -- -- -- -- Interest income -- -- -- -- Total other income (expense) (3,435) (3,453) (3,141 ) 1,471 Net Loss (2,139,679 ) (1,671,998 ) (1,956,872 ) (1,310,934 ) Basic and Diluted Loss Per Share $ (0.17 ) $ (0.13 ) $ (0.34 ) $ (0.10 ) Weighted Average Number of Shares Outstanding 12,877,500 12,848,108 12,877,500 12,833,758 Balance Sheet Data: September 30, December 31, 2014 2013 2012 (Unaudited) Current Assets $ 1,177,769 $ 1,241,397 $ 31,922 Total Assets 1,177,769 1,241,397 32,066 Accounts Payable And Accrued Expenses 874,631 421,632 894,475 Derivative Liability -- 5,687,262 Total Liabilities 874,631 421,631 6,581,737 Preferred Stock 1,041 879 541 Common Stock 14,125 12,879 12,839 Accrued Dividends 796,181 1,353,961 861,872 Additional Paid-In Capital 12,282,878 10,120,454 1,286,613 Accumulated Deficit (12,808,087 ) (10,668,408 ) (8,711,836 ) Stockholders Equity (Deficit) 303,138 819,765 6,549,671 Total Liabilities and Stockholders Equity $ 1,177,769 $ 1,241,397 $ 32,066
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001458962_mindbody_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001458962_mindbody_prospectus_summary.txt
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless expressly indicated or the context requires otherwise, the terms Zendesk, company, we, us, and our in this prospectus refer to Zendesk, Inc., a Delaware corporation, and its consolidated subsidiaries. Overview Zendesk believes the fundamental relationship between organizations and their customers is changing, and a new customer service philosophy is emerging. Zendesk was formed to help organizations capitalize on this profound shift. We are a software development company that provides a software-as-a-service, or SaaS, customer service platform. Our beautifully simple platform helps organizations engage with people in new ways that foster long-term customer loyalty and satisfaction. We empower organizations to better answer customers questions, and to solve their problems through the channels that people use every day when seeking help, such as email, chat, voice, social media, and websites. Our platform also helps people find answers on their own through knowledge bases and communities, capitalizing on the increasing customer preference for self-service. Our customer engagement capabilities allow organizations to proactively serve their customers, reaching out to those who may need help and soliciting feedback about their experience. The openness of our customer service platform makes it easy for organizations to integrate with other applications and embed our platform s functionality natively into their own websites and mobile applications. Our platform consolidates the data from customer interactions and provides organizations with powerful analytics and performance benchmarking. Our business model is designed to drive organic growth, leverage positive word-of-mouth, and remove friction from the evaluation and purchasing process. A substantial percentage of our customers find us online and subscribe to our customer service platform directly from our website. Exemplifying the success of our sales and marketing strategy, during the three months ended December 31, 2014, approximately 64% of our qualified sales leads generated online, and approximately 62% of the total qualified sales leads for our customer service platform, came from organic search, customer referrals, and other unpaid sources. Our largest source of qualified sales leads is free trials of our customer service platform commenced by prospects. Our sales team largely focuses on a land and expand strategy, which leverages this grassroots adoption and seeks to expand our footprint within organizations. As of December 31, 2014, we had approximately 52,500 paid customer accounts on our customer service platform and live chat software in the aggregate, which represent organizations across a broad array of sizes, industries, and geographies. Our customers are located in 150 countries and territories and provide customer service through our platform in over 40 languages. In March 2014, we completed the acquisition of Zopim Technologies Pte Ltd., or Zopim, a software development company that provides a SaaS live chat service. Through Zopim, we provide live chat software as a standalone service and as an integrated service with our customer service platform for chat-enabled agents. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion. Dated March 16, 2015. 8,530,000 Shares Zendesk, Inc. Common Stock Zendesk, Inc. is selling 7,500,000 shares of common stock and the selling stockholders identified in this prospectus are selling 1,030,000 shares of common stock in this offering. We will not receive any proceeds from the sale of shares to be offered by the selling stockholders. Our common stock is listed on the New York Stock Exchange under the symbol ZEN. On March 12, 2015, the last reported sale price of our common stock on the New York Stock Exchange was $22.62 per share. We are an emerging growth company as defined under the federal securities laws and, as such, we are subject to reduced public company reporting requirements. See Risk Factors beginning on page 10 to read about factors you should consider before buying shares of common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to selling stockholders $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. The underwriters have the option to purchase up to an additional 1,279,500 shares from us at the public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. Goldman, Sachs & Co. Morgan Stanley BofA Merrill Lynch Credit Suisse Pacific Crest Securities Canaccord Genuity JMP Securities Prospectus dated , 2015. Table of Contents Our financial performance reflects our significant customer growth and strong customer retention and expansion. For the years ended December 31, 2012, 2013, and 2014, our revenue was $38.2 million, $72.0 million, and $127.0 million, respectively, representing an 88% annual growth rate from 2012 to 2013 and a 76% annual growth rate from 2013 to 2014. For the years ended December 31, 2012, 2013, and 2014, we derived $15.8 million, or 41%, $29.6 million, or 41%, and $54.8 million, or 43%, respectively, of our revenue from customers located outside of the United States. For the years ended December 31, 2012, 2013, and 2014, we generated net losses of $24.4 million, $22.6 million, and $67.4 million, respectively. We intend to continue to invest aggressively to drive continued growth and market leadership. Industry Background Over the last several years, the ways in which people research, purchase from, and communicate with organizations have evolved from a relatively simple set of interactions into a rapidly expanding network of information and communications. The result is people who are better informed about the products and services they buy; have more choices and potentially less loyalty; and can influence many others with their opinions. People have higher expectations about how an organization will relate to them and less patience for organizations that do not meet these expectations. We believe this transformation creates tremendous opportunities for organizations of all sizes that make customer service a critical focus of their operations. We believe that many successful organizations today exemplify this new approach and have discovered that a deep understanding of the customer experience can be the foundation for building highly valuable customer relationships. While opportunities abound for organizations that recognize and capitalize on these trends, the penalties for failing to evolve to this changing landscape can be severe. Acting as brand advocates or adversaries, individuals can influence peers opinions and purchasing behavior. Various software tools, delivered both on-premise and in the cloud, have attempted to address the difficult nature of customer support for many years. This legacy customer support software is costly and complex, causing the vast majority of small and medium-sized businesses, or SMBs, to rely primarily on tools like email, phones, and spreadsheets. Even larger organizations able to afford customer support software often adopt a piecemeal approach with the goal of minimizing support costs. The result is the inability to support multiple channels or expand to new channels, ultimately leading to customer frustration. Legacy customer support software also limits employees effectiveness in responding to customer inquiries and offers few, if any, analytics, recommendations, or performance benchmarks. Familiar with consumer web software like Facebook, Twitter, and Gmail, employees desire tools with similar ease-of-use and sophistication. Most enterprise software, particularly customer support software, has not progressed to embrace consumer design tactics including optimized user experience, availability on personal devices, and ease-of-deployment. We believe that effective customer service requires a purpose-built platform that embraces the new landscape of omni-channel communication and the empowered and informed customer, and places an emphasis on well-designed experiences. According to International Data Corporation, or IDC, a global market intelligence firm, in 2013 the worldwide customer relationship management, or CRM, software market comprised $22.8 billion. Our customer service platform primarily addresses the customer service and contact center segments which comprised a total of $10.5 billion in 2013 worldwide. In addition, IDC has estimated that between 2012 and 2017 SaaS solutions in the overall CRM applications market will grow over ten times faster Table of Contents Table of Contents than legacy on-premise solutions. In a 2013 report, IDC also estimated that there were approximately 76 million SMBs worldwide. We believe that many of these organizations have not been able to implement or afford legacy customer support software and therefore represent a substantial greenfield market opportunity for our customer service platform. The Zendesk Approach Zendesk s mission is to help organizations and their customers build better relationships. Our intuitive customer service platform facilitates listening to the customer, finding the best possible answer, communicating through the appropriate channel, and sharing the knowledge gained with the whole organization. Beautifully Simple. We have an overarching philosophy to be beautifully simple. We take intuitive design elements that people have grown to expect from consumer software and incorporate them into our platform. We also offer a free trial and a transparent purchase process with numerous self-service options that are suitable for SMBs and enterprise departments as well as assisted options for larger clients. Omni-Channel and Contextual. Our customer service platform is built to support customers across a wide variety of integrated channels email, voice, social media, and websites. We offer live chat as a standalone service and as an integrated service with our customer service platform for chat-enabled agents. In addition, our customer service platform provides important contextual information around customer issues by encouraging employee collaboration and enabling real-time information sharing. Affordable. We believe our subscription plans are significantly less expensive and offer greater pricing transparency than many legacy customer support software applications (especially when software updates, ongoing maintenance, and consultant fees required for integration, installation, customization, and training are taken into account). Natively Mobile. Through native mobile apps, employees can access our platform anywhere with robust product functionality, an elegant interface, and performance analytics. Cloud-Based Architecture. Our architecture automates frequent software updates and introduction of new features while also allowing our platform to easily scale within organizations. Configurations made with simple tools tailor the functionality and design of our platform to an organization s particular needs and keep customer service efforts of any size organized. Open Platform. Our platform includes over 270 pre-built integrations with CRM, e-commerce, telephony, live chat, and other apps, which are enabled through our app marketplace. Developed with our open application programming interfaces, or APIs, our platform can also be customized, integrated, or expanded upon with private apps. Through Zendesk Embeddables, we enable customers to simply and natively integrate critical functionality directly into their own websites and applications, including optimized integrations for mobile applications. Proactive Engagement. Organizations are equipped to proactively communicate with customers at the most relevant and critical moments. For example, organizations can automatically trigger workflow to proactively reach out to customers that may signal they have had a bad experience or need particular attention. Strategic Analytics. Our customer service platform provides analytics that are mission critical for an organization s operations. In all subscription plans for our customer service platform, managers have access to real-time operational efficiency and customer satisfaction analytics at the interaction, agent, and organizational level. Table of Contents Table of Contents Growth Strategy We are focused on the following key areas of growth: Introducing new products and broadening our platform functionality; Furthering our data-driven approach; Maintaining our leadership in the SMB market; Expanding our enterprise customer base; Continuing to increase our global customer footprint; Broadening our integrations and partnerships; and Developing our brand.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001463459_emergent_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001463459_emergent_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference. This summary sets forth the material terms of this offering, but does not contain all of the information you should consider before investing in our notes. You should read carefully this entire prospectus supplement and the accompanying prospectus, including the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, before making an investment decision to purchase our notes, especially the risks of investing in our notes discussed in the section entitled "Risk Factors" in this prospectus supplement as well as the financial statements and notes to those financial statements incorporated by reference into this prospectus supplement and the accompanying prospectus. "We," "us," "our company," "our," "Emergent Health" and the "Company" refer to Emergent Health Corp., a Nevada Corporation. Corporate History We were incorporated, under the name Rolling Stone Retirement Community, Inc. on April 27, 2006, under the laws of the State of Nevada. Pursuant to an agreement dated January 18, 2007, John V. Cappello and Associates, Inc., (JVC), acting as an agent for its designees purchased 95% of the outstanding shares of the issuer's predecessor, Rolling Stone Retirement Community, Inc., which it then distributed to its designees. Upon purchase, John Cappello became our sole officer and director and our business plan became the development and distribution of nutritional and dietary products developed by Dr. Cappello. On May 20, 2007, we amended our corporate charter to change our name from "Rolling Stone Retirement Community, Inc." to "Emergent Health Corp." Our common shares are quoted by the OTC Markets OTC Link with an OTC Pink Tier under the symbol "EMGE". Pursuant to an agreement dated January 18, 2007, John V. Cappello and Associates (JVC) acting as an agent for its designees purchased 95% of the outstanding shares of our predecessor, Rolling Stone Retirement Community, Inc., which it then distributed to its designees. On July 9, 2008, we authorized a 50:1 reverse split of its common shares, effective July 19, 2008. A new CUSIP Number 29100Q 209 was granted by NASDAQ. This action reduced the outstanding common shares of the Issuer from 10,279,216 to 206,101. On January 31, 2008, we made a private placement of a paperless un- certificated Preferred Stock designated Series A. The Series A was for restricted convertible preferred stock priced at $1.00 per share and in the amount of $20,000 for 20,000 shares. It is to yield 7% payable annually on January 31 of each year. It has a conversion ratio of four shares of common for one share of Preferred. The purchaser is an accredited investor, namely; Hamilton Foundation. The Company has redeemed the Series A shares. On July 24, 2008 we issued 18,000,000 common shares (restricted Rule 144 shares) to its majority shareholder Cappellos, Inc. for multiple past and future efforts dedicated to the success of the Issuer. These included: his non-compensation since inception; no future compensation to the detriment of Issuer's viability; a provision of patent license agreement with no upfront payment; delay of royalties until feasible for payment; and an agreement to continue ongoing support for the Company in consideration of the shares issued. After the issuance of said shares the total common shares outstanding were 18,206,101. On July 28, 2008, 1,600,000 shares of common stock were purchased by Seven Palm Investments, LLC (the "Purchaser") from the Issuer for a purchase price of $240,000. The outstanding shares then became 19,806,101. The Issuer had expected to receive payment after issuance of the shares. Due to the financial situation of the Purchaser, a Promissory Note was signed by the Purchaser on September 30, 2008 due June 30, 2009, or shares to be returned. The Note was carried as a questionable receivable on the footnotes of subsequent Balance Sheets. The Issuer sent several demand letters after June 30, 2009 to the Purchaser and full payment of $240,000 was received as of September 30, 2009. A Form D was filed with the Securities and Exchange Commission in August 2009 describing this sale of stock. On December 31, 2009, an 11-10 forward split became effective increasing our outstanding common shares to 21,786,711. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price Amount of Registration Fee Convertible Notes (1) $ 7,500,000 (1) $ 7,500,000 $ 871.50 Common Shares Underlying Notes (2) 10,000,000 (2) $ 7,500,000 (3) $ 0 (4) (1) Includes $7,500,000 of 12% convertible promissory notes. (2) Includes 10,000,000 shares of common stock issuable upon conversion of the convertible promissory notes at the price of $0.75 per share of common stock. Pursuant to Rule 416 under the Securities Act, such number of shares of common stock registered hereby shall include an indeterminate number of shares of common stock that may be issued in connection with a stock split, stock dividend, recapitalization or similar event. (3) Pursuant to Rule 457(i), there is no additional filing fee with respect to the shares of common stock issuable upon conversion of the convertible promissory notes because no additional consideration will be received in connection with the exercise of the conversion privilege. (4) Calculated in accordance with Rule 457(a) under the Securities Act of 1933, as amended (the "Securities Act"). THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE. On November 12, 2013, Emergent President, John V. Cappello (JVC), experiencing poor health and recognizing the need to attract new management, entered into a Stock Purchase Agreement with Parcae Capital Corporation (Parcae), a Massachusetts company, and Clover Capital Corp (Clover)., a Pennsylvania company controlled by Gregory McCauley. Parcae and Clover agreed to purchase 11,880,000 shares of common stock from JVC for $800,000, restructure the company, install new management, update the Company's books and records, have an audit of the Company's 2012 and 2013 financial statements performed and facilitate the filing of an S-1 Registration Statement with the SEC. On May 29, 2014, we entered into a consulting agreement with Parcae and Clover. We issued 15,000,000 common shares in total to Parcae and Clover for their services. Their services include assistance with the closing of a May 30, 2014 Amended Stock Purchase Agreement, development of our business plan, accounting services, assisting with regulatory filings and assisting the Company with its capital formation activities. On August 27, 2014, the Stock Purchase Agreement closed and Stephen Hussey and Kimberly Halvorson joined our management team. On September 13, 2014 John Launie was appointed the Company's Chief Financial Officer. In December 2014, Scott Maguire Chairman, John Launie, Robert S. McCoy Jr., Dr. David P. Jones, and Kevin Harrington were elected to our Board of Directors. In connection therewith, on January 14, 2015, Stephen Hussey resigned as our chief executive officer, and on January 21, 2015 John Launie was appointed as our new President and Chief Executive Officer. In November and December 2014, the Company raised $200,000.00 through a subscription agreement. The Company authorized the issuance of 930,000 shares of restricted Rule 144 common stock. The securities were exempt from registration under Section 4(2) of the Securities Act. All investors were accredited investors and were provided with all requested information before investing. Our Business We are engaged in the development and commercialization of nutritional products through approximately 950 distributors/customers who participate in our multi-level marketing program. We have a website at www.emergenthealth.com. Information contained in, or accessible through, our website does not constitute part of this prospectus. For the years ending December 31, 2013, and nine months ending September 30, 2014, we generated gross revenues of $1,540,712 and $712,847, respectively. We had net income of $121,027 and incurred a net loss of ($184,045) for the year ending December 31, 2013 and nine months ending September 30, 2014, respectively. Our principal executive office is located at 2424 North Federal Highway, Suite 257, Boca Raton, FL 33431. Our telephone number is 561-961-4344.
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+parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors and our consolidated financial statements and the related notes, before deciding to invest in our common stock. Unless the context requires otherwise, references in this prospectus to AltheaDx, we, us and our refer to AltheaDx, Inc. Overview We are a commercial stage molecular diagnostics company specializing in the field of personalized medicine. IDgenetix, our pharmacogenetic, or PGx, testing portfolio, enables personalized therapeutic decisions for patients suffering from some of the most prevalent clinical conditions in the United States, including cardiovascular disease, neuropsychiatric disorders and pain. Our proprietary algorithm-based bioinformatic platform and PGx testing portfolio are intended to serve as a tool to assist healthcare providers in identifying optimal drugs for their patients as well as dosing guidelines based on a patient s genetic make-up, current prescription regimen and other key factors. IDgenetix is designed to enable healthcare providers to make timely and evidence-based decisions, which we believe can reduce the overall cost of patient care by reducing adverse events, optimizing patients overall therapeutic regimen and helping to achieve a faster therapeutic response. In 2013, the U.S. healthcare system spent in excess of $260 billion on prescription drugs and that amount is expected to exceed $450 billion in 2022. Nearly 50% of the U.S. population, and almost 90% of people 65 years and over (or approximately 36 million patients), take at least one prescription drug and more than 10% of the U.S. population, and almost 40% of people 65 years and over (or approximately 16 million patients), take five or more prescription drugs, which we refer to as polypharmacy. We estimate that the overall potential market opportunity for IDgenetix is greater than 150 million patients in the United States, representing the number of people that take at least one prescription drug, which includes the more than 30 million people who are polypharmacy. We believe there are significant health concerns and unnecessary costs associated with the trial-and-error manner in which physicians prescribe drugs, without prior knowledge of an individual patient s genetic profile. There are an estimated approximately 120,000 deaths and more than two million serious adverse reactions attributable to prescription drug use in the United States each year, at a cost to the healthcare industry that exceeds $136 billion annually. It has been estimated that genetics can account for up to 95% of variability in drug disposition and effects and as much as 40-60% of adverse drug reactions. We believe IDgenetix can improve clinical outcomes and reduce the overall cost of prescription drugs by enabling better drug selection, earlier favorable results and lower occurrence of adverse events. In October 2013, we commercially launched IDgenetix in the United States. Since launch and through September 30, 2014, we completed IDgenetix tests for more than 13,500 patient samples, of which more than 7,500 samples were completed in the quarter ended September 30, 2014. IDgenetix examines genes involved in both the metabolism and pharmacological activity of numerous drugs. It provides physicians with information on the functionality of critical metabolic enzymes and key biological drug targets, where applicable, for each patient. In addition, our algorithm screens for unfavorable metabolic interactions resulting from multiple prescription drugs, over-the-counter drugs and herbal supplements, and environmental and dietary factors that may significantly alter the metabolism of certain drugs. We currently offer 13 tests in the therapeutic areas of cardiovascular disease, neuropsychiatric disorders and pain, and we are developing additional tests/offerings in the therapeutic areas of neurology and rheumatology. Table of Contents We designed IDgenetix to provide a comprehensive PGx test offering to best meet the needs of our target customers such as long-term and post-acute care facilities, government facilities, integrated delivery networks, or IDNs, and managed care organizations. These institutional healthcare providers require broad PGx testing capabilities to manage a large and diverse patient population, with patients often suffering from multiple clinical conditions. These customers often operate under fixed-fee-per-patient or fixed-fee-per-procedure arrangements and are searching for ways to improve clinical outcomes at the lowest possible cost. In addition, IDgenetix addresses the needs of physicians across multiple specialties, such as cardiologists, general practitioners, obstetricians and neurologists. In addition to IDgenetix, we provide research and development services, primarily in oncology, to numerous biopharmaceutical partners. We use our expertise in next-generation sequencing, or NGS, and our computational biology and information technology capabilities to analyze subject samples from preclinical through clinical development. We are validating a number of companion diagnostic test assays in late stage clinical trials. We believe that IDgenetix will have commercial success due to the following factors: Significant market need for personalized, genetic based information in treating patients. There is a significant need to address the current trial-and-error method of prescribing drugs and reduce healthcare costs due to drug-related adverse events and over-prescribing practices. We believe the use of IDgenetix can address both physician and patient needs as well as the financial burden of the current trial-and-error method of prescribing drugs. Government agencies also acknowledge the importance of PGx. For example, the U.S. Food and Drug Administration, or FDA, has required, for certain drugs, the incorporation of PGx information into drug labeling and currently recommends genetic testing for patients taking a subset of these drugs. Additionally, the National Institutes of Health, or NIH, has established the Clinical Pharmacogenetics Implementation Consortium, or CPIC, guidelines intended to assist healthcare providers in translating laboratory genetic test results into actionable prescribing decisions for specific drugs. Broad test portfolio that comprehensively identifies information that will enable decisions to improve patient outcomes. IDgenetix tests are designed to evaluate genes encoding critical metabolic enzymes and key biological drug targets, where applicable, for which clinical data exists. IDgenetix examines clinically significant gene duplication and deletion events and covers more than 85 genetic mutations in 19 different genes, which we believe is the most comprehensive offering on the market today. We continue to enhance IDgenetix by updating our proprietary algorithm as well as evaluating additional genes to incorporate into our tests. We believe this is a competitive advantage as institutional healthcare providers require broad PGx testing capabilities to manage a large and diverse patient population, with patients often suffering from multiple clinical conditions. Speed and ease of use for routine clinical practice. The IDgenetix process, from order initiation and sample acquisition through report delivery and availability of our genetic counseling team, enables healthcare providers to obtain and interpret the information we provide in a convenient and simple manner. Patient samples are easily collected via a cheek swab and sent to our laboratory for analysis. Once received, our proprietary laboratory workflow and bioinformatic algorithm enable us to detect, interpret and report clinically relevant information to healthcare providers, generally within 48 hours of sample receipt, which we believe is an industry-leading turnaround time. Our concise, easy-to-interpret reports and analysis provide healthcare providers with actionable information on therapeutic options regarding drugs and dosing for their patients, based upon the complex genetic, pharmacological and environmental analysis performed by our algorithm. Healthcare cost reduction. We provide healthcare providers a tool that enables them to make decisions regarding treatment that may result in the elimination, replacement, supplementation or revision of dosing regimens for prescribed drugs, fewer adverse events and faster therapeutic response. We believe this can reduce Table of Contents overall treatment costs, a particular concern for healthcare providers operating under fixed-fee-per-patient or fixed-fee-per-procedure arrangements who are searching for ways to improve clinical outcomes at the lowest possible cost. Clinical studies supporting the use of PGx testing. While there have not been any IDgenetix-specific studies to date, there are more than 5,000 published studies on the use of PGx testing in a clinical setting. For example, there have been several publications linking the CYP2C19 gene to the use of clopidogrel (marketed by Bristol-Myers Squibb under the name Plavix) anticoagulant therapy, including meta-analysis studies totaling more than 150,000 patients. We believe that further studies, including studies that are specific to IDgenetix, will increase awareness and drive adoption of PGx testing, and help establish PGx testing as a standard of care in drug selection. Our Strategy Our goal is to become the premier provider of PGx testing services to institutional healthcare providers and physicians across the United States. To achieve this objective, we intend to: Target large institutions where polypharmacy is a significant cost driver. IDgenetix may address polypharmacy by enabling healthcare providers to make timely and evidence-based decisions, which we believe can reduce the overall cost of patient care by reducing adverse events, optimizing patients overall therapeutic regimen and helping to achieve a faster therapeutic response. As such, we believe institutional healthcare providers represent the largest opportunity for IDgenetix. Currently, we have more than 10 agreements with institutional healthcare providers for our IDgenetix testing services, all of which are in the early stages of implementation. We recently entered into an agreement with a subsidiary of Universal Health Services, Inc., or UHS, a hospital management company covering 25 acute care hospitals, 195 behavior health facilities and three surgery centers, to initiate a pilot roll-out of IDgenetix testing among different specialties at its Aiken Regional Medical Center in South Carolina, which is currently underway. We also recently entered into an agreement with a nationally-ranked medical center within a large healthcare system in the southeastern United States to perform IDgenetix testing. This medical center is staffed by more than 390 physicians and specialists across numerous areas of clinical expertise. There are more than 1,500 physicians across the healthcare system and over 1,300 licensed beds. While we market our IDgenetix service across several specialties within this healthcare system, the initial focus of IDgenetix testing will be for patients undergoing neurosurgery in an effort to optimize post-operative pain management and reduce both the costs and length of stay following surgery. Highlight our value proposition and clinical utility through clinical studies. We are currently conducting an ongoing pilot study with a large managed care organization to evaluate patient outcomes in approximately 300 polypharmacy patients over a 12-month period following IDgenetix testing, and, in September 2014, we entered into an agreement for a second pilot study to be conducted at an acute care facility run by Universal Health Services, Inc., a hospital management company covering 25 acute care hospitals, 195 behavior health facilities and three surgery centers. We intend to continue to sponsor or co-sponsor IDgenetix-guided clinical studies within institutional healthcare organizations to analyze the impact of the use of IDgenetix by physicians on defined endpoints such as the number of prescription drugs, hospitalizations and length of stay, and other health assessments. Differentiate our IDgenetix offering through superior customer service. As part of our IDgenetix customer service department, we provide physicians with access to individuals with doctorate degrees in pharmacy (Pharm.D.), certified genetic counselors and additional customer service support personnel at no additional charge. Our customer service department has the capability to address a range of inquiries, from routine questions to complex patient cases, with healthcare providers. We believe this differentiated service Table of Contents offering increases the quality of care to patients, thereby facilitating adoption of our IDgenetix tests by institutional healthcare providers and physicians. Leverage operational efficiency. Our automated and efficient testing platform enables us to maintain a low-cost, scalable laboratory operation. As our sample volume increases, we expect our average cost per sample to decrease. Expand the IDgenetix portfolio and offerings. We recently expanded our IDgenetix tests from 16 to 19 genes, and, in the near term, expect to expand our tests from three to five therapeutic areas. Because we currently test more than 85 genetic mutations in 19 different genes that are most commonly associated with drug metabolism, we are able to add additional tests at an accelerated pace, with limited additional cost. IDgenetix Our proprietary bioinformatic algorithm incorporates complex genetic, pharmacological and environmental factors which we use to provide a simple, easy-to-read, actionable report for use by healthcare providers. In addition to this patient report, we currently offer a polypharmacy analysis for certain institutional healthcare provider customers that allows physicians to identify potentially harmful interactions and possibly avoid adverse events through elimination of drugs or selection of more appropriate drugs. We believe that our polypharmacy analysis is especially beneficial to institutional healthcare providers. Polypharmacy patients tend to be the most costly for institutional healthcare providers to treat, as they typically suffer from multiple clinical conditions and experience increased adverse events due to the number of prescription drugs these patients take on a regular basis. Optimization of treatment therapies for these patients represents an opportunity to reduce the overall cost of healthcare for these patients while potentially improving patient outcomes. In October 2013, we launched eight IDgenetix tests covering three therapeutic areas: cardiovascular disease, neuropsychiatric disorders and pain. We have since launched five new tests to expand our offering to 13 tests within our three therapeutics areas of focus. We initially targeted these therapeutic areas as they include six of the top ten prescription classes written in the United States, according to a 2011 Annual Prescription Audit by IMS Health (a leading healthcare information company), representing more than 1.3 billion prescriptions and $80 billion in spending per year. In the near term, we intend to expand the IDgenetix portfolio by adding additional tests and categorizing current tests to better fit specific physician specialties in the therapeutic areas of neurology and rheumatology. Similar to our initial strategy, we have targeted these therapeutic areas as they satisfy our development criteria that include: clinical utility of PGx testing, high prescription volume, commercial potential, synergy with our current IDgenetix test offerings and clinical relevance to institutional healthcare providers. Sales and Marketing Our selling strategy divides the market into two categories: (1) institutional healthcare providers and (2) physicians. We have more than 100 account representatives dedicated to optimizing near-term growth in both categories. We designed the IDgenetix service for the institutional healthcare provider category and believe that this market category will be a significant driver of growth for the company both near and longer-term due to the many types and significant number of potential institutional healthcare providers. Currently, we have an institutional sales team of six account managers and a contract sales organization, or CSO, that provides an additional three account managers focused on institutional healthcare providers. Institutional healthcare providers typically represent sizeable patient populations of 2,000 to 500,000 patients, allowing a relatively large number of patients to be targeted with a limited number of account managers. We also market directly to individual physicians. We currently have a sales force composed of several fully dedicated CSOs and a limited distributor network. While this sales force focuses exclusively on physicians, they have also generated a significant number of leads for the institutional sales team due to deep client relationships within their respective geographical areas. Table of Contents Recent Developments Our estimated financial results for the three months and year ended December 31, 2014 presented below are preliminary and are subject to the completion of our year-end audit. The preliminary financial data have been prepared by and are the responsibility of our management. Ernst & Young LLP has not audited, reviewed, compiled or performed any procedures with respect to the preliminary financial data or its achievability. Accordingly, Ernst & Young LLP does not express an opinion or any other form of assurance with respect thereto. These estimates are not a comprehensive statement of our financial results for this period and should not be viewed as a substitute for full financial statements prepared in accordance with generally accepted accounting principles. Our actual results may differ from these estimates as a result of the completion of our year-end closing procedures, audit adjustments and other developments that may arise between now and the time our financial results for this period are finalized, and such changes could be material. While complete financial information as of and for such period are not available, based on the information and data currently available, our management preliminarily estimates the following: We estimate total IDgenetix samples processed in the range of 9,100 to 9,200 for the three months ended December 31, 2014 and 22,615 to 22,715 for the year ended December 31, 2014. This compares to 348 samples processed during the three months and year ended December 31, 2013. We estimate total revenue in the range of $7.0 million to $7.5 million for the three months ended December 31, 2014, of which we expect approximately 75% to 80% in diagnostic revenue from our IDgenetix tests. This compares to total revenue of $3.1 million for the three months ended December 31, 2013. For the full year ended December 31, we estimate total revenue in the range of $20.6 million to $21.1 million for the year ended December 31, 2014. This compares to total revenue of $7.3 million for the year ended December 31, 2013. We estimate total operating expenses in the range of $9.2 million to $10.7 million, including non-cash stock-based compensation of approximately $3.0 million, for the three months ended December 31, 2014 and $23.3 million to $24.8 million, including non-cash stock-based compensation of approximately $3.3 million, for the year ended December 31, 2014. This compares to total operating expenses of $2.5 million, including non-cash stock-based compensation of $0.1 million, for the three months ended December 31, 2013 and $6.7 million, including non-cash stock-based compensation of $0.1 million, for the year ended December 31, 2013. We estimate a net loss in the range of $4.9 million to $6.4 million, including non-cash stock-based compensation of approximately $3.0 million, for the three months ended December 31, 2014 and $10.8 million to $12.3 million, including non-cash stock-based compensation of approximately $3.3 million, for the year ended December 31, 2014. This compares to a net loss of $1.1 million, including non-cash stock-based compensation of $0.1 million, for the three months ended December 31, 2013 and a net loss of $4.1 million, including non-cash stock-based compensation of $0.1 million, for the year ended December 31, 2013. We estimate that we had approximately $10.2 million in cash and cash equivalents at December 31, 2014. These preliminary results of operations for the three months and year ended December 31, 2014 are not necessarily indicative of the results to be achieved in any future period. Table of Contents Risks Associated With Our Business Our business is subject to numerous risks, as more fully described in the section entitled Risk Factors immediately following this prospectus summary. You should read these risks before you invest in our common stock. We may be unable, for many reasons, including those that are beyond our control, to implement our business strategy. In particular, risks associated with our business include: We have a limited operating history and have incurred significant operating losses since our inception, including an accumulated deficit of $19.2 million as of September 30, 2014. Our financial results are largely dependent on the commercial success of IDgenetix, and we may not be able to generate sufficient revenue from our existing tests or new tests that we may develop to achieve profitability. Our IDgenetix tests may never achieve significant market acceptance. Changes in laws, regulations, payor policies or contracting arrangements with payors have adversely affected, and may continue to adversely affect, coverage or reimbursement for IDgenetix testing services, which may decrease our revenue and adversely affect our results of operations and financial condition. Changes in FDA policies regarding oversight over laboratory developed tests could cause us to experience significantly increased development costs and may delay or prevent commercialization of new tests and impact our ability to continue marketing our current tests. If we fail to comply with federal and state healthcare laws and regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. Increased competition, including from competitors replicating our key service offerings in the future, and the failure to provide a higher quality of service than that of our competitors could adversely affect our revenue and profitability. If our laboratory facility becomes inoperable, we will be unable to perform our IDgenetix tests and our business will be harmed. We rely on a limited number of third parties for manufacture and supply of all of our laboratory instruments, tests and materials, including consumables, and we may not be able to find replacement suppliers or manufacturers in a timely manner in the event of any disruption, which could adversely affect our business. If our tests do not perform as expected, our operating results, reputation and business will suffer. We will need to grow the size of our organization, and we may experience difficulties in managing this growth. We rely on third-party organizations and their sales representatives to market IDgenetix to healthcare providers, and these contracted sales representatives are outside our direct control. Table of Contents Corporate Information We were incorporated in Delaware in January 2008. Our principal executive offices are located at 3550 Dunhill Street, San Diego, California 92121, and our telephone number is (858) 224-7200. Our corporate website address is www.AltheaDx.com. Information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. We have obtained a registered trademark for IDgenetix in the United States. This prospectus contains references to our trademark and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the or TM symbols. We do not intend our use or display of other companies trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Implications of Being an Emerging Growth Company As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An emerging growth company may take advantage of reduced reporting requirements that are otherwise applicable to public companies and other exemptions. These exemptions include, but are not limited to: being permitted to present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended; reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may rely on these exemptions until the last day of our fiscal year following the fifth anniversary of the completion of this offering. However, if certain events occur prior to the end of such five-year period, including if we become a large accelerated filer, our annual gross revenues exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Table of Contents The Offering Common stock offered by us 4,615,000 shares Common stock to be outstanding after this offering 12,372,003 shares Over-allotment option We have granted to the underwriters the option, exercisable for 30 days from the date of this prospectus, to purchase up to 692,250 additional shares of common stock at the initial public offering price. Use of proceeds We estimate that we will receive net proceeds of approximately $52.2 million (or approximately $60.6 million if the underwriters exercise their over-allotment option in full) from the sale of the shares of common stock offered by us in this offering, based on the assumed initial public offering price, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering as follows: (1) to fund research and development, including clinical studies to demonstrate the utility of our products and support reimbursement efforts, as well as expansion of our IDgenetix testing portfolio; (2) to expand our commercial capabilities in selling and marketing related to our IDgenetix tests; (3) to fund expansion of our facilities and laboratory operations; and (4) the remaining proceeds for working capital and other general corporate purposes. See Use of Proceeds.
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+PRELIMINARY PROSPECTUS NL ONE CORPORATION 24,882,000 Shares of Common Stock $0.02 PER SHARE In this offering the Selling Shareholders are offering 24,882,000 shares of NL One Corporation s common stock at a fixed price of $.02 per share or at market prevailing prices once, and if, a listing is achieved on the OTC marketplace (OTCQB). We intend to get trading on the OTCQB of the OTC marketplace. Also, once a listing has been achieved, the selling shareholders may decide to sell shares at privately agreed upon prices. NL One Corporation will not receive any proceeds from the sale of shares by the Selling Shareholders. No public market currently exists for our shares of common stock. While we plan to have our shares listed on the Over the Counter Market Place, there is no assurance that our shares will be approved for listing on the Over the Counter Market Place or any other listing service or exchange. The Offering The Shares herein within this particular offering are being offered by the selling shareholders listed below. Shares are being offered on a best efforts basis by each shareholder. There will be no escrow account and there will be no refunds. Additionally, there is no minimum number of shares that have to be sold to new investors. Please refer to Plan of Distribution beginning on page 19 of this prospectus for more information. The offering of shares will end in 180 days as measured from the date of effectiveness of this registration statement unless extended by our Board of Directors for an additional 90 days or as many days as deemed necessary thereafter. We may elect to close the offering before the expiration of the 180 day period if the 24,882,000 shares are sold, or for any other reason, at our sole discretion. Currently, the Company s focus is on its provisional patents for various medical devices that have not yet been developed into physical products. Materializing our provisional patents into a or several physical products may pose a challenge to the Company. It should be noted that the cost to utilize third party development engineering firms can not be accurately forecasted as product development is extremely variable. Only when we hire a firm and they directly start creating our products will be be able to better understand exactly how much it will cost. However, we estimate this cost to be upwards of $300,000 as there will be the need to create prototypes, carry out testing, and consistently make design modifications to the product until a final product is in place that may be viable for use in the marketplace. At this time the Company does not have the funds to move forward with the hiring of third party development engineering firms to carry out the previously mentioned tasks however, the Company hopes through acquiring future investors it will acquire the funds necessary to move forward. Our provisional patent applications were refiled on March 20, 2015. Prior to the pending expiration dates of our provisional patent applications, we plan to refile the applications with the intention of subsequently gaining a utility patent for each. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, which became law in April 2012 and will be subject to reduced public company reporting requirements. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS BEGINNING ON PAGE 6. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus and the information we may refer you to. We have not authorized any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby that is different from the information included in this Prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is April 29, 2015. - 1 - The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS PART I PROSPECTUS PAGE PROSPECTUS SUMMARY 2
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+Item 3 Prospectus Summary This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of New Media Insight Group, Inc. (referred to herein as our company, we, our, and us ). You should carefully read the entire Prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the accompanying financial statements and notes before making an investment decision. Business Overview New Media Insight Group, Inc. was incorporated on March 29, 2010 in the State of Nevada, U.S.A. Our fiscal year end is April 30. Our administrative offices are located at 28202 N. 58th Street, Cave Creek, AZ 85331. The telephone number is (480) 275-2294. Recent Developments Amendment of Articles On March 11, 2014, our company filed a certificate of change (the Amendment ) to its Certificate of Incorporation with the Secretary of State of the State of Nevada in order to: 1. effectuate a one (1) for two (2) reverse split of our company s shares of common stock, par value $0.001 per share ( Reverse Split ); and 2. decrease the number of authorized shares of capital stock of our company to 850,000,000 shares of common stock, par value $0.001 per share. The certificate of change has an effective date of March 24, 2014. Our issued and outstanding shares decreased from 59,237,500 to 29,768,750 shares of common stock, with a par value of $0.001. Our preferred shares remained unchanged These amendments have been reviewed by the Financial Industry Regulatory Authority ( FINRA ) and have been approved for filing with an effective date of April 7, 2014. The reverse split became effective with the Over-the-Counter Bulletin Board at the opening of trading on April 7, 2014. Our trading symbol is NMED . Our new CUSIP number is 64704U 306. Throughout this Registration Statement, each instance that refers to a number of shares of our common stock, refers to the number of shares of common stock after giving effect to the Reverse Split, unless otherwise indicated. Our company is continuing to pursue and expand upon the same business however is in the process of significantly enhancing its product and service offering and is developing new and proprietary technology in the area of mobile payments and online monetization. Our company is a development stage company and operates as an internet marketing business providing clients with the latest in new media and mobile / smart phone advertising solutions. We will specialize in developing mobile marketing, loyalty, and communication solutions. Our company s mission is to help local merchants connect, communicate and transact with their customers in a more effective way. Effective September 1, 2013, our company entered into an exclusive agency agreement with PayWith Worldwide Inc. ( PayWith ), pursuant to which our company will market a new product called mCards (mobile cards) (the Platform ) in the following states: Arizona, Colorado, Nevada, Oregon, Utah and Washington (the Territories ). Pursuant to the agency agreement, our company will generate revenue associated with every mCard transaction that takes place using the mCardNetwork. Under the agency agreement, our company had the following obligations to PayWith: Achieve the following targets within the Territories: Number of Signed Target Date Merchant Agreements 6 months after effective date 500 12 months after effective date 2,000 18 months after effective date 10,000 As of the date of this Registration Statement, these targets have not been met. These targets were not met due to the slow rate of mobile payment adoption in the United States. Pursuant to the agreement, PayWith may revoke the exclusivity of the rights to the Platform held by us in the Territories as these obligations were not met. Our company has paid $150,000 to PayWith for the exclusive licensing rights mentioned above. Equity Purchase Agreement with Premier Venture On December 10, 2014, we entered into the Equity Purchase Agreement with Premier Venture, a California limited liability company. Pursuant to the terms of the Equity Purchase Agreement, Premier Venture committed to purchase up to $2,000,000 of our common stock during the Open Period. From time to time during the Open Period, we may deliver a drawdown notice to Premier Venture which states the dollar amount that we intend to sell to Premier Venture on a date specified in the put notice (the Put Notice ). The maximum investment amount per notice shall not exceed the lesser of (i) 200% of the average daily trading volume of our common stock on the five trading days prior to the day the Put Notice is received by Premier Venture and (ii) 110% of any previous put amount during the maximum thirty-six (36) month period (however the amount for the preceding (ii) shall never be less than 70,000 shares). The total purchase price to be paid, in connection to the Put Notice, by Premier Venture shall be calculated at a thirty percent (30%) discount to the lowest individual daily volume weighted average price of the common stock of our company during such trading day ( VWAP ) of during the five (5) consecutive trading days immediately after the applicable date of the Put Notice, notwithstanding certain provisions pursuant to the Equity Purchase Agreement, less six hundred dollars ($600.00) . We have more shares reserved than are covered in this Registration Statement. In consideration for the execution and delivery of the Equity Purchase Agreement by Premier Venture, we issued Premier Venture 71,429 shares of our common stock (the Initial Commitment Shares ). On the effective date of this Registration Statement, we shall issue to Premier additional commitment shares (the Additional Commitment Shares ) of its common stock representing 2.5% of $2,000,000 divided by the sum equal to the lowest of the daily VWAPs of the common stock on the three trading days immediately preceding the effective date. The Additional Commitment Shares shall not constitute registerable securities and shall not be included in this Registration Statement in accordance with the terms of the Registration Agreement. In connection with the Equity Purchase Agreement, we also entered into a registration rights agreement (the Registration Rights Agreement ) with Premier Venture, pursuant to which we are obligated to file a registration statement with the SEC. We are obligated to use all commercially reasonable efforts to maintain an effective registration statement until termination of the Equity Purchase Agreement. The 16,397,960 shares to be registered herein represent approximately 35.5% of our common shares issued and outstanding, assuming that the selling stockholder will sell all of the shares offered for sale. At an assumed purchase price of $0.1225 (representing 70% of $0.175 being the average high and low prices of our common stock as reported on the OTCQB on February 24, 2015), we will be able to receive up to $2,000,000 in gross proceeds, assuming the sale of the entire 16,397,960 shares (of which only 71,429 shares have previously been issued) being registered hereunder pursuant to the Equity Purchase Agreement. Accordingly, we may be required to register additional shares to obtain the balance from the $2,000,000 under the Equity Purchase Agreement. We are currently authorized to issue 850,000,000 shares of our common stock. Premier Venture has agreed to refrain from holding an amount of shares which would result in Premier Venture owning more than 4.99% of the then-outstanding shares of our common stock at any one time. There are substantial risks to investors as a result of the issuance of shares of our common stock under the Equity Purchase Agreement. These risks include dilution of stockholders percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed. Premier Venture will periodically purchase our common stock under the Equity Purchase Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to Premier Venture to raise the same amount of funds, as our stock price declines. On February 25, 2015, we entered into an amending agreement with Premier, whereby Premier and the Company agreed to amend the Equity Purchase Agreement so that the Equity Purchase Agreement terminates upon the occurrence of a material adverse effect as defined in the Purchase Agreement. Where You Can Find Us Our mailing address is 28202 N.58th Street, Cave Creek, AZ 85331, and our telephone number is (480) 275-2294. The Offering We have 29,840,179 shares of common stock issued and outstanding as of February 25, 2015 and are registering 16,397,960 shares (of which 71,429 shares of our company have been issued to date and the remaining may be issued in accordance with the Equity Purchase Agreement between Premier Venture Partners, LLC ("Selling Security Holder") and the Company). In the event less than 16,397,960 are issued in accordance with the Equity Purchase Agreement, the remaining unissued shares will be terminated. We will receive 100% of the proceeds from the sale of the common stock to the Selling Security Holder, but will not receive any proceeds from any future re-sale of the common shares by the Selling Security Holder. The following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering. Securities being offered by the Selling Security Holders, common stock, $0.001 par value 16,397,960 shares of common stock, $0.001 par value to be issued to Premier Venture Partners, LLC in accordance with a certain Equity Purchase Agreement dated December 10, 2014. Underwriter: Premier Venture Partners, LLC is both the underwriter and Selling Security Holder in this transaction. Offering Price per Share by the Selling Security Holders: All shares being registered may be sold by the Selling Security Holder without our involvement. The actual price of the stock will be determined in accordance with the price as set forth in the Equity Purchase Agreement. Offering Period: The period during which the Company may make a Put Notice as defined in the Equity Purchase Agreement, is thirty-six (36) months from the effectiveness of this Registration Statement. Number of Shares Outstanding Before the Offering: 29,840,179 common shares are currently issued and outstanding of which 71,429 shares are being registered under this prospectus by the Selling Security Holder. The remaining 16,326,531 shares which may be issued in the future under the Equity Purchase Agreement. Minimum number of shares to be sold in this Offering: None. Use of Proceeds All of the proceeds will be used by the Company for working capital. We have paid and will pay all expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states) other than commissions, expenses, reimbursements and discounts of underwriters, dealers or agents, if any. Termination of the offering The earlier of (i) thirty-six (36) months from the effectiveness of this Registration Statement, (ii) when the Company receives the full $2,000,000 under the Equity Purchase Agreement, or (iii) as otherwise provided for in the Equity Purchase Agreement. Terms of the offering The actual price of the stock will be determined by using the prevailing market prices at the time of sale as adjusted in accordance with the Equity Purchase Agreement (which is 70% of the lowest reported trade of the our common stock during the Put Period as defined in the Equity Purchase Agreement) and the Selling Security Holder will determine when and how they will sell the common stock offered in this prospectus. Our company will receive no proceeds from any future re-sale of any of the registered shares by the Selling Security Holder. Trading Market: Our common stock is currently quoted in the OTCQB. The common stock trades under the symbol NMED, but there is only a limited trading market. The last high and low trades of our common stock for the last 30 trading days were as follows: Date High Trading Price Low Trading Price 12/09/14 $ 1.36 12/17/14 $ 0.4613 The Selling Security Holder named in this prospectus is registering all or a portion of its shares of common stock through this prospectus are doing in accordance with a certain Registration Rights Agreement and Equity Purchase Agreement, each dated December 10, 2014. We will receive 100% of the proceeds from the sale of these shares to the Selling Security Holder in accordance with the Equity Purchase Agreement but none of the proceeds of any future re-sale by the Selling Shareholder. This summary does not contain all the information that should be considered before making an investment in New Media Insight Group, Inc. s common stock. The entire prospectus should be read including the Risk Factors on page 9 and financial statements before deciding to invest in our common stock. Financial Summary Information All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the Management s Discussion and Analysis of Financial Position and Results of Operations section and the accompanying financial statements and related notes included elsewhere in this Prospectus. Income Statement Data Three Months Ended October 31, 2014 (Unaudited) Year Ended April 30, 2014 (Audited) Year Ended April 30, 2013 (Audited) Revenues Nil $241 Nil Operating Expenses $104,861 $806,978 $41,727 Net Income (Loss) ($104,861) ($806,737) ($41,727) Net Earnings (Loss) Per 0.00 ($0.027) ($0.001) Share Balance Sheet Data As at October 31, 2014 (Unaudited) As at April 30, 2014 (Audited) As at April 30, 2013 (Audited) Working Capital (Deficit) $78,627 $277,907 ($27,845) Total Assets $86,570 $295,200 $27 Total Liabilities $7,943 $17,293 $27,872 We are subject to those financial risks generally associated with development stage enterprises. Despite currently having sufficient capital on hand, we have sustained losses since inception. We may require additional financing and independently seek capital to fund our development activities. However, we may be unable to obtain such financing. Investing in our common stock involves a high degree of risk. We are subject to risk factors specific to our business strategy and the health and wellness industry. You should carefully consider all the risks described below, together with other information contained in this prospectus (including our financial statements and related notes), before making a decision to invest in our common stock. Our business could be harmed by any of these risks at any time. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled Special Note Regarding Forward Looking Statements above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this Registration Statement. RISKS RELATED TO OUR BUSINESS You should carefully consider the risks described below together with all of the other information included in this Registration Statement before making an investment decision with regard to our securities. The statements contained in or incorporated into this Registration Statement that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Our independent auditors have issued an audit opinion for our company, which includes a statement describing our going concern status. Our financial status creates a doubt whether we will continue as a going concern. As described in Note 11 of our accompanying financial statements, our auditors have issued a going concern opinion regarding our company. This means there is substantial doubt we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty regarding our ability to continue in business. As such we may have to cease operations and investors could lose part or all of their investment in our company. We have a minimal operating history and have losses which we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations. We were incorporated on March 29, 2010, and we have only started our proposed business operations in December 2010 realizing revenues of $38,690 through April 30, 2014. We do not have a sufficient operating history upon which an evaluation of our future success or failure can be made. Our net loss since inception to April 30, 2014, was $911,471. We have generated only nominal revenues since our inception and do not anticipate that we will generate revenues which will be sufficient to sustain our operations in the near future. Our ability to achieve and maintain profitability and positive cash flow is dependent upon on our ability to: attract customers who will buy our services; and generate revenue through the sale of our services. We may not be able to successfully achieve any of these requirements or ever become profitable. Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses in excess of revenues. We cannot guarantee that we will be successful in generating sufficient revenues in the future. In the event our company is unable to generate sufficient revenues it may be required to seek additional funding. Such funding may not be available, or may not be available on terms which are beneficial and/or acceptable to our company. In the event our company cannot generate sufficient revenues and/or secure additional financing, our company may be forced to cease operations and investors will likely lose some or all of their investment in our company. We do not have any additional source of funding for our business plans and may be unable to find any such funding if and when needed, resulting in the failure of our business. No other source of capital has been has been identified or sought. If we do find an alternative source of capital, the terms and conditions of acquiring such capital may result in dilution and the resultant lessening of value of the shares of stockholders. We possess minimal capital. We possess minimal capital and must limit the amount of marketing we can perform with respect to our website. Our business plan contemplates the generation of revenues through the sale of goods and services via our website. Our limited marketing activities may not attract enough paying customers to generate sufficient revenue to operate profitably, expand our services, implement our business plan or continue operating our business. Our limited marketing capabilities may have a negative effect on our business and may cause us to limit or cease our business operations which could result in investors losing some or all of their investment in our company. We are dependent upon our current officers and directors. We currently are managed by our sole officer and director, Michael Palethorpe, and we are entirely dependent upon him in order to conduct our operations. If our sole officer and director should resign or die, there will be no one to run our company, and our company has no Key Man insurance. If our current officer and director is no longer able to serve as such and we are unable to find other persons to replace him, it will have a negative effect on our ability to continue active business operations, and could result in investors losing some or all of their investment in our company. Our business mode requires the use of outside personnel, who may not be available when needed. Our company seeks to grow its business in the ever-expanding niche of hyper local marketing and advertising, while maintaining a low cost of operations. Our company will utilize a virtual workplace (employees and independent contractors will primarily work from their residences eliminating their need for permanent offices), will retain only a minimum number of full time employees and instead hire a core group of independent contractors on an as needed basis. If we are unable to hire the required talent and/or are unable to get our technology functional, it may have a negative effect on our ability to implement our business plan. In such an event, we may be required to change our business plan or curtail or delay implementation of some, or all, of our business plan. We could face intense competition, which could result in lower revenues and higher expenditures and could adversely affect our results of operations. Unless we and our partners keep pace with changing technologies, we could lose existing customers and fail to win new customers. In order to compete effectively in the internet marketing and mobile payments industry, we must continually design, develop implement and market new and enhanced technologies and strategies. Our future success will depend, in part, upon our ability to address the changing and sophisticated needs of the marketplace. Mobile payments technologies have not achieved widespread commercial acceptance in Canada and the United States and our strategy of expanding our marketing of mobile payments business could adversely affect our business operations and financial condition. We are governed by only one person serving as director and officers which may lead to faulty corporate governance. We have not implemented various corporate governance measures nor have we adopted any independent committees as we presently do not have any independent directors. We may not be able to secure additional financing to meet our future capital needs due to changes in general economic conditions. We anticipate requiring significant capital to fulfill our contractual obligations (as noted in our audited financial statements), continue development of our planned products to meet market evolution, and execute our business plan, generally. We may use capital more rapidly than currently anticipated and incur higher operating expenses than currently expected, and we may be required to depend on external financing to satisfy our operating and capital needs. We may need new or additional financing in the future to conduct our operations or expand our business. Any sustained weakness in the general economic conditions and/or financial markets in the United States or globally could adversely affect our ability to raise capital on favorable terms or at all. From time to time we have relied, and may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and for general corporate purposes. We may be unable to secure debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding. If we do raise funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders would be reduced, and the securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common stock which would result in dilution to our existing stockholders. If we raise additional funds by issuing debt, we may be subject to debt covenants, which could place limitations on our operations including our ability to declare and pay dividends. Our inability to raise additional funds on a timely basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial condition and results of operations. Our business and operating results could be harmed if we fail to manage our growth or change. Our business may experience periods of rapid change and/or growth that could place significant demands on our personnel and financial resources. To manage possible growth and change, we must continue to try to locate skilled professionals in the oil and gas industry and adequate funds in a timely manner. We are affected by certain law and governmental regulations which could affect operations of our proprietary technology in the area of mobile payments and online monetization. While our mobile payments service has been approved in certain states, failure to gain national or international compliance would limit international operations. In addition, future government regulations concerning privacy and consumer protection issues could have an adverse effect on market acceptance or cause time delays or additional costs to meet requirements. To the best of our knowledge, there are no laws or governmental regulations which would prohibit the use of our proprietary technology in the area of mobile payments and online monetization in the Territories. Use of our technology is only subject to local operator/owner approval. Where we may be restricted as to the introduction of our technology in foreign countries relates only to local governmental regulations which may require the establishment of a corporate entity in the subject country, of which we may decide against due to costs and lack of corporate control of that new entity. If our intellectual property is not adequately protected, then we may not be able to compete effectively and we may not be profitable. Our commercial success may depend, in part, on obtaining and maintaining patent protection, trade secret protection and regulatory protection of our technologies and product candidates as well as successfully defending third-party challenges to such technologies and candidates. We will be able to protect our technologies and product candidates from use by third parties only to the extent that valid and enforceable patents, trade secrets or regulatory protection cover them and we have exclusive rights to use them. The ability of our licensors, collaborators and suppliers to maintain their patent rights against third-party challenges to their validity, scope or enforceability will also play an important role in determining our future. The patent positions of technology related companies can be highly uncertain and involve complex legal and factual questions that include unresolved principles and issues. No consistent policy regarding the breadth of claims allowed regarding such companies patents has emerged to date in the United States, and the patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. Accordingly, we cannot predict with any certainty the range of claims that may be allowed or enforced concerning our patents. We may also rely on trade secrets to protect our technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we seek to protect confidential information, in part, through confidentiality agreements with our consultants and scientific and other advisors, they may unintentionally or willfully disclose our information to competitors. Enforcing a claim against a third party related to the illegal acquisition and use of trade secrets can be expensive and time consuming, and the outcome is often unpredictable. If we are not able to maintain patent or trade secret protection on our technologies and product candidates, then we may not be able to exclude competitors from developing or marketing competing products, and we may not be able to operate profitability. If we are the subject of an intellectual property infringement claim, the cost of participating in any litigation could cause us to go out of business. There has been, and we believe that there will continue to be, significant litigation and demands for licenses in our industry regarding patent and other intellectual property rights. Although we anticipate having a valid defense to any allegation that our current products, production methods and other activities infringe the valid and enforceable intellectual property rights of any third parties, we cannot be certain that a third party will not challenge our position in the future. Other parties may own patent rights that we might infringe with our products or other activities, and our competitors or other patent holders may assert that our products and the methods we employ are covered by their patents. These parties could bring claims against us that would cause us to incur substantial litigation expenses and, if successful, may require us to pay substantial damages. Some of our potential competitors may be better able to sustain the costs of complex patent litigation, and depending on the circumstances, we could be forced to stop or delay our research, development, manufacturing or sales activities. Any of these costs could cause us to go out of business. We could lose our competitive advantages if we are not able to protect any intellectual property rights against infringement, and any related litigation could be time-consuming and costly. Our success and ability to compete depends to a significant degree on our license to market and promote the Platform which is automatically renewed every year unless there is sixty days of notice by either party. If any of our competitor s copies or otherwise gains access to the Platform or develops similar technologies independently, we would not be able to compete as effectively. We also consider our trademarks invaluable to our ability to continue to develop and maintain the goodwill and recognition associated with our brand. These and any other measures that we may take to protect our intellectual property rights, which presently are based upon a combination of copyright, trade secret and trademark laws, may not be adequate to prevent their unauthorized use. We may need to bring legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, could result in substantial costs and diversions of resources. In addition, notwithstanding any rights we have secured in our intellectual property, other persons may bring claims against us that we have infringed on their intellectual property rights, including claims based upon the content we license from third parties or claims that our intellectual property right interests are not valid. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill associated with our service marks or require us to make changes to our website or other of our technologies. If we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained. As we proceed with the commercialization of our technology, we expect to experience significant and rapid growth in the scope and complexity of our business. We will need to add staff to market our services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition. Our services may become obsolete and unmarketable if we are unable to respond adequately to rapidly changing technology and customer demands. Our industry is characterized by rapid changes in technology and market demands. As a result, our service and technology may quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate market demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, our products must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, we may not be able to adapt new or enhanced services to emerging industry or governmental standards. Our company lacks effective internal controls over our financial reporting. Except as otherwise set forth our public filings with the SEC (the SEC Documents ), we maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles by a firm with membership to the PCAOB and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Our management has determined that our internal accounting controls were not effective as of the date of this Registration Statement. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), as of the end of the financial period ending April 30, 2014 (the Evaluation Date ). Based on this evaluation, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of our chief executive and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 31, 2014, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ( COSO ) in Internal Control Integrated Framework. Based upon such evaluation, our management concluded that we did not maintain effective controls over the control environment. The Board of Directors does not have any independent members and no director qualifies as an audit committee financial expert as defined in Item 207(d)(5)(ii) of Regulation S-B. Currently, we do not have the available personnel for proper segregation of duties. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. This Registration Statement on does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management s report was not subject to attestation by our registered public accounting firm pursuant to a permanent exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Risks Relating to Ownership of Our Securities We do not expect to pay dividends in the foreseeable future. We presently do not anticipate that we will pay dividends on any of our common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any common stock dividends will be within the discretion of our Board of Directors. We presently intend to retain all earnings to implement our business plan; accordingly, we do not anticipate the declaration of any dividends for common stock in the foreseeable future. Applicable SEC rules governing the trading of penny stocks will limit the trading and liquidity of our common stock, which may affect the trading price of our common stock. Our common stock is considered to be a penny stock and is therefore subject to SEC rules and regulations that (i) impose limitations upon the manner in which our shares may be publicly traded and (ii) regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges such as the NASDAQ Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules and may increase the difficulty investors might experience in attempting to liquidate such securities. The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you. Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price. As we are listed on the Over-the-Counter Bulletin Board quotation system, our common stock is subject to penny stock rules which could negatively impact our liquidity and our shareholders ability to sell their shares. Our common stock is currently quoted on the OTCQB. We must comply with numerous NASDAQ MarketPlace rules in order to maintain the listing of our common stock on the OTCQB. There can be no assurance that we can continue to meet the requirements to maintain the quotation on the OTCQB listing of our common stock. If we are unable to maintain our listing on the OTCQB, the market liquidity of our common stock may be severely limited. Our stock price may be volatile, which may result in losses to our shareholders. The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the OTCQB quotation system in which shares of our common stock are listed, have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control: variations in our operating results; changes in expectations of our future financial performance, including financial estimates by securities analysts and investors; changes in operating and stock price performance of other companies in our industry; additions or departures of key personnel; and future sales of our common stock. Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock. Our common shares may become thinly traded and you may be unable to sell at or near ask prices, or at all. We cannot predict the extent to which an active public market for trading our common stock will be sustained. The trading volume of our common shares has historically been sporadically or thinly-traded meaning that the number of persons interested in purchasing our common shares at or near bid prices at certain given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community who generate or influence sales volume. Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained. Shareholders may be diluted significantly through our efforts to obtain financing, satisfy obligations, and/or complete acquisitions through the issuance of additional shares of our common stock or other securities. Wherever possible, our Board will attempt to use non-cash consideration to satisfy our obligations. The non-cash consideration may consist of restricted shares of our common stock, convertible debt, or other securities. We have signed an Equity Purchase Agreement with Premier Venture, for up to $2,000,000 through sales of our common stock. The Equity Purchase Agreement grants the investors the ability to buy a substantial number of shares of common stock in a series of private placement transactions at a price that is at a discount to the market price. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, investors percentage interests in us will be diluted. The result of this could reduce the value of current investors stock. Please also see below at Item 6 – Dilution for more detail. Additionally, moving forward, we may attempt to conduct acquisitions and/or mergers of other entities or assets using our common stock or other securities as payment for such transactions. Our Board has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock and preferred stock with various preferences and other rights. If such transactions occur, this may result in substantial dilution of the ownership interests of existing shareholders, and dilute the book value of our common stock. Please see below at Item 6 – Dilution for more detail. We may not have access to the full amount available under the Equity Purchase Agreement. Our ability to draw down funds and sell shares under the Equity Purchase Agreement requires that this Registration Statement be declared effective and continue to be effective. This Registration Statement registers the resale of 16,397,960 shares issuable under the Equity Purchase Agreement, and our ability to sell any remaining shares issuable under the Equity Purchase Agreement is subject to our ability to prepare and file one or more additional registration statements registering the resale of these shares. These registration statements may be subject to review and comment by the staff of the SEC, and will require the consent of our independent registered public accounting firm. Therefore, the timing of effectiveness of these registration statements cannot be assured. The effectiveness of these registration statements is a condition precedent to our ability to sell all of the shares of our common stock to Premier Venture under the Equity Purchase Agreement. Even if we are successful in causing one or more registration statements registering the resale of some or all of the shares issuable under the Equity Purchase Agreement to be declared effective by the SEC in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have to increase the number of our authorized shares in order to issue the shares to Premier Venture. Accordingly, because our ability to draw down any amounts under the Equity Purchase Agreement is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of $2,000,000 under the Equity Purchase Agreement. There will be an adverse effect related to declining prices for our common stock. Our right to require Premier Venture pursuant to the Equity Purchase Agreement to purchase our common shares is subject to a maximum number of shares equal to 200% of the average daily trading volume of our common stock on the five trading days prior to the date the we deliver a notice to purchase shares to Premier Venture. For example, a 50% decline in volume of our shares traded will result in a corresponding 50% decline in the total aggregate amount of our common shares that we can require Premier Venture to purchase at one time under the Equity Purchase Agreement. Additionally, there will be an adverse effect of declining prices for our common stock on the terms at which we will be able to raise the $2 million in capital under the Equity Purchase Agreement with Premier Venture. For example: Percentage Decrease in Price 0% 25% 50% 75% Stock Price $0.175 $0.131 $0.0875 $0.044 Approximate shares needed to be issued to obtain $2,000,000 16,326,531 21,768,708 32,653,062 65,306,123 Approximate amount of dollars that can be obtained from each Put Notice (assuming average daily volume of 50,000 shares) $12,500.00 $9,187.50 $6,125.00 $3,062.50 Volatility in our common share price may subject us to securities litigation. The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management s attention and resources. The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees. Our Articles of Incorporation contains a specific provision that eliminates the liability of our directors and officers for monetary damages to our company and shareholders. Further, we are prepared to give such indemnification to our directors and officers to the extent provided for by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders. Our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance. Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. We will incur increased costs and compliance risks as a public company. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company prior. Our business will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and FINRA. We expect these rules and regulations, in particular Section 404 of the Sarbanes-Oxley Act of 2002, to significantly increase our legal and financial compliance costs and to make some activities more time-consuming and costly. Like many smaller public companies, we face a significant impact from required compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies to evaluate the effectiveness of internal control over financial reporting. The SEC has adopted rules implementing Section 404 for public companies as well as disclosure requirements. We are currently preparing for compliance with Section 404; however, there can be no assurance that we will be able to effectively meet all of the requirements of Section 404 as currently known to us in the currently mandated timeframe. Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet reporting obligations or result in management being required to give a qualified assessment of our internal controls over financial reporting. Any such result could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price. We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
\ No newline at end of file
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@@ -0,0 +1,537 @@
+PROSPECTUS SUMMARY
+ 
+
+ To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 7 and the financial statements.
+ 
+
+ General
+ The registrant was incorporated under the laws of the State 
+ of Nevada on April 21, 2009.
+ 
+
+ Operations
+ The registrant is a sales and distribution company focused on cannabinoid infused products for the treatment of medical conditions. 
+ 
+
+ Our auditor s report for the fiscal year ended February 28, 2014 includes an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.
+ 
+
+ Common Shares 
+ Outstanding
+ 361,322,812 
+ 
+
+ Common Shares 
+ Outstanding upon Conversion
+ Of all Outstanding
+ Warrants
+ 1,159,943,334 
+ 
+
+ Sales by Selling
+ Shareholders
+ The selling shareholders may sell at prevailing prices or privately negotiated prices. We are registering common shares on behalf of the selling shareholders in this prospectus. We are not selling any common shares on behalf of selling shareholders and have no control or effect on the selling shareholders.
+ 
+
+ Use of Proceeds
+ We will not receive any cash or other proceeds in connection with the subsequent sale by the selling shareholders. 
+ 
+
+ Funds received from the exercise of warrants, if any, will be used for working capital needs.
+ 
+
+ Termination of the 
+ Offering 
+ The offering will commence on the effective date of this prospectus and will terminate on or before March 31, 2016. 
+ 
+
+ 6
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ OTCQB Trading Symbol
+ Our common shares are traded on the OTCQB under the symbol MJMD .
+ 
+
+ Risk Factors
+ The common shares offered hereby involve a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment.
+ 
+
+ 
+
+ RISK FACTORS
+ 
+
+ Our business will be subject to numerous risk factors, including the following:
+ 
+
+ 1. 
+ Health, wellness and cannabinoid industry investing is highly speculative and there can be no assurance that the registrant will ever achieve profitable operations. 
+ 
+
+ The registrant intends to engage in the health, wellness and cannabinoid industry that is speculative and involves a high degree of risk. Cannabinoids are a class of diverse chemical compounds that act on cannabinoid receptors on cells that repress neurotransmitter release in the brain. The health, wellness and cannabinoid industries are speculative and are significantly affected by changes in economic and other conditions, such as: 
+ 
+ employment levels; 
+ 
+ construction costs;
+ 
+ climate conditions;
+ 
+ natural disaster;
+ 
+ acts of war;
+ 
+ availability of financing; 
+ 
+ local and national economics;
+ 
+ interest rates; and 
+ 
+ consumer confidence. 
+ 
+
+ 
+
+ These factors can negatively affect the demand for and pricing of the registrant's projects and margin on sale. The registrant is also subject to a number of risks, many of which are beyond the registrant's control, including but not limited to: 
+ 
+
+ 
+ changes in governmental regulations
+ 
+ increases or decreases in harvesting production 
+ 
+ labor strikes
+ 
+ changes in the health, wellness and cannabinoid industries and government policy; and
+ 
+ distribution costs
+ 
+
+ 
+
+ 7
+ 
+
+ 
+
+ 
+
+ 
+
+ 2. 
+ We cannot offer any assurance as to our future financial results. We have received a going concern opinion from our auditors. You may lose your entire investment. 
+ 
+
+ Our independent auditors have included in their audit report, included with this prospectus, an explanatory note regarding our ability to continue as a going concern. We cannot assure you that we will be able to generate sufficient revenue to achieve profitability. At this current time, we cannot predict with assurance the potential success of our business. This increases the risk that we may not be able to continue as a going concern. 
+ 
+
+ 2.
+ The registrant is dependent on the services of certain key employees and the loss of their services could harm the registrant's business. 
+ 
+
+ The registrant's success largely depends on the continuing services of its officers, and there is presently no key man insurance policy on either officer. The registrant believes that Russell Stone possesses valuable business experience and leadership abilities that would be difficult in the short term to replicate. 
+ 
+
+ 3.
+ Our future success depends, to a significant extent, on our ability to attract, train and retain management, operations and technical personnel. 
+ 
+
+ Recruiting and retaining capable personnel, particularly those with expertise in the health, wellness and cannabinoid industries, are vital to our success. If we are unable to attract and retain qualified associates, our business may be materially and adversely affected. 
+ 
+
+ 4.
+ Our control shareholders may effectively exercise control over matters requiring shareholder approval.
+ 
+
+ Caduceus Industries LLC and Phoenix Bio Pharmaceuticals Corporation, a Colorado corporation, beneficially directly or indirectly own or control approximately 45 % of our outstanding common shares. They effectively have the power to elect all of the directors and control the management, operations and affairs of the registrant. Their ownership may discourage someone from making a significant equity investment in the registrant, even if we needed the investment to operate our business. Their holdings could be a significant factor in delaying or preventing a change of control transaction that other shareholders may deem to be in their best interests, such as a transaction in which the other shareholders would receive a premium for their shares over their current trading prices.
+ 
+
+ 
+
+ 8
+ 
+
+ 
+
+ 
+
+ 
+
+ 5.
+ We will be subject to risks generally incident to the health, wellness and cannabinoid industry industries. We may never be profitable.
+ 
+
+ We will be subject to the risks generally incident to the health, wellness and cannabinoid industries, including: uncertainty of cash flow to meet fixed and other obligations; adverse changes in local market conditions, population trends, neighborhood values, community conditions, general economic conditions, local employment conditions, interest rates, and real estate tax rates; changes in fiscal policies; changes in applicable laws and regulations (including tax laws); uninsured losses and other risks that are beyond the control of the registrant. There can be no assurance of profitable operations. Moreover, although we expect to obtain insurance to cover most casualty losses and general liability arising from sale of our products, no insurance will be available to cover cash deficits from ongoing operations.
+ 
+
+ 6.
+ O ur product s are subject to U.S. controlled substance laws and regulations and failure to comply with these laws and regulations, or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, both during clinical development and post approval, and our financial condition.
+ 
+
+ Our product s contain controlled substances as defined in the federal Controlled Substances Act of 1970, or CSA. Controlled substances that are pharmaceutical products are subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the DEA. The DEA classifies controlled substances into five schedules: Schedule I, II, III, IV or V substances. Schedule I substances by definition have a high potential for abuse, are not currently recognized as "accepted medical use" in the United States, lack accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the United States. Pharmaceutical products approved for use in the United States may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances. Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for importation. In addition, dispensing of Schedule II drugs is further restricted. For example, they may not be refilled without a new prescription. Our products are federally considered a Schedule 1 controlled substance. As a result, we only sell our products within states that have passed marijuana laws allowing for the sale of Schedule 1 products. 
+ 
+
+ 
+
+ 9
+ 
+
+ 
+
+ 
+
+ 
+
+ While cannabis is a Schedule I controlled substance, products approved for medical use in the United States that contain cannabis or cannabis extracts may be required to be placed in Schedules II V, since approval by the FDA satisfies the "accepted medical use" requirement. If any proposed products developed receive FDA approval, the DEA will make a scheduling determination and place it in a schedule other than Schedule I in order for it to be prescribed to patients in the United States. Consequently, its manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use may be subject to a significant degree of regulation by the DEA. Our failure to comply with these regulations could result in the loss of our DEA registration, civil penalties or criminal prosecution. In addition, the scheduling process may take one or more years, thereby delaying the launch of any product in the United States. Furthermore, if the FDA, DEA, or any foreign regulatory authority determines that any product may have potential for abuse, it may require us to generate more clinical or other data than we currently anticipate to establish whether or to what extent the substance has an abuse potential, which could increase the cost and/or delay the launch of any proposed product.
+ 
+
+ The DEA, and some states, also conduct periodic inspections of registered establishments that handle controlled substances. Facilities that conduct research, manufacture, store, distribute, import or export controlled substances must be registered to perform these activities and have the security, control and inventory mechanisms required by the DEA to prevent drug loss and diversion. Failure to maintain compliance, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, results of operations, financial condition and prospects. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal proceedings. 
+ 
+
+ 7.
+ Compliance with DEA registration and inspection of facilities could negatively affect our operations.
+ 
+
+ Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA or other state reporting agency to prevent drug loss and diversion. All these facilities must renew their registrations annually, except dispensing facilities, which must renew every three years. The DEA conducts periodic inspections of certain registered establishments that handle controlled substances. Obtaining the necessary registrations may result in delay of the importation, manufacturing or distribution of any products. 
+ 
+
+ 
+
+ 10
+ 
+
+ 
+
+ 
+
+ 
+
+ Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations. In certain circumstances, violations could lead to criminal proceedings.
+ 
+
+ 8.
+ Compliance with state-controlled substances laws could negatively affect our operations.
+ 
+
+ Individual states have also established controlled substance laws and regulations. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule any product candidates as well. While some states automatically schedule a drug based on federal action, other states schedule drugs through rulemaking or a legislative action. State scheduling may delay commercial sale of any product for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness of such product. We or our partners must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.
+ 
+ 9.
+ Clinical trials are subject to DEA registration and approval. Any delays or denials could negatively affect operations.
+ 
+
+ Because the proposed products of our project developers contain cannabis extracts, which are Schedule I substances, to conduct clinical trials in the United States prior to approval, each of the research sites must submit a research protocol to the DEA and obtain and maintain a DEA researcher registration that will allow those sites to handle and dispense the products and to obtain the product from a supplier. If the DEA delays or denies the grant of a research registration to one or more research sites, the clinical trial could be significantly delayed, and the clinical trial sites could be lost. The supplier for the clinical trials must also obtain a Schedule I registration.
+ 
+
+ 10.
+ Manufacture in the United States may be subject to the DEA s annual manufacturing and procurements quota requirements. 
+ 
+
+ If, because of a Schedule II classification or voluntarily, a project developer were to conduct manufacturing or repackaging/relabeling in the United States, they would be subject to the DEA's annual manufacturing and procurement quota requirements. Additionally, regardless of the scheduling of any product, cannabis comprising the active ingredient in the final dosage form are currently Schedule I controlled substances and would be subject to such quotas as these substances could remain listed on Schedule I. 
+ 
+
+ 11
+ 
+
+ 
+
+ 
+
+ 
+
+ The annual quota allocated to us or our contract manufacturers for the active ingredient in any product may not be sufficient to meet commercial demand or complete clinical trials. Consequently, any delay or refusal by the DEA in establishing our, or our contract manufacturers', procurement and/or production quota for controlled substances could delay or stop our clinical trials or product launches, which could have a material adverse effect on our business, financial position and operations.
+ 
+
+ 11.
+ Distribution in the United States requires DEA registration and authority that could be time-consuming and costly.
+ 
+
+ If a product is scheduled as Schedule II or III, we would also need to identify wholesale distributors with the appropriate DEA registrations and authority to distribute the product to pharmacies and other health care providers. We would need to identify distributors to distribute the product to pharmacies; these distributors would need to obtain Schedule II or III distribution registrations. The failure to obtain, or delay in obtaining, or the loss any of those registrations could result in increased costs to us. If a product is a Schedule II drug, pharmacies would have to maintain enhanced security with alarms and monitoring systems and they must adhere to recordkeeping and inventory requirements. This, coupled with the fact that a product must be refrigerated, may discourage some pharmacies from carrying the product. Furthermore, state and federal enforcement actions, regulatory requirements, and legislation intended to reduce prescription drug abuse, such as the requirement that physicians consult a state prescription drug monitoring program may make physicians less willing to prescribe, and pharmacies to dispense, Schedule II products.
+ 
+
+ 12.
+ Lack of diversification could result in additional risk exposure. 
+ 
+
+ As the registrant expects to sell its products primarily in target markets, the registrant may be unable to achieve optimal diversification to properly hedge the registrant s risk exposure to the asset class. If one or more of these markets experiences an economic downturn or suffers from a catastrophic natural disaster, such as a hurricane, tornado, earthquake, tidal wave, tropical storm, flood, mudslide or severe erosion or accretion, the value of the registrant s assets may decrease rapidly. Declines in the health, wellness and cannabinoid industries markets in any of the target markets may reduce the returns on investment.
+ 
+
+ 13.
+ Acts of terrorism could have a negative effect on the valuation of our investments.
+ 
+
+ The impact on economic conditions of terrorist attacks or the outbreak or escalation of armed conflict involving the United States may have an adverse impact on interest rates, the availability of financing, raw materials, oil, gas, electricity, water, energy or other factors. These events could reduce the value of the registrant s assets.
+ 
+
+ 
+
+ 12
+ 
+
+ 
+
+ 
+
+ 
+
+ 14.
+ The registrant has limited financial resources and has not received any revenues from operations. 
+ 
+
+ The registrant has limited financial resources, and its business is subject to significant risks and competition. The registrant s profitability may be diminished if it incurs significant operating losses or become subject to significant liabilities that impede their operational efficiency.
+ 
+
+ 15.
+ Our inability to obtain adequate insurance could subject us to additional risk of loss or additional expenses.
+ 
+
+ The registrant may not be able to obtain adequate insurance with respect to the registrant s products, or may not be able to obtain insurance on reasonable terms. Failure to obtain insurance or the excessive costs of insurance may expose the registrant to additional risk of loss or additional expenses to which it would not otherwise be subject.
+ 
+
+ 16.
+ An inability to maintain sufficient reserves could result in additional debt borrowings and negatively affect the operations of the registrant.
+ 
+
+ A portion of the registrant s gross income may be held as working capital reserves to meet the registrant s expenses. Such expenses include those related to the sale and distribution of our products, management and the preparation of income tax information. To the extent that such reserves prove inadequate to defray the registrant s costs and expenses or unanticipated costs and expenses, it could be necessary for the registrant to attempt to borrow additional funds. In the event such financing is not available on acceptable terms, management may, although is not required to, advance such sums, or the registrant could be required to liquidate one or more of its investments, which might not be on terms favorable to the registrant.
+ 
+
+ 17.
+ If product liability lawsuits are successfully brought against us, we will incur substantial liabilities and may be required to limit the commercialization of our products.
+ 
+
+ We face potential product liability exposure in jurisdictions where we market and distribute our products. We may face exposure to claims by an even greater number of persons if we begin marketing and distributing our products commercially in the United States and elsewhere, including those relating to misuse of our products. Now, and in the future, an individual may bring a liability claim against us alleging that one of our products caused an injury. While we continue to take what we believe are appropriate precautions, we may be unable to avoid significant liability if any product liability lawsuit is brought against us. If we cannot successfully defend ourselves against product liability claims, or if our insurance coverage is inadequate, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
+ 
+
+ 13
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ decreased demand for our products;
+ 
+ injury to our reputation;
+ 
+ withdrawal of clinical trial participants;
+ 
+ costs of related litigation;
+ 
+ substantial monetary awards to patients and others;
+ 
+ increased cost of liability insurance;
+ 
+ loss of revenue; and
+ 
+ the inability to successfully commercialize our products.
+ 
+
+ Risks Associated with our Common Stock
+ 
+
+ 18.
+ There is only a limited trading market for our common stock and if an active market for our common stock does not develop, our investors will be unable to sell their shares.
+ 
+
+ There is currently only a limited trading market for our common stock and such a market may not develop or be sustained. If an active public market for our common stock does not develop, then shareholders may not be able to resell the common shares that they have purchased and may lose all of their investment. 
+ 
+
+ If we establish an active trading market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operation results, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of exploration stage companies, which may affect the market price of our common stock in a materially adverse manner.
+ 
+
+ Currently, our stock prices are quoted on the OTCQB. The OTCQB tends to be highly illiquid, in part because there is no national quotation system by which potential investors can track the market price of shares except through information received or generated by a limited number of broker-dealers that make markets in particular stocks. There is a greater chance of market volatility for securities that trade on the OTCQB as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including: 
+ 
+
+ a. 
+ The lack of readily available price quotations; 
+ 
+
+ b. 
+ The absence of consistent administrative supervision of "bid" and "ask" 
+ quotations; 
+ c. 
+ Lower trading volume; and 
+ 
+
+ d. 
+ Market conditions. 
+ 
+
+ 14
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ In a volatile market, you may experience wide fluctuations in the market price of our securities. These fluctuations may have an extremely negative effect on the market price of our securities and may prevent you from obtaining a market price equal to your purchase price when you attempt to sell our securities in the open market. In these situations, you may be required to either sell our securities at a market price which is lower than your purchase price, or to hold our securities for a longer period of time than you planned. 
+ 
+
+ 19.
+ We do not expect to pay dividends in the foreseeable future.
+ 
+
+ We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common stock.
+ 
+
+ 20.
+ We may in the future issue additional common shares that would reduce a shareholder s ownership interest in our company and which may dilute their share value.
+ 
+
+ Our Articles of Incorporation authorizes the issuance of 1,000,000,000 common shares, par value $0.001 per common share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
+ 
+
+ 21.
+ Our outstanding warrants may have an adverse effect on the market price of our common stock.
+ 
+
+ As of the date of this prospectus, we had outstanding warrants to purchase 33 ,866,667 common shares. Such securities, when exercised, will increase the number of issued and outstanding common shares. Therefore, the sale, or even the possibility of sale, of the common shares underlying the options and warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution in your holdings.
+ 
+
+ 22.
+ Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission s penny stock regulations that may limit a stockholder s ability to buy and sell our stock.
+ 
+
+ 
+
+ 15
+ 
+
+ 
+
+ 
+
+ 
+
+ Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors . The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
+ 
+
+ 23.
+ FINRA sales practice requirements may limit a stockholder s ability to buy and sell our stock.
+ 
+
+ FINRA has adopted rules that relate to the application of the SEC s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information.
+ 
+
+ Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. FINRA s requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of 
+ 
+
+ 16
+ 
+
+ 
+
+ 
+
+ 
+
+ trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder s ability to resell shares of our common stock.
+ 
+
+ 28.
+ We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our results of operations.
+ 
+
+ As a public registrant, we will incur legal, accounting and other expenses that we did not incur as a private registrant, including costs associated with public registrant reporting and corporate governance requirements. These requirements include compliance with Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules implemented by the Securities and Exchange Commission and other applicable securities or exchange-related rules and regulations. In addition, our management team will also have to adapt to the requirements of being a public registrant. We expect complying with these rules and regulations will substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
+ 
+
+ The increased costs associated with operating as a public registrant will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. Additionally, if these requirements divert our management s attention from other business concerns, our results of operations could be adversely affected.
+ 
+
+ 29 .
+ We may need additional capital in the future, which may not be available to us on favorable terms, or at all, and may dilute your ownership of our common stock.
+ 
+
+ We have historically relied on outside financing and cash from operations to fund our operations, capital expenditures and expansion. We may require additional capital from equity or debt financing in the future to:
+ 
+
+ 
+ 
+ 
+
+ a) 
+ fund our operations; 
+ 
+
+ b)
+ respond to competitive pressures; 
+ 
+
+ c)
+ take advantage of strategic opportunities, including more rapid expansion of our business or the acquisition of complementary products, technologies or businesses; and
+ 
+
+ d)
+ develop new products or enhancements to existing products. 
+ 
+
+ 
+
+ 
+
+ 17
+ 
+
+ 
+
+ 
+
+ 
+
+ We may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional financing may place limits on our financial and operating flexibility. If we raise additional funds through issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of the registrant, and any new securities we issue could have rights, preferences and privileges senior to those of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges could be significantly limited.
+ 
+
+ 30 .
+ We may expand through acquisitions of, or investments in, other companies or through business relationships, all of which may result in additional dilution to our stockholders and consumption of resources that are necessary to sustain our business.
+ 
+
+ One of our business strategies is to acquire competing or complementary services, technologies or businesses. In connection with one or more of those transactions, we may:
+ 
+
+ 
+ 
+ 
+
+ a)
+ issue additional equity securities that would dilute our stockholders;
+ b)
+ use cash that we may need in the future to operate our business;
+ c)
+ incur debt on terms unfavorable to us or that we are unable to repay;
+ d)
+ incur large charges or substantial liabilities;
+ e)
+ encounter difficulties retaining key employees of the acquired company or 
+ f) 
+ integrating diverse business cultures; 
+ g) 
+ become subject to adverse tax consequences, substantial depreciation or deferred compensation charges; and 
+ h)
+ encounter unfavorable reactions from investment banking market analysts who disapprove of our completed acquisitions.
+ 
+
+ 31 .
+ United States state securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus.
+ 
+
+ Secondary trading in securities sold in this offering will not be possible in any state in the U.S. unless and until the common shares are qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our securities for secondary trading, or identifying an available exemption for secondary trading in our securities in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the securities in any particular state, the securities could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our securities, the market for our securities could be adversely affected.
+ 
+
+ 
+
+ 18
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001493566_otonomy_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001493566_otonomy_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001493566_otonomy_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001495899_enerpulse_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001495899_enerpulse_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6194fcdab86f933efc9af71c8e042be62ece4683
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001495899_enerpulse_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus or incorporated by reference herein. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the risks related to our business and investing in our common stock discussed under "Risk Factors" beginning on page 10 and the other information and documents incorporated by reference into this prospectus, including our consolidated financial statements and related notes thereto. Overview Enerpulse Technologies, Inc. was incorporated in the State of Nevada on May 3, 2010 and currently conducts our operations primarily through our wholly-owned subsidiary, Enerpulse, Inc. Enerpulse, Inc. was originally incorporated under the laws of the State of New Mexico in 1998 under the name "Combustion Technology Products, Corp." On January 20, 2004, Combustion Technology Products, Corp. changed its name to Enerpulse, Inc., merged with Enerpulse, Inc. a Delaware corporation, and became a Delaware corporation. We completed a reverse acquisition with Enerpulse, Inc. on September 4, 2013 when our wholly-owned subsidiary, Enerpulse Merger Sub, Inc., merged with and into Enerpulse, Inc. We refer to this transaction as the "Merger." The Merger was accounted for as a reverse acquisition and, as a result, our Company s (the legal acquirer) consolidated financial statements are now those of Enerpulse, Inc. (the accounting acquirer), with the assets and liabilities and revenues and expenses of ENPT being included effective from September 4, 2013, the date of the closing of the Merger. Enerpulse Technologies, Inc. has designed, developed and commercialized a high-power, capacitor-based technology that improves performance of spark-ignited internal combustion (IC) engines in such areas of horsepower, torque, fuel economy, acceleration, combustion stability and emissions. Our patented technology is called Nano-Plasma Assisted Combustion (n-PAC ) technology. We believe our n-PAC technology will enable fuel consumption and emissions improvements. Furthermore, we believe n-PAC technology will enhance vehicle performance by increasing engine torque and improving throttle response and combustion stability. In addition to the benefits in gasoline-fueled vehicles, we believe our n-PAC technology has similar or greater benefits in IC engines operating on alternative combustion fuels including natural gas, CNG, LNG, LPG and landfill gas (collectively referred to as "natural gas"). Enerpulse n-PAC technology installed on natural gas (CNG, CNG or LNG) engines show combustion benefits that result in increased performance by way of greater engine power output, reduced fuel consumption and lower emissions. While testing is currently being conducted on engines fueled by landfill gas and LPG and we believe the results on these fuels should be similar to natural gas results, there is no assurance or guarantee that this will occur. To our knowledge, our patented n-PAC technology is the only n-PAC technology in the market and there are no other n-PAC products or similar technology under development or for sale by others. Enerpulse initially commercialized its n-PAC technology for the automotive aftermarket as it represented the fastest path to market and validation of the technology s potential. Through this channel, we have developed brand awareness, customer base, manufacturing capability and distribution channels. The aftermarket has also provided a platform for large-scale field tests to validate performance and durability that will serve as a strong foundation for our move into the larger original equipment manufacturer (OEM) automotive and burgeoning natural gas engine markets. Our n-PAC technology is a direct replacement for automotive spark plugs. To date, over one million n-PAC technology units have been deployed on IC engines through the automotive aftermarket channels. We have registered trademarks for Pulstar , Pulse Plug , EcoPulse , n-PAC and Spark of Genius . The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where such offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 2, 2015 PRELIMINARY PROSPECTUS Enerpulse Technologies, Inc. 22,484,531 Shares of Common Stock This prospectus relates to the offer and sale from time to time by the selling stockholders identified in this prospectus of up to 22,484,531 shares of our common stock, par value $0.01 per share. The shares of common stock covered by this prospectus include shares of common stock issued or issuable upon conversion of our senior secured convertible notes in an aggregate principal amount of $3,048,750 (the "Convertible Notes") which were issued in connection with a private placement financing. We are registering the resale of the shares of common stock underlying the Convertible Notes as required by the Registration Rights Agreement that we entered into with the selling stockholders on February 19, 2015 (the "Registration Rights Agreement"). The shares offered by this prospectus may be sold from time to time by the selling stockholders at prevailing market prices or prices negotiated at the time of sale. See "Plan of Distribution" and "Principal Stockholders and Selling Stockholders." The shares offered by this prospectus were issued or are issuable upon conversion of securities issued to the selling stockholders in transactions exempt from registration under the Securities Act of 1933, or Securities Act. We will not receive any cash proceeds from the sale of shares by the selling stockholders. We will pay the expenses of registering the shares. These shares will be offered for sale by the selling stockholders in accordance with the "Plan of Distribution." Our common stock is currently quoted on the OTCQB under the symbol "ENPT". The closing price of our common stock on the OTCQB on March 31, 2015 was $0.118 per share. Investing in our common stock involves a
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001498720_interactiv_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001498720_interactiv_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001498720_interactiv_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001499807_k2m-group_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001499807_k2m-group_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..875efff3bbe9684cc3a75a5f17b1e7a2d78dea79
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001499807_k2m-group_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in shares of our common stock. You should read this entire prospectus carefully, including the sections entitled Risk Factors, Selected Historical Consolidated Financial Data and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the related notes included elsewhere in this prospectus, before you decide to invest in shares of our common stock. Except where the context requires otherwise, references in this prospectus to K2M, the Company, we, us and our refer to K2M Group Holdings, Inc., together with its consolidated subsidiaries. Welsh, Carson, Anderson & Stowe XI, L.P. and certain of its affiliated funds, our current majority owners, are referred to herein as WCAS or our Sponsor, and WCAS, together with the other owners of K2M Group Holdings, Inc. prior to our May 2014 initial public offering, are collectively referred to as our pre-IPO owners. Overview We are a global medical device company focused on designing, developing and commercializing innovative and proprietary complex spine technologies and techniques. Our complex spine products are used by spine surgeons to treat some of the most difficult and challenging spinal pathologies, such as deformity (primarily scoliosis), trauma and tumor. We believe these procedures typically receive a higher rate of positive insurance coverage and often generate more revenue per procedure as compared to traditional degenerative spine surgery procedures. We have applied our product development expertise in innovating complex spine technologies and techniques to the design, development and commercialization of an expanding number of minimally invasive surgery, or MIS, products. These proprietary MIS products are designed to allow for less invasive access to the spine and faster patient recovery times as compared to traditional open access surgical approaches. We have also leveraged these core competencies in the design, development and commercialization of an increasing number of products for patients suffering from degenerative spinal conditions. Our products consist of implants, disposables and instruments which are marketed and sold primarily to hospitals for use by spine surgeons. Since our founding in 2004 through December 31, 2013, we have commercialized 57 product lines that are used in complex spine surgery, MIS and degenerative procedures, enabling us to favorably compete in the $10.0 billion global spinal surgery market. Of these 57 commercialized product lines, our MESA technology or products that incorporate MESA have accounted for approximately 39%, 37%, 35% and 31%, respectively, of our revenue for the years ended December 31, 2011, 2012 and 2013 and the nine months ended September 30, 2014. While the quality, safety and efficacy of our marketed products are not yet supported by long-term clinical data, we believe many of our products provide several benefits, including: simplified surgical techniques; less invasive access to implant sites; enhanced capabilities to manipulate and correct the spinal column; lower profile spinal implant technology; and improved clinical outcomes. In addition to our current product portfolio, we continue to invest in the design, development and commercialization of new solutions for unmet clinical needs in the complex spine and MIS markets by leveraging our highly efficient product development process. We have introduced 34 new product lines Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated January 29, 2015 6,044,990 Shares K2M GROUP HOLDINGS, INC. Common Stock $ per share K2M Group Holdings, Inc. is offering 2,044,990 shares and the selling stockholders are offering 4,000,000 shares of our common stock in this offering. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders identified in this prospectus, including affiliates of Welsh, Carson, Anderson & Stowe XI, L.P., our current majority owner, and certain members of our management and Board of Directors. NASDAQ Global Select Market, or NASDAQ, trading symbol: KTWO. On January 27, 2015, the last sale price of our common stock as reported on NASDAQ was $19.56 per share. This investment involves risks. See Risk Factors beginning on page 15. We are an emerging growth company as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Per Share Total Public offering price $ $ Underwriting discounts(1) $ $ Proceeds, before expenses, to K2M Group Holdings, Inc. $ $ Proceeds to selling stockholders $ $ (1) See Underwriting for additional information regarding underwriting compensation. The underwriters have a 30-day option to purchase up to 906,748 additional shares of common stock from certain of the selling stockholders identified in this prospectus to cover over-allotments, if any. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders, including from any exercise by the underwriters of their option to purchase additional shares. Neither the Securities and Exchange Commission nor any state securities commission has approved of anyone s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Piper Jaffray Barclays Wells Fargo Securities William Blair Cowen and Company The date of this prospectus is , 2015. Table of Contents since the beginning of 2011 through December 31, 2013, demonstrating our ability to leverage this product development process to rapidly innovate new products. Our focus on our core competences of complex spine and MIS is highlighted by the fact that, for the years ended December 31, 2011, 2012 and 2013 and the nine months ended September 30, 2014, 59%, 60%, 58% and 57%, respectively, of our revenue in the United States was derived from the use of our products in complex spine and MIS surgeries. We believe this represents a greater proportion of total revenue devoted to these markets as compared to our competitors. We further believe the proportion of our international revenue derived from complex spine and MIS is even higher than in the United States. We have grown our revenue to $157.6 million in 2013 from $60.4 million in 2008, representing a five-year compound annual growth rate, or CAGR, of 21%. For the years ended December 31, 2011, 2012 and 2013 and the nine months ended September 30, 2014, our net income (loss) was $13.3 million, $(32.7) million, $(37.9) million and $(48.6) million, and our Adjusted EBITDA was $(7.4) million, $(1.8) million, $(5.3) million, and $(8.2) million, respectively. For information about how we calculate Adjusted EBITDA, please see Summary Historical Consolidated Financial Data. We expect to continue to incur additional losses in the near term as we invest in the global expansion of our business. As of September 30, 2014, our accumulated deficit was $119.1 million. We currently market and sell our products in the United States and 29 other countries. For the nine months ended September 30, 2014, international sales represented approximately 29% of our revenue. We have made significant investments in building a hybrid sales organization consisting of direct sales employees, independent sales agencies and distributor partners. As of September 30, 2014, our U.S. sales force consisted of 121 direct sales employees and 66 independent sales agencies and our international distribution network consisted of 37 direct sales employees, eight independent sales agencies and 19 independent distributorships. We expect to continue to invest in our global hybrid sales organization by increasing the number of our direct sales employees and broadening our relationships with independent sales agencies and distributor partners. We believe the continuing expansion of our global sales force will provide us with significant opportunities for future growth as we increase our penetration of existing geographic markets and enter new ones. We do not sell our products through or participate in physician owned distributorships, or PODs. Market Opportunity According to iData Research, Inc., or iData, the global spine surgery market was valued at approximately $10.0 billion in 2012 and is expected to grow to $14.9 billion by 2019. We believe this market will continue to grow as a result of the following growth drivers: Complex Spine : We believe the $1.2 billion global complex spine market has been underserved and underdeveloped by major spine market competitors, which generally focus on the larger degenerative spine market. As a result, we believe the complex spine patient population has and will continue to benefit from innovative technologies and techniques that simplify surgical procedures, enable MIS approaches and allow for surgical treatment earlier in the continuum of care. MIS : We believe the overall improvement to the standard of care resulting from the introduction of new MIS products will increase demand and drive growth in the $1.4 billion MIS market. We believe the vast majority of surgeons and patients, when given the option, will utilize MIS procedures rather than traditional open procedures due to the advantages of MIS approaches, which often include less soft tissue disruption, reduced frequency of surgical morbidity, faster operating times, improved scarring-related aesthetics and, as a consequence of these advantages, shorter patient recovery times. Table of Contents Table of Contents Degenerative Spine : We believe that several factors will continue to influence the growth in the $6.0 billion global degenerative spine market, including aging patient demographics, increased life expectancies, the desire for maintaining and/or improving lifestyles and demand from patients and surgeons for innovative technologies and techniques that enable simplified surgical procedures, faster procedure times and improved clinical outcomes. Biomaterials : The $1.5 billion biomaterials market includes products that are used by spine surgeons during the surgical treatment of certain complex spine and degenerative pathologies to augment spinal implants and to promote fusion by accelerating, augmenting or substituting for the normal regenerative capacity of bone. Biomaterials are used in the treatment of certain complex and degenerative pathologies and, as such, we expect them to demonstrate similar growth trends. Our Competitive Strengths Our executive management team is highly experienced in the spinal surgery industry. We believe this experience and the following competitive strengths have been instrumental to our success and position us well to grow our revenue and market share. Focus in Complex Spine and MIS. Our strategic focus and core competencies are the design, development and commercialization of innovative complex spine and MIS technologies and techniques supported by our strong relationships with key opinion leaders and spine societies focused on the complex spine and MIS markets. Comprehensive Portfolio of Innovative Proprietary Technologies. We have developed a comprehensive portfolio of products that address a broad array of spinal pathologies, anatomies and surgical approaches in the complex spine and MIS markets, and this broad product portfolio provides us with an opportunity to cross-sell our product offerings in the degenerative market. We have developed and maintain an expanding intellectual property portfolio which includes 197 issued patents globally and 176 pending patent applications globally. Highly Efficient Product Development Process. Our integrated approach to product development leverages our access to key opinion leaders, engineers, product managers and clinical and regulatory personnel to conceptualize, design and develop new products. Broad Global Distribution Network. We have made significant investments in our global distribution network, which, as of September 30, 2014, included 158 direct sales employees and contractual relationships with 74 independent sales agencies and 19 distributor partners. We have also broadened our operational capabilities by increasing inventory levels and opened offices in strategic markets worldwide. Demonstrated Track Record of Innovation and Execution. Our executive management team has the vision, experience and network of relationships to continue our successful growth. Our Strategies Our goal is to drive sustainable growth by servicing the needs of patients, surgeons and hospitals through product innovation and differentiation in the complex spine and MIS markets and continuing to leverage these core competencies in the degenerative spinal surgery market. To achieve this goal, we intend to: Capitalize on our highly efficient product development process to innovate new technologies and techniques; Leverage our investments in infrastructure to further penetrate the global spine market; Table of Contents Expand our global distribution footprint; and Selectively pursue opportunities to enhance our product offerings. Our Products We have developed a comprehensive portfolio of products that address a broad array of spinal pathologies, anatomies and surgical approaches in the complex spine, MIS and degenerative markets. Some of our key proprietary technologies and their associated benefits include the following: MESA: a low-profile spinal screw technology, used primarily during deformity correction, featuring our proprietary locking mechanism that eliminates the need for a secondary locking feature and reduces rotational force on the spine during implantation, which has been used to treat more than 30,000 patients; Rail 4D: an innovative beam-like implant, utilized with our proprietary MESA spinal screws, that aids in the restoration of spinal balance while providing enhanced rigidity and significantly greater strength as compared to existing titanium and cobalt chrome rod offerings; Deformity Cricket: spinal correction instrumentation, utilized with our proprietary MESA spinal screws, that provides surgeons with an innovative approach to more easily capture, manipulate and align a deformed spine as compared to traditional deformity correction instrumentation such as threaded rod reducers and rod forks; SERENGETI: minimally invasive retractor systems featuring one-step placement of screws and retractors, thereby reducing the number of surgical steps, while allowing for direct visualization and improved access to the spine; RAVINE: minimally invasive retractor systems that represent an innovative design departure from standard tubular retractors, facilitating retractor placement, positioning and fixation to the patient s anatomy through a lateral access approach; EVEREST: a spinal screw technology that we believe, based on internal testing, provides for improved insertion speed, industry-leading pull-out strength and the ability to accommodate a variety of titanium and cobalt chrome rods of two different diameters; and tifix : a locking technology integrated into a number of our interbody and plate implants providing surgeons with the flexibility to insert screws at various angles and lock them to an implant with a one-step locking mechanism that eliminates the need for a secondary locking feature. Recent Developments Financial Performance for the Quarter Ended December 31, 2014 For the fiscal quarter ended December 31, 2014, we estimate that our revenue will range from $48.7 million to $49.3 million, an increase of approximately 15% to 16% year-over-year. We estimate that domestic revenue for the fiscal quarter ended December 31, 2014 will range from $35.4 million to $35.7 million, an increase of approximately 23% to 25% year-over-year. This domestic revenue increase is comprised of U.S. complex spine growth of approximately 20% year-over-year, U.S. MIS growth of approximately 24% year-over-year and U.S. degenerative spine growth of approximately 29% year-over-year. We estimate that international revenue for the fiscal quarter ended December 31, 2014 will range from $13.3 million to $13.6 million. Table of Contents For the full year ended December 31, 2014, we estimate that our revenue will range from $186.1 million to $186.7 million, an increase of 18% year-over-year. For the fiscal quarter ended December 31, 2014, we estimate that our net loss will range from $11.0 million and $12.0 million, compared with a net loss of $12.0 million for the fiscal quarter ended December 31, 2013. The estimated net loss for the fiscal quarter ended December 31, 2014 is expected to be equal to or slightly less than our net loss for the fiscal quarter ended December 31, 2013, primarily as a result of decreases in amortization expense of intangible assets and interest expense due to lower debt balances, offset by increases in foreign currency transaction losses and operating expenses due to greater sales volumes. For the full year ended December 31, 2014, we estimate that our net loss will range from $59.5 million to $60.5 million. The financial data presented above is preliminary, based upon our estimates and is subject to revision based upon our financial closing procedures and the completion of our financial statements. Our actual results may be materially different from our estimate. In addition, these estimated results are not necessarily indicative of our results for any future period. The preliminary financial data included above has been prepared by, and is the responsibility of, management. Ernst & Young LLP has not audited, reviewed, compiled or performed any procedures with respect to the above preliminary financial data. Accordingly, Ernst & Young LLP does not express an opinion or any other form of assurance with respect thereto. Corporate Headquarters Facilities Lease Agreement On December 11, 2014, we entered into a Deed of Lease (the Lease Agreement ) with TC Oaklawn Owner, LLC (the Landlord ) with respect to our new headquarters facilities to be located in two adjacent buildings in Leesburg, Virginia (the Buildings ). We have agreed to, among other items, lease the entire rentable space of the Buildings, containing a total of approximately 145,819 square feet, for an initial term of 186 calendar months. The term of the lease will commence approximately five months after the Landlord completes the base building improvements. Under the terms of the Lease Agreement, upon the commencement of the lease term, we will (subject to an initial abatement described below) pay to the Landlord an annual base rent of approximately $3.2 million, which will increase by 2.5% per year (without regard to the initial abatement) commencing upon the first anniversary of the commencement of the lease term. The Landlord will abate the first six months of the base rent after the commencement of the lease term. We will bear the cost for real estate taxes, utilities, maintenance, repairs and insurance. Concurrent with entering into the Lease Agreement, we provided a security deposit in the form of a letter of credit in the amount of $6.0 million, which letter of credit may be reduced from time to time upon the satisfaction of certain conditions as set forth in the Lease Agreement. The Landlord is providing a tenant improvement allowance to us for the construction of certain improvements to the Buildings. We are required to fund all actual costs of tenant improvements in excess of the Landlord s tenant improvement allowance and currently expect to spend at least $6.7 million on tenant improvements in excess of the Landlord s tenant improvement allowance. We have the option to renew the lease for three additional terms of five years each at the then-current market rate. We also have the right to reduce the amount of rentable space we will lease beginning in the eleventh year of the lease term pursuant to certain conditions, including the payment of a contraction fee for unamortized costs. Table of Contents Credit Agreement Amendments On October 21, 2014, subsidiaries of ours entered into a fourth amendment (the Fourth Amendment ) to the Company s senior secured credit facilities credit agreement, dated as of October 29, 2012 (as amended from time to time, the Credit Agreement ), by and among K2M Holdings, Inc. as the guarantor ( Guarantor ), K2M, Inc. and K2M UK Limited as the borrower ( Borrower ), and Silicon Valley Bank and Comerica Bank as lenders. The Fourth Amendment, among other things, extends the maturity date of the revolving credit facility to October 2015, increases the total revolving commitments from $30.0 million to $40.0 million and increases the letter of credit sub-facility from $1.0 million to $10.0 million. In addition, the Fourth Amendment removes the sub-facility provided by the Export-Import Bank of the United States, which had been a party to the prior loan agreements. ABR loans under the revolving credit facility bear interest at a rate per annum equal to ABR plus 0.75%. LIBOR loans under the revolving credit facility bear interest at a rate per annum equal to the greater of (i) LIBOR plus 2.50% or (ii) 3.75%. The total obligations under the amended credit facility cannot exceed (i) the lesser of the total revolving commitment of $40.0 million or (ii) the borrowing base, which is calculated as (x) 85% of accounts receivable so long as certain of those accounts receivable do not exceed, in the aggregate, 50% of the borrowing base plus (y) 35% of the value of the eligible inventory provided that the contribution of the value of the eligible inventory does not exceed the lesser of (1) 40% of the borrowing base or (2) $10.0 million. Borrowings under the revolving credit facility remain secured by a first priority lien on all of the Borrower s personal property assets, including intellectual property. The existing financial covenants were deleted in their entirety and replaced with a quick ratio financial covenant, calculated as the ratio of (i) the sum of all unrestricted cash and cash equivalents, accounts or accounts receivable and inventory (to the extent not in excess of 50% of the foregoing) to (ii) the consolidated liabilities plus outstanding letters of credit minus deferred revenue, which cannot exceed 1.20:1.00 on the last day of any month. The revolving credit facility also continues to contain other restrictive covenants with which the Guarantor and/or Borrower must comply, including restrictive covenants which limit the ability to pay dividends on common stock and make certain investments. Basket sizes and thresholds applicable to the negative covenants have also been added and/or modified. Certain additional modifications to the revolving credit facility are consistent with us becoming a public company in May 2014. On January 9, 2015, subsidiaries of ours entered into a fifth amendment (the Fifth Amendment ) to the Company s Credit Agreement. The Fifth Amendment, among other things, amended and restated the definition of Available Revolving Commitment under the Credit Agreement in order to exclude the Company s issued and outstanding Letters of Credit under the Credit Agreement s $10.0 million Letter of Credit sub-facility from the calculation of the Company s borrowing capacity under the Credit Agreement. The Letters of Credit will continue to be considered when determining the Total Revolving Commitments, as defined under the Credit Agreement, which remain unchanged at $40.0 million. Initial Public Offering On May 13, 2014, we completed our initial public offering ( IPO ) of 8,825,000 shares of common stock at a price of $15.00 per share. The IPO generated net proceeds of $118.9 million after deducting underwriting commissions of $9.3 million and expenses of approximately $4.3 million. The underwriting commissions and offering costs were reflected as a reduction to the IPO proceeds received in additional paid-in capital. Concurrent with the closing of the IPO, the outstanding shares of the Series A redeemable convertible preferred stock ( Series A Preferred ) and Series B redeemable convertible preferred stock Table of Contents ( Series B Preferred ) were converted on a 2.43-to-1 basis into 5,577,016 shares of common stock. Following the closing of the IPO, there were no shares of preferred stock outstanding. The Company used proceeds from the IPO to pay cumulative dividends of approximately $11.9 million to holders of Series A Preferred and $6.6 million to holders of Series B Preferred following the conversion of the preferred stock. In addition, the Company used approximately $23.5 million to repay all outstanding indebtedness under its line of credit and $40.5 million to prepay all outstanding aggregate principal of, and accrued interest on, notes to stockholders (the Shareholder Notes ). On June 10, 2014, the underwriters exercised an over-allotment option and purchased 1,000,000 shares of common stock from selling shareholders at a price of $15.00 per share before underwriting discounts. The Company received no proceeds from the sale of these shares. Risks Related to Our Business and this Offering An investment in shares of our common stock involves substantial risks and uncertainties that may adversely affect our business, financial condition, results of operations and cash flows. Some of the more significant challenges and risks relating to an investment in our company include: We have incurred losses in the past and may not be able to achieve or sustain profitability in the future; We must continue to successfully demonstrate to spine surgeons the merits of our technologies and techniques compared to those of our competitors; Pricing pressure from our competitors, hospitals and changes in third-party coverage and reimbursement may impact our ability to sell our products at prices necessary to support our current business strategies; We operate in a highly competitive market and we must continue to develop and commercialize new products or our revenue may decline. If our competitors develop and commercialize products that are safer, more effective, less costly or otherwise more attractive than our products, our ability to generate revenue may be reduced or eliminated; Many of our competitors have greater resources than we have; If hospitals and other healthcare providers are unable to obtain adequate coverage and reimbursement for procedures performed using our products, it is unlikely that our products will gain widespread acceptance; The safety and efficacy of our products are not yet supported by long-term clinical data, which could limit sales, and our products might therefore prove to be less safe and effective than initially thought; If we are unable to maintain and expand our network of direct sales employees, independent sales agencies and international distributors, we may not be able to generate anticipated sales; If we do not enhance our product offerings through our research and development efforts, we may be unable to effectively compete; Our products and operations are subject to extensive governmental regulation both in the United States and abroad, and our failure to comply with applicable requirements could cause our business to suffer; If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights; and Table of Contents Our international operations subject us to certain operating risks, which could adversely impact our net sales, results of operations and financial condition. See Risk Factors for a discussion of these and other factors you should consider before making an investment in shares of our common stock. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As a result, we are permitted to, and intend to continue to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies. Accordingly, we have included compensation information for only our three most highly compensated executive officers and have not included a compensation discussion and analysis of our executive compensation programs in this prospectus. In addition, for so long as we are an emerging growth company, we will not be required to: engage an independent registered public accounting firm to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; adopt new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or the PCAOB, regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); submit certain executive compensation matters to shareholder advisory votes, such as say-on-pay, say-on-frequency and say-on-golden parachutes; or disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer s compensation to median employee compensation. We will remain an emerging growth company until the earliest to occur of: our reporting of $1.0 billion or more in annual gross revenues; our issuance, in any three year period, of more than $1.0 billion in non-convertible debt; the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeds $700.0 million on the last business day of our second fiscal quarter; and the end of fiscal 2019. Corporate History and Information K2M Group Holdings, Inc. was incorporated in Delaware in June 2010. Our principal executive offices are located at 751 Miller Drive SE, Leesburg, Virginia 20175 and our telephone number is (703) 777-3155. Our website address is www.k2m.com. The information on, or accessible through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus. Table of Contents THE OFFERING Issuer K2M Group Holdings, Inc. Common stock offered by K2M Group Holdings, Inc. 2,044,990 shares. Common stock offered by the selling stockholders 4,000,000 shares. Common stock to be outstanding immediately after this offering 39,471,485 shares. Option to purchase additional shares of common stock from the selling stockholders Certain of the selling stockholders have granted the underwriters a 30-day option from the date of this prospectus to purchase up to 906,748 additional shares of our common stock at the public offering price, less underwriting discounts. Use of proceeds We estimate that our net proceeds from the sale of 2,044,990 shares of our common stock in this offering will be approximately $37.3 million, assuming a public offering price of $19.56 per share, which was the closing price of our common stock as reported on NASDAQ on January 27, 2015, and after deducting the estimated underwriting discount and estimated offering expenses payable by us. We intend to use the net proceeds received by us from this offering for working capital and general corporate purposes, which is expected to include the expansion of our global distribution network through the hiring or contractual engagement of qualified individuals and purchasing of inventory to support their sales efforts and which may also include the acquisition of or investment in complementary products, technologies or businesses. We will not receive any proceeds from the sale of any shares of our common stock by the selling stockholders, which include WCAS, our chief executive officer, chief financial officer and certain other members of our management and Board of Directors, including from any exercise by the underwriters of their option to purchase additional shares. See Use of Proceeds for additional information. Dividend policy We have no current plans to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our Board of Directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant. See Dividend Policy. Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights material information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled "Where You Can Find More Information" in this prospectus and any amendment or supplement hereto. Unless otherwise indicated, the terms the "Company," "Mix 1," "Mixx," "we," "us," and "our" refer and relate to Mix 1 Life, Inc. The Company Overview The Company was incorporated in the State of Nevada on June 10, 2009 under the name Antaga International Corp. The original business plan of the Company was to distribute nutritional supplements. On August 27, 2013, the Company entered into a Definitive Agreement (the "Definitive Agreement") with Mix 1LLC, an Arizona company. Mix 1 developed, marketed, sold and distributed ready to drink healthy beverages under the brand name "Mix 1." The Mix 1 brand launched in 2005 and marketed and sold Mix 1 products until December 2012. In December 2012, Mix 1 sold its remaining inventory to wholesalers and stopped the manufacture of Mix 1 products. Pursuant to the Definitive Agreement, the Company acquired 100% of certain assets owned by Mix 1 LLC, including, but not limited to, access to the Mix 1 brand name, product formulas, packaging design specifications, vendor/supplier lists, market research reports, product sales sheets, social media assets, other work product and full rights to market and sell such assets and conduct business with the assets (the "Acquisition"). In exchange for the assets, the Company issued Ten Million (10,000,000) new post-split shares of common stock to Mix 1. On September 12, 2013, the Company changed its name to Mix 1 Life, Inc. to reflect its new business. On November 1, 2013, the Company changed its trading symbol from "ANTR" to "MIXX". The Company is now focused on the continued development, marketing, sale and distribution of Mix 1 protein drinks. Following the Acquisition, the Company re-engineered the existing Mix 1 products to improve their taste, quality, look and nutritional content. In the second half of 2014, we re-positioned and re-launched the Mix 1 brand to market all of the improvements made to the existing Mix 1 products. Currently, we have developed three flavors including Chocolate, Blueberry Vanilla and Strawberry Banana. All of our Mix 1 beverages are made from simple all natural ingredients and offer a complete balanced macronutrient mix of whey protein, vitamins, minerals, fiber, healthy fat, and antioxidants, without the use of any artificial sweeteners or preservatives. All of our products are gluten free, caffeine free, 99% lactose free and made with non-GMO ingredients. A single twelve ounce serving provides 19 essential vitamins and minerals, including 70% of the recommended amount of daily calcium. Mix 1 products are made with the highest quality natural ingredients and offer superior functionality, meaning, our beverages are designed not only for hydration, but also for the promotion of overall health by giving the body the proper daily balance of nutrients. On March 31, 2015, we entered into an Asset Purchase Agreement with Shadow Beverages and Snack, LLC, an Arizona limited liability company ("Shadow") for the purchase of the "No Fear" brand asset ("No Fear") from Shadow. Shadow's interest in the No Fear brand is in the form of an exclusive Trademark and License Agreement between Shadow and No Fear International wherein Shadow was granted exclusive licensing and distribution of the No Fear drink within the United States of America. The Company acquired One Hundred Percent (100%) of Shadow's interest in the No Fear brand only for an aggregate purchase price of Twelve Million Two Hundred Thousand ($12,200,000) USD. Mix 1 products are designed for consumers looking for better options for on-the-go energy and natural products that provide the required nutrients for consumers' daily needs. We believe that our products will be able to reach the mainstream consumer market because of the broad range of occassions for consumers to drink our beverages, such as before a workout as an energy enhancer, after a workout to restore the body, as meal replacements for breakfast, lunch or dinner, as snacks or meal supplements, as energy boosts to get through the workday, or for no occasion at all. Our business strategy over the next five years is to increase distribution of our products to national markets and expanding our distribution to international markets, to diversify and expand our current product portfolio and to increase our management and number of employees to effectively manage the growth of our business and increase our sales and marketing forces. We commenced production of the Mix 1 products in May 2014 and began selling products in June 2014. SUMMARY OF THIS OFFERING Securities being offered 677,500 shares of common stock, which includes: (i) 451,667 shares of common stock; and, (ii) 225,833 shares of common stock issuable upon the exercise of the outstanding Investor Warrants. Our common stock is described in further detail in the section of this prospectus titled "DESCRIPTION OF SECURITIES." Securities being offered by the Company None. Number of common shares outstanding Before the Offering (1) 12,730,840 shares of common stock. Number of common shares outstanding After the Offering (2) 13,408,340 shares of common stock. Use of Proceeds We will not receive any of the proceeds from the sale of shares of common stock by the Selling Shareholders. Upon exercise of the Investor Warrants, we will receive $5.00 per share, or such lower price as may result from the anti-dilution protection features of such Warrants. Any proceeds from the exercise of such Warrants will be used for general working capital and other corporate purposes. Terms of Warrants Each Investor Warrant entitles the holder thereof to purchase one common share at an exercise price of $5.00 per full share, for a five-year period ending January 5, 2020. The price per Warrant Share shall be subject to adjustment for stock splits, combinations and similar recapitalization events and anti-dilution protection features. Risk Factors An investment in our common stock involves a high degree of risk. You should carefully consider the risk factors set forth under the "Risk Factors" section hereunder and the other information contained in this prospectus before making an investment decision regarding our common stock. Our common stock should not be purchased by investors who cannot afford the loss of their entire investment. OTCBB Trading Symbol Our common stock is currently quoted on the OTCBB (the "OTCBB") under the symbol "MIXX". Based on the number of shares issued and outstanding as of May 28, 2015, including the 225,833 Warrant Shares being offered for sale under this prospectus. Assumes full exercise of the Warrants held by the Selling Shareholders (and excluding all other shares issuable upon exercise of outstanding options and warrants). RISK FACTORS Investment in our common stock involves significant risk. You should carefully consider the information described in the following risk factors, together with the other information appearing elsewhere in this prospectus, before making an investment decision regarding our common stock. If any of the events or circumstances described in these risks actually occur, our business, financial conditions, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or a part of your investment in our common stock. RISKS ASSOCIATED WITH OUR COMPANY We have not generated any significant revenue since our inception and we may never achieve profitability. Mix 1 Life, Inc. is in the beginning stages of its operations. In the final quarter of 2014, the Company began filling product orders and developing its customer base. As we continue to develop and market our products, our expenses are expected to increase significantly. Accordingly, we will need to generate significant revenue to achieve profitability. Even as we begin to market and sell our intended products, we expect our losses to continue as a result of ongoing research and development expenses, as well as increased manufacturing, sales and marketing expenses. These losses, among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders' equity. Because of the numerous risks and uncertainties associated with our product development and commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we are unable to achieve and then maintain profitability, our business, financial condition and results of operations will be negatively affected and the market value of our common stock will decline. We may need to raise additional capital in the future. If we are unable to secure adequate funds on terms acceptable to us, we may be unable to execute our plan of operations. We believe that our current cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements to the fourth quarter of 2015. If we incur delays in commencing commercialization of our intended products or in achieving significant product revenue, or if we encounter other unforeseen adverse business developments, we may exhaust our capital resources prior to this time. We cannot be certain that additional capital will be available when needed or that our actual cash requirements will not be greater than anticipated. Financing opportunities may not be available to us, or if available, may not be available on favorable terms. The availability of financing opportunities will depend on various factors, such as market conditions and our financial condition and outlook. In addition, if we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we obtain additional debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on our operations. If we are unable to obtain financing on terms favorable to us, we may be unable to execute our plan of operations and we may be required to cease or reduce development or commercialization of any future products, sell some or all of our technology or assets or merge with another entity. Our future success depends on our ability to retain our officers and directors and other key employees and to attract, retain and motivate qualified personnel. Our success depends on our ability to attract, retain and motivate highly qualified management and scientific personnel. In particular, we are highly dependent on our President and Chief Executive Officer, our other officers and directors and key employees. The loss of any of these persons or their expertise would be difficult to replace and could have a material adverse effect on our ability to achieve our business goals. In addition, the loss of the services of any one of these persons may impede the achievement of our research, development and commercialization objectives by diverting management's attention to the identification of suitable replacements, if any. There can be no assurance that we will be successful in hiring or retaining qualified personnel, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations. Recruiting and retaining qualified personnel and, in the future, sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among companies for similar personnel. We do not maintain "key person" insurance on any of our employees. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating products and commercialization strategies. Our consultants and advisors, however, may have other commitments or employment, that may limit their availability to us. We expect to expand our product development and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations. We expect to experience significant growth in the number of our consultants, advisors, and employees and the scope of our operations as we continue to develop and commercialize our current pipeline of intended products and new products. In order to manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plan or disrupt our operations. Our Articles of Incorporation exculpates our officers and directors from certain liability to our Company or our stockholders. Our Articles of Incorporation contain a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our Company. Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision. We have a "going concern" opinion from our auditors, indicating the possibility that we may not be able to continue to operate. Our independent registered public accountants have expressed substantial doubt about our ability to continue as a going concern. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital when needed, we will not be able to complete our proposed business. As a result we may have to liquidate our business and investors may lose their investments. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plan of operations described herein and eventually attain profitable operations. Investors should consider our independent registered public accountant's comments when deciding whether to invest in the Company. RISKS ASSOCIATED WITH OUR BUSINESS The sale of ingested products involves product liability and other risks. Like other distributors of products that are ingested, the Company faces an inherent risk of exposure to product liability claims if the use of its products results in illness or injury. The products that the Company sells in the U.S. are subject to laws and regulations, including those administered by the USDA and FDA that establish manufacturing practices and quality standards for food products. Product liability claims could have a material adverse effect on the Company's business as existing insurance coverage may not be adequate. Distributors of vitamins, nutritional supplements and minerals, have been named as defendants in product liability lawsuits from time to time. The successful assertion or settlement of an uninsured claim, a significant number of insured claims or a claim exceeding the limits of the Company's insurance coverage would harm the Company by adding costs to its business and by diverting the attention of senior management from the operation of its business. The Company may also be subject to claims that its products contain contaminants, are improperly labeled, include inadequate instructions as to use or inadequate warnings covering interactions with other substances. Product liability litigation, even if not meritorious, is very expensive and could also entail adverse publicity for the Company and reduce its revenue. In addition, the products the Company distributes, or certain components of those products, may be subject to product recalls or other deficiencies. Any negative publicity associated with these actions would adversely affect the Company's brand and may result in decreased product sales and, as a result, lower revenues and profits. Significant additional labeling or warning requirements may inhibit sales of affected products. Various jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to the content or perceived adverse health consequences of the Company's product. If these types of requirements become applicable to the Company's product under current or future environmental or health laws or regulations, they may inhibit sales of such products. As a new business enterprise, the Company likely will experience fluctuations in its operating results. The Company's operating results may fluctuate significantly as a result of a variety of factors, many of which are outside its control. As a result of the Company's lack of operating history it is difficult for the Company to forecast its revenues or earnings accurately. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues relative to the Company's planned expenditures would have an immediate, adverse effect on its business, results of operations and financial condition. Criticism of the Company's product and/or the market generally could adversely affect its operating results. Criticism of the Company's product, including criticism by healthcare professionals and other criticism for a variety of reasons, could affect consumer opinions of its product and result in decreased demand, which in turn could have an adverse effect on its results of operations and business. Changes in the business environment for the Company's product could impact its financial results. The business environment for the Company's product is rapidly evolving as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures. If the Company is unable to successfully adapt to this rapidly changing environment, its business could be negatively affected. Changes in formula and new flavor offerings; we cannot accurately predict the volume or timing of any future sales of our reformulated or any new products, making the timing of any revenues difficult to predict. The past experienced by our predecessor company was based on a formula and flavor that we no longer offer or sell. Although management believes the new formula and flavors provide more attractive alternatives than the former best-selling popular berry flavor there is no assurance our consumers will agree. We may be faced with lengthy customer evaluation and approval processes associated with our reformulated and new beverage offerings. Consequently, we may incur substantial expenses and devote significant management effort and expense in developing customer acceptance, which may not result in revenue generation. As such, we cannot accurately predict the volume or timing of any future sales. If the Company is not able to effectively protect its intellectual property, its business may suffer a material, negative impact and may fail. The Company believes that its brand is important to its success and competitive position. If the Company is unable to secure trademark protection for its intellectual property in the future or that protection is inadequate for its current products and any future products, the Company's business may be materially adversely affected. Further, the Company cannot be sure that its activities do not and will not infringe on the intellectual property rights of others. If claims are made against the Company's current product formula, the Company may not be able to effectively minimize damage claims due to its significant sales pipeline. If the Company is compelled to prosecute infringing parties, defend its intellectual property or defend itself from intellectual property claims made by others, it may face significant expenses and liability as well as the diversion of management's attention from the Company's business, any of which could negatively impact the Company's business or financial condition. Our business could be harmed if we fail to maintain proper inventory levels. We place orders with our manufacturers for some of our products prior to the time we receive all of our customers' orders. We do this to minimize purchasing costs, the time necessary to fill customer orders and the risk of non-delivery. We also maintain an inventory of certain products that we anticipate will be in greater demand. However, we may be unable to sell the products we have ordered in advance from manufacturers or that we have in our inventory. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair our brand image and have a material adverse effect on our operating results and financial condition. Conversely, if we underestimate consumer demand for our products or if our manufacturers fail to supply the quality products that we require at the time we need them, we may experience inventory shortages. Inventory shortages might delay product shipments, negatively impact key relationships with our customers, and diminish brand loyalty. We rely on contract manufacturing of our products. Our inability to secure production sources meeting our quality, cost, working conditions and other requirements, or failures by our contractors to perform, could harm our sales and reputation. We source our products from third party manufacturers. As a result, we must locate and secure production that meets our demands. We depend on our manufacturers to maintain adequate financial resources and maintain sufficient development and manufacturing capacity. We do not have material long-term contracts with any of our manufacturers, and these manufacturers generally may unilaterally terminate their relationship with us at any time. Our dependence on contract manufacturers could subject us to a number of risks if these manufacturers do not meet our quality, cost, working conditions and other requirements or if they fail to materially perform, any of which could seriously harm our sales and reputation. Further, if we need to place greater demands on our current manufacturers due to increased customer demands, or seek additional or replacement manufacturers, we may be unable to do so on terms that are acceptable to us, if at all. We rely on third-party suppliers who provide raw materials to our manufacturers to create our products. We have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity. We do not manufacture our products or the raw materials used to create our products and instead rely on third-party suppliers to supply the materials to our manufacturers. We have no material long-term contracts with these suppliers, and we compete with other companies for raw materials and production. We may experience a significant disruption in the supply of raw materials from current sources or, in the event of a disruption, we may be unable to locate alternative materials suppliers of comparable quality at an acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to replace an existing supplier, we may be unable to locate additional supplies of raw materials on terms that are acceptable to us, or at all, or we may be unable to locate any supplier with sufficient capacity to meet our requirements or to fill our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. Even if we are able to expand existing sources, we may encounter delays in production and added costs as a result of the time it takes to train suppliers in our methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from our markets or from other participants in our supply chain. Any delays, interruptions or increased costs in the supply of fabrics for our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenue and income from operations both in the short and long term. Our business is subject to risks associated with distribution overseas. Our ability to export products in a timely and cost-effective manner may be affected by conditions at ports or issues that otherwise affect transportation, such as port and shipping capacity, labor disputes and work stoppages, political unrest, severe weather, or security concerns. These issues could delay exportation of products or require us to locate alternative ports to avoid disruption to our customers. These alternatives may not be available on short notice, if at all, or could result in higher transit costs, which could have an adverse impact on our business and financial condition. Our exported products are subject to customs laws, which may impose tariffs, as well as import quota restrictions on apparel. However, we have no guarantee that regulations on exported goods will not materially change or that our business will not be adversely affected by duties, tariffs or embargoes in the future. Violation of labor laws and practices by our manufacturers and suppliers could harm our business. We require our manufacturers and suppliers to operate in compliance with applicable laws and regulations. While the Company promotes ethical business practices, we do not control our manufacturers or suppliers or their labor practices. The violation of labor or other laws by any of our manufacturers or suppliers, or divergence of their labor practices from those generally accepted as ethical in the local markets, could interrupt or otherwise disrupt the shipment of our products, harm the value of our trademarks, damage our reputation or expose us to potential liability for their wrongdoings. A privacy breach could damage our reputation and our relationship with our customers, expose the Company to litigation risk and adversely affect our business. As part of our normal course of business, we collect, process and retain sensitive and confidential customer information. Despite security measures we have in place, our facilities and systems may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information could severely damage our reputation and our relationships with our customers, expose the Company to risks of litigation and liability and adversely affect our business. Our success depends on the continued protection of our trademarks. Our trademarks are important to our success and competitive position, and the loss of or inability to enforce our trademarks could harm our business. We have devoted and will continue to devote substantial resources to the establishment and protection of our trademarks on a worldwide basis. Despite any precautions we may take to protect our trademarks, policing unauthorized use of them is difficult, expensive and time-consuming, and we may be unable to adequately protect our trademarks or determine the extent of any unauthorized use, particularly in those foreign countries where the laws do not protect proprietary rights as fully as in the United States. Our efforts to establish and protect our trademarks may not be adequate to prevent imitation or counterfeiting of our products by others or to prevent others from seeking to block sales of our products for violating their trademarks. Unauthorized copying of our products or unauthorized use of our trademarks may decrease sales of our products and cause significant damage to our brand name and our ability to effectively represent ourselves to our customers. Also, we cannot assure you that others will not assert rights in, or ownership of, our trademarks, that our trademarks would be upheld if challenged or that we would, in that event, not be prevented from using our trademarks, any of which could have a material adverse effect on our financial condition and results of operations. Further, we could incur substantial costs in legal actions relating to our use of our trademarks or the use of our trademarks by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us. We are an "Emerging Growth Company" and as such, intend to take advantage of certain exemptions from reporting requirements that are available to us. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), and as such, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an "emerging growth company." We will remain an emerging growth company until the earliest of: (A) the last day of the fiscal year following the fifth anniversary of our first sale of common equity securities pursuant to an effective Registration Statement, (B) the last day of the fiscal year in which we have total annual gross revenue of $1.0 billion or more, (C) the date that we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (D) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. If ever we are no longer an "emerging growth company," we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not "emerging growth companies," including Section 404 of the Sarbanes-Oxley Act. We are an "Emerging Growth Company" and we cannot be certain if the reduced disclosure requirements applicable to Emerging Growth Companies will make our Common Stock less attractive to Investors. We are an "emerging growth company," as defined in the Jumpstart our Business Startups Act of 2012 ("JOBS Act"), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Stock less attractive because we will rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile. Under the JOBS Act, "emerging growth companies" can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to "opt out" of such extended transition period and, therefore, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. RISKS ASSOCIATED WITH OUR COMMON STOCK The Company's stock price may be volatile. The market price of the Company's common stock is likely to be highly volatile and could fluctuate widely in price in response to various potential factors, many of which will be beyond the Company's control, including the following: competition; additions or departures of key personnel; the Company's ability to execute its business plan; operating results that fall below expectations; loss of any strategic relationship; industry developments; economic and other external factors; and period-to-period fluctuations in the Company's financial results. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Company's common stock. We do not expect to pay dividends in the foreseeable future. We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common stock. We may in the future issue additional shares of our common stock which would reduce investors' ownership interests in the Company and which may dilute our share value. Our Articles of Incorporation and amendments thereto authorize the issuance of 100,000,000 shares of common stock, par value $0.001 per share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock. FINRA sales practice requirements may limit a stockholder's ability to buy and sell our stock. The Financial Industry Regulatory Authority ("FINRA") has adopted rules that relate to the application of the SEC's penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. FINRA's requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder's ability to resell shares of our common stock. DETERMINATION OF OFFERING PRICE The prices at which the shares of common stock covered by this prospectus may actually be sold will be determined by the prevailing public market price for shares of common stock, by negotiations between the Selling Shareholders and buyers of our common stock in private transactions or as otherwise described in "Plan of Distribution." USE OF PROCEEDS We will not receive any proceeds from the sale of shares of common stock by the Selling Shareholders covered by this prospectus. All proceeds from the sale of shares of common stock offered under this prospectus will be for the account of the Selling Shareholders as described below in the sections entitled "Selling Security Holders" and "Plan of Distribution." We have agreed to bear the expenses relating to the registration of the common stock for the Selling Shareholders. To the extent the Selling Shareholders exercise all of the Warrants covering the 225,833 shares of common stock issuable upon exercise of all of the Warrants held by such Selling Shareholders, we would receive $5.00 per share from the exercise of the Investor Warrants, or such lower price as may result from the anti-dilution protection features of such Warrants. The Warrants may expire without having been exercised. Even if some or all of these Warrants are exercised, we cannot predict when they will be exercised and when we would receive the proceeds. We intend to use any proceeds we receive upon exercise of the warrants for general working capital and other corporate purposes. SELLING SECURITY HOLDERS This prospectus covers the resale by our Selling Shareholders of 677,500 shares of common stock, including: (i) up to 451,667 shares (the "Purchased Shares") of common stock previously issued at a price of $3.00 per share to the Selling Shareholders in connection with a convertible debenture offering that closed on May 14, 2015; and, (ii) up to 225,833 shares (the "Investor Warrant Shares") of common stock issuable upon the exercise of outstanding investor's warrants (the "Investor Warrants") at an exercise price of $5.00 that were previously issued to the Selling Shareholders in connection with a convertible debenture offering that closed on May 14, 2015. The following table sets forth, as to each of the Selling Shareholders, the number of shares of our common stock and Warrants held of record by the Selling Shareholder as of May 28, 2015, assuming full exercise of all of the Warrants held by such Selling Shareholder on that date; the number of shares of our common stock being offered by such Selling Shareholder pursuant to this prospectus; the number of shares of our common stock beneficially owned by the Selling Shareholder upon completion of the offering and the percentage of beneficial ownership of the Shareholder upon completion of the offering, based upon 12,730,840 shares of our common stock outstanding as of May 28, 2015, assuming full exercise of all Warrants held by the Selling Shareholders and outstanding on that date. The shares being offered hereby are being registered to permit public secondary trading, and the Selling Shareholders may offer all or part of the shares for resale from time to time. However, the Selling Shareholders are under no obligation to sell all or any portion of such shares nor are the Selling Shareholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the Selling Shareholders. Name of Selling Shareholder Position, Office or Other Material Relationship
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001501134_invitae_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001501134_invitae_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001501134_invitae_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001502630_plh_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001502630_plh_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3f662b0d036d7051394029734fd762d80381cdde
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001502630_plh_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This section of the offering is intended as a summary only. Each prospective investor should read the offering in its entirety for a more detailed description of the transaction. The following summary is qualified in its entirety by reference to the full text of the offering.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001503538_ipoworld_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001503538_ipoworld_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..430ab4531e9a522f7e015d41b575c65c36625381
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001503538_ipoworld_prospectus_summary.txt
@@ -0,0 +1,11 @@
+PROSPECTUS SUMMARY
+
+ 
+
+This summary highlights selected information
+contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing
+in the Common Stock. You should carefully read the entire Prospectus, including "Risk Factors", "Management's Discussion
+and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision.
+In this Prospectus, the "Company," "we," "us," and "our" refer to IPOWorld unless the context
+otherwise requires. The term "fiscal year" refers to our fiscal year ended September 30. Unless otherwise indicated the
+term "Common Stock" refers to shares of the Company's common stock.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001506503_white-fox_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001506503_white-fox_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001506503_white-fox_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001509477_nownews_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001509477_nownews_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d90236dc93bb14df419594e2f03bca44b2a12dc4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001509477_nownews_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. You should read the entire prospectus carefully before making an investment in our Common Stock. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections entitled "Risk Factors," "Business" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Unless the context otherwise requires, the terms "NOWnews," "the Company," "we," "us" and "our" in this prospectus refer to NOWnews Digital Media Technology Co. Ltd., and its subsidiaries. Overview NOWnews Digital Media Technology Co. Ltd. (the "Company", "NOWnews", or "we") is engaged in the business of creating, collecting and distributing news and information through its website http://www.nownews.com/ and its applications on mobile phones or tablets. We generate revenue primarily from online advertising and marketing services and news content licensing. Company Information We maintain our principal executive offices at 4F, No. 32, Ln. 407, Sec. 2, Tiding Road, Neihu District, Taipei City 114, Taiwan. Our telephone number is +886-287978775 ext. 500 and our website address is http://www.nownews.com/. The information contained in, or that can be accessed through, our website is not incorporated into and is not part of this prospectus. We were incorporated as Forever Zen Ltd. on March 20, 2010 under the laws of the State of Nevada. On December 13, 2013, we changed our name to NOWnews Digital Media Technology Co Ltd. Going Concern As described in auditor s report on our financial statements, our auditors have included a "going concern" provision in their opinion on our financial statements, expressing substantial doubt that we can continue as an ongoing business for the next twelve months. The Offering Common Stock offered by the selling stockholders 3,990,950 shares of Common Stock of the Company Common Stock Outstanding before this offering 22,412,000 shares Common stock to be outstanding after this offering 22,412,000 shares Trading Market OTCQB Ticker Symbol NDMT Use of proceeds We will not receive any of the proceeds from the sale of shares to be offered by the selling stockholders. See "Use of Proceeds."
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001512787_canwealth_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001512787_canwealth_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bc9cb09050aefabd6676b411897a12825000b6eb
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001512787_canwealth_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 canws1a042415.htm As filed with the Securities and Exchange Commission on April 28, 2015 Registration No. 333-201468 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A Pre-Effective Amendment No. 3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CANWEALTH MINERALS CORPORATION (Exact name of registrant as specified in its charter) Delaware 1000 27-2288541 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1376 Perrot Boulevard Ile Perrot, Quebec, Canada J7V 7P2 (514) 425-2020 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Garth McIntosh Chief Executive Officer Canwealth Minerals Corporation 1376 Perrot Boulevard Ile Perrot, Quebec, Canada J7V 7P2 (514) 425-2020 (Name, address, including zip code, and telephone number, including area code, of agent for service) With copies to: Alan C. Ederer, Esq. Westerman Ball Ederer Miller Zucker & Sharfstein, LLP 1201 RXR Plaza Uniondale, NY 11556 Telephone: (516) 622-9200 Facsimile: (516) 622-9212 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement as determined by the selling stockholders named in the prospectus contained herein. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Number of shares to be registered (1) Proposed maximum offering price per share (2) Proposed maximum aggregate offering price (2) Amount of registration fee (3) Common stock, par value $0.0001 per share 8,602,000 $0.10 $860,200 $99.96 (1) This registration statement includes an indeterminate number of additional shares of common stock issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected which results in an increase in the number of outstanding shares of our common stock. In the event of a stock split, stock dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act of 1933, as amended. (2) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (3) This registration fee shall be offset against the $2,046.00 fee paid by Canwealth Minerals Corporation in connection with its Registration Statement on Form S-1 (Registration No. 333-189845) initially filed with the Securities and Exchange Commission on July 8, 2013. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 4. PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. Because it is only a summary, it may not contain all of the information that may be important to you in making an investment decision. We urge you to read this entire prospectus carefully, including the risks of investing in our common stock discussed under Risk Factors and the information incorporated herein by reference, before making an investment decision. All references in this prospectus to Canwealth, we, us, our, the Company or our Company refer to Canwealth Minerals Corporation, a Delaware corporation. Our Company and Predecessor USG1, Inc., or USG1, the predecessor to Canwealth, was formed on February 27, 2010 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including selected mergers and acquisitions. USG1 registered its common stock in a Form 10 registration statement filed pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Rule 12(g) thereof. Canwealth Minerals Corporation (Canada), or Canwealth Canada, was formed on February 1, 2006 under the laws of the Canada Business Corporations Act. Canwealth Canada s mission is to explore the mining claims it has registered in various areas of Northern Quebec, which based on assay reports of preliminary surface samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, rare earth elements, or REE, and other minerals. Prior to the consummation of the merger described in the following paragraph, the stockholders of Canwealth Canada contributed their shares of Canwealth Canada to the Company in exchange for shares of the Company s common stock. Accordingly, Canwealth Canada became a wholly-owned subsidiary of the Company. On February 11, 2013, USG1 and the Company consummated a merger whereby the existing shares of the Company s common stock converted into USG1 common stock, and the existing USG1 stockholders continued to hold their shares of USG1 common stock. USG1 succeeded to the mining business and operations of the Canwealth entities and, contemporaneously with the merger, the corporate name USG1, Inc. was changed to Canwealth Minerals Corporation. Description of Business We are an exploration stage company located in Ile Perrot, Quebec, Canada formed for the purposes of acquiring, exploring and, if warranted and feasible, developing commercially viable mineral deposits, including gold, silver, platinum, palladium, base metals and REE, in the Province of Quebec. We intend to engage in grass roots mineral exploration which includes conventional prospecting, geological and geophysical surveys, applied research and core drilling. At the present time, our sole activity is acquiring and holding mining claims with respect to five mineral properties located in the mineral-rich Abitibi Greenstone Belt zone of the Grenville orogeny in southern Quebec, Canada. We have not initiated our exploration program, hired employees, realized any revenues or begun operations or mine development to date. Our initial focused activity will be to search for viable mineral deposits in Quebec under a Phase 1 program. Our Phase 2 program is expected to involve staking of additional claims, entering into joint ventures with other mining companies and/or optioning properties in other mining jurisdictions in Canada. Our Phase 3 program is expected to involve taking the Company on an international level in a quest for viable mineral deposits. A leadership team will be assembled in the form of an exploration team which will be actively conducting fieldwork and assessments and assembling data to support new approaches that will expand the scope of our exploration projects. This exploration team will consist of a core group of experienced geologists and geoscientists, mining engineers, consultants and mineral research institutions, all committed to the quest of determining the mineral source(s) of our properties. Table of Contents1 Risk Factors An investment in the shares of our common stock involves a high degree of risk and may not be an appropriate investment for persons who cannot afford to lose their entire investment. For a discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully review and consider the section entitled Risk Factors beginning on page 4 of this prospectus. The Offering The selling stockholders named in this prospectus are offering up to 8,602,000 shares of our common stock held by them. We issued the shares of common stock to the selling stockholders in private placements completed by us and by our predecessor. For a complete description of the terms and conditions of our common stock, you are referred to the section in this prospectus entitled Description of Securities. The shares being offered by this prospectus will be offered for a period not to exceed two years from the original effective date of this prospectus. Use of Proceeds We will not receive any proceeds from the resale of the shares of our common stock by the selling stockholders. Principal Office, Telephone Number and Internet Address Our principal executive office is located at 1376 Perrot Boulevard, Ile Perrot, Quebec, Canada J7V 7P2. Our telephone number is (514) 425-2020 and our internet address is www.canwealthminerals.com. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements, as that term is used in federal securities laws, about our financial condition, results of operations and business. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Forward-looking statements may be identified by words such as believes , expects , anticipates , estimates , projects , intends , should , seeks , future , continue , or the negative of such terms, or other comparable terminology. Factors that could cause actual results to differ materially include, but are not limited to: adverse economic conditions, inability to raise sufficient additional capital to operate our business, unexpected costs, lower than expected sales and revenues, and operating deficits, adverse results of any legal proceedings, the volatility of our operating results and financial condition, inability to attract or retain qualified senior management personnel, including sales and marketing personnel, inability to achieve anticipated product sales, and other specific risks that may be referred to in this prospectus. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Table of Contents2 Because these statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this prospectus. Further, the information contained in this document is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions. Unless otherwise required by applicable law, we do not undertake, and specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. RISK FACTORS The purchase of shares of our common stock is very speculative and involves a very high degree of risk. An investment in our Company is suitable only for the persons who can afford the loss of their entire investment. Accordingly, investors should carefully consider the following risk factors, as well as other information set forth herein, in making an investment decision with respect to our securities. Risks Relating to Our Business We are an exploratory stage company and have a limited history of operations, making an evaluation of us extremely difficult. At this stage, even with our good faith efforts, there is nothing on which to base an assumption that we will become profitable or generate any significant amount of revenues. We have only a limited operating history on which you can evaluate our business, financial condition and operating results. We have not yet recognized revenues from our operations, and since our inception we have incurred significant operating losses and negative cash flows. We have been focused on organizational, start-up activities and business plan development since we incorporated. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our product, the level of our competition and our ability to attract and maintain key management and employees. If we cannot achieve operating profitability, we may not be able to meet our working capital requirements, which will have a material adverse effect on our operating results and financial condition. Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing. The report of our independent auditors dated April 14, 2015 on our consolidated financial statements for the year ended December 31, 2014 included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Our auditors doubts are based on our incurring significant losses from operations and our working capital deficit position. Our ability to continue as a going concern will be determined by our ability to obtain additional funding in the short term to enable us to realize the commercialization of our planned business operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. We are an emerging growth company under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. Table of Contents3 We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates. We will remain an emerging growth company for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million. Due to the speculative nature of mineral property exploration, there is substantial risk that no commercially viable mineral deposits will be found on the properties on which we currently own mining claims or other mineral properties that we acquire. In order for us to even commence mining operations we face a number of challenges which include finding qualified professionals to conduct our exploration program, obtaining adequate financing to continue our exploration program, locating a viable mineral body, partnering with a senior mining company, and ultimately selling minerals in order to generate revenue. Moreover, exploration for commercially viable mineral deposits is highly speculative in nature and involves substantial risk that no viable mineral deposits will be located on any of our present or future mineral properties. There is a substantial risk that the exploration program that we will conduct on our mining claims may not result in the discovery of any significant mineralization, and therefore no commercial viable mineral deposit. There are numerous geological features that we may encounter that would limit our ability to locate mineralization or that could interfere with our exploration programs as planned, resulting in unsuccessful exploration efforts. In such a case, we may incur significant costs associated with an exploration program, without any benefit. This would likely result in a decrease in the value of our common stock. Due to the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business. The search for minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or may elect not to insure. We currently have no such insurance nor do we expect to obtain such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all our assets and cease operations, resulting in the loss of your entire investment. Our activities are subject to governmental regulations which may subject us to penalties for failure to comply, may limit our ability to conduct exploration activities and could cause us to delay or abandon our projects. Table of Contents4 Various regulatory requirements affect the current and future activities of the Company, including exploration activities on our mining claims. Failure to comply with applicable laws, regulations, and licensing requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing exploration activities to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining activities may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws. Any change in or amendments to current laws, regulations and permits governing activities of mineral exploration companies, or more stringent implementation thereof, could require increases in exploration expenditures, or require delays in exploration or abandonment of new mineral properties. The cost of compliance with changes in governmental regulations has a potential to increase the Company s expenses. Because we are subject to compliance with environmental regulation, the cost of our exploration program may increase. Our operations may be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain exploration and mining industry operations which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations. Competition in the mineral exploration and prospecting industry is intense, and we have limited financial and personnel resources with which to compete. Competition in the mineral exploration and prospecting industry is intense. Numerous companies headquartered in the United States, Canada and elsewhere throughout the world compete for gold and other precious metals on a global basis. We are an insignificant participant in the gold industry due to our limited financial and personnel resources. We presently operate with a sole employee, and anticipate that we will compete with other companies in our industry to hire additional qualified personnel which will be required to successfully operate our Company. We may be unable to attract the necessary investment capital or personnel to fully develop our marketing and business plan. Consequently, our revenues, operations and financial condition could be materially adversely affected. However, while we compete with other exploration companies, there is no competition for the exploration or removal of minerals from our mining claims. The market prices for gold and other precious metals are based on numerous factors beyond our control and, in general, are volatile. The gold and precious metals industry is intensely competitive, resulting in a great deal of price volatility. Even if we have the ability to market commercial quantities of gold and other mineral resources, prevailing prices could limit our ability to earn a profit for the sale of those resources. Factors beyond our control may affect the marketability of minerals, including international, economic and political trends, expectations of inflation, global and regional supply and demand and consumption patterns, metal stock levels maintained by producers and others, the availability and cost of metal substitutes, currency exchange fluctuations, inflation rates, interest rates, speculative activities and increased production due to improved mining and production methods. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital and you may lose your entire investment in this offering. The loss or unavailability to the Company of Mr. McIntosh s services would have an adverse effect on our business, operations and prospects in that we may not be able to obtain new management under the same financial arrangements, which could result in a loss of your investment. Table of Contents5 Our business plan is significantly dependent upon the abilities and continued participation of Garth McIntosh, our president and chief executive officer. It would be difficult to replace Mr. McIntosh at such an early stage of development. The loss by or unavailability to us of Mr. McIntosh s services would have an adverse effect on our business, operations and prospects. In the event that we are unable to locate or employ personnel to replace Mr. McIntosh, we would be required to cease pursuing our business opportunity, which would result in a loss of your investment. Current management s lack of experience in operating a public company could impact your return on investment, if any. As a result of our reliance on Mr. McIntosh, and his lack of experience in operating a public company, our investors are at risk in losing their entire investment. Mr. McIntosh intends to hire personnel in the future, when sufficiently capitalized, who would have the experience required to manage our Company. Such management is not anticipated until the occurrence of future financing. Until such a future offering occurs, and until such management is in place, we are reliant upon Mr. McIntosh to make the appropriate management decisions. Current management s lack of experience in and/or with mining and, in particular, mineral exploration activity, means that it is difficult to assess, or make judgments about, our potential success. Mr. McIntosh does not have any prior experience with and has never been employed in the mining industry. With no direct training or experience in exploring for, starting, and/or operating a mine, Mr. McIntosh may not be fully aware of many of the specific requirements related to mineral exploration, let alone the overall mining industry as a whole. Consequently, our operations, earnings, and ultimate financial success could be negatively impacted due to Mr. McIntosh s future decisions or lack of sophistication or experience in this particular industry. As a result, if we do obtain the funding or other means to implement a bona fide mineral exploration program, such program will likely have to be implemented and carried out by joint venturers, partners or independent contractors who would have the requisite mineral exploration experience and know-how that we currently lack. We will require additional financing in order to implement our business plan. In the event we are unable to acquire additional financing, we may not be able to implement our business plan resulting in a loss of revenues and ultimately the loss of your investment. To fully implement our business plan, we will require substantial additional funding. We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our stockholders will lose part or all of their investment. Our officers and directors are entitled to indemnification and limitation of liability under our organizational documents and applicable law. Our officers and directors are required to exercise good faith and high integrity in the management of our affairs. Our certificate of incorporation provides, however, that our officers and directors shall have no personal liability to us or our stockholders for damages for any breach of duty owed to us or our stockholders, unless they breached their duty of loyalty, did not act in good faith, knowingly violated a law, or received an improper personal benefit. Our certificate of incorporation and bylaws also provide for the indemnification by us of our officers and directors against any losses or liabilities they may incur by reason of their serving in such capacitates, provided that they do not breach their duty of loyalty, act in good faith, do not knowingly violate a law, and do not received an improper personal benefit. We may be unable to comply with disclosure controls and procedures necessary to make required public filings. Table of Contents6 We currently have no full-time employees other than our Chief Executive Officer, although we intend to add personnel once we are sufficiently capitalized. Given our limited personnel, we may be unable to maintain effective controls to insure that we are able to make all required public filings in a timely manner. If we are successful in having our common stock listed on a stock exchange or quotation service, and if we do not make all public filings in a timely manner, our shares of common stock may be delisted and we could also be subject to regulatory action and/or lawsuits by stockholders. Sarbanes-Oxley and federal securities laws reporting requirements can be expensive. As a public reporting company, we will be subject to the Sarbanes-Oxley Act of 2002, as well as the information and reporting requirements of the Exchange Act, and other federal securities laws. The costs of compliance with the Sarbanes-Oxley Act and of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC, and furnishing audited reports to stockholders, are significant and may increase in the future. Risks Relating to Our Common Stock A significant amount of our common stock is held by a few stockholders. As of the date of this prospectus, ICBS, Ltd. and Radcor Inc. hold 38,648,077 (or approximately 76.12%) and 5,521,154 (or approximately 10.88%), respectively, of our outstanding shares of common stock and could, therefore, have a significant influence on us. Garth McIntosh, our President, Chief Executive Officer and Chairman of the Board, is the president, director and a principal shareholder of ICBS, Ltd. There is no current public market for our common stock; therefore you may be unable to sell your securities at any time, for any reason, and at any price, resulting in a loss of your investment. As of the date of this prospectus, there is no public market for our common stock. Although we have been in contact with an authorized OTC market maker for sponsorship of our securities on the OTC, we have not made any arrangements to do so and our attempts to do so may be unsuccessful. If our securities are not quoted on the OTC or elsewhere, a market may not develop for the common stock or a market in the common stock may not be maintained. As a result of the foregoing, investors may be unable to liquidate their investment for any reason. Further issuances of equity securities may be dilutive to current stockholders. We will be required to seek additional capital in the future. This capital funding could involve one or more types of equity securities, including convertible debt, common or convertible preferred stock and warrants to acquire common or preferred stock. Such equity securities could be issued at or below the then market price for our common stock. Any issuance of additional shares of our common stock will be dilutive to existing stockholders and could adversely affect the market price of our common stock. Our certificate of incorporation grants the board of directors the power to designate and issue additional shares of preferred stock. Our certificate of incorporation grants our board of directors authority to, without any action by our stockholders, designate and issue, from our authorized capital, shares in such classes or series as it deems appropriate and establish the rights, preferences, and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of classes or series of preferred stock that may be issued could be superior to the rights of the common stock offered hereby. Our board of directors ability to designate and issue shares could impede or deter an unsolicited tender offer or takeover proposal. Further, the issuance of additional shares having preferential rights could adversely affect other rights appurtenant to the shares of common stock offered hereby. Any such issuances will dilute the percentage of ownership interest of our stockholders and may dilute our book value. Because our common stock is deemed a low-priced penny stock, an investment in our common stock should be considered high risk and subject to marketability restrictions. Table of Contents7 Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to: deliver to the customer, and obtain a written receipt for, a disclosure document; disclose certain price information about the stock; disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer; send monthly statements to customers with market and price information about the penny stock; and in some circumstances, approve the purchaser s account under certain standards and deliver written statements to the customer with information specified in the rules. Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future. The trading price of our common stock may fluctuate significantly due to factors beyond our control. If an active trading market develops for our common stock, the trading price will be subject to significant fluctuations in response to numerous factors, including: Variations in anticipated or actual results of operations; Announcements of new products or technological innovations by us or our competitors; Changes in earnings estimates of operational results by analysts; Inability of market makers to combat short positions on the stock; Inability of the market to absorb large blocks of stock sold into the market; and Comments about us or our markets posted on the Internet. Moreover, the stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for emerging growth companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our common stock. If our stockholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity or equity related securities in the future at a price we deem appropriate. We do not intend to pay dividends on our common stock. We have never paid or declared any cash dividends on our common stock and intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares of common stock unless they sell them. Table of Contents8 USE OF PROCEEDS We will not receive any proceeds from the resale of the shares of our common stock by the selling stockholders. DETERMINATION OF OFFERING PRICE The initial offering price of the shares offered hereby, until such time that our common stock is quoted on the OTC, has been determined arbitrarily by us and does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company. After our shares are quoted on the OTC, the offering price of the shares will be at prevailing market prices or privately negotiated by the selling stockholders with investors. See the section hereof entitled, Plan of Distribution. DILUTION We are not selling any of the shares of our common stock in this offering. All of the shares sold in this offering will be held by the selling stockholders at the time of the sale, so that no dilution will result from the sale of the shares. SELLING STOCKHOLDERS On February 11, 2013, the merger contemplated by the Merger Agreement dated August 10, 2012, among USG1, Inc., Canwealth Delaware and Kimi Royer (as representative of the USG1 stockholders) was consummated. Upon closing, the existing shares of Canwealth Delaware common stock converted into 44,169,231 shares of USG1 common stock, and the existing USG1 stockholders (each of which acquired its shares in private placements conducted by USG1 prior to the merger) continued to hold 6,600,000 shares of USG1 common stock. Contemporaneously with the merger, the corporate name USG1, Inc. was changed to Canwealth Minerals Corporation. On June 30, 2014, the Company consummated a private placement of securities pursuant to which we issued 2,400 shares of our common stock. When we refer to the selling stockholders in this prospectus, we mean those persons listed in the table below, as well as the permitted transferees, pledgees, donees, assignees, successors and others who later come to hold any of the selling stockholders interests other than through a public sale. Such selling stockholders acquired their shares of our common stock in the transactions described above. The selling stockholders may from time to time offer and sell pursuant to this prospectus any or all of the shares of common stock set forth in the following table. There is no requirement for the selling stockholders to sell their shares, and we do not know when, or if, or in what amount the selling stockholders may offer the securities for sale pursuant to this prospectus. The table below has been prepared based upon the information furnished to us by the selling stockholders as of December 30, 2014. The selling stockholders identified below may have sold, transferred or otherwise disposed of some or all of their shares since the date on which the information in the following table is presented in transactions exempt from or not subject to the registration requirements of the Securities Act. Information concerning the selling stockholders may change from time to time and, if necessary, we will supplement this prospectus accordingly. We cannot give an estimate as to whether the selling stockholders will in fact sell any or all of their shares of common stock. Table of Contents9 Selling Stockholder Name Shares Beneficially Owned prior to Offering Percentage (%) Beneficially Owned prior to Offering Shares to be Offered Shares Beneficially Owned after Offering Percentage (%) Beneficially Owned after Offering Stahla, Randy 50,000 * 50,000 0 * Stephens, Trevor 350,000 * 350,000 0 * Strobel, Molly 100,000 * 100,000 0 * Sullivan, Brenda 250,000 * 250,000 0 * Tiber Creek Corp. 250,000 * 250,000 0 * Wall, Robert 50,000 * 50,000 0 * Watson, Charles 50,000 * 50,000 0 * Wininger, Kenneth 50,000 * 50,000 0 * (1)Mr. Garth McIntosh, our Chairman of the Board, Chief Executive Officer and President, is also a majority shareholder of ICBS Ltd., which is our largest shareholder. ICBS Ltd. has given a loan to us and also transferred assets to us worth $39,494 as of December 31, 2014. PLAN OF DISTRIBUTION The common shares being offered for resale by the selling stockholders consist of 8,602,000 shares. We will pay any fees and expenses incurred by us incident to the registration of the securities. Each selling stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on any stock exchange, market or trading facility on which the securities may be traded in the future or in private transactions. No public market currently exists for our common stock. Upon completion of this offering, we will attempt to have our common stock quoted on the OTC. The offering price at which the selling stockholders will sell the shares of common stock that are part of this offering shall be $.10 per share until our shares are quoted on the OTC, and thereafter at prevailing market prices or at privately negotiated prices. A selling stockholder may use any one or more of the following methods when selling securities, to the extent available: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; privately negotiated transactions; in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security; through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; a combination of any such methods of sale; or any other method permitted pursuant to applicable law. Table of Contents12 Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440. In connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be underwriters within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Securities Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act). The selling stockholders may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus. In general, under Rule 144, any person (or persons whose shares are aggregated) including persons deemed to be affiliates, whose restricted securities have been fully paid for and held for at least six months from the later of the date of issuance by us or acquisition from an affiliate, may sell such securities in broker s transactions or directly to market makers, provided, in the case of sales by an affiliate, that the number of shares sold in any three-month period may not exceed the greater of one percent of the then-outstanding shares of our common stock or the average weekly trading volume of our shares of common stock in the over-the-counter market during the four calendar weeks preceding the sale. Sales under Rule 144 are also subject to the availability of current public information about our Company and, with respect to affiliates, certain notice requirements. After one year has elapsed from the later of the issuance of restricted securities by us or their acquisition from an affiliate, such securities may be sold without limitation by persons who are not affiliates under the rule. Table of Contents13 Penny Stock Rules You should note that our common stock is a penny stock covered by Rules 15g-1 through 15g-6 and 15g-9 promulgated under the Exchange Act. Under those Rules, a penny stock is generally defined to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Those Rules impose additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors . The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth (excluding the individual s primary residence) in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The Rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the Rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer s confirmation. In addition, the Rules require that prior to a transaction in a penny stock not otherwise exempt from these Rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these Rules. Consequently, these Rules may affect the ability of broker-dealers to trade our shares of our common stock. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock and may also affect your ability to resell your shares of common stock due to broker-dealer reluctance to undertake the above described regulatory burdens. DESCRIPTION OF SECURITIES Our authorized capital stock consists of 120,000,000 shares, consisting of 100,000,000 shares of our common stock, par value $0.0001 per share, and 20,000,000 shares of our preferred stock, par value $0.0001 per share. Our common stock is registered under Section 12(g) of the Exchange Act. Common Stock Voting Rights. A holder of our common stock is entitled to one vote per share on all matters submitted for action by the stockholders. A quorum for the transaction of business at any meeting of the holders of common stock is the majority of the votes of all shares issued and outstanding. All shares of common stock are equal to each other with respect to the election of directors. Our certificate of incorporation does not allow for cumulative voting. Dividend Rights. The holders of our common stock are entitled to receive such dividends as may be declared by our board of directors out of funds legally available for dividends. Our board of directors is not obligated to declare a dividend. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, future earnings, the operating and financial condition of our company, its capital requirements, general business conditions and other pertinent factors. We do not anticipate that dividends will be paid in the foreseeable future. Liquidation. Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities and the preferences of any then outstanding shares of our preferred stock. Other. The holders of our common stock have no preemptive, subscription, redemption or conversion rights. All issued and outstanding shares of our common stock are fully-paid and non-assessable. Table of Contents14 Preferred Stock Under our certificate of incorporation, the board of directors has the power, without further action by the holders of our common stock, to designate the relative rights and preferences of our preferred stock, and to issue the preferred stock in one or more series as designated by the board of directors. The designation of rights and preferences could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of the common stock or the preferred stock of any other series. The issuance of preferred stock may have the effect of delaying or preventing a change in control of the Company without further stockholder action and may adversely affect the rights and powers, including voting rights, of the holders of our common stock. We have not designated or issued any shares of our preferred stock to date. INTEREST OF NAMED EXPERTS AND COUNSEL None of our experts or counsel have any equity or other interests in the Company. DESCRIPTION OF BUSINESS The following discussion should be read in conjunction with the Management s Discussion and Analysis of Financial Condition and Results of Operations section and the consolidated financial statements and related notes thereto included in this prospectus. Description of our Company and Predecessor USG1, Inc., the predecessor to Canwealth, was formed on February 27, 2010 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including selected mergers and acquisitions. USG1 had been in the developmental stage since inception and its operations had been limited to issuing shares to its original stockholders and filing a registration statement with the SEC. USG1 registered its common stock on a Form 10 registration statement filed pursuant to the Exchange Act and Rule 12(g) thereof. Canwealth Minerals Corporation (Canada), was formed on February 1, 2006 under the laws of the Canada Business Corporations Act. Canwealth Canada s mission is to explore and develop the mining claims it has registered in various areas of Northern Quebec, which based on assay reports of preliminary surface samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, REE and other minerals. Prior to the consummation of the merger described in the following paragraph, the stockholders of Canwealth Canada contributed their shares of Canwealth Canada to the Company in exchange for shares of the Company s common stock. Accordingly, Canwealth Canada became a wholly-owned subsidiary of the Company. On August 10, 2012, USG1 entered into a Merger Agreement with the Company and Kimi Royer as representative of the USG1 stockholders, pursuant to which the Company would merge with and into USG1 at the closing. The merger contemplated by the Merger Agreement occurred on February 11, 2013. Upon the closing, the existing shares of Canwealth Delaware common stock converted into 44,169,231 shares of USG1 common stock. The existing USG1 stockholders continued to hold 6,600,000 shares of USG1 common stock. As consideration for the merger, the Company agreed to pay $50,000 in the aggregate to the participating stockholders of USG1, which shall be payable as follows: $10,000 will be payable upon a registration statement on Form S-1 filed by USG1 being declared effective by the SEC; and $40,000 will be payable upon (i) the filing of a Form 15c2-11 (allowing the submission and publication of quotations by brokers and dealers for certain over-the-counter equity securities) with the SEC by USG1 and (ii) the shares of USG1 common stock being actively traded on a stock exchange or quotation service. Table of Contents15 As a result of the merger, USG1 succeeded to the mining business and operations of the Canwealth entities and, contemporaneously with the merger, the corporate name USG1, Inc. was changed to Canwealth Minerals Corporation. Prior to the merger, there were no material relationships between USG1 and the Company or between our respective affiliates, directors or officers. All USG1 pre-merger liabilities were settled prior to closing. Upon the effectiveness of the merger, the existing directors and officers of USG1 each resigned and Garth McIntosh was elected as the sole officer and director of USG1. At the present time, our sole activity is acquiring and holding mining claims with respect to five mineral properties located in the mineral-rich Abitibi Greenstone Belt zone of the Grenville orogeny in southern Quebec, Canada. We have not yet generated revenues or begun operations or mine development. We currently have no employees other than our Chief Executive Officer, although we intend to add personnel once we are sufficiently capitalized. Description of our Industry Overview According to the Mining Association of Canada, or MAC, mining is one of Canada s most important economic sectors and a major job creator. Recent data shows that, in 2013, the mining industry contributed $54 billion to Canada s gross domestic product, employing approximately 400,000 workers across Canada in the mining and mineral processing industries. Due to its rich geology, Canada is one of the largest mining nations in the world, producing more than 60 minerals and metals. According to Natural Resources Canada, or NRC, the total value of Canadian mineral exports was approximately $44 billion in 2013, accounting for 20% of Canada s total good exports. Key exports included gold, copper, aluminum, nickel, silver, uranium, coal, potash, zinc, diamonds, iron, steel and iron ore. Canada was the world s top destination for exploration spending in 2011, hosting 18% of global investment at $4.2 billion. Canadian exploration spending is focused in many regions, with a strong interest in the North. Competition As mentioned earlier, competition in the gold and precious metals industry for desirable quantities, quality, investment capital and personnel is intense. Numerous companies headquartered in the United States, Canada and elsewhere throughout the world compete for gold and other precious metals on a global basis. We are an insignificant participant in the gold industry due to our currently limited financial and personnel resources. Quebec Mining Legislation and Regulation In Quebec, mining rights are governed by the Mining Act (Quebec) and, subject to limited exceptions, are owned by the province. A mining claim is a mineral right that grants its holder an exclusive right to explore a designated territory for any mineral substances that are part of the public domain, with limited exceptions. Each claim provides access rights to a parcel of land on which exploration work may be performed. However, the claim holder cannot access land that has been granted, alienated or leased by the province for non-mining purposes, or land that is the subject of an exclusive lease to mine surface mineral substances, without first having obtained the permission of the current holder of these rights. At the time of issuing mining claims that lie within the boundaries of a town or on territories identified as province reserves, the Minist re des Ressources naturelles (Ministry of Natural Resources (Quebec)), or the MNR, may impose certain conditions and obligations concerning the work to be performed on the claim. The MNR also reserves the right to modify these conditions in the public s interest. Table of Contents16 A mining claim remains in force for a term of two years from the date it is registered and may be renewed subject to continued exploration work in relation thereto. In order to retain title to mining claims, exploration work (or an equivalent value cash payment) has to be completed in advance and filed with the MNR prior to the date of expiry of the claim. A third party (other than the prior holder of the mining claim) is entitled to acquire a mining claim from the Quebec government 30 days following the expiration of the claim; the prior holder must wait 60 days following expiration to re-acquire a mining claim from the Quebec government. In Quebec, holders of mining claims must obtain a mining lease from the Quebec government in order to mine and remove valuable mineral substances from the subject land. A mining lease requires annual rent set by Quebec government regulations, which currently ranges from CAD21.50 per hectare (on privately held land) to CAD45 per hectare (on land owned by the province). Mining leases are granted for an initial term of 20 years and are renewable up to three times, each for a duration of ten years. After the third renewal, the MNR may grant an extension thereof on the conditions, for the rental and for the term that the MNR determines. Description of our Business Canwealth Minerals Corporation is an exploration stage company located in Ile Perrot, Quebec, Canada formed for the purposes of acquiring, exploring and, if warranted and feasible, developing commercially viable mineral deposits, including gold, silver, platinum, palladium, base metals and REE, in the Province of Quebec. We intend to engage in grass roots mineral exploration which includes conventional prospecting, geological and geophysical surveys, applied research and core drilling. At the present time, our sole activity is acquiring and holding mining claims with respect to five mineral properties located in the mineral-rich Abitibi Greenstone Belt zone of the Grenville orogeny in southern Quebec, Canada. We have not initiated our exploration program, hired employees, realized any revenues or begun operations or mine development to date. Once we become operational, our focused activity will be to search for viable mineral deposits in Quebec under a Phase 1 program. Our Phase 2 program is expected to involve staking of additional claims, entering into joint ventures with other mining companies and/or optioning properties in other mining jurisdictions in Canada. Our Phase 3 program is expected to involve taking the Company on an international level in a quest for viable mineral deposits. We are presently in the exploration stage of our business and we can provide no assurance that any commercially viable mineral deposits exist on our mining claims, that we will discover commercially exploitable levels of mineral resources on our properties, or, if such deposits are discovered, that we will enter into further substantial exploration programs. Further exploration is required before a final determination can be made as to whether our mining claims possess commercially exploitable mineral deposits. If our claims do not contain any reserves all funds that we spend on exploration will be lost. Currently, we do not have sufficient funds to enable us to commence or complete our exploration program. We will require financing to commence and complete our exploration program. We will assemble a leadership team in the form of an exploration team which will be actively conducting fieldwork and assessments and assembling data to support new approaches that will expand the scope of our exploration projects. This exploration team will consist of a core group of experienced geologists and geoscientists, mining engineers, consultants and mineral research institutions, all committed to the quest of determining the mineral source(s) of our properties. Table of Contents17 Short-Term Goals Our short term goals include continuing to seek out properties for staking mining claims, hiring a chief geologist and a mining engineer and, under the guidance of our chief geologist and mining engineer, performing Phase 1 drilling for core samples on our current mining claims. The focus is to develop a mining plan in which the current resources are best used to bring the most value to the Company. Our actual approach will be highly contingent on the findings and recommendations of our geologist and mining engineer. Depending on such findings and recommendations, we estimate that our short-term goals will cost approximately $1,100,000 $1,500,000, which we expect to fund with the proceeds of additional capital raising activities following this offering, to the extent available. This aggregate cost is comprised of the following estimated amounts: geological team: $200,000 300,000 per year; drilling/exploration: $600,000 $800,000; administrative costs: $200,000 300,000; and assay reports and laboratory services: $100,000. Mid-Term Goals As we grow and build our name in our industry, we anticipate seeking partnerships with other mining companies in order to move into full scale mining projects. It takes significant capital to move into this phase in the mining industry, and we realize it will be a huge undertaking to develop all the properties we currently own without outside assistance. We believe it is better to be part of a successful venture by sharing what we currently own, as bringing in other expertise and resources will speed the process. This will elevate our Company to new levels by becoming a known supplier to the world of natural resources, both on the open markets and to users of such materials like lithium or barium, which cover the electronics industry, medicine, military and many other industries. Since the scope and direction of our mid-term goals will be highly contingent on the recommendations of our geological team and the scale of the mining projects and joint ventures, if any, we ultimately pursue based on our mining partnerships, it is difficult to estimate the cost to achieve our mid-term goals at this time; however, we expect the cost to be substantial and require significant capital. We expect to fund our mid-term goals with the proceeds of additional capital raising activities following this offering, to the extent available. Long-Term Goals Our long-term goal is to develop different branches to our operations, including building a consulting division which will help other start-up companies looking to break into the mining industry. We feel that once we master the knowledge and experience of building a mining company, we will want to work with others, and thereby become the go-to entity for startups. We believe that, if our business plan is carried out as intended, we will be well positioned to become their initial partners and help these companies attain their goals. Canwealth Mining Claims Acquisition and Retention of Title Each of our 165 mining claims that we intend to explore, which are listed on Annex A attached to this prospectus, were initially acquired by Richard Howarth, who is a stockholder of Canwealth, who subsequently transfers the mining claims to us. We do not have any agreement, understanding or arrangement with Mr. Howarth with respect to our mining claims, other than promissory notes we issued to Mr. Howarth as consideration for the acquisition of mining claims, nor was Mr. Howarth acting as our agent in connection with the acquisition and subsequent transfer of such claims. In order to retain title to each mining claim, we are required, within the two-year claim term, to either spend at least CAD1,200 per claim on exploration of the property underlying the claim, or make a CAD1,200 cash payment to the MNR (or, where applicable, an amount equal to the difference between CAD1,200 and the cost of the exploration work performed on the property underlying the claim). Any amount in excess of CAD1,200 disbursed to perform exploration work on the property may be applied to subsequent terms of the claim. The expiration date, prior to which we must spend at least CAD1,200 on exploration, with respect to each of our mining claims is set forth in Annex A, which is attached to this prospectus. Failure to spend the required exploration costs with respect to any claim prior to its expiration date would cause the claim to lapse and we would risk losing our rights to such claim permanently if Mr. Howarth is not able to re-acquire the claim on our behalf. Table of Contents18 We previously held approximately 260 claims for which we paid Mr. Howarth CAD56 per claim. Many of those claims lapsed, resulting from our inability to perform the requisite exploration work within the initial two-year term due to a lack of sufficient funding. The Company elected not to re-acquire many of these mining claims because the land underlying certain claims on mineral properties was designated for other uses by the Quebec government which prohibited or significantly restricted mining activities, or because the Company otherwise believed that exploration of such property was not desirable. On August 26, 2013, Mr. Howarth acquired 140 of the lapsed mining claims and transferred such claims to us for an aggregate purchase price of CAD14,000, which amount was paid by issuing a promissory note to Mr. Howarth. That promissory note is non-interest bearing with an original maturity date of August 26, 2014. On November 1, 2013, Mr. Howarth acquired and transferred to us 22 mining claims (including five previously lapsed mining claims of ours) for an aggregate purchase price of CAD2,200, which amount was paid by issuing a promissory note to Mr. Howarth. That promissory note is non-interest bearing with an original maturity date of November 1, 2014. We have not yet repaid these promissory notes issued to Mr. Howarth, and Mr. Howarth has agreed to extend the maturity date of these promissory notes until December 31, 2016. We allowed 14 mining claims to lapse in February 2014. As a result of the foregoing, we currently own 165 mining claims that we intend to explore with respect to five mineral properties. Accordingly, to date we have paid, by cash or promissory note, approximately CAD31,000 to acquire, and in some cases re-acquire, our mining claims. In order for us to comply with the requirement to spend at least CAD1,200 per claim on exploration costs, we will be required to spend at least an additional CAD198,000 in the aggregate on exploration costs with respect to our 165 current mining claims. Each of our mining claims is a lode claim, entitling us to the minerals within the rocks on the properties subject to our mining claims. No mining leases or other permits are required at the present time because of the early stage of exploration by Canwealth. We expect that our future exploration activities will likely require us to obtain mining leases, but the requirement for, and the scope of, any such mining leases or other permits will be contingent on the findings and recommendations of our geological team. At this early stage, we have not yet identified any current holders of non-mining rights with respect to the parcels of land on which we have mining rights or the extent of permissions or approvals, if any, required from any such holders with respect to our future exploration or mining activities on such land. Costs and Effects of Compliance with Environmental Laws In Quebec, the primary provincial regulatory authorities with jurisdiction over the Company's mining operations in respect of environmental matters are the MNR and the Ministry of Sustainable Development, Environment, Wildlife and Parks (Quebec). We currently have no costs to comply with environmental laws concerning our exploration program. Our future exploration and mining programs, if any, may subject us to the costs of reclamation and environmental remediation for all work undertaken which causes sufficient surface disturbance to necessitate reclamation work. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Reclamation is the process of bringing the land back to a natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused by exploration or mining activities. The amount of these remedial costs is not known at this time as we do not know the extent of the exploration or mining programs we will undertake. These programs will be determined by our exploration team, led by our mining engineer and chief geologist. Because there is presently no information on the size, tenor, or quality of any resource or reserve at this time, it is impossible to assess the impact of any capital expenditures on our earnings or competitive position in the event a potentially economic mineral deposit is discovered. Employees We currently have no employees other than our Chief Executive Officer, Garth McIntosh. We intend to retain the services of geologists, engineers and consultants to determine and conduct the exploration programs on our mining claims. Table of Contents19 Description of our Properties We currently hold 165 mining claims that we intend to explore with respect to five mining properties in Canada Highland Gold, Lake View, Shadow Mountain, Shining Star and Winsome Lake. Annex A, which is attached to this prospectus, sets forth the mining claim numbers with respect to each of our properties, as well as the area and expiration date of each mining claim. All of these mining claims are 100% owned by Canwealth. Each of our five mineral properties is located in the mineral-rich Abitibi Greenstone Belt zone of the Grenville orogeny in southern Quebec, Canada. The Grenville orogeny was a long-lived Mesoproterozoic (circa 1250-980 million years) mountain-building event associated with the assembly of the supercontinent Rodinia. It is a prominent orogenic belt which spans a significant portion of the North American continent, from Labrador to Mexico. This orogenic geological structure is considered a highly favorable site for the exploration of minerals. Each of our properties is accessible by all-terrain vehicle from a nearby road. There is currently no infrastructure at any of our properties and, accordingly, resources such as power and water must be brought to the properties by portable means. Our properties were visited by our former president, though our current management has not personally visited any of the properties. Our business activities to date have involved only the acquisition of mining claims and conducting assay testing on surface samples. Surface samples were taken from random locations on the Lake View and Shadow Mountain properties in May 2011 and assay testing was conducted on some of these samples. Although surface samples are generally drained by weather and the mineral content in such samples is typically low, the assay reports with respect to these samples indicated traces of various elements such as gold, silver, copper, REE and other minerals on these properties. Our current proposed program is exploratory in nature. Accordingly, the properties currently are without known reserves. We do not currently have detailed plans of our intended exploration of the properties, as our exploration program for each property will not be known until our exploration team, led by our mining engineer and chief geologist, conducts a comprehensive sampling and analysis (including a review of the topography and history) of each property. Highland Gold Table of Contents20 The Highland Gold property is located in the Townships of Poirier and Dalet, approximately 78 kilometers north of Amos, Quebec. The Highland Gold property is located in the prolific Abitibi Greenstone Belt zone of the Superior geological province. The Abitibi Greenstone Belt is one of the largest greenstone belts in the world, developed during the Archean period (3.8-2.5 Ga (billion years)). This orogenic geological structure, also known as an epithermal or mesothermal vein structure, is considered a highly favorable site for the exploration of gold. In contrast to Proterozoic rocks, Archean rocks are often heavily metamorphized deep-water sediments, such as greywacke, mudstone, volcanic sediments and banded iron formations and may contain a variety of base metals and REE. Greenstone belts are typical Archean formations, consisting of alternating units of metamorphosed mafic igneous and sedimentary rocks. The meta-igneous rocks were derived from volcanic island arcs, while the metasediments represent deep-sea sediments eroded from the neighboring island arcs and deposited in a forearc basin. Greenstone belts represent sutures between protocontinents. The Highland Gold property were chosen for their lithology and geology. The distinct tectonic events that occurred in this region host a variety of orogenic gold deposits across the Province of Quebec. Recent studies by the Minist re des Ressources naturelles et de la Faune (Ministry of Natural Resources and Wildlife (Quebec)), or the MNRW, identified significant mineralized zones in this region. Based on these studies, we believe that the Highland Gold property is an ideal location for porphyry (Copper-gold-molybdenum) deposits and orogenic gold and VMS (volcanogenic massive sulfide) deposits. The location of the Highland Gold property presents opportunities for further expansion to surrounding areas. The work to be performed with respect to the Highland Gold property is exploratory in nature. Accordingly, the property currently is without known mineral reserves. Lake View The Lake View property is located in the regional county of Abitibi, 55 kilometers northwest of Amos, Quebec in the prolific Abitibi Greenstone Belt. The Lake View property was chosen for its lithology and geology. Recent studies by the MNRW identified significant mineralized zones in the region. Based on these studies and the results of the assay testing conducted on surface samples taken from this property, we believe that the Lake View property is highly favorable for the exploration of porphyry (Copper-gold-molybdenum) deposits and orogenic gold, platinum and palladium and VMS (volcanogenic massive sulfide) deposits, and presents opportunities for expansion to the south and east. Table of Contents21 The work to be performed with respect to the Lake View property is exploratory in nature. Accordingly, the property currently is without known mineral reserves. Shadow Mountain The Shadow Mountain project is located in the Township of Ripon, well within a VMS zone of the Grenville orogeny. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel, PGE (platinum group elements) and REE, a point corroborated by the assay testing conducted on surface samples taken from this property. The work to be performed with respect to the Shadow Mountain property is exploratory in nature. Accordingly, the property currently is without known mineral reserves. Shining Star Table of Contents22 The Shining Star property is located in the Township of Sainte-Dominique-du-Rosaire, north of Amos Quebec in the prolific Abitibi Greenstone belt zone of the Grenville orogeny. The Shining Star property location was chosen for its lithology and geology. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel and PGE, and we believe that the Shining Star property is in an ideal location of orogenic gold deposits. This location presents opportunities for further expansion to the north and west. The work to be performed with respect to the Shining Star property is exploratory in nature. Accordingly, the property currently is without known mineral reserves. Winsome Lake The Winsome Lake project is located in the Township of Antoine-Labelle, well within a VMS zone of the Grenville orogeny. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel, PGE and REE. The work to be performed with respect to the Winsome Lake property is exploratory in nature. Accordingly, the property currently is without known mineral reserves. Emerging Growth Company We qualify as an emerging growth company under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to: have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); Table of Contents23 submit certain executive compensation matters to shareholder advisory votes, such as say-on-pay and say-on-frequency; and disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive s compensation to median employee compensation. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates. We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Legal Proceedings There are no material pending legal proceedings to which we or our subsidiary is a party or of which any of our, or our subsidiary s, property is the subject. Market Price and Dividends on Common Equity and Related Stockholder Matters On October 20, 2012, we received a CAD20,000 loan from Robert Howarth which is evidenced by a convertible promissory note with an original maturity date of December 31, 2014. The convertible promissory note bears interest at a rate of 20% per annum and is immediately convertible into 100,000 shares of our common stock. As of December 31, 2014, the principal balance of the convertible promissory note was CAD20,000, and accrued interest thereunder was CAD4,000. In February 2015, Mr. Howarth agreed to extend the maturity date of this convertible promissory note until December 31, 2016. We have not yet repaid this convertible promissory note. During the nine months ended September 30, 2013, we received advances of $28,550 from Mr. Howarth for working capital purposes. As of September 30, 2013, the principal balance of those advances was $26,145. The advances are non-interest bearing and were repayable on December 31, 2013. In February 2015, Mr. Howarth agreed to extend the repayment due date for these advances until December 31, 2016. We have not yet repaid these advances. On August 26, 2013, we issued a promissory note in the principal amount of CAD14,000 to Mr. Howarth as consideration for our re-acquisition of 140 mining claims which previously lapsed. The promissory note is non-interest bearing with an original maturity date of August 26, 2014. In February 2015, Mr. Howarth agreed to extend the maturity date of this promissory note until December 31, 2016. We have not yet repaid this promissory note. On November 1, 2013, we issued a promissory note in the principal amount of CAD2,200 to Mr. Howarth as consideration for the transfer of 22 mining claims to us (some of which were previously lapsed mining claims of ours). The promissory note is non-interest bearing with an original maturity date of November 1, 2014. In February 2015, Mr. Howarth agreed to extend the maturity date of this promissory note until December 31, 2016. We have not yet repaid this promissory note. On March 1, 2014, the Company received loans totaling CAD15,000 from three non-affiliates which are evidenced by convertible promissory notes bearing interest at a rate of 10% per annum. These promissory notes are convertible into shares of our common stock at the market price plus 50% additional shares at the same market price on the date of conversion. As of the date hereof, none of these promissory notes have reached their respective maturity date. Table of Contents24 On June 19, 2014, the Company received a loan of CAD20,000 from a non-affiliate which is evidenced by a convertible promissory note bearing interest at a rate of 10% per annum. This promissory note is convertible into shares of our common stock at the market price plus 25% additional shares at the same market price on the date of conversion. As of the date hereof, this promissory note has not reached its maturity date. On July 2, 2014, the Company received a loan of CAD5,000 from a non-affiliate which is evidenced by a convertible promissory note bearing interest at a rate of 10% per annum. This promissory note is convertible into shares of our common stock at the market price plus 33% additional shares at the same market price on the date of conversion. As of the date hereof, this promissory note has not reached its maturity date. On September 1, 2014, the Company received a loan of CAD5,000 from a non-affiliate which is evidenced by a convertible promissory note bearing interest at a rate of 10% per annum. This promissory note is convertible into shares of our common stock at the market price plus 33% additional shares at the same market price on the date of conversion. As of the date hereof, this promissory note has not reached its maturity date. As of November 30, 2014, there were 65 holders of record of our common stock. We do not have an equity compensation plan in effect as of the date hereof. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes thereto included in this prospectus. Results of Operations Comparison of Results of Operations for the Years Ended December 31, 2014 and 2013 We have received no income and have incurred operating expenses for general corporate overhead and accounting fees. Since there is minimal cash on hand, we will be reliant on the additional capital from existing shareholders or will need to issue more shares to continue our business plan. The Company sustained a net loss of $258,303 for the year ended December 31, 2014 as compared to a net loss of $103,012 for the year ended December 31, 2013. General and administrative expenses for the year ended December 31, 2014 totaled $254,895 as compared to $102,248 for the year ended December 31, 2013. The increase in general and administrative expenses was primarily due to the accrual of management compensation, and also reflects an increase in the legal and professional fees incurred. Table of Contents25 The following chart summarizes operating expenses and other income and expenses for the years ended December 31, 2014 and 2013: For the year ended December 31, 2014 For the year ended December 31, 2013 Revenue $— $— OPERATING EXPENSES: Selling, general and administrative 254,895 102,248 Total operating expenses 254,895 102,248 Loss from operations (254,895) (102,248) OTHER INCOME (EXPENSE): Interest expense (3,408) (764) Loss before provision for income taxes (258,303) (103,012) Provision for income taxes : Current — — Deferred — — Total income taxes — — NET LOSS $(258,303) $(103,012) Foreign currency translation adjustment 26,507 12,338 Comprehensive loss $(231,796) $(90,674) Liquidity and Capital Resources The accompanying audited consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of December 31, 2014, the Company had a deficit accumulated of $571,282 and has incurred significant operating losses and negative cash flows. The Company sustained a net loss of $258,303 for the year ended December 31, 2014 as compared to a net loss of $103,012 for the year ended December 31, 2013. We have not yet recognized revenues from our operations. The Company will need additional financing which may take the form of equity or debt. In the event that the Company is not able to increase its working capital, the Company will not be able to implement or may be required to delay all or part of its business plan, and the Company s ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected. The accompanying audited consolidated financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence. As mentioned earlier, to date we have paid, by cash or promissory note, approximately CAD31,000 to acquire (and in some cases re-acquire) our mining claims, and we expect to pay at least an additional CAD198,000 in the aggregate on mandated exploration costs with respect to our 165 current mining claims that we intend to explore. We expect our material commitments for capital expenditures in the foreseeable future to relate to securing and maintaining mining claims, and the exploration of our mining properties. Beyond the commitments mentioned above, we will not know the extent of our future material commitments until our exploration team is engaged and develops our business plan. Table of Contents26 Off-Balance Sheet Arrangements There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that is material to investors. Inflation We do not believe our business and operations have been materially affected by inflation. Critical Accounting Policies Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report. As an emerging growth company, we have elected to opt-in to the extended transition period for new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates. Our critical accounting policies are as follows: Revenue Recognition The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition ( ASC 605-10 ) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments ( ASC 605-25 ). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect of implementing ASC 605-25 on the Company's financial position and results of operations. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the Unites States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Table of Contents27 Cash and Cash Equivalent The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2014 and 2013, cash consists of a checking account. Mine Exploration and Development Costs The Company accounts for mine exploration costs in accordance with Accounting Standards Codification 930, Extractive Activities Mining. All exploration expenditures are expensed as incurred. Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine s production capacity and is not considered to shift the mine into the production phase. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. From February 1, 2006 (date of inception) through December 31, 2014, the Company had not incurred any mine development costs. Mine Properties The Company accounts for mine properties in accordance with Accounting Standards Codification 930, Extractive Activities-Mining. Costs of acquiring mine properties are capitalized by project area upon purchase of the associated claims. Mine properties are periodically assessed for impairment of value and any diminution in value. Our mining properties as of December 31, 2014 and December 31, 2013 are presented as intangible assets of $22,224 and $24,233, respectively. The Company had five mineral properties as of December 31, 2014. Share-Based Payments The Company accounts for stock based compensation under Accounting Standards Codification 718, Compensation Stock Compensation, using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity s equity instruments or that may be settled by the issuance of those equity instruments. To date, the Company has not adopted a stock option plan nor granted any stock options. Income Taxes Income taxes are accounted for under the assets and liabilities method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Net Loss Per Share, basic and diluted The Company has adopted Accounting Standards Codification subtopic 260-10, Earnings Per Share ( ASC 260-10 ) specifying the computation, presentation and disclosure requirements of earning per share information. Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. There were no diluted shares as of December 31, 2014 and December 31, 2013. Table of Contents28 Derivative Instruments The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging ( ASC 815 ), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. As of December 31, 2014 and December 31, 2013, the Company had not engaged in any transactions that would be considered derivative instruments or hedging activities. Fair Value of Financial Instruments The Company's financial instruments, as defined by Accounting Standards Codification subtopic 825-10, Financial Instruments ( ASC 825-10 ), include cash, accounts payable and convertible notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2014 and December 31, 2013. Accounting Standards Codification 820, Fair Value Measurements and Disclosures ( ASC 820 ) defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1:Observable inputs such as quoted prices in active markets; Level 2:Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3:Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. The Company did not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2014 or at December 31, 2013. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the years ended December 31, 2014 and December 31, 2013. Foreign Currency Translation and Comprehensive Income (Loss) The functional currency of Canwealth is the Canadian Dollar, or CAD. For financial reporting purposes, CAD were translated into United States Dollars ( USD or $ ) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders equity as Accumulated other comprehensive income . Gains and losses resulting from foreign currency transactions are included in the results of operations. There has been no significant fluctuation in the exchange rate for the conversion of CAD to USD after the balance sheet date. Table of Contents29 The Company uses Accounting Standards Codification 220, Comprehensive Income. Comprehensive income is comprised of net income and all changes to the statements of stockholders equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the years ended December 31, 2014 and December 31, 2013 consisted of net income and foreign currency translation adjustments. The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows: December 31, 2014 December 31, 2013 Period-end CAD: USD exchange rate 0.8620 0.9399 Average Period CAD: USD exchange rate 0.9022 0.9710 Concentration and Credit Risk The Company s principal operations are all carried out in Canada. Accordingly, the Company s business, financial condition and results of operations may be influenced by the political, economic and legal environments in Canada, and by the general state of the Canadian economy. The Company s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Research and Development The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development ( ASC 730-10 ). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses from February 1, 2006 (date of inception) through December 31, 2014. Reliance on Key Personnel and Consultants The Company employs one executive officer, Garth McIntosh. The Company is heavily dependent on the continued active participation of Mr. McIntosh and key consultants. The loss of Mr. McIntosh or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place. Reclassification Certain reclassifications have been made to prior periods data to conform to the current period s presentation. These reclassifications had no impact on the reported net loss. Recently Issued Accounting Pronouncements The Company has reviewed the recently issued, but not yet adopted, accounting standards to determine their potential effects, if any, on its results of operation, financial position and cash flows. Based on that review, the Company believes that none of those pronouncements will have a material effect on its consolidated financial statements. Table of Contents30 Financial Statement Presentation The Company s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On April 11, 2013, the Board of Directors of the Company approved the dismissal of its then accountants, KCCW Accountancy Corp., or KCCW. During the period from February 27, 2010 (inception) through April 11, 2013, the Company had no disagreements on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure and the former accountant's report on the Company s financial statements for the past two years and from February 27, 2010 (inception) through December 31, 2011 did not contain an adverse opinion or disclaimer of opinion nor was qualified or modified as to uncertainty, scope or accounting principles, except for the substantial doubt about the Company's ability to continue as a going concern. KCCW furnished a letter dated April 11, 2013 to the SEC stating that KCCW agrees with the statements noted above. Simultaneously on April 11, 2013, the Company engaged the accounting firm of RBSM, LLP, or RBSM, 805 Third Avenue, Suite 902 New York, New York, 10022. During the period from February 27, 2010 (inception) through April 11, 2013, the Company did not consult with RBSM regarding (i) the application of accounting principles, (ii) the type of audit opinion that might be rendered by RBSM, or (iii) any other matter that was the subject of a disagreement between us and KCCW or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively). On February 6, 2014, the Board of Directors of the Company approved the dismissal of RBSM. Except as noted in the paragraph immediately below, the reports of RBSM on the Company s financial statements for the years ended December 31, 2012 and 2011 and for the period from February 1, 2006 (date of inception) through December 31, 2012 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle. The reports of RBSM on the Company s financial statements as of and for the years ended December 31, 2012 and 2011 and for the period from February 1, 2006 (date of inception) through December 31, 2012 contained an explanatory paragraph which noted that there was substantial doubt as to the Company s ability to continue as a going concern as the Company has suffered recurring losses since inception and is experiencing difficulty in generating sufficient cash flow to sustain its operations. During the years ended December 31, 2012 and 2011 and the period February 1, 2006 (date of inception) through December 31, 2012 and through February 6, 2014, the Company has not had any disagreements with RBSM on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to RBSM s satisfaction, would have caused them to make reference thereto in their reports on the Company s financial statements for such periods. During the years ended December 31, 2012 and 2011 and the period February 1, 2006 (date of inception) through December 31, 2012 and through February 6, 2014, there were no reportable events. Table of Contents31 On February 6, 2014, the Company engaged Paritz & Company, P.A., or P&C, which was approved by the Board of Directors. The Company had not previously consulted with P&C regarding the application of accounting principles to a specified transaction, either completed or proposed, the type of audit opinion that might be rendered by P&C on the Company s financial statements, or any matter that was either the subject of a disagreement or a reportable event. MANAGEMENT Executive Officers and Directors Our sole officer and our directors will serve until their respective successors are duly elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees. The name, age and positions of our sole executive officer and our three directors as of the date of this prospectus are as follows: Name Age Position Garth McIntosh 69 President and Chief Executive Officer and Director Carl Caumartin 53 Director Neji Jedda 47 Director Garth McIntosh has served as a director and our President, Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer since the completion of the merger between USG1 and Canwealth Delaware in February 2013. Mr. McIntosh has over 40 years of extensive experience working as an executive officer, business analyst and consultant for a variety of private and public corporations. Since 2001, Mr. McIntosh has been performing consulting services as the President and Chief Executive Officer of ICBS Ltd., an investment firm that also provides advisory services with respect to mergers and acquisitions. From 1999 to 2001, Mr. McIntosh served as the President and Chief Executive Officer of Reaction Industries, a manufacturer of adult walking aids; from 1996 to 1998, Mr. McIntosh served as the President and Chief Executive Officer of JF Ink and Color, a manufacturer of printing inks; and from 1990 to 1995, Mr. McIntosh served as the President and Chief Executive Officer of Defender Metal, a designer and manufacturer of ground support equipment for the airline industry. Mr. McIntosh has not had prior experience in the mining industry. Mr. McIntosh does not have any expertise in finance and accounting, or experience as a principal financial officer or principal accounting officer in a public company. We will employ a duly qualified individual to serve in such capacities on behalf of our Company once we become sufficiently capitalized. Carl Caumartin has served as a director of the Company since March 2014. From 2011 until 2014, Mr. Caumartin has served as Chief Executive Officer and corporate advisor of The Resource Company AG, a privately funded mining group based in Switzerland, and he continues to serve as a technical advisor to such company and its affiliated entities. From 2008 to 2011, Mr. Caumartin served as the General Manager/Chief Executive Officer of Azerbaijan International Mineral Resources Operating Company (AIMROC) Ltd., the mining subsidiary of a large holding company spearheading investments and development of mining projects in the Republic of Azerbaijan. Prior to joining AIMROC Ltd., Mr. Caumartin served as Vice President Exploration & Development for TVI Pacific Inc., Infinito Gold Ltd. (formerly Vannessa Ventures) and Philippines Gold Plc., all junior mining companies with operations in China/Southeast Asia, Latin America and the Philippines, respectively. The Company welcomed Mr. Caumartin as a director of the Company due to his invaluable mining expertise and knowledge based on over 25 years of international experience as an executive and consultant in the mining industry. Mr. Caumartin has an extensive background in exploration, project management, feasibility studies and operations open pit and underground on multiple commodities and in a variety of geo-political environments, including Canada, Europe, Australasia, Africa and South America. Table of Contents32 Neji Jedda has served as a director of the Company since March 2014. Mr. Jedda has served as Senior Manager of the Business Development Bank of Canada since 2008. From 2005 to 2008, Mr. Jedda served as a financial services representative, underwriter and account manager for Toronto Dominion Bank of Canada. The Company welcomed Mr. Jedda as a director of the Company due to his valuable financial and transactional experience. Executive Compensation The Company has not paid any executive compensation in the two most recent fiscal years. Outstanding Equity Awards at Fiscal Year-End The Company did not have any equity incentive plan awards outstanding as of the end of its last completed fiscal year. Director Compensation The Company has not paid any director compensation in the two most recent fiscal years. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus by (a) each person who is known by us to beneficially own 5% or more of our common stock, (b) each of our directors and executive officers, and (c) all of our directors and executive officers as a group. Title of Class Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class Common Stock ICBS, Ltd. (1) 1376 Perrot Boulevard Ile Perrot, Quebec, Canada J7V 7P2 38,648,077(1) 76.12% Radcor Inc. (2) 4915 De Salaberry, Ste 104 Saint Laurent, Quebec H4J 1H8 5,521,154(2) 10.88% Garth McIntosh (1) 38,648,077(1) 76.12% 1376 Perrot Boulevard Ile Perrot, Quebec, Canada J7V 7P2 Perry Radin (2) 4915 De Salaberry, Ste 104 Saint Laurent, Quebec H4J 1H8 5,521,154(2) 10.88% Directors and Officers as a Group (one person) 38,648,077 76.12% (1)Mr. McIntosh is the president, director and a principal shareholder of ICBS, Ltd. (2)Perry Radin is the sole director and sole holder of voting stock of Radcor Inc. Table of Contents33 Change in Control We are not aware of any arrangement that might result in a change in control of our company in the future. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Mr. Garth McIntosh, our Chairman of the Board, Chief Executive Officer and President, is also a majority shareholder of ICBS Ltd., which is our largest shareholder. ICBS Ltd. has given a loan to us and also transferred assets to us worth $39,494 as of December 31, 2014. As of December 31, 2014, we had intangible assets of $22,224 which we acquired using the proceeds from loans from related parties. As of December 31, 2014 and December 31, 2013, we had loans from our shareholders of $60,074 and $63,451, respectively. No formal repayment terms or arrangements exist for these loans. These loans are non-interest bearing and payable on demand. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Section 145 of the Delaware General Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to such corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Our certificate of incorporation provides for indemnification of our directors, officers, agents and employees to the fullest extent permitted by the DGCL. Our bylaws provide that, to the extent permitted by applicable law, we will generally indemnify any director, officer, agent or employee of the Company for judgments, fines, amounts paid in settlement or expenses (including attorneys fees) actually and reasonably incurred by such indemnified person, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, he or she had no reason to believe his or her conduct was unlawful. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and persons controlling our Company pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of our Company in the successful defense of any action, suit or proceeding) is asserted by any of our directors, officers or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue. Table of Contents34 ABOUT THIS PROSPECTUS This prospectus is not an offer or solicitation in respect to these securities in any jurisdiction in which such offer or solicitation would be unlawful. This prospectus is part of a registration statement that we filed with the SEC. The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about our company and the securities offered under this prospectus. That registration statement can be read at the SEC s website or offices indicated under the section of this prospectus entitled Where You Can Find More Information. We have not authorized anyone else to provide you with different information or additional information. You should not assume that the information in this prospectus, or any supplement or amendment to this prospectus, is accurate at any date other than the date indicated on the cover page of such documents. WHERE YOU CAN FIND MORE INFORMATION Federal securities laws require us to file information with the SEC concerning our business and operations. Accordingly, we file annual, quarterly, and special reports and other information with the SEC. You may read and copy any of this material at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may receive information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding companies that, like us, file information electronically with the SEC. Upon written request delivered to Canwealth Minerals Corporation, 1376 Perrot Boulevard, Ile Perrot, Quebec, Canada J7V 7P2, Attention: Garth McIntosh, we will send to any security holder a copy of our annual report, complete with audited financial statements, at no charge to the security holder. LEGAL MATTERS Legal matters in connection with the validity of the shares offered by this prospectus will be passed upon by Westerman Ball Ederer Miller Zucker & Sharfstein, LLP, of Uniondale, New York. TRANSFER AGENT The current transfer agent for the shares of our common stock is Pacific Stock Transfer, 4045 South Spencer Street, Suite 403, Las Vegas, NV 89119. EXPERTS The financial statements of the Company as of December 31, 2014 and December 31, 2013, and for the years then ended, included in this prospectus and registration statement, have been included herein in reliance on the reports of Paritz & Company, P.A., independent registered certified public accounting firm, given on the authority of that firm as experts in accounting and auditing. INCORPORATION BY REFERENCE We maintain an internet site at www.canwealthminerals.com which contains information concerning our Company. The information contained on our internet site is not incorporated by reference in this prospectus and should not be considered a part of this prospectus. Table of Contents35 ANNEX A Mining Claims Name Title Polygone Area (Hectare) Expiration Date 1. Lake View CDC 2388979 32D15 x 0022 0051 56,5900 8/8/15 2. Lake View CDC 2389345 32D15 x 0018 0048 56,6200 8/25/15 3. Lake View CDC 2389346 32D15 x 0018 0049 56,6200 8/25/15 4. Lake View CDC 2389347 32D15 x 0018 0050 56,6200 8/25/15 5. Lake View CDC 2389348 32D15 x 0018 0051 56,6300 8/25/15 6. Lake View CDC 2389349 32D15 x 0018 0052 56,6300 8/25/15 7. Lake View CDC 2389350 32D15 x 0018 0053 56,6300 8/25/15 8. Lake View CDC 2389351 32D15 x 0018 0054 56,6300 8/25/15 9. Lake View CDC 2389352 32D15 x 0018 0056 56,6300 8/25/15 10. Lake View CDC 2389353 32D15 x 0018 0058 56,6300 8/25/15 11. Lake View CDC 2389354 32D15 x 0018 0059 56,6300 8/25/15 12. Lake View CDC 2389355 32D15 x 0018 0060 56,6300 8/25/15 13. Lake View CDC 2389356 32D15 x 0019 0048 56,6100 8/25/15 14. Lake View CDC 2389357 32D15 x 0019 0049 56,6200 8/25/15 15. Lake View CDC 2389358 32D15 x 0019 0050 56,6200 8/25/15 16. Lake View CDC 2389359 32D15 x 0019 0051 56,6200 8/25/15 17. Lake View CDC 2389360 32D15 x 0019 0053 56,6200 8/25/15 18. Lake View CDC 2389361 32D15 x 0019 0054 56,6200 8/25/15 19. Lake View CDC 2389362 32D15 x 0019 0055 56,6200 8/25/15 20. Lake View CDC 2389363 32D15 x 0019 0056 56,6200 8/25/15 21. Lake View CDC 2389364 32D15 x 0019 0058 56,6200 8/25/15 22. Lake View CDC 2389365 32D15 x 0019 0059 56,6200 8/25/15 23. Lake View CDC 2389366 32D15 x 0020 0048 56,6100 8/25/15 24. Lake View CDC 2389367 32D15 x 0020 0051 56,6100 8/25/15 25. Lake View CDC 2389368 32D15 x 0020 0052 56,6100 8/25/15 26. Lake View CDC 2389369 32D15 x 0020 0053 56,6100 8/25/15 27. Lake View CDC 2389370 32D15 x 0020 0054 56,6100 8/25/15 28. Lake View CDC 2389371 32D15 x 0020 0055 56,6100 8/25/15 29. Lake View CDC 2389372 32D15 x 0020 0056 56,6100 8/25/15 30. Lake View CDC 2389373 32D15 x 0020 0057 56,6100 8/25/15 31. Lake View CDC 2389374 32D15 x 0020 0058 56,6100 8/25/15 32. Lake View CDC 2389375 32D15 x 0021 0048 56,6000 8/25/15 33. Lake View CDC 2389376 32D15 x 0021 0049 56,6000 8/25/15 34. Lake View CDC 2389377 32D15 x 0021 0050 56,6000 8/25/15 35. Lake View CDC 2389378 32D15 x 0021 0051 56,6000 8/25/15 36. Lake View CDC 2389379 32D15 x 0021 0052 56,6000 8/25/15 37. Lake View CDC 2389380 32D15 x 0021 0053 56,6000 8/25/15 38. Lake View CDC 2389381 32D15 x 0021 0054 56,6000 8/25/15 39. Lake View CDC 2389382 32D15 x 0021 0055 56,6000 8/25/15 40. Lake View CDC 2389383 32D15 x 0021 0056 56,6000 8/25/15 41. Lake View CDC 2389384 32D15 x 0021 0058 56,6000 8/25/15 42. Highland Gold CDC 2393189 32E08 x 0001 0017 56,2300 10/27/15 43. Highland Gold CDC 2393190 32E08 x 0001 0018 56,2300 10/27/15 44. Highland Gold CDC 2393191 32E08 x 0001 0019 56,2300 10/27/15 Table of Contents36 45. Highland Gold CDC 2393192 32E08 x 0001 0020 56,2300 10/27/15 46. Highland Gold CDC 2393193 32E08 x 0001 0021 56,2300 10/27/15 47. Highland Gold CDC 2393194 32E08 x 0002 0017 56,2200 10/27/15 48. Highland Gold CDC 2393195 32E08 x 0002 0018 56,2200 10/27/15 49. Highland Gold CDC 2393196 32E08 x 0002 0019 56,2200 10/27/15 50. Highland Gold CDC 2393197 32E08 x 0003 0017 56,2100 10/27/15 51. Highland Gold CDC 2393198 32E08 x 0003 0018 56,2100 10/27/15 52. Highland Gold CDC 2393199 32E08 x 0003 0019 56,2100 10/27/15 53. Highland Gold CDC 2393200 32E08 x 0003 0020 56,2100 10/27/15 54. Highland Gold CDC 2393201 32E08 x 0003 0021 56,2100 10/27/15 55. Highland Gold CDC 2393202 32E08 x 0003 0022 56,2100 10/27/15 56. Highland Gold CDC 2393203 32E08 x 0004 0020 56,2000 10/27/15 57. Highland Gold CDC 2393204 32E08 x 0004 0021 56,2000 10/27/15 58. Highland Gold CDC 2393205 32E08 x 0004 0022 56,2000 10/27/15 59. Highland Gold CDC 2393206 32E08 x 0005 0021 56,1900 10/27/15 60. Highland Gold CDC 2393207 32E08 x 0005 0022 56,1900 10/27/15 61. Highland Gold CDC 2393208 32E08 x 0006 0021 56,1800 10/27/15 62. Highland Gold CDC 2393209 32E08 x 0006 0022 56,1800 10/27/15 63. Highland Gold CDC 2393210 32E08 x 0006 0023 56,1900 10/27/15 64. Shadow Mountain CDC 2385990 31G14 x 0006 0040 59,9800 9/19/2015 65. Shadow Mountain CDC 2385991 31G14 x 0006 0041 59,9800 9/19/2015 66. Shadow Mountain CDC 2388931 31G11 x 0029 0037 60,0200 8/8/15 67. Shadow Mountain CDC 2388932 31G11 x 0029 0038 60,0200 8/8/15 68. Shadow Mountain CDC 2388933 31G11 x 0029 0039 60,0200 8/8/15 69. Shadow Mountain CDC 2388934 31G11 x 0029 0040 60,0200 8/8/15 70. Shadow Mountain CDC 2388935 31G11 x 0029 0041 60,0200 8/8/15 71. Shadow Mountain CDC 2388936 31G11 x 0029 0042 60,0200 8/8/15 72. Shadow Mountain CDC 2388937 31G11 x 0030 0038 60,0200 8/8/15 73. Shadow Mountain CDC 2388938 31G11 x 0030 0039 60,0200 8/8/15 74. Shadow Mountain CDC 2388939 31G11 x 0030 0040 60,0200 8/8/15 75. Shadow Mountain CDC 2388940 31G11 x 0030 0041 60,0200 8/8/15 76. Shadow Mountain CDC 2388941 31G11 x 0030 0042 60,0200 8/8/15 77. Shadow Mountain CDC 2388942 31G14 x 0001 0040 60,0100 8/8/15 78. Shadow Mountain CDC 2388943 31G14 x 0001 0041 60,0100 8/8/15 79. Shadow Mountain CDC 2388944 31G14 x 0001 0042 60,0100 8/8/15 80. Shadow Mountain CDC 2388945 31G14 x 0001 0043 60,0100 8/8/15 81. Shadow Mountain CDC 2388946 31G14 x 0001 0044 60,0100 8/8/15 82. Shadow Mountain CDC 2388947 31G14 x 0002 0040 60,0000 8/8/15 83. Shadow Mountain CDC 2388948 31G14 x 0002 0041 60,0000 8/8/15 84. Shadow Mountain CDC 2388949 31G14 x 0002 0042 60,0000 8/8/15 85. Shadow Mountain CDC 2388950 31G14 x 0002 0043 60,0000 8/8/15 86. Shadow Mountain CDC 2388951 31G14 x 0002 0044 60,0000 8/8/15 87. Shadow Mountain CDC 2388952 31G14 x 0003 0040 59,9900 8/8/15 88. Shadow Mountain CDC 2388953 31G14 x 0003 0041 59,9900 8/8/15 89. Shadow Mountain CDC 2388954 31G14 x 0003 0042 59,9900 8/8/15 90. Shadow Mountain CDC 2388955 31G14 x 0003 0043 59,9900 8/8/15 91. Shadow Mountain CDC 2388956 31G14 x 0003 0044 59,9900 8/8/15 92. Shadow Mountain CDC 2388957 31G14 x 0004 0040 59,9800 8/8/15 93. Shadow Mountain CDC 2388958 31G14 x 0004 0042 59,9800 8/8/15 94. Shadow Mountain CDC 2388959 31G14 x 0004 0043 59,9800 8/8/15 Table of Contents37 95. Shadow Mountain CDC 2388960 31G14 x 0004 0044 59,9800 8/8/15 96. Shadow Mountain CDC 2389402 31G11 x 0027 0031 60,0400 8/25/15 97. Shadow Mountain CDC 2389403 31G11 x 0027 0032 60,0400 8/25/15 98. Shadow Mountain CDC 2389404 31G11 x 0027 0033 60,0400 8/25/15 99. Shadow Mountain CDC 2389405 31G11 x 0027 0034 60,0400 8/25/15 100.Shadow Mountain CDC 2389406 31G11 x 0027 0036 60,0400 8/25/15 101.Shadow Mountain CDC 2389407 31G11 x 0027 0037 60,0400 8/25/15 102.Shadow Mountain CDC 2389408 31G11 x 0028 0031 60,0300 8/25/15 103.Shadow Mountain CDC 2389409 31G11 x 0028 0032 60,0300 8/25/15 104.Shadow Mountain CDC 2389410 31G11 x 0028 0034 60,0300 8/25/15 105.Shadow Mountain CDC 2389411 31G11 x 0028 0036 60,0300 8/25/15 106.Shadow Mountain CDC 2389412 31G11 x 0028 0037 60,0300 8/25/15 107.Shadow Mountain CDC 2389413 31G11 x 0028 0038 60,0300 8/25/15 108.Shadow Mountain CDC 2389414 31G11 x 0028 0039 60,0300 8/25/15 109.Shadow Mountain CDC 2389415 31G11 x 0028 0040 60,0300 8/25/15 110.Shadow Mountain CDC 2389416 31G11 x 0028 0041 60,0300 8/25/15 111.Shadow Mountain CDC 2389417 31G11 x 0028 0042 60,0300 8/25/15 112.Shadow Mountain CDC 2389418 31G11 x 0029 0032 60,0200 8/25/15 113.Shadow Mountain CDC 2389419 31G11 x 0029 0033 60,0200 8/25/15 114.Shadow Mountain CDC 2389420 31G11 x 0029 0034 60,0200 8/25/15 115.Shadow Mountain CDC 2389421 31G11 x 0029 0035 60,0200 8/25/15 116.Shadow Mountain CDC 2389422 31G11 x 0029 0043 60,0200 8/25/15 117.Shadow Mountain CDC 2389423 31G11 x 0030 0032 60,0200 8/25/15 118.Shadow Mountain CDC 2389424 31G11 x 0030 0033 60,0200 8/25/15 119.Shadow Mountain CDC 2389425 31G11 x 0030 0034 60,0200 8/25/15 120.Shadow Mountain CDC 2389426 31G14 x 0001 0034 60,0100 8/25/15 121.Shadow Mountain CDC 2389427 31G14 x 0001 0035 60,0100 8/25/15 122.Shadow Mountain CDC 2389428 31G14 x 0002 0034 60,0000 8/25/15 123.Shadow Mountain CDC 2389429 31G14 x 0002 0035 60,0000 8/25/15 124.Shadow Mountain CDC 2389430 31G14 x 0003 0036 59,9900 8/25/15 125.Shining Star CDC 2388323 32D09 x 0026 0047 56,8500 7/21/15 126.Shining Star CDC 2388324 32D09 x 0026 0048 56,8500 7/21/15 127.Shining Star CDC 2388325 32D09 x 0026 0049 56,8500 7/21/15 128.Shining Star CDC 2388326 32D09 x 0026 0050 56,8500 7/21/15 129.Shining Star CDC 2388327 32D09 x 0026 0051 56,8500 7/21/15 130.Shining Star CDC 2388328 32D09 x 0027 0047 56,8400 7/21/15 131.Shining Star CDC 2388329 32D09 x 0027 0048 56,8400 7/21/15 132.Shining Star CDC 2388330 32D09 x 0027 0049 56,8400 7/21/15 133.Shining Star CDC 2388331 32D09 x 0027 0050 56,8400 7/21/15 134.Shining Star CDC 2388332 32D09 x 0027 0051 56,8400 7/21/15 135.Shining Star CDC 2388333 32D09 x 0028 0047 56,8300 7/21/15 136.Shining Star CDC 2388334 32D09 x 0028 0049 56,8300 7/21/15 137.Shining Star CDC 2388335 32D09 x 0028 0050 56,8300 7/21/15 138.Shining Star CDC 2388336 32D09 x 0028 0051 56,8300 7/21/15 139.Shining Star CDC 2388337 32D09 x 0029 0047 56,8200 7/21/15 140.Shining Star CDC 2388338 32D09 x 0029 0048 56,8200 7/21/15 141.Shining Star CDC 2388339 32D09 x 0029 0049 56,8200 7/21/15 142.Shining Star CDC 2388340 32D09 x 0029 0050 56,8200 7/21/15 143.Shining Star CDC 2388341 32D09 x 0029 0051 56,8200 7/21/15 144.Shining Star CDC 2388342 32D09 x 0029 0052 56,8200 7/21/15 Table of Contents38 145.Shining Star CDC 2390948 32D09 x 0026 0052 56,8500 9/19/15 146.Shining Star CDC 2390949 32D09 x 0027 0052 56,8500 9/19/15 147.Shining Star CDC 2390950 32D09 x 0028 0052 56,8500 9/19/15 148.Winsome Lake CDC 2388961 31J13 x 0008 0037 58,8800 8/8/15 149.Winsome Lake CDC 2388962 31J13 x 0008 0038 58,8800 8/8/15 150.Winsome Lake CDC 2388963 31J13 x 0008 0039 58,8800 8/8/15 151.Winsome Lake CDC 2388964 31J13 x 0008 0040 58,8800 8/8/15 152.Winsome Lake CDC 2388965 31J13 x 0008 0041 58,8800 8/8/15 153.Winsome Lake CDC 2388966 31J13 x 0008 0042 58,8800 8/8/15 154.Winsome Lake CDC 2388967 31J13 x 0008 0043 58,8800 8/8/15 155.Winsome Lake CDC 2388968 31J13 x 0009 0037 58,8700 8/8/15 156.Winsome Lake CDC 2388969 31J13 x 0009 0038 58,8700 8/8/15 157.Winsome Lake CDC 2388970 31J13 x 0009 0039 58,8700 8/8/15 158.Winsome Lake CDC 2388971 31J13 x 0009 0040 58,8700 8/8/15 159.Winsome Lake CDC 2388972 31J13 x 0009 0041 58,8700 8/8/15 160.Winsome Lake CDC 2388973 31J13 x 0009 0042 58,8700 8/8/15 161.Winsome Lake CDC 2388974 31J13 x 0009 0043 58,8700 8/8/15 162.Winsome Lake CDC 2388975 31J13 x 0009 0044 58,8700 8/8/15 163.Winsome Lake CDC 2388976 31J13 x 0011 0049 58,8500 8/8/15 164.Winsome Lake CDC 2388977 31J13 x 0012 0047 58,8400 8/8/15 165.Winsome Lake CDC 2388978 31J13 x 0012 0049 58,8400 8/8/15 Table of Contents39 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Canwealth Minerals Corporation We have audited the accompanying consolidated balance sheet of Canwealth Minerals Corporation (the Company ), as of December 31, 2014 and 2013 and the related statements of comprehensive loss, stockholders deficit and cash flows for the years ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We have conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Canwealth Minerals Corporation as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the year ended December 31, 2014 and 2013, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the accompanying financial statements. As of December 31, 2014, the Company has a deficit accumulated of $571,282 and has incurred significant operating losses and negative cash flows. For the year ended December 31, 2014, the Company sustained a net loss of $258,303 compared to a net loss of $101,417 for the year ended December 31, 2013. These factors, among others, raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 4. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. /s/Paritz & Company P.A. Hackensack, New Jersey April 14, 2015 Table of ContentsF-2 CANWEALTH MINERALS CORPORATION CONSOLIDATED BALANCE SHEETS December 31, 2014 December 31, 2013 ASSETS Current assets: Cash and cash equivalent $— $466 Total current assets — 466 Property and equipment 39,494 43,063 Other assets: Intangible assets 22,224 24,233 Total other assets 22,224 24,233 Total assets $61,718 $67,762 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Bank indebtedness $325 $— Accounts payable and accrued liabilities 397,281 217,296 Convertible notes payable 64,977 22,558 Loans from non-related parties 59,046 54,775 Loans from related parties 60,074 63,451 Total current liabilities 581,703 358,080 Commitments and contingencies — — Stockholders' deficit: Preferred stock; $0.0001 par value, 20,000,000 shares authorized, none issued and outstanding as of December 31, 2014 and December 31, 2013 — — Common stock; $0.0001 par value, 100,000,000 shares authorized, 50,771,631 and 50,769,231 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively 5,077 5,077 Additional paid in capital 8,170 6,041 Other comprehensive income (loss) 38,050 11,543 Deficit accumulated (571,282) (312,979) Total stockholders' deficit (519,985) (290,318) Total liabilities and stockholders' deficit $61,718 $67,762 The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-3 CANWEALTH MINERALS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the year ended December 31, 2014 For the year ended December 31, 2013 Revenue $ — $ — OPERATING EXPENSES: Selling, general and administrative 254,895 102,248 Total operating expenses 254,895 102,248 Loss from operations (254,895) (102,248) OTHER INCOME (EXPENSE): Interest expense (3,408) (764) Loss before provision for income taxes (258,303) (103,012) Provision for income taxes: — — NET LOSS $(258,303) $(103,012) Loss per common share, basic and diluted $(0.00) $(0.00) Weighted average shares, basic and diluted 50,770,431 49,955,532 Comprehensive loss: Net loss (258,303) (103,012) Foreign currency translation adjustment 26,507 12,338 Comprehensive loss $(231,796) $(90,674) The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-4 CANWEALTH MINERALS CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS DEFICIT Common Stock Shares Amount Additional paid in capital Other comprehensive income Accumulated Deficit Total Balance, December 31, 2012 44,169,231 $4,417 $— $(795) $(200,787)$ (197,165) Effect of reverse acquisition, February 11, 2013 6,600,000 660 — — (9,180) (8,520) Capital contribution — — 6,041 — — 6,041 Foreign currency translation gain — — — 12,338 — 12,338 Net loss for year ended December 31, 2013 — — — — (103,012) (103,012) Balance December 31, 2013 50,769,231 5,077 6,041 11,543 (312,979) (290,318) Net loss for the year ended December 31, 2014 — — — — (258,303) (258,303) Issuance of shares 2,400 — 2,129 — — 2,129 Foreign currency translation — — — 26,507 — 26,507 Balance December 31, 2014 50,771,631 $5,077 $8,170 $38,050 $(571,282) $(519,985) The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-5 CANWEALTH MINERALS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2014 For the year ended December 31, 2013 CASH FLOWS FROM OPERATING ACTIVITIES : Net loss $(258,303) $(103,012) Adjustments to reconcile net loss to net cash used in operating activities: Accrued interest on convertible notes payable 2,515 — Changes in operating assets and liabilities: Other current assets — 3,601 Bank indebtedness 325 — Accounts payable and accrued liabilities 179,985 51,585 Net cash used in operating activities (75,478) (47,826) CASH FLOWS FROM INVESTING ACTIVITIES: — — CASH FLOWS FROM FINANCING ACTIVITES: Proceeds from issuance of shares 2,129 — Cash acquired on acquisition — 82 Proceeds from issuance of convertible note payable 39,904 2,456 Repayment of loans from related party (3,377) (17,023) Proceeds from advances from others 4,271 54,775 Capital contribution — 6,041 Net cash provided by financing activities 42,927 46,331 Effect of foreign exchange gain 32,085 1,537 Net increase (decrease) in cash and cash equivalents (466) 42 Cash and cash equivalents at beginning of year 466 424 Cash and cash equivalents at end of year $— $466 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest $— $— Cash paid during the period for income taxes $— $— NON CASH INVESTING AND FINANCING ACTIVITIES: Property and equipment purchased through loans from related Parties $— $(1,127) Intangible assets purchased through loans from related parties $— $(11,095) Recapitalization effect on reverse acquisition $— $9,180 Sale of property and equipment to related party $— $10,024 The accompanying notes are an integral part of these consolidated financial statements. Table of ContentsF-6 CANWEALTH MINERALS CORPORATION Notes to Consolidated Financial Statements December 31, 2014 NOTE 1 - NATURE OF OPERATIONS Canwealth Minerals Corporation was organized on February 1, 2006 under the laws of the Canada Business Corporations Act. Canwealth s mission is to develop the mining concessions it has registered in various areas of Northern Quebec, which based on assay reports of preliminary samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, rare earth and other such minerals. The Company, when presented with the opportunity to do so, will seek to register additional land claims in other regions of Quebec, however it is not limited to only that region of North America, or any other area where opportunities may present themselves. Upon entering into agreements to acquire concessions, the Company will market the properties to mining companies and other interested parties. The Company s year end is December 31. The Company is in the exploratory stage as defined by Accounting Standards Codification subtopic 915-10, Development Stage Entities ( ASC 915-10 ) with its efforts principally devoted to developing a platform of prime quality energy assets. To date, the Company has incurred expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise. As of December 31, 2014, the Company has accumulated deficit of $571,282. The Company also owns as of December 31, 2014, mining equipment with an associated cost of $39,494 and mining concessions at a cost of $22,224. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies applied in the presentation of financial statements are as follows: Principals of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Revenue Recognition The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition ( ASC 605-10 ) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates. Table of ContentsF-7 Cash and Cash Equivalent The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2014 cash consists of a checking account. Mine Exploration and Development Costs The Company accounts for mine exploration costs in accordance with Accounting Standards Codification 930, Extractive Activities Mining. All exploration expenditures are expensed as incurred. Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine s production capacity and is not considered to shift the mine into the production phase. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. As of December 31, 2014, the Company had not incurred any mine development costs. Mine Properties The Company accounts for mine properties in accordance with Accounting Standards Codification 930, Extractive Activities Mining. Costs of acquiring mine properties are capitalized by project area upon purchase of the associated claims. Mine properties are periodically assessed for impairment of value and any diminution in value. The Company held mining claims with respect to five mineral properties as of December 31, 2014, which are presented as intangible assets of $22,224. Income Taxes The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes ( ASC 740-10 ) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences such as deferred officers compensation and stock compensation accounting versus tax differences. Net Loss Per Share, basic and diluted The Company has adopted Accounting Standards Codification Subtopic 260-10, Earnings Per Share ( ASC 260-10 ) specifying the computation, presentation and disclosure requirements of earning per share information. Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. There were no diluted shares as of December 31, 2014 and 2013. Derivative Instruments The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging ( ASC 815 ), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. Table of ContentsF-8 If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. At December 31, 2014 and December 31, 2013, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities. Fair Value of Financial Instruments The Company's financial instruments, as defined by Accounting Standards Codification subtopic 825-10, Financial Instruments ( ASC 825-10 ), include cash, accounts payable and convertible notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2014. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1:Observable inputs such as quoted prices in active markets; Level 2:Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3:Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions The Company does not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2014 and December 31, 2013. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2014 and December 31, 2013. Foreign Currency Translation and Comprehensive Income (Loss) The functional currency of Canwealth is the Canadian Dollar ( CAD ). For financial reporting purposes, CAD were translated into United States Dollars ( USD or $ ) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders equity as Accumulated other comprehensive income . Gains and losses resulting from foreign currency transactions are included in the results of operations. There has been no significant fluctuation in the exchange rate for the conversion of CAD to USD after the balance sheet date. The Company uses Accounting Standard Codification 220 Comprehensive Income . Comprehensive income is comprised of net income and all changes to the statements of stockholders equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the years ended December 31, 2014 and 2013 consisted of net income and foreign currency translation adjustments. Table of ContentsF-9 The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows: December 31, 2014 December 31, 2013 Period-end CAD: USD exchange rate 0.8620 0.9399 Average Period CAD: USD exchange rate 0.9022 0.9710 Stock Based Compensation The Company follows Accounting Standards Codification subtopic 718-10, Compensation ( ASC 718-10 ) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values. As of December 31, 2014 and December 31, 2013, the Company did not have any issued or outstanding stock options. Concentration and Credit Risk The Company s principal operations are all carried out in Canada. Accordingly, the Company s business, financial condition and results of operations may be influenced by the political, economic and legal environments in Canada, and by the general state of Canadian economy. The Company s operations in Indonesia are subject to specific considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Research and Development The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development ( ASC 730-10 ). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. As of December 31, 2014, the Company had not incurred any research and development expenses. Reliance on Key Personnel and Consultants The Company employs one executive officer. The Company is heavily dependent on the continued active participation of Mr. McIntosh and key consultants. The loss of any of Mr. McIntosh or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place. Reclassification Certain reclassifications have been made to prior periods data to conform to the current period s presentation. These reclassifications had no impact on the reported net loss. Impact of New Accounting Standards Table of ContentsF-10 The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements. NOTE 3 - GOING CONCERN MATTERS The accompanying consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of December 31, 2014, the Company has a deficit accumulated of $571,282 and has incurred significant operating losses and negative cash flows. For the year ended December 31, 2014, the Company sustained a net loss of $258,303 compared to a net loss of $103,012 for the year ended December 31, 2013. The Company will need additional financing which may take the form of equity or debt and the Company has converted certain liabilities into equity. In the event the Company is not able to increase its working capital, the Company will not be able to implement or may be required to delay all or part of its business plan, and its ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be adversely affected. The accompanying consolidated financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence. The Company is seeking to raise capital through public offerings and through other potential financings and business opportunities. The Company s goal is to raise the initial funding of approximately $15,000,000 to enable it to fund its operations for the next twelve months and beyond. These operations will be to engage a team of mining specialists and geologists, further develop the mining claims that the Company already owns, and to perform additional tests on existing claims to determine an overall strategy or mining plan. The amount of money raised will determine how long the Company will continue as a going concern. NOTE 4 PROPERTY AND EQUIPMENT Property and equipment at December 31, 2014 and December 31, 2013 are as follows: December 31, 2014 December 31, 2013 Mining machinery and equipment $39,494 $43,063 Total $39,494 $43,063 No depreciation has been charged for the years ended December 31, 2014 and 2013, since the Company is in assembly and testing mode, not in operations. NOTE 5 - CAPITAL STOCK Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock, par value of $0.0001. As of December 31, 2014 and December 31, 2013, no preferred stock was issued and outstanding. Common Stock The Company is authorized to issue 100,000,000 shares of common stock with par value of $0.0001 per share. As of December 31, 2014 and December 31, 2013, there were 50,771,631 and 50,769,231 shares of common stock issued and outstanding, respectively. Table of ContentsF-11 NOTE 6 - RELATED PARTY TRANSACTIONS Mr. Garth McIntosh, the Company s Chairman of the Board, Chief Executive Officer and President, is also a majority shareholder of ICBS Ltd. which is the largest shareholder of Canwealth Minerals Corporation. As of December 31, 2014 and December 31, 2013, the Company has taken loans from shareholders of $60,074 and $63,451, respectively. No formal repayment terms or arrangements existed. The entire above loan is non-interest bearing and payable on demand. ICBS Ltd. has given a loan to the Company and also transferred the assets worth $39,494 as of December 31, 2014. As of December 31, 2013, the Company acquired intangible asset of $22,224 through loans from related parties. NOTE 7 CONVERTIBLE NOTES PAYABLE On October 20, 2012, the Company entered into an agreement with a third party non-affiliate to a 20% interest bearing convertible note for $22,558 ($20,000 CAD original principal amount) due on December 31, 2014, with the conversion features commencing immediately. The note is convertible into 100,000 shares of common stock of the Company. As of December 31, 2014, the balance in the note and accrued interest was $22,558. The lender has agreed to freeze interest at $4,000 CAD provided the loan is repaid on or prior to that date. In February 2015, the loan was extended to December 31, 2016. On March 1, 2014, the Company entered into three arrangements with third parties to 10% interest bearing notes totaling $14,944, accrued interest included ($15,000 CAD original principal amount), which are convertible into common stock of the Company at the market price plus 50% additional shares at the same market price on the date of conversion. On September 1, 2014, the Company entered into an arrangement with a third party non-affiliate to a 10% interest bearing convertible note totaling $4,788, accrued interest included ($5,000 CAD original principal amount), which is convertible into common stock of the Company at the market price plus 33% additional shares at the same market price on the date of conversion. On July 2, 2014, the Company entered into an arrangement with a third party non-affiliate to a 10% interest bearing convertible note totaling $4,525, accrued interest included ($5,000 CAD original principal amount), which is convertible into common stock of the Company at the market price plus 33% additional shares at the same market price on the date of conversion. On June 19, 2014, the Company entered into an arrangement with a third party non-affiliate to a 10% interest bearing convertible note totaling $18,161, accrued interest included ($20,000 CAD original principal amount), which is convertible into common stock of the Company at the market price plus 25% additional shares at the same market price on the date of conversion. Interest on these loans is accrued to December 31, 2014. NOTE 8 LOAN FROM NON-RELATED PARTIES The Company has loans from a non-related party of $59,046. These loans are non-interest bearing and payable on December 31, 2016. NOTE 9 COMMITMENTS AND CONTINGENCIES Operating lease The Company does not currently lease facilities. Table of ContentsF-12 Litigation The Company may be subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, The Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of its operations or liquidity. The Company had no pending legal proceedings or claims other than described above as of December 31, 2014. NOTE 10 INCOME TAXES The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes ( ASC 740-10 ), which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been reflected in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but are not limited to, accounting for intangibles, debt discounts associated with convertible debt, equity based compensation and depreciation and amortization. At December 31, 2014, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $556,300, which expires in the year 2034, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management, based upon the earnings history of the Company, it is more likely than not that the benefits will not be realized. Based upon the change in ownership rules under section 382 of the Internal Revenue Code of 1986, if in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by that section, all of the Company s net operating losses carry forwards may be significantly limited as to the amount of use in a particular year. All or a portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits. The significant components of the deferred tax assets (liabilities) as of December 31, 2014 are summarized below: Net operating loss carry forwards expiring through 2033 $556,300 Tax Asset 111,300 Less valuation allowance (111,300) Balance $— Net operating loss carry forwards 2014 (estimated) $556,300 Balance $556,300 The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expenses. As of December 31, 2014, the Company has no unrecognized tax benefit from uncertain tax positions, including interest and penalties. The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows: Statutory federal (US) income tax rate 35.0% Tax rate difference between Canada and USA (15.0)% Effective tax rate 20.0% Table of ContentsF-13 Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following: Deferred Tax Asset: (Liability) Net operating loss carry forward $556,300 Valuation allowance (556,300) Net Deferred Tax Asset (Liability) $— NOTE 11 SUBSEQUENT EVENTS Management has evaluated events occurring after the date of these financial statements through the date that these financial statements were issued. There have been no events that would require adjustment to or disclosure in the financial statements. Table of ContentsF-14 CANWEALTH MINERALS CORPORATION PRELIMINARY PROSPECTUS Up to 8,602,000 Shares Common Stock ____________________, 2015 Table of Contents40 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution The registrant estimates that expenses payable by the registrant in connection with the offering described in this registration statement will be as follows: SEC registration fee $99.96 Legal fees and expenses $15,000.00 Accounting fees and expenses $11,000.00 Total $26,099.96 Item 14. Indemnification of Directors and Officers Delaware General Corporation Law Section 145 of the Delaware General Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to such corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. Our certificate of incorporation provides for such limitation of liability. We intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification for expenses such as attorneys fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of the Registrant, arising out of the person s services as a director or executive officer. Our Articles of Incorporation and Bylaws Our certificate of incorporation provides for indemnification of our directors, officers, agents and employees to the fullest extent permitted by the DGCL. Our bylaws provide that, to the extent permitted by applicable law, we will generally indemnify any director, officer, agent or employee of the Company for judgments, fines, amounts paid in settlement or expenses (including attorneys fees) actually and reasonably incurred by such indemnified person, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, he or she had no reason to believe his or her conduct was unlawful. Table of Contents41 Item 15. Recent Sales of Unregistered Securities For each of the following transactions, we relied upon the exemptions from registration provided by 4(2) of the Securities Act and Rule 506 promulgated thereunder, based upon (i) the fact that each investor was an accredited or sophisticated investor with experience in investing in securities such that it could evaluate merits and risks related to our securities; (ii) that no general solicitation of the securities was made by us; (iii) the securities issued were restricted securities as that term is defined under Rule 144 promulgated under the Securities Act; and (iv) we placed appropriate restrictive legends on the certificates representing the securities regarding the restricted nature of these securities: On February 11, 2013, the merger contemplated by the Merger Agreement dated August 10, 2012, among USG1, Inc., Canwealth Delaware and Kimi Royer (as representative of the USG1 stockholders) was consummated. Upon the closing, the existing shares of Canwealth Delaware common stock converted into 44,169,231 shares of USG1 common stock. The shares were issued upon reliance on the exemption from the registration requirements of the Securities Act provided in Section 4(2) thereof. On June 30, 2014, the Company issued 2,400 shares with par value of $0.0001 per share for proceeds of $2,129. On October 20, 2012, we received a CAD20,000 loan from Robert Howarth which is evidenced by a convertible promissory note with an original maturity date of December 31, 2014. The convertible promissory note bears interest at a rate of 20% per annum and is immediately convertible into 100,000 shares of our common stock. As of December 31, 2014, the principal balance of the convertible promissory note was CAD20,000, and accrued interest thereunder was CAD4,000. In February 2015, Mr. Howarth agreed to extend the maturity date of this convertible promissory note until December 31, 2016. We have not yet repaid this convertible promissory note. During the nine months ended September 30, 2013, we received advances of $28,550 from Mr. Howarth for working capital purposes. As of September 30, 2013, the principal balance of those advances was $26,145. The advances are non-interest bearing and were repayable on December 31, 2013. In February 2015, Mr. Howarth agreed to extend the repayment due date for these advances until December 31, 2016. We have not yet repaid these advances. On August 26, 2013, we issued a promissory note in the principal amount of CAD14,000 to Mr. Howarth as consideration for our re-acquisition of 140 mining claims which previously lapsed. The promissory note is non-interest bearing with an original maturity date of August 26, 2014. In February 2015, Mr. Howarth agreed to extend the maturity date of this promissory note until December 31, 2016. We have not yet repaid this promissory note. On November 1, 2013, we issued a promissory note in the principal amount of CAD2,200 to Mr. Howarth as consideration for the transfer of 22 mining claims to us (some of which were previously lapsed mining claims of ours). The promissory note is non-interest bearing with an original maturity date of November 1, 2014. In February 2015, Mr. Howarth agreed to extend the maturity date of this promissory note until December 31, 2016. We have not yet repaid this promissory note. On March 1, 2014, the Company received loans totaling CAD15,000 from three non-affiliates which are evidenced by convertible promissory notes bearing interest at a rate of 10% per annum. These promissory notes are convertible into shares of our common stock at the market price plus 50% additional shares at the same market price on the date of conversion. As of the date hereof, none of these promissory notes have reached their respective maturity date. On June 19, 2014, the Company received a loan of CAD20,000 from a non-affiliate which is evidenced by a convertible promissory note bearing interest at a rate of 10% per annum. This promissory note is convertible into shares of our common stock at the market price plus 25% additional shares at the same market price on the date of conversion. As of the date hereof, this promissory note has not reached its maturity date. Table of Contents42 On July 2, 2014, the Company received a loan of CAD5,000 from a non-affiliate which is evidenced by a convertible promissory note bearing interest at a rate of 10% per annum. This promissory note is convertible into shares of our common stock at the market price plus 33% additional shares at the same market price on the date of conversion. As of the date hereof, this promissory note has not reached its maturity date. On September 1, 2014, the Company received a loan of CAD5,000 from a non-affiliate which is evidenced by a convertible promissory note bearing interest at a rate of 10% per annum. This promissory note is convertible into shares of our common stock at the market price plus 33% additional shares at the same market price on the date of conversion. As of the date hereof, this promissory note has not reached its maturity date. Item 16. Exhibits and Financial Statement Schedules The following Exhibits are filed as part of this Registration Statement: Exhibit No. Description 3.1 Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant s Registration Statement on Form 10, filed on October 26, 2011. 3.2 Amended and Restated By-Laws of the Registrant, incorporated by reference to Exhibit 3.2 to the Registrant s Quarterly Report on Form 10-Q, filed on November 11, 2014. 3.3 Specimen stock certificate of the Registrant, incorporated by reference to Exhibit 3.3 to the Registrant s Registration Statement on Form 10, filed on October 26, 2011. 3.4 Certificate of Merger, incorporated by reference to Exhibit 3.3 to the Registrant s Current Report on Form 8-K, filed on February 15, 2013. 5.1 Opinion of Westerman Ball Ederer Miller Zucker & Sharfstein, LLP.* 10.1 Agreement and Plan of Merger, dated August 10, 2012, by and among Canwealth Minerals Corporation, USG1, Inc. and Kimi Royer, as representative of the USG1 Stockholders, incorporated by reference to Exhibit 10.1 to the Registrant s Current Report on Form 8-K, filed on August 14, 2012. 10.2 First Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.2 to the Registrant s Current Report on Form 8-K, filed on February 15, 2013. 10.3 Second Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.3 to the Registrant s Current Report on Form 8-K, filed on February 15, 2013. 16.1 Letter of KCCW Accountancy Corp. to the Securities and Exchange Commission regarding change in independent registered accounting firm, incorporated by reference to Exhibit 16.1 to the Registrant s Current Report on Form 8-K, filed on April 12, 2013. 16.2 Letter of RBSM, LLP to the Securities and Exchange Commission regarding change in independent registered accounting firm, incorporated by reference to Exhibit 16.1 to the Registrant s Current Report on Form 8-K, filed on February 11, 2014. 21.1 Subsidiaries of the Registrant, incorporated by reference to Exhibit 21.1 to the Registrant s Registration Statement on Form S-1, filed on July 8, 2013. 23.1 Consent of Paritz & Company, P.A.* 24.1 Powers of Attorney (included in signature page to this Registration Statement). * Filed herewith Table of Contents43 Item 17. Undertakings (a)The undersigned Registrant hereby undertakes: (1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i)To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement; and (iii)To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. (2)That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4)That, for the purpose of determining any liability under the Securities Act, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Table of Contents44 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant hereby certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Montreal, Canada, on April 28, 2015. CANWEALTH MINERALS CORPORATION By: /s/ Garth McIntosh Garth McIntosh Chief Executive Officer and Chief Financial Officer Each person whose signature to this Registration Statement appears below hereby constitutes and appoints Garth McIntosh as his true and lawful attorney-in-fact and agent, with full power of substitution, to sign on his behalf individually and in the capacity stated below and to perform any acts necessary to be done in order to file all amendments to this Registration Statement and any and all instruments or documents filed as part of or in connection with this Registration Statement or the amendments thereto and each of the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or his substitutes, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended this Registration Statement has been signed by the following persons on April 28, 2015 in the capacities stated: Name Title /s/ Garth McIntosh Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), and Director Garth McIntosh /s/ Carl Caumartin Director Carl Caumartin /s/ Neji Jedda Director Neji Jedda Table of Contents45 EXHIBIT INDEX Exhibit No. Description 3.1 Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant s Registration Statement on Form 10, filed on October 26, 2011. 3.2 Amended and Restated By-Laws of the Registrant, incorporated by reference to Exhibit 3.2 to the Registrant s Quarterly Report on Form 10-Q, filed on November 11, 2014. 3.3 Specimen stock certificate of the Registrant, incorporated by reference to Exhibit 3.3 to the Registrant s Registration Statement on Form 10, filed on October 26, 2011. 3.4 Certificate of Merger, incorporated by reference to Exhibit 3.3 to the Registrant s Current Report on Form 8-K, filed on February 15, 2013. 5.1 Opinion of Westerman Ball Ederer Miller Zucker & Sharfstein, LLP.* 10.1 Agreement and Plan of Merger, dated August 10, 2012, by and among Canwealth Minerals Corporation, USG1, Inc. and Kimi Royer, as representative of the USG1 Stockholders, incorporated by reference to Exhibit 10.1 to the Registrant s Current Report on Form 8-K, filed on August 14, 2012. 10.2 First Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.2 to the Registrant s Current Report on Form 8-K, filed on February 15, 2013. 10.3 Second Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.3 to the Registrant s Current Report on Form 8-K, filed on February 15, 2013. 16.1 Letter of KCCW Accountancy Corp. to the Securities and Exchange Commission regarding change in independent registered accounting firm, incorporated by reference to Exhibit 16.1 to the Registrant s Current Report on Form 8-K, filed on April 12, 2013. 16.2 Letter of RBSM, LLP to the Securities and Exchange Commission regarding change in independent registered accounting firm, incorporated by reference to Exhibit 16.1 to the Registrant s Current Report on Form 8-K, filed on February 11, 2014. 21.1 Subsidiaries of the Registrant, incorporated by reference to Exhibit 21.1 to the Registrant s Registration Statement on Form S-1, filed on July 8, 2013. 23.1 Consent of Paritz & Company, P.A.* 24.1 Powers of Attorney (included in signature page to this Registration Statement). * Filed herewith Table of Contents46 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED. SUBJECT TO COMPLETION DATED APRIL 28, 2015 PRELIMINARY PROSPECTUS CANWEALTH MINERALS CORPORATION Up to 8,602,000 Shares of Common Stock The selling stockholders named in this prospectus may offer and sell up to 8,602,000 shares of our common stock, par value $0.0001 per share, held by them. The shares being sold by the selling stockholders were issued to them in private placement transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. We are not selling any common stock under this prospectus and will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. These shares will be offered for sale by the selling stockholders from time to time in a number of different ways as described in the section of this prospectus entitled Plan of Distribution. We will pay the expenses incurred in connection with the offering described in this prospectus, with the exception of brokerage expenses, fees, discounts and commissions, if any, which will be paid by selling stockholders. No public market currently exists for our common stock. Upon completion of this offering, we will attempt to have our common stock quoted on the Over-the-Counter Bulletin Board, or the OTC. The offering price at which the selling stockholders will sell the shares of common stock that are part of this offering shall be $.10 per share until our shares are quoted on the OTC, and thereafter at prevailing market prices or at privately negotiated prices, as described in the section of this prospectus entitled Plan of Distribution. Shares Offered by the Selling Stockholders Price to the Public Selling Agent Commissions Proceeds to the Selling Stockholders Per Share $.10 Not applicable $.10 Total (8,602,000 shares) $860,200 Not applicable $860,200 You should rely only on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. The information in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission, and such securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The shares being offered by this prospectus will be offered for a period not to exceed two years from the original effective date of this prospectus. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ), and will therefore be subject to reduced public company reporting requirements. An investment in our common stock involves a high degree of risk. We urge you to read carefully the Risk Factors section beginning on page 4, where we describe specific risks associated with an investment in Canwealth Minerals Corporation and these securities, before you make your investment decision. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is __________, TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in our common stock, you should read this entire prospectus carefully, including the sections of this prospectus entitled Risk factors and Management s discussion and analysis of financial condition and results of operations and our financial statements and related notes contained elsewhere in this prospectus. Unless the context otherwise requires, references in this prospectus to the company, Versartis, we, us and our refer to Versartis, Inc. Versartis, Inc. We are an endocrine-focused biopharmaceutical company initially developing our novel long-acting recombinant human growth hormone, VRS-317, for growth hormone deficiency, or GHD, an orphan disease. A key limitation to current recombinant human growth hormone, or rhGH, products is that they impose the burden of daily injections over multiple years, often resulting in poor compliance, which in turn can lead to suboptimal treatment outcomes in GHD patients. Despite this limitation, global annual sales from currently marketed rhGH products have grown to more than $3 billion in 2013. VRS-317 is intended to reduce the burden of daily treatment by requiring significantly fewer dosing events and injections, potentially improving compliance and, therefore, treatment outcomes. We have global rights to VRS-317 and, if VRS-317 is approved, given the highly concentrated prescriber base, we intend to commercialize it with our own specialty sales force in the United States and Canada, and potentially other geographies. Our first target indication for VRS-317 is pediatric GHD, which represents an approximately $1.5 billion existing market opportunity. We have completed the Phase 2a stage of our pediatric GHD clinical trial, demonstrating that weekly, semi-monthly and monthly dosing regimens over six months of treatment provide comparable safety and efficacy to daily rhGH administered at the highest approved dose on the labels of Genotropin and Norditropin , the two market leading daily rhGH products. Approximately 95% of the patients who completed the Phase 2a stage chose to continue with VRS-317 treatment in our ongoing long-term safety study, or the Extension Study. In the 57 patients completing 12 months of continuous VRS-317 treatment in the Phase 2a stage and the Extension Study, VRS-317 was found to be safe and well tolerated, and patients maintained on their Phase 2a dose during the Extension Study experienced less waning of their growth response than typically observed with daily rhGH therapy. In addition, we switched the patients on the 1.15 mg/kg weekly dose to our selected Phase 3 dose of 3.5 mg/kg semi-monthly. These patients experienced an increase in their insulin-like growth factor-I, or IGF-I, levels to the upper part of the therapeutic range without IGF-I overexposure, and a subset treated for six months at this dose achieved an approximately 2 cm/yr increase in mean annualized height velocity from the first six months to the second six months. We plan to initiate three registration studies for VRS-317 in GHD, beginning with a pediatric GHD Phase 3 study, which we refer to as the VELOCITY study, in the United States, Western Europe and Canada in early 2015. In addition, we intend to initiate a pediatric GHD Phase 2/3 study in Japan in early 2015 and a Phase 2/3 study of VRS-317, dosed monthly, in GHD adults in the second half of 2015. The existing pediatric GHD market in Japan and adult GHD market worldwide each represents approximately $500 million of annual sales. Additionally, we may develop VRS-317 for idiopathic short stature, or ISS, Table of Contents Index to Financial Statements The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated January 21, 2015 $75,000,000 Common Stock We are offering 3,949,447 shares of our common stock, assuming a public offering price of $18.99 per share, the last reported sale price of our common stock on The NASDAQ Global Select Market on January 16, 2015, with an aggregate market value of approximately $75,000,000. The number of shares of common stock offered by us will determined based on the public offering price per share. Our common stock is listed on The NASDAQ Global Select Market under the trading symbol VSAR. We are an emerging growth company under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves a high degree of risk. See Risk factors beginning on page 13. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to Versartis $ $ (1) See Underwriting for additional disclosure regarding underwriting discounts, commissions and expenses. To the extent that the underwriters sell more than that number of shares of common stock with an aggregate public offering price of approximately $75,000,000, the underwriters have an option to purchase up to 592,417 additional shares from us, assuming a public offering price of $18.99 per share, the last reported sale price of our common stock on The NASDAQ Global Select Market on January 16, 2015, with an aggregate public offering price of up to approximately $11,250,000 at the public offering price, after deducting underwriting discounts and commissions. The number of additional shares of common stock the underwriters have the option to purchase will be determined based on the public offering price per share. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Citigroup Credit Suisse Cowen and Company Canaccord Genuity SunTrust Robinson Humphrey , 2015 Table of Contents Index to Financial Statements which is short stature of unknown cause, and Turner Syndrome, which is an X-chromosomal deficit or deletion in females. ISS and Turner Syndrome together accounted for approximately 20% of the global rhGH market in 2013. Growth hormone deficiency GHD is a chronic disease with multiple causes that affects two distinct patient groups, pediatric patients and adult patients, although rhGH treatment options for the two groups are the same. Children with GHD typically have pathologic degrees of short stature, a tendency toward obesity, delayed and deficient mineralization of the skeleton, impaired growth of skeletal muscle and development of a high risk lipid profile. GHD during adulthood manifests as alterations in body composition, such as decreased lean and increased fat mass with skeletal demineralization, and causes adverse changes in cardiovascular outcome markers. Patients with untreated GHD also face increased mortality. The current standard of care for GHD is daily subcutaneous, or under the skin, injections of rhGH, and there are currently seven rhGH products marketed in the United States for the treatment of GHD. In therapy-compliant GHD children, rhGH therapy initially promotes catch-up growth, enabling patients to approach or achieve heights on a standard growth curve, and thereafter permits them to maintain normal growth throughout the course of treatment. In therapy-compliant GHD adults, daily subcutaneous injections of rhGH have resulted in improvements in body composition parameters, bone density, cardiovascular outcomes and quality of life. Despite the demonstrated benefits of rhGH therapy, published studies have shown that a majority of patients on a daily rhGH regimen, which requires up to 365 dosing events per year, are not fully compliant and fail to achieve expected treatment outcomes. Lack of compliance may be due to the burden of these frequent dosing events, each of which typically involves a series of twenty or more steps to prepare and inject rhGH. It often requires up to one hour per dosing event. Significant reductions in the degree of growth in pediatric GHD patients have been observed as a result of missing as few as two injections per week. As a result, pediatric endocrinologists have consistently sought a long-acting rhGH therapy to reduce the treatment burden on patients and their caregivers without compromising safety or efficacy. Importantly, other rhGH manufacturers have attempted to develop a long-acting rhGH product using microsphere, PEGylation, fusion and alternative delivery technologies. Each of these approaches has not been successful due to regulatory, safety, efficacy or manufacturing issues, or a combination thereof. Our product candidate: VRS-317 We believe VRS-317 will fulfill this significant need for a long-acting rhGH product. VRS-317, which is a new chemical entity, combines the same rhGH amino acid sequence utilized in currently approved rhGH products with a proprietary in-licensed half-life extension technology, XTEN, to enable less frequent administration. VRS-317 was engineered using XTEN technology to extend the residence time in the bloodstream by reducing the clearance of rhGH from the body by the two primary mechanisms, kidney filtration and receptor mediated clearance. In our Phase 1a clinical trial, VRS-317 demonstrated a half-life at least thirty times longer than daily rhGH and to date has shown a safety and tolerability profile comparable to that of marketed daily rhGH products. Additionally, the XTEN amino acid sequences fused to rhGH to form VRS-317 confer Table of Contents Index to Financial Statements VERSARTIS Improving Therapies Improving Lives We are an endocrine-focused biopharmaceutical company initially developing VRS-317, our novel long-acting recombinant human growth hormone, for the treatment of growth hormone deficiency. VRS-317 is intended to reduce the burden of daily injection therapy by requiring significantly fewer injections, potentially improving compliance and, therefore, treatment outcomes. We are initiating a Phase 3 clinical trial of VRS-317 in pediatric growth hormone deficient patients in early 2015. Table of Contents Index to Financial Statements improved pharmaceutical properties compared to rhGH alone, including greater solubility, a lower isoelectric point and a higher net negative charge. These improved properties enable a straightforward purification process without the need for complex steps that can reduce manufacturing yields, such as protein folding, which may ultimately offer a cost-of-goods advantage for VRS-317 versus current rhGH products. There are currently seven rhGH products marketed in the United States for the treatment of GHD. We are pursuing the same regulatory pathway for VRS-317 followed by most of these products for pediatric GHD patients: a dose-finding study and a Phase 3 registration trial with a primary endpoint of 12 month mean height velocity. Mean height velocity refers to the mean height change of the individuals in a treatment group over a specified time period. In June 2014, we completed the Phase 2a stage of our Phase 1b/2a pediatric GHD clinical trial, in which we evaluated weekly, semi-monthly and monthly dosing of VRS-317. In the Phase 1b stage of this clinical trial, we selected IGF-I, which is a commonly used marker, as the primary pharmacodynamic marker to measure the effect of VRS-317 treatment. All subjects had relative IGF-I deficiency at baseline, and the increase from baseline in the 30 day average IGF-I standard deviation score, or IGF-I SDS, was proportional to dose, enabling the development of a pharmacokinetic/pharmacodynamic, or PK/PD, model. Based on this PK/PD model, in the Phase 2a stage of our clinical trial, a total monthly dose of 5.0 mg/kg of VRS-317 was administered to pediatric GHD patients either weekly, semi-monthly or monthly. Over the six months of treatment with VRS-317 in the Phase 2a stage of the study, VRS-317 was found to be safe and well tolerated in these pre-pubertal GHD children. In all three dose groups, VRS-317 maintained mean IGF-I increases over baseline and within the lower part of the therapeutic range without IGF-I overexposure, confirming the PK/PD model developed from the Phase 1b stage of study. In addition, we demonstrated that six months of dosing of VRS-317, when given at weekly, semi-monthly and monthly intervals, achieves annualized six month height velocity (which was the study s primary endpoint) comparable to the annual height velocity for similar GHD children given a dose of daily rhGH that is the highest approved dose on the labels of Genotropin and Norditropin . Upon completion of the Phase 2a stage of the trial, we offered patients the opportunity to participate in the Extension Study and to continue with VRS-317 treatment. Approximately 95% of the patients completing the Phase 2a stage elected to participate in the Extension Study. We increased the VRS-317 dose of the 20 patients who received the 1.15 mg/kg weekly dose to the 3.5 mg/kg semi-monthly dose for the Extension Study based on our PK/PD model. As predicted by our PK/PD model, the IGF-I levels of these patients increased into the upper part of the therapeutic range without IGF-I overexposure. Daily rhGH therapy dosed at 40 g/kg/day in similar moderate GHD patients caused a comparable IGF-I response in a published U.S. study. More importantly, the subset of patients who were treated with the 1.15 mg/kg weekly dose in the Phase 2a stage and then completed a full six months of treatment with the 3.5 mg/kg semi-monthly dose in the Extension Study achieved a nearly 2 cm/yr increase in mean annualized height velocity, from 7.5 cm/yr in the first six months to 9.3 cm/yr in the second six months. Typically, based on observations from existing approved daily rhGH therapies, a decrease in height velocity in the second six months of treatment would be expected with daily rhGH therapy. The results of the Extension Study to date have demonstrated a dose response in both IGF-I levels and height velocity supporting the selection of the 3.5 mg/kg semi-monthly dose for Phase 3. To date, the 3.5 mg/kg semi-monthly dose has been found to be safe and well tolerated with only a few mild transient adverse events in a minority of patients. Table of Contents Index to Financial Statements Table of contents Prospectus summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire Prospectus, including our financial statements and the documents to which we refer you. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this registration statement on Form S-1 (this "Registration Statement"). Unless the context indicates or suggests otherwise, references to "we," "our," "us," the "Company," "Soul and Vibe" "Soul & Vibe," "Soul," or the "Registrant" refer to Soul and Vibe Interactive Inc., a Nevada corporation, and its wholly-owned subsidiaries, Soul and Vibe Entertainment, Inc. and Soul and Vibe Publishing, Inc. Business Overview Soul and Vibe Interactive Inc. is a video and computer games company. We develop, publish, and digitally distribute interactive entertainment for video game consoles, mobile and augmented reality/wearable tech devices, and personal computers. Since our inception, we have generated a degree of revenue. Revenue generation began in the 1st quarter of 2014 with the release of our first product. The release was Timeless Gems, an innovative "match-3" game that features board game elements. Timeless Gems was released, worldwide, on Facebook, Google's Google Play, and Apple's App Store (for iPhone, iPad, and iPod Touch) in February and March 2014. In addition to the development and release of the Timeless Gems product, two packages of expansion content for Timeless Gems were developed and released during fiscal year 2014. A third package of expansion content for Timeless Gems was developed during fiscal year 2014 but this package has not yet been released. It is anticipated that this third expansion package will be released during fiscal year 2015. In June 2014 the company released a second product, Striker Rush: Champion Edition. Striker Rush: Champion Edition was released, worldwide, through Apple s App Store (for iPhone, iPad, and iPod Touch mobile devices), and through Google Play and Amazon.com (for Android devices.) During fiscal year 2014, the Company licensed Timeless Gems and Striker Rush: Champion Edition to Tanjarine, at the time a subsidiary of TouchTunes, the largest provider of in-venue music and entertainment throughout North America. Tanjarine was the first integrated tabletop ordering, entertainment and pay-at-the-table solution to combine 10" proprietary tabletop tablets with server handhelds, which expedite service, payment, and second screen televisions. The platform provided guests with menu and entertainment options, portability that eliminates the constraints of one-tablet-per-table installations, and other innovations that help increase restaurant efficiency and average check size. Customizable for bars and restaurants, Tanjarine s catalog of entertainment offered games, music and content that targets everyone from families to sports fans to couples and more. Many of the games also enable guests to play with a friend or connect the tabletop tablets to second screen televisions located throughout a venue, creating a more interactive gaming experience. During fiscal year 2014 the Company also continued the development of additional products that, as of the date of this Annual Report, have not been publicly announced. It is anticipated that these products will be released into the market late in the second quarter of 2015 on the following hardware platforms: Facebook, through Apple s App Store (for iPhone, iPad, and iPod Touch mobile devices), through Google Play and Amazon.com (for Android devices), and on the Windows Mobile Platform with anticipated support for Xbox Live, as a feature set. These aforementioned releases have begun to generate a degree of revenue for the Company. Our operations to date have been financed by Mr. Chiodo, our sole officer, and independent accredited investors who have entered into private finance transactions with us. The Company intends to focus its operational strategy on the development of product for a variety of hardware platforms: video game consoles (for example: Xbox 360 and PlayStation 3), mobile (for example: Apple iOS, Android devices, and Windows Phones), augmented reality/wearable tech devices (for example: HTC Vive, Vuzix-branded hardware, and Oculus Rift), and personal computers (for example: PC and Mac and browser applications such as Facebook). Our products are also anticipated to be released on portable video game consoles (for example: PlayStation Vita), which can be defined as residing in both the video game console and mobile hardware platform categories. Products will be designed for specific hardware platforms; not all products will be released on all hardware platforms. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price Per Share Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee (4) Common stock, $0.001 par value per share 20,000,000 (3) $ 0.0025 (2) $ 50,000.00 $ 5.81 (1) Estimated pursuant to Rule 457(a) of the Securities Act of 1933, as amended (the "Securities Act") solely for purposes of calculating the registration fee. (2) This offering price has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act with respect to the shares of common stock registered hereunder, based upon the price of $0.0025, which was the average of the high and low prices for the Company s common stock on July 16, 2015, as reported on the OTC Market Group, Inc. s OTC QB tier. (3) Represents the Initial Commitment Shares (and not the Aggregate Limit of shares of common stock of the registrant, as those terms are defined in the Purchase Agreement, as amended) of common stock issued or issuable by the registrant pursuant to the Common Stock Purchase Agreement between the registrant and Beaufort Capital Partners LLC, a New York limited liability company, dated February 11, 2015 and amended on June 19, 2015 (the "Purchase Agreement"). (4) Previously paid. In accordance with Rule 416(a) under the Securities Act, the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. WE HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL WE SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. The information in this prospectus (this "Prospectus") is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission (the "SEC") is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Most of the Company s products are expected to be digitally distributed (via download) through a "First Party" distribution store (for example: Facebook, Microsoft Corporation s Marketplace, Apple Inc. s App Store, Google s Google Play, etc.). Some of the Company s products may bear licensed-brands through which there is potential for exploitation via merchandising, cross-promotion and/or publicity tie-ins with its licensor, as well as within social media communities. Other Company products will be based on our internally generated and wholly owned intellectual properties. The Company s products are focused within three core areas: Licensed-brand games, internally-generated intellectual property ("IP") based games, and so-called "Pick-Ups." Pick-ups are games developed (and financed) by independent software developers located throughout the world. Oftentimes, these independent software developers are looking for a publishing partner such as the Company as they tend to: (i) lack the marketing/publicity infrastructure and relationships to properly bring a game to market, (ii) need to partner with a company in possession of platform-specific publishing licenses, and/or (iii) require some additional capital to complete the development cycle. The Company can acquire the games created by these independent software developers for either a flat fee or a combination of a flat fee and a small "back-end" royalty that is payable once the Company recoups its costs. Pick-ups could be beneficial for the Company as they represent products that can often be quickly brought to market and subsequently fill in the gaps between the releases of the "bigger" Licensed-Brand and internally-generated IP-based games. This allows the Company to establish a recurring release calendar that: (i) distributes revenues across a fiscal year and (ii) provides a steady stream of content for our users and games industry media to talk about, thus reinforcing our Soul and Vibe brand as a publishing label. It is anticipated that a large portion of the Company s product portfolio in fiscal year 2015 onward may be comprised of pick-up opportunities. We have sustained losses from operations in each fiscal year since our inception, and we expect these losses to continue for the indefinite future, due to our substantial investment in research and development, attorneys fees and expenses, and consultants fees. During the twelve months ended December 31, 2014, the Company realized a net loss of $2,121,633 compared with a net loss of $2,270,453 for year ended December 31, 2013. As of December 31, 2014, the Company had a working capital deficiency of $1,629,760 and a shareholder s deficit of $1,238,127. For the three months ended March 31, 2015, the Company realized net income of $157,447, as compared to net income of $551,359 for the three months ended March 31, 2014. As of March 31, 2015, the Company had a working capital deficiency of $1,183,732 and a shareholder s deficit of $793,038. Common Stock Purchase Agreement with Beaufort On February 11, 2015, we entered into the Purchase Agreement with Beaufort. The Purchase Agreement provides that, upon the terms and subject to the conditions in the Purchase Agreement, Beaufort is committed to purchase up to $2,000,000 of shares of Common Stock over the 36-month term of the Purchase Agreement, which we refer to as the Total Commitment and the number of shares issuable thereunder as the Total Commitment Shares, as such number shall be reduced as Draw Downs are made. From time to time over the 36-month term of the Purchase Agreement, commencing on the trading day immediately following the date on which the Registration Statement of which this Prospectus is a part is declared effective by the SEC, we may, in our sole discretion, provide Beaufort with a draw down notice (each, a "Draw Down Notice"), to purchase a specified number of the Total Commitment Shares (such number, the "Commitment Shares"), representing the Total Commitment divided by the per share purchase price, as described below (each, a "Draw Down Amount Requested"), subject to the limitations discussed below. The actual amount of proceeds we receive pursuant to each Draw Down Notice (each, a "Draw Down Amount") is to be determined by multiplying the Draw Down Amount Requested by the applicable purchase price. The purchase price of each Commitment Share equals 71% of the Market Price (as defined below) during the five consecutive trading days immediately preceding the date of the applicable Draw Down Notice. The "Market Price" is the average of the lowest trading prices of the Common Stock as reported by Bloomberg L.P. in the five (5) trading day period immediately preceding the date of the applicable Draw Down Notice. SUBJECT TO COMPLETION, DATED JULY 22, 2015 PROSPECTUS 20,000,000 Shares of Common Stock SOUL AND VIBE INTERACTIVE INC. This Prospectus relates to the offer and sale of up to 20,000,000 shares of common stock, par value $0.001 (the "Common Stock"), of Soul and Vibe Interactive Inc., a Nevada corporation, by Beaufort Capital Partners, LLC, a New York limited liability company ("Beaufort" or the "Selling Stockholder") identified on page 15 of this Prospectus. We are registering a total of 20,000,000 shares of Common Stock (the "Initial Commitment Shares"), which are issuable pursuant to the terms of the Purchase Agreement described in this Prospectus. The resale of such shares by Beaufort pursuant to this Prospectus is referred to herein as the "Offering." Provided that the Registration Statement of which this Prospectus forms a part is declared effective by the SEC, we may sell to the Investor a presently indeterminate number of shares from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Purchase Agreement. We are not selling any securities under this Prospectus and will not receive any of the proceeds from the sale of shares of Common Stock by the Selling Stockholder. We will, however, receive proceeds from the sale of shares directly to Beaufort pursuant to the Purchase Agreement. When we put an amount of shares to Beaufort, the per-share purchase price that Beaufort will pay to us in respect of the put will be equal to 71% of the average of the two lowest trading price of the Common Stock as reported by Bloomberg L.P. for the five (5) trading days immediately preceding the applicable draw down notice. The Selling Stockholder is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act. The Selling Stockholder may sell the shares of Common Stock described in this Prospectus in a number of different ways and at varying prices. See "Plan of Distribution" for more information about how the Selling Stockholder may sell the shares of Common Stock being registered pursuant to this Prospectus. Our Common Stock is currently quoted on the OTC Market Group, Inc. s OTC QB tier under the symbol "SOUL." On July 16, 2015, the last reported sale price of our Common Stock was $0.0025. Investing in our Common Stock involves a high degree of risk. See "Risk Factors" beginning on page 5 of this Prospectus. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is _________, 2015. If the Company were to draw down on the entire $2,000,000, then the Company would have to issue approximately 1,000,000,000 shares of common stock based upon an assumed purchase price under the Purchase Agreement of $0.0020 (equal to 71% of the closing price of our common stock of $0.0028 on July 16, 2015), representing approximately 89.4% of the outstanding common stock of the Company at the time the Company advances the maximum investment amount of $2,000,000 of shares of common stock. The current registration statement covers 20,000,000 shares of our Common Stock under the Purchase Agreement that would raise $56,000 assuming our Common Stock s closing bid price remains unchanged from its price as of July 16, 2015. In the event the price of our common stock price decreases, we may receive substantially less than $56,000. In that case, the Company may have to prepare and file one or more additional registration statements registering the resale of these shares if this registration statement is unable to cover the remaining amount of shares. These subsequent registration statements may be subject to review and comment by the staff of the SEC, and will require the consent of our independent registered public accounting firm. The maximum number of Commitment Shares requested to be purchased pursuant to any single Draw Down Notice cannot exceed the lesser of (i) 300% of the average daily share volume of the Common Stock in the five (5) trading days immediately preceding the Draw Down Notice, (ii) such number of shares as shall cause Beaufort to acquire or purchase an aggregate number of shares of common stock that would result in Beaufort beneficially owning more than 4.99% of the issued and outstanding shares of common stock, or (iii) the aggregate offering price or number of shares of Common Stock available for issuance under a registration statement (the "Maximum Draw Down Amount Requested"). If the price our common stock decreases, it is possible that we may be permitted to draw only a very limited amount in any drawdown request, which may not provide adequate funding for our planned operations and may materially decrease our liquidity. Analysis shows that an initial drawdown at current market prices will result in a drawdown of 5,890,878 shares of stock resulting in approximately $11,782 of actual available funds. In order to deliver a Draw Down Notice, certain conditions set forth in the Purchase Agreement must be met. In addition, we are prohibited from delivering a Draw Down Notice if: (i) the Draw Down Amount Requested in such Draw Down Notice exceeds the Maximum Draw Down Amount Requested; (ii) the sale of Commitment Shares pursuant to such Draw Down Notice would cause us to issue and sell to Beaufort or Beaufort to acquire or purchase a number of shares of Common Stock that, when aggregated with all shares of common stock purchased by Beaufort pursuant to all prior Draw Down Notices issued under the Purchase Agreement, would exceed the Total Commitment; or (iii) the sale of the Commitment Shares pursuant to the Draw Down Notice would cause us to issue and sell to Beaufort or Beaufort to acquire or purchase an aggregate number of shares of common stock that would result in Beaufort beneficially owning more than 4.99% of the issued and outstanding shares of common stock. The Purchase Agreement contains customary representations, warranties, and covenants by, among, and for the benefit of the parties. Unless earlier terminated, the Purchase Agreement will terminate automatically on the earlier to occur of: (i) the first day of the month next following the 36-month anniversary of the date on which the Registration Statement of which this Prospectus is a part becomes effective and (ii) the date on which Beaufort has purchased or acquired shares of our common stock pursuant to the Purchase Agreement equal to the Total Commitment. Under certain circumstances set forth in the Purchase Agreement, we and Beaufort each may terminate the Purchase Agreement on one trading day s prior written notice to the other, without fee, penalty, or cost. However, if we terminate the Purchase Agreement (i) after having drawn down no less than $500,000 in Commitment Shares, we must issue to the Investor 1,000,000 shares of our restricted common stock, and (ii) without having drawn down at least $500,000 in Commitment Shares, we must issue to the Investor 7,000,000 shares of our restricted common stock. The Purchase Agreement, as amended provides that Beaufort may terminate it if, in general: (i) this registration statement has not been declared effective within six (6) months of February 11, 2015, or we have materially breached the registration rights agreement; (ii) subject to certain circumstances, if the registration statement is unavailable to Beaufort for the resale of all of the common stock registered thereby, other than due to acts of Beaufort; (iii) trading in the common stock on the trading market for our shares shall have been suspended or delisted for more than an aggregate of 60 business days in any single year; (iv) we have filed for and/or are subject to any bankruptcy or similar proceedings or (v) we have materially breached the Purchase Agreement, provided, however, that in the case of each of (i) and (iv) above, each such event has occurred because of a failure on the Company s part. In lieu of terminating the Purchase Agreement, however, Beaufort will also have the ability to decline any Draw Down Notice delivered to it during the pendency of any event described immediately above. The Purchase Agreement will terminate if a Material Adverse Effect occurs. TABLE OF CONTENTS Page PART I - INFORMATION REQUIRED IN PROSPECTUS Prospectus Summary 1
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+OPERATION
+
+ 
+ 
+ 32
+ 
+
+ 
+ 
+
+DESCRIPTION OF BUSINESS
+
+ 
+ 
+ 43
+ 
+
+ 
+ 
+
+DESCRIPTION OF PROPERTY
+
+ 
+ 
+ 63
+ 
+
+ 
+ 
+
+MANAGEMENT
+
+ 
+ 
+ 63
+ 
+
+ 
+ 
+
+MANAGEMENT COMPENSATION
+
+ 
+ 
+ 67
+ 
+
+ 
+ 
+
+EQUITY COMPENSATION PLAN
+
+ 
+ 
+ 75
+ 
+
+ 
+ 
+
+CORPORATE GOVERNANCE
+
+ 
+ 
+ 77
+ 
+
+ 
+ 
+
+PRINCIPAL SHAREHOLDERS
+
+ 
+ 
+ 79
+ 
+
+ 
+ 
+
+DESCRIPTION OF SECURITIES
+
+ 
+ 
+ 80
+ 
+
+ 
+ 
+
+CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
+
+ 
+ 
+ 81
+ 
+
+ 
+ 
+
+MATERIAL AGREEMENTS
+
+ 
+ 
+ 84
+ 
+
+ 
+ 
+
+LEGAL PROCEEDINGS
+
+ 
+ 
+ 88
+ 
+
+ 
+ 
+
+CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
+
+ 
+ 
+ 89
+ 
+
+ 
+ 
+
+EXCHANGE CONTROLS
+
+ 
+ 
+ 89
+ 
+
+ 
+ 
+
+TAXATION
+
+ 
+ 
+ 89
+ 
+
+ 
+ 
+
+AVAILABLE INFORMATION
+
+ 
+ 
+ 98
+ 
+
+ 
+ 
+
+ENFORCEABILITY OF CIVIL LIABILITIES
+
+ 
+ 
+ 98
+ 
+
+ 
+ 
+
+DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
+LIABILITIES
+
+ 
+ 
+ 99
+ 
+
+ 
+ 
+
+LEGAL MATTERS
+
+ 
+ 
+ 99
+ 
+
+ 
+ 
+
+EXPERTS
+
+ 
+ 
+ 99
+ 
+
+ 
+
+ 
+
+5
+
+ 
+
+ 
+ 
+
+FINANCIAL STATEMENTS
+
+ 
+ 
+ 100
+ 
+
+ 
+ 
+
+PART II INFORMATION NOT REQUIRED
+IN PROSPECTUS
+ 
+ 211
+ 
+
+ 
+ 
+
+OTHER EXPENSES OF
+ISSUANCE AND DISTRIBUTION
+ 
+ 211
+ 
+
+ 
+ 
+
+INDEMNIFICATION OF DIRECTORS AND OFFICERS
+
+ 
+ 
+ 211
+ 
+
+ 
+ 
+
+RECENT SALES OF UNREGISTERED SECURITIES
+
+ 
+ 
+ 213
+ 
+
+ 
+ 
+
+UNDERTAKING
+
+ 
+ 
+ 219
+ 
+
+ 
+ 
+
+EXHIBITS
+
+ 
+ 
+ 220
+ 
+
+ 
+ 
+
+SIGNATURES
+
+ 
+ 
+ 222
+ 
+
+ 
+
+6
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001518165_soft_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001518165_soft_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..631cf98bf6c34f65acd90b46af714bd09163ef28
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001518165_soft_prospectus_summary.txt
@@ -0,0 +1,1199 @@
+PROSPECTUS SUMMARY
+
+6
+
+THE OFFERING
+
+8
+
+RISK FACTORS
+
+9
+
+FORWARD LOOKING STATEMENTS
+
+19
+
+USE OF PROCEEDS
+
+20
+
+DILUTION
+
+21
+
+DESCRIPTION OF SECURITIES
+
+22
+
+MARKET FOR OUR SECURITIES AND RELATED SHAREHOLDER MATTERS
+
+24
+
+OUR BUSINESS 
+
+26
+
+MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS
+
+37
+
+MANAGEMENT
+
+47
+
+EXECUTIVE COMPENSATION
+
+49
+
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+
+51
+
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+
+53
+
+PLAN OF DISTRIBUTION
+
+54
+
+LEGAL PROCEEDINGS
+
+57
+
+DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES
+
+57
+
+ADDITIONAL INFORMATION
+
+58
+
+FINANCIAL STATEMENTS
+
+66
+
+SIGNATURES
+
+99
+
+5
+
+We have not authorized any person to give you any supplemental information or to make any representations for us. You should not rely upon any information about our company that is not contained in this prospectus. Information contained in this prospectus may become stale. You should not assume that the information contained in this prospectus or any prospectus supplement is accurate as of any date other than their respective dates, regardless of the time of delivery of this prospectus, any prospectus supplement or of any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since those dates. 
+
+In this prospectus, Specialized laboratory testing the Company, we, us, and our refer to Soft Landing Labs Ltd., an Illinois corporation.
+
+ 
+
+PROSPECTUS SUMMARY
+
+ 
+
+This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including Risk Factors and the financial statements and the related notes before making an investment decision.
+
+ 
+
+You should carefully read all information in the prospectus, including the financial statements and their explanatory notes, under the Financial Statements prior to making an investment decision.
+
+The Company , us , we and our refer to Soft Landing Labs Ltd., an Illinois corporation.
+
+ 
+
+Company Organization
+
+ 
+
+We were incorporated in the State of Illinois on June 30, 2009 to provide specialized clinical laboratory toxicology testing, including drug and substance abuse testing, using advanced methodologies. Our customers are hospitals who pay us directly and, drug treatment facilities, physician s offices and other medical laboratories for whom we provide laboratory testing services for their patient and bill the patient s insurance company.
+
+Our principal executive office is located at 747 North Church Road, Suite F4, Elmhurst, IL 60126. Our telephone number is (630) 424-0030. Our website is www.softlandinglabs2.com and is not part of this prospectus.
+
+For the year ended December 31, 2013, and December 31, 2012, we have a net income (loss) of $252,079 and ($13,238), respectively. For the nine month period ending September 30, 2014, we have net income of $269,655. For the year ended December 31, 2013 and December 31, 2012, we had revenues of $2,539,630 and $1,289,199 respectively. For the nine months ending September 30, 2014, we had revenues of $2,374,603.
+
+Risk Factors
+
+ 
+
+Our ability to successfully operate our business and achieve our goals and strategies is subject to numerous risks including:
+
+ 
+
+The clinical laboratory testing industry is highly competitive and our competitors have greater resources and brand recognition than us. 
+
+6
+
+ 
+
+If reimbursement for our services by third party payors is reduced, our net revenues could diminish.
+
+ 
+
+A significant increase in the days billings that are outstanding could increase bad debt expense and have an adverse effect on our business.
+
+ 
+
+Failure to maintain the security of customer-related information could damage our reputation with customers and cause us to incur substantial additional costs and become subject to litigation.
+
+ 
+
+If we fail to keep up with technological advancements and fail to develop our services, we may be at a competitive disadvantage and our testing services may become less attractive or obsolete.
+
+ 
+
+Our business and testing services are subject to stringent laws and regulations and if we are unable to comply, our business may be significantly harmed.
+
+ 
+
+We must be able to adapt to rapidly changing technology trends and evolving industry standards or we risk our testing services becoming obsolete.
+
+ 
+
+Adverse publicity of our specialized laboratory testing services and any similar services offered by others could harm our reputation and adversely affect our revenues.
+
+ 
+
+Should we lose the services of our management, our financial condition will be negatively impacted.
+
+ 
+
+Our officers and directors have no experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting. 
+
+ 
+
+Because we do not have an audit or compensation committee, shareholders will be required to rely on the members of our board of directors, who are not independent, to perform these functions.
+
+ 
+
+The offering price of the common shares has been arbitrarily determined by us and bears no relationship to any criteria of value; as such, investors should not consider the offering price or value to be an indication of the value of the shares being registered.
+
+ 
+
+Our officers and directors have voting control over all matters submitted to a vote of our common stockholders, which will prevent our minority shareholders from having the ability to control any of our corporate actions.
+
+Emerging Growth Company
+
+ 
+
+We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
+
+ 
+
+ 
+
+The last day of our fiscal year during which we have had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
+
+ 
+
+The last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective IPO registration statement.
+
+ 
+
+The date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or
+
+ 
+
+The date on which we are deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
+
+7
+
+As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure and procedures for financial reporting.
+
+ 
+
+As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which requires the shareholder approval of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company.
+
+ 
+
+We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
+
+ 
+
+THE OFFERING
+
+ 
+
+Issuer
+
+ 
+Soft Landing Labs Ltd.
+
+Securities Offered by the Company
+
+ 
+
+$5,000,000
+
+Shares of Common Stock Outstanding Before the Offering
+
+ 
+6,479,739
+
+Total Common Shares Outstanding After the Offering Assuming the Sale of All Shares Being Offered Hereunder
+
+ 
+11,479,739
+
+Minimum Investment
+
+ 
+$10,000 or 10,0000 common shares
+
+Limited Public Market for the Common Shares
+
+ 
+Our common shares are quoted by the OTC Markets OTC Link with an OTC Pink tier under the symbol SLNZ . There is a limited trading market for our common shares
+
+Terms of the Offering
+
+ 
+We, through our officers and directors, will sell the Common Shares upon effectiveness of this registration statement.
+
+Use of Proceeds
+
+ 
+We plan to use the proceeds to expand our services into biomarker and gene testing. The proceeds of the Offering will be used for patent applications, instrumentation, hiring of chemists and scientists and other staff, increasing our sales force and marketing, research and development and working capital.
+
+Complete Description of Common Shares
+
+ 
+For a more complete description of the Common Shares, see Description of Securities on Page 22, hereof.
+
+8
+
+Financial Summary
+
+ 
+
+Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision. 
+
+Statement of Operations
+
+For the year ending
+
+December 31, 2012
+
+For the year ending December 31, 2013
+
+For the nine months ended September 30, 2014
+
+Revenues
+
+$
+
+1,289,199 
+
+$
+
+2,539,630 
+
+$
+
+2,374,603 
+
+Total Operating Expense
+
+$
+
+1,218,376 
+
+$
+
+1,898,172 
+
+$
+
+1,850,645 
+
+Income From Operations
+
+$
+
+70,823 
+
+$
+
+641,458 
+
+$
+
+523,958 
+
+Other Income (Expenses)
+
+($54,326)
+
+($44,902)
+
+($20,492)
+
+Income Tax Expense
+
+$
+
+29,725 
+
+$
+
+344,477 
+
+$
+
+233,811 
+
+Net Income ( loss)
+
+($13,328)
+
+$
+
+252,079 
+
+$
+
+269,655 
+
+ 
+
+ 
+ 
+ 
+
+Balance Sheet
+
+ 
+ 
+ 
+
+Total Assets
+
+$
+
+751,379 
+
+$
+
+1,640,069 
+
+$
+
+2,181,248 
+
+Total Liabilities
+
+$
+
+658,933 
+
+$
+
+824,928 
+
+$
+
+971,452 
+
+Retained Earnings (Deficit)
+
+($32,679)
+
+$
+
+219,400 
+
+$
+
+489,055 
+
+Stockholders Equity
+
+$
+
+92,446 
+
+$
+
+815,141 
+
+$
+
+1,209,796 
+
+Total Liabilities and Stockholders' Equity
+
+$
+
+751,379 
+
+$
+
+1,640,069 
+
+$
+
+2,181,248 
+
+ 
+
+Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision.
+
+RISK FACTORS
+
+ 
+
+You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are not historic facts are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment.
+
+9
+
+Risks Related to Our Financial Condition
+
+ 
+
+Expenses required to operate as a public company will reduce funds available to develop our business and could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
+
+Operating as a public company is more expensive than operating as a private company, including additional funds required to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements. We anticipate that the cost of SEC reporting will be approximately $60,000 annually. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition. If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities on the OTC Markets OTC Link, or, if we have secured a qualification, we may lose the qualification and our securities would no longer trade on the OTC Markets OTC Link. Further, if we fail to meet these obligations and consequently fail to satisfy our SEC reporting obligations, investors will then own stock in a company that does not provide the disclosure available in quarterly, annual reports and other required SEC reports that would be otherwise publicly available leading to increased difficulty in selling their stock due to our becoming a non-reporting issuer. 
+
+Risks Related to Our Business
+
+The clinical laboratory services industry is highly competitive. 
+
+We compete in a fragmented and highly competitive industry. Our major competitors include Quest Diagnostics Incorporated, Laboratory Corporation of America Holdings as well as the testing units of other clinical laboratories, including independent laboratories, specialized laboratories, and in-house testing facilities maintained by hospitals. Many of our competitors have substantially greater financial and other resources than we do. The laboratory toxicology and drug testing industry is consolidating. The consolidation is being driven by the larger laboratories whose greater resources enable them to be more responsive and better able to increase operating efficiencies in the form of critical mass (testing volumes) and required investment levels. In light of these forces, we face an increasing challenge to differentiate ourselves through our technology and value-added services, such as data management, collection site management, training and technical support and expertise. If we are unsuccessful in these differentiation efforts, we may experience declining revenues and gross margins, and reduced cash flows.
+
+If reimbursement for our services by third party payors is reduced, our net revenues could diminish.
+
+Third party payors, including state payors and Medicare, are challenging the prices charged for medical services including clinical laboratory testing. Third party payors may limit both coverage and the level of reimbursement for our services. A portion of the testing for which we bill our hospital and laboratory clients is ultimately paid by third party payors. Any pricing pressure exerted by these third party payors on our customers may, in turn, be exerted by our customers on us. If government and other third party payors do not provide adequate coverage and reimbursement for our services, our net revenues could decline. If we cannot offset additional reductions in the payments we receive for our services by reducing costs, increasing test volume and/or introducing new procedures, our net revenues and profitability could decline. Health care reform changes in government reimbursement could also reduce our net revenues.
+
+10
+
+A significant increase in the billings we have outstanding could increase bad debt expense and have an adverse effect on our business.
+
+Our revenues are billed to our hospital customers, patients and third-party payors, including insurance companies and Medicaid and Medicare agencies. The increase is a result of growth in our clinical laboratory. Billing to third party payors is complex and is subject to extensive and non-uniform rules and administrative requirements. It is subject to risks including delayed reimbursement, difficulties in gathering complete and accurate billing information, inabilities to collect and long collection cycles. Failure to timely or correctly bill may lead to our not being reimbursed for our services or an increase in the aging of our accounts receivable, which could adversely affect our results of operations and cash flows. In addition, we are experiencing more billing to patients. Patient billing is increasing as a result of the growth in patient copayments, coinsurance and deductibles and an increase in high deductible health plans. Patient billings are subject to the risk of difficulties in gathering accurate billing information, inabilities to collect and long collection cycles which also could adversely affect our results of operations and cash flows. We believe our allowance for contractuals and doubtful accounts is adequate. However, we cannot assure that our ongoing assessment of accounts receivable will not result in the need for additional provisions, which would adversely affect our results of operations and cash flows.
+
+We could face significant monetary damages and penalties and/or exclusion from the Medicare and Medicaid programs if we violate health care anti-fraud and abuse laws.
+
+We are subject to extensive government regulation at the federal, state and local levels. Our failure to meet governmental requirements under these regulations, including those relating to billing practices and relationships with physicians and hospitals, could lead to civil and criminal penalties, exclusion from participation in Medicare and Medicaid and possible prohibitions or restrictions on the use of our laboratory. While we believe that we conduct our operations and relationships with care in an effort to meet all statutory and regulatory requirements, there is a risk that government authorities might take a contrary position. Such occurrences, regardless of their outcome, could damage our reputation and adversely affect important business relationships we have with third parties.
+
+Failure to maintain the security of customer-related information could damage our reputation with customers and cause us to incur substantial additional costs and become subject to litigation.
+
+We receive certain personal information about our customers. In addition, we depend upon the secure transmission of confidential information over public networks, including information permitting cashless payments. A compromise in our security systems that results in customer personal information being obtained by unauthorized persons could adversely affect our reputation with our customers and others, as well as our results of operations, financial condition and liquidity. It could also result in litigation against us or the imposition of penalties.
+
+11
+
+If we fail to keep up with technological advancements and fail to develop our testing services, we may be at a competitive disadvantage and our testing services may become less attractive or obsolete.
+
+The continuing changes in modern biotechnology could render our services as unmarketable or obsolete. These changes come in the form of technological innovation, changes in customer requirements, declining prices and evolving industry requirements. Historically, our product and service obsolescence has not had a material impact on our profitability. New services, as well as new technology, may render existing technology services obsolete, or too costly and unmarketable. If we do not commit the resources necessary to develop and sell testing services incorporating new technologies as demanded by our markets, our services may be rendered obsolete, impacting our revenues and profitability. Even with the development of new technologically advanced services, we cannot assure you that they will gain market acceptance. Lack of market acceptance for any of our services could reduce our revenues and negatively affect our profitability.
+
+Our business is subject to stringent laws and regulations and if we are unable to comply, our business may be significantly harmed.
+
+Our testing services are subject to the regulations of a number of governmental agencies as listed in Business under the heading Regulation . We cannot predict whether future changes in governmental regulations might significantly increase compliance costs or adversely affect the time or cost required to develop and introduce new services. If we do not comply with existing or additional laws or regulations, or if we incur penalties and fines, it could increase our expenses, prevent us from increasing net revenues, or hinder our ability to conduct our business.
+
+We may be exposed to liability claims.
+
+We are exposed to the risk of liability claims from our testing services and other aspects of our business. We currently maintain insurance to cover professional and general liability claims. In the past, all professional and general liability claims have been covered under our insurance policy. However, in the future, we may be faced with litigation claims which exceed our insurance coverage or are not covered under our insurance policy, which could have a significant impact on our results of operations and financial condition.
+
+We may have liability for claims not covered by our insurance policies.
+
+We face financial exposure to product liability claims if the use of our testing services results in an improper diagnosis. We maintain liability insurance in the amount of $1,000,000 per occurrence. Potential product liability claims may exceed the amount of our insurance coverage or may be excluded from coverage under the terms of our insurance policy. We currently maintain insurance to cover such product liability claims. To the extent any such claim is uncovered or our insurance coverage is inadequate, we could be required to pay any and all costs associated with such claim, the cost of defense whatever the outcome of the action, and possible settlement or damages if a court rendered a judgment in favor of any plaintiff asserting such claim against us. Damages assessed in connection with, and the costs of defending, any legal action could be substantial. Damages may include punitive damages, which may substantially exceed actual damages. The obligation to pay such damages could exceed our ability to pay such damages, which could have a significant impact on our results of operations and financial condition.
+
+12
+
+If our tests and business processes infringe on the intellectual property rights of others, we could be forced to engage in costly litigation, pay substantial damages or be prohibited from providing our services.
+
+Other companies or individuals, including our competitors, may obtain patents or other property rights that would prevent, limit or interfere with our ability to develop, perform or provide our testing services. As a result, we may be involved in intellectual property litigation and we may be found to infringe on the proprietary rights of others, which could force us to do one or more of the following:
+
+ 
+
+cease developing, performing our testing services that incorporate the challenged intellectual property;
+
+ 
+
+change our business processes; or
+
+ 
+
+pay substantial damages, court costs and attorneys' fees, including potentially increased damages for any infringement held to be willful.
+
+Infringement and other intellectual property claims, regardless of their merit, can be expensive and time consuming to litigate. In addition, any requirement to reengineer our business processes could substantially increase our costs, force us to interrupt product sales or delay new test releases. In the past, we have not been subject to a dispute regarding infringement of intellectual property of third parties. 
+
+Adverse results in material litigation matters could have a material adverse effect upon our business.
+
+We may become subject in the ordinary course of business to material legal action related to, among other things, professional liability and employee-related matters, as well as inquiries from governmental agencies and Medicare or Medicaid carriers regarding billing issues. Legal actions could result in substantial monetary damages as well as damage to our reputation with customers, which could have a material adverse effect upon our business.
+
+We must be able to adapt to rapidly changing technology trends and evolving industry standards or we risk our services becoming obsolete.
+
+The specialized laboratory testing market in which we compete is characterized by intensive development efforts and rapidly advancing technology. Our future success will depend, in large part, upon our ability to anticipate and keep pace with advancing technology and competing innovations. We may not be successful in identifying, developing and marketing new services or enhancing our existing services. 
+
+Adverse publicity of our specialized laboratory testing services could harm our reputation and adversely affect our revenues.
+
+ 
+
+We believe we are highly dependent upon positive consumer perceptions of the reliability of our specialized laboratory testing as well as similar testing services distributed by other companies. Consumer perception of the reliability of specialized laboratory testing can be substantially influenced by scientific research or findings, national media attention and other publicity about the use of our services. Adverse publicity from these sources regarding the reliability, quality or efficacy of our testing services could harm our reputation and results of operations. The mere publication of news articles or reports asserting that specialized laboratory testing is not reliable for the purposes intended could have a material adverse effect on our business, financial condition and results of operations, regardless of whether such news articles or reports are scientifically supported.
+
+13
+
+We rely on intellectual property, which we may not be able to protect fully or effectively.
+
+We rely on trade secret rights, employee confidentiality agreements and non-disclosure agreements in order to develop and protect our proprietary technology and information. Notwithstanding our efforts to protect our proprietary rights, existing trade secret, copyright, and trademark laws afford only limited protection. Despite our efforts to protect our proprietary rights and other intellectual property, unauthorized parties may attempt to copy certain aspects of our testing services, obtain and use information that we regard as proprietary or misappropriate our trademarks, trade names and similar proprietary rights. Our means of protecting our proprietary rights may not be adequate. In addition, our competitors might independently develop similar technology or duplicate our testing procedures and other intellectual property rights.
+
+Risks Related To Our Management
+
+Should we lose the services of our management, our financial condition may be negatively impacted.
+
+ 
+
+Our future depends on the continued contributions of Dr. Abdel Fahmy, our chief executive officer and director and Kareem Fahmy, our chief operating officer and director, who would each be difficult to replace. Their services are critical to the management of our business and operations. We do not maintain key man life insurance on any of our officers or directors. Should we lose the services of any of our officers and directors, we may be unable to replace their services with equally competent and experienced personnel, our operational goals and strategies may be adversely affected, which will negatively affect our potential revenues.
+
+Because our management consists of family relationships and our management has outside business interests, there may be conflicts of interests that may not be resolved in our favor.
+
+Our chief executive officer and director, Dr. Abdel Fahmy is the brother of our chief operating officer and director, Kareem Fahmy. Their family relationships in the conduct of our business may come into conflict with our interests and those of our minority stockholders. You should carefully consider these potential conflicts of interest before deciding whether to invest in our common stock shares. We have not yet adopted a policy for resolving these conflicts of interests. 
+
+Dr. Abdel Fahmy dedicates approximately 32 hours to our business each week and Kareem Fahmy dedicates full time service to our business. Our Chief Executive Officer, Dr. Abdel Fahmy found and is the executive director of Soft Landing Interventions Ltd., an addiction treatment medical practice where he provides part time service.
+
+Accordingly, the personal interests of our chief executive officer may come into conflict with our interests and those of our minority stockholders. We may present Dr. Fahmy with business opportunities which are simultaneously desired. Additionally, we may compete for time, investment capital, technical resources, key personnel, management time and other things in the future. You should carefully consider these potential conflicts of interest before deciding whether to invest in our shares of our common stock. We have not yet adopted a policy for resolving such conflicts of interests. 
+
+14
+
+Our officers and directors have no experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting. 
+
+We have never operated as a public company and our management has no experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations, which are required for a public company that is reporting company with the SEC. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected.
+
+We will incur additional costs and management time related expenses pertaining to SEC reporting obligations and SEC compliance matter and our management has no experience in such matters.
+
+ 
+
+Our management is responsible for managing us, including compliance with SEC reporting obligations and maintaining disclosure controls and procedures and internal control over financial reporting. These public reporting requirements and controls are new to these individuals and at times will require us to obtain outside assistance from legal, accounting or other professionals that will increase our costs of doing business. Should we fail to comply with SEC reporting and internal controls and procedures, we may be subject to securities law violations that may result in additional compliance costs or costs associated with SEC judgments or fines, each of which would increase our costs and negatively affect our potential profitability and our ability to conduct our business.
+
+Because we do not have an audit or compensation committee, shareholders will be required to rely on the members of our board of directors, who are not independent, to perform these functions.
+
+ 
+
+We do not have an audit or compensation committee or board of directors as a whole that is composed of independent directors. Because our directors are also our officers and controlling shareholders, they are not independent. There is a potential conflict between their or our interests and our shareholders interests, since our directors are also our officers who will participate in discussions concerning management compensation and audit issues that may affect management decisions. Until we have an audit committee or independent directors, there may be less oversight of management decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority shareholders.
+
+We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
+
+ 
+
+We are an "emerging growth company," as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed $1,000,000,000, if we issue more than $1,000,000,000 in non-convertible debt in a 
+
+15
+
+three year period, or if the market value of our common stock held by non-affiliates exceeds $100,000,000 as of any April 30 before that time, in which case we would no longer be an emerging growth company as of the following April 30. We cannot predict whether investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+
+ 
+
+We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
+
+Risks Related to Our Common Stock
+
+ 
+
+The offering price of the common shares has been arbitrarily determined by us and bears no relationship to any criteria of value; as such, investors should not consider the offering price or value to be an indication of the value of the shares being registered.
+
+The offering price for the common shares being registered has been arbitrarily determined by us and is not based on assets, operations, book or other established criteria of value. Thus, investors should be aware that the offering price does not reflect the market price or value of our common shares.
+
+Our officers and directors have voting control over all matters submitted to a vote of our common stockholders, which will prevent our minority shareholders from having the ability to control any of our corporate actions.
+
+ 
+
+As of the date of this prospectus, we had 6,479,739 shares of common stock outstanding, each entitled to one vote per common share, and 1,000 shares of preferred stock, each entitled to 50,000 votes per share. Our chief executive officer and director, Dr. Abdel Fahmy, controls 2,937,300 common shares and 600 preferred shares. Kareem Fahmy, our chief operating officer and director, controls 1,937,300 common shares and 400 preferred shares. As such, the aggregate number of common shares controlled by our management effectively entitles them to vote approximately 89% of our outstanding common shares on all matters submitted to a vote of our common stockholders. As a result, our management has the ability to determine the outcome of all matters submitted to our stockholders for approval, including the election of directors. Our management s control of our voting securities may make it impossible to complete some corporate transactions without its support and may prevent a change in our control. In addition, this ownership could discourage the acquisition of our common stock by potential investors and could have an anti-takeover effect, possibly depressing the trading price of our common stock.
+
+We are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
+
+The SEC has adopted regulations which generally define so-called penny stocks to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a penny stock , and is subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule . This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser 
+
+16
+
+and have received the purchaser s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our common shares and may affect the ability of purchasers to sell any of our common shares in the secondary market.
+
+ 
+
+For any transaction (other than an exempt transaction) involving a penny stock, the rules require delivery, prior to such transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made regarding sales commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
+
+ 
+
+Our common stock does not qualify for exemption from the Penny Stock Rule. In any event, even if our common stock is exempt from the Penny Stock Rule in the future, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
+
+Sales of our common stock under Rule 144 could reduce the price of our stock.
+
+ 
+
+We presently have 6,479,739 common shares outstanding. Of these shares, 1,605,139 common shares are held by non-affiliates and 4,874,600 common shares are held by affiliates, which Rule 144 of the Securities Act of 1933 defines as restricted securities. 1,355,139 of our outstanding shares held by non-affiliates are eligible for resale under Rule 144 and 4,874,600 held by affiliates are available for resale in reliance upon Rule 144.
+
+ 
+
+If we are not required to continue filing reports under Section 15(d) of the Securities Exchange Act of 1934 in the future, for example because we have less than three hundred shareholders of record at the end of the first fiscal year in which this registration statement is declared effective, and we do not file a Registration Statement on Form 8-A, our common shares (if listed or quoted) would no longer be eligible for quotation, which could reduce the value of your investment.
+
+ 
+
+As a result of this offering as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission as required under Section 15(d). However, if in the future we are not required to continue filing reports under Section 15(d), for example because we have less than three hundred shareholders of record at the end of the first fiscal year in which this registration statement is declared effective, and we do not file a Registration Statement on Form 8-A upon the occurrence of such an event, our common stock can no longer be quoted on the OTC Markets OTC Link, which could reduce the value of your investment. Of course, there is no guarantee that we will be able to meet the requirements to be able to cease filing reports under Section 15(d), in which case we will continue filing those reports in the years after the fiscal year in which this registration statement is declared effective. Filing a registration statement on Form 8-A will require us to continue to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity. Thus the filing of a Form 8-A in such event makes our common shares continued to be able to be quoted on the OTC Markets OTC Link.
+
+17
+
+We may, in the future, issue additional securities, which would reduce investors percent of ownership and may dilute our share value.
+
+ 
+
+Our Articles of Incorporation authorize us to issue 50,000,000 shares of common stock and 1,000 shares of preferred stock. As of the date of this prospectus, we had 6,479,739 shares of common stock outstanding. Accordingly, we may issue up to an additional 43,520,261 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis including for services or acquisitions or other corporate actions that may have the effect of diluting the value of the shares held by our stockholders, and might have an adverse effect on any trading market for our common stock. Our board of directors may designate the rights, terms and preferences of our authorized but unissued preferred shares at its discretion including conversion and voting preferences without notice to our shareholders.
+
+We will be subject to the 15(d) reporting requirements under the Securities Exchange Act of 1934, upon effectiveness of this registration statement which does not require a company to file all the same reports and information as a fully reporting company.
+
+ 
+
+Upon effectiveness of this registration statement, we will be subject to the 15(d) reporting requirements according to the Securities Exchange Act of 1934. We are required to file the necessary reports in the fiscal year that the registration statement is declared effective. After that fiscal year and provided that we have less than 300 shareholders, we are not required to file these reports. If the reports are not filed, the investors will have reduced information about us including about our business, plan of operations and financial condition. In addition, as a filer subject to Section 15(d) of the Exchange Act, we are not required to prepare proxy or information statements; our common stock will not be subject to the protection of the going private regulations; we will be subject to only limited portions of the tender offer rules; our officers, directors, and more than ten (10%) percent shareholders are not required to file beneficial ownership reports about their holdings of our common shares; that these persons will not be subject to the short-swing profit recovery provisions of the Exchange Act; and that more than five percent (5%) holders of classes of your equity securities will not be required to report information about their ownership positions in the securities.
+
+There is no assurance of a public market or that our common stock will ever trade on a recognized stock exchange. Therefore, you may be unable to liquidate your investment in our stock.
+
+ 
+
+There is no established public trading market for our common stock even though our common shares are quoted on the OTC Markets OTC Link. There can be no assurance that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.
+
+Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase our common stock.
+
+We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Our payment of any future dividends will be at the sole discretion of our board of directors after considering whether we have generated sufficient revenues, our financial condition, operating results, cash needs, growth plans and other factors. Accordingly, investors that are seeking cash dividends should not purchase our common stock.
+
+18
+
+As an issuer of penny stock the protection provided by the federal securities laws relating to forward looking statements does not apply to us.
+
+Although the federal securities law provides a safe harbor for forward looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, if we are a penny stock we will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.
+
+FORWARD LOOKING STATEMENTS
+
+ 
+
+Some of the statements in this prospectus are forward looking statements. These forward looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward looking statements. These factors include, among others, the factors set forth above under Risk Factors . The words believe, expect, anticipate, intend, plan, and similar expressions identify forward looking statements. We caution you not to place undue reliance on these forward looking statements. We undertake no obligation to update and revise any forward looking statements or to publicly announce the result of any revisions to any of the forward looking statements in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.
+
+19
+
+USE OF PROCEEDS
+
+This is a best efforts offering. Assuming we sell the maximum number of shares, we will receive net proceeds of approximately $4,920,000 after the deduction of offering expenses of $80,000. We plan to use the proceeds of the Offering to expand our testing services to include biomarker and gene testing. The summary of the use of proceeds is shown below:
+
+Allocation of funds
+
+ 
+
+ 
+
+ 
+
+Amount raised
+
+$420,000 
+
+$2,420,000 
+
+$4,920,000
+
+% of Total Offering
+
+10%
+
+50%
+
+100%
+
+ 
+
+ 
+
+ 
+
+ 
+
+Allocation
+
+ 
+
+ 
+
+ 
+
+ Patent application for discovered biomarkers
+
+$50,000
+
+$50,000
+
+$50,000
+
+Purchase instruments to conduct genetic testing and biomarker development lab & develop software to translate findings to clinical data health care providers can use
+
+$120,000
+
+$750,000
+
+ $750,000
+
+ Hire chemists, scientists & staff
+
+$120,000
+
+$360,000
+
+ $360,000
+
+ Operational expense and raw materials
+
+$80,000
+
+$540,000
+
+ $900,000
+
+Expand laboratory space-annual cost - this includes, reagents which is the most expensive par, fume hoods, disposables and other necessary lab equipment) 
+
+ 
+$100,000
+
+$100,000
+
+Research and development partners in order to validate the role of biomarker in the diagnosis of disease multi-center clinical trials and research with universities is necessary
+
+ 
+$450,000
+
+$500,000
+
+Website development/Social Network sites for the biomarkers to market to consumers
+
+ 
+$60,000
+
+$120,000
+
+Third party researchers and consultants
+
+ 
+
+$60,000
+
+$250,000
+
+Marketing materials (print material, like brochures, flyers, catalogs and other marketing tools)
+
+ 
+
+ 
+
+$150,000
+
+Sales force to educate health care providers, administrators and insurance companies on how these would improve quality of health care or reduce cost)
+
+ 
+
+ 
+
+ $1,000,000
+
+Working capital
+
+$50,000
+
+$50,000
+
+$740,000(1)
+
+Total
+
+$420,000
+
+$2,420,000
+
+$4,920,000
+
+We estimate that if the Food and Drug Administration ( FDA ) approval is required for our biomarker gene testing services, the cost could be as much as $500,000, which will reduce the amount allocated for working capital. 
+
+The above amounts and priorities for the use of proceeds represent management's estimates based upon current conditions. While we currently intend to use the proceeds of this offering substantially in the manner set forth above, we reserve the right to reassess and reassign such use if, in the judgment of our board of directors, such changes are necessary or advisable. Such changes could include costs associated with obtaining FDA approval of our proposed biomarker and gene testing methods.
+
+20
+
+DILUTION
+
+The following information is based upon the Company s unaudited balance sheet for the nine month period ended September 30, 2014, the net tangible book value of the Company s assets as of September 30, 2014 is $1,209,796.
+
+ 
+
+ Dilution as used herein represents the difference between the offering price per share of shares offered hereby and the net tangible book value per share of the Company s common stock after completion of the offering. Dilution in the offering is primarily due to the losses previously recognized by the Company.
+
+ 
+
+The net tangible book value of the Company at September 30, 2014, was $1,209,796 or $0.19 per share. Net tangible book value represents the amount of total tangible assets less total liabilities. Assuming that all of the shares offered hereby were purchased by investors (a fact of which there can be no assurance) as of September 30, 2014, the then outstanding 6,479,739 shares of common stock plus the 5,000,000 assumed shares sold or 11,479,739 common shares, which would constitute all of the issued and outstanding equity capital of the Company, would have a net tangible book value $6,129,796 (after deducting commissions and offering expenses) or approximately $0.54 per share. 
+
+ 
+
+We determine dilution by subtracting the adjusted net tangible book value per share after this offering from the public offering price per share of our common stock. The following items influence the dilution in net tangible book value per share to new investors:
+
+ 
+
+ASSUMING 5,000,000 OF THE SHARES OFFERED ARE SOLD
+
+ 
+
+Public offering price per share: 
+
+$1.00
+
+Net tangible book value per share as of September 30, 2014
+
+$0.19
+
+Increase per share attributable to sale of common stock to investors
+
+$0.35
+
+Dilution per share to investors
+
+$0.46
+
+Dilution as a percentage of the offering price
+
+46%
+
+Net tangible book value
+
+ 
+
+ 
+
+September 30, 2014
+
+Offering
+
+Post-offering
+
+Net tangible book value
+
+$1,209,796.00
+
+$4,920,000.00
+
+$6,129,796.54
+
+Common Shares outstanding
+
+6,479,739
+
+5,000,000 
+
+11,479,739
+
+ Net tangible book value/per share
+
+$0.19
+
+$0.35
+
+$0.54
+
+Initial dilution to new shareholders
+
+ 
+ 
+$0.46
+
+ 
+
+ASSUMING 2,500,000 OF THE SHARES OFFERED ARE SOLD
+
+ 
+
+Public offering price per share: 
+
+$1.00
+
+Net tangible book value per share as of September 30, 2014
+
+$0.19
+
+Increase per share attributable to sale of common stock to investors
+
+$0.22
+
+Dilution per share to investors
+
+$0.59
+
+Dilution as a percentage of the offering price
+
+59%
+
+21
+
+ Net tangible book value
+
+ 
+
+ 
+
+September 30, 2014
+
+Offering
+
+Post-offering
+
+Net tangible book value
+
+ $1,209,796.00
+
+$2,420,000.00
+
+$3,629,796.00
+
+Common Shares outstanding
+
+ 6,479,739
+
+ 2,500,000 
+
+8,979,739
+
+ Net tangible book value/per share
+
+$0.19
+
+$0.22
+
+$0.41
+
+Initial dilution to new shareholders
+
+ 
+ 
+ $0.59
+
+ASSUMING 500,000 OF THE SHARES OFFERED ARE SOLD
+
+ 
+
+Public offering price per share: 
+
+$1.00
+
+Net tangible book value per share as of September 30, 2014
+
+$0.19
+
+Increase per share attributable to sale of common stock to investors
+
+$0.05
+
+Dilution per share to investors
+
+$0.76
+
+Dilution as a percentage of the offering price
+
+76%
+
+Net tangible book value
+
+ 
+
+ 
+
+September 30, 2014
+
+Offering
+
+Post-offering
+
+Net tangible book value
+
+$1,209,796
+
+$420,000
+
+$1,629,796.00
+
+Common Shares outstanding
+
+ 6,479,739
+
+ 5,000,000
+
+6,979,739
+
+Net tangible book value/per share
+
+ $0.19
+
+$0.05 
+
+$0.24
+
+Initial dilution to new shareholders
+
+ 
+ 
+$0.76
+
+DESCRIPTION OF SECURITIES
+
+ 
+
+The following description is a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws. Our Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.
+
+ 
+
+Authorized Capital Stock
+
+Our authorized stock consists of 50,000,000 shares of common stock, with $0.000001 par value and 1,000 shares of preferred stock with $0.001 par value. There are currently 6,479,739 shares of common stock issued and outstanding and 1,000 shares of preferred stock outstanding. Dr. Abdel Fahmy, our chief executive officer and director holds 600 shares and Kareem Fahmy, our chief operating officer and director holds 400 shares of our Series A Preferred Stock.
+
+22
+
+Common Stock
+
+Each share of our common stock entitles its holder to one vote in the election of each director and on all other matters voted on generally by our stockholders, other than any matter that (1) solely relates to the terms of any outstanding series of preferred stock or the number of shares of that series and (2) does not affect the number of authorized shares of preferred stock or the powers, privileges and rights pertaining to the common stock. No share of our common stock affords any cumulative voting rights. This means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors to be elected if they choose to do so.
+
+Holders of our common stock will be entitled to dividends in such amounts and at such times as our board of directors in its discretion may declare out of funds legally available for the payment of dividends. We currently intend to retain our entire available discretionary cash flow to finance the growth and development of our business and do not anticipate paying any cash dividends on the common stock in the foreseeable future. Any future dividends will be paid at the discretion of our board of directors after taking into account various factors, including:
+
+ 
+
+general business conditions;
+
+ 
+
+industry practice;
+
+ 
+
+our financial condition and performance;
+
+ 
+
+our future prospects;
+
+ 
+
+our cash needs and capital investment plans;
+
+ 
+
+our obligations to holders of any preferred stock we may issue;
+
+ 
+
+income tax consequences; and
+
+ 
+
+the restrictions Illinois and other applicable laws and our credit arrangements then impose.
+
+If we liquidate or dissolve our business, the holders of our common stock will share ratably in all our assets that are available for distribution to our stockholders after our creditors are paid in full and the holders of all series of our outstanding preferred stock, if any, receive their liquidation preferences in full.
+
+Our common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase fund.
+
+Preferred Stock
+
+ 
+
+We are authorized to issue 1,000 shares of Series A Preferred Stock, par value of $.001 per share (the Preferred Stock ). On January 30, 2015, we issued 600 Series A Preferred Shares to Dr. Abdel Fahmy, our Chief Executive Officer and Director and 400 Series A Preferred Shares to Kareem Fahmy, our Chief Operating Officer and Director. Both before and after the issuance of the Series A Preferred Shares they had the ability to collectively determine the outcome of all matters submitted to our stockholders.
+
+Each one (1) share of Series A Preferred Stock shall vote together with our common as a single class. Each one (1) share of Series A Preferred Stock is entitled to 50,000 votes per share on all matters submitted to a vote of our stockholders. As such, the 1,000 shares held by Dr. Abdel Fahmy and Kareem Fahmy provide them with 50,000,000 votes which enable them to determine the outcome of all matters submitted to a vote of our common stockholders.
+
+23
+
+The holders of the outstanding shares of Series A Preferred Stock are not entitled to receive dividends. The Series A Preferred Stock is not convertible. The shares are redeemable at the price of $1.00 per share upon the request of the holder. The preferred shares have a stated value of $1.00 per share.
+
+MARKET FOR OUR SECURITIES AND RELATED SHAREHOLDER MATTERS
+
+Our common stock has been trading on the OTC Markets OTC Link under the symbol SLNZ since April 4, 2014. The OTC Markets OTC Link is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter, or the OTC, equity securities. Generally, this includes any equity that is not listed or traded on a national securities exchange. The following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the OTC Link quotation service. These bid prices represent prices quoted by broker-dealers on the OTC Link quotation service. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions.
+
+ 
+
+Price Range of Common Stock
+
+ 
+
+The following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the OTC quotation service. These bid prices represent prices quoted by broker-dealers on the OTC quotation service. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions. 
+
+ 
+Fiscal December 31, 2014
+
+ 
+
+High
+
+Low
+
+Second Quarter (April 1 June 30)
+
+$0.925
+
+$0.35
+
+Third Quarter (July 1- September 30)
+
+$0.67
+
+$0.50
+
+Fourth Quarter (October 1- December 31)
+
+$0.52
+
+$0.35
+
+Holders
+
+As of the date of this registration statement, we had 48 shareholders of our common stock.
+
+Transfer Agent and Registrar
+
+VStock Transfer is currently the transfer agent and registrar for our common stock. VStock Transfer s address is 18 Lafayette Place, Woodmere, NY 11598. Its phone number is (212) 828-8436. Its email is info@vstocktransfer.com. 
+
+Dividends
+
+ 
+
+Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our board of directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our board of directors may deem relevant.
+
+24
+
+Securities Authorized for Issuance under Equity Compensation Plans
+
+We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our shareholders to do so.
+
+Penny Stock Considerations
+
+ 
+
+Our shares will be "penny stocks", as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
+
+ 
+
+Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.
+
+In addition, under the penny stock regulations, the broker-dealer is required to:
+
+ 
+
+Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
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+Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
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+Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value, and information regarding the limited market in penny stocks; and
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+Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.
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+Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of investors to sell their shares in the secondary market, and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities. 
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+Sales of Our Common Stock Under Rule 144
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+We presently have 6,479,739 common shares outstanding. Of these shares, 1,605,139 common shares are held by non-affiliates and 4,874,600 common shares are held by affiliates, which Rule 144 of the Securities Act of 1933 defines as restricted securities. 1,355,139 of our outstanding shares held by non-affiliates are eligible for resale under Rule 144 and 4,874,600 held by affiliates are available for resale in reliance upon Rule 144.
+
+25
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+The non-affiliate shares and the affiliates shares are subject to the resale restrictions of Rule 144. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
+
+Where You Can Find Additional Information
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+We have filed with the Securities and Exchange Commission a registration statement on
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not intended to be complete and does not contain all of the information that you should consider before deciding to invest in our securities. We urge you to read this entire prospectus carefully, especially the "Risk Factors" section beginning on page 7. Except where the context requires otherwise, in this prospectus the terms "Company," "XRpro" "we," "us" and "our" refer to XRpro Sciences, Inc., a Delaware corporation. Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented on a pro forma basis to reflect the reverse stock split of our outstanding shares of Common Stock par value $0.001 per share (the "Common Stock") at a ratio of 1-for-2 that we effected on March 25, 2015. Company Overview We use proprietary x-ray fluorescence technology called XRpro to deliver ion channel screening, transporter screening, ion channel kinetics and custom screening services to our customers. Our proprietary technology is designed to detect and quantitatively analyze the x-ray signature of each element with an atomic number greater than 12, we combine the flexibility of the analysis with patented sample processing to address a wide range of ion channel and other biological targets. We believe that our technology can reduce the cost of drug discovery by detecting safety and efficacy issues at an early stage of development. To date, substantially all of our revenue has been derived from our analytical services that we have performed for United States governmental agencies. However, we expect that our revenue will be derived from (i) provision of our analytical drug discovery services to commercial customers as well as United States governmental agencies; (ii) leasing of our technology and sale of our consumables; and (iii) commercialization of new drug candidates that we identify using the XRpro drug discovery instruments. Since inception, we have financed our operations primarily through private sales of our securities, revenue derived from our analytical services that we have performed for United States governmental agencies and settlement of legal matters. We expect to continue to seek to obtain our required capital through the private sale of securities and revenue derived for the services we provide. To date, we have been granted twenty (20) contracts from United States governmental agencies; of which nine (9) were granted from the Department of Defense and eleven (11) were granted from the National Institutes of Health. Of such contracts, eighteen (18) have been completed and we received payment in full for all eighteen (18) completed contracts. All the contracts contained standard terms, including termination provisions which allow for the government to terminate the contract, in whole or in part, at any time for convenience. In that event, the government agency concerned would notify us of their intention to terminate, and all costs incurred in our performance of the work terminated will be recoverable and we will have no refund obligations for our research conducted to the date of termination. The contracts also contain Bayh-Dole and related provisions for disposition of intellectual property. The Bayh-Dole Act allows small businesses, such as ours, to retain title to federally funded inventions if we follow certain procedures, including filing for patent protection and actively pursuing commercialization of the invention, and the U.S. government retains a non-exclusive, non-transferable, paid up irrevocable license, throughout the world, with respect to the invention. In addition, the U.S. government also retains a "march in" right that allows it to license the invention to third parties, without our consent, if it determines that the invention is not being made available to the public on a reasonable basis. Set forth below are the details of the firm - fixed price contract under which we are continuing to provide services to the National Institutes of Health under which we expect to receive an additional $825,000 for our services. Contract 2R44AI079935-03 with the National Institutes of Health; to develop strontium-selective therapies, contract amount: $3,000,000.00 operative from August 24, 2011 to July 31, 2014, approximately $2,775,000 paid to date, $225,000 remaining in contract. $2,000,000 of the grant was awarded for the period August 24, 2011 to July 31, 2013. An additional $1,000,000 was made available for us to invoice our project time and expenses against on July 9, 2013, initially expiring on July 31, 2014 and recently extended until July 31, 2015. To date we have received $775,000 under this contract and we have $225,000 remaining under the contract. Contract number 1R43AI091186-01A1 with the National Institutes of Health; to develop Radioactive Cesium decorporation Agents, contract amount of $600,000 operative from July 1, 2014 to June 30, 2016. No funds have been received under this contract as work on the project is only expected to commence in 2015. TABLE OF CONTENTS Recent Events Financing On January 31, 2015, in accordance with the terms of the various exchange agreements (the "Series B Preferred Stock Exchange Agreements") entered into between us, and the holders of our outstanding Series B Preferred Stock, each holder of Series B Preferred Stock exchanged all of their shares of Series B Preferred Stock for the number of shares of our Common Stock, determined by dividing the sum of the amount of the holder s initial investment in the Series B Preferred Stock, plus all accrued and unpaid dividends owed to the holder, by $1.75. All 2,133,947 outstanding shares of our Series B Preferred Stock, including accrued and unpaid dividends thereon, were exchanged for approximately 1,803,803 (3,607,591 shares prior to the reverse stock split) shares of the Common Stock, resulting in no shares of Series B Preferred Stock remaining outstanding. In addition, on January 31, 2015, we entered into: (i) exchange agreements (the "Series B Preferred Stock and Warrant Exchange Agreements") with the holders of the warrants that were issued as part of the private placement of the Series B Preferred Stock (the "Existing Series B Warrants") to exchange both Series B Preferred Stock for Common Stock and their Existing Series B Warrants, (ii) exchange agreements (the "Bridge Warrant Exchange Agreements") with the holders (the "Bridge Warrant Holders") of our warrants that were issued in connection with our bride note financing (the "Existing Bridge Warrants"), and (iii) exchange agreements (the "Placement Agent Exchange Agreements") with Taglich Brothers, Inc. and its designees (the "Placement Agent Warrant Holders") that were issued warrants as compensation for the placement agent services provided in connection with the private placement of the Series B Preferred Stock (the "Existing Placement Agent Warrants"). The Existing Series B Warrants, the Existing Bridge Warrants and the Existing Placement Agent Warrants are collectively referred to as the "Existing Warrants". Pursuant to the terms of the Bridge Warrant Exchange Agreements, the Series B Preferred Stock and Warrant Exchange Agreements and the Placement Agent Exchange Agreements, the Existing Bridge Warrants, the Existing Series B Warrants and the Existing Placement Agent Warrants were exchanged for new warrants (the "Series B Exchange Warrants," the "Bridge Exchange Warrants" and the "Placement Agent Exchange Warrants"), which have substantially similar terms to the Existing Warrants except that: (i) the exercise price of the Series B Exchange Warrants, the Bridge Exchange Warrants and the Placement Agent Exchange Warrants are 30% less than the exercise price of the Existing Warrants for which they were exchanged (such that: (x) the Bridge Exchange Warrants have an exercise price of $4.20 ($2.10 prior to the reverse stock split); (y) the Placement Agent Exchange Warrants have an exercise price of $3.85 ($1.925 prior to the reverse stock split); and (z) the Series B Exchange Warrants have an exercise price of $3.50 ($1.75 prior to the reverse stock split)); (ii) the Bridge Exchange Warrants, the Series B Exchange Warrants and the Placement Agent Exchange Warrants do not contain anti-dilution price protection for issuances of securities at per share prices that are lower than the exercise price; (iii) the Bridge Exchange Warrants, the Series B Exchange Warrants and the Placement Agent Exchange Warrants are assignable by their holders; and (iv) the Bridge Exchange Warrants, the Series B Exchange Warrants and the Placement Agent Exchange Warrants provide for certain buy-in-rights in the event that we fail to deliver shares of Common Stock underlying the warrant in a timely manner. On December 31, 2014, we sold in a private placement offering (the "Private Placement") 716,981 units at a per unit price of $7.00, each unit (the "Units") consisting of four shares of Common Stock, prior to the reverse stock split and a five year warrant (the "Private Placement Warrants") to acquire one half of one share of Common Stock (post-split) at an exercise price of $3.50 ($1.75 pre-split) per share, to accredited investors for aggregate cash proceeds of $5,018,867 pursuant to a master purchase agreement entered into with the investors (the "Purchase Agreements"). On January 7, 2015, we consummated the second closing in the Private Placement and sold an additional 548,019 Units for additional aggregate cash proceeds of $3,836,133. The aggregate total number of Units sold in both closings was 1,265,000 Units, prior to the reverse stock split, for total gross proceeds of $8,855,000. The aggregate number of shares of Common Stock issued and Private Placement Warrants issued in the Private Placement resulted in the issuance of approximately 2,530,000 shares of Common Stock and warrants exercisable for 632,531 shares of Common Stock, after rounding up each fractional share or warrant and after giving effect to the reverse stock split. In connection with the Private Placement, we have agreed to prepare and file a registration statement with the SEC for the resale by the purchasers of all of the Common Stock and the Common Stock underlying the Private Placement Warrants and all shares of Common Stock issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect thereto. In addition, we agreed to register the shares of Common Stock underlying the Placement Agent Warrants. On March 6, 2014, we and Dr. Benjamin Warner entered into a confidential settlement agreement with Los Alamos National Security LLC ("LANS"), The Regents of the University of California, the UChicago Argonne, LLC and certain individuals (the "Parties") relating to the following: (i) a lawsuit, Caldera Pharmaceuticals, Inc. v. The Regents of the University of California, et al., Case No. CGC-07-470554, brought in the Superior Court of the State of California, County of San Francisco; (ii) a lawsuit, Caldera Pharmaceuticals, Inc. v. Los Alamos National Security, LLC, et al., Case No. 1:10-cv-06347, brought in the United States District Court for the District of New Mexico; and (iii) a lawsuit, Caldera Pharmaceuticals, Inc. v. The Regents of the University of California, et al., Case No. 2011-L-9329, brought in the Circuit Court of Cook County, Illinois, County Department – Law Division and dismissed without prejudice on or about July 26, 2013 (collectively the "Actions"). The agreement called for the Parties to: (i) mutually release each other from all existing, past, present or future claims, counter-claims, demands and causes of action; (ii) amend our license agreement with LANS, to include rights to certain issued and pending patents; (iii) return of 78,750 (157,500 prior to the reverse stock split) shares of our Common Stock; and (iv) pay us $7,000,000, which resulted in a cash settlement of approximately $5,852,000 after the deduction of initial legal expenses with total expenses still pending. TABLE OF CONTENTS On July 5, 2013, we entered into a fee agreement with Dentons US LLP ("Dentons"), our previous legal counsel, which called for a payment of 50% of any settlement up to $6 million and 5% thereafter. The agreement also called for Dentons to cooperate with us by making its partners and/or employees available to furnish information or reasonable assistance in connection with any future disqualification proceedings, as reasonably requested by us. Subsequent to signing the agreement, we determined that Dentons had egregiously breached this cooperation clause. As a result, we have suffered significant harm. We further believe that due to Dentons breach of its contract with us, Dentons is not owed any amount under the breached agreement and we are also considering our legal remedies in regard to the harm we have suffered. There is no certainty as to how Dentons will respond to our claims or to the ultimate amount that we may collect from or have to pay to Dentons. Scientific Advantages of XRpro The pharmaceutical industry uses assays to measure the properties of experimental medicines. XRpro allows previously unavailable or unacceptably expensive assays to be performed at high-throughput scales at a price that is acceptable to customers and premium relative to other high throughput assays. XRpro assays include: Ion Channel Assays, for cardio toxicity and pain management; Transporter assays for several proprietary co-transporter assays; Binding assays for kinase-ATP disease models; Binding assays in complex matrices; Additional proprietary assays commissioned by clients Some key features of XRpro include: Direct label-free measurements. This feature reduces assay development times, allows measurement of previously difficult or unfeasible assays, and allows significant cost reductions compared to other technology options that our clients might have. Assay durability. We are able to provide services to clients in a model that allows them to protect their compound intellectual property. This distinguishes our assay service. Assay performance. We have demonstrated that our assays meet client performance requirements for accuracy and precision. Our XRpro technology uses advances in X-ray fluorescence. Each chemical element emits X-ray photons with a characteristic energy. We exploit this effect and have applied it to drug discovery. By taking a single spectrum, within a few seconds we can simultaneously measure all elements with an atomic number greater than 12 (Al and higher). This enables us to qualitatively and quantitatively interrogate many aspects of cell biology: Ions important for measuring ion channels and transporters (Rb + , Zn ++ , Ca ++ , K + , etc.) Transition metal- and nucleotide-based cofactors Kinase and phosphatase activity (by monitoring P and S) HTS of peptides and proteins Drugs containing a halogen or other heteroatom History XRpro, formerly known as Caldera, was founded by Dr. Benjamin Warner in 2003 at the request of the then director of Los Alamos National Laboratory ("LANL") for the purpose of commercializing previous work done by Dr. Warner at LANL regarding the use of x-ray fluorescence to measure the chemical composition of pharmaceuticals. Dr. Warner earned his PhD in Chemistry from the Massachusetts Institute of Technology ("MIT") in 1995. After MIT, Dr. Warner joined LANL where he held various positions including the position of Project Leader for National Security Programs from 2000 until 2004. While at LANL, Dr. Warner patented through the auspices of the University of California (then the manager of LANL) his improvement to x-ray fluorescence technology that allowed it to be used to measure nanograms of material. This improvement made x-ray fluorescence economically feasible to measure the chemical composition of pharmaceuticals. Dr. Warner has won numerous awards from LANL for his commercialization and patenting work, including the Distinguished Licensing Award, the Distinguished Entrepreneurial Award, the Distinguished Patent Award, and the Federal Laboratory Consortium Distinguished Service Award. Jointly with LANL, XRpro won the 2007 Federal Laboratory Consortium Award for Excellence in Technology Transfer and an R&D 100 Award. XRpro has won multiple Technology Ventures Corporation awards for top technology companies in New Mexico. TABLE OF CONTENTS LANL is a United States Department of Energy national laboratory. LANL is managed and operated by Los Alamos National Security, LLC (LANS), a private limited liability company formed by the University of California, Bechtel, Babcock & Wilcox Technical Services, and URS Energy and Construction. LANL is one of the largest science and technology institutions in the world. It conducts multidisciplinary research in national security, space exploration, renewable energy, medicine, nanotechnology, supercomputing and other disciplines. LANL s mission is to develop and apply science and technology to ensure the safety, security, and reliability of the U.S. nuclear deterrent; reduce global threats; and solve other emerging national security challenges. LANL is the largest institution in Northern New Mexico with more than 9,000 employees plus approximately 650 contractor personnel and an annual budget of approximately $2.2 billion. On December 2, 2014, we filed a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to change our name to XRpro Sciences, Inc. effective December 4, 2014. On March 25, 2015, we effected a 1-for-2 reverse stock split of our Common Stock. Our principal offices are located at One Kendall Square, Suite B2002, Cambridge, Massachusetts 02139, and our telephone number at that office is (617) 631-8825. We maintain an Internet website at www.xrpro.com. Neither this website nor the information on this website is included or incorporated in, or is a part of, this prospectus or any supplement to the prospectus. TABLE OF CONTENTS THE OFFERING Issuer XRpro Sciences, Inc. Securities offered This prospectus covers the sale of up to 2,069,525 shares of Common Stock, of which 1,555,602 shares are currently outstanding, 388,923 shares are issuable upon exercise of warrants issued in our private placement and 125,000 shares are issuable upon exercise of warrants and options issued to consultants for consulting services. Common Stock to be outstanding on the date hereof 6,373,707 shares Use of Proceeds We will not receive proceeds from the sale or other disposition of the shares of Common Stock covered by this prospectus. However, we will receive net proceeds of any warrants and options exercised (unless the warrants and options are exercised on a cashless basis). See "Use of Proceeds". Risk Factors You should carefully read and consider the information set forth under "Risk Factors," together with all of the other information set forth in this prospectus, before deciding to invest in shares of our Common Stock. The number of shares of Common Stock outstanding is based on 6,373,707 shares outstanding as of April 1, 2015 and excludes 2,146,970 shares of Common Stock issuable upon the exercise of warrants with a weighted average exercise price of $4.28 per share; 980,952 shares of Common Stock issuable upon the exercise of options with a weighted average exercise price of $3.82 per share; and 519,048 additional shares of Common Stock reserved for future issuance under our equity incentive plans. We effected a 1-for-2 reverse stock split on March 25, 2015. Unless we indicate otherwise, all references to numbers of shares of Common Stock in this prospectus reflect the effects of this reverse stock split. TABLE OF CONTENTS RISK FACTORS Investing in our Common Stock involves a high degree of risk, and you should be able to bear the complete loss of your investment. You should carefully consider the risks described below, and the other information in this prospectus when evaluating our company and our business. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our Common Stock could decline and investors could lose all or a part of the money paid to buy our Common Stock. RISKS RELATING TO OUR BUSINESS Risks Related to the Company We have a history of losses and there can be no assurance that we will generate or sustain positive earnings. For the year ended December 31, 2014 we had a net income of $49,517, primarily due to the settlement of the LANS matter, discussed above, and for the year ended December 31, 2013, we had a net loss of $(3,694,786). We cannot be certain that our business strategy will ever be successful. Future revenues and profits, if any, will depend upon various factors, including the success, if any, of our expansion plans for the lease of our instruments and services to biotechnical and pharmaceutical customers, marketability of our instruments and services, our ability to maintain favorable relations with manufacturers and customers, and general economic conditions. There is no assurance that we can operate profitably or that we will successfully implement our plans. There can be no assurance that we will ever generate positive earnings. Substantially all of our net revenue has been generated from services provided to governmental agencies. If such agencies were to terminate their existing agreement with us or no longer continue to use our services, our net revenue and results of operations would be adversely affected. To date we have derived substantially all of our revenue from services we performed for two governmental agencies. For the year ended December 31, 2014, the majority of our revenue was generated from government contacts (84%), and the remaining 16% was generated from commercial contracts recently undertaken; and for the year ended December 31, 2013, substantially all of our revenue was derived from two different research projects for the same two governmental agencies. For the year ended December 31, 2012 substantially all of our revenue was derived from three different research projects for the same two governmental agencies. For the year ended December 31, 2011, ninety six percent (96%) of our revenue was derived from six different research projects for the same two governmental agencies. As of the date hereof we have two existing contracts with the National Institutes of Health ("NIH") pursuant to which we are continuing to perform services. We were awarded a $1,000,000 grant from the NIH on August 24, 2011 which was fully utilized and expired on July 31, 2012. An additional $1,000,000 was made available for us to invoice our project time and expenses against on August 2, 2012 which was fully utilized and expired on July 31, 2013, a further $1,000,000 (of which we have received $775,000 to date) was made available to us on July 9, 2013 for the period August 1, 2013 to July 2014, recently extended to July 2015, depending on availability of government funding and satisfactory progress made on the project. However, under NIH policies the contracts can be terminated in whole or in part by the government for convenience at any time and in such case we would be entitled to payment of our costs incurred in the performance of the work terminated. If there were to be a decline in the demand for our services from governmental agencies, or the two governmental agencies from which we have received funding were required to reduce spending, our net revenue would be significantly impacted, which would negatively affect our business, financial condition and results of operations and may affect our ability to continue operations. We were awarded Contract number 1R43AI091186-01A1 with the National Institutes of Health; to develop Radioactive Cesium decorporation Agents on June 23, 2014 for an amount of $600,000 operative from July 1, 2014 to June 30, 2016. No funds have been received under this contract as work on the project is only expected to commence in 2015. If we cannot establish profitable operations, we will need to raise additional capital to fully implement our business plan, which may not be available on commercially reasonable terms, or at all, and which may dilute your investment. We generated a net income of $49,517 for the year ended December 31, 2014 primarily due to the settlement of the LANS matter as discussed above. We incurred a net loss of $(3,694,786) for the year ended December 31, 2013. Achieving and sustaining profitability will require us to increase our revenues and manage our product, operating and administrative expenses. We cannot guarantee that we will be successful in achieving profitability. If we are unable to generate sufficient revenues to pay our expenses and our existing sources of cash and cash flows are otherwise insufficient to fund our activities, we will need to raise additional funds to continue our operations at their current level and in order to fully implement our business plan. We do not have any commitments in place for additional funds. If needed, additional funds may not be available on favorable terms, or at all. As of the date hereof, we expect that our current cash and revenues generated from services, our private placement financings and the settlement of the LANS litigation will provide us with enough funds to continue our operations at our current level for at least an additional 12 months. Unless we raise additional funds or increase revenues we will be forced to curtail our operations, limit our marketing expenditures and concentrate solely on our government contracting services. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we are unsuccessful in achieving profitability and we cannot obtain additional funds on commercially reasonable terms or at all, we may be required to curtail significantly or cease our operations, which could result in the loss of all of your investment in our stock. TABLE OF CONTENTS We may not be able to utilize our tax net operating loss carry-forwards to offset future taxable income. At December 31, 2014 we had approximately $5,523,000 in tax net operating loss carry-forwards available to offset future taxable income, thereby potentially reducing our future tax expense/liabilities. However, these tax net operating loss carry-forwards may be limited in accordance with IRC Section 382 following a more than 50 percentage point change in ownership, in aggregate during any three year look-back period. This potential limitation on our ability to use our tax net operating loss carry-forwards to offset future taxable income could result in increased tax expense/liabilities and decreased net earnings. These loss carry-forwards expire through 2034 if unused. There is uncertainty as to market acceptance of our technology and products. Our business has been solely dependent upon revenue derived from government agencies for services performed by us. We have derived only minimal revenue from the provision of our analyses services to biotech and pharmaceutical companies and there can be no assurance that the future revenue received from these customers will increase. Although our XRpro instruments is commercially available, we have not yet leased our XRpro instruments to third parties nor have any drug candidates that we discover while conducting our chemical analyses been approved by the FDA or commercialized from our technology. There can be no assurance that our XRpro instruments will be accepted in the market or that our commercialization efforts will be successful. The life sciences research instrumentation market is characterized by rapid technological change and frequent new product introductions. Our future success may depend on our ability to enhance our current products and to develop and introduce, on a timely basis, new products that address the evolving needs of our customers. We may experience difficulties or delays in our development efforts with respect to new products and the provision of our services, and we may not ultimately be successful in developing or commercializing them, which would harm our business. Any significant delay in releasing products or providing services could cause our revenues to suffer, adversely affect our reputation, give a competitor a first-to-market advantage or cause a competitor to achieve greater market share. In addition, our future success depends on our continued ability to develop new applications for our existing products and continuing to provide our current services. If we are not able to complete the development of these applications, or if we experience difficulties or delays, we may lose our current customers and may not be able to attract new customers, which could seriously harm our business and our future growth prospects. We rely heavily on a single source for a major part of our product, and the partial or complete loss of this supplier could cause customer supply or production delays and a substantial loss of revenues. We rely on one outside vendor to manufacture substantial portions of critical hardware that will be used with or included in our XRpro instruments. We have an agreement with our equipment supplier for an indefinite period of time to develop a product that incorporates our technology with a product already produced by them. Our agreement provides that we will not develop, manufacture, or distribute products that compete directly or indirectly with the product that is supplied by them and incorporated into the XRPro instruments during the term of the agreement and for a period of three years subsequent to the termination of the agreement if we should terminate the agreement for any reason. Our agreement may be terminated by either party without cause upon six months prior written notice. Our supplier is located in Berlin, Germany and its ability to perform the agreement will be affected by the quality controls in Germany, which may be different than those in the United States, as well as the regional or worldwide economic, political or governmental conditions. Disruptions in international trade and finance or in transportation may have a material adverse effect on our business, financial condition and results of operation. Any significant disruption in our operations for any reason, such as regulatory requirements, scheduling delays, quality control problems, loss of certifications, power interruptions, fires, hurricanes, war or threats of terrorism, labor strikes, contract disputes, could adversely affect our sales and customer relationships. There can be no assurances that a third party contract manufacturer will be able to meet the design specifications of our technology. Our reliance on one manufacturer is expected to continue and involve several other risks including limited control over the availability of components, delivery schedules, pricing and product quality. We may experience delays, additional expenses and lost sales because of our dependency upon a single manufacturer. Although we have no reason to believe that our supplier will be unable to supply us with needed products, if they were to be unable to supply us with adequate equipment in a timely manner, or if we are unable to locate a suitable alternative supplier or at favorable terms, our business could be materially adversely impacted. While we believe alternative manufacturers exist, we have not specifically identified any alternative manufacturer and may not be able to replace our equipment supplier if we need to in a timely fashion. TABLE OF CONTENTS Our reliance on a sole supplier involves several risks, including the following: our supplier of required parts may cease or interrupt production or otherwise fail to supply us with an adequate supply of required parts for a number of reasons, including contractual disputes with our supplier or adverse financial developments at or affecting the supplier; we have reduced control over the pricing of third party-supplied materials, and our supplier may be unable or unwilling to supply us with required materials on commercially acceptable terms, or at all; we have reduced control over the timely delivery of third party-supplied materials; and our supplier may be unable to develop technologically advanced products to support our growth and development of new systems. In addition, in the event of a breach of law by our equipment supplier or a breach of a contractual obligation that has an adverse effect upon our operations, we will have little or no recourse because all of our manufacturer s assets are located in Germany. In addition, it may not be possible to effect service of process in Germany and uncertainty exists as to whether the courts in Germany would recognize or enforce judgments of U.S. courts obtained against a German company. We must expend a significant amount of time and resources to develop new products, and if these products do not achieve commercial acceptance, our operating results may suffer. We expect to spend a significant amount of time and resources to develop new products and refine existing products, and have spent significant time and money developing our XRpro instruments. We commenced development of our XRpro instruments in the year 2006 and since then have developed four enhanced versions of our original instrument; each enhancement was developed over an approximate two year period of time. We enhance our XRpro instruments on a regular basis, including recent improvements to the throughput capabilities of the instrument, increasing production efficiency. We may also be required to make modifications or enhancements at the request of our customers. Our research and development expense for the year ended December 31, 2014 was approximately $309,747, most of which was used to develop assays for commercial applications. In light of the long product development cycles inherent in our industry, any developmental expenditure will typically be made well in advance of the prospect of deriving revenues from the sale of new products. Our ability to commercially introduce and successfully market new products will be subject to a wide variety of challenges during this development cycle that could delay introduction of these products. In addition, since our potential customers are not expected to be obligated by long-term contracts to purchase our products, our anticipated product orders may not materialize, or orders that do materialize may be canceled. As a result, if we do not achieve market acceptance of new products, our operating results will suffer. Our products may also be priced higher than competitive products, which may impair commercial acceptance. We cannot predict whether new products that we expect to introduce will achieve commercial acceptance. Our limited marketing capability may limit our ability to gain commercial acceptance of our XRpro instrument and cause our future operating results to suffer. Our future operating results will suffer if our products do not achieve commercial acceptance. Our ability to gain commercial acceptance of our XRpro product will be limited by our marketing capability. We have recently increased our financial resources, and intend improving our sales efforts by hiring appropriate resources on our XRpro products and our marketing efforts. We have not sold or leased any XRpro instruments and to date no one other than us has used the XRpro instrument to perform analytical services. Our Chief Scientific Officer beneficially owns a substantial portion of our outstanding Common Stock, which may limit your ability and the ability of our other stockholders, whether acting alone or together, to propose or direct the management or overall direction of our company. The concentration of ownership of our stock could discourage or prevent a potential takeover of our company that might otherwise result in an investor receiving a premium over the market price for his shares. Our Chief Scientific Officer beneficially owns 1,752,403 shares of our Common Stock, representing 27.0% of our outstanding shares of Common Stock. In addition, our directors as a group beneficially own 3,069,288 shares of our Common Stock, representing 43.2% of our outstanding shares of Common Stock. Accordingly, our Chief Scientific Officer alone and together with our directors would have significant influence over the election of our directors and the approval of actions for which the approval of our stockholders is required. If you acquire shares of our securities, you may have no effective voice in the management of our Company. Such significant influence over control of our Company may adversely affect the price of our Common Stock. Our principal stockholder may be able to significantly influence matters requiring approval by our stockholders, including the election of directors, as well as mergers or other business combinations which require the vote of a majority of our outstanding shares. Such significant influence may also make it difficult for our stockholders to receive a premium for their shares of our Common Stock in the event we merge with a third party or enter into different transactions which require stockholder approval. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock. TABLE OF CONTENTS If we deliver products or services with defects, our credibility will be harmed and the sales and market acceptance of our products will decrease. Our products and services are complex and may at times contain errors, defects and bugs when introduced. If in the future we deliver products or services with errors, defects or bugs, our credibility and the market acceptance and sales of our products would be harmed. Further, if our products or services contain errors, defects or bugs, we may be required to expend significant capital and resources to alleviate such problems. Defects could also lead to product liability as a result of product liability lawsuits against us or against our customers. We may agree to indemnify our customers in some circumstances against liability arising from defects in our products or services. In the event of a successful product liability claim, we could be obligated to pay significant damages. Most of our potential customers are from the pharmaceutical and biotechnology sector and are subject to risks faced by those industries. We expect to derive a significant portion of our future revenues from sales to customers in the pharmaceutical and biotechnology sector, which includes governments and private companies. As a result, we will be subject to risks and uncertainties that affect the pharmaceutical and biotechnology industries, such as availability of capital and reduction and delays in research and development expenditures by companies in these industries, pricing pressures as third-party payers continue challenging the pricing of medical products and services, government regulation, and the uncertainty resulting from technological change. In addition, our future revenues may be adversely affected by the ongoing consolidation in the pharmaceutical and biotechnology industries, which would reduce the number of our potential customers. Furthermore, we cannot assure you that the pharmaceutical and biotechnology companies that may be our customers will not develop their own competing products or capabilities, or choose our competitors technology instead of our technology. Many of our current and potential competitors have significantly greater resources than we do, and increased competition could impair sales of our products and services. We operate in a highly competitive industry and face competition from companies that design, manufacture and market instruments for use in the life sciences research industry, from genomic, pharmaceutical, biotechnology and diagnostic companies and from academic and research institutions and government or other publicly-funded agencies, both in the United States and elsewhere. We may not be able to compete effectively with all of these competitors. Many of these companies and institutions have greater financial, engineering, manufacturing, marketing and customer support resources than we do. As a result, our competitors may be able to respond more quickly to new or emerging technologies or market developments by devoting greater resources to the development, promotion and sale of products, which could impair sales of our products. Moreover, there has been significant merger and acquisition activity among our competitors and potential competitors. These transactions by our competitors and potential competitors may provide them with a competitive advantage over us by enabling them to rapidly expand their product offerings and service capabilities to meet a broader range of customer needs. Many of our potential customers are large companies that require global support and service, which may be easier for our larger competitors to provide. We believe that competition within the markets we serve is primarily driven by the need for innovative products that address the needs of customers. We attempt to counter competition by seeking to develop new products and provide quality, cost-effective products and services that meet customers needs. We cannot assure you, however, that we will be able to successfully develop new products or that our existing or new products and services will adequately meet our potential customers needs. Rapidly changing technology, evolving industry standards, changes in customer needs, emerging competition and frequent new product and service introductions characterize the markets for our products. To remain competitive, we may be required to develop new products and periodically enhance our existing products in a timely manner. We may face increased competition as new companies enter the market with new technologies that compete with our products and future products, and our services and future services. We cannot assure you that one or more of our competitors will not succeed in developing or marketing technologies products or services that are more effective or commercially attractive than our products or future products, or our services or future services, or that would render our technologies and products obsolete or uneconomical. Our future success will depend in large part on our ability to maintain a competitive position with respect to our current and future technologies, which we may not be able to do. In addition, delays in the launch of our new products or the provision of our services may result in loss of market share due to our customers purchases of competitors products or services during any delay. We depend on our key personnel, the loss of whom would impair our ability to compete. We are highly dependent on the employment services of key management, engineering and scientific staff. The loss of the service of any of these persons could seriously harm our product development and commercialization efforts. In addition, research, product development and commercialization will require additional skilled personnel in areas such as chemistry and biology, and software and electronic engineering and recruitment and retention of personnel, particularly for employees with technical expertise, is uncertain. If we are unable to hire, train and retain a sufficient number of qualified employees, our ability to conduct and expand our business could be seriously reduced. The inability to retain and hire qualified personnel could also hinder the planned expansion of our business and may result in us relocating some or all of our operations. TABLE OF CONTENTS We have initiated and may in the future need to initiate lawsuits to protect or enforce our patents, which would be expensive and, if we lose, may cause us to lose some of our intellectual property rights, which would reduce our ability to compete in the market. Our success will depend in part upon protecting our technology from infringement, misappropriation, duplication and discovery, and avoiding infringement and misappropriation of third party rights. We intend to rely, in part, on a combination of patent and contract law to protect our technology in the United States and abroad. The risks and uncertainties that we face with respect to our patents and other proprietary rights include the following: the pending patent applications we have filed or to which we have exclusive rights may not result in issued patents or may take longer than we expect to result in issued patents; the claims of any patents which are issued may not provide meaningful protection; we may not be able to develop additional proprietary technologies that are patentable; the patents licensed or issued to us or our customers may not provide a competitive advantage; other companies may challenge patents licensed or issued to us or our customers; patents issued to other companies may harm our ability to do business; other companies may independently develop similar or alternative technologies or duplicate our technologies; and other companies may design around the technologies we have licensed or developed. There can be no assurance that any of our patent applications or licensed patent applications will issue or that any patents that may issue will be valid and enforceable. We may not be successful in securing or maintaining proprietary patent protection for our products and technologies that we develop or license. In addition, our competitors may develop products similar to ours using methods and technologies that are beyond the scope of our intellectual property protection, which could reduce our anticipated sales. While some of our products have proprietary patent protection, a challenge to these patents can subject us to expensive litigation. Litigation concerning patents, other forms of intellectual property, and proprietary technology is becoming more widespread and can be protracted and expensive and distract management and other personnel from performing their duties. We also rely upon trade secrets, unpatented proprietary know-how, and continuing technological innovation to develop a competitive position. If these measures do not protect our rights, third parties could use our technology, and our ability to compete in the market would be reduced. In addition, employees, consultants and others who participate in the development of our products may breach their agreements with us regarding our intellectual property, and we may not have adequate remedies for the breach. We also may not be able to effectively protect our intellectual property rights in some foreign countries and our trade secrets may become known through other means not currently foreseen by us. We cannot assure you that others will not independently develop substantially equivalent proprietary technology and techniques or otherwise gain access to our trade secrets and technology, or that we can adequately protect our trade secrets and technology. There can be no assurance that third parties will not assert infringement or other claims against us with respect to rights to any of our products. Litigation to protect and defend the rights to our licensed technology or to determine the validity of any third party claims could result in significant expense to us and divert the efforts of our technical and management personnel, whether or not such litigation is determined in our favor. If we determine that additional rights are necessary for the development of our product(s) and further determine that a license to additional third party rights is needed, there can be no assurance that we can obtain a license from the relevant party or parties on commercially reasonable terms, if at all. We could be sued for infringing patents or other intellectual property that purportedly cover products and/or methods of using such products held by persons other than us. Litigation arising from an alleged infringement could result in removal from the market, or a substantial delay in, or prevention of, the introduction of our products, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Additionally, in order to protect or enforce our patent rights, we may initiate patent litigation against third parties, such as infringement suits or interference proceedings. Litigation may be necessary to: assert claims of infringement; enforce our patents; protect our trade secrets or know-how; or determine the enforceability, scope and validity of the proprietary rights of others. TABLE OF CONTENTS Lawsuits could be expensive, take significant time and divert management s attention from other business concerns. They would put our licensed patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. We may also provoke third parties to assert claims against us. Patent law relating to the scope of claims in the technology fields in which we operate is still evolving and, consequently, patent positions in our industry are generally uncertain. If initiated, we cannot assure you that we would prevail in any of these suits or that the damages or other remedies awarded, if any, would be commercially valuable. During the course of these suits, there could be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation. If securities analysts or investors were to perceive any of these results to be negative, our stock price could decline. We have claims and lawsuits against us that may result in material adverse outcomes. On March 16, 2015, the Circuit Court in Cook County, Illinois ruled against us and held that the Estate of Sigmund Eisenschenk owns no less than 88,750 shares of our stock (177,500 shares prior to reverse stock split). The Court further awarded sanctions against us in an amount not yet determined. The Court has yet to rule on certain other claims made by the Estate, which relate to a further 236,250 shares of our stock (472,500 shares prior to reverse stock split). We are also subject to other claims and other lawsuits in which adverse outcomes could result in significant monetary damages. A material adverse impact on our financial statements also could occur for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable. We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits. We could be the subject of complaints or litigation from customers alleging product quality or operational concerns. Litigation or adverse publicity resulting from these allegations could materially and adversely affect our business, regardless of whether the allegations are valid or whether we are liable. We currently do not have product liability insurance coverage, and even if there was such coverage, there would be no assurance that such coverage would be sufficient to properly protect us. Further, claims of this type, whether substantiated or not, may divert our financial and management resources from revenue generating activities and the business operation. We may be subject to the risks of doing business internationally. Although we have not successfully sold any of our products yet, we currently offer our products both in the United States and outside of the United States, and we intend to manufacture products at our equipment suppliers facility in Germany once we receive purchase orders. Because we intend to do so, our business is subject to risks associated with doing business internationally, including: trade restrictions and changes in tariffs; the impact of business cycles and downturns in economies outside of the United States; unexpected changes in regulatory requirements that may limit our ability to export our products or sell into particular jurisdictions; import and export license requirements and restrictions; difficulties in maintaining effective communications with employees and customers due to distance, language and cultural barriers; disruptions in international transport or delivery; difficulties in protecting our intellectual property rights, particularly in countries where the laws and practices do not protect proprietary rights to as great an extent as do the laws and practices of the United States; difficulties in enforcing agreements through non-U.S. legal systems; longer payment cycles and difficulties in collecting receivables; and potentially adverse tax consequences. If any of these risks materialize, our international sales could decrease and our foreign operations could suffer. TABLE OF CONTENTS We are an "emerging growth company," and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make our Common Stock less attractive to investors. We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act enacted in April 2012, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could remain an emerging growth company until the earliest of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement which has not yet occurred; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer. We cannot predict if investors will find our Common Stock less attractive if we choose to rely on these exemptions. If some investors find our Common Stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Common Stock and our stock price may be more volatile. Under Section 107(b) of the Jumpstart Our Business Startups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result of our being a public company, we are subject to additional reporting and corporate governance requirements that require additional management time, resources and expense. We are obligated to file with the SEC annual and quarterly information and other reports that are specified in the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We are also subject to other reporting and corporate governance requirements under the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder, all of which impose significant compliance and reporting obligations upon us. Our internal controls over financial reporting are not effective which could have a significant and adverse effect on our business and reputation. As a public reporting company, we are in a continuing process of developing, establishing, and maintaining internal controls and procedures that allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an emerging growth company. Our management is required to report on our internal controls over financial reporting under Section 404. If we fail to achieve and maintain the adequacy of our internal controls, we would not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Our Management has determined that the adequacy of our internal controls is not effective and is therefore unable to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Moreover, our testing, or the subsequent testing by our independent registered public accounting firm, that must be performed may reveal other material weaknesses or that the material weaknesses described above have not been fully remediated. If we do not remediate any material weaknesses identified, or if other material weaknesses are identified or we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could be materially misstated or could subsequently require restatement, we could receive an adverse opinion regarding our internal controls over financial reporting from our independent registered public accounting firm and we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and management resources, and the market price of our stock could decline. Future sales of our Common Stock by our existing shareholders could cause our stock price to decline. We currently have 6,373,707 shares of our Common Stock outstanding. All of such shares are eligible for resale under Rule 144; however, 2,679,378 are held by affiliates and are subject to certain volume limitations. If our shareholders sell substantial amounts of our Common Stock in the public market at the same time, the market price of the Common Stock could decrease significantly due to an imbalance in the supply and demand of our Common Stock. Even if they do not actually sell the stock, the perception in the public market that our shareholders might sell significant shares of the Common Stock could also depress the market price of the Common Stock. A decline in the price of shares of our Common Stock might impede our ability to raise capital through the issuance of additional shares of our Common Stock or other equity securities, and may cause you to lose part or all of your investment in our shares of Common Stock. TABLE OF CONTENTS We do not expect to pay dividends on our Common Stock in the foreseeable future. We do not expect to pay dividends on our Common Stock for the foreseeable future, and we may never pay dividends. Consequently, the only opportunity for Common Stockholders to achieve a return on their investment may be if a trading market develops and Common Stockholders are able to sell their shares for a profit or if our business is sold at a price that enables Common stockholders to recognize a profit. Our Series A Preferred stockholders are entitled to an annual dividend of $0.46 for each share of Series A Preferred, payable in cash or Common Stock, at the election of the holder, on January 31 of each year. We currently intend to retain any future earnings other than those paid as dividends to the Series A Preferred Stock or any other class of preferred stock to support the development and expansion of our business and do not anticipate paying cash dividends for the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our Common Stock may be limited by state law. Accordingly, we cannot assure investors any return on their investment, other than in connection with a sale of their shares or a sale of our business or dividends on their Series A Preferred Stock. At the present time there is no trading market for our shares. Therefore, holders of our securities may be unable to sell them. We cannot assure investors that an active trading market will develop or that any third party will offer to purchase our business on acceptable terms and at a price that would enable our investors to recognize a profit. Limitations on director and officer liability and indemnification of our Company s officers and directors by us may discourage stockholders from bringing suit against an officer or director. Our certificate of incorporation and bylaws provide, with certain exceptions as permitted by governing state law, that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director or officer, except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage stockholders from bringing suit against a director or officer for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director or officer. We are responsible for the indemnification of our officers and directors. Should our officers and/or directors require us to contribute to their defense, we may be required to spend significant amounts of our capital. Our certificate of incorporation and bylaws also provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of our Company. This indemnification policy could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant, or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going concern. The rights of our preferred stock could negatively affect holders of Common Stock and make it more difficult to effect a change of control. Our board of directors is authorized by our charter to create and issue preferred stock. Certain of the rights of holders of preferred stock take precedence over the rights of holders of Common Stock. We are authorized to issue 10,000,000 shares of Preferred Stock, of which 3,000,000 are designated as Series B Preferred Stock and 400,000 are designated as Series A Preferred Stock. We currently have no shares of Series B Preferred Stock and 105,000 shares of Series A Preferred Stock outstanding. Holders of Series A Preferred Stock are entitled to a dividend of $0.46 per share each year payable in cash or stock at the option of the holder and Series A Preferred stock are entitled to a preference upon our liquidation, dissolution or winding up. The Series A Preferred Stock are convertible voluntarily at the election of the holder or automatically ten trading days after delivery to the holder by us of a notice that the volume-weighted average closing price of our Common Stock over the ten trading days immediately preceding the date of notice is at least $20.00 per share. The holders of the Series A Preferred Stock and the shares of Common Stock and warrants issued in our private placement offering that was consummated in January 2015 are also entitled to registration rights with respect to such shares. We may issue additional shares of Series B or Series A Preferred Stock in addition to other preferred stock. As future tranches of capital are received by us, additional preferred stock may be issued which such terms and preferences as are determined in the sole discretion of our board of directors. The rights of future preferred stockholders could delay, defer or prevent a change of control, even if the holders of Common Stock are in favor of that change of control, as well as enjoy preferential treatment on matters like distributions, liquidation preferences and voting. TABLE OF CONTENTS Our Common Stock is not currently traded on any market, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares. The Common Stock is not currently traded on any market and therefore no public market for our Common Stock exists. Accordingly, investors will have great difficulty selling any of our securities. Even if our Common Stock becomes traded on a securities exchange, we cannot predict the extent to which investors interests will lead to an active trading market for our Common Stock or whether the market price of our Common Stock will be volatile or exceed the price paid by investors for the Common Stock or the exercise price of our Warrants outstanding. If an active trading market does not develop, investors will continue to have difficulty selling any of our Common Stock. There may be limited market activity in our stock and we are likely to be too small to attract the interest of many brokerage firms and analysts. If we trade on OTC markets, the trading volume we will develop may be limited by the fact that many major institutional investment funds, including mutual funds as well as individual investors, follow a policy of not investing in OTC stocks and certain major brokerage firms restrict their brokers from recommending OTC stocks because they are considered speculative, volatile, thinly traded and the market price of the Common Stock may not accurately reflect the underlying value of our Company. The market price of our Common Stock could be subject to wide fluctuations in response to quarterly variations in our revenues and operating expenses, announcements of new products or services by us, significant sales of our Common Stock, including "short" sales, the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends in our markets or general economic conditions. The application of the "penny stock" rules to our Common Stock could limit the trading and liquidity of the Common Stock, adversely affect the market price of our Common Stock and increase your transaction costs to sell those shares. If our Common Stock becomes traded on a securities market or exchange, as long as the trading price of our Common Stock is below $5 per share, the open-market trading of our Common Stock will be subject to the "penny stock" rules, unless we otherwise qualify for an exemption from the "penny stock" definition. The "penny stock" rules impose additional sales practice requirements on certain broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). These regulations, if they apply, require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination regarding such a purchaser and receive such purchaser s written agreement to a transaction prior to sale. These regulations may have the effect of limiting the trading activity of our Common Stock, reducing the liquidity of an investment in our Common Stock and increasing the transaction costs for sales and purchases of our Common Stock as compared to other securities. The stock market in general and the market prices for penny stock companies in particular, have experienced volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance. Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price. We may not be able to attract the attention of major brokerage firms, which could have a material adverse impact on the market value of our Common Stock. If a trading market develops for our Common Stock it will rely in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts. However, security analysts of major brokerage firms may not provide coverage of our Common Stock since there is no incentive to brokerage firms to recommend the purchase of our Common Stock, which may adversely affect the market price of our Common Stock. If equity research analysts do provide research coverage of our Common Stock, the price of our Common Stock could decline if one or more of these analysts downgrade our Common Stock or if they issue other unfavorable commentary about us or our business. If one or more of these analysts ceases coverage of our Company, we could lose visibility in the market, which in turn could cause our stock price to decline. We effected a 1-for-2 reverse stock split of our outstanding Common Stock on March 25, 2015. However, the reverse stock split may not increase our stock price sufficiently once the stock is trading and we may not be able to list our Common Stock on a national securities exchange. We expect that the reverse stock split of our outstanding Common Stock will increase the market price of our Common Stock once our stock is trading and enable us to meet the minimum market price requirement of the listing rules of a national securities exchange. However, the effect of a reverse stock split upon the market price of our Common Stock cannot be predicted with certainty, and the results of reverse stock splits by companies in similar circumstances have been varied. It is possible that the market price of our Common Stock following the reverse stock split will not increase sufficiently for us to be in compliance with the minimum market price requirement of a national securities exchange, or if it does, that such price will be sustained. If we are unable to meet the minimum market price requirement, we may be unable to list our shares on a national securities exchange, in which case such an offering may not be completed. TABLE OF CONTENTS Even if the reverse stock split achieves the requisite increase the market price of our Common Stock, there can be no assurance that we will be approved for listing on a national securities exchange or able to comply with other continued listing standards of a national securities exchange. Even if the market price of our Common Stock increases sufficiently so that we comply with the minimum market price requirement, we cannot assure you that we will be able to comply with the other standards that we are required to meet in order to be approved for listing on a national securities exchange or maintain a listing of our Common Stock on such exchange. Our failure to meet these requirements may result in our Common Stock being delisted from a national securities exchange. The reverse stock split may decrease the liquidity of the shares of our Common Stock. The liquidity of the shares of our Common Stock may be affected adversely by the reverse stock split given the reduced number of shares that will be outstanding following the reverse stock split. In addition, the reverse stock split may increase the number of shareholders who own odd lots (less than 100 shares) of our Common Stock, creating the potential for such shareholders to experience an increase in the cost of selling their shares and greater difficulty affecting such sales. TABLE OF CONTENTS USE OF PROCEEDS All of the Shares covered by this prospectus are being sold by the Selling Stockholders. See "Selling Stockholders" on page 40. We will not receive any proceeds from these sales of shares of our Common Stock. A portion of the Shares covered by this prospectus are issuable upon exercise of the Private Placement Warrants to purchase our Common Stock. Upon any exercise of the Private Placement Warrants for cash, the Selling Stockholders would pay us the exercise price of the Warrant. Cash received from exercise of Warrants will be used for general corporate purposes. Additionally, the Private Placement Warrants are exercisable on a cashless basis. If the Private Placement Warrants are exercised on a cashless basis, we would not receive any cash payment from such Selling Stockholders upon any exercise of the Private Placement Warrants. TABLE OF CONTENTS OUR BUSINESS Overview We use proprietary x-ray fluorescence technology called XRpro to deliver ion channel screening, transporter screening, ion channel kinetics and custom screening services to our customers. Our proprietary technology is designed to detect and quantitatively analyze the x-ray signature of each element with an atomic number greater than 12, we combine the flexibility of the analysis with patented sample processing to address a wide range of ion channel and other biological targets. We believe that our technology can reduce the cost of drug discovery by detecting safety and efficacy issues at an early stage of development. To date, substantially all of our revenue has been derived from our analytical services that we have performed for United States governmental agencies. However, we expect that our revenue will be derived from (i) provision of our analytical drug discovery services to commercial customers as well as United States governmental agencies; (ii) leasing of our technology and sale of our consumables; and (iii) commercialization of new drug candidates that we identify using the XRpro drug discovery instruments. Since inception, we have financed our operations primarily through private sales of our securities, revenue derived from our analytical services that we have performed for United States governmental agencies and settlement of legal matters. We expect to continue to seek to obtain our required capital through the private sale of securities and revenue derived for the services we provide. To date, we have been granted twenty (20) contracts from United States governmental agencies; of which nine (9) were granted from the Department of Defense and eleven (11) were granted from the National Institutes of Health. Of such contracts, eighteen (18) have been completed and we received payment in full for all eighteen (18) completed contracts. All the contracts contained standard terms, including termination provisions which allow for the government to terminate the contract, in whole or in part, at any time for convenience. In that event, the government agency concerned would notify us of their intention to terminate, and all costs incurred in our performance of the work terminated will be recoverable and we will have no refund obligations for our research conducted to the date of termination. The contracts also contain Bayh-Dole and related provisions for disposition of intellectual property. The Bayh-Dole Act allows small businesses, such as ours, to retain title to federally funded inventions if we follow certain procedures, including filing for patent protection and actively pursuing commercialization of the invention, and the U.S. government retains a non-exclusive, non-transferable, paid up irrevocable license, throughout the world, with respect to the invention. In addition, the U.S. government also retains a "march in" right that allows it to license the invention to third parties, without our consent, if it determines that the invention is not being made available to the public on a reasonable basis. Set forth below are the details of the firm - fixed price contract under which we are continuing to provide services to the National Institutes of Health under which we expect to receive an additional $825,000 for our services. Contract 2R44AI079935-03 with the National Institutes of Health; to develop strontium-selective therapies, contract amount: $3,000,000.00 operative from August 24, 2011 to July 31, 2014, approximately $2,775,000 paid to date, $225,000 remaining in contract. $2,000,000 of the grant was awarded for the period August 24, 2011 to July 31, 2013. An additional $1,000,000 was made available for us to invoice our project time and expenses against on July 9, 2013, initially expiring on July 31, 2014 and recently extended until July 31, 2015. To date we have received $775,000 under this contract and we have $225,000 remaining under the contract. Contract number 1R43AI091186-01A1 with the National Institutes of Health; to develop Radioactive Cesium decorporation Agents, contract amount of $600,000 operative from July 1, 2014 to June 30, 2016. No funds have been received under this contract as work on the project is only expected to commence in 2015. XRpro Drug Discovery Services We currently derive substantially all of our revenue from the provision of our analytical drug discovery services to the federal government. We have recently expanded our customer base and are performing pilot studies on ion channel and transporter testing with several large and specialty pharmaceutical companies. We believe that due to the unique properties of our technology there is the potential to convert these pilot studies into sustainable, long term commercial customers and conduct large-scale analytical services projects in collaboration with these customers to support their research and development programs. New Drug Candidates Often when we conduct our chemical analysis of molecules for safety and efficacy in accordance with government funded research, we discover new drug candidates. We have developed new molecules including new MRI contrast agents, radiopharmaceuticals, anti-infectives, and therapies for heavy metal toxicity. These chemicals have been developed using our XRpro technology and have been tested using in vitro safety and efficacy models, and initial in vivo models. We plan to further develop these molecules as far as possible using Federal contracts and grants that pay for substantially all the research and development costs and either sell them or license them to third parties who will apply for FDA approval of such drugs. We obtained a $3,000,000 grant in August 2011 from the National Institutes of Health/ National Institute for Allergies and Infectious Diseases to conduct animal trials for one of our drug candidates, which is a therapy for exposure to radioactive strontium. The grant was awarded for the period August 24, 2011 to July 31, 2014, was recently extended until July 31, 2015 depending on the availability of government funds and satisfactory progress on the project and to date we have received $775,000 under this grant and we have $225,000 remaining under the contract. We do not plan to be a pharmaceutical company but to provide analytical services. We will continue to capitalize on our technology to commercialize drug candidates from government work where appropriate. TABLE OF CONTENTS Our Analysis Technology Our XRpro technology quantifies drug/protein interactions without the need to modify the drug, protein, or cell, or use expensive reagents. We apply this technology to assay a variety of cellular processes and enzymatic functions. Cellular processes include ion channel and transporters, which we assay to determine whether a drug is safe and effective as modeled by certain cellular processes, which are typically specified by our customers. Many technologies require that expensive reagents (substances that are added to a system in order to bring about a chemical reaction or is added to see if a reaction occurs) or "labels" be used to measure the properties of drug candidates during the drug discovery process. These reagents are expensive, toxic, subject to regulatory oversight and can introduce experimental errors. Label-free technologies are particularly sought by the pharmaceutical industry because it is believed that they provide superior data at lower cost. Our current installed capacity of our high-throughput XRpro technology typically measures between approximately 500,000 and 2,000,000 compounds per month, depending on the assays. Our technology measures multiple parameters for both drugs and proteins, including chemical and biochemical binding and functional assays. This allows, for example, the ability to measure multiple interactions between a single drug and multiple proteins in a single measurement. We therefore measure on-target (e.g., efficacy) and off-target (e.g. side effects/toxicity) properties. Our high throughput XRpro technology allows us to perform assays that were previously unavailable or unacceptably expensive when performed using other technologies. Significant advantages of XRpro according to customers include the ability to perform measurements in challenging matrices, such as serum, and the ability to conduct assays of non-electrogenic transporters. We believe that our ability to provide our services in a cost and time efficient manner will allow us to profitably offer and expand our XRpro drug discovery services to appropriate biotech and pharmaceutical companies. TABLE OF CONTENTS Scientific Advantages of XRpro The pharmaceutical industry uses assays to measure the properties of experimental medicines. XRpro allows previously unavailable or unacceptably expensive assays to be performed at high-throughput scales at a price that is acceptable to customers and premium relative to other high throughput assays. XRpro assays include: Ion Channel Assays, for cardio toxicity and pain management; Transporter assays for several proprietary co-transporter assays; Binding assays for kinase-ATP disease models; Binding assays in complex matrices; Additional proprietary assays commissioned by clients Some key features of XRpro include: Direct label-free measurements. This feature reduces assay development times, allows measurement of previously difficult or unfeasible assays, and allows significant cost reductions compared to other technology options that our clients might have. Assay durability. We are able to provide services to clients in a model that allows them to protect their compound intellectual property. This distinguishes our assay service. Assay performance. We have demonstrated that our assays meet client performance requirements for accuracy and precision. Our XRpro technology uses advances in X-ray fluorescence. Each chemical element emits X-ray photons with a characteristic energy. We exploit this effect and have applied it to drug discovery. By taking a single spectrum, within a few seconds we can simultaneously measure all elements with an atomic number greater than 12 (Al and higher). This enables us to qualitatively and quantitatively interrogate many aspects of cell biology: Ions important for measuring ion channels and transporters (Rb + , Zn ++ , Ca ++ , K + , etc.) Transition metal- and nucleotide-based cofactors Kinase and phosphatase activity (by monitoring P and S) HTS of peptides and proteins Drugs containing a halogen or other heteroatom History XRpro, formerly known as Caldera, was founded by Dr. Benjamin Warner in 2003 at the request of the then director of Los Alamos National Laboratory ("LANL") for the purpose of commercializing previous work done by Dr. Warner at LANL regarding the use of x-ray fluorescence to measure the chemical composition of pharmaceuticals. Dr. Warner earned his PhD in Chemistry from the Massachusetts Institute of Technology ("MIT") in 1995. After MIT, Dr. Warner joined LANL where he held various positions including the position of Project Leader for National Security Programs from 2000 until 2004. While at LANL, Dr. Warner patented through the auspices of the University of California (then the manager of LANL) his improvement to x-ray fluorescence technology that allowed it to be used to measure nanograms of material. This improvement made x-ray fluorescence economically feasible to measure the chemical composition of pharmaceuticals. Dr. Warner has won numerous awards from LANL for his commercialization and patenting work, including the Distinguished Licensing Award, the Distinguished Entrepreneurial Award, the Distinguished Patent Award, and the Federal Laboratory Consortium Distinguished Service Award. Jointly with LANL, XRpro won the 2007 Federal Laboratory Consortium Award for Excellence in Technology Transfer and an R&D 100 Award. XRpro has won multiple Technology Ventures Corporation awards for top technology companies in New Mexico. LANL is a United States Department of Energy national laboratory. LANL is managed and operated by Los Alamos National Security, LLC (LANS), a private limited liability company formed by the University of California, Bechtel, Babcock & Wilcox Technical Services, and URS Energy and Construction. LANL is one of the largest science and technology institutions in the world. It conducts multidisciplinary research in national security, space exploration, renewable energy, medicine, nanotechnology, supercomputing and other disciplines. LANL s mission is to develop and apply science and technology to ensure the safety, security, and reliability of the U.S. nuclear deterrent; reduce global threats; and solve other emerging national security challenges. LANL is the largest institution in Northern New Mexico with more than 9,000 employees plus approximately 650 contractor personnel and an annual budget of approximately $2.2 billion. TABLE OF CONTENTS On December 2, 2014, we filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to change our name to XRpro Sciences, Inc. effective December 4, 2014. On March 25, 2015, we effected a 1-for-2 reverse stock split of our Common Stock. PROPERTIES Cambridge We lease approximately 2,813 square feet at One Kendall Square, Suite B2002, Cambridge, Massachusetts 02139 where our main laboratory and corporate head office is located. The term of the original lease expired May 31, 2014. The monthly rental amounts were $15,118. The lease is under renewal arrangements for a period of eighteen months terminating on December 31, 2015 and the monthly rental amounts are approximately $16,291. We entered into a corporate apartment lease agreement in Cambridge, Massachusetts effective June 4, 2013. The monthly rental amounts were $3,325 and the term of the lease expired June 3, 2014. The lease was not renewed and instead we entered into a new one year lease on August 1, 2014 with monthly rental amounts of $2,500. We entered into a second corporate apartment lease agreement in Cambridge Massachusetts, effective February 1, 2014. This lease was terminated early during September 2014 with the payment of early settlement penalties of $4,346. We entered into a further apartment lease agreement effective October 10, 2014 and terminating on July 6, 2015. The monthly rental amounts to $3,351. New Mexico We lease approximately 5,160 square feet at 278 DP Road, Suite D, Los Alamos, New Mexico 87544, where one of our laboratories is located under the terms of two leases. Each lease is on a month to month basis until we determine our future need for these premises. The leases provide for an aggregate annual rent of approximately $60,900 or $5,075 per month excluding utilities and property taxes. We believe these facilities are in good condition and adequate to meet our current requirements. Employees As of March 31, 2015, we employed nine full time employees. A significant number of our management and professional employees have had prior experience with pharmaceutical, biotechnology or medical product companies. None of our employees are covered by collective bargaining agreements, and management considers relations with our employees to be good. Corporate Structure and Information Our principal offices are located at One Kendall Square, Suite B2002, Cambridge, Massachusetts 02139, and our telephone number at that office is (617) 631-8825. Our website address is www.xrpro.com. The information contained on our website or that can be accessed through our website does not constitute part of this document. Dividend Policy We have not paid any dividends on our Common Stock and do not anticipate paying any such dividends in the near future. Instead, we intend to use any earnings for future acquisitions and expanding our business. Nevertheless, at this time there are not any restrictions on our ability to pay dividends on our Common Stock. Our Common Stock Listing and Holders Our Common Stock is not currently traded on any established market. We are in the process of applying to have our Common Stock quoted on the OTCQB. We currently have approximately 260 holders of our Common Stock, no holders of our Series B Preferred Stock and one holder of our Series A Preferred Stock. TABLE OF CONTENTS Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information about the securities authorized for issuance under our equity compensation plans for the fiscal year ended December 31, 2014. Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options Weighted- Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans Equity compensation plans approved by stockholders: 2005 Stock Incentive Plan 725,952 $3.94 774,048 Equity compensation plans not approved by stockholders - - - Total 725,952 $3.94 774,048 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our audited consolidated financial statements and related notes that appear elsewhere in this filing. Cautionary Note Regarding Forward-Looking Statements Some of the statements made in this section of our report are forward-looking statements. These forward-looking statements generally relate to and are based upon our current plans, expectations, assumptions and projections about future events. Our management currently believes that the various plans, expectations, and assumptions reflected in or suggested by these forward-looking statements are reasonable. Nevertheless, all forward-looking statements involve risks and uncertainties and our actual future results may be materially different from the plans, objectives or expectations, or our assumptions and projections underlying our present plans, objectives and expectations, which are expressed in this section. In light of the foregoing, prospective investors are cautioned that the forward-looking statements included in this filing may ultimately prove to be inaccurate—even materially inaccurate. Because of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by XRpro Sciences, Inc. or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. The risks discussed in the Item 1A of this filing should be considered in evaluating our prospects and future performance. Those risks and uncertainties include: our ability to achieve profitability; our ability to continue as a going concern; our ability to obtain adequate funding; our dependence upon certain members of management; our ability to obtain sufficient market acceptance of our services; our dependence upon third parties; our ability to protect our intellectual property; the lack of public market for our Common Stock; our ability to comply with governmental regulations; our ability to compete in the market; our ability to remediate our weaknesses in internal controls; TABLE OF CONTENTS Overview and Financial Condition We use proprietary x-ray fluorescence technology called XRpro to deliver ion channel screening, ion channel kinetics and custom screening services to our customers. Our proprietary technology is designed to detect and quantitatively analyze the x-ray signature of each element with an atomic number greater than 12, we combine the flexibility of the analysis with patented sample processing to address a wide range of ion channel and other biological targets. We believe that our technology can reduce the cost of drug discovery by detecting safety and efficacy issues at an early stage of development. To date, substantially all of our revenue has been derived from our analytical services that we have performed for United States governmental agencies. However, we expect that our future revenue will be derived from (i) provision of our analytical drug discovery services to commercial customers as well as United States governmental agencies; (ii) sale of instruments and consumables; and (iii) commercialization of new drug candidates that we identify using the XRpro drug discovery instruments. Since inception, we have financed our operations primarily through private sales of our securities, revenue derived from our analytical services that we have performed for United States governmental agencies and settlement of legal matters. We expect to continue to seek to obtain our required capital through the private sale of securities and revenue derived for the services we provide. To date, we have been granted twenty (20) contracts from United States governmental agencies; of which nine (9) were granted from the Department of Defense and eleven (11) were granted from the National Institutes of Health. Of such contracts, eighteen (18) have been completed and we received payment in full for all eighteen (18) completed contracts. All the contracts contained standard terms, including termination provisions which allow for the government to terminate the contract, in whole or in part, at any time for convenience. In that event, the government agency concerned would notify us of their intention to terminate, and all costs incurred in our performance of the work terminated will be recoverable and we will have no refund obligations for our research conducted to the date of termination. The contracts also contain Bayh-Dole and related provisions for disposition of intellectual property. The Bayh-Dole Act allows small businesses, such as ours, to retain title to federally funded inventions if we follow certain procedures, including filing for patent protection and actively pursuing commercialization of the invention, and the U.S. government retains a non-exclusive, non-transferable, paid up irrevocable license, throughout the world, with respect to the invention. In addition, the U.S. government also retains a "march in" right that allows it to license the invention to third parties, without our consent, if it determines that the invention is not being made available to the public on a reasonable basis. Set forth below are the details of the firm - fixed price contract under which we are continuing to provide services to the National Institutes of Health under which we expect to receive an additional $825,000 for our services. Contract 2R44AI079935-03 with the National Institutes of Health; to develop strontium-selective therapies, contract amount: $3,000,000.00 operative from August 24, 2011 to July 31, 2014, approximately $2,775,000 paid to date, $225,000 remaining in contract. $2,000,000 of the grant was awarded for the period August 24, 2011 to July 31, 2013. An additional $1,000,000 was made available for us to invoice our project time and expenses against on July 9, 2013, initially expiring on July 31, 2014 and recently extended until July 31, 2015. To date we have received $775,000 under this contract and we have $225,000 remaining under the contract Contract number 1R43AI091186-01A1 with the National Institutes of Health; to develop Radioactive Cesium decorporation Agents, contract amount of $600,000 operative from July 1, 2014 to June 30, 2016. No funds have been received under this contract as work on the project is only expected to commence in 2015. Discussions with respect to our Company s operations included herein include the operations of our operating subsidiary, XRpro Corp. Our Company formed XRpro Corp. on July 9, 2010. We have no other operations than those of XRpro Sciences, Inc. and XRpro Corp. Recent Events Financing On January 31, 2015, in accordance with the terms of the Series B Preferred Stock Exchange Agreements entered into between us, and the holders of our outstanding Series B Preferred Stock, each holder of Series B Preferred Stock exchanged all of their shares of Series B Preferred Stock for the number of shares of our Common Stock, determined by dividing the sum of the amount of the holder s initial investment in the Series B Preferred Stock, plus all accrued and unpaid dividends owed to the holder, by $1.75. All 2,133,947 outstanding shares of our Series B Preferred Stock, including accrued and unpaid dividends thereon, were exchanged for approximately 1,803,803 shares of the Common Stock, after the reverse stock split, resulting in no shares of Series B Preferred Stock remaining outstanding. In addition, on January 31, 2015, we entered into: (i) the Series B Preferred Stock and Warrant Exchange Agreements with the holders of the Existing Series B Warrants to exchange both Series B Preferred Stock for Common Stock and their Existing Series B Warrants, (ii) the Bridge Warrant Exchange Agreements with the Bridge Warrant Holders of its warrants that were issued in connection with the Existing Bridge Warrants, and (iii) the Placement Agent Exchange Agreements with the Placement Agent Warrant Holders that were issued warrants as compensation for the placement agent services provided in connection with the Existing Placement Agent Warrants. Pursuant to the terms of the Bridge Warrant Exchange Agreements, the Series B Preferred Stock and Warrant Exchange Agreements and the Placement Agent Exchange Agreements, the Existing Bridge Warrants, the Existing Series B Warrants and the Existing Placement Agent Warrants were exchanged for the Series B Exchange Warrants, the Bridge Exchange Warrants and the Placement Agent Exchange Warrants, which have substantially similar terms to the Existing Warrants except that: (i) the exercise price of the Series B Exchange Warrants, the Bridge Exchange Warrants and the Placement Agent Exchange Warrants are 30% less than the exercise price of the Existing Warrants for which they were exchanged (such that: (x) the Bridge Exchange Warrants have an exercise price of $4.20 ($2.10 prior to the reverse stock split); (y) the Placement Agent Exchange Warrants have an exercise price of $3.85 ($1.925 prior to the reverse stock split); and (z) the Series B Exchange Warrants have an exercise price of $3.50 ($1.75 prior to the reverse stock split); (ii) the Bridge Exchange Warrants, the Series B Exchange Warrants and the Placement Agent Exchange Warrants do not contain anti-dilution price protection for issuances of securities at per share prices that are lower than the exercise price; (iii) the Bridge Exchange Warrants, the Series B Exchange Warrants and the Placement Agent Exchange Warrants are assignable by their holders; and (iv) the Bridge Exchange Warrants, the Series B Exchange Warrants and the Placement Agent Exchange Warrants provide for certain buy-in-rights in the event that we fail to deliver shares of Common Stock underlying the warrant in a timely manner. TABLE OF CONTENTS On December 31, 2014, we sold in the Private Placement 716,981 units at a per unit price of $7.00, each unit (the "Units") consisting of four shares of Common Stock, prior to the reverse stock split and a five year warrant to acquire one half of one share of Common Stock (post-split) at an exercise price of $3.50 ($1.75 pre-split) per share, to accredited investors for aggregate cash proceeds of $5,018,867 pursuant to a master purchase agreement entered into with the investors. On January 7, 2015, we consummated the second closing in the Private Placement and sold an additional 548,019 Units for additional aggregate cash proceeds of $3,836,133. The aggregate total number of Units sold in both closings was 1,265,000 Units, prior to the reverse stock split, for total gross proceeds of $8,855,000. The aggregate number of shares of Common Stock issued and Private Placement Warrants issued in the Private Placement resulted in the issuance of approximately 2,530,000 shares of Common Stock and warrants exercisable for 632,531 shares of Common Stock, after rounding up each fractional share or warrant and after giving effect to the reverse stock split. In connection with the Private Placement, we have agreed to prepare and file a registration statement with the SEC for the resale by the purchasers of all of the Common Stock and the Common Stock underlying the Private Placement Warrants and all shares of Common Stock issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect thereto. In addition, we agreed to register the shares of Common Stock underlying the Placement Agent Warrants. On March 6, 2014, we and Dr. Benjamin Warner entered into a confidential settlement agreement with LANS, The Regents of the University of California, the UChicago Argonne, LLC and certain individuals (the "Parties") relating to the following: (i) a lawsuit, Caldera Pharmaceuticals, Inc. v. The Regents of the University of California, et al., Case No. CGC-07-470554, brought in the Superior Court of the State of California, County of San Francisco; (ii) a lawsuit, Caldera Pharmaceuticals, Inc. v. Los Alamos National Security, LLC, et al., Case No. 1:10-cv-06347, brought in the United States District Court for the District of New Mexico; and (iii) a lawsuit, Caldera Pharmaceuticals, Inc. v. The Regents of the University of California, et al., Case No. 2011-L-9329, brought in the Circuit Court of Cook County, Illinois, County Department – Law Division and dismissed without prejudice on or about July 26, 2013 (collectively the "Actions"). The agreement called for the Parties to: (i) mutually release each other from all existing, past, present or future claims, counter-claims, demands and causes of action; (ii) amend our license agreement with LANS, to include rights to certain issued and pending patents; (iii) return of 78,750 (157,500 shares prior to the reverse stock split) shares of our Common Stock; and (iv) pay the Company $7,000,000, which resulted in a cash settlement of approximately $5,852,000 after the deduction of initial legal expenses with total expenses still pending. On July 5, 2013, we entered into a fee agreement with Dentons, our previous legal counsel, which called for a payment of 50% of any settlement up to $6 million and 5% thereafter. The agreement also called for Dentons to cooperate with us by making its partners and/or employees available to furnish information or reasonable assistance in connection with any future disqualification proceedings, as reasonably requested by us. Subsequent to signing the agreement, we determined that Dentons had egregiously breached this cooperation clause. As a result, we have suffered significant harm. We further believe that due to Dentons breach of its contract with us, Dentons is not owed any amount under the breached agreement and we are also considering our legal remedies in regard to the harm we have suffered. Results of Operations for the year ended December 31, 2014 and the year ended December 31, 2013. Revenues We had revenues totaling $541,794 and $708,273 for the years ended December 31, 2014 and 2013, respectively, a decrease of $166,479 or 23.5%. Substantially all of our revenues have been from federal government contracts. Our revenue is dependent on the number of contracts we have in operation and the progress we have made on these contracts to date. We have an order backlog in the form of firm fixed price government contracts. We were awarded a $1,000,000 grant from the NIH on August 24, 2011 which was fully utilized and expired on July 31, 2012. An additional $1,000,000 was made available for us to invoice our project time and expenses against on August 2, 2012, which was fully utilized and expired on July 31, 2013 with a further $1,000,000 (of which we have received $775,000 to date) made available for us to invoice our project time and expenses against on July 9, 2013, initially expiring on July 31, 2014, and recently extended to July 31, 2015, depending on availability of government funding and satisfactory progress made on the project. We believe that these are firm orders as there are no indications that funding will not be available and we believe that we have made satisfactory progress on the project to date. The funds available under this grant are earned by us on a percentage-of-completion basis, based on the costs we incur as a measure of the progress made on the project. We have been awarded a further Contract with the National Institutes of Health; to develop Radioactive Cesium decorporation Agents, the contract amount of $600,000 was awarded for the period July 1, 2014 to June 30, 2016. No funds have been received under this contract as work on the project is only expected to commence in 2015. TABLE OF CONTENTS Going forward, based on financing, we plan to market our XRpro equipment and services and educate potential customers concerning the advantages and value propositions of the XRpro technology. While we are optimistic about our prospects, since this is a relatively new product offering with significantly different characteristics compared with existing equipment on the market (and we have not recognized significant revenues to date), there can be no assurance about whether or when our products will generate sufficient revenues with adequate margins in order for us to be profitable. We are pursuing several leads for the use of our technology by several significant companies within the pharmaceutical and industrial sectors; however there can be no assurance that such leads will be successful and result in revenue. Cost of goods sold Cost of goods sold totaled $608,050 and $507,766 for the years ended December 31, 2014 and 2013, respectively, an increase of $100,284 or 19.8%. Our cost of goods sold is dependent on the progress made on each project to date. Cost of goods sold is primarily comprised of direct expenses related to providing our services under our contracts. These expenses include salary expenses directly related to research contracts, recoverable expenses incurred on contracts, the cost of outside consultants, and direct materials used on our contracts. The salary expense included in cost of sales for the year ended December 31, 2014 and 2013 respectively was $232,180 and $236,451, a decrease of $4,271 or 1.8% due to a slight decrease in man hours spent on Government contracts, particularly during the last quarter of 2014. For additional information regarding salary expense reference is made to the discussion of total salary expense in selling, general and administrative expenses below. Included in cost of sales for the year ended December 31, 2014 and 2013, respectively was laboratory supplies and direct materials of $238,813 and $246,078, a decrease of $7,265 or 3.0%, the use of laboratory supplies is dependent on the amount of supplies used in developing assays for significant pharmaceutical customers. During the prior year we incurred slightly higher laboratory supply costs whilst setting up the Cambridge laboratory. During the year ended December 31, 2014 and 2013, respectively, outside contractors costs amounted to $122,368 and $22,237, an increase of $100,131, outside contractors were primarily hired during the last quarter of the prior year and continued during the current year to improve our technical skills in the laboratory. Gross (loss)/profit Gross (loss)/profit was $(66,256) and $200,507 for the years ended December 31, 2014 and 2013, respectively, a decrease of $266,763, or 133.0%. The decrease in gross profit is directly related to the reduction in higher margin recoverable machine time earned in the prior year. The gross profit percentage earned may not be indicative of anticipated future results due to our plan to diversify its source of revenues into the provision of services or usage arrangements. Selling, general and administrative expenses Selling, general and administrative expenses totaled $4,502,353 and $4,395,805 for the years ended December 31, 2014 and 2013, respectively, an increase of $106,548 or 2.4%. The major expenses making up selling, general and administrative expenses included the following: Year ended December 31, Increase/ Percentage 2014 2013 (decrease) change Marketing and selling expenses $39,817 $24,942 $14,875 59.6% Salary expenses 763,717 690,600 73,117 10.6% Severance pay 327,328 9,000 318,328 * Research and development salaries 309,747 194,222 115,525 59.4% Bonus expense 360,137 50,000 310,137 620.3% Directors fees 152,500 6,250 146,250 * Stock option compensation charge 702,300 660,468 41,832 6.3% Legal fees 598,098 1,700,668 (1,102,570) (64.8)% Consulting fees 375,198 340,631 34,567 10.1% Audit fees and taxation services 56,100 72,160 (16,060) (22.2)% Repairs and maintenance 47,922 42,197 5,725 13.6% Rental expense 338,764 199,070 139,694 70.2% Travel Expenses 88,528 68,224 20,304 29.8% $4,160,156 $4,058,432 $101,724 2.5% * In excess of 1,000% TABLE OF CONTENTS Marketing and selling expenses for the year ended December 31, 2014, primarily consisted of website design and development expenses to increase the relevancy and the clarity of the message we are delivering to prospective customers. The marketing and selling expense in the prior year was primarily a once off professional promotional activity. Total salary expenses are allocated to the various expense categories detailed below depending on the level of activity of our employees on government and commercial projects, internal research and development expenses and administrative activities. An increase in activity on projects will result in an increase in salary expense charged to cost of sales with a corresponding decrease in salary expense charged to selling, general and administrative expenses. A comparison of salary expenses is presented below. Total salary expenditure for the year ended December 31, 2014 and 2013, respectively is included in the following expense categories: Year ended December 31, Increase/ Percentage 2014 2013 (decrease) change Cost of sales $232,180 $236,451 $(4,271) (1.8)% Selling, general and administrative expenses 763,717 690,600 73,117 10.6% Severance pay 327,328 9,000 318,328 * Research and development salaries 309,747 194,222 115,525 59.5% $1,632,972 $1,130,273 $502,699 44.5% * In excess of 1,000% The increase in total salary expenditure for the year ended December 31, 2014 of $502,699 is primarily due to the severance pay paid to Gary Altman of $327,276 as of September 30, 2014 as well as the salary paid to Gary Altman while employed as our CEO, effective July 1, 2013, resulting in an increased expense of $77,727 for the year ended December 31, 2014, the employment of a VP of business development at an increased cost of $120,180 for the year ended December 31, 2014 offset by the resignation of our controller, resulting in a saving of $39,393 and a decrease in our sick and vacation pay accrual or $22,585 due to the reduction in the number of days owed to employees for the year ended December 31, 2014. In addition, a new Senior Scientist was employed in September 2013, resulting in an increased cost in the 2014 year of $97,387. The salary expense included in cost of sales for the year ended December 31, 2014 decreased by $4,271 or 1.8%. The lower salary expense charged to cost of sales in the current year was primarily due to the lower level of activity on our government contracts in the current year, primarily due to the timing of when work is performed on these contracts. The decrease in salary expense charged to cost of sales for the year ended December 31, 2014 resulted in a corresponding increase in salary expense charged to Selling, general and administrative expenses and research and development salaries for the year ended December 31, 2014. The salary expense charged to Selling, general and administrative expenses for the year ended December 31, 2014 increased by $73,117 or 10.6% due to the employment of a VP of business development whose expense is primarily recorded as administrative expenses, offset by the resignation of our controller. We employed a new CEO, Richard Cunningham on November 24, 2014 to replace our previous CEO, Gary Altman. Research and development salaries for the year ended December 31, 2014 increased due to the employment of a new senior scientist and the allocation of more scientific time from existing employees to develop products for commercial applications and lower levels of activity on our government contracts. TABLE OF CONTENTS Bonus expense increased by $310,137 primarily due to a once-off discretionary bonus paid to certain consultants and our Chief Scientific Officer for their extraordinary efforts in connection with the settlement of the legal matter disclosed in note 17 to the consolidated financial statements. In the prior year, a discretionary bonus, approved by the Board of Directors, of $50,000 was paid to our Chief Scientific Officer. Directors fees increased by $146,250 due to the introduction of directors fees paid to certain non-executive directors of $25,000 per annum, per director, commencing on April 1, 2014. This amounted to a charge of $56,250 in the 2014 year. In addition to this, an agreement was reached with Mr. Timothy Tyson whereby he would serve as our non-executive chairman with effect from April 1, 2014 for a monthly fee of $10,000, resulting in an increase in expenditure of $90,000. The increase in the stock option compensation charge of $41,832 was primarily due to the acceleration of the vesting of the 514,900 stock options granted to Gary Altman in terms of his severance agreement, 489,900 of these options have subsequently expired and are available for re-issue. In the prior year, 650,000 options were issued to members of management and certain key consultants. These options were fully vested in March 2014. Legal fees decreased by $1,102,570 over the prior year due to the conclusion of substantially all of the legal proceedings in the LANS matter, partially offset by the increase in legal fees incurred on patents registered both locally and internationally. For additional information on our legal matters, see Legal Proceedings. The legal expenses incurred on the LANS and Bellows matters are not connected with our regular business activities and should be viewed as non-operating expenses. The increase in consulting fees of $34,567 is primarily due to an investor relations consulting arrangement entered into during the second quarter of the prior year and the resumption of a management consulting arrangement which was originally terminated in the first quarter of the prior year The decrease in audit fees and taxation services of $16,060 is due to the payment of 2012 audit fees of $25,000 and the accrual of 2013 audit fees of $25,000 in the 2013 year. The current year accrual amounts to $25,000, included in the charge in the current year is an additional accrual for taxation preparation fees of $10,000 and the under provision of taxation preparation fees of $4,300 for the 2013 tax year. Repairs and maintenance expense increased by $5,725 over the prior year, this movement includes the amortization of a maintenance contract purchased for the X-ray fluorescence equipment located in Los Alamos and the replacement of an x-ray tube for our x-ray fluorescence equipment located in Cambridge at a cost of $19,571. Rent has increased by $139,694 due to the establishment of a second laboratory in Cambridge at a monthly cost of approximately $15,100 from 1 June 2013, which subsequently increased to approximately $16,300 from June, 1, 2014, resulting in a net increase of approximately $83,900. An apartment was leased in Cambridge with effect from June 1, 2013 for $3,325 per month, this apartment lease was terminated in June 2014 and a new lease was entered into on 1 July 204 for a monthly rental of $2,500 per month, resulting in a net increase in cost of $10,850 over the prior year. In addition to this a second apartment was leased in Cambridge for nine months at an additional cost of $26,620, which was subsequently terminated in October 2014 and a third apartment was leased at an additional cost of $11,304 with effect from October 10, 2014. Travel expenses increased by $20,304 over the prior year due to increased travel undertaken by our VP of Business Development, our CSO and CEO whilst attending trade conferences both locally and abroad to promote our product and increase our visibility. Depreciation and Amortization We recognized depreciation expenses of $114,156 and $118,227 for the year ended December 31, 2014 and 2013, respectively, the slight decrease in our depreciation expense is due to the disposal of two vehicles we no longer require and the full depreciation of two significant laboratory equipment assets in the prior year, partially offset by new laboratory equipment assets acquired for the Cambridge laboratory. The depreciation expense is primarily made up of depreciation of our laboratory equipment, which makes up the vast majority of our capital equipment. Amortization expenses were $51,683 and $51,684 for the year ended December 31, 2014 and 2013. Amortization expenses relates to the amortization of license fees paid to Los Alamos National Laboratories for the use of certain patents. These patents has now been assigned to us by the Licensor, however we will continue amortizing these costs as an amortization of acquired patents. Other income/(expense) Other income of $7,177,522 relates to the $7,000,000 cash settlement received from the Los Alamos National Security ("LANS") matter disclosed in note 17 to the consolidated financial statements and the recognition of fair value income of $177,522 upon the return of 78,750 (157,500 common shares prior to reverse stock split) common shares originally issued to LANS as consideration for the license agreement we had entered into, disclosed under note 4 to the consolidated financial statements. Other income for the year ended December 31, 2013 of $30,120 consists primarily of net proceeds of $30,000 received on a settlement agreement entered into on the Joel Bellows matter in the New Mexico legal jurisdiction. TABLE OF CONTENTS Other expense of $490,625 in the current year, relates to the estimated liability we expect to incur in proceedings related to the administration of the estate of the late Sigmund Eisenschenk as fully described in note 17 to the consolidated financial statements. The $115,273 in the prior year relates to the valuation of series A shares issued to Mr. Bellows in terms of a legal settlement agreement reached with him. Interest expense Interest expense totaled $14,852 and $165,635 for the year ended December 31, 2014 and 2013, respectively. The interest expense in the current year consisted primarily of interest on the Los Alamos County loan and the prior year included interest on the Los Alamos County loan; bridge note discount of $117,629; bridge note interest of $11,193 and interest on the Joel Bellows legal settlement of $8,000. Change in fair value of derivative liabilities The fair value of derivative liabilities was re-assessed at December 31, 2014 using a Black Scholes valuation model resulting in the increase of the liability by $1,881,181 as compared to a reduction in the liability of $919,948 in the prior year, the movement in liability is dependent upon external market factors. Subsequent to year end, on January 31, 2015, the warrants subject to derivative liability were exchanged for new warrants which are no longer afforded price protection. The derivative liability on warrants that are no longer price protected is no longer required and has been applied to additional paid in capital as of December 31, 2014. Net income (loss) Net income totaled $49,517 and net loss totaled $(3,694,786) for the year ended December 31, 2014 and 2013, respectively. The increase to a net income position during the current period is primarily due to the litigation settlement included in other income and other movements discussed above, offset by the net movement of $2,801,129 in the derivative liability discussed above. Liquidity and Capital Resources We have a history of annual losses from operations since inception and we have primarily funded our operations through sales of our unregistered equity securities and cash flows generated from government contracts and grants. The settlement of the Los Alamos National Security ("LANS") matter has resulted in a gross cash injection of $7,000,000 (net cash injection of $5,502,000 after legal expenses and discretionary bonus payments). The closing of the Private placement on December 31, 2014 resulted in a gross cash injection of $5,018,867 and net proceeds of $4,579,858 after placement agent fees and expenses. Subsequent to year end, a further closing of the private placement took place on January 7, 2015, resulting in a further cash injection of $3,836,133 and net proceeds of $3,529,242 which should be sufficient to fund operations for at least the next 12 months, dependent upon the outcome of settlement discussions we are having with Denton s, as described in note 17 to our consolidated financial statements. Should we be unsuccessful in our discussions or not generate anticipated revenue, we may need to raise additional funding through equity issues to fulfill our commercialization objectives. As of December 31, 2014 we had cash totaling $6,472,392, other current assets totaling $159,200 and total assets of $7,630,465. We had total current liabilities of $2,353,952, and a net working capital of $4,277,641. Total liabilities were $2,496,454 and the Series A convertible redeemable preferred stock totaled $133,350 resulting in a stockholders equity of $5,000,661. Should we not achieve our forecasted operating results or should strategic opportunities present themselves such that additional financial resources would present attractive investing opportunities for our company, we may decide in the future to issue debt or sell our equity securities in order to raise additional cash. We cannot provide any assurances as to whether we will be able to secure any additional financing, or the terms of any such financing transaction if one were to occur. We repaid in full the term loan provided by Los Alamos National Bank on April 11, 2014 with a payment of $227,717. As of December 31, 2014, we owed $177,054 in accordance with the terms of a Project Participation Agreement with the Incorporated County of Los Alamos that we entered into in September 2006. The loan bears interest at a rate of 5% per annum, is for a thirteen year term, with monthly repayments of $3,547 that commenced on September 21, 2009. TABLE OF CONTENTS An analysis of our cash flows from operating, investing and financing activities for the years ended December 31, 2014 and 2013 is provided below: Year ended December 31, 2014 Year ended December 31, 2013 Net cash generated/ (used) by operating activities $1,825,257 $(2,195,268) Net cash used in investing activities (142,653) (206,483) Net cash provided by financing activities 4,270,056 2,542,841 Net increase in cash and cash equivalents $5,952,660 $141,090 Net cash generated by/(used in) operating activities was $1,825,257 and $(2,195,268) for the year ended December 31, 2014 and 2013, respectively. The increase in cash generated by operating activities was primarily due to the following: Year ended December 31, Increase/ Percentage 2014 2013 (decrease) change Net income/(loss) $49,517 $(3,694,786) $3,744,303 101.3% Adjustments for non-cash items 3,068,961 172,664 2,896,297 * Changes in operating assets and liabilities (1,293,221) 1,326,854 (2,620,075) (197.5)% Net cash generated by/(used in) operating activities $1,825,257 $(2,195,268) $4,020,525 183.1% * Greater than 1,000% The increase in net income is discussed under net income/(loss) in the results of operations for the year ended December 31, 2014 and 2013, respectively and includes net legal settlement proceeds of $5,502,000, an accrual for estimated judgment liability expenses of $490,625 in the proceedings related to the administration of the estate of the late Sigmund Eisenschenk, offset by an increase in the derivative liability of $2,801,129 and a decrease in legal expenses of $1,102,570. The change in adjustments for non-cash items is primarily due to the increase in the derivative liability charge of $2,808,129 over the prior year, which is dependent on market factors affecting the volatility and the underlying assumptions in our valuation methodology, offset by the non-cash gain of $177,522 on the cancellation of the shares issued to LANS as described under other income above, the amortization of the Bridge note discount of $117,629 in the prior year, and the increase in the judgment/legal settlement accrual of $373,352 over the prior year. The decrease in operating assets and liabilities is primarily due to the payment of primarily legal bills accrued on the LANS matter under accounts payable resulting in a net reduction in payables balances of $2,490,199 and the repayment of promissory notes owing to Joel Bellows of $166,800 during the current year resulting in a decrease in our other payables balance. Net cash used in investing activities was $142,653 for the year ended December 31, 2014 compared to $206,483 for the prior year and consists primarily of laboratory equipment purchased for our new Cambridge laboratory. Net cash provided by financing activities was $4,270,056 and $2,542,841 for the years ended December 31, 2014 and 2013, respectively and is made up as follows: Year ended December 31, Increase/ Percentage 2014 2013 (decrease) change Movement in borrowings from banks and third parties $(280,027) $(91,859) $(188,168) (204.8)% Movements in bridge note borrowings - 125,000 (125,000) (100)% Net proceeds from stock issues and repurchases 4,579,857 2,509,700 2,070,157 82.5% Dividends paid (29,774) - (29,774) (100)% Net cash provided by financing activities $4,270,056 $2,542,841 $1,727,215 67.9% TABLE OF CONTENTS The movement in borrowings from banks and third parties in the current year included the repayment of the LANB Term loan of $247,201 and repayments on the Los Alamos County loan of $32,826. In the prior year, the borrowings from Los Alamos National Bank were restructure and the Commercial loan and the revolving draw line advanced by Los Alamos National bank were settled for $307,832 and a new term loan of $267,392 was advanced to us, repayments of $20,191 were made against the term loan. In the prior year, net bridge borrowings of $125,000 were received, these borrowings were subsequently converted into Series B Preferred Stock. Net proceeds from stock issued included the sale of 716,981 Common Stock units at $7.00 per unit, each unit consisting of four common shares and a warrant to purchase a common share at an exercise price of $3.50 per share. ($1.75 per share prior to the reverse stock split). After the reverse stock split on March 25, 2015, the number of shares and warrants issued on the sale of the units mentioned above was 1,433,962 and 358,512, after rounding up for fractional shares and warrants. Share issue expenses, including placement agents fees of $439,010 were incurred on this issuance. In the prior year, Series B Preferred Stock was sold to new investors for net proceeds of $2,509,700 after deducting share issue expenses of $286,300. A dividend of $29,774 ($0.46 per share) was paid to the Series A stockholder in terms of the certificate of designations governing those shares. TABLE OF CONTENTS Capital Expenditures Our current plan is to improve the efficiency of our laboratory operations by employing additional scientific personnel and equipment to further automate the processes required in our Assay workflows to meet our customer requirements. Critical Accounting Policies Estimates The preparation of these consolidated financial statements in accordance with US GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts and recovery of long-lived assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the allowance for doubtful accounts, the useful life of plant and equipment and intangible assets, and assumptions used in assessing impairment of long-term assets and the assumptions used in determining percentage of completion on our long-term contracts. Revenue recognition Revenue sources consist of government grants, government contracts and commercial development contracts. We account for our long-term Firm Fixed Price Government contracts and grants associated with the delivery of research on drug candidates and the development of drug candidates using the percentage-of-completion accounting method. Under this method, revenue is recognized based on the extent of progress towards completion of the long-term contract. We generally use the cost-to-cost measure of progress for all of our long-term contracts, unless we believe another measure will produce a more reliable result. We believe that the cost-to-cost measure is the best and most reliable performance indicator of progress on our long-term contracts as all our contract estimates are based on costs that we expect to incur in performing our long-term contracts and we have not experienced any significant variations on estimated to actual costs to date. Under the cost-to-cost measure of progress, the extent of progress towards completion is based on the ratio of costs incurred-to-date to the total estimated costs at the completion of the long-term contract. Revenues, including estimated fees or profits are recorded as costs are incurred. When estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recorded in the period the loss is determined. To a much lesser extent, we enter into fixed fee commercial development contracts that are not associated with the delivery of feasible research on drug candidates and the development of drug candidates. Revenue under such contracts is generally recognized upon delivery or as the development is performed. Research and Development The remuneration of our research and development staff, materials used in internal research and development activities, and payments made to third parties in connection with collaborative research and development arrangements, are all expensed as incurred. Where we make a payment to a third party to acquire the right to use a product formula which has received regulatory approval, the payment is accounted for as the acquisition of a license or patent and is capitalized as an intangible asset and amortized over the shorter of the license period or the patent life. Share-Based Compensation Share-based compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense over the employee's requisite service period or vesting period on a straight-line basis. Share-based compensation expense recognized in the consolidated statements of operations for the year ended December 31, 2014 and 2013 is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. This estimate will be revised in subsequent periods if actual forfeitures differ from those estimates. We have no awards with market or performance conditions. TABLE OF CONTENTS Net income/(loss) per Share Basic net income/(loss) per share is computed on the basis of the weighted average number of Common Stock outstanding during the period. Diluted net income/(loss) per share is computed on the basis of the weighted average number of Common Stock and Common Stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net income/(loss) per share are excluded from the calculation. Dilution is computed by applying the treasury stock method for options and warrants. Under this method, "in-the money" options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase Common Stock at the average market price during the period. Dilution is computed by applying the if-converted method for convertible preferred stocks. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to Common Stock. The shares issuable upon conversion will be added to weighted average number of Common Stock outstanding. Conversion will be assumed only if it reduces earnings per share (or increases loss per share). Contingencies Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to us but which will only be resolved when one or more future events occur or fail to occur. Our management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against and by us or unasserted claims that may result in such proceedings, our management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. Intangible assets All of our intangible assets are subject to amortization. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. Where intangibles are deemed to be impaired we recognize an impairment loss measured as the difference between the estimated fair value of the intangible and its book value. a) Patents and License Agreements Patents and License agreements acquired by us are reported at acquisition value less accumulated amortization and impairments. b) Amortization Amortization is reported in the income statement on a straight-line basis over the estimated useful life of the intangible assets, unless the useful life is indefinite. Amortizable intangible assets are amortized from the date that they are available for use. The estimated useful life of the patents and license agreement is twenty years which is the term of the patents and patents supporting the underlying license agreements Plant and equipment Plant and equipment is stated at cost less accumulated depreciation. Depreciation is computed using straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows: Leasehold improvements 5 Years Laboratory equipment 7 Years Furniture and fixtures 10 Years Computer equipment 3 Years Motor vehicles (used) 2 Years TABLE OF CONTENTS The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset s estimated fair value and its book value. Derivative Liabilities The Company assessed the classification of its derivative financial instruments as of December 31, 2014, which consist of convertible instruments and rights to shares of the Company s Common Stock, and determined that such derivatives meet the criteria for liability classification under ASC 815. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described. Convertible Instruments We evaluate and accounts for conversion options embedded in our convertible instruments in accordance with professional standards for "Accounting for Derivative Instruments and Hedging Activities". Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as "The Meaning of "Conventional Convertible Debt Instrument". We account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when "Accounting for Convertible Securities with Beneficial Conversion Features," as those professional standards pertain to "Certain Convertible Instruments." Accordingly, we record, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. We also record when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entity s control could or require net cash settlement, then the contract shall be classified as an asset or a liability. Recent accounting pronouncements For discussion of recently issued and adopted accounting pronouncements, please see Note 2 to the XRpro Sciences consolidated financial statements included herein. Off Balance Sheet Arrangements None. TABLE OF CONTENTS Contractual Obligations None. Inflation The effect of inflation on our operating results was not significant. Legal Proceedings Suit against The Regents of the University of California, Los Alamos National Security, et al. On March 6, 2014, our Company and Dr. Benjamin Warner entered into a confidential settlement agreement with Los Alamos National Security LLC ("LANS"), The Regents of the University of California, the UChicago Argonne, LLC and certain individuals (the "Parties") relating to the following: (i) a lawsuit, Caldera Pharmaceuticals, Inc. v. The Regents of the University of California, et al., Case No. CGC-07-470554, brought in the Superior Court of the State of California, County of San Francisco; (ii) a lawsuit, Caldera Pharmaceuticals, Inc. v. Los Alamos National Security, LLC, et al. , Case No. 1:10-cv-06347, brought in the United States District Court for the District of New Mexico; and (iii) a lawsuit, Caldera Pharmaceuticals, Inc. v. The Regents of the University of California, et al., Case No. 2011-L-9329, brought in the Circuit Court of Cook County, Illinois, County Department – Law Division and dismissed without prejudice on or about July 26, 2013 (collectively the "Actions"). The agreement called for the Parties to: (i) mutually release each other from all existing, past, present or future claims, counter-claims, demands and causes of action; (ii) amend our license agreement with LANS, to include rights to certain issued and pending patents; (iii) return of 78,750 (157,500 shares prior to the reverse stock split) shares of our Common Stock; and (iv) pay us $7,000,000, which resulted in a cash settlement of approximately $5,852,000 after the deduction of initial legal expenses with total expenses still pending. On July 5, 2013, we entered into a fee agreement with Dentons US LLP ("Dentons"), our previous legal counsel, which called for a payment of 50% of any settlement up to $6 million and 5% thereafter. The agreement also called for Dentons to cooperate with us by making our partners and/or employees available to furnish information or reasonable assistance in connection with any future disqualification proceedings, as reasonably requested by us. Subsequent to signing the agreement the Company determined that Dentons had egregiously breached this cooperation clause. As a result, we have suffered significant harm. We further believe that due to Dentons breach of its contract with us, Dentons is not owed any amount under the breached agreement and we are also considering its legal remedies in regard to the harm it has suffered. There is no certainty as to how Dentons will respond to our claims or to the ultimate amount that we may collect from or have to pay to Dentons. The proceeds received of $7,000,000 and any additional proceeds we may receive or any additional expenditure incurred on this matter will be recognized as income or expense in future periods. No liability to Dentons has been recorded by us. Joel Bellows Suit On January 18, 2014, we reached a settlement agreement with Bellows during a pre-trial settlement conference. Subsequent to the pre-trial settlement conference, the parties were unable to agree to terms relating to the conversion of shares of Series A Preferred Stock to yet-to-be issued shares of Series B Preferred Stock. On April 30, 2013, the Circuit Court of Cook County, Illinois, compelled us to execute a version of the settlement agreement proposed by Bellows incorporating a conversion formula that we expressly rejected. The Circuit Court also dismissed Bellows lawsuit against us pursuant to the settlement agreement. We have, thus far, performed the terms of the Court ordered settlement agreement under protest and reservation of rights. We have paid Bellows $240,000 pursuant to the disputed settlement agreement, together with interest thereon. We have also issued 105,000 shares of Series A Preferred Stock to Joel Bellows, in exchange for his 52,500 (105,000 shares of common stock prior to the reverse stock split) shares of Common Stock under protest and reservation of rights. Our motion for reconsideration of the April 30, 2013, order was heard on September 25, 2013 and denied. On December 5, 2013, our Company and Dr. Benjamin Warner filed a notice of appeal in the First District Appellate Court of Illinois. On December 26, 2014, the First District Appellate Court of Illinois dismissed our appeal as moot. TABLE OF CONTENTS Dividend Litigation On July 15, 2014, Joel Bellows filed a complaint against us and our Board of Directors in the Law Division of the Circuit Court of Cook County, Illinois. In the complaint, Bellows alleges that we are obligated, pursuant to the terms of a private placement memorandum, to pay him a dividend of $0.46 for each share of Series A Preferred Stock on January 1 of each year (subject to pro rations for any short year) in (i) cash; or (ii) fully paid and non-assessable shares of our Common Stock at a price of $11.40 ($5.70 per common share prior to the reverse stock split) per common share, at his option. Bellows alleges that we violated his rights under the private placement memorandum by willfully refusing to pay him his dividend. Bellows also alleges that we have a continuing obligation to pay him an annual dividend under the terms of the court ordered settlement that is the subject of a pending appeal in the First District Appellate Court of Illinois. Bellows alleges that our refusal to pay his dividends is also a breach of the settlement agreement. Bellows also alleges that members of our Board of Directors breached their duties of loyalty, good faith and fair dealing to Bellows by knowingly refusing to distribute dividends to Bellows to which he was entitled. Bellows contends that he has been injured in his business and property and irreparably harmed in that he has not received the true value of his equity ownership in our Company. Bellows seeks the following relief against us: (1) an award of compensatory damages in the amount of $48,300.00; (2) prejudgment interest; (3) all costs and reasonable attorneys fees incurred by Bellows; (4) such other relief as may be just and proper. Bellows seeks the following relief against our Board of Directors: (1) an award of compensatory damages exceeding $48,300.00; (2) an award of punitive damages in an amount not less than $50,000.00; (3) costs and expenses; (4) attorneys fees; and (5) such other relief as may be just and equitable. On October 3, 2014, our Company and our Board of Directors filed a motion to disqualify Bellows Law Group, P.C. pursuant to Rules 1.9 and 1.10 of the Illinois Code of Professional Conduct. On December 2, 2014, Bellows Law Group PC voluntarily withdrew as counsel for Joel Bellows. Joel Bellows is now represented by attorney Cary Goldberg. On January 9, 2015, our Company and our Board of Directors filed a motion to dismiss Counts I of the complaint pursuant to 735 ILCS 5/2-619(a)(9) and to dismiss Counts II and III of the complaint pursuant to 735 ILCS 5/2-615. Bellows filed a response to the motion to dismiss on February 4, 2015. On February 23, 2015, Bellows filed a motion for leave to file a first amended complaint. On February 23, 2015, Bellows was granted leave to file his first amended complaint. Bellows filed his first amended complaint on February 23, 2015. In his first amended complaint, Bellows alleges that we are obligated, pursuant to the terms of a private placement memorandum, to pay him a dividend of $0.46 for each share of Series A Preferred Stock on January 1 of each year (subject to pro rations for any short year) in (i) cash; or (ii) fully paid and non-assessable shares of Common Stock of the corporation at a price of $11.40 per share ($5.70 prior to reverse stock split), at his option. Bellows alleges that we paid him a partial dividend of $29,773.97 after he filed his original complaint. He alleges that we continue to violate his rights under the private placement memorandum by willfully refusing to pay him the remainder of the dividends due in the alleged amount of $16,144.00, interest on the late dividends due and interest on the unpaid dividends. Bellows also alleges that we have a continuing obligation to pay him an annual dividend under the terms of a court ordered settlement. Bellows alleges that our refusal to pay his dividends is also a breach of the settlement agreement. He alleges that our breach entitles him to attorneys fees. Bellows also alleges that certain members of our Board of Directors breached their duties of loyalty, good faith and fair dealing to Bellows by knowingly refusing to distribute the remaining dividends to Bellows to which he was entitled. Bellows contends that he has been injured in his business and property and irreparably harmed in that he has not received the true value of his equity ownership in our Company. Bellows also alleges that a judgment conveyed to him by us under the terms of a court ordered settlement agreement was fictitious. He contends that his acceptance of the purported asset as part of the settlement was secured by the fraud of our Company and Benjamin Warner, acting in concert with Michael Lyon and Richard Lane. In his amended complaint, Bellows seeks the following relief against us on his allegations of breach of contract: (1) an award of compensatory damages of no less than $30,000.00; (2) prejudgment interest; (3) all costs and reasonable attorneys fees incurred by Bellows; (4) such other relief as may be just and proper. Bellows seeks the following relief against our Board of Directors on his allegations of breach of fiduciary duty: (1) an award of compensatory damages of no less than $30,000.00; (2) an award of punitive damages in an amount not less than $60,000.00; (3) costs, expenses and interest; (4) attorneys fees; and (5) such other relief as may be just and equitable. Bellows also seeks the following relief against our Company and Benjamin Warner on his allegations of fraud and deceit: (1) compensatory damages of no less than $50,000.00, and (2) punitive damages as a multiple of compensatory damages. TABLE OF CONTENTS On March 16, 2015, we filed a second motion to disqualify the Bellows Law Group, P.C and Bellows & Bellows, P.C. We believe that the litigation is entirely without merit as the declaration of any cash dividends was not permissible under Delaware law due to the financial condition of our Company at the time. Due the improvement in the financial condition of our Company subsequent to March 6, 2014, the dividend owing to the shareholders of Series A Preferred Stock has subsequently been declared and the amount due to Mr. Bellows has been paid to him. Our response to the amended complaint is due March 23, 2015. Redemption Litigation On August 25, 2014, Joel Bellows filed a complaint against our Company and Benjamin Warner in the Chancery Division of the Circuit Court of Cook County, Illinois. In the complaint, Bellows alleges that he is entitled to redeem his cumulative Series A Preferred Stock at a price of $7.41 pursuant to the terms of our June 24, 2011, private placement memorandum. Bellows alleges that we violated his rights under the private placement memorandum by unreasonably and vexatiously denying his request for redemption. In the complaint, Bellows alleges that an actual controversy exists between the parties whether Bellows is entitled to immediate redemption of his cumulative Series A Preferred Stock. Bellows seeks a declaration and order that we are immediately obligated to redeem all 105,000 shares of his cumulative Series A Preferred Stock for a total price of $778,050.00. Bellows alleges that our refusal to redeem his cumulative Series A Preferred Stock is a breach of the court ordered settlement. Bellows also alleges that our refusal to redeem his cumulative Series A Preferred Stock is a breach of the June 24, 2011 private placement memorandum. Bellows also asserts that Benjamin Warner, as our officer and director, breached his duties of loyalty, care, independence, and good faith and fair dealing to Bellows by knowingly failing to have us redeem his shares of Series A Preferred Stock, failing to provide him with information concerning his redemption rights, and putting his interests ahead of Bellows rights. Bellows alleges that he suffered damages, as a result, of at least $778,050.00. Bellows seeks the following relief against us: (1) a declaration that we are immediately obligated to redeem all 105,000 shares Series A Preferred Stock for $778,050.00; (2) actual damages of $778,050.00; (3) prejudgment interest; (4) reasonable attorneys fees and costs; (5) such other relief as may be just and equitable. Bellows seeks the following relief against Benjamin Warner: (1) actual damages of $778,050.00; (2) an award of punitive damages of at least $2,000,000.00; (3) reasonable attorney s fees and costs; and (4) such other relief as may be just and equitable. On October 7, 2014, we and Benjamin Warner filed a motion to disqualify Bellows Law Group, P.C. and Bellows & Bellows, PC, pursuant to Rules 1.9 and 1.10 of the Illinois Code of Professional Conduct. On December 2, 2014, Bellows Law Group PC voluntarily withdrew as counsel for Joel Bellows. Joel Bellows is now represented by attorney Cary Goldberg. On November 4, 2014, Bellows sought, and was granted, a substitution of judges as of right and the case was reassigned to Judge David Atkins. On December 30, 2014, we and Benjamin Warner filed a motion to dismiss Counts I, II and IV of the complaint pursuant to 735 ILCS 5/2-615 and to dismiss Counts I and III of the complaint pursuant to 735 ILCS 5/2-619(a)(9). Bellows filed a response to the motion to dismiss on February 4, 2015. We filed our reply brief on March 13, 2015. A hearing is scheduled for April 29, 2015. We believe that this litigation is without merit as net proceeds received on the settlement of the LANS matter has not been finalized due to the uncertainty regarding the fee agreement entered into with Dentons LLP. The resolution of our fee agreement with Dentons LLP could substantially reduce the net settlement proceeds received and thereby affect Bellows right to redemption at this time. Citation to Recover Property filed against the Company and others On June 14, 2014, in a proceeding to probate the estate of Sigmund Eisenschenk ("Estate") pending in the Circuit Court of Cook County, Illinois, a claimant, QTM Ventures, LLC ("Claimant") was granted leave to file a Petition for Citation to Recover Property against us, Aaron Crane and Gregg Ryzepcynski. In the Petition for Citation to Recover Property, the Claimant alleges that we; i) breached our fiduciary duties to the deceased by wrongfully repurchasing 236,250 shares of our Common Stock (472,500 shares of our common stock prior to the reverse stock split) held by the deceased in our Company at a nominal value based upon the false assertion that the deceased breached a financing agreement; ii) conspired with Aaron Crane to divest the Estate of assets, and not protect the Estates assets; iii) committed fraud by failing to properly notify the deceased of our repurchase of the 236,250 shares of our common stock (472,500 shares of our common stock prior to the reverse stock split), at a nominal value, held by the deceased; and iv) converted the deceased s shares by repurchasing the shares to prevent them from being acquired by the creditors to the Estate. The Claimant seeks the following relief: i. An award for damages plus interest for any and all losses suffered by the Estate and the Claimant; TABLE OF CONTENTS ii. Punitive damages against us; iii. Attorney s fees and costs for the claimant; iv. Any further relief deemed fit by the court. On July 11, 2014, we removed the Petition for Citation to Recover to the Northern District of Illinois. On August 12, 2014, QTM filed a motion to remand the petition to the state court. After considering the written submissions of the parties, Judge Harry Leinenweber entered an order remanding the Petition to state court and denying QTM s request for attorney fees. On February 18, 2015, a Claimant, American Milling LP ("American Milling") filed a motion to vacate two orders entered on November 26, 2014, allowing Michael T. Lyon and Richard Lane s claims ("Claims") against the Estate. American Milling contends that the Claims were fraudulently filed by Lyon and Lane who had no interest in the underlying judgments. American Millings also contends that the judgments were partially satisfied and the Claims should not have been allowed for the full amount of the judgments. On February 18, 2015, American Milling also filed a motion for sanctions against us and Crane pursuant to Illinois Supreme Court Rule 137 alleging that our Company and Crane convinced Lyon and Lane to file the allowed claims in an attempt to improperly recover under a judgment that was partially satisfied. On February 18, 2015, American Milling also filed a motion for partial summary judgment of the citation to recover against us seeking a finding that the Estate owns at least 88,750 shares of our Common Stock (177,500 shares of our common stock prior to the reverse stock split), which represents a portion of our shares at issue in the citation proceedings. On March 4, 2015, we and Crane filed a response to American Millings motion to vacate asking the Court to vacate the allowed Claims but not for the reasons claimed by American Milling. We and Crane also filed briefs in opposition to the request for sanctions and in opposition to summary judgment. On March 16, 2015, in a proceeding to administer the estate of the late Sigmund Eisenschenk, the Circuit Court in Cook County, Illinois (the "Court") heard arguments relating to American Millings motion to vacate, motion for Rule 137 sanctions, and motion for partial summary judgment. The Court ruled against us as follows: (i) finding that Sigmund Eisenschenk s rights in our stock were not collected, recalled, or cancelled pursuant to an August 17, 2010, Judgment Order entered by the Honorable Amy J. St. Eve in the U.S. District Court for the Northern District of Illinois, Case No. 08 C 754, the October 28, 2010 Assignment of Judgment and Settlement Agreement, or otherwise by us, and therefore the Estate of Sigmund Eisenschenk owns no less than 88,750 shares of our Common Stock (177,500 shares of our Common Stock prior to the reverse stock split and which shares were previously held by Sigmund Eisenschenk having a current value of $3.50 per share, after the reverse stock split); ii) partially vacating Michael T Lyon or the Michael T Lyon Profit Sharing Plan and Richard Lane s claims against the Estate and finding that a portion of these claims were partially satisfied by Eisenschenk during his life through collection of Eisenschenk s interest in certain real estate; and iii) allowing the recovery of Rule 137 sanctions against us, Michael T Lyon or the Michael T Lyon Profit Sharing Plan, Richard Lane and Aaron Crane, the previous administrator of the Estate, based upon the Court s finding that the October 9, 2012 claims filed against the Estate by Michael Lyon, Richard Lane and Aaron Crane, for the collection on the Judgment Order in the United States District Court, Northern District of Illinois, Eastern Division, in No. 08 C 754 (the "Claims"), were not well grounded in fact and not warranted by existing law, or a good faith argument for the extension, modification or reversal of existing law as the Judgment Order had already been partially satisfied by Michael Lyon and Richard Lane s collection of certain real estate property owned by the late Sigmund Eisenschenk. The Court further found that Michael Lyon, Richard Lane, Aaron Crane s and our testimony, in support of the Claims, constituted misrepresentations upon the Court, that the Claims were brought for an improper purpose, that we and Crane operated without candor to the Court, misrepresented facts, and failed to disclose conflicts to the Court. The amount of the sanctions to be assessed against them and us for expenses, attorney s fees and costs associated with this matter are yet to be determined. Claims for attorney s fees, expenses and costs are required to be filed with the Court on April 1, 2015. We will be given an opportunity to respond to the claims. The case is scheduled for a status on the claims on April 6, 2015. We are currently considering our options and have charged other expense and accrued a liability of $490,625 in our financial statements for the year ended December 31, 2014 relating to these court orders. Suit against Peter J. Schmiedel, Administrator of the estate of Sigmund Eisenschenk We instituted litigation in the First Judicial District Court for Los Alamos County, New Mexico on September 12, 2013, to obtain declaratory relief against the Estate of the late Sigmund Eisenschenk ("Eisenschenk"), seeking a declaration of the status of certain vested and unvested shares of our Common Stock that were repurchased by us in 2010 and transferred to us in 2011. Eisenschenk and others were party to a 2005 formation agreement and had executed a financing term sheet with us whereby Eisenschenk was to contribute capital to us and that Eisenschenk would also receive shares of our Common Stock based on his capital contribution and successful completion of a capital raising for us. We seek a declaratory judgment stating that Eisenschenk did not satisfy the terms of the financing term sheet and that all non-vested shares which were granted to Eisenschenk were repurchased by us. In addition, we acquired a judgment against Eisenschenk from third parties and in partial satisfaction of that judgment, any vested shares owned by Eisenschenk or his controlled entities were acquired by assignment and transfer to us and that Eisenschenk owns no capital stock or options to acquire our capital stock of nor has any rights thereto. TABLE OF CONTENTS The administrator of the Eisenschenk estate filed a motion to dismiss the matter on a forum of non conveniens arguing that the proceedings mentioned above in The Citation to recovery Property against us and others, was the appropriate forum to adjudicate our claims. This motion was denied, which was responded to by an answer contesting the allegations made by us and asserting a continued interest of Eisenschenk in our capital stock. This matter is tentatively scheduled for a trial on the merits on June 15, 2015. There is a possibility that the Illinois court in The Citation to recovery Property against us and others may make a ruling before the New Mexico trial is completed. DETERMINATION OF OFFERING PRICE The Selling Stockholders will determine at what price they may sell the offered Shares, and such sales may be made at prevailing market prices, or at privately negotiated prices. TABLE OF CONTENTS SELLING STOCKHOLDERS We have prepared this prospectus to allow the Selling Stockholders or their successors, assignees or other permitted transferees to sell or otherwise dispose of, from time to time, up to 2,069,525 Shares of Common Stock. This prospectus covers the offer and disposition by the Selling Stockholders identified below, or their transferee(s), of a total of 2,069,525 Shares of Common Stock of which 1,555,602 shares of Common Stock are currently outstanding, 388,923 Private Placement Warrant Shares are issuable upon exercise of the Private Placement Warrants issued in our private placement and 125,000 Consultant Shares are issuable upon exercise of the Consultant Warrant and Options. The Common Shares and Private Placement Warrants were acquired by the Selling Stockholders in connection with a private placement offering that was completed in December 2014 and January 2015 (the "Private Placement"). The Consultant Warrant and Options were issued as compensation to a consultant. We are registering the resale of the Shares as required by contractual obligations that we have with each of the Selling Stockholders. All of the securities were sold pursuant to an exemption from registration provided by Rule 506 of Regulation D under the Securities Act The securities upon which the Shares may be issued were sold to the Selling Stockholders in the private financing pursuant to an exemption from registration provided by Rule 506 of Regulation D under the Securities Act. In connection with the private financing, entered into a registration rights agreement with the Selling Stockholders pursuant to which we agreed to file a registration statement to register the Shares. The Selling Stockholders made to us certain representations, warranties, covenants, and conditions customary for private placement investments to accredited investors. The table below presents information regarding the Selling Stockholders and the Shares that they may sell or otherwise dispose of from time to time under this prospectus. The table is based on information supplied to us by the Selling Stockholders and reflects holdings as of April 1, 2015. Percentages of beneficial ownership are based upon 6,373,707 shares of Common Stock outstanding as of April 1, 2015. Beneficial ownership is determined under Section 13(d) of the Exchange Act and generally includes voting or investment power with respect to securities and including any securities that grant the Selling Stockholders the right to acquire Common Stock within 60 days of April 1, 2015. The Selling Stockholders have sole voting and investment power with respect to the Shares, subject to community property laws where applicable. We do not know when or in what amounts the Selling Stockholders may sell or otherwise dispose of the Shares covered hereby. We currently have no agreements, arrangements or understandings with the Selling Stockholders regarding the sale of any of the Shares by their other than the registration rights agreements described below. The Selling Stockholders might not sell any or all of the Shares covered by this prospectus or may sell or dispose of some or all of the Shares other than pursuant to this prospectus. Because the Selling Stockholders may not sell or otherwise dispose of some or all of the Shares covered by this prospectus and because there are currently no agreements, arrangements or understandings with respect to the sale or other disposition of any of the Shares, we cannot estimate the number of the Shares
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+PROSPECTUS SUMMARY This summary highlights information contained in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. We urge you to read this entire Prospectus carefully, including the section entitled Risk Factors and the financial statements and other information included in this Prospectus. Company Overview We are one of the leading producers of Gannan navel oranges in China, with operations that include the planting, growing, harvesting, post-harvest processing and temperature controlled preservation and storage of our oranges. Through our vertically integrated model, we exercise strict and direct control over the quality of our navel oranges, which we believe gives us a distinct competitive advantage. We operate through a flexible procurement model by entering into contractual agreements with local farmers for the planting and harvesting work in our orchards on one hand, while also relying on third party farmers and cooperatives that do not use our land by purchasing some of their production on the other hand. We believe that this model provides us a stable and safe source of supply. Once the navel oranges are harvested or purchased, we commercially process and preserve them according to the standards of organic navel oranges, store and subsequently sell them throughout many regions in the PRC. Led by a management team with extensive experience in the industry, we have put in place several investment programs that have allowed us to achieve our current strong position in the domestic market, with our scale and scope evidenced by the following: During fiscal year 2014, we sold over 25,141 metric tons of navel oranges, which generated sales revenue of $19.5 million. In the first three quarters of fiscal year 2015 we sold over 28,750 metric tons of navel oranges which generated revenue of $22.6 million. We established significant orchards with approximately 26,585 mu of land (4,380 acres, a mu is a Chinese acre equal to approximately 0.16 acres) in Ganzhou, Jiangxi Province, with the number of planted trees growing by approximately 90% from 536,586 orange trees at the end of fiscal year 2012 to 1,022,014 orange trees at the end of the third fiscal quarter of 2015. We constructed one of the largest navel orange temperature-controlled facilities in the country which is 19,176 square meters (approximately 4.74 acres) with a 7,000 metric ton storage capacity Numerous honors and certifications awarded to our company and our General Red brand name for the quality of our oranges, including the High Quality Navel Orange awarded by China (Ganzhou) Navel Orange Festival committee, and China Famous Fruit awarded by China Fruit Distribution Association. Our goal is to become the largest integrated grower, packager and distributor of navel oranges in China. We plan to pursue continued growth and margin expansion through a strategy focused on the increase of our orchard and navel orange trees. Industry Overview According to Beijing Huqing Zongheng Information and Statistics Center, China s domestic navel orange annual production grew from 270,000 metric tons to 3,140,000 metric tons between 2000 and 2013, a compound annual growth rate of 21%. In addition, as China s economic transformation continues, the navel orange domestic production is forecasted to grow at 15% annually over the next three years. The China navel orange industry is fragmented, with the different players scattered across the value-chain, which can be divided into three categories: production, post-harvest processing and preservation. Navel orange production requires stringent climate conditions; therefore, there are limited areas in the world where navel oranges can be produced. As a result, production is primarily concentrated in warmer climates, such as California, Spain, South Africa, Australia, and Gannan Southern Hunan Northern Guangxi in China. The Chinese government has identified the Gannan area as the hometown of the navel orange in TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion, Dated September 29, 2015 GENERAL AGRICULTURE CORPORATION MINIMUM OFFERING: 800,000 SHARES OF COMMON STOCK MAXIMUM OFFERING: 2,000,000 SHARES OF COMMON STOCK We are offering a minimum of 800,000 shares of common stock of General Agriculture Corporation (the Company ) with a par value of $0.0001 per share and a maximum of 2,000,000 shares of common stock of the Company. The offering price per share is $ . Our common stock is traded on the Financial Industry Regulatory Authority s ( FINRA ) OTC Bulletin Board ( OTCBB ) under the symbol GELT and is not currently listed or quoted for trading on any national securities exchange. We have applied to have our common stock listed on the NASDAQ Capital Market under the symbol GELT. The last reported sales price per share of our common stock as reported on the OTCBB on September 24, 2015 was $5.10. Spartan Securities Group, Ltd. (the Underwriter ) is required to use only its best efforts to sell the securities offered. Until the at least 800,000 shares of common stock are sold, all funds received in payment for securities sold in this offering will be required to be submitted by subscribers to a non-interest bearing escrow account, and will be held by the escrow agent for such account. If the Underwriter does not sell at least 800,000 shares of common stock within 180 days of the effective date of the Registration Statement of which this Prospectus is a part, all funds will be returned within 3 business days to subscribers without interest or deduction. The Underwriter will receive compensation for sales of the securities offered hereby at a fixed commission rate of 6% of the gross proceeds of the offering, provided that the commission rate shall be reduced to 4% with respect to the greater of gross proceeds of shares sold to certain investors identified and agreed to by us and the Underwriter and 50% of the gross proceeds of the offering. Please see the Plan of Distribution section for more information. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. An investment in our common stock may be considered speculative and involves a high degree of risk, including the risk of a substantial loss of your investment. See Risk Factors beginning on page 7 to read about the risks you should consider before buying our common stock. An investment in our common stock is not suitable for all investors. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. Total Per Share Minimum Offering Maximum Offering Public Offering Price $ $ $ Underwriting discounts and commissions 1 2 $ $ $ Proceeds to Us, Before Expenses $ $ $ (1) For the purpose of estimating the Underwriter s discounts and commissions, we have assumed that the underwriter will receive its maximum commission on all sales made in the offering. See Plan of Distribution beginning on page 30 of this prospectus for more information on this offering and the underwriting arrangements. (2) We estimate the total expenses of this offering, excluding the Underwriter s commissions, will be approximately $699,000. Delivery of the common stock is expected to be made on or about , 2015. SPARTAN SECURITIES GROUP, LTD. The date of this Prospectus is , 2015 TABLE OF CONTENTS China , and has been supportive of local producers. The Ministry of Agriculture named Gannan navel oranges as one of the nine competitive agricultural products in the country, and listed Gannan as one of the key developing areas. As one of the leading enterprises in Gannan, we play a decisive role in the navel orange industry. Furthermore, even though Gannan Navel Orange is the common brand shared by all producers in Gannan area, we believe that our General Red brand stands out among all of the other Gannan brands because of the measures we take to ensure the highest quality standards and our consistent branding strategy. In regards to the post-harvest processing and preservation of harvested fruits, we believe that the Chinese market also presents high-growth potential. Post-harvest processing includes selecting, grading, cleaning, pre-cooling, waxing and packaging. Proper processing can minimize post-harvest loss, maintain the high nutritional content and freshness, slow down the metabolic process of fruit in its natural state, enhance the appearance of the fruit and extend the life of the fruit. Currently, 10% of fresh fruits are processed in the post-harvesting period in China, lower than the average level of 35% worldwide. As for the storage and preservation technology, China also lags behind that of developed countries in the citrus exports sector due to grossly inadequate storage and preservation facilities. Competition Even though we are one of the largest integrated navel orange companies with both growing areas and post-harvest processing and preservation facilities in Gannan, the whole industry is still very fragmented and we believe the industry will consolidate and present good opportunities for growth through acquisitions. Our competitors are pure navel orange growers, pure post-harvest processors, or both. The largest competitor in navel orange growing is Jiangxi Wangpin Agricultural Science and Technology Development Co. Ltd. with approximately 5,600 mu (992 acres) of navel orange groves. The largest competitors in post-harvest processing and preservation are Anyuan Shengda Fruit Industrial Co. Ltd with approximately 20,000 metric tons of preservation capacity, and Xinfeng Yuhe Agricultural Development Co. Ltd. with approximately 30,000 metric tons of preservation capacity. Competitive Strengths Our current strong market position and potential future growth can be attributed to the following key factors and competitive strengths: Our vertically integrated operations, which allow us to exercise a better control of the quality of our products and generate higher margins; The strategic location of our planting areas, which affords us numerous advantages, including desirable climate conditions and soil for cultivating oranges, as well as proximity to China s extensive transportation network; Our product quality and brand name, for which we have received more than 20 honors related to our navel oranges and our preservation facility; Our controlled atmosphere storage and preservation technology, which allows us to maintain a storage period of up to 6 8 months, improve orange appearance and color, and retain a fresh flavor, and which we believe enables us to sell navel oranges at a higher price during the off-season when other producers may not have sufficient supply; and Our management and expert team, which has developed extensive expertise through formal education on farming techniques, in-house training and several years of experience in the navel orange industry. TABLE OF CONTENTS Growth Strategy As one of the leading vertically integrated producers of navel oranges in Gannan, we believe that we are in a unique position to take full advantage of the vast opportunities in our domestic market. We intend to leverage our current strengths and take full advantage of market opportunities in order to achieve continued growth and increased margin by: Increasing the size of our navel orange orchards Promoting our General Red brand, in order to further enhance brand recognition Risk Factors Our business is subject to a number of risks that you should understand before deciding to invest in our common stock, including the following: (1) The market in which we participate is intensely competitive, and we may not be able to compete successfully with our current or future competitors. (2) We rely on contracts with the PRC to use land. If the PRC revokes our land use rights, we would have no operational capabilities or ability to conduct our business. (3) We are subject to PRC laws and regulations. Changes in the laws, regulations or current policies of the PRC could negatively affect our ability to conduct our business or eliminate certain tax-related privileges that we enjoy. These and other risks are discussed more fully in the section of this Prospectus titled Risk Factors beginning on page 7. Corporate Information The Company s executive offices are located at Room 801, Plaza B, Yonghe Building, No. 28 AnDingMen East Street, Dongcheng District, Beijing, China 100007 and its telephone number is 86-10-6409-7316. The Company s registered office is located at Business Filings Incorporated, 108 W. 13th Street, Wilmington, DE 19801 and its website is www.gelt-cn.com. Information contained on or accessed through our website is not intended to constitute and shall not be deemed to constitute part of this Prospectus. TABLE OF CONTENTS
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History First Rate Staffing Corporation, a Delaware corporation (the "Company"), provides recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses. The Company was incorporated in the State of Delaware in April 2011, and was formerly known as Moosewood Acquisition Corporation ("Moosewood" or "Moosewood Acquisition"). In May 2012, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the Company changed its name from Moosewood Acquisition Corporation to First Rate Staffing Corporation. On November 9, 2012, the Company entered into merger agreements with each of First Rate Staffing, LLC, a California limited liability company ("First Rate California"), and First Rate Staffing, Inc., a Nevada corporation ("First Rate Nevada"), in separate mergers (collectively, and together, the "Mergers") that were concurrently completed on November 13, 2012. The purpose of the Mergers was to facilitate and prepare the Company for a registration statement and/or public offering of securities. Prior to the Mergers, First Rate California and First Rate Nevada were under common control of the same group of shareholders. First Rate California was formed in April 2010 in the State of California. Since its inception, First Rate California has provided recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses to clients in California. First Rate Nevada was formed in March 2010 in the State of Nevada and is registered to do conduct business in the State of Arizona. Since its inception, First Rate Nevada has provided recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses to clients in Arizona. Prior to the Mergers, Moosewood had no ongoing business or operations and was established for the purpose of completing a business combination with target companies, such as First Rate California and First Rate Nevada. As a result of the Mergers, each of First Rate California and First Rate Nevada has merged into and become a part of the Company. The Company, as the surviving entity from the Mergers, has taken over the respective operations and business plans of each of both First Rate California and First Rate Nevada. The Company is located at 2775 West Thomas Road, Suite 107, Phoenix, Arizona 85018. The Company s main phone number is (602) 442-5277. Business The Company is a temporary staffing company, which provides recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses. The Company s client customization model allows it to formulate its services to meet its client specific needs and thereby provide its clients with the highest level of customer service. The Company strives to devote adequate time and attention to understand both the needs of its clients and the capabilities of its employees so that the Company can identify the best suitable matches between client needs and employee abilities. The Company is dedicated to achieving a high level of service for all of its clients and considers itself to be a loyal partner to meeting client demands. In this regard, the Company seeks to position itself not only as a pool of employee for its clients, but also as a dedicated business partner that understands its clients businesses and needs. Services provided to clients by the Company include recruiting, payroll, all state and federal taxes, worker s compensation coverage, and screening and managing of clients contingent work force. The Company provides comprehensive screening and electronic verification (for federal employment eligibility requirements) for all employees. The Company also conducts reference checks of employees to ensure that the employers receive accurate and useful descriptions of employees backgrounds and experiences. The Company also operates a risk management department that helps client mitigate losses by implementing sound and effective risk management procedures at client sites. Clients receive these risk management services at no cost, helping them to reduce their own business risks and expenses. Risks and Uncertainties facing the Company The Company has a limited operating history and may experience losses in the near term. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that profits are consistently achieved. In order to expand the Company s business, the Company would likely require additional financing. As an early-stage company, management of the Company must continually develop and refine its strategies and goals in order to execute the business plan of the Company on a broad scale and expand the business. The Company anticipates that it would need approximately $1.0 million to $1.5 million to expand its operations in accordance with its current business plan. One of the biggest challenges facing the Company will be in securing adequate capital to continue to expand its business and build a larger scale and more efficient set of operations. Secondarily, an ongoing challenge remains the maintenance of an efficient operating structure and business model. The Company must keep its expenses and the costs of employees at a minimum in order to generate a profit from the revenues that it receives from its clients. Third, in order to expand, the Company will need to continue implementing effective sales, marketing and distribution strategies to reach the intended end customer clients. The Company has devised its initial sales, marketing and advertising strategies, however, the Company will need to continue refinement of these strategies and also skillfully implement these plans in order to achieve ongoing and long-term success in its business. Fourth, the Company must continuously identify, attract, solicit and manage employee talent, which requires the Company to consistently recruit, incent and monitor various employees. High employee turnover or attrition is a significant risk for the Company, as it requires expending substantial resources to locate and train new personnel and also to replace personnel for clients. These tasks require significant time and attention from the Company s management, and employees may nevertheless become dissatisfied with their respective tenure with the Company. Due to financial constraints and the early stage of the Company s life, the Company has to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet located the sources of funding to develop the Company on a broader scale through acquisitions or other major partnerships. If the Company were unable to locate such financing and/or later develop strong and reliable sources of potential customers and a means to efficiently reach buyers and customers, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s services are consistently met with client satisfaction in the marketplace and exhibit steady success amongst the potential customer base, neither of which is reasonably predictable or guaranteed. Significant uncertainty exists concerning State regulations governing employment matters as these regulations constantly change from year-to-year across many States. Changes in regulations (or the promulgation of new regulations or deletion of previous regulations) in States may have a substantially adverse effect on the Company and its business, including (without limitation) by increasing the costs of hiring, retaining and compensating employees. For example, and without limitation, in California, the State has been unsuccessful in reforming worker s compensation laws, thereby resulting in ongoing and consistently large increases in the amount of worker s compensation costs for businesses and employers (such as the Company). These increasing costs hamper the Company s ability to compete for new clients and maintain existing clients. While the Company has a diverse and wide range of clients, the Company still has heavy customer concentration with just a few of its clients. If the Company were to lose a significant client or if a major client reduced its annual spending with the Company (neither of which the Company could reasonably anticipate or predict), the Company would likely suffer a material adverse effect to its business and operations. The Company will likely be significantly affected by any unforeseen changes in the businesses and operations of its clients. For example, and without limitation, any change in the individual at a client making purchase decisions of the Company s services or any change of the client department that authorizes such purchases could potentially be very damaging for the Company. In addition, clients may, at any time and for any reason, downsize, reduce, reorganize or restructure their respective workforces, and such changes may potentially reduce or eliminate the need for the Company s services. Due to these and other factors, the Company s need for additional capital, the Company s independent auditors have issued a report raising substantial doubt of the Company s ability to continue as a going concern. The Company s board of directors has designated and plans to issue one series of shares of Series A preferred stock consisting of 2,000,000 such shares. Each share of Series A preferred stock is entitled to 25 votes on all matters on which shareholders are entitled to vote. While there is no fixed time when the designated shares of preferred stock will be issued, the Company currently anticipates that it will issue these shares to its current officers and directors promptly following the effectiveness of the instant registration statement (i.e. within 90 days). The shares are expected to be issued as follows: (a) 333,335 shares to Cliff Blake; (b) 333,333 shares to each of the following individuals: (i) Devon Galpin; (ii) Julie Galpin; (iii) Michael Mautz; (iv) Joy Mautz; and (iv) Terry Blake. The purpose of the issuance of the Series A preferred stock would be to retain control of the Company for the current officers and directors. Even though such officers and directors presently control a majority of the common stock of the Company, their majority holdings may become diluted through additional shares issued by the Company from to time for completing acquisitions or securing financing or outside capital. The effect of issuing all such Series A preferred stock would result in the Company s officers and directors having more than 90% voting control power of the Company assuming all of the shares were sold in this offering (in lieu of 72% voting control without the 25:1 voting rights of the Series A preferred stock being in effect). Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to work with market-makers for its securities that will apply for quotation of its common stock on the OTC Bulletin Board. However, the Company does not know if any such application will be made and whether it will be successful if made, how long such application will take, or, that if successful, that a market for the common stock will ever develop or continue on the OTC Bulletin Board. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See "RISK FACTORS" and "DESCRIPTION OF SECURITIES". The Offering The maximum number of Shares that can be sold pursuant to the terms of this offering is 1,600,000. The offering will terminate twenty-four (24) months from the date of this prospectus unless earlier fully subscribed or terminated by the Company. This prospectus relates to the offer and sale by certain shareholders of the Company of up to 1,600,000 Shares (the "Selling Shareholder Shares"). The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at a price of $2.00 per share for the duration of the offering. Common stock outstanding before the offering 7,500,000 (1) Common stock for sale by selling shareholders 1,600,000 Common stock outstanding after the offering 7,500,000 Offering Price $ 2.00 per share Proceeds to the Company $ 0 (1) Based on number of shares outstanding as of the date of this prospectus. As of the date of this offering, non-affiliates of the Company currently hold 1,000,000 shares of common stock in the Company (of the 7,500,000 total outstanding shares at present). The total number of shares being registered through this prospectus exceeds the number of shares held by non-affiliates of the Company. All shares of the Company s common stock currently held by non-affiliates are being registered pursuant to this prospectus. Summary Financial Information The Company had no operations or specific business plan until the Mergers. The statements of operations data for the years ended December 31, 2014 and December 31, 2013, respectively, and the balance sheet data as of December 31, 2014 and December 31, 2013, respectively, are derived from the audited consolidated financial statements of the Company and related notes thereto included elsewhere in this prospectus. The statement of operations data for the three months ended March 31, 2015, and the balance sheet as of March 31, 2014, provided below are derived from the unaudited financial statements and related notes thereto included elsewhere in this prospectus. Three months ended Three months ended Year ended Year ended March 31, 2015 March 31, 2014 December 31, 2014 December 31, 2013 Statement of operations Revenue $ 4,906,244 $ 2,897,127 $ 18,003,628 $ 9,177,841 Gross profit $ 382,431 $ 246,482 $ 1,866,404 $ 877,812 Income (loss) from operations $ (87,405 ) $ (2,430 ) $ 261,697 $ (22,776 ) Net income (loss) $ (136,918 ) $ (33,948 ) $ 9,766 $ (41,899 ) At March 31, 2015 At December 31, 2014 At December 31, 2013 Balance sheet Cash $ 624,720 $ 787,238 $ 54,043 Other assets $ 1,556,344 $ 6,200 $ 6,280 Total assets $ 2,181,064 $ 2,358,616 $ 316,708 Total liabilities $ 1,359,018 $ 1,399,652 $ 367,510 Total stockholders equity (deficit) $ 822,046 $ 958,964 $ (50,802 ) The statements of operations data for the year ended December 31, 2013 and the year ended December 31, 2012, respectively, and the balance sheet data as of December 31, 2013 and at December 31, 2012, respectively, are derived from the audited consolidated financial statements of Loyalty Staffing Services and related notes thereto included elsewhere in this prospectus. Year ended Year ended December 31, 2013 December 31, 2012 Statement of operations Revenue $ 7,942,248 $ 7,667,602 Gross profit $ 765,313 $ 869,681 Income from operations $ 255,593 $ 159,941 Net income $ 187,579 $ 120,036 At December 31, 2013 At December 31, 2012 Balance sheet Cash $ 25,815 $ 69,961 Other assets $ 26,526 $ 24,026 Total assets $ 781,466 $ 532,319 Total liabilities $ 209,996 $ 126,057 Total members equity $ 571,470 $ 406,262
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+Prospectus Summary Our Business Our company is in the business of manufacturing, developing, marketing and distributing for retail sale beverages and nutritional products based on the fruit of the coffee plant. We were incorporated under the laws of the State of Nevada on October 4, 2010 under the name TeamUpSport Inc. . Our business model prior to the acquisition of the health beverage and food business operated under the name KonaRed from Sandwich Isles Trading Co, Inc. ('SITC') on October 4, 2013 was to develop and commercialize a website which was to be designed to integrate people s interest in sport with the new capabilities of online social networking. However, as our company had not successfully developed the business model at the time prior to the entry into an Asset Purchase Agreement with SITC, and had no source of revenue from our business plan, our company determined to seek out a new business opportunity to increase value for our stockholders. On October 4, 2013 we entered into and closed a definitive Asset Purchase Agreement between our company, SITC, and Shaun Roberts and Steven M. Schorr, the principal shareholders, directors and officers of SITC, whereby we completed the acquisition of the KonaRed business from SITC. Prior to the acquisition on October 4, 2013, SITC, a private Hawaiian corporation, had established and operated the KonaRed business since its incorporation on August 22, 2008. In connection with the closing of the asset purchase with SITC, we experienced a change of control and , SITC s management became our management and the acquisition was treated as a reverse recapitalization for accounting purposes, with SITC as the acquirer for accounting purposes. Since the acquisition, we have continued to be engaged in the KonaRed business of manufacturing, developing, marketing and distributing for retail sale the beverages and nutritional products based on the fruit of the coffee plant. Our principal product continues to be our premium coffee fruit wellness drink, KonaRed Antioxidant Juice, offered to wholesale distributors and retail consumers. Our principal executive offices are located at 2829 Ala Kalanikaumaka St., Suite F-133 Koloa, Hawaii, 96756 and our product warehouse is located at 1101 Via Callejon - #200, San Clemente, California 92673. Our products are sold throughout North America, including select locations of retail chains such as Walmart, K-Mart, Whole Foods Markets, Vitamin Shoppe, 7-11, and Kroger (Fred Meyer, Ralphs, Harris Teeter). Number of Shares Being Offered This prospectus covers the resale by the selling stockholders named in this prospectus of up to may offer and sell up to 21,666,667 shares of our common stock, consisting of: (i) 1,666,667 shares of common stock sold to Lincoln Park under the 2015 Purchase Agreement; (ii) 2,666,667 shares of common stock issued to Lincoln Park as the initial commitment shares under the 2015 Purchase Agreement; (iii) up to 15,000,000 shares of common stock that may be sold to Lincoln Park under the 2015 Purchase Agreement; (iv) up to 666,666 shares of common stock that may be issued to Lincoln Park as additional commitment shares under the 2015 Purchase Agreement (see The Lincoln Park Transactions for a description of the 2015 Purchase Agreement); and (v) 1,666,667 shares of common stock issued to Peat Financial under the PF Agreement. See Selling Stockholders for additional information regarding Lincoln Park and Peat Financial. As of July 1, 2015, there were 91,640,910 shares of our common stock outstanding, of which 71,371,132 shares were held by non-affiliates, including the 4,333,334 shares that we have already issued to Lincoln Park under the 2015 Purchase Agreement and 1,666,667 shares of common stock issued to Peat Financial under the PF Agreement. Although the 2015 Purchase Agreement provides that we may sell up to $10,250,000 of our common stock to Lincoln Park, only 20,000,000 shares of our common stock that may be issued and sold to Lincoln Park under the 2015 Purchase Agreement are being offered under this prospectus, which represents (i) 1,666,667 shares that we sold to Lincoln Park in the Initial Purchase, (ii) 2,666,667 Initial Commitment Shares that we issued to Lincoln Park as a commitment fee, (iii) an additional 15,000,000 shares which may be issued to Lincoln Park in the future under the 2015 Purchase Agreement, and (iv) 666,666 Additional Commitment Shares that we are required to issue proportionally in the future, as an additional commitment fee, if and when we sell shares to Lincoln Park under the 2015 Purchase Agreement. The 21,666,667 shares registered in this prospectus (inclusive of the shares already issued to Lincoln Park and Peat Financial represent approximately 24% of the total number of shares of our common stock outstanding and approximately 30% of the total number of outstanding shares held by non-affiliates, in each case as of the date hereof. If we elect to issue and sell more than the 20,000,000 shares offered under this prospectus to Lincoln Park, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional shares, which could cause additional substantial dilution to our stockholders. The number of shares ultimately offered for resale by Lincoln Park is dependent upon the number of shares we sell to Lincoln Park under the 2015 Purchase Agreement. As filed with the Securities and Exchange Commission on July 2, 2015 Registration No. 333-[*] Table of Contents Agreements with Lincoln Park Capital Fund, LLC On June 16, 2015, we entered into a purchase agreement with Lincoln Park, which we refer to in this prospectus as the 2015 Purchase Agreement , pursuant to which Lincoln Park has agreed to purchase from us up to $10,250,000 of our common stock (subject to certain limitations) from time to time over a 30-month period. Also on June 16, 2015, we entered into a registration rights agreement, or the Registration Rights Agreement , with Lincoln Park, pursuant to which we have filed with the SEC the registration statement that includes this prospectus to register for resale under the Securities Act of 1933, as amended, or the Securities Act, 20,000,000 of the shares that have been or may be issued to Lincoln Park under the 2015 Purchase Agreement. This prospectus covers the 1,666,667 shares of our common stock that we have already issued to Lincoln Park for a total purchase price of $250,000 as an initial purchase under the 2015 Purchase Agreement (the Initial Purchase ) and 2,666,667 shares of our common stock, which we refer to in this prospectus as the Initial Commitment Shares, already issued to Lincoln Park, as consideration for Lincoln Park s commitment to purchase additional shares of our common stock pursuant to the 2105 Purchase Agreement. This prospectus also covers an additional 15,000,000 shares of our common stock which may be issued to Lincoln Park in the future pursuant to the 2015 Purchase Agreement and 666,666 shares of our common stock, which we refer to in this prospectus as the Additional Commitment Shares , that we are required to issue proportionally in the future, as an additional commitment fee, if and when we sell shares to Lincoln Park pursuant to the 2015 Purchase Agreement. The Additional Commitment Shares are issued pro rata as Lincoln Park purchases up to the additional $10,250,000 of our common stock as directed by us. For example, if we elect, at our sole discretion, to require Lincoln Park to purchase $100,000 of our stock then we would issue 6,504 Additional Commitment Shares, which is the product of $100,000 (the amount we have elected to sell) divided by $10,250,000 (the remaining total amount we can sell Lincoln Park pursuant to the 2015 Purchase Agreement multiplied by 666,666 (the total number of Additional Commitment Shares). The Additional Commitment Shares will only be issued pursuant to this formula as and when we elect at our discretion to sell stock to Lincoln Park. We do not have the right to commence any further sales to Lincoln Park under the 2015 Purchase Agreement until the SEC has declared effective the registration statement of which this prospectus forms a part. Thereafter, we may, from time to time and at our sole discretion, direct Lincoln Park to purchase up to 150,000 shares of our common stock on any business day, which amount may be increased to up to 350,000 shares, provided the closing price of our common stock exceeds certain thresholds set forth in the 2015 Purchase Agreement. Additionally, we may direct Lincoln Park to purchase an additional accelerated amount under certain circumstances set forth in the 2015 Purchase Agreement. Except as described in this prospectus, there are no trading volume requirements or restrictions under the 2015 Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Lincoln Park. The purchase price of the shares that may be sold to Lincoln Park pursuant to the 2015 Purchase Agreement will be based on the market price of our common stock immediately preceding the time of sale as computed pursuant to the 2015 Purchase Agreement without any fixed discount; provided that in no event will such shares be sold to Lincoln Park when our closing sale price is less than $0.05 per share, subject to adjustment as provided in the 2015 Purchase Agreement. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute such price. We may at any time in our sole discretion terminate the 2015 Purchase Agreement without fee, penalty or cost upon one business days notice. Lincoln Park may not assign or transfer its rights and obligations under the 2015 Purchase Agreement. Issuances of our common stock in this offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to Lincoln Park. Agreement with Peat Financial Ltd. On June 29, 2015, we entered into a securities purchase agreement with Peat Financial Ltd., which we refer to in this prospectus as the PF Agreement, pursuant to which we issued 1,666,667 shares of common stock to Peat Financial, at a purchase price of $0.06 per unit for gross proceeds of $100,000. Pursuant to the PF Agreement, we agreed to file a registration statement related to the transaction with the SEC covering the shares of common stock. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 KONARED CORPORATION (Exact name of registrant as specified in its charter) Nevada 2080 99-0366971 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 2829 Ala Kalanikaumaka St., Suite F-133 Koloa, Hawaii 96756 Telephone: 808.212.1553 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Shaun Roberts 2829 Ala Kalanikaumaka St., Suite F-133 Koloa, Hawaii 96756 Telephone: 808.212.1553 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy of Communications To: Gregory Sichenzia, Esq. Peter DiChiara, Esq. Sichenzia Ross Friedman Ference LLP 61 Broadway, 32nd Floor New York, NY 10006 Telephone: (212) 930-9700 Facsimile: (212) 930-9725 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company (Do not check if a smaller reporting company) Table of Contents Securities Offered Common stock to be offered by the selling stockholders 21,666,667 shares including (i) 20,000,000 shares, 4,333,334 which have been issued, and 15,666,666 which we may issue under the Purchase Agreement with Lincoln Park and (ii) 1,666,667 sold to Peat Financial. Common stock outstanding prior to this offering 91,640,910 shares Common stock outstanding after this offering (1) 107,307,576 shares Use of Proceeds We will receive no proceeds from the sale of shares of common stock by Lincoln Park in this offering. However, we may receive up to an additional $10,000,000 under the 2015 Purchase Agreement with Lincoln Park. Any proceeds that we receive from sales to Lincoln Park under the 2015 Purchase Agreement will be used for working capital and general corporate purposes. See Use of Proceeds.
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+S-1/A 1 ncmfs1a061715.htm As filed with the Securities and Exchange Commission on June 30, 2015 Registration No. 333-193160 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ================================== AMENDMENT NO. 9 TO FORM S-1/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ================================== NCM Financial, Inc. (Exact Name of Small Business Issuer in its Charter) Texas 7372 20-4859853 (State or other Jurisdiction of Incorporation) (Primary Standard Classification Code) (IRS Employer Identification No.) Rosewood Court 2101 Cedar Springs Road, Suite 1050 Dallas, TX 75201 Tel. No.: 800-686-3259 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) Copies of communications to: Gregg E. Jaclin, Esq. Szaferman Lakind Blumstein & Blader, PC 101 Grovers Mill Road Second Floor Lawrenceville, NJ 08648 Tel. No.: (609) 275-0400 Fax No.: (609) 555-0969 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [x] CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share (4) Proposed Maximum Aggregate Offering Price Amount of Registration fee (5) Common Stock, $0.01 par value per share (1)(2) 38,425,000 $0.25 $9,606,000 $1,116.25 Common Stock, $0.01 par value per share (3) 83,050,000 $0.25 $20,762,500 $2,412.60 Total 121,475,000 $0.25 $30,368,750 $3,528.85 (1) This registration statement includes the resale by our selling shareholders of up to 38,425,000 shares of common stock. (2) Pursuant to Rule 416 under the Securities Act, this Registration Statement shall be deemed to cover the additional securities (i) to be offered or issued in connection with any provision of any securities purported to be registered hereby to be offered pursuant to terms which provide for a change in the amount of securities being offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions and (ii) of the same class as the securities covered by this Registration Statement issued or issuable prior to completion of the distribution of the securities covered by this Registration Statement as a result of a split of, or a stock dividend on, the registered securities (3) This registration statement includes 83,050,000 shares of common stock that may be sold by the registrant from time to time at an offering price of $0.25. Pursuant to Rule 416(b) of the Securities Act of 1933, as amended (the "Securities Act").The shares of common stock being registered hereunder includes a maximum of 83,050,000 shares of common stock as may be issuable with respect to the shares being registered hereunder resulting from the split of, or the stock dividend on, the registered securities. (4)
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001533427_pazoo-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001533427_pazoo-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to PAZOO, Inc.. PAZOO, INC Organization Pazoo ( Pazoo ), was incorporated in Nevada on November 16, 2010 under the name IUCSS, Inc. A name change from IUCSS, Inc. to Pazoo occurred on May 9, 2011. As of January 31, 2015 there were 219,731,242 shares of common stock outstanding. There were also the following Preferred Stock issued and outstanding on January 31, 2015: Series A - 1,198,526; Series B -1,187,500; and no Series C shares outstanding. Certain of these Series of Preferred Stock convert into Pazoo Common Stock. Copies of the filed Certificates of Designations can be obtained from the Nevada Secretary of State or the Company. Our principal executive offices are located at 760 Route 10, Suite 203, Whippany, New Jersey 07981. Our telephone number is (855) PAZOO-US. Our internet address is www.pazoo.com. Information on our website does not constitute part of this prospectus. Our Business We are a health and wellness company. Presently, our primary source of revenue is pazoo.com, an online, content driven, advertising supported health and wellness web site for people and their pets. This site has e-commerce functionality which allows pazoo.com to be an online retailer of nutritional foods/supplements, wellness goods, and fitness apparel. The Company has also moved into the cannabis industry where it seeks to provide, through its wholly owned subsidiaries (MA & Associates, LLC and Harris Lee Holdings, LLC), quality control services to the medical and recreational cannabis industry. The company s primary mission is to protect the public health by providing infrastructure and analytical services to legally authorized distributors and producers of cannabis and to regulators tracking their operations. This will be accomplished by the exclusive use of a best-in-class testing protocol established by Steel Hill Labs, Inc. The company will provide the medical cannabis industry guidelines on how the regulation and inspection by public health authorities is to be implemented. It is anticipated that this segment of the company will be its primary revenue source in the future. The cannabis industry is heavily regulated on the Federal, State and Local levels and the company is subject to changing regulation and enforcement. The Risk Factors as set forth on Page 9 should be read carefully as there is much uncertainly in this area. Table of Contents THE OFFERING We have 219,731,242 shares of common stock issued and outstanding as of January 31, 2015 and are registering 40,000,000 shares to be issued in accordance with the Equity Purchase Agreement between Premier Venture Partners, LLC ( Selling Security Holder ) and the Company. In the event less than 40,000,000 are issued in accordance with the Equity Purchase Agreement, the remaining unissued shares will be terminated. We will receive 100% of the proceeds from the sale of the common stock to the Selling Security Holder, but will not receive any proceeds from any future re-sale of the common shares by the Selling Security Holder. The following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering. Securities being offered by the Selling Security Holders, common stock, $0.001 par value 40,000,000 shares of common stock, $0.001 par value to be issued to Premier Venture Partners, LLC in accordance with a certain Equity Purchase Agreement dated April 4, 2014. Underwriter: Premier Venture Partners, LLC is both the underwriter and Selling Security Holder in this transaction. Offering Price per Share by the Selling Security Holders: All shares being registered may be sold by the Selling Security Holder without our involvement. The actual price of the stock will be determined in accordance with the price as set forth in the Equity Purchase Agreement. Offering Period: The period during which the Company may make a Put Notice as defined in the Equity Purchase Agreement, is thirty-six (36) months from April 4, 2014 (i.e. April 3, 2017) Number of Shares Outstanding Before the Offering: 219,731,242 common shares are currently issued and outstanding none of which are being registered under this prospectus. All 40,000,000 shares may be issued in the future under the Equity Purchase Agreement. Minimum number of shares to be sold in this Offering: None. Use of Proceeds All of the proceeds will be used by the Company for working capital. We have paid and will pay all expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states) other than commissions, expenses, reimbursements and discounts of underwriters, dealers or agents, if any. As of January 31, 2015, expenses for this offering, including the preparation of this prospectus and the filing of this registration statement, were approximately $5,000. Termination of the offering April 3, 2017 Terms of the offering The actual price of the stock will be determined by using the prevailing market prices at the time of sale as adjusted in accordance with the Equity Purchase Agreement (which is 70% of the lowest reported trade of the Company s common stock during the Put Period as defined in the Equity Purchase Agreement) and the Selling Security Holder will determine when and how they will sell the common stock offered in this prospectus. The Company will receive no proceeds from any future re-sale of any of the registered shares by the Selling Security Holder. Trading Market: Our common stock is currently quoted in the Over-the-Counter Bulletin Board ( OTCQB ). The common stock trades under the symbol PZOO, but there is only a limited trading market. The last high and low trades of Pazoo Common Stock for the last 30 trading days were as follows: Date High Trading Price Low Trading Price 1/30/15 0.0102 1/14/15 0.0219 We are subject to those financial risks generally associated with startup enterprises. We have sustained losses since inception. We may require additional financing and independently seek capital to fund our development activities. However, we may be unable to obtain such financing. Investing in our common stock involves a high degree of risk. We are subject to risk factors specific to our business strategy and the health and wellness industry. You should carefully consider all the risks described below, together with other information contained in this prospectus (including our financial statements and related notes), before making a decision to invest in our common stock. Our business could be harmed by any of these risks at any time. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. Table of Contents RISK FACTORS General Risks Relating to the our Business and this Offering We have only a limited operating history. We have had only limited sales and revenue during our operating history. We have never been profitable. We cannot therefore forecast with any accuracy the results of operations for the next fiscal year, nor predict our need for cash. Our revenues may not grow as anticipated, and revenues are dependent on consumer acceptance of our products and website, our ability to market our products and website, the effect of competition, and general economic factors beyond our control. We have competition in each of our business segments. Health & Wellness Websites. Pazoo.com is a site for people who want to live a healthy life and also want the same for their pets. Based on our market research, we have not identified other web sites that offer our dual health and wellness offerings, catering to the health of people and pets. There are indirect competitors, which offer medical advice such as WebMD. However, these sites have, in relative terms, a narrow focus on medical issues and don't focus on the broader area of health and wellness. We are not looking to be an in depth resource about a specific ailment or condition, which is the main focus for WebMD and other similar sites. In effect, we are not competing with those sites per se, because if you want specific information on a specific ailment or condition a consumer will perform internet searches and end up at sites such as WebMD. People Focused. We are about living a healthy and happy lifestyle which includes making sure that a visitor has the proper health and wellness experts involved in their lives when professionals are needed. On the people side we are looking for the same audience as Health.com, Shape.com, EveryDayHealth.com, etc., which are very informative sites. These sites primarily focus on diets and exercise. While Pazoo does provide content related to diets and exercise (as good, if not better than these competitors), we go beyond that offering a comprehensive look at health and wellness by going to areas like military health and wellness. We not only have professional writers addressing these issues but we have our Pazoo experts discussing these issues. In another words, we go outside the narrow focus that other sites have, utilizing our own Experts as well as professional writers. This combination is rare in health and wellness web sites. Pet Focused. We compete with websites in the pet owner space. These sites are usually more narrowly focused than Pazoo's approach to a broad view of the Pet world. Most pet sites are for shopping (Petco.com) or a specific area like adoption/rescue, etc. (Breeders.net, Dogfriendly.com -- travel advice). We take a broad view, providing an ongoing experience to learn more about a lot of different areas in the pet world. So, if a visitor is a pet lover (over 60% of American homes have pets) then this visitor can go to pazoo.com and find a wide array of topics and new information. E-Commerce. The online commerce market is rapidly evolving and intensely competitive, and we expect the competition to intensify in the future. Barriers to entry are minimal, and current and new competitors can launch new sites at a relatively low cost. In addition, the health improvement industry is intensely competitive. We currently or potentially compete with a variety of other companies. These competitors include: 1. Direct competitors that specialize in or derive a substantial portion of their revenues from online retail and direct marketing of health and wellness products, including Vitacost; 2. Various nutrition centers and vendors of other health related products such as sports nutrition, diet or other wellness products, including General Nutrition Centers; and 3. Online vendors of dietary supplements, vitamins, minerals and herbs, with significant brand awareness, sales volume and customer bases, such as and VitaminShoppe. We believe that the principal competitive factors in our market are brand recognition, selection, convenience, price, accessibility, customer service, and speed of order fulfillment. Many of our current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than Pazoo. In addition, online retailers may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies as use of the Internet and other online services increases. Some of our competitors may be able to secure merchandise from vendors on terms that are more favorable, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing or inventory availability policies and devote substantially more resources to website and systems development than our company. Increased competition may result in reduced operating margins, loss of market share and a diminished brand franchise. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our financial condition, operational results, business, and prospects. Furthermore, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on our financial condition, operational results, business, and prospects. Table of Contents The Selling Security Holder named in this prospectus is registering all or a portion of its shares of common stock through this prospectus are doing in accordance with a certain Equity Purchase Agreement dated April 4, 2014. We will receive 100% of the proceeds from the sale of these shares in accordance with the Equity Purchase Agreement but none of the proceeds of any future re-sale by the Selling Shareholder.
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+S-1/A SUMMARY General MA Managed Futures Fund, LP, a Delaware limited partnership formed in October 2011 (the "Fund"), is offering three classes of limited partnership units ("Units"): Class A, Class C (divided into four series: Series I, Series II, Series III, and Series IV), and Class I (each, a "Class"). Each Class invests in the Fund's futures trading portfolio, as well as the Fund's portfolio of managed futures funds and managed futures accounts, each selected by MA Capital Management, LLC, the general partner and commodity pool operator of the Fund (the "General Partner"). The Fund has not yet begun investment and trading operations. For break-even analysis purposes, investments in the Fund will be calculated in terms of the minimum investment to each Class: $5,000 each for Class A and Class C Units, and $1,000,000 for Class I Units. At this price and after taking into account the estimated costs and fees applicable to the Fund, two break-even scenarios were created for the Fund. In the first scenario, an assumption is made that the Fund operates with the minimum capitalization needed to commence operations ($5,000,000) for its first twelve (12) calendar months of operations; under this assumption, the break-even point for the Fund twelve months after an investment is a return of $774.61 or 15.49% or $561.20 or 11.22% for Class A and Class C Units, respectively, and a return of $93,945.12 or 9.39% for Class I Units. This scenario further assumes that the Fund's total assets under management remains at $5,000,000 for the first year of the Fund's operations. In the second scenario, an assumption is made for break-even purposes that the Fund operates with an average capitalization of $50,000,000 for its first twelve (12) calendar months of operations; under this assumption, the break-even point for the Fund after twelve months after an investment is a return of $612.52 or 12.25% or $399.11 or 7.98% for Class A and Class C Units, respectively, and a return of $61,528.66 or 6.15% for Class I Units. To the extent that the Fund falls short of this capitalization amount, a higher break-even point than that provided in the second break-even calculation scenario would result. Investment Program The Fund will invest approximately 97% of its assets in exchange-traded futures contracts, options on futures, and off-exchange retail foreign currencies by implementing its own futures trading program as well as by investing in managed futures funds and managed futures accounts managed by third party commodity pool operators and third party sub-advisors. Approximately 10% of the 97% of the Fund's assets committed to exchange-traded futures contracts, options on futures, and off-exchange retail foreign currencies will be managed "in house" by the General Partner. The remainder, or approximately 90% of the 97% of the Fund's assets committed to trading the above assets, will be managed by third party sub-advisers or invested in other managed futures funds. The General Partner will exclusively trade futures contracts and options on futures contracts. The General Partner will not trade foreign currencies of any kind, although the managed futures funds and managed futures accounts in which the Fund invests will do so. Neither the General Partner, nor the managed futures funds and managed futures accounts in which the Fund will invest, will trade in swaps subject to CFTC regulation, or foreign exchange which are exempted from the definition of "swap" in accordance with the Commodity Exchange Act. The futures contracts the Fund will trade will consist of 8 asset classes: stock indices (United States: S&P 500, Nasdaq 100, Dow Jones; European: DAX, CAC 40, FTSE, etc.; and Asia: Hang Seng, Nikkei, etc.), volatility indices, bonds (US Treasury bonds, Australian bonds, UK bonds, etc.), currencies (USD/AUD, USD/CAD, USD/CHF, USD/EUR, USD/GBP, USD/JPY, USD/MXN, USD/NOK, USD/NZD, USD/SEK and US dollar indexes, etc.), real estate (Case-Shiller Home Index, etc.), energy (crude oil, natural gas, heating oil, coal, electricity, ethanol, etc.), metals (gold, silver, platinum, copper, aluminum, zinc, nickel, uranium, etc.), weather (temperature, hurricanes, snowfall, rainfall, etc.), and agricultural commodities (orange juice, coffee, cotton, sugar, cocoa, wheat, corn, soybeans, rapeseed, rice, palm oil, live cattle, lean hogs, rubber, etc.). The off-exchange foreign currency contracts the managed futures funds and managed futures accounts in which the Fund will invest may trade include: USD/AUD, USD/CAD, USD/CHF, USD/EUR, USD/GBP, USD/JPY, USD/MXN, USD/NOK, USD/NZD, USD/SEK, etc. The Fund will not trade futures contracts for individual securities. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 13 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MA MANAGED FUTURES FUND, LP (Exact name of registrant as specified in its charter) Delaware 6221 (State of Organization) (Primary Standard Industrial Classification Code Number) 90-0793845 (I.R.S. Employer Identification Number) Agents and Corporations, Inc. 4440 PGA Boulevard 1201 Orange Street Suite 600 Suite 600 Palm Beach Gardens, FL 33410 Wilmington, DE 19801 (561) 623-5310 (302) 575-0877 (Address, including zip code, and telephone number, including area (Name, address, including zip code, and telephone number, including code, of registrant's principal executive offices) area code, of agent for service) Copy to: Bilal H. Malik Malik Law Group LLC 191 Peachtree Street, Suite 3275 Atlanta, GA 30303 (678) 279-5478 Approximate Date Of Commencement Of Proposed Sale To The Public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act") check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o When investing in futures contracts, the Fund will utilize global futures markets and exchanges andUnited States futures markets, including: the Chicago Mercantile Exchange (CME); the Chicago Board of Trade (CBOT); the Commodity Exchange (COMEX); and the New York Mercantile Exchange (NYMEX). The Fund's currency trading will be conducted using exchange-traded futures and forward contracts and, to a lesser extent, spot forex markets. The General Partner MA Capital Management, LLC, a Florida limited liability company, serves as the general partner and commodity pool operator of the Fund and is responsible for the management and administration of the Fund. The General Partner's offices, and the office of the Fund where its books and records will be kept, are located at 4440 PGA Boulevard, Suite 600, Palm Beach Gardens, FL 33410. The General Partner is registered as a commodity pool operator with the Commodity Futures Trading Commission ("CFTC") as of October 31,2011 and is also a commodity trading advisor registered with the CFTC as of August 17, 2010. The General Partner was also registered as a Forex Firm as of September 10, 2012. The General Partner is a member of the National Futures Association ("NFA") as of August 17, 2010. The Managing Partner of the General Partner is Monty Agarwal and Mark Stephan serves as a portfolio manager of the General Partner. The General Partner reserves the right to add additional personnel in the future. The past performance disclosures of the General Partner may be found beginning on page 14. The General Partner is a professional futures trading advisor. The General Partner intends to delegate certain administrative functions, including calculation of the Fund's net asset value to NAV Consulting, Inc., a major fund administration firm. Certain Fund records will be located at the offices of NAV Consulting Inc. at 2625 Butterfield Road, Suite 208W, Oak Brook, IL 60523. The General Partner also intends to delegate certain transfer agent duties, including the calculation of the net asset value of each Class and Series of Units and the distribution of reports to investors, to Mutual Shareholder Services, LLC. Certain Fund records will be located at the offices of Mutual Shareholder Services, LLC at 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147. Monty Agarwal, a principal of the General Partner, has contributed $3,000 to the capital of the Fund as the "Initial Limited Partner." This amount is in addition to the total capital contribution amount offered by this Prospectus. Monty Agarwal will maintain an investment in the Fund of at least $3,000, but may withdraw any excess above such level in the Fund at any month-end. The Offering MA Capital Management LLC will select one or more selling agents, including Newport Coast Securities, Inc. (CRD# 16944), who will offer the Units of the Fund for an initial capital contribution period scheduled to end at 5:00 p.m. in New York, NY on , subject to extension for up to 3 months. After the initial capital contribution period, capital contributions will be continuously accepted as of the last day of each month until the offering of the Units terminates on May 31, 2016. Units will be purchased at their current net asset value after deduction of any front-end sales load. The selling agents will use their best efforts to locate investors for the Fund but are not required to meet any predetermined total capital contribution amount. Capital contribution proceeds will be deposited in the Fund's account at Huntington National Bank until the Fund commences operations, with all income from such deposits paid to the Fund. The Fund is required to reach a capitalization of $5,000,000 prior to beginning trading and, thereafter, no capital contribution amount must be raised as of the end of any month and the Fund does not need to maintain any minimum capitalization level to continue operations. The selling agents will not be paid any front-end sales loads or annual sales fees until the minimum offering amount ($5,000,000) is sold. If the total amount registered pursuant to this offering is contributed, the proceeds to MA Managed Futures Fund, LP will be as follows: $50,000,000 if all Units sold are Class I Units; $47,500,000 if all Units sold are Class A Units; $49,250,000 if all Units sold are Class C Units (assuming all Class C Units sold are of Series I, which pays the highest sales fee), or; some figure between $47,500,000 and $50,000,000 if some combination of the Classes of Units is sold. Investors should note that the selling agents will be deemed statutory underwriters of the Fund. As of the date of this Prospectus, only Newport Coast Securities, Inc. has been retained as a selling agent by the General Partner. No selling agent, including Newport Coast Securities, Inc., will receive any non-cash compensation in connection with the offering of the Fund under FINRA Rule 2310(c). If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Maximum Aggregate Number of Securities to be Offered Proposed Maximum Aggregate Offering Amount of Registration Fee Class A, Class C, and Class I Limited Partnership Units, no par value per Unit 50,000 $ 50,000,000 $ 5,730.00 Total: 50,000 $ 50,000,000 $ 5,730.00 The proposed maximum aggregate offering has been calculated assuming that all Units are sold at the price of $1,000 per Unit. After the initial contribution period, Units will be sold at their present net asset value. The amount of the registration fee for the Units is calculated in reliance upon Rule 457(o) under the Securities Act and using the proposed maximum aggregate offering as described above. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Escrow of Funds During the initial capital contribution period, funds from capital contributions will be deposited in a non-interest bearing escrow account within One (1) business day of acceptance by the General Partner in the Fund's name at Huntington National Bank, the Fund's escrow agent, until(i) the Fund raises the minimum aggregate initial capital contributions ($5,000,000) and released for trading purposes. Please note that investor's funds will remain in Escrow, and will not be released for trading, until the $5 million contingency is met ; or (ii) returned to the payors of such funds as further described herein. Subscriptions may be accepted or rejected by the General Partner in its sole discretion. If a Subscriber's subscription is rejected, or if the minimum aggregate initial capital contribution is not achieved, his or her subscription payment will promptly be returned within Ten (10) business days. Minimum Investment & Unit Net Asset Value Calculation The minimum initial capital contribution for Class A Units and Class C Units is $5,000. The minimum initial capital contribution for Class I Units is $1,000,000. The minimum additional capital contribution for Class A Units, Class C Units, and Class I Units is $1,000. The transfer agent of the Fund, Mutual Shareholder Services, LLC is responsible for calculating the net asset value of each Class of Units, including each Series of Class C. To determine the net asset value of each Unit, the transfer agent takes the net asset value of each Class and divides it by the number of Units in such Class, provided that, in the case of Class C Units, the transfer agent divides the net asset value of each Class C Series by the number of Units in such Series. To determine the value of the Limited Partner's investment in the Fund as of any date, the net asset value of the Class A, Class C, and/or Class I Units, as applicable, is multiplied by the number of Units the Limited Partner owns. The number of Units a Limited Partner owns will be increased by additional capital contributions and decreased by withdrawals. Major Risks of the Fund An investment in the Fund is a speculative investment. You must be prepared to lose all or substantially all of your investment. The Fund is newly formed and thus has no performance history. The past performance of the General Partner's managed futures program is not necessarily indicative of the future results of the Fund. The General Partner's trading program, as well as the managed futures funds and managed futures accounts in which the Fund invests, are speculative and leveraged. The General Partner's trading program, as well as the managed futures funds and managed futures accounts, will acquire positions with face amounts substantially greater than their total equity. Leverage magnifies the impact of both gains and losses. The Fund's performance is expected to be volatile; the net asset value of the Fund and each Unit therein may fluctuate significantly in a single month. Third party sub-advisors and commodity pool operators will control the investment programs of each managed futures account and managed futures fund in which the Fund invests. Therefore, the Fund's performance will depend, to a certain extent, on the skill and acumen of such third party sub-advisors and commodity pool operators and their ability to successfully implement their trading programs. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. PROSPECTUS AND DISCLOSURE DOCUMENT OF MA MANAGED FUTURES FUND, LP $50,000,000.00 CLASS A, CLASS C, AND CLASS I, COLLECTIVELY LIMITED PARTNERSHIP UNITS The Offering MA Managed Futures Fund, LP (the "Fund"), a Delaware limited partnership, is offering three separate classes of limited partnership units (the "Units"), designated Class A, Class C, and Class I, in an aggregate offering amount of up to $50,000,000.00, collectively for all Classes. Class C is further divided into four series: Series I, Series II, Series III, and Series IV. Each investor will receive a Schedule K-1 reporting their allocable share of partnership tax items each year for income tax purposes. The primary objective of MA Managed Futures Fund, LP is to seek appreciation of its assets over time by implementing its futures trading program as well as by investing in a portfolio of managed futures funds and managed futures accounts which, in turn, invest in a wide array of futures products. The three Classes invest in a single portfolio, and the assets and liabilities of each Class are not segregated from the assets and liabilities of the other Classes. Selling agents selected by MA Capital Management, LLC, the general partner of the Fund, including Newport Coast Securities, Inc. (CRD# 16944), are offering the Units for an initial capital contribution period scheduled to end at 5:00 p.m. in New York, NY on , subject to extension for up to 3 months. After the initial offering period, capital contributions will be accepted as of the last day of each month. In each case, Units will be purchased at their current net asset value after deduction of any front-end sales load. The selling agents will use their best efforts to locate investors for the Fund but are not required to meet any predetermined total capital contribution amount. The selling agents will not be paid any front-end sales loads or annual sales fees until the minimum offering amount ($5,000,000) is sold. The offering of the Units will terminate 36 months after the effective date of this registration, on <TBD> If the total amount registered pursuant to this offering is sold, the proceeds to MA Managed Futures Fund, LP will be as follows: Proceeds to MA Managed Futures Fund, LP* Aggregate Per Unit ($1,000/Unit) If all Units sold are Class I Units $50,000,000.00 $1,000.00 If all Units sold are Class A Units $47,500,000.00 $950.00 If all Units sold are Class C Series I Units $49,937,500.00 $998.75 If all Units sold are Class C Series II Units $49,958,333.33 $999.16 If all Units sold are Class C Series III Units $49,979,166.66 $999.58 If all Units sold are Class C Series IV Units $50,000,000.00 $1,000.00 *To be held in a non-interest bearing escrow account at Huntington National Bank during the initial capital contribution period until the minimum capital contributions ($5,000,000) is raised. Thereafter, such proceeds will be turned over to the Fund for trading. During the initial capital contribution period, all Class A, Class C, and Class I Units will be sold at a price of $1,000 per Unit. Thereafter, due to the performance of the Fund, the prices of the Class A, Class C, and Class I Units will fluctuate according to their net asset value. Therefore, any Units sold after the initial capital contribution period will be There is no secondary market for the Fund's Units. You may withdraw from the Fund only as of a calendar month-end. Transfers of Units are subject to limitations as described herein. The Units will sustain losses if the substantial expenses of the Fund are not offset by investment gains and interest income. The Fund is subject to numerous conflicts of interest as described herein. Investment Considerations The Fund will implement its own futures trading program as well as invest in managed futures funds and managed futures accounts managed by third party commodity pool operators and third party sub-advisors. Accordingly, the performance of the Fund will depend on the investment performance of the Fund's trading program as well as such third party commodity pool operators and sub-advisors. The Fund may not retain sub-advisors or invest in managed futures funds which are managed or advised by persons related to the General Partner or its Principals. The General Partner utilizes fundamental analysis in selecting the managed futures funds and accounts in which it will invest the Fund's assets. Decisions to select managed futures funds and retain third party sub-advisors made by the General Partner are discretionary and thus involve human emotional responses to communications with third party commodity pool operators and sub-advisors, changing market conditions, and other factors outside the General Partner's control. An investment in the Fund has the potential to help diversify an investor's traditional securities portfolios. A diverse portfolio consisting of assets that perform in an unrelated manner, or non-correlated assets, may increase overall return and/or reduce the volatility (a widely used measure of risk) of a traditional portfolio of stocks and bonds. However, for a non-correlated asset to increase a traditional portfolio's overall returns, the non-correlated asset must outperform either stocks or bonds over the period being measured. There can be no assurance that the Fund will outperform other sectors of an investor's portfolio or not produce losses. The Fund will hold that portion of its assets traded in the Fund's futures trading program or invested in managed futures accounts (including those assets used as margin deposits for trading activities) in U.S. government securities and/or interest-bearing deposit accounts. Accordingly, the Fund, in addition to its potential to profit from its investment operations, will earn interest on all or almost all of its assets deposited in such accounts. Limited Liability Investors cannot lose more than the amount of their investments and undistributed gains, if any. Thus, investors receive the advantage of limited liability in a leveraged trading vehicle. Withdrawals, Distributions, Transfers, and Exchanges The Fund is intended to be a medium- to long-term (i.e., 3 to 5-year) investment. However, monthly withdrawals are permitted, without penalty or any charge, upon thirty (30) days' written notice to Mutual Shareholder Services (the Fund's transfer agent). Withdrawal proceeds will be paid in U.S. dollars. Due to the availability of monthly withdrawals, the General Partner does not intend to make any distributions, and the investment gains of the Fund, if any, will be reinvested in the Fund. Charges to the Fund and each Unit The Fund's fees and charges are substantial and must be offset by investment gains and interest income in order to avoid depletion of the Fund's assets. The fees and expenses applicable to the Fund and each Unit therein are as follows: sold at their current net asset value, which may be higher or lower than $1,000, to be determined at the time of such sale by the Fund's transfer agent, Mutual Shareholder Services, LLC. Investors will be notified of the current net asset value of the Units prior to their execution of the Fund's Subscription Agreement and will also be notified of the final Unit price determined as of the month-end closing date of their subscription to the Fund after such determination is made by the Fund's transfer agent. Investors should note that there are volume discounts for Class A Units; please see please see the "Sales Compensation" subsection under the "Charges" section, below. The General Partner MA Capital Management, LLC, a professional futures trading advisor, serves as the general partner and commodity pool operator of MA Managed Futures Fund, LP (the "General Partner"). The General Partner is registered as a commodity pool operator and commodity trading advisor with the U.S. Commodity Futures Trading Commission. Minimum Investment The minimum initial capital contribution for Class A and Class C Units is $5,000 and the minimum capital contribution for Class I Units is $1,000,000. The minimum additional capital contribution for each Class of Units is $1,000. The Risks These limited partnership Units are speculative securities. You could lose all or substantially all of your investment in the Fund. Before you decide whether to invest, read this entire prospectus carefully and consider "THE RISKS YOU FACE" on page 14. The Fund has not yet commenced operations and thus has no performance history. The General Partner's investment program and the managed futures funds and managed futures accounts in which the Fund invests are speculative and leveraged. The General Partner's trading program, as well as the managed futures funds and managed futures accounts, will acquire positions with face amounts substantially greater than their total equity. Leverage magnifies the impact of both gains and losses. Performance is expected to be volatile; the net asset value of an investor's Units may fluctuate significantly in a single month. The General Partner anticipates that approximately 90% of the Fund's assets will be managed by third party sub-advisors to the Fund or invested in managed futures funds which are themselves managed by commodity pool operators unaffiliated with the General Partner. These third party sub-advisors and commodity pool operators will control the investment programs of each managed futures account and managed futures fund, respectively, in which the Fund invests. Therefore, the Fund's performance will, to a certain extent, depend on the skill and acumen of such third party sub-advisors and commodity pool operators and their ability to successfully implement their trading programs. As of the date of this Prospectus, , the Fund has executed no agreements with any third party commodity trading advisers or managed futures funds. Therefore, the Fund is not obligated to invest with any trading program or managed futures fund at this time. In the future, when the Fund signs agreements with such third party sub-advisors and managed futures funds, the Fund will be obligated to make such agreements available to investors online via the SEC's EDGAR database except to the extent such agreements are protected, in whole or in part, by confidentiality treatment as determined by order of the Securities and Exchange Commission. After each calendar year each investor in the Fund will receive a Schedule K-1 reporting such investor's share of partnership tax items for income tax purposes. This form is expected to be available prior to April 15 each year following the taxable year it relates to; however, if there were a delay in making Schedule K-1's available, it could be more difficult for investors to complete their tax returns in a timely fashion. Additionally, investors who seek advice from tax advisors with respect to their Schedule K-1 may incur additional costs in the form of fees. There is no secondary market for the Fund's Units. You may withdraw from the Fund only as of a month-end. Transfers of Units are subject to limitations. You will sustain losses if the substantial expenses of the Fund are not offset by investment gains and interest income. To invest, you will be required to represent and warrant, among other things, that you have received a copy of this Prospectus and that you satisfy the minimum net worth and income requirements for residents of your state to invest in the Fund. You are encouraged to discuss your investment decision with your individual financial, tax, and legal advisers. The General Partner The Fund is charged a one percent (1%) annual management fee (1/12 of 1% payable monthly in advance) of the net assets of the Fund. The management fee will be allocated proportionally to each Limited Partner according to the Class and Series of Units such Limited Partner holds. The Fund is also charged an incentive allocation equal to ten percent (10%) of the Fund's new appreciation, including realized and unrealized gains and losses, for each fiscal quarter. New appreciation is the increase in the Fund's net asset value, after adjusting for capital contributions and withdrawals, since the last time an incentive allocation was paid or, if no incentive allocation has been paid, since the Fund commenced trading operations. As "new appreciation" will take into account capital contributions and withdrawals, any changes in the Fund's net asset value due to contributions and withdrawals will be ignored for purposes of determining the increase in the Fund's net asset value. The incentive allocation will be allocated proportionally to each Limited Partner according to the Class and Series of Units such Limited Partner holds. Please see "Charges to be Paid by the Fund and Each Unit Therein Incentive Allocation" for a more detailed discussion of new appreciation and the incentive allocation. Third Party Sub-Advisors and Managed Futures Fund Fees The Fund may be charged a management fee of up to two percent (2%) of the actual (as opposed to notional) net assets of the Fund managed by a third party sub-advisor or invested in a managed futures fund, payable to such third party sub-advisor or managed futures fund at such regular intervals, either in arrears or in advance, as the General Partner and such third party sub-advisor or managed futures fund may agree. The Fund may also be charged an incentive fee of up to twenty percent (20%) of the new appreciation, including realized and unrealized gains and losses, attributable to the Fund's assets managed by a third party sub-advisor or invested in a managed futures fund on such schedule as the General Partner and such third party sub-advisor or managed futures fund may agree. New appreciation is the increase in the net asset value of the assets managed by such third party sub-advisor or invested in a managed futures fund since the last time an incentive fee was paid or, if no incentive fee has been paid, since the Fund's allocation of assets to such third party sub-advisor or managed futures fund, in each case adjusted for additional capital contributions and withdrawals; the initial net asset value of the Fund's assets managed by a third party sub-advisor or invested in a managed futures fund is equal to the total net assets allocated by the Fund to such third party sub-advisor or managed futures fund. As incentive fees paid to third party sub-advisors or managed futures funds do not take into account the overall net gains or losses of the Fund and each Limited Partner's investment therein, the Fund may be assessed third party sub-advisor and managed futures fund incentive fees at a time when the overall net asset value of the Fund has decreased (although the General Partner may not be entitled to an incentive allocation in such a situation). Selling Agents and Others Investors in Class A Units will pay a front-end sales load on each capital contribution to the Fund equal to the following schedule: for capital contributions of less than $50,000: 5.0%; less than $100,000 but at least $50,000: 4.0%; less than $250,000 but at least $100,000: 3.0%; less than $500,000 but at least $250,000: 2.5%; less than $750,000 but at least $500,000: 2.0%; less than $1,000,000 but at least $750,000: 1.5%; at least $1,000,000: no front-end sales load. The front-end sales load will reduce the number of Class A Units purchased. Payments of front-end sales loads may be made directly to third party selling agents by the Fund's independent transfer agent. The General Partner may waive the front-end sales load for any Class A Limited Partner. The selling agents will not be paid any front-end sales loads until the minimum offering amount ($5,000,000) is sold. Class C Units will be sold in four different Series according to the total capital contributions (less any withdrawals) made by the Limited Partner holding such Class C Units: for contributions of less than $100,000, Series I; for contributions less than $500,000 but at least $100,000, Series II; for contributions less than $1,000,000 but at least $500,000, Series III; for contributions of at least $1,000,000, Series IV. Class C Units will pay an annual sales fee according to their respective Series equal to the following schedule: for Series I: 1.5%; for Series II, 1.0%; for Series III, 0.5%; for Series IV, no annual sales fee. The annual sales fee is charged monthly in advance as of the first day of each calendar month. The annual sales fee will be treated as an expense and will be charged to Class C Units for a period of 5 years. To the extent additional capital contributions or withdrawals by a Limited Partner would make such Limited Partner eligible for Units of another Series, all of the Class C Units held by such Partner will be exchanged for Units of the new Series at the current net asset values of the Units of the respective Class C Series. Payments of front-end sales loads may be made directly to third party selling agents by the Fund's independent transfer agent. The General Partner may waive the annual sales fee for any Class C Limited Partner. The selling agents will not be paid any annual sales fees until the minimum offering amount ($5,000,000) is sold. The Fund is an "emerging growth company" under the federal securities laws and will therefore be subject to reduced public reporting requirements. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. The Fund is not registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and the investor protections and regulations applicable to registered investment companies will not apply to the Fund. This Prospectus is in two parts: a disclosure document and a statement of additional information. These parts are bound together, and both contain important information. Prospectus dated July 25, 2014 Investors in Class I Units are not charged selling commissions. Furthermore, participating members will not receive any form of compensation related to Class I Units, including but not limited to front-end commissions, ongoing asset based fees or performance fees. The Fund itself may be charged sales loads or other commissions or fees by brokers for, or advisers of, the managed futures funds or managed futures accounts in which the Fund invests. Each Partner in the Fund will indirectly bear these commissions or fees. Additionally, in the case of the Fund's trading program and the managed futures accounts in which the Fund invests, brokerage fees will be incurred by the Fund in the course of the General Partner or third party sub-adviser pursuing their respective investment programs on the Fund's behalf. In the case of the Fund's investment in a managed futures fund, the Fund will bear its pro rata share of the managed futures fund's expenses, including brokerage fees. Regardless of whether incurred by the Fund's trading program, its managed futures accounts, or the managed futures funds in which the Fund invests, such brokerage fees and expenses are estimated to amount to approximately 1.00% of the average month-end net assets per year allocated by the Fund to such program, accounts, or funds. The Fund anticipates that individual commissions per side (as opposed to round turn) will be in the following ranges (subject to minimum commissions of approximately $10.00): $0.50 - $2.00 per futures contract; $0.50 - $2.00 per option contract; $1.00 - $2.50 per index option contract; $1.00 - $2.00 per contract for option exercise/assignment. The foregoing commissions are in addition to futures exchange and clearing fees and other fees assessed by applicable options and futures exchanges. Futures and option clearing fees are estimated to be between $0.02 and $0.50 per contract, which may be subject to a maximum fee per trade for large orders. Forex brokerage fees are paid in either a fixed spread or a variable spread of the bid price and the ask price; in either case, the fee will typically be between 1.5 pips (one basis point or 1/100th of one percent for most currency pairs) and 5 pips, depending on the currency pair and market volatility. In some cases, however, the brokerage commission may be as low as a fraction of 1 pip (e.g., two-tenths of one pip). Actual operating and ongoing offering expenses (including the costs of updating this Prospectus and increasing the maximum amount of Units for sale to the public), such as legal, auditing, administration, escrow, printing, and postage costs, are estimated to be 0.50% of average month-end net assets per year of the Fund. The General Partner will assume liability for operating expenses in excess of 1.00% of average month-end net assets per year of the Fund. The Fund will bear, without reimbursement, its organizational and initial offering costs (other than sales commissions) up to $120,000. Costs in excess of $120,000 will be borne by the General Partner. Break-Even Analysis The following tables show the fees and expenses that an investor would incur on a minimum initial capital contribution to the Fund for each Class of Units and the amount that such investment must earn to break even after one year. The Break-Even Analysis has been performed under two scenarios: The first set of break-even tables were created under the assumption that the Fund receives the minimum capital contributions required to begin trading, or $5,000,000. This scenario further assumes that the Fund's total assets under management remains at $5,000,000 for the first year of the Fund's operations. The second set of break-even tables were created under the assumption that the Fund has an average minimum net asset value of $50,000,000 for the first year of the Fund's operations (the total amount offered pursuant to this Prospectus). The fees estimated using these assumptions and shown below will be significantly overestimated or underestimated if the average net asset value of the Fund during its first year is significantly more than COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 39 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 7. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 14. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. $5,000,000 or less than $50,000,000, respectively. The break-even analysis is an approximation only. ASSUMPTION: MINIMUM NET ASSET VALUE FOR FIRST CALENDAR YEAR ($5,000,000) CLASS A UNITS DOLLAR RETURN REQUIRED PERCENTAGE RETURN REQUIRED ($5,000 INITIAL INVESTMENT) INITIAL TWELVE MONTHS OF INITIAL TWELVE MONTHS OF ROUTINE EXPENSES INVESTMENT INVESTMENT General Partner Management Fees (1) 1.00 % $ 50.00 General Partner Incentive Allocation (2) 0.00 % $ 0.00 Third Party Sub-Advisor or Managed Futures Fund Management Fees (3) 1.80 % $ 90.00 Third Party Sub-Advisor or Managed Futures Fund Incentive Fee (4) 2.79 % $ 139.43 Selling Commissions (5) 5.00 % $ 250.00 Operating and Ongoing Offering Expenses (6) 1.00 % $ 50.00 Brokerage Fees and Expenses (7) 1.00 % $ 50.00 Organizational and Initial Offering Costs (8) 2.40 % $ 120.00 Less Interest Income (9) 0.05 % $ 2.50 TWELVE-MONTH BREAK-EVEN 14.94 % $ 746.93 CLASS C UNITS DOLLAR RETURN REQUIRED PERCENTAGE RETURN REQUIRED ($5,000 INITIAL INVESTMENT) INITIAL TWELVE MONTHS OF INITIAL TWELVE MONTHS OF ROUTINE EXPENSES INVESTMENT INVESTMENT General Partner Management Fees (1) 1.00 % $ 50.00 General Partner Incentive Allocation (2) 0.00 % $ 0.00 Third Party Sub-Advisor or Managed Futures Fund Management Fees (3) 1.80 % $ 90.00 Third Party Sub-Advisor or Managed Futures Fund Incentive Fee (4) 2.02 % $ 101.02 Selling Commissions (5) 1.50 % $ 75.00 Operating and Ongoing Offering Expenses (6) 1.00 % $ 50.00 Brokerage Fees and Expenses (7) 1.00 % $ 50.00 Organizational and Initial Offering Costs (8) 2.40 % $ 120.00 Less Interest Income (9) 0.05 % $ 2.50 TWELVE-MONTH BREAK-EVEN 10.67 % $ 533.52 YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY ENGAGE IN OFF-EXCHANGE FOREIGN CURRENCY TRADING. SUCH TRADING IS NOT CONDUCTED IN THE INTERBANK MARKET. THE FUNDS THAT THE POOL USES FOR OFF-EXCHANGE FOREIGN CURRENCY TRADING WILL NOT RECEIVE THE SAME PROTECTION AS FUNDS USED TO MARGIN OR GUARANTEE EXCHANGE-TRADED FUTURES AND OPTION CONTRACTS. IF THE POOL DEPOSITS SUCH FUNDS WITH A COUNTERPARTY AND THAT COUNTERPARTY BECOMES INSOLVENT, THE POOL'S CLAIM FOR AMOUNTS DEPOSITED OR PROFITS EARNED ON TRANSACTIONS WITH THE COUNTERPARTY MAY NOT BE TREATED AS A COMMODITY CUSTOMER CLAIM FOR PURPOSES OF SUBSCHAPTER IV OF CHAPTER 7 OF THE BANKRUPTCY CODE AND THE REGULATIONS THEREUNDER. THE POOL MAY BE A GENERAL CREDITOR AND ITS CLAIM MAY BE PAID, ALONG WITH THE CLAIMS OF OTHER GENERAL CREDITORS, FROM ANY MONIES STILL AVAILABLE AFTER PRIORITY CLAIMS ARE PAID. EVEN POOL FUNDS THAT THE COUNTERPARTY KEEPS SEPARATE FROM ITS OWN FUNDS MAY NOT BE SAFE FROM THE CLAIMS OF PRIORITY AND OTHER GENERAL CREDITORS. This Prospectus does not include all of the information or exhibits in MA Managed Futures Fund, LP's Registration Statement. You can read and copy the entire Registration Statement at the Public Reference Facilities maintained by the Securities and Exchange Commission ("SEC") in Washington, D.C. MA Managed Futures Fund, LP will file quarterly and annual reports with the SEC. You can read and copy these reports at the SEC Public Reference Facility in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information. MA Managed Futures Fund, LP's filings will be posted at the SEC website at http://www.sec.gov. PENNSYLVANIA INVESTORS: Because the minimum closing amount is less than $13,333,334, you are cautioned to carefully evaluate MA Managed Futures Fund, LP's ability to fully accomplish its stated objectives and to inquire as to the current dollar volume of capital contributions in MA Managed Futures Fund, LP. Units will not be offered nor will capital contributions be accepted in Pennsylvania until a minimum of $6,666,667 has been invested in the aggregate in MA Managed Futures Fund, LP. FLORIDA INVESTORS: The following notice is provided to satisfy the notification requirement set forth in subsection 11(a)(5) of Section 517.061 of the Florida Statutes, 1987, as amended: the Florida investor acknowledges that any sale of a Unit to the Florida investor is voidable by the Florida investor either within three days after the first tender of consideration is made by the Florida investor to the issuer, or an agent of the issuer, or within three days after the availability of that privilege is communicated to the Florida investor, whichever occurs later. MA CAPITAL MANAGEMENT, LLC General Partner 4440 PGA Boulevard Suite 600 Palm Beach Gardens, FL 33410 (561) 623-5310 CLASS I UNITS DOLLAR RETURN REQUIRED PERCENTAGE RETURN REQUIRED ($1,000,000 INITIAL INVESTMENT) INITIAL TWELVE MONTHS OF INITIAL TWELVE MONTHS OF ROUTINE EXPENSES INVESTMENT INVESTMENT General Partner Management Fees (1) 1.00 % $ 10,000.00 General Partner Incentive Allocation (2) 0.00 % $ 0.00 Third Party Sub-Advisor or Managed Futures Fund Management Fees (3) 1.80 % $ 18,000.00 Third Party Sub-Advisor or Managed Futures Fund Incentive Fee (4) 1.69 % $ 16,910.12 Selling Commissions (5) 0.00 % $ 0.00 Operating and Ongoing Offering Expenses (6) 1.00 % $ 10,000.00 Brokerage Fees and Expenses (7) 1.00 % $ 10,000.00 Organizational and Initial Offering Costs (8) 2.40 % $ 24,000.00 Less Interest Income (9) 0.05 % $ 500.00 TWELVE-MONTH BREAK-EVEN 8.84 % $ 88,410.12 ASSUMPTION: AVERAGE NET ASSET VALUE FOR FIRST CALENDAR YEAR OF $50,000,000 CLASS A UNITS DOLLAR RETURN REQUIRED PERCENTAGE RETURN REQUIRED ($5,000 INITIAL INVESTMENT) INITIAL TWELVE MONTHS OF INITIAL TWELVE MONTHS OF ROUTINE EXPENSES INVESTMENT INVESTMENT General Partner Management Fees (1) 1.00 % $ 50.00 General Partner Incentive Allocation (2) 0.00 % $ 0.00 Third Party Sub-Advisor or Managed Futures Fund Management Fees (3) 1.80 % $ 90.00 Third Party Sub-Advisor or Managed Futures Fund Incentive Fee (4) 2.21 % $ 110.25 Selling Commissions (5) 5.00 % $ 250.00 Operating and Ongoing Offering Expenses (6) 1.00 % $ 50.00 Brokerage Fees and Expenses (7) 1.00 % $ 50.00 Organizational and Initial Offering Costs (8) 0.24 % $ 12.00 Less Interest Income (9) 0.05 % $ 2.50 TWELVE-MONTH BREAK-EVEN 12.20 % $ 609.75 CLASS C UNITS DOLLAR RETURN REQUIRED PERCENTAGE RETURN REQUIRED ($5,000 INITIAL INVESTMENT) INITIAL TWELVE MONTHS OF INITIAL TWELVE MONTHS OF ROUTINE EXPENSES INVESTMENT INVESTMENT General Partner Management Fees (1) 1.00 % $ 50.00 General Partner Incentive Allocation (2) 0.00 % $ 0.00 Third Party Sub-Advisor or Managed Futures Fund Management Fees (3) 1.80 % $ 90.00 Third Party Sub-Advisor or Managed Futures Fund Incentive Fee (4) 1.44 % $ 71.84 Selling Commissions (5) 1.50 % $ 75.00 Operating and Ongoing Offering Expenses (6) 1.00 % $ 50.00 Brokerage Fees and Expenses (7) 1.00 % $ 50.00 Organizational and Initial Offering Costs (8) 0.24 % $ 12.00 Less Interest Income (9) 0.05 % $ 2.50 TWELVE-MONTH BREAK-EVEN 7.93 % $ 396.34 CLASS I UNITS DOLLAR RETURN REQUIRED PERCENTAGE RETURN REQUIRED ($1,000,000 INITIAL INVESTMENT) INITIAL TWELVE MONTHS OF INITIAL TWELVE MONTHS OF ROUTINE EXPENSES INVESTMENT INVESTMENT General Partner Management Fees (1) 1.00 % $ 10,000.00 General Partner Incentive Allocation (2) 0.00 % $ 0.00 Third Party Sub-Advisor or Managed Futures Fund Management Fees (3) 1.80 % $ 18,000.00 Third Party Sub-Advisor or Managed Futures Fund Incentive Fee (4) 1.11 % $ 11,075.16 Selling Commissions (5) 0.00 % $ 0.00 Operating and Ongoing Offering Expenses (6) 1.00 % $ 10,000.00 Brokerage Fees and Expenses (7) 1.00 % $ 10,000.00 Organizational and Initial Offering Costs (8) 0.24 % $ 2,400.00 Less Interest Income (9) 0.05 % $ 500.00 TWELVE-MONTH BREAK-EVEN 6.10 % $ 60,975.16 The foregoing break-even analyses are approximations only and assume a constant net asset value ($5,000 with respect to Class A and Class C or $1,000,000 with respect to Class I) during the first year of an investor's investment in the Fund. (1) The Fund is charged a one percent (1%) annual management fee (1/12 of 1% payable monthly in advance) of the net assets of the Fund, payable to the General Partner. (2) The Fund is charged an incentive allocation equal to ten percent (10%) of the Fund's new appreciation, including realized and unrealized gains and losses, for each fiscal quarter. New appreciation is the increase in the Fund's net asset value, after adjusting for capital contributions and withdrawals, since the last time an incentive allocation was paid or, if no incentive allocation has been paid, since the Fund commenced trading operations. As "new appreciation" will take into account capital contributions and withdrawals, any changes in the Fund's net asset value due to contributions and withdrawals will be ignored for purposes of determining the increase in the Fund's net asset value. The incentive allocation will be allocated proportionally to each Limited Partner according to the Class and Series of Units such Limited Partner holds. No incentive allocation to the General Partner will be charged to the Fund until break-even costs are met for the Fund. However, because the General Partner's incentive allocation is payable quarterly, and the General Partner is not obligated to return incentive allocations once earned, it is possible for the General Partner to earn an incentive allocation during a break-even or losing year for the Fund if, after payment of an incentive allocation, the Fund incurs losses resulting in a break-even or losing year. It is impossible to predict what incentive allocations, if any, could be paid during a break-even or losing year for the Fund, thus none is shown. The General Partner will pay a portion of the annual management fee (1%) and the incentive allocation (10%) it collects to the managing underwriter, Newport Coast Securities as underwriting compensation. This underwriting compensation will only be paid to the managing underwriter and not to other selling agents. The maximum portion of the annual management and incentive allocation that the General Partner pays will be 10% for Class A and C units for an annual maximum of 0.50% of assets for a period of 3 years. (3) The Fund may be charged a management fee of up to two percent (2%) of the actual (as opposed to notional) net assets of the Fund managed by a third party sub-advisor or invested in a managed futures fund, payable at such regular intervals, either in arrears or in advance, as the General Partner and such third party sub-advisor or managed futures fund may agree. The General Partner estimates that approximately 90% of the Fund's assets will be managed by third party sub-advisors or invested in managed futures funds. For purposes of this break-even calculation, the most conservative management fee figure of 2% of actual funding has been used. Therefore, the calculation under the second scenario is as follows: ($50,000,000 X 90%) X (2%) = $900,000 per year of third party sub-advisor and managed futures fund management fees paid by the Fund. (4) The Fund may also be charged an incentive fee of up to twenty percent (20%) of the new appreciation, including realized and unrealized gains and losses, attributable to the Fund's assets managed by a third party sub-advisor or invested in a managed futures fund on such schedule as the General Partner and such third party sub-advisor or managed futures fund may agree. New appreciation is the increase in the net asset value of the assets managed by such third party sub-advisor or invested in such managed futures fund since the last time an incentive fee was paid or, if no incentive fee has been paid, since the Fund's allocation of assets to such third party sub-advisor or managed futures fund; the initial net asset value of the Fund's assets managed by a third party sub-advisor or invested in a managed futures fund is equal to the total net assets allocated by the Fund to such third party sub-advisor or managed futures fund. No incentive fees will be paid to a third party sub-advisor or managed futures fund until the loss carryforward provisions applicable to the Fund's investment are satisfied. However, as there may be multiple third party sub-advisors or managed futures funds retained by the Fund at any time, it is possible that the loss carryforward provisions protecting the assets managed by a particular third party sub-advisor or invested in a particular managed futures fund could be met, and the Fund would be obligated to pay such third party sub-advisor or managed futures fund an incentive fee, at a time when the Fund has experienced net losses. As third party sub-adviser and managed futures fund incentive fees may be paid regardless of whether the Fund overall breaks even in a given year and given that third party sub-advisors and managed futures funds will manage approximately 90% of the Fund's assets, it is likely that under a break-even scenario, the Fund will pay incentive fees to third party sub-advisors or managed futures funds. For purposes of the above break-even calculations, the incentive fees that would be paid to third party sub-advisors and managed futures funds, assuming that such third party sub-advisors and managed futures funds account for 90% of the Fund's income or profit and the General Partner accounts for the remaining 10%, under the respective break-even scenarios are provided. Limited Partners should be aware, however, that the actual incentive fees paid to third party sub-advisors and managed futures funds under an actual break-even scenario may differ widely from those figures provided above. (5) Investors in Class A Units will pay a front-end sales load on each capital contribution to the Fund equal to the following schedule: for capital contributions of less than $50,000: 5.0%; less than $100,000 but at least $50,000: 4.0%; less than $250,000 but at least $100,000: 3.0%; less than $500,000 but at least $250,000: 2.5%; less than $750,000 but at least $500,000: 2.0%; less than $1,000,000 but at least $750,000: 1.5%; at least $1,000,000: no front-end sales load. The front-end sales load will reduce the number of Class A Units purchased. Payments of front-end sales loads may be made directly to third party selling agents by the Fund's independent transfer agent.. The General Partner may waive the front-end sales load for any Class A Limited Partner. The selling agents will not be paid any front-end sales loads until the minimum offering amount ($5,000,000) is sold. Exhibit A: Form of Agreement of Limited Partnership Exhibit B: Subscription Agreement Exhibit C: Request for Withdrawal Exhibit D: Consent of Independent Registered Public Accounting Firm Exhibit E: Consent of Independent Public Accounting Firm An electronic version of this Prospectus is available on a special web site (http://www.MAFuturesFund.com) being maintained by MA Capital Management, LLC. Class C Units will be sold in four different Series according to the total capital contributions (less any withdrawals) made by the Limited Partner holding such Class C Units: for contributions of less than $100,000, Series I; for contributions less than $500,000 but at least $100,000, Series II; for contributions less than $1,000,000 but at least $500,000, Series III; for contributions of at least $1,000,000, Series IV. Class C Units will pay an annual sales fee according to their respective Series equal to the following schedule: for Series I: 1.5%; for Series II, 1.0%; for Series III, 0.5%; for Series IV, no annual sales fee. In the above break-even tables, the sales fee applicable to Series I of Class C Units has been used; Series II, Series III, and Series IV will have lower sales fees and, therefore, a lower break-even point. The annual sales fee is charged monthly in advance as of the first day of each calendar month. The annual sales fee will be treated as an expense and will be charged to Class C Units for a period of 5 years. To the extent additional capital contributions or withdrawals by a Limited Partner would make such Limited Partner eligible for Units of another Series, all of the Class C Units held by such Partner will be exchanged for Units of the new Series at the current net asset values of the Units of the respective Class C Series. Payments of front-end sales loads may be made directly to third party selling agents by the Fund's independent transfer agent. The General Partner may waive the annual sales fee for any Class C Limited Partner. The selling agents will not be paid any annual sales fees until the minimum offering amount ($5,000,000) is sold. Investors in Class I Units are not charged selling commissions. Furthermore, participating members will not receive any form of compensation related to Class I Units, including but not limited to front-end commissions, ongoing asset based fees or performance fees. (6) The Fund will pay its actual operating and ongoing offering expenses (including the costs of updating this Prospectus and increasing the total capital contribution amount available to the public), such as legal, auditing, administration, escrow, printing and postage costs. Additionally, the Fund will bear the operating expenses of the managed futures funds in which it invests. Together, the total operating and ongoing offering expenses of the Fund are estimated to be 0.50% of the average month-end net assets per year of the Fund. The General Partner will assume liability for operating expenses in excess of 1.00% of the average month-end net assets per year of the Fund. For the purpose of the above break-even calculations, the maximum figure (1.00%) has been employed under a "worst-case" scenario. (7) The Fund will pay brokerage fees and commissions in connection with its futures, options, and forward currency trading activities. Additionally, in the case of managed futures accounts in which the Fund invests, brokerage fees will be incurred by the Fund in the course of the third party adviser pursuing their investment program on the Fund's behalf. Finally, in the case of the Fund's investment in a managed futures fund, the Fund will bear its pro rata share of the managed futures fund's expenses, including brokerage fees. The Fund anticipates that individual commissions per side (as opposed to round turn) will be in the following ranges (subject to minimum commissions of approximately $10.00): $0.50 - $2.00 per futures contract; $0.50 - $2.00 per option contract; $1.00 - $2.50 per index option contract; $1.00 - $2.00 per contract for option exercise/assignment. The foregoing commissions are in addition to futures exchange and clearing fees and other fees assessed by applicable options and futures exchanges. Futures and option clearing fees are estimated to be between $0.02 and $0.50 per contract, which may be subject to a maximum fee per trade for large orders. Forex brokerage fees are paid in either a fixed spread or a variable spread of the bid price and the ask price; in either case, the fee will typically be between 1.5 pips (one basis point or 1/100th of one percent for most currency pairs) and 5 pips, depending on the currency pair and market volatility. In some cases, however, the brokerage commission may be as low as a fraction of 1 pip (e.g., two-tenths of one pip). Regardless of how incurred, the General Partner estimates that the brokerage fees paid directly or indirectly by the Fund will be approximately 1.00% of average month-end net assets per year of the Fund. This amount is an approximation by the General Partner and such fees and expenses may be significantly more or less than 1.00% on an annual basis. (8) The Fund will bear, without reimbursement, its organizational and initial offering costs (other than sales commissions) up to $120,000. Costs in excess of $120,000 will be borne by the General Partner. The organizational costs will be expensed upon the commencement of the Fund's operations and the offering costs will be amortized over the first 12 months of the Fund's operations. (9) The Fund will earn interest income on the money left over after all margin requirements are met, which will be directly dependent on the Fund's capitalization. The General Partner estimates that at a capitalization of $5,000,000, approximately 5% of the Fund's money will be earning interest and that at a capitalization of $50,000,000, approximately 50% of the Fund's money will be earning interest. If interest income earned is less than estimated, the Fund will have to earn investment profits greater than the amounts shown to cover its costs. Actual interest to be earned by the Fund will be at the prevailing rates for the period being measured which may be less than or greater than the 1.00% rate used in these break-even calculations over any twelve month period. Federal Income Tax Aspects The Fund will be a partnership for federal income tax purposes. As such, investors will be taxed each year on the income attributable to their Units whether or not they make a withdrawal from the Fund or receive distributions from the Fund. To the extent the Fund's trading program, managed futures funds, or managed futures accounts invest in futures, gain or loss on such investments will, depending on the contracts traded, consist of a mixture of: 1) ordinary income or loss; and/or 2) capital gain or loss. Forty percent (40%) of trading profits, if any, on U.S. exchange-traded futures contracts are taxed as short-term capital gains at ordinary income rates and the remaining sixty percent (60%) is taxed as long-term capital gains at a lower maximum rate for individuals. Trading gains or losses from other contracts will be primarily short-term capital gains or losses, and interest income is taxed at ordinary income rates. For non-corporate investors, capital losses may be deducted against capital gains but may only be deducted against ordinary income to the extent of $3,000 per year. Therefore, investors could pay tax on their share of the Fund's interest income even though such investor's Units have decreased in net asset value. Is MA Managed Futures Fund, LP a Suitable Investment for You? The primary objective of MA Managed Futures Fund, LP is to seek appreciation of its assets over time by investing in the General Partner's trading program as well as a portfolio of managed futures funds and managed futures accounts, each of which invest in a wide array of futures products. An investment in the Fund may fit within your portfolio allocation strategy if you are interested in the Fund's potential to produce returns generally unrelated to traditional securities investments. An investment in the Fund is speculative and involves a high degree of risk. The Fund is not a complete investment program. The General Partner offers Units in the Fund as a diversification opportunity for an investor's entire investment portfolio, and therefore an investment in the Fund should only be a limited portion of the investor's portfolio. To invest, you must, at a minimum, have: (1) a net worth of at least $250,000, exclusive of home, furnishings and automobiles; or (2) a net worth, similarly calculated, of at least $70,000 and an annual gross income of at least $70,000. Some jurisdictions in which the Fund's Units are offered impose higher minimum suitability standards on prospective investors. These suitability standards are, in each case, regulatory minimums only, and merely because you meet such standards does not mean that an investment in the Fund is suitable for you. You should not invest more than 10% of your net worth, exclusive of home, furnishings, and automobiles, in MA Managed Futures Fund, LP. Capital Contribution Procedure To invest in the Fund, you must complete and sign the Subscription Agreement, attached hereto as Exhibit B, and deliver it to your selling agent at least five business days prior to the applicable month-end closing date. Payment instructions are included with the Subscription Agreement. Subscription Agreements deemed valid and complete by the General Partner will be accepted, within five business days of receipt of a capital contribution, once payment proceeds have been received and cleared. Investors' purchases will be confirmed by their selling agents, generally within five business days after the applicable month-end closing. The General Partner will notify investors of, and will return, rejected capital contributions within five business days following the applicable month-end closing or sooner if practicable. No interest is earned while capital contributions are being processed. See "Plan of Distribution." Inception of Trading The minimum initial capital contribution to the Fund by Limited Partners investing in Class A and Class C Units is $5,000; the minimum initial capital contribution to the Fund by Limited Partners investing in Class I Units is $1,000,000. Monty Agarwal, Principal of the General Partner, has invested $3,000 in the Fund and at all times will maintain at least $3,000 invested in the Fund. The Fund must be funded with at least $5,000,000 in capital contributions before it may begin trading activities. The maximum contribution amount that may be contributed to the Fund is currently $50,000,000. The General Partner may hold Limited Partners' funds prior to the commencement of the Fund's trading activities; all capital contributions may be deposited with the Fund's FCM or in the Fund's bank account(s). Any interest income paid on such deposits shall accrue to the Fund. Reports Within 30 days after the end of a calendar month or as soon as practicable, the General Partner will provide Limited Partners with monthly account statements in accordance with CFTC Regulation 4.22. The account statements will report the fees charged by the third party sub-advisers or other managed futures funds, and will report the changes in net asset value of the third party sub-advisers or other managed futures funds. To the extent the third party sub-advisers or managed futures funds have submitted their CFTC mandated reports to the General Partner, they will be readily available and provided accordingly. In addition, the General Partner will provide Limited Partners with year-end audited financial statements as soon as practicable after the end of each fiscal year (beginning with fiscal year 2014), but in no case later than 90 days after the end of each fiscal year, including a statement of profit or loss for such fiscal year. The Fund's financial statements will be prepared using accounting principles generally accepted in the United State of America ("GAAP"). The General Partner shall be empowered to make any changes of accounting method that it shall deem advisable. Commodity Futures Trading Commission Rules require that this Prospectus be accompanied by summary financial information, which may be a recent monthly report of the Fund, current within 60 calendar days. Organizational Chart The organizational chart below illustrates the relationship among the various service providers of this offering. MA Capital Management, LLC is the general partner of the Fund. The selling agents and clearing brokers are not affiliated with MA Capital Management, LLC or MA Managed Futures Fund, LP. Performance Disclosures THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE HISTORY. NEITHER THIS POOL OPERATOR NOR ANY OF ITS TRADING PRINCIPALS HAS PREVIOUSLY OPERATED ANY OTHER POOLS OR TRADED ANY OTHER ACCOUNTS. MONTY AGARWAL HAS NOT OPERATED TRADING PROGRAMS COMPARABLE TO THE FUND WITHIN THE PRIOR FIVE YEARS AND, THEREFORE, THERE ARE NO PERFORMANCE DISCLOSURES RELATING TO HIS TRADING HISTORY. MARK STEPHAN HAS NOT OPERATED TRADING PROGRAMS COMPARABLE TO THE FUND PREVIOUSLY; THEREFORE, THERE ARE NO PERFORMANCE DISCLOSURES RELATING TO HIS TRADING HISTORY.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001546381_rlj_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001546381_rlj_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..8e8768a6e2e3141b841bc476fba5094d9421548f
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+PROSPECTUS SUMMARY SUMMARY OF THE OFFER Common stock offered: 31,046,243 shares issuable upon conversion of preferred stock and 9,313,873 shares issuable upon exercise of $1.50 warrants Common stock outstanding before this offering: 12,882,275 shares as of July 9, 2015 Additional common stock issuable upon conversion of all outstanding shares of preferred stock: 31,046,243 Additional common stock issuable upon exercise of outstanding $1.50 warrants: 9,313,873 shares Common stock to be outstanding if all outstanding shares of preferred stock are converted and all $1.50 warrants are exercised: 53,242,391 shares Use of proceeds: The common stock issuable upon conversion of the preferred stock and the exercise of the warrants are being offered solely for the accounts of the selling holders. We will not receive any proceeds from the sale of such securities. We will receive proceeds from the exercise of the warrants. We intend to use any proceeds of the exercise of the warrants for general working capital. See Use of Proceeds. NASDAQ symbol: RLJE Risk Factors: You should read the Risk Factors section of this prospectus and in the documents incorporated by reference in this prospectus for a discussion of factors to consider before deciding to purchase shares of our common stock. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001549719_intelligen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001549719_intelligen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..154c95df231a6715c6a0f0f91c3a3677ded79412
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock of Intelligent Highway Solutions, Inc. (referred to herein as the "Company," "we," "our," and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying financial statements and notes before making an investment decision. Business Overview On August 22, 2013, Intelligent Highway Solutions, Inc. (the "Company") entered into a distribution agreement (the "Distribution Agreement") with SCS Lighting Solutions Inc. ("SCS"), whereby SCS appointed the Company as its exclusive distributer of SCS products in Sacramento, California and other locations, as determined by both parties in the future. The SCS products include standard lighting solutions, as well as custom lighting products for indoor and outdoor applications. The Distribution Agreement is no longer exclusive. The Distribution Agreement s term automatically renews for one (1) year increments, unless either party elects to terminate the Agreement by giving not less than sixty (60) days notice prior to the end of the current term. On March 19, 2014, the Company announced it had received a significant purchase order from Honeywell International Inc. ("Honeywell") for the installation of a temperature control system and associated sensors in a state owned office building in Alameda, California. On July 1, 2014, the Company announced it had received a second purchase order from Honeywell. The purchase order is for additional work in office buildings owned by the State of California. The relationship with Honeywell ties directly into Intelligent Highway Solutions continued expansion of using 428, sensor technology for the transportation industry and expanding on our Phase II marketing plan to broaden our revenue base to technologies outside the traditional Intelligent Transportation System market. Honeywell has the state of the art in smart sensor technology, by becoming a Honeywell vendor, coupled with our installation background, we will be able to offer Honeywell s customers full turn-key services. Equity Purchase Agreement with GHS On August 6, 2015, we entered into the Equity Purchase Agreement with GHS, a Nevada limited liability company. Pursuant to the terms of the Equity Purchase Agreement, GHS committed to purchase up to $5,000,000 of our Common Stock during the Open Period. From time to time during the Open Period, we may deliver a drawdown notice to GHS which states the dollar amount that we intend to sell to GHS on a date specified in the put notice (the "Put Notice"). The maximum investment amount per notice shall be twice the average of the trading volume in dollar for the Company s Common Stock during the ten (10) trading days preceding the date of the Put Notice, but in no event lower than five thousand ($5,000) dollars or higher than one hundred thousand ($100,000) dollars without prior approval of GHS. The total purchase price to be paid, in connection to the Put Notice, by GHS shall be calculated at a thirty percent (30%) discount to the average of the two (2) lowest closing bid prices of the Company s Common Stock during the five (5) consecutive trading days immediately after the applicable Put notice date, notwithstanding certain provisions pursuant to the Equity Purchase Agreement. In connection with the Equity Purchase Agreement, we also entered into a registration rights agreement (the "Registration Rights Agreement") with GHS, pursuant to which we are obligated to file a registration statement with the SEC. We are obligated to use all commercially reasonable efforts to maintain an effective registration statement until termination of the Equity Purchase Agreement. The Company shall issue to GHS three percent (3%) of the total Commitment Amount as common stock (the "Commitment Fee"). The Commitment Fee shall be issuable in common stock fifteen (15) days after the Registration Statement becomes effective. Our current number of authorized shares is sufficient to cover the amount of shares that could be issued pursuant to the commitment fee. The value of shares will be determined based on the Formula Price, which is the average of the daily volume weighted average prices of the Company s Common Stock during the five (5) business days immediately preceding the day upon the due date of the issuance. Such shares will be registered in the Registration Statement filed with the SEC. The 600,000,000 shares to be registered herein represent 23.55% of the total issued and outstanding shares, assuming that the selling stockholder will sell all of the shares offered for sale. There are substantial risks to investors as a result of the issuance of shares of our Common Stock under the Equity Purchase Agreement. These risks include dilution of stockholders percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed. GHS will periodically purchase our Common Stock under the Equity Purchase Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to GHS to raise the same amount of funds, as our stock price declines. The aggregate investment amount of $5,000,000 was determined based on numerous factors, including the following: Current financial operating needs Financing of workover projects Acquisition of assets, business and/or operations Acquisition of additional licensing Other purposes that the Board in its good faith deem in the best interest of the Company Where You Can Find Us Our mailing address is 8 Light Sky Court, Sacramento, CA 95828, and our telephone number is (916) 379-0324. THE OFFERING
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001551693_project_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001551693_project_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..df79badb97fb4e32b7a1c091e5f003514c852a6f
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus or incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2014, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015, and our other filings with the Securities and Exchange Commission listed in the section of the prospectus entitled "Incorporation of Certain Information by Reference." This summary does not contain all of the information you should consider in making your investment decision. Before deciding to invest in shares of our common stock, you should read the entire prospectus, the registration statement of which this prospectus is a part, and the information incorporated by reference herein in their entirety. You should carefully consider, among other things, the matters discussed in the sections entitled "Risk Factors" and "Selected Financial Data" included elsewhere in this prospectus and incorporated herein by reference and the matters discussed in our financial statements and the accompanying notes and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case, incorporated by reference into this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements." Unless otherwise stated in this prospectus, references to "Sientra," "we," "us," "our" or "the Company" refer to Sientra, Inc. Overview We are a medical aesthetics company committed to making a difference in patients' lives by enhancing their body image, growing their self-esteem and restoring their confidence. We were founded to provide greater choice to board-certified plastic surgeons and patients in need of medical aesthetics products. We have developed a broad portfolio of products with technologically differentiated characteristics, supported by independent laboratory testing and strong clinical trial outcomes. We sell our breast implants and breast tissue expanders, or Breast Products, exclusively to board-certified and board-admissible plastic surgeons and tailor our customer service offerings to their specific needs, which we believe helps secure their loyalty and confidence. These advantages have allowed us to increase our market share each year since we entered the market in 2012. Our primary products are silicone gel breast implants for use in breast augmentation and breast reconstruction procedures, which we offer in over 195 variations of shapes, sizes, fill volumes, and textures. Our breast implants are primarily used in elective procedures which are generally performed on a cash-pay basis. Many of our breast implants incorporate one or more differentiated technologies, including a proprietary high-strength, cohesive silicone gel and proprietary texturing branded TRUE Texture. Our breast implants offer a desired balance between strength, shape retention and softness due to the high-strength, cohesive silicone gel used in our manufacturing process. TRUE Texture provides texturing on the implant shell that is designed to reduce the incidence of malposition, rotation and capsular contracture. We also offer breast tissue expanders and a range of other aesthetic and specialty products. We do not have any patents or patent applications, but rely on trade secrets, proprietary know-how and regulatory barriers to protect our products and technologies. Our breast implants were approved by the U.S. Food and Drug Administration, or FDA, in 2012, based on data we collected from our ongoing, long-term clinical trial of our breast implants in 1,788 women across 36 investigational sites in the United States, which included 3,506 implants (approximately 53% of which were smooth and 47% of which were textured). Our clinical trial is the largest prospective, long-term safety and effectiveness pivotal study of breast implant patients in the United States and included the largest magnetic resonance imaging, or MRI, cohort with 571 patients. The MRI cohort is a subset of study patients that underwent regular MRI screenings in addition to the other aspects of the clinical trial protocol. The clinical data we collected over an eight-year follow-up period demonstrated rupture rates, capsular contracture rates and reoperation rates that were Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Trademarks Our trademark portfolio contains five registered U.S. trademarks, including Sientra , Simplicity is Beauty , Sientra Simplicity is Beauty , Anatomical Controlled and ACX , and six Canadian trademark applications. This prospectus contains additional trademarks and trade names of others, which are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus or any document incorporated herein by reference are referred to without the and symbols, but such references should not be construed as any indicator that we will not assert, to the fullest extent under applicable law, our rights thereto. Investors Outside of the United States Neither we nor any of the underwriters have taken any action that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of shares of our common stock and the distribution of this prospectus outside of the United States. Market and Industry Data and Forecasts Certain market and industry data and forecasts included or incorporated by reference in this prospectus were obtained from independent market research, industry publications and surveys, governmental agencies, publicly available information and Realself, Inc. Industry surveys, publications and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We believe the data from such third-party sources that is included in the prospectus or incorporated herein by reference to be reliable. However, we have not independently verified any of such data and cannot guarantee its accuracy or completeness and cannot assure you that the trends reflected in this data will continue. Similarly, internal market research and industry forecasts, which we believe to be reliable based upon our management's knowledge of the market and the industry, have not been verified by any independent sources. While we are not aware of any misstatements regarding the market or industry data presented
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001552700_wisdomtree_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001552700_wisdomtree_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..229abfcdd87d5fda56832282f97879920ebe1257
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001552700_wisdomtree_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 3
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001554230_managed_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001554230_managed_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..02c257c9ecf869f6ca2ed1e12a7a43abdf1aa736
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001554230_managed_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some of the information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the Shares. You should carefully read this entire prospectus, including Risk Factors beginning on page 13, before making a decision to invest in the Shares. Capitalized terms not defined in this section have the meaning set forth in the Glossary beginning on page 4 of Part 2 of this prospectus. Structure of the Trust Managed Emerging Markets Trust, or the Trust, is a Delaware statutory trust. The Trust intends to continuously issue and redeem Shares in transactions with Authorized Participants. Each Share represents a unit of fractional undivided beneficial interest in the Trust. The assets of the Trust, called the Portfolio, consist of cash or cash equivalents, foreign exchange, and financial instruments that are used, as needed, to secure the Trust s trading obligations in respect of exchange-traded futures contracts and foreign currency forward contracts selected by Artivest Advisors LLC, the Trust s Adviser, utilizing a discretionary portfolio construction approach that is designed to provide (1) the index exposure (as defined below), and (2) exposure to an alpha portfolio with returns likely to be independent of, and uncorrelated to, the index exposure. See Investment Objective; Strategy below. The term of the Trust is perpetual, unless it is dissolved under the circumstances described under Description of the Shares and the Trust Agreement Amendment and Dissolution. The Trust changed its name from Resonance Emerging Markets Macro Trust to Managed Emerging Markets Trust on November 9, 2012. The principal offices of the Trust are located at 1140 Broadway, Suite 1501, New York, NY 10001, and the Trust s telephone number is (855) 433-4383. The Trust is a commodity pool as defined in the Commodity Exchange Act (the CEA ) and the regulations of the Commodity Futures Trading Commission (the CFTC ). The Trust is operated by its Sponsor, Artivest Advisors LLC, a Delaware limited liability company, that is also the Trust s Adviser and is registered under the CEA as a commodity pool operator. The sole member of the Sponsor is Artivest Holdings, Inc., a Delaware corporation. The Bank of New York Mellon, a New York banking corporation, is the Trustee of the Trust. The Adviser, Artivest Advisors LLC, is the commodity trading advisor of the Trust and will at all times be either registered as a commodity trading advisor or properly exempt from such registration under the CEA. The Trust is not an investment company registered under the Investment Company Act and is not required to register under that Act. The Trust is obligated under the Trust Agreement to pay all of its ordinary and extraordinary expenses, as set forth in Breakeven Analysis on page 12. For a description of trust fees and expenses, see Business of the Trust Trust Expenses. There is a patent pending on certain aspects of the investment strategy that is used by the Adviser. The material terms of the agreement governing the Trust are discussed in greater detail under Description of the Shares and the Trust Agreement. Breakeven Point Per Unit of Initial Investment The estimated amount of trading income required to be earned by the Trust in order for an investor to break even on an initial investment of one Share, assuming the initial price per Share of $[ ], is [ ]% and [ ]% assuming the Trust has $50 million and $200 million of investment capital, respectively. See Breakeven Analysis on page 12. Creations and Redemptions The Trust issues Shares only in one or more blocks of 100,000 Shares (each, a Basket ) in exchange for cash in an amount equal to the Basket Amount announced by the Trust on the Business Day the purchase order is received by the Trust. The Trust redeems Shares only in Baskets in exchange for cash in an amount equal to the Basket Amount announced by the Trust on the Business Day the redemption order is received by the Trust. The Trust does not redeem individual Shares or Baskets held by parties who are not Authorized Participants. See Risk Factors Risks Relating to the Trust and Investment in the Shares Creation and redemption of Baskets may be delayed when one or more of the exchanges where the Trust may need to trade, either to establish new positions or to liquidate existing ones, are scheduled to be closed, and may be subject to postponement, suspension or rejection under certain circumstances, all of which may reduce the liquidity of the Shares. AUTHORIZED PARTICIPANTS MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN SELLING TO THE PUBLIC SHARES PURCHASED FROM THE TRUST. SEE PLAN OF DISTRIBUTION. The Sponsor The Sponsor is Artivest Advisors LLC, a Delaware limited liability company. The Sponsor s primary business function in connection with the Trust is to manage the Trust and to act as commodity pool operator of the Trust. The Sponsor is registered under the CEA as a commodity pool operator and will be a member of the NFA. A registration application has been submitted to the CFTC and is currently pending. The Sponsor has arranged for the creation of the Trust, the registration of the Shares for their public offering and the listing of the Shares on NYSE Arca. The Sponsor is entitled to an allocation that accrues daily at an annualized rate equal to [ ]% of the Adjusted Net Asset Value of the Trust and is payable by the Trust monthly in arrears. That allocation to the Sponsor is referred to in this prospectus as the Sponsor s Fee. However, the Sponsor s Fee will not be payable by the Trust to the Sponsor so long as 200,000 or fewer Shares are issued and outstanding. For a description of how the net asset value of the Trust is calculated, see Business of the Trust Computation of the Trust s Net Asset Value. The principal office of the Sponsor is located at 1140 Broadway, Suite 1501, New York, NY 10001, and its telephone number is (855) 433-4383. The Adviser The Adviser is Artivest Advisors LLC, a Delaware limited liability company. The Adviser is the commodity trading advisor for the Trust, as well as the Trust s Sponsor, and has discretionary authority to make all Portfolio trading and investment decisions, subject to specified limitations. The Adviser will at all times be either registered as a commodity trading advisor and a member of the NFA or properly exempt from such registration and membership. The Adviser is not a broker-dealer and is not affiliated with a broker-dealer. The Adviser does not intend to register as a commodity trading advisor, but may do so in the future if it engages in other activities for which such registration is required. The Adviser may enter into sub-advisory agreements with certain agents or dealers. The Adviser and the Trust will enter into an Advisory Agreement that they may each terminate at any time upon 30 days prior written notice. The Trustee The Trustee of the Trust is The Bank of New York Mellon, a New York banking corporation. The Shares are not deposits or other obligations of The Bank of New York Mellon or any of its subsidiaries or affiliates or any other bank, are not guaranteed by The Bank of New York Mellon or any of its subsidiaries or affiliates or any other bank and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. An investment in the Shares is speculative and involves a high degree of risk. The Sponsor may remove the Trustee in its discretion at any time after the first anniversary of the date of the Trust Agreement and appoint a successor Trustee if the Trustee ceases to meet certain objective requirements, or if, having received written notice of a material breach of its obligations under the Trust Agreement, the Trustee has not cured the breach within 30 days. The Sponsor may also replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in its discretion, at any time following the first anniversary of the creation of the Trust. The Trustee s functions with respect to the Trust are limited to certain ministerial duties, primarily relating to custody of cash and calculation of the net asset value of the Trust and the Shares. The Delaware Trustee Wilmington Trust, National Association, a national banking association, is the Delaware Trustee of the Trust. The Delaware Trustee is not entitled to exercise any of the powers, and does not have any of the duties or responsibilities, of the Trustee. The Delaware Trustee is a trustee of the Trust for the sole and limited purpose of fulfilling the requirements of the Delaware Statutory Trust Act that at least one trustee of the Trust have its principal place of business in Delaware. As filed with the Securities and Exchange Commission on August 18, 2015 Registration No. 333-182772 You should rely only on the information contained in this prospectus. None of the Sponsor, the Adviser, the Trustee, the Delaware Trustee or the Trust has authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. None of the Sponsor, the Adviser, the Trustee, the Delaware Trustee or the Trust is making an offer to sell the Shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Certain defined terms used in this prospectus are set forth in the Glossary in the Statement of Additional Information attached hereto. The Trust Administrator and Certain Agents of the Trust The processing of creation and redemption orders of Baskets is handled by The Bank of New York Mellon (the Processing Agent and Settlement Agent ) on behalf of the Trust. The valuation of certain assets of the Trust for purposes of the daily calculation of the net asset value of the Trust and certain other administrative responsibilities is handled by The Bank of New York Mellon (the Trust Administrator ) on behalf of the Trust. None of the Processing Agent, the Settlement Agent or the Trust Administrator are affiliated with the Sponsor. The Trust also will retain PricewaterhouseCoopers LLP (the Tax Administrator ) to provide tax accounting and tax reporting services for the Trust. The Trust may terminate the Processing Agent, the Settlement Agent, the Trust Administrator or the Tax Administrator at any time or appoint different agents to act on its behalf. The Distributor The Trust has appointed Foreside Fund Services, LLC as the Distributor to assist the Sponsor and the Trust with certain functions and duties relating to distribution, compliance of sales and marketing materials, and certain regulatory compliance matters. The Distributor will not open or maintain customer accounts or handle orders from the investing public for the Trust. Information regarding the names of the parties that have executed an Authorized Participant Agreement may be obtained from the Distributor by calling the following telephone number: (877) 909-5113. The Distributor will retain marketing materials for the Trust, at c/o Foreside Fund Services, LLC, Three Canal Plaza, Portland, ME 04101; telephone number (877) 909-5113. The Sponsor, on behalf of the Trust, will enter into a Distribution Services Agreement with the Distributor. The Trust will pay the Distributor for performing its duties on behalf of the Trust as provided under the Distribution Services Agreement. In addition, the Sponsor will compensate the Distributor for registering certain employees of the Sponsor in order for them to assist in marketing the Trust. Investment Objective; Strategy The objective of the Trust is to pursue long-term total returns by seeking to provide both (1) a long-only exposure to one or more emerging markets equity indices (the index exposure ) and (2) "alpha" returns that are additive to, and are not correlated with, the index exposure (measured over rolling 5-year periods), while seeking to control overall downside risk and volatility. There is no assurance that the Trust will achieve its investment objectives. Strategy The Adviser pursues the Trust s investment objective by utilizing a discretionary portfolio construction approach that is designed to provide (1) index exposure and (2) exposure to an alpha portfolio with returns likely to be independent of, and uncorrelated to, the index exposure. The Adviser seeks to provide the index exposure by holding long emerging markets equity index futures positions. The Adviser seeks to provide alpha exposure by actively trading and investing a portfolio primarily composed of exchange-traded futures and foreign currency forwards using its discretion to make investment choices based on fundamental analysis of various macroeconomic factors. In certain limited circumstances, the Trust may invest in swaps accepted for central clearing (referred to as cleared swaps ) and swaps which are not accepted for central clearing (referred to as uncleared swaps ). The Trust will only invest in uncleared swaps if an investment in cleared swaps is unavailable. To construct the alpha portfolio, the Adviser applies both quantitative and qualitative analysis to market and economic data to generate investment ideas, to trade and invest on a discretionary basis, and to manage portfolio risk. As part of its investment process, the Adviser uses quantitative and qualitative analysis to form conclusions regarding future economic conditions and future financial instruments pricing based on its review and analysis of macroeconomic factors. With respect to quantitative analysis, the Adviser applies a range of mathematical and statistical techniques to historical and real-time market and economic data that relates to various macroeconomic factors, as part of an ongoing research process. The Adviser analyzes this historical data in an effort to identify how changes to current conditions and expectations about future conditions will affect the prices of various financial instruments, focusing on the volatility and correlation characteristics of financial instruments, as the Adviser seeks to build a diversified portfolio in the alpha strategy. With respect to qualitative analysis, the Adviser relies on the investment experience and views of its principals, as well as internally-developed frameworks for evaluating and generating investment ideas. The Adviser's qualitative analysis focuses on research relating to the subjective conditions of macroeconomic factors in emerging markets, the perception and expectations of market participants, and the risk characteristics of investment ideas. Emerging Markets Emerging markets are generally considered to be nations with social or business activity in the process of rapid growth and industrialization, typically characterized by increasingly liquid and broad capital markets, strengthening civil institutions, improving governance, strengthening infrastructure and increasing quality of life for citizens. Emerging market economies also generally reflect higher coordination costs and transaction friction for buyers and sellers, and emerging markets are considered to be higher risk markets for investment than more advanced or developed economies. Depending on the particular futures on emerging market indices in which the Trust invests, the underlying securities or other financial instruments of the emerging market indices will be sovereign debt instruments; corporate debt or equity instruments; futures, swaps, options or other derivatives; and currency instruments including forwards. Typically, emerging market credit indices are composed of sovereign-issued bonds (denominated in either local currency or foreign currency, typically U.S. dollars) and corporate bonds, while emerging market equity indices are composed of corporate equities issued in local markets. See Business of the Trust Investment Objective, Investment Strategy and Portfolio Construction.
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. You should read the following summary together with the more detailed information about our company and the common stock being registered in this offering and our financial statements and the notes to those statements included elsewhere in this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account References in this prospectus to "we," "our," "us", "GMP" and the "Company" refer to GREEN MEADOW PRODUCTS, INC. Organizational History Green Meadow Products, Inc. was incorporated in the state of Wyoming on June 22, 2012. We were formed to develop businesses, assets and opportunities, some acquired and contributed from third parties and our founding shareholders, in the natural health supplement and related fields; with a focus on natural pet pain relief formulas and pet pain preventative products. The Company initially acquired a product for trucking fleets which it subsequently sold at a loss in order to focus on the pet product business. The Company believes it will be able to successfully compete in today's natural supplement and related fields industry by controlling production costs and by limiting its distribution expenses using, primarily, online marketing tools to promote its products and to further develop its digital strategies. Introduction The Company has only an, approximately, twenty seven (27) month operating history at the period ended December 31, 2014. The Company's primary, current business is as a distributor and producer of a natural pet pain relief product and a pain preventative product for dogs. The Company, currently, only generates revenues from the sale of rights to its pain relief formula and retail sales of its pain preventative product. The FDA may classify our pain relief product as a drug specifically because in our efforts to market or sell our pain relief product we state here and elsewhere that our pain relief product may be used as a pain relief product in the pet industry. We have no intention to apply to the FDA for approval for our pain relief product. (See: Risk Factors, Page 10) The Company also seeks to acquire and/or develop other products in the natural supplement industry primarily for the pet industry. Company Assets The Company's principal assets ("Assets") consist of cash, title and rights to a natural pain relief formula and a pain preventative product for dogs. As there are no studies on the formula there is no certainty that those goals can or cannot be achieved by using the pain relief formula. All of the Company's income to date has been generated from the sale of the rights to its natural pain relief formula, rights to its pain preventative product and the retail sales of its pain relief product. It is management's opinion that the assets it has, including cash, formulas, products and certain business concepts will adequately capitalize the Company for the next twelve (12) months. The Company intends to develop, operate and capitalize the Assets, as well as to create new products for its distribution, to form an ongoing and diverse entity. Company Cash Flow The Company has cash assets derived from the sale of the rights to its natural pain relief formula, rights to its pain preventative product and the retail sales of its pain relief product and a private placement of its stock. Assuming the Company does not generate any income from the sale or production and distribution of current products it still may have sufficient cash to operate for the next twelve (12) months. For the period from its inception (June 22, 2012) through June 30, 2014 the Company had gross revenues of $44,640 and from June 30, 2014 through December 31, 2014 the Company had gross revenues of $15,000. . Future Assets and Growth We will continue to generate limited future income from our assets, however, we cannot provide absolute assurances or estimates of these revenues. The Company generated net income of $11,240 in the period from its inception (June 22, 2012) through June 30, 2014, and a net loss of $(1,108) in the period from June 30, 2014 to December 31, 2014. However, the Company anticipates it may operate at a deficit for its next fiscal years and may expend most of its available capital. The Company's cash on hand is, primarily, budgeted to market its products and formula and for various administrative costs associated with developing and operating the businesses going forward including costs for legal, accounting and Transfer Agent services. We believe that the Company may have sufficient capital to operate its businesses over the next twelve (12) months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from our existing Assets will be adequate to maintain our businesses. The natural supplement industry and pet supplement industry is an extremely competitive industry dominated by several very large, fully integrated conglomerates. The World Wide Web is having a significant impact on this industry as well. The Company's management plans on attempting to develop strategies and opportunities that will allow us to compete in this environment. The Company is building its business model cognizant of these market realities and management will be attempting to use and capitalize upon emerging technologies to deliver and market its products. Our business model is predicated on the assumption that we can continue to generate multiple revenue streams from various products and from our existing Assets and from products we intend to develop, produce and distribute over the next fiscal year and that we can, successfully, manage our costs by capitalizing on new and emerging digital technologies, business developments and our management. Although the Company generated Net Income, in its initial, approximate, fifteen (15) months of operation it anticipates it may lose money in its next, full year of operation and it shall require raising additional capital to develop its Concepts. The Company may plan on filing for a Secondary offering of its stock in 2015 to raise capital for its projects and concepts which will result in further dilution to shareholders. The Company's primary manager, its CEO Stanley Windhorn, has limited experience and expertise in the Health and/or pet industry and related industries and has no experience operating a public company. The Company will continue to seek consultation from those persons more adept in the health and pet industry possibly as a director, employee, or outside consultant. Until such time as the Company is more established and capitalized, we will not be able to employ any personnel on a full time basis. FOUNDING SHAREHOLDERS The following individuals and entities are considered founding shareholders of our Company. Class Name Shares Percentage Common Stanley Windhorn (1) 7,100,000 94% (1) Stanley Windhorn, is the CEO Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.50 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be registered. $0.50 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
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+This summary highlights information contained in other parts of this prospectus or incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2014, and our other filings with the Securities and Exchange Commission listed in the section of the prospectus entitled "Incorporation of Certain Information by Reference." This summary does not contain all of the information you should consider in making your investment decision. Before deciding to invest in shares of our common stock, you should read the entire prospectus, the registration statement of which this prospectus is a part, and the information incorporated by reference herein in their entirety. You should carefully consider, among other things, the matters discussed in the section entitled "Risk Factors" included elsewhere in this prospectus and the matters discussed in the sections entitled "Selected Consolidated Financial Data," our consolidated financial statements and the accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case, incorporated by reference into this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements." Our Company We are a specialty biopharmaceutical company focused on bringing innovative and differentiated products to dermatologists and their patients. Our management team has extensive experience in product development and commercialization, having served in leadership roles at several leading dermatology companies. Our strategy is to leverage this experience to in-license, acquire, develop and commercialize products that we believe can be successful in the dermatology marketplace. Our portfolio of five product candidates targets significant market opportunities and includes three late-stage product candidates: Cimzia (certolizumab pegol), which we are developing in collaboration with UCB Pharma S.A. for the treatment of moderate-to-severe plaque psoriasis; DRM04, which we are developing for the treatment of hyperhidrosis, or excessive sweating; and DRM01, which we are developing for the treatment of acne. We are currently focused on the development of therapeutic solutions in medical dermatology to treat skin conditions, such as psoriasis, hyperhidrosis and acne. These diseases impact millions of people worldwide and can have significant, multidimensional effects on patients' quality of life, including their physical, functional and emotional well-being. According to multiple published studies, patients report that medical dermatology conditions affect quality of life in ways comparable to other serious diseases, such as cancer, heart disease, diabetes, epilepsy, asthma and arthritis. We believe that medical dermatology represents a particularly attractive segment of the biopharmaceutical industry for multiple reasons: Dermatology represents a large, growing, specialty market supported by strong patient demand. The dermatology market is ripe for innovation with significant commercial opportunities. The development of dermatology products can be relatively efficient in terms of time and cost. Dermatology products can be commercialized at relatively low cost. The needs of dermatologists and their patients have been underserved as a result of the significant consolidation of dermatology-focused companies. We believe that these industry dynamics present an opportunity for us to establish our company as a leader in dermatology product development and commercialization, and we plan to capitalize on that opportunity for the benefit of patients and dermatologists. Dermira was founded by Thomas G. Wiggans, Eugene A. Bauer, M.D., Christopher M. Griffith and Luis C. Pe a with the vision of building a leading dermatology company. Several members of our AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents management team, including Mr. Wiggans, Dr. Bauer and Mr. Pe a, have extensive experience within the dermatology field, including having served in executive roles at leading dermatology companies such as Connetics Corporation, Peplin, Inc. and Stiefel Laboratories, Inc., a GlaxoSmithKline LLC Company. This experience brings us significant insight into product and commercial opportunities, as well as a broad network of relationships with leaders within the industry and medical community. Our Product Candidates Our three late-stage product candidates are: Cimzia, an injectable biologic tumor necrosis factor-alpha inhibitor, or TNF inhibitor, that is currently approved and marketed by UCB for the treatment of numerous inflammatory diseases spanning multiple medical specialties, including rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis and Crohn's disease, in multiple countries, including the United States. Biologic TNF inhibitors are a class of pharmaceutical products that are manufactured by biological processes and designed to exert their effect by inhibiting TNF, a naturally occurring molecule that plays an important role in promoting inflammation within the body, including in patients with psoriasis. We have entered into a development and commercialization agreement, or the UCB agreement, to collaborate with UCB to develop Cimzia for the treatment of moderate-to-severe plaque psoriasis in the United States, Canada and the European Union and, upon regulatory approval, to market Cimzia to dermatologists in the United States and Canada. Based on the results of two Phase 2 clinical trials conducted by UCB and our end-of-Phase 2 meeting with the U.S. Food and Drug Administration, or FDA, we and UCB commenced a Phase 3 clinical program for Cimzia for the treatment of moderate-to-severe plaque psoriasis in December 2014. We expect topline results from the Phase 3 clinical program in 2017. DRM04, a topical, small-molecule anticholinergic product we are developing for the treatment of hyperhidrosis. Anticholinergics are a class of pharmaceutical products that exert their effect by blocking the action of acetylcholine, a molecule that transmits signals within the nervous system that are responsible for a range of bodily functions, including the activation of sweat glands. DRM04 is a topical formulation of a novel form of an anticholinergic agent that has been approved for systemic administration in other indications, and it is designed to inhibit sweat production by blocking the activation of sweat glands following topical administration. Based on the results of a Phase 2 program comprising three randomized, double-blind, vehicle-controlled clinical trials in 341 patients and our end-of-Phase 2 meeting with the FDA in April 2015, we commenced a Phase 3 clinical program for DRM04 in patients with primary axillary, or underarm, hyperhidrosis in July 2015. We expect topline results from the Phase 3 clinical program in the second half of 2016. DRM01, a novel, topical, small-molecule sebum inhibitor we are developing for the treatment of acne. Sebum is an oily substance made up of lipids produced by glands in the skin called sebaceous glands, and excessive sebum production is an important aspect of acne that is not addressed by available topical therapies. DRM01 is designed to exert its effect by inhibiting acetyl coenzyme A carboxylase, an enzyme that plays an important role in the synthesis of fatty acids, a type of lipid that represents an essential component of the majority of sebum lipids. Based on the results of a 108-patient, randomized, multi-center, double-blind, vehicle-controlled Phase 2a clinical trial, we commenced a Phase 2b clinical program in April 2015. We expect topline results from the Phase 2b clinical program in the first half of 2016. In addition, we have two early-stage product candidates in preclinical development for the treatment of inflammatory skin diseases and acne. Table of Contents Our Strategy Our strategy is to in-license, acquire, develop and commercialize innovative and differentiated products that we believe can be successful in the dermatology marketplace. The key components of our strategy are to: Rapidly develop our late-stage product candidates. We commenced our Phase 3 clinical program for Cimzia within 10 months of establishing our collaboration with UCB, produced positive Phase 2b clinical trial results within nine months of initiating our first clinical trial of DRM04 and produced positive Phase 2a clinical trial results within one year of initiating our first clinical trial of DRM01. We believe that our team's expertise in designing and executing product development programs in dermatology, combined with the relative efficiencies of dermatology product development, will enable us to rapidly develop our late-stage product candidates. Efficiently establish proof-of-concept for our early-stage product candidates and advance promising candidates into late-stage development. In developing our early-stage product candidates, we focus on translating advances in the understanding of skin disease biology into innovative solutions for unmet needs in dermatology. We seek to rapidly and efficiently establish proof-of-concept for these product candidates. Using this approach, our experienced management team is able to efficiently determine whether and how to advance product candidates into the next stages of development, which we believe increases our ability to direct resources to promising programs and enhances our likelihood of successfully developing and commercializing our product candidates. In-license and acquire new product candidates and, potentially, commercial-stage products. Since our founding in 2010, we have executed three transactions resulting in a portfolio of five product candidates. We intend to continue to identify, evaluate, in-license and acquire product candidates from a number of sources by leveraging the insights, network and experience of our management team. Our objective is to maintain a well-balanced portfolio by in-licensing or acquiring additional product candidates across various stages of development. We also may seek to in-license and acquire dermatology products that have received regulatory approval for marketing in order to accelerate our entry into the market or expand the portfolio of products we can market to dermatologists. Build a medical affairs organization and specialized sales and marketing organization of highly experienced professionals who can effectively communicate the benefits of our approved products and support dermatologists and their patients. We believe that we can compete effectively in the dermatology market by having a medical affairs organization and specialized sales and marketing organization focused solely on dermatologists and their patients. To commercialize any approved products we may successfully develop or acquire, we intend to build a medical affairs organization and specialized sales and marketing organization that will provide high levels of customer support and scientific expertise to dermatologists and their patients. Maximize the value of our portfolio by commercializing our approved products ourselves where we can effectively do so and partnering with other companies to help us reach new markets. We currently hold worldwide rights to all of our product candidates with the exception of Cimzia. We currently plan to commercialize our approved products in the United States and Canada by deploying a specialized sales force targeting dermatologists in these countries. We may partner with third parties to help us reach other geographic markets or medical specialties. We have an exclusive license to market Cimzia to dermatologists in the United States and Canada following regulatory approval of Cimzia for the treatment of psoriasis in these countries. We plan to leverage the infrastructure of our partner, UCB, to support our marketing of Cimzia in the United States and Canada. 275 Middlefield Road, Suite 150 Menlo Park, CA 94025 (650) 421-7200 (Address, including zip code, and telephone number, including area code of registrant's principal executive offices) Table of Contents Continue to build a team of committed, experienced employees and leverage our relationships with members of the dermatology community. We believe that the field of dermatology offers an exceptional opportunity to build relationships with opinion leaders, advocacy groups and medical practitioners. We believe that consolidation in the dermatology industry has resulted in an enhanced opportunity for a dermatology-focused company to build relationships with these stakeholders and has made available a large and growing talent pool of experienced employees who can make significant contributions to our company. Key Markets for Our Product Candidates The Moderate-to-Severe Plaque Psoriasis Market Psoriasis is a chronic, complex, immune-mediated disease that requires long-term treatment. It is commonly considered the most prevalent autoimmune disease in the world. According to Decision Resources, the diagnosed prevalence of psoriasis in the United States was approximately 9.3 million people, or approximately 2.9% of the population, in 2013. According to Decision Resources, in 2013, U.S. sales of psoriasis prescriptions accounted for $4.4 billion and U.S. sales of biologic therapies for moderate-to-severe plaque psoriasis were $3.7 billion, of which $2.8 billion were from TNF inhibitors. According to data provided by IMS Health National Prescription Audit, or IMS NPA, and IMS National Sales Perspectives, or IMS NSP, between 2010 and 2013, sales of biologic therapies attributable to U.S. dermatologists grew at a compounded annual growth rate of 19% and sales of TNF inhibitors attributable to U.S. dermatologists grew at a compounded annual growth rate of 12%. We believe that there is a substantial opportunity for continued expansion of the market for biologic psoriasis therapies. According to an analysis of survey data collected by the National Psoriasis Foundation published in JAMA Dermatology, roughly half of moderate-to-severe plaque psoriasis patients remain unsatisfied with their treatment options. Even with the significant recent growth in the market, penetration of biologics into the addressable population of moderate-to-severe plaque psoriasis patients remains relatively low, particularly in comparison to other large biologics markets. In the United States in 2012, according to Decision Resources, only 10.5% of treated moderate-to-severe psoriasis patients received biologics and 21.7% of treated rheumatoid arthritis patients received biologics. We believe that penetration into the psoriasis patient population may continue to increase as dermatologists become more familiar with available biologic therapies, particularly the established safety record of TNF inhibitors, and as new biologic products reach the market. Decision Resources projects that U.S. sales of branded, systemic psoriasis therapies will increase from approximately $3.9 billion in 2013 to $5.9 billion by 2023. The Hyperhidrosis Market Hyperhidrosis is a condition of excessive sweating beyond what is physiologically required to maintain normal thermal regulation. Primary hyperhidrosis, which is excessive sweating without a known cause, can affect the underarms, palms of the hands, soles of the feet, face and other areas. Several studies have demonstrated that excessive sweating often impedes normal daily activities and can result in occupational, emotional, psychological, social and physical impairment. In the United States, based on the most recent data available, the prevalence of hyperhidrosis was estimated in 2003 to be 2.8% of the population, or roughly 7.8 million people. According to published studies, approximately half of hyperhidrosis sufferers have axillary hyperhidrosis. The market for products to control sweating is large and highly underpenetrated by prescription pharmaceutical products. Despite the limited efficacy of over-the-counter, or OTC, antiperspirants for the alleviation of hyperhidrosis symptoms, according to a 2003 survey, only 38% of hyperhidrosis patients had discussed their condition with a healthcare professional. We believe that this is largely a Thomas G. Wiggans Chief Executive Officer and Chairman of the Board 275 Middlefield Road, Suite 150 Menlo Park, California 94025 (650) 421-7200 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Douglas N. Cogen, Esq. Michael A. Brown, Esq. Robert A. Freedman, Esq. Fenwick & West LLP 555 California Street, 12th Floor San Francisco, CA 94104 (415) 875-2300 Andrew L. Guggenhime Chief Operating Officer and Chief Financial Officer 275 Middlefield Road, Suite 150 Menlo Park, CA 94025 (650) 421-7200 Andrew S. Williamson, Esq. David G. Peinsipp, Esq. Charles S. Kim, Esq. Cooley LLP 101 California Street, 5th Floor San Francisco, CA 94111 (415) 693-2000 Table of Contents result of the lack of effective, well-tolerated, convenient prescription treatment options. Patients who seek treatment from a physician most commonly receive prescription topical antiperspirants. According to data provided by IMS NPA, these topical antiperspirants generated approximately 490,000 prescriptions in the United States in 2014. However, their use is limited by modest efficacy and skin irritation, particularly in patients with more severe disease. We believe that the market opportunity for a new, effective, well-tolerated, topical hyperhidrosis treatment is substantially larger than the current market for prescription topical antiperspirants because such a therapy could further penetrate the segment of patients who seek treatment from a physician and encourage more patients to seek treatment. The Acne Market Acne is one of the most common skin diseases. It is characterized by clogging of the pores and associated local skin lesions. Acne lesions are believed to result from an interaction of multiple pathogenic, or contributing, factors, including excessive sebum production. Acne can significantly impact patients' quality of life, resulting in social, psychological and emotional impairments that are comparable to those reported by patients with epilepsy, asthma, diabetes or arthritis. According to widely-cited data, it is estimated that acne affected more than 85% of teenagers globally in 1994, 150 million people globally as of 2008 and 40 to 50 million Americans as of 1998. Acne is one of the most common reasons for visiting a dermatologist. According to GfK Custom Research, LLC, in 2007, acne represented about one-fourth of U.S. dermatologists' patient volume. According to IMS MIDAS, products to treat acne accounted for over $4.0 billion in global pharmaceutical sales in 2013. In the same year, according to data provided by IMS NSP and IMS NPA, products to treat acne accounted for approximately $3.5 billion in U.S. pharmaceutical sales and each of the three major prescription pharmaceutical product classes that are predominantly used to treat acne generated between approximately $580 million and $2.1 billion in U.S. sales. These three product classes have been available for over 30 years, and we believe that growth in this market recently has been significantly limited by a lack of innovation in new product development. We believe that there is a substantial unmet need and commercial opportunity for a topical acne therapy that targets sebum production. Acne treatment guidelines published by the Global Alliance to Improve Outcomes in Acne recommend that acne treatment be directed toward as many pathogenic factors as possible. Accordingly, patients are often treated with combination regimens that incorporate agents with complementary mechanisms of action targeting different pathogenic factors. The vast majority of acne patients are treated with topical therapies, and all of the four primary pathogenic factors except for excessive sebum production can be targeted with available topical treatments. While systemic therapies may be used to effectively inhibit sebum production, their use is limited by significant, systemic side effects. As a result, we believe that the introduction of a topical acne treatment that targets sebum production could establish a new product class and expand the acne market. Key Developments Following is a summary of selected key developments affecting our business: Phase 3 program for DRM04 in patients with axillary hyperhidrosis. In July 2015, we dosed the first patients in a Phase 3 program for DRM04 in patients with axillary hyperhidrosis. The DRM04 Phase 3 program consists of two identical, randomized, double-blind, vehicle-controlled studies, ATMOS-1 and ATMOS-2, each enrolling approximately 330 patients. The program is designed to assess the safety and efficacy of DRM04 compared to vehicle to support a potential New Drug Application, or NDA, submission to the FDA. A total of 660 adult and adolescent, or ages nine and older, patients with primary axillary hyperhidrosis will be enrolled in two identical Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Phase 3 trials being conducted at approximately 60 sites in the United States and Germany. Subjects will be randomized into two separate arms evaluating DRM04 compared to vehicle. In each trial, 220 patients will receive DRM04 and 110 patients will receive vehicle. Patients are instructed to apply the study product to each axilla once daily for four weeks using topical wipes containing either DRM04 or vehicle only. The DRM04 dose being evaluated in the Phase 3 program is a 3.75% concentration of our novel form of the reference agent, which was evaluated in Study DRM04-HH02 and corresponds to the 3% dosage formulation of the reference agent evaluated in both Phase 2b studies. The co-primary endpoints will be the average absolute change from baseline in gravimetrically-measured sweat production and the proportion of patients who achieve at least a four-point improvement from baseline in disease severity as measured by the Axillary Sweating Daily Diary, or ASDD, the company's proprietary patient-reported outcome, or PRO, instrument. Each of these endpoints will be measured at the end of the four-week treatment period. Based on discussions with the FDA, we developed and validated the ASDD instrument in accordance with the 2009 FDA guidance document for PRO measures. The ASDD endpoint, a 4-point change on an 11-point scale, was selected based on analyses of data generated in the second Phase 2b Study, DRM04-HH02, and feedback from the FDA. Secondary efficacy endpoints will measure the proportion of subjects who have at least a two-grade improvement from baseline as measured by the Hyperhidrosis Disease Severity Scale, or HDSS, wherein patients rate the severity of their disease on a four-point scale, and the proportion of subjects with at least a 50% reduction from baseline in gravimetrically-measured sweat production, each as measured at the end of the four-week treatment period. The Phase 3 program also will include an open-label study, ARIDO, assessing the long-term safety of DRM04, in which patients from either of the Phase 3 studies will be permitted to continue to receive treatment for up to an additional 44 weeks. Phase 2b program for DRM01 in patients with acne. In April 2015, we announced the dosing of the first patient in a Phase 2b dose-ranging trial for DRM01 in patients with facial acne vulgaris. The randomized, multi-center, double-blind, parallel-group, vehicle-controlled study is designed to assess the safety and efficacy of DRM01 compared to vehicle. The goal of the study is to establish the optimal dose for a potential Phase 3 program. In the Phase 2b trial, approximately 400 adult patients with moderate-to-severe facial acne vulgaris will be randomized into five separate arms evaluating different DRM01 dosing regimens compared to vehicle. Approximately 300 patients will receive DRM01 with 100 patients in each of three arms consisting of DRM01 gel at concentrations of 7.5% once a day, 7.5% twice a day and 4% once a day, and approximately 100 will receive vehicle, with 50 patients receiving vehicle once a day and 50 patients receiving vehicle twice a day. Consistent with the preceding Phase 2a trial and in accordance with the published FDA draft guidance for the development of acne drugs, the primary endpoints are the absolute changes from baseline in inflammatory and non-inflammatory lesion counts and the proportion of patients achieving at least a two-point improvement from baseline in the five-point Investigator's Global Assessment, or IGA, score. Each endpoint will be measured at the end of the 12-week treatment period. The trial will be conducted at approximately 30 sites in the U.S. and Canada. Pending the successful completion of the Phase 2b trial and all applicable non-clinical work, we expect to include both adult and adolescent patients in a Phase 3 program. End-of-Phase 2 meeting with FDA for DRM04. In April 2015, we held an end-of-Phase 2 meeting with the FDA for DRM04. Based on feedback from the FDA and the results of the Phase 2 program comprising three randomized, double-blind, vehicle-controlled clinical trials in 341 patients, we are finalizing the design of a Phase 3 program for DRM04 in axillary hyperhidrosis and plan to initiate the program in the second half of 2015. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share(2) Proposed maximum aggregate offering price(2) Amount of registration fee(3) Common Stock, $0.001 par value per share 4,312,500 $22.43 $96,729,375 $11,240 (1)Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes additional shares that the underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the amount of the registration fee and is based on the last reported sale price per share of Registrant's common stock as reported on The NASDAQ Global Select Market on August 3, 2015. (3)The Registrant previously paid $11,359 in connection with a prior filing of this Registration Statement. No additional registration fee is being paid in connection with this amendment to the Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents U.S. patents covering DRM01 and DRM04 and patent portfolio. U.S. Patent No. 8,884,034 issued in November 2014 and includes claims covering DRM01, pharmaceutical compositions and methods of its use. U.S Patent Nos. 8,859,610 and 9,006,462 issued in October 2014 and April 2015, respectively, and include claims covering pharmaceutical solutions, topical solutions and absorbent pads comprising DRM04 and methods of its use. As of June 30, 2015, we own or have an exclusive license to 27 issued U.S. patents and 87 issued foreign patents, which include granted European patent rights that have been validated in various EU member states, and 12 pending U.S. patent applications and 34 pending foreign patent applications. Cash and cash equivalents and investments balance. As of June 30, 2015, we had $143.8 million in cash and cash equivalents and investments. Selected Risks Associated with Our Business
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms, the "Company", "Accurexa", "we," "us," "our," and "our company" refer to Accurexa, Inc., a Delaware corporation. Company Overview The Offering Common stock 3,762,000 shares that may be offered by the Selling Stockholders. Shares Outstanding: 6,013,816 shares of Common stock currently outstanding. 9,775,816 shares of Common Stock outstanding if all shares of Preferred Stock are converted and all Investor Warrants and Agent Warrants are exercised. Total proceeds: If all Investor Warrants and Agent Warrants are exercised, the company will receive proceeds of $2,943,000.
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+Prospectus Summary 1 The Company 1 The Offering 6 Summary Consolidated Financial Data 9 Risk Factors 10 Cautionary Note Regarding Forward-Looking Statements 31 Use of Proceeds 33 Dividend Policy 33 Capitalization 34 Dilution 36 Selected Consolidated Financial Data 38 Management s Discussion and Analysis of Financial Condition and Results of Operations 39 Business 51 Management 85 Executive Compensation 91 Certain Relationships and Related Party Transactions 100 Principal Stockholders 102 Description of Securities 104 Shares Eligible for Future Sale 107 Certain U.S. Federal Income Tax Considerations 109 Plan of Distribution 113 Legal Matters 119 Experts 119 Where You Can Find More Information 119 Index to Financial Statements F-1 We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information other than the information contained in this prospectus. The information contained in this prospectus is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this prospectus nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus. This prospectus will be updated and made available for delivery to the extent required by the federal securities laws. This prospectus includes estimates, statistics and other industry data that we obtained from industry publications, research and surveys, from studies conducted by third parties and from publicly available information. All of such data involve a number of assumptions and limitations, and contains projections and estimates of the future performance of the industries in which we operate, all of which is subject to a high degree of uncertainty. We caution you not to give undue weight to any such estimates, statistics, other industry data and projections. Internet addresses for such publicly available information are provided solely for the convenience of the reader. We do not incorporate by reference any information available through such websites, other than to the extent we quote or expressly refer to such information in the body of this prospectus. As of January 16, 2015, we effectuated a 15-1 reverse split of our shares, meaning that 15 of our shares held prior to the reverse split equals one share held after the reverse split. If, as a result of the split, any stockholder would be entitled to receive a fraction of a share, in order to avoid issuing fractional shares we will instead provide that stockholder with an additional whole share. All references to the number of shares, options, warrants and other common stock equivalents, price per share and weighted-average number of shares of common stock outstanding presented in this prospectus retroactively reflect the effectuation of the 15-1 reverse split dated January 16, 2015, unless otherwise stated or unless the context otherwise indicates. i PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. Before making an investment decision, you should read the entire prospectus carefully, including our consolidated financial statements and the related notes, and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations". Unless the context requires otherwise, we use
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that should be considered before investing in our common stock. Potential investors should read the entire prospectus carefully, including the more detailed information regarding our business provided below in the "Description of Business" section, the risks of purchasing our common stock discussed under the "Risk Factors" section, and our consolidated financial statements and the accompanying notes to the consolidated financial statements. Unless the context indicates otherwise, all references in this registration statement to "Content Checked Holdings," the "Company," "we," "us" and "our" refer to Content Checked Holdings, Inc., and its wholly-owned consolidated subsidiary, Content Checked, Inc.; and references to "Content Checked" refer to Content Checked, Inc. Overview Content Checked created and on July 21, 2014 released to the market its initial application, in an anticipated suite of applications the Content Checkedsm smartphone application designed for use by those who suffer from food allergies and intolerances. The application allows its users the ability to scan product s bar code and determine if it is safe for consumption. Their friends and family can also use it to assist in their food selections. The Company believes it has created the first application with genuine comprehensive content information and in-depth allergen definitions for most U.S. food products and is designed to meet the need for millions of people in the United States. The Company has unique database of allergens and food ingredients that directly correlate with allergies and intolerances. Currently there are several hundreds of thousand products database and it is constantly growing. The application is highly scalable and can expand into new geographic areas and product categories with limited modifications and investment. The Content Checkedsm smartphone application helps users to personalize their shopping lists and makes sure they purchase products that compatible with their specific allergies and intolerances. The Content Checkedsm application and supporting database allows its user to save time and make better decisions while grocery shopping since the application will guide and direct shopping. On September 1, 2014 the Company released MigraineChecked. Statistics indicate that over 36 million Americans have the disease. Similar in function to Content Checked, MigraineChecked allows the user to scan and avoid known triggers in food and drinks. The Company is able to utilize its existing comprehensive menu and recipe database to provide recommendations how to prepare food for individuals with Migraine headaches. MigraineChecked allows you to set up profiles and favorites for not just yourself but also your friends and family making sharing of favorites and ideas fun and simple. MigraineChecked allows food manufacturers to showcase their products in an effective and relevant way. They now have a platform to communicate to those having special food preferences, a variety of alternatives that are better suited to them. Both manufacturers and consumers benefit from targeted communication. In June 2015 the Company released its smartphone application Sugar Checked (Sugarcheckedsm). The addressable U.S. , ' ': No Sugar market is approximately 98 million people in the danger zone of developing type 2 diabetes. Organizational History Content Checked is a Wyoming corporation formed July 19, 2013 ("Content Checked"). Content Checked is a family of smartphone applications designed for people with dietary restriction, those who care for them, and organizations that cater for them. Content Checked is building a revolutionary digital marketplace these people and organizations. Content Checked s fiscal year end is March 31. Content Checked has no subsidiaries. Our principal executive office is located at 8730 Sunset Blvd., Suite 240, West Hollywood, California 90069. Our website address is www.Content Checked.com. On December 18, 2014, (i) we changed our name to Content Checked Holdings, Inc., and (ii) we increased our authorized capital stock from 75,000,000 shares of common stock, par value $0.001, to 250,000,000 shares of common stock, par value $0.001 (the "common stock"), and 10,000,000 shares of "blank check" preferred stock, par value $0.001. On January 26, 2015, we completed a 2.44-for-1 forward split of our common stock, with the result that the 12,530,000 shares of our Common Stock outstanding immediately prior to the stock split became 30,573,202 shares of our common stock outstanding immediately thereafter. On April 17, 2015, our wholly owned subsidiary, Content Checked Acquisition Corp., a corporation formed in the State of Wyoming ("Acquisition Sub"), merged (the "Merger") with and into Content Checked. Content Checked was the surviving corporation in the Merger and became our wholly owned subsidiary. All of the outstanding Content Checked stock was converted into shares of our common stock, as described in more detail below. As a result of the Merger, we discontinued our pre-Merger business and acquired the business of Content Checked to develop, market and sell a smartphone application designed for use by those who suffer from food allergies and intolerances. Upon the closing of the Merger, under the terms of a split-off agreement and a general release agreement, we transferred all of our pre-Merger operating assets and liabilities to our wholly-owned special-purpose subsidiary, Vesta International Split Off Corp., a Nevada corporation ("Split-Off Subsidiary"). Thereafter, pursuant to the Split-Off Agreement, we transferred all of the outstanding shares of capital stock of Split-Off Subsidiary to Mr. Yan Wang, our pre-Merger majority stockholder, and our former sole officer and sole director (the "Split-Off"), in consideration of and in exchange for (i) the surrender and cancellation of an aggregate of 24,400,000 shares of our common stock held by Yan Wang (which were cancelled and will resume the status of authorized but unissued shares of our common stock) and (ii) certain representations, covenants and indemnities. At the closing of the Merger, each of the 1,000,000 shares of Content Checked s common stock issued and outstanding immediately prior to the closing of the Merger was converted into 24 shares of our common stock. As a result, an aggregate of 24,000,000 shares of our common stock were issued to the holders of Content Checked s stock. Between August 2014 and April 2015, Content Checked offered and sold in a series of private placement to accredited investors an aggregate of $1,503,450 principal amount of its unsecured convertible promissory notes (the "Unsecured Bridge Notes"). The Unsecured Bridge Notes bore interest at 5% per annum and were payable between March 31, 2015 and April 30, 2015 (as applicable), subject to conversion as described below. Interest on the Unsecured Bridge Notes would have been payable at maturity; however, upon conversion of the Unsecured Bridge Notes as described below, accrued interest was forgiven. The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated October 5 , 2015 Content Checked Holdings, Inc. Prospectus 8,331,808 Shares Common Stock This prospectus relates to the sale of up to 8,331,808 shares of our common stock, par value $0.001 per share, by the selling stockholders of Content Checked Holdings, Inc., a Nevada corporation, listed in this prospectus. The shares offered by this prospectus may be sold by the selling stockholders from time to time in the open market, through privately negotiated transactions or a combination of these methods, at market prices prevailing at the time of sale or at negotiated prices. The distribution of the shares by the selling stockholders is not subject to any underwriting agreement. We will not receive any proceeds from the sale of the shares by the selling stockholders. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them. Our common stock is traded on OTCQB under the symbol "CNCK." On October 2 , 2015, the last reported sale price for our common stock was $0. 63 per share. Our business and an investment in our securities involve a high degree of risk. Before making any investment in our securities, you should read and carefully consider risks described in the "Risk Factors" section beginning on page 6 of this prospectus. You should rely only on the information contained in this prospectus or any prospectus supplement or amendment thereto. We have not authorized anyone to provide you with different information. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus is only accurate on the date of this prospectus, regardless of the time of any sale of securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus is dated , 2015. Additionally, on May 5, 2014, Content Checked offered and sold in a private placement to an accredited investor $250,000 principal amount of its secured convertible promissory note (the "Secured Bridge Note"). The Secured Bridge Note bore interest at 5% per annum and was payable on March 31, 2015, subject to conversion as described below. Interest on the Secured Bridge Notes would have been payable at maturity; however, upon conversion of the Secured Bridge Notes as described below, accrued interest was forgiven. The Secured Bridge Note was secured by a priority security interest on all of the assets of Content Checked. This security interest terminated upon conversion of the Secured Bridge Note. Upon the closing of the Merger and the PPO, the outstanding aggregate principal amount of the Unsecured Bridge Notes and Secured Bridge Note was automatically converted into shares of our common stock (as described below under "The Private Placement Offering") at a conversion price of $0.45 and $0.40 per share, respectively. Accordingly, we issued 3,341,000 and 625,000 shares of our common stock as a result of the conversion of the Unsecured Bridge Notes and Secured Bridge Note, respectively. Concurrently with the closing of the Merger we held a closing of our PPO in which it sold $166,700 of shares of our common stock at a purchase price of $0.50 per share, which resulted in the issuance of 333,400 shares of our restricted common stock. Purchasers of the restricted shares of our common stock have weighted average anti-dilution protection with respect to the shares of our common stock purchased by them in the PPO if within 24 months after April 17, 2015 we shall issue additional shares of our common stock or common stock equivalents (subject to customary exceptions) for consideration per share less than $0.50. The aggregate gross proceeds of the PPO were $1,920,150 (including the aggregate principal amount of Unsecured Bridge Notes and Secured Bridge Notes converted as part of the PPO and before deducting expenses of the offering, estimated at approximately $125,000). The PPO was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the exemption provided by Regulation D and/or Regulation S promulgated by the Securities and Exchange Commission (the "SEC") thereunder. The PPO was sold to "accredited investors," as defined in Regulation D, and/or foreign investors in compliance with Regulation S. The closing of the PPO and the closing of the Merger were conditioned upon each other. In connection with the PPO we did not pay any finders fees or placement agent commissions. The Merger was accounted for as a "reverse merger," and Content Checked was deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will were reflected in the financial statements prior to the Merger are those of Content Checked and will be recorded at the historical cost basis of Content Checked, and the consolidated financial statements after completion of the Merger will include the assets and liabilities of Content Checked, historical operations of Content Checked and operations of our Company and our subsidiaries from the closing date of the Merger. As a result of the issuance of the shares of our common stock pursuant to the Merger, a change in control of our Company occurred as of the date of consummation of the Merger. We continue to be a "smaller reporting company," as defined under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), following the Merger. We believe that as a result of the Merger, we ceased to be a "shell company" (as such term is defined in Rule 12b-2 under the Exchange Act). See "Certain Relationships and Related Party Transactions" below for more information about the Merger and related transactions. Additionally, on September 3, 2015, we completed a private placement offering of our securities (the "Offering") to a certain investor for total gross proceeds of $4,500,000. The securities consisted of (i) 8% senior secured convertible debenture due July 1, 2017 in the principal amount of $5,040,000, (ii) warrants to purchase approximately 6,300,000 shares of our common stock, which are exercisable at $0.96 per share, and (iii) warrants to purchase approximately 6,300,000 shares of our common stock (the "B Warrants"), which are exercisable at $0.80 per share. As long as all Debenture payments are made on time, the B Warrants will be surrendered by the Investor. The net proceeds of the Offering will be used for general working capital. For more information on the Offering and the terms of the securities sold in the Offering, please see below under section captioned "Description of Securities — Other Convertible Securities." Capital Needs With the capital raised to date as described above, we believe we have funding to implement our business plan, support operations and meet current obligations for at least the next 18 months. We will determine when and if to proceed with any additional financing in the future, and there can be no assurance financing will be available to us when required on acceptable terms or at all. About This Offering This prospectus relates to the public offering, which is not being underwritten, by the selling stockholders listed in this prospectus, of up to 8,331,808 shares of our common stock. The shares offered by this prospectus may be sold by the selling stockholders from time to time in the open market, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. We will receive none of the proceeds from the sale of the shares by the selling stockholders. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them. Selected Risks Associated With an Investment in Shares of Our Common Stock An investment in shares of our common stock is highly speculative and is subject to numerous risks described in the section entitled "Risk Factors" and elsewhere in this prospectus. You should carefully consider these risks before making an investment. Some of these risks include: We have a limited operating history upon which investors can evaluate our future prospects. Our products may not be accepted in the market. We may be subject to governmental regulations relating to the use, labeling and marketing of Content Checked s products. We may be unable to manage our growth and entry into new business areas. We have a history of losses and we may not achieve or sustain profitability in the future. If we are unable to obtain additional financing on acceptable terms, we may have to curtail our growth or cease our development plans and operations. You could lose all of your investment. You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock. There currently is a very limited market for our common stock and there can be no assurance that a consistent trading market will ever develop. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares. Corporate Information Our principal executive office is located at 8730 Sunset Blvd, Suite 240, West Hollywood, California 90069. Our telephone number is 1-424-205-1777. Our website address is www.contentchecked.com. The information on, or that can be accessed through, our website is not part of this prospectus. THE OFFERING Common stock currently outstanding 35,785,658 shares (1) Preferred stock currently outstanding None Common stock offered by the Company None Common stock offered by the selling stockholders 8,331,808 shares Use of proceeds We will not receive any of the proceeds from the sales of our common stock by the selling stockholders. OTC Markets symbol CNCK Risk Factors You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "Risk Factors" section beginning on page 6 of this prospectus before deciding whether or not to invest in shares of our common stock. (1) As of October 2 , 2015. NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements, including, without limitation, in the sections captioned "Description of Business," "Risk Factors," and "Management s Discussion and Analysis of Financial Condition and Plan of Operations," and elsewhere. Any and all statements contained in this prospectus that are not statements of historical fact may be deemed forward-looking statements. Terms such as "may," "might," "would," "should," "could," "project," "estimate," "pro-forma," "predict," "potential," "strategy," "anticipate," "attempt," "develop," "plan," "help," "believe," "continue," "intend," "expect," "future," and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this prospectus may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development of commercially viable pharmaceuticals, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC, and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above. The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, the significant length of time associated with drug development and related insufficient cash flows and resulting illiquidity, our inability to expand our business, significant government regulation of the healthcare industry, lack of product diversification, existing or increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this prospectus appears in the section captioned "Risk Factors" and elsewhere in this prospectus. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in this prospectus to reflect any new information or future events or circumstances or otherwise. RISK FACTORS An investment in shares of our common stock is highly speculative and involves a high degree of risk. We face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict. Before investing in our common stock you should carefully consider the following risks, together with the financial and other information contained in this prospectus. If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be materially adversely affected. In that case, the trading price of our common stock would likely decline and you may lose all or a part of your investment. Only those investors who can bear the risk of loss of their entire investment should invest in our common stock. Risks Related to Our Business and the Industry in Which We Operate We have a limited operating history upon which investors can evaluate our future prospects. We have a limited operating histories upon which an evaluation of our business plan or performance and prospects can be made. Indeed, Content Checkedsm mobile application was launched in June of 2014. Our business and prospects must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with a newly established business. The risks include, but are not limited to, the possibility that, we will not be able to develop functional and scalable products and services, or that although functional and scalable, our products and services will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products; that our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our technologies and products to accommodate new features and expanded service offerings; or the failure to receive necessary regulatory clearances for our products. To successfully introduce and market our products at a profit, we must establish brand name recognition and competitive advantages for our products. There are no assurances that we can successfully address these challenges. If we are unsuccessful, we and our business, financial condition and operating results could be materially and adversely affected. Given the limited operating history, management has little basis on which to forecast future demand for Content Checked s products from its existing customer base, much less new customers. Our current and future expense levels are based largely on estimates of planned operations and future revenues rather than experience. It is difficult to accurately forecast future revenues because our business is new and its market has not been developed. If our forecasts prove incorrect, our business, operating results and financial condition will be materially and adversely affected. Moreover, we may be unable to adjust its spending in a timely manner to compensate for any unanticipated reduction in revenue. As a result, any significant reduction in revenues would immediately and adversely affect our business, financial condition and operating results. The industries in which we operate are highly competitive and subject to technological change. If our competitors are better able to develop and market products that are safer, more effective, less costly, easier to use, or are otherwise more attractive, we may be unable to compete effectively with other companies. The food allergy industry is characterized by intense competition and rapid technological change, and we will face competition across Content Checked s product lines and in each market in which our products are sold on the basis of product features, functionality and accuracy, outcomes, price, services and other factors. Competitors may include Food Guard Inc., Food Angle Inc., and other companies, some of which have significantly greater financial and marketing resources than we do, and firms that are more specialized than we are with respect to particular markets. Our competition may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing and other resources than we do or may be more successful in attracting potential customers, employees and strategic partners. Our competitive position depends on multiple, complex factors, including our ability to achieve market acceptance for our products, develop new products, implement production and marketing plans, secure regulatory approvals for products under development and protect our intellectual property. In some instances, competitors may also offer, or may attempt to develop, alternative food allergy results in a speedier or more effective fashion. The development of new or improved products, processes or technologies by other companies may render Content Checked s products or proposed products obsolete or less competitive. Our future success depends, among other things, upon our ability to compete effectively against current technology, as well as to respond effectively to technological advances, and upon our ability to successfully implement our marketing strategies and execute our research and development plan. Our mobile applications may not be accepted in the market. We cannot be certain that our current mobile application or any other mobile applications we may develop or market will achieve or maintain market acceptance. Market acceptance of our mobile applications depends on many factors, including our ability to convince key opinion leaders to provide recommendations regarding our mobile applications, convince users that our technology is an attractive alternative to other technologies, supply and service mobile quality, user friendly and user widely adopted mobile applications directly or through marketing alliances, and price mobile applications competitively in light of the current tech, mobile applications and macroeconomic environment, which, particularly in the case of the healthy industry, are becoming increasingly price sensitive. If we are unable to provide content and services that attract users to our Content Checkedsm application on a consistent basis, our may never materialize, and sponsorship revenue could be reduced. We believe that the users of Content Checkedsm application have numerous other online and offline sources of allergy information and related services. Our ability to compete for user traffic on our public portals depends upon our ability to make available a variety of health, wellness and medical content, decision-support applications and other services that meet the needs of a variety of types of users, including consumers, physicians and other healthcare professionals, with a variety of reasons for seeking information. Our ability to do so depends, in turn, on: our ability to hire and retain and grow product database; our ability to license quality content from third parties; and our ability to monitor and respond to increases and decreases in user interest in specific topics. If consumers and healthcare professionals do not perceive our content, applications and tools to be useful, reliable and trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement with our allergy information services. We cannot assure you that we will be able to continue to develop or acquire needed content, applications and tools at a reasonable cost. In addition, since consumer users of our public portals may be attracted to Content Checked as a result of a specific condition or for a specific purpose, it is difficult for us to predict the rate at which they will return to our public portals. Because we generate revenue by, among other things, selling sponsorships of specific products on Content Checkedsm application, a decline in user traffic levels or a reduction in the number of pages viewed by users could cause our revenue to decrease and could have a material adverse effect on our results of operations. Dependence on patent and other proprietary rights and failing to protect such rights or to be successful in litigation related to such rights may result in our payment of significant monetary damages or impact offerings in our product portfolios. Our long-term success largely depends on our ability to market technologically competitive mobile applications. If we fail to obtain or maintain adequate intellectual property protection, we may not be able to prevent third parties from using our proprietary technologies or may lose access to technologies critical to our mobile applications. Also, our currently pending or future patent applications may not result in issued patents, and issued patents are subject to claims concerning priority, scope and other issues. Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products. The industries in which Content Checkedsm operates including, in particular, the food allergy detection industry, are characterized by extensive intellectual property litigation and, from time to time, we might be the subject of claims by third parties of potential infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert the time and effort of our management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in our payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category and could have a material adverse effect on our business, cash flows, financial condition or results of operations. We could be subject to governmental regulations relating to the use, labeling and marketing of Content Checked s products. Based on current U.S. Food and Drug Administration (the "FDA") guidelines, Content Checked believes that it is currently not subject to any regulation by the FDA. However, Content Checked s technology products and operations could be subject to regulation by the FDA, the European Union and other governmental authorities in the future. These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing and distribution and market surveillance that could eventually apply to the use of our products. We face significant competition for our allergy information products and services. The markets for healthcare information products and services are intensely competitive, continually evolving and, in some cases, subject to rapid change. Content Checked faces competition from numerous other companies, both in attracting users and in generating revenue from advertisers and sponsors. We compete for users with Websites and mobile applications that provide health-related information, including both commercial ones and not-for-profit ones. We compete for advertisers and sponsors with: allergy-related Websites and mobile applications; general interest consumer Websites that offer specialized health sub-channels or functions; other high-traffic Websites that include both healthcare-related and non-healthcare- related content and services, including social media Websites; search engines that provide specialized health search; and advertising networks that aggregate traffic from multiple sites. Content Checked also faces competition from traditional media and offline publications and information services. Our Content Checked private portals compete with: providers of healthcare decision-support tools and online health management applications, including personal health records; wellness and allergy management vendors; and health information services and health management offerings of healthcare benefits companies and their affiliates. Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations may be better known than we are and have more customers or users than we do. We cannot provide assurance that we will be able to compete successfully against these organizations. In addition, we expect that competitors will continue to enter these markets. The competition we face for our services may result in fewer or smaller customer commitments or pressure to reduce prices, which could reduce our profit margins. There are low barriers to entry, and we expect that competition will possibly intensify in the future. We believe that numerous factors, including price, client base, brand name, and general economic trends (particularly unfavorable economic conditions adversely affecting consumer investment), will affect our ability to compete successfully. Our competitors include companies that could have substantially greater market presence and financial, technical, marketing and other resources than we do. There can be no assurance that we will be have the financial resources, technical expertise or marketing and support capabilities to compete successfully. Increased competition could result in significant price competition, which in turn could result in lower revenues, which could materially adversely affect our potential profitability. Failure to enhance the analytic capabilities we use to demonstrate the value of our services to advertisers and sponsors could adversely affect our ability to market our services. We are working to enhance the analytic capabilities we use to demonstrate to advertisers and sponsors how promotional strategies implemented through Content Checked impact physician and consumer behaviors and preferences. Our ability to demonstrate the value of advertising and sponsorship on Content Checked will depend, in part, on the accuracy of our analytics and measurement capabilities, on our ability to develop reporting tools using the capabilities and our ability to further improve such capabilities and tools. If we are unable to enhance our analytic capabilities, it could adversely affect our ability to market our services and we may lose business to competitors even if our advertising and sponsorship services are superior to theirs. Developing and implementing new and updated features and services for our public and private portals and our mobile applications may be more difficult than expected, may take longer and cost more than expected, and may not result in sufficient increases in revenue to justify the costs. Attracting and retaining users of our public portals and our mobile application and clients for our private portals requires us to continue to improve the technology underlying those portals and applications and to continue to develop new and updated features and services for those portals and applications. If we are unable to do so on a timely basis or if we are unable to implement new features and services without disruption to our existing ones, we may lose potential users and clients. We rely on a combination of internal development, strategic relationships, developing our portals, mobile application and related features and services. Our development and/or implementation of new technologies, features and services may cost more than expected, may take longer than originally expected, may require more testing than originally anticipated and may require the acquisition of additional personnel and other resources. There can be no assurance that the revenue opportunities from any new or updated technologies, applications, features or services will justify the amounts spent. We could be exposed to significant liability claims if we are unable to obtain insurance at acceptable costs and adequate levels or otherwise protect ourselves against potential product liability claims. The testing, manufacture, marketing and sale of food allergy technology entails the inherent risk of liability claims or product recalls. Product liability insurance is expensive and may not be available on acceptable terms, if at all. A successful product liability claim or product recall could inhibit or prevent the successful commercialization of our products, cause a significant financial burden on our Company, or both, which in either case could have a material adverse effect on our business and financial condition. Content Checked s advertising and sponsorship revenue may vary significantly from quarter to quarter and its amount and timing may be subject to factors beyond our control, including regulatory changes. Content Checked s advertising and sponsorship revenue may vary significantly from quarter to quarter due to a number of factors, many of which are not within our control, and some of which may be difficult to forecast accurately, including potential effects on demand for our services as a result of regulatory changes affecting advertising and promotion of particular products and ingredients and general economic conditions. The majority of our advertising and sponsorship programs are for terms of approximately four to twelve months. We have relatively few longer term advertising and sponsorship programs. We cannot assure you that our current advertisers and sponsors will continue to use our services beyond the terms of their existing contracts or that they will enter into any additional contracts. The time between the date of initial contact with a potential advertiser or sponsor regarding a specific program and the execution of a contract with the advertiser or sponsor for that program, as well as the additional time period before our services are delivered, may be longer than expected, especially for medium-sized and larger contracts, and may be subject to delays over which we have little or no control, including as a result of budgetary constraints of the advertiser or sponsor or their need for internal approvals, including internal approvals relating to compliance with the laws and regulations applicable to the marketing of healthcare products. We have experienced, from time to time, a lengthening of this internal review process by pharmaceutical and biotechnology companies, which has resulted in delays in contracting as well as delays in recognizing expected revenue under executed contracts and which may continue to cause such delays. Other factors that could affect the timing of contracting for specific programs with advertisers and sponsors, or receipt of revenue under such contracts, include: the timing of Food and Drug Administration ( " FDA " ) approval for new products or for new approved uses for existing products; the timing of FDA approval of generic products that compete with existing brand name products and any increase in the number or significance of such approvals; the timing of withdrawals of products from the market; consolidation of companies in the pharmaceutical and food produce industries; the timing of rollouts of new or enhanced services on our public portals; and seasonal factors relating to the prevalence of specific health conditions and other seasonal factors that may affect the timing of promotional campaigns for specific products. Software defects or errors in our products could harm our reputation, result in significant costs to us and impair our ability to sell our products, which would harm our operating results. Content Checked s product may contain undetected defects or errors when first introduced or as new versions are released, which could materially and adversely affect our reputation, result in significant costs to us and impair our ability to sell our product in the future. The costs incurred in correcting any defects or errors may be substantial and could adversely affect our operating results. Any service interruption or failure in the systems that we use to provide online services could harm our business. Content Checked online services are designed to operate 24 hours a day, seven days a week, without interruption. However, we have experienced and expect that we will in the future experience interruptions and delays in services and availability from time to time. We rely on internal systems as well as third-party vendors, including data center providers, bandwidth providers and mobile carriers, to provide our online services. We may not maintain redundant systems or facilities for some of these services. In the event of a catastrophic event with respect to one or more of these systems or facilities, we may experience an extended period of system unavailability, which could negatively impact our relationship with users. In addition, system failures may result in loss of data, including user registration data, business intelligence data, content, and other data critical to the operation of our online services, which could cause significant harm to our business and our reputation. To operate without interruption or loss of data, both we and our service providers must guard against: damage from fire, power loss and other natural disasters; communications failures; software and hardware errors, failures and crashes; security breaches, computer viruses, distributed denial-of-service (DDOS) attacks and similar disruptive problems; and other potential service interruptions. Any disruption in the network access or co-location services provided by third-party providers to us or any failure by these third-party providers or our own systems to handle current or higher volume of use could significantly harm our business. We exercise little control over these third-party vendors, which increases our vulnerability to problems with services they provide. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services or our own systems could negatively impact our relationships with users and adversely affect our brand and our business and could expose us to liabilities to third parties. Although we maintain insurance for our business, the coverage under our policies may not be adequate to cover the losses that could result from the above. From time to time, we implement additions to or changes in the hardware and software platforms we use for providing our online services. During and after the implementation of additions or changes, a platform may not perform as expected, which could result in interruptions in operations, an increase in response time or an inability to track performance metrics. In addition, in connection with integrating acquired businesses, we may move their operations to our hardware and software platforms or make other changes, any of which could result in interruptions in those operations. Any significant interruption in our ability to operate any of our online services could have an adverse effect on our relationships with users and clients and, as a result, on our financial results. We rely on a combination of purchasing, licensing, internal development, and acquisitions to develop our hardware and software platforms. Our implementation of additions to or changes in these platforms may cost more than originally expected, may take longer than originally expected, and may require more testing than originally anticipated. In addition, we cannot provide assurance that additions to or changes in these platforms will provide the additional functionality and other benefits that were originally expected. We may be unable to attract and retain key employees. Our success depends on our ability to identify, hire, train and retain highly qualified managerial, technical and sales and marketing personnel. In addition, as we introduce new products or services, it will need to hire additional personnel. Currently, competition for personnel with the required knowledge, skill and experiences is intense, and we may not be able to attract, assimilate or retain such personnel. The inability to attract and retain the necessary managerial, technical and sales and marketing personnel could have a material adverse effect on our business, results of operations and financial condition. We are heavily dependent on certain key personnel, namely Mr. Kris Finstad, who has extensive knowledge with respect to our product and business and thus, the Loss of Mr. Finstad may adversely affect our business. We are heavily dependent upon the expertise of our management key officer and director, Mr. Kris Finstad, who has extensive knowledge about our products and our operations, and the loss of Mr. Finstad would likely have a material adverse effect on our business and operations. We do not maintain key-person insurance policies on any of our executive officers. Since we are a technology based company, our future success also depends on our ability to continue to attract, retain and motivate highly skilled employees in the healthcare industry. Competition for employees in our industry is intense. We may be unable to retain key employees or attract, assimilate or retain other highly qualified employees in the future. We currently have an employment agreement with our key executive officer as described herein (see "Employment Agreements"). International sales of Content Checked s products account for a portion of our anticipated revenues, which will expose the Company to certain operating risks. If we are unable to successfully manage our international activities, our net sales, results of operations and financial condition could be adversely impacted. Content Checked s business currently depends in part on its activities in Europe and other foreign markets, making it subject to a number of challenges that specifically relate to international business activities. These include: failure of local laws to provide the same degree of protection against infringement of our intellectual property rights; protectionist laws and business practices that favor local competitors, which could slow our growth in international markets; the expense of establishing facilities and operations in new foreign markets; building an organization capable of supporting geographically dispersed operations; challenges caused by distance, language and cultural differences; challenges caused by differences in legal regulations, markets, and customer preferences, which may limit our ability to adapt our products or succeed in other regions; multiple, conflicting, and changing laws and regulations, including complications due to unexpected changes in regulatory requirements, foreign laws, tax schemes, international import and export legislation, trading and investment policies, exchange controls and tariff and other trade barriers; foreign tax consequences; fluctuations in currency exchange rates and foreign currency translation adjustments; foreign exchange controls that might prevent us from repatriating income earned outside the United States; imposition of public sector controls; political, economic and social instability; and restrictions on the export or import of technology. If we are unable to meet and overcome these challenges, then our international operations may not be successful, which could adversely affect our net sales, results of operations and financial condition and limit our growth. We may be unable to manage our growth and entry into new business areas. If the initial response to Content Checked s food allergy detection technology exceeds the Company s capacity to provide services timely and efficiently, then the Company may be required to expand its operations accordingly and swiftly. Management of the Company believes that establishing industry leadership will require the Company to: Test, introduce and develop new products and services including enhancements to its Content Checked device; Develop and expand the breadth of products and services offered; Develop and expand our market presence through relationships with third parties; and Generate satisfactory revenues from such expanded products or services to fund the foregoing requirements while obtaining and maintaining satisfactory profit margins. To be able to expand its operations in a cost-effective or timely manner and increase the overall market acceptance of its products and services in this manner, we will need additional capital and technical and managerial human resources. These additional resources may not be available to us. Our failure to timely and efficiently expand its operations and successfully achieve the four requirements listed above could have a material adverse effect on our business, results of operations and financial condition. New product introductions may adversely impact our financial results. Content Checked may introduce new products with enhanced features and extended capabilities from time to time. The products will be subject to various regulatory processes, and we will need to obtain and maintain regulatory approvals in order to sell our new products. If a potential purchaser believes that we plan to introduce a new product in the near future or if a potential purchaser is located in a country where a new product that we have introduced has not yet received regulatory approval, planned purchases may be deferred or delayed. As a result, new product introductions may adversely impact our financial results. The acquisition of other companies, businesses, or technologies could result in operating difficulties, dilution, and other harmful consequences. We may selectively pursue strategic acquisitions, any of which could be material to our business, operating results, and financial condition. Future acquisitions could divert management s time and focus from operating our business. In addition, integrating an acquired company, business or technology is risky and may result in unforeseen operating difficulties and expenditures associated with integrating employees from the acquired company into our organization and integrating each company s accounting, management information, human resources and other administrative systems to permit effective management. The anticipated benefits of future acquisitions may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition. Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all. Continuing worldwide macroeconomic instability, such as recent recessions in Europe and the debt crisis in certain countries in the European Union, could negatively affect our ability to conduct business in those geographies. Since 2008, the global economy has been impacted by the sequential effects of an ongoing global financial crisis which has caused extreme disruption in the financial markets, including severely diminished liquidity and credit availability. There can be no assurance that further deterioration will not occur. Our customers and suppliers may experience financial difficulties or be unable to borrow money to fund their operations which may adversely impact their ability to purchase our products or to pay for them on a timely basis, if at all. Further, the continuing debt crisis in certain European countries could cause the value of the euro to deteriorate, reducing the purchasing power of our European customers. Failure to receive payment of all or a significant portion of our receivables could adversely affect our results of operations. In addition, financial difficulties experienced by our suppliers could result in product delays and inventory issues. Natural or other disasters could disrupt our business and result in loss of revenue or in higher expenses. Natural disasters, terrorist activities, military conflict and other business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses. Content Checked s corporate headquarters are located in California, a seismically active region. A natural disaster in any of our major markets in North America or Europe could have a material adverse impact on our operations, operating results and financial condition. Further, any unanticipated business disruption caused by Internet security threats, damage to global communication networks or otherwise could have a material adverse impact on our operating results. Risks Related to our Financial Condition We have a history of losses and we may not achieve or sustain profitability in the future. We have incurred losses from July 19, 2013 (inception) to March 31, 2015 and generated a small amount of net income for the quarter ended June 30, 2015 . We anticipate that our and Content Checked s operating expenses will increase in the foreseeable future as we continue to invest to grow our business, acquire customers and develop our platform and new functionality. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenues sufficiently to offset these higher expenses. Our operating losses and lack of revenues raise substantial doubt about our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment. Content Checked s historical operating losses and lack of substantial revenues to support our cost structure raise substantial doubt about our ability to continue as a going concern. If we do not generate higher revenues, do not achieve profitability and do not have other sources of financing for our business, we may have to curtail or cease our development plans and operations, which could cause investors to lose the entire amount of their investment. Upon completion of our Secured Debenture Offering, we incurred debt obligations. The terms of the Debenture impose significant operating and financial restrictions on us and our subsidiaries, which may materially and adversely affect our business. Upon completion of our Secured Debenture Offering (as defined in the section captioned "Description of Securities — Other Convertible Securities" below), we incurred approximately $5 million of debt obligations under the Debenture (as defined in the section captioned "Description of Securities — Other Convertible Securities" below). The terms of the Debenture and related agreements we entered into with Hillair Capital Investments L.P. impose significant operating and financial restrictions on us, which limit our ability, among other things, to: incur additional indebtedness; pay dividends or make distributions to our shareholders; incur liens that would rank senior in priority to, or pari passu with, the obligations under the Debentures; and sell or otherwise dispose of any of our assets or rights or any subsidiary, subject to certain exceptions. These restrictions may affect our ability to operate our business, including, among other things: making it more difficult for us to satisfy our obligations with respect to the Debenture and our other indebtedness; limiting our ability to obtain additional financing to fund future working capital, capital expenditures, strategic acquisitions or other general corporate requirements; requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes; limiting our financial flexibility in planning for and reacting to changes in the industry in which we compete; placing us at a disadvantage compared to other, less leveraged competitors; and increasing our cost of borrowing. We may not be able to generate a sufficient amount of cash flow to meet our debt service obligations under the Debenture. Our ability to make scheduled payments with respect to the Debenture depends on our financial and operating performance, which, in turn is subject to certain financial, competitive, business and other factors which may be beyond our control. If our cash flow and capital resources are insufficient to fund our debt service obligations under the Debenture, and our other capital commitments, we could face substantial liquidity problems and may be forced to reduce or delay scheduled expansions and capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. There can be no assurances that our operations will generate sufficient cash flows to enable us to pay our Debenture indebtedness or to fund our other liquidity needs. If we cannot make scheduled payments on the Debenture, we will be in default and, as a result, among other things, the holder of the Debenture could declare all outstanding principal and interest to be due and payable which could force us to liquidate certain assets or alter our business operations or debt obligations. In addition, we cannot assure that our operating performance, cash flow and capital resources will be sufficient for payment of our debt in the future. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more restrictive covenants which could further restrict our business operations. In the event that we are required to dispose of material assets or operations or restructure our debt to meet our debt service obligations, we cannot provide assurance that we could effect any of these actions on a timely basis, on commercially reasonable terms or at all, or that these actions would be sufficient to repay our debt service obligations. If we cannot make scheduled payments on our future debts, we will be in default and, as a result, our then existing debt holders could declare all outstanding principal and interest to be due and payable and we could be forced into bankruptcy or liquidation. If we are unable to obtain future financing when needed on acceptable terms, we may have to curtail our growth or cease our development plans and operations. The operation of our business and our growth efforts will require significant cash outlays and advance capital tech expenditures and commitments. We will be largely dependent on capital raised through the equity and/or debt financings to implement our business plan and support our operations. We believe that the current cash and cash equivalents on hand and cash generated from operations will be sufficient to fund us for at least the next 18 months. At the present time, we have not made any arrangements to raise additional cash, other than through the PPO or the Secured Debenture Offering. However, we may need to raise additional capital in the future to fund our operations and growth. To date we have been able to raise needed capital for our business through the sales of equity and debt securities. We cannot assure you that we will be able to raise additional working capital as needed on terms acceptable to us in the future, if at all. If we are unable to raise capital as needed, we may be required in the future to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case, you may lose all your investment. Financings, if obtained, may be on terms that are dilutive to our stockholders, and the prices at which new investors would be willing to purchase our securities may be lower than the price at which you purchase your shares. Potential investors should be aware that the value of an investment in our Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in our Company will fully reflect its underlying value. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States. Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change. Changes in tax laws or exposure to additional income tax liabilities could have a material adverse impact on our financial condition and results of operations. We are subject to income taxes as well as non-income based taxes, in both the U.S. and various jurisdictions outside the U.S. We are subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with certain positions we have taken and assess additional taxes and penalties. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our consolidated earnings and financial condition. Additionally, changes in tax laws or tax rulings could materially impact our effective tax rate. Proposals for fundamental U.S. corporate tax reform, if enacted, could have a material adverse impact on our future results of operations. Investment Risks You could lose all of your investment. An investment in our shares of common stock is speculative and involves a high degree of risk. Potential investors should be aware that the value of an investment in the Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying value. You could lose your entire investment. You may experience dilution of your ownership interests because of the conversion or exercise of currently outstanding convertible securities or the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock. As of October 2 , 2015, we had the following convertible securities outstanding: (i) 8% senior secured convertible debenture due July 1, 2017 in the principal amount of $5,040,000, which is convertible into shares of our common stock at any time prior to maturity at a conversion price of $0.80 per share (or up to 6,300,000 shares), subject to certain conversion limitations and anti-dilution provisions as set forth in the debenture, (ii) warrants to purchase approximately 6,300,000 shares of our common stock, which are exercisable at $0.96 per share, subject to certain anti-dilution provisions as set forth in such warrants, and (iii) warrants to purchase approximately 6,300,000 shares of our common stock (the "B Warrants"), which are exercisable at $0.80 per share, subject to certain anti-dilution provisions as set forth in the B Warrants. As long as all debenture payments are made on time, the B Warrants will be surrendered by the Investor. However, there can be no assurance that we will be able to make all debenture payments timely. In addition, we may issue in the future our authorized but previously unissued common stock or other equity securities, resulting in the dilution of the ownership interests of our present stockholders and the purchasers of our shares offered hereby. We are authorized to issue an aggregate of 250,000,000 shares of our common stock and 10,000,000 shares of "blank check" preferred stock. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The exercise of such debenture, the conversion of such warrants and/or future issuance of any such additional shares of our common stock or securities convertible into shares of our common stock may create downward pressure on the trading price of the common stock. We may need to raise additional capital in the future to meet our working capital needs and/or debt obligations, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise prices) below the price you paid for your stock or below the conversion price of such debenture or the exercise prices of such warrants. The ability of our Board of Directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of our Company. Our Board of Directors will be authorized to issue up to 10,000,000 shares of preferred stock with powers, rights and preferences designated by it. See "Preferred Stock" in the section of this Report titled "Description of Securities." Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of the Company. The ability of the Board to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of the Company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to the Board of Directors could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally. There is currently a very limited public market for shares of our common stock and there can be no assurance that an active public market will ever develop. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares. There is currently a very limited public market for shares of our common stock and there can be no assurance that an active market will never develop. Our common stock is currently quoted on the OTCQB under the symbol "CNCK." Each of the OTC Markets (of which OTCQB is a part of) is a thinly traded market and lacks the liquidity of certain other public markets with which some investors may have more experience. We may not ever be able to satisfy the listing requirements for our common stock to be listed on a national securities exchange, which is often a more widely-traded and liquid market. Some, but not all, of the factors which may delay or prevent the listing of our common stock on a more widely-traded and liquid market include the following: our stockholders equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our common stock may not be sufficiently widely held; we may not be able to secure market makers for our common stock; and we may fail to meet the rules and requirements mandated by the several exchanges and markets to have our common stock listed. Should we fail to satisfy the initial listing standards of the national exchanges, or our common stock is otherwise rejected for listing, and remains listed on the OTC Markets or is suspended from the OTC Markets, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility. Our common stock is subject to the "penny stock" rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock. Rule 15g-9 under the Exchange Act, establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares. Until our common stock is listed on a national securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our Common Stock to remain eligible for quotation on the OTC Markets, or on another over-the-counter quotation system, or in the "pink sheets." In those venues, however, the shares of our common stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our shares of common stock at or near bid prices at any given time may be relatively small or non-existent. An investor may find it difficult to obtain accurate quotations as to the market value of our common stock or to sell his or her shares at or near bid prices or at all. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity of our common stock. This would also make it more difficult for us to raise capital. We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment. Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares of common stock. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment. Being a public company is expensive and administratively burdensome. As a public reporting company, we are subject to the information and reporting requirements of the Securities Act, the Exchange Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act. Complying with these laws and regulations requires the time and attention of our Board of Directors and management, and increases our expenses. Among other things, we are required to: maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board; maintain policies relating to disclosure controls and procedures; prepare and distribute periodic reports in compliance with our obligations under federal securities laws; institute a more comprehensive compliance function, including with respect to corporate governance; and involve, to a greater degree, our outside legal counsel and accountants in the above activities. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders is expensive and much greater than that of a privately-held company, and compliance with these rules and regulations may require us to hire additional financial reporting, internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting expenses and the attention of management. There can be no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all. In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage. These factors could also make it more difficult for us to attract and retain qualified executives and members of our Board of Directors, particularly directors willing to serve on an audit committee which we expect to establish. Any failure to maintain effective internal control over our financial reporting could materially adversely affect us. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include in our Annual Reports on Form 10-K an assessment by management of the effectiveness of our internal control over financial reporting. In addition, at such time, if any, as we are no longer a "smaller reporting company," our independent registered public accounting firm will have to attest to and report on management s assessment of the effectiveness of such internal control over financial reporting. Based upon the last evaluation conducted as of June 30 , 2015, our management at the time concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. While our new management as a result of the Merger believes that our control environment is substantially improved, we continue at the present time not to have an audit committee. While we intend to diligently and thoroughly document, review, test and improve our internal control over financial reporting in order to ensure compliance with Section 404, management may not be able to conclude that our internal control over financial reporting is effective. Furthermore, even if management were to reach such a conclusion, if our independent registered public accounting firm is not satisfied with the adequacy of our internal control over financial reporting, or if the independent auditors interpret the requirements, rules or regulations differently than we do, then they may decline to attest to management s assessment or may issue a report that is qualified. Any of these events could result in a loss of investor confidence in the reliability of our financial statements, which in turn could negatively affect the price of our common stock. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and (if required in future) our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404. Our compliance with Section 404 may require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group or an audit committee, and we will need to retain the services of additional accounting and financial staff or consultants with appropriate public company experience and technical accounting knowledge to satisfy the ongoing requirements of Section 404. We intend to review the effectiveness of our internal controls and procedures and make any changes management determines appropriate, including to achieve compliance with Section 404 by the date on which we are required to so comply. *** The risks above do not necessarily comprise all of those associated with an investment in our Company. This prospectus contains forward looking statements that involve unknown risks, uncertainties and other factors that may cause our actual results, financial condition, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that might cause such a difference include, but are not limited to, those set out above. SELLING STOCKHOLDERS This prospectus covers the resale from time to time by the selling stockholders identified in the table below of up to 8,331,808 outstanding shares of our common stock. The 8,331,808 shares that we are registering for resale consist of (i) 3,341,000 and 625,000 shares of our common stock issued as a result of the conversion of the Unsecured Bridge Notes and Secured Bridge Note as part our 2015 private placement offering of our common stock (the "2015 Offering"), (ii) 333,400 shares of our common stock that were sold in the 2015 Offering concurrently with the closing of the Merger at a purchase price of $0.50 per share, for aggregate new proceeds of $166,700, (iii) 3,882,408 shares of our common stock that were issued to Content Checked s pre-Merger stockholders (all of such stockholders other than Mr. Finstad), and (iv) 150,000 shares of our common stock that were issued on July 14, 2015 to certain partners of Foley Shechter LLP in consideration for legal and other services provided by such firm to us in connection with the Merger and transactions consummated thereunder and other corporate and securities laws matters. The selling stockholders identified in the table below may from time to time offer and sell under this prospectus any or all of the shares of common stock described under the column "Shares of common stock owned prior to this Offering and Registered hereby" in the table below. Certain selling stockholders may be deemed to be "underwriters" as defined in the Securities Act. Any profits realized by such selling stockholder may be deemed to be underwriting commissions. The table below has been prepared based upon the information furnished to us by the selling stockholders as of the date of this prospectus. The selling stockholders identified below may have sold, transferred or otherwise disposed of some or all of their shares since the date on which the information in the following table is presented in transactions exempt from or not subject to the registration requirements of the Securities Act. Information concerning the selling stockholders may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly. We cannot give an estimate as to the number of shares of common stock that will actually be held by the selling stockholders upon termination of this offering because the selling stockholders may offer some or all of their common stock under the offering contemplated by this prospectus or acquire additional shares of common stock. The total number of shares that may be sold hereunder will not exceed the number of shares offered hereby. Please read the section entitled "Plan of Distribution" in this prospectus. The following table sets forth the name of each selling stockholder, the number of shares of our common stock beneficially owned by such stockholder before this offering, the number of shares to be offered for such stockholder s account and the number and (if one percent or more) the percentage of the class to be beneficially owned by such stockholder after completion of the offering. The number of shares owned are those beneficially owned, as determined under the rules of the SEC, and such information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares of our common stock as to which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60 days after October 2 , 2015 (the "Determination Date"), through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement, and such shares are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the person holding such options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other person. Unless otherwise set forth below, based upon the information furnished to us, (a) the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the selling stockholder s name, subject to community property laws, where applicable, (b) no selling stockholder had any position, office or other material relationship within the past three years, with us or with any of our predecessors or affiliates, and (c) no selling stockholder is a broker-dealer or an affiliate of a broker-dealer. Selling stockholders who are broker-dealers or affiliates of broker-dealers are indicated by footnote. We have been advised that these broker-dealers and affiliates of broker-dealers purchased our common stock in the ordinary course of business, not for resale, and at the time of purchase, did not have any agreements or understandings, directly or indirectly, with any person to distribute such common stock. The number of shares of common stock shown as beneficially owned before the offering is based on information furnished to us or otherwise based on information available to us at the timing of the filing of the registration statement of which this prospectus forms a part. Selling Stockholder Shares of common stock Beneficially owned Prior to
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+Prospectus summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and may not include all information that may be important to you. You should carefully read the entire prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. Summary of Our Business Skoda Ventures, Inc. was incorporated under the laws of the State of Nevada on August 16, 2012. Our principal executive office is located at Casa 5183-B Calle Parson, Diablo, Ancon, Panama City, Republic of Panama and our telephone number is (507) 6725-8263. We are a development stage company with plans to create a website that will offer fashion apparel and related accessories reflecting North American trends to retail customers across Latin America. The website will initially carry products targeting the women s young adult market and once we begin to generate revenues, we plan to incorporate products for young adult men. Although our business is not yet operational and we have not yet begun to implement our business plan, we anticipate on commencing operations in the next 12 months if we are able to raise the funds required from this offering. Summary Financial Information We have not earned any revenues to date and do not anticipate earning revenues until our website is completed. Management plans on raising cash from public or private debt and equity financings, on an as needed basis, until revenues are sufficient to fund operations. The following tables present summarized financial information from inception (August 16, 2012) through November 30, 2014, extracted from our financial statements presented elsewhere in this prospectus. The information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", the financial statements, and the related notes presented elsewhere in this prospectus. Balance Sheet Summary As of November 30, 2014 ($) Cash $4,430 Total Assets $4,430 Total Liabilities $5,420 Total Liabilities and Stockholder s Equity $4,430 Statement of Operations and Deficit Summary For the period from inception (August 16, 2012) through November 30, 2014 ($) Sales Nil Net Loss for the Period $5,990 Net Loss per common share (basic) * (less than $0.01 per share) Since our inception on August 16, 2012 through November 30, 2014, we have incurred a net loss of $5,990. Our net loss is due to lack of revenues to offset our general and administrative expenses related to the creation and organization of our business. Given our lack of operating history, and due to the fact that, to date, we have had no revenues, our independent auditor has included a note in our November 30, 2014 financial statements raising substantial doubt about our ability to continue as a going concern. Summary of the Offering Securities Offered Minimum 2,000,000 to maximum 4,000,000 shares of our common stock, par value $0.001 Shares Outstanding Before the Offering 5,000,000 Shares Outstanding After the Offering if all of the Shares are Sold 9,000,000 Offering Price per Share, Fixed $0.015 Market for common stock. Our common stock is not traded or quoted for trading on any exchange or over-the-counter market. After the effective date of the registration statement relating to this prospectus, we intend to have a market maker apply for our common stock to be eligible to be quoted for trading on the OTC Bulletin Board. If our application is approved, there is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of shares under this prospectus may find it difficult to resell them when they are eligible for public resale. Use of Proceeds We will use the proceeds to pay for administrative expenses, the implementation of our business plan, and working capital. Net Proceeds to Us $30,000 assuming the minimum number of shares is sold. $60,000 assuming the maximum number of shares is sold. Offering Period The shares are being offered for a period not to exceed 270 days. Blank Check Issue We are not a blank check corporation. Section 7(b)(3) of the Securities Act of 1933, as amended defines the term "blank check company" to mean, any development stage company that is issuing a penny stock that, "(A) has no specific plan or purpose, or (B) has indicated that its business plan is to merge with an unidentified company or companies." We have a specific plan and purpose. Our business purpose is to offer fashion apparel and accessories manufactured in Asia that is trendy in North America to retail customers in South America. In Securities Act Release No. 6932 which adopted rules relating to blank check offerings, the Securities and Exchange Commission stated in II DISCUSSION OF THE RULES, A. Scope of Rule 419, that, "Rule 419 does not apply to . . . start-up companies with specific business plans . . . even if operations have not commenced at the time of the offering." Further, we have not indicated in any manner whatsoever, that we plan to merge with an unidentified company or companies, nor do we have any plans to merge with an unidentified company or companies. We have no plans or intentions to be acquired or to merge with an operating company, nor does our stockholder, have plans to enter into a change of control or similar transaction or to change our management.
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+PRELIMINARY PROSPECTUS VAPETEK, INC. 35,050,000 SHARES OF COMMON STOCK $0.0001 PAR VALUE PER SHARE Prior to this Offering, no public market has existed for the common stock of Vapetek, Inc. Upon completion of this Offering, we will attempt to have the shares quoted on the OTCQB operated by OTC Markets Group, Inc. There is no assurance that the Shares will ever be quoted on the OTCQB. To be quoted on the OTCQB, a market maker must apply to make a market in our common stock. As of the date of this Prospectus, we have not made any arrangement with any market makers to quote our shares. In this public offering we, "Vapetek, Inc." are offering 20,000,000 shares of our common stock and our selling shareholders are offering 15,050,000 shares of our common stock. We will not receive any of the proceeds from the sale of shares by the selling shareholders. The offering is being made on a self-underwritten, "best efforts" basis. There is no minimum number of shares required to be purchased by each investor. The shares offered by the Company will be sold on our behalf by our Chief Executive Officer, Andy Michael Ibrahim. Mr. Ibrahim is deemed to be an underwriter of this offering. The selling shareholders are also deemed to be underwriters of this offering. There is uncertainty that we will be able to sell any of the 20,000,000 shares being offered herein by the Company. Mr. Ibrahim will not receive any commissions or proceeds for selling the shares on our behalf. All of the shares being registered for sale by the Company will be sold at a fixed price of $0.025 per share for the duration of the Offering. Additionally, all of the shares offered by the selling shareholders will be sold at a fixed price of $0.025 for the duration of the Offering. Assuming all of the 20,000,000 shares being offered by the Company are sold, the Company will receive $500,000 in gross proceeds. Assuming 15,000,000 shares (75%) being offered by the Company are sold, the Company will receive $375,000 in net proceeds. Assuming 10,000,000 shares (50%) being offered by the Company are sold, the Company will receive $250,000 in net proceeds. Assuming 5,000,000 shares (25%) being offered by the Company are sold, the Company will receive $125,000 in net proceeds. There is no minimum amount we are required to raise from the shares being offered by the Company and any funds received will be immediately available to us. There is no guarantee that we will sell any of the securities being offered in this offering. Additionally, there is no guarantee that this Offering will successfully raise enough funds to institute our company s business plan. Additionally, there is no guarantee that a public market will ever develop and you may be unable to sell your shares. This primary offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this Prospectus, unless extended by our directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. In their audit report dated March 30, 2015, our auditors have expressed substantial doubt as to our ability to continue as a going concern. Currently, Andy Michael Ibrahim, our CEO, and Director and Alham Benyameen our Director, together own approximately 90.33% of the voting power of our outstanding capital stock. After the offering, assuming all of their personal shares that are being registered herein and those shares being offered on behalf of the company are sold, both Mr. Ibrahim and Mr. Benyameen will together have the ability to control approximately 51.49% of the voting power of our outstanding capital stock. Currently, both Andy Michael Ibrahim and Alham Benyameen each respectively own 23,600,000 shares of our common stock. *Andy Michael Ibrahim will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Ibrahim s interest in selling shares for his own account and in selling shares on the Company s behalf. Regarding the sale of Mr. Ibrahim s shares, they will be sold at a fixed price of $0.025 for the duration of the offering. If all the shares are not sold in the company s offering, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering, which the Company estimates at $20,000. The proceeds from the sale of the securities will be placed directly into the Company s account; any investor who purchases shares will have no assurance that any monies, beside their own, will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. All expenses incurred in this offering are being paid for by Andy Michael Ibrahim, our President, and CEO. There has been no public trading market for the common stock of Vapetek, Inc. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, which became law in April 2012 and will be subject to reduced public company reporting requirements. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS BEGINNING ON PAGE 5. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby that is different from the information included in this Prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is August 21, 2015 - 1 - The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS PART I PROSPECTUS PAGE PROSPECTUS SUMMARY 2 RISK FACTORS 5 SUMMARY OF FINANCIAL INFORMATION 13 MANAGEMENT S DISCUSSION AND ANALYSIS 14 INDUSTRY OVERVIEW 14 FORWARD-LOOKING STATEMENTS 15 DESCRIPTION OF BUSINESS 15 USE OF PROCEEDS 17 DETERMINATION OF OFFERING PRICE 17 DILUTION 18 SELLING SHAREHOLDERS 20 PLAN OF DISTRIBUTION 20 DESCRIPTION OF SECURITIES 21 INTERESTS OF NAMED EXPERTS AND COUNSEL 22 REPORTS TO SECURITIES HOLDERS 22 DESCRIPTION OF FACILITIES 22 LEGAL PROCEEDINGS 23 PATENTS AND TRADEMARKS 23 DIRECTORS AND EXECUTIVE OFFICERS 23 EXECUTIVE COMPENSATION 23 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 26 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 26 PRINCIPAL ACCOUNTING FEES AND SERVICES 26 MATERIAL CHANGES 26 FINANCIAL STATEMENTS F1-F18 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION 27 ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS 27 ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES 28 ITEM 16. EXHIBITS TO FINANCIAL STATEMENTS 28 ITEM 17. UNDERTAKINGS 29 SIGNATURES 30 You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Table of Contents PROSPECTUS SUMMARY In this Prospectus, , ' ': , ' ': Vapetek, the "Company, , ' ': , ' ': we, , ' ': , ' ': us, and , ' ': , ' ': our, refer to Vapetek, Inc., unless the context otherwise requires. Unless otherwise indicated, the term , ' ': , ' ': fiscal year refers to our fiscal year ending December 31. Unless otherwise indicated, the term , ' ': , ' ': common stock refers to shares of the Company s common stock. This Prospectus, and any supplement to this Prospectus include "forward-looking statements". To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates", "projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the "Risk Factors" section and the "Management s Discussion and Analysis of Financial Position and Results of Operations" section in this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 5, and the financial statements, before making an investment decision. The Company Vapetek, Inc., a Delaware corporation ("the Company") was incorporated under the laws of the State of Delaware on June 18, 2013. The Company was originally incorporated with the name Alpine 2, Inc. Vapetek is a technology company engaged in developing, marketing and selling electronic cigarettes ("e-cig"), e-liquids, rechargeable batteries and vapor devices in the emerging growth e-cigarette industry. It should be noted that we do not create the technology for, or develop, the products that we sell and Vapetek is a reseller of products created by third party manufacturers. The Company s executive offices are located at 5445 Oceanus Driver STE 102 Huntington Beach, CA 92649 Our activities have been limited to developing our business and financial plans. We believe we need to raise $250,000 to execute our business plan over the next 12 months. The funds raised in this offering, even assuming we sell all the shares being offered, may be insufficient to carry out our intended business operations. We will receive proceeds from the sale of 20,000,000 shares of our common stock and intend to use the proceeds from this offering to continue to carry out our business operations and expand to make our products available to more customers. There is uncertainty that we will be able to sell any of the 20,000,000 shares being offered herein by the Company. The expenses of this offering, including the preparation of this prospectus and the filing of this registration statement, estimated at $20,000.00, are being paid for by the Company. The maximum proceeds to us from this offering ($500,000) will satisfy our basic subsistence level, cash requirements for up to 24 months including legal and accounting costs associated with this offering, the costs associated with our continuous disclosure obligations, incidental expenses, and the cost of implementing the investigative aspects of our business plan, including identifying and securing additional sources of financing, consultants, operating equipment, marketing and facility. 75% of the possible proceeds from the offering by the company ($375,000) will satisfy our basic, subsistence level cash requirements for up to 18 months, while 50% of the proceeds ($250,000) will sustain us for up to 12 months, and 25% of the proceeds ($125,000) will sustain us for up to six months. Our budgetary allocations may vary, however, depending upon the percentage of proceeds that we obtain from the offering. For example, we may determine that it is more beneficial to allocate funds toward securing potential financing and business opportunities in the short terms rather than to conserve funds to satisfy continuous disclosure requirements for a longer period. During the 12 months following the completion of this offering, we intend to continue our current business plan and increase operations relating to the sales of our products. - 2 - Table of Contents In their audit report dated March 30, 2015, our auditors have expressed an opinion that substantial doubt exists as to whether we can continue as an ongoing business. Because our President, and Chief Executive Officer Andy Michael Ibrahim may be unwilling or unable to loan or advance any additional capital to us, we believe that if we do not raise additional capital within 12 months of the effective date of this registration statement, we may be adversely effected and may have to curtail operations or continue operations at a limited level that is financially suitable for the Company. Our Offering We have authorized capital stock consisting of 100,000,000 shares of common stock, $0.0001 par value per share ("Common Stock") and 5,000,000 shares of preferred stock, $0.0001 par value per share ("Preferred Stock"). We have 52,250,000 shares of Common Stock and no shares of Preferred Stock issued and outstanding. Through this offering we will register a total of 35,050,000 shares. These shares represent 20,000,000 additional shares of common stock to be issued by us and 15,050,000 shares of common stock by our selling stockholders. We may endeavor to sell all 20,000,000 shares of common stock after this registration becomes effective. Upon effectiveness of this Registration Statement, the selling stockholders may also sell their own shares. The price at which we, the company, offer these shares is at a fixed price of $0.025 per share for the duration of the offering. The selling stockholders will also sell shares at a fixed price of $0.025 for the duration of the offering. There is no arrangement to address the possible effect of the offering on the price of the stock. We will receive all proceeds from the sale of our common stock but we will not receive any proceeds from the selling stockholders. *The primary offering on behalf of the company is separate from the secondary offering of the selling stockholders in that the proceeds from the shares of stock sold by the selling stockholder s will go directly to them, not the company. The same idea applies if the company approaches or is approached by investors who then subsequently decide to invest with the company. Those proceeds would then go to the company. Whomever the investors decide to purchase the shares from will be the beneficiary of the proceeds. None of the proceeds from the selling stockholder s will be utilized or given to the company. Mr. Ibrahim will clarify for investors at the time of purchase whether the proceeds are going to the company or directly to himself. *Mr. Ibrahim will be able to sell his shares at any time during the duration of this offering. Regarding the sale of Mr. Ibrahim s shares, they will be sold at a fixed price of $0.025 for the duration of the offering. *Mr. Ibrahim will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Ibrahim s interest in selling shares for his own account and in selling shares on the Company s behalf. Please note that at this time Mr. Ibrahim intends to sell the Company s shares prior to selling his own shares, although he is under no obligation to do so. Mr. Ibrahim will decide whether shares are being sold by the Company or by Mr. Ibrahim himself. *We will notify investors by filing an information statement that will be available for public viewing on the SEC Edgar Database of any such extension of the offering. Securities being offered by the Company 20,000,000 shares of common stock, at a fixed price of $0.025 offered by us in a direct offering. Our offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Securities being offered by the Selling Stockholders 15,050,000 shares of common stock, at a fixed price of $0.025 offered by selling stockholders in a resale offering. As previously mentioned this fixed price applies at all times for the duration of the offering. The offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus, unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Offering price per share We and the selling shareholders will sell the shares at a fixed price per share of $0.025 for the duration of this Offering. Number of shares of common stock outstanding before the offering of common stock 52,250,000 common shares are currently issued and outstanding. Number of shares of common stock outstanding after the offering of common stock 72,250,000 common shares will be issued and outstanding if we sell all of the shares we are offering. The minimum number of shares to be sold in this offering None. Market for the common shares There is no public market for the common shares. The price per share is $0.025. We may not be able to meet the requirement for a public listing or quotation of our common stock. Furthermore, even if our common stock is quoted or granted listing, a market for the common shares may not develop. The offering price for the shares will remain at $0.025 per share for the duration of the offering. - 3 - Table of Contents Use of Proceeds We intend to use the gross proceeds to us for working capital, marketing, increasing our customer base, recruiting, training and hiring qualified staff, sales agents, and performance of financial strategies. Termination of the Offering This offering will terminate upon the earlier to occur of (i) 365 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all 35,050,000 shares registered hereunder have been sold. We may, at our discretion, extend the offering for an additional 90 days. At any time and for any reason we may also terminate the offering. Terms of the Offering Our Chief Executive Officer, Andy Michael Ibrahim will sell the 20,000,000 shares of common stock on behalf of the company, upon effectiveness of this registration statement, on a BEST EFFORTS basis. Subscriptions: All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $20,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001582586_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001582586_china_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..49ac69f99e5d98024aa68754ce821c84fb96ec52
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001582586_china_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 4
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001582718_toa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001582718_toa_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..49ac69f99e5d98024aa68754ce821c84fb96ec52
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001582718_toa_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 4
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001584697_perko_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001584697_perko_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b6adefb92ba8bef7c18482af74758f3b790526d8
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001584697_perko_prospectus_summary.txt
@@ -0,0 +1,3463 @@
+PROSPECTUS SUMMARY
+ 7
+
+ Overview of Our Business
+ 7
+
+ The Offering
+ 9
+
+ Selected Financial Information
+ 10
+
+ Important Information – No Required Minimum Amount of Shares Must be Sold
+ 10
+
+ Rule 419 – "Blank Check Company"
+ 10
+
+ RISK FACTORS
+ 11
+
+ Special Note Regarding Forward-Looking Statements
+ 19
+
+ USE OF PROCEEDS 
+
+ 19
+
+ DILUTION
+ 20
+
+ DETERMINATION OF OFFERING PRICE
+ 
+
+ PLAN OF DISTRIBUTION
+ 21
+
+ Terms of the Offering
+ 21
+
+ Section 15(g) of the Exchange Act
+ 22
+
+ MANAGEMENT S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
+ 23
+
+ Results of Operations
+ 24
+
+ DESCRIPTION OF OUR BUSINESS AND PROPERTIES
+ 26
+
+ Overview of Our Business
+ 26
+
+ Industry Background
+ 
+
+ Competition
+ 28
+
+ Plan of Operations
+ 29
+
+ Operations and Management
+ 27
+
+ Proposed Milestones to Implement Business Operations
+ 32
+
+ Financing
+ 33
+
+ Intellectual Property
+ 34
+
+ DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
+ 34
+
+ Officers
+ 34
+
+ Board of Directors
+ 35
+
+ EXECUTIVE COMPENSATION
+ 36
+
+ SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+ 37
+
+ DESCRIPTION OF SECURITIES
+ 38
+
+ Common Stock
+ 38
+
+ Dividend Policy 
+ 38
+
+ Share Purchase Warrants
+ 38
+
+ Options
+ 38
+
+ Shares Eligible for Future Sale
+ 38
+
+ Transfer Agent
+ 39
+
+ CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND CORPORATE GOVERNANCE
+ 39
+
+ LEGAL PROCEEDINGS
+ 40
+
+ Table of Contents5 
+
+ 
+
+ 
+
+ 
+
+ INTERESTS OF NAMED EXPERTS AND COUNSEL
+ 40
+
+ DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
+ 41
+
+ 
+
+ ADDITIONAL INFORMATION
+ 41
+
+ REPORTS TO SECURITY HOLDERS
+ 41
+
+ FINANCIAL STATEMENTS
+ 42
+
+ 
+
+Until ninety days after the date this registration statement
+is declared effective, all dealers that effect transactions in these securities whether or not participating in this offering,
+may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as
+underwriters and with respect to their unsold allotments or subscriptions. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Table of Contents6 
+
+ 
+
+ 
+
+PROSPECTUS SUMMARY
+
+ 
+
+The following summary highlights selected information
+contained in this prospectus. This summary does not contain all the information that may be important to you. You should
+read the more detailed information contained in this prospectus, including, but not limited to, the risk factors beginning on page
+11. References to "we," "us," "our," "Perko Worldwide" or the "Company"
+mean Perko Worldwide Corp.
+
+ 
+
+Overview of Our Business
+
+ 
+
+We were incorporated on June 3, 2003 in the State of Delaware.
+ We formed the Company to develop and build a patented revolutionary type of high-speed roll on/roll off container cargo transportation
+vessel having secondary and tertiary sources of income within each ship of parcels and passengers.
+
+ 
+
+We are the sole licensee of a 9-year globally exclusive license
+for the development, utilization, and marketing of our founder s, David Perko, patent (Patent number issued, #7013828, titled:
+Buoyant Tube Ship (the "Patent"). In addition the Patent Licensing Agreement gives us the right of first refusal for
+other patents pending technology owned by Mr. Perko.
+
+ 
+
+As of June 1, 2015, we have
+not generated any revenue and have relied upon directors to provide resources which permitted seeking patents awarded in
+March 2006 for an entire high speed sea going vessel, professionally valued in April 2013 at $45.6 Million U.S. Dollars. We
+have lobbied the U.S. Congress, and otherwise been seeking prototype building capital. We are a development stage company and
+we do not expect to generate revenue which would be sufficient to sustain our operations for at least 12 months after our
+initial public offering (IPO) has been effective. The financial statements do not include any adjustments that might result from
+the outcome of IPO.
+
+ 
+
+This offering and any investment in our common stock
+involves a high degree of risk. If we are unable to generate adequate revenue, we may be obliged to cease business
+operations due to a lack of operating capital. We face a number of manageable challenges to continue
+operations, including our lack of operating history, lack of revenues to date, and the
+losses we have incurred to date. Please review the "Risk Factors" starting on page 11 of this
+prospectus.
+
+ 
+
+Our
+directors collectively own 93.2% of all the shares of our common stock issued as of the date of this prospectus.
+ If we sell all of the shares being offered in this prospectus (30,000,000) our directors will still own 69.2% of common stock. Accordingly, they will have a significant influence in determining the
+outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or
+substantially all of our assets. The Founder s fleet building goals, along with the interests of our directors
+all being large shareholders, are forced to see our stock climb in value and earn a significant dividend.
+
+ 
+
+We are conducting this offering
+through this prospectus in an effort to raise enough capital to build our first vessel, a working prototype ship. The
+capital we will raise from this offering may be inadequate to initiate operations, cover the costs of this offering, and,
+because we will become a reporting company as a result of this offering, meet future reporting requirements. Please
+review the "Risk Factors" starting on page 11 of this prospectus and "Liquidity and Capital Resources"
+on page 24.
+
+ 
+
+Our principal executive offices are located at 2650 SW 18th
+Street, Fort Lauderdale, FL 33312 and our telephone number at that address is (954) 646-7555. This office space is being
+provided to us by our president and chief executive officer, David E. Perko, free of charge.
+
+ 
+
+ Table of Contents7 
+
+ 
+
+ 
+
+Implications of Being an Emerging Growth Company
+
+ 
+
+As a company with less than $1.0 billion in revenue during
+its last fiscal year, we qualify as an "emerging growth company" as defined in the JOBS Act. For as long as a company
+is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements
+that are generally unavailable to other public companies. These provisions include:
+
+ 
+
+ a
+ requirement to have only two years of audited financial statements and only two years
+ of related Management's Discussion and Analysis included in an initial public offering
+ registration statement;
+
+ an
+ exemption to provide less than five years of selected financial data in an initial public
+ offering registration statement;
+
+ an
+ exemption from the auditor attestation requirement in the assessment of the emerging
+ growth company's internal controls over financial reporting;
+
+ an
+ exemption from the adoption of new or revised financial accounting standards until they
+ would apply to private companies; an exemption from compliance with any new requirements
+ adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm
+ rotation or a supplement to the auditor's report in which the auditor would be required
+ to provide additional information about the audit and the financial statements of the
+ issuer; and
+
+ reduced
+ disclosure about the emerging growth company's executive compensation arrangements.
+
+ 
+
+An emerging growth company is also exempt from Section
+404(b) of Sarbanes Oxley which requires that the registered accounting firm shall, in the same report, attest to and report on
+the assessment on the effectiveness of the internal control structure and procedures for financial reporting. Similarly, as a Smaller
+Reporting Company we are exempt from Section 404(b) of the Sarbanes-Oxley Act and our independent registered public accounting
+firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until such time
+as we cease being a Smaller Reporting Company.
+
+ 
+
+As an emerging growth company, Perko Worldwide Corp.
+is exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive
+compensation and golden parachutes.
+
+ 
+
+Section 107 of the JOBS Act provides that an emerging
+growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying
+with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting
+standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of
+this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with
+such new or revised accounting standards.
+
+ 
+
+We would cease to be an emerging growth company upon
+the earliest of:
+
+ the
+ first fiscal year following the fifth anniversary of this offering,
+
+ the
+ first fiscal year after our annual gross revenues are $1 billion or more,
+
+ the
+ date on which we have, during the previous three-year period, issued more than $1 billion
+ in non-convertible debt securities, or
+
+ as
+ of the end of any fiscal year in which the market value of our common stock held by non-affiliates
+ exceeded $700 million as of the end of the second quarter of that fiscal year.
+
+ 
+
+The exemptions available to the Company as an Emerging
+Growth Company are also available to the Company as a Smaller Reporting Company.
+
+ 
+
+ Table of Contents8 
+
+ 
+
+ 
+
+The Offering
+
+ 
+
+Following is a brief summary of this offering:
+
+ 
+
+ 
+ 
+
+ Securities being offered by Perko Worldwide: 
+ 30,000,000 shares of common stock, $1.00 par value 
+
+ 
+ 
+
+ Offering price: 
+ $3.00 per share 
+
+ 
+ 
+
+ Minimum number of shares to be sold in this offering: 
+ None 
+
+ 
+ 
+
+ Company capitalization: 
+ 
+ Common Stock : 125,000,000 shares authorized; 86,846,700
+ shares issued and outstanding and 38,153,300 unissued as of the date of this prospectus.
+
+ 
+
+ 
+ 
+
+ Number of shares outstanding before the offering: 
+ 86,846,700
+
+ 
+ 
+
+ Number of shares outstanding after the offering, assuming all of the shares are sold: 
+ 
+ 
+
+ 116,846,700
+
+ 
+ 
+
+ Use of proceeds: 
+ We intend to use the
+ proceeds of this offering to: (i) build our first prototype ship of 300 feet or more and (ii) as general working capital
+ to further develop and continue our business operations. See the "Use of Proceeds" section
+ for more information on page 19. 
+
+ 
+ 
+
+ Lack of escrow account: 
+ There are no arrangements or plans to place the proceeds from this offering into an escrow, trust or similar account. All proceeds from this offering will be available immediately to us for general corporate use, regardless of whether we are able to place the entire offering. 
+
+ 
+ 
+
+ Risk factors: 
+ See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our Common Stock. Any investment in our business should be considered extremely risky and is suitable only for those who can afford to lose the entirety of their investment.
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Table of Contents9 
+
+ 
+
+ 
+
+Selected Financial Information
+
+ 
+
+The tables below summarize the
+audited financial statements of Perko Worldwide Corp. for the three-month periods ending March 31, 2014 and March 31, 2015
+and year ended December 31, 2014:
+
+ 
+
+Balance Sheet Summary :
+
+ 
+ 
+ 
+
+ 
+ Three-months
+ ending March 31, 2015 (unauited) 
+ As of December 31, 2014 
+(audited*)
+
+ 
+ 
+ 
+
+ Cash and cash equivalents 
+ $2,019 
+ $3046 
+
+ Total assets 
+ $223,119 
+ $299,171 
+
+ Total liabilities 
+ $38,829 
+ $35,829 
+
+ Total stockholders equity 
+ $184,290 
+ $193,342 
+
+ 
+
+ 
+
+Statement of Operations
+Summary :
+
+ 
+ Three-months
+ ending March 31, 2015 (unaudited) 
+ Three-months ending March 31, 2014 (unaudited)
+
+ 
+ 
+ 
+
+ Revenue 
+ $0 
+ $0 
+
+ Expenses 
+ $46,553 
+ $6,105 
+
+ Net (loss) 
+ ($)46,553 
+ ($)6,105 
+
+ 
+
+Important Information – No Required
+Minimum Amount of Shares Must be Sold
+
+ 
+
+There is no required minimum amount of Shares that must be
+sold in this offering. As a result, potential investors will not know how many Shares will ultimately be sold and the amount
+of proceeds we will receive from this offering. If we sell only a few Shares, potential investors may end up holding shares
+in a company that:
+
+ 
+
+ hasn t received enough proceeds from the offering to build a
+ prototype ship and/or sustain ongoing operations; and 
+
+ has limited, volatile, and sporadic trading market for its common stock.
+
+ 
+
+This should be considered
+a substantial risk of investment, taken together with the "Risk Factors" section presented in this prospectus starting
+on page 11.
+
+ 
+
+Rule 419 – "Blank Check Company"
+
+ 
+
+We are not a "blank check company" as defined
+by Rule 419 of the Securities Act of 1933, as amended, and therefore the registration statement need not comply with the requirements
+of Rule 419. Rule 419 defines a "blank check company" as a company that:
+
+ Table of Contents10 
+
+ 
+
+ 
+
+(1) is a development stage company that
+has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an
+unidentified company or companies, or other entity or person; and
+
+ 
+
+(2) is issuing "penny stock,"
+as defined in Rule 3a51-1 under the Securities Exchange Act of 1934.
+
+ 
+
+We have a very specific business purpose and a bona fide
+plan of operations. Our business plan and purpose is to develop and build a patented revolutionary type of high-speed roll
+on/roll off container cargo transportation vessel having secondary and tertiary sources of income within each ship of parcels and
+passengers.
+
+ 
+
+As of March 1, 2015, we have not
+generated any revenue nor do we anticipate generating any material revenue for at least twelve months from the date we close
+this offering, assuming we are able to place a sufficient amount of this offering. Upon receipt of adequate funding
+from this offering we intend to (i) build prototypes and conduct sea trials (30,000,000), (ii) construct a fleet
+($30,000,000) (iii) purchase major ship components (10,000,000), (iv) turbine deposit and payments (10,000,000), and (v)
+acquire ports contracts and building leases ($5,000,000). Lastly, we do not have any plans or intentions to engage in a
+merger or acquisition with an unidentified company or companies or other entity or person.
+
+RISK FACTORS
+
+Please consider the following risk factors before deciding to invest
+in our common stock.
+
+ 
+
+This offering and any investment in our common stock involves a
+high degree of risk. You should carefully consider the risks described below and all of the information contained in this
+prospectus before deciding whether to purchase our common stock.
+
+ 
+
+If any of the following risks actually occur, our business, financial
+condition and results of operations could be harmed and you may lose your entire investment.
+
+ 
+
+Industry Risk Factors
+
+ 
+
+If the shipping industry, which historically has
+been cyclical and volatile, does not continue to improve in the future, our business may not succeed.
+
+ 
+
+In the late 1990s, shipping rates were growing at a
+rate roughly 2% annually. This increase in margins prompted new container shipbuilding and retrofitting of older vessels. Due to
+the lag time in bringing these new ships and retrofitted vessels online, many of them were not seaworthy and operational until
+2000 to 2003.
+
+ 
+
+The addition of new and retrofitted vessels caused a
+surplus of vessels in the shipping market which negatively impacted shipping rates. Along with the economic recession of 2008,
+shipping rates globally began to fall thirty percent (30%) from $2,727 per forty foot container in July 2008 to $1,882 per forty
+foot container in May 2013 and container traffic decreased.
+
+ 
+
+However, there has been a turnaround in the last eighteen
+months in the shipping industry. The Port of New York and New Jersey reported handling 5.3 million loaded and unloaded 20-foot
+equivalent units (TEUs) which was 16% increase in total container traffic from 2009.
+
+ 
+
+World trade is highest between Europe and North America,
+accounting for as much as 35 percent of all world trade. In December 2014, a 40 foot standard container at 25,000 pounds transported
+from Miami, Florida to London, United Kingdom costs $2,700 to $3,100. Industry shippers expect shipping rates to increase in 2015.
+
+ 
+
+ Table of Contents11 
+
+ 
+
+ 
+
+A shortage of skilled labor together with
+rising labor costs in the shipping industry may further increase operating costs, which could adversely affect our results of operations.
+
+ 
+
+Launching a state of the art transportation vessel using
+modern techniques and equipment requires skilled laborers, preferably with several years of experience and proficiency in construction.
+If there is a shortage of experienced labor or if we are unable to train the necessary number of skilled laborers, there could
+be an adverse impact on our labor productivity and costs and our ability to expand production.
+
+ 
+
+As a result of current market conditions and the high
+demand for skilled labor in certain regions in which we will operate, the cost of labor may increase in the future. The continued
+increase in labor costs could adversely affect our profitability.
+
+ 
+
+Our production process
+consumes large amounts of liquid natural gas. An increase in the price or a significant interruption in the supply of these
+or any other significant raw material costs could have a material adverse effect on our business, financial condition or
+results of operations.
+
+ 
+
+As previously stated, liquid
+natural gas will be the fuel source used to operate our transportation vessel and, as such, our profitability is impacted by
+the price and availability of natural gas we purchase from third parties. The price and supply of natural gas are
+unpredictable and can fluctuate significantly based on international, political and economic circumstances, as well as other
+events outside our control, such as changes in supply and demand due to weather conditions, actions by OPEC and other oil and
+gas producers, regional production patterns and environmental concerns. Furthermore, utility companies could enforce natural
+gas curtailments which affect our operations. In addition, potential climate change regulations or carbon or emissions taxes
+could result in higher production costs for energy, which may be passed on to us in whole or in part. In the past, the price
+of natural gas has been extremely volatile, and we expect this volatility to continue. For example, during the year ended
+December 31, 2013, the monthly closing price of natural gas on the New York Mercantile Exchange ranged from a high of $4.15
+per million British Thermal Units ("BTUs") to a low of $3.23 per million BTUs.
+
+ 
+
+Our industry depends on freight forwarders. 
+
+ 
+
+The shipping industry depends on freight forwarders, such as, FedEx,
+UPS, DHL and the U.S. Post Office for business. The inability to acquire business from freight forwarders could prevent our business
+from reaching profitability, or if profitability is ever obtained, fail to maintain such profitability. 
+
+ 
+
+Company Risk Factors
+
+ 
+
+We lack an operating history
+and have losses which we expect to continue into the future. There is no assurance our future operations will result in
+profitable revenues. If we cannot generate sufficient revenues to operate profitably, our business will fail.
+
+ 
+
+We were incorporated on June 3, 2003, and
+have generated only limited revenue from a handful of private stock investors. The Founder has spent personally and
+accumulated debts recently to make this offering, now approaching $200,000 through December 31, 2014. We
+have very little operating history upon which an evaluation of our future success or failure can be made. We have not
+achieved profitability as of March 1, 2015. Even if we do achieve profitability, we may be unable to sustain or increase
+profitability on an ongoing basis without a successful IPO.
+
+ 
+
+We are dependent upon the funds
+to be raised in this offering to advance our business, the proceeds of which may be insufficient to begin generating sufficient
+levels of revenue which could cause our business to fail. 
+
+ 
+
+ Table of Contents12 
+
+ 
+
+ 
+
+We have had limited operations to date which have been funded
+exclusively by our directors and current stockholders. We need the proceeds from this offering to (i) build prototypes and
+conduct sea trials ($20M), (ii) construct a fleet ($30M) (iii) purchase major ship components(10M), (iv) turbine deposit and payments(10M),
+and (v) acquire ports and buildings($5M). We may need additional funds to complete further development of our business
+plan before we are able to achieve a sustainable level of revenue where ongoing operations can be funded out of revenues. There
+is no assurance that any additional financing will be available, or if available, on terms that will be acceptable to us. If
+we are not able to obtain additional financing, we may have to cease operations and investors will lose their entire investment.
+
+ 
+
+Our model may not perform as expected.
+
+ 
+
+A substantial portion of the Offering Proceeds will
+be used to construct a Model of the high speed roll on/roll off container cargo transportation vessel that will become the
+basis of our business. Although we have hired Paul Zankich of Columbia - Sentinel Engineers Inc. (who is currently a board
+member) to conduct a design feasibility study, there can be no assurances that the actual Model will perform as expected. In
+the event that the Model does not perform, we may incur substantial additional costs to revise the design of the Model.
+
+ 
+
+Although we believe that we have a unique technology that
+will revolutionize the cargo/transportation shipping industry, as competition in the industry increases, it may become increasingly
+difficult for us to maintain a technological advantage and to leverage that advantage toward increased revenues and profits.
+
+ 
+
+The markets we serve are highly competitive, and we
+may be unable to compete effectively.
+
+ 
+
+We will compete with many established companies in the markets
+we serve and some of these companies (whether independently or by establishing alliances) may have substantially greater financial,
+marketing and technological resources, larger distribution capabilities, earlier access to customers and greater opportunity to
+address customers requirements than us. We will also compete with many smaller, less established companies who may be able
+to focus more effectively on specific product segments or markets.
+
+ 
+
+Current ship owners which already transport and control
+one hundred percent (100%) of the container or world twenty-foot equivalent units (TEU) market will charge cheaper rates for slow
+freight. Potential customers might prefer to pay cheaper rates than those that Perko will charge for its high speed delivery.
+
+ 
+
+Our business could be materially adversely affected
+as a result of war or acts of terrorism or piracy.
+
+ 
+
+Terrorist acts, Piracy, or acts of war may cause damage or
+disruption to our ships, our shipping abilities, our employees, facilities, and customers, which could have a material adverse
+effect on our business, results of operations or financial condition. Such conflicts may also cause damage or disruption to transportation
+and communication systems and to our ability to manage logistics in such an environment.
+
+ 
+
+ Our business may suffer if we are unable to
+retain or attract key personnel.
+
+ 
+
+Our business depends to a significant extent on the continued
+service of senior management and other key employees, the development of additional management personnel and the hiring of new
+qualified employees. There can be no assurance that we will be successful in retaining existing personnel or recruiting new personnel.
+The loss of one or more key or other employees, our inability to attract additional qualified employees or the delay in hiring
+key personnel could have a material adverse effect on our business, results of operations or financial condition.
+
+ 
+
+ Table of Contents13 
+
+ 
+
+ 
+
+Changes in foreign conditions could impair our international
+services.
+
+ 
+
+A portion of our revenues may be derived from shipping contracts
+outside the United States. Accordingly, our future results could be materially adversely affected by a variety of factors, including
+changes in foreign currency exchange rates, changes in a specific country s or region s political or economic conditions,
+trade restrictions, import or export licensing requirements, the overlap of different tax structures or changes in international
+tax laws, changes in regulatory requirements, compliance with a variety of foreign laws and regulations and longer payment cycles
+in certain countries.
+
+ 
+
+Our business may suffer if we cannot protect our intellectual
+property.
+
+ 
+
+Pursuant to our Licensing Agreement it is our responsibility
+to bear the costs of protecting our proprietary rights and filing and maintaining any and all patents which incorporate the technology
+licensed pursuant to the Agreement, until such time as the Licensing Fee is paid in full. Thereafter, we will have to depend on
+David Perko, the Patent owner to protect our proprietary rights. There can be no assurance that any of our proprietary rights will
+not be challenged, invalidated or circumvented or that Mr. Perko will be able to adequately protect them. In addition, the laws
+of certain countries do not protect our proprietary rights to the same extent as do the laws of the United States. Therefore, there
+can be no assurance that we will be able to adequately protect our proprietary technology against unauthorized third-party copying
+or use, which could adversely affect our competitive position.
+
+ 
+
+The protection of Company s proprietary information
+is limited.
+
+ 
+
+Although Company regards certain of its intellectual property
+as proprietary, there can be no guarantee that Company will be able to achieve exclusive use of such intellectual property. To
+establish, maintain and protect its proprietary rights, Company intends to file for such protection, if available, and intends
+to rely on a combination of patent, copyright, and trademark laws, confidentiality agreements, and contract provisions with third
+parties. Although Company has been entering into confidentiality, non-compete, or invention assignment agreements with its employees
+and limits access to, and distribution of, its proprietary technology and trade secrets, Company s efforts to safeguard and
+maintain its proprietary rights may not be sufficient to deter misappropriation, imitation, copying or independent third-party
+development, exploitation and use of Company s products, technology or other information PWWC regards as proprietary. If
+Company is unable to protect its intellectual property and proprietary rights, such inability could have a material adverse effect
+on Company s business, financial condition, and results of operation. There also can be no assurance that Company s
+competitors will not independently develop proprietary rights similar to Company s. Litigation may be necessary in the future
+to protect Company s trade secrets or other intellectual property rights or to determine the validity and scope of the proprietary
+rights of others. Such litigation could result in substantial costs and diversion of resources and could have a material adverse
+effect on Company s business, financial condition, and results of operations.
+
+ 
+
+ Some of our competitors have greater financial
+resources than we do,
+
+ 
+
+There is strong competition in the cargo/transportation shipping
+industry. We will compete with many companies, certain of which have substantially greater financial and technological resources,
+larger distribution capabilities, earlier access to customers. Our business may be adversely affected by price reductions of our
+competitors' product or services and the implementation of certain marketing strategies by its competitors. See "Competition."
+
+ 
+
+A significant portion of our future financial performance
+will depend on a successful marketing and sales campaign.
+
+ 
+
+A significant portion of our future financial performance
+will depend on a successful marketing and sales campaign as well as client acceptance of our services. The market for our services
+could fail to grow as rapidly, or grow more slowly than anticipated, or become more competitive by much slower ship reducing their
+pricing to make their service more attractive, which could lead to a sharply decreased margin for Perko Worldwide Corp that may
+not be sustainable.
+
+ 
+
+ Table of Contents14 
+
+ 
+
+ 
+
+The potential profitability of this business model is unproven.
+As a result, we cannot be certain that our business model will be successful or that we can sustain revenue growth or achieve or
+sustain profitability. While we have based our cash flow and business model assumptions on rates we feel are reasonable, we cannot
+provide any assurance that we will achieve these average rates.
+
+ 
+
+Our operations expose us to numerous and sometimes
+conflicting legal and regulatory requirements, and violation of these regulations could harm our business.
+
+ 
+
+Company plans to retain the services of a specialized regulatory
+attorney to ensure that the Company is compliant with all state and federal laws. We are also subject to numerous, and sometimes
+conflicting, legal rules on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation,
+sanctions, government affairs, internal and disclosure control obligations, data privacy and labor relations. Violations of these
+regulations in the conduct of our business could result in fines, criminal sanctions against us or our officers, prohibitions on
+doing business and/or damage to our reputation. Violations of these regulations in connection with the performance of our obligations
+to our clients also could result in liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions
+on our ability to process information and allegations by our clients that we have not performed our contractual obligations. Due
+to the varying degrees of development of the legal systems of the countries in which we might operate, local laws might be insufficient
+to protect our rights. Our failure to comply with applicable regulatory requirements could have a material adverse effect on our
+business, results of operations and financial condition.
+
+ 
+
+The Company's inability to prevent computer viruses
+or destruction of hardware through "acts of god" could limit or halt operations.
+
+ 
+
+In the event Company s technology, networks, and/or
+hardware become subject to computer viruses, including viruses targeting at Company, our business operations may suffer a material
+adverse effect and we may be forced to halt operations until our systems and hardware are restored. While management recognizes
+the importance of maintaining anti-virus protection to protect its technology, data, and hardware, there is no guarantee that anti-virus
+protection can prevent such attacks. In addition, Company may also be materially adversely affected in the event its computer hardware
+or technology is destroyed in the event of an act of God (i.e., a hurricane, flood, tornado, fire, earthquake etc.). In the event
+of an act of God, Company could be forced to halt operations for an extended period time which would have an adverse effect on
+the Company's operating revenue and investor returns.
+
+ 
+
+Construction of a larger untried vessel may not be feasible.
+Since such a vessel has never been built, there are many factors that may prohibit its construction:
+
+ 
+
+ The U.S. Coast Guard and America Bureau of Shipping Passenger may not grant vessel
+permits which are needed to operate from U.S. ports. Perko s prototype would sail at 300 mph which has not been done before.
+Therefore, the government agencies might be wary of providing a license to operate.
+
+ There is no existing lift joint for the Company s patent pending folding ship
+wings.
+
+ There is no no existing propulsion system of the Company s patent pending design.
+
+ Shipyard may
+ not agree to install wings assembled offsite. The typical vessel that is built at a shipyard
+ does not have wings.
+
+ Shipyard s agreement to provide a completion bond for our vessel may not accompany
+a performance bond due to its revolutionary speed.
+
+ Shipyard s
+ already committed to other companies for new ship build or rework projects could
+ delay the start of Perko s prototype construction.
+
+ 
+
+ Table of Contents15 
+
+ 
+
+ 
+
+Risk Factors Relating to Our Common Stock and This
+Offering 
+
+ 
+
+There is no public (trading) market for our common
+stock and there is no assurance that our common stock will ever trade on a recognized exchange or dealers network. Therefore,
+anyone investing in this offering may not be able to sell their shares. 
+
+ 
+
+Our common stock is not listed on any exchange or quoted
+on any similar quotation service, and there is currently no public market for our common stock. We have only taken initial
+steps in preparing our S1 filing to enable our common stock to be quoted on the OTC Bulletin Board or other similar venue, so we
+can provide no assurance that our common stock will ever be quoted on any quotation service or that any market for our common stock
+will ever develop. As a result, stockholders may be unable to liquidate their investments, or may encounter considerable
+delay in selling shares of our common stock. We have not engaged an underwriter for this offering. Therefore, we cannot
+assure you that any brokerage firm will act as a market maker of our securities. A trading market may not develop in the
+future, and if one does develop, it may not be sustained. If an active trading market does develop, the market price
+of our common stock is likely to be highly volatile due to, among other things, the nature of our business and because
+we are a new public company with a limited operating history. Further, even if a public market develops, the volume of trading
+in our common stock will presumably be limited and likely be dominated by a few individual stockholders. The limited volume,
+if any, will make the price of our common stock subject to manipulation by one or more stockholders and will significantly limit
+the number of shares that one can purchase or sell in a short period of time. The market price of our common stock may also
+fluctuate significantly in response to the following factors, most of which are beyond our control:
+
+ 
+
+ variations in our quarterly operating results; 
+
+ changes in general economic conditions, in particular the tourism industry
+within the Caribbean region; 
+
+ announcements by us or our competitors of significant new contracts,
+acquisitions, strategic partnerships or joint ventures, capital commitments; 
+
+ loss of a significant advertiser, partner or joint venture participant;
+and 
+
+ the addition or loss of key managerial and collaborative personnel.
+
+ 
+
+The equity markets have, on occasion, experienced significant
+price and volume fluctuations that have affected the market prices for many companies' securities and that have often been unrelated
+to the operating performance of these companies. Any such fluctuations may adversely affect the market price of our common
+stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may
+be forced to sell them at a loss.
+
+ 
+
+We are selling this offering without an underwriter
+and may be unable to sell any shares. 
+
+ 
+
+This offering is self-underwritten, that is, we are not going
+to engage the services of an underwriter to sell the shares. We intend to sell our shares through our directors who will
+receive no commissions or other forms of compensation for doing this for us. Our directors will offer the shares to friends,
+family members, and other business associates. However, there is no guarantee that they will be able to sell any of the shares.
+ Unless they are successful in selling the shares and we receive the proceeds from this offering, we may have to seek alternative
+financing before we are able to proceed with our business plan.
+
+ 
+
+ Table of Contents16 
+
+ 
+
+ 
+
+If our common stock is accepted for quotation on the
+OTC Bulletin Board it will be subject to the "Penny Stock" rules of the SEC which may limit the trading market in our
+common stock and make transactions in our stock cumbersome, thereby possibly reducing the value of an investment in our common
+stock. 
+
+ 
+
+The Securities and Exchange Commission has adopted Rule 15g-9
+which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has
+a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.
+ For any transaction involving a penny stock, unless exempt, the rules require:
+
+ 
+
+ that a broker or dealer approve a person's account for transactions
+in penny stocks; and 
+
+ 
+
+ the broker or dealer receives from the investor a written agreement
+to the transaction, setting forth the identity and quantity of the penny stock to be purchased. 
+
+ 
+
+In order to approve a person's account for transactions in
+penny stocks, the broker or dealer must:
+
+ 
+
+ obtain financial information, investment experience and investment objectives
+of the person; and 
+
+ 
+
+ make a reasonable determination that the transactions in penny stocks
+are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of
+evaluating the risks of transactions in penny stocks. 
+
+ 
+
+The broker or dealer must also deliver, prior to any transaction
+in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
+
+ 
+
+ sets forth the basis on which the broker or dealer made the suitability
+determination; and 
+
+ 
+
+ that the broker or dealer received a signed, written agreement from
+the investor prior to the transaction. 
+
+ 
+
+Generally, brokers may be less willing to execute transactions
+in securities subject to the "penny stock" rules. This may make it more difficult for investors to sell shares
+of our common stock and cause a decline in the market value of our stock.
+
+ 
+
+Disclosure also has to be made about the risks of investing
+in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and
+the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases
+of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for
+the penny stock held in the account and information on the limited market in penny stocks.
+
+ 
+
+ Table of Contents17 
+
+ 
+
+ 
+
+For as long as we are an emerging growth company, we will
+not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure
+about our executive compensation, that apply to other public companies.
+
+We are classified as an "emerging growth company"
+under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public
+companies, we will not be required to, among other things, (1) provide an auditor s attestation report on management s
+assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley
+Act, (2) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor s
+report in which the auditor would be required to provide additional information about the audit and the financial statements of
+the issuer, (3) provide certain disclosure regarding executive compensation required of larger public companies or (4) hold nonbinding
+advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose
+that status sooner if we have more than $1.0 billion of revenues in a fiscal year, have more than $700 million in market value
+of our common stock held by nonaffiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.
+
+ 
+
+We may issue preferred stock
+whose terms could adversely affect the voting power or value of our common stock.
+
+ 
+
+Our amended and restated certificate of incorporation authorizes
+us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations,
+preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions,
+as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact
+the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some
+number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly,
+the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the
+residual value of the common stock. 
+
+ 
+
+Volatility in our common share price may subject us
+to securities litigation, thereby diverting our resources which may materially affect our profitability and results of operations.
+
+ 
+
+We expect the market for our common stock, if one ever develops,
+to be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will
+continue to be more volatile than a seasoned issuer for the indefinite future.
+
+ 
+
+In the past, plaintiffs have often initiated securities class
+action litigation against a company following periods of volatility in the market price of its securities. We may in the
+future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could
+divert management's attention and resources.
+
+ 
+
+We will be required to make substantial capital
+expenditures to develop our Prototype and build a fleet. The inability to obtain needed capital or financing on satisfactory terms,
+or at all, could have a material adverse effect on our growth and profitability.
+
+ 
+
+Even if we are able to obtain financing or access the
+capital markets, incurring additional debt may significantly increase our interest expense and financial leverage, and our level
+of indebtedness could restrict our ability to fund future development and acquisition activities. In addition, the issuance of
+additional common stock in an equity offering may result in significant stockholder dilution.
+
+ 
+
+ Table of Contents18 
+
+ 
+
+ 
+
+Special Note Regarding Forward-Looking
+Statements
+
+ 
+
+When used in this prospectus, the words or phrases "will
+likely result," "we expect," "will continue," "anticipate," "estimate," "project,"
+"outlook," "could," "would," "may," or other similar expressions are intended to
+identify forward-looking statements. We wish to caution readers not to place undue reliance on any such forward-looking statements,
+each of which speaks only as of the date made. Such statements are subject to certain risks and uncertainties that could
+cause actual results to differ materially from historical earnings and those presently anticipated or projected. Such risks
+and uncertainties include, among others, our
+ability to develop our core business model and execute on our business plan and expansion strategies, and our ability to finance
+and sustain operations. We have no obligation to publicly release the results of any revisions which may be made to any forward-looking
+statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.
+
+ 
+
+USE OF PROCEEDS
+
+If we are able to sell all of the shares of our common stock
+we are offering through this prospectus, then we will raise gross proceeds of $90,000,000. 
+
+ 
+
+Our offering is being made on a self-underwritten
+basis. No minimum number of shares must be sold in order for the offering to proceed. The offering price per share
+is $3.00. The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100%, respectively,
+of the securities offered for sale by us. If less than $10,000,000 is raised in this offering, we intend to continue operating
+on a limited basis, meeting our SEC filing obligations while we seek alternative sources of financing. 
+
+ 
+
+ USE OF PROCEEDS 
+ 
+ 
+ 
+ 
+
+ 
+ If 25% of the Shares are Sold 
+ If 50% of the Shares are Sold 
+ If 75% of the Shares are Sold 
+ If 100% of the Shares are Sold 
+
+ Gross proceeds 
+ $22,500,000 
+ $45,000,000 
+ $67,500,000 
+ $90,000,000 
+
+ Operational Expenses (1), Debts Retires, CFO & CLC salaries 
+ 250,000 
+ 250,000 
+ 250,000 
+ 250,000 
+
+ Deposits at Investment firms to seed our 2nd offering (4) 
+ — 
+ 4,500,000 
+ 18,002,250 
+ 45,000,000 
+
+ Prototype Building (2) 
+ 2,500,000 
+ 2,500,000 
+ 2,500,000 
+ 2,500,000 
+
+ Ports Contracted/Developed and Containers 
+ — 
+ 1,800,000 
+ 3,600,000 
+ 5,400,000 
+
+ Marketing & Promotions, World Record Breaking Sea Trials 
+ 125,000 
+ 180,000 
+ 180,000 
+ 180,000 
+
+ Corporate Office Building Acquired, Port Offices leases (3) 
+ 3,500,000 
+ 60,000 
+ 60,000 
+ 60,000 
+
+ Working Capital/Cash Reserves/Human Resources 
+ 16,125,000 
+ 35,710,000 
+ 42,907,750 
+ 36,610,000 
+
+ TOTALS 
+ $22,500,000 
+ $45,000,000 
+ $67,500,000 
+ $90,000,000 
+
+ 
+
+(1) Includes: Chief Legal Counsel, and CFO salaries,
+general overhead, licensing and permitting fees.
+
+(2) We are presently looking for suitable shipyards to
+build the prototype ship. We have not identified or entered into negotiations with a suitable shipyard. This is a general estimate
+based on the condition of prospective locations we have viewed to date.
+
+(3) Estimated Commercial Real Estate, office furniture,
+equipment, and supplies.
+
+(4) After our prototype is built and operational,
+we will seek a contract with investment firms to make a second institutional PPM which we plan to capitalize five billion dollars
+for fleet construction, and further worldwide port acquisitions.
+
+ Table of Contents19 
+
+ 
+
+ 
+
+DILUTION 
+
+Dilution per share
+
+ 
+
+The following table presents a reconciliation of the numerator and denominator of basic and diluted earings
+per share for the years ended December 31, 2014 and 2013, and for the periods ended March 31, 2015 and 2014. Basic EPS
+includes no dilution and is computed by dividing net tangible book value by the weighted average number of common shares outstanding
+before the offering, in comparison to the Diluted EPS which reflects the potential dilution of securities computed by dividing
+net tangible book value by the weighed average number of common shares outstanding after the offering.
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Year Ended December 31, 
+ Period Ended March 31,
+
+ 
+ 2014 
+ 2013 
+ 2015 
+ 2014
+
+ Numerator: 
+ 
+ 
+ 
+ 
+
+ Net tangible book value before the offering 
+ $(32,783) 
+ $(41,460) 
+ $(36,810) 
+ $(41,540)
+
+ 
+ 
+ 
+ 
+ 
+
+ Increase in net tangible book value from sale of 
+ 
+ 
+ 
+ 
+
+ 30,000,000 common shares at $3 per share 
+ 90,000,000 
+ 90,000,000 
+ 90,000,000 
+ 90,000,000 
+
+ 
+ 
+ 
+ 
+ 
+
+ Net tangible book value after the offering 
+ $89,967,217 
+ $89,958,540 
+ $89,963,190 
+ $89,958,460 
+
+ 
+ 
+ 
+ 
+ 
+
+ Denominator: 
+ 
+ 
+ 
+ 
+
+ Basic - weighted average common shares 
+ 
+ 
+ 
+ 
+
+ before offering 
+ 78,970,721 
+ 33,973,250 
+ 86,698,908 
+ 44,901,833 
+
+ 
+ 
+ 
+ 
+ 
+
+ Increase in weighted average common shares 
+ 
+ 
+ 
+ 
+
+ from 30,000,000 additional shares sold/issued 
+ 30,000,000 
+ 30,000,000 
+ 30,000,000 
+ 30,000,000 
+
+ 
+ 
+ 
+ 
+ 
+
+ Diluted - weighted average common shares 
+ 
+ 
+ 
+ 
+
+ after offering 
+ 108,970,721 
+ 63,973,250 
+ 116,698,908 
+ 74,901,833 
+
+ 
+ 
+ 
+ 
+ 
+
+ Basic earnings per share 
+ $(0.0004) 
+ $(0.0012) 
+ $(0.0004) 
+ $(0.0009)
+
+ 
+ 
+ 
+ 
+ 
+
+ Dilute earnings per share 
+ $(0.0003) 
+ $(0.0006) 
+ $(0.0003) 
+ $(0.0006)
+
+ Table of Contents20 
+
+ 
+
+ 
+
+PLAN OF DISTRIBUTION
+
+Shares Offered by Us 
+
+ 
+
+This is a self-underwritten "best-efforts" offering.
+ This prospectus is part of a prospectus that permits our directors, David E. Perko, Jonathan S. Williams, Michelle A. Williams,
+and L. Paul Zankich, to sell the shares of common stock directly to the public with no commission or other remuneration payable
+to our directors for any shares they may sell. There are no plans or arrangements to enter into any contracts or agreements
+to sell the shares with a broker or dealer. Our directors will sell the shares and intend to offer them to friends, family
+members, and personal and professional acquaintances. In offering the securities on our behalf, our directors will rely on
+the safe harbor from broker dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934. In their
+endeavors to sell this offering, our directors will not use any mass-advertising methods such as the Internet or print media.
+
+ 
+
+Our directors will not register as a broker-dealer pursuant
+to Section 15 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), in reliance upon Rule 3a4-1, which
+sets forth the conditions under which a person associated with an issuer, may participate in the offering of the issuer's securities
+and not be deemed to be a broker-dealer. The conditions are that:
+
+ 
+
+1) The person is not statutorily disqualified,
+as that term is defined in Section 3(a)(39) of the Exchange Act, at the time of his participation;
+
+ 
+
+2) The person is not compensated
+in connection with his or her participation by the payment of commissions or other remuneration based either directly or
+indirectly on transactions in securities;
+
+ 
+
+3) The person is not at the time of
+their participation, an associated person of a broker-dealer; and
+
+ 
+
+4) The person meets the
+conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he or she (a) primarily performs, or is intended
+primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection
+with transactions in securities; and (b) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding
+12 months; and (c) does not participate in selling and offering of securities for any issuer more than once every 12 months other
+than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
+
+ 
+
+Our directors are not statutorily disqualified, are not being
+compensated, and are not associated with a broker-dealer. They are and will continue to be our directors at the end of this
+offering and are not currently and have not been during the last 12 months broker-dealers or associated with a broker-dealer. They
+have not during the last 12 months and will not in the next 12 months offer or sell securities for another corporation.
+
+ 
+
+Terms of the Offering
+
+ 
+
+We are offering on a best-efforts basis 30,000,000 shares
+of our common stock at a price of $3.00 per share. This is the initial offering of our common stock and no public market
+exists for the securities being offered. We are offering the shares through a "self-underwritten" offering, directly
+through our directors. The shares will be offered at a fixed price of $3.00 per share for a period not to exceed one-hundred
+and eighty (180) days from the date of this prospectus. There is no minimum number of shares required to be purchased. No
+commission or other compensation related to the sale of the shares will be paid to our directors. The intended methods of
+communication include, without limitations, telephone, and personal contact.
+
+ 
+
+This offering shall terminate on the earlier of (i) the date
+when the sale of all 30,000,000 shares is completed or (ii) one hundred and eighty (180) days from the date of this prospectus.
+ We will not extend the offering period beyond one hundred and eighty (180) days from the effective date of this prospectus.
+
+ 
+
+ Table of Contents21 
+
+ 
+
+ 
+
+There can be no assurance that any of the shares will be
+sold. We have not entered into any agreements or arrangements for the sale of the shares with any broker-dealer or sales
+agent, nor do we intend to enter into any such agreement or arrangement with any broker-dealer or sales agent.
+
+ 
+
+In order to comply with the applicable securities laws of
+certain states, the securities will be offered or sold only in those states if they have been registered or qualified for sale
+or an exemption from such registration or qualification requirement is available and with which we have complied.
+
+ 
+
+Procedures for Subscribing 
+
+ 
+
+If you decide to subscribe for any shares in this offering,
+you must: (i) execute and deliver a subscription agreement; and (ii) wire transfer or deliver a check, certified funds or cash
+to us for acceptance or rejection. All checks for subscriptions must be made payable to Perk Worldwide Corp.
+
+ 
+
+There are no arrangements or plans to place the proceeds
+from this offering into an escrow, trust or similar account. Because this is a best efforts offering, once a subscription
+is accepted by us, we will have immediate availability to use the subscription proceeds, regardless of whether we are able to place
+the entire offering.
+
+ 
+
+Right to Reject Subscriptions 
+
+ 
+
+We have the right to accept or reject subscriptions in whole
+or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to
+the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within two (2)
+business days after we receive them.
+
+ 
+
+Applicable to the Offering by Us
+
+ 
+
+Section 15(g) of the Exchange Act
+
+ 
+
+Our shares are covered by Section 15(g) of the Exchange Act,
+and Rules 15g-1 through 15g-6 promulgated thereunder. They impose additional sales practice requirements on broker-dealers
+who sell our securities to persons other than established customers and accredited investors (generally institutions with assets
+in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $160,000 or $300,000 jointly
+with their spouses).
+
+ 
+
+Rule 15g-1 exempts a number of specific transactions from
+the scope of the penny stock rules.
+
+ 
+
+Rule 15g-2 declares unlawful broker-dealer transactions in
+penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.
+
+ 
+
+Rule 15g-3 provides that it is unlawful for a broker-dealer
+to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer current
+quotation prices or similar market information concerning the penny stock in question.
+
+ 
+
+ Table of Contents22 
+
+ 
+
+ 
+
+ 
+
+Rule 15g-4 prohibits broker-dealers from completing penny
+stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other
+remuneration received as a result of the penny stock transaction.
+
+ 
+
+Rule 15g-5 requires that a broker-dealer executing a penny
+stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction,
+information about the sales persons compensation.
+
+ 
+
+Rule 15g-6 requires broker-dealers selling penny stocks to
+provide their customers with monthly account statements.
+
+ 
+
+Rule 15g-9 requires broker-dealers to:
+
+ 
+
+ approve the transaction for the customer's account; 
+
+ obtain a written agreement from the customer setting forth the identity
+and quantity of the stock being purchased; 
+
+ obtain from the customer information regarding his investment experience;
+
+ make a determination that the investment is suitable for the investor;
+
+ deliver to the customer a written statement for the basis for the suitability
+determination; 
+
+ notify the customer of his rights and remedies in cases of fraud in
+penny stock transactions; and 
+
+ provide the customer with FINRA s toll free telephone number and
+the central number of the North American Administrators Association, for information on the disciplinary history of broker-dealers
+and their associated persons. 
+
+ 
+
+The application of the penny stock rules may affect your
+ability to resell your shares.
+
+ 
+
+MANAGEMENT S DISCUSSION AND ANALYSIS OR
+PLAN OF OPERATION
+
+ 
+
+We are a development stage
+corporation with limited operations and are not currently generating any revenues from our business operations. We do not
+anticipate generating significant revenues until we are able to build our prototypes and conduct sea trials.
+ Accordingly, we must raise additional cash from sources other than operations.
+
+ 
+
+We are attempting to raise
+money from this offering. If we raise sufficient funds from this offering we will be able to (i) build
+prototypes and conduct sea trials ($20,000,000), (ii) construct a fleet ($30,000,000) (iii) purchase major ship components
+($10,000,000), (iv) turbine deposit and payments ($19,000,000), and (v) acquire ports and buildings ($5,000,000). If we are unable
+to generate significant revenues for any reason, or if we are unable to make a reasonable profit after building our first
+cargo transportation vessel, we may be forced to raise additional funds or to cease operations. At the present time, we
+have not made any arrangements to raise additional cash, other than through this offering.
+
+ 
+
+If we need additional cash and cannot raise it, we will either
+have to suspend operations until we do raise the cash, or cease operations entirely. If we fail to raise sufficient funds
+from this offering and need more money we will have to revert to obtaining additional money through a second public offering, a
+private placement of securities, or loans. Other than as described in this paragraph, we have no other financing plans.
+
+ 
+
+Limited Operating History; Need for Additional Capital
+
+ 
+
+ Table of Contents23 
+
+ 
+
+ 
+
+There is limited historical financial information about us
+upon which to base an evaluation of our performance. We are in the start-up stage of operations and have yet to generate
+any revenues. We cannot guarantee that we will be successful in our business operations. Our business is subject to
+risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns,
+such as increases in marketing costs, increases in administration expenditures associated with daily operations, increases in accounting
+and audit fees, and increases in legal fees related to filings and regulatory compliance.
+
+ 
+
+To become profitable and competitive, we have to successfully
+build our prototypes and conduct sea trials. We anticipate relying on equity sales of our common stock in order to continue
+to fund our business operations until we are able to generate sufficient revenues to cover our operating expenses, which may never
+happen. Issuances of additional shares will result in dilution to our then existing stockholders. There is no assurance
+that we will be able to make any additional sales of our equity securities or arrange for debt or other financing to fund our planned
+business activities. We may also rely on loans from our directors. However, there are no assurances that our directors
+will provide us with any additional funds.
+
+ 
+
+Currently, we do not have any arrangements for additional
+financing. We have no assurance that future financing will be available to us on acceptable terms. If financing is
+not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could
+result in additional dilution to existing shareholders.
+
+ 
+
+Results of Operations
+
+ 
+
+From Inception on June 3, 2003 through
+March 31, 2015. 
+
+ 
+
+During the period from June 3,
+2003 (inception) through March 31, 2015, we have had minimal operations and have devoted most of our efforts to developing
+our business plan, developing our intellectual property, issuing common stock, attempting to raise capital, and establishing
+an accounting system and other administrative functions. We have generated no revenue and incurred $85,438
+in losses since inception, which includes $30,000 in formation costs and related legal fees and in filing and obtaining our
+patents.
+
+ 
+
+Liquidity and Capital Resources 
+
+ 
+
+As of December 31, 2014, we had no cash or otherwise, and
+our total liabilities were $41,579, which are current accounts payable to a related party. 
+
+ 
+
+We expect to incur continued losses over the next 12 months,
+possibly even longer. We have no cash or other assets, and we believe that we need at least $90,000,000 to meet our minimal
+working capital requirements over the next 12 months to build our prototypes, and fund a second multi-billion dollar Wall Street
+fleet building capitalization.
+
+ 
+
+Without limiting our available options,
+future equity financings will most likely be through the sale of additional shares of our common stock. It is possible that
+we could also offer warrants, options and/or rights in conjunction with any future issuances of our common stock. However,
+we can give no assurance that financing will be available to us, and if available to us, in amounts or on terms acceptable to
+us. If we cannot secure adequate financing through this offering or through alternative sources, we may be forced to cease
+operations and you will lose your entire investment. 
+
+ Table of Contents24 
+
+ 
+
+ 
+
+Cash Flow Summary (Unaudited)
+
+The Company's cash flow activities for the three months ended March 31, 2015 and 2014, respectively, are summarized as follows:
+
+ 
+
+ Operating Cash Flow Activities: 
+ 2015 
+ 2014
+
+ Net loss 
+ $(46,553) 
+ $(6,105)
+
+ Adjustments to net loss 
+ 5,025 
+ 4,975 
+
+ Cash used in operating activities 
+ $(41,528) 
+ $(1,130)
+
+ 
+
+The Company's cash flow activities from operating activities was (41,528) in 2015 compared to ($1,130) in 2014.
+
+The increase was primarily attributable to operating expenses incurred in 2015. 
+
+ 
+
+ Financing Cash Flow Activities: 
+ 2015 
+ 2014
+
+ Proceeds from issuance of common stock 
+ $33,700 
+ $1,000 
+
+ Proceeds from additional paid-in capital 
+ 3,800 
+ — 
+
+ Other financing activities 
+ 3,000 
+ 40 
+
+ Cash provided by financing activities 
+ $40,500 
+ $1,040 
+
+ 
+
+Financing activities include proceeds from common stock issuance and equity contributions and advances from shareholder.
+
+ 
+
+Cash provided in financing
+activites totaled $40,500 and $1,040 for the three months ended March 31, 2015 and 2014, respectively. Proceeds raised
+through the sale of common stock of $33,700 and $1,000 in 2015 and 2014, respectively, combined with proceeds from proceeds
+from equity contributions of $3,800 and $0 in 2015 and 2014, respectively and advances from shareholders of $3,000 and $40,
+respectively and advances from shareholders of $3,000 and $40 in 2015 and 2014, respectively were sources of working capital
+for the years then ended.
+
+ 
+
+Cash Flow Summary (Audited)
+
+The Company s cash flow activities
+for the years ended December 31, 2014 and 2013, respectively, are summarized as follows:
+
+ 
+
+ Operating Cash Flow Activities: 
+ 2014 
+ 2013
+
+ Net loss 
+ $(101,223) 
+ $(104,973)
+
+ Adjustments to net loss 
+ 20,050 
+ 55,979 
+
+ Cash used by operating activities 
+ $(81,173) 
+ $(48,994)
+
+ 
+
+The Company s cash flow from operating activities was ($81,173) in 2014 compared to ($48,994) in 2013. The increase was primarily attributable to operating expenses incurred during the years then ended.
+
+ 
+
+ Financing Cash Flow Activities: 
+ 2014 
+ 2013
+
+ Proceeds from equity issuance 
+ $70,100 
+ $57,550 
+
+ Proceeds from equity contributions 
+ 19,700 
+ 500 
+
+ Other financing activities 
+ (5,700) 
+ (11,437)
+
+ Cash provided by financing activities 
+ $84,100 
+ $46,613 
+
+ 
+
+Financing activities include proceeds from common stock issuance and equity contributions and repayment of due to shareholder.
+
+ 
+
+Cash provided in financing activities
+totaled $84,100 and $46,613 for the years ended December 31, 2014 and 2013, respectively. Proceeds raised through
+the sale of common stock of $70,100 and $57,550 in 2014 and 2013, respectively, combined with proceeds from equity contributions
+of $19,700 and $500 in 2014 and 2013, respectively were more than offset by payment of due to stockholder of $5,700 and $11,437
+in 2014 and 2013. 
+
+ Table of Contents25 
+
+ 
+
+ 
+
+Cash provided in financing activities totaled $84,100 and $46,613 for the years ended December 31, 2014 and 2013, respectively.
+Proceeds raised through the sale of common stock of $70,100 and $57,550 in 2014 and 2013, respectively, combined with proceeds
+from equity contributions of $19,700 and $500 in 2014 and 2013, respectively were more than offset by payment of due to stockholder
+of 5,700 in 2014.
+
+DESCRIPTION OF OUR BUSINESS AND PROPERTIES
+
+You should rely only on the information contained in this
+prospectus or any supplement hereto. We have not authorized anyone to provide you with different information. If anyone
+provides you with different information, you should not rely on it. We are not making an offer to sell the shares in any
+jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is
+accurate as of any date other than the date on the front cover of this prospectus, regardless of the date of delivery of this prospectus
+or any supplement hereto, or the sale of the shares. Our business, financial condition, results of operations and prospects
+may have changed since that date.
+
+ 
+
+Overview of Our Business
+
+ 
+
+We were incorporated on June 3, 2003 in the State
+of Delaware. Perko Worldwide, a development stage company, was formed to build a patented revolutionary type of
+high-speed roll on/roll off container cargo vessel having secondary and tertiary sources of income within each ship of
+parcels and passengers. The initial fleet will be used to connect the east coast of the United States to Europe, then and
+west coast to China. Once the cost of operations has been established and proven successful, that information will be used to
+develop a fleet that could establish high speed shipping routes worldwide.
+
+ 
+
+We are the sole licensee of a 9 year globally exclusive license
+for the development, utilization, and marketing of our founder's, David Perko, patent (Patent number issued, # 7013828, titled:
+Buoyant Tube Ship (the "Patent") In addition, the Patent Licensing Agreement gives us the right of first refusal for
+other patents pending technology owned by Mr. Perko. The Company recently received a third party appraisal for the Patent Technology
+from Cardinal Intellectual Property that estimated it value at $45.56 Million US dollars.
+
+ 
+
+The Company s principal products, services and
+markets are overseas transportation of cargo, passenger and express parcels. It will not build ships to sell. Perko plans to place
+the majority of ships into its own operations and lease a few to the petroleum and express parcel industries.
+
+ 
+
+L. Paul E. Zankich, owner Columbia-Sentinel Naval Architects
+and Maritime Engineers, drafted the feasibility report for this concept. He later joined the Board and has been assisting Perko
+in the research and development of the new vessel. Mr. Zankich has many contacts in the shipping industry. We have contacted companies
+who can build our patent pending propulsion system such as TwinDisc, KaMeWa and ZF and we are working now to soon fully patent
+our propulsion system. We are consulting aeronautical engineers in Seattle, WA who can assist us on building our folding ship wings
+and have had discussions with companies that are able to construct the rubberized metallic weave for the tubes of our prototype
+ship.
+
+ 
+
+There will be approximately 400 employees needed to
+build each ship which includes the number of employees constructing the wings and tubes. Each ship will need a Captain and a second
+in command, an engineer, and six or more able crew to work helm watches, assist in engine spaces, and with cargo load and unload.
+Each ship will also require 6 to 10 stewardesses to cater to passengers.
+
+ 
+
+Industry Background
+
+ 
+
+The demand for cargo shipping throughout the world has been
+growing at the rate of over 6% for the past 10 years. This rate of growth is expected to increase for the foreseeable future, with
+predictions of 100% over the next 20 years.
+
+ 
+
+ Table of Contents26 
+
+ 
+
+ 
+
+Containerization is the last technological improvement
+in ocean shipping which revolutionized ocean transportation of general cargo decades ago. By handling when loaded and unloaded
+from a container, less port labor and shipping capacity are required to transport the same amount of cargo that would have moved
+as break-bulk cargo. The impact of containerization on ocean shipping lines, shippers, ship design, trade flow networks, port competition,
+port design, port labor, port investment, and inland transportation were substantial. It became clear that ocean container shipping
+played an important role in international trade and economies.
+
+ 
+
+Through the 1950s, general cargo continued to be
+handled as break-bulk, (i.e., on pallet) cargo: Pallets were moved, generally one at a time, onto a truck or rail car that carried
+them from the factory or warehouse to the docks. There each pallet was unloaded and hoisted, by cargo net and crane, off the dock
+on onto the ship. Once the pallet was in the ship s hole, it had to be positioned precisely, and braced to protect it from
+damage during the ocean crossing. The process was reversed at the other end of the voyage, making the ocean transport of general
+cargo a slow, labor-intensive, and expensive process.
+
+ 
+
+All this began to change in 1955,
+when Malcolm Mclean, believed that pieces of cargo needed to be handled only twice: First at their origin when stored in a
+standardized container box: Second at their destination when unloaded. He purchased a small tanker company, named it Sea
+Land, and adapted the ships to transport truck trailers. The first voyage, to Puerto Rico, of a Sea-Land containership began
+in Newark, New Jersey on April 26, 1956.
+
+ 
+
+In the years that followed, standardized container
+were constructed, generally twenty or forty feet long: without wheels: having locking mechanisms at each corner that could be secured
+to a truck chassis, a rail car, a crane, or to other containers, inside a ship hole or on its deck. The use of standardized containers
+also meant that intermodalism of international trade, the movement of cargo from an origin in one country to a destination in another
+by more than one transport mode, became commercially feasible.
+
+ 
+
+Currently the shipping industry is
+dedicated towards larger ship with more TEU (twenty-foot equivalent capacity). A twenty-foot equivalent (often TEU or teu) is an
+inexact unit of cargo capacity often used to describe the capacity of often used to describe the capacity of container slips
+and containers terminals. These ships are very expensive, but relatively slow, (to the proposed vessels), with large
+and expensive crews, and are not self sustaining. This means expensive port facilities, labor for loading and unloading,
+and expensive equipment.
+
+ 
+
+Perko s new vessel design will be capable of competing
+with containerized shipping. At least 3% of container shippers will pay for faster service. All passenger aircraft flying across
+the Atlantic Ocean carry belly freight at premium pricing. There are also dozens of flights across daily which are dedicated freight
+aircraft only. These aircraft travel at 600 MPH in six hours. Given the opportunity to use a high speed vessel for cargo transportation,
+shippers would divert 20%-50% of airfreight from traditional containerized transport to high speed vessel transportation.
+
+ 
+
+The costs to load with a crane per container of $175.
+However, the cost of roll on/roll off (RO/RO) is only $30 per container. Our costs to build the rolling racks within the ship,
+at the shipyard, will add nearly half a million dollars to the construction costs of the ship ($9,000,000). The large concrete
+slab with grading, framing, pouring and finishing at this volume will cost several hundred thousand dollars.
+
+ 
+
+Current ships make large circuits around the Atlantic
+Ocean, stopping at many ports as they complete the pickup and delivery of containers. This causes containers to sit on the ship
+for several ports of call before finally arriving at their final destination. To achieve cost efficiency, our plan is to have our
+high speed vessel travel directly back and forth across the Atlantic Ocean and use shuttle ships to move from various ports to
+main ports of operation on either side of the Ocean.
+
+ 
+
+The bull dozers will cost $600,000 for a smaller units
+at our shuttle ports, and nearly $4,000,000 for the bull dozers at our main ports on either side of the Atlantic.
+The modification of the bull dozers needed will cost less than $50,000 to make them suited to push and pull our container rolling
+racks in and out of our ships.
+
+ Table of Contents27 
+
+ 
+
+ 
+
+Ship Design
+
+In the early 1980 s some experts predicted
+that containerships would not only become very large but would also be non-self- sustaining, having no cargo cranes of their own
+(unlike break-bulk ships) and no roll-on roll-off (RO-RO) ramps, and having to call at ports equipped with large dockside container
+cranes. The expectation was that these large volumes of containers would be concentrated by land transportation, barges, and small
+feeder vessels. These so- called load center ports would be analogous to the hubs of the hub spoke networks of airlines. In reality,
+strategy drove the ship design, and vice versa. Shipping lines whose strategies were based on loading centers did opt for larger,
+non-self-sustaining containership. If their strategies were to call at a number of smaller ports, they invested in smaller vessels,
+self sustaining containerships and RO-RO vessels, which were able to load and discharge their own containers. If their strategies
+were to operate only in one ocean, they purchased vessels that were more the panamax size (too large to transit the Panama
+Canal).
+
+ 
+
+The rational for these strategies is the non-self-sustaining
+(or cellular) containerships exhibit cost economies of ship size at sea (e.g., a 4,000 TEU ship has a 30 percent to 40 percent
+per TEU cost saving over a 2,500 TEU ship). (TEU = twenty foot equivalent.)
+
+ 
+
+Specifically, the size of a non-self-sustaining
+containership that minimize the cost per TEU moved per voyage leg on a given route declines as (1) the number of ports calls increase,
+(2) the time in port per port call increases, and (3) the distance of the route decreases. Thus, relatively large containerships
+are expected to serve long-distance routes, calling on a small number of ports, if all else is constant.
+
+ 
+
+As of 2007 the capacity of the world s containerships
+was 417 million TEUs and was expected to increase by 22 percent by 2013; however, the recession of 2009 has seen this expectation
+decline, but should remain near 20 percent by 2010. The carrying capacity of new containerships has increased about five percent
+per year on average over the past decade. Today, most of the ships under construction have a carrying capacity of 5,000 to 6,000
+TEUs. Maersk Line has nearly completed its launch of twelve super-panamax containerships with these specifications: carrying capacity
+of 6,000 TEU, 1,049 feet in length, wide enough to carry 17 containers across, the world s largest diesel engine, a cruising
+speed of more than 25 knots, and a fifteen person crew. A super-panamax containership yields and 18 percent to 24 percent TEU cost
+saving over a 4,000 TEU vessel. The British line, P & O Containers, has built the two worlds largest containerships with carrying
+capacities of 6,674 TEU. A modern non-self-sustaining containership with a carrying capacity of 5,000 TEU or greater has a price
+range of $60 to $80 million.
+
+ 
+
+Containerization in shipping has revolutionized
+the ocean transportation of general cargo. Their impacts are numerous. It has led to the formation of ocean shipping lines specializing
+in the transport of containers. The container shipping line industry has become more concentrated, and the lines have sought to
+improve their financial position by forming alliances, merging, and investing in larger and more cost-efficient ships. For the
+shipper, containerization has meant less cargo pilferage and damage, faster and more reliable transportation service, and reduced
+freight rates, especially for transportation of high-value cargo. As a consequence, international containerized seaborne trade
+(in TEUs) increased 433 percent between 1990 and 2006, largely accredited to China Shipping which account for 1 of every 8 containers
+at sea.
+
+ 
+
+As reported in the Journal
+of Commerce 2013 Shipping Review and Outlook, U.S. container cargo is projected to more than double in the next twelve years
+and to increase sevenfold over the next fifty years, severely stressing the nation s port, rail, and
+highway infrastructures. Containerized cargo shipment is the preferred method of shipping.
+
+ 
+
+Competition
+
+ 
+
+To a certain extent we will compete with every company that
+offers services in the package and freight delivery industry and, therefore, will compete with many different regional, national
+and international companies, most of with which have significantly greater financial and other resources than we do. Our competitors
+include worldwide postal services, various motor carriers, express companies, freight forwarders, air couriers, and others. The
+top 5 competitors are as follows:
+
+ 
+
+ Table of Contents28 
+
+ 
+
+ 
+
+Maersk
+
+ 
+
+Maersk Is a Danish shipping company
+and is considered by Freight Forward Associates to be the best shipping company in the world. With FFA saying, that the Danish
+company is the world s top carrier with a market share of 15% and has a presence in all of the world s ports. Their
+ships are regularly seen entering and exiting the top ports in the world. Maersk operates and has subsidiaries/offices in more
+than 135 countries worldwide. Involved in global liner shipping services, Maersk Line operates over 550 vessels and has a capacity
+of 2.2 million.
+
+ 
+
+Mediterranean Shipping Company
+
+ 
+
+MSC is the world s largest shipping line in terms of
+container vessel capacity. MSC serves 270 ports worldwide on the six continents. It has 350 local offices, employing a total of
+29,000 people, providing a large agency network representation. The line was named shipping line of the year in 2007 for the sixth
+time in eleven years by Lloyds Loading List, which is an achievement not matched by any other shipping line. The Geneva-based company
+operates in all major ports of the world. MSC s most important port is Antwerp in Belgium.
+
+ 
+
+Plan of Operations
+
+ 
+
+Perko was incorporated on June 3, 2003 in the State of Delaware.
+ We will begin building our Prototype with sixty days following our IPO, and our prototype ship will be operational within
+18 months of laying the keel. After the Prototype is operational, Perko would engage with a large European Bank, with a shipbuilding
+division that has offered a $500,000,000 loan. The lender only seeks a small equity position they can liquidate after our fleet
+is built and operational. In addition, Before the end of 2017 we will complete a private placement offering to Institutional Investors
+via investment firms that would help Perko raise billions for fleet construction. We plan to add between 10 and 16 additional
+vessels and become a dominate force in shipping and transportation across the Atlantic Ocean, while operating smaller feeder ships
+in the Caribbean, Central, and South America, the Mediterranean, etc. Even with that number of vessels, Perko Worldwide will have
+to capture a minor market share to attain their projected figures.
+
+ 
+
+Perko Worldwide s hopes to overcome the challenges
+faced in containerized cargo shipping. The Perko Worldwide conceptualized vessel has a target speed in excess of 300 MPH. It is
+designed for stability, weight control, easy loading and unloading, docking, maneuvering, and extremely fast speeds. These vessels
+will carry cargo containers, express parcels, and passengers across the Atlantic Ocean. The naval architectural firm of Columbia-Sentinel
+Engineers has reviewed the concept and issued a feasibility letter wherein they stated while carrying 4950 tons of payload the
+design presented to them should make 300 mph. The initial fleet, at 980 feet, is to carry a max load of approximately two hundred
+forty forty-foot containers per ship.
+
+ 
+
+The initial fleet will be used to connect Boston on east
+coast of the United States to Lisbon, Portugal in Europe, and once the cost of operations has been established and proven successful,
+that information will be used to develop a fleet that could be used worldwide.
+
+ 
+
+Once the prototype if fully operational, we intend to establish
+a subsidiary, Perko Atlantic Shipping, to build and operate the actual shipping division. This subsidiary will be majority owned
+by the company. We estimate that an additional $5,000,000,000 will be needed for the development of eight 980-foot ships capable
+of making 300 mph ships for either side of the Atlantic Ocean, airport/sea port startup operations,
+and establishment of worldwide headquarters. We intend to raise these funds through the subsidiary, either through equity or debt
+financing.
+
+ 
+
+Stanford and Harvard Universities surveys
+U.S. Shippers for the Fast Ship Corps found that 20% of all shippers were willing to pay up to six times more for
+significantly faster service.
+
+ 
+
+Perko Worldwide initially intends
+to introduce a shipping rate comparable to the average rate. Once established we will increase pricing to equal market demand
+and expect to bill rates at three to six times the average rate for containers moved to and from Europe. We expect to charge
+$6,000 to $9,000 per container. 
+
+ 
+
+ Table of Contents29 
+
+ 
+
+ 
+
+It is important to note that we are a development stage business
+with minimal business activity. As of the date of this prospectus we do not own or operate any vessels.
+
+ 
+
+Perko Worldwide Corp s Concepts
+
+ 
+
+Company s vessel will have a target speed in excess
+of 300 MPH. It is designed for stability, weight control, easy loading, and unloading, docking, maneuvering, and extremely fast
+speeds. Although the vessel is currently in its conceptual stage, the naval architectural firm of Columbia- Sentinel Engineers
+has reviewed the concept and issued a feasibility letter wherein they stated while carrying 4950 Tons of payload the design presented
+to them should make 300 MPH. The initial fleet, at 980 feet, is to carry a max load of approximately two hundred forty 40 foot
+containers per ship.
+
+ 
+
+Propulsion
+
+ 
+
+The speed requirement of the vessel necessitates the use
+of gas turbine engines as its main method of propulsion. The turbo-shafts under consideration are three GE LM 6000s which each
+develop over 50,000 shaft horsepower, and six, GE CF6-80 turbo-fans, each developing between 47,000 and 75,000 ft/lbs of thrust.
+These gas turbines have impressive records for reliability, and are readily available on the used turbine market for our initial
+fleet.
+
+ 
+
+Secondary propulsion will be generated by marine diesel engines
+creating electrical power, and power for the ship s thruster system primarily used for close quarter maneuvering, but can
+also be used to obtain forward propulsion attaining a maximum speed of approximately 4 knots when in ports or no wake zones where
+our turbines or main propulsion system cannot be operated.
+
+ 
+
+Thrusters are to be used primarily in close quarters maneuvering,
+or in no wake zones. We estimate making a max speed of 4 knots when under thruster power.
+
+ 
+
+Loading and Unloading
+
+ 
+
+Many of the newer and larger ships that have been specifically
+designed for containers are not designed for self-sufficiency, loading one container at a time with large port side cranes. Perko
+Worldwide Corps new vessels will incorporate patented deck towing, and roller systems to load and unloading the Entire Ship s
+Container Cargo All At Once. Due to the multiple levels of roll on loading a several story loading dock must be built requiring
+significant capitalization at the air ports/sea ports where our main ocean crossing vessels operate from on either side of the
+Atlantic. Smaller coastal shuttle ships can load using a rear ship ramp and self-sustain-RO-RO system. Our main ocean crossing
+vessels and coastal shuttle ships will dock perpendicular with it stern into the dock. The docking system will include an enclosed
+berth/lock using massive high speed pumps to raise and lower the vessel as needed to match the fixed height of the multiple levels
+for containers, drive on cars, parcels/luggage, and passengers.
+
+ 
+
+Speed
+
+ 
+
+By the early 1900 the fastest naval destroyers could reach
+a sustained speed of 37 nautical miles per hour (knots). The Atlantic crossing record for a passenger liner was set in 1952 by
+the U.S.S. United States, which posted an average speed of 35.6 knots on her maiden voyage from New York to Le Havre.
+
+ 
+
+ Table of Contents30 
+
+ 
+
+ 
+
+The technology needed to build a 35 knot ship has been around
+for at least 40 years, so why do modern container ships still plod along at 18 to 25 knots? The answer is a combination of physics
+and economics. The basic problem is that heavy displacement cargo ships encounter water resistance which increases exponentially
+with speed. In other words, making a large container ship go twice as fast will require more than twice as much power. At some
+point, the extra power required to increase speed become technically prohibitive: the necessary engine weight and fuel tanks would
+be too large to fit into the ship. A comparable marine diesel engine that develops 50,000 SHP would weight over 350,000 lbs. compared
+to the 18,000 lbs. for the same SHP GE LM 6000 gas turbine. Early record setting naval destroyers, for example, were little more
+than floating engines, with only enough fuel for a few hours at top speed. Moreover, the cost of extra speed becomes commercially
+unattractive well before it becomes technically prohibitive. High fuel consumption and big engines not only drive up operating
+costs, they also leave less room for cargo, so perpound costs, (unit costs) rapidly increase to uncompetitive levels.
+
+ 
+
+However, speed is a key component of Company vessels.
+We have designed a patented ship buoyancy system to overcome water resistance by sitting on the surface, or very near the
+surface, at all times, even when loaded with heavy cargo. This permits little or no water resistance, so the ships can plane
+across the surface. On our Web Site: www.perkoworldwide.com under, Documents, we have a current Feasibility Letter prepared
+by Columbia Sentinel Engineers Maritime Engineers, Seattle, WA, which also states our patented ship at 900 feet while under
+nine million lbs of payload, can make 300 MPH.
+
+ 
+
+Currently, unless you chartered a massive aircraft, there
+is no way to carry multiple heavy containers between the USA and Europe at this speed, and the biggest plane would carry two. Company s
+ships carry two hundred, forty-foot containers.
+
+ 
+
+Future Fuel Prices
+
+ 
+
+Company intends to use liquid
+natural gas as the fuel for the engines instead of jet fuel, or premium diesel. Company acknowledges this reduces the SHP
+rating of the engines approximately 5%, but is saves considerably more on the cost of fuel. This minor reduction will not
+affect the performance of the vessel. PWC estimates to save more than 20% on the cost of operational fuel.
+
+ 
+
+Shipyards
+
+ 
+
+Company will choose a shipyard to fabricate its vessels which
+has experience working with the raw materials being contemplated for use to build the initial fleet. PWWC will require a bond from
+the builders certifying that work can be completed. Malaysia and China are both attractive for cost saving. Building the transatlantic
+ships in foreign shipyards manages the costs of building the larger ships; however, our far more numerous coastal shuttle ships,
+to operate in multiple U.S. Ports, and in compliance with the Jones Act, will be built in the United States.
+
+ 
+
+Crews
+
+ 
+
+Crews are an essential part of the operation and will need
+special training at Star Training in Dania Beach FL for the vessels under consideration. The U.S. East Coast Senior V.P. for Sea
+Board Ship Management is a personal friend of Mr. Perko and has offered help with crew when needed.
+
+ 
+
+The Perko Worldwide Patent
+
+ 
+
+The Perko Worldwide Patent (, ' ': Patent ) claims
+a revolutionary vessel projected to meet both the speed threshold, load carrying capacity, and ease of loading and unloading. The
+Patent covers unique deck towing, and roller systems to load and unloading the entire ship s container cargo all at once.
+
+ 
+
+Speed is a key component of Perko Worlwide
+vessels. They have been designed to overcome water resistance by sitting on the surface, or very near the surface, at all times,
+even when loaded with heavy cargo. This is a main portion of the patented extreme buoyancy system. It permits little or no water
+resistance, so the ships can plane across the surface.
+
+ Table of Contents31 
+
+ 
+
+ 
+
+Keys for Success 
+
+ 
+
+To better achieve our business objectives and successfully
+compete with other shipping companies, we have developed the following focal points and strategies we anticipate implementing in
+all of our future cargo transportation vessels:
+
+Closely monitor all financial aspects of PWWC so as to minimize
+expenses while generating maximum profits.
+
+Focus on instituting solid monitoring programs to help its
+primary business of tracking all financial matters, as experience has shown the once these programs have been established the produce
+excellent results for the future
+
+Focus heavily on the operational end of the business, with
+emphasis on obtaining the most return of each dollar spent.
+
+Focus on recruiting the personnel necessary to enable the
+ company obtain its goals.
+
+Focus on implementing revenue enhancement and cost containment
+programs to maximize the returns for investors.
+
+Continue to provide the very highest level of monitoring
+possible.
+
+Focus heavily on the operations of the company as a whole
+and monitor aggressively the procedures and infrastructure that are in place, to support and sustain operations.
+
+Focus on recruiting new personnel in order to enhance its
+productivity, training people to help them achieve the very highest form of professionalism, thereby contributing to the image,
+business, and goals of the company.
+
+Focus on implementing revenue enhancements and cost containment
+programs.
+
+Concentrate on its plan to be successful in this industry.
+
+Operations and Management
+
+The Officers and the Board of
+Directors of the Company are accountable to the Company as a fiduciary and consequently must exercise good faith and
+integrity in handling Company affairs. We intend to indemnify our Officers and Directors to the full extent permitted by
+Delaware Law. Management will have no liability to the Company for a mistake or error of judgment or for any act or omission
+believed to be within the scope of the authority conferred by the Delaware Law unless such mistake, error of judgment or act
+or omission was made, performed or omitted by the Management fraudulently or in bad faith or constituted gross negligence. We
+will also provide for indemnification of the company s management and its Board of Director s to the full extent
+permitted by law for any action, suit, or proceeding that may be brought or threatened against them due to their roles in the
+Company. Any indemnification of our Management is recoverable only out of
+the assets of the Company and not from the Shareholder. We may pay the cost of liability insurance insuring our Management
+against any liability as to which our Management may be indemnified. In addition, cash advances from Company funds may be
+made to Management for legal expenses and other costs incurred as a result of any legal action or proceeding if certain
+conditions set forth in the Bylaws are met, including, but not limited to, in the event an action is initiated by one or more
+of the Shareholder.
+
+ 
+
+To the extent that the indemnification provisions purport
+to include indemnification for liabilities arising under the Securities Act of 1933, in the opinion of the Securities and Exchange
+Commission, such indemnification is contrary to public policy and is, therefore, unenforceable. Notwithstanding the foregoing,
+we will not indemnify our Board of Directors, Officers or their affiliates, from any liabilities incurred by them arising under
+federal and state securities laws
+
+Unless:
+
+ 
+
+ Table of Contents32 
+
+ 
+
+ 
+
+There has been a successful adjudication on the merits of
+each count involving alleged securities law violations as to the particular person seeking indemnification
+
+Such claims have been dismissed with prejudice on the merits
+by a court of competent jurisdiction as to the particular person seeking indemnification; or
+
+A court of competent jurisdiction approves a settlement of the claims against the particular person seeking indemnification and finds
+that indemnification of the settlement and related costs should be made.
+
+ 
+
+ In addition, prior to seeking court approval for indemnification, Management is required to inform the court of the position of the Securities
+and Exchange Commission and various securities regulatory authorities with respect to indemnification for securities violations.
+
+ 
+
+Proposed
+Milestones to Implement Business Operations
+
+ 
+
+Company s mission is to be a highly efficient and profit
+oriented company. This will come about by the company s highly qualified management team. One of its main goals is closely
+monitor all financial aspects of Company so as to minimize expenses while generating maximum profits.
+
+ 
+
+Company is dedicated to fostering an atmosphere of respect,
+understanding, and distinguishing itself from the competition through a Higher Standard of Excellence.
+
+ 
+
+Short Term Goals
+
+ 
+
+Make an IPO which builds our revolutionary Prototype
+High Speed Ship and places sufficient seed capital at various investment firms which will initiate construction
+of a fleet via a multibillion dollar second offering.
+
+ 
+
+Long-Term
+Plan (5 Years) 
+
+ 
+
+Have our initial Fleet operating running eight 900 foot ships at 300 MPH back and forth across the Atlantic
+Ocean, docking each side every eight hours, with 300 foot shuttle ships running up and down the respective coastlines consolidating
+freight at the Main Ports where the 900 foot transatlantic ships load, refuel and put to sea four times, each side of the Atlantic
+Ocean, every day; thus connecting the USA to Europe with a Revolutionary New Means of Operations.
+
+ 
+
+Financing
+
+We believe that
+we will be able to raise sufficient funds from this offering to build our first prototype ship, conduct sea trials, and
+meet our projected expenditures over the next 18 months. While we believe that this offering will provide adequate
+funds to cover our initial capital requirements, we plan to seek other sources of equity financing on favorable terms to
+satisfy our growth and expansion plans. However, there are no assurances that any such financing can be obtained or, if
+obtained, on terms favorable to us. If we are unable to generate profits or unable to obtain additional funds to meet
+our working capital needs, we may need to cease or curtail our business operations. Further, there is no assurance that
+the net proceeds from any successful financing arrangement will be sufficient to cover our cash requirements during the
+initial stages of our business development.
+
+ 
+
+ Table of Contents33 
+
+ 
+
+ 
+
+Intellectual Property
+
+ 
+
+We are the sole licensee of a 9 year globally
+exclusive license for the development, utilization, and marketing of our founder's, David Perko, patent (Patent number
+issued, # 7013828, titled: Buoyant Tube Ship (the "Patent") The patent is due to expire in March 2021. In
+addition, the Patent Licensing Agreement gives us the right of first refusal for other patents pending technology owned by
+Mr. Perko. See "The Company- Patents and Proprietary Rights and Related Litigation" and "Certain
+Relationships and Related Transactions".
+
+ 
+
+Property and Equipment 
+
+ 
+
+At present, the Company owns no property and maintains a
+corporate address at 2650 SW 18th Street, Fort Lauderdale, FL., which is the property of its President. The Company
+pays no rent. Assuming a successful completion of this offering the Company intends to open corporate headquarters in South Florida.
+
+DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
+
+The Management has broad discretionary powers to manage the
+affairs of the Company under the laws of the State of Delaware. Generally, actions taken by the Management are not subject to a
+vote or review by the Shareholder, except to the extent provided in the Bylaws.
+
+ 
+
+Our executive officers and directors and their respective
+ages as of the date of this prospectus are as follows:
+
+ 
+
+ 
+ 
+ 
+
+ Name 
+ Age 
+ Position 
+
+ 
+ 
+ 
+
+ David Perko 
+ 51
+ President, Chairman 
+
+ 
+ 
+ 
+
+ Jonathan S. Williams
+ 28
+ Director 
+
+ 
+ 
+ 
+
+ Michelle A.Williams
+ 58
+ Director 
+
+ 
+ 
+ 
+
+ L. Paul Zankich
+ 72
+ Director 
+
+ 
+ 
+ 
+
+Officers
+
+At present, we have one Officer,
+David Perko, our President, and no employees. We have no employment agreements with Mr. Perko and Mr. Perko receives no
+compensation. However, once funds are available, we intend to pay enter into an Employment Agreement with David Perko, our
+President. His initially salary will be $80,000 per year. We plan to hire additional full-time executives along with full
+and part-time (training) employees as necessary to meet the expanded operations of the business. As it starts operations,
+PWWC will acquire personnel that will oversee all the financial, operational, human resources, marketing, and sales aspects
+of the business.
+
+ 
+
+Currently, Mr. Perko is speaking with several outstanding
+candidates to fill key positions, such Vice President, Chief Financial Officer and Chief Legal Counsel, to be retained once the
+funds are available and the Company s operations required such positions to be filled.
+
+ 
+
+Mr. Perko realizes that the stability and success of PWWC
+will be largely dependent upon these executives. Although prime candidates have been considered with outstanding experience and
+backgrounds, there is no assurance they will agree to the terms and conditions of the Company and accept employment when needed.
+
+ Table of Contents34 
+
+ 
+
+ 
+
+ 
+
+Board of Directors
+
+David Perko – Chairman of the Board,
+President, CEO
+
+ 
+
+Mr. Perko is the Founder/President and Chairman of the Board
+of PWWC and has held those positions since its inception in 2003. Mr. Perko has an impressive background which includes 3 years
+as a sailor in the U.S. Navy, and 10 years as an officer in the United States Marine Corp, from which he separated honorably in
+2000 with the rank of Captain. His background in the Marines includes logistics, and the study of Marine Power and Propulsion Systems
+of the U.S. Navy.
+
+ 
+
+Jonathan S. Williams – Director
+
+ 
+
+Mr. Williams has been a director of the Company since 2008.
+Currently, Mr. Williams is a Lieutenant on Active Duty in the U.S. Air Force. Mr. Williams holds a
+Bachelor of Science degree in Chemical Engineering. 
+
+ 
+
+Michelle A. Williams – Director 
+
+ 
+
+Ms. Williams has been a director of the Company since 2003.
+Ms. Williams is a Registered Nurse certified in psychiatric care and presently works at Life Skills Treatment Center where she
+has been employed for the past nine years. 
+
+ 
+
+L. Paul Zankich, P.E –
+Director 
+
+ 
+
+Mr. Zankich is the founder/owner of Columbia-Sentinel Engineers, a Professional Engineering, and Principle
+Naval Architectural firm located in Seattle Washington, since 1973. Columbia-Sentinel Engineers provides services in Naval Architecture
+and Marine Engineering, Industrial Engineering and Management to the marine business community. The company was founded as a partnership
+in 1973 to provide engineering services to vessel owners, operators, and shipyards. CSE has operated continuously since 1973 and
+was incorporated in Washington State in 1976. In addition to new and existing vessel design and engineering, they provide management,
+quality assurance, production engineering, and other consulting services to the shipbuilding and ship repair industry and related
+businesses. 
+
+ 
+
+Committees of the Board of Directors 
+
+ 
+
+Our Board of Directors presently does not have any active
+committees.
+
+ Table of Contents35 
+
+ 
+
+ 
+
+EXECUTIVE COMPENSATION
+
+The following table sets forth information with respect
+to compensation paid by us to our officers from inception on June 3, 2003 through December 31, 2014. Our fiscal year end
+is December 31. No compensation has been paid to our officers from inception on June 3, 2003 through December 31, 2014.
+ We have no plans to begin paying our officers any cash compensation during the current fiscal year ending December 31,
+2015.
+
+ 
+
+Summary Compensation Table 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ (a) 
+ (b) 
+ (c) 
+ (d) 
+ (e) 
+ (f) 
+ (g) 
+ (h) 
+ (i) 
+ (j)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Name and Principal 
+ Position 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Year 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Salary 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Bonus 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+Stock 
+ Awards 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+Option 
+ Awards 
+ ($) 
+ 
+ 
+ 
+Non-Equity
+ Incentive 
+ Plan Compen-
+ sation 
+ ($) 
+ 
+ Change in 
+ Pension 
+ Value & 
+ Nonqual-ified
+ Deferred 
+ Compen-
+ sation 
+ Earnings ($) 
+ 
+ 
+ 
+ 
+All Other 
+ Compen-
+ sation 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Totals 
+ ($) 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ David Perko 
+President, Chairman of Board 
+ 2015 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+The following table sets forth information with respect
+to compensation paid by us to our directors from inception on June 3, 2003 through December 31, 2014. Our fiscal year end
+is December 31.
+
+ 
+
+Director Compensation Table 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ (a) 
+ (b) 
+ (c) 
+ (d) 
+ (e) 
+ (f) 
+ (g) 
+ (h)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Name 
+ 
+ 
+ 
+Fees 
+ Earned 
+ or 
+ Paid in 
+ Cash 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+Stock 
+ Awards 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+Option 
+ Awards 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+Non-Equity Incentive Plan Compensation 
+ ($) 
+ 
+ 
+Change in
+
+ 
+ Pension 
+ Value and 
+ Nonqualified 
+ Deferred 
+ Compensation 
+ Earnings 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+All Other 
+ Compensation 
+ ($) 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Total 
+ ($) 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ David Perko 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+
+ Jonathan S. Williams 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+
+ Michelle A. Williams 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+
+ L. Paul Zankich 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+ 0 
+
+ 
+
+ Table of Contents36 
+
+ 
+
+ 
+
+All compensation received by our officers and directors has
+been disclosed. There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and
+directors.
+
+ 
+
+Employment Agreements 
+
+ 
+
+We have not entered into any employment agreements with any
+of our officers or directors. As of the date of this prospectus we had no employees other than those listed above. All
+future employment arrangements are subject to the discretion of our Board of Directors
+
+ 
+
+Long-Term Incentive Plan Awards 
+
+ 
+
+We do not have any
+long-term incentive plans that provide compensation intended to serve as incentive for performance.
+
+ 
+
+Officer Compensation
+
+ 
+
+Our sole officer,
+Mr. David E. Perko currently receives no salary but is a positioned to control his own compensation, structure his employment
+contracts, and to approve affiliated transactions, if any.
+
+ 
+
+Director Compensation 
+
+ 
+
+We have no plans to begin paying our directors any cash compensation
+until our business becomes operationally profitable. We may, however, reimburse our directors for any out-of-pocket travel
+and lodging expenses associated with their attendance of Board meetings.
+
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
+AND MANAGEMENT
+
+ 
+
+The following table sets forth information regarding beneficial
+ownership as of the date of this prospectus by (i) each named executive officer, (ii) each member of our Board of Directors, (iii)
+each person deemed to be the beneficial owner of more than five percent (5%) of any class of our common stock, and (iv) all of
+our executive officers and directors as a group. Unless otherwise indicated, each person named in the following table is
+assumed to have sole voting power and investment power with respect to all shares of our common stock listed as owned by such person.
+
+ 
+
+As of the date of this prospectus, we have 125,000,000 shares of common stock authorized with 38,153,300 unissued
+shares, and 86,846,700 issued and outstanding. 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+Name of 
+ Beneficial Owner 
+ 
+ 
+Shares of 
+ Common Stock 
+ 
+ Percentage
+ Before Offering 
+ 
+Shares of 
+ Common Stock After Offering
+ 
+ Percentage
+ After Offering
+
+ 
+ 
+ 
+ 
+ 
+
+ Officers and Directors
+
+ David Perko, 
+President, CEO, Treasurer and Secretary 
+ 78,910,000 
+ 90.8% 
+ 78,910,000 
+ 67.5%
+
+ 
+ 
+ 
+ 
+ 
+
+ All directors as a group (4 persons) 
+ 80,910,000 
+ 93.2% 
+ 80,910,000 
+ 69.2%
+
+ 
+ 
+ 
+ 
+ 
+
+ Table of Contents37 
+
+ 
+
+ 
+
+DESCRIPTION OF SECURITIES
+
+Common Stock
+
+Our Articles of Incorporation authorize us to issue up to
+125,000,000 shares of common stock, $1.00 par value. Each holder of our common stock is entitled to one (1) vote for each
+share held of record on all voting matters we present for a vote of stockholders, including the election of directors. Holders
+of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities,
+and there are no conversion rights or redemption or sinking fund provisions with respect to our common stock. All shares
+of our common stock are entitled to share equally in dividends from sources legally available when, and if, declared by our Board
+of Directors.
+
+ 
+
+Our Board of Directors is authorized to issue additional
+shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for
+such consideration as the Board may deem appropriate without further stockholder action.
+
+ 
+
+In the event of our liquidation or dissolution, all shares
+of our common stock are entitled to share equally in our assets available for distribution to stockholders. However, the
+rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights
+of the holders of shares of preferred stock that our Board of Directors may decide to issue in the future.
+
+ 
+
+As of the date of this prospectus we had 86,847,700
+shares of common stock issued and outstanding.
+
+ 
+
+Dividend Policy
+
+ 
+
+We have never declared or paid cash dividends. We currently
+intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends
+on the common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our
+Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and
+other factors deemed relevant by our directors.
+
+ 
+
+Share Purchase Warrants
+
+ 
+
+We have not issued and do not have outstanding any warrants
+to purchase shares of our stock.
+
+ 
+
+Options
+
+ 
+
+We have not issued and do not have outstanding any options
+to purchase shares of our stock.
+
+ 
+
+Convertible Securities
+
+We have not issued and do not have outstanding any securities
+convertible into shares of our stock or any rights convertible or exchangeable into shares of our stock.
+
+ 
+
+Shares Eligible for Future Sale
+
+ 
+
+The 125,000,00 shares of common stock
+registered in this offering will be freely tradable without restrictions under the Securities Act. No shares held by our affiliates
+(officers, directors or shareholders) are being registered hereunder. 
+
+ 
+
+The eventual availability for sale of substantial amounts
+of common stock under Rule 144 could adversely affect prevailing market prices for our securities, if a market ever develops.
+
+ 
+
+ Table of Contents38 
+
+ 
+
+ 
+
+Transfer Agent
+
+ 
+
+We intend to use Pacific Stock Transfer Company, a Nevada
+corporation, and registered with the US Securities and Exchange Commission with offices at 4045 South Spencer Street, Suite 403,
+Las Vegas, Nevada 89119.
+
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+AND CORPORATE GOVERNANCE
+
+Patent License
+
+ 
+
+The Company licenses the Patent for the Vessel
+Technology from David Perko, our President. In addition, Mr. Perko had granted the Company a right of first refusal for
+additional technology Mr. Perko has developed. The license is for a term of 9 years (the remaining life of the Patent) and
+will expire on March 2021.
+
+ 
+
+Affiliation
+
+ 
+
+Three of our Directors are affiliated. Ms. Williams is the
+mother of Jon Williams, who is also on the Board. Ms. Williams is the "significant other" of David Perko.
+
+ 
+
+Conflicts of Interest
+
+ 
+
+David E. Perko
+
+David Perko is our sole officer and a Director is affiliated
+with two of our three outside Directors thus effectively controlling the Board. In addition, Mr. Perko
+presently owns 90.8% of the outstanding voting stock and therefore controls who will serve as directors of the Company. See "Directors,
+Executive Officers and Control Persons" page 28.
+
+ 
+
+Mr. Perko is not currently
+bound by an employment contract or non-competitive agreement, and thus may engage in other business activities similar or dissimilar
+to those engaged in by the Company. To the extent that Mr. Perko engages in such other activities, it will have possible conflicts
+of interest in diverting opportunities to other companies, entities or persons with which it is or may be associated or have an
+interest, rather than divert such opportunities to the Company. Similarly, Mr. Perko may have the Company engage in transactions,
+situations, or projects in which he or his affiliates may have a vested interest. Such potential conflicts of interest include,
+among other things, the time, effort, and corporate opportunity involved in its participation in other business transactions or
+activities. As no policies have been established for the resolution of such conflicts, we may be adversely affected should he
+choose to place their business interests before those of the Company. No assurance can be given that such potential conflicts
+of interest will not cause the Company to lose potential opportunities. See, "Directors, Executive Officers and Control
+Persons" page 28.
+
+ 
+
+Although Mr. David Perko presently does not receive a salary,
+he is in a position to control his own compensation, structure his employment contracts and to approve affiliated transactions,
+if any. Although Mr. David Perko intends to act fairly and in full compliance with his fiduciary obligations, there can be no assurance
+that the Company will not, as a result of the conflicts of interest described above, possibly enter into arrangements under terms
+less favorable than it could have obtained had it been dealing with unrelated persons. See, "Risk Factors.
+
+ 
+
+In addition, the Company licenses the Patent for the Vessel
+Technology from David Perko, our President. The license is for a term of 9 years (the remaining life of the Patent) and the licensing
+fee of $5,000,000 was paid by the issuance of a 5-year Promissory Note, which will be due and payable July 3, 2018. The Note bears
+simple interest at the rate of 7% per annum. In addition, Mr. Perko is also entitled to receive a royalty equal to 3% of the gross
+revenues generated by each ship using the Patented Technology. The Company recently received a third party appraisal for the Patent
+Technology from Cardinal Intellectual Property that estimated it value at $45.56 Million US dollars.
+
+ 
+
+The Company believes that this transaction was fair, however
+since Mr. Perko is the owner of the Patent and also controls the Company this transactions between the parties did not have the
+benefit of arm s length negotiation of the type normally conducted between unrelated parties.
+
+ Table of Contents39 
+
+ 
+
+ 
+
+L. Paul K. Zankich
+
+ 
+
+Mr. Zankich is the founder/owner of Columbia Sentinel
+Engineers, a Professional Engineering, and Principle Naval Architectural firm located in Seattle Washington, since 1973. Columbia
+Sentinel Engineers provides services in Naval Architecture and Marine Engineering, Industrial Engineering and Management to the
+marine business community. In April of 2013, Perko hire Mr. Zankich s firm to conduct a feasibility study for its "Fold
+Back Wing Ship" concept. He drafted and signed a feasibility letter. In June of 2013, The Board asked Mr. Zankich
+to join the Board.
+
+ 
+
+Since Mr. Zankich is the signatory of the engineering
+report that Perko is relying on to demonstrate the feasibility of the project, a member of Perko s Board of Directors and
+holds 500,000 shares, his status poses a "conflict of interest". As a result of this conflict, he may favor his own
+interests as a Board member over those of shareholders.
+
+LEGAL PROCEEDINGS
+
+No officer, director, or persons nominated for these positions,
+and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an
+evaluation of our management. We are not aware of any pending or threatened legal proceedings involving Perko Worldwide Corp.
+
+ 
+
+During the past ten (10) years, David Perko have not been
+the subject of the following events:
+
+ 
+
+1) Any bankruptcy petition filed by or against
+any business of which Mr. Perko were a general partner or executive officer either at the time of the bankruptcy or within two
+(2) years prior to that time;
+
+ 
+
+2) Any conviction in a criminal proceeding
+or being subject to a pending criminal proceeding;
+
+ 
+
+3) An order, judgment, or decree, not subsequently
+reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending
+or otherwise limiting Mr. Perko s involvement in any type of business, securities or banking activities; and
+
+ 
+
+4) Found by a court of competent jurisdiction
+(in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal
+or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
+
+INTERESTS OF NAMED EXPERTS AND COUNSEL 
+
+No named expert or counsel referred to in this Prospectus
+has any interest in our Company. No expert or counsel was hired on a contingent basis, will receive additional direct or indirect
+interest in our Company, or was a promoter, underwriter, voting trustee, director, officer or employee of, or for, our Company.
+
+ 
+
+Our financial statements included in this
+prospectus and the registration statement have been audited by Schild & Co., Inc. to the extent and for the periods set
+forth in their report appearing elsewhere in this prospectus and in the registration statement filed with the SEC, and are
+included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
+
+ 
+
+The validity of the shares of common stock
+being registered has been passed upon for us by Keidi S. Carrington, Esq., Carrington Legal LLC, 867 Boylston St. 5th Fl.,
+Boston, MA 02116.
+
+ Table of Contents40 
+
+ 
+
+ 
+
+DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
+FOR SECURITIES ACT LIABILITIES
+
+Section 145 of the Delaware General Corporation Law
+(the "Delaware Law") authorizes a court to award, or a corporation s board of directors to grant, indemnity to
+directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities,
+(including reimbursement for expenses incurred) arising under the Securities Act of 1933. Article XII of the Certificate of Incorporation
+of U.S. Geothermal Inc. ("we", "us" or "our company") provides for indemnification of officers,
+directors and other employees of U.S. Geothermal to the fullest extent permitted by Delaware Law. Article XIII of the Certificate
+of Incorporation provides that directors shall not be personally liable to the Corporation or its stockholders for monetary damages
+for breach of fiduciary duty as a director, except (i) for any breach of a director s duty of loyalty to our company or our
+stockholders, (ii) acts and omissions that are not in good faith or that involve intentional misconduct or knowing violation of
+law, (iii) under Section 174 of the Delaware Law, or (iv) for any transaction from which the director derived any improper benefit.
+
+ 
+
+Insofar as indemnification for liabilities arising
+under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the
+foregoing provisions, the registrant has been information that in the opinion of the Securities and Exchange Commission such indemnification
+is against public policy as expressed in the Securities Act and is therefore unenforceable.
+
+ADDITIONAL INFORMATION
+
+We have filed a registration statement on
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001586513_natural_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001586513_natural_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ec313aec8cc07f1e8f8e86ee171293d264031ac6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001586513_natural_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History Natural Resources Corporation, a Delaware corporation (the "Company"), is a rapidly growing producer and wholesale distributer of dairy based ingredients and milk powder products to global food and beverage manufacturers. The Company was incorporated in the State of Delaware in July 2013, and was formerly known as Plum Run Acquisition Corporation ("Plum Run" or "Plum Run Acquisition"). In March 2014, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares from existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the Company changed its name from Plum Run Acquisition Corporation to Natural Resources Corporation. On August 12, 2014, the Company acquired, M-Power Food Industries Private Limited, a company incorporated in Singapore ("M-Power Industries"), in a stock-for-stock transaction (the "Acquisition"). The purpose of the Acquisition was to facilitate and prepare the Company for a registration statement and/or public offering of securities. M-Power Industries was formed in 2001 in Singapore. Since its inception, M-Power Industries has engaged in the manufacture and production of milk based ingredients and other dairy products for the food industry. M-Power Industries is currently an ISO 22000 certified manufacturer of dairy products. Prior to the Acquisition, Plum Run had no ongoing business or operations and was established for the purpose of completing a business combination with target companies, such as M-Power Industries. As a result of the Acquisition, M-Power Industries became a wholly owned subsidiary of the Company. The Company, as the sole shareholder of M-Power Industries, has taken over the operations and business plans of M-Power Industries. The Company is located at 76 Playfair Road, #03-06 LHK2 Building, 367996 Singapore. The Company s main phone number is +65-62875955. Business The Company s headquarters and principal place of business are in Singapore, an international logistic and financial hub in South East Asia. The Company benefits from this excellent strategic location to deliver its products to its strong customer base across Asia, the Middle East and Africa in a timely manner. The Company s business is the manufacture and sale of milk based ingredients to global food and beverage manufacturers. The Company also manufactures and sells ready for sale milk powders and other food products. The Company s products, including whole milk powder (WMP), full fat milk powder (FFMP), and skim milk powder (SMP), are available in both regular and instant versions. The Company s main area of expertise is the formulation and production of specialty milk based powders. These formulated milk powders have been developed to meet the specific needs of the food industry. These needs include: (a) Nutritional needs often associated with economic considerations, such as the need for particular fat and protein contents; (b) Functional needs, which require specialized technology to service, such as particular textures, firmness, mouth feels, melting times and/or yield output of products. The Company s milk powders benefit both basic food applications (such as condensed milk, where the manufacturing process is reasonably simple) and more sophisticated applications (such as biscuits, confectionary and specialty cheeses where the manufacturing process is more complex, and which tend to be more expensive) not only in terms of direct cost savings but also in terms of improved functionalities such as better yield or better end-products texture, taste and appearance depending on the field of application. Fields of application include manufacturing of chocolate, ice cream, cheese, bakery, confectionery, yoghurt, biscuits, instant beverages, and condensed milk. The Company is constantly working to improve and enhance its range of formulated products. The Company also supplies whey powder, whey protein concentrate, lactose, casein, butter milk powder, butter, anhydrous milk fat/butter oil, and de-mineralized whey powder. The Company owns and operates production facilities in Singapore duly approved and licensed by relevant authorities and certified ISO 22000:2005 by the Certification Body of TUV SUD PSB Pte Ltd Singapore. The Company was awarded , ' ': Singapore SME 1000 company (SME1000) four years in a row in 2012, 2013, 2014 and 2015, and also received a Fastest Growing 50 (FG50) award in 2013 based on financial performance from DP Information Network Pte Limited. The Company is a member of Singapore Business Federation (SBF) and Singapore Manufacturing Federation (SMF). In addition to the Company's manufacturing and production operations, the Company has developed various formulations for several categories of food products including but not limited to formulations for chocolate, ice cream, confectionery, yoghurt, cheese manufacturing. In the past couple of years, a number of parties became interested in adopting the Company's business model for local production in their respective countries and the Company has provided services to assist such producers. This interest coincided with the events of Arab spring in Middle East that impacted the Company's core business of production and manufacturing and therefore for specific markets, the Company decided to consider providing consulting and advisory services to assist those parties in implementing their business models. The Company's management is discussing the inclusion of technical services in our regular business; however our principal focus is now the growth of the core business which remains the manufacturing and sales of formulated dairy products. Risks and Uncertainties facing the Company The Company has a mixed record of earning revenues, and the Company may experience losses in the near term. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that profits are consistently achieved. In order to expand the Company s business, the Company would likely require additional financing. As an early-stage company, management of the Company must continually develop and refine its strategies and goals in order to execute the business plan of the Company on a broad scale and expand the business. One of the biggest challenges facing the Company will be in securing adequate capital to continue to expand its business and build a larger scale and more efficient set of operations. Secondarily, an ongoing challenge remains the maintenance of an efficient operating structure and business model. The Company must keep its expenses and the costs of employees at a minimum in order to generate a profit from the revenues that it receives. Third, in order to expand, the Company will need to continue implementing effective sales, marketing and distribution strategies to reach the intended end customers. The Company has devised its initial sales, marketing and advertising strategies, however, the Company will need to continue refinement of these strategies and also skillfully implement these plans in order to achieve ongoing and long-term success in its business. Fourth, the Company must continuously identify, attract, solicit and manage employee talent, which requires the Company to consistently recruit, incent and monitor various employees. Due to financial constraints and the early stage of the Company s life, the Company has to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet located the sources of funding to develop the Company on a broader scale through acquisitions or other major partnerships. If the Company were unable to locate such financing and/or later develop strong and reliable sources of potential customers and a means to efficiently reach buyers and customers, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to work with market-makers for its securities that will apply for quotation of its common stock first on the OTC QB and then later on Nasdaq Capital Markets. However, the Company does not know if any such application will be made and whether it will be successful if made, how long such application will take, or, that if successful, a market for the common stock will ever develop or continue on the OTC QB or Nasdaq Capital Markets. There can be no assurance that the Company
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001587285_enterprise_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001587285_enterprise_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..69faac99bd69ccb0270e3c3eb4462422522f3d9c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001587285_enterprise_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 5
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001591615_virexit_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001591615_virexit_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2089d4973e391e4ec1aa5d408228081d2f90e1d2
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001591615_virexit_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us, and Poverty Dignified, refer to Poverty Dignified, Inc. Poverty Dignified, Inc. is a development stage company incorporated in the State of Nevada in September of 2013. Poverty Dignified s address and phone number is: Poverty Dignified, Inc. 10617 Kettering Drive, Ste. 219 Charlotte, NC 28226 (719) 761-1869 Operating History Poverty Dignified is a development stage company that recently began operations, selling its first franchise on March 30, 2015. Poverty Dignified established itself as a business incubation company developing micro-franchise business concepts designed to effect the individual, community and local economy in rural and peri-urban areas across the globe. My Power Solutions, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc., was incorporated in the State of Nevada on March 13, 2014 as a franchise business concept providing cell phone charging, LED lighting systems and MP3 players for education and entertainment. These entities are collectively referred herein to as Poverty Dignified, or the Company. Going Concern As of February 28, 2015, 2014, the Company had cash of $15,741; working capital deficit of $21,117 and a stockholders deficiency of $20,089. The Company has not generated any revenues from ongoing operations as of the end of the second quarter ended February 28, 2015, has incurred net losses since inception, and continues to expend cash in order to accomplish its business objectives. Based on the Company s current progress in its business plan, it has not successfully implemented its plan to mitigate the going concern issue. Specifically, the Company has sold one unit that is not operational and has not been effective in reducing operational expenses. As a result, as of February 28, 2015, these issues raise substantial doubt about the Company s ability to continue as a going concern. The consolidated financial statements included in this prospectus do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. See Management s Discussion and Analysis of Financial Condition and Results of Operations Going Concern. Company Assets Poverty Dignified s principal assets ( Assets ) for the periods ending August 31, 2014 and February 28, 2015 consisted of cash totaling $147,877 and $15,741, prepaid expenses of $7,182 and $3,930, and property of $1,346 and $1,081 for the respective periods. Company Cash Flow The Company has cash assets derived from a private placement of its stock. For the period from its inception through the period ending August 31, 2014 and the period ending February 28, 2015 the Company had Gross Revenues of $0. From inception to the period ending August 31, 2014 and the six months ending February 28, 2015, the Company had Total Operating Expenses of $5,226,579 and $1,831,690, respectively and Net Loss of $5,226,579 and $1,831,690, respectively. From inception to the period ending August 31, 2014 the Company incurred $4,624,537 in non-cash expenses related to stock compensation expense for shares sold to founding company directors. During the three month period ending February 28, 2015 the Company incurred non-cash expenses related to stock compensation expense of $1,230,877 for stock issued for services to founding company officers and consultants. The Company had for the period ended August 31, 2014 and February 28, 2015 Total Current Assets of $155,059, and $19,671, respectively; Total Assets of $156,405 and $20,752, respectively; Total Current Liabilities of $10,948 and $40,841, respectively; and Total Stockholders Equity (Deficit) of $145,457 and $(20,089), respectively. Future Assets and Growth Over the next year we intend on developing our wholly owned subsidiary My Power Solutions and selling franchise opportunities throughout the continent of Africa. We will continue to develop our services and offerings and look to incubate other businesses that may be franchised in the developing world. We hope to differentiate ourselves from the many other power providers in the developing world by offering a for profit opportunity for shareholders. We currently do not generate a profit, but our competitors are mostly non-profit organizations. Our marketing will focus on highlighting the overall advantages on a community and profit level of our franchises. The Company had a Net Loss of $5,226,579 for the period from inception to August 31, 2014 and a Net Loss of $1,831,690 for the six months ended February 28, 2015. The Company anticipates it will operate at a deficit for its next fiscal year and may expend most of its available capital. The Company s cash on hand is, primarily, budgeted to cover the anticipated operating costs for the deployment and marketing of our franchise disclosure document in order to sell franchises to interested franchisees, development of our marketing plan and legal, accounting, and Transfer Agent services. We have elected to become a public company at this early stage of development for a number of reasons. First and foremost, it is because our need for capital is substantial and our principal feels his time devoted to the Company is best served developing the business plan rather than developing a network of people to invest into a private offering for a company of this type. Mr. Lowther believes that he can raise more capital in less time through future public offerings rather than through private offerings. The company has no plans or intentions to engage in a merger or acquisition with an unidentified company, companies, entity or person. We do understand as a company the disadvantages of going public such as the increased costs of ongoing reporting and scrutiny from the relevant governmental agencies. However, we believe that such a time and financial investment in the short term will be worth the long-term benefits of being a public entity. The Company currently has three officers and five employees. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $1.25 was determined by the price shares were sold to our shareholders in a private placement memorandum which was dated January 22, 2014 and closed on November 30, 2014 where shares have been sold to investors at $1.00 per share plus an increase based on the fact the shares will be liquid and registered. $1.25 is a fixed price at which the selling security holders will sell their shares for the duration of the offering. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Additional shares have been issued to various individuals for consulting services rendered with regard to the development of the business plan as well as coordination of this Registration Statement. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001592057_enviva-llc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001592057_enviva-llc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..03d3639a86987c7926f0ec3270f06a79523368c5
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001592057_enviva-llc_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical consolidated financial statements and the notes to those consolidated financial statements, before investing in our common units. The information presented in this prospectus assumes an initial public offering price of $20.00 per common unit (the mid-point of the price range set forth on the cover page of this prospectus) and, unless otherwise indicated, that the underwriters option to purchase additional common units is not exercised. You should read Risk Factors for information about important risks that you should consider before buying our common units. Enviva Partners, LP
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001592058_party_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001592058_party_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001592058_party_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001592261_us-nobel_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001592261_us-nobel_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..0278c6ec9823a1aa991b50127b352e1c736b88e0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001592261_us-nobel_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to US-Nobel Primary Education Development Int l, Inc. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on July 12, 2012 in the State of California. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. The selling shareholders in this offering are underwriters. Business Strategy We are a start up stage company. The Company is a young, energetic and adventurous company. Based in the USA, we aim to develop international quality bilingual (Chinese and English) educational products for children around the world. In the next 12 months, we plan to put our efforts on developing well structured and high quality educational materials for school children in China. We will start our work at Heilongjiang province. We have not developed any products that have generated revenue. At this point it is not known where the products will be developed or produced and there are no current operations in the United States. Prince of the Forest s English Club, which we intend to be our flagship product, is a series of well structured bilingual (Chinese and English) educational materials designed for kindergarten and primary school children in Heilongjiang province and the whole country. Together with the Prince of the Forest and his friends animation series, this product promotes environmental protection across different platforms in an educating way. In additional, the company plans to develop the Prince of the Forest interactive pen and the Prince of the Forest intelligence toys, a secondary level product line, to penetrate the market and obtain exposure at a more affordable price point. Our characters, products, planned animation series and ideas are only at the concept stage. The Company has a current monthly burn rate of approximately $1,000 per month. As of September 30, 2014 the company s current cash on hand was $285 which would be expended within one month at the current monthly burn rate of about $1,000 per month. The company intends to apply to be listed in the stock market and plan to raise a start-up capital of one million US dollars, to subsidize the development of the above products and the operation of the company. Our plan is to spend approximately 30% of the capital in the development of the Prince of the Forest s English Club product series. We have a plan to work closely with the Education Bureau of Heilongjiang province and to introduce our products to the national education system within a reasonable timeframe. Meanwhile, the Prince of the Forest and his friends animation series will be our next App with mass market potential. We plan to develop cooperation with different partners to achieve a national TV broadcasting coverage. The Company has an accumulated deficit of $39,373 since inception and our auditors issued a going concern opinion in its March 31, 2015 audit. Our executive offices are located at 2500 E. Colorado Blvd. Suite 255, Pasadena CA 9117. Our telephone number is (626) 568-8789. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. As a Smaller Reporting Company the exemptions are available to the Company even in the event they cease to be an emerging growth company. The Company is a Shell Company as defined by as defined in Rule 405. As such no shares will be eligible to be sold or transferred under Rule 144 until in excess of 1 year from the filing of the equivalent of Form 10 information by the Company with the SEC. None of the members of our current management has experience managing and operating a public company. From the company s perspective, the major risks to investors shall be the protection of the intellectual property in China. The company is going to create a variety of tangible and intangible assets, such as artistic, literary, and musical works; learning devices and tools, and designs, which shall be legally protected worldwide, especially in China. The company as an inventor, original author and publisher, shall apply relevant patents, copyright and trademarks for its intellectual property locally, regionally and globally. Most of the company s intangible assets will be located in the United States. The company needs to work with freelancers, vendors and suppliers for particular work. A copyright contract shall be prepared and signed. The company shall divide the work into smaller inorganic parts strategically so that no supplier or vendor would be able to know the full picture and reproduce the whole thing. The Offering This prospectus covers up to 49,900,000 shares to be sold by our selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders are all underwriters in this offering. The Company intends to apply to have its stock quoted on the OTCPK. Even if the stock is quoted on the OTCPK there is no guarantee that this will provide liquidity to the shareholders and that at this time we have taken no steps to be quoted on the OTCPK. ABOUT THIS OFFERING Securities Being Offered Up 49,900,000 shares of common stock of US-Nobel Primary Education Development Int l, Inc. to be sold by selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders in this offering are underwriters. Initial Offering Price Up 49,900,000 shares of common stock of US-Nobel Primary Education Development Int l, Inc. to be sold by selling shareholders at a fixed price of $0.02 per share. Terms of the Offering The selling shareholders will sell at a fixed price of $0.02 per share. Termination of the Offering The offering will conclude when the selling shareholder have sold all of the 49,900,000 shares of common stock offered by them.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to "us," "our," "DMTX," "Dimension," "we," the "company" and similar designations refer to Dimension Therapeutics, Inc. Dimension Therapeutics, Inc. Overview We are a leading gene therapy platform company focused on discovering and developing new therapeutic products for people living with rare diseases associated with the liver and caused by genetic mutations. Our initial programs address hemophilia B, hemophilia A, ornithine transcarbamylase, or OTC, deficiency, and glycogen storage disease type Ia, or GSDIa. In August 2015, we submitted an Investigational New Drug application, or IND, with the U.S. Food and Drug Administration, or FDA, for our lead product candidate, DTX101 for the treatment of hemophilia B. In September 2015, we received notification allowing us to proceed with our Phase I/II clinical trial of DTX101. DTX101 was also granted Orphan Drug Designation in the United States in August 2015 and Fast Track Designation in September 2015 for the treatment of hemophilia B. We plan to initiate clinical trials for DTX101 by the end of 2015. We retain the global rights to all of our programs, with the exception of our hemophilia A program, which is partnered with Bayer HealthCare LLC, or Bayer. We have developed a robust scientific platform that brings together deep expertise in rare genetic diseases, liver biology, adeno-associated virus, or AAV, gene therapy and vector manufacturing. We believe that by leveraging the expertise created by our platform we will be able to accelerate the research and development of our pipeline of programs while continuing to discover and develop the next generation of products in this field. We have made and continue to make significant investments in order to develop manufacturing processes designed to reliably produce high quality AAV vectors at commercial scale. We believe that our manufacturing processes, methods and expertise will ultimately give us the most comprehensive manufacturing platform developed to date for AAV-based gene therapy product candidates. Our Focus The Liver The liver is a vital organ that plays an important role in human metabolism and other key physiologic functions. Over 400 described rare monogenic disorders are associated with the liver, many of which have severe or even fatal consequences for patients, and collectively represent a significant unmet medical need. Our product candidates are focused on a subset of these monogenic diseases that we believe are particularly well-suited to our gene therapy platform and are designed to achieve sustained efficacy with low toxicity. We target diseases with readily identifiable patient populations that may allow us to pursue orphan drug designation for our product candidates. In addition, the nature of these diseases permits us to leverage highly predictive preclinical models and well-described, and often clinically validated, biomarkers to shorten time to clinical proof of concept. AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents Our Gene Therapy Technology and Industrialized Manufacturing Approach Our gene therapy product candidates and programs are designed to provide a functional copy of an abnormal or missing gene using the most advanced AAV-based vector delivery technology, which has been optimized to potentially offer durable clinical benefit to patients while minimizing risk. AAV vectors have been studied in over 120 clinical trials that suggest an initial favorable safety profile with early signals of efficacy. Certain AAV strains, or capsid serotypes, have been identified and characterized as having properties that enhance gene transfer to the liver, including superior gene transfer to liver cells, or hepatocytes, with reduced prevalence of harmful or neutralizing antibodies that can prevent gene transfer. AAV vectors derived from a subset of related capsid serotypes referred to as Clade E have been shown to lead to expression that is 16 to 110 times greater in the liver than with other AAV vectors. Two of the most commonly used capsid serotypes within Clade E are AAV8 and AAVrh10, which are over 90% identical in their DNA sequences, have high affinity for hepatocytes and we believe are well-suited as vectors for gene therapies targeting the liver. Going forward, we will continue to optimize our gene therapy vectors to seek to further increase levels of liver-specific gene transfer while minimizing potential adverse effects. In addition to our vector technology, we believe that a comprehensive and scalable manufacturing approach will be important to our success. Our manufacturing platform includes a series of highly selective and robust purification processes that we have adapted and customized for multiple AAV capsid serotypes. This approach is designed to produce higher purity AAV vectors at commercial scale with a greater percentage of AAV capsids containing a therapeutic vector genome than other manufacturing approaches. Our Pipeline of Programs: We have leveraged our focus on the liver, our gene therapy platform technology and our proprietary manufacturing approach to select our initial pipeline of programs. We retain the global rights to all of our programs, with the exception of our hemophilia A program, which is partnered with Bayer. Our pipeline of programs is described below. DIMENSION THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2836 (Primary Standard Industrial Classification Code Number) 46-3942159 (I.R.S. Employer Identification Number) 840 Memorial Drive Cambridge, MA 02139 (617) 401-0011 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents DTX101 is our lead gene therapy product candidate designed to deliver Factor IX, or FIX, gene expression in patients with hemophilia B. Hemophilia B is a rare genetic bleeding disorder resulting from a deficiency in FIX. The current standard of care for patients with hemophilia B involves chronic replacement of FIX protein through intravenous infusion, which is invasive, inconvenient and not curative. In 2013, the World Federation of Hemophilia estimated that there were approximately 28,000 hemophilia B patients worldwide, including approximately 4,000 patients in the United States. Our product candidate DTX101 is an AAVrh10 capsid containing a codon-optimized FIX gene expressing wild-type FIX protein. AAVrh10 is a member of the Clade E family of capsids, which has demonstrated enhanced affinity for the liver. In contrast to other approaches, such as those that use the Padua FIX gene, we believe that delivery of a codon-optimized wild-type FIX gene is the most appropriate method to achieve FIX gene correction while minimizing the risk of excessive blood clotting, or hypercoagulation, and unwanted immune response, or immunogenicity. In academic studies, a different codon-optimized wild-type FIX gene administered to humans with severe hemophilia B has shown preliminary signs of efficacy and an initial favorable safety profile for several years. In our preclinical studies, a single DTX101 intravenous injection led to dose-dependent expression of FIX continuing for at least 32 weeks in a validated mouse model of hemophilia B. In August 2015, we submitted an IND for DTX101 with FDA and in September 2015, we received notification allowing us to proceed with our Phase I/II clinical trial of DTX101. DTX101 was granted Orphan Drug Designation in the United States in August 2015 and Fast Track Designation in September 2015 for the treatment of hemophilia B and we plan to initiate clinical studies of DTX101 by the end of 2015. To evaluate the therapeutic response of DTX101, we plan to assess clotting factor levels and annual bleeding rates, which are two well-established measures of hemophilia B disease status. Based on our preclinical studies completed to date, we believe DTX101 has the potential to be a well-tolerated, effective therapy for hemophilia B. DTX301 is our gene therapy product candidate designed for the treatment of patients with OTC deficiency. OTC deficiency is the most common urea cycle disorder and leads to increased levels of ammonia, which can result in irreversible neurocognitive damage and potentially death if treatment is not initiated early during a metabolic crisis. We estimate that there are approximately 10,000 patients worldwide with OTC deficiency, of which we estimate approximately 80% are classified as late-onset, our target population. Approved therapies, which must be taken multiple times a day for the patient's entire life, do not eliminate the risk of future metabolic crises. In our preclinical studies in a well-described mouse model of OTC deficiency, DTX301 resulted in stable expression and activity of OTC and normalization of levels of urinary orotic acid, a marker of ammonia production. We have completed candidate selection and plan to complete IND-enabling studies of DTX301 in the second half of 2016. To evaluate therapeutic response of DTX301, we plan to measure ammonia levels, which is a well-established measure of OTC deficiency disease status. DTX401 is our gene therapy program for the treatment of patients with GSDIa, a disease that arises from a defect in glucose-6-phosphatase, or G6Pase, an essential enzyme in glycogen and glucose metabolism. We estimate there are approximately 6,000 GSDIa patients worldwide. There are currently no drug therapies approved for GSDIa, and as a result, patients and their caregivers must manage the disease by maintaining a strict diet and regular delivery of carbohydrates, which may require a feeding tube. Any disruption in carbohydrate delivery may lead to low blood sugar levels, which can cause coma or death. In preclinical studies in well-described mouse and dog models of GSDIa conducted by our collaborators, delivery of the G6Pase gene with an AAV vector restored normal glucose metabolism, reduced glycogen stores, prevented hepatic adenoma formation and increased survival. We plan to complete candidate selection and initiate IND-enabling studies of Annalisa Jenkins, M.B.B.S, M.R.C.P. President and Chief Executive Officer 840 Memorial Drive Cambridge, MA 02139 (617) 401-0011 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents DTX401 in the first half of 2016. To evaluate the therapeutic response to DTX401, we plan to measure glucose, which is a well-established measure of GSDIa disease status. DTX201 is our Factor VIII, or FVIII, gene therapy program for the treatment of hemophilia A that we are developing in collaboration with Bayer, a global leader in the development and commercialization of innovative therapeutics for treating patients with hemophilia. Under the agreement, we are responsible for the development of DTX201 through a proof-of-concept clinical trial, with full reimbursement from Bayer for all project costs in accordance with the mutually agreed upon research budget. Bayer is responsible for managing and funding any subsequent clinical trials and commercialization. We also received an upfront payment of $20.0 million and are eligible for potential development and commercialization milestone payments of up to $232.0 million, as well as royalties on product sales. The relationship with Bayer brings us non-dilutive financial benefits and allows us to leverage Bayer's significant experience in the hemophilia market. Hemophilia A is the most common form of hemophilia with approximately 140,000 patients worldwide. The only therapies currently available for hemophilia A are intravenously administered FVIII protein or its derivatives. We plan to initiate IND-enabling studies of DTX201 by the end of 2015. To evaluate the therapeutic response of DTX201, we plan to assess clotting factor levels and annual bleeding rates, which are two well-established measures of hemophilia A disease status. Beyond our current pipeline of programs, we intend to focus our research and development on future product candidates that treat well-understood rare monogenic diseases associated with the liver that we believe are well-suited to our gene therapy platform and can leverage learnings from our current programs. We select our programs based on demonstrated preclinical proof of concept in well-described or validated animal models. We seek to address clear unmet medical need in readily identifiable patient populations for which there are no therapies or where current standards of care only manage symptoms. Our Team To execute on this opportunity, we have assembled a team of seasoned biopharmaceutical executives, scientific advisory council members and key partners with broad and deep expertise in all aspects of gene therapy, global drug discovery, development, manufacturing and commercialization. Our chief executive officer, Annalisa Jenkins, M.B.B.S., M.R.C.P., is a biopharmaceutical leader with 18 years of experience at Merck Serono and Bristol-Myers Squibb in developing and commercializing novel and innovative products. Our other management team members have successful track records in developing, manufacturing and commercializing drugs across a wide range of therapeutic areas, including rare genetic diseases, through previous experiences at Genzyme Corporation, Sanofi S.A., Shire plc, Novartis International AG, Cubist Pharmaceuticals Inc. and Nationwide Children's Hospital. Our AAV technology is the product of over 25 years of research conducted at University of Pennsylvania School of Medicine by James M. Wilson, M.D., Ph.D., the chair of our scientific advisory council, and his colleagues. We believe our team's combined expertise in gene therapy, global rare disease clinical development and market access provides an advantage over our competitors in developing and commercializing liver-directed gene therapies for patients suffering from severe rare diseases. Our progress has been enabled by support from several leading biotech investors, including Fidelity Biosciences, OrbiMed Advisors, New Leaf Venture Partners, Jennison Associates (on behalf of investors), Partner Fund Management, RA Capital Management, Rock Springs Capital and Tourbillon Global Ventures. Copies to: Kingsley L. Taft, Esq. Ryan S. Sansom, Esq. Caitlin L. Murray, Esq. Goodwin Procter LLP Exchange Place Boston, Massachusetts 02109 (617) 570-1000 Mary T. Thistle Chief Business Officer Dimension Therapeutics, Inc. 840 Memorial Drive Cambridge, MA 02139 (617) 401-0011 Patrick O'Brien, Esq. Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, Massachusetts 02199 (617) 951-7000 Table of Contents Our Mission We are dedicated to bringing hope to patients and their families living with hemophilia and other rare genetic diseases, through our commitment to scientific innovation. We plan to focus on advancing the science of gene therapy in an innovative, energetic and ethical manner, by building our corporate culture and strengthening our team and community. Our Culture At Dimension, we focus on developing and delivering novel gene therapy treatments that improve health and quality of life for patients with hemophilia and rare diseases associated with the liver. Our team is aligned by core values that guide everything that we do: Commitment to our patients, science and the team; Collaboration across the organization and externally, ensuring that every voice matters; and Community focus on our internal community and giving back to the broader community. We seek to foster a collaborative environment of diverse, ethical, committed and highly accomplished people. Together, we live the Dimension values as we continue advancing novel treatments for patients. Strategy Our goal is to utilize our gene therapy platform to transform the lives of patients suffering from severe and chronic genetic disorders associated with the liver by developing, manufacturing and commercializing gene therapies that have the potential to offer a durable and meaningful therapeutic benefit. We select and design our gene therapy programs to accelerate the generation of human proof of concept. Our strategy leverages well-described animal models, relevant biomarkers and relatively small clinical trials appropriate for therapies targeting monogenic diseases associated with the liver. To achieve our goal, we are pursuing the following key strategies: Advance our lead product candidate DTX101 through clinical development; Initiate and complete IND-enabling activities to advance DTX301 and DTX401 into clinical development; Continue to deepen our pipeline through our leading gene therapy platform for product candidates targeting liver-associated rare genetic diseases; Maximize the value of our DTX201 collaboration with Bayer; Continue to invest in and develop state-of-the-art manufacturing processes to ensure the highest product quality; Continue to drive innovative vector research to advance our platform and future gene therapies for rare diseases; and Build a premier global ecosystem of patient-focused gene therapy expertise to support our continued leadership as an innovator in the gene therapy field. Table of Contents section of The Wall Street Journal as the prime rate then in effect (the greater of which equated to an interest rate of 5.5% as of June 30, 2015). Borrowings under the loan and security agreement are secured by substantially all of our assets, except for our intellectual property. There are no financial covenants associated with the loan and security agreement. There are negative covenants restricting our activities, such as disposing of our business or certain assets, changing our business, management, ownership or business locations, incurring additional debt or liens or making payments on other debt, making certain investments and declaring dividends, acquiring or merging with another entity, engaging in transactions with affiliates or encumbering intellectual property. The obligations under the loan and security agreement are subject to acceleration upon occurrence of specified events of default, including a material adverse change in our business, operations or financial or other condition. In connection with entering into the loan and security agreement, in August 2014, we granted to the lender a warrant to purchase 11,973 shares of our common stock at an exercise price of $0.56 per share. This warrant may be exercised at the option of the lender either by delivery of the exercise price in cash or by a cashless exercise, and will expire in August 2024. Contractual Obligations and Commitments The following table summarizes our contractual obligations as of June 30, 2015 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods: Payments Due by Period Total Less Than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years (in thousands) Operating lease commitments(1) $ 1,856 $ 701 $ 1,155 $ $ Debt obligations(2) 1,776 655 1,116 5 Research and development agreement(3) 488 244 244 Total $ 4,120 $ 1,600 $ 2,515 $ Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Accelerated Filer Non-Accelerated Filer (Do not check if a smaller reporting company) Smaller Reporting Company Table of Contents Risks Associated with Our Business Our ability to implement our business strategy is subject to numerous risks, as more fully described in the section entitled "Risk Factors" immediately following this prospectus summary. These risks include, among others: We are a biopharmaceutical company with a limited operating history and have not generated any revenue from product sales. We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future, and even if we consummate this offering, we will need to raise substantial additional funding. We are very early in our development efforts. All of our product candidates are still in preclinical development. If we are unable to advance our product candidates to clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed. Our AAV gene therapy product candidates have not yet been dosed in any patients and are based on a relatively new technology that has been exposed to a limited number of patients in the clinic, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval, if at all. Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any potential marketing approval. Genetically defined diseases may have relatively low prevalence and it may be difficult to identify patients with the genetic driver of the disease, which may lead to delays in enrollment for our trials and difficulties in commercializing our product candidates, if approved. We intend to rely on third parties to produce our product candidates and other key materials, but these manufacturers have minimal or no experience producing our product candidates and other materials for clinical use or at commercial scale and may not achieve the necessary regulatory approvals or produce our products at the quality, quantities, locations and timing needed to support development or commercialization. We are required to pay certain royalties under our license agreements with third-party licensors, and we must meet certain milestones to maintain our license rights. Our future success depends in part upon our ability to retain our team of seasoned biopharmaceutical executives and to attract, retain and motivate qualified personnel. Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: being permitted to present only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure in this prospectus; CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, par value $0.0001 per share $101,200,000 $10,190 (1)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2)Includes the offering price of shares that the underwriters may purchase pursuant to an option to purchase additional shares. (3)A registration fee of $13,363 was already paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents reduced disclosure about our executive compensation arrangements; no nonbinding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or SEC. We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock. We have irrevocably elected to "opt out" of the exemption for the delayed adoption of certain accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Company and Other Information We were incorporated under the laws of the State of Delaware in June 2013. Our principal executive office is located at 840 Memorial Drive, Cambridge, MA 02139, and our telephone number is (617) 401-0011. Our website address is www.dimensiontx.com. We do not incorporate the information on or accessible through our website into this prospectus, and you should not consider any information on, or that can be accessed through, our website as part of this prospectus. We own various U.S. federal trademark applications and unregistered trademarks, including our company name. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols and , but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated October 13, 2015. 5,500,000 Shares Common Stock Table of Contents THE OFFERING Common stock offered by us 5,500,000 shares. Common stock to be outstanding immediately after this offering 24,879,574 shares (or 25,704,574 shares if the underwriters exercise their option to purchase additional shares in full). Underwriters' option to purchase additional shares We have granted a 30-day option to the underwriters to purchase up to an aggregate of 825,000 additional shares of common stock from us at the public offering price, less underwriting discounts and commissions, on the same terms as set forth in this prospectus. Use of proceeds We estimate that we will receive net proceeds from the sale of shares of our common stock in this offering of approximately $73.7 million, or $85.2 million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We anticipate that we will use the net proceeds from this offering as follows: to advance DTX101 as a treatment for hemophilia B through a Phase I/II clinical trial; to advance DTX301 as a treatment for OTC deficiency through IND-enabling studies and into a Phase I/II clinical trial; to advance DTX401 as a treatment for GSDIa through IND-enabling studies and into a Phase I/II clinical trial; to expand our internal process development capabilities; to continue to advance and to expand our research and development pipeline of our product candidates and other indications; and for working capital and other general corporate purposes, as well as potentially for repaying our secured borrowings. For a more complete description of our intended use of the proceeds from this offering, see "Use of Proceeds."
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+Prospectus summary This summary highlights certain significant aspects of our business and this offering. This is a summary of information contained elsewhere in this prospectus and the documents incorporated by reference herein, is not complete and does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus, the documents incorporated by reference in this prospectus and any free writing prospectus prepared by us, including the section entitled Risk factors in this prospectus and the section entitled Part I Item 1A. Risk Factors and our audited consolidated financial statements and the notes thereto, in each case in our 2014 Form 10-K incorporated by reference into this prospectus, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of certain factors such as those set forth in Risk factors and Special note regarding forward-looking statements in this prospectus and Part I Item 1A. Risk Factors in our 2014 Form 10-K incorporated by reference in this prospectus. When making an investment decision, you should also read the discussion under Basis of presentation above for the definition of certain terms used in this prospectus and a description of certain transactions and other matters described in this prospectus. Company overview We are a leading owner, operator and franchisor of select-service hotels primarily serving the midscale and upper-midscale segments under the La Quinta brand. Based on data provided by STR, over the last ten years ended December 31, 2014, La Quinta is the fastest growing of the hotel brands comprising our main STR competitive set in terms of percentage growth of number of hotels in the United States, significantly outpacing the percentage increase in number of hotels by each of such brands. Our system-wide portfolio, as of December 31, 2014, consisted of 867 hotels representing approximately 86,500 rooms located predominantly across 47 U.S. states, as well as in Canada and Mexico, of which 353 hotels were owned and operated and 514 were franchised. We also had a pipeline of 207 franchised hotels as of December 31, 2014, to be located in the United States, Mexico, Canada, Colombia, Honduras, Nicaragua and Guatemala (86% of which represents new construction as opposed to the conversion of an existing hotel). Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated March 23, 2015. 17,500,000 Shares La Quinta Holdings Inc. Common Stock The selling stockholders identified in this prospectus are offering 17,500,000 shares of common stock of La Quinta Holdings Inc. We will not receive any of the proceeds from the sale of our common stock by the selling stockholders. Our common stock is listed on the New York Stock Exchange (the NYSE ) under the symbol LQ. The last reported sale price of our common stock on the NYSE on March 20, 2015 was $24.19 per share. See Risk Factors beginning on page 19 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than 17,500,000 shares of common stock, the underwriters have the option to purchase up to an additional 2,625,000 shares of common stock from the selling stockholders at the public offering price less the underwriting discounts and commissions. The selling stockholders will receive all of the proceeds from the sale of any such additional shares to the underwriters. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. J.P. Morgan Morgan Stanley BofA Merrill Lynch Citigroup Credit Suisse Deutsche Bank Securities Goldman, Sachs & Co. Wells Fargo Securities EA Markets Evercore ISI JMP Securities Lebenthal Capital Markets Loop Capital Markets Mischler Financial Group, Inc Ramirez & Co., Inc. Raymond James RBC Capital Markets Stifel Prospectus dated , 2015. Table of Contents Trademarks, service marks and trade names We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and/or in certain foreign jurisdictions. Our primary trademarks are La Quinta, LQ, Returns and the sunburst Q symbol. Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus or the documents incorporated by reference herein are without the and symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus and the documents incorporated by reference herein contain additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus or in the documents incorporated by reference herein are, to our knowledge, the property of their respective owners. Basis of presentation On April 14, 2014, we completed our initial public offering (the IPO ), in which we issued and sold approximately 44.0 million shares of common stock of La Quinta Holdings Inc. Our business prior to the IPO was conducted, and our hotel properties were owned, through multiple entities (including the entities owned by the Company at the completion of the IPO and previously under common control or otherwise consolidated for financial reporting purposes and their consolidated subsidiaries (the Predecessor Entities ) and the entities that own the 14 La Quinta hotels managed by the Predecessor Entities (the Previously Managed Portfolio ), collectively, the Existing Entities ). Prior to the IPO, certain of our Existing Entities operated as real estate investment trusts ( REITs ) for U.S. federal income tax purposes. To effectuate the IPO, we enacted a series of transactions that resulted in a reorganization of our business (the Pre-IPO Transactions ). Specifically, among other transactions, one of the Predecessor Entities purchased the Previously Managed Portfolio and we purchased the management company for the Predecessor Entities and the equity interests in the Predecessor Entities held by the pre-IPO owners were exchanged for an aggregate of 81,060,034 shares of common stock of the Issuer. Additionally, all of the shares of capital stock held by third-party stockholders of the Existing Entities that were REITs were redeemed for cash and the REITs were converted into limited liability companies. Following the IPO, neither we nor any of our subsidiaries were operated as a REIT, and we are taxed as a C corporation at the federal and state level. See Prospectus summary Corporate history, growth and structure. For a further discussion of the Pre-IPO Transactions, see the italicized introduction to the section entitled Part II Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the 2014 Form 10-K ) incorporated by reference into this prospectus. Unless otherwise indicated or the context otherwise requires, all information in this prospectus reflects the consummation of the Pre-IPO Transactions and references in this prospectus to we, our, us and the Company refer to La Quinta Holdings Inc. and its consolidated subsidiaries, and references to La Quinta Holdings Inc. and the Issuer refer only to La Quinta Holdings Inc. exclusive of its subsidiaries. Table of Contents The following tables illustrate the growth in number of our owned and franchised hotels from 2004 to December 31, 2014. (1) Certain of our owned hotels were previously operated by us as non-La Quinta hotels and are not included in this table until such time as they were converted to La Quinta-branded hotels. From the Acquisition, as defined below, through December 31, 2014 and primarily in 2006, we converted 128 such hotels. We primarily derive our revenues from owned hotel operations and fees generated from franchised and managed hotels. On a pro forma basis, for the year ended December 31, 2014, we generated total revenue of $988.9 million, Adjusted EBITDA of $375.5 million and net income from continuing operations of $54.6 million. For a reconciliation of Adjusted EBITDA, see Summary historical consolidated financial data. We are focused on providing clean and comfortable guest rooms at affordable prices in convenient locations. When STR s price points by segment are applied to each of our hotels, approximately 30% would be considered upper-midscale, approximately 53% would be considered midscale, approximately 7% (principally our owned hotels) would be considered economy and the balance would be considered in the segments above upper-midscale. Our hotels have fewer costly services and amenities than full-service hotels, which we believe results in a highly efficient hotel-level cost structure. Our hotels typically include common areas with amenities such as a great room (including breakfast seating area, lobby with seating area and business center), swimming pool and vending areas and generally offer a complimentary breakfast. As of December 31, 2014, the hotels in our system consisted of 607 La Quinta Inn & Suites, which include guest suites and generally are our newer hotels with interior corridors, and 260 La Quinta Inns, 140 of which include interior corridors. Our guest mix includes both business and leisure travelers. La Quinta was founded in San Antonio, Texas in 1968 and has a 46-year history of owning and operating hotels. From 1973 to January 2006, we operated through our predecessors as a public company. In January 2006, we were acquired by Blackstone (the Acquisition ), who identified a strategic repositioning opportunity to improve the quality and performance of our owned portfolio, narrow the RevPar Index gap between us and our main STR competitive set and accelerate growth in our franchise business. RevPAR Index measures a hotel s fair market share of Table of Contents Table of Contents As of December 31, 2013, four of our La Quinta-branded hotels were designated as assets held for sale and the results of their operations, together with the operations of the 29 hotels sold during 2013, have been classified as discontinued operations (collectively, the Hotels Designated for Sale ). Sales of these four hotels closed in February 2014. Presentation of historical non-financial data and pro forma financial information. Unless otherwise indicated or the context otherwise requires, (i) operating and other non-financial data, including number of hotels and related data, disclosed in the sections of this prospectus and the documents incorporated by reference herein other than the Financial Statement Sections (as defined below) and (ii) pro forma financial information in this prospectus: reflects the combined and consolidated business and operations of the Predecessor Entities; treats the Previously Managed Portfolio as owned hotels, which were acquired by the Predecessor Entities at the time of the IPO; includes the Hotels Designated for Sale (with the Hotels Designated for Sale treated as discontinued operations in the pro forma financial information) until such hotels were sold in February 2014; and excludes 11 Baymont-branded hotels (the Baymont Hotels ) which we sold on August 8, 2013 (with the Baymont Hotels treated as discontinued operations in the pro forma financial information). Presentation of consolidated financial information and certain other non-financial data. Unless otherwise indicated, or the context otherwise requires, for periods prior to the completion of the IPO, (i) the historical financial data (excluding all pro forma financial data) included or incorporated by reference in this prospectus and (ii) the operating and other non-financial data (but excluding all related data prepared on a pro forma basis), including number of hotels and related data, disclosed in Summary historical consolidated financial data in this prospectus and Part II Item 6. Selected Financial Data and Part II Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations included in the 2014 Form 10-K incorporated by reference into this prospectus (collectively, the Financial Statement Sections ): reflects the combined and consolidated business and operations of the Predecessor Entities (including the management company, which was consolidated for financial reporting purposes); treats the Previously Managed Portfolio as franchised and managed hotels; excludes the Hotels Designated for Sale (other than as discontinued operations); and excludes the Baymont Hotels (other than as discontinued operations). Except where the context requires otherwise, the information in this prospectus assumes no exercise by the underwriters of their option to purchase up to an additional 2,625,000 shares of common stock from the selling stockholders. Table of Contents its competitive set s revenue per available room and is calculated by comparing the hotel s RevPAR to the aggregate RevPAR of a group of competing hotels generally in the same market. Our strategic repositioning plan included: assembling a management team led by lodging industry and La Quinta veteran Wayne Goldberg; investing capital into our owned real estate, brand and technology infrastructure; prioritizing the growth of our franchise business and dedicating resources to existing and new domestic franchise markets; establishing a franchising infrastructure in Mexico and Central America; increasing the focus on operating efficiencies and revenue management within our owned portfolio; consolidating operations around the La Quinta brand; and increasing the marketing spend with a focus on differentiating the La Quinta brand and growing our loyalty program. In connection with our strategic repositioning plan from the Acquisition through December 31, 2014, we have expanded our franchise system by over three times, growing from 158 franchised hotels to 514 franchised hotels, with an additional 207 hotels in our pipeline. Based on historical experience, converted hotels in our pipeline can generally become operational between 12 to 18 months from the date of execution of the franchise agreement, and newly constructed hotels in our pipeline can generally become operational between 36 to 48 months from the date of execution of the franchise agreement. Openings may be delayed, or franchises canceled, for a number of factors, including economic conditions, weather and construction delays, and certain of our pipeline properties may not become operational. Additionally, because revenues from franchised hotels are principally derived from franchise fees rather than room rentals, as we grow our system by increasing the number of franchised hotels, our revenues and expenses will increase at a significantly slower rate than if we were growing our system through an increase in number of owned hotels. Additionally, over the period from 2007 through the last full fiscal year prior to our IPO, we: invested a total of $759 million in capital, $310 million of which we consider repositioning capital which was invested to increase our RevPAR Index. Repositioning capital investments included $148 million for improvements across our owned hotel portfolio, including acceleration of some aspects of cycle renovations, and $45 million for upgrades to our technology infrastructure. Repositioning capital also included over $74 million expended to upgrade the non-La Quinta hotels we converted to La Quinta-branded hotels after the Acquisition and $42 million to develop our flagship downtown Chicago property; after experiencing a decrease in RevPAR Index of 340 basis points from 2006 to 2007, principally due to the conversion over that period of 128 non-La Quinta hotels to La Quinta-branded hotels, increased our system-wide RevPAR Index by 990 basis points to 98.5% over the annual periods from 2007 through the last full fiscal year prior to our IPO, based on the STR competitive set of hotels existing as of December 31, 2013; Table of Contents Table of Contents Certain defined terms The following are definitions of certain terms used in this prospectus: ADR or average daily rate means hotel room revenues divided by total number of rooms sold in a given period; Blackstone or our Sponsor means The Blackstone Group L.P. and its affiliates; CAGR means compound annual growth rate; Comfort refers to Comfort Inns and Comfort Suites collectively; comparable hotels means hotels that: (i) were active and operating in our system for at least one full calendar year as of the end of the applicable period and were active and operating as of January 1st of the previous year; and (ii) have not sustained substantial property damage, business interruption or for which comparable results are not available. Management uses comparable hotels as the basis upon which to evaluate ADR, occupancy, RevPAR and RevPAR Index on a system-wide basis and for each of our reportable segments; franchised hotels refers to La Quinta-branded hotels which are owned and operated by third party franchisees under franchise agreements with us; Hampton refers to Hampton Inns and Hampton Inn & Suites collectively; main STR competitive set refers to Comfort, Holiday Inn Express and/or Hampton, the brands most often included in our STR competitive sets; occupancy means the total number of rooms sold in a given period divided by the total number of rooms available at a hotel or group of hotels; owned hotels and owned portfolio refer to our hotels located on properties in which we have an ownership interest or leasehold interest; pipeline means our portfolio of future La Quinta-branded hotels, each of which is represented by an executed franchise agreement; pre-IPO owners refers to Blackstone and the members of our management and consultants that owned, directly or indirectly, interests in the Predecessor Entities; RevPAR or revenue per available room means the product of the ADR charged and the average daily occupancy achieved; RevPAR Index measures a hotel s fair market share of its competitive set s revenue per available room. See Market and industry data ; system-wide refers collectively to our owned, franchised and managed hotel portfolios; and U.S. defined market tracts refers to the 629 geographic areas or locations in the United States, compiled by STR, each of which is a subset of a geographic market. Table of Contents sold (or were holding for sale) 33 La Quinta hotels, the effect of which was to improve our system-wide RevPAR and guest satisfaction scores for our remaining portfolio; and increased membership in our La Quinta Returns loyalty program by 143% from 3.7 million to over nine million members. Additionally, following the industry-wide economic downturn that began in 2008, our operating performance has improved significantly over the past five fiscal years, during the strong lodging industry recovery that industry analysts believe will continue for the next several years. Specifically, we have: increased our ADR 20.1% from $69.38 to $83.34 for the year ended December 31, 2014 compared to the year ended December 31, 2010; increased our RevPAR 36.4% from $40.49 to $55.21 for the year ended December 31, 2014 compared to the year ended December 31, 2010; and realized Adjusted EBITDA growth (including the Previously Managed Portfolio as franchised and managed hotels) of 60.8% for the twelve months ended December 31, 2014 compared to the twelve months ended December 31, 2010. Although we believe we have been successful in implementing our strategic repositioning plan, we believe there remains significant opportunity for future growth: There remains a meaningful ADR differential between us and the hotels in our main STR competitive sets, which we believe we can continue to decrease over time. Our 2014 Adjusted EBITDA and Adjusted EBITDA margins for our owned portfolio remain below comparable 2008 metrics which we believe represent significant capacity for future organic growth at our hotels. We remain approximately half the size of the hotel brands in our main STR competitive set in terms of number of hotels in the United States, which we believe provides for significant future expansion opportunity. Our competitive strengths We are driven by our core values and principles that we believe drive a high level of employee and guest engagement. Together with these core values and principles, we believe that the following competitive strengths position us to execute on our business plan and growth strategies. Scalable and efficient business model with attractive cash flow characteristics. Our hotel product offering is efficient, replicable and supported by a scalable operational, technological and administrative platform. In 2014, over 98% of our owned hotel revenue was derived solely from room rentals, as compared to 63% for full-service hotels, according to STR, and our operating margins in 2014 were 47% as compared to operating margins in 2013 of 32% for full-service hotels (which reflects the most current available information). As a select-service hotel brand, our hotels require fewer costly services, amenities and capital expenditures than full-service hotels, resulting in what we believe to be a highly efficient hotel-level cost structure, strong Adjusted EBITDA margins and stable cash flows. Even during the height of the Table of Contents Table of Contents recent economic downturn in 2009, our Adjusted EBITDA margins remained above 32% as compared to approximately 20% for full-service hotels, based on data provided by STR. In addition, our model enables us to manage corporate overhead expenses even though the number of our hotels, particularly the number of our franchised hotels, has increased substantially. Established and rapidly growing franchise business. Since 2004, we have grown our total number of franchised hotels from 120 in 2004 to 514 as of December 31, 2014, achieving a franchise compounded annual growth rate of 16%. Our franchise business requires little or no capital investment by us (which we refer to as capital light ), and has substantial scale and an established infrastructure that we believe positions us to achieve meaningful franchise growth as development capital for franchisees continues to become more available. The hotels in our franchised portfolio have an average age of 14 years, with 34% of our franchised portfolio being in our system less than 5 years. Despite the strong decade of growth, we are still less than half the size of our main STR competitive set, allowing room for continued aggressive franchise growth in a number of under-penetrated U.S. markets. As of December 31, 2014, we have a large pipeline of 207 franchised hotels (of which 86% are new construction), each represented by an executed franchise agreement. Given our founding and significant presence in Texas, our presence in the U.S. southern border states and our established brand history with travelers from this region, we believe La Quinta has significant brand awareness in Mexico and believe Mexico, Central America and South America provide opportunities for significant franchise growth internationally where we have laid the foundation for expansion. In Central and South America, we will build on this awareness of the La Quinta brand by emphasizing the associated LQ registered marks to identify La Quinta hotels in certain markets. Additionally, as our franchise business continues to grow, we expect cash flow from this segment will comprise a higher percentage of our total cash flow. Given that the average remaining term of our existing franchise contracts is approximately 14 years, we believe that our existing franchisees provide a long-term stable income stream. Moreover, we anticipate our franchise revenues will grow over time as new franchise agreements and renewals of existing franchise agreements are executed at our current published rates, which include a 4.5% royalty fee, which is higher than the 4.0% royalty fee generally applicable to our franchise agreements entered into prior to April 2013. Widely recognized and differentiated brand. We own, operate and franchise all of our hotels under a single brand, La Quinta, a highly recognizable brand in the select-service market, established over a 46-year history. We have a loyal base of customers and a growing loyalty program, La Quinta Returns, with over ten million members as of December 31, 2014. We believe the capital investments we have made to upgrade and reposition our brand and hotel experience have helped to improve our brand awareness, brand perception, guest loyalty and guest experience. Our improved guest experience, brand perception and growing loyalty have contributed to consistent market share increases as reflected by our RevPAR Index growth. We believe that the demonstrated strength of our brand and loyal customer base drive revenues for our existing owned and franchised hotels and also makes us attractive to new franchisees. Owner and operator business model promotes alignment with our franchisees. Our position as an owner and operator of La Quinta-branded hotels creates an alignment of economic objectives with our franchisees, which we believe is a differentiating factor among our competitors. We are focused on delivering value to our guests, which generates repeat stays Table of Contents Table of contents Prospectus Page MARKET AND INDUSTRY DATA i TRADEMARKS, SERVICE MARKS AND TRADE NAMES ii BASIS OF PRESENTATION ii CERTAIN DEFINED TERMS iv PROSPECTUS SUMMARY 1
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+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in shares of our common stock. You should read this entire prospectus carefully, including the information incorporated by reference in this prospectus and any free writing prospectus prepared by us or on our behalf, including the section entitled Risk Factors in this prospectus and the documents incorporated by reference in this prospectus and the financial statements and the related notes incorporated by reference in this prospectus, before you decide to invest in shares of our common stock. OUR COMPANY We are the leading global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products. Our oral, injectable and respiratory delivery technologies address the full diversity of the pharmaceutical industry including small molecules, large molecule biologics and consumer health products. Through our extensive capabilities and deep expertise in product development, we help our customers take products to market faster, including nearly half of new drug products approved by the Food and Drug Administration (the FDA ) in the last decade. Our advanced delivery technology platforms, broad and deep intellectual property, and proven formulation, manufacturing and regulatory expertise enable our customers to develop more products and better treatments. Across both development and delivery, our commitment to reliably supply our customers needs is the foundation for the value we provide; annually, we produce more than 70 billion doses for nearly 7,000 customer products. We believe that through our investments in growth-enabling capacity and capabilities, our ongoing focus on operational and quality excellence, the sales of existing customer products, the introduction of new customer products, our patents and innovation activities, and our entry into new markets, we will continue to benefit from attractive and differentiated margins, and realize the growth potential from these areas. Since 2010, we have made investments to expand our sales and marketing activities, leading to growth in the number of active development programs for our customers in both of our two main strategic areas. This has further enhanced our extensive, long-duration relationships and long-term contracts with a broad and diverse range of industry-leading customers. In the fiscal year ended June 30, 2014, we did business with 83 of the top 100 branded drug marketers, 19 of the top 20 generics marketers, 38 of the top 50 biologics marketers, and 24 of the top 25 consumer health marketers globally. Selected key customers include Pfizer, Johnson & Johnson, GlaxoSmithKline, Merck, Novartis, Roche, Actavis and Teva. We have many long-standing relationships with our customers, particularly in advanced delivery technologies, where we tend to follow a prescription molecule through all phases of its lifecycle, from the original brand prescription, development and launch to generics or over-the-counter switch. A prescription pharmaceutical product relationship with an innovator will often last for nearly two decades, extending from mid-clinical development through the end of the product s life cycle. We serve customers who require innovative product development, superior quality, advanced manufacturing and skilled technical services to support their development and marketed product needs. Our broad and diverse range of technologies closely integrates with our customers molecules to yield final dose forms, and this generally results in the inclusion of Catalent in our customers prescription product regulatory filings. Both of these factors translate to long-duration supply relationships at an individual product level. We believe our customers value us because our depth of development solutions and advanced delivery technologies, intellectual property, consistent and reliable supply, geographic reach, and substantial expertise enable us to create a broad range of business and product solutions that can be customized to fit their individual needs. Today we employ approximately 1,000 scientists and technicians and hold approximately 1,300 patents and patent applications in advanced delivery, drug and biologics formulation and manufacturing. The aim of our offerings is to allow our customers to bring more products to market faster, and develop and market differentiated new products that improve patient outcomes. We believe our leading market position, significant Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated June 1, 2015. 20,000,000 Shares Catalent, Inc. Common Stock The selling stockholders named in this prospectus are offering 20,000,000 shares of common stock of Catalent, Inc. We will not receive any proceeds from the sale of our common stock by the selling stockholders. Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol CTLT . On May 29, 2015, the closing sales price of our common stock as reported on the NYSE was $31.96 per share. See Risk Factors beginning on page 15 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to the selling stockholders (1) . $ $ (1) For additional information regarding underwriters compensation, please see Underwriting (Conflicts of Interest). To the extent that the underwriters sell more than 20,000,000 shares of our common stock, the underwriters have the option to purchase up to an additional 3,000,000 shares of our common stock from the selling stockholders at the public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2015. MORGAN STANLEY J.P. MORGAN BofA MERRILL LYNCH GOLDMAN, SACHS & CO. JEFFERIES DEUTSCHE BANK SECURITIES BLACKSTONE CAPITAL MARKETS EVERCORE ISI RAYMOND JAMES WELLS FARGO SECURITIES WILLIAM BLAIR Prospectus dated , 2015. Table of Contents global scale, and diversity of customers, offerings, regulatory categories, products, and geographies reduce our exposure to potential strategic and product shifts within the industry. We provide a number of proprietary, differentiated technologies, products and service offerings to our customers across our advanced delivery technologies and development solutions platforms. The core technologies within our advanced delivery technologies platform include softgel capsules, our Zydis oral dissolving tablets, blow-fill-seal unit dose liquids and a range of other oral, injectable and respiratory technologies. The technologies and service offerings within our development solutions platform span the drug development process, ranging from Optiform formula optimization technology, Micron Technologies particle size engineering for small molecules, and GPEx and SMARTag platforms for development of biologics and antibody-drug conjugates (ADCs), to formulation, analytical services, early stage clinical development, clinical trials supply and regulatory consulting. Our offerings serve a critical need in the development and manufacturing of difficult-to-formulate products across a number of product types. We have advanced our technologies and grown our service offerings over more than 80 years through internal development, strategic alliances, in-licensing and acquisitions. We initially introduced our softgel capsule technology in the 1930s and have continued to expand our range of new, technologically enhanced offerings. Since fiscal 2013 we have launched OptiShell, OptiDose, OptiMelt, Zydis Nano and Zydis Bio, and in fiscal 2015 we launched OptiPact. To extend the reach of our technologies and services, we have also formed several active partnerships, including recent partnerships with BASF (Germany), CEVEC (Germany), CTC Bio (South Korea) and ShangPharma Corporation (China), and have active relationships with research universities around the world. We have also augmented our portfolio through nine acquisitions since fiscal year 2012, including significantly expanding the scale of our Development and Clinical Services business through the acquisition of the Aptuit CTS business in 2012, adding an ADC business through the completion of our acquisition of the Redwood BioScience business, and extending our particle engineering capabilities via our November 2014 acquisition of Micron Technologies, a leader in the category. We believe our own internal innovation, supplemented by current and future external partnerships and acquisitions, will continue to strengthen and extend our leadership positions in the delivery and development of drugs, biologics and consumer health products. For the fiscal year ended June 30, 2014, our revenues were $1,827.7 million and Adjusted EBITDA was $432.3 million. For a reconciliation of Adjusted EBITDA to net income, see Summary Financial Data. HISTORY Catalent was formed in April 2007, when affiliates of The Blackstone Group L.P. ( Blackstone ) acquired the core of the Pharmaceutical Technologies and Services ( PTS ) segment of Cardinal Health, Inc. ( Cardinal ). Cardinal in turn created PTS through a series of acquisitions beginning with R.P. Scherer Corporation in 1998, with the intent of creating the world s leading outsourcing provider of specialized, market-leading solutions to the global pharmaceutical and biotechnology industry. Since our 2007 acquisition, we have regularly reviewed our portfolio of offerings and operations in the context of our strategic growth plan, and, as a result, we have sold five businesses and consolidated operations at four facilities, integrating them into the remaining facility network. We have also actively acquired new businesses and facilities, completing nine transactions since fiscal 2012. In July 2014, we completed the initial public offering of our common stock, which is now listed on the New York Stock Exchange (the NYSE ) under the symbol CTLT. INDUSTRY We participate in nearly every sector of the $800 billion annual revenue global pharmaceutical industry, including the prescription drug and biologic sectors, as well as consumer health, which includes the over-the-counter and vitamins and nutritional supplement sectors. Global demand for both pharmaceutical and consumer Table of Contents healthcare products continues to increase, driven by: expanded access to care arising from reforms in two large markets, the United States and China; increased life expectancy in aging and increasingly obese populations in both developed markets and emerging markets; and a rising number of affluent consumers in emerging markets. While benefiting from this strong demand, innovator companies have faced many challenges, including significant patent expirations and challenges, pricing pressures, increasingly complex discovery and development activities, and higher regulatory expectations. In response, many larger pharmaceutical companies have been restructuring their in-house approaches to research and development, manufacturing and sales and marketing, including realigning therapeutic class focus, scaling back on idle capacity resulting from generic conversions, and accessing specialized capabilities and capacity through outsourcing arrangements. The total share of industry spend that is outsourced is estimated around 30% today, with the share of large company spend that is outsourced growing, and medium-to-smaller companies already outsourcing a significant portion of their activities due to their limited resources and more virtual business models. Advanced Delivery Technologies Market. More than half of today s prescription revenues come from dose forms that require more than simple, immediate release tablets and oral solutions drugs and biologics frequently require specialized manufacturing and/or molecular profile modification to achieve expected clinical results. An increasing share of molecules will require advanced delivery technologies, with estimates ranging from 60% to 90% of all new molecules entering development. Consumer health products also benefit from advanced delivery technologies, to enable innovative new products, or to create new formats for existing products and extend a brand franchise. We believe, based on the reports of external industry analysts, that the size of the advanced delivery technologies market will grow approximately 6-10% annually driven by these factors. Development Solutions Market. The global pharmaceutical industry invests approximately $160 billion annually in research and development ( R&D ), of which an estimated 40% is outsourced (approximately 25% in large companies, with more than 50% in mid-sized and specialty companies). Approximately 50% of R&D spend is for compounds in Phase II and later stages of development; separately approximately half of R&D spend is on the combination of clinical research and chemistry, manufacturing and controls ( CMC ) work. These areas are the most common areas of outsourcing, with large global and regional clinical research organizations participating in clinical research spend (approximately 36% of R&D spend), and providers of development sciences, clinical trial supplies and logistics such as Catalent, participating in the CMC spend (approximately 14% of R&D spend). Global development and clinical activities are increasingly complex, with evolving global standards, and more complex multi-arm trials in multiple patient populations across both developed and emerging markets. OUR COMPETITIVE STRENGTHS Leading Provider of Advanced Delivery Technologies and Development Solutions We are the leading global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products. In the last decade, we have earned revenue with respect to nearly half of the drugs based on new chemical entities ( NCEs ) approved by the FDA, and over the past three years with respect to nearly 80% of the top 200 largest-selling compounds globally. With approximately 1,000 scientists and technicians worldwide and approximately 1,300 patents and patent applications, our expertise is in providing differentiated technologies and solutions that help our customers bring more products and better treatments to market faster. For example, in the high value area of NCEs, approximately 90% of NCE softgel approvals by the FDA over the last 25 years have been developed and supplied by us. Table of Contents Diversified Operating Platform We are diversified by virtue of our geographic scope, our large customer base, the extensive range of products we produce, our broad service offerings, and our ability to provide solutions at nearly every stage of product lifecycles. We produce nearly 7,000 distinct items across multiple categories, including brand and generic prescription drugs and biologics, over-the-counter, consumer health and veterinary products, medical devices and diagnostics. In fiscal 2014, our top 20 products represented approximately 25% of total revenue, with no single customer accounting for greater than 10% of revenue and with no individual product greater than 3%. We serve approximately 1,000 customers in approximately 80 countries, with a majority of our fiscal 2014 revenues coming from outside the United States. This diversity, combined with long product lifecycles and close customer relationships, has contributed to the stability of our business. It has also allowed us to reduce our exposure to potential strategic, customer and product shifts as well as to payor-driven pricing pressures experienced by our branded drug and biologic customers. Longstanding, Extensive Relationships with Blue Chip Customers We have longstanding, extensive relationships with leading pharmaceutical and biotechnology customers. In fiscal 2014, we did business with 83 of the top 100 branded drug marketers, 19 of the top 20 generics marketers, 38 of the top 50 biologics marketers, and 24 of the top 25 consumer health marketers globally, as well as with nearly a thousand other customers, including emerging and specialty companies, which are often more reliant on outside partners as a result of their more virtual business models. Regardless of size, our customers seek innovative product development, superior quality, advanced manufacturing and skilled technical services to support their development and marketed product needs. We believe our customers value us because our depth of advanced delivery technologies and development services, consistent and reliable supply, geographic reach and substantial expertise enable us to create a broad range of tailored solutions, many of which are unavailable from other individual providers. Deep, Broad and Growing Technology Foundation Our breadth of proprietary and patented technologies and long track record of innovation substantially differentiate us from other industry participants. Within our oral technologies business, our leading softgel platforms, including Liqui-Gels , OptiShell capsules, and our modified release technologies, including the Zydis family, OSDrC , OptiDose and OptiMelt technologies, provide formulation expertise to solve complex delivery challenges for our customers. We offer advanced technologies for delivery of small molecules and biologics via respiratory, ophthalmic and injectable routes, including the blow-fill-seal unit dose technology, ADVASEPT glass-free vials, and prefilled syringes. We also provide advanced biologics formulation options, including Gene Product Expression ( GPEx ) cell-line and SMARTag antibody-drug conjugate technologies. We have a market leadership position within respiratory delivery, including both metered dose and dry powder inhalers, and intra-nasal. We have reinforced our leadership position in advanced delivery technologies over the last three years, as we have launched more than a dozen new technology platforms and applications, including in fiscal 2015 the addition of particle size engineering technologies for small molecules through our acquisition of Micron Technologies, a recognized market leader in the space. Our culture of creativity and innovation is grounded in our advanced delivery technologies, our scientists and engineers, and our patents and proprietary manufacturing processes throughout our global network. Our global R&D team drives focused application of resources to highest priority opportunities for both new customer product introductions and platform technology development. As of March 31, 2015, we had nearly 600 product development programs in active development across our businesses. Long-Duration Relationships Provide Sustainability Our broad and diverse range of technologies closely integrates with our customers molecules to yield final dose forms, and this generally results in the inclusion of Catalent in our customers prescription product Table of Contents regulatory filings. Both of these factors translate to long-duration supply relationships at an individual product level, to which we apply our expertise in contracting to produce long-duration commercial supply agreements. These agreements typically have initial terms of three to ten years with regular renewals of one to three years. Nearly 70% of our fiscal 2014 advanced delivery technology platform revenues (comprised of our Oral Technologies and Medication Delivery Solutions reporting segments) were covered by such long-term contractual arrangements. We believe this base provides us with a sustainable competitive advantage. Significant Recent Growth Investments We have made significant investments over time to establish a global manufacturing network and today hold nearly 5 million square feet of manufacturing and laboratory space across five continents. We have invested approximately $506.9 million in the last five fiscal years in gross capital expenditures. Growth-related investments in facilities, capacity and capabilities across our businesses have positioned us for future growth in areas aligned with anticipated future demand. Through our focus on operational, quality and regulatory excellence, we drive ongoing and continuous improvements in safety, productivity and reliable supply to customer expectations, which we believe further differentiate us. Our manufacturing network and capabilities allow us the flexibility to reliably supply the changing needs of our customers while consistently meeting their quality, delivery and regulatory compliance expectations. High Standards of Regulatory Compliance and Operational and Quality Excellence We operate our plants in accordance with current good manufacturing practices ( cGMP ), following our own high standards, which are consistent with those of many of our large global pharmaceutical and biotechnology customers. We have more than 1,000 employees around the globe focused on quality and regulatory compliance. More than half of our facilities are registered with the FDA, with the remaining facilities registered with other applicable regulatory agencies, such as the European Medicines Agency ( EMA ). In some cases, facilities are registered with multiple regulatory agencies. In fiscal 2014, we underwent 48 regulatory audits and in the nine months ended March 31, 2015, we underwent 42 regulatory audits. Over the last five fiscal years, we successfully completed 239 regulatory audits. We also undergo nearly 500 customer and internal audits annually. We believe our quality and regulatory track record to be a competitive differentiator for Catalent. Strong and Experienced Management Team Our executive leadership team has been transformed since 2009, with most of the team in place since fiscal 2010. Today, our management team has more than 200 years of combined and diverse experience within the pharmaceutical and healthcare industries. With an average of more than 20 years of functional experience, this team possesses deep knowledge and a wide network of industry relationships. OUR STRATEGY We are pursuing the following key growth initiatives: Follow the Molecule by Providing Solutions to our Customers across all Phases of the Product Lifecycle We intend to use our advanced delivery technologies and development solutions across the entire lifecycle of our customers products to drive future growth. Our development solutions span the drug development process, starting with our platforms for development of small molecules, biologics and antibody-drug conjugates, to formulation and analytical services, through early stage clinical development and manufacturing of clinical trials supply, to regulatory consulting. Once a molecule is ready for late-stage trials and subsequent commercialization, we provide our customers with a range of advanced delivery technologies and manufacturing expertise that allow them to deliver their molecules to the end-users in appropriate dosage forms. The Table of Contents relationship between a molecule and our advanced delivery technologies typically starts with developing and manufacturing the innovator product, then extends throughout the molecule s commercial life, including through potential generic launches or over-the-counter ( OTC ) conversion. For prescription products, we are typically the sole and/or exclusive provider, and are reflected in customers new drug applications. Our breadth of solutions gives us multiple entry points into the lifecycle of our customers molecules. Our initial commercial opportunity arises during the discovery and development of a molecule, when our development solutions can be applied. Once a product reaches late-stage development, we can provide our customers with drug delivery solutions for the commercialization of their products. We then have two commercial additional entry points; upon loss-of-exclusivity and upon OTC conversion. At these points, we partner with both generic and OTC pharmaceutical manufacturers to provide them with advanced delivery technologies that can be applied to their products through these stages of the product lifecycle. Our revenues from our advanced delivery technologies are primarily driven by volumes and, as a result, the loss of exclusivity events may not have a significant negative impact if we continue to work with both branded and generic partners. An example of this can be found in a leading over-the-counter respiratory brand, which today uses both our Zydis fast dissolve and our Liqui-Gels softgel technologies. We originally began development of the prescription format of this product for our multinational pharmaceutical company partner in 1992 to address specific patient sub-segment needs. After four years of development, we then commercially supplied the prescription Zydis product for six years, and continue to provide the Zydis form during the switch to OTC status in the United States and other markets in the early 2000s. More recently, we proactively brought a softgel product concept for the brand to the customer, which the customer elected to develop and launch as well. By following this molecule, we have built a strong, 24-year long relationship across multiple formats and markets. Continue to Grow Through New Product Launches and Projects We intend to grow by supplementing our existing diverse base of commercialized advanced delivery technology products with new development programs. As of March 31, 2015, our product development teams were working on more than 580 new customer programs. Our base of active development programs has expanded in recent years from growing market demand, as well as from our investments since 2010 to expand our global sales and marketing function; once developed and approved in the future, we expect these programs to add to long-duration commercial revenues under long-term contracts and grow our existing product base. In the fiscal year ended June 30, 2014, we introduced 175 new products, an increase of more than 80% from the 97 new product introductions in the fiscal year ended June 30, 2013. In the nine months ended March 31, 2015, the number of new product introductions was in-line with new product introductions for the nine months ended March 31, 2014. In addition, for the nine months ended March 31, 2015 we recorded development revenue of $97 million, an increase of 28% versus the same period of the prior fiscal year. We also expect that our expanded offerings and capacity, such as bioanalytical testing and metered dose inhaler production, our acquisition of Micron Technologies, our expanded presence in Brazil, and our market entry into China will further expand our active advanced delivery technologies development programs and position us for future growth. Our development solutions business is driven by thousands of projects annually, ranging from individual short-duration analytical projects to multi-year clinical supply programs. Accelerate Growth with Existing Customers through Increased Penetration and Broadening of Services While we have a broad presence across the entire biopharmaceutical industry, we believe there are significant opportunities for additional revenue growth in our existing customer base, by providing advanced delivery solutions for new pipeline or commercial molecules, and by expanding the range and depth of development solutions used by those customers. Within our top 50 customers, nearly 75% use less than half of our individual offerings. In order to ensure we provide the most value to our customers, we have increased our Table of Contents field sales and marketing force by approximately 20% since fiscal 2009. We have continued to follow a targeted account strategy, designating certain accounts as global accounts, based on current materiality, partnering approach and growth potential. We have also begun to designate other accounts as growth accounts, based primarily on partnering approach and potential to become global accounts in the future. In both cases, we assign incremental business development and R&D resources to identify and pursue new opportunities to partner. Global accounts represented nearly 37% of our revenues in fiscal 2014, while growth accounts represented approximately 6% of revenues in that same period. Enter into and Expand in Attractive Technologies and Geographies We have made a number of internal investments in new geographies and markets, including the construction of a state-of-the-art biomanufacturing facility in Wisconsin to serve the growing global biologics development market, the acquisition of particle engineering provider Micron Technologies to extend our drug solubility enhancement capabilities, and the acquisition of the SMARTag antibody-drug conjugate technology to address the growing need for improved targeted delivery of therapeutic compounds directly to tumor sites. In addition, we intend to proactively enter into emerging/high-growth geographies and other markets where we are currently only narrowly represented, including China, Brazil, Japan, and the animal health market. We have made recent investments in such high-growth areas, including the formation of a China-based clinical supplies joint venture with ShangPharma Corporation, the first provider in China of end-to-end clinical supply solutions, and a softgel joint venture in China focused initially on the export of cost-advantaged consumer health products, as well as our recent acquisition of a Brazilian softgel provider. Capitalize on our Substantial Technology Platform We have a broad and diverse technology platform that is supported by approximately 1,300 patents and patent applications in more than 125 families across advanced delivery technologies, drug and biologics formulation and manufacturing. This platform is supported by substantial know-how and trade secrets that provide us with additional competitive advantages. For example, we have significant softgel fill and formulation databases and substantial softgel regulatory approval expertise, and, as a result, approximately 90% of NCE softgels approved in the last 25 years by the FDA have been developed and launched by us. In addition to resolving product challenges for our customers molecules, for more than two decades we have applied our technology platforms and development expertise to proactively develop proof of concept products, whether improved versions of existing drugs, new generic formulations or innovative consumer health products. In the consumer health area, we file product dossiers with regulators in relevant jurisdictions for Catalent-created products, which help contribute sustainable growth to our consumer health business. We expect to continue to seek proactive development and other non-traditional relationships to increase demand for and value realized from our technology platforms. These activities have provided us with opportunities to capture an increased share of end-market value through out-licensing, profit-sharing and other arrangements. Leverage Existing Infrastructure and Operational Discipline to Drive Profitable Growth Through our existing infrastructure, including our global network of operating locations and programs, we promote operational discipline and drive margin expansion. With our Lean Six Sigma programs, a global procurement function and conversion cost productivity metrics in place, we have created a culture of functional excellence and cost accountability. We intend to continue to apply this discipline to further leverage our operational network for profitable growth. From fiscal 2009 through fiscal 2014, we have expanded gross margin by over 500 basis points and Adjusted EBITDA margin by over 300 basis points. Pursue Strategic Acquisitions and Licensing to Build upon our Existing Platform We operate in highly fragmented markets in both our advanced delivery technologies and development solutions businesses. Within those markets, the five top players represent only 30% and 10% of the total market Table of Contents share, respectively, by revenue. Our broad platform, global infrastructure and diversified customer base provide us with a strong foundation from which to consolidate within these markets and to generate operating leverage through such acquisitions. Since fiscal 2012, we have executed nine transactions, investing more than $700 million, and have demonstrated an ability to efficiently and effectively integrate these acquisitions. We intend to continue to opportunistically source and execute bolt-on acquisitions within our existing business areas, as well as to undertake transactions that provide us with expansion opportunities within new geographic markets or adjacent market segments. We have a dedicated corporate development team in place to identify these opportunities and have a rigorous and financially disciplined process for evaluating, executing and integrating such acquisitions. OUR SPONSOR Blackstone (NYSE: BX) is one of the world s leading investment and advisory firms. Blackstone s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Through its different businesses, Blackstone had total assets under management of approximately $311 billion as of March 31, 2015. Investment funds affiliated with Blackstone intend to sell approximately 17.6 million shares in this offering (assuming no exercise by the underwriters of their option to purchase additional shares). INVESTMENT RISKS An investment in shares of our common stock involves substantial risks and uncertainties that may adversely affect our business, financial condition and results of operations and cash flows. Some of the more significant challenges and risks relating to an investment in our company include the following: We participate in a highly competitive market and increased competition may adversely affect our business. The demand for our offerings depends in part on our customers research and development and the clinical and market success of their products. Our business, financial condition and results of operations may be harmed if our customers spend less on or are less successful in these activities. We are subject to product and other liability risks that could adversely affect our results of operations, financial condition, liquidity and cash flows. Failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition. Failure to provide quality offerings to our customers could have an adverse effect on our business and subject us to regulatory actions and costly litigation. The services and offerings we provide are highly exacting and complex, and any problem we encounter while providing our products or services could cause our business to suffer. Our global operations are subject to a number of economic, political and regulatory risks. If we do not enhance our existing or introduce new technology or service offerings in a timely manner, our offerings may become obsolete over time, customers may not buy our offerings and our revenue and profitability may decline. We and our customers depend on patents, copyrights, trademarks and other forms of intellectual property protections, which may turn out to be inadequate. Table of Contents Our future results of operations are subject to fluctuations in the costs, availability, and suitability of the components of the products we manufacture, including active pharmaceutical ingredients, excipients, purchased components, and raw materials. Changes in market access or healthcare reimbursement in the United States or internationally could affect purchases by consumers of our customers products and thereby adversely affect our results of operations and financial condition. Fluctuations in the exchange rate of the U.S. dollar and other foreign currencies could have a material adverse effect on our international business results and thereby adversely affect our results of operations and financial condition. Tax law changes or challenges to our tax positions could adversely affect our results of operations and financial condition. Our business is complex and depends on maintaining good relationships with suppliers, customers and regulators; thus, we are dependent on key personnel who are knowledgeable and experienced concerning our business. Risks generally associated with our information systems could adversely affect our results of operations. We may in the future engage in acquisitions and other transactions that may complement or expand our business or divest of non-strategic businesses or assets. We may not be able to complete such transactions, and such transactions, if executed, pose significant risks and could have a negative effect on our operations. We may not be able to integrate previous or future acquisitions as intended and achieve all projected synergies or other cost savings. Our offerings and our customers products may infringe on the intellectual property rights of third parties. We are subject to environmental, health and safety laws and regulations, which could increase our costs and restrict our operations in the future. We are subject to labor and employment laws and regulations, which could increase our costs and restrict our operations in the future. Certain of our pension plans are underfunded, and additional cash contributions we may be required to make will reduce the cash available for our business. Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or in our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our indebtedness. Affiliates of Blackstone currently have significant influence over us, and their interests may conflict with ours or yours in the future. Even after this offering, those affiliates will hold a substantial portion of our stock. Please see Risk Factors in our 2014 Form 10-K, which is incorporated by reference in this prospectus, for a discussion of these and other factors you should consider before making an investment in shares of our common stock. Catalent, Inc. is a Delaware corporation. Our principal executive offices are located at 14 Schoolhouse Road, Somerset, New Jersey 08873, and our telephone number is (732) 537-6200. We maintain a website at www.catalent.com. The information contained on our website or that can be accessed through our website neither constitutes part of this prospectus nor is incorporated by reference in this prospectus. Table of Contents THE OFFERING Common stock offered by the selling stockholders 20,000,000 shares. Option to purchase additional shares The underwriters have an option to purchase up to 3,000,000 additional shares of our common stock from the selling stockholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus. Common stock outstanding 124,286,388 shares as of May 14, 2015. Use of proceeds We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders. Dividend policy We have no current plan to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to "us," "our," "Blueprint," "Blueprint Medicines," "we," the "Company" and similar designations refer to Blueprint Medicines Corporation. Blueprint Medicines Overview We are a biopharmaceutical company focused on improving the lives of patients with genomically defined diseases driven by abnormal kinase activation. Our approach is to systematically and reproducibly identify kinases that are drivers of genomically defined diseases and to craft drug candidates with therapeutic windows that provide significant and durable clinical responses to patients. This integrated biology and chemistry approach enables us to drug known kinases that have been difficult to inhibit selectively and also identify, characterize and drug novel kinase targets. By focusing on genomically defined diseases, we believe that we will have a more efficient development path with a greater likelihood of success. Over the past three years, we have developed a robust small molecule drug pipeline in cancer and a rare genetic disease. One of our lead drug candidates is BLU-285, which targets KIT Exon 17 and PDGFRa D842V, abnormally active receptor tyrosine kinase mutants that are drivers of cancer and proliferative disorders. BLU-285 will initially be developed for patients with systemic mastocytosis, a myeloproliferative disorder of the mast cells, and defined subsets of patients with gastrointestinal stromal tumor, the most common sarcoma, or tumor of bone or connective tissue, of the gastrointestinal tract. Our other lead drug candidate is BLU-554, which targets FGFR4, a kinase that is aberrantly activated and is a driver of disease in a defined subset of patients with hepatocellular carcinoma, the most common type of liver cancer. Both drug candidates have demonstrated proof of concept in pre-clinical models and we expect to file Investigational New Drug applications, or INDs, in mid-2015 and initiate our Phase 1 clinical trials in mid-2015. We are also developing a drug candidate to target both RET, a receptor tyrosine kinase that can become abnormally activated when a portion of the gene that encodes RET is joined to part of another gene, and RET resistant mutants that we predict will arise from treatment with first generation therapies. We believe that our strategy will allow us to deliver transformative drugs to patients while building a fully-integrated biopharmaceutical company. Our Focus Highly Selective Kinase Drugs for Genomically Defined Diseases Kinases are enzymes that function in many signaling pathways. Abnormal activation of kinases has been shown to drive several key activities of cancer cells, including growth, survival, metabolism, cell motility and angiogenesis. For many of the known kinases, there is a strong link between genetic alterations in a kinase and disease, including specific forms of cancer and rare genetic diseases. Approved kinase drugs, such as imatinib, have demonstrated significant benefit to patients, and small molecule kinase drugs achieved over $14 billion in 2013 sales. Despite this success, there is room for further improvement in kinase drug discovery and development. Many of the approved drugs are multi-kinase inhibitors that are not selective for disease drivers. This results in off-target toxicities that limit dose levels and target inhibition, thereby reducing efficacy. Further, patients who initially respond to a targeted kinase treatment often relapse due to the development of resistant mutants. Finally, as of 2014, kinase drugs approved by the U.S. Food and Drug Administration, or FDA, target less than five percent of the 518 kinases that constitute the kinome. Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents In addition, the function of the majority of the kinome is unknown. Taken together, this represents a substantial opportunity for developing novel and transformative drugs for cancer, rare genetic diseases and other disease areas. Our Approach and Platform Our approach is to systematically and reproducibly identify kinases that are drivers of genomically defined diseases and to craft drug candidates with therapeutic windows that provide significant and durable clinical responses to patients. To capitalize on the kinase opportunity, we built a platform that integrates a novel target discovery engine and a proprietary compound library. Our novel target discovery engine, which was developed entirely in-house under the direction of our chief scientific officer, combines our expertise in genomics, bioinformatics, and cell and structural biology to provide new insights into the biology of kinases as drivers of disease. To develop kinase drugs, we start by interrogating our proprietary compound library. Our library is a unique collection of novel small molecules rationally designed and developed entirely in-house by Blueprint Medicines' scientists as kinase inhibitors and enriched for drug-like properties. We do not owe royalties or other fees to any parties associated with our novel target discovery engine and our proprietary compound library. Another aspect of our platform is predicting resistance mutations. While treatment of patients with genomically-defined cancers with a targeted therapy typically results in a significant anti-tumor response, frequently the response is not durable due to mutations that arise in response to therapy. Through our structural and cell biology expertise, we predict mutations in kinases that render the enzyme insensitive to inhibition by an approved drug or compound in development. We have used this process of predicting resistance to inform the design of several of our next generation drugs. Using this platform, we have produced a drug pipeline of several promising drug candidates that target genomically-defined patient subsets. As we advance our drug candidates through clinical development, we will enrich our Phase 1 trials by selecting patients most likely to respond to our drug candidates to confirm mechanistic and clinical proof of concept. We are collaborating with corporate partners to create companion diagnostics and to develop assays to measure target engagement, which is confirmation that a drug binds to its intended protein target in vivo, and early response. We expect these approaches to enable early determination of efficacy, allowing for clear decision points in clinical trials. Our Development Programs We have leveraged our platform to develop a robust drug pipeline of orally available, potent and selective small molecule kinase inhibitors that target genomic drivers in several cancers and a rare genetic disease. We currently own worldwide commercial rights to all of our oncology-focused drug candidates, and have a rare genetic disease program that is the subject of our collaboration Blueprint Medicines Corporation (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 26-3632015 (I.R.S. Employer Identification Number) 215 First Street Cambridge, MA 02142 (617) 374-7580 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents with Alexion Pharma Holding, or Alexion. Our most advanced drug candidates are summarized in the table below. Drug Candidates Genomic Drivers Initial Diseases Stage of Development Commercial Rights BLU-285 (KIT Exon 17 inhibitor) KIT D816V SM IND-enabling activities PDGFRa D842V GIST IND-enabling activities Blueprint Medicines KIT Exon 17 mutants GIST IND-enabling activities BLU-554 (FGFR4 inhibitor) Aberrant FGFR4 signaling HCC IND-enabling activities Blueprint Medicines RET fusions and predicted RET resistant mutants RET fusions* Non-small cell lung cancer Other solid tumors Lead optimization Blueprint Medicines Rare genetic disease target Undisclosed Rare genetic disease Undisclosed Alexion *A fusion protein is encoded by a fusion gene, which is a gene in which a portion of one gene is joined to part of another gene. In the case of RET, a portion of the RET gene that encodes the kinase domain is joined to part of another gene. RET fusion proteins are always active and are thought to be drivers in several cancers. KIT Inhibitor Program BLU-285 is an orally available, potent and selective inhibitor of several activating mutations of KIT that occur in Exon 17, which encodes a portion of the tyrosine kinase domain. BLU-285 also potently and selectively inhibits PDGFRa D842V. Due to the high degree of structural similarity of the kinase domains of KIT and PDGFRa, BLU-285 is able to inhibit both KIT Exon 17 mutants and the PDGFRa D842V mutant with minimal inhibition of other kinases. BLU-285 is a highly targeted therapeutic candidate for genomically-selected patients with diseases driven by these mutations, including systemic mastocytosis, or SM, and genomically-defined patient subsets within gastrointestinal stromal tumor, or GIST, which are KIT and PDGFRa mediated diseases. Imatinib, which is an inhibitor of KIT, is approved in SM and GIST and validates this kinase as a therapeutic target in these diseases. Imatinib also inhibits PDGFRa, which is a driver of disease in a subset of GIST. However, a meaningful percentage of patients harbor mutations in KIT and PDGFRa that are not targeted by imatinib and fail to respond to treatment with the drug. We plan to initially develop BLU-285 for targeted patient populations that harbor these mutations and currently lack adequate treatments. For SM, we demonstrated significant anti-tumor efficacy of BLU-285 in a mouse xenograft model with a mastocytoma, or mast cell tumor driven by a KIT Exon 17 mutation. For GIST, we also demonstrated significant anti-tumor efficacy with BLU-285 in an imatinib resistant patient-derived xenograft model with a KIT Exon 17 resistance mutation, which is a model believed to be highly predictive of clinical response. We have completed 28-day Good Laboratory Practice, or GLP, toxicology studies and have identified what we believe to be the dose limiting toxicity and anticipated first-in-human dose for BLU-285. We plan to file two INDs for BLU-285, one in SM and one in GIST, in mid-2015. We plan to initiate our Phase 1 clinical trials in mid-2015. Our Phase 1 clinical trials in these indications will test the safety and tolerability of BLU-285 in multiple ascending doses with the goal of establishing a maximum tolerated dose, or MTD, or a recommended dose if the MTD is not achieved. All patients in the SM trial will be tested retrospectively for KIT D816V mutational status. Patients in the GIST trial will be tested retrospectively for both KIT Exon 17 mutations and PDGFRa D842V. Once the MTD is reached, or a recommended dose is established, we will open expansion cohorts with genomically-selected patients. We expect data to be available approximately 12 months after the start of these Phase 1 clinical trials. Jeffrey W. Albers President and Chief Executive Officer Blueprint Medicines Corporation 215 First Street Cambridge, MA 02142 (617) 374-7580 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents FGFR4 Inhibitor Program BLU-554 is an orally available, potent, selective and irreversible inhibitor of the kinase FGFR4. FGFR4 has historically been a challenging target to drug selectively given the closely related paralogs, proteins encoded by closely related genes, namely FGFR1-3. Aberrantly active FGFR4 signaling is a driver of disease in a subset of patients with hepatocellular carcinoma, or HCC, a disease with high unmet need and no approved genomically-targeted therapies. We plan to initially develop BLU-554 for a genomically-defined patient population within HCC with aberrantly active FGFR4 signaling. BLU-554 has shown proof of concept in several different pre-clinical models of HCC with aberrantly active FGFR4 signaling. The administration of BLU-554 in an HCC cell-line xenograft model resulted in robust dose-dependent tumor growth inhibition. At the highest dose, BLU-554 was well-tolerated and induced complete remission in a subset of mice for at least 30 days after cessation of treatment. Further, in a patient-derived HCC xenograft model, which we believe to be highly predictive of clinical response, treatment with BLU-554 led to dose-dependent tumor growth inhibition. We have completed 28-day GLP toxicology studies and have identified what we believe to be the dose limiting toxicity and anticipated first-in-human dose for BLU-554. IND-enabling studies are completed, and we anticipate filing our IND in mid-2015 and initiating our Phase 1 clinical trial in mid-2015. Our Phase 1 clinical trial in patients with HCC will test the safety and tolerability of BLU-554 in multiple ascending doses with the goal of establishing an MTD or a recommended dose if the MTD is not achieved. Once the MTD is reached, or a recommended dose is established, we will open expansion cohorts with genomically-selected patients. We expect data to be available approximately 12 months after the start of our Phase 1 clinical trial. RET Fusion Program Our third program targets RET fusions and predicted RET resistant mutants. By using our proprietary compound library, we have crafted drug candidates to selectively inhibit not only RET but also the RET resistant mutants. We believe we can provide a treatment that results in a more meaningful and durable clinical response by prospectively inhibiting RET and RET resistant mutants early in the treatment of the disease. Our research suggests that RET is a driver of disease in a broad set of cancers including non-small cell lung cancer, and cancers of the thyroid, colon and breast. Our Team To execute on this opportunity, we assembled an experienced management team, board of directors and scientific founders who bring extensive industry experience to our company. Our management team has broad capabilities and successful track records in oncology and rare genetic diseases through previous experience at Algeta ASA, Genzyme Corporation, Millennium Pharmaceuticals, Inc., Novartis AG and Sanofi S.A. We were founded by an internationally-recognized scientific team, including Brian Druker, Nicholas Lydon and Charles Sawyers, who led the discovery and development of imatinib. The approval of imatinib revolutionized the treatment of chronic myelogenous leukemia by converting it from an aggressive and deadly cancer to a chronic, manageable disease. Our vision is to emulate the success of imatinib in a reproducible way by leveraging our platform to transform the lives of patients while building a fully-integrated biopharmaceutical company. Our initial investors included funds managed by Fidelity Biosciences and Third Rock Ventures. Additional blue chip investors participated in our Series B and C financings, including funds managed by (listed alphabetically) Biotechnology Value Fund, Casdin Capital, Cowen Investments, Copies to: Kingsley L. Taft Michael J. Minahan Laurie A. Burlingame Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 (617) 570-1000 Peter N. Handrinos Ryan K. deFord Latham & Watkins LLP John Hancock Tower 200 Clarendon Street Boston, MA 02116 (617) 948-6000 Table of Contents Nextech Invest, Partner Fund Management, Perceptive Advisors, RA Capital Management, Redmile Group, Sabby Capital, and Tavistock Life Sciences. Our Mission Blueprint Medicines makes kinase drugs to treat patients with genomically defined diseases. Led by a team of industry innovators, Blueprint Medicines integrates a novel target discovery engine and proprietary compound library to understand the genetic blueprint of cancer and to craft highly selective therapies. This empowers Blueprint Medicines to rapidly develop patient-defined drug candidates aimed at eradicating cancer and other genomically defined diseases. Our Principles We maintain a culture of high integrity that embraces the following guiding principles to provide long-term benefits to patients and our stakeholders: Patients First Maintaining intense focus on improving patients' lives. Thoughtfulness Exploring creative approaches by daring to make well-thought-out decisions and owning the outcomes. Trust Through collaboration and cooperation, building and maintaining a cohesive team that has mutual respect of different viewpoints, opinions and talents. Optimism Pursuing transformative therapies that we believe will make a difference. Urgency Solving complex problems rapidly, with attention and care. Our Strategy Our strategy was created to enable us to achieve our mission. The key tenets of our strategy include the following: Rapidly advance our lead drug candidates, BLU-285 and BLU-554, through clinical development. Build a pipeline of kinase drugs for genomically-defined drivers of disease. Continuously invest in our proprietary platform to ensure future growth. Maintain the Blueprint Medicines' culture as we grow our business. Evaluate strategic collaborations to maximize value. Risks Associated With Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include the following: We are a biopharmaceutical company with a limited operating history and have not generated any revenue from drug sales. We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future. Even if we consummate this offering, we will need to raise substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate some of our drug development programs or commercialization efforts. Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Proposed maximum aggregate initial public offering price(1) Amount of registration fee(2)(3) Common stock, $0.001 par value $140,515,625 $16,328 (1)Includes initial public offering price of shares that the underwriters have the option to purchase. Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, as amended. (2)Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate initial public offering price. (3)$11,620 of this registration fee was previously paid by the Registrant. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents We are very early in our development efforts. All of our lead drug candidates are still in pre-clinical development. If we are unable to advance our drug candidates to clinical development, obtain regulatory approval and ultimately commercialize our drug candidates or experience significant delays in doing so, our business will be materially harmed. Our approach to the discovery and development of drug candidates that inhibit kinases is unproven, and we do not know whether we will be able to develop any drugs of commercial value. If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented. Genomically defined diseases may have relatively low prevalence and it may be difficult to identify patients with the genomic driver of the disease, which may lead to delays in enrollment for our trials. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals both for our drug candidates and for the related companion diagnostics, we will not be able to commercialize, or will be delayed in commercializing, our drug candidates, and our ability to generate revenue will be materially impaired. Our drug candidates may cause undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any. The incidence and prevalence for target patient populations of our drug candidates have not been established with precision. If the market opportunities for our drug candidates are smaller than we estimate or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially. We may seek to establish additional collaborations, and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans. We expect to rely on third parties to conduct our clinical trials for our drug candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business could be substantially harmed. If we are unable to adequately protect our proprietary technology or obtain and maintain patent protection for our technology and drugs or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired. Implications of Being an Emerging Growth Company We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and, for as long as we continue to be an "emerging growth company," we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. In particular, we have provided only two years of audited financial statements and we have not included all of the executive compensation related information that would be required in this prospectus if we were not an emerging growth company. In addition, the JOBS Act provides that an "emerging growth company" can take advantage of an extended transition period for Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion. Dated April 20, 2015. Preliminary Prospectus 7,187,500 Shares Blueprint Medicines Corporation Common Stock Table of Contents complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. However, we are electing not to take advantage of such extended transition period, and as a result we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable. We could be an "emerging growth company" for up to five years from completion of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Corporate History and Information We were incorporated in Delaware in October 2008 under the name ImmunoCo, Inc. In May 2010, we changed our name to Hoyle Pharmaceuticals, Inc., and in June 2011, we changed our name again to Blueprint Medicines Corporation. Our principal executive offices are located at 215 First Street, Cambridge, Massachusetts 02142, and our telephone number is (617) 374-7580. Our website address is http://www.blueprintmedicines.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. We are filing various U.S. federal trademark registrations and applications, and we own unregistered trademarks and servicemarks, including BLUEPRINT MEDICINES and our corporate logo. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus may be referred to without the and symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. This prospectus also includes other trademarks of other persons. This is an initial public offering of shares of common stock of Blueprint Medicines Corporation. All of the 7,187,500 shares of common stock are being sold by the company. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $15.00 and $17.00. Application has been made for the quotation of the common stock on The NASDAQ Global Market under the symbol "BPMC." See "Risk Factors" on page 12 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents THE OFFERING Common stock offered by us 7,187,500 shares Common stock to be outstanding after this offering 24,873,631 shares Option to purchase additional shares The underwriters have an option for a period of 30 days to purchase up to 1,078,125 additional shares of our common stock. Use of proceeds We estimate that we will receive net proceeds of approximately $104.4 million from the sale of the shares of common stock offered in this offering, or approximately $120.4 million if the underwriters exercise their option to purchase additional shares in full, based on an assumed initial public offering price of $16.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The offering is designed to provide funding for multiple proof-of-concept readouts for our drug candidates. In particular, we intend to use the net proceeds from this offering as follows: approximately $35.0 to $40.0 million to fund our two Phase 1 clinical trials for BLU-285 in SM and GIST; approximately $20.0 to $25.0 million to fund our Phase 1 clinical trial for BLU-554 in HCC, in each case, including clinical research outsourcing, drug manufacturing, companion diagnostic development and internal personnel costs; approximately $40.0 million to fund new and ongoing research activities including for our RET program and our platform with the goal of delivering one IND annually on average; and the balance for working capital and other general corporate purposes. See "Use of Proceeds" for additional information.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001598696_neuroderm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001598696_neuroderm_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our ordinary shares. You should read the entire prospectus carefully, including Risk Factors and our financial statements and notes to those financial statements, before making an investment decision. In this prospectus, the terms NeuroDerm, we, us, our and the company refer to NeuroDerm Ltd. Company Overview We are a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives. Product candidates in our pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally. Additionally, because our product candidates are based on reformulations of leading, approved drugs, we believe that most of them qualify for an accelerated, lower risk regulatory pathway to marketing approval. For moderate to severe Parkinson's disease, our product candidates are aimed at overcoming the most significant limitations of current levodopa-carbidopa, or LD/CD, therapy. For over 30 years, oral administration of LD/CD has been the standard of care for Parkinson's disease. However, despite its widespread acceptance, oral LD/CD has significant limitations, primarily short duration in the blood, or half-life, as well as low absorption and availability in the body. As a result, plasma levodopa concentrations fluctuate sharply, contributing to patients' motor complications. At the advanced stages of the disease, patients do not respond to oral administration of LD/CD, motor complications are exacerbated and patients are left with limited treatment options that are highly invasive and/or burdensome. We have developed liquid formulations, such as our product candidates ND0612H and ND0612L, that for the first time enable 24-hour, continuous subcutaneous administration of LD/CD to overcome these limitations, maintain steady levodopa levels and offer patients a better quality of life without the need for surgery. There are three main stages to Parkinson's disease: mild, moderate and severe, each associated with increasing levels of motor complications and requiring different treatments. We are developing a pipeline of product candidates for the growing population of moderate and severe Parkinson's disease patients that address the deficiencies of current treatments. These product candidates are designed to administer continuous, controlled doses of LD/CD or apomorphine, utilizing customized versions of off-the-shelf, belt pump devices. We are also developing a product candidate for patients suffering from cognition disorders associated with CNS diseases. These diseases include Attention Deficit Disorder/Attention Deficit Hyperactivity Disorder, or ADD/ADHD, Parkinson's disease, Alzheimer's disease and schizophrenia. Our cognition product candidate is based on a combination of reformulated approved drugs allowing for continuous administration via transdermal patches. In our completed Phase IIa dose-finding trial, we examined the plasma levodopa concentrations achieved in individual Parkinson s disease patients treated with ND0612H and ND0612L for eight hours. The chart below shows that ND0612H achieved an average maximum plasma levodopa concentration of approximately 1500ng/ml when administered alone and an average maximum plasma levodopa concentration of approximately 1800ng/ml when combined with two administrations of oral entacapone during eight hours of infusion. The high average plasma levodopa concentrations achieved with ND0612H in this trial indicate that ND0612H may offer a viable alternative to more invasive surgical procedures for advanced Parkinson s Disease. TABLE OF CONTENTS The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 13, 2015 PRELIMINARY PROSPECTUS 3,340,000 Shares NeuroDerm Ltd. Ordinary Shares We are offering 3,340,000 ordinary shares. Our ordinary shares are listed on the NASDAQ Global Market under the symbol NDRM. On July 10, 2015, the last reported sales price of our ordinary shares on the NASDAQ Global Market was $15.62 per share. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our ordinary shares involves a high degree of risk. Please read Risk Factors beginning on page 14. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PER SHARE TOTAL Public Offering Price $ $ Underwriting Discounts and Commissions 1 $ $ Proceeds to NeuroDerm Ltd. before expenses. $ $ 1 See Underwriting for a description of compensation payable to the underwriters. Delivery of the ordinary shares is expected to be made on or about , 2015. We have granted the underwriters an option for a period of 30 days to purchase up to an additional 501,000 ordinary shares. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses, will be $ . Jefferies Cowen and Company Raymond James Roth Capital Partners Prospectus dated , 2015. TABLE OF CONTENTS In our completed Phase II trial with ND0612L, we examined plasma levodopa concentrations of individual Parkinson's disease patients treated with optimized, current standard of care and either ND0612L or a placebo as an add-on for 14 days. Additionally, in order to determine the effect of ND0612L without the standard of care, we conducted an additional week of treatment of ND0612L alone or with entacapone. The chart below shows that an average steady plasma levodopa concentration of 550ng/ml was maintained when ND0612L was administered alone, and an approximately 800ng/ml plasma levodopa concentration was maintained when ND0612L was administered together with thrice-daily oral entacapone. TABLE OF CONTENTS TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001599533_principal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001599533_principal_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary contains information about Principal Maritime Tankers Corporation and its common stock. It does not contain all of the information that may be important to you in making a decision to participate in the offering. For a more complete understanding of Principal Maritime Tankers Corporation, we urge you to read this prospectus carefully, including the sections entitled Risk Factors, Special Note Regarding Forward-Looking Statements and Where You Can Find Additional Information. Unless we specify otherwise, when used in this prospectus the terms Principal Maritime Tankers, the Company, we, our, us and PMAR refer to Principal Maritime Tankers Corporation and its consolidated subsidiaries after giving effect to the Transactions as defined below under The Transactions. References in this prospectus to Principal Management or Manager are to Principal Maritime Management, LLC and its subsidiaries, which provide to us commercial, operational, administrative and strategic advisory services. References in this prospectus to our Technical Managers refer to those persons described under Management of Our Fleet who provide us with services such as vessel maintenance and management, vessel regulation and classification society compliance and crewing pursuant to technical management agreements described therein. References in this prospectus to the Sponsor refer to the investments funds affiliated with Apollo Global Management, LLC as described under Our Sponsor. For the definition of some of the shipping and other terms used in this prospectus, please see Glossary of Shipping Terms at the end of this prospectus. Unless otherwise indicated, all references to dollars and $ in this prospectus are to, and amounts are presented in, U.S. dollars. Overview We are a leading provider of international seaborne transportation services for crude oil and petroleum products. As of February 28, 2015, we owned and operated a fleet of 12 modern Suezmax tankers with an aggregate carrying capacity of 1,877,000 DWTs. Our vessels were built at leading shipyards and include three groups of sister ships, which we believe results in improved scheduling flexibility and higher operating efficiency through economies of scale for these ten ships. We believe that our fleet s average age of approximately five years, which is younger than the average age of approximately nine years for the world crude tanker fleet, makes our fleet attractive to our customers and also reduces operating costs and increases our fleet s reliability, which improves utilization. The details for each of our tankers are as follows: Vessel Type / Name DWT Year Built Sister Ship Group Shipyard Country of Origin Employment Suezmax Princimar Courage 158,000 2013 A Samsung South Korea Stena Sonangol Pool Princimar Pride 158,000 2012 A Samsung South Korea Stena Bulk Time Charter (1) Princimar Integrity 158,000 2012 A Samsung South Korea Stena Sonangol Pool Princimar Grace 158,000 2011 A Samsung South Korea Shell Commercial Mgmt. Princimar Hope 158,000 2011 A Samsung South Korea Shell Commercial Mgmt. Princimar Promise 158,000 2011 A Samsung South Korea Mjolner Commercial Mgmt. Princimar Joy 156,000 2010 B Rongsheng China Shell Matrix Time Charter(2) Princimar Strength 156,000 2010 B Rongsheng China Shell Matrix Time Charter(2) Princimar Truth 159,000 2007 Hyundai South Korea Shell Commercial Mgmt. Princimar Confidence 150,000 2006 C Universal Japan Shell Time Charter(3) Princimar Loyalty 150,000 2006 C Universal Japan Shell Time Charter(3) Princimar Faith 158,000 2005 Daewoo South Korea Shell Commercial Mgmt. Total DWT 1,877,000 (1) Fixed-rate time charter expiring in December 2015 at a fixed daily rate of $28,000. (2) Market-index linked time charters expiring in June 2015. (3) Fixed-rate time charters expiring in January 2016 and February 2016 at fixed daily rates of $18,066. Table of Contents We believe we are well positioned to benefit from a continuing recovery in the global crude tanker market. Increasing global demand for crude oil, driven by strengthening global economic activity and industrial production, in addition to longer voyage distances due to additional imports into Asia, is resulting in increased seaborne trade volumes. This, combined with a significant contraction in overall vessel supply growth, is driving an increase in day rates and vessel prices for crude tankers. We believe that to the extent these trends continue, we are well positioned to take advantage of these improving crude tanker market fundamentals as our vessel employment strategy provides us with the ability to benefit from upswings in tanker market earnings. We utilize a balanced employment strategy for our fleet which provides us with the ability to benefit from upswings in tanker spot market earnings through (a) strategic proprietary spot trading arrangements, (b) pool participations and (c) market-index linked time charters, as well as a stable base of contracted cash flows from fixed-rate time charters. We currently employ eight of our 12 vessels with Shell in a combination of strategic proprietary spot trading arrangements, market-index linked time charters and fixed-rate time charters. Two of our 12 vessels currently operate in a pool with Stena Sonangol, one vessel is employed by Stena Bulk on a fixed-rate time charter expiring in December 2015 and one vessel is employed in a strategic proprietary spot trading arrangement with Mjolner Shipping. We believe that operating vessels through strategic proprietary spot trading arrangements, pools and market-index linked time charters, relative to operating directly in the spot market, is advantageous because these vessels generally enjoy more stable earnings and higher utilization in what has been and may continue to be a volatile crude tanker market, while still being able to benefit from increases in earnings due to tanker market upswings. Our vessels are also qualified to perform voyages for other major oil companies such as Exxon, Chevron, and BP. While future volatility in the crude tanker market may impact our business, we believe that our charter arrangements with blue-chip customers position us to benefit from a recovery in the global crude tanker market while providing us with a stable base of cash flows. Since commencing operations in early 2010, we have accomplished significant growth through the effective utilization of a scalable and cost-effective operating structure that includes the use of key outsourced service providers under management agreements. Accordingly, we have enlisted Principal Management to act as our Manager. Principal Management has a strong track record of successfully satisfying the operational, safety, environmental and technical vetting criteria of some of the world s most selective major international oil companies, including, among others, Shell, Exxon, Chevron, BP, PetroChina and Unipec. The Technical Managers of our fleet are Northern Marine and Bernhard Schulte, which are both recognized and well-respected managers in the international shipping industry. We believe this structure will continue to allow us to grow efficiently while maintaining cost-effective operations. Our U.S.-based executive management team has extensive experience in the international shipping industry, with a demonstrated track record in all facets of the business, including sale and purchase, commercial and technical, finance and capital markets, insurance and risk management and legal. Guided by our management team, we have grown our fleet from zero to 12 vessels since 2010, through successful execution of accretive vessel acquisitions. In addition, our Manager has a history of forming strategic relationships with key players in the shipping industry. Having the combined benefits of an experienced executive management team, a high quality Manager, a strong Sponsor and a conservative balance sheet we believe provides a strong foundation for future fleet and earnings growth. Our total revenue for the fiscal years ended December 31, 2014 and 2013 was $152.9 million and $85.4 million, respectively, and our net income for the fiscal year ended December 31, 2014 was $3.7 million and our net loss for the fiscal year ended December 31, 2013 was $27.5 million. Table of Contents Table of Contents Competitive Strengths We believe that the following business strengths will enable us to execute our strategy: We believe we are well positioned to capitalize on improving crude tanker market fundamentals. We believe we are well positioned to benefit from a continuing recovery in the global crude tanker market. Increasing global demand for crude oil, driven by strengthening global economic activity and industrial production, in addition to longer voyage distances due to additional imports into Asia, is resulting in increased seaborne trade volumes. This, combined with a significant contraction in overall vessel supply growth, is driving an increase in day rates and vessel prices for crude tankers. We believe that to the extent these trends continue, we are well positioned to take advantage of these improving crude tanker market fundamentals as our vessel employment strategy provides us with the ability to benefit from upswings in tanker market earnings. We own a modern, high-quality and flexible fleet of modern Suezmax tankers. Our fleet consists of 12 modern Suezmax tankers that were built at leading shipyards. Suezmax tankers are built to carry cargo parcels of one million barrels, which is the most commonly traded parcel size in crude trading markets. Our fleet has an average age of approximately five years, which is younger than the average age of approximately nine years for the world crude tanker fleet. Our fleet includes three groups of sister ships, which are substantially similar in terms of design, capacities and shipbuilding yard origin, a trait that allows us higher revenue generating potential due to improved scheduling flexibility and higher operating efficiency through economies of scale for these ten ships. We believe that owning a modern, high quality and flexible fleet of Suezmax tankers is attractive to our customers and also reduces operating costs and increases our fleet s reliability, which improves utilization. We are one of the fastest growing Suezmax tanker owners and have a strong track record of sourcing and executing vessel acquisitions. Led by Arthur L. Regan, our President and Chief Executive Officer, we have been the most active acquirer of Suezmax tankers in the tanker market since 2010. We have grown our fleet from zero to 12 vessels since 2010, through successful execution of accretive vessel acquisitions. Our sourcing activities have included newbuild resales and secondhand vessel acquisitions. We believe that our extensive experience in sourcing and executing vessel acquisitions, combined with our strong relationships in the shipping sector, will allow us to continue executing our growth strategy. Our balanced vessel employment strategy allows us to benefit from upswings in tanker market earnings while providing us with a stable base of contracted cash flows. We utilize a balanced employment strategy for our fleet which provides us with the ability to benefit from upswings in tanker spot market earnings through (a) strategic proprietary spot trading arrangements, (b) pool participations and (c) market-index linked time charters, as well as a stable base of contracted cash flows from fixed-rate time charters. We currently employ eight of our 12 vessels with Shell in a combination of strategic proprietary spot trading arrangements, market-index linked time charters and fixed-rate time charters. Two of our 12 vessels currently operate in a pool with Stena Sonangol, one vessel is employed by Stena Bulk on a fixed-rate time charter expiring in December 2015 and one vessel is employed in a strategic proprietary spot trading arrangement with Mjolner Shipping. We believe that operating vessels through strategic proprietary spot trading arrangements, pools and market-index linked time charters, relative to operating directly in the spot market, is advantageous because these vessels generally enjoy more stable earnings and higher utilization while still being able to benefit from increases in earnings due to tanker market upswings. Our U.S.-based executive management team has extensive experience and relationships in the shipping industry. Our executive management team has broad and unique expertise and a demonstrated track record in all facets of the shipping industry, including commercial and technical, finance and capital markets, insurance and risk management and legal. Led by Arthur L. Regan, who has 30 years of Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+This summary highlights some of the information contained or incorporated by reference in this prospectus and does not contain all of the information that may be important to you. You should read this entire prospectus, including the documents incorporated by reference, before making an investment decision. Our Company We are an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. As of May 31, 2015, we had assembled an acreage position approximating 222,000 net acres in Eastern Ohio. Approximately 101,000 of our net acres are located in what we believe to be the most prolific and economic area of the Utica Shale fairway, which we refer to as the Utica Core Area, and approximately 27,000 of these net acres are also prospective for the highly liquids rich area of the Marcellus Shale in Eastern Ohio within what we refer to as Our Marcellus Project Area. Based on our initial drilling results, we believe the Utica and Marcellus Shales offer some of the highest rate of return wells in North America. We are the operator of approximately 87% of our net acreage within the Utica Core Area and Our Marcellus Project Area. As of May 31, 2015, we had identified approximately 2,934 gross (800 net) remaining horizontal drilling locations across our acreage, comprised of 2,389 locations within the Utica Core Area and 545 locations within Our Marcellus Project Area. As of May 31, 2015, we or our operating partners had commenced drilling 197 gross wells within the Utica Core Area and Our Marcellus Project Area. We intend to focus on developing our substantial inventory of horizontal drilling locations and will continue to opportunistically add to this acreage position where we can acquire acreage at attractive prices. We have assembled a team of executive and operating professionals with significant knowledge and experience in the Appalachian Basin, particularly with respect to drilling unconventional oil and natural gas wells, managing large scale drilling programs and optimizing the value of the associated production through a coordinated midstream effort. Our senior management has over 250 years of combined engineering, land, legal, and financial expertise. Recent Developments Commodity Prices Recently, commodity prices have been extremely volatile, and we expect this volatility to continue for the foreseeable future. A further or extended decline in commodity prices could materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures. We make price assumptions that are used for planning purposes, and a significant portion of our cash outlays, including rent, salaries and noncancelable capital commitments, are largely fixed in nature. Accordingly, if commodity prices are below the expectations on which these commitments were based, our financial results are likely to be adversely and disproportionately affected because these cash outlays are not variable in the short term and cannot be quickly reduced to respond to unanticipated decreases in commodity prices. Significant or extended price declines could also adversely affect the amount of oil, NGLs and natural gas that we can produce economically, which may result in our having to make significant downward adjustments to our estimated proved undeveloped reserves. A reduction in production could also result in a shortfall in expected cash flows and require us to reduce capital spending or borrow funds to cover any such shortfall. Any of these factors could negatively affect our ability to replace production and our future rate of growth. Table of Contents Index to Financial Statements Commodity price revisions, based on 12-month average SEC prices for 2014, did not have a significant impact on our 2014 reserve revisions, but could potentially have a significant impact on future reserve estimates, if the currently depressed pricing environment for oil, NGLs and natural gas persists or worsens. From December 31, 2014 to March 31, 2015, the 12-month average SEC price for WTI oil declined from $94.99 per Bbl to $82.72 per Bbl, while the 12-month average SEC price for Henry Hub natural gas declined from $4.35 per MMBtu to $3.88 per MMBtu. Service costs have also declined significantly during the same time period, which should mitigate a portion of the negative impact of declining commodity prices on our future reserve estimates. In addition, we expect to continue to increase our proved reserves through further extensions and discoveries as we continue to develop our acreage position. Based on the current market conditions, we have revised our capital budget for 2015 downward to $352 million, which is a 45% reduction from our initial capital budget for the year, and a 57% decrease from 2014. We have reduced the number of our operated horizontal drilling rigs down to one, compared to three horizontal rigs as of December 31, 2014. As a result of the reduction in drilling activity, we recorded a charge related to the early termination of drilling rig contracts of $7.1 million during the three months ended March 31, 2015. This reduction in planned capital expenditures will also likely result in a slower rate of growth of our proved reserves through extensions and discoveries than previously forecasted as development of our acreage position is deferred to subsequent years. In addition, based on the reassessment of our capital expenditure plan and the current commodity pricing environment, we have shifted our drilling activity to the dry gas area of our Utica Shale acreage due to greater potential returns of this area. The dry gas area of our Utica Shale acreage has more readily available access to transportation infrastructure and a larger number of our units in the area are ready for drilling as compared to our other operating areas. We currently expect to resume our development activity in the wet gas areas of our Utica Shale acreage and in our Marcellus acreage during 2017. We consider future commodity prices when determining our development plan but many other factors are also considered. Although the magnitude of change in these collective factors within a sustained low commodity price environment is difficult to estimate, we currently expect to execute our development plan based on current conditions. To the extent there is a significant increase or decrease in commodity prices in the future, we will assess the impact on our development plan at that time, and we may respond to such changes by altering our capital budget or our development plan. We plan to fund our development budget with a portion of the proceeds from the issuance of our 8.875% Senior Notes due 2023, the proceeds remaining from the private placement of our common stock that we completed during January 2015, cash flows from operations, proceeds from asset sales, borrowings under our revolving credit facility and proceeds from additional debt and/or equity offerings. Offering of Senior Notes due 2023 On July 6, 2015, we issued $550 million in aggregate principal amount of our 8.875% senior notes due 2023, which we refer to as the Notes, at an issue price of 97.903% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to Deutsche Bank Securities Inc. and the other initial purchasers. The initial purchasers purchased the Notes from us at a purchase price of 95.954% of the principal amount of the Notes. In this private offering, the Notes were sold for cash to qualified institutional buyers in the United States pursuant to Rule 144A of the Securities Act and to persons outside the United States in compliance with Regulation S under the Securities Act. Upon closing, we received net proceeds of approximately $525.5 million, after deducting original issue discount, the initial purchasers discounts and estimated offering expenses, of which we used approximately $510.7 million to finance the redemption of all of our outstanding 12.0% senior unsecured PIK notes due 2018. We intend to use the remaining net proceeds to fund our capital expenditure plan and for general corporate purposes. Table of Contents Index to Financial Statements Emerging Growth Company Status We are an emerging growth company as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we are an emerging growth company, unlike other public companies that are not emerging growth companies under the JOBS Act, we are not required to: provide an auditor s attestation report on management s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002; provide more than two years of audited financial statements and related management s discussion & analysis of financial condition and results of operations; comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory votes on executive compensation as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act; or obtain stockholder approval of any golden parachute payments not previously approved. We will cease to be an emerging growth company upon the earliest of: the last day of the fiscal year in which we have $1.0 billion or more in annual revenues; the date on which we become a large accelerated filer (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30); the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or the last day of the fiscal year following the fifth anniversary of our initial public offering. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, but we have irrevocably opted out of the extended transition period, and as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies. Corporate Information Our principal executive offices are located at 2121 Old Gatesburg Road, Suite 110, State College, Pennsylvania 16803, and our telephone number is (814) 308-9754. Our website is www.eclipseresources.com. We make our periodic reports and other information filed with, or furnished to, the SEC available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with, or furnished to, the SEC. The information on, or otherwise accessible through, our website or any other website does not constitute a part of this prospectus. Table of Contents Index to Financial Statements The Offering Issuer Eclipse Resources Corporation Shares of common stock outstanding 222,663,611 shares (as of July 31, 2015) Shares of common stock offered for resale by the selling stockholders 51,850,000 shares Use of proceeds We will not receive any proceeds from the sale of the common stock by the selling stockholders. See Use of Proceeds.
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+This summary highlights selected information contained elsewhere in this prospectus or documents incorporated by reference herein, but it does not contain all of the information that you should consider before deciding to invest in our Class A common stock. You should read this entire prospectus carefully, including the matters discussed under the headings "Risk Factors," "Organizational Structure," "Unaudited Pro Forma Financial Information," our financial statements and related notes, which are included elsewhere in this prospectus, and the detailed information that is incorporated in this prospectus by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (including, without limitation, matters discussed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in our consolidated financial statements and related notes), and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (including, without limitation, matters discussed under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in our unaudited condensed consolidated financial statements and related notes). In this prospectus, our "Annual Report" refers to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 that we filed with the SEC on February 27, 2015 and our "Quarterly Report" refers to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 that we filed with the SEC on May 1, 2015, each of which is incorporated herein by reference. See "Incorporation by Reference." Unless we state otherwise or the context otherwise requires, the terms "Adeptus Health," "Adeptus," "we," "us," "our" and the "Company" refer to Adeptus Health Inc. and its consolidated subsidiaries after giving effect to the Reorganization Transactions completed in connection with our initial public offering, as described under the heading "Organizational Structure" and elsewhere in this prospectus; prior to the consummation of the Reorganization Transactions and the completion of our initial public offering, these terms refer to Adeptus Health LLC, a Delaware limited liability company through which we are currently conducting our operations, and its consolidated subsidiaries. Some of the statements in this prospectus or documents incorporated by reference herein constitute forward-looking statements. For more information, see "Special Note Regarding Forward-Looking Statements." Company Overview We own and operate First Choice Emergency Rooms, the largest network of independent freestanding emergency rooms in the United States. We have experienced rapid growth in recent periods, growing from 14 freestanding facilities at the end of 2012 to 26 freestanding facilities at the end of 2013, and to 65 freestanding facilities as of May 1, 2015. Our facilities are currently located in the: (i) Houston, Dallas/Fort Worth, San Antonio and Austin, Texas markets; (ii) Colorado Springs and Denver, Colorado markets; and (iii) Phoenix, Arizona market, which includes a full service, licensed general hospital. Each of our facilities opened in 2014 and 2015 were newly constructed. Since our founding in 2002, our mission has been to address the need within our local communities for immediate and convenient access to quality emergency care in a patient-friendly, cost-effective setting. We believe we are transforming the emergency care experience with a differentiated and convenient care delivery model which improves access, reduces wait times and provides high-quality clinical and diagnostic services on-site. Our facilities are fully licensed and provide comprehensive emergency care with an acuity mix that we believe is comparable to hospital-based emergency rooms. Emergency care is a significantly underserved market in the United States today and the current system is overburdened. Demand has grown dramatically, with emergency room visits increasing 46.7%, from 90.8 million in 1992 to 133.2 million in 2012, while the number of emergency room departments decreased by 11.4% over the same period, from approximately 5,035 in 1992 to approximately 4,460 in 2012, according to the American Hospital Association, or AHA. AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents MARKET AND INDUSTRY DATA This prospectus and documents incorporated by reference herein include industry data and forecasts that we have prepared based, in part, on information obtained from industry publications and surveys and internal company surveys. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, including the American College of Emergency Physicians, or ACEP, a professional organization of emergency medicine physicians that publishes reports relating to emergency medical care, the American Hospital Association, or AHA, a national organization that represents, serves and advocates for nearly 5,000 hospitals, health systems, networks and other providers, and Press Ganey Associates, Inc., or Press Ganey, an independent healthcare advisory services and consulting organization. References to the ACEP National Report Card may be sourced to the ACEP Annual National Report Card released in January 2014. References to AHA Annual Survey data may be sourced to the AHA Annual Survey of Hospitals released in 2013. The statements regarding our market position in this prospectus or documents incorporated by reference herein are based on information derived from market studies and research reports cited above and elsewhere in this prospectus or documents incorporated by reference herein. Although some of the companies that compete in our markets are publicly held as of the date of this prospectus, some are not. Accordingly, only limited public information is available with respect to our relative market strength or competitive position. Unless we state otherwise, our statements about our relative market strength and competitive position in this prospectus or documents incorporated by reference herein are based on our management's beliefs, internal studies and our management's knowledge of industry trends. PRESENTATION OF CERTAIN FINANCIAL MEASURES Certain financial measures presented in this prospectus or documents incorporated by reference herein, such as Adjusted EBITDA, are not recognized under accounting principles generally accepted in the United States, which we refer to as "GAAP." Adjusted EBITDA has been presented in this prospectus or documents incorporated by reference herein as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, further adjusted to eliminate the impact of certain additional items, including advisory services paid to our Sponsor (as defined herein), facility preopening expenses, management recruiting expenses, stock compensation expense, costs associated with our public offerings and other non-recurring costs that we do not consider in our evaluation of ongoing operating performance from period to period as discussed further below. Adjusted EBITDA is included in this prospectus or documents incorporated by reference herein because it is a key metric used by management to assess our financial performance. We use Adjusted EBITDA to supplement GAAP measures of performance in order to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. Adjusted EBITDA is also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Adjusted EBITDA is a non-GAAP measure of our financial performance and should not be considered as an alternative to net income (loss) as a measure of financial performance, or any other performance measure derived in accordance with GAAP, nor should it be construed as an inference that our future results will be unaffected by unusual or other items. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as preopening expenses, stock compensation expense and other adjustments. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures, facility openings and certain other cash costs Table of Contents In their 2014 National Report Card on America's emergency care environment, the American College of Emergency Physicians, or ACEP, assigned an overall grade of "D " for the category of access to emergency care, reflecting too few emergency departments to meet the needs of a growing, aging population and the projected increase in the number of insured individuals as a result of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, or PPACA. We believe freestanding emergency rooms are an essential part of the solution, providing access to quality care and offering a significantly improved patient experience relative to traditional hospital emergency departments. What We Do and Why We Are Different We focus on providing emergency care through our freestanding emergency rooms with the goal of improving the quality of care and enhancing the overall experience for patients and physicians. We have developed an innovative facility design and infrastructure specifically tailored to the emergency care delivery system that combines staff, equipment and physical layout to deliver high-quality, cost-effective and coordinated patient-focused care. This approach limits the need to move patients and provides ease of access to all necessary medical services we provide, allowing us to enhance the overall experience of the patient. Our facility design also allows physicians and nursing staff to provide all levels of care required for our patients during their visit. Our philosophy is to center care around the patient, rather than expect the patient to adapt to our facilities and staff. We believe our focused approach increases patient, physician and staff satisfaction. Innovative characteristics of our emergency facilities include: 24/7 Emergency Care. Freestanding emergency room facilities, which typically range from approximately 6,000 to 7,000 square feet and are located in a convenient, local community setting and open 24 hours a day, seven days a week with on-site emergency staff, including a physician, at all times; Board-Certified Physicians. Staffed with experienced healthcare professionals capable of handling all emergency issues. As of December 31, 2014, we contracted with approximately 434 Board-certified physicians with an average of 15 years of medical experience who have treated more than 400,000 patients at our facilities; Streamlined. Streamlined check-in process designed to have patients seen by a physician within minutes; Focused Capability. Typically six to nine emergency exam rooms, which include two high-acuity suites, one child-friendly pediatric room and a specialized obstetrics/gynecology room; Coordinated Care. Centralized nurses' station that serves as a command center to coordinate care; Full Radiology Suite. In-house diagnostic imaging technology, including CT scanners, digital x-rays and ultrasounds, with final reads from on-call radiologists; and On-Site Laboratory. On-site laboratories, which provide results within approximately 20 minutes, and are certified by the Clinical Laboratory Improvements Amendments, or CLIA, and accredited by the Commission on Office Laboratories Accreditation, or COLA. Table of Contents that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by supplementally relying on our GAAP results in addition to using Adjusted EBITDA. Our presentation of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. ABOUT THIS PROSPECTUS We and the underwriters (and any of our or their affiliates) have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus, or documents incorporated by reference herein, or in any free writing prospectuses filed with the Securities and Exchange Commission, or the SEC. We and the underwriters (and any of our or their affiliates) take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. Throughout this prospectus or in the documents incorporated by reference herein, we provide a number of key operating metrics used by management and that we believe are used by our competitors. These key operating metrics are discussed in more detail under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Key Performance Measures" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, each of which is incorporated by reference herein. We also reference certain non-GAAP financial measures. See "Presentation of Certain Financial Measures," "Summary Summary Financial and Other Data" and "Selected Historical Consolidated Financial Data" in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Key Performance Measures" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, each of which is incorporated by reference herein, for a discussion of these measures, as well as a reconciliation of these measures to the most directly comparable financial measures required by, or presented in accordance with GAAP. We are an "emerging growth company" as defined in Section 2(a)(19) of the Securities Act of 1933 and Section 3(a)(80) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Pursuant to Section 102 of the Jumpstart Our Business Startups Act, or the JOBS Act, we have provided reduced executive compensation disclosure and have omitted a compensation discussion and analysis from the documents incorporated by reference herein. We previously opted out of the extended transition period with respect to new or revised accounting standards and, as a result, we comply with any such new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards was irrevocable. Certain monetary amounts, percentages and other figures included in this prospectus or documents incorporated by reference herein have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. Unless we state otherwise, the information in this prospectus or documents incorporated by reference herein gives effect to the Reorganization Transactions described under the heading "Organizational Structure" and elsewhere in this prospectus. Table of Contents We operate at the higher end of the acuity and emergency care spectrum. Our capabilities and offerings differ from other care models as outlined below: Spectrum of Primary and Emergency Care Services Market Opportunity Freestanding emergency rooms remain the least penetrated alternate site provider segment in the U.S. healthcare sector. As of 2012, there were approximately 400 freestanding emergency rooms in the United States as compared to approximately 1,400 retail clinics, 6,000 ambulatory surgery centers and 9,300 urgent care centers. We believe this represents a significant opportunity to deliver quality care in the freestanding emergency room setting and transform this underpenetrated market. We have developed a highly scalable business model for establishing new freestanding emergency rooms that include attractive unit economics, sophisticated data analytics to support our site-selection process, proven real estate development practices and innovative marketing programs. Using this model, we have grown to become more than three times the size of our next largest independent freestanding emergency room competitor and are expanding rapidly. We seek to transform the emergency care delivery model by offering high-quality, efficient and consumer-oriented healthcare in our local communities. In their 2014 National Report Card on America's emergency care environment, ACEP assigned an overall grade of "D " for the category of access to emergency care, reflecting too few emergency departments to meet the needs of a growing, aging population and the projected increase in the number of insured individuals as a result of PPACA. We believe freestanding emergency rooms are an essential part of the solution. We also believe that we offer a dramatically improved patient experience relative to traditional hospital emergency departments by significantly reducing wait times and providing rapid access to Board-certified physicians on-site. We also provide convenient access to critical, high-acuity care as compared with urgent care centers and are open 24 hours a day, seven days a week. Based on patient feedback collected by Press Ganey, First Choice Emergency Room received the prestigious Guardian of Excellence Award in 2013 and 2014 for exceeding the 95th percentile in patient satisfaction nationwide. Our Value Proposition Value Proposition for Patients As healthcare has evolved, the consumer has taken greater control of healthcare expenditures and demands more convenient access to healthcare, better value and an improved overall patient experience. Our philosophy is to center care around the patient, rather than expect the patient to adapt to our facilities and staff. We offer patients an attractive value proposition: Access to Care. Our facilities are located in a convenient, local community setting and are open 24 hours a day, seven days a week with on-site emergency staff, including a Board-certified physician at all times. Immediate Care. A streamlined check-in process designed to have patients seen by a physician within minutes. Physician Focus. Our physicians are focused on the patient, spending more time on patient care than on administrative tasks, providing high-quality service, prompt diagnoses and the appropriate medical treatment. Technology. Facilities equipped with full radiology suites, including CT scanners, digital x-rays and ultrasounds, as well as on-site laboratories certified by CLIA and accredited by COLA that provide test results within approximately 20 minutes. 2941 Lake Vista Drive Lewisville, Texas 75067 Telephone: (972) 899-6666 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Superior Experience. An overall enhanced patient experience. As a result, based on patient feedback collected by Press Ganey, First Choice Emergency Room received the prestigious Guardian of Excellence Award in 2013 and 2014 for exceeding the 95th percentile in patient satisfaction nationwide. Value Proposition for Communities Community providers, including physician's offices and hospital emergency rooms, serve a critical and valuable purpose in delivering healthcare. However, the shortage of emergency rooms makes it increasingly challenging to meet the rising demand for emergency care. This has led to an overburdened emergency room network that is often poorly aligned with care consumption trends. We seek to transform the emergency delivery model and fill a public need by offering high quality, efficient and consumer oriented healthcare in our local communities. We offer communities an attractive value proposition: Access to Care. Facilities located in convenient, local community settings. Approximately 60% of each facility's patients come from a three-mile radius, with approximately 80% coming from a five-mile radius. 24/7. Access to Board-certified physicians at all times, including outside normal business hours. Partnership. Key partner for health systems seeking to enhance their local community presence through direct admissions relationships and new innovative partnerships. Care Continuum. Connectivity across the patient-care continuum from patient referrals to post-emergency care. Value Proposition for Physicians The evolving healthcare delivery environment, reflected by significant regulatory changes, increasing administrative burdens, shifting competitive provider landscape and a transition to new reimbursement models, is increasing pressure on physicians. We offer an attractive working environment: Team-Based Care. Team-based environment, supported by dedicated staff. Patient Centric. Our model allows physicians to spend more time with each patient, which enables them to focus their attention on the patient in order to deliver high-quality care. Dedicated Support. Rapid delivery of lab and diagnostic results through on-site capabilities. Physician Friendly. Scheduling flexibility and a well-defined compensation program. Payment of malpractice insurance coverage premiums for physicians practicing at our facilities. Value Proposition for Payors We believe that our emergency room facilities reduce overall costs for payors by reducing unnecessary tests and patient admittances. According to the National Hospital Ambulatory Medical Care Survey, the national average emergency room inpatient admittance rate was approximately 11.9% in 2011, while our average inpatient admittance rate was approximately 3.8% for the year ended December 31, 2014. We believe our facilities provide comprehensive emergency care with an acuity mix that is comparable to hospital-based emergency rooms. Timothy L. Fielding Chief Financial Officer 2941 Lake Vista Drive Lewisville, Texas 75067 Telephone: (972) 899-6666 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Value Proposition for Hospitals We have an attractive business model that provides communities direct access to emergency care, helping to relieve the overburdened hospital emergency room system. Our facilities provide high-quality emergency care for a wide variety of conditions, including heart attacks, severe abdominal pain and respiratory distress similar to the care provided in traditional hospital emergency rooms. When hospital-based services such as surgery or cardiac catheterization are needed, patients are stabilized at our facilities before being transferred to nearby hospitals via ambulance. Transfer agreements are in place with local hospitals that often facilitate direct admission. Recent Initiatives and Outlook Following an investment in 2011 by Sterling Partners, which we refer to as our Sponsor, we embarked on a number of growth initiatives. These included the hiring of a number of senior officers, including our CEO Tom Hall, as part of our efforts to enhance and expand our management team, developing the necessary clinical and operational infrastructure to position us for future growth and entering new geographic markets such as Colorado. We are also building strategic alliances with leading health systems. In October 2014, we entered into a joint venture with Dignity Health to support the growing demand for access to quality medical care in Arizona. As described below, this partnership has started with Dignity Health Arizona General Hospital, a full-service healthcare hospital facility in the Phoenix market, and includes plans for additional access to emergency medical care in Phoenix. In April 2015, we announced a new joint venture with University of Colorado Health to improve access to high-quality and convenient emergency medical care in Colorado. We have also entered into alliances with affiliates of Hospital Corporation of America, or HCA, in the North Texas and Houston areas to enhance the continuum of care for our patients by streamlining clinical protocols for transfers to hospitals and providing direct access to approximately 5,500 physicians and 12 hospitals in North Texas and approximately 3,300 physicians and 9 hospitals in the Houston area, for follow-up care. In addition, we have a relationship with an affiliate of Concentra Medical Centers, or Concentra, urgent care clinics in the Dallas/Fort Worth market, whereby we are able to refer workers' compensation patients to Concentra when follow-up, non-emergent, care is needed. Our commitment to delivering superior patient care in the local community setting, identifying and retaining outstanding healthcare professionals, and investing in systems and processes to drive results, coupled with strong industry trends and sophisticated real estate development and marketing, has enabled us to build a track record of growth. We expect to grow our facility base at a rate of more than 20 facilities annually over the next several years, targeting communities within mid-sized and large metropolitan markets currently underserved by emergency departments. We believe we have the opportunity to substantially grow our footprint to more than 100 facilities over the next two years in both existing and new markets. We have a robust pipeline of more than 50 sites under development in our existing and additional new markets, including opening a full-service general hospital in Texas in 2015. To support this growth and development, we have made significant investments in our professional and real estate development staff, as well as in sales and marketing initiatives. Our consolidated total net patient service revenue increased from $102.9 million in 2013 to $210.7 million in 2014, representing approximately 104.8% annual growth. Recent Developments Initial Public Offering On June 30, 2014, we completed our initial public offering of 5,321,414 shares of our Class A common stock at a price to the public of $22.00 per share and received net proceeds of approximately $96.2 million, after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from the initial public offering to purchase limited liability company units of Adeptus With copies to: Joseph H. Kaufman, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-2000 David C. Lopez, Esq. Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, New York 10006 (212) 225-2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Health LLC, or LLC Units, from Adeptus Health LLC. Adeptus Health LLC used the proceeds it received as a result of our purchase of LLC Units to cause First Choice ER, LLC to reduce outstanding borrowings under its senior secured credit facility, to make a $2.0 million one-time payment to an affiliate of our Sponsor in connection with the termination of an advisory services agreement and for general corporate purposes. An additional 313,586 shares were also sold by an affiliate of our Sponsor in our initial public offering. Additional Master Funding and Development Agreements In July 2014, we entered into a second Master Funding and Development Agreement, or the Second MPT Agreement, with an affiliate of Medical Properties Trust, or MPT, to fund future facilities. The Second MPT Agreement allows for a maximum aggregate funding of $150.0 million, of which $89.4 million remained available as of December 31, 2014. In April 2015, we entered into an amendment to the Second MPT Agreement, or the Amended MPT Agreement. The Amended MPT Agreement allows for a maximum aggregate funding of $250.0 million. The Second and Amended MPT Agreements are separate from and in addition to our initial Master Funding and Development Agreement, or the Initial MPT Agreement. All other material terms in these agreements remain consistent with our Initial MPT Agreement. We refer to these agreements collectively as the MPT Agreements. Joint Venture with Dignity Health On October 22, 2014, we announced our expansion into Arizona through a joint venture with Dignity Health, one of the nation's largest health systems. The new partnership has started with Dignity Health Arizona General Hospital, a full-service healthcare hospital facility in Phoenix, Arizona, and includes plans for additional access to emergency medical care in Phoenix. This facility began its training and certification phase of operation in December 2014 and received its CMS certification from the Joint Commission on January 30, 2015. Department of Health and Human Services' Centers for Medicare and Medicaid Services, or CMS, certification allows us to receive reimbursement for services provided to Medicare and Medicaid patients of the hospital. Dignity Health Arizona General Hospital is a full-service healthcare hospital facility, licensed by the state as a general hospital. Spanning 39,000 square-feet, the hospital has 16 inpatient rooms, two operating rooms for inpatient and outpatient surgical procedures, an emergency department, a high-complexity laboratory and a full radiology suite. Patients have full access to the Dignity Health area facilities and physicians, and the hospital provides Phoenix-area residents with 24/7 access to emergency medical care. Joint Venture with University of Colorado Health On April 21, 2015, we announced a new partnership with University of Colorado Health, or UCHealth, to improve access to high-quality and convenient emergency medical care in Colorado. Under the partnership, UCHealth will hold a majority stake in our freestanding emergency rooms throughout Colorado Springs, northern Colorado and the Denver metro area. All 12 existing Colorado First Choice Emergency Room locations, and two more under construction, are included in the partnership. The partnership will also include hospital locations planned for Colorado Springs and Denver. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price per Share(1)(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Class A common stock, par value $0.01 per share 2,415,000 shares $62.83 $151,734,450 $17,631.55 (1)Includes shares subject to the underwriters' option to purchase additional shares, if any. (2)Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) of the Securities Act, as amended. The price per share and aggregate offering price are based on the average of the high and low price of the registrant's Class A common stock on April 27, 2015, as reported on the New York Stock Exchange. (3)The Registrant previously paid $14,025.81 of the registration fee, with respect to $120,704,000 of the proposed maximum aggregate offering price, in connection with the initial filing of this registration statement. Table of Contents Competitive Strengths We believe the following strengths differentiate us from our competitors and will enable us to capitalize on favorable industry dynamics: Leader in the Rapidly Expanding Freestanding Emergency Room Market First Choice Emergency Room is the largest freestanding emergency room provider in the United States with 65 facilities as of May 1, 2015, of which 29 were opened in 2014 and 10 in 2015. We are more than three times the size of our next largest independent freestanding emergency room competitor. We believe our innovative facility model enables us to offer our customers comprehensive emergency services with individualized attention and local convenience. We believe that our scale and scope, when combined with our comprehensive service offerings and tailored best practices, differentiate us from our local and regional competitors. Given our market positions in the highly fragmented and rapidly expanding markets in which we provide our services, we believe there continue to be opportunities to build more facilities in existing and new markets as well as develop new alliances with health systems seeking to enhance their local community presence. This will result in further expanding our leadership in the freestanding emergency room market. Superior Patient Experience We strive to consistently offer a superior patient experience through both our medical staff and facility capabilities. Our emergency rooms are staffed with Board-certified physicians and emergency-trained registered nurses capable of handling all emergency room issues with a physician on-site at all times. Each of our facilities is equipped with a full radiology suite, including CT scanners, digital x-ray and ultrasound, as well as on-site laboratories certified by CLIA and accredited by COLA. Our patients are typically face-to-face with a medical professional within minutes of arrival, and our patient satisfaction ratings exceed the vast majority of hospital emergency rooms nationally. Based on patient feedback collected by Press Ganey, we exceeded the 95th percentile in the nation for patient satisfaction and received the Guardian of Excellence Award in 2013 and 2014, the highest award bestowed by the organization. Scalable Service Model Well-Positioned for Growth We maintain the highest standards of clinical excellence, led by our 434 contracted Board-certified physicians who have an average of 15 years of medical experience. We have standardized, highly scalable clinical and operational infrastructure that we believe will support significant continued growth. Our highly trained staff is complemented by our managed care contracting and revenue cycle management expertise. Moreover, our innovative sales and marketing programs combine active outreach and awareness campaigns with patient-centric marketing programs in order to most effectively reach our target populations. We endeavor to continue to develop multiple sites because we believe regional density creates value through leverage in managed care contracting and greater brand awareness. Distinctive Real Estate Development Strategy Supports Attractive Unit Growth and Economics We have built an internal team with significant experience in multi-unit retail expansion strategy and execution. As a result, our approach to real estate planning is highly consumer-centric with a discipline traditionally utilized by sophisticated retail businesses. Our proprietary site selection model is a key to the success of our business, allowing us to identify and fill critical voids in community healthcare delivery systems. When combined with our scalable operating structure and attractive new-facility model, our real estate development strategy allows us to maximize performance and quickly grow our facility base. Our seasoned real estate planning and development team follows a proven and The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents disciplined strategy that leverages advanced data analytics to identify opportunities to provide underserved communities with high-quality emergency care. This development model has also proven commercially successful in highly competitive markets and is currently supporting growth outside of our home state of Texas. Our sophisticated selection guidelines and scalable procedures allow us to open a new facility within 14 to 21 months of site selection, enabling us to quickly capitalize on emerging opportunities. We have experienced rapid growth in recent periods, growing from 14 facilities at the end of 2012 to 26 facilities at the end of 2013, and to 65 facilities as of May 1, 2015. We have a robust pipeline under development designed to support the addition of approximately 14 facilities during the remainder of 2015. Ability to Attract and Retain High-Quality Physicians and Clinicians Through our differentiated recruiting and development programs, we are able to identify and target high-quality physicians and clinicians to optimally match the needs of our facilities. Each of our facilities is staffed with Board-certified physicians, who have an average of 15 years of medical experience. Compared to a traditional hospital setting, our physicians have a significantly reduced administrative workload, which allows them to spend more time focusing on patient care. Additionally, we offer our physicians extensive flexibility in managing their work schedules. Due to our customized staffing model, physicians can schedule their own work hours, practice at multiple sites, and take advantage of a wide variety of career development opportunities, including maintaining their own practice or affiliations with other healthcare facilities or hospitals. Consequently, our facilities offer a positive work environment that leads to high retention rates and strong customer and provider relationships. We believe these programs will allow us to continue to effectively recruit physicians and clinicians to support our robust pipeline of new facilities. Management Team with Significant Public Company Experience We have an experienced management team that leverages expertise across the healthcare, retail and hospitality sectors. The members of our executive management team with healthcare backgrounds have an average of 11 years of experience in that industry and have proven and extensive knowledge of healthcare operations and facility expansion. Additionally, our management has significant experience with high-growth, multi-state customer-focused operations through involvement in the retail and hospitality sectors. The three most senior members of the executive team have substantial experience in leading publicly traded companies. Over their respective tenures, members of our team have been instrumental in establishing a successful, scalable operating model, consistently generating strong financial results and developing an effective site selection and build out process. They have also developed proven recruiting and staffing capabilities to identify, hire and retain high quality physicians. We believe the breadth of management's background and the depth of its expertise will continue to drive our dynamic growth and continued success. Growth Strategies We believe we have significant growth potential in both new and existing markets because of our leading market position in the freestanding emergency room sector, high-quality care delivery, strong unit economics, disciplined development strategy and significant management experience. We plan to pursue the following growth strategies: Grow our Presence in Existing Markets We believe there is a significant opportunity to expand in our existing markets, which include: Dallas/Fort Worth, Houston, San Antonio and Austin, Texas; Colorado Springs and Denver, Colorado; and Phoenix, Arizona. Our scale, scope and leading market position, combined with our sophisticated, Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 4, 2015. 2,100,000 Shares Adeptus Health Inc. Class A Common Stock Table of Contents proven site selection and development processes provide us with competitive advantages to continue to expand our facility base in these markets. We endeavor to continue to develop multiple sites because we believe regional density creates value through leverage in managed care contracting and greater brand awareness. We anticipate that as we further build our brand and increase the visibility of our facilities in our existing markets these efforts will increase patient awareness, and drive patient volume and same-store growth. Build Strategic Alliances with Leading Health Systems Development of our existing and new health system alliances is an important part of our continued growth. We expect to be a key partner for health systems seeking to enhance their local community presence through direct admissions relationships and new innovative partnerships. Our alliance with HCA in North Texas provides an example of one such innovative partnership, giving our patients direct access to HCA's approximately 5,500 physicians and 12 hospitals in North Texas and approximately 3,300 physicians and 9 hospitals in the Houston area. In addition, we have a relationship with the Concentra urgent care clinics in the Dallas/Fort Worth market, whereby we are able to refer workers' compensation patients to Concentra when follow-up, non-emergent, care is needed. We also recently expanded into Arizona through a joint venture with Dignity Health, one of the nation's largest health systems, with the opening of a full-service healthcare hospital facility and includes plans for additional access to emergency medical care in the Phoenix area through freestanding emergency departments of the hospital. To improve access to high-quality and convenient emergency medical care in the northern Colorado and Denver metro area, we recently partnered with UCHealth. We believe our ability to alleviate hospital emergency room over-crowding, while providing a new access point to patients, enhances our value proposition as a partner of choice for health systems. Pursue a Disciplined Development Strategy in New States and Markets We intend to continue expanding our facility base through new facility openings in new states and markets by leveraging our core capabilities in site selection, development and efficient facility openings. We view expansion as a core competency and see a significant opportunity to replicate the regional platform model established in Texas in new geographic markets. We entered the Colorado market in 2013, where we now have 12 facilities and recently announced a joint venture with UCHealth, and the Arizona market in 2015, through our partnership with Dignity Health, with a full-service general hospital in the Phoenix area that has 16 inpatient rooms, two operating rooms, a nine-room emergency department, a high-complexity laboratory and a full radiology suite. We have experienced rapid growth in recent periods, growing from 14 facilities at the end of 2012 to 26 facilities at the end of 2013, and to 65 facilities as of May 1, 2015. We have a robust pipeline under development designed to support the addition of approximately 14 facilities during the remainder of 2015. As we expand into new markets, particularly in states with complex regulatory requirements, we believe there is a potential to implement different operating models, such as innovative hospital partnership models, including a hospital hub and freestanding emergency room satellite model. Risks Related to Our Business and Industry, Healthcare Regulation and Organizational Structure An investment in our Class A common stock involves a high degree of risk. See "Risk Factors" in this prospectus and "Risk Factors" in our Annual Report. Some of the more significant challenges and risks related to our business include the following: We may not be able to successfully implement our growth strategy on a timely basis or at all, which could harm our growth and results of operations; Our expansion into new markets presents increased risks and may require us to develop new business models; This is a public offering of shares of Class A common stock of Adeptus Health Inc. We are offering 1,349,671 shares of our Class A common stock and SCP III AIV THREE-FCER Conduit, L.P., or the selling stockholder, is offering 750,329 shares of our Class A common stock. We intend to use the net proceeds from this offering received by us to purchase, for cash, 1,349,671 limited liability company units of Adeptus Health LLC, our direct subsidiary, from certain of the unit holders of Adeptus Health LLC specified herein, including certain of our directors and executive officers. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholder. The selling stockholder will receive all of the net proceeds from the sale of the shares of Class A common stock being sold by it. Our Class A common stock is listed on the New York Stock Exchange, or the NYSE, under the symbol "ADPT." On May 1, 2015, the last reported sale price of our Class A common stock on the NYSE was $66.26 per share. We are an "emerging growth company" as that term is defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, and, as such, have elected to comply with certain reduced public company reporting requirements in this prospectus, or documents incorporated by reference herein, and future filings. See "Summary Implications of Being an Emerging Growth Company." Investing in our common stock involves significant risks. See "Risk Factors" beginning on page 18 of this prospectus and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, incorporated by reference herein, to read about factors you should consider before buying shares of our Class A common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents Our long-term success is highly dependent on our ability to successfully identify and secure appropriate sites for our facilities and develop and expand our operations in existing and new markets; We conduct business in a heavily regulated industry and, if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations; Compliance with a number of additional federal and state regulatory schemes as a result of our recent enrollment of our Arizona general hospital to participate in the federal Medicare program and the Arizona Medicaid program; Our current facilities are subject to state statutes and regulations that govern our operations, and the failure to comply with these laws and regulations can result in civil or criminal sanctions; State law regulation of construction or expansion of emergency rooms could prevent us from developing additional freestanding emergency rooms or other facilities; and Recent healthcare reform legislation and other changes in the healthcare industry and in healthcare spending could adversely affect our business model, financial condition or results of operations. Our History and Sponsor First Choice ER, LLC was founded in Texas by Dr. Jacob J. Novak in 2002, when he recognized the need for convenient access to high-quality emergency care in a patient-friendly, community-based manner, and as an alternative to traditional hospital-based emergency care. The community's response to our initial facility in Flower Mound, Texas was so positive that we began looking for opportunities to expand. In 2003, Richard Covert joined the company and eventually became its Chief Executive Officer. Mr. Covert was instrumental in securing legislation to license and regulate freestanding emergency rooms in the state of Texas. Mr. Covert helped expand the company to 12 facilities in three Texas markets. In 2007, we received the Gold Seal of Approval from The Joint Commission on Accreditation of Healthcare Organizations, or the Joint Commission. In 2011, funds affiliated with Sterling Partners acquired a 75% share in First Choice ER, LLC. In 2013, Adeptus Health LLC was created as a holding company to own and operate First Choice Emergency Rooms. Adeptus Health Inc. was incorporated as a Delaware corporation on March 7, 2014 for the purpose of becoming our new parent company in connection with the Reorganization Transactions described under the heading "Organizational Structure" and elsewhere in this prospectus or in documents incorporated by reference herein. Corporate Information Our principal executive offices are located at 2941 Lake Vista Drive, Lewisville, Texas 75067 and our telephone number is (972) 899-6666. Our website is www.adhc.com. Information contained on our website or that can be accessed through our website is not incorporated by reference herein. Implications of Being an Emerging Growth Company We are an "emerging growth company" as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted, and intend, to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies. These include: being permitted to provide only two years of audited financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to Adeptus Health Inc. $ $ Proceeds, before expenses, to the selling stockholder $ $ (1)We have agreed to reimburse the underwriters for certain Financial Industry Regulatory Authority, or FINRA, related expenses. See "Underwriting." To the extent that the underwriters sell more than 2,100,000 shares of our Class A common stock, the underwriters have the option to purchase up to an additional 315,000 shares from us and the selling stockholder at the public offering price less the underwriting discount. Table of Contents Operations" disclosure included in this prospectus or in documents incorporated by reference herein; not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; reduced disclosure obligations regarding executive compensation; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of some reduced reporting burdens in this prospectus or in documents incorporated by reference herein. Accordingly, the information contained or incorporated by reference herein may differ from the information provided by other public companies. We may avail ourselves of these provisions until the last day of the fiscal year following the fifth anniversary of the date of our initial public offering, which occured on June 24, 2014, or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1 billion of non-convertible debt securities over a three-year period. The JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We previously opted out of this provision. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards was irrevocable. The underwriters expect to deliver the shares of Class A common stock on or about , 2015. Table of Contents The Offering Class A common stock offered by Adeptus Health Inc. 1,349,671 shares. Class A common stock offered by the selling stockholder 750,329 shares. Option to purchase additional shares of Class A common stock. We and the selling stockholder have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to 315,000 additional shares of Class A common stock, of which 92,375 will be sold by the selling stockholder and 222,625 sold by the Company, with the proceeds used to purchase an equivalent number of LLC Units from certain of our Post-IPO Unit Holders, as defined under the heading "Organizational Structure." Class A common stock outstanding after this offering. 11,335,171 shares (or 20,727,339 shares if the Post-IPO Unit Holders were to exchange all of their LLC Units and Class B common stock for Class A common stock on a one-for-one basis). Class B common stock outstanding after giving effect to this offering. 9,392,168 shares. The shares of Class B common stock have no economic rights but entitle the holder to one vote per share on matters presented to stockholders of Adeptus Health Inc. Shares of Class B common stock are generally not transferable other than in connection with an exchange of LLC Units for Class A common stock. Use of proceeds The net proceeds to us from this offering, after deducting estimated underwriting discounts and commissions, will be approximately $129.4 million (or $148.8 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock), assuming an offering price per share of $66.26, which was the last reported sale price of our Class A common stock on the NYSE on May 1, 2015. We estimate that our expenses from this offering will be approximately $0.9 million. We intend to use the proceeds received by us to purchase, for cash, 1,349,671 outstanding LLC Units from certain of our Post-IPO Unit Holders at a purchase price per unit equal to the public offering price per share of Class A common stock in this offering net of underwriting discounts and commissions. We will not receive any of the proceeds from the sale of shares of Class A common stock by the selling stockholder. Joint Book-Running Managers Goldman, Sachs & Co. BofA Merrill Lynch Co-Managers BMO Capital Markets Evercore ISI Piper Jaffray RBC Capital Markets Dougherty & Company Table of Contents If the underwriters exercise in full their option to purchase up to an aggregate of 315,000 additional shares of Class A common stock, we intend to purchase, for cash, 222,625 outstanding LLC Units from certain of our Post-IPO Unit Holders at a purchase price per unit equal to the public offering price per share of Class A common stock in this offering net of underwriting discounts and commissions. The remaining 92,375 shares of Class A common stock subject to the underwriters' option are expected to be Class A common stock to be held by the selling stockholder. We will not receive any of the proceeds from the sale of shares of Class A common stock by the selling stockholder. Exchange rights of holders of Adeptus Health LLC units The amended and restated limited liability company agreement of Adeptus Health LLC, or the Amended and Restated Limited Liability Company Agreement, gives the Post-IPO Unit Holders (subject to the terms of the Amended and Restated Limited Liability Company Agreement) the right to exchange their vested LLC Units (together with a corresponding number of shares of our vested Class B common stock) for shares of our Class A common stock on a one-for-one basis. The Post-IPO Unit Holders will hold 9,392,168 LLC Units following this offering and the application of the net proceeds from this offering as described under the heading "Use of Proceeds." Voting rights Each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally. Following this offering, the Post-IPO Unit Holders will continue to hold 9,392,168 shares of Class B common stock. Shares of Class B common stock have no economic rights but entitle the holder to one vote per share on all matters to be voted on by stockholders generally. Following this offering, such Class B common stock will entitle the Post-IPO Unit Holders to 45.3% of the voting power of our outstanding capital stock. Holders of our Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. See "Description of Capital Stock Common Stock." Dividend policy We do not currently plan to pay a dividend on our common stock following this offering. The declaration, amount and payment of any future dividends on shares of Class A common stock will be at the sole discretion of our board of directors. The date of this prospectus is , 2015. Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights selected information, such as the company s current operations and summary financial information contained in this Prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this Prospectus, including but not limited to, the risk factors beginning on page 8. In addition, certain statements are forward-looking statements, which involve risks and uncertainties. See Disclosure Regarding Forward-Looking Statements. References in this Prospectus to Frontera Group , Company , we , our , or us refer to Frontera Group Inc. unless otherwise indicated or the context otherwise requires. Forward-Looking Statements This Prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the "Risk Factors" section and elsewhere in this Prospectus. Our Company We were formed on November 21, 2013. Frontera Group Inc. is an export management company providing business development and market consultancy services that assist small and medium-sized businesses in entering new markets in Central and South America. Our target clients are manufacturers of food products, who are looking for assistance in the areas of marketing, sales and logistics as they expand their sales territories. We specifically target these types of companies because of experience of our management in providing marketing and distribution services to manufacturer of food products. We generate revenue by providing consulting services to small and medium businesses. We acquire customers through direct marketing, referrals and our primary website, www.fronteragroupinc.com. The legal definition of "small business" varies by country and by industry. We follow the guidelines established in the United States as to the size of the business. In the United States, the Small Business Administration ( SBA ) establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 250 employees for manufacturing businesses and less than $7 million in annual receipts for most non-manufacturing businesses. For specific size standards as of January 1 of each year refer to the annual editions of SBA s Small Business Size Regulations in 13 CFR 121.201. SBA maintains on its website a current table of small business size standards that includes all changes and modifications made since January 1 of the most recent year. (See www.sba.gov/size). We view a medium size business as having less than 500 employees. Our services include: market and competitor research, marketing strategy development, translation services, trade show and commercial event management and administration and on-going business services. As of September 30, 2014 we provided consulting services related to market feasibility studies and competitor research. Market feasibility study services begin with a client request for research on the feasibility of introducing products to a specific potential target market. In turn, we provide a quote with a cost breakdown of possible outside expenses and our consulting fees. For new clients, we request a 50% deposit before starting work. Once the quote is approved, we conduct the research, which culminates in a final report provided to the client with the results and recommendations. The final payment is due upon delivery of the report. Our plan over the next twelve months is to expand our client base and the range of services we provide. We have commenced our operations during the period ended June 30, 2014. As of September 30, 2014 we have generated $18,500 in revenues from consulting services related to market and competitor research in Costa Rica and Brazil. As of September 30, 2014 we have provided services to four clients who are food manufacturers looking for opportunities to introduce their products in new markets. To date, we have focused on providing individualized services to clients on a contract basis. The average length of our contracts is from one to two months. We do not have any contracts in place that have long-term ongoing commitments from clients. In order to increase our revenue we have to expand our client base and offer additional services to existing clients on an ongoing basis. There is substantial doubt that we will be able to continue as an ongoing business for the next twelve months (See risk factor on page 10). To date we have relied upon revenues from our operations and sales of our securities in unregistered private placement transactions to fund our operations. We are a development stage company with a limited operating history. Accordingly, for the foreseeable future, we will continue to be dependent on revenues from operations and additional financing in order to maintain our operations and continue with our corporate activities. This offering and any investment in our common stock involve a high degree of risk. If our future revenues will not be sufficient to cover our operating costs we may be obliged to cease business operations due to lack of funds. If we raise only the minimum amount of proceeds from this offering, we will have limited funds available to build and grow our business. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for us to fund our planned business activities. We may also rely on loans from our Directors; however, there are no assurances that our Directors will provide us with any additional funds. Currently, we do not have any arrangements for additional financing. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing shareholders. We face many challenges to continue operations, including, but not limited to our limited operating history, competition, and general economic conditions. Please review the "Risk Factors" starting on page 8 of this offering. Our Directors collectively own 100% of the 4,000,000 outstanding shares of our common stock as of the date of this Offering. If the minimum amount of the shares will be sold, our Directors will own 55.17% of our outstanding common stock. Accordingly, they will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. Frontera Group's principal executive office is located at 8670 W. Cheyenne, Suite 120, Las Vegas, NV 89129 and our telephone number is (702) 718-0140. Our primary website address is www.fronteragroupinc.com. The information on, or that can be accessed through this website is not part of this prospectus. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. The Company shall continue to be deemed an emerging growth company until the earliest of: (a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . The Company intends to take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an emerging growth company . Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company , which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company , the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. Notwithstanding the above, we are also currently a smaller reporting company , meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company , at such time are we cease being an emerging growth company , we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies , smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an emerging growth company or smaller reporting company may make it harder for investors to analyze the Company s results of operations and financial prospects. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Offering Following is a brief summary of this Offering: Securities being offered: 3,250,000 shares of common stock minimum and 32,500,000 shares of common stock maximum, par value $0.001 Offering price per share: $ 0.0125 Offering period: The shares are being offered for a period not to exceed 180 days or 270 days, if extended. Net proceeds to us: Approximately $32,273 assuming the minimum number of shares is sold. Approximately $397,898 assuming the maximum number of shares is sold. Use of proceeds: We will use the proceeds to pay for the implementation of our business plan, administrative expenses and general working capital. (i) Number of shares outstanding before the offering: 4,000,000 Number of shares outstanding after the offering: 7,250,000 (if minimum number of shares are sold) 36,500,000 (if maximum number of shares are sold) (i) If the minimum amount of the shares is sold, we will use the proceeds to pay for offering expenses of $8,352. Of the $8,352, the amounts to be paid from the proceeds for expenses of the offering are: $5,000 for accounting fees; $1,500 for filing fees; $800 for legal fees; $52 for registration fee; and $1,000 for transfer agent fees. We will use the rest of the funds (net of offering expenses) to pay off our current liabilities, hire new personnel and implement our business plan. In particular, we will pay our current accounts payable totaling $7,901 that the company owes to third party vendors as of June 30, 2014 for incorporation and filing expenses ($675), general and administrative expenses ($3,871) and cost of revenues ($3,355). We will use the rest of the funds (net of offering expenses) for paying off our current liabilities, hiring new personnel and implementation of our business plan. Selected Financial Data The following financial information summarizes the more complete historical financial information at the end of this Prospectus. The summary information below should be read in conjunction with Selected Historical Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included elsewhere in this Prospectus. Income Statement Data: For the Three Months For the Period from November 21, 2013 Ended (Inception) through September 30, 2014 June 30, 2014 Revenue $ 7,800 $ 10,700 Cost of Revenue (1,350) (4,606) Operating Expenses (11,901) (23,379) Net Income (Loss) $ (5,451) $ (17,285) Balance Sheet Data: As of As of September 30, June 30, 2014 2014 Total Assets $ 5,234 $ 6,616 Total Liabilities (23,970) (19,901) Shareholders' Deficit $ (18,736) $ (13,285) As of September 30, 2014, we had a working capital deficiency of $18,736 and accumulated deficit of $22,736 since inception.
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+PROSPECTUS SUMMARY The following summary highlights aspects of the offering. This prospectus does not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the "Risk Factors" section and the financial statements, related notes and the other more detailed information appearing elsewhere in this prospectus before making an investment decision. In this prospectus, unless otherwise indicated, "we," "us," "our" and the "Company" refer to Legendary Ventures, Inc. and Econ Pest Control Inc. Our Company Legendary Ventures, Inc. is a full pest control services company based in Mississauga, Canada. We offer services both residential and commercial market to the Ontario, Canada community. Through our wholly-owned subsidiary, Encon Pest Control Inc. ("Encon"), we specialize in domestic and commercial extermination and the strategies used are continuously improving so that our standards, knowledge and efficiency, will guarantee customer satisfaction. We offer competitive services at affordable prices. We are a family owned company known for outstanding customer service. We protect households against unwanted pest attacks and assist our customers in keeping their house and offices pest free. Our business strategy involves a team of experts who visit the customer home and determine their problems and then outline a plan of action which is personalized to their needs. Legendary Ventures, Inc. was incorporated in Nevada on December 7, 2012 and became a pest control services company when we acquired Encon. Encon Pest Control, Inc. ("Encon") is a family owned company. Our principal executive offices are located at 5615 Doctor Peddle Cres, Mississauga, Ontario, Canada L5M 0K4, telephone 647.478.6365. Stock Purchase Agreement. On December 31, 2012, the Company entered into a stock purchase agreement with the spouse of our chief executive officer, Fareeha Ahmad, the sole shareholder of Encon Pest Control, Inc. ("Encon"), a private Ontario corporation in the business of serving residential, commercial and industrial southern Ontario communities with pest control services whereby the Company acquired all of the outstanding stock of Encon for a promissory note to Fareeha Ahmad in the amount of $46,400. The original promissory note bears zero percent (0%) interest and has a maturity date, June 30, 2014. As a result of the stock purchase agreement, Encon became a wholly owned subsidiary of the Company. On June 1, 2014, the Company and Fareeha Ahmad executed an amendment to the stock purchase agreement dated December 31, 2012 to cancel the promissory note of $46,400 and replace it with a two year consulting agreement with total annual consulting fees of $23,200 to be paid in monthly installments. As a consultant, Mrs. Ahmad will manage the residential and commercial accounts. The Company has restated its financial statements for the years ended December 31, 2013 and 2012 to account for the amendment to the purchase agreement. We have accounted for the acquisition of Encon as a reorganization of entities under common control. We have used the guidance of Emerging Issues Task Force: No 02-5, Definition of "Common Control" in Relation to FASB Statement No. 141 which states that common control exists among separate entities in situations of immediate family members, most notably with a married couple as in our case. In reorganizations of entities under common control, the balances of the acquired entity are carried over at historical costs with no goodwill or excess consideration recorded. Though we did issue a promissory note to Fareeha Ahmad pursuant to the Agreement, being they are entities under common control and pursuant to the guidelines of FASB 141, all intra-equity transactions are eliminated upon consolidation. Therefore the promissory note of $46,400, noted above, was eliminated upon consolidation. Pursuant to FASB 141, the financial activity of the acquiree (Encon) in a reorganization of entities under common control is presented as if the acquiree was consolidated at the beginning of the period. Please see "Management's Discussion and Analysis of Operations" beginning on page 33 for detailed description of transaction. Please see "Description of Business" – Products and Services"- beginning on page 24 for detailed descriptions of our products and services. Although we have established a website to market our products, prospective investors are strongly cautioned that any information appearing on our website should not be deemed to be a part of this prospectus and should not be utilized in making a decision whether to buy our Common Stock. Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Unit (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee (3) Common Stock Shares offered by the Company 10,000,000 $0.04 $400,000 $ Shares offered by Selling Stockholders 400,000 0.04 $16,000 $ Total 10,400,000 0.04 $416,000 $ (1) Pursuant to Rule 415(o) of the Securities Act, these securities are being offered by the Company and the Selling Stockholder named herein on a delayed or continuous basis. The offering price has been arbitrarily determined. (2) The offering price has been arbitrarily determined by the Board of Directors. (3) Estimated solely for the purpose of calculating the registration fee under Rule 457(c) or (g) under the Securities Act of 1933. (4) These are outstanding shares of common stock which may be offered for sale by a Selling Stockholder pursuant to this registration statement at a fixed price of $0.04 per share until our securities are quoted on the OTCBB or OTCQB (if they ever are quoted on either marketplace) and thereafter at prevailing market prices or privately negotiated prices. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(A) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(A), may determine. Table of Contents SUMMARY OF THIS OFFERING Securities Offered By the Company Up to 10,000,000 Shares of our Common Stock are being offered for sale by the Company. Our Common Stock is described in further detail in the section of this prospectus titled "DESCRIPTION OF SECURITIES – Common Stock." Offering Price We will sell the Shares at $0.04. This price was determined by us arbitrarily. Securities Offered By Selling Stockholders Up to 400,000 Shares of our Common Stock owned by Selling Stockholders are included in this Prospectus. The Selling Stockholders are not obligated to sell any Shares. Offering Price The Selling Stockholders may sell their Shares from time to time at a fixed price of $0.04 until our securities are quoted on the OTCBB or OTCQB (if they ever are quoted on either marketplace) and thereafter at prevailing market prices or privately negotiated prices. Number of shares outstanding before the offering 7,545,000 shares of Common Stock issued and outstanding as of August 1, 2014. Total number of shares of Common Stock outstanding after the offering (if fully subscribed) 17,545,000 shares of Common Stock. Net Proceeds to the Company We intend to accomplish this Offering on a "self-underwritten" basis directly through our officers, directors and/or employees, who will not be separately compensated therefore. However, we reserve the right to utilize an underwriter in which case we will amend this Prospectus to disclose the material terms of such relationship as they pertain to the offering. Additionally, we estimate that costs of this offering for such items as legal and accounting fees, printing, and SEC registration fees, and other charges will total approximately $30,000. Thus net proceeds to the Company if this offering is fully subscribed without the use of underwriters will be $370,000 (assuming $30,000 in Offering expenses are paid). In the event that only 50% of the Shares are sold we will generate net proceeds of $170,000 (assuming $30,000 in Offering expenses are paid). In the event that we only sell 10% of the Shares, we will generate net proceeds of $10,000 (assuming $30,000 in Offering expenses are paid). Use of Proceeds We will use the proceeds from this offering to: (1) purchase machinery and equipment; and (2) provide working capital to finance operational expenses. A summary of our intended use of the proceeds of this offering is set forth in the section of this prospectus titled USE OF PROCEEDS Consummation of the offering We will terminate this offering upon the earlier to occur of (1) one year from the effective date of this prospectus, (2) sale of all the Shares being offered, or (3) anytime after a minimum of six months from the date of the Prospectus at our sole discretion if we determine that it is in our best interests to withdraw the offering. Our common stock is considered to be a "penny stock" because it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Securities Exchange Act of 1934, as amended. The principal result or effect of being designated a "penny stock" is that securities broker-dealers cannot recommend the stock but must trade it on an unsolicited basis. Moreover the SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. JANUARY __, 2015 10,400,000 Shares of Common Stock Offered for Sale 10,000,000 Shares Offered at $0.04 Per Share by the Company 400,000 Shares Offered at Market Price by a Selling Shareholder Legendary Ventures, Inc., a Nevada corporation (the "Company") is offering for sale a total of up to 10,000,000 shares of its common stock, par value $0.001 per share ("Common Stock") on a "self- underwritten," best efforts basis. The shares will be offered at a price of $.04 per share for a period of at least six months but not more than twelve months from the date of this prospectus, and we may close or terminate the Offering earlier than twelve months. There is no minimum number of shares required to be purchased per investor, and we are not required to sell any minimum number of shares in the offering. Proceeds from the offering will not be placed in escrow or similar type of account and will be immediately available for use by the Company. See "Use of Proceeds" and "Plan of Distribution." We make no prediction how many shares we will sell, and we may not realize enough proceeds to remain in operation. In addition, the selling stockholders named in this prospectus (the "Selling Stockholders") are offering for sale from time to time an aggregate of up to 400,000 shares of our Common Stock. If we sell all of the 10,000,000 shares offered by the Company, we will receive $400,000 in estimated gross proceeds. We expect the net proceeds from the sale of all of the shares will sustain our operations for a period of 12 months. We will not receive any of the proceeds from the sale of shares offered by the Selling Stockholders. The shares being offered for resale by the Selling Stockholders will be offered and sold at a fixed price of $0.04 per share until our securities are quoted on the OTC BB or OTCQB (if they ever are quoted on either marketplace) and thereafter at prevailing market prices or privately negotiated prices. If the Selling Shareholders sells all 400,000 shares at a fixed price of $0.04 per share, they may realize approximately $16,000. The shares being offered for resale by the Selling Stockholders represent approximately 5.3% of the Company's current issued and outstanding Common Stock. Also, sales of a substantial number of shares of our Common Stock by the Selling Stockholders within a relatively short period of time could have the effect of depressing the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. The Selling Stockholders and any broker/dealer executing sell orders on behalf of the Selling Stockholders may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended. Commissions received by any broker/dealer may be deemed to be underwriting commissions under the Securities Act. Proceeds received by the Selling Stockholders in excess of $16,000 represent underwriting discounts to the Selling Stockholders. Our common stock is not listed on a national securities exchange or The Nasdaq Stock Market. Our common stock is presently not traded on any market nor listed on any national securities exchange. The offering price at $0.04 per common share may not reflect the market price of our shares after the offering. These securities are speculative and involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. Please refer to "Risk Factors" beginning on Page 3, which describes certain material risks you should consider before investing and "Dilution" beginning on Page 15, which describes the immediate dilution that investors in this offering will suffer. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Table of Contents RISK FACTORS You should carefully consider the risks, uncertainties and other factors described below because they could materially and adversely affect our business, financial condition, operating results and prospects and could negatively affect the market price of our Common Stock. Also, you should be aware that the risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we do not yet know of, or that we currently believe are immaterial, may also impair our business operations and financial results. Our business, financial condition or results of operations could be harmed by any of these risks. The trading price of our Common Stock could decline due to any of these risks, and you may lose all or part of your investment. THERE IS NO MINIMUM NUMBER OF SHARES THAT MUST BE SOLD AND NO ASSURANCE THAT THE PROCEEDS FROM THE SALE OF SHARES WILL ALLOW THE COMPANY TO MEET ITS GOALS. We are selling our shares on a "best efforts" basis, and there is no minimum number of shares that must be sold by us in this Offering. Similarly, there are no minimum purchase requirements. We do not have an underwriter, and no party has made a firm commitment to buy any or all of our securities. We intend to sell the shares through our employees, officers and directors, who will not be separately compensated for their efforts. Even if we only raise a nominal amount of money, we will not refund any funds to you. Any money we do receive will be immediately used by us for our business purposes. Upon completion of this Offering, we intend to utilize the net proceeds to finance our business operations. While we believe that the net proceeds from the sale of all shares in this Offering will enable us to meet our business plans and enable us to operate as other than a going concern, there can be no assurance that all these goals can be achieved. Moreover if less than all of the shares are sold, management will be required to adjust its plans and allocate proceeds in a manner which it believes, in our sole discretion, will be in our best interests. It is highly likely that if not all of the shares are sold there will be a need for additional financing in the future, without which our ability to operate as other than a going concern may be jeopardized. No assurance whatsoever can be given or is made that such additional financing, if and when needed, will be available or that it can be obtained on terms favorable to us. Accordingly you may be investing in a company that does not have adequate funds to conduct its operations. If that happens, you will suffer a loss of your investment. WE NEED ADDITIONAL EXTERNAL CAPITAL AND IF WE ARE UNABLE TO RAISE SUFFICIENT CAPITAL TO FUND OUR PLANS, WE MAY BE FORCED TO DELAY OR CEASE OPERATIONS. We believe that the funds to be raised in this offering will meet all of our needs for the next 12 months (assuming the sale of 100% of the shares). Based on our current growth plan, however, we believe we may require approximately $500,000 in additional financing thereafter to develop our sales channels and marketing program. Our success will depend upon our ability to access equity capital markets and borrow on terms that are financially advantageous to us. However, we may not be able to obtain additional funds on acceptable terms. If we fail to obtain funds on acceptable terms, then we might be forced to delay or abandon some or all of our business plans or may not have sufficient working capital to develop products, finance acquisitions, or pursue business opportunities. If we borrow funds, then we could be forced to use a large portion of our cash reserves, if any, to repay principal and interest on those loans. If we issue our securities for capital, then the interests of investors and stockholders will be diluted. WE HAVE EXPERIENCED HISTORICAL LOSSES AND A SUBSTANTIAL ACCUMULATED DEFICIT. IF WE ARE UNABLE TO REVERSE THIS TREND, WE WILL LIKELY BE FORCED TO CEASE OPERATIONS. We have incurred losses for the past fiscal years which consist of a net loss of $18,002 for 2013 and a net loss of $28,912 for 2012. In addition, we had an accumulated deficit of $60,043 at December 31, 2013 as compared with $42,041 at December 31, 2012. We also incurred a net loss for the nine months ended September 30, 2014 of $136,424. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital will be required for future periods for: (i) new product development expenses; (ii) potential marketing costs and professional fees; or (iii) we encounter greater costs associated with general and administrative expenses or offering costs. As a result, we are unable to predict whether we will achieve profitability in the future, or at all. Table of Contents [Inside Cover of Prospectus] You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should read the entire prospectus before making an investment decision to purchase our Common Stock. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. This prospectus is not an offer to sell securities in any state where the offer is not permitted. Table of Contents The uncertainty and factors described throughout this section may impede our ability to economically develop, produce, and market our products effectively. As a result, we may not be able to achieve or sustain profitability or positive cash flows from operating activities in the future. We have a limited operating history and have not generated significant revenues. We have not achieved profitability and expect to incur losses for the foreseeable future. We expect those losses to increase as we continue to incur expenses to develop our services and increase our product sales. We believe that our business depends on our ability to significantly increase revenues and to limit our operating expenses. If our revenues fail to grow at anticipated rates or our operating expenses increase without a commensurate increase in our revenues, or we fail to adjust operating expense levels appropriately, we may never be able to achieve profitability. Based upon current plans, we expect to incur further indebtedness in future periods. This will happen because there are expenses associated our operations which may exceed revenue. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues may cause us to incur further indebtedness or to suspend or cease operations, which will have a material adverse affect on our shareholders. ANY EXISTING INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITIONS AND WE MAY NOT BE ABLE TO FULFILL OUR DEBT OBLIGATIONS. We have certain indebtedness that may limit our ability to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or make other distributions to our stockholders; (iii) make restricted payments; and (iv) enter into proposed business transactions or combinations. This indebtedness includes: (i) Our indebtedness could limit our ability to withstand general economic downturns that may affect our business, obtain future financing, make acquisitions or capital expenditures, conduct operations or otherwise capitalize on business opportunities that may arise. Additionally, if we incur substantial debt for working capital purposes, we may use a significant portion of our cash flow to pay interest on our outstanding debt, limiting the amount available for working capital, capital expenditures and other general corporate purposes. We may be more vulnerable to adverse economic conditions than less leveraged competitors and thus less able to withstand competitive pressures. If our cash flow is inadequate to make interest and principal payments on our debt, we might have to refinance our indebtedness or issue additional equity or other securities and may not be successful in those efforts or may not obtain terms favorable to us. Additionally, our ability to finance working capital needs and general corporate purposes for the public and private markets, as well as the associated cost of funding, is dependent, in part, on our credit ratings, which may be adversely affected if we experience declining service revenue. Any of these events could reduce our ability to generate cash available for investment or debt repayment or to make improvements or respond to events that would enhance profitability. WE HAVE A NEW BUSINESS MODEL, A NEW BUSINESS APPROACH, AND MAY NOT GENERATE SUFFICIENT REVENUES FOR OUR BUSINESS TO SURVIVE OR BE SUCCESSFUL. Our business model is based on the viability of our services and products that will be sold in a limited geographic area. We have begun marketing some of our services. In order for our business to be successful, we must not only develop viable marketing channels that directly generate revenues, but also cultivate relationships to maintain clients. Our business model assumes that potential clients will see the appeal in the value of our pest control services and products as well as the benefits to purchase higher value services and products we offer. Each of these assumptions is unproven, and if any of the assumptions are incorrect, we may be unable to generate sufficient revenues to sustain our business or to obtain profitability. At the present time, we have service agreements with approximately 12 homes and 11 businesses on a continuous basis representing different regular customers. WEATHER CONDITIONS AND SEASONALITY MAY AFFECT THE DEMAND FOR OUR SERVICES AND OUR RESULTS OF OPERATIONS. The demand for our services and our results of operations may be affected by weather conditions and by the seasonal nature of our termite and pest control services. For example, cooler temperatures can made the development of the termite swam and lead to lower demand for our termite services. INCREASES IN RAW MATERIAL PRICES, FUEL PRICES AND OTHER OPERATING COSTS MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. Our financial performance is affected by the level of our operating expenses, such as fuel, raw materials, wages and salaries, vehicle, self-insurance costs and other insurance premiums as well as various regulatory compliance costs, all of which may be subject to inflationary pressures. In particular, our financial performance is adversely affected by increases in these operating costs. In recent years, fuel prices have fluctuated widely and have generally increased, including sharp increases in 2012 and 2013. These fuel price increases raise our costs of operating vehicles and equipment. Fuel price increases can also result in increases in the cost of chemicals and other materials used in our business. We cannot predict the extent to which we may experience future increases in fuel costs and other operating costs. To the extent such cost increases continue, we may not be able to fully pass these increased costs through to our existing and prospective customers, and the rates we pay may increase, any of which could have a material adverse impact on our operating results. With respect to fuel, our fleet could be negatively impacted by significant increases in fuel prices. A shortage in supply of fuel would also adversely affect our business. Table of Contents CHANGES IN GENERAL ECONOMIC CONDITIONS, ESPECIALLY AS THEY MAY AFFECT HOME RE-SALES OR CONSUMER CONFIDENCE OR SPENDING LEVELS, MAY ADVERSELY AFFECT THE DEMAND FOR OUR SERVICES. Changes in general economic conditions and consumer confidence affect the demand for our services. Unfavorable general economic conditions such as those experienced recently, including rising fuel prices, changes in interest rates, continued or further softening of the home resale market, increases in home foreclosures, disruption of the credit markets and increases in unemployment rates, could reduce consumer confidence and related spending levels and, in turn, reduce the demand for our services. These factors could also negatively impact the timing or the ultimate collection of accounts receivable, which would negatively impact our operating revenues, profitability and cash flow. PUBLIC PERCEPTIONS THAT OUR PRODUCTS AND SERVICES ARE NOT ENVIRONMENTALLY FRIENDLY OR SAFEMAY ADVERSELY AFFECT THE DEMAND FOR OUR SERVICES. In providing our services, we use, among other things, pesticides. Public perception that our products and services are not environmentally friendly or safe or are harmful to humans, whether justified or not, could lead to reduced demand for our services, impair our reputation, involve us in litigation, damage our brand name and otherwise have a material adverse effect on our business, financial condition and results of operations. LAWS AND REGULATIONS REGARDING THE USE OF PESTICIDES AND CLAIMSOF PERSONALINJURY OR PROPERTY DAMAGE AS WELL AS OTHER ENVIRONMENTALLAWS AND RESULTIAOTNS COULD RESULT IN SIGNIFICANT COSTS THAT ADVERSELY AFFECT OUR OPERATING RESULTS. Local, national and international laws and regulations relating to environmental, health and safety matters affect us in several ways. In Canada, all products containing pesticides must be registered with the Health Canada Pest Management Regulatory Agency ("PMRA") and other similar agencies before they can be sold or applied. The failure to obtain or the cancellation of any such registration, or the other withdrawal from the market place of such pesticides, could have an adverse effect on our business, the severity of which would depend on the products involved, whether other products could be substituted and whether our competitors were similarly affected. The pesticides we use are manufactured by independent third parties and are evaluated by the PMRA as part of its ongoing exposure risk assessment. The PMRA may decide that a pesticide we use will be limited or will not be re-registered for use in Canada. We cannot predict the outcome or the severity of the effect of the PMRA' s continuing evaluations. In addition, the use of certain pesticides is regulated by various local environmental and public health agencies. These regulations may require that only certified or professional users apply the product or that certain products be used only on certain types of locations, may require users to post notices on properties to which products have been or will be applied, may require notification to individuals in the vicinity that products will be applied in the future or may restrict or ban the use of certain products. Even if we are able to comply with all such regulations and obtain all necessary registrations and licenses, we cannot assure you that the products we apply or the manner in which we apply them, particularly pesticide products, will not be alleged to cause injury to the environment or to people under any circumstances. The costs of compliance, remediation or products liability lawsuits could materially affect our future operating results. Local, state, federal and foreign agencies that regulate environmental matters may change environmental laws, regulations or standards. Changes in any of these or other laws, regulations or standards could materially affect our future operating results. Table of Contents BECAUSE OF OUR LIMITED RESOURCES AND THE SPECULATIVE NATURE OF OUR BUSINESS, THERE IS SUBSTANTIAL DOUBT AS TO OUR ABILITY TO OPERATE AS A GOING CONCERN. Our continued operations are dependent on our ability to obtain financing and upon our ability to achieve future profitable operations from the development of our business model. Our independent registered public accounting firm (our auditors) issued its audit report including an explanatory paragraph as to an uncertainty with respect to our ability to continue as a going concern. If we are not able to continue as a going concern, it is likely investors will lose their investment. OUR FUTURE OPERATING RESULTS ARE LIKELY TO BE VOLATILE AND MAY CAUSE OUR EQUITY VALUE TO FLUCTUATE. Our future revenues and operating results, if any, are likely to vary from quarter to quarter due to a number of factors, many of which are outside of our control. Factors, which may cause our revenues and operating results to fluctuate, include the following: The willingness of potential clients to enter into service agreements with us Market acceptance of our services and products; Seasonal and weather related needs of our services and products; The timing and uncertainty of sales cycles or demand for the products; Similar services and products offered by current or future competitors; and General economic conditions in Ontario, Canada. IF WE FAIL TO ATTRACT ADDITIONAL CLIENTS AND PURCHASERS OF OUR PRODUCTS, IT WILL HAVE AN ADVERSE IMPACT ON OUR BUSINESS. Our success depends upon our ability to attract additional clients to enter into service agreements with us and to sell our pest control services to clients. If we do not continually augment and improve our marketing channels, we will not be able to sustain a sales level that will support our operations without the infusion of additional capital. Table of Contents IF WE DO NOT EFFECTIVELY EDUCATE CLIENTS ON THE BENEFITS OF A PEST FREE ENVIRONMENT AND OVERALL PEST CONTROL, WE WILL NOT HAVE SUFFICIENT DEMAND FOR OUR SERVICES AND PRODUCTS. Our business plan is predicated on our company attracting active and loyal support from potential clients. Our target market will be commercial, industrial, and residential consumers that have a specific interest in keeping their property pest free and looking clean while utilizing pest control services and products. There can be no assurance that there will be significant appeal from our efforts to attract clients and educate them on the benefits of our services and products. Failure to achieve recognition and acceptance of the services and products we offer will have a material adverse effect on our sales and may require us to incur unexpected incremental marketing expenses to educate and inform the market place. AS A RESULT OF OUR LIMITED OPERATING HISTORY, WE MAY NOT BE ABLE TO CORRECTLY ESTIMATE OUR FUTURE OPERATING EXPENSES, WHICH COULD LEAD TO CASH SHORTFALLS. We have a limited operating history from which to evaluate our business. We have generated minimal revenue to date. Accordingly, our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in an early stage of development. We may not be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business, operating results and financial condition. Because of this limited operating history, our historical financial data is of limited value in estimating future operating expenses. Our budgeted expense levels are based in part on our expectations concerning future revenues. Our ability to generate revenues depends on new client service contracts generated by our company. The size of any future revenues depends on the choices and demands of potential clients residing in the territory, which are difficult to forecast accurately. We may be unable to adjust our operations in a timely manner to compensate for any unexpected shortfall in revenues. Accordingly, a significant shortfall in demand for our pest control services and products could have an immediate and material adverse effect on our business, results of operations, and financial condition. Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control, primarily because our core business may be seasonal in nature and different seasons require different services and products and quantities of quantities thereof. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as any indication of our future performance. Our quarterly and annual expenses are likely to increase substantially over the next several years, and revenues from the sale of the services and product in the market may not meet our expectations. Our operating results in future quarters may fall below expectations. Any of these events could adversely impact our business prospects and make it more difficult to raise additional equity capital at an acceptable price per share. Each of the risk factors listed in this "Risk Factors" section may affect our operating results. We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing when such funding is required. Obtaining additional financing would be subject to a number of factors, including investor acceptance of our services and our business model. Furthermore, there is no assurance that we will not incur further debt in the future, that we will have sufficient funds to repay our future indebtedness, or that we will not default on our future debts, thereby jeopardizing our business viability. Finally, we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to maintain our operations, which might result in the loss of some or all of your investment in our common stock. Table of Contents Our company anticipates that the funds that were raised from our previous private placement will not be sufficient to satisfy our cash requirements for the next twelve month period. Also, there is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: 1. we are unable to create a substantial market for our pest control services; 2. we incur any significant unanticipated expenses; and 3. we find that we need to spend additional funds to advertise in the market and promote our pest control services and products. The occurrence of any of the aforementioned events could prevent us from pursuing our business plan, expanding our business operations and ultimately achieving a profitable level of operations. We depend almost exclusively on outside capital to pay for the continued development of our business and the marketing of our services and products. Such outside capital may include the sale of additional stock, shareholder and director advances, and/or commercial borrowing. There can be no assurance that capital will continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us will result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may not be able to expand to our planned franchising phase and may be forced to scale back or cease operations or discontinue business. IF WE DO LAUNCH PLANNED MARKETING INITIATIVES, OUR TARGET CLIENT MARKET MAY NOT BE RECEPTIVE TO THE PEST CONTROL SERVICES AND PRODUCTS PROVIDED, THE COST OF THE PEST CONTROL SERVICES AND PRODUCTS MAY BE PROHIBITIVE AND WE MAY NOT ATTRACT NEW CLIENTS. No assurance can be given that our pest control services and products will be accepted by potential clients. In the event there is no generally large market acceptance in the services and products by potential clients in the territories where we are entering, it is unlikely that we will be able to sustain commercial operations. If there is no demand or only a limited demand for our pest control services and products, we could financially fail and our shareholders could potentially lose their entire investment. WE RELY ON OUR MANAGEMENT AND WILL BE HARMED IF ANY OR ALL OF THEM LEAVE. Our success is dependent on the efforts, experience and relationships of Zahoor Ahmad as well as the other officer of the corporation. If Mr. Ahmad were unable to continue in his role, the business would be adversely affected as to its business prospects and earning potential. We do not currently carry any insurance to compensate for any such loss. WE MAY NOT BE ABLE TO MAINTAIN A COMPETITIVE POSITION IN THE PEST CONTROL INDUSTRY IN THE FUTURE. We operate in a highly competitive industry. Our revenues and earnings may be affected by changes in competitors prices, and general economic issues. We compete with other large pest control companies, as well as numerous smaller pest control companies, for a finite number of customers. We believe that the principal competitive factors in the market areas that we serve are service quality, and product availability, terms of guarantees, reputation for safety, technical proficiency and price. Although we believe that our experience and reputation for safety and quality service is excellent, we cannot assure investors that we will be able to maintain our competitive position. Table of Contents OUR OPERATIONS MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO COMPLY WITH REGULATORY AND ENVIRONMENTAL LAWS. Our business is significantly affected by environmental laws and other regulations relating to the pest control industry and by changes in such laws and the level of enforcement of such laws. We are unable to predict the level of enforcement of existing laws and regulations, how such laws and regulations may be interpreted by enforcement agencies or court rulings, or whether additional laws and regulations will be adopted. We believe our present operations substantially comply with applicable Canadian federal and province environmental laws and regulations. We also believe that compliance with such laws has had no material adverse effect on our operations to date. However, such environmental laws are changed frequently. We are unable to predict whether environmental laws will, in the future, materially affect our operations and financial condition. Penalties for noncompliance with these laws may include cancellation of licenses, fines, and other corrective actions, which would negatively affect our future financial results. ECONOMIC CONDITIONS MAY ADVERSELY AFFECT OUR BUSINESS. Pest and termite services represent discretionary expenditures to most of our residential customers. As consumers restrict their discretionary expenditures, we may suffer a decline in revenues from our residential service lines. Economic downturns can also adversely affect our commercial customers, including food service, hospitality and food processing industries whose business levels are particularly sensitive to adverse economies. For example, we may lose commercial customers and related revenues because of consolidation or cessation of commercial businesses or because these businesses switch to a lower cost provider. OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS RAISED DOUBT OVER OUR ABILITY TO CONTINUE AS A GOING CONCERN. The independent registered public accounting firm s report accompanying our December 31, 2013 and 2012 audited financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that the Company will continue as a going concern." Our ability to continue as a going concern is dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. There can be no assurance that we will be able to raise sufficient additional capital or eventually have positive cash flow from operations to address all of our cash flow needs. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders will be materially and adversely affected WE MUST SUCCESSFULLY INTRODUCE NEW OR ENHANCED PRODUCTS AND MANAGE THE COSTS ASSOCIATED WITH PROVIDING SEVERAL SERVICES AND PRODUCT LINES TO BE SUCCESSFUL. WE OPERATE IN A MARKET WHICH IS SUBJECT TO INNOVATIVE CHANGES AND INCREASING COMPETITION COULD LEAD TO PRICING PRESSURES, REDUCED OPERATING MARGINS, LOSS OF MARKET SHARE AND INCREASED CAPITAL EXPENDITURES. Our future success depends on our ability to continue to improve our existing pest control products and to develop new products using the latest techniques that will satisfy customer needs. We cannot be certain that we will be successful at producing successful service lines and we may find that the cost of several service lines may inhibit our ability to maintain or improve our gross profit margins. In addition, the failure of our pest control services to gain or maintain market acceptance or our failure to successfully manage our cost of production could adversely affect our financial condition. The pest control industry and market is highly competitive and we expect increased competition in the future that could adversely affect our revenue and market share. Larger established companies with high brand recognition may develop products and services that are competitive with our core products and services. These competitors may be able to devote greater resources than us to the development, promotion and sale of their products and services and respond more quickly than we can to new techniques and/or technologies or changes. We may not be able to compete effectively with current or future competitors, especially those with significantly greater resources or more established customer bases, which may materially adversely affect our sales and our business. Table of Contents THE CONFIDENTIALITY, NON-DISCLOSURE AND OTHER AGREEMENTS WE USE TO PROTECT OUR PRODUCTS, TRADE SECRETS AND PROPRIETARY INFORMATION MAY PROVE UNENFORCEABLE OR INADEQUATE. We intend to protect our products, trade secrets and proprietary information, in part, by requiring all of our employees and consultants to enter into agreements providing for the maintenance of confidentiality. We intend to also enter into non-disclosure agreements with our technical consultants to protect our confidential and proprietary information. We cannot assure you that our confidentiality agreements with our employees, consultants and other third parties will not be breached, that we will be able to effectively enforce these agreements, that we will have adequate remedies for any breach, or that our trade secrets and other proprietary information will not be disclosed or will otherwise be protected. WE MAY BE UNABLE TO ATTRACT AND RETAIN THE SKILLED EMPLOYEES NEEDED TO SUSTAIN AND GROW OUR BUSINESS. Our success to date has largely depended on, and will continue to depend on, the skills, efforts and motivations of our executive team and employees, who generally have significant experience with the pest control industry. Our success also depends largely on our ability to attract and retain highly qualified pest control professionals and sales and marketing managers and corporate management personnel. We may experience difficulties in locating and hiring qualified personnel and in retaining such personnel once hired, which may materially and adversely affect our business. OUR DIRECTORS AND OFFICERS ARE ABLE TO EXERCISE SIGNIFICANT INFLUENCE OVER MATTERS REQUIRING STOCKHOLDER APPROVAL. Currently, we have 7,545,000 shares of common stock issued and outstanding. Currently, our sole director and executive officer holds approximately 53% of the voting power of our common stock and entitled to vote on any matter brought to a vote of the stockholders. Pursuant to Nevada law and our bylaws, the holders of a majority of our voting stock may authorize or take corporate action with only a notice provided to our stockholders. A stockholder vote may not be made available to our minority stockholders, and in any event, a stockholder vote would be controlled by the majority stockholders. Our sole officer will have the ability to make decisions regarding: (i) whether to issue common stock and preferred stock, including decisions to issue common and preferred stock to himself; (ii) employment decisions, including his own compensation arrangements; and (iii) whether to enter into material transactions with related parties. OUR CEO/PRESIDENTAND CFO HAS LITTLE OR NO EXPERIENCE MANAGING A PUBLIC REPORTING COMPANY AND MAY NOT BE FULLY AWARWE OF ALL THE REQUIREMENTS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING THOSE REGARDING INTERNAL CONTROLS. Our President/Chief Executive Officer/Chief Financial Officer has not has previously managed a public reporting company and, therefore, will need to rely on the expertise of others, including our outside accountant, auditors and legal counsel, regarding preparation of reports under the Securities Exchange Act, preparation of financial statements according to U.S. GAAP, establishment of internal controls and procedures, and overall compliance with the Sarbanes-Oxley Act. NEVADA LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OUR DIRECTORS FROM CERTAIN TYPES OF LAWSUITS. Nevada law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances. WE ARE AN "EMERGING GROWTH COMPANY" AND WE CANNOT BE CERTAIN IF THE REDUCED REPORTING REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCKLESS ATTRACTIVE TO INVESTORS. We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, delay compliance with new or revised accounting standards that have different effective dates for public and private companies until they are made applicable to private companies, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a non binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. We have decided to take advantage of the exemptions provided to emerging growth companies and as a result our financial statements may not be comparable to companies that comply with public company effective dates. In addition, some investors might find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. FAILURE TO MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT WOULD LEAD TO LOSS OF INVESTOR CONFIDENCE IN OUR REPORTED FINANCIAL INFORMATION. Pursuant to proposals related to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required to furnish a report by our management on our internal control over financial reporting. If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly. Table of Contents Consultant Agreement On June 1, 2014, our Board of Directors approved the issuance of 1,000,000 shares of our restricted common stock to Zirex Consulting in accordance with the terms and provisions of the Consultant Agreement. The shares of common stock were issued at a per share price of $0.05. The shares of common stock were issued in accordance with the terms and provisions of the Consultant Agreement in reliance on Regulation S promulgated under the United States Securities Act of 1933, as amended (the "Securities Act"). The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. Zirex Consulting acknowledged that the securities to be issued have not been registered under the Securities Act and that it understood the economic risk of an investment in the securities. Executive Service Agreement On June 1, 2014, our Board of Directors approved the issuance of 1,000,000 shares of our restricted common stock to our sole officer and director, Zahoor Ahmad, in accordance with the terms and provisions of the Executive Service Agreement. The shares of common stock were issued at a per share price of $0.05. The shares of common stock were issued in accordance with the terms and provisions of the Executive Service Agreement in reliance on Regulation S promulgated under the United States Securities Act of 1933, as amended (the "Securities Act"). The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. Zahoor Ahmad acknowledged that the securities to be issued have not been registered under the Securities Act and that it understood the economic risk of an investment in the securities. ITEM 16 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following exhibits are filed as part of this registration statement unless otherwise indicated: Incorporated by reference Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date 3.1 Articles of Incorporation S-1 3.1 8/5/2014 3.2 By-Laws S-1 3.2 8/5/2014 4.2 Sample Subscription Agreement between Legendary Ventures. X 5.1 Opinion of Counsel on legality of securities being registered X 10.1 Executive Service Agreement between Legendary Ventures Inc. and Zahoor Ahmad dated June 1, 2014. S-1 10.1 8/5/2014 10.2 Consultant Agreement between Legendary Ventures Inc. and Zeeshan Saeed dated June 1, 2014. S-1 10.2 8/5/2014 10.3 Stock Purchase Agreement between Legendary Ventures Inc. and Fareeha Ahmad dated December 31, 2012. S-1 10.3 8/5/2014 10.4 Amendment No. 1 to Stock Purchase Agreement between Legendary Ventures Inc. and Fareeha Ahmad dated December 31, 2012 X S-1/A 10.5 Consulting Agreement with Fareeh Ahmad dated June 1, 2014. X 10.6 Convertible promissory note to Zeeshan Saeed dated June 20, 2014 X S-1/A 10.7 Amendment No. 1 to Consultant Agreement between legendary Ventures Inc. and Zeeshan Saeed dated December 1, 2014. X 21 List of Subsidiares X 23.1 Consent of Accountants X 23.2 Consent of Counsel (as part of Exhibit 5.1) Table of Contents To maintain compliance with Section 404 of the Act, we engage in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging and requires management to dedicate scarce internal resources and to retain outside consultants. During the course of our testing, we may identify deficiencies which we may not be able to remediate in time for securities disclosure reporting deadlines. In addition, if we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. THERE IS NO SIGNIFICANT ACTIVE TRADING MARKET FOR OUR SHARES, AND IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP, PURCHASERS OF OUR SHARES MAY BE UNABLE TO SELL THEM PUBLICLY. There is no significant active trading market for our shares, and we do not know if an active trading market will develop. An active market will not develop unless broker-dealers develop interest in trading our shares, and we may be unable to generate interest in our shares among broker-dealers until we generate meaningful revenues and profits from operations. Until that time occurs, if it does at all, purchasers of our shares may be unable to sell them publicly. In the absence of an active trading market: Investors may have difficulty buying and selling our shares or obtaining market quotations; Market visibility for our common stock may be limited; and A lack of visibility for our common stock may depress the market price for our shares. Moreover, the market price for our shares is likely to be highly volatile and subject to wide fluctuations in response to various factors, including the following: (i) actual or anticipated fluctuations in our quarterly operating results and revisions to our expected results; (ii) changes in financial estimates by securities research analysts; (iii) conditions in the market for our products; (iv) changes in the economic performance or market valuations of companies specializing in the defense industries; (v) announcements by us or our competitors of new services, strategic relationships, joint ventures or capital commitments; (vi) addition or departure of key personnel; (vii) litigation related to any intellectual property; and (viii) sales or perceived potential sales of our shares. In addition, the securities market has from time to time, and to an even greater degree since the last quarter of 2007, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ordinary shares. Furthermore, in the past, following periods of volatility in the market price of a public company s securities, shareholders have frequently instituted securities class action litigation against that company. Litigation of this kind could result in substantial costs and a diversion of our management s attention and resources. OUR COMMON STOCK IS CONSIDERED TO BE "PENNY STOCK." Our common stock is considered to be a "penny stock" because it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Securities Exchange Act of 1934, as amended. These include but are not limited to, the following: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a "recognized" national exchange; (iii) it is not quoted on The NASDAQ Stock Market, or even if quoted, has a price less than $5.00 per share; or (iv) is issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of less than $6.0 million for the past three years. The principal result or effect of being designated a "penny stock" is that securities broker-dealers cannot recommend the stock but must trade it on an unsolicited basis. Table of Contents The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares. BROKER-DEALER REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY. Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stocks." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise. OUR COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE THAT YOU MAY PAY FOR THE SHARES. Because of the limited trading market for our common stock, and because of the possible price volatility, you may not be able to sell your shares of common stock when you desire to do so. The inability to sell your shares in a rapidly declining market may substantially increase your risk of loss because of such illiquidity and because the price for our common stock may suffer greater declines because of its price volatility. Table of Contents The market price of our common stock may be higher or lower than the price you may pay for your shares. Certain factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to, the following: variations in our quarterly operating results; Loss of a key relationship or failure to complete significant transactions; additions or departures of key personnel; and fluctuations in stock market price and volume. Additionally, in recent years the stock market in general, and the over-the-counter markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies' common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on your investment in our stock. WE HAVE NOT PAID, AND DO NOT INTEND TO PAY, CASH DIVIDENDS IN THE FORESEEABLE FUTURE. We have not paid any cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Dividend payments in the future may also be limited by other loan agreements or covenants contained in other securities which we may issue. Any future determination to pay cash dividends will be at the discretion of our board of directors and depend on our financial condition, results of operations, capital and legal requirements and such other factors as our board of directors deems relevant. SALES OF OUR COMMON STOCK RELYING UPON RULE 144 MAY DEPRESS PRICES IN THE MARKET FOR OUR COMMON STOCK BY A MATERIAL AMOUNT. As of the date of this Prospectus, all of our common stock held by non-affiliates that was issued before July 1, 2013 has been issued and outstanding beyond applicable holding periods imposed by Rule 144 under the Securities Act of 1933, as amended. Thus, with stock issued prior to July 1,2013 to non-affiliates being freely tradeable, there is a significant risk that sales under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of our common stock in the over-the-counter market, especially in situations where a large volume of shares is offered for sale at the same time. Securities saleable pursuant to the Rule 144 exemption from registration may only be resold, however, if all of the requirements of Rule 144 have been met, including, but not limited to, the requirement that the issuer of the securities have made available all required public information. However, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for a period of at least six months and the other requirements of Rule 144 have been satisfied. Presently shares of restricted common stock held by non-affiliates of the Company may be sold, subject to compliance with Rule 144, six months after issuance, provided that our Exchange Act registration remains in effect and we are current in our disclosure reporting obligations. THE OFFERING PRICE OF THE SHARES OFFERED BY THE COMPANY WAS NOT DETERMINED BY TRADITIONAL CRITERIA OF VALUE. Presently there is no limited market for our shares of common stock on the OTCQB or OTCBB. Trading of our common stock does not occur and therefore our common stock will be relatively illiquid and difficult to price. We cannot give any assurance that the future quoted prices on the OTCBB for our shares will have any relation to the actual value of the Company. Accordingly potential investors in this Offering should note that the Offering price of the shares being offered pursuant to this Prospectus was arbitrarily established by us and was not determined by reference to any traditional criteria of value, such as book value, earnings or assets. Table of Contents PURCHASERS OF THE SHARES WILL INCUR AN IMMEDIATE AND SUBSTANTIAL DILUTION. The purchasers of the shares being offered hereby will furnish a substantial amount of our capital and will assume substantially all of the financial risk, whereas the present stockholders and the Selling Stockholders will receive a substantial majority of the benefits, if any. In addition, the present Stockholders may have substantial potential profits as a result of this Offering, while purchasers of the newly-issued Shares will experience an immediate and substantial percentage dilution in the net tangible book value of their of their Shares. See: "DILUTION." WE ARE NOT A FULLY REPORTING COMPANY UNDER THE EXCHANGE ACT, AS AMENDED, AND THUS SUBJECT ONLY TO THE REPORTING REQUIREMENTS OF SECTION 15(d). Until our common stock is registered under the Exchange Act of 1934, as amended (the "Exchange Act"), we will be subject only to the reporting obligations imposed by Section 15(d) of the Exchange Act. Section 15(d) of the Exchange Act requires issuers to file periodic reporting with the Securities and Exchange Commission when they have issued any class of securities for which a registration statement was filed and became effective pursuant to the Securities Act of 1933, as amended. The purpose of Section 15(d) is to ensure that investor who buy securities in registered offering are provided with the same information on an ongoing basis that they would receive if the securities they purchased were listed on a securities exchange or the issuer were otherwise subject to periodic reporting obligations i.e, under Section 13 of the Exchange Act. The reporting obligations under Section 15(d) are automatically suspended when: (i) any class of securities of the issuer reporting under Section 15(d) is registered under Section 12 of the Exchange Act; or (ii) at the beginning of the issuer s fiscal year, other than the year in which the registration statement became effective, the class of securities covered by the registration statement is held of record by fewer than 300 persons. In the latter case, the Company would no longer be subject to periodic reporting obligations so long as the number of holders remains below 300 unless we file a registration statement with the Securities and Exchange Commission under Section 12 of the Securities Act. Management of the Company, however, fully intends to file on an ongoing basis all periodic reports required under the Exchange Act. We anticipate an increase in expenses that will result from becoming a reporting company. Management has estimated the yearly increase in expenses to be $50,000, which will consist of approximately $30,000 in audits and reviews, $15,000 in legal costs, and $5,000 in filing and miscellaneous fees. The Company does not anticipate a change in officer compensation once it becomes a reporting company. NEVADA LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OR DIRECTORS FROM CERTAIN TYPES OF LAWSUITS. Nevada law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances. Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Information included in this Prospectus contains forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of View Systems, Inc. (the "Company"), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. DESCRIPTION OF SECURITIES Our amended and restated articles of incorporation provide that we are authorized to issue one class of equity securities comprised of 410,000,000 shares of common stock with a par value of $0.001 per share. We are also authorized to issue rights, warrants, and options to purchase any class of equity securities. Common Stock This offering pertains only to our Common Stock. Pursuant to the terms of our articles of incorporation, our common stock may be issued from time to time without any action by the stockholders for such consideration as may be fixed from time to time by the Board of Directors, and shares so issued, the full consideration for which has been paid or delivered, shall be deemed the full paid up stock, and the holder of such shares shall not be liable for any further payment thereof. Shares of common stock are not redeemable, do not have any conversion or preemptive rights, and are not subject to further calls or assessments by the Company once fully paid and shall not be subject to assessment to pay the debts of the Company. Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders and may not cumulate their votes for the election of directors. Holders of common stock will be entitled to share pro rata in such dividends and other distributions as may be declared from time to time by the Board of Directors out of funds legally available therefore, subject to any prior rights accruing to any holders of preferred stock of the Company. Upon liquidation or dissolution of, or any distribution of the assets of, the Company, holders of shares of common stock will be entitled to share proportionally in all assets available for distribution to such holders. USE OF PROCEEDS We estimate that, if our Offering is fully subscribed, we will receive net proceeds of $370,000 from our sale of 10,000,000 Shares. This estimate is based on an Offering price of $0.04 per share, and assumes that we will not engage the services of an underwriter to assist us in selling all of the shares. If we engage an underwriter, our net proceeds will be reduced by the negotiated commissions paid to the underwriter. However, as of the effective date of this prospectus, we have not engaged an underwriter. For purposes of this disclosure we have assumed that no commissions will be paid on any shares. Additionally, we estimate that our direct costs of this Offering (SEC filing fees, legal, accounting, printing, and miscellaneous expenses) will be $30,000. The primary purposes of this Offering are to obtain additional capital to: (i) purchase innovative equipment and machinery; and (ii) provide working capital to finance operational expenses. If fully funded, included in our working capital budget of $110,000, we anticipate to budget $25,000 for website development. We do not anticipate using funds raised to pay compensation to our officer and director or to our two consultants or to pay off outstanding liabilities prior to maturity or in an accelerated way. The table below represents our best estimate of the allocation of the net proceeds, including the priorities for the use of the proceeds, based upon our current business plan and assuming that all of the shares are sold and not used to retire debt in exchange for common stock registered in this offering. Table of Contents Assuming the Sale of All Shares Gross Proceeds from Offering $400,000 100% Offering Expenses (legal, accounting, filing fees, printing, transfer agent, And miscellaneous fees) 30,000 7.5% Acquisition of Machinery and Equipment 260,000 65.0% Working Capital (including office expense, general administration expenses, professional fees and website development) per breakdown below: Office expense $9,760; administration expenses of $48,240; professional fees of $45,000; and website development of $8,000. 110,000 27.5% Total $400,000 100% Assuming the Sale of 50% of the Shares Gross Proceeds from Offering $200,000 100% Offering Expenses (legal, accounting, filing fees, printing, transfer agent, and miscellaneous fees) 30,000 15.0% Acquisition of Machinery and Equipment 130,000 65.0% Working Capital (including office expense, general administration expenses, professional fees and website development) per breakdown below: Office expense $10,700; administration expenses of $22,300; and website development of $7,000. 40,000 20.00% Total $200,000 100% Assuming the Sale of 10% of the Shares Gross Proceeds from Offering $40,000 100% Offering Expenses (legal, accounting, filing fees, printing, transfer agent and miscellaneous fees) 30,000 75% Acquisition of Machinery and Equipment 7,000 17.5 Working Capital (including office expense, general administration expenses, professional fees and website development) per breakdown below: Office expense $1,920 and administration expenses of $1,080. 3,000 7.5% Total 40,000 100% The amounts set forth merely indicate the general application of net proceeds of the Offering. Actual expenditures relating to the development of our business may differ from the estimates depending on the efficacy of our business development efforts, unanticipated costs in connection therewith as well as changes in the industry and actions of our competitors among other causes. There can be no assurance we will be successful in our efforts to secure investors to invest in our Offering and/or obtain alternative financing. In the event that not all of the Shares are sold, management in its sole discretion will allocate the proceeds of this Offering in a manner in which it determines will be in our best interests. In such an event we may not be able to follow our business plan. This may have a significant impact on our ability to continue operating our business. Moreover even if all of the Shares are sold, management reserves the right to alter the above projected use of proceeds if it determines that such changes will be in our best interests. Accordingly, the amounts and timing of our actual expenditures will depend on numerous factors, including the status of our development and marketing activities and competition. Accordingly, our management will have broad discretion in the use of the net proceeds from this Offering. All net proceeds from this Offering will be immediately available for use by the Company. Table of Contents DETERMINATION OF OFFERING PRICE Since there is no trading of our shares of common stock, the offering price of our shares was unilaterally determined solely by us. The factors we considered in determining the Offering price were: our financial condition and prospects; pest control industry market in general; our operating history; the general condition of the securities market; and management s informal prediction of demand for securities such as the shares. The Offering price is not an indication of and is not based upon our actual value. The Offering price bears no relationship to our book value, assets or earnings or any other recognized criteria of value. The Offering price should not be regarded as an indicator of the future market price of our securities and/or the price at which any investor will be able to resell shares purchased in this Offering. DILUTION Upon purchasing share in this offering, you will experience immediate and substantial dilution. "Dilution" represents the difference between the offering price of the shares of Common Stock and the net book value per share of Common Stock immediately after completion of the offering. "Net Book Value" is the amount that results from subtracting total liabilities from total assets. In this offering, the level of dilution is increased as a result of the relatively low book value of Legendary Ventures, Inc. s issued and outstanding stock. The following table summarizes the difference between the offering price in this registration and the share price recognized to outstanding shareholders. Price Paid Offering Share Price Difference % Ownership Post-Offering (1) Shares issued to founding officer $0.00 $0.04 $0.04 19.3% Shares issued for cash $0.01 $0.04 $0.03 16.4% Contributions by investors in this offering (2) $0.04 $0.04 $- 64.3% (1) Calculation of percentage is based on the assumption that all 10,000,000 shares offered in this prospectus are sold. (2) Contributions by investors in this offering represent the total potential investment amount if all shares in this offering were sold. Table of Contents The difference between our estimated offering price of $0.04 per share of common stock and the pro forma net tangible book value per share of common stock after this offering constitutes the dilution to investors in this offering. Our net tangible book value per share is determined by dividing our net tangible book value (total tangible assets less total liabilities) by the number of outstanding shares of common stock. At September 30, 2014 our common stock had a pro forma net tangible book value of approximately ($64,090) or $(0.008) per share. After giving effect to the receipt of the net proceeds from the maximum offering offered in this prospectus by the Company at an assumed initial offering price of $0.04 per share, our pro forma net tangible book value at September 30, 2014 would be $335,910 or $0.04 per share in the maximum offering. This represents an immediate increase in net tangible book value to our present stockholders of $400,000 in the maximum offering. The following table illustrates dilution to investors on a per share basis: Estimated offering price per share $0.04 Net tangible book value per share before offering $(0.008) Pro forma net tangible book value per share after offering $0.04 Increase per share attributable to investors $0.032 Dilution per share to investors $0.04 Dilution per share to investors (%) 80% SELLING STOCKHOLDERS The following section presents information regarding our Selling Stockholders. The Selling Stockholders table and the notes thereto describe the Selling Stockholders and the number of securities being sold. A description of how the Selling Stockholders acquired the securities being sold in this offering is detailed under in the footnotes to the Selling Stockholders Table. We are registering 400,000 shares owned by and on behalf of the Selling Stockholders named in this prospectus. We will pay all costs, expenses and fees related to the registration, including all registration and filing fees, printing expenses, fees and disbursements of our counsel, blue sky fees and expenses. We will not offer any shares on behalf of a Selling Stockholders. The Selling Stockholders are not required to sell their shares, nor have they indicated to us, as of the date of this prospectus, an intention to sell its shares. The Selling Stockholders are offering the common stock for their own account. The following table provides as of the date of this prospectus, information regarding the beneficial ownership of our common stock held by the Selling Stockholders, including, (i) the number of shares of our common stock beneficially owned by each prior to this offering; (ii) the percentage of such shares of the Company's issued and outstanding shares; (iii) the total number of shares of our common stock that are to be offered by the Selling Stockholders; (iv) the percentage of the issued and outstanding shares being offered;(v) the total number of shares that will be beneficially owned by the Selling Stockholders upon completion of the offering; and (vi) the percentage owned by each upon completion of the offering. To the best of our knowledge, neither of the Selling Stockholders is a broker-dealer or affiliate thereof. The shares below were issued to the Selling Stockholders pursuant to subscription agreements. The 1,000,000 shares were issued under the exemption from the registration requirements of Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the issuance did not involve a public offering of securities. Table of Contents Selling Stockholders Table Selling Stockholder Shares of Common Stock Owned by Selling Stockholder Percentage of Common Stock Owned Before the Offering (1) Shares of Common Stock Included in Prospectus Beneficial Ownership After the Offering (1)(2) Percentage of Common Stock Owned After Offering (1)(2) Rehan Saeed 50,000 .063% 50,000 -0- -0- Saeed Khan 50,000 .063% 50,000 -0- -0- Zeeshan Saeed (3) 1,000,000 13.25% 50,000 950,000 12.59% Shaukat Ali 250,000 3.31% 250,000 -0- -0- Totals (1) Based upon beneficial ownership information reported to the Company as of November 5, 2014. (2) Assuming that all the 10,000,000 shares are sold and that the respective Selling Shareholders sold all shares owned of record as registered under this Registration Statement. (3) Effective June 1, 2014, we entered into that certain three-year consultant agreement (the "Consultant Agreement") with Zirex Consulting Inc. ("Zirex Consulting"), of which Zeeshan Saeed ("Saeed") is the sole officer and director (the "Consultant"). In accordance with the terms and provisions of the Consultant Agreement: (i) Saeed through Zirex Consulting shall provide services to us primarily relating to operational aspects regarding the pest control industry. In consideration therefore, we shall pay Zirex Consulting an aggregate monthly fee of $2,000 and issue 1,000,000 shares of our restricted common stock (which issuance of stock is deemed consideration for prior services provided by Zirex Consulting for the past fiscal year. PLAN OF DISTRIBUTION This Offering relates to the sale of up to 10,000,000 Shares at the estimated Offering price of $0.04 per share in a "best-efforts" direct public offering, without any involvement of underwriters. The shares will be offered and sold by Zahoor Ahmad, our sole officer and director. Mr. Ahmad will not receive a sales commission or any other form of compensation for this Offering. In connection with his efforts, our officer will rely on the safe harbor provisions of Rule 3a4-1 of the Securities Exchange Act of 1934. Generally speaking, Rule 3a4-1 provides an exemption from the broker/dealer registration requirements of the Securities Exchange Act of 1934 for persons associated with an issuer provided that they meet certain requirements. Those requirements are: (i) not be subject to a statutory disqualification as defined in Section 3(a)(39) of the Exchange Act; (ii) not be compensated in connection with the sale of our securities by payment of commissions or other remuneration based either directly or indirectly on transaction; and (iii) not be associated with a broker-dealer. Moreover, any sales duties of Mr. Ahmad will be considered passive. No one has made any commitment to purchase any or all of the Shares being offered. Rather, our officer will use his best efforts to find purchasers for the Shares. We are not required to sell any minimum number of Shares in this Offering. Funds received from investors will not be placed in an escrow, trust or similar account. Instead, all cleared funds will be immediately available to us following their deposit into our bank account, and there will be no refunds once a subscription for Shares are accepted. We cannot predict how many Shares, if any, will be sold. As of September 30, 2014, we have a total of $65,546 in current liabilities. As of December 31, 2013 and December 31, 2012, we have a total of $47,777 and $57,731, respectively, in debt. We will bear any expenses of this offering, which we estimate to be $30,000. We also may retain an underwriter to assist us or to supplant our selling efforts in the Offering. At this time we do not have any binding commitments, agreements, or understandings with any potential underwriter. If we elect to utilize an underwriter, we will amend this Prospectus. We have prepared this prospectus as if we are not using an underwriter to assist us with this Offering. To the extent that we are able to sell the Shares directly through our officers, directors, and employees, the net proceeds received from this Offering will be correspondingly higher than if we engage an underwriter. This Offering will terminate no later than 12 months after the effective date of this prospectus, unless the Offering is fully subscribed before that date or we decide to close the Offering prior to that date. In either event, the Offering may be closed without further notice to you. However, the offering will remain open at least six months from the effective of the registration statement for the benefit of Selling Stockholder. All costs associated with the registration will be borne by us. Table of Contents We have not authorized any person to give any information or to make any representations in connection with this Offering other than those contained in this prospectus and if given or made, that information or representation must not be relied on as having been authorized by us. This prospectus is not an offer to sell or a solicitation of an offer to buy any of the securities to any person in any jurisdiction in which that offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances, create any implication that the information in this prospectus is correct as of any date later than the date of this prospectus. Purchasers of share either in this Offering or in any subsequent trading market that may develop must be residents of states in which the securities are registered or exempt from registration. Some of the exemptions are self-executing, that is to say that there are no notice or filing requirements, and compliance with the conditions of the exemption renders the exemption applicable. Prior to the date of this prospectus, there has been no trading market for our common stock. Until an active and steady trading market develops for our common stock, the price at which shares of our common stock trades at in the future may fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for our shares, developments affecting our businesses generally, including the impact of the factors referred to in "RISK FACTORS" above, investor perception of the Company, and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for our shares or that an investor will be able to resell the chares purchased in this Offering. Shares of common stock sold in this Offering will be freely transferable, except for shares of our common stock received by persons who may be deemed to be "affiliates" of the Company under the Securities Act. Persons who may be deemed to be affiliates of the Company generally include individuals or entities that control, are controlled by or are under common control with us, and may include our senior officers and directors, as well as principal stockholders. Persons who are affiliates will be permitted to sell their shares of common stock only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Section 4(1) of the Securities Act or Rule 144 adopted under the Securities Act. PENNY STOCK REGULATION Our common stock will be considered a "penny stock" as defined by Section 3(a)(51) and Rule 3a51-1(g) under the Securities Exchange Act of 1934 because we do not have: Net tangible assets (i.e., total assets less intangible assets and liabilities) in excess of $2,000,000, and Average revenue of at least $6,000,000 for the last three years. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Table of Contents Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The above-referenced requirements may create a lack of liquidity, making trading difficult or impossible, and accordingly, shareholders may find it difficult to dispose of our shares. STATE SECURITIES - BLUE SKY LAWS Transfer of our common stock may also be restricted under the securities laws or securities regulations promulgated by various states and foreign jurisdictions, commonly referred to as "Blue Sky" laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time. We are not currently listed in Standard and Poor's Corporation Records, a nationally recognized securities manual, which would provide us with "manual" exemptions in 38 states as indicated in 1 Blue Sky L. Rep. (CCH) 2401 (2008), entitled "Standard Manuals Exemptions." We intend to obtain a listing in Standard and Poor's Corporation Records and intend to do so as soon as possible. Thirty-eight states have what is commonly referred to as a "manual exemption" for secondary trading of securities purchased under this registration statement. In these states, so long as we obtain and maintain a Standard and Poor s Corporate Records listing or another acceptable manual, secondary trading of our Common Stock can occur without any filing, review or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. In most instances, under current state rules, secondary trading can occur in these states without further action. However no assurance can be given that such rules will not change in the future or that a specific secondary trading transaction will qualify for a manual exemption. We may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders. PROCEDURES FOR SUBSCRIBING TO SHARES OFFERED BY THE COMPANY If you decide to subscribe for any shares in this Offering, you are required to execute a Subscription Agreement and tender it, together with a check or certified funds to us. All checks for subscriptions should be made payable to Legendary Ventures, Inc. SHARES OFFERED BY THE SELLING STOCKHOLDERS 400,000 shares of common stock are included in this prospectus as being offered by the Selling Stockholders. The offering will be kept open for at least six months to allow the Selling Stockholders to sell their shares pursuant to this registration statement and prospectus. The Company will pay the expenses of the registration of the Selling Stockholder s shares. Table of Contents The Selling Stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock received after the date of this prospectus from the Selling Stockholders as a gift, pledge, partnership distribution or other transfer, may offer the shares covered by this prospectus to the public or otherwise from time to time. The registration of these shares does not necessarily mean that any of them will be offered or sold by the Selling Stockholders. The Selling Stockholders have informed us that any or all of the common shares covered by this prospectus may be sold to purchasers directly by the Selling Stockholders or on their behalf through brokers, dealers or agents in private or market transactions, which may involve crosses or block transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The Selling Stockholders may use any one or more of the following methods when disposing of shares or interests therein: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated transactions; short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the SEC; broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; a combination of any such methods of sale; and any other method permitted pursuant to applicable law. The Selling Stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus. The Selling Stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. In connection with the sale of our common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). Table of Contents The aggregate proceeds to the Selling Stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. The Selling Stockholders may receive underwriter compensation. The Selling Stockholders in this prospectus will be able to sell at the market price and may profit by the difference between its cost and the market price so long as the market price per share exceeds the Selling Stockholders' costs per share. The Selling Stockholders reserve the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from the offering made by the Selling Stockholders. The Selling Stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act provided that they each meet the criteria and conform to the requirements of that rule. The Selling Stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. To the extent required, the shares of our common stock to be sold, the name of the Selling Stockholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus. In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with. We have advised the Selling Stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the Selling Stockholders and their affiliates and that there are restrictions on market-making activities by persons engaged in the distribution of the common shares. We have also advised the Selling Stockholders that if a particular offer of common shares is to be made on terms constituting a material change from the information described in this "Plan of Distribution" section of the Prospectus, then, to the extent required, a prospectus supplement must be distributed setting forth such terms and related information as required. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act, if applicable. The Selling Stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. We have agreed with the Selling Stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold pursuant to Rule 144(d) promulgated under the Securities Act. Table of Contents INTERESTS OF NAMED EXPERTS AND COUNSEL The consolidated financial statements of Legendary Ventures, Inc. as of December 31, 2013 and 2012, included herein and elsewhere in this prospectus, have been audited by Terry L. Johnson, an independent registered public accounting firm, for the periods and the extent set forth in its report appearing herein and elsewhere in the prospectus. The consolidated financial statements have been included in reliance upon the report of such firm given upon its authority as an expert in auditing and accounting. Diane D. Dalmy (the "Firm"), has acted as our counsel in connection with this offering, including with respect to opining on the validity of the issuance of the securities offered in this prospectus. Also, if an underwriter is engaged by the Company in connection with this offering, certain legal matters in connection with this offering will be passed upon for the underwriters by the Firm. The Firm will be compensated for its fees incurred in the preparation of this prospectus and the related registration statement filed with the SEC. Such compensation is expected to be paid from a portion of the sale proceeds realized by the Company from its offering of Shares herein. DESCRIPTION OF BUSINESS CORPORATE HISTORY Legendary Ventures, Inc. was incorporated in Nevada on December 7, 2012 and became a pest control services company when we acquired Encon. Legendary Ventures Inc. qualifies as an "emerging growth company" as defined in the Jumpstart our Business Startups Act (the "JOBS Act"), which was recently signed into law April 5, 2012. The Company therefore will be subject to reduced public company reporting requirements. An emerging growth company is a company with annual gross revenues of less than $1,000,000,000 during its most recently completed fiscal year. An emerging growth company retains its status and reduced regulatory and reporting requirements associated with it until the earliest of: the last day of the first fiscal year during which the Company has annual gross revenues of $1,000,000,000 or more; the last day of the first fiscal year following the fifth anniversary of the Company's initial public offering ("IPO"); the date on which the Company has, during the previous three year period, issued more than $1,000,000,000 in non-convertible debt; or the date on which the Company is deemed to be a large accelerated filer. The Company is an emerging growth company for purposes of the Securities Act and the Securities Exchange Act if the first sale of common equity securities of such issuer pursuant to an effective registration statement under the Securities Act occurred on or before December 8, 2011. The Company is exempt from certain regulatory and reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The JOBS Act facilitates the IPO process for emerging growth companies by exempting them from: Section 14A(a) and (b) of the Exchange Act implemented by Section 951 of the Dodd-Frank Act, which requires companies to hold shareholder advisory votes on executive compensation and golden parachute compensation; Section 14(i) of the Exchange Act, which will require companies to disclose the relationship between executive compensation actually paid and the financial performance of the company; Section 953(b)(1) of the Dodd-Frank Act, which will require companies to disclose the ratio between the annual total compensation of the chief executive officer and the median on the annual total compensation of all employees of the respective company; Table of Contents The requirement to provide certain other executive compensation disclosure under Item 402 of Regulation S-K, of which an emerging growth company will be required to comply only with the more limited provisions of Item 402 applicable to smaller reporting companies. An emerging growth company will not be required to provide an auditor's attestation report on internal financial reporting controls under Section 404(b) of the Sarbanes-Oxley Act of 2002; An emerging growth company will not have to comply with any new or revised financial accounting standards not applicable to private companies; and An emerging growth company will not have to comply with any rules that the Public Company Accounting Oversight Board might adopt requiring audit firm rotation or auditor discussion and analysis of the issuer's financial statements. Under the JOBS Act, emerging growth companies are subject to scaled financial disclosure requirements. Pursuant to these scaled requirements, emerging growth companies may: (i) provide only two rather than three years of audited financial statements in their IPO Registration Statement; (ii) provide selected financial data only for periods no earlier than those included in the IPO Registration Statement in all SEC filings, rather than the five years of selected financial date normally required; (iii) delay compliance with new or revised accounting standards that have different effective dates for public and private companies until they are made applicable to private companies; and (iv) be exempted from compliance with Section 404(b) of the Sarbanes-Oxley Act, which requires companies to receive an outside auditor's attestation regarding the issuer's internal controls. We have decided to take advantage of the exemptions provided to emerging growth companies as outlined above. As a result, some investors may find our common stock less attractive as a result. The result may be a less active trading market for our common stock and our stock price may be more volatile. In addition, during the IPO offering process, emerging growth companies are exempt from: (i) restrictions on analyst research prior to and immediately after the IPO, even from an investment bank that is underwriting the IPO; (ii) certain restrictions on communications to institutional investors before filing the IPO registration statement; and (iii) the requirement initially to publicly file IPO Registration Statements. Emerging growth companies can confidentially file draft Registration Statements and any amendments with the SEC. Public filings of the draft documents must be made at least 21 days prior to commencement of the IPO "road show." Stock Purchase Agreement. On December 31, 2012, the Company entered into a stock purchase agreement with the spouse of our chief executive officer, Fareeha Ahmad, the sole shareholder of Encon Pest Control, Inc. ("Encon"), a private Ontario corporation in the business of serving residential, commercial and industrial southern Ontario communities with pest control services whereby the Company acquired all of the outstanding stock of Encon for a promissory note to Fareeha Ahmad in the amount of $46,400. The original promissory note bears zero percent (0%) interest and has a maturity date, June 30, 2014. As a result of the stock purchase agreement, Encon became a wholly owned subsidiary of the Company. On June 1, 2014, the Company and Fareeha Ahmad executed an amendment to the stock purchase agreement dated December 31, 2012 to cancel the promissory note of $46,400 and replace it with a two year consulting agreement with total annual consulting fees of $23,200 to be paid in monthly installments. As a consultant, Mrs. Ahmad will manage the residential and commercial accounts. OUR BUSINESS We are a full pest control services company based in Mississauga, Canada. We offer services both residential and commercial market to the Ontario, Canada community. Through our wholly-owned subsidiary, Encon, we specialize in domestic and commercial extermination and the strategies used are continuously improving so that our standards, knowledge and efficiency, will guarantee customer satisfaction. We offer competitive services at affordable prices. We are a family-owned company known for outstanding customer service. We protect households against unwanted pest attacks and assist our customers in keeping their house and offices pest free. Our business strategy involves a team of experts who visit the customer home and determine their problems and then outline a plan of action which is personalized to their needs. Table of Contents The pest control industry provides bird control and extermination services for bed bugs, mosquitoes, rodents, and termites and other insects and pests for residential and commercial clients. Operators also provide fumigation services. This industry does not include companies that provide pest control for agriculture or forestry purposes. We also are specialized in fire ant control, insulation services, mosquito prevention and control, new construction treatments, pest control, termite protection, wildlife control and exclusion services and providing pest control services both residentially and commercially. Our wholly-owned subsidiary, Encon, specializes in domestic and commercial extermination and the strategies used are continuously improving so that our standards, knowledge and efficiency, will provide customer satisfaction. We are a full service residential, commercial and industrial pest control company serving the Ontario, Canada community. We also provide a guarantee to our customers. If our customers are not satisfied with the results of the scheduled treatment, we will retreat the entire area free of charge. If, even after this, they are not satisfied, we will collaborate on further attempts to resolve the problem or refund their last service payment. SERVICES AND PRODUCTS Our pest control major projects and services are divided into two categories; residential pest control services and commercial pest control services. Residential Pest Control Services. We offer house protection during the entire year and our service plan includes protection against a large number of house invading pests such as cockroaches, ants, mice, rats, spiders, silverfish, fleas, bedbugs etc. Also, we provide visits from a professional team three times a year so that the pest problem will not reappear. Our services involve a two-step program: (i) initial visit during which the first treatment targets pests which might be or not be present in the cracks and crevices of a home; and (ii) on-going visits based on differing attacks per season and prevention of new invaders. Insects. The focus of our pest control is to prevent insects and feral pests from entering residences or commercial properties as follows: (i) ants, which are one of the most common house pests and difficult to control because they travel great distances across unsanitary areas; (ii) bedbugs, which are a relatively new problem since they spread easily once they have infiltrated a house and very difficult to treat; (iii) cockroaches, which are one of the most dangerous pests in the house as they are a great threat to health carrying diseases such as salmonella, dysentery or gastroenteritis, leave an obnoxious odor on food and belongings, and breed rapidly and highly resilient to pesticides; (iv) spiders, which include the funnel web spider, huntsman spiders, red back spider and white-tailed spiders; (v) flies, which are know for the sound they make while also posing a health risk for humans by transmitting microbes responsible for food poising, dysentery, tuberculosis, cholera and parasitic worm infections; (vi) mosquitoes, which bites are irritating and can transmit diseases such as malaria or dengue fever; (vii) pests that damage textiles of which the most dangerous is the larvae moth damaging clothes, fabrics, carpets, furs and leathers; (viii) wasps and bees, which are a threat to those allergic to the venom; and (ix) other bugs which include many other species spreading diseases and causing damage to household possessions and even causing psychological distress. Rodents. Rodents and feral pests might occur in the garden or house and can be a great health risk as well as a risk to the house structure or crops as follows: (i) feral pests usually live around the home and destroy the green area for living and entertainment, damaging trees and wildlife and a source of bacteria; (ii) rats, which can infest your house imposing extensive damage to the wiring, floor joints, walls, and insulation; (iii) mice, which are also a main source for bacteria, fecal matter source for triggering asthma in children, contaminate food and water; and (iv) birds, which can damage our property as well as spread diseases such as salmonella and ornithosis, damage property with fecal matter, attract other pests with their nests. Table of Contents We also offer multiple home maintenance services, which are key to a home's integrity. Those services include: (i) gutter cleaning; (ii) temperature vents; (iii) moisture control and power; (iv) vapor barriers; (v) chimney capping; (vi) live animal trapping and removal. Commercial Pest Control. Commercial buildings must meet certain regulations and requirements related to the physical layout, maintenance, sanitation regulations and storage practices. We provide service to such sites offering a large variety of services based on the strict sanitation regulations imposing pest control. Our commercial customers will benefit from experience and an integrated pest management pro-active program. We detail customized solutions for different types of businesses as follows: (i) dairy industry; (ii) education; (iii) energy and utilities; (iv) farming and agriculture and other businesses; (v) food processing pharmaceuticals; (vi) government and local authorities; (vii) healthcare; (viii) hospitality and leisure; (ix) industrial and construction; (x) museums and antiquities; (xi) offices; (xii) restaurants and bars; (xiii) retail; and (xiv) wine industry. Integrated Pest Management We specialized in Integrated Pest Management (IPM), which implies an approach to pest control that combines all the methods present today on the market to prevent the appearance of pests in an environment (the "Encon IPM Program"). In all of Encon IPM Programs, pesticides are used only when they are impetuously needed, so that the results are acceptable with causing minimal harm to mammals or any life form which is not targeted. Encon IPM Programs are biological, mechanical or cultural. Biological implies the use of natural predators or parasites. Mechanical implies traps or other exclusion techniques. Cultural implies a reorganizing the hygiene habits to prevent further development of pest infestation. Our process entails a detailed examination at every facility during which the five pest-activity zones are monitored: (i) customer and employee areas; (ii) entry points; (iii) food sources; (iv) harborage points; and (v) water sources. After the detailed inspection is complete, all the potential and current pest sites are noted. There are different strategies for treatments based on variables, such as growth pattern of the infestation and characteristics. The number of variables needed in an investigation to achieve a perfect "cookie cutter" solution for one facility is far too great. Factors such as location, climate, the building and its age play an important part in the program. The main focus of our program is the sanitation schedule, which leads to a direct impact towards the factors causing the pests. The main treatment strategies are all non-chemical and the chemical strategies are second in the event the first one is not suitable or does not reflect the desired results. Ongoing monitoring and maintenance are a critical step in our program as this step implies the accurate reporting about pest sightings as well as extensive documentation available for the clients and regulatory. Lastly, fumigation which is a procedure accomplished with up to date treatments and latest trends utilizing fumigation techniques done responsibly, ensuring quality and maintenance of the property, abiding with government regulations, technical and safety training, licensing and use of certified applicators. We provide the following pest protections under our Encon IPM Program as follows: Fly control by using a revolutionary technique, the new electronic Vector Fly System, against flies to maintain sanitation. The system is small and can be placed almost anywhere without disturbing the design. It does not use any chemical and also you will not be disturbed by the insects which might fall as an effect of the apparatus, thus making it proper even for cooking areas. It uses low-voltage pulses which affects the nervous system of the flying insect, directing them to fly straight into the unit where there is non-toxic adhesive board. This system can function 24 hours a day, silently and can make your life free of flying insects. Washroom care by offering assistance in maintaining proper sanitation levels in the washroom and reducing the possibility of germs being transmitted, especially through manual contact as well as to keep a pleasant smell in the washroom. Table of Contents Odor care involving a two step program not only masking odors but eliminating them with: (i) advanced AirStreme Misting System with powerful all-natural reactants neutralizing airborne odors from accumulated waste; or (ii) BioStreme Micronutrients for eliminating sources by converting odorous anaerobic bacteria into non-odorous facultative bacteria. Bird control having a negative impact by bring disease or ectoparasite carriers, contaminating water and food products, creating damage to building structure, creating liability with physcial contact, making environment dangerous for working or living, minimizing your professional image, and producing noise, feather and dropping. Wildlife control, including opossums, raccoons, squirrels, skunks and others are the wildlife. SUPPLIERS We purchase our pest control products from major suppliers and have contractual relations as follows: Gardex Chemicals LTD Gardex Chemicals Ltd. ("Gardex") offers the highest quality products available through Gardex Brand chemicals, along with insecticides, rodenticides, fumigants, and a wide variety of application and safety equipment from the most reputable manufacturers around the globe. We believe that Gardex make every effort to find the most efficacious, affordable, and innovative products to assist with our business of serving our customers. Univar Canada Univar Canada ("Univar") provides lime and liquid lime products to help scrub exhaust gases and precipitate heavy metals from waste water for clearer skies and cleaner rivers. We believe Univar is a world leader in the distribution of chemistry and related products and services. Univar is more than just a distribution company. Univar scale, geographic reach, diversified distribution channels, industry expertise and comprehensive product portfolio enable it to develop strong, long-term relationships with suppliers and to provide a single-source solution for industry. Bell Labs Bell Labs ("Bell") is the exclusive manufacturer of rodent control products and produces the high quality rodenticides and other rodent control products available to the pest control and agricultural industries on six continents. Bell Labs has developed a complete line of products - rodenticides, tamper-resistant bait stations, non-poisonous glue boards, mechanical traps and attractants - to control rodents in any situation. EMPLOYEES As of the date of this Prospectus, we have two full time employees. Table of Contents OUR MARKET General We believe that the pest control industry has seen unprecedented growth in recent years, on the back of an increasing number of pests and growing consciousness around health issues. Due to increasing health issues, people are becoming more cautious about the environment around them. One of the major reasons for the rising demand of the pest control measures, especially in the North America, could be attributed to the increasing federal and state regulations imposed on the commercial segment. Due to these restrictions, the segment has become more aware and is maintaining high safety standards. With the increasing need to maintain a pest free environment, the sales of the pest control service providers has increased significantly, which in turn provides incentive for more players to enter into the market and establish themselves in the industry. The pest control services market is characterized by stiff competition within the industry, launch of eco-friendly products, offering of customized services and a number of mergers and acquisitions.1 The rise of bed bugs across the United States has left homeowners and business owners frustrated, but been a boon for the Pest Control industry, which experienced heightened demand for its services. While bed bugs were typically confined to hotels and some residences in the past, the creatures have begun to pop up in unlikely spots, including movie theaters, offices and even clothing stores. We believe that the increased occurrence of these pests has led to substantial demand for pest exterminators and rising service prices. Furthermore, the more insecticide-resistant strain of bed bugs has driven operators to research product innovation to deliver solutions to homeowners and businesses. Heightened demand for bed bug extermination has also caused the number of industry companies to rise. Rising demand and service prices have resulted in higher profit margins for pest control companies. We believe that while profit margins may have declined slightly during the recession due to rising fuel expenses and price-based competition, heightened demand for industry services has favorably affected margins overall and allowed operators to pass on price increases to consumers. We further believe that conditions are expected to further improve over the five years to 2018 with industry revenue forecast to increase. Increased business and consumer spending will drive demand for regular inspections for pests. Furthermore, with increased income, businesses and consumers will be less likely to opt for cheaper household products from home and garden stores. Instead, they will favor more effective and expensive professional exterminating treatments. Housing sales and residential construction are also expected to rise, further supporting demand for fumigation services. Increasing and changing pest populations across the North America will characterize the next five years for the pest control industry. Canadian Market Management believes that the Pest Control industry has experienced robust growth over the past five years, led by the increasing presence of bed bugs. The rising ubiquity of these nighttime critters has fuelled demand for pest extermination professionals, underpinning robust industry revenue growth. Management further believes that revenue growth may accelerate because of the rapid proliferation of bed bugs, which has yielded strong demand particularly from hotels and residential clients. Table of Contents Pest control services in Canada are traditionally geared toward the commercial market, which management believes makes up an estimated 80.0% of industry revenue. Pest control operators are increasingly targeting residential customers and diversifying their service lines, however, in order to take advantage of more untapped markets. The Pest Control industry has a moderate degree of market share concentration that has expanded over the past five years. Larger companies have pursed targeted acquisitions in order to increase the density of their client base. With high transportation costs, larger pest control companies are increasingly acquiring nearby companies to expand the number of clients they serve within their immediate vicinity. The Canadian market is roughly the opposite of the U.S. market and is 80 percent commercial and 20 percent residential. The residential market is likely to increase with more over-the-counter pesticide products being banned and taken away from the end user. There is no doubt that this will create a need for consumers to look to hire a professional pest management company. Bed bugs are giving the market a push and they will be around for a while. Some businesses have started only offering bed bug services. With climate changes, we are likely to see new pests emerge in Canada which can offer new service opportunities. Market Demographics The success of any business especially pest control heavily depends on the market demographics. The market demographics show how much potential is there to boost the business. Moreover, market demographics are also critical for long term growth of the business. Encon Pest Control is based in Mississauga and is the member of Canadian Pest Management Association (CPMA) and Professional Structural Pest Management Association in Ontario (PSPMAO). Currently we are serving in Brampton, Burlington, Milton, Mississauga,Welland, Niagara Falls, Oakville, St. Catharines and Toronto areas. Mississauga is a city in Southern Ontario, Canada. It lies on the shores of Lake Ontario, located in the Regional Municipality of Peel, in the western part of the Greater Toronto Area. The city has a population of 713,443 as of the Canada 2011 Census, and is Canada's sixth-most populous municipality. It is the largest suburb in Anglo-America by population. However, as the city ran out of vacant lands, the city shifted its focus to building a full-fledged downtown core while shaping its new identity as a distinct city from Toronto. Mississauga was also rated as Canada's 11th best city to live in terms of prosperity according to MoneySense magazine. CONSULTANT AGREEMENT Effective June 1, 2014, we entered into that certain three-year consultant agreement (the "Consultant Agreement") with Zirex Consulting Inc. ("Zirex Consulting"), of which Zeeshan Saeed ("Saeed") is the sole officer and director (the "Consultant"). In accordance with the terms and provisions of the Consultant Agreement, Saeed through Zirex Consulting shall provide services to us primarily relating to our operational aspects involving the pest control industry. In consideration therefore, we shall pay Zirex Consulting an aggregate monthly fee of $2,000 and issue 1,000,000 shares of our restricted common stock (which issuance of stock is deemed consideration for prior services provided by Zirex Consulting for the past fiscal year. On June 1, 2014, the Company and Fareeha Ahmad amended the stock purchase agreement dated December 31, 2012 to cancel the promissory note of $46,400 and replace it with a two year consulting agreement with total annual consulting fees of $23,200 to be paid in monthly installments. Mrs. Ahmad will stay on as a consultant were she will continue to manage the residential and commercial accounts. MARKETING STRATAGIES As with any business, products or services, marketing is essential for success. Marketing does not just happen at the startup phase, but it is a continuous process even for the most successful businesses. Selling pest control services is not different from other businesses in that it requires commitment over the long haul. The owners must also manage their time wisely because they are competing with other pest control services providers. The company is committed to provide best quality services at competitive prices. For effective marketing strategy it is mandatory to see what competitors are offering. A meticulous research has been done to analyze the exact market scenario and growth potential within the target market. We are a small business operator and has no competition with national chains such as Orkin, Abell and Terminix. Our selling strategy is to offer innovative services and to approach targeted customer. There are about 900 pest controls companies in Canada and we certainly need to cut out to stand out from the crowd. Our marketing strategy is to represent its services as the best pest control offers. The company is positioning the best quality services with easy approach for the peoples. Our primary promotional and marketing policies will include the following. 2 http://www.ibisworld.ca/industry/default.aspx?indid=1495 Table of Contents Networking and Referral Marketing Networking. Commercial and residential customers often prefer to do business with someone they know or with a company that comes with a personal referral. Being involved in the community by participating in local business networking groups such as the Chamber of Commerce or a local business alliance provides the company with opportunities to network with other small business owners who support each other. Our pest control would focus on networking for promoting the business. Referrals. Customers look for pest control services in the phone directory and online. No amount of advertising can compete with word of mouth, though. Develop relationships with homebuilders and property managers who often get calls for pest control referrals. We will start a referral campaign for current clientele by offering a bonus or future discount for every referral, provide the best service and follow-up to ensure a consistent stream of referrals. Ask the Expert. In the business of providing pest elimination and control services, we intend to set our self apart from the competition by creating an image that casts as the expert. The National Pest Management Association provides members with a magazine format in which company will publish informative articles and hand or mail them to a group of prospects and current clients. Email newsletters filled with useful information related to seasonal pest problems to an email list we will continually update and increase. We intend to pitch our expertise to local television and radio stations, offer to do a segment for the station about various pest control topics complete with tips and instructions. Local and Print Media Marketing Strategy The most effective marketing channels are taken into consideration while preparing the local and print media marketing strategies. We intend to work closely with marketing professionals to ensure that we are on the cutting edge of advertising technology. It is important to highlight that the majority of the most effective marketing channels are internet-based. Given this fact, marketing cost of advertising will be relatively low compared to leveraging more traditional local and print media campaigns. The following is a complete breakdown of our local and print media marketing strategy: (i) newspapers and magazines in which we may place small ads throughout the first few months of expanding operations; (ii) printed brochures; (iii) effective customer support to timely respond to calls, emails and online queries; and(iv) free samples. Internet Marketing Strategy A new development on the part of marketing strategy is the role of social media and the internet. We believe that this is the most effective marketing channel to market products and services. When bedbugs made daily news reports in 2010, the New York Times reported an 83 percent jump in searches on Google for pest control services and information. If a business is not among the links users find when they search for help, it will miss out on much of that new business. We intend to create a website that s easy for potential clients to read and clearly presents contact information so customers can call or email and get an immediate response. The company will make full use of available internet marketing channels. "Online" or "Internet" marketing is comparatively cost-effective than the traditional "Local and Print Media" marketing campaigns. The following is a complete breakdown of the internet marketing strategy: (i) search engine optimization to provide visibility of our website on all major search engines; (ii) paid advertisements with Google, Adsense and Facebook to display our website ads on all major search results; (iii) social media marketing placing advertisements; (iv) YouTube commercials regarding our services; and (v) professional networking with industry experts mainly through online efforts such as LinkedIn, etc. Table of Contents REGULATORY ENVIRONEMNT The Canadian Pest Control market is over-regulated and have access to a very limited line-up of active ingredients. Regulations can vary from province to province and city to city. The regulatory climate is making companies hire people who are willing to learn more about pest biology and how to better apply exclusion techniques. They become experts at generating preventative and corrective management procedures thus reducing the opportunities for pests to flourish and prevent problems. These are good things in the end but the regulatory climate is very challenging. Pest Control Regulation Process The registration process for pest control products in Canada is considered to be one of the most rigorous worldwide. In 2006, Canada introduced a new Act with many requirements, such as added safety factors and taking into account vulnerable populations. To meet the strict requirements for registration in Canada, industry is required to submit extensive scientific and technical data for screening and review by the Pest Management Regulatory Agency (PMRA) under the Pest Control Products Act. PMRA evaluates the data for the product's "effectiveness and the potential for adverse impact on human health and the natural environment." Only products that pose no unacceptable risks to health and environment are approved by Health Canada. Health Canada s number one priority is to protect the Health of Canadians. Health Canada employs over 350 professionals to review applications for new pesticides to be approved as well as regularly re-evaluating existing products. These people are experts in, among other things: (i) toxicology; (ii) entomology; (iii) weed biology; (iv) chemistry; and (v) environment. Pest Control Products Act (PCPA) PMRA s mandate is to administer the PCPA which regulates products that are manufactured or used as a means for directly or indirectly controlling, destroying, attracting/repelling a pest for mitigating or preventing its injurious, noxious or troublesome effects. Their mandate includes: (i) preventing unacceptable risks to people and the environment from the use of pest control products; and (ii) ensuring with reasonable certainty that no harm to human health, future generations, or the environment will result from exposure to or use of the product, taking into account its conditions or proposed conditions of registration. Only pest control products that are determined to be of acceptable value are approved for use in Canada. COMPETITION Pest management is a global industry and Canada has long-been home to some of the most creative and successful pest management companies in North America. According to Manta.com listing there are more than 876 pest control companies in Canada. Familiar names such as Orkin, Ecolab, Steritech, Rentokil and Copesan have operations in the country and join recognized Canadian-based firms including Abell Pest Control and Maheu & Maheu to form a dynamic marketplace with a heavy emphasis on commercial work. On August 15, 2013, Terminix, the world s largest pest and termite control provider, announced its entry into the Canadian pest control market with the acquisition of substantially all of the assets of Toronto-based Magical Pest Control. While not equal in size to the U.S. market, the two markets do face similar challenges, bed bugs for example, but Canadian PMPs have far greater challenges in the regulatory area. We believe that there is an inevitable bed bug opportunity in larger cities like Toronto, Vancouver, and Montreal. The market is pretty mature but there is room for creative companies to be successful. We believe that we will distinguish ourselves from the competition through our innovative products and quality of service. Our competitive edges are our ability to provide unique services to our customers more economically and faster than any of our competitors. We believe our key competitive edges are as follows: (i) implementing innovating technologies to control insects/pests, such as the use of thermal technology to control bed bugs; (ii) outsourcing the customer services and other such services to international low cost call centers; (iii) souring low cost and higher quality materials; (iv) creating innovative and targeted marketing plans to promote pest control business; (v) focus on customer strategy as per customized requirements of the market; and (vi) use of exceptional expert teams with extensive prior experience and success. Table of Contents Potential Barriers The pest control industry has moderate barriers to entry. The primary barriers involve licensing and regulatory requirements for new entrants, as well as trained and licensed staff. In Canada, all pest control technicians and fumigators must hold a provincial pesticide applicator license. In addition to having an exterminator license, all businesses that employ persons that apply federally regulated pesticides commercially must have an Operator General License. Start-up costs vary depending on the scale of operations. New businesses need to secure warehouses or operational facilities and specialized equipment and vehicles. Companies also need supplies, such as insecticide sprays, dusters, repellents, powders, foams and gels based on treatment types. DESCRIPTION OF PROPERTY We lease office and warehouse space from our President/Chief Executive Officer located at 5615 Doctor Peddle Cres, Mississauga, Ontario, Canada. This location serves as both our principal executive office and the inventory location for our pest control products. LEGAL PROCEEDINGS As of the date of this Prospectus, management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Prospectus, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties. PRICE OF AND DIVIDENDS ON THE REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. MARKET INFORMATION Our common stock does not trade on either the OTCQB or the OTC Bulletin Board. SHAREHOLDERS OF RECORD As of December 11, 2014, there were approximately 39 holders of record of our common stock. Table of Contents DIVIDENDS We have never declared or paid a cash dividend. At this time, we do not anticipate paying dividends in the future. We are under no legal or contractual obligation to declare or to pay dividends, and the timing and amount of any future cash dividends and distributions is at the discretion of our Board of Directors and will depend, among other things, on our future after-tax earnings, operations, capital requirements, borrowing capacity, financial condition and general business conditions. We plan to retain any earnings for use in the operation of our business and to fund future growth. You should not purchase our Shares on the expectation of future dividends. INFORMATION RELATING TO OUTSTANDING SHARES As of December 11, 2014, there were 7,545,000 shares of our common stock issued and outstanding. We have not reserved any other shares for issuance upon exercise of common stock purchase warrants or stock options. All of our issued and outstanding common shares (of which 5,000,000 shares are owned by officers, directors and principal stock holders) were issued in a private placement and have generally been held a period in excess of one year and are eligible to be resold pursuant to Rule 144 promulgated under the Securities Act. Table of Contents The resale of our shares of common stock owned by officers, directors and affiliates is subject to the volume limitations of Rule 144. In general, Rule 144 permits our affiliate shareholders who have beneficially-owned restricted shares of common stock for at least one year to sell without registration, within a three-month period, a number of shares not exceeding one percent of the then outstanding shares of common stock. Furthermore, if such shares are held for at least six months by a person not affiliated with us (in general, a person who is not one of our executive officers, directors or principal shareholders during the three month period prior to resale), such restricted shares can be sold without any volume limitation, provided all of the other requirements for resale under Rule 144 are applicable. ISSUER PURCHASE OF SECURITIES None. CAPITALIZATION The Company is authorized to issue 410,000,000 shares of common stock with a par value of $0.001. On December 31, 2012, the Company issued 3,000,000 shares of common stock to its founding officer Zahoor Ahmad. The Company valued the shares at a par value of $.001 which resulted in an expense of $3,000. During the year ended December 31, 2013, the Company issued 2,515,000 shares of common stock for $25,150 cash. In the nine months ended September 30, 2014, the Company issued 2,030,000 shares of common stock of which 1,000,000 shares were to our chief executive officer for services, 1,000,000 shares were to an outside consultant for services and 30,000 shares were for $1,500 cash. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following analysis of our consolidated financial condition and results of operations for the years ended December 31, 2013 and 2012 and for the nine months ended September 30, 2014 should be read in conjunction with the Consolidated Financial Statements and other information presented elsewhere in this Prospectus. GENERAL On December 31, 2012, we entered into a stock purchase agreement with the spouse of our chief executive officer, Fareeha Ahmad, the sole shareholder of Encon Pest Control, Inc. ("Encon"), a private Ontario corporation in the business of serving residential, commercial and industrial southern Ontario communities with pest control services whereby we acquired all of the outstanding stock of Encon for a promissory note to Fareeha Ahmad in the amount of $46,400. The original promissory note bears zero percent (0%) interest and had a maturity date, June 30, 2014. On June 1, 2014, the Company and Mrs. Ahmad amended the stock purchase agreement to cancel the promissory note of $46,400 and include a two year consulting agreement with total annual consulting fees of $23,200 to begin accruing on June 30, 2014. Mrs. Ahmad will stay on as a consultant were she will continue to manage the residential and commercial accounts. As a result of the stock purchase agreement, Encon became a wholly owned subsidiary of the Company. The Company has accounted for the acquisition of Encon as a reorganization of entities under common control. The Company has used the guidance of Emerging Issues Task Force: No 02-5, Definition of "Common Control" in Relation to FASB Statement No. 141 which states that common control exists among separate entities in situations of immediate family members, most notably with a married couple as in our case. In reorganizations of entities under common control, the balances of the acquired entity are carried over at historical costs with no goodwill or excess consideration recorded. Pursuant to FASB 141, the financial activity of the acquiree (Encon) in a reorganization of entities under common control is presented as if the acquiree was consolidated at the beginning of the period. Table of Contents RESULTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 The following discussions are based on our consolidated financial statements, including our subsidiary. These charts and discussions summarize our financial statements for the three months ended September 30, 2014 and 2013 and should be read in conjunction with the financial statements, and notes thereto. SUMMARY COMPARISON OF OPERATING RESULTS Three Months Ended September 30, 2014 2013 Revenues $7,563 $7,023 Cost of services 548 1,569 Gross Margin 7,015 5,454 Total operating expenses 75,228 8,385 Operating Income(Loss) (68,213) (2,931) Total other income (expense) (210) (205) Net income (loss) (68,423) (3,136) Other Comprehensive Income (Loss) (1,957) 655 Comprehensive Income (Loss) (90,380) (2,481) Net income (loss) per share $(0.01) $(0.00) Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013. Our comprehensive net loss for the three months ended September 30, 2014 was ($70,380) compared to a comprehensive net loss of ($2,481) during the three months ended September 30, 2013 (an increase in comprehensive net loss of $67,899). We generated revenues of $7,563 during the three month period ended September 30, 2014 compared to $7,023 during the three month period ended September 30, 2013 (an increase in revenue of $540). Cost of services sold decreased during the three month period ended September 30, 2014 to $548 from $1,569 incurred during the three month period ended September 30, 2013, resulting in a gross margin of $7,015 for the three month period ended September 30, 2014 compared to a gross margin of $5,454 for the three month period ended September 30, 2013. During the three month period ended September 30, 2014, we incurred operating expenses of $75,228 compared to $8,385 incurred during the three month period ended September 30, 2013 (an increase of $66,843). These operating expenses incurred during the three month period ended September 30, 2014 consisted of: (i) consulting of $58,000 (2013: $-0-); (ii) general and administrative of $3,018 (2013: $6,448); (iii) insurance of $755 (2013: $908); (iv) officer compensation of $6,000 (2013: $-0-); and (v) professional fees of $7,455 (2013: $1,029). Operating expenses incurred during the three month period ended September 30, 2014 compared to the three month period ended September 30, 2013 increased primarily due to the increase in consulting expense ($50,000 of which was from stock issued for services), professional fees and officer compensation based upon the accrued salary earned pursuant to the executive service agreement executed on June 1, 2014. Our operating loss during the three month period ended September 30, 2014 was ($68,213) compared to an operating loss of ($2,931) during the three month period ended September 30, 2013. During the three months ended September 30, 2014, we incurred other comprehensive loss in the form of foreign currency translation of $1,957 and foreign currency translation gain of $655 in the three months ended September 30, 2014. Therefore, we realized a comprehensive loss of ($70,380) or ($0.01) for the three month period ended September 30, 2014 compared to a comprehensive loss of ($2,481) or ($0.00) for the three month period ended September 30, 2013. The weighted average number of shares outstanding was 5,545,000 for the three month period ended September 30, 2014 compared to 3,000,000 for the three month period ended September 30, 2013. Table of Contents RESULTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 The following discussions are based on our consolidated financial statements, including our subsidiary. These charts and discussions summarize our financial statements for the nine months ended September 30, 2014 and 2013 and should be read in conjunction with the financial statements, and notes thereto. SUMMARY COMPARISON OF OPERATING RESULTS* Nine Months Ended September 30, 2014 2013 Revenues $21,238 $20,147 Cost of services 2,033 3,422 Gross Margin 19,205 16,725 Total operating expenses 154,987 28,037 Operating Income(Loss) (135,782) (11,312) Total other income (expense) (642) (648) Net income (loss) (136,424) (11,960) Other Comprehensive Income (Loss) 701 612 Comprehensive Income (Loss) (135,723) (11,348) Net income (loss) per share $(0.02) $(0.00) Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013. Our comprehensive net loss for the nine months ended September 30, 2014 was ($135,723) compared to a comprehensive net loss of ($11,348) during the nine months ended September 30, 2013 (an increase in comprehensive net loss of $124,375). We generated revenues of $21,238 during the nine month period ended September 30, 2014 compared to $20,147 during the nine month period ended September 30, 2013 (an increase in revenue of $1,091). Cost of services decreased during the nine month period ended September 30, 2014 to $2,033 from $3,422 incurred during the nine month period ended September 30, 2013, resulting in a gross margin of $19,205 for the nine month period ended September 30, 2014 compared to a gross margin of $16,725 for the nine month period ended September 30, 2013. During the nine month period ended September 30, 2014, we incurred operating expenses of $154,987 compared to $28,037 incurred during the nine month period ended September 30, 2013 (an increase of $126,950). These operating expenses incurred during the nine month period ended September 30, 2014 consisted of: (i) consulting of $58,000 (2013: -0-); (ii) general and administrative of $5,882 (2013: $21,654); (iii) insurance of $2,253 (2013: $3,698); (iv) officer compensation of $64,968 (2013: $-0-); and (v) professional fees of $23,884 (2013: $2,685). Operating expenses incurred during the nine month period ended September 30, 2014 compared to the nine month period ended September 30, 2013 increased primarily due to the increase in consulting (which includes $50,000 of stock issued for services), professional fees and officer compensation (which includes $50,000 of stock issued for executive services to our chief executive officer pursuant to an executive service agreement executed on June 1, 2014). Our operating loss during the nine month period ended September 30, 2014 was ($154,987) compared to an operating loss of ($28,037) during the nine month period ended September 30, 2013. During the nine month period ended September 30, 2014, we incurred other comprehensive income in the form of foreign currency translation of $701 (2013: $612). Therefore, we realized a comprehensive loss of ($135,723) or ($0.02) for the nine month period ended September 30, 2014 compared to a comprehensive loss of ($11,348) or ($0.00) for the nine month period ended September 30, 2013. The weighted average number of shares outstanding was 5,532,468 for the nine month period ended September 30, 2014 compared to 3,000,000 for the nine month period ended September 30, 2013. Table of Contents RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED DECEMBER 31, 2013 AND 2012 The following discussions are based on the consolidated financial statements of Legendary Ventures Inc. and its subsidiary. These charts and discussions summarize our financial statements for the years ended December 31, 2013 and 2012 and should be read in conjunction with the financial statements, and notes thereto, included with this report at Part II, Item 8, below. SUMMARY COMPARISON OF OPERATING RESULTS Years Ended December 31, 2013 2012 Revenues $27,721 $28,468 Cost of services 4,710 6,651 Gross margin 22,561 21,817 Total operating expenses 39,722 49,784 Loss from operations (17,161) (27,967) Total other income (expense) (841) (945) Net Income loss (18,002) (28,912) Other Income (Expense) (841) (945) Net Income (Loss) (18,002) (28,912) Other Comprehensive Income (Loss) 1,769 465 Comprehensive Income (Loss) (16,233) (28,447) Net loss per share $(0.01) $(0.01) Fiscal Year Ended December 31, 2013 Compared to Fiscal Year Ended December 31, 2012 Our net loss for fiscal year ended December 31, 2013 was ($18,002) compared to a net loss of ($28,912) during fiscal year ended December 31, 2012 (a decrease in net loss of $10,910). We generated revenues of $27,271 during fiscal year ended December 31, 2013 compared to $28,468 during fiscal year ended December 31, 2012. Cost of services decreased during fiscal year ended December 31, 2013 to $4,710 from $6,651 incurred during fiscal year ended December 31, 2012, resulting in a gross profit of $22,561 for fiscal year ended December 31, 2013 compared to a gross profit of $21,817 for fiscal year ended December 31, 2012. During fiscal year ended December 31, 2013, we incurred operating expenses of $39,722 compared to $49,784 incurred during fiscal year ended December 31, 2012 (a decrease of $10,062). These operating expenses incurred during fiscal year ended December 31, 2013 consisted of: (i) general and administrative of $29,869 (2012: $24,885); (ii) insurance of $4,468 (2012: $4,764); (iii) professional fees of $5,385 (2012: $2,500); and (iv) commissions of $-0- (2012: $17,635). Operating expenses incurred during fiscal year ended December 31, 2013 compared to fiscal year ended December 31, 2012 decreased primarily due to a decrease in commissions paid to outside sales representatives. The Company has transitioned to more of a web-based system to generate sales leads through their search engine optimization and website. Our operating loss during fiscal year ended December 31, 2013 was ($17,161) compared to an operating loss of ($49,784) during fiscal year ended December 31, 2012. During fiscal year ended December 31, 2013, we realized other income (expense) in the total amount of ($841) consisting of interest expense compared to $945 during fiscal year ended December 31, 2012. During the years ended December 31, 2013 and 2012, we incurred other comprehensive income in the form of foreign currency translation of $1,769 and $465. Therefore, we realized a comprehensive loss of ($16,233) or ($0.01) for the year ended December 31, 2013 compared to a comprehensive loss of ($28,447) or ($0.01) for the year ended December 31, 2012. The weighted average number of shares outstanding was 4,431,740 for the year ended December 31, 2013 compared to 3,000,000 for the year ended December 31, 2012. Table of Contents LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN As of September 30, 2014 and December 31, 2013 As of September 30, 2014, our current assets were $1,456 and our current liabilities were $65,546, which resulted in a working capital deficit of $64,090 as compared to December 31, 2013 when current assets were $17,910, current liabilities were $47,777 and our working capital deficit was $29,867. As of September 30, 2014, current assets were comprised of: (i) $626 in cash (2013: $15,714); and (ii) $830 in accounts receivable (2013: $2,196). As of September 30, 2014, current liabilities were comprised of: (i) $17,608 in accounts payable and accrued expenses (2013: $1,697); (ii) $28,851 in loans from related parties (2013: $34,773); (iii) $8,380 in note payable (2013: $11,307); and (iv) $10,707 in convertible notes payable (2013: -0-).. The decrease in total current assets during the nine month period ended September 30, 2014 was primarily due to the decrease in cash. The increase in liabilities during the nine month period ended September 30, 2014 from December 31, 2013 was primarily due to the increase in convertible notes payable and loans from related parties.Stockholders deficit increased from ($29,867) as of December 31, 2013 to ($64,090) as of September 30, 2014. Cash Flows from Operating Activities for Nine Month Period Ended September 30, 2014 We have not generated positive cash flows from operating activities. For the nine months ended September 30, 2014, net cash flows used in operating activities was ($18,446) compared to net cash flows used in operating activities of ($9,761) for the nine months ended September 30, 2013. Net cash flows used in operating activities consisted primarily of a net loss of $135,723 (2013: $11,348), which was changed by: (i) stock for services $100,000 (2013 $-0-); (ii) an increase of $15 911 (2013: $1,042) in accounts payable; and (iii) an decrease of $1,366 (2013: $545) in accounts receivable. Cash Flows from Investing Activities for Nine Month Period Ended September 30, 2014 For the nine month periods ended September 30, 2014 and September 30, 2013, net cash flows used in investing activities was $-0-. Cash Flows from Financing Activities for Nine Month Period Ended September 30, 2014 We have financed our operations primarily from debt or the issuance of equity instruments. For the nine months ended September 30, 2014, net cash flows provided from financing activities was $3,358 compared to $1,841 for the nine months ended September 30, 2013. Cash flows from financing activities for the nine months ended September 30, 2014 consisted of $1,500 in proceeds from issuance of stock for cash, $4,130 in proceeds from loans to related parties, which was offset by $10,052 for payment on loans from related parties , $2,927 for payments on notes payable and $10,707 in proceeds from convertible notes payable. As of December 31, 2013 and 2012 As of December 31, 2013, our current assets were $17,910 and our current liabilities were $47,777, which resulted in a working capital deficit of $29,867 as compared to December 31, 2012 when current assets were $8,347, net fixed assets were $6,600 and current liabilities were $53,731. As of December 31, 2013, current assets were comprised of: (i) $15,714 in cash (2012: 8,347); and (ii) $2,196 in accounts receivable (2012: -0-). The increase in total current assets during fiscal year ended December 31, 2013 from fiscal year ended December 31, 2012 was primarily due to the increase in cash. The slight decrease in liabilities during fiscal year ended December 31, 2013 from fiscal year ended December 31, 2012 was primarily due to the decrease in accounts payable and accrued expenses and note payable. Stockholders deficit decreased from ($38,784) for fiscal year ended December 31, 2012 to ($29,867) for fiscal year ended December 31, 2013. Cash Flows from Operating Activities for Fiscal Year Ended December 31, 2013 and 2012 We have not generated positive cash flows from operating activities. For fiscal year ended December 31, 2013, net cash flows used in operating activities was $10,926 compared to $18,736 for fiscal year ended December 31, 2012. Net cash flows used in operating activities consisted primarily of a net loss of $16,233 (2012: $28,447), which was partially adjusted by: (i) $6,600 (2012: $-0-) in depreciation; (ii) $-0- (2012: $3,000) in stock issued to founders; (iii) increase in accounts payable of $903 (2012: -0-); and (iv) decrease in accounts receivable of $2,196 (2012: -0-). Table of Contents Cash Flows from Investing Activities for Fiscal Year Ended December 31, 2013 and 2012 For fiscal year ended December 31, 2013 and 2012, net cash flows used in investing activities was $-0-. Cash Flows from Financing Activities for Fiscal Years Ended December 31, 2013 and 2012 We have financed our operations primarily from debt or the issuance of equity instruments. For the fiscal year ended December 31, 2013, net cash flows provided from financing activities was $18,293 compared to $23,567 for fiscal year ended December 31, 2012. Cash flows from financing activities for the fiscal year ended December 31, 2013 consisted of $25,150 (2012: $-0-) in proceeds from issuances of stock for cash, $6,500 for proceeds from loans to related parties (2012: $28,249), which was offset by ($9,487) for payment on loans from related parties (2012: $1,500) and ($3,870) for payments on notes payable (2012: $3,182). PLAN OF OPERATION AND FUNDING We have incurred losses for the past two fiscal years and had a net loss of $136,424 for the nine months ended September 30, 2014 and $3,969. We have incurred losses for the past two fiscal years and had a net loss of $18,002 at fiscal year ended December 31, 2013. We believe that our revenues from pest control services will continue to increase but are not sufficient to cover all of our operating expenses. Our auditors have expressed substantial doubt that we can continue as a going concern. We are continuing to push sales and control costs. Management intends to finance our 2014 operations primarily with the revenue from service sales and any cash short falls will be addressed through equity or debt financing, if available. Management expects revenues will continue to increase but not to the point of profitability in the short term. We will need to continue to raise additional capital, both internally and externally, to cover cash shortfalls and to compete in our markets. At our current revenue levels management believes we will require an additional $400,000 in equity financing during the next 12 months to satisfy our cash requirements to facilitate our business plan. These operating costs include cost of sales, general and administrative expenses, salaries and benefits and professional fees related to contracting engineers and website development costs. We have insufficient financing commitments in place to meet our expected cash requirements for 2014 and we cannot assure you that we will be able to obtain financing on favorable terms. If we cannot obtain financing to fund our operations in 2014, then we may be required to reduce our expenses and scale back our operations. Table of Contents Going Concern If the market price of our common stock falls below the fixed price of our registered stock offering, as in prior years we may again have insufficient financing commitments in place to meet our expected cash requirements for 2014. We cannot assure you that we will be able to obtain financing on favorable terms. If we cannot obtain financing to fund our operations in 2014, then we may be required to reduce our expenses and scale back our operations. These factors raise substantial doubt of our ability to continue as a going concern. Footnote 3 to our financial statements provides additional explanation of Management s views on our status as a going concern. The audited financial statements contained in this Annual Report do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result should we be unable to continue as a going concern. Our independent registered accounting firm included an explanatory paragraph December 31, 2013, in their reports on the accompanying financial statements for December 31, 2013 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. COMMITMENTS AND CONTINGENT LIABILITIES Our total current liabilities are $65,546 as of September 30, 2014. As of September 30, 2014, our liabilities consist of the following: Note Payable On January 19, 2011, we executed a secured promissory note with Royal Bank of Canada in the amount of $20,133 for the purchase of an automobile. The note has 5.79% fixed interest amortized over 72 months. In the nine months ended September 30, 2014 and 2013, we paid $642 and $648 in interest on the note. As of September 30, 2014 and December 31, 2013, we had a principle note payable balance of $8,380 and $11,307. Convertible Note Payable On June 20, 2014, the Company executed a convertible promissory note with Zeeshan Saeed in the amount of $12,000 Canadian Dollars, approximately $11,115 US Dollars as of June 20, 2014. The convertible promissory note bear no interest, is payable on demand and can be converted into shares of the Company s common stock at a rate of $0.04 USD per share. As of September 30, 2014, no debt has been converted and the Company has recorded a balance of the convertible promissory note in the amount of $10,707. Loans from Related Parties Since inception, the Company has been loaned money from time to time by Zahoor Ahmad and Fareeha Ahmad for working capital purposes. Zahoor Ahmad is the President of the Company and Fareeha Ahmad is his spouse as well as the sole officer of Encon at the time of the stock purchase agreement. At September 30, 2014 and December 31, 2013 the Company has a loan from related parties balance of $28,851 and $34,773, respectively. Of the loan from related parties balance at September 30, 2014, $8,022 is owed to Zahoor Ahmand and $20,829 is owed to Fareeha Ahmad. Of the loan from related parties balance at December 31, 2013, $0 is owed to Zahoor Ahmand and $34,773 is owed to Fareeha Ahmad. The loans bear interest at zero percent (0%) per annum and are payable on demand. Consulting Fees On June 1, 2014, the Company and Mrs. Ahmad amended the stock purchase agreement to cancel the promissory note of $46,400 and include a two year consulting agreement which requires consulting fees totaling $23,200 annually to be paid in monthly installments. Mrs. Ahmad will stay on as a consultant were she will continue to manage the residential and commercial accounts. On June 1, 2014, the Company executed a consulting agreement with Zirex Consulting, Inc. whereby the Company will issue 1,000,000 common shares upon execution and pay $2,000 a month for consulting services to be provide which include but are not limited to: (i) providing financial, managerial and administrative services; (ii) assisting with capital raising; (iii) preparation of business plan; and (iv) assistance with day-to-day operations. The 1,000,000 shares issued to the unrelated third party consultant were fully earned upon issuance and valued at the current stock price paid by cash investors, $0.05 per share, which resulted in the Company recording a consulting expense of $50,000. Executive Services On June 1, 2014, we executed a three year executive service agreement with our chief executive officer, Zahoor Ahmad, whereby we issued him 1,000,000 common shares upon execution and will pay $2,000 a month in compensation. As of September 30, 2014, the Company has an accrued compensation balance owed to Mr. Ahmad in the amount of $8,000. Table of Contents OFF BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. CONTRACTUAL OBLIGATIONS As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide this information. Going Concern Opinion You should carefully consider the risks, uncertainties and other factors identified below because they could materially and adversely affect our business, financial condition, operating results and prospects and could negatively affect the market price of our Common Stock. Also, you should be aware that the risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we do not yet know of, or that we currently believe are immaterial, may also impair our business operations and financial results. Our business, financial condition or results of operations could be harmed by any of these risks. The trading price of our Common Stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks you should also refer to the information contained in or incorporated by reference to our Form 10-K for the year ended December 31, 2012, including our financial statements and the related notes thereto. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS AND EXECUTIVE OFFICERS The following table includes the names and positions held of our executive officers and directors who serve as of the date of this Prospectus. NAME AGE POSITION DIRECTOR SINCE Zahoor Ahmad 44 President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer 2012 Zahoor Ahmad. Sole Director, President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer since inception. Mr. Ahmad has been in the pest control and related industries since 1993. During 1993, Mr. Ahmad commenced his career with FMC in Pakistan as a technical sales officer. He subsequently joined Al-Muqeet International as a zonal manager in 1994. In August of 2000, Mr. Ahmad and his family moved to Canada where he commenced employment with Orkin Pest Control as a technician where he worked till November of 2010. During his tenure at Orkin Pest Control, Mr. Ahmad held different positions, including lead hand and certified field trainer. From approximately 2010 through 2012, Mr. Ahmad worked at Remax Performance as a sales agent. Mr. Ahmad became the sole director and executive officer of Legendary Ventures, Inc. at inception, December 7, 2012. He has considerable experience in the pest control industry. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS None of our directors, executive officers or control persons has been involved in any of the legal proceedings required to be disclosed in Item 401 of Regulation S-K, during the past five years. Table of Contents CORPORATE GOVERNANCE MATTERS Audit Committee The Board of Directors has not established an audit committee, and the functions of the audit committee are currently performed by our Board of Directors with assistance by expert independent accounting personnel. We are not currently subject to any law, rule or regulation requiring that we establish or maintain an audit committee. Board of Directors Independence. Our Board of Directors currently consists of one member. We are not currently subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include "independent" directors. Audit Committee Financial Expert. Our Board of Directors has determined that we do not have an audit committee financial expert serving on our audit committee within the meaning of Item 407(d)(5) of Regulation S-K. In general, an "audit committee financial expert" is an individual member of the audit committee who (a) understands generally accepted accounting principles and financial statements, (b) is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves, (c) has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to the Company's financial statements, (d) understands internal controls over financial reporting and (e) understands audit committee functions. We have not yet replaced our former audit committee financial expert, but we are engaged in finding a suitable replacement. Code of Ethics We have not adopted a code of ethics for our executive officers, directors and employees. However, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations. Nominating Committee We have not yet established a nominating committee. Our Board of Directors, sitting as a board, performs the role of a nominating committee. We are not currently subject to any law, rule or regulation requiring that we establish a nominating committee. Compensation Committee We have not established a compensation committee. Our Board of Directors, sitting as a board, performs the role of a compensation committee. We are not currently subject to any law, rule or regulation requiring that we establish a compensation committee. During the last fiscal year, Mr. Ahmad, the sole executive officer and director, held Board of Directors meetings and deliberations concerning executive officer compensation, including standard in the pest control industry and as a fully reporting and publicly traded company. Table of Contents EXECUTIVE COMPENSATION. Management has been compensated in accrued salary, common stock and reimbursement of fuel expense during the nine months ended September 30, 2014 and for the fiscal years ended December 31, 2013 and 2012. On June 1, 2014, we executed a three year executive service agreement with our chief executive officer, Zahoor Ahmad, whereby we issued him 1,000,000 common shares upon execution and will pay $2,000 a month in compensation. As of September 30, 2014, the Company has an accrued compensation balance owed to Mr. Ahmad in the amount of $8,000. Mr. Ahmad will provide numerous services to the Company pertaining to the executive service agreement which include but are not limited to investor relations, marketing, Board of Director duties and bookkeeping. The 1,000,000 shares issued to Mr. Ahmad were fully earned upon issuance and valued at the current stock price paid by cash investors, $0.05 per share, which resulted in the Company recording an officer compensation expense of $50,000. The following table summarizes the compensation paid to our officer and director for the nine months ended September 30, 2014 and for the years ended December 31, 2013 and 2012; SUMMARY COMPENSATION TABLE Name and Principal Position Period Salary ($)(2) Bonus ($) Stock Awards ($)(1) Option Awards ($) Nonequity Incentive Plan Compen- sation ($) Non- Qualified Deferred Compen- sation Earnings ($) All Other Compen- sation ($) Total ($) Zahoor Ahmad (Principal Chief Executive Officer, President, Principal Accounting Officer, Treasurer and Director) 2012 2013 2014 -0- -0- 8,000 -0- -0- -0- -0- 3,000 50,000 - - - - - - - - - - - - -0- 3,000 58,000 (1) The Company has to date issued 4,000,000 common shares to Mr. Ahmad of which 3,000,000 shares were for the founding of the Company and 1,000,000 share were pursuant to an executive service agreement executed June 1, 2014. The Company valued the 3,000,000 founder shares at par $0.01 which resulted in an expense of $3,000. The Company valued the 1,000,000 shares for services at $0.05 which resulted in compensation expense of $50,000. (2) The Company will pay $2,000 a month in compensation to Mr Ahmad pursuant to his executive service agreement. As of September 30, 2014, the Company has an accrued compensation balance owed to Mr. Ahmad in the amount of $8,000. Fees Earned or Paid in Cash $ Stock Awards $ Option Awards $ Non-Equity Incentive Plan Compensation $ Non-Qualified Deferred Compensation Earnings $ All Other Compensation $ Total $ Zahoor Ahmad 0 0 0 0 0 0 0 EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS Zahoor Ahmad Executive Employment Agreement On June 1, 2014, the Board of Directors authorized the execution of that certain executive services agreement (the "Executive Agreement") with our President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer, Zahoor Ahmad (the "Executive"). In accordance with the terms and provisions of the Executive Agreement: (i) the Executive shall provide services and perform all duties typical of the offices held by the Executive; (ii) we shall pay to the Executive a base salary of $2,000.00 per month, payable in form of cash or shares of our common stock as agreed upon, (ii) we shall pay to the Executive an incentive bonus to be determined by the Board of Directors based upon our performance and the results anticipated to be achieved by the Executive in his job performance; and (iii) we shall issue to the Executive an aggregate 1,000,000 shares of common stock in exchange for his loyalty and the non-compete provisions contained therein. In further accordance with the terms and provisions of the Executive Agreement, in consideration of the payment specified above in subparagraph (iv), and for so long as the Executive is employed by us, and for one calendar year following termination of this Executive Agreement, the Executive shall not directly or indirectly own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with as an officer, employee, partner, stockholder, consultant or otherwise, any individual, partnership, firm, corporation or other business entity that materially competes with us. Table of Contents In further accordance with the terms and provisions of the Executive Agreement, in consideration of the payment specified above in subparagraph (iv), and for so long as the Executive is employed by us, and for one calendar year following termination of this Executive Agreement, the Executive shall not, whether for his own account or for the account of any other individual, partnership, firm, corporation or other business entity, intentionally solicit, endeavor to entice away from us or otherwise interfere with the relationship between us and any person who is employed by or otherwise engaged to perform services for us, including any employees of our venture partners and independent sales representatives or organizations or any person or entity who is or was within the then most recent twelve month period customer or client of ours. The term of the Executive Agreement commenced June 1, 2014 and continues in effect unless terminated by either party upon ninety days written notice. In the event the Executive Agreement is terminated, we shall pay the Executive the compensation the Executive has earned to the termination date. Lastly, in the event we are acquired or the non-surviving party in a merger or sell all or substantially all of our assets, this Executive Agreement shall not be deemed terminated as a result thereof. Issuance of Common Stock On December 31, 2012, we issued 3,000,000 shares of common stock to our founding officer Zahoor Ahmad. We valued the shares at a par value of $.001 which resulted in an expense of $3,000. On June 30, 2014, we issued 1,000,000 shares of common stock to Zahoor Ahmad in accordance with the terms and provisions of the Executive Service Agreement. We valued the shares at a par value of $0.05, which will result in an expense of $50,000. Directors Compensation No director received compensation for services rendered in any capacity to us during the fiscal years ended December 31, 2013 and December 31, 2012. Indemnification of Directors and Officers Our Articles of Incorporation, as amended and restated, and our Bylaws provide for mandatory indemnification of our officers and directors, except where such person has been adjudicated liable by reason of his negligence or willful misconduct toward the Company or such other corporation in the performance of his duties as such officer or director. Our Bylaws also authorize the purchase of director and officer liability insurance to insure them against any liability asserted against or incurred by such person in that capacity or arising from such person's status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have the power to indemnify such person under the applicable law. Compensation Committee Interlocks and Insider Participation We have not established a compensation committee. We are not currently subject to any law, rule or regulation requiring that we establish a compensation committee. During the last fiscal year, Mr. Ahmad, an executive officer, participated in our Board of Directors deliberations concerning executive officer compensation. Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following tables set forth information as of November 5, 2014 regarding the beneficial ownership of our common stock, (a) each stockholder who is known by us to own beneficially in excess of 5% of our outstanding common stock; (b) each director known to hold common stock; (c) our chief executive officer; and (d) the executive officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares of stock. The percentage of beneficial ownership of common stock is based upon 7,545,000 shares of common stock outstanding as of November 5, 2014. Name and Address Number of Common Shares Beneficially Owned Before Offering Percentage of Total Voting Power Before Offering Number of Common Shares Beneficially Owned After Offering (1) Percentage of Total Voting Power After Offering Officers and Directors Zahoor Ahmad 5615 Doctor Peddle Cres Mississauga, Ontario Canada L5M 0K4 4,000,000 53.02 % 4,000,000 53.02 % All Directors and officers as a group (1 member) 4,000,000 53.02 % 4,000,000 53.02 % 5% or Greater Shareholders Zeeshan Saeed 5448 Churchill Meadows Blvd Mississauga ON L5M 6X5 1,267,675 (2) 16.22 % 1,217,657 (2) 6.83 % (1) Assumes all 10,000,000 shares are sold in this Offering. Zeeshan Saeed is a selling shareholder and this assumes all 10,000,000 shares are sold in this Offering. (2) Included in this figure are: (i) 1,000,000 shares held of record before the offering and 267,675 shares issuable upon conversion of the convertible note which, as of current date, is in the principal amount and accrued interest of $10,700 at a per share conversion price of $0.04. (3) Included in this figure are: (i) 950,000 shares of held of record after the offering and 267,675 shares issuable upon conversion of the convertible note which, as of current date, is in the principal amount and accrued interest of $10,700. The above table reflects share ownership as of the most recent date. Each share of common stock has one vote per share on all matters submitted to a vote of our shareholders. TRANSACTIONS WITH RELATED PERSONS, PROMOTORS, AND CERTAIN CONTROL PERSONS AND CORPORATE GOVERNANCE. We do not have a specific policy or procedure for the review, approval, or ratification of any transaction involving related persons. We historically have sought and obtained funding from officers, directors, and family members as these categories of persons are familiar with our management and often provide better terms and conditions than we can obtain from unassociated sources. Also, we are so small that having specific policies or procedures of this type would be unworkable. Table of Contents Stock Purchase Agreement On December 31, 2012, the Company entered into a stock purchase agreement with the spouse of our chief executive officer, Fareeha Ahmad, the sole shareholder of Encon, a private Ontario corporation in the business of serving residential, commercial and industrial southern Ontario communities with pest control services, whereby the Company acquired all of the outstanding stock of Encon for a promissory note to Fareeha Ahmad in the amount of $46,400. The original promissory note bears zero percent (0%) interest and has a maturity date, June 30, 2014. As a result of the stock purchase agreement, Encon became a wholly owned subsidiary of the Company. On June 1, 2014, the Company and Fareeha Ahmad executed an amendment to the stock purchase agreement dated December 31, 2012 to cancel the promissory note of $46,400 and replace it with a two year consulting agreement. Consulting Agreement In accordance with the terms and provisions of the Consulting Agreement between the Company and Fareeha Ahmad, Ms. Ahmad shall manage the residential and commercial accounts and the Company shall pay to Ms. Ahmad an annual consulting fee of $23,200 in monthly installments. Affiliate Loan In order for us to meet our financial obligations, our President, Zahoor Ahmad, loans us funds on occasion and is repaid when funds are available. At September 30, 2014, we owed Mr. Ahmad $8,022. We have not repaid these advances so the balance due to Mr. Ahmad remains at $8,022. Zahoor Ahmad Executive Employment Agreement On June 1, 2014, we entered into the Executive Agreement with our President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer, Zahoor Ahmad (the "Executive"). In accordance with the terms and provisions of the Executive Agreement: (i) the Executive shall provide services and perform all duties typical of the offices held by the Executive; (ii) we shall pay to the Executive a base salary of $2,000.00 per month, payable in form of cash or shares of our common stock as agreed upon, (ii) we shall pay to the Executive an incentive bonus to be determined by the Board of Directors based upon our performance and the results anticipated to be achieved by the Executive in his job performance; and (iii) we shall issue to the Executive an aggregate 1,000,000 shares of common stock in exchange for his loyalty and the non-compete provisions contained therein. In further accordance with the terms and provisions of the Executive Agreement, in consideration of the payment specified above in subparagraph (iv), and for so long as the Executive is employed by us, and for one calendar year following termination of this Executive Agreement, the Executive shall not directly or indirectly own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with as an officer, employee, partner, stockholder, consultant or otherwise, any individual, partnership, firm, corporation or other business entity that materially competes with us. In further accordance with the terms and provisions of the Executive Agreement, in consideration of the payment specified above in subparagraph (iv), and for so long as the Executive is employed by us, and for one calendar year following termination of this Executive Agreement, the Executive shall not, whether for his own account or for the account of any other individual, partnership, firm, corporation or other business entity, intentionally solicit, endeavor to entice away from us or otherwise interfere with the relationship between us and any person who is employed by or otherwise engaged to perform services for us, including any employees of our venture partners and independent sales representatives or organizations or any person or entity who is or was within the then most recent twelve month period customer or client of ours. The term of the Executive Agreement commenced April 1, 2014 and continues in effect unless terminated by either party upon ninety days written notice. In the event the Executive Agreement is terminated, we shall pay the Executive the compensation the Executive has earned to the termination date. Lastly, in the event we are acquired or the non-surviving party in a merger or sell all or substantially all of our assets, this Executive Agreement shall not be deemed terminated as a result thereof. Director Independence Our Board of Directors currently consists of one member. Our director is not deemed independent. We are not currently subject to any law, rule or regulation requiring that all or any portion of our board of directors include "independent" directors. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES While indemnification for liabilities under the Securities Act of 1933 would be permitted for actions taken in good faith by directors, officers, and employees pursuant to various provisions contained in our articles of incorporation, as amended and restated, and/or by our Bylaws, we have been advised that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. Table of Contents Table of Contents Page SUMMARY 1
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+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND PETRICHOR CORP. REFERS TO PETRICHOR CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+PETRICHOR CORP.
+
+ 
+
+We are a development stage company and intend to commence operations in the business of web-based human translation. Petrichor Corp. was incorporated in Nevada on January 14, 2014. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $25,000 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate significant revenues during months 8-12 after completion of this offering. However, there is no assurance that we will generate significant revenue in the first 12 months after completion our offering or ever generate any significant revenue. Moreover, we might not raise any or sufficient funds in the offering to begin full operations. Being a development stage company, we have very limited operating history. If we do not generate any significant revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 18801 Collins Ave., Ste. 102-252, Sunny Isles Beach, FL 33160. Our phone number is (702) 605-0610.
+
+From inception until the date of this filing, we have had limited operating activities. To date, we have formed the Company, developed our business plan and registered a web domain. As of today, we have recognized the $1,560 of revenue. Our financial statements from inception (January 14, 2014) through November 30, 2014, reports a net loss of $3,353. Our independent registered public accounting firm has issued an audit opinion for Petrichor Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have formed the Company and developed our business plan. 
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+We do not anticipate earning significant revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully assemble, construct and sell any services related to our planned activities. 
+
+We are a shell company within the meaning of Rule 405, promulgated pursuant to Securities Act of 1933, as amended (the Securities Act ), because we have nominal assets and nominal operations. Accordingly, the securities sold in this offering can only be resold through registration under Section 5 the Securities Act, Section 4(1), if available, for non-affiliates or by meeting the conditions of Rule 144(i), which will potentially reduce liquidity of our securities. For us to cease being a shell company we must have more than nominal operations and more that nominal assets or assets which do not consist solely of cash or cash equivalents.
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+PETRICHOR CORP.
+
+Securities Being Offered:
+
+ 
+
+5,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.01
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 5,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 5,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+$50,000
+
+Securities Issued and Outstanding:
+
+There are 5,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Liudmila Shokhina. 
+
+If we are successful at selling all the shares in this offering, we will have 10,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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+MANAGEMENT Directors and Executive Officers The sole member of the Board of Directors of Code Navy serves until the next annual meeting of stockholders, or until he successors have been elected. The officer serves at the pleasure of the Board of Directors. The following is the director and executive officer of Code Navy. Tamara Semenova, age 33, has been officer and director since June 2014. From July 2003 to November 2013, Ms. Semenova was Director of Marketing for Turtess Travel LLC, in Kiev Ukraine. Ms. Semenova was responsible for all marketing activities for Turtess. During this time period, Turtess Travel grew to become one of the largest marketers of international vacations to consumers in Ukraine; Turtess was acquired in November 2013 by Cyprus company Togebi Holdings. Since June 2013, she has been owner of TUI franchising in Kiev. TUI Leisure Travel is Germany s largest travel agency franchisor and part of one of Europe s largest travel groups and Ms. Semenova is responsible for franchising in Ukraine. She is expected to devote approximately half time to the Company s business until no less than 20% of the offering is successfully completed, at which time her time commitment will increase to 80%. Executive Compensation Ms. Semenova is not receiving any regular compensation, cash or otherwise, for her services until such times as revenues are forthcoming. She is the sole director. There is no option or non-cash compensation plan at this time. No amounts are paid or payable to directors for acting as such. In the year ended June 30, 2014, Code Navy had one board of directors meeting. No Board committees have been established. Due to the small size of Code Navy s operations, the entire Board of Directors functions as the audit committee; Ms. Semenova is not a financial expert as defined in Regulation S-K 407. We have no independent director. The following table sets forth the compensation of the Company's sole executive officer for the year ended June 30, 2014. SUMMARY COMPENSATION TABLE Name and Principal Position (a) Year (b) Salary ($) (c) Bonus ($) (d) Stock Awards ($) (e) Option Awards ($) (f) NonEquity Incentive Plan Compensation ($) (g) Nonqualified Deferred Compensation Earnings ($) (h) All Other Compensation ($) (i) Total ($) (j) Tamara Semenova CEO and CFO 2014 800 0 0 0 0 0 0 0 0 0 0 0 0 0 800 0 PRINCIPAL SHAREHOLDERS The following table sets forth information relating to the beneficial ownership of Company common stock as of the date of this prospectus by (i) each person known by Code Navy to be the beneficial owner of more than 5% of the outstanding shares of common stock (ii) each of Code Navy' directors and executive officers, and (iii) the Percentage After Offering assumes the sale of all shares offered. Unless otherwise noted below, Code Navy believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. For purposes hereof, a person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any warrants, options or convertible securities that are held by such person (but not those held by any other person) and which are exercisable within 60 days from the date hereof, have been exercised. Percentage Percentage Name Common Stock Before Offering After Offering Tamara Semenova(1) 100,000,000 99.9% 40.0% All officers and directors as a group (1 person) 100,000,000 99.9% 40.0% (1) Address is c/o the Company. PLAN OF DISTRIBUTION Code Navy is making this offering on a no minimum, straight best efforts basis. No escrow account will be established. Purchasers will be required to complete a subscription agreement and pay the purchase price in cash directly to Code Navy. Code Navy is making this offering on a self underwritten basis and does not intend to enter into any arrangements with any other person regarding sales of these securities. The offering price of $.01 per share has been determined arbitrarily and without any reference to book value, trading price of the common stock, projected earnings or any other recognized measure of value. The Company believes that its officer, Ms. Semenova is not required to register as a broker or sales agent because she will comply with Securities Exchange Act Rule 3a4-1, in that: (a) she is not subject to a statutory disqualification as defined in Exchange Act 3(a)(39); (b) she will not be compensated by the payment of commissions or other remuneration based directly or indirectly on transactions in securities; (c) she is not an associated person of a broker dealer; (d) she performs, and intends to perform after the close of the offering,, substantial duties as president, chief financial officer and director, other than transactions in securities; (e ) she has not been associated with any broker-dealer for the past 12 months; and (f) she has not participated in any other offering for the preceding 12 months. Ms. Semenova or her affiliates may, but have made no commitment to, purchase shares in this offering. Such shares will be restricted securities and resales of those shares will be subject to Rule 144. Code Navy will bear all costs of the offering in registering the shares estimated to not exceed $20,000. Code Navy will use its best efforts to update the registration statement and maintain its effectiveness for one year. CERTAIN TRANSACTIONS The officer and director contributed $5,000 in software development cost in exchange for her 100 million shares of common stock. In September 2014, she contributed $30,000 in cash to the Company for no additional shares or consideration. Murray Polischuk and Alexander Eliashevsky were the former control persons of Culture Medium Holdings Corp., the Nevada corporation which initiated the holding company reorganization described below under the caption "The Reorganization." Mr. Eliashevsky was appointed as a director of Culture Medium Holdings Corp. from May 2010, and subsequently became its Chief Executive Officer. Murray Polischuk became a director and the Chief Financial Officer of that entity at some time after 2011. Both resigned their positions in February 2014, and at that time Mr. Eliashevsky received 73,000 shares of common stock and Mr. Polischuk received 79,000 shares of common stock, both in full settlement of any amounts owed to them. Messrs. Eilashevsky and Polischuk have no involvement with Code Navy. Under Securities Act Rule 405, these persons may be deemed to be "promoters" of Code Navy. THE REORGANIZATION The Company was incorporated on June 9, 2014 under the laws of the state of Wyoming, and is the product of a holding company reorganization effected by Code Navy, a Nevada corporation. Code Navy (NV) was organized in March 2007 as Qele Resources, Inc. to explore mineral properties in Fiji. That business did not result in any revenues. Subsequently Code Navy (NV) changed its name to Brand Neue Corp. and then to Culture Media Holdings Corp., and was engaged in the business of developing and marketing consumer products through a number of subsidiaries. That business appeared to have been significant, resulting in sales of $977,133 and a net loss of $2,467,858 as reported in the annual report on Form 10-K for the year ended March 31, 2011. According to Code Navy (NV) s filings on EDGAR, there was a series of disputes between current and former management and Code Navy (NV) terminated operations sometime in late 2011 or 2012. Code Navy (NV) was dormant until management acquired control in March 2014, at which point it was viewed as a public shell. Prior management elected Ms. Semenova as sole officer and director on March 4, 2014. On that date, Ms. Semenova transferred all of the assets of the programming business to Code Navy (NV), but that transaction was rescinded on June 9, 2014 due to undisclosed liabilities of Code Navy (NV). Upon incorporation of the Company on June 9, 2014 as a second-tier subsidiary of Code Navy (NV), Ms. Semenova transferred all of the programming enterprise s assets to the Company and Code Navy (NV) issued 100 million shares of common stock to management in exchange for the Code Navy business plan. (All share numbers give effect to a 1-for-2000 reverse stock split occured on February 13, 2015.) The Company reincorporated in Wyoming and ceased to have any interest in the assets or liabilities of Code Navy (NV) in connection with a holding company reorganization under Oklahoma law. As a result of the holding company reorganization, Code Navy NV changed its name to Culture Medium Holdings Corp., became a wholly-owned Oklahoma subsidiary of the Company and was disposed of to a non-affiliated third party, and the former Code Navy NV shareholders became shareholders of the Company on a one-for-one basis. As of June 30, 2014 and March 31, 2015, and giving effect to the holding company reorganization, there were approximately 100,190,858 shares of Common Stock outstanding. As is the case in all holding company reorganizations, the assets and liabilities of the former Nevada operating company, Code Navy (NV) remain with the Oklahoma subsidiary, in which the Company holds no interest. The following charts illustrate the reorganization. In each stage of the reorganization, the shareholders received shares on a one-for-one basis. Specifically, when Code Navy NV merged into its Oklahoma subsidiary Culture Medium Holdings Corp., each of the holders of the 100,190,858 outstanding shares of Code Navy NV received one new share of Culture Medium Holdings Corp. (Oklahoma) common stock. When Culture Medium Holdings Corp. (Oklahoma) merged into Culture Medium Special Merger Corporation, each of the holders of the 100,190,858 outstanding shares of Culture Medium Holding Corp. (Oklahoma) received in exchange one new share of Code Navy (Oklahoma) for each one share held in Culture Medium Holding Corp. (Oklahoma). When Code Navy (Oklahoma) merged into Code Navy (Wyoming), each of the holders of the 100,190,858 outstanding shares of Code Navy (Oklahoma) common stock received one new share of Code Navy (Wyoming) in exchange for each one share held by them in Code Navy (Oklahoma). DESCRIPTION OF SECURITIES Common Stock Code Navy's Articles of Incorporation authorize the issuance of an unlimited number of shares of common stock, no par value per share, of which 100,190,858 shares were outstanding as of March 31, 2015. Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockhol ders. Holders of common stock have no cumulative voting rights. Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared, from time to time by the Board of Directors in its discretion, from funds legally available therefore. In the event of a liquidation, dissolution or winding up of Code Navy, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities and the liquidation preference to holders of Preferred Stock. Holders of common stock have no preemptive rights to purchase Code Navy's common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common stock. Meetings of stockholders may be called by the board of directors, the chairman of the board, the president, or by one or more holders entitled to cast in the aggregate not less than 20% of the votes at the meeting. Holders of a majority of the shares outstanding and entitled to vote at the meeting must be present, in person or by proxy, for a quorum to be present to enable the conduct of business at the meeting. Preferred Stock Code Navy's Articles of Incorporation authorizes the issuance of an unlimited number of shares of preferred stock, no par value, of which no shares of Preferred Stock are outstanding. Code Navy's Board of Directors has authority, without action by the shareholders, to issue all or any portion of the authorized but unissued preferred stock in one or more series and to determine the voting rights, preferences as to dividends and liquidation, conversion rights, and other rights of such series. Code Navy considers it desirable to have preferred stock available to provide increased flexibility in structuring possible future acquisitions and financings and in meeting corporate needs which may arise. If opportunities arise that would make desirable the issuance of preferred stock through either public offering or private placements, the provisions for preferred stock in Code Navy's Articles of Incorporation would avoid the possible delay and expense of a shareholder's meeting, except as may be required by law or regulatory authorities. Issuance of the preferred stock could result, however, in a series of securities outstanding that will have certain preferences with respect to dividends and liquidation over the common stock which would result in dilution of the income per share and net book value of the common stock. Issuance of additional common stock pursuant to any conversion right which may be attached to the terms of any series of preferred stock may also result in dilution of the net income per share and the net book value of the common stock. The specific terms of any series of preferred stock will depend primarily on market conditions, terms of a proposed acquisition or financing, and other factors existing at the time of issuance. Therefore, it is not possible at this time to determine in what respect a particular series of preferred stock will be superior to Code Navy's common stock or any other series of preferred stock which Code Navy may issue. The Board of Directors may issue additional preferred stock in future financings, but has no current plans to do so at this time. The issuance of Preferred Stock could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock of Code Navy. Code Navy intends to furnish holders of its common stock annual reports containing audited financial statements and to make public quarterly reports containing unaudited financial information. Transfer Agent The transfer agent for the common stock is Empire Stock Transfer, Las Vegas, Nevada. INTEREST OF NAMED EXPERTS AND COUNSEL The legality of the Shares offered hereby will be passed upon for Code Navy by Jehu Hand, an attorney admitted to practice in the State of California. EXPERTS The audited financial statements of Code Navy included in this Prospectus as of June 30, 2014 have been audited by Yu Certified Public Accountant, P.C., independent certified public accountants, to the extent and for the periods set forth in their report thereon and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. INDEMNIFICATION Code Navy has adopted provisions in its articles of incorporation and bylaws that limit the liability of its directors and provide for indemnification of its directors and officers to the full extent permitted under the Wyoming Business Corporation Act. Under Code Navy's articles of incorporation, and as permitted under the Wyoming Business Corporation Act, directors are not liable to Code Navy or its stockholders for monetary damages arising from a breach of their fiduciary duty of care as directors. Such provisions do not, however, relieve liability for breach of a director's duty of loyalty to Code Navy or its stockholders, liability for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, liability for transactions in which the director derived as improper personal benefit or liability for the payment of a dividend in violation of Wyoming law. Further, the provisions do not relieve a director's liability for violation of, or otherwise relieve Code Navy or its directors from the necessity of complying with, federal or state securities laws or affect the availability of equitable remedies such as injunctive relief or recision. At present, there is no pending litigation or proceeding involving a director, officer, employee or agent of Code Navy where indemnification will be required or permitted. Code Navy is not aware of any threatened litigation or proceeding that may result in a claim for indemnification by any director or officer. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of Code Navy pursuant to the foregoing provisions, or otherwise, Code Navy has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Code Navy of expenses incurred or paid by a director, officer or controlling person of Code Navy in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Code Navy will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. CODE NAVY FINANCIAL STATEMENTS INDEX Report of Independent Registered Public Accounting Firm Balance Sheets as of March 31, 2015 (unaudited) and June 30, 2014 Statements of Operations for the period June 9, 2014 (inception) to June 30, 2014, and for the three and nine months ended March 31, 2015 (unaudited) Statements of Changes in Stockholder s Equity (Deficit) for the period June 9, 2014 (inception) to June 30, 2014 and the nine months ended March 31, 2015 (unaudited) Statements of Cash Flows for the for the period June 9, 2014 (inception) to June 30, 2014, and for the nine months ended March 31, 2015 (unaudited) Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Audit Committee of the Board of Directors and Shareholders of Code Navy We have audited the accompanying balance sheet of Code Navy (the Company ) as of June 30, 2014, and the related statements of income, changes in stockholders equity and cash flows for the period June 9, 2014 (Inception) to June 30, 2014. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (Untied States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Code Navy as of June 30, 2014 and the results of its operations and its cash flows for the period June 9, 2014 (Inception) to June 30, 2014 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that Code Navy will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered a net loss for the period June 9, 2014 (Inception) to June 30, 2014, and has negative working capital and a stockholders deficit at June 30, 2014. These conditions raise substantial doubt about the Company s ability to continue as a going concern. Management s plans in regard to these matters are also described in Note 2 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Yu Certified Public Accountant, P.C. New York, New York December 11, 2014 Certified Public Accountants 136-20 38TH AVENUE, Suite 10i (F), Flushing NY 11354 Tel: 347-618-9237, 718-813-2130 Email: Info@ywlcpa.com CODE NAVY Balance Sheets March 31, June 30, 2015 2014 (unaudited) ASSETS Current Assets Cash and cash equivalents 5,990 $ -- Total Current Assets -- -- Total Assets $ 5,990 $ -- LIABILTITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current Liabilities Accounts payable $ 3,445 $ 16,705 Total Current Liabilities 3,445 16,705 Total Liabilities 3,445 16,705 Stockholders' equity (deficit) Preferred stock, no par value, unlimited shares authorized; no shares issued and Outstanding Common stock, no par value, unlimited shares authorized; 100,190,858 shares issued and outstanding 35,000 5,000 Accumulated deficit (33,455) (21,705) Total stockholders' equity (deficit) 1,545 (16,705) Total Liabilities and Stockholders' Equity (Deficit) $ 5,990 $ -- See accompanying Notes to Financial Statements. CODE NAVY Statements of Operations For the Nine For the Three For the Period Months Ended Months Ended June 9, 2014 March 31, March 31, (Inception) to 2015 2015 June 30, 2014 (unaudited) (unaudited) REVENUE $ -- $ -- $ -- EXPENSES Research and development -- -- 5,000 General and Administrative 11,750 5,102 16,705 Loss from operations (11,750) (5,102) (21,705) NET LOSS $ (11,750) $ (5,102) $ (21,705) LOSS PER COMMON SHARE - BASIC $ (0.01) $ (0.01) $ (0.01) Basic weighted average shares outstanding 100,190,858 100,190,858 100,190,858 See accompanying Notes to Financial Statements. CODE NAVY Statement of Changes in Stockholders' Equity (Deficit) For the Period June 9, 2014 (Inception) to June 30, 2014 and the Unaudited Nine Months Ended March 31, 2015 Common Stock Accumulated Shares Amount Deficit Total Balances, June 9, 2014 -- $ -- $ -- $ -- Issuance of Shares for prepaid expenses of $5,000 100,000,000 5,000 -- 5,000 Acquisition of public shell in reverse merger 190,858 -- -- -- Net Loss -- -- (21,705) (21,705) Balances, June 30, 2014 100,190,858 5,000 (21,705) (16,705) Contribution to capital 30,000 -- 30,000 Net Loss for the nine months ended March 31, 2015 (unaudited) -- -- (11,750) (11,750) Balances, March 31, 2015 100,190,858 $ 35,000 $ (33,455) $ 1,545 CODE NAVY Statements of Cash Flows For the Nine For the Period Months Ended June 9, 2014 March 31, (Inception) to 2015 June 30, 2014 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (11,750) $ (21,705) Adjustments to reconcile net loss to net cash used in operating activities: Increase/(decrease) in accounts payable (12,260) 16,705 Research & development asset depreciation -- 5,000 Net cash provided (used) by operating activities (24,010) -- CASH FLOWS FROM FINANCING ACTIVITIES Contributions to capital 30,000 -- Net cash provided (used) by financing activities 30,000 -- Net increase (decrease) in cash 5,990 -- Cash, at beginning of period -- -- Cash, at end of period $ 5,990 $ -- Supplemental disclosure of Cash Flow Information: Cash paid during the period for: Interest $ -- $ -- Income taxes $ -- $ -- Issuance of 100,000,000 shares of common stock for business plan valued at $5,000 $ -- $ -- See accompanying Notes to Financial Statements CODE NAVY NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD INCEPTION (JUNE 9, 2014) TO JUNE 30, 2014 AND THE UNAUDITED THREE AND NINE MONTHS ENDED MARCH 31, 2015 NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES The Company Code Navy, a Wyoming corporation (the "Company") was incorporated on June 9, 2014 and is the result of a holding company reorganization effected under Oklahoma law by Code Navy, a Nevada corporation formerly known as Culture Medium Holdings Corp. ( Code Navy NV ). On June 9, 2014, when the Company was a second-tier subsidiary of Code Navy NV, the Company obtained the rights to its current business plan in exchange for 100,000,000 Code Navy NV shares. mmediately prior to the issuance of the 100,000,000 shares, Code Navy NV had 190,858 shares outstanding. As a result of the holding company reorganization, Code Navy NV changed its name to Culture Medium Holdings Corp., became a wholly-owned Oklahoma subsidiary of the Company and was disposed of to a non-affiliated third party, and the former Code Navy NV shareholders became shareholders of the Company. As of June 30, 2014, and giving effect to the holding company reorganization, there were approximately 100,190,858 shares of Common Stock outstanding. The transaction was accounted for as a reverse merger (recapitalization) with the acquired business plan deemed to be the accounting acquirer and the Company deemed to be the legal acquirer. The financial statements presented herein are those of the accounting acquirer. The Company is engaged in the business of developing a database of offshore programmers and intends to offer programming services in an offshore floating vessel. Basis of Presentation of Unaudited Financial Information The unaudited financial statements of the Company for the three and nine months ended March 31, 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America ( GAAP ) but they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Summary of Significant Accounting Policies Revenue Recognition The Company recognizes sales in accordance with the United States Securities and Exchange Commission ( SEC ) Staff Accounting Bulletin ( SAB ) No. 104, Revenue Recognition . The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting receivable is reasonably assured. Revenue is not recognized until title and risk of loss is transferred to the customer, which generally occurs upon delivery of goods, and objective evidence exists that customer acceptance provisions have been met. Income tax We are subject to income taxes in the U.S. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. In accordance with FASB ASC Topic 740, Income Taxes, we provide for the recognition of deferred tax assets if realization of such assets is more likely than not. Estimates The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others, the fair value of shares of common stock issued for services. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Fair Value Measurements Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, are observable either directly or indirectly. Level 3 Unobservable inputs based on the Company's assumptions. The Company is required to use observable market data if available without undue cost and effort. The Company s financial instruments include cash and cash equivalents, accounts payable, and accrued expenses. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature. Loss Per Share Basic loss per share has been computed using the weighted average number of common shares outstanding and issuable during the period. Diluted loss per share is computed based on the weighted average number of common shares and all common equivalent shares outstanding during the period in which they are dilutive. Common equivalent shares consist of shares issuable upon the exercise of stock options, warrants or other convertible securities such as convertible notes. As of June 30, 2014 and March 31, 2015, the weighted average common shares outstanding totaled 100,190,858. There were no potentially dilutive shares as of any period presented. Stock-Based Compensation The Company periodically issues stock instruments, including shares of its common stock, stock options, and warrants to purchase shares of its common stock to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option awards issued and vesting to employees in accordance with authorization guidance of the FASB whereas the value of stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. Options to purchase shares of the Company s common stock vest and expire according to the terms established at the grant date. The Company accounts for stock options and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete. Advertising costs Advertising costs of $0 were incurred from June 9, 2014 (inception) to June 30, 2014 and in the nine months ended March 31, 2015 Recent Accounting Pronouncements On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition. On August 27, 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or is not believed by management to have a material impact on the Company's present or future consolidated financial statements. NOTE 2 - GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company is still in development stage and has not yet been successful in establishing profitable operations. The Company incurred a net loss of $21,705 for the period June 9, 2014 (inception) to June 30, 2014, and a net loss of $11,750 for the nine months ended March 31, 2015, and the Company's liabilities exceed its assets by $16,705 as of June 30, 2014. The Company has not generated any revenues to date. These factors create substantial doubt about the Company's ability to continue as a going concern. As a result, the Company s independent registered public accounting firm has raised substantial doubt about the Company s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company's management plans to continue as a going concern revolves around its ability to achieve, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company. The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company's plan. There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations. NOTE 3 - STOCKHOLDERS DEFICIT The Company has authorized an unlimited number of shares of common stock, no par value, of which 100,190,858 shares are outstanding, and an unlimited number of shares of preferred stock, no par value. The preferred stock may be issued with such rights, preferences and designation and to be issued in such series as determined by the Board of Directors. No shares of preferred stock are issued and outstanding at June 30, 2014 or March 31, 2015. No dealer, salesman or other person is authorized to give any information or to make any representations not contained in this Prospectus in connection with the offer made hereby, and, if given or made, such information or representations must not be relied upon as having been authorized by Code Navy. We are responsible for the information contained in this prospectus and in any free-writing prospectus we prepare or authorize. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. This Prospectus does not constitute an offer to sell or a solicitation to an offer to buy the securities offered hereby to any person in any state or other jurisdiction in which such offer or solicitation would be unlawful. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date hereof. TABLE OF CONTENTS Page Prospectus Summary 2 Risk Factors 3 Trading Price of the Common Stock 6 Additional Information 6 Dilution 7 Use of Proceeds 9 Dividend Policy 10 Plan of Operation 10 Business 12 Management 15 Principal Shareholders 16 Plan of Distribution 16 Certain Transactions 17 The Reorganization 17 Description of Securities 19 Interest of Named Experts and Counsel 20 Experts 20 Indemnification 20 Financial Statements 21 CODE NAVY 150,000,000 SHARES PROSPECTUS June __, 2015 Until (insert date), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. CODE NAVY PART II Item 24. Indemnification of Directors and Officers. Code Navy has adopted provisions in its articles of incorporation and bylaws that limit the liability of its directors and provide for indemnification of its directors and officers to the full extent permitted under the Wyoming Business Corporation Act. Under Code Navy's articles of incorporation, and as permitted under the Wyoming Business Corporation Act, directors are not liable to Code Navy or its stockholders for monetary damages arising from a breach of their fiduciary duty of care as directors. Such provisions do not, however, relieve liability for breach of a director's duty of loyalty to Code Navy or its stockholders, liability for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, liability for transactions in which the director derived as improper personal benefit or liability for the payment of a dividend in violation of Wyoming law. Further, the provisions do not relieve a director's liability for violation of, or otherwise relieve Code Navy or its directors from the necessity of complying with, federal or state securities laws or affect the availability of equitable remedies such as injunctive relief or recision. At present, there is no pending litigation or proceeding involving a director, officer, employee or agent of Code Navy where indemnification will be required or permitted. Code Navy is not aware of any threatened litigation or proceeding that may result in a claim for indemnification by any director or officer. Item 25. Other Expenses of Issuance and Distribution. (all to be paid by Code Navy) Filing fee under the Securities Act of 1933(1) $ 174.30 Blue Sky filing fees $ 2,000.00 Printing and engraving(1) $ 3,000.00 Legal Fees $ 8,000.00 Auditing Fees(1) $ 3,000.00 Miscellaneous(1) $ 3,825.70 TOTAL $ 20,000.00 (1) Estimates Item 26. Recent Sales of Unregistered Securities. The Company s predecessor, Code Navy, a Nevada corporation ( Code Navy NV ) issued 100,000,000 shares of common stock on March 3, 2014 to Tamara Semenova for contribution of business plan and development expenses of $5,000. On February 19, 2014, Code Navy NV issued 152,000 shares of common stock to Alexander Eliashevsky and Murray Polichuk, two former officers and directors, in lieu of $304,000 in accrued salary. No underwriter was involved in these issuances. The transactions by Code Navy NV were exempt under section 4(2) of the Securities Act of 1933 as one not involving any public solicitation or public offering, and was also exempt under Section 4(6) as an offering solely to accredited investors not involving any public solicitation or public offering. Ms. Semenova and the former directors are considered to be accredited persons based on their status as directors and executive officers of Code Navy NV. Code Navy NV rescinded the issuance of the 100,000,000 shares to Ms. Semenova on June 9, 2014, and the Company reissued such 100,000,000 shares to Ms. Semenova in exchange for the transfer of the assets to Code Navy, a Wyoming corporation. On effectiveness of the holding company reorganization on June 30, 2014, the Company issued 190,858 shares to the former shareholders of Code Navy NV in a transaction exempt from registration because it did not involve any offer or sale, pursuant to Securities Act Rule 145. II-1 Item 27. Exhibits and Financial Schedules 3. Certificate of Incorporation and Bylaws 3.1. Articles of Incorporation(1) 3.2 Bylaws(1) 5. Opinion of Hand & Hand as to legality of securities being registered.(1) 21. Subsidiaries of the registrant Not applicable 23. Consents of Experts and Counsel 23.1 Consent of accountant (2). 23.2 Consent of Hand & Hand included in Exhibit 5 hereto All other Exhibits called for by Rule 601 of Regulation S-B are not applicable to this filing. (b) Financial Statement Schedules All schedules are omitted because they are not applicable or because the required information is included in the financial statements or notes thereto. (1) Filed with original registration statement. (2) Filed herewith. II-2 Item 28. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events which, individually or together represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (Section 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities as at that time to be the initial bona fide offering thereof. (3)
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+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common shares. You should read this entire prospectus carefully, especially the information set forth under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Unless the context otherwise requires, we use the terms we, us, the company and our in this prospectus to refer to Northern Power Systems Corp. and its subsidiaries. Company Overview We are a growing provider of advanced renewable power creation and power conversion technology for the energy sector. We design, manufacture and service next-generation Permanent Magnet Direct-Drive, or PMDD, wind turbines for the distributed wind market, and we currently license our utility-class wind turbine platform, which uses the same PMDD technology as our distributed turbines, to large manufacturers on a global basis. We also provide technology development services for a wide variety of energy applications. With our predecessor companies dating back to 1974 and our new turbine development since 1977, we have decades of experience in developing advanced, innovative wind turbines, as well as technology for power conversion and integration with other energy applications. Since 2008, we have invested more than $130 million in developing and commercializing our wind turbine platforms. Our PMDD wind turbine technology is based on a simplified architecture that utilizes a unique combination of a permanent magnet generator and direct-drive design. The permanent magnet generator provides higher efficiency and higher energy capture than units that utilize a traditional gearbox design. Importantly, the direct-drive design of our turbine utilizes significantly fewer moving parts than traditional geared turbines, which increases reliability due to reduced maintenance and downtime costs. The substantial majority of our current sales are in the small wind subset of the distributed wind market, which commonly consists of turbines with rated capacities of 500 kW output or smaller. Based on the number of turbines that we have sold and installed to date, we consider ourselves a leader in the U.S., U.K. and Italy in the larger energy output sub-segment of this market, which comprises turbines ranging in size from 50 kW to 100 kW. Since the introduction of our second generation 60 kW and 100 kW PMDD wind turbines in late 2008, we have shipped over 400 of these turbines and as of September 30, 2014, we have orders approximating $33 million in backlog for our second and third generation turbines. To date, these shipped units have run for over six million hours in the aggregate. Our distributed wind customers include financial investors and project developers which deploy our turbines to provide power for farms, remote villages, schools, small businesses, and U.S. military installations. We are advancing our efforts to sell our utility-class wind turbines. We have developed a 2 MW turbine platform with three wind-speed regime variants based upon our PMDD technology, of which the 2.3 MW variant is certified to International Electrotechnical Commission standard 61400-1 by Det Norske Veritas, a globally recognized certification firm. In 2013, we launched a strategy of partnering with large-scale manufacturers in developing regions, starting with a multi-billion dollar (in revenue) industrial equipment manufacturer based in Brazil (WEG Equipamentos El tricos S.A., or WEG). We have licensed our technology to WEG exclusively for Brazil, but retain our right to sell Northern Power-branded utility-class turbines produced by WEG on a rest-of-world basis. WEG has executed a backlog of orders comprising over 300 MW of turbine installations for the sale of turbines built using our design, eleven of which have been installed to date in Brazil. We are also seeking a limited number of similar partnership structures in other regional geographies, through which we intend that other large-scale manufacturers will produce and sell turbines for their domestic market and make available to us Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated January 14, 2015 PROSPECTUS Shares NORTHERN POWER SYSTEMS CORP. Common Shares This is our initial U.S. public offering. We are offering of our common shares to be sold in this offering. Our common shares are listed on the Toronto Stock Exchange, or TSX, under the symbol NPS. The last reported sale price of our common shares on TSX on , 2015 was CDN$ per share (or $ per share, based on an exchange rate of CDN$ per $1.00). We have applied to list our common shares on the NASDAQ Capital Market under the symbol NPS. We are an emerging growth company as defined in Section 2(a)(19) of the U.S. Securities Act of 1933, as amended, and, as such, are allowed to provide in this prospectus more limited disclosures than an issuer that would not so qualify. In addition, for as long as we remain an emerging growth company, we will qualify for certain limited exceptions from investor protection laws such as the Sarbanes-Oxley Act of 2002 and the Investor Protection and Securities Reform Act of 2010. Please read Risk Factors and Prospectus Summary Emerging Growth Company under the JOBS Act. Investing in our common shares involves significant risks. See Risk Factors beginning on page 12 to read about factors you should carefully consider before buying our common shares. Per Share Total Offering Price $ $ Underwriting Discounts and Commissions(1) $ $ Proceeds before expenses $ $ (1) We refer you to Underwriting beginning on page 125 of this prospectus for additional information regarding total underwriter compensation. We have granted the underwriters an option for a period of 30 days to purchase up to additional common shares, on the same terms and conditions set forth above. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Delivery of the shares against payment is expected to be made on or about , 2015. We anticipate delivery of our common shares will be made through the facilities of the Depository Trust Company, subject to customary closing conditions. Needham & Company Craig-Hallum Capital Group Northland Capital Markets Prospectus dated , 2015 Table of Contents the supply of turbines to expand our regional ability to sell such turbines. We believe this approach will allow us to participate in the utility-class wind turbine market without a significant investment in capital equipment that would otherwise be required. Our direct sales strategy for utility-class wind turbines is directed primarily towards North America and focuses on underserved, smaller scale wind projects such as those generating 50 MW or less. As part of our market entry plan, we intend to be a minority investor in the development of a limited number of these wind power projects to ensure initial sales of our utility-class turbines. After a number of these installations, we plan to participate in the same utility wind marketplace solely by selling the turbines without providing any investment. We also intend to expand our sales and marketing capabilities to execute this strategy. In addition to wind turbine development, we provide technology development services to customers to develop products and technology for a variety of complex energy applications, including energy storage, microgrids, and grid stabilization. While the customer owns the developed technology for a limited field of use, we typically maintain a license for all other applications and all other markets. While we do not expect material revenue from our development services, these services fund the expansion of our intellectual property portfolio. Through providing certain of such services, we have identified a series of non-wind market applications for our FlexPhase power converters. As a result, we intend to invest in expanding our sales of this product offering. For the nine months ended September 30, 2014 and 2013 and the year ended December 31, 2013, we generated $42.6 million, $11.6 million, and $20.6 million in revenue, respectively. For the nine months ended September 30, 2014 and 2013 and the year ended December 31, 2013 we incurred net losses of $5.5 million, $9.3 million and $14.1 million, respectively. Industry Overview and Market Opportunity Wind power has been one of the fastest growing sources of electricity generation globally over the past decade. According to the International Energy Agency, in its 2013 Annual Report, wind power currently provides nearly 4% of global electricity demand with installations in over 100 countries. In the same report, the IEA observed that wind power deployment currently exceeds 318 gigawatts, or GW, of installed capacity globally, which the Global Wind Energy Council, or GWEC, in its Global Wind Statistics 2013 report notes has increased more than 250% since 2008. GWEC further reports in its Global Wind Report-Annual Market Update 2013 that the new installations added approximately 12.5% to the installed wind base in 2013 and have averaged approximately 21% per year over the last ten years. In its latest Technology Roadmap: Wind Energy (2013 edition), the IEA set targets for wind power to satisfy 15-18% of worldwide electrical power demand by 2050, up previously from 12%. The top ten wind power producing countries accounted for approximately 85% of year-end global capacity as of December 31, 2013, but at least 85 countries had commercial wind activity that year, with at least 71 having more than 10 MW of reported capacity, and 24 had more than 1 GW in operation. The Renewable Energy Policy Network reports that annual growth rates of cumulative wind power capacity have averaged 21.4% since the end of 2008, and global capacity has increased eightfold over the past decade. The annual worldwide small wind market is forecast to grow from 144.2 MW in 2014 to 668.1 MW in 2023, representing projected cumulative revenue from installations of $647.7 million and $2.6 billion, respectively, according to Navigant Research s Global Distributed Generation Deployment Forecast (3Q 2014). Our key target wind power markets include the E.U., the U.S., and Brazil. The growth in the industry is largely attributable to increasing cost competitiveness with other power generation technologies and growing public and governmental support for renewable energy driven by concerns regarding the security of conventional fossil fuel energy supply, as well as the environmental benefits of wind power. Table of Contents National targets for wind and other renewables are also driven by each individual country s efforts to produce energy domestically, increase employment, build domestic industries, and replace other forms of power generation, such as coal and nuclear. The majority of this wind power expansion is currently installations of utility-class wind turbine farms. These farms generate electricity to feed into the electrical grid, supplying a utility company with energy that can be sold to customer. The utilities that purchase such power still have additional costs to deliver the electricity to the source of use. As such, utility-class power costs are measured as only costs to generate power. Based on our current strategy of pursuing direct sales of utility-class turbines into underserved, smaller scale wind projects and pursuing other sales of these turbines through strategic partners such as WEG, we estimate that our current target addressable market in utility wind is approximately 30% of the global onshore utility wind market. Wind power also is expanding in the distributed wind market. This market is made up of turbines connected on the customer side of the power meter, designed to meet onsite electrical loads as well as to feed into distribution or microgrids, thereby reducing energy costs at the site of use. The comparable cost of distributed wind energy is the cost for landed power, which is the cost for other forms of energy generation to be produced as well as delivered to the location of consumption. In the distributed wind markets in which we currently sell our products, a variety of incentives have promoted the introduction of wind power while greatly reducing the payback period for investments in wind turbines for property owners and businesses. Such incentives take the form of feed-in-tariffs, tax breaks or cash incentives to purchasers of wind power systems. As a result, the effective price or cost to the user is greatly reduced making the return on investment much more attractive and lowering the time period it takes to generate enough energy to recover the total cost of the system. While many customers are attracted to renewable energy for its positive environmental attributes, the ultimate decision often centers on a cost/benefit and investment return analysis. Governmental and private (utility-sponsored) incentives play an important role by lowering the effective cost to the end user of a wind power system, thereby making a purchase more attractive. Our Products and Services We have three operating business lines, which include product sales and service, technology licensing, and technology development, in addition to a shared services segment. In our product sales and service line, we offer wind turbines serving global distributed wind and utility wind markets featuring our next generation Permanent Magnet Direct-Drive technology coupled with full power conversion and 24/7 fleet monitoring. We also sell power converters based on our proprietary FlexPhase technology for complex energy applications ranging from 500 kW to over 5 MW. Our technology licensing line is focused on licensing certain of our wind turbine and power converter technology to global manufacturers for specific geographies and applications. We have licensed certain elements of our wind turbine technology to two large global manufacturers. Our technology development business line utilizes our experienced team of 39 engineers to provide technology development services that are targeted to the global wind power market as well as other advanced energy markets. Applications of our technology development services have included energy storage, microgrids, and grid stabilization and have been delivered to a wide range of industries. Our Strategy We are focused on being a leader in the commercialization of distributed-class wind turbines, expanding our presence in the utility wind markets, and strategically leveraging our proprietary technology by expanding our product offerings in power creation and power conversion. Key elements of our strategy include: Continuing to drive sales growth in distributed wind, by improving the economics of our product offerings for our customers and deepening our relationships with our existing customers as well as adding new customers. Table of Contents In addition to selling utility-class turbines through our strategic partners based on our licensed technology and designs, directly selling utility-class turbines in underserved, smaller scale wind projects where we can take advantage of our industry relationships. Continuing to build upon our intellectual property portfolio as we pursue further wind turbine enhancements and create new designs. Continuing to customize our proprietary power conversion technology for developing applications and market our products to pursue revenue opportunities outside of use in wind turbines. Our Competitive Strengths We believe that the following competitive strengths enable us to compete effectively in the wind power technology and renewable energy industries and to capitalize on the growth of those industries: A broad portfolio of intellectual property including our highly efficient, but low cost, permanent magnet generator, our modular turbine design, our full power converter, and our voltage stabilization capabilities as well as our experienced team comprised of 39 engineers. Wind turbines designed for high availability, high energy output and low energy production cost per kWh in a wide range of wind conditions throughout the world. Since the introduction of our second generation 60 kW and 100 kW PMDD wind turbines in late 2008, shipment of over 400 of these turbines, which have run for over six million hours in the aggregate and have averaged 98-99% availability for grid-connected turbines. Deep customer relationships with a number of our customers, each of which has extensive experience developing wind and other renewable energy projects in Europe. A validated strategy of entering into geographic partnerships that expand our participation in the global utility-class wind turbine market. An integrated development and manufacturing capability at our facility in Barre, Vermont, which has approximately $100 million in annual revenue capacity at current prices, has strong production capabilities and rigorous system-driven manufacturing processes and quality control. An experienced management team that has successfully expanded our operations and increased our capacity and business through organic growth. Emerging Growth Company under the JOBS Act As a company with less than $1.0 billion in revenues during our last fiscal year, we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company: we may present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations; we are exempt from the requirement to obtain an attestation and report from our auditors on whether we maintained effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002; we are permitted to provide less extensive disclosure about our executive compensation arrangements; and we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements. Table of Contents We may take advantage of these provisions for up to five years if we continue to be an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues, have more than $700 million in market value of our shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. We have elected to provide two years of audited financial statements and two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations. We have also availed ourselves of the exemption from disclosing certain executive compensation information in this prospectus pursuant to Title 1, Section 102 of the JOBS Act. Additionally, we have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the U.S. Securities Act, as amended, or the Securities Act, for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act. See Management s Discussion and Analysis of Financial Condition and Results of Operations Summary of Critical Accounting Policies for a further discussion of this exemption. Risks Affecting Our Business Our business, financial condition, results of operations and prospects are subject to numerous risks and uncertainties. These risks include, but are not limited to, the following: We have incurred significant operating losses since inception and may not be able to achieve, or subsequently maintain, profitability. The distributed wind market is in the early stages of development and its future is uncertain. If the market is not as large as we expect or we are unable to compete effectively in the distributed wind market, our business and operating results could be harmed. We are in the early stages of product and service commercialization, and as such, our products and services may not generate sufficient revenue or profitability. Our sales cycles are complex and lengthy and the timing of our distributed wind installations are subject to seasonal variations, each of which may impact operating results from quarter to quarter and make results difficult to predict. We maintain a sizable backlog and the timing of our conversion of revenue out of backlog is uncertain. Because we depend on a limited number of single source suppliers for certain components, third-party business and relationship interruptions could harm our operations. If we do not successfully execute on our utility-class sales commercialization strategy, we may be unable to effectively grow this business. Strategic partnerships are essential to our business growth, particularly in the utility wind market, and the inability to secure these relationships could adversely impact revenue and operations. If we fail to expand effectively in international markets, our revenue and business could be harmed. Problems with quality or performance in our products or products manufactured by our licensees could have a negative impact on our relationships with customers and our reputation and cause reduced market demand for our products. Our customers inability to obtain financing to make purchases from us or maintain their businesses could harm our business, and negatively impact revenue, results of operations, and cash flow. We may not be able to secure additional financing in a timely manner, on favorable terms, or at all, to meet our future capital needs, which could impair our ability to execute on our business plan. We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our common shares less attractive to investors. Table of Contents We face intense competition and, if we are unable to compete effectively, our business, financial condition and results of operations could be harmed. New or existing technologies could gain wide adoption and supplant our services and features and harm our revenue and financial results. For a complete description of the risks and uncertainties affecting us, please carefully review the Risk Factors set forth in in this registration statement under the heading Risk Factors beginning on page 12. Company Information We were originally incorporated in Delaware on August 12, 2008 as Wind Power Holdings, Inc., or WPHI. On August 15, 2008, WPHI s wholly-owned subsidiary CB Wind Acquisition, Inc., or CBWA, acquired the wind turbine business of Distributed Energy Systems Corp., which was operating under the name Northern Power Systems. Northern Power Systems had commenced business in 1974 as North Wind Power Company in Warren, Vermont, but entered into bankruptcy proceedings along with its parent company Distributed Energy Systems in 2008. Following the acquisition, CBWA changed its name to Northern Power Systems, Inc. Northern Power Systems, Inc. also has two wholly-owned subsidiaries, Northern Power Systems AG, a Switzerland corporation, and Northern Power Systems S.r.l., an Italy limited liability company. In February 2014, WPHI filed a Registration Statement on Form 10 (File No. 001-36317) with the Securities and Exchange Commission to register the shares of common stock of WPHI, which became effective on June 3, 2014. On April 16, 2014, we completed a reverse takeover transaction, or RTO, with Mira III Acquisition Corp., a Canadian capital pool company incorporated in British Columbia, Canada, or Mira III, whereby all of the equity securities of WPHI were exchanged (as described below) for common shares and restricted voting shares of Mira III, which became the holding company of our corporate group. In connection with the RTO, Mira III changed its name to Northern Power Systems Corp. and the historical consolidated financial statements of WPHI included in this prospectus became the historical consolidated financial statements of Northern Power Systems Corp. Also in connection with the RTO, we completed a CDN$24.5 million private placement whereby we issued 6,125,000 subscription receipts. Immediately prior to the RTO, the shares of common stock of WPHI, or WPHI Shares, were consolidated on a 1.557612-to-1 basis and then all of WPHI s outstanding senior secured convertible notes automatically converted into an aggregate of 3,384,755 WPHI Shares. Additionally, each subscription receipt issued in the private placement converted into one WPHI Share. In connection with the RTO, each WPHI Share held by U.S. residents who are accredited investors were exchanged for 0.72742473 of our restricted voting shares and 0.27257527 of our common shares. All other issued and outstanding WPHI Shares were exchanged for our common shares on a 1-to-1 basis. Additionally, all outstanding options to purchase WPHI Shares were exchanged and cancelled for options to purchase our common shares on a 1-to-1 basis with terms substantially the same to the options being exchanged. Upon completion of the RTO, Northern Power Systems Corp. succeeded to WPHI s status as a reporting company under the U.S. Securities Exchange Act of 1934, as amended, which permits us to continue to prepare our financial statements in accordance with U.S. generally accepted accounting principles. In connection with the RTO, our common shares were listed on the Toronto Stock Exchange, or TSX, under the symbol NPS. Our principal executive office is located at 29 Pitman Road, Barre, Vermont, 05641. Our telephone number at our principal executive office is (802) 461-2955. Our website address is www.northernpower.com. You may Table of Contents access our periodic reports and other SEC filings on EDGAR or on our website, which also provides links to our Canadian securities filings on SEDAR and the SEC filings of our predecessor reporting company Wind Power Holdings, Inc. on EDGAR. This is a textual reference only. We do not incorporate the information on, or accessible through, our website into this prospectus, and you should not consider any information on, or that can be accessed through, our website as part of this prospectus. We use various trademarks and trade names in our business, including Northern Power Systems, Northern Power, NPS, FlexPhase and SmartView, some of which we have registered in the U.S. and in various other countries. This prospectus also contains trademarks and trade names of other businesses that are the property of their respective holders. We have omitted the and designations, as applicable, for the trademarks we name in this prospectus. Table of Contents THE OFFERING Common shares offered by us shares Common shares to be outstanding immediately after this offering shares Option to purchase additional shares We have granted the underwriters an option, exercisable for 30 days after the date of this prospectus, to purchase up to an additional common shares from us. Use of Proceeds We expect our net proceeds from this offering will be $ million (or $ million if the underwriters exercise their option to purchase additional shares in full), based on an assumed offering price of $ per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses. We currently intend to use the net proceeds from this offering primarily for the commercialization of our sales of utility-class wind turbines, including potential minority investment into the development of a limited number of wind farms, and also for general corporate purposes, including working capital. For a more complete description of our intended use of proceeds from this offering, see Use of Proceeds on page 35. Toronto Stock Exchange symbol NPS Proposed NASDAQ Capital Market trading symbol NPS
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+PROSPECTUS SUMMARY AND RISK FACTORS This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our or our industry s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. AMERICATOWNE, INC. As with any business plan that is aspirational in nature, there is no assurance we will be able to accomplish all of our objectives or that we will be able to meet our financing needs to accomplish our objectives. Mission "AmericaTowne is to be a world-class, globally respected and profitable company, providing value to its customers, the environment and the lives of the people we service." This statement is a forward-looking statement; however, the Company has already made strides in facilitating relationships intended to advance its mission. The Company s aim is to provide upper and middle-income consumers in China with "Made In The USA" goods and services allowing customers to experience the United States culture and lifestyle. In achieving this objective, our focus is on four initiatives: (1) The development of a United States International Trade Center in Meishan Ningbo China with employees and/or independent contractors focusing on advancing our initial business objective, which is to be the "go-to" place for all things "Made In The USA." (2) The development of upwards of 20 AmericaTowne communities in China with each community consisting of upwards of 50 United States based companies, and upscale hotels, villas, children theme parks, senior care and educational facilities - all based upon United States culture and lifestyle. (3) The development of an internet platform in Chinese to complement (1) and (2), above, focusing on importing "Made In The USA" goods and services to China through internet sales. (4) The development of franchise operations in the United States and internationally to support and advance the above-referenced initiatives. These initiatives are admittedly aspirational in nature. Our intent is to accomplish the majority, if not all, of our initiatives, but there is no assurance we will or that our financing needs to meet our initiatives will be met. The Company currently has 21 exporters in our export program. In addition, Manhattan Institute of Management and six institutions associated with Student Resource USA (Capella University, Walden University, Western Governors University, Northcentral University, Belhaven University and National University) are represented in our education export initiative. Our intention is to bring the United States International Trade Center in Meishan Ningbo China online in 2015. We expect to complete our initial trade operations with our exporters in 2015. In addition, our office in Raleigh, North Carolina is operational, recently expanded and serves as our base and model for eight other export Trade Center Support Service Centers planned in the United States and other locations. Although we are planning to develop US Trade Centers in Richmond Virginia, Chicago Illinois, New York City New York, Las Vegas Nevada, Los Altos California, Dallas Texas, Seattle Washington, and Santo Domingo Dominican Republic we have no operations in these locations at this time and we may never have operations in these locations. Internationally, we plan on developing and operating Support Trade Centers in the Nairobi Kenya, Dakar Senegal, and the Kinshasa Democratic Republic of Congo. Although we are completing preliminary work in setting up these locations, none are operational and they may never be operational. The AmericaTowne Community planned in China and our Internet operations with Chinese websites planned are not yet operational. While we plan to have robust operations in the United States and international locations to support the AmericaTowne concept and trade center, we expect 55% to 65% of our operations and revenue will come from China. China s economy and its government impact our revenues and operations. While we have an agreement in place with the government in Meishan Ningbo China to operate the United States International Trade Center in Meishan Island China, there is no assurance that we will operate the center successfully. Additionally, the Company will need government approval in China to operate other aspects of our business plan. There is no assurance that we will be successful in obtaining approvals from government entities to operate other aspects of our business plan. We expect to conduct a large part of our business operations and receive a significant portion of our revenues from operations in China. Accordingly, our results of operations and prospects are subject, to a large extent, to any economic, political or legal developments in China. Our business may be impacted by various factors including but not limited to changes in foreign exchange regulations; changes in regulations and laws that affect foreign investments; requirements for us to operate subsidiaries or related companies within China; changes in rules and regulations at the national and local level that impact construction; lifestyle businesses, foreign trade; education programs; private investments; export laws, lax laws; internet operations; and requirements to purchase and occupy land. China s economy differs from the economies of most developed countries in many aspects, including: political structure; degree of government involvement; degree of development; level and control of capital reinvestment; control of foreign exchange; and the allocation of resources. China s economy has been transitioning from a centrally planned economy to a more market-oriented economy. For more than two decades, China s government has implemented economic reform measures emphasizing the utilization of market forces in the development of the China s economy. Although we believe these reforms will have a positive effect on China s overall and long-term growth, we cannot predict whether changes in the China economic, political and social conditions, laws, regulations and policies will have any adverse effect on our current or future business, financial condition or results of operations. Additionally, during most business operations we will require the approval of the Chinese government to operate. While to date we have had favorable responses from various government agencies in developing our business plan, there is no assurance that such support and cooperate will continue. Corporate History The Company was originally incorporated in Delaware on April 22, 2014. On June 18, 2014, the Company s sole shareholder, officer and director, Richard Chiang, entered into an agreement to sell an aggregate of 10,000,000 shares of the Company s common stock to Yilaime Corporation, a Nevada corporation ("Yilaime"). Effective upon the closing date of the Share Purchase Agreement, June 26, 2014, Richard Chiang executed the agreement and owned no shares of the Company s stock. This transaction resulted in Yilaime retaining rights, title and interest to all issued and outstanding shares of common stock in the Company. The "AmericaTowne, Inc." symbol and tradename were registered with the United States Patent and Trademark Office on October 30, 2012. This registration is current. The Company currently employs 12 people. Between August 28, 2014 and the date of this Prospectus, the Company has entered into 2 Licensing, Lease and Use Agreements and 19 Exporter Service Agreements. The Company is a service provider to exporters of "Made in the USA" good and services to China through these two primary forms of agreement. Under the Licensing, Lease and Use Agreement, the Company licenses its intellectual property to the customer and a right to lease a future physical location to conduct its business in China. For the consideration set forth in the Licensing Agreement, the Company grants to the customer a license and lease right to operate one business unit on the proposed, anticipated and intended location in China Under the Exporter Services Agreement, the Company represents to the customer that it is in the process of preparing the AmericaTowne Platform. This platform will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States and China, and the platform will provide a buyer s network, and online websites either directly owned by AmericaTowne or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods and services to consumers in China. The AmericaTowne Platform will provide the customer with access to and participation in a program whereby the Company will exercise its experience, expertise and training in assessing the customer s market acceptance and demand of the customer s products or services in China (and perhaps other locales depending on the Company s findings). In short, the Company is focused on increasing USA exports to China and elsewhere. The Company s aim is to provide upper and middle-income consumers in China with "Made In The USA" goods and services allowing customers to experience the United States culture and lifestyle. There are barriers to entry that make it difficult for entrants into the industry, including, but not limited to the socio-political environment in China. Although the Company provides different types of services and intends on providing a variety of products through its contractual relationships, the key notable competitors are China HGS Real Estate Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN), and Xinyuan Real Estate Co., Ltd (XIN), and IFM Investments Limited (CTC). As we develop our business model further, we expect additional competitors to service and the competitive picture to become clearer. Our principal supplier of potential exporters is Yilaime, a related party to the Company. On October 27, 2014, the Company entered into a Service Provider Agreement with Yilaime (the "Service Agreement"). Pursuant to the terms of the Service Agreement, the Company and Yilaime have agreed to an exclusivity relationship over the next five years with Yilaime retaining an option right on five more years. In consideration of the mutual compensation set forth in the Service Agreement, Yilaime has agreed to provide on an exclusive basis "Export Funding and Support Services" and "Occupancy Services," as these terms are defined therein. Yilaime has also agreed to a covenant not to compete, an agreement not to circumvent, confidentiality and mutual indemnification and hold harmless. On November 25, 2014, the Company entered into an Employment, Lock-Up and Options Agreement with Mabiala T. Phuati to serve as the Company s Vice President Worldwide Operations effective retroactively to November 15, 2014. The term of the agreement is one year with an option held by the Company to extend employment for another year. The Company has agreed to issue 477,198 shares of common stock to Mr. Phuati in consideration of his services during the term, and to the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Mr. Phuati for his services. In addition to restrictions under the 1933 Securities Act, Mr. Phuati has agreed to specific lock-up provisions. He has agreed not to dispose or convey greater than ten-percent (10%) of the shares between the first day after the first year after issuance and the conclusion of the second year after issuance, and he shall not dispose or convey greater than twenty percent (20%) of the shares between the conclusion of the first year up to and after the first day of the third year after issuance. These lock-up periods terminate immediately prior to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1 (or its then equivalent) under the 1933 Securities Act, pursuant to which the aggregate price paid for the public to purchase of stock is at least $10.00, or on the third anniversary of the date of the agreement, whichever occurs first. The Company entered into a similar agreement on November 21, 2014 with Alton Perkins to serve as the Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer and Secretary. The term of Mr. Perkins agreement is five years with the Company retaining an option to extend in one-year periods. In consideration for Mr. Perkins services, the Company has agreed to issue to his designee, the Alton & Xiang Mei Lin Perkins Family Trust, 5,100,367 shares of common stock. The Company may elect in the future to include money compensation to Mr. Perkins or his designee for his services provided there is sufficient cash flow. In addition to restrictions under the 1933 Securities Act, Mr. Perkins has agreed to specific lock-up provisions. He has agreed not to dispose of or convey greater than five-percent (5%) of the shares and or any shares under his control for his personal benefit between the first day after the first year after issuance and the conclusion of the second year after issuance. He has agreed not to dispose or convey greater than fifteen percent (15%) of the shares and or any shares under his control for his personal benefit between the conclusion of the first year up to and after the first day of the third year after issuance, and not to dispose of or convey greater than twenty percent (20%) of the shares and or any shares under his control for his personal benefit between the conclusion of the first year up to and after the first day of the fourth year after issuance. Subject to restrictions as an insider under the 1933 Securities Act, the lock-up provisions set forth herein shall terminate immediately prior to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1 (or its then equivalent) under the 1933 Securities Act, pursuant to which the aggregate price paid for the public to purchase of stock is at least $10.00, or on the fifth anniversary of the date of the agreement, whichever occurs first. Mr. Phuati and Mr. Perkins, or their respective designees or assignees, each retain an option to purchase up to 1,000,000 shares of common stock of the Company at any time prior to the conclusion of the first year of the Agreement, i.e. prior to 365 days after execution of the Agreement, at a price of $0.50 per share. Prior to issuing the shares under their respective options, Mr. Phuati and Mr. Perkins agree that any agreement between the Company and their respective entities or affiliates must be satisfied. The Chairman of the Board must certify that these funds have been paid. The shares purchased under this option shall be considered subject to all rights and restrictions set forth in the schedule attached to their respective agreements. The shares under the Employment Agreements have been issued through the Company s transfer agent, Action Stock Transfer. On August 26, 2015, the Company entered into an Employment, Lock-Up and Options Agreement with Dr. Daniel K. Katabaki to serve as the Company s Vice President for Marketing USA and Africa. After a three-month probation, the term of the agreement is one year with an option held by the Company to extend employment for another year. The Company has agreed to issue 450,000 shares of common stock to Dr. Katabaki in consideration of his services during the term. The shares will be issued at a later date. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Dr. Katabaki for his services. On August 28, 2015, the Company entered into an Employment, Lock-Up and Options Agreement with Dr. Yu Wang to serve as the Company s Senior Vice President for Human and Export Technical Compliance. The term of the agreement is one year with an option held by the Company to extend employment for another year. The Company has agreed to issue 477,190 shares of common stock to Dr. Wang in consideration of her services during the term. The shares will be issued at a later date. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Dr. Wang for her services. On October 7, 2015, the Company entered into an Employment, Lock-Up and Options Agreement (the "Agreement") with Ms. Lindsey Moore to serve as the Company s Vice President for Marketing USA Eastern Region. After a three-month probation, the term of the Agreement is three years with an option held by the Company to extend employment for another year. The Company has agreed to issue 100,000 shares of common stock to Lindsey Moore in consideration of her services during the term following her three-month probation period. Additionally, the Company has agreed to provide Ms. Moore options to acquire up to 100,000 shares of stock for each year she is employed by the Company for up to five years. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Ms. Moore for her services. On October 12, 2015, the Company entered into an Employment, Lock-Up and Options Agreement (the "Agreement") with Mr. Qingjun Wang to serve as the Company s Manager of Corporate Operations China. After a three-month probation, the term of the Agreement is three years with an option held by the Company to extend employment for another year. The Company has agreed to issue 20,000 shares of common stock to Mr. Wang in consideration of his services during the term following his three-month probation period. Additionally, the Company has agreed to provide Mr. Wang options to acquire up to 20,000 shares of stock for each year he is employed by the Company for up to five years. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Mr. Wang for his services. In addition to restrictions under the 1933 Securities Act, Dr. Daniel K. Katabaki, Dr. Yu Wang, Lindsey Moore and Qingjun Wang have agreed to specific lock-up provisions once their respective shares of common stock are issued by the Company. They have agreed not to dispose or convey greater than ten-percent (10%) of their respective shares between the first day after the first year after issuance and the conclusion of the second year after issuance, and they shall not dispose or convey greater than twenty percent (20%) of the shares between the conclusion of the first year up to and after the first day of the third year after issuance. These lock-up periods terminate immediately prior to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1 (or its then equivalent) under the 1933 Securities Act, pursuant to which the aggregate price paid for the public to purchase of stock is at least $10.00, or on the third anniversary of the date of the agreement, whichever occurs first. The Company has issued, and has outstanding, 22,943,624 shares of restricted common stock, all of which is being registered under this registration statement as shares owned by the Selling Shareholders. Of the outstanding shares, on May14, 2015, the Company issued 3,615,059 shares to Yilaime NC (acquired under the Stock Exchange Agreement). The 70 Selling Shareholders, upon effectiveness of this registration will receive the 3,615,059 shares as part of a corporate restructuring of Yilaime. In addition to the shares associated with the Selling Shareholders, which carry the fixed pricing of $2.75/share during the duration of the offering, the Company is registering out of its treasury a total of 8,000,000 shares of common stock with direct offering price of $2.75/share pursuant to the terms of the Prospectus. The options on the 2,927,190 shares of common stock associated with the aforementioned employment agreements are not being registered herein. As a preface to the subsequent disclosures herein, the Company represents that certain statements in this filing are not historical facts, but rather "forward-looking statements." These forward-looking statements are subject to risks and uncertainties that are beyond our control. Although management believes that the assumptions underlying the forward looking statements included in this filing are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this filing will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors" contained in this report. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Except as required by law, we expressly disclaim any obligation to update publicly any forward-looking statements for any reason after the date of this report, to conform these statements to actual results, or to changes in our expectations. You should, however, review the factors and risks we describe in the reports we will file from time to time with the United States Securities and Exchange Commission (the "SEC") after the date of this report. AmericaTowne is to be a world class, globally-respected and profitable company providing value to its customers, the environment and the lives of the people we service. Pursuant to the rights granted to the Company under its Contribution Agreement, the Company is in the process of planning and developing the AmericaTowne and AmericaStreet concept. The concept allows American style communities to be built in China. It is anticipated that the AmericaTowne community will be planned on 50-plus acres consisting of small businesses, hotel, villas, senior care facilities, a theme park and performing arts center - all located on specific acreage in China depicting the American lifestyle and the American experience. Through AmericaTowne , the Company s goal is to provide unique one-of-a-kind communities for people in China to go spend their leisure time all fashioned after the American way, business, and lifestyle. In short, the focus of AmericaTowne is to bring "a slice of Americana to China." The Company plans to develop communities and conduct business operations within China using "Made in America" goods and services within five core areas: 1) small business operations (including 50 United States based businesses that will be either franchises, joint venture partners or individual operators); 2) a hotel with the development, construction, management and ownership through the Company or an entity under the control of the Company; 3) approximately 50 villas with the construction, management, leasing, timeshare and sales through the Company or an entity under the control of the Company; 4) a theme park and performing arts center with the development, construction, management, ownership and operations through the Company or an entity under the control of the Company; and 5) senior care facilities with the development, construction, management, ownership and operations through the Company or an entity under the control of the Company. All components of AmericaTowne are expected to be similar in style, decor and business operations typically found in the United States. AmericaTowne is targeted at the middle to upper income consumer in China. The Company believes that this type of consumer in China desires goods and services from the United States, but also the experiences of American culture and lifestyle. The Company believes that by providing this target consumer with unique "Made in America" experiences, it will meet its business model s needs and growth strategy. In addition, the business model offers United States based small businesses a complete ecosystem for their businesses. For those businesses that would not typically seek to export because of various reasons, AmericaTowne will strive to offer those businesses a complete support system that will allow them to market their products and services in China. The revenue streams from the Company s business operations align themselves with the five core business components set forth above, and provides eight potential revenue streams, if not more, as follows: 1) licenses and or franchise fees for businesses that set-up shop and operate within AmericaTowne as well as businesses that desire to export their goods and services to China through AmericaTowne; 2) franchise, joint venture and partnership arrangements with United States based businesses residing in and operating within AmericaTowne; 3) revenue from villa sales, rentals, timeshare and leasing; 4) hotel, leasing and or operational revenues and sales; 5) theme park and performing art center operations, sales and or leasing; 6) senior care facilities, operations and or sales; 7) export sales, marketing and license fees; and 8) franchise and license fees for United States support locations. Mr. Perkins, the creator of the AmericaTowne concept, has extensive experience in business in China involving operations, construction, marketing, consumer behavior, finance and exporting. Mr. Perkins has experience as a co-chairman of a Foreign Invested Partnership in China that focused on real estate development and laid much of the foundation for the concepts behind AmericaTowne . The Company intends on continuing to use the management systems and services provided by Yilaime. The Company intends on evaluating and assessing potential management service agreements with Yilaime whereby Yilaime would provide valuable services to the Company in effectuating and facilitating the business model associated with AmericaTowne. The Company states that the need for Chinese government approval of its principal products and services is based upon China s economy and the extent to which the government impacts our revenues and operations. While the Company has an agreement in place with the government in Meishan Ningbo China to operate the United States International Trade Center in Meishan Island China, there is no assurance that it will operate the center successfully. Additionally, the Company will need government approval in China to operate other aspects of the business plan. There is no assurance that it will be successful in obtaining approvals from government entities to operate other aspects of the business plan. The Company will promptly file a Form 8-K upon execution of a materially definitive agreement. It is anticipated that the location will be within a 100 miles of a Tier I or II city that the Company believes has the right economic and consumer base to support the AmericaTowne concept. See http://sme.amcham-shanghai.org/faq/what-meant-first-tier-second-tier-and-third-tier-cities (American Chamber of Commerce in Shanghai). Any location selected requires the cooperation of the local government and approval of the local and provincial planning and zoning boards. Though the Company has submitted plans, it does not yet have all required approvals from the applicable boards. Management and local government officials have agreed that the Company will first focus on completing the build out of Meishan Trade Center before finalizing negotiations for the AmericaTowne Complex. The results of the Company s operations and prospects are subject, to a large extent, to any economic, political or legal developments in China. The business may be impacted by various factors including but not limited to changes in foreign exchange regulations; changes in regulations and laws that affect foreign investments; requirements for the Company to operate subsidiaries or related companies within China; changes in rules and regulations at the national and local level that impact construction; lifestyle businesses, foreign trade; education programs; private investments; export laws, lax laws; internet operations; and requirements to purchase and occupy land. Furthermore, China s economy differs from the economies of most developed countries in many aspects, including: political structure; degree of government involvement; degree of development; level and control of capital reinvestment; control of foreign exchange; and the allocation of resources. China s economy has been transitioning from a centrally planned economy to a more market-oriented economy. For more than two decades, China s government has implemented economic reform measures emphasizing the utilization of market forces in the development of the China s economy. Although the Company believes these reforms will have a positive effect on China s overall and long-term growth, it is unpredictable whether changes in the China economic, political and social conditions, laws, regulations and policies will have any adverse effect on the current or future business, financial condition or results of operations. The Company s Strategy The Company s primary business strategy is to develop a position as a leader in supplying quality "Made in the USA" goods and services to middle, upper middle, and upper income consumers in China. The Company seeks to create market share in the rapidly growing middle and upper income population demographic with a focus on tourism, exports, and senior care. The Company believes China s economy is robust. People in China are prospering making more money and are looking for more places to go to enjoy leisure and tourism. Today and in the foreseeable future, in China, the Company believes the demand for leisure activities is outstripping the supply. As set forth above, the Company s objective is to provide unique one-of-a-kind communities for people in China to spend their leisure time. The Company s current planning committee is concentrating its efforts on securing land between 50 and 165 acres, and to chart out land up to 50 unique American small businesses, a 5-star hotel, 50 villas, a theme park, performing arts center, and a senior care facility all fashioned after the American way, business, and lifestyle. The aforementioned businesses will bring a slice of America to China. The Company believes the communities will offer authentic goods, products and services that are "Made in the USA." The company is in the process of identifying United States based businesses looking to locate their operations and conduct business in AmericaTowne , and to take advantage of the key Chinese demographic. We believe that AmericaTowne will help China counter its tourist deficit, satisfy China s increasing need to import United States based goods and meet the growing demand for senior living facilities (all of which are discussed in more detail below). As a dual and added value, the Company believes AmericaTowne will provide export opportunities and jobs in China and America. Furthermore, AmericaTowne supports America s national initiative to improve the balance of trade by exporting goods and services carrying the "Made in the USA" tag. (i) Tourism AmericaTowne meets the challenge of helping China reduce its tourist deficit by keeping more Chinese citizens at home to enjoy a slice of America. In short, instead of an economy based upon manufacturing and exporting products to other countries, the Company believes that China s focus has now changed to internal domestic consumption. The Company believes that China s government is ramping up the demand for its citizens to buy and use consumer products. At the same time, the Chinese government is emphasizing stability and improving its citizen s quality of life. The Company believes leisure and tourism are cornerstones of China s long-term plans. Additionally, the Company believes that the demand by Chinese consumers for "Made in America" goods and services are high. Most important, the Company believes that the target Chinese consumer is sophisticated and focused on goods and services, but also the experiences that those goods and services bring. The Company believes that providing an AmericaTowne community with support services model after the American lifestyle will provide those experiences. (ii) Exporting According to Forbes Major Trends In China: The Next 10 Years, China will account for 36% of global growth in consumer spending during this period (http://www.forbes.com/sites/jackperkowski/2012/11/27/major-trends-in-china-the-next-10-years/). The Company believes that over the next ten years, global spending on consumer goods is expected to increase by $4.8 trillion, from $7.3 trillion in 2010 to $12.1 trillion in 2020. In 2013, United States exports to China reached $120 billion, according to the US-China Business Council, making it the third-largest export market for United States goods behind Canada and Mexico, our neighbors and NAFTA partners. United States exports to China have grown faster than exports to any other major United States trading partner. From 2005 to 2014, United States exports to China increased 198%. That rate is greater than growth to any of the other top ten US export markets, including the two largest US trading partners, Canada (47 percent growth) and Mexico (102 percent growth). With its large population, rapidly growing middle class, and long list of infrastructure goals, China will continue to be a major export market for United States goods and services. (US-China Business Council, US Exports to China 2005-2014; https://www.uschina.org/reports/us-exports/national; www.uschina.org/reports/us-exports/national-2013 (iii) Senior Care A component of the Company s business is designed to take advantage of market conditions by constructing, developing and operating either through partnership or independently senior care facilities in China. "There is no stronger brand in the world than "Made in America," according to USA Export-Import Bank Chairman and President Fred P. Hochberg. We want to build on this and provide a slice of Americana in the fastest growing economy in the world. As stated by the Chairman and President of the United States Export-Import Bank - Fred P. Hochberg, "There is no stronger brand in the World that Made in America ". See "Export-Import Bank Report to Congress: Aggressive, Unregulated Financing from Foreign Competitors is Costing U.S. Jobs" dated June 25, 2014. The Company intends on building on this brand and provides a "slice of Americana" in the fastest growing economy in the World. According to China s National Bureau of Statistics, China has roughly 185,000,000 people over the age of 601.1A 2007 study by the United Nations estimated that in 2005, there were 16 retired people in China for every 100 workers. The study projected that this ratio will reach 64 elderly for every 100 workers by 2025. Compare this to the United States, which currently has approximately 20 retirees for every 100 workers and is projected to have 33 retirees for every 100 workers by 2050. See also "Major Trends in China: The Next 10 Years" attached hereto. China s government funding only covers 1.6% of seniors in need of care, who cannot otherwise pay for their own care. The World Bank s standard for developed nations is 8% coverage. As Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People s Congress stated last year, this translates to a need for an additional 3,400,000 hospital and nursing home beds dedicated to senior care over the next five years alone. Clearly, the need for senior care facilities is outstripping the supply. According to China s National Bureau of Statistics, China has roughly 185 million people over the age of 60. A 2007 study by the United Nations estimated that in 2005, there were 16 retired people in China for every 100 workers. The study projected that this ratio will reach 64 elderly for every 100 workers by 2025. Compare this to the United States, which currently has approximately 20 retirees for every 100 workers and is projected to have 33 retirees for every 100 workers by 2050. China s government funding only covers 1.6% of seniors in need of care, who cannot otherwise pay for their own care. The World Bank s standard for developed nations is 8 percent coverage. As Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People s Congress, stated last year, this translates to a need for an additional 3.4 million hospital and nursing home beds dedicated to senior care over the next five years alone. Clearly, the need for senior care facilities is outstripping the supply.1 FN1 - See www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/; see also http://www.exim.gov/news/export-import-bank-report-congress-aggressive-unregulated-financing-foreign-competitors-costing; https://docs.google.com/viewer?url=http%3A%2F%2Fwww.exim.gov%2Fsites%2Fdefault%2Ffiles%2Fnewsreleases%2FEx-Im-Bank-2013-Competitiveness-Report-to-Congress-Complete.pdf Gap in Small and Mid-Size Businesses In June of 2013, the Commerce Department reported that exports hit a record high for one month of $191.1 billion-up 3.2% from June of 2012. As a result of imports falling, the United States trade deficit shrank 22.4% to its lowest monthly level since October 2009.Small and medium-sized companies account for 98% of United States exporters, but represent less than one-third of the known export value of United States goods exports. In 2010, there were over 293,000 identified U.S. exporters - 269,269 of which were small or medium-sized. The Company believes a market clearly exists; yet most small businesses do not have the resources including time, money and knowledge to enter the export market. A goal of AmericaTowne is to provide United States based small businesses with a support system that will allow them to flourish without undue worry of conducting business from afar. The Company believes that AmericaTowne provides some United States based businesses with a safety net, an entire team of businesses working together all focused on the same objective - to sell Americana to the Chinese consumer. Keys to Success In order to meet its goals and objectives, and to achieve short-term and long-term success, the Company must develop significant cooperative agreements with key partners, including local governments in the United States and China, a business developer and United States based entrepreneurs and businesses. The Company must continue to develop and utilize cutting edge technology and commit to research and development of its brand and market presence. It must dedicate financial resources and executive time towards establishing world-class marketing programs and procedures designed exclusively with the Chinese consumer in mind. As stated above, the Company must continue to be dedicated to building and operating AmericaTowne centers to meet the growing demand by citizens for more leisure and tourism opportunities. As part of his ongoing market analysis, over the past five years, at the invitation of China city mayors and other government officials in China, our Chief Executive Officer, Mr. Perkins lived and worked in China, researching and studying consumer trends, and helping to develop import, tourist and leisure projects for the Chinese consumer. While in China, Mr. Perkins had the opportunity to work with local government officials, city mayors and Provincial Governments, and mid-size and large Chinese companies. The formation of the Company and the contribution of assets by Yilaime were the byproduct of Mr. Perkins work dating back to 2009 and 2010 by the privately-held and Chinese-based Development Center Foreign Invested Partnership, which he owned and co-chaired. This early partnership did much of the work paving the way for much of the Company s current business plans. As part of his market research efforts, Mr. Perkins visited the United States Ex-Im Bank in Washington, D.C., and attended a United States Ex-Im Bank National Conference to learn exporting rules and financing requirements. Additionally, the AmericaTowne concept was presented to the United States Ex-Im Bank, which provided a Letter of Interest for AmericaTowne filed on a Form 8 on September 23, 2014. Although no loan application has been submitted management is under the impression that subject to meeting Ex-Im Bank s standard underwriting requirements, there is a possibility of loans, and other funding including working capital and insurance. Going forward, we plan on working with Ex-Im to seek insurance and funding for exporters. There is no assurance that funding and or insurance will be obtained. Further there is no assurance that Congress will continue to fund the Exim Bank program or that funding will be available to help implement our plan. Mr. Perkins coordinated the initial draft of the business plan and proposed actions with a representative of the United States Small Business Administration with expertise in both exporting and finance, who in turn, reviewed the Company s business plan and provided suggestions and directions for implementing the plan. It is this level of involvement and dedication that is necessary to continue developing market awareness and success. It should be noted, however, that due to a lapse in Ex-Im Bank s authority, as of July 1, 2015, the Bank is not able to process applications or engage in new business until further notice. The Company must also continue to stick to its core principles of delivering superb and unique products and services at the lowest possible cost while still maintaining the highest quality - the quality accustomed to United States goods and services. As an international operation operating on opposite ends of the World, the Company must maintain a strong dual-economic strategic plan and implement financial controls in the United States and China. Finally, the Company will need to aggressively pursue adequate funding to implement these keys to success and in the continued development of attractive programs in providing the Chinese consumer with the "Made in the USA" experience. Financial Objectives The Company seeks to achieve commercial success in its initial AmericaTowne location. The Company seeks to validate its work through the success of its products and services. Since inception, the Company s revenues of $804,755 realized and earned through 30 June of 2015, 21 participants in its export program, seven institutions in the education export initiative, and a Letter of Interest from US Ex-Im Bank are an initial step towards this effort. The Company also seeks to develop a robust line of additional AmericaTowne products including licensing and franchising fees for additional project locations in the near future and to become financially sustainable. It should be noted, however, that due to a lapse in Ex-Im Bank s authority, as of July 1, 2015, the Bank is not able to process applications or engage in new business until further notice. Sourcing and Fulfillment To complete the initial AmericaTowne, the Company expects a collaborative effort between small businesses owners in the United States looking for expansion opportunities in Africa and China. The Company through its relationship with Yilaime will contract with these businesses providing unique goods and services carrying the "Made in the USA" label. These select businesses will team with local counterparts to supply, source and operate the core businesses that are a part of AmericaTowne. Competition Our competitive position within the tourism, export and senior care industry are affected by a number of factors. There are barriers to entry that make it difficult for entrants into the industry, including, but not limited to the socio-political environment in China. In reviewing market conditions, the Company determined that although there is no known structure or operations existing within mainland China similar to AmericaTowne , the concept could be duplicated. The challenge for competitors whose business originates from China would be to identify and provide business owners and operators, as well as goods and services that would provide a unique American experience in one location, under one roof, and receive the support of the local government in providing "authentic American goods." It has been Management s experience that at the local level mayors and other government officials have concerns about the authenticity of both the concept and the goods and services that would originate from America. Therefore, operators from America that provide goods and services especially from America s small businesses have a competitive advantage. Builders and developers focusing on tourism and quality of life components are regionally based, and most focus on operations in what are called (based on demographics and other criteria) Tier 2, Tier 3 and Tier 4 Cities. Competitors that appear to be doing exceptionally well it seems have designed internal management, finance and control systems that work well in the United States and China. Though Management is aware of "Disney" typed operations and ventures in China that focuses on themed leisure activities, AmericaTowne focus is on business operations in three specific areas and providing an experience unique to America. To date Management is not aware of similar businesses or concept operating within Mainland China. In Management s opinion based upon its analysis, and research over three and a half year period direct competition and the intensity of that competition will depend upon the specific sector. Management believes that competition from other businesses and communities in some specific sectors will be intense. For example, Management expects to receive stiff competition in the real estate sector specifically in developing villas. On the other hand, Management expects to receive moderate to little competition in developing its senior care and business communities. The key competitors within the real estate sector as reflected in SEC filings consist of seven companies operating within China. However, there are considerably more developers operating within the industry. Of the competitors, we focused on two that are listed on NASDAQ (China HGS Real Estate Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN)) and two listed on the New York Stock exchange (Xinyuan Real Estate Co., Ltd (XIN), and IFM Investments Limited (CTC). All have the advantage of being from China and may have better competitive balances because of this. All may receive various support and perceived benefits that are afforded to companies that are "home grown." Additionally, all appear to focus on regional and or Tier II, III and IV cities. On the other hand, AmericaTowne focuses on Tier I, II, and III cities were the competition for development could be both keen and at times restricted to a larger degree by the Central Government than smaller Tier locations. AmericaTowne will have to adapt to a system that its competitors have been operating all of their existence virtually. Additionally, most of the competition will not only have more experience but be better capitalized. As we develop our business model further, we expect additional competitors to service and the competitive picture to become clearer. Tax Exempt Status for Certain Export Transactions Because AmericaTowne will focus on providing "Made in the USA" goods and services to China, a portion of the Company s activities will involve not only development but also exporting. To take advantage of favorable United States tax rates on dividend distributions or to direct a steady flow of cash distributions for shareholders of corporate exporters, the Company has directed its legal counsel to assess the acquisition of Perkins-HSU Export Corporation ("Perkins-Hsu"), a Nevada corporation that is qualified as an Interest Charge - Domestic International Sales Corporation ("IC-DISC") under section 992(a)(1) of the Internal Revenue Code of 1986. The tax benefits to shareholders can be accomplished by allowing shareholders to defer the tax on a portion of export-related income that is accumulated within the IC DISC, versus distributed to the IC DISC shareholders. Federal taxes on the export-related income are deferred until such time as the income is distributed or deemed distributed. In the event the Company acquires Perkins-Hsu or another IC-DISC entity, the Company would not need additional offices, employees, or tangible assets, nor would it be required to perform any invoicing or services. Additionally, as an IC-DISC, if warranted, the Company may achieve a significant reduction in taxes on the first $10,000,000 in revenues. Contractual Relationships with Customers In conducting its business, AmericaTowne relies primarily on the following two types of contractual arrangements with its customers: (a) Exporter Services Agreement and (b) Licensing, Lease and Use Agreement. Although these agreements may be modified by the parties in the normal course of negotiations, the general terms and conditions presented by the Company to the customer are set forth above. Employees As of October 15, 2015, the Company employed a total of twelve people. The Company considers its relationship with its employees to be stable, and anticipates growing its workforce. Facilities and Logistics The Company is headquartered at 4700 Homewood Court, Suite 100, Raleigh, North Carolina 27609. Legal Matters Mr. Perkins is subject to a Desist and Refrain Order dated March 21, 2008 issued by the State of California s Business, Transportation and Housing Agency, Department of Corporations. Mr. Perkins has been in compliance with the Order since issuance. The Order is not related in any manner with respect to the Company or its related parties. To the extent the Order was entered, there is no restriction on Mr. Perkins from engaging in an offering in the State of California provided he complies with the appropriate disclosures and laws. The Company is not aware of any similar orders in any other jurisdiction. Except as disclosed above, none of our officers nor directors, promoters or control persons have been involved in the past ten years in any of the following: (a) Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (b) Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (c) Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; o (d) Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See "RISK FACTORS" and "DESCRIPTION OF SECURITIES". Common Stock Offering by Selling Shareholders The maximum number of shares identified herein as common stock held by Selling Shareholders that can be sold under this offering is 22,943,624. The offering will terminate twelve months from the date of this Prospectus unless earlier fully subscribed or terminated by the Company. The Offering By Selling Shareholders Common Stock Offered By Selling Shareholders (1) 22,943,624 shares of common stock Common Stock Outstanding Before the Offering 22,943,624 shares of common stock Common Stock Outstanding After the Offering 22,943,624 shares of common stock Terms of the Offering The Selling Shareholders may sell their shares at the fixed price of $2.75 during the duration of the offering. Termination of the Offering This Offering will terminate twelve months after the effective date of the registration statement associated with this Prospectus. Use of Proceeds The Company will not receive any proceeds from the sale of the shares offered by the Selling Shareholders. Risk Factors The investment in the shares offered hereby involves a high degree of risk and should not be purchased by any investor who cannot afford the loss of their entire investment. The above-referenced offering represents the number of shares outstanding as of the date of this Prospectus. The Company is not receiving proceeds from the sale of the shares offered by the Selling Shareholders. In the event the Selling Shareholders are successful in the sale of the shares at $2.75 per share, the value of the outstanding shares subject to this specific offering, i.e. not including the shares subject to the direct public offering below, may be assumed to be $63,094,966. Direct Public Offering of Common Stock The maximum number of shares identified herein as common stock subject to the Company s "best efforts" direct public offering is 8,000,000. The Direct Public Offering Common Stock Offered Through Direct Offering 8,000,000 shares of common stock Common Stock Outstanding Before the Offering 22,943,624 shares of common stock Common Stock Outstanding After the Offering 30,943,624 shares of common stock Terms of the Offering $2.75 per share Use of Proceeds Our direct public offering of 8,000,000 shares of common stock is being made on a self-underwritten basis and there is no minimum number of shares of common stock that must be sold in order for the offering to proceed. The net proceeds to AmericaTowne from the sale of up to 8,000,000 shares offered through the offering price of $2.75 per share (total of $22,000,000) will vary contingent upon the success of AmericaTowne s sales efforts. It is the Company s intention to use proceeds raised through this prospectus towards the acquisition, planning and development of real property in China and supporting Trade Centers in the United States to operate the AmericaTowne concept, and towards the continued expenses commonly associated with operating a publicly reporting company. To the extent there are excess proceeds from the offering associated with this prospectus, the Company intends on using such proceeds in furtherance of its business purpose, as set forth in Item 11. Regardless of the number of shares of common stock sold, the Company expects to incur offering expenses estimated at $50,000 for legal, accounting, printing and other costs in connection with this offering. We will not maintain an escrow account for the receipt of proceeds from the sale of our registered shares of common stock. Risk Factors The investment in the shares offered hereby involves a high degree of risk and should not be purchased by any investor who cannot afford the loss of their entire investment. Use of Funds from Public Offering: Provided that funds are raised in the Direct Offering at between the 25 - 100% levels, funds raised will be allocated as reflected in the Funds Use Table Funds Use Table 100% Estimated Use of Proceeds Amount China US Totals Percent Operations Operations Deposits for Land Use Rights (a) $6,306,264 $6,306,264 $6,306,264 28.7% US Trade Center Operations - Meishan Ningbo (b) $1,500,000 $1,500,000 $1,500,000 6.8% Legal, Accounting, & Other Professional Fees $300,000 $20,000 $280,000 $300,000 1.4% Marketing & Advertising $150,000 $50,000 $100,000 $150,000 0.7% Operational Expenses (c) $716,426 $216,426 $500,000 $716,426 3.3% Franchise Acquisitions (d) $4,000,000 $4,000,000 $4,000,000 18.2% Registered Capital Reserves (e) $1,500,000 $1,500,000 $1,500,000 6.8% US Trade Centers in 8 US Locations (f) $5,200,000 $5,200,000 $5,200,000 23.6% Export Funding (g) $1,000,000 $1,000,000 $1,000,000 4.5% Working Capital & Reserves $1,327,310 $827,310 $500,000 $1,327,310 6.0% Total $22,000,000 $10,420,000 $11,580,000 $22,000,000 100% Percent 47% 53% 100% Notes: (a) Rights required to obtain land for AmericaTowne - 40 year lease, for a location. (b) Meishan Ningbo, China Trade Center Startup, Operations, and Staff advocates. Responsible for identifying buyers for US made goods and services and operations of the Trade Center in China. (c) Staff Operations and Salaries. (d) Funds used to acquire franchise rights and licenses as well as furniture, equipment, and other to operate select US franchises in AmericaTowne. (e) Required by Regs in China to Operate. (f) Operations of 8 US Trade facilities throughout the US. Purpose is to source US made goods and services, and to identify and recruit exporters, and small businesses to operate within the US Trade Center in Meishan, and AmericaTowne in China. This includes Internet Operations of 3 Sites in Chinese. One Site specifically designed for business to business customers directly linked to US Trade Center Operations; and one site designed for the affluent consumer interested in select high end goods; and one site for the average or middle income consumer. (g) Funds used to support Exporter s funding and sourcing goods and services. Funds Use Table 75% Estimated Use of Proceeds Amount China US Totals Percent Operations Operations Deposits for Land Use Rights (a) $4,479,698 $4,479,698 $4,479,698 27.1% US Trade Center Operations - Meishan Ningbo (b) $1,125,000 $1,125,000 $1,125,000 6.8% Legal, Accounting, & Other Professional Fees $225,000 $15,000 $210,000 $225,000 1.4% Marketing & Advertising $112,500 $37,500 $75,000 $112,500 0.7% Operational Expenses (c) $537,319.5 $162,320 $375,000 $537,320 3.3% Franchise Acquisitions (d) $3,250,000 $3,250,000 $3,250,000 19.7% Registered Capital Reserves (e) $1,125,000 $1,125,000 $1,125,000 6.8% US Trade Centers in 8 US Locations (f) $3,900,000 $3,900,000 $3,900,000 23.6% Export Funding (g) $750,000 $750,000 $750,000 4.5% Working Capital & Reserves $995,482.5 $620,482 $375,000 $995,482 6.0% Total $16,500,000 $7,565,000 $8,935,000 $16,500,000 100% Percent 46% 54% 100% Notes: (a) Rights required to obtain land for AmericaTowne - 40 year lease, for a location. (b) Meishan Ningbo, China Trade Center Startup, Operations, and Staff advocates. Responsible for identifying buyers for US made goods and services and operations of the Trade Center in China. (c) Staff Operations and Salaries. (d) Funds used to acquire franchise rights and licenses as well as furniture, equipment, and other to operate select US franchises in AmericaTowne. (e) Required by Regs in China to Operate. (f) Operations of 8 US Trade facilities throughout the US. Purpose is to source US made goods and services, and to identify and recruit exporters, and small businesses to operate within the US Trade Center in Meishan, and AmericaTowne in China. This includes Internet Operations of 3 Sites in Chinese. One Site specifically designed for business to business customers directly linked to US Trade Center Operations; and one site designed for the affluent consumer interested in select high end goods; and one site for the average or middle income consumer. (g) Funds used to support Exporter s funding and sourcing goods and services. Funds Use Table 50% Estimated Use of Proceeds Amount China US Totals Percent Operations Operations Deposits for Land Use Rights (a) $2,653,132 $2,653,132 $2,653,132 25.3% US Trade Center Operations - Meishan Ningbo (b) $750,000 $750,000 $750,000 7.1% Legal, Accounting, & Other Professional Fees $300,000 $15,000 $280,000 $300,000 2.9% Marketing & Advertising $50,000 $20,000 $30,000 $50,000 0.5% Operational Expenses (c) $716,000 $216,000 $500,000 $716,000 6.8% Franchise Acquisitions (d) $1,500,000 $1,500,000 $1,500,000 14.3% Registered Capital Reserves (e) $500,000 $500,000 $500,000 4.8% US Trade Centers in 8 US Locations (f) $2,600,000 $2,600,000 $2,600,000 24.8% Export Funding (g) $500,000 $500,000 $500,000 4.8% Working Capital & Reserves $930,868 $550,868 $380,000 $930,868 8.9% Total $10,500,000 $4,710,000 $5,790,000 $10,500,000 100% Percent 45% 55% 100% Notes: (a) Rights required to obtain land for AmericaTowne - 40 year lease, for a location. (b) Meishan Ningbo, China Trade Center Startup, Operations, and Staff advocates. Responsible for identifying buyers for US made goods and services and operations of the Trade Center in China. (c) Staff Operations and Salaries. (d) Funds used to acquire franchise rights and licenses as well as furniture, equipment, and other to operate select US franchises in AmericaTowne. (e) Required by Regs in China to Operate. (f) Operations of 8 US Trade facilities throughout the US. Purpose is to source US made goods and services, and to identify and recruit exporters, and small businesses to operate within the US Trade Center in Meishan, and AmericaTowne in China. This includes Internet Operations of 3 Sites in Chinese. One Site specifically designed for business to business customers directly linked to US Trade Center Operations; and one site designed for the affluent consumer interested in select high end goods; and one site for the average or middle income consumer. (g) Funds used to support Exporter s funding and sourcing goods and services. Funds Use Table 25% Estimated Use of Proceeds Amount China US Totals Percent Operations Operations Deposits for Land Use Rights (a) $1,285,000 $1,285,000 $1,285,000 23.4% US Trade Center Operations - Meishan Ningbo (b) $250,000 $250,000 $250,000 4.5% Legal, Accounting, & Other Professional Fees $215,000 $15,000 $200,000 $215,000 3.9% Marketing & Advertising $50,000 $20,000 $30,000 $50,000 0.9% Operational Expenses (c) $526,000 $216,000 $310,000 $526,000 9.6% Franchise Acquisitions (d) $495,000 $495,000 $495,000 9.0% Registered Capital Reserves (e) $300,000 $300,000 $300,000 5.5% US Trade Centers in 8 US Locations (f) $1,250,000 $1,250,000 $1,250,000 22.7% Export Funding (g) $450,000 $450,000 $450,000 8.2% Working Capital & Reserves $679,000 $399,000 $280,000 $679,000 12.3% Total $5,500,000 $2,485,000 $3,015,000 $5,500,000 100% Percent 45% 55% 100% Notes: (a) Rights required to obtain land for AmericaTowne - 40 year lease, for a location. (b) Meishan Ningbo, China Trade Center Startup, Operations, and Staff advocates. Responsible for identifying buyers for US made goods and services and operations of the Trade Center in China. (c) Staff Operations and Salaries. (d) Funds used to acquire franchise rights and licenses as well as furniture, equipment, and other to operate select US franchises in AmericaTowne. (e) Required by Regs in China to Operate. (f) Operations of 8 US Trade facilities throughout the US. Purpose is to source US made goods and services, and to identify and recruit exporters, and small businesses to operate within the US Trade Center in Meishan, and AmericaTowne in China. This includes Internet Operations of 3 Sites in Chinese. One Site specifically designed for business to business customers directly linked to US Trade Center Operations; and one site designed for the affluent consumer interested in select high end goods; and one site for the average or middle income consumer. (g) Funds used to support Exporter s funding and sourcing goods and services. The Company has no agreement or immediate plans to conduct a private placement. The Company has not issued debt securities and at this time and have no plans to do so. Disclosure Regarding Jumpstart Our Business Startups ("JOBS") Act In April of 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things: Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies; Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934; Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings; Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and Exemption from registration by a non-reporting company offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and such sales are exempt from state law registration, documentation or offering requirements. In general, a company is an emerging growth company under the JOBS Act if its initial public offering ("IPO") of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of: (i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more, (ii) the completion of the fiscal year of the fifth anniversary of the company s IPO; (iii) the company s issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or (iv) the company becoming a "larger accelerated filer" as defined under the Securities Exchange Act of 1934. AmericaTowne meets the definition of an emerging growth company. The Company will be affected by some of the changes provided in the JOBS Act and certain new exemptions. The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. For example, the financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows: (i) audited financial statements required for only two fiscal years; (ii) selected financial data required for only the fiscal years that were audited; and (iii) executive compensation only needs to be presented in the limited format now required for smaller reporting companies. A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter. However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations. Pursuant to section 102(b) of the JOBS Act, the Company s independent registered public accounting firm are exempt from complying with any rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after the date of the JOBS Act s enactment, except as otherwise required by SEC rule. Section 102(c) of the JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company s accounting firm or for a supplemental auditor report about the audit. Section 103 of the JOBS Act also provides an exemption from the requirement of the Company s independent registered public accounting firm to file a report on the Company s internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company s internal control over financial reporting. Section 102(a) of the JOBS Act goes on to exempt emerging growth companies from the requirements in 1934 Act Section 14A(e) for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes. Section 105 of the JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO. Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a road show. Election to Opt Out of Transition Period Under The JOBS Act Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard. The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period. RISK FACTORS RELATING TO OUR COMPANY AND COMMON STOCK Special Note Regarding Forward-Looking Statements Information included in this Form S-1 contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements may contain the words "believes," "project," "expects," "anticipates," "estimates," "forecasts," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions, and are subject to numerous known and unknown risks and uncertainties. Additionally, statements relating to implementation of business strategy, future financial performance, acquisition strategies, capital raising transactions, performance of contractual obligations, and similar statements may contain forward-looking statements. In evaluating such statements, prospective investors and shareholders should carefully review various risks and uncertainties identified in this Form S-1, including the matters set forth under the captions "Risk Factors" and in the Company s other SEC filings. These risks and uncertainties could cause the Company s actual results to differ materially from those indicated in the forward-looking statements. The Company disclaims any obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments. Although forward-looking statements in this Form S-1 reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risk Factors Related to Our Business" below, as well as those discussed elsewhere in this registration statement on Form S-1. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of registration statement on Form S-1. We file reports with the Securities and Exchange Commission ("SEC"). You can read and copy any materials we file with the SEC at the SEC s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. We disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Form S-1. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this registration statement, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Before you invest in AmericaTowne securities, you should be aware that there are various risks. These risks must be evaluated in the context of the disclosures made within the section titled "Description of Business." You should consider carefully these risk factors, together with all of the other information included in this prospectus before you decide to purchase our securities. If any of the following risks and uncertainties develops into actual events, our business, financial condition or results of operations could be materially adversely affected. The stock offered hereby involves a high degree of risk. No one should invest who is not prepared to lose his, her, or its entire investment. There is no public market in the foreseeable future for the resale of the stock. Prospective investors, prior to making an investment, should carefully examine the risk factors set forth in the business plan and the following risk factors, which are inherent in making an investment in, and affecting the business of, the Company, in addition to the other information presented in this prospectus. This prospectus contains certain forward-looking statements. The Company s actual results could differ materially from the results anticipated in these forward-looking statements as a result of various risks and uncertainties, including certain factors set forth in the following risk factors and elsewhere in this prospectus. Risk Factors Applicable To The Company Limited Operating History: The Company has only a limited operating history upon which an evaluation of the Company and its prospects can be based. The Company s prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in emerging markets. In order to increase sales and achieve profitability, the Company must, among other things, establish market acceptance and sell and support its services. The Company plans to increase significantly its expenditures on sales and marketing, technology and infrastructure, expand administrative resources to support the enlarged organization, maintain brand identity, broaden its customer support capabilities, and pursue strategic alliances. To the extent that revenues do not grow at anticipated rates or that increases in such operating expenses precede or are not subsequently followed by commensurate increases in revenues, the Company s business, results of operations and financial condition will be materially and adversely affected. There can be no assurance that the Company will achieve or sustain the substantial revenue growth needed in order to reach profitability. Potential Fluctuations in Results: The Company s operating results may fluctuate significantly in the future as a result of a variety of factors, some of which are outside of the Company s control. These factors include: general economic conditions, specific economic conditions in China, demand for the Company s products/services, usage and growth of the Company s products/services, sales trends, budget cycles of customers, the mix of products or services sold by the Company or the Company s competitors, sales cycles for Company s products or services, changes in costs of expenses or capital expenditures relating to the Company s expansion of operations, the introduction of new products or services by the Company or its competitors, change in the sales mix, distribution channels or pricing for the Company s products or services. In the future, strategic partners may require payments or other consideration in exchange for providing access to the Company s products or services. As a strategic response to a changing competitive environment, especially in China and possibly other foreign markets, the Company may elect from time to time to make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on its results. Developing Market; Unproven Acceptance of the Company s Product or Services: The market for the Company s services is rapidly evolving and is characterized by an increasing number of market entrants. The Company is directly and indirectly highly dependent upon general business markets. There can be no assurance that the Company will achieve or sustain market acceptance of its products or services, or that the Company will be able to execute its business plan successfully. Because the market for the Company s services is evolving, it is difficult to predict the size of this market and growth rate, if any. There can be no assurance that the market for the Company s services will develop or that demand for the Company s products and services will emerge or become sustainable. If the market fails to develop, develops more slowly than expected or becomes saturated with competitors, or if the Company s products and services do not achieve or sustain market acceptance, the Company s business, results of operations and financial condition would be materially adversely affected. Need for Future Funding: The Company anticipates that its existing capital resources, together with the net proceeds from the sale of its stock under any future prospectus, interest earned thereon and expected future revenues will enable it to maintain its current operations into the first quarter of 2016. There can be no assurance that the Company will be able to develop, produce or market products or services on a profitable basis. The Company may have underestimated the costs necessary to achieve sustainable revenues. As a result of the early stage of its business, the Company expects to sustain operating losses and require substantial additional financing in addition to that provided from the sale of its common stock through any future prospectus. The Company will need to raise additional funding thereafter in order to continue operations. No party is obligated to provide financing to the Company. It is possible that such external financing may not be obtainable. No assurances can be given that the Company will be able to raise cash from additional financing efforts and, even if such cash is raised, that it will be sufficient to satisfy the Company s anticipated capital requirements, or on what terms such capital will be available. Future equity financing is likely to result in ownership dilution to existing investors. If the Company is unable to obtain sufficient funds from future financings, the Company will need to curtail certain development efforts and operating plans, which would have a material adverse effect on its business, results of operations and financial condition. Factors that may increase the Company s capital requirements include, but are not limited to, the following: (i) failure to realize revenues in the amounts or as promptly as the Company projected; (ii) unforeseen or sooner than expected capital expenditure requirements; (iii) accelerated, higher than budgeted or unbudgeted operating expenses; (iv) unforeseen working capital requirements; and (v) socio-economic conditions in China. Concentrated Product and Service Risk: The Company expects that sales of its services will account for substantially all of the Company s revenues for the foreseeable future. Broad market acceptance of these services is, therefore, critical to the Company s future success, and any factor adversely affecting sales or pricing levels of its products could have a material adverse effect on the Company s business, results of operation and financial condition. Although the Company intends to expand its services offering, there can be no assurance that any such new or enhanced services will be successfully developed, introduced and marketed, and failure to do so would have a material adverse effect on the Company s business, results of operations and financial condition. There can be no assurances that the revenues generated from the Company s current or future services are enough to support a stand-alone business. Reliance on Key Customers: The Company will derive a significant portion of revenues from a small number of large customers and business resources. As a result, the decrease in revenues from or loss of any particular customer could materially negatively impact the Company s future business, results of operations and financial condition. Dependence on Strategic Relationships: The Company believes that its success in penetrating markets for its investment and services will depend in part on its ability to develop and maintain strategic relationships. The Company further believes that such relationships are important in order to expand the functionality of the Company s services. No assurance can be given that the Company will be successful in entering into any strategic alliances on acceptable terms or, if any such strategic alliance is entered into, that the Company will realize any anticipated benefits from it, or at all. In addition, the alliance of strategic partners with competitors, or the termination of one or more successful relationships, could have a material adverse effect on the Company s business, results of operations and financial condition. Protection of Proprietary Information: The Company s success depends, in part, upon its proprietary information. The Company will rely on a combination of available trademarks and trade secret laws, non-disclosure agreements and other contractual provisions to establish, maintain and protect its proprietary rights, all of which afford only limited protection. There can be no assurance that its agreements with employees, consultants, and others who participate in the development of its intellectual and proprietary information will not be breached, or that the Company will have adequate remedies for any breach. Despite the Company s efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company s services in order to obtain and use information that the Company regards as proprietary. Legal Proceedings: The Company is not the subject of any material litigation, claims or investigations at the time of this Form S-1. Management of Potential Growth: The rapid execution necessary for the Company to successfully offer its services and implement its business plan in an evolving market requires an effective planning and management process. The Company expects to continue to expand its management, technical, accounting, finance, marketing, sales and production operations, including perhaps the assignment of assets to a banking institution to maximize the value of its stock. The Company s growth, coupled with rapid evolution of the Company s markets, has placed, and is expected to continue to place, a significant strain on its administrative, operational and financial resources as well as increased demands on internal systems, procedures and controls. Furthermore, the Company will be required to manage multiple relationships with various strategic partners. There can be no assurance that the Company has made adequate allowances for the costs and risks associated with this expansion and transition, that the Company s systems, procedures or controls will be adequate to support the Company s operations, or that management will be able to achieve the rapid execution necessary to offer successfully the Company s products and services and implement its business plan. The Company s future operating results will also depend on many factors, including its ability to expand its business development organizations and expand its support organization commensurate with the expected growth of its business. If the Company is unable to manage growth effectively, the Company s business, results of operations and financial condition could be materially adversely affected. Dependence on Key Personnel: The Company s success significantly depends on reputation and the continued services of the Company s key management; more specifically, the employment of Alton Perkins, Mabiala T. Phuati, Dr. Daniel K. Katabaki, Dr. Yu Wang, Lindsey Moore, and Qingjun Wang pursuant to the terms of the employment agreements discussed above. The Company intends to maintain a key man life insurance on these individuals. There is no assurance that the Company will be able to insure the aforementioned employees or that such amount will be adequate to compensate the Company in event of one of their deaths. The loss of these individuals or other key editorial or design personnel would likely harm the Company s business. In order to grow the Company s business, the Company s future success depends on its continuing ability to identify, attract, hire, train, motivate and retain highly qualified management, research and development, and sales and marketing personnel (including the Company s past hires). Competition for qualified personnel are intense and there can be no assurance that the Company will be able to attract, assimilate or retain qualified personnel in the future. The inability to attract and retain the necessary personnel could have a material adverse effect upon the Company s business, operating results and financial condition. No Public Market; Possible Volatility of Share Price: There is no public or other trading market for the Company offered hereby or the Company s stock, and there can be no assurance that any market will develop or, if developed, will be sustained in the future. If a public market does develop for the stock, factors such as the Company s or competitors announcements about performance, failure to meet securities analysts expectations, government regulatory action, and market conditions for the stock in general could have a material adverse effect on the price of the Company s shares. The company s auditor has substantial doubts as to the Company s ability to continue as a going concern: Our auditor s report on our 2014 financial statements expresses an opinion that substantial doubt exists as to whether we can continue as an ongoing business. The lack of revenues from operations to date raises substantial doubt about our ability to continue as a going concern. The accompanying audited financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. Because the Company has been issued an opinion by its auditors that substantial doubt exists as to whether the company can continue as a going concern, it may be more difficult for the company to attract investors. The Company has generated little to no revenue since inception. Our future is dependent upon our ability to obtain financing and implement the Company s business plan. We will seek additional funds through private placements of our common stock. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence. If we complete a financing through the sale of additional shares of our common stock in the future, then shareholders will experience dilution: The most likely source of future financing presently available to us is through the sale of shares of our common stock. Any sale of common stock will result in dilution of equity ownership to existing shareholders. This means that, if we sell shares of our common stock, more shares will be outstanding and each existing shareholder will own a smaller percentage of the shares then outstanding. To raise additional capital we may have to issue additional shares, which may substantially dilute the interests of existing shareholders. Alternatively, we may have to borrow large sums, and assume debt obligations that require us to make substantial interest and capital payments. We cannot guarantee we will be successful in generating revenue in the future or be successful in raising funds through the sale of shares to pay for the Company s business plan and expenditures. As of the date of this filing, we have earned little to no revenues. Failure to generate revenue or to raise funds could cause us to go out of business, which would result in the complete loss of your investment. Because we do not have an audit committee, shareholders will have to rely on the directors, who are not independent, to perform these functions: We do not have an audit or compensation committee comprised of independent directors. The board of directors as a whole performs these functions. The members of the Board of Directors are not independent. Thus, there is a potential conflict in that the board members are also engaged in management and participates in decisions concerning management compensation and audit issues that may affect management performance. We have not developed independent corporate governance: We do not presently have audit, compensation, or nominating committees. This lack of independent controls over our corporate affairs may result in conflicts of interest between our officers, directors and our stockholders. We presently have no policy to resolve such conflicts. As a result, our directors have the ability to, among other things, determine their own level of compensation. Until we comply with such corporate governance measures to form audit and other board committees in a manner consistent with rules of a national securities exchange, there is no assurance that we will not be subject to any conflicts of interest. As a result, potential investors may be reluctant to provide us with funds necessary to expand our operations. The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an "emerging growth company": We are required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements are time-consuming and expensive and could have a negative effect on our business, results of operations and financial condition. As a public company, we are subject to the reporting requirements of the Exchange Act, and requirements of the Sarbanes-Oxley Act of 2002 ("SOX"). The cost of complying with these requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. SOX require that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we must commit significant resources, may be required to hire additional staff and need to continue to provide effective management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join the Company and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs. We will be obligated to develop and maintain proper and effective internal controls over financial reporting: We may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may have one or more material weaknesses, which may adversely affect investor confidence in our company and, as a result, the value of our common stock. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently. Section 404 of the Sarbanes-Oxley Act requires public companies to conduct an annual review and evaluation of their internal controls and attestations of the effectiveness of internal controls by independent auditors. We will be required to perform the annual review and evaluation of our internal controls no later than for the fiscal year ending December 31, 2014. However, we initially expect to qualify as a smaller reporting company and as an emerging growth company, and thus, we would be exempt from the auditors attestation requirement until such time as we no longer qualify as a smaller reporting company and an emerging growth company. We would no longer qualify as a smaller reporting company if the market value of our public float exceeded $75 million as of the last day of our second fiscal quarter in any fiscal year following this offering. We would no longer qualify as an emerging growth company at such time as described in the risk factor immediately below. We are in the early stages of the costly and challenging process of compiling the system and processing documentation necessary to evaluate our internal controls needed to comply with Section 404. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective. If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline. While we currently qualify as an "emerging growth company" under the JOBS Act, we will lose that status at the latest by the end of 2017, which will increase the costs and demands placed upon our management: We will continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which we had total annual gross revenues of $1,000,000,000 (as indexed for inflation); (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock under a registration statement; (iii) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which we are deemed to be a "large accelerated filer," as defined by the SEC, which would generally occur upon our attaining a public float of at least $700 million. Once we lose emerging growth company status, we expect the costs and demands placed upon our management to increase, as we would have to comply with additional disclosure and accounting requirements, particularly if our public float should exceed $75 million on the last day of our second fiscal quarter in any fiscal year following this offering, which would disqualify us as a smaller reporting company. We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors: The JOBS Act permits "emerging growth companies" like us to rely on some of the reduced disclosure requirements that are already available to smaller reporting companies, which are companies that have a public float of less than $75 million. As long as we qualify as an emerging growth company or a smaller reporting company, we would be permitted to omit the auditor s attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act, as described above and are also exempt from the requirement to submit "say-on-pay", "say-on-pay frequency" and "say-on-parachute" votes to our stockholders and may avail ourselves of reduced executive compensation disclosure that is already available to smaller reporting companies. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(B). As a result, during such time that we delay the adoption of any new or revised accounting standards, our financial statements may not be comparable to other companies that comply with all public company accounting standards. We will cease to be an emerging growth company at such time as described in the risk factor immediately above. Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and could cause our stock price to decline. We have not achieved profitable operations and continue to operate at a loss: From incorporation to date, we have not achieved sustained profitable operations. Our present business strategy is to improve cash flow by adding to our existing product line and expanding our sales and marketing efforts, including the addition of in-house sales personnel. There can be no assurance that we will ever be able to achieve profitable operations or that we will not require additional financing to fulfill our business plan. The relative lack of public company experience of our management team may put us at a competitive disadvantage: As a company with a class of securities registered under the Exchange Act, we are subject to reporting and other legal, accounting, corporate governance, and regulatory requirements imposed by the Exchange Act and rules and regulations promulgated under the Exchange Act. Our management team lacks significant public company experience, which could impair our ability to comply with these legal, accounting, and regulatory requirements. Such responsibilities include complying with Federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement and effect programs and policies in an effective and timely manner that adequately responds to such increased legal and regulatory compliance and reporting requirements. Our failure to do so could lead to the imposition of fines and penalties and further result in the deterioration of our business. Our profitability depends upon achieving success in our future operations through implementing our business plan, increasing sales, and expanding our customer and distribution bases, for which there can be no assurance given: Profitability depends upon many factors, including the success of the Company s marketing program, the Company s ability to identify and obtain the rights to additional products to add to its existing product line, expansion of its distribution and customer base, maintenance or reduction of expense levels and the success of the Company s business activities. The Company anticipates that it will continue to incur operating losses in the future. The Company s ability to achieve profitable operations will also depend on its ability to develop and maintain an adequate marketing and distribution system. There can be no assurance that the Company will be able to develop and maintain adequate marketing and distribution resources. If adequate funds are not available, the Company may be required to materially curtail or cease its operations. If we are unable to successfully develop and market our products or if our products do not perform as expected, our business and financial condition will be adversely affected: With the release of any new product, we will be subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in development and implementation, and failure of products to perform as expected. In order to introduce and market new products successfully with minimal disruption in customer purchasing patterns, we will need to manage the transition from existing products in the market. There can be no assurance that we will be successful in developing and marketing, on a timely basis, products that respond to advances by others, that our new products will adequately address the changing needs of the market, or that we will successfully manage product transitions. Further, failure to generate sufficient cash from operations or financing activities to develop or obtain improved products and technologies could have a material adverse effect on our results of operations and financial condition. We are highly dependent on our executive officers and certain technical and operations employees: Management anticipates that the Company s revenues will be derived almost exclusively from the sales of products and the operations of AmericaTowne. We depend heavily on our executive officers, including Alton Perkins, Xianghai Lin and Mabiala T. Phuati. We have written employment agreements with Alton Perkins and Mabiala T. Phuati. The loss of services of any of these personnel could impede the achievement of the Company s objectives. There can be no assurance that the Company will be able to attract and retain qualified executive or technical personnel on acceptable terms. We intend to rely on third parties to construct AmericaTowne. The Company has no construction capabilities and will seek to partner with and or hire a developer in China to develop the initial AmericaTowne location. While management has experience in identifying and selecting such joint venture partners in China, there is no guarantee that the partner and or developer selected to carry out the objectives of the AmericaTowne concept can do so successfully. We expect substantially all of our project construction and related work to be outsourced to third-party contractors. We are exposed to risks that the performance of our contractors may not meet our standards or specifications. Negligence or poor work quality by any contractors may result in defects in our buildings or residential units, which could in turn cause us to suffer financial losses, harm our reputation or expose us to third-party claims. We expect to work with multiple contractors on different projects and we cannot guarantee that we can effectively monitor their work at all times. Although our construction and other contracts will contain provisions designed to protect us, we may be unable to successfully enforce these rights and, even if we are able to successfully enforce these rights, the third-party contractor may not have sufficient financial resources to compensate us. Moreover, the contractors may undertake projects from other property developers, engage in risky undertakings or encounter financial or other difficulties, such as supply shortages, labor disputes or work accidents, which may cause delays in the completion of our property projects or increases in our costs. We may be unable to complete our property developments on time or at all. Our insurance policies may be inadequate and potentially expose us to unrecoverable risks: Any significant insurance claims would have a material adverse effect on our business, financial condition and results of operations. Insurance availability, coverage terms and pricing continue to vary with market conditions. We endeavor to obtain appropriate insurance coverage for insurable risks that we identify; however, we may fail to correctly anticipate or quantify insurable risks. Additionally, we may not be able to obtain appropriate insurance coverage, and insurers may not respond as we intend to cover insurable events that may occur. We have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance. Such conditions have resulted in higher premium costs, higher policy deductibles, and lower coverage limits. For some risks, we may not have or maintain insurance coverage because of cost or availability. We have no dividend history and have no intention to pay dividends in the foreseeable future: We have never paid dividends on or in connection with any class of our common stock and do not intend to pay any dividends to common stockholders for the foreseeable future. Ownership of our common stock will not provide dividend income to the holder, and holders should not rely on investment in our common stock for dividend income. Any increase in the value of investment in our common stock could come only from a rise in the market price of our common stock, which is uncertain and unpredictable, and there can be no guarantee that our stock price will rise to provide any such increase. We face competition from established as well as other emerging companies, which could divert customers to our competitors and significantly reduce our revenue and profitability: We expect existing competitors and new entrants to the market to constantly revise and improve their business models in response to challenges from competing businesses, including ours. If these or other participants introduce changes or developments that we cannot meet in a timely or cost-effective manner, our revenue and profitability could be reduced. In addition, consolidation among our competitors may give them increased negotiating leverage and greater marketing resources, thereby providing corresponding competitive advantages over us. Consolidation among other companies may increase competition from a small number of very prominent companies in the market place. If we are unable to compete effectively, competitors could divert our customers away from our products. Regulations, including those contained in and issued under the Sarbanes-Oxley Act of 2002 ("SOX") and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank"), increase the cost of doing business and may make it difficult for us to retain or attract qualified officers and directors, which could adversely affect the management of our business and our ability to obtain or retain listing of our common stock: We are a publicly reporting company. The current regulatory climate for publicly reporting companies, even small and emerging growth companies such as ours, may make it difficult or prohibitively expensive to attract and retain qualified officers, directors and members of board committees required to provide for our effective management in compliance with the rules and regulations which govern publicly-held companies, including, but not limited to, certifications from executive officers and requirements for financial experts on boards of directors. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles. For example, the enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of a series of new rules and regulations and the strengthening of existing rules and regulations by the SEC. Further, recent and proposed regulations under Dodd-Frank heighten the requirements for board or committee membership, particularly with respect to an individual s independence from the corporation and level of experience in finance and accounting matters. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, the management of our business could be adversely affected. If we are unable to obtain adequate insurance, our financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. Our ability to effectively recruit and retain qualified officers and directors could also be adversely affected if we experience difficulty in obtaining adequate directors and officers liability insurance: We do not have officer and director liability insurance or general liability insurance for our business. We may be unable to maintain sufficient insurance to cover liability claims made against us or against our officers and directors. If we are unable to adequately insure our business or our officers and directors, our business will be adversely affected and we may not be able to retain or recruit qualified officers and directors to manage the Company. Limitations on director and officer liability and our indemnification of our officers and directors may discourage stockholders from bringing suit against a director: Our Certificate of Incorporation and By-Laws provide, with certain exceptions as permitted by Delaware corporation law, that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director, except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director. In addition, our Certificate of Incorporation and By-Laws provide for mandatory indemnification of directors and officers to the fullest extent permitted by governing state law. Our failure to manage growth effectively could harm our ability to attract and retain key personnel and adversely impact our operating results: Our culture is important to us, and we anticipate that it will be a major contributor to our success. As we grow, however, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations. Failure to maintain our culture could negatively impact our operations and business results. Additionally, expansion increases the complexity of our business and places a significant strain on our management, operations, technical performance, financial resources and internal control over financial reporting functions. There can be no assurance that we will be able to manage our expansion effectively. Our current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage our future operations, especially as we employ personnel in multiple geographic locations. We may not be able to hire, train, retain, motivate and manage required personnel, which may limit our growth, damage our reputation and negatively affect our financial performance and harm our business. While the Company believes it can develop a new customer base through the marketing and promotion plans, the inability of the Company to further develop such a customer base could have a material adverse effect on the Company: Although the Company believes that its product matrix offer advantages over competitive companies and products, no assurance can be given that the Company will attain a degree of market acceptance on a sustained basis or that it will generate revenues sufficient for sustained profitable operations. We cannot assure that our marketing and sales efforts will be successful: Management believes that its marketing and development programs will sustain the business. Additionally, we intend to invest substantial financial resources in the marketing and sales of our AmericaTowne concept. We cannot assure you that our marketing and sales efforts will be successful and that we will be able to capture sufficient market share to realize our financial projections. The Company s operating results may fluctuate significantly from period to period as a result of a variety of factors, including purchasing patterns of customers, competitive pricing, debt service and principal reduction payments, and general economic conditions. There is no assurance that the Company will be successful in marketing any of its products, or that the revenues from the sale of such products will be significant. Consequently, the Company s revenues may vary by quarter, and the Company s operating results may experience fluctuations. We cannot assure that acceptance of products and services will be successful: Though we have completed analysis of the market and key founding members or either Chinese or Chinese Americans and or have lived in China for a considerable period of time, there is no certainty that our marketing and sales campaigns will be effective with the Chinese consumer or that such campaigns would help reach our revenue projections. There is no assurance that customers will accept our product offer. Risks of borrowing might adversely impact us: If the Company incurs indebtedness, a portion of its cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair the Company s operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of members of the Company. A judgment creditor would have the right to foreclose on any of the Company s assets resulting in a material adverse effect on the Company s business, operating results or financial condition. Changes in or missteps in the execution of our business plan may adversely impact operations: The Company s business plans may change significantly. Many of the Company s potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that the Company s chosen activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of the Company s principals and advisors. Management reserves the right to make significant modifications to the Company s stated strategies depending on future events. There can be no assurances that secrecy obligations will be honored: In certain cases, the Company may rely on trade secrets to protect intellectual property, proprietary technology and processes, which the Company has acquired, developed or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior products or technology. Substantial funds are required in the future to implement our plans: We may require substantial additional funds in the future to finance our product development and commercialization plans. Our product development schedule could be delayed if we are unable to fund our research & development activities. Changes in laws or regulations may adversely impact our business: Foreign, national, regional and local governments may enact laws that we may be subject to that may adversely impact our operations. In particular, we will be required to comply with certain SEC, state and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied could have a material adverse effect on our business and results of operations. A downturn in general economic conditions could cause adverse consequences for the Company operations: The financial success of the Company may be sensitive to adverse changes in general economic conditions in the United States, and China such as recession, inflation, unemployment, and interest rates. Such changing conditions could reduce demand in the marketplace for the Company s products. Management believes that the impending growth of the market, mainstream market acceptance and the targeted product line of the Company will insulate the Company from excessive reduced demand. Nevertheless, the Company has no control over these changes. The demand for leisure activities could experience a downturn. If so, then our ability to achieve our financial objectives may be impaired and we may not meet the goals, projections and revenues outlined in our business plan. Land and Concessions rights may not be obtained at favorable rates: Although we expect to receive favorable terms when negotiating, based upon foreign investment laws within China that may grant favorable positions, we may not be able to negotiate favorable prices to acquire land needed to develop AmericaTowne. In order to build AmericaTowne we expect to receive favorable consideration concerning price and location of the land. However, favorable negotiations may not be achieved. There may be possibilities that we may not be able to favorable negotiate an acceptable price to acquire land from the local government or obtain the necessary permits, and or tax benefits on favorable terms. If we are unable to achieve favorable consideration, this could materially adversely affect expected revenues and profitability. We may not be able to recruit enough or the right type of businesses from the United States: We anticipate more small businesses wanting to expand their businesses into China; however, we may not be able to recruit enough businesses from the USA to meet the demand of the local community. The plan calls for up to fifty businesses using the USA style of operations to be located and actually set-up operations within AmericaTowne. Though we expect to achieve this objective, there is no assurance that this objective can be achieved. If not then, our business model would have to shift allowing local businesses to operate within the project. This may reduce the overall appeal of AmericaTowne. The unique aspect of AmericaTowne is that all of the goods, services and products sold there are expected to carry the "Made in the USA" label. If we are not able to source enough products and services from the United States then projections and business goals as well as overall profitability will be adversely impacted. Trade Disputes could adversely affect business operations: Trade disputes or differences between the United States and China could adversely impact the perception of the project and ultimately the acceptance by the consumers of the product. Any negative perception of the product and services offered would materially impact the Company s profitability. Strikes, labor shortages or work stoppage could affect operations: We have no control over the labor market. Though not expecting them, strikes, labor shortage or work stoppages could occur, and would be adverse could materially impact the ability to meet the Company s goals and objectives. Delays in VISA applications and protocols could cause delays and or work stoppage: In developing businesses in AmericaTowne some potential business owners are expected to travel to China. There may be instances where potential owners may experience delays in processing and or receiving VISAs. This could impact sales, production, and extended time in negotiating with businesses from the United States and this could materially impact owners and material adversely affect the Company s programs and financial objectives. Change in foreign exchange and currency rates may impact operations: Changes in exchange rates between the United States dollar and the RMB (Chinese currency) may occur and could adversely impact the goals, objectives and profitability of the business. In conducting business in China, the inflow and outflow of currency is highly regulated by the Chinese government. Regulators within China must approve any large inflow or outflow of funds. There is no assurance that approval for foreign exchange will be obtained or that it will be achieved at the level required to conduct business as outline in the business plan. Any delays or non-approval would have a material adverse impact on our business operations. Lack of government support could adversely impact our business: The government within China has identified tourism and leisure as a growth industry that should be fully supported. However, there is no certainty that the Government will continue to support the leisure/tourism industry. A lack of support on a national level could impact consumer spending and the overall demand for the product. The lack of continued support would have a material adverse impact on, operations, concessions, tax advantages, and the cost of land and other equipment. In turn, the Company s business and profitability could be adversely impacted. China s economy and growth in exports could affect our expected results: Though China economy is expected to continue to be strong sustaining an increase in consumer spending and demand for leisure/tourism, there can be no certainty that the economy and or demand for consumer products in our sector will continue to remain high. A downturn in China s economy may impact the leisure/tourism industry and may have a material adverse impact on the business. While the export of US made goods and services to China is high, there is no assurance that there will be continued growth in exports to China. A key component of our business model is to export "made in the USA" goods and services to China. Any drop-off in demand for exports could adversely affect the Company s projections, goals, and profitability. We may not be able to build at an affordable rate: To complete AmericaTowne we expect to partner with a local construction partner that will be identified if possible by the local government. There can be no certainty that we will be able to build and construct facilities at an affordable rate and or on time. The failure to achieve affordable build rates and meet production schedules could adversely impact cost and overall profitability. We require substantial capital resources to fund our land use rights acquisition and property developments, which may not be available: Property development is capital intensive. Our ability to secure sufficient financing for land use rights acquisition and property development depends on a number of factors that are beyond our control, including market conditions in the capital markets, the Peoples Republic of China ("PRC") economy and the PRC government regulations that affect the availability and cost of financing for real estate companies. We may be unable to acquire desired development sites at commercially reasonable costs: Part of our revenue depends on the completion and sale and or operations of our projects, which in turn depends on our ability to acquire development sites. Our land use rights costs are a major component of our cost of real estate sales and increases in such costs could diminish our gross margin. In China, the PRC government controls the supply of land and regulates land sales and transfers in the secondary market. As a result, the policies of the PRC government, including those related to land supply and urban planning, affect our ability to acquire, and our costs of acquiring, land use rights for our projects. In recent years, the PRC government has introduced various measures attempting to moderate investment in the property market in China. Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences: We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. The Chinese government exerts substantial influence over the manner in which we must conduct our business activities: China only recently has permitted provincial and local economic autonomy and private economic activities, and, as a result, we are dependent on our relationship with the local government in the province in which we operate our business. Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. We believe that our proposed operations in China are in material compliance with all applicable legal and regulatory requirements. Our operations are highly subject to government policies and regulations in the real estate market. Since 2010, the PRC has tightened its control of the real estate market with the aim of curbing increases in property prices. The PRC s policies and regulatory measures on the PRC real estate sector could limit our access to required financing and other capital resources, adversely affect the property purchasers ability to obtain mortgage financing or significantly increase the cost of mortgage financing, reduce market demand for our properties and increase our operating costs. We cannot be certain that the PRC will not issue additional and more stringent regulations or measures or that agencies and banks will not adopt restrictive measures or practices in response to PRC governmental policies and regulations, which could substantially reduce pre-sales of our properties and cash flow from operations and substantially increase our financing needs, which would in turn materially and adversely affect our business, financial condition, results of operations and prospects. The PRC government has adopted various measures to regulate the property development industry and may adopt further restrictive measures in the future. PRC economic, political and social conditions as well as government policies can affect our business: The PRC economy differs from the economies of most developed countries in many aspects, including, but not limited to, (a) political structure, (b) degree of government involvement, (c) degree of development, (d) level and control of capital reinvestment, (e) control of foreign exchange, and (f) allocation of resources. The PRC economy has been transitioning from a centrally planned economy to a more market-oriented economy. For more than two decades, the PRC government has implemented economic reform measures emphasizing utilization of market forces in the development of the PRC economy. Although we believe these reforms will have a positive effect on China s overall and long-term development, we cannot predict whether changes in the PRC economic, political and social conditions, laws, regulations and policies will have any adverse effect on our current or future business, financial condition or results of operations. We have not obtained an opinion of counsel as to the tax treatment of certain material federal tax issues potentially affecting the Company, the management, and/or the shareholders: Moreover, any such opinion, if we obtained one, would not be binding upon the IRS, and the IRS could challenge our position on such issues. Also, rulings on such a challenge by the IRS, if made, could have a negative effect on the tax results of ownership of the Company s securities. Tax laws are subject to change and these changes could adversely impact our business: Tax laws are continually being introduced, changed, or amended, and there is no assurance that the tax treatment presently potentially available with respect to the Company s proposed activities will not be modified in the future by legislative, judicial, or administrative action. Congress and or the Government in China could enact proposals or laws having an adverse tax impact on our activities and these proposals could be adopted by at any time, and such proposals could have a severe economic impact on us. Risks Related to Ownership of Our Common Stock We are subject to the reporting requirements of federal securities laws, which can be expensive. As a result of the filing of our Form 10 registration statement on May 8, 2014, we became a public reporting company and, accordingly, became subject to the information and reporting requirements of the Exchange Act and other federal securities laws. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we remained a privately held company. Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly: Our Board of Directors and Officers have limited experience with publicly traded companies, with much of that experience coming prior to the adoption of the Sarbanes-Oxley Act of 2002. It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by Sarbanes-Oxley. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxley s internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly traded companies to obtain. There is no public market for our securities and an active trading market may not develop: We cannot predict the extent to which investor interest will lead to the development of an active trading market on the OTC Bulletin Board or otherwise or how liquid that market might become. An active public market for our Common Stock may not develop or be sustained after the offering. If an active public market does not develop or is not sustained, it may be difficult for our current shareholders to sell their shares of Common Stock at a price that is attractive to them, or at all. Once our shares begin trading, the market price for our common stock is likely to be volatile, in part because our shares have not been traded publicly. If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline: The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about our business or us. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage or fail to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline. Our common stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies: Under a regulation of the SEC known as "Rule 144," a person who has beneficially owned restricted securities of an issuer and who is not an affiliate of that issuer may sell them without registration under the Securities Act provided that certain conditions have been met. One of these conditions is that such person has held the restricted securities for a prescribed period, which will be 6 months or 1 year, depending on various factors. The holding period for our common stock would be 1 year if our common stock could be sold under Rule 144. However, Rule 144 is unavailable for the resale of securities issued by an issuer that is a shell company (other than a business combination related shell company) or that has been at any time previously a shell company. The SEC defines a shell company as a company that has (a) no or nominal operations and (b) either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets. The SEC has provided an exception to this unavailability if and for as long as the following conditions are met: (a) the issuer of the securities that was formerly a shell company has ceased to be a shell company, (b) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, (c) the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and (d) at least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company known as "Form 10 Information." As a result, although the registration statement on Form 10 originally filed with the SEC on May 18, 2014, intended to provide "Form 10 Information," the original Form 10 stated only that the company was a blank-check shell, seeking a transaction with another entity. The Form 8-K dated March 2, 2015, frequently referred to as a "Super 8-K," was filed to provide additional information about the Company s planned operations, contracts, shareholders, management, financial position, and other information which the Company believes to constitute Form 10 Information under the SEC s regulations. The Company has exited the shell company stage of development. Nevertheless, because of the Company s prior history as a shell company, stockholders who receive our restricted securities will be able to sell them pursuant to Rule 144 without registration for only as long as we continue to meet those requirements and are not a shell company. No assurance can be given that we will meet these requirements or that we will continue to do so, or that we will not again be a shell company. Furthermore, any non-registered securities we sell in the future or issue for acquisitions or to consultants or employees in consideration for services rendered, or for any other purpose, will have limited or no liquidity until and unless such securities are registered with the SEC and/or until a year after we have complied with the requirements of Rule 144. As a result, it may be harder for us to fund our operations, to acquire assets and to pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the SEC, which could cause us to expend additional resources in the future. In addition, if we are unable to attract additional capital, it could have an adverse impact on our ability to implement our business plan and sustain our operations. Our status as a former "shell company" could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions, which could cause the value of our securities, if any, to decline in value or become worthless. The Company may issue more shares in connection with future mergers or acquisitions, which could result in substantial dilution to existing shareholders: Our Certificate of Incorporation authorizes the issuance of 100,000,000 shares of common stock and 5,000,000 shares of preferred stock. Any future merger or acquisition effected by us may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then-current stockholders. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our Board of Directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a future business combination or otherwise, dilution to the interests of our stockholders will occur, and the rights of the holders of common stock could be materially and adversely affected. Our Certificate of Incorporation authorizes the issuance of "blank check" preferred stock, which could result in dilution to the holdings of our stockholders: Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights, which could adversely affect the voting power or, other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although as of the date of this registration statement we had intentions or plans to issue any shares of our authorized preferred stock, there can be no assurance that we will not do so in the future, and such issuances could have a dilutive impact on the holdings of our stockholders. We cannot assure you that the common stock will become liquid or that it will be listed on a securities exchange: We cannot assure you that we will be able to meet the initial listing standards of any stock exchange, or that we will be able to maintain any such listing. Until the common stock is listed on an exchange, we expect that it would be eligible to be quoted on the OTC Bulletin Board, the OTC Markets (including OTCQB and OTCQX), another over-the-counter quotation system, or in the "pink sheets." In those venues, however, an investor may find it difficult to obtain accurate quotations as to the market value of the common stock. In addition, if we failed to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital. Even if publicly traded in the future, our common stock may be subject to "Penny Stock" restrictions: If our common stock becomes publicly traded and our stock price remains at less than $5, we will be subject to so-called penny stock rules, which could decrease our stock s market liquidity. The Securities and Exchange Commission has adopted regulations which define a "penny stock" to include any equity security that has a market price of less than $5 per share or an exercise price of less than $5 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require the delivery to and execution by the retail customer of a disclosure statement written suitability relating to the penny stock, which must include disclosure of the commissions payable to both the broker/dealer and the registered representative and current quotations for the securities. Finally, the broker/dealer must send monthly statements disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Those requirements could adversely affect the market liquidity of such stock. There can be no assurance that if our common stock becomes publicly-traded the price will rise above $5 per share so as to avoid these regulations. Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation: As a publicly reporting company, we will be required to evaluate our internal controls over financial reporting. Furthermore, at such time as we cease to be an "emerging growth company," as more fully described herein, we shall also be required to comply with Section 404. At such time, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may issue an adverse opinion due to ineffective internal controls over financial reporting and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could negatively affect our results of operations and cash flows. We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors, potentially decreasing our stock price: We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if potential investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile or decrease. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we may choose "opt out" of such extended transition period, and as a result, we would then comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards would be irrevocable. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We may remain an "emerging growth company" for up to five years, although we may cease to be an emerging growth company earlier under certain circumstances. We cannot predict or estimate the amount of additional costs we may incur as a result of the change in our status under the JOBS Act or the timing of such costs. Our management and other affiliates have significant control of our common stock and could control our actions in a manner that conflicts with the interests of other stockholders: As of the date of this filing, Yilaime, which is owned and controlled by Alton Perkins owns the majority and controlling shares of our common stock, and thus retains the majority of the voting power of our outstanding capital stock. As a result, this stockholder will be able to exercise control over matters requiring approval by our stockholders, including the election of directors, removal of directors, amendments to bylaws and may not always act in the best interests of other stockholders. Such a concentration of ownership may have the effect of delaying or preventing a change in our control, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices. No Dividend Anticipated in Future: The Company has never paid cash dividends on any of its securities. Payment of dividends on any of its securities is within the discretion of the Board of Directors of the Company and will depend upon the Company s earnings, its capital requirements and financial condition and other relevant factors. It is the Company s intention to retain earnings, if any, to finance the operation and expansion of its business and, therefore, it does not expect to pay any cash dividends on any of its securities in the foreseeable future. Due Diligence and Investigation: This prospectus is not underwritten, and there has not been an independent review of the matters covered in this prospectus by a placement agent. Investors must rely solely upon their own investigation and analysis of the risks in making any investment decision. Risks Associated with Potential Acquisitions: The Company may in the future pursue acquisitions of complementary projects or businesses similar to AmericaTowne and those set forth in the section titled "Description of Business." However, there can be no assurance that the Company will identify suitable acquisition opportunities or that future acquisitions by the Company will result. ITEM 4. USE OF PROCEEDS The Company will not receive any proceeds from the sale of common stock by the Selling Shareholders. Our direct public offering of 8,000,000 shares of common stock is being made on a self-underwritten basis and there is no minimum number of shares of common stock that must be sold in order for the offering to proceed. The net proceeds to AmericaTowne from the sale of up to 8,000,000 shares offered through the offering price of $2.75 per share (total of $22,000,000) will vary contingent upon the success of AmericaTowne s sales efforts. It is the Company s intention to use proceeds raised through this prospectus towards the acquisition, planning and development of real property in China to operate the AmericaTowne concept, and towards the continued expenses commonly associated with operating a publicly reporting company. To the extent there are excess proceeds from the offering associated with this prospectus, the Company intends on using such proceeds in furtherance of its business purpose, as set forth in Item 11. Regardless of the number of shares of common stock sold, the Company expects to incur offering expenses estimated at $50,000 for legal, accounting, printing and other costs in connection with this offering. We will not maintain an escrow account for the receipt of proceeds from the sale of our registered shares of common stock. ITEM 5. DETERMINATION OF THE OFFERING PRICE The offering price of the different classes of registered shares of common stock in this Prospectus has been determined arbitrarily by AmericaTowne. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately-held company. In determining the number of shares to be offered and the offering price, we took into consideration our cash on hand and the amount of money we would need to implement our business plan. The Company further based this offering price on comparable companies operating in the same or similar industry. Accordingly, the offering price should not be considered an indication of the actual value of the securities. ITEM 6. DILUTION At this time, the Company does not have any disclosures required under Item 506 of Regulation S-K. ITEM 7. SELLING SHAREHOLDERS The Company s current shareholders hold an aggregate amount of 22,943,624 issued and outstanding shares. They are registering or selling their respective shares through this Prospectus. The Company will not receive any proceeds from the sale of the shares by the Selling Shareholders. The Selling Shareholders have no agreement with any underwriters with respect to the sale of their shares. The Selling Shareholders, who are deemed to be statutory underwriters, will offer their shares at a fixed price of $2.75 per share for the duration of the offering. The Selling Shareholders may from time to time offer their shares through underwriters, dealers or agents, which may receive compensation in the form of underwriting discounts, concessions or commissions from them and/or the purchasers of the Selling Shareholder s shares for whom they may act as agents. Any agents, dealers or underwriters that participate in the distribution of the Selling Shareholder Shares may be deemed to be "underwriters" under the Securities Act and any discounts, commissions or concessions received by any such underwriters, dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. The following table sets forth ownership of shares held by each person who is a Selling Shareholder (including those shareholders associated with Yilaime transferring 3,615,059 shares of the Company stock, out of the total of 3,616,059 issued to Yilaime under the Stock Exchange Agreement on October 8, 2014, to 70 holders of common stock in Yilaime, as part of a corporate restructuring of Yilaime. The 3,615,059 shares were issued to Yilaime NC on May 14, 2015 and are to be issued to the shareholders identified below upon effectiveness of this registration statement. See "Security Ownership of Certain Beneficial Owners" set forth in Item 11. Name Shares Beneficially Owned Prior to Offerings Number of Shares Offered Shares Beneficially Owned After Offerings Number Percent Number Percent Yilaime (1) 13,750,000 59.93% 13,750,000 59.93% Alton & Xiang Mei Lin Perkins Family Trust (2) 5,100,367 22.23% 5,100,367 22.23% Mabiala T. Phuati 477,198 2.08% 477,198 2.08% Alvin Powell 14,145 * 7,073 7,073 * Grace K. Mabiala 65,313 * 32,657 32,657 * Agnes K. Kimutu 4,400 * 2,200 2,200 * Ayodele Joy Oyelowo 3,000 * 1,500 1,500 * Alice Katundu David 12,000 * 6,000 6,000 * Cheryl Chaslin 55,039 * 27,520 27,520 * Jacinta Mwalali 13,500 * 6,750 6,750 * Dr. Philip Mwalali 8,500 * 4,250 4,250 * Dr. Joseph Karogi 2,900 * 1,450 1,450 * Jane Muturi 20,400 * 10,200 10,200 * Samson Maina Thuo 7,000 * 7,000 * Lindsey E. Moore 22,000 * 11,000 11,000 * Bruce Rogers 4,420 * 4,420 * Jeannette Lelo 3,400 * 3,400 * Winny David 6,000 * 6,000 * Estella Chitambo Tindal 2,000 * 2,000 * Isack Niyongabo 5,000 * 5,000 * Dr. Kimberly Tungate 40,000 * 20,000 20,000 * Lillian W. Kthungu 9,500 * 9,500 * Samuel Muli 15,333 * 15,333 * Christopher T. Moore 125,000 * 62,500 62,500 * Platini Lelo 1,700 * 850 850 * Lucy Nganga 8,400 * 4,200 4,200 * Doris W. Nganga 9,900 * 4,950 4,950 * Jane Wanjohi 11,900 * 5,950 5,950 * Christine Malu Tshiapey 2,000 * 1,000 1,000 * Xianghai Lin 35,259 * 17,630 17,630 * Olufemi Oyelowo 3,400 * 1,700 1,700 * Andre Chaslin 419,139 1.83% 209,570 209,570 1% Watson Salapo 11,000 * 11,000 * Paul M. Ndungu 14,215 * 14,215 * Paul Janssen 352,543 1.54% 176,272 176,272 1% Margaret Ngunjiri 13,600 * 13,600 * Diversified Compliance Service, LLC (3) 35,000 * 35,000 * Gillian Mwanikio 20,200 * 20,200 * Elizabeth Mukuna 1,000 * 1,000 * Veronica Lelo 2,000 * 2,000 * Domitila Mutavi 5,700 * 5,700 * Michelle Mwizu 1,000 * 1,000 * Beatrice Kahihu 8,500 * 8,500 * Glodie Montanga 19,000 * 19,000 * Dr. Daniel Gatabaki 58,750 * 58,750 * Margaret Wangui Mutua 3,333 * 3,333 * Dr. Emile Omba 3,400 * 3,400 * Nehemie Diayenda 4,400 * 4,400 * Clarie M. Mufalo 1,700 * 1,700 * Dorina Gardner 2,000 * 2,000 * Damian Okeke Ideas Professional Consulting Firm (Mary Hodges) (4) 3,000 * 3,000 * Stephen Barine 50,000 * 25,000 25,000 * Nadia Emhirech 30,000 * 15,00 15,000 * Martha Chelimo 5,000 * 2,500 2,500 * Esther Kivuti 6,100 * 3,050 3,050 * Albertha Johnson 1,500 * 1,500 * Elizabeth Njoki Muigai 4,027 * 4,027 * Catherine Ngugi 1,000 * 1,000 * Harriet Karambu Kimutai 3,500 * 3,500 * Jin Rong Liu 25,000 * 12,500 12,500 * Beatrice David 6,000 * 6,000 * Regina Price 1,000 * 1,000 * Lillian Kathungu 40,000 * 20,000 20,000 * Agnes A. Akoth 1,000 * 1,000 * Christine Mugwongo 10,000 * 10,000 * Alton & Xiang Mei Lin Perkins Family Trust (2) 1,703,117 7.42% 1,703,117 7.42% Leah Bett 43,352 * 43,352 * Rose G. Murithi 3,061 * 3,061 * Charles Farag 40,212 * 20,106 20,106 * Bruno Soba Quirino 1,750 * 1,750 * Yannick M. Shabani 1,100 * 1,100 * Ladell Blackwell 2,000 * 2,000 * Zhi Cai Lin 25,451 * 25,451 * AXP Nevada Asset Protection Trust #4 (2) 120,000 * 120,000 * Yilaime NC (1) 1,000 * 1,000 * * Less than 1% of the outstanding shares of common stock (1) Alton Perkins has the majority shareholder has voting authority over the entity s shares. (2) Alton Perkins has the trustee has voting authority over the entity s shares. (3) Peter R. Bossman has the majority shareholder of the LLC has voting authority over the entity s shares. (4) Mary Hodges has the majority shareholder has voting authority over the entity s shares. ITEM 8. PLAN OF DISTRIBUTION We intend to offer and sell our shares through our officers and directors who will receive no compensation or fees with the offers and/or sales. This Offering is commencing on the date of this Prospectus and will continue until all shares are sold (the "Offering Period"). The shares are being offered on a "reasonable efforts, best efforts" basis. Affiliates of AmericaTowne may purchase shares for their own account. Such purchases will be included in determining whether all of the shares have been sold. AmericaTowne may hold a closing at any time after funds for all $22,000,000 in registered common stock have been received and accepted, and after other applicable conditions have been satisfied (the "Closing"). AmericaTowne has agreed to indemnify its officers and directors in offering and selling the common stock, to the fullest extent permitted by law, against certain liabilities that may be incurred in connection with this Offering, including certain civil liabilities under the Securities Act. If we should find reasonable cause to believe that any statement in this Prospectus or the due diligence information is not true or continued ownership of such shares will cause a violation of any law by which we are governed, we may either (i) refuse to issue the common stock, or (ii) redeem any common stock at 100% of the original purchase price on the date of redemption as specified in the notice advising the investor of the compulsory redemption. During such time as we may be engaged in a distribution of any of the shares we are registering by this registration statement, we are required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a "distribution" as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a "distribution participant" as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution. Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed the selling shareholders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this prospectus, and we have also advised the selling shareholders of the requirements for delivery of this prospectus in connection with any sales of the common stock offered by this Prospectus. The anti-manipulation rules of Regulation M under the Exchange Act, may apply to sales of shares and activities of the Selling Shareholders. The Selling Shareholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. The Selling Shareholders may use a variety of methods when selling shares. They may engage in ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers. They may block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction. The shares may be purchased by a broker-dealer as principal and resale by the broker-dealer for its account. They might elect to engage in an an exchange distribution in accordance with the rules of the applicable exchange. Finally, they might engage in privately negotiated transactions or broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share, or any other method permitted pursuant to applicable law. The Selling Shareholders or their pledges, donees, transferees or other successors in interest, may also sell the Shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Shareholders and/or the purchasers of Shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that the Selling Shareholders will attempt to sell shares in block transactions to market makers or other purchasers at a price per Share which may be below the then market price. The Selling Shareholders cannot assure that all or any of the shares offered in this Prospectus will be sold by the Selling Shareholders. In addition, the Selling Shareholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this Prospectus are "underwriters" as that term is defined under the Securities Act or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Shareholders may from time to time pledge or grant a security interest in some or all of their shares and, if it defaults in the performance of its secured obligations, the pledgee or secured parties may offer and sell the shares from time to time under this Prospectus after the Company has filed an amendment to this Prospectus under Rule 424(b)(3) or any other applicable provision of the Securities Act amending the list of Selling Shareholders to include the pledgee, transferee or other successors in interest as a Selling Shareholders under this Prospectus. The Selling Shareholders also may transfer the shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this Prospectus and may sell the shares from time to time under this Prospectus after we have filed an amendment to this Prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as a Selling Stockholders under this Prospectus. The Selling Shareholders acquired the shares offered hereby in the ordinary course of business and they have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of the shares, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of Shares by the Selling Shareholders. We will file a supplement to this Prospectus if the Selling Shareholders enter into a material arrangement with a broker-dealer for sale of common stock being registered. If the Selling Shareholders use this Prospectus for any sale of the shares, it will be subject to the prospectus delivery requirements of the Securities Act. Pursuant to a requirement by the Financial Industry Regulatory Authority, or FINRA, the maximum commission or discount to be received by any FINRA member or independent broker/dealer may not be greater than eight percent of the gross proceeds received by the Selling Shareholders for the sale of any securities being registered pursuant to SEC Rule 415 under the Securities Act. ITEM 9. DESCRIPTION OF SECURITIES TO BE REGISTERED Under Item 202 of Regulation S-K, the Company is to disclose any share classes and any provisions of its Bylaws that might affect an investor, such as any clauses that may act as a "poison pill" or liability of shares to foreign tax. The Company currently does not have any such disclosures, and furthermore, directs any investor to the Bylaws and Articles of Incorporation, as amended - both of which are set forth in the exhibits, below. The authorized capital stock of the Company consists of 100,000,000 shares of common stock, par value $.0001 per share, of which there are 22,943,624 issued and outstanding and 5,000,000 shares of preferred stock par value $.0001 per share, of which none have been designated or issued. We have not paid any dividends on our Common Stock and do not presently intend to pay cash dividends prior to the consummation of a business combination. The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to consummation of a business combination, if any. The payment of any dividends subsequent to a business combination, if any, will be within the discretion of our then existing Board of Directors. It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations and, accordingly, the Board of Directors does not anticipate paying any cash dividends in the foreseeable future. Holders of common stock are not entitled to pre-emptive or subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to the common stock. We have not issued and do not have outstanding any warrants to purchase common shares. We have issued options to Alton Perkins, Mabiala T. Phuati, Dr. Daniel K. Katabaki, Dr. Yu Wang, Ms. Moore and Mr. Wang under their respective Employment, Lock-Up and Options Agreements, as discussed herein. We have not issued and do not have outstanding any securities convertible into common shares or any rights convertible or exchangeable into common shares. Following the effectiveness of the registration statement of which this Prospectus is a part, we plan to apply for quotation of our securities on the OTC Bulletin Board. ITEM 10. INTERESTS OF NAMED EXPERTS AND COUNSEL The Company has retained Anthony R. Paesano of the law firm of Paesano Akkashian, P.C. located at 7457 Franklin Road, Suite 200 in Bloomfield Hills, Michigan to serve as counsel. Mr. Paesano authored a professional opinion on the validity of the shares to be issued at Exhibit 5.1 and Exhibit 23.1. Mr. Paesano does not have an equity interest in the Company. The audited financial statement of AmericaTowne between inception and December 31, 2014 were audited by Yichien Yeh, CPA, P.C., an independent registered public accounting firm, to the extent set forth in its report and are included herein in reliance upon the authority of this firm as experts in accounting and auditing. See Exhibit 23.2 ITEM 11. INFORMATION WITH RESPECT TO THE REGISTRANT Management s Discussion and Analysis of Financial Condition and Operations You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to the audited financial statements included in the registration statement on Form S-1 of which this Prospectus is a part. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements. You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to the audited financial statements included in this registration statement on Form S-1. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements. We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to: have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;" and disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO s compensation to median employee compensation. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We will remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. As an emerging growth company, the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company is an Emerging Growth Company under the JOBS Act of 2012, but the Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(B) of the JOBS Act. We plan to raise capital following our recent change in status to an operating entity through the offering of shares of common stock or preferred stock to investors. We anticipate we will need to pursue capital to fund our operations over the next twelve months. We believe we will be able to raise the necessary capital to carry out our business plan, but there is no assurance that we will be able to do so. General Discussion We plan to earn revenues and income, and generate cash, by focusing on our four core business operations and initiatives, as set forth above. At this point, the Company s revenue is generated from our Service Provider and Exporter Service Agreements. We generate revenues and cash by servicing these agreements. We work with exporters carefully and focus on our accounts receivable as part of managing our projected tight liquidity position. Additionally, we work with exporters closely in developing export strategies for the goods and services they planned to export. At present, the bulk of our operations takes place at our Raleigh, North Carolina office, which acts as a model for plans for our United States Trade Center Operations. We are in the process of outfitting our operations in Meishan, China. We have hired a full-time manager to operate the facilities located at Meishan and selected our first exporter, and the products we plan to export. Additionally, we are working with the Meishan Port Authorities to ensure that our operational procedures are in compliance with various import laws at Meishan. Our short-term operational objectives are to develop our exporter pipeline, grow revenues and increase operations and facilities in the United States while bringing our facility online in Meishan, China. Our focus currently is on enhancing our exporter base, including working with state export agencies to identify exporters as well as sources of goods and services made in the United States that are in demand in China. Along with increasing our United States operations, we are hoping to identify additional key staff in the United States and China that can help us implement our plan. While we feel optimistic about meeting the challenges as well as the opportunities before us, there is no assurance that we will be able to meet the challenges or take advantage of opportunities we perceive are available. To achieve its long-term objectives, the Company intends on shifting its revenue stream from a United Stated-based to a China-based stream by fully operating all planned activities at the planned Meishan trade center, and activities within our AmericaTowne complexes and Chinese-based internet sites. Each of the Company s four core initiative present challenges, risks, and opportunities. We believe that we see positive trends in the export area. Additionally, the Company plans to pursue opportunities in export not often thought of as an "exported commodity." Along with our planned core AmericaTowne communities, trade centers in the United States and China, and Internet operations, the Company plans on pursuing opportunities that are traditionally not thought of as an export commodity. There is no assurance we will be able to pursue these opportunities successfully. Additionally, our short and long-term liquidity position is impacted by the success we achieve in implementing our plans. We do plan on pursuing the full range of available funding opportunities. Additionally, we expect to help those in our exporting program with funding opportunities and various programs that may be available to them in the private community, and at the state and national level within the United States. Additionally, going forward we expect to take advantage of the various export tax laws that will help our cash flow position as well as assist our exporters with their growth. There is no assurance that our plans will be successful. There will be cost to bring all of the planned facilities online in China, including the costs involved with the Trade Center in Meishan, China. While we do have a plan to cover these costs, there can be no assurance that our plan will be successful. While we have discussed the possibility of outside investments in various forms, there are no agreements in place or any assurance that they will be realized in the future. The uncertainty of implementing our business plan in China and the various laws and policies in China and how they may impact our Company going forward is real. There is no assurance that we will be able to navigate the laws and policies at the national or local level that will allow us to achieve objectives outlined in our business plan. Though our results of operations thus far have been effective, there can be no assurance that we will obtain the same results going forward. Results of Operations for the Period from Inception (April 22, 2014) to December 31, 2014 Our operating results are summarized as follows: December 31, 2014 (Restated) Revenues $244,034 Cost of Revenues $52,113 Gross Profit 191,921 Operating Expenses $147,939 Provision for income taxes $15,394 Net Income 28,588 Revenues AmericaTowne was a development stage company in fiscal year 2014. During fiscal year 2014, the Company had sales of $244,034. Our sales consisted of $194,034 in primarily Export Service Agreements, and $50,000 in Services to related parties for Operation fees. The Cost of Revenues to related parties were $52,113. The $194,034 in revenue was from Services Fees charged to Bamyline Services $52,500, Nadia Emhirech $36,000, Janssen Farms $50,000, and World Empowerment Import and Export $55,000. Grandeur on Demand LLC, Land Mark Motors and were charged a total of $534. Pursuant to the Company s Service Agreement with Yilaime, Yilaime paid the Company $50,000 for an "Operations Fee". The Operations Fee is the result of an agreement that Yilaime has with the Company to act as an exclusive representative for the Company. The Operations Fee is not related to the $52,113 in costs of revenues. The related costs of revenues of $52,113 were costs associated with the Service Provider Agreement with Yilaime whereby services rendered and fees and commissions due for exporters were as follows: Bamyline Services $5,250; Nadia Emhirech $3,600; Janssen farms $5,000; World Empowerment $5,500.00; Yilaime follow-on support $32,710. The costs associated with Grandeur on Demand LLC ($19.00) and Landmark Motors ($34.00) were amortized over the life of the fifteen-year occupancy agreements. We can make no assurances that we will find commercial success in any of our revenue producing contracts. We are a new company and thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to our business as we began operations in the second quarter of 2014. Operating Expenses Our expenses for the period from inception (April 22, 2014) to December 31, 2014 are outlined in the table below: April 22 (inception) through December 31, 2014 General and administrative $82,626 Professional fees $65,313 Total operating expenses $147,939 Our operating expenses are largely attributable to office, rent and professional fees related to our reporting requirements as a public company and preparing our Form S-1 Registration Statement. We anticipate that we will incur approximately $50,000 for operating expenses, including, legal, accounting and audit expenses associated with our reporting requirements as a public company under the Exchange Act during the next twelve months. Net Income As a result of our operations, the Company reported net income after tax obligations of $28,588. Liquidity and Capital Resources Working Capital December 31, 2014 Current Assets $160,179 Current Liabilities $46,475 Working Capital $113,704 Cash Flow April 22 (inception) through December 31, 2014 Net cash provided by operating activities $16,403 Cash used in investment activities $- Cash used by financing activities $- Increase (Decrease) in cash $16,403 Cash Provided by Operating Activities Our net profit for the period ending December 31, 2014 was the main contributing factor for our positive operating cash flow. As of December 31, 2014, the Company had the minimum amount of cash to operate its business at the current level for the next twelve months, but insufficient cash to achieve our business goals and initiatives set forth above. To address the cash situation, the Company continues to manage its cash accounts and receivables closely. To date, we have been able to meet nearly all of our account payable obligations within a five to ten day window. If required, we can extend this window to improve our cash flow position. Additionally, we have a plan to increase sales. There is no assurance that we will be able to maintain this level of operations. The success of our business plan beyond the next twelve months is contingent upon us growing our business, keeping costs down, increasing revenue and obtaining additional equity and/or debt financing. We intend to fund operations through our pro-active efforts to monitor receivables, and debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There is no assurance that such additional financing will be available to us on acceptable terms, or at all or that our receivable plan will be effective in the future. Results of Operations for the Three Months Ended June 30, 2015 Our operating results for the three months ended June 30, 2015 are summarized as follows: Three months ended June 30, 2015 Revenues $341,135 Cost $29,162 Operating Expenses $148,062 Net Income $89,608 Revenues Compared to the first Quarter 2015 sales of $216,136, for the second quarter of 2015, the Company had sales of $341,135. For the first two quarters of 2015, total sales were $557,271. In the second quarter 2015, the Company s sales consisted of $291,135 in Service Fees and $50,000 in services to related parties for Operations Fees. Cost of Revenue to related parties totaled $29,162. The $291,135 in revenue was from Service Fees charged to Community and Global Learning Systems, Chariot Group LLC, US Africa Business, and KCC Construction, Inc. each for $55,000; and International Consulting Business Center and Canaan Care Home LLC for $35,000 each. The $29,162 in related party Costs of Revenues was attributed to payments to Yilaime under its Service Agreement. Cost of Revenue expenses for $5,500 each were attributed to Community and Global Learning Systems, Chariot Group LLC, US Africa Business, and KCC Construction, Inc., while expenses of $3,500 each was attributed to services for International Consulting Business Center and Canaan Care Home LLC. During the second Quarter 2015 export contracts increased from 10 to 16. We can make no assurances that we will find commercial success in any of our revenue producing contracts. We are a new company and thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to our business as we began operations in the third quarter of 2015. Operating Expenses Our expenses for the three months ended June 30, 2015 are outlined in the table below: Three months ended June 30, 2015 General and administrative $122,259 Professional fees $25,803 Total operating expenses $148,062 Our operating expenses are largely attributable to office, rent and professional fees related to our reporting requirements as a public company and preparing our Form S-1 Registration Statement. Net Income As a result of our operations, the Company reported net income after tax obligations of $89,608 for the second Quarter of 2015. Results of Operations for the Six Months Ended June 30, 2015 Our operating results for the six months ended June 30, 2015 are summarized as follows: Six months ended June 30, 2015 Revenues $557,271 Cost $65,873 Operating Expenses $293,185 Net Income $123,910 Revenues For the first two quarters of 2015, total sales were $557,271. The Company s sales consisted of $457,271 in Service Fees and $100,000 in services to related parties for Operations Fees. Cost of Revenue to related parties totaled $65,873. The $457,271 in revenue was from Service Fees charged to World Class International Development LLC, Bett & Ndungu Partnership, the Society Cooperative Pour Transaction Agricoles (SOCOOTRA), Community and Global Learning Systems, Chariot Group LLC, US Africa Business, and KCC Construction, Inc. each for $55,000; and International Consulting Business Center and Canaan Care Home LLC for $35,000 each. The $65,873 in Costs of Revenues was attributed to payments to Yilaime under its Service Agreement. Cost of Revenue expenses for $5,500 each were attributed to World Class International Development LLC, Bett & Ndungu Partnership, SOCOOTRA, Community and Global Learning Systems, Chariot Group LLC, US Africa Business, and KCC Construction, Inc., $20,373, were attributed to services provided for goods and services funding requests, while expenses of $3,500 each was attributed to services for International Consulting Business Center and Canaan Care Home LLC. During six month ending June 30 2015 export contracts increased from 6 to 16. We can make no assurances that we will find commercial success in any of our revenue producing contracts. We are a new company and thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to our business as we began operations in the third quarter of 2015. Operating Expenses Our expenses for the six months ended June 30, 2015 are outlined in the table below: Six months ended June 30, 2015 General and administrative $250,668 Professional fees $42,517 Total operating expenses $293,185 Our operating expenses are largely attributable to office, rent and professional fees related to our reporting requirements as a public company and preparing our Form S-1 Registration Statement. Net Income As a result of our operations for six months ending June 30, 2015, the Company reported net income after tax obligations of $123,910. Liquidity and Capital Resources Working Capital June 30, 2015 Current Assets $536,880 Current Liabilities $121,448 Working Capital $415,432 Cash Flow Six months ended June 30, 2015 Net cash provided by operating activities $18,902 Cash used in investment activities $7,739 Cash used by financing activities $4,500 Increase (Decrease) in cash $15,663 Cash Provided by Operating Activities Our net profit for the first two quarters in 2015 was the main contributing factor for our positive operating cash flow. Cash Used in Investing Activities We spent $7,739 on fixed assets for the six months ended June 30, 2015. Cash Provided by Financing Activities We received proceeds of $4,500 from loan for the six months ended June 30, 2015. Plan of Operation and Cash Requirements The Company anticipates that its expenses over the next twelve months will be approximately $900,000 as described in the table below. These estimates may change significantly depending on the nature of our business activities and our ability to raise capital from our shareholders or other sources. Estimated Potential Expenses Description Completion Date ($) Trade Center Operations 12 months 350,000 Salaries 12 months 25,000 Utility expenses 12 months 25,000 Investor relations costs 12 months 80,000 Marketing expenses 12 months 300,000 Professional fees 12 months 60,000 Other administrative expenses 12 months 60,000 Total 900,000 Our other administrative expenses for the year will consist primarily of transfer agent fees, bank and interest charges and general office expenses. The professional fees are related to our regulatory filings throughout the year and include legal, accounting and auditing fees. Based on our planned expenditures, we will require approximately $900,000 to proceed with our business plan over the next twelve months. If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources. We intend to raise the balance of our cash requirements for the next twelve months from private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any third-party to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us. Even though we plan to raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for funding our operations, as we do not have sufficient tangible assets to secure any such financing. We anticipate that any additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide any assurance that we will be able to raise sufficient funds from the sale of our common stock to finance our operations. In the absence of such financing, we may be forced to abandon our business plan. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Quantitative and Qualitative Disclosures about Market Risk We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not have any borrowings and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.Critical Accounting Policies Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management s Discussion and Analysis of Financial Condition and Results of Operations. Revenue Recognition The Company recognizes revenue at the date of delivery to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company s Revenue Recognition policy is provided in detail at Note 2 pages F7 and F 23 of the financial Statements. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, "Income Taxes." ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Under ASC 740, a tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. The adoption had no effect on the Company s consolidated financial statements. Recent Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company s results of operations, financial position, or cash flow. Contractual Obligations As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information. Legal Proceedings There are no pending legal proceedings to which AmericaTowne is a party or in which any director, officer or affiliate of AmericaTowne, any owner of record or beneficially of more than 5% of any class of voting securities of AmericaTowne, or security holder is a party adverse to AmericaTowne or has a material interest adverse to AmericaTowne. Market Price of and Dividends on the Registrant s Common Equity and Related Stockholder Matters We intend to have our common stock be quoted on the NASDAQ Capital Market or other US trading exchange. If our securities are not quoted on the NASDAQ Capital Market or other US trading exchange, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The NASDAQ Capital Market differs from national and regional stock exchanges in that it: (1) is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and (2) securities admitted to quotation are offered by one or more Broker-dealers rather than the "specialist" common to stock exchanges. To qualify for quotation on the NASDAQ Capital Market, an equity security must have three registered broker-dealers, known as the market makers, willing to list bid or sale quotations and to sponsor AmericaTowne listing. We do not yet have an agreement with a registered broker-dealer, as the market maker, willing to list bid or sale quotations and to sponsor AmericaTowne listing. If AmericaTowne meets the qualifications for trading securities on the NASDAQ Capital Market our securities will trade on the NASDAQ Capital Market until a future time, if at all, that we apply and qualify for admission to quotation on the NASDAQ Capital Market. We may not now and it may never qualify for quotation on the NASDAQ Capital Market or be accepted for listing of our securities on the NASDAQ Capital Market. The Company has never paid cash dividends on any of its securities. Payment of dividends on any of its securities is within the discretion of the Board of Directors of the Company and will depend upon the Company s earnings, its capital requirements and financial condition and other relevant factors. It is the Company s intention to retain earnings, if any, to finance the operation and expansion of its business and, therefore, it does not expect to pay any cash dividends on any of its securities in the foreseeable future. There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained. A stockholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resale. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We have no plans, proposals, arrangements, or understandings with any person with regard to the development of a trading market in any of our securities. Our shares likely will be "penny stocks" as that term is generally defined in the Exchange Act and the rules and regulations promulgated thereunder to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Under Rule 15g-9 of the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser s written consent to the transaction prior to the sale. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to: (a) Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt; (b) Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities; (c) Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer s account, the account s value and information regarding the limited market in penny stocks; and (d) Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction, prior to conducting any penny stock transaction in the customer s account. Because of the penny stock regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of Selling Stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our stockholders will, in all likelihood, find it difficult to sell their securities. To have our shares of common stock on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Common Stock. As set forth above, upon effectiveness of this Form S-1, we intend on engaging the services of Spartan Securities Group Ltd, a FINRA Market Maker to file our application on Form 211 with FINRA. As of the date of this Prospectus, we had 75 holders of record of our common stock. We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant. Financial Statements As a smaller reporting company, AmericaTowne is required to disclose information under Rule 8-04 (Financial Statements of Businesses Acquired or to be Acquired) and Rule 8-05 (Pro Forma Financial Information) of Regulation S-X in lieu of the financial information required by Rule 3-05 and Article 11 of Regulation S-X. In furtherance of this disclosure requirement, AmericaTowne has attached those financial statements and related audit report filed in its 2014 Form 10-K. Selected Financial Data As a "smaller reporting company," as defined by Item 10 of Regulation S-K, the Company is not required to provide this information. Supplementary Financial Information The Company does not have any disclosures required under Item 302 of Regulation S-K Changes In and Disagreements with Accountants on Accounting and Financial Disclosures The Company does not have any disclosures required under Item 304 of Regulation S-K. Directors and Executive Officers Name Age Position Alton Perkins 62 President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors Xianghai Lin 38 Vice President Mabiala T. Phuati 54 Senior Vice President Dr. Yu Wang 60 Senior Vice President for Human and Export Technical Compliance Dr. Daniel K. Katabaki 63 Vice President for Marketing USA and Africa Lindsey Moore 27 Vice President for Marketing USA Eastern Region Qingjun Wang 34 Manager of Corporate Operations China Biographical Information for Alton Perkins, Age 62, Chairman of the Board of Directors, President, Chief Executive Officer, Chief Financial Officer and Secretary Mr. Perkins currently serves as President, Chief Executive Officer and Chairman of the Board of Directors of Yilaime and Yilaime s related entity doing business in North Carolina. Mr. Perkins is a former decorated Air Force Officer and Missile Launch Officer with 22 years of military service, who graduated from the University of Southern Illinois with a B.S. in Business Administration and a M.B.A. from the University of North Dakota. From 1988 through 1997 he held CEO positions with start-up companies in the Jet Fuels, Defense Contracting, construction, business consulting and development, and real estate industries. From 1997 through 2009, Mr. Perkins served as the CEO and Chief Technology Officer for internet, childcare operations, media, and realty development companies. From 2009 to present, Mr. Perkins has served as Chairman of Yilaime and its related entity. Mr. Perkins has expertise in conducting business in China. Living and working in China studying Chinese consumer habits, working with Chinese entrepreneurs and government agencies, he developed the AmericaTowne and AmericaStreet concept. In addition to serving as Co-Chair of Yilaime Foreign Invested Partnership in China an entity focused on real estate development, he served as a Chief consultant to a major Chinese Chemical Company responsible for funding and technology transfer; he coordinated business with USA based auditors, DOW Chemical and USA Exim Bank. Mr. Perkins is subject to a Desist and Refrain Order dated March 21, 2008 (the "Order") issued by the State of California s Business, Transportation and Housing Agency, Department of Corporations (the "Department"). Mr. Perkins has been in compliance with the Order since issuance. The Order is not related in any manner with respect to the Company or its related parties. To the extent the Order was entered, there is no restriction on Mr. Perkins from engaging in an offering in the State of California provided he complies with the appropriate disclosures and laws. The Company is not aware of any similar orders in any other jurisdiction. Biographical Information for Xianghai Lin, Age 38, Vice President Mr. Xianghai Lin, a Chinese citizen residing in China is responsible for the Corporation s operations in China. From 2010 to 2012 Mr. Lin served as Director of Marketing and Investments for Yilaime Corporation s Foreign Invested Partnership in China. Mr. Lin was a lead executive in helping to develop the AmericaTowne and AmericaStreet concept. Mr. Lin serves as the Company s Managing Director for all operations in China. Prior to working with Yilaime Corporation, Mr. Lin was the Assistant Managing Director for one of China s largest Grocery Chains. Mr. Lin has expertise in product design, marketing and sales. He is responsible for the export Buyer Program and the AmericaTowne and AmericaStreet Export Support programs in China. Biographical Information for Mabiala T. Phuati, Age 54, Senior Vice President Mr. Mabiala T. Phuati currently serves as President and Chief Executive Officer of the Yilaime entity doing business in North Carolina. Mr. Phuati is a retired from the Zaire Government now the Democratic Republic of Congo. Mr. Phuati previously worked at the World Bank, and the United Nations. His portfolio of work includes: Executive Administrator of the Democratic Republic of Congo Government; Executive Administrator for United Nations High Commission for Refugees in the Central African Region; World Bank; World Health Organization; and the State Banking Commission for the North Carolina Department of Commerce. After leaving the State Banking Commission, in 2000, Mr. Phuati served as the President and Chief Executive Officer of Global Development Corporation a private enterprise where he focused on developing business in Africa in the mining industry. In 2013, Mr. Phuati became Managing Director of the Yilaime entity doing business in North Carolina. In 2013, Mr. Phuati was promoted to President and Chief Executive Officer of the Yilaime entity doing business in North Carolina and Vice President of Yilaime. Biographical Information for Dr. Yu Wang, Age 60, Senior Vice President of Human Resources and Export Technical Compliance Dr. Wang is from China, and is a resident of the United States. She serves as the Senior Vice President of Human Resources and Export Technical Compliance. Dr. Wang worked for Duke University for more than twenty years in the field of medical research. Prior to her work at Duke University, Dr. Wang was an Associate Professor for six years at Tongi University China. After retiring from Duke University in 2013, Dr. Wang served as the President and Chief Executive Officer of United International Development Inc. ("United Development"), a private enterprise where she focused on international trade and development. In 2014, Dr. Wang became Managing Assistant Director in United Development. In late-August 2015, Dr. Wang was appointed to her current Senior Vice President position with the Company. Biographical Information for Dr. Daniel Gatabaki, Age 63, Vice President for Marketing USA and Africa Dr. Gatabaki is 63 years old. He is a native of Kenya, and a resident of the United States. He is responsible for the Corporation s development of operations in Africa. Dr. Gatabaki earned a Bachelor of Education degree from University of Nairobi and Master of International Affairs, Master of Economics and Ph.D. degrees from Ohio University. In addition to holding a number of Associate and Assistant faculty positions at the college level, Dr. Gatabaki comes to the Company from Behavioral Health Care, where since 2011 he has been a President and Chief Executive Officer of Canaan Care Homes, LLC, an entity focusing on catering to residential homes for intellectually and developmentally disabled adults in Wake County, North Carolina. Biographical Information for Lindsey Moore, Age 27, Vice President for Marketing USA Eastern Region Ms. Moore received a juris doctor degree from North Carolina Central University School of Law in Durham, North Carolina in 2015, and a Bachelor of Science degree in Business Administration from William Peace University in 2011. While studying law, she was an honors student ranking in the top 10 percent of her class. From 2013 to 2014 Ms. Moore completed internships with two law firms and the Trial Court Administrator s Office in Raleigh, North Carolina. Additionally, from 2009- 2011, Ms. Moore worked in marketing and advertising for the International Festival of Raleigh and as a life insurance agent with Liberty National Life Insurance Company. Biographical Information for Qingjun Wang, Age 34, Manager of Corporate Operations China Mr. Wang, a citizen and resident of China has a bachelor s degree in business from Peking University, China. Since 2010, Mr. Wang has worked in the medical field in China as well as a general manager in the export business. Mr. Wang is a certified translator and his responsibilities with the Company include developing business initiatives in China focusing on auto sales, education initiatives, export sales, and marketing. Mr. Wang also is responsible for matching exporters with buyers in China. Executive Compensation and Corporate Governance It is the intention of the Company to establish nominating committees, audit committees, compensation committees and protocols and procedures associated with annual and special meetings of shareholders (to the extent not addressed in the enclosed Bylaws). Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our director. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since AmericaTowne is an early exploration stage company and has only seven directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our director and officer has the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. The Company was formed on April 22, 2014. No officer or director has received any monetary compensation from the Company since its inception. The Company agreed to issue 477,198 shares of common stock to Mr. Phuati in consideration of his services, and to the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Mr. Phuati for his services. Similarly, the Company issued 5,100,367 shares of common stock to Mr. Perkins designee - Alton & Xiang Mei Lin Perkins Family Trust, in consideration of his services. In addition, the Company holds an option to issue 450,000 shares of restricted common stock to Dr. Gatabaki and 477,190 shares of restricted stock to Dr. Katabaki and Dr. Wang, and 100,000 shares to Lindsey Moore and 20,000 shares to Qingjun Wang, respectively, under their respective Employment, Lock-Up and Options Agreements. Until the Company acquires additional capital, it is not anticipated that any officer or director will receive compensation from the Company other than reimbursement for out-of-pocket expenses incurred on behalf of the Company. The Company has recently adopted an Employee Stock Option Plan, but no shares have been registered or issued. The Company has not yet adopted retirement, pension, or profit sharing programs for the benefit of directors, officers or other employees, but our officers and directors may recommend adoption of one or more such programs in the future. The Company does not have a standing compensation committee, audit committee, nomination committee, or committees performing similar functions. We anticipate that we will form such committees of the Board of Directors once we have a full Board of Directors. Security Ownership of Certain Beneficial Owners The table set forth in this subsection lists, as of April 30, 2015, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within sixty days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power. The percentages below are calculated based on 22,943,624 shares of our common stock issued and outstanding as of the date of this Prospectus. Other than those options associated with the Employment, Lock-Up and Options Agreements set forth herein, we do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock. Name of Beneficial Amount and Nature of Beneficial Percent (%) of Common Owner(1) Ownership Stock Named Executive Officers Alton Perkins (2) 22,466,426 (3) 97.92% (1) The above table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable. Unless otherwise indicated, beneficial ownership is determined in accordance with the Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, and includes voting or investment power with respect to the shares beneficially owned. (2) Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer and Secretary. (3) Mr. Perkins is the majority shareholder of Yilaime and Yilaime NC. These two entities are the holders of the majority of issued and outstanding shares of common stock in the Company. Mr. Perkins is also the Trustee of the Alton & Xiang Mei Lin Perkins Family Trust and the AXP Nevada Asset Protection Trust 1, which holds 5,100,367 and 120,000 shares, respectively, of the issued and outstanding common stock in the Company. If and when this S-1 is declared effective and shares are distributed to Yilaime NC selling shareholders, Mr. Perkins will be the beneficial owner of 20,674,484 shares, which equals 90.11% of issued and outstanding. Related Party Transactions Yilaime and Yilaime NC are related parties to the Company. Yilaime is a "Control Party" to AmericaTowne because it has title to greater than 50% of the issued and outstanding shares of common stock in the Company. Alton Perkins is the majority shareholder and controlling principal of Yilaime, Yilaime NC and the Company. Mr. Perkins directs all major activities and operating policies of each entity. The common control may result in operating results or a financial position significantly different from that, which would have been obtained if the enterprises were autonomous. Further, pursuant to ASC 850-10-50-6 the Company lists and provides details for all material Related Party transactions so that readers of the financial statements can better assess and predict the possible impact on performance. Item 11A. MATERIAL CHANGES The Company does not have any disclosures associated with material changes in its affairs since the end of the latest fiscal year. ITEM 12. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The Company does not have any disclosures under this item. ITEM 12A. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LITIGATION Our Bylaws provide to the fullest extent permitted by law that our directors or officers, former directors and officers, and persons who act at our request as a director or officer of a body corporate of which we are a shareholder or creditor shall be indemnified by us. We believe that the indemnification provisions in our By-laws are necessary to attract and retain qualified persons as directors and officers. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling AmericaTowne pursuant to provisions of the State of Delaware, AmericaTowne has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and accordingly, file current and periodic reports, proxy statements and other information with the SEC. We have also filed a registration statement on Form S-1 under the Securities Act, as amended, in connection with this offering. We have also filed with the Commission a Registration Statement on Form S-1, under the Securities Act of 1933, as amended, with respect to the securities offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all the information set forth in the registration statement, as permitted by the rules and regulations of the Commission. For further information with respect to us and the securities offered by this prospectus, reference is made to the registration statement. The registration statement and other information may be read and copied at the Commission s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reports and other information regarding issuers that file electronically with the Commission. PART II - INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table indicates the expenses to be incurred in connection with the offering described in this registration statement, all of which will be paid by us. All amounts are estimated except the Securities and Exchange Commission registration fee, accountant s fees and expenses, the legal fee and expenses, and transfer agent s fees and expenses. Amount Securities and Exchange Commission registration fee 8,439.00 DTC Eligibility and support fee 18,000.00 Accountants fees and expenses 3,000.00 Legal fees and expenses 5,000.00 Transfer Agent s fees and expenses 810.00 Edgar Agent fees and expenses 2,000.00 Total expenses 37,249.00 ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (referred to as the "DGCL") provides that a corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A similar standard is applicable in the case of derivative actions (i.e., actions by or in the right of the corporation), except that indemnification extends only to expenses, including attorneys fees, incurred in connection with the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. Our articles of incorporation and bylaws contain provisions that limit the liability of our directors and officers for monetary damages to the fullest extent permitted by the DGCL. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except liability: for any breach of the director s duty of loyalty to our company or our stockholders; for any act or omission not in good faith or that involve intentional misconduct or knowing violation of law; under Section 174 of the DGCL regarding unlawful dividends and stock purchases; or for any transaction from which the director derived an improper personal benefit. Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the DGCL is amended to provide for further limitations on the personal liability of directors or officers of corporations, then the personal liability of our directors and officers will be further limited to the fullest extent permitted by the DGCL. In addition, we intend to enter into indemnification agreements with our current directors and officers containing provisions that are in some respects broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements will require us, among other things, to indemnify our directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and officers. We intend to maintain liability insurance policies that indemnify our directors and officers against various liabilities, including certain liabilities under arising under the Securities Act and the Exchange Act that may be incurred by them in their capacity as such. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. On June 18, 2014, the Company s sole shareholder, officer and director at the time, Richard Chiang, entered into an agreement to sell an aggregate of 10,000,000 shares of the Company s common stock to Yilaime. Effective upon the closing date of the Share Purchase Agreement, June 26, 2014, Richard Chiang executed the agreement and owned no shares of the Company s stock. This transaction resulted in Yilaime retaining rights, title and interest to all issued and outstanding shares of common stock in the Company. We believed that Section 4(2) was available because the Company believes that the foregoing transaction was exempt from the registration requirements under the Securities Act of 1933, as amended ("the Act"), based on the following facts: there was no general solicitation, there was a limited number of purchasers, each of whom the Registrant believes was an "accredited investor" (within the meaning of Regulation D under the Securities Act of 1933, as amended) and was sophisticated about business and financial matters, and all shares issued were subject to restriction on transfer, so as to take reasonable steps to assure that the purchaser was not an underwriter within the meaning of Section 2(11) under the Act. On August 11, 2014, the Company entered into a Contribution Agreement with Yilaime resulting in the issuance of 3,000,000 shares of common stock in the Company to Yilaime. Yilaime agreed to contribute to the operations of the Company certain assets previously acquired by Yilaime through an Intellectual Property Assignment Agreement between Mr. Perkins, as Assignee, and Yilaime, as Assignor. The intent of the parties in executing and performing under the Contribution Agreement was to effectuate the tax-free transfer of assets into the Company pursuant to Section 351 of the United States Tax Code. We believed that Section 4(2) was available because the Company believes that the foregoing transaction was exempt from the registration requirements under the Securities Act of 1933, as amended ("the Act"), based on the following facts: there was no general solicitation, there was a limited number of purchasers, each of whom the Registrant believes was an "accredited investor" (within the meaning of Regulation D under the Securities Act of 1933, as amended) and was sophisticated about business and financial matters, and all shares issued were subject to restriction on transfer, so as to take reasonable steps to assure that the purchaser was not an underwriter within the meaning of Section 2(11) under the Act. On October 8, 2014, the Company entered into the Stock Exchange Agreement with Yilaime NC. Pursuant to the terms of the Stock Exchange Agreement, in consideration for the issuance of 3,616,059 shares of common stock in the Company to Yilaime NC, Yilaime NC conveyed 10,848,178 shares of its restricted common stock. The 3,616,059 shares were issued on May 14, 2015. The intent of the parties in executing and performing under the Stock Exchange Agreement is to effectuate tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. As set forth above, the 3,616,059 shares of common stock will be issued amongst the Selling Shareholders defined herein upon effectiveness of this registration statement based on their respective prior holdings in Yilaime NC. We believed that Section 4(2) was available because the Company believes that the foregoing transaction was exempt from the registration requirements under the Securities Act of 1933, as amended ("the Act"), based on the following facts: there was no general solicitation, there was a limited number of purchasers, each of whom the Registrant believes was an "accredited investor" (within the meaning of Regulation D under the Securities Act of 1933, as amended) and was sophisticated about business and financial matters, and all shares issued were subject to restriction on transfer, so as to take reasonable steps to assure that the purchaser was not an underwriter within the meaning of Section 2(11) under the Act. On January 8, 2015, the Board of Directors for the Company authorized its Chairman of the Board to execute the Contribution Agreement between the Company and Yilaime. Pursuant to the terms of the Contribution Agreement, in consideration for the issuance of 750,000 shares of common stock in the Company to Yilaime, Yilaime is contributing to the operations of the Company certain assets previously acquired by Yilaime through an agreement with the Ningbo Meishan Free Trade Port Zone Administrative Committee dated April 1, 2014 (the "Meishan Agreement"). More specifically, the Company, as assignee of Yilaime s rights under the Meishan Agreement, shall receive certain incentives, preferential policies and financial support from Meishan in consideration of the Company meeting specific exporting benchmarks mutually agreed upon by the parties following good faith negotiations. The Meishan Agreement is attached as an exhibit to the Contribution Agreement, in addition to Meishan s approval of the contribution and assignment of assets to the Company and ratification of the Company s assumption of Yilaime s duties under the Meishan Agreement. We believed that Section 4(2) was available because the Company believes that the foregoing transaction was exempt from the registration requirements under the Securities Act of 1933, as amended ("the Act"), based on the following facts: there was no general solicitation, there was a limited number of purchasers, each of whom the Registrant believes was an "accredited investor" (within the meaning of Regulation D under the Securities Act of 1933, as amended) and was sophisticated about business and financial matters, and all shares issued were subject to restriction on transfer, so as to take reasonable steps to assure that the purchaser was not an underwriter within the meaning of Section 2(11) under the Act. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. The exhibits to the Registration Statement are listed in the Exhibit Index attached hereto. Exhibit Exhibit Description Filed herewith Form Period Ending Exhibit Filing Date 3.1 Certificate of Incorporation 10-12G 31.1 5/8/2014 3.2 By-Laws 10-12G 3.2 5/8/2014 3.3 Contribution Agreement 8-K 10.4 8/13/2014 3.4 Letter of Interest from Exim Bank 8-K 10.5 9/23/2014 3.5 Licensing Lease and Use Agreement dated August 29, 2014 (Landmark) 8-K 10.4 9/23/2014 3.6 Licensing Lease and Use Agreement dated August 28, 2014 (Granduer) 8-K 10.3 9/23/2014 3.7 Exporters Services Agreement dated August 28,2014 (Baymline) 8-K 10.2 9/23/2014 3.8 Stock Exchange Agreement October 13, 2014 (Yilaime NC) 8-K 10.1 10/10/2014 3.9 Service Agreement dated October 27, 2914 (Yilaime) 8-K 10.1 10/28/2014 3.10 Exporters Services Agreement dated October 28,2014 (Nadia) 8-K 10.1 10/30/2014 3.11 Exporters Services Agreement dated October 28,2014 (Janssen's) 8-K 10.2 10/30/2014 3.12 Exporters Services Agreement dated November 6, 2014 (World Empowerment LLC) 8-K 10.9 11/13/2014 3.13 Employee Stock Option Plan of AmericaTowne, Inc. dated January 8, 2015 8-K 10.2 1/13/2015 3.14 Contribution Agreement January 8, 2015 (Yilaime) 8-K 10.1 1/13/2015 3.15 Exporters Services Agreement dated January 8, 2015 (Leah) 8-K 10.4 1/13/2015 3.16 Exporters Services Agreement dated January 8, 2015 (World Class) 8-K 10.3 1/13/2015 3.17 Exporters Services Agreement dated January 30, 2015 (SOCOOTRA) 8-K 10.2 2/5/2015 3.18 Exporters Services Agreement dated June 21, 2015 (Community and Global) 8-K 10.1 6/24/2015 3.19 Exporters Services Agreement dated June 29, 2015 (USA Africa) 8-K 10.3 7/9/2015 3.20 Exporters Services Agreement dated June 29, 2015 (International Consulting) 8-K 10.2 7/9/2015 3.21 Exporters Services Agreement dated June 29, 2015 (Chariot Group) 8-K 10.1 7/9/2015 3.22 Exporters Services Agreement dated June 30, 2015 (KCC Construction) 8-K 10.4 7/9/2015 3.23 Exporters Services Agreement dated June 30, 2015 (Canaan Care) 8-K 10.5 7/9/2015 3.24 Exporters Services Agreement dated July 30, 2015 (Landmark Auto Sales) 8-K 10.1 7/31/2015 3.25 Exporters Services Agreement dated August 18, 2015 (Hi-Esteem) 8-K 10.1 8/20/2015 3.26 Employment Agreement November 25, 2014 (Perkins) 10-KA 10.12 8/27/2015 3.27 Employment Agreement November 25, 2014 (Phuati) 10-KA 10.13 8/27/2015 3.28 Exporter Services Agreement dated August 26, 2015 (LFTE USA Agreement) 8-K 10.1 9/08/2015 3.29 Exporter Services Agreement dated August 28, 2015 (Lion Agreement) 8-K 10.2 9/08/2015 3.30 Memorandum of Understanding Agreement dated August 28, 2015 (Student Resource USA Agreement) 8-K 10.3 9/08/2015 3.31 Employment Agreement - Dr. Daniel K. Katabaki dated August 26, 2015 8-K 10.4 9/08/2015 3.32 Employment Agreement - Dr. Yu Wang dated August 28, 2015 8-K 10.5 9/08/2015 3.33 Exporter Services Agreement (1) X 3.34 Licensing, Lease and Use Agreement (2) X 3.35 Employment Agreement - Ms. Lindsey Moore dated October 7, 2015 8-K 10.1 10/9/2015 3.36 Employment Agreement - Mr. Qingjun Wang dated October 12, 2015 8-K 10.1 10/15/2015 5.1 Opinion re: Legality X 23.1 Consent of Counsel (Included as part of Exhibit 5.1) X 23.2 Consent of Independent Auditor X (1) The Exporter Services Agreement attached as Exhibit 3.33 sets forth the general parameters, terms and conditions associated with this type of agreement used in the usual course of the Company s business. This exhibit excludes, however, negotiated terms of consideration since every relationship differs in this respect. This exhibit is subject to modification in the usual course of the Company s business. (2) The Licensing, Lease and Use Agreement attached as Exhibit 3.34 sets forth the general parameters, terms and conditions associated with this type of agreement used in the usual course of the Company s business. This exhibit excludes, however, negotiated terms of consideration since every relationship differs in this respect. This exhibit is subject to modification in the usual course of the Company s business. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any Prospectus required by section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; 2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 4. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: i. Any Preliminary Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; ii. Any free writing Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; iii. The portion of any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. 5. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: Each Prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated, and upon unanimous approval of the Board of Directors. /s/Alton Perkins AMERICATOWNE, INC. By: Alton Perkins Its: Chairman of the Board, President Chief Executive Officer, Treasurer and Chief Financial Officer Date: October 20, 2015 AMERICATOWNE Inc. Balance Sheets June 31, December 31, 2015 2014 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 32,066 $ 16,403 Accounts receivable, net 487,777 143,132 Accounts receivable, net - related parties 16,393 Prepayment-current 644 644 Total Current Assets 536,880 160,179 Prepayment-non current 8,485 8,808 Property, plant and equipment, net 7,391 - Goodwill 40,331 40,331 Investments 3,860 - Total Assets $ 596,947 $ 209,318 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued expenses $ 23,000 $ 26,539 Deferred revenues-current 4,542 4,542 Loan payable 4,500 - Income tax payable 89,406 15,394 Total Current Liabilities 121,448 46,475 Deferred revenues-non current 60,791 63,062 Total Liabilities 182,239 109,537 Commitments & Contingencies Shareholders Equity Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding - - Common stock, $0.0001 par value; 100,000,000 shares authorized, 22,943,624 and 18,577,565 shares issued and outstanding 2,294 1,858 Additional paid-in capital 1,435,956 1,432,533 Deferred compensation (1,176,040) (1,363,198) Retained Earnings 152,498 28,588 Shareholders Equity 414,708 99,781 Total Liabilities and Shareholders Equity $ 596,947 $ 209,318 See Notes to Financial Statements. Page F-2 AMERICATOWNE Inc. Statements of Operations (Unaudited) For the Three Months Ended For the Six Months Ended 30-Jun-15 30-Jun-15 Revenues Sales $ 291,135 $ 457,271 Services-related parties 50,000 100,000 341,135 557,271 Cost of Revenues-Related Parties 29,162 65,873 Gross Profit 311,973 491,398 Operating Expenses General and administrative 122,259 250,668 Professional fees 25,803 42,517 Total operating expenses 148,062 293,185 Income from operations 163,911 198,213 Other Expenses Interest expense 291 291 Income before income taxes 163,620 197,922 Provision for income taxes 74,012 74,012 Net Income $ 89,608 $ 123,910 Earnings per share - basic and diluted $ 0.00 $ 0.01 Weighted average shares outstanding- basic and diluted 21,195,200 20,175,381 See Notes to Financial Statements. Page F-3 AMERICATOWNE Inc. Statements of Cash Flows (Unaudited) For the Six Months Ended 30-Jun-15 Operating Activities: Net income $ 123,910 Adjustments to reconcile net income to net cash provided by operations Stock compensation 187,158 Depreciation 347 Bad debt provision 18,898 Changes in operating assets and liabilities: Accounts receivable, net (379,936) Prepayment 323 Accounts payable and accrued expenses (3,539) Deferred revenues (2,271) Income tax payable 74,012 Net cash provided by operating activities 18,902 Investing Activities: Purchase of fixed assets (7,739) Financing Activities: Proceeds from loan payable 4,500 Increase in cash and cash equivalents 15,663 Cash and cash equivalents at beginning of period 16,403 Cash and cash equivalents at end of period $ 32,066 Supplemental disclosure of cash flow information Interest paid $ - Income taxes paid $ - See Notes to Financial Statements. Page F-4 AMERICATOWNE Inc. Notes to Financial Statements (Unaudited)
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+Prospectus Summary 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001607551_adeptpros_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001607551_adeptpros_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider
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+PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001609132_c1_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001609132_c1_prospectus_summary.txt
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+S-1/A 1 dp58717_s1a.htm FORM S-1/A As filed with the Securities and Exchange Commission on August 11, 2015 Registration No. 333-206107 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 C1 Financial, Inc. (Exact Name of Registrant as Specified in Its Charter) Florida 6022 46-4241720 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 100 5th Street South St. Petersburg, Florida 33701 (877) 266-2265 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Trevor R. Burgess President and Chief Executive Officer C1 Financial, Inc. 100 5th Street South St. Petersburg, Florida 33701 (877) 266-2265 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Copies to: Manuel Garciadiaz Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 Anna T. Pinedo Morrison & Foerster LLP 250 West 55th Street New York, New York 10019 (212) 468-8000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title Of Each Class Of Securities To Be Registered Proposed Maximum Aggregate Offering Price(1) Amount Of Registration Fee(2) Common stock, par value $1.00 per share $24,346,222 $2,829.03 (1) Estimated solely for the purposes of calculating the registration fee pursuant to Section 6(b) of the Securities Act and computed pursuant to Rule 457(c) promulgated under the Securities Act of 1933, as amended, based upon the average of the high and low prices of the Registrant s common stock on August 3, 2015, as reported by the NYSE. (2) This amount was previously paid in connection with the initial filing of this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 11, 2015 PROSPECTUS 1,256,255 Shares C1 Financial, Inc. Common Stock The selling stockholders identified in this prospectus are offering 1,256,255 shares of C1 Financial, Inc. s common stock. We will not receive any proceeds from the sale of the shares being sold by the selling stockholders. Our common stock is listed on the New York Stock Exchange under the symbol "BNK." On August 10, 2015, the last reported sale price of our common stock was $18.32 per share. Certain directors and executive officers of
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001609319_that-s_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001609319_that-s_prospectus_summary.txt
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+S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (Amendment No. 5) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NUVOLA, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 7374 (Primary Standard Industrial Classification Code Number) 90-1031365 (I.R.S. Employer Identification Number) 8800 N. Gainey Center Dr., Suite 270 Scottsdale, Arizona 85258 (480) 275-7572 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Jeffrey I. Rass s, President Nuvola, Inc. 8800 N. Gainey Center Dr., Suite 270 Scottsdale, Arizona 85258 (480) 275-7572 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of Communications to: Stoecklein Law Group, LLP 401 West A Street Suite 1150 San Diego, CA 92101 (619) 704-1310 Fax (619) 704-1325 Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered Proposed Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.001 par value 776,453 $0.001 $776.45(1) $0.09 (1) There currently exists no market for Nuvola, Inc. s Common Stock. Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. A Registration Statement relating to these securities has been filed with the Securities Exchange Commission. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Prospectus (Subject to Completion) Dated _________, 20__ PROSPECTUS Nuvola, Inc. 776,453 Shares of Common Stock offered by the Selling Stockholders This is an initial public offering of Nuvola, Inc. s common stock. We have prepared this prospectus to allow our stockholders to sell up to 776,453 shares of our common stock. We are registering all of our issued and outstanding shares of common stock. This prospectus relates to the disposition by the selling stockholders listed on page 15, or their transferees, of up to 776,453 shares of our common stock already issued and outstanding. The offering price per share registered is $0.001, for maximum offering of $776.45. Nuvola, Inc will receive no proceeds from the sale of already outstanding shares of our common stock by the selling stockholders. Bollente Companies, Inc. ( BOLC ) deteremined to spin-off Nuvola, Inc. through a divided distribution (the Spin-Off Distribution ) to BOLC s stockholders of shares of 776,453 shares of Nuvola s common stock (the Spin-Off Shares ). The Spin-Off Distribution was completed on November 24, 2014 (the Distribution Date ) to stockholders of BOLC common stock on the record date of October 20, 2014 (the Record Date ). We filed a registration statement with the Securities and Exchange Commission (the SEC or Commission ) related to the Spin-Off Distribution. The Spin-Off Shares were distributed to BOLC stockholders prior to the effective date of the registration statement. The Spin-Off Distribution did not comply with the federal securities laws. As a result we may have potential liability (see Risk Factors ). This prospectus provides for registration of the Nuvola shares for resale by the holders of the 776,453 Nuvola shares issued in the Spin-Off Distribution. The selling stockholders, who are deemed underwriters as that term is defined under the Securities Exchange Act of 1934, or the rules and regulations thereunder, may sell these shares from time to time after this Registration Statement is declared effective by the Securities and Exchange Commission. The selling stockholders will sell at a stated fixed price of $0.001, based upon the price of the last private sale of the Company s common stock in October 2014, for the duration of the offering. We will not receive any of the proceeds received by the selling stockholders. As of the date of this Prospectus there is no trading market for our stock, furthermore we have not taken any steps to have these securities quoted on the OTCQB. There is no guarantee that our common stock will be quoted on the OTCQB. For a description of the plan of distribution of the shares, please see page 18 of this prospectus. We urge you to read carefully the Risk Factors section beginning on page 5 where we describe specific risks associated with an investment in Nuvola, Inc. and these securities before you make your investment decision. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 5. We are considered a shell company under applicable securities rules and subject to additional regulatory requirements as a result, including the inability of our shareholders to sell our shares in reliance on Rule 144 promulgated pursuant to the Securities Act of 1933, as well as additional restrictions. Accordingly, investors should consider our shares to be significantly risky and illiquid investments. See Risk Factors, beginning on page 5. Our auditors have substantial doubt about our ability to continue as a going concern. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is permitted. Prospectus (Subject to Completion) THE DATE OF THIS PROSPECTUS IS __________, 2015. TABLE OF CONTENTS PAGE Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001609351_spark_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001609351_spark_prospectus_summary.txt
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the Risk factors section and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Overview We are a leader in the field of gene therapy, seeking to transform the lives of patients suffering from debilitating genetic diseases by developing one-time, life-altering treatments. The goal of gene therapy is to overcome the effects of a malfunctioning, disease-causing gene by delivering a normal, functional copy of the same gene. Our product candidates have the potential to provide long-lasting effects, dramatically and positively changing the lives of patients with conditions where no, or only palliative, therapies exist. Our initial focus is on treating orphan diseases, and we recently reported statistically significant results in a pivotal Phase 3 clinical trial of our first product candidate targeting rare genetic blinding conditions, which has received both breakthrough therapy and orphan product designation. Based on these positive results, we intend to file a Biologics License Application, or BLA, for this product candidate with the U.S. Food and Drug Administration, or FDA, in 2016 as the first step in executing our global regulatory and commercialization strategy. We also have built a pipeline of product candidates targeting multiple rare blinding conditions, hematologic disorders and neurodegenerative diseases. Our pipeline includes: a product candidate targeting another rare genetic blinding condition currently in a Phase 1/2 clinical trial; product candidates for the treatment of hemophilia with a hemophilia B product candidate currently in a Phase 1/2 clinical trial in collaboration with Pfizer Inc., or Pfizer, and a preclinical product candidate for hemophilia A; a product candidate for the treatment of a form of Batten disease, for which we expect to commence Investigational New Drug application, or IND, enabling studies by the end of 2015; and other ophthalmic, hematologic and neurodegenerative disease programs. Product candidates Our most advanced product candidate, SPK-RPE65, is intended to treat genetic blinding conditions called inherited retinal dystrophies, or IRDs, caused by non sex-linked, or autosomal recessive, mutations in the RPE65 gene. Patients suffering from RPE65-mediated IRDs are affected by a range of severe visual impairments, notably night blindness, or nyctolopia, that make independent activities of daily living challenging and ultimately lead to blindness. For example, affected children often depend on visual aids to carry out classroom activities while adults with these diseases may face diminished employment opportunities and may be stripped of some of the rewards of parenting, such as watching a child play his or her favorite sport. We estimate that there are approximately 3,500 individuals with RPE65-mediated IRDs in the United States and the five major European markets. In October 2015, we announced positive top-line results from our pivotal Phase 3 clinical trial of SPK-RPE65, the first randomized controlled Phase 3 trial of a gene therapy for genetic disease. The trial of 31 subjects met with statistical significance its primary endpoint, the bilateral mobility test change score (p 0.001), as well as the first two of three secondary endpoints, specifically full-field light sensitivity threshold testing, or FST (p < 0.001), and the assigned first eye mobility test change score (p 0.001). Statistical significance was not achieved for the third secondary endpoint, visual acuity (p 0.17). Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholder may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated December 14, 2015 3,000,000 shares Common stock Spark Therapeutics, Inc. is offering 2,000,000 shares of common stock and The Children s Hospital of Philadelphia Foundation, the selling stockholder identified in this prospectus, is offering 1,000,000 shares of our common stock. We will not receive any proceeds from the sale of any shares by the selling stockholder. Our common stock is listed on the NASDAQ Global Select Market under the symbol ONCE. On December 11, 2015, the last sale price of our common stock as reported on the NASDAQ Global Select Market was $50.52 per share. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public reporting requirements. Per share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to Spark, before expenses $ $ Proceeds to selling stockholder $ $ (1) We have agreed to reimburse the underwriters for certain FINRA-related expenses. See Underwriting in this prospectus. We and the selling stockholder have granted the underwriters an option for a period of 30 days to purchase up to an additional 450,000 shares of common stock. Investing in our common stock involves risks. See Risk factors beginning on page 13 of this prospectus. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to investors on or about December , 2015. J.P. Morgan Cowen and Company Evercore ISI SunTrust Robinson Humphrey Roth Capital Partners The date of this prospectus is December , 2015. Table of Contents The trial demonstrated a statistically significant restoration of vision in subjects that were progressing toward complete blindness. On average, subjects that received SPK-RPE65 demonstrated an improvement in their mobility test change score of 1.9 lux levels. Of the subjects in the intervention group, 65% achieved the maximum improvement measurable on the mobility test. Similarly, on average, intervention group subjects achieved a greater than 100-fold improvement in light sensitivity as measured by FST. Further, subjects receiving SPK-RPE65 achieved a mean improvement in visual acuity of approximately two lines (9.0 letters averaged across both eyes) on the logarithm of the minimum angle of resolution, or logMAR, scale, a standard measure of visual acuity, compared with a slight improvement (1.6 letters) among control subjects. To date, we have not observed any product candidate-related serious adverse events nor any deleterious immune responses in the Phase 3 trial or in earlier Phase 1 trials. Based on these positive results, we intend to file a BLA for SPK-RPE65 with FDA in 2016 as the first step in executing our global regulatory and commercialization strategy. SPK-RPE65 also continues to demonstrate long-lasting effects. Specifically, a cohort of eight subjects that participated in our second Phase 1 clinical trial that received the same dose and volume as used in the Phase 3 clinical trial and that would have met the eligibility criteria for the Phase 3 trial, continue to experience durable improvement as measured by mobility testing and FST over three years from time of administration, with observation ongoing. Further, members of our clinical study team report that subjects from our first Phase 1 clinical trial that received SPK-RPE65 reported continued improvement in functional vision out five to seven years. RPE65-mediated IRDs historically have been characterized most frequently as LCA and retinitis pigmentosa, or RP. LCA is a rare, inherited eye disease that typically is diagnosed in childhood and results in severe visual impairment and, ultimately, blindness. RP is a rare, inherited eye disease that typically is diagnosed in the teenage years or later and results in severe visual impairment and, ultimately, blindness. To date, across all of our clinical trials, SPK-RPE65 has been studied in subjects diagnosed with LCA due to RPE65 mutations, as confirmed by genetic testing. According to key opinion leaders, over the past decade, the diagnosis of IRDs has begun to shift from clinical classifications to a diagnosis based on the specific underlying causal gene. In our Phase 3 and Phase 1 clinical trials, we enrolled a genetically heterogeneous population, with 34 of 41 subjects having unique RPE65 gene mutations, and based upon a review of the literature, 26 of these mutations have been associated with clinical diagnoses other than LCA. Further, in our ongoing natural history study of patients with confirmed RPE65 gene mutations, we observed that the practice of clinical diagnosis is not standardized in this population, having encountered over 20 different clinical diagnoses given at just the first two of seven centers we are utilizing in this retrospective chart review study across the United States, Europe and Latin America. With the broad availability of genetic testing, the corresponding shift from clinical to genetic diagnosis, the genetic heterogeneity of the subjects tested to date and the fact that SPK-RPE65 delivers a normal, functional copy of the RPE65 gene regardless of the type or location of the underlying mutations, we believe SPK-RPE65 should have broad application to all IRDs caused by autosomal recessive RPE65 gene mutations. As such, we are developing a regulatory strategy and are considering seeking approval for a label that would include both a description of the core clinical manifestation of RPE65-mediated disease along with a genetic characterization of the patients that should receive the product candidate. One such possible clinical manifestation is nyctolopia, or night blindness, which is not only a hallmark of RPE65-mediated disease, but was assessed by multiple endpoints in our trials and was specifically noted in our breakthrough therapy designation. Table of Contents Table of contents Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001610092_diplomat_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001610092_diplomat_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001610400_atd-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001610400_atd-corp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001610466_shell_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001610466_shell_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001610680_dinoco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001610680_dinoco_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1dce21f4a1a08a3f5e4a2a27416f73b1193902ba
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+Prospectus Summary 4
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001610837_greys-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001610837_greys-corp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..9c6a0a8e626692f7de4e63e65cf9108e14e2a0a7
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History Greys Corporation, a Delaware corporation (the "Company"), intends to establish paper recycling facilities across the United States. The Company was incorporated in the State of Delaware in May 2014, and was formerly known as Fall Valley Acquisition Corporation ("Fall Valley" or "Fall Valley Acquisition"). In November 2014, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then-existing officers and directors. In connection with the change of control, the Company changed its name from Fall Valley Acquisition Corporation to Greys Corporation. On February 1, 2015, Greys Corporation entered into a Sub-License Agreement with respect to certain assets (the "Sub-License") with Greys Paper Recycling Industries Limited Partnership, a company organized under the laws of the Province of Alberta in Canada ("Greys Canada"). The purpose of the Sub-License was to develop the Company s business and build substantive operations from this initial base of assets. Greys Canada is controlled, operated and managed by the Company s president and director, Rajan Ahluwalia. The Company is located at Corporate Ridge II, 18001 W. 106th Street, Suite 130, Olathe, KS 66061. The Company s main phone number is (780) 442-0450. Business The Company plans to develop and operate paper recycling facilities in the United States. Each anticipated facility will utilize unique equipment and processing technologies to manufacture recycle paper into reusable products. The management of the Company is currently an officer of Greys Canada, which operates a city-wide paper-recycling program in Edmonton, Alberta in Canada. Greys Canada currently utilizes the model intended for the Company s planned operations in the United States facilities in that the goal is to capture vast quantities of paper and recycle such paper through unique equipment to produce new paper products. Those new paper products are then sold back to the originator of the paper and others for reuse. The recycling facilities are anticipated to be located near large paper generators which will facilitate ease of transport, collection and redistribution. At the present time, discarded paper waste generally ends up in landfills. For instance, in a typical city of 1 million inhabitants, the Company anticipates that every year over 4 million tons of paper waste is buried in such manner. Virtually all of this material represents an excellent raw material that can be recycled and reused. These municipalities may run out of landfill space soon. Countless acres of pristine forest space used to make paper may be wasted when an easier recycling solution is available. There are already strong efforts underway to use recycled paper in response to public demand, therein limiting the necessity of cutting down so many trees. However, the Company anticipates a high demand for paper fiber across the continent (and beyond) to grow as the world moves toward a green, eco-friendly use of natural resources. As such, every year, many forests that continue to be destroyed so that tremendous quantities of new paper fiber can be processed at industry mills for which the Company offers an eco-friendly alternative product. The Company s success as a business may offer substantial environmental benefits of recycling paper. The Company aims to provide its product in a cost-efficient and profitable manner through a closed-loop paper recycling operation. The Company s focus on closed-loop recycling refers to having local businesses supply the Company with its waste office paper and used white cotton clothing (i.e. bed sheets, towels from hotel, motels). The Company uses a unique manufacturing process and converts this waste into useful paper and paper products. These products are then resold in the local area. Thus, closing the loop on the recycling process. In this manner, the Company believes itself to be unique because it can help to create permanent local jobs, use local raw material and sell the recycled product locally. The Company considers a "local" market to be a geographical area of approximately 40 miles around the recycling plant usually covering a population demographic of 1 million people. Based on the Company s calculations, the population of 1 million generally uses at least 40 tonnes of paper per day. The Company believes that the underlying economics associated with paper recycling are sufficiently strong. A modern closed-loop paper-recycling operation, which the Company plans to use, is not only effective in extending the lives of landfills, but the selling of recycled paper products generated by the processes involved is potentially very profitable. Large organizations use vast quantities of paper at significant cost to themselves and the environment. Once a closed-loop recycling program is in place, these organizations paper can be collected and processed in an efficient facility very near to their places of operation. The organizations then receive back paper products at competitive price points that involve the same standards of quality as non-recycled products. A closed-loop recycling project is anticipated by the Company to change purchasing behaviors of major paper users. The paper used can be recycled locally, converted back into useful product, and returned back to the original user for reuse through the Company s plan of operation. GREYS CORPORATION (Formerly Fall Valley Acquisition Corporation) UNAUDITED CONDENSED STATEMENTS OF OPERATIONS Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 For the period from inception (May 20, 2014) to June 30, 2014 Revenue $- $- $- Cost of revenue - - - Gross profit - - - Salaries and wages 60,000 120,000 - Operating expenses 40,520 63,406 707 Operating loss (100,520) (183,406) (707) Other income 10,679 12,819 - Loss before income taxes (89,841) (170,587) (707) Net loss $(89,841) $(170,587) $(707) Loss per share - basic and diluted $(0.01) $(0.02) $(0.00) Weighted average shares - basic and diluted 12,993,192 9,617,738 20,000,000 The accompanying notes are an integral part of these unaudited condensed financial statements. The Company plans to offer unique equipment configurations and processing systems to partner with host communities and organizations across the United States to offer profitable paper recycling facilities would be established within these communities and organizations. The Company hopes that the resulting finished paper products from the recycled paper would be of superior quality and comparable price relative to any competing paper brands already on the market. The Company plans to work with host sites that already feature high levels of available paper and fiber waste, and a large customer base (especially institutional and corporate) that demands quality recycled paper. The Company has received interest from over 30 cities across the United States for the establishment of a paper recycling facility in their respective communities, and the Company is actively pursuing a number of such host partnership opportunities across the United States. To date, the Company s outreach has mainly entailed directly contacting the commerce and waste management divisions of differing communities throughout the U.S in order to better understand what these communities are currently doing in terms of paper recycling. The Company has discovered that presently most of the communities in the U.S. are recycling their waste paper and only 35% of waste paper goes to landfills; however, in this case the term "recycling" does not mean manufacturing or converting what they have collected into the new products. These recyclers typically only collect waste paper, clothing etc., sorting them, bailing and exporting to other countries for actual conversion into the new products. On the other hand, the Company plans to work with these recyclers, buy the material at market cost and then the Company would use it in its plant and produce new paper products and sell it back to the community. Although the Company has started its initial operations, it has yet to build any plants or engaged in any recycling within a host community. To date, the Company s focus has been on building its business plan, making outreach to potential host communities and laying a foundation upon which to build its business. Risks and Uncertainties facing the Company The Company has not generated revenues to date, and the Company may experience losses in the near term. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that profits are consistently achieved. In order to expand the Company s business, the Company would likely require substantial additional funding. As an early-stage company, management of the Company must continually develop and refine its strategies and goals in order to execute the business plan of the Company on a broad scale and expand the business. Greys Canada is currently operating a citywide, paper-recycling program in Edmonton, Alberta. Greys Canada has demonstrated the ability to capture vast quantities of paper, and to recycle it through the use of unique technology so as to produce new paper products. These paper products are being sold back to the originator for reuse. The current facility converts roughly 40-tons of paper into useful end product every day, with much of this restored product staying within a closed-loop recycling program. The Company will require funding to build facilities such as these one in Edmonton when it partners with communities and organizations in the United States to implement the closed-loop paper recycling program. Each facility is expected to encompass unique equipment and processing technologies, and each facility is planned to spearhead the establishment of a closed-loop paper-recycling program in that community. One of the biggest challenges facing the Company will be in securing adequate capital to continue to expand its business and build a larger scale and more efficient set of operations. The Company estimates that over the next several years, it will require as much as $100 million to finance, develop and expand its business according to its business plan and goals. Secondarily, an ongoing challenge remains the maintenance of an efficient operating structure and business model. The Company must minimize operating costs and expenses in order to maximize profit from the revenues that it receives. Third, in order to expand, the Company will need to continue implementing effective strategies to partner with communities and organizations across the United States. The Company has developed its initial sales, marketing and advertising strategies, however, the Company will need to continue refining these strategies and also skillfully implement these plans in order to achieve ongoing and long-term success in its business. Fourth, the Company must continuously identify, attract, solicit and manage employee talent. The Company plans to consistently recruit, incent and monitor its employees. Due to financial constraints and the early stage of the Company s life, the Company has to date conducted limited sales and marketing to reach communities and organizations to work with and serve as a base for attracting customers. In addition, the Company has not yet located the sources of funding to develop the Company on a broader scale through acquisitions or other major partnerships. If the Company were unable to locate such financing and/or later develop strong and reliable sources of potential customers and a means to efficiently reach buyers and customers, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Due to these and other factors, the Company s need for additional capital, the Company s independent auditors have issued a report raising substantial doubt of the Company s ability to continue as a going concern. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to work with market-makers for its securities that will apply for quotation of its common stock on the OTC Bulletin Board. However, the Company does not know if any such application will be made and whether it will be successful if made, how long such application will take, or, that if successful, that a market for the common stock will ever develop or continue on the OTC Bulletin Board. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See "RISK FACTORS" and "DESCRIPTION OF SECURITIES". GREYS CORPORATION (Formerly Fall Valley Acquisition Corporation) UNAUDITED CONDENSED STATEMENT OF CASH FLOWS Six Months Ended June 30, 2015 For the period from inception (May 20, 2014) to June 30, 2014 OPERATING ACTIVITIES Net loss $(170,587) $(707) Non-cash adjustments to reconcile net loss to net cash: Changes in operating assets and liabilities: Expenses paid by stockholder and contributed as capital - 707 Interest receivable from related party (12,819) - Accounts payable and accrued liabilities 121,479 - Advances to related parties (1,291,345) - Net cash used by operating activities (1,353,272) - FINANCING ACTIVITIES Funds raised by share issuance $1,386,750 $- Net cash provided by financing activities 1,386,750 - Net increase in cash 33,478 - Cash, beginning of period - - Cash, end of period $33,478 $- Supplemental cash flow information: Interest paid $- $- Income tax paid $- $- The accompanying notes are an integral part of these unaudited condensed financial statements. The Offering The maximum number of Shares that can be sold pursuant to the terms of this offering is 5,127,000. The offering will terminate twenty-four (24) months from the date of this prospectus unless earlier fully subscribed or terminated by the Company. This prospectus relates to the offer and sale by certain shareholders of the Company of up to 5,127,000 Shares (the "Selling Shareholder Shares"). The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at a price of $1.00 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale Common stock outstanding before the offering (1) 14,127,000 Common stock for sale by selling shareholders 5,127,000 Common stock outstanding after the offering (1) 14,127,000 Offering Price $ 1.00 per share Proceeds to the Company $ 0 (1) Based on number of shares outstanding as of the date of this prospectus. Summary Financial Information The statements of operations data for the period from May 20, 2014 (inception) to December 31, 2014, and the balance sheet data as of December 31, 2014, are derived from the Company s audited financial statements and related notes thereto included elsewhere in this prospectus. The statement of operations data for the six months ended June 30, 2015, and the balance sheet as of June 30, 2015, provided below are derived from the unaudited financial statements and related notes thereto included elsewhere in this prospectus. Six months May 20, 2014 ended (inception) to June 30, 2015 Dec. 31, 2014 (unaudited) Statement of operations data Revenue $ 0 $ 0 Gross profit $ 0 $ 0 Income (Loss) from operations $ (183,406 ) $ (657 ) Net income (loss) $ (170,587 ) $ (657 ) At June 30, 2015 At December 31, 2014 (unaudited) Balance sheet data Cash $ 33,478 $ 0 Other assets $ 1,304,164 $ 0 Total assets $ 1,337,642 $ 0 Total liabilities $ 121,479 $ 0 Total shareholders equity (deficit) $ 1,216,163 $ 0
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus or incorporated by reference into this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. Before investing in our common stock, you should read this prospectus carefully in its entirety, especially the risks of investing in our common stock that we discuss in the Risk Factors section of this prospectus together with the documents that we incorporate by reference into this prospectus. Unless the context requires otherwise, references to our company, we, us and our refer to INC Research Holdings, Inc. and its direct and indirect subsidiaries; references to INC Holdings refer to INC Research Holdings, Inc.; and references to INC refer to INC Research, LLC, our wholly-owned subsidiary. Unless the context otherwise requires, references to common stock refer to our Class A common stock and our Class B common stock, which is convertible into our shares of our Class A common stock on a one-for-one basis. References to GAAP are to the generally accepted accounting principles of the United States. Overview We are a leading global Contract Research Organization, or CRO, based on revenues, and are exclusively focused on Phase I to Phase IV clinical development services for the biopharmaceutical and medical device industries. We provide our customers highly differentiated therapeutic alignment and expertise, with a particular strength in Central Nervous System, or CNS, oncology and other complex diseases. We consistently and predictably deliver clinical development services in a complex environment and offer a proprietary, operational approach to clinical trials through our Trusted Process methodology. Our service offerings focus on optimizing the development of, and therefore, the commercial potential for, our customers new biopharmaceutical compounds, enhancing returns on their research and development, or R&D, investments and reducing their overhead by offering an attractive variable cost alternative to fixed cost, in-house resources. Founded more than two decades ago as an academic CNS research organization, we have translated that expertise into a global organization with a number of therapeutic specialties, as well as functional services such as full data services and standalone biometric services and regulatory and consultancy capabilities. Over the past decade, we have built our scale and capabilities to become a leading global provider of Phase I to Phase IV clinical development services, with approximately 6,100 employees in over 50 countries across six continents as of June 30, 2015. Our broad global reach has enabled us to provide clinical development services in over 100 countries. Our global footprint provides our customers with broad access to diverse markets and patient populations, local regulatory expertise and local market knowledge. We provide robust clinical development services through specialized therapeutic teams that have deep scientific expertise and are strategically aligned with the largest and fastest growing areas of our customers R&D investments. Approximately 68% of our backlog as of June 30, 2015 was in CNS (31%), oncology (24%), and other complex diseases (13%), such as genetic disorders and infectious diseases. INC s therapeutically aligned teams enable us to work more effectively with clinical research sites globally. We were ranked the Top CRO to Work With among large global CROs in the 2015 Global Investigative Site Relationship Survey conducted by CenterWatch, a third-party leading publisher in the clinical trials industry. Results of the 2015 survey reflect responses from more than 1,900 sites globally that evaluated 11 CROs, including top five by revenue, across 37 specific relationship attributes. INC Research ranked top 3 on 33 out of 37 attributes. We believe INC s ranking as Top CRO to Work With among the large global CROs for a second straight time demonstrates the effectiveness of our therapeutic business model and our ability to deliver high-quality clinical trial results on time and on budget for our customers. Our diversified customer base includes a mix of many of the world s largest biopharmaceutical companies as well as high-growth, small and mid-sized biopharmaceutical companies. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated August 11, 2015. PRELIMINARY PROSPECTUS 8,000,000 Shares INC Research Holdings, Inc. Class A Common Stock The selling stockholders identified in this prospectus are offering 8,000,000 shares of Class A common stock. We will not receive any proceeds from the sale of our Class A common stock by the selling stockholders. Our Class A common stock is listed on the NASDAQ Global Select Market, or the NASDAQ, under the symbol INCR. The last reported sale price of our Class A common stock on NASDAQ on August 10, 2015, was $49.31 per share. See Risk Factors beginning on page 17 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to the selling stockholders $ $ (1) We refer you to Underwriting beginning of page 73 of this prospectus for additional information regarding total underwriting compensation. The underwriters expect to deliver the shares against payment in New York, New York on , 2015. Credit Suisse J.P. Morgan Prospectus dated , 2015. Table of Contents For the years ended December 31, 2013 and 2014, we had total net service revenue of $652.4 million and $809.7 million, respectively, net loss of $(41.5) million and $(23.5) million, respectively, Adjusted Net Income of $16.3 million and $44.6 million, respectively, and Adjusted EBITDA of $105.5 million and $145.3 million, respectively. Net service revenue, Adjusted Net Income and Adjusted EBITDA increased by 24.1%, 174.1% and 37.7%, respectively, and net loss decreased by 43.5% for the year ended December 31, 2014 from the year ended December 31, 2013. For the six months ended June 30, 2014 and 2015, we had total net service revenue of $388.2 million and $438.9 million, respectively, net income of $13.8 million and $48.6 million, respectively, Adjusted Net Income of $17.3 million and $54.9 million, respectively, and Adjusted EBITDA of $68.1 million and $104.5 million, respectively. Net service revenue, net income, Adjusted Net Income and Adjusted EBITDA increased by 13.0%, 253.2%, 216.9% and 53.4%, respectively, for the six months ended June 30, 2015 from the six months ended June 30, 2014. For a reconciliation of Adjusted Net Income and Adjusted EBITDA, each of which are non-GAAP measures, to our net income (loss), see Selected Consolidated Financial Data. Additional information regarding our financial data is presented in our Annual Report on Form 10-K for the year ended December 31, 2014, or 2014 Form 10-K, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, or Q2 2015 Form 10-Q. Our Market The market for our services includes biopharmaceutical companies that outsource clinical development services. We believe we are well-positioned to benefit from the following market trends: Trends in late-stage clinical development outsourcing. Within the clinical development market, we primarily focus on Phase II to Phase IV clinical trials. Biopharmaceutical companies continue to prioritize the outsourcing of Phase II to Phase IV clinical trials, particularly in complex, high-growth therapeutic areas such as CNS, oncology and other complex diseases. We estimate, based on industry sources, including analyst reports, and management s knowledge, that the market for CRO services for Phase II to Phase IV clinical development services will grow at a rate of 7% to 8% annually through 2020, driven by a combination of increased development spend and further outsourcing penetration. In addition, we estimate that total biopharmaceutical spending on drug development in 2014 was approximately $76.9 billion, of which the clinical development market, which is the market for drug development following pre-clinical research, was approximately $67.0 billion. Of the $67.0 billion, we estimate our total addressable market to be $55.2 billion, after excluding $11.8 billion of indirect fees paid to principal investigators and clinical research sites, which are not a part of the CRO market. We estimate that total biopharmaceutical spending on clinical development will grow at a rate of 3% to 4% annually through 2020. In 2014, we estimate biopharmaceutical companies outsourced approximately $23.0 billion of clinical development spend to CROs, representing a 9% increase in such spending compared to 2013 of approximately $21.0 billion and a penetration rate of 42% of our total addressable market. We estimate that this penetration rate will increase to over 50% of our total addressable market by 2020. We believe that CROs with deep therapeutic expertise, global reach and capabilities, the ability to conduct increasingly complex clinical trials and maintain strong principal investigator and clinical research site relationships will be well-positioned to benefit from these industry trends. Optimization of biopharmaceutical R&D efficiency. Market forces and healthcare reform, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or, collectively, the Affordable Care Act, and other governmental initiatives, place significant pressure on biopharmaceutical companies to improve cost efficiency. Companies need to demonstrate the relative improvement in quality, safety, and effectiveness of new Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. You should read the following summary together with the more detailed information appearing in this prospectus, including our consolidated financial statements and related notes, and in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, we use the terms "MaxPoint," the "company," "we," "us" and "our" in this prospectus to refer to MaxPoint Interactive, Inc. and its subsidiary. Overview MaxPoint provides a leading business intelligence and marketing automation software service, which we refer to as our solution, that enables national brands to drive local, in-store sales. National brands use our MaxPoint Intelligence Platform to predict the most likely local buyers of a specific product at a particular retail location and then execute cross-channel digital marketing campaigns to reach these buyers. Business intelligence is at the core of our solution, which leverages high-velocity data processing and proprietary statistical models to continuously analyze more than 20 billion daily data attributes to delineate consumers' real-time purchase intent. By identifying and reaching only the most likely local buyers with digital customized product offers for local stores, national brands can more efficiently and effectively run local marketing campaigns, thereby increasing in-store sales and reducing wasted marketing spend associated with traditional approaches. We provide a technology-driven alternative to traditional local marketing methods for national brands across a number of industries where transactions take place predominantly offline, such as consumer products, retail, automotive, healthcare, telecommunications and entertainment. The primary marketing methods traditionally utilized to engage local consumers are print media, direct mail and radio. We believe these methods have become outdated as media consumption moves online and national brands increasingly seek digital solutions to make effective local marketing decisions to drive in-store sales. Approximately 88% of total U.S. retail purchases in 2014 occurred at physical locations, according to Euromonitor. The challenges associated with the promotion of local, in-store purchasing include predicting a consumer's purchase intent and matching that consumer with the appropriate local store that currently has the desired product in stock. We believe these challenges are more pronounced for national brands because they generally operate on a centralized or regional basis, which limits their visibility into the purchase intent of local consumers. The MaxPoint Intelligence Platform is a cloud-based software service that enables national brands to predict local demand based on consumers' purchase power and intent and manage customized digital advertisements containing in-store offers and promotions to reach consumers at a local level across display, mobile, social and video channels. The MaxPoint Intelligence Platform matches the most likely communities of local buyers with a specific product at a particular retail location within a given timeframe. Through marketing automation and direct integration with real-time bidding, or RTB, exchanges, our platform delivers customized digital advertisements containing product and store-specific promotions to local consumers. National brands can then measure the offline sales impact of those digital marketing campaigns to optimize future campaigns and budgets and manage in-store supply levels. We introduced the MaxPoint Intelligence Platform in 2011 as a cloud-based service primarily run by us on behalf of our customers. Since 2013, our customers have also had the ability to directly interface with the MaxPoint Intelligence Platform software service. The foundation for our local targeting is our proprietary Digital Zip architecture, a digital grid of households organized into over 44,000 specific neighborhoods, or Digital Zips, which can be as small as a couple of city blocks. Through a combination of our proprietary and third-party data, we Amendment No. 2 To Form S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents create a profile for each Digital Zip based on shared demographic and financial traits, such as family size, income level, education, age and historical purchasing behavior. We use our consumer purchase intent model to determine which products consumers in a particular Digital Zip are most likely to purchase. Our consumer purchase intent model uses proprietary algorithms that take into account demographic and financial characteristics of potential consumers, historical purchase patterns of potential consumers and recent consumption of online media content by consumers, each aggregated at the Digital Zip level, which relate to targeted product characteristics or brand attributes. We analyze the aggregated consumption of online media content in each Digital Zip through the use of our proprietary search-based technology. This technology crawls, indexes and analyzes webpages around-the clock to interpret the meaning of text on webpages and catalogue each webpage by key topics. We then match the Digital Zips with the highest number of views of webpages that pertain to a key topic associated with a targeted product or product category. Based on these results, we can then match a targeted product offer to specific Digital Zips that exhibit an online behavior that correlates most strongly with the likely purchase of such products at the local level. We define "local," in terms of both retail locations and buyers or consumers, as the close proximity of a targeted consumer to a targeted retail location, typically within a specific Digital Zip. Our diverse customer base consists primarily of enterprises with national brands in the consumer products, retail, automotive, healthcare, telecommunications and entertainment industries. We sell our solution either directly to our customers or through advertising agencies that act on behalf of our customers. We have worked with each of the top 20 leading national advertisers and each of the top 10 advertising agencies in the United States as ranked in 2014 by Advertising Age. As of December 31, 2014, we had 479 enterprise customers. We define an enterprise customer to be any customer from which we have generated more than $10,000 of revenue during any trailing twelve-month period. Our customers typically pay us on a cost per thousand impression, or CPM, model based on the number of impressions we deliver through our platform for each marketing campaign. We generated revenue of $35.1 million, $66.1 million and $106.5 million for the years ended December 31, 2012, 2013 and 2014, respectively, representing year-over-year increases of 88% and 61%, respectively. Revenue less traffic acquisition costs, which we refer to as Revenue ex-TAC, was $18.6 million, $38.4 million and $61.9 million for the years ended December 31, 2012, 2013 and 2014, respectively, representing year-over-year increases of 106% and 61%, respectively. We recorded a net loss of $6.8 million, $0.2 million and $13.0 million for the years ended December 31, 2012, 2013 and 2014, respectively. Our Adjusted EBITDA was $(5.1) million, $2.6 million and $(5.4) million for the years ended December 31, 2012, 2013 and 2014, respectively. Revenue ex-TAC and Adjusted EBITDA are financial measures not calculated in accordance with U.S. generally accepted accounting principles, or GAAP. Please refer to " Summary Consolidated Financial Data" for information on Revenue ex-TAC and Adjusted EBITDA and for a reconciliation of Revenue ex-TAC to revenue and Adjusted EBITDA to net loss, respectively, the most directly comparable GAAP financial measures. Industry Background Despite the growth of e-commerce over the past decade, the vast majority of consumer purchases currently is and, in the foreseeable future, is expected to be made locally in physical retail stores. Approximately 88% of total U.S. retail purchases in 2014 occurred at physical store locations, representing over $2 trillion of spending, and approximately 12% of total U.S. retail purchases occurred at non-physical store locations (including e-commerce), representing over $300 billion of spending, according to Euromonitor. We believe the vast majority of these retail purchases at physical store locations are made at retail stores in close proximity to the consumer's home. By 2019, retail purchases at physical retail store locations will continue to represent MAXPOINT INTERACTIVE, INC. (Exact Name of Registrant as Specified in its Charter) Table of Contents approximately 85%, or nearly $3 trillion, and retail purchases at non-physical store locations (including e-commerce) will represent approximately 15%, or approximately $500 billion, of total U.S. retail spending according to Euromonitor. National brands employ a variety of offline and online local marketing channels in an effort to target and reach consumers to promote sales of their products at physical retail locations. According to BIA/Kelsey, the U.S. marketing industry spent approximately $137 billion in 2014 and is projected to spend approximately $159 billion in 2019 on local media marketing, which includes both traditional and digital forms of marketing. Traditional Local Marketing. Local marketing is still predominantly conducted through traditional marketing channels, which include television, newspaper, magazine and radio advertising, as well as mailers, free-standing inserts and coupons. According to BIA/Kelsey, spending for traditional local marketing was approximately $106 billion in 2014 and is projected to be approximately $104 billion in 2019, which would represent a decline from approximately 77% to approximately 65% of total local marketing spend during that period. Online/Digital Local Marketing. As consumers continue to shift their media consumption online, national brands continue to increase their digital marketing efforts. According to BIA/Kelsey, digital local marketing spending was approximately $31 billion in 2014 and is projected to be approximately $55 billion in 2019, which would represent an increase from approximately 23% to approximately 35% of total local marketing spend during that period. National brands seeking to drive in-store sales face the following challenges with current local marketing channels: Limited ability to predict and target the most likely buyers. Traditional marketing methods typically lack sophisticated technology while online methods generally rely on cookies that are not optimized for local consumer targeting and are frequently deleted. Limited ability to efficiently reach the most likely buyers at scale and at the right time. Many traditional methods for local marketing have shrinking audiences and lack the ability to connect consumers to a particular product. Also, as lead times of up to eight weeks are generally required to plan and execute marketing campaigns, national brands often miss opportunities to reach consumers at the point in time when they desire to purchase a product. Inability to capture and analyze massive amounts of unstructured and disparate data in real time. Most local marketing methods are unable to programmatically capture, process and analyze in real time the massive amounts of disparate data that reflect the current purchase intent of consumers and store-level supply of products. Inability to measure and optimize local marketing based on in-store sales. Both offline and online media typically lack measurement and attribution tools that, at the individual store level, demonstrate return on investment for national brands and help them determine where to allocate marketing budgets. Inability to automate offline methods of marketing. Traditional local marketing campaigns typically have long lead times, require a significant amount of effort to manage across multiple markets and involve numerous small media purchases across multiple channels and geographies. The Benefits of Our Solution Our solution presents significant benefits to our customers, including the ability to: predict and target the most likely local buyers for specific products based on consumers' purchase intent in real time; Delaware (State or Other Jurisdiction of Incorporation or Organization) 7370 (Primary Standard Industrial Classification Code Number) 20-5530657 (I.R.S. Employer Identification Number) MaxPoint Interactive, Inc. 3020 Carrington Mill Blvd., Suite 300 Morrisville, North Carolina 27560 (800) 916-9960 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Table of Contents reach the most likely consumers of a product efficiently, at scale, and at the right time by programmatically delivering targeted and timely advertisements to the most likely buyers; capture and analyze massive amounts of unstructured and disparate data in real time using our integrated proprietary software and customized hardware platform to make 450,000 decisions per second and run more than a thousand simultaneous campaigns; measure the impact of local, online marketing campaigns on the in-store sales of specific locations; and automate and streamline the execution of local marketing with minimal lead time and human intervention. Our Competitive Strengths We believe we have the following competitive strengths: Pioneering solution with compelling value proposition. Our proprietary, predictive business intelligence engine identifies, in real time, consumers likely to be receptive to our customers' advertisements, thereby focusing marketing spend on the most efficient and effective channel. Virtuous cycle of data aggregation. As our business intelligence engine analyzes and makes millions of predictions about consumer intent, our solution learns from each action, enabling us to programmatically improve our algorithms and the results we deliver to our customers. Proprietary, data-driven understanding of consumer intent and behavior. We have developed a proprietary business intelligence engine that predicts consumer purchase intent for products generally purchased offline. Deep relationships with national brands across key industries. Leading national brands trust us to help them automate and execute local marketing campaigns. Our Growth Strategies The core elements of our growth strategy include: Increase share of spend from existing customers. Our goal is to capture an increasing share of our existing customers' marketing budgets by working with more of their national brands, growing the number of physical store locations of retailers through which they sell their products, and broadening the number of regions and geographies covered by our solution. Acquire new customers. We believe that many national brands can benefit from our proprietary, technology-driven local marketing solution, and we plan to invest in growing our sales organization and marketing efforts in order to reach these potential customers. Further penetrate new industries. Historically, we have focused primarily on serving national brands in three industries consumer products, retail and automotive and have recently expanded into three new industries healthcare, telecommunications and entertainment. Our plan is to continue to penetrate these new industries and pursue opportunities in additional industries. Continue to innovate and invest in our technology. We plan to continue to make substantial investments in our technology and product development to enhance the effectiveness of our solution in an effort to deliver increasing value to our customers. Expand internationally. We believe that our technology and solution can be adapted to other countries where national brands face similar local marketing challenges. We recently Joseph Epperson Chief Executive Officer MaxPoint Interactive, Inc. 3020 Carrington Mill Blvd., Suite 300 Morrisville, North Carolina 27560 (800) 916-9960 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents established a presence in the United Kingdom and expect to explore additional international expansion opportunities. Key Financial and Operating Performance Metrics The following metrics aid us in developing and refining our growth strategies and making strategic decisions: Year Ended December 31, 2012 2013 2014 (in thousands, except number of enterprise customers) Revenue $ 35,072 $ 66,068 $ 106,460 Revenue ex-TAC $ 18,587 $ 38,356 $ 61,926 Adjusted EBITDA $ (5,116 ) $ 2,631 $ (5,391 ) Number of enterprise customers 225 304 479 Revenue ex-TAC is a non-GAAP financial measure defined by us as revenue less traffic acquisition costs, which consist of purchases of advertising impressions from RTB exchanges. This metric is meaningful because it is frequently used for internal management purposes and combines the important factors of our ability to sustain pricing with our customers, purchase inventory at reasonable and expected prices, and to scale our business. See " Summary Consolidated Financial Data." Adjusted EBITDA represents our net loss before income taxes, interest expense, and depreciation and amortization, adjusted to eliminate stock-based compensation expense and the change in the fair value of convertible preferred and common stock warrant liabilities. We evaluate Adjusted EBITDA because we believe it provides a useful measure for period-to-period comparisons of our core business. See " Summary Consolidated Financial Data." We believe our ability to attract new customers onto our MaxPoint Intelligence Platform is an important component of our growth strategy. We also believe that those customers from which we have generated more than $10,000 of revenue during any trailing twelve-month period best identifies customers that are actively using our solution and contribute more meaningfully to revenue. We refer to these customers as our enterprise customers. As of December 31, 2012, 2013 and 2014, customers from which we have generated less than $10,000 of revenue during the previous trailing twelve-month period have accounted for less than 2% of our revenue. Risks Related to Our Business Our business is subject to numerous risks of which you should be aware before making an investment decision, described more fully in the "Risk Factors" section immediately following this prospectus summary. These risks represent challenges to the successful implementation of our strategy and to the growth and future profitability of our business. These risks include the following: Our limited operating history makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment. We have a history of losses, we expect our operating expenses to continue to increase substantially and we may not achieve or sustain profitability in the future. If the MaxPoint Intelligence Platform does not accurately predict the most likely local buyers for specific products, we could lose revenue, which would have a material adverse impact on our operating results and financial condition. Copies to: Robert V. Gunderson, Jr., Esq. Glen R. Van Ligten, Esq. Richard C. Blake, Esq. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 1200 Seaport Blvd. Redwood City, California 94063 (650) 321-2400 Brad R. Schomber Chief Financial Officer MaxPoint Interactive, Inc. 3020 Carrington Mill Blvd., Suite 300 Morrisville, North Carolina 27560 (800) 916-9960 Mark G. Borden, Esq. Erika L. Robinson, Esq. Wilmer Cutler Pickering Hale and Dorr LLP 7 World Trade Center, 250 Greenwich Street New York, New York 10007 (212) 230-8800 Table of Contents Our operating results fluctuate, which make our future results difficult to predict and could cause our operating results to fall below analysts' and investors' expectations. If we are unable to attract new customers or our existing customers do not allocate a greater portion of their marketing spend to us, our revenue growth will be adversely affected. If we fail to develop new solutions and services or enhance our existing solution and services, we may not attract and retain customers, and our revenue and results of operations may decline. If we do not manage our growth effectively, the quality of our solution may suffer, and our operating results may be negatively affected. We may not be able to compete successfully against current and future competitors, which may result in declining revenue or inability to grow our business. We have historically relied, and expect to continue to rely, on a small number of customers for a significant portion of our revenue, and the loss of any of these customers may significantly harm our business, results of operations and financial condition. We rely on advertising agencies that act on behalf of our customers for a substantial majority of our revenue. Multiple advertising agencies operating within four global advertising networks represented numerous customers accounting for approximately 10%, 10%, 13% and 16% of our revenue, respectively, for the year ended December 31, 2014. The loss of any such relationships or increased competition from such advertising agencies or agency trading desks could materially harm our business. Legislation and regulation of online businesses, including privacy and data protection regimes, could create unexpected costs, subject us to enforcement actions for compliance failures or cause us to change our technology platform or business model, which may have a material adverse effect on our business. Our ability to generate revenue depends on our collection of significant amounts of data from various sources. Corporate Information We were incorporated in the state of Delaware in September 2006. Our principal executive offices are located at 3020 Carrington Mill Blvd., Suite 300, Morrisville, North Carolina 27560. Our telephone number is (800) 916-9960. Our website address is www.maxpoint.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be part of this prospectus or in deciding whether to purchase shares of our common stock. MaxPoint, the MaxPoint logo, MaxPoint Interactive, Digital Zip and other trademarks or service marks of MaxPoint appearing in this prospectus are the property of MaxPoint. This prospectus contains additional trade names, trademarks and service marks of ours and of other companies. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Reverse Stock Split Our board of directors and stockholders approved a 1-for-2 reverse split of our capital stock, which was effected on February 20, 2015. All references to common stock, options to purchase common stock, restricted stock, share data, per share data, warrants, convertible preferred stock and related information have been retroactively adjusted where applicable in this prospectus to reflect the reverse stock split of our capital stock as if it had occurred at the beginning of the earliest period presented. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents THE OFFERING Common stock offered 6,500,000 shares Common stock to be outstanding after this offering 25,566,243 shares Over-allotment option 975,000 shares Use of proceeds We expect to receive net proceeds from this offering of approximately $66.0 million based on the assumed initial public offering price of $11.50 per share, which is the midpoint of the range included on the cover page of this prospectus, after deducting the underwriting discount and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for general corporate purposes, including working capital, sales and marketing activities, engineering initiatives including enhancement of our solution, investment in technology and development and capital expenditures. We also may use a portion of the net proceeds from this offering to acquire or invest in technologies, solutions or businesses that complement our business, although we have no present commitments, and have not allocated specific amounts of net proceeds, to complete any such transactions or plans. See "Use of Proceeds."
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+(table of contents) SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", "AIT" "Company" are to AVANGARD INNOVATIVE TECHNOLOGIES INC A Cautionary Note on Forward-Looking Statements This Prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our industry's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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+PROSPECTUS SUMMARY 1
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+This summary highlights some of the information contained in this prospectus. This summary may not contain all of the information that may be important to you. For a more complete understanding of our business and this offering, we encourage you to read this entire prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and the more detailed information regarding our Company and the common stock being sold in this offering, as well as our consolidated historical financial statements and the related notes appearing elsewhere in this prospectus, before deciding to invest in our common stock. The information presented in this prospectus assumes, unless otherwise indicated, that the underwriters do not exercise their option to purchase additional shares of common stock and reflects a 7.7 for 1 split of our outstanding common stock that occurred on July 17, 2015. References in this prospectus to our operating statistics and market positions in 2014 are pro forma for the acquisitions of the Screen Scene Group, MPP Mediatec Group AB ( Mediatec ) and Outside Broadcast and RecordLab and Media GmbH ( Outside Broadcast ). Please see Recent Developments. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. In this prospectus, the terms the Company, NEP, we, us and our refer to NEP Group, Inc. and its subsidiaries. NEP Group, Inc. is a holding company with no independent operations and all of its business is conducted by its subsidiaries. Overview We are the largest global outsourced provider of comprehensive live and broadcast production solutions, with leading market positions in the United States, Europe and Australia. We serve the premium sports, entertainment and other live event production markets, where we offer mission-critical outsourced solutions, including remote production, studio production, video display and host broadcasting. Our service offering combines highly-trained technical experts with state-of-the-art production resources to offer a platform-agnostic solution across a wide variety of broadcasts and live events. With a team of more than 800 engineers, we work side-by-side with clients to design tailored solutions and provide real-time support for their productions. Our diverse capabilities offer clients the convenience of a comprehensive solution covering technical design, video and audio content capture through to the delivery of an integrated broadcast feed. We believe that we have the largest and most experienced outsourced engineering team in our industry, delivering unique value through our extensive network of mobile units, fixed-location studios and control rooms, and modular video displays. Our objective is to leverage our engineering expertise and technical solutions to deliver superior service and develop long-standing client relationships. We believe our clients view us as a trusted partner who shares their commitment to continuous innovation and the seamless delivery of complex, high-quality productions. Our clients include many of the world s premier television broadcasters, cable networks and event producers who offer the following live and broadcast productions: Sports production for well-known media rights holders and related events such as the NFL, PGA, MLB, NHL, NBA, WWE, NCAA, professional tennis, EPL, Olympic Games, World Cup and Commonwealth Games; Entertainment production for scripted and unscripted television programming, late night television, awards shows, concert tours and music festivals; and Other live event production for corporate events and trade shows. Founded in 1986, NEP was first to respond to an unmet need for higher service levels and advanced engineering expertise to support our clients live broadcasts. Over time, we have developed a wide range of services and expanded our geographic footprint, building our scale and engineering capabilities. Our strategy of increasing our scale has been accelerated by strategic acquisitions, where we have a proven track record of Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated July 30, 2015 PROSPECTUS 13,000,000 Shares NEP Group, Inc. COMMON STOCK This is the initial public offering of the common stock of NEP Group, Inc., a Delaware corporation. We are offering 13,000,000 shares of our common stock. No public market currently exists for our common stock. We are an emerging growth company and are eligible for reduced reporting requirements. Please see Summary Emerging Growth Company Status. Crestview Partners II GP, L.P., an existing principal stockholder, has indicated that it or its affiliates may purchase in this offering up to $20.8 million, or up to approximately 1,300,000 (based on the midpoint of the price range set forth below), of our shares of common stock at the same price as the price paid by the underwriters in this offering. The shares acquired by Crestview Partners II GP, L.P. or its affiliates will be subject to the lock-up restrictions described in Underwriting (Conflicts of Interest) Lock-up Agreements Director, Executive Officer and Stockholder Lock-Up. The underwriters will not receive any underwriting discounts or commissions on any shares of common stock sold to affiliates of Crestview Partners II GP, L.P. or its affiliates. The number of shares of common stock available for sale to the general public will be reduced to the extent Crestview Partners II GP, L.P. or its affiliates purchase such shares of common stock. See Underwriting (Conflicts of Interest) beginning on page 141 of this prospectus. However, because indications of interest are not binding agreements or commitments to purchase, Crestview Partners II GP, L.P. or its affiliates may determine to purchase fewer shares than it indicates an interest in purchasing or not to purchase any shares in this offering. It is also possible that Crestview Partners II GP, L.P. or its affiliates could indicate an interest in purchasing more shares of our common stock. In addition, the underwriters could determine to sell fewer shares to Crestview Partners II GP, L.P. or its affiliates. Our common stock has been approved for listing on the New York Stock Exchange ( NYSE ) under the symbol NEPG. We anticipate that the initial public offering price will be between $15.00 and $17.00 per share. Investing in our common stock involves risks. Please see Risk Factors beginning on page 23 of this prospectus. Per share Total (2) Price to the public $ $ Underwriting discounts and commissions (1) $ $ Proceeds to us (before expenses) $ $ (1) Please see Underwriting (Conflicts of Interest) for a description of all underwriting compensation payable in connection with this offering. (2) Assumes Crestview Partners II GP, L.P. or its affiliates have not purchased shares of common stock in this offering, for which the underwriters would not receive any underwriting discounts or commissions. We have granted the underwriters the option to purchase up to 1,950,000 additional shares of common stock on the same terms and conditions set forth above if the underwriters sell more than 13,000,000 shares of common stock in this offering. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on or about , 2015. Joint Book-Running Managers Barclays Morgan Stanley Jefferies Macquarie Capital RBC Capital Markets Co-Managers Nomura Stifel Prospectus dated , 2015 Table of Contents BASIS OF PRESENTATION Unless otherwise indicated, all of the financial data presented in this prospectus is presented on a consolidated basis for NEP Group, Inc. and its subsidiaries. The financial information and certain other information presented in this prospectus have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables in this prospectus. In addition, certain percentages presented in this prospectus reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers or may not sum due to rounding. INDUSTRY AND MARKET DATA The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. Some data is also based on our good faith estimates. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled Risk Factors. These and other factors could cause results to differ materially from those expressed in these publications. References in this prospectus to: Premium Events refer to live or near-live events which are broadcast nationally by major broadcasters and event producers utilizing remote production services; representative Premium Events include Monday Night Football, the Masters, the Academy Awards and the Indy 500; Client group refer to clients that are under the common control of a single ultimate parent; and NFL refer to the National Football League; MLB refer to Major League Baseball; NHL refer to the National Hockey League; NASCAR refer to the National Association for Stock Car Auto Racing; NBA refer to the National Basketball Association; NCAA refer to the National Collegiate Athletic Association; EPL refer to the English Premier League; PGA refer to Professional Golfers Association of America. This prospectus includes copyrighted information of The Nielsen Company, licensed for use herein. The Nielsen material contained in this report represents Nielsen s estimates and does not represent facts. Nielsen has neither reviewed nor approved this report and/or any of the statements made herein. TRADEMARKS AND TRADE NAMES We may own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks and trade names. Table of Contents effectively sourcing, evaluating and integrating attractive businesses and assets. Today, we believe that the scale of our platform allows us to satisfy increasingly complex client requirements globally, while enabling us to achieve attractive returns on capital. Our offices in 13 countries and experience in more than 65 countries provide us with a global platform from which we serviced over 1,700 clients and more than 10,700 events in 2014. For the three months ended March 31, 2015 and the year ended December 31, 2014, we generated total revenues of $103.1 million and $442.8 million, respectively, net losses of $35.9 million and $41.2 million, respectively and Adjusted EBITDA of $32.1 million and $145.1 million, respectively. For a reconciliation of Adjusted EBITDA to net loss, please see Summary Non-GAAP Financial Measure. Outsourcing in our industry is driven by the need for greater engineering expertise and technical solutions, as well as the scale and geographic reach offered by a comprehensive service provider like NEP. We offer a wide array of live and broadcast production services to the sports, entertainment and other live event markets in the United States, Europe and Australia: Remote Production services provide our clients with a mobile control room to facilitate the creation and capture of live content, typically equipped with NEP-owned assets (e.g., cameras and related audio and video equipment) together with an NEP broadcast engineering team. These services are typically provided under long-term contracts with our clients for full season coverage of events and programs throughout the life of their related broadcast rights agreements. We have helped clients broadcast over 20 years of popular sports and live entertainment. For the three months ended March 31, 2015 and the year ended December 31, 2014, our remote production services generated 75% and 74%, respectively, of our total revenues. Studio Production services include the supply and operation of studios and/or control rooms that support live and near-live television programming for entertainment clients as well as post-production services. These services are typically provided pursuant to annual contracts and are generally renewed throughout the life of the show. For the three months ended March 31, 2015 and the year ended December 31, 2014, our studio production services generated 9% and 9%, respectively, of our total revenues. Video Display services provide our clients with the design and set-up of large-scale, modular, LED video screens and related capabilities. For the three months ended March 31, 2015 and the year ended December 31, 2014, our video display services generated 16% and 12%, respectively, of our total revenues. Host Broadcasting includes the provision of technical design, build and operational services (e.g., equipment, satellite facilities and broadcast engineers) to assemble and operate centralized broadcast facilities that enable our clients to receive, produce and distribute content globally for multi-venue events. For the three months ended March 31, 2015 and the year ended December 31, 2014, our host broadcasting services generated 0% and 4%, respectively, of our total revenues. Our ability to deliver high-quality technical solutions for our clients is directly related to our ability to hire, train and retain the most experienced and innovative engineers in the industry. Our technical solutions are supported on-site and in real-time by a team of over 800 highly-trained engineers around the globe. Our high-quality equipment and facilities, which are typically designed and procured in connection with a specific long-term contract, are primarily comprised of 118 mobile production units, 46 studios and control rooms and approximately 14,400 square meters of modular LED displays. Our objective is to stay ahead of our competitors by continually innovating and developing technical solutions that fully leverage the talents of our team and meet our clients evolving production, technology and budgetary goals. Our engineers are responsible for driving innovation for our clients and have established NEP s track record of delivering numerous industry firsts. Our highly skilled integration team, which is dedicated to Table of Contents Table of Contents design and development, enables us to translate our extensive on-the-ground experience into high-quality solutions. Lastly, our relationships with suppliers and manufacturers provide us with insight into the latest technologies and trends across the live and broadcast event production industry. In 2014, we were the: # 1 provider of remote production for Premium Events in the United States, with greater than 70% market share; # 1 independent provider of technical control rooms in New York City and Los Angeles; # 1 provider of remote production for Premium Events in Australia, with greater than 50% market share; # 1 provider of remote production for Premium Events in the United Kingdom (the U.K. ), with greater than 35% market share; and # 1 provider of remote production for Premium Events in the Nordic countries (Norway, Finland, Denmark and Sweden), with greater than 40% market share. We have long-standing relationships with many of the world s premier television broadcasters, cable networks and event producers who offer live and broadcast productions in sports, entertainment and other live events. Many of our clients have partnered with us for over 20 years, which we believe is driven by our track record of quality, reliability and excellence in service and technology. Our clients produce high-value, live content and, therefore, often rely on our ability to perform when given only one opportunity to execute a seamless live broadcast. In close consultation with our clients, our engineering team designs, develops and integrates production solutions that fit our clients technology, production and budgetary needs and provides on-site technical support for each event to facilitate high-quality productions. Our client relationships provide us with strong revenue visibility, as a large portion of our annual revenue is derived from multi-year contracts. Our contracts are typically coterminous with our clients broadcast or production rights agreements. As of April 30, 2015 and 2014, our firm contracted revenue backlog for contracts with greater than one year remaining was approximately $673 million and $560 million, respectively, with a weighted average remaining contract length of approximately 4.4 years as of April 30, 2015. Approximately $496 million of our total firm contracted revenue backlog as of April 30, 2015 is not expected to be realized during 2015. In addition, we also generate additional revenues above contracted levels by providing incremental services at events to support expanded client needs, such as shoulder programming (e.g., pre-game, post-game and halftime shows) or additional on-site cameras. Since 2004, we have completed 19 acquisitions for total consideration of over $700 million. Our acquisition activity has broadened our global footprint and expanded our service offering, enabling us to increase revenues from our clients, achieve cost synergies, cross-sell existing or acquired service offerings and improve our purchasing power with suppliers. Most recently, we acquired Mediatec in April 2015, a remote production company with leading market share in the Nordic countries, and Outside Broadcast, a remote production company in Belgium. The acquisitions are expected to provide us with a platform for organic growth and bolt-on acquisitions, as well as a new cloud-based media production solution known as Mediabank. In January 2014, we acquired Global Television ( GTV ), the market leader in remote production in Australia. This acquisition provided us with a leading position in the Australian market, a platform for potential expansion into the broader Asian markets and a host broadcasting capability that has been leveraged across the NEP platform. Table of Contents Market Opportunity We believe that the size of the total addressable market of global live and broadcast production solutions is approximately $19.2 billion, out of which $1.5 billion and $8.1 billion represent existing U.S. and international core service offering opportunities, respectively, and $9.6 billion represents global opportunities in future planned service offerings, including content management, post production, uplink, audio, lighting, stage set design, freight forwarding, playout and technical consulting. As the largest global outsourced provider of comprehensive live and broadcast production solutions, we believe that our economies of scale and deep industry experience allow us to continue expanding our platform through both organic investment and acquisitions in these highly fragmented markets. We also believe that we are well positioned to win a disproportionate amount of the new business that is converted from in-house operations or currently outsourced to a smaller provider as clients seek services from partners with the scale and engineering expertise necessary to deliver high-quality productions. Over the past decade, demand for high-quality productions with increasingly complex technical needs has driven consolidation within the live and broadcast production industry, especially in the United States. We believe that these same dynamics will support consolidation internationally, with additional support by the increasing demand for global delivery of comprehensive production services. We expect providers with greater scale and global reach will offer increasing competitive advantage, delivering higher-quality services and overall value to clients through long-term relationships. Against this backdrop, we believe there may be opportunities to consolidate markets, increase our scale, and continue to diversify the solutions that we provide to our clients. Our primary end markets include production and related solutions for sports, entertainment and corporate events, where we seek to be a top-tier service provider in all of the markets where we operate. Our scale and expertise position us to take advantage of several end-market trends including: Increased demand for outsourced solutions Outsourcing of live and broadcast solutions continues to be driven by the need for greater technical resources and expertise, particularly for live and broadcast productions. We believe that our clients have historically found it difficult to attract, develop and retain the necessary talent to design, construct and deliver high-quality production solutions, including engineers and other technical experts. Today, this outsourcing trend continues, driven by the increasing complexity of some of our clients live and broadcast productions, requiring specialized talent and technical capabilities, as well as the scale and geographic reach offered by a comprehensive service provider. Increased value of live television due to time-shifting of programming With the advent and continued evolution of digital video recorders (DVR) and Video-on-Demand (VoD) technology, consumers increasingly possess capabilities that speed or avoid delivery of advertisements, resulting in lower advertising value for marketers. Due to these trends, higher value programming has shifted towards content that is not only in high demand among viewers but also much more likely to be viewed live, translating into significantly more value for both marketers and broadcasters. As sporting events and unscripted television tend to be real-time and results-oriented in nature, broadcasters are more aggressively increasing programming in these areas. Sports: According to The Nielsen Company, the total hours of sports programming aired on television grew over 240% from 2004 to 2014. In order to take advantage of the premium advertising spend, broadcasters have increased the segmentation of live sports broadcasting content, including pre-game and post-game analysis as well as halftime entertainment, highlights and replay shows. Each additional event potentially generates incremental demand for our services. Unscripted Television Programming: After a decade of growth, broadcaster and consumer focus on unscripted television content has remained strong. According to Nielsen s weekly ratings, unscripted Table of Contents television shows have accounted for as many as seven out of the top ten highest rated television broadcast programs in the United States in the last six months. Unscripted programming typically requires higher use of outsourced production solutions that we offer, including remote and studio production, video display, transmission and post-production services. Increase in global consumer demand for live sports programming According to The Nielsen Company, individual consumption of sports related content has grown over 21% from 2004 to 2014. One of the drivers of this increase is sports globalization; for instance, the EPL has recently granted broadcast rights to NBC for all of its regular season games through the 2016 season as a means to expand access to United States viewers. With the ability to broadcast globally, leagues are broadcasting games from all over the world, not just in their domestic markets. As domestic leagues expand into foreign markets, they will need reliable production partners to deliver and operate key production equipment all over the world. Given that each league has unique preferences in capturing, editing and broadcasting data, we believe they will require comprehensive service offerings to ensure seamless production as the number of international broadcasts increases. According to SNL Kagan, the value of the most recent NFL, MLB and NBA broadcast rights agreements have increased between 60% to 170% as compared to the prior contracts. Growing global content consumption across all media genres Technological advancements have enabled consumers of all age, race and ethnicity groups to consume media content with more presence than ever before. According to Nielsen s Cross-Platform Report, during the fourth quarter of 2014, the average American adult spent approximately 5% more time per day, compared to the fourth quarter of 2012, consuming media through live television, time-shifted television and smartphones. This increased demand for content continues to fuel the proliferation of content delivery alternatives. For instance, the number of cable channels has increased approximately 400% since 1995, according to SNL Kagan. As a result, broadcasters focus on delivering premium programming through HD content or exclusive events in order to generate larger, captive and loyal audiences. These trends are particularly relevant to remote production services providers such as NEP, as our ability to generate revenue is typically unaffected by the content delivery method (e.g. internet, cable and satellite streaming video services), and therefore, we generally benefit from increased content creation. Continued increase in outsourced studio production by broadcasters As outsourced production and new media content proliferation trends continue, we believe specialized technical and engineering experts will be required to design and deliver the technical solutions to support this content. In some markets this trend is already apparent. For instance, New York has experienced 50% growth in production of television series since 2011. Similarly in the U.K., multichannel broadcaster expenditures on independent production grew at a 26% compound annual growth rate between 2004 and 2012 according to data from the Commercial Broadcasters Association. To further support production outside of a broadcaster s location, several international and domestic markets are providing tax incentives to promote foreign television production where the broadcasters likely have no established studio or control room facilities including British Columbia, the U.K., New York and Connecticut. We believe independently operated studio providers are poised to benefit from the increase in demand for technical services, crewing support and studio facilities driven by the new content and incentives provided in key studio production markets. Table of Contents A resurgence in live music concerts, tours and festivals and other live event services generating demand for mobile broadcasting service and display technology The transition of recorded music to digital media has resulted in electronic distribution and digital music streaming, which represents a growing portion of industry revenue and has left the music industry susceptible to piracy. These changes have led musicians to target touring and live events as a more stable source of revenue. According to a Billboard survey in May 2015, concert revenue accounted for more than 80% of revenue in the music industry in 2014. Focus on the live music sector is growing, while the venues at which live concert and events are held are becoming larger; in the last five years, multiple arenas and stadiums have been replaced, in some cases increasing attendance by approximately 50%. Audiences are demanding a more immersive experience, which includes more advanced features such as the ability to stream events remotely. Additionally, music festivals, which require advanced technical capabilities, are becoming increasingly popular, with 32 million people attending at least one festival a year in the United States in 2014, as reported by Nielsen. We believe these trends will create further opportunities for live and broadcast production solutions providers, such as NEP, to expand service offerings for live events (e.g. display, projection, audio and lighting), as well as the opportunity to provide other value added services (e.g. content management, live event management and technical consulting). Our Competitive Strengths We believe the following are among our core competitive strengths and enable us to differentiate ourselves in the markets we serve: Market leader in comprehensive live and broadcast production solutions, with global reach, expansive scale and breadth of service offerings We are the largest global outsourced provider of comprehensive live and broadcast production solutions to the sports, entertainment and other live events markets. We offer a diverse array of services primarily in the United States, Europe and Australia and have serviced events in more than 65 countries. The depth and breadth of our platform is supported by over 800 experienced engineers and an extensive portfolio of mobile and studio assets including 118 mobile production units, 46 studios and control rooms and 14,400 square meters of modular LED displays. Our global reach, expansive scale and breadth of service offerings provide us with a number of competitive advantages, including the ability to: Deliver Gold Standard Service We are able to deliver best-in-class performance, allowing us to create and maintain long-term client relationships. Our Gold Standard service is made possible due to the performance of our experienced, technically-skilled engineers and in-house designed technical solutions. We believe our clients view us as a trusted partner who shares their commitment to high-quality productions; Leverage Scale and Geographic Reach to Satisfy Complex Client Needs We are able to leverage our scale to deliver a compelling value proposition to our clients, who are increasingly demanding global delivery of complex integrated services, while maintaining the expertise and footprint to remain nimble and responsive; Achieve Attractive Economics by Differentiation through Innovation and Scale Our combination of engineering expertise, technical solutions and unparalleled global platform represent significant competitive differentiation. Our increased negotiating power with key suppliers provides lower cost and ready access to new technology across our global footprint, which helps us achieve attractive returns on capital; Table of Contents Efficiently Repurpose Owned Technical Solutions Our geographic reach and diversified service offerings allow us to optimize the useful life and revenue-generating potential of our assets by selectively repurposing existing assets and solutions into markets with lesser technical requirements; and Consistently Maintain Financial Performance The diversity of our clients, markets and service offerings has enabled us to maintain substantially consistent historical financial performance across economic cycles, characterized by long-term growth in long-term Adjusted EBITDA and free cash flow. Award-winning technology leader providing innovative, mission-critical production solutions We offer our clients the latest in live and broadcast production technology, allowing us to deliver industry-leading comprehensive live and broadcast production solutions which enable high-quality productions. We were one of the first movers in successfully transitioning remote production from standard (SD) to high definition (HD) technology and we strive to be at the forefront of new technologies and broadcast innovations. Our clients rely on the depth of our engineering team s technical expertise to match existing market technologies and capabilities with their specifications. Through the design, development and implementation of mission-critical production solutions, our engineering personnel become highly integrated within our clients organizations. These engineers, together with our in-house integration teams, also have a strong record of innovation for our clients. Examples of such innovation include low latency wireless camera solutions, innovative video display set designs and automation of the configuration process for production monitor walls. Our success and technology leadership has been recognized through numerous awards, including seven of the last ten Sports Emmy Technical Team Remote awards, Emmy Awards for technical excellence, five Sports Broadcasting Hall of Fame inductees, two technology leadership awards from Broadcasting & Cable Magazine four Pollstar Awards, four Parnelli Awards and a design award from the National Association of Broadcasters. Strong culture of innovation and technical excellence driven by superior people development Our culture of innovation and technical excellence is at the foundation of our business model. We believe our ability to deliver consistently high-quality, comprehensive outsourced production solutions for our clients is directly related to our ability to hire, train and retain the finest and most innovative engineers in the industry. Taking advantage of our global reach and depth of expertise, we provide numerous education and training opportunities to our engineering teams. Since 2006, we have offered a rigorous two-year training program for our new hires known as the NEP Mobile Unit Engineer Apprentice Program. Additionally, our Engineer Exchange Program provides engineers the opportunity to travel to one of our overseas locations to work alongside regional engineering teams and exchange know-how, facilitate integration of newly acquired assets and better equip themselves for global service delivery. Our engineers are also involved in the research and development process, enhancing their capability to troubleshoot and support our clients on site. As a result, we believe that we have earned a reputation as an employer of choice in the outsourced production industry. This is evidenced by the low levels of turnover among our engineers, who have an average tenure of 6.5 years, helping to develop continuity in customer relationships and depth of technical expertise, based on live and diverse experience. Proven ability to successfully execute and integrate acquisitions, adding new companies to the NEP worldwide network We believe there are strong benefits to achieving scale in live and broadcast production solutions, where many clients are looking for full-service solutions across multiple geographies. Therefore, we view acquisitions as an important component of our business strategy and intend to continue to pursue attractively-priced acquisitions. We target companies that enjoy leading market share positions, generate strong cash flow, are culturally aligned with NEP and offer a mix of new services, clients and geographic access. Table of Contents We have a strong in-house M&A team with significant experience that provides support with identification, evaluation, diligence and integration. The production solutions markets are large and highly fragmented with many attractive targets. Based on our acquisition track record and the favorable view of NEP from target management teams, NEP is typically viewed as a credible buyer to potential acquisition targets, which has allowed us to continue to grow our pipeline of opportunities. Our experienced in-house M&A team is regularly engaged in acquisition discussions and has a pipeline of several potential targets under consideration. We have consummated and integrated 19 acquisitions since 2004. These acquisitions have expanded our geographic reach in remote production, studio production and video display and have added service offering capabilities in host broadcasting, post production and uplink. In the United States, we have consolidated several remote production players which serve sports broadcasts, including Corplex, MIRA Mobile, National Mobile Television, New Century Production and Trio Video. Within the video display market we have built scale through the acquisitions of Screenworks, American Hi-Def and Sweetwater. We entered the U.K. market with the acquisition of Visions in 2004 and have subsequently added capabilities across remote and studio production with the acquisitions of Bow Tie Video, Cymru, Roll To Record and the Screen Scene Group. We entered the Australian market in 2014 with the acquisition of GTV and further strengthened our platform there with the acquisition of Silk Studios. We further grew our European platform in December 2014 with the acquisition of Faber in the Netherlands and, most recently in April 2015, we acquired Mediatec and Outside Broadcast, extending our network to the Nordic and DACH countries (Switzerland, Germany and Austria). Attractive operating model with high level of contracted revenue and strong free cash flows Our annual revenue historically has been highly predictable, with strong revenue visibility and relatively limited sensitivity to significant macroeconomic changes. As of April 30, 2015 and 2014, our firm contracted revenue backlog for contracts with one or more years remaining was approximately $673 million and $560 million, respectively. Approximately $496 million of our total firm contracted revenue backlog as of April 30, 2015 is not expected to be realized during 2015. Our long-term contracts typically range from three to seven years with certain contracts lasting up to 12 years and had a weighted average remaining life of 4.4 years as of April 30, 2015. In addition to this contracted revenue stream, our long-term client relationships provide for a significant amount of recurring revenue. These factors have contributed to the consistency of our historical financial performance across economic cycles. We also have limited exposure to individual client risk, with no single client group accounting for more than 14% of revenue for the year ended December 31, 2014. In addition to high levels of contracted revenue, there are several factors which have contributed to our strong historical generation of free cash flow. Much of our capital investment is success-based, with significant capital investments typically tied to new or renewed client contracts. Pricing for these contracts is market-based, but supported by internal rate of return criteria that we evaluate prior to entering into a new contract. In addition, given our size and scale, we are able to optimize the useful life of assets by repurposing assets and solutions into markets with lesser technical requirements. We also benefit from modest working capital requirements; well-maintained, long-lived equipment, which limits our near-term maintenance capital expenditure requirements; and, as of December 31, 2014, approximately $182.6 million in U.S. Federal net operating losses in addition to state and foreign net operating losses, which, subject to some limitations, are expected to support increased free cash flow. Table of Contents Long-term relationships with high-profile clients driven by the delivery of high-quality comprehensive live and broadcast production solutions We have a long track record of delivering high-quality comprehensive live and broadcast production solutions to our clients. Our clients include premier broadcasters, event producers and cable networks, and our services are mission-critical to enable their productions across the globe. As our clients increasingly demand the integrated delivery of complex, comprehensive services on a global scale, we believe that our ability to be nimble and responsive in leveraging our growing global platform and capabilities, such as host broadcasting and flypacks, also becomes a key differentiating factor in maintaining and creating long-term client relationships. We believe our reputation for superior service, demonstrated through our history of consistent, long-term coverage of high-profile sports, entertainment and other live events, together with our intimate knowledge of clients operations, preferences and technology needs, provide our existing clients with strong incentives to renew contracts with us. In 2014, over 83% of our contracted revenue came from repeat contracts. Strong, diverse management team supported by deep bench of industry-leading talent Our management team possesses a combination of long-time NEP experience, related industry backgrounds and functional area expertise. Members of our senior management team average 12 years with our Company, during which time they have cultivated strong client relationships and serviced thousands of events. Our management team has positioned us as a leader in our markets and has successfully marketed our services to retain and grow market share over time. Further, our management team has demonstrated its ability to successfully identify and execute acquisition and growth strategies on a global scale. Our Strategy for Growth Our multi-faceted growth strategy is to continue to pursue strategic acquisitions and expand our global scale while further developing our industry-leading technical solutions, engineering expertise and deep client relationships. Our strategy has historically allowed us to achieve strong margins, cash flow growth and attractive returns on capital. The key components of our strategy are: Continue to pursue strategic acquisitions to improve our scale, reach and value to our clients Acquisitions are an important component of our growth strategy. We believe that many of our clients increasingly favor scale providers to service their broadcasts and live events in order to meet their needs for the global delivery of high-quality and technically-complex productions. Since 2004, we have acquired and successfully integrated 19 businesses for total consideration of over $700 million. These acquisitions have added new leadership and engineering expertise to our platform, helped diversify our revenue mix and increased the scale and reach of our global service offerings, while enabling us to achieve cost synergies, cross-sell services and improve purchasing power. Most recently, in April 2015, we expanded our remote production and studio production capabilities by acquiring Mediatec and Outside Broadcast, extending our reach into the Nordic and DACH countries, as well as Belgium. In January 2015, we acquired the Screen Scene Group, extending our reach into Ireland and expanding our presence in the U.K., while also adding remote production and video display capabilities in these geographies. During 2014, we acquired GTV, Silk Studios and Faber; these acquisitions together provide entry into Asia and Continental Europe broadly, as well as new capabilities to deliver remote production, video display and host broadcasting services from local offices in Europe, Australia and the Middle East. We utilize a targeted approach to identify and evaluate acquisition candidates based on quantitative and qualitative criteria, including market position and reputation, cash flow profile, return on capital, service mix and culture. Our leading market positions, global scale, ample track record integrating acquisitions and access to Table of Contents capital provide us with a competitive advantage in attracting potential sellers. We believe that there will continue to be an attractive pipeline of available acquisition candidates for us to consider and we intend to continue to aggressively pursue opportunities within broadcasting, live events and other value added services. Expand global platform through continued consolidation and other growth initiatives In addition to the acquisitions of Mediatec and Outside Broadcast, we are working to expand our operations within our existing international footprint, including the U.K., Continental Europe, Australia and the Middle East, both organically and through potential acquisitions. We believe that we have the opportunity to selectively consolidate smaller providers and win new outsourced production contracts in these geographic markets. Once we have an established position in a geographic market with our core service offering, often through the acquisition of a successful regional or local player, we are able to further leverage the NEP platform with bolt-on acquisitions. This strategy has been successful over the past decade for NEP in the United States, and we intend to apply the same approach to international markets that are more highly-fragmented today. These acquisitions are typically similar in return and risk profile to organic growth through new signed contracts, while also offering the opportunity for increased utilization and cost synergies. We are also able to leverage our existing operations to drive organic growth opportunities with both new and existing clients. For example, following our acquisition of Australia-based GTV which brought new host broadcasting capabilities to NEP, we were able to roll-out these services beyond the Australia market in 2014, most notably with the Commonwealth Games. In addition, we have been able to utilize high profile global events, such as the Olympic Games and Wimbledon, to raise our profile and establish new client relationships in our existing geographies. Develop complementary products and services to increase our penetration with existing clients We continually evaluate opportunities to serve our clients additional or adjacent production needs, organically or through acquisitions. These offerings may include lighting and audio solutions for live events, rigging infrastructure for stage productions, operations and logistics management and various other play-out and feed monitoring services. Many of these services are complementary to our existing technical solutions, allowing us to provide a more comprehensive set of services to our existing clients. We seek to leverage our existing expertise and service offerings to further penetrate our clients organizations and capture a greater share of their rapidly evolving production needs. We are in a strong position to evaluate the demand characteristics and overall adoption potential of adjacent service offerings given the depth to which we are integrated into our clients production workflow. Continue to invest in human capital and client-driven service offerings to further sustain and enhance our leadership position We believe that we have the most experienced live and broadcast event production engineering team in the industry. We seek to be the employer-of-choice for highly-skilled technical and engineering experts, who are integral to delivering superior services to our clients. We have made, and will continue to make, significant investments in the development of comprehensive technical solutions in the areas of broadcast, live events and other value-added services. As content delivery standards in our industry advance, we are focused on ensuring our portfolio of services delivers the greatest value for our clients, enabling us to grow with them as their production needs expand. We believe that our innovative capabilities are vital to maintaining our long-term relationships with our clients as well as developing new opportunities. Across all of our operations, we remain committed to hiring, training and retaining the industry s most skilled engineers to strengthen and expand our offerings, delivering innovative solutions for our clients. Table of Contents Recent Developments Consolidated Media Industries Acquisition On July 8, 2015, we entered into a definitive agreement to acquire Consolidated Media Industries B.V. ( CMI ). Headquartered in the Netherlands, CMI operates both the DutchView and Infostrada Creative Technologies brands. DutchView is one of the leading providers of solutions for remote production and studio production in Northern Europe. Infostrada Creative Technologies is an innovative provider of solutions for the creation, management and distribution of video content. The acquisition is expected to expand our reach in Northern Europe and add extensive video and media management solutions to our offerings. The aggregate purchase price for CMI is expected to be approximately 92.0 million EUR, or $101.9 million (based on currency exchange rates as of July 8, 2015), in cash consideration and the assumption of CMI s existing debt. The purchase price will be subject to certain adjustment between the date of signing and the closing of the transaction. The acquisition is expected to close in the third quarter of 2015, subject to certain closing conditions. We intend to use cash on hand and borrowings under our revolving credit facility to fund a portion of the CMI acquisition price. See Use of Proceeds. Mediatec Acquisition On April 29, 2015, we closed the acquisition of Mediatec, a leading outsourced production services provider in the Nordic and DACH countries, with headquarters in Sweden. This acquisition provides NEP with an established presence in the Nordic and DACH countries from which to grow its remote production and studio production service offerings, as well as complement the existing video display service offering under Faber. The aggregate purchase price for Mediatec was approximately 696.4 million SEK, or $81.0 million (based on currency exchange rates as of April 29, 2015), in cash consideration and included the assumption of Mediatec s existing debt of approximately 408.8 million SEK, or $47.5 million. Outside Broadcast Acquisition On April 29, 2015, we closed the acquisition of Outside Broadcast, a leading outsourced production services provider in Belgium. This acquisition provides NEP with an established presence in Continental Europe from which to grow its remote production and studio production service offerings. The aggregate purchase price for Outside Broadcast was approximately 10.6 million EUR, or $11.5 million (based on currency exchange rates as of April 29, 2015). In connection with the Outside Broadcast acquisition, we assumed debt of approximately 10.3 million EUR, or $11.2 million. The debt balance is comprised of outstanding loans, including a line of credit and capital leases with third party financial institutions. The aggregate purchase price for each of the Outside Broadcast and Mediatec acquisitions was funded in part by additional borrowings of $75.0 million under our second lien term loan and $25.0 million in proceeds from the issuance of 1,750,002 shares of our common stock to certain of our existing stockholders. On April 30, 2015, we also issued 237,306 shares of our common stock to certain members of management and other accredited investors of Mediatec and Outside Broadcast. See Capitalization. Preliminary Estimates of Selected Second Quarter 2015 Financial Information We are in the process of preparing our consolidated financial statements for the quarter ended June 30, 2015. The following are the preliminary estimates of the financial information listed below for the three months and six months ended June 30, 2015. Table of Contents Total revenue is expected to be in the range of $141.4 million to $147.4 million for the three months ended June 30, 2015, compared to $117.7 million of total revenue for the three months ended June 30, 2014. Total revenue is expected to be in the range of $244.5 million to $250.5 million for the six months ended June 30, 2015, compared to $212.9 million of total revenue for the six months ended June 30, 2014. Net loss is expected to be in the range of $14.3 million to $11.3 million for the three months ended June 30, 2015, compared to $0.9 million of net income for the three months ended June 30, 2014. Net loss is expected to be in the range of $50.2 million to $47.2 million for the six months ended June 30, 2015, compared to $9.8 million of net loss for the six months ended June 30, 2014. Adjusted EBITDA for the three months ended June 30, 2015 is expected to be between $43.0 million and $46.0 million compared to $42.4 million for the three months ended June 30, 2014. Adjusted EBITDA for the six months ended June 30, 2015 is expected to be between $75.1 million and $78.1 million compared to $69.4 million for the six months ended June 30, 2014 (see next page for a reconciliation of estimated Adjusted EBITDA to estimated net income, the most directly comparable measure calculated in accordance with generally accepted accounting principles ( GAAP )). The estimated increase in our Adjusted EBITDA for the three and six months ended June 30, 2015 as compared to the prior year period is based on the accretive results of the acquisitions of MIRA, Faber, Screen Scene Group, Mediatec and Outside Broadcast, partially offset by a decrease due to the coverage of the 2014 Winter Olympic games, which positively impacted the prior year, and lower foreign currency exchange rates year over year. Capital expenditures are expected to be in the range of $24.8 million to $28.8 million for the three months ended June 30, 2015, compared to $15.0 million of capital expenditures for the three months ended June 30, 2014. Capital expenditures are expected to be in the range of $61.0 million to $65.0 million for the six months ended June 30, 2015, compared to $46.3 million of capital expenditures for the six months ended June 30, 2014. The preliminary financial information above has been prepared on a basis substantially consistent with our consolidated financial statements included elsewhere in this prospectus and in good faith based upon our internal reporting as of and for the three months ended June 30, 2015. These estimated ranges are preliminary and unaudited and are thus inherently uncertain and subject to change as we complete our financial closing procedures for the three months ended June 30, 2015. In particular, depreciation and amortization expense for the three months ended June 30, 2015 includes estimates related to the acquired fair market values of the Mediatec and Outside Broadcast acquisitions, which were recently completed. These estimates are preliminary pending the completion of fixed asset and intangible valuations which are in progress. Actual results may differ materially from the estimated preliminary financial information above. Our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to the preliminary financial information presented above. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect to this information. Our consolidated financial statements and related notes as of and for the three months ended June 30, 2015 are not expected to be filed with the SEC until after this offering is completed. Table of Contents The following table shows the reconciliation of net income (loss) to Adjusted EBITDA for the three months and six months ended June 30, 2014 along with the estimated range for the three and six months ended June 30, 2015. The line items in the table for the three months and six months ended June 30, 2015 are estimates and are subject to the qualifications set forth above: ($ in millions) Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Low High Low High Net income (loss) $ (14.3 ) $ (11.3 ) $ (50.2 ) $ (47.2 ) $ 0.9 $ (9.8 ) Adjustments: Interest Expense 14.1 14.1 26.0 26.0 10.6 20.9 Depreciation and amortization 41.5 41.5 78.4 78.4 32.5 62.7 Income tax expense (benefit) 0.2 0.2 5.1 5.1 (0.9 ) (4.1 ) Stock-based compensation 0.6 0.6 1.1 1.1 0.5 1.0 Acquisition activity expenses 3.2 3.2 6.0 6.0 0.7 1.7 Write off of unamortized debt issuance costs 0.7 0.7 0.7 0.7 0.5 Other income (8.0 ) (8.0 ) (9.6 ) (9.6 ) (3.7 ) (6.5 ) Other expense 5.1 5.1 17.8 17.8 1.7 2.4 Miscellaneous expenses (income) (0.1 ) (0.1 ) (0.2 ) (0.2 ) 0.2 0.7 Adjusted EBITDA $ 43.0 $ 46.0 $ 75.1 $ 78.1 $ 42.4 $ 69.4 Our Equity Sponsor Founded in 2004, Crestview Partners is a value-oriented private equity firm focused on the middle market. The firm is based in New York and manages funds with over $7 billion of aggregate capital commitments. The firm is led by a group of partners who have complementary experience and distinguished backgrounds in private equity, finance, operations and management. Crestview s senior investment professionals primarily focus on sourcing and managing investments in each of the specialty areas of the firm: media, energy, financial services, healthcare and industrials. As used in this prospectus, Crestview Partners or Crestview refers to Crestview Advisors, L.L.C., a registered investment adviser to private equity funds, including funds affiliated with Crestview Partners II GP, L.P., which, following this offering, will continue to be our controlling stockholder as the owner of approximately 57.2% of our common stock (or approximately 54.4% if the underwriters exercise their option to purchase additional shares in full). Crestview Partners II GP, L.P. has indicated that it or its affiliates may purchase in this offering up to $20.8 million, or up to approximately 1,300,000 (based on the midpoint of the price range set forth on the cover page of this prospectus), of shares of our common stock at the same price as the price paid by the underwriters in this offering, in which case they would directly own, upon completion of the offering, approximately 60.6% of our common stock.
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+PROSPECTUS SUMMARY. The Company Our Business Lockbox Link, Inc is a development stage company that intends to specialize in providing real estate agents in the United States the opportunity to increase customer satisfaction, improve productivity, and ensure business continuity by offering the agents' clients a simplified, secure, and predictable home buying process. The company s intended product is a cloud based software solution (SaaS) that is being developed to provide guidance and security to all the parties who participate in the home buying/selling process via limited control access and innovative user interface. Our proposed solution "Lockbox Link", will be designed to take advantage of the structured flow and repeatability of existing real estate transaction processes. The Company has been doing business since April 10, 2014, when it was formed in the State of Nevada. We intend to provide a customizable virtual Data Room specifically designed to simplify and automate real estate transactions. We expect our software will offer its users modifiable transaction templates, allowing seamless integration into brokerages workflow. This service will be designed to be made available through a cloud-based software-based platform we have named Lockbox Link . We expect Lockbox Link to have a subscription fee of $10/month. Our initial focus will be on servicing the California market. As and when the business grows, we intend to broaden our market area to other States and eventually the entire United States. However there can be no assurance that Lockbox Link will be successfully developed, or even if developed, that the Company will be successful in marketing it. As of the date of this prospectus, we have commenced only limited operations with no revenues. Management estimates that the Company has sufficient funds to cover the cost of operating our business for the next 12 months. We may raise additional capital, by selling shares of our common stock or borrowing funds. We have no commitments from any source to provide additional funding. There can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern. We were incorporated in Nevada on April 10, 2014, as Lockbox Link, Inc. Our principal executive offices are located at 13708 Ruette Le Parc #C, Del Mar, CA 92014. Our phone number is 858-353-9199. Common stock offered by selling stockholders: 944,500 Common stock to be outstanding after the offering: 5,444,500 Offering Price Per Share $.20 (until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.)
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock. You should carefully read the entire prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. In this Prospectus, the terms "Nuts and Bolts International, Inc.," "Company," "we," "us" and "our" refer to Nuts and Bolts International, Inc. Overview Nuts and Bolts International, Inc. (the "Company"), a Nevada corporation, creates, publishes, and markets electronic books or "eBooks" sold and distributed through the internet. The Company was incorporated on August 21, 2013 to commercialize the efforts of its founder to create short, interactive, non-fiction eBooks designed as a fun, easy and fast way to learn business and hobby-related skills as well as creating fiction eBooks. In addition to fiction eBooks, the Company s non-fiction eBooks are short, do-it-yourself courses in an eBook format that use text, images, and audio to help people quickly obtain new skills or improve on existing skills. The Company intends to capitalize on a number of publishing industry innovations, including the eBook multimedia format, low price point, and online sales and delivery. The Company further intends to introduce new hobby and "do-it-yourself" eBooks under the "Nuts and Bolts" brand name, to expand its production and sales of eBooks and to address additional market segments in the future. The Company conducts its business through its wholly-owned operating subsidiary: Nuts and Bolts Publishing LLC, a North Carolina limited liability company ("NABP"). NABP conducts its business worldwide by delivering eBooks through the Internet. As of March 25, 2015, NABP, using the marketing name Nuts and Bolts Press, has published two eBooks – one was published in October 2014 and one was published in November 2014. The Company s business strategy is to take advantage of the significant growth in the market for eBooks and the relative absence of introductions of new quality brands. The US publishing market is large but fragmented, ranging from very large international media companies to authors who self- publish a single book. Where You Can Find Us The Company s principal executive office and mailing address is 929 Greenwood Circle, Cary, NC 27511. Our telephone number is (919) 633-2488 Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have elected to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. For more details regarding this exemption, see "Management s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies." The Offering Common Stock offered by selling security holders 1,437,500 shares of Common Stock. This number represents 22.33% of our current outstanding Common Stock. (1) Common Stock outstanding before the offering 6,437,500 Common Stock outstanding after the offering 6,437,500 Terms of the Offering The selling security holders will determine when and how they will sell the Common Stock offered in this prospectus. The selling security holders will sell at a fixed price of $0.10 per share until our Common Stock is quoted on the OTC Markets, and thereafter at prevailing market prices or privately negotiated prices or in transactions that are not in the public market. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to the Registration Statement or (ii) such time as all of the Common Stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Trading Market There is currently no trading market for our Common Stock. We intend to apply soon for quotation on the OTC Markets. We will require the assistance of a market-maker to apply for quotation and there is no guarantee that a market-maker will agree to assist us. Use of proceeds We are not selling any shares of the Common Stock covered by this prospectus. As such, we will not receive any of the offering proceeds from the registration of the shares of Common Stock covered by this prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See "Risk Factors" beginning on page 8. (1) Based on 6,437,500 Common Stock outstanding as of March 25, 2015. Summary of Financial Information The following summary financial data should be read in conjunction with "Management s Discussion and Analysis," "Plan of Operation" and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from August 21, 2013 (inception) through July 31, 2014 are derived from our audited financial statements and the statement of operations and balance sheet data for the six months ended January 31, 2015 are derived from our unaudited financial statements. The data set forth below should be read in conjunction with "Management s Discussion and Analysis of Financial Condition and Results of Operations," our financial statements and the related notes included in this prospectus. Statement of Operations: For the Period From August 21, 2013 (Inception) To July 31, 2014 For the Six Months Ended January 31, 2015 (unaudited) Revenues $ - - Operating expenses $ 45,277 73,198 Net Loss $ (45,277 ) (73,198 ) Net Loss per common share - Basic and Diluted $ (0.01 ) (0.01 ) Weighted Average Number of Common Shares Outstanding - Basic and Diluted 5,613,975 6,437,500 Balance Sheet Data: As of July 31, 2014 As of January 31, 2015 (unaudited) Total Assets $ 109,132 35,524 Total Current Liabilities $ 12,909 9,299 Total Stockholders' Equity $ 96,223 26,225 Total Liabilities and Stockholders Equity $ 109,132 35,524 RISK FACTORS The shares of our Common Stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose their entire amount invested in the Common Stock. Accordingly, prospective investors should carefully consider, along with other matters referred to herein, the following risk factors in evaluating our business before purchasing any Shares. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our Common Stock. Risks Related to Our Business LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT The founder of the Company began developing the concept for an eBook publishing company in early 2013. The Company was formed and began operations on August 21, 2013. Prior to that time, the Company had no operations upon which an evaluation of the Company and its prospects could be based. There can be no assurance that management of the Company will be successful in completing the Company s product development programs, implementing the corporate infrastructure to support operations at the levels called for by the Company s business plan, conclude a successful sales and marketing plan to attain significant penetration of the eBook market or that the Company will generate sufficient revenues to meet its expenses or to achieve or maintain profitability. DIFFICULTIES IN ESTABLISHING A BRAND NAME The Company s principal business strategy is to develop the Nuts and Bolts brand name as a respected brand associated with the highest quality fiction and non-fiction eBooks. The marketing of consumer products such as high-quality eBooks are highly dependent on creating favorable consumer perception through well-orchestrated marketing and advertising. The Company has little advertising experience, having expended only minimal amounts on such activities to date. The Company s competitors have significantly greater advertising resources and experience and enjoy well-established brand names. There can be no assurance that the Company s initial advertising and promotional activities will be successful in creating the desired consumer perception. OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. The audited financial statements included in the Registration Statement have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern. We have incurred significant losses since our inception. Based on our financial history since inception, in their report on our financial statements from inception through July 31, 2014, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. We have not yet started generating revenue. There can be no assurance that we will have adequate capital resources to fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be available on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern. IF WE NEED ADDITIONAL CAPITAL TO FUND OUR FUTURE OPERATIONS, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR OPERATIONS. If adequate additional financing is not available on reasonable terms, we may not be able to undertake sufficient sales and business development efforts, which may result in a negative impact to our cash flow and we would have to modify our business plans accordingly. There is no assurance that additional financing will be available to us. In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) revenue generation; (ii) our profitability; (iii) the development of similar services undertaken by our competition; (iv) the level of our investment in sales and marketing; and (v) the amount of our capital expenditures, including corporate acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs. In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our Common Stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. If we cannot obtain additional funding, we may be required to: (i) limit our expansion; (ii) limit our marketing efforts; and (iii) decrease or eliminate capital expenditures. Such reductions could materially adversely affect our business and our ability to compete. Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are favorable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to the shares being offered for resale by the selling security holders. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. TECHNOLOGY RISKS The Company is dependent on software technology for the creation of its products and on the Internet for marketing, sales and product delivery. While the software and systems used by the Company have been well adopted by hundreds of other customers, there remains risk of software failure. Because the Internet is a public network susceptible to outages, hackers, and potential cyber terrorism there is risk that technology related issues could materially affect the Company. Consumer reading habits have also changed as a result of increased Internet and Smartphone usage. Changes in consumer preferences in their use of electronic devices could adversely affect the Company. COMPETING PRODUCTS The electronic nature of eBook production makes it relatively easy for small companies and individual authors to produce their own eBooks. While editorial and content quality affect consumer purchasing decisions, the low barrier to entry for new eBook publishers could adversely affect the Company. The free information and content that is widely available on the Internet is also a source of competition that could negatively affect the Company. COMPETITION The Company has several large, well-financed competitors in the market for eBooks, each of whom enjoys strong, well-known brand names and a history of successful book launches. These companies compete directly with the Company for consumer sales. The top - companies have substantially greater capital resources, manufacturing, and sales and marketing experience than the Company and long standing brand recognition and market acceptance. See "RISK FACTORS." The Company believes, however, that the market for eBooks is growing rapidly enough to support the entry of new brands such as those offered by the Company and that the success of new independent publishers supports this position. Small publishers and self-published authors are an emerging force within the industry, making room for ventures like the Company. Our largest publicly-traded competitors include: Courier (NASDASQ: CRRC): Known primarily as one of the nation's largest book printers, Courier also publishes home and garden books, fiction and education materials. A limited number of their titles are produced as eBooks. John Wiley & Sons (NYSE: JW-A): For Dummies, Frommer's and CliffsNotes are just a few of the lines from Wiley, a publisher of reference works, textbooks and journals. Some eBooks published McGraw-Hill (NYSE: MHP): One of the world's largest producers of textbooks and other educational materials, its Standard & Poor's (S&P) unit provides indexes and credit ratings as well. Recently they launched their McGraw-Hill eBook Library, offering more than 1,000 titles to institutions around the world. Pearson (NYSE: PSO): London-based Pearson is a leading publisher of textbooks, as well as fiction and nonfiction through its Penguin Group. They have actively marketing digital products. Scholastic (NASDASQ: SCHL): New York-based Scholastic was the U.S. publisher of the phenomenally successful Harry Potter series. The leading children's book publisher has accelerated spending on digital initiatives. Lagard re (Euronext Paris: MMB): Lagard re is a French diversified media group headquartered in Paris. The firm does business in around 30 countries and is the owner of Hachette Book Group USA, the top eBook publisher in the US. PUBLISHING SHIFTS AND TRENDS The publishing industry is undergoing significant changes that the company believes will provide attractive business opportunities. Examples include the struggle of traditional publishers to find business models that effectively compete and are profitable. Consumer buying habits are changing and they are unlikely to spend hardcover book prices for moderate quality information that is available online for free. As a result, there is growing market for concise "manuals" that provide quality information at a low price point. While this industry shift can provide opportunities for the Company, the changing industry also presents risks that could adversely affect the Company materially. COST OF ADVERTISING Advertising costs are a significant percentage of Company expenses. While the Company has experience in estimating advertising costs needed to acquire new customers, it is impossible to predict these expenses with certainty. Unexpected increases in advertising costs could have a material adverse impact on the publishing industry in general and the Company in particular. DEPENDENCE ON KEY PERSONNEL AND CONTRACTORS The Company will be dependent on its sole officer, Michael Hillerbrand, for the foreseeable future. The loss of the services of Mr. Hillerbrand could have a material adverse effect on the operations and prospects of the Company. The Company will also be dependent on contract authors and illustrators. Given the nature of the Company s business, it is likely that the failure of contracted authors to meet their obligations would have a material adverse effect on the Company. Apart from its sole officer, Mr. Hillerbrand, as of the date hereof, the Company does not have any employees and does not have an employment agreement with Mr. Hillerbrand. It is contemplated that the Company may enter into employment agreements usual and customary for its industry in the future. The Company does not currently have any "key man" life insurance on Mr. Hillerbrand. ABSENCE OF DIVIDENDS The Company has paid no dividends on its capital stock to date, nor does it anticipate doing so in the foreseeable future. INDEMNIFICATION AND LIMITATION OF LIABILITY The Company s Certificate of Incorporation and By-Laws include provisions that eliminate the personal liability of the directors of the Company for monetary damages to the fullest extent possible under the laws of the State of Nevada or other applicable law. These provisions eliminate the liability of directors to the Company and its stockholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Nevada law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit. These provisions do not affect a director s liabilities under the federal securities laws or the recovery of damages by third parties. POTENTIAL RISKS OF LOW-PRICED STOCKS If the Company is not successful in listing its Common Stock for trading on the Bulletin Board and if the price per share of the Common Stock on the Electronic Bulletin were to fall below $5 per share, the Common Stock would most likely come within the definition of "penny stock," as contained in certain rules and regulations of the SEC. Under those regulations, any broker-dealer seeking to effect a transaction in a penny stock not otherwise exempt from the rules must first deliver to the potential customer a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salespersons in the transaction and monthly account statements showing the market value of each penny stock held in the customer s account. This information must be given to the customer orally or in writing before the transaction and in writing before or with delivery of the customer s confirmation of the transaction. Under the penny stock rules, the broker-dealer must make a special determination of the suitability of the suggested investment for the individual customer and must receive the customer s written consent to the transaction. If the Common Stock were to come within the penny stock rules, it could have the effect of limiting the trading market for the Common Stock and the ability of purchasers in this Offering to sell their stock in the market. If the trading market for the Shares were so limited, the adverse effect on the liquidity of the Shares could have the effect of materially increasing the risks of an investment in the Shares. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. If we raise additional capital subsequent to this offering through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, we may also have to issue securities that may have rights, preferences and privileges senior to our Common Stock. In the event we seek to raise additional capital through the issuance of debt or its equivalents, this will result in increased interest expense. UNCERTAINTY OF PROFITABILITY Our profitability will depend upon our success at accomplishing the following tasks: implementing and executing our business model; establishing name recognition and a reputation for value; and developing sound business relationships with key strategic partners, and hiring and retaining skilled employees. Additionally, our revenues and operating results may vary significantly from quarter-to-quarter due to a number of factors, including: economic conditions generally, as well as those specific to the eBook industry; and our ability to access capital as needed, on terms which are fair and reasonable to the Company. MANAGEMENT OF GROWTH Successful expansion of our business will depend on our ability to effectively attract and manage staff, strategic business relationships, and shareholders. Expansion has the potential to place significant strains on financial, management, and operational resources, yet failure to expand will inhibit our profitability goals. WE ARE ENTERING A POTENTIALLY HIGHLY COMPETITIVE MARKET The market for the creation and distribution of eBooks such as those created and distributed by the Company has several large, well-financed competitors with long-standing brand recognition. These companies compete with the Company for sales to consumers. The Company believes that the rapidly expanding market for eBook sales has created room for new competitors such as the Company but there can be no assurance that the Company s competitors will not be able to use their financial and other advantages in competing in price or in creating new eBook topics and formats, resulting in material adverse effects on the business of the Company. CONFLICTS OF INTEREST The Company s principal executive officers and directors also control a majority of the outstanding shares of the Company s stock, and will continue to do so for the foreseeable future. As a result, no other persons can or will be able to effect any Company action except with the consent of these officers and directors, and in certain matters (such as compensation, incentive stock ownership, and continues employment), there may be an inherent conflict of interest unless such persons agree to abstain from voting on such matters, which they are not legally required to do. Our officers and directors may also serve as officers and directors of other entities that are not affiliated with us. Such non-affiliates may be involved in similar business enterprises to ours. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect these costs to be approximately $25,000 per year. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors (the "Board") or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. WE ARE AN "EMERGING GROWTH COMPANY," AND ANY DECISION ON OUR PART TO COMPLY ONLY WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO "EMERGING GROWTH COMPANIES" COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. We are an "emerging growth company," as defined in the JOBS Act, and, for as long as we continue to be an "emerging growth company," we expect and fully intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to opt in to the extended transition period for complying with the revised accounting standards. We have elected to rely on these exemptions and reduced disclosure requirements applicable to "emerging growth companies" and expect to continue to do so. THE JOBS ACT ALLOWS US TO DELAY THE ADOPTION OF NEW OR REVISED ACCOUNTING STANDARDS THAT HAVE DIFFERENT EFFECTIVE DATES FOR PUBLIC AND PRIVATE COMPANIES. Since we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act, this election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. OUR SHARES OF COMMON STOCK WILL NOT BE REGISTERED UNDER THE EXCHANGE ACT AND AS A RESULT WE WILL HAVE LIMITED REPORTING DUTIES WHICH COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. Our shares of Common Stock are not registered under the Exchange Act. As a result, we will not be subject to the federal proxy rules and our directors, executive officers and 10% beneficial holders will not be subject to Section 16 of the Exchange Act. In additional our reporting obligations under Section 15(d) of the Exchange Act may be suspended automatically if we have fewer than 300 shareholders of record on the first day of our fiscal year. Our common shares are not registered under the Securities Exchange Act of 1934, as amended, and we do not intend to register our shares of Common Stock under the Exchange Act for the foreseeable future, provided that, we will register our shares of Common Stock under the Exchange Act if we have, after the last day of our fiscal year, more than either (i) 2000 persons; or (ii) 500 shareholders of record who are not accredited investors, in accordance with Section 12(g) of the Exchange Act. As a result, although, upon the effectiveness of the Registration Statement of which this prospectus forms a part, we will be required to file annual, quarterly, and current reports pursuant to Section 15(d) of the Exchange Act, as long as our shares of Common Stock are not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the Securities and Exchange Commission a proxy statement and form of proxy complying with the proxy rules. In addition, so long as our shares of Common Stock are not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding shares of Common Stock will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directors, and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of shares of Common Stock and other equity securities, on Forms 3, 4 and 5, respectively. Such information about our directors, executive officers, and beneficial holders will only be available through this (and any subsequent) Registration Statement, and periodic reports we file thereunder. Furthermore, so long as our shares of Common Stock are not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations. BECAUSE OUR COMMON STOCK IS NOT REGISTERED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OUR REPORTING OBLIGATIONS UNDER SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, MAY BE SUSPENDED AUTOMATICALLY IF WE HAVE FEWER THAN 300 SHAREHOLDERS OF RECORD ON THE FIRST DAY OF OUR FISCAL YEAR. Our Common Stock is not registered under the Exchange Act, and we do not intend to register our Common Stock under the Exchange Act for the foreseeable future (provided that, we will register our Common Stock under the Exchange Act if we have, after the last day of our fiscal year, $10,000,000 in total assets and either more than 2,000 shareholders of record or 500 shareholders of record who are not accredited investors (as such term is defined by the Securities and Exchange Commission), in accordance with Section 12(g) of the Exchange Act). As long as our Common Stock is not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations. OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. The Company s Certificate of Incorporation and By-Laws include provisions that eliminate the personal liability of the directors of the Company for monetary damages to the fullest extent possible under the laws of the State of Nevada or other applicable law. These provisions eliminate the liability of directors to the Company and its stockholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Nevada law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit. These provisions do not affect a director s liabilities under the federal securities laws or the recovery of damages by third parties. REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT AND COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002, INCLUDING ESTABLISHING AND MAINTAINING ACCEPTABLE INTERNAL CONTROLS OVER FINANCIAL REPORTING, ARE COSTLY AND MAY INCREASE SUBSTANTIALLY. The rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") requires, among other things, that we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor confidence and a decline in our share price. As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an "emerging growth company." The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. We are working with our legal, accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, we anticipate that the expenses that will be required in order to adequately prepare for being a public company could be material. We estimate that the aggregate cost of increased legal services; accounting and audit functions; personnel, such as a chief financial officer familiar with the obligations of public company reporting; consultants to design and implement internal controls; and financial printing alone could be several hundred thousand dollars per year. In addition, if and when we retain independent directors and/or add senior management, we may incur additional expenses related to director compensation and/or premiums for directors and officers liability insurance, the costs of which we cannot estimate at this time. We may also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate at this time. However, these additional expenses individually, or in the aggregate, may also be material. In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors and officers liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board, our Board committees or as executive officers. The increased costs associated with operating as a public company may decrease our net income or increase our net loss, and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these requirements divert our management s attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. THE COMPANY MAY BE SUBJECT TO LITIGATION IN THE FUTURE WHICH COULD IMPACT THE FINANCIAL HEALTH OF THE COMPANY. Currently there are no legal proceedings pending or threatened against the Company. However, from time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Risks Related to Our Common Stock THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading marketing for our Common Stock and there can be no assurance that one will ever develop. Market liquidity will depend on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. As a result, holders of our securities may not find purchasers for our securities should they to sell securities held by them. Consequently, our securities should be purchased only by investors having no need for liquidity in their investment and who can hold our securities for an indefinite period of time. WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect to pay any dividends in the foreseeable future, but will review this policy as circumstances dictate. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.10 per share for the shares of common stock was determined based on the price of our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. We may be subject now and in the future to the SEC s "penny stock" rules if our shares of Common Stock sell below $5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer s confirmation. In addition, the penny stock rules require that prior to a transaction, the broker dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our Common Stock. As long as our shares of Common Stock are subject to the penny stock rules, the holders of such shares of Common Stock may find it more difficult to sell their securities. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information contained in this Registration Statement includes forward-looking statements. The statements herein which are not historical reflect our current expectations and projections about the Company s future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to the Company and its management and management s interpretation of what is believed to be significant factors affecting the business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things, (i) our projected sales and profitability; (ii) our growth strategies; (iii) anticipated trends in our industry; (iv) our future financing plans; and (v) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words "will," "shall," "may," "should," "expect," "anticipate," "estimate," "believe," "intend," "plan," or "project" or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition, prospects and opportunities could differ materially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including the ability to raise sufficient capital to continue the Company s operations. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Registration Statement generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Registration Statement will in fact occur. Prospective investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. The specific discussions herein about the Company include financial projections and future estimates and expectations about the Company s business. The projections, estimates and expectations are presented in this Registration Statement only as a guide about future possibilities and do not represent actual amounts or assured events. All the projections and estimates are based exclusively on the sole officer of the Company s own assessment of its business, the industry in which it works and the economy at large and other operational factors, including capital resources and liquidity, financial condition, fulfillment of contracts and opportunities. The actual results may differ significantly from the projections. Prospective investors should not make an investment decision based solely on the Company s projections, estimates or expectations. Use of Proceeds We will not receive any proceeds from the sale of Common Stock by the selling security holders. All of the net proceeds from the sale of our Common Stock will go to the selling security holders as described below in the sections entitled "Selling Security Holders" and "Plan of Distribution". We have agreed to bear the expenses relating to the registration of the Common Stock for the selling security holders. Determination of Offering Price Since our Common Stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of Common Stock was determined by the price of the Common Stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our Common Stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The implied aggregate value of our outstanding shares after this offering is $643,750. Our total stockholders equity as of our most recent balance sheet dated January 31, 2015 (unaudited) is $26,225. Although our Common Stock is not listed on a public exchange, we will be filing to obtain a quotation on the OTC Markets concurrently with the filing of this prospectus. In order to be quoted on the OTC Markets, a market maker must file an application on our behalf in order to make a market for our Common Stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Markets, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our Common Stock will trade at market prices in excess of the initial offering price as prices for the Common Stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. Dilution The Common Stock to be sold by the selling security holders as provided in the "Selling Security Holders" section is Common Stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. Selling Security Holders The shares of Common Stock being offered for resale by the selling security holders consist of 1,437,500 shares of our Common Stock held by no more than 35 unaccredited shareholders. These shares were sold in our private offering pursuant to Regulation D Rule 506 sold through July 31, 2014 at an offering price of $0.10 per share (the "Private Offering"). The following table sets forth the names of the selling security holders, the number of shares of Common Stock beneficially owned by each of the selling stockholders as of March 25, 2015 and the number of shares of Common Stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior to Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering Jeannene Alt 2,500 2,500 0 0% Jeffrey Alt 2,500 2,500 0 0% Anne L. Beaurline 20,000 20,000 0 0% William Robert Bizzell 2,500 2,500 0 0% Steven C. Brinkley 2,500 2,500 0 0% David Campbell 50,000 50,000 0 0% Tammy P. Campbell 50,000 50,000 0 0% Pat Catizone 50,000 50,000 0 CC3 Holdings, LLC (1) 5,000 5,000 0 0% James Coker 200,000 200,000 0 0% Peggy Lee Coker 20,000 20,000 0 0% Hubert O. Davis, Jr. 2,500 2,500 0 0% Dina Dunn 2,500 2,500 0 0% William M. Geist 2,500 2,500 0 0% Jerry W. Harrelson 10,000 10,000 0 0% Hans J. Hillerbrand 50,000 50,000 0 0% Thomas R. Hunter 30,000 30,000 0 0% Diana T. Johnson 100,000 100,000 0 0% James A. Johnson 100,000 100,000 0 0% Deborah Lovig 2,500 2,500 0 0% Catherine LoVullo 5,000 5,000 0 0% Joseph LoVullo 5,000 5,000 0 0% Thomas A. Lund 200,000 200,000 0 0% Marc Allan Mason 5,000 5,000 0 0% Sara Moran 20,000 20,000 0 0% James M. O Connell 25,000 25,000 0 0% Ohio Blasting Equipment & Media, Inc. (2) 5,000 5,000 0 0% Kathleen N. Patten 40,000 40,000 0 0% Irv Pyun 2,500 2,500 0 0% Lawrence Richard 150,000 150,000 0 0% Mary C. Rice 20,000 20,000 0 0% Douglas L. Snodgrass 50,000 50,000 0 0% Priscilla Snodgrass 50,000 50,000 0 0% Denis M. Snyder 100,000 100,000 0 0% Bryan Christopher Solomon 2,000 2,000 0 0% James Andrew Solomon 2,000 2,000 0 0% James Michael Solomon 4,000 4,000 0 0% Jeffrey Michael Solomon 2,000 2,000 0 0% The Turner Family Grantor Trust (3) 30,000 30,000 0 0% Edward Williams 5,000 5,000 0 0% John Williams 10,000 10,000 0 0% Total 1,437,500 1,437,500 0 0% (1) James Cunningham III has sole voting and investment control with respect to the shares offered by CC3 Holdings, LLC. (2) William Witt has sole voting and investment control with respect to the shares offered by Ohio Blasting Equipment & Media, Inc. (3) Jonathan F. Turner is the sole trustee of the Turner Family Grantor Trust and has sole voting and investment control with respect to the shares offered by Turner Family Grantor Trust. There are no agreements between the company and any selling security holder pursuant to which the shares subject to this Registration Statement were issued. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.10 per share until our shares are quoted on the OTC Markets and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Markets, shareholders may sell their shares in private transactions to other individuals. Although our Common Stock is not listed on a public exchange, we will be filing to obtain a quotation on the OTC Markets concurrently with the filing of this prospectus. In order to be quoted on the OTC Markets, a market maker must file an application on our behalf in order to make a market for our Common Stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Markets, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.10 until a market develops for the stock. Once a market has developed for our Common Stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales, transactions involving cross or block trades on any securities or market where our Common Stock is trading, market where our Common Stock is trading, through direct sales to purchasers or sales effected through agents, through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or any combination of the foregoing. In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. None of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $30,000. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Description of Securities to be Registered General We are authorized to issue an aggregate number of 110,000,000 shares of capital stock, of which 100,000,000 shares are Common Stock, $0.0001 par value per share, and 10,000,000 shares are preferred stock, par value of $0.0001 per share. Common Stock We are authorized to issue 100,000,000 shares of Common Stock, $0.0001 par value per share. Currently we have 6,437,500 shares of Common Stock issued and outstanding. Each share of Common Stock shall have one (1) vote per share for all purpose. Our Common Stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our Common Stock holders are not entitled to cumulative voting for election of our Board. Preferred Stock We are authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value per share. Currently, no shares of our preferred stock have been designated any rights and we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar The Company is currently acting as its own transfer agent. Interests of Named Experts and Counsel No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. Szaferman, Lakind, Blumstein & Blader, P.C. will pass on the validity of the common stock being offered pursuant to this registration statement. The financial statements for the period ended July 31, 2014 included in this prospectus and the Registration Statement have been audited by Liggett, Vogt & Webb, P.A, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Information about the Registrant DESCRIPTION OF THE BUSINESS Overview The Company was established on August 21, 2013 to publish eBooks under the Nuts and Bolts brand name. Earlier in 2013, the Company s founder began developing the concept for an eBook publisher that would produce products that would appeal to tablet and Smartphone users who were eager to learn more about their hobbies and interests. The family of our founder, President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Director, Michael Hillerbrand, includes numerous published authors and professional educators. Mr. Hillerbrand, our sole officer, believes the increased popularity of eBooks in the United States is due to certain industry and social trends that should continue for at least the next few years. The Company believes that the principal changes that have contributed to growth in the eBook market are (1) the emergence of eBook readers, tablet computers and Smartphones that make reading eBooks more convenient than a traditional print book, (2) the low cost of production and distribution of eBooks, and (3) the continued consumer interest in consuming media electronically rather than in the traditional print format. The Company conducts its business through its wholly-owned operating subsidiary NABP which conducts its business worldwide by delivering eBooks through the Internet. As of March 25, 2015, NABP, using the marketing name Nuts and Bolts Press, has published two eBooks – one was published in October 2014 and one was published in November 2014. The Company s strategy is to publish new titles on a regular basis, increasing output each year of operation. As the eBook catalog increases in size, brand awareness and profit margins are projected to increase. Titles will be carefully researched based on consumer search engine topic queries and eBook content will be specifically tailored to match high consumer interests. Formats will be tested to ensure learning effectiveness and positive consumer reception. The eBook electronic format will facilitate easy, low-cost updates and format changes. The eBook creation process starts with market research. This research consists of identifying the categories of current "best sellers" published by other companies and identifying topics in market niches that have a high number of Google and Bing searches, but where such searches result in limited competitive advertising for books. Both of these market research methods are good indicators of potentially profitable eBook titles. The next step in developing eBook titles is to rank this list of potential titles/topics by potential profitability. The ranking order of titles is dynamic and is revised as new topics are identified. Periodically the top titles are moved off the potential title list and put on the production list. Even when a title is published, development is ongoing. Because the eBooks are published electronically, they can be easily modified. If an existing eBook title is not meeting sales expectations, it can be edited, combined with other titles, or re-titled. Edits can be made to enhance the quality of the titles or to add new material. The creation of new titles can range in the time required, depending on familiarity the author has with the subject matter and whether the title is derived from a print book in the public domain or is an original work of the author. Original works on topics unfamiliar to the author take the longest amount of time to produce. The shortest time frame from conception to publication would be about four weeks and the longest could be six months to a year or more. The Company is focused on the titles that have the highest sales potential and the shortest turnaround time to publication. The Company s previously released titles are being reproduced in a multi-media format and are scheduled for release in the second quarter of calendar year 2015. In addition, there are two new titles scheduled to be released in multi-media format in the third quarter of calendar year 2015. Mr. Hillerbrand is expected to produce all of the Company s eBook titles until the Company achieves positive cash flow. Thereafter, the writing of new eBooks will be contracted out to other authors, and Mr. Hillerbrand will provide editorial services for these publications. Products eBooks are a collection of text and formatting files that when viewed using eReader software produce a book-like reading experience. There are several formats of eBooks including the Apple, Inc. (NASDAQ symbol "APPL") iBooks and Amazon.com, Inc. s (NASDAQ symbol: "AMZN") Kindle format. In addition to the preceding proprietary eBook formats there is also the open EPUB eBook standard. Most eBook electronic reading devices (e.g. Amazon Kindle) use a single eReader software program. As a result, eBook publishers typically publish their books in all three formats. While most basic features are shared by all eReader software, there are exceptions. For example, video imbedded into eBooks is currently only supported by the Apple iBook format and EPUB 3 standard. The Company s books are designed to be published in all three eBook formats from a single Master File. The Company s eBooks will be standardized to a shorter length (less than 100 pages), a common number of chapters, and consistent fonts and book layout. In addition to the Company s fiction eBooks, the reading style, information presentation and learning approach will also be consistent for all of the Company s non-fiction eBooks. Because the Company s non-fiction eBooks are specifically designed to facilitate learning of new skills, well accepted pedagogic principles will be incorporated into each book. Information flow, image use and lesson question will be used to maximize reader enjoyment and to enhance new skill acquisition. The electronic eBook format facilitates interactive learning not available in traditional print books or manuals. The creation of new books follows a pre-defined process. The Company decides on titles and topics it wishes to add to the Company catalog. Titles are then assigned to either in-house or contract authors. To keep production costs low, contract authors are primarily used, being compensated by a royalty percentage based on book sales. Some books are authored by in-house staff, who produce new books according to Company production quotas. After the book has been thoroughly reviewed by in-house editorial staff, the book is placed on the Company s website and made available for purchase. Sales and Marketing The Company intends to use its website as the center of its marketing, sales and product delivery activities. The website will include an online catalog and eCommerce functionality where customers can purchase eBooks online and download purchased products. The website will include eBook descriptions, articles and/or blog posts covering the same topics as in the eBooks. The Company intends to optimize the website s content to optimize search engine rankings. The website s content will be designed to attract potential customers to the Company website. The Company will establish credibility as an authority on a given topic by providing some free information on the topic. The low price point for additional information included in the eBook is designed to make buying the eBook attractive. A key part of the Company s selling proposition is that it is much more efficient to purchase the company s eBooks than to search for free information of questionable quality and accuracy. Customer convenience will be a key selling point. In addition to "organic" search engine referrals to the Company website, the Company will purchase search based "pay per click" advertising to drive traffic to its website. Advertisement headlines and website landing pages will be tested for effectiveness using state-of-the art analytical tools, including Google Analytics. Display advertising on websites related to a particular eBook will also be evaluated. Social networking sites centered on the particular skill or hobby covered in the eBook will be identified for potential marketing opportunities. Because the Company will position its products as leaders in the electronic DIY segment, identifying effective marketing channels is not anticipated to be a problem. The Company s eBooks are sold individually, in multi-book "packages," and on a "club subscription" basis. Individual eBooks are priced below $10.00. eBook packages of multiple books are offered with a promotional discount. Club Subscriptions will allow the customers to download any of the eBooks in the catalog for a renewable annual subscription fee. In addition to the Company s fiction eBooks, the Company s non-fiction eBooks essentially function as short, do-it-yourself courses in an eBook format that use test, images, and audio to help people quickly obtain skills for work or hobbies. The eBooks encompass the key attributes of multimedia format, low price point, and online sales and delivery, increasing potential for success. Employees Apart from its sole officer, Mr. Hillerbrand, the Company currently has no employees. DESCRIPTION OF PROPERTY The primary residence of our sole officer, Mr. Hillerbrand, consists of a house and a separate building on the same property. Our office is in the non-house building. We do not pay any rent to Mr. Hillerbrand for the use of this building. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims against the Company. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTC Markets upon the effectiveness of the Registration Statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTC Markets or, if quoted, that a public market will materialize. Holders of Capital Stock As of the date of this Registration Statement, we had 42 holders of our common stock. Rule 144 Shares As of the date of this Registration Statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants We do not have a stock option plan in place and have not granted any stock options at this time. NUTS AND BOLTS INTERNATIONAL, INC. & SUBSIDIARY FINANCIAL STATEMENTS TABLE OF CONTENTS Audited financial statements as of July 31, 2014 and for the period from August 21, 2013 (Inception) through July 31, 2014 PAGE F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PAGE F-2 CONSOLIDATED BALANCE SHEET AS OF JULY 31, 2014. PAGE F-3 CONSOLIDATED STATEMENT OF OPERATIONS FOR PERIOD FROM AUGUST 21, 2013 (INCEPTION) TO JULY 31, 2014 PAGE F-4 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) FOR THE PERIOD FROM AUGUST 21, 2013 (INCEPTION) TO JULY 31, 2014 PAGE F-5 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM AUGUST 21, 2013 (INCEPTION) TO JULY 31, 2014 PAGES F-6 – F-11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. Unaudited financial statements as of October 31, 2014 and for the six months ended January 31, 2015 PAGE F-12 CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JANUARY 31, 2015 AND JULY 31, 2014 (unaudited) PAGE F-13 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED JANUARY 31, 2015 AND FOR THE PERIOD AUGUST 21, 2013 TO JANUARY 31, 2014 (unaudited) PAGE F-14 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) FOR THE PERIOD AUGUST 21, 2013 TO JANUARY 31, 2015 (unaudited) PAGE F-15 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2015 AND FOR THE PERIOD AUGUST 21, 2013 TO JANUARY 31, 2014 (unaudited) PAGES F-16 – F-19 NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Overview The Company was established on August 21, 2013 to publish fiction eBooks and "life enriching" non-fiction eBooks under the Nuts and Bolts brand name. Earlier in 2013, the Company s founder began developing the concept for an eBook publisher that would produce products that would appeal to tablet and Smartphone users who were eager to learn more about their hobbies and interests. The family of our founder, President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Director, Michael Hillerbrand, includes numerous published authors and professional educators. The Company s business strategy is to take advantage of the significant growth in the market for eBooks and the relative absence of introductions of new quality brands. The US publishing market is large but is fragmented, ranging from very large international media companies to authors who self- publish a single book. Mr. Hillerbrand, our sole officer, believes the increased popularity of eBooks in the United States is due to certain industry and social trends that should continue for at least the next few years. The Company believes that the principal changes that have contributed to growth in the eBook market are (1) the emergence of eBook readers, tablet computers and Smartphones that make reading eBooks more convenient than a traditional print book, (2) the low cost of production and distribution of eBooks, and (3) the continued consumer interest in consuming media electronically rather than in the traditional print format. Plan of Operation The Company s strategy is to publish new titles on a regular basis, increasing output each year of operation. The Company currently has three books in its catalog. These are in the business "How To" category and humor category and are available for purchase on the Company s website: www.nutsandboltspress.com. As the eBook catalog increases in size, brand awareness and profit margins are projected to increase. Titles will be carefully researched based on consumer search engine topic queries and eBook content will be specifically tailored to match high consumer interests. Formats will be tested to ensure effectiveness and positive consumer reception. Given the fact that the Company is marketing its products to both mature and growing consumer markets, it is anticipated that its marketing strategy will continue to change and evolve over time. The eBook electronic format should facilitate easy, low-cost updates and format changes over time. The Company currently has $34,809 cash on hand. The cost of doing business at current revenue and expense levels is approximately $6,666/month or approximately $20,000 a calendar quarter. On March 1, 2014, the Company signed a consulting agreement with Tryon Capital Ventures, LLC ("Tryon") that pays Tryon $5,000 per month in exchange for administrative and other miscellaneous services. Tryon also may help with transactions the Company may be considering. The Company is striving to minimize the monthly cost of doing business. At the current rate of expenditure, the Company has resources to last six months or until July 1, 2015. The Company s previously released titles are being reproduced in a multi-media format and are scheduled for release in the second quarter of calendar year 2015. In addition, there are two new titles scheduled to be released in multi-media format in the third quarter of calendar year 2015. Because the Company manages eBook publications on a quarterly basis, each calendar quarter is a significant milestone. The Company plans to publish other eBooks in each quarter of the 12 months ending December 2015. The Company will make a determination at the end of the March 2015 quarter as to whether the then current publications will produce sufficient revenue to sustain operations without additional investment. If at any time it appears that the publications will not generate sufficient revenues to sustain the business for the next 12 months, then the Company will seek further equity investment with the understanding that it will likely dilute the current shareholders in the company. Liquidity, Capital Resources, and Off-Balance Sheet Arrangements At the date hereof, we have minimal cash at hand. We require additional capital to implement our business and fund our operations. Additional funding may not be available on favorable terms, if at all. The Company intends to continue to fund its business by way of equity or debt financing and advances from related parties. In the event we seek to raise additional capital through the issuance of debt or its equivalents, this will result in increased interest expense. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. We cannot assure you that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all. The Company currently has $34,809 of cash on hand. The cost of doing business at the current rate is approximately $6,666 per month. At the current rate, the Company has resources to last until July 1, 2015. If we are unable to raise capital as needed, we are required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case, you will lose all of your investment. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the names and ages of our officer and directors as of March 25, 2015. Our executive officers are elected annually by our Board. Our executive officers hold their offices until they resign, are removed by the Board, or their successor is elected and qualified. Name Age Position Michael Hillerbrand 53 President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Director Susanna Hillerbrand 26 Director Kevin Flynn 50 Director Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years. Michael Hillerbrand is the founder of Nuts and Bolts International, Inc., and has been a Director, and our sole officer, since our inception. Mr. Hillerbrand is a successful businessman and entrepreneur. He has been involved in media and marketing since 1990. He has held several senior managerial positions, including founding CEO of etrials.com (publicly traded as NASDAQ:ETWC prior to being acquired by Merge Healthcare Inc.) and President of First Madison LLC, a national merchant banking firm. His writing has been published in national publications, including Deli Business, Cheese Connoisseur, GRAZE Magazine and Culture. Mr. Hillerbrand is experienced in website design, website search engine optimization ("SEO") and online advertising. He is Google AdWords and Google Analytics certified. Mr. Hillerbrand received his MBA from the Kenan-Flagler Business School at University of North Carolina, Chapel Hill. Susanna Hillerbrand has served as a Director of the Company since our inception. Ms. Hillerbrand is currently the Business Development/Social Media Coordinator of REACH LLC based in Nashville, Tennessee. REACH is an entertainment and experiential marketing agency serving the music industry. REACH clients include Toyota, Farmers Insurance, the Country Music Association and World Vision. Prior to working at REACH, Ms. Hillerbrand was editor for ChristianConcertAlerts.com, a national Christian Concert ticket and promotions company. Prior to ChristianConcertAlerts.com, she held several positions in event management and office administration. Ms. Hillerbrand received her Bachelor of Liberal Arts degree in Communications/Media Studies from Wheaton College (Wheaton, IL) and earned an Associate in Arts degree from Wake Technical Community College. Ms. Hillerbrand is related to Mr. Michael Hillerbrand. Kevin Flynn has served as a Director of the Company since our inception. Mr. Flynn has extensive experience in management, media and entrepreneurship. Prior to graduating from Duke University in 2013 with a Masters Degree in religious Studies, Mr. Flynn worked as a real estate developer with Upper Straights Development where his projects included large residential and commercial developments. Mr. Flynn also served as Vice President of Lexington Capital (Lexington, KY), a merchant banking firm that promoted and managed large, local real-estate projects. Mr. Flynn has been actively involved in the live event management business, having promoted over 25 live events with some having attendance of over 40,000 people. In addition to a Master s degree from Duke, Mr. Flynn received a BA from William Tyndale College. TABLE OF CONTENTS PAGE Prospectus Summary 5
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+PROSPECTUS SUMMARY
+
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus:
+
+ 
+
+references in this prospectus to we, us or our company refer Stem Sales, Inc.
+
+ 
+
+references in this prospectus to currently issued and outstanding shares refer to the 1,000,000 shares of common stock currently held by our officers and directors and current shareholders;
+
+ 
+
+references in this prospectus to our management or our management team refer to our officers and directors;
+
+ 
+
+references in this prospectus to our public shares refer to shares of our common stock which are being sold as part of the primary offering (whether they are purchased in this offering) and references to public stockholders refer to the holders of our public shares, including our officers and directors and current shareholders to the extent they purchase public shares, provided that their status as public stockholders shall exist only with respect to such public shares;
+
+ 
+
+references in this prospectus to our original shareholders refer to the holders of the currently issued and outstanding shares prior to the consummation of this offering. 
+
+You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted.
+
+General
+
+We are a blank check company formed under the laws of the State of Florida on April 9, 2014. We were formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as our initial business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. To date, our efforts have been limited to organizational activities as well as activities related to this offering. We have not selected any target business on which to concentrate our search for our initial business combination.
+
+STEM is a shell company as defined in Rule 405 of the 1933 Securities Act rules. A shell company is one that has no or nominal operations and assets consisting primarily of cash or cash equivalents. As a shell company we are restricted in our use of Registrations on Form S-8; the limitations of using Rule 144 by security holders; and the lack of liquidity in our stock. Rule 144(i) Unavailability to Securities of Issuers With No or Nominal Operations and No or Nominal Non-Cash Assets provides that Rule 144 is not available for the resale of securities initially issued by an issuer that is a shell company. We have identified our company as a shell company therefore the holders of our securities may not rely on Rule 144 to have the restriction removed from their securities without registration or until the company is no longer identified as a shell company.
+
+All securities issued in connection with this offering and any other securities issued with respect to such securities, including securities issued with respect to stock splits, stock dividends or similar rights, shall be deposited directly into the trust account promptly upon issuance. The identity of the purchaser of securities shall be included on the stock certificates or other documents evidencing such securities. Securities held in the trust account are to remain as issued and deposited and shall be held for the sole benefit of the purchasers. The purchasers shall have voting rights, if any, with respect to securities held in their names as provided by applicable state law. No transfer or other disposition of securities held in the trust account or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+Pursuant to Rule 15g-8 of the 1934 Securities and Exchange Act, as amended makes it unlawful for any person to sell or offer to sell any security that is deposited and held in the trust account pursuant to Rule 419 under the Securities 
+
+I-4
+
+Table of Contents
+
+Financial Statements
+
+Act of 1933, as amended or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+
+Warrants, convertible securities or others derivative securities relating to securities held in the trust account may be exercised or converted in accordance with their terms; Provided, however, that securities received upon exercise or conversion, together with any cash or other consideration paid in connection with the exercise or conversion, are promptly deposited into the trust account.
+
+Our efforts to identify a target business will not be limited to a particular industry or geographic region. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction.
+
+If we are unable to consummate a business combination within 18 months from the effective date of the initial registration statement and a business combination has not yet been consummated within such 18-month period, we will redeem 100% of the public shares using the funds in the trust account. If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more than five business days thereafter, redeem 100% of our outstanding public shares with the funds held in the trust account and then seek to dissolve and liquidate. 
+
+Our common stock is not presently quoted on or traded on any securities exchange or automatic quotation system and we have not yet applied for quotation on any public market. We can provide no assurance that there will ever be an established pubic trading market for our common stock. If we decide to seek quotation on the OTC MARKETS, we must obtain a market maker to file an application with the Financial Industry Regulatory Authority (FINRA) on our behalf. There is a risk that we may not be able to obtain a market maker to file such an application. If a market maker does file an application on our behalf, it may take as long as nine (9) months to one (1) year to be approved by the FINRA. We may or may not seek to have a market maker file a Listing Application on our behalf.
+
+All securities issued in connection with this offering and any other securities issued with respect to such securities, including securities issued with respect to stock splits, stock dividends or similar rights, shall be deposited directly into the trust account promptly upon issuance. Securities held in the trust account are to remain as issued and deposited and shall be held for the sole benefit of the purchasers. The purchasers shall have voting rights, if any, with respect to securities held in their names as provided by applicable state law. No transfer or other disposition of securities held in the trust account or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+Pursuant to Rule 15g-8 of the 1934 Securities and Exchange Act, as amended makes it unlawful for any person to sell or offer to sell any security that is deposited and held in trust pursuant to Rule 419 under the Securities Act of 1933, as amended or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+
+The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or businesses that we acquire will have a collective fair market value in excess of 80% of the maximum offering proceeds.
+
+We currently anticipate structuring our initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to 
+
+I-5
+
+Table of Contents
+
+Financial Statements
+
+register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test.
+
+To the best of the Officers and Directors knowledge there are no pre-existing fiduciary or contractual obligations that would impact any business combination opportunity presented to us.
+
+We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act) and will remain such for up to five years. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards.
+
+Officer and Director s Shares
+
+The Officers and Director s shares are identical to the shares of common stock included in the primary offering. However, our Officers and Directors have agreed (A) to approve any proposed business combination, (B) not to propose, or vote in favor of an amendment to our certificate of incorporation prior to the consummation of such a business combination, (C) not to receive cash from the trust account in connection with any approval of a proposed initial business combination and (D) that the Officers and Director s shares shall not participate in any liquidating distribution of the trust funds upon winding up if a business combination is not consummated. 
+
+Stem Sales, Inc. was formed on April 9, 2014 under the Laws of the State of Florida. Our executive offices are located at 801 West Bay Drive, Largo, FL 33770 and our telephone number is (727) 415-9409.
+
+Rule 419 Requirements 
+
+The following are the requirements set forth under Rule 419 regarding the completion of a transaction as a blank check company. All of the requirements of Rule 419 of the Securities Act of 1933, as amended are applicable to our offering.
+
+If we engage in a registration statement offering, our securities for sale as a blank check company, or with a company that would still be considered a shell company or blank check company, will require registration subject to Rule 419 of the Securities Act of 1933, as amended (the Securities Act ). The Securities and Exchange Commission has adopted a rule (Rule 419) which defines a blank-check company as (i) a development stage company, that is (ii) offering penny stock, as defined by Rule 3a51-1, and (iii) that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies. We have filed this registration statement offering of our securities for sale before we complete a business combination with an operating company, we are considered a blank check company within the meaning of Rule 419 and any sales of the stock issued in the offering require registration under the Securities Act, furthermore, the registered securities and the proceeds from this offering subject us to Rule 419 and require the following:
+(1)
+
+Deposit and investment of proceeds 
+
+(i)
+
+All offering proceeds shall be deposited promptly into the trust account; provided, however, that no deduction may be made for underwriting commissions, underwriting expenses or dealer allowances payable to an affiliate of the registrant.
+
+I-6
+
+Table of Contents
+
+Financial Statements
+
+(ii)
+
+Deposited proceeds shall be in the form of checks, drafts, or money orders payable to the order of the or trustee.
+
+(iii)
+
+Deposited proceeds and interest or dividends thereon, if any, shall be held for the sole benefit of the purchasers of the securities.
+
+(iv)
+
+Deposited proceeds shall be invested in one of the following: 
+
+(A)
+
+An obligation that constitutes a deposit , as that term is defined in section
+
+3(l) of the Federal Deposit Insurance Act;
+
+(B)
+
+Securities of any open-end investment company registered under the Investment Company Act of 1940 that holds itself out as a money market fund meeting the conditions of paragraphs (c)(2), (c)(4) of Rule 2a-7 under the Investment Company Act: 
+
+(C)
+
+Securities that are direct obligations of, or guaranteed as to principal or interest by, the United States.
+
+(v)
+
+Interest or dividends earned on the funds, if any, shall be held in the trust account until the funds are released in accordance with the provisions of this rule. If funds held in the trust account are released to a purchaser of the securities, the purchasers shall receive interest or dividends earned, if any, on such funds up to the date of release. If funds held in the trust account are released to the registrant, interest or dividends earned on such funds up to the date of release may be released to the registrant.
+
+(vi)
+
+Under Rule 419(b)(2)(vi) the registrant may receive up to 10 percent of the proceeds remaining after payment of underwriting commissions, underwriting expenses and dealer allowances permitted by paragraph (b)(2)(i) of this rule, exclusive of interest or dividends, as those proceeds are deposited into trust account. All subscription proceeds will be placed in the trust account. None of the proceeds will be released to the registrant. The proceeds will be released only after such time as the offering has been fully completed and Trustee then receives a written request of the Company.
+
+(2)
+
+Deposit of securities. 
+
+(i)
+
+All securities issued in connection with the offering, whether or not for cash consideration, and any other securities issued with respect to such securities, including securities issued with respect to stock splits, stock dividends, or similar rights, shall be deposited directly into the trust account promptly upon issuance. The identity of the purchaser of the securities shall be included on the stock certificates or other documents evidencing such securities.
+
+(ii)
+
+Securities held in the trust account are to remain as issued and deposited and shall be held for the sole benefit of the purchasers, who shall have voting rights, if any, with respect to securities held in their names, as provided by applicable state law. No transfer or other disposition of securities held in the trust account or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+
+(iii)
+
+Warrants, convertible securities or others derivative securities relating to securities held in the trust account may be exercised or converted in accordance with their terms; Provided, however, that securities received upon exercise or conversion, together with any cash or other consideration paid in connection with the exercise or conversion, are promptly deposited into the trust account. 
+
+I-7
+
+Table of Contents
+
+Financial Statements
+
+(3)
+
+Release of deposited funds and securities. 
+
+(i)
+
+By Post-effective amendment for acquisition agreement: upon execution of an agreement(s) for the acquisition(s) of a business(es) or assets that will constitute the business (or a line of business) of the registrant and for which the fair value of the business(es) or net assets to be acquired represents at least Eighty percent (80%) of the maximum offering proceeds, including proceeds received or to be received upon the exercise or conversion of any securities offered, but excluding amounts payable to non-affiliates for underwriting commissions, underwriting expenses, and dealer allowances, the registrant shall file a post-effective amendment disclosing the entire transaction.
+
+(4)
+
+Information to Investors Regarding Acquisitions.
+
+(i)
+
+Within five days of the effective date of a post-effective amendment(s), we must send by first class mail, or other prompt means, to each purchaser of securities in trust a copy of the prospectus contained in the post-effective amendment and any amendment or supplement thereto.
+
+(ii)
+
+Each purchaser shall have no fewer than 20 business days and no more than 45 business days from the effective date of the post-effective amendment to notify the registrant in writing that the purchaser elects to remain an investor. If we have not received written notification by the 45th business day following the effective date of the post-effective amendment, funds and interest or dividends, if any, held in trust shall be sent by first class mail or other equally prompt means to the purchaser within five business days. 
+
+(iii)
+
+If we do not consummate an acquisition within 18 months from the effective date of the initial registration statement, funds in trust shall be returned by first class mail or equally prompt means to the purchaser within five business days following that date.
+
+(iv)
+
+No purchaser of our securities in this offering whose securities are held in trust pursuant to Rule 419 shall be able to sell such security other than pursuant to a Qualified Domestic Relations Order as defined by the Internal Revenue Code of 1986 as amended or Title I of the Employee Retirement Income Security Act, or the rules thereunder. 
+
+The following are the terms of the offering as included in our trust agreement. Each purchaser has the right to receive information regarding an acquisition, including the requirement that pursuant to Rule 419(c) of the 1933 Securities Act Amended that, purchasers must confirm in writing that investment in the securities registrant. 
+
+Terms of the Offering. 
+
+The terms of the offering must provide, and the Company must satisfy, the following conditions. 
+
+Within five business days after the effective date of the post-effective amendment(s), the Company shall send by first class mail or other equally prompt means, to each purchaser of securities held in the trust account, a copy of the prospectus contained in the post-effective amendment and any amendment or supplement thereto; 
+
+Each purchaser shall have no fewer than 20 business days and no more than 45 business days from the effective date of the post-effective amendment to notify the Company in writing that the purchaser elects to remain an investor. If the Company has not received such written notification by the 45th business day following the effective date of the post-effective amendment, funds and interest or dividends, if any, held in the trust account shall be sent by first class mail or other equally prompt means to the purchaser within five business days; 
+
+The acquisition(s) meeting the criteria set forth in the above paragraph will be consummated if a sufficient number of purchasers confirm their investments; and 
+
+I-8
+
+Table of Contents
+
+Financial Statements
+
+If a consummated acquisition(s) meeting the requirements of this section has not occurred by a date 18 months after the effective date of the initial registration statement, funds held in the trust account shall be returned by first class mail or equally prompt means to the purchaser within five business days following that date. 
+
+Conditions for release of deposited securities and funds. 
+
+Funds held in the trust account may be released to the Registrant and securities may be delivered to the purchasers or other registered holder identified on the deposited securities only at the same time as or after: 
+
+The trustee has received a signed representation from the Company, together with other evidence acceptable to the trustee, that the requirements of Rule 419(e) have been met; and 
+
+Consummation of an acquisition(s) meeting the requirements of Rule 419(e)(2)(iii). The Trustee shall have no further duties hereunder after the disbursement or destruction of the securities held in the trust account in accordance with Rule 419.
+
+Conditions for return of deposited securities and funds. 
+
+ 
+
+If a consummated acquisition meeting the requirements of Rule 419 has not occurred by a date 18 months after the effective date of the initial registration statement, 
+
+The funds held in the trust account shall be returned by first class mail or equally prompt means to the purchasers within five business days following that date.
+
+The securities held in the trust account shall be returned by first class mail or equally prompt means to the Registrant within five business days following that date.
+
+ 
+
+Any public transactions in our Common Stock by will require compliance with the registration requirements under the Securities Act.
+
+ 
+
+Furthermore, if we publicly offer any securities as a condition to the closing of any acquisition or business combination while we are a blank check or shell company, we will have to fully comply with Rule 419 of the Securities Act and deposit all funds in the trust pending advice about the proposed transaction to our stockholders fully disclosing all information required by Regulation 14A of the SEC and seeking the approval of the investment of those stockholders to whom such securities were offered; if no response is received from these stockholders within 45 days thereafter or if any stockholder elects not to invest following our advice about the proposed transaction, all funds that must be held in trust by the trustee under Rule 419, as applicable, will be promptly returned to any such stockholder. All securities issued in any such offering will likewise be deposited in trust, pending satisfaction of the foregoing conditions. In addition, if we enter into a transaction with a company that would still be considered a shell company or blank check company, the exemption from registration available from Rule 144, for the resale of our securities by our stockholders, would not be available to us.
+
+Risks
+
+We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision on whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company, as well as the fact that this offering is being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page I-11 of this prospectus.
+
+The Offering
+
+I-9
+
+Table of Contents
+
+Financial Statements
+
+In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is being conducted in compliance with Rule 419 promulgated under the Securities Act. You will be entitled to protections normally afforded to investors in Rule 419 blank check offerings. 
+
+The Offering
+
+ 
+
+Number of Shares Being Offered
+
+The company is offering to sell up to 1,000,000 shares of common stock at the fixed price of $0.10 per share for the duration of the offering. 
+
+Number of Shares Outstanding After the Offering
+
+1,000,000 shares of our common stock are currently issued and outstanding. We have no other securities issued. In the event we sell all of the common stock in our primary offering we will have 2,000,000 common shares issued and outstanding.
+
+Use of proceeds
+
+The proceeds from the sale of shares of common stock by the company shall be used for a business combination. Under Rule 419(b)(2)(vi) the registrant may receive up to 10 percent of the proceeds remaining after payment of underwriting commissions, underwriting expenses and dealer allowances permitted by paragraph (b)(2)(i) of this rule, exclusive of interest or dividends, as those proceeds are deposited into trust account. All subscription proceeds will be placed in the trust account. None of the proceeds will be released to the registrant. The proceeds will be released only after such time as the offering has been fully completed and Trustee then receives a written request of the Company.
+
+The release of deposited funds and securities shall occur by the following. A Post-effective amendment for acquisition agreement: upon execution of an agreement(s) for the acquisition(s) of a business(es) or assets that will constitute the business (or a line of business) of the registrant and for which the fair value of the business(es) or net assets to be acquired represents at least Eighty percent (80%) of the maximum offering proceeds, including proceeds received or to be received upon the exercise or conversion of any securities offered, but excluding amounts payable to non-affiliates for underwriting commissions, underwriting expenses, and dealer allowances, the registrant shall file a post-effective amendment disclosing the entire transaction; and 
+
+The trustee has received a signed representation from the Company, together with other evidence acceptable to the trustee, that the requirements of Rule 419(e) have been met; and 
+
+Consummation of an acquisition(s) meeting the requirements of Rule 419(e)(2)(iii). The Trustee shall have no further duties hereunder after the disbursement or destruction of the securities held in the trust account in accordance with Rule 419.
+
+Plan of Distribution
+
+The Offering is being made by our officers and directors on a self-underwritten, best efforts basis. We may or may not seek quotation of our common stock on the OTC MARKETS. Management has made no decision as to whether to seek a quotation and will not do so until such time as it can properly make a decision based on the value to the shareholders of such a quotation. No assurance can be given that our common stock will be approved for quotation on the OTC MARKETS even if we make application to the OTC MARKETS. 
+
+Risk Factors 
+
+You should carefully consider all the information in this Prospectus including the information set forth in the section of the Prospectus entitled Risk Factors beginning on page 13, before deciding whether to invest in our common stock.
+
+I-10
+
+Table of Contents
+
+Financial Statements
+
+Lack of Liquidity in our common stock
+
+Our common stock is not presently quoted on or traded on any securities exchange or automatic quotation system and we have not yet applied for quotation on any public market. We can provide no assurance that there will ever be an established pubic trading market for our common stock. If we decide to seek quotation on the OTC MARKETS, we must obtain a market maker to file an application with the Financial Industry Regulatory Authority (FINRA) on our behalf. There is a risk that we may not be able to obtain a market maker to file such an application. If a market maker does file an application on our behalf, it may take as long as nine (9) months to one (1) year to be approved by the FINRA. We may or may not seek to have a market maker file a Listing Application on our behalf. 
+
+Pursuant to Rule 15g-8 of the 1934 Securities and Exchange Act, as amended makes it unlawful for any person to sell or offer to sell any security that is deposited and held in trust pursuant to Rule 419(b)(3) under the Securities Act of 1933, as amended or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+
+All securities issued in connection with the offering, whether or not for cash consideration, and any other securities issued with respect to such securities, including securities issued with respect to stock splits, stock dividends, or similar rights, shall be deposited directly into the trust account promptly upon issuance. The identity of the purchaser of the securities shall be included on the stock certificates or other documents evidencing such securities.
+
+Securities held in the trust account are to remain as issued and deposited and shall be held for the sole benefit of the purchasers, who shall have voting rights, if any, with respect to securities held in their names, as provided by applicable state law. No transfer or other disposition of securities held in the trust account or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+
+Warrants, convertible securities or others derivative securities relating to securities held in the trust account may be exercised or converted in accordance with their terms; Provided, however, that securities received upon exercise or conversion, together with any cash or other consideration paid in connection with the exercise or conversion, are promptly deposited into the trust account. 
+
+I-11
+
+Table of Contents
+
+Financial Statements
+
+RISK FACTORS
+
+An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, which we believe represent the material risks related to the offering, together with the other information contained in this prospectus, before making a decision to invest in our offering. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below.
+
+Risks Associated with Our Business
+
+We are a newly formed blank check company in the development stage with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.
+
+We are a newly formed blank check company in the development stage with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing through the public offering of our shares. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate any revenues until, at the earliest, after the consummation of our initial business combination.
+
+Our independent registered public accounting firm s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern. 
+
+As of September 30, 2014, we had $31,211 in cash and cash equivalents and a deficit of $18,789. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management s plans to address this need for capital through this offering are discussed in the section of this prospectus titled Management s Discussion and Analysis of Financial Condition and Results of Operations. Our plans to raise capital and to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.
+
+If we are unable to consummate our initial business combination, our stockholders may be forced to wait more than 18 months before receiving distributions from the trust account.
+
+We will have 18 months from the effective date of the initial registration statement to consummate our initial business combination. We have no obligation to return funds to investors prior to such date unless we consummate our initial business combination prior thereto and only then in cases where investors have sought not to remain investors. Only after the expiration of this full time period will holders of our common stock be entitled to distributions from the trust account if we are unable to complete our initial business combination. Accordingly, investors funds may be unavailable to them until after such date and to liquidate your investment, public security holders may be forced to sell their public shares, potentially at a loss. In addition the holders of the securities purchased in this offering and held in the trust account will not be available for sale or transfer by the security holders other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended, or Title 1 of the Employee Retirement Income Security Act, or the rules thereunder.
+
+We may issue shares of our capital stock to complete our initial business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership.
+
+Our certificate of incorporation authorizes the issuance of up to 500,000,000 shares of common stock, par value $.01 per share and a blank check class of preferred stock. Immediately after this offering and the purchase of the offering shares, there will be 498,000,000 authorized but unissued shares of common stock available for issuance. Although we 
+
+I-12
+
+Table of Contents
+
+Financial Statements
+
+have no commitment as of the date of this offering, we may issue a substantial number of additional shares of common stock or shares of preferred stock, or a combination of common stock and preferred stock, to complete our initial business combination. The issuance of additional shares of common stock or preferred stock:
+
+ 
+
+may significantly reduce the equity interest of investors in this offering;
+
+ 
+
+may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock;
+
+ 
+
+may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
+
+ 
+
+may adversely affect prevailing market prices for our shares of common stock.
+
+We may incur significant indebtedness in order to consummate our initial business combination.
+
+If we find it necessary to incur significant indebtedness in connection with our initial business combination, it could result in:
+
+ 
+
+default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations;
+
+ 
+
+acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
+
+ 
+
+our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
+
+ 
+
+our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.
+
+If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption price received by stockholders may be less than $.10. 
+
+Our placing of funds in the trust account is to protect those funds from third party claims against us. The trust account we have established will be established by a broker or dealer registered under the Exchange Act maintaining net capital equal to or exceeding $25,000 (as calculated pursuant to Exchange Act Rule 15c3-1, in which the broker or dealer acts as trustee for persons having the beneficial interests in the account. The records of the trustee will reflect that the funds in the trust account will be for the benefit of the purchasers of the securities in this offering in order to comply with Rule 419(b)(1)(ii).
+
+Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek legal recourse against the trust account. A court may not uphold the validity of such agreements and subject the funds in trust to claims of third parties. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of our public stockholders. Therefore, the distribution from the trust account to each holder of shares of common stock may be less than $.10 plus interest, due to such claims.
+
+Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account we may not be able to return to our holders of shares of common stock at least $.10. 
+
+Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
+
+I-13
+
+Table of Contents
+
+Financial Statements
+
+If we have not completed our initial business combination within 18 months from the effective date of the initial registration statement, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than five business days thereafter, redeem 100% of the outstanding public shares of common stock, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Florida law to provide for claims of creditors and the requirements of other applicable law. We may not properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us.
+
+If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration of the 12 or 24-month deadline, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public holders of common stock from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.
+
+Since we are not limited to a particular industry or target business with which to complete our initial business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.
+
+We may consummate our initial business combination with a company in any industry we choose and are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete our initial business combination with a financially unstable company or an entity in its development stage we may be affected by numerous risks inherent in the business operations of those entities. If we complete our initial business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we may not properly ascertain or assess all of the significant risk factors. An investment in our shares may not ultimately prove to be more favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business.
+
+The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the maximum offering proceeds at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with.
+
+Pursuant to the FINRA listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the maximum offering proceeds at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust account.
+
+Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
+
+I-14
+
+Table of Contents
+
+Financial Statements
+
+We may structure a business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company acquires 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
+
+Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct.
+
+Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. None of our officers are required to commit any specified amount of time to our affairs (although we expect them to devote approximately 10 hours per week to our business) and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have employment agreements with or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us.
+
+The role of our key personnel after our initial business combination, however, remains to be determined. Although some of our key personnel may serve in senior management or advisory positions following our initial business combination, it is likely that most, if not all, of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
+
+Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
+
+We may consummate a business combination with a target business in any geographic location or industry we choose. Our officers and directors may not have enough experience or sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding our initial business combination.
+
+Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
+
+Our key personnel will be able to remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or 
+
+I-15
+
+Table of Contents
+
+Financial Statements
+
+our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
+
+Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate our initial business combination.
+
+Our officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers and directors other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. These conflicts may not be resolved in our favor.
+
+The shares beneficially owned by our officers and directors will not participate in the trust account liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.
+
+Our officers and directors have waived their right to receive distributions with respect to their shares upon our trust account liquidation if we are unable to consummate our initial business combination. Accordingly, these securities may be worthless if we do not consummate our initial business combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors and officers discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders best interest.
+
+We may only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services.
+
+It is likely we will consummate our initial business combination with a single target business, although we have the ability to simultaneously acquire several target businesses. By consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
+
+ 
+
+solely dependent upon the performance of a single business, or
+
+ 
+
+dependent upon the development or market acceptance of a single or limited number of products, processes or services.
+
+This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
+
+Alternatively, if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
+
+I-16
+
+Table of Contents
+
+Financial Statements
+
+We may be unable to consummate an initial business combination if a target business requires that we have a certain amount of cash at closing, in which case public stockholders may have to remain stockholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account.
+
+A potential target may make it a closing condition to our initial business combination that we have a certain amount of cash available at the time of closing. If the amount of money available to us to consummate an initial business combination is below such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case, public stockholders may have to remain stockholders of our company and wait the full 18 months in order to be able to receive a distribution from the trust account, in which case they may receive less than their original purchase price from the trust account. 
+
+Each public stockholder will have the option to elect to remain an investor in the proposed business combination with his, her or its shares in accordance with Rule 419 of the Securities Act of 1933, as amended.
+
+In connection with any initial business combination, in accordance with the procedures under Rule 419(e)(2), each public stockholder will have to remain as an investor in such proposed business combination or receive a refund of his, her, or its investment. Each shareholder shall have no fewer than 20 business days or more than 45 business days to notify us in writing of their decision to remain an investor in any proposed business combination. Each public shareholder will receive by first class mail or other prompt means, sent by the company no more than five days after a post-effective amendment effective date, a copy of the post-effective amendment prospectus for the acquisition of a business. 
+
+If an acquisition meeting the requirements of Rule 419 has not occurred by a date 18 months after the effective date of the initial registration statement the funds held in the trust account shall be returned by first class mail or equally prompt means to the purchasers within five business days following that date. The securities held in the trust account shall be returned by first class mail or equally prompt means to the Registrant within five business days following that date.
+
+Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
+
+We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval of our initial business combination may delay the consummation of a transaction. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial business combination.
+
+Our ability to consummate an attractive business combination may be impacted by the market for initial public offerings.
+
+Our efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although it is very likely that our target will want to be a public reporting company. If the market for initial public offerings is limited, we believe there will be a greater number of attractive target businesses open to being acquired by us as a means to achieve publicly held status. Alternatively, if the market for initial public offerings is robust, we believe that there will be fewer attractive target businesses amenable to being acquired by us to become a public reporting company. Accordingly, during periods with strong public offering markets, it may be more difficult for us to complete an initial business combination.
+
+I-17
+
+Table of Contents
+
+Financial Statements
+
+We may be unable to obtain additional financing, if required, to complete our initial business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination.
+
+Although we believe that the net proceeds of this offering will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective target business, the capital requirements for any particular transaction remain to be determined. If the net proceeds of this offering prove to be insufficient, either because of the size of the business combination, the depletion of the available working capital in search of a target business, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers and directors is required to provide any financing to us in connection with or after our initial business combination.
+
+Our officers and directors will control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
+
+Upon consummation of our offering and sale of the stock in this offering, our officers and directors, will collectively own approximately 50.0% of our issued and outstanding shares of common stock (assuming they do not purchase any shares in this offering). None of our officers, directors or their affiliates has indicated any intention to purchase shares in this offering or any shares from persons in private transactions. However, our officers, directors or their affiliates could determine in the future to make such purchases in private transactions, to the extent permitted by law, in order to influence the vote. 
+
+Our original shareholders paid an aggregate of $50,000, or approximately $0.05 per share, for their shares and our new shareholders will pay $0.10 per unit for their shares resulting in immediate and substantial dilution from the purchase of our shares of common stock.
+
+The difference between the public offering price per share and the net tangible book value per share of common stock after this offering constitutes the dilution to the investors in this offering. Our original shareholders acquired their shares of common stock at a nominal price, significantly contributing to this dilution. Upon consummation of this offering, you and the other new investors will incur an immediate and substantial dilution per share.
+
+The requirement that we complete our initial business combination within 18 months from the effective date of the initial registration statement may give potential target businesses leverage over us in negotiating our initial business combination.
+
+We have 18 months from the effective date of the initial registration statement to complete our initial business combination. Any potential target business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time limit referenced above.
+
+We may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely on the judgment of our board of directors in approving a proposed business combination.
+
+We will only be required to obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of our officers and directors. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of our board of directors in approving a proposed business combination.
+
+I-18
+
+Table of Contents
+
+Financial Statements
+
+We may not be required to obtain an opinion from an independent investment banking firm as to the fair market value of the target business we are seeking to acquire.
+
+We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value of such target business if our board of directors independently determines that the target business complies with the 80% threshold. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing such target business or businesses, and our board of directors may not properly value such target business or businesses.
+
+Resources could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
+
+It is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
+
+Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.
+
+Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls and may require that we have such system of internal controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management s evaluation of our system of internal controls. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
+
+We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.
+
+We are an emerging growth company is an issuer whose initial public offering was or will be completed after Dec. 8, 2011, and had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. An issuer s EGC status terminates on the earliest of:
+
+ 
+
+The last day of the first fiscal year of the issuer during which it had total annual gross revenues of $1 billion or more;
+
+ 
+
+The last day of the fiscal year of the issuer following the fifth anniversary of the date of the issuer s initial public offering;
+
+ 
+
+The date on which such issuer has issued more than $1 billion in non-convertible debt securities during the prior three-year period determined on a rolling basis; or
+
+ 
+
+The date on which the issuer is deemed to be a large accelerated filer under the Exchange Act, which means, among other things, that it has a public float in excess of $700 million.
+
+I-19
+
+Table of Contents
+
+Financial Statements
+
+Pursuant to the JOBS Act of 2012, as an emerging growth company the Company can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the PCAOB or the SEC. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the standard for the private company. This may make comparison of the Company's financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
+
+The Company has elected to use the extended transition period for complying with new or revised financial accounting standards available under Section 102(b)(2)(B) of the Act. Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of Executive Officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.
+As an Emerging Growth Company our investors could suffer the loss of their investment in the event of a downturn of the economy, the loss of one or more of the Officers or Directors, broad market fluctuations, or revenues and operating results falling below our expectations. 
+
+If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
+
+We may effect our initial business combination with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated with companies operating in the target business home jurisdiction, including any of the following:
+
+ 
+
+rules and regulations or currency conversion or corporate withholding taxes on individuals;
+
+ 
+
+tariffs and trade barriers;
+
+ 
+
+regulations related to customs and import/export matters;
+
+ 
+
+longer payment cycles;
+
+ 
+
+tax issues, such as tax law changes and variations in tax laws as compared to the United States;
+
+ 
+
+currency fluctuations and exchange controls;
+
+ 
+
+challenges in collecting accounts receivable;
+
+ 
+
+cultural and language differences;
+
+ 
+
+employment regulations;
+
+ 
+
+crime, strikes, riots, civil disturbances, terrorist attacks and wars; and
+
+ 
+
+deterioration of political relations with the United States.
+
+We may not be able to adequately address these additional risks. If we are unable to do so, our operations may suffer.
+
+If we effect our initial business combination with a target business located outside of the United States, the laws applicable to such target business will likely govern all of our material agreements and we may not be able to enforce our legal rights.
+
+If we effect our initial business combination with a target business located outside of the United States, the laws of the country in which such target business is domiciled will govern almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements in such jurisdiction and appropriate remedies to enforce its rights under such material agreements may not be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could 
+
+I-20
+
+Table of Contents
+
+Financial Statements
+
+result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.
+
+Because we must furnish our stockholders with target business financial statements prepared in accordance with U.S. generally accepted accounting principles or international financial reporting standards, we will not be able to complete our initial business combination with prospective target businesses unless their financial statements are prepared in accordance with U.S. generally accepted accounting principles or international financial reporting standards.
+
+The federal proxy rules require that a proxy statement with respect to a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire.
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+PROSPECTUS SUMMARY INFORMATION, RISK FACTORS AND RATIO OF EARNINGS TO FIXED CHARGES Our Company Safe Lane Systems, Inc. ( Safe Lane Systems , Safe Lane Systems, We, Us, Our, or Company hereafter), was incorporated in the State of Colorado on September 10, 2013. We were formed to engage in the sale of traffic safety equipment. We may also engage in any other business permitted by law, as designated by the Board of Directors of our Company. We have licensed and sub-licensed I.P. for a spring traffic cone dispenser designed to protect highway workers, first responders to vehicle collisions and highway incidents, law enforcement personnel, towing operators, private and public utility workers, as well as pedestrians and motorists. Our flagship product, The Kone General Automatic Safety Cone Deployment System, is the world s first and only portable safety cone dispensing system. Safe D-Ploy Spring Cones are patented MUTCD (Manual on Uniform Traffic Control Devices) compliant highway safety cones. We must commence manufacture and sales by January 1, 2016. We cannot give any assurance that we will be able to comply with this requirement of the license. We have begun initial minimal operations and are currently without revenue. We have one contract employee at the present time, our CEO. During the year ended December 31, 2013, the executive officers contributed their services and had not begun to be compensated. Upon formation, the founder, our CEO and Chairman, Paul D. Dickman, purchased 2,000,000 shares of the Company s common stock as a price of $0.0005, per share for a total price of $1,000 and in addition he was granted 10,000,000 ($0.0001 par value) shares of Class A Super Majority Voting stock for organizational services. We have engaged a marketing consultant to develop a marketing and sales plan for both the spring traffic cone and our automatic traffic cone dispenser. The consultant s final marketing plan should be received and approved by the end of the year. We expect to incur an additional $15,000 in fees prior to the plan being finalized. We currently have sufficient capital to cover the expected expense. We have engaged and are currently under agreement with a globally recognized manufacturer s representation firm, The Johander Company of Minneapolis, to help guide us into retail markets, build a manufacturer s representative network, and drive retail sales of our Spring Cone and Safe-D-ploy product accessories. Johander was founded in 1987 by Bill Johander and remains a family business operated by his daughter Jennifer who joined the company after a successful career at Target Stores. We will pursue under a pay for success commission structure the following existing Johander retail relationships including; Target and Target.com, Bluestem Brands (Fingerhut), Meijer, Menard s, Home Depot, Lowe s, Advance Auto, Sam s Club and Gander Mountain, Walmart, Costco, Dick's Sporting Goods, Sports Authority, Academy Amazon, NAPA, Auto Zone, O'Reillys, Pep Boys, AC Delco, ULine, Grainger, Gempler's, Toys R Us, and Streicher's. Through this relationship we expect to have a new manufacture in place by the end of the year at no additional costs until such time as manufacturing begins. We began marketing our products in early 2015 based upon the recommendation of our marketing consultants. We expect we will need to raise an additional $1, 250,000 in equity financing prior to implementing our full marketing and sales plan. We owe a note payable of $210,000, which will need to be paid within the year 2015, as we have rewritten the note due March 31, 2015 to a due date of December 31, 2015. If we are unable to pay this note or refinance, the Company may have to cease operations . We are in the developmental stage of our business. Since our incorporation September 2013, we have been engaged in securing both exclusive and non-exclusive license agreements for our key products, designing a marketing plan, and lining up suppliers and manufacturers for production. During the 2015 fiscal year, we intend to focus our efforts on our product launch and marketing of the Kone General Automatic Safety Cone Deployment System. We must commence manufacture and sales by January 1, 2016 or our licenses will be in default. Our Auditors have issued a going concern opinion and the reasons noted for issuing the opinion are our lack of revenues or business and very modest capital. As of December 31, 2014, we had approximately $88,000 in cash on hand. Our current monthly cash burn rate is approximately $12,500, and it is expected that burn rate will continue until significant additional capital is raised and our marketing plan is executed. Once additional capital is raised to support our marketing efforts, we expect to increase our monthly general and administrative cash burn rate to approximately $25,000 per month until revenue is generated to offset this expense. Based upon our current burn rate, we will use all current cash within six months time. However, we will need to raise an additional approximately $1,250,000 to execute our plan of operations. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act ). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)2(B) of the Securities Act of 1933, as amended (the Securities Act ) for complying with new or revised accounting standards. We have elected to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. For more details regarding this exemption, see Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies. Factors that make this offering highly speculative or risky are: There is no market for any securities; We have no revenues or sales; We are start up company; We have minimal experience in the traffic safety business as a company; We are undercapitalized. Our principal executive offices are located at 1624 Market Street, Suite #202, Denver, Colorado 80202 and our telephone number is (949) 825-6512. We maintain a website at www.safelanes.com, such website is not incorporated into or a part of this filing. Summary of Financial Information The Summary Financial Information presented below is at December 31, 2014. As at December 31, 2014 Total Assets $90,504 Current Liabilities $212,764 Shareholders Deficit $(122,260) From September 10, 2013 (inception) to December 31, 2014 Revenues to December 31, 2013 and December 31, 2014 $0 Net Loss at December 31, 2013 $ (1,000) Net Loss at the year ended December 31, 2014 $(125,538) As of December 31, 2013, the accumulated deficit was $(1,000). As of December 31, 2014, the accumulated deficit was $(126,538). We anticipate that we will operate in a deficit position and continue to sustain net losses for the foreseeable future. The implied aggregate value of all common stock intended to be outstanding after the conversion, based on price of $0.01 and the 22,768,273 shares to be issued is $227,683. The Offering 22,768,273 shares of common stock underlying conversion rights of Class B Preferred Convertible Non-Voting Stock for distribution to Distributees under the Plan of Liquidation and 22,768,273 shares of common stock for resale by Distributees of the Plan of Liquidation We are registering: (a)22,768,273 common shares to be distributed to Distributees under Plan of Liquidation, upon conversion of Class B Preferred Convertible Non-Voting Stock (b)22,768,273 shares of common stock for resale by Distributees of the Plan of Liquidation We will not receive any proceeds from sales of shares by selling shareholders. Pursuant to the Master I.P. Agreement, we agreed to issue up to 22,768,273 shares of our Class B Preferred Convertible Non-Voting Stock on a one-for-one basis convertible to 22,768,273 shares of our common stock to a Trustee for Superior Traffic Control, Inc. s ( STC ) shareholders with the understanding and agreement that we would file an S-1 Registration Statement for a) the distribution of the common shares, pro-rata, to the shareholders of STC, and b) for resale of such converted common shares issued to STC shareholders in public market or private transactions. The terms of our Class B Preferred Convertible Non-Voting Stock and the terms of the Trust provide that there can be no conversion of our Class B Preferred Convertible Non-Voting Stock to common stock unless and until a Registration Statement on Form S-1 under the Securities Act of 1933 has been made effective. Our common stock, only, will be transferable immediately after the closing of this offering. (See Description of Securities ) Common shares outstanding before this offering 2,000,000 Maximum common shares being offered by our existing selling shareholders 22,768,273 Maximum common shares outstanding after this offering 24,768,273 We are authorized to issue 450,000,000 shares of common stock and 50,000,000 shares of preferred stock. Our current shareholders, officers and directors collectively own 2,000,000 shares of restricted common stock and 10,000,000 shares of Class A Preferred Super Majority Voting Stock as of December 31, 2014. These shares were issued in the following amounts and at the following prices: Number of Shares Consideration Price Per Share 2,000,000 common Stock $1,000 $0.0005 10,000,000 Class A Preferred Super Majority Voting Stock Founder Services $0.0001 22,768,273 Class B Preferred Convertible Non-Voting Stock Licenses $0.0001 There is currently no public market for our shares as it is presently not traded on any market or securities exchange. RISK FACTORS RELATED TO OUR COMPANY Our securities, as offered hereby, are highly speculative and should be purchased only by persons who can afford to lose their entire investment in us. Each prospective investor should carefully consider the following risk factors, as well as all other information set forth elsewhere in this prospectus, before purchasing any of the shares of our common stock. We have a lack of revenue history and investors cannot view our past performance since we are a start-up company. We were formed on September 10, 2013 for the purpose of engaging in any lawful business and adopted a plan to engage in the traffic safety business. We have had no revenues since inception. We are not profitable and the business effort is considered to be in an early development stage. We must be regarded as a new or development venture with all of the unforeseen costs, expenses, problems, risks and difficulties to which such ventures are subject. We should be considered highly speculative. We have limited working capital and limited cash funds. Our capital needs are projected to be $1,250,000 during the next 12 months of operations. Such funds are not committed, at this time in any amount. Within the next six months additional financing requirements are projected to be $90,000. We have a note payable agreement in place with our current lender that will provide this funding need. We will not receive any proceeds from the resale of the shares registered hereby. We are registering 22,768,273 shares of common stock on behalf of our shareholders for distribution and resale. We have limited funds, and such funds may not be adequate to carry out the business plan. We have limited funds (as of April 9, 2015, we had $30,788 in cash on hand), and such funds may not be adequate to carry out the business plan. The ultimate success of our Company may depend upon our ability to raise additional capital. We have investigated the availability, source, or terms that might govern the acquisition of additional capital. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us. If not available, our operations will be limited to those that can be financed with our modest capital. The ultimate success of our Company may depend upon our ability to raise additional capital. Safe Lane Systems has investigated the availability, source, or terms that might govern the acquisition of additional capital. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to Safe Lane Systems. If not available, Safe Lane System s operations will be limited to those that can be financed with its modest capital. Our officers and directors may have conflicts of interest which may not be resolved favorably to us. Certain conflicts of interest may exist between us and our officers and directors. Our Officers and Directors have other business interests to which they devote their attention and may be expected to continue to do so although management time should be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to us. See Directors and Executive Officers (page 40), and Conflicts of Interest" (page 42). Our officer is spending part-time in this business up to 10 hours per week. We may in the future issue more shares which could dilute current stockholders. We may issue further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance, represent more equity of our Company. The result of such an issuance would be those new stockholders and management would control our Company, and persons unknown could replace our management at this time. Such an occurrence could result in a greatly reduced percentage of ownership of our Company by our current shareholders and distributes and their purchasers in the event of resale, which could present significant risks to investors. We will incur significant costs to be a public company to ensure compliance with U.S.. corporate governance and accounting requirements and we may not be able to absorb such costs. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect these costs to be approximately $50,000-$75,000 per year. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. We are an emerging growth company, and any decision on our part to comply only with certain reduced disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors. We are an emerging growth company, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we expect and fully intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)2(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to opt in to the extended transition period for complying with the revised accounting standards. We have elected to rely on these exemptions and reduced disclosure requirements applicable to emerging growth companies and expect to continue to do so. We may not be able to meet the filing and internal control reporting requirements imposed by the SEC which may result in a decline in the price of our common shares and an inability to obtain future financing. As directed by Section 404 of the Sarbanes-Oxley Act, as amended by SEC Release No. 33-8934 on June 26, 2008, the SEC adopted rules requiring each public company to include a report of management on the company s internal controls over financial reporting in its annual reports. In addition, the independent registered public accounting firm auditing a company s financial statements may have to also attest to and report on management s assessment of the effectiveness of the company s internal controls over financial reporting. We may be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement Of management s responsibility for establishing and maintaining adequate internal control over its financial reporting; Of management s assessment of the effectiveness of its internal control over financial reporting as of year end; and Of the framework used by management to evaluate the effectiveness of our internal control over financial reporting. Furthermore, our independent registered public accounting firm may be required to file its attestation on whether it believes that we have maintained, in all material respects, effective internal control over financial reporting. While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule. In the event that we are unable to receive a positive attestation from our independent registered public accounting firm with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer. In addition, in the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with its audit of our financial statements, and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the SEC, which could also adversely affect the market price of our Common Stock and our ability to secure additional financing as needed. The JOBS Act allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies. Since, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act, this election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. Our common shares will not initially be registered under the exchange act and as a result we will have limited reporting duties which could make our common stock less attractive to investors. Our common shares are not registered under the Exchange Act. As a result, we will not be subject to the federal proxy rules and our directors, executive officers and 10% beneficial holders will not be subject to Section 16 of the Exchange Act. In additional our reporting obligations under Section 15(d) of the Exchange Act may be suspended automatically if we have fewer than 300 shareholders of record on the first day of our fiscal year. Our common shares are not registered under the Securities Exchange Act of 1934, as amended, and we do not intend to register our common shares under the Exchange Act for the foreseeable future, provided that, we will register our common shares under the Exchange Act if we have, after the last day of our fiscal year, more than either (i) 2000 persons; or (ii) 500 shareholders of record who are not accredited investors, in accordance with Section 12(g) of the Exchange Act. As a result, although, upon the effectiveness of the registration statement of which this prospectus forms a part, we will be required to file annual, quarterly, and current reports pursuant to Section 15(d) of the Exchange Act, as long as our common shares are not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the Securities and Exchange Commission a proxy statement and form of proxy complying with the proxy rules. In addition, so long as our common shares are not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding common shares will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directs, and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common shares and other equity securities, on Forms 3, 4 and 5, respectively. Such information about our directors, executive officers, and beneficial holders will only be available through this (and any subsequent) registration statement, and periodic reports we file thereunder. Furthermore, so long as our common shares are not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations. Because our common stock is not registered under the Securities Exchange Act of 1934, as amended, our reporting obligations under section 15(d) of the Securities Exchange Act of 1934, as amended, may be suspended automatically if we have fewer than 300 shareholders of record on the first day of our fiscal year. Our common stock is not registered under the Exchange Act, and we do not intend to register our common stock under the Exchange Act for the foreseeable future (provided that, we will register our common stock under the Exchange Act if we have, after the last day of our fiscal year, $10,000,000 in total assets and either more than 2,000 shareholders of record or 500 shareholders of record who are not accredited investors (as such term is defined by the Securities and Exchange Commission), in accordance with Section 12(g) of the Exchange Act). As long as our common stock is not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations. Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors. Our By-Laws include provisions that eliminate the personal liability of the directors of the Company for monetary damages to the fullest extent possible under the laws of the State of Colorado or other applicable law. These provisions eliminate the liability of directors to the Company and its stockholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Colorado law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit. These provisions do not affect a director s liabilities under the federal securities laws or the recovery of damages by third parties. Reporting requirements under the Exchange Act and compliance with the Sarbanes-Oxley Act of 2002, including establishing and maintaining acceptable internal controls over financial reporting, are costly and may increase substantially. The rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ) requires, among other things, that we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor confidence and a decline in our share price. As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an emerging growth company. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. We are not diversified and we will be dependent on only one business. Because of the limited financial resources that we have, it is unlikely that we will be able to diversify our operations. Our probable inability to diversify our activities into more than one area will subject us to economic fluctuations within the traffic safety industry and therefore increase the risks associated with our operations due to lack of diversification. We will depend upon management but we will have limited participation of management (which could be detrimental to the business.). We currently have two individuals who are serving as our officers and directors for up to 10 hours per week each on a part-time basis. Our directors are also acting as our officers. Our directors and officers are, or may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses. We will be heavily dependent upon our officers skills, talents, and abilities, as well as several consultants to us, to implement our business plan, and may, from time to time, find that the inability of the officers, directors and consultants to devote their full-time attention to our business results in a delay in progress toward implementing our business plan. Once we achieve more funding other consultants may be employed on a part-time basis under a contract to be determined. See "Management." Because investors will not be able to manage our business, they should critically assess all of the information concerning our officers and directors. We may be unable to obtain and retain appropriate patent and trademark protection of our products and services. We may seek to protect our intellectual property rights (if any) through patents, trademarks, trade names, trade secrets and a variety of other measures. However, these measures may be inadequate to protect our intellectual property (to the extent we have any) or other proprietary information. Trade secrets may become known by third parties. Our trade secrets or proprietary technology may become known or be independently developed by competitors. Rights to patents applications and trade secrets may be invalidated. Disputes may arise with third parties over the ownership of our intellectual property rights. Patents may be invalidated, circumvented or challenged, and the rights granted under the patent application that provide us with a competitive advantage may be nullified. Problems with future patent applications. Pending or future patent applications may not be approved, or the scope of the granted patent may be less than the coverage sought. Infringement claims by third parties. Infringement, invalidity, right to use or ownership claims by third parties or claims for indemnification may be asserted by third parties in the future. If any claims or actions are asserted against us, we can attempt to obtain a license for that third party's intellectual property rights. However, the third party may not provide a license under reasonable terms, or may not provide us with a license at all. Litigation may be required to protect any intellectual property rights. Litigation may be necessary to protect our intellectual property rights and trade secrets, to determine the validity of and scope of the rights of third parties or to defend against claims of infringement or invalidity by third parties. Such litigation could be expensive, would divert resources and management's time from our sales and marketing efforts, and could have a materially adverse effect on our business, financial condition and results of operations. We can give no assurance of success or profitability to our stockholders. There is no assurance that we will ever operate profitably. There is no assurance that we will generate revenues or profits, or that the market price of our common stock will be increased thereby. We have authorized and designated a Class A Preferred Super Majority Voting Stock, which having voting rights superior to our common stock. Class A Preferred Super Majority Voting Stock (the Class A Preferred Stock ) of which 10,000,000 shares of preferred stock have been authorized for the class and the shares have a deemed purchase price at $0.0001 per share. At the date of filing this Registration Statement, all 10,000,000 Class A Preferred shares have been issued to our CEO, Paul D. Dickman. The holder of the Class A Preferred Stock has the ability to vote equivalent of 60% of our common stock in any vote of the common stockholders. The Class A Preferred Stock would have a voting equivalent of 60%, if issued at this time. We have authorized designated and issued a Class B Preferred Convertible Non-Voting Stock, which have no voting right until converted to common. Class B Preferred Convertible Non-Voting Stock (the Class B Preferred Stock ) of which 30,000,000 shares of preferred stock have been authorized for the class and the shares have a deemed purchase price at $.0001 per share. The Class B Preferred Stock are to have voting rights equivalent to their conversion rate, one (1) share of Class B Preferred Stock equals one (1) share of common stock. At this time, 22,768,273 shares of the Class B Preferred Stock have been issued. Holders of the Class B Preferred Stock shall have no right to vote on any matter with holders of Common Stock and may not vote on any action, except an action which might change the rights and privileges of Class B Preferred Convertible Non-Voting Stock. We have agreed to indemnification of officers and directors as is provided by Colorado Statutes. Colorado Statutes provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we will be unable to recoup. Our directors liability to us and stockholders is limited Colorado Statutes exclude personal liability of our directors and our stockholders for monetary damages for breach of fiduciary duty except in certain specified circumstances. Accordingly, we will have a much more limited right of action against our directors that otherwise would be the case. This provision does not affect the liability of any director under federal or applicable state securities laws. Burden to investors. The financial risk of our activities will be borne primarily by existing shareholders, who will have contributed a significantly greater portion of our capital, than prior investors. We will incur expenses in connection with SEC Filing Requirements and we may not be able to meet such costs, which could jeopardize our filing status with the SEC. Those costs are estimated to be $50,000 to 75,000 per year additional. We will incur legal and accounting expenses as a result of being a public company in order to meet the filing requirements under the Securities and Exchange Act of 1934 ( 34 Act ). We will see an increase in legal and accounting expenses as a result of such requirements. These costs can increase significantly if we are subject to comment from the SEC on its filings and/or is required to file supplemental filings for transactions and activities. If we are not compliant in meeting the filing requirements of the SEC, we could lose its status as a 1934 Act Company, which could compromise its ability to raise funds and to ever achieve trading status on the OTCBB. RISK FACTORS RELATING TO OUR BUSINESS Any person or entity contemplating an investment in the securities offered hereby should be aware of the high risks involved and the hazards inherent therein. Specifically, the investor should consider, among others, the following risks: We have a limited operating history. If we fail to generate revenues and profits in the future, we may exhaust our capital resources and be forced to discontinue operations. We were organized in 2013 and have a limited operating history. The potential for us to generate profits depends on many factors, including the following: our ability to secure adequate funding to facilitate the anticipated business plan and goals of the Company; the size and timing of future client contracts, milestone achievement, service delivery and client acceptance; success in developing, maintaining and enhancing strategic relationships with potential business partners; actions by competitors towards the development and marketing of technologies, products and services that will compete directly with ours; the costs of maintaining and expanding operations; and our ability to attract and retain a qualified work force. We cannot assure you that we will achieve any of the foregoing factors or realize profitability in the immediate future or at any time. We expect operating results to fluctuate significantly in the future as a result of a variety of factors, many of which are outside of our control. Factors that may adversely affect our operating results include, among others, demand of our products, the budgeting cycles of potential customers, lack of enforcement of or changes in governmental regulations or laws, the amount and timing of capital expenditures and other costs relating to the expansion of our operations, the introduction of new or enhanced products and services by us or our competitors, the timing and number of new hires, changes in our pricing policy or those of our competitors, the mix of products, increases in the cost of raw materials, technical difficulties, incurrence of costs relating to product design changes, general economic conditions, and market acceptance of our products. As a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions or business combinations that could have a material adverse effect on our business, results of operations and financial condition. Any seasonality is likely to cause quarterly fluctuations in our operating results, and there can be no assurance that such patterns will not have a material adverse effect on our business, results of operations and financial condition. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Because of the products and services we offer and will offer, we may become subject to significant product liability exposure. We will be dependent on third party suppliers for various components used in our current technology and products. Some of the components that we procure from third party suppliers include engineering, manufacturing, and sales, some of which are the sole source of the components. The cost, quality and availability of components are essential to the successful production and sale of our products. Any significant disruption in the source of these components could seriously impact production of our products and seriously harm our ability to market these products. If we are unable to compete effectively with existing or new competitors, our resulting loss of competitive position could result in price reductions, fewer customer orders, reduced margins and loss of market share. There are numerous competitors in the market places in which we will be marketing our products and we expect competition to increase in the future. Many of our competitors may have significantly greater financial, technical and marketing resources than we do. These competitors may be able to respond more rapidly to new or emerging technologies or changes in customer requirements. They may also be able to devote greater resources to the development, promotion and sale of their products. Increased competition could result in price reductions, fewer customer orders, reduced margins and loss of market share. Our failure to compete successfully against current or future competitors could seriously harm our business, financial condition and results of operations. We may not be able to manage future growth effectively, which could adversely affect our operations and financial performance. The ability to manage and operate our business as we execute our development and growth strategy will require effective planning. Significant rapid growth could strain management and internal resources and cause other problems that could adversely affect our financial performance. We expect that our efforts to grow will place a significant strain on personnel, management systems, infrastructure and other resources. Our ability to manage future growth effectively will also require us to successfully attract, train, motivate, retain and manage new employees and continue to update and improve our operational, financial and management controls and procedures. Further, our ability to successfully offer our products and implement our business plan in a rapidly evolving market requires an effective planning and management process. We plan to increase the scope of our operations domestically and our anticipated growth in future operations will continue to place, a significant strain on our management systems and resources. If we do not manage our growth effectively, our operations could be adversely affected, resulting in slower growth and a failure to achieve or sustain profitability. Changing Traffic Safety Standards could impact our product sales efforts. The federal and state standards for traffic management are subject to ongoing changes and such changes may have an impact in the future on our products that cannot be determined. We intend to rely on outside consultants, manufacturers and suppliers. We intend to rely on the experience of outside consultants, manufacturers and suppliers. In the event that one or more of these consultants, manufacturers, or suppliers terminates with us, or becomes unavailable, suitable replacements will need to be obtained and there is no assurance that such replacement could be obtained under conditions favorable to us. We may rely on strategic relationships to promote our product. As a recently formed company, we intend to rely on strategic partnerships with outside companies and individuals to promote our products, thus making the future success of our business particularly contingent on the efforts of other parties. Our products are designed to serve several markets. An important part of our strategy is to promote acceptance of our products through product alliances with distributors who we feel could assist us with our promotion strategies. Our dependence on outside distributors, however, raises potential risks with respect to the future success of our business. Our success is dependent on the successful completion and commercial deployment of our products and on the future commitment of our distributors to our products and technology. We will rely on suppliers, manufacturers and others. We intend to rely on key vendors and suppliers to provide high quality products and services on a consistent basis. We must use outside facilities and contract manufacturers to produce and prove products which include manufacturing facilities, warehouses, shippers, testing companies and other critical vendor partners. Our future success will be contingent on the efforts and performance of these relationships. We may have difficulty in locating or using alternative resources should supply problems arise with any one supplier. An interruption or reduction in the source of supply of any of the component materials, or an unanticipated increase in vendor prices, could materially affect our operating results and damage customer relationships as well as our business. We determined an arbitrary offering price. The offering price of our shares under this Registration Statement was arbitrarily determined and does not necessarily bear any relationship to the assets, book value, earnings (loss) or our net worth and should not be considered to be an indication of the actual value of our Company. Our common shareholders will not have any control of our Company. The common stock registered hereby will represent a majority of our outstanding stock after its conversion but will remain limited in voting power due to the Class A Super Majority Voting Preferred stock held by management. Accordingly, it could be difficult for the investors hereunder to effectuate control over our affairs and it should be assumed that our officers, directors and Class A Super Majority Voting Preferred shareholders will be able, by virtue of their voting control and stock holdings, to control our affairs and policies permanently as they hold 60% voting power at all times while Class "A" is issued and outstanding. As a result, these stockholders will possess dominant influence over us, giving them the ability, among other things, to elect a majority of our Board of Directors and approve significant corporate transactions. Such share ownership and control may also have the effect of delaying or preventing a change in our control, impeding a merger, consolidation, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us which could have a material adverse effect on the market price of our common stock. Our shares will have limited transferability. Absence of Public Market: Non-Transferability and Non-Liquidity of Investment. The shares distributed or resold pursuant to this Registration while registered for resale, may have extremely limited liquidity because our common shares are not approved for trading or quotation, and if we become approved brokerage houses have imposed severe restrictions upon penny stock trading. Until that time, there will be no market for the shares registered hereunder. An investor may be unable to liquidate an investment in the common stock and should be prepared to bear the economic risk of an investment in our stock for an indefinite period. In addition an investor should be able to withstand the total loss of their or its investment. Our Management has broad discretion in Budget usage. We expect to use our limited capital for general corporate purposes, including working funds, capital expenditures, promotional and marketing expenditures and to fund anticipated operating losses. In addition, we may use an unspecified portion of any future capital raised to acquire or invest in complementary products, IP and technologies if a favorable opportunity to make such an acquisition or investment arises. In the ordinary course of business, we expect to evaluate potential acquisitions of products and technologies, which complement our business model. In addition, from time to time, we will evaluate the usage of cash to determine whether the then existing uses and apportionment should be changed. Accordingly, our management will have broad discretion in the application of our budgets. The failure of our management to apply funds effectively could have a material adverse effect on our business, results of operations and financial condition. Our success depends upon compliance with our Master I.P. License Agreement. In the second quarter of 2014, we entered into a Master I.P. License Agreement relating to the safety cone dispenser and flexible marker device with Superior Traffic Controls, Inc., a California corporation who is the owner of certain intellectual property relating to each of the aforesaid devices. Therefore, this agreement is exclusive as it relates to the safety cone dispensing device and non-exclusive as it relates to the flexible marker device. In the event that we do not meet certain conditions in the Master I.P. License Agreement, we could lose our right to manufacture and distribute the cone dispenser. Our success will depend significantly upon this license agreement and the proprietary technologies covered by said license agreement. Our CEO has an incentive to generate revenues, but which may reduce our profitability. Paul Dickman, our CEO is entitled to an 8% administrative fee on our total billings. This fee is substantial enough that it might be the difference between profitability on revenues and unprofitability, which could negatively impact our profitability, and therefore or investors. Forward looking statements and associate risks. This Prospectus contains certain forward-looking statements, including among others: (i) the projected time for commencing operations; (ii) anticipated trends in our financial condition and results of operations; (iii) our business strategy for its plan of operations; and (iv) our ability to distinguish itself from its current and future competitors. These forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward looking statements. In addition to other risks described elsewhere in this Risk Factors discussion, important factors to consider in evaluating such forward-looking statements include (i) changes to external competitive market factors or in our internal budgeting process which might impact trends in our results of operations; (ii) anticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the industry in which we will operate; and (iv) various competitive factors that may prevent us form competing successfully in the marketplace. In light of these risks and uncertainties, many of which are described in greater detail elsewhere in this Risk Factors discussion, there can be no assurance that the events predicted in forward-looking statements contained in this Prospectus will in fact transpire. Our continuation as a going concern is dependent on additional financing, as our operations are capital intensive and future capital expenditures are expected to be substantial. Our future success is dependent on our ability to attract additional capital and ultimately, upon our ability to develop future profitable operations. There can be no assurance that we will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions future actions to be taken to revise our operating and financial requirements may provide the opportunity for us to continue as a going concern. RISK FACTORS RELATED TO OUR STOCK No public market exists for our common stock at this time, and there is no assurance of a future market. There is no public market for our common stock, and no assurance can be given that a market will develop or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Factors such as these discussed in the Risk Factors section may have a significant impact upon the market price of the shares offered hereby. Due to the low price of our securities, many brokerage firms may not be willing to effect transactions in our securities. Even if a purchaser finds a broker willing to effect a transaction in our shares, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of our shares as collateral for any loans. Our stock, if ever listed, will in all likelihood be thinly traded and as a result you may be unable to sell at or near ask prices or at all if you need to liquidate your shares. The shares of our common stock, if ever listed, may be thinly-traded. We are a small company which is relatively unknown to stock analysts, stock brokers, institutional stockholders and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or purchase or recommend the purchase of any of our securities until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on Securities price. We cannot give you any assurance that a broader or more active public trading market for our common Securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we can give stockholders no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities. Our common stock may be volatile, which substantially increases the risk that you may not be able to sell your securities at or above the price that you may pay for the security. If we are able to obtain an exchange listing of our common stock in the future, because of the possible price volatility, you may not be able to sell your shares of common stock when you desire to do so. The inability to sell your securities in a rapidly declining market may substantially increase your risk of loss because of such illiquidity and because the price for our securities may suffer greater declines because of our price volatility. The price of our common stock that will prevail in the market after this offering may be higher or lower than the price you may pay. Certain factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to the following: Variations in our quarterly operating results; Loss of a key relationship or failure to complete significant transactions; Additions or departures of key personnel; and Fluctuations in stock market price and volume. Additionally, in recent years the stock market in general, has experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on your investment in our stock. If we cannot pay the note payable for $ 250,000 it could subject us to a lawsuit and potential judgment We owe a note for $250,000 which is due December 31, 2015 and if we do not pay the note, the holder could sue on the note and obtain a judgment and levy and execute on our assets, which could cause our business to fail. The regulation of penny stocks by the SEC and FINRA will discourage the tradability of our securities. We are a penny stock company, as our stock price is less than $5.00 per share. Even if we were able to obtain an exchange listing for our stock, we cannot make an assurance that we will be able to maintain a stock price greater than $5.00 per share and if the share price was to fall to such prices, that we wouldn t be subject to the Penny Stocks rules. None of our securities currently trade in any market and, if ever available for trading, will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited stockholders. For purposes of the rule, the phrase accredited stockholders means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse s income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser s written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Very few brokers now affect such trades. Consequently, the rule will affect the ability of purchasers in this offering to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions. In addition, the Securities and Exchange Commission has adopted a number of rules to regulate penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute penny stocks within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions. Investors should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. Investors in penny stocks have limited remedies in the event of violations of penny stock rules. While the courts are always available to seek remedies for fraud against us, most, if not all, brokerages require their customers to sign mandatory arbitration agreements in conjunctions with opening trading accounts. Such arbitration may be through an independent arbiter. Stockholders may file a complaint with FINRA against the broker allegedly at fault, and FINRA may be the arbiter, under FINRA rules. Arbitration rules generally limit discovery and provide more expedient adjudication, but also provide limited remedies in damages usually only the actual economic loss in the account. Stockholders should understand that if a fraud case is filed an against a company in the courts it may be vigorously defended and may take years and great legal expenses and costs to pursue, which may not be economically feasible for small stockholders. Without arbitration agreements, specific legal remedies available to stockholders of penny stocks include the following: If a penny stock is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment. If a penny stock is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages. The fact that we are a penny stock company will cause many brokers to refuse to handle transactions in the stocks, and will discourage trading activity and volume, or result in wide disparities between bid and ask prices. These may cause stockholders significant illiquidity of the stock at a price at which they may wish to sell or in the opportunity to complete a sale. Stockholders will have no effective legal remedies for these illiquidity issues. We will pay no foreseeable dividends in the future. We have not paid dividends on our common stock and do not ever anticipate paying such dividends in the foreseeable future. Stockholders whose investment criteria are dependent on dividends should not invest in our common stock. Rule 144 sales in the future may have a depressive effect on our stock price. All of the outstanding shares of common stock are held by our present officers, and directors, stockholders as "restricted securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides in essence that a person who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1.0% of a company's outstanding common stock or the average weekly trading volume during the four calendar weeks prior to the sale. There is no limit on the amount of restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities for a period of six months. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to subsequent registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop. Our stockholders may suffer future dilution due to issuances of shares for various considerations in the future. There may be substantial dilution to our stockholders as a result of future decisions of the Board to issue shares without shareholder approval for cash, services, or acquisitions. Any sales of our common stock, if in significant amounts, are likely to depress the market price of our securities. Assuming all of the shares of common stock under this Registration Statement are sold by the selling security holders registered hereby, we would have 22,768,273 shares that are freely tradable, and in the market float. Unrestricted sales of 22,768,273 shares of stock by our selling stockholders could have a significant negative impact on our share price, and the market for our shares. Any new potential investors in our stock may suffer a disproportionate risk and there may be immediate dilution of existing investor s investments if the price is significantly lower than other investors basis. Our present shareholders have acquired their securities at a cost significantly less than that which the investors purchasing after this Registration may pay for their stock in the market. Therefore, any new potential investors will bear significant risk of loss. We have determined an arbitrary offering price of our shares. The price of our shares has been determined arbitrarily by us with no established criteria of value. There is no direct relationship between these prices and our assets, book value, lack of earnings, shareholder s equity, or any other recognized standard of value of our business. The offering price should not be considered an indication of the actual value of the shares or securities.
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+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," AND "KARNET CAPITAL CORP." REFERS TO KARNET CAPITAL CORP. THE FOLLOWING SUMMARY PROVIDES A BRIEF OVERVIEW OF THE KEY ASPECTS OF THE OFFERING. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. KARNET CAPITAL CORP. We are a development stage company and we are in the business of selling Food Waste Disposal Units, or Garburators in Russian Federation. The premise behind the use of a Food Waste Disposal Unit is to effectively regard food scraps as liquid (averaging 70% water, like human waste), and use existing infrastructure (underground sewers and wastewater treatment plants) for its management. Food waste disposal units are widely used in US, but they are not widely known on Russian market. This is why we see it as a viable opportunity, that worth pursuing. Our intention is taking advantage of low penetration of such products on Russian market. At present moment we have one (1) distributor and have minimal operations. Being a development stage company, we have limited revenues and have limited operating history. Karnet Capital Corp. was incorporated in Nevada on Jan 31, 2014. To date we have prepared a business plan, signed the purchase contract with manufacturer, signed a Sales contract with distributor Kalynka 25, an established home appliance and electronics chain in Saint Petersburg, and delivered a lot of 50 Food Waste Disposal Units (Garburators) to them. We plan to form a long-term relationship with Kalynka 25 and although our one and only contract with Kalynka 25, (Exhibit 10.1), clearly states that Kalynka 25 will pay for the "goods" when "the goods are received", initially we waved those terms only for the first order and allowed them to postpone payments for the units received, in order to be able to display them in their retail locations so that we could raise awareness of our products. Since then, Kalynka 25 made a full payment for those 50 units of garburators they received in the first purchase order. We received an overwhelming response, which resulted in second purchase order of 25 units pursuant to our initial Sales contract from June 05, 2014, which is currently being fulfilled by our manufacturer. All future orders from Kalynka 25 will fall under our initial Sales contract, done on reinstated terms of our contract and will be paid on delivery of our products to their warehouse.done on reinstated terms of our contract and will be paid on delivery of our products to their warehouse. Our principal executive office is located at Lensoveta 42, app. 48, Saint-Petersburg, Russia, 196143. Our phone number is + 1 305 459 3998. We are a company with limited revenues and have just recently started our operations; we have minimal assets and have incurred losses since inception. Our financial statements for the period from January 31, 2014 (date of inception) to February 28, 2015, report revenue of $7,688 and a net loss of $9,778. As of February 28, 2015 we had $7,725 in cash on hand. As of the date of this prospectus we had $5,264 in cash on hand. Our independent registered public accountant has issued an audit opinion for Karnet Capital Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. If we are unable to obtain additional working capital our business may fail. To date we have engaged in the following operations: (i) completion of our business plan, (ii) the identification of potential distributors with existing customer bases, (iii) and the purchase and sale of lot of 50 Waste Disposal Units. We intend to use the proceeds from this offering to develop our business operations (See "Description of Business" and "Use of Proceeds"). Being a development stage company, we have very limited operating history. Proceeds from this offering are required for us to proceed further with our business plan over the next twelve months. We require minimum funding of $30,000 to conduct our continuing operations and pay all expenses for a minimum period of one year including expenses associated with maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of $30,000, our business may fail. Even if we raise $90,000 from this offering, we may need more funds to develop growth strategy and to continue maintaining a reporting status. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. Our President devotes approximately 20 hours/week to the business and he has no prior experience managing a public company. Aleksandr Chuiko, our President, has verbally agreed to lend funds, up to $30,000, to pay for the registration process to help maintain a reporting status with the SEC and to further follow our business plan in the form of a non-secured loan for the next twelve months. However, the verbal agreement is not binding and there is no guarantee that we will receive such loan. The loan is unsecured, non-interest bearing and due on demand. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. THE OFFERING The Issuer: KARNET CAPITAL CORP. Securities Being Offered: 9,000,000 shares of common stock Price Per Share: $0.01 Duration of the Offering: The offering shall terminate on the earlier of: (i) the date when the sale of all 9,000,000 common shares is completed; (ii) one year from the date of this prospectus; or (iii) prior to one year at the sole determination of the board of directors. iiii) The Board of Directors may decide to terminate the offer (prior to the completion of the sale of all of the 9,000,000 shares being registered if sufficient revenue is generated from operations to allow the company to further its business plan without the need from outside funding. Net Proceeds if 100% of the shares offered hereunder are sold: $80,000 Net Proceeds if 2/3 of the shares offered hereunder are sold: $50,000 Net Proceeds if 1/3 of the shares offered hereunder are sold: $20,000 Securities Issued and Outstanding: There are 6,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our sole officer and director, Aleksandr Chuiko. Registration Costs: We estimate our total offering registration costs to be approximately $10,000. Risk Factors: See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock. SUMMARY FINANCIAL INFORMATION The summarized financial data presented below is derived from, and should be read in conjunction with, our audited financial statements and related notes from January 31, 2014 (date of inception) to February 28, 2015, included on Page F-1 in this prospectus. FINANCIAL SUMMARY February 28, 2015 ($) --------------------- Cash and Deposits 7,725 Total Assets 7,725 Total Liabilities 11,503 Total Stockholder's Equity (3,778) STATEMENT OF OPERATIONS Accumulated From January 31, 2014 to February 28, 2015 ($) --------------------- Revenues 7,688 Cost of Goods Sold (5,125) Total Expenses 12,351 Net Loss for the Period (9,778) Net Loss per Share (0.00)
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+This summary highlights information contained elsewhere in this prospectus. Unless we otherwise specify, all references to information and data in this prospectus about our business and fleet refer to our business and fleet to be contributed to the Partnership upon the closing of this offering. Prior to the closing of this offering, the Partnership will not own any vessels. You should read the entire prospectus carefully, including the historical financial statements of Costamare Partners LP Predecessor, which includes the subsidiaries of Costamare Inc. that own the vessels in our initial fleet, and the notes to those financial statements. The information presented in this prospectus assumes, unless otherwise noted, (1) an initial public offering price of $ per common unit (the midpoint of the price range set forth on the cover of this prospectus) and (2) that the underwriters do not exercise their option to purchase additional common units. You should read Risk Factors for more information about important risks that you should consider carefully before buying our common units. Unless otherwise indicated, all references to dollars and $ in this prospectus are to, and amounts are presented in, U.S. dollars. References in this prospectus to Costamare Partners , we , our , us and the Partnership or similar terms when used in a historical context refer to Capetanissa Maritime Corporation, Jodie Shipping Co., Kayley Shipping Co. and Raymond Shipping Co., the subsidiaries of Costamare Inc. that hold interests in the vessels in our initial fleet. When used in the present tense or prospectively, those terms refer to Costamare Partners LP or any one or more of its subsidiaries, or to all such entities unless the context otherwise indicates. Please read Summary Financial, Operating and Pro Forma Data beginning on page 29 for an overview of our predecessor s operating results and financial position. References in this prospectus to our general partner refer to Costamare Partners GP LLC, the general partner of Costamare Partners. References in this prospectus to Costamare refer, depending on the context, to Costamare Inc. and to any one or more of its direct and indirect subsidiaries, including Croy Holdings Inc., other than us. References in this prospectus to Costamare Shipping refer to Costamare Shipping Company S.A., an affiliate of Costamare controlled by Costamare s chairman and chief executive officer. References in this prospectus to Shanghai Costamare refer to Shanghai Costamare Ship Management Co., Ltd., a Chinese corporation affiliated with Costamare Inc. References in this prospectus to York refer to York Capital Management Global Advisors LLC, Sparrow Holdings, L.P., Bluebird Holdings, L.P. and certain affiliated funds on whose behalf York Capital Management Global Advisors LLC has entered into the Framework Agreement (as defined herein) and the omnibus agreement (as discussed elsewhere in this prospectus), as the context may require. References in this prospectus to the omnibus agreement refer to the omnibus agreement dated as of October 1, 2014, as amended and supplemented by an addendum dated June 5, 2015, each made among the Partnership, Costamare, York Capital Management Global Advisors LLC, Sparrow Holdings, L.P. and Bluebird Holdings, L.P., as may be further amended, supplemented or restated from time to time. References in this prospectus to the Framework Agreement refer to the Framework Deed between Costamare Inc. and its wholly-owned subsidiary, Costamare Ventures Inc., on the one hand, and York and its affiliated fund, Sparrow Holdings, L.P., on the other, as amended from time to time, pursuant to which Costamare and York agreed to jointly invest in newbuild and secondhand container vessels through jointly held companies in which Costamare holds a 25% to 75% interest (any such entity, referred to as a JV Entity , and any such jointly owned or acquired vessel, referred to as a JV vessel ). References in this prospectus to V.Ships Greece refer to V.Ships Greece Ltd. We use the term twenty foot equivalent unit , or TEU , the international standard measure of containers, in describing the capacity of our containerships.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001615780_teardroppe_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001615780_teardroppe_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001615780_teardroppe_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001616215_tiluro-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001616215_tiluro-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..8ecd62334f692b8c19edae8cc7eb9d77f3ca479a
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+++ b/parsed_sections/prospectus_summary/2015/CIK0001616215_tiluro-inc_prospectus_summary.txt
@@ -0,0 +1,701 @@
+PROSPECTUS SUMMARY
+
+ 
+
+Item 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges.
+
+This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding TILURO, INC. ( Us, We, Our, TILU, the Company, or the Corporation ) and our financial statements and the related notes appearing elsewhere in this prospectus.
+
+The SEC has adopted penny stock regulations which apply to securities traded over-the-counter. These regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser s written consent to the transaction. If a market for our common stock does develop and our shares trade below $5.00 per share, it will be a penny stock. Consequently, the penny stock rules will likely restrict the ability of broker-dealers to sell our shares and will likely affect the ability of purchasers in the offering to sell our shares in the secondary market. Trading in our common stock will be subject to the penny stock rules. Due to the thinly traded market of these shares investors are at a much higher risk to lose all or part of their investment. Not only are these shares thinly traded but they are subject to higher fluctuations in price due to the instability of earnings of these smaller companies. As a result of the lack of a highly traded market in our shares investors are at risk of a lack of brokers who may be willing to trade in these shares.
+
+ The Company
+
+Our Business
+
+ 
+
+TILURO, INC. (hereinafter TILU ) is a company incorporated in the State of Florida in May 2014. We were formed as a consultant to the Restaurant Electronic Commerce industry. The Restaurant Electronic Commerce industry is subject to constant change due to market trends, thereby making it extremely competitive. The Restaurant Electronic Commerce industry is complex, because several segments are regulated by both federal and state governments. TILU s approach assists general business operations with the growth and development, international expansion and marketing aspects of their business, allowing our potential customers to focus on the business aspects of operations. By using the services provided by TILU, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goals.
+
+TILURO, INC. focuses on three main aspects of the consulting business: operations management, international expansion strategy and marketing. Assisting business owners to build strong relationships with their vendors, partners and contractors will allow our client companies to add business stability through retention of key personnel, project success and brand sustainability.
+
+Our programs will be tailored to meet the needs and requests of our clients. We will assist our clients with growth by increasing their customer base and assisting their operations and growth management in new markets. 
+
+We will provide customized business strategies, based upon client preference, which may include any or all of the following:
+
+ 
+ 
+
+International and domestic corporate development strategies;
+
+ 
+ 
+
+ 
+ 
+
+Strategic and financial partnering specific to Restaurant Electronic Commerce revenue;
+
+ 
+ 
+
+ 
+ 
+
+Project management;
+
+ 
+ 
+
+ 
+ 
+
+Seminars and Special Events; and,
+
+ 
+ 
+
+ 
+ 
+
+Marketing.
+
+The company has consulted extensively with SiteBenefits Inc., a provider of electronic technology to the restaurant industry on a number of projects. Dr. Wright was appointed as a member of the Board of Advisors of SiteBenefits in 2005. He has worked pro-bono (part time) for SiteBenefits since that time. The agreement between Dr. Wright and SiteBenefits has been verbal and in return 
+
+5
+
+Dr. Wright has been given permission to use some of the data obtained by SiteBenefits as a basis for research. He has been involved in several mathematically based analyses of restaurant management practices since that time and has developed several approaches to problems in the restaurant industry.
+
+ 
+
+The rate charged for our services will be dependent upon the level of consulting services the client company is interested in utilizing and the complexity of the client company business. TILU consulting fees will be negotiated and established based upon factors such as the level of services requested by the client.
+
+Thus far we have marketed our services primarily to Restaurant Electronic Commerce organizations located in the United States of America (the U.S. ). TILU has been doing business since inception, May 2014. Originally formed to do any and all legal business, the intent of the corporation was to specialize in corporate development and growth management consultation. Roger Wright, our president, has been involved in the company since inception and is the founder. We focus on geographic areas, projects and budget levels where we believe there is significant demand for our services and the potential for attractive returns to our company and investors. We do not consider our company to be a blank check company as such term is defined in Securities and Exchange Commission Rule 419; however, we are a company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. The company is not a blank-check company and is not being formed for the purposes of a reverse merger or any other like transaction. The company has no present plans to be acquired or to merge with another company nor does the company, nor any of its shareholders, have plans to enter into a change of control or similar transaction The company does now and will continue to operate as an advisory company, on a fee-based compensation basis, for independent clients requiring our expertise, experience and international contact networks. Any acquisitions that the company may make in the future, would be of companies similar in nature to our own, operating in similar or complementary industry segments or geographic location; that would provide TILU with new growth opportunities or competitive advantage. However, even though our business plan does contemplate potential growth through the acquisition of specialty service providers and other independent consulting services companies that would complement our business plan we are first and foremost a business consulting company TILU anticipates growth through the consolidation of consulting service providers, proprietary processes and small to mid-sized independent management consulting companies that operate in related industries. Our management has designed an aggressive but straightforward strategy to transition TILU to a full service independent consultant to the Restaurant Electronic Commerce industry solutions provider in addition to our consulting with minimal risk to the existing operation.
+
+We believe that our conduct to date evidences significant, bona fide business operations and a scenario that is wholly inapposite to any attempt to create the mere appearance of a specific business plan and effort to avoid the application of Rule 419. 
+
+ The Company is focused on addressing areas of business, which concentrate on Restaurant Electronic Commerce business operations, Restaurant Electronic Commerce information technology trends, and those related components that assist in advancing Restaurant Electronic Commerce on a national and global scale. These include:
+
+1. Restaurant Electronic Commerce Strategy and Planning
+
+2. Restaurant Electronic Commerce Information Technology
+
+3. Business Intelligence and Analysis
+
+4. Restaurant Electronic Commerce Reform Trends and Analysis
+
+Restaurants need a lot of technical help. Decisions by restaurants to embrace their own online reservations, online gift certificates, online customer loyalty programs, online preordering of meals (important at lunch given time constraints), etc.
+
+Within the 2015 forecast from the National Restaurant Association (http://www.fsrmagazine.com/human-resources/restaurant-industry-coninues-growth-sixth-year?utm_medium=fsinsider&utm_source=email&utm_campaign=20150203&microsite=11881)
+
+ was this section on Consumers:
+
+Consumer Trends
+
+Roughly one-quarter of consumers say technology options are important features that factor into their decision to choose a restaurant (up from the nearly one-fifth that said the same the year prior).
+
+While restaurants are more rapidly starting to adopt various forms of consumer-facing technology, a gap remains between what consumers want and what restaurants currently offer. That gap is beginning to narrow and will further close over the next several years as restaurant technology evolves and more options enter the marketplace.
+
+Despite increased consumer use of technology options, personal service will continue to be the hallmark of dining out. Consumers still want people as part of their restaurant experience, yet look to technology to increase service speed and convenience.
+
+6
+
+Eight in 10 consumers say restaurants offer more healthful menu options now compared to two years ago, and 76 percent say they are more likely to visit a restaurant that offers healthful options. In addition, 67 percent of consumers say they also order more healthful options in restaurants than they did two years ago.
+
+Consumers are showing increased interest in local sourcing and more restaurants are taking notice, with more than eight in 10 table service operators saying their guests are more interested in locally sourced items this year, compared with seven in 10 that said the same a year earlier.
+
+The founders of TILURO, INC. have extensive experience in the consulting, planning, technical development and production processes aspects associated with this industry, and intend on providing these services, on a contract basis, to Restaurant Electronic Commerce organizations.
+
+Implications of Being an Emerging Growth Company
+
+We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
+
+ 
+
+ 
+
+ 
+
+ 
+
+A requirement to have only two years of audited financial statements and only two years of related MD 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;
+
+ 
+
+ 
+
+ 
+
+ 
+
+Reduced disclosure about the emerging growth company s executive compensation arrangements; and
+
+ 
+
+ 
+
+ 
+
+ 
+
+No non-binding advisory votes on executive compensation or golden parachute arrangements.
+
+We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act ).
+
+In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act ) for complying with new or revised accounting standards. We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act. This election allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. 
+
+We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. As a smaller reporting company, we intend to rely upon and utilize each exemption available to us under applicable law to minimize our cost of compliance with federal securities laws.
+
+The Company, the officer and director, or any Company promoters or their affiliates do not intend for the Company, once it is reporting, to be used as a vehicle for a private company to become a reporting company. We do not believe that we are a blank check company because we have no plans or intentions to engage in a merger or acquisition with an unidentified company, companies, entity or person unless we believe it will enhance, improve or grow our business operations. At this time, our objective is to increase our business operations by marketing our services and performing our job with quality and care to maximize value for our shareholders.
+
+The following sections present an overview of our business segment, including information regarding the principal business and competitive strengths. Our results of operations and financial condition are subject to a variety of risks. For information regarding our key risk factors, see Risk Factors. 
+
+We conduct consulting services in industry/incentive friendly regions of the United States of America. Our business consists of one operation from the corporate headquarters. Our revenue will be generated from consulting services.
+
+7
+
+We currently have only two employees, Roger Wright, who is our CEO and President, and Director, and Peter Hall, who is our Chief Technology Officer (CTO), Secretary Treasurer, and Director. 
+
+The Offering
+
+Number of Shares Being Offered:
+
+The selling security holders may sell up to 1,147,000 shares of common stock at $0.075 per share. Affiliated persons are not offering any shares. Issuance of these shares to the selling security holders was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Non-affiliated selling security holders will sell at the fixed price. Selling shareholders are underwriters as defined under the Securities Act of 1933.
+
+Number of Shares Outstanding After the Offering:
+
+23,147,000 shares of our common stock are issued and outstanding. We have no other securities issued.
+
+8
+
+Selected Financial Data - Annual:
+
+ 
+
+ 
+ 
+ 
+May 13, 2014 (inception)
+
+September 30,
+
+ 
+ 
+ 
+2014
+
+Current assets
+
+$
+
+141,341
+
+Total Assets
+
+ 
+141,341
+
+ 
+
+Total current liabilities
+
+ 
+206,445
+
+Total stockholders' equity (deficit)
+
+ 
+(65,104)
+
+ 
+ 
+ 
+ 
+
+Working Capital 
+
+ 
+(65,104)
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+May 13, 2014 (inception)
+
+September 30, 2014
+
+Statement of Operations
+
+ 
+ 
+
+ 
+Revenues
+
+$
+
+--- 
+
+ 
+Operating expenses
+
+ 
+143,484
+
+ 
+Interest Expense
+
+ 
+7,645
+
+ 
+Net income (loss)
+
+$
+
+(151,129)
+
+ 
+
+RISK FACTORS
+
+Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial conditions and results of operations.
+
+Risks Related To the Company
+
+(1) Our Auditor Has Expressed Substantial Doubt About Our Ability To Continue As A Going Concern.
+
+These financial statements included with this registration statement have been prepared on a going concern basis. We have a working capital deficiency of $65,104, and have an accumulated deficit of $65,104 since inception as of September 30, 2014. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. The Company to date has funded its initial operations through the sale of unregistered securities in the amount of $37,275. Management plans to continue to provide for its capital needs by the issuance of common stock and related party advances. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
+
+(2) Our access to credit markets may be limited, which may adversely impact our liquidity. 
+
+We may require additional capital from outside sources from time to time. Our ability to arrange financing, and the cost of such capital, is dependent on numerous factors, including: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+credit availability from banks and other financial institutions; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+investor confidence in us; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+our levels of indebtedness; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+competitive, legislative and regulatory matters; 
+
+ 
+
+ 
+ 
+
+ 
+
+cash flows; and,
+
+ 
+
+ 
+
+ 
+
+provisions of tax and securities laws that may impact raising capital.
+
+In addition, volatility in the capital markets may adversely affect our ability to access any available borrowing capacity under our revolving credit facility. 
+
+(3) Our operating results and financial condition may be adversely affected by unfavorable general economic conditions. 
+
+Unfavorable economic conditions worldwide contribute to slowdowns. If global economic conditions or economic conditions in the U.S. remain uncertain or persist, spread or deteriorate further, we may experience material adverse impacts on our results of operations, cash flows and financial condition. 
+
+(4) Our profitability depends on the demand for the services we sell in the markets we serve. 
+
+Any sustained reduction in demand for our services in markets served by oould result in a significant reduction in the volume of services that we sell, thereby adversely affecting our results of operations, cash flows and financial condition. Factors that could lead to a reduction in demand include: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+an increase in the price of services; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+higher taxes, including federal excise taxes or sales taxes or other governmental or regulatory actions that increase, directly or indirectly; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+adverse economic conditions which result in lower spending by consumers and businesses on services we sell; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+higher taxes or other governmental or regulatory actions that increase the cost of the services we provide; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+effects of weather, natural phenomena, terrorism, war, or other similar acts; 
+
+ 
+
+ 
+
+ 
+
+a shift by consumers to more technological advances by manufacturers or federal or state regulations; and,
+
+ 
+
+ 
+
+ 
+
+ 
+
+decisions by our customers or suppliers to use alternate service providers for a portion or all of their needs, operate in different markets not served by us, reduce operations or cease operations entirely. 
+
+ 
+
+(5) Because of the natural decline in production in our areas of operation, our success depends on our ability to obtain new sources of business, which is dependent on factors beyond our control. 
+
+We have no control over the level of business consulting in our areas of operation. In addition, we have no control over business owners or their decisions, which are affected by, among other things, the availability and cost of capital, prevailing and projected prices, and demand for services, levels of reserves, geological considerations, and or other governmental regulations. 
+
+(6) Our establishment of new areas may not result in the anticipated revenue increases and is subject to unanticipated regulatory, political, legal and economic risks which could adversely affect our business. 
+
+One of the ways we intend to grow our business is through the establishment of new sales areas. The additions or modifications to our existing business and of new areas could involve a variety of regulatory, political and legal uncertainties beyond our control and may require the expenditure of significant amounts of capital. If we undertake such projects, they may not be completed on schedule or at the budgeted cost, or at all. Moreover, our revenue may not increase immediately upon the expenditure of funds on a particular project. For instance, if we expand into a new geographical area, the expansion may occur over an extended period of time and we will not receive any material increases in revenue until the project is completed. Moreover, we may construct facilities to capture anticipated future growth in production in a region in which such growth does not materialize. To the extent we rely on estimates of future production in our decision to expand, such estimates may prove to be inaccurate because of numerous uncertainties inherent in estimating quantities of future production. As a result, new areas may not be able to attract enough demand to achieve our expected investment return which could adversely affect our results of operations, cash flows and financial condition. 
+
+(7) We may be unable to generate sufficient or positive cash flows from the sale of services to adequately support our financial or operational results. 
+
+Our marketing results depend upon our ability to generate sufficient or positive cash flows from the purchase, sale and cost to provide our services. Our cash flows are affected by many factors beyond our control, including: 
+
+ 
+
+10
+
+ 
+
+ 
+
+ 
+
+availability of parties willing to enter into purchase and sale transactions with us; 
+
+ 
+
+ 
+
+ 
+
+increases in operational or capital costs; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+availability of funds from our operations and credit facilities to support marketing activities; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+availability of counterparties willing to offer credit to us; and,
+
+ 
+
+ 
+
+ 
+
+ 
+
+reductions in demand for, and supply of, consulting services for any reason. 
+
+ 
+
+ (8) We operate in a highly competitive business environment, and competitive pressures could adversely affect our business. 
+
+We compete with similar enterprises in our areas of operation. Our competitors may expand or construct sales systems and associated infrastructure that would create additional competition for the services we provide to our customers. Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors and our customers. Uncertainty and possible adverse publicity may make us more susceptible to the loss of customers to our competitors. All of these competitive pressures could have a material adverse effect on our business, results of operations and financial condition. 
+
+(9) Because our financial statements reflect results from inception, financial information in our current and future financial statements may not be comparable to prior periods. 
+
+The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period.
+
+(10) We have minimal revenues and limited operating history.
+
+We are a company with no principal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. Our record of minimal revenues and a limited operating history pose specific risks that may adversely affect our business or an investment in our common stock. There can be no assurances that we will generate sufficient revenue from future operations to implement our business plan or otherwise allow management to continue to devote any time to our business operations. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our services, the level of our competition and our ability to attract and maintain key management and employees.
+
+ 
+
+Our prospects are subject to the risks and expenses encountered by start-up companies, such as ours, in establishing a business as consulting firm. Our limited operating history makes it difficult or impossible to predict future results of our operations. We may not establish a client base that will make us profitable, which might result in the loss of some or all of your investment in our common stock.
+
+ 
+
+You should consider our prospects in light of the risks and difficulties frequently encountered by early stage companies in the rapidly evolving consulting market. These risks include, but are not limited to, an unpredictable business environment, the difficulty of managing growth and the use of our business model among these risks. To address these risks, we must, among other things:
+
+ 
+
+ 
+
+expand our customer base;
+
+ 
+
+enhance our name recognition;
+
+ 
+
+expand our product and service offerings;
+
+ 
+
+successfully implement our business and marketing strategy;
+
+ 
+
+provide superior customer service;
+
+ 
+
+respond effectively to competitive and technological developments; and,
+
+ 
+
+attract and retain qualified personnel.
+
+11
+
+(11) Adverse developments in our existing areas of operation could adversely impact our results of operations, cash flows and financial condition. 
+
+Our operations are focused on utilizing our sales efforts which are principally located in Florida. As a result, our results of operations, cash flows and financial condition depend upon the demand for our services in this region. Due to our current lack of broad diversification in industry type and geographic location, adverse developments in our current segment of the restaurant commerce industry, or our existing areas of operation, could have a significantly greater impact on our results of operations, cash flows and financial condition than if our operations were more diversified. 
+
+(12) As a public company, we will be subject to additional financial and other reporting and corporate governance requirements that may be difficult for us to satisfy will raise our costs and may divert resources and management attention from operating our business. 
+
+We have historically operated as a private company. Following the effectiveness of this registration statement, we will need to file with the SEC annual and quarterly information and other reports that are specified in the Securities Exchange Act of 1934, as amended (the Exchange Act ), and SEC regulations. Thus, we will need to ensure that we have the ability to prepare, on a timely basis, financial statements that comply with SEC reporting requirements. We will also become subject to other reporting and corporate governance requirements, including the listing standards of the national securities exchange upon which we may list our Class A Common Stock, and the provisions of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ), and the regulations promulgated thereunder, which will impose significant new compliance obligations upon us. As a public company, we will be required, among other things, to: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+prepare and distribute reports and other stockholder communications in compliance with our obligations under the federal securities laws and the applicable national securities exchange listing rules; 
+
+ 
+
+ 
+
+ 
+
+define and expand the roles and the duties of our Board of Directors and its committees; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+institute more comprehensive compliance, investor relations and internal audit functions; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+evaluate and maintain our system of internal control over financial reporting, and report on management s assessment thereof, in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and related rules and regulations of the SEC; and, 
+
+ 
+
+ 
+
+ 
+
+ 
+
+involve and retain outside legal counsel and accountants in connection with the activities listed above.
+
+The adequacy of our internal control over financial reporting must be assessed by management for each year commencing with the year ending September 30, 2014. Our internal control over financial reporting may not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act. We will incur additional costs in order to improve our internal control over financial reporting and comply with Section 404, including increased auditing and legal fees and costs associated with hiring additional accounting and administrative staff. Ultimately, our efforts may not be adequate to comply with the requirements of Section 404. If we are unable to implement and maintain adequate internal control over financial reporting or otherwise to comply with Section 404, we may be unable to report financial information on a timely basis, may suffer adverse regulatory consequences, may have violations of the applicable national securities exchange listing rules and may breach covenants under our credit facilities. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. 
+
+The changes necessitated by becoming a public company will require a significant commitment of additional resources and management oversight that will increase our costs and might place a strain on our systems and resources. As a result, our management s attention might be diverted from other business concerns. In addition, we might not be successful in implementing and maintaining controls and procedures that comply with these requirements. If we fail to maintain an effective internal control environment or to comply with the numerous legal and regulatory requirements imposed on public companies, we could make material errors in, and be required to restate, our financial statements. Any such restatement could result in a loss of public confidence in the reliability of our financial statements and sanctions imposed on us by the SEC. 
+
+(13) We are exposed to the creditworthiness and performance of our customers, suppliers and transactional counterparties, and any material nonpayment or nonperformance by one or more of these parties could adversely affect our financial and operational results. 
+
+There can be no assurance we have adequately assessed the creditworthiness of each of our existing or future customers, suppliers or transactional counterparties or that there will not be a rapid or unanticipated deterioration in their creditworthiness, which may have an adverse impact on our financial condition and results of operations. Nor is there certainty that our counterparties will perform or adhere to existing or future contractual arrangements. We plan to be paid upfront for the services that we provide, however in order to garner business in the early stages, we may have to provide consulting services and then invoice the clients. In many cases there could be as much as 30-60 days before cash flow begins. In essence we are extending credit to our clients.
+
+12
+
+We manage our exposure to credit risk through credit analysis and credit monitoring procedures and policies, including credit support requirements for customers and counterparties to which we extend no or limited unsecured credit, such as letters of credit, prepayments, and guarantees. Additionally, we apply a risk/reward analysis on each client to insure that their projections and business assumptions are accurate, reasonable and provide a likelihood of success. However, these procedures and policies cannot fully eliminate counterparty credit risks, and to the extent our procedures and policies prove to be inadequate, our financial and operational results may be negatively impacted. 
+
+(14) We Are Dependent On The Services Of Certain Key Employees. The Limited Experience In Operating A Public Company And The Loss Of Their Services Could Harm Our Business.
+
+Our success largely depends on the continuing services of our Chief Executive Officer and Chairman, Roger Wright and our Chief Technology Officer and Secretary Treasurer, Peter Hall. Our continued success also depends on our ability to attract and retain qualified personnel. We believe that Dr. Wright and Mr. Hall possess valuable knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of them as key employees could harm our operations, business plans and cash flows. Dr. Wright and Mr. Hall have agreed to dedicate approximately 20 hours per week to the development of our business. This limited amount of time that Dr. Wright and Mr. Hall are able to devote to the development of our business on a weekly basis may inhibit our ability to generate sufficient revenue to maintain our business as a going concern. 
+
+(15) The Limited Experience In Operating A Public Company
+
+Our Chief Executive Officer and Chairman, Roger Wright and our Chief Technology Officer and Secretary Treasurer, Peter Hall have limited experience in operating a public company. As a result their inexperience could harm our operations, business plans and cash flows.
+
+Risks Related To This Offering
+
+(16) There Is No Public Market for Our Shares, and We Do Not Know If One Will Develop Due to the Limited Demand for Stocks In the Business Services We Offer.
+
+Purchasers of these shares are at risk of no liquidity for their investment. Prior to this offering, there has been no established trading market for our securities, and we do not know that a regular trading market for the securities will develop. Due to the limited services we offer, we anticipate that demand for our shares will not be very high. If a trading market does develop for the securities offered hereby, we do not know if it will be sustained. We plan to apply to have our stock quoted on the over-the-counter ( OTC ) Electronic Bulletin Board. Such application will be filed with the Financial Industry Regulatory Authority ( FINRA ). We must obtain the services of a FINRA approved broker-dealer/market maker to file an application for our company and we do not know if such market maker will be to obtain a listing or if an established market for our common stock will be developed.
+
+(17) Because it May Be Difficult to Effect a Change in Control of TILURO, INC. Without Current Management Consent, Management May Be Entrenched Even Though Stockholders May Believe Other Management May Be Better. 
+
+Roger Wright, President and CEO and Peter Hall, CTO and Secretary Treasurer currently hold approximately 22,000,000 shares of our outstanding voting stock, of which no shares are being registered in this offering. If Dr. Wright and Mr. Hall choose to keep all of their stock (that is, they sell none of their stock during this offering), Dr. Wright and Mr. Hall could retain their status as a controlling security holders. Such concentration of ownership may have the effect of delaying, deferring or preventing a change in control of the Company and entrenching current management even though stockholders may believe other management may be better. Dr. Wright and Mr. Hall have the ability to control the outcome on all matters requiring stockholder approval, including the election and removal of directors; any merger, consolidation or sale of all or substantially all of our assets; and the ability to control our management and affairs.
+
+(18) The Possible Sale of Shares of Common Stock by Our Selling Security Holders May Have a Significant Adverse Effect on the Market Price of Our Common Stock Should a Market Develop. 
+
+Our ability to raise additional capital through the sale of our stock in a private placement may be harmed by these competing re-sales of our common stock by the selling security holders. Potential investors may not be interested in purchasing shares of our common stock if the selling security holders are selling their shares of common stock. The selling of stock by the security holders could be interpreted by potential investors as a lack of confidence in us and our ability to develop a stable market for our stock. The price of our common stock could fall if the selling security holders sell substantial amounts of our common stock. These sales may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate because the selling security holders may offer to sell their shares of common stock to potential investors for less than we do.
+
+(19) Our Lack of Business Diversification Could Result in the Devaluation of Our Stock if our Revenues From Our Primary Services Decrease.
+
+We expect our business to solely consist of the sale of consulting services. We do not have any other lines of business or other sources of revenue if we are unable to compete effectively in the marketplace. This lack of business diversification could cause 
+
+13
+
+you to lose all or some of your investment if we are unable to generate additional revenues since we do not expect to have any other lines of business or alternative revenue sources.
+
+ (20) There Has Been No Independent Valuation of the Stock, Which Means That the Stock May Be Worth Less Than the Purchase Price.
+
+The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on our recent sale of stock at par value, not based on perceived market value, book value, or other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
+
+(21) Investors May Never Receive Cash Distributions Which Could Result in an Investor Receiving Little or No Return on His or Her Investment.
+
+Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.
+
+ (22) The Penny Stock Rules Could Restrict the Ability of Broker-Dealers to Sell Our Shares Having a Negative Effect on Our Offering.
+
+The SEC has adopted penny stock regulations which apply to securities traded over-the-counter. These regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser s written consent to the transaction. If a market for our common stock does develop and our shares trade below $5.00 per share, it will be a penny stock. Consequently, the penny stock rules will likely restrict the ability of broker-dealers to sell our shares and will likely affect the ability of purchasers in the offering to sell our shares in the secondary market. Trading in our common stock will be subject to the penny stock rules. Due to the thinly traded market of these shares investors are at a much higher risk to lose all or part of their investment. Not only are these shares thinly traded but they are subject to higher fluctuations in price due to the instability of earnings of these smaller companies. As a result of the lack of a highly traded market in our shares investors are at risk of a lack of brokers who may be willing to trade in these shares.
+
+ (23) If our customers are found in violation of the Environmental, Health and Safety Regulation it could negatively impact our sales if our customers operations are interrupted.
+
+General 
+
+Our customers operations have been subject to varying degrees of complex laws and regulations by multiple levels of government relating to the production, transportation, storage, processing, release and disposal of waste, products and other materials or otherwise relating to protection of the environment. Our company is not currently directly subject to such regulations. 
+
+(24) We might not be successful in achieving our objectives if there are significant changes in the economic and regulatory environment surrounding business.
+
+TILU will be subject to risks related to national economic conditions, changes in the investment climate for business consulting governmental rules and fiscal policies, and other factors beyond the control of our management. 
+
+(25) Our business may be significantly harmed by a slowdown in the economy.
+
+ 
+
+An overall decline in the economy or the occurrence of a natural disaster could decrease the need of our services. . This could restrict our success in attracting clients and significantly harm our business, financial condition and liquidity. 
+
+(26) To the extent that we expand our operations to new markets, our business operations may suffer from our lack of experience, which may adversely affect our revenues.
+
+14
+
+Currently, TILU operates in Florida. Depending on the market and our performance, we plan to expand our operations throughout the United States. However, we have limited experience outside of the market in which we currently operate. Any difficulties encountered by us in this regard could adversely affect our operating results, slow down our expansion plans, which may diminish our revenues. 
+
+ 
+
+(27) The issuance of additional shares of stock to obtain additional financing may dilute the holdings of our existing stockholders or reduce the market price of our stock.
+
+The 1,147,000 shares of common stock owned by the selling security holders will be registered with the U.S. Securities Exchange Commission. The security holders may sell some or all of their shares immediately after they are registered. In the event that the security holders sell some or all of their shares, the price of our common stock could decrease significantly. Additional equity offerings by us may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both. Any decision to issue securities in any future offering will depend on market conditions and other factors beyond our control. TILU cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock or diluting their stock holdings in us. 
+
+A NOTE CONCERNING FORWARD-LOOKING STATEMENTS
+
+This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipates, believes, plans, expects, future, intends, and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by TILURO, INC. described in Risk Factors and elsewhere in this prospectus. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements include:
+
+(a)
+
+an abrupt economic change resulting in an unexpected downturn in demand for our services;
+
+(b)
+
+governmental restrictions or excessive taxes on our services;
+
+(c)
+
+economic resources to support the development of our projects;
+
+(d)
+
+expansion plans, access to potential clients, and advances in technology; and.
+
+(e)
+
+lack of working capital that could hinder acquisitions for development of our projects.
\ No newline at end of file
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to buy our ADSs. In addition, we commissioned Beijing Heading Century Consulting Co., Ltd, a third-party market research firm, to prepare a report about the third-party wealth management services industry in China and our market position in the industry in China. Information from this report, or the Heading Report, appears in "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Industry," "Business" and other sections of this prospectus. Our Business We are a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Our integrated business model features an established wealth management product advisory services operation complemented by our growing in-house asset management capabilities. The asset management business, which we started in 2013, not only diversifies our wealth management product offerings and increases our competitiveness, but also enhances our overall profitability. We believe that our client-focused service model, alongside our broad range of carefully selected third-party and self-developed products, have made us a trusted brand among our clients. We aspire to become a leading player in China's fast growing wealth management industry focusing on the high-net-worth population. We provide our wealth management product advisory services mainly to China's high-net-worth individuals who have investable assets in excess of RMB3.0 million (US$0.5 million). With our network of 32 client centers in 18 economically vibrant cities as of March 31, 2015, we strategically bring our services closer to our clients by maintaining a physical presence in key markets in China. Our network primarily covers the Bohai Rim, the Yangtze River Delta and the Pearl River Delta regions, where over 80% of China's high-net-worth individuals reside or work, according to the Heading Report. Our high-net-worth client base has grown significantly since our inception. During 2012, 2013, 2014 and the three months ended March 31, 2015, we had 1,090, 2,122, 4,678 and 1,941 active clients, respectively. We believe that our comprehensive and personalized client service, delivered by experienced service professionals, is key to our success. We operate under a proven and cost-efficient client service model, which features a team approach that covers the full service cycle for each client. A typical wealth management service team is centered around a seasoned wealth management product advisor who maintains regular contact with and facilitates the execution of transactions for our clients. Each wealth management product advisor is supported by an average of five client managers, who are tasked with searching for and making contact with potential clients, and a centralized client care unit that specializes in maintaining client relationships. Our wealth management product advisors, many of whom possess industry-recognized qualifications, are primarily recruited from reputable institutions in the wealth management industry and have an average of approximately eight years of industry experience. We believe our wide spectrum of value-added services offered before, during and after distribution of wealth management products have helped us generate client loyalty. Among our active clients in 2012, 2013, 2014 and the three months ended March 31, 2015, approximately 21.4%, 34.4%, 41.8% and 63.8% of them had previously purchased wealth management products that we distribute at least once before their latest purchase, demonstrating our strong client retention ability despite the fast expansion of our client base. We serve as a one-stop wealth management product aggregator. In addition to the products that we develop and manage in-house, we also source products from third parties. As of March 31, 2015, we sourced third-party products from 105 domestic and six overseas product providers for recommendation to our clients. Our product choices include fixed income products, private equity and venture capital funds, public market Amendment No. 4 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents products and other products such as insurance products and tailored alternative investments. In 2012, 2013, 2014 and the three months ended March 31, 2015, the aggregate value of wealth management products we distributed reached US$442.4 million, US$1.2 billion, US$2.1 billion and US$0.7 billion, respectively. We started to develop products in-house in 2013. In terms of value, approximately US$254.1 million, US$1.1 billion and US$0.6 billion of the products that we distributed in 2013, 2014 and the three months ended March 31, 2015, respectively, were either products developed and managed by us or third-party products that we helped design. Our brand is built upon our rigorous risk management and product selection standards, which ensure the quality of products that we distribute. We draw on in-house and external expertise to carefully screen each product we distribute from legal and commercial perspectives. Our wealth management product advisory services are complemented by our ability to provide asset management services, which we started in 2013, in the management and advisory of real estate or related funds, other specialized fund products and funds of funds. By participating in the management of a fund where our clients are some of the investors, we are well positioned to develop ongoing relationships with the clients and improve our understanding of their varied expectations for investment products, which in turn helps us and the product providers to design more attractive and competitive products. In April 2015, we entered into a share purchase agreement with E-House Investment and Reckon Capital, the joint owners of Scepter Pacific Limited, or Scepter Pacific, the holding company of E-House Capital, to acquire Scepter Pacific upon the completion of this offering. Upon completion of our acquisition of Scepter Pacific, we expect our asset management capabilities to grow substantially together with the growth of assets under our sole or joint management, and revenue generated from our asset management services is expected to constitute a significant portion of our total revenue in the future. We generate revenues in connection with our wealth management product advisory services from one-time commissions and recurring service fees paid by third-party product providers and corporate borrowers. Where Juzhou Asset Management (Shanghai) Co., Ltd., or Shanghai Juzhou, or any of its subsidiaries acts as the product provider for our self-developed products, we generate revenues from one-time commissions from the corporate borrowers or fees collected by Shanghai Juzhou from our clients. The one-time commissions are calculated based on the value of wealth management products we distribute to our clients. During the life cycle of some of the public market products and fund products, we charge product providers or corporate borrowers recurring service fees for our ongoing services. Historically, one-time commissions received from distribution of fixed income products in connection with our wealth management product advisory services accounted for substantially all of our revenues. We started to generate asset management services revenues in 2013 from one-time commissions for our fund formation services and from recurring management fees for managing the funds. These fees are typically computed as a percentage of the capital contribution in the funds. The recurring management fees also include performance fees or carried interest paid by funds that we manage or co-manage mostly upon maturity of the related funds. We have experienced substantial growth in recent years. Our net revenues increased significantly from US$8.3 million in 2012 to US$22.4 million in 2013 and to US$38.9 million in 2014, and from US$8.1 million in the three months ended March 31, 2014 to US$13.9 million in the three months ended March 31, 2015. The net income attributable to our shareholders increased significantly from US$4.0 million in 2012 to US$9.2 million in 2013 and to US$14.4 million in 2014, and from US$3.3 million in the three months ended March 31, 2014 to US$4.9 million in the three months ended March 31, 2015. Upon completion of our acquisition of Scepter Pacific, the holding company of E-House Capital, the pro forma net income attributable to our shareholders would be US$15.1 million in 2014 and US$4.9 million in the three months ended March 31, 2015. We had RMB2.8 billion (US$0.4 billion) of assets under our management as of March 31, 2015 and our pro forma amount of assets under our management as of March 31, 2015 would be approximately RMB5.3 billion (US$0.9 billion) upon completion of our acquisition of Scepter Pacific, representing an increase of RMB2.5 billion (US$0.4 billion). Jupai Holdings Limited (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands 8900 Not Applicable (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 10th Floor, Jin Sui Building 379 South Pudong Road Pudong New District Shanghai 200120 People's Republic of China +86-21-6836-7031 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Law Debenture Corporate Services Inc. 4th Floor, 400 Madison Avenue New York, New York 10017 (212) 750-6474 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our Clients We target China's high-net-worth individuals as our clients. The Heading Report defines high-net-worth individuals as those possessing RMB3.0 million (US$0.5 million) or more in investible assets including cash, deposits, stocks, bonds and other financial assets, but excluding primary residence. Our client base consists of entrepreneurs, corporate executives, high income professionals and other investors. During 2012, 2013, 2014 and the three months ended March 31, 2015, we provided wealth management product advisory services to 1,090, 2,122, 4,678 and 1,941 active clients, respectively. Our clients enter into contractual arrangements with the product providers to purchase investment products directly from them. We generally charge product providers or the underlying corporate borrowers a one-time commission based on the investment amount made by our clients. Where our consolidated affiliated entity Juzhou Asset Management (Shanghai) Co., Ltd., or Shanghai Juzhou, or any of its subsidiaries acts as the product provider for our self-developed products, we generate revenues from one-time commissions from the corporate borrowers or fees collected by Shanghai Juzhou from our clients. We also charge recurring service fees during the life cycle of certain wealth management products from the underlying product providers or corporate borrowers for services we provide. For the products that are developed and managed by us, Shanghai Juzhou, our consolidated entity together with its subsidiaries, takes the role of product provider. Our Industry China has become one of the fastest growing countries in the world in terms of total wealth in recent years. According to the Heading Report, China's total wealth held by households was the largest in Asia, excluding Japan, and the third largest in the world, totaling approximately US$21.4 trillion in 2014 as measured by investable assets excluding primary residences. China's high-net-worth population is also one of the fastest growing in the world with a compounded annual growth rate, or CAGR, of 12.1% between 2008 and 2014, according to the Heading Report. This population reached 5.4 million in 2014 holding RMB90 trillion (US$14.7 trillion) in total investable assets. Geographically, over 80% of China's high-net-worth population is concentrated among three core economic regions in China, namely the Bohai Rim, the Yangtze River Delta, and the Pearl River Delta regions. China's high-net-worth individual wealth management services industry is at an early stage of development, characterized by low market penetration, increasing sophistication, a fragmented market and strong growth potential. Key market participants include banks, insurance companies, fund management companies, securities firms, and third-party wealth management service providers, which are not associated with any financial institutions and which may offer and distribute a wide range of financial products and provide comprehensive financial planning services to their clients. In particular, third-party wealth management service providers only had approximately 1% market share in 2013, significantly lower than approximately 60% in the United States and 55% in the United Kingdom, according to the Heading Report. This demonstrates significant growth potential for third-party wealth management service providers in China. Among other things, third-party wealth management services industry in China differs significantly from that of the United States in terms of participating institutions, and operating and profit models. Most of the third-party wealth management service providers in China only function as distribution channels for wealth management products and lack in-house product development and professional asset allocation and financial planning capabilities. Third-party management service providers in China typically do not directly manage their clients' funds. These service providers generate revenue from product providers based on the value of products distributed to their clients, whereas a typical wealth management service provider or financial institution in the United States generates revenues from management fees charged to clients for wealth management plans and capital management plans crafted by these institutions. The rise of China's private wealth has also fostered the growth of China's asset management industry. As the market seeks more diversified and professional asset allocation services offered by wealth management companies, asset management platforms equipped with in-house investment capabilities and broad investment product choices offer valuable support and market advantage. According to the Heading Report, Copies to: Z. Julie Gao, Esq. Will H. Cai, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3740-4700 David J. Roberts, Esq. Ke Geng, Esq. O'Melveny & Myers LLP 37/F, Yin Tai Centre Office Tower No. 2 Jianguomenwai Avenue, Chaoyang District Beijing 100022 People's Republic of China +86-10-6563-4200 Table of Contents China's total assets under management of wealth management service providers have grown at a CAGR of 31.4% from 2008 to 2014, compared with a compound annual growth rate, or CAGR, of 10.1% globally from 2008 to 2013. Total assets under management of wealth management service providers in China stood at RMB70.7 trillion (US$11.5 trillion) as of the end of 2014. By the end of 2014, total assets under management of banks accounted for 20.8% of the market in China, followed by 19.8% for trust companies, 14.4% for insurance companies, 11.3% for securities firms and 7.0% for fund management companies. Our Strengths We believe our growth to date is largely attributable to the following key competitive strengths: integrated business model featuring strong wealth management product advisory services operation complemented by growing asset management capabilities; comprehensive and personalized client services delivered by experienced service professionals; leading and trusted brand in China's fast-growing third-party wealth management industry; extensive and targeted coverage of China's high-net-worth population; and experienced and visionary management team. Our Strategies Our mission is to become China's leading wealth management service provider with distinguished asset management capabilities. We plan to achieve our mission through pursuing the following strategies: further grow our client base and increase our market penetration; continue to grow our asset management business; continue to enhance our ability to identify, source and develop investment products; further strengthen our brand awareness; expand into online financial services; and pursue strategic investments and acquisition opportunities. Our Challenges Our ability to achieve our goal and execute our strategies is subject to risks and uncertainties, including those relating to our ability to: manage our growth or implement our business strategies sustainably; comply with applicable PRC regulations and policies, particularly as laws and regulations governing the financial services and wealth management industries are constantly evolving, and obtain or maintain licenses and permits necessary to conduct our business operations in China; adapt to the uncertainties in China's real estate industry, as a significant portion of the products we distribute involve real estate or related assets; attract and retain qualified wealth management product advisors and product development personnel and maintain a healthy employee turnover rate; maintain and further grow our active high-net-worth client base or maintain or increase the amount of investment made by our clients in the products we distribute; protect our reputation and enhance our brand recognition; and identify or effectively control the various risks involved in the wealth management products we distribute or manage. In addition, we face risks and uncertainties related to our proposed acquisition of Scepter Pacific, the holding company of E-House Capital. We also face risks inherent in our use of, instead of subsidiaries owned by us, variable interest entities, or VIE, to operate certain of our business, such as the use of Shanghai Jupai and its subsidiaries to conduct market surveys and to potentially engage in the direct sale of mutual funds and asset management plans sponsored by mutual fund management companies. In particular, we face risks and uncertainties related to the impact of China's proposed foreign investment law Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents on the viability of our current corporate structure. We also face risks related to our ability to obtain and maintain licenses and permits necessary to conduct our operations in China. Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of the above and other challenges and risks. Corporate History and Structure We commenced operations in July 2010 through Shanghai Jupai Investment Group Co., Ltd., or Shanghai Jupai, in China. We established Jupai Investment Group as our holding company in August 2012 in the Cayman Islands. In December 2014, we changed our name from Jupai Investment Group to Jupai Holdings Limited, or Jupai. Jupai owns Shanghai Juxiang Investment Management Consulting Co., Ltd., or Shanghai Juxiang, our wholly owned subsidiary in China established in July 2013. For more details, see "Corporate History and Structure." Due to lack of express permission under PRC law for foreign-invested enterprises to sell mutual fund products or asset management plans and to provide asset management services in China, we provide asset management services and plan to sell mutual fund products and asset management plans through the subsidiaries of Shanghai Jupai, a domestic PRC company. In July 2013, we established Shanghai Juxiang, our wholly-owned subsidiary in China. Shanghai Juxiang has entered into a series of contractual arrangements with Shanghai Jupai and its shareholders. The contractual arrangements between Shanghai Juxiang and Shanghai Jupai and its shareholders enable us to (1) exercise effective control over Shanghai Jupai; (2) receive substantially all of the economic benefits of Shanghai Jupai in consideration for the consulting services provided by Shanghai Juxiang; and (3) have an exclusive option to purchase all of the equity interests in Shanghai Jupai when and to the extent permitted under PRC laws and regulations. As a result of these contractual arrangements, we are considered the primary beneficiary of Shanghai Jupai, and we treat it as our VIE under the generally accepted accounting principles in the United States, or U.S. GAAP. We have consolidated the assets, liabilities, revenues, expenses and cash flows that are directly attributable to Shanghai Jupai and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. If our VIE or its shareholders fail to perform their obligations under these contractual arrangements, our ability to enforce the contractual arrangements that give us effective control may be limited. In the event that we are unable to enforce the contractual arrangements, we may not be able to consolidate the financial results of our VIE and its subsidiaries into our consolidated financial statements in accordance with U.S. GAAP. See also "Risk Factors Risk Related to Our Corporate Structure We rely on contractual arrangements with our VIE, and its shareholders for a portion of our China operations, which may not be as effective as direct ownership in providing operational control." In 2013, in conjunction with the establishment of Shanghai Juxiang, we completed an internal business migration whereby almost all of our wealth management advisory services personnel became employees of Shanghai Juxiang. We also started to use Shanghai Juxiang as the operating entity of our wealth management advisory services business that are not subject to foreign investment restrictions. After this internal business migration, Shanghai Juxiang is a party to the business contracts related to our wealth management advisory services and is the entity that receives one-time commissions and recurring service fees from this business. This internal migration caused no substantive change in the management or operation of the relevant business because those business operations remain under the leadership of the same management team of our company and are operated through almost identical wealth management advisory services personnel. Our VIE and its subsidiaries contributed US$8.3 million, US$15.3 million, US$4.4 million and US$4.6 million for 2012, 2013, 2014 and the three months ended March 31, 2015, respectively, accounting for 100%, 68%, 11% and 33% of our total net revenues for each relevant period. The change CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount of shares to be registered(1)(2) Proposed maximum offering price per share(1) Proposed maximum aggregate offering price(1)(2) Amount of registration fee(4) Ordinary shares, par value US$0.0005 per share(2)(3) 40,475,400 US$2.00 US$80,950,800 US$9,407 (1)Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933. (2)Includes ordinary shares that are issuable upon the exercise of the underwriters' option to purchase additional ADSs. Also includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These ordinary shares are not being registered for the purpose of sales outside the United States. (3)American depositary shares issuable upon deposit of ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-205526). Each American depositary share represents six ordinary shares. (4)Previously paid. Notes: (1)Shanghai Jupai is our VIE. Each of Mr. Tianxiang Hu, Dr. Weishi Yao, Mr. Keliang Li, Ms. Yacheng Shen and Ms. Yichi Zhang holds 67.7%, 10%, 8.3%, 8% and 6% of equity interests in Shanghai Jupai, respectively. (2)The remaining 15% of the equity interest is owned by a third party unrelated to us. (3)The remaining 15% of the equity interest is owned by Mr. Liang Li, our president, and 5% of the equity interest is owned by an employee. (4)The remaining 10% of the equity interest is owned by Mr. Liang Li, our president, and 10% of the equity interest is owned by a third party unrelated to us. (5)Shanghai Juzhou owns equity interests in 13 asset management companies. Among the 13 companies, Shanghai Yiju Asset Management Co., Ltd, or Shanghai Yiju, is owned by Shanghai Juzhou and Shanghai Yidezhao Investment Management Center, which is a limited partnership currently controlled by E-House (China) Capital Investment Management Limited, our principal shareholder. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Our Relationship with E-House and Acquisition of Scepter Pacific, the Holding Company of E-House Capital E-House (China) Holdings Limited, or E-House, is a leading real estate services company in China. E-House directly and wholly owns E-House (China) Capital Investment Management Limited, or E-House Investment, a principal shareholder of our company incorporated in the British Virgin Islands. Immediately prior to the completion of this offering, E-House Investment is the beneficial owner of approximately 33.1% of our total issued and outstanding ordinary shares on an as-converted basis (excluding 16,565,592 ordinary shares we will issue to E-House Investment upon the completion of our acquisition of Scepter Pacific). Prior to the completion of this offering, E-House Capital is a business unit of E-House. E-House Capital provides asset management services with a focus on the design and management of real estate or related investment projects and funds. The business of E-House Capital is currently operated by Scepter Pacific, a company incorporated in the British Virgin Islands, and its subsidiaries and consolidated entities. E-House, through E-House Investment, owns 51% of Scepter Pacific, while Reckon Capital Limited, or Reckon Capital, a company incorporated in the British Virgin Islands, owns the remaining 49%. Reckon Capital is majority owned by Mr. Xin Zhou, co-chairman and chief executive officer of E-House. In April 2015, we entered into a share purchase agreement with E-House Investment and Reckon Capital in connection with the acquisition of Scepter Pacific upon the completion of this offering. According to the share purchase agreement, E-House Investment and Reckon Capital will transfer all of their respective equity interests in Scepter Pacific in exchange for our issuance to E-House Investment and Reckon Capital an aggregate number of our ordinary shares equal to 20% of our total post-issuance outstanding ordinary shares on a fully diluted basis including the shares issuable upon exercise of the options outstanding as of the completion of the offering (without giving effect to the shares to be issued in this offering) upon the completion of this offering. Subject to the closing conditions contained in the share purchase agreement, immediately after the completion of this offering, we will become the sole shareholder of Scepter Pacific and fully own and control the business of E-House Capital, and E-House Investment and Reckon Capital will hold 31.4% and 9.0% of our total outstanding shares, respectively, taking into account 32,481,552 ordinary shares that we will issue upon the completion of our acquisition of Scepter Pacific and assuming the underwriters do not exercise their option to purchase additional ADSs. E-House Capital's business is conducted through Shanghai E-Cheng Asset Management Co., Ltd., or Shanghai E-Cheng, and its subsidiaries. Shanghai E-Cheng is currently a VIE of Scepter Pacific through the contractual arrangements between Baoyi Investment Consulting (Shanghai) Co., Ltd., or Shanghai Baoyi, a wholly-owned PRC subsidiary of Scepter Pacific, and Shanghai E-Cheng and its shareholders. The contractual arrangements between Shanghai Baoyi and Shanghai E-Cheng and its shareholders enable Scepter Pacific to (1) exercise effective control over Shanghai E-Cheng; (2) receive substantially all of the economic benefits of Shanghai E-Cheng in consideration for the consulting services provided by Shanghai Baoyi; and (3) have an exclusive option to purchase all of the equity interests in Shanghai E-Cheng when and to the extent permitted under laws and regulations of People's Republic of China. After our acquisition of Scepter Pacific, if the VIE of Scepter Pacific or the VIE's shareholders fail to perform their obligations under these contractual arrangements, our ability to enforce the contractual arrangements that will give us effective control over Scepter Pacific's VIE may be limited. In the event that we are unable to enforce the contractual arrangements, we may not be able to consolidate the financial results of Scepter Pacific's VIE and the VIE's subsidiaries into our consolidated financial statements in accordance with U.S. GAAP. Scepter Pacific's VIE and the VIE's subsidiaries contributed in amounts of US$2.1 million, US$5.9 million, US$7.0 million and US$1.3 million for the year ended December 31, 2012, 2013, 2014 and the three months ended March 31, 2015, respectively, accounting for 100% of Scepter Pacific's total consolidated revenues for each of the relevant periods. Upon the completion of our acquisition of Scepter Pacific, the holding company of E-House Capital, the pro forma net income attributable to our shareholders would be US$15.1 million in 2014 and US$4.9 million in the three months ended March 31, 2015. The net income attributable to our Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2015 5,866,000 American Depositary Shares Jupai Holdings Limited Representing 35,196,000 Ordinary Shares Notes: (1)Shanghai E-Cheng is Scepter Pacific's VIE. Each of Mr. Zuyu Ding and Mr. Weijie Ma holds 50% equity interests in Shanghai E-Cheng. (2)It is a limited partnership. Shanghai E-Cheng is the limited partner and Shanghai Yubo Investment Management Co., Ltd., or Shanghai Yubo, as the general partner, holds the remaining interests in the partnership. This is an initial public offering of American depositary shares, or ADSs, of Jupai Holdings Limited, or Jupai. Jupai is offering 4,400,000 ADSs. The selling shareholders identified in this prospectus are offering an additional 1,466,000 ADSs. Each ADS represents six of our ordinary shares, par value US$0.0005 per share. We will not receive any proceeds from the ADSs sold by the selling shareholders. Prior to this offering, there has been no public market for the ADSs or the ordinary shares. It is currently estimated that the initial public offering price per ADS will be between US$10.00 and US$12.00. Our ADSs have been approved for listing on the NYSE under the symbol "JP." We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements. See "Risk Factors" beginning on page 17 for factors you should consider before buying the ADSs. Table of Contents For illustration purposes, the following diagram reflects our anticipated corporate structure immediately upon the completion of this offering and our acquisition of Scepter Pacific: Corporate Information Our principal executive offices are located at 10th Floor, Jin Sui Building, 379 South Pudong Road, Pudong New District, Shanghai 200120, the People's Republic of China. Our telephone number at this address is +86-21-6836-7031. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.jpinvestment.cn. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 4th Floor, 400 Madison Avenue, New York, New York 10017. Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents Conventions that Apply to this Prospectus Unless otherwise indicated or the context otherwise requires: "active clients" for a given period refers to clients who purchase wealth management products distributed by us at least once during that given period; "ADSs" refers to our American depositary shares, each of which represents six ordinary shares; "asset management plan" refers to an investment arrangement under which a mutual fund management company or its subsidiary (unless otherwise indicated, collectively referred to as mutual fund management company) or securities company, in its capacity as trustee, manages funds entrusted to it by multiple sources for the interest of the entrusting parties by investing the entrusted funds in pre-determined assets or projects to generate returns for the beneficiaries. Investments in asset management plans are referred to as asset management products; "assets under management" by our company or E-House Capital refers to the amount of capital contributions made by the investors to the fund without adjustment for any gain or loss from investment; "China" or the "PRC" refers to the People's Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan; "contractual fund" refers to the rights and obligations regarding investment management among the investor, the manager of the investor's funds and the custodian of such funds in accordance with the contractual fund contracts, under which the fund manager manages the investor's fund as its agent. Instead of being owned by a separate legal entity, the funds to be invested remain the legal property of the investor held in a custody account separate from the fund manager's own assets or other funds under its management. The custodian oversees the usage of the fund by the fund manager; "E-House" refers to E-House (China) Holdings Limited, a leading real estate services company in China, which wholly owns E-House (China) Capital Investment Management Limited, or E-House Investment, a principal shareholder of our company incorporated in the British Virgin Islands; "E-House Capital" refers to, prior to the completion of this offering, a business unit of E-House that provides asset management services with a focus on the design and management of real estate or related investment projects and funds. The business of E-House Capital is currently being operated by Scepter Pacific Limited, a British Virgin Islands company, together with its subsidiaries and consolidated entities. E-House Investment owns 51% shares in Scepter Pacific Limited; "fixed income products" refers to products that are distributed or managed by us with potential prospective fixed rates of return; "Jupai," "we," "us," "our company" and "our" refer to Jupai Holdings Limited and its subsidiaries and consolidated entities; "mutual fund" refers to a securities investment fund as defined under the PRC Law on Securities Investment Fund, which raises capital through public offerings of fund shares within China, and the related capital are managed by fund managers and placed in the custody of fund custodians, and invested in securities portfolios for the holders of fund shares; "ordinary shares" refers to our ordinary shares of par value US$0.0005 per share; "private bond fund" refers to an investment fund that invests in debt instruments which are placed via non-public means to qualified investors and which are regulated by and traded on authorized exchanges in China; "public market product" refers to a type of wealth management product that invests in publicly traded securities in China; "RMB" and "Renminbi" refer to the legal currency of China; "SINA" refers to SINA Corporation, a leading online media company in China listed on the NASDAQ Global Select Market; PER ADS TOTAL Initial public offering price US$ US$ Underwriting discount US$ US$ Proceeds, before expenses, to Jupai US$ US$ Proceeds, before expenses, to the selling shareholders US$ US$ Table of Contents "trust plan" refers to a collective investment arrangement under which a trust company, in its capacity as trustee, manages funds entrusted to it by multiple sources for the interest of specified beneficiaries (often the same as the entrusting parties), by investing the entrusted funds in pre-determined assets or projects to generate returns for the beneficiaries. Investments in trust plans are referred to as trust products; "US$," "U.S. dollars," "$," and "dollars" refer to the legal currency of the United States; and "wealth management product" refers to an investment venture in which investors participate for wealth preservation or appreciation. Our reporting currency is U.S. dollar. This prospectus contains translations of certain foreign currency into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB6.1990 to US$1.00, the noon buying rate on March 31, 2015 as set forth in the H. 10 statistical release of the U.S. Federal Reserve Board. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus should have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On July 3, 2015, the noon buying rate for Renminbi was RMB6.2044 to US$1.00. Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their option to purchase additional ADSs. The underwriters have an option to purchase up to an additional 879,900 ADSs from us at the initial public offering price less the underwriting discount, within 30 days after the date of this prospectus. Table of Contents The Offering Offering price We currently estimate that the initial public offering price will be between US$10.00 and US$12.00 per ADS. ADSs offered by us 4,400,000 ADSs (or 5,279,900 ADSs if the underwriters exercise their option to purchase additional ADSs in full). ADSs offered by the selling shareholders 1,466,000 ADSs. ADSs outstanding immediately after this offering 5,866,000 ADSs (or 6,745,900 ADSs if the underwriters exercise their option to purchase additional ADSs in full). Ordinary shares outstanding immediately after this offering 176,016,759 ordinary shares (or 181,296,159 ordinary shares if the underwriters exercise their option to purchase additional ADSs in full, including 32,481,552 ordinary shares that we will issue upon the completion of our acquisition of Scepter Pacific). The ADSs Each ADS represents six ordinary shares of par value US$0.0005 per share. The depositary will hold ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement. You may surrender your ADSs to the depositary in exchange for our ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, New York on , 2015. Credit Suisse China Renaissance Table of Contents Option to purchase additional ADSs We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of 879,900 additional ADSs. Use of proceeds We expect that we will receive net proceeds of approximately US$41.8 million from this offering, assuming an initial public offering price of US$11.00 per ADS, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to set up new client centers and expand our coverage network, including hiring additional wealth management product advisors and client managers; fund capital expenditures in new office buildings, infrastructure and enhanced information technology system for operational needs; and the remaining amount for general corporate purposes, including funding potential acquisitions of complementary business, although we are not currently negotiating any such transactions, other than our acquisition of Scepter Pacific, the holding company of E-House Capital, the consideration of which will be our equity securities. See "Use of Proceeds" for more information. We will not receive any of the proceeds from the sale of ADSs by the selling shareholders. Lock-up We, our directors, executive officers and all of our existing shareholders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. See "Shares Eligible for Future Sales" and "Underwriting." Reserved ADSs At our request, the underwriters have reserved for sale, at the initial public offering price, up to an aggregate of 469,280 ADSs offered in this offering to some of our directors, officers, employees, business associates and related persons through a directed share program. Listing Our ADSs have been approved for listing on the NYSE under the symbol "JP." Our ADSs and shares will not be listed on any other stock exchange or traded on any automated quotation system. Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of the Depository Trust Company on , 2015. Depositary JPMorgan Chase Bank, N.A. Prospectus dated , 2015. Table of Contents Summary Consolidated Financial and Operating Data The following summary consolidated income and comprehensive income data for the years ended December 31, 2012, 2013 and 2014, summary consolidated balance sheet data as of December 31, 2013 and 2014 and summary consolidated cash flow data for the years ended December 31, 2012, 2013 and 2014 are derived from our audited consolidated financial statements included elsewhere in this prospectus. Our balance sheet data as of December 31, 2012 has been derived from our audited financial statements not included in this prospectus. The summary consolidated statements of operations and comprehensive income (loss) data for the three months ended March 31, 2014 and 2015 and summary consolidated balance sheet data as of March 31, 2015 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and include all adjustments that we consider necessary for a fair statement of our financial position and operating results for the periods presented. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial Data section together with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Table of Contents Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this Prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this Prospectus, including but not limited to, the risk factors beginning on page 8. In addition, certain statements are forward-looking statements, which involve risks and uncertainties. See Disclosure Regarding Forward-Looking Statements. References in this Prospectus to OranjTek , Company , we , our , or us refer to OranjTek unless otherwise indicated or the context otherwise requires. Forward-Looking Statements This Prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the "Risk Factors" section and elsewhere in this Prospectus. Our Company We were incorporated in Delaware on September 17, 2014. We are a development stage company. OranjTek Co is a in the business of designing, manufacturing and selling custom, fashionable high-end umbrellas. We intend to use the net proceeds from this offering to develop our business operations as discussed in "Description of Business" and "Use of Proceeds" elsewhere in this Prospectus. From inception until the date of this filing, we have had very limited operating activities. Our financial statements for the three months ended October 31, 2014 reports no revenues and a net loss of $ 15,290. Our independent registered public accounting firm has issued an audit opinion for OranjTek Co which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our Directors collectively own 100% of the 2,000,000 outstanding shares of our common stock as of the date of this Offering. If the minimum amount of the shares will be sold, our Directors will own 66.7% of our outstanding common stock. Accordingly, they will have a significant influence in determining the outcome of all corporate transactions or other matters, including control over the election of our directors, mergers, consolidations and the sale of all or substantially all of our assets. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. Our principal executive offices are located at 3422 Old Capital Trail, Suite 700, Wilmington, Delaware 19808 and our telephone number is (302) 295-6635. Our office is a virtual office. The basic annual fee for the virtual office is $315 per year. We also pay $36.90 per month for the phone service and an answering service. We do not have a contract or lease agreement for this arrangement. Our primary website address is www.oranjtek.co. To date, we have purchased and own the domain name but have not completed and launched the website. The information on, or that can be accessed through this website is not part of this prospectus. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. The Company shall continue to be deemed an emerging growth company until the earliest of: (a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company , we can take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an emerging growth company . Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company , which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company , the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. Notwithstanding the above, we are also currently a smaller reporting company , meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company , at such time are we cease being an emerging growth company , we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies , smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an emerging growth company or smaller reporting company may make it harder for investors to analyze the Company s results of operations and financial prospects. Starting in 2012, our founder, Karen Travis, has envisioned creating a business around developing high-end umbrellas for the fashion conscious. In 2013, Ms. Travis attended the New Designers Show in London where university students showcased innovative designs across a number of product lines, including umbrellas fashion. It was at this event where she met with experts in the fashion industry and began building her idea for OranjTek through researching the global umbrella industry and networking among industry experts. To date OranjTek has been in discussions with several umbrella manufacturers including iBrolly Umbrella in the UK, Guy de Jean in France, J&H Umbrella in China and Pasotti Luxury Umbrellas in Italy. We are in advanced discussions with iBrolly Umbrella who have verbally agreed to produce two umbrella designs made to order. They are able to create exclusive designs for the high-end fashion brands such as Burberry and Coach. We plan to work with iBrolly to create our initial designs. They will provide the initial designs at no cost to the company. The initial designs and prototypes we hope to complete in the first quarter of 2015. We have not entered into any contract. Once the designs and prototypes are completed to our satisfaction, we plan to enter into a manufacturing agreement. We have sourced and are in discussions with several web designers to build OranjTek a website which will showcase our umbrellas and will be our initial sales portal. We are currently working on the comprehensive layout of the website incorporating our logo and company colors to represent our brand. We hope to have that finalized by the second quarter of 2015. The Offering Following is a brief summary of this Offering: Securities being offered: 1,000,000 shares of common stock minimum and 2,000,000 shares of common stock maximum, par value $0.001 Offering price per share: $ 0.05 Offering period: The shares are being offered for a period not to exceed 180 days, which may be extended by an additional 90 days, at the Company s discretion. In no event, however, shall the offering stay open for more than 270 calendar days. Net proceeds to us: Approximately $31,012 assuming the minimum number of shares is sold. Approximately $81,012 assuming the maximum number of shares is sold. We have expected offering expenses of $18,988. Use of proceeds: We will use the proceeds to pay for the implementation of our business plan, administrative expenses and general working capital and as more fully described in the Use of Proceeds section below on page 18. There is no guarantee that we will receive any proceeds from this offering. Number of shares outstanding before the offering: 2,000,000 Number of shares outstanding after the offering: 3,000,000 (if minimum number of shares are sold) 4,000,000 (if maximum number of shares are sold) Selected Financial Data The following financial information summarizes the more complete historical financial information at the end of this Prospectus. The summary information below should be read in conjunction with Selected Historical Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included elsewhere in this Prospectus.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, especially the section of this prospectus titled Risk Factors and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. In this prospectus, unless the context otherwise requires, references to we, us, our, Nexvet, Nexvet Biopharma plc or the Company refer to Nexvet Biopharma public limited company and its consolidated subsidiaries. Overview We are a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals by developing and commercializing novel, species-specific biologics based on human biologics. Biologics are therapeutic proteins derived from biological sources. As a class, biologics have transformed human medicine in recent decades and represent some of the top-selling therapies on the market today. Our proprietary platform, which we refer to as PETization, is an algorithmic approach that enables us to rapidly create monoclonal antibodies that are designed to be recognized as self or native by an animal s immune system, a property we refer to as 100% species-specificity. PETization is also designed to build upon the safety and efficacy data from clinically tested human therapies to create new therapies for companion animals, thereby reducing clinical risk and development cost. Biologics generally include monoclonal antibodies, or mAbs, which are targeted antibodies derived from identical, or clonal, cells, and fusion proteins, which are proteins created by joining two or more genes coded for separate proteins. Our first product candidate, NV-01, is a mAb that is a nerve growth factor, or NGF, inhibitor for the control of pain associated with osteoarthritis in dogs. NGF is a protein involved in growing and maintaining neural pathways and in neural signaling, including pain signals. NGF inhibitors seek to interrupt those signals to reduce pain. Our second product candidate, NV-02, is a mAb that is an NGF inhibitor for the control of pain associated with degenerative joint disease in cats. We expect data from our pivotal safety and efficacy studies for NV-01 by the end of 2015 and for NV-02 in 2016. Our third product candidate, NV-08, is a fusion protein that is a tumor necrosis factor, or TNF, inhibitor for the treatment of chronic inflammatory diseases, including atopic dermatitis, in dogs. TNF is a protein that causes inflammation, and TNF inhibitors suppress this inflammation. If our proof-of-concept safety and efficacy studies for NV-08 are successful, we will progress this product into formal development. In addition, using PETization, we are seeking to advance one new product candidate into development per year, commencing in the second half of 2015. Veterinary care is one of the fastest growing industries in the overall U.S. companion animal market and is estimated to reach $15.3 billion in 2014. We are targeting the companion animal therapeutics segment of the veterinary care industry. We estimate that in 2013 consumers spent $2.3 billion on companion animal therapeutics. This segment is currently dominated by synthetic chemical drugs commonly referred to as small molecule drugs. The size and growth of the veterinary care industry reflects many factors, including higher rates of companion animal ownership, improved quality of veterinary care, and the increasingly important role of companion animals in our lives, who are often considered members of our families. We believe these factors, together with the introduction of our product candidates with their favorable safety and compliance profiles, will increase overall demand for companion animal therapeutics. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion. Dated January 30, 2015 4,000,000 Shares Ordinary Shares Nexvet Biopharma public limited company is offering 4,000,000 ordinary shares. This is our initial public offering and no public market currently exists for our ordinary shares. We anticipate that the initial public offering price of our ordinary shares will be between $13.00 and $16.00 per share. We have applied to list our ordinary shares on the Nasdaq Global Market under the symbol NVET. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our ordinary shares involves a high degree of risk. Before buying any ordinary shares, you should read carefully the discussion of material risks of investing in our ordinary shares under the heading Risk Factors beginning on page 11 of this prospectus. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ (1) See the section of this prospectus titled Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option to purchase up to an additional 600,000 ordinary shares to cover over-allotments. The underwriters can exercise this option at any time within 30 days after the date of this prospectus. Entities affiliated with Farallon Capital Management, L.L.C., which hold more than 5% of our ordinary shares and are affiliates of a director nominee, and other existing holders of our ordinary shares have indicated an interest in purchasing up to an aggregate of $12.0 million of our ordinary shares in this offering at the initial public offering price. However, because these indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to these entities, and such entities could determine to purchase more, less or no shares in this offering. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the ordinary shares on or about , 2015. BofA Merrill Lynch Cowen and Company Piper Jaffray JMP Securities The date of this prospectus is , 2015. Table of Contents Product Pipeline We have identified three lead product candidates, NV-01, NV-02 and NV-08. We submitted an investigational new animal drug application, or INAD, with the U.S. Food and Drug Administration, or the FDA, for NV-01 in 2012, for NV-02 in 2013 and for NV-08 in 2014. (1) Our proof-of-concept studies include four sequential studies: pharmacokinetics (P), preliminary safety (PS), immunogenicity (I) and safety and efficacy (SE). (2) We have completed clonal cell manufacturing for NV-01, and we have accelerated and completed clonal cell manufacturing for NV-02 in order to rapidly advance its development. Material from manufactured clonal cells, from which biologics are created, is used in pivotal studies and is intended to be used later for commercial supply. The production of a high-yielding clonal cell line facilitates budgeting for commercial production. (3) FDA protocol concurrence means the Center for Veterinary Medicine within the FDA fundamentally agrees with the design, execution and analyses proposed in the protocol and there is a commitment that it will not later alter its perspective on these issues unless public or animal health concerns appear that were not recognized at the time of the protocol assessment. We have obtained protocol concurrences to commence our pivotal safety and efficacy studies for NV-01. Development of companion animal therapeutics is typically faster and less expensive than human drug development. It requires fewer clinical trials, requires fewer subjects and pre-clinical work and can be conducted directly in the target species. According to Pharmaceutical Commerce, companion animal therapeutics can obtain U.S. regulatory approval in under six years. We expect the costs to complete the development and manufacturing scale-up of each of our three lead product candidates to be approximately $13.0 to $15.0 million per candidate. In contrast, receipt of regulatory approval for human therapeutics may take 12 to 13 years and development can cost hundreds of millions of dollars per drug. Our PETization Platform Our PETization platform is a proprietary algorithmic approach that has demonstrated a reduction in the time and cost typically associated with the development of mAbs using conventional interspecies conversion methods. By applying our algorithms to analyze large data sets from our proprietary complementary deoxyribonucleic acid, or cDNA, library, PETization is designed to determine the minimal number of changes required in the mAb framework region to generate a 100% species-specific mAb that preserves the attraction between a biologic and its target, a property known as affinity. We have used PETization to successfully convert human and rodent mAbs into 100% species-specific canine, feline and equine mAbs, thereby leveraging their safety and efficacy profile for our companion animal therapies in development. Using PETization, we are seeking to advance one new product candidate into development per year commencing in the second half of 2015. Our internal research team is studying mAbs that bind to canine, feline and equine targets relevant to pain, inflammation, cancer and other chronic conditions. We have also recently completed a survey of specialist veterinarians in the United States and the European Union, or the EU, to identify Table of Contents Table of Contents key areas of unmet medical need where mAbs could have a significant impact. The results of this survey are guiding our product development priorities. We believe our PETization platform offers the following important advantages over other approaches to the design, discovery and development of mAbs in the veterinary care industry: Rapid creation of new products. PETization is designed to substantially reduce the time involved in the discovery process for new mAbs with high affinity, when compared to conventional discovery techniques. Cost efficiencies in production. mAbs with higher affinity require less active pharmaceutical ingredient to achieve a therapeutic dose, leading to lower cost of goods. Efficient development pathway. Harnessing existing donor mAb manufacturing, safety and clinical efficacy data can significantly reduce costs, time-to-market and regulatory and clinical risk. Scalability across species. PETization enables us to rapidly identify new product candidates for many indications across multiple species. Proprietary cDNA approach to mAb identification. Our proprietary cDNA library of mAb sequences allows us to use the natural variations found in mAbs to generate novel, species-specific mAbs. We believe that our PETization platform will create differentiated, high-value companion animal therapies with better health outcomes through the following characteristics: Efficacy. PETized mAbs are designed to retain the efficacy of the donor mAbs. Safety. PETized mAbs match the structure of the target species more successfully than conventional approaches, thereby reducing the risk of immunogenicity. Ease of compliance. PETized mAbs are designed to be injected every four to six weeks, as compared to small molecule treatments, which can require daily or more frequent injections or oral dosing. We believe that these product characteristics align favorably with veterinarian preferences and will contribute to the widespread market adoption of PETized mAbs. We may also develop biologics outside of our PETization platform, such as NV-08. NV-08 is a proprietary fusion protein we have identified using internal research that has shown NV-08 to be a potent inhibitor of the inflammatory response. Companion Animal Therapeutic Market Overview The U.S. companion animal market, which includes veterinary care, food, supplies and over-the-counter medications, live animal purchases and services such as grooming and boarding, is estimated to exceed $58.5 billion in sales in 2014. Veterinary care, which includes sales of companion animal therapeutics, parasiticides and vaccines and other medical expenses for veterinarian visits, is one of the fastest growing industries in the overall U.S. companion animal market. We are targeting the companion animal therapeutics segment of the veterinary care industry. We estimate that in 2013 consumers spent $2.3 billion on companion animal therapeutics. This segment is currently dominated by small molecule drugs. Although a few have received conditional licensure in the United States, there are currently no mAbs for the management of pain or inflammation in companion animals approved for marketing in the United States or the EU. Biologics, including mAbs, have grown to be the largest class of therapeutics within the top ten best-selling drugs for humans. We believe that mAbs will drive a similar trend in the companion animal therapeutics market. Table of Contents TABLE OF CONTENTS Prospectus Prospectus Summary 1
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+The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. The Company FWF Holdings Inc. is a Hot Sauce product business that will focus on selling a planned hot sauce product with a blend of peppers, fruits, herbs and spices. The Company has targeted four main customer groups to sell its planned product. The first group is specialty food stores, the second is wholesale distributors, the third is restaurants and the last customer segment is through a company owned online website. We are considered a development stage company. We currently have no product to sell, but we intend to use an old family receipt in the manufacturing of the product. We intend to identify and distinguish ourselves by positioning our product at the high end of the market in price, targeting a broad base of consumers. From inception until the date of this filing, we have had no operating activities. Our financial statements from inception (July 22, 2014) through the year end July 31, 2014, reports no revenues and a net loss of $2,204. Our independent registered public account has issued an audit for FWF Holdings Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. FWF Holdings Inc. anticipates that it will derive its income from the sale of its proposed Hot Sauce product. We do not anticipate earning revenues until such time as we enter into commercial operations. Since we are presently in the development state of our business, we can provide no assurance that we will successfully identify and sell any products or services related to our planned act ivies. We were incorporated under the laws of Nevada effective July 22, 2014. Our principal business offices are Stiftstr. 32, 20099 Hamburg, Germany and our telephone number is (800) 873-0694 and our fax number is (775) 882-8628. The Offering FWF Holdings Inc. has 10,000,000 of common stock issued and outstanding and is registering an additional 5,000,000 shares of common stock for offering to the public. The Company may endeavor to sell all 5,000,000 shares of common stock after the registration becomes effective. The price at which the Company offers these shares is fixed at $0.03 per share for the duration of the offering. There is no arrangement to address the possible effect of the offering on the price of the stock. FWF Holdings Inc. will receive all proceeds from the sale of the common stock. The Issuer: FWF Holdings Inc. Securities Being Offered: 5,000,000 shares of common stock Offering Price: $0.03 Termination of the Offering: This offering will conclude at when all the securities offered are sold or within 180 days after the registration statement becomes effective with the Securities and Exchange commission whichever occurs first. Net Proceeds: $138,000 (one hundred and thirty-eight thousand). (The $138,000 is Net of the $11,500 registration costs.) Use of Proceeds: See Use of Proceeds and the other information in this prospectus. Outstanding Shares of Common Stock: There are 10,000,000 shares of common stock issued and outstanding as July 22, 2014 held solely by our President and Chief Executive Officer, and Secretary, Nami Shams.
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+this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, our Consolidated and Combined Financial Statements, the notes to those statements and both our selected historical and pro forma consolidated and combined financial data before making a decision to purchase our common stock. Some information in this prospectus contains forward-looking statements. See Special Note Regarding Forward-Looking Statements. As used in this prospectus, all references in this prospectus to OneMain, the Company, we, us, our, ours or similar terms refer to OneMain Financial Holdings, Inc., a Delaware corporation, together with its consolidated subsidiaries. References to Citi refer to Citigroup Inc. and its subsidiaries other than OneMain. OneMain Financial Overview We are a leading consumer finance company in the United States, providing responsible solutions to credit-worthy individuals through our nationwide branch network and online channels. Our 100-plus year history and culture embodies our dedication to high-quality origination, underwriting and servicing of traditional, easily understood and transparent personal loans to primarily middle-income households. Our personal loans are fixed-rate, fixed-term and fixed-payment, which are attractive to our customers. We also offer optional products that protect customers in the event of unforeseen circumstances. We have been a stable and positive community presence using our industry-leading technology platform, proprietary underwriting process and data analytics to originate, price, manage, and monitor risk effectively through changing economic conditions. We have built a culture of compliance to anticipate, understand and embrace a changing regulatory environment. Our experienced management team, strong financial position, and adherence to our core values of customer advocacy, ethical leadership, ownership attitude, continuous improvement and personal development, position us well for future success and growth. At the core of our business is a national, community-based network of 1,140 branches as of September 30, 2014, serving 1.3 million customer accounts across 43 states. This network is supported by our state-of-the-art technology platform that allows us to efficiently process applications and provide convenient self-service features for our customers. As of September 30, 2014, the network consists of a local, well-trained, front-end workforce of approximately 4,100 employees and is supported centrally by approximately 1,150 employees with additional functional support provided by Citi. Our captive insurance business, Citi Assurance Services, or CAS, is staffed by an additional workforce of approximately 215 employees. Our branch employees typically live in the communities they serve, and we believe our customers value the face-to-face interaction and the long-term relationships they build with our branch employees. This face-to-face interaction significantly enhances the value we provide to customers as we work together to assess their household budgets and ability to repay their loans. The knowledge gained and relationships built during the face-to-face interactions allow us to quickly service customers, while also improving our loan performance. Branches not only originate but also service loans through early-stage delinquency, which we view as a key aspect of our relationship-driven model. This relationship-driven model is further strengthened by our extensive and complementary centralized operations that deliver cost efficiencies and risk and compliance controls. Our experience suggests that combined, our branches and centralized operations are the most effective means for both serving our target customers and driving low default and delinquency rates in our loan portfolio. Our customers are creditworthy and represent a unique segment of the middle-income market that is underserved by traditional banking institutions and can particularly benefit from our reationship-driven approach. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2015 PRELIMINARY PROSPECTUS Shares Common Stock $ per share This is the initial public offering of shares of our common stock. We currently expect the initial public offering price to be between $ and $ per share of common stock. See Use of Proceeds. Immediately following the completion of this offering, Citigroup Inc. will beneficially own between approximately % and % of our shares of common stock, depending on whether and the extent to which the underwriters exercise their over-allotment option. We intend to apply to have our common stock listed on the New York Stock Exchange under the trading symbol . Investing in our common stock involves risks. See Risk Factors beginning on page 16. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discounts and Commissions(1) $ $ Proceeds to OneMain (before expenses) $ $ (1) See Underwriting for additional compensation to be paid to the underwriters. Citigroup Inc., or the selling stockholder, has granted the underwriters an option for a period of 30 days to purchase up to additional shares of common stock to cover over-allotments. Any proceeds resulting from the sale of shares by the selling stockholder, after deducting underwriting discounts, will be paid to the selling stockholder, and we will receive no proceeds from the exercise of the over-allotment option. The underwriters expect to deliver the shares to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company. Sole Book-Running Manager Citigroup , 2015 Table of Contents NON-GAAP FINANCIAL MEASURES AND OTHER INFORMATION In this prospectus, we have included financial measures that are compiled in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, as well as certain non-GAAP financial measures. These non-GAAP financial measures include: Adjusted pro forma net income from continuing operations is the pro forma net income from continuing operations giving effect to the Transactions (as defined in Unaudited Pro Forma Consolidated and Combined Financial Information ) further adjusted for (i) the transfer of our real estate portfolio to an affiliate effective January 1, 2014 and (ii) the transfer of our servicing portfolio to an affiliate that occurred on January 6, 2014, in each case net of tax, as if each of the Transactions and the further adjustments had occurred on January 1, 2013. We refer to the (i) transfer of our real estate portfolio to an affiliate effective January 1, 2014 and (ii) transfer of our servicing portfolio to an affiliate on January 6, 2014 collectively as our 2014 exit from the real estate business. See Management s Discussion and Analysis of Financial Condition and Results of Operations Segment Overview. Adjusted pro forma return on assets is the ratio of Adjusted pro forma net income from continuing operations to Adjusted average pro forma total assets. Adjusted average pro forma total assets is the average pro forma total assets, giving effect to the Transactions and adjusted for our 2014 exit from the real estate business, as if each of the Transactions and the further adjustments had occurred on January 1, 2013. Adjusted pro forma return on equity is the ratio of Adjusted pro forma net income from continuing operations to pro forma equity. These non-GAAP financial measures are supplemental measures of our performance and are not required by, or presented in accordance with, GAAP. We use the non-GAAP measures to provide us and other interested third parties a basis to better understand our ongoing operating results on a consistent basis. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. The non-GAAP financial measures used in this prospectus have limitations as analytical tools, and you should not consider them in isolation or as a substitute for the analysis of our results as reported under GAAP. You should be aware that in the future we may incur expenses that are the same as, or similar to, the adjustments used in this prospectus. Our presentation of adjusted pro forma net income from continuing operations should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Throughout this prospectus we also refer to the term FICO score, which means a credit score developed by Fair Isaac Corporation. A FICO score is widely used as a means of evaluating the likelihood that credit users will pay their obligations. The range of FICO scores is 300-850, with a higher FICO score generally indicating a greater likelihood of repayment. Table of Contents Our customers typically come to us with a specific borrowing need. We believe our customers prefer and benefit from the face-to-face discussion of their household budgets and cash flow needs with our branch employees. Our customers value speed, convenience, service and funds availability as high priorities. Our customers have an average FICO score of 629 and an average income of $45,000. During 2013, we advanced new funds totaling $3.2 billion, and at September 30, 2014, we had $8.3 billion of loans outstanding and 1.3 million customer accounts. For the year ended December 31, 2013, we had net income of $536 million, representing a return on assets of 5.4% and return on equity of 19.9%. For the nine months ended September 30, 2014, we had net income of $415 million, representing a return on assets of 5.7% and return on equity of 17.9%. Our Strengths Largest Consumer Finance Branch Network in the United States with Complementary Centralized Support Operations Our business is large and well established with 1,140 branches as of September 30, 2014, serving 1.3 million customer accounts across 43 states. Our national, community-based branch network is the foundation of our relationship-driven business model and is the product of thoughtful market identifications and profitability analysis. Our centralized operations provide customer services, transaction processing and late-stage collection efforts, driving operating efficiencies and risk and compliance control. We believe the scale of our business, resulting operating efficiencies, proprietary industry knowledge and investment in regulatory compliance contribute significantly to our success and profitability. Industry-Leading Technology Strategy and Platform We believe that our technology platform is a strategic asset, and we maintain a well-defined technology strategy and investment plan to protect our competitive edge. Technology investments improve our speed of service and ability to respond to customer needs and help drive our efficiency, scale and stable operations. We use a centrally-run technology platform with proprietary applications for originations, servicing and collections to provide a seamless, real-time link between our branches and our centralized operations. The cornerstone of this platform is our internally developed, front-office processing platform that integrates our key business functions into a single, web-based solution. Additionally, our expanding digital capabilities are helping us service and grow our customer base. Centralized Risk Analytics Supported by Our Proprietary, National Database Our longevity and stability result from our focus on providing straightforward, traditional loan products and our conservative approach to originating loans. While our branches originate and service loans, our pricing, loan underwriting and approval decisions are made centrally through our risk management system. Our disciplined risk management model and advanced analytics effectively complement localized branch operations to drive low default and delinquency rates. We use a rigorous underwriting process that leverages industry and proprietary credit tools built using customer performance data from our national lending database. Our long-tenured and experienced branch staff complements our data-driven process. Extensive Experience with Complex Regulatory Oversight and Strong Compliance Culture We have extensive experience operating in a complex and highly regulated environment. We have built a robust compliance culture in the last decade and established processes and controls to monitor our legal and regulatory adherence. Our primary regulators are state regulators from whom we have state level licenses, the Table of Contents Board of Governors of the Federal Reserve System, or the Federal Reserve Board, and the Consumer Financial Protection Bureau, or the CFPB. In 2013, state regulators conducted exams of over 600 of our branches and centralized sites. In addition, as a subsidiary of a bank holding company, we have been closely examined a number of times by the Federal Reserve Board and continue to have regular interactions with them. We also have been examined several times by the CFPB, and we believe our business is well suited to address their requirements. Robust Financial Performance We increased our profitability in 2012 and 2013 with net income of $407 million and $536 million, a return on assets of 4.0% and 5.4% and an operating efficiency ratio of 34.8% and 32.5% in each of the two years, respectively. We believe our profitability can be attributed to our rigorous underwriting process, strong pricing and expense discipline, operational expertise and loyal customer base. Seasoned Management with Extensive Industry Experience We have highly experienced employees throughout all levels of our organization. Mary McDowell, our Chief Executive Officer and President, is an accomplished financial services executive with more than 30 years of experience in consumer finance and was the 2010-2011 Chair of the American Financial Services Association, the consumer credit industry s trade organization. Our senior leadership has an average of 24 years of experience in consumer finance and an average tenure of 19 years at OneMain and/or Citi. Our branch network employees and managers hold an average tenure of 11 and 14 years, respectively, and our district managers and area directors average 19 and 25 years of experience, respectively, when looking at their combined years of service at OneMain and Citi. Our Business and Growth Strategy We are a leading branch-based consumer finance business in the United States, and our strategy is to enhance stockholder value by (1) maintaining our attractive profitability profile and (2) growing our business through new origination channels, capabilities and products, as follows: Maintain Our Attractive Profitability by Focusing on Fundamental Aspects of Our Business Customer-Centric Strategy: Our customer-centric strategy is to continue to deliver responsible solutions consistent with fair lending principles to our customers to grow our market and gain market share. Improving the customer experience is the primary motivation for our investments in digital, product and service innovations. Data-Driven, Analytical Approach to Profit Optimization: Data analysis is the core of our business engine, and the multi-decade history of consumer behavior that forms the backbone of our analytics gives us a strong competitive advantage. Our ability to link marketing activity, branch incentives, financial return and risk analytics to drive profitability forms the foundation of our strategy. We continuously improve our data collection, management and analytical capabilities to further expand growth possibilities and focus on the most profitable opportunities. Highly Efficient and Scalable Operations: We believe that we are an industry leader in operating efficiency, and we remain diligent by continuously leveraging digital advancements and other opportunities to optimize our expense base. We test new branch models, layouts, locations and centralized support and distribution options on a regular basis to optimize employee focus on customers while maintaining efficiency. We design technology platforms for our centralized operations and branches that are scalable so that we may grow efficiently. Table of Contents Diverse Funding Sources: The consumer finance business requires constant access to liquidity, and we have the proven ability to finance our business from a variety of funding sources, including cash flows from operations and the capital markets through the completion of three personal loan securitizations, an unsecured debt offering and a warehouse facility that is secured by our personal loans. Our continued access to financing on favorable terms is important to our business and failure to access such financing on favorable terms could adversely affect our financial condition and results of operations. Grow Our Business Through New Origination Channels, Capabilities and Products Increase Personal Loan Volume through New Channels: We are growing volume by expanding outreach to new customers through physical and digital channels. On the physical front, we are focusing on customer referrals and partnerships with retailers and other institutions that cater to our core customer base. We are also growing leads through digital channels by extending our network of over 40 online partners (for example, our relationship with Lending Club, a leading peer-to-peer online lending platform), increasing volume through our dedicated online portal and leveraging channels such as social media. Digital Sales and Service Enablement: We are developing new capabilities as part of our digital strategy to increase loan applications through all channels. We have been testing centralized capabilities to onboard new borrowers that complement our local presence and increase the volume of loans we make. These capabilities allow us to provide rapid response times to customers from both physical and digital channels, for inquiries and pre-closing services. We have launched 20 fully operating Discovery Branches to test new technologies, operating models and processes that increase our productivity, improve the customer experience, accelerate learning and speed deployment across the network. Discovery Branch learnings, along with our investments in new account and data management systems and enhanced web capabilities, are helping us create the flexibility to originate, fund and service loans online. Broaden Our Product Offering: We believe that we can successfully offer additional complementary financial products to our customers. In the nine months ended September 30, 2014, approximately 65% of our customer base purchased optional products in addition to receiving a personal loan. We may either develop additional complementary financial products ourselves or distribute them on behalf of partners. We have achieved success with these strategies in the past. Leveraging our risk expertise and extensive branch network with expanded solutions has the potential to both increase the products available to existing customers and attract new customers. Table of Contents Industry and Market Overview The U.S. consumer finance industry has approximately $3.2 trillion of outstanding borrowings and includes vehicle loans and leases, credit cards, student loans and personal loans. Our 1.3 million customer accounts represent a very small fraction of the approximately 115 million consumers that generally align with our customer base (FICO scores between 550 and 749). A portion of these consumers have non-prime credit scores, meaning that loans to them generally have lower collection rates and are generally subject to higher loss rates than loans to prime borrowers. We believe that most of this population is underserved and provides an attractive market opportunity for our business. $3.2 Trillion Consumer Finance Industry U.S. FICO Score Distribution Sources: Federal Reserve Bank of New York; Federal Student Aid/U.S. Department of Education. As of September 30, 2014. Source: FICOTM Banking Analytics Blog. Fair Isaac Corporation. As of October 31, 2014. As a leading player in the highly-fragmented, non-prime consumer finance industry, we believe we are uniquely positioned to take advantage of our market opportunity. Many existing consumer lenders operate at a regional level and typically have fewer than 200 branches and less than $2 billion in loans outstanding. With 1,140 branches and $8.3 billion loans outstanding as of September 30, 2014, our strategy is to maintain and expand our market share with our robust physical and online presence. Our History and Development We have been operating since the founding of our predecessor, Commercial Credit Company, in 1912. Since our founding, we have grown both organically as well as through various acquisitions. Commercial Credit Company acquired Primerica in 1988, forming the Primerica Corporation, which acquired the Travelers Corporation in 1993. Following the merger of Travelers Group with Citicorp to form Citigroup Inc. in 1998, Commercial Credit Company was rebranded as CitiFinancial in 1999. Prior to 2011, we were part of a larger business within Citi known as CitiFinancial North America, or CFNA, the U.S. business of which contained approximately $10 billion of personal loans and $15 billion of mortgage and real estate loans. In the middle of 2010, CFNA s management decided to split the U.S. business of Table of Contents CFNA into two distinct business lines. OneMain, the go-forward business, retained the majority of CFNA s U.S. personal loans and a portion of its U.S. real estate loans but only until January 2014. CitiFinancial Servicing was formed with the remaining portion that did not strategically align with OneMain s go-forward origination and risk strategy. CitiFinancial Servicing was designed to support certain customers and loans that would benefit from expanded support, including loan modifications or restructurings, rather than originate loans. In effect, CitiFinancial Servicing became a liquidating business. For a discussion of the separation and how it and subsequent transactions are presented in our Consolidated and Combined Financial Statements, see Management s Discussion and Analysis of Financial Condition and Results of Operations Segment Overview. The chart below summarizes the ownership structure that we anticipate at the time of this offering. The Transactions and Our Separation from Citi Citi currently indirectly owns 100% of our common stock. After the completion of this offering, Citi will beneficially own % of our outstanding common stock (or % if the underwriters exercise their over-allotment option in full). Prior to this offering, we expect to declare a dividend of a $ million note, which we refer to as the Dividend Note, and issue the Dividend Note to Citi. We intend to repay the Dividend Note in full (plus any accrued and unpaid interest thereon) with the proceeds of this offering. Upon the consummation of this offering, we will enter into a number of agreements with Citi that will govern our relationship with Citi. We refer to this offering, our establishment of a fully independent capital structure and the various other transactions relating to our separation from Citi as the Transactions. For more information relating to the Transactions, see Unaudited Pro Forma Consolidated and Combined Financial Information. For a discussion of certain risks associated with our separation from Citi, see Risk Factors Risks Relating to Our Organization and Structure. Citi has informed us that, after this offering, it may complete its exit from our business in one or more of several ways. Citi may exit our business by selling or otherwise distributing or disposing of all or a portion of its shares of our common stock, including through a tax-free distribution of all of its remaining shares of our common stock to its stockholders, which we refer to as the Distribution. For more information, see Risk Factors Risks Relating to Our Organization and Structure. Table of Contents Debt Financings Historically, we have funded our operations through cash from our operations and funding provided by Citi. The weighted average interest rate on our historical debt was 3.99% per annum for the nine months ended September 30, 2014 and 3.7% per annum for the year ended December 31, 2013. In preparation for this offering, we have established a fully independent capital structure to finance our liquidity needs from a variety of third-party debt sources. For example, since April 2014, we have raised capital by completing three separate securitizations totaling approximately $3.17 billion of notes collateralized by our personal loans, an issuance of $1.5 billion of unsecured debt and a $3 billion warehouse facility that is secured by our personal loans. See Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources and Description of Certain Indebtedness. Through our establishment of a fully independent capital structure, we are in a position to replace our historical related-party debt from Citi with funding provided by third-party sources. At the completion of this offering, we anticipate that all of our capital will be provided by third-party sources. Pro forma for the Transactions at September 30, 2014, our debt outstanding would have by approximately $ billion, and for the year ended December 31, 2013 and the nine months ended September 30, 2014, our interest expense would have by $ million and $ million, respectively, and our cost of funds would have from % to % per annum, respectively. See Unaudited Pro Forma Consolidated and Combined Financial Information, Management s Discussion and Analysis of Financial Condition and Results of Operations Business Trends and Conditions Changing funding mix and increased funding costs and Management s Discussion and Analysis of Financial Condition and Results of Operations Our Separation from Citi. Dividend Recapitalization On November 18, 2014, we paid a $1.5 billion dividend, or the Dividend Recapitalization, to Citi, which was funded by $1.5 billion of related-party debt from Citi. This dividend was intended to align our equity capital with what we believe is a level needed to support an independent capital structure through our transition away from related-party debt from Citi. Corporate Information Our executive offices are located at 300 St. Paul Place, Baltimore, Maryland 21202, and our telephone number is (410) 332-3000. Our website address is onemainfinancial.com. The information on our website is not a part of this prospectus. Risks Affecting Us As part of your evaluation of our company, you should consider the risks associated with our business, regulation of our business, our indebtedness, our organization and structure and this offering. These risks include: Risks relating to our business, including: (i) our ability to access adequate sources of liquidity to fund operational requirements and satisfy financial obligations; (ii) the impact of macroeconomic conditions; (iii) insufficient allowance for loan losses; (iv) our ability to successfully manage our credit risk; (v) the identification of material weaknesses and significant deficiencies in our internal control over financial reporting; (vi) historical charge-off rates that may not be predictive of future charge-off rates; (vii) the effectiveness of our risk management processes and procedures, and the accuracy of the assumptions or estimates used in our models and in preparing our financial statements; (viii) the competition in the consumer finance industry; (ix) risks and uncertainties associated with our insurance operations; (x) failures or security breaches in our or third parties information systems or Internet platform or disruptions in the operations of our computer systems and data centers; (xi) our transition to, and quality of, new technology platforms; (xii) our ability to protect our intellectual property; (xiii) litigation and Table of Contents regulatory actions; (xiv) damage to our reputation; (xv) our ability to attract, retain and motivate key officers and employees; (xvi) misconduct by our employees or third parties that we employ; (xvii) potential future geographic concentrations of our loan portfolio; (xviii) requirements to repurchase loans from purchasers of loans that we sell or securitize; (xix) our ability to implement our growth strategy and realize the value of strategic investments; (xx) our ability to successfully develop new or enhanced products; and (xxi) natural disasters, acts of war or terrorism or other external events. Risks relating to regulation, including: (i) significant and extensive regulation, supervision and examination of, and enforcement relating to, our business by governmental authorities; (ii) impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and the impact of the CFPB s regulation of our business; (iii) regulations and supervision by the Federal Reserve Board for as long as we are controlled by Citi for bank regulatory purposes; (iv) regulatory scrutiny resulting from selling loans, including charged-off loans and loans where the borrower is in default; (v) the impact of state regulations in the states in which we conduct our business; (vi) regulations relating to privacy, information security and data protection; (vii) use of third-party vendors and ongoing third-party business relationships; and (viii) banking regulations that limit our business activities. Risks relating to our indebtedness, including: (i) the size of our indebtedness, which could affect our ability to meet our obligations under our debt instruments and could impact our business; (ii) the impact of covenants in our debt instruments that may restrict our operations; (iii) our obligations under the indenture governing our unsecured debt restrict our current operations and may restrict our future operations; (iv) the accuracy of the judgments and estimates used in assessing our liquidity; (v) the potential impact to our funding and business resulting from a change in our credit ratings; (vi) the impact of our asset-backed financing transactions and our ability to access the asset-based financing market in the future; and (vii) repayment of the Dividend Note and compliance with its covenants. Risks relating to our organization and structure, including: (i) the interests of Citi conflicting with our interests and with those of our public stockholders, including you; (ii) the sufficiency of assets and resources that we acquire from Citi in our separation from Citi and the difficulties in separating our assets and resources from Citi in our separation from Citi; (iii) loss of some of our arrangements with Citi that existed before this offering; (iv) the impact on our business resulting from competition with Citi after this offering; (v) loss of association with Citi s strong brand and reputation; (vi) certain of our directors experiencing conflicts of interest because of their positions with Citi; (vii) the limited liability of Citi and its directors and officers for breach of fiduciary duty to us or to you; (viii) our consolidated and combined historical financial data and pro forma consolidated and combined financial data do not necessarily reflect future results; (ix) charges in connection with this offering and incremental costs of operating as a stand-alone public company; (x) the allocation of liabilities between us and Citi; (xi) our exemption from certain corporate governance requirements due to our status as a controlled company within the meaning of the New York Stock Exchange rules; (xii) Citi potentially selling a controlling interest in our company to a third party in a private transaction; (xiii) failure of the Distribution to qualify for tax-free treatment, which, if caused by us, may result in significant tax liabilities to Citi for which we may be required to indemnify Citi; (xiv) our reliance on our operating subsidiaries to provide us with the funds that are necessary to meet our financial obligations; (xv) our intention to not pay dividends on our common stock in the foreseeable future; (xvi) the insurance laws and regulations that may delay or impede purchases of our common stock; and (xvii) immediate dilution as a result of this offering. Risks relating to this offering, including: (i) future sales of a substantial number of shares of our common stock; (ii) the development of an active trading market for our common stock; (iii) volatility of the price and trading volume of our common stock; (iv) resources and management attention required to meet the obligations associated with being a public company; and (v) our common stock is and will be subordinate to all of our existing and future indebtedness. For a discussion of these and other risks, see Risk Factors. Table of Contents Conflicts of Interest Prior to this offering, all of our outstanding common stock is indirectly owned by Citi. Citi will continue to own a majority of our outstanding common stock immediately following completion of this offering and we expect will receive $ million in connection with our repayment of the full amount due to Citi under the Dividend Note using the proceeds of this offering. If the underwriters exercise the over-allotment option, Citi will also receive all of the net proceeds from such exercise. In addition, prior to this offering we have had, and after this offering we will continue to have, numerous commercial and contractual arrangements with affiliates of Citi. Citigroup Global Markets Inc., the sole book-running manager of this offering, is a wholly owned subsidiary of Citigroup Inc. Because Citigroup Global Markets Inc. is under common control with us and the selling stockholder, and because the selling stockholder, an affiliate of Citigroup Global Markets Inc., will receive at least 5% of the proceeds of this offering, a conflict of interest under Financial Industry Regulatory Authority, Inc., or FINRA, Rule 5121 is deemed to exist. This offering will be conducted in accordance with that rule. As required by FINRA Rule 5121, has agreed to act as the qualified independent underwriter for this offering and has participated in the preparation of, and has exercised the usual standards of due diligence in respect of, this prospectus. See Risk Factors Risks Relating to Our Organization and Structure, Use of Proceeds and Underwriting Conflicts of Interest. Table of Contents
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our" and "Lissome" are to Lissome Trade Corp. Inc.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read the entire prospectus carefully, including the section entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus before making an investment decision to purchase shares of our common stock. In this prospectus, unless we indicate otherwise or the context requires, references to the "company," "Inovalon," "we," "our," "ours," and "us" refer to Inovalon Holdings, Inc. and its consolidated subsidiaries. The following summary is qualified in its entirety by the more detailed information and consolidated financial statements and notes thereto included elsewhere in this prospectus. On January 14, 2015, our board of directors approved a five-for-one stock split of our Class A common stock and Class B common stock. Effective January 16, 2015, we amended our certificate of incorporation to give effect to the stock split and to change our authorized common equity capital to 900,000,000 shares of common stock, 750,000,000 shares of Class A common stock, and 150,000,000 shares of Class B common stock, all par value $0.000005 per share. All share data included in this prospectus give retroactive effect to the stock split and related amendment to our certificate of incorporation. Inovalon Holdings, Inc. Our Company We are a leading technology company that combines advanced cloud-based data analytics and data-driven intervention platforms to achieve meaningful insight and improvement in clinical and quality outcomes, utilization, and financial performance across the healthcare landscape. Our powerful platforms drive high-value impact, improving quality and economics for health plans, hospitals, physicians, patients, pharmaceutical companies, and researchers. The value we deliver to our clients is achieved by turning data into insights and those insights into action. Through our large proprietary datasets, advanced data integration technologies, sophisticated predictive analytics, and deep subject matter expertise, we deliver seamless, end-to-end platforms that bring the benefits of big data and large-scale analytics to the point of care. Our analytics identify gaps in care, quality, data integrity, and financial performance, while our data-driven intervention platforms provide clients with differentiated capabilities to resolve these gaps. During 2014, we provided these services to more than 100 clients representing approximately 200 patient populations, providing analytics informed by our data and insight on more than 754,000 physicians, 248,000 clinical facilities, 120 million unique patients (covering approximately 98.2% of all U.S. counties), and 9.2 billion discrete entries relating to patient interactions, medical procedures or changes in patients' medical conditions, which we refer to as medical events, a number that has been increasing at a rate of approximately 3.0% compounding monthly, or 42.6% annually, since 2000. Healthcare costs in the United States have been increasing significantly for many years, currently approaching almost $3 trillion annually. This rise in healthcare costs has driven a broad transition from consumption-based payment models to value-based payment models across the healthcare landscape. As a result, the specific disease and comorbidity status (i.e., the presence of one or more diseases or medical conditions co-occurring with a primary disease or medical condition), clinical and quality outcomes, resource utilization, and care details of the individual patient have become increasingly relevant to the various constituents of the healthcare delivery system. Concurrently, the count and complexity of diseases, diagnostics, and treatments let alone payment models and regulatory oversight requirements have soared. In this setting, granular data has become critical to determining and improving quality of care and financial performance in healthcare. AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents We believe that the opportunity before us is substantial as data increasingly becomes the lynchpin in healthcare from clinical quality outcomes and financial performance, to the consumer experience and drug discovery. A January 2013 McKinsey & Company, or McKinsey, report estimates that utilizing data analytics could drive improvements in healthcare resulting in a beneficial economic impact of $300 billion to $450 billion annually. As a reflection of the increasing need for data analytics, in the last several years our advanced analytics and data-driven intervention platforms have been driving significant economic impact through improvements in clinical and quality outcomes, disease and comorbidity data accuracy, and utilization, achieving hundreds of millions of dollars per year in quantified beneficial financial improvements for our clients. At the core of our capabilities is a long history of innovation and profitable growth, positioning us to deliver value to our clients and capitalize on the confluence of recent changes in the healthcare industry that many describe as historically unprecedented. Our ability to rapidly innovate is enabled by the depth and breadth of our industry expertise, large-scale proprietary datasets, advanced analytical prowess, highly flexible platform components, a common native code base, and experience across the healthcare landscape. We deliver value to our clients through our platforms, which are accomplished through four primary components: Data Integration: Highly efficient and effective data assimilation of structured and unstructured healthcare data in any format from highly disparate and disconnected sources; Advanced Analytics: Data analysis using big-data processing to yield highly actionable insights identifying gaps in care, quality, data integrity, and financial performance; Intervention Platforms: Software and services that allow our clients to take the insights derived from our analytics to address and resolve the identified gaps in care, quality, data integrity, and financial performance; and Business Processing: Powerful business intelligence tools that summarize key analytics and benchmarking information as well as a comprehensive claims data warehouse that helps our clients comply with government mandated reporting requirements. Our ability to deliver value to our clients through our advanced analytics and intervention platforms has allowed us to achieve significant growth since the company's organization. Over the last three years, our revenue has increased at a compounded annual growth rate of 19%, Adjusted EBITDA at a compounded annual growth rate of 20%, and net income at a compounded annual growth rate of 33% despite a 1% revenue decrease during the year ended December 31, 2013 as compared to the year ended December 31, 2012. For the nine months ended September 30, 2014, our revenue was $271.6 million, representing 17% growth over the same period of the prior year. In this same period, we generated Adjusted EBITDA of $103.1 million, representing 38% of revenue and 77% growth over the same period in the prior year. Net income for the nine months ended September 30, 2014 was $51.9 million, representing 19% of revenue and a 92% increase over the same period in 2013. Adjusted EBITDA is a non-GAAP measure. For a reconciliation of Adjusted EBITDA to net income, see "Selected Consolidated Financial Data." Industry Overview We believe that the increasing demand for our platform is driven by the confluence of four fundamental healthcare industry trends: Unsustainable Rise in Healthcare Costs. Healthcare spending in the U.S. was almost $3 trillion in 2012 according to the 2012 National Health Expenditure Highlights prepared by the Centers for Medicare and Medicaid Services, or CMS, representing more than 17% of U.S. Gross Domestic Product, or GDP. The 2014 set of healthcare cost projections from the Congressional Budget Office, or the CBO, indicate national healthcare spending will rise to 22% of GDP by 2039. Inovalon Holdings, Inc. (Exact name of registrant as specified in its charter) Table of Contents To address this expected significant rise in healthcare costs, the U.S. healthcare market is seeking more efficient and effective methods of delivering care. This same trend is playing out across modernized nations around the globe. Shift to Value-Based Healthcare. The traditional fee-for-service reimbursement model in healthcare has played a major role in elevating both the level and growth rate of healthcare spending. In response, both the public and private sectors are shifting away from the historical fee-for-service models toward value-based, capitated payment models that are designed to incentivize value and quality at an individual patient level. As seen in the figure below, the number of Americans covered by capitated payment programs (care programs wherein an organization is financially responsible for the healthcare of a population of patients for which the total compensation is fixed other than adjustments for factors including specifically how sick individual patients are, how much resource is needed to be applied or spent on each patient, what is the quality of the clinical care, and other demographic factors) has been increasing rapidly and, according to industry sources and our internal estimates, is anticipated to increase from approximately 80 million at the start of 2014 to over 150 million by 2019. This increase is expected to further drive the critical importance to accurately measure, analyze, report, and improve patient disease and comorbidity conditions, utilization rates, and clinical quality outcomes. Digitization of Healthcare Information. Across the healthcare landscape, a significant amount of data is being created every day driven by patient care, payment systems, regulatory compliance, and record keeping. These data include information within patient health records, clinical trials, pharmacy benefit programs, imaging systems, sensors and monitoring platforms, laboratory results, patient reported information, hospital and physician performance programs, and billing and payment processing. Despite significant investments by public and private sources within the industry, however, the digitized healthcare data remain largely stored in "walled gardens" data that is static and not easily shared or interpreted. As the amount of data in healthcare continues to grow, we believe that it will be critical for the healthcare industry to be able to use this disparate data to better achieve the goals of higher quality and more efficient care. Table of Contents Increasing Complexity. The healthcare industry is on a course of dramatically progressive complexity. As technology employed in the healthcare space has become increasingly sophisticated, new diagnostics and treatments have been introduced, the pool of clinical research has expanded, and the paradigms dictating payment and regulatory oversight have multiplied. This expanding complexity drives a growing and continuous need for analysis of the underlying and resulting data. Problems Our Clients Face As the U.S. healthcare market continues to transform, the aforementioned industry trends have set into motion a number of significant challenges faced by our clients. We believe that we are well-positioned and have the solutions to help clients not only adapt to, but thrive within, the new healthcare landscape. Understanding and Improving Clinical Quality Outcomes. Quality and value-based, capitated programs require that clinical and quality outcomes be measured at the individual patient level. These measures require detailed and highly granular reporting of the care sought and delivered to each patient to allow for the accurate calculation of population quality metrics. The results of these quality measurements drive significant financial incentives and consequences, influencing more than an estimated $3 billion in quality-related payments annually. Understanding the True Health Status of Patients. The ability to establish the appropriate treatment protocol among multiple physicians, ensure that patients are supported with the correct care resources and monitored for the proper patient-relevant quality metrics, and determine the overall population risk is contingent on the ability to become accurately aware of a patients' disease and comorbidity status. Having detailed and highly granular reporting of the disease and comorbidities of each patient is essential for care, quality, and financial performance. Understanding and Improving Utilization. Under new legislation, health plans are required to submit data on the percentage of revenue collected from health insurance premiums that is spent on clinical services and quality improvement, which is more commonly known as the Medical Loss Ratio, or the MLR. If health plans fail to meet set MLR thresholds, they are required to rebate the customer. If the cost of care exceeds the MLR threshold, however, health plans must absorb the shortfall. Given the importance of accurately reporting the MLR and managing the underlying healthcare costs, many health plans enter into complex arrangements with key providers in their networks and other industry constituents (such as pharmaceutical companies and pharmacy benefit managers) through shared risk arrangements and performance bonus programs to help manage costs, drive improvements in patient health, and achieve long-term utilization containment and quality goals. Complying with Increasingly Complex Regulatory Requirements. Federal and state regulation and compliance is increasing and becoming ever more complex, with agencies at nearly every level of government regulating the activities of organizations participating within the healthcare marketplace. The breadth, complexity, and intensity of regulation require these organizations to focus nearly every activity through a compliance lens in order to meet the data-intensive regulatory reporting requirements. Enabling and Empowering the Consumer. Individuals can now buy direct coverage, select clinicians and hospitals, and directly research implications of specific medications, procedures, and treatment courses. Further, the individual is increasingly participating in the quantified-self movement in which they can self-monitor their key health metrics. This shift to a more informed and engaged consumer is resulting in new challenges and opportunities for how practice groups, payors, employers, pharmaceutical companies, retail pharmacies, and other healthcare constituents interact with consumers. 4321 Collington Road Bowie, MD 20716 (301) 809-4000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Unlocking the Value of Data through Actionable Interventions. A key commonality among the changes in the healthcare landscape is the importance of highly granular data. However, data by itself has limited usefulness without the right technology and systems in place to analyze and act on it and drive meaningful action. We believe that the leveraging of data is the critical differentiator in deriving meaningful insight and turning that insight into action to drive valuable impact across the healthcare landscape. However, in today's healthcare technology environment, much of this data goes unrecorded in a structured or meaningful way, unintegrated with other pertinent data related to the patient's events or conditions, and unanalyzed for the purposes of driving improvements in care and affordability. Easily Deploying and Interoperating Platforms at Massive Scale. The ability to receive, seamlessly integrate, and accurately process extremely large-scale data flows efficiently and at high speeds is increasingly important and necessary for the healthcare industry. However, data integration and processing in massive scale is extremely challenging, which prevents the various components of the healthcare landscape from effectively communicating and coordinating with one another to deliver higher quality care. Overcoming this in scale is integral to managing large patient populations efficiently and effectively. Our platforms provide solutions to help address our clients' challenges and drive meaningful improvements in the clinical quality outcomes and financial performance across a wide expanse of our society's healthcare landscape. Our Market Opportunity We believe that our opportunity is significant and growing. According to a January 2013 McKinsey report, utilizing data analytics could reduce healthcare costs in the United States by $300 billion to $450 billion, or 12% to 17% of total U.S. healthcare costs today. The ability to aggregate, integrate, and analyze data in massive scale and apply garnered insights in a manner that achieves meaningful impact is crucial for healthcare payors (e.g., health plans and integrated health delivery systems), clinical providers (e.g., hospitals, ACOs, and physicians), pharmaceutical and life sciences companies, and consumers. We estimate that our addressable market for these capabilities serving these healthcare constituents to be approximately $83.8 billion. We believe that the market opportunity for our current platform offering within the payor market, the historical focus of our company, is approximately $10.6 billion. According to industry sources, the market for software and related services is approximately $14.0 billion within the U.S. payor market. We believe that as analytics continue to demonstrate greater value within the U.S. payor landscape, the market will expand commensurately. As we continue to build and launch new capabilities, we believe it will provide a significantly larger value opportunity within this same payor space. For providers, industry sources estimate that software and related services represent a $32.3 billion U.S. market size. In the global pharmaceutical and life-sciences market, International Data Corporation, or IDC, in a 2013 report, estimates a $30.9 billion market size for total software and services spend in 2013. In the consumer market, an October 2013 Research and Markets report estimated a $6.6 billion global market size for mobile health applications and solutions. As with our other market segments, we believe that analytics will also drive a significant expansion in the consumer market. In addition, the pressures that face the U.S. healthcare market are not unique, as other communities around the world are facing aging populations and growing pressures in the sustainable affordability of healthcare. We believe that our capabilities are highly applicable to other developed and developing countries around the globe, which we believe represents a sizable related future opportunity for us. Our Platforms Through the application of our platforms, we help our clients achieve large-scale insight and meaningful improvement in clinical and quality outcomes, utilization, and financial performance. Keith R. Dunleavy, M.D. Chief Executive Officer and Chairman Inovalon Holdings, Inc. 4321 Collington Road Bowie, MD 20716 (301) 809-4000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David P. Slotkin Spencer D. Klein Justin R. Salon Morrison & Foerster LLP 2000 Pennsylvania Avenue, Suite 6000 Washington, DC 20006 (202) 887-1500 Shauna L. Vernal Chief Legal Officer Inovalon Holdings, Inc. 4321 Collington Road Bowie, MD 20716 (301) 809-4000 Rachel W. Sheridan John H. Chory Latham & Watkins LLP John Hancock Tower, 27th Floor 200 Clarendon Street Boston, MA 02116 (617) 948-6000 Table of Contents In deploying our technology to attain the results our clients require, they want us to synthesize opaque, convoluted, and disparate data into actionable information aligned with individualized goals and, in turn, empower patient and provider intervention platforms that achieve the realization of their goals in a measurable way. The diagram below illustrates the components of our technology platforms. Our platforms' capabilities are currently engaged by more than 100 clients supporting approximately 200 patient populations that leverage our ability to analyze and improve clinical and quality outcomes and financial performance. Data Integration: Datasets and the management of data are part of our core strengths, which give us insight into how a patient, provider, or population is doing. We integrate data seamlessly and securely into our systems through our proprietary extraction, transformation, and load tools and processes. Data we receive in the course of providing our services are statistically de-identified and stored in our Medical Outcomes Research for Effectiveness and Economics Registry, or MORE2 Registry , which, as of December 31, 2014, contained more than 9.2 billion medical events from more than 120 million unique patients, 754,000 physicians, and 248,000 clinical facilities, touching 98.2% of all U.S. counties and Puerto Rico and growing at a rate of approximately 42.6% annually since 2000. Advanced Analytics. For years we have developed, honed, and scaled a portfolio of sophisticated analytics. Applying our team's deep subject matter expertise in compute processing, data architecture, statistics, medical sciences, and healthcare policy, and leveraging the billions of medical events within our significant propriety datasets, we believe that we have developed one of the most advanced analytical platforms within the industry, as well as a culture and set of analytical Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee(2) Class A Common Stock, $0.000005 par value per share 25,555,555 $26.00 $664,444,430 $71,269.34 (1)Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes the additional shares the underwriters have the right to purchase from the Registrant, if any. (2)Previously paid. Pursuant to Rule 457(a), no additional fee is payable as a result of the increase in the proposed maximum aggregate offering price per share reflected herein. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents toolsets that serve to rapidly innovate and significantly expand our platform. Examples of the innovative analytics powered by this combination of data and processing capabilities include: disease and comorbidity presence and closure probability determination analytics; clinical and quality outcomes gap presence and closure probability determination analytics; medication compliance and persistence analytics; principally relevant provider determination analytics; targeted intervention timing optimization analytics; targeted intervention venue and logistics optimization analytics; gap resolution valuation determination and prioritization analytics; population simulation analytics; and relative comparative analytics. Intervention Platforms. Our data-driven intervention platforms are toolsets and services that enable our clients to take the insights derived from our analytics and implement solutions at the patient and provider level in order to achieve meaningful impact with the patient and provider. Our data-driven intervention platform tools encompass both internal administrative tasks as well as outbound, patient-oriented and provider-oriented functions. Examples of our intervention platform tools include: point of care tools that provide patient-level insight to the healthcare provider, which guides the provider to aid in the assessment, documentation, and care of a specific patient; communication tools that support a wide range of notifications and interactions with patients and providers at the appropriate level of implied education and language to aid in the process of achieving patient and provider actions; supplemental patient encounter tools that facilitate the coordination of data-driven patient encounters for those who are unable to participate in traditional office encounter venues; and medical record data tools that facilitate electronic medical record data pulls, remote accessing, and clinical facility communications regardless of the underlying medical record data medium (e.g., digital or paper). Business Processing. Our business processing toolsets are made up of a powerful business intelligence system and comprehensive data warehousing, which provide historical and current data insight, reporting, and benchmarking to support multiple client business needs such as government-mandated data filings, financial planning, and compliance requirements. Our Competitive Strengths We believe that our operational and financial success is based on the following key strengths: Industry-Leading Analytics. We have demonstrated performance and leadership in disease and comorbidity identification analytics, predictive model analytics, patient and provider intervention prioritization analytics, quality outcomes analytics, and a host of additional analytical and data-driven processes. Based on our experience in the industry and our interactions with existing and prospective clients, we believe that very few other organizations, if any, are able to offer the depth and breadth of data-driven analytical insights, tools, and actionable interventions that our platforms are able to offer. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated February 10, 2015. 22,222,222 Shares Class A Common Stock Table of Contents Industry-Leading Data Asset. We maintain one of the industry's largest independent datasets in our MORE2 Registry. The primary source nature of the contributing data, the clinical content depth of certain elements, the analytically-derived enrichments, the significant data integrity, and the ability to maintain accurate identification of entries and patient matching over time regardless of data source and chronology (a valuable characteristic within our datasets known as longitudinal matching) all combine to create a unique and valuable asset. We believe that these datasets serve as a significant differentiator, informing analytical and product strength design, population simulations, health outcomes research, patient engagement, and both speed-to-market and speed-to-impact capabilities. Fully Integrated End-To-End Solution Delivery. Our platform is able to turn data into insights and insights into actionable interventions. The ability of our platform to integrate disparate and highly complex data to derive impactful and actionable insights has enabled us to bridge the gap from analytics to practical applications on a vast scale. Scale of Organically Developed Platform. We have developed a highly efficient and scalable data and analytics platform that has successfully scaled to serve many of the nation's largest health plans as well as hundreds of separate patient populations concurrently. This platform has been developed on one common code base, supporting strong interoperability within our platform, efficiency in innovating and expanding our platform capabilities, and establishing both predictability and reliability when operated at high levels of load. Subject Matter Expertise. We have, and plan to continue to cultivate, a culture of fostering domain expertise. We maintain a dedicated research team comprised of industry experts and thought leaders, including physicians, as well as clinical, statistical, economical, and data research scientists, and field practitioners who focus on next-generation healthcare solutions and data applications. In addition, we empower our product groups with their own industry experts who focus on research and development in their respective product domains. Industry Innovator and Thought-Leader. We invest considerable time and resources to produce ground-breaking research and strategically share it through industry publications, peer presentations, strategic relationships, and the media. Our MORE2 Registry is routinely featured at high-profile industry events and within influential publications, which we believe further reinforces our brand as an industry innovator and thought-leader. Long, Successful, Profitable Operating History. We have been delivering value to our clients while gaining scale and profitability since 2006, the year of our reorganization as a C corporation. This scale and profitability has provided organizational stability, an empowerment to invest in ongoing research and development, a high level of trust and confidence in us from our existing clients and potential clients, and ready access to resources to meet our clients' needs. Trusted, Independent, and Unbiased Partner. We are not owned or influenced by a health plan or private equity organization. As a result, our data and analyses remain truly independent, not biased to any single patient base, we are incentivized to be transparent with our clients, and we believe our goals are more fully aligned with the success of our clients. We have grown by attracting clients, accumulating increasingly larger and more robust datasets, and developing more advanced analytics from this growing dataset that deliver increasingly valuable insights and impact. By providing increasingly valuable insights and performing increasingly effective patient and provider interventions we are able to deliver greater value to our clients. As our data asset continues to grow, our analytics and intervention solutions become even more effective and our clients realize even more value from our solutions. This in turn This is the initial public offering of shares of Class A common stock of Inovalon Holdings, Inc. We have two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of our Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock will be entitled to one vote per share. Each share of Class B common stock will be entitled to 10 votes per share and will be convertible at the election of each holder at any time, or automatically upon the occurrence of certain events, into one share of Class A common stock. Immediately following the completion of this offering, outstanding shares of our Class B common stock will represent approximately 98% of the voting power of our outstanding common stock. See "Description of Capital Stock Class A and B Common Stock." Prior to this offering, there has been no public market for our Class A common stock. It is currently estimated that the initial public offering price per share will be between $24.00 and $26.00 per share. We have been approved for listing of our Class A common stock on the NASDAQ Global Select Market under the symbol "INOV." We are an "emerging growth company" as defined under federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements. Investing in our Class A common stock involves significant risks. See "Risk Factors" beginning on page 23 to read about factors you should consider before buying shares of our Class A common stock. Table of Contents results in greater demand for our solutions and attracts new clients. We believe that this virtuous cycle provides us with a competitive position that cannot be easily replicated. Growth Strategies Our objective is to continue to provide leading data analytics and intervention platforms across the healthcare landscape while continuing to grow profitably. We intend to achieve this objective through the following key strategies. Deliver Increasing Value to Existing Clients. We believe that we have a significant opportunity to deliver increasing value to our existing clients and this, in turn, will drive continued growth for us. As our clients recognize value and success as a result of working with our platforms, we frequently see our clients grow in their patient count and increase the number of products engaged with us both of which result in our mutual success and growth. As we continue to deliver value to our clients, we plan to increase revenue from our existing clients by expanding their use of our platforms, selling to other parts of their organizations, and selling additional analytical toolsets and services to them. Continue to Grow Our Client Base. We believe that we are still in the early stages of realizing our substantial opportunity to grow our client base. We intend to leverage our expertise and experience from the existing large client base to gain new clients through increased investment in our sales force and marketing efforts. Continue to Innovate. Our strength in applying advanced, big data, cloud-based data analytics and our proprietary datasets enable us to achieve increasingly more impactful results for our clients. We intend to continue to invest in research and development to further enhance our data analytics and intervention platforms. Continue Expanding into Adjacent Verticals. We believe the application of advanced analytics and data extends well beyond our current market opportunities and provides additional adjacent market verticals for growth. These verticals include providers, pharmaceutical and life sciences, employer and private exchanges, and direct to consumer. Expand Reach through Growing our Channel Partnerships. While we have been successful in growing our business through our direct sales efforts, we believe there is a significant opportunity that exists for us to further expand and accelerate our reach through channel partnerships with organizations such as retail clinics, pharmaceutical companies, contract research organizations, large technology solution providers, and consulting firms. Continue to Leverage our Technology Partnerships. The healthcare industry has traditionally lagged behind the technology innovation curve. Our advanced data processing and analytics capabilities, coupled with infrastructure thought leadership from leading vendors like EMC, has enabled us to empower our clients with powerful data-driven solution offerings and further transform the use case of modern technologies across the evolving IT healthcare landscape. We intend to continue to invest in these partnerships with thought leaders in the software and infrastructure sector. Expand Internationally. Governments, corporations, and consumers worldwide face similar pressures as within the U.S. with respect to their healthcare systems. We believe that our capabilities are highly applicable to other countries around the world and we intend to invest in replicating our success in the U.S. market to other strategic countries and regions. Selectively Pursue Acquisitions. We plan to selectively pursue acquisitions of complementary businesses, technologies, and teams that will allow us to add new features and functionalities to Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents our platform and accelerate the pace of our innovation and expansion into adjacent market spaces beyond what we can achieve organically. Leverage our Dynamic, Passionate and Mission-Focused Culture. We believe that our work must meet a higher standard. We believe that the analytics that we design, deliver, and support achieve an impact in the lives of real people parents, spouses, partners, siblings, and children making integrity and quality cornerstones of our culture. Our dedication to integrity and quality extends to the proprietary technology used for medical data integration, analysis, abstraction, and reporting. Even more importantly, this culture is embraced throughout our company. Recent Developments Financial and Operating Information Preliminary Unaudited 2014 Financial and Other Data Our unaudited consolidated financial and key metrics data for the three months and the year ended December 31, 2014 presented below is preliminary and estimated financial information prepared by our management in good faith based upon our internal reporting for the three months and year ended December 31, 2014. Where indicated, these estimates are provided as a range. As these estimates are preliminary, actual results may still occur outside of the provided range. These estimates are preliminary and represent the most current information available to management. We have not identified any unusual or unique events or trends that occurred during the period which might materially affect these estimates. The unaudited financial information set forth below is subject to adjustments that may be identified when audit work is performed on our preliminary, unaudited financial information. As a result, our actual financial results for the three months and year ended December 31, 2014 may be different from the preliminary estimates herein and those differences could be material. In addition, our independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures on this preliminary financial data, and accordingly, does not express an opinion or other form of assurance with respect to this preliminary financial data. These estimates should not be viewed as a substitute for our full interim or annual financial statements prepared in accordance with GAAP. As a result, you are cautioned not to place undue reliance on the information furnished in this presentation and should view this information in the context of our 2014 results when such results are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014. See "Risk Factors" and "Forward-Looking Statements." For a further description of Adjusted EBITDA and Adjusted EBITDA margin, non-GAAP measures, and our MORE2 Registry dataset metrics, Trailing 12 month Patient Analytics Months, Engaged Patient Populations, revenue from data analytics subscriptions and revenue from data-driven intervention platform services, see " Summary Consolidated Financial and Other Data" and "Selected Consolidated Financial Data." Three Months Ended December 31, Year Ended December 31, 2013 2014 2013 2014 (estimated & unaudited) (estimated & unaudited) Low High Low High (in thousands) Consolidated Statement of Operations Data: Revenue $ 64,534 $ 88,400 $ 90,400 $ 295,798 $ 360,000 $ 362,000 Income from operations $ 8,189 $ 23,100 $ 25,100 $ 52,445 $ 109,000 $ 111,000 Net income $ 5,735 $ 13,100 $ 14,100 $ 32,718 $ 65,000 $ 66,000 Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to Inovalon $ $ (1)Adjusted EBITDA and Adjusted EBITDA margin are financial measures not calculated in accordance with U.S. generally accepted accounting principles, or GAAP. For definitions of Adjusted EBITDA and Adjusted EBITDA margin, as well as the reasons why we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and, to the extent material, any additional purposes for which we use Adjusted EBITDA and Adjusted EBITDA margin, see "Selected Consolidated Financial Data." (2)Credit facilities plus capital lease obligations, less current portion. Table of Contents Inovalon Holdings, Inc. Notes to Consolidated Financial Statements (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue from significant clients, those representing 10% or more of total revenue for the respective periods, is summarized as follows: Year Ended December 31, Nine Months Ended September 30, Revenue: 2011 2012 2013 2013 2014 (Unaudited) Client A 17 % * 10 % 10 % * Client B 15 % 17 % * * * Client C 12 % * * * * Client D 11 % 11 % 11 % 11 % * Client E * 11 % 12 % 11 % * Client F * * 11 % (1)See "Underwriting" for additional information regarding underwriting compensation. Table of Contents The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated: Three Months Ended December 31, Year Ended December 31, 2013 2014 2013 2014 (estimated & unaudited) (estimated & unaudited) Low High Low High (in thousands) Reconciliation of Net Income to Adjusted EBITDA: Net Income $ 5,735 $ 13,100 $ 14,100 $ 32,718 $ 65,000 $ 66,000 Depreciation and amortization 4,412 4,800 4,900 15,517 19,800 19,900 Interest expense 18 1,100 1,200 79 1,300 1,400 Interest (income) (3 ) (9 ) Provision for income taxes 2,439 9,500 9,600 19,657 43,300 43,400 EBITDA 12,601 28,500 29,800 67,962 129,400 130,700 Stock-based compensation 434 1,500 1,700 1,842 2,800 3,000 Other non-comparable items (a) 1,565 Professional service fees (b) 478 478 800 800 Adjusted EBITDA $ 13,513 $ 30,000 $ 31,500 $ 71,847 $ 133,000 $ 134,500 (a)Other "non-comparable items" include business transaction-related professional fees, corporate name change and associated rebranding expenses, workforce restructuring expenses, and certain legal costs. We believe these are non-comparable expenses that should be excluded from Adjusted EBITDA in order to more effectively assess our period-over-period and on-going operating performance. (b)Represents legal costs associated with the enforcement of a specific client contract. The legal process associated with this matter began in the first quarter of 2013 and concluded in the second quarter of 2014. Comparison of the Three Months Ended December 31, 2014 to the Three Months Ended December 31, 2013 (Unaudited) Revenue is currently estimated to be between $88.4 and $90.4 million for the three months ended December 31, 2014, representing an estimated increase of approximately 37% to 40% compared to the same period in the prior year. This estimated increase is primarily attributable to an increase in revenue primarily from new clients as well as a net increase from existing clients. Income from operations is currently estimated to be between $23.1 and $25.1 million for the three months ended December 31, 2014, representing an estimated increase of approximately 182% to 207% compared to the same period in the prior year. The estimated improvement in income from operations is primarily due to the increase in revenue, and the reduced cost of revenue as a percentage of revenue driven by revenue mix shifting toward more data-driven analytical solution activities (from data-driven intervention services), as well as continued efficiency gains through technology implementation, standardization of services, and operational process automation. Adjusted EBITDA is currently estimated to be between $30.0 and $31.5 million for the three months ended December 31, 2014, representing an estimated increase of approximately 122% to 133% compared to the same period in the prior year. The estimated increase in Adjusted EBITDA is primarily due to the improvement in our income from operations described above, as well as increased adjustments to net income to arrive at Adjusted EBITDA due to a higher depreciation and amortization and higher stock-based compensation expense. Net income is currently estimated to be between $13.1 and $14.1 million for the three months ended December 31, 2014, representing an estimated increase of approximately 128% to 146% compared to the same period in the prior year. The estimated improvement in net income is primarily due to the growth in income from operations, partially offset by an increase in our provision for income taxes. Table of Contents platforms on which our data analytics and data-driven interventions capabilities are deployed as summarized below (in thousands, except percentages). Year Ended December 31, Nine Months Ended September 30, 2011 2012 2013 2013 2014 Investment in Innovation Research and development(1) $ 14,855 $ 15,499 $ 21,192 $ 16,171 $ 17,376 Capitalized software development(2) 5,778 10,070 10,304 7,341 11,758 Research and development infrastructure investments(3) 421 1,759 3,565 2,853 4,567 Total investment in innovation $ 21,054 $ 27,328 $ 35,061 $ 26,365 $ 33,701 As a percentage of revenue Research and development(1) 6 % 5 % 7 % 7 % 6 % Capitalized software development(2) 2 % 3 % 3 % 3 % 4 % Research and development infrastructure investments(3) 0 % 1 % 1 % 1 % 2 % Total investment in innovation 8 % 9 % 11 % 11 % *Less than 10% Accounts receivable from significant clients, those representing 10% or more of total accounts receivable for the dates noted, is summarized below: December 31, September 30, 2014 Accounts Receivable: 2012 2013 (Unaudited) Client A * * * Client B 18 % * * Client D * * 15 % Client E 14 % 21 % * Client F * * 11 % Client G 13 % * 13 % Client I * * * Client J * The underwriters have the option to purchase up to an additional 3,333,333 shares from us at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares of Class A common stock to purchasers in New York, New York on or about , 2015. Table of Contents Comparison of the Year Ended December 31, 2014 (Unaudited) to the Year Ended December 31, 2013 Revenue is currently estimated to be between $360.0 and $362.0 million for the year ended December 31, 2014, representing an estimated increase of approximately 22% compared to the prior year. This estimated increase is primarily attributable to increase in revenue from new clients as well as a net increase from existing clients. Income from operations is currently estimated to be between $109.0 and $111.0 million for the year ended December 31, 2014, representing an estimated increase of approximately 108% to 112% compared to the prior year. The estimated improvement in income from operations is primarily due to the increase in revenue and reduction in cost of revenues driven by revenue mix shifting toward more data-driven analytical solution activities (from data-driven intervention services), as well as continued efficiency gains through technology implementation, standardization of services, and operational process automation. Adjusted EBITDA is currently estimated to be between $133.0 and $134.5 million for the year ended December 31, 2014, representing an estimated increase of approximately 85% to 87% compared to the prior year. The estimated increase in Adjusted EBITDA is primarily due to the improvement in our income from operations described above, as well as increased adjustments to net income to arrive at Adjusted EBITDA due to higher depreciation and amortization and higher stock-based compensation expense. Net income is currently estimated to be between $65.0 and $66.0 million for the year ended December 31, 2014, representing an estimated increase of approximately 99% to 102% compared to the prior year. The estimated improvement in net income is primarily due to the growth in income from operations, partially offset by an increase in our provision for income taxes.
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+detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus: references in this prospectus to we, us or our company refer to Quinpario Acquisition Corp. 2; references in this prospectus to insider shares refer to the 10,062,500 shares of common stock issued prior to this offering, which include up to an aggregate of 1,312,500 shares of common stock subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part; references in this prospectus to initial stockholders refer to the holders of the insider shares; references in this prospectus to our management or our management team refer to our officers and directors; references in this prospectus to our public shares and public warrants refer to shares of our common stock and warrants which are being sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to public stockholders and public warrantholders refer to the holders of our public shares and public warrants, including our sponsor and management team to the extent they purchase public shares or public warrants, provided that their status as public stockholders and public warrantholders shall exist only with respect to such public shares or public warrants; references to private warrants refer to the warrants we are selling privately to our sponsor and its designees upon consummation of this offering; references in this prospectus to our sponsor refer to Quinpario Partners 2, LLC; except as specifically provided otherwise, the information in this prospectus assumes that members of our sponsor and/or their affiliates do not purchase any units in this offering, and, accordingly, the number of private warrants purchased by our sponsor and its designees will not be reduced, as more fully described in this prospectus; and except as specifically provided otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. General We are a blank check company formed under the laws of the State of Delaware on July 15, 2014. We were formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as our initial business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. To date, our efforts have been limited to organizational activities as well as Table of Contents activities related to this offering. We have not selected any target business on which to concentrate our search for our initial business combination. Our efforts to identify a target business will not be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that operate in the specialty chemicals and performance materials industries. Our management team intends to focus on acquiring companies that will increase stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of business operations of the acquired company. We intend to focus primarily on acquiring companies with an enterprise value between $700 million and $2 billion. We believe that the acquisition and operation of an established business will provide a foundation from which to build a diversified business platform. We will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to the tender offer rules of the Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. We will have until 24 months from the closing of this offering to consummate our initial business combination. If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account and then seek to dissolve and liquidate. In such event, our warrants will expire worthless. We expect the per share redemption price to be $10.00 per share of common stock (regardless of whether the underwriters exercise their over-allotment option in full or in part), without taking into account any interest earned on such funds. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public stockholders. Pursuant to Nasdaq listing rules, our initial business combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the trust account at the time of the execution of a definitive agreement for such business combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or Table of Contents QUINPARIO ACQUISITION CORP. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents businesses that we acquire may have a collective fair market value substantially in excess of 80% of the trust account balance. We currently anticipate structuring our initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of trust account balance test. Management Operating and Investing Experience Over the course of their careers, the members of our management team have developed a broad international network of contacts and corporate relationships we believe will serve as a useful source of investment opportunities. We will seek to capitalize on the global network and investing and operating experience of our management team to identify, acquire and operate one or more businesses in the specialty chemicals and performance materials industries within or outside of the United States, although we may pursue a business combination outside these industries. In the event we elect to pursue an investment outside of these industries, our management s expertise related to that industry may not be directly applicable to its evaluation or operation, and the information contained herein regarding these industries might not be relevant to an understanding of the business that we elect to acquire. Our executive officers all have deep knowledge of the chemicals and performance materials industries, experience in managing global businesses, and experience operating in a public-company environment. Moreover, they have experience with mergers and acquisitions, including business and financial analysis, negotiations, structuring and execution. A majority of our management team served as executive officers and/or directors of Quinpario Acquisition Corp., or Quinpario 1, a former blank check company which raised $172.5 million in its initial public offering in August 2013 and completed its initial business combination in June 2014. We believe that potential sellers of target businesses will view the fact that our management team has successfully closed a business combination with a vehicle similar to our company as a positive factor in considering whether or not to enter into a business combination with us. However, past performance by our management team is not a guarantee of success with respect to any business combination we may consummate. A majority of our executive officers are also partners in our sponsor and Quinpario Partners LLC, a privately owned investment and operating company founded by our Chairman of the Board, Jeffry N. Table of Contents Quinn, and focused on the specialty chemicals and performance materials sector. Quinpario Partners LLC is also our sponsor s managing member. Mr. Quinn and his partners formed Quinpario Partners LLC after leaving Solutia Inc. (formerly NYSE: SOA), a global specialty chemical and performance materials company, following its sale to Eastman Chemical Company (NYSE: EMN). Mr. Quinn was Solutia s Chairman, President and Chief Executive Officer, and two of our other managers were also senior executives of Solutia. All have corporate management experience, extensive operational expertise and significant transactional experience. We believe our management team has the skills and experience to identify, evaluate and consummate a business combination and is positioned to assist businesses we acquire. However, there is no assurance that we will complete an initial business combination nor is there any guarantee that such an initial business combination will be successful. The members of our management team are not required to devote any specific amount of time to our business (although we expect them to devote a reasonable amount of their time to our business) and are concurrently involved with other businesses. There is no guarantee that our current officers and directors will continue in their respective roles, or in any other role, after our initial business combination, and their expertise may only be of benefit to us until our initial business combination is completed, if at all. If any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. See the section titled Management Conflicts of Interest for complete details on the pre-existing fiduciary duties or contractual obligations of our management team. Emerging Growth Company Status We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or our total revenues exceed $1 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Private Placements In September 2014, our sponsor purchased an aggregate of 10,062,500 shares of our common stock, which we refer to throughout this prospectus as the insider shares, for an aggregate purchase price of $25,000, or approximately $0.002 per share. The managing member of our sponsor is Quinpario Partners LLC, and the managing member of Quinpario Partners LLC is our Chairman of the Board, Jeffry N. Quinn. Our sponsor subsequently transferred a portion of its insider shares to members of our management team. The insider shares held by our initial stockholders, which include our sponsor and management team, includes an aggregate of up to 1,312,500 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that our initial stockholders will collectively own 20.0% of our issued and outstanding shares after this offering (assuming they do not purchase units in this offering). Neither our sponsor nor any member of our management team has indicated any intention to purchase units in this offering. The insider shares are identical to the shares of common stock included in the units being sold in this offering. However, the holders have entered into written agreements with us (A) to vote the insider shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to Table of Contents our amended and restated certificate of incorporation with respect to our pre-business combination activities prior to the consummation of such a business combination unless we provide dissenting public stockholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any shares (including the insider shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders rights or pre-business combination activity and (D) that the insider shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, the holders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 20% of the insider shares, the consummation of our initial business combination and (2) with respect to the remaining 80% of the insider shares, the earlier of one year after the date of the consummation of our initial business combination or if after 150 days after our initial business combination, the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30 trading day period. Notwithstanding the foregoing, these transfer restrictions will be removed earlier if, after our initial business combination, we consummate a subsequent (i) liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property or (ii) consolidation, merger or other change in the majority of our management team. In addition, our sponsor has committed that it and its designees will purchase an aggregate of 18,000,000 private warrants at a price of $0.50 per warrant ($9,000,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our sponsor and its designees have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $0.50 per warrant an additional number of private warrants (up to a maximum of 2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. Notwithstanding the foregoing, the number of private warrants to be purchased by our sponsor and its designees will be reduced to the extent that members of our sponsor and/or their affiliates invest in the public offering as described elsewhere in this prospectus because the underwriters have agreed that we will receive the entire aggregate gross proceeds from any such purchases and the discounts and commissions that we would have paid to the underwriters for such purchased units at the closing will instead be placed into the trust account. The proceeds from the private placement of the private warrants will be added to the proceeds of this offering and placed in an account in the United States maintained by Continental Stock Transfer & Trust Company, as trustee. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct UBS Financial Services to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. The private warrants are identical to the warrants included in the units sold in this offering except the private warrants will be non-redeemable and may be exercised on a cashless basis, at the holder s option, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. The purchasers have also agreed not to transfer, assign or sell any of the private warrants or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the private warrants must agree to, each as described above) until 30 days after the completion of our initial business combination. Our executive offices are located at 12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141, and our telephone number is (314) 548-6200. Copies to: David Alan Miller, Esq. Jeffrey M. Gallant, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 818-8800 (212) 818-8881 Facsimile Christian O. Nagler, Esq. Kirkland & Ellis LLP 601 Lexington Avenue New York, NY 10022 (212) 446-4800 Table of Contents The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors. Securities offered 35,000,000 units, at $10.00 per unit, each unit consisting of one share of common stock and one warrant. Each warrant offered in this offering is exercisable to purchase one-half of one share of our common stock. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. We structured each warrant to be exercisable for one-half of one share of our common stock at a price of $5.75 per half share, as compared to warrants issued by some other similar companies which are exercisable for one whole share, in order to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. However, this unit structure may cause our units to be worth less than if they included a warrant to purchase one full share. Listing of our securities and proposed symbols We anticipate the units, and the shares of common stock and warrants once they begin separate trading, will be listed on Nasdaq under the symbols QPACU, QPAC and QPACW, respectively. Each of the common stock and warrants may trade separately on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. o If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o 1 This number includes an aggregate of 1,312,500 insider shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. 2 Assumes the over-allotment option has not been exercised and an aggregate of 1,312,500 insider shares have been forfeited. 3 Assumes the over-allotment option has not been exercised and that members of our sponsor and/or their affiliates do not purchase any units in this offering which would otherwise reduce the number of private warrants being purchased, as described elsewhere in this prospectus. CALCULATION OF REGISTRATION FEE Title of each Class of Security being registered Table of Contents Exercise price $5.75 per half share, subject to adjustment as provided for herein. No public warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within a specified period following the consummation of our initial business combination, public warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis. Exercise period The warrants will become exercisable on the later of 30 days after the completion of an initial business combination or 12 months from the closing of this offering. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption. Redemption We may redeem the outstanding warrants (excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant: at any time while the warrants are exercisable, upon a minimum of 30 days prior written notice of redemption, if, and only if, the last sales price of our shares of common stock equals or exceeds $24.00 per share for any 20 trading days within a 30 trading day period (the 30-day trading period ) ending three business days before we send the notice of redemption, and if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. If the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the shares of common stock may fall below the Amount being Registered Table of Contents $24.00 trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued. The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a substantial premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a cashless basis will depend on a variety of factors including the price of our shares of common stock at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock issuances. Offering proceeds to be held in the trust account $341,000,000 of the net proceeds of this offering (or $392,450,000 if the over-allotment option is exercised in full), plus the $9,000,000 we will receive from the sale of the private warrants (or $10,050,000 if the over-allotment option is exercised in full), for an aggregate of $350,000,000 (or $402,500,000 if the over-allotment option is exercised in full) or $10.00 per unit sold to the public in this offering (whether or not the over-allotment option is exercised in full or in part), will be placed in an account in the United States maintained by Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the Proposed Maximum Offering Price Per Security(1) Table of Contents date of this prospectus. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct UBS Financial Services to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. The remaining $1,300,000 of net proceeds of this offering will not be held in the trust account. Except as set forth below, the proceeds held in the trust account will not be released until the earlier of: (1) the completion of our initial business combination within the required time period and (2) our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period. Therefore, unless and until our initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business. Notwithstanding the foregoing, there can be released to us from the trust account (1) any interest earned on the funds in the trust account that we need to pay our income or other tax obligations and (2) any remaining interest earned on the funds in the trust account that we need for our working capital requirements. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account of approximately $1,300,000; provided, however, that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust account and interest earned on the funds held in the trust account available to us are insufficient, our sponsor, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a non-interest bearing promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $1,500,000 of the notes may be converted upon consummation of our Proposed Maximum Aggregate Offering Price(1) Table of Contents business combination into additional private warrants at a price of $0.50 per warrant. Our stockholders have approved the issuance of the warrants (and underlying shares of common stock) upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans will not be repaid. Limited payments to insiders There will be no fees, reimbursements or other cash payments paid to our sponsor, officers, directors or their affiliates prior to or in connection with the consummation of a business combination (regardless of the type of transaction that it is) other than: repayment at the closing of this offering of non-interest bearing loans in an aggregate amount of up to $300,000 made by our sponsor; payment of $10,000 per month to Quinpario Partners LLC for office space and related services; and reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made to any sponsor or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and approval. Stockholder approval of, or tender offer in connection with, initial business combination In connection with any proposed initial business combination, we will either (1) seek stockholder approval of such initial business combination at a meeting called for such purpose at which Amount of Registration Fee Table of Contents stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares. If enough stockholders tender their shares so that we are unable to satisfy any applicable closing condition set forth in the definitive agreement related to our initial business combination, or we are unable to maintain net tangible assets of at least $5,000,001, we will not consummate such initial business combination. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended, or Exchange Act, which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common Units, each consisting of one share of Common Stock, $.0001 par value, and one Warrant 40,250,000 Units(2) $ 10.00 $ 402,500,000 $ 51,842.00 Shares of Common Stock, $.0001 par value, included as part of the Units 40,250,000 Shares(2) (3) Warrants included as part of the Units(4) 40,250,000 Warrants(2) (3) Total $ 402,500,000 $ 51,842.00 (5) (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). (2) Includes 5,250,000 Units and 5,250,000 shares of Common Stock and 5,250,000 Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. (3) No fee pursuant to Rule 457(g). (4) Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (5) Filing fee previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents stock voted are voted in favor of the business combination. We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, our net tangible asset threshold may limit our ability to consummate such initial business combination (as we may be required to have a lesser number of shares converted or sold to us in any tender offer) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Our sponsor (including its officers, directors, members, employees and affiliates) and our officers and directors have agreed (1) to vote any of their insider shares and any public shares purchased in or after this offering in favor of any proposed business combination, (2) not to convert any shares (including the insider shares) in connection with a stockholder vote to approve a proposed initial business combination and (3) not to sell any shares (including the insider shares) in a tender offer in connection with any proposed business combination. None of our sponsor, officers, directors or their affiliates has indicated any intention to purchase units in this offering or any units or shares of common stock in the open market or in private transactions. However, if a significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our sponsor, officers, directors or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors, sponsor and their affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company s stock. Table of Contents Conversion rights At any meeting called to approve an initial business combination, any public stockholder voting either for or against such proposed business combination will be entitled to demand that his shares of common stock be converted for a pro rata portion of the amount then in the trust account (initially $10.00 per share, plus any pro rata interest earned on the funds held in the trust account and not previously released to us to pay our taxes or for working capital). Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 15% or more of the shares of common stock sold in this offering without our prior written consent. We believe this restriction will prevent an individual stockholder or group from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase its shares at a substantial premium to the then current market price. We may require public stockholders, whether they are a record holder or hold their shares in street name, to either tender their certificates to our transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. Liquidation if no business combination If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public Table of Contents shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption as part of a single integrated transaction, dissolve and liquidate, subject to the approval of our remaining holders of common stock and our board of directors (who have contractually agreed to take such actions to effectuate such dissolution and liquidation), subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The holders of the insider shares will not participate in any redemption distribution. Holders of warrants will receive no proceeds in connection with the redemption or liquidation. We may not have funds sufficient to pay or provide for all creditors claims. Although we will seek to have all third parties (including any vendors or other entities we engage after this offering) and any prospective target businesses enter into valid and enforceable agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. There is also no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the trust account for monies owed them. Quinpario Partners LLC and Mr. Quinn have agreed that they will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but they may not be able to satisfy their indemnification obligations if they are required to do so. Furthermore, they will have no liability under this indemnity as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. If we are unable to conclude our initial business combination and we expend all of the net proceeds of this offering not deposited in the trust account, without taking into account any interest earned on the trust account, we expect Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 8, 2015 PRELIMINARY PROSPECTUS Quinpario Acquisition Corp. 2 $350,000,000 35,000,000 Units Quinpario Acquisition Corp. 2 is a newly-organized blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as our initial business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. Our efforts to identify a target business will not be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that operate in the specialty chemicals and performance materials industries. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. Each warrant will become exercisable on the later of 30 days after the completion of an initial business combination or 12 months from the date of this prospectus, and will expire five years after the completion of an initial business combination, or earlier upon redemption. If we are unable to consummate a business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares using the funds in our trust account described below. We have granted the underwriters a 45-day option to purchase up to 5,250,000 units (over and above the 35,000,000 units referred to above) solely to cover over-allotments, if any. Our sponsor and its designees have committed to purchase from us an aggregate of 18,000,000 warrants, or private warrants, at $0.50 per warrant (for a total purchase price of $9,000,000). These purchases will take place on a private placement basis simultaneously with the consummation of this offering. Each private warrant is exercisable to purchase one-half of one share of our common stock at $5.75 per half share. Our sponsor and its designees have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $0.50 per warrant an additional number of private warrants (up to a maximum of 2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. All of the proceeds we receive from this private placement will be placed in the trust account. There is presently no public market for our units, shares of common stock or warrants. We intend to apply to have our units listed on the Nasdaq Capital Market, or Nasdaq, under the symbol QPACU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on Nasdaq. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the common stock and warrants will be traded on Nasdaq under the symbols QPAC and QPACW, respectively. We cannot assure you that our securities will continue to be listed on Nasdaq after this offering. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 19 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally offered to investors in Rule 419 blank check offerings. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Certain members of our sponsor and/or their affiliates have indicated that they may invest in the public offering. If any of them do, the underwriters have agreed that we will receive the entire aggregate gross proceeds from such purchases and the underwriters will not receive any underwriting discounts or commissions on such purchased units at the closing of the offering. As a result, the discounts and commissions that we would have paid to the underwriters for such purchased units at the closing of the offering will instead be placed into the trust account and will reduce the number of private warrants our sponsor and its designees will need to purchase simultaneously with the consummation of this offering described above. If such members of which our sponsor or their affiliates do not purchase any units in the public offering, they will be sold to the public. The following table assumes that no units are purchased by members of our sponsor or their affiliates in this offering. Price to Public Table of Contents that the initial per-share redemption price will be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of our stockholders. In addition, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. Therefore, the actual per-share redemption price may be less than $10.00. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, Quinpario Partners LLC has agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has agreed not to seek repayment for such expenses. Underwriting Discounts and Commissions(1) Table of Contents Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision on whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison to offerings of blank check companies subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors. Proceeds, Before Expenses, to us (1) Includes the $9,000,000 we will receive from the sale of the private warrants. (2) The as adjusted calculation equals actual working capital of ($47,278) as of September 12, 2014, plus $350,000,000 in cash held in trust from the proceeds of this offering, plus $1,300,000 in cash held outside the trust account, plus $60,000 to reduce liabilities related to offering costs at September 12, 2014 paid out of the proceeds from this offering, less $12,250,000 of deferred underwriting commissions. (3) The as adjusted calculation equals actual total assets of $84,385 as of September 12, 2014 plus $350,000,000 in cash held in trust from the proceeds of this offering, plus $1,300,000 in cash held outside the trust account, less payment of $71,663 of liabilities as of September 12, 2014. (4) The as adjusted calculation represents deferred underwriting commissions. (5) The as adjusted value of common stock subject to possible conversion/tender is derived by taking 33,406,272 shares of common stock which may be converted, representing the maximum number of shares that may be converted or sold while maintaining at least $5,000,001 in net tangible assets after the offering, multiplied by a conversion/tender price of $10.00. The as adjusted information gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment of the estimated remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid. The as adjusted working capital and total assets amounts include the $350,000,000 to be held in the trust account, which, except for limited situations described in this prospectus, will be available to us only upon the consummation of our initial business combination within the time period described in this prospectus. If our initial business combination is not so consummated, the trust account, less amounts we are permitted to withdraw as described in this prospectus, will be distributed solely to our public stockholders (subject to our obligations under Delaware law to provide for claims of creditors). We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Per Unit $ 10.00 $ 0.55 $ 9.45 Total $ 350,000,000 $ 19,250,000 $ 330,750,000 Table of Contents RISK FACTORS An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, which we believe represent the material risks related to the offering, together with the other information contained in this prospectus, before making a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below. Risks Associated with Our Business We are a newly-formed blank check company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. We are a newly-formed blank check company with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing through the public offering of our shares. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate any revenues until, at the earliest, after the consummation of our initial business combination. Our independent registered public accounting firm s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern. As of September 12, 2014, we had $24,385 in cash and cash equivalents and a working capital deficiency of $47,278. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management s plans to address this need for capital through this offering are discussed in the section of this prospectus titled Management s Discussion and Analysis of Financial Condition and Results of Operations. Our plans to raise capital and to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern. If we are unable to consummate our initial business combination, our public stockholders may be forced to wait more than 24 months before receiving distributions from the trust account. We will have until 24 months from the closing of this offering to consummate our initial business combination. We have no obligation to return funds to investors prior to such date unless we consummate our initial business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the expiration of this full time period will holders of our common stock be entitled to distributions from the trust account if we are unable to complete our initial business combination. Accordingly, investors funds may be unavailable to them until after such date and to liquidate your investment, public security holders may be forced to sell their public shares, potentially at a loss. (1) Includes $0.35 per unit, or $12.25 million in the aggregate (or approximately $14.10 million in the aggregate if the underwriters overallotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in our trust account. These funds will be released only on completion of our initial business combination, as described in this prospectus. Please see the section titled Underwriting for further information relating to the underwriting arrangements agreed to between us and the underwriters in this offering. Upon consummation of the offering, $10.00 per unit sold to the public in this offering (whether or not the over-allotment option has been exercised in full or part) will be deposited into a United States-based account maintained by Continental Stock Transfer & Trust Company, acting as trustee. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct UBS Financial Services to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. Except as described in this prospectus, these funds will not be released to us until the earlier of the completion of our initial business combination and our redemption of the shares of common stock sold in this offering upon our failure to consummate a business combination within the required time period. The underwriters are offering the units on a firm commitment basis. The underwriters expect to deliver the units to purchasers on or about __________, 2015. Deutsche Bank Securities Cantor Fitzgerald & Co. _______________, 2015 Table of Contents Our public stockholders may not be afforded an opportunity to vote on our proposed business combination. We will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our public stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described elsewhere in this prospectus. Accordingly, it is possible that we will consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination we consummate. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. For instance, Nasdaq rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination instead of conducting a tender offer. You will not be entitled to protections normally afforded to investors of blank check companies. Since the net proceeds of this offering are intended to be used to complete our initial business combination with a target business that has not been identified, we may be deemed to be a blank check company under the U.S. securities laws. However, since we will have net tangible assets in excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules which would, for example, completely restrict the transferability of our securities, require us to complete our initial business combination within 18 months of the effective date of the initial registration statement and restrict the use of interest earned on the funds held in the trust account. Because we are not subject to Rule 419, our units will be immediately tradable, we will be entitled to withdraw interest income earned on the funds held in the trust account prior to the completion of our initial business combination and we will have a longer period of time to complete such a business combination than we would if we were subject to such rule. We may issue shares of our capital stock to complete our initial business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership. Our certificate of incorporation authorizes the issuance of up to 135,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per share. Immediately after this offering and the purchase of the private warrants (assuming no exercise of the underwriters over-allotment option), there will be 64,750,000 authorized but unissued shares of common stock available for issuance (after appropriate reservation for the issuance of the shares upon full exercise of our outstanding warrants). Table of Contents You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. TABLE OF CONTENTS Page Table of Contents Although we have no commitment as of the date of this offering, we may issue a substantial number of additional shares of common stock or shares of preferred stock, or a combination of common stock and preferred stock, to complete our initial business combination. The issuance of additional shares of common stock or preferred stock: may significantly reduce the equity interest of investors in this offering; may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and may adversely affect prevailing market prices for our shares of common stock. We may incur significant indebtedness in order to consummate our initial business combination. If we find it necessary to incur significant indebtedness in connection with our initial business combination, it could result in: default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations; acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding. The funds held in the trust account may not earn significant interest and, as a result, we may be limited to the funds held outside of the trust account to fund our search for target businesses, to pay our tax obligations and to complete our initial business combination. Of the net proceeds of this offering, $1,300,000 is anticipated to be available to us initially outside the trust account to fund our working capital requirements. We will depend on sufficient interest being earned on the proceeds held in the trust account to provide us with additional working capital we will need to identify one or more target businesses and to complete our initial business combination, as well as to pay any tax obligations that we may owe. Interest rates on permissible investments for us have been less than 1% over the last several years. Accordingly, if we do not earn a sufficient amount of interest on the funds held in the trust account and use all of the funds held outside of the trust account, we may not have sufficient funds available with which to structure, negotiate or close our initial business combination. In such event, we would need to borrow funds from our sponsor, officers or directors to operate or may be forced to liquidate. Our sponsor, officers and directors are under no obligation to loan us any funds. If we are unable to obtain the funds necessary, we may be forced to cease searching for a target business and may be unable to complete our initial business combination. Table of Contents If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption price received by stockholders may be less than $10.00. Our placing of funds in the trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of our public stockholders. If we are unable to complete an initial business combination within the required time period, Quinpario Partners LLC and Mr. Quinn have agreed that they will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver. However, they may not be able to meet such obligation. Therefore, the distribution from the trust account to each holder of shares of common stock may be less than $10.00, plus interest, due to such claims. Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our holders of shares of common stock at least $10.00. Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them. If we have not completed our initial business combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares of common stock, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption as part of a single integrated transaction, dissolve and liquidate, subject to the approval of our remaining stockholders and our board of directors (who have contractually agreed to take such actions to effectuate such dissolution and liquidation), subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. We may not properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us. If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration of the 24-month deadline, this may be viewed or interpreted as giving preference to our public stockholders Table of Contents over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public holders of common stock from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons. If we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a cashless basis. If we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the public warrants at the time that holders wish to exercise such warrants, they will only be able to exercise them on a cashless basis. As a result, the number of shares of common stock that holders will receive upon exercise of the public warrants will be fewer than it would have been had such holders exercised their warrants for cash. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential upside of the holder s investment in our company may be reduced. Notwithstanding the foregoing, the private warrants and any other warrants that may be issued to our officers, directors, sponsor or their affiliates as described elsewhere in this prospectus may be exercisable for unregistered shares of common stock for cash even if the prospectus relating to the shares of common stock issuable upon exercise of the warrants is not current and effective. An investor will be able to exercise a warrant only if the issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants. No public warrants will be exercisable for cash and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed on a national securities exchange, which would provide an exemption from registration in every state. Accordingly, we believe holders in every state will be able to exercise their warrants as long as our prospectus relating to the shares of common stock issuable upon exercise of the warrants is current. However, we cannot assure you of this fact. If the shares of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold. We may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants. We will be issuing 35,000,000 warrants to purchase 17,500,000 shares of common stock as part of the units offered by this prospectus in addition to the 18,000,000 private warrants to purchase 9,000,000 shares of common stock. Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of a majority of the Table of Contents then outstanding warrants (including the private warrants) in order to make any change that adversely affects the interests of the registered holders, or 26,500,001 warrants. Upon consummation of this offering, our sponsor and its designees will own 18,000,000 of the outstanding warrants (assuming they do not purchase any units in this offering). Therefore, we would only need approval from holders of 8,500,001 public warrants to amend the terms of the warrants. Since we are not limited to a particular industry or target business with which to complete our initial business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate. Although we intend to focus our search on target businesses in the specialty chemicals and performance materials industries, we may consummate our initial business combination with a company in any industry we choose and are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete our initial business combination with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete our initial business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we may not properly ascertain or assess all of the significant risk factors. An investment in our shares may not ultimately prove to be more favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business. Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire. We may consummate a business combination with a target business in any geographic location or industry we choose. Our officers and directors may not have enough experience or sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding our initial business combination. The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with. Pursuant to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust account. 1.1 Form of Underwriting Agreement. 3.1 Certificate of Incorporation.** 3.2 Amended and Restated Certificate of Incorporation. 3.3 Bylaws.** 4.1 Specimen Unit Certificate.** 4.2 Specimen common stock Certificate.** 4.3 Specimen Warrant Certificate.** 4.4 Form of Warrant Agreement among the Registrant and Continental Stock Transfer & Trust Company.** 5.1 Opinion of Graubard Miller.** 10.1 Form of Letter Agreement among the Registrant, Deutsche Bank Securities, Inc., Cantor Fitzgerald & Co. and each of the Registrant s Officers, Directors and Sponsor.** 10.2 Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.** 10.3 Form of Letter Agreement between Quinpario Partners LLC and Registrant regarding administrative support.** 10.4 Promissory Note issued to Quinpario Partners LLC.** 10.5 Form of Registration Rights Agreement among the Registrant, the Sponsor and other initial Stockholders.** 10.6 Form of Subscription Agreements among the Registrant, Graubard Miller and the Sponsor.** 14 Code of Ethics.** 23.1 Consent of Marcum LLP. 23.2 Consent of Graubard Miller (included in Exhibit 5.1).** Table of Contents Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business. We may structure a business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company, in which our public stockholders own shares, acquires 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company, in which our public stockholders own shares, owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business. Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct. Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. None of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and performing and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us. The role of our key personnel after our initial business combination, however, remains to be determined. Although some of our key personnel may serve in senior management or advisory positions following our initial business combination, it is likely that most, if not all, of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations. Table of Contents Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous. Our key personnel will be able to remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate our initial business combination. Our officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers and directors other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. These conflicts may not be resolved in our favor. Our officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Our officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies, including companies that are engaged in business activities similar to those intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial business combination. As a result, a potential target business may be presented by our management team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such target business. For a more detailed description of the pre-existing fiduciary and contractual obligations of our management team, and the potential conflicts of interest that such obligations may present, see the section titled Management Conflicts of Interest. Table of Contents The shares beneficially owned by our sponsor, officers and directors will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination. Our sponsor and our officers and directors have waived their right to convert their insider shares or any other shares of common stock acquired in this offering or thereafter, or to receive distributions with respect to their insider shares upon our liquidation if we are unable to consummate our initial business combination. Accordingly, the insider shares will be worthless if we do not consummate our initial business combination. The private warrants and any other warrants they acquire will also be worthless if we do not consummate an initial business combination. The personal and financial interests of our sponsor, officers and directors may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors and officers discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders best interest. Nasdaq may delist our securities from quotation on its exchange which could limit investors ability to make transactions in our securities and subject us to additional trading restrictions. We anticipate that our securities will be listed on Nasdaq, a national securities exchange, upon consummation of this offering. Although, after giving effect to this offering, we meet the minimum initial listing standards of Nasdaq on a pro forma basis, which generally only requires that we meet certain requirements relating to stockholders equity, market capitalization, aggregate market value of publicly held shares and distribution, our securities may not continue to be listed on Nasdaq in the future prior to an initial business combination. Generally, we must maintain a minimum amount in stockholders equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 round-lot holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ s initial listing requirements, which are more rigorous than NASDAQ s continued listing requirements, in order to continue to maintain the listing of our securities on NASDAQ. We may not be able to meet those initial listing requirements at that time. If Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our shares are a penny stock, which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares; a limited amount of news and analyst coverage for our company; and a decreased ability to issue additional securities or obtain additional financing in the future. We may only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services. It is likely we will consummate our initial business combination with a single target business, although we have the ability to simultaneously acquire several target businesses. By Table of Contents consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be: solely dependent upon the performance of a single business, or dependent upon the development or market acceptance of a single or limited number of products, processes or services. This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination. Alternatively, if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations. The ability of our public stockholders to exercise their conversion rights or sell their shares to us in a tender offer may not allow us to effectuate the most desirable business combination or optimize our capital structure. If our initial business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise conversion rights or seek to sell their shares to us in a tender offer, we may either need to reserve part of the trust account for possible payment upon such conversion or sale, or we may need to arrange third party financing to help fund our initial business combination. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us. We may be unable to consummate an initial business combination if a target business requires that we have a certain amount of cash at closing, in which case public stockholders may have to remain stockholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account or attempt to sell their shares in the open market. A potential target may make it a closing condition to our initial business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing. If the number of our public stockholders electing to exercise their conversion rights has the effect of reducing the amount of money available to us to consummate an initial business combination below such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such initial business combination and we may not be able to locate another suitable target within the Table of Contents Once the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and warrants. We will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of this offering, which is anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise of the over-allotment option. Shares of common stock: Number outstanding before this offering 10,062,500 shares1 Number to be outstanding after this offering and sale of private warrants 43,750,000 shares2 Warrants: Number outstanding before this offering 0 Number to be outstanding after this offering and sale of private warrants 53,000,000 warrants3 Exercisability Each warrant offered in this offering is exercisable to purchase one-half of one share of our common stock. Table of Contents applicable time period, if at all. In that case, public stockholders may have to remain stockholders of our company and wait the full 24 months in order to be able to receive a pro rata portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust account for their shares. If we hold a stockholder meeting to approve any initial business combination, we will offer each public stockholder the option to vote in favor of the proposed business combination and still seek conversion of his, her or its shares. In connection with any meeting held to approve an initial business combination, we will offer each public stockholder (but not our initial stockholders) the right to have his, her or its shares of common stock converted to cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such stockholder votes for or against such proposed business combination. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Accordingly, public stockholders owning 33,406,272 shares of common stock sold in this offering may exercise their conversion rights and we could still consummate a proposed business combination so long as a majority of shares voted at the meeting are voted in favor of the proposed business combination. This threshold and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination. Public stockholders that fail to vote either in favor of or against a proposed business combination will not be able to have his shares converted to cash. If we hold a meeting to approve a proposed business combination, public stockholders must vote either in favor of or against a proposed business combination in order to have his, her or its shares converted to cash. If a public stockholder fails to vote in favor of or against a proposed business combination, whether that stockholder abstains from the vote or simply does not vote, that stockholder would not be able to have his shares of common stock so converted to cash. Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a group, will be restricted from seeking conversion rights with respect to more than 15% of the shares of common stock sold in this offering. In connection with any meeting held to approve an initial business combination, we will offer each public stockholder (but not our initial stockholders) the right to have his, her, or its shares of common stock converted into cash. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group will be restricted from seeking conversion rights with respect to more than 15% of the shares of common stock sold in this offering. Generally, in this context, a stockholder will be deemed to be acting in concert or as a group with another stockholder when such stockholders agree to act together for the purpose of acquiring, voting, holding or disposing of our equity securities. Accordingly, if you purchase more than 15% of the shares of common stock sold in this offering and our proposed business combination is approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such additional shares of common stock or sell them in the open market. The value of such additional shares may not appreciate over time following our initial business combination, and the market price of our shares of common stock may not exceed the per-share conversion price. Table of Contents In connection with any stockholder meeting called to approve a proposed initial business combination, we may require public stockholders who wish to convert their shares of common stock to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights. In connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he is voting for or against such proposed business combination, to demand that we convert his shares of common stock into a share of the trust account. We may require public stockholders who wish to convert their shares of common stock in connection with a proposed business combination to either tender their certificates to our transfer agent at any time prior to the vote taken at the stockholder meeting relating to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical stock certificate, a stockholder s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares. If, in connection with any stockholder meeting called to approve a proposed business combination, we require public stockholders who wish to convert their shares of common stock to comply with the delivery requirements for conversion, such converting stockholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved. If we require public stockholders who wish to convert their shares of common stock to comply with specific delivery requirements for conversion described above and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market price for our shares of common stock may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek conversion may be able to sell their securities. Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination. We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, Table of Contents seeking stockholder approval of our initial business combination may delay the consummation of a transaction. Additionally, the insider shares and our outstanding warrants, and the future dilution they represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial business combination. Our ability to consummate an attractive business combination may be impacted by the market for initial public offerings. Our efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although it is very likely that our target will want to be a public reporting company. If the market for initial public offerings is limited, we believe there will be a greater number of attractive target businesses open to being acquired by us as a means to achieve publicly held status. Alternatively, if the market for initial public offerings is robust, we believe that there will be fewer attractive target businesses amenable to being acquired by us to become a public reporting company. Accordingly, during periods with strong public offering markets, it may be more difficult for us to complete an initial business combination. We may be unable to obtain additional financing, if required, to complete our initial business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination. Although we believe that the net proceeds of this offering will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective target business, the capital requirements for any particular transaction remain to be determined. If the net proceeds of this offering prove to be insufficient, either because of the size of the business combination, the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash a significant number of shares of common stock, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or sponsor is required to provide any financing to us in connection with or after our initial business combination. Our initial stockholders will control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. Upon consummation of this offering, our initial stockholders will collectively own 20% of our issued and outstanding shares of common stock (assuming they do not purchase any units in this offering). None of our sponsor, officers, directors or their affiliates has indicated any intention to purchase units in this offering or any units or shares from persons in the open market or in private transactions. However, our sponsor, officers, directors or their affiliates could determine in the future to make such purchases in the open market or in private transactions, to the extent permitted by law. In connection with any vote for a proposed business combination, our sponsor, as well as all of our officers and directors, have agreed to vote the shares of common stock owned by them immediately before this offering as well as any shares of common stock acquired in this offering or in the aftermarket in favor of such proposed business combination. Table of Contents Our board of directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, in which case all of the current directors will continue in office until at least the consummation of the business combination. Accordingly, you may not be able to exercise your voting rights under corporate law for up to 24 months. If there is an annual meeting, as a consequence of our staggered board of directors, fewer than half of the board of directors will be considered for election and our sponsor, because of its ownership position, will have considerable influence regarding the outcome. Accordingly, our sponsor will continue to exert control at least until the consummation of our initial business combination. We may not hold an annual meeting of stockholders until after the consummation of our initial business combination. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the Delaware General Corporation Law, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the Delaware General Corporation Law, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the Delaware General Corporation Law. Our initial stockholders paid an aggregate of $25,000, or approximately $0.002 per share, for the insider shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our shares of common stock. The difference between the public offering price per share and the pro forma net tangible book value per share of common stock after this offering constitutes the dilution to the investors in this offering. Our initial stockholders acquired the insider shares at a nominal price, significantly contributing to this dilution. Upon consummation of this offering, you and the other new investors will incur an immediate and substantial dilution of approximately 95.2% or $9.52 per share (the difference between the pro forma net tangible book value per share $0.48, and the initial offering price of $10.00 per unit). This is because investors in this offering will be contributing approximately 99.99% of the total amount paid to us for our outstanding securities after this offering but will only own 80% of our outstanding common stock. Accordingly, the per-share purchase price you will be paying substantially exceeds our per share net tangible book value. Our outstanding warrants may have an adverse effect on the market price of shares of common stock and make it more difficult to effect a business combination. We will be issuing warrants to purchase 17,500,000 shares of common stock as part of the units offered by this prospectus and the private warrants to purchase 9,000,000 shares of common stock. We may also issue additional warrants to our sponsor, officers, directors or their affiliates upon conversion of promissory notes issued to such entities or individuals for loans made to supplement our working capital requirements, as described elsewhere in this prospectus. To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of a substantial number of additional shares upon exercise of Table of Contents these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will increase the number of issued and outstanding shares of common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings. We may redeem the warrants at a time that is not beneficial to public investors. We may call the public warrants for redemption at any time after the redemption criteria described elsewhere in this prospectus have been satisfied. If we call the public warrants for redemption, public stockholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do so. Our management s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash. If we call our public warrants for redemption after the redemption criteria described elsewhere in this prospectus have been satisfied, our management will have the option to require any holder that wishes to exercise its warrant (including any warrants held by our sponsor, officers, directors or their permitted transferees) to do so on a cashless basis. If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential upside of the holder s investment in our company. Because each warrant is exercisable for only one-half of one share of our common stock, the units may be worth less than units of other blank check companies. Each warrant is exercisable for one-half of one share of common stock. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. This is different from other offerings similar to ours whose units include one share of common stock and one warrant to purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for half of the number of shares compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share. If our security holders exercise their registration rights, it may have an adverse effect on the market price of our shares of common stock and the existence of these rights may make it more difficult to effect our initial business combination. The holders of the insider shares are entitled to demand that we register the resale of the insider shares and the holders of the private warrants are entitled to demand that we register the resale of the private warrants (and underlying securities) and any securities our sponsor, officers, directors or their affiliates may be issued in payment of working capital loans made to us. The presence of these additional securities trading in the public market may have an adverse effect on the market price of our securities. In addition, the existence of these rights may make it more difficult to effectuate our initial business combination or increase the cost of Table of Contents acquiring the target business, as the stockholders of the target business may be discouraged from entering into a business combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on the trading market for our shares of common stock. If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination. A company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in the trust account may be invested by the trustee only in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940. If we are nevertheless deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult for us to complete our initial business combination, including: restrictions on the nature of our investments; and restrictions on the issuance of securities. In addition, we may have imposed upon us certain burdensome requirements, including: registration as an investment company; adoption of a specific form of corporate structure; and reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations. Compliance with these additional regulatory burdens would require additional expense for which we have not allotted. The determination for the offering price of our units is more arbitrary compared with the pricing of securities for an operating company in a particular industry. Prior to this offering there has been no public market for any of our securities. The public offering price of the units was negotiated between us and the representative of the underwriters. Factors considered in determining the price of the shares of units include: the history of other similarly structured blank check companies; prior offerings of those companies; our prospects for acquiring an operating business at attractive values; our capital structure; securities exchange listing requirements; market demand; Table of Contents expected liquidity of our securities; and general conditions of the securities markets at the time of the offering. However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since we have no historical operations or financial results to compare them to. The requirement that we complete our initial business combination within 24 months from the closing of this offering may give potential target businesses leverage over us in negotiating our initial business combination. We have 24 months from the closing of this offering to complete our initial business combination. Any potential target business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time limit referenced above. We may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely on the judgment of our board of directors in approving a proposed business combination. We will only be required to obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of our officers, directors or sponsor. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of our board of directors in approving a proposed business combination. We may acquire a target business that is affiliated with our officers, directors or sponsor. While we do not currently intend to pursue an initial business combination with a company that is affiliated with our officers, directors or sponsor, we are not prohibited from pursuing such a transaction. We are also not prohibited from consummating a business combination where any of our officers, directors, sponsor or their affiliates acquire a minority interest in the target business alongside our acquisition. These affiliations could cause our officers or directors to have a conflict of interest in analyzing such transactions due to their personal and financial interests. We may not be required to obtain an opinion from an independent investment banking firm as to the fair market value of the target business we are seeking to acquire. We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value of such target business if our board of directors independently determines that the target business complies with the 80% threshold. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing such target business or businesses, and our board of directors may not properly value such target business or businesses. Table of Contents Resources could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. It is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition. Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls and may require that we have such system of internal controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management s evaluation of our system of internal controls. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock. We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors. We are an emerging growth company, as defined in the JOBS Act. We will remain an emerging growth company for up to five years. However, if our non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find our shares Table of Contents of common stock less attractive because we may rely on these provisions. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations. We may effect our initial business combination with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated with companies operating in the target business home jurisdiction, including any of the following: rules and regulations or currency conversion or corporate withholding taxes on individuals; tariffs and trade barriers; regulations related to customs and import/export matters; longer payment cycles; tax issues, such as tax law changes and variations in tax laws as compared to the United States; currency fluctuations and exchange controls; challenges in collecting accounts receivable; cultural and language differences; employment regulations; crime, strikes, riots, civil disturbances, terrorist attacks and wars; and deterioration of political relations with the United States. We may not be able to adequately address these additional risks. If we are unable to do so, our operations may suffer. Table of Contents If we effect our initial business combination with a target business located outside of the United States, the laws applicable to such target business will likely govern all of our material agreements and we may not be able to enforce our legal rights. If we effect our initial business combination with a target business located outside of the United States, the laws of the country in which such target business is domiciled will govern almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements in such jurisdiction and appropriate remedies to enforce its rights under such material agreements may not be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management. Our amended and restated certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a result, at a given annual meeting only one-third of the board of directors may be considered for election. Since our staggered board may prevent our stockholders from replacing a majority of our board of directors at any given annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, our board of directors has the ability to designate the terms of and issue new series of preferred stock. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. Because we must furnish our stockholders with target business financial statements prepared in accordance with U.S. generally accepted accounting principles or international financial reporting standards as issued by the IASB, we will not be able to complete our initial business combination with prospective target businesses unless their financial statements are prepared in accordance with U.S. generally accepted accounting principles. The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. We will include the same financial statement disclosure in connection with any tender offer documents we use, whether Table of Contents or not they are required under the tender offer rules. Additionally, to the extent we furnish our stockholders with financial statements prepared in accordance with IFRS, such financial statements will need to be audited in accordance with U.S. GAAP at the time of the consummation of the business combination. These financial statement requirements may limit the pool of potential target businesses we may acquire. There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities. There is currently no market for our securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained. We may be subject to an increased rate of tax on our income if we are treated as a personal holding company. Depending on the date and size of our initial business combination, it is possible that we could be treated as a personal holding company for U.S. federal income tax purposes. A U.S. corporation generally will be classified as a personal holding company for U.S. federal income tax purposes in a given taxable year if more than 50% of its ownership (by value) is concentrated, within a certain period of time, in five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds, and charitable trusts), and at least 60% of its income is comprised of certain passive items. See the section titled Material U.S. Federal Tax Considerations Company Personal Holding Company Status for more detailed information. Risks applicable to the specialty chemicals and performance materials industries We intend to focus our search on target businesses operating in the specialty chemicals and performance materials industries. We believe that the following risks will apply to us following the consummation of our initial business combination with a target business operating in such industries. If we elect to pursue an investment outside of these industries, the disclosure below would not be relevant to an understanding of the business that we elect to acquire. Volatility in costs for strategic raw material and energy commodities or disruption in the supply of these commodities could adversely affect financial results. Companies in the specialty chemicals and performance materials industries are reliant on strategic raw material and energy commodities for operations and utilize risk management tools, including hedging, as appropriate, to mitigate short-term market fluctuations in raw material and energy costs. These risk mitigation measures cannot eliminate all exposure to market fluctuations. In addition, natural disasters, plant interruptions, changes in laws or regulations, war or other outbreak of hostilities or terrorism, and breakdown or degradation of transportation infrastructure used for delivery of strategic raw material and energy commodities, could adversely impact both the cost and availability of these commodities. The specialty chemicals and performance materials industries could be materially adversely affected by disruptions to manufacturing operations or related infrastructure. Significant limitation on a company s ability to manufacture products due to disruption of manufacturing operations or related infrastructure could have a material adverse effect on its Table of Contents sales revenue, costs, results of operations, and financial condition. Disruptions could occur due to internal factors such as computer or equipment malfunction (accidental or intentional), operator error, or process failures; or external factors such as natural disasters, pandemic illness, changes in laws or regulations, war or other outbreak of hostilities or terrorism, cyber attacks, or breakdown or degradation of transportation infrastructure used for delivery of supplies to or for delivery of products to customers. Legislative or regulatory actions could increase a company s future compliance costs. The facilities and businesses of companies in the specialty chemicals and performance materials industries are subject to complex health, safety and environmental laws and regulations, which require and will continue to require significant expenditures to remain in compliance with such laws and regulations. Accruals for such costs and associated liabilities are subject to changes in estimates on which the accruals are based. The amount accrued generally reflects a company s assumptions about remediation requirements at the contaminated site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, chemical control regulations, and testing requirements could result in higher costs. Pending and proposed U.S. Federal legislation and regulation increase the likelihood that manufacturing sites will in the future be impacted by regulation of greenhouse gas emissions and energy policy, which legislation and regulation, if enacted, may result in capital expenditures, increases in costs for raw materials and energy, limitations on raw material and energy source and supply choices, and other direct compliance costs. The specialty chemicals and performance materials industries are highly competitive and include competitors with greater resources than ours. The specialty chemicals and performance materials industries in which we will seek to compete are highly competitive. Competition in these industries is based on a number of factors, such as price, product, quality and service. Competitors may have greater financial, technological and other resources and may be better able to withstand changes in market conditions. In addition, competitors may be able to respond more quickly than us to new or emerging technologies and changes in customer requirements. Consolidation of competitors or customers may also adversely affect any potential business we enter. Furthermore, global competition and customer demands for efficiency will continue to make price increases difficult. Companies in the specialty chemicals and performance materials industries tend to operate in cyclical business segments and financial results are likely to fluctuate accordingly. A substantial portion of sales in the specialty chemicals and performance materials industries are to customers involved, directly or indirectly, in the commercial and residential real estate, aerospace, automotive and construction, industrial and energy related industries, all of which are, by their nature, cyclical industries. A downturn in these industries would and has in the past, and may again in the future, result in lower demand for products among customers involved in those industries and a reduced ability to pass on cost increases to these customers. Table of Contents
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+The idea for using a liquid cooled engine to drive a generator posed operating difficulties due to the fact that the engine was not designed to run on gaseous fuels. Therefore, a completely new system for delivering a gaseous fuel to the engine had to be invented and developed. The inventor, Larry Pendell, pioneered a new system capable of delivering the gaseous fuel to the engine. Further testing and modifications have produced a solid state unit that efficiently delivers the fuel to the engine, resulting in a strong and reliable engine that can operate on any gaseous fuel with a sustained engine life and maximum horsepower. Patents, Trademarks, Intellectual Property We have no copyrights, or trademarks. We plan to manufacture, install, maintain and sell cogeneration units (also known as the Thermal Watt Furnace, patent no. 6,788,031), created by Larry Pendell. The patent is expired, however we are in the process of designing a newer version of the TWF, with the assistance of Mr. Pendell. We intend to file for a patent in the fourth quarter of 2015. McGregor will own the patent. We have a prototype that is targeted for residential use, but we intend to have a full product line that will include units for industrial and commercial customers. Mr. Pendell is now working fulltime as a consultant for the Company. Previously, our prototype used a rotary engine that was built by a third party. Our current operations are currently focused on designing a rotary engine we can manufacture ourselves. Mr. Pendell is working fulltime on this endeavor. If our offering is successful, then our intended operations will include expanding our operations to manufacture residential and small commercial units of the thermal watt furnace, further refine our product design, and use proceeds for marketing our product. We have not sold any products to date, nor have we manufactured a TWF that is ready to sell. Risks and Uncertainties facing the Company As a development stage company, the Company has no operating history and has continuously experienced losses since its inception. The Company needs to create a source of revenue or locate additional financing in order to continue its manufacturing plans. As a development stage company, our sole Director and CEO, Michael M. Brown, has had 25 years experience in machine shop production, management, and engineering. The inventor, Larry Pendell, has in the past, owned, operated, and managed several different manufacturing companies. Neither Brown nor Pendell have had experience in manufacturing on this scale previously. One challenge facing the Company is identifying and targeting effective sales, marketing and distribution strategies. As a developing company, the Company is in the process of identifying and targeting potential distributors and marketers of its products in order to reach the intended end users for the products. To reach potential end customers, the Company will need to have an effective sales, marketing and distribution strategy. If the Company were unable to develop strong and reliable sources of potential end users and a means to efficiently reach buyers and customers for its products, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s products are met with customer satisfaction in the marketplace and exhibit steady adoption of products amongst the potential customer base, neither of which is currently known or guaranteed. McGregor s independent auditors have issued a report questioning the Company s ability to continue as a going concern. Our sole Director owns a significant amount of stock as of the date of this Offering. Accordingly, he will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. THE OFFERING-PLAN OF DISTRIBUTION This prospectus refers to the sale of 50,000,000 shares of the Company's Class B stock. There is no minimum number of shares that must be sold by us for the offering to proceed, and we will retain the proceeds from the sale of any of the offered shares. The shares will be offered at a fixed price of $1.00 per share for the duration of the offering, which will be for one year from the date of effectiveness of this prospectus. Shareholders who purchase the Class B common stock in this offering are not entitled to vote on any matters. This offering is a self-underwritten offering, which means that it does not involve the participation of an underwriter to market, distribute or sell the shares offered under this prospectus. We will sell shares on a continual basis. We reasonably expect the amount of securities registered pursuant to this offering to be offered and sold within one year from this initial effective date of this registration. We are offering the shares on a "self-underwritten" best efforts basis directly through our President & CEO, Michael M. Brown. They are both qualified pursuant to the safe harbor provision from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934. He will attempt to sell the shares. This Prospectus will permit Brown to use their best efforts to market and sell this common stock directly, with no commission or other remuneration payable to them for any shares they may sell. At this time, the Company has not made any arrangements to place the funds received in an escrow or trust account, thus, the Company and its executive officers will have immediate access to such funds. This offering will terminate upon the earliest to occur of (i) the first anniversary of the effective date of the registration statement, (ii) the date on which all 50,000,000 shares registered hereunder have been sold, or (iii) the date on which we terminate this offering. In connection with his selling efforts in the offering, Mr. Brown will not register as a broker-dealer pursuant to Section 15 of the Exchange Act but rather will rely upon the "safe harbor" provisions of Rule 3a4-1 under the Exchange Act. Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participates in an offering of the issuer's securities. Mr. Brown is not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Mr. Brown will not be compensated in connection with his participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Mr. Brown have not been within the past 12 months, a broker or dealer, and have not within the past 12 months, an associated person of a broker or dealer. At the end of the offering, Mr. Brown will continue to primarily perform substantial duties for us or on our behalf otherwise than in connection with transactions in securities. Mr. Brown have not participated in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii). Any investment in the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a loss of your investment. Our independent registered public accountant has issued an audit opinion for our company, which includes a statement expressing substantial doubt as to our ability to continue as a going concern. There currently is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. The following table shows the possible outcomes for computing the Company's outstanding stock given partial sales of the total offering given in percentage intervals. The Company has made no plans to place the proceeds of the offering in escrow or trust account. The proceeds are to be used when available. Immediate use of the proceeds when received in the Company s accounts regardless of the total received at any time during the offering has the possibility of having a negative effect on investors. Because the offering has no set minimum and there is no plan to escrow the offering proceeds, the Company may fail to raise enough capital to fund its business plan and operations and it s possible that investors may lose all or substantially all of their investment. Certain Information about this Offering Offering Price Per Share Commissions Proceeds to Company Before Expenses if 10% of the shares are sold Proceeds to Company Before Expenses if 50% of the shares are sold Proceeds to Company Before Expenses if 100% of the shares are sold Class B Common Stock $ 1.00 Not Applicable $ 5,000,000 $ 25,000,000 $ 50,000,000 Totals $ 1.00 Not Applicable $ 5,000,000 $ 25,000,000 $ 50,000,000 Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Where You Can Find Us Our current mailing address is 4426 North 21st St., Ozark, MO 65721. The Company s main phone number is 417-207-3249. Our primary website address is www.mcgregorpowersystems.com. SUMMARY FINANCIAL INFORMATION We have prepared the following summary of our consolidated financial statements. The summary of our consolidated financial data set forth below should be read together with our separate audited financial statements and the notes thereto, as well as Management s Discussion and Analysis of Financial Condition and Results of Operations included in this prospectus. 12/31/14 ($) Financial Summary (Audited) Cash and Deposits 100 Total Assets 7,219 Total Liabilities - Total Stockholder s Equity 7,219 Common Stock, $.000001 par value, 2,000,000,000 shares authorized; 219,110,000 shares issued and outstanding 214 Additional Paid in Capital 9,843 (Deficit) accumulated during development stage (2,838 ) Accumulated from 6/11/14 (Inception) to 12/31/14 ($) Consolidated Statements of Expenses and Comprehensive Loss Total Operating Expenses 2,838 Total Loss (2,838) EMERGING GROWTH COMPANY We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of: a. the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; b. the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; c. the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or d. the date on which such issuer is deemed to be a `large accelerated filer', as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. SMALLER REPORTING COMPANY IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY - THE JOBS ACT We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: * A requirement to have only two years of audited financial statements and only two years of related MD * Exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; * Reduced disclosure about the emerging growth company's executive compensation arrangements; and * No non-binding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of the reduced reporting requirements applicable to smaller reporting companies even if we no longer qualify as an "emerging growth company." In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
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+PROSPECTUS SUMMARY This summary highlights information that we present more fully in the rest of this prospectus. This summary does not contain all of the information you should consider before buying common shares in this offering. This summary contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as anticipate, estimate, plan, project, continuing, ongoing, expect, we believe, we intend, may, should, will, could, and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including the Risk Factors section and the financial statements and the notes to those statements. Our Company We are a call center business process outsourcing ( BPO ) service provider in China. BPO services are designed to allow businesses to achieve various operational benefits, such as cost savings, better quality services, and the ability to focus on core competencies. Our call centers are currently equipped with approximately 7,800 seats in Shandong Province, Jiangsu Province, Jiangxi Province, Hebei Province, Anhui Province, the Xinjiang Uygur Autonomous Region, the Guangxi Zhuang Autonomous Region and Chongqing City. We use approximately 87% of our seats. Our business focuses on the complex, voice-based segment of customer care services, including: customer relationship management; technical support; sales; customer retention; marketing surveys; and research. We are a significant provider of BPO services in the telecommunications industry in China, as we hold contracts with provincial subsidiaries of China Mobile Communications Corporation ( China Mobile ) and China Telecommunications Corporation ( China Telecom ) in that sector and have been recognized by the Chinese Ministry of Industry and Information Technology ( MIIT ) as China s Best Inbound Outsourcing Contact Center of the Year for 2009, China s Best Outbound Outsourcing Contact Center of the Year for 2011, and The Well Known Servicing Enterprise Who has the Most Growth Potential in China for 2014. Most of our revenues are generated from provincial subsidiaries of China Mobile and China Telecom and from Haier, GM OnStar, and Volvo. We currently have short-term agreements with 7 provincial subsidiaries of China Mobile and with 3 provincial subsidiaries of China Telecom. Further, we are in the process of renewing an additional 7 contracts with the provincial subsidiaries of China Mobile. There is no assurance that these 7 additional contracts will be renewed. Upon renewal we will have a total of 14 contracts with the provincial subsidiaries of China Mobile. In addition to answering inbound calls, or calls initiated by customers purchasing products and services from our clients, our company also provides outbound cold calling services to help the provincial subsidiaries of China Mobile and China Telecom promote mobile value-added service ( MVAS ) products, such as weather, health, education and farming related MVAS products to targeted subscribers. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement is filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 9, 2015 China Customer Relations Centers, Inc. MINIMUM OFFERING: 2,000,000 COMMON SHARES MAXIMUM OFFERING: 2,400,000 COMMON SHARES This is the initial public offering of China Customer Relations Centers, Inc. ( CCRC ). We are offering a minimum of 2,000,000 common shares and a maximum of 2,400,000 common shares. The offering price is $4.00 per common share. No public market currently exists for our common shares. We have applied for approval for quotation on the NASDAQ Capital Market under the symbol CCRC for the common shares we are offering. We believe that upon the completion of the offering contemplated by this prospectus, we will meet the standards for listing on the NASDAQ Capital Market. We are an emerging growth company as that term is used in the Jumpstart Our Business Startup Act of 2012. Investing in these common shares involves significant risks. See Risk Factors beginning on page 11 of this prospectus. To our Company Per Share Minimum Offering Maximum Offering Public offering price $ 4.00 $ 8,000,000 $ 9,600,000 Placement fee (1) $ .32 $ 640,000 $ 768,000 Proceeds, before expenses (2) $ 3.68 $ 7,360,000 $ 8,832,000 (1) The placement fee will be 8% of the public offering price, or $.32 per common share. The placement fee does not reflect additional compensation to the placement agent in the form of a non-accountable expense allowance of 1.5% or $.06 per common share. See section entitled Placement on page 89 for more information (2) The total expenses of this offering, excluding the placement fee and expenses, are approximately $700,000. The placement agent must sell the minimum number of securities offered (2,000,000 common shares) if any are sold. The placement agent is required to use only its best efforts to sell the securities offered. The offering will terminate upon the earlier of: (i) a date mutually acceptable to us and our placement agent after which the minimum offering is sold or (ii) January 18, 2016. Until the placement agent sells at least 2,000,000 common shares, all investor funds will be held in an escrow account at SunTrust Bank, Richmond, Virginia, which is serving as the escrow agent for this offering. If the placement agent does not sell at least 2,000,000 common shares by January 18, 2016, all funds will be promptly returned to investors (within one business day) without interest or deduction. If this offering completes, net proceeds will be delivered to our company on the closing date. If we complete this offering, then on the closing date, we will issue the common shares to investors in the offering. Newbridge Securities Corporation will be a sub-placement agent in this offering. These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. VIEWTRADE SECURITIES, INC. Prospectus dated , 2015 Table of Contents Corporate Information Our principal executive office is located at 1366 Zhongtianmen Dajie, High-tech Zone, Taian City, Shandong Province, China 271000. Our telephone number is (+86) 538 691 8899. Our facsimile number is (+86) 538 691 6699. We do not maintain a corporate website at this time. Industry and Market Background China s Call Center BPO Market Compared with countries such as the U.S. and India that have relatively more mature markets, China s call center outsourcing market is still in an early stage of development. In the past few years, competition in China s market was relatively low due to highly differentiated positions and large number of unexploited potential outsourcing customers. At present, low price, standard service vendors tend to be most popular in the market. Nevertheless, as more competition in the China market is introduced in the future, we believe that the ability to provide customer oriented solutions in the China call center BPO market will be increasingly valued by customers. We believe outsourcing will continue to grow as a result of higher client demand for cost savings, along with the need for high-quality customer interactions and innovative service solutions that deliver tangible value. The call center BPO services of our clients are non-core outsourcing processes, or BPO services that our clients may not view as critical to their operations and are outsourced to us. By providing these services for our clients, we aid them in streamlining their business operations. Telecommunications Market According to the Ministry of Industry and Information Technology, in February 2015, the number of China s mobile phone subscribers increased to 1.289 billion while the number of China s fixed-line phone subscribers decreased to 247 million. As of December 2014, China had 557 million mobile Internet users, the percentage of those using mobile phones to go online reaching 85.8%. With intensified competition in the telecommunications market, major telecommunication companies such as China Mobile are making transitions from voice-centric to data-centric operations, from communications to mobile Internet and information consumption, and from mobile communication operations to innovative full service operations. Our Operating Companies (as defined on page 40) largest customers are the provincial subsidiaries of two of the three major telecommunications operators in China, namely China Mobile and China Telecom, and we believe that increasing competition among the three operators will drive demand for outsourcing their call center functions to third party service providers. China s Banking Industry China s banking system has grown considerably in recent years. According to the Institute of International Finance, China s bank assets have grown more than five-fold over the last decade, as compared with a 40-50% increase in the United States, Europe and Japanese bank assets. According to Banks Around the World website, in 2014, four of the world s top 10 banks by asset size are Chinese banks, including the world s largest bank and the 2nd, 4th, and 7th largest banks. The total assets of the Industrial and Commercial Bank of China, the biggest bank in the world for the third consecutive year, reached $3,182 billion based on the March 31, 2014 balance sheet. According to the China Banking Regulatory Commission, the total assets of Chinese banking industry grew by 13.84 percent from the prior year to 172 trillion Yuan by the end of 2014. We believe developments in China s banking industry such as, internet, mobile banking and the increase in innovative financial products will bring pressure on financial institutions to take measures to generate sales, reduce their costs of operations, and become more efficient. One such measure is to outsource their call center or data services to companies like us. Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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+The following summary highlights information contained elsewhere in this prospectus. It does not contain all the information you need to consider in making your investment decision. Before making an investment decision, you should read this entire prospectus carefully and should consider, among other things, the matters set forth under Risk factors, Selected historical combined financial data, Management s discussion and analysis of financial condition and results of operations and the financial statements and related notes thereto appearing elsewhere in this prospectus. Unless otherwise specifically noted, (i) all operating and similar data for our business or our Sponsor s business included in this prospectus is as of March 31, 2015 and (ii) all references to MW or GW in relation to our initial portfolio (or our portfolio of call right or right of first offer projects) represent the rated generation capacity at standard test conditions of a project multiplied by our percentage of economic ownership (or the ownership we may acquire) of such project, or net capacity, as of the date of this prospectus. About TerraForm Global, Inc. Overview We are a high-growth, globally diversified renewable energy company that owns long-term contracted wind, solar and hydro-electric power plants. Our business objective is to increase our dividend to stockholders by continuing to acquire, from SunEdison and unaffiliated third parties, clean power generation assets that produce high-quality, long-term contracted cash flows, primarily by serving utility and commercial customers with strong credit profiles. Our initial target markets will be China, Brazil, India, South Africa, Honduras, Costa Rica, Peru, Uruguay, Malaysia and Thailand. Several of these markets, including China, Brazil and India, are expected to be among the fastest growing solar and wind energy markets worldwide from 2015 to 2020 in terms of annual installations and capital investment in renewable energy projects. Our initial portfolio consists of solar projects located in China, India, South Africa, Honduras, Uruguay, Malaysia and Thailand, wind projects located in China, Brazil, India, South Africa, Honduras, Costa Rica and Nicaragua and hydro-electric projects located in Brazil and Peru. These projects have a total combined capacity of 1,406.1 MW, and we forecast that they will generate an aggregate of $231.5 million of cash available for distribution for the year ending December 31, 2016. Our initial portfolio includes 921.7 MW of projects that we expect to acquire from third parties concurrently with the completion of this offering or during the remainder of 2015. All of these projects are supported by power purchase agreements, or PPAs, with creditworthy counterparties. The PPAs for projects included in our initial portfolio have a weighted average remaining life of 19 years as of March 31, 2015. We have a well diversified project portfolio, across both geographies and renewable energy technologies, which we believe enables us to generate consistent quarterly cash flows. For example, projects in our initial portfolio located in any single country are not expected to represent more than 30% of our projected cash available for distribution for the year ending December 31, 2016. We intend to rapidly expand and diversify our initial portfolio by acquiring utility-scale solar and commercial and industrial distributed solar, wind and hydro-electric power generation assets located in our initial target markets, which we expect will also have long-term PPAs with creditworthy counterparties. We expect to pursue opportunities in other high-growth emerging markets that have characteristics similar to those of our initial target markets, with a focus on markets located in Asia (except Japan), Africa, Latin America and the Middle East. Over time, we may selectively acquire other clean power generation assets, including natural gas, biomass and hybrid energy and storage solutions, as well as transmission lines, that enable us to provide power on a 24/7 basis, as well as to add solar generation assets serving residential and commercial building customers. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated July 31, 2015 Prospectus 45,000,000 shares Class A common stock This is an initial public offering of shares of Class A common stock of TerraForm Global, Inc. All of the shares of Class A common stock are being sold by us. Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price per share will be $15.00. Our Class A common stock has been approved for listing on the NASDAQ Global Select Market under the symbol GLBL. We will have two classes of common stock outstanding after this offering: Class A common stock and Class B common stock. Each share of Class A common stock entitles its holder to one vote on all matters presented to our stockholders generally. All of our Class B common stock will be held by SunEdison, Inc., or our Sponsor, or its controlled affiliates. Each share of Class B common stock entitles our Sponsor to 100 votes on all matters presented to our stockholders generally. Immediately following this offering, the holders of our Class A common stock will collectively hold 100% of the economic interests in us and 1.9% of the voting power in us, and our Sponsor will hold the remaining 98.1% of the voting power in us. As a result, we will be a controlled company within the meaning of the corporate governance standards of the NASDAQ Global Select Market. See Management Controlled company. We are an emerging growth company as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. Per share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) Excludes a structuring fee payable to J.P. Morgan Securities LLC and Barclays Capital Inc. equal to 1.25% of the gross offering proceeds. See Underwriting (conflicts of interest). The underwriters have the option to purchase up to an additional 6,750,000 shares from us at the initial public offering price less the underwriting discounts and commissions for a period of 30 days after the date of this prospectus. See Risk factors beginning on page 47 to read about factors you should consider before buying shares of our Class A common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. We expect that the shares will be delivered against payment in New York, New York on , 2015. J.P. Morgan Barclays Citigroup Morgan Stanley Goldman, Sachs & Co. BofA Merrill Lynch Deutsche Bank Securities BTG Pactual Ita BBA SMBC Nikko SOCIETE GENERALE Kotak Investment Banking , 2015. Table of Contents Trademarks and trade names We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of SunEdison, Inc. and third parties, which are the property of their respective owners. Our use or display of third parties trademarks, service marks, trade names or products in this prospectus is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. Industry and market data This prospectus includes industry data and forecasts that we obtained from industry publications and surveys, public filings and internal company sources. In particular, unless otherwise specified, we have relied upon the data collected and published by Bloomberg New Energy Finance (as accessed on June 1, 2015) with respect to all of the data included in this prospectus relating to the size of the various clean energy markets, including the expected growth of our initial target markets over the periods specified herein. Bloomberg New Energy Finance is a market research firm focused on the energy sector. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our market position and market estimates are based on independent industry publications, government publications, third-party forecasts, management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding the market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings Risk factors and Cautionary statement concerning forward-looking statements in this prospectus. As used in this prospectus, all references to watts (e.g., megawatts, gigawatts, MW, GW, etc.) refer to measurements of direct current, or DC, with respect to solar generation assets, and measurements of alternating current, or AC, with respect to wind and hydro-electric generation assets. Except as otherwise noted, all currency conversions referred to in this prospectus are calculated as of March 31, 2015. Certain defined terms Unless the context provides otherwise, references herein to: we, our, us, our company and Global refer to TerraForm Global, Inc., together with, where applicable, its consolidated subsidiaries after giving effect to the Organizational Transactions (as defined herein), which corporation is the issuer of the Class A common stock offered hereby; First Wind refers to First Wind Holdings, LLC, together with, where applicable, its consolidated subsidiaries, which our Sponsor and TerraForm Power, as appropriate, acquired on January 29, 2015; Global LLC refers to TerraForm Global, LLC, which will be controlled by Global as its sole managing member upon the completion of the Organizational Transactions; Global Operating LLC refers to TerraForm Global Operating, LLC, a wholly owned subsidiary of Global LLC, which will, through its direct and indirect subsidiaries, conduct our business and operations; Table of Contents Portfolio growth Call and ROFO rights We believe we will be able to rapidly expand our initial portfolio as a result of the significant project acquisition call rights and rights of first offer, or ROFO rights, that we have with our Sponsor and the project acquisition call rights and ROFO rights we have and expect to acquire from third-party developers of clean power generation assets. Upon completion of this offering, we will have call rights with respect to identified projects that have an aggregate capacity of 5,856.1 MW. We will enter into a support agreement with our Sponsor immediately prior to the completion of this offering, pursuant to which our Sponsor will agree to offer us additional qualifying projects through the fifth anniversary of the completion of this offering that are projected to generate an aggregate of at least $1.4 billion of cash available for distribution during their respective first twelve months of commercial operations. We expect that our Sponsor will continue to provide us with the opportunity to acquire additional qualifying projects after it has satisfied its minimum commitment under the support agreement in order to maximize the value of its equity ownership and incentive distribution rights. The support agreement with our Sponsor will also grant us ROFO rights with respect to additional clean energy projects that our Sponsor elects to sell or otherwise transfer and that are located in our initial target markets or other emerging markets that we mutually agree upon. We executed call right agreements with seven third-party developers, pursuant to which we have the right to purchase, at our election, a total of 43 solar, wind and hydro-electric projects in China with an aggregate capacity of 1,559.7 MW for a specified period. Third-party acquisitions We also intend to rapidly expand our project portfolio by acquiring renewable energy projects from third parties. As discussed below, our Sponsor and its operating subsidiary, TerraForm Power, have a strong record of third-party project and corporate acquisitions. We expect that our initial portfolio will include 1.1 GW of projects acquired from third parties in nine acquisitions. We expect to continue to have significant opportunities to acquire projects from third-party developers, enabling us to expand our project portfolio through acquisitions for the foreseeable future. Our Sponsor Our U.S.-based Sponsor is the largest globally diversified developer of wind and solar energy projects in the world and has been one of the top three developers and installers of solar energy facilities in the world in each of the past two years based on megawatts installed. As of March 31, 2015, our Sponsor had a 7.5 GW pipeline of development-stage solar and wind projects, including 1.7 GW in our initial and future target markets, and approximately 4.9 GW of self-developed and third-party developed solar and wind power generation assets under management. Our Sponsor has developed over 1,300 solar and wind projects in 20 countries and has completed all of the projects on which it has commenced construction, including over 140 projects in our initial target markets. Our Sponsor has over 1,900 development and operations employees, over 700 of which service our initial and future target markets. We believe we are well positioned to capitalize on favorable market trends in the renewable power generation segment due to our relationship with our Sponsor, which has an established presence in each of our initial target markets, a strong asset development pipeline and acquisition track record, significant project financing experience and asset management and operational expertise. Table of Contents Table of Contents initial portfolio refers to 42 projects with an aggregate of 72 sites, representing a total capacity of 1,406.1 MW, that we will either own upon completion of this offering or that we expect to acquire from third parties or receive as contributions from our Sponsor after the completion of this offering, including (i) 442.5 MW of projects that we expect to acquire from third parties shortly after the completion of this offering upon receipt of governmental or lender consents; (ii) 158.4 MW of projects that will be acquired from third parties when such projects reach their commercial operations date, which we expect to occur during the remainder of 2015, and (iii) 128.4 MW of projects that will be contributed to us by our Sponsor when such projects reach their respective commercial operations date, which we expect to occur during the remainder of 2015; SunEdison and Sponsor refer to SunEdison, Inc., together with, where applicable, its consolidated subsidiaries; TerraForm Power refers to TerraForm Power, Inc., together with, where applicable, its consolidated subsidiaries, which is a publicly traded subsidiary of our Sponsor that also owns and operates clean power assets; and $ refers to U.S. dollars, CNY refers to Chinese Yuan Renminbi, BRL refers to Brazilian Real, INR refers to Indian Rupee, ZAR refers to South African Rand, MYR refers to Malaysian Ringgit, THB refers to Thai Baht and PEN refers to Peruvian Nuevo Sol. See Summary Organizational Transactions for more information regarding our ownership structure. Table of Contents Yieldco experience Our Sponsor has significant experience in acquiring, financing and operating clean power generation assets through a publicly listed dividend-oriented company. We will be the second yieldco vehicle to launch with our Sponsor s support. Our Sponsor s subsidiary, TerraForm Power, which owns and operates clean power assets located in the United States and other select jurisdictions, completed its initial public offering in July 2014. With our Sponsor s support, TerraForm Power has raised approximately $3.9 billion in acquisition and permanent financing to pursue acquisitions of renewable energy projects totaling 1,703.0 MW as of May 1, 2015. We intend to capitalize on our Sponsor s experience in successfully launching and supporting TerraForm Power. M&A expertise During the year ended December 31, 2014, our Sponsor completed 32 corporate and project acquisitions worldwide, which included operating projects with an aggregate capacity of 1.5 GW. On January 29, 2015, our Sponsor completed the purchase of First Wind s development platform, pipeline and projects in development, including over 1.6 GW of wind and solar generation assets under development, and increased its assets under management by 1.5 GW. Our Sponsor: (i) will acquire Latin America Power Holding, B.V. s, or LAP s, asset management platform, its operation and maintenance personnel expertise in Peru and certain rights with respect to a pipeline of Peruvian hydro-electric development assets and (ii) has acquired an asset management platform in China consisting of operations and maintenance personnel and management expertise from Honiton Energy Caymans, Ltd., or Honiton. In addition, in July 2015 our Sponsor entered into an agreement with Renova Energia S.A., the largest renewable energy company in Brazil, or Renova, pursuant to which it (i) agreed to acquire eleven Brazilian wind and solar projects between 2017 and 2020 representing an aggregate capacity of 2,659.0 MW, which we refer to herein as the Renova Backlog Projects, and (ii) entered into a put/call arrangement for a hydro-electric project representing an aggregate capacity of 291.0 MW, upon the satisfaction of certain conditions, which we refer to herein as the Renova Put/Call Assets. We expect to continue to leverage our Sponsor s significant development expertise, project pipeline and third-party acquisition track record. For example, we have completed or expect to complete in connection with the closing of this offering or during the remainder of 2015, nine separate acquisitions representing 1.1 GW in the aggregate of projects located across multiple geographies that utilize a variety of renewable energy technologies. Market opportunity The global renewable power generation segment is large and growing rapidly due to significant increases in energy demand, decreasing cost of renewable energy, the emergence in various energy markets of grid parity, which is the point at which renewable energy sources can generate electricity at a cost equal to or lower than prevailing retail electricity prices, and strong social and political support for renewable energy, among other factors. We expect the cost to produce energy from conventional sources will continue to rise, owing to the required investments in transmission and distribution infrastructure and increasing regulatory costs relating to conventional energy sources. We believe accelerating industrialization, an expanding middle class and the need to develop energy grid infrastructure will continue to drive demand in our initial target markets for the foreseeable future. We believe that solar and wind energy systems are particularly attractive in addressing the undersupply of electrical generation capacity in emerging markets due to their relative ease and speed of installation, scalability and, with respect to solar energy systems, their ability to be located near the customer, thereby reducing the customer s transmission and distribution costs. In addition, we believe that hydro-electric energy represents a significant acquisition opportunity for us because it is a proven renewable technology with significant installed capacity of more than 412 GW in our initial target markets. Table of Contents Table of Contents The global renewables market is projected to require more than $2.1 trillion of investment in capacity expansions over the period from 2015 through 2020, of which approximately 35% of such capacity expansion is expected to occur in our initial target markets. Of this total expected investment, more than $723 billion and $664 billion is expected to be in global solar and wind generation capacity expansions, respectively. Our initial target markets are expected to account for 48% and 41% of global wind and solar capacity expansions, respectively. In addition, more than $253 billion is expected to be invested globally in hydro-electric generation assets through 2016, of which our initial target markets are expected to account for 27% of such capacity expansion. The installed base of renewable energy generation capacity in our initial target markets is greater than 622 GW, including more than 39 GW of solar capacity, 138 GW of wind capacity and 412 GW of hydro-electric capacity. Driven by the increasing cost competitiveness of wind and solar energy, accelerating industrialization, an expanding middle class and attractive regulatory policies that incentivize renewable energy investments, we expect substantial growth in installed renewable energy capacity over the next several years. Solar energy capacity additions are expected to total over 179 GW between 2014 and 2020 in our initial target markets and are expected to grow at a compound annual growth rate, or CAGR, of 32% between 2014 and 2020 in our initial target markets. Over the same period, wind energy capacity additions are expected to total over 188 GW in our initial target markets and are expected to grow at a CAGR of 14% between 2014 and 2020, in our initial target markets. Project Support Agreement Immediately prior to the completion of this offering, we will enter into a project support agreement, or the Support Agreement, with our Sponsor, which will require our Sponsor to offer us additional qualifying projects from its development pipeline through the fifth anniversary of the completion of this offering that are projected to generate an aggregate of at least $1.4 billion of cash available for distribution during the first twelve months following the qualifying projects respective commercial operation dates, or Projected FTM CAFD. We refer to these projects as the Call Right Projects. If the amount of Projected FTM CAFD of the projects we acquire under the Support Agreement through the fifth anniversary of the completion of this offering is less than $1.4 billion, our Sponsor has agreed that it will continue to offer us sufficient, qualifying Call Right Projects from its pipeline until the total aggregate Projected FTM CAFD commitment has been satisfied. In addition, the Support Agreement grants us a right of first offer with respect to any clean energy projects (other than Call Right Projects) that our Sponsor elects to sell or otherwise transfer during the six-year period following the completion of this offering and that are located in our initial target markets and other emerging markets that we mutually agree upon. We refer to these projects as the SunEdison ROFO Projects. The Support Agreement does not identify the SunEdison ROFO Projects since our Sponsor will not be obligated to sell any project that would constitute a SunEdison ROFO Project. In the event that our Sponsor elects to sell such assets, it will not be required to accept any offer we make to acquire any SunEdison ROFO Project and, following the completion of good faith negotiations with us, our Sponsor may choose to sell such assets to a third party or not to sell the assets at all. Table of Contents Table of Contents Cash dividend policy We intend to use a portion of the cash available for distribution, or CAFD, generated by our project portfolio to pay regular quarterly cash dividends to holders of our Class A common stock. After determining an appropriate reserve for our working capital needs and the prudent conduct of our business, our objective is to pay our Class A common stockholders a consistent and growing cash dividend that is sustainable on a long-term basis. Based on our forecast and the related assumptions and our intention to acquire assets with characteristics similar to those in our initial portfolio, we expect to grow our CAFD and increase our quarterly cash dividends over time. Our initial quarterly dividend will be set at $0.2750 per share of Class A common stock, or $1.1000 per share on an annualized basis. We established our initial quarterly dividend level based upon a targeted payout ratio by Global LLC of approximately 85% of projected annual CAFD. This dividend payout ratio is not prescribed by our governing documents and is subject to change based on the discretion of our board of directors. We expect our dividend payout ratio to vary as we intend to maintain or increase our dividend despite variations in our CAFD from period to period. In addition, we may adjust our dividend payout ratio from time to time based on changes in our portfolio in terms of size and scope, working capital and capital expenditure requirements, operating expenses and market conditions, including acquisition opportunities and our ability to borrow funds and access capital markets. We intend to target a 20% CAGR in dividends per share over the three-year period following the completion of this offering. This target is based on, and supported by, our Sponsor s $1.4 billion aggregate Projected FTM CAFD commitment to us under the Support Agreement and our Sponsor s track record of successful project acquisitions from unaffiliated third parties, which will provide us the opportunity to grow our CAFD following this offering. While we believe our targeted growth rate is reasonable for the emerging markets on which we focus, it is based on estimates and assumptions regarding a number of factors, many of which are beyond our control, including the market value of projects we acquire from third parties, the purchase price we pay for acquired projects, our cost of capital, the ratio of debt to equity with respect to the financing of acquisitions, whether we have the financial resources to acquire the Call Right Projects and the timing of such acquisitions. Prospective investors should read Cash dividend policy, including our financial forecast and related assumptions, and Risk factors, including the risks and uncertainties related to our forecasted results, completion of construction of projects and acquisition opportunities, in their entirety. We intend to cause Global LLC to distribute a portion of its CAFD to the holders of its units (including us as the sole holder of the Class A units and our Sponsor as the sole holder of the Class B units) pro rata, based on the number of units held, subject to the incentive distribution rights, or IDRs, held by our Sponsor that are described below. However, the Class B units held by our Sponsor are deemed subordinated because for a period of time, referred to as the Subordination Period, the Class B units will not be entitled to receive any distributions from Global LLC until the Class A units and Class B1 units (which may be issued upon reset of IDR target distribution levels or in connection with acquisitions from our Sponsor or third parties) have received quarterly distributions in an amount equal to $0.2750 per unit, or the Minimum Quarterly Distribution, plus any arrearages in the payment of the Minimum Quarterly Distribution from prior quarters. The practical effect of the subordination of the Class B units is to increase the likelihood that during the Subordination Period there will be sufficient CAFD to pay the Minimum Quarterly Distribution on the Class A units and Class B1 units (if any). For a description of the IDRs and the Subordination Period, see Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC Distributions. Our initial portfolio includes 921.7 MW of projects that we expect to acquire from third parties concurrently with or, in certain cases, during the remainder of 2015, which we refer to herein as the Pending Acquisitions. The closing of this offering is not conditioned on the consummation of the Pending Acquisitions. Table of Contents Our initial portfolio also includes 128.2 MW of projects that have not reached their commercial operation dates, or CODs, to be contributed to us by our Sponsor once such projects reach their respective COD, or the Contributed Construction Projects. The Contributed Construction Projects are expected to achieve their CODs during the remainder of 2015. To reduce the effect on the Class A units of delays (if any) in the closing of the Pending Acquisitions or the completion of the Contributed Construction Projects, our Sponsor has agreed to forego distributions under certain circumstances. In particular, our Sponsor has agreed to forego any distributions on its Class B units through the end of 2016 (i.e., distributions declared on or prior to March 31, 2017), and thereafter to forego distributions on its Class B units until the end of the Distribution Forbearance Period to the extent the holders of the Class A units and Class B1 units have not received distributions in an amount equal to the Minimum Quarterly Distribution plus any arrearages in the payment of Minimum Quarterly Distributions from prior quarters. For a description of the IDRs, the Subordination Period and the Distribution Forbearance Period, including the definitions of Subordination Period, As Delivered CAFD, Closed Acquisition CAFD, CAFD Forbearance Threshold and Distribution Forbearance Period, see Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC Distributions. Purpose of TerraForm Global, Inc. We intend to create value for the holders of our Class A common stock by achieving the following objectives: owning and operating a diverse platform of renewable energy projects, including solar, wind, hydro-electric and other clean power generation technologies, that provide long-term contracted cash flows from creditworthy counterparties; creating a geographically diverse platform of renewable energy generation assets; growing our project portfolio through the exercise of our call rights and the completion of third-party acquisitions; capitalizing on the expected high growth in the worldwide clean power generation market; creating an attractive investment opportunity for dividend growth-oriented investors; and gaining access to a broad investor base with a more competitive source of equity capital that accelerates our long-term growth and acquisition strategy. Table of Contents Our initial portfolio, the Call Right Projects and ROFO Projects The following table provides an overview of the projects that we expect will comprise our initial portfolio. We expect to acquire certain of the projects included in our initial portfolio through the consummation of the Pending Acquisitions and the transfer of the Contributed Construction Projects. Our initial portfolio includes: (i) approximately 327.0 MW of projects that we expect to acquire substantially concurrently with the completion of this offering; (ii) approximately 442.5 MW of projects that we expect to acquire shortly after the completion of this offering upon receipt of pending governmental approvals and lender consents; and (iii) approximately 286.8 MW of projects that we expect to acquire during the remainder of 2015 when such projects are expected to reach COD. This offering is not conditioned on the concurrent closing of all of the Pending Acquisitions. As of the date of this prospectus, we have not yet received all of the governmental, regulatory or third-party approvals or consents required to complete all of these acquisitions, and the timing for those approvals is outside of our control. As a result, we cannot assure you that all of the Pending Acquisitions will be consummated on the timetable currently contemplated or at all. For more information about the projects included in our initial portfolio, see Business Our portfolio. Country Total Net Capacity (MW)(1) % of Total MW Pending Acquisition Net Capacity (MW)(2) # of Sites Remaining Duration of PPA (Years)(3) Brazil Projects: Wind 294.4 20.9% 294.4 14 17 Hydro(4) 41.8 3.0 41.8 3 13 Total Brazil 336.2 23.9% 336.2 17 17 India Projects: Wind(7) 119.4 8.5 101.6 4 18 Solar 134.0 9.5 0.0 12 23 Total India 253.3 18.0% 101.6 16 21 Honduras Projects: Wind(4) 126.0 9.0 126.0 1 22 Solar(6) 82.0 5.8 82.0 3 20 Total Honduras 208.0 14.8% 208.0 4 21 China Projects: Wind 148.5 10.6 0.0 3 15 Solar 18.0 1.3 0.0 1 18 Total China 166.5 11.8% 0.0 4 16 Uruguay Solar Projects(6)(7) 101.1 7.2% 26.4 3 28 South Africa Projects: Wind(4)(5) 17.6 1.2 17.6 1 19 Solar(4)(5) 81.3 5.8 41.4 5 19 Total South Africa 98.8 7.0% 59.0 6 19 Costa Rica Wind Projects(4)(6) 74.0 5.3% 74.0 2 14 Peru Hydro Projects(4)(5) 72.5 5.2% 72.5 6 18 Nicaragua Wind Project(4) 44.0 3.1% 44.0 1 18 Thailand Solar Projects(7) 39.3 2.8% 0.0 9 26 Malaysia Solar Projects 12.3 0.9% 0.0 4 20 Total(8) 1,406.1 100.0% 921.7 72 19 (1) Net capacity represents the maximum, or rated, generating capacity at standard test conditions of a facility multiplied by our percentage of economic ownership of that facility as of the date of this prospectus. Generating capacity may vary based on a variety of factors discussed elsewhere in this prospectus. For projects referenced herein that have not yet achieved their COD, the figures reflect expected final capacity. Table of Contents (2) Certain of the Pending Acquisitions are subject to the receipt of governmental, regulatory or third-party approvals or consents. For more information relating to the outstanding conditions precedent to closing, see Risk factors Risks related to our business There can be no assurance that the Pending Acquisitions will be consummated on the timetable currently anticipated, and the closing of this offering is not conditioned on the consummation of these acquisitions. (3) Calculated as of March 31, 2015. (4) Includes projects that we expect to acquire shortly after the completion of this offering upon receipt of certain governmental and lender consents. (5) Includes projects for which we have cash distribution arrangements in place with the seller or our Sponsor, pursuant to which we are entitled to receive project cash distributions prior to their transfer to us. (6) Includes projects that we expect to acquire upon the project achieving COD, which we expect to occur during the second half of 2015. (7) Includes projects that will be contributed to us by our Sponsor upon such project achieving COD during the second half of 2015. (8) Amounts may not sum due to rounding. The following charts provide an overview of our initial portfolio by geography and technology: The projects in our initial portfolio, as well as the call right projects discussed below, were selected because they are located in our initial target markets and have or will have PPAs or other offtake arrangements with creditworthy counterparties that we believe will provide sustainable and predictable cash flows to fund the regular quarterly cash dividends that we intend to pay to holders of our Class A common stock. With the exception of five projects representing an aggregate of 128.2 MW, all of the Sponsor contributed projects included in our initial portfolio have reached their COD. We expect the remaining five projects to reach COD before the end of 2015. Our initial portfolio includes the Pending Acquisitions representing 921.7 MW that we expect to close concurrently with the completion of this offering or during the remainder of 2015. The Pending Acquisitions include three non-operational projects representing an aggregate of 158.4 MW. Our acquisition of these projects is subject to their reaching COD, which we expect to occur before the end of 2015. However, we cannot assure you that all of the projects in the Pending Acquisitions that are to be acquired upon reaching COD will achieve COD on the currently anticipated timelines or at all, or that any of the Pending Acquisitions that are expected to close after the consummation of this offering will close on the currently anticipated timelines or at all. Because the forecasted CAFD presented in this prospectus is based upon assumptions regarding the size of our portfolio and the timing of the consummation of the Pending Acquisitions (which, in certain cases, depends upon the timing of projects under construction reaching COD), our actual CAFD for the forecast periods could be smaller than the forecasted CAFD. See Risk factors Risks related to our business There can be no assurance that the Pending Acquisitions will be consummated on the timetable currently anticipated, and the closing of this offering is not conditioned on the consummation of these acquisitions and Our forecasted and unaudited pro forma financial information assumes the completion of all of the Pending Acquisitions. To reduce the effect on the Class A units of delays (if any) in the closing of the Pending Acquisitions or the completion of the Contributed Construction Projects, our Sponsor has agreed to forego distributions on its Class B units under certain circumstances. See The offering Distribution Forbearance Provisions. Table of Contents We will have the right to acquire the Call Right Projects set forth in the table below at prices to be determined by good faith negotiations between us and our Sponsor. The price for each of these Call Right Projects will be the fair market value of such project. The Support Agreement provides that we will work with our Sponsor to mutually agree on the fair market value, but if we are unable to, we and our Sponsor will engage a third-party advisor to determine the fair market value, after which we have the right (but not the obligation) to acquire such Call Right Project. Until the price for such Call Right Project is mutually agreed to by us and our Sponsor, should our Sponsor receive a bona fide offer for a Call Right Project from a third party, we will have the right to match any price offered by such third party and acquire such Call Right Project on the terms our Sponsor could obtain from the third party. After the price for a Call Right Project has been agreed upon and until the total aggregate Projected FTM CAFD commitment has been satisfied, our Sponsor may not market, offer or sell that Call Right Project to any third party without our consent. The Support Agreement will further provide that our Sponsor is required to offer us additional qualifying Call Right Projects from its pipeline on a quarterly basis until we have acquired projects under the Support Agreement that have the specified minimum amount of Projected FTM CAFD covered by the Support Agreement. We cannot assure you that we will be offered these Call Right Projects on terms that are favorable to us. See Certain relationships and related party transactions Project Support Agreement for additional information. We recently executed call right agreements with seven third-party developers pursuant to which we have the right to purchase, at our election, a total of 43 solar, wind and hydro-electric projects located in China with an aggregate capacity of 1,559.7 MW, for a specified period. Thirteen of these projects with an aggregate capacity of 371.7 MW have reached their COD. The remainder of these projects are expected to achieve their COD at varying times prior to the end of 2017. We refer to these call rights as our Third-Party Call Right Projects. We also have an option to acquire certain current and future renewable energy projects that Renova owns that are supported by PPAs having a PPA term of at least ten years that are (i) in development, (ii) under construction or (iii) have achieved COD. Upon expiration of the option, we will have a right of first refusal to purchase any project previously subject to the option. Table of Contents The following table provides an overview of our currently identified Call Right Projects and Third-Party Call Right Projects: Country Technology Net Capacity(1) (MW) % of Total MW Expected COD # of Projects Sponsor Operating Call Right Projects: Brazil Wind 386.0 6.6% Q3 14 - Q2 15 2 India Solar 1.0 0.0 Q1 15 1 Wind 242.5 4.1 Q3 07 - Q4 14 4 Malaysia Solar 5.3 0.1 Q1 14 - Q3 14 5 Sponsor Operating Call Right Projects 634.8 10.8% 12 Sponsor Development Call Right Projects: Brazil Wind 2,228.0 38.0 Q3 15 - Q1 19 9 Solar 45.0 0.8 Q4 17 1 China Solar 68.0 1.2 Q2 16 - Q4 16 2 India Solar 625.3 10.7 Q3 15 - Q3 17 20 Wind 170.0 2.9 Q4 15 1 South Africa Solar 274.0 4.7 Q2 17 - Q4 18 6 Latin America (excluding Brazil) Wind 80.0 1.4 Q3 16 1 Thailand Solar 148.9 2.5 Q1 16 - Q4 16 19 Philippines Solar 22.5 0.4 Q4 15 1 Sponsor Development Call Right Projects 3,661.6 62.5% 60 Total Sponsor Call Right Projects 4,296.4 73.4% 72 Third-Party Operating Call Rights Projects: China Wind 260.0 4.4 Q1 11 - Q3 14 8 Hydro 111.7 1.9 Q3 98 - Q2 10 5 Third-Party Operating Call Rights Projects 371.7 6.3% 13 Third-Party Development Call Rights Projects: China Wind 745.0 12.7 Q3 15 - Q4 17 15 Solar 400.0 6.8 Q4 15 - Q2 16 13 Hydro 43.0 0.7 Q4 15 2 Third-Party Development Call Rights Projects 1,188.0 20.3% 30 Total Third-Party Development Call Rights Projects 1,559.7 26.6% 43 Total Call Right Projects 5,856.1 100.0% 115 (1) Net capacity represents the maximum, or rated, generating capacity at standard test conditions of a facility multiplied by our expected percentage of economic ownership of such facility as of the date of this prospectus. Generating capacity may vary based on a variety of factors discussed elsewhere in this prospectus. The following charts provide an overview of our currently identified Call Right Projects and Third-Party Call Right Projects by geography and technology: Table of Contents Industry overview We expect to benefit from continued high growth in clean energy demand across the utility, commercial and residential customer segments. We believe the solar and wind segments of the clean power generation industry are particularly attractive, as declining solar and wind electricity costs and increasing grid electricity prices are trending towards grid parity in emerging markets. We also believe the hydro-electric segment of the clean power generation industry represents an attractive market given its long-term contracts with creditworthy counterparties, significant installed base, extended useful life and prospective acquisition opportunities. Solar energy benefits from highly predictable energy generation, the absence of fuel costs and proven technology. In addition, solar generating assets have the potential to be located at a customer s site, which reduces the customer s transmission and distribution costs. Finally, solar energy generation benefits from governmental, public and private support due to the environmentally friendly attributes of solar energy. The increasing adoption of wind energy across the globe relative to other power generation technologies is expected to be driven by its increasing cost competitiveness, broad resource availability, well established technology, non-reliance on water and ancillary societal benefits, such as job creation and energy security. Hydro-electric power generation is a well established clean energy technology. Its multiple methods of generation, such as conventional dam, pumped storage and run-of-river, have led to its diverse use in renewable power generation from large-scale (greater than or equal to 50 MW rated capacity) to small-scale (less than 50 MW rated capacity) facilities. The following charts summarize anticipated growth in our initial target markets: Total solar energy generation rated capacity in MW 2014 Actual 2017 Expected 2020 Expected CAGR(1) China 32,925 85,420 161,881 30% Brazil 37 1,430 3,654 115% India 3,259 14,606 31,205 46% South Africa 1,075 2,588 2,588 (2) 16% Honduras 376 376 (2) Costa Rica 25 25 (2) Peru 84 200 200 (2) 16% Uruguay 223 223 (2) 178% Malaysia 200 377 639 21% Thailand 1,197 2,323 2,323 (2) 12% Total 38,778 107,568 203,113 32% Table of Contents Total wind energy generation rated capacity in MW 2014 Actual 2017 Expected 2020 Expected CAGR(1) China 110,409 169,126 228,876 13% Brazil 5,069 14,382 22,676 28% India 20,529 30,029 38,729 11% South Africa 606 2,400 4,240 38% Honduras 126 251 381 20% Costa Rica 127 278 558 28% Peru 146 313 533 24% Uruguay 379 1,651 2,101 33% Malaysia N/A N/A N/A N/A Thailand 242 242 242 Total 137,634 218,672 298,335 14% Source: Bloomberg New Energy Finance (1) Represents compound annual growth rate from 2014 to 2020. Where 2020 data is unavailable, represents compound annual growth rate from 2014 to 2017. (2) Bloomberg New Energy Finance does not provide 2020 projections for these countries. As such, 2017 capacity has been held constant through 2020. Cash available for distribution The table below summarizes our estimated cash available for distribution per share of Class A common stock for the twelve months ending June 30, 2016 and December 31, 2016 based on our forecasts included elsewhere in this prospectus: (in thousands, except share, per share and project data) Forecast for the twelve months ending June 30, 2016 December 31, 2016 (unaudited) Assumed operating MW at the beginning of the period 1,119.5 1,406.1 Cash available for distribution by Global LLC(1) $ 195,808 $ 231,452 Cash available for distribution to holders of Class A shares(1)(2) $ 110,366 $ 130,457 Class A shares at period end 118,597,013 118,597,013 Cash available for distribution per Class A share(1)(2) $ 0.9306 $ 1.1000 (1) Cash available for distribution is not a measure of performance under U.S. generally accepted accounting principles, or GAAP. For a reconciliation of these forecasted metrics to their closest GAAP measure, see Cash dividend policy Estimate of future cash available for distribution elsewhere in this prospectus. (2) Does not give effect to any reductions of distributions on the Class B units during the Distribution Forbearance Period. We define cash available for distribution, or CAFD, as net cash provided by the operating activities of Global LLC as adjusted for certain other cash flow items that we associate with our operations. It is a non-GAAP measure of our ability to generate cash to service our dividends. As calculated in this prospectus, cash available for distribution represents net cash provided by (used in) operating activities of Global LLC: (i) plus or minus changes in assets and liabilities as reflected on our statements of cash flows, (ii) minus deposits into (or plus withdrawals from) restricted cash accounts required by project financing arrangements to the extent they decrease (or increase) cash provided by operating activities, (iii) minus cash distributions paid to non-controlling interests in our projects, if any, (iv) minus scheduled project-level and other debt service payments and repayments in accordance with the related borrowing arrangements, to the extent they are paid from operating cash flows during a period, (v) minus non-expansionary capital expenditures, if any, to the extent they are paid from operating cash flows during a period, (vi) plus cash contributions from our Sponsor pursuant to the Interest Payment Agreement, (vii) plus operating costs and expenses paid by our Sponsor pursuant to the Management Services Agreement to the extent such costs or expenses exceed the fee payable by us pursuant to Table of Contents such agreement but otherwise reduce our net cash provided by operating activities and (viii) plus or minus operating items as necessary to present the cash flows we deem representative of our core business operations, with the approval of the audit committee. Our intention is to cause Global LLC to distribute a portion of the CAFD generated by our project portfolio to its members each quarter, after appropriate reserves for our working capital needs and the prudent conduct of our business. For further discussion of cash available for distribution, including a reconciliation of net cash provided by (used in) operating activities to cash available for distribution and a discussion of its limitations, see footnote (2) under the heading Summary historical and pro forma financial data elsewhere in this prospectus. Our business strategy Our primary business strategy is to increase the cash dividends we pay to the holders of our Class A common stock over time. Our plan for executing this strategy includes the following: Focus on long-term contracted clean power generation assets. All projects included in our initial portfolio, together with any call right project that we acquire, will have a PPA with a creditworthy counterparty or be subject to a similar offtake arrangement such as a feed-in tariff program. We intend to focus on owning and operating long-term contracted clean power generation assets with proven technologies, low operating risks and stable cash flows consistent with our initial portfolio. We believe industry trends will support significant growth opportunities for long-term contracted power in the clean power generation segment as various emerging markets continue to rapidly grow their electricity usage and approach grid parity. Grow our business through acquisitions of long-term contracted operating assets. We intend to acquire additional long-term contracted clean power generation assets from our Sponsor and unaffiliated third parties to increase our CAFD. The Support Agreement establishes: (i) a minimum commitment from our Sponsor to provide us with $1.4 billion of Projected FTM CAFD through the fifth anniversary of the completion of this offering, which will be satisfied either through (x) the option to acquire the identified Call Right Projects, which currently represent an aggregate capacity of approximately 4,296.4 MW, or (y) the option to acquire additional projects from our Sponsor s development pipeline that will in the future be designated as Call Right Projects; and (ii) a right of first offer on the SunEdison ROFO Projects. We also have Third-Party Call Right Projects and expect to enter into additional call rights agreements with third parties. Given the strong growth trends in our initial target markets, we also expect to have significant opportunities to acquire other clean power generation assets from third-party developers, independent power producers and financial investors. We believe our acquisition strategies, based on an extensive knowledge of the market, third-party relationships, operating expertise and access to capital, will enhance our ability to grow and generate CAFD and provide us with a competitive advantage in acquiring new assets. Attractive, high-growth asset class. We intend to initially focus on the solar and wind energy segments because we believe they are currently the fastest growing segments of the clean power generation industry globally and offer attractive opportunities to own assets and deploy long-term capital due to the predictability of their cash flows, and the hydro-electric energy segment because we believe its significant market size presents numerous investment opportunities. Also, we believe the solar, wind and hydro-electric energy segments are attractive because there is no associated fuel cost risk, their associated technologies have become highly reliable and, based on the experience of our Sponsor, require low operational and maintenance expenditures and a low level of interaction from managers as compared to conventional energy assets. Solar, wind and hydro-electric projects also have an expected life which can exceed 30 years. In addition, the projects in our initial portfolio generally operate under long-term PPAs with terms of up to 30 years. Table of Contents Focus on emerging markets with favorable investment attributes. While our current focus is on solar, wind and hydro-electric energy generation assets in our initial target markets, we will selectively consider acquisitions of clean power generation assets in other geographies. We expect to pursue opportunities in other high-growth emerging markets that have characteristics similar to those of our initial target markets, with a focus on other markets located in Asia (except Japan), Africa, Latin America and the Middle East. We believe there will be ample opportunities to acquire high-quality contracted clean power generation assets in high-growth emerging markets with these attributes. Technology-neutral clean power platform. We intend to expand upon our Sponsor s technology-neutral platform. Our Sponsor s platform enables the development, acquisition, maintenance and operation of renewable energy generation assets across various renewable energy technologies, including solar, wind and hydro-electric. This technology-neutral platform enables our open architecture approach, which provides us with the ability to evaluate a broad range of development partnerships and acquisition opportunities and support the rapid growth of our portfolio. Maintain sound financial practices. We intend to maintain our commitment to disciplined financial analysis and a balanced capital structure. Our financial practices will include: (i) a risk and credit policy focused on transacting with creditworthy counterparties; (ii) a financing policy focused on achieving an optimal capital structure through various capital formation alternatives to minimize interest rates, refinancing risks and tax withholdings; (iii) utilizing derivative financial instruments to minimize our net exposure to currency fluctuations; and (iv) a dividend policy that is based on distributing the CAFD generated by our project portfolio (after deducting appropriate reserves for our working capital needs and the prudent conduct of our business). Our initial dividend was established based on our targeted payout ratio of approximately 85% of projected CAFD. See Cash dividend policy. Our competitive strengths We believe our key competitive strengths include: Diversity. Our initial portfolio is well diversified in terms of geography, market segment, counterparty, and types of renewable energy technology. We serve utility, commercial, industrial and governmental customers and may serve residential business lines in the future. We have projects located across 11 countries and four continents. Projects in our initial portfolio located in any single country are not expected to represent more than 30% of our projected CAFD for the year ending December 31, 2016, thereby reducing our operating risk profile and reliance on any single market or segment. We utilize several renewable energy technologies, the production profiles of which complement one another, which we believe enables us to generate consistent cash flow. We believe our diverse customer base, geographic presence and technology improves our business development opportunities by enhancing our industry relationships, reputation and understanding of regional power market dynamics. Portfolio growth opportunities. We believe we will be able to rapidly expand our initial portfolio through several channels. We have significant project acquisition call rights and ROFO rights with our Sponsor. We also expect to have call rights with third-party developers of clean power generation assets, including the Third-Party Call Right Projects. We and our Sponsor have strategically located project origination teams, along with relationships with regionally-focused clean power generation companies, that we believe will facilitate the growth of our project pipeline. We expect to have significant opportunities to expand our project portfolio through additional third-party acquisitions for the foreseeable future. Table of Contents Stable, high-quality cash flows. Our initial portfolio of projects, together with the call right projects that we acquire, will provide us with a stable, predictable cash flow profile. We sell the electricity generated by our projects under PPAs or similar offtake arrangements, such as feed-in tariff programs, with creditworthy counterparties. As of March 31, 2015, the weighted average (based on megawatts) remaining life of our PPAs was 19 years. All of our projects have highly predictable operating costs, in large part due to solar, wind and hydro-electric facilities having no fuel cost and utilizing reliable technology. We intend to utilize foreign exchange and foreign tax strategies in an effort to mitigate the impact of cross-border costs. Finally, based on our initial portfolio of projects, we do not expect to pay significant U.S. federal income taxes in the near term. Relationship with SunEdison. We believe our relationship with our Sponsor provides us with significant benefits, including the following: Strong asset development track record. Our Sponsor has demonstrated a significant track record in developing both solar and, as a result of its acquisition of First Wind, wind energy generation facilities. Over the last three calendar years, our Sponsor has constructed solar power generation assets with an aggregate capacity of 2.0 GW and, as of March 31, 2015, was constructing additional solar power generation assets expected to have an aggregate capacity of approximately 773.7 MW. Our Sponsor has been one of the top three developers and installers of solar energy facilities in the world in each of the past two years based on megawatts installed. Our Sponsor has developed over 1,300 solar and wind projects and has completed all of the projects on which it has commenced construction, including over 140 projects in our initial target markets. In addition, our Sponsor had a 7.5 GW pipeline of development stage solar and wind projects as of March 31, 2015, including 1.7 GW in our initial and future target markets. As of the same date, our Sponsor employed 3,400 people globally, of which over 1,900 were serving as developers and operators of renewable energy projects. Our Sponsor s operating history demonstrates its organic project development capabilities in our initial target markets. We believe our Sponsor s relationships, knowledge and employees will facilitate our ability to rapidly acquire operating projects from our Sponsor in our initial target markets. Yieldco experience. Our Sponsor s subsidiary, TerraForm Power, which owns and operates clean power assets located in the United States and other select jurisdictions, completed its initial public offering in July 2014. With our Sponsor s support, TerraForm Power has raised approximately $3.9 billion in acquisition and permanent financing to pursue acquisitions of renewable energy projects totaling 1,703.0 MW as of May 1, 2015. Proven acquisition expertise. In 2014, our Sponsor completed 32 corporate and project acquisitions worldwide, which included operating projects with an aggregate nameplate capacity of 1.5 GW. In addition, our Sponsor, through TerraForm Power, completed the acquisition on January 29, 2015 of First Wind s 500.0 MW of operating wind generation assets and 21.1 MW of operating solar generation assets and 1.66 GW of wind and solar generation assets under development. These acquisitions include two wholly owned subsidiaries of Honiton, which provides our Sponsor with an operating and maintenance platform in China. Additionally, our Sponsor s pending acquisition of LAP will provide it with a hydro-electric development pipeline in Peru and an operations and maintenance platform in Latin America. We believe our Sponsor s significant acquisition experience and expertise will enable us to expand our portfolio through additional acquisitions of operating projects from unaffiliated third parties in our initial target markets. Our initial portfolio includes two projects that we have acquired from third parties. Concurrently with this offering or, in certain cases, during the remainder of 2015, we expect to complete seven separate transactions to acquire projects included in our initial portfolio, expanding our geographic footprint and diversifying our renewable energy technologies. Table of Contents Project financing experience. We believe our Sponsor has demonstrated a successful track record of sourcing long-term capital to fund project acquisitions and the development and construction of projects located in our initial target markets. To date, our Sponsor has raised an aggregate of $3.3 billion since January 1, 2014 to support its development and acquisition activities. We expect that we will realize significant benefits from our Sponsor s financing and structuring expertise as well as its relationships with financial institutions and other providers of capital. Asset management expertise. We will have access to the significant resources of our Sponsor to support the high-growth strategy of our business. As of March 31, 2015, our Sponsor had over 4.9 GW of projects under management across 20 countries. Approximately 16.1% of these projects are third-party power generation facilities, demonstrating our Sponsor s collaboration with multiple developers and owners. These projects utilize 29 different module types and inverters from 17 different manufacturers. As of March 31, 2015, our Sponsor had approximately 700 employees servicing operations and management in our initial target markets. In addition, our Sponsor maintains three renewable energy operation centers to service assets under management. Our Sponsor s asset management experience helps ensure that our facilities will be monitored and maintained to maximize cash generation. We also benefit from First Wind s asset management expertise as the First Wind team has been integrated with our Sponsor. Access to and experience in mature capital markets. As a publicly listed company in the United States, we will have access to a broad investor base with a competitive source of capital. We believe access to this market will accelerate our long-term growth and acquisition strategy and provide us with a competitive advantage over regional renewable energy developers in our target markets where we may be competing to acquire assets or development rights. We believe that both our Sponsor and TerraForm Power have benefited from their status as publicly listed companies in the United States. To date, our Sponsor and TerraForm Power have raised an aggregate of $9.4 billion since January 1, 2014, providing them with the capital necessary to acquire projects and development platforms to grow TerraForm Power s portfolio of operational renewable energy projects in mature markets. In addition, we believe that a public listing in the United States will provide transparency to investors regarding our operations that will help us attract and retain capital. Long-term contracted portfolio. We benefit from a portfolio of relatively newly constructed assets, with most of the projects in our initial portfolio having achieved COD within the past five years or expected to reach COD by the end of 2015. The PPAs for projects included in our initial portfolio have a weighted average remaining life of 19 years as of March 31, 2015. The projects in our initial portfolio and the call right projects utilize proven and reliable technologies provided by leading equipment manufacturers and, as a result, we expect to achieve high project availability and predictable maintenance capital expenditures. Experienced management team. Under the Management Services Agreement, our Sponsor has committed to provide us with a team of experienced professionals to serve as our executive officers and other key officers. We expect that certain of these professionals will provide such services to us on a dedicated basis. Our officers have considerable experience in developing, acquiring and operating clean power generation assets, with an average of over five years of experience in the sector. Mr. Domenech, our Chief Executive Officer, and his team have been successful in expanding TerraForm Power s project portfolio from 807.7 MW as of its initial public offering in July 2014 to 1,703.0 MW as of May 1, 2015, an increase of 111%. Our management team will also have access to the other significant management resources of our Sponsor to support the operational, financial, legal and regulatory aspects of our business. Table of Contents Agreements with our Sponsor We will enter into the agreements described below with our Sponsor immediately prior to the completion of this offering. For a more comprehensive discussion of these agreements, see Certain relationships and related party transactions. For a discussion of the risks related to our relationship with our Sponsor, see Risk factors Risks related to our relationship with our Sponsor. In addition, we will amend Global LLC s operating agreement to provide for Class A units, Class B units and Class B1 units and will convert our Sponsor s interest in Global s common equity into Global LLC Class B units and issue the IDRs to our Sponsor. As a result of holding Class B units and IDRs, subject to certain limitations during the Subordination Period and the Distribution Forbearance Period, our Sponsor will be entitled to share in distributions from Global LLC to its unit holders. See Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC. Support Agreement. Pursuant to the Support Agreement, our Sponsor will provide us with the right, but not the obligation, to purchase for cash certain clean energy projects from its project pipeline with aggregate Projected FTM CAFD of at least $1.4 billion through the fifth anniversary of the completion of this offering. If the amount of Projected FTM CAFD of the projects we acquire under the Support Agreement through the fifth anniversary of the completion of this offering is less than $1.4 billion, our Sponsor has agreed that it will continue to offer us sufficient Call Right Projects until the total aggregate Projected FTM CAFD commitment has been satisfied. We have agreed to pay cash for each Call Right Project that we acquire, unless we and our Sponsor otherwise mutually agree. The Support Agreement provides that we will work with our Sponsor to mutually agree on the fair market value of each Call Right Project within a reasonable time after it is added to the list of identified Call Right Projects. If we are unable to agree on the fair market value, we and our Sponsor will engage a third-party advisor to determine the fair market value, after which we will have the right (but not the obligation) to acquire such Call Right Project. Until we provide our Sponsor with written notice of exercise of our right to purchase a Call Right Project, should our Sponsor receive a bona fide offer for a Call Right Project from a third party, our Sponsor must give us notice of such offer in reasonable detail and we will have the right to acquire such project on terms substantially similar to those our Sponsor could have obtained from such third party, but at a price no less than the price specified in the third-party offer. After the price for a Call Right Project has been agreed upon and until the total aggregate Projected FTM CAFD commitment has been satisfied, our Sponsor may not market, offer or sell that Call Right Project to any third party without our consent. The Call Right Projects are to be offered to us on a quarterly basis until we have acquired projects under the Support Agreement that have the specified minimum amount of Projected FTM CAFD for the period covered by the Support Agreement. These Call Right Projects must satisfy certain criteria. In addition, our Sponsor may remove a project then under construction from the Call Right Project list if, in its reasonable discretion, the project is unlikely to be successfully completed or if we have not exercised our call right with respect to an operating Call Right Project within twelve months of it being identified in the Support Agreement. In that case, the Sponsor will be required to replace such project with one or more additional reasonably equivalent projects that have a similar economic profile. Generally, we may exercise our call right with respect to any pre-COD Call Right Project identified in the Support Agreement at any time until 30 days prior to COD for such project, and with respect to any operating Call Right Project at any time within twelve months of it being added to the list. If we exercise our option to purchase a project under the Support Agreement and reach a mutually agreed upon price, our Sponsor is required to sell us that project on such date as we may agree or, in the case of a project under construction, on or about the date of its COD. Table of Contents In addition, our Sponsor has agreed to grant us a right of first offer on any of the SunEdison ROFO Projects that it determines to sell or otherwise transfer during the six-year period following the completion of this offering. Under the terms of the Support Agreement, our Sponsor will agree to negotiate with us in good faith, for a period of 30 days, to reach an agreement with respect to any proposed sale of a SunEdison ROFO Project for which we have exercised our right of first offer before it may sell or otherwise transfer such SunEdison ROFO Project to a third party. However, our Sponsor will not be obligated to sell any of the SunEdison ROFO Projects and, as a result, we do not know when, if ever, any SunEdison ROFO Projects will be offered to us. In addition, in the event that our Sponsor elects to sell SunEdison ROFO Projects, it will not be required to accept any offer we make and may choose to sell the assets to a third party or not sell the assets at all. Under our related party transaction policy, the prior approval of our Corporate Governance and Conflicts Committee will be required for each material transaction with our Sponsor under the Support Agreement. See Conflicts of interest below. Management Services Agreement. Pursuant to the Management Services Agreement, our Sponsor will provide, or arrange for the provision of, operational, management and administrative services to us and our subsidiaries, and we will pay our Sponsor a base management fee as follows: (i) 2.5% of Global LLC s CAFD in each of 2016, 2017 and 2018; and (ii) an amount equal to our Sponsor s actual cost for providing services to us pursuant to the terms of the Management Services Agreement in 2019 and thereafter. We and our Sponsor may agree to adjust the management fee as a result of a change in the scope of services provided under the Management Services Agreement, but no adjustment will be required solely as a result of our acquisition of Call Right Projects or other assets. The prior approval of our Corporate Governance and Conflicts Committee will be required for each material transaction with our Sponsor under the Management Services Agreement unless such transaction is expressly contemplated by the agreement. Repowering Services Agreement. Immediately prior to the completion of this offering, Global, Global LLC and Global Operating LLC, collectively, the Service Recipients, will enter into a Repowering Services Agreement with our Sponsor, pursuant to which our Sponsor will be granted a right of first refusal to provide certain services, including (i) repowering power generation projects and providing related services to analyze, design and replace or improve any of the power generation projects through the modification of the relevant energy system or the installation of new components, but excluding any maintenance, and (ii) such other services as may from time to time be reasonably requested by the Service Recipients related to any such repowerings, collectively, the Repowering Services. Investment Agreements. On December 22, 2014, Global LLC entered into an investment agreement with our Sponsor pursuant to which our Sponsor agreed to (i) provide support with respect to the interest payment obligations due under the Bridge Facility and (ii) contribute certain enumerated projects to Global LLC. Immediately prior to the completion of this offering, we will enter into an additional investment agreement with our Sponsor pursuant to which our Sponsor will agree to contribute to us the Bora Bora wind project in India, the NPS Star and WXA solar projects in Thailand and the Del Litoral and El Naranjal solar projects in Uruguay, all of which are currently under construction. Interest Payment Agreement. Immediately prior to the completion of this offering, Global LLC and Global Operating LLC will enter into an agreement with our Sponsor and SunEdison Holdings Corporation, or the Interest Payment Agreement, pursuant to which our Sponsor will agree to pay an aggregate amount equal to all of the scheduled interest on Global Operating LLC s senior unsecured notes until December 31, 2016 and up to an aggregate amount of $40 million in 2017, $30 million in 2018, $20 million in 2019 and $10 million in 2020, plus any interest due on any payment not remitted when due. In addition, our Sponsor will from time to time contribute to Table of Contents us the amounts necessary to make the scheduled principal and interest payments due under our Orosi project s syndicated credit facilities for the life of such indebtedness (unless earlier repaid by our Sponsor), which as of March 31, 2015 had an aggregate amount outstanding of $78.3 million. Our Sponsor will not be obligated to pay any amounts due under the Senior Notes in connection with an acceleration of the payment of the principal amount of such indebtedness. Global LLC will be entitled to set off any amounts owing by SunEdison pursuant to the Interest Payment Agreement against any and all sums owed by Global LLC to SunEdison under the distribution provisions of the amended and restated operating agreement of Global LLC, and Global LLC may pay such amounts to Global Operating LLC. Project contracts. Our contributed projects were or are being built pursuant to engineering, procurement and construction, or EPC, contracts, and we anticipate they will be operated and maintained pursuant to operations and maintenance, or O&M, contracts with affiliates of our Sponsor. Under the EPC contracts, the relevant Sponsor affiliates provide liquidated damages to cover delays in project completion, as well as market standard warranties, including performance ratio guarantees, designed to ensure the expected level of electricity generation is achieved, for periods that range between two and five years after project completion depending on the relevant market. The O&M contracts with affiliates of our Sponsor provide for the performance of preventive and corrective maintenance services for fees as defined in such agreements. The applicable Sponsor affiliates also provide project availability guarantees of 98% including as to a majority of the solar projects that we own (on a megawatt basis), designed to ensure the expected level of power plant operation is achieved, and certain related liquidated damage obligations. See Management s discussion and analysis of financial condition and results of operations Key metrics Operating metrics Project availability for a description of project availability. Conflicts of interest. While our relationship with our Sponsor and its subsidiaries is a significant strength, it is also a source of potential conflicts. As discussed above, our Sponsor and its affiliates will provide important services to us, including assisting with our day-to-day management and providing individuals who will serve as our executive officers and other key officers. Our management team, including our officers, will remain employed by and, in certain cases, will continue to serve as executive officers or other senior officers of SunEdison or its affiliates. For example, our Chief Executive Officer also serves as the Chief Executive Officer and Director of TerraForm Power. Following this offering, our officers will also generally continue to have economic interests in our Sponsor and, with respect to our Chief Executive Officer, in TerraForm Power. These same officers may help our board of directors and, in particular, our Corporate Governance and Conflicts Committee evaluate potential acquisition opportunities presented by our Sponsor under the Support Agreement. As a result of their employment by, and economic interest in, our Sponsor, our officers may be conflicted when advising our board of directors or Corporate Governance and Conflicts Committee or otherwise participating in the negotiation or approval of such transactions. Notwithstanding the significance of the services to be rendered by our Sponsor or its designated affiliates on our behalf in accordance with the terms of the Management Services Agreement or of the assets which we may elect to acquire from our Sponsor in accordance with the terms of the Support Agreement or otherwise, our Sponsor will not owe fiduciary duties to us or our stockholders and will have significant discretion in allocating acquisition opportunities (except with respect to the Call Right Projects and SunEdison ROFO Projects) to us or to itself or third parties. Under the Management Services Agreement, our Sponsor will not be prohibited from acquiring operating assets of the kind that we seek to acquire. See Risk factors Risks related to our relationship with our Sponsor. Any material transaction between us and our Sponsor (including the proposed acquisition of any material Call Right Project or any material SunEdison ROFO Project pursuant to the Support Agreement) will be subject to Table of Contents our related party transaction policy, which will require prior approval of such transaction by our Corporate Governance and Conflicts Committee. Each of the directors on such committee will satisfy the requirements for independence under applicable laws and regulations of the Securities and Exchange Commission, or the SEC, and the rules of the NASDAQ Global Select Market. See Risk factors Risks related to our relationship with our Sponsor, Certain relationships and related party transactions Procedures for review, approval and ratification of related-person transactions; conflicts of interest and Management Committees of the board of directors Corporate Governance and Conflicts Committee for a discussion of the risks associated with our organizational and ownership structure and corporate strategy for mitigating such risks. Third-Party Call Right Agreements We have recently executed call right agreements with seven third-party developers, pursuant to which we have the right to acquire, at our election, a total of 43 solar, wind and hydro-electric projects located in China with an aggregate capacity of 1,559.7 MW. Thirteen of these projects, with an aggregate capacity of 371.7 MW, have already achieved commercial operation. The remaining projects are at various stages of development or construction, but all have received the approval required for development projects in China. Those Third-Party Call Right Projects which are not yet operational are all expected to achieve commercial operation prior to the end of 2017. The call rights may be exercised by us during the period specified in the respective call right agreement. For projects in development or under construction, this is generally a period of three months following the COD of the relevant Third Party Call Right Project. For projects which are already in commercial operation, the relevant period expires between two and three months following the date of execution of the respective call right agreement. During that period, the developer cannot sell or otherwise dispose of its direct or indirect interests in the Third-Party Call Right Projects. If we do not exercise our call rights, those rights will automatically expire at the end of the specified period (unless an extension is agreed upon with the developer). Following the exercise of a call right, we will work together with the developer in good faith to complete due diligence and to finalize documentation. The purchase price is either a fixed amount specified in the relevant agreement, or a price calculated by reference to an agreed financial model. If the parties are in dispute regarding the purchase price, the matter will be resolved by an independent expert. Following execution of transaction documentation, the acquisition will be completed in accordance with the agreed terms and conditions. Renova Agreement We have entered into an option agreement for development assets with Renova, pursuant to which Renova has granted us a right, at our election, to acquire certain current and future renewable energy projects it owns that are supported by PPAs having a term of at least ten years that (i) are in development, (ii) are under construction or (iii) have achieved COD. The exercise price is based on a proposed financial model. If the option is exercised, we will pay for the applicable project with shares of our Class A common stock. Upon expiration of the option, we will have a right of first refusal to purchase any project previously subject to the option. Upon completion of the Renova Transaction (defined below), Renova will be entitled to appoint one member to our board of directors, and such right will continue so long as Renova holds at least 28% of the Class A common stock it receives in connection with the transaction. Table of Contents Organizational Transactions Formation Transactions Equity Grants. TerraForm Global, Inc. is a Delaware corporation formed on September 12, 2014 by SunEdison to serve as the issuer of the Class A common stock offered hereby. Shortly thereafter, we granted certain employees of SunEdison who will perform services for us equity incentive awards under the TerraForm Global, Inc. 2014 Long-Term Incentive Plan, or the 2014 Incentive Plan, in the form of restricted shares of Global. See Executive officer compensation Equity incentive awards. Contributed and Acquired Projects. Global LLC was formed by SunEdison in connection with this offering as a Delaware limited liability company that owns and operates through its subsidiaries a portfolio of contracted clean power generation assets acquired and to be acquired from SunEdison and unaffiliated third parties. Prior to the completion of this offering: (i) SunEdison and its subsidiaries will contribute or commit to contribute to subsidiaries of Global LLC the clean technology energy projects developed, presently being constructed or acquired by SunEdison that are included in our initial portfolio, which we refer to collectively as the Contributed Projects and (ii) we have completed the following acquisitions: Chint-NSM Transaction the acquisition from an affiliate of Chint Solar (Zhejiang) Co., Ltd., of the remaining 51% interest in the 23.9 MW solar project NSM 24 located in India; and Hercules Transaction the acquisition of two wholly owned subsidiaries of Honiton, which includes the 148.5 MW wind project located in China. We collectively refer to these acquisitions as the Acquired Projects. We paid an aggregate of $117.8 million in cash for the Acquired Projects. Bridge Facility. On December 22, 2014, Global LLC entered into a new $150.0 million term loan bridge facility, or the Bridge Facility, to provide funding for any acquisitions of clean technology energy projects developed by third parties that may be completed by Global LLC or its subsidiaries prior to the completion of this offering or to repay certain of the project-level indebtedness incurred by projects included in our initial portfolio. On May 6, 2015, the Bridge Facility was amended to increase the aggregate commitment to $450.0 million, of which $87.5 million was subsequently prepaid with a portion of the net proceeds from the Units Private Placements. On June 5, 2015, the Bridge Facility was further amended to increase the aggregate commitment to $550.0 million. Units Private Placements. On May 6, 2015, we raised $175.0 million from the sale to investment vehicles affiliated with Blackstone Alternative Solutions L.L.C., Everstream Opportunities Fund and Altai Capital Terrapin Blocker, LLC of 50,000, 100,000 and 25,000 Class D units of Global LLC for a cash purchase price of $50.0 million, $100.0 million and $25.0 million, respectively. Concurrently with the closing of this offering, these purchasers will receive on account of such Class D units a number of shares of our Class A common stock equal to the quotient of (x) the aggregate original cash purchase price of such Class D units and (y) 90% of the initial per share public offering price of our Class A common stock. Based on an initial public offering price of $15.00 per share, which is listed on the cover of this prospectus, these purchasers will receive an aggregate of 12,962,963 shares of our Class A common stock on account of their Class D units purchased in the private placements. Global will receive the same number of newly issued Class A units of Global LLC in connection with the issuance of its Class A common stock on account of the Class D units. Global LLC used a portion of the net proceeds from the sale of these Class D units to reduce its borrowings under the Bridge Facility and expects to use the remainder to complete acquisitions of projects from third parties and to reduce certain project-level indebtedness. Table of Contents On June 9, 2015, we raised an additional $335.0 million from the sale of an aggregate of 335,000 Class D units of Global LLC to certain investors, including certain of the Baron Funds and investment vehicles affiliated therewith, Capricorn Investment Group, GE, Glenview Capital Management and Kingdon Capital Management. Concurrently with the closing of this offering, these purchasers will receive on account of such Class D units a number of shares of our Class A common stock equal to the quotient of (x) the aggregate original cash purchase price of such Class D units and (y) 95% of the initial per share public offering price of our Class A common stock. Based on an initial public offering price of $15.00 per share, which is listed on the cover of this prospectus, these purchasers will receive an aggregate of 23,508,772 shares of our Class A common stock on account of their Class D units purchased in the private placements. Global will receive the same number of newly issued Class A units of Global LLC in connection with the issuance of its Class A common stock on account of the Class D units. Global LLC expects to use the net proceeds from the sale of the Class D units to complete acquisitions of projects from third parties and to reduce certain project-level indebtedness. We collectively refer to these purchases as the Units Private Placements. We relied upon the private placement exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof in connection with the sale of these Class D units. For a further discussion of these private placement transactions, see Certain relationships and related party transactions Private Placements. We collectively refer to all of the foregoing transactions as the Formation Transactions. Pending Acquisitions We intend to complete the following acquisitions from third parties: Solarpack Transaction the acquisition from Solarpack Corporaci n Tecnol gica, S.L., a Spanish solar developer, or Solarpack, of the 26.4 MW solar project Alto Cielo located in Uruguay; Chint-Soutpan/Witkop Transaction the acquisition of an additional 41.3% interest in the solar projects Soutpan and Witkop located in South Africa and currently owned by an affiliate of Chint Solar (Zhejiang) Co., Ltd., representing 26.4 MW in the aggregate; BioTherm Transaction the acquisition from BTSA Netherlands Cooperative U.A., a South African renewable project developer, or BioTherm, of the solar projects Aries and Konkoonsies and the wind project Klipheuwel located in South Africa, representing 32.6 MW in the aggregate; FERSA Transaction the acquisition from Fersa Energ as Renovables, S.A., a Spanish wind energy developer, of the wind projects Bhakrani, Gadag and Hanumanhatti located in India, representing 101.6 MW in the aggregate; Renova Transaction the acquisition from Renova of three wind and hydro-electric projects located in Brazil, representing 336.2 MW in the aggregate; LAP Transaction the acquisition of six hydro-electric projects located in Peru, representing 72.5 MW in the aggregate, as part of our Sponsor s acquisition of LAP, a developer and operator of hydro-electric generation facilities; and GME Transaction the acquisition of Globeleq Mesoam rica Energy Wind Energy Limited, or GME, including a portfolio consisting of solar and wind projects located in Honduras, Costa Rica and Nicaragua, representing 326.0 MW in the aggregate. Table of Contents We collectively refer to these acquisitions as the Pending Acquisitions and, together with the Acquired Projects, as the Acquisitions. As consideration for the Pending Acquisitions, we expect to pay an aggregate of $759.7 million in cash. In addition, with respect to the Renova Transaction, the BioTherm Transaction and the GME Transaction, we will pay $321.3 million, $8.2 million and $10.5 million of additional consideration in shares of Class A common stock, or 22,664,278 shares in the aggregate, assuming an initial public offering price of $15.00 per share, which is listed on the cover of this prospectus. The Pending Acquisitions include: (i) approximately 327.0 MW of projects that we expect to acquire substantially concurrently with the completion of this offering; (ii) approximately 442.5 MW of projects that we expect to acquire shortly after the completion of this offering upon receipt of necessary governmental and lender consents; and (iii) approximately 158.4 MW of projects that we expect to acquire during the remainder of 2015 when such projects are expected to reach COD. Specifically, we do not expect to complete the acquisitions of the 41.8 MW hydro-electric project (ESPRA) that is part of the Renova Transaction, the 101.6 MW of wind projects being acquired as part of the FERSA Transaction or 194.0 MW of operating projects being acquired as part of the GME Transaction until shortly after the completion of this offering upon receipt of the necessary governmental and lender consents. In addition, we expect that the Solarpack Transaction and the acquisition of an 82.0 MW solar project (Choluteca) and a 50.0 MW wind project (Orosi) that are part of the GME Transaction will be completed when those respective projects achieve COD, which is expected to occur in the second half of 2015. The projects in the BioTherm Transaction and the LAP Transaction are also expected to be acquired by us after this offering upon the receipt of certain consents and approvals. Prior to the receipt of such consents and approvals, we will have entered into cash distribution agreements with BioTherm, in the case of the BioTherm Transaction, and our Sponsor, in the case of the LAP Transaction, pursuant to which we will have the right to receive cash distributions from the projects prior to the transfer of such projects to us. This offering is not conditioned on the concurrent closing of all of the Pending Acquisitions. As of the date of this prospectus, we have not yet received all of the governmental, regulatory or third-party approvals or consents required to complete all of these acquisitions, and the timing for and terms of those approvals are outside of our control. As a result, we cannot assure you that all of the Pending Acquisitions will be consummated on the timetable currently contemplated or at all. To reduce the effect on the Class A units of delays (if any) in the closing of the Pending Acquisitions or the completion of the Contributed Construction Projects, our Sponsor has agreed to forego distributions on its Class B units under certain circumstances. See The offering Distribution Forbearance Provisions and Risk factors Risks related to our business There can be no assurance that the Pending Acquisitions will be consummated on the timetable currently anticipated, and the closing of this offering is not expressly conditioned on the consummation of the these acquisitions. Concurrent Class A Common Stock Private Placement On June 9, 2015, certain of the Baron Funds and Zimmer Partners entered into a stock purchase agreement with Global in which they agreed to purchase $42.5 million and $25.0 million, respectively, of its Class A common stock at a price per share equal to the initial public offering price in a separate private placement transaction. These share purchases are subject to certain customary closing conditions and will be completed concurrently with the closing of this offering. Based on an assumed initial public offering price of $15.00 per share, which is listed on the cover of this prospectus, these purchasers will purchase an aggregate of 4,500,000 shares of our Class A common stock in this concurrent private placement. We will rely upon the private placement exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof in connection with the sale of these shares of Class A common stock and accordingly, these shares will not be registered under the Securities Act. Table of Contents Throughout this prospectus, we refer to this concurrent private placement of Class A common stock as the Class A Common Private Placement and collectively with the Units Private Placements as the Private Placements. For a further discussion of these private placement transactions, see Certain relationships and related party transactions Private Placements. Offering Transactions Concurrently with the completion of this offering, based on an assumed initial public offering price of $15.00 per share, which is listed on the cover page of this prospectus: we will amend and restate Global s certificate of incorporation to provide for Class A common stock, Class B common stock and Class B1 common stock (which Class B1 common stock may be issued in the future upon a reset of IDR target distribution levels or in connection with acquisitions from our Sponsor or third parties), at which time SunEdison s interest in Global s common equity will solely be shares of Class B common stock and interests in Global LLC (as described below) and the restricted shares issued under the 2014 Incentive Plan will automatically convert into a number of shares of Class A common stock that represent an aggregate 5.6% economic interest in Global LLC, subject to certain adjustments to prevent dilution; we will amend Global LLC s operating agreement to provide for Class A units, Class B units and Class B1 units (which Class B1 units may be issued in the future upon a reset of IDR target distribution levels or in connection with acquisitions from our Sponsor or third parties) and to convert our Sponsor s interest in Global s common equity into Class B units, issue to Global a number of Class A units equal to the number of shares of Class A common stock (including any restricted shares) outstanding immediately after Global amends and restates its certificate of incorporation as described above, issue the IDRs to our Sponsor and appoint Global as the sole managing member of Global LLC; Global will issue 45,000,000 shares of its Class A common stock to the purchasers in this offering (or 51,750,000 shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in exchange for net proceeds of approximately $618.1 million (or approximately $712.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock), after deducting underwriting discounts and commissions, the structuring fee and offering expenses payable by us; Global will (i) issue 36,471,735 shares of its Class A common stock on account of the Class D units of Global LLC issued to the purchasers in the Units Private Placements and will receive the same number of newly issued Class A units in Global LLC and (ii) issue 4,500,000 shares of its Class A common stock to the purchasers in the Class A Common Private Placement; Global will issue 21,418,467 shares, 544,057 shares and 701,754 shares of Class A common stock to Renova, BioTherm (or its affiliate) and GME, which are the selling parties in the Renova Transaction, BioTherm Transaction and the GME Transaction, respectively; Global will use all of the net proceeds from this offering and the Class A Common Private Placement to purchase newly issued Class A units of Global LLC, representing 27.7% of Global LLC s outstanding membership units (or 31.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock); Global Operating LLC will issue $810.0 million of senior unsecured notes due 2022, or the Senior Notes, to qualified institutional buyers in reliance on Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S promulgated under the Securities Act; Table of Contents Global LLC will use net proceeds of this offering and the Class A Common Private Placement, together with the net proceeds from the issuance of the Senior Notes by Global Operating LLC, to repay the outstanding principal amount of the Bridge Facility (including accrued interest), to pay fees and expenses associated with the Revolver (as defined below), to complete the Pending Acquisitions and the repayment of certain project-level indebtedness; Global Operating LLC will enter into a new $485.0 million revolving credit facility, or the Revolver, which will remain undrawn at the completion of this offering; and we will enter into various agreements with our Sponsor, including the Support Agreement, the Management Services Agreement, the Repowering Services Agreement, the Interest Payment Agreement and the Project Investment Agreement. We collectively refer to the foregoing transactions, together with the Class A Common Private Placement, as the Offering Transactions and, together with the Formation Transactions and the Pending Acquisitions, as the Organizational Transactions. We intend to use any net proceeds we receive as a result of the underwriters option to purchase additional shares of Class A common stock, which we estimate will be approximately $93.9 million after deducting underwriting discounts and commissions, a pro rata portion of the structuring fee and offering expenses payable by us, to purchase Class B units (and shares of Class B common stock) held by our Sponsor at a price equal to the initial public offering price in this offering less the underwriting discounts and commissions and structuring fee, and immediately cancel such Class B units (and shares of Class B common stock) contemporaneously with Global LLC issuing Class A units to us. Accordingly, we will not retain any such proceeds used by us to acquire Class B units (and shares of Class B common stock) from our Sponsor. Our Sponsor will not receive any of the net proceeds or other consideration in connection with this offering, other than (i) the net proceeds used by us to purchase Class B units of Global LLC (and the related shares of Class B common stock) in the event the underwriters exercise their option to purchase additional shares and (ii) the Class B common stock, Class B units of Global LLC and the IDRs issued to it in the Offering Transactions on account of its existing ownership interest. Following completion of this offering, we may elect to use a portion of the net proceeds to fund acquisitions from our Sponsor, including pursuant to the Support Agreement. Immediately following the completion of this offering: Global will be a holding company and the sole material asset of Global will be the Class A units of Global LLC; Global will be the sole managing member of Global LLC and will control the business and affairs of Global LLC and its subsidiaries; Global will hold 118,597,013 Class A units of Global LLC representing approximately 66.3% of Global LLC s total outstanding membership units (or 125,347,013 Class A units representing approximately 70.1%, if the underwriters exercise in full their option to purchase additional shares of Class A common stock); SunEdison, through a wholly owned subsidiary, will own Class B units of Global LLC, representing approximately 33.7% of Global LLC s total outstanding membership units (or 29.9%, if the underwriters exercise in full their option to purchase additional shares of Class A common stock); SunEdison or one of its subsidiaries will be the holder of the IDRs; Table of Contents SunEdison, through the ownership by a wholly owned subsidiary of our Class B common stock, will have 98.1% of the combined voting power of all of our common stock and, through such subsidiary s ownership of Class B units of Global LLC, will hold, subject to the right of holders of IDRs to receive a portion of distributions after certain thresholds are met and certain limitations during the Subordination Period and the Distribution Forbearance Period, approximately 33.7% of the economic interest in our business (or 97.7% of the combined voting power of our common stock and a 29.9% economic interest in our business if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and the purchasers in this offering will own 45,000,000 shares of our Class A common stock, representing 0.7% of the combined voting power of all of our common stock and, through our ownership of Class A units of Global LLC, subject to the right of holders of IDRs to receive a portion of distributions after certain thresholds are met, approximately 25.2% of the economic interest in our business (or 0.9% of the combined voting power of our common stock and a 28.9% economic interest if the underwriters exercise in full their option to purchase additional shares of Class A common stock). At any time, SunEdison (or any other permitted holder) may exchange its Class B units or Class B1 units in Global LLC, together with a corresponding number of shares of Class B common stock or shares of Class B1 common stock, as applicable, for shares of our Class A common stock on a one-for-one basis, subject to equitable adjustments for stock splits, stock dividends and reclassifications in accordance with the terms of the exchange agreement we will enter into with SunEdison concurrently with the completion of this offering. When a holder exchanges a Class B unit or Class B1 unit of Global LLC for a share of our Class A common stock, (i) Global LLC will cancel the Class B units or Class B1 units, as applicable, (ii) Global LLC will issue additional Class A units to us, (iii) we will cancel a corresponding number of shares of our Class B common stock or Class B1 common stock, as applicable, and (iv) we will issue a corresponding number of shares of Class A common stock to such holder. See Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC Exchange Agreement. We have established the Class B1 common stock and Class B1 units primarily to be issued in connection with resetting the IDR target distribution levels. We may issue such shares and units in the future in connection with acquisitions from our Sponsor or third parties. Table of Contents The following chart summarizes certain relevant aspects of our ownership structure and principal indebtedness as of March 31, 2015, after giving effect to the Organizational Transactions and this offering, based on the assumptions set forth in The offering Certain assumptions : (1) Our Sponsor s economic interest is subject to certain limitations on distributions to holders of Class B units during the Subordination Period and the Distribution Forbearance Period. See Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC Distributions. In the future, our Sponsor may receive Class B1 units and Class B1 common stock in connection with a reset of the IDR target distribution levels or sales of projects to Global LLC. (2) Based on the initial public offering price of $15.00 per share, which is set forth on the cover of this prospectus. (3) The economic interest of holders of Class A units, Class B units and Class B1 units, and, in turn, holders of shares of Class A common stock, is subject to the right of holders of the IDRs to receive a portion of distributions after certain distribution thresholds are met. See The offering IDRs and Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC Distributions. Table of Contents (4) Incentive distribution rights, or IDRs, represent a variable interest in distributions by Global LLC and therefore cannot be expressed as a fixed percentage interest. All of our IDRs will be issued to SunEdison Holdings Corporation, which is a wholly owned subsidiary of our Sponsor. In connection with a reset of the target distribution levels, holders of IDRs will be entitled to receive newly issued Class B1 units of Global LLC and shares of our Class B1 common stock. See Certain relationships and related party transactions Amended and Restated Operating Agreement of Global LLC Distributions for further description of the IDRs and Description of capital stock Class B1 common stock for further description of the Class B1 common stock. (5) Concurrently with the completion of this offering, Global Operating LLC plans to enter into the Revolver, which will provide for a revolving line of credit of $485.0 million. The closing of the Revolver will be conditioned upon completion of this offering, the implementation of our Organizational Transactions and other customary closing conditions. (6) The closing of the offering of the Senior Notes will be conditioned upon the completion of this offering. (7) All of our project-level indebtedness is denominated in either U.S. dollars, Indian Rupee, Malaysian Ringgit, South African Rand, Thai Baht, Brazilian Real or Chinese Yuan Renminbi. We converted such indebtedness into U.S. dollars using the applicable conversion rate as of March 31, 2015. For additional information regarding our project-level indebtedness, see Description of certain indebtedness Project-level financing arrangements. (8) Based on an assumed initial public offering price of $15.00 per share, which is listed on the cover of this prospectus, Global will issue 21,418,467 shares, 701,754 shares and 544,057 shares of its Class A common stock to Renova, GME and BioTherm (or its affiliate), respectively, representing in the aggregate 12.7% of the issued and outstanding shares of its common stock in connection with the Renova Transaction, the GME Transaction and the BioTherm Transaction. Material United States tax consequences If we make a distribution from current or accumulated earnings and profits, as computed for United States federal income tax purposes, such distribution will generally be taxable to holders of our Class A common stock in the current period as ordinary income for United States federal income tax purposes, eligible under current law for the lower tax rates applicable to qualified dividend income of non-corporate taxpayers. If a distribution exceeds our current and accumulated earnings and profits as computed for United States federal income tax purposes, such excess distribution will constitute a non-taxable return of capital to the extent of a holder s United States federal income tax basis in our Class A common stock and will result in a reduction of such basis. The portion of any such excess distribution that exceeds a holder s basis in our Class A common stock will be taxed as capital gain. While we expect that a portion of our distributions to holders of our Class A common stock may exceed our current and accumulated earnings and profits as computed for United States federal income tax purposes and therefore constitute a non-taxable return of capital to the extent of a holder s basis in our Class A common stock, no assurance can be given that this will occur. See Risk factors Risks related to taxation Distributions to holders of our Class A common stock may be taxable as dividends. Upon the sale of our Class A common stock, the holder generally will recognize capital gain or loss measured by the difference between the sale proceeds received by the holder and the holder s basis in the Class A common stock sold, adjusted to reflect prior distributions that were treated as return of capital. Based on our current portfolio of assets and the projected allocations of depreciation and amortization deductions, we expect to generate net operating losses, or NOLs, and NOL carryforwards that we can utilize to offset a significant portion of our taxable income in the near term. See
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001620928_rice_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001620928_rice_prospectus_summary.txt
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+This summary provides a brief overview of information contained elsewhere in this prospectus and the documents we incorporate by reference. It does not contain all of the information you should consider before making an investment decision. You should read this entire prospectus and the documents incorporated by reference, including our Annual Report on Form 10-K for the year ended December 31, 2014 (including the section entitled Risk Factors therein), our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2015, June 30, 2015 and September 30, 2015, and our Current Report on Form 8-K filed on November 13, 2015 before making an investment decision. Rice Midstream Partners LP Overview We are a fee-based, growth-oriented limited partnership formed by Rice Energy Inc. (NYSE: RICE) to own, operate, develop and acquire midstream assets in the Appalachian Basin. Our assets consist of natural gas gathering, compression and water services assets servicing high quality producers in the rapidly developing dry gas cores of the Marcellus and Utica Shales. We provide our services under long-term, fee-based contracts, primarily to Rice Energy in its core operating areas. We believe that our strategically located assets, high quality customers and relationship with Rice Energy position us to become a leading midstream energy company in the Appalachian Basin.
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001621199_union_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001621199_union_prospectus_summary.txt
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+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND COSTO INC. REFERS TO COSTO INC. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+COSTO INC.
+
+ 
+
+We are a development stage company and intend to commence operations in the distribution of auto parts and components necessary for maintenance and repairs of automobiles and special equipment. Costo Inc. was incorporated in Nevada on May 6, 2014. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $22,000 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate revenues during months 6-12 after completion of this offering. However, there is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue.
+
+Being a development stage company, we have very limited operating history. After twelve months period we may need additional financing. If we do not generate any revenue, we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Shierweilu Nanjingjie Street 67, Heping District, Shenyang, Liaoning, China 110003. Our phone number is +
+
+85281925811
+
+.
+
+From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (May 6, 2014) through February 28, 2015, reports no revenues and a net loss of $7,549. Our independent registered public accounting firm has issued an audit opinion for Costo Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan and entered into a Contract with our supplier, ZHEJIANG ANTAI AUTO PARTS CO.,LTD., dated December 10, 2014. The contract with ZHEJIANG ANTAI AUTO PARTS CO.,LTD. expires on December 31, 2015 and may be terminated by either party with 60 days notice to the other party. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The company is publicly offering its shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success.
+
+As of the date of this prospectus, the company s cash balance is $3,928. Our current monthly cash burn is roughly $833 a month. The minimum period of time we will be able to conduct planned operations using currently-available capital resources is approximately eight months.
+
+5 
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+COSTO INC.
+
+Securities Being Offered:
+
+ 
+
+8,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.01
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 8,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 8,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+$80,000
+
+Securities Issued and Outstanding:
+
+There are 8,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Yuhua Xu 
+
+ 
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially the "Risk Factors" beginning on page 12 and our financial statements and related notes, before deciding to buy shares of our common stock. Unless the context indicates otherwise, as used in this prospectus, the terms "Zynerba," "Zynerba Pharmaceuticals," "we," "us," "our," "our company" and "our business" refer to Zynerba Pharmaceuticals, Inc. Company Overview We are a ten-year-old specialty pharmaceutical company focused on developing and commercializing proprietary next-generation synthetic cannabinoid therapeutics formulated for transdermal delivery. Our management team is highly experienced and has a successful history of development, regulatory approval and commercialization of patch and gel transdermal delivery products. We are evaluating two patent-protected product candidates, ZYN002 and ZYN001, in five indications. We intend to study ZYN002 in patients with refractory epilepsy, Fragile X syndrome, or FXS, and osteoarthritis, or OA. We intend to study ZYN001 in patients with fibromyalgia and peripheral neuropathic pain. We expect to initiate Phase 1 clinical trials for ZYN002 in the second half of 2015 and ZYN001 by mid-2016. Cannabinoids are a class of compounds derived from Cannabis plants. The two primary cannabinoids contained in Cannabis are cannabidiol, or CBD, and D9-tetrahydrocannabinol, or THC. Clinical and preclinical data suggest that CBD has positive effects on treating refractory epilepsy, FXS and arthritis and THC has positive effects on treating pain. Interest in cannabinoid therapeutics has increased significantly over the past several years as preclinical and clinical data has emerged highlighting the potential efficacy and safety benefits of cannabinoid therapeutics. The cannabinoid therapeutics market is expected to grow significantly due to the potential benefits these products may provide over existing therapies. In addition to ZYN002 and ZYN001 potentially offering first-line therapies to patients suffering from FXS, OA, fibromyalgia and peripheral neuropathic pain, we believe ZYN002 may provide a complementary treatment for patients suffering from epilepsy who are refractory to their current treatment regimens. We believe that we offer an attractive alternative to existing cannabinoid therapies by synthetically manufacturing and transdermally delivering our product candidates. Most cannabinoid therapies have drawbacks and limitations due to their botanical (plant-derived) nature, as well as the fact that they are administered orally. Botanical cannabinoids create significant challenges for drug manufacturers because of the natural resources and security measures required to grow Cannabis, as well as the strict batch controls required by regulatory agencies in pharmaceutical manufacturing. In addition, we believe all currently approved and development-stage cannabinoid therapeutics, except ZYN002 and ZYN001, are designed to be administered orally which can lead to limitations in safety and efficacy including low bioavailability, inconsistent plasma levels, degradation by stomach acids, and significant first-pass liver metabolism. First-pass liver metabolism refers to the process by which the liver breaks down therapeutics ingested directly or indirectly through the gastrointestinal system, such as through oral or oral mucosal delivery methods, allowing only a small amount of drug to be absorbed into the circulatory system. In contrast, transdermal therapeutics are absorbed through the skin directly into the systemic circulation, avoiding first-pass liver metabolism and degradation by stomach acids, and potentially enabling lower dosage levels of active pharmaceutical ingredients and rapid and reliable absorption with high bioavailability, fewer negative psychoactive effects and fewer drug-drug interactions. AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents We have assembled a highly experienced management team, each of whom has over 25 years of pharmaceutical industry experience, including our chief executive officer and president, who have a track record of success for obtaining regulatory approval of and commercializing products using transdermal delivery. Armando Anido, our chairman and chief executive officer, previously served as the chief executive officer of two publicly traded companies, Auxilium Pharmaceuticals Inc., or Auxilium, and NuPathe, Inc., or NuPathe. Terri B. Sebree, our president, previously co-founded NuPathe and served as senior vice president, development at Auxilium, and has successfully developed ten products from Investigational New Drug Application to regulatory approval. Ms. Sebree most recently oversaw the development and regulatory approval of Testim gel and Zecuity patch. Richard A. Baron, our chief financial officer, has extensive experience as chief financial officer of public and private pharmaceutical companies, most recently having served as chief financial officer of Globus Medical, Inc. and, prior to that, at Avid Radiopharmaceuticals, Inc. Our Product Candidates Our patent-protected synthetic transdermal cannabinoid product candidates, ZYN002 and ZYN001, represent next-generation cannabinoid therapeutics for several indications including refractory epilepsy, FXS, OA, fibromyalgia and peripheral neuropathic pain. Treatments for these indications represent markets with underserved patient populations which we believe can benefit from cannabinoid therapies. With the FXS indication, we have requested orphan drug designation from the Food and Drug Administration, or FDA, in the second half of 2015. We believe our proprietary synthetic transdermal product candidates will effectively address these indications and provide a solution to the limitations of botanically-derived and oral and oral mucosal delivered cannabinoid therapeutics. ZYN002 is the first and only synthetic CBD formulated as a permeation-enhanced gel for transdermal delivery, and is patent-protected through 2030. In preclinical animal studies, ZYN002's permeation enhancer increased delivery of CBD through the layers of the skin and into the circulatory system. These preclinical studies suggest increased bioavailability, consistent plasma levels and the avoidance of first-pass liver metabolism. In addition, an in vitro study performed by us demonstrated that CBD is degraded to THC in an acidic environment such as the stomach. We believe such degradation may lead to increased psychoactive effects, which may be avoided or minimized with the transdermal delivery of ZYN002, which avoids the gastrointestinal tract and potential stomach acid degradation. ZYN002 is being developed as a clear, odorless gel with once- or twice-daily dosing. We plan to evaluate ZYN002 in patients with refractory epilepsy, FXS and OA. Epilepsy is a disease characterized by an enduring predisposition to generate epileptic seizures (transient symptoms due to abnormal neuronal activity in the brain) and by the neurobiological, cognitive, psychological and social consequences of the condition. FXS is a genetic condition that causes autism-like symptoms including intellectual disability, anxiety disorders, behavioral and learning challenges and various physical characteristics. OA is a degenerative joint disease that leads to wear and tear of the joints and, in some patients, significant inflammation and involves the cartilage, joint lining, ligaments and bone. ZYNERBA PHARMACEUTICALS, INC. (Exact Name Of Registrant As Specified In Its Charter) (1)Based on data provided by Decision Resources. Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 26-0389433 (I.R.S. Employer Identification Number) 80 W. Lancaster Avenue, Suite 300 Devon, PA 19333 (484) 581-7505 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Product Candidate Target Indication Delivery Method Current Development Status Expected Next Steps ZYN002 Refractory Epilepsy Permeation-enhanced Gel Preclinical 2H15: Initiate Phase 1 Fragile X Syndrome 2H16: Initiate Phase 2a Osteoarthritis ZYN001 Fibromyalgia Transdermal Patch Preclinical Mid-2016: Initiate Phase 1 Peripheral Neuropathic Pain 1H17: Initiate Phase 2a Our Intellectual Property Our intellectual property related to ZYN002 and ZYN001 was internally developed. Our ZYN002 patent portfolio currently consists of two issued patents in the United States, five issued patents in France, Germany, Ireland, Switzerland and the United Kingdom and two pending patent applications in Canada and Japan. The issued patents will expire between 2026 and 2029, and any patents that issue from our currently pending patent applications will expire in 2030. Our ZYN001 patent portfolio currently consists of two issued patents in the United States, one issued patent in Japan, one allowed patent in Europe and patent applications pending in the United States, Europe, Canada and Japan. The issued patents will expire Armando Anido Chairman and Chief Executive Officer 80 W. Lancaster Avenue, Suite 300 Devon, PA 19333 (484) 581-7505 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents between 2028 and 2031, and any patents that issue from our currently pending patent applications will expire in 2028. Our Strengths We are the first and only company developing patent-protected synthetic transdermal cannabinoid therapeutics with the following key distinguishing characteristics: Exceptional and experienced management team with proven track record. We have a sophisticated and experienced management team, each of whom has over 25 years of pharmaceutical industry experience, including our chief executive officer and president, who have a successful history of development, regulatory approval and commercialization of patch and gel transdermal delivery products. Unique delivery methods. We are the first and only company developing patent-protected synthetic cannabinoid therapeutics for transdermal delivery. Transdermal delivery has a range of potential benefits including the ability to provide sustained and consistent plasma levels, controlled delivery and convenient dosing, as well as the avoidance of the first-pass liver metabolism and stomach acid degradation and an alternative for patients for whom oral formulations are suboptimal. Synthetically manufactured pure cannabinoid therapeutics. Our product candidates are synthetically manufactured rather than extracted from Cannabis plants. We believe synthetically produced cannabinoids offer several advantages to botanically-derived cannabinoids, including consistent, reproducible pharmaceutical-grade active ingredients with well-defined impurity profiles. Targeting indications with significant unmet medical need. We believe that our product candidates can provide effective treatment to patients with significant unmet medical needs in large markets, which will increase the probability of commercial success if our product candidates are approved. Strong intellectual property protection for our product candidates. Our patent portfolio provides a long window for development and commercialization and is not specific to any single indication, which we believe will allow us to develop products for additional patient populations in markets with significant unmet medical need. Our Business Strategy Our goal is to become a leader in the cannabinoid pharmaceuticals market by pursuing the following strategies: Rapidly advance ZYN002 and ZYN001 through clinical development to regulatory approval in the United States. Explore collaborations to develop and pursue regulatory approval of ZYN002 and ZYN001 outside the United States. Explore additional indications and product candidates for synthetic CBD and THC. Strengthen our competitive position by maintaining leadership in the transdermal synthetic cannabinoid therapeutics market and broadening our intellectual property rights. Commercialize ZYN002 and ZYN001 in the United States independently or with third parties. Copies to: Jeffrey P. Libson, Esq. Steven J. Abrams, Esq. Rachael M. Bushey, Esq. Pepper Hamilton LLP 3000 Two Logan Square 18th and Arch Streets Philadelphia, PA 19103 (215) 981-4241 Steven D. Singer, Esq. Lisa Firenze, Esq. Wilmer Cutler Pickering Hale and Dorr LLP 7 World Trade Center 250 Greenwich Street New York, NY 10007 (212) 295-6307 Table of Contents Risks Associated with Our Business Our ability to implement our business strategy is subject to numerous risks and uncertainties. As a preclinical-stage specialty pharmaceutical company, we face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading "Risk Factors," beginning on page 12, prior to making an investment in our common stock. These risks include, among others, the following: We have no commercial revenue, may never become profitable and will incur substantial and increasing net losses for the foreseeable future as we continue development of, and seek regulatory approvals for, ZYN002 and ZYN001; We will need to raise additional capital to continue operations, including the development of ZYN002 and ZYN001; We have limited resources which may inhibit our ability to commence clinical trials of ZYN002 in 2015 and ZYN001 in 2016; We are subject to regulatory approval processes that are lengthy, time consuming and unpredictable, and we may not obtain approval for ZYN002 or ZYN001 from the FDA or foreign regulatory authorities; Even if we achieve regulatory approval, our success is dependent on the effective commercialization of ZYN002 and ZYN001; Our product candidates will be subject to controlled substances laws and regulations, including approval, oversight and scheduling by the DEA; It is difficult and costly to protect our intellectual property rights; We may be unable to recruit or retain key employees, including our senior management team; We depend on the performance of third parties, including contract research organizations, or CROs, and third-party manufacturers; and Our government grants are conditioned upon audits and could require us to repay funds previously awarded to us. Our Corporate Information We were incorporated in Delaware in January 2007 under the name AllTranz, Inc., and in June 2007 we merged with AllTranz LLC, a Kentucky limited liability company that was founded in 2004 by Audra Stinchcomb, a pharmacologist and transdermal expert, with AllTranz, Inc. surviving. In May 2014, we were reorganized and recapitalized pursuant to an agreement and plan of merger whereby BCM Partners IV, Corp., a non-operating entity owned by BCM X1 Holdings, LLC and Audra Stinchcomb, two of our principal stockholders at that time, was merged with and into Alltranz, Inc., with Alltranz, Inc. surviving. In August 2014, AllTranz, Inc. changed its name to Zynerba Pharmaceuticals, Inc. See "Certain Relationships and Related Party Transactions Agreements with Broadband Capital Management Agreement and Plan of Merger" in this prospectus. Our primary executive offices are located at 80 W. Lancaster Avenue, Suite 300, Devon, PA 19333 and our telephone number is (484) 581-7505. Our website address is www.zynerba.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. We have applied to register Zynerba as a U.S. trademark. All other trademarks, trade names or service marks referred to in this prospectus are the property of their respective owners. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Implications of Being an Emerging Growth Company We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or JOBS Act. As such, we are eligible to take advantage of exemptions from various disclosure and reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to: our exemption from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002; being permitted to present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations, in each case, instead of three years; being permitted to present the same number of years of selected financial data as the years of audited financial statements presented, instead of five years; reduced disclosure obligations regarding executive compensation, including no Compensation Disclosure and Analysis; our exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; and our exemption from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may rely on these provisions until the last day of our fiscal year following the fifth anniversary of the closing of this offering. However, if certain events occur prior to the end of such period, including if we become a "large accelerated filer," our annual gross revenue exceeds $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such period. We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, par value $0.001 per share 3,450,000 $15.00 $51,750,000 $6,013.35 (1)Includes 450,000 shares of common stock that may be sold if the underwriters exercise their option to purchase additional shares. (2)Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (3)Previously paid. Table of Contents THE OFFERING Common stock offered by us 3,000,000 shares Common stock to be outstanding after this offering 8,733,963 shares Option to purchase additional shares We have granted to the underwriters the option, exercisable for 30 days from the date of this prospectus, to purchase up to 450,000 additional shares of common stock. Use of proceeds We estimate that the net proceeds to us from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $36.3 million. This assumes a public offering price of $14.00, which is the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering for the following purposes: approximately $16.4 million to fund development efforts of ZYN002; approximately $14.2 million to fund development efforts of ZYN001; and the remainder to fund working capital and research and development and for general corporate purposes. See "Use of Proceeds" for more information. Directed share program The underwriters have reserved for sale, at the initial public offering price, up to approximately 5% of the shares of our common stock being offered. These shares will be offered for sale to our directors and director nominees; officers; existing stockholders and their affiliates and employees of both; and business associates, as well as certain friends and family members of our directors and officers. We will offer these shares to the extent permitted under applicable regulations in the United States. The number of shares available for sale to the general public in this offering will be reduced to the extent these persons purchase reserved shares. Any reserved shares not purchased will be offered by the underwriters to the general public on the same terms as the other shares.
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+PROSPECTUS SUMMARY This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to "we," "our," "us" and ZRHO refer to ZRHO Beverages, Inc. ZRHO Beverages, Inc. is a development stage company incorporated in the State of Nevada on May 12, 2014. We were formed to engage in the business of developing, marketing, selling and distributing an alternative beverage category beverage, which is intended to prevent the effects of a hangover. In May 2014 we formed the corporation and began researching companies that will help develop our beverage formula and bottle our product to commence our planned prinicipal operations. During the initial eight months of formation, we were primarily involved in organizational activities and analyzing the viability of our business plan, and establishing our business model, including researching the items needed to secure a trademark and develop relationships with outlets for sale and distribution. We filed a trademark for our corporate logo on December 29, 2014. On February 5, 2015, we engaged Allen Flavors, Inc., a proprietary beverage formulation, flavor and ingredient supply company, to develop our beverage formula (flavors and ingredients). On February 9, 2015, the project was submitted to the lab for formulation and production of the prototype samples. At the end of March 2015, we tested some flavors and gave some of our feedback to Allen Flavors. Allen Flavors is currently working on the first step which is creating the finished beverage prototypes for us to test before the final beverage formulation is completed. We are a development stage company and have not earned any revenues. We cannot state with certainty whether we will achieve profitability. Since our inception on May 12, 2014, we have not generated any revenues. For the three months ended January 31, 2015, we incurred a net loss of $37,781. Throughout May 12, 2014 and March 31, 2015 our business activity has focused around the formation of our corporate entity, the development of our business model, website design, researching beverage development services companies for the development of our product, and researching packaging companies to bottle and label our product. We anticipate the commencement of generating revenues in the next twelve months, of which we can provide no assurance. The capital raised in this offering has been budgeted to cover the costs associated with the offering, such as accounting services, as well as various filing fees and transfer agent fees. Additionally, capital raised in this offering will fund website and marketing development and working capital. We believe that with our lack of significant expenses, the working capital raised in this offering, and the possible advancement of funds which we may or may not receive from our President, Mr. Orr, we may have sufficient capital to support the limited costs associated with our initial plan of operations for the next twelve months, assuming we are successful in the launching and implementation of our current business plan. However, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that the funds advanced by our president, if any, will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors report to the financial statements included in the registration statement. ZRHO is building a business based on developing, marketing, selling and distributing an alternative beverage category beverage, which is intended to prevent the effects of a hangover. On February 5, 2015, we hired Allen Flavors, Inc. to develop our beverage formula. In addition to working on our beverage development, at this time, we are implementing our marketing plan which includes graphic design work, lead development and website. We have no intentions to be acquired or to merge with an operating company. Additionally, our shareholders have no intention of entering into a change of control or similar transaction. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (Amendment No. 6) Commission File Number 333-201273 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZRHO BEVERAGES, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 2080 (Primary Standard Industrial Classification Code Number) 46-5662800 (I.R.S. Employer Identification Number) 15720 N. Greenway-Hayden Loop #2 Scottsdale, AZ 85260 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Edward C. Orr III, President ZRHO Beverages, Inc. 15720 N. Greenway-Hayden Loop #2 Scottsdale, AZ 85260 (480) 219-8564 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x No member of our management or any of our affiliates have been previously involved in the management or ownership of a development stage company that has not implemented its business plan, engaged in a change of control or similar transaction or has generated no or minimal resources to date. We were formed in May 2014, since then we have been developing our website and marketing plan, researching beverage development services companies for the development of our product, researching packaging companies to bottle and label our product, establishing market contacts, and researching outlets for sale and distribution. As of the date of this prospectus we have one officer who also serves as our sole director, our sole employee, and who we anticipate will devote 15 to 20 hours a week to the company going forward. Additionally, even with the sale of securities offered hereby, we will not have the financial resources needed to hire additional employees or meaningfully expand our business. Even though we intend to generate revenues upon the commencement of our marketing plan, it is possible we will sustain operating losses for at least the next 12 months. Even if we sell all the securities offered, a substantial portion of the proceeds of the offering will be spent for costs associated with the offering, fees associated with SEC reporting requirements, and website development. Investors should realize that following this offering we will be required to raise additional capital to cover the costs associated with our plan of operation. ZRHO s address and phone number are: ZRHO Beverages, Inc. 15720 N. Greenway-Hayden Loop #2 Scottsdale, Arizona 85260 (480) 219-8564 Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered Proposed Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.001 par value 550,000 $0.10 $55,000 $6.39 TOTAL 550,000 $0.10 $55,000(1) $6.39 (1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. A Registration Statement relating to these securities has been filed with the Securities Exchange Commission. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 5. Prospectus (Subject to Completion) Dated _________, 20___
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+S-1/A 1 actionsportss1a.htm FORM S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT No. 3 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Nevada (State or other jurisdiction of incorporation or organization) 8742 (Primary Standard Industrial Classification Code Number) ACTION SPORTS MEDIA, INC. (Name of small business issuer in its charter) Nevada 46-4321216 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 6613 Corte Real Carlsbad, California 92009 (858) 900-8989 (Address, including zip code, and telephone number, Including area code, of registrant s principal executive offices) Jason Fierro, Chief Executive Officer 6613 Corte Real Carlsbad, California92009 (858) 900-8989 (Name, address, including zip code, and telephone number, Including area code, of agent for service) As soon as practicable after this Registration Statement is declared effective. (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [ X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] i Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [x] Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Unit (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.001 per share, issuable pursuant to the conversion of 150 Series A Preferred Stock 1,071,429 $0.20 $214,286 $24.90 Total 1,071,429 $0.20 $214,286 $24.90 (1) 1,071,429 shares are being in accordance with a certain Registration Rights Agreement between us and Premier Venture Partners LLC dated July 24, 2014. (2) We are not making an initial public offering of our common stock. Only those shares to be issued pursuant to the Registration Rights Agreement and Equity Purchase Agreement, each dated July 24, 2014, are being registered pursuant to this Form S-1. In the event no shares, or fewer than the amount of shares registered under this S-1, are issued, the remaining shares registered under this S-1 will be terminated. (3) The registration fee is calculated in accordance with Rule 457(i) of the Securities Act, based upon the conversion price set forth in the Equity Purchase Agreement when using the highest trading price of the Company s common stock in the last thirty (30) calendar days. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 (A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED APRIL __, 2015 ii ACTION SPORTS MEDIA, INC. 1,071,429 Shares of Common Stock This Prospectus relates to the resale of up to 1,071,429 shares of common stock of Action Sports Media, Inc., a Nevada corporation (the "Company"), par value $0.001 per share (the "Common Stock"), issuable to Premier Venture Partners LLC, a California limited liability company ("Premier Ventures"), pursuant to a preferred stock purchase agreement dated July 24, 2014 between Premier Venture and the Company (the "Stock Purchase Agreement"). The Company will not receive any proceeds from the resale of these shares of common stock. The percentage of the total outstanding common stock being registered to be offered by the Selling Stockholder is approximately 13.1% based upon 8,197,857 common shares outstanding which accounts for all 300 Series A Preferred Shares being converted into common shares at their respective conversion rate which would result in an additional 2,142,857 common shares to be issued. The Company currently has 6,065,000 common shares and 300 Series A Preferred Shares issued and outstanding as of the date of this prospectus. The selling stockholder has set an offering price for these securities of $0.20 per common share. This is a fixed price for the duration of the offering. The selling stockholder is an underwriter, within the meaning of Section 2(11) of the Securities Act. Any broker-dealers or agents that participate in the sale of the common stock or interests therein are also be deemed to be an "underwriter" within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit earned on any resale of the shares may be underwriting discounts and commissions under the Securities Act. The selling stockholder, who is an "underwriter" within the meaning of Section 2(11) of the Securities Act, is subject to the prospectus delivery requirements of the Securities Act. See "Security Ownership of Certain Beneficial Owners" for more information about the selling stockholder. The offering constitutes a primary offering and we expect the amount of securities being registered to be sold within two years from the effective date. The offering shall continue for a period of two years and terminate on the date two years from the effective date of this registration statement. The selling stockholder may offer all or part of the shares for resale from time to time through public or private transactions at a fixed price of $0.20 throughout the entire offering even after our common stock is quoted on the OTCQB. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 6 to read about factors you should consider before investing in shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. iii [Inside Cover of Prospectus] You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should read the entire prospectus before making an investment decision to purchase our Common Stock. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. This prospectus is not an offer to sell securities in any state where the offer is not permitted. iv TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622175_barington_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622175_barington_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622231_boatim-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622231_boatim-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..f3d79964649bbb4195798256fbb1a922c7dc5f27
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@@ -0,0 +1,58 @@
+PROSPECTUS SUMMARY
+ 
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," AND "EMERALD DATA INC." REFERS TO EMERALD DATA INC. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+ 
+EMERALD DATA INC.
+ 
+We are a development stage company and our business is the distribution of Outdoor Wicker, Patio, Garden Rattan Furniture. EMERALD DATA INC. was incorporated in Nevada on August 15, 2014. We intend to use the net proceeds from this offering to develop our business operations (See "Description of Business" and "Use of Proceeds"). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations. Being a development stage company, we have a very limited operating history. Our principal executive offices are located at Atbrivosanas Aleja 5, Rezekne, Latvia which we purchased on August 26, 2014 for $14,000. Our phone number is (702) 757-1148.
+ 
+From inception until the date of this filing, we have had very limited operating activities. Our financial statements from inception (August 15, 2014) through August 31 , 2015, report revenues of $ 163,181 and a net loss of $30,155. Our independent registered public accounting firm has issued an audit opinion for EMERALD DATA INC., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. We have developed our business plan, and executed contracts with J and K Industrial Limited, LINHAI FEELWAY LEISURE PRODUCTS CO., Magic Style International Co., Ltd., Ningbo Grand Ocean International CO., Ltd., NINGBO JIADA LEISURE PRODUCTS CO., LTD. and Patio Design. These companies were engaged as independent contractors for the specific purpose of developing, manufacturing and supplying products for us. As of the date of the financial statements included in this filing, August 31, 2015, we had purchased products from LINHAI FEELWAY LEISURE PRODUCTS CO. for the sales revenue generated during that period.
+ 
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop.
+ 
+THE OFFERING
+ 
+ The Issuer:
+EMERALD DATA INC.
+
+ 
+ 
+
+Securities Being Offered:
+2,000,000 shares of common stock.
+
+ 
+ 
+
+Price Per Share:
+$0.04
+
+ 
+ 
+
+Duration of the Offering:
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. Our offering will terminate on that date unless all the shares have been sold prior to that date and our sole director, Mr Janis Kalnins deems the offering completed. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering. 
+
+ 
+ 
+
+Gross Proceeds
+$80,000
+
+ 
+ 
+
+Securities Issued and Outstanding:
+There are 4,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our officers, Janis Kalnins.
+
+ 
+ 
+
+Subscriptions
+All subscriptions once accepted by us are irrevocable.
+
+ 
+ 
+
+Registration Costs
+We estimate our total offering registration costs to be approximately $8,850. The registration costs will be paid from cash on hand or from funds advanced to us by our director.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622491_nimtech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622491_nimtech_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," AND "NIMTECH CORP" REFERS TO NIMTECH CORP THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. NIMTECH CORP We are a development stage company and our business is manufacture and distribution of paper cup products. Nimtech Corp was incorporated in Nevada on February 4, 2014. We intend to use the net proceeds from this offering to develop our business operations (See "Description of Business" and "Use of Proceeds"). To implement our plan of operations we require a minimum of $30,000 for the next twelve months as described in our Plan of Operations. Being a development stage company, we have very limited operating history. After the initial twelve month period we may need additional financing. If we do not generate any additional revenue we may need a minimum of $15,000 of additional funding to pay for ongoing advertising expenses and SEC filing requirements. We currently have arrangement for additional financing of $30,000 to implement our plan of operations in case if we will not be able to raise it from this offering, from our sole officer and director Badria Alhussin. Our principal executive offices are located at str. 100, Emirhan, 10/2, bld. A, Turkey. Our phone number is +902129327067. From inception (February 4, 2014) until the date of this filing, we have had very limited operating activities. Our financial statements from inception (February 4, 2014) through January 31, 2015, reports limited revenue of $1,925 from selling paper cups to Paul Cafeteria according to the sale contract which is filed in Exhibit 10.1 and a net loss of $(8,176). Our independent registered public accounting firm has issued an audit opinion for Nimtech Corp which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan, purchased one unit of equipment from "STREAMTOWN COMMERCIAL AG", who has agreed to supply us with paper cup forming machines. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: NIMTECH CORP Securities Being Offered: 9,000,000 shares of common stock. Price Per Share: $0.01 Duration of the Offering: The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) the date when the sale of all 9,000,000 shares is completed, (ii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 9,000,000 shares registered under the Registration Statement of which this Prospectus is part. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering. Gross Proceeds; $90,000 Securities Issued and Outstanding: There are 3,500,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our director, Badria Alhussin Subscriptions: All subscriptions once accepted by us are irrevocable. Registration Costs: We estimate our total offering registration costs to be approximately $7,000. Risk Factors: See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from February 4, 2014 (Inception) to July 31, 2014. FINANCIAL SUMMARY July 31, 2014 ($) ----------------- (Audited) Cash 1,124 Fixed Assets 8,047 Total Assets 9,171 Total Liabilities 5,807 Total Stockholder's Equity 3,364 STATEMENT OF OPERATIONS Accumulated From February 4, 2014 (Inception) to July 31, 2014 ($) ----------------- (Audited) Total Expenses 136 Net Loss for the Period (136) Net Loss per Share (0.00)* ---------- * denotes a loss of less than $(0.01) per share. The tables and information below are derived from our quarterly condensed financial statements (unaudited) for the period from February 4, 2014 (Inception) to January 31, 2015. FINANCIAL SUMMARY January 31, 2015 ($) -------------------- (Unaudited) Cash 4,618 Inventory 180 Fixed Assets, net of accumulated depreciation 7,913 Total Assets 12,711 Total Liabilities 17,387 Total Stockholder's Equity (Deficit) (4,676) STATEMENT OF OPERATIONS Accumulated From February 4, 2014 (Inception) to January 31, 2015 ($) -------------------- (Unaudited) Revenues 1,925 Cost of Sales 420 General and administrative expense 9,681 Total Expenses 10,101 Net Loss for the Period (8,176) Net Loss per Share (0.00)* ---------- * denotes a loss of less than $(0.01) per share.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622537_talen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622537_talen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5d1c24008d086d4554a824fa34b302e05f2a1a66
--- /dev/null
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@@ -0,0 +1 @@
+The following summary highlights information contained elsewhere in this prospectus relating to the Transactions. You should read this entire prospectus including the risk factors, management s discussion and analysis of financial condition and results of operations of Energy Supply and RJS Power, historical financial statements of Energy Supply and RJS Power, and our unaudited pro forma condensed combined financial information and the respective notes to the financial statements and pro forma financial information. Our pro forma condensed combined financial data adjust the historical financial data of Energy Supply and RJS Power to give effect to the Transactions and our anticipated post-Transactions capital structure. Except as otherwise indicated or the context otherwise requires, the information included in this prospectus assumes the completion of the Transactions. Capitalized terms not otherwise defined in this prospectus have the meanings assigned to them under Glossary included elsewhere in this prospectus. Talen Energy Upon completion of the Transactions described in this prospectus, Talen Energy Corporation ( Talen Energy, Talen, or the Company ) will be one of the largest competitive energy and power generation companies in North America. Our primary business will be the production and sale of electricity, capacity and related products from our fleet of power plants totaling approximately 14,000 MW of generating capacity. We will own and operate a portfolio of generation assets principally located in PJM and ERCOT, which we consider to be two of the most attractive power markets in the United States. Within these markets, our portfolio is expected to benefit from technological and fuel diversity, enabling us to respond to changing market conditions and regulatory developments. We believe stockholder value creation is built on a foundation of excellence in operations and skillful commercial management of our generation fleet with a strong focus on cash returns. We intend to pursue a strategy that embraces these core concepts, optimizes Talen Energy s operations and supports value-enhancing growth. Our Operations Our generation fleet is diverse in terms of fuel, technology, dispatch characteristics and location. A majority of our generation revenue is expected to come from our efficient low-cost baseload and intermediate generation facilities. We also expect to capture additional value by selling power during periods of peak demand from our quick-start peaking facilities. We plan to further enhance margins by selling capacity within the PJM markets, both in the three-year forward PJM base residual auction and through bilateral agreements with power purchasers, as well as by providing ancillary services to support transmission system reliability. We believe our assets are strategically positioned in what we view as the two most attractive power markets in the United States, each of which is characterized by strong and improving fundamentals and a regulatory framework supportive of competitive generators. Our generation facilities will be predominantly located in PJM, an RTO, and ERCOT, an ISO, which are regional organizations formed, in part, to provide reliable wholesale power marketplaces. PJM is the largest wholesale energy market in the United States and ERCOT is the oldest ISO in the country. PJM is characterized by improving fundamentals due to limited import capacity, significant anticipated capacity retirements, an improving demand outlook and a forward capacity market that provides future cash flow visibility for generation asset owners. Specific efforts are being undertaken by PJM to support and potentially increase capacity prices for existing generation to ensure the availability of adequate resources. ERCOT is an attractive wholesale electricity market with historically above-average demand growth, tight reserve margins, increasing price caps and an increasing reliance on flexible and quickly-dispatchable natural gas-fired assets. Additionally, the ERCOT sub region in which we operate, ERCOT-South, has historically experienced premium energy pricing relative to the average price for the broader ISO. We consider PJM and ERCOT to be two of the most well-developed power markets in the United States, providing significant price transparency, market liquidity and support to competitive generators, including recent proposed reforms that we believe will enhance the value of our portfolio. Table of Contents The competitive dispatch costs and operating flexibility of our generation fleet position us favorably to generate attractive cash margins in a wide variety of market conditions. In an effort to support our operations and stabilize future cash flows, we will enter into forward physical and financial transactions to hedge energy, capacity and related products and to hedge fuel and fuel transportation. We will sell the output of our generation facilities to a diverse group of wholesale customers, including RTOs and ISOs, utilities, cooperatives, municipalities, power marketers, and financial counterparties. We will also sell the output of our generation facilities to commercial, industrial and residential retail customers. The following map illustrates the locations of our generation facilities as of December 31, 2014: The charts below illustrate the composition and diversity of our portfolio by market and fuel type as of December 31, 2014: The charts above do not reflect the sale or other disposition of approximately 1,300 MW of generation capacity that is required to obtain regulatory approval for the Transactions. As a result, our generation portfolio will not include all of the plants that currently comprise the Energy Supply business and the RJS Power business. See The Separation Agreement and The Transaction Agreement The Transaction Agreement Regulatory Approvals and Efforts to Close Mitigation Plans. Table of Contents Our Competitive Strengths We believe that we will be well-positioned to execute our business strategy and create superior value for our stakeholders based on the following competitive strengths: Well-positioned in attractive, liquid and transparent energy markets. We believe that the composition and locations of our facilities will give us a strategic advantage and offer attractive upside opportunities. The majority of our facilities will be located in PJM and ERCOT, which are among the most liquid, well-developed power markets in the United States, each with attractive fundamentals. We believe the PJM market presents attractive value opportunities, driven by a substantial number of announced power plant retirements, limited import capacity and an improving demand outlook. Our PJM assets are highly diverse both in terms of fuel (coal, natural gas/oil dual fuel, nuclear, natural gas, oil and hydro and other renewables) and dispatch (baseload, intermediate/load following and peaking), which provides us with operational flexibility and enables our portfolio to provide reliable generation under a variety of market conditions. A key attribute of PJM is its base residual auction, a long-term capacity market in which power customers pay for capacity three years in advance. These known capacity revenues are expected to be an important component of our gross margins. Additionally, we expect that recently proposed market reforms may provide additional revenue opportunities for us in PJM in future capacity auctions. See Our Key Markets PJM for information on the recently proposed market reforms in PJM. We believe the ERCOT market also presents attractive value opportunities, driven by robust demand growth and limited import capacity, which we expect will result in a lower reserve margin. Our generation assets in ERCOT consist of flexible, natural gas-fired units that have the ability to start up quickly and respond to load variability, which positions them well to produce significant margin from ancillary products offered in this market in addition to physical energy sales. All of our ERCOT capacity is located in the ERCOT South Zone, which has historically experienced premium pricing due to favorable supply and demand fundamentals and strong demand driven by growth related to Eagle Ford shale development, the midstream energy sector and petrochemical industry expansion. The ERCOT regulatory framework has addressed resource adequacy concerns through rule changes that have increased generator compensation and pricing floors for ancillary products and increased the state-wide offer cap. ERCOT reserve margins are forecasted to continue to compress due to growing demand and limited announced new-build projects, further tightening the supply/demand balance across ERCOT and creating conditions that may generate increased price volatility and higher energy prices until additional resources are added. Robust cash flow generation potential. We expect to be able to generate substantial free cash flow, which we define as cash from operations less maintenance capital expenditures. A number of factors are expected to contribute to our strong cash flow profile: our focus on lean operations, relatively low financial leverage, efficient baseload units with low dispatch costs, significant ancillary revenue potential of the Texas facilities, significant synergies resulting from successful execution of our transition plans with PPL and Riverstone, and a well-maintained fleet requiring modest maintenance and environmental expenditures. The stability of our cash flows is further supported by forward capacity sales in PJM through May 2018. We believe this cash flow potential provides a competitive advantage by making us more resilient during price fluctuations in the commodity cycles, less reliant on external sources of capital to finance operations and a company better situated to pursue both organic and acquisition-driven growth opportunities. Strong balance sheet, poised for growth. We believe that our expected financial leverage will provide multiple competitive advantages. First, our strong balance sheet and credit profile are expected to enhance our ability to pursue both organic and acquisition-driven growth by offering favorable access to capital markets and maximum financial flexibility. We also believe a strong balance sheet will position us well to manage through periods of commodity price volatility which may require collateral posting and credit support that could challenge a more levered competitive power company. We believe we will be able to use our strong balance Table of Contents sheet to grow through acquisitions, taking an opportunistic approach when others in the sector may face financial stresses during those periods. Finally, our low level of financial leverage will allow us to absorb a greater degree of operating cash flow volatility, which will allow our margin hedging program to have a shorter-term focus. We believe this will reduce hedging transaction volume and expenses, liquidity needs and hedge book complexity, which we believe will result in lower operating costs and greater financial transparency. Competitive scale. As one of the largest competitive power generating companies in North America, with approximately 14,000 MW of operating capacity, we expect to benefit from the multiple competitive advantages attendant to a large scale portfolio. We will have a scale presence in our key markets, allowing us to operate integrated portfolios within each of PJM and ERCOT and offering us beneficial dispatch and operational synergies. We expect those benefits will include improved leverage of our fixed costs, enhanced procurement opportunities and diversity of cash flows. These advantages combined with a strong balance sheet and significant liquidity, enable us to operate with more financial flexibility and, as such, should enable us to utilize our competitive scale to grow and further expand our already-robust generation platform. Significant historical environmental control investments. We believe our assets are substantially compliant with current environmental regulations and are well-positioned relative to the current trend of tightening environmental legislation and regulations. Because of significant prior investments and the composition of our fleet, we expect that future environmental compliance-driven capital expenditures will be a relatively modest $155 million dollars through 2019, representing less than 10% of total capital expenditures for the same period. Proven, experienced management team. Our management team has significant experience and expertise operating power generating facilities, marketing electricity and ancillary services and managing the risks of a competitive power generation business. We have a strong track record of value creation through the execution of strategic initiatives and exceptional asset management, which positions us optimally to enhance and expand the Talen Energy platform. We strongly believe that the proven leadership team at Talen Energy will successfully execute our business strategy and deliver superior operating and financial performance. Our Business Strategy Our business strategy is to maximize value to our customers and stockholders with particular emphasis on: Excellence in operations. We believe that value is built on a foundation of operational excellence. Safety is a core value of ours and is critical to maintaining a platform for strong, reliable plant performance. We inherit robust safety programs from our predecessor companies which have demonstrated dedication to sustaining safe cultures by achieving VPP Star status at a majority of our facilities. We also believe value is a function of disciplined investment and continuous improvement in operating efficiency. We intend to make prudent investments to enable our plants to run at the most profitable times while ensuring safe, reliable operations. Additionally, we plan to continue our commitment to asset optimization and reducing operating costs. We believe that persistent focus on process improvement and innovative cost management is a key component to success. Focus on cash returns. We will run our business with a focus on producing strong cash flows in order to sustain our operations and fund growth opportunities. Capital allocation decisions will be made on a cash return basis, as we believe this discipline is necessary to drive consistent long-term value creation for our stockholders. We believe that our proven management team, reliable, low-cost operating structure and strong commercial management of our plants will enable us to invest in and grow the existing platform while enhancing overall cash flows and achieving attractive returns on investment. Table of Contents Active hedging and commercial management. Hedging the fuel and output of our plants will be primarily focused on providing margin and cash flow visibility on a one-year forward basis. We intend to execute hedging and marketing strategies for the output of our facilities in both the wholesale and retail energy markets. We also intend to execute asset-based portfolio strategies to monetize inherent market volatility. We believe our hedging and commercial management strategy, in combination with a strong balance sheet, will provide a long-term advantage through cycles of higher and lower commodity prices. Finally, our lower level of financial leverage will allow us to absorb a greater degree of operating cash flow volatility, which will further allow our margin hedging program to have a shorter-term focus. We believe this will reduce hedging transaction volume and expenses, liquidity needs and hedge book complexity, which we further believe will result in lower operating costs and greater financial flexibility. Growth posture. We believe scale in the competitive power generation sector is an element of value creation. We expect to be able to leverage our management and operational systems to integrate additional assets and activities with relatively modest incremental cost. We intend to grow value through development and acquisitions that are complementary to our competitive strengths, with a focus on developed competitive markets that offer liquidity and price transparency. Additionally, as Talen Energy grows, our goal is to maintain a multi-fuel and multi-dispatch profile, as we believe this type of diversity is inherently valuable and provides an added measure of risk mitigation. We believe that our strong balance sheet and cash flow generation, combined with our current presence in attractive markets and our experienced, disciplined management team, will position Talen Energy favorably in its pursuit of value-enhancing growth opportunities. Our Management Team In selecting our management team, sourced largely from PPL, we have focused on individuals that have strong and proven track records of delivering stockholder value in executive capacities covering operations, strategy and financing. Our President and Chief Executive Officer, Paul Farr, has over 20 years of power and utilities experience having spent more than seven years as Chief Financial Officer of PPL prior to being named President of Energy Supply at the announcement of the Transactions. Mr. Farr also has extensive operations experience, having served as Chief Operating Officer of PPL Global, LLC for over three years, which included responsibility for all of PPL s international utilities operations in Latin America and the United Kingdom, as well as global corporate strategy. Mr. Farr was also integral to the establishment of PPL s competitive power generation business in Montana from 1999 to 2001. Jeremy McGuire, our Senior Vice President and Chief Financial Officer, served as Vice President Strategic Development of PPL Strategic Development, LLC since 2008. Prior to joining PPL, Mr. McGuire was an investment banker for 13 years, ten of which were focused on competitive power companies and utilities. Mr. Farr and Mr. McGuire were instrumental in PPL s acquisition and financing of $14 billion in utility businesses in Kentucky and the United Kingdom, which nearly doubled PPL s asset base, increased annual revenues by 70 percent and helped grow market capitalization by 40 percent between 2009 and 2011. Our executive team includes other key members that bring significant experience and expertise operating, marketing and managing risks of a competitive power generation business. Joe Hopf, our Senior Vice President and Chief Commercial Officer, has more than 30 years of experience in the electricity business serving in various roles in power plant operations, trading and risk management. Most recently, Mr. Hopf led PPL s fossil and hydro generating operations with nearly 8,000 MWs of generating capacity. Tim Rausch, our Senior Vice President and Chief Nuclear Officer, served as PPL Generation s Senior Vice President and Chief Nuclear Officer since 2009. Mr. Rausch came to PPL after 25 years of experience in virtually all disciplines of the nuclear power industry. Jim Schinski, our Senior Vice President and Chief Administrative Officer, joined PPL Services in 2009 as Vice President-Chief Information Officer. Prior to joining PPL, Mr. Schinski served as Chief Information Officer and Vice President of Human Resources for the Midwest Independent System Operator since 2004, where he was responsible for design, development, implementation and operation of technology systems for one of the country s Table of Contents largest electricity markets. We believe our leadership team positions Talen Energy to meet our objectives of delivering superior operating and financial performance through committed execution of Talen Energy s business strategy. Our Key Markets The substantial majority of our generation capacity is located in either PJM or ERCOT. We consider these regions to be among the most well-developed, transparent and liquid energy markets in the United States. PJM PJM is an RTO that coordinates the movement of wholesale electricity in all or parts of thirteen states and the District of Columbia. It is the largest competitive wholesale electricity market in the United States, dispatching more than 180,000 MW to more than 60 million people. The current mix of generating capacity within PJM is largely coal-dominated, with a significant number of nuclear and natural gas power plants rounding out the dispatch curve. As is the case in many markets in the United States, generating capacity within PJM is transitioning from a coal-dominated generation base to a mix that incorporates larger amounts of natural gas and renewable units, driven in large part by current and impending EPA regulations. The following map illustrates PJM by regions. PJM benefits from a combination of stable demand growth, liquid trading hubs, limited energy import capacity and a wide range of available market products. Generation owners in PJM may earn energy, capacity and ancillary revenues. The PJM energy market consists of day-ahead and real-time markets. The day-ahead Table of Contents market is a forward market in which hourly prices are calculated for the next operating day based on offers, bids and bilateral obligations. The real-time market is a spot market in which energy is continuously bought and sold based on actual grid operating conditions. The PJM capacity market, known as the Reliability Pricing Model ( RPM ), is intended to ensure that resources are available when needed to keep the power grid operating reliably for customers. Under the RPM, PJM conducts a series of auctions. Most capacity is procured in the base residual auctions each May for the sale of generating capacity three years in advance of the delivery year. In these auctions, prices are set based on available capacity and other factors such as transmission constraints. The capacity market construct provides generation owners the opportunity for some revenue visibility on a multi-year basis. Recent developments have the potential to be supportive of future revenue opportunities for generation owners in PJM, including: PJM s proposal to add an enhanced Capacity Performance product to the capacity market structure to permit additional compensation for generation owners/operators to make the necessary investments to maintain system reliability in exchange for stronger performance requirements. The intent of the Capacity Performance product is to improve operational availability during periods of peak power system demand, such as extreme weather. Specifically, PJM s stated objectives of this product include fuel security through dependable fuel sources, high availability of generation resources and operational diversity. If approved by the FERC, Capacity Performance is expected to benefit generation owners like Talen Energy that will own assets supplied by firm fuel commitments and have demonstrated reliability during peak load and extreme weather conditions; PJM s recent changes to the Variable Resource Requirement ( VRR ) curve. The VRR curve is a downward-sloping demand curve used by PJM to model sufficient capacity resources for PJM and set capacity prices. The VRR curve supports PJM s objective of attracting and retaining adequate capacity resources to ensure grid reliability, providing an indication of incremental reliability and economic value of capacity at different planning reserve levels. PJM s recent changes include a shift in the VRR curve, which signifies an increase in demand and therefore price, offering potential upside to future capacity prices for PJM generators; Recent developments that increase uncertainty associated with demand response s ability to participate in future capacity auctions, offering potential upside to future capacity prices for PJM generators; and Potential rule changes affecting price formation including offer cap changes which may lead to higher energy market prices. Table of Contents ERCOT ERCOT is an ISO that manages the flow of electricity from approximately 75,000 MW of installed capacity to 24 million Texas customers, representing 90% of the state s electric load and covering approximately 75% of its geography. ERCOT is an attractive wholesale electricity market with historically above-average demand growth, tight reserve margins, increasing price caps and an increasing reliance on flexible and quickly-dispatchable natural gas-fired assets. ERCOT was established in September 1996 and, as such, is the oldest ISO in the United States. The following map illustrates ERCOT by regions. As an energy-only market, ERCOT s market design is different from other competitive electricity markets in the United States. Other markets, including PJM, maintain a minimum reserve margin through regulated planning, resource adequacy requirements and/or capacity markets. In contrast, ERCOT s resource adequacy is predominately dependent on free market processes and energy market price signals. All electricity prices are subject to a system-wide offer cap, which was $5,000/MWh in 2013. This offer cap increased to $7,000/MWh in 2014 and is set to increase to $9,000/MWh in June 2015, providing a higher maximum marginal price. The system-wide offer cap has been reached on a number of occasions since 2011. Transactions in ERCOT take place in two key markets: the day-ahead market and the real-time market. The day-ahead market is a voluntary forward energy market conducted the day before each operating day in which generators and purchasers of power may bid for one or more hours of energy supply or consumption. The day-ahead market also allows ERCOT and generators and purchasers of power to buy and sell ancillary services. The real-time market is a spot market in which energy may be sold in five-minute intervals. Table of Contents Generation facilities in the region include efficient combined cycle natural gas-fired facilities, a large wind fleet and a mixture of environmentally compliant and older, non-compliant coal-fired assets. The combination of these assets has historically led to lower marginal cost of production during most periods, compared to other markets. However, the region has limited excess capacity to meet high demand days and the marginal facilities have high operating costs. Therefore, the marginal price of supply rapidly increases during periods of high demand. As a result, many generators benefit from these sporadic periods of scarcity pricing in which power prices increase significantly. The Texas population and gross state product is currently expanding at well above the national average rate, spurred in part from significant growth in oil and gas development and associated petrochemical industry growth. In December 2014, ERCOT released its latest reserve margin projections, which showed ERCOT s reserve margin dipping below the current target reserve margin of 13.75% in 2019. The table below illustrates ERCOT s forecasted reserve margin for 2015 through 2019. 2015 2016 2017 2018 2019 Reserve Margin Forecast 15.7 % 17.1 % 18.1 % 16.5 % 13.6 % In addition to energy, ancillary services, such as non-spinning reserves, responsive reserves and regulation up/down, offer another potential revenue stream for market participants in order to maintain system reliability, which is impacted by the high concentration of wind capacity in ERCOT. These ancillary services provide network support from quick-start generation capacity that is able to reach full load operation in exceptionally short periods of time in order to help manage the impact of wind variability on the electricity grid. Such ancillary services have received increased compensation and exhibited higher offer floors in part because ERCOT has one of the highest concentrations of wind capacity in the United States, with over 12,500 MW of installed capacity. Table of Contents Market Opportunity The market for competitive power generation assets has been very robust over the past five years, and we expect a continuation of this trend, providing further opportunities to enhance our competitive scale. From 2010 to 2014, roughly 344 GW of competitive power generation capacity has been sold, with approximately 121 GW and 36 GW in PJM and ERCOT, respectively. The diverse nature of these transactions, encompassing both conventional (predominantly natural gas and coal) and renewable (predominantly wind and solar) generating facilities, aligns with our goal of maintaining a multi-fuel and multi-dispatch profile. The table below illustrates the volume of transactions in dollars and GWs from 2010 through 2014. We believe that there will continue to be significant acquisition opportunities for competitive power generation assets in the United States, enabling us to grow our fleet and enhance shareholder value. Approximately 81 GW of operating capacity are owned by companies that operate both regulated utilities and competitive power generation assets, while approximately 40 GW are owned by private equity funds. Given the trend of separating competitive power generation assets from regulated utility assets, and the typically defined target holding period of private equity funds, we expected that a significant number of assets will come to market over the next several years. Table of Contents Transaction Rationale We believe that the creation of Talen Energy through the separation of Energy Supply from PPL s rate-regulated utility business and concurrent combination with RJS Power will maximize value for both PPL shareholders as well as Talen Energy stockholders. The separation will give rise to a number of significant benefits by allowing each company to pursue its own business strategy without requiring compromise relative to the other. Separating PPL into two independent companies, with one focused on rate-regulated utility operations and the other focused on competitive energy and power generation, recognizes the significant opportunities each of the two businesses have going forward as well as the different risks inherent in each. The two businesses have significantly different capital investment priorities, obligations and opportunities. They also have significantly different risk profiles and costs of capital. Each company will be able to attract investors and source capital based on its own risk profile and return prospects. This will translate into a better alignment of PPL s and Talen Energy s management teams with the direct interests of their respective shareholders because the factors that drive shareholder value for a competitive power generation company are often different, and at times at odds with, factors that drive shareholder value for a rate-regulated utility. In addition, the separation will also allow Talen Energy to compensate employees in the competitive power generation business with its own equity, which will result in equity compensation that is more in line with the financial results of such employees direct work product. Further, PPL determined that shareholder value could be enhanced by simultaneously combining Energy Supply with another competitive power generation company, thereby increasing the scale and diversity of the generating fleet and enhancing the ability to realize cost synergies and margin benefits through initiatives and programs currently being developed by management, as well as creating a larger, stronger platform from which to pursue additional organic and acquisition-related growth opportunities. The Companies Energy Supply Energy Supply is primarily engaged in the competitive power generation and marketing of electricity, generating capacity, ancillary services and related commodities primarily on a wholesale basis from its fleet of power plants located in Pennsylvania and Montana, totaling approximately 9,896 MW of electricity generation capacity as of December 31, 2014. Energy Supply s principal subsidiaries are PPL EnergyPlus, LLC ( PPL EnergyPlus ), its marketing and trading subsidiary, and PPL Generation, LLC ( PPL Generation ), the subsidiaries of which own and operate its generating facilities in Pennsylvania and Montana. PPL Generation owns and operates, through its subsidiaries, a diverse portfolio of competitive domestic power generating facilities. Its power generating facilities are fueled by coal, uranium, natural gas, oil and water. Approximately 93% and 7% of the net generating capacity of PPL Generation is located in PJM and WECC, respectively. PPL EnergyPlus sells electricity produced by PPL Generation s facilities, participates in wholesale market load-following auctions, and markets various energy products and commodities such as: capacity, transmission, financial transmission rights, coal, natural gas, oil, uranium, emission allowances, renewable energy credits and other commodities in competitive wholesale and competitive retail markets, primarily in the northeastern and northwestern United States. PPL EnergyPlus focuses on entering into energy and energy-related physical and financial contracts to hedge the variability of expected cash flows associated with PPL Generation s facilities and its marketing activities, as well as for trading purposes. RJS Power RJS Power is engaged in the competitive power generation and marketing of electricity, generating capacity and ancillary services on a wholesale basis from its fleet of power generating facilities located in five states totaling approximately 5,331 MW of electricity generation capacity as of December 31, 2014. RJS Power owns and operates a diverse portfolio of power generating facilities of various technology types and operating Table of Contents characteristics fueled by coal, natural gas and oil. RJS Power focuses on managing the dispatch of its assets to maximize physical energy margin and engaging in prudent risk mitigation through contracted forward capacity sales and physical and financial hedges. Approximately 63% and 35% of the net generating capacity of RJS Power s facilities is located in PJM and ERCOT, respectively. Our Fleet Asset Location Fuel Type Ownership Owned Capacity (MW) (1) Commercial Operation Date Region/ ISO Energy Supply (1) Montour PA Coal 100% 1,504 1972 1973 PJM Brunner Island PA Coal 100% 1,411 1961 1969 PJM Keystone PA Coal 12% 211 1967 1968 PJM Conemaugh PA Coal 16% 278 1970 1971 PJM Martins Creek 3 & 4 PA Natural Gas / Oil 100% 1,700 1975 1977 PJM Ironwood PA Natural Gas 100% 660 2001 PJM Lower Mt. Bethel PA Natural Gas 100% 538 2004 PJM Peakers PA Natural Gas / Oil 100% 354 1967 1973 PJM Susquehanna PA Nuclear 90% 2,245 1983 1985 PJM Eastern Hydro (2) PA Hydro 100% 293 1910 1926 PJM Colstrip 1 & 2 MT Coal 50% 307 1975 1976 WECC Colstrip 3 MT Coal 30% 222 1984 WECC Corette (3) MT Coal 100% 148 1968 WECC Renewables (4) NH, NJ, PA, VT Renewables 100% 25 Various Various Total Energy Supply 9,896 RJS Power (1)(5) Brandon Shores MD Coal 100% 1,273 1984 1991 PJM H.A. Wagner MD Coal / Natural Gas / Oil 100% 976 1956 1972 PJM C.P. Crane MD Coal 100% 399 1961 1967 PJM Bayonne NJ Natural Gas / Oil 100% 174 1988 PJM Camden NJ Natural Gas / Oil 100% 151 1993 PJM Dartmouth MA Natural Gas / Oil 100% 89 1996 ISO-NE Elmwood Park NJ Natural Gas / Oil 100% 73 1989 PJM Newark Bay NJ Natural Gas / Oil 100% 129 1993 PJM Pedricktown (6) NJ Natural Gas / Oil 100% 132 1992 PJM York PA Natural Gas 100% 52 1989 PJM Laredo 4 TX Natural Gas 100% 98 2008 ERCOT Laredo 5 TX Natural Gas 100% 98 2008 ERCOT Nueces Bay 7 TX Natural Gas 100% 678 2010 ERCOT Barney Davis 1 TX Natural Gas 100% 335 1974 ERCOT Barney Davis 2 TX Natural Gas 100% 674 2010 ERCOT Total RJS Power 5,331 Total Talen Energy 15,227 (1) Does not reflect the sale or other disposition of approximately 1,300 MW of generating capacity that is required to obtain regulatory approval for the Transactions. See The Separation Agreement and the Transaction Agreement The Transaction Agreement Regulatory Approvals and Efforts to Close Mitigation Plans. (2) Includes Holtwood and Wallenpaupack. Table of Contents (3) Operations were suspended and the Corette plant was retired in March 2015. (4) Energy Supply is presently considering divesting its renewables plants. See Management s Discussion and Analysis of Financial Condition and Results of Operations Energy Supply Overview Financial and Operational Developments Mechanical Contracting Subsidiaries and Renewables Plants. (5) Total net generating capacities are based on average summer and winter capacity. (6) Pedricktown capacity includes capacity dedicated to serving landlord load (which has historically averaged 9 MW). Risk Factors We face numerous risks related to, among other things, our business operations, our strategies, general economic conditions, competitive dynamics of the industry, our level of indebtedness, the legal and regulatory environment in which we operate, and our status as an independent public company following the Transactions. These risks are set forth in detail under the heading Risk Factors. If any of these risks should materialize, they could have a material adverse effect on our business, financial condition, results of operations or cash flows. We encourage you to review these risk factors carefully. Furthermore, this prospectus contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those under the headings Risk Factors and Cautionary Statement Regarding Forward-Looking Statements. Risks related to our business include, among others: our operating and financial performance and prospects; our access to financial and capital markets to issue debt or enter into new credit facilities; investor perceptions of us and the industry and markets in which we operate; future sales of equity or equity-related securities; many of our facilities operate, wholly or partially, without power sale agreements; our financial performance can be impacted by changing natural gas prices and unpredictable price movements in the wholesale power markets and other markets that are beyond our control; changes in earnings estimates or buy/sell recommendations by analysts; general financial, domestic, economic and other market conditions; costs, results of operations, financial conditions and cash flows could be adversely impacted by disruption of fuel supplies; trading operations and the use of hedging agreements could result in financial losses that negatively impact results of operations; the accounting for hedging activities may increase volatility in the Company s quarterly and annual financial results; maintenance, expansion and refurbishment of power generation facilities involve significant risks that could result in unplanned power outages or reduced output and could have a material adverse effect on our results of operations, cash flow and financial conditions; increased stringency of environmental regulations and requirements and other environmentally related issues could increase our costs significantly; insufficient liquidity to hedge markets effectively; and competition in wholesale power markets and issues related to the oversupply of power generation capacity in certain regional markets in which we operate may have a material adverse effect on our operations. Table of Contents Summary of the Transactions We provide below a summary of the Transactions. See The Transactions for a more detailed description. The Distribution and the Merger Distributing Company PPL Corporation, a Pennsylvania corporation. After the Distribution, PPL will not own any shares of Talen Energy common stock. Distributed Company Talen Energy Corporation, a Delaware corporation. After the Distribution and Merger, Talen Energy will be an independent, publicly traded company. Record Date Record ownership will be determined as of 5:00 p.m., New York City time, on May 20, 2015. Distribution Date The Distribution Date is expected to be on or about June 1, 2015. Distribution Ratio Each share of PPL common stock outstanding as of the record date will entitle its holder to receive a number of shares of HoldCo common stock determined by a formula based on the number of PPL shares of common stock outstanding at 5:00 p.m. New York City time, on the record date. Each such record holder will be entitled to receive a number of shares of HoldCo common stock equal to the aggregate number of shares of HoldCo common stock multiplied by a fraction, the numerator of which is the number of shares of PPL common stock held by such record holder on the record date and the denominator of which is the total number of shares of PPL common stock outstanding on the record date. Based on the number of shares of PPL common stock outstanding as of March 31, 2015, we expect the distribution ratio to be approximately 0.125 shares of HoldCo common stock for each share of PPL common stock. Promptly after the record date, we will issue a press release disclosing the actual distribution ratio. As a result of the Merger, each such share of HoldCo common stock will be converted into one share of Talen Energy common stock. The shareholders of PPL as of the record date and their transferees will own 65%, and the Contributors, collectively, will own 35%, of the shares of Talen Energy common stock immediately following the Combination. Securities to be distributed and delivered All of the 83,525,000 shares of common stock of HoldCo outstanding immediately prior to the Merger will be distributed pro rata to PPL shareholders who hold PPL common stock as of the record date and will be automatically converted into shares of Talen Energy common stock at the Effective Time and delivered to PPL shareholders. The number of Talen Energy shares that PPL will ultimately deliver to its shareholders will be reduced to the extent that cash payments are to be made in lieu of fractional shares, as described below. Table of Contents The Distribution On the Distribution Date, PPL will cause the distribution agent to distribute the shares of HoldCo common stock to the transfer agent for the accounts of the PPL shareholders as of the record date, which shares (other than shares held by Talen Energy, Merger Sub, HoldCo or any HoldCo subsidiary, which shares will be cancelled and retired) will be, immediately prior to the effective time of the Merger, automatically converted into the right to receive shares of Talen Energy common stock on a one-for-one basis. It is expected that it will take the distribution agent up to three business days to electronically issue Talen Energy shares to PPL shareholders or their respective bank or brokerage firm on behalf of PPL shareholders by way of direct registration in book-entry form. PPL shareholders will not be required to make any payment, surrender or exchange PPL common stock or take any other action to receive their Talen Energy common stock. No fractional shares Holders of PPL common stock will not receive any fractional shares of Talen Energy common stock. In lieu of fractional shares of Talen Energy, PPL shareholders will receive a cash payment. Fractional shares of Talen Energy common stock that would otherwise be allocable to any record holders of PPL common stock will be aggregated and, following the Merger, sold by the distribution agent as whole shares of Talen Energy in the open market at prevailing market prices (or otherwise as reasonably directed by PPL, in consultation with the Contributors). The exchange agent will make available the net proceeds of this sale, after deducting any required withholding taxes and brokerage charges, commissions and transfer taxes, on a pro rata basis, without interest, to each PPL shareholder who would otherwise have been entitled to receive a fractional share of Talen Energy in the Distribution and the Merger. See The Transactions Structure of the Distribution, the Merger and the Combination Treatment of Fractional Shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient shareholders that are subject to U.S. federal income tax as described in The Transactions Material U.S. Federal Income Tax Consequences of the Transactions. Tax consequences of the Distribution, Merger and Combination to PPL shareholders PPL expects to receive an opinion from Simpson Thacher to the effect that the contribution by PPL of 100% of the outstanding equity securities of Energy Supply to HoldCo (the HoldCo Contribution ) together with the Distribution will qualify as a reorganization pursuant to Section 368(a)(1)(D) of the Code and a tax-free distribution pursuant to Section 355 of the Code, that the Merger will qualify as a reorganization pursuant to Section 368(a) of the Code, and that the Merger and Combination together will qualify as a transaction described in Section 351 of the Code. Such opinions will rely on certain facts and assumptions, and certain representations and undertakings, provided by us, PPL and the Contributors regarding the past and future conduct of our respective businesses and other matters. Table of Contents Assuming that the HoldCo Contribution and the Distribution together qualify as a reorganization pursuant to Section 368(a)(1)(D) of the Code and a tax-free distribution pursuant to Section 355 of the Code, no gain or loss will be recognized by PPL shareholders for U.S. federal income tax purposes upon the deemed receipt of HoldCo common stock pursuant to the Distribution. Assuming that the Merger qualifies as a reorganization pursuant to Section 368(a) of the Code and that the Merger and Combination together will qualify as a transaction described in Section 351 of the Code, HoldCo stockholders will not recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger and Combination, except for any gain or loss attributable to cash received in lieu of a fractional share of Talen Energy. See The Transactions Material U.S. Federal Income Tax Consequences of the Transactions and Risk Factors Risks Relating to the Transactions If the Distribution does not qualify as a tax-free distribution under the Code and/or the Merger does not qualify as a reorganization under the Code, including as a result of subsequent acquisitions of stock of PPL or Talen Energy, then PPL and/or its shareholders may be required to pay substantial U.S. federal income taxes. Each PPL shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Transactions to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws. Relationship with PPL and TPM after the Transactions PPL will have no continuing ownership interest in, control of or affiliation with Talen Energy following the Distribution. Talen Energy has entered into the Separation Agreement, the Transaction Agreement and the Employee Matters Agreement and, shortly before the Distribution, Talen Energy expects to enter into other agreements with PPL and the Contributors related to the Transactions. These agreements will govern the relationship between Talen Energy and PPL subsequent to the completion of the Distribution and provide for the allocation between Talen Energy and PPL of various assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities). The Separation Agreement, in particular, provides for the settlement or extinguishment of certain obligations between Talen Energy and PPL. Energy Supply will enter into Transition Services Agreements with PPL and TPM, pursuant to which the parties thereto will provide certain services to the other parties thereto and their respective subsidiaries on a transitional basis. We describe these and related arrangements in greater detail under The Separation Agreement and the Transaction Agreement Ancillary Agreements and describe some of the risks of these arrangements under Risk Factors Risks Relating to the Transactions. Table of Contents Distribution Agent Wells Fargo Bank, National Association The Combination Structure of the Combination The Contributors will contribute, directly or indirectly, all of the outstanding equity interests of RJS Power to Talen Energy. Consideration for the Combination In consideration of the Combination, we will issue additional shares of our common stock to the Contributors in an aggregate amount which will result in PPL shareholders owning 65% of Talen Energy s outstanding common stock and the Contributors owning the remaining 35% immediately following the Combination. Talen Energy s stockholders immediately prior to the Combination will not receive any consideration in the Combination, and Talen Energy will remain the parent company for the combined company. Approval of the Combination No vote by PPL shareholders is required or is being sought in connection with the Combination. Each of PPL, HoldCo, Talen Energy and Energy Supply and RJS has already approved the Combination. Termination of the Transaction Agreement The Transaction Agreement may be terminated at any time prior to the Closing Date by mutual consent of PPL and the Contributors. The Transaction Agreement may also be terminated on the occurrence of certain events, including if the Closing Transactions have not been consummated on or prior to June 30, 2015, if the consummation of any component of the Transactions would be illegal or otherwise prohibited under applicable law, order or other action by any governmental authority or if either party has breached or failed to perform any of its respective representations, warranties, covenants or other agreements contained in the Transaction Agreement. Each of the foregoing termination events are described in greater detail under The Separation Agreement and the Transaction Agreement The Transaction Agreement Termination of the Transaction Agreement. Transaction Expense Adjustments Generally, all fees and expenses incurred in connection with the Transactions are to be paid by the party incurring such fees or expenses; however, any costs incurred by PPL, Energy Supply, Talen Energy, HoldCo or Merger Sub or any of their subsidiaries in connection with the Separation Transactions and the Distribution, other than certain shared expenses, are to be paid by PPL. Certain expenses incurred in connection with the Transactions are to be paid by Talen Energy if the Closing Transactions are consummated, or 65% by PPL and 35% by the Contributors if the Closing Transactions are not consummated. All fees and expenses of financial, legal, accounting and other professional advisors retained by each of the parties will be paid by the party incurring such fees and expenses, unless such expenses are considered Shared Expenses pursuant to Table of Contents the Transaction Agreement. See The Separation Agreement and the Transaction Agreement The Transaction Agreement Transaction Expense Adjustments. Tax consequences to PPL shareholders PPL shareholders are not expected to recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger and Combination, except for any gain or loss attributable to cash received in lieu of a fractional share of Talen Energy. See The Transactions Material U.S. Federal Income Tax Consequences of the Transactions. Each PPL shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Combination to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws. Accounting Treatment of the Combination Energy Supply will be the accounting acquirer in the Combination. Accordingly, Energy Supply will apply acquisition accounting to the assets acquired and liabilities assumed of RJS Power upon consummation of the Combination. See The Transactions Accounting Treatment and Considerations. The Transactions Primary purpose of the Transactions The primary purpose of the Transactions is to separate the Energy Supply business from PPL and combine the Energy Supply business with the RJS Power business in order to realize the full value of the Energy Supply business in both the short- and long-term. See The Transactions PPL s Reasons for the Transactions. Conditions to the Transactions The Transactions are subject to a number of important conditions. Under the terms of the Separation Agreement and the Transaction Agreement, the consummation of the Transactions are conditioned upon, among other things, (i) the Separation Transactions having occurred in accordance with the Separation Agreement, (ii) the SEC declaring effective the registration statement of which this prospectus forms a part and no actual or threatened stop order of the SEC suspending effectiveness of the registration statement being in effect prior to the Separation; (iii) the Talen Energy common stock being authorized for listing on the NYSE; (iv) certain regulatory approvals being obtained, including approval by the NRC and the FERC, Hart-Scott-Rodino clearance and certain approvals by the PUC (as more fully described in The Separation Agreement and the Transaction Agreement Transaction Agreement Regulatory Approvals and Efforts to Close ), and (v) there being, after giving effect to the financings described in The Separation Agreement and Transaction Agreement The Transaction Agreement Financing and Debt Payoff and the posting of any credit support and other Table of Contents financial commitments required to be provided by RJS Power, Talen Energy, Merger Sub, HoldCo, Energy Supply and/or their respective subsidiaries in connection with, or as a condition to, regulatory approvals required in connection with the Transactions, at least $1.0 billion of undrawn capacity under a revolving credit facility or similar facility available to Talen Energy and its subsidiaries (for purposes of which any letters of credit or other credit support measures posted in connection with energy marketing and trading transactions then outstanding shall not be considered as drawn against such facility). For a more detailed description of the Distribution conditions see The Separation Agreement and the Transaction Agreement The Separation Agreement Conditions to the Separation and The Separation Agreement and the Transaction Agreement The Transaction Agreement Conditions to Consummation of the Closing Transactions. No approval by the PPL shareholders or the Contributors is required in connection with the Transactions. Trading market and symbol We intend to apply to list our common stock on the NYSE under the ticker symbol TLN. We anticipate that, on or shortly before the record date for the Distribution, trading of Talen Energy common stock will begin on a when-issued basis and will continue up to and including the Distribution Date. See The Transactions Listing and Trading of Our Common Stock. Dividend Policy We do not currently expect to declare or pay dividends on our common stock. See Dividend Policy. New Energy Supply Revolving Credit Facility In connection with the Transactions, Energy Supply will enter into a senior secured revolving facility that will provide for revolving loans in an aggregate principal amount of up to $1.85 billion. See The Transactions New Energy Supply Revolving Credit Facility and Description of Material Indebtedness. Table of Contents The following chart illustrates our simplified organizational structure following the Transactions. Market and Industry Data Certain market, industry, regulatory, competitive position and other similar data included in this prospectus were obtained from Energy Supply s and RJS Power s own research, from surveys, studies or reports conducted by third parties or from government, industry or general publications or websites (including surveys and forecasts). Some data is also based on good faith estimates by management, which are derived from their review of internal surveys or studies, as well as the independent sources described above. Statements regarding industry, regulatory, competitive position or other similar data presented in this prospectus involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings Cautionary Statement Regarding Forward-Looking Statements and Risk Factors. * * * * * Talen Energy Corporation is a Delaware corporation. Prior to the Transactions, our principal executive offices are located at Two North Ninth Street, Allentown, Pennsylvania, 18101, and our telephone number at that address is (610) 774-5151. Following the Transactions, our principal executive offices will be located in 835 W. Hamilton Street, Allentown, Pennsylvania 18101. Our website will be www.talenenergy.com. Information on, and which can be accessed through, our website is not incorporated in this prospectus. Table of Contents SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA OF ENERGY SUPPLY The following table sets forth summary historical consolidated financial data of Energy Supply as of December 31, 2013 and 2014 and for each of the years ended December 31, 2012, 2013 and 2014. The summary historical consolidated financial data of Energy Supply as of December 31, 2013 and 2014 and for each of the years ended December 31, 2012, 2013 and 2014 have been derived from, and should be read together with, the audited consolidated financial statements of Energy Supply and the accompanying notes contained elsewhere in this prospectus. The summary historical consolidated financial data presented below include certain assets and liabilities of Energy Supply relating to facilities that may be sold as part of Talen Energy s mitigation plan discussed elsewhere in this prospectus. As a result, the summary historical consolidated financial data of Energy Supply set forth below may not necessarily be indicative of the Energy Supply business that will be operated by Talen Energy in future periods. The summary historical consolidated financial data set forth below are not necessarily indicative of the results of future operations. The summary historical consolidated financial data should be read in conjunction with Risk Factors, Selected Historical Consolidated Financial Data of Energy Supply, Unaudited Pro Forma Condensed Combined Financial Information, Management s Discussion and Analysis of Financial Condition and Results of Operations Energy Supply and the consolidated financial statements of Energy Supply and accompanying notes, all of which are included elsewhere in this prospectus. Year Ended December 31, (dollars in millions) 2012 2013 2014 Statement of Operations Data: Operating revenues $ 5,346 $ 4,514 $ 3,736 Operating income (loss) 804 (293 ) 397 Income (loss) from continuing operations after income taxes attributable to member 428 (262 ) 187 Net income (loss) attributable to member 474 (230 ) 410 Balance Sheet Data (at period end): Cash and cash equivalents $ 239 $ 352 Total assets 11,074 10,760 Total liabilities 6,276 6,853 Long-term debt, including current portion 2,525 2,218 Member s equity 4,798 3,907 Statement of Cash Flows Data: Cash provided by (used in): Operating activities $ 784 $ 410 $ 462 Investing activities (469 ) (631 ) 497 Financing activities (281 ) 47 (846 ) Table of Contents SUMMARY HISTORICAL CONSOLIDATED AND COMBINED FINANCIAL DATA OF RJS POWER The following table sets forth summary historical consolidated and combined financial data of RJS Power as of December 31, 2013 and 2014 and for each of the years ended December 31, 2012, 2013 and 2014. The summary historical consolidated and combined financial data of RJS Power as of December 31, 2013 and 2014 and for each of the years ended December 31, 2012, 2013 and 2014 have been derived from, and should be read together with, the audited consolidated and combined financial statements of RJS Power and the accompanying notes contained elsewhere in this prospectus. The summary historical consolidated and combined financial data presented below include certain assets and liabilities of RJS Power relating to facilities that may be sold as part of Talen Energy s mitigation plan discussed elsewhere in this prospectus. As a result, the summary historical consolidated and combined financial data of RJS Power set forth below may not necessarily be indicative of the RJS Power business that will be operated by Talen Energy in future periods. The summary historical consolidated and combined financial data set forth below are not necessarily indicative of the results of future operations. The summary historical consolidated and combined financial data should be read in conjunction with Risk Factors, Selected Historical Consolidated and Combined Financial Data of RJS Power, Management s Discussion and Analysis of Financial Condition and Results of Operations RJS Power, Unaudited Pro Forma Condensed Combined Financial Information and the consolidated and combined financial statements of RJS Power and accompanying notes, all of which are included elsewhere in this prospectus. Year Ended December 31, (dollars in millions) 2012 2013 2014 Statement of Operations Data: Operating revenues $ 453 $ 979 $ 1,045 Operating income (loss) 82 67 55 Income (loss) from continuing operations after income taxes 33 (27 ) (55 ) Net income (loss) 33 (27 ) (55 ) Balance Sheet Data (at period end): Cash and cash equivalents $ 141 $ 30 Total assets 1,981 1,798 Total liabilities 1,376 1,549 Long-term debt 1,204 1,275 Members interests 605 249 Statement of Cash Flows Data: Net cash provided by (used in): Operating activities $ 14 $ 169 $ 183 Investing activities (397 ) (33 ) 11 Financing activities 384 (13 ) (305 ) Table of Contents SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA The following sets forth summary unaudited pro forma condensed combined financial data which combines the consolidated financial information of Energy Supply and the combined financial information of RJS Power as of and for the year ended December 31, 2014 after giving effect to the spinoff of HoldCo and the Combination with RJS Power as if they were completed on January 1, 2014. The summary unaudited pro forma condensed combined balance sheet data gives effect to the spinoff and the Combination as if they were completed on December 31, 2014. The summary unaudited pro forma condensed combined financial data are derived from the unaudited pro forma condensed combined financial information that is included elsewhere in this prospectus. The summary unaudited pro forma condensed combined financial data are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of the combined company would have been had the Transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. This information is only a summary and should be read in conjunction with Risk Factors, Selected Historical Consolidated Financial Data of Energy Supply, Selected Historical Consolidated and Combined Financial Data of RJS Power, Unaudited Pro Forma Condensed Combined Financial Information, Management s Discussion and Analysis of Financial Condition and Results of Operations Energy Supply and Management s Discussion and Analysis of Financial Condition and Results of Operations RJS Power, which are included elsewhere in this prospectus. (dollars in millions) Year Ended December 31, 2014 Statement of Operations Data: Operating revenues $ 4,274 Operating income 409 Income from continuing operations after income taxes attributable to stockholders $ 139 Balance Sheet Data (at period end): Cash and cash equivalents $ 903 Total assets 13,906 Total liabilities 8,527 Long-term debt, including current portion 3,419 Stockholders equity 5,379 Other Financial Data: Pro forma Adjusted EBITDA (1) $ 915 (1) In addition to evaluating the financial condition and results of operations in accordance with GAAP, management also reviews and evaluates certain alternative financial measures not prepared in accordance with GAAP. Non-GAAP measures do not have definitions under GAAP and may be defined differently by, and not be comparable to, similarly titled measures used by other companies. As a result, management considers and evaluates non-GAAP measures in connection with a review of the most directly comparable measure calculated in accordance with GAAP. Management cautions investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measure. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP. In this prospectus, the pro forma financial information prepared in accordance with GAAP has been supplemented with pro forma EBITDA and pro forma Adjusted EBITDA because we believe that pro forma EBITDA and pro forma Adjusted EBITDA provide useful information to investors, lenders and rating agencies since these groups have historically used EBITDA-related measures in our industry, along with other measures, to estimate the value of companies, to make investment decisions and to evaluate a company s Table of Contents ability to meet its debt service requirements. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by other companies because not all companies calculate EBITDA and Adjusted EBITDA in the same manner. EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP. EBITDA is defined as income (loss) from continuing operations after income taxes attributable to stockholders adjusted for depreciation, amortization and accretion, interest expense and income taxes. Adjusted EBITDA is defined as EBITDA as further adjusted for certain items, such as unrealized loss (gain) on derivative contracts, non-cash equity-based compensation, certain financing and transaction costs and other items not indicative of ongoing operating performance. Pro forma EBITDA and pro forma Adjusted EBITDA reflect EBITDA and Adjusted EBITDA, respectively, after giving effect to the Transactions. A reconciliation of pro forma EBITDA and pro forma Adjusted EBITDA to pro forma income (loss) from continuing operations after income taxes attributable to stockholders determined in accordance with GAAP is provided below (See Unaudited Pro Forma Condensed Combined Financial Statements for information on the Pro Forma Adjustments and Pro Forma Condensed Combined amounts): Year Ended December 31, 2014 Historical Pro Forma Adjustments Pro Forma Condensed Combined (a) Energy Supply RJS Power (dollars in millions) Income (loss) from continuing operations after income taxes attributable to stockholders $ 187 $ (55 ) $ 7 $ 139 Interest expense (b) 124 110 (15 ) 219 Income taxes 116 (33 ) 83 Depreciation and amortization (c) 329 90 (53 ) 366 EBITDA $ 756 $ 145 $ (94 ) $ 807 Unrealized loss (gain) on derivative contracts (d) (17 ) 64 47 Raven Acquisition adjustments (e) 20 20 Non-cash compensation expense (f) 33 15 48 Separation benefits (g) 33 33 Mechanical contracting and engineering subsidiary revenue adjustment (h) (17 ) (17 ) Gain from NDT fund (26 ) (26 ) Other 1 2 3 Adjusted EBITDA $ 763 $ 246 $ (94 ) $ 915 (a) Reflects the impact of divesting one of the asset portfolios required to achieve FERC regulatory approval. See The Separation Agreement and the Transaction Agreement The Transaction Agreement Regulatory Approvals and Efforts to Close Mitigation Plans for information on such divestitures. (b) RJS Power includes a $36 million charge for the write-off of unamortized debt discount and deferred financing costs, on RJS Power s then outstanding debt, in connection with the issuance of the 2019 Senior Notes. (c) Energy Supply includes $32 million of ARO accretion that is recognized in Other operation and maintenance on the Pro Forma Condensed Combined Statement of Income included under Unaudited Pro Forma Condensed Combined Financial Information. (d) Represents non-cash change in the fair value of derivative instruments that have been included in Energy Supply s and RJS Power s earnings. (e) Comprised of two adjustments resulting from the Raven Acquisition in 2012. RJS Power has adjusted EBITDA as reported for pension related payments of $3 million made to legacy CPSG employees, as such payments will no longer be a recurring expense for RJS Power after December 31, 2014. RJS Table of Contents Power has also adjusted its EBITDA as reported to reflect a capacity make whole payment of $17 million from CPSG. Under the Purchase and Sale Agreement between CPSG and Raven Power Holdings LLC, CPSG agreed to capacity make-whole payments for uncleared capacity in the 2014/2015 PJM Capacity year. The right to receive the capacity make-whole payment from CPSG was recorded as a receivable on RJS Power s balance sheet under the purchase accounting rules. Payments received under this agreement are not reflected as revenue in RJS Power financial statements. RJS Power makes an adjustment to EBITDA to eliminate the effect of adjustments resulting from the application of purchase accounting to this payment stream. (f) For Energy Supply, reflects the portion of PPL s non-cash stock-based compensation cost allocable to Energy Supply. For RJS Power, reflects non-cash compensation expense related to agreements directly with the owners of RJS Power and the contracted asset manager, TPM, which allows TPM to participate in the profits of RJS Power if certain cash generation and distribution targets are met. Although the amounts paid under these agreements are not paid directly by RJS Power, RJS Power recognizes amounts paid under these agreements as non-cash compensation expense included in general and administrative expenses on its consolidated and combined statement of operations. (g) In June, 2014, Energy Supply s largest IBEW local ratified a new three-year labor agreement. In connection with the new agreement, estimated bargaining unit one-time voluntary retirement benefits were recorded. In addition, in 2014, Energy Supply recorded separation benefits related to the anticipated spinoff transaction. (h) In 2014, Energy Supply recorded $17 million to Energy-related businesses revenues on the Statement of Income to correct an error related to prior periods and the timing of revenue recognition for a mechanical contracting and engineering subsidiary. See Note 1 to the audited consolidated financial statements of Energy Supply included elsewhere in this prospectus for additional information. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. Unless otherwise stated in this prospectus: we, us or our company refers to Arowana Inc.; initial shareholders refers to all of our shareholders immediately prior to the date of this prospectus, including all of our officers and directors to the extent they hold such shares; insider shares refers to the 2,070,000 ordinary shares held by our initial shareholders prior to this offering (including up to an aggregate of 270,000 ordinary shares subject to compulsory repurchase by us to the extent that the underwriters over-allotment option is not exercised in full or in part) , after giving effect to an issuance of an aggregate of 345,000 shares by way of capitalisation effectuated in February 2015 ; private units refer to the units we are selling privately to our initial shareholders and their affiliates upon consummation of this offering and references to private shares, refers to the ordinary shares included within the private units; US Dollars and $ refer to the legal currency of the United States; Companies Law refers to the Companies Law (2013 Revision) of the Cayman Islands as the same may be amended from time to time; the term public shareholders means the holders of the ordinary shares which are being sold as part of the units in this public offering, or public shares, whether they are purchased in the public offering or in the aftermarket, including any of our initial shareholders to the extent that they purchase such public shares (except that our initial shareholders will not have conversion or tender rights with respect to any public shares they own); and the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. We are a Cayman Islands company incorporated on October 1, 2014 as an exempted company with limited liability. Exempted companies are Cayman Islands companies wishing to conduct business outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, we have applied for and received a tax exemption undertaking from the Cayman Islands government that, in accordance with section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us. We were formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a target business. While our efforts to identify a prospective target business will not necessarily be limited to a particular industry or geographic region of the world, we initially intend to focus on target businesses located in the Asia Pacific region (with a particular emphasis on South East Asia and Australia) operating in the energy (including solar and alternative energy) industry, or target businesses in such industry operating outside of those geographic locations which we believe would benefit from expanding Table of Contents their operations to such locations. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction. We will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. The decision as to whether we will seek shareholder approval of our proposed business combination or allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Unlike other blank check companies which require shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to the tender offer rules of the Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination. We will have until 18 months from the consummation of this offering to consummate our initial business combination. If we are unable to consummate our initial business combination within this time period, we will liquidate the trust account and distribute the proceeds held therein to our public shareholders and dissolve. If we are forced to liquidate, we anticipate that we would distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation. Pursuant to the Nasdaq listing rules, our initial business combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the trust account at the time of the execution of a definitive agreement for such business combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or businesses that we acquire may have a collective fair market value substantially in excess of 80% of the trust account balance. We are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance of the trust account unless our board of directors cannot make such determination on its own. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our shareholders from a financial point of view unless the target is affiliated with our officers, directors, initial shareholders or their affiliates. We currently anticipate structuring our initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. Management Operating and Investing Experience We believe that our executive officers possess the experience, skills and contacts necessary to source, evaluate, and execute an attractive business combination. Kevin Chin, our Chairman and Chief Executive Officer, is the founder of Arowana & Co. which comprises Arowana Partners Group, Arowana Capital and Arowana International Limited, or Arowana International, a company listed on the Australian Stock Exchange. Over his 20 year career, Mr. Chin has held a number of strategic and operational leadership roles and was also previously with Lowy Family Group, J.P. Morgan in Sydney and New York, Ord Minnett, PriceWaterhouseCoopers and Deloitte. Mr. Chin has significant experience in strategic and operational management, private equity, leveraged buyouts of public companies, mergers and acquisitions and capital raisings. Gary Hui, our Chief Financial and Investment Officer, was formerly a Managing Director of Indus Capital Partners, LLC, a hedge fund founded by former Soros Fund Management Partners. Mr. Hui has 20 years of experience in commercial enterprise, spanning the disciplines of accounting, mergers and acquisitions, equity capital markets and alternative investments. We intend to leverage the contacts and relationships of our executive officers, as well as those of our other directors, to source, evaluate and execute business combination opportunities. See the sections titled Business Management Operating and Investment Experience and Management for complete information on the experience of our officers and directors. Notwithstanding the foregoing, our officers and directors are not required to commit their full time to our affairs and will allocate their time to other businesses. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). Furthermore, none of our officers or directors has been a principal of a blank check company that has completed a business combination like we are attempting to do. As a result, the past successes of our executive officers and directors do not guarantee that we will successfully consummate an initial business combination. As more fully discussed in Management Conflicts of Interest, if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Certain of our officers and directors currently have pre-existing fiduciary duties or contractual obligations. Table of Contents Emerging Growth Company Status We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act) and will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or our total revenues exceed $1 billion or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Private Placements In October 2014, our initial shareholders purchased an aggregate of 1,725,000 ordinary shares, which we refer to throughout this prospectus as the insider shares, for an aggregate purchase price of $25,000, or approximately $0.01 per share. In February 2015, we issued an aggregate of 345,000 ordinary shares to our initial shareholders by way of capitalisation under Cayman Islands law, resulting in our initial shareholders owning an aggregate of 2,070,000 insider shares. Such issuance was made in order to maintain our initial shareholders ownership at 20% of our issued and outstanding ordinary shares upon consummation of this offering (excluding ownership of the private units). The insider shares held by our initial shareholders include an aggregate of up to 270,000 shares subject to compulsory repurchase by us for an aggregate purchase price of $0.01 to the extent that the underwriters over-allotment option is not exercised in full or in part, so that our initial shareholders will collectively own 20.0% of our issued and outstanding shares after this offering (excluding the sale of the private units and assuming our initial shareholders do not purchase units in this offering). None of our initial shareholders has indicated any intention to purchase units in this offering. The insider shares are identical to the ordinary shares included in the units being sold in this offering. However, our initial shareholders have agreed, pursuant to written letter agreements with us, (A) to vote their insider shares (as well as any public shares acquired in or after this offering) in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated memorandum and articles of association with respect to our pre-business combination activities prior to the consummation of such a business combination unless we provide dissenting public shareholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any insider shares (as well as any other shares acquired in or after this offering) into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated memorandum and articles of association relating to shareholders rights or pre-business combination activity and (D) that the insider shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, our initial shareholders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property. In addition, our initial shareholders and their affiliates have committed, pursuant to written subscription agreements with us, to purchase from us an aggregate of 455 ,000 units, or private units, at $10.00 per unit (for a total purchase price of $ 4,550,000 ). These purchases will take place on a private placement basis simultaneously with the consummation of this offering. Our initial shareholders and their affiliates have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price AROWANA INC. (Exact name of registrant as specified in its constitutional documents) Cayman Islands 6770 N/A (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) Level 11, 153 Walker Street North Sydney, NSW 2060 Australia +612-8083-9600 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Table of Contents of $10.00 per unit an additional number of private units (up to a maximum of 54 ,000 private units) pro rata with the amount of the over-allotment option exercised so that at least $10.20 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The proceeds from the private placement of the private units will be added to the proceeds of this offering and placed in an account in the United States maintained by Continental Stock Transfer & Trust Company, as trustee. The foregoing purchases will only be made by the initial shareholders if they are able to do so in accordance with Regulation M and Sections 9(a)(2) and 10(b) and Rule 10b-5 of the Exchange Act. The private units are identical to the units sold in this offering except the warrants included in the private units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, because the warrants underlying the private units will be issued in a private transaction, the holders and their transferees will be allowed to exercise such warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Furthermore, the purchasers have agreed (A) to vote their private shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated memorandum and articles of association with respect to our pre-business combination activities prior to the consummation of such a business combination unless we provide dissenting public shareholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any private shares into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination (or sell any private shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated memorandum and articles of association relating to shareholders rights or pre-business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination. We have also agreed to sell to EarlyBirdCapital (and/or its designees), for $100, an option to purchase up to a total of 720 ,000 units exercisable at $10.00 per unit (or an aggregate exercise price of $ 7,200,000 ) commencing on the later of the consummation of a business combination and one year from the date of this prospectus. Since the option is not exercisable until at the earliest the consummation of a business combination, and the rights included in the units will entitle the holder to receive ordinary shares upon consummation of a business combination, the option will effectively represent the right to purchase 792 ,000 ordinary shares (which includes the 72 ,000 ordinary shares that will be issued for the rights included in the units) and 720 ,000 redeemable warrants to purchase 3 6 0,000 shares at $12.50 per full share. Our principal executive offices are located at Level 11, 153 Walker Street, North Sydney, NSW 2060, Australia and our telephone number is +612-8083-9800. Kevin T. Chin Executive Chairman of the Board and Chief Executive Officer Arowana Inc. Level 11, 153 Walker Street North Sydney, NSW 2060 Australia +612-8083-9600 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 20 of this prospectus. Securities offered 7,200,000 units, at $10.00 per unit, each unit consisting of one ordinary share, one right and one redeemable warrant Each right entitles the holder to receive one-tenth (1/10) of a share upon consummation of our initial business combination. Each redeemable warrant entitles the holder thereof to purchase one-half of one ordinary share at a price of $12.50 per full share, subject to adjustment as described in this prospectus. By offering rights as part of the units that entitle the holder to receive only one-tenth of a share and redeemable warrants that entitle the holder to purchase one-half of one share, as opposed to warrants included in units of similarly structured blank check offerings that entitle the holder to receive a full share, our management believes we have reduced the number of shares that we would be obligated to issue after the offering compared to other offerings similar to ours. Notwithstanding the foregoing, no additional consideration will be required to be paid to us by holders of the rights to receive the additional shares upon consummation of our business combination unlike the case with the redeemable warrants (which require the payment of additional consideration to receive the shares underlying such redeemable warrants). Furthermore, no fractional shares will be issued upon exercise of the redeemable warrants. Accordingly, unless you exercise at least two redeemable warrants, you will not be able to receive a share upon exercise of your redeemable warrants. Accordingly, this unit structure may cause our units to be worth less than if they simply included a warrant to purchase one full share. Listing of our securities and proposed symbols We anticipate the units, and the ordinary shares, rights and redeemable warrants once they begin separate trading, will be listed on Nasdaq under the symbols ARWAU, ARWA ARWAR and ARWAW, respectively. Each of the ordinary shares, rights and redeemable warrants may trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital determines that an earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the Copies to: David Alan Miller, Esq. Jeffrey M. Gallant, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 818-8800 (212) 818-8881 Facsimile Robert H. Cohen, Esq. McDermott Will & Emery LLP 340 Madison Avenue New York, New York 10173-1922 (212) 547-5400 (212) 547-5444 Facsimile Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company [ ] CALCULATION OF REGISTRATION FEE Title of each Class of Security being registered 1 This number includes an aggregate of up to 270,000 ordinary shares held by our initial shareholders that are subject to compulsory repurchase by us if the over-allotment option is not exercised by the underwriters in full. 2 Assumes the over-allotment option has not been exercised and an aggregate of 270,000 ordinary shares held by our initial shareholders have been compulsorily repurchased by us. 3 Assumes the over-allotment option has not been exercised. Proposed Maximum Aggregate Offering Price(1) Table of Contents Exercise price $12.50 per whole share. Except as described elsewhere in this prospectus, no warrants will be exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares. It is our current intention to have an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares in effect promptly following consummation of an initial business combination. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the warrants is not effective within 90 days following the consummation of our initial business combination, public warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the volume weighted average price of the ordinary shares for the 20 trading days ending on the day prior to the date of exercise. For example, if a holder held 300 warrants to purchase 150 shares and the fair market value on the date prior to exercise was $15.00, that holder would receive 25 shares without the payment of any additional cash consideration. If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis. Exercise period The warrants will become exercisable on the later of the completion of an initial business combination and 12 months from the date of this prospectus. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption. Redemption We may redeem the outstanding warrants (excluding the warrants underlying the private units but including any outstanding warrants issued upon exercise of the unit purchase option issued to EarlyBirdCapital), in whole and not in part, at a price of $0.01 per warrant: at any time while the warrants are exercisable, upon a minimum of 30 days prior written notice of redemption, Amount of Registration Fee Table of Contents if, and only if, the last sales price of our ordinary shares equals or exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption, and if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. If the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the ordinary shares may fall below the $17.50 trigger price as well as the $12.50 warrant exercise price after the redemption notice is issued. The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the volume weighted average price of the ordinary shares for the 20 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a cashless basis will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive share issuances. Rights: Number outstanding before this offering 0 rights Units, each consisting of one Ordinary Share, $.0001 par value, and one Right and one Redeemable Warrant(2) $ 82,800,000 $ 9,621.36 Ordinary Shares included as part of the Units(2) Rights included as part of the Units(2) Redeemable Warrants included as part of the Units(2) Shares underlying Rights included as part of Units(2) Representative s Unit Purchase Option $ 100 $ 0.01 Units underlying the Representative s Unit Purchase Option ( Representative s Units ) $ 7,200,000 $ 836.64 Ordinary Shares included as part of the Representative s Units Rights included as part of the Representative s Units Redeemable Warrants included as part of the Representative s Units Shares underlying Rights included as part of Representative s Units(2) Total $ 90 ,000,100 $ 10,458.01 (3) (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). (2) Includes (i) Units, (ii) Ordinary Shares, Rights and Redeemable Warrants underlying such Units and (iii) Ordinary Shares underlying the Rights included in such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. (3) $8,715.01 of t he filing fee was previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 4 Assumes the over-allotment option has not been exercised. Table of Contents Except as set forth below, the proceeds in the trust account will not be released until the earlier of the completion of an initial business combination within the required time period or our entry into liquidation if we have not completed a business combination in the required time period. Therefore, unless and until an initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business. Notwithstanding the foregoing, there can be released to us from the trust account (i) any interest earned on the funds in the trust account that we need to pay our income or other tax obligations and (ii) any remaining interest earned on the funds in the trust account that we need for our working capital requirements. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account (estimated to initially be $500,000); provided, however, that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust account and interest earned on the funds held in the trust account available to us are insufficient, our initial shareholders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 ordinary shares upon the closing of our business combination, as well as 50,000 warrants to purchase 25,000 shares). Our shareholders have approved the issuance of the units (and underlying securities) upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans would not be repaid. Limited payments to insiders Prior to the consummation of a business combination, there will be no fees, reimbursements or other cash payments paid to our initial shareholders, officers, directors or their affiliates prior to, or for any services Table of Contents they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction that it is) other than: repayment at the closing of this offering of a $ 171,306 non-interest bearing loan made by Arowana Partners Group Pty Ltd., an affiliate of our executive officers; payment of $10,000 per month to Arowana International Ltd. for office space and related services; and reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account available to us, such expenses would not be reimbursed by us unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made to any initial shareholder or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and approval. Shareholder approval of, or tender offer in connection with, initial business combination In connection with any proposed initial business combination, we will either (1) seek shareholder approval of such initial business combination at a meeting called for such purpose at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. If we determine to engage in a tender offer, such tender offer will be structured so that each public shareholder may tender any or all of his, her or its public shares rather than some pro Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 13 , 2015 $ 72 ,000,000 Arowana Inc. 7,200,000 Units Arowana Inc. is a Cayman Islands exempted company incorporated as a blank check company for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region of the world although we initially intend to focus on target businesses located in the Asia Pacific region (with a particular emphasis on South East Asia and Australia) operating in the energy (including solar and alternative energy) industry, or target businesses in such industry operating outside of those geographic locations which we believe would benefit from expanding their operations to such locations. This is an initial public offering of our securities. Each unit that we are offering has a price of $10.00 and consists of one ordinary share, one right and one redeemable warrant. Each right entitles the holder thereof to receive one-tenth (1/10) of an ordinary share on the consummation of an initial business combination. Each redeemable warrant entitles the holder thereof to purchase one-half of one ordinary share. We will not issue fractional shares. As a result, you must exercise warrants in multiples of two warrants, at a price of $12.50 per full share, subject to adjustment as described in this prospectus, to validly exercise your warrants. Each warrant will become exercisable on the later of the completion of an initial business combination and 12 months from the date of this prospectus, and will expire five years after the completion of an initial business combination, or earlier upon redemption. We have granted EarlyBirdCapital, Inc., the representative of the underwriters, a 45-day option to purchase up to 1,080,000 units (over and above the 7,200,000 units referred to above) solely to cover over-allotments, if any. Our initial shareholders have committed that they and their affiliates will purchase from us an aggregate of 455 ,000 units, or private units, at $10.00 per unit (for a total purchase price of $ 4,550,000 ). These purchases will take place on a private placement basis simultaneously with the consummation of this offering. Our initial shareholders have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit an additional number of private units (up to a maximum of 54 ,000 private units) pro rata with the amount of the over-allotment option exercised so that at least $10.20 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. All of the proceeds we receive from these purchases will be placed in the trust account described below. There is presently no public market for our units, ordinary shares, rights or redeemable warrants. We intend to apply to have our units listed on the Nasdaq Capital Market, or Nasdaq, under the symbol ARWAU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on Nasdaq. The ordinary shares, rights and redeemable warrants comprising the units will begin separate trading on the 90th day after the date of this prospectus unless EarlyBirdCapital determines that an earlier date is acceptable, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the ordinary shares, rights and redeemable warrants will be traded on Nasdaq under the symbols ARWA, ARWAR and ARWAW, respectively. We cannot assure you that our securities will continue to be listed on Nasdaq after this offering. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 and have elected to comply with certain reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 20 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. No offer or invitation to subscribe for units may be made to the public in the Cayman Islands. Public Offering Price Table of Contents rata portion of his, her or its shares. If enough shareholders tender their shares so that we are unable to satisfy any applicable closing condition set forth in the definitive agreement related to our initial business combination, or we are unable to maintain net tangible assets of at least $5,000,001, we will not consummate such initial business combination. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us based on a variety of factors such as the timing of the transaction, whether the terms of the transaction would otherwise require us to seek shareholder approval or whether we were deemed to be a foreign private issuer (which would require us to conduct a tender offer rather than seeking shareholder approval under SEC rules). Unlike other blank check companies which require shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended, or Exchange Act, which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination. We have determined not to consummate any business combination unless we have net tangible assets of at least $5,000,001 upon such consummation in order to avoid being subject to Rule 419 promulgated under the Securities Act. The $5,000,001 net tangible asset value would be determined once a target business is located and we can assess all of the assets and liabilities of the combined company (which would include the fee payable to EarlyBirdCapital in an amount equal to 4.0% of the total gross proceeds raised in the offering as described elsewhere in this prospectus, any out-of-pocket expenses incurred by our initial shareholders, officers, directors or their affiliates in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations that have not been repaid at that time, as well as any other liabilities of Underwriting Discount and Commissions(1) Table of Contents ours and the liabilities of the target business). However, if we seek to consummate a business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such business combination, the net tangible asset requirement may limit our ability to consummate such a business combination and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Our initial shareholders have agreed (i) to vote their insider shares, private shares and any public shares purchased in or after this offering in favor of any proposed business combination and (ii) not to convert any shares (including the insider shares) in connection with a shareholder vote to approve, or sell their shares to us in any tender offer in connection with, a proposed initial business combination. As a result, if we sought shareholder approval of a proposed transaction, we would need only 2,472,501 (or approximately 34. 3 %) of the 7,200,000 public shares sold in this offering to be voted in favor of the transaction in order to have such transaction approved (assuming the over-allotment option is not exercised and the initial shareholders do not purchase any units in this offering or units or shares in the after market). None of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase units in this offering or any units or ordinary shares in the open market or in private transactions. However, if a significant number of shareholders vote, or indicate an intention to vote, against a proposed business combination, our officers, directors, initial shareholders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. There is no limit on the amount of shares that may be purchased by the insiders. Any purchases would be made in compliance with federal securities laws, including the fact that all material information will be made public prior to such purchase, and no purchases would be made if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company s stock. Public shareholders who convert their public shares or sell their public shares to us in a tender offer will still receive one tenth of a share for each right held (provided that we will not issue any fractional shares to the extent that the number of rights held by a holder is not divisible by ten) and continue to have the right to exercise any Proceeds, Before Expenses, to us Table of Contents warrants they may hold if the business combination is consummated. If the business combination is not consummated, public shareholders will not be entitled to convert their public shares. Conversion rights In connection with any shareholder meeting called to approve a proposed initial business combination, each public shareholder will have the right, regardless of whether he is voting for or against such proposed business combination, to demand that we convert his public shares into a pro rata share of the trust account upon consummation of the business combination. Notwithstanding the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the ordinary shares sold in this offering. Accordingly, all shares purchased by a holder in excess of 20% of the shares sold in this offering will not be converted to cash. We believe this restriction will prevent an individual shareholder or group from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase its shares at a significant premium to the then current market price. By limiting a shareholder s ability to convert no more than 20% of the ordinary shares sold in this offering, we believe we have limited the ability of a small group of shareholders to unreasonably attempt to block a transaction which is favored by our other public shareholders. We may also require public shareholders wishing to exercise conversion rights, whether they are a record holder or hold their shares in street name, to either tender the certificates they are seeking to convert to our transfer agent at any time through the vote on the business combination or to deliver the shares they are seeking to convert to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. The foregoing is different from the procedures used by traditional blank check companies. In order to perfect conversion rights in connection with their business combinations, many traditional blank check companies would distribute proxy materials for the shareholders vote on an initial business combination, and a holder could simply vote against a proposed business Per unit $ 10.00 $ 0.30 $ 9.70 Total $ 72 ,000,000 $ 2,160,000 $ 69,840,000 Table of Contents combination and check a box on the proxy card indicating such holder was seeking to exercise its conversion rights. After the business combination was approved, the company would contact such shareholder to arrange for it to deliver its certificate to verify ownership. As a result, the shareholder then had an option window after the consummation of the business combination during which it could monitor the price of the company s stock in the market. If the price rose above the conversion price, it could sell its shares in the open market before actually delivering his shares to the company for cancellation. As a result, the conversion rights, to which shareholders were aware they needed to commit before the shareholder meeting, would become an option right surviving past the consummation of the business combination until the converting holder delivered its certificate. The requirement for physical or electronic delivery prior to the closing of the shareholder meeting ensures that a holder s election to convert is irrevocable once the business combination is completed. If we require public shareholders who wish to convert their ordinary shares to comply with specific delivery requirements for conversion described above and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public shareholders. Please see the risk factors titled In connection with any shareholder meeting called to approve a proposed initial business combination, we may require shareholders who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights and If we require public shareholders who wish to convert their ordinary shares to comply with the delivery requirements for conversion, such converting shareholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved. Once the shares are converted by the beneficial holder, and effectively repurchased by us under Cayman Islands law, the transfer agent will then update our Register of Shareholders to reflect all conversions. Automatic liquidation if no business combination As described above, if we fail to consummate a business combination within 18 months from the consummation of this offering, it will trigger our automatic winding up, dissolution and liquidation pursuant to the terms of our amended and restated memorandum and articles of association. As a result, this has the same effect as if we had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no (1) Please see the section titled Underwriting for further information relating to the underwriting arrangements agreed to between us and the underwriters in this offering. Upon consummation of the offering, $10.20 per unit sold to the public in this offering (whether or not the over-allotment option has been exercised in full or part) will be deposited into a United States-based account maintained by Continental Stock Transfer & Trust Company, acting as trustee. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct UBS Financial Services to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. Except as described in this prospectus, these funds will not be released to us until the earlier of the completion of our initial business combination and our liquidation upon our failure to consummate a business combination within the required time period. We are offering the units for sale on a firm-commitment basis. EarlyBirdCapital, Inc., acting as representative of the underwriters, expects to deliver our securities to investors in the offering on or about __________, 2015. Sole Book-Running Manager EarlyBirdCapital, Inc. I-Bankers Securities, Inc. _______________, 2015 Table of Contents vote would be required from our shareholders to commence such a voluntary winding up, dissolution and liquidation. The amount in the trust account (less $ 720 representing the aggregate nominal par value of the shares of our public shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is to be made, we are able to pay our debts as they fall due in the ordinary course of business. If we are forced to liquidate, we anticipate that we would distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation. Furthermore, while we will seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the trust account or that a court would conclude that such agreements are legally enforceable. The holders of the insider shares and private units will not participate in any liquidation distribution with respect to their insider shares or private shares. Kevin Chin has contractually agreed pursuant to a written agreement with us that, if we liquidate the trust account prior to the consummation of a business combination, he will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. Accordingly, if a claim brought by a target business or vendor did not exceed the amount of funds available to us outside of the trust account or Table of Contents AROWANA INC. TABLE OF CONTENTS Page Table of Contents available to be released to us from interest earned on the trust account balance, Mr. Chin would not have any obligation to indemnify such claims as they would be paid from such available funds. However, if a claim exceeded such amounts, the only exceptions to Mr. Chin s obligations to pay such claim would be if the party executed an agreement waiving any right, title, interest or claim of any kind they have in or to any monies held in the trust account. We cannot assure you that Mr. Chin will be able to satisfy these obligations if he is required to do so. Therefore, we cannot assure you that the per-share distribution from the trust account, if we liquidate the trust account because we have not completed a business combination within the required time period, will not be less than $10.20. We will pay the costs of liquidating the trust account from our remaining assets outside of the trust account. If such funds are insufficient, Mr. Chin has contractually agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has contractually agreed not to seek repayment for such expenses. Risks In making your decision on whether to invest in our securities, you should take into account the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison to offerings of blank check companies subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 20 of this prospectus. (1) Includes the $ 4,550,000 we will receive from the sale of the private units. The as adjusted information gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment of the estimated remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid. The as adjusted working capital and total assets amounts include the $ 73,440,000 to be held in the trust account, which, except for limited situations described in this prospectus, will be available to us only upon the consummation of a business combination within the time period described in this prospectus. If a business combination is not so consummated, the trust account, less amounts we are permitted to withdraw as described in this prospectus, will be distributed solely to our public shareholders (subject to our obligations under Cayman Islands law to provide for claims of creditors). We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination. Gross proceeds From offering $ 72 ,000,000 $ 82,800,000 From private placement 4,550,000 5,090,000 Total gross proceeds $ 76,550,000 $ 87,890,000 Offering expenses(1) Underwriting discount (3.0% of gross proceeds from offering) 2,160,000 (2) 2,484,000 (2) Legal fees and expenses 280,000 280,000 Nasdaq listing fee 50,000 50,000 Printing and engraving expenses 45,000 45,000 Accounting fees and expenses 35,000 35,000 FINRA filing fee 14,000 14,000 SEC registration fee 10,500 10,500 Miscellaneous expenses 15,500 15,500 Total offering expenses $ 2,610,000 $ 2,934,000 Net proceeds Held in trust $ 73,440,000 (3) $ 84,456,000 (3) Not held in trust 500,000 500,000 Total net proceeds $ 73,940,000 $ 84,956,000 Use of net proceeds not held in trust and amounts available from interest income earned on the trust account(4)(5) Legal, accounting and other third party expenses attendant to the search for target businesses and to the due diligence investigation, structuring and negotiation of a business combination $ 125,000 25 % Due diligence of prospective target businesses by officers, directors and initial shareholders 25,000 5 % Legal and accounting fees relating to SEC reporting obligations 75,000 15 % Payment of administrative fee to Arowana International ($10,000 per month for up to 18 months) 180,000 36 % Working capital to cover miscellaneous expenses, D&O insurance, general corporate purposes, liquidation obligations and reserves 95,000 Table of Contents RISK FACTORS An investment in our securities involves a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material risks related to the offering, together with the other information contained in this prospectus, before making a decision to invest in our units. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below. Risks Associated with Our Business We have no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. We have no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing through the public offering of our securities. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate any revenues until, at the earliest, after the consummation of a business combination. Our independent registered public accounting firm s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern. The report of our independent registered public accountants on our financial statements includes an explanatory paragraph stating that our ability to continue as a going concern is dependent on the consummation of this offering. The financial statements do not include any adjustments that might result from our inability to consummate this offering or our ability to continue as a going concern. Moreover, there is no assurance that we will consummate our initial business combination. These factors raise substantial doubt about our ability to continue as a going concern. If we are unable to consummate a business combination, our public shareholders may be forced to wait more than 18 months before receiving liquidation distributions. We have 18 months from the consummation of this offering in which to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the expiration of this full time period will public shareholders be entitled to liquidation distributions if we are unable to complete a business combination. Accordingly, investors funds may be unavailable to them until after such date and to liquidate your investment, you may be forced to sell your securities potentially at a loss. The requirement that we complete an initial business combination within 18 months from the consummation of this offering may give potential target businesses leverage over us in negotiating a business transaction. We have 18 months from the consummation of this offering to complete an initial business combination. Any potential target business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time limits referenced above. You will not be entitled to protections normally afforded to investors of blank check companies. Since the net proceeds of this offering are intended to be used to complete a business combination with a target business that has not been identified, we may be deemed to be a blank check company under the United States securities laws. However, since we will have net tangible assets in excess of $5,000,000 upon Table of Contents the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules which would, for example, completely restrict the transferability of our securities and restrict the use of interest earned on the funds held in the trust account. Because we are not subject to Rule 419, our units will be immediately tradable and we will be entitled to withdraw amounts from the funds held in the trust account prior to the completion of a business combination. We may issue ordinary or preferred shares or debt securities to complete a business combination, which would reduce the equity interest of our shareholders and likely cause a change in control of our ownership. Our memorandum and articles of association currently authorize the issuance of up to 100,000,000 ordinary shares, par value $.0001 per share, and 1,000,000 preferred shares, par value $.0001 per share. Immediately after this offering and the purchase of the private units (assuming no exercise of the underwriters over-allotment option), there will be 84,800,000 authorized but unissued ordinary shares available for issuance (after appropriate reservation for the issuance of the shares underlying the public and private rights, upon full exercise of our outstanding warrants and the issuance of the securities underlying the underwriters purchase option). Although we have no commitment as of the date of this offering, we may issue a substantial number of additional ordinary shares or preferred shares, or a combination of ordinary shares and preferred shares, to complete a business combination. The issuance of additional ordinary shares or preferred shares: may significantly reduce the equity interest of investors in this offering; may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares; may cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and may adversely affect prevailing market prices for our ordinary shares. Similarly, if we issue debt securities, it could result in: default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations; acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding. The funds held in the trust account may not earn significant interest and, as a result, we may be limited to the funds held outside of the trust account to fund our search for target businesses, to pay our tax obligations and to complete our initial business combination. Of the net proceeds of this offering, approximately $500,000 will be available to us initially outside the trust account to fund our working capital requirements. We will depend on sufficient interest being earned on the proceeds held in the trust account to provide us with additional working capital we will need to identify one or more target businesses and to complete our initial business combination, as well as to pay any tax obligations that we may owe. Interest rates on permissible investments for us have been less than 1% over the last several years. Accordingly, if we do not earn a sufficient amount of interest on the funds held in the trust account and use all of the funds held outside of the trust account, we may not have sufficient funds available Table of Contents with which to structure, negotiate or close an initial business combination. In such event, we may be forced to cease searching for a target business. We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination. Since we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering prove to be insufficient, either because of the size of the business combination, the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash (or purchase in any tender offer) a significant number of shares from dissenting shareholders, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after a business combination. If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by shareholders may be less than $10.20. Our placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the monies held in the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public shareholders. If we liquidate the trust account before the completion of a business combination, Kevin Chin has agreed that he will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. However, he may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be less than $10.20, plus interest, due to such claims. Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise enter compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public shareholders at least $10.20 per share. Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them. Our amended and restated memorandum and articles of association provide that we will continue in existence only until 18 months from the consummation of this offering if a business combination has not been consummated by such time. If we are unable to complete an initial business combination during such time period, it will trigger our automatic winding up, dissolution and liquidation. As such, our shareholders could potentially be liable for any claims to the extent of distributions received by them pursuant to such process and any liability of our shareholders may extend beyond the date of such distribution. Accordingly, we cannot assure you that third parties, or us under the control of an official liquidator, will not seek to recover from our shareholders amounts owed to them by us. Table of Contents If we are unable to consummate a transaction within the required time period, upon notice from us, the trustee of the trust account will distribute the amount in our trust account to our public shareholders. Concurrently, we shall pay, or reserve for payment, from funds not held in trust, our liabilities and obligations, although we cannot assure you that there will be sufficient funds for such purpose. If there are insufficient funds held outside the trust account for such purpose, Kevin Chin has agreed that he will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to pay a fine of US$15,000 and subject to imprisonment for five years in the Cayman Islands. Unlike other blank check companies, our units are comprised of ordinary shares, redeemable warrants to purchase one-half of one ordinary share and rights to receive one-tenth of an ordinary share, rather than units comprised of ordinary shares and warrants to purchase one ordinary share. Unlike other blank check companies that sell units comprised of shares and warrants to purchase one share in their initial public offerings, we are selling units comprised of ordinary shares, redeemable warrants to purchase one-half of one ordinary share and rights entitling the holder to receive one-tenth of a share upon consummation of our initial business combination. Neither the rights nor the redeemable warrants will have any voting rights and each will expire and be worthless if we do not consummate an initial business combination. Furthermore, no fractional shares will be issued upon exercise of the redeemable warrants. As a result, unless you acquire at least two redeemable warrants, you will not be able to receive a share upon exercise of your redeemable warrants. Accordingly, investors in this offering will not be issued as many shares as part of their investment as they may have in other blank check company offerings, which may have the effect of limiting the potential upside value of your investment in our company. Holders of rights and warrants will not have redemption rights if we are unable to complete an initial business combination within the required time period. If we are unable to complete an initial business combination within the required time period and we redeem the funds held in the trust account, the rights and warrants will expire and holders will not receive any of such proceeds with respect to such rights and warrants. We have no obligation to net cash settle the rights or warrants. In no event will we have any obligation to net cash settle the rights or warrants. Furthermore, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Accordingly, the rights and warrants may expire worthless. We may amend the terms of the rights in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding rights. Our rights will be issued in registered form under a rights agreement between Continental Stock Transfer & Trust Company, as rights agent, and us. The rights agreement provides that the terms of the rights may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The Table of Contents rights agreement requires the approval by the holders of a majority of the then outstanding rights (including the rights underlying the private units) in order to make any change that adversely affects the interests of the registered holders. If we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the redeemable warrants, public holders will only be able to exercise such redeemable warrants on a cashless basis which would result in a fewer number of shares being issued to the holder had such holder exercised the redeemable warrants for cash. Except as set forth below, if we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants at the time that holders wish to exercise such warrants, they will only be able to exercise them on a cashless basis provided that an exemption from registration is available. As a result, the number of ordinary shares that a holder will receive upon exercise of its warrants will be fewer than it would have been had such holder exercised its warrant for cash. Further, if an exemption from registration is not available, holders would not be able to exercise their warrants on a cashless basis and would only be able to exercise their warrants for cash if a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential upside of the holder s investment in our company may be reduced or the warrants may expire worthless. Notwithstanding the foregoing, the warrants underlying the private units may be exercisable for unregistered ordinary shares for cash even if the prospectus relating to the ordinary shares issuable upon exercise of the warrants is not current and effective. An investor will only be able to exercise a warrant if the issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants. No warrants will be exercisable for cash and we will not be obligated to issue ordinary shares unless the ordinary shares issuable upon such exercise have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed on a national securities exchange, which would provide an exemption from registration in every state. However, we cannot assure you of this fact. If the ordinary shares issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold. Our management s ability to require holders of our redeemable warrants to exercise such redeemable warrants on a cashless basis will cause holders to receive fewer ordinary shares upon their exercise of the redeemable warrants than they would have received had they been able to exercise their redeemable warrants for cash. If we call our warrants for redemption after the redemption criteria described elsewhere in this prospectus have been satisfied, our management will have the option to require any holder that wishes to exercise his warrants (including any warrants held by our initial shareholders or their permitted transferees) to do so on a cashless basis. If our management chooses to require holders to exercise their warrants on a cashless basis, the number of ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrants for cash. This will have the effect of reducing the potential upside of the holder s investment in our company. We may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants. Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective Table of Contents provision. The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including the warrants underlying the private units) in order to make any change that adversely affects the interests of the registered holders. Since we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate. While we intend to focus our search for target businesses on specific locations and industries as described in this prospectus, we are not limited to those locations or industries and may consummate a business combination with a company in any location or industry we choose. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business combination with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business. The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with. Pursuant to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number of companies with which we may complete a business combination. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust account. If Nasdaq delists our securities from trading on its exchange after this offering, we would not be required to satisfy the fair market value requirement described above and could complete a business combination with a target business having a fair market value substantially below 80% of the balance in the trust account. Our ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. Our ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following a business combination, it is likely that some or all of the management of the target business will Table of Contents securities markets and small capitalization and blank check companies in general, and the trading pattern of, and demand for, our securities in particular). In no event will EarlyBirdCapital allow separate trading of the ordinary shares, rights and redeemable warrants until we file an audited balance sheet reflecting our receipt of the gross proceeds of this offering. Once the ordinary shares, rights and redeemable warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into separately trading ordinary shares, rights and redeemable warrants. We will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of this offering, which is anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise of the over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information indicating if EarlyBirdCapital has allowed separate trading of the ordinary shares, rights and redeemable warrants prior to the 90th day after the date of this prospectus. Ordinary shares: Number outstanding before this offering 2,070,000 shares1 Number to be outstanding after this offering and sale of private units 9, 455,000 shares2 Redeemable Warrants: Number outstanding before this offering 0 warrants Number to be outstanding after this offering and sale of private units 7,655,000 warrants 3 Exercisability Each warrant is exercisable for one-half of one ordinary share. Because the warrants may only be exercised for whole numbers of shares, only an even number of warrants may be exercised at any given time. Table of Contents remain in place or be hired after consummation of the business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations. Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire. While we intend to focus our search for target businesses within the locations and industries as described in this prospectus, we may consummate a business combination with a target business in any geographic location or industry we choose. We cannot assure you that our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding a business combination. If we become aware of a potential business combination outside of the geographic location or industry where our officers and directors have the most experience, our management may retain consultants and advisors with experience in such industries to assist in the evaluation of such business combination and in our determination of whether or not to proceed with such a business combination. However, our management is not required to engage consultants or advisors in any situation. If they do not engage any consultants or advisors to assist them in the evaluation of a particular target business or business combination, our management may not properly analyze the risks attendant with such target business or business combination. Even if our management does engage consultants or advisors to assist in the evaluation of a particular target business or business combination, we cannot assure you that such consultants or advisors will properly analyze the risks attendant with such target business or business combination. As a result, we may enter into a business combination that is not in our shareholders best interests. Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous. Our key personnel will be able to remain with the company after the consummation of a business combination only if they are able to negotiate employment or consulting agreements or other arrangements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. Our officers and directors will allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate our initial business combination. Our officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers and directors other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. We cannot assure you these conflicts will be resolved in our favor. Table of Contents Our officers and directors have pre-existing fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Our officers and directors have pre-existing fiduciary and contractual obligations to other companies, including Arowana International and other companies that are engaged in business activities similar to those intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial business combination. As a result, a potential target business may be presented by our management team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such target business. For a more detailed description of the pre-existing fiduciary and contractual obligations of our management team, and the potential conflicts of interest that such obligations may present, see the section titled Management Conflicts of Interest. Our officers and directors personal and financial interests may influence their motivation in determining whether a particular target business is appropriate for a business combination. Our officers and directors have waived their right to convert (or sell to us in any tender offer) their insider shares, private shares or any other ordinary shares acquired in this offering or thereafter (although none of these insiders have indicated any intention to purchase units in this offering or thereafter), or to receive distributions with respect to their insider shares or private shares upon our liquidation if we are unable to consummate our initial business combination. Accordingly, these securities will be worthless if we do not consummate our initial business combination. The rights and warrants underlying the private units and any other rights or warrants they acquire will also be worthless if we do not consummate an initial business combination. In addition, our officers and directors may loan funds to us after this offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors and officers discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we might have a claim against such individuals. However, we might not ultimately be successful in any claim we may make against them for such reason. Nasdaq may delist our securities from trading on its exchange which could limit investors ability to make transactions in our securities and subject us to additional trading restrictions. We anticipate that our securities will be listed on Nasdaq, a national securities exchange, upon consummation of this offering. Although, after giving effect to this offering, we meet on a pro forma basis the minimum initial listing standards of Nasdaq, which generally only requires that we meet certain requirements relating to shareholders equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities will continue to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business combination, it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements at that time. If Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our ordinary shares are penny stock which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares; Table of Contents a limited amount of news and analyst coverage for our company; and a decreased ability to issue additional securities or obtain additional financing in the future. We may only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services. We may only be able to complete one business combination with the proceeds of this offering. By consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be: solely dependent upon the performance of a single business, or dependent upon the development or market acceptance of a single or limited number of products, processes or services. This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination. Alternatively, if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations. The ability of our public shareholders to exercise their conversion rights or sell their public shares to us in a tender offer may not allow us to effectuate the most desirable business combination or optimize our capital structure. If our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public shareholders may exercise conversion rights or seek to sell their public shares to us in a tender offer, we may either need to reserve part of the trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business transaction. In the event that the business combination involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us. We may be unable to consummate a business combination if a target business requires that we have cash in excess of the minimum amount we are required to have at closing and public shareholders may have to remain shareholders of our company and wait until our liquidation to receive a pro rata share of the trust account or attempt to sell their shares in the open market. A potential target may make it a closing condition to our business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing. If the number of our shareholders electing to exercise their conversion rights or sell their shares to us in a tender offer has the effect of reducing the amount of money available to us to consummate a business combination below such minimum amount Table of Contents required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case, public shareholders may have to remain shareholders of our company and wait the full 18 months in order to be able to receive a pro rata portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust account for their shares. In connection with any meeting held to approve an initial business combination, we will offer each public shareholder the option to vote in favor of a proposed business combination and still seek conversion of his, her or its public shares, which may make it more likely that we will consummate a business combination. In connection with any meeting held to approve an initial business combination, we will offer each public shareholder the right to have his, her or its public shares converted to cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such shareholder votes for or against such proposed business combination. Furthermore, we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares voted are voted in favor of the business combination. Accordingly, public shareholders owning shares sold in this offering may exercise their conversion rights and we could still consummate a proposed business combination so long as a majority of shares voted at the meeting are voted in favor of the proposed business combination. This is different than other similarly structured blank check companies where shareholders are offered the right to convert their shares only when they vote against a proposed business combination. This is also different than other similarly structured blank check companies where there is a specific number of shares sold in the offering which must not exercise conversion rights for the company to complete a business combination. The lack of such a threshold and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination. In connection with any meeting held to approve an initial business combination, public shareholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a group, will be restricted from seeking conversion rights with respect to more than 20% of the shares sold in this offering. In connection with any meeting held to approve an initial business combination, we will offer each public shareholder the right to have his, her, or its public shares converted into cash. Notwithstanding the foregoing, a public shareholder, together with any of its affiliates or any other person with whom it is acting in concert or as a group will be restricted from seeking conversion rights with respect to more than 20% of the shares sold in this offering. Accordingly, if you hold more than 20% of the shares sold in this offering and a proposed business combination is approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such shares over 20% following the business combination or sell them in the open market. We cannot assure you that the value of such shares will appreciate over time following a business combination or that the market price of our ordinary shares will exceed the per-share conversion price. In connection with any shareholder meeting called to approve a proposed initial business combination, we may require shareholders who wish to convert their public shares to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights. In connection with any shareholder meeting called to approve a proposed initial business combination, each public shareholder will have the right, regardless of whether it is voting for or against such proposed business combination, to demand that we convert its public shares into a share of the trust account. Such conversion will be effectuated under Cayman Islands law as a repurchase of the shares, with the repurchase price to be paid being the applicable pro rata portion of the monies held in the trust account. We may require public shareholders who wish to convert their public shares in connection with a proposed business Table of Contents Number to be outstanding after this offering and sale of private units 7,655,000 rights 4 Terms of the Rights Each holder of a right will receive one-tenth (1/10) of a share upon consummation of our initial business combination. In the event we will not be the surviving company upon completion of our initial business combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the 1/10 of a share underlying each right (without paying any additional consideration) upon consummation of the business combination. More specifically, each holder will be required to indicate his, her or its election to convert the rights into their underlying shares as well as to return the original rights certificates to us. There is no length of time within which an investor must affirmatively elect to convert the rights. However, until a holder affirmatively elects to convert its rights, the right certificates held by such holder will not represent the ordinary shares they are convertible for but instead will simply represent the right to receive such ordinary shares. If we are unable to complete an initial business combination within the required time period and we redeem the public shares for the funds held in the trust account, holders of rights will not receive any of such funds for their rights and the rights will expire worthless. Because we will only issue a whole number of shares, you will not receive any fractional shares to the extent the number of rights held by you upon consummation of our initial business combination is not divisible by ten. Offering proceeds to be held in trust $ 68,890,000 of the net proceeds of this offering (or $ 79,366,000 if the over-allotment option is exercised in full), plus the $ 4,550,000 we will receive from the sale of the private units (or $ 5,090,000 if the over-allotment option is exercised in full), for an aggregate of $ 73,440,000 (or an aggregate of $ 84,456,000 if the over-allotment option is exercised in full), or $10.20 per unit sold to the public in this offering (regardless of whether or not the over-allotment option is exercised in full or part) will be placed in a trust account in the United States, maintained by Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this prospectus. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct UBS Financial Services to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. The remaining $500,000 of net proceeds of this offering will not be held in the trust account. Table of Contents combination to either tender their certificates to our transfer agent at any time prior to the vote taken at the shareholder meeting relating to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Company s ( DTC ) DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option. In order to obtain a physical share certificate, a shareholder s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate. It is also our understanding that it takes a short time to deliver shares through the DWAC System. However, this too may not be the case. Accordingly, if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares. Investors may not have sufficient time to comply with the delivery requirements for conversion. Pursuant to our memorandum and articles of association, we are required to give a minimum of only ten days notice for each general meeting. As a result, if we require public shareholders who wish to convert their public shares into the right to receive a pro rata portion of the funds in the trust account to comply with specific delivery requirements for conversion, holders may not have sufficient time to receive the notice and deliver their shares for conversion. Accordingly, investors may be forced to retain our securities when they otherwise would not want to. If we require public shareholders who wish to convert their public shares to comply with the delivery requirements for conversion, such converting shareholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved. If we require public shareholders who wish to convert their public shares to comply with specific delivery requirements for conversion described above and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public shareholders. Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market price for our shares may decline during this time and you may not be able to sell your securities when you wish to, even while other shareholders that did not seek conversion may be able to sell their securities. Because of our limited resources and structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination. We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, seeking shareholder approval of a business combination may delay or prevent the consummation of a transaction, a risk a target business may not be willing to accept. Additionally, our outstanding warrants and unit purchase options, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating a business combination. Our initial shareholders control a substantial interest in us and thus may influence certain actions requiring a shareholder vote. Upon consummation of our offering, our initial shareholders will collectively own approximately 23.8 % of our issued and outstanding ordinary shares (assuming they do not purchase any units in this offering). None of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase units in Table of Contents this offering or any units or ordinary shares from persons in the open market or in private transactions. However, our officers, directors, initial shareholders or their affiliates could determine in the future to make such purchases in the open market or in private transactions, to the extent permitted by law, in order to assist us in consummating our initial business combination. In connection with any vote for a proposed business combination, all of our initial shareholders, as well as all of our officers and directors, have agreed to vote the ordinary shares owned by them immediately before this offering as well as any ordinary shares acquired in this offering or in the aftermarket in favor of such proposed business combination. Our board of directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no requirement under the Companies Law for us to hold annual or general meetings to elect directors. Accordingly, shareholders would not have the right to such a meeting or election of directors, unless the holders of not less than 10% in par value capital of our company request such a meeting. As a result, it is unlikely that there will be an annual meeting of shareholders to elect new directors prior to the consummation of a business combination, in which case all of the current directors will continue in office until at least the consummation of the business combination. Accordingly, you may not be able to exercise your voting rights for up to 18 months. If there is an annual meeting, as a consequence of our staggered board of directors, only a minority of the board of directors will be considered for election and our initial shareholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial shareholders will continue to exert control at least until the consummation of a business combination. Our initial shareholders paid an aggregate of $25,000, or approximately $0.01 per share, for the insider shares and our initial shareholders will pay $10.00 per unit for the private units, resulting in an aggregate average price of approximately $ 1.99 per share (assuming the issuance of 0.1 of a share for each right outstanding, no exercise of the warrants, the over-allotment option has not been exercised and an aggregate of 270,000 insider shares have been compulsorily repurchased as a result thereof), and, accordingly, you will experience immediate and substantial dilution from the purchase of our ordinary shares. The difference between the public offering price per share and the pro forma net tangible book value per share after this offering constitutes the dilution to the investors in this offering. For the purposes of the dilution calculation, we have assumed the issuance of 0.1 of a share for each right outstanding, as such issuance will occur upon an initial business combination without the payment of additional consideration, but have assumed no exercise of the warrants. Accordingly, for the purposes of the dilution calculation, the number of shares included in the units offered hereby will be deemed to be 7,920,000 , the price per share in this offering will be deemed to be approximately $9.09 and the number of shares included in the private units will be deemed to be 500,500 . Our initial shareholders acquired their insider shares at a nominal price, significantly contributing to this dilution. Upon consummation of this offering, you and the other new investors will incur an immediate and substantial dilution of approximately 84.2 % or $ 7.65 per share (the difference between the pro forma net tangible book value per share of $1. 44 , and the initial offering price of $9.09 per share as adjusted for the ordinary shares underlying the rights included in the units). This is because investors in this offering will be contributing approximately 94.0 % of the total amount paid to us for our outstanding securities after this offering but will only own approximately 77. 5 % of our outstanding securities. Accordingly, the per-share purchase price you will be paying substantially exceeds our per share net tangible book value. Our outstanding rights, warrants and unit purchase options may have an adverse effect on the market price of our ordinary shares and make it more difficult to effect a business combination. We will be issuing rights that will result in the issuance of an additional 720 ,000 ordinary shares as part of the units offered by this prospectus, redeemable warrants to purchase 3, 6 00,000 ordinary shares as part of the units offered by this prospectus, rights underlying the private units that will result in the issuance of an additional 45 ,500 ordinary shares and warrants underlying the private units to purchase 227 ,500 ordinary shares. We will also issue unit purchase options to purchase 720 ,000 units to the representative of the underwriters which, if exercised, will result in the issuance of 792 ,000 ordinary shares (including 72 ,000 Table of Contents shares upon conversion of the rights included therein) and 720 ,000 redeemable warrants (which could result in the issuance of an additional 3 6 0,000 shares). The potential for the issuance of a substantial number of additional shares upon exercise of these warrants or conversion of the rights could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised or converted, will increase the number of issued and outstanding ordinary shares and reduce the value of the shares issued to complete the business combination. Accordingly, our rights, warrants and unit purchase options may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the rights, warrants and unit purchase options could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these rights, warrants and options are converted and exercised, you may experience dilution to your holdings. We may redeem the warrants at a time that is not beneficial to public investors. Except with respect to the warrants underlying the private units, we may call the warrants for redemption at any time after the redemption criteria described elsewhere in this prospectus have been satisfied. If we call the warrants for redemption, public shareholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do so. If our shareholders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of our ordinary shares and the existence of these rights may make it more difficult to effect a business combination. Our initial shareholders are entitled to make a demand that we register the resale of their insider shares at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally, the purchasers of the private units and our initial shareholders, officers and directors are entitled to demand that we register the resale of the private units (and the underlying ordinary shares, rights and warrants) and any securities our initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to us at any time after we consummate a business combination. The presence of these additional securities trading in the public market may have an adverse effect on the market price of our securities. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business, as the shareholders of the target business may be discouraged from entering into a business combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on the trading market for our ordinary shares. EarlyBirdCapital may have a conflict of interest in rendering services to us in connection with our initial business combination. We have engaged EarlyBirdCapital to assist us in connection with our initial business combination. We will pay EarlyBirdCapital a cash fee for such services upon the consummation of our initial business combination in an amount equal to 4.0% of the total gross proceeds raised in the offering. This financial interest may result in EarlyBirdCapital having a conflict of interest when providing the services to us in connection with an initial business combination. If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination. A company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in trust may be invested by Table of Contents the trustee only in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States treasuries. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940. If we are nevertheless deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult for us to complete a business combination, including: restrictions on the nature of our investments; and restrictions on the issuance of securities. In addition, we may have imposed upon us certain burdensome requirements, including: registration as an investment company; adoption of a specific form of corporate structure; and reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations. Compliance with these additional regulatory burdens would require additional expense for which we have not allotted. We may not seek an opinion from an unaffiliated third party as to the fair market value of the target business we acquire. We are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance of the trust account unless our board of directors cannot make such determination on its own. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, whose collective experience in business evaluations for blank check companies like ours is not significant. Furthermore, our directors may have a conflict of interest in analyzing the transaction due to their personal and financial interests. We may acquire a target business that is affiliated with our officers, directors, initial shareholders or their affiliates. While we do not currently intend to pursue an initial business combination with a company that is affiliated with our officers, directors, initial shareholders or their affiliates, we are not prohibited from pursuing such a transaction, nor are we prohibited from consummating a business combination where any of our officers, directors, initial shareholders or their affiliates acquire a minority interest in the target business alongside our acquisition, provided in each case we obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our shareholders from a financial point of view. These affiliations could cause our officers or directors to have a conflict of interest in analyzing such transactions due to their personal and financial interests. The determination of the offering price of our units is more arbitrary than the pricing of securities for an operating company in a particular industry. Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the rights and redeemable warrants were negotiated between us and the representative of the underwriters. Factors considered in determining the prices and terms of the units, including the ordinary shares, rights and redeemable warrants underlying the units, include: the history and prospects of companies whose principal business is the acquisition of other companies; prior offerings of those companies; Table of Contents our prospects for acquiring an operating business at attractive values; our capital structure; the per share amount of net proceeds being placed in the trust account; an assessment of our management and their experience in identifying operating companies; and general conditions of the securities markets at the time of the offering. However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since we have no historical operations or financial results to compare them to. Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited. We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers. Our corporate affairs will be governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) or the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States. We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognise and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company. Table of Contents We intend to effect a business combination with a company located outside of the United States and if we do, we would be subject to a variety of additional risks that may negatively impact our business operations and financial results. If we consummate a business combination with a target business located outside of the United States, we would be subject to any special considerations or risks associated with companies operating in the target business governing jurisdiction, including any of the following: rules and regulations or currency redemption or corporate withholding taxes on individuals; tariffs and trade barriers; regulations related to customs and import/export matters; longer payment cycles; inflation; economic policies and market conditions; unexpected changes in regulatory requirements; challenges in managing and staffing international operations; tax issues, such as tax law changes and variations in tax laws as compared to the United States; currency fluctuations; challenges in collecting accounts receivable; cultural and language differences; protection of intellectual property; and employment regulations. We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer. If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights. If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. Because we must furnish our shareholders with financial statements of the target business prepared in accordance with U.S. GAAP or IFRS as issued by the IASB or reconciled to U.S. GAAP, we may not be able to complete an initial business combination with some prospective target businesses. The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required to be prepared in accordance with, or be Table of Contents reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. The financial statements may also be required to be prepared in accordance with U.S. GAAP for the Form 8-K announcing the closing of an initial business combination, which would need to be filed within four business days thereafter. These financial statement requirements may limit the pool of potential target businesses we may acquire. Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide reliable financial reports could harm our business. A target business may also not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities. We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors. We are an emerging growth company, as defined in the JOBS Act. We will remain an emerging growth company for up to five years. However, if our non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find our shares less attractive because we may rely on these provisions. If some investors find our shares less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. Table of Contents An investment in this offering may involve adverse U.S. federal income tax consequences. An investment in this offering may involve adverse U.S. federal income tax consequences. For instance, there is a risk that an investor s entitlement to receive payments in excess of the investor s initial tax basis in our ordinary shares upon exercise of the investor s conversion right or upon our liquidation of the trust account will result in constructive income to the investor, which could affect the timing and character of income recognition and result in U.S. federal income tax liability to the investor without the investor s receipt of cash from us. Furthermore, because there are no authorities that directly address instruments similar to the units we are issuing in this offering, the allocation an investor makes with respect to the purchase price of the unit between the ordinary shares, rights and redeemable warrants included in the units could be challenged by the IRS or the courts. See the section titled Taxation for a summary of the material United States Federal income tax consequences of an investment in our securities. Prospective investors are urged to consult their own tax advisors with respect to these and other tax consequences when purchasing, holding or disposing of our securities. We have also not sought a ruling from the Internal Revenue Service, or IRS, as to any U.S. federal income tax consequences described in this prospectus. The IRS may disagree with the descriptions of U.S. federal income tax consequences described herein, and its determination may be upheld by a court. Any such determination could subject an investor or our company to adverse U.S. federal income tax consequences that would be different than those described in this prospectus. Accordingly, each prospective investor is urged to consult a tax advisor with respect to the specific tax consequences of the acquisition, ownership and disposition of our securities, including the applicability and effect of state, local, or foreign tax laws, as well as U.S. federal tax laws. We may qualify as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors. In general, we will be treated as a passive foreign investment company ( PFIC ) for any taxable year in which either (1) at least 75% of our gross income (looking through certain 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50% of the average value of our assets (looking through certain 25% or more-owned corporate subsidiaries) is attributable to assets that produce, or are held for the production of, passive income. Passive income generally includes, without limitation, dividends, interest, rents, royalties, and gains from the disposition of passive assets. If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of our units, ordinary shares or warrants, the U.S. holder may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. Our actual PFIC status for our current taxable year may depend on whether we qualify for the PFIC start-up exception (see the section of this prospectus captioned Taxation United States Federal Income Taxation Passive Foreign Investment Company Rules ). Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year (or after the end of the start-up period, if later). Accordingly, there can be no assurance with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules. Target businesses in the energy (including solar and alternative energy) industry are subject to special considerations and risks. Business combinations with companies with operations in the energy (including solar and alternative energy) industry entail special considerations and risks. If we are successful in completing a business combination with a target business with operations in the energy industry, we will be subject to, and possibly adversely affected by, the following risks: increased competition; adherence to existing or newly promulgated government regulations; fluctuations in energy prices; Table of Contents creation of new and alternative energy sources protection of intellectual property; litigation, including product liability and intellectual property infringement litigation; and changes in technology. Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements contained in this prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believe, continue, could, estimate, expect, intends, may, might, plan, possible, potential, predicts, project, should, would and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about our: ability to identify or complete an initial business combination; limited operating history; success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; potential ability to obtain additional financing to complete a business combination; pool of prospective target businesses; the ability of our officers and directors to generate potential investment opportunities; potential change in control if we acquire one or more target businesses for shares; our public securities potential liquidity and trading; regulatory or operational risks associated with acquiring a target business; use of proceeds not held in the trust account or available to us from interest income on the trust account balance; financial performance following this offering; or listing or delisting of our securities from Nasdaq or the ability to have our securities listed on Nasdaq following our initial business combination. The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading Risk Factors. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Table of Contents SUMMARY FINANCIAL DATA The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data are presented. February 28, 2015 (1) $130,465 of the offering expenses, including the SEC registration fee, the FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees, have been paid from the funds we borrowed from Arowana Partners Group Pty Ltd. described below. These funds will be repaid out of the proceeds of this offering available to us. If we determine not to proceed with the offering, such amounts would not be repaid. (2) No discounts or commissions will be paid with respect to the purchase of the private units. Actual Table of Contents (3) The funds held in the trust account will be used to acquire a target business, to pay holders who wish to convert or sell their shares for a portion of the funds held in the trust account and potentially to pay our expenses relating thereto, including a fee payable to EarlyBirdCapital equal to 4.0% of the gross proceeds raised in this offering upon consummation of our initial business combination for assisting us in connection with our initial business combination, as described under the section titled Underwriting Business Combination Marketing Agreement. Our expenses relating to the acquisition of a target business would either come from the funds held in the trust account or additional funds otherwise available to us outside of the trust account, including cash held by the target business. Any remaining funds will be disbursed to the combined company and be used as working capital to finance the operations of the target business. (4) The amount of proceeds not held in trust will remain constant at $500,000 even if the over-allotment is exercised. In addition, interest income earned on the amounts held in the trust account (after payment of taxes owed on such interest income) will be available to us to pay for our working capital requirements. We estimate the interest earned on the trust account will be approximately $45,900 over an 18-month period assuming an interest rate of approximately 0.05% per year. (5) These are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of that business combination. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would be deducted from our excess working capital. Our initial shareholders and their affiliates have committed to purchase an aggregate of 455 ,000 private units at a price of $10.00 per unit ($ 4,550,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our initial shareholders and their affiliates have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit an additional number of private units (up to a maximum of 54 ,000 private units) pro rata with the amount of the over-allotment option exercised so that at least $10.20 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. All of the proceeds we receive from these purchases will be placed in the trust account described below. $ 73,440,000 , or $ 84,456,000 if the over-allotment option is exercised in full, of net proceeds of this offering and the sale of the private units will be placed in an account in the United States, maintained by Continental Stock Transfer & Trust Company, New York, New York, as trustee. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct UBS Financial Services to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. The funds held in trust will be invested only in United States government treasury bills, bonds or notes having a maturity of 180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States government treasuries, so that we are not deemed to be an investment company under the Investment Company Act. Except with respect to (i) interest earned on the funds held in the trust account that may be released to us to pay our income or other tax obligations and (ii) any remaining interest earned on the funds held in the trust account that may be released to us for our working capital requirements, the proceeds will not be released from the trust account until the earlier of the completion of a business combination or our liquidation. The proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we complete a business combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business. Commencing on the date of this prospectus, we will pay Arowana International, an affiliate of our executive officers, a monthly fee of $10,000 pursuant to a letter agreement for general and administrative services including office space, utilities and secretarial support. The foregoing arrangement is being agreed to by Arowana International for our benefit and is not intended to provide our executive officers compensation in As Adjusted(1) Table of Contents lieu of a salary. We believe, based on rents and fees for similar services in North Sydney, Australia, that the fee charged by Arowana International is at least as favorable as we could have obtained from an unaffiliated person. This arrangement will terminate upon completion of a business combination or our liquidation. Other than the $10,000 monthly administrative fee, no compensation of any kind (including finder s, consulting or other similar fees) will be paid to any of our existing officers, directors, shareholders, or any of their affiliates, prior to, or for any services they render in order to effectuate, the consummation of the business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. Since the role of present management after a business combination is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons after a business combination. Regardless of whether the over-allotment option is exercised in full, the net proceeds from this offering available to us out of trust for our working capital requirements in searching for a business combination will be approximately $500,000. In addition, the interest earned on the funds held in the trust account (after payment of taxes owed on such interest income) may be released to us to fund our working capital requirements in searching for a business combination. We intend to use the excess working capital available for miscellaneous expenses such as paying fees to consultants to assist us with our search for a target business and for director and officer liability insurance premiums, with the balance being held in reserve in the event due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed our estimates, as well as for reimbursement of any out-of-pocket expenses incurred by our initial shareholders, officers and directors in connection with activities on our behalf as described above. We will also be entitled to have interest earned on the funds held in the trust account released to us to pay any tax obligations that we may owe. We intend to use the after-tax interest earned for miscellaneous expenses such as paying fees to consultants to assist us with our search for a target business and for director and officer liability insurance premiums, with the balance being held in reserve in the event due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed our estimates, as well as for reimbursement of any out-of-pocket expenses incurred by our initial shareholders, officers and directors in connection with activities on our behalf as described below. The allocation of the net proceeds available to us outside of the trust account, along with the available interest earned on the funds held in the trust account, represents our best estimate of the intended uses of these funds. In the event that our assumptions prove to be inaccurate, we may reallocate some of such proceeds within the above described categories. If our estimate of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available from the trust account is insufficient as a result of the current low interest rate environment, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional capital through loans or additional investments from members of our management team, but such members of our management team are not under any obligation to advance funds to, or invest in, us. We will likely use a substantial portion of the net proceeds of this offering, including the funds held in the trust account, to acquire a target business, to pay holders who wish to convert or sell their shares to us for a portion of the funds held in the trust account and to pay our expenses relating thereto, including a fee payable to EarlyBirdCapital equal to 4.0% of the gross proceeds raised in this offering (exclusive of any applicable finders fees which might become payable) upon consummation of our initial business combination for assisting us in connection with our initial business combination, as described under the section titled Underwriting Business Combination Marketing Agreement. If the payment of our liabilities, including the fee payable to EarlyBirdCapital, were to reduce the amount available to us in trust necessary to pay all holders who wish to convert or sell their shares to us for a portion of the funds held in the trust account, we would not be able to consummate such transaction. To the extent that our share capital is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account which are not Balance Sheet Data: Working capital (deficiency) ( 141,987 ) 73,925,989 Total assets 157,195 73,925,989 Total liabilities 171,306 Value of ordinary shares subject to possible conversion/tender 68,925,987 Shareholders equity (deficit) (14,111 ) 5,000,002 Table of Contents used to consummate a business combination, to pay holders who wish to convert their shares into a portion of the funds held in the trust account or pay our expenses relating thereto (which could include the up to $2,760,000 payable to EarlyBirdCapital described above if the over-allotment option is exercised in full) will be disbursed to the combined company and will, along with any other net proceeds not expended, be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business operations, for strategic acquisitions and for marketing, research and development of existing or new products. To the extent we are unable to consummate a business combination, we will pay the costs of liquidating our trust account from our remaining assets outside of the trust account. If such funds are insufficient, Kevin Chin has agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than $15,000) and has agreed not to seek repayment of such expenses. As of February 28, 2015 , Arowana Partners Group Pty Ltd. loaned to us an aggregate of $ 171,306 to be used to pay a portion of the expenses of this offering referenced in the line items above for SEC registration fee, FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees and expenses. The loan is payable without interest on the earlier of (i) October 21, 2015, (ii) the date on which we consummate our initial public offering or (iii) the date on which we determine to not proceed with our initial public offering. The loan will be repaid out of the proceeds of this offering available to us for payment of offering expenses. If we determine not to proceed with the offering, such amounts would not be repaid. In order to meet our working capital needs following the consummation of this offering until completion of an initial business combination, our initial shareholders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 shares upon the closing of our business combination, as well as 50,000 warrants to purchase 25,000 shares). Our shareholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete our initial business combination, the loans would not be repaid. A public shareholder will be entitled to receive funds from the trust account (including interest earned on his, her or its portion of the trust account to the extent not previously released to us) only in the event of (i) our liquidation if we have not completed a business combination within the required time period or (ii) if that public shareholder converts such public shares or sells them to us in a tender offer in each case in connection with a business combination which we consummate or in connection with an amendment to our memorandum and articles of association prior to the consummation of an initial business combination. In no other circumstances will a public shareholder have any right or interest of any kind to or in the trust account. Table of Contents DIVIDEND POLICY We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. In February 2015, we issued an aggregate of 345,000 ordinary shares to our initial shareholders by way of capitalisation under Cayman Islands law, resulting in our initial shareholders owning an aggregate of 2,070,000 insider shares. Such issuance was made in order to maintain our initial shareholders ownership at 20% of our issued and outstanding ordinary shares upon consummation of this offering (excluding ownership of the private units). O ur board of directors is not currently contemplating and does not anticipate declaring any other share dividends (including as a result of any further recapitalisations under Cayman Islands law) in the foreseeable future, except if we increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in which case we will effect an additional share dividend by way of a capitalisation under Cayman Islands law immediately prior to the consummation of the offering in such amount as to maintain our initial shareholders ownership at 20% of our issued and outstanding ordinary shares upon the consummation of this offering (excluding ownership of the private units). Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. (1) Assumes the over-allotment option has not been exercised and an aggregate of 270 ,000 ordinary shares held by our initial shareholder have been compulsorily repurchased by us as a result thereof. (1) Assumes the over-allotment option has not been exercised and an aggregate of 270 ,000 ordinary shares held by our initial shareholders have been compulsorily repurchased by us as a result thereof. (1) Includes the $ 4,550,000 we will receive from the sale of the private units. (2) Note payable to related party is a promissory note issued in the aggregate amount of $ 171, 3 06 to Arowana Partners Group Pty Ltd. The note is non-interest bearing and is payable on the earliest to occur of (i) October 21, 2015, (ii) the consummation of this offering or (iii) the date on which we determine not to proceed with this offering. (3) Assumes the over-allotment option has not been exercised and an aggregate of 270 ,000 ordinary shares held by our initial shareholders have been compulsorily repurchased by us as a result thereof. Table of Contents MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We were formed on October 1, 2014 as a Cayman Islands exempted company to serve as a vehicle to effect a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses. While our efforts to identify a prospective target business will not necessarily be limited to a particular industry or geographic region of the world, we initially intend to focus on target businesses located in the Asia Pacific region (with a particular emphasis on South East Asia and Australia) operating in the energy (including solar and alternative energy) industry, or target businesses in such industry operating outside of those geographic locations which we believe would benefit from expanding their operations to such locations. We intend to utilize cash derived from the proceeds of this offering, our securities, debt or a combination of cash, securities and debt, in effecting a business combination. The issuance of additional ordinary shares or preferred shares: may significantly reduce the equity interest of our shareholders; may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares; will likely cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and may adversely affect prevailing market prices for our securities. Similarly, if we issue debt securities, it could result in: default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations; acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding. We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our proposed fundraising through an offering of our equity securities. Liquidity and Capital Resources As indicated in the accompanying financial statements, at February 28, 2015 , we had $ 29,319 in cash and cash equivalents and a working capital deficiency of $ 141,987 . Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management s plans to address this uncertainty through this offering are discussed above. Our plans to raise capital or to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our liquidity needs have been satisfied to date through receipt of $25,000 from the sale of the insider shares and a loan from Arowana Partners Group Pty Ltd., an affiliate of certain of our executive officers, in an aggregate amount of $ 171,306 that is more fully described below. We estimate that the net proceeds from (1) the sale of the units in this offering, after deducting offering expenses of approximately $450,000 and underwriting discounts and commissions of $ 2,160,000 (or $ 2,484,000 if the over-allotment option is exercised in full) and (2) the sale of the private units for a purchase price of $ 4,550,000 (or $ 5,090,000 if the Table of Contents over-allotment option is exercised in full), will be $ 73,940,000 (or $ 84,956,000 if the over-allotment option is exercised in full). $ 73,440,000 (or $ 84,456,000 if the over-allotment option is exercised in full) will be held in the trust account. The remaining $500,000 (whether or not the over-allotment option is exercised in full) will not be held in the trust account. We intend to use substantially all of the net proceeds of this offering, including the funds held in the trust account, to acquire a target business or businesses and to pay our expenses relating thereto, including a cash fee equal to 4.0% of the gross proceeds of this offering payable to EarlyBirdCapital upon consummation of our initial business combination for assisting us in connection with such business combination. To the extent that our share capital is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders fees which we had incurred prior to the completion of our initial business combination if the funds available to us outside of the trust account were insufficient to cover such expenses. Over the next 18 months (assuming a business combination is not consummated prior thereto), we will be using the funds held outside of the trust account, plus any interest earned on the funds held in the trust account and released to us as described in this prospectus, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination. We anticipate that we will incur approximately: $125,000 of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of a business combination; $25,000 of expenses for the due diligence and investigation of a target business by our officers, directors and initial shareholders; $75,000 of expenses in legal and accounting fees relating to our SEC reporting obligations; $180,000 for the administrative fee payable to Arowana International ($10,000 per month for up to 18 months); and $95,000 for general working capital that will be used for miscellaneous expenses, including director and officer liability insurance premiums. If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available to us from the trust account is less than we expect as a result of the current interest rate environment, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. Related Party Transactions As of February 28, 2015 , Arowana Partners Group Pty Ltd. loaned an aggregate of $ 171,306 to us, on a non-interest bearing basis, for payment of offering expenses on our behalf. The loan is payable without Table of Contents interest on the earlier of (i) October 21, 2015, (ii) the date on which we consummate our initial public offering or (iii) the date on which we determine to not proceed with our initial public offering. The loan will be repaid out of the proceeds of this offering not being placed in the trust account. We are obligated, commencing on the date of this prospectus, to pay Arowana International a monthly fee of $10,000 for general and administrative services. Our initial shareholders and their affiliates have committed to purchase an aggregate of 455 ,000 private units at a price of $10.00 per unit ($ 4,550,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our initial shareholders and their affiliates have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit an additional number of private units (up to a maximum of 54 ,000 private units) pro rata with the amount of the over-allotment option exercised so that at least $10.20 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. If needed to finance transaction costs in connection with searching for a target business or consummating an intended initial business combination, our initial shareholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 shares upon the closing of our business combination, as well as 50,000 warrants to purchase 25,000 shares). We believe the purchase price of these units will approximate the fair value of such units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase price in accordance with Accounting Standards Codification ( ASC ) 718 Compensation Stock Compensation. Controls and Procedures We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2015. As of the date of this prospectus, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as: staffing for financial, accounting and external reporting areas, including segregation of duties; reconciliation of accounts; proper recording of expenses and liabilities in the period to which they relate; evidence of internal review and approval of accounting transactions; documentation of processes, assumptions and conclusions underlying significant estimates; and documentation of accounting policies and procedures. Table of Contents Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting. Once our management s report on internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when required by Section 404. The independent auditors may identify additional issues concerning a target business s internal controls while performing their audit of internal control over financial reporting. Quantitative and Qualitative Disclosures about Market Risk The net proceeds of this offering, including amounts in the trust account, will be invested in United States government treasury bills, bonds or notes having a maturity of 180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results As of the date of this prospectus, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date. JOBS Act On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an emerging growth company and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates. Table of Contents PROPOSED BUSINESS Introduction We are a Cayman Islands exempted company incorporated on October 1, 2014 for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses. While our efforts to identify a prospective target business will not necessarily be limited to a particular industry or geographic region of the world, we initially intend to focus on target businesses located in the Asia Pacific region (with a particular emphasis on South East Asia and Australia) operating in the energy (including solar and alternative energy) industry, or target businesses in such industry operating outside of those geographic locations which we believe would benefit from expanding their operations to such locations. We believe the Asia Pacific region is characterized by strong demographic trends, in contrast to the situation in many parts of the developed world. For example, according to the CIA World Factbook, 2014, Indonesia has a population of over two hundred and fifty million people with a median age of twenty nine years and an elderly dependency ratio of only 8% (versus the United States with a population of approximately three hundred and nineteen million people with a median age of approximately thirty eight years and an elderly dependency ratio of approximately 22%). The faster growth of working age individuals relative to elderly individuals in many parts of South East Asia creates a highly favorable growth dynamic. Despite this, many parts of South East Asia are challenged by shortages of energy, in particular the reliable availability of affordable electricity. We believe that alternative energy sources are ideally suited to address these shortages in an increasingly cost competitive manner. We therefore believe that there will be attractive targets in this industry. Competitive Advantages We believe our competitive strengths to be the following: Status as a Public Company We believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange their shares in the target business for our shares or for a combination of shares and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses might find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, roadshow and public reporting efforts that will likely not be present to the same extent in connection with a business combination with us. Furthermore, once the business combination is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters ability to complete the offering as well as general market conditions that could prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with shareholders interests than it would have as a privately-held company. It can offer further benefits by augmenting a company s profile among potential new customers and vendors and aid in attracting talented employees. While we believe that our status as a public company will make us an attractive business partner, some potential target businesses may view the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination with a more established entity or with a private company. Financial Position With funds held in trust available for our initial business combination initially in the amount of $ 73,440,000 (or $ 84,456,000 if the over-allotment option is exercised in full), we offer a target business a variety of options such as providing the owners of a target business with shares in a public company and a Table of Contents public means to sell such shares, providing cash for stock, and providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, since we have no specific business combination under consideration, we have not taken any steps to secure third party financing and it may not be available to us. Management Operating and Investing Experience We believe that our executive officers possess the experience, skills and contacts necessary to source, evaluate, and execute an attractive business combination. Kevin Chin, our Chairman and Chief Executive Officer, is the founder of Arowana & Co. which comprises Arowana Partners Group, Arowana Capital and Arowana International. Over his 20 year career, Mr. Chin has held a number of strategic and operational leadership roles and was also previously with Lowy Family Group, J.P. Morgan in Sydney and New York, Ord Minnett, PriceWaterhouseCoopers and Deloitte. Mr. Chin has significant experience in strategic and operational management, private equity, leveraged buyouts of public companies, mergers and acquisitions and capital raisings. Gary Hui, our Chief Financial and Investment Officer, was formerly a Managing Director of Indus Capital Partners, LLC, a hedge fund founded by former Soros Fund Management Partners. Mr. Hui has 20 years of experience in commercial enterprise, spanning the disciplines of accounting, mergers and acquisitions, equity capital markets and alternative investments. We intend to leverage the contacts and relationships of our executive officers, as well as those of our other directors, to source, evaluate and execute business combination opportunities. Notwithstanding the foregoing, our officers and directors are not required to commit their full time to our affairs and will allocate their time to other businesses. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). Effecting a Business Combination General We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to utilize cash derived from the proceeds of this offering and the private placement of private units, our share capital, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of this offering and the private placement of private units are intended to be applied generally toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors in this offering are investing without first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination. Table of Contents We Have Not Identified a Target Business To date, we have not selected any target business on which to concentrate our search for a business combination. None of our officers, directors, initial shareholders and other affiliates has engaged in discussions on our behalf with representatives of other companies regarding the possibility of a potential merger, share exchange, asset acquisition or other similar business combination with us, nor have we, nor any of our agents or affiliates, been approached by any candidates (or representatives of any candidates) with respect to a possible business combination with our company. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate such an acquisition candidate. We have also not conducted any research with respect to identifying the number and characteristics of the potential acquisition candidates. As a result, we cannot assure you that we will be able to locate a target business or that we will be able to engage in a business combination with a target business on favorable terms or at all. Subject to the limitations that a target business have a fair market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our initial business combination, as described below in more detail, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target businesses. Accordingly, there is no basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete a business combination. To the extent we effect a business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors. Sources of Target Businesses We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings which will not commence until after the completion of this offering. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis, since many of these sources will have read this prospectus and know what types of businesses we are targeting. Our officers and directors, as well as their respective affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis (other than EarlyBirdCapital as described in this prospectus), we may engage these firms or other individuals in the future, in which event we may pay a finder s fee, consulting fee or other compensation to be determined in an arm s length negotiation based on the terms of the transaction. In no event, however, will any of our existing officers, directors, special advisors or initial shareholders, or any entity with which they are affiliated, be paid any finder s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction). If we decide to enter into a business combination with a target business that is affiliated with our officers, directors or initial shareholders, we will do so only if we have obtained an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view. However, as of the date of this prospectus, there is no affiliated entity that we consider a business combination target. Selection of a Target Business and Structuring of a Business Combination Subject to the limitations that a target business have a fair market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our initial business combination, as Table of Contents described below in more detail, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following: financial condition and results of operation; growth potential; experience and skill of management and availability of additional personnel; capital requirements; competitive position; barriers to entry; stage of development of its products, processes or services; degree of current or potential market acceptance of the products, processes or services; proprietary features and degree of intellectual property or other protection for its products, processes or services; regulatory environment of the industry; and costs associated with effecting the business combination. We believe such factors will be important in evaluating prospective target businesses, regardless of the location or industry in which such target business operates. However, this list is not intended to be exhaustive. Furthermore, we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third parties. The time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination. Fair Market Value of Target Business Pursuant to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target Table of Contents sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities. Since we have no specific business combination under consideration, we have not entered into any such fund raising arrangement and have no current intention of doing so. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold. Lack of Business Diversification Our business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at the time of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating businesses at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike other entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity, our lack of diversification may: subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services. If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. Limited Ability to Evaluate the Target Business Management Although we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment of the target business management will prove to be correct. In addition, we cannot assure you that the future management Table of Contents will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior management or advisory positions with us following a business combination, it is unlikely that they will devote their full time efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. Additionally, our officers and directors may not have significant experience or knowledge relating to the operations of the particular target business. Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management. Shareholders May Not Have the Ability to Approve an Initial Business Combination In connection with any proposed business combination, we will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. If we determine to engage in a tender offer, such tender offer will be structured so that each shareholder may tender any or all of his, her or its public shares rather than some pro rata portion of his, her or its shares. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us based on a variety of factors such as the timing of the transaction, whether the terms of the transaction would otherwise require us to seek shareholder approval or whether we were deemed to be a foreign private issuer (which would require us to conduct a tender offer rather than seeking shareholder approval under SEC rules). Unlike other blank check companies which require shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combination even when a vote is not required by law, we will have the flexibility to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination. We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, our net tangible asset threshold may limit our ability to consummate such initial Table of Contents business combination (as we may be required to have a lesser number of shares converted or sold to us) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Public shareholders may therefore have to wait 18 months from the closing of this offering in order to be able to receive a pro rata share of the trust account. Our initial shareholders and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of any proposed business combination, (2) not to convert any ordinary shares in connection with a shareholder vote to approve a proposed initial business combination and (3) not sell any ordinary shares in any tender in connection with a proposed initial business combination. As a result, if we sought shareholder approval of a proposed transaction, we would need only 2,472,501 (or approximately 34. 3 %) of the 7,200,000 public shares sold in this offering to be voted in favor of the transaction in order to have such transaction approved (assuming the over-allotment option is not exercised and the initial shareholders do not purchase any units in this offering or units or shares in the after market). None of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase units or ordinary shares in this offering or from persons in the open market or in private transactions. However, if we hold a meeting to approve a proposed business combination and a significant number of shareholders vote, or indicate an intention to vote, against such proposed business combination, our officers, directors, initial shareholders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors, initial shareholders and their affiliates will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company s stock. Conversion/Tender Rights At any meeting called to approve an initial business combination, public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. The conversion rights will be effected under our amended and restated memorandum and articles of association and Cayman Islands law as repurchases. If we hold a meeting to approve an initial business combination, a holder will always have the ability to vote against a proposed business combination and not seek conversion of his shares. Notwithstanding the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the ordinary shares sold in this offering. Accordingly, all shares in excess of 20% of the shares sold in this offering held by a holder will not be converted to cash. We believe this restriction will prevent shareholders from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase their shares at a significant premium to the then current market price. By limiting a shareholder s ability to convert no more than 20% of the ordinary shares sold in this offering, we believe we have limited the ability of a small group of shareholders to unreasonably attempt to block a transaction which is favored by our other public shareholders. Alternatively, if we engage in a tender offer, each public shareholder will be provided the opportunity to sell his public shares to us in such tender offer. The tender offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum amount of time we would need to provide holders to determine whether they want to sell their public shares to us in the tender offer or remain an investor in our company. Our initial shareholders, officers and directors will not have conversion rights with respect to any ordinary shares owned by them, directly or indirectly, whether acquired prior to this offering or purchased by them in this offering or in the aftermarket. Table of Contents We may also require public shareholders, whether they are a record holder or hold their shares in street name, to either tender their certificates to our transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option. Once the shares are converted by the beneficial holder, and effectively repurchased by us under Cayman Island law, the transfer agent will then update our Register of Shareholders to reflect all conversions. The proxy solicitation materials that we will furnish to shareholders in connection with the vote for any proposed business combination will indicate whether we are requiring shareholders to satisfy such delivery requirements. Accordingly, a shareholder would have from the time our proxy statement is mailed through the vote on the business combination to deliver his shares if he wishes to seek to exercise his conversion rights. Under our amended and restated memorandum and articles of association, we are required to provide at least 10 days advance notice of any shareholder meeting, which would be the minimum amount of time a shareholder would have to determine whether to exercise conversion rights. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event we require shareholders seeking to exercise conversion rights to deliver their shares prior to the consummation of the proposed business combination and the proposed business combination is not consummated, this may result in an increased cost to shareholders. Any request to convert or tender such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or expiration of the tender offer. Furthermore, if a holder of a public share delivered his certificate in connection with an election of their conversion or tender and subsequently decides prior to the vote on the business combination or the expiration of the tender offer not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically). If the initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise their conversion or tender rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public holders. Automatic Liquidation of Trust Account if No Business Combination If we do not complete a business combination within 18 months from the consummation of this offering, it will trigger our automatic winding up, dissolution and liquidation pursuant to the terms of our amended and restated memorandum and articles of association. As a result, this has the same effect as if we had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no vote would be required from our shareholders to commence such a voluntary winding up, dissolution and liquidation. The amount in the trust account (less $ 720 representing the aggregate nominal par value of the shares of our public shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, we are able to pay our debts as they fall due in the ordinary course of business. If we are forced to liquidate the trust account, we anticipate that we would distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation. Table of Contents Furthermore, while we will seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the trust account or that a court would conclude that such agreements are legally enforceable. Each of our initial shareholders has agreed to waive its rights to participate in any liquidation of our trust account or other assets with respect to the insider shares and private shares and to vote their insider shares and private shares in favor of any dissolution and plan of distribution which we submit to a vote of shareholders. There will be no distribution from the trust account with respect to our warrants, which will expire worthless. If we are unable to complete an initial business combination and expend all of the net proceeds of this offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the initial per-share distribution from the trust account would be $10.20. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would be prior to the claims of our public shareholders. Although we will seek to have all vendors, including lenders for money borrowed, prospective target businesses or other entities we engage execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account, including but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with a claim against our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving such claims to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would be in the best interest of our shareholders if such third party refused to waive such claims. Examples of possible instances where we may engage a third party that refused to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a provider of required services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed that such third party s engagement would be significantly more beneficial to us than any alternative. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Kevin Chin has agreed that, if we liquidate the trust account prior to the consummation of a business combination, he will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us in excess of the net proceeds of this offering not held in the trust account, but only to the extent necessary to ensure that such debts or obligations do not reduce the amounts in the trust account and only if such parties have not executed a waiver agreement. However, we cannot assure you that he will be able to satisfy those obligations if he is required to do so. Accordingly, the actual per-share distribution could be less than $10.20, plus interest, due to claims of creditors. Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders at least $10.20 per share. Table of Contents Competition In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources. The following also may not be viewed favorably by certain target businesses: our obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent to shareholders in connection with such business combination may delay or prevent the completion of a transaction; our obligation to convert public shares held by our public shareholders may reduce the resources available to us for a business combination; Nasdaq may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our securities following a business combination; our outstanding rights, warrants and unit purchase options, and the potential future dilution they represent; our obligation to pay EarlyBirdCapital a fee of 4.0% of the gross proceeds of this offering upon consummation of our initial business combination; our obligation to either repay or issue private units upon conversion of up to $500,000 of working capital loans that may be made to us by our initial shareholders, officers, directors or their affiliates; our obligation to register the resale of the insider shares, as well as the private units (and underlying securities) and any securities issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital loans; and the impact on the target business assets as a result of unknown liabilities under the securities laws or otherwise depending on developments involving us prior to the consummation of a business combination. Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms. Furthermore, the fact that we will not be required to pay our underwriters any deferred compensation upon consummation of an initial business combination may give us a competitive advantage over other similarly structured blank check companies. If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively. Facilities We maintain our principal executive offices at Level 11, 153 Walker Street, North Sydney, NSW 2060, Australia. The cost for this space is included in the $10,000 per-month fee Arowana International will charge us for general and administrative services commencing on the effective date of this prospectus pursuant to a letter agreement between us and Arowana International. We believe, based on rents and fees for similar services in North Sydney, Australia, that the fee charged by Arowana International is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for our current operations. Table of Contents Employees We have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based on whether a target business has been selected for the business combination and the stage of the business combination process the company is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time investigating such target business and negotiating and processing the business combination (and consequently spend more time to our affairs) than they would prior to locating a suitable target business. We presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior to the consummation of a business combination. Periodic Reporting and Audited Financial Statements We have registered our units, ordinary shares, rights and redeemable warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain financial statements audited and reported on by our independent registered public accountants. We will provide shareholders with audited financial statements of the prospective target business as part of any proxy solicitation sent to shareholders to assist them in assessing the target business. In all likelihood, the financial information included in the proxy solicitation materials will need to be prepared in accordance with U.S. GAAP or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. The financial statements may also be required to be prepared in accordance with U.S. GAAP for the Form 8-K announcing the closing of an initial business combination, which would need to be filed within four business days thereafter. We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have the necessary financial information. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business. We may be required to have our internal control procedures audited for the fiscal year ending February 2 9, 2016 as required by the Sarbanes-Oxley Act. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. We are an emerging growth company as defined in the JOBS Act and will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or our total revenues exceed $1 billion or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Legal Proceedings There is no material litigation, arbitration or governmental proceeding currently pending against us or any of our officers or directors in their capacity as such, and we and our officers and directors have not been subject to any such proceeding in the 12 months preceding the date of this prospectus. Comparison to Offerings of Blank Check Companies Subject to Rule 419 The following table compares and contrasts the terms of our offering and the terms of an offering of blank check companies under Rule 419 promulgated by the SEC assuming that the gross proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same as this offering and Escrow of offering proceeds $ 73,440,000 of the net offering proceeds and proceeds from the sale of the private units will be deposited into a trust account in the United States, maintained by Continental Stock Transfer & Trust Company, acting as trustee. $ 62,856,000 of the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account. Investment of net proceeds The $ 73,440,000 of the net offering proceeds and proceeds from the sale of the private units held in trust will only be invested in United States government treasury bills, bonds or notes with a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States government treasuries. Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act of 1940 or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States. Limitation on fair value or net assets of target business The initial target business that we acquire must have a fair market value equal to at least 80% of the balance in our trust account at the time of the execution of a definitive agreement for our initial business combination. We would be restricted from acquiring a target business unless the fair value of such business or net assets to be acquired represent at least 80% of the maximum offering proceeds. Trading of securities issued The units may commence trading on or promptly after the date of this prospectus. The ordinary shares and redeemable warrants comprising the units will begin to trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading (based upon its assessment of the relative strengths of the securities markets and small capitalization and blank check companies in general, and the trading pattern of, and demand for, our securities in particular), provided we have filed with the SEC a Current Report on Form 8-K, which includes an audited balance sheet reflecting our receipt of the proceeds of this offering. No trading of the units or the underlying ordinary shares and warrants would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account. Exercise of the warrants The warrants cannot be exercised until the completion of a business combination and, accordingly, will be exercised only after the trust account has been terminated and distributed. The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account. Election to remain an investor We will either (1) give our shareholders the opportunity to vote on the business combination or (2) provide our public shareholders with the opportunity to sell their public shares to us in a tender offer for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, less taxes. If we hold a meeting to approve a proposed business combination, we will send each shareholder a proxy statement containing information required by the SEC. Under our amended and restated memorandum and articles of association, we must provide at least 10 days advance notice of any meeting of shareholders. Accordingly, this is the minimum amount of time we would need to provide holders to determine whether to exercise their rights to convert their shares into cash at such a meeting or to remain an investor in our company. Alternatively, if we do not hold a meeting and instead conduct a tender offer, we will conduct such tender offer in accordance with the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as we would have included in a proxy statement. The tender offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum amount of time we would need to provide holders to determine whether they want to sell their shares to us in the tender offer or remain an investor in our company. A prospectus containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company, in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of the post-effective amendment, to decide whether he or she elects to remain a shareholder of the company or require the return of his or her investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account would automatically be returned to the shareholder. Unless a sufficient number of investors elect to remain investors, all of the deposited funds in the escrow account must be returned to all investors and none of the securities will be issued. Business combination deadline Pursuant to our amended and restated memorandum and articles of association, if we do not complete an initial business combination within 18 months from the consummation of this offering, it will trigger our automatic winding up, dissolution and liquidation. If an acquisition has not been consummated within 18 months after the effective date of the initial registration statement, funds held in the trust or escrow account would be returned to investors. Table of Contents USE OF PROCEEDS We estimate that the net proceeds of this offering, in addition to the funds we will receive from the sale of the private units (all of which will be deposited into the trust account), will be as set forth in the following table: Without Over-Allotment Option Interest earned on the funds in the trust account There can be released to us, from time to time, (i) any interest earned on the funds in the trust account that we may need to pay our tax obligations and (ii) any remaining interest earned on the funds in the trust account that we need for our working capital requirements. The remaining interest earned on the funds in the trust account will not be released until the earlier of the completion of a business combination and our entry into liquidation upon failure to effect a business combination within the allotted time. All interest earned on the funds in the trust account will be held in trust for the benefit of public shareholders until the earlier of the completion of a business combination and our liquidation upon failure to effect a business combination within the allotted time. Release of funds Except for (i) interest earned on the funds held in the trust account that may be released to us to pay our tax obligations and (ii) any remaining interest that we may need for our working capital requirements that may be released to us from the interest earned on the trust account balance described above, the proceeds held in the trust account will not be released until the earlier of the completion of a business combination (in which case, the proceeds released to us will be net of the funds used to pay converting or tendering shareholders, as the trustee will directly send the appropriate portion of the amount held in trust to the converting or tendering shareholders at the time of the business combination) and the liquidation of our trust account upon failure to effect a business combination within the allotted time. The proceeds held in the escrow account would not be released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time. Over-Allotment Option Exercised Kevin Tser Fah Chin 41 Executive Chairman of the Board and Chief Executive Officer Gary San Hui 45 Chief Financial Officer, Chief Investment Officer and Director John C. Moore 78 Director Dudley Hoskin 45 Director Kien Khan Kwan 35 Director Kevin Tser Fah Chin has served as our Executive Chairman of the Board and Chief Executive Officer since our inception. We believe Mr. Chin is well-qualified to serve as a member of the Board due to his business leadership, investment and operational experience and contacts, as well as his diverse activities and contacts across Australian and Asia. In 2007, Mr. Chin founded Arowana & Co., which comprises Arowana Partners Group, Arowana Capital and Arowana International. Arowana Partners Group operates a number of unlisted investment funds and arranges and manages acquisitions and syndicated investments in unlisted companies. Arowana Capital operates as an Early Stage Venture Capital Limited Partnership venture capital fund, having formerly managed a Venture Capital Limited Partnership private equity fund. Arowana International is a company listed on the Australian Stock Exchange with subsidiaries in Australia, New Zealand and South East Asia operating in three segments: education, diagnostic testing and training and events. Mr. Chin served as Managing Partner of Arowana Capital from June 2007 to June 2013 and has served as Chief Executive Officer of Arowana International since January 2013. Prior to founding Arowana & Co., Mr. Chin led the management buyout of an ASX listed software business, SoftLaw Corporation (which was renamed to RuleBurst Haley Limited) in November 2004 and became its Chief Financial Officer (and for a period also its Chief Operating Officer). RuleBurst Haley was acquired by Oracle Corporation in November 2008. Between October 2003 and October 2004, Mr. Chin worked as investment manager / analyst with a family office called the Lowy Family Group. Prior to then, he was with J.P. Morgan as a Vice President in its Investment Banking division, primarily in Sydney, Australia but also in New York. Before joining J.P.Morgan, Mr. Chin worked as a corporate finance executive with an Australian merchant bank, Ord Minnett, from July 1996 to August 1997. He was previously also with Price Waterhouse in their corporate finance and litigation support team (June 1995 to July 1996) and Deloitte in their business consulting division (January 1993 to June 1995). Mr. Chin holds a Bachelor of Commerce degree from the University of New South Wales where he was one of the inaugural University Co-Op Scholars with the School of Banking and Finance. Mr. Chin is a Fellow of FINSIA (Financial Services Institute of Australia) where he also lectured for the FINSIA Masters Degree course, Advanced Industrial Equity Analysis. Mr. Chin is a qualified Chartered Accountant. Gary San Hui has served as our Chief Financial Officer, Chief Investment Officer and Director since November 2014. We believe Mr. Hui is well-qualified to serve as a member of the Board due to his significant investment experience and his other experience and contacts. Mr. Hui joined Arowana International as an Executive Director and Fund Manager in November 2014. From 2007 to November 2014 when he joined Arowana, Mr. Hui was with Indus Capital, a hedge fund founded by former Soros Fund Management Partners. Mr. Hui joined Indus as a senior analyst, before becoming Managing Director and Chief Representative of Indus Singapore office in December 2011, prior to relocating to San Francisco in July 2013. From 1999 to 2007, Mr. Hui was with J.P. Morgan, including as an equity capital and derivatives banker responsible for the origination, structuring and execution of mandates in the Asian region. Prior to this, he worked at Deloitte in audit, business consulting and corporate finance. Table of Contents Mr. Hui qualified as a Chartered Accountant and completed the Securities Institute of Australia (now FINSIA) program. He holds a Bachelor of Commerce degree from the University of New South Wales. John C. Moore has served as a member of the Board of Directors since October 2014. We believe Mr. Moore is well-qualified to serve as a member of the Board due to his significant experience in business and politics, and contacts. From 1998 until 2001, Mr. Moore was Federal Minister of Defence of Australia. Since retiring from Australian politics in 2001, Mr. Moore has held numerous directorships across a range of industries including power and electrical services, education, and road maintenance. Mr. Moore was previously the Australian Federal Minister for Industry, Science and Tourism from 1996 until 1998, also holding the position of Vice President of the Executive Council. Mr. Moore has also held director or board memberships in a number of Australian companies, including Brandt Limited (Australia), P.F.C.B. Limited and Agricultural Investments Limited, and was a board member of Merrill Lynch Australia and Citinational Australia. He is currently Chairman of the Evolution Road Maintenance Group, Chairman of Ubiquity Power and Maintenance Group Limited, a director of Arowana International and Arowana Australasia Value Opportunities Fund Limited, as well as several other private companies. Mr. Moore holds a Bachelor of Commerce and Associate in Accountancy from the University of Queensland, Australia. Dudley Hoskin has served as a member of the Board of Directors since October 2014. We believe Mr. Hoskin is well-qualified to serve as a member of the Board due to his significant business and investment experience gained across Asia. Since October 2011, Mr. Hoskin has been a Portfolio Manager with Tudor Investment Corporation, a global investment firm based in Greenwich, Connecticut. From 2007 to September 2011, Mr. Hoskin served as a Managing Director with Goldman Sachs in Australia, before which (from 2000 to 2002) he was based in Hong Kong with the same firm. From 2002 until 2005, he ran the G10 currency trading business for HSBC, at which time returned to Australia to set up the Proprietary Trading Business for Societe Generale Australia before resuming his career with Goldman Sachs in 2007. Mr. Hoskin holds a Bachelors Degree with Honours in Aeronautical Engineering and Design from Loughborough University in the United Kingdom and trained as a Pilot in the Royal Air Force (UK). Kien Khan Kwan has served as a member of the Board of Directors since October 2014. We believe Mr. Kwan is well-qualified to serve as a member of the Board due to his significant investment experience and his other experience and contacts. From February 2012 to October 2014, Mr. Kwan served as Executive Director and Chief Investment Officer of Arowana International. Mr. Kwan has significant international experience in transaction origination, structuring, negotiation and execution, including transactions raising in excess of $4.3 billion of listed and unlisted equity. He has led teams involved in multiple merger and acquisition transactions in Australia and Europe across various industries. Prior to this role, Mr. Kwan spent 10 years in various investment and advisory roles in Sydney, Perth and London including at J.P. Morgan (September 2008 to April 2011) and at Macquarie Capital (December 2006 to August 2008). He also was a small caps portfolio manager at J.P. Morgan Asset Management with direct responsibility for over $1 billion in funds under management. Mr. Kwan holds a Bachelor of Commerce (majoring in Accounting and Finance) and a Bachelor or Laws from the University of Western Australia. Our board of directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first class of directors, consisting of Kien Khan Kwan, will expire at our first annual meeting of shareholders. The term of office of the second class of directors, consisting of Gary San Hui and Dudley Hoskin, will expire at the second annual meeting. The term of office of the third class of directors, consisting of Kevin Tser Fah Chin and John C. Moore, will expire at the third annual meeting. Table of Contents Executive Compensation No executive officer has received any cash compensation for services rendered to us. Commencing on the date of this prospectus through the acquisition of a target business, we will pay Arowana International, an affiliate of our executive officers, a fee of $10,000 per month, subject to adjustment as described elsewhere in this prospectus, for providing us with office space and certain office and secretarial services. However, this arrangement is solely for our benefit and is not intended to provide our executive officers compensation in lieu of a salary. Other than the $10,000 per month administrative fee, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors and audit committee, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Director Independence Currently John C. Moore, Dudley Hoskin and Kien Khan Kwan would each be considered an independent director under the Nasdaq listing rules, which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company s board of directors would interfere with the director s exercise of independent judgment in carrying out the responsibilities of a director. Our independent directors will have regularly scheduled meetings at which only independent directors are present. We will only enter into a business combination if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers and directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent parties. Any related-party transactions must be approved by our audit committee and a majority of disinterested independent directors. Audit Committee Effective as of the date of this prospectus, we have established an audit committee of the board of directors, which will consist of John C. Moore, Dudley Hoskin and Kien Khan Kwan, each of whom is an independent director under Nasdaq s listing standards. The audit committee s duties, which are specified in our Audit Committee Charter, include, but are not limited to: reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K; discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; discussing with management major risk assessment and risk management policies; monitoring the independence of the independent auditor; verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; reviewing and approving all related-party transactions; inquiring and discussing with management our compliance with applicable laws and regulations; pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; Table of Contents appointing or replacing the independent auditor; determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and approving reimbursement of expenses incurred by our management team in identifying potential target businesses. Financial Experts on Audit Committee The audit committee will at all times be composed exclusively of independent directors who are financially literate as defined under Nasdaq listing standards. Nasdaq listing standards define financially literate as being able to read and understand fundamental financial statements, including a company s balance sheet, income statement and cash flow statement. In addition, we must certify to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual s financial sophistication. The board of directors has determined that Kien Khan Kwan qualifies as an audit committee financial expert, as defined under rules and regulations of the SEC. Nominating Committee Effective as of the date of this prospectus, we have established a nominating committee of the board of directors, which will consist of John C. Moore, Dudley Hoskin and Kien Khan Kwan, each of whom is an independent director under Nasdaq s listing standards. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others. Guidelines for Selecting Director Nominees The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that persons to be nominated: should have demonstrated notable or significant achievements in business, education or public service; should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders. The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons. Table of Contents Compensation Committee Effective as of the date of this prospectus, we will establish a compensation committee of the board of directors, which will consist of John C. Moore, Dudley Hoskin and Kien Khan Kwan, each of whom is an independent director under Nasdaq s listing standards. The compensation committee s duties, which are specified in our Compensation Committee Charter, include, but are not limited to: reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer s compensation, evaluating our Chief Executive Officer s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer s based on such evaluation; reviewing and approving the compensation of all of our other executive officers; reviewing our executive compensation policies and plans; implementing and administering our incentive compensation equity-based remuneration plans; assisting management in complying with our proxy statement and annual report disclosure requirements; approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees; if required, producing a report on executive compensation to be included in our annual proxy statement; and reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. Notwithstanding the foregoing, as indicated above, other than the $10,000 per month administrative fee, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination. Code of Ethics Upon consummation of this offering, we will adopt a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern all aspects of our business. Conflicts of Interest Potential investors should be aware of the following potential conflicts of interest: None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our management has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company. Table of Contents The insider shares owned by our officers and directors will be released from escrow only if a business combination is successfully completed and subject to certain other limitations. Additionally, our officers and directors will not receive distributions from the trust account with respect to any of their insider shares if we do not complete a business combination. Furthermore, our initial shareholders have agreed that the private units (and underlying securities) will not be sold or transferred by them until after we have completed our initial business combination. In addition, our officers and directors may loan funds to us after this offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. For the foregoing reasons, the personal and financial interests of our directors and executive officers may influence their motivation in identifying and selecting a target business, completing a business combination in a timely manner and securing the release of their shares. Under Cayman Islands law, directors and officers owe the following fiduciary duties: (i) duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; (ii) duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; (iii) directors should not properly fetter the exercise of future discretion; (iv) duty to exercise powers fairly as between different sections of shareholders; (v) duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and (vi) duty to exercise independent judgment. In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience which that director has. As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval at general meetings. Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved in our favor. Furthermore, each of our officers and directors has pre-existing fiduciary obligations to other businesses of which they are officers or directors. To the extent they identify business opportunities which may be suitable for the entities to which they owe pre-existing fiduciary obligations, our officers and directors will honor those fiduciary obligations. Accordingly, it is possible they may not present opportunities to us that otherwise may be attractive to us unless the entities to which they owe pre-existing fiduciary obligations and any successors to such entities have declined to accept such opportunities. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors has contractually agreed, pursuant to a written agreement with us, until the earliest of a business combination, our liquidation or such time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable business Arowana International Kevin Tser Fah Chin Gary San Hui John Moore Each of these individuals may present all business opportunities which are suitable for Arowana International to Arowana International prior to presenting them to us. Tudor Investment Corporation Dudley Hoskin Mr. Hoskin may present all business opportunities which are suitable for Tudor Investment Corporation to Tudor Investment Corporation prior to presenting them to us. In connection with the vote required for any business combination, all of our existing shareholders, including all of our officers and directors, have agreed to vote their respective insider shares and private shares in favor of any proposed business combination. In addition, they have agreed to waive their respective rights to participate in any liquidation distribution with respect to those ordinary shares acquired by them prior to this offering. If they purchase ordinary shares in this offering or in the open market, however, they would be entitled to participate in any liquidation distribution in respect of such shares but have agreed not to convert such shares (or sell their shares in any tender offer) in connection with the consummation of our initial business combination or an amendment to our amended and restated memorandum and articles of association relating to pre-business combination activity. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested independent directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested independent directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. To further minimize conflicts of interest, we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers, directors or initial shareholders, unless we have obtained (i) an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view and (ii) the approval of a majority of our disinterested and independent directors (if we have any at that time). Furthermore, in no event will any of our initial shareholders, officers, directors, special advisors or their respective affiliates be paid any finder s fee, consulting fee or other similar compensation prior to, or for any services they render in order to effectuate, the consummation of our initial business combination. Table of Contents DILUTION The difference between the public offering price per share, assuming no value is attributed to the redeemable warrants included in the units we are offering by this prospectus and included in the private units, and the pro forma net tangible book value per share after this offering constitutes the dilution to investors in this offering. Such calculation does not reflect any dilution associated with the sale and exercise of warrants, including the warrants underlying the private units. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (excluding the value of ordinary shares which may be converted into cash), by the number of outstanding ordinary shares. For the purposes of the dilution calculations, we have assumed the issuance of 0.1 of a share for each right outstanding, as such issuance will occur upon a business combination without the payment of additional consideration. Accordingly, for the purposes of the dilution calculation, the number of shares included in the units offered hereby will be deemed to be 7,920,000 , the price per share in this offering will be deemed to be $9.09 and the number of shares included in the private units will be deemed to be 500 ,500. At February 28, 2015 , our net tangible book value was $( 141,987 ) or approximately $(0.0 8 ) per share. After giving effect to the sale of 7,200,000 ordinary shares included in the units we are offering by this prospectus, and the deduction of underwriting discounts and estimated expenses of this offering, and the sale of the private units, and assuming the issuance of 765 ,500 shares for the outstanding rights, our pro forma net tangible book value at February 28, 2015 would have been $5,000,002 or $1. 44 per share, representing an immediate increase in net tangible book value of $1. 52 per share to the initial shareholders and an immediate dilution of 84.2 % per share or $ 7.65 to new investors not exercising their conversion/tender rights. For purposes of presentation, our pro forma net tangible book value after this offering is $ 68,925,987 less than it otherwise would have been because if we effect a business combination, the ability of public shareholders (but not our initial shareholders) to exercise conversion rights or sell their shares to us in any tender offer may result in the conversion or tender of up to 6,757,450 shares sold in this offering. The following table illustrates the dilution to the new investors on a per-share basis inclusive of the shares underlying the rights included in the units, assuming no value is attributed to the redeemable warrants: Public offering price $ 9.09 Net tangible book value before this offering (0.0 8 ) Increase attributable to new investors and private sales 1. 52 Pro forma net tangible book value after this offering 1. 44 Dilution to new investors $ 7. 65 Percentage of dilution to new investors 84.2 % The following table sets forth information with respect to our initial shareholders and the new investors: Shares Purchased * Less than 1%. (1) Unless otherwise indicated, the business address of each of the individuals is c/o Arowana Inc., Level 11, 153 Walker Street, North Sydney, NSW 2060, Australia. (2) Assumes no exercise of the over-allotment option and, therefore, the compulsory repurchase by us of an aggregate of 270,000 ordinary shares held by our initial shareholders. Also assumes the purchase of an aggregate of 455 ,000 private units by our initial shareholders. ( 3 ) Represents shares held by The Panaga Group Trust, of which Mr. Chin is a beneficiary and one of the directors of the corporate trustee of such fund. ( 4 ) Does not include the shares held by The Octagon Foundation of which Mr. Chin is a director of the corporate trustee of such foundation. ( 5 ) The business address of Mr. Hoskin is Tudor Investment Corporation, 1275 King Street, Greenwich, CT 06831. ( 6 ) The Octagon Foundation is controlled by its board of directors, which is comprised of Kevin Chin, Graham Chee, Karen Gillespie, Terence Chin and Suk Chin. The board of directors of The Octagon Foundation as a group controls the voting and dispositive power over the shares held by this entity and no one individual acting alone has such power. ( 7 ) Kevin Chin is a beneficiary, and is the sole director, of The Panaga Group Trust. Accordingly, he may be deemed to have voting and dispositive power over the shares held by this entity. Total Consideration Table of Contents ( 8 ) Arowana Australasian Special Situation Partnership 1, LP is an incorporated limited partnership whose investors include Arowana International. Arowana International owns 100% of the entity s general partner. Arowana International is controlled by its board of directors, which is comprised of Kevin Chin, John Moore and Robert McKelvey. The board of directors of Arowana International as a group controls the voting and dispositive power over the shares held by this entity and no one individual acting alone has such power. ( 9 ) These shares are held by Beira Corp., an entity controlled by Mr. Hui. (10) These shares are held by the Ralsten Pty Ltd. , an entity controlled by Mr. Moore . Immediately after this offering, our initial shareholders will beneficially own approximately 24.0% of the then issued and outstanding ordinary shares (assuming none of them purchase any units offered by this prospectus). None of our initial shareholders, officers and directors has indicated to us that he intends to purchase securities in this offering. Because of the ownership block held by our initial shareholders, such individuals may be able to effectively exercise control over all matters requiring approval by our shareholders, including the election of directors and approval of significant corporate transactions other than approval of our initial business combination. If the underwriters do not exercise all or a portion of the over-allotment option, our initial shareholders will have up to an aggregate of 270 ,000 ordinary shares compulsorily repurchased by us as required by Cayman Islands law, for an aggregate purchase price of $0.01. Our initial shareholders will be required to have repurchased by us only a number of shares necessary to maintain their collective 20% ownership interest in our ordinary shares (excluding the private units) after giving effect to the offering and the exercise, if any, of the underwriters over-allotment option. All of the insider shares outstanding prior to the date of this prospectus will be placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a liquidation, merger, share exchange or other similar transaction which results in all of our shareholders having the right to exchange their shares for cash, securities or other property. Up to 270 ,000 of the insider shares may also be released from escrow earlier than this date for compulsory repurchase by us and cancellation if the over-allotment option is not exercised in full as described above. During the escrow period, the holders of these shares will not be able to sell or transfer their securities except (i) for transfers to an entity s members upon its liquidation, (ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of our securities, (vi) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased or (vii) to us for no value for cancellation in connection with the consummation of our initial business combination, in each case (except for clause (vii)) where the transferee agrees to the terms of the escrow agreement, but will retain all other rights as our shareholders, including, without limitation, the right to vote their ordinary shares and the right to receive cash dividends, if declared. If dividends are declared and payable in ordinary shares, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate the trust account, none of our initial shareholders will receive any portion of the liquidation proceeds with respect to their insider shares. Our initial shareholders and their affiliates have committed to purchase an aggregate of 455 ,000 private units at a price of $10.00 per unit ($ 4,550,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our initial shareholders and their affiliates have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of Average Price Per Share Table of Contents $10.00 per unit an additional number of private units (up to a maximum of 54 ,000 private units) pro rata with the amount of the over-allotment option exercised so that at least $10.20 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The foregoing purchases will only be made by the initial shareholders if they are able to do so in accordance with Regulation M and Sections 9(a)(2) and 10(b) and Rule 10b-5 of the Exchange Act. The private units are identical to the units sold in this offering except the warrants underlying the private units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, because the warrants underlying the private units will be issued in a private transaction, the holders and their transferees will be allowed to exercise such warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Furthermore, our initial shareholders and their affiliates have agreed (A) to vote their private shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated memorandum and articles of association with respect to our pre-business combination activities prior to the consummation of such a business combination unless we provide dissenting public shareholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any private shares into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination (or sell any private shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated memorandum and articles of association relating to shareholders rights or pre-business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Our initial shareholders and their affiliates have also agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination. In order to meet our working capital needs following the consummation of this offering, our initial shareholders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 shares upon the closing of our business combination, as well as 50,000 warrants to purchase 25,000 shares). Our shareholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans will not be repaid. Kevin Chin is our promoter, as that term is defined under the Federal securities laws. Number Table of Contents CERTAIN TRANSACTIONS In October 2014, we issued an aggregate of 1,725,000 ordinary shares to our initial shareholders for $25,000 in cash, at a purchase price of $0.01 share. In February 2015, we issued an aggregate of 345,000 ordinary shares to our initial shareholders by way of capitali sation under Cayman Islands law, resulting in our initial shareholders owning an aggregate of 2,070,000 insider shares. In March 2015, our initial shareholders transferred certain insider shares amongst themselves at the same price originally paid for such shares to reflect certain business arrangements amongst themselves. If the underwriters do not exercise all or a portion of their over-allotment option, our initial shareholders have agreed to have compulsorily repurchased by us, for an aggregate purchase price of $0.01, up to an aggregate of 270,000 ordinary shares in proportion to the portion of the over-allotment option that was not exercised. If such shares are repurchased, they would be immediately cancelled. If the underwriters determine the size of the offering should be increased (including pursuant to Rule 462(b) under the Securities Act) or decreased, a share dividend or a contribution back to capital, as applicable, would be effectuated in order to maintain our initial shareholder s ownership at a percentage of the number of shares to be sold in this offering (not including the private shares). Our initial shareholders and their affiliates have committed to purchase an aggregate of 455 ,000 private units at a price of $10.00 per unit ($ 4,550,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our initial shareholders and their affiliates have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit an additional number of private units (up to a maximum of 54 ,000 private units) pro rata with the amount of the over-allotment option exercised so that at least $10.20 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The foregoing purchases will only be made by the initial shareholders if they are able to do so in accordance with Regulation M and Sections 9(a)(2) and 10(b) and Rule 10b-5 of the Exchange Act. The purchase price for the private units will be delivered to Graubard Miller, our counsel in connection with this offering, who will also be acting solely as escrow agent in connection with the private sale of such units, at least 24 hours prior to the date of this prospectus to hold in a non-interest bearing account until we consummate this offering. Graubard Miller will deposit the purchase price into the trust account simultaneously with the consummation of the offering. The private units are identical to the units sold in this offering except the warrants underlying the private units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, because the warrants underlying the private units will be issued in a private transaction, the holders and their transferees will be allowed to exercise such warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Furthermore, our initial shareholders and their affiliates have agreed (A) to vote their private shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated memorandum and articles of association with respect to our pre-business combination activities prior to the consummation of such a business combination unless we provide dissenting public shareholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any private shares into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination (or sell any private shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated memorandum and articles of association relating to shareholders rights or pre-business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Our initial shareholders and their affiliates have also agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the Percentage Table of Contents transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination. In order to meet our working capital needs following the consummation of this offering, our initial shareholders, officers and directors and their respective affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 shares upon the closing of our business combination, as well as 50,000 warrants to purchase 25,000 shares). Our shareholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans would not be repaid. The holders of our insider shares issued and outstanding on the date of this prospectus, as well as the holders of the private units (and all underlying securities) and any securities our initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to us, will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of this offering. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the private units or securities issued in payment of working capital loans made to us can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain piggy-back registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements. Arowana International, an affiliate of our executive officers, has agreed that, commencing on the effective date of this prospectus through the earlier of our consummation of a business combination or our liquidation, it will make available to us certain general and administrative services, including office space, utilities and administrative support, as we may require from time to time. We have agreed to pay Arowana International $10,000 per month for these services. This arrangement is solely for our benefit and is not intended to provide our executive officers compensation in lieu of a salary. We believe, based on rents and fees for similar services in North Sydney, Australia, that the fee charged by Arowana International is at least as favorable as we could have obtained from an unaffiliated person. As of February 28, 2015 , Arowana Partners Group Pty Ltd. loaned to us an aggregate of $ 171,306 to cover expenses related to this offering. The loan is payable without interest on the earlier of (i) October 21, 2015, (ii) the date on which we consummate our initial public offering or (iii) the date on which we determine to not proceed with our initial public offering. We intend to repay this loan from the proceeds of this offering not being placed in the trust account. We will reimburse our officers and directors for any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying and investigating possible target businesses and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made to any initial shareholder or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and approval. Other than the $10,000 per-month administrative fee and reimbursable out-of-pocket expenses payable to our officers and directors, no compensation or fees of any kind, including finder s fees, consulting fees or Amount Table of Contents other similar compensation, will be paid to any of our initial shareholders, officers or directors who owned our ordinary shares prior to this offering, or to any of their respective affiliates, prior to or with respect to the business combination (regardless of the type of transaction that it is). All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions, including the payment of any compensation, will require prior approval by a majority of our uninterested independent directors (to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested independent directors (or, if there are no independent directors, our disinterested directors) determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Related Party Policy Our Code of Ethics, which we will adopt upon consummation of this offering, will require us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position. We also require each of our directors and executive officers to annually complete a directors and officers questionnaire that elicits information about related party transactions. Our audit committee, pursuant to its written charter, will be responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested independent directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested independent directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete a directors and officers questionnaire that elicits information about related party transactions. These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer. To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our initial shareholders unless we obtain an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view. Furthermore, in no event will any of our existing officers, directors or initial shareholders, or any entity with which they are affiliated, be paid any finder s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination. Percentage Table of Contents DESCRIPTION OF SECURITIES General We are currently authorized to issue 100,000,000 ordinary shares, par value $0.0001, and 1,000,000 preferred shares, par value $0.0001. As of the date of this prospectus, 2,070,000 ordinary shares are outstanding, held by our initial shareholders. No preferred shares are outstanding. Units Each unit consists of one ordinary share, one right and one redeemable warrant. Each right entities the holder thereof to receive one-tenth (1/10) of a share on the consummation of an initial business combination. Each redeemable warrant entitles the holder to purchase one half of one ordinary share. Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrantholder. For example, if a warrantholder holds one warrant to purchase one-half of one share, such warrant shall not be exercisable. If a warrantholder holds two warrants, such warrants will be exercisable for one share. The ordinary shares, rights and redeemable warrants will begin to trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital determines that an earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the securities markets and small capitalization companies in general, and the trading pattern of, and demand for, our securities in particular). In no event will EarlyBirdCapital allow separate trading of the ordinary shares, rights and redeemable warrants until we file an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file a Current Report on Form 8-K which includes an audited balance sheet promptly upon the consummation of this offering. The audited balance sheet will reflect proceeds we receive from the exercise of the over-allotment option, if the over-allotment option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K, or a new Form 8-K, to provide updated financial information to reflect the exercise of the over-allotment option. We will also include in this Form 8-K, an amendment thereto, or in a subsequent Form 8-K information indicating when separate trading of the ordinary shares and redeemable warrants has commenced. Ordinary Shares Our shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. In connection with any vote held to approve our initial business combination, all of our initial shareholders, as well as all of our officers and directors, have agreed to vote their respective ordinary shares owned by them immediately prior to this offering and any shares purchased in this offering or following this offering in the open market in favor of the proposed business combination. We will proceed with the business combination only if we have net tangible assets of at least $5,000,001 upon consummation of such business combination and a majority of the ordinary shares voted are voted in favor of the business combination. At least five days notice must be given for each general meeting (although we will provide whatever minimum number of days are required under Federal securities laws). Shareholders may vote at meetings in person or by proxy. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares eligible to vote for the election of directors can elect all of the directors. Pursuant to our amended and restated memorandum and articles of association, if we do not consummate a business combination by 18 months from the consummation of this offering, it will trigger our automatic winding up, dissolution and liquidation. Our initial shareholders have agreed to waive their rights to share in any distribution from the trust account with respect to their insider shares upon our winding up, dissolution and liquidation. Initial shareholder s 2,300,500 (1) 22. 5 % $ 4,575,000 6. 0 % $ 1.99 New investors 7,920,000 77. 5 % 72 ,000,000 94.0 % $ 9.09 10,220,500 100.0 % $ 76,575,000 100.0 % Table of Contents Our shareholders have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the ordinary shares, except that public shareholders have the right to have their public shares converted to cash equal to their pro rata share of the trust account if they vote on the proposed business combination and the business combination is completed. Public shareholders who convert their public shares into their portion of the trust account still have the right to exercise the redeemable warrants that they received as part of the units. Register of Members Under Cayman Islands law, we must keep a register of members and there shall be entered therein: (a) the names and addresses of the members, a statement of the shares held by each member, and of the amount paid or agreed to be considered as paid, on the shares of each member; (b) the date on which the name of any person was entered on the register as a member; and (c) the date on which any person ceased to be a member. Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members shall be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Upon the closing of this public offering, the register of members shall be immediately updated to reflect the issue of shares by us. Once our register of members has been updated, the shareholders recorded in the register of members shall be deemed to have legal title to the shares set against their name. However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by a company should be rectified where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands court. Preferred Shares Our amended and restated memorandum and articles of association authorizes the issuance of 1,000,000 preferred shares with such designation, rights and preferences as may be determined from time to time by our board of directors. No preferred shares are being issued or registered in this offering. Accordingly, our board of directors is empowered, without shareholder approval, to issue preferred shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares. However, the underwriting agreement prohibits us, prior to a business combination, from issuing preferred shares which participate in any manner in the proceeds of the trust account, or which votes as a class with the ordinary shares on a business combination. We may issue some or all of the preferred shares to effect a business combination. In addition, the preferred shares could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently intend to issue any preferred shares, we cannot assure you that we will not do so in the future. Redeemable Warrants No warrants are currently outstanding. Each redeemable warrant entitles the registered holder to purchase one half of one ordinary share at a price of $12.50 per full share, subject to adjustment as discussed below, at any time commencing on the later of the completion of an initial business combination and 12 months from the date of this prospectus. Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrantholder. However, except as set forth below, no warrants will be exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon Table of Contents exercise of the warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the warrants is not effective within 90 days from the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis. The warrants will expire five years from the consummation of our initial business combination at 5:00 p.m., New York City time. We may call the warrants for redemption (including any outstanding warrants issued upon exercise of the unit purchase option issued to EarlyBirdCapital and/or its designees), in whole and not in part, at a price of $.01 per warrant: at any time while the warrants are exercisable, upon not less than 30 days prior written notice of redemption to each warrant holder, if, and only if, the reported last sale price of the ordinary shares equals or exceeds $17.50 per share, for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders, and if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder s warrant upon surrender of such warrant. The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the volume weighted average price of the ordinary shares for the 20 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a cashless basis will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive share issuances. The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval, by written consent or vote, of the holders of a majority of the then outstanding warrants in order to make any change that adversely affects the interests of the registered holders. The exercise price and number of ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below their respective exercise prices. Table of Contents The pro forma net tangible book value after the offering is calculated as follows: Numerator: Net tangible book value before the offering $ ( 141,987 ) Net proceeds from this offering and private placement of private units 73,940,000 Plus: Offering costs accrued for and paid in advance, excluded from tangible book value before this offering 127,876 Plus: Proceeds from sale of unit purchase option to underwriters 100 Less: Proceeds held in trust subject to conversion/tender ( 68,925,987 ) $ 5,000,002 Denominator: Ordinary shares outstanding prior to this offering 1, 8 00,000 (1) Ordinary shares to be sold in this offering 7,200,000 Ordinary shares underlying the rights to be sold in this offering 720,000 Ordinary shares to be sold in private placement 455,000 Ordinary shares underlying the rights to be sold in private placement 45,500 Less: Shares subject to conversion/tender ( 6,757,450 ) 3,463,050 Table of Contents The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive ordinary shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders. Except as described above, no warrants will be exercisable and we will not be obligated to issue ordinary shares unless at the time a holder seeks to exercise such warrant, a prospectus relating to the ordinary shares issuable upon exercise of the warrants is current and the ordinary shares have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current prospectus relating to the ordinary shares issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so and, if we do not maintain a current prospectus relating to the ordinary shares issuable upon exercise of the warrants, holders will be unable to exercise their warrants and we will not be required to settle any such warrant exercise. If the prospectus relating to the ordinary shares issuable upon the exercise of the warrants is not current or if the ordinary shares is not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, we will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and the warrants may expire worthless. Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder (and his, her or its affiliates) would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder (and his, her or its affiliates) would beneficially own in excess of 9.8% of the ordinary shares outstanding. Notwithstanding the foregoing, any person who acquires a warrant with the purpose or effect of changing or influencing the control of our company, or in connection with or as a participant in any transaction having such purpose or effect, immediately upon such acquisition will be deemed to be the beneficial owner of the underlying ordinary shares and not be able to take advantage of this provision. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share (as a result of a subsequent share dividend payable in ordinary shares, or by a split up of the ordinary shares or other similar event), we will, upon exercise, round up or down to the nearest whole number the number of ordinary shares to be issued to the warrant holder. Contractual Arrangements with respect to the Certain Warrants We have agreed that so long as the warrants underlying the private units are still held by the initial purchasers or their affiliates, we will not redeem such warrants and we will allow the holders to exercise such warrants on a cashless basis. Additionally, the representative of the underwriters has agreed that it will not be permitted to exercise any warrants underlying the purchase option to be issued to it and/or its designees upon consummation of this offering after the five year anniversary of the effective date of the registration statement of which this prospectus forms a part. However, once any of the foregoing warrants are transferred from the initial purchasers or their affiliates, these arrangements will no longer apply. Furthermore, because the warrants underlying the private units will be issued in a private transaction, the holders and their transferees will be allowed to exercise such warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Rights Each holder of a right will receive one-tenth (1/10) of a share upon consummation of our initial business combination, even if the holder of such right converted all ordinary shares held by him, her or it in connection with the initial business combination or an amendment to our amended and restated memorandum and articles of association with respect to our pre-business combination activities. No additional consideration will be Table of Contents required to be paid by a holder of rights in order to receive his, her or its additional shares upon consummation of an initial business combination as the consideration related thereto has been included in the unit purchase price paid for by investors in this offering. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours) since the issuance of the shares underlying the rights will either be registered under an effective registration statement on Form S-4 (in the case where we are not the surviving entity) or be exempt from registration pursuant to an applicable exemption such as the exemption provided by Section 3(a)(9) (in the case where we are the surviving entity). The number of ordinary shares that the holders of rights are entitled to receive upon consummation of a business combination shall be equitably adjusted to reflect appropriately the effect of any share split, reverse share split, share dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the ordinary shares occurring on or after the date hereof and prior to the consummation of a business combination. The rights will be issued in registered form under a rights agreement between Continental Stock Transfer & Trust Company, as rights agent, and us. The rights agreement provides that the terms of the rights may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval, by written consent or vote, of the holders of a majority of the then outstanding rights in order to make any change that adversely affects the interests of the registered holders. If we enter into a definitive agreement for a business combination in which we will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary share basis. In the event we will not be the surviving company upon completion of our initial business combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the 1/10 of a share underlying each right (without paying any additional consideration) upon consummation of the business combination. More specifically, each holder will be required to indicate his, her or its election to convert the rights into their underlying shares as well as to return the original rights certificates to us. There is no length of time within which an investor must affirmatively elect to convert the rights. However, until a holder affirmatively elects to convert its rights, the right certificates held by such holder will not represent the ordinary shares they are convertible for but instead will simply represent the right to receive such ordinary shares. If we are unable to complete an initial business combination within the required time period and we liquidate the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from our assets held outside of the trust account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Additionally, in no event will we be required to net cash settle the rights. Because we will only issue a whole number of shares, you will not receive any fractional shares to the extent the number of rights held by you upon consummation of our initial business combination is not divisible by ten. Purchase Option We have agreed to sell to EarlyBirdCapital an option for $100 to purchase up to a total of 720 ,000 units at $10.00 per unit. The units issuable upon exercise of this option are identical to those offered by this prospectus. For a more complete description of the purchase option, see the section below entitled Underwriting Purchase Option. Dividends We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our then board of directors. It is the present intention of our Table of Contents CAPITALIZATION The following table sets forth our capitalization at February 28, 2015 and as adjusted to give effect to the sale of our units and the private units and the application of the estimated net proceeds derived from the sale of such securities. February 28, 2015 Table of Contents board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future. Our Transfer Agent, Rights Agent and Warrant Agent The transfer agent for our ordinary shares, rights agent for our rights and warrant agent for our warrants is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York 10004. Listing of our Securities There is presently no public market for our units, ordinary shares, rights or redeemable warrants. We have applied to have the units, and the ordinary shares, rights and redeemable warrants once they begin separate trading, listed on Nasdaq under the symbols ARWAU, ARWA, ARWAR and ARWAW, respectively. Although, after giving effect to this offering, we meet on a pro forma basis the minimum initial listing standards of Nasdaq, which generally only requires that we meet certain requirements relating to shareholders equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities will continue to be listed on Nasdaq as we might not meet certain continued listing standards. Certain Differences in Corporate Law Cayman Islands companies are governed by the Companies Law. The Companies Law is modeled on English Law but does not follow recent English Law statutory enactments, and differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the material differences between the provisions of the Companies Law applicable to us and the laws applicable to companies incorporated in the United States and their shareholders. Mergers and Similar Arrangements. In certain circumstances, the Companies Law allows for mergers or consolidations between two Cayman Islands companies, or between a Cayman Islands company and a company incorporated in another jurisdiction (provided that is facilitated by the laws of that other jurisdiction). Where the merger or consolidation is between two Cayman Islands companies, the directors of each company must approve a written plan of merger or consolidation containing certain prescribed information. That plan or merger or consolidation must then be authorized by either (a) a special resolution (usually a majority of 66 - 2/3 % in value) of the shareholders of each company; or (b) such other authorisation, if any, as may be specified in such constituent company s articles of association. A shareholder has the right to vote on a merger or consolidation regardless of whether the shares that he holds otherwise give him voting rights. No shareholder resolution is required for a merger between a parent company (i.e., a company that owns at least 90% of the issued shares of each class in a subsidiary company) and its subsidiary company. The consent of each holder of a fixed or floating security interest of a constituent company must be obtained, unless the court waives such requirement. If the Cayman Islands Registrar of Companies is satisfied that the requirements of the Companies Law (which includes certain other formalities) have been complied with, the Registrar of Companies will register the plan of merger or consolidation. Where the merger or consolidation involves a foreign company, the procedure is similar, save that with respect to the foreign company, the director of the Cayman Islands company is required to make a declaration to the effect that, having made due enquiry, he is of the opinion that the requirements set out below have been met: (i) that the merger or consolidation is permitted or not prohibited by the constitutional documents of the foreign company and by the laws of the jurisdiction in which the foreign company is incorporated, and that those laws and any requirements of those constitutional documents have been or will be complied with; (ii) that no petition or other similar proceeding has been filed and remains outstanding or order made or resolution adopted to wind up or liquidate the foreign company in any jurisdictions; (iii) that no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the foreign company, its affairs or its property or any part thereof; (iv) that no scheme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the foreign company are and continue to be suspended or restricted. Actual Table of Contents Where the surviving company is the Cayman Islands company, the director of the Cayman Islands company is further required to make a declaration to the effect that, having made due enquiry, he is of the opinion that the requirements set out below have been met: (i) that the foreign company is able to pay its debts as they fall due and that the merger or consolidated is bona fide and not intended to defraud unsecured creditors of the foreign company; (ii) that in respect of the transfer of any security interest granted by the foreign company to the surviving or consolidated company (a) consent or approval to the transfer has been obtained, released or waived; (b) the transfer is permitted by and has been approved in accordance with the constitutional documents of the foreign company; and (c) the laws of the jurisdiction of the foreign company with respect to the transfer have been or will be complied with; (iii) that the foreign company will, upon the merger or consolidation becoming effective, cease to be incorporated, registered or exist under the laws of the relevant foreign jurisdiction; and (iv) that there is no other reason why it would be against the public interest to permit the merger or consolidation. Where the above procedures are adopted, the Companies Law provides for a right of dissenting shareholders to be paid a payment of the fair value of his shares upon their dissenting to the merger or consolidation if they follow a prescribed procedure. In essence, that procedure is as follows (a) the shareholder must give his written objection to the merger or consolidation to the constituent company before the vote on the merger or consolidation, including a statement that the shareholder proposes to demand payment for his shares if the merger or consolidation is authorized by the vote; (b) within 20 days following the date on which the merger or consolidation is approved by the shareholders, the constituent company must give written notice to each shareholder who made a written objection; (c) a shareholder must within 20 days following receipt of such notice from the constituent company, give the constituent company a written notice of his intention to dissent including, among other details, a demand for payment of the fair value of his shares; (d) within seven days following the date of the expiration of the period set out in paragraph (b) above or seven days following the date on which the plan of merger or consolidation is filed, whichever is later, the constituent company, the surviving company or the consolidated company must make a written offer to each dissenting shareholder to purchase his shares at a price that the company determines is the fair value and if the company and the shareholder agree the price within 30 days following the date on which the offer was made, the company must pay the shareholder such amount; (e) if the company and the shareholder fail to agree a price within such 30 day period, within 20 days following the date on which such 30 day period expires, the company (and any dissenting shareholder) must file a petition with the Cayman Islands Grand Court to determine the fair value and such petition must be accompanied by a list of the names and addresses of the dissenting shareholders with whom agreements as to the fair value of their shares have not been reached by the company. At the hearing of that petition, the court has the power to determine the fair value of the shares together with a fair rate of interest, if any, to be paid by the company upon the amount determined to be the fair value. Any dissenting shareholder whose name appears on the list filed by the company may participate fully in all proceedings until the determination of fair value is reached. These rights of a dissenting shareholder are not be available in certain circumstances, for example, to dissenters holding shares of any class in respect of which an open market exists on a recognized stock exchange or recognized interdealer quotation system at the relevant date or where the consideration for such shares to be contributed are shares of any company listed on a national securities exchange or shares of the surviving or consolidated company. Moreover, Cayman Islands law also has separate statutory provisions that facilitate the reconstruction or amalgamation of companies in certain circumstances, schemes of arrangement will generally be more suited for complex mergers or other transactions involving widely held companies, commonly referred to in the Cayman Islands as a scheme of arrangement which may be tantamount to a merger. In the event that a merger was sought pursuant to a scheme of arrangement (the procedure of which are more rigorous and take longer to complete than the procedures typically required to consummate a merger in the United States), the arrangement in question must be approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meeting summoned for that purpose. The convening of the meetings and subsequently the terms of the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a As Adjusted(1) Table of Contents dissenting shareholder would have the right to express to the court the view that the transaction should not be approved, the court can be expected to approve the arrangement if it satisfies itself that: we are not proposing to act illegally or beyond the scope of our corporate authority and the statutory provisions as to majority vote have been complied with; the shareholders have been fairly represented at the meeting in question; the arrangement is such as a businessman would reasonably approve; and the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law or that would amount to a fraud on the minority. If a scheme of arrangement or takeover offer (as described below) is approved, any dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations, providing rights to receive payment in cash for the judicially determined value of the shares. Squeeze-out Provisions. When a takeover offer is made and accepted by holders of 90% of the shares to whom the offer is made within four months, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith, collusion or inequitable treatment of the shareholders. Further, transactions similar to a merger, reconstruction and/or an amalgamation may in some circumstances be achieved through other means to these statutory provisions, such as a share capital exchange, asset acquisition or control, through contractual arrangements, of an operating business. Shareholders Suits. Our Cayman Islands counsel is not aware of any reported class action having been brought in a Cayman Islands court. Derivative actions have been brought in the Cayman Islands courts, and the Cayman Islands courts have confirmed the availability for such actions. In most cases, we will be the proper plaintiff in any claim based on a breach of duty owed to us, and a claim against (for example) our officers or directors usually may not be brought by a shareholder. However, based both on Cayman Islands authorities and on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, exceptions to the foregoing principle apply in circumstances in which: a company is acting, or proposing to act, illegally or beyond the scope of its authority; the act complained of, although not beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been obtained; or those who control the company are perpetrating a fraud on the minority. A shareholder may have a direct right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed. Enforcement of civil liabilities. The Cayman Islands has a different body of securities laws as compared to the United States and may provide less protection to investors. Additionally, Cayman Islands companies may not have standing to sue before the Federal courts of the United States. We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognise or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognise and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a Note payable to related party(2) $ 171,306 $ Ordinary shares, $.0001 par value, -0- and 6,757,450 shares which are subject to possible conversion/tender 68,925,987 Preferred shares, $.0001 par value, 1,000,000 shares authorized; none issued or outstanding Ordinary shares, $.0001 par value, 100,000,000 shares authorized; 2,070,000 shares issued and outstanding, actual; 2,697,550 shares issued and outstanding(3) (excluding 6,757,450 shares subject to possible conversion/tender), as adjusted 207 270 Additional paid-in capital 24,793 5,038,843 Accumulated deficit ( 39,111 ) ( 39,111 ) Total shareholders equity: (14,111 ) 5,000,002 Total capitalization $ 157,195 $ 73,925,989 Table of Contents foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. Special Considerations for Exempted Companies. We are an exempted company with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below: annual reporting requirements are minimal and consist mainly of a statement that the company has conducted its operations mainly outside of the Cayman Islands and has complied with the provisions of the Companies Law; an exempted company s register of members is not open to inspection; an exempted company does not have to hold an annual general meeting; an exempted company may issue negotiable or bearer shares or shares with no par value; an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; an exempted company may register as a limited duration company; and an exempted company may register as a segregated portfolio company. Amended and Restated Memorandum and Articles of Association Our amended and restated memorandum and articles of association filed under the laws of the Cayman Islands contain provisions designed to provide certain rights and protections to our shareholders prior to the consummation of a business combination. The following are the material rights and protections contained in our amended and restated memorandum and articles of association: the right of public shareholders to exercise conversion rights and have their public shares repurchased in lieu of participating in a proposed business combination (up to a maximum of 20% of the public shares sold in this offering); a prohibition against completing a business combination unless we have net tangible assets of at least $5,000,001 upon consummation of such business combination; a requirement that if we seek shareholder approval of any business combination, a majority of the outstanding ordinary shares voted must be voted in favor of such business combination; the separation of our board of directors into three classes and the establishment of related procedures regarding the standing and election of such directors; a requirement that directors may call general meetings on their own accord and are required to call an extraordinary general meeting if holders of not less than 10% in par value of the issued shares request such a meeting; Table of Contents a prohibition, prior to a business combination, against our issuing (i) any ordinary shares or any securities convertible into ordinary shares or (ii) any other securities (including preferred shares) which participate in or are otherwise entitled in any manner to any of the proceeds in the trust account or which vote as a class with the ordinary shares on a business combination; a requirement that our management take all actions necessary to liquidate our trust account in the event we do not consummate a business combination by 18 months from the consummation of this offering; a prohibition, prior to a business combination, against our issuing (i) any ordinary shares or any securities convertible into ordinary shares or (ii) any other securities (including preferred shares) which participate in or are otherwise entitled in any manner to any of the proceeds in the trust account or which vote as a class with the ordinary shares on a business combination; and the limitation on shareholders rights to receive a portion of the trust account. The Companies Law permits a company incorporated in the Cayman Islands to amend its memorandum and articles of association with the approval of the holders of at least two-thirds of such company s outstanding ordinary shares. A company s articles of association may specify that the approval of a higher majority is required but, provided the approval of the required majority is obtained, any Cayman Islands company may amend its memorandum and articles of association regardless of whether its memorandum and articles of association provides otherwise. Accordingly, although we could amend any of the provisions relating to our proposed offering, structure and business plan which are contained in our amended and restated memorandum and articles of association, we view all of these provisions as binding obligations to our shareholders and neither we, nor our officers or directors, will take any action to amend or waive any of these provisions unless we provide dissenting public shareholders with the opportunity to convert their public shares in connection with any such vote. The foregoing is set forth in our amended and restated memorandum and articles of association and cannot be amended. Anti-Money Laundering Cayman Islands In order to comply with legislation or regulations aimed at the prevention of money laundering, we are required to adopt and maintain anti-money laundering procedures, and may require subscribers to provide evidence to verify their identity and source of funds. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person. We reserve the right to request such information as is necessary to verify the identity of a subscriber. In some cases the directors may be satisfied that no further information is required since an exemption applies under the Money Laundering Regulations (2013 Revision) of the Cayman Islands, as amended and revised from time to time (the Regulations ). Depending on the circumstances of each application, a detailed verification of identity might not be required where: (a) the subscriber makes the payment for their investment from an account held in the subscriber s name at a recognised financial institution; or (b) the subscriber is regulated by a recognised regulatory authority and is based or incorporated in, or formed under the law of, a recognised jurisdiction; or (c) the application is made through an intermediary which is regulated by a recognised regulatory authority and is based in or incorporated in, or formed under the law of a recognised jurisdiction and an assurance is provided in relation to the procedures undertaken on the underlying investors. For the purposes of these exceptions, recognition of a financial institution, regulatory authority or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognized by the Cayman Islands Monetary Authority as having equivalent anti-money laundering regulations. Table of Contents In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited. We also reserve the right to refuse to make any payment to a shareholder if our directors or officers suspect or are advised that the payment to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction. If any person resident in the Cayman Islands knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Law, 2008 of the Cayman Islands if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the Financial Reporting Authority, pursuant to the Terrorism Law (2011 Revision) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise. Table of Contents SHARES ELIGIBLE FOR FUTURE SALE Immediately after this offering, we will have 9,455,000 ordinary shares outstanding, or 10,859,000 shares if the over-allotment option is exercised in full. Of these shares, the 7,200,000 shares sold in this offering, or 8,280,000 shares if the over-allotment option is exercised in full, will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining shares are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. All of those shares will not be transferable except in limited circumstances described elsewhere in this prospectus. Rule 144 A person who has beneficially owned restricted ordinary shares or warrants for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Persons who have beneficially owned restricted ordinary shares for at least six months but who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period a number of shares that does not exceed the greater of either of the following: 1% of the number of ordinary shares then outstanding, which will equal 94,5 50 shares immediately after this offering (or 108,590 if the over-allotment option is exercised in full); and the average weekly trading volume of the ordinary shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. Sales under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us. Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies Historically, the SEC staff had taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition, however, if the following conditions are met: the issuer of the securities that was formerly a shell company has ceased to be a shell company; the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. As a result, it is likely that pursuant to Rule 144, our initial shareholders will be able to sell their insider shares freely without registration one year after we have completed our initial business combination assuming they are not an affiliate of ours at that time. Registration Rights The holders of our insider shares issued and outstanding on the date of this prospectus, as well as the holders of the private units (and all underlying securities) and any securities issued to our initial shareholders, officers, directors or their affiliates in payment of working capital loans made to us, will be entitled to Table of Contents registration rights pursuant to an agreement to be signed prior to or on the effective date of this offering. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the private units and securities issued in payment of working capital loans (or underlying securities) can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain piggy-back registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements. Table of Contents TAXATION The following summary of the material Cayman Islands and United States Federal income tax consequences of an investment in our ordinary shares and warrants is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares and warrants, such as the tax consequences under state, local and other tax laws. Cayman Islands Taxation The Government of the Cayman Islands will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the company or its shareholders. The Cayman Islands are not party to a double taxation treaty with any country that is applicable to any payment made to or by us. We have applied for and on October 14, 2014 received an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by the company to its members or a payment of principal or interest or other sums due under a debenture or other obligation of the company. United States Federal Income Taxation General This section is a general summary of the material United States Federal income tax provisions relating to the acquisition, ownership and disposition of our units, ordinary shares, rights and warrants. This section does not address any aspect of United States Federal gift or estate tax, or the state, local or non-United States tax consequences of an investment in our ordinary shares, rights and warrants, nor does it provide any actual representations as to any tax consequences of the acquisition, ownership or disposition of our ordinary shares, rights and warrants. Because the components of a unit are separable at the option of the holder, the holder of a unit generally will be treated, for U.S. federal income tax purposes, as the owner of the underlying ordinary share, right and redeemable warrant components of the unit, as the case may be. As a result, the discussion below of the U.S. federal income tax consequences with respect to actual holders of ordinary shares, rights and warrants should also apply to holders of units (as the deemed owners of the underlying ordinary shares, rights and redeemable warrants that comprise the units). The discussion below of the U.S. federal income tax consequences to U.S. Holders will apply to a beneficial owner of our securities that is for U.S. federal income tax purposes: an individual citizen or resident of the United States; a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia; an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or a trust if (i) a U.S. court can exercise primary supervision over the trust s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. Table of Contents If a beneficial owner of our securities is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such owner will be considered a Non-U.S. Holder. The material U.S. federal income tax consequences applicable specifically to Non-U.S. Holders are described below under the heading Non-U.S. Holders. This discussion is based on the Internal Revenue Code of 1986, as amended (the Code ), its legislative history, Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis. This discussion assumes that the ordinary shares, rights and warrants will trade separately and does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder s individual circumstances. In particular, this discussion considers only holders that own our securities as capital assets within the meaning of Section 1221 of the Code, and does not address the potential application of the alternative minimum tax. In addition, this discussion does not address the U.S. federal income tax consequences to holders that are subject to special rules, including: financial institutions or financial services entities; broker-dealers; taxpayers that are subject to the mark-to-market accounting rules under Section 475 of the Code; tax-exempt entities; governments or agencies or instrumentalities thereof; insurance companies; regulated investment companies; real estate investment trusts; expatriates or former long-term residents of the United States; persons that actually or constructively own 5 percent or more of our voting shares; persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation; persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or persons whose functional currency is not the U.S. dollar. This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, state, local or non-U.S. tax laws or, except as discussed herein, any tax reporting obligations of a holder of our securities. Additionally, this discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our securities through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our securities, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. This discussion also assumes that any distributions made (or deemed made) by us on our ordinary shares and any consideration received (or deemed received) by a holder in consideration for the sale or other disposition of our securities will be in U.S. dollars. We have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the descriptions herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion. THIS DISCUSSION IS ONLY A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES. IT DOES NOT PROVIDE ANY ACTUAL REPRESENTATIONS AS TO ANY TAX CONSEQUENCES OF Table of Contents THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES AND WE HAVE NOT OBTAINED ANY OPINION OF COUNSEL WITH RESPECT TO SUCH TAX CONSEQUENCES. AS A RESULT, EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES. Allocation of Purchase Price and Characterization of a Unit There is no authority addressing the treatment, for U.S. federal income tax purposes, of securities with terms substantially the same as the units, and, therefore, that treatment is not entirely clear. Each unit should be treated for U.S. federal income tax purposes as an investment unit consisting of one ordinary share, one right and one redeemable warrant to acquire one-half of one ordinary share. For U.S. federal income tax purposes, each holder of a unit generally must allocate the purchase price of a unit between the ordinary share, right and the redeemable warrant that comprise the unit based on the relative fair market value of each at the time of issuance. The price allocated to each ordinary share, right and redeemable warrant generally will be the holder s tax basis in such share, right or redeemable warrant, as the case may be. The foregoing treatment of our ordinary shares, rights and warrants and a holder s purchase price allocation are not binding on the IRS or the courts. Because there are no authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Accordingly, each holder is advised to consult its own tax advisor regarding the risks associated with an investment in a unit (including alternative characterizations of a unit) and regarding an allocation of the purchase price between the ordinary share, right and the redeemable warrant that comprise a unit. The balance of this discussion assumes that the characterization of the units described above is respected for U.S. federal income tax purposes. U.S. Holders Tax Reporting Certain U.S. Holders may be required to file an IRS Form 926 (Return of a U.S. Transferor of Property to a Foreign Corporation) to report a transfer of property (including cash) to us. Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting requirement. Each U.S. Holder is urged to consult with its own tax advisor regarding this reporting obligation. A U.S. holder is required to file with such U.S. holder s income tax return new Form 8938 to report the ownership of shares or securities issued by a foreign corporation exceeding certain threshold amounts. Taxation of Distributions Paid on Ordinary Shares Subject to the passive foreign investment company ( PFIC ) rules discussed below, a U.S. Holder generally will be required to include in gross income as dividends the amount of any cash distribution paid on our ordinary shares. A cash distribution on such shares generally will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such dividends paid by us will be taxable to a corporate U.S. holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. Distributions in excess of such earnings and profits generally will be applied against and reduce the U.S. Holder s basis in its ordinary shares (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares. Possible Constructive Distributions The terms of each warrant provide for an adjustment to the number of shares for which the warrant may be exercised or to the exercise price of the warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. However, the U.S. Holders of the warrants would be treated as Table of Contents receiving a constructive distribution from us if, for example, the adjustment increases the warrant holders proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of ordinary shares that would be obtained upon exercise) as a result of a distribution of cash to the holders of our ordinary shares which is taxable to the U.S. Holders of such ordinary shares as described under Taxation of Distributions Paid on Ordinary Shares above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. Holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest. Taxation on the Disposition of Ordinary Shares, Rights and Warrants Upon a sale or other taxable disposition of our ordinary shares, rights or warrants (which, in general, would include a redemption of warrants or ordinary shares, as discussed below, and including as a result of a dissolution and liquidation in the event we do not consummate an initial business combination within the required time), and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder s adjusted tax basis in the ordinary shares, rights or warrants. See Exercise or Lapse of a Right or Warrant below for a discussion regarding a U.S. Holder s basis in the ordinary share acquired pursuant to the exercise of a warrant. The regular U.S. federal income tax rate on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on ordinary income, except that under tax law currently in effect long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a maximum regular rates of 15% or 20% depending upon the U.S. Holder s level of taxable income. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder s holding period for the ordinary shares, rights or warrants exceeds one year. It is unclear whether the redemption rights with respect to the ordinary shares described in this prospectus may prevent a U.S. Holder from satisfying the applicable holding period requirements for this purpose. The deductibility of capital losses is subject to various limitations that are not described herein because a discussion of such limitations depends on each U.S. Holder s particular facts and circumstances. Among such limitations is the deduction for losses upon a taxable disposition by a U.S. Holder of shares, rights or a warrant (whether or not held as part of a unit) if, within a period beginning 30 days before the date of such disposition and ending 30 days after such date, such U.S. Holder has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical shares or securities. U.S. Holders who recognize losses with respect to a disposition of our ordinary shares, rights or warrants should consult their own tax advisors regarding the tax treatment of such losses. Conversion of Ordinary Shares Subject to the PFIC rules described below, if a U.S. Holder converts ordinary shares into the right to receive cash pursuant to the exercise of a shareholder conversion right, for U.S. federal income tax purposes, such conversion will be subject to the following rules. If the conversion qualifies as a sale of the ordinary shares under Section 302 of the Code, the tax treatment of such conversion will be as described under Taxation on the Disposition of Ordinary Shares and Warrants above. If the conversion does not qualify as a sale of ordinary shares under Section 302 of the Code, a U.S. Holder will be treated as receiving a distribution with the tax consequences described below. Whether conversion of our shares qualifies for sale treatment will depend largely on the total number of our ordinary shares treated as held by such U.S. Holder (including any shares constructively owned as a result of, among other things, owning warrants). The conversion of ordinary shares generally will be treated as a sale or exchange of the ordinary shares (rather than as a distribution) if the receipt of cash upon the conversion (i) is substantially disproportionate with respect to a U.S. Holder, (ii) results in a complete termination of such holder s interest in us or (iii) is not essentially equivalent to a dividend with respect to such holder. These tests are explained more fully below. In determining whether any of the foregoing tests are satisfied, a U.S. Holder must take into account not only our ordinary shares actually owned by such holder, but also our ordinary shares that are constructively owned by such holder. A U.S. Holder may constructively own, in addition to our ordinary shares owned Table of Contents directly, ordinary shares owned by related individuals and entities in which such holder has an interest or that have an interest in such holder, as well as any ordinary shares such holder has a right to acquire by exercise of an option, which would generally include ordinary shares which could be acquired by ownership of the rights or pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our outstanding voting shares actually and constructively owned by a U.S. Holder immediately following the conversion of our ordinary shares must, among other requirements, be less than 80% of the percentage of our outstanding voting and ordinary shares actually and constructively owned by such holder immediately before the conversion. There will be a complete termination of a U.S. Holder s interest if either (i) all of our ordinary shares actually and constructively owned by such U.S. Holder are converted or (ii) all of our ordinary shares actually owned by such U.S. Holder are converted and such holder is eligible to waive, and effectively waives, in accordance with specific rules, the attribution of shares owned by family members and such holder does not constructively own any other shares. The conversion of the ordinary shares will not be essentially equivalent to a dividend if such conversion results in a meaningful reduction of a U.S. Holder s proportionate interest in us. Whether the conversion will result in a meaningful reduction in a U.S. Holder s proportionate interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a meaningful reduction. U.S. Holders should consult with their own tax advisors as to the tax consequences of an exercise of the conversion right. If none of the foregoing tests are satisfied, then the redemption may be treated as a distribution and the tax effects will be as described under Taxation of Distributions Paid on Ordinary Shares, above. After the application of those rules, any remaining tax basis a U.S. Holder has in the redeemed ordinary shares will be added to the adjusted tax basis in such holder s remaining ordinary shares. If there are no remaining ordinary shares, a U.S. Holder should consult its own tax advisors as to the allocation of any remaining basis. U.S. Holders who actually or constructively own one percent or more of our shares (by vote or value) may be subject to special reporting requirements with respect to a conversion of ordinary shares, and such holders should consult with their own tax advisors with respect to their reporting requirements. Exercise or Lapse of a Right or Warrant Subject to the PFIC rules discussed below, a U.S. Holder generally will not recognize gain or loss upon the acquisition of an ordinary share from the right or on the exercise of a warrant for cash. An ordinary share received upon consummation of an initial business combination or acquired pursuant to the exercise of a warrant for cash generally will have a tax basis equal to the U.S. Holder s tax basis in the right or warrant, increased by the amount paid to exercise the warrant. The holding period of such ordinary share generally would begin on the day after the date of receipt of shares from the right or exercise of the warrant and will not include the period during which the U.S. Holder held the right or warrant. If a warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder s tax basis in the warrant. The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a gain realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a U.S. Holder s basis in the ordinary shares received would equal the holder s basis in the warrant. If the cashless exercise were treated as not being a gain realization event, a U.S. Holder s holding period in the ordinary shares would be treated as commencing on the date following the date of exercise of the warrant. If the cashless exercise were treated as a recapitalization, the holding period of the ordinary shares would include the holding period of the warrant. It is also possible that a cashless exercise could be treated as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. Holder could be deemed to have surrendered warrants equal to the number of ordinary shares having a value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would recognize capital gain or loss in an amount equal to the difference between the fair market value of the ordinary shares represented by the warrants deemed surrendered and the U.S. Holder s tax basis in the warrants deemed surrendered. In this case, a U.S. Holder s Table of Contents tax basis in the ordinary shares received would equal the sum of the fair market value of the ordinary shares represented by the warrants deemed surrendered and the U.S. Holder s tax basis in the warrants exercised. A U.S. Holder s holding period for the ordinary shares would commence on the date following the date of exercise of the warrant. Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding the tax consequences of a cashless exercise. Unearned Income Medicare Tax A 3.8% Medicare contribution tax will generally apply to all or some portion of the net investment income of a U.S. Holder that is an individual with adjusted gross income that exceeds a threshold amount ($250,000 if married filing jointly or if considered a surviving spouse for federal income tax purposes, $125,000 if married filing separately, and $200,000 in other cases). This 3.8% tax will also apply to all or some portion of the undistributed net investment income of certain U.S. Holders that are estates and trusts. For these purposes, dividends and gains from the taxable dispositions of the ordinary shares, rights and warrants will generally be taken into account in computing such a U.S. Holder s net investment income. Information Reporting and Backup Withholding Information returns may be filed with the IRS with respect to dividends or other distributions we may pay to you and proceeds from the sale of your ordinary shares or warrants. You will be subject to backup withholding on these payments if you fail to provide your taxpayer identification number to the paying agent and comply with certain certification procedures or otherwise establish an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld with respect to your ordinary shares, rights or warrants under the backup withholding rules will be refunded to you or credited against your United States federal income tax liability, if any, by the IRS provided that certain required information is furnished to the IRS in a timely manner. Passive Foreign Investment Company Rules A foreign (i.e., non-U.S.) corporation will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. Because we are a blank check company, with no current active business, we believe that it is likely that we will meet the PFIC asset or income test for our current taxable year. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up exception to us will not be known until after the close of our current taxable year. After the acquisition of a company or assets in a business combination, we may still meet one of the PFIC tests depending on the timing of the acquisition and the amount of our passive income and assets as well as the passive income and assets of the acquired business. If the company that we acquire in a business combination is a PFIC, then we will likely not qualify for the start-up exception and will be a PFIC for our current taxable year ending December 31, 2014. Our actual PFIC status for our current taxable year or any subsequent taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year. If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our ordinary shares, rights or warrants and, in the case of our ordinary shares, the Table of Contents U.S. Holder did not make either a timely qualified electing fund ( QEF ) election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares, as described below, such holder generally will be subject to special rules with respect to: any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares, rights or warrants; and any excess distribution made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder s holding period for the ordinary shares). Under these rules, the U.S. Holder s gain or excess distribution will be allocated ratably over the U.S. Holder s holding period for the ordinary shares, rights or warrants; the amount allocated to the U.S. Holder s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income; the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder. In general, if we are determined to be a PFIC, a U.S. Holder will avoid the PFIC tax consequences described above in respect to our ordinary shares by making a timely QEF election to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge. A U.S. Holder may not make a QEF election with respect to its rights or warrants to acquire our ordinary shares. As a result, if a U.S. Holder sells or otherwise disposes of such rights or warrants (other than upon exchange of rights or exercise of such warrants), any gain recognized generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if we were a PFIC at any time during the period the U.S. Holder held the rights or warrants. If a U.S. Holder that exercises such warrants properly makes a QEF election with respect to the newly acquired ordinary shares (or has previously made a QEF election with respect to our ordinary shares), the QEF election will apply to the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election under the PFIC rules. The purging election creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares acquired upon the exercise of the warrants for purposes of the PFIC rules. The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be Table of Contents made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular circumstances. In order to comply with the requirements of a QEF election, a U.S. Holder must receive a PFIC annual information statement from us. If we determine we are a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided. If a U.S. Holder has made a QEF election with respect to our ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC taint pursuant to a purging election, as described above), any gain recognized on the sale of our ordinary shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable as a dividend to such U.S. Holders. The tax basis of a U.S. Holder s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF. Although a determination as to our PFIC status will be made annually, an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held ordinary shares or warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any taxable year of us that ends within or with a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder makes a purging election, as described above, and pays the tax and interest charge with respect to the gain inherent in such shares attributable to the pre-QEF election period. Alternatively, if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable shares, the U.S. Holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) ordinary shares in us and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares. Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder s basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to warrants. The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including Nasdaq Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors Table of Contents regarding the availability and tax consequences of a mark-to-market election in respect to our ordinary shares under their particular circumstances. If we are a PFIC and, at any time, have a foreign subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or the U.S. Holders otherwise were deemed to have disposed of an interest in the lower-tier PFIC. We will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder the information that may be required to make or maintain a QEF election with respect to the lower-tier PFIC. However, there is no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition, we may not hold a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause the lower-tier PFIC to provide the required information. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs. A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621 (whether or not a QEF or market-to-market election is made) and such other information as may be required by the U.S. Treasury Department. The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of our ordinary shares and warrants should consult their own tax advisors concerning the application of the PFIC rules to our ordinary shares and warrants under their particular circumstances. Non-U.S. Holders Dividends (including constructive dividends) paid or deemed paid to a Non-U.S. Holder in respect to its ordinary shares generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United States). In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our ordinary shares, rights or warrants unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from United States sources generally is subject to tax at a 30% rate or a lower applicable tax treaty rate). Dividends and gains that are effectively connected with the Non-U.S. Holder s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally will be subject to U.S. federal income tax (but not the Medicare contribution tax) at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate. The U.S. federal income tax treatment of a Non-U.S. Holder s receipt of a share upon consummation of an initial business combination or exercise of a warrant, or the lapse of a warrant held by a Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment of the receipt of a share or exercise or lapse of a warrant by a U.S. Holder, as described under U.S. Holders Exercise or Lapse of a Right or Warrant , above, although to the extent a cashless exercise results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above for a Non-U.S. Holders gain on the sale or other disposition of our ordinary shares, rights and warrants. Backup Withholding and Information Reporting In general, information reporting for U.S. federal income tax purposes should apply to distributions made on our ordinary shares within the United States to a U.S. Holder, subject to certain exceptions, and to the Table of Contents proceeds from sales and other dispositions of our ordinary shares, rights or warrants by a U.S. Holder to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances. In addition, backup withholding of U.S. federal income tax, currently at a rate of 28%, generally will apply to dividends paid on our ordinary shares to a U.S. Holder and the proceeds from sales and other dispositions of shares, rights or warrants by a U.S. Holder, in each case who: fails to provide an accurate taxpayer identification number; is notified by the IRS that backup withholding is required; or fails to comply with applicable certification requirements. A Non-U.S. Holder generally will eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption. We will withhold all taxes required to be withheld by law from any amounts otherwise payable to any holder of our ordinary shares or securities, including tax withholding required by the backup withholding rules. Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder s or a Non-U.S. Holder s U.S. federal income tax liability and may entitle such holder to a refund, provided that the requisite information is timely furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedure for obtaining an exemption from backup withholding in their particular circumstances. A 30% withholding tax will be imposed on payments to certain foreign entities on dividends on and the gross proceeds of dispositions of U.S. equity interests, unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied. Non-U.S. Holders should consult their tax advisors regarding the possible implications of this legislation on their investment in the units. EarlyBirdCapital, Inc. I-Bankers Securities, Inc. Total 7,200,000 A copy of the underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part. The underwriting agreement provides that the underwriters must purchase all of the units if they purchase any of them. However, the underwriters are not required to take or pay for the units covered by the over-allotment option described below. Our units are offered subject to a number of conditions, including: receipt and acceptance of the units by the underwriters; and the underwriters right to reject orders in whole or in part. In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically. Upon the execution of the underwriting agreement, the underwriters will be obligated to purchase the units at the prices and upon the terms stated therein, and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms after completion of this offering. Over-allotment Option We have granted the underwriters an option to buy up to 1,080,000 additional units. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriters have 45 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional units approximately in proportion to the amounts specified in the table above. Commissions and Discounts Units sold by the underwriters to the public will initially be offered at the offering price set forth on the cover of this prospectus. Any units sold by the underwriters to securities dealers may be sold at a discount of up to $_____ per unit from the public offering price. Any of these securities dealers may resell any units purchased from the underwriters to other brokers or dealers at a discount of up to $_____ per unit from the public offering price. If all of the units are not sold at the initial public offering price, the representative may change the offering price and the other selling terms. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the units at the prices and upon the terms stated therein, and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms. No offer or invitation to subscribe for units may be made to the public in the Cayman Islands. (1) The offering expenses are estimated at $450,000. No discounts or commissions will be paid on the sale of the private units. Business Combination Marketing Agreement We have engaged EarlyBirdCapital to assist us in connection with our initial business combination. Pursuant to this arrangement, EarlyBirdCapital will assist us in holding meetings with our shareholders to discuss the potential business combination and the target business s attributes, introduce us to potential investors that may be interested in purchasing our securities, assist us in obtaining shareholder approval for the business combination and assist us with our press releases and certain public filings in connection with the business combination. Pursuant to this arrangement, we will pay EarlyBirdCapital a cash fee equal to 4% of the gross proceeds received in this offering for such services upon the consummation of our initial business combination (exclusive of any applicable finders fees which might become payable). We will also reimburse EarlyBirdCapital for up to $20,000 of its reasonable costs and expenses incurred by it (including reasonable fees and disbursements of counsel) in connection with the performance of its services pursuant to the agreement; provided, however, all expenses in excess of $5,000 in the aggregate shall be subject to our prior written approval, which approval will not be unreasonably withheld. Purchase Option We have agreed to sell to the representative, for $100, an option to purchase up to a total of 720 ,000 units. The units issuable upon exercise of this option are identical to those offered by this prospectus. This option is exercisable at $10.00 per unit, and may be exercised on a cashless basis, in whole or in part, commencing on the later of the consummation of a business combination or the one-year anniversary of the date of this prospectus. The option expires on the five-year anniversary of the effective date of the registration statement of which this prospectus forms a part. Since the option is not exercisable until at the earliest the consummation of a business combination, and the rights will result in the issuance of shares upon consummation of a business combination, the option will effectively represent the right to purchase 792 ,000 ordinary shares (which includes the 72 ,000 ordinary shares issuable for the rights included in the units), and 720 ,000 redeemable warrants to purchase 3 6 0,000 shares, for $ 7,200,000 . Notwithstanding anything to the contrary, neither the option nor the redeemable warrants underlying the option shall be exercisable after the five year anniversary of the effective date of the registration statement of which this prospectus forms a part. The option and the 720 ,000 units, the 720 ,000 ordinary shares and the 720 ,000 redeemable warrants underlying such units, and the 3 6 0,000 ordinary shares underlying such redeemable warrants and 72 ,000 shares relating to the rights that are issuable upon consummation of our initial business combination, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of the FINRA Conduct Rules. Accordingly, the option may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part, except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners and except as otherwise provided in Rule 5110(g)(2) of the FINRA Conduct Rules. Although the purchase option and its underlying securities have been registered under the registration statement of which this prospectus forms a part, the option grants to holders demand and piggy back rights for periods of five Table of Contents that the underwriters will not exercise their over-allotment option. None of the terms of a Rule 419 offering will apply to this offering because we will be listed on a national securities exchange, we will have net tangible assets in excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact. Terms of the Offering Table of Contents and seven years, respectively, from the effective date of the registration statement of which this prospectus forms a part with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. We will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. We will have no obligation to net cash settle the exercise of the purchase option or the redeemable warrants underlying the purchase option. The holder of the purchase option will not be entitled to exercise the purchase option or the redeemable warrants underlying the purchase option unless a registration statement covering the securities underlying the purchase option is effective or an exemption from registration is available. If the holder is unable to exercise the purchase option or underlying redeemable warrants, the purchase option or redeemable warrants, as applicable, will expire worthless. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a share dividend, or our recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise price. Listing of our Securities There is presently no public market for our units, ordinary shares, rights or redeemable warrants. We have applied to have the units, and the ordinary shares, rights and redeemable warrants once they begin separate trading, listed on Nasdaq under the symbols ARWAU , ARWA, ARWAR and ARWAW , respectively. Although, after giving effect to this offering, we meet on a pro forma basis the minimum initial listing standards of Nasdaq, which generally only requires that we meet certain requirements relating to shareholders equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities will continue to be listed on Nasdaq as we might not meet certain continued listing standards. Pricing of Securities We have been advised by the representative that the underwriters propose to offer the units to the public at the offering price set forth on the cover page of this prospectus. Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the rights and redeemable warrants were negotiated between us and the representative. Factors considered in determining the prices and terms of the units, including the ordinary shares, rights and redeemable warrants underlying the units, include: the history and prospects of companies whose principal business is the acquisition of other companies; prior offerings of those companies; our prospects for acquiring an operating business at attractive values; our capital structure; the per share amount of net proceeds being placed into the trust account; an assessment of our management and their experience in identifying operating companies; general conditions of the securities markets at the time of the offering; and other factors as were deemed relevant. However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since the underwriters are unable to compare our financial results and prospects with those of public companies operating in the same industry. Terms Under a Rule 419 Offering Table of Contents Regulatory Restrictions on Purchase of Securities Rules of the SEC may limit the ability of the underwriters to bid for or purchase our units before the distribution of the units is completed. However, the underwriters may engage in the following activities in accordance with the rules: Stabilizing Transactions. The underwriters may make bids or purchases for the purpose of preventing or retarding a decline in the price of our units, as long as stabilizing bids do not exceed the offering price of $10.00 and the underwriters comply with all other applicable rules. Over-Allotments and Syndicate Coverage Transactions. The underwriters may create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus up to the amount of the over-allotment option. This is known as a covered short position. The underwriters may also create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus and the units allowed by the over-allotment option. This is known as a naked short position. If the underwriters create a short position during the offering, the representative may engage in syndicate covering transactions by purchasing our units in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option. Determining what method to use in reducing the short position depends on how the units trade in the aftermarket following the offering. If the unit price drops following the offering, the short position is usually covered with shares purchased by the underwriters in the aftermarket. However, the underwriters may cover a short position by exercising the over-allotment option even if the unit price drops following the offering. If the unit price rises after the offering, then the over-allotment option is used to cover the short position. If the short position is more than the over-allotment option, the naked short must be covered by purchases in the aftermarket, which could be at prices above the offering price. Penalty Bids. The representative may reclaim a selling concession from a syndicate member when the units originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. Stabilization and syndicate covering transactions may cause the price of our securities to be higher than they would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the prices of our securities if it discourages resales of our securities. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our securities. These transactions may occur on Nasdaq, in the over-the-counter market or on any trading market. If any of these transactions are commenced, they may be discontinued without notice at any time. Other Terms We are obligated to reimburse the underwriters up to $ 35,500 for (i) filing fees, costs and expenses (including fees and disbursements of underwriters counsel not to exceed $15,000) incurred in registering the offering with FINRA; (ii) preparation of transaction bibles and lucite cube mementos (with expenses not to exceed $3,000 for such transaction bibles and lucite cube mementos ); and (iii) the costs of an investigative search firm to conduct background checks on our principals, up to a maximum of $3,500 per principal or $17,500 in the aggregate . Except as set forth above, we are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, and have no present intent to do so. However, any of the underwriters may, among other things, introduce us to potential target businesses or assist us in raising additional capital, as needs may arise in the future. If any underwriter provides services to us after this offering, we may pay the underwriter fair and reasonable fees that would be determined at that time in an arm s length negotiation; provided that no agreement will be entered into with the underwriter and no fees for such services will be paid to the underwriter prior to the date which is 90 days after the date of this prospectus, unless FINRA determines that such payment would not be deemed underwriter s compensation in connection with this offering. Table of Contents Indemnification We have agreed to indemnify the underwriters against some liabilities, including civil liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in this respect. Selling Restrictions Canada Resale Restrictions We intend to distribute our securities in the Province of Ontario, Canada (the Canadian Offering Jurisdiction ) by way of a private placement and exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in such Canadian Offering Jurisdiction. Any resale of our securities in Canada must be made under applicable securities laws that will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Canadian resale restrictions in some circumstances may apply to resales of interests made outside of Canada. Canadian purchasers are advised to seek legal advice prior to any resale of our securities. We may never be a reporting issuer , as such term is defined under applicable Canadian securities legislation, in any province or territory of Canada in which our securities will be offered and there currently is no public market for any of the securities in Canada, and one may never develop. Canadian investors are advised that we have no intention to file a prospectus or similar document with any securities regulatory authority in Canada qualifying the resale of the securities to the public in any province or territory in Canada. Representations of Purchasers A Canadian purchaser will be required to represent to us and the dealer from whom the purchase confirmation is received that: the purchaser is entitled under applicable provincial securities laws to purchase our securities without the benefit of a prospectus qualified under those securities laws; where required by law, that the purchaser is purchasing as principal and not as agent; the purchaser has reviewed the text above under Resale Restrictions; and the purchaser acknowledges and consents to the provision of specified information concerning its purchase of our securities to the regulatory authority that by law is entitled to collect the information. Rights of Action Ontario Purchasers Only Under Ontario securities legislation, certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of our securities, for rescission against us in the event that this prospectus contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for our securities. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for our securities. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us. In no case will the amount recoverable in any action exceed the price at which our securities were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for damages, we will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of our securities as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions. Table of Contents Terms of the Offering Table of Contents Enforcement of Legal Rights All of our directors and officers as well as the experts named herein are located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All of our assets and the assets of those persons are located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada. Collection of Personal Information If a Canadian purchaser is resident in or otherwise subject to the securities laws of the Province of Ontario, the Purchaser authorizes the indirect collection of personal information pertaining to the Canadian purchaser by the Ontario Securities Commission (the OSC ) and each Canadian purchaser will be required to acknowledge and agree that the Canadian purchaser has been notified by us (i) of the delivery to the OSC of personal information pertaining to the Canadian purchaser, including, without limitation, the full name, residential address and telephone number of the Canadian purchaser, the number and type of securities purchased and the total purchase price paid in respect of the securities, (ii) that this information is being collected indirectly by the OSC under the authority granted to it in securities legislation, (iii) that this information is being collected for the purposes of the administration and enforcement of the securities legislation of Ontario, and (iv) that the title, business address and business telephone number of the public official in Ontario who can answer questions about the OSC s indirect collection of the information is the Administrative Assistant to the Director of Corporate Finance, the Ontario Securities Commission, Suite 1903, Box 5520, Queen Street West, Toronto, Ontario, M5H 3S8, Telephone: (416) 593-8086, Facsimile: (416) 593-8252. Cayman Islands No offer or invitation to subscribe for shares may be made to the public in the Cayman Islands. LEGAL MATTERS Graubard Miller, New York, New York, is acting as United States counsel in connection with the registration of our securities under the Securities Act and will pass on the validity of the rights and redeemable warrants offered in the prospectus. Legal matters as to Cayman Islands law, as well as the validity of the issuance of the shares offered in this prospectus, will be passed upon for us by Maples and Calder, Cayman Islands. McDermott Will & Emery LLP, New York, New York, is acting as counsel for the underwriters in this offering. EXPERTS The financial statements of Arowana Inc. as of February 28, 2015 and for the period from October 1, 2014 (inception) through February 28, 2015 appearing in this prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report, thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of Arowana Inc. to continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, and are included in reliance on such report given on the authority of such firm as an experts in auditing and accounting. Terms Under a Rule 419 Offering Table of Contents WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the SEC a registration statement on Form S-1, which includes exhibits, schedules and amendments, under the Securities Act, with respect to this offering of our securities. Although this prospectus, which forms a part of the registration statement, contains all material information included in the registration statement, parts of the registration statement have been omitted as permitted by rules and regulations of the SEC. We refer you to the registration statement and its exhibits for further information about us, our securities and this offering. The registration statement and its exhibits, as well as our other reports filed with the SEC, can be inspected and copied at the SEC s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information about the operation of the public reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at http://www.sec.gov which contains the Form S-1 and other reports, proxy and information statements and information regarding issuers that file electronically with the SEC. Table of Contents Terms of the Offering Terms Under a Rule 419 Offering Table of Contents MANAGEMENT Directors and Executive Officers Our current directors and executive officers are as follows: Name Age Position Table of Contents opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual obligations he might have. The following table summarizes the other relevant pre-existing fiduciary or contractual obligations of our officers and directors: Name of Affiliated Company Name of Individual Priority/Preference relative to Arowana Inc. Table of Contents PRINCIPAL SHAREHOLDERS The following table sets forth information regarding the beneficial ownership of our ordinary shares as of the date of this prospectus and as adjusted to reflect the sale of our ordinary shares included in the units offered by this prospectus (assuming none of the individuals listed purchase units in this offering), by: each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary shares; each of our officers and directors; and all of our officers and directors as a group. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following table does not reflect record of beneficial ownership of any ordinary shares issuable upon exercise of warrants or conversion of rights as these warrants and rights are not exercisable or convertible within 60 days of the date of this prospectus. Prior to Offering After Offering(2) Name and Address of Beneficial Owner(1) Amount and Nature of Beneficial Ownership Approximate Percentage of Outstanding Ordinary Shares Amount and Nature of Beneficial Ownership Approximate Percentage of Outstanding Ordinary Shares Kevin Chin 827,979 (3)(4) 39.9 % 829,922 (3)(4) 8.8 % Gary Hui 255,549 ) (3)(9 ) 12. 3 % 276,155 2.9 % John C. Moore 25,554 ( 10) 1.2 % 27,614 * Dudley Hoskin( 5 ) 25,554 1.2 % 27,614 * Kien Khan Kwan 25,554 1.2 % 27,614 * The Octagon Foundation( 6 ) 408,878 19.7 % 506,672 5.4 % The Panaga Group Trust( 7 ) 827,97 9 39.9 % 829,922 8.8 % Arowana Australasian Special Situations Partnership 1, LP ( 8 ) 424,218 20. 5 % 368,752 3.9 % All directors and executive officers as a group (five individuals) 1,160,190 56.0 % 1,188,919 12.6 % Table of Contents UNDERWRITING We intend to offer our securities described in this prospectus through the underwriters named below. EarlyBirdCapital, Inc. is the representative for the underwriters. We have entered into an underwriting agreement with the representative. Subject to the terms and conditions of the underwriting agreement, each of the underwriters has severally agreed to purchase from us the number of units listed next to its name in the following table: Underwriter Number of Units Table of Contents The following table shows the per unit and total underwriting discounts and commissions we will pay to the underwriters assuming both no exercise and full exercise of the underwriters over-allotment option to purchase up to an additional 1,080,000 units. Per Unit Without Over-allotment With Over-allotment Public offering price $ 10.00 $ 72 ,000,000 $ 82,800,000 Discount $ 0.30 $ 2,160,000 $ 2,484,000 Proceeds before expenses(1) $ 9.70 $ 69,840,000 $ 80,316,000 Table of Contents Arowana Inc. Balance Sheet February 28, 2015 Assets Current Asset: Cash and cash equivalents $ 29,319 Deferred offering costs associated with proposed public offering 127,876 Total Assets $ 157,195 Liabilities and Shareholders Deficit Current Liabilities: Note payable related party 171,306 Total Current Liabilities 171,306 Commitments Shareholders Deficit : Preferred shares, $0.0001 par value; 1,000,000 authorized none issued and outstanding Ordinary shares, $0.0001 par value; 100,000,000 shares authorized; 2,070,000 shares issued and outstanding(1) 207 Additional paid in capital 24,793 Accumulated deficit ( 39,111 ) Total Shareholders Deficit (14,111 ) Total Liabilities and Shareholders Deficit $ 157,195 Table of Contents Arowana Inc. Statement of Operations For The Period from October 1, 2014 (Inception) through February 28, 2015 Formation and operating costs $ 39,111 Net loss $ ( 39,111 ) Net loss per ordinary share basic & diluted $ (0.0 2 ) Weighted average ordinary shares outstanding basic & diluted 1, 8 00,000 (1) Table of Contents Arowana Inc. Statement of Changes in Shareholder s Deficit For The Period From October 1, 2014 (Inception) through February 28, 2015 Ordinary Shares (1) Shares Amount Additional Paid-In Capital Accumulated Deficit Shareholder s Deficit Table of Contents Until __________, 2015, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful. $ 72 ,000,000 Arowana Inc. 7,200,000 Units PROSPECTUS Sole Book-Running Manager EarlyBirdCapital, Inc. I-Bankers Securities, Inc. ____________, 2015 Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as follows: Initial Trustees fee $ 1,000 (1) SEC Registration Fee 10,500 FINRA filing fee 14,000 Accounting fees and expenses 35,000 Nasdaq listing fees 50,000 Printing and engraving expenses 45,000 Directors & Officers liability insurance premiums 70,000 (2) Legal fees and expenses 270,000 Miscellaneous 24,500 (3) Total $ 520,000 (1) In addition to the initial acceptance fee that is charged by Continental Stock Transfer & Trust Company, as trustee, the registrant will be required to pay to Continental Stock Transfer & Trust Company $16,100 for acting as trustee, as transfer agent of the registrant s ordinary shares, as warrant agent for the registrant s warrants, as rights agent for the registrant s rights and as escrow agent. (2) This amount represents the approximate amount of director and officer liability insurance premiums the registrant anticipates paying following the consummation of its initial public offering and until it consummates a business combination. (3) This amount represents additional expenses that may be incurred by the Company in connection with the offering over and above those specifically listed above, including distribution and mailing costs. Item 14. Indemnification of Directors and Officers. Cayman Islands law does not limit the extent to which a company s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. Our memorandum and articles of association will provide for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable. Item 15. Recent Sales of Unregistered Securities. (a) During the past three years, we sold the following ordinary shares without registration under the Securities Act: In October 2014, the Company issued an aggregate of 1,725,000 ordinary shares to its initial shareholders for an aggregate purchase price of $25,000, or approximately $0.01 per share, in connection with the Company s organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. II-1 Issuance of ordinary shares 2,070,000 $ 207 $ 24, 793 $ $ 25,000 Net loss ( 39,111 ) ( 39,111 ) Balance, February 28, 2015 2,070,000 $ Table of Contents In February 2015, the Company issued an aggregate of 345,000 ordinary shares to its initial shareholders by way of capitalisation under Cayman Islands law, pursuant to the exemption from registration contained in Section 4(2) of the Securities Act. In addition, the initial shareholders have committed to purchase an aggregate of 455 ,000 private units from the Company on a private placement basis simultaneously with the consummation of this offering. The initial shareholders have also agreed that if the over-allotment option is exercised by the underwriters in full or in part, they will purchase from the Company at a price of $10.00 per unit up to an additional 54 ,000 private units. These issuances will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such sales. Item 16. Exhibits and Financial Statement Schedules. (a) The following exhibits are filed as part of this Registration Statement: Exhibit No. Description 1.1 Form of Underwriting Agreement. 1.2 Business Combination Marketing Agreement. ** 3.1 Amended and Restated Memorandum and Articles of Association. ** 4.1 Specimen Unit Certificate.** 4.2 Specimen Ordinary Share Certificate.** 4.3 Specimen Right Certificate.** 4.4 Specimen Warrant Certificate. ** 4.5 Form of Rights Agreement between Continental Stock Transfer & Trust Company and the Registrant. 4.6 Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant. 4.7 Form of Unit Purchase Option between the Registrant and EarlyBirdCapital, Inc. 5.1 Opinion of Maples and Calder. 5.2 Opinion of Graubard Miller. 10.1 Form of Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and the Company s officers, directors and shareholders.** 10.2 Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant. 10.3 Form of Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Shareholders. 10.4 Form of Letter Agreement between Arowana International and the Registrant regarding administrative support.** 10.5 Form of Promissory Note issued to Arowana Partners Group Pty Ltd.** 10.6 Form of Registration Rights Agreement among the Registrant and the Initial Shareholders.** 10.7 Form of Subscription Agreement among the Registrant, Graubard Miller and the Initial Shareholders.** 10.8 Form of Letter Agreement among the Registrant, EarlyBirdCapital and Kevin T. Chin.** 14 Form of Code of Ethics.** 23.1 Consent of Marcum LLP. 23.2 Consent of Maples and Calder (included in Exhibit 5.1). 23.3 Consent of Graubard Miller (included in Exhibit 5.2). II-2 Table of Contents Exhibit No. Description 24 Power of Attorney (included on signature page of this Registration Statement). 99.1 Form of Audit Committee Charter.** 99.2 Form of Nominating Committee Charter.** 99.3 Form of Compensation Committee Charter.** ** Previously filed. Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement; iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That for the purpose of determining any liability under the Securities Act of 1933 in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. II-3 Table of Contents (5) That for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (b) The undersigned hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of North Sydney, Australia, on the 13 th day of March , 2015. AROWANA INC. By: /s/ Kevin Tser Fah Chin Name: Kevin Tser Fah Chin Title: Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin Tser Fah Chin and Gary San Hui his true and lawful attorney-in-fact, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Name Position Date /s/ Kevin Tser Fah Chin Kevin Tser Fah Chin Executive Chairman of the Board and Chief Executive Officer (Principal executive officer) March 13 , 2015 /s/ Gary San Hui Gary San Hui Chief Financial Officer (Principal financial and accounting officer), Chief Investment Officer and Director March 13 , 2015 /s/ John C. Moore John C. Moore Director March 13 , 2015 /s/ Dudley Hoskin Dudley Hoskin Director March 13 , 2015 /s/ Kien Khan Kwan Kien Khan Kwan Director March 13 , 2015 II-5 AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622676_taxus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622676_taxus_prospectus_summary.txt
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+Our Company The Registrant, Taxus Pharmaceuticals Holdings, Inc, was founded under the name Little Neck Health Connection Inc under the laws of the State of New York on January 2, 2002. On September 22, 2014, the Registrant changed its name to Taxus Pharmaceuticals Holdings, Inc and still does business as Little Neck Health Connection Inc. We are a retail store that sells dietary supplement products such as vitamins, minerals, calcium, fibers, and proteins, etc. Our sales revenue is $ 146,776 for the year ended June 30, 2014 and $136,650 for the year ended June 30, 2013. The Offering This prospectus relates to the resale of up to 1,500,000 shares of Common Stock, par value $0.00001 per share ( Shares ) of Taxus Pharmaceuticals Holdings, Inc., a New York corporation, that may be sold from time to time by Selling Stockholders. Selling stockholders will sell at a fixed price of $ 0.10 per share until our common shares are quoted on OTCBB and, thereafter, at prevailing market prices or privately negotiated price. We intend to apply to have our common stock quoted on the OTCBB within one year after this Form S-1 Registration Statement becomes effective and we estimate that the application process might take approximately 3 months. We have not been approved for listing on OTCBB and we may not be successful in the application to list on OTCBB. The Shares were issued to the Selling Stockholders in private placement transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Common Stock outstanding prior to offering 81,500,200 Total shares held by non-affiliate stockholders prior to the offering 39,880,400 Total shares of Common Stock offered by Selling Stockholders 1,500,000 Common Stock to be outstanding after the offering 81,500,200 Use of proceeds of sale We will not receive any of the proceeds from the sale of the shares of Common Stock by the Selling Stockholders. Risk Factors See Risk Factors beginning on page 15 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our Common Stock.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622767_sirrus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622767_sirrus_prospectus_summary.txt
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+PROSPECTUS SUMMARY This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on page 8 of this Prospectus and the Management's Discussion and Analysis of Financial Position and Results of Operations section elsewhere in this Prospectus. Prospectus Summary This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to "we," "our," "us" and Sirrus refer to Sirrus Corp. Corporate Background We were incorporated on May 7, 2014 under the laws of the State of Nevada. Our registered statutory office is located at 711 S. Carson Street, Suite 6, Carson City, Nevada 89701, (775) 882-4641. Our fiscal year end is August 31. We intend to design, market, and distribute electronic cigarettes ( e-cigarette ) in East Africa. Our products, services, as well as our website www.sirruscorp.com , are all in the start-up stage. We have no operations, sales or revenues, and a net loss of $19,161, therefore rely upon the sale of our securities to fund our operations. We have a going concern uncertainty as of the date of our most recent financial statements. We have no manufacturing capabilities and do not intend to develop any manufacturing capabilities. We rely on third party manufacturers for the production of the products we intend to sell to retailers and wholesalers and to online customers through our website. Our products are manufactured on a purchase-order basis with production being initiated following receipt of an initial payment from us. On September 17, 2014, we had executed two exclusive distribution agreements with two separate e-cigarette manufactures. Both agreements state that we shall undertake to buy not less than 100 of the aforesaid devices during the first three months from our manufacturer, of which exclusivity will become effective after the delivery of the initial sample order which we should place to the manufacturer in the first month, and the sample order should be no less than 100 devices. If an additional 100 devices are purchased in the first year, the exclusivity agreement shall continue for five full years thereafter. If we fail to purchase an additional 100 devices in the first year, the exclusivity agreements will be voided. The estimated costs associated in fulfilling the contractual requirements for the initial 100 Devices for both manufacturers are approximately $400.00. We estimate that the sale of 100% of the shares offered herein would allow us to implement our full Plan of Operations for our e-cigarette business, maintaining our filing obligations with the SEC, establishing an office, developing our website, hiring employees and begin to fill orders through our distributors . Selling at least 75% of the offered shares herein would allow us to keep our status current with the SEC and implement our Plan of Operations, though with some compromises. We estimate that the sale of at least 50% of the shares offered herein would allow us to keep our status current with the SEC but we would likely need more funds to implement our Plan of Operations. If we sell less than 25% of the shares offered herein, we would need more funds to implement our Plan of Operations and maintain our reporting obligations. In order to fully carry out our full business plan and expand operations into other countries, we will need additional financing of approximately $180,000 for the next twelve months. The additional financing would cover fees relating to legal, accounting, consulting, investor relations, samples and inventory, website development, management fees, would allow us to pay a salary to our sole officer and director, and would allow us to private label our own products and to have distribution agreements in place. Our plan is to finalize our first distribution agreement by the end of February 2015 with a health food company that has multi locations and distribution agreements with three of the top 3 grocery chains in Kenya. We are currently in negotiations to finalize this distribution agreement. We believe that we will be able to maintain basic operations of meeting filing obligation and expenses relating to seeking additional financing if we raise 100%, 75%, 50% or 25% of this offering. Our company will use the funds available to pay for the expenses related to this offering and the expenses to maintain our reporting status for twelve months after the effective date. Our plan of operations is based on the net proceeds from this offer (gross proceeds less expenses related to this offering, estimated at a fixed cost of $10,000 and expenses to maintain our report status for twelve months after effective date, estimated at a fixed cost of $17,500). For full disclosure; see our Use of Proceeds table further in this prospectus. Our sole officer and director, Mr. Ahmed Guled, owns 100% of the outstanding shares and will own approximately 45% after this offering is completed, if all the offered shares are sold. Additionally, Mr. Guled is 74 years old and has no experience in the e-cigarette or tobacco business. At this time, we do not have any full or part-time employees and Mr. Guled is the only person devoting time to our operations of which he spends approximately 15 hours a week.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622867_ho-wah_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622867_ho-wah_prospectus_summary.txt
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our" and "Company" refer to "Computron, Inc.".
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622869_ceba_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622869_ceba_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..506f6327e40bd891dc757e98f12ea8f4e63efb55
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+This summary provides a brief overview of information contained elsewhere in this prospectus. You should read this entire prospectus and the documents to which we refer you before making an investment decision. You should carefully consider the information set forth under Risk Factors, Cautionary Statement Regarding Forward-Looking Statements and Management s Discussion and Analysis of Financial Condition as well as the unaudited pro forma condensed balance sheet for CEBA Midstream, LP included elsewhere in this prospectus. Prior to the completion of this offering, our saltwater gathering and disposal assets were not operated or accounted for as a business separate and apart from SandRidge Energy, Inc. s ( SandRidge ) exploration and production activities. For this reason, this prospectus does not contain any historical financial statements showing the results of operations of our saltwater gathering and disposal assets for periods prior to the completion of this offering. The information presented in this prospectus assumes an initial public offering price of $ per common unit (the mid-point of the price range set forth on the cover page of this prospectus) and, unless otherwise indicated, that the underwriters option to purchase additional common units is not exercised. References in this prospectus to CEBA Midstream, LP, the partnership, we, our, us or like terms, when used in the historical context, refer to the saltwater gathering and disposal assets being contributed to us in connection with this offering. When used in the present tense or prospectively, those terms refer to CEBA Midstream, LP and its subsidiaries. Unless the context otherwise requires, references in this prospectus to SandRidge refer to SandRidge Energy, Inc. and its subsidiaries, other than CEBA Midstream, LP, its subsidiaries and its general partner. Certain third parties that own working interests in SandRidge-operated oil and gas wells connected to our system in the Mid-Continent own an aggregate working interest of approximately 27.3% in our Mid-Continent saltwater disposal wells and a right to use our saltwater gathering systems, which together allow them to transport on our gathering systems and deposit into our saltwater disposal wells all saltwater produced in respect of their interest in SandRidge-operated oil and gas wells. Their working interests in the SandRidge-operated oil and gas wells represent approximately 27.3% of the combined working interests of SandRidge and these third parties in these oil and gas wells. Unless otherwise indicated, (i) operating data included in this prospectus, such as throughput volumes, is shown on a net basis to exclude the interests of our third-party partners, and (ii) asset level data included in this prospectus, such as miles of gathering lines, well connections, disposal wells and disposal capacity, is shown on a gross basis. We similarly treat operating data and asset level data relating to saltwater gathering and disposal assets that will be retained by SandRidge following the completion of this offering. For more information, please read Summary Third-Party Interests. We include a glossary of some of the terms used in this prospectus as Appendix B.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001622879_medicine_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001622879_medicine_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary provides an overview of certain information contained elsewhere in this Prospectus and does not contain all of the information that you should consider or that may be important to you. Before making an investment decision, you should read the entire Prospectus carefully, including the "RISK FACTORS" section and the financial statements and the notes to the financial statements. In this Prospectus, the terms "the "Company," "we," "us" and "our" refer to MEDICINE MAN TECHNOLOGIES, INC., unless otherwise specified herein. We were incorporated on March 20, 2014, in the State of Nevada. On May 1, 2014, we entered into a non-exclusive Technology License Agreement with Futurevision, Inc., f/k/a Medicine Man Production Corporation, a Colorado corporation, dba Medicine Man Denver ("Medicine Man Denver"), a company owned and controlled by affiliates of our Company, whereby Medicine Man Denver granted us a license to use all of their proprietary processes they have developed, implemented and practiced at its cannabis facilities relating to the commercial growth, cultivation, marketing and distribution of medical marijuana and recreational marijuana pursuant to relevant state laws and the right to use and to license such information, including trade secrets, skills and experience (present and future) (the "Medicine Man Denver License Agreement"). See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." We are already working with existing companies and independent consultants within the cannabis industry by licensing our specific cultivation technologies, with specific protections and our non-disclosure agreement in place. We do not provide our operations manual of training to potential licensees until they have a state granted license in place. We focus on providing assistance to our clients in the two principal businesses of the cannabis industry, including (i) cultivation, and (ii) the dispensary business model, including combinations and other variables related to the retail model configuration. We strongly support the combination of both of these components for any licensee candidate so that they may have better control over their overall business destiny but offer a separate cultivation and dispensary license as needed. As of the date of this Prospectus we have a total of five (5) active license agreements to whom we provide assistance, including two (2) cultivation license agreements with Nevada and Illinois companies, two (2) cultivation and dispensary license agreements with companies in Nevada and Florida, and one other dispensary only license with an Illinois company. As of the date of this Prospectus we have generated approximately $375,000 in revenues arising out of licensing arrangements since commencement of our operations. As of the date of this Prospectus we have contracts to generate $450,000 of new work during 2015 and while no assurances can be provided that we will collect this amount or enter into additional contracts with clients, we are optimistic that this will occur. This does not include future business noting we are currently in pre-licensure negotiations with business groups having interests in Arizona, Alaska, Florida, Hawaii, Maryland, Missouri, New York, Ohio, Pennsylvania and Texas. There are no assurances that we will generate additional contracts and/or revenues from these efforts. Our business model has five distinct premises wherein we provide services to our clients, including: Clients may adopt and utilize the intellectual property, technology and training we offer thereby providing the various state and local jurisdictions they are making application to with the reliable underpinnings of a well-known and respected cultivation and dispensary operation, Medicine Man Denver. Our Licensees should be able to avoid the multitude of costly mistakes generally made by many start-up business ventures in the cannabis industry, as well as base their business operations on an efficient industrial cultivation process that has no singular dependence on a "guru" or "master grower," instead relying on the experience of a team based culture that has a substantial depth of successful operating experience. Our licensees will become a part of a larger licensee network that will , ' ': share the sum of its experience across this network as managed by us, thereby aggregating the experience of a much larger group all having the same motivation for which we intend to create a , ' ': culture generation approach that will exclusively serve the whole licensure network. While no assurances can be provided, we believe that this unique feature provides us with a strong advantage over others in this space trying to deliver similar services and will in fact over time be adopted by our competitors. Our clients and licensees will have access to a substantial experience and knowledge base as they consider their ongoing options in the pre-public and public market space, as we believe we are capable of offering a second opinion and due diligence support structure to such strategies as they evolve, rather than after such a plan is developed. Our clients and licensees will have access to a substantial experience and knowledge base as they consider their ongoing options in the pre-public and public market space, as we believe we are capable of offering a second opinion and due diligence support structure to such strategies as they evolve, rather than after such a plan is developed. Through our relationship with Medicine Man Denver we intend to continue to invest in our technology and intellectual property through active participation with our growing licensure group to develop the best practices in this industry to remain a low cost producer while maintaining the highest levels of safety, quality, and consistency. See "DESCRIPTION OF BUSINESS." We commenced operations in May 2014. During the eight months of operations in 2014 we generated revenues of $251,891 and incurred a net loss of $29,954 as of December 31, 2014, which includes a charge of $54,230 for stock based expense. During the six months ended June 30, 2015 we generated revenues of $365,071, including consulting/licensing fees of $334,699. We generated a net profit of $82,685 during the six months ended June 30, 2015 (approximately $0.01 per share). Total stockholders equity at June 30, 2015 was $423,261. As of June 30, 2015, we had $380,321 in cash. See "RISK FACTORS" and "FINANCIAL STATEMENTS." Our executive offices are located at 4880 Havana Street, Suite 102 South, Denver, Colorado 80239,, telephone (303) 481-4419. Our website address is www.medicinemantechnologies.com. About The Offering Common Stock to be Offered by Selling Shareholders 1,619,000 shares. This number represents approximately 16.3% of the total number of shares outstanding following this Offering. Number of shares outstanding before and after the Offering 9,947,500 (1) Use of Proceeds We will not receive any proceeds from the sale of the Common Stock. Risk Factors See the discussion under the caption "RISK FACTORS" and other information in this Prospectus for a discussion of factors you should carefully consider before deciding to invest in our Common Stock. _________________________ (1) Because we are not selling any of our Common Stock as part of this Offering, the number of issued and outstanding shares of our Common Stock will remain the same following this Offering. Selected Financial Data The following selected financial data should be read in conjunction with our financial statements and the related notes to those statements included in "FINANCIAL STATEMENTS" and with "MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" appearing elsewhere in this Prospectus. The selected financial data has been derived from our audited financial statements. Our audited financial statements as of and for the year ended December 31, 2014, as previously filed as part of our initial registration statement filed with the SEC on May 28, 2015, have been restated. The previously filed financial statements recognized the purchase of our license from Medicine Man Denver as an expense. Management has determined that the accounting treatment should have been evaluated as an asset and the expense recognized over the life of the license term. The net effect of this restatement was to reduce our net loss from $(34,724) (approximately $0.004 per share) to $(29,954) (approximately $0.003 per share). See Note 10 to our audited Financial Statements herein. Statement of Operations: Year Ended December 31, 2014 Six Months Ended June 30, 2015 (unaudited) Revenues $ 251,891 $ 365,071 Total operating expenses $ 280,641 $ 188,037 Income (loss) from operations $ (28,750 ) $ 89,037 Other income (expense) $ 1,939 $ (6,352 ) Provision for income tax $ (3,143 ) $ 14,423 Net income (loss) $ (29,954 ) $ 82,685 Net income (loss) per share – (basic and fully diluted) $ (.003 ) $ .01 Weighted common shares outstanding 9,840,000 9,850,000 Balance Sheet: December 31, 2014 Cash $ 54,511 Current assets $ 307,633 Total assets $ 312,403 Current liabilities $ 22,827 Total liabilities $ 22,827 Total stockholders equity $ 289,576
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+We have provided below a summary description of the contribution, separation and spin-off agreement, the Agreement and Plan of Merger and the key related agreements that will be entered into in connection with the transactions. The terms of these agreements have not yet been finalized; changes, some of which may be material, may be made to the terms of these agreements before they are finalized. This description, which summarizes the material terms of these agreements, is not complete. You should read the full text of these agreements, which will be filed with the SEC as exhibits to the registration statement into which this prospectus is incorporated. Contribution, Separation and Spin-off Agreement Prior to the effective time of the spin-off, we will enter into a contribution, separation and spin-off agreement with Comcast (the separation agreement ) to provide for, among other things, the principal corporate transactions required to effect the spin-off, the conditions to the spin-off and certain provisions governing the relationship between us and Comcast following the spin-off. The separation agreement will provide that, effective as of the effective time of the spin-off, Comcast will transfer or cause to be transferred to us all of Comcast s and its subsidiaries right, title and interest in the SpinCo systems, together with the related subscribers, the assets primarily related to the SpinCo systems (other than certain specified assets) and certain other specified assets. In addition, effective as of the effective time of the spin-off, we will assume all liabilities of Comcast and its subsidiaries primarily relating to the SpinCo systems (other than certain specified liabilities) and certain other specified liabilities. All other assets and liabilities of Comcast and its subsidiaries will be retained by Comcast. Pursuant to the separation agreement, each of us and Comcast will agree to use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary proper or advisable under applicable law to consummate and make effective the spin-off, subject to certain specified exceptions. In particular, subject to certain specified exceptions, neither we nor Comcast will be required to (i) divest or otherwise hold separate any businesses, assets or properties, (ii) accept any conditions or take any actions that would apply to, or affect, any businesses, assets or properties of us or Comcast that are not consistent with conditions imposed by governmental authorities in prior acquisitions of U.S. cable systems since February 12, 2002 with an aggregate purchase price of at least $500 million (clauses (i) and (ii), subject to certain specified exceptions, are referred to as a burdensome condition ); provided, however, that any condition that is imposed on and accepted by Comcast to obtain regulatory approval for the Comcast/TWC Merger (except for any condition that relates solely to the assets and liabilities transferred in the transactions and for which there is no substantially similar condition that relates to other assets and liabilities of Comcast) may not be invoked as a burdensome condition or (iii) litigate or participate in the litigation of any proceeding involving certain regulatory authorities. The separation agreement will also provide that we and Comcast will use reasonable best efforts to cause us to incur new indebtedness in an aggregate amount equal to 5.0 times the 2014 EBITDA of the SpinCo systems (as such term is defined by our financing sources for purposes of the financing). The indebtedness is expected to consist of (i) credit facilities to be used primarily to fund cash distributions to Comcast and (ii) notes newly issued by us to Comcast, which notes will be used to enable Comcast to complete a debt-for-debt exchange whereby one or more financial institutions are expected to conduct a third-party tender offer for certain of Comcast s publicly traded debt securities, which is referred to as the debt tender offer , and will then exchange the tendered debt securities of Comcast for our new notes held by Comcast, which is referred to as the debt-for-debt exchange. The obligations of Comcast to consummate the spin-off will be subject to a number of conditions, including: the consummation of the merger between Comcast and TWC; the receipt of a number of regulatory approvals, including approval of the FCC, approval from all required public utility commissions and approval of certain franchise authorities, in most cases without the imposition of a burdensome condition; Table of Contents the absence of an injunction or certain legal impediments; the effectiveness of the registration statement into which this prospectus is incorporated and the approval of the listing of the shares of our Class A common stock on the NASDAQ Global Select Market; the completion of the debt-for-debt-exchange; and the satisfaction or waiver of the conditions to the obligations of the parties in the merger agreement and, with certain specified exceptions, certain other agreements to be entered into by Comcast and Charter in connection with the exchange and sale of certain cable systems. Comcast s obligation to consummate the spin-off will be further subject to, among other things, Comcast s receipt of an opinion of tax counsel regarding the tax-free nature of the transactions. The separation agreement will require that, following the satisfaction of certain conditions to the consummation of the spin-off and completion of the debt tender offer, the board of directors of Comcast will establish the record date and the effective date of the spin-off. The separation agreement will also provide that, prior to the effective time of the spin-off, we and Comcast will take all action necessary to issue to Comcast the shares of our common stock that will be distributed in the spin-off, with the percentage of shares of our common stock that are shares of our Class A-1 common stock representing the New Charter SpinCo ownership percentage (which is expected to be approximately 33%). New Charter SpinCo ownership percentage means the maximum number of shares of our Class A common stock that New Charter can acquire in the SpinCo merger such that historic Comcast shareholders (not including former TWC stockholders) hold at least 50.75% of our outstanding shares of Class A common stock following the completion of the SpinCo merger, expressed as a percentage of the total number of shares of our Class A common stock. The separation agreement will also provide that, at the effective time of the spin-off, Comcast will distribute all of the shares of our Class A common stock and Class A-1 common stock pro rata to holders of Comcast common stock. The separation agreement will include customary representations of Comcast relating to, among other matters, our business. In addition, pursuant to the separation agreement, and subject to certain specified exceptions, Comcast will agree to operate our business prior to the effective time of the spin-off in the ordinary course consistent with past practice and not to permit us to take certain specified actions. The separation agreement will also contain other covenants addressing, among other matters, insurance matters, access to information, litigation cooperation and confidentiality obligations. In addition, the separation agreement will provide that, from the effective date of the spin-off until the eighth anniversary of that date, subject to certain specified exceptions, Comcast will not, directly or indirectly, make any acquisition after which Comcast would own in excess of 1% of the then-outstanding shares of our capital stock. The separation agreement will provide that, following the effective time of the spin-off, we will indemnify Comcast for any losses arising out of liabilities that we have assumed pursuant to the separation agreement or out of our breach of any of our covenants in the separation agreement. The separation agreement will also provide that, following the effective time of the spin-off, Comcast will indemnify us for any losses arising out of liabilities retained by Comcast pursuant to the separation agreement, out of Comcast s breach of any of its covenants in the separation agreement or, subject to certain limitations (including time limits for claims to be made and a deductible and cap on indemnification amounts), out of Comcast s breach of any of its representations in the separation agreement. The separation agreement will terminate automatically upon termination of the merger agreement. If the separation agreement terminates prior to the effective time of the spin-off, the spin-off will not be effected. The terms of the separation agreement have not yet been finalized; changes, some of which may be material, may be made to the terms of the separation agreement before it is finalized, including to the terms described above. You should read the full text of the separation agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. Table of Contents Agreement and Plan of Merger Prior to the effective time of the spin-off, we will enter into a merger agreement with Charter, New Charter, two newly formed, wholly owned subsidiaries of New Charter, which are referred to as Charter merger sub and SpinCo merger sub , and Comcast (the merger agreement ) to provide for, among other things, the Charter reorganization and the SpinCo merger. Structure of the Mergers Pursuant to the merger agreement, immediately following the effective time of the spin-off, New Charter will convert into a corporation. Charter merger sub will then merge with and into Charter with the effect that each share of Charter will be converted into one share of New Charter, and New Charter will survive as the publicly traded parent company of Charter, which transaction is referred to in this prospectus as the Charter reorganization. The merger agreement will provide that, immediately following the Charter reorganization, SpinCo merger sub will merge with and into us, with us surviving, which is referred to in this prospectus as the SpinCo merger. At the effective time of the SpinCo merger, and pursuant to the SpinCo merger, (i) each share of our Class A-1 common stock will be converted into, and New Charter will issue to our stockholders, a pro rata portion of the shares of New Charter common stock issued in the SpinCo merger and (ii) the common stock of SpinCo merger sub (all of which, at the time of the SpinCo merger, will be held by New Charter) will be converted into, and we will issue to New Charter, a number of shares of our Class A common stock that is equal to the number of shares of our Class A-1 common stock that have been converted into shares of New Charter common stock. Because the separation agreement will provide that the shares of our Class A-1 common stock that will be distributed in the spin-off will represent the New Charter SpinCo ownership percentage of the total number of shares of our common stock, the shares of our Class A common stock that will be received by New Charter in the SpinCo merger will represent the New Charter SpinCo ownership percentage (which is expected to be approximately 33%) of the total number of shares of our Class A common stock (after giving effect to the SpinCo merger). Fractional Shares No fractional shares of New Charter will be issued in the SpinCo merger. All fractional shares of New Charter common stock that a holder of shares of our Class A-1 common stock would otherwise be entitled to receive as a result of the SpinCo merger shall be aggregated and, if a fractional share results from such aggregation, such holder shall be entitled to receive, in lieu thereof, an amount in cash without interest determined based on the volume-weighted average of shares of Charter Class A common stock in the 60 consecutive calendar days ending on the last trading day immediately prior to closing of the transactions. New Charter Stock Issuance and Our Equity Valuation The merger agreement will further provide that the shares of New Charter common stock issued in the SpinCo merger will have an aggregate value equal to the New Charter SpinCo ownership percentage multiplied by the aggregate SpinCo equity valuation. Aggregate SpinCo equity valuation means the excess of (A) 7.125 times the Carveout 2014 EBITDA (as defined in the merger agreement), plus the fair market value of any of our non-system assets over (B) the amount of our indebtedness as of closing (other than indebtedness incurred to fund certain transaction-related fees), plus certain other adjustments. The shares of New Charter common stock will be valued based on the volume-weighted average price of shares of Charter Class A common stock in the 60 consecutive calendar days ending on the last trading day immediately prior to closing of the transactions. The merger agreement will contain a process for determining the aggregate SpinCo equity valuation. If the aggregate SpinCo equity valuation has not been finally determined prior to the completion of the SpinCo merger, the aggregate SpinCo equity valuation used to determine the number of shares of New Charter common stock issued in the SpinCo merger will be determined by Comcast in good faith in accordance with certain procedures, and there will be a post-closing adjustment between us and Comcast equal to the excess of the aggregate SpinCo equity valuation as finally determined in accordance with certain procedures over the aggregate SpinCo equity valuation used to determine the number of shares of New Charter common stock issued in the SpinCo merger. If the post-closing adjustment is a positive number, we will pay the amount of the post-closing adjustment to Comcast in cash. If the post-closing adjustment is a negative number, Comcast will pay the absolute value of the amount of the post-closing adjustment to us in cash. Table of Contents Conditions to the SpinCo Merger and Charter Reorganization The obligations of the parties to the merger agreement to consummate the Charter reorganization and the SpinCo merger will be subject to a number of conditions, including: the consummation of the merger between Comcast and TWC; the consummation of the spin-off; the receipt of a number of regulatory approvals, including approval of the FCC, approval from all required public utility commissions and approval of certain franchise authorities, in most cases without the imposition of a burdensome condition; the absence of an injunction or certain legal impediments; unless not required under applicable law, the approval by Charter s stockholders of the issuance of New Charter common stock in the SpinCo merger; the effectiveness of the registration statement filed by New Charter to register the New Charter common stock that will be issued in the Charter reorganization and the SpinCo merger and the approval of the listing of the New Charter common stock on the NASDAQ Global Select Market; the effectiveness of the registration statement into which this prospectus is incorporated and the approval of the listing of our Class A common stock on the NASDAQ Global Select Market; completion of the debt-for-debt exchange; and the satisfaction or waiver of the conditions to the obligations of the parties in the separation agreement and, with certain specified exceptions, certain other agreements to be entered into by Comcast and Charter in connection with the exchange and sale of certain cable systems. The obligations of Charter, New Charter, Charter merger sub and SpinCo merger sub to consummate the Charter reorganization and the SpinCo merger will be further subject to (i) the accuracy of representations and warranties and the performance of covenants made by us and Comcast in the merger agreement and the separation agreement, subject to applicable materiality thresholds, (ii) Charter s receipt of an opinion of tax counsel regarding the tax-free nature of the transactions, and (iii) since April 25, 2014, there not having occurred and being continuing any event, occurrence, development or state of circumstances or facts which, individually or in the aggregate, has had or would reasonably be expected to have, a material adverse effect on our assets and liabilities and certain other assets and liabilities of Comcast to be transferred to Charter in the transactions, taken as a whole. Comcast s obligation to consummate the SpinCo merger will be further subject to, among other things, (i) the accuracy of representations and warranties and the performance of covenants made by Charter, New Charter, Charter merger sub and SpinCo merger sub in the merger agreement, subject to applicable materiality thresholds, (ii) Comcast s receipt of an opinion of tax counsel regarding the tax-free nature of the transactions and (iii) since entry into the merger agreement, there not having occurred and being continuing any event, occurrence, development or state of circumstances or facts which, individually or in the aggregate, has had or would reasonably be expected to have, a material adverse effect on Charter. Representations and Warranties The merger agreement will include certain representations and warranties made by Charter to us, including the following: corporate existence and qualification to do business; corporate power and authority to execute the merger agreement, the contribution, separation and spin-off agreement and the other key related agreements; Table of Contents governmental authorizations to enter into the merger agreement, the contribution, separation and spin-off agreement and the other key related agreements; absence of any conflict with or breach of organizational documents, laws or regulations or agreements as a result of the execution, delivery or performance of the merger agreement, the contribution, separation and spin-off agreement and the other key related agreements; compliance with SEC filing requirements, accuracy of information filed with the SEC, and compliance with the Sarbanes-Oxley Act; no action that would be reasonably likely to prevent the Charter reorganization and the SpinCo merger, taken together, from qualifying under Section 351 of the Code; no agreements with respect to an acquisition of us; and other than certain financial advisors, no investment banker, broker or other intermediary is entitled to any fee or commission from Charter. Termination The merger agreement may be terminated prior to completion of the transactions: by Charter, Comcast or us upon termination of the TWC merger agreement; by mutual written agreement of Charter, Comcast and us; by Charter, Comcast or us: o subject to certain exceptions, if there shall be any final and nonappealable injunction or certain legal impediments; o unless such stockholder approval will in no event be required under applicable law, if, at the Charter stockholder meeting, Charter stockholders fail to approve the issuance of New Charter common stock in the SpinCo merger; o if the Charter reorganization and the SpinCo merger have not been completed by (i) if all necessary regulatory approvals for the Charter reorganization, the SpinCo merger and certain other transactions between Comcast and Charter relating to the exchange and sale of certain cable systems are received on or before the completion of the Comcast/TWC merger, then the date that is 60 days after completion of the Comcast/TWC merger (or, if on such 60th day the debt tender offer has commenced, then the date that is 90 days after completion of the Comcast/TWC merger) or (ii) if all necessary regulatory approvals for the Charter reorganization, the SpinCo merger and certain other transactions between Comcast and Charter relating to the exchange and sale of certain cable systems are not received on or before the completion of the Comcast/TWC merger, then the date that is 150 days after completion of the Comcast/TWC merger (or, if by the 75th day after completion of the Comcast/TWC merger, all necessary regulatory approvals are received other than approvals from local franchise authorities and public utility commission, then the date that is 240 days after completion of the Comcast/TWC merger); by Charter, if there is a material breach by Comcast or us of the merger agreement or the separation agreement, subject to certain cure periods; by Comcast or us, if there is a material breach by Charter, New Charter, Charter merger sub or SpinCo merger sub of the merger agreement, subject to certain cure periods; Table of Contents by Comcast or SpinCo, if the Charter board of directors changes its recommendation that Charter stockholders approve the issuance of New Charter common stock in the SpinCo merger; by Comcast, Charter or us if the amount of notes tendered in the debt tender offer is less than the amount necessary for us to reach a Resulting SpinCo Leverage (as defined in the separation agreement) of 2.5 times; and automatically upon termination of certain other agreements between Comcast and Charter relating to the exchange and sale of certain cable systems, other than in certain specified circumstances. Reasonable Best Efforts Covenant Pursuant to the merger agreement, each of the parties to the merger agreement will agree to use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary proper or advisable under applicable law to consummate and make effective the Charter reorganization and the SpinCo merger, subject to certain specified exceptions. In particular, subject to certain specified exceptions, none of us, Comcast or Charter will be required to (i) divest or otherwise hold separate any businesses, assets or properties, (ii) accept any conditions or take any actions that would apply to, or affect, any businesses, assets or properties of us, Comcast or Charter that are not consistent with conditions imposed by governmental authorities in prior acquisitions of U.S. cable systems since February 12, 2002 with an aggregate purchase price of at least $500 million (clauses (i) and (ii), subject to certain specified exceptions, are referred to as a burdensome condition ) or (iii) litigate or participate in the litigation of any proceeding involving certain regulatory authorities. Other Covenants of Charter The merger agreement will contain certain covenants which, among other things, will prohibit Charter from taking certain specified actions. Pursuant to the merger agreement, Charter will not, during the 100-calendar-day period ending on closing: (i) split, combine or otherwise reclassify the shares of Charter Class A common stock; (ii) declare, set aside or make any dividend or other distribution to its stockholders (whether cash or stock); (iii) engage in a reclassification, reorganization, recapitalization or exchange or other like change, or redeem, repurchase or otherwise acquire any shares of Charter Class A common stock, other than redemptions pursuant to the exercise of, or the withholding of taxes in connection with, any compensatory equity awards or the net-issuance exercise of any currently-outstanding warrants; or (iv) publicly announce any intention to do any of the foregoing. In addition, Charter will agree that it shall take all action necessary to cause CCH I Spinco Sub, LLC, a wholly owned subsidiary of Charter ( CCH I Spinco ), Charter merger sub and, prior to the closing of the transactions, New Charter to perform their respective obligations under the merger agreement and, as applicable, to consummate the SpinCo merger and the Charter reorganization. Charter will also agree that it shall use its reasonable best efforts to cause the shares of New Charter common stock to be issued as part of the merger consideration to be listed on NASDAQ. Charter Stockholder Meeting Pursuant to the merger agreement, Charter will agree to hold a meeting of Charter s stockholders to approve the issuance of New Charter common stock in the SpinCo merger and the Charter board of directors will agree to recommend that Charter stockholders grant such approval, subject to the right of the Charter board of directors to withdraw that recommendation if it determines in good faith that failure to take such action would be inconsistent with its fiduciary duties under applicable law. Indemnification Pursuant to the merger agreement, (i) Comcast will agree to indemnify us and Charter for certain liabilities arising from (A) filings made by Comcast with the SEC in connection with the transactions or the Comcast/TWC merger and (B) certain information provided by Comcast for inclusion in filings made by Charter with the SEC in connection with the transactions or in this prospectus and (ii) Charter will agree to indemnify us and Comcast for certain liabilities arising from (A) filings made by Charter with the SEC in connection with the transactions and (B) certain information provided by Charter for inclusion in this prospectus or in filings made by Comcast with the SEC in connection with the transactions. Table of Contents The terms of the merger agreement have not yet been finalized; changes, some of which may be material, may be made to the terms of the merger agreement before it is finalized, including to the terms described above. You should read the full text of the merger agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. Transition Services Agreement Prior to the effective time of the spin-off, we will enter into a transition services agreement with Comcast (the transition services agreement ) pursuant to which Comcast and its subsidiaries will provide certain transition services to us. The transition services will include, among other services, certain facilities and asset-based, software platforms, marketing and sales and customer-facing services. The nature and scope of the transition services will be as set forth in the transition services agreement and will otherwise be substantially consistent with the nature and scope of such services as provided by Comcast and its subsidiaries to the SpinCo systems immediately before the effective date of the spin-off. If, after the effective time of the spin-off, we identify additional services that are not provided under the transition services agreement (other than because Comcast and we agreed that those services would not be provided), and certain other conditions are met, Comcast and its subsidiaries will provide those services as they can reasonably provide and those services that Comcast and its subsidiaries provide will become transition services under the transition services agreement. Promptly following entry into the transition services agreement, we and Comcast will develop a joint migration plan, which will target completion of the migration of certain transition services to us or our designees by not later than the first anniversary of the effective date of the spin-off. In consideration for the transition services, the transition services agreement will provide that we will reimburse and pay to Comcast and its subsidiaries their actual, incremental costs (without overhead allocation) of providing the transition services (including in connection with the migration of the transition services). Each transition service will be provided from the effective date of the spin-off until the earliest of (i) the expiration of the transition services agreement, (ii) the termination of the transition services agreement or of that transition service, (iii) the termination date provided for that transition service in the transition services agreement or (iv) the completion of the migration of that transition service to us or our designees. Unless earlier terminated, the transition services agreement will expire one year after the effective date of the spin-off, except that the transition services agreement will renew under certain circumstances. The transition services agreement (either in whole or with respect to one or more transition services) may be terminated by either party upon the material breach of the other party, subject to certain cure periods. In addition, we may terminate any transition services upon 30 days prior notice and individual transition services may be terminated in certain other circumstances. Upon termination of the transition services agreement or any transition services in certain circumstances, if requested by us, Comcast will continue to provide the transition services for an extension period, during which period certain specified payment terms will apply. Pursuant to the transition services agreement, Comcast will agree to indemnify us and certain related parties for losses arising out of the material breach by Comcast and certain related parties of the transition services agreement and the gross negligence, willful misconduct or material violation of applicable law by Comcast and certain related parties in connection with the transition services agreement. However, except in the case of losses arising out of the gross negligence, willful misconduct or material violation of law by Comcast and certain related parties in connection with the transition services agreement, Comcast s liability will not exceed the total amount paid and payable to Comcast pursuant to the transition services agreement. We will agree to indemnify Comcast and certain related parties for any losses arising out of the transition services agreement, other than losses arising from circumstances for which Comcast has agreed to indemnify us. The transition services agreement will also include certain other provisions, including, among others, a limited license for us to use certain Comcast marks and provisions addressing the treatment of confidential information of each party. Table of Contents The transition services agreement has not yet been executed and remains subject to change. You should read the full text of the transition services agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. In addition to the transition services to be provided by Comcast to us pursuant to the transition services agreement as described above, we may provide certain services to Comcast in order for Comcast to operate its retained cable systems in the ordinary course of business consistent with past practice. These services may include, for example, network connectivity to Comcast retained facilities, equipment colocation at our facilities and transport for signals from our cable systems to Comcast s cable systems, and may be in the nature of transition services (in which case they would be provided under a reverse transition services agreement between Comcast and us (the reverse transition services agreement ), the terms of which would generally parallel the terms of the transition services agreement, except that our position and Comcast s position would be reversed) or they may be provided under longer term commercial arrangements. The terms of these services have not yet been finalized. Any material reverse transition services agreement will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated, and you should read the full text of any such agreements. Charter Services Agreement Prior to the effective time of the spin-off, we will enter into a services agreement with a subsidiary of Charter (the Charter services agreement ) pursuant to which Charter and its subsidiaries will provide services to us, subject to our overall authority and supervision. The services provided by Charter and its subsidiaries will include, among other services, the following services to certain of our systems: corporate services; network operations; engineering and IT; voice operations; field operations support services; customer service; billing and collections; product services; marketing services; sales; business intelligence; and intellectual property licensing. The nature and scope of the services will be as set forth in the services agreement. If, after the effective time of the spin-off, we identify additional services that are not provided under the services agreement (other than because Charter and we agreed that those services would not be provided), and certain other conditions are met, then, subject to certain exceptions, Charter and its subsidiaries will provide those services and those services that Charter and its subsidiaries provide will become services under the services agreement. Table of Contents In consideration for the services, the Charter services agreement will provide that we will pay to Charter and its subsidiaries the actual, economic costs of providing the services, without markup, which will comprise any direct costs incurred in providing the services and, subject to certain exceptions, an allocated portion of the compensation and overhead expenses incurred in providing the services. We will also reimburse Charter and its subsidiaries for out-of-pocket costs incurred in providing the services. In addition, in consideration for certain rights, including the rights to purchase goods and services, and the rights to obtain programming services, under Charter s third party procurement and programming agreements, we will pay Charter a services fee equal to 4.25% of our gross revenues. Unless earlier terminated, the Charter services agreement will expire three years after the effective date of the spin-off, except that the Charter services agreement will automatically renew for successive one-year periods unless we or Charter give notice of an election not to renew at least one year prior to expiration of the then-current term. The Charter services agreement may be terminated by either party upon the material breach of the other party, subject to certain cure periods, and the services agreement may also be terminated in certain circumstances involving a change of control of us or upon the termination of the merger agreement. In addition, Charter may suspend provision of the services in certain circumstances, including upon the occurrence of certain bankruptcy events involving us. Upon termination of the Charter services agreement in certain circumstances, if requested by us, Charter will continue to provide the services for a transition period of not less than one year. Pursuant to the Charter services agreement, Charter will agree to indemnify us and certain related parties for any losses arising out of material breach by Charter and certain related parties of the Charter services agreement and the gross negligence, willful misconduct or material violation of applicable law by Charter and certain related parties in connection with the Charter services agreement. However, except in the case of losses arising out of the gross negligence, willful misconduct or material violation of law by Charter and certain related parties in connection with the Charter services agreement, Charter s liability will not exceed the total amount paid and payable by us pursuant to the Charter services agreement. We will agree to indemnify Charter and certain related parties for any losses arising out of the Charter services agreement, other than losses arising from circumstances for which Charter has agreed to indemnify us. The Charter services agreement will also include certain other provisions, including, among others, a limited license for us to use certain Charter marks and provisions addressing the treatment of confidential information of each party. The Charter services agreement has not yet been executed and remains subject to change. You should read the full text of the Charter services agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. GreatLand Services Agreement Prior to the effective time of the spin-off, we will enter into a second services agreement with Charter (the GreatLand services agreement ) pursuant to which we and our subsidiaries will provide certain services to Charter. The services will include, among other services, certain field technical operational support services provided in areas where our and Charter s cable markets are contiguous. The terms of the GreatLand services agreement will generally parallel the terms of the Charter services agreement, except that our position and Charter s position will be reversed and Charter will pay to us only the actual, economic costs of providing the services and reimburse us for out-of-pocket costs incurred in providing the services, and Charter will not pay to us any additional services fee. The terms of the GreatLand services agreement have not yet been finalized; changes, some of which may be material, may be made to the terms of the GreatLand services agreement before it is finalized, including to the terms described above. You should read the full text of the GreatLand services agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. Employee Matters Agreement Prior to the effective time of the spin-off, we will enter into an employee matters agreement with Comcast to provide for specified employee, compensation and benefits matters relating to current and former employees who are or were employed primarily with respect to the SpinCo systems and certain other assets. The employee matters agreement will provide that, effective as of the effective time, we generally will assume or retain the obligations and liabilities relating to the employment, termination of employment, or employment practices with respect to these employees, whether arising before, on or after the spin-off. Table of Contents The employee matters agreement will provide that, for one year following the spin-off, we will provide, or cause to be provided, to each employee who continues to be employed by us immediately following the spin-off (other than any employees included in a collective bargaining unit covered by a collective bargaining agreement, who are referred to in this prospectus as union employees), such employees being referred to in this prospectus as covered employees, with: base pay, commission opportunities and cash bonus opportunities, as applicable, that are no less favorable in the aggregate than provided to such covered employee immediately prior to the spin-off; and employee benefits that are no less favorable, in the aggregate, than were provided to such covered employee immediately prior to the spin-off. For purposes of determining whether the pay, opportunities and benefits referred to in the immediately preceding two bullets are no less favorable in the aggregate, equity compensation, defined benefit pension plan benefits, severance, retention, sale, stay, or change in control payments or awards or any similar compensation or benefits will not be taken into account. With respect to union employees, we will assume or retain any and all of the rights and obligations we may have pursuant to any collective bargaining agreements or applicable law. In addition, under the employee matters agreement, following the spin-off, we will, for all covered employees, (i) honor all contracts providing for severance to the extent and in accordance with their terms and (ii) honor, without amendment, all plans providing for severance during the period from completion of the spin-off through the first anniversary thereof, or for any longer period during which such amendments are prohibited under the terms of the applicable plan. The employee matters agreement will provide that, following the effective time of the spin-off, we will indemnify Comcast for any losses arising out of liabilities that we have retained or assumed pursuant to the employee matters agreement, and Comcast will indemnify us for any losses arising out of liabilities retained by Comcast pursuant to the employee matters agreement. The employee matters agreement will terminate automatically upon termination of the separation agreement. The terms of the employee matters agreement have not yet been finalized; changes, some of which may be material, may be made to the terms of the employee matters agreement before it is finalized, including to the terms described above. You should read the full text of the employee matters agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. Tax Matters Agreement In connection with the spin-off and SpinCo merger (together with certain related transactions), we, Comcast and New Charter will enter into a tax matters agreement (the tax matters agreement ) that will govern the parties respective rights, responsibilities, and obligations with respect to taxes, including taxes arising in the ordinary course of business, and taxes, if any, incurred as a result of any failure of the spin-off, SpinCo merger (or certain related transactions, including the debt-for-debt exchange) to qualify as tax-free for U.S. federal income tax purposes. The tax matters agreement will also set forth the respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters. In general, the tax matters agreement will govern the rights and obligations that we, Comcast and New Charter have after the spin-off and SpinCo merger with respect to taxes for both pre- and post-closing periods. Under the tax matters agreement, Comcast generally will be responsible for pre-spin-off income taxes, and we will be responsible for all post-spin-off income taxes and all non-income taxes primarily related to our assets and businesses that are due and payable after the spin-off. Table of Contents In the event that the spin-off, SpinCo merger and certain related transactions (including the debt-for-debt exchange) fail to qualify for their intended tax treatment, in whole or in part, and Comcast is subject to tax as a result of such failure, which we refer to as transaction taxes, the tax matters agreement will determine whether Comcast must be indemnified for any such transaction taxes by us or New Charter. As a general matter, under the terms of the tax matters agreement, we are required to indemnify Comcast for any transaction taxes due to any action of any person following the spin-off other than transaction taxes arising from (i) an action of Comcast or with respect to Comcast, in which case Comcast will bear the liability of the transaction taxes; or (ii) a breach by New Charter of the New Charter tax standstill (as described below) or other covenant of New Charter, in which case New Charter will bear the liability of the transaction taxes. For purposes of the prior sentence, the SpinCo merger, a violation of the SpinCo Tax Standstill and certain actions relating to our governance following the closing and the entrance into and actions under the Charter services agreement do not constitute actions of Comcast. Therefore, in the event that the spin-off, SpinCo merger and/or related transactions fail to qualify for their intended tax treatment, we will generally be required to indemnify Comcast for the resulting transaction taxes unless the liability for such transaction taxes is allocated to Comcast or New Charter in the limited circumstances described above. However, the tax matters agreement will also provide that (i) if Comcast has a claim in respect of transaction taxes against Liberty Media Corporation ( Liberty ) under the voting agreement between Comcast and Liberty entered into as April 25, 2014 and no action we have taken shall have contributed to the imposition of the transaction taxes, Comcast will take reasonable best efforts to pursue and exhaust any and all recourse available to Comcast against Liberty prior to seeking to enforce its indemnification right against us and (ii) if both an action we have taken and the action of another person (including New Charter) gives rise to transaction taxes that are indemnifiable by us under the tax matters agreement, then Comcast will pursue its available recourses against us and such other person. The tax matters agreement will further provide that: Without duplication of our indemnification obligations described in the prior paragraph, we will indemnify Comcast against (i) our taxes for the post-closing period; (ii) any liability or damage resulting from a breach by us or any of our affiliates of a covenant made in the tax matters agreement or representation we made to tax counsel in connection with tax counsel s delivery of the Closing Tax Opinion; and (iii) any transfer taxes arising from or associated with the spin-off, SpinCo merger and related transactions. New Charter will indemnify Comcast against (i) any transaction taxes arising due to a violation of the New Charter tax standstill (as described below) by New Charter or any of its affiliates and (ii) any liability or damage resulting from a breach by New Charter or any of its affiliates of a covenant made by New Charter in the tax matters agreement or a representation made by New Charter to tax counsel in connection with tax counsel s delivery of the Closing Tax Opinion, in each case, without any duplication of any amounts for which Comcast has otherwise been indemnified; Comcast will indemnify us against (i) any tax liability of the Comcast consolidated group; (ii) any tax liability a result of our having been a member of the Comcast consolidated group; and (iii) any pre-spin-off income taxes, in each case, other than tax liabilities of Comcast for which we are required to indemnify Comcast; and New Charter will indemnify us against any tax liability of the New Charter consolidated group. In addition to the indemnification obligations described above, the indemnifying party will generally be required to indemnify the indemnified party against any interest, penalties, additions to tax, losses, assessments, settlements or judgments arising out of or incident to the event giving rise to the indemnification obligation, along with costs incurred in any related contest or proceeding. Further, the tax matters agreement generally will prohibit us and New Charter, and our and New Charter s affiliates, from taking certain actions that could cause the spin-off, SpinCo merger and certain related transactions (including the debt-for-debt exchange) to fail to qualify for their intended tax treatment. In particular: SpinCo from and until the second anniversary of the spin-off (or otherwise pursuant to a plan within the meaning of Section 355(e) of the Code) we may not take any action (including the issuance of any equity securities or a redemption, repurchase or other acquisition of any of its equity securities) that would result in New Charter holding (or being treated as holding) a greater percentage of our outstanding shares than it holds immediately after the SpinCo merger; Table of Contents other than the SpinCo merger, from and until the second anniversary of the spin-off (or otherwise pursuant to a plan within the meaning of Section 355(e) of the Code), we may not cause or permit any merger or consolidation of us or any liquidation or dissolution of us (except for certain transactions with a subsidiary); from and until the second anniversary of the spin-off, neither we nor any of our subsidiaries may, or agree to, sell, exchange, distribute or otherwise dispose of any asset of any member of the SpinCo group, except in the ordinary course of business or except for assets that, in the aggregate, do not constitute more than 30% of our gross assets; from and until the second anniversary of the spin-off, we may not permit or cause our securities used by Comcast in the debt-for-debt exchange to be modified, repurchased, defeased, satisfied or discharged other than in accordance with their terms; from and until the second anniversary of the spin-off (or otherwise pursuant to a plan within the meaning of Section 355(e) of the Code), we may not take any other action where the taking of such action could reasonably be expected to have, in the aggregate and taking into account the SpinCo merger and the Comcast/TWC merger, the effect of causing or permitting one or more persons to acquire a fifty percent (50%) or greater interest in us or any of our subsidiaries for purposes of Section 355(e) of the Code; from and until the second anniversary of the spin-off, we may not discontinue the active conduct of our business; and we may not take any action where the taking of such action could reasonably be expected to cause the spin-off, debt-for-debt exchange, SpinCo merger or certain related transactions to fail to qualify as tax-free transactions under the applicable provisions of the Code. New Charter from and until the second anniversary of the spin-off (or otherwise pursuant to a plan within the meaning of Section 355(e) of the Code) New Charter may not take any action that would result in New Charter holding (or being treated as holding) a greater percentage of our outstanding shares than it holds immediately after the SpinCo merger (which we refer to as the New Charter tax standstill ); from and until the second anniversary of the spin-off (or otherwise pursuant to a plan within the meaning of Section 355(e) of the Code) New Charter may not take any action that could reasonably be expected to have the effect of causing New Charter (or any person acting in concert with New Charter) to be treated as acquiring a 50% or greater interest in us for purposes of Section 355(e) of the Code; and from and until the second anniversary of the spin-off, New Charter may not liquidate Charter or take any other action where the taking of such action could reasonably be expected to have the effect of causing the SpinCo merger and Charter reorganization, taken together, to fail for their intended tax treatment. As described above, if we or New Charter take any of the actions described above and such actions result in transaction taxes, we or New Charter, as applicable, will be required to indemnify Comcast against such transaction taxes. The terms of the tax matters agreement have not yet been finalized; changes, some of which may be material, may be made to the terms of the tax matters agreement before it is finalized, including to the terms described above. You should read the full text of the tax matters agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. Stockholders Agreement Prior to the effective time of the SpinCo merger, we will enter into a stockholders agreement with New Charter (the stockholders agreement ) that will set forth certain agreements with New Charter relating to our relationship with New Charter and its subsidiaries following the transactions. Table of Contents The stockholders agreement will include certain provisions relating to our governance, including an agreement that our board of directors will be comprised of nine directors, divided into three classes of three directors each. The stockholders agreement will further provide that, subject to certain exceptions (including where applicable law or the listing rules of the NASDAQ Global Select Market require such committee to be otherwise comprised), each committee appointed by our board of directors will consist of three directors of the same class. The stockholders agreement will also provide New Charter with certain preemptive rights. In particular, beginning on the second anniversary of the completion of the transactions, in the event that we propose to issue or sell equity securities (other than pursuant to a compensation program or equity plan that meets certain conditions), the stockholders agreement will grant New Charter preemptive rights to purchase from us the number of equity securities necessary to maintain its percentage ownership. The preemptive rights will terminate when New Charter and its subsidiaries cease to own at least 5% of our outstanding capital stock. The stockholders agreement will also provide that New Charter and its controlled affiliates will not enter into any transaction with us, other than (i) transactions pursuant to agreements entered into concurrently with the completion of the transactions, (ii) transactions that have been approved by a majority of our independent directors and (iii) transactions on arms-length terms involving aggregate consideration of $10,000,000 or less. In addition, the stockholders agreement will provide that, from the second anniversary of the completion of the transactions until the fourth anniversary of the completion of the transactions, New Charter and its controlled affiliates will not acquire beneficial ownership in excess of 49% of our then-outstanding shares, other than in a transaction that is approved by a majority of our independent directors or a majority of our stockholders (other than New Charter). Pursuant to the stockholders agreement, we will agree that, other than the limitations set forth in the stockholders agreement and the tax matters agreement, we will not take any actions that restrict the ability of New Charter and its subsidiaries to acquire, hold or dispose of our equity securities. The terms of the stockholders agreement have not yet been finalized; changes, some of which may be material, may be made to the terms of the stockholders agreement before it is finalized, including to the terms described above. You should read the full text of the stockholders agreement, which will be filed with the SEC as an exhibit to the registration statement into which this prospectus is incorporated. Expenses If the transactions are consummated, any expenses in connection with our financing (as described under Description of Indebtedness below), as well as certain expenses incurred in connection with our formation and other actions in preparation for the spin-off, including the hiring of certain of our key future executives and employees (collectively, including financing expenses, the SpinCo Expenses ), will be borne by us, and we will reimburse Comcast, Charter and their respective affiliates for any SpinCo Expenses incurred by such company. In addition, if the transactions are consummated, we will reimburse Comcast for certain others costs and liabilities borne by Comcast on our behalf (including certain costs and liabilities with respect to our employees). For a more detailed description of these employee-related costs and liabilities see Employee Matters Agreement above. If the transactions are terminated, then, depending on the circumstances under which the transactions are terminated, the SpinCo Expenses will be borne in the following manner: (i) If the transactions are terminated because: (a) the amount of notes tendered in the debt tender offer is less than the amount necessary for us to reach a Resulting SpinCo Leverage (as defined in the separation agreement) of 2.5 times; or (b) of any other reason not provided in clauses (ii) and (iii) below, then SpinCo Expenses will be shared by Comcast and Charter in proportion to the percentage of our common stock that, immediately following completion of the transactions, would have been owned by Comcast shareholders and by New Charter, respectively (expected to be approximately 67% and 33%, respectively) and, if Comcast or Charter has borne more than its share of expenses, the other will reimburse it to the extent necessary to achieve such proportion; (ii) If the transactions are terminated because: (a) Charter stockholders fail to approve the issuance of New Charter common stock in the SpinCo merger; or (b) of (1) a breach by Charter, (2) a material adverse effect with respect to Charter or certain assets and liabilities of Charter or (3) Charter s unwillingness to accept a burdensome condition, then SpinCo Expenses will be borne by Charter, with Charter reimbursing Comcast and us for SpinCo Expenses incurred by Comcast and us; or (iii) If the transactions are terminated because: (a) the TWC merger agreement is terminated; or (b) of (1) a breach by Comcast or us, (2) a material adverse effect with respect to us or certain assets and liabilities of Comcast or (3) Comcast s or our unwillingness to accept a burdensome condition, then SpinCo Expenses will be borne by Comcast, with Comcast reimbursing Charter for SpinCo Expenses incurred by Charter or its affiliates. Table of Contents MANAGEMENT Directors and Executive Officers We expect that our board of directors following the transactions will be composed of nine directors, at least a majority of whom will be considered independent under the independence requirements of the NASDAQ Global Select Market. The following table sets forth certain information concerning our directors and executive officers following the consummation of the transactions: Name Age Position Michael S. Willner 62 President and Chief Executive Officer Matthew Siegel 52 Chief Financial Officer Leonard Baxt 67 Executive Vice President, Chief Administrative Officer and Chief Legal Officer Keith A. Hall 40 Executive Vice President for Corporate Affairs Thomas M. Rutledge 61 Chairman of the Board of Directors James Chiddix 69 Director Richard D Avino 59 Director Gregory L. Doody 50 Director Jill A. Greenthal 58 Director Dennis S. Hersch 67 Director Wendell F. Holland 62 Director Gregory Maffei 54 Director Christopher L. Winfrey 39 Director Set forth below is information concerning the individuals we expect to become our executive officers and directors as of the date of the consummation of the transactions. Michael S. Willner has served as an employee of CCH I Spinco, a wholly owned subsidiary of Charter, since June 2014. Prior to that, Mr. Willner served as President and CEO of Penthera Partners, a privately-held software licensing company focused on cloud-to-mobile technology, from 2012 to 2014 and remains on the board of Penthera Partners. Mr. Willner began his career at Vision Cable Communications, a division of Advanced Publications and a part of the Newhouse family s media investments, in 1974. Mr. Willner subsequently co-founded Insight Communications and was CEO of Insight Communications from 1985 until 2012 when it was sold to TWC. Mr. Willner has twice served as Chairman of the National Cable and Telecommunications Association ( NCTA ), the industry s principal trade association. In addition, he was Chairman of the NCTA s political action committee from 2000 until 2012, Chairman of the Board of the Cable Center from 2007 through 2011, was on the executive committee of CableLabs and the boards of C-SPAN and the Walter Kaitz Foundation. Mr. Willner is a recipient of the NCTA s 2004 Vanguard Award for Distinguished Leadership and a member of both the Broadcasting and Cable Hall of Fame and the Cable Hall of Fame. Mr. Willner graduated from Boston University s College of Communications in 1974. Matthew Siegel has served as Senior Vice President and Treasurer at TWC since 2008. Mr. Siegel joined TWC in 2008 from Time Warner Inc., where he was Vice President and Assistant Treasurer. Prior to joining Time Warner Inc. in 2001, Mr. Siegel served as Senior Vice President of Finance and Treasurer of Insight Communications. Mr. Siegel graduated with an MBA from the University of Chicago s Graduate School of Business and with a B.S. in Economics from the University of Pennsylvania Wharton School. Leonard Baxt has served as our Executive Vice President and Chief Administrative Officer since October, 2014. In August and September 2014, he served in a similar capacity at a subsidiary of Charter. Prior to that, Mr. Baxt was a senior counsel in the Business department of Cooley LLP, a global law firm, representing a wide range of media, technology and content companies, including Cox Enterprises, Insight Communications and Hasbro, until August 2014. He was the former Chairman of Dow Lohnes, which merged with Cooley in 2014. Prior to joining Dow Lohnes in 1972, he served in the U.S. Army Reserve. Mr. Baxt is currently Vice Chairman of the Board of the Partnership for Educational Solutions and the Vice Chairman of the Board of the USO of Metropolitan Washington, D.C. and Baltimore. Mr. Baxt graduated with a J.D. from the University of Michigan Law School in 1972 and with a B.A. from the University of Pittsburgh in 1969. Mr. Baxt is admitted to the bar of the District of Columbia. Table of Contents Keith A. Hall has served as an employee of CCH I Spinco, a wholly owned subsidiary of Charter, since July 2014. Prior to that, Mr. Hall served as Senior Vice President for External Affairs and Deputy General Counsel for Insight Communications from April 2009 until March 2012, when Insight was sold to TWC. There, he oversaw interactions with local, state, and federal officials, corporate communications, and community relations. Prior to that, he was Senior Vice President, Government Relations of Insight from August 2005 to April 2009. From March 2012 until July 2014, Mr. Hall was in the private practice of law in Louisville, Kentucky. While at Insight, Mr. Hall was responsible for the negotiation of and compliance with over 500 franchises held by Insight in six states, as well as a variety of federal and state level certificates for providing video and telephone services. He also served as Insight s lead counsel on securing regulatory approvals for Insight s sale to TWC. Mr. Hall graduated with a J.D. from the University of Louisville and with an undergraduate degree from Centre College. Thomas M. Rutledge was appointed as a director and President and Chief Executive Officer of Charter effective on February 13, 2012. A 34-year cable industry veteran, Mr. Rutledge served as Chief Operating Officer of Cablevision from April 2004 until December 2011 and previously served as president of TWC. He began his career in 1977 at American Television and Communications, a predecessor company of TWC. Mr. Rutledge currently serves on the board of the NCTA. He served as Chairman of the NCTA from 2008 to 2010 and currently serves on the boards of CableLabs, C-SPAN, and the Cable & Telecommunications Association for Marketing Educational Foundation. In 2011, Mr. Rutledge received NCTA s Vanguard Award for Distinguished Leadership, the cable industry s highest honor. He is a member of the Cable Hall of Fame and was inducted into the Broadcasting and Cable Hall of Fame in 2011. He received a B.A. in economics from California University in California, Pennsylvania in 1977. James Chiddix has spent a career of 35 years in the cable industry, including senior roles at both major service providers and equipment suppliers. He was the Chairman and Chief Executive Officer of OpenTV Corporation prior to his retirement in 2007, having served in this position from March 2004 until April 2007. From 2007 to 2009, he served as the Vice-Chairman of the Board of OpenTV. Prior to 2004, his previous roles included President at MystroTV (a division of Time Warner) and Chief Technology Officer and Senior Vice President, Engineering and Technology at TWC. Mr. Chiddix has served as a director of Arris Group, Inc. since July 2009, and of Magnum Semiconductor Inc. since October 2010. Mr. Chiddix previously served on the boards of Virgin Media Inc., Symmetricom Inc., Dycom Industries Inc., and Vyyo Inc. Mr. Chiddix attended the School of Electrical Engineering at Cornell University. Richard D Avino joined the private equity firm General Atlantic in 2014 as a Special Advisor and works with investment teams and portfolio companies on tax matters. Mr. D Avino also serves as Managing Director of PriceWaterhouseCoopers. Mr. D Avino served as Vice President and Senior Tax Counsel of the General Electric Company from 1991 through 2013. He was on the Boards of Directors of GE Capital Corporation and GE Capital Services from 2009 to 2012, and of GE SeaCo, a joint venture between the General Electric Company and Sea Containers Ltd. from 1996 to 2011. Prior to his time at the General Electric Company, Mr. D Avino was a tax partner at King & Spalding LLP, and served as an Attorney-Advisor and the Deputy Tax Legislative Counsel in the U.S. Treasury Department. Mr. D Avino graduated with a J.D. from the University of Pennsylvania Law School and with a B.S. in Economics from the University of Pennsylvania Wharton School. Gregory L. Doody became Senior Vice President, Business Affairs for Vineyard Brands in January 2014. He previously served as Executive Vice President, Programming and Legal Affairs for Charter, a position to which he was appointed in January 2011 after having previously served as Executive Vice President and General Counsel since December 2009. He also served as Charter s Chief Restructuring Officer and Senior Counsel in connection with its Chapter 11 proceedings after being appointed in March 2009. Prior to working for Charter, Mr. Doody served as Executive Vice President, General Counsel, and Secretary of Calpine Corporation from July 2006 through August 2008. From July 2003 through July 2006, Mr. Doody held various positions at HealthSouth Corporation, including Executive Vice President, General Counsel, and Secretary. Mr. Doody served as an executive officer of Charter during the pendency of its Chapter 11 cases in 2009. Mr. Doody earned a J.D. degree from Emory University School of Law and received a bachelor s degree in management from Tulane University. Mr. Doody is a certified public accountant. Jill A. Greenthal is a Senior Advisor in the Private Equity Group at The Blackstone Group L.P. Before joining Blackstone in 2003, Ms. Greenthal was Co-Head of the Global Media Group, Co-Head of the Boston Office and a member of the Executive Board of Investment Banking at Credit Suisse First Boston. Ms. Greenthal was also Co-Head of the Boston office of Donaldson, Lufkin & Jenrette, before its acquisition by CSFB. Prior to joining DLJ, she was Head of the Media Group at Lehman Brothers. Ms. Greenthal graduated as a member of The Academy from Simmons College and received an MBA from Harvard Business School. Ms. Greenthal is on the Board of Directors of Akamai Technologies, Michaels Stores, Inc., The Weather Channel and Houghton Mifflin Harcourt. Ms. Greenthal is also a member of the Women s Executive Council of Dana-Farber Cancer Institute and a Trustee of The James Beard Foundation, Simmons College and Overseer of the Museum of Fine Arts in Boston. Table of Contents Dennis S. Hersch has been President of N.A. Property, Inc., through which he acts as a business advisor to Mr. and Mrs. Leslie H. Wexner, since February 2008. He also serves as a trustee of several trusts established by Mr. and Mrs. Wexner. He was a Managing Director of J.P. Morgan Securities Inc. from December 2005 through January 2008, where he served as the Global Chairman of its Mergers & Acquisitions Department. Mr. Hersch was a partner of Davis Polk & Wardwell LLP, a New York law firm, from 1978 until December 2005. Mr. Hersch currently serves as a director of L Brands, Inc. Mr. Hersch has also served as a director at Sprout Foods, Inc., a producer of organic baby food, since 2009. Mr. Hersch also served as a director of NBCUniversal Enterprise, Inc., a subsidiary of Comcast Corporation, from 2013 to May 2014, and Clearwire Corporation, a wireless, high-speed ISP, from November 2008 to 2013. Mr. Hersch graduated with a J.D. from the New York University School of Law and with a B.A. from Brooklyn College. Wendell F. Holland has been a partner at the CSFD Group, LLC, a financial advisory firm for regional utility companies, since July 2009. Mr. Holland was partner in the law firm of Saul Ewing, LLP from October 2008 to September 2013. He served from 2004 to 2008 as Chairman of the Pennsylvania Public Utilities Commission and as Treasurer of the National Association of Regulatory Utility Commissioners ( NARUC ), in addition to serving on NARUC s Executive Committee and its Board of Directors and as Chairman of its Audit and Investment committees. He has been a director of Aqua America, Inc. since 2011 and a director of Bryn Mawr Bank Corporation since 1997. He was previously a director of the Allegheny Energy, Inc. from 1994 to 2003. Mr. Holland was Of Counsel at Obermayer Rebmann Maxwell & Hippel LLP from 1999 to 2003, Vice President of American Water Works Company from 1996 to 1999 and a partner at Leboeuf Lamb Greene & Macrae LLP from 1993 to 1995. Mr. Holland graduated with a J.D. from the Rutgers University School of Law, Camden and a B.S. from Fordham University. Gregory Maffei is the President and CEO and a director of Liberty Media Corporation and Liberty Interactive Corporation. Liberty Media owns interests in a broad range of media, communications and entertainment businesses, including SiriusXM, Charter, Live Nation Entertainment and the Atlanta Braves. Liberty Interactive has interests in digital commerce businesses, including TripAdvisor, QVC, Provide Commerce, Backcountry.com, Bodybuilding.com, CommerceHub, BuySeasons, Evite, Expedia, Tree.com, Interval Leisure Group, and HSN. Mr. Maffei also serves as Chairman of the Liberty-related companies Live Nation Entertainment, SiriusXM, Starz and TripAdvisor, and as a director of Charter and Zillow. Prior to his joining Liberty in 2005, Mr. Maffei served as President and CFO of Oracle, Chairman, President and CEO of 360networks, CFO of Microsoft and Chairman of the Board of Expedia. Additionally, he has served as a director of Barnes & Noble, Citrix, DIRECTV, Dorling Kindersley, Electronic Arts and Starbucks Coffee. He has an M.B.A. from Harvard Business School, where he was a Baker Scholar, and an A.B. from Dartmouth College. Christopher L. Winfrey joined Charter as Executive Vice President and Chief Financial Officer in November 2010. Mr. Winfrey is responsible for all of Charter s financial functions, including accounting, financial planning and analysis, tax and treasury, mergers and acquisitions, capital structure activities, and investor relations. He also directs Charter s supply chain management, facilities, revenue assurance, and business intelligence teams. Prior to joining Charter, Mr. Winfrey served as Chief Financial Officer and Managing Director of Unitymedia GmbH, Germany s second-largest provider of media and communications services via broadband cable, from March 2006 through October 2010. Mr. Winfrey was also appointed Managing Director of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH, and Unitymedia NRW GmbH in March 2006 and arena Sport Rechte und Marketing GmbH in April 2008. He has held leadership and finance positions with Cablecom and NTL Europe, assuming a key role in the operational turnaround, triple-play services rollout, and capital markets development at these companies over the last decade. Mr. Winfrey graduated from the University of Florida, with a B.S. degree in Accounting. He also received his M.B.A. from the University of Florida. Composition of Our Board of Directors At the closing of the transactions, we will have a board of nine directors, separated into three classes serving staggered three year terms, with the directors at the closing of the transactions designated as follows: (i) three independent directors selected by Comcast and reasonably acceptable to Charter (such directors being Messrs. D Avino, Hersch and Holland), each of whom shall be in a separate class, (ii) three independent directors selected by Comcast from a list of potential nominees provided by Charter (such directors being Messrs. Chiddix and Doody and Ms. Greenthal), each of whom shall be in a separate class and (iii) three directors designated by Charter (such directors being Messrs. Maffei, Rutledge and Winfrey), each of whom shall be in a separate class. Comcast s and Charter s right to designate directors will not continue beyond the selection of directors in office at the closing of the Table of Contents transactions. The Class I, Class II and Class III directors will serve until our annual meetings of stockholders in , and , respectively. The members of the classes at the closing of the transactions will be divided as follows: the Class I directors are , and ; the Class II directors are , and ; and the Class III directors are , and . At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors. Committees of Our Board of Directors Upon consummation of the transactions, the standing committees of our board of directors will consist of an audit committee, a compensation and benefits committee and a nominating and corporate governance committee. These committees are described below. Our board of directors may also establish various other committees to assist it in its responsibilities. Audit Committee The audit committee will be comprised of three directors, all of whom will meet the requirements for independence under the current NASDAQ Global Select Market listing standards and SEC rules and regulations. Each member of our audit committee will be financially literate. We expect that the audit committee will include at least one audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act. This designation does not impose any duties, obligations or liabilities that are greater than are generally imposed on members of our audit committee and our board of directors. Our audit committee will be directly responsible for, among other things: selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; evaluating the independence of the independent registered public accounting firm; discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results; establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; reviewing material related party transactions; and approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. Compensation and Benefits Committee The compensation and benefits committee will be comprised of three directors. Each member will be independent under NASDAQ Global Select Market rules and will qualify as a non-employee director (as defined under Rule 16b-3 under the Exchange Act) and an outside director (as defined in Section 162(m) of the Code). Our compensation and benefits committee will be responsible for, among other things: reviewing and approving our compensation and benefit programs; overseeing and setting compensation for our executives; Table of Contents approving the nature and amount of compensation paid to, and the employment and related agreements entered into with, our executives; reviewing and approving performance-based compensation programs; and overseeing our cash bonus and equity-based plans, approving guidelines for grants of awards under these plans. Nominating and Corporate Governance Committee The nominating and corporate governance committee will be comprised of three directors, each of whom will meet the requirements for independence under the current NASDAQ Global Select Market rules. Our nominating and governance committee exercises general oversight with respect to the governance of our board of directors, and will be responsible for, among other things: reviewing and evaluating the size, structure, composition and functioning of our board of directors and its committees; identifying and recommending candidates for membership on our board of directors; reviewing and recommending our corporate governance guidelines; overseeing the succession planning for our executive officers; overseeing the process of evaluating the performance of our board of directors; and assisting our board of directors on corporate governance matters. Code of Ethics In connection with the transactions, our board of directors will adopt a financial code of ethics that applies to our Chief Executive Officer, Chief Financial Officer and other persons performing similar senior financial functions. Upon completion of the transactions, the full text of our financial code of ethics will be posted on the investor relations section of our website. We intend to disclose future amendments to our financial codes of ethics, or any waivers of such code, on our website or in public filings. Compensation and Benefits Committee Interlocks and Insider Participation None of our executive officers has served during 2013 as a member of a compensation committee (or if no committee performs that function, the board of directors) of any other entity that has an executive officer serving as a member of our board of directors. Table of Contents EXECUTIVE COMPENSATION We were formed in 2014 in connection with the spin-off and we paid no compensation to any executive officers for the fiscal year ended December 31, 2013. We have not yet made determinations with respect to the compensation of our executive officers following the spin-off, other than as described below. Introduction Upon the completion of the transactions, we expect Michael Willner to be our President and Chief Executive Officer, Matthew Siegel to be our Chief Financial Officer, Leonard Baxt to be our Executive Vice President, Chief Administrative Officer and Chief Legal Officer and Keith A. Hall to be our Executive Vice President for Corporate Affairs. In order to assure us of the services of Mr. Willner and Mr. Hall following completion of the transactions, CCH I Spinco, entered into an employment agreement with Mr. Willner effective as of June 1, 2014 and with Mr. Hall effective as of July 1, 2014. We expect that CCH I Spinco will also enter into an employment agreement with Mr. Siegel. CCH I Spinco will be merged with and into us in the SpinCo merger. In order to assure us of the services of Mr. Baxt following completion of the transactions, SpinCo entered into an employment agreement with Mr. Baxt effective as of October 17, 2014. Mr. Baxt previously entered into an employment agreement with CCH I Spinco effective August 1, 2014, which agreement was substantially similar to his current agreement. That agreement was terminated effective October 16, 2014 due to Mr. Baxt s intent to enter into an employment agreement directly with us. The material terms of Mr. Willner s, Mr. Baxt s and Mr. Hall s employment agreements are described below. We expect to reimburse Charter and Comcast for amounts paid to our executive officers prior to the spin-off. Prior to the spin-off, we have been a wholly owned subsidiary of Comcast. Following the spin-off, our compensation and benefits committee will review all aspects of our executive compensation plans and programs and will make adjustments that it believes are appropriate. The compensation program for our executive officers following the spin-off has not yet been determined, but we expect that it will include the elements and terms described below under Key Elements of Expected Compensation from SpinCo. Agreements with Executive Officers of SpinCo The material terms of the employment agreements with Mr. Willner, Mr. Baxt and Mr. Hall are summarized below: Michael S. Willner: CCH I Spinco entered into an employment agreement with Mr. Willner effective June 1, 2014. Pursuant to his employment agreement, Mr. Willner will be employed as our President and Chief Executive Officer for a term of three years from the effective date of the spin-off, unless terminated earlier or extended, at our option, for an additional year, for a maximum four-year term. Under the employment agreement, Mr. Willner will be paid an annual base salary of $1,500,000 and be eligible for an annual target bonus of 150% of his base salary, payable based on his achievement of certain performance criteria. These performance criteria will be set by the President and Chief Executive Officer of Charter prior to the spin-off, and by our compensation and benefits committee after the spin-off. Under his employment agreement, Mr. Willner is entitled to annual equity award grants, the first of which will be made on the effective date of the spin-off, with respect to shares of our Class A common stock with a grant date value of not less than $3,750,000, 50% of which will be in the form of restricted stock or restricted stock units with respect to shares of our Class A common stock (both referred to hereafter as RSUs ), and 50% of which will be in the form of a stock option to purchase shares of our Class A common stock. One-third of these awards will vest on each of the first three anniversaries of the date of grant. In addition to his annual grant, Mr. Willner will be granted equity awards on the effective date of the spin-off for his service prior to that date. Such grant will have an annual value of $3,750,000, pro-rated for the period from June 1, 2014 through the spin-off date, and have the same terms and conditions as his annual equity awards, with one-third of the award vesting on each of June 1, 2015, June 1, 2016 and June 1, 2017. Table of Contents Under his employment agreement, Mr. Willner is eligible to receive certain severance benefits if he is terminated by us without cause, if he resigns his employment with us for good reason or if he is terminated on the date his employment agreement expires. The severance benefits generally consist of (a) two times his base salary, (b) two times the target bonus for the year of termination, (c) a lump sum payment equal to 24 months of COBRA payments and (d) payment for twelve months of outplacement services. If Mr. Willner s employment is terminated in connection with a change of control, or if he is terminated on the date his employment agreement expires, then in addition to the severance benefits described above, he will be fully vested in all of his outstanding equity awards. In each case, receipt of these severance benefits is contingent upon Mr. Willner s execution and non-revocation of a release of claims in favor of us. In addition, Mr. Willner is subject to covenants regarding confidentiality, invention assignment, noncompetition and non-solicitation under his employment agreement. Mr. Willner s severance benefits under his employment agreement are contingent upon his compliance with these obligations. Good reason under Mr. Willner s employment agreement generally means (i) a reduction in base salary or target bonus percentage; (ii) any failure by us to pay Mr. Willner s compensation when due; (iii) any material breach by us of his employment agreement, including a reduction in title; (iv) a relocation of more than 50 miles; (v) after the spin-off, the transfer or reassignment of Mr. Willner s material responsibilities to another employee; or (vi) a change of control during the term of the employment agreement, in which case Mr. Willner must terminate employment within one year of the change of control. In each of (i) through (v) above, we will have 30 days upon notice from Mr. Willner to rectify the good reason trigger. Change of control under Mr. Willner s employment agreement generally means (i) the acquisition by any person or group under Section 13(d) or 14(d) of the Exchange Act of more than 50% of the combined voting power of our outstanding securities other than in a non-control transaction ; (ii) a change in the board of directors such that the directors who were on the board immediately prior to the effective date of his employment agreement (or, after the spin-off, the directors who were on the board of directors immediately prior to the spin-off) no longer comprise a majority of the board, unless such change is approved by at least two-thirds of the board; (iii) the consummation of a merger, consolidation or reorganization other than in a non-control transaction ; (iv) our complete liquidation or dissolution; or (v) the sale or other disposition of all or substantially all of our assets other than in a non-control transaction. For these purposes, a non-control transaction generally means a merger, consolidation, reorganization, sale or other disposition where (1) the stockholders immediately before such transaction own following the transaction more than 50% of the voting power of the outstanding voting shares of the entity resulting from the transaction or its parent (the surviving entity ), (2) the board members immediately prior to the execution of the agreement for such transaction constitute at least a majority of members of the board of the surviving entity and (3) subject to certain exceptions, no person has beneficial ownership of more than 50% of the combined voting power of the outstanding voting securities or common stock of the surviving entity. Under his employment agreement, if Mr. Willner s employment is terminated due to his death or disability, he (or his estate, in the case of death) will receive the pro-rata portion of his annual bonus for the year in which his death or disability occurs. In addition, if Mr. Willner becomes disabled, is no longer receiving base salary payments from us and has not yet begun receipt of long-term disability payments, we will make interim payments to Mr. Willner equal to the unpaid disability payments until his long-term disability insurance payments commence. To the extent any severance benefits would constitute parachute payments within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code, Mr. Willner will receive either (a) the full amount of such benefits or (b) such lesser amount as would result in no portion of such benefits being subject to the excise tax under Section 4999 of the Code, whichever results in his receipt, on an after-tax basis, of the greater amount of severance benefits, notwithstanding that some or all of such severance benefits may be taxable under Section 4999 of the Code. Leonard Baxt: SpinCo entered into an employment agreement with Mr. Baxt effective October 17, 2014. Pursuant to his employment agreement, Mr. Baxt currently serves as our Executive Vice President and Chief Administrative Officer and will be employed as our Executive Vice President, Chief Administrative Officer and Chief Legal Officer for a term of three years from the effective date of the spin-off, unless his employment with us is terminated earlier or extended, at our option, for an additional year, for a maximum four-year term. Under his employment agreement, Mr. Baxt will be paid an annual base salary of $800,000 and be eligible for an annual target bonus of 150% of his base salary, payable based upon on his achievement of certain performance criteria. These bonus criteria will be set by our President and Chief Executive Officer prior to the spin-off, and by our compensation and benefits committee after the spin-off. Under his employment agreement, Mr. Baxt is entitled to annual equity award grants, the first of which will be made on the effective date of the spin-off, with respect to shares of our Class A common stock with a grant date value of not less than $2,500,000, 50% of which will be in the form of RSUs and 50% of which will be in the form of a stock option to purchase shares of our Class A common stock. One-third of these awards will vest on each of the first three anniversaries of the date of grant. In addition to his annual grant, Mr. Baxt will receive a grant of equity awards on the effective date of the spin-off for his service prior to that date. Such grant will have an annual value of $2,500,000, pro-rated for the period from August 1, 2014 through the spin-off date, and have the same terms and conditions as his annual equity awards, with one-third of the award vesting on each of August 1, 2015, August 1, 2016 and August 1, 2017. Table of Contents Under his employment agreement, Mr. Baxt is eligible to receive certain severance benefits if he is terminated by us without cause, if he resigns his employment with us for good reason or if he is terminated on the date his employment agreement expires. The severance benefits generally consist of (a) two times his base salary, (b) two times the target bonus for the year of termination, (c) a lump sum payment equal to 24 months of COBRA payments and (d) payment for twelve months of outplacement services. If Mr. Baxt s employment is terminated in connection with a change of control, or if he is terminated on the date his employment agreement expires, then in addition to the severance benefits described above, he will be fully vested in all of his outstanding equity awards. In each case, receipt of these severance benefits is contingent upon Mr. Baxt s execution and non-revocation of a release of claims in favor of us. In addition, Mr. Baxt is subject to covenants regarding confidentiality, invention assignment, noncompetition and non-solicitation under his employment agreement. Mr. Baxt s severance benefits under his employment agreement are contingent upon his compliance with these obligations. Good reason under Mr. Baxt s employment agreement generally has the same meaning as under Mr. Willner s employment agreement. Change of control under Mr. Baxt s employment agreement generally has the same meaning as under Mr. Willner s employment agreement. Under his employment agreement, if Mr. Baxt s employment is terminated due to his death or disability, he (or his estate, in the case of death) will receive the pro-rata portion of his annual bonus for the year in which his death or disability occurs. In addition, if Mr. Baxt becomes disabled, is no longer receiving base salary payments from us and has not yet begun receipt of long-term disability payments, we will make interim payments to Mr. Baxt equal to the unpaid disability payments until his long-term disability insurance payments commence. To the extent any severance benefits would constitute parachute payments within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code, Mr. Baxt will receive either (a) the full amount of such benefits or (b) such lesser amount as would result in no portion of such benefits being subject to the excise tax under Section 4999 of the Code, whichever results in his receipt, on an after-tax basis, of the greater amount of severance benefits, notwithstanding that some or all of such severance benefits may be taxable under Section 4999 of the Code. Keith A. Hall: CCH I Spinco entered into an employment agreement with Mr. Hall effective July 1, 2014. Pursuant to his employment agreement, Mr. Hall will be employed as our Executive Vice President of Corporate Relations for an initial term of three years from the effective date of the spin-off, unless terminated earlier or extended at our option. Under the employment agreement, Mr. Hall will be paid an annual base salary of $350,000 and be eligible for an annual target bonus of 75% of his base salary, payable based on his achievement of certain performance criteria. These performance criteria will be set by Mr. Willner in consultation with the President and Chief Executive Officer of Charter prior to the spin-off, and by our compensation and benefits committee after the spin-off. Under his employment agreement, Mr. Hall is entitled to annual equity award grants, the first of which will be made on the effective date of the spin-off, with respect to shares of our Class A common stock with a grant date value of not less than $1,000,000, 50% of which will be in the form of RSUs, and 50% of which will be in the form of a stock option to purchase shares of our Class A common stock. Under his employment agreement, Mr. Hall is eligible to receive certain severance benefits if he is terminated by us without cause or if he resigns his employment with us for good reason. The severance benefits generally consist of (a) two times his base salary, (b) two times the target bonus for the year of termination, (c) a lump sum payment equal to 24 months of COBRA payments and (d) payment for twelve months of outplacement services. Mr. Hall will also be eligible to receive accelerated vesting of his equity awards and long-term incentives to the extent provided in his award agreements and our plans, which such award agreement will provide that Mr. Hall receive accelerated vesting of his equity if he resigns for good reason because his employment agreement is not renewed on substantially similar terms for at least a one-year period after the initial term expires. In each case, receipt of these severance benefits is contingent upon Mr. Hall s execution and non-revocation of a release of claims in favor of us. In addition, Mr. Hall is subject to covenants regarding confidentiality, invention assignment, noncompetition and non-solicitation under his employment agreement. Mr. Hall s severance benefits under his employment agreement are contingent upon his compliance with these obligations. Good reason under Mr. Hall s employment agreement generally means (i) any reduction in his base salary, target bonus percentage, or title; (ii) any failure by us to pay Mr. Hall s compensation when due; (iii) any material breach by us of his employment agreement; (iv) a relocation of more than 50 miles; (v) after the spin-off, a transfer or reassignment of Mr. Hall s material responsibilities to another employee unless we have given Mr. Hall a non-renewal notice of his employment agreement; (vi) after the spin-off, a change in reporting structure such that Mr. Hall no longer reports directly to our Chief Executive Officer; (vii) a change of control during the term of the employment agreement, in which case Mr. Hall does not receive an offer within six months from the date of the change of control to continue his position immediately prior to the change of control on the same terms and conditions; (viii) a change of control during the term of his employment agreement, in which the successor fails to assume the obligations under Mr. Hall s employment agreement; or (ix) non-renewal of Mr. Hall s employment agreement on substantially similar terms for at least a one-year period after the initial term expires. In each of (i) through (vi) above, we will have 30-day cure period upon notice from Mr. Hall to rectify the good reason trigger. Change of control under Mr. Hall s employment agreement generally has the same meaning as under Mr. Willner s employment agreement. Under his employment agreement, if Mr. Hall s employment is terminated due to his death or disability, he (or his estate, in the case of death) will receive the pro-rata portion of his annual bonus for the year in which his death or disability occurs. In addition, if Mr. Hall becomes disabled, is no longer receiving base salary payments from us and has not yet begun receipt of long-term disability payments, we will make interim payments to Mr. Hall equal to the unpaid disability payments until his long-term disability insurance payments commence. To the extent any severance benefits would constitute parachute payments within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code, Mr. Hall will receive either (a) the full amount of such benefits or (b) such lesser amount as would result in no portion of such benefits being subject to the excise tax under Section 4999 of the Code, whichever results in his receipt, on an after-tax basis, of the greater amount of severance benefits, notwithstanding that some or all of such severance benefits may be taxable under Section 4999 of the Code. In addition to the payments described above, in the event the spin-off does not occur, the employment of each of Mr. Willner, Mr. Baxt and Mr. Hall will automatically terminate and they will be entitled to certain severance payments. Table of Contents Key Elements of Expected Compensation for Our Executive Officers We expect that our executive compensation programs will include the following elements: Base Salary: The base salaries for our executive officers will be established either at the time of hiring or upon promotion, and will be determined based on the nature of the executive officer s position and responsibilities, his or her experience and expertise, as well as market factors. Base salary is the fixed element of an executive officer s annual cash compensation, designed to provide a stable source of income for the executive, and a stable management team for our company. Annual Bonus Compensation: In connection with the spin-off, we expect that our compensation and benefits committee will adopt an annual bonus framework with key financial and operational metrics that will drive performance and create a pay-for-performance culture within our company. Our executive officers will be eligible for annual bonus compensation. We expect each officer will have a target bonus opportunity established as a percentage of base pay. We also expect that target bonus opportunities will be generally highest at the highest levels of the organization, reflecting the increased emphasis on pay-for-performance at those levels and the greater variability of pay based on company and individual performance. Long-Term Equity-Incentive Awards: We anticipate that our executive officers will be eligible to receive long-term equity incentive awards that will have the potential to provide significant rewards for strong financial performance. These equity incentives serve the additional purpose of strongly aligning the interests of our executives with those of our stockholders. The employment arrangements of our executive officers, as described above, provide for awards of long-term equity incentives under a plan to be established by us. The amount and timing of any additional equity-based compensation to be granted to our executive officers following the spin-off will be determined by the compensation and benefits committee. Equity incentive awards granted to our executive officers will generally be granted pursuant to the new equity incentive plan, which is described under New Equity Incentive Plan below. Benefits and Perquisites: At the time of the spin-off, we will have established employee benefit plans and programs providing health and welfare benefits, as well as 401(k) participation, for most of our employees. We expect that our executive officers will participate in these plans and programs on generally the same terms as our other employees. From time to time, our executive officers may be eligible for additional benefits or perquisites, as our compensation and benefits committee may determine necessary or appropriate. New Equity Incentive Plan Information regarding our new equity incentive plan will be provided by amendment to this prospectus. Compensation of Directors Prior to the spin-off, our directors were Comcast employees and not separately compensated for serving on our board of directors. Following the spin-off, our compensation and benefits committee will develop a compensation program for our non-employee directors and will make recommendations to our board of directors with respect to such a program. We believe our compensation and benefits committee will review peer company data, in order to ensure we are able to attract and retain qualified directors. Information regarding our non-employee director compensation program will be provided by amendment to this prospectus. Table of Contents OWNERSHIP OF OUR STOCK The following table sets forth information regarding beneficial ownership of our Class A common stock as of January 15, 2015 after giving effect to the transactions by: each person whom we know will own beneficially more than 5% of our common stock; each of the directors and named executive officers individually; and all directors and executive officers as a group. In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable pursuant to stock options that are exercisable within 60 days of January 15, 2015. Shares issuable pursuant to stock options are deemed outstanding for computing the percentage of the person holding such options but are not outstanding for computing the percentage of any other person. The percentage of beneficial ownership for the following table is based on shares of Class A common stock to be outstanding following consummation of the transactions, assuming no issuance of cash in lieu of fractional shares in the spin-off. Shares Beneficially Owned After the Transactions Name and Address of Beneficial Owner Number Percent Named Executive Officers and Directors Michael S. Willner * Matthew Siegel * Leonard Baxt * Keith A. Hall * Thomas M. Rutledge * James Chiddix * Richard D Avino * Gregory L. Doody * Jill A. Greenthal * Dennis S. Hersch * Wendell F. Holland * Gregory Maffei * Christopher L. Winfrey * All directors and executive officers as a group (13 persons) * 5% Stockholders New Charter 33% * Less than one percent. Table of Contents DESCRIPTION OF CAPITAL STOCK We have provided below a summary description of our capital stock. This description is not complete, and is qualified in its entirety by the full text of our certificate of incorporation and bylaws, which will be filed as exhibits to the registration statement into which this prospectus is incorporated and which will be effective upon consummation of the transactions. You should read the full text of our certificate of incorporation and bylaws, as well as the provisions of applicable law. General Upon the consummation of the transactions, our authorized capital stock will consist of shares of Class A common stock, par value $0.001 per share, and shares of Class A-1 common stock, par value $0.001 per share. All outstanding shares of our common stock are fully paid and non-assessable, and the Class A shares of common stock to be outstanding upon completion of the transactions will be fully paid and non-assessable. Common Stock Our shares of Class A and Class A-1 common stock have identical rights, except that, (1) pursuant to the SpinCo merger, the Class A-1 shares of our common stock will be converted into a pro rata portion of the shares of New Charter common stock issued in the SpinCo merger, upon which Class A-1 common stock will cease to be authorized and (2) shares of our Class A-1 common stock will not be transferrable. The following description of our common stock rights and preferences apply equally to Class A and Class A-1 shares of common stock. Voting rights. The holders of our common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Dividend rights. The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor. See Dividend Policy. Rights upon liquidation. In the event of liquidation, dissolution or winding up of us, the holders of our common stock are entitled to share ratably in all assets remaining after payment of liabilities. Other rights. Other than as described under Preemptive Rights below, the holders of our common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. Board of Directors Our board of directors will consist of nine directors. No director may be removed except for cause, and directors may be removed for cause by an affirmative vote of shares representing a majority of the shares then entitled to vote at an election of directors. Any vacancy occurring on the board of directors and any newly created directorship may be filled only by a majority of the remaining directors in office. Staggered Board At the closing of the transactions, our board of directors will be divided into three classes serving staggered three year terms, with the directors at the closing of the transactions designated as follows: (i) three independent directors selected by Comcast and reasonably acceptable to Charter, each of whom shall be in a separate class, (ii) three independent directors selected by Comcast from a list of potential nominees provided by Charter, each of whom shall be in a separate class and (iii) three directors designated by Charter, each of whom shall be in a separate class. See Management Composition of Our Board of Directors. Our current Class I, Class II and Class III directors will serve until our annual meetings of stockholders in 20 , 20 and 20 , respectively. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors. Table of Contents Committees of the Board of Directors Our certificate of incorporation will provide that each committee of our board of directors will be comprised of three directors of the same class, unless applicable law or the listing rules of the NASDAQ Global Select Market require such committee to be otherwise comprised, in which case such committee shall be comprised of three directors selected by the majority of the Board, or unless a majority of the independent directors of our board of directors determines in good faith, based on the advice of counsel, that composing a specific committee of three directors of the same class would result in a conflict of interest for such committee. The nominating committee will be subject to additional restrictions, including that the nominating committee will determine, subject to board approval, who will fill any vacancy on the nominating committee. Written Consents Our certificate of incorporation and our bylaws will provide that holders of our capital stock will be able to act by written consent without a meeting, provided the consent is signed by the holders of our capital stock having not less than the minimum number of votes that would be necessary to take such action at a meeting. Stockholder Meetings Our certificate of incorporation and our bylaws will provide that special meetings of our stockholders may be called by the chairman of our board of directors, a vice chairman of our board of directors, our chief executive officer, a majority of the directors or the holders of our capital stock having not less than 25% of the voting power of all of the outstanding shares of capital stock. Preemptive Rights Our certificate of incorporation will provide New Charter with certain preemptive rights. In particular, beginning on the second anniversary of the completion of the transactions, in the event that we propose to issue or sell equity securities (other than pursuant to a compensation program or equity plan that meets certain conditions), our certificate of incorporation will provide that we will grant New Charter preemptive rights to purchase from us the number of equity securities necessary to maintain its percentage ownership of us. The preemptive rights will terminate when New Charter and its subsidiaries cease to own at least 5% of our outstanding capital stock. Tax Standstill Our certificate of incorporation will provide that until the second anniversary of the spin-off, we will not take any action that would cause the historic Comcast shareholders to own less than 50.75% of our outstanding shares of capital stock. In addition, New Charter and its controlled affiliates shall not be subject to, and we will not take any action to impose on New Charter and its controlled affiliates, any restriction on holding, acquiring or transferring our equity securities, except as otherwise set forth in the tax matters agreement among us, Comcast and New Charter or the stockholders agreement. Amendment of Certificate of Incorporation The provision of our certificate of incorporation described under Tax Standstill may be amended only by the affirmative vote of at least 80% of our directors and holders of at least 80% of the voting power of our outstanding shares of capital stock. The affirmative vote of holders of at least 60% of the voting power of our outstanding shares of capital stock will generally be required to amend other provisions of our certificate of incorporation. Amendment of Bylaws Our bylaws may generally be amended, supplemented or repealed, and new bylaws may be adopted, with the affirmative vote of a majority of directors present at any regular or special meeting of the board of directors called for that purpose. Table of Contents Other Limitations on Stockholder Actions Our bylaws will also impose some procedural requirements on stockholders who wish to: make nominations in the election of directors; or propose any other business to be brought before an annual or special meeting of stockholders. Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely notice of a proposal pertaining to a proper subject for presentation at the meeting to our corporate secretary along with the following: a description of the business or nomination to be brought before the meeting and the reasons for conducting such business at the meeting; the stockholder s name and address; any material interest of the stockholder in the proposal; the number of shares beneficially owned by the stockholder and evidence of such ownership; a representation that the stockholder is a holder of record of stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination; a representation addressing whether the stockholder intends (or is part of a group which intends) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to approve or adopt the proposal or elect the nominee; and the names and addresses of all persons with whom the stockholder is acting in concert and a description of all arrangements and understandings with those persons, and the number of shares such persons beneficially own. To be timely, a stockholder must generally deliver notice: in connection with an annual meeting of stockholders, not more than 60 nor less than 30 days prior to the date on which the annual meeting of stockholders was held in the immediately preceding year, but in the event that the date of the annual meeting is more than 30 days before or more than 30 days after the anniversary date of the preceding annual meeting of stockholders, a stockholder notice will be timely if received by us not later than the close of business on the later of (1) the 30th day prior to the annual meeting and (2) the 10th day following the day on which we first publicly announce the date of the annual meeting; or in connection with the election of a director at a special meeting of stockholders, a stockholder notice will be timely if received by us not earlier than the 90th day prior to the special meeting and not later than the close of business on the later of (1) the 60th day prior to the special meeting and (2) the 10th day following the day on which we first publicly announce the date of the special meeting and the nominees proposed by our board of directors to be elected at the special meeting. In order to submit a nomination for our board of directors, a stockholder must also submit any information with respect to the nominee that we would be required to include in a proxy statement, as well as certain other information. If a stockholder fails to follow the required procedures, the stockholder s proposal or nominee will be ineligible and will not be voted on by our stockholders. Limitation of Liability of Directors and Officers Our certificate of incorporation will provide that no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except as required by applicable law, as in effect from time to time. Currently, Delaware law requires that liability be imposed for the following: any breach of the director s duty of loyalty to our company or our stockholders; any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law; Table of Contents unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and any transaction from which the director derived an improper personal benefit. As a result, neither we nor our stockholders have the right, through stockholders derivative suits on our behalf, to recover monetary damages against a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior, except in the situations described above. Our certificate of incorporation will also provide that, to the fullest extent permitted by law, we will indemnify any officer or director of our company against all damages, claims and liabilities arising out of the fact that the person is or was our director or officer, or served any other enterprise at our request as a director, officer, employee, agent or fiduciary. We will reimburse the expenses, including attorneys fees, incurred by a person indemnified by this provision when we receive an undertaking to repay such amounts if it is ultimately determined that the person is not entitled to be indemnified by us. Amending this provision will not reduce our indemnification obligations relating to actions taken before an amendment. Business Opportunities Our certificate of incorporation will provide that, to the fullest extent permitted by applicable law and except as may be otherwise agreed in writing with New Charter, New Charter and its related parties will not have any duty to refrain from, and will not be liable to us for, pursuing any business opportunity, even if the business opportunity is one that we or our subsidiaries might have pursued or had the ability or desire to pursue if granted the opportunity to do so, unless such person is an officer or director of us and the business opportunity is offered to such director or officer in writing solely in her or her capacity as such. Forum Selection Our certificate of incorporation will provide that the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware, in all cases subject to the court s having personal jurisdiction over the indispensable parties named as defendants, no other court having exclusive jurisdiction, and the Delaware Court of Chancery having subject matter jurisdiction. Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws and Delaware Law Some provisions of our certificate of incorporation and bylaws could make the following more difficult: acquisition of control of us by means of a proxy contest or otherwise; or removal of our incumbent officers and directors. These provisions may discourage coercive takeover practices and inadequate takeover bids. These provisions may also encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because negotiation of those proposals could result in an improvement of their terms. Transfer Agent and Registrar The transfer agent and registrar for our common stock is . Listing We have applied to list our Class A common stock on the NASDAQ Global Select Market under the symbol GLCI. Our Class A-1 common stock will not be listed for trading on any securities exchange and will be converted into New Charter common stock as part of the SpinCo merger. New Charter common stock will be traded on the NASDAQ Global Select Market under the symbol CHTR. Upon consummation of the SpinCo merger, we expect to change our legal name to GreatLand Connections Inc. Table of Contents DESCRIPTION OF INDEBTEDNESS Prior to the spin-off and SpinCo merger, we expect to incur new indebtedness in an aggregate amount equal to 5.0 times the 2014 EBITDA of the SpinCo systems (as such term is defined by our financing sources for purposes of the financing). We currently estimate such indebtedness to be $7.8 billion in the aggregate. The amount of indebtedness was determined by both Comcast and Charter and is believed to be consistent with many other cable operators. The indebtedness is expected to consist of (i) credit facilities of approximately $4.8 billion to be used primarily to fund cash distributions to Comcast up to the amount of Comcast s tax basis in SpinCo and (ii) approximately $3.0 billion of notes newly issued to Comcast, which notes will enable Comcast to complete a debt-for-debt exchange whereby one or more financial institutions will conduct a third-party tender offer for certain of Comcast s publicly traded debt securities and will then exchange the tendered debt securities of Comcast for our new notes held by Comcast. The amount of indebtedness we incur may fluctuate based on the 2014 EBITDA of the SpinCo systems. The amount of the cash distributions to Comcast and the amounts of and allocation between the credit facilities and notes issued to Comcast, including structural seniority and subordination levels, will be determined upon completion of a detailed analysis to quantify Comcast s tax basis in our company and are subject to change based on additional factors, including market conditions at the time of the financings. In addition, we expect to enter into a $750 million revolving credit agreement to provide us with additional liquidity, including for short-term working capital needs. See The Transactions Background and Description of the Transactions for more information on the debt-for-debt exchange. The specific terms of such indebtedness are unknown at this time and will be included in an amendment to this prospectus. Table of Contents CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Other than with respect to compensation arrangements, which are described where required under Executive Compensation, and other than the agreements with Comcast and Charter that are described above under Arrangements Among Us, Comcast and Charter, there have not been, nor are there any currently proposed, transactions or series of similar transactions to which we are or will be a party, in which: the amounts involved exceeded or will exceed $120,000; and any of our directors, executive officers or beneficial holders of more than 5% of any class of our capital stock had or will have a direct or indirect material interest. Policies and Procedures for Related Person Transactions Our board of directors will adopt written policies and procedures covering related party transactions. The audit committee will review the material facts of related party transactions. We will have various procedures in place, e.g., an annual questionnaire to be completed by our directors, director nominees and executive officers, specifically requesting information about potential related party transactions. Management will bring transactions to the committee for review as appropriate. We expect that our related party transaction policy will provide that a related party transaction is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year; (2) we are a participant; and (3) any related party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A related party is any: (a) person who is or was (since the beginning of the last fiscal year, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director; (b) greater than 5% beneficial owner of our common stock; or (c) immediate family member of any of the foregoing. Immediate family member includes a person s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law and brothers- and sisters-in-law and anyone residing in such person s home (other than a tenant or employee). Open market purchases or privately-negotiated transactions, excluding any non-pro rata distributions by us involving any of our securities or those of our subsidiaries will not deemed to be related party transactions under our related party transaction policy. Table of Contents MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF AND THE SPINCO MERGER In the opinion of Davis Polk & Wardwell LLP, counsel to Comcast, the following are the material U.S. federal income tax consequences of the spin-off and SpinCo merger to U.S. Holders (as defined below) of Comcast common stock. This discussion is based on the Code, applicable Treasury regulations, administrative interpretations and court decisions as in effect as of the date of this prospectus, all of which may change, possibly with retroactive effect. For purposes of this discussion, a U.S. Holder is a beneficial owner of Comcast common stock that is for U.S. federal income tax purposes: a citizen or resident of the United States; a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof; or an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. This discussion addresses only the consequences of the spin-off and SpinCo merger to U.S. Holders that hold Comcast common stock as a capital asset. It does not address all aspects of U.S. federal income taxation that may be important to a U.S. Holder in light of that shareholder s particular circumstances or to a U.S. Holder subject to special rules, such as: a financial institution, regulated investment company or insurance company; a tax-exempt organization; a dealer or broker in securities, commodities or foreign currencies; a shareholder that holds Comcast common stock as part of a hedge, appreciated financial position, straddle, conversion, or other risk reduction transaction; a shareholder that holds Comcast common stock in a tax-deferred account, such as an individual retirement account; or a shareholder that acquired Comcast common stock pursuant to the exercise of options or similar derivative securities or otherwise as compensation. If a partnership, or any entity treated as a partnership for U.S. federal income tax purposes, holds Comcast common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partners and the activities of the partnership. A partner in a partnership holding Comcast common stock should consult its tax advisor. This discussion of material U.S. federal income tax consequences is not a complete analysis or description of all potential U.S. federal income tax consequences of the spin-off and SpinCo merger. This discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. In addition, it does not address any U.S. federal, estate, gift or other non-income tax or any foreign, state or local tax consequences of the spin-off and SpinCo merger. Accordingly, each holder of Comcast common stock should consult its tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of the spin-off and SpinCo merger to such holder. Table of Contents Tax Opinions The consummation of the spin-off and SpinCo merger, along with certain related transactions, are conditioned upon the receipt of an opinion of tax counsel substantially to the effect that (i) the spin-off, together with certain related transactions, should qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(D) of the Code and a tax-free distribution within the meaning of Section 355 of the Code, (ii) the debt-for-debt exchange should qualify as tax-free exchange to Comcast within the meaning of Section 361 of the Code, and (iii) the SpinCo merger and Charter reorganization, taken together, will qualify as a tax-free transaction within the meaning of Section 351 of the Code (a Tax Opinion ). In rendering the Tax Opinion given as of the date of this prospectus (the Registration Statement Tax Opinion ), tax counsel has relied, and in rendering the Tax Opinion to be given as of the closing of the spin-off and SpinCo merger (the Closing Tax Opinion ), will rely, on (i) customary representations and covenants made by Comcast, us and Charter, including those contained in certificates of officers of Comcast, us and Charter, and (ii) specified assumptions, including an assumption regarding the completion of the spin-off, debt-for-debt exchange, SpinCo merger, Charter reorganization and certain related transactions in the manner contemplated by the transactions agreements. In addition, tax counsel has assumed in rendering the Registration Statement Tax Opinion, and tax counsel s ability to provide the Closing Date Tax Opinion will depend on, the absence of changes in existing facts or in law between the date of this registration statement and the closing date of the spin-off and SpinCo merger. If any of those representations, covenants or assumptions is inaccurate, tax counsel may not be able to provide the Closing Tax Opinion or the tax consequences of the spin-off and SpinCo merger could differ from those described below. An opinion of tax counsel neither binds the Internal Revenue Service, which is referred to in this discussion as the IRS, nor precludes the IRS or the courts from adopting a contrary position. Comcast does not intend to obtain a ruling from the IRS on the tax consequences of the spin-off, SpinCo merger or any of the related transactions. The Spin-Off Assuming that the spin-off, together with certain related transactions, will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(D) of the Code and a tax-free distribution within the meaning of Section 355 of the Code, in general, for U.S. federal income tax purposes: the spin-off will not result in the recognition of income, gain or loss to Comcast or us, except for taxable income or gain of Comcast possibly arising as a result of certain internal restructuring transactions undertaken in anticipation of the spin-off, and assuming that the debt-for-debt exchange will qualify as a tax-free exchange to Comcast within the meaning of Section 361 of the Code, the debt-for-debt exchange will not result in the recognition of income, gain or loss to Comcast; no gain or loss will be recognized by, and no amount will be included in the income of, U.S. Holders of Comcast common stock upon the receipt of our common stock; the aggregate tax basis of the shares of our common stock (including fractional shares) distributed in the spin-off to a U.S. Holder of Comcast common stock will be determined by allocating the aggregate tax basis such U.S. Holder has in the shares of Comcast common stock immediately before such spin-off between such Comcast common stock and our common stock in proportion to the relative fair market value of each immediately following the spin-off; the holding period of any shares of our common stock received by a U.S. Holder of Comcast common stock will include the holding period of the shares of Comcast common stock held by a U.S. Holder prior to the spin-off; and a U.S. Holder of Comcast common stock that receives cash in lieu of a fractional share of our common stock will recognize capital gain or loss, measured by the difference between the cash received for such fractional share and the U.S. Holder s tax basis in that fractional share, determined as described above; such gain or loss will be long-term capital gain or loss if the U.S. Holder s holding period for such fractional share is more than one year as of the closing date of spin-off. Because one share of our common stock will be received with respect to more than one share of Comcast common stock, the basis of each share of Comcast common stock must be allocated to a segment of each share of our common stock received with respect thereto in proportion to their relative fair market values in a manner that reflects, to the greatest extent possible, that a share of our common stock is received with respect to shares of Comcast common stock acquired on the same date and at the same price. To the extent this is not possible, the allocations must be made in a manner that minimizes the disparity in the holding periods of shares of Comcast common stock with respect to which such shares of our common stock are received; in such a case, each segment of a share of our common stock will have a basis and corresponding holding period. Table of Contents Under applicable Treasury regulations, a U.S. Holder must allocate the aggregate tax basis of the shares of our common stock (determined as described above) among each class of our common stock received. For this purpose, a U.S. Holder may be permitted to designate the particular Comcast shares on which it receives shares of our Class A common stock and the particular Comcast shares on which it receives shares of our Class A-1 common stock (which will be exchanged for shares of New Charter common stock in the SpinCo merger) by electing pursuant to the terms of the contribution, separation and spin-off agreement, to receive shares of our Class A and Class A-1 common stock on particular Comcast shares (holders of Comcast common stock will receive further information regarding the manner in which this election may be made). Treasury regulations promulgated under Section 358 of the Code provide that where a stockholder receives shares of stock of more than one class in a distribution under Section 355 of the Code, then, to the extent the terms of the exchange specify that shares of stock of a particular class are received with respect to a particular share of stock of the distributing corporation, the terms of the distribution shall control for the purpose of determining a shareholder s basis and holding period to the extent the terms of the exchange are economically reasonable. The election described above is intended to permit U.S. Holders to rely upon these Treasury regulations, although it is possible such an election will not be treated as satisfying the requirements of such regulations, and there can therefore be no assurance that, if a U.S. Holder determines its basis and holding period in the shares of our common stock received in the spin-off by designating the particular Comcast shares on which it receives shares of our Class A common stock and Class A-1 common stock, the IRS will not challenge such election. If the IRS were to challenge successfully the position that the U.S. Holder takes with respect to the allocation of tax basis to our common stock received in the spin-off, then the U.S. Holder could be required to reallocate its tax basis among its shares of our Class A stock and Class A-1 stock on a pro rata basis to each share of Comcast common stock that the U.S. Holder held at the time of the spin-off. U.S. Holders should consult with their tax advisors regarding the determination of their basis and holding period in the shares of our common stock received in the spin-off. A U.S. Holder that does not make such an election will be required to allocate its tax basis among its shares of our Class A stock and Class A-1 stock on a pro rata basis to each share of Comcast common stock that the U.S. Holder held at the time of the spin-off. In general, if the spin-off does not qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(D) of the Code and a tax-free distribution within the meaning of Section 355 of the Code, the spin-off would be treated as a taxable dividend to holders of Comcast common stock in an amount equal to the fair market value of our common stock received, to the extent of such holder s ratable share of Comcast s earnings and profits. In addition, if the spin-off does not qualify as a tax-free transaction under Sections 368(a)(1)(D) and 355 of the Code, Comcast would recognize taxable gain, which could result in significant tax to Comcast. If the spin-off does qualify as a tax-free transaction under Sections 368(a)(1)(D) and 355 of the Code, but the debt-for-debt exchange does not qualify as a tax-free exchange within the meaning of Section 361 of the Code, Comcast would recognize taxable gain in an amount up to the fair market value of our securities. Even if the spin-off were otherwise to qualify as a tax-free transaction under Sections 368(a)(1)(D) and 355 of the Code, the spin-off will be taxable to Comcast (but not to holders of Comcast common stock) pursuant to Section 355(e) of the Code if there is a 50% or greater change in ownership of either Comcast or us, directly or indirectly, as part of a plan or series of related transactions that include the spin-off. For this purpose, any acquisitions of Comcast or our common stock within the period beginning two years before the spin-off and ending two years after the spin-off are presumed to be part of such a plan, although Comcast or we may be able to rebut that presumption. For purposes of this test, we assume that the Comcast/TWC merger and the SpinCo merger will be treated as part of such a plan, but these transactions together should not cause the spin-off to be taxable to Comcast under Section 355(e) of the Code because pre-Comcast/TWC merger holders of Comcast common stock will directly own approximately 76% of the Comcast common stock following the Comcast/TWC merger and therefore, the amount of our common stock held by the pre-Comcast/TWC merger holders of Comcast common stock, in the aggregate, will equal or exceed 50.75% of our common stock following the SpinCo merger (disregarding public trading for this purpose). Comcast will set the actual number of our shares of common stock to be acquired by New Charter in the SpinCo merger to ensure this result. In addition, under the tax matters agreement, New Charter has agreed to the New Charter Tax Standstill and we have agreed to not take any action that would result in New Charter increasing its ownership in us or any action that could reasonably be expected to have the effect of causing or permitting one or more persons to acquire a fifty percent (50%) or greater interest in us for purposes of Code Section 355(e), in each case for a period of two years following the spin-off, or otherwise pursuant to plan for purposes of Section 355(e) of the Code (the SpinCo Tax Standstill ) (See Arrangements Between Us, Comcast and Charter Tax Matters Agreement ). However, if the IRS were to determine that other acquisitions of Comcast or our common stock, either before or after the spin-off, were part of a plan or series of related transactions that included the spin-off, such determination could result in the recognition of a very substantial amount of gain by Comcast under Section 355(e) of the Code, which could result in significant tax to Comcast. In connection with the Tax Opinion, Comcast has represented (and will represent) that the spin-off is not part of any such plan or series of related transactions. Table of Contents In general, under the tax matters agreement, New Charter is required to indemnify Comcast against any taxes on the spin-off and certain related transactions that arise as a result of certain prohibited actions by New Charter (including violation of the New Charter Tax Standstill) and we are required to indemnify Comcast against any taxes on the spin-off and certain related transactions in certain circumstances, including taxes arising due to the SpinCo merger or a violation of the SpinCo Tax Standstill (See Arrangements Between Us, Comcast and Charter Tax Matters Agreement ). If the spin-off were to be taxable to Comcast, the liability for payment of such tax by Comcast, or by us or New Charter under the tax matters agreement, could have a material adverse effect on Comcast, us or New Charter, as the case may be. The SpinCo Merger Assuming that the SpinCo merger and Charter reorganization, taken together, qualify as a tax-free transaction within the meaning of Section 351 of the Code, in general, for U.S. federal income tax purposes: no gain or loss will be recognized by us, New Charter, Charter or either of the merger subsidiaries as a result of the SpinCo merger and Charter reorganization; no gain or loss will be recognized by, and no amount will be included in the income of, U.S. Holders of our Class A-1 common stock upon the receipt of New Charter common stock in exchange for our Class A-1 common stock in the SpinCo merger, except for any gain or loss recognized with respect to cash received in lieu of a fractional share of New Charter common stock; the tax basis of New Charter common stock received in the SpinCo merger, including any fractional share of New Charter common stock deemed received, will be the same as the tax basis in the shares of our Class A-1 common stock exchanged therefor (determined in the manner described under the section entitled The Spin-Off ); the holding period of New Charter common stock received by a holder of our common stock in the SpinCo merger will include the holding period of our common stock exchanged therefor (determined in the manner described under the section entitled The Spin-Off ); and gain or loss will be recognized by holders of our common stock on any cash received in lieu of a fractional share of New Charter common stock in the SpinCo merger equal to the difference between the amount of cash received in lieu of the fractional share and the U.S. Holder s tax basis in the fractional share of New Charter common stock; such gain or loss will be long-term capital gain or loss if the U.S. Holder s holding period for such fractional share is more than one year as of the closing date of SpinCo merger. If the SpinCo merger and Charter reorganization, taken together, do not qualify as a tax-free transaction within the meaning of Section 351 of the Code for U.S. federal income tax purposes, a U.S. Holder will, in general, recognize capital gain or loss upon the receipt of New Charter common stock in exchange for our Class A-1 common stock in an amount equal to the difference between the fair market value of the New Charter common stock received and such U.S. Holder s tax basis in the shares of our Class A-1 common stock exchanged therefor (determined in the manner described under the section entitled The Spin-Off ). Such gain or loss will be long-term capital gain or loss if, as of the effective time of the SpinCo merger, the holding period for such U.S. Holder s shares of our Class A-1 common stock (determined in the manner described under the section entitled The Spin-Off ) is more than one year. In addition, if the SpinCo merger does not qualify as a tax-free transaction, the IRS could take the position that, as a result of such taxable transaction occurring immediately following the spin-off, the spin-off would also fail to qualify as a tax-free transaction, in which case the spin-off would be taxable to holders of Comcast common stock and Comcast (see The Spin-Off ). Information Reporting and Backup Withholding U.S. Treasury regulations generally require holders who own at least five percent of the total outstanding stock of Comcast (by vote or value) and who receive our common stock pursuant to the spin-off to attach to their U.S. federal income tax return for the year in which the spin-off occurs a detailed statement setting forth certain information relating to the tax-free nature of the spin-off. Comcast and/or we will provide the appropriate information to each holder upon request, and each such holder is required to retain permanent records of this information. In addition, payments of cash to a U.S. Holder of Comcast common stock in lieu of fractional shares of our common stock in the spin-off or cash to a holder of our common stock in lieu of a fractional share of New Charter common stock in the SpinCo merger may be subject to information reporting, unless the U.S. Holder provides the withholding agent with proof of an applicable exemption. Such payments that are subject to information reporting may also be subject to backup withholding, unless such U.S. Holder provides the withholding agent with a correct taxpayer identification number and otherwise complies with the requirements of the backup withholding rules. Backup withholding does not constitute an additional tax, but merely an advance payment, which may be refunded or credited against a U.S. Holder s U.S. federal income tax liability, provided the required information is timely supplied to the IRS. Table of Contents LEGAL MATTERS The validity of the shares of our common stock to be distributed in the spin-off will be passed upon for us by Davis Polk & Wardwell LLP. Davis Polk & Wardwell LLP will provide to Comcast a legal opinion regarding certain U.S. federal income tax matters. EXPERTS The combined financial statements of the Comcast Cable Systems to be Contributed to Midwest Cable, Inc. as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013, and the related financial statement schedule, included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports appearing herein (which report on the combined financial statements expresses an unqualified opinion and includes an explanatory paragraph referring to the basis of presentation of the combined financial statements). Such combined financial statements and combined financial statement schedule have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statement of Midwest Cable, Inc. included in this prospectus, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statement is included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We have filed a registration statement on Form S-1 with the SEC with respect to the shares of our common stock being distributed as contemplated by this prospectus. This prospectus is a part of, and does not contain all of the information set forth in, the registration statement and the exhibits and schedules to the registration statement. For further information with respect to our company and our common stock, please refer to the registration statement, including its exhibits and schedules. Statements made in this prospectus relating to any contract or other document are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract or document. You may review a copy of the registration statement, including its exhibits and schedules, at the SEC s public reference room, located at 100 F Street, N.E., Washington, D.C. 20549, as well as on, or accessible through, the Internet website maintained by the SEC at www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Information contained on any website referenced in this prospectus is not incorporated by reference into this prospectus or the registration statement of which this prospectus is a part. After the transactions, we will become subject to the information and reporting requirements of the Exchange Act, and, in accordance with the Exchange Act, we will file periodic reports, proxy statements and other information with the SEC. Our future filings will be available from the SEC as described above. Table of Contents Comcast Cable Systems to be Contributed to Midwest Cable, Inc. Notes to Combined Financial Statements Note 1: Basis of Presentation Table of Contents The combined statement of income includes all revenue and expenses directly attributable to our business. Expenses include costs for facilities, functions and services that we use at shared sites and costs for certain functions and services performed by centralized Comcast operations and directly charged to us based on usage. The combined statement of income also includes allocations of costs for administrative functions and services performed on our behalf by other centralized functions within Comcast. These costs were primarily allocated based on the relative proportion of our video customer relationships to total Comcast Cable video customer relationships. All of the allocations and estimates reflected in the combined financial statements are based on assumptions that management believes are reasonable. However, these allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if we had been operated as a separate entity. Following the spin-off, we will incur costs to replace Comcast support and to allow us to function as an independent, publicly traded company. In particular, we will be required to obtain new programming arrangements, primarily through Charter, as well as through some direct relationships with programmers. See Note 3 for additional information on our allocations. We present our operations in one reportable business segment, as management has historically evaluated our performance and allocated resources on a combined basis as a part of Comcast Cable. Note 2: Accounting Policies Table of Contents Note 3: Related Party Transactions Table of Contents Note 4: Property and Equipment Table of Contents Note 5: Intangible Assets Table of Contents We capitalize direct development costs associated with internal-use software, including external direct costs of material and services and payroll costs for employees devoting time to these software projects. We also capitalize costs associated with the purchase of software licenses. We include these costs in other intangible assets and amortize them on a straight-line basis over a period not to exceed five years. We expense maintenance and training costs, as well as costs incurred during the preliminary stage of a project, as they are incurred. We capitalize initial operating system software costs and amortize them over the life of the associated hardware. We evaluate the recoverability of our intangible assets subject to amortization whenever events or substantive changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is based on the cash flows generated by the underlying asset groups, including estimated future operating results, trends or other determinants of fair value. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge to the extent the carrying amount of the asset group exceeded its estimated fair value. Unless presented separately, the impairment charge is included as a component of amortization expense. We have not recognized any impairment charges for 2013, 2012 and 2011. Note 6: Employee Compensation and Benefit Plans Table of Contents The expense reflected in the combined statement of income related to share-based compensation is based on the estimated fair value of our employees awards at the date of grant and is recognized over the period in which any related services are provided. Amounts recognized for share-based compensation for 2013, 2012 and 2011 totaled $6 million, $5 million and $5 million, respectively. Note 7: Income Taxes Note 8: Commitments and Contingencies Table of Contents Note 9: Supplemental Financial Information For 2013, 2012 and 2011, our revenue was derived from the following sources: (in millions) 2013 2012 2011 Residential: Video $ 2,203 $ 2,137 $ 2,081 High-speed Internet 1,125 1,052 960 Voice 380 387 385 Commercial services 320 253 195 Advertising 237 257 226 Other 205 189 171 Total $ 4,470 $ 4,275 $ 4,018 Subsequent Events We have evaluated all subsequent event activity through October 24, 2014, which is the issue date of these combined financial statements, and concluded that no additional subsequent events have occurred that would require recognition in the combined financial statements or disclosure in the notes to the combined financial statements. Note 10: Unaudited Pro Forma Information Table of Contents Comcast Cable Systems to be Contributed to Midwest Cable, Inc. Notes to Condensed Combined Financial Statements (Unaudited) Note 1: Basis of Presentation Table of Contents All of the allocations and estimates reflected in the condensed combined financial statements are based on assumptions that management believes are reasonable. However, these allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if we had been operated as a separate entity. Following the spin-off, we will incur costs to replace Comcast support and to allow us to function as an independent, publicly-traded company. In particular, we will be required to obtain new programming arrangements, primarily through Charter, as well as through some direct relationships with programmers. See Note 3 for additional information on our allocations. For the nine months ended September 30, 2014 and 2013, 2.9% and 3.2% of our revenue was derived from franchise and other regulatory fees, respectively. We present our operations in one reportable business segment as management has historically evaluated our performance and allocated resources on a combined basis as a part of Comcast Cable. We have prepared the condensed combined financial statements based on Securities and Exchange Commission rules that permit reduced disclosure for interim periods. These financial statements include all adjustments that are necessary for a fair presentation of the combined results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The combined results of operations for the interim periods presented are not necessarily indicative of results for the full year. The year-end condensed combined balance sheet was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States of America. Note 2: Recent Accounting Pronouncements Revenue Recognition In May 2014, the Financial Accounting Standards Board and the International Accounting Standards Board updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which entities have to refer. The updated accounting guidance will be effective for us on January 1, 2017, and early adoption is not permitted. The updated accounting guidance allows for either a full retrospective adoption or modified retrospective adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on the combined financial statements and our method of adoption. Note 3: Related Party Transactions Contingencies In June 2010, the City of Detroit (the City ) initiated an action against us in the U.S. District Court for the Eastern District of Michigan in which the City sought a ruling that certain aspects of the Michigan Uniform Video Services Local Franchise Act were unlawful under the Federal Cable Communications Policy Act of 1984 and the Constitution of the State of Michigan. The City also sought declaratory relief as to our applicable cable franchise obligations and monetary relief for our alleged non-compliance. We appealed the U.S. District Court s ruling on summary judgment in favor of the City to the U.S. Court of Appeals for the Sixth Circuit in July 2013, and in October 2014 we resolved this action through mediation with the City. As a result of the resolution of this action, we recorded $16 million in other operating and administrative expenses and $6 million in interest expense for the nine months ended September 30, 2014. We are subject to other legal proceedings and claims that arise in the ordinary course of our business. While the amount of ultimate liability with respect to such actions is not expected to materially affect our results of operations, cash flows or financial position, any litigation resulting from any such legal proceedings or claims could be time consuming and injure our reputation. Note 5: Subsequent Events We have evaluated all subsequent event activity through December 8, 2014, which is the issue date of these condensed combined financial statements, and concluded that no additional subsequent events have occurred that would require recognition in the condensed combined financial statements or disclosure in the notes to the condensed combined financial statements. Note 6: Unaudited Pro Forma Information Table of Contents Midwest Cable, Inc. Notes to Financial Statement Note 1: History and Description of the Company Midwest Cable, Inc. (the Company ), a cable service provider to residential and commercial customers located in the Midwestern and Southeastern United States, was formed for the purpose of being the parent company of approximately 2.5 million legacy Comcast Corporation ( Comcast ) video subscribers. The Company has not engaged in any business or other activities and is currently a subsidiary of Comcast. Midwest Cable, LLC was formed in the state of Delaware as a limited liability company in May 2014 and converted to Midwest Cable, Inc., a Delaware corporation, in September 2014. Note 2: Basis of Presentation and Summary of Significant Accounting Policies The balance sheet and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States. Receivable from Parent is classified as an offset to stockholder s equity as it represents the consideration to be received in exchange for the Company s common stock issued to Comcast. Note 3: Subsequent Events Table of Contents Shares of Class A Shares of Class A-1 Common Stock Midwest Cable, Inc. PROSPECTUS , 2015 Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of the Transactions Amount to Be Paid SEC registration fee $ 662,456.20 Listing fee * Transfer agent s fees * Printing and engraving expenses * Legal fees and expenses * Accounting fees and expenses * Miscellaneous * Total $ * * To be completed by amendment. Each of the amounts set forth above, other than the registration fee, is an estimate. Item 14. Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the registrant. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Article Seventh of the registrant s amended and restated certificate of incorporation will provide for indemnification by the registrant of its directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law. The registrant will enter into indemnification agreements with each of its current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in the registrant s amended and restated certificate of incorporation and amended and restated bylaws and to provide additional procedural protections. There is no pending litigation or proceeding involving a director or executive officer of the registrant for which indemnification is sought. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The registrant s certificate of incorporation provides for such limitation of liability. The registrant will maintain standard policies of insurance under which coverage is provided (a) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and (b) to the registrant with respect to payments which may be made by the registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law. Item 15. Recent Sales of Unregistered Securities The registrant has not sold any securities, registered or otherwise, within the past three years. II-1 Table of Contents Item 16. Exhibits and Financial Statement Schedules (a) Exhibits See Exhibit Index following the signature pages. (b) Financial statement schedules Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. Item 17. Undertakings The undersigned registrant hereby undertakes: (a) Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the Securities Act ), may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (b) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on February 3, 2015. MIDWEST CABLE, INC. By: /s/ Arthur R. Block Name: Arthur R. Block Title: Senior Vice President and Secretary Date: February 3, 2015 II-3 Table of Contents Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date President (principal executive officer) February 3, 2015 Neil Smit Executive Vice President and Director (principal financial and accounting officer) February 3, 2015 Michael J. Angelakis /s/ Arthur R. Block Director February 3, 2015 Arthur R. Block Director February 3, 2015 David L. Cohen By: /s/ Arthur R. Block Name: Arthur R. Block Title: Attorney-in-Fact II-4 Table of Contents EXHIBIT INDEX Exhibit Number Exhibit Title 2.1 Contribution, Separation and Spin-off Agreement* 2.2 Agreement and Plan of Merger* 3.1 Form of Amended and Restated Certificate of Incorporation (to be effective at the time of the transactions)* 3.2 Certificate of Incorporation (currently in effect)** 3.3 Form of Amended and Restated Bylaws (to be effective at the time of the transactions)* 3.4 Bylaws (currently in effect)** 4.1 Form of Specimen Certificate for GreatLand Connections Inc.* 5.1 Opinion of Davis Polk & Wardwell LLP* 8.1 Opinion of Davis Polk & Wardwell LLP as to certain tax matters* 10.1 Form of Tax Matters Agreement* 10.2 Transition Services Agreement* 10.3 Form of Charter Services Agreement* 10.4 Form of GreatLand Services Agreement* 10.5 Employee Matters Agreement* 10.6 Form of Stockholders Agreement* 10.7 Employment Agreement, dated as of June 1, 2014, between CCH I Spinco Sub, LLC and Michael S. Willner* 10.8 Employment Agreement, dated as of October 17, 2014, between Midwest Cable, Inc. and Leonard Baxt* 10.9 Employment Agreement, dated as of July 1, 2014, between CCH I Spinco Sub, LLC and Keith Hall* 10.10 Form of Indemnification Agreement between Midwest Cable, Inc. and each of its officers and directors* 21.1 Subsidiaries of the Registrant* 23.1 Consent of Deloitte & Touche LLP relating to the combined financial statements and combined financial statement schedule of the Comcast Cable Systems to be Contributed to Midwest Cable, Inc. 23.2 Consent of Deloitte & Touche LLP relating to the financial statement of Midwest Cable, Inc. 23.3 Consent of Davis Polk & Wardwell LLP (included in Exhibits 5.1 and 8.1)* 24.1 Power of Attorney** 99.1 Consent of Thomas M. Rutledge, as director nominee** 99.2 Consent of James Chiddix, as director nominee** 99.3 Consent of Richard D Avino, as director nominee** 99.4 Consent of Gregory L. Doody, as director nominee** 99.5 Consent of Jill A. Greenthal, as director nominee** 99.6 Consent of Dennis S. Hersch, as director nominee** 99.7 Consent of Wendell F. Holland, as director nominee** 99.8 Consent of Gregory Maffei, as director nominee** 99.9 Consent of Christopher L. Winfrey, as director nominee** * To be filed by amendment. ** Previously filed. II-5 Page Page Prospectus Summary 1 Arrangements Among Us, Comcast and Charter 66
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001623032_eklips_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001623032_eklips_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..49ac69f99e5d98024aa68754ce821c84fb96ec52
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 4
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001623046_gvura-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001623046_gvura-corp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5ce37ea3aaa75b52b223fd41333debda2e69e4c1
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+The Company has elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b), which is irrevocable. The Company s Early Growth Status Terminates on the earliest of (i) the last day of the first fiscal year of the Company during which it had total annual gross revenues of $1 billion or more; (ii) the last day of the fiscal year of the Company following the fifth anniversary of the date of the issuer s initial public offering; (iii) the date on which the Company has issued more than $1 billion in non-convertible debt securities in any three year period; or (iv) the date on which the Company is deemed to be a large-accelerated filer under the Securities Exchange Act of 1934, which means that it has at least $700 million of equity securities held by non-affiliates. The Company is not a blank-check company. The Company has a defined business plan involving the export/import business and while the Company has limited assets, has not generated any revenue to date, and has a net loss of $691.00 as of November 30, 2014, the Company is using the present S-1 Registration Statement to acquire enough capital from investors to launch operations. The Company has no plans or intentions to engage in a merger or acquisition with an unidentified company or person. Further, once the Company is a reporting company, it will not be used as a vehicle for a private company to become a reporting company. SEE "RISK FACTORS" ON PAGES 8 -12 FOR A DISCUSSION OF CERTAIN INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE WILL NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S. SECURITIES COMMISSION HAS BEEN CLEARED OF COMMENTS AND IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OF SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED ______, 2015 Page | 4 TABLE OF CONTENTS PROSPECTUS SUMMARY 4
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001623109_avintiv_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001623109_avintiv_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..8225b0739c9b5eae55d6a2b35763e1f8e95efb6e
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+S-1/A 1 d806629ds1a.htm AMENDMENT NO. 2 TO FORM S-1 Amendment No. 2 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on July 10, 2015. Registration No. 333-201995 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AVINTIV Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 2221 27-4132779 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 9335 Harris Corners Parkway, Suite 300 Charlotte, North Carolina 28269 (704) 697-5100 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) April Miller Boise Senior Vice President, General Counsel, Head of Global Mergers & Acquisitions and Secretary AVINTIV Inc. 9335 Harris Corners Parkway, Suite 300 Charlotte, North Carolina 28269 (704) 697-5100 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Igor Fert, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Telephone: (212) 455-2000 Facsimile: (212) 455-2502 Michael Kaplan, Esq. Richard D. Truesdell, Jr., Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 Phone: (212) 450-4000 Fax: (212) 701-5800 Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title Of Each Class Of Securities To Be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, par value $0.01 per share $100,000,000 $11,620 (1) Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. (2) Includes shares of common stock subject to the underwriters option to purchase additional shares of common stock. (3) Previously paid The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents TABLE OF CONTENTS Page Market, Ranking and Other Industry Data ii Trademarks, Service Marks and Tradenames ii Basis of Presentation ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001623360_mirage_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001623360_mirage_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..94f079597178a7001eaf9702ad9533e636c6049e
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", "Bridgewater Platforms" and "Company" are to Bridgewater Platforms Inc. References to "Bridgewater Construction" are to Bridgewater Construction Ltd., our operating subsidiary. A Cautionary Note on Forward-Looking Statements This Prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our industry's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001623877_gen3bio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001623877_gen3bio_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c7650e85b8eb4088c248fcf69e96b8a274e9da19
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001623877_gen3bio_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Except as otherwise indicated, as used in this prospectus, references to the Company, Gen3Bio, G3B, we, us, or our refer to Gen3Bio, Inc. The following summary highlights selected information contained in this prospectus, and it may not contain all of the information that is important to you. Before making an investment decision, you should read the entire prospectus carefully, including Risk Factors and our financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. Corporate Background Gen3Bio, Inc. was incorporated under the laws of the State of Nevada on July 25, 2014, and is engaged in the business of developing technologies to transform algae and other feedstocks into biofuels, bioplastics, and other specialty chemicals, proving those technologies, and either licensing those technologies to other producers, or using those technologies to produce biofuels, bioplastics, and other specialty chemicals in-house. New technologies to transform algae into biofuels and bioplastics are important to enhance research on non-food crops as G3B expects a surge in demand for bioplastics in future years, thus potentially creating pressure on food crops. Algae is the first non-food crop project on which we are focusing, and our R&D department is contemplating the development of additional non-food crop-based materials in future years. We are in the process of negotiating a license and development agreement with the University of Toledo (the "University") to acquire joint development and marketing rights to algae-based technologies and develop those technologies in University facilities, but we may be unable to do so, and we have not yet acquired any patent rights relating to those technologies. We have conducted research at the University to develop our technologies and have applied for grant funding to fund additional research and development efforts. However, we are a development stage company with no current revenue-generating operations, products, intellectual property or other assets, and we anticipate generating losses for the next twelve months. As of December 31, 2014, we had cash and cash equivalents of $1,104, and we will need to raise capital to implement our planned operations. If we are unable to do so, an entire investment in our stock could be lost. Our independent public accounting firm has issued an audit opinion, which includes a statement that the results of our operations and our financial condition raise substantial doubt about our ability to continue as a going concern. Where You Can Find Us Our offices are currently located at Gen3Bio, Inc., 4000 W 106th Street, Suite 125, Carmel, Indiana 46032. Our telephone number is (317) 564-9282. Summary of the Offering Securities being registered by the Selling Security Holders pursuant to the Secondary Offering: 2,962,500 shares of common stock Secondary Offering price: $0.05 per share until a market develops and our shares are quoted on the OTC Bulletin Board or another quotation board (such as OTCQB) and thereafter at market prices or prices negotiated in private transactions Secondary Offering period: From the date of this prospectus until _____, 2017 Newly issued common stock being registered pursuant to the Primary Offering: 10,000,000 shares of common stock Primary Offering price: $0.05 per share Primary Offering period: From the date of this prospectus until _____, 2017 Number of shares outstanding after the offering: 70,112,500 shares of common stock Market for the common stock: There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-The- Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to eligible for trading on the OTC Bulletin Board or another quotation board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, purchasers of our common stock may find it difficult to resell the securities offered herein should the purchasers desire to do so when eligible for public resale. Our officers and directors are not purchasing shares in this offering. Use of proceeds: We will receive approximately $500,000 in gross proceeds if we sell all of the shares in the Primary Offering, and we will receive estimated net proceeds (after paying offering expenses) of approximately $440,925 if we sell all of those shares. We will receive none of the proceeds from the sale of shares by the Selling Security Holders. See Use of Proceeds for a more detailed explanation of how the proceeds from the Primary Offering will be used.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001624140_coretag_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001624140_coretag_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..c2a6ed9d0189d1a731f49044bca9bf0600d2802e
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+S-1/A 1 pgre_s1a.htm FORM S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Amendment No. 3 PARAMOUNT SUPPLY INC (Exact name of registrant as specified in its charter) Nevada 3171 35-2515740 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Number) (IRS Employer Identification Number) 40 Lielais prospekts, Ventspils, LV-3601 Latvia (702) 843-0232 supplyparamount@gmail.com (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Enterprise Solutions LLC 3228 Cherum St, Las Vegas, NV 89135 Tel: (918) 515-6677 (Address, including zip code, and telephone number, including area code, of agent for service) Approximate date of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective registration statement filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective registration statement filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to Be Registered(1) Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock ,$0.001 par value 2,000,000 (2) $ 0.04 (2) $ 80,000 $ 9.30 TOTAL 2,000,000 $ 0.04 $ 80,000 9.30 (1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the proposed maximum aggregate offering price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(a). THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. The information in this prospectus is not complete and may be amended. The Registrant may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. S-1/A 1 pgre_s1a.htm FORM S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Amendment No. 3 PARAMOUNT SUPPLY INC (Exact name of registrant as specified in its charter) Nevada 3171 35-2515740 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Number) (IRS Employer Identification Number) 40 Lielais prospekts, Ventspils, LV-3601 Latvia (702) 843-0232 supplyparamount@gmail.com (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Enterprise Solutions LLC 3228 Cherum St, Las Vegas, NV 89135 Tel: (918) 515-6677 (Address, including zip code, and telephone number, including area code, of agent for service) Approximate date of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective registration statement filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective registration statement filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to Be Registered(1) Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock ,$0.001 par value 2,000,000 (2) $ 0.04 (2) $ 80,000 $ 9.30 TOTAL 2,000,000 $ 0.04 $ 80,000 9.30 (1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the proposed maximum aggregate offering price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(a). THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. The information in this prospectus is not complete and may be amended. The Registrant may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS PARAMOUNT SUPPLY INC 2,000,000 SHARES OF COMMON STOCK This prospectus relates to the offer and sale of a maximum of 2,000,000 shares (the "Maximum Offering") of common stock, $0.001 par value, by Paramount Supply Inc, a Nevada company ("we", "us", "our", "Paramount", "Company" or similar terms). There is no minimum for this offering. The offering will commence promptly on the date upon which this prospectus is declared effective by the Securities and Exchange Commission ("SEC") and will continue for 12 months (365 days). We will pay all expenses incurred in this offering. We are an "emerging growth company" under applicable SEC rules and will be subject to reduced public company reporting requirements. We are not a "shell company" within the meaning of Rule 405, promulgated pursuant to Securities Act, because we do have hard assets and real business operations. The offering of the 2,000,000 shares is a "best efforts" offering, which means that our sole officer and director will use his best efforts to sell the shares and there is no commitment by any person to purchase any shares. The shares will be offered at a fixed price of $0.04 per share for the duration of the offering. There is no minimum number of shares required to be sold to close the offering. Proceeds from the sale of the shares will be used to fund the initial stages of our business development. We have not made any arrangements to place funds received from share subscriptions in an escrow, trust or similar account. Any funds raised from the offering will be immediately available to us for our immediate use. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our officer and sole director will be solely responsible for selling shares under this offering and no commission will be paid on any sales. Prior to this offering, there has been no public market for our common stock and we have not applied for the listing or quotation of our common stock on any public market. We have arbitrarily determined the offering price of $0.04 per share in relation to this offering. The offering price bears no relationship to our assets, book value, earnings or any other customary investment criteria. After the effective date of the registration statement, we intend to seek a market maker to file an application with the Financial Industry Regulatory Authority ("FINRA") to have our common stock quoted on the OTC Bulletin Board. We currently have no market maker who is willing to list quotations for our shares of stock. There is no assurance that an active trading market for our shares will develop or will be sustained if developed. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business is subject to many risks and an investment in our shares of common stock will also involve a high degree of risk. You should carefully consider the factors described under the heading "Risk Factors" beginning on page 5 before investing in our shares of common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this prospectus is _______________, 201__. The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS Page Prospectus Summary 1
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+This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common units. You should read the entire prospectus carefully, including the historical financial statements and the notes to those financial statements, before investing in our common units. The information presented in this prospectus assumes an initial public offering price of $ per common unit (the mid-point of the price range set forth on the cover page of this prospectus), and unless otherwise indicated, that the underwriters option to purchase additional common units is not exercised. You should read Risk Factors for information about important risks that you should consider before buying our common units. We include a glossary of some of the industry terms used in this prospectus as Appendix B. Royal Resources Partners LP Overview We are a Delaware limited partnership formed by our Sponsor to own and acquire overriding royalty interests, or ORRIs, and mineral and royalty interests in oil and natural gas properties in North America. These types of interests entitle the holder to a portion of the production of oil and natural gas from the underlying acreage at the sales price received by the operator, net of post-production expenses and taxes. The holder of these interests has no obligation to fund finding and development costs, lease operating expenses or plugging and abandonment costs at the end of a well s productive life. All of our initial assets consist of ORRIs in properties in the Eagle Ford Shale region in South Texas. Our primary business objective is to provide increasing cash distributions to unitholders resulting from organic growth through the development of the properties underlying our ORRIs by third party operators and from accretive growth opportunities through acquisitions from our Sponsor and from third parties. As of March 31, 2015, our assets consisted of ORRIs related to 69,974 net leasehold acres concentrated in what we believe is the core of the core of the liquids-rich condensate region of the Eagle Ford Shale. We believe that the wells and locations on the properties underlying our ORRIs are among the most productive in North America, and that such properties are experiencing some of the highest levels of development activity in North America. Our acreage is 100% held by production and is delineated by 770 producing horizontal wells as of March 31, 2015, all of which have been drilled over the past five years. The average net daily production attributable to the acreage underlying our ORRIs has increased 191% since the initial acquisition of the ORRIs by our predecessor in March 2012 to 4,381 BOE/d for the month of February 2015, primarily due to rapid development of these properties by third party operators. As of December 31, 2014, the estimated proved oil, natural gas liquids, and natural gas reserves of our underlying acreage were 19,141 MBOE (75% liquids, consisting of 57% oil and 18% natural gas liquids ( NGLs )) based on a reserve report prepared by Ryder Scott Company, L.P. ( Ryder Scott ). Of these reserves, 23% were classified as proved developed producing ( PDP ) reserves and 68% were classified as proved undeveloped ( PUD ) reserves. PUD reserves included in this estimate are from 1,347 gross proved undeveloped well locations. Our revenues are derived from royalty payments we receive from our operators based on the sale of oil and natural gas production, as well as the sale of natural gas liquids that are extracted from natural gas during processing. As of March 31, 2015, our ORRIs represent the right to receive an average royalty of 1.20% from the producing wells on the acreage underlying our ORRIs. For the year ended December 31, 2014, our revenues were derived 82% from oil sales, 9% from natural gas liquid sales and 9% from natural gas sales. For the three months ended March 31, 2015, our revenues were derived 78% from oil sales, 10% from natural gas liquid sales and Table of Contents Index to Financial Statements The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer and sale is not permitted. Subject to Completion, dated July 14, 2015 PROSPECTUS Common Units Representing Limited Partner Interests This is the initial public offering of our common units representing limited partner interests. We are offering common units. Prior to this offering, there has been no public market for our common units. We currently expect the initial public offering price to be between $ and $ per common unit. We intend to apply to list our common units on the New York Stock Exchange under the symbol ORRI. Investing in our common units involves risks. Please read Risk Factors beginning on page 21. These risks include the following: We may not have sufficient available cash to pay any quarterly distribution on our common units. We do not have a legal or contractual obligation to pay distributions quarterly or on any other basis or at the minimum quarterly distribution rate or at any other rate, and there is no guarantee that we will pay distributions to our unitholders in any quarter. All of our revenues are derived from royalty payments that are based on the price at which oil, natural gas and natural gas liquids produced from the underlying acreage is sold, and we do not currently hedge these commodity prices. The volatility of these prices due to factors beyond our control greatly affects our financial condition, results of operations and cash available for distribution. We depend on two third party operators for substantially all of the exploration and production on the properties underlying our ORRIs. Substantially all of our revenue is derived from royalty payments made by these operators. Therefore, any reduction in production from the wells drilled on our acreage by these operators or the failure of our operators to adequately and efficiently develop and operate our acreage could have a material adverse effect on our revenues and cash available for distribution. None of the operators of the properties underlying our ORRIs are contractually obligated to undertake any development activities, so any development and production activities will be subject to their discretion. Our Sponsor owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including our Sponsor, have conflicts of interest with us and limited duties, and they may favor their own interests to the detriment of us and our unitholders. We will not have any employees, and we will rely solely on the employees of our general partner to manage our business. The management team of Riverbend, which includes the individuals who will manage us, will also perform similar services for our Sponsor and other industry partners, and thus will not be solely focused on our business. Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors. Unitholders will incur immediate and substantial dilution in net tangible book value per common unit. Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service were to treat us as a corporation for federal income tax purposes or we were to become subject to entity-level taxation for state tax purposes, then our cash available for distribution to you could be substantially reduced. Even if you do not receive any cash distributions from us, you will be required to pay taxes on your share of our taxable income. In addition, we qualify as an emerging growth company as defined in Section 2(a)(19) of the Securities Act of 1933 and, as such, are allowed to provide in this prospectus more limited disclosures than an issuer that would not so qualify. Furthermore, for so long as we remain an emerging growth company, we will qualify for certain limited exceptions from investor protection laws such as the Sarbanes-Oxley Act of 2002 and the Investor Protection and Securities Reform Act of 2010. Please read Summary Emerging Growth Company Status. Per Common Unit Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds to Royal Resources Partners LP (before expenses) $ $ (1) See Underwriting. The underwriters may purchase up to an additional common units from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common units to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company. Credit Suisse Citigroup Morgan Stanley Wells Fargo Securities Barclays BofA Merrill Lynch Prospectus dated , 2015 Table of Contents Index to Financial Statements CERTAIN TERMS USED IN THIS PROSPECTUS All references in this prospectus to: DGK, our predecessor, we, our, us or like terms when used in a historical context refer to DGK ORRI Company, L.P., which Royal Resources L.P. is contributing to Royal Resources Partners LP in connection with this offering and which has historically owned all of our assets; we, our, us, our partnership or like terms used in the present tense or prospectively refer to Royal Resources Partners LP and its subsidiaries; Holdings refer to DGK ORRI Holdings, LP, the historical parent of DGK; Royal or our Sponsor refer to Royal Resources L.P. and its subsidiaries other than Royal Resources Partners LP and its subsidiaries, except where expressly noted otherwise; our general partner refer to Royal Resources Partners GP, LLC, a wholly owned subsidiary of Royal Resources L.P.; Riverbend refer to Riverbend Oil & Gas, L.L.C., which owns a portion of Royal through an affiliate and whose employees have historically managed DGK s and our business; Blackstone refer to The Blackstone Group, L.P., Blackstone Energy Partners L.P. and Blackstone Capital Partners VI L.P., and their respective affiliates, which own a portion of and control Royal; and our executive officers and our directors refer to the executive officers and directors of our general partner, respectively. Table of Contents Index to Financial Statements 12% from natural gas sales. Our revenues may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices. Oil, natural gas liquids and natural gas prices have historically been volatile, and we do not currently hedge our exposure to changes in commodity prices. The Eagle Ford Shale is one of the fastest growing and most active unconventional shale trends in North America. According to monthly rig count metrics published by Baker Hughes, the Eagle Ford Shale has consistently been one of the most active US basins since 2012 and has also proven to be the most robust of the liquids-focused basins, experiencing the lowest percentage decline in rig counts in the current low commodity price environment when compared to the Permian and Williston basins. Over 98% of our acreage is located in DeWitt County, one of the most active counties in terms of new wells drilled in the Eagle Ford Shale over the last five years. Our acreage is characterized by high liquids content and low finding and development costs leading to attractive operator economics compared to other unconventional basins. We believe these factors make development of the Eagle Ford Shale commercially viable in lower commodity price environments. Over 99% of our acreage is operated by BHP Billiton Petroleum ( BHP ) and Devon Energy Corporation ( Devon ) through a joint venture, ConocoPhillips Company ( ConocoPhillips ), EOG Resources, Inc. ( EOG ), and Pioneer Natural Resources Company ( Pioneer ). These operators have publicly announced aggregate capital expenditure programs in the Eagle Ford Shale of over $5.0 billion in 2015. As of June 1, 2015, BHP, Devon and ConocoPhillips operate 7 of the 8 rigs on our acreage, comprising 54% of their total rigs in the Eagle Ford Shale. Upon the completion of this offering, our Sponsor will own and control our general partner, and will own approximately % of our outstanding common units and all of our outstanding subordinated units and incentive distribution rights. Our Sponsor is an independent oil and natural gas company currently focused on the acquisition and ownership of non-operating, non-cost bearing oil and natural gas properties in North America, such as mineral and royalty interests and ORRIs. We believe that the properties held by our Sponsor include acreage that will continue to support future reserve and production growth as operators explore other target zones, and have production and reserves characteristics, as well as significant acreage overlap, that could make them attractive for inclusion in our partnership. In addition, we believe our Sponsor s significant ownership interest in us will motivate it to offer additional mineral and royalty interests in oil and natural gas properties to us in the future, although our Sponsor has no obligation to do so and may elect to dispose of interests without offering us the opportunity to acquire such interests. Please read Our Relationship with Royal and Others. Our Properties Our initial assets consist of ORRIs related to 69,974 net leasehold acres, associated with 245 drilling units, in what we believe is the core of the core of the Eagle Ford Shale. As of March 31, 2015, these interests entitle us to receive an average royalty of 1.20% from the producing wells on the acreage underlying our ORRIs, with no additional future capital or operating expenses required. As of March 31, 2015, there were 770 horizontal wells producing on this acreage, and net production was approximately 4,381 BOE/d during the month of February 2015. In addition, there were 188 horizontal wells in various stages of completion. As of June 1, 2015, there were 114 permits outstanding for undrilled wells or wells currently being drilled on the acreage underlying our ORRIs. For the three months ended March 31, 2015, revenue generated from these ORRIs was $13.5 million. Table of Contents Index to Financial Statements Table of Contents Index to Financial Statements The following table includes our operating metrics as of December 31, 2014, unless otherwise indicated. Net Leasehold Acres to Which Royalty Applies Average Royalty Interest per PDP Well(1) Average Daily Production(2) Total Proved Reserves (MBOE) %Reserves Proved Undeveloped Locations Rigs Operating On Our Acreage(1) Operator/Developer Oil (Bbls/d) Natural Gas (Mcf/d) Natural Gas Liquids (Bbls/d) Combined Volumes (BOE/d) Devon/BHP 60,970 1.40 % 2,329 4,584 768 3,862 15,798 83 % 822 5 ConocoPhillips 7,500 0.59 % 201 436 72 346 2,933 15 % 475 2 EOG, Pioneer & Other 1,504 0.56 % 79 319 41 173 410 2 % 50 1 Total 69,974 1.20 % 2,609 5,339 881 4,381 19,141 100 % 1,347 8 (1) As of June 1, 2015. (2) Average daily production for the month of February 2015. The leases underlying our ORRIs are delineated by 770 producing horizontal wells as of March 31, 2015, all of which have been drilled over the past five years. The leases on these properties are 100% held by production and will generally only expire upon termination of production. The gross estimated ultimate recoveries ( EURs ) from the future PUD horizontal wells included in our reserve report on 40-acre spacing, as estimated by Ryder Scott as of December 31, 2014, range from 316 MBOE per well (consisting of 155 MBbls of oil, 658 MMcf of natural gas and 50 MBbls of natural gas liquids) to 1,829 MBOE per well (consisting of 868 MBbls of oil, 3,774 MMcf of natural gas and 331 MBbls of natural gas liquids) with an average EUR per well of 952 MBOE (consisting of 476 MBbls of oil, 1,889 MMcf of natural gas and 162 MBbls of natural gas liquids). The following chart shows the number of producing wells on the acreage underlying our ORRIs for each quarter since the acquisition of the ORRIs by our Sponsor in March 2012. Producing Wells By Quarter Our Relationship with Royal and Others Royal. Upon the completion of this offering, our Sponsor will own and control our general partner and will own approximately % of our outstanding common units and all of our outstanding subordinated units and incentive distribution rights. We believe our Sponsor s significant ownership interest in us will motivate it to offer additional ORRIs and other mineral and royalty interests to us in the future, although our Sponsor has no obligation to do so and may elect to dispose of interests without offering us the opportunity to acquire such interests. Table of Contents Index to Financial Statements Following the completion of this offering, our Sponsor will continue to own oil and gas interests in the Eagle Ford Shale region consisting solely of ORRIs and mineral and royalty interests (the Retained Assets ). As of March 31, 2015, the Retained Assets relate to 77,403 net leasehold acres (many of which overlap with acreage underlying our ORRIs), with an average royalty of 1.11% from the producing wells on this acreage. As of December 31, 2014, our Sponsor had estimated proved oil, natural gas liquids and natural gas reserves of 23,727 MBOE attributable to the Retained Assets. Of these reserves, 20% were classified as PDP reserves and 52% were oil, 19% were natural gas liquids and 29% were natural gas. PUD reserves included in this estimate are from 1,623 gross horizontal well locations. The following table shows a comparison of the assets that we will hold at the completion of this offering to the assets that will be retained by our Sponsor, as of December 31, 2014 unless otherwise indicated. Our initial assets Sponsor retained assets Average daily production (BOE/d)(1) 4,381 5,505 Total proved reserves (MBOE) 19,141 29,810 PDP reserves (MBOE) 4,440 5,862 PUD reserves (MBOE) 12,957 22,681 (1) Average daily production for the month of February 2015. The following map shows the location of 323 drilling units in the Eagle Ford Shale in which we and our Sponsor own interests. We own interests in 245 drilling units in the Eagle Ford Shale. Our Sponsor s Retained Assets include interests in 317 drilling units in the Eagle Ford Shale, of which 239 overlap with drilling units in which we own interests. Table of Contents Index to Financial Statements We believe that the Retained Assets held by our Sponsor include acreage that will continue to support future reserve and production growth as operators explore other target zones, and have, or with additional development by third party operators will have, production and reserves characteristics that are similar to our properties, which could make them attractive for inclusion in our partnership. Furthermore, we believe our Sponsor will provide us with opportunities to pursue acquisitions that will be accretive to our unitholders. However, our Sponsor may elect to acquire properties without offering us the opportunity to participate in such transactions and our Sponsor s pursuit of such acquisitions may be in competition with us. Moreover, our Sponsor may not be successful in identifying potential acquisitions. After this offering, our Sponsor will continue to be free to act in a manner that is beneficial to its interests without regard to ours, which may include electing not to present us with acquisition or disposition opportunities. Please read Conflicts of Interest and Fiduciary Duties. Riverbend. Riverbend is an owner-managed firm formed in 2003 focused on the acquisition of minerals and royalty interests, ORRIs and non-operated working interests. Riverbend s historic co-investment equity partners have included Blackstone and other industry partners. Riverbend has completed numerous acquisitions and divestments, drilling arrangements and equity investments. Riverbend s team, currently comprised of 21 employees, has extensive energy experience in the exploration and production sector and encompasses all disciplines (finance, engineering, accounting and land), which are all housed and managed internally. Since December 2013, an affiliate of Riverbend has owned an equity interest in our Sponsor, and Riverbend provides management and advisory services to our Sponsor pursuant to a management services agreement. Following the closing of this offering, neither we nor our subsidiaries will have any employees, and we will be managed by employees of our general partner, some of which are also employees of Riverbend. Please read Management and Certain Relationships and Related Party Transactions. Blackstone. Royal and our general partner are controlled by affiliates of Blackstone, one of the world s leading investment and advisory firms. Blackstone s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Through its different investment businesses, as of March 31, 2015, Blackstone had assets under management over $310 billion. Blackstone has committed and invested over $8.7 billion in more than 21 energy transactions throughout the energy value chain on a global basis, primarily through Blackstone Energy Partners L.P., a $2.5 billion fund that invests globally in energy opportunities, and Blackstone Capital Partners VI L.P., a $16.2 billion fund that invests alongside Blackstone Energy Partners L.P. in energy and natural resource transactions. Investments in oil and natural gas assets represent a substantial portion of this activity and include leading independent onshore and offshore exploration and production companies in North America and globally. Business Strategies Our primary business objective is to provide an attractive return to unitholders by focusing on business results and total distributions and pursuing accretive growth opportunities through acquisitions from our Sponsor and from third parties. We intend to accomplish this objective by executing the following strategies: Benefit from reserve, production and cash flow growth from organic development of our acreage. We are a beneficiary of the continued organic development by our operators of the acreage underlying our ORRIs. As of December 31, 2014, 68% of the proved reserves attributable to our ORRIs were characterized as PUD reserves, which provides for significant development opportunities for our operators. We believe that our operators will continue to rapidly develop this acreage due to its strategic location in what we believe is the core of the core of the Eagle Ford Shale, the relatively low-risk, delineated nature of its reserves, and attractive operator economics. As a holder of ORRIs, we have no responsibility for finding and development costs, lease operating expenses or plugging and abandonment at the end of a well s productive life. As such, we benefit from this continued development cost-free to us, which we believe will enable us to grow our distributions over time. Table of Contents Index to Financial Statements Seek to acquire additional interests in oil and gas properties from our Sponsor. Following the completion of this offering, our Sponsor will continue to own significant mineral and royalty interests and ORRIs in the Eagle Ford Shale and may acquire additional assets in the future. As of March 31, 2015 and after giving effect to this offering, our Sponsor retained additional ORRIs covering 77,403 net leasehold acres in the Eagle Ford Shale. Many of our Sponsor s retained interests are in acreage in which we currently own an interest. We believe our Sponsor may be incentivized to sell additional interests in oil and gas properties to us, as doing so may enhance our Sponsor s economic returns by monetizing properties while potentially retaining a portion of the resulting cash flow through its ownership of the incentive distribution rights, all of the subordinated units and common units, representing a % limited partner interest in us. However, neither our Sponsor nor any of its affiliates are contractually obligated to offer or sell any properties to us. Pursue accretive third party acquisitions and leverage our relationships with our Sponsor, Riverbend and Blackstone. We intend to expand our portfolio of interests in oil and gas properties by pursuing acquisitions that are accretive to distributable cash flow. We intend to actively pursue strategic acquisitions of mineral and royalty interests and ORRIs in basins that have substantial organic growth potential. Our criteria for acquisitions will include similar characteristics to our existing assets, such as high rates of return, well-capitalized operators, existing production and the potential for organic production growth. In addition, through our relationships with our Sponsor, Riverbend and Blackstone, we have access to their significant pool of management talent and industry relationships, which we believe provide us with a competitive advantage in pursuing potential third party acquisition opportunities. We may have additional opportunities to work jointly with our Sponsor to pursue certain acquisitions of oil and natural gas properties that may not otherwise be attractive acquisition candidates for either of us individually. We believe this arrangement may give us access to third party acquisition opportunities that we would not otherwise be in a position to pursue. Maintain a conservative capital structure and prudently manage the business for the long term. We intend to maintain a conservative capital structure to allow us the financial flexibility to execute our business strategies over the long term, including the ability to pursue strategic acquisitions. Following the completion of this offering, we will have $ million of available liquidity under our undrawn revolving credit facility and no outstanding indebtedness. We believe that this liquidity, together with cash flow from operations and access to the public debt and equity markets, will provide us with financial flexibility to execute on strategic acquisitions and to contribute to production and cash flow growth over time. Competitive Strengths We believe that the following competitive strengths will allow us to successfully execute our business strategies and achieve our primary business objective: Low-risk, multi-year inventory in one of North America s leading liquids plays. Our concentrated acreage position is located in what we believe is the core of the core of one of the most prolific plays in North America, the Eagle Ford Shale in South Texas. Over 98% of our properties are located in DeWitt County, the most productive section of the play, which is characterized by high liquids content and low finding and development costs, which lead to attractive operator economics compared to other unconventional basins. We believe these characteristics make the acreage underlying our ORRIs commercially viable to our operators in a variety of commodity price environments. As of March 31, 2015, our acreage is 100% held by production and is delineated by 770 producing horizontal wells that have been drilled over the past five years. As of December 31, 2014, our estimated proved oil and natural gas reserves were 19,141 MBOE (75% liquids, consisting of 57% oil and 18% natural gas liquids), of which 23% were classified as PDP reserves. As of December 31, 2014, we identified 1,347 gross proved undeveloped drilling locations on our acreage. Our identification of drilling locations is based on Table of Contents Index to Financial Statements specifically identified locations, which have been reviewed and confirmed by Ryder Scott in connection with the preparation of the reserve report as of December 31, 2014. For additional information regarding our drilling locations, please read Business Oil and Natural Gas Data Identification of Drilling Locations. As of June 1, 2015, our operators had obtained 106 permits for undeveloped locations on our acreage and were running an aggregate of 8 rigs on our acreage. We believe this extensive inventory of undeveloped acreage will contribute to strong organic growth. High-quality operators with active development programs. Over 99% of our acreage is operated by BHP and Devon through a joint venture, ConocoPhillips, EOG and Pioneer. These operators have publicly announced aggregate capital expenditure programs in the Eagle Ford Shale of over $5.0 billion in 2015. As of June 1, 2015, BHP, Devon and ConocoPhillips operate 7 of the 8 rigs on our acreage, comprising 54% of their aggregate rigs in the Eagle Ford Shale. These operators are characterized by investment grade credit profiles as of March 31, 2015. We believe our operators will continue to develop our acreage in lower commodity price environments because of its high margin economics and public statements from our operators that the Eagle Ford Shale continues to be a top priority. Significant opportunity for our operators to increase production through down spacing and development of other zones. All of our current proved reserves are attributable to the lower Eagle Ford Shale and assume 40-acre spacing. Several of our operators are currently down spacing their development programs, using staggered development that could yield additional down spacing to 20-acre spacing. Based on our analysis, we believe that there is little degradation of well performance caused by this spacing. In addition, several of our operators are testing our acreage for other target zones, such as the Upper Eagle Ford and Austin Chalk. We believe this down spacing and drilling in additional zones could increase reserves, well locations and production beyond our reserve report. Experienced and proven management team. Our management team has an average of over years of industry experience, most of which were focused on managing and acquiring non-operated oil and gas interests. This team has a proven track record of executing and integrating on property acquisitions. We believe this experience is essential for us to grow from our initial property base. Management We are managed and operated by the board of directors and executive officers of our general partner, Royal Resources Partners GP, LLC, a wholly owned subsidiary of our Sponsor. As a result of owning our general partner, our Sponsor will have the right to appoint all members of the board of directors of our general partner, including at least three directors meeting the independence standards established by the New York Stock Exchange (the NYSE ). At least one of our independent directors will be appointed by the time our common units are first listed for trading on the NYSE. Our unitholders will not be entitled to elect our general partner or its directors or otherwise directly participate in our management or operations. In addition, neither we nor our subsidiaries will have any employees. The executive officers and some of the directors of our general partner currently serve as executive officers and directors of our Sponsor. Please read Management and Certain Relationships and Related Party Transactions. Table of Contents Index to Financial Statements Conflicts of Interest and Fiduciary Duties Although our relationship with our Sponsor may provide significant benefits to us, it may also become a source of potential conflicts. For example, our Sponsor and its affiliates, including Riverbend and Blackstone, are not restricted from competing with us. In addition, the executive officers and certain of the directors of our general partner also serve as officers or directors of our Sponsor, and these officers and directors face conflicts of interest, including conflicts of interest regarding the allocation of their time between us and our Sponsor. Our general partner has a contractual duty to manage us in a manner that it believes is not adverse to our interest. However, the executive officers and directors of our general partner have fiduciary duties to manage our general partner in a manner beneficial to our Sponsor, the owner of our general partner. Our Sponsor and its affiliates are not prohibited from engaging in other business activities, including those that might be in direct competition with us. In addition, our Sponsor may compete with us for investment opportunities and may own an interest in entities that compete with us. As a result, conflicts of interest may arise in the future between us or our unitholders, on the one hand, and our Sponsor and our general partner, on the other hand. Our partnership agreement limits the liability of and replaces the fiduciary duties owed by our general partner to our unitholders. Our partnership agreement also restricts the remedies available to our unitholders for actions that might otherwise constitute a breach of duties by our general partner or its directors or executive officers. Our partnership agreement also provides that affiliates of our general partner, including our Sponsor, are not restricted in competing with us and have no obligation to present business opportunities to us. By purchasing a common unit, the purchaser agrees to be bound by the terms of our partnership agreement, and each unitholder is treated as having consented to various actions and potential conflicts of interest contemplated in the partnership agreement that might otherwise be considered a breach of fiduciary or other duties under Delaware law. For a more detailed description of the conflicts of interest and duties of our general partner and its directors and executive officers, please read Conflicts of Interest and Fiduciary Duties. For a description of other relationships with our affiliates, please read Certain Relationships and Related Party Transactions. Emerging Growth Company Status We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ). For as long as we are an emerging growth company, we may take advantage of specified exemptions from reporting and other regulatory requirements that are otherwise applicable generally to other public companies. These exemptions include: an exemption from providing an auditor s attestation report on management s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ); an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board ( PCAOB ), requiring a supplement to the auditor s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; an exemption from compliance with any other new auditing standards adopted by the PCAOB after April 5, 2012, unless the Securities and Exchange Commission ( SEC ) determines otherwise; and reduced disclosure of executive compensation. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the Securities Act ) for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Table of Contents Index to Financial Statements However, we are choosing to opt out of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We will cease to be an emerging growth company upon the earliest of (i) the last day of the first fiscal year when we have $1.0 billion or more in annual revenues, (ii) the first day of the first fiscal year after we have more than $700 million in outstanding common equity held by non-affiliates and have been public for at least 12 months (the value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter), (iii) the date on which we have issued more than $1.0 billion of non-convertible debt over a three-year period or (iv) the last day of the first fiscal year following the fifth anniversary of our initial public offering. Formation Transactions and Structure At or prior to the closing of this offering, the following transactions will occur: Holdings will contribute its 100% ownership interest in DGK to us; we will issue common units and subordinated units, representing an aggregate % limited partner interest in us, to Holdings, and incentive distribution rights ( IDRs ) directly to our Sponsor; our general partner will maintain its non-economic general partner interest; we will issue and sell common units to the public in this offering, representing a % limited partner interest in us; we will pay the related underwriting discounts and offering expenses and use the net proceeds from this offering in the manner described under Use of Proceeds ; and we will enter into a new $ million revolving credit facility, as described in Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Revolving Credit Facility, which will be undrawn at the closing of this offering. We refer to these transactions collectively as the formation transactions. The number of common units to be issued to our Sponsor includes common units that will be issued at the expiration of the underwriters option to purchase additional common units, assuming that the underwriters do not exercise the option. Any exercise of the underwriters option to purchase additional common units would reduce the common units shown as issued to our Sponsor by the number to be purchased by the underwriters in connection with such exercise. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters pursuant to any exercise will be sold to the public, and any remaining common units not purchased by the underwriters pursuant to any exercise of the option will be issued to our Sponsor at the expiration of the option period for no additional consideration. We will use any net proceeds from the exercise of the underwriters option to purchase additional common units from us to make an additional cash distribution to our Sponsor. Table of Contents Index to Financial Statements The following chart illustrates our organizational structure after giving effect to this offering and the other formation transactions described above: Public Common Units % Interests of Royal: Common Units %(1) Subordinated Units 100 % Non-Economic General Partner Interest 0.0 %(2) Incentive Distribution Rights (3) 100.0 % (1) Assumes the underwriters do not exercise their option to purchase additional common units and such additional common units are issued to Royal. (2) Our general partner owns a non-economic general partner interest in us. Please read How We Make Distributions General Partner Interest. (3) Incentive distribution rights represent a variable interest in distributions and thus are not expressed as a fixed percentage. Please read How We Make Distributions Incentive Distribution Rights. Distributions with respect to the incentive distribution rights will be classified as distributions with respect to equity interests. Incentive distribution rights will be issued to Royal. Table of Contents Index to Financial Statements Principal Executive Offices Our principal executive offices are located at One Allen Center, 500 Dallas Street, Suite 1250, Houston, Texas 77002, and our telephone number is (713) 874-9000. Our website address will be www. .com. We intend to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001624982_realstatez_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001624982_realstatez_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4a416a6da0c367a5b4ea4d6545e1fda6609ec568
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this prospectus, the terms Sweets & Treats DE Company, we, us and our , our company refer to Sweets and Treats, Inc. Overview Incorporated on July 7, 2014 under the laws of the State of Delaware, Sweets & Treats, Inc. ( Sweets & Treats DE ) is a bakery based company in California, specializing in freshly-made cakes and cupcakes and also offering other desserts and baked goods, including cookies, scones, croissants, brownies and muffins, as well as hot and cold beverages such as drip coffees, espresso-based drinks, teas and hot chocolate. Our gourmet desserts are crafted with quality ingredients and presented in an artistic fashion. On July 18, 2014, we completed a share exchange whereby we acquired all of the issued and outstanding shares of common stock of Sweets & Treats Inc., a company organized under the laws of California on April 13, 2011 ( Sweets & Treats CA ) in exchange for 5,000,000 shares of our Common Stock pursuant to certain share exchange agreement as Exhibit 10.1 dated July 18, 2014 (the Share Exchange ). Sweets & Treats CA became our wholly-owned subsidiary and we have operated our business through Sweets & Treats CA since the Share Exchange. As we currently market our products primarily through our website, social media and personal referrals, we plan to maintain the high quality of its product and are seeking the resources to open our first retail location in the Los Angeles metropolitan area. Our plan for the next twelve months calls for opening either a standalone or mall-based store. We are also seeking opportunities to potentially expand into mall-based kiosk locations, which typically have an average size of approximately 100 square feet. We anticipate that the cost of establishing its first retail location - standalone or mall-based store- will be approximately $250,000. Despite of our plan, we currently have no commitments for any financing and cannot provide assurance that we will realize this goal. In October 2014, we completed a Regulation D Rule 506 offering in which we sold 300,000 shares of Common Stock to thirty (30) accredited investors, at a purchase price of $0.10 per share for an aggregate offering price of $30,000. Where You Can Find Us The Company's principal executive office and mailing address is 13113 Mesa Verde Way Sylmar, CA, 91342. Our telephone number is (818) 272-5987. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act ). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act ) for complying with new or revised accounting standards. We have elected to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. The Offering Common stock offered by selling security holders 300,000 shares of Common Stock. This number represents 1.96 % of our current outstanding Common Stock. Common stock outstanding before the offering 15,300,000 shares of Common Stock. Common stock outstanding after the offering 15,300,000 shares of Common Stock. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. The selling security holders will sell at a fixed price of $0.10 per share for the duration of the offering. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act (iii) or we decide at any time to terminate the registration of the shares at our sole discretion. Trading Market There is currently no trading market for our Common Stock. We are in the process of applying for quotation on OTCQB. We will require the assistance of a market-maker to apply for quotation and there is no guarantee that a market-maker will agree to assist us. Use of proceeds We are not selling any shares of the Common Stock covered by this prospectus. As such, we will not receive any of the offering proceeds from the registration of the shares of Common Stock covered by this prospectus.
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@@ -0,0 +1,1115 @@
+PROSPECTUS
+SUMMARY
+
+This summary
+highlights certain information appearing elsewhere in this
+prospectus. For a more complete understanding of this offering, you
+should read the entire prospectus carefully, including the risk
+factors and the financial statements. Unless otherwise stated in
+this prospectus:
+
+ 
+"we,"
+"us" or "our company" refers to E-compass
+Acquisition Corp.;
+
+ 
+"US
+Dollars" and "$" refer to the legal currency of
+the United States;
+
+ 
+"RMB"
+refers to Renminbi, the legal currency of the PRC;
+
+ 
+ the information in this prospectus assumes that investors introduced by us to the underwriter purchase
+at least $20,000,000 of the units being offered hereby and as a result, the commissions payable to the underwriter will not increase
+and the initial shareholders will not purchase any commission units; and 
+
+ 
+the information in
+this prospectus assumes that the underwriter will not exercise its
+over-allotment option.
+
+You should rely only
+on the information contained in this prospectus. We have not
+authorized anyone to provide you with different information. We are
+not making an offer of these securities in any jurisdiction where
+the offer is not permitted.
+
+We are a Cayman Islands company incorporated on September 23, 2014
+as an exempted company with limited liability. Exempted companies
+are Cayman Islands companies wishing to conduct business outside
+the Cayman Islands and, as such, are exempted from complying with
+certain provisions of the Companies Law (2013 Revision) of the
+Cayman Islands as the same may be amended from time to time. As an
+exempted company, we have applied for and received a tax exemption
+undertaking from the Cayman Islands government that, in accordance
+with section 6 of the Tax Concessions Law (2011 Revision) of
+the Cayman Islands, for a period of 20 years from the date of the
+undertaking, no law which is enacted in the Cayman Islands imposing
+any tax to be levied on profits, income, gains or appreciations
+shall apply to us or our operations and, in addition, that no tax
+to be levied on profits, income, gains or appreciations or which is
+in the nature of estate duty or inheritance tax shall be payable
+(i) on or in respect of our shares, debentures or other obligations
+or (ii) by way of the withholding in whole or in part of a payment
+of dividend or other distribution of income or capital by us to our
+shareholders or a payment of principal or interest or other sums
+due under a debenture or other obligation of us.
+
+We were formed for the purpose of entering into a merger, share
+exchange, asset acquisition, share purchase, recapitalization,
+reorganization or similar business combination with one or more
+businesses or entities, which we refer to as a "target
+business," or entering into contractual arrangements that
+give us control over such a target business. While our efforts to
+identify a prospective target business will not necessarily be
+limited to a particular industry or geographic region of the world,
+we initially intend to focus our search on target businesses
+located in the People s Republic of China as well as the Hong
+Kong Special Administrative Region and the Macau Special
+Administrative Region (but not Taiwan), which we refer collectively
+throughout this prospectus as "China" or the
+"PRC," that operate in the e-commerce and consumer
+retail industry. We believe that companies that operate in the
+e-commerce and consumer retail industry in China will perform
+favorably over the next decade due to the following reasons:
+
+ 
+Rising spending power of Chinese consumers;
+
+ 
+China s online shopping population is relatively
+underpenetrated;
+
+ 
+An increase in categories of products and services online;
+
+ 
+Increased usage of mobile devices;
+
+ 
+China s offline retail market faces significant
+challenges;
+
+ 
+Offline retailers are starting to use online marketplaces to grow
+their business;
+
+ 
+Growth in China s consumption;
+
+1
+
+ 
+Growth in the number of people in China that have access to the
+Internet; and
+
+ 
+Greater availability of goods online across consumption
+categories.
+
+We do not have any specific business combination under
+consideration and we have not (nor has anyone on our behalf),
+directly or indirectly, contacted any prospective target business
+or had any discussions, formal or otherwise, with respect to such a
+transaction. Accordingly, we may not be able to locate a suitable
+or attractive target business to consummate an initial business
+combination with.
+
+ We
+will have until 18 months from the consummation of this offering to consummate our initial business combination. If we are unable
+to consummate our initial business combination within such time period, we will distribute the aggregate amount then on deposit
+in the trust account, pro rata to the holders of the ordinary shares which are being sold as part of the units in this public
+offering (whether they are purchased in the public offering or in the aftermarket) by way of redemption and cease all operations
+except for the purposes of winding up of our affairs. 
+
+Pursuant to the Nasdaq
+listing rules, our initial business combination must be with a
+target business or businesses whose collective fair market value is
+at least equal to 80% of the balance in the trust account at the
+time of the execution of a definitive agreement for such business
+combination, although this may entail simultaneous acquisitions of
+several target businesses. The fair market value of the target will
+be determined by our board of directors based upon one or more
+standards generally accepted by the financial community (such as
+actual and potential sales, earnings, cash flow and/or book value).
+The target business or businesses that we acquire may have a
+collective fair market value substantially in excess of 80% of the
+trust account balance. We are not required to obtain an opinion
+from an unaffiliated third party that the target business we select
+has a fair market value in excess of at least 80% of the balance of
+the trust account unless our board of directors cannot make such
+determination on its own.
+
+We currently anticipate structuring our initial business
+combination to acquire 100% of the equity interests or assets of
+the target business or businesses. We may, however, structure our
+initial business combination where we merge directly with the
+target business or where we acquire less than 100% of such
+interests or assets of the target business in order to meet certain
+objectives of the target management team or shareholders or for
+other reasons, but we will only complete such business combination
+if the post-transaction company owns or acquires 50% or more of the
+outstanding voting securities of the target (whether through
+outright ownership or through contractual arrangements) or
+otherwise acquires a controlling interest in the target sufficient
+for it not to be required to register as an investment company
+under the Investment Company Act of 1940, as amended, or the
+Investment Company Act. The government of the PRC has restricted or
+limited foreign ownership of certain kinds of assets and companies
+operating in a wide variety of industries, including some online
+and mobile commerce businesses. Accordingly, we may need to
+structure our transaction to acquire a target business using
+contractual arrangements through variable interest entities, which
+are entities 100% owned by Chinese citizens. For further
+information on such arrangements, see "Proposed
+Business — Contractual Arrangements." Even if
+the post-transaction company owns or acquires 50% or more of the
+voting securities of the target, our shareholders prior to the
+business combination may collectively own a minority interest in
+the post-transaction company, depending on valuations ascribed to
+the target and us in the business combination transaction. For
+example, we could pursue a transaction in which we issue a
+substantial number of new shares in exchange for all of the
+outstanding capital shares of a target. In this case, we would
+acquire a 100% controlling interest in the target; however, as a
+result of the issuance of a substantial number of new shares, our
+shareholders immediately prior to our initial business combination
+could own less than a majority of our outstanding shares subsequent
+to our initial business combination. If less than 100% of the
+equity interests or assets of a target business or businesses are
+owned or acquired by the post-transaction company, only the portion
+of such business or businesses that is owned or acquired is what
+will be valued for purposes of the 80% of net assets test.
+
+As more fully discussed in "Management —
+Conflicts of Interest," if any of our officers or
+directors becomes aware of a business combination opportunity that
+falls within the line of business of any entity to which he has
+pre-existing fiduciary or contractual obligations, he may be
+required to present such business combination opportunity to such
+entity prior to presenting such business combination opportunity to
+us. All of our officers and directors currently have certain
+pre-existing fiduciary duties or contractual obligations.
+Additionally, each of Richard Xu, our Executive Chairman and Chief
+Executive Officer, Peiling (Amy) He, our Chief Financial Officer,
+and Aimin Song, one of our Directors, is also an officer and/or
+director of Sino Mercury Acquisition Corp., or Sino Mercury, a
+
+2
+
+blank check company formed to
+effect a merger, capital stock exchange, asset acquisition or other
+similar business combination with one or more businesses or
+entities. On April 24, 2015, Sino Mercury entered into an Agreement
+and Plan of Reorganization with Wins Finance Group Ltd., or WFG, an
+integrated financing solution provider with operations located
+primarily in Jinzhong City, Shanxi Province and Beijing, China.
+Pursuant to the Agreement and Plan of Reorganization, Sino Mercury
+is currently prohibited from reviewing alternative transactions.
+Accordingly, at this time, Mr. Xu, Ms. He and Mr. Song have no
+obligation to present business opportunities to Sino Mercury prior
+to presenting them to us. If the business combination between Sino
+Mercury and WFG is not completed for any reason, then Sino Mercury
+will have until June 1, 2016 (or September 1, 2016 if certain
+conditions are met) to complete another business combination. Each
+of Mr. Xu, Ms. He and Mr. Song would then be required to present
+all business opportunities which are suitable for Sino Mercury to
+Sino Mercury prior to presenting them to us.
+
+We are an emerging growth company as defined in the Jumpstart Our
+Business Startups Act of 2012 (which we refer to herein as the JOBS
+Act) and will remain such for up to five years. However, if our
+non-convertible debt issued within a three-year period or our total
+revenues exceed $1 billion or the market value of our ordinary
+shares that are held by non-affiliates exceeds $700 million on the
+last day of the second fiscal quarter of any given fiscal year, we
+would cease to be an emerging growth company as of the following
+fiscal year. As an emerging growth company, we have elected, under
+Section 107(b) of the JOBS Act, to take advantage of the extended
+transition period provided in Section 7(a)(2)(B) of the Securities
+Act of 1933, as amended, or the Securities Act, for complying with
+new or revised accounting standards.
+
+Private
+Placements
+
+ Prior
+to this offering, our shareholders immediately prior to the date of this prospectus, including all of our officers and directors
+and their affiliates, purchased an aggregate of 1,150,000 ordinary shares, which we refer to throughout this prospectus as the
+"insider shares," for an aggregate purchase price of $25,000, or approximately $0.02 per share. The insider shares
+held by our initial shareholders include an aggregate of up to 150,000 shares subject to compulsory repurchase by us for an aggregate
+purchase price of $0.01 to the extent that the underwriter s over-allotment option is not exercised in full or in part,
+so that the insider shares will comprise 20.0% of our issued and outstanding shares after this offering (excluding the private
+units and any commission units). None of our initial shareholders has indicated any intention to purchase units in this offering. 
+
+The insider shares are identical to the ordinary shares included in
+the units being sold in this offering. However, our initial
+shareholders have agreed, pursuant to written agreements with us,
+(A) to vote their insider shares and any public shares acquired in
+or after this offering in favor of any proposed business
+combination, (B) not to propose, or vote in favor of, an amendment
+to our amended and restated memorandum and articles of association
+with respect to our pre-business combination activities prior to
+the consummation of such a business combination unless we provide
+dissenting public shareholders with the opportunity to convert
+their public shares in connection with any such vote, (C) not to
+convert any shares (including the insider shares) for cash from the
+trust account in connection with a shareholder vote to approve our
+proposed initial business combination or a vote to amend the
+provisions of our amended and restated memorandum and articles of
+association relating to shareholders rights or pre-business
+combination activity and (D) that the insider shares shall not
+participate in any liquidating distribution upon winding up if a
+business combination is not consummated. Additionally, our initial
+shareholders have agreed not to transfer, assign or sell any of the
+insider shares (except to certain permitted transferees) until (1)
+with respect to 50% of the insider shares, the earlier of one year
+after the date of the consummation of our initial business
+combination and the date on which the closing price of our ordinary
+shares equals or exceeds $13.00 per share (as adjusted for share
+splits, share dividends, reorganizations and recapitalizations) for
+any 20 trading days within any 30-trading day period commencing
+after our initial business combination and (2) with respect to the
+remaining 50% of the insider shares, one year after the date of the
+consummation of our initial business combination, or earlier, in
+either case, if, subsequent to our initial business combination, we
+consummate a liquidation, merger, stock exchange or other similar
+transaction which results in all of our shareholders having the
+right to exchange their ordinary shares for cash, securities or
+other property.
+
+ In
+addition, an affiliate of Richard Xu, our Executive Chairman and Chief Executive Officer, has committed to purchase an aggregate
+of 310,000 private units at a price of $10.00 per unit ($3,100,000 in the aggregate). These purchases will take place on a private
+placement basis that will occur simultaneously with the closing of this offering. This affiliate has also agreed that if lead
+investors introduced by us to the underwriter do not purchase at least $20,000,000
+of 
+
+3
+
+ the
+units being offered hereby, it will purchase from us at a price of $10.00 per unit an additional number of commission units (up
+to an aggregate of 110,000 commission units) that will equal the increased commissions we will pay the underwriter and to cover
+the additional $0.40 that public investors may receive upon conversion or liquidation to total $10.40 per share. 
+The commission units have been registered on the registration statement of which this prospectus
+forms a part. An investor will be deemed to be introduced by us to the underwriter
+if such investor was referred to the underwriter by us, has not previously invested in any similarly structured blank check companies
+through the underwriter and are listed on a schedule to the underwriting agreement, which such schedule would be finalized prior
+to execution of the underwriting agreement. The underwriter will not purchase for its account any units not purchased by investors
+introduced by us and instead will sell such units to investors pursuant to the terms of this prospectus.
+We will be required to pay the underwriter an additional $0.15 per unit, or an aggregate of $300,000 on up to 2,000,000 units
+if we do not introduce any investors to the underwriter to satisfy this requirement and the underwriter is required to sell such
+units to other purchasers in this offering. See the section titled "Underwriting" for further information related
+to this arrangement. The proceeds from the private placement of the private units other than the commission units will be added
+to the proceeds of this offering and placed in an account in the United States at Morgan Stanley, maintained by Continental Stock
+Transfer & Trust Company, as trustee. 
+
+The private units are identical to the units sold in this offering.
+However, the holder has agreed (A) to vote the private shares in
+favor of any proposed business combination, (B) not to propose, or
+vote in favor of, an amendment to our amended and restated
+memorandum and articles of association with respect to our
+pre-business combination activities prior to the consummation of
+such a business combination unless we provide dissenting public
+shareholders with the opportunity to convert their public shares in
+connection with any such vote, (C) not to convert any private
+shares for cash from the trust account in connection with a
+shareholder vote to approve our proposed initial business
+combination or a vote to amend the provisions of our amended and
+restated memorandum and articles of association relating to
+shareholders rights or pre-business combination activity and
+(D) that the private shares shall not participate in any
+liquidating distribution upon winding up if a business combination
+is not consummated. The purchaser has also agreed not to transfer,
+assign or sell any of the private units or underlying securities
+(except to the same permitted transferees as the insider shares and
+provided the transferees agree to the same terms and restrictions
+as the permitted transferees of the insider shares must agree to,
+each as described above) until the completion of our initial
+business combination.
+
+ We
+have also agreed to sell to Cantor Fitzgerald & Co. (and/or its designees), for $100, an option to purchase up to a total
+of 300,000 units exercisable at $10.00 per unit (or an aggregate exercise price of $3,000,000) commencing on the later of the
+consummation of a business combination and one year from the date of this prospectus. Since the option is not exercisable until
+at the earliest the consummation of a business combination, and the rights included in the units will entitle the holder to receive
+ordinary shares upon consummation of a business combination, the option will effectively represent the right to purchase 330,000
+ordinary shares (which includes the 30,000 ordinary shares that will be issued for the rights included in the units) for $3,000,000. 
+
+Our principal executive offices are located at 6F/Tower, 2 West
+Prosper Centre, No.5, Guanghua Road, Chaoyang District, Beijing,
+100020, P.R. China and our telephone number is 86 (10) 8573
+1453.
+
+4
+
+The Offering
+
+In making your
+decision on whether to invest in our securities, you should take
+into account not only the backgrounds of the members of our
+management team, but also the special risks we face as a blank
+check company and the fact that this offering is not being
+conducted in compliance with Rule 419 promulgated under the
+Securities Act. You will not be entitled to protections normally
+afforded to investors in Rule 419 blank check offerings. You should
+carefully consider these and the other risks set forth in the
+section below entitled "Risk Factors" beginning on page
+12 of this prospectus.
+
+ Securities
+offered 
+
+ 
+
+ 4,000,000
+units, at $10.00 per unit, each unit consisting of one ordinary share and one right, each right entitling the holder to receive
+one-tenth (1/10) of an ordinary share upon consummation of our initial business combination, subject to the conditions described
+in this prospectus. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ This
+is different from other offerings similar to ours whose units include one share and one warrant or a combination of warrants and
+rights. Our management believes that investors in similarly structured blank check offerings, and those likely to invest in this
+offering, have come to expect the units of such companies to include one share and another security which would allow the holders
+to acquire additional shares. Without the ability to acquire such additional shares, our management believes that the investors
+would not be willing to purchase units in such companies initial public offerings. In this offering, by solely offering
+rights as part of the units that entitle the holder to receive only one-tenth of a share, as opposed to a combination of warrants
+and rights included in units of similarly structured blank check offerings, our management believes we have reduced the number
+of shares that we would be obligated to issue after the offering compared to other offerings
+similar to ours. However, no additional consideration will be required to be paid to us by holders of the rights to receive the
+additional shares upon consummation of our business combination unlike the case when the units include warrants (which would require
+the payment of additional consideration to us in order to receive the shares underlying such warrants). Our management believes
+our unit structure (with rights instead of warrants) will make us a more attractive merger partner for target businesses as our
+capitalization structure will be simpler without the warrants present. However, our management may be incorrect in this belief
+and our unit structure may cause our units to be worth less than if they included a combination of rights and warrants. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ We
+are also registering up to 110,000 commission units that may be purchased as described herein. 
+
+ 
+
+ 
+
+ 
+
+Listing of our securities
+and proposed symbols
+
+ 
+
+We anticipate the units, and the ordinary shares and rights once
+they begin separate trading, will be listed on Nasdaq under the
+symbols "ECACU," "ECAC" and
+"ECACR," respectively.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+We have agreed with Cantor Fitzgerald & Co.
+that each of the ordinary shares and rights may trade separately
+ten business days following the earlier to occur of the expiration
+of the underwriter s over-allotment option, its exercise in
+full or the announcement by the underwriter of their intention not
+to exercise all or any remaining portion of the over-allotment
+option. In no event will Cantor Fitzgerald & Co. allow separate
+trading of the ordinary shares and rights until we file an audited
+balance sheet reflecting our receipt of the gross proceeds of this
+offering.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Once the ordinary shares and rights commence
+separate trading, holders will have the option to continue to hold
+units or separate their units into the component pieces. Holders
+will need to have their brokers contact our transfer agent in order
+to separate the units into separately trading ordinary shares and
+rights.
+
+ 
+
+ 
+
+ 
+
+5
+
+ 
+
+ 
+
+We will file a Current Report on Form 8-K with
+the SEC, including an audited balance sheet, promptly after the
+consummation of this offering, which is anticipated to take place
+three business days from the date the units commence trading. The
+audited balance sheet will reflect our receipt of the proceeds from
+the exercise of the over-allotment option if the over-allotment
+option is exercised on the date of this prospectus. If the
+over-allotment option is exercised after the date of this
+prospectus, we will file an amendment to the Form 8-K or a new Form
+8-K to provide updated financial information to reflect the
+exercise of the over-allotment option. We will also include in the
+Form 8-K, or amendment thereto, or in a subsequent Form 8-K,
+information relating to the separate trading of the ordinary shares
+and rights.
+
+ 
+
+ 
+
+ 
+
+Ordinary shares:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Number outstanding before this offering
+
+ 
+
+1,150,000 shares1
+
+ 
+
+ 
+
+ 
+
+ Number
+to be outstanding after this offering and sale of private units 
+
+ 
+
+ 
+
+5,310,000 shares2 
+
+ 
+
+ 
+
+ 
+
+Rights:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Number outstanding before this offering
+
+ 
+
+0 rights
+
+ 
+
+ 
+
+ 
+
+ Number
+to be outstanding after this offering and sale of private units 
+
+ 
+
+ 
+
+4,310,000 rights2 
+
+ 
+
+ Terms
+of the Rights 
+
+ 
+
+ Each
+holder of a right will receive one-tenth (1/10) of a share upon consummation of our initial business combination. Therefore, you
+must have seven rights in order to receive one share. If you own rights in a multiple of less than seven, such rights will be
+cancelled without compensation as we will not issue fractional shares. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ In
+the event we will not be the surviving company upon completion of our initial business combination, each holder of a right will
+be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each
+right (without paying any additional consideration) upon consummation of the business combination. If we are unable to complete
+an initial business combination within the required time period and we liquidate the funds held in the trust account, holders
+of rights will not receive any of such funds for their rights and the rights will expire worthless. 
+
+ 
+
+ 
+
+ 
+
+ Offering
+proceeds to be held in trust 
+
+ 
+
+ 
+
+$37,700,000 of the net proceeds of this offering (or $43,700,000 if the over-allotment option
+is exercised in full), plus the $3,100,000 we will receive from the sale of the private units but not the commission units, for
+an aggregate of $40,800,000 (or an aggregate of $46,800,000 if the over-allotment option is exercised in full), or $10.40 (or
+approximately $10.31 if the over-allotment option is exercised in full) per unit sold to the public in this offering (excluding
+the lead investors and non-tendering investors) will be placed in a trust account at Morgan Stanley in the United States, maintained
+by Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this
+prospectus. The remaining $600,000 of net proceeds of this offering will not be held in the trust account. 
+
+ 
+
+ 
+
+ 
+
+____________
+
+1 
+This number includes an aggregate of up to 150,000 ordinary shares
+held by our initial shareholders that are subject to compulsory
+repurchase by us if the over-allotment option is not exercised by
+the underwriter.
+
+ 2 
+Assumes (i) the over-allotment option has not been exercised and an aggregate of 150,000 ordinary shares held by our initial
+shareholders have been compulsorily repurchased by us and (ii) the initial shareholders will not purchase any commission units. 
+
+6
+
+ 
+
+ 
+
+Except as set forth below, the proceeds in the
+trust account will not be released until the earlier of the
+completion of an initial business combination within the required
+time period or our entry into liquidation if we have not completed
+a business combination in the required time period. Therefore,
+unless and until an initial business combination is consummated,
+the proceeds held in the trust account will not be available for
+our use for any expenses related to this offering or expenses which
+we may incur related to the investigation and selection of a target
+business and the negotiation of an agreement to acquire a target
+business.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Notwithstanding
+the foregoing, there can be released to us from the trust account (i) any interest earned on the funds in the trust account that
+we need to pay our income or other tax obligations and (ii) any remaining interest earned on the funds in the trust account that
+we need for our working capital requirements. With these exceptions, expenses incurred by us may be paid prior to a business combination
+only from the net proceeds of this offering not held in the trust account (estimated to initially be $600,000); provided, however,
+that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust
+account and interest earned on the funds held in the trust account available to us are insufficient, our initial shareholders,
+officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in
+whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would
+either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion,
+up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a
+price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes
+were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 ordinary shares
+upon the closing of our business combination). Our initial shareholders have approved the issuance of the units (and underlying
+securities) upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation
+of our initial business combination. If we do not complete a business combination, the loans would not be repaid. 
+
+ 
+
+ 
+
+ 
+
+Limited payments to insiders
+
+ 
+
+Prior to the consummation of a business combination, there will be
+no fees, reimbursements or other cash payments paid to our initial
+shareholders, officers, directors or their affiliates prior to, or
+for any services they render in order to effectuate, the
+consummation of a business combination (regardless of the type of
+transaction that it is) other than:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ repayment at the
+closing of this offering of a $165,000 non-interest loan made by
+Lodestar Investment Holdings I LLC, an affiliate of Richard Xu, our
+executive chairman and chief executive officer; and
+
+ 
+
+ 
+
+ reimbursement of
+out-of-pocket expenses incurred by them in connection with certain
+activities on our behalf, such as identifying and investigating
+possible business targets and business combinations, traveling to
+and from the offices, plants or similar locations of prospective
+target businesses to examine their operations, reviewing corporate
+documents and material agreements of prospective target businesses
+and structuring, negotiating and consummating the business
+combination. To date, no such expenses have been
+incurred.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+There is no limit on the amount of out-of-pocket
+expenses reimbursable by us; provided, however, that to the extent
+such expenses exceed the available proceeds not deposited in the
+trust account and the interest income earned on the amounts held in
+the trust account available to us, such expenses would not be
+reimbursed by us unless we consummate an initial business
+combination. Our audit committee will review and approve all
+reimbursements and payments made to any initial shareholder or
+member of our management team, or our or their respective
+affiliates, and any reimbursements and payments made to members of
+our audit committee will be reviewed and approved by our Board of
+Directors, with any interested director abstaining from such review
+and approval.
+
+ 
+
+ 
+
+ 
+
+7
+
+ Shareholder
+approval of initial business combination 
+
+ 
+
+ 
+
+In connection with any proposed initial business combination, we will seek shareholder approval of such initial business combination
+at a meeting called for such purpose at which shareholders may seek to have their shares converted, regardless of whether they
+vote for or against the proposed business combination, for a pro rata share of the aggregate amount then on deposit in the trust
+account, less any taxes then due but not yet paid (initially anticipated to be $10.40 per share for public shareholders and $10.00
+for the lead investors). 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Under our amended and restated memorandum and
+articles of association, we must provide at least 10 days advance
+notice of any meeting of shareholders. The proxy statement mailed
+in connection with any meeting to approve a proposed business
+combination will describe the manner in which you can vote on the
+proposed transaction. The proxy statement will also describe the
+vote necessary to approve the proposed business combination. See
+the section titled "Proposed Business
+— Shareholder Approval of a Business
+Combination" for further information.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+We will consummate our initial business
+combination only if we have net tangible assets of at least
+$5,000,001 upon such consummation and a majority of the outstanding
+ordinary shares voted are voted in favor of the business
+combination. We have determined not to consummate any business
+combination unless we have net tangible assets of at least
+$5,000,001 upon such consummation in order to avoid being subject
+to Rule 419 promulgated under the Securities Act of 1933, as
+amended, or the Securities Act.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ We
+have agreed to introduce the underwriter in this offering to lead investors who are interested in purchasing at least $20,000,000
+of the units being offered hereby and to cause at least $10,000,000 of the units being offered hereby to be purchased by non-tendering
+investors introduced by us who will agree to hold their shares through the consummation of our initial business combination, vote
+in favor of such proposed business combination and not seek redemption in connection therewith, as described in this prospectus.
+Such investors will not be providing us with a proxy to vote their shares, however. As a result, we expect to meet the $5,000,001
+net tangible asset requirement in order to complete an initial business combination. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Notwithstanding the foregoing, if we seek to
+consummate a business combination with a target business that
+imposes any type of working capital closing condition or requires
+us to have a minimum amount of funds available from the trust
+account upon consummation of such business combination, the net
+tangible asset requirement may limit our ability to consummate such
+a business combination and may force us to seek third party
+financing which may not be available on terms acceptable to us or
+at all. As a result, we may not be able to consummate such business
+combination and we may not be able to locate another suitable
+target within the applicable time period, if at all.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Our initial shareholders have agreed (i) to vote
+their insider shares, private shares and any public shares
+purchased in or after this offering in favor of any proposed
+business combination and (ii) not to convert any shares (including
+the insider shares) in connection with a shareholder vote to
+approve a proposed initial business combination. None of our
+officers, directors, initial shareholders or their affiliates has
+indicated any intention to purchase units in this offering or any
+units or ordinary shares in the open market or in private
+transactions. However, if a significant number of shareholders
+vote, or indicate an intention to vote, against a proposed business
+combination, our officers, directors, initial shareholders or their
+affiliates could make such purchases in the open market or in
+private transactions in order to influence the vote. There is no
+limit on the amount of shares that may be purchased by the
+insiders.
+
+ 
+
+ 
+
+ 
+
+8
+
+ 
+
+ 
+
+Any purchases would be made in compliance with
+federal securities laws, including the fact that all material
+information will be made public prior to such purchase, and no
+purchases would be made if such purchases would violate Section
+9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed
+to stop potential manipulation of a company s
+stock.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+If the business combination is not consummated,
+public shareholders will not be entitled to have their shares
+converted. Public shareholders who convert their shares will
+continue to have the right to receive shares upon automatic
+conversion of the rights they may hold if the business combination
+is consummated.
+
+ 
+
+ 
+
+ 
+
+Conversion rights
+
+ 
+
+In connection with any shareholder meeting
+called to approve a proposed initial business combination, each
+public shareholder will have the right, regardless of whether he is
+voting for or against such proposed business combination, to have
+his shares converted into a pro rata share of the trust account
+upon consummation of the business combination.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Notwithstanding
+the foregoing, a public shareholder, together with any affiliate of
+his or any other person with whom he is acting in concert or as a
+"group" (as defined in Section 13(d)(3) of the Exchange
+Act) will be restricted from seeking conversion rights with respect
+to 20% or more of the ordinary shares sold in this offering.
+Accordingly, all shares purchased by a holder in excess of 20% of
+the shares sold in this offering will not be converted for cash. We
+believe this restriction will prevent an individual shareholder or
+"group" from accumulating large blocks of shares before
+the vote held to approve a proposed business combination and
+attempt to use the redemption right as a means to force us or our
+management to purchase its shares at a significant premium to the
+then current market price. By limiting a shareholder s
+ability to convert no more than 20% of the ordinary shares sold in
+this offering, we believe we have limited the ability of a small
+group of shareholders to unreasonably attempt to block a
+transaction which is favored by our other public shareholders. All
+conversions of shares shall take effect as repurchases as a matter
+of Cayman Islands law.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+We may also require public shareholders, whether
+they are a record holder or hold their shares in "street
+name," to either tender their certificates to our transfer
+agent at any time through the vote on the business combination or
+to deliver their shares to the transfer agent electronically using
+Depository Trust Company s DWAC (Deposit/Withdrawal At
+Custodian) System, at the holder s option. There is a nominal
+cost associated with this tendering process and the act of
+certificating the shares or delivering them through the DWAC
+system. The transfer agent will typically charge the tendering
+broker $45 and it would be up to the broker whether or not to pass
+this cost on to the converting holder.
+
+ 
+
+ 
+
+ 
+
+Liquidation if no business combination
+
+ 
+
+ 
+
+If we are unable to complete our initial business combination within 18 months from the consummation of this offering, it will
+trigger our automatic winding up, dissolution and liquidation pursuant to the terms of our amended and restated memorandum and
+articles of association. As a result, this has the same effect as if we had formally gone through a voluntary liquidation procedure
+under the Companies Law of the Cayman Islands. Accordingly, no vote would be required from our shareholders to commence such a
+voluntary winding up, dissolution and liquidation. 
+
+ 
+
+ 
+
+ 
+
+9
+
+ 
+
+ 
+
+ The
+amount in the trust account (less $400 representing the aggregate nominal par value of the shares of our public shareholders)
+under the Companies Law of the Cayman Islands will be treated as share premium which is distributable under the Companies Law
+of the Cayman Islands provided that immediately following the date on which the proposed distribution is to be made, we are able
+to pay our debts as they fall due in the ordinary course of business. If we are forced to liquidate, we anticipate that we would
+distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior to the
+distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that
+may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts,
+as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that
+we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be
+liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter
+an insolvent liquidation. Furthermore, while we will seek to have all vendors and service providers (which would include any third
+parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses
+execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the
+trust account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities
+execute such agreements with us, they will not seek recourse against the trust account or that a court would conclude that such
+agreements are legally enforceable. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The holders of
+the insider shares and private units will not participate in any
+redemption distribution with respect to their insider shares,
+private shares or private rights.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Richard
+Xu and Chen Liu have contractually agreed that, if we liquidate the trust account prior to the consummation of a business combination,
+they will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses
+or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us.
+Accordingly, if a claim brought by a target business or vendor did not exceed the amount of funds available to us outside of the
+trust account or available to be released to us from interest earned on the trust account balance, Messrs. Xu and Liu would not
+have any personal obligation to indemnify such claims as they would be paid from such available funds. However, if a claim exceeded
+such amounts, the only exceptions to the obligations of Messrs. Xu and Liu to pay such claim would be if the party executed an
+agreement waiving any right, title, interest or claim of any kind they have in or to any monies held in the trust account. We
+cannot assure you that Messrs. Xu and Liu will be able to satisfy these obligations if he is required to do so. Therefore, we
+cannot assure you that the per-share distribution from the trust account, if we liquidate the trust account because we have not
+completed a business combination within the required time periods, will not be reduced. 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+We will pay the
+costs of any subsequent liquidation from our remaining assets
+outside of the trust account. If such funds are insufficient,
+Messrs. Xu and Liu have agreed to pay the funds necessary to
+complete such liquidation (currently anticipated to be no more than
+approximately $15,000) and have agreed not to seek repayment for
+such expenses.
+
+Risks
+
+In making your decision on whether to invest in our securities, you
+should take into account the special risks we face as a blank check
+company, as well as the fact that this offering is not being
+conducted in compliance with Rule 419 promulgated under the
+Securities Act of 1933, as amended, or the Securities Act, and,
+therefore, you will not be entitled to protections normally
+afforded to investors in Rule 419 blank check offerings. For
+additional information
+concerning how Rule 419 blank check offerings differ from this
+offering, please see "Proposed Business
+— Comparison to offerings of blank
+check companies subject to Rule 419." You should
+carefully consider these and the other risks set forth in the
+section entitled "Risk
+Factors" beginning on page 12 of this prospectus.
+
+10
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001625095_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001625095_global_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..14b5eac01e5ccb860a2a983840856ebfd4c1fe64
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001625095_global_prospectus_summary.txt
@@ -0,0 +1,71 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND TODEX CORP. REFERS TO TODEX CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+TODEX CORP.
+
+ 
+
+We are a development stage company and we plan to organize a software development business. We intend to develop special software for the car dealership business sector. Our software will help to car dealerships in their business activity by creating a platform for analyzing and controlling and tracking inventory levels, orders, sales, deliveries, record and processing sales and accounting transactions. Our business is on the development stage level and we have no developed product, minimal revenues and identified just one customer. Todex Corp. was incorporated in Nevada on September 18, 2014. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). We expect our operations to begin to generate sufficient revenues during months 8-12 after completion of this offering. However, there is no assurance that we will generate sufficient revenue in the first 12 months after completion our offering or ever generate sufficient revenue.
+
+Being a development stage company, we have very limited operating history. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 1810 E Sahara Ave, Office 219, Las Vegas, NV 89104. Our phone number is (702) 997-2502. 
+
+From inception (September 18, 2014) until the date of this filing, we have had limited operating activities. Our financial statements from inception (September 18, 2014) through February 28, 2015, dicslose $2,000 of deferred revenue and a net loss of $6,316. Our independent registered public accounting firm has issued an audit opinion for Todex Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have established our company, developed our business plan and are looking for the potential clients. As of today, we have signed the Software Development Agreement, dated February 12, 2015 with Batona Motors, a car dealer to devlop software for them. As a result of this agreement, we have generated recorded $2,000 as deferred revenue.
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $30,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $30,000, our business may fail. We do not anticipate earning sufficient revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities.
+
+5 | Page
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+TODEX CORP.
+
+Securities Being Offered:
+
+ 
+
+5,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.01
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of one hundred and eighty (180) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus), (ii) the date when the sale of all 5,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 5,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+$50,000
+
+Securities Issued and Outstanding:
+
+There are 6,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Vladislav Ermolovich. 
+
+If we are successful at selling all the shares in this offering, we will have 11,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001626078_savden_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001626078_savden_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..12766a9684e4e8243f65ea35d25705e18ace0705
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001626078_savden_prospectus_summary.txt
@@ -0,0 +1,111 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND SAVDEN GROUP CORP. REFERS TO SAVDEN GROUP CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+SAVDEN GROUP CORP.
+
+ 
+
+SavDen Group Corp. was incorporated in Nevada on October 2, 2014. We are development stage company and intend to commence operations in the business of software development. We intend to provide a business planning service (software) mainly aimed at at medium-sized and small companies in order to help them to develop their businesses or make presentations of their businesses to investors. We plan to offer a multilingual online computing platform in a form of a web site and a cloud based webstorage with pay per use system as a service. The services are going to be delivered without the cost and and complexity of buying and managing software, providing all of the facilities required to support the complete cycle of building and delivering business plans. Our offerings may include team collaboration within a particular business plan, converting business plans to different document formats (such as clear PDF files), sharing business plans, security of data and data storage.
+
+We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $42,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue.
+
+Being a development stage company, we have very limited operating history. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Griegstrasse, 9 Nesonova, Stuttgart, Germany 70195. Our phone number is +44 20 8133 4952. 
+
+From inception (October 2, 2014) until the date of this filing, we have had limited operating activities. Our financial statements from inception (October 2, 2014) through August 31, 2015, reports no revenue and a net loss of $
+
+3,936
+
+. As of
+
+October 5, 2015
+
+ we have cash reserves of approximately $2,669. The current rate at which we use funds in our operations is approximately $833 a month. The minimum period of time we will be able to conduct planned operations using currently-available capital resources is approximately three months. Our independent registered public accounting firm has issued an audit opinion for SavDen Group Corp., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan and developed concepts of our software. On July 1, 2015 we signed the Agreement with Gr ne Weltraumtechnik, GmbH. The material terms of the Agreement are: 
+
+- The Provider (SavDen Group Corp.) creates business plan for the Company (Gr ne Weltraumtechnik, GmbH) and integrates it to Provider s web-based service in order to create, upload, store, transmit, disseminate, print and otherwise distribute business plans. The web-based service is on the development stage and the Company will use The Service is at its own risk.
+
+- The term of the Agreement shall be for a period of six months commencing July 1, 2015, and is renewable for successive terms by mutual agreement of the parties.
+
+- The full price of the Agreement is $5,000. The Company hereby agrees to prepay Provider $2,500.
+
+On August 3, 2015 and August 24, 2015 we have signed the Commission Sales Agreements with two independent contractors (Sales Representatives). The key terms of the Sales Agreement are: 
+
+- Company (SavDen Group Corp.) appoints Sales Representative as an authorized non-exclusive independent representative to sell and promote all services provided by Company in the Sales Representative s geographical area ( Territory ) described in the Sales Agreement. 
+
+- Sales Representative shall devote time, energy and skill on a regular and consistent basis as is necessary to sell and promote the sale of Company's services in the Territory. Weekly Sales Reports is mandatory for Sales Representative.
+
+- For each contract for the performance of Company's services as arranged by Sales Representative under the Sales Agreement, Sales Representative shall be entitled to a commission as follows:
+
+a. (10%) percent of contract billing during the first 30 days; 
+
+b. (15 %) percent of contract billing during the first year; 
+
+c. (5%) percent of contract billing raise according to performance, and for any year thereafter.
+
+- Sales Representative shall bear any and all costs or expenses incurred by Sales Representative to perform his obligation under this Agreement, including, but not limited to, vehicle insurance, travel expenses and telephone expenses.
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $42,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $42,000, our business may fail. If we fail to raise a minimum of $42,000 under this offering, we will be forced to scale back or abandon the implementation of our 12-month plan of operations. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities.
+
+5 | Page
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+Savden Group Corp.
+
+Securities Being Offered:
+
+ 
+
+5,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.02
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of one hundred and eighty (180) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus), (ii) the date when the sale of all 5,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 5,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+If 10% of the shares sold - $10,000
+
+If 25% of the shares sold - $25,000
+
+If 50% of the shares sold - $50,000
+
+If 75% of the shares sold - $75,000
+
+If 100% of the shares sold - $100,000
+
+Securities Issued and Outstanding:
+
+There are 5,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Denis Savinskii. 
+
+If we are successful at selling all the shares in this offering, we will have 10,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001626320_klox_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001626320_klox_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..57b06c3100c493043126bf5498badf09e358b614
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001626320_klox_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our common shares and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors, Business and our consolidated financial statements and the related notes, before deciding to buy our common shares. Unless the context otherwise requires, any reference to Klox, Klox Technologies, we, our and us in this prospectus refers to Klox Technologies Inc. and its subsidiaries. Unless otherwise specified, all references to $ in this Prospectus Summary, other than in the section entitled Summary Consolidated Financial Data, refer to U.S. dollars. All references to $ in the section entitled Summary Consolidated Financial Data refer to Canadian dollars. OUR COMPANY We are a specialty pharmaceutical company focused on developing and commercializing products based on our proprietary BioPhotonic technology platform to address skin and soft tissue disorders. Initially, we intend to focus on indications in the areas of dermatology, wound care and oral health. LumiCleanse and LumiBel, our dermatology treatment systems for acne vulgaris and cosmetic skin care, respectively, are being commercialized with leading global collaborators in Canada and Europe. Our LumiHeal wound healing treatment system consists of our LumiHeal gel and a multi-LED lamp. Both products are regulated as medical devices in the European Union, have undergone the required procedures for Conformit Europ enne, or CE, marking and can be marketed and sold in Europe. We intend to commercialize these products on our own. We anticipate commercial launch of LumiCleanse, LumiBel and LumiHeal in Europe in 2015. We are also developing our oral health franchise, including PERIO-1 for the treatment of periodontitis, and we intend to file for CE mark approval for PERIO-1 in 2015. The CE mark is an international symbol that represents adherence to certain essential principles of safety and effectiveness mandated in the European Medical Device Directive and, once affixed, enables a product to be sold within the European Union and other countries that recognize the CE mark, subject to compliance with applicable submission and approval requirements in such other countries. Through our collaborators efforts and our own, we plan to commercialize these and future treatment systems worldwide. Our BioPhotonic technology platform is a proprietary and novel treatment solution that harnesses the power of light and photo-activated oxygen-rich gel formulations to treat skin and soft tissue disorders. The combination of the emitted wavelengths from multi-light-emitting diode, or LED, lamps and the light absorbing molecules, or chromophores, contained in our gels are specific to each indication. By varying the interactions between light and gel, we can induce different physiological processes that promote healing specific to the underlying pathology. These physiological processes promote healing with bactericidal properties specific to the underlying pathology and include increased collagen production, altered cellular response and the production of photons and oxygen. Our topical therapy is non-invasive, non-abrasive, kills bacteria, stimulates healing within a short exposure period and does not require incubation or metabolization of the chromophores. Individual treatment times last less than 10 minutes, with a significant majority of patients reporting treatments to be painless, which we believe may result in improved patient compliance with treatment regimens. Further, treatments are generally well tolerated and do not induce photosensitivity. Health Canada has designated our BioPhotonic treatment systems as Class II medical devices for the treatment of acne and for wound healing. European regulatory bodies have designated our BioPhotonic treatment system for the treatment of acne and our LumiHeal gel as Class II medical devices. The multi-LED lamp that we Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion April 27, 2015 4,800,000 Shares Common Shares This is an initial public offering of common shares of Klox Technologies Inc. No public market currently exists for our common shares. We are offering all of the 4,800,000 common shares to be sold in this offering. We expect the public offering price to be between US$13.00 and US$15.00 per share. We have applied to list our common shares on the NASDAQ Global Market under the symbol KLOX. We are an emerging growth company as defined under the United States federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements for this and future filings. Investing in our common shares involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common shares in Risk factors beginning on page 13 of this prospectus. Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price US$ US$ Underwriting discounts(1) US$ US$ Proceeds, before expenses, to us US$ US$ (1) We refer you to Underwriting beginning on page 177 for additional information regarding total underwriting compensation. The underwriters may also purchase up to an additional 720,000 common shares from us at the public offering price, less the underwriting discounts payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. The underwriters are offering the common shares as set forth under Underwriting. Delivery of the shares will be made on or about , 2015. UBS Investment Bank Canaccord Genuity Needham & Company National Bank of Canada Financial Inc. Table of Contents intend to commercialize with our LumiHeal gel is a Class I medical device. We believe that these designations will enable us and our collaborators to commercialize treatment systems for acne and wound healing more quickly in these jurisdictions. In the United States, the Food and Drug Administration, or FDA, has indicated that our LumiHeal treatment system for chronic wounds will be regulated as a combination product. MARKET OPPORTUNITY Dermatology The markets that we serve and intend to serve are large and growing. According to VisionGain Ltd., or VisionGain, the medical dermatology market is expected to approach $25.5 billion in global revenues in 2015. Acne treatments accounted for approximately $3.7 billion of global pharmaceutical sales in 2012 and, according to widely-cited data, it is estimated that acne affects nearly 85% of individuals at some point in their lives and 40 to 50 million Americans each year. Inflammatory skin diseases, such as psoriasis, an autoimmune disease that can be associated with a wide range of skin symptoms, and eczema, a skin condition that makes skin red and itchy, collectively accounted for over $9.5 billion in global pharmaceutical sales in 2012, according to VisionGain. While the current standards of care for these dermatology conditions offer benefits and temporary relief to patients, they also possess many limitations, including application site irritation, dryness, stinging, burning and photosensitivity. The global market for aesthetic dermatology is significant and growing, driven by a large population of consumers who are looking to delay signs of aging and improve general appearance. The International Society of Aesthetic Plastic Surgery conducted a survey of board certified equivalent plastic surgeons in the top global markets for aesthetic procedures and reported that this group performed approximately 23.5 million procedures, comprised of approximately 11.6 million surgical procedures and approximately 11.9 million non-surgical procedures, in 2013. During the same period, consumers spent more than $12 billion on over 11 million physician-administered surgical and non-surgical aesthetic procedures in the United States alone, according to the annual statistics of the American Society for Aesthetic Plastic Surgery. A strong consumer preference for non-surgical options and the increasing availability of effective alternatives have prompted adoption of non-surgical aesthetic procedures by a broader patient population. Wound care Chronic wounds are skin lesions that become arrested during the healing process leading to progressive ulceration of the skin and necrosis of the surrounding tissue, and are classified by the underlying condition that results in impaired healing ability. Common treatments for ulcers include bandaging, oral antibiotics and lavage, whereby the affected area is cleaned using a medicated solution. In the United States, the annual cost to the healthcare system of chronic wound treatment and related complications was estimated to exceed $25 billion in 2010, according to research published in Wound Repair and Regeneration. In 2012, chronic wounds in the form of diabetic ulcers, or DUs, venous leg ulcers, or VLUs, and pressure ulcers, or PUs, affected 20 million people worldwide, according to research published in Advances in Skin & Wound Care. Despite the existence of these many different treatments for chronic wounds, many patients do not respond to traditional treatments. Surgical wounds form as a result of various types of surgical procedures and traumatic wounds form as a result of cuts, lacerations or puncture wounds. Taken together, the aggregate worldwide cost of treating surgical and traumatic wounds exceeded $8.7 billion in 2013, according to Kalorama Information. While surgical and traumatic wounds are generally expected to progress through the normal phases of wound healing (resulting in closure of the wound), dirt, bacteria and resulting infections, as well as comorbidities, may impair the healing process. This impairment may also lead to scar formation, which is a significant clinical problem that can result in disability, disfigurement and patient frustration. Table of Contents Table of Contents Burns are life threatening and debilitating traumatic injuries causing considerable morbidity and mortality. According to Critical Care, burns are also among the most expensive traumatic injuries because of long and costly hospitalization, rehabilitation and wound and scar treatment. The worldwide burn treatment market grew at a compounded annual growth rate of 7.8% from 2003 to 2008, when it reached $2.1 billion, according to Kalorama Information. Wound care often occurs in a variety of settings, ranging from the hospital to patients homes, with varying standards of care and reimbursement levels. In jurisdictions such as the United States, Canada and the United Kingdom, third-party payors are increasingly scrutinizing treatment methods and reimbursement amounts, resulting in reduced reimbursement for many standards of care. A significant shift in reimbursement practice in the United States for wound care occurred in 2014, following changes instituted by Centers for Medicare & Medicaid Services, which tiered skin substitute products into high and low-paying groups and introduced bundled payments for procedures performed in the hospital outpatient setting. These changes have the potential to impact the use of current skin grafting methods as the use of many high-cost skin substitute products may now be unprofitable to hospitals, which may force providers to consider more cost-effective alternatives. Oral health Periodontitis, a condition caused by plaque build-up on teeth, is characterized by the progressive, chronic infection and inflammation of the gums and surrounding tissue. In its mildest form, the disease is termed gingivitis, which is accompanied by swollen, bleeding gums. When gingivitis is not controlled, the disease often progresses to periodontitis. The World Health Organization estimates that 10% to 15% of adults worldwide suffer from advanced periodontal disease. According to the Centers for Disease Control and Prevention, half of Americans age 30 or older have periodontal disease, which includes periodontitis, with the prevalence increasing to 70% for adults age 65 and older. It is estimated that the annual cost of periodontal therapy in the United States alone exceeded $14 billion in 2002, according to research published in Advances in Experimental Medicine and Biology. LICENSING AND COLLABORATION AGREEMENTS In July 2014, we entered into a license and joint venture agreement with LEO Pharma A/S, or LEO, pursuant to which we granted LEO the exclusive global right, excluding Canada, to commercialize our current and future BioPhotonic topical formulations and lamps for dermatological conditions, excluding orphan indications (rare diseases as defined by the FDA and European Medicines Agency), and aesthetic rejuvenation procedures. We anticipate that LEO will begin commercial sales of LumiCleanse and LumiBel in select European countries in 2015, under a new LEO brand and CE mark. In late 2014, LEO began pursuing regulatory clearance to market LumiCleanse in the United States and we expect LEO to initiate clinical trials of LumiCleanse in the United States in 2015 in support of its application. We anticipate that LEO will begin commercializing both LumiCleanse and LumiBel in the United States if and when LumiCleanse has been cleared or approved. In November 2013, we entered into a distribution and supply agreement with Sandoz Canada Inc., or Sandoz Canada, pursuant to which we granted Sandoz Canada the exclusive right to commercialize LumiCleanse and LumiBel in Canada. Sandoz Canada began commercialization of LumiCleanse and LumiBel in two Canadian provinces, Qu bec and Ontario, as their flagship branded products in the first half of 2014 and has indicated to us that it retained additional sales agents in early 2015 in order to support the expansion of its commercialization efforts to all major Canadian population centers in 2015. All commercialization efforts have involved Sandoz Canada sales agents marketing and selling directly to physicians. Our LumiHeal wound healing treatment system consists of our LumiHeal gel and a multi-LED lamp. Both products are regulated as medical devices in the European Union, have undergone the required Table of Contents You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the United States Securities and Exchange Commission. Neither we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus filed with the United States Securities and Exchange Commission. We and the underwriters are offering to sell, and seeking offers to buy, our common shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, or such other dates as are stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. TABLE OF CONTENTS Page Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001627014_black_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001627014_black_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..815b548c78310998259c4f0ab877c0ef4d982048
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001627014_black_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before making a decision to participate in the offering. Unless otherwise stated in this prospectus, references to BKFS and the issuer refer to Black Knight Financial Services, Inc., a newly formed Delaware corporation, and not to any of its subsidiaries; references to BKFS Operating LLC refer to Black Knight Financial Services, LLC, a Delaware limited liability company, which, together with its subsidiaries, conducts all of our business operations; and references to the company, we, us and our and similar terms (i) when used in the context of the periods following the completion of this offering refer to BKFS and its consolidated subsidiaries, including BKFS Operating LLC, (ii) when used in the context of the periods prior to the completion of this offering but following the acquisition by Fidelity National Financial, Inc., or FNF, a Delaware corporation, of Lender Processing Services, Inc., or LPS, formerly a Delaware corporation, on January 2, 2014, which we refer to herein as the Acquisition, refer to BKFS Operating LLC and its consolidated subsidiaries and (iii) when used in the context of periods prior to the Acquisition refer to BKFS Operating LLC, which was formed on October 16, 2013 for the purpose of the Internal Reorganization (as defined below) and contains the combined operations of Fidelity National Commerce Velocity, LLC, a Delaware limited liability company, or Commerce Velocity, and Property Insight, LLC, a California limited liability company, or Property Insight. You should carefully read the entire prospectus, including the information presented under Risk Factors, Selected Historical Consolidated Financial Data, Unaudited Pro Forma Condensed Combined Financial Data and the historical financial statements and related notes presented elsewhere in this prospectus. Our Company We are a leading provider of integrated technology, workflow automation and data and analytics to the mortgage industry. Our solutions facilitate and automate many of the mission-critical business processes across the entire mortgage loan life cycle, from origination until asset disposition. We believe we differentiate ourselves by the breadth and depth of comprehensive, integrated solutions and the insight we provide to our clients. We have market leading positions in mortgage processing and technology solutions combined with comprehensive real estate data and extensive analytic capabilities. Our solutions are utilized by 23 of the 25 largest U.S. mortgage originators and all of the 25 largest U.S. mortgage servicers as of September 30, 2014, according to data published by the National Mortgage News on December 16, 2014, or the National Mortgage News Report, as well as other financial institutions, investors and real estate professionals, to support mortgage lending and servicing operations, analyze portfolios and properties, operate more efficiently, meet regulatory compliance requirements and mitigate risk. The U.S. mortgage market is undergoing significant change and mortgage market participants have been subjected to more stringent oversight in recent years. Regulators have increasingly focused on better disclosure, improved risk mitigation and enhanced oversight. Mortgage lenders large and small have experienced higher costs in order to comply with this higher level of regulation. Despite these new regulatory burdens, the mortgage industry remains a competitive marketplace with numerous large lenders and smaller institutions competing for new loan originations. In order to comply with this increased regulatory burden and compete more effectively, mortgage market participants have continued to outsource mission-critical functions to third-party technology providers that can offer comprehensive and integrated solutions that are also cost effective due to their deep domain expertise and economies of scale. We believe our comprehensive end-to-end, integrated solutions differentiate us from other technology providers serving the mortgage industry and positions us particularly well for evolving opportunities in this market. We have exclusively served the mortgage and real estate industries for over 50 years and utilize this experience to Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is neither an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 18, 2015 17,000,000 Shares BLACK KNIGHT FINANCIAL SERVICES, INC. Class A Common Stock This is an initial public offering of shares of Class A common stock of Black Knight Financial Services, Inc. Black Knight Financial Services, Inc. is selling 17,000,000 shares of Class A common stock. Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share of our Class A common stock will be between $22.00 and $25.00. We are in the process of applying to list our Class A common stock on the New York Stock Exchange under the symbol BKFS. Following this offering, we will have two classes of common stock outstanding: Class A common stock and Class B common stock. Each share of Class A common stock and Class B common stock entitles its holder to one vote on matters presented to our stockholders. Holders of our Class A common stock will be eligible for dividends and distributions upon liquidation. Holders of our Class B common stock will have no economic rights, including no rights to dividends or distributions upon liquidation. See Prospectus Summary History and Corporate Structure Class A Common Stock and Class B Common Stock. Following this offering, an affiliate of ours will control a majority of the combined voting power of our Class A and Class B common stock, including a majority of the power to elect directors. As a result, we will be deemed a controlled company within the meaning of the corporate governance rules of the New York Stock Exchange. See Our Corporate Structure and Management Board Governance and Independence. Investing in our Class A common stock involves a high degree of risk. See Risk Factors beginning on page 27. Per Share Total Initial public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to us $ $ To the extent that the underwriters sell more than 17,000,000 shares of Class A common stock, the underwriters will have the option, for a period of 30 days from the date of this prospectus, to purchase up to 2,550,000 additional shares of our Class A common stock at the initial public offering price, less the underwriting discount. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of Black Knight Financial Services, Inc. s Class A common stock to investors on or about , 2015. J.P. Morgan BofA Merrill Lynch Wells Fargo Securities Goldman, Sachs & Co. Citigroup Credit Suisse Deutsche Bank Securities SunTrust Robinson Humphrey Dowling & Partners Securities LLC Keefe, Bruyette & Woods A Stifel Company Mizuho Securities Piper Jaffray Stephens Inc. Prospectus dated , 2015 Table of Contents design and develop solutions that fit our clients ever-evolving needs. Our proprietary technology platforms and data and analytics capabilities reduce manual processes, improve compliance and quality, mitigate risk and deliver significant cost savings to our clients. Our scale allows us to continually and cost-effectively invest in our business in order to meet evolving industry requirements and maintain our position as an industry-standard platform for mortgage market participants. Based on the total number of U.S. first lien mortgages outstanding as of February 28, 2015 according to the BKFS Mortgage Monitor published in February 2015, or the BKFS Mortgage Monitor Report, our proprietary technology platform services approximately 57% of all U.S. first lien mortgages, reflecting our leadership in the mortgage servicing market, and our market share has grown by more than four percentage points over the last five years. Our business is organized into two segments: Technology offers software and hosting solutions that support loan servicing, which includes the core mortgage servicing, specialty mortgage servicing including loss mitigation and default workflow management, loan origination and settlement services. Data and Analytics offers solutions to enhance and support our technology products in the mortgage, real estate and capital markets industries. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, prepayment and default models, lead generation and other data solutions. Our combination of public and proprietary data sets include 99.99% of the U.S. population and 96% of all mortgage transactions according to 2012 U.S. census data. We offer our solutions to a wide range of clients across the mortgage industry. The quality and breadth of our solutions contributes to the long-standing nature of our relationships with our clients, the majority of whom enter into long-term contracts across multiple products that are embedded in their mission critical workflow and decision processes. Given the contractual nature of our revenues and stickiness of our client relationships, our revenues are highly visible and recurring in nature. Due to our integrated suite of solutions and our scale in the mortgage market, we are able to drive significant operating leverage, which we believe enables our clients to operate more efficiently while allowing us to generate strong margins and cash flow. Our Industry The U.S. mortgage market is large and the loan life cycle is complex and consists of several stages. The total U.S. mortgage debt outstanding is approximately $9.9 trillion as of September 30, 2014 according to the Federal Reserve Statistical Release published by the Board of Governors of the Federal Reserve, or the Fed, on December 11, 2014, or the Federal Reserve Statistical Release. The mortgage loan life cycle includes origination, servicing and default. Mortgages are originated through home purchases or refinancings of existing mortgages. Once the mortgage is originated, it is serviced on a periodic basis by mortgage servicers, which may not be the lenders that originated the mortgage. Furthermore, if a mortgage goes into default, it triggers a set of multifaceted processes with an assortment of potential outcomes depending on a mix of variables. Underlying the three major components of the mortgage loan life cycle is the technology and data and analytics support behind each process, which has become increasingly critical to industry participants due to the complexity of regulatory requirements. As the industry has grown in complexity, participants have responded by outsourcing to large scale specialty providers, automating manual processes and seeking end-to-end solutions that support the processes required to manage the entire mortgage loan life cycle. Overview of the Mortgage Origination Market The U.S. mortgage origination market consists of both purchase and refinance originations. According to the Mortgage Bankers Association Mortgage Finance Forecast published February 20, 2015, or the MBA Mortgage Finance Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to eBizware, Inc. .
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001627452_me_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001627452_me_prospectus_summary.txt
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+PROSPECTUS SUMMARY
+
+ 
+
+As used in this prospectus, unless the context otherwise requires, we, us, our, and jarex solutions corp. Refers to jarex solutions corp. The following summary does not contain all of the information that may be important to you. You should read the entire prospectus before making an investment decision to purchase our common stock.
+
+ 
+
+JAREX SOLUTIONS CORP.
+
+ 
+
+Jarex Solutions Corp. was incorporated in Nevada on October 28, 2014. We are development stage company and intend to commence operations in the business of Automatic Number Plate Recognition ( ANPR ) software development for businesses which have parking zones or access control on their sites. We intend to develop a software based on the ANPR technologies in Latvia. Our software is intended to provide easy-to-use, high quality and cost-effective automation and management solutions based on ANPR technology. We intend to design and operate our systems as either a stand-alone solution or to be integrated with existing access control equipment. We plan to develop a wide range of ANPR access control applications including car parking, gated communities, factories, corporate facilities, warehouses, restricted areas, private areas, airports and schools. We plan to sell software and hardware and we intend to develop software which is easily integrated into existing security and video surveillance systems as well as to develop custom solutions in addition to existing surveillance systems. We intend to engage in business activity, however, there is no assurance that we will be successful in developing our marketable product. 
+
+We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $42,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will generate any substantial revenue in the first 12 months after completion our offering or ever generate substantial revenue.
+
+Being a development stage company, we have very limited operating history. If we do not generate sufficient revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Puces iela 47 dz.40, Riga, Latvia, LV-1082. Our phone number is +37128102618. 
+
+From inception (October 28, 2014) until the date of this filing, we have had limited operating activities. On February 26, 2015 we signed a Software Development Agreement. The material terms of the contract are: ANPR sowtware development for the parking, entry/exit access zone; the software delivery date is July 31, 2015; the compensation is $2,000 prepayment; the contract valid until December 31, 2015. As a result of this agreement, we have received a prepayment of $2,000, which is classified as unearned revenue. Our unaudited financial statements from inception (October 28, 2014) through March 31, 2015, reports no revenue and a net loss of $7,162. Our independent registered public accounting firm has issued an audit opinion for Jarex Solutions Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have established our company, developed our business plan, signed the Software Development Agreement, dated February 26, 2015 and are looking for additional potential clients. 
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $42,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $42,000, our business may fail. We do not anticipate earning substantial revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities.
+
+5 | Page
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+JAREX SOLUTIONS CORP.
+
+Securities Being Offered:
+
+ 
+
+5,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.02
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of one hundred and eighty (180) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus), (ii) the date when the sale of all 5,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 5,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+$100,000
+
+Securities Issued and Outstanding:
+
+There are 6,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Jaroslavna Tomsa. 
+
+If we are successful at selling all the shares in this offering, we will have 11,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001627487_fogo-de_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001627487_fogo-de_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights some of the information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed in the Risk Factors section of this prospectus and our consolidated financial statements and the related notes to those statements included elsewhere in this prospectus before making an investment decision to invest in our common stock. Our Company Fogo de Ch o (fogo-dee-shoun) is a leading Brazilian steakhouse, or churrascaria, which has specialized for over 35 years in fire-roasting high-quality meats utilizing the centuries-old Southern Brazilian cooking technique of churrasco. We deliver a distinctive and authentic Brazilian dining experience through the combination of our high-quality Brazilian cuisine and our differentiated service model known as espeto corrido (Portuguese for continuous service ) delivered by our gaucho chefs. We offer our guests a tasting menu of meats featuring up to 20 cuts, simply seasoned and carefully fire-roasted to expose their natural flavors. Guests can begin their dining experience at the Market Table, which offers a wide variety of Brazilian-inspired side dishes, fresh-cut vegetables, seasonal salads, aged cheeses and cured meats, or they can receive immediate entr e service table-side from our gaucho chefs by turning a service medallion, found at each guest s seat, green side up. Each gaucho chef rotates throughout the dining room, and is responsible for a specific cut of meat which they prepare, cook and serve to our guests continuously throughout their meal. Guests can pause the service at any time by turning the medallion to red and then back to green when they are ready to try additional selections and can communicate to our gauchos their preferred cut of meat, temperature and portion size. Our continuous service model allows customization and consumer engagement since our guests control the variety and quantity of their food and the pace of their dining experience. Through the combination of our authentic Brazilian cuisine, differentiated service model, prix fixe menu and engaging hospitality in an upscale restaurant atmosphere, we believe our brand delivers a differentiated dining experience relative to other specialty and fine-dining concepts and offers our guests a compelling value proposition. Throughout our history, we have been recognized for our leading consumer appeal by both national and local media in the markets where we operate, including winning multiple best of restaurant awards from one of Brazil s most prominent lifestyle publications, Veja Magazine, and numerous accolades in the United States, including awards from Nation s Restaurant News, Zagat and Wine Spectator Magazine. Table of Contents Subject to Completion, Dated June 15, 2015 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS 4,411,764 Shares Fogo de Ch o, Inc. Common Stock We are offering 4,411,764 shares of our common stock. This is our initial public offering and no public market currently exists for our common stock. We expect our initial public offering price to be between $16.00 and $18.00 per share. We have applied to list our common stock on the NASDAQ Global Select Market under the symbol FOGO. We are an emerging growth company as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001627554_pedro-s_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001627554_pedro-s_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c4f1d793a265bb96e8c46bb5eda646bf008b29dc
--- /dev/null
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@@ -0,0 +1 @@
+PRELIMINARY PROSPECTUS QUEST MANAGEMENT INC. 2,000,000 SHARES OF COMMON STOCK This prospectus relates to the offer and sale of a maximum of 2,000,000 shares (the Maximum Offering ) of common stock, $0.001 par value ( Common Shares ) by Quest Management Inc., a Nevada corporation ( we , us , our , Quest Management , Company or similar terms). There is no minimum for this offering. The offering will commence promptly on the date upon which this prospectus is declared effective by the SEC and will continue for 16 months or until all the shares are sold. We will pay all expenses incurred in this offering. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. The offering of the 2,000,000 shares is a best efforts offering, which means that our officer and director will use their best efforts to sell the common stock and there is no commitment by any person to purchase any shares. The shares will be offered at a fixed price of $0.04 per share for the duration of the offering. There is no minimum number of shares required to be sold to close the offering. Proceeds from the sale of the shares will be used to fund the initial stages of our business development. We have not made any arrangements to place funds received from share subscriptions in an escrow, trust or similar account. Any funds raised from the offering will be available to us for our immediate use. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our officer and sole director will be solely responsible for selling shares under this offering and no commission will be paid on any sales. Prior to this offering, there has been no public market for our common stock and we have not applied for the listing or quotation of our common stock on any public market. We have arbitrarily determined the offering price of $0.04 per share in relation to this offering. The offering price bears no relationship to our assets, book value, earnings or any other customary investment criteria. After the effective date of the registration statement, we intend to seek a market maker to file an application with the Financial Industry Regulatory Authority ( FINRA ) to have our common stock quoted on the OTC Bulletin Board. We currently have no market maker who is willing to list quotations for our stock. There is no assurance that an active trading market for our shares will develop or will be sustained if developed. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. Our business is subject to many risks and an investment in our shares of common stock will also involve a high degree of risk. You should carefully consider the factors described under the heading Risk Factors beginning on page 8 before investing in our shares of common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this prospectus is _______________, 201___. S-1/A 1 quest_s1a.htm FORM S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 /A Amendment No. 2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 QUEST MANAGEMENT INC. (Exact name of registrant as specified in its charter) Nevada 3949 32-0450509 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Number) (IRS Employer Identification Number) 1 Kalnu iela, Malta, LV-4630 Latvia (702) 907-8836 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Direct Enterprise Services LLC 8544 Manalang Rd. Las Vegas, NV 89123 Tel: (206)278-0700 (Address, including zip code, and telephone number, including area code, of agent for service) Copies to: Harrison Law, P.A. 8955 U.S. Highway 301 North, #203 Parrish, FL 34219 Tel: (941)723-7564 Fax: (941)531-4935 Approximate date of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective registration statement filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective registration statement filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Title of Each Class of Securities to be Registered Amount to Be Registered (1) Price Offering per Share Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.001 per share 2,000,000 (2) $ 0.04 (2) $ 80,000 $ 9.30 TOTAL 2,000,000 $ 0.04 $ 80,000 9.30 (1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the proposed maximum aggregate offering price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(a). THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. The information in this prospectus is not complete and may be amended. The Registrant may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001628228_optileaf_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001628228_optileaf_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..162d7c5c6217d81fda019ab989d0978a53c55b66
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including "Risk Factors" and the consolidated financial statements and the related notes before making an investment decision. "We," "us," "our company," "our," "OptiLeaf" and the "Company" refer to OptiLeaf, Inc., but do not include the shareholders of OptiLeaf, Inc. Business Overview We were incorporated under the laws of the State of Florida on August 11, 2014. OptiLeaf, Inc. was formed to provide a world-class fully integrated turn-key growth management system for the cannabis industry to help dispensary owners, grow operations and caregivers increase their sales and reduce costs, increase their company s productivity and profitability and reduce or eliminate the need for manual labor while maximizing yield. We presently have no customers, sales, suppliers or inventory as of this filing. We are a Shell Company under Rule 405 of the Securities Act. Until such time as we obtain revenue other than nominal revenue and commence business operations, we will be considered a Shell Company under Rule 405 of the Securities Act. As a result, our Shareholders will not be able to avail themselves of certain exemptions regarding the sale of their shares under Rule 144 until one year from the date on which our Company has filed certain information with the SEC indicating we are no longer a shell company. OptiLeaf s target market will include dispensary owners, grow operations, and caregivers. We believe this industry will continue to grow, and as it does we will have a greater number of potential customers for our product. There can be no assurance that we will be able to capture any portion of this market. OptiLeaf will endeavor to offer a complete line of hardware and software technological solution for the cannabis industry. Our software, once developed, will be a seed-to-sale growth management system, designed to not only offer a complete grow automation system, but to enhance every aspect of the medical cannabis business. We believe our wireless sensor networks, once developed, will include an array of products that control, monitor, and automate all aspects of the grow house operations. We believe our principal product, OptiLeaf GrowPro Elite, will, once developed, provide a complete, robust state-of-the-art hardware and software solution for large cultivation operations with multiple locations. We have not completed development of any products as of this Offering, and there can be no assurance that any such products will be finalized and brought to market, or that the products will gain market acceptance if they are. We are endeavoring to build a multi-purpose growth management software suite. OptiLeaf has added proprietary hardware components, which, together with software, provide a turn-key growth management system. We believe the system will allow growers to realize significant labor savings as common grow house tasks are fully automated. We believe our integrated hardware will be capable of monitoring and adjusting light, soil moisture, CO2, temperature, ventilation, nutrients, and humidity as needed, in real time and around-the-clock. Our user interface, data tracking, and remote access capabilities allow growers to monitor, adjust, and manage their facilities as needed from anywhere in the world. We have not completed development of any products as of this Offering, and there can be no assurance that our software will be fully developed or that it will gain market acceptance once it is. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION ON DECEMBER 11, 2015 4,466,668 shares of common stock OptiLeaf, Inc. This prospectus relates to periodic offers and sales of 4,466,668 shares of our common stock by the selling security holders. This is our initial public offering of securities. Our common stock is presently not traded on any market or securities exchange. The 4,466,668 shares of our common stock can be sold by selling security holders at a price to be determined once our shares are quoted on the OTC Bulletin Board or other similar exchange, and thereafter at prevailing market prices or privately negotiated prices. The offering price of $0.80 per share for the shares of common stock was determined based on the price of our common stock during our private offering. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ("FINRA"), nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained. In the absence of a trading market or an active trading market, investors may be unable to liquidate their investment or make any profit from the investment. We are a shell company as defined under Rule 405 of the Securities Act. As a result, our Shareholders will not be able to avail themselves of certain exemptions regarding the sale of their shares under Rule 144 until one year from the date on which our Company has filed certain information with the SEC indicating we are no longer a shell company. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An investment in our securities is highly speculative, involves a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See "Risk Factors" beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is ____________, 2015 Table of Contents Once developed, it is our plan that our products will be manufactured in the USA and Asia, managed by a team possessing years of experience with domestic and overseas production. OptiLeaf does not directly distribute, sell, grow, harvest cannabis or any substances that violate United States law or the Controlled Substances Act, nor does it intend to do so in the future. While individual components of our contemplated system are available from our main competitors, OptiLeaf believes it will have the first and only system to completely integrate all aspects of growth automation and management into one system. We will be, when and if our products our developed, a technology provider to the cannabis industry. As such, we are operating within an industry that is very complex in terms of legal requirements and compliance. Cannabis is an illegal drug under Federal Law, and is illegal in many states as well. Certain states have made cannabis legal for medicinal use only, but in very few circumstances is it legal to possess or sell cannabis. Although we plan on being a technology provider only, and do not plan of growing, selling or possessing any cannabis, we nevertheless must comply with, and our business must comply with, a myriad of state and local laws and regulations regarding our operations, and our operations, as well as our profitability, can be significantly affected by all of these laws and how they affect the businesses or our customers. OptiLeaf does not, and will not, grow, harvest or sell cannabis or any other controlled substance, as that term is defined under any federal, state or local law. There can be no assurance that we will finalize development of our products, or gain market acceptance for the products when and if fully developed. As of August 2014, we have taken the following steps to become an operating company: 1.We finished and launched our website www.optileaf.com. 2.We engaged the services of Byrd & Byrd, PL as our legal counsel. 3.We created our innovative multi-purpose growth management software suite and added proprietary hardware components, which together with our software suite, provide a turn-key growth management system. 4.We registered our trademark "OptiLeaf" and our slogan "Technology for Optimal Growth with the USPTO (United States Patent Trademark Office). During the next 12 months we intend to take the following additional steps to market our products and services: 1.Once our products are developed, we will educate consumers to differentiate our products from the competition thus giving them the confidence to try something new. 2.OptiLeaf s marketing strategy is to aggressively enhance, promote, and support the significant benefits of our growth management software and our array of wireless sensor network products. We will endeavor to sell our products direct to consumers who are registered growers, dispensaries, and caregivers. Marketing will be directed to those contained in the readily available database. However, as a new company with no proven sales record, we cannot be certain as to our rate of market penetration, or as to the market acceptance of our products. We plan on driving our complete line of products through our online showroom. Our plan is to launch product sales first from our website and database marketing, generating cash flow before we move into the retail channel. These marketing strategies were chosen because we believe they will provide the most direct access to the greatest number of potential customers. Our advertising and promotion strategy is to position OptiLeaf as the leading technological solution provider for the cannabis market. We will endeavor to track, whenever possible, all revenues generated from our advertising, promotion, and publicity efforts. Revenue To date we have not experienced any revenue. We cannot be assured when we will be able to begin operations and experience revenue.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001628237_atlantica_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001628237_atlantica_prospectus_summary.txt
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+SUMMARY OF PROSPECTUS One should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the "Company", "Atlantica Seafoods Company" and "Atlantica" refer to Atlantica Seafoods Company, Inc. General Information about Our Company Atlantica Seafoods Company, Inc. was formed under the laws of the State of Delaware on April 29, 2014 to act as a seafood sales and marketing company. The Company amended its articles of incorporation on July 30, 2014, which was filed with the state of Delaware on November 14, 2014, in order to change its capital structure and authorize 250,000,000 common shares with a par value of $0.0001 per share. The Company is a seafood sales and marketing company based out of Seattle, Washington, and currently distributes its products to customers in the state of Michigan. On May 27, 2014, the Company purchased Silver Stream Seafood pursuant to a share exchange, whereby Atlantica received 100% of the equity of Silver Stream Seafood in exchange for 4 million shares of Atlantica, which were issued to the owner of Silver Stream Seafood. Silver Stream Seafood is a Michigan based seafood sales and marketing company specializing in the sale of salmon, sole, trout and bass. Silver Stream Seafood, LLC was originally formed on August 9, 2011. The Company sells four main species of fresh and frozen fish, which consist of Salmon, Sole, Trout and Bass. The Company sources its products from all over the world, but primarily from the United States and Canada. The Company s goal is to source from sustainable suppliers that follow sustainability practices monitored by the Marine Stewardship Council. The Company s current business plans include continuing to develop, market and sell its four main products, as well as expanding its product types, packaging and distribution to additional geographic regions in the United States. The Company derives revenue by way of the sale of its products to consumers, through the use of third party distributors. Our distributors pick up our products from our suppliers and transfer them by truck to the retail locations in which they are sold. The Company is currently working with two different distributors that distribute our products in the state of Michigan. The names of our current distributors are Superior Foods Company and Landlock Seafood. The Company currently has pending distributor relationships in Washington, New Jersey and Massachusetts. Currently, the company does not have formal contracts with its suppliers or distributors. The Company has oral agreements with its suppliers to provide the raw seafood products, and there are oral agreements with our distributors to distribute our products. The Company intends to continue expanding its product line and provide new fresh and frozen fish products to its customers. In addition, the Company intends to expand its current geographic customer base and begin distributing its products nationwide through organic growth and acquisitions in seafood distribution and production. Currently, the Company does not have any pending acquisitions of seafood distribution or production companies. In order to pursue its strategic objectives, the Company plans to utilize a portion of the proceeds received from this offering, as well as its available cash, cash generated from operations and additional cash as may be raised via equity or debt offerings as may be approved by its Board of Directors. The administrative office of the Company is located at 126 S. Spokane Street, Seattle, WA 98134. The Company plans to use this office space until it requires larger space. The company fiscal year end is June 30. The Company has not been subject to any bankruptcy, receivership or similar proceeding. The Offering Following is a brief summary of this offering. Please see the "Plan of Distribution" section for a more detailed description of the terms of the offering. Securities Being Offered by the Company: 15,000,000 shares of common stock, par value $.0001, on a best-efforts basis Offering Price per Share: $0.25 Offering Period: The shares being sold by the Company are being offered for a period not to exceed 180 days, unless extended by the Board of Directors for an additional 90 days. Net Proceeds to Our Company: $3,750,000, if all the shares are sold Use of Proceeds: The Company intends to use the proceeds received from the sale of its common stock to use as working capital, fund business operations and assist in asset purchases or acquisitions. Number of Shares Outstanding Before the Offering: 80,210,000 Number of Shares Outstanding After the Offering: 95,210,000, if all the shares are sold The Company officers, directors and control persons do not intend to purchase any shares in this offering. Selected financial data The following financial information summarizes the more complete historical financial information at the end of this prospectus. Total Expenses are composed of General and Administrative costs and Professional Fees. As of December 31, 2014 Balance Sheet Total Assets $442,361 Total Liabilities $1,501 Stockholder s Equity $440,860 Six Month Period ended December 31, 2014 Statement of Operations Revenue $30,872 Cost of Sales $0 Total Operating Expenses $75,469 Net Loss $(44,597) As of June 30, 2014 Balance Sheet Total Assets $464,854 Total Liabilities $1,151 Stockholder s Equity (Deficit) $463,703 Period From Inception (April 29, 2014) through June 30, 2014 Statement of Operations Revenue $4,641 Cost of Sales $0 Total Operating Expenses $11,996 Net Loss $(7,355)
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001628331_commercial_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001628331_commercial_prospectus_summary.txt
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001628609_revenue_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001628609_revenue_prospectus_summary.txt
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+PROSPECTUS SUMMARY
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001628739_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001628739_global_prospectus_summary.txt
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+The following table provides summary financial statement data as of the period from March 28, 2014 (Inception) through November 30, 2014. The financial statement data as of the period ended November 30, 2014 has been derived from our audited financial statements. The results of operations for past accounting periods are not necessarily indicative of the results to be expected for any future accounting period. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our financial statements and the related notes included in this Prospectus, and the statements and related notes included in this Prospectus. GLOBAL HOLDING INTERNATIONAL (a development stage company) March 28, 2014 (inception) to November 30, 2014 Statement of Operations Data: (Audited) Revenues $ - Operating expenses $ 1,335 Net (loss) $ (1,335 ) Per Share Data: Net (loss) $ (1,335 ) Number of shares outstanding 10,000,000 Basic and diluted loss per share $ (0.00 ) Weighted average shares outstanding 10,000,000 Balance Sheet Data: Cash $ 8,800 Total current assets $ 9,900 Total current liabilities $ 1,235 Total stockholders equity (deficit) $ 9,900 EMERGING GROWTH COMPANY We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of: a. The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; b. The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; c. The date on which such issuer has, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt; or d. The date on which such issuer is deemed to be a `large accelerated filer', as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY - THE JOBS ACT We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: * A requirement to have only two years of audited financial statements and only two years of related MD&A ; * Exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; * Reduced disclosure about the emerging growth company's executive compensation arrangements; and * No non-binding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of the reduced reporting requirements applicable to smaller reporting companies even if we no longer qualify as an "emerging growth company." In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. RISK FACTORS The shares of our common stock being offered for resale in the Primary Offering and by the Selling Security Holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. (A) RISKS RELATED TO OUR BUSINESS WE HAVE RECEIVED AN OPINION OF GOING CONCERN FROM OUR AUDITORS. IF WE DO NOT RECEIVE ADDITIONAL FUNDING, WE WOULD HAVE TO CURTAIL OR CEASE DEVELOPMENT STAGE OPERATIONS. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT. Our independent auditors noted in their report accompanying our financial statements for the period ended November 30, 2014 that we are a development stage company and has not commenced the planned operation, and incapable of generating sufficient cash flow which raises substantial doubt about our ability to continue as a going concern. As of November 30, 2014, we had a net loss of $ 1,335 and they further stated that the uncertainty related to these conditions raised substantial doubt about our ability to continue as a going concern. At November 30, 2014, our cash on hand was $8,800, are total assets are $9,900 consisting of cash and prepaid rent. We do not currently have sufficient capital resources to fund operations. To stay in business, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing. As of the date of this Prospectus, we have commenced business operations but have not yet generated any revenues. We will need additional capital to fully implement our business, operating and development plans. However, additional funding from an alternate source or sources may not be available to us on favorable terms, if at all. To the extent that money is raised through the sale of our securities, the issuance of those securities could result in dilution to our existing security holder. If we raise money through debt financing or bank loans, we may be required to secure the financing with some or all of our business assets, which could be sold or retained by the creditor should we default in our payment obligations. If we fail to raise sufficient funds, we would have to curtail or cease operations. THE COMPANY HAS A LIMITED DEVELOPMENT STAGE OPERATING HISTORY UPON WHICH TO BASE AN EVALUATION OF ITS BUSINESS AND PROSPECTS. WE MAY NOT BE SUCCESSFUL IN OUR EFFORTS TO GROW OUR BUSINESS AND TO EARN INCREASED REVENUES. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT. We have a limited history from March 28, 2014 inception to November 30, 2014 of development stage operations and we may not be successful in our efforts to grow our business and to earn revenues. Our business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. As a result, management may be unable to adjust its spending in a timely manner to compensate for any unexpected revenue shortfall. An investment in our securities represents significant risk and you may lose all or part of your entire investment. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations. Our ability to achieve and maintain profitability and positive cash flows is dependent upon: Our ability to attract customers who will buy our product. Our ability to facilitate sales to new customers. Attain customer loyalty in light of competition. Maintain current strategic relationships and develop new strategic relationships. Increase awareness of our brand name and develop an effective business plan. Attract, retain and motivate qualified personnel who can successfully assist us in implementing our business plan. Maintain current strategic relationships and develop new strategic relationships. Our ability to reduce operating costs. Our ability to build and to update our website. Based upon current plans, we expect to incur operating losses in future periods until revenues are sufficient to fund operations. Failure to generate enough revenues for us to become profitable may cause us to suspend or cease activities. WE HAVE A HISTORY OF LOSSES. FUTURE LOSSES AND NEGATIVE CASH FLOW MAY LIMIT OR DELAY OUR ABILITY TO BECOME PROFITABLE. IT IS POSSIBLE THAT WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART OF YOUR ENTIRE INVESTMENT. We have yet to establish profitable development stage operations or a history of profitable development stage operations. We anticipate that we will continue to incur substantial development stage operating losses for an indefinite period of time due to the significant costs associated with the development of our business. Since incorporation, we have expended financial resources on the development of our business. As a result, losses have been incurred since incorporation. Management expects to experience development stage operating losses and negative cash flow for the foreseeable future. Management anticipates that losses will continue to increase from current levels because the Company expects to incur additional costs and expenses related to: marketing and promotional activities; the possible addition of new personnel; and the development of relationships with strategic business partners. The Company s ability to become profitable depends on its ability to sell its one product a handheld water enrichment and filtration system called Hydra Pitcher to home owners and through online sales. If the Company does achieve profitability, it cannot be certain that it would be able to sustain or increase profitability on a quarterly or annual basis in the future. An investment in our securities represents significant risk and you may lose all or part of your entire investment. IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL. We will need to obtain additional financing in order to complete our business plan because we currently have nominal income. We do not have any arrangements for outside financing, other than with Mr. Sjauta, our president and major shareholder and this offering. We may not be able to find such financing if required. Mr. Sjauta has agreed to fund the Company, through a written agreement, until such time as the Company raises $75,000 for the operating plan and $10,000 for registration expenses. Mr. Sjauta has agreed that he will charge six (6) percent interest for the loaned funds. Obtaining additional financing would be subject to a number of factors, including investor acceptance. These factors may adversely affect the timing, amount, terms, or conditions of any financing that we may obtain or make any additional financing unavailable to us. If we do not obtain additional financing our business will fail. WE HAVE NO HOME OWNERS, INDIVIDUALS OR BUSINESSES OFFERING TO PURCHASE OUR ONE PRODUCT HYDRA PITCHER AT THIS TIME AND WE CANNOT GUARANTEE WE WILL EVER HAVE ANY. EVEN IF WE HAVE HOME OWNERS, INDIVIDUALS OR BUSINESSES OFFERING TO PURCHASE HYDRA PITCHER, THERE IS NO ASSURANCE THAT WE WILL MAKE A PROFIT. We have no home owners, individuals or businesses offering to purchase our one product Hydra Pitcher at this time. We have not identified any home owners, individuals or businesses offering to purchase Hydra Pitcher and we cannot guarantee we ever will have any home owners, individuals or businesses. Even if we obtain home owners, individuals and or businesses offering to purchase Hydra Pitcher, there is no guarantee that we will be able to generate enough sales to operate profitably. If we are not able to operate profitably we may have to suspend or cease operations. REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GLOBAL HOLDING INTERNATIONAL (Exact Name of Small Business Issuer in its Charter) Nevada 5399 46-5282137 (State or other Jurisdiction of Incorporation) (Primary Standard Classification Code) (IRS Employer Identification No.) GLOBAL HOLDING INTERNATIONAL 4921 Birch Street Suite 110 Newport Beach California 92660 Phone: (949) 988-0968 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) Paracorp Incorporated 318 North Carson Street, Suite 208 Carson City, Nevada 89032 Phone: (775) 883-0104 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: Dennis Brovarone, Esq. 35 Pinyon Pine Road Littleton, Colorado 80127 Voice: (303) 466-4092 Email: dbrovarone@aol.com Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company However, it is estimated that the amount of additional costs and expenses associated with public company reporting requirements will be approximately $10,000. It is also estimated that the amount of additional costs and expenses associated with newly applicable corporate governance requirements will be approximately $5,000. BECAUSE WE ARE A DEVELOPMENT COMPANY AND HAVE LITTLE CAPITAL, WE MUST LIMIT THE MARKETING OF OUR PRODUCT TO POTENTIAL INDIVIDUALS AND/OR BUSINESSES. AS A RESULT, WE MAY NOT BE ABLE TO ATTRACT ENOUGH CUSTOMERS TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS. Because we are a developing company and do not have much capital, we must limit marketing of our one product. The sale of our product via direct marketing and our website is how we will initially generate revenues. Because we will be limiting our marketing activities, we may not be able to attract enough customers to buy our one product Hydra Pitcher. BECAUSE WE ARE A DEVELOPING COMPANY AND HAVE LITTLE CAPITAL, WE MUST LIMIT THE MARKETING OF OUR PRODUCT TO POTENTIAL HOME OWNERS, INDIVIDUALS AND/OR BUSINESSES. AS A RESULT, WE MAY NOT BE ABLE TO ATTRACT ENOUGH CUSTOMERS TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS. Because we are a developing company and do not have much capital, we must limit marketing of our one product. The sale of our product via direct marketing and our website is how we will initially generate revenues. Because we will be limiting our marketing activities, we may not be able to attract enough customers to buy our one product Hydra Pitcher and to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations. We will need to obtain additional financing in order to complete our business plan because we currently have nominal income. We do not have any arrangements for financing other than Mr. Sjauta our president and major shareholder and we may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including investor acceptance. These factors may adversely affect the timing, amount, terms, or conditions of any financing that we may obtain or make any additional financing unavailable to us. If we do not obtain additional financing our business will fail. No assurance can be given that Global will obtain access to capital markets in the future or that adequate financing to satisfy the cash requirements of implementing our business strategies will be available on acceptable terms. The inability of Global to gain access to capital markets or obtain acceptable financing will have a material adverse effect upon the results of its operations and its financial conditions. The proceeds from the sale of the securities offered in this registration statement will not cover the expected operations of the company for the next 12 months. As such, this offering might negatively affect Global s ability to raise needed funds through a secondary offering of Global s securities in the future. BECAUSE OF LACK OF CAPITAL OUR MARKETING ACTIVITIES WILL BE LIMITED. Due to the fact we are small and do not have much capital, we must limit our marketing activities to a relatively small number of potential customers having the likelihood of purchasing our product. We intend to generate revenue through the sale of our one product. Because we will be limiting the scope of our marketing activities, we may not be able to generate timely or sufficient sales to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations. The Company s financing requirements for next twelve month are the following. $28,500 toward marketing materials which include filers, broachers, direct marketing and mailing costs. $10,000 towards costs associated with public company reporting requirements $5,000 related to expenses associated with newly applicable corporate governance requirements. $15,500 for software and hardware to develop an internet site, $16,000 for program administration and working capital In addition to the $75,000 needed for the operating plan, the Company will need approximately $10,000 for completing this registration. Our future capital requirements depend on many factors, including the following: the progress of our direct sales, the progress of marketing to the end users, The progress in getting our web site completed and operational. Although we have from time to time reviewed opportunities provided to us by investment bankers or potential investors in regard to additional equity financings, there can be no assurance that additional financing will be available when needed, or if available, will be available on acceptable terms. The Company also does not have any agreement in place with any investment bankers or potential investors to provide the Company with any financing. Insufficient funds may prevent us from implementing our business strategy and will require us to further delay, scale back or eliminate our marketing program, or to scale back or eliminate our other operations. In order to obtain working capital we will continue to seek capital through debt or equity financing which may include the issuance of convertible debentures or convertible preferred stock whose rights and preferences are superior to those of the common stockholders. BECAUSE OUR SOLE OFFICER AND DIRECTOR WILL ONLY BE DEVOTING LIMITED TIME TO OUR COMPANY, OUR OPERATIONS MAY BE SPORADIC WHICH MAY RESULT IN PERIODIC INTERRUPTIONS OR SUSPENSIONS OF OPERATIONS. THIS ACTIVITY COULD PREVENT US FROM ATTRACTING NEW CUSTOMERS, AND OR BUSINESSES, AND RESULT IN A LACK OF REVENUES THAT MAY CAUSE US TO SUSPEND OR CEASE OPERATIONS. At this time we have commenced business operations but have not generated any revenues. Our sole officer and director, Bernard Sjauta, will only be devoting limited time to our operations. Mr. Sjauta will be devoting approximately 20 hours per week of his time to our operations. Because our sole officer and director will only be devoting limited time to our Company, our operations may be sporadic and occur at times which are convenient to him . As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a possible cessation of operations. OUR DEVELOPMENT STAGE OPERATING RESULTS WILL BE VOLATILE AND DIFFICULT TO PREDICT. IF THE COMPANY FAILS TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE SIGNIFICANTLY. Management expects both quarterly and annual development stage operating results to fluctuate significantly in the future. Because our development stage operating results will be volatile and difficult to predict, in some future quarter our development stage operating results may fall below the expectations of securities analysts and investors. If this occurs, the trading price of our common stock may decline significantly. At this time we do not have a trading symbol and the shares of Global Holding International are not traded on any market. A number of factors will cause gross margins to fluctuate in future periods. Factors that may harm our business or cause our development stage operating results to fluctuate include the following: the inability to obtain new customers at reasonable cost; the ability of competitors to offer new or enhanced products; price competition; the failure to develop marketing relationships with key business partners; increases in our marketing and advertising costs; the amount and timing of development stage operating costs and capital expenditures relating to expansion of operations; a change to or changes to government regulations; a general economic slowdown. Any change in one or more of these factors could reduce our ability to earn and grow revenue in future periods. OUR CURRENT BUSINESS DEVELOPMENT STAGE OPERATIONS RELY HEAVILY UPON OUR KEY EMPLOYEE AND FOUNDER, MR. BERNARD SJAUTA. We have been heavily dependent upon the expertise and management of Mr. Bernard Sjauta, our Chief Executive Officer and President, and our future performance will depend upon her continued services. The loss of the services of Mr. Sjauta s services could seriously interrupt our business operations, and could have a very negative impact on our ability to fulfill our business plan and to carry out our existing development stage operations. The Company currently does not maintain key man life insurance on this individual. There can be no assurance that a suitable replacement could be found for her upon retirement, resignation, inability to act on our behalf, or death. THE LIMITED PUBLIC COMPANY EXPERIENCE OF OUR SOLE OFFICER COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our sole officer has limited public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had sole responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our sole officer management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act ), which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. A PERMANENT LOSS OF DATA OR A PERMANENT LOSS OF SERVICE ON THE INTERNET WILL HAVE AN ADVERSE AFFECT ON OUR OPERATIONS AND WILL CAUSE US TO BE LESS EFFECTIVE IN THE INDUSTRY. The Company has developed a two prong marketing plan, of which one prong depends on our website and the Internet. If we permanently lose data or permanently lose Internet service for any reason, be it technical failure or criminal acts, we will be less effective in selling our one product Hydra Pitcher and you could lose your investment. IF WE ARE UNABLE TO MEET THE RAPID CHANGES IN TECHNOLOGY, OUR PRODUCT, TECHNOLOGY AND MARKETING PLAN MAY BECOME OBSOLETE. Due to the costs and management time required to introduce a new product and enhancements, we may not be able to respond in a timely manner to avoid becoming uncompetitive. To remain competitive, we must meet the challenges of the introduction by our competitors of new products using new technologies or the introduction of new industry standards and practices. Additionally, the supplier (Velara) we use to support our technology may not provide the level of service we expect or may not be able to properly have the Hydra Pitcher produced on commercially reasonable terms or at all. NONE OF GLOBAL S TECHNOLOGY OR BUSINESS MODEL PARTICULARS ARE PROPRIETARY. The hurdles to enter the sales and marketing sector of the handheld water filtration business segment are low. The technology required to commence operations for any potential competitor are available from third party providers and the costs for the products and marketing material to support a product are not onerous. The business model, with few exceptions, is not new and can be readily adopted by those with a basic knowledge of the handheld water filter industry and mid-level technology expertise. GLOBAL WILL BE DEPENDENT ON ITS SUPPLIER VELARA, FOR ITS ONE PRODUCT HYDRA PITCHER . Velara will have the handheld water enrichment and filtration system manufactured by a non affiliated third party for Global. Velara already produces a standalone water unit which they sell themselves. Global does not intend to sell the standalone units at this time. Global does not have a contract with Velara to sell its standalone unit. Velara will not sell or distribute the Hydra Pitcher to anyone else to sell. The manufacturing of the Hydra Pitcher, the handheld water filter system, will be done for Velara by Megafresh Water Filter Limited located in Hong Kong. Velara has produced 700 Hydra Pitchers (the handheld water enrichment and filtration systems) to date. Velara has produced test or prototype models of the handheld water filter system and supplied them to the company. On March 29, 2014, Global Holding International entered into a formal contract with Velara to supply its handheld water filter system. Velara is headquartered at 4921 Birch Street, Suite 110, Newport Beach, California 92660. BECAUSE WE ARE A DEVELOPMENT STAGE COMPANY AND HAVE LITTLE CAPITAL, WE WILL NOT PURCHASE ANY PRODUCT FROM OUR SUPPLIER VELARA UNTIL THE END CUSTOMER HAS PAID FOR THE PRODUCT. ORDERS WILL BE SHIPPED 30 TO 45 DAYS AFTER BEING ORDERED FROM THE SUPPLIER. AS A RESULT, WE MAY NOT BE ABLE TO ATTRACT ENOUGH CUSTOMERS TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS. Because we are a developing company and do not have much capital, we will not purchase any product from our supplier Velara until the end customer has paid for the product. The manufacturing of the Hydra Pitcher handheld water filter system will be done in Hong Kong and shipped directly Velara Inc. Velara Inc. will package and ship the Hydra Pitcher unit directly to the end user within 30 to 45 days. Because shipments of finished product may take to 30 to 45 days to be delivered to the end customer, we may not be able to generate timely or sufficient sales to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations. OUR BUSINESS COULD GROW FASTER THAN OUR INFRASTRUCTURE. WE MAY NOT HAVE THE NECESSARY RESOURCES OR AVAILABLE FUNDS TO MAINTAIN OPERATIONS WHICH MAY HAVE AN ADVERSE EFFECT ON OUR BUSINESS. It is possible that our business could grow much faster than our infrastructure and available resources. New customers could lose confidence during the time it takes for our business to expand and adjust which may have an adverse effect on our business operations. WE ARE HIGHLY RELIANT UPON THE MANUFACTURING CAPABILITIES OF VELARA TO MANUFACTURE OUR PRODUCT. Our Company is currently solely reliant on Velara to package and ship our product to the end user. Should Velara not have the Hydra Pitcher unit manufactured as intended, we may or may not be able to secure another company to manufacture our product which would result in a failure of our business. (B) RISKS RELATED TO THE OFFERING AND OUR SECURITIES WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. OUR CONTROLLING SECURITY HOLDER MAY TAKE ACTIONS THAT CONFLICT WITH YOUR INTERESTS. Mr. Bernard Sjauta, our Chief Executive Officer and sole director, owns 100% of our capital stock with voting rights. Even if the entire offering is sold, Mr. Sjauta will continue to control a large amount of the company because he will hold 56% of the Company s issued and outstanding common stock. In this case, Mr. Sjauta will be able to exercise his 56% control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions, and he will have significant control over our management and policies. The directors elected by our controlling security holder will be able to significantly influence decisions affecting our capital structure. This control may have the effect of delaying or preventing changes in control or changes in management, or limiting the ability of our other security holders to approve transactions that they may deem to be in their best interest. For example, our controlling security holder will be able to control the sale or other disposition of our operating businesses and subsidiaries to another entity. The interests of our Chief Executive Officer may differ from the interests of our other shareholders and thus may result in corporate decisions that are disadvantageous to our other shareholders.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001629414_r-m_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001629414_r-m_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms RMD Company, we, us and our refer to R M Diversified, Inc.. Overview We, R M Diversified, Inc. is a development stage company with a limited history of development stage operations. We were incorporated in the State of Nevada on December 4, 2014. R M Diversified, Inc., is engaged in the construction supervision and construction management for real estate construction. The Company s services range from construction supervision and construction management for homebuilder, industrial building and community development in California, Nevada and Wyoming. The Company focuses on the construction supervision and construction management for of airplane owner communities, which are airplane-restricted or airplane-targeted to individuals or companies that own airplanes. The Company is presently reviewing a project in Alpine Wyoming which is situated on approximately 11 acres on the east side of US Highway 26. The property consists of 16 current electric meters for mobile home/RV plus 14 meters for the Alpine Inn cottages and main house and 2 commercial units. All of these meters would be converted for use by newly graded mobile home/RV spaces upon demolition of exiting cottages and implementation of new landscape plan for the western portion of the property facing Highway 26. The Company s principle objective with respect to this offering is to become a public company so that it can increase its capital in order to expand its construction supervision and construction management operations. The Company has not entered into any construction contracts to date. We are not a shell company and do not intend to merge with or sell the company to a private operating company in a reverse merger transaction. We expect to continue to incur losses for at least the next 12 months. We do not expect to generate revenue that are sufficient to cover our expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next 12 months. We will need to obtain additional financing, through equity security sales, debt instruments and private financing, to conduct our day-to-day operations, and to fully execute our business plan. We plan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. See Plan of Operation Taking into account that our company is a new startup and is without an established income stream and/or profit and loss statement and has not yet entered into any construction contracts the estimated annual burn rate for the operating plan is projected during the first fiscal year, without due consideration for adjustment is $150,000. This includes a three month burn, in cash, of $13,500 (at $4,500 per month) considering the Company encounters a bad quarter during its first year in business. In addition to the $150,000 needed for the operating plan the company needs approximately $10,000 for completing this public offering. Mr. Mosher our president and major shareholder entered into an agreement with the Company to fund operations until such time as the Company raises $150,000 for the operating plan and $10,000 for public company compliance expenses. .The agreement calls for six (6) percent interest for the loaned funds. Our independent auditors have added an explanatory paragraph to their report of our audited financial statements for the period from December 4, 2014 (inception) to December 15, 2014, stating that our net loss of $835 Lack of revenues and dependence on our ability to raise additional capital to continue our business, raise substantial doubt about our ability to continue as a going concern. Our financial statements and their explanatory notes included as part of this prospectus do not include any adjustments that might result from the outcome of this uncertainty. There is no guarantee that we will be able to raise funds through equity security sales, debt instruments, and private financing. Currently, we have no agreements in place to raise money through debt instruments or private financing. If we fail to obtain additional financing, either through an offering of our securities or by obtaining loans, we may be forced to cease our planned business operations altogether. Presently, other than Mr. Mosher, no other sources of financing have been identified and it is unknown if any other sources will be identified. There is no assurance that the Company will be able to obtain any bank loans or private financing. Since our inception on December 4, 2014 through December 15, 2014, we have incurred cumulative losses of $835. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per Security Proposed Maximum Aggregate Offering Price Amount of Registration Fee(3) Common Stock, $0.001 par value 8,000,000 $ 0.01 $ 80,000 $ 9.30 $ TOTAL 8,000,000 80,000 $ 9.30 THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT ALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. EMERGING GROWTH COMPANY We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of: a. The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; b. The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; c. The date on which such issuer has, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt; or d. The date on which such issuer is deemed to be a `large accelerated filer', as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The information in this preliminary prospectus is not complete and May be changed. These securities May not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to completion, dated April 14, 2015 PROSPECTUS R M DIVERSIFIED, INC . 8,000,000 SHARES OF COMMON STOCK AT $0. 01 PER SHARE Prior to this registration, there has been no public trading market for the common stock of R M Diversified, Inc. ("RMD", the "Company", "us", "we", "our") and it is not presently traded on any market or securities exchange. We are offering up to 8,000,000 shares of common stock for sale by us to the public. We are offering for sale a minimum of 2,000,000 and a maximum of 8,000,000 shares of common stock at a price of $0. 01 per share). The offering is being conducted on best effort basis by our officer and director . We will not be able to spend any of the proceeds unless a minimum of 2,000,000 shares are sold. This offering will continue for the earlier of: (i) 180 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all 8,000,000 shares registered hereunder have been sold. Proceeds from the sale of the Primary Offering shares will be used to fund the initial stages of our business development. There have been no arrangements to place the offering funds in escrow. We intend to open a standard, non-interest bearing, bank account to be used only for the deposit of funds received from the sale of the shares in this Primary Offering. When at least 2,000,000 shares of the offering are sold and the offering has expired the funds will be transferred to our business account for use in the implementation of our business plan. If the minimum number of shares are not sold by the expiration date of the offering, the funds will be returned to the investors within 3 business days, without interest or deduction. There can be no assurance that all or any shares being offered in this ffering are going to be sold and that we will be able to raise any funds from this Offering. Shares Offered by Company Price to Public Commissions Net Proceeds Per Share $ 0. 01 0 $ 0.001 Minimum (2,000,000 shares) $ 20,000 0 $ 10,000 Maximum (8,000,000 shares) $ 80,000 $ 70,000 Offering expenses are estimated at $10,000. THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE RISK FACTORS . Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is ____ 2015. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001629489_lightbeam_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001629489_lightbeam_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001630132_bojangles_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001630132_bojangles_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001630132_bojangles_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001630582_separation_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001630582_separation_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ffb55cf509029c19e3f3d75fbf65559baf9a9131
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001630582_separation_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. The summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. Company Overview Separation Degrees - One, Inc. ("SDOI", "we" or the "Company") is an emerging growth company that develops multi pronged marketing and eCommerce solutions for brands looking to become more competitive and relevant in the domestic and international marketplaces. We were incorporated in Delaware on December 7, 2014, and are headquartered in California at 77 Geary Street, 5th Floor San Francisco, CA, 94108. Our focus is to be unique in our comprehensive solution to the Business-to-Consumer ("B-to-C") and Business-to-Business ("B-to-B") markets. While there are many companies that offer eCommerce, marketing, and product fulfillment solutions, there are few that can provide a truly integrated seamless experience. We provide the design, set up, and maintenance of customized eCommerce platforms, complete warehousing and order fulfillment, and call center support for the brands we represent. In conjunction therewith, we provide Software as a Service ("SAAS") catalogue and inventory management that manages product placement and complex pricing strategies for selling product into online market places and comparison-shopping sites. Our initial software was acquired from our Founder, Gannon K. Giguiere on December 19, 2014. That software is a proprietary SAAS eCommerce platform called "One Degree of Separation," which will allow us to coordinate efforts of brands to holistically message, market and sell their products through different Internet channels. Additionally, we provide search engine marketing, social media marketing, interactive media planning, buying and placement, and design services to facilitate a complete technical and marketing solution. The eCommerce market has grown significantly over the last several years, as consumers have increasingly shifted their retail purchases from traditional brick and mortar stores to online stores and digital marketplaces. This trend has created many opportunities for retailers and manufacturers, but at the same time has resulted in additional challenges, including the need to manage product data and transactions across hundreds of highly fragmented online channels where data attributes vary, requirements change frequently, and the pace of innovation is rapid and increasing. In response to these challenges, we will offer retailers and manufacturers solutions that enable them to integrate, manage and optimize their merchandise sales across disparate online channels. As online channels frequently update their product information requirements, policies, merchandising strategies and integration specifications, our solutions will enable retailers and manufacturers to stay up to speed with the ever-changing Internet, allowing brands to efficiently analyze and manage their products on new and existing online channels. Our services span three practice areas that focus on the customer shopping experience while facilitating and supporting the entire lifecycle of eCommerce transactions: (1) Ecommerce Infrastructure, (2) Ecommerce Sales and Marketing, and (3) Ecommerce Transactional Support. We earn revenue from service-based fees for technical development; subscription fees paid by brands for access to our various cloud-based solutions; participation fees for media planning, buying and placement, either in the form of a percentage of spend, or participation in the actual transaction; direct sales of products when most beneficial; and creative development fees. We seek to target brands in the United States, Canada, China, India, and the United Kingdom. Currently, we have only one customer from which we are generating revenue; however, we believe that our customer base will expand and will continue to grow as more and more people learn about our service. Although we were only recently incorporated and are in the development stage, we believe that this Offering will provide us with added flexibility to raise capital in today's financial climate. We believe that investors in today's markets demand more transparency. By our registering this Offering and becoming a reporting company, we will provide that transparency to our investors. While we believe that our limited reporting requirements will satisfy most investors seeking transparency in any potential investment, we still caution that simply because we have a registration statement declared effective (when in fact, it does become effective) we will not become a "fully reporting" company, but rather, we will be only subject to the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934. Accordingly, unless we subsequently register our shares of Common Stock pursuant to Section 12(b) or 12(9) of the Securities Exchange Act of 1943, except during the year that our registration statement becomes effective, these reporting obligations may be automatically suspended under Section 15(d) if we have less than 300 shareholders at the beginning of our fiscal year. Further, our required disclosure is less extensive than the disclosures required of "fully reporting" companies. For example, we are not subject to disclose, in our Form 10K, risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B, 6, respectively. Since inception, our operations have consisted of incorporating the Company; formulating the 2015 through 2017 annual operating plan; completing an asset acquisition from our Founder Gannon K. Giguiere; engaging key management, consultants and operation personnel; and commencing early-stage operations. We plan to, within 2-3 months after obtaining a Notice of Effectiveness of the Offering, accelerate the plan of operations that calls for us to extend marketing and advertising services for new potential brands. We hope to achieve initial substantive growth through our sales team's marketing of our products and services. The effectiveness of the sales team in increasing the client base would have the greatest positive effect on our revenue. We hope to realize the full plan of operations by raising money through the sale of our securities, as contemplated within this Offering. We believe that if the full amount of funds contemplated in this Offering are raised, we will be able to fully launch our Company and properly market our eCommerce and online advertising platform solutions. Conversely, if we close the offering following the sale of substantially less then the maximum shares offered, our ability to fully launch our intended operations to market our solutions will be limited. Although this is our initial public offering and there is no present market for our common stock, management believes that we will meet all requirements to be quoted on OTC Markets, although no assurances can be given that this will prove to be the case. Even though our common stock initially will be a penny stock, becoming a reporting company is expected to provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. We currently have limited revenues. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the audit report to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs, management intends to rely primarily upon debt and equity financings to supplement cash flows, if any, generated by our services. We will seek out such financing as necessary to allow us to continue to grow our business operations, and to cover such costs, including professional fees, associated with being a reporting company with the Securities and Exchange Commission ("SEC"). We estimate such costs to be approximately $60,000 for the 12 months following this Offering. We have included such costs to become a publicly reporting company in our targeted expenses for working capital expenses and intend to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point we have been funded by our Founder, Gannon K. Giguiere, and have not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investments in us. Our current cash and working capital is not sufficient to cover our current estimated expenses for our planned growth over the next 12 months, including moving to a larger facility; growing our sales team; adding key technical resources search engine optimization, web front end, and enterprise developers; and launching meaningful marketing brand awareness. Our estimated expenses also include those fees associated with obtaining a Notice of Effectiveness from the SEC for this Registration Statement. We hope that we will be able to secure additional financing, and complete this Offering within the coming months, in order to initiate our marketing and anticipated growth. Upon obtaining effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from the offering to market and grow our Company. We believe that the maximum amount of funds generated from the Offering will provide us with enough proceeds to fund our plan for marketing and operations for up to twelve months after the completion of the Offering. Assuming we generate only nominal revenues, we will require additional financing to fund our operations during the twelve-month period following the completion of the Offering if all or substantially all of the shares offered hereby are not sold. While our ability to generate revenue is not correlated directly to the amount of shares sold by us under the Offering, our potential to generate revenue can be affected by our marketing and advertising strategies and the amount of personnel we employ. These factors are directly related to the amount of proceeds we receive from the Offering, which corresponds to the number of shares we are successful in selling under the Offering (see "Use of Proceeds"). We believe we can begin generating accelerating revenues within the first three months following the successful completion of the Offering. As we are a start-up company, it is unclear how much revenue our operations will generate; however, it is our hope that our revenues will exceed our costs. Our revenues will be impacted by how successful and well-targeted execution of our marketing campaign, the general condition of the economy, and the number of brands we will attract. For a further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled "Description of Business". We are neither a "Shell Company" as defined in Rule 405 under the Securities Act of 1933 as amended, or a "Blank Check Company" as defined in Rule 419 (a2) under the Securities Act of 1933, as amended. We have a detailed business plan and business related assets and have no present plans or intentions to engage in a merger or acquisition with an identified company or companies, or other entity or person. Corporate Information Our principal executive offices are located at 77 Geary, Street, 5th Floor, San Francisco, CA 94100. Our telephone number is (949) 500-6960. Our website address is http://www.separation.degrees.com. The information on, or that can be accessed through, our website is not part of this prospectus. We are an emerging growth company as defined in the Jumpstart Our Business Startup Act of 2012, or JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 13st, or (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001630940_atlantic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001630940_atlantic_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..554f23e2c172c2d67f356970b38ef2bf12f5deb0
--- /dev/null
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+this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: "Companies Act" and "Insolvency Act" are to the BVI Business Companies Act, 2004 and the Insolvency Act, 2003, of the British Virgin Islands, respectively. "founder shares" refer to our ordinary shares initially purchased by our sponsor in a private placement prior to this offering; "initial shareholder" is to the holder of our founder shares prior to this offering; "management" or our "management team" are to our executive officers and directors; "ordinary shares" refer to the ordinary shares of no par value in the company; "private placement shares" are to the ordinary shares issued to our sponsor in a private placement simultaneously with the closing of this offering; "public shares" are to our ordinary shares sold in this offering (whether they are purchased in this offering or thereafter in the open market); "public shareholders" are to the holders of our public shares, including our initial shareholder and management team to the extent our initial shareholder and/or members of our management team purchase public shares, provided that our initial shareholder s and members of our management team s status as a "public shareholder" shall only exist with respect to such public shares; "sponsor" is to AAP Sponsor (PTC) Corp, a business company incorporated in the British Virgin Islands with limited liability; and "we," "us," "company" or "our company" are to Atlantic Alliance Partnership Corp., a business company incorporated in the British Virgin Islands with limited liability. Registered trademarks referred to in this prospectus are the property of their respective owners. Unless we tell you otherwise, the information in this prospectus assumes that the underwriter will not exercise their over-allotment option. Overview We are a newly organized blank check company incorporated in the British Virgin Islands as a business company with limited liability (meaning that our shareholders have no additional liability, as members of our company, for the liabilities of our company over and above the amount paid for their shares) and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar initial business combination with one or more businesses or entities, which we refer to throughout this prospectus as our initial business combination. We have not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any discussions, directly or indirectly, with any potential business combination target. We have conducted no operations and have generated no revenues to date and we will not generate operating revenues until, at the earliest, after we consummate our initial business combination. Although we anticipate acquiring a target business that is an operating business, we are not obligated to do so and may determine instead to merge with or acquire a company with no operating history if the terms of the transaction are determined by us to be favorable to our public shareholders and the target business has a fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income accrued on the trust account) at the time of the agreement to enter into the initial business combination. In such event, investors would not have the benefit of basing the decision on whether to remain with our company following such transaction on the past operations of such target business. Furthermore, 1 in such a situation, many of the acquisition criteria and guidelines set forth in this prospectus may be rendered irrelevant. If we do not obtain a fairness opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or an accounting firm, with respect to such criteria, the fair market value of such a target would be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as actual and potential sales, earnings, cash flow and/or book value, discounted cash flow valuation or value of comparable businesses. We can provide no assurances that our management team s expertise will guarantee a successful initial business combination. In addition, our management team is not required to devote a significant or certain amount of time to our businesses on a monthly basis and our management team is currently devoting time to, and is involved with, other businesses. Business Strategy We will seek to capitalize on the substantial deal sourcing, investing and operating expertise of our sponsor and management team led by our President and Chief Executive Officer, Jonathan Goodwin. While we may pursue an acquisition opportunity in any industry or sector and in any region, we intend to focus on industries that complement our management team s background so we can capitalize on their ability to identify, acquire and operate a business. We therefore intend to focus on companies in the media, internet and consumer sector operating in the United Kingdom and Europe (which may include a business based in Europe which has operations or opportunities outside of Europe). We believe our sponsor s and management team s deal sourcing, investing and operating expertise, as well as their network of contacts will well position us to take advantage of opportunities in the media, internet and consumer sector. We believe this expertise and network of contacts will allow us to generate a number of acquisition opportunities. As a result of our investing and operating expertise, we believe there are a number of high-quality media, internet and consumer sector businesses in Europe with adequate scale to be attractive public companies in the United States. We intend to seek out potential targets that enjoy proven business models and attractive growth profiles. We also believe our sponsor s and management team s extensive experience in deal sourcing from private and public sources, as well as their advisory and consulting engagements, provide unique insight when identifying potential business combination opportunities and creating value. We believe their experience and proximity to real-time information positions us to obtain access to differentiated deal flow, frequently in a non-competitive manner and prior to other parties with an interest in such transactions. Furthermore, we believe the European IPO market has not been open to issuance from growth companies as consistently as the U.S. market. Under conditions where the European capital markets are less attractive than the U.S. capital markets, we believe we can provide the target company with an attractive alternative path to a public listing. Acquisition Criteria Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We intend to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet any of these criteria and guidelines. We intend to seek to acquire companies that we believe: have proven business models and attractive growth prospects; could benefit from the substantial expertise, experience and network of our sponsor and management team, who could assist with, for example, growth strategy, international expansion, and the evaluation and integration of acquisitions; are focused on U.S. or international expansion where a U.S. listing would complement the broader growth strategy and could be a powerful branding event; 2 are well positioned to participate in sector consolidation and would benefit from a public acquisition currency; and would avoid the potentially onerous terms, such as liquidation preferences, that are often characteristic of late state private growth financing rounds. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Initial Business Combination Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or an accounting firm, with respect to the satisfaction of such criteria. We anticipate structuring our initial business combination so that the post-transaction company in which our public shareholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking shareholder approval, as applicable. Our Acquisition Process In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us. We also expect to utilize our operational and capital planning experience. For more information regarding our management team s experience, please see "Proposed Business" beginning on page 56. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an accounting firm, that our initial business combination is fair to our company from a financial point of view. Our Management Team Jonathan Goodwin, our Chief Executive Officer, President and a director, is founder and CEO of Lepe Partners LLP, an independent merchant bank focused on the media, internet and consumer sectors. Lepe Partners LLP, started in December 2011 as a successor to LongAcre Partners, a middle market boutique investment bank that he co-founded in 3 2000 and sold to Jefferies Group Inc. ("Jefferies") in 2007. As CEO and Co-founder of LongAcre Partners, Mr. Goodwin built the company into a mid-market media and corporate finance house, prior to selling it to Jefferies. While at Jefferies, from 2007 to February 2011, Mr. Goodwin was head of global TMT (Technology, Media and Telecommunications) investment banking. During his career, Mr. Goodwin has advised on over 100 transactions in the media and internet sectors. Mr. Goodwin has focused on the media, internet and consumer sectors since his time at private equity investment firm Apax Partners. After Apax Partners, he joined the Management Buy-In team of Talk Radio, a radio station that became the foundation for the Wireless Group PLC, the UK radio broadcasting and syndication company that went on to acquire a series of other UK radio stations before being acquired itself by UTV PLC in 2005 for 98 million. In 2006, Mr. Goodwin co-created, and remains involved in, the Founders Forum, a global network of leading digital and technology entrepreneurs. In 2009, Mr. Goodwin also co-founded PROfounders Capital, an early stage fund backed by entrepreneurs for digital entrepreneurs, which focuses on capital efficient, early stage companies operating in the digital media and technology space, which has to date invested in 26 businesses. Mr. Goodwin has a long standing relationship with Messrs. Klein and Mitchell who are also members of our management team. Lord Waheed Alli, our Chairman and a director, also serves as Chairman of the Board of the Indian fashion company KOOVS plc, an online retailer, as well as Chairman of the Board of Silvergate Media, a company specializing in children s television, positions which he has held since August 2012 and September 2011, respectively. As a former managing director at Carlton TV, from March 1999 to November 2000, Lord Alli was responsible for the production of all its programs. He was also Managing Director of Planet 24, a UK-based independent production company, from October 1991 to December 2000. Since 1992 he has also been a director of "Castaway", which has the rights to the reality TV program "Survivor". Until November 2012, he was the founding Chairman of the Board of ASOS, plc, a global online fashion retailer, and since January 2006 has been a Director of Olga TV, a production company which he runs with television entertainer Paul O Grady. Lord Alli was appointed a working Labour peer in July 1998. Lord Alli is also Chancellor of De Montford University, a trustee of The Elton John Aids Foundation and President of the National Youth Theatre. Jonathan Mitchell is our Chief Financial Officer and a director and also currently serves as a Managing Director at B. Riley Capital Management, LLC (until February 2015 known as MK Capital Advisors, LLC), an SEC registered Investment Advisor which also provides advisory services to high net worth individuals and small institutions, and serves as the advisor to the MKCA Opportunity Fund, a fund-of-funds. In his role at B. Riley Capital Management, LLC, he helps oversee investment portfolios, while simultaneously providing a wide array of integrated family office services, and is a registered representative with its broker-dealer affiliate, B. Riley & Co., LLC. Prior to joining B. Riley Capital Management, LLC he served as the founder and Chief Executive Officer of Pacific Capital Partners, a global investment company and private investment vehicle started on behalf of a dozen international family offices, which made investments in companies where it could add strategic value and capital to accelerate growth. Previous to founding Pacific Capital Partners, Mr. Mitchell was an Equities Manager at Cullen Investments, a single-family office, which made special situation investments (including SPACs), based in London and Auckland, New Zealand. Mr. Mitchell began his career at JP Morgan and currently serves on the Advisory Board for Lepe Partners LLP and GSV Capital. Mark Klein, one of our directors, is Managing Member of M. Klein & Company, LLC, an investment and holding company, which among other investments, owns the Klein Group, LLC, a registered broker dealer and FINRA member, where he is a Registered Representative and Principal. He is also an employee of B. Riley Capital Management, LLC (until February 2015 known as MK Capital Advisers, LLC) an SEC registered Investment Advisor which he co-founded and sold in February 2015 to B. Riley Financial, Inc. B. Riley Capital Management, LLC in addition to providing advisory services to high net worth individuals and small institutions, serves as the advisor to the MKCA Opportunity Fund, a fund-of-funds. Mr. Klein cofounded and joined the Board of Directors of GSV Capital, a business development company focused on equity investments in private growth companies. Mr. Klein has held significant management positions throughout his career, including serving as the Chief Executive Officer and Co-Chairman of the Board of National Holdings Corporation, as a Board Member of Crumbs Bake Shop, Inc., formerly 57th Street General Acquisition Corp., where he also served as the Chief Executive Officer and Director until its initial business combination, as a Director of Great American Group, formerly Alternative Asset Management Acquisition Corporation, where he also served as Chief Executive Officer and Director and as Chairman of Ladenburg Thalmann & Co. Inc., which is engaged in retail and institutional securities brokerage, investment banking and asset management services. He was Chief Executive Officer and President of Ladenburg Thalmann Financial Services, Inc., the parent of Ladenburg Thalmann & Co. Inc., and Chief Executive Officer of Ladenburg Thalmann Asset Management Inc., a subsidiary of Ladenburg Thalmann Financial Services, Inc. In addition, Mr. Klein served as the Chief Executive Officer and President of NBGI Asset Management, Inc. and NBGI Securities, 4 U.S. subsidiaries of the National Bank of Greece. Prior to joining NBGI, Mr. Klein was also President and Founder of Newbrook Capital Management, Founder and Managing Member of Independence Holdings Partners, LLC, a private equity fund of funds company, and Founder and General Partner of Intrinsic Edge Partners, a long/short equity fund. Prior to joining Newbrook, he was a Senior Portfolio Manager for PaineWebber and Smith Barney Shearson. Mr. Klein has previously participated in two blank check offerings. He served as an officer and director of Alternative Asset Management Acquisition Corporation, which raised $414 million in August 2007 and consummated a business combination with Great American Group, LLC in July 2009. Mr Klein served as the Chief Executive Officer and director of Alternative Asset Management Acquisition Corporation from March 2007 to July 2009, and thereafter solely as an independent director of Great American Group from May 2009 until August 2014. He was also director and officer of 57th Street General Acquisition Corp., which raised $50.0 million in May 2010 and consummated a business combination with Crumbs Bake Shop, Inc. in May 2011. Mr. Klein served as the Chief Executive Officer and a Director of 57th Street General Acquisition Corp. from April 2010 until May 2011, and thereafter solely as an independent director of Crumbs Bake Shop Inc. until April 2014. Members of our management team will directly or indirectly own our ordinary shares following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. As more fully discussed in "Management — Conflicts of Interest," if any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such initial business combination opportunity to such entity prior to presenting such initial business combination opportunity to us. Certain of our officers and directors currently have certain relevant fiduciary duties or contractual obligations. We do not believe, however, that any fiduciary duties or contractual obligations of our executive officers arising in the future would materially undermine our ability to complete our initial business combination. Our sponsor, executive officers, directors and director nominees have agreed not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the required timeframe. Our executive offices are located at 590 Madison Avenue, New York, New York and our telephone number is (212) 409-2434. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. 5 The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled "Risk Factors" beginning on page 16 of this prospectus. Securities offered 7,500,000 ordinary shares, at $10.00 per share. Proposed NASDAQ symbol "AAPC" Current Report on Form 8-K Promptly after the consummation of this offering, which is anticipated to take place three trading days from the date the shares commence trading, we will file a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and the private placement. If the underwriter s over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriter s over-allotment option. Number of ordinary shares outstanding before this offering 2,156,250(1) Number of private placement shares to be sold simultaneously with this offering 762,500(2) Number of ordinary shares outstanding after this offering and private placement 10,137,500(3) (1) Includes up to 281,250 ordinary shares that are subject to forfeiture by our initial shareholder depending on the extent to which the underwriter s over-allotment option is exercised. (2) Assumes no exercise of the underwriter s over-allotment option. (3) Assumes no exercise of the underwriter s over-allotment option and the forfeiture by our initial shareholder of 281,250 founder shares. 6 Founder shares On January 15, 2015 our sponsor purchased an aggregate of 2,156,250 founder shares for an aggregate purchase price of $25,000, or approximately $0.012 per share. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding public shares and founder shares after this offering. As such, our initial shareholder will own founder shares equal to 20% of the outstanding public shares and founder shares after this offering (assuming they do not purchase any shares in this offering). If we increase or decrease the size of the offering, we will effect a stock dividend or share buy back, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of founder shares by our initial shareholder prior to this offering at 20% of our public shares and founder shares upon the consummation of this offering. Up to 281,250 founder shares will be subject to forfeiture by our initial shareholder (or its permitted transferees) on a pro rata basis depending on the extent to which the underwriter s over-allotment option is exercised. Transfer restrictions on founder shares Subject to certain limited exceptions discussed on page 90 of this prospectus, and set forth in a letter agreement between us and our initial shareholder, the founder shares may not be transferred, assigned or sold until one year after the date of the consummation of our initial business combination or earlier if, subsequent to our initial business combination, (i) the last sale price of our ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination or (ii) we consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property. We refer to such transfer restrictions throughout this prospectus as the lock-up. Private placement shares Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 762,500 ordinary shares (or 858,125 ordinary shares in the event the over-allotment option is exercised in full) at a price of $10.00 per share ($7,625,000 in the aggregate, or $8,581,250 in the event the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. The purchase price of the private placement shares will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 18 months from the closing of this offering, the proceeds of the sale of the private placement shares will be used to fund the redemption of our public shares (subject to the requirements of applicable law). Transfer restrictions on private placement shares Under the terms of a letter agreement between us and the sponsor, the private placement shares will not be transferable, assignable or saleable until released from lockup on the date that is 30 days after the completion of our initial business combination. 7 Terms of founder shares and private placement shares The founder shares and private placement shares are identical to the public shares being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail above, and our initial shareholder has entered into a letter agreement with us, pursuant to which it has agreed (i) to waive its redemption rights with respect to its founder shares, private placement shares and public shares purchased during or after this offering in connection with the completion of our initial business combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to its founder shares and private placement shares if we fail to complete our initial business combination within 18 months from the closing of this offering although it will be entitled to liquidating distributions from the trust account with respect to any public shares it holds purchased during or after this offering if we fail to complete our initial business combination within the prescribed time frame. If we submit our initial business combination to our public shareholders for a vote, our initial shareholder has agreed to vote its founder shares, private placement shares and any public shares purchased during or after this offering in favor of our initial business combination. Proceeds to be held in trust account Of the net proceeds of this offering and sale of the private placement shares, $78,750,000, or $90,562,500 if the underwriter s over-allotment option is exercised in full ($10.50 per share, regardless of whether or not the underwriter exercises any portion of its over-allotment option) will be placed into a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee. These proceeds include $2,625,000 (or $3,018,750 if the underwriter s over-allotment option is exercised in full) in deferred underwriting commissions. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds from this offering will not be released from the trust account until the earlier of (a) the completion of our initial business combination or (b) the redemption of our public shares if we are unable to complete our initial business combination within 18 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders. Anticipated expenses and funding sources Except as described above, unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use. Based upon current interest rates, we expect the trust account to generate approximately $16,000 of interest annually. Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $500,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering; and any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of an initial business combination. 8 Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or an accounting firm. We will complete our initial business combination only if the post-transaction company in which our public shareholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking shareholder approval, as applicable. Permitted purchases of public shares by our affiliates If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial shareholder, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. 9 Redemption rights for public shareholders upon completion of our initial business combination We will provide our shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our tax obligations, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.50 per public share, regardless of whether or not the underwriter exercises any portion of its over-allotment option. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriter. Our initial shareholder has entered into a letter agreement with us, pursuant to which it has agreed to waive its redemption rights with respect to its founder shares, private placement shares and any public shares it may acquire during or after this offering in connection with the completion of our initial business combination. Manner of conducting redemptions We will provide our shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval under the law or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require shareholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding ordinary shares or seek to amend our memorandum and articles of association would require shareholder approval. We may conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is required by law or stock exchange listing requirements or we choose to seek shareholder approval for business or other legal reasons. If a shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we may, pursuant to our memorandum and articles of association: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase ordinary shares in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public shares, which number will be 10 based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, shareholder approval of the transaction is required by law or stock exchange listing requirements, or we decide to obtain shareholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek shareholder approval, we will complete our initial business combination only if a majority of the outstanding ordinary shares voted are voted in favor of the business combination. In such case, our initial shareholder has agreed to vote its founder shares, private placement shares and any public shares purchased during or after this offering in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding ordinary shares, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. We may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public shareholders, which could delay redemptions and result in additional administrative cost. If the proposed business combination is not approved and we continue to search for a target company, we will promptly return any certificates delivered, or shares tendered electronically, by public shareholders who elected to redeem their shares. Our memorandum and articles of association provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all public shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all public shares submitted for redemption will be returned to the holders thereof. 11 Limitation on redemption rights of shareholders holding 20% or more of the shares sold in this offering if we hold shareholder vote Notwithstanding the foregoing redemption rights, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our memorandum and articles of association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the shares sold in this offering. We believe the restriction described above will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder holding more than an aggregate of 20% of the shares sold in this offering could threaten to exercise its redemption rights against an initial business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders ability to redeem to no more than 20% of the shares sold in this offering, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with an initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our shareholders ability to vote all of their shares (including all shares held by those shareholders that hold more than 20% of the shares sold in this offering) for or against our initial business combination. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public shareholders who exercise their redemption rights as described above under "Redemption rights for public shareholders upon completion of our initial business combination," to pay the underwriter its deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, executive officers, directors and director nominees have agreed that we will have only 18 months from the closing of this offering to complete our initial business combination. 12 If we are unable to complete our initial business combination within such 18-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, commence a voluntary liquidation and thereby a formal dissolution of the company, subject in each case to our obligations under BVI law to provide for claims of creditors and the requirements of other applicable law. Our initial shareholder has entered into a letter agreement with us, pursuant to which it has waived its rights to liquidating distributions from the trust account with respect to its founder shares and private placement shares if we fail to complete our initial business combination within 18 months from the closing of this offering. However, if our initial shareholder acquires public shares in or after this offering, it will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 18-month time frame. The underwriter has agreed to waive its rights to its deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within 18 months from the closing of this offering and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Amendments to our memorandum and articles of association prior to our initial business combination Provisions of our memorandum and articles of association (and corresponding provisions of the agreement governing the release of funds from our trust account) relating to the rights and obligations attaching to our ordinary shares and certain aspects of our pre-business combination activity may be amended prior to the consummation of our initial business combination by a resolution of shareholders holding 65% of the issued and outstanding ordinary shares attending and voting at the meeting at which the resolution is considered, which is a lower amendment threshold than that of many blank check companies. It may be easier for us, therefore, to amend our memorandum and articles of association to facilitate the consummation of an initial business combination that some of our shareholders may not support. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering, unless we provide our public shareholders with the opportunity to redeem their ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our tax obligations, divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules). 13 Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of up to a total of $100,000 in loans made to us by an affiliate of our Chief Executive Officer and President to cover offering-related and organizational expenses; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto; but up to $1,000,000 of such loans may be convertible into shares of the post business combination entity at a price of $10.00 per share at the option of the lender; and We may pay Lepe Partners LLP, an entity affiliated with our President and Chief Executive Officer, and/or M. Klein & Co. LLC, an entity affiliated with one of our directors, a fee for financial advisory services rendered in connection with our identification, negotiation and consummation of our initial business combination. The amount of any fee we pay to Lepe Partners LLP and/or M. Klein & Co. LLC will be based upon the prevailing market for similar services for such transactions at such time, and will be subject to the review of our audit committee pursuant to the audit committee s policies and procedures relating to transactions that may present conflicts of interest. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Audit Committee We will, prior to the consummation of this offering, establish and maintain an audit committee composed entirely of independent directors. Our audit committee will, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled "Management — Committees of the Board of Directors — Audit Committee." Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see "Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 16 of this prospectus. 14 Summary Financial Data The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented. As of January 20, 2015 Actual As Adjusted Balance Sheet Data: Working capital (deficiency) $ (30,740 ) $ 76,646,760 (1) Total assets $ 77,500 $ 79,271,760 (2) Total liabilities $ 55,740 $ 2,625,000 (3) Value of ordinary shares that may be redeemed in connection with our initial business combination ($10.50 per share) $ — $ 71,646,750 (4) Shareholders equity $ 21,760 $ 5,000,010 (5) (1) The "as adjusted" calculation includes $78,750,000 in cash held in trust from the proceeds of this offering and the sale of the private placement shares (less offering expenses and underwriting commissions) plus $500,000 in cash held outside the trust account, plus $25,000 of proceeds from the sale of founders shares to the initial shareholder, minus the $2,625,000 of deferred underwriting commissions, less formation costs of $3,240. (2) The "as adjusted" calculation equals $78,750,000 cash held in trust from the proceeds of this offering and the sale of the private placement shares (less offering expenses and underwriting commissions), plus $500,000 in cash held outside the trust account, plus $25,000 of proceeds from the sale of founders shares to the initial shareholder, less formation costs of $3,240. (3) The "as adjusted" calculation includes the $2,625,000 of deferred underwriting commissions in connection with this offering. (4) The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the "as adjusted" shareholders equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001. (5) Excludes 6,823,500 ordinary shares purchased in the public market which are subject to redemption in connection with our initial business combination. The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the value of ordinary shares that may be redeemed in connection with our initial business combination (approximately $10.50 per share, regardless of whether or not the underwriter exercises any portion of its over-allotment option). If no business combination is completed within 18 months from the closing of this offering, the proceeds then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares. Our initial shareholder has entered into a letter agreement with us, pursuant to which it has agreed to waive its rights to liquidating distributions from the trust account with respect to its founder shares and private placement shares if we fail to complete our initial business combination within such 18-month time period. However, if our initial shareholder acquires public shares in, or subsequent to, this offering, it will be entitled to liquidating distributions from the trust account with respect to such public shares. 15
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001631001_lumiox-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001631001_lumiox-inc_prospectus_summary.txt
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@@ -0,0 +1 @@
+Prospectus Summary" on page 1 and "Risk Factors on page 6 of the highly illiquid nature of investment in our shares. This is our initial public offering. We are registering for sale a total of 16,000,000 shares of our common stock on a self-underwritten, "best efforts" basis. There is no minimum number of shares required to be purchased by each investor. The shares will be sold on our behalf by our sole officer, Michael Paul Jarvie. He will not receive any commissions or proceeds for selling the shares on our behalf. All of the shares being registered for sale by the Company will be sold at a price per share of $0.005 for the duration of the Offering. There is no minimum amount we are required to raise from the shares being offered by the Company and any funds received will be immediately available to us. If 100% of the shares are sold, the Company will receive net proceeds of $80,000. If 75%, 50% or 25% of the shares are sold the Company will receive net proceeds of $60,000, $40,000, and $20,000, respectively. There is no guarantee that this Offering will successfully raise enough funds to institute its business plan. Additionally, there is no guarantee that a public market will ever develop and you may be unable to sell your shares , as we may be unable to find a market maker to file an application on our behalf. The shares being offered by the Company will be offered for a period of two hundred and seventy (270) days from the original effective date of this Prospectus, unless extended by our directors for an additional ninety (90) days. Lumiox, Inc. is in the development stage and currently has minimal active business operations. Any investment in the Shares offered herein involves a high degree of risk. You should only purchase Shares if you can afford a complete loss of your investment. Our independent auditors have issued an audit opinion for Lumiox, Inc., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. If we receive less than $40,000 in proceeds, potential investors may end up holding shares in a company that does not have sufficient proceeds to begin operations. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. We are considered a "shell company" under applicable securities rules and subject to additional regulatory requirements as a result, including the inability of our shareholders to sell our shares in reliance on Rule 144 promulgated pursuant to the Securities Act of 1933, as well as additional restrictions. Accordingly, investors should consider our shares to be significantly risky and illiquid investments. See Risk Factors, beginning on page 6. Neither the U.S. Securities and Exchange Commission ("SEC") nor any state securities division has approved or disapproved these securities, or determined if this Prospectus is current, complete, truthful or accurate. Any representation to the contrary is a criminal offense. SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", "Lumiox" and "Company" are to Lumiox, Inc. A Cautionary Note on Forward-Looking Statements This Prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our industry's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001631547_roid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001631547_roid_prospectus_summary.txt
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@@ -0,0 +1,197 @@
+ITEM 3. PROSPECTUS SUMMARY
+ 
+ ROID GROUP, INC.
+ (A Development Stage Company)
+ 
+
+ This summary contains material information about us and the offering which is described in detail elsewhere in the Prospectus. Since it may not include all of the information you may consider important or relevant to your investment decision, you should read the entire Prospectus carefully, including the more detailed information regarding our company, the risks of purchasing our Common Stock discussed under Risk Factors on page 9, and our financial statements and the accompanying notes.
+ 
+ Unless the context otherwise requires, the terms we, our, us, the Company and ROID refer to ROID Group, Inc., a Nevada corporation.
+ 
+ Our Business
+ 
+ We were incorporated under the laws of the State of Nevada on December 4, 2013.
+ 
+ Our general business strategy is to market Quantum Dots ( Quantum Dot or QD ). A Quantum Dot is a is a nanocrystal made of a material that has an electrical conductivity that are small enough to exhibit quantum mechanical properties, typically between 2 and 10 nanometers (a billionth of a meter) in diameter or mean dimension, which emit light fluorescence or electrons when excited with energy. The Emission or absorption wavelength can be tuned by the creation of quantum dots of different sizes. The smaller the quantum dot, the closer it is to the blue end of the spectrum, and the larger the quantum dot, the closer it is to the red end of the spectrum. The unique physical properties of quantum dots exist as electrons within the quantum dot and are confined to a very small space which makes them subject to certain quantum effects. These qualities are driving demand for quantum dots as a performance and efficiency enhancing next generation engineered material, and have led to the use of quantum dots in a range of electronic and other applications, including in the optoelectronic (display), lighting and life sciences industries. Quantum Dots can be used in bio-imaging, this includes the use of quantum dots for marking (illuminating) particular cell types or metabolic processes for understanding diseases and conditions as well as the use of quantum dots to act as delivery agents for drug treatments or therapy for a wide range of ailments. The fluorescent qualities of quantum dots provide an attractive alternative to traditional organic dyes in bio-imaging procedures and are able to image a number of different color wavelengths simultaneously. Quantum dots are able to withstand irradiation from high powered microscopes for longer periods than organic dyes, and have been widely adopted in the bio-imaging sector. Our QD materials for bio-imaging in laboratories(in vitro) have already been developed by us in South Korea in a lab size limited production, our ability to obtain the necessary financing to complete the development of full scale production and profitable manufacturing is dependent on raising money in the future.
+ 
+
+ We currently do not havepatents on our QD materials, production methods and related products. Please refer to Description of Our Business. We have no revenues, have sustained losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We may not generate revenues even if any of our QD technology is developed into full scale production. Accordingly, we will be dependent on future financings in order to maintain our operations and continue our research and development. Please refer to Risk Factors. 
+ 
+
+ The Company qualifies as an emerging growth company as defined in the Jumpstart our Business Startups Act (the JOBS Act ).
+ 
+
+ The Company s fiscal year end is December 31st.
+ 
+
+ Where You Can Find Us
+ 
+
+ Our principal office, from which we conduct our business activities, is located at 10827 Cloverfield Pt., San Diego, CA 92131. 
+ 
+
+ 
+
+ 5
+ 
+
+ The telephone number is 858.365.1737.
+ 
+ Our History
+ 
+
+ We were incorporated under the laws of the State of Nevada on December 4, 2013.
+ 
+
+ On December 4, 2013, we appointed Dr. Kwanghyun Kim to be the President, Chief Executive Officer, Treasurer, Chief Financial Officer, and Director of the Company. 
+ 
+
+ On December 4, 2013, we appointed Myungae Cha to be the Secretary of the Company.
+ 
+
+ We received our initial funding of $10,000 through the sale of common stock to our President, Dr. Kwanghyun Kim, who purchased 1,000,000 shares of our Common Stock at $0.01 per share on December 4, 2013. 
+ 
+
+ On December 10, 2013, we appointed Dr. Dokyung Kim as a director of the Company. The Company also issued a further 5,000,000 shares of common stock to its President Dr. Kwanghyun Kim for his services as the President.
+ 
+
+ On December 31, 2013, the Company sold through a Regulation S private placement offering an aggregate of 450,000 shares of our Common Stock in transactions which were exempt from registration and prospectus delivery requirements of the Securities Act of 1933, as amended, for proceeds of $90,000 to six non-US investors at a share price of $0.20 per share. 
+ 
+
+ On January 31, 2014, the Company sold through a Regulation S private placement offering an aggregate of 675,000 shares of our Common Stock in transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended, for proceeds of $135,000 to six non-US investors at a share price of $0.20 per share. 
+ 
+
+ On March 31, 2014, the Company sold through a Regulation S private placement offering an aggregate of 1,450,000 shares of our Common Stock in transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended, for proceeds of $290,000 to twelve non-US investors at a share price of $0.20 per share. 
+ 
+
+ About this offering
+ 
+
+ This Prospectus relates to a total of 4,875,000 shares of common stock of ROID Group, Inc., a Nevada corporation.
+ 
+
+ An aggregate of up to 4,875,000 shares of our Common Stock may be offered and sold pursuant to this Prospectus by the Company and its Selling Stockholders. The Selling Stockholders acquired the 2,875,000 shares from us in a Regulation S private placement conducted between December 31, 2013 and March 31, 2014, and from shares gifted to them from current stockholders. 
+ 
+
+ Selling Stockholders
+ 
+ Shares being Registered by the Company
+ 
+ This is the Company s initial public offering. The Company is registering a total of 4,875,000 shares of its Common Stock. Of the shares being registered, 2,875,000 are being registered for sale by the Selling Stockholders that are currently issued and outstanding. The Company will not receive any proceeds from the sale of any of the 2,875,000 shares of the common stock being sold by the Selling Stockholders. The Selling Stockholders may sell, as soon as practicable following the effectiveness of this registration at a fixed price of $0.60 until the shares are quoted on the Over the Counter Bulletin Board ( OTCBB ), or the OTC Markets or listed on a securities exchange, and thereafter at prevailing market prices or in privately negotiated transactions.
+ 
+ 
+
+ 6
+ 
+
+ The Company is offering 2,000,000 Shares of its common stock for sale in a self-underwritten, best-efforts offering. The Company will receive up to $1,200,000 in the event that all the 2,000,000 shares of common stock are sold, of which there can be no assurance.
+ 
+
+ The Company will not receive any proceeds from the sales by the Selling Stockholders. The proceeds, if any, from the sale of the 2,000,000 shares of common stock by the Company, will be used for general working capital purposes. This offering will terminate on the earlier of the sale of all of the shares offered or 180 days after the date of the prospectus, unless extended an additional 90 days by the board of directors.
+ 
+ The Company qualifies as an emerging growth company as defined in the Jumpstart our Business Startups Act (the JOBS Act ). We intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As well, our election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until they apply to private companies. Therefore, as a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates.
+ 
+
+ THE OFFERING
+ 
+
+ Terms Of The Offering
+ 
+
+ As of the date of this prospectus, The Company has 8,575,000 shares of Common Stock issued and outstanding. The Company is registering an additional 2,000,000 shares of its Common Stock for sale at the price of $0.60 per share. There is no arrangement to address the possible effect of the Offering on the price of the stock.
+ 
+
+ In connection with the Company s selling efforts in the Offering, Dr. Kwanghyun Kim and Dr. Dokyung Kim will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the safe harbor provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act ). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an Offering of the issuer s securities. Dr. Kwanghyun Kim and Dr. Dokyung Kimare not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Dr. Kwanghyun Kim, and Dr. Dokyung Kimwill not be compensated in connection with their participation in the Offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in the securities. Dr. Kwanghyun Kim and Dr. Dokyung Kimare not, nor havethey been within the past 12 months, a broker or dealer, and they have not, nor have they been within the past 12 months, an associated person of a broker or dealer. At the end of the Offering, Dr. Kwanghyun Kim and Dr. Dokyung Kimwill continue to primarily perform substantial duties for the Company or on its behalf otherwise than in connection with transactions in securities. Dr. Kwanghyun Kim and Dr. Dokyung Kimhave not participated in another offering of securities pursuant to the Exchange Act Rule 3a4-1 in the past twelve months. Additionally, they have not and will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on the Exchange Act Rule 3a4-1(a)(4)(i) or (iii). 
+ 
+
+ In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in those states only if they have been registered or qualified for sale; an exemption from such registration or if qualification requirement is available and with which the Company has complied. In addition, and without limiting the foregoing, the Company will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective.
+ 
+
+ There is no guarantee the Company will be able to sell the shares being offered in this prospectus. If it is unable to sell enough shares to complete its plan of operations, the business could fail.
+ 
+
+ 
+
+ 
+
+ 7
+ 
+
+ Following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering.
+ 
+
+ 
+ Securities Being Offered by the Company:
+ 2,000,000 shares of Common stock, par value $0.01, on a best-efforts basis
+
+ Securities Being Offered by the Selling Stockholders:
+ Up to 2,875,000 shares of common stock, par value$0.01, until the common stock becomes quoted on the OTC Bulletin Board, OTC Markets or listed on a securities exchange, and thereafter at market prices or prices negotiated in private transactions
+
+ Offering Price per Share:
+ The offering price per share is:
+ (i) $0.60 per share for the 2,000,000 shares offered by the Company;
+ (ii) $0.60 per share for securities being offered by the Selling Stockholders;
+
+ Offering Period:
+ The shares being sold by the Company are being offered for a period not to exceed 180 days, unless extended by the Board of Directors for an additional 90 days.
+
+ Net Proceeds to The Company:
+ $1,178,000, if all the shares are sold (Total Net Offering Proceeds). 
+
+ Use of Proceeds:
+ The Company intends to use the proceeds for day to day business operations. We anticipate that any net proceeds we receive in connection with the sale of the shares will be used for continued development of our products and for general corporate purposes and working capital.
+
+ Number of Shares Outstanding Before the Offering
+ 8,575,000
+
+ Number of Shares Outstanding After the Offering:
+ Up to 10,575,000, if all the shares are sold.
+
+ Registration Costs:
+ Management estimates the total offering registration costs to be $22,000.
+
+ 
+
+ The Company s officers, directors and control persons do not intend to purchase any shares in this offering.
+ 
+
+ Jumpstart Our Business Startups Act:
+ 
+
+ The Company is a development stage, company and qualifies as an emerging growth company as defined in the Jumpstart our Business Startups Act (the JOBS Act ). For so long as we are an emerging growth company, we will not be required to:
+ 
+
+ 
+
+ 
+ 
+ have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
+
+ 
+ 
+
+ 
+ comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
+
+ 
+ 
+
+ 
+ submit certain executive compensation matters to shareholder advisory votes, such as say-on-pay and say-on-frequency; and
+
+ 
+ 
+
+ 
+ disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO s compensation to median employee compensation.
+
+ 
+
+ 8
+ 
+
+ 
+ In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will remain an emerging growth company for up to five full fiscal years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31, or if our annual revenues exceed $1 billion, we would cease to be an emerging growth company the following fiscal year, or if we issue more than $1 billion in non-convertible debt in a three-year period, we would cease to be an emerging growth company immediately.
+ 
+
+ We will elect to take advantage of the extended transition period for complying with new or revised accounting standards under section 102(b)(1). This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001631650_aimmune_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001631650_aimmune_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001631650_aimmune_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001631790_bowie_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001631790_bowie_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001631790_bowie_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001632352_tesoro_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001632352_tesoro_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8f0a72f9cd8194671a8c4678df2ee4e994ec25db
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001632352_tesoro_prospectus_summary.txt
@@ -0,0 +1,69 @@
+Prospectus Summary
+ 2
+
+ Risk Factors
+ 3
+
+ Cautionary Note Regarding Forward-Looking Statements
+ 6
+
+ Use of Proceeds
+ 6
+
+ Description of Securities
+ 7
+
+ Determination of Subscription Price
+ 7
+
+ Dilution
+ 8
+
+ Plan of Distribution
+ 9
+
+ Description of Business
+ 10
+
+ Management s Discussion and Analysis of Financial Condition and Plan of Operations
+ 12
+
+ Directors, Executive Officers, Promoters and Control Persons
+ 15
+
+ Executive Compensation
+ 16
+
+ Securities Ownership of Certain Beneficial Owners and Management
+ 16
+
+ Certain Relationships and Related Party Transactions
+ 16
+
+ Legal Matters
+ 17
+
+ Experts
+ 17
+
+ Interests of Named Experts and Counsel
+ 17
+
+ Where You Can Find More Information
+ 17
+
+ Information Not Required in Prospectus
+ 18
+
+ Signatures
+ 
+
+ 
+
+You should only rely on the information contained in
+this prospectus. We have not authorized anyone to provide you with different information or represent anything not contained in
+this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making
+an offer to sell or buy these securities in any state or other jurisdiction where an offer or sale is not permitted.. You should
+assume that the information in this prospectus is accurate as of the date on the front cover of this prospectus, regardless of
+the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition, and results
+of operations may have changed since that date.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001632646_avondale_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001632646_avondale_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..77355eb3324a4cacf85bacecfd0c036546486703
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001632646_avondale_prospectus_summary.txt
@@ -0,0 +1 @@
+appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001632808_philadelph_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001632808_philadelph_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001632808_philadelph_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001634052_headstart_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001634052_headstart_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a9ba6a0229c55f71c2a92b794c2370efc8100d06
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001634052_headstart_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY You should read the following summary together with the entire prospectus, including the more detailed information in our financial statements and related notes appearing elsewhere in this prospectus. You should carefully consider the matters discussed in Risk Factors beginning on page 7. THE COMPANY Headstart Holdings, Inc. was incorporated in the State of Nevada on December 11, 2014, under the name Headstart Lending, Inc. On January 9, 2015, we changed our name to Headstart Holdings, Inc. Our proposed business is to operate as a factoring company specifically targeting real estate businesses across all types, including residential, commercial and raw land. We will purchase real estate commissions receivable at a discount to the face value of the receivable, as well as charge nominal documentation and contract fees. Our goal is to assist real estate businesses stabilize their cash flows through the factoring of their accounts receivable. We plan to service any real estate business, including agents, brokers, title officers, initially in the United States and Panama. We are not and have no intention to operate as a loan company, banking institution or collections agency. We will service only real estate businesses and will not purchase consumer debt or charged-off receivables. We are registering shares of our common stock in this offering to raise capital sufficient to cover the costs associated with the offering and to establish a base of operations, including, but not limited to: website development, graphic design, marketing and advertising, working capital, legal, accounting and transfer agent fees. However, we cannot assure you that the actual expenses incurred will not materially exceed our estimates or that cash flows from potential future revenues will be adequate to maintain our business. To date, we have not commenced our planned principal operations and have no significant assets. Our operations have been devoted primarily to startup and development activities, which include the formation of our corporate identity and obtaining seed capital through sales of our equity securities. Since our inception, we have not generated any revenues. During the quarter ended March 31, 2015, we incurred a net loss of $4,663 and had $24,837 of cash on hand. We have not experienced any material adverse changes to our financial condition subsequent to March 31, 2015. We expect to spend up to $40,000 in the next 12 months to execute our proposed real estate commission factoring business and continue as a going concern. Unfortunately, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that cash flows from operating activities will be adequate to maintain our business. In consideration of the foregoing risks, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern in the independent registered public accounting firm s report to the financial statements. As of the date of this prospectus, we have 5,000,000 shares of $0.001 par value common stock issued and outstanding. Our address and telephone number are: Enrique Geenizier Street PH Miro, Suite 504, Bella Vista Panama, Republic de Panama Telephone: (800) 680-7071 Our fiscal year end is December 31. We are considered a "shell company," as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are subject to additional regulatory requirements as a result, including, but not limited to, the inability of our shareholders to sell our shares in reliance on Rule 144 promulgated pursuant to the Securities Act of 1933, a safe harbor on which holders of restricted securities usually rely to resell securities, as well as our inability to register our securities on Form S-8 (an abbreviated registration process). Accordingly, investors should consider our shares to be significantly risky and illiquid investments. TABLE OF CONTENTS PAGE PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001634432_strongbrid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001634432_strongbrid_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..203664b6d046b382e1b296cd81c956b9a4717555
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001634432_strongbrid_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in the ordinary shares, you should read this entire prospectus carefully, including the sections titled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and our consolidated financial statements, including the notes thereto, included elsewhere in this prospectus. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to "Strongbridge" or the "Company," "we," "our," "ours," "us" or similar terms refer to Strongbridge Biopharma plc, together with its consolidated subsidiaries (including Cortendo AB, its predecessor, and current subsidiaries), and "dollar," "US$" or "$" refer to U.S. dollars. Unless otherwise indicated in this prospectus, all share amounts and per share amounts included in this prospectus have been retroactively adjusted, where applicable, to reflect (i) the exchange offer described below, which settled on September 8, 2015, pursuant to which holders of 99.582% of the outstanding shares of Cortendo AB tendered their shares in exchange for beneficial interests in ordinary shares of Strongbridge Biopharma plc in the form of depositary receipts (or, in the case of non-accredited holders of Cortendo AB shares located within the United States, in exchange for cash), and (ii) immediately following the settlement of its exchange offer, a reverse stock split of the outstanding ordinary shares of Strongbridge Biopharma plc (including the beneficial interests in such shares in the form of depositary receipts) at a ratio of 1-for-11. Overview We are a biopharmaceutical company focused on the development, in-licensing, acquisition and eventual commercialization of multiple complementary products and product candidates within franchises that target rare diseases. Our primary focus has been to build our rare endocrine franchise, which includes product candidates for the treatment of endogenous Cushing's syndrome and acromegaly, two rare diseases with a high unmet need for innovative treatment options. Given the well-identified and concentrated prescriber base addressing our target markets, we believe we can use a small, focused sales force to effectively market our products, if approved, in the United States, the European Union and other key global markets. We believe that our ability to execute on this strategy is enhanced by the significant clinical development and commercial experience of key members of our management team. We also intend to identify and in-license or acquire products or product candidates that would be complementary to our existing rare endocrine franchise or that would form the basis for new rare disease franchises. We believe this approach will enable us to maximize our commercial potential by further leveraging our existing resources and expertise. Our rare endocrine franchise includes the following product candidates: COR-003 (levoketoconazole), a cortisol synthesis inhibitor, in Phase 3 clinical development for the treatment of endogenous Cushing's syndrome. Endogenous Cushing's syndrome is a rare endocrine disorder characterized by sustained elevated cortisol levels that most commonly result from a benign tumor of the pituitary gland. We believe that COR-003 has the potential to become the new standard of care for the drug therapy of endogenous Cushing's syndrome. COR-003 may provide a favorable efficacy, safety and tolerability profile compared to current drug therapies, including ketoconazole, the most commonly used drug therapy for endogenous Cushing's syndrome. COR-003 has been granted orphan drug designation by the U.S. Food and Drug Administration, or the FDA, and the European Medicines Agency, or the EMA. We are developing COR-003, a single enantiomer of ketoconazole, as a new chemical entity, or NCE, under the FDA 505(b)(2) regulatory approval pathway, and intend to reference the FDA's prior conclusions of safety and effectiveness for ketoconazole. Molecules of ketoconazole occur in two forms, which are mirror images of each other. These mirror image pairs are referred to as enantiomers. Single enantiomer drugs may offer safety and efficacy advantages because one of the enantiomer AMENDMENT NO. 5 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents versions can have safety issues or be less effective in treatment of the disorder or disease. The 505(b)(2) regulatory approval pathway allows companies developing drug products to rely in part on FDA conclusions of safety and effectiveness from studies that were not conducted by or for the applicant. Because approval can rest in part on data already accepted by the FDA or otherwise publicly available, an abbreviated and reduced development program may be possible. We are currently conducting a pivotal Phase 3 clinical trial for COR-003 and expect to report top-line data from this trial in the first half of 2017 and file applications for regulatory approval in the second half of 2017. COR-004, a second-generation antisense oligonucleotide, in Phase 2 clinical development for the treatment of acromegaly. Acromegaly is a rare endocrine disorder that most commonly results from a benign tumor of the pituitary gland, leading to excess production of growth hormone, or GH, and insulin-like growth factor 1, or IGF-1, a key regulator of growth and metabolism. COR-004 has a novel mechanism of action targeting human GH receptor messenger RNA, or GHR mRNA, a molecule that is necessary for the synthesis of GHR protein. Currently, somatostatin analogs, or SSAs, are the most commonly used drug therapy for the treatment of patients with acromegaly. Up to one-half of treated patients do not adequately respond to SSAs and need alternative or adjunctive drug therapies. The novel mechanism of action of COR-004 may result in a differentiated safety and efficacy profile as compared to pegvisomant, the most common drug therapy used as an alternative to or in combination with SSAs. In contrast to daily administration of pegvisomant, we intend to develop COR-004 for once- or twice-weekly administration, potentially leading to improved patient compliance. In addition, we plan to develop COR-004 to be packaged in pre-filled syringes, eliminating the need for reconstitution, in contrast to most other drug therapies for acromegaly. We intend to seek orphan drug designation for COR-004 from the FDA and the EMA. Following a planned pre-Investigational New Drug, or IND, consultation with the FDA in the second half of 2015, we intend to file an IND for COR-004 in the United States and begin a multinational development program to support regulatory approval in the United States and subsequently the European Union. COR-005, a novel SSA, in Phase 2 clinical development for the treatment of acromegaly. Based on the differentiated activation pattern of COR-005 to somatostatin receptor subtypes, or SSTRs, and preclinical and clinical data, we believe that COR-005 may offer an improved efficacy and safety profile relative to existing drug therapies for acromegaly. COR-005 has been granted orphan drug designation by the FDA and the EMA. Following a planned consultation with the FDA and EMA in the first half of 2016, we intend to file an IND for COR-005 in the United States and begin a multinational development program to support regulatory approval in the United States and European Union. Since the introduction of our new management team beginning in August 2014, we have established a rare disease, franchise-based business model focused on expansion through a disciplined in-licensing and acquisition strategy. In pursuit of our growth strategy, we have raised over $70 million since December 2014 from leading life sciences investors, including RA Capital, New Enterprise Associates, Broadfin Capital, HealthCap, Longwood Capital, TVM Capital and Granite Point Capital. Leveraging this capital and our experience in sourcing, selecting, in-licensing and acquiring product candidates, we were successful in augmenting our rare endocrine franchise by adding COR-004 and COR-005 to our product pipeline. We believe that these clinical product candidates, if successful, will benefit from significant development and commercial synergies with our lead product candidate, COR-003, because both Cushing's disease and acromegaly are typically caused by benign pituitary tumors and are mainly treated by pituitary endocrinologists. Given the concentrated specialty prescriber base for these indications, we plan to create a sales force of approximately 30 representatives in each of the United States and the European Union to market our endocrine franchise product candidates, if Strongbridge Biopharma plc (formerly known as Cortendo plc) (Exact Name of Registrant as Specified in Its Charter) Table of Contents approved. In addition, we believe the development of two product candidates with different mechanisms of action to treat acromegaly may potentially enable us to address the broad acromegaly patient population requiring drug therapy. Our Strategy Our goal is to transform the lives of patients by building a leading franchise-based, commercially oriented biopharmaceutical company addressing rare diseases with significant unmet medical needs. We are focused on developing, in-licensing, acquiring and eventually commercializing products and product candidates that target rare diseases across several complementary therapeutic areas. To achieve our goal, we are pursuing the following strategies: Focus on rare diseases. We are developing treatments for rare diseases, initially endogenous Cushing's syndrome and acromegaly. Rare diseases typically have a high unmet need for innovative treatment options. Drug development for the treatment of rare diseases often requires smaller clinical trials and has the potential for accelerated regulatory review. Product candidates focused on rare diseases also often qualify for orphan drug designation, which in the United States provides for seven years of market exclusivity and in the European Union provides for 10 years of market exclusivity after regulatory approval has been granted. In addition, given the well-identified and concentrated prescriber base addressing our target markets, we believe we can use a small, focused sales force to effectively promote our products in key geographies. We believe these characteristics enable more efficient resource allocation. Independently commercialize products in the United States and the European Union. We intend to independently commercialize our rare disease product candidates, if approved, in the United States and the European Union, and selectively in other key global markets. Given the concentrated specialty prescriber base, we plan to create a sales force of approximately 30 representatives in each of the United States and the European Union to market our rare endocrine disease product candidates, if approved. We believe that our ability to execute on this strategy is enhanced by the significant prior commercial experience of key members of our management team. Prior to joining our company, members of our management team were involved in the launch or commercialization of over 20 pharmaceutical products. Expand our portfolio through a disciplined in-licensing and acquisition strategy. We plan to source new product candidates by in-licensing or acquiring them. Our management team seeks to mitigate the potential risks of this strategy by adhering to our disciplined criteria of focusing on in-licensing or acquisition opportunities of products that are already commercially available or that have human clinical data that we believe suggest a high probability of success for development progression and an attractive potential return on investment. As a result of our management team's experience in sourcing, selecting, in-licensing and acquiring product candidates, we were successful in augmenting our rare endocrine franchise by adding COR-004 and COR-005 to our product pipeline. Utilize a franchise model built on rare disease therapeutic areas. We intend to build our company by creating franchises in areas where there is a significant commercial opportunity. We seek to in-license and acquire products and product candidates that target rare diseases in therapeutically aligned franchises. We believe that complementary products and product candidates will allow us to significantly leverage our expertise as well as our development and commercial infrastructure. For example, our product candidates for the treatment of Not Applicable (Translation of Registrant's name into English) Ireland (State or Other Jurisdiction of Incorporation or Organization) 2834 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) 900 Northbrook Drive Suite 200 Trevose, PA 19053 +1 610-254-9200 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents endogenous Cushing's syndrome and acromegaly, if approved, will serve as the basis for our rare endocrine franchise. Expand indications of products and product candidates within our franchises. In addition to identifying products and product candidates that can form the basis of new rare disease franchises, we also intend to leverage opportunities to develop potential products and product candidates for additional indications within their respective therapeutic franchises. We believe that this approach will enable us to maximize our commercial potential by further leveraging our existing resources and expertise. Recent Developments On May 13, 2015, we entered into an exclusive license agreement with Antisense Therapeutics Limited, or Antisense Therapeutics, that provides us with development and commercialization rights to Antisense Therapeutics' product candidate, ATL1103, for endocrinology applications. We refer to this product candidate as COR-004. Under the terms of the agreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash, and we also invested $2.0 million in Antisense Therapeutics equity. We may become obligated to make additional payments, contingent upon achieving specific development and commercialization milestones, of up to $105.0 million over the lifetime of the agreement. We may also be required to make royalty payments based on a percentage, ranging from the mid-single digits to the mid-teens, of net sales of COR-004, if approved. We will be responsible for the future clinical development of COR-004 in endocrinology applications and for the funding of associated future development, regulatory and drug manufacture costs. Antisense Therapeutics will retain commercialization rights for COR-004 in endocrinology applications in Australia and New Zealand as well as worldwide rights for COR-004 in indications other than endocrinology, and may utilize any new COR-004 data generated by us in pursuing these other indications, subject to specified terms and conditions set forth in our license agreement with Antisense Therapeutics. On June 29 and 30, 2015, we raised $33.2 million in aggregate gross proceeds in a private placement of common shares, the proceeds of which we expect to use primarily for the continued development of COR-003, along with the planned development of our two new programs, COR-004 and COR-005, and for general corporate purposes. The subscription price was $14.54 per share and we issued 2,284,414 new shares to the investors. The investors in this transaction included RA Capital, New Enterprise Associates, Broadfin Capital, HealthCap, Longwood Capital, TVM Capital and Granite Point Capital. On June 30, 2015, we acquired from Aspireo Pharmaceuticals Ltd., an Israeli company, its product candidate, DG3173. We refer to this product candidate as COR-005. Under the terms of the acquisition agreement, we issued to Aspireo Pharmaceuticals 2,062,677 common shares, which had a value of $33.2 million on June 30, 2015. In connection with this acquisition, we made a payment to the Office of the Chief Scientist of the Israeli Ministry of Economy, or OCS, in the amount of $3.0 million, which represents the repayment of amounts previously granted by OCS to Aspireo Pharmaceuticals, plus interest, that were used in support of research and development conducted by Aspireo Pharmaceuticals for the development of DG3173. On September 4, 2015, we changed our name from "Cortendo plc" to "Strongbridge Biopharma plc." Effective September 8, 2015, we settled a share exchange offer pursuant to which holders of 99.449% of the outstanding shares of Cortendo AB tendered their shares in exchange for beneficial interests in ordinary shares of Strongbridge Biopharma plc in the form of depositary receipts and non-accredited holders of Cortendo AB shares located within the United States, representing 0.133% of the outstanding shares of Cortendo AB, agreed to exchange their shares for cash, which cash settlement Stephen Long, Chief Legal Officer Strongbridge Biopharma plc 900 Northbrook Drive Suite 200 Trevose, PA 19053 +1 610-254-9200 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Table of Contents occurred on September 14, 2015. Immediately following the settlement of the exchange offer, we effected a 1-for-11 reverse stock split of our outstanding ordinary shares (including the beneficial interests in such shares in the form of depositary receipts). The information contained in this prospectus gives effect to the closing of these transactions. Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include, but are not limited to, the following: We are a development-stage biopharmacuetical company and have a limited operating history on which to assess our business, have incurred significant losses over the last several years, and anticipate that we will continue to incur losses for the foreseeable future. We have never generated any revenue from product sales and may never be profitable. We may not be successful in executing our growth strategy or our growth strategy may not deliver the anticipated results. If we acquire other businesses or in-license or acquire other product candidates and are unable to integrate them successfully, our financial performance could suffer. We are highly dependent on our key personnel, including our president and chief executive officer, as well as our ability to recruit, retain and motivate additional qualified personnel. We and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting, which could make it difficult to maintain an effective system of internal control over financial reporting, harm investor confidence in our company and affect the value of our ordinary shares. We depend entirely on the success of a limited number of product candidates, which are still in preclinical or clinical development. If we do not obtain regulatory approval for and successfully commercialize one or more of our product candidates, or we experience significant delays in doing so, we may never become profitable. Clinical trials are very expensive, time consuming, difficult to design and implement, and involve uncertain outcomes. Furthermore, results of earlier studies and trials may not be predictive of results of future trials. We have never commercialized a product candidate and we may lack the necessary expertise, personnel and resources to successfully commercialize any of our products that receive regulatory approval on our own or together with suitable partners. We operate in a highly competitive and rapidly changing industry, which may result in our competitors discovering, developing or commercializing competing products before or more successfully than we do, or our entering a market in which a competitor has commercialized an established competing product, and we may not be successful in competing with them. If we or our licensors are unable to obtain and maintain effective patent rights for our technologies, product candidates or any future product candidates, or if the scope of the patent rights obtained is not sufficiently broad, we may not be able to compete effectively in our markets. Copies to: Aron Izower Reed Smith LLP 599 Lexington Avenue, 22nd Floor New York, NY 10022 Divakar Gupta Brent B. Siler Cooley LLP 1114 Avenue of the Americas New York, NY 10036-7798 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents Even if one or more of our product candidates obtains regulatory approval, we will be subject to ongoing obligations and continued regulatory requirements, which may result in significant additional expense. We expect to be classified as a passive foreign investment company for U.S. income tax purposes, and our U.S. shareholders may suffer adverse tax consequences as a result. Corporate Information Strongbridge Biopharma plc, an Irish public limited company, was established on May 26, 2015 under the name Cortendo plc. On September 4, 2015, Cortendo plc changed its name to Strongbridge Biopharma plc. Our ordinary shares are currently quoted on the NOTC A-list in Norway. Cortendo AB, a company organized under the laws of Sweden, was established in October 1996 under the name Stefan Kronvall Medical AB and registered in Sweden in December 1996 for the purpose of developing medically innovative products for pharmaceutical diagnostics and other health care products. Stefan Kronvall Medical AB changed its name to Cortendo AB in 1997, to Cortendo Invest AB in 2003 and then to Cortendo AB (publ) in 2011. Cortendo AB has three wholly owned subsidiaries, Cortendo Invest AB, a company organized under the laws of Sweden, BioPancreate Inc., a Delaware corporation, and Cortendo Cayman Ltd., an exempted company incorporated in the Cayman Islands. In order to effect a corporate reorganization in connection with this offering, on September 8, 2015, we settled an exchange offer, which we refer to as the Exchange Offer, pursuant to which holders of 99.449% of the outstanding shares of Cortendo AB exchanged their shares for beneficial interests in ordinary shares of Strongbridge Biopharma plc in the form of depositary receipts on a 1-for-1 basis and non-accredited holders of Cortendo AB shares located within the United States, representing 0.133% of the outstanding shares of Cortendo AB, agreed to exchange their shares for cash, which cash settlement occurred on September 14, 2015. Non-accredited U.S. holders of ordinary shares of Cortendo AB received cash in an amount equivalent to the value of one ordinary share of Strongbridge Biopharma plc for each share of Cortendo AB validly exchanged. Pursuant to individual agreements with the holders of options to purchase shares of Cortendo AB, the outstanding options of Cortendo AB were converted to options to purchase an equivalent number of ordinary shares of Strongbridge Biopharma plc. We intend to acquire the remaining 0.418% of the outstanding shares of Cortendo AB held by shareholders who declined to participate in the Exchange Offer, pursuant to a process permitted by Swedish law. For additional information on this process, see "Risk Factors Risks Related to the Offering and Our Ordinary Shares The Swedish squeeze-out process is a lengthy process to complete and will result in additional costs to us. Any delay in our acquiring full ownership of Cortendo AB could result in increased administrative costs and burdens and could adversely affect our day-to-day operations and the liquidity and market value of our shares." Following the settlement of the Exchange Offer, Strongbridge Biopharma plc became the parent of Cortendo AB and its subsidiaries. As a result of the settlement of the Exchange Offer, the historical financial statements of Cortendo AB became, for financial reporting purposes, the historical consolidated financial statements of Strongbridge Biopharma plc and its subsidiaries as a continuation of the predecessor. Our principal executive offices are located at 900 Northbrook Drive, Suite 200, Trevose, Pennsylvania, 19053 and our telephone number is +1 610-254-9200. For the purposes of Irish law, our registered office is Arthur Cox Building, Earlsfort Terrace, Dublin 2, Ireland. CALCULATION OF REGISTRATION FEE TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED PROPOSED MAXIMUM AGGREGATE OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE(2) Ordinary shares, par value $0.01 per share $28,750,000.00 $2,895.13(3) (1)Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes the aggregate offering price of additional ordinary shares that the underwriters have the option to purchase. (2)Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price. (3)The Registrant previously paid $10,182.95 in connection with the filing of previous amendments to this Registration Statement. Table of Contents Our website is www.strongbridgebio.com. The information on, or that can be accessed through, our website is not part of and should not be incorporated by reference into this prospectus. We have included our website address as an inactive textual reference only. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the and symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. The trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Implications of Being an "Emerging Growth Company" We qualify as an "emerging growth company," as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and regulatory requirements in contrast to those otherwise applicable generally to public companies. These provisions include: the requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 the Sarbanes-Oxley Act of 2002. We may take advantage of these reduced reporting and other regulatory requirements for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. In addition, the JOBS Act provides that an emerging growth company may delay adopting new or revised accounting standards until those standards apply to private companies. We have irrevocably elected not to avail ourselves of this delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. If we choose to take advantage of any of these reduced reporting burdens, the information that we provide shareholders may be different than you might get from other public companies. Implications of Being a Foreign Private Issuer Upon consummation of this offering, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. We intend to take advantage of these exemptions as a foreign private issuer. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. Table of Contents The Offering Ordinary shares offered by us 2,500,000 ordinary shares Ordinary shares to be outstanding after this offering 21,205,382 ordinary shares Option to purchase additional ordinary shares We have granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to 375,000 additional ordinary shares. Use of proceeds We estimate that the net proceeds to us from this offering will be approximately $19.3 million, assuming an initial offering price of $10.00 per ordinary share, after deducting the estimated underwriting discount and estimated offering expenses payable by us. We intend to use the net proceeds from this offering, together with cash and cash equivalents on hand, to fund external research and development expenses for COR-003 for the treatment of endogenous Cushing's syndrome; to fund external research and development expenses for COR-004 for the treatment of acromegaly; to fund external research and development expenses for COR-005 for the treatment of acromegaly; and for working capital, general and administrative expenses, internal research and development expenses, and other general corporate purposes, including pre-commercial activities, potential in-licenses and potential acquisitions. See "Use of Proceeds."
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001634912_intelligen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001634912_intelligen_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..abd37c8f4429062b93e0b04c756085927275bcdc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001634912_intelligen_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1 CONTROLS AND PROCEDURES INFORMATION ABOUT MARKET RISKS
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001634925_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001634925_american_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b601e20b44c93fc7950cea78f89d55073c0a96bc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001634925_american_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights material information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, including the Risk Factors before making an investment decision to purchase our common stock. As used in this prospectus, references to the Company, we, our, us or American Clock refer to American Clock Company, Inc. and its wholly-owned subsidiary, J. Tyler Clock Company Inc., unless the context otherwise indicates. AMERICAN CLOCK COMPANY, INC. While American Clock Company, Inc. was incorporated in the State of Nevada on December 17, 2013, its wholly owned subsidiary, J. Tyler Clock Company Inc., was incorporated in the State of Colorado on August 12, 2010 and has been manufacturing and selling personalized clocks since that time. The Company had gross profits of $124,178 in the year ended December 31, 2013 and $84,304 in the year ended December 31, 2012 and net income of $32,911 in the year ended December 31, 2013 and $17,892 the year ended December 31, 2012. The funds from this offering will be used to expand advertising and marketing and other growth activities. We intend to use the net proceeds from this offering to expand our advertising and marketing and to develop our business operations (See DESCRIPTION OF BUSINESS and USE OF PROCEEDS ). We do not have any arrangements for financing and there is no guarantee that we will be able to obtain additional financing. Our principal office is located at 1525 N. 67th St. Mesa, AZ 85205. Our fiscal year end is December 31. The company has 4 full time employees and 4 part time employees. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: American Clock Company, Inc. The Offering Self-underwritten, direct primary offering with no minimum purchase requirement. Securities Being Offered: 2,000,000 shares of common stock Price Per Share: $0.05 Duration of the Offering: The shares will be offered for a period of one hundred and eighty (180) days from the effective date of this prospectus, unless extended by our board of directors for an additional 90 days. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus, unless extended by our board of directors for an additional 90 days), (ii) the date when the sale of all 2,000,000 shares is completed, or (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 2,000,000 shares registered under the Registration Statement of which this Prospectus is part. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering. Net Proceeds if 100% of the Shares Are Sold $100,000 Net Proceeds if 50% of the Shares Are Sold $50,000 Securities Issued and Outstanding: There are 6,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our sole officer and director, C. Noelle Ray. Anticipated Total Offering Costs We estimate our total offering costs to be approximately $24,000. Risk Factors See Risk Factors and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001634942_broke-out_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001634942_broke-out_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fbf66135c930bac414b0fe6596bd2cc7f80f156
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001634942_broke-out_prospectus_summary.txt
@@ -0,0 +1 @@
+Summary Broke Out Inc. The Company We were incorporated as Broke Out Inc. on December 19, 2014 in the State of Nevada for the purpose of designing, manufacturing, and selling street ware and gym fitness apparel to customers. We operate through our wholly-owned subsidiary, Broke Out, Ltd., company organized under the Laws of England and Wales that we purchased from our President, CEO and director, Jason Draper, for 10,000,000 shares of our common stock.. Broke Out Ltd. was formed on August 29, 2014, and, before we acquired it, was owned and operated by Mr. Draper. Prior to forming Broke Out Ltd., Mr. Draper operated the business as a sole proprietor under the dba "Broke Out, Ltd." He started the business on December 12, 2013 when he purchased a computer, started working on product designs and the company s website. The first sales occurred in early 2014, prior to the formation of Broke Out, Ltd. Subsequently, Mr. Draper contributed the business assets and liabilities of his sole proprietorship into Broke Out, Ltd., in exchange for a 100% equity interest in the company. We then acquired Broke Out, Ltd. As of December 31, 2014, we had $24,651 in current assets and current liabilities in the amount of $47,269. Accordingly, we had a working capital deficit of $22,618 as of December 31, 2014. Our current working capital is not sufficient to enable us to implement our business plan as set forth in this prospectus. Our expenses in this offering are estimated at $10,000, and we will need a minimum of $40,000 for the next twelve months. As such, our monthly burn rate for the next twelve months is estimated at $3,300. We will need to sell a minimum of 25% of the shares offering in this prospectus for net proceeds of $40,000 in order to meet our financial obligations. Our ability to remain in business with less than $40,000 in this offering is questionable. For these and other reasons, our independent auditors have raised substantial doubt about our ability to continue as a going concern. Accordingly, we will require additional financing, including the equity funding sought in this prospectus. We are offering for sale to investors a maximum of 50,000,000 shares of our common stock at an offering price of $0.004 per share. Our business plan is to use the proceeds of this offering for the development of additional product designs, the manufacture of additional inventory, and marketing of our products. However, our management has retained discretion to use the proceeds of the offering for other uses. The minimum investment amount for a single investor is $300 for 75,000 shares. Subscriptions for less than the minimum investment will automatically be rejected. The shares are being offered by us on a "best efforts" basis and there can be no assurance that all or any of the shares offered will be subscribed. If less than the maximum proceeds are available to us, our development and prospects could be adversely affected. There is no minimum offering required for this offering to close. The proceeds of this offering will be immediately available to us for our general business purposes. The maximum offering amount is 50,000,000 shares ($200,000). Our address is 83, High Street, Stony Stratford, Milton Keynes, United Kingdom, MK11 1AT. Our phone number is +44 744 438 5345. Our fiscal year end December 31. The Offering Securities Being Offered Up to 50,000,000 shares of our common stock. Offering Price The offering price of the common stock is $0.004 per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock. Upon the effectiveness of the registration statement of which this prospectus is a part, we intend to apply to FINRA for quotation on the OTC Bulletin Board and OTCQB, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. There is no guarantee, however, that our common stock will ever be quoted on the OTC Bulletin Board or OTCQB. Minimum Number of Shares To Be Sold in This Offering n/a Maximum Number of Shares To Be Sold in This Offering 50,000,000 Securities Issued and to be Issued 15,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. Our sole officer and director, Jason Draper owns an aggregate of 100% of the common shares of our company and therefore have substantial control. Upon the completion of this offering, Mr. Draper will own an aggregate of approximately 23.08% of the issued and outstanding shares of our common stock if the maximum number of shares is sold. Number of Shares Outstanding After The Offering If All The Shares Are Sold 65,000,000 Use of Proceeds If we are successful at selling all the shares we are offering, our net proceeds from this offering will be approximately $190,000. We intend to use these proceeds to execute our business plan. Offering Period This offering will be open until the earlier of: (i) the maximum amount of shares have been sold; or (ii) nine months from the date of effectiveness of this registration statement of which this prospectus forms a part. Summary Financial Information As of As of Balance Sheet Data December 31, 2014 (audited) December 31, 2013 (audited) Cash $24, 650 $- Total Assets $51,847 $1,963 Liabilities $47,269 $2,007 Total Stockholder s Equity (Deficit) $4,578 $(44) Statement of Operations For the Year ended December 31, 2014 (audited) For the period from December 12, 2013 through December 31, 2013 (audited) Revenue $30,714 $- Net Profit (Loss) for Reporting Period $(6,309) $(44)
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001635497_axis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001635497_axis_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4874bf571c33984e414f3f607785a87f84f1d19d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001635497_axis_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we", "us", "our", and "Company" are to Axis Research & Technologies, Inc.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001635607_scor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001635607_scor_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..adef62a1cc8ef4989dc1a748a299e354cc7c6a81
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001635607_scor_prospectus_summary.txt
@@ -0,0 +1 @@
+SUMMARY OF PROSPECTUS One should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the "Company", "Scor International Foods" and "Scor" refer to Scor International Foods, Inc. General Information about Our Company Scor International Foods, Inc. was formed under the laws of the State of Delaware on December 19, 2014 to act as an ethnic food production and distribution company. The Company currently has authorized 150,000,000 shares of common stock, par value $0.0001 The Company is an ethnic food production and distribution company that plans on acquiring processing facilities, processing equipment and other operational assets in order to develop an output of prepackaged ethnic foods. The Company s current business plans include contracting with marketing partners to gain access to large retailers and foodservice distributors, developing and acquiring additional ethnic food production and packaging assets, processing facilities, processing equipment and other operational assets. Once the first acquisitions are completed, the company plans to utilize the production facilities to produce our own branded and private label products for large retail customers and food service distributors. With the growing ethnic population in North America, Scor will focus on developing and marketing prepared, semi prepared products grab and goes and snack foods for the largest and fastest growing ethnic groups, Latin American and Asian American. The Company s immediate plan is to generate revenue by way of the sale of prepackaged ethnic food items to consumers, through the use of third party distributors. The Company intends to contract with distributors that will deliver our products by truck to retail and food service locations. Currently, the company does not have formal contracts with distributors, but is currently searching for potential distributors as well as retailers that would be willing to stock our products. Our sole officer and directors is researching the distribution and retail marketplace and is attempting to negotiate preliminary terms with potential distributors and retailers, in an effort to create a distribution network for the Company once our planned products are created and are ready to be shipped. At this time, we have no products and no food production facilities. The Company is finalizing negotiations with a meal producer, whereby the meal producer will provide products to the Company. Additionally, the Company is in the process of structuring acquisition offers with a tortilla and pita producer, a pasta producer and a prepared meal producer. Prior to finalizing any agreements, the Company has commenced a review of facility capabilities of these third parties. The Company has not yet signed any agreements with the third parties. The Company intends to develop its product line by creating new ethnic group focused brands and provide new prepackaged ethnic food products to its customers. In addition, the Company intends to begin distributing its products in Canada and the United States through organic growth and acquisitions related to ethnic food distribution and production. Currently, the Company does not have any pending acquisitions of distribution or production assets. In order to pursue its strategic objectives, the Company plans to utilize a portion of the proceeds received from this offering, as well as its available cash, cash generated from operations and additional cash as may be raised via equity or debt offerings as may be approved by its Board of Directors. The administrative office of the Company is located at 539 Jarvis Street, Suite M2, Toronto, Ontario, Canada M4Y 2H7. The Company plans to use this office space until it requires larger space. The company fiscal year end is December 31. The Company has not been subject to any bankruptcy, receivership or similar proceeding. The Offering Following is a brief summary of this offering. Please see the "Plan of Distribution" section for a more detailed description of the terms of the offering. Securities Being Offered 20,000,000 shares of common stock, par value by the Company: $.0001, on a best-efforts basis Offering Price per Share: $0.25 Offering Period: The shares being sold by the Company are being offered for a period not to exceed 180 days, unless extended by the Board of Directors for an additional 90 days. Net Proceeds to Our Company: $5,000,000, if all the shares are sold Use of Proceeds: The Company intends to use the proceeds received from the sale of its common stock to use as working capital, fund business operations and assist in asset purchases or acquisitions. Number of Shares Outstanding Before the Offering: 39,798,000 Number of Shares Outstanding After the Offering: 59,798,000, if all the shares are sold The Company s sole officer and director, and control persons do not intend to purchase any shares in this offering. Selected financial data The following financial information summarizes the more complete historical financial information at the end of this prospectus. Total Expenses are composed of General and Administrative costs and Professional Fees. As of March 31, 2015 Balance Sheet Total Assets $59,500 Total Liabilities $350 Stockholder s Equity $59,150 For the Three Months Ended March 31, 2015 Statement of Operations Revenue $— Total Operating Expenses $3,500 Net Loss $(3,500) As of December 31, 2014 Balance Sheet Total Assets $ — Total Liabilities $1,350 Stockholder s Deficit $(1,350) Period From Inception (December 19, 2014) through December 31, 2014 Statement of Operations Revenue $— Total Operating Expenses $1,350 Net Loss $(1,350)
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001635650_green_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001635650_green_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001635650_green_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001635748_zoompass_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001635748_zoompass_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..954007ec47d672dd47220ef4572cc1e0a2b07abd
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001635748_zoompass_prospectus_summary.txt
@@ -0,0 +1,93 @@
+PROSPECTUS SUMMARY
+
+ 
+
+As used in this prospectus, unless the context otherwise requires, we, us, our, and Uvic Inc. Refers to Uvic Inc. The following summary does not contain all of the information that may be important to you. You should read the entire prospectus before making an investment decision to purchase our common stock.
+
+ 
+
+UVIC INC.
+
+ 
+
+Uvic Inc. was incorporated in Nevada on August 21, 2013. We are development stage company and intend to commence operations in the business of developing a web catalog integrated within the inventory count of any kind of shops aimed at all sorts of customers willing to acquire goods of any purpose. Our catalog is about to be based on the website platform demonstrating the availability of different goods intended for different purposes. The website mentioned above will permit the end commercial customers to order, purchase, or to put a hold on the goods in the shop itself. We intend to engage in business activity, however, there is no assurance that we will be successful in developing our marketable product. 
+
+We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $27,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue.
+
+Being a development stage company, we have very limited operating history. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. We are software development company and we believe that such type of business does not have any restrictions for business operation worldwide. We believe that majority of business processes could be realized with help of freelancers and outsource suppliers of products and services. Our principal executive offices are located at 2235 E. Flamingo Rd., #100G, Las Vegas, NV 89119. Our phone number is 702-608-4543. Mr. Iuldashkhan Umurzakov mostly resides in Kyrgyzstan and partly resides in USA. Uvic Inc. has rented the office in Nevada for business operations. 
+
+From inception (August 21, 2013) until the date of this filing, we have had limited operating activities. On February 24, 2015 we signed the Service Agreement. The Agreement was signed between Angara Corp. ( Client ) and Uvic Inc in Nevada State. The material terms of the Service Agreement are: 
+
+- The Client (Angara Corp.) is engaging Uvic Inc. for the purpose of preparing and creating 3D model of the Clint s goods for publishing on the Uvic Inc s web-catalog and developing a webpage to be installed on the Uvic Inc. s web space. 
+
+- The Client authorizes Uvic Inc. to access its products and provide with all information for the web catalog.
+
+- The Estimate Cost of the Agreement is $2,614, which includes: Client goods photographs, Client goods 3D modeling, 1 web page, 1 additional blank web page, publishing of the final approved webpage to the Uvic Inc. s web catalog.
+
+- Fees to Uvic Inc. are due and payable on the following schedule: 50% of the estimated cost upon signing of this Agreement, Remaining balance due once web page is completed with the content provided from the Client .
+
+- The agreement begins with an initial non refundable deposit payment of $1,307. At the completion of the site Uvic Inc. will provide the Client with a final billing of the actual cost for the site.
+
+On June 21, 2015 we signed the second Service Agreement. The Agreement was signed with Rivex Technology Corp, a Nevada corporation. The agreement begins with an initial non refundable prepayment of $1,300.
+
+Our financial statements from inception (August 21, 2013) through March 31, 2015, reports 1,307 of revenue and a net loss of $1,594. Our independent registered public accounting firm has issued an audit opinion for Uvic Inc., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have established our company, developed our business plan, signed the two Service Agreements, dated February 24, 2015 and June 21, 2015 accordingly, researching the market and are looking for additional potential clients. 
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $27,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $27,000, our business may fail. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities.
+
+5 | Page
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+UVIC INC.
+
+Securities Being Offered:
+
+ 
+
+7,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.01
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of one hundred and eighty (180) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus), (ii) the date when the sale of all 7,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 7,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+If 10% of the shares sold - $7,000
+
+If 25% of the shares sold - $17,500
+
+If 50% of the shares sold - $35,000
+
+If 100% of the shares sold - $70,000
+
+Securities Issued and Outstanding:
+
+There are 7,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Iuldashkhan Umurzakov. 
+
+If we are successful at selling all the shares in this offering, we will have 14,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary may not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including Risk Factors beginning on page 12 and our financial statements and related notes included elsewhere in this prospectus, before making an investment decision. Unless otherwise indicated, the terms BioCardia, the Company, we, us and our refer to BioCardia, Inc. Overview We are a clinical-stage regenerative medicine company developing novel therapeutics for cardiovascular diseases with large unmet medical needs. Our lead therapeutic candidate is the CardiAMP Cell Therapy System, or CardiAMP. We anticipate enrolling the first patient in our U.S. Food and Drug Administration, or FDA, accepted Phase III pivotal trial for CardiAMP in ischemic systolic heart failure in 2015 and obtaining top-line data in the second half of 2017. If our Phase III pivotal trial is successful, we believe we will be the first company to reach the market with a cell-based therapy to treat heart failure. Our second therapeutic candidate is the CardiALLO Cell Therapy System, or CardiALLO. We anticipate acceptance of an Investigational New Drug, or IND, application by the FDA in 2016 for a Phase II trial for CardiALLO in ischemic systolic heart failure. We are committed to applying our expertise in the fields of autologous and allogeneic cell-based therapies to improve the lives of patients with cardiovascular conditions. Autologous cell therapies use autologous cells, which means the patient s own cells, while allogeneic cell therapies use allogeneic cells, which means cells from a third party donor. CardiAMP is a comprehensive therapeutic treatment that includes a companion diagnostic, and is comprised of (i) a cell potency screening test, (ii) a point of care cell processing platform, and (iii) a biotherapeutic delivery system. CardiAMP is the first comprehensive therapeutic treatment utilizing a patient s own cells for the treatment of ischemic systolic heart failure, which is heart failure that develops after a heart attack. In the screening process with the companion diagnostic, the physician extracts a small sample of the patient s bone marrow in an outpatient procedure performed under local anesthesia. The clinic sends the sample to a centralized diagnostic lab, which tests for identified biomarkers from which we generate a potency assay score for the patient. During the treatment, a clinician harvests and then prepares the patient s own bone marrow mononuclear cells, or autologous cells, using our point of care cell processing platform, which a cardiologist then delivers into the heart using our proprietary biotherapeutic delivery system. We designed the entire procedure to be performed in approximately 60 to 90 minutes, which we believe is substantially faster than alternative cell-based therapies in development. The patient then leaves the hospital the same or next day. Our CardiAMP Phase III pivotal trial follows a completed U.S. based randomized placebo-controlled Phase II trial that showed: CardiAMP cells at a dosage of 200 million cells met the primary safety endpoint with 0% treatment related major adverse cardiac events at 30 days; CardiAMP cells, when compared with placebo, were associated with statistically and clinically significant improvements in functional capacity as measured by the six minute walk test and improvements in quality of life as measured by the Minnesota Living with Heart Failure Questionnaire; fewer clinical events such as hospitalizations were confirmed at one year following treatment; and benefit in clinical outcomes was supported by improvement in patients cardiac function. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 13, 2015 PRELIMINARY PROSPECTUS 3,846,154 Shares Common Stock We are offering 3,846,154 shares of our common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $12.00 and $14.00 per share. We have applied to list our common stock on the NASDAQ Global Market, under the symbol BCDA. No assurance can be given that our application will be approved. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves risks. See Risk Factors beginning on page 12 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ (1) See the Underwriting section for a description of the compensation payable to the underwriters. Certain of our existing stockholders and their affiliated entities, stockholders affiliated with our directors and other individuals introduced to us by our directors have indicated an interest in purchasing up to approximately $12.5 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, fewer or no shares in this offering to any of these parties, or any of these parties may determine to purchase more, fewer or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these entities as they will on any other shares sold to the public in this offering. We have granted a 30-day option to the underwriters to purchase up to an additional 576,923 shares of our common stock to cover over-allotments, if any. The underwriters expect to deliver the shares of our common stock to purchasers on or about , 2015. Cantor Fitzgerald & Co. Roth Capital Partners Maxim Group LLC , 2015 Table of Contents Cell-Based Therapy Product Pipeline We are developing two therapeutic candidates, with an initial focus on heart failure resulting from a heart attack: CardiAMP autologous minimally processed bone marrow cells from a patient s own cells, with an FDA accepted Phase III pivotal trial. To date, 53 patients have been treated in our Phase I and Phase II trials; and CardiALLO allogeneic culture expanded mesenchymal bone marrow cells from a universal donor for use in multiple unrelated patients, entering Phase II development. To date, 64 patients have been treated in CardiALLO related mesenchymal stem cell Phase I and Phase II trials. CardiAMP was the first therapeutic candidate to enter a clinical program with a bone marrow derived cell-based therapy for ischemic systolic heart failure patients who are not actively ischemic. It is also the first cardiac therapeutic candidate to use a companion diagnostic, the CardiAMP potency assay, to identify patients who are likely responders to treatment with autologous cells. Finally, it is the first therapeutic candidate to initiate a Phase III pivotal trial in the United States for heart failure using point of care cell processing of bone marrow mononuclear cells. We are also exploring the development of CardiAMP for subacute myocardial infarction, and may in the future explore the development of CardiAMP for additional indications such as chronic myocardial ischemia and heart failure with preserved ejection fraction, or cardiac function as measured by outbound blood pumped out of the heart with each heartbeat. CardiALLO, our second program, is an allogeneic off the shelf mesenchymal stem cell-based product candidate from universal donors and may be an alternative for patients who are not optimal candidates for CardiAMP. CardiALLO related mesenchymal stem cell studies co-sponsored by us have demonstrated safety and suggested efficacy, presenting a complimentary therapeutic program to fully address physician and patient interests in bone marrow derived cell-based therapies for cardiac indications. We expect to receive FDA acceptance of an IND in 2016 for a Phase II trial for CardiALLO in ischemic systolic heart failure. Enabling and Delivery Product Portfolio Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+This summary highlights selected information about us and this offering but does not contain all of the information that you should consider before investing in our Class A common stock. Before making an investment decision, you should read this entire prospectus carefully, including the discussion under the heading Risk Factors and the financial statements and related notes thereto contained elsewhere in this prospectus. This prospectus includes forward-looking statements that involve risks and uncertainties. See Forward-Looking Statements for more information. Unless we state otherwise or the context otherwise requires, the terms we, us, our, Wayne Farms and the Company refer to Wayne Farms, Inc., a Delaware corporation, and its consolidated subsidiaries after giving effect to the Reorganization Transactions described under The Reorganization Transactions and Organizational Structure below. Also, unless we state otherwise or the context otherwise requires, all information in this prospectus gives effect to the Reorganization Transactions described below. Wayne Farms LLC refers to Wayne Farms LLC, a Delaware limited liability company and a consolidated subsidiary of ours following the Reorganization Transactions. Continental Grain refers to Continental Grain Company, a Delaware corporation, the sole owner of Wayne Farms LLC prior to the Reorganization Transactions and our controlling stockholder following the Reorganization Transactions, and its consolidated subsidiaries. Overview Following a series of targeted acquisitions, combined with organic growth, we are currently the sixth largest integrated producer and processor of broiler chickens in the United States. We are primarily engaged in the production and processing of fresh and prepared foods chicken products to retailers, distributors and foodservice operators. We offer fresh as well as deboned, value-added marinated, breaded, cooked and individually frozen products to our customers through strong national and international distribution channels. We employ approximately 9,000 people and have the capacity to process more than 6.5 million birds per week for a total of more than 2.7 billion pounds of live chicken annually. In the fiscal year ended March 28, 2015, we generated $2.2 billion in total revenue compared to $2.1 billion in the fiscal year ended March 29, 2014, representing a 7.4% year-over-year increase, and produced approximately 2.4 billion pounds of chicken products, a 5.2% increase over the fiscal year ended March 29, 2014. We market our diversified portfolio of fresh and prepared foods chicken products to a diverse set of customers across the United States and in 29 other countries. We have become a valuable partner to our customers and a recognized industry leader by consistently providing high-quality products and services designed to meet their needs and enhance their respective businesses. Our sales efforts are largely targeted towards the business-to-business industry and selling to some of the largest chain restaurant, industrial, fresh meat distributor, institutional and regional foodservice distribution companies in the country, including, among others, Chick-fil-A, Nestl SA, Boar s Head Provisions and Costco Wholesale Corporation. We employ a strategy of being a highly efficient producer and then reaching the consumer by becoming a key supplier to national and regional chain restaurants, regional foodservice, fresh meat distributors and retail-oriented food companies. We target customers that are recognized leaders in regional distribution or have both brand equity and consumer loyalty and place a high value on quality, consistency and predictability of products and services. We have positioned ourselves as a marketer involved in the supply side of the value chain, and we aim to enhance the equity of our customers brands and businesses through the delivery of quality and value through our products and services. Historically, we have not marketed our own retail brands. We will continue to view our customers brands as extensions of our own, enabling us to form deeper partnerships with major branded food companies and distributors and to concentrate on developing new products as well as partnering with customers to lower costs throughout the supply chain. We operate a fully vertically integrated business model, which allows us to control every phase of the production process from feed to final product. Our integrated operations consist of breeding stock, contracting with growers to raise the birds, producing and delivering feed, processing, further processing and marketing of chicken products. As a vertically integrated company, we are able to better manage food safety and quality, as well as more effectively control margins and improve customer service. Today, we operate nine integrated complexes, comprising nine hatcheries; nine feed mills; nine slaughter processing plants; and two prepared foods plants. Our operations are located across six states through the southeastern United States and are strategically located to access raw materials in an effective manner and ensure that customers receive the freshest products in 1 TABLE OF CONTENTS a timely manner. Combined with our network of approximately 1,100 contract growers, we believe we are well-positioned to supply the growing demand for our products and ensure the highest quality products and services for our customers. Our Industry The U.S. poultry industry is a large, attractive and growing sector, driven by strong demand for and consumption of chicken in the United States as well as in attractive and growing export markets around the world. The United States consumes more chicken than any other animal protein (approximately 33.0 billion pounds projected in calendar year 2015 according to the U.S. Department of Agriculture ( USDA )), and chicken is the second most consumed animal protein globally after pork. The United States is the world s largest producer of chicken and is projected to produce approximately 40.0 billion pounds of ready-to-cook broiler meat (any meat from chickens raised specifically for meat production, as opposed to laying hens) in calendar year 2015, representing 20.6% of the total world production. China and Brazil are the second and third largest producers of broiler meat, with 15.0% and 14.9% of the world market share, respectively, according to the USDA. According to the USDA, chicken production in the United States has grown from 1998 through 2014 at a compound annual growth rate ( CAGR ) of 2.0%. Several factors contribute to the continued growth in the sector. In the United States, chicken is a more affordable animal protein compared to beef and pork. It is also widely viewed as a healthier alternative to other animal proteins, provides versatility and consistent quality for preparers of meals, and is increasingly being introduced as the anchor animal protein for many menus across the quick service restaurant ( QSR ), casual dining and broader foodservice channels. In addition to robust domestic consumption trends, the U.S. poultry industry has capitalized on strong growth in demand for chicken in an increasing number of attractive export markets. According to the USDA, exports accounted for nearly 19.2% of total U.S. poultry production in 2014, up from 15.7% in 1998. Rising standards of living in emerging markets, driven by growing middle class populations in developing countries, have resulted in an increase in global animal protein demand. According to the USDA, the export of U.S. chicken products increased at an average annual growth rate of 3.0% from 1998 through 2014. The United States is the second-largest exporter of broiler meat behind Brazil. The United States is projected to export 6.7 billion pounds of broiler meat in calendar year 2015, which would account for 29.2% of the total world exports and 16.9% of the total U.S. production, according to the USDA. Our Competitive Strengths We believe our competitive strengths position us to continue to be a leading poultry producer in the United States. Our vertical integration gives us control over our supply of chicken and chicken parts, helping to ensure high quality products. Our processing facilities offer a wide range of capabilities and are suited for high-volume production as well as smaller value-added production runs, which meet both the capacity and quality requirements of our customer base. We believe that we have established a reputation for partnering with the entire supply chain to deliver dependable quality, innovation and highly responsive customer service. We believe these strategies position Wayne Farms to be the favored chicken supplier to quality conscious customers. Leading fresh poultry franchise. We are currently the sixth largest integrated producer and processor of broiler chickens in the United States, producing approximately 2.4 billion pounds of chicken products and generating over $2.2 billion in total revenue in the fiscal year ended March 28, 2015. We are primarily engaged in the production and processing of fresh and prepared foods chicken products to some of the largest chain restaurant, industrial, fresh meat distributor, institutional and regional foodservice distribution companies in the country. We offer deboned, value-added marinated, breaded, cooked and individually frozen products, both fresh and prepared foods, to our customers through national and international distribution channels. We have the capacity to process more than 6.5 million birds per week for a total of more than 2.7 billion pounds of live chicken annually. We have become a valuable partner to our customers and a recognized industry leader by consistently providing high-quality, innovative products and services designed to meet their needs and enhance their respective businesses. Best-in-class operator and low-cost producer. We currently operate nine fresh processing and two prepared foods facilities, located in Alabama, Arkansas, Georgia, Mississippi and North Carolina. All of our fresh 2 TABLE OF CONTENTS facilities have hatching, feed mill, slaughter and deboning capabilities. The presence of all critical production stages in-house at each facility allows us to streamline our operations, reduce production costs, ensure optimal breeding and feeding decisions, and provide high quality products. Our facilities are modernized as a result of over $130 million spent in capital expenditures in the past three fiscal years. In our fresh business, we have improved and upgraded chillers, installed new lines to process larger birds and upgraded weigh-scale and packaging to reduce waste. We also have recently undertaken restructuring initiatives to enhance our prepared foods operations. Key changes we have implemented include improving our management team and sales force strategy, increasing capacity utilization, closing unprofitable lines and facilities, and identifying and implementing cost savings programs. Our focus on quality and food safety allows us to target customers that have strong brand equity and place a high value on quality, consistency, food safety and predictability of products and services. All of our facilities are USDA inspected and are Safe Quality Foods ( SQF ) 2000 Level 2 certified. In addition, American Society for Quality ( ASQ ) certified personnel ensure that our internal audit programs reflect current industry best practices. Attractive, blue-chip customer base. Our customer base is characterized by strong, long-term partnerships with leading blue-chip companies, which represent some of the largest accounts in the country. At present, we have over 400 customers balanced across our distribution channels, including foodservice distribution (e.g., US Foods, Gordon Food Service and Sysco Corporation), retail (e.g., Costco Wholesale Corporation and H.E. Butt Grocery Company), fresh meat distributors (e.g., Boar s Head Provisions, Perdue Farms and Tyson Foods, Inc.), national and regional restaurant chains (e.g., Chick-fil-A, Jack in the Box and Little Caesar s), industrial (e.g., Nestle S.A. and HJ Heinz Co.) and export (e.g., AJC International). Our leadership in cultivating long-standing strategic partnerships is evidenced by the average length of our customer relationships. As of March 28, 2015, the average length of our relationship with our top ten customers was over 15 years. Furthermore, we benefit from limited customer concentration in which our three largest customers collectively accounted for approximately 15% of our total sales and no single customer contributed more than 6.1% of our total sales in fiscal year 2015. The depth of our customer relationships provides a foundation for recurring revenues as well as a platform for growth. Experienced management team. We have a proven senior management team whose tenure in the chicken and food industries has spanned numerous market cycles and which is among the most experienced in the industry. Our senior management team is led by Elton Maddox, our Chief Executive Officer, who has over 41 years of experience in the chicken industry. The other members of our senior executive team have backgrounds with leading agribusiness and food companies, including, among others, Perdue Farms, Pilgrim s Pride Corporation, ConAgra Foods, Inc., PepsiCo Inc., Monsanto Company and Sara Lee Corporation. Our management team has improved the competitiveness of our business and instilled a continuous improvement culture focused on operating efficiency. Management s strategy includes a system-wide competitive gap analysis to improve plant-level profitability, which we believe drives team engagement and local ownership over the results at each plant. We believe that our senior team s combination of backgrounds and experience will continue to provide the foundation for a results-oriented business that will maintain and strengthen long-term partnerships with vendors and customers to ensure the future growth of our company. We also benefit from shared ideas and experience with the management team of our majority stockholder, Continental Grain, a respected leader in the agribusiness industry that was founded in 1813. Strategic alliance and support from Continental Grain. As a majority-owned subsidiary of Continental Grain, we have worked closely with Continental Grain s management team to leverage their extensive agribusiness experience and implement strategies to manage the risks associated with volatile commodity inputs. Further, we regularly interact with other Continental Grain companies to better understand global trends and share best practices. We also expect that our relationship with Continental Grain will help us as we continue to build new strategic alliances and enhance our existing strategic relationships. Our Growth Strategy Our growth strategy is focused in these key areas: Expansion and optimization of existing plants. We expect to continue to focus on growing our existing customer relationships and building new partnerships through both our fresh and prepared foods chicken products and services. Through continued penetration of our existing channels and partnering with our customers to deliver customized, value-added and innovative products, we believe that we are well-positioned to continue our 3 TABLE OF CONTENTS organic growth. Our customers often look to partner with Wayne Farms as they continue to expand their respective businesses. For example, recently, one of our larger customers, a recognized leader in their segment, approached us about substantially expanding our supply to that customer. We have developed a multi-year expansion plan with this customer that will include doubling one of our existing plants in the near term and the potential for further expansion in the future. We also continually look for opportunities to optimize existing facilities and incrementally expand our current capabilities. We have identified opportunities to lower our feed costs through consolidation and expansion of feed mills, which will also allow us to take advantage of capacity expansion opportunities. Our operations teams continually work to identify production bottlenecks and develop plans to eliminate them. Furthermore, we plan to capitalize on robust export market trends for U.S. poultry. Continued product innovation. We work with our partners to continually develop new products and processes that meet their needs, including the opportunity to further expand the depth and breadth of our prepared foods product offerings. Through our proprietary approach to product development and planning, INNOVATION CENTRAL , our team of R&D staff is able to leverage its expertise in culinology, food science, process development and ideation to find creative solutions for our customers and generate demand for our products. We have demonstrated recent success with several innovative products (e.g., chicken sausages and waffle bites). In addition, our prepared foods facilities have been approved by the USDA for multi-protein capabilities that will allow us to specialize in custom designed convenience foods. We offer customers fast-track commercialization and can provide limited initial roll-outs as well as broader roll-outs. Industry consolidation opportunities. The U.S. poultry industry remains fragmented, with a significant percentage of producers consisting of smaller family-owned businesses. While the top two competitors in the poultry industry have a combined 38% market share, 13 companies make up the next 50% of the market. We believe that we are well prepared to participate in industry consolidation as opportunities arise and are positioned as a consolidator in an industry consisting of many private and family-owned businesses. We believe there is a clear path to further increasing our market share in the industry, and we have demonstrated our ability to successfully integrate acquired plants through our acquisition of the production facility in Dothan, Alabama in 2013. We believe we have a management team, processes and capacity to integrate several companies into our platform. As a public company, our access to the equity market and ability to use our equity as currency will help facilitate our participation in industry consolidation and allow us to diversify our business. Corporate History We and our predecessors have been in the agricultural and poultry businesses for nearly 120 years. In 1895, the Marsden Company of Philadelphia formed Allied Mills, Inc., a commercial feed manufacturer that used its expertise in the poultry feed business to expand into the manufacturing and sale of poultry. In 1981, Continental Grain acquired all of Allied Mills, Inc. and the poultry component became Continental Grain s new Poultry Division. In 2000, the poultry division became a separate entity and was renamed Wayne Farms LLC. Today, Wayne Farms LLC operates nine fresh processing and two prepared foods facilities throughout the southeastern United States as well as nine hatcheries and nine feed mills and partners with approximately 1,100 independent contract growers. The Reorganization Transactions Prior to the consummation of the Reorganization Transactions described below, all of Wayne Farms LLC s outstanding equity interests are owned by Continental Grain. In connection with this offering, we and Continental Grain intend to complete a reorganization, which we refer to as the Reorganization Transactions. As part of the Reorganization Transactions, the following steps will occur: we and Continental Grain will enter into the amended and restated limited liability company agreement of Wayne Farms LLC (as amended and restated from time to time, the Wayne Farms LLC Agreement ), and we will be admitted as the sole managing member of Wayne Farms LLC; pursuant to the terms of the Wayne Farms LLC Agreement, Wayne Farms LLC will be unitized to provide for Class A Units of Wayne Farms LLC (the Class A Units ) and Class B Units of Wayne Farms LLC (the Class B Units ) having identical economic rights. The existing membership interests of Wayne Farms LLC will be converted into the Class B Units, all of which will be held by Continental Grain; 4 TABLE OF CONTENTS we will amend and restate our certificate of incorporation (as amended and restated from time to time, our Certificate of Incorporation ) and will be authorized to issue two classes of common stock: Class A common stock and Class B common stock, which we refer to collectively as our common stock. The Class A common stock and Class B common stock will each provide holders with one vote on all matters submitted to a vote of stockholders. Shares of our common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders. Our Class B common stock will not have any of the economic rights (including rights to dividends and distributions upon liquidation) that our Class A common stock will have; we will sell shares of our Class A common stock to the public in this offering and contribute all of the net proceeds of this offering (after deducting underwriting commissions and discounts and certain offering expenses) to Wayne Farms LLC in exchange for Class A Units equal in number to the shares of our Class A common stock issued in this offering; Continental Grain will contribute a nominal amount to us in exchange for a number of shares of our Class B common stock equal to the number of Class B Units issued as described above; and we will enter into a tax receivable agreement with Continental Grain (the Tax Receivable Agreement ) (see Certain Relationships and Related Party Transactions Tax Receivable Agreement ). See Organizational Structure for further details. As described above, as part of the Reorganization Transactions, we intend to contribute all of the net proceeds from this offering (after deducting underwriting commissions and discounts and certain offering expenses) to Wayne Farms LLC (including any net proceeds resulting from the underwriters decision to exercise their option to purchase additional shares) in exchange for a number of Class A Units equal to the number of shares of our Class A common stock sold in this offering (meaning a contribution amount of $18.23 per Class A Unit, based on an assumed initial offering price of $19.50 per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus), provided that we may reduce such contribution amount, without reducing the number of Class A Units we receive, by the amount of any expenses we pay in connection with this offering for which we are not otherwise reimbursed by Wayne Farms LLC). Wayne Farms LLC will use the net proceeds of the offering contributed to it as follows: (i) approximately $161.9 million will be used to repay existing indebtedness, (ii) approximately $25 million will be used for working capital and general corporate purposes and (iii) the remainder (approximately $38.7 million based on an assumed initial offering price of $19.50) will be used to make a distribution to Continental Grain. Any additional proceeds from the exercise of the underwriters option to purchase additional shares will be used to make a further distribution to Continental Grain. 5 TABLE OF CONTENTS The following diagram depicts our organizational structure following the Reorganization Transactions, including this offering and the application of the net proceeds from this offering (assuming an initial public offering price of $19.50 per share of Class A common stock (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus) and no exercise of the underwriters option to purchase additional shares). This chart is provided for illustrative purposes only and does not purport to represent all legal entities within our organization: Immediately following the Reorganization Transactions, including this offering: we will hold all of the Class A Units; Continental Grain will hold all of the Class B Units; public stockholders will own all of our Class A common stock (representing 24% of the combined voting power) and Continental Grain will own all of our Class B common stock (representing 76% of the combined voting power). In connection with the Reorganization Transactions, we will be admitted as the sole managing member of Wayne Farms LLC pursuant to the Wayne Farms LLC Agreement. Because we will manage and operate the business and control the strategic decisions and day-to-day operations of Wayne Farms LLC and will also have a substantial financial interest in Wayne Farms LLC, we will consolidate the financial results of Wayne Farms LLC, and a portion of our net income (loss) will be allocated to the non-controlling interest to reflect the entitlement of Continental Grain to a portion of Wayne Farms LLC s net income (loss). In addition, because Wayne Farms LLC will be under the common control of Wayne Farms affiliates before and after the Reorganization 6 TABLE OF CONTENTS Transactions, we will account for the Reorganization Transactions as a reorganization of entities under common control and will initially measure the interests in the assets and liabilities of Wayne Farms LLC at their carrying amounts as of the date of the completion of the Reorganization Transactions. The Reorganization Transactions and future exchanges by Continental Grain of Class B Units for shares of our Class A common stock are expected to make available favorable tax attributes, including in the case of future exchanges of Class B Units, tax basis adjustments. These tax attributes would not be available to us in the absence of those transactions. Both the existing and anticipated tax basis adjustments are expected to reduce the amount of tax that we would otherwise be required to pay in the future. In connection with the Reorganization Transactions, we will enter into the Tax Receivable Agreement, which will obligate us to make payments to Continental Grain generally equal to 85% of the applicable cash savings that we actually realize as a result of these tax attributes and tax attributes resulting from payments made under the Tax Receivable Agreement. We will retain the benefit of the remaining 15% of these cash savings. See Certain Relationships and Related Party Transactions Tax Receivable Agreement. Our Principal Stockholder Following the Reorganization Transactions, including this offering, Continental Grain will control approximately 76% of the combined voting power of our outstanding common stock (or 73.4% if the underwriters exercise their option to purchase additional shares). As a result, Continental Grain will control any action requiring the general approval of our stockholders, including the election of our board of directors (which will control our management and affairs), the adoption of amendments to our Certificate of Incorporation and by-laws and the approval of any merger or sale of substantially all of our assets. Because Continental Grain will hold more than 50% of the combined voting power of our outstanding common stock, we will be a controlled company under the corporate governance rules for the NASDAQ-listed companies. Therefore we will be permitted to, and we intend to, elect not to comply with certain corporate governance requirements. See Management Controlled Company. We will also be party to a Stockholders Agreement (as defined below) with Continental Grain, pursuant to which Continental Grain will be entitled to certain veto rights including with respect to any payment or declaration of any dividend or other distribution on our equity securities (subject to certain exceptions specified therein), as long as Continental Grain Ownership (as defined below) is at least 25%. See Certain Relationships and Related Party Transactions Stockholders Agreement. Control by Continental Grain may give rise to actual or perceived conflicts of interest with holders of our Class A common stock. Because Continental Grain will hold part of its economic interest through Wayne Farms LLC rather than through the public company, it may have conflicting interests with holders of shares of Class A common stock. In addition, Continental Grain s significant ownership in us, its rights under the Stockholders Agreement and its resulting ability to effectively control us may discourage a third party from making a significant equity investment in us or a transaction involving a change of control, including transactions in which holders of shares of our Class A common stock might otherwise receive a premium for such holders shares over the then-current market price. Corporate Information We were formed as a Delaware corporation on March 4, 2015. We are a newly formed corporation, have no material assets, other than ownership interests in Wayne Farms LLC after consummation of the Reorganization Transactions, and have not engaged in any business or other activities except in connection with the Reorganization Transactions described under Organizational Structure. Our corporate headquarters are located at 4110 Continental Drive, Oakwood, GA 30566, and our telephone number is (678) 450-3111. Our website address is www.waynefarms.com. Information contained on our website does not constitute a part of this prospectus. 7 TABLE OF CONTENTS
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common shares, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Unless the context otherwise requires, we use the terms "company," "we," "us" and "our" in this prospectus to refer to Axovant Sciences Ltd. and our wholly-owned subsidiary, Axovant Sciences, Inc. Company Overview We are a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of novel therapeutics for the treatment of neurodegenerative disorders. Our goal is to be the leading biopharmaceutical company focused on the treatment of dementia, a condition characterized by a significant decline in mental capacity and impaired daily function. Our near-term focus is to develop our product candidate, which we refer to as RVT-101, for the treatment of Alzheimer's disease and other forms of dementia. We acquired worldwide rights to RVT-101 from Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, collectively GSK, in December 2014. We plan to commence a Phase 3 pivotal program of RVT-101 for the treatment of mild-to-moderate Alzheimer's disease in the fourth quarter of 2015. If our Phase 3 program is successful, we plan to seek regulatory approval and commercialize RVT-101 in the United States and the European Union. In the long-term, we intend to develop a pipeline of product candidates to comprehensively address the cognitive, behavioral and functional components of dementia. Alzheimer's disease, a form of dementia, is a progressive neurodegenerative disorder that results in significant impairments in cognition and day-to-day functioning. According to the Alzheimer's Association, Alzheimer's disease affects approximately 5.3 million people in the United States. It is estimated that between 70% and 90% of Alzheimer's disease patients age 65 and older are classified as having mild-to-moderate Alzheimer's disease. No new chemical entity has been approved by the U.S. Food and Drug Administration, or the FDA, for the treatment of Alzheimer's disease since 2003. RVT-101 is an orally administered, potent antagonist of the 5-hydroxytryptamine 6, or 5-HT6, serotonin receptors in the brain. Antagonism of the 5-HT6 receptor is a novel mechanism that promotes the release of acetylcholine, glutamate and other neurotransmitters. These neurotransmitters are believed to be critical for alertness, memory, thought and judgment, key components of cognition and function that are impaired in patients with Alzheimer's disease. We plan to develop RVT-101 for use in combination with donepezil and potentially other cholinesterase inhibitors. Donepezil, a generic drug also marketed under the trade name Aricept by Eisai Co., Ltd. and Pfizer, Inc., is one of the most commonly used cholinesterase inhibitors. Cholinesterase inhibitors are the current standard of care for the treatment of mild-to-moderate Alzheimer's disease, and the only class of drugs approved by the FDA for the treatment of patients with mild Alzheimer's disease. Based on preclinical and clinical data collected to date, we believe RVT-101, when used in combination with donepezil, works additively to increase the concentration of acetylcholine and other neurotransmitters and thereby synergistically improve cognition and function in patients with Alzheimer's disease. We believe RVT-101, which is being developed as a once-daily oral medication, has the potential to be a best-in-class 5-HT6 receptor antagonist for the treatment of Alzheimer's disease based on its safety, tolerability and efficacy for up to 48 weeks, as demonstrated in a 684-subject, randomized, placebo-controlled Phase 2b trial conducted by GSK. We believe this is meaningful, in part, because currently marketed Alzheimer's disease drugs were approved on efficacy data of 28 weeks or less. In this Phase 2b trial, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in cognition and function, as compared to those receiving donepezil alone. AMENDMENT No. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Cognition and function are the two endpoints that have historically been the basis for FDA approval for drugs to treat Alzheimer's disease. To determine whether an outcome is statistically significant, a "p-value" is calculated. Historically, the FDA and European Medicines Agency, or the EMA, have generally required newly approved drugs to demonstrate an effect with a p-value of less than 0.05, which suggests there is a less than 5.0% probability that the observed effect is due to chance alone. When the p-value is less than 0.05, the result is generally considered "statistically significant." We intend to conduct a Phase 3 pivotal program in subjects with mild-to-moderate Alzheimer's disease designed to confirm the results of the Phase 2b clinical trial conducted by GSK, and we plan to commence this program in the fourth quarter of 2015. We have assembled a team with substantial experience in developing and obtaining approval for drugs for central nervous system disorders, including Dr. Lawrence Friedhoff, the Chief Development Officer of Axovant Sciences, Inc., who previously led the development of Aricept at Eisai Co., Ltd. Alzheimer's Disease: Overview and Market Opportunity According to Alzheimer's Disease International, more than 44 million individuals worldwide suffer from dementia, and based on scientific literature, approximately 34 million individuals are affected by Alzheimer's disease. In addition, the prevalence of Alzheimer's disease is expected to increase over time, with 13.8 million people age 65 and older projected to have the disease by 2050 in the United States, up from 5.0 million in 2014. This projection does not include Alzheimer's disease patients under the age of 65, who currently account for approximately 4% of the overall Alzheimer's disease population. In addition to its debilitating effect on patients' cognition and day-to-day functioning, Alzheimer's disease places a significant burden on the healthcare system. According to the Alzheimer's Association, the aggregate cost of care in 2014 for patients with Alzheimer's disease and other types of dementia in the United States was estimated to be $214 billion, over half of which is borne by the Medicare system. Alzheimer's disease is often grouped into three categories based on severity: mild, moderate and severe. Although the relative prevalence of each of these categories is not well-defined in the literature, a report published by the Alzheimer's Society, a leading care and research charity in the United Kingdom for individuals and families that suffer from dementia, estimates that between 70% and 90% of all Alzheimer's disease patients age 65 and older have mild-to-moderate Alzheimer's disease. The current standard of care for the treatment of patients with mild-to-moderate Alzheimer's disease includes the use of cholinesterase inhibitors initiated at the time of diagnosis. Currently marketed cholinesterase inhibitors include donepezil (marketed by Eisai Co., Ltd. and Pfizer, Inc. as Aricept), rivastigmine (marketed by Novartis AG as Exelon) and galantamine (marketed by Janssen Pharmaceuticals, Inc. as Razadyne). Cholinesterase inhibitors continue to be used widely for the treatment of patients with Alzheimer's disease and can lead to clinically significant improvements in cognition. However, most patients require additional therapy due to progression of their disease. Our Product Candidate: RVT-101 We acquired worldwide rights to RVT-101 from GSK in December 2014. RVT-101 is an orally administered, potent antagonist of the 5-HT6 serotonin receptor. By antagonizing the 5-HT6 receptor, RVT-101 helps enhance the release of acetylcholine, glutamate and other neurotransmitters that are essential to cognition. 5-HT6 receptors are primarily localized to the central nervous system, or CNS, particularly in regions of the brain that modulate cognition. Because 5-HT6 receptor antagonists do not significantly increase levels of acetylcholine outside of the CNS, it is believed that 5-HT6 receptor antagonists have limited peripheral side effects, including many that are commonly associated with cholinesterase inhibitors. In addition, we believe that RVT-101's action as a 5-HT6 receptor antagonist provides a strong mechanistic rationale to support its use in combination with cholinesterase inhibitors. While cholinesterase inhibitors help prevent the breakdown of acetylcholine, 5-HT6 receptor antagonists promote the release of acetylcholine. Therefore, when used in combination with one another, we believe that 5-HT6 receptor antagonists and cholinesterase Axovant Sciences Ltd. (Exact name of registrant as specified in its charter) Bermuda (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) Clarendon House 2 Church Street Hamilton HM 11, Bermuda +1 (441) 295-5950 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents inhibitors increase the concentration of acetylcholine through complementary mechanisms without exacerbating the toxicities associated with cholinesterase inhibitors. Clinical Development Prior to our acquisition of RVT-101 in December 2014, GSK conducted 13 clinical trials for RVT-101 involving over 1,250 individuals, which included healthy subjects as well as subjects with mild-to-moderate Alzheimer's disease. In a Phase 2b clinical trial of 684 subjects with mild-to-moderate Alzheimer's disease, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in cognition at 12, 24 and 48 weeks following initiation of treatment, compared to subjects that received donepezil alone, as measured by the Alzheimer's Disease Assessment Scale-cognitive, or ADAS-cog, subscale. We believe this is a meaningful result because currently marketed Alzheimer's disease drugs were approved on efficacy data of 28 weeks or less. In addition to RVT-101's effect on cognition, subjects that received 35 mg RVT-101 in combination with donepezil achieved a statistically significant improvement in function at 12, 24 and 36 weeks following the initiation of treatment, compared to subjects that received donepezil alone, as measured by the Alzheimer's Disease Cooperative Study Activities of Daily Living, or ADCS-ADL, a commonly used scale evaluating function in which a subject's ability to perform a list of daily activities is evaluated based on information obtained from the subject and his or her caregiver. We believe these ADCS-ADL results are particularly noteworthy in light of the fact that the decline in the ability of Alzheimer's disease patients to perform activities essential to daily living places a significant burden on caregivers and the healthcare system. The graphs below present the results from the Phase 2b clinical trial described above on ADAS-cog and ADCS-ADL. ADAS-cog Change Over 48 Weeks Corporate Services Company 2711 Centerville Road Wilmington, DE 19808 (866) 846-8765 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents ADCS-ADL Change Over 48 Weeks The tolerability profile of RVT-101 in the Phase 2b clinical trial conducted by GSK, with the relevant comparisons to placebo when added to a stable dose of donepezil, is shown in the table below. 35 mg RVT-101 plus Donepezil Placebo plus Donepezil 24 weeks Withdrawals from trial 11% 12% 48 weeks Withdrawals from trial 20% 22% 24 weeks Drug-related serious adverse events 0% < 1% 48 weeks Drug-related serious adverse events 0% < 1% 24 weeks Drug-related adverse events 6% 9% 48 weeks Drug-related adverse events 7% 13% Phase 3 Development Plan We intend to conduct a Phase 3 pivotal program in subjects with mild-to-moderate Alzheimer's disease designed to confirm the results of the Phase 2b clinical trial conducted by GSK. We met with the FDA at the end of March 2015 to discuss our development plan for RVT-101. We believe that this meeting confirmed the results of the prior end-of-Phase 2 meeting between the FDA and GSK and that our proposed Phase 3 trial, if successful, would, in conjunction with GSK's Phase 2b clinical trial, be sufficient to support the filing of a new drug application, or NDA. The proposed trial would randomize patients already on a stable background of donepezil therapy to receive adjunctive treatment with either 35 mg RVT-101 or placebo once daily for a period of at least 24 weeks. We intend to begin this pivotal trial in the fourth quarter of 2015, and if the results of this trial are positive, our goal is to submit an NDA to the FDA and a marketing authorization application, or MAA, to the EMA by the end of 2017. We may conduct additional clinical trials to further support the commercial potential of RVT-101 in the United States, the European Union, Japan and other major markets. Copies to: Frank F. Rahmani John T. McKenna Divakar Gupta Cooley LLP 3175 Hanover Street Palo Alto, CA 94304 (650) 843-5000 Marc D. Jaffe Nathan Ajiashvili Latham & Watkins LLP 885 Third Avenue New York, NY 10022 (212) 906-1200 Table of Contents Other Potential Indications for RVT-101 Beginning in the second half of 2015, we plan to evaluate RVT-101 as a potential treatment for forms of dementia other than mild-to-moderate Alzheimer's disease, such as severe Alzheimer's disease, dementia with Lewy bodies, Parkinson's disease dementia and vascular dementia. We also intend to augment our current pipeline through the acquisition or in-license of additional late-stage product candidates for the treatment of other aspects of dementia that we believe can be developed and commercialized in a capital-efficient manner. Our Strategy Our goal is to be the leading biopharmaceutical company focused on the treatment of dementia. The key elements of our strategy to achieve this goal include the following: Rapidly advance RVT-101 for the treatment of mild-to-moderate Alzheimer's disease. Develop RVT-101 for severe Alzheimer's disease and other forms of dementia. Acquire or in-license late-stage product candidates for the treatment of other aspects of dementia in a capital-efficient manner. Maximize the commercial potential of our product candidates. Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common shares. These risks are discussed more fully in the section titled "Risk Factors" and include, among others: We have a limited operating history and have never generated any product revenues. We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability. Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. We are heavily dependent on the success of RVT-101, our only product candidate, and if RVT-101 does not receive regulatory approval or is not successfully commercialized, our business may be harmed. We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of RVT-101. We may be required to make significant payments in connection with our acquisition of RVT-101 from GSK. Under our amended and restated bye-laws, we may reduce the voting power of your common shares without your consent. Clinical trials are very expensive, time-consuming, difficult to design and implement and involve an uncertain outcome. We intend to rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business. If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets. We do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of RVT-101 and any future product candidate. We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively. We currently have a limited number of employees who are employed by our wholly-owned subsidiary, Axovant Sciences, Inc., and we rely on Roivant Sciences, Inc. to provide various administrative, research and development and other services. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. Table of Contents If we are unable to adequately address these and other risks we face, our business, financial condition, operating results and prospects may be adversely affected. In addition, we are an emerging growth company, as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and therefore we intend to take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in this prospectus, our periodic reports and our proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We may take advantage of these exemptions for up to five years or until we are no longer an "emerging growth company." Relationship with Roivant Sciences Ltd., Roivant Sciences, Inc. and Axovant Sciences, Inc. Roivant Sciences Ltd. will be our controlling shareholder. We are a wholly-owned subsidiary of Roivant Sciences Ltd., a company focused on the acquisition, development and commercialization of late-stage product candidates that are non-strategic, deprioritized or under-resourced at other biopharmaceutical companies. After the closing of this offering, we expect to be a "controlled company" within the meaning of the corporate governance rules of the New York Stock Exchange, or the NYSE. Assuming we sell the number of the shares set forth on the cover page of this prospectus, Roivant Sciences Ltd. will own, in the aggregate, approximately 80.7% of our outstanding common shares, or approximately 78.5% if the underwriters exercise their option to purchase additional common shares in full. Roivant Sciences Ltd. will be able to exercise control over all matters requiring shareholder approval, including the election of our directors and approval of significant corporate transactions. We have entered into an information sharing and cooperation agreement with Roivant Sciences Ltd. For a description of this agreement, see the section titled "Certain Relationships and Related Party Transactions Information Sharing and Cooperation Agreement." Services Agreement with Roivant Sciences, Inc. We and our wholly-owned subsidiary, Axovant Sciences, Inc., have received, and will continue to receive, various services provided by our affiliate, Roivant Sciences, Inc., which is also a wholly-owned subsidiary of Roivant Sciences Ltd. These services include, but are not limited to, the identification of potential product candidates, project management of clinical trials and other development, administrative and financial activities. Following the completion of this offering, we expect that our reliance on Roivant Sciences, Inc. will decrease over time as we, Axovant Sciences, Inc. and any other future subsidiary of ours continue to hire the necessary personnel to manage the development and potential commercialization of RVT-101. We and Axovant Sciences, Inc. have entered into a services agreement with Roivant Sciences, Inc. in connection with the provision of these services. For a description of this agreement, see the section titled "Certain Relationships and Related Party Transactions Services Agreement with Roivant Sciences, Inc." Corporate Information We are an exempted limited company incorporated under the laws of Bermuda on October 31, 2014. Our registered office is located in Bermuda at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, and we also have business operations at 14 Par-La-Ville Road, Hamilton HM08, Bermuda. The telephone number of our registered office is +1 (441) 295 5950. Our website address is www.axovant.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common shares. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. Table of Contents THE OFFERING Common shares offered by us 17,900,000 common shares Option to purchase additional shares We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase an additional 2,685,000 common shares. Common shares to be outstanding immediately after this offering 92,900,000 common shares (or 95,585,000 common shares if the underwriters exercise their option to purchase additional common shares in full) Use of proceeds We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $230.1 million, assuming the shares are offered at $14.00 per common share, which is the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering primarily for the clinical development of our product candidate, RVT-101. The remaining proceeds, if any, will be used for working capital and general corporate purposes. See the section titled "Use of Proceeds" for additional information. Controlled company Upon the closing of this offering, Roivant Sciences Ltd. will beneficially own a controlling interest in us and we expect to be a "controlled company" under NYSE rules. As a controlled company, we may elect to avail ourselves of the controlled company exemption under the corporate governance requirements of the NYSE.
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001636300_ziwira-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001636300_ziwira-inc_prospectus_summary.txt
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+SUMMARY OF PROSPECTUS One should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the "Company", "Ziwira" and refer to Ziwira, Inc. General Information about Our Company Ziwira, Inc. was formed under the laws of the State of Delaware on January 21, 2015 with plans to operate an online portal for green industry topics, products and services. The Company currently has authorized 250,000,000 shares of common stock, par value $0.0001 The Company plans to develop a web-based platform that acts as a green energy portal, where users can exchange ideas and information, and can also buy and sell environmentally friendly services and products. The company plans to receive fees for advertisement from users and a commission when products or services are purchased on the platform between users. The Company currently has no customers or users and has not generated any revenues. Our business operations to date have been related to the development of our website platform, which, once completed, will allow us to begin developing a user base. The Company s current business plans include developing its online platform, in order to feature information, user services and products, and also grow its user base. The Company s immediate plan is to generate revenue by way of receiving commissions and subscription fees from users, with the goal of becoming a one stop shop of information, products and services in the green industry. The Company currently has no customers or users and has not generated any revenues. The Company intends to provide the platform whereby green information, products and services may be shared, bought and sold between users. Our business operations to date have been related to the development of our website platform, which, once completed, will allow us to begin developing a user base. The terms website, platform, marketplace and portal are used interchangeably in this prospectus. The Company plans to initially market to potential users in the United States and the Middle East, specifically Dubai. The Company hopes to develop its user base to include individuals, corporate entities and government agencies, all of which would be able to exchange information, products and services through the online platform. The Company believes that by using a web-based portal, there exists the ability for users from all countries to access the same information, which would allow for a geographically diverse user base. Currently, the Company does not have any users, but plans to begin marketing the website as soon as development is complete, which the company expects will take approximately six months from the completion of this offering due to the fact that the Company intends to use a portion of the proceeds from this offering to develop its website. In order to pursue its strategic objectives, the Company plans to utilize a portion of the proceeds received from this offering, as well as its available cash, cash generated from operations and additional cash as may be raised via equity or debt offerings as may be approved by its Board of Directors. The administrative office of the Company is located at 445 Park Avenue, 9th Floor, New York, NY 10022. The Company s phone number is 800-953-6593. The Company plans to use this office space until it requires larger space. The company fiscal year end is January 31. The Company has not been subject to any bankruptcy, receivership or similar proceeding. The Offering Following is a brief summary of this offering. Please see the "Plan of Distribution" section for a more detailed description of the terms of the offering. Securities Being Offered 20,000,000 shares of common stock, par value by the Company: $.0001, on a best-efforts basis Offering Price per Share: $0.35 Offering Period: The shares being sold by the Company are being offered for a period not to exceed 180 days, unless extended by the Board of Directors for an additional 90 days. Net Proceeds to Our Company: $6,952,686, if 100% of the shares are sold, $5,202,686 if 75% of the shares are sold, $3,452,686 if 50% of the shares are sold, $1,702,686 if 25% of the shares are sold, and $652,686 if 10% of the shares are sold. Use of Proceeds: The Company intends to use the proceeds received from the sale of its common stock to use as working capital, fund business operations and assist in asset purchases or acquisitions. Number of Shares Outstanding Before the Offering: 100,000,000 Number of Shares Outstanding After the Offering: 120,000,000, if all the shares are sold The Company officers, directors and control persons do not intend to purchase any shares in this offering. Selected financial data The following financial information summarizes the more complete historical financial information at the end of this prospectus. Total Expenses are composed of General and Administrative costs and Professional Fees. As of April 30, 2015 Balance Sheet Total Assets $12,500 Total Liabilities $350 Stockholder s Equity $12,150 For the Three Months Ending April 30, 2015 Statement of Operations Revenue $— Total Operating Expenses $9,328 Net Loss $(9,328)
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we", "us", "our", and "Company" are to Blackhawk USA.
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", "Cheetah Enterprises", "Cheetah", and "Company" are to Cheetah Enterprises, Inc. and its wholly-owned subsidiary, Cheetah Autos S.A. We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. A Cautionary Note on Forward-Looking Statements This Prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our industry's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. General Information about Our Company Cheetah Enterprises, Inc. was incorporated in the State of Nevada on June 27, 2014, as cheetahenterprises.com and changed its name to Cheetah Enterprises, Inc. on July 16, 2014 ("we," "us," "our," or the "Company"). The Company incorporated a wholly owned subsidiary in San Jose, Costa Rica on September 29, 2014, named Cheetah Autos SA. The Company's wholly owned subsidiary, Cheetah Autos SA, is a small company that operates as buyer and seller of quality used automobiles in the Costa Rican market. The Company also plans to import vehicles from the United States for resale in Costa Rica. Cheetah Enterprises, Inc. owns the domain names www.cheetahenterprises.com and www.cheetahautos.com, which we will use to develop websites once we raise funds from this offering. Our objective is to provide quality used vehicles in at competitive prices to customers in Costa Rica. Our Secretary, Juan Bordallo, with his knowledge or the Costa Rican market, will source quality used vehicles, largely in distress sales. Mr. Bordallo owns and operates a automobile repair shop that has been located in San Jose, Costa Rica location for over 14 years. It is our intention to leverage the repair shop's reputation to expand into offering cars for sale. We will require a minimum of $50,000, or 50% of this Offering, to have sufficient funds to purchase additional vehicles. We are a small early stage company and have just commenced business operations and generated our initial revenues in January 2015, from the purchase and sale of our first automobile. We will attempt to purchase another vehicle from current cash on hand, however, we will require the funds from this offering in order to purchase multiple vehicles to grow our current operations. Our auditors issued a "substantial doubt" going concern opinion. Our only assets since inception (June 27, 2014) are our cash and cash equivalents at February 28, 2015, consisting of approximately $27,918 in cash generated from the issuance of shares of Company common stock to our founders. Our monthly expense rate is currently $1,500 per month. Our funds on hand will only provide us with the ability to pay for the expenses related to this Offering and to purchase another vehicle. Currently we do not have sufficient capital to fund our business development. Per the Use of Proceeds section, we are attempting to raise $100,000, from this Offering. However, if we raise $75,000, we feel this is sufficient to develop the business for the next 12 months. If we are only able to raise $20,000, from the Offering, then we feel this will be sufficient for the next 12 months to cover professional fees for our reporting needs to the SEC and no additional business development. Table of Contents Our business and corporate address is Condominio Torres Paseo Colon, #604 San Jose, Costa Rica. Our telephone number is 506-8730-1923 and our registered agent for service of process is Nevada Business Services, 1805 North Carson Street, Carson City, NV 89701. Our fiscal year end is November 30. We received our initial funding of $33,850 through the sale of common stock to an officer and director, who purchased 12,500,000 and 4,270,000 shares of our common stock at $0.001 on July 7, 2014, for $12,500 and at $0.005 on October 23, 2014, for $21,350, respectively. Our financial statements from inception (June 27, 2014) through the period ended November 30, 2014, report no revenues and a net loss of $4,572. Our financials for the three months ended February 28, 2015, report revenues of $6,500 and a net loss of $4,722. This is our initial public offering. We are registering a total of 10,000,000 shares of our common stock. All of the shares being registered for sale by the Company will be sold at a price per share of $0.01 for the duration of this Offering. We will sell those 10,000,000 shares of common stock as a self-underwritten offering. There is no minimum amount we are required to raise in this Offering, and any funds received will be immediately available to us. This Offering will terminate on the earlier of the sale of all of the shares offered or 270 days after the effective date of the registration statement of which this Prospectus is a part, unless extended an additional 90 days by our board of directors. There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investments in our securities are not liquid. Emerging Growth Company We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of: 1. The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; 2. The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement; 3. The date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or 4. The date on which such issuer is deemed to be a 'large accelerated filer', as defined in section 240.12b-2 of title 46, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure and procedures for financial reporting. Table of Contents As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. The Offering Following is a brief summary of this Offering. Please see the PLAN OF DISTRIBUTION and TERMS OF THE OFFERING sections for a more detailed description of the terms of the Offering. Securities being Offered 10,000,000 shares of common stock. Offering price $0.01 per share for the duration of the Offering. Offering period This Offering will terminate on the earlier of the sale of all of the shares offered by the Company or 270 days after the effective date of the registration statement of which this Prospectus is a part, unless extended by our board of directors for an additional 90 days Securities Issued and outstanding 16,770,000 shares of common stock are issued and outstanding before the offering and 26,770,000 shares will be outstanding after the Offering, assuming all shares are sold. However, if only 50% or 25% of the shares being offered are sold, there will be 21,770,000 or 19,270,000 shares outstanding, respectively. Offering Proceeds $100,000 assuming 100% of the shares being sold. However, if only 50% or 25% of the shares being offered are sold, the proceeds will be $50,000 or $25,000, respectively. Registration costs We estimate our total offering registration costs to be $16,000. If we experience a shortage of funds prior to funding, our directors may advance funds to allow us to pay for offering costs, filing fees, and correspondence with our shareholders; however, our directors have no formal commitment or legal obligation to advance or lend funds to the Company. Our officers, directors, control persons and/or affiliates do not intend to purchase any shares in this Offering. If all the shares in this Offering are sold, our executive officers and directors will own 62.6% of our common stock. However, if only 50% or 25% of the shares in this Offering are sold, our executive officers and directors will own 77.0% or 87.0%, respectively. Regulation M Our officers and directors will offer and sell the shares offered hereby and are aware that they are required to comply with the provisions of Regulation M promulgated under the Securities Exchange Act of 1934. With certain exceptions, Regulation M precludes the officers and directors, sales agents, any broker-dealer or other person who participates in the distribution of shares in this Offering from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Table of Contents
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY The following is a summary of some of the information contained in this prospectus. It does not contain all the details concerning Horizon or the spin-off, including information that may be important to you. We urge you to read this entire document carefully, including Risk Factors, Selected Historical Combined Financial Data and Unaudited Pro Forma Combined Financial Data and the combined financial statements and the notes to those financial statements included elsewhere in this prospectus. Except as otherwise indicated or unless the context otherwise requires, the information included in this prospectus assumes the completion of the separation of Horizon from TriMas and the related distribution of our common stock. Horizon Global Horizon is comprised of TriMas historical Cequent businesses. We believe we are a leading designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products on a global basis, serving the automotive aftermarket, retail and original equipment, or OE, channels. These products are designed to support original equipment manufacturers, or OEMs, original equipment suppliers, retail and aftermarket customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. We believe that our brand names and product lines are among the most recognized and extensive in the industry. We have positioned our product portfolios to create pricing options for entry-level to premium products across all of our market channels. We believe that no other competitor features a comparable array of components and recognized brand names. Our brand names include Aqua Clear , Bulldog , BTM, DHF , Draw-Tite , Engetran, Fulton , Harper , Hayman-Reese , Hidden Hitch , Highland , Kovil , Laitner , Parkside , Pro Series , Reese , Reese CarryPower , Reese Outfitter , Reese Power Sports, Reese Towpower , ROLA , Tekonsha , TriMotive , Trojan , Wesbarg and Witter Towbar Systems . We believe that no individual competitor serving the channels we participate in can match our broad product portfolio, which we categorize into the following four groups: Towing: These products include devices and accessories installed on a tow-vehicle for the purpose of attaching a trailer, camper, etc. such as hitches, fifth wheels, gooseneck hitches, weight distribution systems, wiring harnesses, draw bars, ball mounts, crossbars, towbars, security and other towing accessories; Trailering: These products include control devices and components of the trailer itself such as brake controls, jacks, winches, couplers, interior and exterior vehicle lighting and brake replacement parts; Cargo Management: This product category includes a wide variety of products used to facilitate the transportation of various forms of cargo, to secure that cargo or to organize items. Examples of these products are bike racks, roof cross bar systems, cargo carriers, luggage boxes, car interior protective products, rope, tie-downs, tarps, tarp straps, bungee cords, loading ramps and interior travel organizers; and Other: This product category includes a diverse range of items in our portfolio that do not fit into any of the previous three main categories. Items in this category include commercial brooms and brushes, skid plates, oil pans, tubular push bars, side steps and sports bars. Table of Contents Company Information Our principal executive offices are located at 39400 Woodward Avenue, Suite 100, Bloomfield Hills, MI 48304, and our telephone number is (248) 631-5450. Our website address is www.horizonglobal.com. Information on or accessible through our website is not a part of this prospectus. Emerging Growth Company Status We are an emerging growth company, as defined in the JOBS Act. For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are not otherwise applicable generally to public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, which we refer to as the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory say-on-pay votes on executive compensation and stockholder advisory votes on golden parachute compensation. Under the JOBS Act, we will remain an emerging growth company until the earliest of: the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; the last day of the fiscal year following the fifth anniversary of the completion of the spin-off; the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, or the Exchange Act (we will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates and (ii) been public for at least 12 months; the value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter). The JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, or the Securities Act, for complying with new or revised accounting standards. However, we are choosing to opt out of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Summary of the Spin-off The following is a brief summary of the terms of the spin-off. Please see The Spin-off for a more detailed description of the matters described below. Distributing company TriMas, which is the parent company of Horizon. After the distribution, TriMas will no longer retain any of our common stock. Table of Contents Distributed company Horizon, which is currently a wholly owned subsidiary of TriMas. After the distribution, Horizon will be an independent, publicly traded company. Shares to be distributed Approximately 18.1 million shares of Horizon common stock. Our common stock to be distributed will constitute 100% of our outstanding common stock immediately after the spin-off. Distribution ratio Each holder of TriMas common stock will receive two shares of Horizon common stock for every five shares of TriMas common stock held on the record date. Fractional shares The transfer agent identified below will aggregate fractional shares into whole shares and sell them on behalf of stockholders in the open market, when, how and through which broker-dealers as determined in its sole discretion without any influence by TriMas or us, at prevailing market prices and distribute the proceeds pro rata to each TriMas stockholder who would otherwise have been entitled to receive a fractional share in the spin-off. You will not be entitled to any interest on the amount of payment made to you in lieu of a fractional share. The transfer agent is not an affiliate of TriMas or us. See The Spin-off - Treatment of Fractional Shares. Distribution procedures On or about the distribution date, the distribution agent identified below will distribute our common stock by crediting those shares to book-entry accounts established by the transfer agent for persons who were stockholders of TriMas as of 5:00 p.m., New York City time, on the record date. You will not be required to make any payment or surrender or exchange your TriMas common stock or take any other action to receive our common stock. However, as discussed below, if you sell TriMas common stock in the regular way market between the record date and the distribution date, you will be selling your right to receive the associated shares of Horizon common stock in the distribution. Registered stockholders will receive additional information from the transfer agent shortly after the distribution date. Beneficial stockholders will receive information from their brokerage firms. Distribution agent, transfer agent and registrar for our common stock Computershare, which currently serves as the transfer agent and registrar for TriMas common stock. Record date 5:00 p.m., New York City time, on June 25, 2015. Distribution date June 30, 2015. Reorganization TriMas currently, directly or through wholly owned subsidiaries, holds the Cequent businesses, which include both the Cequent Americas and Cequent APEA reportable segments. In connection with the spin-off, TriMas will Table of Contents undertake an internal reorganization, or the Reorganization, of entities associated with these businesses that will be part of Horizon in order to facilitate the completion of the spin-off. Trading before or on the distribution date It is anticipated that, beginning shortly before the record date, TriMas common stock will trade in two markets on the NASDAQ, a regular way market and an ex-distribution market. Investors will be able to purchase TriMas common stock without the right to receive shares of our common stock in the ex-distribution market for TriMas common stock. Any holder of TriMas common stock who sells TriMas common stock in the regular way market on or before the distribution date will be selling the right to receive our common stock in the spin-off. You are encouraged to consult with your financial advisor regarding the specific implications of selling TriMas common stock before or on the distribution date. Assets and liabilities transferred to the distributed company Before the distribution date, we and TriMas will enter into a separation and distribution agreement that will contain key provisions relating to the separation of our business from TriMas and the distribution of our common stock. The separation and distribution agreement will identify the assets to be transferred, liabilities to be assumed and contracts to be assigned to us by TriMas in the spin-off and describe when and how these transfers, assumptions and assignments will occur. See Relationship with TriMas After the Spin-off - Material Agreements Between TriMas and Us - Separation and Distribution Agreement. Relationship with TriMas after the spin-off Before the distribution date, we and TriMas will enter into several agreements to govern our relationship following the distribution, including a tax sharing agreement, an employee matters agreement, a transition services agreement and other agreements governing other ongoing commercial relationships. See Relationship with TriMas After the Spin-off - Material Agreements Between TriMas and Us. Indemnities The separation and distribution agreement to be entered into in connection with the spin-off will provide for cross-indemnification between TriMas and us. Please see Relationship with TriMas After the Spin-off - Material Agreements Between TriMas and Us - Separation and Distribution Agreement. In addition, we will indemnify TriMas under the tax sharing agreement that we will enter into in connection with the spin-off for the taxes resulting from any acquisition or issuance of our shares that triggers the application of Section 355(e) of the U.S. Internal Revenue Code of 1986, as amended, or the Code. For a discussion of Section 355(e), please see The Spin-off - Material U.S. Federal Income Tax Consequences of the Spin-off. We will also indemnify TriMas for certain taxes Table of Contents incurred before and after the distribution date. Please see Relationship with TriMas After the Spin-off - Material Agreements Between TriMas and Us - Tax Sharing Agreement. U.S. federal income tax consequences TriMas expects to obtain a tax opinion that the distribution of our common stock in the spin-off should qualify as a tax-free distribution for United States federal income tax purposes. Certain United States federal income tax consequences of the spin-off are described in more detail under The Spin-off - Material U.S. Federal Income Tax Consequences of the Spin-off. Conditions to the spin-off We expect that the spin-off will be completed on June 30, 2015, provided that the conditions set forth under the caption The Spin-off - Spin-off Conditions and Termination have been satisfied in TriMas sole and absolute discretion. Reasons for the spin-off TriMas board of directors and management believe that our separation from TriMas will provide the following benefits: (i) providing both companies greater flexibility to focus on their distinct growth and margin improvement strategies within their respective core markets, enabling them to further improve competitiveness and create significant value for shareholders, customers and employees; (ii) enabling each company to better allocate resources to meet the needs of their respective businesses, pursue distinct capital allocation strategies, intensify focus on growth and margin improvement priorities, and provide a clearer investment thesis to attract a long-term investor base best-suited to each company; (iii) providing the ability to better align incentive compensation with the financial performance of each business, as well as the ability to attract and retain key employees; and (iv) increasing the flexibility to independently evaluate and finance organic and inorganic growth opportunities without limitations of operating as a consolidated entity. For more information, see The Spin-off - Reasons for the Spin-off. Stock exchange listing Currently there is no public market for our common stock. We have applied for listing of our common stock on the NYSE under the symbol HZN. We anticipate that trading will commence on a when-issued basis approximately two trading days before the record date. When-issued trading refers to a transaction made conditionally because the security has been authorized but not yet issued. Generally, common stock may trade on the NYSE on a when-issued basis after it has been authorized but not yet formally issued, which is often initiated by the NYSE prior to the record date relating to the issuance of such common stock. When-issued transactions are settled after shares of our common stock Table of Contents have been issued to TriMas stockholders. On the first trading day following the distribution date, when-issued trading in respect of our common stock will end and regular way trading will begin. Regular way trading refers to trading after a security has been issued. We cannot predict the trading price for shares of our common stock following the spin-off. In addition, following the spin-off, TriMas common stock will remain outstanding and will continue to trade on the NASDAQ under the symbol TRS. Risk factors You should review the risks relating to the spin-off, our industry and our business and ownership of our common stock described in Risk Factors. Table of Contents Summary Historical Combined Financial Data The following table sets forth our summary historical financial data as of and for each of the periods indicated. We derived the summary historical financial data for the years ended December 31, 2014 and 2013 and as of December 31, 2014 and 2013 from our audited combined financial statements that are included elsewhere in this prospectus. We derived the summary historical financial data for the three months ended March 31, 2015 and 2014 and as of March 31, 2015 from our unaudited combined financial statements that are included elsewhere in this prospectus. In our management s opinion, the unaudited combined financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 have been prepared on the same basis as the audited combined financial statements and include all adjustments, consisting only of normal recurring adjustments and allocations, necessary for a fair presentation of the information for the periods presented. The following summary historical combined financial data should be read in conjunction with the sections entitled Selected Historical Combined Financial Data, Unaudited Pro Forma Combined Financial Data and corresponding notes and Management s Discussion and Analysis of Financial Condition and Results of Operations, as well as our combined financial statements and corresponding notes included elsewhere in this prospectus. Three months ended March 31, Year ended December 31, 2015 2014 2014 2013 (dollars in thousands) Statement of Income Data: Net sales $ 142,360 $ 148,090 $ 611,780 $ 588,270 Gross profit 35,300 35,660 148,090 125,010 Operating profit 3,710 4,240 24,460 5,670 Net income 1,480 2,380 15,350 9,780 Statement of Cash Flows Data: Cash flows provided by (used for) Operating activities $ (26,870 ) $ (41,920 ) $ 28,010 $ 13,950 Investing activities (2,200 ) (3,580 ) (11,110 ) (31,880 ) Financing activities 28,500 44,060 (19,060 ) 22,030 Other Financial Data: Depreciation and amortization $ 4,400 $ 4,780 $ 18,930 $ 19,450 Capital expenditures (2,320 ) (3,780 ) (11,440 ) (15,260 ) As of March 31, As of December 31, 2015 2014 2013 (dollars in thousands) Balance Sheet Data: Cash and cash equivalents $ 5,150 $ 5,720 $ 7,880 Current assets 229,420 203,620 207,200 Goodwill and other intangibles, net 68,350 73,090 83,360 Total assets 360,360 343,830 364,320 Current liabilities 115,710 120,380 120,020 Total liabilities 146,260 155,640 168,110 Parent company equity 214,100 188,190 196,210 Table of Contents
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+Prospectus summary The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in the ADSs or the ordinary shares. You should read the entire prospectus carefully, including Risk Factors and our consolidated financial statements and the related notes appearing elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the sections of this prospectus titled Business and Management s Discussion and Analysis of Financial Condition and Results of Operations before making an investment decision. Unless otherwise indicated, Celyad, the company, our company, we, us and our refer to Celyad SA and its consolidated subsidiaries. BUSINESS OVERVIEW We are a leader in engineered cell therapy treatments with clinical programs initially targeting indications in cardiovascular disease and oncology. Our lead drug product candidate in cardiovascular disease is C-Cure, an autologous cell therapy for the treatment of patients with ischemic heart failure, or HF. We completed enrollment in our first Phase 3 clinical trial of C-Cure in Europe and Israel, or CHART-1, in March 2015. On March 30, 2015, we announced that the Data Safety Monitoring Board, or DSMB, reviewed unblinded safety and efficacy data from CHART-1 and determined that such unblinded safety and efficacy data did not support the discontinuation of the trial on the basis of safety or futility. These observations suggested that the trial should be continued in its current form. The full data readout from this trial is expected in the middle of 2016. We anticipate initiating our second Phase 3 clinical trial of C-Cure in the United States and Europe, or CHART-2, pending U.S. Food and Drug Administration, or FDA, lifting of the existing clinical hold, which we expect in the second half of 2015. Our lead drug product candidate in oncology is CAR-NKG2D, an autologous chimeric antigen receptor, or CAR, an artificial, lab engineered receptor, which is used to graft a given protein onto an immune cell, T lymphocyte, or CAR T-cell, therapy. We are currently enrolling patients with refractory or relapsed acute myeloid leukemia, or AML, or multiple myeloma, or MM, in a Phase 1 clinical trial of CAR-NKG2D in the United States. The first patient was treated in this trial in April 2015 and no treatment-related safety concerns were reported during the 30-day follow-up period. Interim data from this trial is expected to be reported at various times during the trial, with the full data readout expected in the middle of 2016. All of our current drug product candidates are autologous cell therapy treatments. In autologous procedures, a patient s cells are harvested, selected, reprogrammed and expanded, and then infused back into the same patient. A benefit of autologous therapies is that autologous cells are not recognized as foreign by patients immune systems. We believe that we are well situated to effectively advance autologous cell therapy treatments for cancer and other indications as a result of the expertise and know-how that we have acquired through our development of C-Cure. Table of Contents The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion June 15, 2015 Celyad SA 1,400,000 Ordinary Shares Including Ordinary Shares in the Form of American Depositary Shares We are offering 1,400,000 of our ordinary shares in a global offering. We are offering 1,120,000 ordinary shares in the form of American Depositary Shares, or ADSs, through the underwriters named in this prospectus. The ADSs may be evidenced by American Depositary Receipts, or ADRs, and each ADS represents the right to receive one ordinary share. We have granted the underwriters an option to purchase up to an additional 168,000 ordinary shares in the form of ADSs in the U.S. offering. We are offering 280,000 ordinary shares in Europe and countries outside of the United States and Canada in a concurrent private placement, or the European private placement, through the underwriters named in this prospectus. We have granted the underwriters an option to purchase up to an additional 42,000 ordinary shares in the European private placement. The closings of the U.S. offering and the European private placement will be conditioned on each other. The total number of ordinary shares in the U.S. offering and the European private placement is subject to reallocation between them. This is our initial public offering in the United States. We have applied to have our ADSs listed on the NASDAQ Global Market under the symbol CYAD. Our ordinary shares have been listed on Euronext Brussels and Euronext Paris since July 5, 2013 under the symbol CYAD. On June 12, 2015, the last reported sale price of our ordinary shares on Euronext Brussels was 62.94 per share, equivalent to a price of $70.98 per ADS, assuming an exchange rate of 1.1278 per U.S. dollar. We are an emerging growth company as defined under the United States federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our ordinary shares or ADSs involves risks. Before buying any ADSs or ordinary shares, you should carefully read the discussion of material risks of investing in our ADSs and our ordinary shares in Risk Factors beginning on page 13 of this prospectus. Neither the United States Securities and Exchange Commission nor any U.S. state or other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Per ADS Total Public offering price $ $ Underwriting commissions(1) $ $ Proceeds, before expenses to us(2) $ $ (1) We refer you to Underwriting beginning on page 209 for additional information regarding underwriting compensation. (2) Total gross proceeds from the global offering, including the European private placement, are $ . Such proceeds less underwriting commissions are $ . The underwriters expect to deliver the ADSs to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company. The underwriters expect to deliver the ordinary shares to purchasers on or about , 2015 through the book-entry facilities of Euroclear Belgium. UBS Investment Bank Piper Jaffray Petercam Bryan, Garnier & Co. LifeSci Capital Lake Street Capital Markets , 2015 Table of Contents OUR PRODUCT CANDIDATE PIPELINE C-CURE FOR ISCHEMIC HEART FAILURE Cardiovascular diseases, which are diseases of the heart and blood vessels, are the largest cause of mortality in the world and, in 2012, approximately 31% of all global deaths were attributable to cardiovascular diseases according to the World Health Organization. If left untreated, cardiac diseases can lead to HF, a condition in which the heart is unable to pump enough blood to meet the body s metabolic needs. HF affects 1% to 2% of the adult population in developed countries and approximately 5.7 million patients were diagnosed with HF in the United States in 2012, according to the American Heart Association. HF can either be of ischemic origin, linked to impairment of blood flow to the heart muscle, or non-ischemic origin, linked to other causes such as hypertension and metabolic disorders. In the Bromley heart failure study, 52% of the patients had HF of ischemic origin. Other studies have reported lower rates of ischemic HF, but such differences can be explained by differences in study population, definitions and timing of when the study was completed. The long-term prognosis associated with HF is dire, with approximately 50% mortality at five years following initial diagnosis according to a 2014 report from the American Heart Association. HF is classified according to the severity of the symptoms experienced by the patient. The classification most commonly used in the New York Heart Association, or NYHA, classification, where patients are classified from Class I, where there is no limitation on a patient s physical activity to Class IV, where the patient is unable to carry on any physical activity without discomfort. Although existing therapies have been somewhat effective in the treatment of HF, there is still great unmet medical need. In particular, in the case of ischemic HF, which is caused by insufficient oxygen to the heart, current treatments fail to address the decrease in the number of functional myocytes, or heart cells, in the heart that result from this lack of oxygen. Our lead drug product candidate, C-Cure, is an autologous cell therapy that we believe has the potential to treat patients with NYHA, Classes II, III and IV ischemic HF. To guide cardiac tissue formation, our C-Cure therapy reprograms multipotent stem cells harvested from a patient into cardiopoietic cells, cells that can become myocytes, using naturally occurring cytokines, small proteins that play an important role in cell Table of Contents You should rely only on the information contained in this prospectus or contained in any free writing prospectus that we file or authorize to be filed with the United States Securities and Exchange Commission. Neither we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus that we file or authorize to be filed with the United States Securities and Exchange Commission. We and the underwriters are offering to sell, and seeking offers to buy, our securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, or such other dates as are stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our securities. TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001638407_flagship_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001638407_flagship_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001638851_inpellis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001638851_inpellis_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001638851_inpellis_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001639143_sadiya_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001639143_sadiya_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..03b1946d3f4e9087cec08dc4b797225352a0ac02
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@@ -0,0 +1 @@
+This summary provides a brief overview of the key aspects of our offering. It may not contain all of the information that is important to you. You should read the entire prospectus carefully, including the more detailed information regarding our Company, the risks of purchasing the Shares discussed under Risk Factors, and our financial statements and their accompanying notes. In this prospectus, Sadiya , the Company, we, us, and our, refer to Sadiya Transport, Inc., unless the context otherwise requires. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending March 31. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock, par value $0.0001 per share. Our Company We were incorporated on February 23, 2015 in the State of Nevada. We plan to operate handicap friendly auto rickshaw(s) in Kurnool, India where we will provide transportation/taxi service for a fee specifically for handicapped persons. We intend to modify the vehicle so that is handicap friendly and we hope many other owners will follow our example and make their vehicles handicap friendly. We intend to operate in proximity to hospitals and develop a website through which handicapped persons or their family members can request our services. We do not currently own any handicap friendly auto rickshaws and have not provided any transportation/taxi services to date. Additionally, we do not currently have any arrangements as to the location where we will be located or contractual relationships with any vendors, customers or website designers. Because we are a company that has no or nominal operations and either no or nominal assets or assets consisting solely of cash and cash equivalents, we are considered to be a shell company as defined in Rule 405 promulgated under the Securities Act of 1933, as amended (the Securities Act ). An investment in the shares of a shell company should be considered highly illiquid given the resale restrictions that apply to them. Our president has experience in the auto rickshaw transportation and management industry. We intend to serve all customers, but mainly focus on the handicapped persons. We will provide our services by being located outside the hospitals and via an Internet website. To implement our plan of operations, we require total funding of approximately $60,000 for the twelve months following this offering, which consists of $17,008 to cover the expenses of this offering and $42,992 to implement our proposed business plan. We will use our existing working capital to cover most of the offering costs, but we will have to complete this offering in order to fund our business plan. We have not realized any revenues to date, and our accumulated deficit as of March 31, 2015 is $4,413. To date, we have raised an aggregate of $15,000 through a private placement of 6,000,000 shares of common stock to our sole shareholder who also serves as our sole officer and director. Proceeds from the private placement are being used for working capital. Our offices are located at the premises of our President, Altaf S. Shariff, who provides such space to us on a rent-free basis at H. No. 5-104, Indira Nagar Colony, Shanti Nagar, Waddepally, Mahabub, State of Telangana, India. Our telephone number is 011-91-96-89-15-7273 and email is sadiyatransport@gmail.com. From inception until the date of this filing we have had limited activities, primarily consisting of the incorporation of our Company, the initial equity funding by our director and registering our website, www.kurnoolrickshaw.com Our financial statements from inception (February 23, 2015) through March 31, 2015 report no revenues and a net loss of $4,413 and our assets consist of our cash balance of $15,000, which was generated from the proceeds of the issuance of shares to our sole shareholder. We will require the funds from this offering in order to implement our business plan as discussed in the "Plan of Operations" section of this prospectus. Our business plan anticipates that once we have secured the financing, we expect operations will begin within five months after completion of share offering. However, there is no guarantee that we will be successful in this regard. Currently, our President devotes approximately five hours per week to our affairs. Investors must be aware that we do not have sufficient capital to independently finance our own plans. We have no plans, arrangements or contingencies in place in the event that we cease operations, in which case investors would likely lose their entire investment. Investors should be aware that our independent auditors have issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. Our auditor's opinion was issued because we have incurred losses since inception resulting in an accumulated deficit and further losses are anticipated in the development of our business. Our only sources for cash at this time other than this offering are investments or loans. However, we do not have any written agreements in place for any investments or loans. We must raise cash to implement our projects and commence our operations. As of June 17, 2015, the Company has $10,200 in cash, and if we do not raise any funds and do not commence our proposed operations, we will have funds to continue in existence through approximately the end of 2015 based on our average monthly burn rate of $1,700. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. This is a direct public offering since we are offering the stock directly to the public without the participation of an underwriter. Our sole officer will be solely responsible for selling shares in this offering and no commission will be paid on any sales. There is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or quoted on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we intend to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for quotation on the OTCBB. We do not yet have a market maker who has agreed to file such an application. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Potential investors should be aware that our sole officer and director, Mr. Shariff, presently own 6,000,000 shares, which would represent 66.67% of the issued and outstanding common shares of the Company if the offering closes and all our offered shares are sold. All the shares owned by Mr. Shariff are restricted shares, which he purchased at a price of $0.0025 per share representing a total cost of $15,000. Penny Stock Rules Under U.S. federal securities legislation, our common stock will be characterized as penny stock . Penny stock is any equity that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission (the Commission ) relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001639327_zhuoxun_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001639327_zhuoxun_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f00b5bd77d814798a3332acb1b16d0eb4c85aea7
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001639327_zhuoxun_prospectus_summary.txt
@@ -0,0 +1 @@
+PRELIMINARY PROSPECTUS GUSHEN, INC. 2,590,000 SHARES OF COMMON STOCK $0.0001 PAR VALUE PER SHARE Prior to this Offering, no public market has existed for the common stock of Gushen, Inc. Upon completion of this Offering, we will attempt to have the shares quoted on the OTCQB operated by OTC Markets Group, Inc. There is no assurance that the Shares will ever be quoted on the OTCQB. To be quoted on the OTCQB, a market maker must apply to make a market in our common stock. As of the date of this Prospectus, we have not made any arrangement with any market makers to quote our shares. Additionally, it should be noted that our company is currently a shell company. We are not however, a blank check company and have no plans or intentions to engage in a business combination following this offering. In this public offering we, "Gushen, Inc." are offering 2,000,000 shares of our common stock and our selling shareholders are offering 590,000 shares of our common stock. We will not receive any of the proceeds from the sale of shares by the selling shareholders. Shareholders may also sell their shares at market prices or in privately negotiated transactions if at such time are shares are quoted on the OTC marketplace. The offering is being made on a self-underwritten, "best efforts" basis. There is no minimum number of shares required to be purchased by each investor. The shares offered by the Company will be sold on our behalf by our Chief Executive Officer, and Chief Financial Officer Huang Pin Lung. Mr. Huang is deemed to be an underwriter of this offering. There is uncertainty that we will be able to sell any of the 2,000,000 shares being offered herein by the Company. Mr. Huang will not receive any commissions or proceeds for selling the shares on our behalf. All of the shares being registered for sale by the Company will be sold at a fixed price of $0.80 per share for the duration of the Offering. If at any times our shares are quoted on the Over The Counter Marketplace "OTC" shareholders may sell their own shares at prevailing market prices or at privately negotiated prices. Assuming all of the 2,000,000 shares being offered by the Company are sold, the Company will receive $1,600,000 in gross proceeds. Assuming 1,500,000 shares (75%) being offered by the Company are sold, the Company will receive $1,200,000 in net proceeds. Assuming 1,000,000 shares (50%) being offered by the Company are sold, the Company will receive $800,000 in net proceeds. Assuming 500,000 shares (25%) being offered by the Company are sold, the Company will receive $400,000 in net proceeds. There is no minimum amount we are required to raise from the shares being offered by the Company and any funds received will be immediately available to us. There is no guarantee that we will sell any of the securities being offered in this offering. Additionally, there is no guarantee that this Offering will successfully raise enough funds to institute our company s business plan. Additionally, there is no guarantee that a public market will ever develop and you may be unable to sell your shares. This primary offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this Prospectus, unless extended by our directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. In their audit report dated May 18, 2015, our auditors have expressed substantial doubt as to our ability to continue as a going concern. *Huang Pin Lung will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Huang s interest in selling shares for his own account and in selling shares on the Company s behalf. Regarding the sale of Mr. Huang s shares, they will be sold at a fixed price of $0.80 for the duration of the offering however, if at such time our shares are quoted on the Over The Counter Marketplace "OTC" the selling stockholders, including Mr. Huang, may sell their shares at prevailing market prices or at privately negotiated prices. If all the shares are not sold in the company s offering, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering, which the Company estimates at $25,000. The proceeds from the sale of the securities will be placed directly into the Company s account; any investor who purchases shares will have no assurance that any monies, beside their own, will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. All expenses incurred in this offering are being paid for by the Company. There has been no public trading market for the common stock of Gushen, Inc. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, which became law in April 2012 and will be subject to reduced public company reporting requirements. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS BEGINNING ON PAGE 6. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby that is different from the information included in this Prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is July 23, 2015 - 1 - The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS PART I PROSPECTUS PAGE PROSPECTUS SUMMARY 2
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001640307_appointmed_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001640307_appointmed_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..f7c2e61b6e4eca7dac81d35d04397cb77d393011
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@@ -0,0 +1 @@
+PART I INFORMATION REQUIRED IN PROSPECTUS The information in this prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where an offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion dated April __, 2015 AppointMed, Inc. $100,000 Up To 10,000,000 Shares of Common Stock Offered By the Company The name of our company is AppointMed, Inc. and we were incorporated in the State of Nevada on November 26, 2014. This is our initial public offering. Our securities are not listed on any national securities exchange or the Nasdaq Stock Market. Our sole officer and director will offer and sell, on our behalf, up to 10,000,000 shares of our common stock at $.01 per share on a best efforts basis that will not utilize a third party underwriter or broker-dealer (the Offering ). Our sole officer and director will not receive any compensation for selling Shares in the Offering. Our sole officer and director will solicit investments in the Shares from friends, family and those persons with which he has a prior business relationship and that he reasonably believes would have an interest in investing in the Company. Our sole officer and director will distribute to all interested investors a copy of the Company s then effective Prospectus. Completion of this Offering is not subject to us raising a minimum amount of money. The Offering is intended to be a self-underwritten public offering, with no minimum purchase requirement. Shares will be offered on a best efforts basis and we do not intend to use an underwriter for this Offering. This Offering will terminate 180 days from the effective date of this Prospectus (the Termination Date ), unless extended by the Board of Directors for an additional 90 days, although we may close the Offering on any date prior to the Termination Date, if the Offering is fully subscribed or upon the vote of the Board of Directors. Reasons the Board may consider in determining whether to extend or terminate the Offering may include, but are not limited to: amount of funds raised, potential to raise additional capital, and response to the Offering as of that date. There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if it is developed, may not be sustained. A market maker is needed to file an application with the Financial Industry Regulatory Authority ( FINRA ) on our behalf so that the shares of our common stock may be quoted on an inter-dealer quotation system such as the OTC Markets Pink Sheets or the Nasdaq OMX. Commencing upon the effectiveness of our registration statement of which this Prospectus is a part, we will seek out a market maker. There can be no assurance that the market maker s application will be accepted by FINRA, nor can we estimate as to the time period that the application will require to be completed, submitted or approved, if at all. This Offering involves a high degree of risk. Please see Risk Factors starting on page 6 to read about factors you should consider before buying any of the Shares pursuant to this Offering. The information in this Prospectus is not complete and may be changed. The Company may not sell the Shares until the registration statement filed with the Securities and Exchange Commission (the SEC ) is effective. This Prospectus is not an offer to sell the Shares nor is it a solicitation of an offer to buy the Shares in any state where the offer or sale is not permitted. There is no public trading market for our securities, and if a market develops for our securities, it will most likely be limited, sporadic and highly volatile. If no market develops, you will not be able to resell your shares publicly. We are an emerging growth company under the federal securities laws and will therefore be subject to reduced public company reporting requirements. Investment in the common stock offered by this prospectus involves a high degree of risk. You may lose your entire investment. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is April __, 2015 1/59 ITEM 3. PROSPECTUS SUMMARY AppointMed, Inc. This summary contains material information about us and the offering which is described in detail elsewhere in the Prospectus. Since it may not include all of the information you may consider important or relevant to your investment decision, you should read the entire Prospectus carefully, including the more detailed information regarding our company, the risks of purchasing our common stock discussed under Risk Factors on page 6, and our financial statements and the accompanying notes. Unless the context otherwise requires, the terms we, our, us, the Company and AppointMed refer to AppointMed, Inc., a Nevada corporation. Our Business We were incorporated under the laws of the State of Nevada on November 26, 2014. Our general business strategy is to market our web and mobile applications for scheduling clinical appointments and transmitting medical information between clinicians and patients (the AppointMed Applications ). The goal of AppointMed, Inc. is to complete automation of a Full Health Care Service Delivery Process on the web, mobile and cloud platforms. AppointMed, Inc. will be a free service to patients and a subscription-based service to clinicians that will allow patients to find a nearby doctor or dentist, clinic, hospitals or any other healthcare professional who meets the patients search criteria, as well as see the clinicians real-time availability, and instantly book an appointment via our mobile and web applications. AppointMed, Inc. will develop a web application and a smartphone application that will ultimately be available on all smartphone operating systems. Our application will be designed to help most patients get access to care with the ability to book last minute appointments. The application would allow patients to fill out their paperwork online in advance of their appointment or print out the specific clinics intake form so that the patient can have it filled in ahead of the appointment and ready to hand in to the clinicians office when they arrive. AppointMed, Inc. will help the patient to find great doctors, dentists, physicians, urgent care centers, hospitals or any other healthcare providers, read verified patient reviews, see the availability of the clinician, instantly book appointments, and even fill out doctor's paperwork pre-visit, no phone calls needed. The service will be absolutely free for patients. The patient will be able to search by Doctor Name, Practice Name, Procedure, Language, Location, Hospital and Insurance type and brand. Our ability to obtain the necessary financing to complete the development of the application and to become profitable is dependent on raising money in the future. We currently do not have patents on our AppointMed applications and related products. Please refer to Description of Our Business. We have no revenues, have sustained losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We may not generate revenues even if any of our AppointMed applications are developed into fully functioning applications. Accordingly, we will be dependent on future financings in order to maintain our operations and continue our research and development. Please refer to Risk Factors. The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act (the JOBS Act ). The Company s fiscal year end is December 31st. Where You Can Find Us Our office is located at 2248 Meridian Blvd Ste. H., Minden, Nevada 89423. The telephone number is (775) 782-2201. Our History We were incorporated under the laws of the State of Nevada on November 26, 2014. 3/59 On December 1, 2014, we appointed Maksim Smirnov to be the President, Chief Executive Officer, Treasurer, Chief Financial Officer, and Director of the Company. We received our initial funding of $5,000 through the sale of common stock to our President, Maksim Smirnov, who purchased 5,000,000 shares of our common stock at $0.001 per share on December 1, 2014. About this offering This Prospectus relates to a total of 10,000,000 shares of common stock of AppointMed, Inc., a Nevada corporation. Shares being Registered by the Company This is the Company s initial public offering. The Company is offering 10,000,000 Shares of its common stock for sale in a self-underwritten, best-efforts offering. The Company will receive up to $100,000 in the event that all the 10,000,000 shares of common stock are sold, of which there can be no assurance. The proceeds, if any, will be used for general working capital purposes. This offering will terminate on the earlier of the sale of all of the shares offered or 180 days after the date of the prospectus, unless extended an additional 90 days by the board of directors. The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act (the JOBS Act ). We intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Our election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until they apply to private companies. Therefore, as a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001641472_empire_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001641472_empire_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bad07e92743cacbb983fc00f399cf380ac12ec91
--- /dev/null
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@@ -0,0 +1 @@
+This summary highlights selected information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including Risk Factors and the audited historical consolidated financial statements, the unaudited historical condensed consolidated financial statements and the unaudited pro forma condensed combined financial statements and the notes to those financial statements, before investing in our common units. Unless otherwise indicated, the information in this prospectus assumes that the underwriters do not exercise their option to purchase additional common units. You should read Risk Factors beginning on page 22 for more information about important factors that you should consider before purchasing our common units. Unless the context otherwise requires, when used in a historical context, references in this prospectus to Empire Petroleum Partners, we, our, us, the partnership, or like terms, refer to Empire Petroleum Partners, LLC, a Delaware limited liability company, and its subsidiaries, or, as the context may require, to Empire Petroleum Holdings, LLC, a Delaware limited liability company, and its subsidiaries. Our predecessor for accounting purposes is Empire Petroleum Partners, LLC for the three months ended March 31, 2015, the years ended December 31, 2014, 2013 and 2012, and for the period from July 7, 2011 through December 31, 2011, and is Empire Petroleum Holdings, LLC for the period from January 1, 2011 through July 6, 2011 and the year ended December 31, 2010. Unless the context otherwise requires, when used in the present tense or in a prospective context, references in this prospectus to Empire Petroleum Partners, we, our, us, the partnership, or like terms refer to Empire Petroleum Partners, LP, a Delaware limited partnership, and its subsidiaries. References to Empire refer to Empire Petroleum Partners, LLC. References in this prospectus to our general partner refer to Empire Petroleum Partners GP, LLC, a Delaware limited liability company and our general partner. References in this prospectus to Empire Services refer to Empire Petroleum Services, LLC, a Delaware limited liability company and our wholly owned subsidiary. Although Empire Services is organized as a limited liability company, it has elected to be treated as a corporation solely for U.S. federal income tax purposes. Unless the context otherwise requires, references in this prospectus to Recent Acquisitions refer collectively to our acquisition of (i) motor fuel supply agreements and related assets and 18 retail fuel outlets from Atlas Oil Company, or Atlas, (ii) 41 retail fuel outlets from CST Brands, Inc., or CST, and (iii) motor fuel supply agreements and related assets from Mansfield Oil Company of Gainesville, Inc., or Mansfield, in each case as more fully described in Recent Acquisitions. Unless otherwise noted, all operational data included in this prospectus reflects our business operations as of March 31, 2015.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001641521_mondovita_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001641521_mondovita_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..15f5988794f4575ec51d902086c9d83f4cff1180
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+++ b/parsed_sections/prospectus_summary/2015/CIK0001641521_mondovita_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Our Business Our business plan is to procure and negotiate employment and endorsement contracts for top talent athletes. We plan to work with clients at all stages of their careers as we help them negotiate contracts, build their personal brand, secure marketing opportunities and support them to excel both in their chosen profession as well as in the community. Our strategic initiative entails building relationships in the Dominican Republic to sign promising athletes in Baseball and Mixed Martial Arts to be their exclusive agency for representation. We plan to derive revenue by way of commissions earned on successfully negotiated employment contracts as well as generate new business/revenue opportunities with clients within their specified sports industry and branding. We will endeavor to become a leading sports management company, representing athletes in mainstream sports internationally. Being a start-up company, we have no revenues, we have limited operating history and no athletes under contract. Our sole officer and director, Elvis Santana, has no experience in the agency or athletic management business and we have no full or part-time employees. We were incorporated in Nevada on November 24, 2014. Our principal executive office is located at #22 Calle Felix Nolasco Atlantica, Puerto Planta Dominican Republic. Our phone number is (829) 639-9334. Our financial statements for the period from November 24, 2014 (date of inception) to March 31, 2015, report no revenues and no net loss or income. As of March 31, 2015 we had $16,000 in cash on hand. Our independent registered public accountant has issued an audit opinion for our company, which includes a statement expressing substantial doubt as to our ability to continue as a going concern. If we are unable to obtain additional funds our business may fail. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business" and "Use of Proceeds"). Proceeds from this offering are required for us to proceed with our business plan over the next twelve months. We require minimum funding of $60,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of $60,000, our business may fail. Even if we raise $80,000 from this offering, we may need more funds to develop our growth strategy and to continue maintaining a reporting status. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The Offering Common Stock Offered Up to 10,000,000 shares at $0.008 per share Common Stock Outstanding after the Offering 23,333,333 shares Use of Proceeds If we are successful at selling all the shares we are offering, our proceeds from this offering less offering expenses will be approximately $60,000. We intend to use these net proceeds to execute our business plan. Risk Factors The Shares of Common Stock offered involves a high degree of risk and immediate substantial dilution. See "Risk Factors" Term of offering The offering shall terminate on the earlier of (i) the date when the sale of all 10,000,000 shares is completed, (ii) when the board of directors decides that it is in our best interest to terminate the offering prior the completion of the sale of all 10,000,000 shares registered or (iii) one year after the effective date of this prospectus. No Symbol for Common Stock There is no trading market for our Common Stock. We intend to apply for a quotation on the OTCBB or OTCQB through a market-maker. There is no guarantee that a market-maker will agree to assist us. Summary Financial Information Balance Sheet Data As of March 31, 2015 Cash $16,000 Total Assets $16,000 Liabilities $0 Total Stockholder s Equity $16,000 Statement of Operations For the Period from Inception to March 31, 2015 Revenue $0 Net Profit (Loss) for Reporting Period $0 References in this prospectus to Mondovita Corp. we, us, and our refer to Mondovita Corp.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001641634_gensight_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001641634_gensight_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ee9df53378aa3870a4835fcbfed0a7a88b7e7a1e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001641634_gensight_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in the ADSs and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before deciding to buy the ADSs. Unless the context requires otherwise, references in this prospectus to the Company, GenSight, we, us and our refer to GenSight Biologics S.A. Overview We are a clinical-stage biotechnology company discovering and developing novel therapies for mitochondrial and neurodegenerative diseases of the eye and, in the future, of the central nervous system. To address these therapeutic areas, we leverage our integrated development platform by combining a gene therapy-based approach with our core technology platforms of mitochondrial targeting sequence, or MTS, and optogenetics. Our management and scientific teams have extensive experience in gene therapy and drug development, in particular in the field of ophthalmology, and have served in leadership roles at several innovative ophthalmology companies. Our initial focus has been on developing therapies for severe retinal diseases, with the goal of preserving or restoring vision in patients suffering from such diseases. Using our gene-therapy based approach, our product candidates are designed to be administered in a single treatment to each eye by intravitreal, or IVT, or subretinal injection in order to provide patients with a long-lasting functional cure, potentially for the rest of their lives. Our pipeline currently consists of two lead product candidates for the treatment of sight-threatening retinal degenerative diseases, together with products in preclinical development targeting ophthalmic and neurodegenerative diseases. Our Core Technology Platforms Our first core technology platform based on our MTS is, to our knowledge, the only existing technology that permits missing mitochondrial proteins to be shuttled into the mitochondrion, enabling the restoration of mitochondrial function. Using our proprietary MTS technology platform, we are developing product candidates for the treatment of Leber hereditary optical neuropathy, or LHON, an orphan mitochondrial disease leading to irreversible and sudden sight loss in teens and young adults and for which no treatment approved by the U.S. Federal Drug Administration, or FDA, is currently available. Our lead product candidate, GS010, targets LHON due to a mutation in the NADH dehydrogenase 4 mitochondrial gene, or ND4. NADH dehydrogenase is an enzyme that acts on NADH, the reduced form of nicotinamide adenine dinucleotide, and is an important enzyme in cellular metabolism. Based on data from regional studies, we estimate the incidence of LHON to be approximately 1,400 to 1,500 new patients who lose their sight every year in the United States and Europe. We believe that, given its stage of clinical development, GS010 has the potential to be the first therapy approved by the FDA for the treatment of LHON. We believe that our MTS technology platform is unique and can be used to address indications outside of ophthalmology involving defects of the mitochondrion, such as Kearns-Sayre syndrome, mitochondrial encephalopathy and other disorders of the central nervous system. The technology is protected by patents over which we have acquired exclusive licenses for ophthalmic disease indications and non-exclusive licenses in other mitochondrial diseases. Table of Contents This preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 3, 2015. PRELIMINARY PROSPECTUS American Depositary Shares GenSight Biologics S.A. 4,650,000 American Depositary Shares Representing 4,650,000 Ordinary Shares This is the initial public offering of American Depositary Shares, or ADSs, representing 4,650,000 ordinary shares of GenSight Biologics S.A. We are offering 4,650,000 ADSs. Each ADS will represent one issued ordinary share, nominal value 0.025 per share. All proceeds of the offering, net of expenses, are to be paid to us. We anticipate that the initial offering per ADS will be between $13.00 and $15.00. Currently, no public market exists for the ADSs or our ordinary shares. We intend to list the ADSs on the NASDAQ Global Market under the symbol GNST. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Per ADS Total Initial public offering price $ $ Underwriting discounts and commissions1 $ $ Proceeds to us, before expenses $ $ (1) The underwriters will also be reimbursed for certain expenses incurred in this offering. See Underwriting for details. Certain of our existing shareholders, including certain affiliates of our directors, have indicated an interest in purchasing up to $15 million of ADSs in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell fewer or no shares in this offering to any of these stockholders, or any of these stockholders may determine to purchase fewer or no shares in this offering. We have granted the underwriters an option for a period of 30 days to purchase up to an additional 697,500 ADSs. If the underwriters exercise their option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses, will be $ . Investing in the ADSs involves a high degree of risk. See Risk Factors beginning on page 12 of this prospectus. Neither the Securities and Exchange Commission nor any U.S. state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Delivery of the ADSs is expected to be made on or about , 2015. Leerink Partners Evercore ISI Canaccord Genuity The date of this prospectus is , 2015. Table of Contents Our second core technology platform is optogenetics, a novel approach that restores vision to patients by using gene therapy to introduce a gene encoding for light-sensitive protein into specific target cells in the retina in order to make them responsive to light. An external wearable medical device to specifically stimulate the transduced cells is currently being developed to amplify the light signal and enable vision restoration. Using our optogenetics technology platform, we are developing our product candidate, GS030, to restore vision in patients suffering from Retinitis Pigmentosa, or RP. RP is an orphan disease caused by multiple mutations in several genes involved in the visual cycle. Our optogenetics technology platform is independent of the specific genetic mutations that lead to the disease. On average, RP patients begin experiencing vision loss in their young adult years, eventually turning blind around the age of 40 to 45. There is currently no existing treatment for RP. RP has an estimated prevalence of 1.5 million people throughout the world. We believe that our optogenetics technology platform could also be used to treat patients suffering from geographic atrophy, or GA, which is a late-stage form of age-related macular degeneration, or AMD, a well-known disease affecting the elderly that results in blindness. We plan to move GS030 into a clinical trial in patients suffering from GA once clinical proof-of-concept studies have been successfully completed for RP. We have compiled a portfolio of exclusive licenses and options for exclusive licenses for specific light-sensitive proteins to be used in developing products that restore vision in RP and GA patients. We believe that we have a significant competitive advantage as a result of the collective experience of our management and scientific team in the biotechnology industry, specifically in the areas of ophthalmology and gene therapy. Our Chief Executive Officer, Executive Chairman and co-founder, Bernard Gilly Ph.D., has over 20 years of experience in the pharmaceutical sector and as an entrepreneur. Dr. Gilly was Chief Executive Officer of Transgene S.A., or Transgene, heading Transgene s public listing and financing. Dr. Gilly also was founder and Chief Executive Officer of Fovea Pharmaceuticals S.A., or Fovea, and later became the Executive Vice President of the Ophthalmology Division of Sanofi S.A., or Sanofi, after Fovea was acquired by Sanofi. Other members of our executive management team have significant experience in the discovery and development of gene therapy and ophthalmology drug products. Our co-founder, Jose-Alain Sahel M.D. Ph.D. is Director of Institut de la Vision and Chairman of the Department of Ophthalmology at the Centre Hospitalier National d Ophtalmologie des XV-XX in Paris, France. Dr. Sahel has conducted pioneering research into the understanding of the pathological mechanisms involved in RP and was recently recognized by the Foundation Fighting Blindness. Our co-founder, Botond Roska M.D. Ph.D., Professor at University of Basel and senior group leader at the Friedrich Miescher Institute, or FMI, in Switzerland focuses on the structure and function of the retina and optogenetic vision restoration. For more information on our management and directors, see Management. Our Lead Product Candidate: GS010 for the Treatment of LHON We are developing GS010 as a treatment for LHON due to the ND4 gene mutation, a rare mitochondrial genetic disease. GS010 is based on our MTS technology platform, which permits missing mitochondrial proteins to be shuttled into the mitochondrion, enabling the restoration of mitochondrial function. There is currently no FDA-approved treatment to prevent loss of sight or restore vision in LHON patients. LHON is a maternally-inherited genetic disease that causes the onset of irreversible and severe loss of sight leading to blindness and disability in teens and young adults. LHON causes patients to suffer from sudden and rapid vision loss resulting in disability that affects patients and their families socially, emotionally and financially. LHON greatly alters the patient s ability to perform daily life activities, reduces their autonomy and, in particular, affects their ability to read, drive and recognize facial features and expressions. The quality of life of patients with LHON is generally poor. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001641751_brewbilt_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001641751_brewbilt_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f59c9e90fb2f452408b51b3262f7a3a63c9bbac3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001641751_brewbilt_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 5
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001642417_sonant_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001642417_sonant_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8a8efaa2ecfe3d94ca85793fe77c2545ef5ef71a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001642417_sonant_prospectus_summary.txt
@@ -0,0 +1,711 @@
+prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of
+our common stock. All material risks are discussed in this section.
+
+ 
+
+Risks Related to Our Company
+
+ 
+
+Our having generated no revenues from
+operations makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our
+future performance.
+
+ 
+
+As of June 30, 2015, we have generated no revenues
+and incurred an accumulated deficit of ($6,750). As a consequence, it is difficult, if not impossible, to forecast our future results
+based upon our historical data. Because of the related uncertainties, we may be hindered in our ability to anticipate and
+timely adapt to increases or decreases in revenues and expenses. If we make poor budgetary decisions as a result of unreliable
+data, we may never become profitable or incur losses, which may result in a decline in our stock price. 
+
+ 
+
+We may be unable to continue paying
+the costs of being a reporting public company.
+
+ 
+
+The costs of being
+a public reporting company under the Securities Exchange Act of 1934 may be substantial and the Company may not be able to
+absorb the costs of being a public company which may cause us to cease being public in the future or require additional fundraising
+in order to remain in business. We estimate that in the future, costs for legal and accounting at $25,000 per year.
+
+ 
+
+Our auditor has indicated in its
+report that there is substantial doubt about our ability to continue as a going concern as a result of our lack of revenues and
+if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
+
+ 
+
+Our auditor has indicated in its report
+that our lack of revenues raise substantial doubt about our ability to continue as a going concern. The financial statements
+do not include adjustments that might result from the outcome of this uncertainty. If we are unable to generate significant revenue
+or secure financing we may be required to cease or curtail our operations.
+
+ 
+
+Our Certificate of Incorporation
+and Bylaws limit the liability of, and provide indemnification for, our officers and directors.
+
+ 
+
+Our Certificate
+of Incorporation, generally limits our officers and directors personal liability to the Company and its stockholders
+for breach of fiduciary duty as an officer or director except for breach of the duty of loyalty or acts or omissions not made in
+good faith or which involve intentional misconduct or a knowing violation of law. Our Certificate of Incorporation and Bylaws,
+provide indemnification for our officers and directors to the fullest extent authorized by the Wyoming Business Corporation Act
+against all expense, liability, and loss, including attorney's fees, judgments, fines excise taxes or penalties and amounts to
+be paid in settlement reasonably incurred or suffered by an officer or director in connection with any action, suit or proceeding,
+whether civil or criminal, administrative or investigative (hereinafter a "Proceeding") to which the officer or
+director is made a party or is threatened to be made a party, or in which the officer or director is involved by reason of the
+fact that he is or was an officer or director of the Company, or is or was serving at the request of the Company whether the basis
+of the Proceeding is an alleged action in an official capacity as an officer or director, or in any other capacity while serving
+as an officer or director. Thus, the Company may be prevented from recovering damages for certain alleged errors or omissions by
+the officers and directors for liabilities incurred in connection with their good faith acts for the Company. Such an
+indemnification payment might deplete the Company's assets. Stockholders who have questions regarding the fiduciary obligations
+of the officers and directors of the Company should consult with independent legal counsel. It is the position of the Securities
+and Exchange Commission that exculpation from and indemnification for liabilities arising under the Securities Act of 1933, as
+amended, and the rules and regulations thereunder is against public policy and therefore unenforceable.
+
+12
+
+ 
+
+ 
+
+We do not yet have substantial assets
+or revenues and are largely dependent upon the proceeds of this offering to fully fund our business. If we do not the sell shares
+in this offering we may have to seek alternative financing to complete our business or abandon them.
+
+ 
+
+We have limited capital
+resources. The Company is in its developmental stage and has funded its operations from limited funding. The Company has not
+yet begun operations or generated any cash. However, our officers and directors have made no written commitments with respect
+to providing a source of liquidity in the form of cash advances, loans and/or financial guarantees. We are dependent on the
+sale of our securities to fund our operations, and will remain so until we generate sufficient revenues to pay for our operating
+costs. Unless the company begins to generate sufficient revenues to finance operations as a going concern, we may experience liquidity
+and solvency problems. Such liquidity and solvency problems may for us to cease operations if additional financing is not available.
+No known alternative sources of funds are available to the Company in the event it does not have adequate proceeds from this offering.
+However, the Company believes that the net proceeds of this offering will be sufficient to satisfy operating requirements for
+the next twelve months. 
+
+The Company may not be able to attain
+profitability without additional funding, which may be unavailable.
+
+ 
+
+The Company has limited capital resources.
+Unless the Company begins to generate sufficient revenues to finance operations as a going concern, the Company may experience
+liquidity and solvency problems. Such liquidity and solvency problems may force the Company to cease operations if additional financing
+is not available. No known alternative resources of funds are available in the event we do not generate sufficient funds from operations.
+
+ 
+
+Expenses required
+to operate as a public company will reduce funds available to develop our business and could negatively affect our stock price
+and adversely affect our results of operations, cash flow and financial condition.
+
+ 
+
+Operating as a public
+company is more expensive than operating as a private company, including additional funds required to obtain outside assistance
+from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be
+required to hire additional staff to comply with additional SEC reporting requirements. We anticipate that the cost of SEC
+reporting will be approximately $25,000 annually. Our failure to comply with reporting requirements and other provisions
+of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial
+condition. If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities
+on the OTC Bulletin Board, or, if we have secured a qualification, we may lose the qualification and our securities would no longer
+trade on the OTC Bulletin Board. Further, if we fail to meet these obligations and consequently fail to satisfy our SEC reporting
+obligations, investors will then own stock in a company that does not provide the disclosure available in quarterly, annual reports
+and other required SEC reports that would be otherwise publicly available leading to increased difficulty in selling their stock
+due to our becoming a non-reporting issuer.
+
+ 
+
+Our lack of history makes evaluating
+our business difficult.
+
+ 
+
+ We are a developmental stage company
+with limited operating history and we may not sustain profitability in the future.
+
+ 
+
+To sustain profitability, we must:
+
+ 
+
+ 
+ -
+ effectively market our services to end users
+
+ 
+
+ 
+ -
+ differentiate our offering from our competitors
+
+ 
+
+ 
+ -
+ compete with larger, more established competitors in the VOIP communication industry
+
+ 
+
+ 
+ -
+ maintain and enhance our brand recognition; and
+
+ 
+
+ 
+ -
+ adapt to meet changes in our markets and competitive developments.
+
+13
+
+ 
+
+ 
+
+We may not be
+successful in accomplishing these objectives. Further, our lack of operating history makes it difficult to evaluate our business
+and prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered
+by companies in their early stages of development, particularly companies in highly competitive industries. The historical information
+in this report may not be indicative of our future financial condition and future performance. For example, we expect that our
+future annual growth rate in revenues will be moderate and likely be less than the growth rates experienced in the early part of
+our history
+
+ 
+
+Risks Related to Our Business
+
+ 
+
+Because we have a limited history of operations we may not
+be able to successfully implement our business plan.
+
+ 
+
+We have less than one year of operational history
+in our industry. Accordingly, our operations are subject to the risks inherent in the establishment of a new business enterprise,
+including access to capital, successful implementation of our business plan and limited revenue from operations. We cannot assure
+you that our intended activities or plan of operation will be successful or result in revenue or profit to us and any failure to
+implement our business plan may have a material adverse effect on the business of the Company.
+
+Declining prices for communications services
+could reduce our revenues and profitability. 
+
+We may fail to achieve
+acceptable profits due to pricing. Prices in telecommunication services have declined substantially in recent years, a trend which
+continues. Accordingly, we cannot predict to what extent we may need to reduce our prices to remain competitive or whether we will
+be able to sustain future pricing levels as our competitors introduce competing services or similar services at lower prices. Our
+ability to meet price competition may depend on our ability to operate at costs equal to or lower than those of our competitors
+or potential competitors.
+
+14
+
+ 
+
+ 
+
+We depend heavily on key personnel,
+and turnover of key senior management could harm our business.
+
+Our future business and results
+of operations depend in significant part upon the continued contributions of our Chief Executive Officer. If we lose his services
+or if he fails to perform in his current position, or if we are not able to attract and retain skilled employees as needed, our
+business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held
+by our existing senior management team. We depend on the skills and abilities of these key employees in managing the product acquisition,
+marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.
+
+ 
+
+Our absence of a developed cloud
+platform creates significant risks to our ability to generate revenue and operate successfully.
+
+ 
+
+ As a development
+stage company, we have not generated any revenue from the products and services which we intend to develop and market. We expect
+to generate all of our future revenues from the development and marketing of our proposed cloud service to small and medium-sized
+enterprises. We have no operating history in implementing our business model, which will make it difficult or impossible for the
+Company to predict future results of operations. Our prospects must be considered in light of the risks, expenses, and difficulties
+frequently encountered by companies in the early stages of a new business enterprise, particularly companies in highly competitive
+markets. Since the Company is among many that have entered the cloud communications market, it faces competition. It
+also faces many risks specific to its business, which include those related to successfully sourcing and further developing the
+cloud platform and technology, successfully commercializing the cloud platform and proprietary technology, the ability to manage
+existing and expanding operations, the continuing need to raise additional capital, the dependence upon and need to hire key personnel,
+and the need to increase spending to adequately market our proposed search engine services. To address these risks, we must, among
+other things, respond to competitive developments, continue to attract, retain and motivate qualified persons, and continue to
+upgrade our technologies. We cannot provide any assurances that we will be successful in addressing such risks. The Company's
+failure to do so could have a material adverse effect on its business, prospects, financial condition and results of operations
+and result in investors losing their entire investment. 
+
+ 
+
+A security breach
+could delay or interrupt service to our customers, harm our reputation, or subject us to significant liability.
+
+ Our future operations
+will depend on our ability to protect our network from interruption or damage from unauthorized entry, computer viruses or
+other events beyond our control. We may become subject to denial or disruption of service, or DDoS, attacks by hackers intent
+on bringing down our subscriptions. We cannot assure you that our backup systems, regular data backups, security protocols and
+other procedures that are currently in place, or that may be in place in the future, will be adequate to prevent significant damage,
+system failure or data loss. Also, our subscriptions will be web-based, and the amount of data we store for our users on
+our servers has been increasing. Despite the implementation of security measures, our infrastructure may be vulnerable to hackers,
+computer viruses, worms, other malicious software programs or similar disruptive problems caused by our customers, employees,
+consultants or other Internet users who attempt to invade public and private data networks. Further, in some cases we may not
+have in place disaster recovery facilities for certain ancillary services, such as email delivery of messages. We anticipate that
+nearly all of our customers will authorize us to bill their credit or debit card accounts directly for all transaction fees that
+we charge. We will rely on encryption and authentication technology to ensure secure transmission of and access to confidential
+information, including customer credit and debit card numbers. Advances in computer capabilities, new discoveries in the field
+of cryptography or other developments may result in a compromise or breach of the technology we use to protect transaction data.
+
+15
+
+ 
+
+ 
+
+Additionally, third parties
+may attempt to fraudulently induce domestic and international employees, consultants or customers into disclosing sensitive information,
+such as user names, passwords or customer proprietary network information, or CPNI, or other information in order to gain access
+to our customers data or to our data. CPNI includes information such as the phone numbers called by a consumer, the frequency,
+duration, and timing of such calls, and any services purchased by the consumer, such as call waiting, call forwarding, and caller
+ID, in addition to other information that may appear on a consumer s bill. Third parties may also attempt to fraudulently
+induce employees, consultants or customers into disclosing sensitive information regarding our intellectual property and other
+confidential business information, or our information technology systems. In addition, because the techniques used to obtain unauthorized
+access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable
+to anticipate these techniques or to implement adequate preventative measures. Any system failure or security breach that causes
+interruptions or data loss in our operations or in the computer systems of our customers or leads to the misappropriation of our
+or our customers confidential or personal information, or CPNI, could result in significant liability to us, cause our subscriptions
+to be perceived as not being secure, cause considerable harm to us and our reputation (including requiring notification to customers,
+regulators or the media), and deter current and potential customers from using our subscriptions. Any of these events could have
+a material adverse effect on our business, results of operations, and financial condition.
+
+We may also maintain
+sensitive data related to our employees, strategic partners, and customers including intellectual property, proprietary business
+information and personally identifiable information on our own systems. We employ sophisticated security measures, however, we
+may face threats across our infrastructure including unauthorized access, security breaches and other system disruptions.
+
+It is critical to our
+business that our employees , strategic partners and customers sensitive information remains secure and that
+our customers perceive that this information is secure. A cybersecurity breach could result in unauthorized access to, loss of,
+or unauthorized disclosure of such information. A cybersecurity breach could expose us to litigation, indemnity obligations, government
+investigations and other possible liabilities. Additionally, a cyber attack, whether actual or perceived, could result in negative
+publicity which could harm our reputation and reduce our customers confidence in the effectiveness of our solutions, which
+could materially and adversely affect our business and operating results. A breach of our security systems could also expose us
+to increased costs including remediation costs, disruption of operations, or increased cybersecurity protection costs that may
+have a material adverse effect on our business. In addition, a cybersecurity breach of our customers systems can also result
+in exposure of their authentication credentials, unauthorized access to their accounts, exposure of their account information including
+CPNI, and fraudulent calls on their accounts, which can subsequently have similar actual or perceived impacts to our business as
+described above.
+
+Our network may not be able to accommodate our capacity needs.
+
+ 
+
+We expect the volume of traffic we carry over
+our network to increase significantly as we commence and expand our operations and service offerings. Our network may not
+be able to accommodate this additional volume. In order to ensure that we are able to handle additional traffic, we may have to
+enter into long-term agreements for leased capacity. To the extent that we overestimate our capacity needs, we may be obligated
+to pay for more transmission capacity than we actually use, resulting in costs without corresponding revenues. Conversely, if
+we underestimate our capacity needs, we may be required to obtain additional transmission capacity from more expensive sources.
+If we are unable to maintain sufficient capacity to meet the needs of our users, our reputation could be damaged and we could
+lose customers and revenues.
+
+16
+
+ 
+
+ 
+
+Additionally, our success depends on our ability
+to handle a large number of simultaneous calls. We expect that the volume of simultaneous calls will increase significantly as
+we expand our operations. If this occurs, additional stress will be placed upon the network hardware and software that manages
+our traffic. We cannot assure stockholders of our ability to efficiently manage a large number of simultaneous calls. If we are
+not able to maintain an appropriate level of operating performance, or if our service is disrupted, then we may develop a negative
+reputation and our business, results of operations and financial condition could be materially adversely affected.
+
+ 
+
+Our management has limited
+experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated
+with the management of our company.
+
+Our Chief Executive Officer, Mr.
+Lancer is responsible for the operations and reporting of our company. The requirements of operating as a small public company
+are new to our management. This may require us to obtain outside assistance from legal, accounting, investor relations, or other
+professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional
+SEC reporting requirements. We anticipate that the costs associated with SEC requirements associated with going and staying public
+are estimated to be approximately $25,000 in connection with this registration statement and thereafter $25,000 annually. If we
+lack cash resources to cover these costs in the future, our failure to comply with reporting requirements and other provisions
+of securities laws could negatively affect our stock price and adversely affect our potential results of operations, cash flow
+and financial condition after we commence operations.
+
+Our future results and reputation
+may be affected by litigation or other liability claims.
+
+ 
+
+We have not procured a general liability
+insurance policy for our business. To the extent that we suffer a loss of a type which would normally be covered by general liability,
+we would incur significant expenses in defending any action against us and in paying any claims that result from a settlement or
+judgment against us. Adverse publicity could result in a loss of consumer confidence in our business or our securities.
+
+We may be subject
+to regulatory inquiries, claims, suits prosecutions which may impact our profitability.
+
+Any failure or perceived
+failure by us to comply with applicable laws and regulations may subject us to regulatory inquiries, claims, suits and prosecutions.
+We can give no assurance that we will prevail in such regulatory inquiries, claims, suits and prosecutions on commercially reasonable
+terms or at all. Responding to, defending and/or settling regulatory inquiries, claims, suits and prosecutions may be time-consuming
+and divert management and financial resources or have other adverse effects on our business. A negative outcome in any of these
+proceedings may result in changes to or discontinuance of some of our services, potential liabilities or additional costs that
+could have a material adverse effect on our business, results of operations, financial condition and future prospects.
+
+We may be subject to legal proceedings
+involving technology that could result in substantial cost and which could materially harm our business operations.
+
+ 
+
+From time to time, we may be subject to
+legal proceedings and claims in the ordinary course of its business, including claims of alleged infringement of the trademarks
+and other intellectual property rights of third parties by us. These types of claims could result in increased costs of doing business
+through legal expenses, adverse judgments or settlements or require us to change its business practices in expensive ways. Additional
+litigation may be necessary in the future to enforce our technology rights, to protect its trade secrets or to determine the validity
+and scope of the proprietary rights of others. Any litigation, regardless of outcome or merit, could result in substantial costs
+and diversion of management and technical resources, any of which could materially harm our business.
+
+ 17
+
+ 
+
+ 
+
+ 
+
+Expanding our service offerings or
+number of offices may not be profitable.
+
+ 
+
+We may choose to develop products and services
+to offer. Developing new offerings involves inherent risks, including:
+
+ 
+
+ 
+ -
+ our inability to estimate demand for the new offerings;
+
+ 
+
+ 
+ -
+ competition from more established market participants;
+
+ 
+
+ 
+ -
+ a lack of market understanding.
+
+ 
+
+In addition, expanding into new geographic
+areas and/or expanding current service offerings is challenging and may require integrating new employees into our culture as well
+as assessing the demand in the applicable market.
+
+ 
+
+If our estimates related to expenditures
+and cash flow from operations are erroneous, and we are unable to sell additional equity securities, our business could fall short
+of expectations and you may lose your entire investment.
+
+ 
+
+Our financial success is dependent in
+part upon the accuracy of our management's estimates of expenditures and cash flow from operations. If such estimates are erroneous
+or inaccurate, we may not be able to carry out our business plan, which could, in a worst-case scenario, result in the failure
+of our business and you losing your entire investment.
+
+ 
+
+ 
+
+We are subject to complex federal, state,
+local and other laws and regulations that could materially and adversely affect our business, financial condition and results of
+operations. 
+
+ 
+
+Our business is subject to various, and sometimes
+complex, laws and regulations. In order to conduct our operations in compliance with these laws and regulations, we must obtain
+and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. We may
+incur substantial costs in order to maintain compliance with these existing laws and regulations. In addition, our costs of compliance
+may increase if existing laws and regulations are revised or reinterpreted or if new laws and regulations become applicable to
+our operations. These costs could have a material and adverse effect on our business, financial condition and results of operations.
+Moreover, our failure to comply with these laws and regulations, as interpreted and enforced, could have a material adverse effect
+on our business, financial condition and results of operations.
+
+ 
+
+Additional taxation and
+government regulation of the cloud communications industry may slow our growth, resulting in decreased demand for our products
+and services and increased costs of doing business.
+
+As a result
+of changes in regulatory policy, we could be forced to pay additional taxes on the products and services we provide. We structure
+our operations and our pricing based on assumptions about various domestic and international tax laws, tax treaties and other relevant
+laws. Taxation authorities or other regulatory authorities might not reach the same conclusions about taxation that
+we have reached in formulating our assumptions. We could suffer adverse tax and other financial consequences if our
+assumptions about these matters are incorrect or the relevant laws are changed or modified.
+
+In the
+U.S. our products and services are subject to varying degrees of federal, state and local regulation, including regulation by the
+Federal Communications Commission ("FCC") and various state public utility commissions. We may also be subject
+to similar regulation by foreign governments and their telecommunications and/or regulatory agencies. While these regulatory
+agencies grant us the authority to operate our business, they typically exercise minimal control over our services and pricing. However,
+they do require the filing of various reports, compliance with public safety and consumer protection standards, and the payment
+of certain regulatory fees and assessments.
+
+18
+
+ 
+
+ 
+
+ We cannot assure
+you that the applicable U.S. and foreign regulatory agencies will grant us the required authority to operate, will allow us to
+maintain existing authority so we can continue to operate or will refrain from taking action against us if we are found to have
+provided services without obtaining the necessary authority. Similarly, if our pricing and/or terms and conditions of
+service are not properly filed or updated with the applicable agencies, or if we are otherwise not fully compliant with the rules
+of the various regulatory agencies, regulators or other third parties could challenge our actions and we could be subject to forfeiture
+of our authority to provide service, or to penalties, fines, fees or other costs. We have in the past been delinquent
+in certain filing and reporting obligations including, but not limited to, filings with the FCC and Universal Service Fund ("USF")
+reports and payments. However, we have worked with these various federal and state regulatory agencies to complete the
+outstanding filings and have resolved the outstanding payment issues.
+
+ 
+
+In addition to new regulations
+being adopted, existing laws may be applied to the Internet, which could hinder our growth.
+
+New and
+existing laws may cover issues that include: sales and other taxes; user privacy; pricing controls; characteristics and quality
+of products and services; consumer protection; cross-border commerce; copyright, trademark and patent infringement; and other claims
+based on the nature and content of Internet materials. Changes to existing regulations or the adoption of new regulations
+could delay growth in demand for our products and services and limit the growth of our revenue.
+
+Online credit card fraud can harm our business.
+
+ 
+
+ We plan to offer our products and services
+for sale over the Internet. The sale of our products and services over the Internet exposes us to credit card fraud risks.
+Some of our products and services can be ordered or established (in the case of new accounts) over the Internet using a major
+credit card for payment. As is prevalent in retail telecommunications and Internet services industries, we are exposed to the
+risk that some of these credit card accounts are stolen or otherwise fraudulently obtained. In general, we are not able to recover
+fraudulent credit card charges from such accounts. In addition to the loss of revenue from such fraudulent credit card use, we
+also remain liable to third parties whose products or services are engaged by us (such as termination fees due telecommunications
+providers) in connection with the services which we provide. In addition, depending upon the level of credit card fraud we experience,
+we may become ineligible to accept the credit cards of certain issuers. The loss of eligibility for acceptance of credit cards
+could significantly and adversely affect our business. We will attempt to manage fraud risks through our internal controls and
+our monitoring and blocking systems. If those efforts are not successful, fraud could cause our revenue to decline significantly
+and our business, financial condition and results of operations to be materially and adversely affected.
+
+ 
+
+International operations may expose us to additional and unpredictable
+risks.
+
+ 
+
+We may enter international markets such as Eastern Europe, the Middle
+East, Latin America, Africa and Asia and may expand our existing operations outside the United States. International operations
+are subject to inherent risks, including:
+
+ 
+
+ potentially
+weaker protection of intellectual property rights;
+
+ 
+
+ political
+and economic instability;
+
+ 
+
+ unexpected
+changes in regulations and tariffs;
+
+ 
+
+ fluctuations
+in exchange rates;
+
+ 
+
+ varying
+tax consequences, and;
+
+ 
+
+ uncertain
+market acceptance and difficulties in marketing efforts due to language and cultural differences.
+
+19
+
+ 
+
+ 
+
+Our success depends on the public acceptance of our
+products and applications.
+
+Our future success depends
+on our ability to significantly increase revenues generated from our cloud-based business communications solutions. The market
+for cloud-based business communications is evolving rapidly and is characterized by an increasing number of market entrants. As
+is typical of a rapidly evolving industry, the demand for, and market acceptance of, these applications is uncertain. If the market
+for cloud-based business communications fails to develop, develops more slowly than we anticipate or develops in a manner different
+than we expect, our products could fail to achieve market acceptance, which in turn could materially and adversely affect our business.
+
+ 
+
+Our growth will depend on the continued
+use of voice communications by businesses, as compared to email and other data-based methods. A decline in the overall rate of
+voice communications by businesses would harm our business. Furthermore, our continued growth depends on future demand for and
+adoption of Internet voice communications systems and services. Although the number of broadband subscribers worldwide has grown
+significantly in recent years, a small percentage of businesses have adopted Internet voice communications services to date. For
+demand and adoption of Internet voice communications services by businesses to increase, Internet voice communications networks
+must improve the quality of their service so that toll-quality service can be consistently provided. Additionally, the cost and
+feature benefits of Internet voice communications must be sufficient to cause customers to switch from traditional phone service
+providers. We must devote substantial resources to educate customers and their end users about the benefits of Internet voice
+communications solutions, in general, and our subscriptions in particular. If any or all of these factors fail to occur, our business
+may be materially and adversely affected.
+
+Most of our revenues will come from small and medium-sized
+businesses, which may have fewer financial resources to weather an economic downturn.
+
+Most of our revenues
+will come from small and medium-sized businesses. These customers may be materially and adversely affected by economic downturns
+to a greater extent than larger, more established businesses. These businesses typically have more limited financial resources,
+including capital-borrowing capacity, than larger entities. Because the vast majority of our customers pay for our subscriptions
+through credit and debit cards, weakness in certain segments of the credit markets and in the U.S. and global economies has resulted
+in and may in the future result in increased numbers of rejected credit and debit card payments, which could materially affect
+our business by increasing customer cancellations and impacting our ability to engage new small and medium-sized customers. If
+small and medium-sized businesses experience financial hardship as a result of a weak economy, industry consolidation or the overall
+demand for our subscriptions could be materially and adversely affected.
+
+ 
+
+The cloud services industry
+is highly competitive and we may be unable to compete effectively.
+
+The cloud services industry, including
+the provisioning of cloud voice services, cloud connectivity, and cloud storage, is highly competitive, rapidly evolving and subject
+to constant technological change and intense marketing by providers with similar products and services. In addition,
+many of our current cloud services competitors are significantly larger and have substantially greater market presence; greater
+financial, technical, operational and marketing resources; and more experience. In the event that such a competitor
+expends significant sales and marketing resources in one or several markets where we compete with them, we may not be able to compete
+successfully in those markets. We also believe that competition will continue to increase, placing downward pressure
+on prices. Such pressure could adversely affect our gross margins if we are not able to reduce our costs commensurate
+with the price reductions of our competitors. In addition, the pace of technological change makes it impossible for
+us to predict whether we will face new competitors using different technologies to provide the same or similar services offered
+or proposed to be offered by us. If our competitors were to provide better and more cost effective services than ours,
+we may not be able to increase our revenues or capture any significant market share.
+
+20
+
+ 
+
+ 
+
+Industry consolidation
+could make it more difficult for us to compete.
+
+Companies offering cloud voice, cloud
+connectivity and other cloud services are, in some circumstances, consolidating. We may not be able to compete successfully
+with businesses that have combined, or will combine, to produce companies with substantially greater financial, technical, sales
+and marketing resources, or with larger client bases, more extended networks or more established relationships with vendors and
+distributors. If we were to experience such heightened competitive pressures, there is a risk that our revenues may
+not grow as expected and the value of our common stock could decline.
+
+ 
+
+We may be unable to adapt
+to rapid technology trends and evolving industry standards, which could lead to our products becoming obsolete.
+
+The cloud
+services industry is subject to rapid and significant changes due to technology innovation, evolving industry standards and frequent
+new service and product introductions. New services and products based on new technologies or new industry standards
+expose us to risks of technical or product obsolescence. We will need to use technologies effectively, continue to develop
+our technical expertise and enhance our existing products and services in a timely manner to compete successfully in this industry. We
+may not be successful in using new technologies effectively, developing new products or enhancing existing products and services
+in a timely manner, and we cannot assure you that any new technologies or enhancements used by us or offered to our customers will
+achieve market acceptance.
+
+Failures in Internet infrastructure or interference
+with broadband access could cause users to believe that our systems are unreliable, possibly leading our customers to switch to
+our competitors or to avoid using our subscriptions.
+
+Unlike traditional communications
+services, our subscriptions depend on our customers high-speed broadband access to the Internet, usually provided through
+a cable or digital subscriber line, or DSL, connection. Increasing numbers of users and increasing bandwidth requirements may degrade
+the performance of our subscriptions and applications due to capacity constraints and other Internet infrastructure limitations.
+As our customer base grows and their usage of communications capacity increases, we will be required to make additional investments
+in network capacity to maintain adequate data transmission speeds, the availability of which may be limited, or the cost of which
+may be on terms unacceptable to us. If adequate capacity is not available to us as our customers usage increases, our network
+may be unable to achieve or maintain sufficiently high data transmission capacity, reliability or performance. In addition, if
+Internet service providers and other third parties providing Internet services have outages or deteriorations in their quality
+of service, our customers will not have access to our subscriptions or may experience a decrease in the quality of our subscriptions.
+Furthermore, as the rate of adoption of new technologies increases, the networks on which our subscriptions and applications rely
+may not be able to sufficiently adapt to the increased demand for these services, including ours. Frequent or persistent interruptions
+could cause current or potential users to believe that our systems or subscriptions are unreliable, leading them to switch to our
+competitors or to avoid our subscriptions, and could permanently harm our reputation and brands.
+
+21
+
+ 
+
+ 
+
+In December 2010, the
+Federal Communications Commission, or FCC, adopted net neutrality rules that made it more difficult for broadband Internet access
+service providers to block, degrade or discriminate against our customers. These rules applied to wired broadband Internet providers,
+but not all of the rules applied to wireless broadband service. In January 2014, the U.S. Court of Appeals for the District of
+Columbia Circuit vacated portions of the FCC s net neutrality rules relating to anti-discrimination and anti-blocking. On
+May 15, 2014, the FCC released a Notice of Proposed Rulemaking to consider the court s decision and what actions the FCC
+should take in response. On February 26, 2015, the FCC adopted an order reclassifying broadband Internet access as a telecommunications
+service, subject to certain provisions of Title II of the Communications Act, including most significantly prohibiting unjust or
+unreasonable practices or discrimination but not regulating rates. As described in a News Release issued by the FCC on February
+26, 2015, the new rules would specifically prohibit broadband providers from blocking access to legal content, applications, services
+or non-harmful devices; impairing or degrading lawful Internet traffic on the basis of content, application, services or non-harmful
+devices; and would prohibit paid prioritization, e.g., the favoring of some lawful Internet traffic over other traffic in exchange
+for higher payments. We cannot predict whether the new rules will be contested and subject to a legal appeal. If the rules
+are overturned or vacated by legal action, broadband internet access providers may be able to charge web-based services such as
+ours for priority access to customers, which could result in increased costs and a loss of existing users, impair our ability to
+attract new users, and materially and adversely affect our business and opportunities for growth.
+
+ 
+
+Risks Related to Our Common Stock
+
+ 
+
+Due to the lack of a current public market for our stock,
+investors may have difficulty in selling stock they purchase
+
+ 
+
+Prior to this Offering, no public trading market
+existed for the Company s securities. There can be no assurance that a public trading market for the Company s common
+stock will develop or that a public trading market, if develop, will be sustained. The common stock sold pursuant to this
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001643542_exsular_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001643542_exsular_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..17ffd39c1d8862c77b1a617c31e66ddfb9c335bc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001643542_exsular_prospectus_summary.txt
@@ -0,0 +1 @@
+SUMMARY OF THE PROSPECTUS This summary provides an overview of certain information contained elsewhere in this Prospectus and does not contain all of the information that you should consider or that may be important to you. Before making an investment decision, you should read the entire Prospectus carefully, including the "Risk Factors" section and the financial statements and the notes to the financial statements. In this Prospectus, the terms the "Company," "we," "us" and "our" refer to Frontier Digital Media Group, Inc., unless otherwise specified herein. To understand this offering fully, you should read the entire Prospectus carefully, including the risk factors beginning on page 5 and the financial statements. General Frontier Digital Media Group, Inc. ("we, "us," "our," or the "Company") was incorporated in the state of Colorado on September 19, 2011. On March 20, 2013, we formed a wholly owned subsidiary company, Smile Producer, Inc., a Colorado corporation. Our business operations are conducted through this entity. Our principal executive offices are located at 537 Pitkin Way, Castle Rock, Colorado, 80104, telephone 303-999-8171. Operations We are a digital design and media company which develops and maintains websites and is a provider of marketing communications services to customers in the United States. We conduct our operations primarily through Smile Producer, Inc., our wholly owned subsidiary company. All references to us in this Prospectus include both our parent and subsidiary company, unless indicated otherwise. We provide a range of marketing communications and consulting services, including all types of advertising, print and digital design, digital motion graphics and client website construction, interactive and mobile marketing, direct marketing, sales promotion, market research, corporate identity and branding, social media and other marketing related services. We have two revenue streams, marketing services and website hosting subscriptions. As of the date of this Prospectus our management only devotes approximately 35-50 hours in the aggregate per week to our affairs. This time may increase if and when our business activity increases, of which there is no assurance. Additionally, our management owns in excess of a majority of our outstanding Common Stock and will continue to own over a majority of our outstanding shares even if all of the shares being offered herein are sold. As a result, they have the ability to determine the outcome on all matters requiring approval of our shareholders, including the election of directors and approval of significant corporate transactions. See "RISK FACTORS." We have not yet generated sustained profits from our operations. Our independent accountants have expressed a "going concern" opinion. Our financial statements accompanying this Registration Statement have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We incurred net losses of $(2,289) during the fiscal year ended December 31, 2014, and generated net income of $6,492 during the year ending December 31, 2013. We incurred a net loss of $22,781 during the nine months ended September 30, 2015. We have recognized limited revenues since our inception, including $50,898 and $35,033 during our fiscal years ended December 31, 2014 and 2013, respectively, and $15,901 during the nine months ended September 30, 2015. Of the $35,033 in revenue from 2013, $21,645 was derived from transactions with related parties and $13,388 was derived from transactions with non-related parties. In 2014, $28,475 of the $50,898 in revenue was derived from transactions with related parties while $22,423 was derived from transactions with non-related parties. Total stockholders equity at December 31, 2014 was $4,517. Our only assets as of September 30, 2015 were our cash in the bank of $4,220 and accounts and other receivables of $4,985. We generated a nominal net loss during the year ended December 31, 2014 and have incurred cumulative net losses from our inception in September 2011 through September 30, 2015, and may continue to incur losses as we execute our strategies and may never maintain profitability. If we fail to execute our business strategy or if there is a change in the demand for our services or market conditions, or any other assumptions we used in formulating our business strategy, our long-term strategy may not be successful, and we may not be able to achieve and/or maintain profitability. CALCULATION OF REGISTRATION FEE Title of securities to be registered Amount to be Registered Proposed maximum offering price per share (1) Proposed maximum aggregate offering price Amount of registration fee (1) Common Stock 1,000,000 Shares $0.05 $50,000 $5.81 * _____________________ (1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(a). * previously paid THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. TABLE OF CONTENTS Page No. SUMMARY OF THE PROSPECTUS 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001644147_neiman_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001644147_neiman_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001644147_neiman_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001644406_hostess_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001644406_hostess_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9f2509401376e4a10dd6108821ac12b91f83ab21
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001644406_hostess_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: we, us, company or our company are to Gores Holdings, Inc., a Delaware corporation; public shares are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders are to the holders of our public shares; management or our management team are to our executive officers and directors; sponsor are to Gores Sponsor LLC, a Delaware limited liability company and an affiliate of The Gores Group; initial stockholders are to holders of our founder shares prior to this offering; founder shares are to shares of our Class F common stock initially purchased by our sponsor in a private placement prior to this offering and the shares of our Class A common stock issued upon the automatic conversion thereof at the time of our initial business combination as provided herein; common stock are to our Class A common stock and our Class F common stock. The Gores Group or Gores are to The Gores Group, LLC, a Delaware limited liability company; and private placement warrants are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company incorporated on June 1, 2015 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any business combination target. While we may pursue an acquisition opportunity in any business industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and manage a business that can benefit from our operational expertise, as members of our management team have done in diverse sectors, including industrials, technology, telecommunications, media and entertainment, business services, healthcare and consumer products. This operationally-oriented investment approach has served The Gores Group well since its founding in 1987. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 10, 2015 PRELIMINARY PROSPECTUS Gores Holdings, Inc. $350,000,000 35,000,000 Units Gores Holdings, Inc. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class A common stock and one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our Class A common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 5,250,000 units to cover over-allotments, if any. We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding shares of Class A common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $50,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable) divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Our sponsor, Gores Sponsor LLC (which we refer to as our sponsor throughout this prospectus) has committed to purchase an aggregate of 18,000,000 warrants (or 20,100,000 warrants if the over-allotment option is exercised in full) at a price of $0.50 per warrant ($9,000,000 in the aggregate, or $10,050,000 if the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Each private placement warrant is exercisable to purchase one-half of one share of our Class A common stock at $5.75 per half share. Prior to this offering, our sponsor purchased 10,062,500 shares of Class F common stock (up to 1,312,500 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised). The shares of Class F common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock outstanding upon completion of this offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to our sponsor. Holders of the Class F common stock and holders of the Class A common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Currently, there is no public market for our units, Class A common stock or warrants. We have applied to list our units on the NASDAQ Capital Market, or NASDAQ, under the symbol GRSHU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on NASDAQ. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Table of Contents We believe that our management team is well positioned to identify operationally-oriented acquisition opportunities in the marketplace and that our contacts and transaction sources, ranging from owners and directors of private and public companies, private equity funds, investment bankers, lenders, attorneys, accountants and other trusted advisors across various sectors, will allow us to generate attractive acquisition opportunities. Our team is led by Alec Gores, our Chairman, who has more than 35 years of experience as an entrepreneur, operator and private equity investor. Over the course of his career, Mr. Gores and his team have invested in more than 100 portfolio companies through varying macroeconomic environments with a consistent, operationally-oriented investment strategy. Together with a team of operations professionals spanning key business functional areas, as well as dedicated investment origination and mergers and acquisitions professionals, Mr. Gores developed a formula that led to numerous marquee investments and business transformations, with a strong focus on carve-out acquisitions from large corporate transaction partners, including: The Learning Company from Mattel Corporation; VeriFone from Hewlett-Packard Company; Micron PC from Micron Electronics, Inc.; Sagem Communications from the Safran Group; Stock Building Supply from Wolseley plc; The broadcast communications division from Harris Corporation; The electronics power systems business from TE Connectivity Ltd.; Elo Touch Solutions from TE Connectivity Ltd.; Therakos from Johnson & Johnson; and Brand-Rex from Honeywell International, Inc. Mr. Gores is the Founder, Chairman and Chief Executive Officer of The Gores Group, a global investment firm focused on acquiring businesses that can benefit from the firm s operating expertise. Mr. Gores pioneered a new operational approach to private equity investing when he founded The Gores Group in 1987. Since then, the firm has acquired more than 100 businesses including a current portfolio of more than 20 active companies worldwide. Under Mr. Gores leadership, The Gores Group has effected a number of successful corporate carve-out acquisitions over the last two decades. The Gores Group acquired VeriFone from Hewlett-Packard Company at a time when the business was generating significant revenues, but was cash flow negative. The Gores Group implemented dramatic changes to the business, and the business was sold and subsequently went public with an operating partner from The Gores Group serving as its chief executive officer. During that same timeframe, The Gores Group acquired The Learning Company from Mattel Corporation and transformed that business which, similarly, was generating significant revenues, but was suffering from severely negative cash flow. Since then, with Mr. Gores leading the firm, The Gores Group has created significant value in numerous transactions, including the acquisitions of Global Tel*Link from Schlumberger Ltd., Stock Building Supply from Wolseley plc, Therakos from Johnson & Johnson, the electronics power systems business from TE Connectivity Ltd., Siemens Enterprise Communications from Siemens AG and Sagem Communications from the Safran Group, among others. Mr. Gores began his career as a self-made entrepreneur and operating executive. In 1978, he self-funded Table of Contents Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be listed on NASDAQ under the symbols GRSH and GRSHW, respectively. We are an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 29 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public offering price $ 10.00 $ 350,000,000 Underwriting discounts and commissions(1) $ 0.55 $ 19,250,000 Proceeds, before expenses, to us $ 9.45 $ 330,750,000 (1) Includes $0.35 per unit, or approximately $12,250,000 (or up to $14,087,500 if the underwriters over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, in an amount equal to $0.35 multiplied by the number of shares of Class A common stock sold as part of the units in this offering, as described in this prospectus. Does not include certain fees and expenses payable to the underwriters in connection with this offering. See also Underwriting beginning on page 144 for a description of compensation and other items of value payable to the underwriters. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $350.0 million or approximately $402.5 million if the underwriters over-allotment option is exercised in full ($10.00 per unit), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee. Except with respect to interest earned on the funds in the trust account that may be released to us to pay our taxes, if any, the proceeds from this offering will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering and (iii) the redemption of all of our public shares if we are unable to complete our business combination within 24 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2015. Deutsche Bank Securities I-Bankers Securities, Inc. , 2015 Table of Contents and founded Executive Business Systems (EBS), a developer and distributor of vertical business software systems. Within seven years, EBS had become a leading value-added reseller in Michigan and employed over 200 people. In 1986, CONTEL purchased EBS, and Mr. Gores subsequently began acquiring and operating non-core businesses from major corporations and building value in those entities, a decision that ultimately led to the founding of what has evolved into The Gores Group today. Under his leadership, The Gores Group has continued to acquire businesses in need of operational and financial resources, while creating value and working with management teams to establish an entrepreneurial environment as a foundation for sustainable growth. As of December 31, 2014, The Gores Group had approximately $3.3 billion in assets under management. Our team, led by Alec Gores and including Mark Stone and Kyle Wheeler, has in the aggregate over 80 years of combined operational, financial, investment and transactional experience involving a diverse group of businesses, and we intend to focus on industries or sectors offering operationally-oriented acquisition opportunities that can benefit from our expertise. Messrs. Gores, Stone and Wheeler possess complementary skills and experience encompassing all aspects of the investment process, including sourcing, due diligence, valuation, structuring, financing, negotiation, execution, strategy development, operations management and investment realization. Our management team s objective is to generate attractive investment returns to create value for our stockholders by applying our strategy of identifying operationally-oriented acquisition opportunities and capitalizing on the ability of our management team to acquire and manage a business that can benefit from our operational expertise. Our management team s approach is focused on industries or sectors in which we have considerable knowledge and emphasizes downside protection and the preservation of capital by opportunistically pursuing transactions where we believe we have the ability to capture asymmetric risk/reward potential. Our management team has successfully applied this acquisition philosophy over its history to source attractive private equity acquisition opportunities and to deploy capital in varying macroeconomic environments. We expect that our management team, including Mr. Gores, will continue to be involved in our business following consummation of our initial business combination. Our management team will assess the skills, qualifications and abilities of the management team of each potential business combination target. The level and length of our existing management s continued active participation in our post-acquisition business will depend on the particular needs of the business acquired. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. With respect to the foregoing examples, past performance by our management team at The Gores Group is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical record of The Gores Group s performance as indicative of our future performance. None of our officers or directors has had experience with any blank check companies or special purpose acquisition corporations in the past. Business Strategy Our acquisition and value creation strategy will be to identify, acquire and, after our initial business combination, to build a company in an industry or sector that complements the experience of our management team and can benefit from our operational expertise. Our acquisition selection process will leverage our team s network of potential transaction sources, Table of Contents ranging from owners and directors of private and public companies, private equity funds, investment bankers, lenders, attorneys, accountants and other trusted advisors across various sectors. In addition, we intend to utilize the networks and industry experience of Mr. Gores and The Gores Group in seeking an initial business combination. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships that we believe will serve as a useful source of acquisition opportunities. This network has been developed through our management team s combined history of over 80 years of business experience, including in private equity and investment banking. We expect this network will provide our management team with a robust and consistent flow of acquisition opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Upon completion of this offering, members of our management team will communicate with their networks of relationships to articulate the parameters for our search for a target company and a potential business combination and begin the process of pursuing and reviewing potentially interesting leads. Acquisition Criteria Consistent with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies that we believe: have a defensible core business, sustainable revenues and established customer relationships; are undergoing change in capital structure, strategy, operations or growth; can benefit from our operational and strategic approach; offer a unique value proposition with transformational potential that can be substantiated during our detailed due diligence process; and have reached a transition point in their lifecycle presenting an opportunity for transformation. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Our Acquisition Process In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We will also utilize our operational and capital planning experience. Table of Contents We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, that our initial business combination is fair to our company from a financial point of view. Members of our management team may directly or indirectly own our common stock and warrants following this offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. We currently do not have any specific business combination under consideration. Our officers and directors have neither individually identified or considered a target business nor have they had any discussions regarding possible target businesses among themselves or with our underwriters or other advisors. Certain members of our management team are employed by certain affiliates of The Gores Group. The Gores Group is continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective target business or had any discussions, formal or otherwise, with respect to a business combination transaction. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with us and we will not consider a business combination with any company that has already been identified to The Gores Group as an acquisition candidate. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition candidate. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Table of Contents Our sponsor, executive officers, and directors have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. Initial Business Combination The NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business combination. Table of Contents Corporate Information We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act. Our executive offices are located at 9800 Wilshire Blvd, Beverly Hills, California 90212 and our telephone number is (310) 209-3010. Table of Contents The Offering In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 29 of this prospectus. Securities offered 35,000,000 units, at $10.00 per unit, each unit consisting of: one share of Class A common stock; and one warrant to purchase one-half of one share of Class A common stock. NASDAQ symbols Units: GRSHU Class A Common Stock: GRSH Warrants: GRSHW Trading commencement and separation of Class A common stock and warrants The units will begin trading promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. Separate trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the Class A common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment Table of Contents option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 35,000,000(1) Common stock: Number outstanding before this offering 10,062,500(2)(4) Number outstanding after this offering 43,750,000(1)(3)(4) Warrants: Number of private placement warrants to be sold in a private placement simultaneously with this offering 18,000,000(1) Number of warrants to be outstanding after this offering and the private placement 53,000,000(1) Exercisability Each warrant offered in this offering is exercisable to purchase one-half of one share of our Class A common stock. Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any (1) Assumes no exercise of the underwriters over-allotment option and the forfeiture by our sponsor of 1,312,500 founder shares. (2) This number consists solely of founder shares, gives effect to the forfeiture of 1,437,500 founder shares which are to be forfeited by our sponsor immediately prior to the pricing of our offering so that our initial stockholders remaining founder shares represent 20% of the number of shares of common stock outstanding immediately following our offering and includes up to 1,312,500 shares that are subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option is exercised. Except as otherwise specified, the rest of this prospectus has been drafted to give effect to the full forfeiture of these 2,750,000 shares. (3) Includes 35,000,000 public shares and 8,750,000 founder shares. (4) Founder shares are classified as shares of Class F common stock, which shares will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as described below adjacent to the caption Founder shares conversion and anti-dilution. Table of Contents odd number of warrants in order to obtain full value from the fractional interest that will not be issued. We structured each warrant to be exercisable for one-half of one share of our Class A common stock, as compared to warrants issued by some other similar blank check companies which are exercisable for one whole share, in order to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Exercise price $5.75 per half share ($11.50 per whole share), subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of Class A common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed; provided, that if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a covered security under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement. Table of Contents The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our Class A common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In determining whether to require all holders to exercise their warrants on a cashless basis, our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock Table of Contents underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled Description of Securities Warrants Public Stockholders Warrants for additional information. None of the private placement warrants will be redeemable by us so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees. Founder shares In June 2015, our sponsor purchased an aggregate of 11,500,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.002 per share. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to us by the number of founder shares issued. On August 5, 2015, our sponsor transferred 25,000 founder shares to each of our independent director nominees at their original purchase price. Immediately prior to the pricing of this offering, our sponsor will forfeit 1,437,500 founder shares so that the remaining founder shares held by our initial stockholders would represent 20.0% of the outstanding shares upon completion of this offering (assuming they do not purchase units in the offering). If we increase or decrease the size of the offering, we will effect a stock dividend or share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class F common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of founder shares by our initial stockholders at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering. Up to 1,500,000 founder shares are subject to forfeiture by our sponsor depending on the extent to which the underwriters overallotment option is exercised. Table of Contents The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, our initial stockholders, officers, directors and director nominees have entered into letter agreements with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination; and the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination or (B) the date on which we complete a liquidation, merger, stock exchange or other similar transaction after our initial business combination that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under Principal Stockholders Transfers of Founder Shares and Private Placement Warrants ). We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within Table of Contents any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up. Founder shares conversion and anti-dilution rights The shares of Class F common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock outstanding upon the completion of this offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to our sponsor. Voting Holders of the Class F common stock and holders of the Class A common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Each share of common stock shall have one vote. Private placement warrants Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 18,000,000 private placement warrants (or 20,100,000 if the over-allotment option is exercised in full), each exercisable to purchase one-half of one share of our Class A common stock at $5.75 per half share, at a price of $0.50 per warrant ($9,000,000 in the aggregate or $10,050,000 in the aggregate if the over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement warrants will be used to fund the redemption of our public shares (subject to the Table of Contents requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will not be redeemable by us so long as they are held by the sponsor or its permitted transferees (except as described below under Principal Stockholders Transfers of Founder Shares and Private Placement Warrants ). If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Our sponsor, or its permitted transferees, has the option to exercise the private placement warrants on a cashless basis. Transfer restrictions on private placement warrants The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination. Proceeds to be held in trust account The rules of NASDAQ provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Of the $359.0 million in proceeds we will receive from this offering and the sale of the private placement warrants described in this prospectus, or approximately $412.6 million if the underwriters over-allotment option is exercised in full, $350.0 million ($10.00 per unit), or $402.5 million ($10.00 per unit) if the underwriters over-allotment option is exercised in full, will be deposited into a segregated trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and $2.0 million will be used to pay expenses in connection with the closing of this offering and for working capital following this offering. The proceeds to be placed in the trust account include up to $12,250,000 (or up to $14,087,500 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our taxes, if any, the proceeds from this offering will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of Table of Contents our public shares if we do not complete our initial business combination within 24 months from the closing of this offering and (iii) the redemption of all of our public shares if we are unable to complete our business combination within 24 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except the withdrawal of interest to pay taxes. Based upon current interest rates, we expect the trust account to generate approximately $70,000 of interest annually (assuming an interest rate of 0.02% per year). Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $1,100,000 in working capital after the payment of approximately $900,000 in expenses relating to this offering; and any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of a business combination. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. The NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or an Table of Contents from an independent accounting firm. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material non-public information and (ii) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, Table of Contents including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Our initial stockholders, directors, executive officers, advisors or their affiliates will not make any purchases if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Redemption rights for public stockholders upon completion of our initial business combination We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they may acquire after this offering in connection with the completion of our business combination. Manner of conducting redemptions We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination Table of Contents or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so Table of Contents that we are not subject to the SEC s penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction. Our amended and restated certificate of incorporation will provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the Table of Contents terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem to no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares (including all shares held by those stockholders that hold more than 15% of the shares sold in this offering) for or against our business combination. Table of Contents Redemption Rights in connection with proposed amendments to our certificate of incorporation Some other blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation will provide that it may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who will beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, executive officers, and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. Table of Contents Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon completion of our initial business combination, to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, executive officers, and directors have agreed that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating Table of Contents distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the 24-month time period. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time frame. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within 24 months from the closing of this offering and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, executive officers, and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of an aggregate of $300,000 in loans made to us by our sponsor to be used for a portion of the expenses of this offering; Table of Contents Payment to an affiliate of our sponsor of a total of $10,000 per month for office space, utilities and secretarial support; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $0.50 per warrant at the option of the lender. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Audit Committee Prior to the effectiveness of this registration statement, we will have established and will maintain an audit committee (which will be composed of two independent directors and Mr. Gores until such time as an additional independent director is appointed to our board) to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled Management Committees of the Board of Directors Audit Committee. Conflicts of Interest The Gores Group manages several investment vehicles. Funds managed by Gores or its affiliates may compete with us for acquisition opportunities. If these funds decide to pursue any such opportunity, we may be precluded from procuring such opportunities. In addition, investment ideas generated within Gores, including by Mr. Gores, may be suitable for both us and for a current or future Gores fund and may be directed to such investment vehicle rather than to us. Neither Gores nor members of our management team who are also employed by certain affiliates of The Gores Group have any obligation to present us with any opportunity for a potential business combination of which they become aware. Gores and/or our management, in their capacities as officers or managing directors of Gores or in their other endeavors, may choose to present Table of Contents potential business combinations to the related entities described above, current or future Gores investment vehicles, or third parties, before they present such opportunities to us. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Indemnity The Gores Group, LLC has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Gores will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Gores has sufficient funds to satisfy its indemnity obligations and we have not asked Gores to reserve for Table of Contents such indemnification obligations. Therefore, we cannot assure you that Gores would be able to satisfy those obligations. We believe the likelihood of Gores having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 29 of this prospectus. Table of Contents
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+S-1/A 1 d936739ds1a.htm PRE-EFFECTIVE AMEND. NO. 4 TO FORM S-1 Pre-Effective Amend. No. 4 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on August 10, 2015 Registration No. 333-204842 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 New Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Maryland 6712 47-4314938 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 45 North Whittaker Street New Buffalo, Michigan 49117 (269) 469-2222 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. Richard C. Sauerman President and Chief Executive Officer 45 North Whittaker Street New Buffalo, Michigan 49117 (269) 469-2222 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Kip Weissman, Esq. Steven Lanter, Esq. Luse Gorman, PC 5335 Wisconsin Avenue, N.W., Suite 780 Washington, D.C. 20015 (202) 274-2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $0.01 par value per share 1,031,550 shares $10.00 $10,315,500 (1) $1,198.67 (2) (1) Estimated solely for the purpose of calculating the registration fee. (2) Previously filed. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents TABLE OF CONTENTS Page SUMMARY 1
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: we, us, company, PHC or our company are to Pace Holdings Corp., a Cayman Islands exempted company (f/k/a Paceline Holdings Corp.); public shares are to our Class A ordinary shares sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public shareholders are to the holders of our public shares; management or our management team are to our executive officers and directors; sponsor are to TPACE Sponsor Corp., a Cayman Islands exempted company and an affiliate of TPG; initial shareholders are to holders of our founder shares prior to this offering; founder shares are to our Class F ordinary shares initially purchased by our sponsor in a private placement prior to this offering and our Class A ordinary shares issued upon the automatic conversion thereof at the time of our initial business combination as provided herein; ordinary shares are to our Class A ordinary shares and our Class F ordinary shares; private placement warrants are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; amended and restated memorandum and articles of association are to our memorandum and articles of association to be in effect upon completion of this offering; letter agreement refers to the letter agreement filed as an exhibit to the registration statement of which this prospectus forms a part; Companies Law are to the Companies Law (2013 Revision) of the Cayman Islands as the same may be amended from time to time; TPG are to TPG Global, LLC, a Delaware limited liability company and its affiliates; and TPG Capital are to TPG s private equity business for equity investments over $100 million. All references in this prospectus to shares of the Company being forfeited shall take effect as surrenders for no consideration of such shares as a matter of Cayman Islands law. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company incorporated on June 3, 2015 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted SUBJECT TO COMPLETION, DATED SEPTEMBER 8, 2015 PRELIMINARY PROSPECTUS Pace Holdings Corp. $400,000,000 40,000,000 Units Pace Holdings Corp. (f/k/a Paceline Holdings Corp.) is a newly organized blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one warrant. Each warrant entitles the holder thereof to purchase one-third of one Class A ordinary share. Three warrants may be exercised for one whole Class A ordinary share at a price of $11.50 per share, subject to adjustment as provided herein. Warrants may be exercised only for a whole number of shares. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the warrant holder. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 6,000,000 units to cover over-allotments, if any. We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding Class A ordinary shares that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $50,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable) divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Our sponsor, TPACE Sponsor Corp., a Cayman Islands exempted company (which we refer to as our sponsor throughout this prospectus) has committed to purchase an aggregate of 20,000,000 warrants (or 22,400,000 warrants if the underwriters over-allotment option is exercised in full) at a price of $0.50 per warrant ($10,000,000 in the aggregate or $11,200,000 if the underwriters over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Each private placement warrant entitles the holder thereof to purchase one-third of one Class A ordinary share. Three private placement warrants are exercisable to purchase one whole Class A ordinary share at $11.50 per share, subject to adjustment as provided herein. Prior to this offering, our sponsor purchased 11,500,000 Class F ordinary shares (up to 1,500,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised). The Class F ordinary shares will automatically convert into Class A ordinary shares at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which Class F ordinary shares shall convert into Class A ordinary shares will be adjusted so that the number of Class A ordinary shares issuable upon conversion of all Class F ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of all Class A ordinary shares outstanding upon completion of this offering, plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to our sponsor. Holders of the Class F ordinary shares will have the right to elect all of our directors prior to our initial business combination. On any other matter submitted to a vote of our shareholders, holders of the Class F ordinary shares and holders of the Class A ordinary shares will vote together as a single class, except as required by law. Currently, there is no public market for our units, Class A ordinary shares or warrants. We have applied to list our units on the NASDAQ Capital Market, or NASDAQ, under the symbol PACEU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on NASDAQ. The Class A ordinary shares and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. (together the Representatives ) inform us of their decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the Class A ordinary shares and warrants will be listed on NASDAQ under the symbols PACE and PACEW, respectively. We are an
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001644863_lucent_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001644863_lucent_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus: references in this prospectus to we, us or our company refer Lucent Pharma, Inc. references in this prospectus to currently issued and outstanding shares refer to the 21,000,000 shares of common stock currently held by our officers and directors and current shareholders; references in this prospectus to our management or our management team refer to our officers and directors; references in this prospectus to our public shares refer to shares of our common stock which are being sold as part of the primary offering (whether they are purchased in this offering) and references to public stockholders refer to the holders of our public shares, including our officers and directors and current shareholders to the extent they purchase public shares, provided that their status as public stockholders shall exist only with respect to such public shares; references in this prospectus to our original shareholders refer to the holders of the currently issued and outstanding shares prior to the consummation of this offering. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. The Offering The following is a summary of what we believe to be the most important aspects of our business and the offering of our securities under this prospectus. We urge you to read this entire prospectus, including the more detailed consolidated financial statements and the notes to the consolidated financial statements or included in any applicable prospectus supplement. Investing in our securities involves risks. Therefore, carefully consider the risk factors set forth in this prospectus and any prospectus supplements before purchasing our securities. Each of the risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our securities. The Offering Number of Shares Being Offered This prospectus is related to the sale of up to 3,000,000 shares of Common Stock offered by the Company for the duration of the offering. Number of Shares Outstanding After the Offering 21,000,000 shares of our common stock are currently issued and outstanding. We have no other securities issued. In the event all of the shares in the primary offering are sold we will have a total of 24,000,000 shares issued and outstanding. Use of proceeds The proceeds from the sale of shares of common stock by the Company will be used for general business purposes. Plan of Distribution Our Common Stock is presently not traded on any market or securities exchange. Accordingly, the sales price to the public is fixed at $0.10 per share for the duration of the offering.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001645763_oressa-ltd_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001645763_oressa-ltd_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001646383_csra-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001646383_csra-inc_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all of the information that you should consider before deciding to purchase shares of our common stock. You should read this entire prospectus carefully, including the risk factors, our and SRA s management s discussion and analysis of financial condition and results of operations, our and SRA s historical financial statements and our unaudited pro forma financial statements and the respective notes to those historical and pro forma financial statements appearing elsewhere in this prospectus, before making an investment decision to purchase shares of our common stock. Unless otherwise indicated or the context otherwise requires, CSRA, we, our and us refer to CSRA Inc. and its combined subsidiaries, including the combined business of SRA International, Inc. ( SRA ). CSRA On November 27, 2015, CSRA became an independent company through consummation of the spin-off by Computer Sciences Corporation ( CSC ) of its U.S. public sector business. Prior to CSC s distribution of the shares of CSRA common stock to CSC stockholders, CSC undertook a series of internal transactions, following which CSRA held the businesses constituting CSC s North American Public Sector segment, as described in CSC s Annual Report on Form 10-K for the year ended April 3, 2015, which we refer to as the Computer Sciences GS Business. We refer to this series of internal transactions as the Internal Reorganization. We refer to CSC s distribution of the shares of CSRA common stock to CSC s stockholders as the Distribution and to the Internal Reorganization and the Distribution collectively as the Spin-Off. For a more detailed description of the Spin-Off, see CSRA Transactions . In periods prior to consummation of the Mergers (as defined below), we sometimes refer to CSRA, formerly known as Computer Sciences Government Services Inc., as Computer Sciences GS . Promptly following the Distribution, holders of CSC common stock who were entitled to receive shares of CSRA in the Distribution also received a special dividend totaling approximately $10.50 per share in the aggregate in cash (of which $8.25 per share was paid by us and $2.25 per share was paid by CSC) (the Special Dividend ). The portion of the Special Dividend paid by CSC was funded by a note payable to CSC that we repaid with the incurrence of additional indebtedness as described in Management s Discussion and Analysis of Financial Condition Liquidity and Capital Resources and Description of Material Indebtedness. On November 30, 2015, CSRA completed its previously announced combination with SRA, pursuant to the Agreement and Plan of Merger, dated as of August 31, 2015, by and among CSRA, CSC, SRA Companies, Inc. ( SRA Parent ), SRA, an indirect wholly-owned subsidiary of SRA Parent, Star First Merger Sub Inc., a wholly-owned subsidiary of CSRA, Star Second Merger Sub LLC, a wholly-owned subsidiary of CSRA, and certain stockholders of SRA Parent (the Merger Agreement ). In accordance with the terms of the Merger Agreement Star First Merger Sub Inc. merged with and into SRA Parent (the First Merger ), with SRA Parent surviving the First Merger. Immediately after the First Merger, SRA Parent merged with and into Star Second Merger Sub LLC (the Second Merger and, together with the First Merger, the Mergers ), with Star Second Merger Sub LLC surviving the Second Merger. As a result of the Mergers, SRA became an indirect wholly-owned subsidiary of CSRA. We refer to the Spin-Off of the Computer Sciences GS Business and the subsequent combination of that business with SRA as the CSRA Transactions . For a more detailed description of the CSRA Transactions, see CSRA Transactions . On November 30, 2015, we issued a joint press release with CSC announcing the completion of the Spin-Off and our combination with SRA, and we announced that our Board had declared a quarterly cash dividend of $0.10 per share. The Board also authorized a share repurchase program (the Share Repurchase Program ), pursuant to which we may, from time to time, purchase shares of our common stock for an aggregate purchase price not to exceed $400 million. The share repurchases may be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or otherwise. The Share Repurchase Program does not obligate us to purchase any shares, and expires in three years. The authorization for the Share Repurchase Program may be terminated, increased or decreased by our Board in its discretion at any time. We expect the combination of Computer Sciences GS and SRA to provide opportunities for cost savings and other operating synergies, which we currently estimate at $80 million in annual cost savings within six to 18 months following the Mergers through the consolidation of account management costs, corporate overhead costs, improved facility efficiencies, lower equipment vendor costs, and reductions in associated fringe benefits. We believe our one-time costs to realize these recurring annual cost savings will be approximately $30 million. The size of these expected cost synergies is partly a function of the significant steps both CSC and SRA have already taken over the past three years to become cost-competitive, with a focus on next generation IT services and solutions. We believe these further cost reductions and operating efficiencies will better position us to compete for U.S. federal government contracts as a portion of these savings should result in lower costs for our customers on cost-plus contracts. As a result of these cost savings passed on to some of our customers on cost-plus contracts, we expect the estimated $80 million in annual costs savings, once fully realized, will reduce our revenue by approximately $30 million annually, but to result in approximately $50 million in net synergies per year. CSRA Business CSRA is one of the nation s largest independent providers of IT services to the U.S. federal government. With more than five decades of government partnership, we believe we make best practices succeed in government contexts. With public sector customers that include nearly every agency within the U.S. federal government, we leverage our domain expertise and extensive resources to support our customers through dedicated, customer-focused teams. Headquartered in Falls Church, Virginia, we deliver comprehensive offerings from concept through sustainment. Following consummation of the Mergers, with the inclusion of SRA, we employ approximately 19,000 employees. We manage our business with a matrix model composed of industry verticals that are customer-facing and have deep knowledge of our customers missions, and a horizontal delivery organization with depth of technical expertise that they deliver across industries. We operate in two industry verticals, which are also our reportable segments: Defense and Intelligence and Civil. Our horizontal delivery organization is Delivery and Operations, which provides capabilities and solutions across our customer base. We believe we differentiate ourselves by combining our technical expertise in applications and IT infrastructure solutions with our deep public sector mission knowledge and experience in order to engage our customers at the highest levels with thought leadership that drives change. Our Business Strategy In the U.S. public sector, technology demands are increasing and government customers are increasingly looking for providers with a strong, focused vision to address the unique challenges and resource needs of the U.S. federal government. The success of our business will depend on our ability to deliver solutions that generate real and measurable business results in terms of mission value and cost efficiency. Targeting specific growth areas in the government and rapidly adapting next-generation solutions tailored to the public sector environment will be key. We expect to continue to work in concert with our next-generation IT partners to create, position and deliver innovative solutions from across our delivery capabilities to support our customers mission success, which will be critical to our efforts to sustain and grow our market position. To address the market trends within our competitive environment, we have developed a strategy that comprises three elements, Get Fit, Grow, and Lead: 1Get Fit: Continue with disciplined management of our overhead costs and general and administrative ( G&A ) expenses, as well as shift to performance-based contracts to improve operating income on existing programs, allowing us to reinvest in our business and improve our ability to compete in a Lowest Price Technically The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 21, 2015 PROSPECTUS 24,803,450 Shares ______________________ CSRA INC. ______________________ Common Stock This prospectus relates solely to the offer and sale from time to time of up to 24,803,450 shares of CSRA Inc. common stock, $0.001 par value per share, by the selling stockholders identified in this prospectus. See Selling Stockholders. The registration of the shares of common stock to which this prospectus relates does not require the selling stockholders to sell any of their shares of our common stock nor does it require us to issue any shares of common stock. We will not receive any proceeds from the sale of the shares by the selling stockholders, but we have agreed to pay certain registration expenses, other than commissions or discounts of underwriters, broker-dealers, or agents. The selling stockholders from time to time may offer and sell the shares held by them directly or through underwriters, agents or broker-dealers on terms to be determined at the time of sale, as described in more detail in this prospectus. For more information, see Plan of Distribution. Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol CSRA. On December 18, 2015, the closing sales price of our common stock as reported on the NYSE was $27.46 per share. Because all of the shares of our common stock offered under this prospectus are being offered by the selling stockholders, we cannot currently determine the price or prices at which our shares may be sold under this prospectus. Investing in our common stock involves risks. Before making a decision to invest in our common stock, you should carefully consider the matters described under Risk Factors beginning on page 19 of this prospectus. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2015. Acceptable environment. Implicit within our Get Fit strategy is the priority of driving excellence in executing programs, demand generation, proposals and capture. 2Grow: Despite the negative trends in overall IT spending by our customers and our own declining revenues over the past few years, we aim to capitalize on growth aligned with government priorities in hybrid cloud infrastructure, citizen benefit services, cloud-based analytics and health. We aim to continue to leverage our deep domain knowledge of our customers core missions and our intimacy with their data and critical work packages and grow our customer relationships through tailored offerings and mission-critical employees. The combination of Computer Sciences GS and SRA was realized as part of this growth strategy. 3Lead: Pursue the hybrid cloud migration market, driving policy- and governance-based integration of solutions in as-a-service and next-generation offerings in cloud, big data, software-as-a-service implementation and mobile computing. We expect the migration to the hybrid cloud will be enabled by an ecosystem of federally compliant partners. We also plan to invest internally on program management and delivery processes. Our Key Strengths: We bring several key competitive strengths: History of public sector delivery. We have 50+ years of public sector experience that combines an in-depth customer knowledge with our proven, next-generation IT and mission expertise. Our People. Our passionate employees have a commitment to our customers mission blend business process, design, and technical capabilities. Offering Brands. Our brands are a proven holistic approach to solving customer business challenges, drawing on best practices and technical expertise. Next Generation. We are driving innovation through next-generation technology and solutions in cloud, big data, mobility and application solutions and services. Alliance Partners. We have enhanced our technical and domain expertise with strategic partnerships that deliver innovative end-to-end solutions. Technology Independence. Our flexible and informed point of view optimizes customers technology choices. Our Key Markets Flat Top Line Federal Budgets. We compete in an environment driven by federal budget constraints. Nevertheless, we see potential for positive developments in U.S. federal government fiscal year ( GFY ) 2016 (a GFY starts on October 1 and ends on September 30). Budget request figures released by the Office of Management and Budget in June 2014 projected IT expenditures for Civil agencies and the DoD to increase by 2% in GFY 2016, from $47.7 billion to $48.6 billion and from $30.4 billion to $30.9 billion, respectively. Budget request figures released by the Office of the Director of National Intelligence in February 2015 projected overall expenditures for U.S. Intelligence Community agencies to increase by 15% in GFY 2016, from $62.7 billion to $71.8 billion. We are also experiencing an increased number of requests to extend the period of performance for our large and most complex IT contracts, are observing increased procurement activity across the U.S. federal government and expect to see adjudications increase. Market Shift to Applications Modernization. Since 2011, the government has delayed application enhancements and new application program starts in favor of data consolidation and IT efficiency initiatives. Consequently, the demand for IT services has been driven by infrastructure and cloud support opportunities, with a government focus on cost savings and new hybrid cloud approaches. We anticipate a possible shift toward application modernization to TABLE OF CONTENTS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001647286_sra_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001647286_sra_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001648104_yanhuang_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001648104_yanhuang_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..49ac69f99e5d98024aa68754ce821c84fb96ec52
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+++ b/parsed_sections/prospectus_summary/2015/CIK0001648104_yanhuang_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 4
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001648158_vizio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001648158_vizio_prospectus_summary.txt
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+S-1/A 1 d946612ds1a.htm FORM S-1/A Form S-1/A Table of Contents As filed with the Securities and Exchange Commission on October 22, 2015 Registration No. 333-205866 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 VIZIO Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware 3651 47-5132195 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 39 Tesla Irvine, California 92618 (949) 428-2525 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) William W. Wang Chairman and Chief Executive Officer VIZIO Holdings, Inc. 39 Tesla Irvine, California 92618 (949) 428-2525 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: R. Scott Shean, Esq. B. Shayne Kennedy, Esq. David C. Lee, Esq. Latham & Watkins LLP 650 Town Center Drive, 20th Floor Costa Mesa, California 92626-1925 (714) 755-8069 Jerry C. Huang, Esq. Vice President and General Counsel VIZIO Holdings, Inc. 39 Tesla Irvine, California 92618 (949) 428-2525 Alan F. Denenberg, Esq. Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, CA 94025-4119 (650) 752-2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and neither we nor the selling stockholders are soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated October 22, 2015 PROSPECTUS Shares VIZIO Holdings, Inc. Class A Common Stock $ per share This is the initial public offering of shares of Class A common stock of VIZIO Holdings, Inc. We are selling shares and the selling stockholders, which include certain of our executive officers and directors, identified in this prospectus are selling an additional shares of Class A common stock. We will not receive any proceeds from the sale of shares of our Class A common stock by any of the selling stockholders. We anticipate the initial public offering price of our Class A common stock will be between $ and $ per share. Currently, no public market exists for our Class A common stock. We have applied to list our Class A common stock on the NASDAQ Global Select Market under the symbol VZIO. We have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share and is convertible into one share of Class A common stock. All outstanding shares of our Class B common stock are beneficially owned by William Wang, our founder, Chairman, Chief Executive Officer and principal stockholder. Upon completion of this offering, the shares beneficially owned by Mr. Wang will represent % of the total voting power of our Class A and Class B common stock. As a result, we will be a controlled company within the meaning of the NASDAQ corporate governance standards. Investing in our Class A common stock involves a high degree of risk. See Risk Factors beginning on page 18 of this prospectus. Per share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds to VIZIO Holdings, Inc., before expenses $ $ Proceeds to selling stockholders, before expenses $ $ (1) We refer you to Underwriting beginning on page 159 for additional information regarding underwriter compensation. The underwriters may also exercise their option to purchase up to an additional shares of Class A common stock from us and the selling stockholders, at the initial public offering price, less the underwriting discount, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The shares of Class A common stock will be ready for delivery on or about . BofA Merrill Lynch Deutsche Bank Securities Citigroup BMO Capital Markets Piper Jaffray Wells Fargo Securities Roth Capital Partners The date of this prospectus is , 2015. Table of Contents Our products are sold in over 8,000 retail stores across the United States. We held the #1 unit share position in the U.S. sound bar industry(1) and the #2 unit share position in the U.S. smart, high definition television, or HDTV, industry in 2014.(2) For the years ended December 31, 2013 and 2014 and the nine months ended September 30, 2015, we generated net sales of $3.0 billion, $3.1 billion and $2.2 billion and reported net income of $25.7 million, $45.0 million and $44.3 million, respectively. Substantially all of these amounts were generated from the sale of televisions and sound bars. Our Platform The VIZIO platform combines our connected media entertainment products, discovery and engagement software and Inscape data services: Connected Entertainment Products. Our Smart TV and audio products combine best-in-class technology with beautifully simple design. Our award-winning products offer industry-leading picture and audio quality and are at the forefront of innovative technology. Our focus on connectivity has driven our consumers to make an initial connection of their Smart TVs to the Internet at an average rate of approximately 91% and 90% for the nine month periods ended September 30, 2015 and September 30, 2014, respectively, and approximately 90% for the twelve month period ended September 30, 2015. Discovery & Engagement Software: VIZIO Internet Apps Plus. Our discovery and engagement software, VIZIO Internet Apps Plus, connects consumers to a wide range of premium entertainment content and enhances the value of our products. We provide an intuitive and engaging interface that enables viewers to easily discover and engage with entertainment and other content on our Smart TVs from traditional and streaming content providers, such as Netflix, Hulu, YouTube and Amazon Instant Video. Since 2009, users have streamed more than 3.5 billion hours of content through our discovery and engagement software. (1) Source: The NPD Group/Retail Tracking Service, based on sound bar units sold in the U.S. from January 2014 to December 2014. (2) Source: The NPD Group/Retail Tracking Service, based on total smart, high definition television units sold in the U.S. from January 2014 to December 2014. The NPD Group/Retail Tracking Service defines a smart, high definition television as an LCD TV with apps included and a display resolution of 1336 x 768 pixels or higher. Table of Contents Table of Contents Inscape Data Services. Our Inscape data services capture, in real time, up to 100 billion anonymized viewing data points each day from our over 10 million VCUs. Inscape collects, aggregates and stores data regarding most content displayed on VCU television screens, including content from cable and satellite providers, streaming devices and gaming consoles. Inscape provides highly specific viewing behavior data on a massive scale with great accuracy, which can be used to generate intelligent insights for advertisers and media content providers and to drive their delivery of more relevant, personalized content through our VCUs. Although we are still in the early stages of commercializing Inscape and have yet to generate meaningful revenue from it, we believe it provides an attractive value proposition to advertisers and media content providers which will enable us to further monetize it in the future. Consumer Use and Engagement Model We believe our business focus enables a self-reinforcing consumer use and engagement model that we expect to fuel our growth while driving revenue. Our connected entertainment products and discovery and engagement software increase usage of our platform, enabling Inscape to gather more anonymized data on viewing behaviors, which we can deliver to advertisers and media content providers. These companies in turn can deliver more relevant and personalized content for viewers, further enhancing the entertainment experience. We believe this self-reinforcing cycle will increase our brand awareness and enhance demand for our connected entertainment products. Table of Contents Table of Contents Our Market Position Our strong market position is underscored by our growth and market share in Smart TVs and audio products. The scale of our connected platform is illustrated by the volume of content delivered through our products and the large amount of real-time data we collect from our VCUs about viewing behaviors and preferences. (1) Source: The NPD Group/Retail Tracking Service, based on total smart, high definition television units and sound bar units sold in the U.S. from January 2014 to December 2014. The NPD Group/Retail Tracking Service defines a smart, high definition television as an LCD TV with apps included and a display resolution of 1336 x 768 pixels or higher. (2) Based on VIZIO internal data as of October 15, 2015. (3) Based on VIZIO internal data as of September 30, 2015. Our Market Opportunity High-Definition Television. Currently, we compete primarily in the North American high-definition television market, which was estimated by IHS Technology as a $21.1 billion market as of 2014. To date, substantially all of our product sales have occurred in the United States, although we also have sold a relatively smaller number of products in Canada and Mexico. IHS Technology is projecting shipments of Smart TVs to experience steady growth in North America, increasing Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 
+ 3
+
+ THE OFFERING 
+ 5
+
+ SUMMARY FINANCIAL DATA 
+ 7
+
+ RISK FACTORS
+ 8
+
+ CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
+ 16
+
+ ITEM 4. USE
+ OF PROCEEDS
+ 17
+
+ ITEM 5. DETERMINATION
+ OF OFFERING PRICE
+ 19
+
+ ITEM 6. DILUTION
+ 19
+
+ ITEM 7. SELLING STOCKHOLDERS
+ 20
+
+ ITEM 8. PLAN
+ OF DISTRIBUTION
+ 20
+
+ ITEM 9. DESCRIPTION
+ OF SECURITIES TO BE REGISTERED
+ 21
+
+ ITEM 10. INTERESTS
+ OF NAMED EXPERTS AND COUNSEL
+ 22
+
+ ITEM 11. INFORMATION
+ WITH RESPECT TO THE REGISTRANT
+ 23
+
+ A. DESCRIPTION
+ OF THE BUSINESS
+ 23
+
+ B. DESCRIPTION OF PROPERTY
+ 31
+
+ C. LEGAL
+ PROCEEDINGS
+ 31
+
+ D. MARKET
+ PRICE OF AND DIVIDENDS ON THE REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
+ 31
+
+ E. FINANCIAL
+ STATEMENTS 
+ 32
+
+ F. SELECTED FINANCIAL DATA
+ 
+ 33
+
+ G. SUPPLEMENTARY
+ FINANCIAL INFORMATION
+ 33
+
+ H. MANAGEMENT S DISCUSSION
+ AND ANALYSIS OR PLAN OF OPERATION
+ 33
+
+ I. CHANGES
+ IN, AND DISAGREEMENTS WITH, ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
+ 35
+
+ J. QUANTITATIVE AND QUALITATIVE
+ DISCLOSURES ABOUT MARKET RISK
+ 35
+
+ K. DIRECTORS,
+ EXECUTIVE MANAGEMENT, PROMOTERS AND CONTROL PERSONS
+ 35
+
+ L. EXECUTIVE COMPENSATION
+ AND CORPORATE GOVERNANCE
+ 36
+
+ M. SECURITY OWNERSHIP
+ OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+ 38
+
+ N. TRANSACTIONS
+ WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
+ 38
+
+ 
+ 
+
+ AUDITED FINANCIAL STATEMENTS
+ F-1
+
+ 
+ 
+
+ PART II – INFORMATION NOT REQUIRED
+ IN PROSPECTUS
+ 40
+
+ ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
+ 40
+
+ ITEM 14. INDEMNIFICATION OF DIRECTOR AND OFFICER
+ 40
+
+ ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
+ 40
+
+ ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
+ 41
+
+ ITEM 17. UNDERTAKINGS
+ 41
+
+ SIGNATURES
+ 43
+
+ 
+
+ 
+
+ -2-
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. Before investing in our ADSs, you should read this entire prospectus carefully, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and congatec AG's consolidated financial statements and related notes, for a more complete understanding of our business and this offering. Except as otherwise required by the context, references to "congatec," "Company," "we," "us" and "our" are to congatec Holding AG and its subsidiaries, including congatec AG, on a consolidated basis. Our Company We are a leader in the design, development and delivery of high-performance embedded computing solutions that enable computing capabilities across a variety of system-level applications and end markets, including industrial automation, medical, entertainment, transportation and test and measurement. As a technology pioneer in our industry, we have grown to become the market share leader in Europe for the computer-on-module, or COM, segment of the embedded computing market, according to our view of the market and third-party research. Our deep technical expertise, combined with longstanding customer, processor partner and supplier relationships, positions us as a trusted provider for industry standard and custom embedded computing solutions. Our participation in the design, development and bringing to market of innovative embedded computing solutions has established what we believe is a track record of innovation by integrating complex central processing units, or processors, into flexible, high-performance computer modules that reduce our customers' system development costs and design risk as well as provide valuable time-to-market advantages. Our hardware solutions are overlaid with Basic Input Output System, or BIOS, software that tailors our solutions to specific end-market, application and customer requirements, while delivering benefits such as enhanced data throughput and system security as well as seamless integration within our customers' products. We are headquartered in Germany and have established a global presence through a network of design and service centers, allowing us to provide our customers with local development, implementation and sales support while maintaining a lean and efficient fabless manufacturing model. Our technology focus over time has evolved to encompass a broad variety of high-performance embedded computing products and solutions. Within the embedded computing market, we provide one of the industry's largest COM portfolios across a range of form factors, or module sizes and shapes, including our COM Express, Qseven, XTX and ETX product families. We further distinguish ourselves with our recently launched industrial single board computer, or Industrial SBC, product family as well as our embedded design and manufacturing, or EDM, services, which provide our customers with customized module solutions. Our engineering-driven sales force guides our customers to select the module best suited to their individual requirements based on technical specifications including size, motherboard specification, power supply and number and type of peripheral ports. Our experienced engineers focus on improving key metrics such as power consumption, temperature tolerance, processing power and system security in order to help our customers meet their product development goals. We offer our customers comprehensive services, ranging from procurement assistance to process management and support integrating our modules into their end products. This complete solution approach and our relationships with processor partners and suppliers in the embedded computing market have allowed us to develop, enhance and expand our product portfolio and consistently offer our customers a competitive advantage. We believe this, along with our broad customer base and market share position, is a strong testament to the established reputation we enjoy in our industry for innovative technology, high-quality products, differentiated technical support, a comprehensive partner network and financial strength. Amendment No. 2 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents PRESENTATION OF FINANCIAL AND OTHER INFORMATION All references in this prospectus to "U.S. dollars" or "$" are to the legal currency of the United States, all references to " " or "euro" are to the currency introduced at the start of the third stage of the European economic and monetary union pursuant to the treaty establishing the European Community, as amended, and all references to "TW dollars" or "TWD" are to the New Taiwan dollar. Unless otherwise indicated, the consolidated financial statements and related notes included in this prospectus have been prepared in accordance with International Accounting Standards and also comply with International Financial Reporting Standards, or IFRS, and interpretations issued by the International Accounting Standards Board, or IASB, which differ in certain significant respects from U.S. generally accepted accounting principles, or U.S. GAAP. INDUSTRY AND MARKET DATA This prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as from industry and general publications, surveys and studies conducted by third parties, including Gartner, Inc. ("Gartner Research") and VDC Research Group, Inc. ("VDC Research"), some of which may not be publicly available. This data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty. We caution you not to give undue weight to such projections, assumptions and estimates. The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner Research, and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner Report(s) are subject to change without notice. Table of Contents The global merchant, or outsourced, embedded computing market is large and growing. The Internet of Things, or IoT, is enabling the next generation of computing whereby objects or endpoints interact with each other and their environment. IoT combines hardware, such as processors, sensors, actuators and wireless transmitters, with software optimized for "Big Data" analytics and real-time decision making. Industry 4.0, which refers to the emerging "smart factory" trend in Europe, builds on the foundation of IoT to drive the rise of new digital industrial technology that connects sensors, machines, equipment and IT systems along the value chain beyond a single enterprise. These connected systems can interact with one another using standard Internet-based protocols and will enable data to be gathered and analyzed across machines, creating faster, more flexible and more efficient processes to produce more reliable, higher quality goods at reduced costs. Our embedded computing solutions help to facilitate both IoT and Industry 4.0. Our end markets' demand for IoT capabilities has created numerous opportunities for us built upon key themes such as Big Data, continuous connectivity and robust computing capabilities, which are all delivered in increasingly compact form factors. As the semiconductor industry continues to test the limits of Moore's Law, which suggests that the number of transistors on an integrated circuit doubles approximately every 18 to 24 months, processor technology will continue to grow in complexity, creating challenges for systems engineers outside of traditional computing applications to implement and unlock the potential of such processors. Harnessing the power of these advanced processors is critical to the emergence of IoT and Industry 4.0. We believe that we are well positioned to capitalize on these immediate and sustainable trends impacting the embedded computing industry. We have longstanding relationships with the world's leading processor companies, including AMD, Freescale and Intel, which allow us to provide a broad suite of embedded computing solutions to our growing customer base. As a testament to our success, Intel has advised us that we are one of its largest European embedded computing partners and the first such partner worldwide to be certified for its Gateway IoT standard. In addition, AMD recently named us an Elite Partner, the highest designation in its Embedded Partner Program. These relationships provide us early access to the technical specifications and capabilities of new processors, which better allows us to integrate the latest processor technology into our embedded computing solutions, resulting in improved performance, cost savings, time to market advantages and greater process simplicity for our customers. In return, these processor companies benefit from our integration of their processors into our customers' end products, while minimizing their direct engineering, sales and after-market support needs. Our customers' applications fall outside of the processor vendors' core computing market and require more significant engineering and software and sales support due to the nature of the applications served. This has created a challenge for our processor partners, who recognize the growth potential of these market segments but are often not organized to efficiently pursue them. We have seized the opportunity to address this gap in the market. We extend the reach of our processor partners into emerging growth opportunities they are not positioned to support without us. We enable our customers to outsource critical physical design and programming challenges for their products, allowing them to focus on their core competencies such as product definition, system architecture and branding. We have over 400 customers worldwide in a variety of industries, including our industrial customers such as Bernecker + Rainer, or B&R, Bosch and Siemens, as well as our medical customers such as General Electric and Samsung. We maintain close proximity to our broad and diverse customer base through a multi-channel sales strategy that utilizes both direct sales and a global network of independent sales representatives and distributors. Our direct sales force and application engineers are focused on securing design wins by supporting industry-leading original equipment manufacturer, or OEM, and original design manufacturer, or ODM, customers. We offer five product families and have shipped more than 1.6 million modules since our inception in 2004. We operate under a fabless business model, meaning we outsource all of the manufacturing, assembly and testing of our products to third parties, enabling us to maintain a flexible and capital efficient congatec Holding AG (Exact name of Registrant as specified in its charter) Table of Contents business model. As of June 30, 2015, we had 184 employees worldwide, of which roughly one-third were in engineering related functions (research and development, technical support and quality management). We are headquartered in Deggendorf, Germany, and have established additional research and development, or R&D, centers in the Czech Republic, Taiwan and the United States. For the six months ended June 30, 2015 and June 30, 2014 and the fiscal years ended December 31, 2014 and December 31, 2013, we recorded revenue of $46.5 million, $39.7 million, $85.0 million and $70.2 million, respectively, and net income of $2.0 million, $1.0 million, $3.6 million and $3.7 million, respectively. Our revenue by geographic region for the year ended December 31, 2014 was 68.9% in Europe, the Middle East and Africa, or EMEA, 18.7% in the Asia-Pacific region, or APAC, and 12.4% in the Americas, as compared to 67.8% in EMEA, 19.5% in APAC and 12.7% in the Americas for the same period in 2013. Our Industry An embedded computing solution is a special-purpose, customizable solution that performs various functions and can be configured to address a number of requirements, including temperature tolerance, ruggedness, power consumption, size and reliability. Embedded computing solutions integrate processors on standardized form factors and modules and differ from general purpose computers, which are commonly used in consumer electronics and personal computing devices. Embedded computing solutions are generally integrated into a larger machine, device or appliance and are present in many industries, including industrial automation, medical, entertainment, transportation, test and measurement, retail and digital signage. Embedded computing solutions are proliferating due to an increasing demand for intelligent and connected systems outside of traditional computing applications. While OEMs and ODMs desire to capitalize on increased processor speed in order to deliver superior system performance, they often lack the specialized engineering talent and knowledge to properly integrate the newest processor technology into their embedded system designs in a cost-effective and timely manner. As a result, OEMs and ODMs are increasingly outsourcing their embedded computing solutions to third parties. According to VDC Research and our own internal estimates, the worldwide market for embedded computing systems and boards was $80.9 billion in 2013 and is expected to grow at a compound annual growth rate, or CAGR, of more than 5% annually to $105.6 billion in 2018. According to VDC Research and our view of the market, we believe that 20% to 25% of the global embedded systems and boards market is outsourced. As a third-party provider, this outsourced portion is our addressable segment of the market. We primarily serve the COM and Industrial SBC sub-segments of the outsourced embedded market. COMs are embedded systems that incorporate the latest processor technology into industry-standard form factors such as COM Express, Qseven, XTX and ETX. Our Industrial SBCs are complete computer modules based on the xITX form factor, built on a single circuit board and that contain various features required of a fully functional computer. VDC Research estimates the COM market will grow from $788 million in 2013 to $1.6 billion in 2018, representing a CAGR of 15% while the outsourced Industrial SBC market, based on the xITX form factor, is estimated to increase from $387 million in 2013 to $839 million in 2018, representing a CAGR of 17%. Our Competitive Strengths We apply our strengths to enhance our position as a leading supplier of COM solutions, including our position as the market share leader in Europe, and as a new entrant to the Industrial SBC market. We consider our key strengths to include the following: Technology leader within the embedded computing market. Our familiarity with industry standards and longstanding relationships with standard-setting consortium partners have helped us achieve a leadership position in the COM market. Our module expertise allows us to identify the best form factor, provide any Not Applicable (Translation of Registrant's name into English) Table of Contents necessary hardware or software modifications and advise on architectural improvement to our customers' systems. Our successful track record and insight into industry-shaping engineering trends have positioned us to contribute numerous advances to both the technological development and market adoption of standardized form factors within our industry. Strategically and geographically positioned to capitalize on industry trends, including the adoption of IoT and Industry 4.0. Our solutions provide customers outside the traditional computing market with the opportunity to take advantage of advanced processing capabilities to build their own differentiated products. As IoT and Industry 4.0 continue to expand, the number of networked, heterogeneous systems in these end markets is expected to grow rapidly. Our value proposition and reputation for performance and quality position us to capitalize on this growth opportunity. In addition, Germany is a recognized global leader in industrial automation and is at the forefront of Industry 4.0 adoption, providing us a geographic advantage in addressing this emerging trend. Broad and diversified module platform. Over the past decade, we have developed a large portfolio of COM modules and services that allow us to address diverse and evolving customer requirements and enable us to participate in a variety of attractive end markets, including industrial automation, medical, entertainment, transportation and test and measurement. In 2014, with the introduction of our Industrial SBC products, we meaningfully increased the breadth of our embedded computing portfolio, offering our customers a low-power, standalone solution that can be easily scaled and quickly integrated into their systems. Our customers depend on the high performance and reliability of our solutions for a variety of mission-critical applications. Standardized form factor complemented by customizable software features and comprehensive service support. Our customers utilize standardized COM form factors to improve resource efficiency, limit design costs and accelerate time to market. We have been able to effectively differentiate our modules from those of our competitors by providing numerous feature sets through our application tailored BIOS software, as well as engineering services and logistical support throughout the design-in process. As part of our comprehensive solutions, we foster a collaborative engagement between our sales engineers and customers, who often rely on our expertise to unlock the potential of complex processor technology and software features for the benefit of our customers' own systems. Our skilled engineering team has helped alleviate complexity for our customers by shifting many processing requirements from hardware components to our software solutions. Longstanding processor partner and customer relationships. We have developed key technology partnerships with the world's leading processor providers, including AMD, Freescale and Intel. Our technological advantages have allowed us to develop relationships with leading customers that rely on us to provide innovative modules, understand complex processor technology and provide critical services. We believe that leading industrial players are increasingly choosing our solutions to meet their mission-critical performance requirements because of our embedded security features that provide vital protection both within factory firewalls and on the machine level. Our solutions have been adopted by leading customers, including our industrial customers such as B&R, Bosch and Siemens, as well as our medical customers such as General Electric and Samsung. Fabless embedded solutions provider. We operate a fabless business model with limited capital expenditures, enabling us to focus our resources on core competencies that differentiate our products. This model allows us to scale our business and enter new markets quickly, requiring less lead time to expand our operations. Since our inception, we have established several contract manufacturing relationships that have proven critical to our fabless model. These relationships provide us with high-quality, cost-effective modules that serve as the hardware backbone to our multifaceted solutions. Experienced management and engineering teams. Our vision and direction are driven by our experienced management team and dedicated engineers. Our founders serve in senior leadership positions and Federal Republic of Germany (State or other jurisdiction of incorporation or organization) 7379 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) Auwiesenstrasse 5 94469 Deggendorf, Germany (49) 991 2700-0 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Corporation Service Company 1090 Vermont Avenue N.W. Washington, DC 20005 (800) 927-9800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents continue to play a critical role in our development as a leading embedded computing solutions provider. The guidance of our management team and engineers continues to define and drive our competitive position in the market. Our Growth Strategies Our aim is to be one of the world's leading providers of embedded computing solutions. Key elements of our growth strategies include: Continue to develop and bring to market leading products and standards. We will continue to invest in the development of high-performance embedded computing solutions that address evolving market demands for processing power, high speed connectivity, cost effectiveness, reliability, energy efficiency, security and enhanced graphics capabilities. We also intend to optimize our high-performance COM and Industrial SBC solutions for the latest processor technologies and internally developed software features, which will allow us to expand our product portfolio and address additional customer opportunities. Continue to leverage expertise in high-growth end markets. Our hardware and software design expertise has allowed us to penetrate high-growth end markets, including industrial automation and medical. We continue to see these markets as primary drivers of our growth, particularly because they are likely to benefit from prominent technology trends, including IoT and Big Data. We have already seen these trends support our growth as Industry 4.0 has led to the demand for manufacturing equipment with advanced processing capabilities as Europe and other developed countries move toward smart factories. Draw on expanding global footprint to catalyze growth opportunities in the United States and Asia. We are committed to continuing to grow our global footprint. Our growth to date has largely been driven by successfully executing on key opportunities in the European market, where we hold the leading market share position in COM, according to our view of the market and third-party research. While this will remain a significant focus in the future, we see an opportunity to gain market share in the United States and Asia. These markets have been key areas of investment for us for several years during which we have expanded our presence by adding key employees as well as distribution and sales representative relationships. Continue to improve operational and financial efficiency. It is our goal to improve our operational efficiency and operating profit by leveraging our existing fixed-cost structure, increasing our purchasing power and continuing to optimize our supply chain. Leveraging manufacturing in best-cost countries has helped us drive financial efficiencies by mitigating burdensome overhead costs and preserving our financial flexibility for strategic opportunities. We also intend to increase our profitability through a higher margin product mix driven by new services and features. Target complementary acquisitions. We may pursue acquisitions of companies, design teams and technologies to complement our existing strengths and execute on our established development goals. Any acquisitions we consider will be undertaken to supplement our broad product portfolio, increase the depth of our engineering and sales teams, expand our addressable market and improve our financial and operational metrics. We also plan to expand our presence globally, including in the United States and Asia, and may evaluate acquisition opportunities to accelerate our penetration of these international markets. Recent Developments Although our results for the three months ended September 30, 2015 have not yet been finalized, the following information reflects our preliminary expectations with respect to such results based on information available to us as of the date of this prospectus. For the three months ended September 30, 2015, we expect to report: total revenue within the range of $24.5 to $25.0 million; Copies to: David S. Rosenthal, Esq. Berthold A. Hummel, Esq. Dechert LLP 1095 Avenue of the Americas New York, NY 10036 (212) 698-3500 Christopher D. Lueking, Esq. Dr. Roland Maass, Esq. Latham & Watkins LLP 330 North Wabash Avenue, Suite 2800 Chicago, IL 60611 (312) 876-7700 Table of Contents gross profit within the range of $7.0 to $7.5 million; a gross profit margin within the range of 28.5% to 30.0%; Adjusted EBITDA within the range of $2.5 to $3.0 million; and an Adjusted EBITDA margin within the range of 10.0% to 12.0%. The preliminary results presented above reflect continued growth in sales to our targeted end markets. We have not identified any material change in the trends observed in our business and otherwise described in this prospectus during the three months ended September 30, 2015. The preliminary financial data included in this prospectus has been prepared by, and is the responsibility of, congatec Holding AG's management. PricewaterhouseCoopers AG Wirtschaftspr fungsgesellschaft has not audited, reviewed, compiled or performed any procedures with respect to accompanying preliminary financial data. Accordingly, PricewaterhouseCoopers AG Wirtschaftspr fungsgesellschaft does not express an opinion or any other form of assurance with respect thereto. The data presented above is subject to the completion of our financial closing procedures, which have not yet been completed. This summary is not meant to be a comprehensive statement of our unaudited financial results for this period. Our actual results for this period will not be available until after this offering is completed and may differ materially from these preliminary estimates. For example, during the course of the preparation of the respective financial statements and related notes, items that would require material adjustments to be made to these preliminary estimates may be identified. Accordingly, you should not place undue reliance upon these preliminary estimates, as there can be no assurance that these estimates will be realized, and these estimates are subject to risks and uncertainties, many of which
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY
+ 
+ The information presented is a brief overview of the key aspects of the offering. The prospectus summary contains a summary of information contained elsewhere in this prospectus. You should carefully read all information in the prospectus, including the financial statements and the notes to the financial statements under the Financial Statements section beginning on page 31 prior to making an investment decision. 
+ 
+ General Information about our Company 
+ 
+ Litera Group, Inc. ("Litera", or the "Company") was incorporated under the laws of the State of Nevada on June 1, 2015. Litera is a developmental stage corporation formed to provide products and services within the theater and film production community. We develop screenplays, stage plays, comedy sketch and skit scripts, short film scripts and other literary and dramatic works, as well as offer abridgment and adaptation services. Our target market is independent film and theatrical producers and small and experimental production studios that scout for new projects to produce and distribute. 
+ 
+ Litera is currently an "emerging growth company" under the JOBS Act. A company loses its "emerging growth company" status on (i) the last day of the fiscal year during which it had total annual gross revenues of $1,000,000,000 or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of its first sale of common equity securities pursuant to an effective registration statement under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (iii) the date on which it has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which it is deemed to be a 'large accelerated filer', as defined in section 240.12b- 2 of title 17, Code of Federal Regulations, or any successor thereto. As an "emerging growth company," Litera is exempt from certain obligations of the Exchange Act including those found in Section 14A(a) and (b) related to shareholder approval of executive compensation and golden parachute compensation. Furthermore, Section 103 of the JOBS Act provides that as an "emerging growth company", Litera is not required to comply with the requirement to provide an auditor's attestation of ICFR under Section 404(b) of the Sarbanes-Oxley Act for as long as Litera qualifies as an "emerging growth company." However, an "emerging growth company" is not exempt from the requirement to perform management's assessment of internal control over financial reporting. 
+ 
+ From inception to the date of this report, we have commenced product development and secured five (5) initial sales for a total of $10,000. The five projects sold were comprised of (i) a $1,500 option granted to Michael Wilson on July 6, 2015 to purchase all motion picture, television, ancillary and exploitation rights in an original project entitled Valley Nights, (ii) a sale of a play to Brain White on July 7, 2015, entitled Tiramisu, for $1,000 plus royalties, and (iii) a sale of a comedic sketch to Chris Kelly on July 13, 2015 for $500, (iv) a $2,500 option granted to Michael Price on August 10, 2015 for a screenplay entitled Golden Hurricane , and (v) a $4,500 option granted to Jason Brown on August 24, 2015 for an original film project entitled On Fleek . The Company also has one more finished product available for sale, as well as two more projects in advanced development status. In order for Litera to successfully continue to sell our products and services in our target market, we must offer quality products and services, address market and competition, utilize specific marketing strategies, and establish growth strategy for the Company. We believe that, given our commitment to excellence and our specifically selected niche market, we will be able to gain the competitive advantage we need in order to target the right audience and distinguish ourselves among our competitors. To advertise our products and services, we plan to implement marketing strategies, such as sending query letters to industry professionals via email, launching PR campaigns, networking at local film and theater festivals, using Internet sources, as well as expanding personal professional relationships with small and experimental studios and indie producers. To achieve and sustain business growth, we will aim to use a three-prong growth strategy model which consists of streamlining core business, target market penetration, and utilizing business alliance opportunities. 
+ 
+ Our founder and sole officer and director, Mr. Wade Gardner, who has education in Creative Arts and over 25 years of work experience in theater and film entertainment, currently handles all facets of the Company's operations, and our strategic development. 
+ Our independent registered public accountant has issued an audit opinion for Litera which includes a statement expressing substantial doubt as to our ability to continue as a going concern. If we are unable to obtain additional working capital our business may fail. We currently use approximately $3,035 per month in our operations. At this rate we estimate our present cash will fund Litera for the next 7 months. We require additional capital in order to continue and advance our business plan. Currently, we rely on the initial funding provided by our founder and sales of our products and services to meet the ongoing expenses of operating the business. We believe that we will need a minimum of $57,900 in capital, including the capital raised in this offering, in order to maintain our current and planned operations through the next twelve months. They are estimates only and derived from research and marketing data accumulated by our sole officer and director. We anticipate to $25,000 in offering expenses, $20,000 in SEC reporting and compliance, $5,500 in advertising and marketing, $4,000 in website design, $12,000 in operating and equipment, and $11,500 to maintain our general and administrative functions over the next twelve months. We intend to raise the capital through the sale of shares of our common stock and/or through the sale of our products and services. We cannot guarantee that we will be able to obtain the necessary capital. 
+ 
+ 
+ 5
+
+ 
+ 
+
+ 
+ 
+ The Terms of the Offering
+ 
+ Securities Being Offered 
+ Up to 7,500,000 Shares of common stock 
+
+ 
+ Minimum Securities Being Offered: 
+ There is no minimum number of shares that need to be purchased for the Offering to be consummated.
+
+ 
+ Initial Offering Price:
+ We will sell our shares at a fixed price of .01 per share. This price was determined arbitrarily by us. 
+
+ 
+ Compensation:
+ No compensation will be paid to the officer and director in connection with the sale of the shares. 
+
+ 
+ Termination of Offering:
+ The offering will conclude when all of the 7,500,000 shares of common stock have been sold or 180 days from the date of this prospectus, whichever occurs earlier. We may decide to terminate the offering for no reason whatsoever at the discretion of our management team.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001648955_capitol_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001648955_capitol_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001648955_capitol_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001649527_code-green_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001649527_code-green_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d1fd15da0a4de2cb57b315304fd7ba55f11f64c0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001649527_code-green_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is only a summary of the information, financial statements and the notes included in this Prospectus. You should read the entire Prospectus carefully, including Risk Factors and our Financial Statements and the notes to the Financial Statements before making any investment decision. Unless the context indicates or suggests otherwise, the terms Company , we, our and us means Code Green Apparel Corp. Principal Offices Our corporate headquarters is located at 4739 S. Durfee Ave., Pico Rivera, California 90660. Our Business Code Green Apparel ( Code Green or the Company ) was incorporated in Nevada on December 11, 2007 under the name Fluid Solutions, Inc. On May 6, 2009, Fluid Solutions, Inc. acquired all of the outstanding capital stock of GS Wyoming in exchange for 100,669,998 shares of its common stock pursuant to an Exchange Agreement dated May 6, 2009 with that corporation and its shareholders. On May 18, 2009, Fluid Solutions, Inc. changed its name to Gold Standard Mining Corp. and effected a 3.3-to-1 forward stock split. On July 17, 2012, Gold Standard Mining Corp. changed its name to J.D. Hutt Corporation. On May 15, 2015, the Company changed its name to Code Green Apparel Corp. The Company is engaged in the business of manufacturing, selling, marketing and outfitting companies of all sizes and industries with eco-friendly apparel made from recycled textiles. The corporate apparel market encompasses a wide variety of apparel products and accessories ranging from customized uniforms to caps, t-shirts and aprons. We believe that many of these companies are actively seeking ways to incorporate being more environmentally friendly into their company and would entertain mandating that all uniforms be manufactured from recycled fabrics. As all of our products are eco-friendly, our strategy is to emphasize the sustainability features while at the same time providing our products at market competitive rates. Penny Stock Rules Our common stock will be considered a penny stock , and subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended. Penny stock is generally defined as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. The required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired. The Offering Common stock offered by selling security holders Common stock outstanding before the offering Common stock outstanding after the offering Terms of the Offering Termination of the Offering Trading Market Use of proceeds Need for Additional Financing: Risk Factors 72,858,608 shares of common stock. This number represents 22 (%) percent of our current outstanding common stock as of July 27, 2015. 327,682,980 common shares as of July 27, 2015. 327,682,980 shares. The selling stockholders will determine when and how they will sell the common stock offered in this prospectus. The selling stockholders will sell at prevailing market prices through the OTCQB marketplace, or such other markets as may be offered by the OTC Markets Group or other national exchange that we may apply to following the effective date of the registration statement of which this prospectus is a part, or at privately negotiated prices in transactions that are not in the public market. The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations and without the requirement for the Company to be in compliance with the current public information requirement pursuant to Rule 144 under the Securities Act of 1933, as amended (the Securities Act ), or any other rule of similar effect. Our common stock is quoted on the OTCQB under the market symbol JABA . We are not selling any shares of the common stock covered by this prospectus. We believe that we may need to raise additional capital in the future. An investment in our common stock involves a high degree of risk. You should carefully consider the risk factors set forth under Risk Factors on page 5 and the other information contained in this prospectus before making an investment decision regarding our common stock
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001649676_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001649676_global_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..cf86590cdb8bfc62980de4adc43a2c32e95e7903
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001649676_global_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary Global Quest Ltd. is a corporation formed under the laws of the State of Nevada on January 16, 2015, whose principal executive offices are located in Seoul Korea. We are currently considered a "shell company" within the meaning of Rule 12b-2 under the Exchange Act, in that we currently have nominal operations and nominal assets other than cash. Our principal business is the, marketing, sales via the Internet of online cooking instruction and multi-cultural recipe's under the website www.homechefinternational.com. The Company's business will be founded on its ability to provide multi-cultural recipes and related services, in a low-cost, easy accessible manner. We will be able to conduct our operations for approximately one year with our currently available capital resources. Our website is currently under construction, and once complete we are not anticipating any major changes to the appearance of our site. We will be in the business of providing recipes from different cultures combined with online cooking instruction embodied as both products and services. Our business model is to market; sell multi-cultural recipes and online cooking instruction via the Internet. We will market and sell these recipes and related services as a subscription based business via our website on the Internet at www.homechefinternational.com. As of October 28, 2015 we have 10,050,000 shares of our common stock outstanding of which 3,050,000 are being registered for resale by selling shareholders and 7,000,000 belong to our directors and officers. The average purchase price paid for the shares to be resold by the selling shareholders is $0.01. All of these shares were acquired from us, between January 16, 2015(inception) to April 4, 2015. As of the date of the prospectus all shares have been issued and there are no subscriptions outstanding. The following table summarizes the date of offering, the price per share paid, the number of shares sold and the amount raised for the offering. Closing Date of Offering Price Per Share Paid Number of Shares Sold Amount Raised February 6, 2015 $0.001 7,000,000 $7,000 April 4, 2015 $0.01 3,050,000 $30,500 July 31, 2015 Loan from Director Nil $27,169 Financial Performance to Date As of October 28, 2015 we had no revenue and we anticipate incurring operating losses and negative operating cash flow for at least the next twelve months. Additionally, our auditors have expressed substantial doubt about our ability continue as a going concern. To date we have not engaged in revenue producing activities. Business Model Our business model is untested and we will operate in a highly competitive market with low barriers of entry. Name, Address, and Telephone Number of Registrant Global Quest Ltd. 103-1602 Gogi 3, Sujigu, Yonginsi, Geong Gido, Korea Email : globalquest0321@gmail.com The Offering The following is a brief summary of this offering. Common stock offered by selling security holders 3,050,000 shares of common stock. This number represents 30.34% of our current issued and outstanding common stock and represents all of our non affiliate shares subscribed for. Common stock outstanding before the offering 10,050,000 Common Shares were subscribed for and are issued and outstanding as of October 28, 2015. Common stock outstanding after the offering 10,050,000 Common Shares issued and outstanding. Offering Price There is no public market for the common shares. The price has been set at $0.02 per share. The Company may not meet the requirement for a public listing or quotation of its common stock. Even if the Company s common stock is granted a listing or quoted there may never develop a market for the stock. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. We will cover the expenses associated with the offering which we estimate to be $19,000. Refer to Plan of Distribution on Page 15. Completion of offering The offering will conclude upon the earliest of such time as all of the common stock has been sold pursuant to the registration statement. Securities Issued And to be Issued Shares of our common stock have been subscribed for and are issued and outstanding as of October 28, 2015. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There are no other subscriptions outstanding. Use of proceeds We are not selling any additional shares and there are no other subscriptions outstanding of the common stock covered by this prospectus. Additionally, we will not receive any proceeds from the sale of the common stock by the selling shareholders. The funds that we raised through the sale of our common stock were used to cover administrative and professional fees such as accounting, legal, and filing costs.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001650505_aifarm-ltd_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001650505_aifarm-ltd_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f006907c49378746248f75078a702f4f5ffb5271
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001650505_aifarm-ltd_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This Prospectus and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on page 9 of this Prospectus and the Management s Discussion and Analysis of Financial Position and Results of Operations section beginning on page 34 of this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including Risk Factors beginning on page 9, and the consolidated financial statements, before making an investment decision. Corporate Background and Business Overview Eco Energy Tech Asia, Ltd. ( Eco , the Company we or us ) is a development stage company. We were incorporated under the laws of the state of Nevada on January 20, 2015. We have developed a proprietary growing system that designs and builds custom biodomes ranging in size appropriate for global commercial agricultural concerns as well as small local producers; delivering greater yields per meter than traditional single level greenhouse operations resulting from our multi-tier/multi-level growing system which permits us to grow a greater number of plants. Our fiscal year end is December 31. On February 1, 2015, we entered into a Share Exchange Agreement to acquire 100% of the outstanding capital stock of Eco Energy Tech Asia, Ltd. ( EETA ), a Hong Kong corporation formed on December 27, 2012. Pursuant to the Share Exchange Agreement, we issued 20,000,000 shares of our common stock to the sole shareholder of EETA in exchange for 1,000,000 ordinary shares of EETA. The sole shareholder of EETA, Yuen May Cheung, is also our Chief Executive Officer, President and Director. EETA is also the owner of 83.34% of the common stock of 7582919 Canada, Inc., a corporation originally formed pursuant to the laws of British Columbia, Canada on June 21, 2010, as Renergy Foods Canada, Inc. On March 6, 2012, Renergy Foods Canada, Inc. changed its name to NuAgri, Inc. On October 1, 2013, NuAgri, Inc. changed its name to 7582919 Canada, Inc. ( 7CA ) All of our operations described in this Prospectus are conducted through EETA and 7CA. Our business offices are currently located at Flat A, 15/F, Block 1, Site 7, Whampoa Garden, Hung Hom, Kowloon, Hong Kong. Our telephone number is (852) 91235575. We have three (3) executive officers, Yuen May Cheung, our Chief Executive Officer and President, Victor J. Elias, our Chief Financial Officer, and Thomas Colclough, our Chief Operating Officer. Yuen May Cheung is our sole Director. We are a development stage company that has generated no revenues and has had limited operations to date. For the six month period ending June 30, 2015 we have incurred accumulated net losses of $1,130,181. As of June 30, 2015, we had $759,630 in current assets and current liabilities of $3,812,882. Through June 30, 2015 we have issued an aggregate of 20,650,000 shares of our common stock since our inception. We issued 20,000,000 shares of our common stock pursuant to the Share Exchange Agreement on February 27, 2015, and we issued a total of 650,000 shares of our common stock to forty-one (41) separate foreign shareholders on April 24, 2015, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, for total proceeds of approximately $6,500. Except for the transaction pursuant to the Share Exchange Agreement described above, since our inception we have not made any significant purchase or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors have included a going concern opinion in their report on our audited financial statements for the period June 30, 2015. The notes to our financial statements contain additional disclosure describing the circumstances leading to the issuance of a going concern opinion by our auditors. Implications of Being an Emerging Growth Company As a company with less than $1 billion in revenue in our last fiscal year, we are defined as an emerging growth company under the Jumpstart Our Business Startups ( JOBS ) Act. We will retain emerging growth company status until the earliest of: The last day of the fiscal year during which our annual revenues are equal to or exceed $1 billion; The last day of the fiscal year following the fifth anniversary of our first sale of common stock pursuant to a registration statement filed under the Securities Act of 1933, as amended, which we refer to in this document as the Securities Act; The date on which we have issued more than $1 billion in nonconvertible debt in a previous three-year period; or The date on which we qualify as a large accelerated filer under Rule 12b-2 adopted under the Securities Exchange Act of 1934, as amended (the Exchange Act ) (i.e., an issuer with a public float of $700 million that has been filing reports with the U.S. Securities and Exchange Commission ( SEC ) under the Exchange Act for at least 12 months). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to SEC reporting companies. For so long as we remain an emerging growth company we will not be required to: have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Wall Street Reform and Consumer Protection Act of 2002; comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); submit certain executive compensation matters to stockholder non-binding advisory votes; submit for stockholder approval golden parachute payments not previously approved; disclose certain executive compensation related items, as we will be subject to the scaled disclosure requirements of a smaller reporting company with respect to executive compensation disclosure; and present more than two years of audited financial statements and two years of selected financial data in this registration statement and future filings, instead of the customary three years for audited financial statements and five years for selected financial data. Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of The JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result, our financial statements may not be comparable to companies that comply with public company effective dates. Section 107 of the JOBS Act provides that our decision to opt into the extended transition period for complying with new or revised accounting standards is irrevocable. Because the worldwide market value of our common stock held by non-affiliates, or public float, is below $75 million, we are also a smaller reporting company as defined under the Exchange Act. Some of the foregoing reduced disclosure and other requirements are also available to us because we are a smaller reporting company and may continue to be available to us even after we are no longer an emerging growth company under the JOBS Act but remain a smaller reporting company under the Exchange Act. As a smaller reporting company we are not required to: have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and present more than two years of audited financial statements in our registration statements and annual reports on Form 10-K and present any selected financial data in such registration statements and annual reports. Summary of the Offering Shares of common stock being offered by the Registrant: 410,000 shares (the Maximum Offering ) of the Selling Shareholder s common stock. Offering price: $0.20 per share of common stock. Number of shares outstanding before the Offering: As of October 15, 2015 we had 20,650,000 shares of our common stock issued and outstanding, and no issued and outstanding convertible securities. Number of shares outstanding after the Offering 20,650,00 if all of the shares being offered are sold Market for the common stock: There is no public market for our common stock. After the effective date of the registration statement of which this prospectus is a part, we intend to seek a market maker to file an application on our behalf to have our common stock quoted on the Over-the-Counter Bulletin Board. We may never be approved for trading on any exchange. We currently have no market maker who is willing to list quotations for our stock. There is no assurance that a trading market for our stock will develop be sustained if developed Use of Proceeds: No proceeds to the Company.
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001650739_ajia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001650739_ajia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d2bd5a54f6fe24a3d8eca14bfbbe6dd5af906ab6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001650739_ajia_prospectus_summary.txt
@@ -0,0 +1 @@
+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", "Wigi4You", and "Company" are to Wigi4You, Inc.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001651064_united_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001651064_united_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..057ed55684b0dd2c3907e53a6b51501f786dde6a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001651064_united_prospectus_summary.txt
@@ -0,0 +1 @@
+SUMMARY As used in this prospectus, unless the context otherwise requires, we, us, our, the Company and TXHD refers to United Lumicon Exhibition Services, Inc. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated. You should read the entire prospectus before making an investment decision to purchase our common shares. Our Business We provide experiential services within the exhibition and events industry. Our core business plan is to provide rental equipment and booth setup services for exhibitions, also known as trade shows or conventions. We plan to cater to exhibitions for clients primarily in the United States, along with clients in China, Korea, and Japan. Being a start-up company, we have achieved no revenues and have a limited operating history. We were incorporated in Nevada on May 21, 2015. To the present, we have engaged in formation activities, raising capital, and commencing operations. We have purchased used equipment from Jaris Exhibition LED Video Services, LLC consisting of LED screens that we plan to lease to our clients at their exhibitions. We have leased a warehouse to store our rental equipment and we have hired staff for sales and to conduct our service operations. Our principal executive office and warehouse is located at 3984 Vanessa Dr. Las Vegas, NV 89103. Our phone number is 702-799-9174 Our financial statements for the period from May 21, 2015 (date of inception) to July 31, 2015, reported $0 in revenues and a net loss of $3,553. As of July 31, 2015 we had $14,397 in cash on hand. Our independent registered public accountant has issued an audit opinion for our company, which includes a statement expressing substantial doubt as to our ability to continue as a going concern. If we are unable to obtain additional funds our business may fail. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business" and "Use of Proceeds"). Proceeds from this offering are required for us to proceed with our business plan over the next twelve months. We require minimum funding of $375,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of $375,000, our business may fail. Even if we raise $750,000 from this offering, we may need more funds to develop our growth strategy and to continue maintaining a reporting status. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The Offering Common Shares Offered by Us: 7,500,000 common shares at a fixed price of $0.10 per share. Common Shares Offered by the Selling Security Holders: 5,019,340 common shares at a price of $0.10 per share or at prevailing market prices, prices related to prevailing market prices or at privately negotiated prices. Minimum Number of Common Shares To Be Sold in This Offering: None. Number of Shares Outstanding Before the Offering: 52,019,340 common shares are issued and outstanding as of the date of this prospectus. Use of Proceeds: Any proceeds that we receive from this offering will be used by us to pay for the expenses of this offering and as general working capital. Summary Financial Information Balance Sheet Data As of July 31, 2015 Cash 14,397 Total Assets 24,571 Liabilities 14,439 Total Stockholder s Equity 10,132 Statement of Operations For the Period from Inception to July 31, 2015 Revenue - Net Profit (Loss) for Reporting Period (3,553)
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001651595_basilea_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001651595_basilea_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001651595_basilea_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001651987_central_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001651987_central_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..179346d9ac9732cedf0f71a8b4323a1026fae12a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001651987_central_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 t1502566-s1a.htm AMENDMENT NO. 2 TO FORM S-1 t1502566-s1a - block - 17.0197018s TABLE OF CONTENTS As filed with the Securities and Exchange Commission on November 6, 2015 Registration No. 333-206874 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 registration statement Under the Securities Act of 1933 Central Federal Bancshares, Inc. (Exact name of registrant as specified in its charter) Missouri 6035 47-4884908 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 210 West 10th Street Rolla, Missouri 65401 (573) 364-1024 (Address, including ZIP Code, and telephone number, including area code, of registrant s principal executive offices) William A. Stoltz President and Chief Executive Officer Central Federal Bancshares, Inc. 210 West 10th Street Rolla, Missouri 65401 Telephone: (573) 364-1024 (Name, address, including ZIP Code, and telephone number, including area code, of agent for service) Copies to: Leonard J. Essig Lewis Rice LLC 600 Washington Avenue, Suite 2500 St. Louis, Missouri 63101 Telephone: (314) 444-7651 Fax: (314) 612-7651 John F. Breyer, Jr. Breyer & Associates PC 8180 Greensboro Drive, Suite 785 McLean, Virginia 22102 Telephone: (703) 883-1100 Fax: (703) 883-2511 Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(3) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Central Federal Bancshares, Inc. common stock, par value $0.01 per share 1,788,020 $ 10.00 $ 17,880,200 $ 2,077.68(2) (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the Securities Act ). (2) Previously paid The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS TABLE OF CONTENTS Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001652226_vatee-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001652226_vatee-inc_prospectus_summary.txt
new file mode 100644
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled "Where You Can Find More Information" in this prospectus and any amendment or supplement hereto. Company Overview Vatee Inc. ("VATEE INC" or the "Company") was incorporated in the State of Nevada on October 28 , 2014. We are a company that engages in the sale of fine loose-leaf teas both direct to consumer as well as direct to dealers, through a distribution of producers and growers of loose leaf tea in South Africa. This contract is not exclusive. Levy Huezey, who is currently our sole officer and director, founded our Company. Our headquarters are located at 3590 North Blagg Rd., Pahrump, NV 89060. During the six month period ended June 30, 2015, we have generated $500 in revenue and incurred general and administrative expenses of $42, resulting in a net increase of $458. As of June 30, 2015, we have assets of $3,958 and liabilities of $9,828. We are a development stage company. We estimate that we will require $175,000 to enable us to implement our business plan for the next twelve months. Because we are in the development stage and have yet to attain profitable operations, there exists substantial doubt about our ability to continue as a going concern. In their report on our financial statements for the year ended December 31, 2014, our independent auditors included an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. We do not have any current plans or intentions to be acquired by or to merge with an operating company nor do we, nor, to the best of our knowledge, our shareholders, have plans to enter into a change of control or similar transaction or to change our management. A WORLD OF FINE TEAS Over the centuries tea, like wine, has developed according to ritual, locality and curative process. The myriad of tastes of fine tea have tantalized and enthralled throughout the ages. Now fine tea is experiencing a revival in the world market, and in our initial target fine tea will be introduced in South Africa, which has mostly been exposed to cheaper, inferior CTC bagged teas. Rich in vitamins, anti-oxidants and minerals, fine tea is healing and cleansing, and still a delectable treat, that offers a journey of exploration, and new vistas in taste. VATEE INC's BUSINESS PLAN Vatee, Inc plans to market and sell premium loose leaf teas to its primary target market in South Africa as well as in the United States and Europe. Our business plans to introduce specialty teas to the South African market, while promoting African teas for the international market. Vatee, Inc is dedicated to spreading the art of tea and tickling the taste buds with a little bit of luxury. Rediscover fine tea, as it used to be. WHAT VATEE WILL DO Vatee, Inc will specialize in acquiring the finest teas from around the world and introduce them into untapped markets. It will import its teas from places of origin, working with top international tea tasters/blend masters. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Maximum Offering Price Per Share Maximum Aggregate Offering Price (1) Amount of Registration Fee (1) Common Stock, $0.0001 par value per share 2,000,000 $ 0.10 $ 200,000.00 $ 23.24 (1) Estimated solely for the purpose of calculating the registration fee under Rule 457(a) and (o) of the Securities Act. The Registrant hereby amends this Registration Statement (the "Registration Statement") on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Subject to completion, dated November _________________, 2015 Table of Contents Vatee, Inc will follow a policy of accountability with all its products, so that consumers can be confident that when they buy from us, they are receiving only the best quality. Vatee, Inc will also create innovative new blends of fine tea and develop recipes that incorporate or complement the tea. What's different about this to regular tea we buy? The easiest comparison is that of a box wine versus a Bordeaux, or between a commercial whisky versus a single malt. The ingredients are the same, but the similarity ends there. "Regular" tea, otherwise known as CTC tea, is processed with the objective of producing an economical, fast-infusing brew. For those of us who are looking for more than "fast food" tea, orthodox or fine tea provides the answer. Orthodox teas are processed according to age-old methods, and their component leaves are specially chosen, with quality taking precedence above all else. Whole leaves, flowers and spices are used instead of tea dust. Fine teas carry multiple layers of complexity, and tastes. The aromatized varieties have powerful flavors and don't end with just a nice smell as their CTC cousins inevitably do. Although the Company has no market for its common stock, management believes that the Company will meet all requirements to be quoted on the OTC market, and even though the Company's common stock will likely will be a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. We are currently a development stage company and to date we have recorded approximately $4,000.00 in revnue. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs, management intends to rely primarily upon debt financing to supplement cash flows, if any, generated by our services. We will seek out such financing as necessary to allow the Company to continue to grow our business operations, and to cover such cost, excluding professional fees, associated with being a reporting Company with the Securities and Exchange Commission ("SEC"); we estimate such costs to be approximately $x for 12 months following this Offering. The Company has included such costs to become a publicly reporting company in its targeted expenses for working capital expenses and intends to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point we have been funded by our sole officer and director, and have not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company. We hope that we will be able to secure additional financing, and complete this Offering within the coming months, to be able to secure a team by fall of 2015. Upon obtaining effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to market and grow our Company. We believe that the maximum amount of funds generated from the Offering will provide us with enough proceeds to fund our plan for marketing and operations for up to twelve months after the completion of this Offering. Assuming we generate nominal revenues, we may still require additional financing to fund our operations past the twelve-month period following the completion of this Offering if the maximum amount of funds is not raised. While our ability to generate revenue is not correlated directly to the amount of shares sold by us under this Offering, our potential to generate revenue can be affected by our marketing and advertising strategies and the amount of personnel the Company employs. These factors are directly related to the amount of proceeds we receive from this Offering, which corresponds to the number of shares we are successful in selling under this Offering (see "Use of Proceeds" chart). We believe we can begin generating revenues within the first three months following the successful completion of this Offering. As we are a start-up company, it is unclear how much revenue our operations will generate; however, it is our hopes that our revenues will exceed our costs. Our revenues will be impacted by how successful and well targeted was the execution of our marketing campaign, the general condition of the economy, and the number of clients we will attract. For a further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled "Description of Business". Neither the Company nor Levy Huezey or any other affiliated or unaffiliated entity has any plans to use the Company as a vehicle for a private company to become a reporting company once Vatee Inc. becomes a reporting Company. Additionally, we do not believe the Company is a blank check company as defined in Section a(2) of Rule 419 under the Securities Act of 1933, as amended because the Company has a specific business plan and has no plans or intentions to engage in a merger or acquisition with an unidentified entity. The information in this prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where an offer or sale is not permitted. PRELIMINARY PROSPECTUS VATEE INC. 3590 North Blagg Rd. Pahrump, NV 89060 (702) 359-0798 2,000,000 SHARES OF COMMON STOCK This is the initial offering of Common Stock of Vatee Inc. We are offering for sale a total of 2,000,000 shares of Common Stock at a fixed price of $0.10 per share for the duration of this Offering (the "Offering"). There is no minimum number of shares that must be sold by us for the Offering and we will retain the proceeds from the sale of any of the offered shares. We will not be utilizing an escrow account for receiving funds. Funds received by the Company pursuant to a subscription will be immediately available to the Company upon acceptance . The Offering is being conducted on a self-underwritten, best efforts basis, which means our President and Chief Executive Officer, Levy Huezey, will attempt to sell the shares directly to friends, family members and business acquaintances. Levy Huezey will not receive commission or any other remuneration for such sales. In offering the securities on our behalf, Levy Huezey will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934. The shares will be offered for sale at a fixed price of $0.10 per share for a period of one hundred and eighty (180) days from the effective date of this prospectus, unless extended by our Board of Directors for an additional ninety (90) days. If all of the shares offered by us are purchased, the gross proceeds to us will be $200,000.00. Accordingly, all funds raised hereunder will become immediately available to the Company and will be used in accordance with the Company's intended "Use of Proceeds" as set forth herein, investors are advised that they will not be entitled to a refund and could lose their entire investment. Offering Price to the Public Per Share Commissions Net Proceeds to Company After Offering Expenses (25% of Shares Sold) Net Proceeds to Company After Offering Expenses (50% of Shares Sold) Net Proceeds to Company After Offering Expenses (100% of Shares Sold) Common Stock $ 0.10 Not Applicable $ 24,500 $ 74,500 $ 174,500 Total $ 0.10 Not Applicable $ 24,500 $ 74,500 $ 174,500 Our independent registered public accountant has issued an audit opinion for Vatee, Inc., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Accordingly, any investment in the shares offered hereby involves a high degree of risk and you should only purchase shares if you can afford a loss of your entire investment. There currently is no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our Common Stock is not traded on any exchange or on the over-the-counter market. There can be no assurance that our Common Stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ THIS ENTIRE PROSPECTUS, INCLUDING THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 8 HEREOF BEFORE BUYING ANY SHARES OF VATEE INC.'S COMMON STOCK. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of this prospectus is November __________ , 2015 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001653059_tv_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001653059_tv_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..48741337ee28dedae45512b6355a49ac1c7d55ef
--- /dev/null
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@@ -0,0 +1 @@
+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to TV Productos Pro Co., Ltd. .
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001653099_vigilant_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001653099_vigilant_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..279456582ff426f2af52712f8e377ec29d22ffc5
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2015/CIK0001653099_vigilant_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus. It does not contain all the information you should consider before making a decision to purchase the shares we are offering. You should very carefully and thoroughly read the following summary together with the more detailed information in this prospectus and review our financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our" and "Company" refer to Vigilant Diversified Holdings, Inc. As of the date of our most recent audit, June 30, 2015, we had $25,000 in total assets. VIGILANT DIVERSIFIED HOLDINGS, INC. Organization We were incorporated in the State of Nevada as a for-profit company on June 30, 2015, under the name Vigilant Diversified Holdings, Inc. and our incorporator adopted our bylaws and appointed our sole director. To date, we have limited operations and are implementing our business plan to provide management consulting services to start-up and development stage enterprises in North America that are in the cannabis industry. We have established a fiscal year end of December 31. On June 30, 2015, we issued 15,000,000 shares of our $0.0001 par value common stock, valued at $0.0001 per share, to our 2 initial shareholders, which includes 14,900,000 common shares to Vigil & Vigil Investments, LLC, a Colorado limited liability company, in exchange for organizational services incurred in our formation, which our sole director valued at $0.0001 per share, or $1,490 for preformation services rendered to develop our organization, business model and website. Vigil & Vigil Investments, LLC is owned by our chief executive officer, Todd W. L. Vigil and Diana Vigil, our Vice President and Secretary. Diana Vigil is the mother of Todd Vigil. On June 30, 2015, we also issued 100,000 shares of our $0.0001 par value commons shares to our other initial shareholder, Jonathan McDermott, in exchange for organizational services incurred in our formation, which our sole director valued at $0.0001 per share, or $10 for preformation services rendered to us for assisting in our organization. On June 30, 2015, we incurred $25,564 in operational expenses. We anticipate our burn rate will be approximately $4,500 per month. We believe that our present capital is insufficient to cover our monthly burn rate for the next 12 months. We believe that we will require approximately $50,000 in cash to accomplish the goals set out in our plan of operation. To the extent we are unable to accomplish our goals with the proceeds from the issuance of our common stock, then we intend to raise additional capital from investors through the sale of our common stock or from loans or advances from our majority shareholder. Our principal business, executive and registered statutory office is located at 433 N. Camden Dr., Suite 600, Beverly Hills, CA 90210 and our telephone number is (310) 279-5169, fax is (310) 388-0697 and email contact is info@vigilantdiversifiedholdings.com. Our URL address is www.vigilantdiversifiedholdings.com. Business We are a newly formed company that commenced operations on June 30, 2015. Our activities have been limited to organizational and business development activities. We a consulting company that intends to assist companies that are involved in various aspects of the cannabis industry by providing consulting services focused on providing administrative and regulatory support functions. We also intend to market our services to other industries. Our mission is to assist management with services designed to keep them focused on their core business ideas while provide the administrative support such as bookkeeping, payroll, website development and marketing strategies. We intend to use the Internet as well as the services of an independent sales representative to market our services to start-up companies in California and Colorado with our initial efforts focused in Denver. We also intend to market to service professionals. We have had limited operations and have limited financial resources. Our auditors indicated in their report on our financial statements (the "Report") that "the Company s lack of business operations and early losses raise substantial doubt about our ability to continue as a going concern." Our operations to date have been devoted primarily to start-up, development and operational activities, which include: 1. Formation of the Company; 2. Development of our business plan; 3. Evaluating various target companies to market our services; 4. Research on marketing channels/strategies for our services; 5. Secured our website domain www.vigilantdiversifiedholdings.com and beginning the development of our initial online website; 6. Research on services and pricing of our services; 7. Hiring our consultant to provide a variety of services to us. We intend to provide services to target companies with the mission to assist the founders develop their product and services and provide hands-on support services to reduce startup costs and accelerate time to market. Besides general administrative services, we intend to offer services to assist with product development and design, corporate formation and structure. We also intend to offer virtual office space, financial and accounting resources, marketing and branding services, and legal guidance by partnering with law firms and accounting firms. By offering these services, we intend to enable our potential entrepreneurial clients the time to focus on developing their products and services so they are not consumed with administrative activities that will consume valuable time from their work schedules. We believe that the administrative and other consulting services will increase the value of our potential clients businesses thereby increasing the attractiveness for additional capital to enable them to bring their products and services to market. Our goal is to assist cannabis entrepreneurs by partnering with them and providing them with the assistance and tools to bring their ideas to market. We intend to initially target businesses in Southern California and Colorado with our main focus in Colorado. We intend to provide turnkey support solutions to the legal cannabis industry and business services for cannabis companies involved in all legal aspects of the industry including: Funding and Financing Solutions Compliance Consulting and Certification Solutions Dispensary and Retail Solutions Commercial Production and Equipment Build Out Solutions Banking and Payment Processing Solutions Multichannel Supply Chain Solutions Branding, Marketing and Sales Solutions Research and Development Solutions Consumer Product Solutions We intend to expand throughout California and Colorado and intend to bring an array of services to each new state that legalizes the use of cannabis according to appropriate state and federal laws. At this time, we do not grow, process, own, handle, transport, or sell marijuana as we are organized and directed to operate strictly in accordance with all applicable state and federal laws. As the legal environment changes in California and other states, our management may explore business opportunities that involve ownership interests in dispensaries and growing operations if and when such business opportunities become legally permissible under applicable state and federal laws. We intend to provide managerial assistance available to our clients and, to the extent available, offer our services for cash or contingent compensation. We will negotiate our fees on a case-by-case basis and intend to offer hourly rates, flat fees and contingent fees for our services. The managerial assistance means, among other things, we, through our directors, officers or employees, offer to provide, and, if accepted do provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company. While our initial focus will offering our services to companies in the cannabis industry, we also intend to market our services to other industries. On July 22, 2015, we engaged a cannabis consulting firm to provide a variety of services to us, including, but not limited to, introducing us to various cannabis opportunities. Our agreement with them is for 6 months for a total fee of $25,000 payable as follows: (i) $10,000 upon execution, $7,500 thirty days thereafter and the balance of $7,500 ninety days thereafter. To date, we have paid them $17,500. Services and Markets We intend to market our services primarily to California and Colorado cannabis-related companies. We also intend to assist companies by consulting on financing and acquisition opportunities for them in various states. We intend to have service contracts in the following sectors: Funding and Financing Solutions Our goal is to become the go to business consultants in the legal cannabis market before expanding nationwide if and when applicable state and federal laws allow us to do so. We intend to assist collectives, dispensaries, producers, and product businesses in the legal cannabis industry with financing and consulting solutions to enable them to grow and expand their businesses. In the evolving legal cannabis industry, where traditional banking opportunities are limited, we intend to consult and assist companies with options for banking services and property financing. We intend to provide a corporate structure to business in search of capital by ensuring that their infrastructure is set up to maximize their potential to obtain financing by ensuring their compliance with all state governance rules. Compliance Consulting and Certification Solutions Led by Todd Vigil, we intend to assist our clients through the complex landscape regarding the legal cannabis industry. Legal cannabis retail, production, and product manufacturers must comply with all regulations in the highly governed legal cannabis industry, as local and state laws dictate different business requirements. Since complying with applicable laws can be complex, we intend to help service our clients in areas such as entity selection, internal bookkeeping, government reporting, and inventory and patient records tracking in order to help our clients be compliant. Commercial Build Out and Dispensary Solutions In addition, we intend to offer build-out and commercial services to our clients. Whether it is financial assistance, real estate consulting, operations design, or building construction, we intend to assist our clients with design and rollout services for them. We intend to offer traditional business services to dispensaries as well. These services include human resources, payroll, workers compensation, donation accounting, tax planning, government audit preparation, and succession strategies. Supply Chain Solutions We intend to offer assistance in the design, planning, and execution of supply chain control and monitoring systems for legal cannabis retail and production facilities. Our objective is to create overall value for our clients, build a competitive infrastructure, coordinate logistics, and assist in providing metrics to synchronize supply and demand, while monitoring, measuring and reporting performance. Branding, Marketing, and Sales Solutions We intend to assist clients in effective branding geared towards enhancing distribution networks. We intend to collaborate with our clients to ensure that they are meeting their business goals. We intend to earn fees based on providing our clients with strategies that grow their sales and maximize their profits. Banking and Payment Processing Solutions Currently, the legal cannabis industry in California transacts an estimated $1.1 billion in sales annually where most of these transactions are done exclusively in cash. This problem presents a business opportunity for us. We intend to evaluate various payment processing systems to assist clients. Competition We compete for industry participants with other companies that offer similar services. We anticipate that competition will increase, and will increase even more if and when applicable state and federal laws change the legal landscape of the cannabis industry. While there is no clear leader or one distinct competitor in the California or Colorado marketplace that provides turnkey solutions to the legal cannabis industry, the existing dispensaries and production facilities operate in what has been labeled "a cottage industry." We intend to continue to develop services that we believe will be valuable to clients. We believe that we can become a market dominant brand, but there can be no assurance that we will be successful in accomplishing our business initiatives, or that we will be able to maintain significant levels of revenues, or recognize net income for providing our services. Market Opportunity The cannabis industry is a rapidly growing sector in the U.S., and we believe that companies building systems to capitalize on it will benefit in the future as legislation is passed that will favor cannabis companies. We believe that an attractive opportunity exists for a public company focused on assisting these businesses in the early-stage of their existence will provide our opportunity. As of the date of this Prospectus, we have 15,000,000 shares of $0.0001 par value common stock issued and outstanding, which is owned by 2 shareholders. We have 10,000,000
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001653136_viventia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001653136_viventia_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001653171_cpsm-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001653171_cpsm-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..825453bf27bc266012ce7c9659df8e4305feee81
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@@ -0,0 +1,359 @@
+PROSPECTUS SUMMARY
+ 
+
+ To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 7 and the financial statements.
+ 
+
+ General
+ The Company was originally incorporated in the State of Nevada on March 27, 2007 under the name Onyx China Inc. On May 1, 2009, the corporate name was changed to Luxe Energy Corporation, and on September 16, 2011, the corporate name was changed to Sunbelt International Inc. Effective January 31, 2014, the corporate name was changed to Nevcor Business Solutions, Inc. Subsequent to a change of control and effective July 3, 2014, the corporate name was changed to CPSM, Inc.
+ 
+
+ Operations
+ The Company acts as a holding company to aggregate synergistic pool industry service providers. Its wholly-owned subsidiaries, Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering Inc. are primarily engaged in the provision of full line pool and spa services specializing in pool maintenance and service, repairs, leak detection, renovations, decking and remodeling. The primary market area includes Martin, Palm Beach, St Lucie, Indian River and Broward counties, Florida.
+ 
+
+ On September 11, 2014, the Company acquired all of the outstanding common shares of Custom Pool & Spa Mechanics, Inc., an entity engaged in the pool service business, in exchange for 19,446,783 common shares of the Company.
+ 
+
+ For accounting purposes the transaction is accounted for as a reverse recapitalization. Reverse recapitalization accounting applies when a non-operating shell company (the Company) acquires a private operating company (Custom Pool & Spa) and the owners and management of the private operating company have actual or effective voting and operating control of the combined company. A reverse recapitalization is equivalent to the issuance of stock by the private operating company for the net monetary assets of the public shell corporation accompanied by a recapitalization with accounting similar 
+ 
+
+ 5
+ 
+
+ 
+
+ Table of Contents
+
+ to that resulting from a reverse acquisition, except that no goodwill or other intangible assets are recorded. 
+ 
+
+ Custom Pool & Spa is a full service maintenance, service, repair and pool and spa design and build company. 
+ 
+
+ Custom Pool & Spa s base line range of services includes: routine maintenance including water analysis and adjustment, debris removal, equipment preventative maintenance and repair. Custom Pool & Spa also provides the following services and products: Leak detection and repair, pool resurfacing, custom design renovations and installations, pool retiling, coping replacement, deck resurfacing, retail pool products, fiber glass resurfacing, tiki huts and outdoor kitchen installations, pool and spa heat systems, salt systems, and filter systems.
+ 
+
+ Since its inception in March 2015, Custom Pool Plastering has provided custom surfaces to pool environments. Custom Pool Plastering s artisans are certified in all offered finishes including but not limited to Diamond Brite, Florida Stucco and River Rok. Custom colors are also available.
+ 
+
+ Securities
+ Outstanding prior 
+ 81,041,422 common shares
+ to the Offering 
+ 
+
+ Sales by Selling
+ Shareholders
+ The selling shareholders shall sell their common shares at prices to be determined by the prevailing market price for the common shares at the time of sale or negotiated transactions. We are registering common shares on behalf of the selling shareholders in this prospectus. We will not receive any cash or other proceeds in connection with the subsequent sales. We are not selling any common shares on behalf of selling shareholders and have no control or effect on the selling shareholders.
+ 
+ Use of Proceeds
+ We will not receive any of the proceeds from sale of the common shares covered by this prospectus.
+ Termination of the 
+ Offering 
+ The offering will commence on the effective date of this prospectus and will terminate on or before September 30, 2016. 
+ 
+
+ 6
+ 
+
+ 
+Table of Contents
+ 
+
+ OTC Market Pink Sheets
+ Trading Symbol
+ Our common shares are traded on the OTC Market Pink Sheets under the symbol SWMM .
+ 
+
+ Risk Factors
+ The common shares offered hereby involve a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment.
+ 
+
+ 
+
+ RISK FACTORS
+ 
+
+ Our business is subject to numerous risk factors, including the following:
+ 
+
+ 1. 
+ We cannot offer any assurance as to our future financial results. You may lose your entire investment.
+ 
+
+ Although we have been in business for several years and have generated revenue, there is no assurance that we will be able to continue to locate additional customers that could use our services in the future and we may not be able to generate revenues in the future in a manner that will be sufficient for us to remain profitable.
+ 
+
+ The continued profitability in the future from our business will be dependent upon if we can continue to service clients and increase our client base. There can be no assurance that we will ever increase our profitability.
+ 
+
+ Even if we obtain future revenues sufficient to expand operations, increased operating expenses could adversely affect our ability to operate in a profitable manner.
+ 
+
+ 2. 
+ We have expanded our business plan. There can be no assurance we will be able to successfully compete in the market or generate enough sales to increase our profitability.
+ 
+
+ We have recently expanded our business through our wholly owned subsidiary, Custom Pool Plastering. We have focused our prior pool resurfacing business within the newly created subsidiary and increased our marketing efforts.
+ 
+
+ There are no assurances that we will be successful in this new business endeavor, successfully compete in the market on or continue to generate enough sales to be profitable. 
+ 
+
+ 
+
+ 7
+ 
+
+ 
+Table of Contents
+ 
+
+ 3. 
+ We may not be able to locate and hire necessary personnel to make our company a success. 
+ 
+
+ We have determined that to increase our business activities and service more clients, we will need to add additional personnel, and such personnel will need to have the talents and ability to consult with our clients in the areas that are required. There is no certainty that we can locate people with such talents and ability. If we cannot locate such individuals, we cannot expand our business and generate additional revenue. If we are unable to expand our business, you could lose your entire investment.
+ 
+
+ Competition for such personnel is intense and there is no certainty that we will be able to successfully attract, integrate or retain sufficiently qualified personnel. The failure to attract and retain the necessary personnel could have a materially adverse effect on our business, operations and financial condition.
+ 
+
+ 4.
+ Our success depends on certain key employees.
+ 
+
+ Our success depends to a significant extent on the performance of a number of senior management and other key employees, including production and creative personnel. 
+ 
+
+ We do not have key person insurance on the lives of our officers or directors other than Lawrence Calarco, our CEO and a director. We have entered into employment agreements with our top executive officers. These agreements entitle us to possible injunctive relief for breach of the agreements. These agreements cannot assure us of the continued services of such employees. Our inability to retain or successfully replace where necessary members of our senior management and other key employees could have a material adverse effect on our business, results of operations and financial condition.
+ 
+
+ 5.
+ We may in the future issue more shares that could cause a loss of control by our present management and current stockholders.
+ 
+
+ We may issue further shares as consideration for the cash or assets or services out of our authorized, but unissued, common stock that would, upon issuance, represent a majority of our voting power and equity. The result of such an issuance would be those new stockholders and management would control the Company, and persons unknown could replace our management at that time. Such an occurrence would result in a greatly reduced percentage of ownership of the Company by our current shareholders, which could present significant risks to investors.
+ 
+
+ 
+
+ 8
+ 
+
+ 
+Table of Contents
+ 
+
+ 6.
+ Our management beneficially owns 80.74% of the issued and outstanding common shares thereby acting together they have the ability to choose management or impact operations.
+ 
+ Management beneficially owns 80.74% of our outstanding common shares. Consequently, management has the ability to influence control of our operations and, acting together, will have the ability to influence or control substantially all matters submitted to stockholders for approval, including:
+ 
+ Election of the board of directors;
+ Removal of directors; and
+ Amendment to the articles of incorporation or bylaws.
+ 
+
+ These stockholders will thus have substantial influence over our affairs and other stockholders possess no practical ability to remove management or effect the operations of our business. Accordingly, this concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for our common shares.
+ 
+
+ 7.
+ The elimination of personal liability of our directors and officers under Nevada law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.
+ 
+
+ We have agreed to indemnification of officers and directors as provided by Nevada Statute. Nevada Statutes provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification.
+ 
+
+ 8.
+ We are a smaller reporting company, and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.
+ 
+
+ We are currently a smaller reporting company, meaning that we are not an investment company, an asset- backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company, at such time we cease being an emerging growth company, we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the 
+ 
+
+ 9
+ 
+
+ 
+Table of Contents
+ 
+
+ Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports and in a registration statement under the Exchange Act on Form 10. Decreased disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects.
+ 
+
+ 9.
+ The regulation of penny stocks by the SEC may discourage the tradability of our securities. 
+ 
+
+ We are a "penny stock" company. Our common stock trades on the OTC Market Pink Sheets and we are subject to a SEC rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of investors to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.
+ 
+
+ In addition, the SEC has adopted a number of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended. Because our securities constitute "penny stocks" within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.
+ 
+
+ Shareholders should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock 
+ 
+
+ 10
+ 
+
+ 
+Table of Contents
+ 
+
+ market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
+ 
+
+ 10.
+ We lack sufficient internal controls and implementing acceptable internal controls will be difficult with only four officers and directors thereby it will be difficult to ensure that information required to be disclosed in our reports filed and submitted under the Securities Exchange Act is recorded, processed, summarized and reported as and when required.
+ 
+ We lack internal controls over our financials and it may be difficult to implement such controls with only four officers and directors. The lack of these internal controls make it difficult to ensure that information required to be disclosed in our reports is recorded, processed, summarized and reported as and when required.
+ 
+ The reason we believe our disclosure controls and procedures are not effective is because:
+ 
+ 
+ There is a lack of segregation of duties necessary for a good system of internal control due to insufficient accounting staff due to the size of the Company.
+ 
+ The staffing of accounting department is weak due to the lack of qualifications and training, and the lack of formal review process.
+ 
+ The control environment of the Company is weak due to the lack of an effective risk assessment process, the lack of internal audit function and insufficient documentation and communication of the accounting policies.
+ 
+ Failure in the operating effectiveness over controls related to recording revenue.
+ 
+
+ 11. We are an emerging growth company and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
+ 
+
+ We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less 
+ 
+
+ 11
+ 
+
+ 
+Table of Contents
+ 
+
+ attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+ 
+
+ In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
+ 
+
+ 12.
+ We have not paid dividends to date and do not intend to pay any dividends in the near future.
+ 
+
+ We have never paid dividends on our common shares and presently intend to retain any future earnings to finance the operations of our business. You may never receive any dividends on our shares.
+ 
+
+ 13.
+ The exercise of stock options and warrants or the later sales of our common shares may further dilute your common shares.
+ 
+
+ Our board of directors is authorized to sell additional common shares or securities convertible into common shares, if in their discretion they determine that such action would be beneficial to us. Any such issuance below the offering price of the common shares in this prospectus would dilute the interest of persons acquiring common shares in this offering.
+ 
+ 14.
+ If large amounts of our common shares held by existing stockholders are sold in the future, the market price of our common shares could decline.
+ 
+
+ The market price of our common shares could fall substantially if our existing stockholders sell large amounts of our common shares in the public market following this offering. These sales, or the possibility that these sales may occur, could also make it more difficult for us to sell equity or equity-related securities if we need to do so in the future to address then-existing financing needs. U.S. federal securities laws requiring the registration or exemption from registration in connection with the sale of securities limit the number of shares of common stock available for sale in the public market. 
+ 
+
+ 
+
+ 12
+ 
+
+ 
+Table of Contents
+ 
+
+ 15.
+ There is only a limited trading market for our common stock and quoting our stock price on the OTC Market Pink Sheets increases the volatility of our stock and makes it harder to sell our stock.
+ 
+ Currently, our stock prices are quoted on the OTC Market Pink Sheets. The OTC Market Pink Sheets tend to be highly illiquid, in part because there is no national quotation system by which potential investors can track the market price of shares except through information received or generated by a limited number of broker-dealers that make markets in particular stocks. There is a greater chance of market volatility for securities that trade on the OTC Market Pink Sheets as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including:
+ 
+
+ a. The lack of readily available price quotations;
+ b. The absence of consistent administrative supervision of "bid" and "ask" 
+ quotations;
+ c. Lower trading volume; and
+ d. Market conditions.
+ 
+ In a volatile market, you may experience wide fluctuations in the market price of our securities. These fluctuations may have an extremely negative effect on the market price of our securities and may prevent you from obtaining a market price equal to your purchase price when you attempt to sell our securities in the open market. In these situations, you may be required to either sell our securities at a market price which is lower than your purchase price, or to hold our securities for a longer period of time than you planned.
+ 
+
+ 16.
+ Investors may suffer substantial dilution or an unrealized loss of seniority in preferences and privileges if we need to seek additional funding in the future.
+ 
+ We have authorized 250,000,000 common shares with 81,041,422 common shares outstanding. If we desire to raise additional capital in the future to expand our operations, we may have to issue additional equity, preferred securities or convertible debt securities, which may not need the approval of current shareholders. The issuance of new common shares would cause the buyers in this offering to suffer dilution of their ownership percentage. In addition, it is possible that any future securities could grant new shareholders rights, preferences, and/or privileges that are different from this offering.
+ 
+
+ 17.
+ We may need additional capital in the future, which may not be available to us on favorable terms, or at all, and may dilute your ownership of our common stock.
+ 
+
+ We have historically relied on outside financing and cash from operations to fund our operations, capital expenditures and expansion. We may require additional capital from equity or debt financing in the future to:
+ 
+
+ 13
+ 
+
+ 
+Table of Contents
+
+ 
+ 
+ 
+
+ a) fund our operations; 
+ b) respond to competitive pressures;
+ c) take advantage of strategic opportunities, including more rapid expansion of 
+ our business or the acquisition of complementary products, technologies or 
+ businesses; and
+ d) develop new products or enhancements to existing products.
+ 
+
+ We may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional financing may place limits on our financial and operating flexibility. If we raise additional funds through issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of the Company, and any new securities we issue could have rights, preferences and privileges senior to those of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges could be significantly limited.
+ 
+
+ 18.
+ We may expand through acquisitions of, or investments in, other companies or through business relationships, all of which may result in additional dilution to our stockholders and consumption of resources that are necessary to sustain our business.
+ 
+
+ One of our business strategies is to acquire competing or complementary services, technologies or businesses. In connection with one or more of those transactions, we may:
+ 
+
+ 
+ 
+ 
+
+ a)
+ issue additional equity securities that would dilute our stockholders;
+ b)
+ use cash that we may need in the future to operate our business;
+ c)
+ incur debt on terms unfavorable to us or that we are unable to repay;
+ d)
+ incur large charges or substantial liabilities;
+ e)
+ encounter difficulties retaining key employees of the acquired company or integrating diverse business cultures;
+ f)
+ become subject to adverse tax consequences, substantial depreciation or deferred compensation charges; and
+ g)
+ encounter unfavorable reactions from investment banking market analysts who disapprove of our completed acquisitions.
+ 
+
+ 
+
+ 
+
+ 14
+ 
+
+ 
+
+ Table of Contents
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001653876_momentous_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001653876_momentous_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9a274d0bdf11e53f2ab528228e790ccf9bf972dd
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+++ b/parsed_sections/prospectus_summary/2015/CIK0001653876_momentous_prospectus_summary.txt
@@ -0,0 +1 @@
+The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The Date of This Prospectus is: December 15, 2015 Table of Contents Page Summary 4
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2015/CIK0001654915_infinity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001654915_infinity_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d7d3cd6ab93bd593072e9163733baa5df77227b5
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The Company Corporate Structure The Company was incorporated in the State of Nevada on August 6, 2014. We are a development stage company with a principal business of developing, promoting and executing themed tour packages for travel destinations in Canada, Asia and the United States. Since the date of inception (August 6, 2014), our activities have been primarily development activities, i.e., forming the Company; acquiring our subsidiary, Infinity (Int l) Travel Holdings Limited, a Hong Kong corporation; and implementing our business plan. Our business is conducted primarily through our wholly-owned subsidiary, Infinity (Int l) Travel Holdings Limited, a Hong Kong corporation. Infinity (Int l) Travel Holdings Limited, a Hong Kong corporation, was incorporated in Hong Kong on July 18, 2014. Its operations are based in Hong Kong. On December 22, 2014, the Company and Infinity (Int l) Travel Holdings Limited entered into an Investment Agreement, effective March 20, 2015, whereby the Company purchased and acquired 500,000 shares of capital stock of Infinity Travel Holdings Limited for a purchase price of $98,323.52, which are all of the issued and outstanding shares of that capital stock. As a result, Infinity (Int l) Travel Holdings Limited became a wholly-owned subsidiary of the Company ( the Subsidiary , our Subsidiary ). A copy of that Investment Agreement is attached as Exhibit 2.1 to that registration statement of which this prospectus is a part. We desire to become one of the largest internationally themed tour package providers, initially focusing on travel destinations in Canada, Asia and the United States. We have developed tour packages for destinations in Canada. These tour packages will primarily be sold to individuals and businesses in the Greater China area, such as Hong Kong, Taiwan, Macau and Zhuhai. We anticipate that ten to fifteen themed tour packages will be sold for destinations in Canada, however, to-date, no tour packages have been sold. Also, we have developed tour packages for destinations in Asia, including, Hong Kong, mainland China, Thailand and Malaysia. These tour packages will primarily be sold to individuals and businesses in Canada and the United States. Fifteen themed tour packages have been developed for destinations in Asia, however, to-date, no tour packages have been sold. Upon receipt of additional funding, we will begin to develop tour packages for destinations in the United States. At this time, we do not have a definite date when such funding will be received. Our Subsidiary, whose operations are based in Hong Kong, researches and develops our themed tour packages; such themes include, but are not limited to, golf, ski and winter sports, wine and vineyard, fishing and lake, wellness and spa, eco-tourism and outdoor wilderness vacation tours for travel destinations in Canada, Asia and the United States (the Tour Packages ). We anticipate that we will receive revenue from the sale of the Tour Packages. The Tour Packages will be sold through our online platform www.myinfinitytravel.com, which is operated by our Subsidiary. The charge for each tour package will vary, depending on a number of factors, including the type (theme) of the tour package, the number of days that the customer will be touring and the destination of the tour. Additionally, the costs of the Tour Packages are determined by analyzing the costs of hotels, tour guide fees, ground transportation fees and online marketing expenses. For example, bird watching and national park eco-tours in Western Canada will range from $2,322 to $2,774. While wine and vineyard tours in Western Canada will range from $3,400 to $4,000 and wellness and spa packages in Western Canada will range from $2,650 to $3,100. As of the date of this prospectus, we have not sold any Tour Packages, nor have we generated any revenue from operations. Our operations to date have been devoted primarily to start-up and business development activities. While our president, treasurer, and member of our board of directors, Ta-Chih Kuo, has performed start-up activities, such as formation of the Company and implementing our business plan, our Subsidiary has commenced operations regarding themed tour activities, which include the following: Research global trends and demands relating to themed based tour packages Develop themed based tour packages such as golf, ski and winter sports, wine and vineyard, fishing and lake, wellness and spa and outdoor wilderness vacation tours in Canada and Asia Research and develop market and sales networks in Canada and Asia Develop our online selling secured platform website www.myinfinitytravel.com Develop our online marketing secured platform website www.yo-travel.com Research customer demographics and analyze our competitors CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Share (1) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock par value $0.10 100,000 $2.00 $200,000 $20.14 (1) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. Table of Contents Our Business We were incorporated in Nevada on August 6, 2014. Our principal executive office is located at 8F., No. 86, Sanguang Rd., Jhongli Dist., Taoyuan City, 320, Taiwan (Republic of China). Our telephone number is 886-34933344. Our fiscal year ends on December 31. As of the date of this prospectus, we have 632,087 shares of our $0.10 par value common stock issued and outstanding; 10,000 shares of that common stock were offered and sold to Ta-Chih Kuo at a purchase price of $0.10 per share, and the other 622,087 shares of that common stock were offered and sold at a purchase price of $0.20 per share. We are registering for sale at a purchase price of $2.00 per share 100,000 shares of our common stock pursuant to the Securities Act of 1933. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months. The financial statements included in the registration statement of which this prospectus is a part do not include any adjustments that might result from the uncertainty about our ability to continue in business. As of June 30, 2015, we had $7,329 in current assets and $43,806 in current liabilities. Accordingly, our negative working capital position as of June 30, 2015 was ($36,477). Currently, we have enough cash to finance our operations for approximately 3 months. We estimate that we need approximately $200,000 to support our operations during the next twelve months. This amount includes (i) $18,750 for costs related to this offering and (ii) 18,750, which is our estimated cost necessary to comply with our reporting requirements during the next twelve months. We believe the maximum proceeds from this offering will be sufficient to meet our cash requirements for the next twelve months. Our cash shortfall will be $50,000, $100,000 and $150,000, respectively, if we sell 75%, 50% and 25% of the maximum offering. We plan to meet any such shortfall through revenue from operations, private placements of our capital stock, and loans from Ta-Chih Kuo, our president, treasurer and a member of the board of directors. In that regard, we have a written commitment from Mr. Kuo for a 12 month line of credit in the amount of $200,000 at no interest; a copy of that commitment is attached as Exhibit 99.1 to that registration statement of which this prospectus is a part. Presently, we have no employees. Our officers and directors are responsible for all planning, development and operational duties and will continue to do so throughout the early stages of our growth. Human resource planning will be a part of an ongoing process that will include regular evaluation of our operations. We intend to hire employees at such time as we determine it is appropriate. We can provide no assurance or guarantee on the date on which we will hire employees. Employees of our Subsidiary Our Subsidiary, currently, has 3 full-time employees. Fui Cheung is the chief executive officer and vice president of the Company. Effective March 1, 2015, our Subsidiary entered into an employment contract with Mr. Cheung, whereby Mr. Cheung will receive an annual salary of $50,000 and 125,000 shares of the Company s common stock valued at $0.20 per share, to be issued on or about February 26, 2016. The Company has undertaken to issue those 125,000 shares to Mr. Cheung. Pursuant to that employment agreement, Mr. Cheung will work 5 days, 40 hours per week. A copy of that employment contract is attached as Exhibit 10.1 to that registration statement of which this prospectus is a part. Hoi Ming Chau is the general manager and secretary of our Subsidiary. Effective October 1, 2014, our Subsidiary entered into an employment contract with Mr. Chau, whereby Mr. Chau will receive an annual salary of HKD$300,000 (approximately, $38,708.68, as of the date of this prospectus). Mr. Chau is required to work 5 days, 40 hours per week. A copy of that employment contract is attached as Exhibit 10.2 to that registration statement of which this prospectus is a part. Vian S. Cheung is the sales and marketing manager of our Subsidiary. Effective October 1, 2014, our Subsidiary entered into an employment agreement with Ms. Cheung, whereby Ms. Cheung will receive an annual salary of HKD$180,000 (approximately, $23,225.21, as of the date of this prospectus). Ms. Cheung is required to work 5 days, 40 hours per week. A copy of that employment agreement is attached as Exhibit 10.3 to that registration statement of which this prospectus is a part. At this time, our Subsidiary has no other employees. We have no present plans to be acquired by or to merge with another company, nor do our directors or shareholders have plans to enter into a change of control or similar transaction. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE COMPANY MAY NOT SELL ITS SECURITIES UNTIL THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED. PRELIMINARY PROSPECTUS Dated November _____, 2015 INFINITY (INT L) TRAVEL HOLDINGS INC. 100,000 Shares of Common Stock $2.00 per share Infinity (Int l) Travel Holdings Inc. ( our , we , us the Company) is offering on a best-efforts basis of as many as 100,000 shares of its common stock at a price of $2.00 per share. This is the initial offering of our common stock, and no public market exists for the securities being offered. The Company is offering those shares on a self-underwritten, best-efforts, basis directly by our president. There is no minimum number of shares required to be purchased by any investor. Ta-Chih Kuo, our president, treasurer and a member of our Board of Directors intends to sell those shares directly. No commission or other compensation related to the sale of those shares will be paid to Mr. Kuo or any other person. The intended methods of communication regarding the offer and sale of those shares include, without limitation, telephone and personal contact. There can be no assurance that all, or any, of the shares offered will be sold. The offering shall terminate on the earlier of (i) the date when the sale of all 100,000 shares is completed or (ii) two hundred seventy (270) days from the effective date the registration statement of which this prospectus is a part. We are a development stage, start-up company. Any investment in the shares offered herein involves significant risks. You should only purchase shares if you can afford a complete loss of your investment. We may not sell all 100,000 shares offered. There is no minimum number of shares we must sell before we can utilize the proceeds from the purchase of shares. If we do not sell all 100,000 shares within the offering period (270 days), we will close the offering and subscription funds will not be returned to subscribers. In the event we do not sell all 100,000 shares offered, the amount of money we receive from the sale of those shares which are in fact purchased, may be minimal and may not be enough to even pay the costs of this offering. Funds from this offering will be deposited in our corporate bank account in our name. As a result, if we are sued for any reason and a judgment is rendered against us, investors subscriptions could be seized in a garnishment proceeding and investors could lose their investments. Investors do not have the right to withdraw invested funds. For more information, see the sections titled PLAN OF DISTRIBUTION and USE OF PROCEEDS herein. We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act, which became law in April, 2012 and will be subject to reduced public company reporting requirements. See Jumpstart Our Business Startups Act specified herein. As defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the Exchange Act ), we are considered a shell company as we have (i) nominal assets and operations, and (ii) our assets consist solely of cash and cash equivalents. Accordingly, we are subject to additional regulatory requirements, including the inability of our shareholders to sell our shares in reliance on Rule 144 promulgated pursuant to the Securities Act of 1933, as well as additional restrictions. Accordingly, investors should consider our shares to be significantly risky and illiquid investments. Refer to the section entitled RISK FACTORS beginning on Page 5. As of the date of this prospectus, we have not sold any of our themed tour packages nor have we generated any revenue from operations. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY, THE RISK FACTORS SECTION, BEGINNING ON PAGE 5. NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Our common stock is not traded on any public market and, although we intend to apply to have the prices of our common stock quoted on the Over-The-Counter Bulletin Board ( OTCBB ) maintained by the Financial Industry Regulatory Authority ( FINRA ) when the registration statement of which this prospectus is a part is declared effective, there can be no assurance that a market maker will agree to file the necessary documents with FINRA to enable us to participate on the OTCBB. There is no assurance that any application filed by any such market maker for quotation on the OTCBB will be approved. Table of Contents Our Challenges and Risks We recommend that you consider carefully the risks discussed below and under the heading Risk Factors beginning on Page 7 of this prospectus before purchasing our common stock. If any of these risks occur, our business, prospects, financial condition, liquidity, results of operations and ability to make distributions to our shareholders could be materially and adversely affected. In that case, the trading price of our common stock could decline if our common stock is listed on any stock market and you could lose some or all of your investment. These risks include, among others, the following: PRC Legal Challenges. Under PRC laws and regulations, we are permitted to use the proceeds from this offering to fund our Subsidiary only by loans or capital contributions, subject to applicable government registration and approval requirements. We currently anticipate financing our Subsidiary by means of capital contributions. These capital contributions, as well as dividends and other payments outbound from the PRC, must be approved by the Ministry of Commerce of China, or MOFCOM, or its local counterpart, which approval usually takes approximately 60 days, but is required by applicable law to be completed within 6 months of application. The cost for obtaining such approvals and completing such registration is minimal. Under the Enterprise Income Tax Law, we may be classified as a Resident Enterprise of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders. As our operations and assets are located outside of the U.S., our shareholders may find it difficult to enforce a U.S. judgment against the assets of the Company, its directors and executive officers. If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter, which could harm our business operations, this offering and our reputation and could result in a loss of your investment in our stock, especially if such matter cannot be addressed and resolved favorably. Limited Operating History. We have a limited operating history, which makes it difficult to evaluate our future prospects and results of operations. Competition. We face considerable competition in the tourism and travel industry. We are electing to not opt out of the JOBS Act of 2012 extended accounting transition period. This may make our financial statements more difficult to compare to other companies. Pursuant to the JOBS Act of 2012, as an emerging growth company, we can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the PCAOB or the SEC. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the standard for the private company. This may make comparison of our financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible, as possible different or revised standards may be used. Emerging Growth Company: Jumpstart Startups Act The JOBS Act of 2012 is intended to reduce the regulatory burden on emerging growth companies. We meet the definition of an emerging growth company and as long as we qualify as an emerging growth company, we will, among other things: be temporarily exempted from the internal control audit requirements Section 404(b) of the Sarbanes-Oxley Act; be temporarily exempted from various existing and forthcoming executive compensation-related disclosures, for example: say-on-pay , pay-for-performance , and CEO pay ratio ; be temporarily exempted from any rules that might be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or supplemental auditor discussion and analysis reporting; be temporarily exempted from having to solicit advisory say-on-pay, say-on-frequency and say-on-golden-parachute shareholder votes regarding executive compensation pursuant to Section 14A of the Securities Exchange Act of 1934, as amended; be permitted to comply with the SEC s detailed executive compensation disclosure requirements on the same basis as a smaller reporting company; and be permitted to adopt any new or revised accounting standards using the same timeframe as private companies (if the standard applies to private companies). We will continue to be an emerging growth company until the earliest of: the last day of the fiscal year during which we have annual total gross revenues of $1 billion or more; the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities in an offering registered pursuant to the Securities Act of 1933, as amended; the date on which we issue more than $1 billion in non-convertible debt securities during a previous three-year period; or the date on which we become a large accelerated filer, which generally is a company with a public float of at least $700 million (Securities Exchange Act Rule 12b-2). Table of Contents The Offering The following is a brief summary of this offering. Please see the PLAN OF DISTRIBUTION section for a more detailed description of the terms of the offering. Number of Shares Being Offered The Company is offering as many as 100,000 shares of common stock, par value $0.10. Offering Price Per Share $2.00 Offering Period The shares are being offered for a period not to exceed two hundred seventy (270) days from the effective date of the registration statement of which this prospectus is a part. Net Proceeds to Company If 100,000 shares (100%) are sold: $200,000 If 75,000 shares (75%) are sold: $150,000 If 50,000 shares (50%) are sold: $100,000 If 25,000 shares (25%) are sold: $50,000 Use of Proceeds We intend to use the proceeds to fund our business operations. Number of Shares of our Common Stock Outstanding Before the Offering 632,087 shares Number of Shares of our Common Stock Outstanding after the Offering If 100,000 shares (100%) are sold: 732,087 shares If 75,000 shares (75%) are sold: 707,087 shares If 50,000 shares (50%) are sold: 682,087 shares If 25,000 shares (25%) are sold: 657,087 shares Offering Expenses The expenses associated with this offering total approximately $18,750 or approximately 9.4% of the gross proceeds of $200,000, if all the shares offered by us are purchased. We may not sell all 100,000 shares offered. There is no minimum number of shares we must sell before we can utilize the proceeds from the purchase of shares. If we do not sell all 100,000 shares within the offering period (270 days), we will close the offering and subscription funds will not be returned to subscribers. In the event we do not sell all 100,000 shares offered, the amount of money we receive from the sale of those shares which are, in fact, purchased may be minimal and may not be enough to even pay the costs of this offering. The offering price of the common stock has no relationship to any objective criterion of value and has been arbitrarily determined. The offering price does not have any relationship to our assets, book value, historical earnings, or net worth. We will use the proceeds from the offering to pay for accounting fees, legal and professional fees, printing and office supplies, technology development costs, personnel recruiting costs, contractors, sales and marketing, and general working capital. The Company has not presently engaged an independent stock transfer agent. We have identified several agents to facilitate the processing of stock certificates upon closing of this offering. The purchase of the common stock in this offering involves significant risks. The shares of common stock offered in this prospectus is for investment purposes only and, currently, no market for our common stock exists. Please refer to the sections herein titled RISK FACTORS and DILUTION before making an investment in our stock. Table of Contents Summary Financial Information The following table sets forth summary financial data derived from our financial statements. The accompanying notes are an integral part of those financial statements and should be read in conjunction with those financial statements, related notes and other financial information included in this prospectus. There is no trading market for our common stock. We intend to apply for participation on the Over-the-Counter Bulletin Board ( OTCBB ), and we hope that thereafter such trading market will develop. We intend to enter into an agreement with a broker-dealer registered with the Securities and Exchange Commission (the SEC ) and a member in good standing of FINRA to assist us in connection with causing the prices of our common stock to be quoted on the OTCBB. There can be no assurance that any application filed by any sponsoring marker maker for such quotation on the OTCBB will be approved. As of the date of this prospectus, we have not sold any of the Tour Packages nor have we generated any revenue from operations. August 6, 2014 (inception) through June 30, 2015 (unaudited) Revenue: $ -0- Interest Income: 1 Operating Expenses: -0- Professional General & administrative 156,716 Total operating expenses 156,716 Net Loss $ (156,927 ) Net loss per common share, basic and diluted $ (0.61 ) Weighted average number of common shares, basic and diluted, outstanding 256,994
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+PROSPECTUS SUMMARY This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: "we," "us" or "our company" refer to Pulte Acquisition Corp.; "insider shares" refer to the 2,012,500 shares of common stock held or controlled by our insiders (as defined below) prior to this offering, which include up to an aggregate of 262,500 shares of common stock subject to forfeiture by our insiders to the extent that the underwriters over-allotment option is not exercised in full or in part; "private units" refer to the 305,000 units (or 336,500 units if the over-allotment option is exercised in full) we are selling privately to our insiders (and/or their designees) upon consummation of this offering and references to "private shares" and "private warrants" refers to the shares of common stock and warrants, respectively, included within the private units; our "management" or our "management team" refer to our officers and directors; our "public shares" refer to shares of common stock which are being sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to "public stockholders" refer to the holders of our public shares, including our insiders to the extent our insiders purchase public shares, provided that their status as "public stockholders" shall exist only with respect to such public shares; our "warrants" or "public warrants" refer to the warrants which are being sold as part of the units in this offering; and our "insiders" refer to our officers, directors, and any other holder of our insider shares. Except as specifically provided otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. We are responsible for the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information, and we take no responsibility for any other information others may give to you. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. General We are a blank check company formed under the laws of the State of Delaware on July 30, 2015. We were formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as our initial business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. To date, our efforts have been limited to organizational activities as well as activities related to this offering. Our efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although we intend to focus our search on target businesses operating in the homebuilding, construction, building products, building services, and homeowner services industries. However, given the experience of some of our team members, we may elect to enter into other sectors if the right opportunity presents itself. Other sectors can include but are not be limited to the biotechnology, industrial products, industrial services, consumer products and consumer services industries. We have not selected any target business for our initial business combination, and we have not (nor has anyone on our behalf), directly or indirectly, engaged in any substantive discussions with a target business with respect to a business combination transaction with us. 1 Our Management Team We will seek to capitalize on the comprehensive experience and contacts of our executive officers in consummating an initial business combination. Charles Heinzelman, our Chairman, has over 25 years of business experience in building products, commodity chemical, office services and supplies industries and currently serves as Vice-Chairman of Carstin Brands, a leading countertop manufacturer. William J. Pulte, our Chief Executive Officer, has broad industry experience in building products and building services businesses. Mr. Pulte is a frequent guest on CNBC to discuss market conditions in the homebuilding and building products industries, and has also appeared on Fox Business Network and MSNBC. Mr. Pulte was named to Forbes 30 under 30 in 2014. Marc Urbach, our Chief Financial Officer, has over 17 years of financial services and public company experience. Our Directors also have served in the capacity of CEO, board members, principals, chief investment officers and advisors for a variety of companies and investment firms and bring a wealth of experience in identifying, negotiating with and conducting due diligence on companies for acquisition candidates. Steven Oliveira is a founding principal and Chief Investment Officer of Chardan SPAC Asset Management, a hedge fund specializing in Special Purpose Acquisition Companies (SPAC) related investments. Kerry Propper is a market leader in advising SPAC IPOs and M&As. Brian Rooney is a Board Member and Owner of the NFL s Pittsburgh Steelers and was appointed by Governor of Michigan to serve as the Deputy Director of the Department of Human Services. Joel Mounty is the President and principal of Mountco Construction and Development Corp., which he founded in 1988. Mr. Mounty has extensive experience in multi-family housing construction, acquisition and rehabilitation with an emphasis on affordable and specific needs housing. New Residential Construction & Home Improvement Market Overview According to the U.S. Census, the U.S. new residential construction market totaled $235 billion in 2014, up from $123 billion in 2011, but well below the recent peak of $481 billion in 2005. According to FannieMae, U.S. new housing starts totaled approximately 1.0 million in 2014 and are expected to increase by 20% to 1.2 million in 2016, which is still below the average of approximately 1.45 million annual new housing starts since 1959. Drivers of future activity in U.S. new residential construction include mortgage rates, mortgage credit availability, consumer confidence, housing supply, housing stock age, demographic trends, consumer preferences, and labor market strength. According to the Joint Center for Housing Studies of Harvard University (the "JCHS"), U.S. homeowner improvement expenditures totaled approximately $300 billion in 2013, down from a peak of $324 billion in 2007 but up from $281 billion in 2011. The U.S. homeowner improvement market is segmented into discretionary spending, such as kitchen and bath remodeling projects, and replacement-oriented spending, such as HVAC / plumbing service and retrofit. The JCHS expects annual growth in U.S. home improvement spending to accelerate from 2.4% in the third quarter of 2015 to 6.8% in the second quarter of 2016. Overall improvement in the U.S. residential new construction and home improvement industries has driven increased M&A activity in the U.S. building products and building services space. According to TM Capital, annual building products M&A transaction volume in the U.S. and Canada increased nearly 50% between 2009 and 2014. Acquisition Strategy Prior to the consummation of our initial business combination, we intend to employ a proactive strategy focused on companies that have demonstrated a potential for future growth or companies for which we believe we can be the catalyst to accelerating growth. Our acquisition selection process will leverage the industry experience of our executive officers, including their extensive contacts, relationships and access to acquisition opportunities, private equity and venture capital sponsor relationships as well as relationships with management teams of public and private companies, investment bankers, attorneys and accountants who we believe should provide us with a robust pipeline of business combination opportunities. We will focus on, but not limited to, the homebuilding, construction, building products, building services, and homeowner services industries, and may consider opportunities in other industries. Past performance by our management team is not a guarantee of success with respect to locating a target business to acquire. Consistent with this strategy, we have identified the below general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet any or all of these criteria and guidelines. Credible and compelling growth strategy Stable or growing margins 2 Diversified customer base Proprietary and/or value-added products/services Differentiated from competitors Sustainable competitive advantage Leading and/or defensible market position Positive industry and/or secular trends Large, fragmented sector or sub-sector with high barriers to entry Strong and experienced management team Possession of untapped value-creation opportunities Subsequent to the consummation of our initial business combination, we believe that the strengths of our management team will be valuable to any business in the homebuilding, construction, building products, building services, and homeowner services industry with which we may consummate our initial business combination, although the specific roles, if any, they may have following our initial business combination cannot be determined at this time. We will have until 24 months from the closing of this offering (or 30 months from the closing of this offering if we have executed a letter of intent or definitive agreement for an initial business combination within 24 months from the closing of this offering but have not completed the initial business combination within such 24-month period) to consummate our initial business combination. If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account, including a pro rata portion of any interest earned on the funds held in the trust account and not previously released to us for our working capital requirements or necessary to pay our taxes, and then seek to dissolve and liquidate. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public stockholders. In the event of our dissolution and liquidation, the public warrants will expire and will be worthless. We will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose, at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Any tender offer documents used in connection with a business combination will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. The initial per public share redemption or conversion price will be $10.00 per share, regardless of whether the over-allotment option is exercised. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public stockholders. Notwithstanding the foregoing, an increase in the size of the offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, or the Securities Act, could result in the per-share conversion or liquidation price decreasing by as much as $0.05. Alternatively, our insiders may purchase from us at a price of $10.00 per unit the number of private units that is necessary to maintain in the trust account an amount equal to $10.00 per share sold to the public in this offering. Pursuant to the rules of the Nasdaq Stock Market, our initial business combination must occur with one or more target businesses having an aggregate fair market value of at least 80% of the value of the trust account (excluding any deferred underwriter s fees and taxes payable on the income earned on the trust account), which we refer to as the 80% test, at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target 3 business or businesses, we will obtain an opinion from an independent investment banking firm with respect to the satisfaction of such criteria. We will also obtain a fairness opinion from an independent investment banking firm before consummating a business combination with an entity affiliated with any of our officers, directors or insiders. If we are no longer listed on Nasdaq or another national securities exchange, we will not be required to satisfy the 80% test. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns 50% or more of the outstanding voting securities of the target or otherwise owns a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% test. As more fully discussed in "Management — Conflicts of Interest," if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our officers, directors and director nominees currently have certain pre-existing fiduciary duties or contractual obligations, although not all of such fiduciary duties necessarily conflict with our search for a target business. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period until we are no longer an "emerging growth company." We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. Private Placements On September 2, 2015, Clark Kinzie Capital LLC purchased an aggregate of 2,012,500 shares of our common stock for an aggregate purchase price of $25,000, or approximately $0.01 per share. On November 16, 2015, Clark Kinzie Capital LLC transferred 1,199,933 of such shares to our officers and directors as specified in the beneficial ownership table included in this 4 prospectus at a price per share equal to the amount paid by Clark Kinzie Capital LLC. The 2,012,500 insider shares held or controlled by our insiders include an aggregate of up to 262,500 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that the insider shares will collectively be equal to 20.0% of our issued and outstanding shares after this offering (excluding the sale of the private units and assuming our insiders do not purchase units in this offering). The insider shares are identical to the shares of common stock included in the units being sold in this offering. However, our insiders have agreed (A) to vote their insider shares, private shares and any public shares acquired in or after this offering in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, net of taxes payable, divided by the number of then outstanding public shares, (C) not to convert any shares (including the insider shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), and (D) that the insider shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is not consummated. On the date of this prospectus, the insider shares will be placed into an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price of our common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and the remaining 50% of the insider shares will not be transferred, assigned, sold or released from escrow until six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we complete a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. The limited exceptions referred to above include (1) transfers among the insiders, to our officers, directors, advisors and employees, (2) transfers to an insider s affiliates or its members upon its liquidation, (3) transfers to relatives and trusts for estate planning purposes, (4) transfers by virtue of the laws of descent and distribution upon death, (5) transfers pursuant to a qualified domestic relations order, (6) private sales made at prices no greater than the price at which the securities were originally purchased or (7) transfers to us for cancellation in connection with the consummation of an initial business combination, in each case (except for clause 7) where the transferee agrees to the terms of the escrow agreement and forfeiture, as the case may be, as well as the other applicable restrictions and agreements of the holders of the insider shares. In addition, our insiders (and/or their designees) have committed to purchase an aggregate of 305,000 private units at a price of $10.00 per unit ($3,050,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our insiders have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit the number of private units (up to a maximum of 31,500 private units) that is necessary to maintain in the trust account an amount equal to $10.00 per share of common stock sold to the public in this offering. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. It is anticipated that the private units will be purchased by Charles Heinzelman, William J. Pulte, Brian Rooney, Steven Oliveira, Kerry Propper and Joel Mounty. The proceeds from the private placement of the private units will be added to the proceeds of this offering and placed in the trust account. The private units are identical to the units sold in this offering. However, the holders have agreed (A) to vote their private shares and any public shares acquired in or after this offering in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously 5 released to us for our working capital requirements or to pay our franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convert any shares (including the private shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) and (D) that the private shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is not consummated. Additionally, our insiders (and/or their designees) have agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination. We have also agreed to sell 30,000 shares of our common stock to Chardan Capital Markets, LLC (and/or its designees) for $100. Chardan Capital Markets, LLC, an underwriter of this offering and a member of the Financial Industry Regulatory Authority, or FINRA, has several interconnecting relationships with the Company, including (i) Mr. Kerry Proper is a director of the Company and the non-executive chairman of the board of Chardan Capital Markets, LLC, (ii) Mr. Steven Urbach, a founder and President of Chardan Capital Markets, LLC is the brother of Mr. Marc Urbach the CFO of the Company, (iii) Mr. Kerry Propper has a 7.4% interest in the common stock of the Company, and (iv) Mr. Kerry Propper is one of the four independent directors serving on each of the Audit Committee, and the Compensation Committee, each of which is important to the operation and direction of the Company. Therefore, upon an evaluation by the underwriters, there was a determination that Chardan Capital Markets, LLC, potentially could have a "conflict of interest" under the applicable provisions of Rule 5121(f)(5) of the Conduct Rules of FINRA. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Conduct Rule 5121(a)(2), which requires that a "qualified independent underwriter," as defined by the FINRA rules, participate in the preparation of the registration statement and exercise the usual standards of due diligence with respect to the registration statement that an underwriter would exercise on its own behalf. Maxim Group LLC is acting as the qualified independent underwriter. Maxim Group LLC, which is also acting as an underwriter to the offering, will not receive any separate consideration for acting as the qualified independent underwriter and will not be reimbursed any expenses incurred as a qualified independent underwriter. Our executive offices are located at 1 N. Saginaw St., Suite 203, Pontiac, MI 48342, and our telephone number is 313-782-3745. 6 The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled "Risk Factors" beginning on page 21 of this prospectus. Securities offered 7,000,000 Units, at $10.00 per unit, each unit consisting of one share of common stock and one-half of one warrant. Each whole warrant entitles the holder thereof to purchase one share of our common stock. We will not issue fractional warrants. As a result, when the units are divided into their component securities, you will receive one warrant for every two units that you own and any interests in a fractional warrant will be canceled. Each whole warrant is exercisable at a price of $11.50 per share of common stock, subject to adjustment as described in this prospectus. Proposed Nasdaq symbols We anticipate the units, and the shares of common stock and warrants once they begin separate trading, will be listed on Nasdaq under the symbols "PLTEU," "PLTE" and "PLTEW," respectively. Trading commencement and separate trading of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. Each of the common stock and warrants may trade separately on the 90th day after the date of this prospectus unless Chardan Capital Markets, LLC determines that an earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the securities markets and small capitalization companies in general, and the trading pattern of, and demand for, our securities in particular). In no event will Chardan Capital Markets, LLC allow separate trading of the common stock and warrants until we file an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. Once the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and warrants. We will file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission, or the SEC, including an audited balance sheet, promptly following the closing of this offering, which is anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise of the over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information indicating if Chardan Capital Markets, LLC has allowed separate trading of the common stock and warrants prior to the 90th day after the date of this prospectus. Units: Number outstanding before this offering 0 Number outstanding after this offering and sale of private units 7,305,000(1) ____________ (1) Assumes the over-allotment option has not been exercised. 7 Shares of common stock: Number outstanding before this offering 2,012,500 shares(2) Number to be outstanding after this offering and sale of private units 9,085,000 shares(3) Warrants included as part of units: Number of private warrants to be sold as part of the private units in a private placement simultaneously with this offering 152,500 warrants(4) Number to be outstanding after this offering and sale of private units 3,652,500 warrants(4) Exercisability Each unit that we are offering consists of one share of common stock and one-half of one warrant. Each whole warrant entitles the holder thereof to purchase one share of our common stock. We will not issue fractional warrants. As a result, when the units are divided into their component securities, you will receive one warrant for every two units that you own and any interests in a fractional warrant will be canceled. Each whole warrant is exercisable at a price of $11.50 per share of common stock, subject to adjustment as described in this prospectus. Exercise Price of public warrants and private warrants $11.50 per share, subject to adjustments as described herein. (2) This number includes an aggregate of up to 262,500 insider shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters in full. (3) Assumes the over-allotment option has not been exercised and an aggregate of 262,500 insider shares have been forfeited. (4) Assumes the over-allotment option has not been exercised. 8 Exercise Period The warrants will become exercisable on the later of: the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their public warrants or private warrants on a cashless basis under the circumstances specified in the warrant agreement). We have agreed to use our best efforts to file and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed, and to register the shares of common stock that are issuable upon exercise of the public warrants and private warrants under state blue sky laws, to the extent an exemption is not available. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants and private warrants has not been declared effective by the 90th business day following the closing of our initial business combination and during any period when we shall have failed to maintain an effective registration statement, public warrant and private warrant holders may, until such time as there is an effective registration statement, exercise the public warrants and private warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act. The public and private warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants: in whole or in part at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our common stock equals or exceeds $17.50 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. 9 We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a "cashless basis." In determining whether to require all holders to exercise their warrants on a "cashless basis," our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported closing price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled "Description of Securities — Warrants — Public Stockholders Warrants" for additional information. None of the private warrants will be redeemable by us so long as they are held by the initial purchasers of the private warrants or any of their permitted transferees. Offering proceeds to be held in the trust account $70,000,000 (or $80,500,000 if the over-allotment option is exercised in full) of the net proceeds of this offering and the proceeds we will receive from the sale of the private units, or $10.00 per unit sold to the public in this offering, will be placed in a trust account in the United States at Morgan Stanley Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this prospectus. These proceeds include approximately $1,400,000 (or approximately $1,610,000 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions which will be paid to the underwriters upon the closing of a business combination. The remainder of the net proceeds of this offering will not be held in the trust account. Except as set forth below, the proceeds held in the trust account will not be released until the earlier of: (1) the completion of our initial business combination within the required time period and (2) our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period. Therefore, unless and until our initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement in connection with our initial business combination. 10 Notwithstanding the foregoing, there can be released to us from the trust account (1) any interest earned on the funds in the trust account that we need to pay our income or other tax obligations and (2) any remaining interest earned on the funds in the trust account that we need for our working capital requirements. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account of approximately $550,000; provided, however, that in order to meet our working capital needs following the consummation of this offering, if the funds not held in the trust account and interest earned on the funds held in the trust account available to us are insufficient, our insiders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender s discretion, up to $200,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit. Our stockholders have approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our initial business combination. If we do not complete a business combination, any other outstanding loans from our insiders, officers and directors or their affiliates, will be repaid only from amounts remaining outside our trust account, if any. Insider Shares On September 2, 2015, Clark Kinzie Capital LLC purchased an aggregate of 2,012,500 shares of our common stock for an aggregate purchase price of $25,000, or approximately $0.01 per share. On November 16, 2015, Clark Kinzie Capital LLC transferred 1,199,933 of such shares to our officers and directors as specified in the beneficial ownership table included in this prospectus at a price per share equal to the amount paid by Clark Kinzie Capital LLC. The 2,012,500 insider shares held or controlled by our insiders include an aggregate of up to 262,500 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that the insider shares will collectively be equal to 20.0% of our issued and outstanding shares after this offering (excluding the sale of the private units and assuming our insiders do not purchase units in this offering). The purchase price of the insider shares was determined by dividing the amount of cash contributed to the company by the number of insider shares issued. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 25% of the number of shares sold in this offering. Our insiders will collectively beneficially own approximately 22.6% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering and the underwriters do not exercise all or a portion of the over-allotment option). Up to 262,500 insider shares will be subject to forfeiture by our insiders and their designees (and/or their permitted transferees) depending on the extent to which the underwriters over-allotment option is exercised. The insider shares are identical to the shares of common stock included in the units being sold in this offering, except that: the insider shares are subject to certain transfer restrictions, as described in more detail below, and 11 our insiders, officers and directors have entered into letter agreements with us, pursuant to which they have agreed (i) to waive their conversion rights with respect to their insider shares and any public shares they purchase in connection with the completion of our initial business combination and (ii) to waive their redemption rights with respect to their insider shares if we fail to complete our initial business combination within 24 months (or 30 months, as applicable) from the closing of this offering (although they will be entitled to redemption rights with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our insiders have agreed to vote their insider shares, private shares and any public shares purchased during or after this offering in favor of our initial business combination. Transfer restrictions on insider shares Our insiders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until, with respect to 50% of the insider shares, the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price of our common stock equals or exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of our initial business combination and, with respect to the remaining 50% of the insider shares, six months after the date of the consummation of our initial business combination, or earlier in each case if, subsequent to our initial business combination, we complete a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. The insider shares will be held in escrow with Continental Stock Transfer & Trust Company during the period in which they are subject to the transfer restrictions described above. Private units Our insiders (and/or their designees) have committed, pursuant to a written agreement, to purchase an aggregate of 305,000 private units (or 336,500 if the over-allotment option is exercised in full) at a price of $10.00 per unit ($3,050,000, or $3,365,000 if the over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the private units will be added to the proceeds from this offering to pay for the expenses of this offering and to be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), the proceeds of the sale of the private units will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private units will be worthless. Limited payments to insiders There will be no fees, reimbursements or other cash payments paid to our insiders or any of the members of our management team prior to, or for any services they render in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is) other than: repayment at the closing of this offering of a non-interest bearing loans and advances in an aggregate amount of $675,000 made by our insiders; 12 payment of $7,500 per month to Pulte Capital Partners LLC, a company owned by William J. Pulte, our Chief Executive Officer and a director, for office space and related services, subject to deferral (other than the $3,000 per month payable to our Chief Executive Officer) as described herein; reimbursement of out-of-pocket expenses incurred by insiders, officers, directors or any of its or their affiliates in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations; and repayment of loans which may be made by our insiders, officers, directors or any of its or their affiliates to finance transaction costs in connection with an initial business combination, the terms of which have not been determined. In exchange for acting as our Chief Financial Officer, our Chief Financial Officer will be paid $3,000 per month out of the $7,500 per month administrative fee described above. Our Chief Financial Officer will prepare our quarterly and annual financial statements, will assist in the preparation and filing of periodic and current reports with the SEC, and assist in the performance of due diligence on potential target businesses. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account that may be released to us, such expenses would not be reimbursed by us unless we consummate an initial business combination. We have no policy which prohibits our insiders or any member of our management team from negotiating the reimbursement of such expenses by a target business. Our audit committee will review and approve all reimbursements and payments made to any insider or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved by our board of directors, with any interested director abstaining from such review and approval. Potential revisions to agreements with insiders We could seek to amend certain agreements made by our management team disclosed in this prospectus without the approval of stockholders, although we have no intention to do so. For example, restrictions on our executives relating to the voting of securities owned by them, the agreement of our management team to remain with us until the closing of a business combination, the obligation of our management team to not propose certain changes to our organizational documents or the obligation of the management team and its affiliates (other than our Chief Financial Officer) to not receive any compensation in connection with a business combination could be modified without obtaining stockholder approval. Although stockholders would not be given the opportunity to redeem their shares in connection with such changes, in no event would we be able to modify the redemption or liquidation rights of our stockholders without permitting our stockholders the right to redeem their shares in connection with any such change. We will not agree to any such changes unless we believed that such changes were in the best interests of our stockholders (for example, if such a modification were necessary to complete a business combination). 13 Stockholder approval of, or tender offer in connection with, initial business combination In connection with any proposed initial business combination, we will either (1) seek stockholder approval of such initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares into the right to receive cash from the trust account, regardless of whether they vote for or against the proposed business combination; or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. If we provide stockholders with the opportunity to sell their shares to us by means of a tender offer, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. If we seek stockholder approval of our initial business combination we will consummate the business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In addition, we will not consummate our initial business combination if public stockholders exercise conversion rights in an amount that would cause our net tangible assets to be less than $5,000,001 (so that this offering is not subject to Rule 419 promulgated under the Securities Act) or if we do not satisfy any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration needed to satisfy cash conditions pursuant to the terms of the proposed business combination exceeds the aggregate amount of cash available to us (including any cash we may obtain from financing from third parties or our insiders, officers, directors or their affiliates, which may not be available on terms acceptable to us or at all), we will not complete the business combination (as we may be required to have a lesser number of shares converted). As a result, we may not be able to locate another suitable target within the applicable time period, if at all. However, if we seek stockholder approval of a business combination and if a significant number of public stockholders properly seek to convert their public shares in connection with a proposed business combination, we or our insiders, officers, directors or their affiliates could purchase some or all of such shares in the open market or in private transactions in order to seek to satisfy the cash conditions. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. No funds from the trust account can be released from the trust account prior to the consummation of a business combination to make such purchases (although such purchases could be made using funds available to us after the closing of a business combination). We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; 14 however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Notwithstanding the foregoing, we or our insiders, officers, directors and their affiliates will not make purchases of shares of common stock if the purchases would violate Sections 9(a)(2) or 10(b) of the Exchange Act, Rule 10b-18 under the Exchange Act, or Regulation M, which are rules that prohibit manipulation of a company s stock. If purchases cannot be made without violating applicable law, no such purchases will be made. Our insiders have agreed (A) to vote their insider shares, private shares and any public shares acquired in or after this offering in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convert any shares (including the insider shares and private shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) within 24 months from the closing of this offering (or 30 months, as applicable) and (D) that the insider shares and private shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is not consummated. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Pursuant to Nasdaq requirements, our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the value of the trust account (excluding any deferred underwriter s fees and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If we are no longer listed on Nasdaq or another national securities exchange, we will not be required to satisfy the 80% test. 15 If our board is not able to independently determine the fair market value of the target business or businesses, we may obtain an opinion from an independent investment banking or accounting firm as to the fair market value of the target business. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% test, provided that in the event that the business combination involves more than one target business, the 80% test will be based on the aggregate value of all of the target businesses. Conversion rights In connection with a business combination, public stockholders will have the right to convert their shares into an amount equal to (1) the number of public shares being converted by such public holder divided by the total number of public shares multiplied by (2) the amount then in the trust account (initially $10.00 per share), which includes the deferred underwriting commission, plus a pro rata portion of any interest earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes. At any meeting called to approve an initial business combination, public stockholders may elect to convert their share regardless of whether or not they vote to approve the business combination. As described above under "— Stockholder approval of, or tender offer in connection with, initial business combination —," we will consummate our initial business combination only if public stockholders do not exercise conversion rights in an amount that would cause our net tangible assets to be less than $5,000,001 (so that this offering is not subject to Rule 419 promulgated under the Securities Act). As a result, if stockholders owning approximately 93.5% (or approximately 94.4% if the over-allotment option is exercised in full) or more of the shares of common stock sold in this offering exercise conversion rights, the business combination will not be consummated. However, the actual percentages will only be able to be determined once a target business is located and we can assess all of the assets and liabilities of the combined company upon consummation of the proposed business combination (which would include the deferred underwriting discounts and commissions payable to Chardan Capital Markets, LLC in an amount equal to 2.0% of the total gross proceeds raised in the offering as described elsewhere in this prospectus, any out-of-pocket expenses incurred by our insiders, officers, directors or their affiliates in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations that have not been repaid at that time, as well as any other liabilities of ours and the liabilities of the target business). As a result, the actual percentages of shares that can be converted may be significantly lower than our estimates. In addition, in order to satisfy any greater net tangible asset or cash condition which may be contained in the agreement relating to our initial business combination, we may not be able to consummate a business combination unless the number of shares of common stock seeking conversion rights is significantly less than the 93.5% (or 94.4% if the over-allotment option is exercised in full) indicated above. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. 16 Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or hers, or any other person with whom he or she is acting in concert or as a "group" (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the shares of common stock sold in this offering without our prior written consent. We believe this restriction will prevent an individual stockholder or "group" from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase its shares at a significant premium to the then current market price. By not allowing a stockholder to convert more than 20% of the shares of common stock sold in this offering, we believe we have limited the ability of a small group of stockholders to unreasonably attempt to block a transaction which is favored by our other public stockholders. We may require public stockholders seeking to convert their shares in connection with a stockholder vote on a business combination, whether they are a record holder or hold their shares in "street name," to either tender their certificates to our transfer agent or to deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option, at least two business days prior to the vote on the initial business combination (a tender of shares is always required in connection with a tender offer). The requirement for physical or electronic delivery prior to the meeting ensures that a holder s election to convert his or her shares is irrevocable once the business combination is approved. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. However, this fee would be incurred regardless of whether or not we require holders to deliver their shares prior to the vote on the business combination in order to exercise conversion rights. This is because a holder would need to deliver shares to exercise conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders to deliver their shares prior to the vote on the proposed business combination and the proposed business combination is not consummated, this may result in an increased cost to stockholders. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their conversion rights as described above under "— Conversion rights," to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or targets or owners of the target or targets of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. 17 Liquidation if no business combination If we are unable to complete our initial business combination within 24 months from the closing of this offering (or 30 months from the closing of this offering if we have executed a letter of intent or definitive agreement for a business combination within 24 months from the closing of this offering but have not completed such business combination with the 24-month period), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the trust account which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining holders of common stock and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. If we execute a letter of intent or definitive agreement for our initial business combination within 24 months and we are unable to consummate that transaction for any reason, we would be free to consummate another business combination so long as we complete such transaction within 30 months from the closing of this offering. In connection with our redemption of 100% of our outstanding public shares, each holder will receive an amount equal to (1) the number of public shares being redeemed by such public holder divided by the total number of public shares multiplied by (2) the amount then in the trust account (initially $10.00 per share), which includes the deferred underwriting commission, plus a pro rata portion of any interest earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes (subject in each case to our obligations under Delaware law to provide for claims of creditors). Holders of warrants will receive no proceeds in connection with the liquidation with respect to such warrants, which will expire worthless. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of our stockholders. We may not have funds sufficient to pay or provide for all creditors claims. Although we will seek to have all third parties (including any vendors or other entities we engage after this offering) and any prospective target businesses enter into valid and enforceable agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. There is also no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the trust account for monies owed them. In addition, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. Therefore, the actual per-share redemption price may be less than $10.00. The holders of the insider shares and private units will not participate in any redemption with respect to their insider shares or private units. 18 We will pay the costs of any liquidation following the redemptions from our remaining assets outside of the trust account. If such funds are insufficient, our insiders have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and have agreed not to seek repayment for such expenses. The underwriters have agreed to waive their rights to the deferred underwriting commissions held in the trust account in the event we do not consummate a business combination within 24 months from the closing of this offering (or 30 months, as applicable) and in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see "Proposed Business — Comparison to offerings of blank check companies subject to Rule 419." You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 21 of this prospectus. 19
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+PRELIMINARY PROSPECTUS British Cambridge, INC. 76,000,000 SHARES OF COMMON STOCK $0.0001 PAR VALUE PER SHARE Prior to this Offering, no public market has existed for the common stock of British Cambridge, Inc. Upon completion of this Offering, we will attempt to have the shares quoted on the OTCQB operated by OTC Markets Group, Inc. There is no assurance that the Shares will ever be quoted on the OTCQB. To be quoted on the OTCQB, a market maker must apply to make a market in our common stock. As of the date of this Prospectus, we have not made any arrangement with any market makers to quote our shares. In this public offering we, "British Cambridge, Inc." are offering 40,000,000 shares of our common stock and our selling shareholders are offering 36,000,000 shares of our common stock. We will not receive any of the proceeds from the sale of shares by the selling shareholders. The offering is being made on a self-underwritten, "best efforts" basis. There is no minimum number of shares required to be purchased by each investor. The shares offered by the Company will be sold on our behalf by our President, Hatadi Shapiro Supaat. Mr. Supaat is deemed to be an underwriter of this offering. Our selling shareholders are also deemed to be underwriters in this offering. Mr. Supaat will not receive any commissions or proceeds for selling the shares on our behalf. All of the shares being registered for sale by the Company and the selling shareholders will be sold at a fixed price of $1.00 per share for the duration of the Offering. Assuming all of the 40,000,000 shares being offered by the Company are sold, the Company will receive $40,000,000 in gross proceeds. Assuming 30,000,000 shares (75%) being offered by the Company are sold, the Company will receive $30,000,000 in gross proceeds. Assuming 20,000,000 shares (50%) being offered by the Company are sold, the Company will receive $20,000,000 in gross proceeds. Assuming 10,000,000 shares (25%) being offered by the Company are sold, the Company will receive $10,000,000 in gross proceeds. There is no minimum amount we are required to raise from the shares being offered by the Company and any funds received will be immediately available to us. There is no guarantee that we will sell any of the securities being offered in this offering. Additionally, there is no guarantee that this Offering will successfully raise enough funds to institute our company s business plan. Additionally, there is no guarantee that a public market will ever develop and you may be unable to sell your shares. This primary offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this Prospectus, unless extended by our directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY COMPANY PUBLIC COMMISSIONS THE COMPANY Per Share $ 1.00 Not applicable $ 1.00 Minimum Purchase None Not applicable Not applicable Total (40,000,000 shares) $ 40,000,000.00 Not applicable $ 40,000,000.00 SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY SELLING SHAREHOLDERS PUBLIC COMMISSIONS THE COMPANY Per Share $ 1.00 Not applicable $ 1.00 Minimum Purchase None Not applicable Not applicable Total (36,000,000 shares) $ 36,000,000.00 Not applicable $ Not applicable Currently, Mr. Supaat owns approximately 92.42% of the voting power of our outstanding capital stock. After the offering, assuming all of his personal shares offered for sale herein are sold and those shares being offered on behalf of the company are sold, Mr. Supaat will hold or have the ability to control approximately 80.89% of the voting power of our outstanding capital stock. *Hatadi Shapiro Supaat will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Supaat s interest in selling shares for his own account and in selling shares on the Company s behalf. Regarding the sale of Mr. Supaat s shares, they will be sold at a fixed price of $1.00 for the duration of the offering. Please note that at this time Mr. Supaat intends to sell the Company s shares prior to selling his own shares, although he is under no obligation to do so. Mr. Supaat will decide whether shares are being sold by the Company or on his own behalf. If all the shares are not sold in the company s offering, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering, which the Company estimates at $65,000. The proceeds from the sale of the securities will be placed directly into the Company s account; any investor who purchases shares will have no assurance that any monies, beside their own, will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. All expenses incurred in this offering are being paid for by the Company s Officers and Directors. There has been no public trading market for the common stock of British Cambridge, Inc. We and our executive team, directors, and any affiliates, once we are reporting, do not have any intentions for us to be used as a vehicle for a private party to acquire us or to purchase us in an effort to take their own Company public in the sense that they would become SEC Reporting. It should be noted that our company is currently a shell company. We have performed limited business operations and have generated no revenue to date. We do not believe that we are a blank check company. We have a bona fide business plan and the rights to an online education platform as described herein. While we do not intend to and have no plans to be acquired or merge with any unidentified companies we do have plans to make acquisitions on our own behalf, if financially feasible, with unidentified companies in the field of education to build up our own Company. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, which became law in April 2012 and will be subject to reduced public company reporting requirements. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS BEGINNING ON PAGE 5. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby that is different from the information included in this Prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is December 22, 2015 - 1 - The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS PART I PROSPECTUS PAGE PROSPECTUS SUMMARY 2
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: "we," "us," "company" or "our company" are to Dundon Capital Acquisition Corporation; "public shares" are to shares of our common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market), including the shares of common stock sold as part of the units purchased by DDFS Partnership LP in this offering; "public stockholders" are to the holders of our public shares, including our initial stockholders and members of our management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder's and member of our management team's status as a "public stockholder" shall only exist with respect to such public shares; "management" or our "management team" are to our executive officers and directors; "sponsor" are to DCAC Sponsor LLC, a Delaware limited liability company; "founder shares" refer to shares of our common stock initially purchased by our sponsor in a private placement prior to this offering; "private placement warrants" are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; and "initial stockholders" are to holders of our founder shares prior to this offering. Unless we tell you otherwise, the information in this prospectus assumes that the underwriter will not exercise its over-allotment option. GENERAL We are a newly organized blank check company incorporated on October 22, 2015 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. While we may pursue an acquisition opportunity in any business industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and manage a business that can benefit from our operational expertise, as members of our management team have done in diverse sectors, including but not limited to financial and business services, technology, and media and entertainment. We believe that our management team is well positioned to identify suitable acquisition opportunities in the marketplace and that our contacts and transaction sources, ranging from owners and directors of private and public companies, private equity funds, investment bankers, lenders, attorneys, accountants and other trusted advisors across various sectors, will allow us to generate attractive acquisition opportunities. Our team is led by Thomas G. Dundon, our Chairman, Chief Executive Officer and President, who has more than 20 years of experience as an entrepreneur, operator and investor. Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Dundon Capital Partners LLC is the managing member of our sponsor and was founded by Thomas G. Dundon, our Chairman, Chief Executive Officer and President in 2015. Prior to forming Dundon Capital Partners LLC, Mr. Dundon was one of the founders, Chairman and Chief Executive Officer of Santander Consumer USA Holdings, Inc., which we refer to throughout this prospectus as SCUSA. Mr. Dundon stepped down as Chairman and Chief Executive Officer of SCUSA in July 2015. The predecessor to SCUSA was founded by a group of entrepreneurs within the auto industry, including our Chairman, CEO & President who saw a need in the industry for a technology-driven, non-captive finance company. The group led SCUSA through several changes in ownership, which enabled the company to attract the right strategic partners to develop the business and fund its successful growth, culminating with its IPO in 2014. From December 2006 to July 2015, Mr. Dundon served as the Chief Executive Officer and as President from May 2005 to November 2013. Under Mr. Dundon's leadership, SCUSA grew successfully and reached several key milestones: Leading independent auto finance with as many as 17,000 dealers and cumulative earnings of more than $4.6 billion since December 2005; Led over $34.0 billion in acquisitions; Developed a strategic partnership with Chrysler as a preferred financing provider for all of Chrysler's retail consumers; Produced consistent growth with assets increasing from $2.0 billion as of December 2005 to over $36.0 billion as of June 30, 2015 (and $49.2 billion in total assets under management); Was profitable in each of the past ten years, delivering an average return on assets of 3.7% from 2010 to 2014 and a return on total common equity of more than 24% in each of those years; and Successfully completed its initial public listing on the New York Stock Exchange at a valuation of $8.3 billion in 2014. In December 2013, Mr. Dundon was appointed Chairman of the Board of SCUSA and he continues to serve as a Director. In addition to his role at SCUSA, Mr. Dundon has been an active investor and manager of, Topgolf International, Inc., a sports entertainment brand headquartered in Dallas, Texas (hereafter referred to as TopGolf). Mr. Dundon first became involved in TopGolf as an investor in January 2011. At the time of his investment, the company had only five locations. Today, facilitated by Mr. Dundon's operational expertise and oversight, TopGolf has grown to 20 locations across nine states, with substantial incremental growth initiatives under way. Mr. Dundon serves as Co-Chairman of the Board of TopGolf. In addition to his operational experience, Mr. Dundon has demonstrated a strong investment capability across a range of diversified industries, including such companies as OTO Development, a hotel management company, where he serves as a Director; GreenSky, a specialty finance company; along with several other real estate and energy investments. Mr. Dundon seeks niche opportunities in markets where he believes his knowledge, insight and experience offer an advantage in assessing and cultivating new investment opportunities. In addition to Mr. Dundon, we are led by John Zutter, who serves as our Chief Financial Officer and Secretary and is a director nominee. Mr. Zutter is also a Partner at Dundon Capital Partners LLC, our sponsor's managing member. Prior to his current role, Mr. Zutter served as SCUSA's Executive Vice President of Corporate Finance where he was responsible for all strategic and capital markets transactions. Prior to joining SCUSA, Mr. Zutter spent over 8 years with J.P. Morgan Securities LLC in the Financial Institutions Investment Banking group. Dundon Capital Acquisition Corporation (Exact name of registrant as specified in its charter) Table of Contents Our team, led by Thomas G. Dundon and including John Zutter, has in the aggregate over three decades of combined operational, financial, investment and transactional experience involving a diverse group of businesses, and we intend to focus on industries or sectors offering acquisition opportunities that can benefit from our expertise. Messrs. Dundon and Zutter possess complementary skills and experience encompassing all aspects of the investment process, including sourcing, due diligence, valuation, structuring, financing, negotiation, execution, strategy development, operations management and investment realization. Our management team's objective is to generate attractive investment returns to create value for our stockholders by applying our strategy of identifying attractive acquisition opportunities and capitalizing on the ability of our management team to acquire and manage a business that can benefit from our management expertise. We expect that our management team, including Mr. Dundon, will continue to be involved in our business following consummation of our initial business combination. Our management team will assess the skills, qualifications and abilities of the management team of each potential business combination target. The level and length of our existing management's continued active participation in our post-acquisition business will depend on the particular needs of the business acquired. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Our acquisition and value creation strategy will be to identify, acquire and, after our initial business combination, to build a company in an industry or sector that complements the experience of our management team and can benefit from our operational expertise. Our acquisition selection process will leverage our team's network of potential transaction sources, ranging from owners and directors of private and public companies, private equity funds, investment bankers, lenders, attorneys, accountants and other trusted advisors across various sectors. In addition, we intend to utilize the networks and industry experience of Mr. Dundon and Dundon Capital Partners LLC in seeking an initial business combination. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships that we believe will serve as a useful source of acquisition opportunities. This network has been developed through our management team's combined history of over three decades of business experience. We expect this network will provide our management team with a robust and consistent flow of acquisition opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Upon completion of this offering, members of our management team will communicate with their networks of relationships to articulate the parameters for our search for a target company and a potential business combination and begin the process of pursuing and reviewing potentially interesting leads. Despite the operating and investment experience of our management team, our management team has no prior experience with blank check companies. Any past experience of our management team or sponsor is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. ACQUISITION CRITERIA Consistent with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies that we believe: have a defensible core business, sustainable revenues, strong competitive market position and established customer relationships; are undergoing change in capital structure, strategy, operations or growth; Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 47-5394717 (I.R.S. Employer Identification Number) 2100 Ross Avenue, Suite 800 Dallas, Texas 75201 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents can benefit from our operational and strategic approach, capital access, relationships and experience; offer a unique value proposition with transformational potential that can be substantiated during our detailed due diligence process; have reached a transition point in their lifecycle presenting an opportunity for transformation; offer opportunities to create investment platforms for consolidation or growth; or are in, but not limited to, the technology-enabled financial and business services sectors and can utilize the extensive networks and insights we have built in those sectors. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. ACQUISITION PROCESS In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent ownership, management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We will also utilize our operational and capital planning experience. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, that our initial business combination is fair to our company from a financial point of view. Members of our management team may directly or indirectly own our common stock and warrants following this offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. We currently do not have any specific business combination under consideration. Our officers and directors have neither individually identified or substantively considered a target business nor have they had any substantive discussions regarding possible target businesses among themselves or with our underwriter or other advisors. Certain members of our management team are employed by certain affiliates of our sponsor. Our sponsor is continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction for the company. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with us and will not consider a business combination with any company that has already been identified to our sponsor as an acquisition candidate. Additionally, we have not, nor has anyone on our behalf, taken any substantive measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition candidate. Thomas G. Dundon Chairman, Chief Executive Officer and President Dundon Capital Acquisition Corporation 2100 Ross Avenue, Suite 800 Dallas, Texas 75201 Telephone: (214) 329-9939 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Certain of our officers and directors presently have, and any of them in the future may have additional fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then- current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering (or 30 months, as applicable). INITIAL BUSINESS COMBINATION NASDAQ rules provide that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or a qualified independent accounting firm with respect to the satisfaction of such criteria. If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire substantially all of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than substantially all of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction Copies to: Matthew M. Guest Jacob A. Kling Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 Facsimile: (212) 403-2000 Gregg A. Noel Jonathan B. Ko Michael J. Zeidel Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 Telephone: (213) 687-5000 Facsimile: (213) 687-5600 Table of Contents company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business combination, unless we are not the surviving entity in such business combination. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. Our executive offices are located at 2100 Ross Avenue, Suite 800, Dallas, Texas 75201 and our telephone number is (214) 329-9939. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of each class of security being registered Amount being registered Proposed maximum offering price per security(1) Proposed maximum aggregate offering price(1) Amount of registration fee Units, each consisting of one share of common stock, $.0001 par value, and one warrant(2) 46,000,000 Units $10.00 $460,000,000 $46,322.00 Shares of common stock included as part of the units(3) 46,000,000 Shares (4) Warrants included as part of the units(3) 46,000,000 Warrants (4) Total $460,000,000 $46,322.00 (1)Estimated solely for the purpose of calculating the registration fee. (2)Includes 6,000,000 units, consisting of 6,000,000 shares of common stock and 6,000,000 warrants, which may be issued upon exercise of a 45-day option granted to the underwriter to cover over-allotments, if any. (3)Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (4)No fee pursuant to Rule 457(g). The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The offering In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled "Risk Factors" beginning on page 27 of this prospectus. Securities offered 40,000,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one warrant to purchase one-half of one share of common stock. Proposed NASDAQ symbols Units: "DCAU" Common Stock: "DCAS" Warrants: "DCAW" Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless UBS Securities LLC informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and warrants. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriter's over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriter's over-allotment option. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 9, 2015 (1)Assumes no exercise of the underwriter's over-allotment option and the forfeiture by our sponsor of 1,500,000 founder shares. (2)This number includes up to 1,500,000 shares that are subject to forfeiture by our sponsor depending on the extent to which the underwriter's over-allotment option is exercised. Exercisability Each warrant offered in this offering is exercisable to purchase one-half of one share of our common stock. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued. We structured each warrant to be exercisable for one-half of one share of our common stock, as compared to warrants issued by some other similar blank check companies which are exercisable for one whole share, in order to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Exercise price $5.75 per half share ($11.50 per whole share), subject to adjustments as described herein. Warrants may be exercised only for a whole number of shares of common stock. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). DUNDON CAPITAL ACQUISITION CORPORATION $400,000,000 40,000,000 Units Table of Contents We are not registering the shares of common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than thirty (30) days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed; provided, that if our common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days' prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish Dundon Capital Acquisition Corporation is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriter a 45-day option to purchase up to an additional 6,000,000 units to cover over-allotments, if any. We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable and working capital released to us) divided by the number of then outstanding shares of common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our business combination within 24 months from the closing of this offering (or 30 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering but have not completed the initial business combination within such 24-month period), we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $80,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable and working capital released to us) divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Prior to this offering, there has been no public market for our units, common stock or warrants. We intend to apply to list our units on the NASDAQ Capital Market, or NASDAQ, under the symbol "DCAU" on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on NASDAQ. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless UBS Securities LLC informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the common stock and warrants will be listed on NASDAQ under the symbols "DCAS" and "DCAW", respectively. Our sponsor, DCAC Sponsor LLC, which we refer to as our sponsor throughout this prospectus, has committed to purchase an aggregate of 17,005,000 warrants (or 18,805,000 warrants if the over-allotment option is exercised in full) at a price of $0.50 per warrant ($8,502,500 in the aggregate, or $9,402,500 if the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Each private placement warrant is exercisable to purchase one-half of one share of our common stock at $5.75 per half share. We are an "emerging growth company" under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 27 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. For purposes of the underwriting discounts and commissions on the units to be sold in this offering, the following table does not include 1,650,000 units being sold in this offering to DDFS Partnership LP, an affiliate of our sponsor at a price equal to the public offering price of $10.00 per unit. The underwriter will not receive any underwriting discounts or commissions on these units, resulting in proceeds to us of $16,500,000. Per unit Total Public offering price $ 10.00 $ 400,000,000 Underwriting discounts and commissions(1) $ 0.40 $ 15,340,000 Proceeds, before expenses, to us $ 9.60 $ 384,660,000 (1)Includes $0.25 per unit, or approximately $9,587,500 (or up to approximately $11,087,500 if the underwriter's over-allotment option is exercised in full) in the aggregate payable to the underwriter for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriter only on completion of an initial business combination, in an amount equal to $0.25 multiplied by the number of shares of common stock sold as part of the units in this offering, as described in this prospectus. Does not include certain fees and expenses payable to the underwriter in connection with this offering. See also "Underwriting" beginning on page 140 for a description of compensation and other items of value payable to the underwriter. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $400.0 million or $460.0 million if the underwriter's over-allotment option is exercised in full ($10.00 per unit), will be deposited into a trust account located in the United States with [ ] acting as trustee. Except with respect to interest earned on the funds in the trust account that may be released to us to pay our taxes, if any, the proceeds from this offering will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of any shares properly tendered in connection with a vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) and (iii) the redemption of all of our public shares if we are unable to complete our business combination within 24 months from the closing of this offering (or 30 months, as applicable), subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. The underwriter is offering the units for sale on a firm commitment basis. The underwriter expects to deliver the units to the purchasers on or about [ ]. Book-Running Manager UBS Investment Bank , 2015 Table of Contents to exercise warrants to do so on a "cashless basis." In determining whether to require all holders to exercise their warrants on a "cashless basis," our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled "Description of Securities Warrants Public Stockholders' Warrants" for additional information. None of the private placement warrants will be redeemable by us so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees. Founder shares In October 2015, our sponsor purchased an aggregate of 11,500,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.002 per share. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20.0% of the outstanding shares upon completion of this offering. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. If we increase or decrease the size of this offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of this offering in such amount as to maintain the founder share ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering. Our initial stockholders will collectively own 11,500,000 founder shares and 1,650,000 units purchased in this offering, representing a combined 22.9% of the outstanding shares upon completion of this offering, assuming the over-allotment option is exercised in full. Up to 1,500,000 founder shares will be subject to forfeiture by our sponsor (or its permitted transferees) depending on the extent to which the underwriter's over-allotment option is exercised. Table of Contents Table of Contents The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, and our initial stockholders, officers, directors and director nominees have entered into letter agreements with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination; provided that the maximum aggregate number of shares subject to such voting agreement is capped at 38% of the company's outstanding shares of common stock, and any public shares acquired in excess of that amount will not be subject to these voting restrictions. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares (except to certain permitted transferees) until the earlier to occur of: (A) one year after the completion of our initial business combination or (B) the date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under "Principal Stockholders Transfers of Common Stock and Warrants"). Any permitted transferees would be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, mergers and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up. Private placement warrants Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 17,005,000 private placement warrants You should rely only on the information contained in this prospectus. We have not, and the underwriter has not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriter is not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. TABLE OF CONTENTS Table of Contents (or 18,805,000 if the over-allotment option is exercised in full), each exercisable to purchase one-half of one share of our common stock at $5.75 per half share, at a price of $0.50 per warrant ($8,502,500 in the aggregate or $9,402,500 in the aggregate if the over allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. Warrants may be exercised only for a whole number of shares of common stock. The purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), the proceeds of the sale of the private placement warrants will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will be non-redeemable so long as they are held by the sponsor or its permitted transferees (except as described below under "Principal Stockholders Transfers of Founder Shares and Private Placement Warrants"). If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Our sponsor, or its permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Transfer restrictions on private placement warrants The private placement warrants (including the common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination. Proceeds to be held in trust account NASDAQ rules provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Of the approximately $408.5 million in gross proceeds we will receive from this offering and the sale of the private placement warrants described in this prospectus, or approximately $469.4 million if the underwriter's over-allotment option is exercised in full, $400.0 million ($10.00 per unit), or approximately $460.0 million ($10.00 per unit) if the underwriter's over-allotment option is exercised in full, will be deposited into a segregated trust account located in the United States with [ ] acting as trustee, and $2.75 million will be used to pay expenses in connection with the closing of this offering and for working capital following this offering. The proceeds to be placed in the trust account include approximately up to $9,587,500 (or approximately up to $11,087,500 if the underwriter's over-allotment option is exercised in full) in deferred underwriting commissions. Table of Contents Except for the withdrawal of interest to pay taxes or working capital expenses, our amended and restated certificate of incorporation, as discussed below and subject to the requirements of law and stock exchange rules, provides that none of the funds held in the trust account will be released from the trust account until the earlier of (i) the completion of our initial business combination, (ii) the redemption of shares in connection with a vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) and (iii) the redemption of 100% of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable). The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except for the withdrawal of interest to pay taxes or working capital expenses. Based upon current interest rates, we expect the trust account to generate approximately $80,000 of interest annually (assuming an interest rate of 0.02% per year). Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $2,000,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering; and any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of a business combination. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. NASDAQ rules provide that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% Table of Contents requirement even if our securities are not listed on NASDAQ at the time of our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a qualified independent accounting firm. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information and (ii) clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, Table of Contents including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Our initial stockholders, directors, executive officers, advisors or their affiliates will not make any purchases if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Redemption rights for public stockholders upon completion of our initial business combination We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable and working capital released to us) divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriter. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they may acquire during or after this offering in connection with the completion of our business combination. Prior to acquiring any founder shares from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be bound by the same restriction. Manner of conducting redemptions We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek Table of Contents stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. Table of Contents If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination; provided that the maximum aggregate number of shares subject to such voting agreement is capped at 38% of the company's outstanding shares of common stock, and any public shares acquired in excess of that amount will not be subject to these voting restrictions. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. A final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed business combination is not approved and we continue to search for a target company, we will promptly return any certificates delivered, or shares. A redeeming holder's election to redeem is irrevocable on the redemption date at the time specified in the related notice. Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its Table of Contents owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our sponsor or its affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder's shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders' ability to redeem to no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders' ability to vote all of their shares (including all shares held by those stockholders that hold more than 15% of the shares sold in this offering) for or against our business combination. Table of Contents Redemption Rights in connection with proposed amendments to our certificate of incorporation Some other blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our common stock, subject to applicable provisions of the Delaware General Corporation Law ("DGCL") or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own 23.3% of our outstanding shares of common stock upon the closing of this offering if the over-allotment option is not exercised and 22.9% of our outstanding shares of common stock if the over-allotment option is exercised in full (including the 1,650,000 units purchased in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital released to us), divided by the number of then outstanding public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. Prior to acquiring any founder shares from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be bound by the same restrictions. Table of Contents Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under "Redemption rights for public stockholders upon completion of our initial business combination," to pay the underwriter its deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination We will have only 24 months from the closing of this offering to complete our initial business combination (or 30 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering but have not completed the initial business combination within such 24-month period). If we are unable to complete our initial business combination within such 24-month period (or 30-month period, as applicable), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital released to us, and less up to $80,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to Table of Contents Units: Number outstanding before this offering 0 Number outstanding after this offering 40,000,000 (1) Common stock: Number outstanding before this offering 11,500,000 (2) Number outstanding after this offering 50,000,000 (1) Warrants: Number of private placement warrants to be sold in a private placement simultaneously with this offering 17,005,000 (1) Number of warrants to be outstanding after this offering and the private placement 57,005,000 (1) Table of Contents complete our business combination within the 24-month time period (or 30-month period, as applicable). Our initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (or 30 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering but have not completed the initial business combination within such 24-month period). However, if our initial stockholders acquire public shares in or after this offering, including the shares purchased by DDFS Partnership LP in this offering they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time frame (or 30-month period, as applicable). The underwriter has agreed to waive its rights to its deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital released to us), divided by the number of then outstanding public shares. Prior to acquiring any founder shares from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be bound by the same restriction. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules). Indemnification Dundon Capital Partners LLC has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to Table of Contents below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes and working capital, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Dundon Capital Partners LLC will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Dundon Capital Partners LLC has sufficient funds to satisfy its indemnity obligations and Dundon Capital Partners LLC may not be able to satisfy those obligations. We have not asked Dundon Capital Partners LLC to reserve for such eventuality. We believe the likelihood of Dundon Capital Partners LLC having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Limited payments to insiders There will be no finder's fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of a $150,000 loan, and any additional advances, made to us by our sponsor to cover offering-related and organizational expenses; Payment of $10,000 per month to an affiliate of our sponsor for office space, utilities and secretarial support; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $0.50 per warrant at the option of the lender. Table of Contents Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Audit Committee Prior to the effectiveness of this registration statement, we will have established and will maintain an audit committee, which will be composed of [ ] and two independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled "Management Committees of the Board of Directors Audit Committee." Directed Share Program At our request, the underwriter has reserved up to [ ] units being offered by this prospectus for sale at the initial public offering price to our directors, officers, employees, business associates and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, the underwriter of this offering, through a directed share program. We do not know if these persons will choose to purchase all or any portion of these reserved units, but any purchases they do make will reduce the number of units available to the general public. Any reserved units not so purchased will be offered by the underwriter to the general public on the same terms as the other units. Participants in the directed share program who purchase more than $1,000,000 of units shall be subject to a 180-day lock-up with respect to any units sold to them pursuant to that program. Any units sold in the directed share program to our directors or executive officers shall be subject to the 180-day lock-up agreement described in "Underwriting No Sales of Similar Securities." See "Underwriting Directed Share Program." Conflicts of Interest Members of our management team may directly or indirectly own our common stock and warrants following this offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Certain of our officers and directors presently have, and any of them in the future may have additional fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors. Principal stockholders The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of our common stock included in the units offered by this prospectus, and assuming none of the individuals listed purchase units in this offering other than DDFS Partnership LP, by: each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; each of our executive officers, directors and director nominees that beneficially owns shares of our common stock; and all our executive officers and directors as a group. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this prospectus. The post-offering ownership percentage column below assumes that the underwriter do not exercise its over-allotment option, that our sponsor forfeits 1,500,000 founder shares, and that there are 50,000,000 shares of our common stock issued and outstanding after this offering. Approximate percentage of outstanding common stock(2) Number of shares beneficially owned Name and address of beneficial owner(1) Before offering After offering DCAC Sponsor LLC 11,500,000 100 % 20 % DDFS Partnership LP 0 * 3 % Thomas G. Dundon(3) 11,500,000 100 % 23 % John Zutter 0 * * All directors and executive officers as a group (2 individuals) 11,500,000 100.0 % Table of Contents which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Table of Contents Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see "Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 27 of this prospectus. (1)The "as adjusted" calculation includes $400,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants plus $2,000,000 in cash held outside the trust account, plus $23,000 of actual stockholder's equity at October 26, 2015, less $9,587,500 of deferred underwriting commissions. (2)The "as adjusted" calculation equals $400,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $2,000,000 in cash held outside the trust account, plus $23,000 of actual stockholder's equity at October 26, 2015. (3)The "as adjusted" calculation includes $9,587,500 of deferred underwriting commissions. (4)The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the "as adjusted" stockholders' equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001 and assumes DDFS Partnership LP will purchase 1,650,000 units in this offering. (5)Excludes 38,350,000 shares of common stock purchased in the public market which are subject to redemption in connection with our initial business combination. The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the value of shares of common stock that may be redeemed in connection with our initial business combination (approximately $10.00 per share). The "as adjusted" information gives effect to the sale of the units in this offering, the sale of the private placement warrants and the payment of the estimated expenses of this offering. The "as adjusted" total assets amount includes the $400.0 million held in the trust account (or $460.0 million if the underwriter's over-allotment option is exercised in full) for the benefit of our public stockholders, which amount, less deferred underwriting commissions, will be available to us only upon the completion of our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable). The "as adjusted" working capital and "as adjusted" total assets include up to $9,587,500 being held in the trust account (or up to approximately $11,087,500 if the underwriter's over-allotment option is exercised in full) representing deferred underwriting commissions. The underwriter will not be entitled to any interest accrued on the deferred underwriting discounts and commissions. If no business combination is completed within 24 months from the closing of this offering (or 30 months, as applicable), the proceeds then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital released to us, and less up to $80,000 of interest to pay dissolution expenses) will be used to fund the redemption of our public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within such 24-month time period (or 30-month period, as applicable). Risk factors An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. We are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. We are a recently formed company with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our business combination. If we fail to complete our business combination, we will never generate any operating revenues. Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable state law or the rules of NASDAQ or if we decide to hold a stockholder vote for business or other reasons. For instance, NASDAQ rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except as required by law, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the outstanding shares of our common stock do not approve of the business combination we consummate. Please see the section entitled "Proposed Business Stockholders May Not Have the Ability to Approve Our Initial Business Combination" for additional information. If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. Unlike many other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders have agreed to vote their founder shares, as well as any public shares purchased during or after this offering in favor of our initial business combination; provided that the maximum aggregate number of shares subject to such voting agreement is capped at 38% of the company's outstanding shares of common stock, and any public shares acquired in excess of that amount will not be subject to these voting restrictions. Assuming the over-allotment option is not exercised, our initial stockholders will own 23.3% of our outstanding shares of common stock immediately following the completion of this offering. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case if our initial stockholders agreed to vote their founder shares and public shares in accordance with the majority of the votes cast by our public stockholders. Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination. At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors may complete a business combination without seeking stockholder approval (unless stockholder approval is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons), public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial business combination. The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target. We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us. The ability of our stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The ability of our stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock. If our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market. The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination on terms that would produce value for our stockholders. Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination within 24 months from the closing of this offering (or 30 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering but have not completed the initial business combination within such 24-month period). Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the time frame described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation. We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate. Our sponsor, executive officers, directors and director nominees have agreed that we must complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable). We may not be able to find a suitable target business and complete our initial business combination within such time period. If we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital released to us, and less up to $80,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. If we seek stockholder approval of our initial business combination, our sponsor, directors, executive officers, advisors and their affiliates may elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public "float" of our common stock. If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase public shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, executive officers, advisors or their affiliates purchase public shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible. In addition, if such purchases are made, the public "float" of our common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. If a public stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business combination. Despite our compliance with these rules, if a public stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a public stockholder fails to comply with these procedures, its shares may not be redeemed. See "Proposed Business Business Strategy Tendering stock certificates in connection with a tender offer or redemption rights." You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss. Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion of an initial business combination, and then only in connection with those shares of our common stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of shares in connection with a vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering, subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond 24 months from the closing of this offering (or 30 months, as applicable) before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. NASDAQ may delist our securities from trading on its exchange, which could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions. We intend to apply to have our units listed on NASDAQ on or promptly after the date of this prospectus and our common stock and warrants listed on or promptly after their date of separation. Although after giving effect to this offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the NASDAQ listing standards, we cannot assure you that our securities will be, or will continue to be, listed on NASDAQ in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders' equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 round-lot holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ's initial listing requirements, which are more rigorous than NASDAQ's continued listing requirements, in order to continue to maintain the listing of our securities on NASDAQ. For instance, our stock price would generally be required to be at least $4 per share and our stockholders' equity would generally be required to be at least $5 million. We cannot assure you that we will be able to meet those initial listing requirements at that time. If NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity for our securities; a determination that our common stock is a "penny stock" which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; a limited amount of news and analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." Because we expect that our units and eventually our common stock and warrants will be listed on NASDAQ, our units, common stock and warrants will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities. You will not be entitled to protections normally afforded to investors of many other blank check companies. Since the net proceeds of this offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a "blank check" company under the United States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the successful completion of this offering and the sale of the private placement warrants and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete our business combination than do companies subject to Rule 419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see "Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a "group" of stockholders are deemed to hold in excess of 15% of our common stock, you will lose the ability to redeem all such shares in excess of 15% of our common stock. If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering, which we refer to as the "Excess Shares." However, we would not be restricting our stockholders' ability to vote all of their shares (including Excess Shares) for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss. Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, on our redemption, and our warrants will expire worthless. We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of common stock which our public stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business combination. This may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. If the net proceeds of this offering not being held in the trust account are insufficient to allow us to operate for at least the next 24 months (or 30 months, as applicable), we may be unable to complete our initial business combination. The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 24 months (or 30 months, as applicable), assuming that our initial business combination is not completed during that time. We believe that, upon the closing of this offering, the funds available to us outside of the trust account, will be sufficient to allow us to operate for at least the next 24 months (or 30 months, as applicable); however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a "no-shop" provision (a provision in letters of intent designed to keep target businesses from "shopping" around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. If the net proceeds of this offering not being held in the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our business combination. Of the net proceeds of this offering, only approximately $2,000,000 will be available to us initially outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $750,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive approximately $10.00 per share on our redemption of our public shares, and our warrants will expire worthless. Subsequent to our completion of our initial business combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment. Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. The fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value. If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share. Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party's engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors. Dundon Capital Partners LLC has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes or working capital expenses, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Dundon Capital Partners LLC will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Dundon Capital Partners LLC has sufficient funds to satisfy its indemnity obligations and, therefore, Dundon Capital Partners LLC may not be able to satisfy those obligations. We have not asked Dundon Capital Partners LLC to reserve for such eventuality. We believe the likelihood of Dundon Capital Partners LLC having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our directors may decide not to enforce the indemnification obligations of Dundon Capital Partners LLC, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders. In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share or (ii) other than due to the failure to obtain such waiver such lesser amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes or working capital expenses, and Dundon Capital Partners LLC asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against Dundon Capital Partners LLC to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against Dundon Capital Partners LLC to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share. If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages. If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent conveyance." As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced. If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced. If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our business combination. If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including: restrictions on the nature of our investments, and restrictions on the issuance of securities, each of which may make it difficult for us to complete our business combination. In addition, we may have imposed upon us burdensome requirements, including: registration as an investment company; adoption of a specific form of corporate structure; and reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. We do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations. We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations. Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares. Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder's pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of this offering (or 30th month, as applicable) in the event we do not complete our business combination and, therefore, we do not intend to comply with those procedures. Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder's pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing of this offering (or 30 months, as applicable) is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. We do not currently intend to hold an annual meeting of stockholders until after our consummation of a business combination and you will not be entitled to any of the corporate protections provided by such a meeting. We do not currently intend to hold an annual meeting of stockholders until after we consummate a business combination (unless required by NASDAQ), and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company's bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. We are not registering the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis and causing such warrants to expire worthless. We are not registering the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than thirty (30) days after the closing of our initial business combination, to use our best efforts to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. Notwithstanding the above, if our common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares under blue sky laws. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of common stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of common stock for sale under all applicable state securities laws. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2015/CIK0001658432_medico_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0001658432_medico_prospectus_summary.txt
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+Prospectus summary The following summary highlights information appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully. In particular, you should read the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the notes relating to those statements included elsewhere in this prospectus. Some of the statements in this prospectus constitute forward-looking statements. See Information Regarding Forward-Looking Statements. OVERVIEW Medico International Inc., a Nevada corporation ( Medico ) was formed by the owners and principals of Smile More Holdings Pte. Ltd., a Singaporean corporation ( Smile Central ), for the purpose acting as the holding company for Smile Central and penetrating the U.S. financial markets. Smile Central owns five (5) dental clinics operating in Singapore. Smile Central s operations were launched in January 2014 with three (3) clinics and in 2015 an additional two (2) clinics were opened. Smile Central plans to continue to expand its operations and create additional clinics in Singapore. IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY As a company with less than $1.0 billion in revenue during our most recently completed fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies. These provisions include: reduced disclosure about our executive compensation arrangements; exemption from the requirement to have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of Sarbanes-Oxley; exemption from the requirement to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (auditor discussion and analysis); no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and reduced disclosure of financial information in this prospectus, including only two years of audited financial information and two years of selected financial information. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company as of December 31 of a particular year: if we had gross revenue of $1.0 billion or more in such year; if the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of June 30 in such year; if at any point in such year, we would have issued more than $1.0 billion of non-convertible debt during the three-year period prior thereto; or on the date on which we are deemed a large accelerated issuer as defined under the federal securities laws. The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. CORPORATE INFORMATION We were originally organized as a corporation in the State of Nevada on September 18 2015, and on September 19, 2015, we acquired all of the issued and outstanding shares of Smile More Holdings Pte Ltd., a Singapore corporation ( Smile Central ), which owns and operates five (5) dental clinics in Singapore. Smile Central was owned by two Singaporean corporations. We issued a total of three million (3,000,000) shares of our common stock to the two (2) owners of Smile Central in exchange for all of the shares of Smile Central. One of the Singaporean corporations that was an owner of Smile Central is owned 100% by our Mr. Liew Min Hin, our Chief Financial Officer and one of the members of our Board of Directors.
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diff --git a/parsed_sections/prospectus_summary/2015/CLLS_cellectis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CLLS_cellectis_prospectus_summary.txt
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+This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our ADSs. You should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our ADSs, including the information discussed under Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes thereto that appear elsewhere in this prospectus. As used in this prospectus, the terms we, our, us, Cellectis, or the Company refer to Cellectis S.A. and its subsidiaries, taken as a whole, unless the context otherwise requires it. Overview We are a pioneering gene-editing company, employing our core proprietary technologies to develop best-in-class products in the emerging field of immuno-oncology. Our product candidates, based on gene-edited T-cells that express chimeric antigen receptors, or CARs, seek to harness the power of the immune system to target and eradicate cancers. We believe that CAR-based immunotherapy is one of the most promising areas of cancer research, representing a new paradigm for cancer treatment. We are designing next-generation immunotherapies that are based on gene-edited CAR T-cells. Our gene-editing technologies allow us to create allogeneic CAR T-cells, meaning they are derived from healthy donors rather than the patients themselves. We believe that the allogeneic production of CAR T-cells will allow us to develop cost-effective, off-the-shelf products that are capable of being stored and distributed worldwide. Our gene-editing expertise also enables us to develop product candidates that feature additional safety and efficacy attributes, including control properties designed to prevent them from attacking healthy tissues, to enable them to tolerate standard oncology treatments, and to equip them to resist mechanisms that inhibit immune-system activity. In addition to our focus on immuno-oncology, we are exploring the use of our gene-editing technologies in other therapeutic applications, as well as to develop healthier food products for a growing population. Cancer is the second-leading cause of death in the United States and accounts for one in four deaths. Immuno-oncology seeks to harness the power of the body s immune system to target and kill cancer. A key to this effort is a type of white blood cell known as the T-cell, which plays an important role in identifying and killing cancer cells. Unfortunately, cancer cells often develop mechanisms to evade the immune system. CARs, which are engineered receptors that can be expressed on the surface of the T-cell, provide the T-cell with a specific targeting mechanism, thereby enhancing its ability to seek, identify, interact with and destroy tumor cells bearing a selected antigen. Research and development of CAR T-cell immunotherapies currently focuses on two approachs: autologous and allogeneic therapies. Autologous CAR T-cell immunotherapies modify a patient s own T-cells to target specific antigens that are located on cancer cells. This type of therapy requires an individualized immunotherapy product for each patient and is currently being tested in clinical trials by several biotechnology and pharmaceutical companies. In contrast, an allogeneic CAR T-cell immunotherapy is an approach by which a cancer patient is infused with a mass-produced, off-the-shelf immunotherapy product derived from a healthy T-cell donor. Our initial focus is on developing allogeneic treatments, and we believe that we are the leading company pursuing this approach. Gene editing is a type of genetic engineering in which DNA is inserted, deleted, repaired or replaced from a precise location in the genome. The most fundamental challenge of gene editing is the need to specifically and efficiently target a precise DNA sequence within a gene. Our proprietary nuclease-based gene-editing technologies, combined with 15 years of genome engineering experience, allow us to edit any gene with highly precise insertion, deletion, repair and replacement of DNA sequences. Our nucleases, including a particular class of proteins derived from transcription activator-like effectors act like DNA scissors to edit genes at precise target sites and allow us to design allogeneic CAR T-cells. Our patented PulseAgile electroporation technology allows Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated March 24, 2015 PROSPECTUS American Depositary Shares Representing 4,750,000 Ordinary Shares This is the initial public offering of American Depositary Shares, or ADSs, of Cellectis. Each ADS represents one ordinary share. Prior to this offering there has been no public market for our ADSs. Our ordinary shares are listed on the Alternext market of Euronext in Paris under the symbol ALCLS. On March 23, 2015, the reported closing sale price of our ordinary shares was 38.37 per share, equivalent to a price of $41.41 per share, assuming an exchange rate of $1.0792 per euro. After the pricing of this offering, we expect our ADSs will trade on the Nasdaq Global Market under the symbol CLLS. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in the ADSs involves risks that are described in the Risk Factors section beginning on page 14 of this prospectus. Per ADS Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds to Cellectis (before expenses) $ $ (1) We refer you to Underwriting beginning on page 210 of this prospectus for additional information regarding underwriting compensation. The underwriters may also exercise their option to purchase up to 712,500 additional ADSs from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any U.S. state or other securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The ADSs will be ready for delivery on or about , 2015 through the book-entry facilities of The Depository Trust Company. BofA Merrill Lynch Jefferies Piper Jaffray Oppenheimer & Co. Trout Capital The date of this prospectus is , 2015. Table of Contents us to efficiently deliver our nucleases into human cells while preserving cell viability, making it particularly well-suited for a large-scale manufacturing process. We believe these technologies will enable our products to be manufactured, stored, distributed broadly and infused into patients in an off-the-shelf approach. We are developing products internally and through recently established strategic alliances with Pfizer Inc., or Pfizer, and Les Laboratoires Servier SAS, or Servier. In addition to our three proprietary pre-clinical programs, we are jointly pursuing six pre-clinical programs with Pfizer and Servier, and we may pursue up to 24 additional targets, nine of which would be wholly owned by us. Our objective is to file one Investigational New Drug, or IND, application (or foreign equivalent), per year. Our lead product candidate, UCART19, is an engineered T-cell product candidate that targets CD19, an antigen located on cancer cells in acute lymphoblastic leukemia, or ALL, and chronic lymphocytic leukemia, or CLL. We expect to file in 2015 for a Clinical Trial Authorization, or CTA, in the United Kingdom for UCART19, and Servier has an option under the collaboration agreement to acquire the exclusive rights to further develop and commercialize UCART19. Our strategic alliances include potential milestone payments to us of up to $3.9 billion and royalties on future sales. We believe that our alliances with Pfizer and Servier validate our technology platform, our expertise in the CAR-T field and the strength of our intellectual property portfolio. Our vision is to leverage the potential of gene editing to deliver revolutionary products that address unmet medical needs, as well as to provide healthier food for a growing population across the world. Our initial focus is to apply our leadership in gene-editing technology to develop and commercialize best-in-class allogeneic CAR T-cell products in the area of immuno-oncology. Immunotherapy The promise of immuno-oncology rests on the ability to train the immune system to recognize and destroy tumor cells that previously evaded immune surveillance. Recent immuno-oncology advancements have shown the potential to cure certain cancers by harnessing the body s immune system to fight cancer cells. For example, in a recent study at the Perelman School of Medicine at the University of Pennsylvania, 27 of 30 (or 90%) of patients, including adults and children, with acute lymphoblastic leukemia who had relapsed multiple times or failed to respond to standard therapies went into remission after receiving a CAR-based immunotherapy, and 78% of the patients were alive six months after treatment; and in February 2014, a trial conducted at Memorial Sloan Kettering Cancer Center and the National Cancer Institute reported that 14 of 16 patients with advanced large B-cell lymphoma that had been treated to that point with CAR-based therapies had experienced complete responses. Based on these advancements, immuno-oncology has become a new frontier for treatment, and we believe it is one of the most promising areas of development within oncology. Our Proprietary Technology Platforms and Pipeline TALEN Proprietary Gene-editing Technology The flagship nuclease structure we use for gene editing is based on a class of proteins derived from transcription activator-like effectors, or TALE. TALEN products are designed by fusing the DNA-cutting domain of a nuclease to TALE domains, which can be tailored to specifically recognize a unique DNA sequence. These fusion proteins serve as readily targetable DNA scissors for genome engineering applications that enable us to perform targeted genome modifications such as sequence insertion, deletion, repair and replacement in living cells. We believe the key benefits of TALEN technology are: Precision. It is possible to design a TALEN that will cleave at any selected region in any gene, giving us the ability to achieve the desired genetic outcome with any gene in any living species. Table of Contents TABLE OF CONTENTS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/CLOW_cloudweb_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CLOW_cloudweb_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. Going Concern The Company has experienced net losses to date, and it has not generated revenue from operations, we will need additional working capital to service debt and for ongoing operations, which raises substantial doubt about its ability to continue as a going concern. Management of the Company has developed a strategy to meet operational shortfalls which may include equity funding, short term or long term financing or debt financing, to enable the Company to reach profitable operations. Company Overview Formigli Inc. ( FORMIGLI INC or the Company ) was incorporated in the State of Florida on May 25, 2014. We are a company in the development stages that plans to engage in the worldwide distribution of custom handmade Italian road bikes, made by Renzo Formigli. FORMIGLI INC. s focus is to be unique in its offering to the cycling sector; while mass production of bicycles in Asia accounts for the majority of production, Renzo Formigli is maintaining the tradition and high quality of custom Italian handicraft. Amy Chaffe, who is currently our sole officer and director, founded our Company. Our headquarters are located at 895 Pismo Street, San Luis Obispo, CA 93401. The current bicycle industry trend is to manufacture frames using pre-set molds, and mass-producing them in Asia. Formigli Inc. fills a need in the cycling market for a custom frame, made specifically for the unique body proportions and size of an individual, at a price that is competitive within the market. Renzo Formigli is a custom Italian bicycle frame builder, based in Florence Italy, rooted in the rich heritage of Italian frame building masters. Every unique Renzo Formigli bicycle frame is custom built for its eventual rider, a one of a kind piece of art. After he or she is measured, a frame is perfectly crafted by hand using the highest quality materials and latest technology. Each frame is finished with a custom paint design. A Renzo Formigli frame is as unique as the individual for whom it was created. The creation of the exclusive hand-made bicycle is done on a small scale, allowing Renzo Formigli to painstakingly perfect each detail of each frame. The name Formigli is synonymous with the highest of excellence and quality, and is 100% made in Italy; Renzo Formigli is of a dying breed of framebuilding masters. He apprenticed with one of the greatest of them all, Cino Cinelli. Originally, all high performance bicycles were custom-built by hand for a particular rider, based on that individual's unique physical geometry. The framebuilder's task was to understand how a bicycle works and to match the new frame's geometry and handling characteristics to its delighted owner. For 25 years Renzo Formigli has perfected his craft, picking and choosing among emerging technologies and blending them with the art and science of frame design that he absorbed from the old masters. Every Renzo Formigli frameset is crafted with Italian materials. Each is built and painted by hand in Italy. Formigli is in the development stages of opening its international distribution. A dealer network will be established and brand awareness will be promoted directly to customers via the Internet, and through the efforts of the Company. The custom frame line of Renzo Formigli consists of four carbon frames, one steel frame and one aluminum frame. The women s line consists of two carbon frames and one steel frame. Although we were only recently incorporated and are in the development stage, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's financial climate. There can be no assurance that we will be successful in our attempt to sell 100% of the shares being registered hereunder; however, we believe that investors in today's markets demand more transparency and by our registering this Offering and becoming a reporting company, we will be able to capitalize on this fact. While we believe that our limited reporting requirements will satisfy most investors seeking transparency in any potential investment, we still caution that simply because we have a registration statement declared effective the Company will not become a fully reporting company, but rather, we will be only subject to the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934. Accordingly, except during the year that our registration statement becomes effective, these reporting obligations may be automatically suspended under Section 15(d) if we have less than 300 shareholders at the beginning of our fiscal year and our required disclosure is less extensive than the disclosures required of fully reporting companies. For example, we are not subject to disclose in our Form 10K risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B, 6, respectively. Since inception, our operations have consisted of incorporating our Company, formulating our business plan, and commencing sales via the website and the beginnings of the dealer network. The Company intends to begin substantive growth in dealer networking. The most effective way to create this growth is by sponsoring a cycling team that will compete in the Tour D France as well as the international cycling racing circuit. The image of a cycling team riding our product and its publicity on television, newspapers, and magazines, as well as the public that sees the race in person, will have the greatest positive effect on Company revenue. Within two to three months after we obtain a Notice of Effectiveness of this Offering, we anticipate initiating the plan of operations that calls for the Company to extend our marketing and our advertising services to new potential clients and shops. We hope to realize our full plan of operation by raising money through the sale of our securities, as contemplated within this Offering. We believe that if we are able to raise the full amount of funds contemplated herein, we would be able to launch our Company fully, and properly market our advertising platform. Our sole officer and director has a decade in the marketing industry and 5 years of experience within the cycling industry. We intend to retain a qualified officer and a team specialist consultant to advise and secure an international team to sponsor. We also plan to hire additional qualified marketing and sales representatives to represent us to key bicycle shops in target cities if we are successful in raising capital through this Offering. We do not have any verbal or written agreements regarding the retention of any qualified personnel to date. Although the Company has no market for its common stock, management believes that the Company will meet all requirements to be quoted on the OTC market, and even though the Company s common stock will likely be a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. As a development stage company we have limited business operations, minimal revenues, and limited assets as a distribution company. Accordingly, our independent registered public accountants have issued a comment raising substantial doubt as to our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs, management intends to rely primarily upon debt financing to supplement cash flows, if any, generated by our services. We will seek out such financing as necessary to allow the Company to continue to grow our business operations, and to cover such cost, excluding professional fees, associated with being a reporting Company with the Securities and Exchange Commission ("SEC"); we estimate such costs to be approximately $50,000.00 for 12 months following this Offering. The Company has included such costs to become a publicly reporting company in its targeted expenses for working capital expenses and intends to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point we have been funded by our sole officer and director, and have not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company. Our current cash and working capital is not sufficient to cover our current estimated expenses for the creation of an international racing team of $200,000, which will be the sole focus of the marketing campaign, which also include those fees associated with obtaining a Notice of Effectiveness from the SEC for this Registration Statement. We hope that we will be able to secure additional financing, and complete this Offering within the coming months, in order to be able to secure a team by winter of 2014. In order to fully implement our business plan, we will require at least $555,000.00 to be raised, either through debt or equity, over the next 12 months. Upon obtaining effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to market and grow our Company. We believe that the maximum amount of funds generated from the Offering will provide us with enough proceeds to fund our plan for marketing and operations for at least twelve months after the completion of this Offering. Assuming we generate only the minimal amount of revenues we may still require additional financing to fund our operations past the twelve-month period following the completion of this Offering and if the maximum amount of funds is not raised. While our ability to generate revenue is not correlated directly to the amount of shares sold by us under this Offering, our potential to generate revenue can be affected by our marketing and advertising strategies and the amount of personnel the Company employs. These factors are directly related to the amount of proceeds we receive from this Offering, which corresponds to the number of shares we are successful in selling under this Offering (see Use of Proceeds chart). We believe we can begin generating revenues within the first three months following the successful completion of this Offering. As we are a start-up company, it is unclear how much revenue our operations will generate; however, it is our hope that our revenues will exceed our costs. Our revenues will be impacted by how successful and well targeted was the execution of our marketing campaign, the general condition of the economy, and the number of clients we will attract. For a further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled Description of Business . On June 1, 2014, the Company (hereinafter referred to as Distributor ) entered into a global exclusive distribution agreement ( Agreement ) with Renzo Formigli, the producer of bicycle frame sets from Italy ( Products ), having a business address at Emidio Spinucci 16/a, Firenz, Italia 50141 (hereinafter referred to as Manufacturer ). Under the terms of the Agreement, the Distributor has an exclusive worldwide distribution right to package, sell and market the Products, with the exception of direct sales within Italy. The term of the Agreement is for five (5) years, and shall automatically renew indefinitely thereafter unless either party terminates with a twelve (12) month notice.The Company is not related to Renzo Formigli manufacturing and is in no way affiliated with Renzo Formigli beyond the terms of the Agreement. Neither the Company nor Amy Chaffe or any other affiliated or unaffiliated entity has any plans to use the Company as a vehicle for a private company to become a reporting company once Formigli Inc. becomes a reporting Company. Additionally, we do not believe the Company is a blank check company as defined in Section a(2) of Rule 419 under the Securities Act of 1933, as amended because the Company has a specific business plan and has no plans or intentions to engage in a merger or acquisition with an unidentified entity. SUMMARY OF THIS OFFERING The Issuer Formigli Inc. Securities being offered Up to 6,000,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
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diff --git a/parsed_sections/prospectus_summary/2015/CMBT_cmb-tech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CMBT_cmb-tech_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information that appears later in this prospectus. This summary may not contain all of the information that may be important to you. As an investor or prospective investor, you should carefully review the entire prospectus, including the section of this prospectus entitled Risk Factors and the more detailed information that appears later in this prospectus before you consider making an investment in our ordinary shares. The information presented in this prospectus assumes, unless otherwise indicated, that the underwriters over-allotment option to purchase up to 2,032,500 additional ordinary shares is not exercised, and that we exercise our option to force a conversion of our outstanding perpetual convertible preferred equity securities for an aggregate amount of 12,297,071 of our ordinary shares. Unless otherwise indicated, references to Euronav, the Company, we, our, us or similar terms refer to, Euronav NV, and its subsidiaries. All references in this prospectus to Chevron, Total, Valero, and Maersk Oil refer to Chevron Corporation, Total S.A., Valero Energy Corporation, and Maersk Oil Qatar AS, respectively, and certain of each of their subsidiaries that are our customers. References to our ordinary shares refer to the shares offered hereby and references to our existing ordinary shares refer to the shares issued and listed on the Euronext in Belgium prior to the closing of this offering. Unless otherwise indicated, all references to U.S. dollars, USD, dollars, US$ and $ in this prospectus are to the lawful currency of the United States of America and references to Euro, EUR, and are to the lawful currency of Belgium. We refer you to a glossary of shipping terms in Appendix A for the definition of certain industry terms used in this prospectus. Our Business We are a fully-integrated provider of international maritime shipping and offshore services engaged primarily in the transportation and storage of crude oil. We were incorporated under the laws of Belgium on June 26, 2003, and we grew out of the combination of certain tanker businesses carried out by three companies that had a strong presence in the shipping industry: Compagnie Maritime Belge NV, or CMB, formed in 1895, Compagnie Nationale de Navigation SA, or CNN, formed in 1938, and Ceres Hellenic Shipping Enterprises Ltd., or Ceres Hellenic, formed in 1950. Our predecessor started doing business under the name Euronav in 1989. Our principal shareholders are Peter Livanos, individually or through entities controlled by the Livanos family, including our corporate director TankLog Holdings Limited, or TankLog, and Marc Saverys, individually or through Saverco NV, or Saverco, an entity controlled by him. Both the Livanos and the Saverys families have had a continuous presence in the shipping industry since the early nineteenth century. The Livanos family has owned and operated Ceres Hellenic since its formation in 1950, and the Saverys family owned a shipyard which was founded in 1829, owned and operated various shipowning companies since the 1960s, and acquired CMB in 1991. Peter Livanos may be deemed to beneficially own 14.5% of our outstanding ordinary shares directly or indirectly, through entities controlled by the Livanos family. Peter Livanos, through his appointment as permanent representative of TankLog on our Board of Directors, serves as the Chairman of our Board. Marc Saverys, the Vice Chairman of our Board of Directors, is also the Chairman of CMB and controls Saverco, a company that is currently CMB s majority shareholder. Marc Saverys may be deemed to beneficially own 11.5% of our outstanding ordinary shares, directly or indirectly through Saverco. Following the completion of this offering, Peter Livanos, individually or through entities controlled by the Livanos family, and Marc Saverys, individually or through Saverco, will beneficially own approximately 12.1% Table of Contents The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 20, 2015 PRELIMINARY PROSPECTUS 13,550,000 Ordinary Shares Euronav NV We are offering 13,550,000 of our ordinary shares. This is our initial public offering in the United States. Our ordinary shares have been approved for listing on the New York Stock Exchange under the symbol EURN, upon notice of issuance. Our ordinary shares currently trade on the Euronext Brussels, under the symbol EURN. On January 19, 2015, the closing price of our ordinary shares trading on the Euronext Brussels was 11.13 per share, which was equivalent to approximately $12.94 per share based on the Bloomberg Composite Rate of 0.8604 per $1.00 in effect on that date. We qualify as an emerging growth company as defined in the Securities Act of 1933, as amended, and, as such, we are eligible for reduced reporting requirements. See Summary Implications of Being an Emerging Growth Company. Investing in our ordinary shares involves risks. See Risk Factors beginning on page 26. We have granted the underwriters a 30-day option to purchase up to an additional 2,032,500 ordinary shares. The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PRICE $ PER SHARE Initial Public Offering Price Underwriting Discounts and Commissions(1) Proceeds (Before Expenses) to Euronav NV Per Share $ $ $ Total $ $ $ (1) See Underwriting for additional information regarding the total underwriter compensation. The underwriters expect to deliver the ordinary shares to purchasers on or about , 2015. Deutsche Bank Securities Citigroup J.P. Morgan Morgan Stanley DNB Markets Evercore ISI SEB ABN AMRO Clarkson Capital Markets KBC Securities Scotiabank / Howard Weil Prospectus dated , 2015 Table of Contents and 10.9%, respectively, of our outstanding ordinary shares (12.0% and 10.7% respectively, if the underwriters exercise their over-allotment option to purchase additional ordinary shares in full). As of January 16, 2015, we owned and operated a modern fleet of 52 vessels (including three chartered-in vessels) with an aggregate carrying capacity of approximately 13.0 million deadweight tons, or dwt, consisting of 26 very large crude carriers, or VLCCs, one ultra large crude carrier, or ULCC, 23 Suezmax vessels, and two floating, storage and offloading vessels, or FSOs. In January 2014, we agreed to acquire 15 modern VLCCs with an average age at the time of acquisition of approximately 4.1 years from Maersk Tankers Singapore Pte Ltd., or Maersk Tankers, which we refer to as the Maersk Acquisition Vessels, for a total purchase price of $980.0 million payable as the vessels were delivered to us charter-free. This acquisition was fully financed through a combination of new equity and debt issuances and borrowings under our $500.0 million Senior Secured Credit Facility. During the period from February 2014 through October 2014, we took delivery of all of the Maersk Acquisition Vessels. In addition, in July 2014, we agreed to acquire four additional modern VLCCs from Maersk Tankers for an aggregate purchase price of $342.0 million, which we refer to as the VLCC Acquisition Vessels . The purchase price of the VLCC Acquisition Vessels will be financed using the net proceeds of $121.1 million that we received in an underwritten private offering of 10,556,808 of our ordinary shares in Belgium in July 2014, available cash on hand, and borrowings under our $340.0 million Senior Secured Credit Facility. Two of these vessels were delivered to us during the fourth quarter of 2014, one vessel is expected to be delivered to us during the first quarter of 2015 and the last vessel is expected to be delivered to us during the second quarter of 2015. After taking delivery of the two remaining VLCC Acquisition Vessels (one of which we currently charter in), we will own and operate 53 double-hulled tankers (including our two FSOs) with an aggregate carrying capacity of approximately 13.3 million dwt. The weighted average age of our fleet as of January 16, 2015, pro forma for the two remaining VLCC Acquisition Vessels to be delivered to us after this date, was approximately 7.4 years, as compared to an industry average age of approximately 8.9 years, according to Drewry Shipping Consultants Ltd., or Drewry. We currently charter our vessels, non-exclusively, to leading international energy companies, such as Maersk Oil, Total and Valero, although there is no guarantee that these companies will continue their relationships with us. We pursue a chartering strategy that seeks an optimal mix of employment of our vessels depending on the fluctuations of freight rates in the market and our own judgment as to the direction of those rates in the future. Our vessels are therefore routinely employed on a combination of spot market voyages, fixed-rate contracts and long-term time charters, which typically include a profit sharing component. We principally employ our VLCCs, and expect to employ the two remaining undelivered VLCC Acquisition Vessels through the Tankers International Pool, or the TI Pool, a spot market-oriented pool in which we were a founding member in 2000. As of January 16, 2015, 14 of our vessels were employed directly in the spot market, 25 of our vessels were employed in the TI Pool, 11 of our vessels were employed on long-term charters, of which the average remaining duration is 13.6 months, including 10 with profit sharing components, and our two FSOs were employed on long-term service contracts. While we believe that our chartering strategy allows us to capitalize Table of Contents Flandre, one of our VLCCs CAP Lara, one of our Suezmax vessels Table of Contents on opportunities in an environment of increasing rates by maximizing our exposure to the spot market, our vessels operating in the spot market may be subject to market downturns to the extent spot market rates decline. At times when the freight market may become more challenging, we will try to timely shift our exposure to more time charter contracts and potentially dispose of some of our assets which should provide us with incremental stable cash flows and stronger utilization rates supporting our business during periods of market weakness. We believe that our chartering strategy and our fleet size management, combined with the leadership of our experienced management team should enable us to capture value during cyclical upswings and to withstand the challenging operating environment such as the one seen in the past several years. We operate in a capital intensive industry and have historically financed our purchase of tankers and other capital expenditures through a combination of cash generated from operations, equity capital, borrowings from commercial banks and the occasional issuance of convertible notes. Our ability to generate adequate cash flows on a short- and medium-term basis depends substantially on the trading performance of our vessels. Historically, market rates for charters of our vessels have been volatile. For example, during the year ended December 31, 2013, our voyage charter and pool revenues decreased by 3% compared to the same period in 2012, from $175.9 million to $171.2 million, and our time charter revenue decreased by 8%, from $144.9 million to $133.4 million. During the nine months ended September 30, 2014, our voyage charter and pool revenues increased by 88% compared to the same period in 2013, from $122.1 million to $230.0 million, reflecting a larger fleet and higher realized spot market charter rates, and our time charter revenue decreased by 3% compared to the same period in 2013, from $102.2 million to $99.1 million because we had slightly less days on time charter. Periodic adjustments to the supply of and demand for oil tankers cause the industry to be cyclical in nature. We expect continued volatility in market rates for our vessels in the foreseeable future with a consequent effect on our short- and medium-term revenue and liquidity. For our fiscal year ended December 31, 2013, we had $304.6 million in revenue and incurred a net loss of $89.7 million, and for the nine month period ended September 30, 2014, we had $329.1 million in revenue and incurred a net loss of $41.9 million. Our Fleet The following table sets forth summary information regarding our fleet as of January 16, 2015: Vessel Name Type Deadweight Tons (DWT) Year Built Shipyard(1) Charterer Employment Charter Expiry Date(2) Owned Vessels TI Europe ULCC 441,561 2002 Daewoo Unipec Time Charter September 2015 Sandra VLCC 323,527 2011 STX Total TI Pool(9) N/A Sara VLCC 323,183 2011 STX Total Time Charter(3) October 2015 Alsace VLCC 320,350 2012 Samsung TI Pool N/A TI Topaz VLCC 319,430 2002 Hyundai TI Pool N/A TI Hellas VLCC 319,254 2005 Hyundai TI Pool N/A Ilma VLCC 314,000 2012 Hyundai TI Pool N/A Simone VLCC 314,000 2012 STX TI Pool N/A Table of Contents FSO Asia, one of our FSOs Table of Contents Vessel Name Type Deadweight Tons (DWT) Year Built Shipyard(1) Charterer Employment Charter Expiry Date(2) Sonia VLCC 314,000 2012 STX TI Pool N/A Ingrid VLCC 314,000 2012 Hyundai TI Pool N/A Iris VLCC 314,000 2012 Hyundai TI Pool N/A Nucleus VLCC 307,284 2007 Dalian TI Pool N/A Nautilus VLCC 307,284 2006 Dalian TI Pool N/A Navarin VLCC 307,284 2007 Dalian TI Pool N/A Nautic VLCC 307,284 2008 Dalian TI Pool N/A Newton VLCC 307,284 2009 Dalian TI Pool N/A Nectar VLCC 307,284 2008 Dalian TI Pool N/A Neptun VLCC 307,284 2007 Dalian TI Pool N/A Noble VLCC 307,284 2008 Dalian TI Pool N/A Flandre VLCC 305,688 2004 Daewoo TI Pool N/A V.K. Eddie(4) VLCC 305,261 2005 Daewoo TI Pool N/A Hojo VLCC 302,965 2013 Ariake TI Pool N/A Hakone VLCC 302,624 2010 Ariake TI Pool N/A Famenne VLCC 298,412 2001 Hitachi TI Pool N/A Artois VLCC 298,330 2001 Hitachi TI Pool N/A Cap Diamant Suezmax 160,044 2001 Hyundai Spot N/A Cap Pierre Suezmax 159,083 2004 Samsung Valero Time Charter(3) June 2018 Cap Leon Suezmax 159,049 2003 Samsung Valero Time Charter(3) April 2018 Cap Philippe Suezmax 158,920 2006 Samsung Valero Time Charter(3) May 2015 Cap Guillaume Suezmax 158,889 2006 Samsung Valero Time Charter(3) April 2015 Cap Charles Suezmax 158,881 2006 Samsung Spot N/A Cap Victor Suezmax 158,853 2007 Samsung Spot N/A Cap Lara Suezmax 158,826 2007 Samsung Spot N/A Cap Theodora Suezmax 158,819 2008 Samsung Valero Time Charter(3) June 2015 Cap Felix Suezmax 158,765 2008 Samsung Spot N/A Fraternity Suezmax 157,714 2009 Samsung Repsol Time Charter(3) November 2017 Eugenie(4) Suezmax 157,672 2010 Samsung Spot N/A Felicity Suezmax 157,667 2009 Samsung Spot N/A Capt. Michael(4) Suezmax 157,648 2012 Samsung Spot N/A Devon(4) Suezmax 157,642 2011 Samsung Spot N/A Maria(4) Suezmax 157,523 2012 Samsung Spot N/A Finesse Suezmax 149,994 2003 Universal Spot N/A Filikon Suezmax 149,989 2002 Universal Spot N/A Cap Georges Suezmax 146,652 1998 Samsung Valero Time Charter(3) May 2015 Cap Laurent Suezmax 146,645 1998 Samsung Spot N/A Cap Romuald Suezmax 146,640 1998 Samsung Valero Time Charter(3) May 2015 Cap Jean Suezmax 146,627 1998 Samsung Valero Time Charter(3) May 2015 Total DWT Owned Vessels 11,630,380 VLCC Acquisition Vessels To Be Delivered Maersk Hirado(6)(8) VLCC 302,550 2011 Ariake TI Pool(5) N/A Maersk Hakata(7) VLCC 302,550 2010 Ariake TI Pool(5) N/A Total DWT VLCC Acquisition Vessels 605,100 Chartered-In Expiry Date Chartered-In Vessels KHK Vision VLCC 305,749 2007 Daewoo TI Pool October 2016 Suez Hans Suezmax 158,574 2011 Hyundai Spot September 2015 Total DWT Chartered-In Vessels 464,323 Service Contract Expiry Date FSO Vessels FSO Africa(4) FSO 442,000 2002 Daewoo Maersk Oil Service Contract September 2017 ( 2 year option) FSO Asia(4) FSO 442,000 2002 Daewoo Maersk Oil Service Contract July 2017 ( 2 year option) Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our ordinary shares. You should read the entire prospectus carefully, including Risk Factors and our consolidated financial statements and notes to those consolidated financial statements, before making an investment decision. In this prospectus, the terms CyberArk, we, us, our and the company refer to CyberArk Software Ltd. and its subsidiaries. Overview We are a global leader and pioneer of a new layer of IT security solutions that protects organizations from cyber attacks that have made their way inside the network perimeter to strike at the heart of the enterprise. Our software solution is focused on protecting privileged accounts, which have become a critical target in the lifecycle of today s cyber attacks. Privileged accounts are pervasive and act as the keys to the IT kingdom, providing complete access to, and control of, all parts of IT infrastructure, industrial control systems and critical business data. In the hands of an external attacker or malicious insider, privileged accounts allow attackers to take control of and disrupt an organization s IT and industrial control infrastructures, steal confidential information and commit financial fraud. Our comprehensive solution proactively protects privileged accounts, monitors privileged activity and detects malicious privileged behavior. Our customers use our innovative solution to introduce this new security layer to protect against, detect and respond to cyber attacks before they strike vital systems and compromise sensitive data. Organizations worldwide are experiencing an unprecedented increase in the sophistication, scale and frequency of cyber attacks. The challenge this presents is intensified by the growing adoption of new technologies, such as cloud computing, virtualization, software-defined networking, enterprise mobility and social networking, which has resulted in increasingly complex and distributed IT environments with significantly larger attack surfaces. Organizations have historically relied upon perimeter-based threat protection solutions such as network, web and endpoint security tools as the predominant defense against cyber attacks, yet these traditional solutions have a limited ability to stop today s advanced threats. As a result, an estimated 90% of organizations have suffered a cybersecurity breach according to a 2011 survey of approximately 580 U.S. IT practitioners by the Ponemon Institute, a research center focused on privacy, data protection and information security policy. Organizations are just beginning to adapt their security strategies to address this new threat environment and are evolving their approaches based on the assumption that their network perimeter has been or will be breached. They are therefore increasingly implementing new layers of security inside the network to disrupt attacks before they result in the theft of confidential information or other serious damage. Regulators are also continuing to mandate rigorous new compliance standards and audit requirements in response to this evolving threat landscape. We believe that the implementation of a privileged account security solution is one of the most critical layers of an effective security strategy. Privileged accounts represent one of the most vulnerable aspects of an organization s IT infrastructure. Privileged accounts are used by system administrators, third-party and cloud service providers, applications and business users, and they exist in nearly every connected device, server, hypervisor, operating system, database, application and industrial control system. Due to the broad access and control they provide, exploiting privileged accounts has become a critical stage of the cyber attack lifecycle. The typical cyber attack involves attackers effecting an initial breach, escalating privileges to access target systems, moving laterally through the IT infrastructure to identify valuable targets, and exfiltrating, or stealing, the desired information. According to Mandiant, credentials of authorized users were hijacked in 100% of the breaches that Mandiant investigated, and privileged accounts were targeted whenever possible. Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and neither we nor the selling shareholders are soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated June 8, 2015. Preliminary Prospectus 4,900,000 Shares Ordinary Shares We are offering 900,000 ordinary shares and the selling shareholders are offering an additional 4,000,000 ordinary shares. We will not receive any of the proceeds from the sale of the shares being offered by the selling shareholders. Our ordinary shares are listed on the NASDAQ Global Select Market under the symbol CYBR . On June 5, 2015, the last reported sales price of our ordinary shares was $66.24 per share. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us (before expenses) $ $ Proceeds to the selling shareholders (before expenses) $ $ (1) See Underwriting (Conflicts of Interest) for a description of compensation payable to the underwriters. The selling shareholders have granted the underwriters an option to purchase up to 735,000 additional ordinary shares from the selling shareholders, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. We are an emerging growth company as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. Investing in our ordinary shares involves a high degree of risk. See Risk Factors beginning on page 12. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the ordinary shares to purchasers on or about , 2015. Goldman, Sachs & Co. Deutsche Bank Securities Barclays BofA Merrill Lynch UBS Investment Bank William Blair Nomura Oppenheimer & Co. , 2015 Table of Contents We have architected our solution from the ground up to address the challenges of protecting privileged accounts and an organization s sensitive information. Our solution provides proactive protection against cyber attacks from both external and internal sources and allows for real-time detection and neutralization of such threats. It can be deployed in traditional on-premise data centers, cloud environments and industrial control systems. Our innovative software solution is the result of over 15 years of research and expertise, combined with valuable knowledge we have gained from working with our diverse population of customers. Our Privileged Account Security Solution is built on our shared technology platform and consists of several products: Enterprise Password Vault: proactively protects and manages all privileged accounts across an entire organization SSH Key Manager: securely stores, rotates and controls access to SSH keys to prevent unauthorized access to privileged accounts Privileged Session Manager: enables live monitoring and command-line keystroke level recording of privileged sessions, isolates the target asset from malware and establishes a single point of control for all privileged activity Application Identity Manager: secures application to application interfaces by enabling proactive controls on privileged credentials embedded in applications, service accounts and scripts On-Demand Privileges Manager: limits the breadth of access of administrative accounts by restricting the use of specified commands and functions Privileged Threat Analytics: profiles and analyzes individual privileged user behavior and creates prioritized alerts when abnormal activity is detected As of March 31, 2015, we had approximately 1,850 customers, including approximately 40% of the Fortune 100 and approximately 18% of the Global 2000. We define a customer to include a distinct entity, division or business unit of a company. Our customers include leading enterprises in a diverse set of industries, including energy and utilities, financial services, healthcare, manufacturing, retail, technology and telecommunications, as well as government agencies. We sell our solution through a high touch, channel fulfilled hybrid sales model that combines the leverage of channel sales with the account control of direct sales, and therefore provides us with significant opportunities to grow our current customer base. This approach allows us to maintain close relationships with our customers and benefit from the global reach of our channel partners. Additionally, we are enhancing our product offerings and go-to-market strategy by establishing technology alliances within the IT infrastructure and security vendor ecosystem. Our business has rapidly grown in recent years. During 2012, 2013 and 2014, our revenues were $47.2 million, $66.2 million and $103.0 million, respectively, representing year-over-year growth of 40.1% and 55.7% in 2013 and 2014, respectively. Our net income for 2012, 2013 and 2014 was $7.9 million, $6.6 million and $10.0 million, respectively. Our revenues for the three months ended March 31, 2014 and 2015 were $17.4 million and $32.9 million, respectively, representing year-over-year growth of 89.2%. Our net income for the three months ended March 31, 2015 was $4.2 million compared with a net loss of $1.2 million for the same period in 2014. Industry Overview The recent increase in sophisticated, targeted security threats by both external attackers and malicious insiders, along with an increase in the attack surface due to the growing complexity and distributed nature of IT environments, have made it extremely challenging for enterprises and governments around the world to protect their sensitive information. These challenges are driving the need for a new layer of security that complements traditional threat protection technologies by securing access to privileged accounts and preventing the exploitation of organizations critical systems and data. Table of Contents Privileged accounts represent one of the most vulnerable aspects of an organization s IT infrastructure. Privileged escalation is a critical stage of the cyber attack because, if privileged credentials are compromised, the attacker is able to move closer to sensitive data while remaining undetected. Today s advanced cyber attacks are typically designed to evade traditional threat prevention technologies that are focused on protecting the perimeter from outside breach. Furthermore, compliance requirements continue to become more stringent in response to the complex and evolving threat landscape. Challenges in Protecting Privileged Accounts The increasing sophistication, scale and frequency of advanced cyber attacks challenge traditional cybersecurity methods and create a need for a comprehensive approach to securing privileged accounts from use by external or internal attackers to gain access to and exploit an organization s confidential data and IT systems. Such an approach must address a range of challenges presented by privileged accounts, including: traditional security solutions limited ability to protect privileged credentials and critical assets from cyber attacks; insufficient visibility and lack of automation in the management of privileged accounts; inability to monitor and audit all privileged activity; inadequate or delayed response time in detecting malicious and high risk behaviors; and limited scalability of existing point solutions. Our Solution Our Privileged Account Security Solution provides organizations with the following benefits: Comprehensive platform for proactive protection of privileged credentials and target assets from cyber attacks. Our comprehensive solution for privileged account security enables our customers to proactively protect against and automatically detect and respond to in-progress cyber attacks before they strike vital systems and compromise sensitive data. Our unified solution to these previously disparate security needs enables our customers to preemptively remediate vulnerabilities and improve their security effectiveness from a central command and control point. Automatic identification and understanding of the scope of privileged account risk. Our solution automatically detects privileged accounts across the enterprise and helps customers visualize the resulting compliance gaps and security vulnerabilities. This automated process reduces the time-consuming and error-prone task of manually tracking and updating privileged credentials, thereby decreasing IT operational costs. This enhanced visibility significantly improves the security posture of our customers and facilitates adherence to rigorous audit and compliance standards. Continuous monitoring, recording and secure storage of privileged account activity. Our solution monitors, collects and records individual privileged session activity down to every mouse click and keystroke. It also provides highly secure storage of privileged session recordings, robust search capabilities and full forensics records to facilitate a more rapid and precise response to malicious activity. Real-time detection, alerting and response to malicious privileged activity. Our Privileged Threat Analytics product uses proprietary algorithms to profile and analyze individual privileged user behavior and creates prioritized alerts in real-time when abnormal activity is detected. This allows our customers incident response teams to investigate and prioritize threatening activity and respond by terminating the active session. Table of Contents Purpose-built solution, architected for privileged account security. Our Digital Vault offers multiple layers of security including robust segregation of duties, a secure proprietary communications protocol and military-grade encryption. Our Privileged Session Manager product establishes a single point of control for all privileged activity, effectively decreasing the attack surface by providing only proxy-based access to IT assets through our platform. Scalable and flexible platform that enables modular deployment. Our solution is scalable and flexible to enable deployment in large-scale distributed environments for on-premise, cloud environments and industrial control systems. Our solution enables enterprises to leverage their existing investments with out of the box support for many devices, networks, applications and servers, including web sites and social media. Our Market Opportunity We believe that the security market is in the midst of a significant transition as enterprises are investing in a new generation of security solutions to help protect them against today s sophisticated and targeted cyber threats from both external attackers and malicious insiders. Gartner estimates that by 2020, 60% of enterprise information security budgets will be allocated to rapid detection and response approaches, up from less than 10% in 2014. Recognizing that traditional perimeter-based threat protection solutions are not sufficient to protect against today s advanced cyber threats, enterprises are investing in security solutions within the datacenter to protect the inside of their networks. According to a 2012 report by International Data Corporation (IDC), worldwide spending on datacenter security solutions was $10.7 billion in 2011 and is expected to grow to $16.5 billion by 2016, representing a compound annual growth rate of 9.3%. According to the same report, worldwide spending for IT security solutions was $28.4 billion in 2011 and is expected to grow to $40.8 billion in 2016, representing a compound annual growth rate of 7.6%. We believe that privileged account security is a new, critical layer of security that is benefitting from this transition. Privileged accounts represent one of the most vulnerable aspects of an organization s IT infrastructure and exist in nearly every connected device, server, hypervisor, operating system, database, application and industrial control system throughout on-premise and cloud-based datacenters. As a result, we believe that an increasing portion of the IT security budget, and specifically datacenter security spend, will be allocated for privileged account security solutions. Our Competitive Strengths Our mission is to protect the heart of the enterprise from advanced cyber attacks. We have established a leadership position in protecting high-value data and critical IT assets by securing privileged accounts, and have several key competitive strengths including: Trusted expert in privileged account security. We are a recognized brand name and a leader in privileged account security, protecting organizations worldwide against external threats that have already penetrated the perimeter, as well as threats that originate from within the perimeter by malicious or careless insiders. Technology leader driven by vision and focus on innovation. Our history of innovation is the cornerstone of our technology leadership. We pioneered Digital Vault technology and introduced patented technology for application identity management, secure connectivity for remote vendors, integrated privileged activity monitoring, private and public cloud privileged account management and privileged threat analytics. Global reach driven by direct and indirect sales organization. We have a broadly dispersed global hybrid sales channel as evidenced by our existing customer implementations in 65 countries, a broad network of over 200 channel and technology alliance partners worldwide, and local presence in more than 20 countries. Table of Contents Strong management team with significant IT security expertise. We have a highly talented management team and a strong research and development organization with significant IT security expertise from past experience in leading IT security companies and Israel s military technology units. Corporate culture committed to our customers success. Our commitment to our customers success is ingrained in our business strategy and is brought to life through constant customer interactions, employee functions and our engaging annual customer conferences attended by hundreds of customers and channel partners. Our Growth Strategy Our goal is to be the global leader in IT security solutions that protect organizations from cyber attacks that have made their way inside the network perimeter to strike at the heart of the enterprise. The key elements of our strategy to extend our global leadership include: continue innovating and enhancing our solution; growing our customer base; further penetrating our existing customer base; continuing to expand our global presence by leveraging systems integrators and distribution partnerships; and selectively pursuing strategic transactions. Risks Associated With Our Business Investing in our ordinary shares involves risks. You should carefully consider the risks described in Risk Factors beginning on page 12 before making a decision to invest in our ordinary shares. If any of these risks actually occur, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our ordinary shares would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face: The IT security market is rapidly evolving within the increasingly challenging cyber threat landscape. If the industry does not continue to develop as we anticipate, our sales will not grow as quickly as expected and our share price could decline. If we fail to effectively manage our growth, our business and operations will be negatively affected, and as we invest in the growth of our business, we expect our operating and net profit margins to decline in the near-term. Our quarterly results of operations may fluctuate for a variety of reasons, including our failure to close significant sales before the end of a particular quarter. Our reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solution or the failure of our solution to meet customers expectations. If we are unable to acquire new customers, our future revenues and operating results will be harmed. If we are unable to sell additional products and services to our existing customers, our future revenues and operating results will be harmed. We face intense competition from IT security vendors, some of which are larger and better known than we are, and we may lack sufficient financial or other resources to maintain or improve our competitive position. Table of Contents If our internal network system is compromised by cyber attackers or other data thieves, public perception of our products and services will be harmed. Corporate Information We are incorporated under the laws of the State of Israel. Our principal executive offices are located at 94 Em-Ha moshavot Road, Park Ofer, P.O. Box 3143, Petach Tikva 4970602, Israel, and our telephone number is +972 (3) 918-0000. Our website address is www.cyberark.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. We have included our website address in this prospectus solely for informational purposes. Our agent for service of process in the United States is Cyber-Ark Software, Inc., located at 60 Wells Avenue, Suite 103, Newton, MA 02459, and our telephone number is (617) 965-1544. Throughout this prospectus, we refer to various trademarks, service marks and trade names that we use in our business. The CyberArk design logo is the property of CyberArk Software Ltd. CyberArk is our registered trademark in the United States. We have several other trademarks, service marks and pending applications relating to our products. In particular, although we have omitted the and trademark designations in this prospectus from each reference to Cyber-Ark DNA, Inter-Business Vault, Network Vault, Password Vault, Privileged Session Manager and Vaulting Technology, all rights to such trademarks are nevertheless reserved. Other trademarks and service marks appearing in this prospectus are the property of their respective holders. Table of Contents The Offering Ordinary shares offered by us 900,000 ordinary shares Ordinary shares offered by the selling shareholders 4,000,000 ordinary shares Ordinary shares to be outstanding after this offering 31,657,908 ordinary shares Underwriters option The selling shareholders have granted the underwriters an option for a period of 30 days after the date of this prospectus to purchase up to 735,000 additional ordinary shares. Use of proceeds We estimate that the net proceeds to us from this offering will be approximately $56.7 million, based on an assumed public offering price of $66.24 per share, the closing price of our ordinary shares on the NASDAQ Global Select Market on June 5, 2015, after deducting the underwriting discount and estimated offering expenses. We intend to use the net proceeds for general corporate purposes, including sales and marketing expenditures aimed at growing our business and research and development expenditures focused on product development. We may also use net proceeds to make acquisitions or investments in complementary companies or technologies. Consistent with our growth strategy, we are currently engaged in discussions, negotiations and diligence evaluations with respect to possible acquisitions, although we do not have any agreement or understanding with respect to any material acquisition or investment at this time. We will not receive any of the proceeds from the sale of ordinary shares by the selling shareholders. See Use of Proceeds, Principal and Selling Shareholders and Underwriting (Conflicts of Interest).
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+S-1 1 a2225323zs-1.htm S-1 Use these links to rapidly review the document TABLE OF CONTENTS TABLE OF CONTENTS 2 Table of Contents As filed with the Securities and Exchange Commission on July 14, 2015 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 You should read this prospectus, any documents that we incorporate by reference in this prospectus, and the additional information described below under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" before making an investment decision. You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this prospectus in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation of an offer in such jurisdiction. The information contained in this prospectus is current only as of its date. 1 We currently own a 48.1% interest in Silver Legacy and our affiliates own a 1.9% interest. We have entered into a purchase agreement to acquire the 50% interest in the Silver Legacy Joint Venture that is owned by a subsidiary of MGM Resorts International and expect that we will acquire the 1.9% interest that is held by our affiliates in connection with the purchase of the 50% interest from the subsidiary of MGM Resorts International. See "Recent Developments Circus Reno/Silver Legacy Purchase." FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Non-GAAP financial measures We have included presentations of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization ("Adjusted EBITDA") in this prospectus that are not in accordance with generally accepted accounting principles ("GAAP"). Our management believes these non-GAAP financial measures provide useful information about our operating performance. However, these measures should not be considered as alternatives to net income or cash flows from operating activities as indicators of operating performance or liquidity. EBITDA and Adjusted EBITDA are not recognized terms under GAAP. EBITDA and Adjusted EBITDA have important limitations as analytical tools and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income, and these measures may vary among companies. See "Summary historical consolidated and summary pro forma condensed combined financial information" for definitions of the non-GAAP financial measures used in this prospectus and reconciliations thereof to the most directly comparable GAAP measures. Table of Contents Business strengths & strategy Personal service and high quality amenities One of the cornerstones of our business strategy is to provide our customers with an extraordinary level of personal service. Our senior management is actively involved in the daily operations of our properties, frequently interacting with gaming, hotel and restaurant patrons to ensure that they are receiving the highest level of personal attention. Management believes that personal service is an integral part of fostering customer loyalty and generating repeat business. We continually monitor our casino operations to react to changing market conditions and customer demands. We target both premium-play and value-conscious gaming patrons with differentiated offerings at our state-of-the-art casinos, which feature the latest in game technology, innovative bonus options, dynamic signage and customer-convenient features. Diversified portfolio across markets and customer segments We are geographically diversified across the United States, with no single property accounting for more than 26% and 38%, respectively, of our net revenues and property EBITDA for year ended December 31, 2014. Our customer pool draws from a diversified base of both local and out-of-town patrons. For example, approximately 20% of our customer base at Eldorado Reno is local, while 80% visit from out-of-town and utilize our hotel, restaurants and other amenities for a full-service gaming experience. We have also initiated changes to our marketing strategy to reach more potential customers through targeted direct mailings and electronic marketing. Lastly, we do not expect any material new competition in the foreseeable future as no new significant gaming operations have opened within the past year in any of our primary markets with the sole exception of Hollywood Mahoning Casino in Youngstown, Ohio, which opened in September 2014. We believe we have assembled a platform on which we can continue to grow and provide a differentiated customer experience. Management team with deep gaming industry experience and strong local relationships We have an experienced management team that includes, among others, Gary Carano, our Chief Executive Officer and the Chairman of the Board, who has more than thirty years of experience in the gaming and hotel industry. Previously, Mr. Carano served as President and Chief Operating Officer of Eldorado Resorts LLC, where he was the driving force behind the Company's development and operations in Nevada and Louisiana. In addition to Gary Carano, our senior executives have significant experience in the gaming and finance industries. Our extensive management experience and unwavering commitment to our team members, guests and equity holders have been the primary drivers of our strategic goals and success. We take pride in our reinvestment in our properties and the communities we support along with emphasizing our family-style approach in an effort to build loyalty among our team members and guests. We will continue to focus on the future growth and diversification of our company while maintaining our core values and striving for operational excellence. Operations and facility enhancement initiatives across entire portfolio In 2015 we implemented a property enhancement program at all of our properties. In particular, we have begun a $29.2 million capital improvements program, net of $3.5 million of reimbursements from West Virginia, and are working to bring Eldorado's legacy of hospitality and service excellence to the MTR properties through new and upgraded food and beverage offerings, the relocation of certain members of the Company's management team and the addition of new amenities to address market-specific challenges and opportunities. One such property enhancement is underway currently at Scioto Downs, where we are building The Brew Brothers, a new $5.9 million microbrewery and restaurant scheduled to open by the fourth quarter of 2015. Similarly, the $5.0 million five phase design and facility enhancement program ELDORADO RESORTS, INC. (Exact Name of Registrant as Specified in its Charter) Table of Contents underway at Presque Isle Downs & Casino, consisting of a reconfiguration of the casino floor, the addition of a center bar in the casino and enhancements of existing facilities, is scheduled to be completed by year-end. The remodel of over 200 rooms in the Skyline Tower at Eldorado Reno was completed in the second quarter of 2015. At Eldorado Shreveport, we are constructing a new casino bar and a new high limit room. In addition, we constructed a smoking patio at Mountaineer casino with approximately 200 slot machines and 6 gaming tables. We expect that the newly-constructed smoking patio will help mitigate the county-wide ban on smoking in public places that was implemented on July 1, 2015. Execution of cost savings program We have identified several areas to improve property level and corporate adjusted EBITDA margins through operating and cost efficiencies and exercising financial discipline throughout the Company without impacting the player experience. In addition to cost savings relating to duplicative executive compensation, legal and accounting fees and other corporate expenses that we have eliminated or expect to eliminate as a result of the Merger, we currently expect to achieve savings in marketing, food and beverage costs, selling, general and administrative expenses and other operating departments as a result of operating efficiencies and purchasing power of the combined MTR and Eldorado organization. In total, we expect to reduce corporate and property level expenses by more than $10 million (property level and corporate level synergies of $5 million each) on an annualized basis over the next 12 months. A portion of such expense reduction was reflected in our operating results for the quarter ended March 31, 2015 and we expect that the full impact of such expense reduction will be realized by the second quarter of 2016. See "Risk factors Risks related to the proposed Circus Reno/Silver Legacy Purchase and the Merger We may not realize all of the anticipated benefits of Circus Reno/Silver Legacy Purchase and the Merger and we may encounter difficulties in integrating Circus Reno, Silver Legacy and the MTR Gaming properties with our operations." Properties As of March 31, 2015, we owned or operated approximately 431,600 square feet of casino space with approximately 7,830 slot machines, 2,150 VLTs, 280 table games, and 3,280 hotel rooms, including Silver Legacy's 89,200 square feet of casino space and approximately 1,340 slot machines, 63 table games and 1,700 hotel rooms. The following table sets forth certain information regarding our properties as of and for the year ended December 31, 2014. See footnote (f) under " Summary historical consolidated financial information" for an explanation of our calculation of Adjusted EBITDA. Year ended December 31, 2014 Adjusted EBITDA ($mm) Casino space (Sq.ft) Slot machines / VLTs Table and poker games Hotel rooms Scioto Downs $ 49,345 83,000 2,150 NA NA Eldorado Shreveport $ 24,142 28,200 1,474 61 403 Eldorado Reno $ 8,000 76,500 1,223 59 814 Presque Isle $ 19,415 61,400 1,720 46 NA The Mountaineer Casino $ 30,412 93,300 2,098 51 354 Nevada (State or other jurisdiction of incorporation or organization) 7990 (Primary Standard Industrial Classification Code Number) 46-3657681 (I.R.S. Employer Identification Number) 100 West Liberty Street, Suite 1150 Reno, Nevada 89501 (775) 328-0100 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents Scioto Downs Scioto Downs is located in the heart of Central Ohio, directly off Highway 23/South High Street, approximately eight miles from downtown Columbus. Columbus is one of the largest metropolitan areas within the state of Ohio. Columbus is centrally located and is a popular tourist destination for state residents and out of state visitors, attracting 37.6 million visitors in 2014 with 22% staying at least one night and $1.56 billion of tourist spending in 2014. The Columbus market generated $275.9 million, $274.8 million and $115.3 million in slot revenues in 2014, 2013 and 2012, respectively. Year to date as of May 31, 2015, the Columbus market generated slot revenues of $121.6 million, which represented a 4.5% increase over the comparable prior year period. Scioto Downs ran its first Standardbred horse race in 1959 and has since established a rich and deep connection within the regional racing community. Opening VLT operations with a new 132,000 square foot gaming facility on June 1, 2012, Scioto Downs became the first "Racino" operation in the State of Ohio and is one of only two licensed gaming facilities in the Columbus area. The new gaming facility was designed to integrate with the iconic and recognizable racing structures; blending architectural features and aspects to achieve a seamless and marketable look. Scioto Downs currently offers: 83,000 square feet of gaming space housing approximately 2,150 VLTs, including a 3,200 square foot outdoor smoking patio; Six full service bars which include the approximately 120 seat lounge atmosphere of the Veil Bar which offers live entertainment three nights a week, the High Limit Bar, a sports bar with eight big screen TVs and state of the art audio, as well as supporting bars within our racing operations facilities; Live standard bred harness horse racing conducted from May through mid-September with barns, paddock and related facilities for the horses, drivers and trainers, that can accommodate over 2,600 patrons for live racing as well as a Summer Concert Series, featuring national acts; On-site pari-mutuel wagering and thoroughbred, harness and greyhound racing simulcast from other prominent tracks, as well as wagering on Scioto Downs' races at over 800 sites to which the races are simulcast; and Surface parking for approximately 3,500 vehicles. Eldorado Shreveport Eldorado Shreveport is a premier resort casino located in Shreveport, Louisiana, the largest gaming market in Louisiana, adjacent to Interstate 20, a major highway that connects the Shreveport market with the attractive feeder markets of East Texas and Dallas/Fort Worth, Texas. Eldorado Shreveport was built next to an existing riverboat gaming and hotel facility formerly operated by Harrah's Entertainment and now operated by Boyd Gaming Corporation. The two casinos form the first and only "cluster" in the Shreveport/Bossier City market, allowing patrons to park once and easily walk between the two facilities. There are currently six casinos and a racino operating in the Shreveport/Bossier City market, which is the largest gaming market in Louisiana. The Shreveport/Bossier City gaming market permits continuous dockside gaming without cruising requirements or simulated cruising schedules, allowing casinos to operate 24 hours a day with uninterrupted access. Based on information published by the state of Louisiana, the six casino operators and racino in the Shreveport/Bossier City market generated approximately $736.1 million, $727.3 million, and $713.3 million in gaming revenues in 2014, 2013 and 2012, respectively. The principal target markets for Eldorado Shreveport are patrons from the Dallas/Fort Worth Metroplex and East Texas. Shreveport/Bossier City has an estimated 445,000 residents and there are approximately Gary L. Carano Chief Executive Officer Eldorado Resorts, Inc. 100 West Liberty Street, Suite 1150 Reno, Nevada 89501 (775) 328-0100 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents 7.2 million adults who reside within approximately 200 miles of Shreveport/Bossier City according to the most recent census data. Eldorado Shreveport is located approximately 185 miles east of Dallas and can be reached by car in approximately three hours. Flight times are less than one hour from both Dallas and Houston to the Shreveport Regional Airport. Eldorado Shreveport opened in 2000 and is a modern, Las Vegas-style resort with a gaming experience that appeals to both local gamers and out-of-town visitors. Our integrated casino and entertainment resort benefits from the following features: A location that positions us as the first casino that customers reach when driving to Shreveport from our primary feeder markets and the Shreveport Regional Airport; A purpose-built 80,634-square foot barge that houses approximately 28,200 square feet of gaming space, as measured by the actual footprint of the gaming equipment, offering approximately 1,470 slots and 60 table and poker games; An approximately 185,000 square foot land-based pavilion featuring a 60-foot high atrium that enables patrons to see the casino floor; An 85-foot wide seamless entrance that connects the casino to the land-based pavilion on all three levels resulting in the feel of a land-based casino; Numerous restaurants and entertainment amenities, including a deli and ice cream shop, VIP check-in, a premium quality bar and a retail store; A luxurious 403-room, all-suite, hotel, with updated rooms featuring modern d cor and flat screen TVs; Part of the only "cluster" in our market that allows for walkable visits between two gaming facilities with over 900 hotel rooms; A 380-seat ballroom with four breakout rooms, a 5,940-square foot spa, a fitness center and salon, a premium players' club and an entertainment show room; and Two parking lots and an eight story parking garage providing approximately 1,800 parking spaces that connects directly to the pavilion by an enclosed walkway, including valet parking for approximately 300 vehicles. Eldorado Reno We also own and operate Eldorado Reno, an 814-room premier hotel, casino and entertainment facility centrally located in downtown Reno, Nevada. Reno is the second largest metropolitan area in Nevada, with a population of approximately 433,700 according to the most recently available census data, and is located at the base of the Sierra Nevada Mountains along Interstate 80, approximately 135 miles east of Sacramento, California and 225 miles east of San Francisco, California. Reno is a destination market that attracts year-round visitation by offering gaming, numerous summer and winter recreational activities and popular special events such as national bowling tournaments. Management believes that approximately two-thirds of visitors to the Reno market arrive by some form of ground transportation. Popular special events include the National Championship Air Races, the Reno-Tahoe Open PGA tour event, Street Vibrations, a motorcycle event, and Hot August Nights, a vintage car event. According to the Reno-Sparks Convention & Visitors Authority (the "Visitors Authority"), the greater Reno area attracted approximately 4.6 million and 4.7 million visitors during the years 2014 and 2013, with copies to: Deborah J. Conrad, Esq. Milbank, Tweed, Hadley & McCloy LLP 601 South Figueroa Street, 30th Floor Los Angeles, California 90017 (213) 892-4000 William J. Miller, Esq. Cahill Gordon & Reindel LLP 80 Pine Street New York, New York 10005 (212) 701-3000 Table of Contents respectively, and year to date visitation through April 2015 was 1.4 million, an increase in 4.1% compared to the comparable prior year period. In addition, a number of companies, including Tesla and Switch, have recently established or announced that they plan to establish operations in the Reno area. Based on information reported by the Nevada State Gaming Control Board, gaming revenues for the Reno/Sparks gaming markets were $671.6 million, $670.1 million and $644.8 million in 2014, 2013 and 2012, respectively. Year to date as of May 31, 2015, the Reno market generated gaming revenues of $281.0 million, which represented a 4.7% increase over the comparable prior year period. Eldorado Reno currently offers: Approximately 76,500 square feet of gaming space, with approximately 1,200 slot machines and 60 table games; 814 finely-appointed guest rooms, including 134 suites, which include "Eldorado Player's Spa Suites" with bedside spas and one or two bedroom suites; Nationally-recognized cuisine which ranges from buffet to gourmet; An approximately 560-seat showroom, a VIP lounge, three retail shops, a versatile 12,010 square foot convention center and an outdoor plaza located diagonal to Eldorado Reno which hosts a variety of special events; and Parking facilities for over 1,100 vehicles, including a an approximately 640-space self-park garage, 120-space surface parking lot and 350-space valet parking facility. Silver Legacy Resort Casino The Silver Legacy, a joint venture between Resorts and MGM Resorts International, opened in July 1995. Silver Legacy's design is inspired by Nevada's rich mining heritage and the legend of Sam Fairchild, a fictitious silver baron who "struck it rich" on the site of the casino. Silver Legacy's hotel, the tallest building in northern Nevada, is a "Y"-shaped structure with three wings, consisting of 37-, 34- and 31-floor tiers. Silver Legacy's opulent interior showcases a casino built around Sam Fairchild's 120-foot tall mining rig, which appears to mine for silver. The rig is situated beneath a 180-foot diameter dome, which is a distinctive landmark on the Reno skyline. The interior surface of the dome features dynamic sound and laser light shows, providing visitors with a unique experience when they are in the casino. Silver Legacy is situated on two city blocks, encompassing 240,000 square feet in downtown Reno. The hotel currently offers 1,711 guest rooms, including 141 player spa suites, eight penthouse suites and seven hospitality suites. Many of Silver Legacy's guest rooms feature views of Reno's skyline and the Sierra Nevada mountain range. Silver Legacy's 10-story parking facility can accommodate approximately 1,800 vehicles. As of March 31, 2015, Silver Legacy's casino featured approximately 89,200 square feet of gaming space with approximately 1,340 slot machines and 63 table games, including blackjack, craps, roulette, Pai Gow Poker, Let It Ride , Baccarat and Pai Gow, a keno lounge and a race and sports book. "Club Legacy," Silver Legacy's slot club, offers customers exciting special events and tournaments and convenient ways of earning complimentaries and slot free play. We and our affiliates currently own a 50% interest in the Silver Legacy Joint Venture and we have entered into an agreement to acquire the other 50% interest in the Silver Legacy Joint Venture that is owned by a subsidiary of MGM Resorts International. See "Recent Developments Circus Reno/Silver Legacy Purchase." Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Presque Isle Downs & Casino Presque Isle Downs, located in Erie, Pennsylvania, opened for business in 2007 and commenced table gaming operations in 2010. Erie is located in northwestern Pennsylvania and Erie County has a population of approximately 280,000 according to the most recently available census data. Presque Isle Downs is located directly off of highway 90 and Presque Isle State Park attracts nearly four million visitors annually. The 153,400 square foot facility consists of: 61,400 square feet of gaming space housing approximately 1,730 slot machines, 36 casino table games and a nine table poker room, which we began operating on October 3, 2011; Live thoroughbred horse racing conducted from May through September on a one-mile track with a state-of-the-art one-mile mile synthetic racing surface with grandstand, barns, paddock and related facilities, and indoor and outdoor seating for approximately 750 patrons; On-site pari-mutuel wagering and thoroughbred and harness racing simulcast from other prominent tracks, as well as wagering on Presque Isle Downs' races at over 1,200 sites to which the races are simulcast; and Surface parking for approximately 3,200 vehicles. Mountaineer Casino, Racetrack & Resort Mountaineer is one of only four racetracks in West Virginia currently permitted to operate slot machines and traditional casino table gaming. Mountaineer is located on the Ohio River at the northern tip of West Virginia's northwestern panhandle, approximately thirty miles from the Pittsburgh International Airport and a one-hour drive from downtown Pittsburgh. Mountaineer is a diverse gaming, entertainment and convention complex with: 93,300 square feet of gaming space housing approximately 2,100 slot machines, 40 casino table games (including blackjack, craps, roulette and other games), and 11 poker tables; 354 hotel rooms, including the 256-room, 219,000 square foot Grande Hotel at Mountaineer, 27 suites, a full-service spa and salon, a retail plaza and indoor and outdoor swimming pools; 12,090 square feet of convention space, which can accommodate seated meals for groups of up to 575, as well as smaller meetings in more intimate break-out rooms that can accommodate approximately 75 people and entertainment events for approximately 1,500 guests; Live thoroughbred horse racing conducted from March through December on a one-mile dirt surface or a 7/8 mile grass surface with expansive clubhouse, restaurant, bars and concessions, as well as grandstand viewing areas with enclosed seating for approximately 3,570 patrons; On-site pari-mutuel wagering and thoroughbred, harness and greyhound racing simulcast from other prominent tracks, as well as wagering on Mountaineer's races at over 1,400 sites to which the races are simulcast; Woodview, an eighteen-hole par 71 golf course measuring approximately 6,200 yards located approximately seven miles from Mountaineer; A 69,000 square foot theater and events center that seats approximately 5,000 patrons for concerts and other entertainment offerings; CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Proposed maximum aggregate offering price(1)(2) Amount of registration fee Common stock, par value $0.00001 per share $80,000,000 $9,296 (1) Estimated solely for the purpose of calculating amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes shares of common stock which the underwriters have the right to purchase. Table of Contents A 13,650 square foot fitness center which has a full complement of weight training and cardiovascular equipment, as well as a health bar, locker rooms with steam and sauna facilities, and outdoor tennis courts; and Surface parking for approximately 5,300 vehicles. Recent developments Circus Reno/Silver Legacy purchase Certain of our subsidiaries have entered into a Purchase and Sale Agreement, dated as of July 7, 2015 (the "Purchase Agreement"), with Circus Circus Casinos, Inc. and Galleon, Inc., each an affiliate of MGM Resorts International, with respect to the acquisition of (i) all of the assets and properties of Circus Circus Reno ("Circus Reno") and (ii) the other 50% membership interest in the Silver Legacy Joint Venture owned by Galleon, Inc. (collectively, the "Circus Reno/Silver Legacy Purchase"). ERI has unconditionally guaranteed the purchasers' obligations under the Purchase Agreement. ERI currently has an indirect interest in 48.1% of the interests of the Silver Legacy Joint Venture. In connection with the consummation of the Circus Reno/Silver Legacy Purchase, ERI expects to acquire the 1.9% indirect interest in the Silver Legacy Joint Venture held by certain affiliates of ERI. Following the consummation of the foregoing transactions, the Silver Legacy Joint Venture will be a wholly-owned indirect subsidiary of ERI. Circus Reno is an iconic, circus-themed hotel-casino and entertainment complex which features, as of March 31, 2015, a 55,000 square foot gaming floor with 906 slot machines, 35 table games, 1,571 hotel rooms (including 67 mini suites, four executive suites and four VIP suites), a sports book, two fine dining restaurants, a buffet and three casual dining restaurants. Circus Reno also has a midway featuring a total of 158 games and a full service wedding chapel with reception services for groups of 25 or more. ERI, Silver Legacy and Circus Reno are connected via a skywalk and together comprise the premier gaming destination in Reno. For the year ended December 31, 2014, Silver Legacy and Circus Reno had a combined Adjusted EBITDA of $27.3 million. See footnote (f) under " Summary historical consolidated financial information" for an explanation of our calculation of Adjusted EBITDA. The proposed purchase price is $72.5 million, subject to a customary working capital adjustment, and the assumption of amounts outstanding under the Silver Legacy Joint Venture credit facility, of which approximately $60 million was outstanding at March 31, 2015 on a net basis. We deposited $3 million in escrow, which we will surrender in the event the proposed acquisitions fail to close for reasons other than a breach by Circus Circus Casinos, Inc. or Galleon, Inc. The balance of the purchase price will be payable in cash at the closing of the Circus Reno/Silver Legacy Purchase. The Circus Reno/Silver Legacy Purchase is not subject to a financing condition and we do not have a financing commitment to fund the acquisition. We expect to fund the purchase price for the Circus Reno/Silver Legacy Purchase and the repayment of amounts outstanding under the Silver Legacy Joint Venture credit facility with a portion of the proceeds from the sale of the Notes, proceeds from contemplated equity offerings in the near term, borrowings under the New Revolving Credit Facility and cash on hand. See "Use of proceeds" and "Risk factors Risks related to the proposed Circus Reno/Silver Legacy Purchase." The consummation of the transactions contemplated by the Purchase Agreement is subject to the satisfaction of certain conditions, including the approval of various gaming authorities. Although we anticipate that the Circus Reno/Silver Legacy transaction will be consummated by the end of 2015, there cannot be any assurance that we will consummate the proposed acquisitions or as to the date by which the proposed acquisitions will close. Additionally, there cannot be any assurance that, if we complete the acquisitions, we will be able to successfully integrate the acquired operations into our business or that the The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine Table of Contents acquired operations will result in increased revenue, profitability or cash flow. See "Risk factors Risks related to the proposed Circus Reno/Silver Legacy Purchase." Nothing contained herein shall constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Preliminary operating results for quarter ended June 30, 2015 Although our results of operations for the quarter ended June 30, 2015 are not yet available, the following reflects our current expectations for that period: We expect consolidated net revenues in the range of $180 million to $185 million for the quarter ended June 30, 2015, compared to pro forma consolidated net revenues of $186.6 million for the quarter ended June 30, 2014, after giving effect to the Merger and we expect consolidated Adjusted EBITDA in the range of $35.5 million to $37.5 million for the quarter ended June 30, 2015. Pro forma Adjusted EBITDA after giving effect to the Merger was $35.4 million for the quarter ended June 30, 2014. The estimates set forth above are based solely on currently available information, which is subject to change and have not been reviewed by our independent auditors. We have not finalized our financial statement closing process or the audit of financial statements for the quarter ended June 30, 2015. During the course of this process we may identify items that would require us to make adjustments to our preliminary operating results described above. As a result, the discussion above constitutes forward-looking statements and, therefore, we caution you that these statements are subject to risks and uncertainties, including possible adjustments to our preliminary operating results and the risk factors highlighted in our public filings. See "Disclosure regarding forward-looking statements." See also footnote (f) under " Summary historical consolidated financial information" for an explanation of our calculation of Adjusted EBITDA. Refinancing transactions We are undertaking a series of transactions to refinance our outstanding indebtedness. We intend to use the net proceeds of this offering, together with borrowings under a proposed new $425 million term loan facility (the "New Term Loan"), proceeds from the sale of new senior notes, borrowings under our proposed new $150 million revolving credit facility (the "New Revolving Credit Facility" and, together with the New Term Loan, the "New Credit Facility") and cash on hand, to (i) purchase or otherwise redeem all of the outstanding 8.625% Senior Secured Notes due 2019 issued by Eldorado Resorts LLC and Eldorado Capital Corp. (the "Resorts Notes") and 11.50% Senior Secured Second Lien Notes due 2019 issued by MTR Gaming Group, Inc. (the "MTR Notes" and, together with the Resorts Notes, the "Existing Notes"), (ii) pay the purchase price for the Circus Reno/Silver Legacy Purchase and repay all amounts outstanding under the Silver Legacy Joint Venture credit facility, and (iii) pay fees and costs associated with such transactions. See "Use of proceeds." On July 13, 2015, we commenced cash tender offers and consent solicitations for any and all of our Existing Notes pursuant to which we are offering to purchase (a) any and all of the Resorts Notes at a purchase price of $1,017.92 in cash, plus a $30.00 consent payment, per $1,000 in principal amount of Resorts Notes (the "Resorts Tender Offer") and (b) any and all of the MTR Notes at a purchase price of $1,036.39 in cash, plus a $30.00 consent payment, per $1,000 in principal amount of MTR Notes (the "MTR Tender Offer" and, together with the Resorts Tender Offer, the "Tender Offers"). The Tender Offers will expire at 12:00 a.m., New York City time, on August 7, 2015, unless extended or terminated earlier by us. To the Table of Contents Subject to completion, dated July 14, 2015 The information contained in this preliminary prospectus is not complete and may be changed. This preliminary prospectus and the accompanying prospectus are not an offer to sell these securities or a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Prospectus Eldorado Resorts, Inc. common stock We are offering shares of common stock (the "common stock"). Our common stock trades on the NASDAQ Stock Market under the symbol "ERI." On July 9, 2015, the last reported sale price of our common stock on the NASDAQ Stock Market was $8.33 per share. Investing in our common stock involves risks. See "Risk factors" beginning on page 19 of this prospectus as well as the risks described in Part I, Item 1A "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2014. Per share Total Public offering price $ $ (1) Underwriting discounts and commissions $ $ (1) Proceeds, before expenses, to us $ $ (1) (1) Assumes no exercise of the underwriters' option to purchase additional shares of common stock described below. We have granted the underwriters an option, exercisable within a 30-day period beginning on, and including, the date of this prospectus, to purchase up to additional shares of common stock from us at the public offering price, less the underwriting discounts and commissions. See the section of this prospectus entitled "Underwriting" beginning on page of this prospectus. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the common stock or determined if this prospectus or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common stock on or about , 2015. Book-running manager J.P. Morgan The date of this prospectus is , 2015 Table of Contents extent that any of the outstanding Existing Notes are not tendered and repurchased in the Tender Offers, we intend to redeem or otherwise retire such notes in accordance with the terms of the indentures under which such notes were issued. Any such notice of redemption will be issued in accordance with the terms of the indentures governing the Existing Notes. Nothing in this prospectus should be construed as a notice of redemption or any offer to purchase or the solicitation of an offer to sell the Existing Notes. The offer and sale of the Notes, the entry into the New Credit Facility and the use of proceeds of the sale of the Notes and borrowings under the New Term Loan to purchase, redeem, defease or otherwise satisfy and discharge the Existing Notes are collectively referred to herein as the "Refinancing Transactions." The new senior notes will be offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and to persons outside the United States under Regulation S of the Securities Act. The new senior notes will not be registered under the Securities Act, and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Table of Contents The offering Issuer Eldorado Resorts, Inc. Common Stock Offered shares. Common Stock Presently Outstanding(1) 46,926,719 shares. Common Stock Outstanding After This Offering shares. Underwriters' Option to Purchase Additional Shares We have granted the underwriters a 30-day option to purchase up to additional shares of common stock at the offering price less the underwriting discount. Use of Proceeds We estimate that the net proceeds of this offering will be approximately $ million, or approximately $ million if the underwriters exercise their option in full, after deducting the underwriting discount and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to finance a portion of the purchase price for the Circus Reno/Silver Legacy Purchase, including repaying amounts outstanding under the Silver Legacy Joint Venture credit agreement. In the event that the Circus Reno/Silver Legacy Purchase is not consummated, we intended to use the net proceeds from this offering for general corporate purposes. See "Use of Proceeds." Voting Rights Holders of shares of our common stock are entitled to vote on all matters to be voted on by stockholders. Each outstanding share of common stock is entitled to one vote. See "Description of Capital Stock." Dividend Policy We do not anticipate paying any cash dividends on our common stock following this offering. Any determination to pay dividends to holders of our common stock will be at the discretion of our Board of Directors. The payment of cash dividends is restricted under the terms of the agreements governing our outstanding debt, and may be further restricted by other agreements related to indebtedness we incur in the future. NASDAQ Symbol ERI. Risk Factors See "Risk Factors" and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock. (1) The number of shares of common stock to be outstanding immediately after this offering is based on 46,426,714 shares outstanding as of March 31, 2015, and assumes no exercise of outstanding stock options or vesting of shares of restricted stock after that date. Unless we indicate otherwise, all information in this prospectus excludes: 46,516,614 shares of common stock issuable upon exercise of outstanding stock options, of which none were vested as of March 31, 2015; and 46,426,714 additional shares of common stock that are reserved for issuance under our incentive award plan. Table of Contents Summary historical consolidated and summary pro forma condensed combined financial information The summary pro forma condensed combined financial information has been prepared to illustrate the effects of certain adjustments that are expected to have a continuing impact on the results of operations related to (x) the Merger as if such events and the Merger Date had occurred on the first day of the period presented and (y) this offering, the Refinancing Transactions and the Circus Reno/Silver Legacy Purchase as if each such transaction had occurred on January 1, 2014. The summary unaudited pro forma condensed combined financial information presented below for the year ended December 31, 2014 have been derived from the Company's unaudited pro forma condensed combined financial statements, which are contained elsewhere in this prospectus. Preparation of unaudited pro forma condensed combined financial information is based on estimates and assumptions deemed appropriate by the Company, which are described more fully under the caption "Unaudited pro forma condensed combined financial statements." The pro forma information is unaudited and is not necessarily indicative of the results that actually would have occurred if the Merger, the Refinancing Transactions, this offering and the Circus Reno/Silver Legacy Purchase had been consummated as of the dates indicated, nor does it purport to represent the financial position and results of operations for future periods. The pro forma adjustments are based upon currently available information and upon certain assumptions that we believe are reasonable. The summary historical consolidated financial data presented below as of and for the three months ended March 31, 2015 and March 31, 2014 have been derived from the Company's unaudited condensed consolidated financial statements, which are contained elsewhere in this prospectus. The summary historical consolidated financial data presented below for the fiscal years ended December 31, 2014, 2013 and 2012 have been derived from the Company's audited consolidated financial statements, which are contained elsewhere in this prospectus. As adjusted balance sheet data gives effect to the Circus Reno/Silver Legacy Purchase, the Refinancing Transactions and this offering as if such transactions had occurred on March 31, 2015 and assuming no exercise of the underwriters' option. As adjusted financial data is presented for informational purposes only and does not purport to project the Company's financial position as of any future date. The Merger closed on September 19, 2014 (the "Merger Date") and has been accounted for as a reverse acquisition of MTR Gaming by HoldCo under accounting principles generally accepted in the United States. As a result, HoldCo is considered the acquirer of MTR Gaming for accounting purposes. The historical financial information included in the following table for periods prior to the Merger Date are those of Resorts and its subsidiaries. The presentation of information herein for periods prior to the Merger Date and after the Merger Date are not fully comparable because the results of operations for MTR Gaming are not included for periods prior to the Merger Date. You should read the financial information presented below in conjunction with our consolidated financial statements and accompanying notes, MTR Gaming's consolidated financial statements, Silver Legacy's financial statements, our unaudited pro forma condensed combined financial statements, as well as Table of Contents Prospectus summary This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this offering, we encourage you to carefully read this entire prospectus. Overview Founded in 1973 in Reno, Nevada, Eldorado is dedicated to providing exceptional guest service, a dynamic gaming product, award-winning dining, exciting entertainment and premier accommodations. We are a gaming and hospitality company that owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. Our primary source of revenue is gaming, but we use our hotels, restaurants, bars, shops and other services to attract customers to our properties. We were founded as a family business by the Carano family and continue to maintain our commitment to customer service, high-quality dining and outstanding amenities. We believe that our extraordinary level of personal service and the variety, quality and attractive pricing of our food and beverage outlets are important factors in attracting customers to our properties and building customer loyalty. We own and operate the following properties: Scioto Downs A modern "racino" offering over 2,100 video lottery terminals located 15 minutes from downtown Columbus, Ohio; Eldorado Resort Casino, Shreveport ("Eldorado Shreveport") A 403-room, all suite art deco style hotel and tri-level riverboat dockside casino situated on the Red River in Shreveport, Louisiana; Eldorado Hotel and Casino, Reno ("Eldorado Reno") A 814-room hotel, casino and entertainment facility located in downtown Reno, Nevada; Silver Legacy Resort Casino ("Silver Legacy")1 A 1,711-room themed hotel and casino located adjacent to Eldorado Reno; Presque Isle Downs and Casino ("Presque Isle Downs") A casino and live thoroughbred horse racing facility with slot machines, table games and poker located in Erie, Pennsylvania; and Mountaineer Casino, Racetrack and Resort ("Mountaineer") A 354-room resort with a casino and live thoroughbred horse racing located on the Ohio River at the northern tip of West Virginia's northwestern panhandle On September 19, 2014 (the "Merger Date") a wholly owned subsidiary of Eldorado Resorts, Inc. ("ERI" or the "Company") merged (the "Merger") into Eldorado HoldCo LLC ("HoldCo"), the parent company of Eldorado Resorts LLC ("Resorts"), which owns Eldorado Shreveport, Eldorado Reno and a 48.1% interest in Silver Legacy, and MTR Gaming Group, Inc. ("MTR Gaming"), which owns Mountaineer, Presque Isle Downs and Scioto Downs. Effective upon the consummation of the Merger, MTR Gaming and HoldCo each became a wholly owned subsidiary of ERI and, as a result of such transactions, Resorts became an indirect wholly owned subsidiary of ERI. Table of Contents "Management's Discussion and Analysis of Financial Condition and Results of Operation," included elsewhere in this prospectus. Pro forma(a) (dollars in thousands) Year ended December 31, 2014 Three months ended March 31, 2015 Consolidated statement of operations data: Operating revenues: Casino $ 721,373 $ 171,795 Pari-mutuel commissions 10,000 1,205 Food and beverage 139,594 32,792 Hotel 82,460 17,149 Other 43,813 10,203 Total revenues 997,240 233,144 Less promotional allowances (88,825 ) (21,360 ) Net revenues 908,415 211,784 Operating expenses: Casino 419,229 98,909 Pari-mutuel commissions 10,464 1,696 Food and beverage 81,273 19,009 Hotel 32,489 7,208 Other 26,931 5,902 Marketing and promotions 48,303 9,854 General and administrative 149,183 37,115 Depreciation and amortization 45,490 12,141 Total operating expenses 813,362 191,834 (Loss) gain on sale or disposition of property (268 ) (11 ) Operating income (loss) 94,785 19,939 Other income (expense): Interest income 28 5 Interest expense (50,172 ) (12,529 ) Gain on extinguishment of debt (Refinance) (1,432 ) Gain on termination of supplemental executive retirement plan 1,430 Change in fair value of supplemental executive retirement plan assets 69 Loss on extinguishment of debt (90 ) Net (loss) income before income taxes 44,618 7,415 Provision (benefit) for income taxes(d) (5,003 ) (1,016 ) Net income $ 39,615 $ 6,399 Table of Contents Year ended December 31, Three months ended March 31, 2012 2013 2014 2014 2015 (unaudited) Consolidated statement of operations data: Operating revenues: Casino $ 200,292 $ 192,379 $ 298,848 $ 44,669 $ 147,662 Pari-mutuel commissions 1,986 1,205 Food and beverage 59,317 60,556 68,233 14,347 22,182 Hotel 26,203 26,934 28,007 5,887 7,034 Other 10,458 10,384 13,198 2,180 4,726 Total revenues 296,270 290,253 410,272 67,083 182,809 Less promotional allowances (41,530 ) (43,067 ) (48,449 ) (10,053 ) (15,358 ) Net operating revenues 254,740 247,186 361,823 57,030 167,451 Operating expenses: Casino 104,044 101,913 167,792 23,974 86,818 Pari-mutuel commissions 2,411 1,696 Food and beverage 29,095 28,982 37,411 7,021 11,921 Hotel 8,020 7,891 8,536 1,945 2,190 Other 7,279 7,290 9,348 1,649 2,867 Marketing and promotions 18,724 17,740 21,982 4,137 7,101 General and administrative 44,936 43,713 63,355 10,812 27,704 Depreciation and amortization 17,651 17,031 28,643 4,188 14,469 Total operating expenses 229,749 224,560 339,478 53,726 154,766 Loss on sale or disposition of property (198 ) (226 ) (84 ) 1 Acquisition charges(b) (3,173 ) (7,411 ) (1,372 ) (84 ) Equity in income (losses) of unconsolidated affiliates(c) (8,952 ) 3,355 2,705 (380 ) (518 ) Operating income 15,841 22,582 17,555 1,552 12,084 Other income (expense): Interest income 14 16 18 4 5 Loss on early retirement of debt, net (22 ) (90 ) Gain on extinguishment of debt of unconsolidated affiliate 11,980 Gain on termination of supplemental executive retirement plan assets of unconsolidated affiliates 715 Loss on property donation (755 ) Interest expense (16,069 ) (15,681 ) (30,752 ) (3,889 ) (17,237 ) Total other expense (16,832 ) (3,685 ) (30,109 ) (3,885 ) (17,232 ) Net (loss) income before income taxes (991 ) 18,897 (12,554 ) (2,333 ) (5,148 ) Provision for income taxes(d) (1,768 ) (1,016 ) Net (loss) income (991 ) 18,897 (14,322 ) (2,333 ) (6,164 ) Less net income attributable to non-controlling interest(e) (103 ) Net (loss) income attributable to the Company $ (991 ) $ 18,897 $ (14,425 ) $ (2,333 ) $ (6,164 ) Net (loss) income per share of common stock, basic and diluted $ (0.04 ) $ 0.81 $ (0.48 ) $ (0.10 ) $ (0.13 ) Weighted average number of shares outstanding, basic and diluted 23,311,492 23,311,492 29,901,405 23,311,492 46,494,638 Other data: Combined Adjusted EBITDA(f) $ 42,642 $ 39,657 $ 50,977 $ 7,492 $ 27,724 Capital expenditures 9,181 7,413 10,564 (502 ) (7,495 ) Operating data(g): Number of hotel rooms(h) 1,217 1,217 1,571 1,217 1,571 Average hotel occupancy rate(i) 84.1% 85.1% 84.1% 79.3% 80.1% Number of slot machines(h) 2,779 2,738 8,665 2,697 8,632 Number of table games, excluding poker tables(h) 97 100 177 100 175 Table of Contents Pro forma(a) December 31, 2014 March 31, 2015 March 31, 2014 (unaudited) (unaudited) Consolidated balance sheet data: Cash and cash equivalents $ 87,604 $ 71,913 $ 18,901 Total assets 1,175,330 1,150,452 1,303,468 Total debt 778,862 776,122 823,032 Stockholders' equity 151,622 146,048 238,578 (a) Pro forma adjustments consist of an adjustment to depreciation expense resulting from an adjustment in the fair value of certain definite-lived tangible assets and property and equipment, adjustments related to transaction costs incurred in connection with the Merger, the elimination of the Resorts' investment in Tamarack Junction Casino, adjustments to interest expense relating to the MTR Notes and certain indebtedness of the Silver Legacy Joint Venture, adjustments relating to income tax liabilities, adjustments relating to interest expense and net loss on extinguishment of debt as a result of the Refinancing Transactions, and recognition of gain on ERI's existing investment in the Silver Legacy Joint Venture and elimination of gain previously recognized in connection with the termination of the Silver Legacy supplemental executive retirement plan. See the notes to unaudited pro forma condensed combined statement of operations contained elsewhere in this prospectus. (b) During the three months ended March 31, 2015 and 2014 and the years ended December 31, 2014 and 2013, we incurred $0.1 million, $1.4 million, $7.4 million and $3.2 million, respectively, in acquisition charges in connection with our merger with MTR Gaming. The amounts have been expensed in accordance with the applicable accounting guidance for business combinations. (c) Except as explained in note (d) below, equity in income (losses) of unconsolidated affiliates represents (1) Resorts' 48.1% joint venture interest in the Silver Legacy Joint Venture and (2) for periods prior to September 1, 2014, Resorts' 21.3% interest in Tamarack Crossing, LLC ("Tamarack"). Since the Company operates in the same line of business as Silver Legacy and Tamarack, each with casino and/or hotel operations, the Company's equity in the income (losses) of such affiliates is included in operating income (loss). (d) Prior to September 19, 2014, HoldCo was taxed as a partnership under the Internal Revenue Code pursuant to which income taxes were primarily the responsibility of the partners. On September 18, 2014, as part of the merger with MTR Gaming, ERI became a C Corporation subject to the federal and state corporate-level income taxes at prevailing corporate tax rates. While taxed as a partnership, HoldCo was not subject to federal income tax liability. Because holders of membership interests in HoldCo were required to include their respective shares of HoldCo and Resorts' taxable income (loss) in their individual income tax returns, Resorts made distributions to its member and HoldCo and HoldCo made distributions to its members to cover such liabilities. (e) Non-controlling interest represented the minority partners' share of ELLC's 50% joint venture interest in the Silver Legacy Joint Venture. The non-controlling interest in ELLC was owned by certain HoldCo equity holders and was approximately 4%. The non-controlling interest in Silver Legacy is 1.9%. The Company expects to acquire the remaining 50% joint venture interest pursuant to the Circus Reno/Silver Legacy Purchase and to exercise its rights to acquire the non-controlling interest or ELLC. See "Recent developments Circus Reno/Silver Legacy Purchase". (f) Adjusted EBITDA (defined below), a non GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non GAAP supplemental information will be helpful in understanding the Company's ongoing operating results. Adjusted EBITDA represents (losses) earnings before interest expense (income), income tax expense (benefit), depreciation and amortization, corporate management fee, (loss) gain on the sale or disposal of property, other regulatory gaming assessment costs, loss on asset impairment, acquisition/strategic transaction costs, gain on retirement of supplemental executive retirement plan assets, change in fair value of supplemental executive retirement plan assets, foreign currency transaction (gain) loss and other expenses to the extent that such items existed in the periods presented. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with U.S. GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide Adjusted EBITDA information may calculate Adjusted EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of the Company's debt agreements. In addition, historical combined Adjusted EBITDA for Circus Reno and the Silver Legacy is not necessarily indicative of the results of operations in future periods or the results that actually would have been realized if such assets had been owned by the Company during the relevant periods. (g) Excludes the operating data of Silver Legacy and Tamarack Junction. (h) As of the end of each period presented. (i) For each period presented. Set forth below is a quantitative reconciliation of Adjusted EBITDA to net (loss) income, which we believe is the most comparable financial measure calculated in accordance with GAAP, for each of the years ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2014 and 2015. Table of Contents Year ended December 31, Three months ended March 31, 2012 2013 2014 2014 2015 (unaudited) (dollars in thousands) Net revenues: Eldorado Reno(1) $ 106,090 $ 106,691 $ 103,695 $ 22,416 $ 23,753 Eldorado Shreveport 148,650 140,495 133,960 34,614 34,634 Resorts total net revenues 254,740 247,186 237,655 57,030 58,387 MTR Gaming 486,989 497,791 476,045 114,828 109,064 Total net revenues $ 741,729 $ 744,977 $ 713,700 $ 171,858 $ 167,451 Adjusted EBITDA: Eldorado Reno(1) $ 9,621 $ 10,006 $ 8,000 $ (67 ) $ 2,431 Eldorado Shreveport(1) 33,037 29,651 24,142 7,559 7,118 Corporate(2)(3) (1,609 ) (2,407 ) (3,570 ) Eldorado total Adjusted EBITDA 42,642 39,657 30,533 5,085 5,979 MTR Gaming(2)(4) 96,233 98,658 87,449 23,360 21,745 Combined Adjusted EBITDA(5) $ 138,891 $ 138,315 $ 117,982 $ 28,445 $ 27,724 Eldorado Reno: Net (loss) income(1) $ (13,665 ) $ 8,971 $ (8,655 ) $ (5,051 ) $ (1,067 ) Interest expense, net of interest income 5,101 4,865 4,772 1,204 1,182 Provision for income taxes 1,054 (518 ) Depreciation and amortization 9,215 8,318 7,951 2,028 1,932 Equity in income of unconsolidated affiliates 8,952 (3,355 ) (2,705 ) 380 518 (Gain) loss on sale or disposal of property (4 ) 14 Gain on extinguishment of debt of unconsolidated affiliate (11,980 ) (715 ) Corporate management fee 384 Acquisition charges 3,173 6,298 1,372 Gain on termination of supplemental retirement plan of unconsolidated affiliate Loss on early retirement of debt, net 22 Adjusted Eldorado Reno EBITDA $ 9,621 $ 10,006 $ 8,000 $ (67 ) $ 2,431 Eldorado Shreveport: Net income(1) $ 12,690 $ 9,926 $ 5,001 $ 2,718 $ 2,051 Interest expense, net of interest income 10,954 10,800 10,654 2,681 2,652 Provision for income taxes Depreciation and amortization 8,436 8,713 8,403 2,160 1,919 Corporate management fee 496 Loss on sale or disposal of property 202 212 84 Loss on property donation 755 Adjusted Eldorado Shreveport EBITDA $ 33,037 $ 29,651 $ 24,142 $ 7,559 $ 7,118 Corporate(2)(3): Net loss $ $ $ (85,218 ) $ (20,764 ) $ (7,667 ) Interest expense, net of interest income 65,068 17,370 13,382 Benefit for income taxes (2,049 ) (9,172 ) Corporate management fee (880 ) Depreciation and amortization 42 10 93 Loss on sale or disposal of property 2 1 Loss on debt extinguishment 90 Stock-based compensation expense 1,310 455 590 Acquisition charges 8,733 521 84 Adjusted Corporate EBITDA $ $ $ (12,022 ) $ (2,407 ) $ (3,570 ) MTR Gaming(4): Net (loss) income(2) $ (5,724 ) $ (9,131 ) $ (25,292 ) $ 14,551 $ 519 Interest expense, net of interest income 67,825 69,539 65,140 18 16 Provision for income taxes 3,577 3,467 3,949 1,017 10,706 Depreciation and amortization 27,511 30,458 34,520 7,774 10,525 Other regulatory gaming assessments 391 (78 ) 175 (17 ) (20 ) Project opening costs 2,705 Loss on extinguishment of debt 90 (Gain) loss on sale or disposal of property (52 ) 38 184 17 (1 ) Strategic transaction costs 4,365 8,683 Adjusted MTR Gaming EBITDA $ 96,233 $ 98,658 $ 87,449 $ 23,360 $ 21,745 Table of Contents Year ended December 31, Three months ended March 31, 2012 2013 2014 2014 2015 (unaudited) (dollars in thousands) Scioto Downs(4): Net income $ 32,974 Interest expense 75 Provision for income taxes 2,595 Depreciation and amortization 13,692 Loss on sale or disposal of property 9 Adjusted EBITDA $ 49,345 Presque Isle Downs(4): Net income $ 6,986 Interest expense (2 ) Provision for income taxes 3,194 Depreciation and amortization 8,852 Regulatory gaming assessments 175 Loss (gain) on sale or disposal of property 210 Adjusted EBITDA $ 19,415 Mountaineer(4): Net income $ 18,307 Interest expense (1 ) (Benefit) provision for income taxes 209 Depreciation and amortization 11,934 (Gain) loss on the sale or disposal of property (37 ) Adjusted EBITDA $ 30,412 Combined Silver Legacy & Circus Reno Net income $ 6,333 Interest expense 11,037 Interest income Gain on retirement of supplemental executive retirement plan assets (1,430 ) Change in fair value of supplemental executive retirement plan assets (69 ) Depreciation and amortization 11,467 Other (net) 4 Loss on disposition of assets Adjusted EBITDA $ 27,342 (1) Excludes intercompany management fees revenues earned by Eldorado Reno and expensed by Eldorado Shreveport amounting to $1.5 million for the last twelve months ended March 31, 2015, $0.8 million for the three months ended March 31, 2014, $2.3 million for the year ended December 31, 2014 and $3 million for the years ended December 31, 2013 and 2012, respectively. (2) Includes corporate expenses subsequent to the Merger Date related to ERI totaling $2.5 million, excluding stock-based compensation expense of $0.6 million, and MTR Gaming's corporate expenses totaling $10.7 million, excluding stock-based compensation of $0.9 million, for the last twelve months ended March 31, 2015, ERI's corporate expenses totaling $1.5 million, excluding stock-based compensation expense of $0.6 million, and MTR Gaming's corporate expenses totaling $1.5 million, excluding stock-based compensation of $0.6 million, and MTR Gaming's corporate expenses totaling $2.7 million for the three months ended March 31, 2015 and MTR Gaming's corporate expenses totaling $2.4 million, excluding stock-based compensation expense of $0.5 million, for the three months ended March 31, 2014. (3) For the year ended December 31, 2014, Corporate includes a reclassification of $10.4 million from Adjusted MTR Gaming EBITDA to Corporate representing MTR Gaming's corporate expense for the year ended December 31, 2014, MTR Gaming's corporate expense for the years ended 2013 and 2012 was $9.0 million and $10.6 million, respectively. Beginning in the first quarter of 2015 the Company changed the Adjusted EBITDA definition to include an add back for stock-based compensation which was $1.3 million, $1.0 million and $1.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. (4) Information for MTR Gaming for periods prior to the Merger are based on MTR Gaming's Annual Reports on Form 10-K for the years ended December 31, 2014, 2013 and 2012 as filed with the SEC. Adjusted MTR Gaming EBITDA excludes corporate expense as noted above. (5) The combined basis reflects operations of MTR Gaming for periods prior to the Merger combined with the operations of Resorts. Such presentation does not conform with U.S. GAAP or the SEC's rules for pro forma presentation; however, we have included the combined information because we believe it provides a meaningful comparison for the periods presented. Table of Contents Risk factors Risks related to our business Our business is sensitive to reductions in discretionary consumer spending as a result of downturns in the economy Consumer demand for casino hotel and racetrack properties such as ours is particularly sensitive to downturns in the economy and the associated impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions, effects of declines in consumer confidence in the economy, including the recent housing, employment and credit crisis, the impact of high energy and food costs, the increased cost of travel, the potential for continued bank failures, decreased disposable consumer income and wealth, or fears of war and future acts of terrorism could further reduce customer demand for the amenities that we offer, which have had, and may continue to have, a negative impact on our results of operations. Increases in gasoline prices, including increases prompted by global political and economic instabilities, can adversely affect the operations of Resorts and MTR Gaming because most of their patrons travel to their properties by car or on airlines that may pass on increases in fuel costs to passengers in the form of higher ticket prices. The recent global, national and regional economic downturn, including the housing crisis, credit crisis, lower consumer confidence, and other related factors which impact discretionary consumer spending and other economic activities that have direct effects on Resorts' and MTR Gaming's business, have resulted in a decline in the tourism industry that has adversely impacted their operations. We cannot be sure how long these factors will continue to impact our operations in the future or the extent of the impact. We face substantial competition in the hotel and casino industry and expect that such competition will continue The gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including land-based casinos, dockside casinos, riverboat casinos, casinos located on Native American reservations and other forms of legalized gaming. There is intense competition among companies in the gaming industry, many of which have significantly greater resources than we do. Certain states have legalized casino gaming and other states may legalize gaming in the future. Legalized casino gaming in these states and on Native American reservations near our markets or changes to gaming laws in states surrounding Nevada, Louisiana, West Virginia, Pennsylvania, or Ohio could increase competition and could adversely affect our operations. We also compete, to a lesser extent, with gaming facilities in other jurisdictions with dockside gaming facilities, state sponsored lotteries, on-and-off track pari-mutuel wagering, card clubs, riverboat casinos and other forms of legalized gambling. In addition, various forms of internet gaming have been approved in Nevada and New Jersey and legislation permitting internet gaming has been proposed by the federal government and other states. The expansion of internet gaming in Nevada and other jurisdictions could result in significant additional competition. Gaming competition is intense in most of the markets where we operate. Recently, there has been additional significant competition in our markets as a result of the expansion of facilities by existing market participants, the entrance of new gaming participants into a market or legislative changes. For example, casino gaming is currently prohibited in several jurisdictions from which the Shreveport/Bossier City market draws customers, primarily Texas. The Texas legislature has from time to time considered proposals to legalize gaming, and there can be no assurance that casino gaming will not be approved in Texas in the future, which would have a material adverse effect on our business. Additionally, since visitors Table of Contents from California comprise a significant portion of our customer base in Reno, we also compete with Native American gaming operations in California. Native American tribes are allowed to operate slot machines, lottery games and banking and percentage games on Native American lands. Although many existing Native American gaming facilities in northern California are modest compared to Eldorado Reno and Silver Legacy, a number of Native American tribes have established large-scale gaming facilities in California and some Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and gaming facilities in northern California. A 320,000 square foot gaming facility located in Sonoma County, California opened on November 5, 2013. Additionally, a 30,000 square foot casino and 400-room hotel in Bossier City across the Red River from Eldorado Shreveport opened in June 2013, which includes several restaurants and a 1,000-seat entertainment arena. In December 2014, a new luxury, land-based casino with 1,600 slot machines, 72 gaming tables, a poker room, and a 740-room hotel with a ballroom and spa, opened in Lake Charles, Louisiana approximately 200 miles south of Eldorado Shreveport, but closer to the Houston, Texas market. With respect to our MTR Gaming facilities, an additional license has been granted for a casino to be located in Lawrence County, Pennsylvania, approximately 45 miles from Mountaineer and 90 miles from Presque Isle Downs, which would result in further competition for both of those properties. Further, gaming facilities in Ohio that have recently commenced operations, including the Horseshoe Casino Cleveland, Hollywood Casino Columbus, ThistleDown Racino, Austintown, Hollywood Mahoning Casino, Hollywood Casinos, at Dayton Raceway, Northfield Park, present significant competition for Mountaineer, Presque Isle Downs and Scioto Downs. Increased competition may require us to make substantial capital expenditures to maintain and enhance the competitive positions of our properties to increase the attractiveness and add to the appeal of our facilities. Because we are highly leveraged, after satisfying our obligations under our outstanding indebtedness, there can be no assurance that we will have sufficient funds to undertake these expenditures or that we will be able to obtain sufficient financing to fund such expenditures. If we are unable to make such expenditures, our competitive position could be materially adversely affected. We are subject to extensive state and local regulation and licensing, and gaming authorities have significant control over our operations, which could have an adverse effect on our business The ownership and operation of casino gaming, riverboat and horseracing facilities are subject to extensive federal, state, and local regulation, and regulatory authorities at the federal, state, and local levels have broad powers with respect to the licensing of gaming businesses and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines, and take other actions, each of which poses a significant risk to our business, financial condition, and results of operations. We currently hold all state and local licenses and related approvals necessary to conduct our present gaming operations, but we must periodically apply to renew many of our licenses and registrations. We cannot assure you that we will be able to obtain such renewals. Any failure to maintain or renew our existing licenses, registrations, permits or approvals would have a material adverse effect on us. Furthermore, if additional laws or regulations are adopted or existing laws or regulations are amended, these regulations could impose additional restrictions or costs that could have a significant adverse effect on us. As an example, on August 26, 2014, the Board of Health of Hancock County, West Virginia adopted and approved the Clean Air Regulation Act of 2014 ("Regulation"), which became effective on July 1, 2015. The Regulation bans smoking in public places in Hancock County including at Mountaineer. Although we constructed a smoking patio with slots and table games to help mitigate the impact of the Regulation, we expect that the Regulation will have a negative impact on our business and results of operations at Mountaineer, and such impact may be material. Any future similar regulations could also adversely impact our business and results of operations. Table of Contents Any of the Nevada Gaming Commission, the Louisiana Gaming Control Board, the West Virginia Alcohol Beverage Control Administration, the West Virginia Lottery Commission, the West Virginia Racing Commission, the Pennsylvania Gaming Control Board, the Pennsylvania Racing Commission, the Pennsylvania Liquor Control Board, the Ohio Lottery Commission, and the Ohio State Racing Commission (which we refer to collectively as the Gaming Authorities) may, in their discretion, require the holder of any securities issued by us to file applications, be investigated, and be found suitable to own our securities if it has reason to believe that the security ownership would be inconsistent with the declared policies of their respective jurisdictions. Further, the costs of any investigation conducted by any of the Gaming Authorities under these circumstances must be paid by the applicant, and refusal or failure to pay these charges may constitute grounds for a finding that the applicant is unsuitable to own the securities. If any of the Gaming Authorities determines that a person is unsuitable to own our securities, then, under the applicable gaming or horse racing laws and regulations, we can be sanctioned, including the loss of their approvals, if, without the prior approval of the applicable Gaming Authority, we conduct certain business with the unsuitable person. Our officers, directors, and key employees will also be subject to a variety of regulatory requirements and various licensing and related approval procedures in the various jurisdictions in which we operate gaming facilities. If any of the applicable Gaming Authorities were to find an officer, director or key employee of ours unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. Furthermore, the Gaming Authorities may require us to terminate the employment of any person who refuses to file appropriate applications. Either result could materially adversely affect our gaming operations. Applicable gaming laws and regulations restrict our ability to issue securities, incur debt and undertake other financing activities. Such transactions would generally require approval of applicable Gaming Authorities, and our financing counterparties, including lenders, might be subject to various licensing and related approval procedures in the various jurisdictions in which we operate gaming facilities. If state regulatory authorities were to find any person unsuitable with regard to his, her or its relationship to us or any of our subsidiaries, we would be required to sever our relationships with that person, which could materially adversely affect our business. In addition, gaming companies are generally subject to significant revenue based taxes and fees in addition to normal federal, state, and local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal, state, and local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. In addition, worsening economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes and/or property taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration of such laws. Such changes, if adopted, could have a material adverse effect on our business, financial condition and results of operations. The large number of state and local governments with significant current or projected budget deficits makes it more likely that those governments that currently permit gaming will seek to fund such deficits with new or increased gaming taxes and/or property taxes, and worsening economic conditions could intensify those efforts. Any material increase, or the adoption of additional taxes or fees, could have a material adverse effect on our future financial results. For more information, see "Business Governmental gaming regulations". Table of Contents We rely on our key personnel Our future success will depend upon, among other things, our ability to keep our senior executives and highly qualified employees. We compete with other potential employers for employees, and we may not succeed in hiring or retaining the executives and other employees that we need. We might not enter into employment contracts with all of our senior executives, and we might not obtain key man insurance policies for any or all of our executives. A sudden loss of or inability to replace key employees could have a material adverse effect on our business, financial condition and results of operation. We may face difficulties in attracting and retaining qualified employees for our casinos and race tracks The operation of our business requires qualified executives, managers and skilled employees with gaming and horse racing industry experience and qualifications who are able to obtain the requisite licenses and approval from the applicable Gaming Authorities. While not currently the case, there has from time to time been a shortage of skilled labor in the regions of Resorts' and MTR Gaming's casinos and race tracks. In addition to limitations that may otherwise exist in the supply of skilled labor, the continued expansion of gaming near Resorts' and MTR Gaming's casinos and race tracks, including the expansion of Native American gaming, may make it more difficult for us to attract qualified individuals. While we believe that we will continue to be able to attract and retain qualified employees, shortages of skilled labor will make it increasingly difficult and expensive to attract and retain the services of a satisfactory number of qualified employees, and we may incur higher costs than expected as a result. We depend on agreements with our horsemen and pari-mutuel clerks to operate our business The Federal Interstate Horse Racing Act and the state racing laws in West Virginia, Ohio and Pennsylvania require that, in order to simulcast races, we have written agreements with the horse owners and trainers at those racetracks. In addition, in order to operate slot machines in West Virginia, we are required to enter into written agreements regarding the proceeds of the slot machines (a "proceeds agreement") with a representative of a majority of the horse owners and trainers and with a representative of a majority of the pari-mutuel clerks. If we fail to maintain operative agreements with the horsemen at any of our racetracks, we will not be permitted to conduct live racing and export and import simulcasting at the applicable racetrack. In addition, if we fail to maintain operative agreements with the horsemen at Mountaineer, Presque Isle Downs and Scioto Downs (including if we do not have in place the legally required proceeds agreement with the Mountaineer pari-mutuel clerks union), we will not be permitted to continue our gaming operations at those facilities. If we fail to renew or modify existing agreements on satisfactory terms, this failure could have a material adverse effect on our business, financial condition and results of operations. Work stoppages, organizing drives and other labor problems could negatively impact our future profits Some of our employees are currently represented by labor unions. A lengthy strike or other work stoppages at any of our casino properties could have an adverse effect on our business and results of operations. Given the large number of employees, labor unions are making a concerted effort to recruit more employees in the gaming industry. In addition, organized labor may benefit from new legislation or legal interpretations by the current presidential administration. Particularly, in light of current support for changes to federal and state labor laws, we cannot provide any assurance that we will not experience additional and more successful union organization activity in the future. Table of Contents Because portions of the land on which our facilities are situated are leased, the termination of such leases could adversely affect our business Resorts owns the parcel on which Eldorado Reno is located, except for approximately 30,000 square feet which is leased from C. S. & Y. Associates, a general partnership of which Donald Carano, father of Gary L. Carano, is a general partner (the "CSY Lease"). The CSY Lease expires on June 30, 2027. If Resorts defaults on a payment under the CSY Lease or if certain other specified events were to occur, C. S. & Y. Associates has the right to terminate the lease and take possession of the property located on the premises. If C. S. & Y. Associates were to exercise these rights, this could adversely affect our business. A subsidiary of Resorts is party to a ground lease with the City of Shreveport for the land on which Eldorado Shreveport was built (the "Shreveport Lease"). The Shreveport Lease automatically renewed on June 17, 2015, and will be available for automatic renewal again on December 20, 2020. If Resorts defaults on a payment under the Shreveport Lease or if certain other specified events were to occur, the City of Shreveport could terminate the lease. If the City of Shreveport were to exercise this right, this could adversely affect our business. Because we own real property, we will be subject to extensive environmental regulation, which creates uncertainty regarding future environmental expenditures and liabilities We are subject to various federal, state and local environmental, health and safety laws and regulations that govern activities that may have adverse environmental effects, such as discharges to air and water, as well as the use, storage, discharge, emission and disposal of solid, animal and hazardous wastes and exposure to hazardous materials. These laws and regulations are complex and frequently subject to change. In addition, our horseracing facilities are subject to laws and regulations that address the impacts of manure and wastewater generated by Concentrated Animal Feeding Operations ("CAFO") on water quality, including, but not limited to, storm water discharges. CAFO regulations include permit requirements and water quality discharge standards. Enforcement of CAFO regulations has been receiving increased governmental attention. Compliance with these and other environmental laws can, in some circumstances, require significant capital expenditures. We have from time to time been responsible for investigating and remediating, or contributing to remediation costs related to, contamination located at or near certain of our facilities, including contamination related to underground storage tanks and groundwater contamination arising from prior uses of land on which certain of our facilities are located. In addition, we have been, and may in the future be, required to manage, abate, remove or contain manure and wastewater generated by concentrated animal feeding operations due to our racetrack operations, mold, lead, asbestos-containing materials or other hazardous conditions found in or on our properties. Moreover, violations can result in significant fines or penalties and, in some instances, interruption or cessation of operations. We are also subject to laws and regulations that create liability and cleanup responsibility for releases of regulated materials into the environment. Certain of these laws and regulations impose strict, and under certain circumstances joint and several, liability on a current or previous owner or operator of property for the costs of remediating regulated materials on or emanating from its property. The costs of investigation, remediation or removal of those substances may be substantial. An earthquake, flood, act of terrorism other natural disasters could adversely affect our business Although we maintain insurance that is customary and appropriate for our business, each of our insurance policies is subject to certain exclusions. In addition, in some cases our property insurance coverage is combined among certain of our properties and Silver Legacy or is otherwise in an amount that may be significantly less than the expected replacement cost of rebuilding our facilities in the event of a total loss. Table of Contents Such losses may occur as a result of any number of casualty events, including as a result of earthquakes, floods, hurricanes or other severe weather conditions. In particular, the Reno area has been, and may in the future be, subject to earthquakes and other natural disasters and Eldorado Shreveport is located in a designated flood zone. Inadequate insurance or lack of available insurance for these and other certain types or levels of risk could expose us to significant losses in the event that a catastrophe occurred for which we are underinsured. In addition to the damage caused to our properties by a casualty loss, we may suffer business disruption as a result of the casualty event or be subject to claims by third parties that may be injured or harmed. While we carry general liability insurance and business interruption insurance, there can be no assurance that insurance will be available or adequate to cover all loss and damage to which our business or our assets might be subjected. In addition, certain casualty events, such as labor strikes, nuclear events, loss of income due to terrorism, deterioration or corrosion, insect or animal damage and pollution, may not be covered under our policies. Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to fund replacements or repairs for destroyed property and reduce the funds available for payments of our obligations. Eldorado Reno and Silver Legacy currently have combined insurance coverage for earthquake and flood damage and for any resulting business interruption and Eldorado Reno, Silver Legacy and Eldorado Shreveport have combined insurance coverage for acts of terrorism. Under these policies, Eldorado Reno and Silver Legacy have combined per occurrence earthquake coverage of $100 million and combined aggregate flood coverage of $250 million. Eldorado Reno, Silver Legacy and Eldorado Shreveport have combined terrorism coverage of $800 million. In the event that an earthquake, flood or terrorist act causes damage only to Eldorado Reno's property, Eldorado Reno is eligible to receive up to the full amount of insurance coverage for the applicable event of loss, depending on the replacement cost. However, in the event that Eldorado Reno and Silver Legacy are damaged in an earthquake, Eldorado Reno is only entitled to receive insurance proceeds only after Silver Legacy's claims have been satisfied. In addition, in the event that both Eldorado Reno and Silver Legacy are damaged in a flood or Eldorado Reno, Eldorado Shreveport and Silver Legacy are damaged as a result of a terrorist act, our properties are entitled to receive an allocated portion of the insurance proceeds and, to the extent that any insurance proceeds remain available after satisfaction of the insurance claims by the other properties, such remaining proceeds. As a result, there is no assurance that our insurance coverage will be sufficient if there is a major event of loss that impacts us and Silver Legacy, and, in particular, if there is an earthquake that causes significant damage. In addition, upon the expiration of our current policies which expire in August 2015 (subject to annual renewal), we cannot assure that adequate coverage will be available at economically justifiable rates, if at all. Because Eldorado Shreveport is located in a designated flood zone, it is subject to risks in addition to those risks associated with land-based casinos, including loss of service due to flood, hurricane or other severe weather conditions. We currently maintain flood insurance for Eldorado Shreveport and for the potential resulting business interruption. However, there is no assurance that this coverage will be sufficient if there is a major flood. Reduced patronage, the loss of use of the casino, the inability to use a dockside facility or riverboat for any period of time due to flood, hurricane or other severe weather could adversely affect our business, financial condition and results of operations. We are subject to risks relating to mechanical failure All of our facilities will generally be subject to the risk that operations could be halted for a temporary or extended period of time, as the result of casualty, forces of nature, mechanical failure, or extended or extraordinary maintenance, among other causes. In addition, our gaming operations could be damaged or Table of Contents halted due to extreme weather conditions. These risks are particularly pronounced at Eldorado Shreveport's riverboat and dockside facilities because of their location on and adjacent to water. We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could impact our business and financial condition From time to time, we are named in lawsuits or other legal proceedings relating to our respective businesses. In particular, the nature of our business subjects us to the risk of lawsuits filed by customers, past and present employees, competitors, business partners and others in the ordinary course of business. As with all legal proceedings, no assurances can be given as to the outcome of these matters. Moreover, legal proceedings can be expensive and time consuming, and we may not be successful in defending or prosecuting these lawsuits, which could result in settlements or damages that could significantly impact our business, financial condition and results of operations. Our information technology and other systems are subject to cyber security risk including misappropriation of customer information or other breaches of information security Our operations require that we collect customer data, including credit card numbers and other personally identifiable information, for various business purposes, including marketing and promotional purposes. The collection and use of personal data are governed by privacy laws and regulations enacted in the United States and other jurisdictions around the world. Privacy regulations continue to evolve and on occasion may be inconsistent from one jurisdiction to another. Compliance with applicable privacy regulations may increase our operating costs and/or adversely impact our ability to market our products, properties and services to our customers. In addition, non-compliance with applicable privacy regulations by us (or in some circumstances non-compliance by third parties engaged by us) or a breach of security on systems storing our data, including due to cyber-attack, system failure, computer virus or unauthorized or fraudulent use by customers, employees or employees of third party vendors, may result in damage of reputation and/or subject us to fines, payment of damages, lawsuits or restrictions on our use or transfer of data. Operations of Resorts and MTR Gaming have historically been subject to seasonal variations and quarterly fluctuations in operating results, and we can expect to experience such variations and fluctuation in the future Historically, the operations of Resorts' and MTR Gaming's gaming facilities have typically been subject to seasonal variations. Eldorado Reno's strongest operating results have generally occurred in the second and third quarters and the weakest results have generally occurred during the period from November through February when weather conditions adversely affected operating results. In the Reno market, excessive snowfall during the winter months can make travel to the Reno area more difficult. This often results in significant declines in traffic on major highways, particularly on routes to and from Northern California, and causes a decline in customer volume. Furthermore, management believes that approximately two-thirds of visitors to the Reno market arrive by some form of ground transportation. In addition, winter conditions can frequently adversely affect transportation routes to Mountaineer, Presque Isle Downs and Scioto Downs and cause cancellations of live horse racing. As a result, unfavorable seasonal conditions could have a material adverse effect on our operations. Table of Contents Transfer Agent and Registrar Continental Stock Transfer & Trust Company Table of Contents In general, it is unlikely that we will be able to obtain business interruption coverage for casualties resulting from severe weather, and there can be no assurance that we will be able to obtain casualty insurance coverage at affordable rates, if at all, for casualties resulting from severe weather. Because we will be heavily dependent upon hotel/casino and related operations that are conducted in certain limited regions, we will be subject to greater risks than a company that is geographically or otherwise more diversified Our business is, and following the consummation of the Circus Reno/Silver Legacy Purchase will continue to be, heavily dependent upon hotel/casino and related operations that are conducted in three discrete markets. As a result, we are still subject to a greater degree of risk than a gaming company that has greater geographical diversity. The risks to which we have a greater degree of exposure include the following: local economic and competitive conditions; inaccessibility due to weather conditions, road construction or closure of primary access routes; changes in local and state governmental laws and regulations, including gaming laws and regulations; natural and other disasters, including earthquakes and flooding; a decline in the number of residents in or near, or visitors to, our operations; and a decrease in gaming activities at any of our facilities. Any of the factors outlined above could adversely affect our ability to generate sufficient cash flow to make payments on our outstanding indebtedness. Significant negative industry or economic trends, reduced estimates of future cash flows, disruptions to our business, slower growth rates or lack of growth in our business may cause us to incur impairments to indefinite-lived intangible assets or long-lived assets We test indefinite-lived intangible assets for impairment annually or if a triggering event occurs. We will also be required to consider whether the fair values of any of our investments accounted for under the equity method have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. Estimated fair value is determined using a discounted cash flow analysis based on estimated future results of the investee and market indicators of the terminal year capitalization rate. If any such declines are considered to be other than temporary, we will be required to record a write-down to estimated fair value. In 2011, Resorts' impairment test in the Silver Legacy Joint Venture resulted in the recognition of a non-cash impairment charge of $33.1 million resulting in the elimination of Resorts' remaining investment in the Silver Legacy Joint Venture at that time. Security concerns, terrorist attacks and other geopolitical events could have a material adverse effect on our future operations Security concerns, terrorist attacks and other geopolitical events can have a material adverse effect on leisure and business travel, discretionary spending and other areas of economic behavior that directly impact the gaming and entertainment industries in general and our business in particular. We cannot predict the extent to which any future security alerts, terrorist attacks or other geopolitical events might impact our business, results of operations or financial condition. Table of Contents The operating agreement of Silver Legacy Joint Venture contains a buy-sell provision which, if exercised by either partner, could adversely affect us if the Circus Reno/Silver Legacy Purchase is not consummated The operating agreement for the entity that owns Silver Legacy contains a buy-sell provision pursuant to which either Resorts or the wholly-owned subsidiary of MGM Resorts International that owns its 50% interest in the Silver Legacy Joint Venture may sell its membership interest or purchase the interest of the other member, in either case, at the price proposed by the offering member. If either member should make such an offer, the operating agreement requires the other member to either sell its membership interest or purchase the membership interest of the offering member, in either case, at the price proposed by the offering member. While we have entered into an agreement to purchase the 50% interest in the Silver Legacy Joint Venture owned by the subsidiary of MGM Resorts International, if such purchase is not consummated, the provisions of the buy-sell agreement will survive. In such event, an election by either member to exercise its buy-sell right, which would result in the buyout of one of the members, could adversely impact its operations, depending, among other things, on its ability to respond to an offer from the other member and the price at which any offer is made. MGM Resorts International has significantly greater resources than we have. If the Circus Reno/Silver Legacy Purchase is not consummated and a subsequent offer by either member pursuant to the buy-sell agreement results in the purchase of its interest in the Silver Legacy Joint Venture, the sale of the interest could adversely affect, or result in the termination of, any existing arrangements or agreements Resorts may have with Silver Legacy or the other member, or otherwise adversely impact us. Silver Legacy may be subject to claims that were not discharged in the Silver Legacy bankruptcy cases, which could have a material adverse effect on our results As described further below, the Silver Legacy Joint Venture and Silver Legacy Capital Corp. (the "Silver Legacy Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code on May 17, 2012. On October 23, 2012, an order of confirmation relating to the Silver Legacy Debtors' joint plan of reorganization was entered by the bankruptcy court (the "Plan of Reorganization"), and the effective date thereof (as defined in the Plan of Reorganization) occurred on November 16, 2012. We believe that substantially all of the claims against the Silver Legacy Debtors that arose before their bankruptcy filing were resolved in connection with their Chapter 11 proceedings. However, there may be certain circumstances in which claims and other obligations that arose prior to their bankruptcy filing may not have been discharged, including instances where a claimant had inadequate notice of the bankruptcy filing or of the deadline to file claims therein. Risks related to the proposed Circus Reno/Silver Legacy Purchase and the Merger The acquisition of Circus Reno and 50% of the equity interests in the Silver Legacy Joint Venture is subject to various closing conditions as well as other uncertainties, including our ability to obtain financing to fund the purchase on terms that we find acceptable or at all, and there can be no assurances as to whether and when it may be completed The consummation of the announced, proposed acquisition of Circus Reno and the 50% interest in the Silver Legacy is subject to certain customary conditions. A number of the conditions are not within our control, and it is possible that such conditions may prevent, delay or otherwise materially adversely affect the completion of the acquisition. These conditions include, among other things, approval by the relevant gaming authorities and obtaining any necessary third party consents to consummate the acquisition. In addition, the Circus Reno/Silver Legacy Purchase is not subject to a financing condition and we do not have a financing commitment to fund the acquisition. As a result, we cannot be sure that we will be able to Table of Contents obtain financing on terms that are satisfactory to us, or at all. Because the purchase agreement for the Circus Reno/Silver Legacy Purchase does not contain a financing condition, our failure to close due to inability to obtain financing could subject us to a claim for substantial damages. In addition, although we intend to issue and sell equity securities to finance a portion of the purchase price for the Circus Reno/Silver Legacy Purchase, we cannot be certain that we will be able to sell equity securities on terms that are acceptable to us, or at all, and, if we are unable to generate sufficient proceeds from sales of equity securities, we may be required to incur additional indebtedness for such purpose. Any such additional indebtedness would increase the amount of our indebtedness and could constrain our operations. While we expect that the Circus Reno/Silver Legacy Purchase will close in the fourth quarter of 2015, we cannot predict with certainty whether and when any of the required conditions will be satisfied or if another uncertainty may arise. If the proposed acquisition does not receive, or timely receive, the required regulatory approvals and clearances, or if another event occurs that delays or prevents the acquisition, such delay or failure to complete the acquisition may cause uncertainty or other negative consequences that may materially and adversely affect our business, financial condition and results of operations. If the transaction is not consummated for these or any other reasons, our ongoing business may be adversely affected and will be subject to a number of risks including: The market price of our common stock may decline to the extent that the current market price reflects a market assumption that the transaction will be completed; We may experience negative reactions to the termination of the transaction from customers, channel partners, suppliers, strategic partners, investors or analysts; We would not realize any of the anticipated benefits of having completed the transaction; and Our expenses incurred related to the transaction, such as legal and accounting fees, must be paid even if the transaction is not completed. In addition, uncertainty about the effect of the proposed acquisition on employees and other parties may have an adverse effect on us or the anticipated benefits of the proposed acquisition. These uncertainties may impair our, the Silver Legacy Joint Venture's and Circus Reno's ability to attract, retain and motivate key personnel until the proposed acquisition is completed and for a period of time thereafter. Employee retention and recruitment may be particularly challenging prior to completion of the proposed acquisition, as our employees and prospective employees, and the employees and prospective employees of Silver Legacy and Circus Reno, may experience uncertainty about their future roles with us following the proposed acquisition. We may not realize all of the anticipated benefits of Circus Reno/Silver Legacy Purchase and the Merger and we may encounter difficulties in integrating Circus Reno, Silver Legacy and the MTR Gaming properties with our operations Our ability to realize the anticipated benefits of the proposed acquisition of the Silver Legacy and Circus Reno will depend, to a large extent, on our ability to integrate our existing business with those businesses. Combining independent businesses is a complex, costly and time-consuming process. In addition, while we have made significant progress in integrating the operations of MTR Gaming into our operations, the Merger was only recently consummated and completion of the integration of five different properties within a relatively short period of time may create additional challenges. As a result, we will be required to devote significant management attention and resources to integrating the businesses and operations of Eldorado, MTR Gaming, the Silver Legacy and Circus Reno. The integration process may disrupt the Table of Contents combined business and, if implemented ineffectively, could preclude the realization of the full benefits of our acquisition transactions. In addition, we may pursue additional acquisition opportunities in the future, which would present further integration challenges. Our failure to meet the challenges involved in integrating the businesses that we have acquired or propose to acquire or to realize the anticipated benefits of such transactions could cause an interruption of, or a loss of momentum in, the activities of the Company and could adversely affect the Company's results of operations. In addition, the combined company's results of operations may not meet our expectations, which would then make it difficult to service our outstanding debt obligations, including additional debt that we may incur to finance the purchase price for the Circus Reno/Silver Legacy Purchase and the repayment of amounts outstanding under the Silver Legacy Joint Venture credit agreement. The overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of certain management's attention. The difficulties of combining the operations of the companies include, among others: the diversion of certain management's attention to integration matters; difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining our business with that of MTR Gaming, Silver Legacy and Circus Reno; difficulties in integrating operations, business practices and systems; difficulties in assimilating employees; difficulties in managing the expanded operations of a larger and more complex company; challenges in retaining existing customers and suppliers; challenges in obtaining new customers and suppliers; potential unknown liabilities and unforeseen increased expenses associated with the acquisitions; and challenges in retaining and attracting key personnel. Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy, which could materially impact the business, financial condition and results of operations of the company. In addition, even if the operations of the businesses of the Company, MTR Gaming, Silver Legacy and Circus Reno are integrated successfully, we may not realize the full benefits of the transactions, or the full benefits may not be achieved within the anticipated time frame, or at all. The market price of our common stock may decline as a result of the proposed acquisition for a number of reasons The market price of our common stock may decline as a result of the proposed acquisition for a number of reasons including if: We do not achieve the perceived benefits of the transaction as rapidly or to the extent anticipated; The effect of the transaction on our business and prospects is not consistent with the expectations of financial or industry analysts; or Investors react negatively to the effect of the transaction on our business and prospects. Table of Contents The consummation of the proposed acquisition is subject to numerous conditions. See " The acquisition of Circus Reno and 50% of the equity interests in the Silver Legacy Joint Venture is subject to various closing conditions as well as other uncertainties, including our ability to obtain financing to fund the purchase on terms that we find acceptable or at all, and there can be no assurances as to whether and when it may be completed." We cannot make any assurances that the Circus Reno/Silver Legacy Purchase will be consummated on the terms or timeline currently contemplated, or at all. Our expenses incurred related to the transaction, such as legal and accounting fees, must be paid even if the transaction is not completed. Our estimates and judgments related to the acquisition accounting models used to record the purchase price allocation may be inaccurate Our management will make significant accounting judgments and estimates for the application of acquisition accounting under GAAP and the underlying valuation models. Our business, operating results and financial condition could be materially and adversely impacted in future periods if our accounting judgments and estimates related to these models prove to be inaccurate. We may be required to recognize impairment charges for other intangible assets The proposed transaction will add approximately $8.1 million of other intangible assets to our consolidated balance sheet. In accordance with GAAP, our management periodically assesses these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets, divestitures and market capitalization declines may impair goodwill and other intangible assets. Any charges relating to such impairments would adversely affect results of operations in the periods recognized. Our assets, liabilities or results of operations could be adversely affected by known or unknown or unexpected events, conditions or actions that might occur at Silver Legacy or Circus Reno prior to the closing of the proposed Circus Reno/Silver Legacy Purchase The assets, liabilities, business, financial condition, cash flows, operating results and prospects of Silver Legacy and Circus Reno to be acquired or assumed by us by reason of the Circus Reno/Silver Legacy Purchase could be adversely affected before or after the closing of such transaction as a result of known or previously unknown events or conditions occurring or existing before the closing of such transaction. Adverse changes in the business or operations of the Silver Legacy Joint Venture or Circus Reno could occur or arise as a result of actions by Silver Legacy or Circus Reno, legal or regulatory developments including the emergence or unfavorable resolution of pre-acquisition loss contingencies, deteriorating general business, market, industry or economic conditions, and other factors both within and beyond the control of Silver Legacy or Circus Reno. A significant decline in the value of the assets to be acquired by us or a significant increase in liabilities to be assumed by us could adversely affect our future business, financial condition, cash flows, operating results and prospects following the completion of the Circus Reno/Silver Legacy Purchase. Risks related to our capital structure We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business We have a substantial amount of debt, which requires significant principal and interest payments. As of March 31, 2015, we and our subsidiaries had approximately $728.7 million of indebtedness outstanding Table of Contents (excluding indebtedness of the Silver Legacy Joint Venture). In addition, we expect that we will be required to incur additional indebtedness to finance a portion of the purchase price for the Circus Reno/Silver Legacy Purchase and the repayment of amounts outstanding under the Silver Legacy Joint Venture credit agreement. This indebtedness may have important negative consequences for us, including: limiting our ability to satisfy our obligations; increasing our vulnerability to general adverse economic and industry conditions; limiting our flexibility in planning for, or reacting to, changes in its businesses and the markets in which we operates; placing us at a competitive disadvantage compared to competitors that have less debt; increasing our vulnerability to, and limiting our ability to react to, changing market conditions, changes in our industry and economic downturns; limiting our ability to obtain additional financing to fund working capital requirements, capital expenditures, debt service, general corporate or other obligations; subjecting us to a number of restrictive covenants that, among other things, limit our ability to pay dividends and distributions, make acquisitions and dispositions, borrow additional funds, and make capital expenditures and other investments; restrictions on making dividend payments and other payments by wholly-owned subsidiaries; limiting our ability to use operating cash flow in other areas of our business because we must dedicate a significant portion of these funds to make principal and/or interest payments on our outstanding debt; exposing us to interest rate risk due to the variable interest rate on borrowings under our credit facility; causing our failure to comply with the financial and restrictive covenants contained in our current or future indebtedness, which could cause a default under such indebtedness and which, if not cured or waived, could have a material adverse effect on us; and affecting our ability to renew gaming and other licenses necessary to conduct our business. Despite our current indebtedness levels, we and our subsidiaries may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness We and our subsidiaries may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. The terms of the agreements governing our indebtedness restrict, but do not completely prohibit, us from doing so. In addition, the agreements governing our indebtedness do not prevent us from incurring other liabilities that do not constitute indebtedness. If new debt or other liabilities are added to our current debt levels, the related risks that we and our subsidiaries now face could intensify. Table of Contents We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We will also be required to obtain the consent of the lenders under the our credit facilities to refinance material portions of our indebtedness. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. Additionally, the agreements governing our indebtedness limit the use of the proceeds from any disposition; as a result, we may not be allowed, under these documents, to use proceeds from such dispositions to satisfy all current debt service obligations. If we default under our indebtedness, we may not be able to service our debt obligations In the event of a default under our outstanding indebtedness or indebtedness that we may incur in the future, the lenders could elect to declare all amounts borrowed, together with accrued and unpaid interest and other fees, to be due and payable, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If such acceleration occurs, we may not be able to repay the outstanding principal amounts that are due. This could have serious consequences to our financial condition and results of operations, and could cause us to become bankrupt or insolvent. If default occurred under the credit facilities of one of our unrestricted subsidiaries, the subsidiary or subsidiaries party to such credit facility might have to take actions that could result in the diminution or elimination of our equity interest in such subsidiary. The agreements governing our indebtedness impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities The agreements governing our indebtedness impose significant operating and financial restrictions on us. These restrictions limit our ability, among other things, to: incur additional debt; create liens or other encumbrances; pay dividends or make other restricted payments, including payments by Resorts and MTR to ERI and to each other; agree to payment restrictions affecting our restricted subsidiaries; prepay subordinated indebtedness; Table of Contents make investments, loans or other guarantees; sell or otherwise dispose of a portion of our assets; or make acquisitions or merge or consolidate with another entity. A failure to comply with the covenants contained in the agreements governing our outstanding indebtedness and any other indebtedness that we may incur in the future could result in an event of default, which, if not cured or waived, could result in the acceleration of the indebtedness and have a material adverse effect on our business, financial condition and results of operations. In the event of any default such agreements the lenders thereunder: will not be required to lend any additional amount to us; could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable and terminate all commitments to extend future credit; or could require us to apply all of our available cash to repay these borrowings. If we are unable to comply with the covenants in the agreements governing our indebtedness or to pay our debts, the lenders with respect to such indebtedness could proceed against the collateral granted to them to secure that indebtedness, which includes substantially all of our assets and would otherwise be entitled to exercise remedies under the agreements governing such indebtedness. If our indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. Moreover, in the event that such indebtedness is accelerated, there can be no assurance that we will be able to refinance it on acceptable terms, or at all. We are a holding company and will depend on our subsidiaries for dividends, distributions and repayment of its indebtedness We are structured as a holding company, a legal entity separate and distinct from its subsidiaries. Our only significant asset is the capital stock or other equity interests of its operating subsidiaries. As a holding company, we conduct all of our business through our subsidiaries. Consequently, our principal source of cash flow, including cash flow to pay dividends, will be dividends and distributions from our subsidiaries. If our subsidiaries are unable to make dividend payments or distributions to us and sufficient cash or liquidity is not otherwise available, we may not be able to pay dividends. Our subsidiaries may not be able to, or be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each of our subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In addition, the agreements governing our indebtedness limit the ability of our restricted subsidiaries to restrict the payment of dividends or make other intercompany payments to us, these limitations will be subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness. Our ability to service all of our indebtedness depends on our ability to generate cash flow, which is subject to factors that are beyond our control Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to general economic, financial, competitive and other factors that are beyond our control. In addition, a further deterioration in the economic performance of our casino properties may cause us to reduce or delay investments and capital expenditures, or to sell assets. In the absence of such operating results and resources, we could face substantial liquidity problems Table of Contents and might be required to dispose of material assets or operations to meet our debt service and other obligations. Risks related to ownership of our common stock and this offering The market price of our common stock could fluctuate significantly The U.S. securities markets in general have experienced significant price fluctuations in recent years. The market price of our common stock may be volatile and subject to wide fluctuations. In addition, the trading volume of our common stock may fluctuate and cause significant price variations to occur. Some of the factors that could cause fluctuations in, or have a material adverse effect on, the stock price or trading volume of our common stock include: general market and economic conditions, including market conditions in the hotel and casino industries; actual or expected variations in operating results; differences between actual operating results and those expected by investors and analysts; changes in recommendations by securities analysts; operations and stock performance of competitors; accounting charges, including charges relating to the impairment of goodwill; significant acquisitions or strategic alliances by us or by competitors; sales of our common stock or other securities in the future, including sales by our directors and officers or significant investors; recruitment or departure of key personnel; conditions and trends in the gaming and entertainment industries; changes in the estimate of the future size and growth of our markets; and changes in reserves for professional liability claims. We cannot assure you that the stock price of our common stock will not fluctuate or decline significantly in the future. In addition, the stock market in general can experience considerable price and volume fluctuations that may be unrelated to our performance. If the market price of our common stock fluctuates significantly, we may become the subject of securities class action litigation which may result in substantial costs and a diversion of management's attention and resources. We do not currently expect to pay dividends We do not currently expect to pay dividends on our common stock. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon among other factors, our earnings, cash requirements, financial condition, requirements to comply with the covenants under our debt instruments, legal considerations, and other factors that the our board of directors deems relevant. If we do not pay dividends, then the return on an investment in its common stock will depend entirely upon any future appreciation in its stock price. There is no guarantee that our common stock will appreciate in value or maintain its value. Table of Contents We may allocate the proceeds of this offering in ways in which you may not agree We intend to use the net proceeds from this offering to finance a portion of the purchase price for the Circus Reno/Silver Legacy Purchase, including repaying amounts outstanding under the Silver Legacy Joint Venture credit agreement. However, in the event that the Circus Reno/Silver Legacy Purchase is not consummated, we intend to use the net proceeds from this offering for general corporate purposes. Under such circumstances, we would have broad discretion in the use of proceeds and our ultimate use of these proceeds may vary substantially from their currently intended use. If we exercise our discretion in the use of the net proceeds, stockholders may not agree with such uses, and we may use the net proceeds in a manner that does not improve our operating results or yield a return. The volatility and disruption of the capital and credit markets and adverse changes in the U.S. and global economies may negatively impact our access to financing During recent years, a confluence of many factors has contributed to diminished expectations for the U.S. economy and increased market volatility for publicly traded securities, including the common shares and notes issued by publicly owned companies. These factors include the availability and cost of credit, declining business and consumer confidence and increased unemployment. These conditions have combined to create an unprecedented level of market volatility, which could negatively impact our ability to access capital and financing (including financing necessary to refinance our existing indebtedness), on terms and at prices acceptable to us, that we would otherwise need in connection with the operation of our businesses. If you purchase shares of our common stock in this offering, you will suffer immediate and substantial dilution of your investment The public offering price of our common stock is substantially higher than the pro forma net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, your interest will be diluted immediately to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering. See "Dilution." You will incur additional dilution if we raise additional capital through the issuance of new equity securities at a price lower than the offering price of our common stock or issue additional shares in connection with our equity incentive plan If we raise additional capital through the issuance of new equity securities at a lower price than the offering price, you will be subject to additional dilution. If we are unable to access the public markets in the future, or if our performance or prospects decrease, we may need to consummate a private placement or public offering of our common stock at a lower price than the offering price. In addition, any new securities may have rights, preferences or privileges senior to our common stock. Additionally, we have reserved 4,800,000 shares of our common stock for issuance under our 2015 Equity Incentive Plan. Future offerings of debt securities or additional or increased loans, which would rank senior to our common stock upon our bankruptcy or liquidation, and future offerings of equity securities that may be senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock In the future, we may attempt to increase our capital resources through offerings of debt securities, entering into or increasing amounts under our loan agreements or additional offerings of equity securities. Upon bankruptcy or liquidation, holders of our debt securities and lenders with respect to our indebtedness will receive a distribution of our available assets prior to the holders of our common stock. Additional Table of Contents equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both. Our decision to issue securities in any future offering or enter into or increase loan amounts will depend on our management's views on our capital structure and financial results, as well as market conditions and other factors beyond our control. As a result, we cannot predict or estimate the amount, timing or nature of any such future transaction, and purchasers of our common stock in this offering bear the risk of our future transactions reducing the market price of our common stock and diluting their ownership interest in our company. If securities analysts do not publish research or reports about our company, or if they issue unfavorable commentary about us or our industry and markets or downgrade our common stock, the price of our common stock could decline The trading market for our common stock depends in part on the research and reports that third-party securities analysts publish about our company and our industry and markets. One or more analysts could downgrade our common stock or issue other negative commentary about our company or our industry or markets. In addition, we may be unable or slow to attract sufficient research coverage. Alternatively, if one or more of these analysts cease coverage of our company, we could lose visibility in the market. As a result of one or more of these factors, the trading price and volume of our common stock could decline. Table of Contents Cautionary statement concerning forward-looking statements This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements contain words such as "believe," "estimate," "expect," "intend," "plan," "project," "may," "will," "might," "should," "could," "would," "seek," "pursue" and "anticipate" or the negative or other variation of these or similar words, or may include discussions of strategy or risks and uncertainties. Forward-looking statements in this prospectus include, among other things, statements concerning: projections of future results of operations or financial condition; expectations regarding our business and results of operations of our existing casino properties and prospects for future development; expenses and our ability to operate efficiently; expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations; our ability to comply with the covenants in the agreements governing our outstanding indebtedness; our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures; expectations regarding availability of capital resources, including our ability to refinance our outstanding indebtedness; our intention to pursue development opportunities and acquisitions and obtain financing for such development and acquisitions; and the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects. Any forward-looking statement is based upon a number of estimates and assumptions that, while considered reasonable by us, is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of operations may vary materially from any forward-looking statement made herein. Forward-looking statements should not be regarded as a representation by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. Some of the contingencies and uncertainties to which any forward-looking statement contained herein is subject include, but are not limited to, the following: our substantial indebtedness and significant financial commitments could adversely affect our results of operations and our ability to service such obligations; restrictions and limitations in agreements governing our debt could significantly affect our ability to operate our business and our liquidity; our facilities operate in very competitive environments and we face increasing competition; our dependence on our Nevada, Louisiana, West Virginia, Pennsylvania and Ohio casinos for substantially all of our revenues and cash flows; Table of Contents our ability to consummate the Circus Reno/Silver Legacy Purchase; our ability to obtain financing for the purchase of Circus Reno and the 50;% interest in Silver Legacy on terms that are acceptable to us, or at all; our ability to integrate the operations of Circus Reno, the Silver Legacy and the MTR Gaming properties and realize the benefits of the Circus Reno/Silver Legacy Purchase, the Merger and other future acquisitions; our operations are particularly sensitive to reductions in discretionary consumer spending and are affected by changes in general economic and market conditions; our gaming operations are highly regulated by governmental authorities and the cost of complying or the impact of failing to comply with such regulations; increases in gaming taxes and fees in jurisdictions in which we operate; risks relating to pending claims or future claims that may be brought against us; changes in interest rates and capital and credit markets; our ability to comply with certain covenants in our debt documents; the effect of disruptions to our information technology and other systems and infrastructure; construction factors relating to maintenance and expansion of operations; our ability to attract and retain customers; weather or road conditions limiting access to our properties; the effect of war, terrorist activity, natural disasters and other catastrophic events; and the intense competition to attract and retain management and key employees in the gaming industry. For additional contingencies and uncertainties, see "Risk Factors." Given these risks and uncertainties, we can give no assurances that results contemplated by any forward-looking statements will in fact occur and therefore caution investors not to place undue reliance on them. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur. Table of Contents Use of proceeds We estimate that the net proceeds from the sale of our common stock in this offering, after deducting underwriting discounts and commissions and offering expenses payable by us, will be approximately $ million ($ million if the underwriters exercise their option in full) based on an estimated offering price of $ per share. Each $1.00 increase or decrease in the estimated offering price would increase or decrease, as applicable, net proceeds from this offering by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimating underwriting discounts and commissions and offering expenses payable by us. If the underwriters' option to purchase additional shares in this offering is exercised in full, we estimate that our net proceeds will be approximately $ million. We intend to use a portion of the net proceeds from this offering to fund a portion of the purchase price payable in connection with the Circus Reno/Silver Legacy Purchase, including repaying amounts outstanding under the Silver Legacy Joint Venture credit facility. In the event that the Circus Reno/Silver Legacy Purchase is not consummated, we intended to use the net proceeds from this offering for general corporate purposes. Pending the use of proceeds from this offering as described above, we plan to invest this portion of the net proceeds in short-term, interest bearing investments. Table of Contents Dividend policy We currently anticipate that we will retain all available funds for use in the operation of our business, and we do not intend to pay any cash dividends on our common stock in the near future. The declaration, amount and payment of any future dividends on shares of common stock will be at the sole discretion of our board of directors and we may reduce or discontinue entirely the payment of such dividends at any time. Our board of directors may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal and tax restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant. Our existing debt agreements contain, and we expect the agreements governing debt incurred with the Refinancing Transactions will contain, restrictive covenants that limit our ability to pay dividends, and any financing arrangements that we enter into in the future may contain similar restrictions. Table of Contents Price range of our common stock Since September 22, 2014, our common stock has traded on the NASDAQ Global Select Market under the symbol "ERI." The following table sets forth, for the periods indicated, the high and low daily sales prices for our common stock, as reported by the NASDAQ Global Select Market, for the period since September 22, 2014. High Low Fiscal year 2015 First Quarter $ 5.68 $ 3.81 Second Quarter $ 8.76 $ 5.00 Third Quarter (through July 9, 2015) $ 8.25 $ 7.56 Fiscal year 2014 Third Quarter (from September 22, 2014) $ 4.75 $ 3.61 Fourth Quarter $ 4.40 $ 3.74 On July 9, 2015, the last reported sale price for our common stock on the NASDAQ Global Select Market was $8.33 per share. As of July 9, 2015, based on the information provided by Continental Stock Transfer & Trust Company, we had 46,444,694 shares of common stock issued and outstanding and there were approximately 690 holders of record of our common stock. Table of Contents Capitalization The following table sets forth our capitalization as of March 31, 2015: on an actual basis; on an as adjusted basis to give effect to the Refinancing Transactions and the sale of shares of common stock in this offering at the assumed offering price of $ per share, which is the closing price of our common stock on July , 2015, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The information in this table should be read in conjunction with "Selected Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as the consolidated financial statements and related notes included elsewhere in this prospectus. As of March 31, 2015 (dollars in millions) Actual As adjusted(1) (Unaudited) Cash and cash equivalents including restricted cash(2) $ 80.3 $ 18.1 Debt(3): Resorts Notes 168.0 MTR Notes 560.7 New Term Loan Facility New Revolving Credit Facility New Senior Notes(4) Total debt 728.7 Stockholders' Equity: Common stock, par value $0.00001: 100,000,000 shares authorized, 46,426,714 shares issued and outstanding, actual; shares issued and outstanding, as adjusted Paid-in capital 166.5 Accumulated deficit (20.6 ) Accumulated other comprehensive income 0.1 Stockholders' equity before non-controlling interest 145.9 Non-controlling interest 0.1 Total stockholders' equity 146.0 Total capitalization $ 957.5 $ (1) Each $1.00 increase or decrease in the assumed offering price of $ per share would increase or decrease, as applicable, our as adjusted cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. (2) Includes $10.9 million of restricted cash. (3) Debt amounts reflect the principal amount of indebtedness and do not include unamortized debt discounts recorded in accordance with GAAP, and accordingly, will not agree to the amounts reported on our condensed consolidated balance sheet. Debt amounts do not reflect $83.5 million of outstanding indebtedness as of March 31, 2015 under the Silver Legacy Joint Venture credit facility and $16.9 million in outstanding principal amount and accrued and unpaid interest owed by the Silver Legacy Joint Venture under member notes payable to ELLC Table of Contents and Galleon as of March 31, 2015. All amounts outstanding under the Silver Legacy Joint Venture credit facility are expected to be paid and the member notes are expected to be extinguished upon consummation of the Circus Reno/Silver Legacy Purchase. (4) Includes $50 million in proceeds from the sale of the Notes that will be placed in escrow and released upon closing of the Circus Reno/Silver Legacy Purchase. The Escrowed Property will be used to consummate the Circus Reno/Silver Legacy Purchase. If such proceeds of this offering are not released from escrow to consummate the Circus Reno/Silver Legacy Purchase on or before April 1, 2016, then an aggregate principal amount of Notes equal to $50 million will be subject to a special mandatory redemption, on a pro rata basis, at a price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest to, but not including, the date of redemption which will be paid by ERI using the Escrowed Property. The new senior notes will be offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and to persons outside the United States under Regulation S of the Securities Act. The new senior notes will not be registered under the Securities Act, and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Table of Contents Dilution As of March 31, 2015, we had a net tangible book value of approximately $146 million or $3.15 per share of common stock, based upon 46,426,714 shares of common stock outstanding on such date. Net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of common stock outstanding. Dilution in net tangible book value per share to new investors in this offering represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of common stock immediately after the completion of this offering. After giving effect to the sale of the shares of common stock offered by us in this offering at the assumed offering price of $ per share, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us, our net tangible book value as of March 31, 2015 would have been $ million, or $ per share of common stock. This represents an immediate increase in net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors in our common stock. The following table illustrates this dilution on a per share basis. The following table illustrates the dilution to the purchasers of the common stock in this offering: Minimum offering Assumed offering price per share $ Net tangible book value per share as of March 31, 2015, before giving effect to this offering $ Increase in net tangible book value per share attributed to new investors purchasing shares in this offering Net tangible book value per share after giving effect to this offering Dilution per share to new investors in this offering $ A $1.00 increase or decrease in the assumed offering price of $ per share would increase or decrease, respectively, our as adjusted net tangible book value after this offering by $ per share and the dilution in as adjusted net tangible book value to new investors by $ per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. As of March 31, 2015, there were options outstanding to purchase a total of 272,200 shares of common stock at a weighted average exercise price of $5.68 per share. To the extent outstanding options are exercised, there will be further dilution to new investors. Table of Contents Unaudited pro forma condensed combined financial statements The following unaudited pro forma condensed combined financial information presents the unaudited pro forma condensed combined balance sheet as of March 31, 2015 and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2014 and the three months ended March 31, 2015 based upon the historical financial statements of Eldorado HoldCo LLC ("HoldCo"), MTR Gaming Group, Inc. ("MTR Gaming"), ERI (as defined below), Circus and Eldorado Joint Venture, LLC ("Silver Legacy"), and Circus Circus Casinos, Inc. d/b/a Circus Circus Hotel Casino Reno, after giving effect to the following transactions: the MTR Merger (as defined below); the Circus Reno/Silver Legacy Purchase (as defined below); the Refinancing Transactions (as defined below); and the issuance of shares of ERI common stock in a public offering in the near term (the "Equity Offering"). On September 9, 2013, MTR Gaming, Eclair Holdings Company, a Nevada corporation, now Eldorado Resorts, Inc. ("ERI"), Ridgeline Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of ERI, Eclair Acquisition Company, LLC, a Nevada limited liability company and wholly-owned subsidiary of ERI, HoldCo and Thomas Reeg, Robert Jones and Gary Carano, as the member representatives thereof, entered into a definitive agreement and plan of merger, as amended on November 18, 2013, February 13, 2014 and May 13, 2014 (the "Merger Agreement"). Pursuant to the Merger Agreement, on September 19, 2014 (the "Merger Date"), MTR merged with and into Ridgeline Acquisition Corp., with MTR Gaming surviving the merger (the "MTR Merger"), and HoldCo merged with and into Eclair Acquisition Company, LLC, with HoldCo surviving the merger (the "HoldCo Merger" and, together with the MTR Merger, the "Merger"). On July 7, 2015, ERI entered into a purchase and sale agreement (the "Purchase Agreement") with subsidiaries of MGM Resorts International ("MGM") to purchase the 50% interest in the Silver Legacy Joint Venture held by Galleon, Inc. and the assets constituting Circus Circus Hotel Casino Reno ("Circus Reno") (the "Circus Reno/Silver Legacy Purchase"). The Purchase Agreement for the Circus Reno/Silver Legacy Purchase contemplates an aggregate cash consideration of $72.5 million, subject to a working capital adjustment, plus the assumption of the third party debt of the Silver Legacy Joint Venture. For purposes of the unaudited pro forma condensed combined financial statements, the estimated purchase consideration is approximately $187.5 million (see Note 2). ERI currently has an indirect interest of 48.1% in the Silver Legacy Joint Venture. The consummation of the Circus Reno/Silver Legacy Purchase is subject to the satisfaction of customary conditions, including the receipt of all required regulatory approvals, and is expected to be consummated by the end of 2015. There can be no assurances that the Circus Reno/Silver Legacy Purchase will be consummated on the terms and conditions described herein, or at all. Prior to the consummation of the Circus Reno/Silver Legacy Purchase, ERI is expected to exercise its rights under a Retained Interest Agreement relating to the 1.9% interest in the Silver Legacy Joint Venture held by certain affiliates of ERI (the "Retained Interest Purchase" and, together with the Circus Reno/Silver Legacy Purchase, the "Circus Reno/Silver Legacy Transaction"). Following the consummation of the Circus Reno/Silver Legacy Transaction, the Silver Legacy Joint Venture will become a wholly-owned indirect subsidiary of ERI. ERI intends to offer $375 million aggregate principal amount of senior notes (the "Notes"). The Notes are expected to mature in July 2023. ERI intends to use the net proceeds from the offering of the Notes, together with borrowings under a proposed new $425 million term loan (the "New Term Loan"), proceeds from the sale of equity securities (see discussion below), borrowings under a proposed new $150 million Table of Contents revolving credit facility (the "New Revolving Credit Facility" and, together with the New Term Loan, the "New Credit Facility") and cash on hand, to (i) purchase or otherwise redeem (a) all of the outstanding 8.625% Senior Secured Notes due 2019 issued by Eldorado Resorts LLC ("Resorts") and Eldorado Capital Corp. (the "Resorts Notes") and (b) all of the outstanding 11.50% Senior Secured Second Lien Notes due 2019 issued by MTR Gaming Group, Inc. (the "MTR Notes" and, together with the Resorts Notes, the "Existing Notes"), (ii) pay the purchase consideration for the purchase of all of the assets of Circus Reno and the 50% interest in the Silver Legacy Joint Venture that is currently owned by a subsidiary of MGM and repay all amounts outstanding under the Silver Legacy Joint Venture credit facility, and (iii) pay fees and costs associated with such transactions. As used herein, the "Refinancing Transactions" means the offer and sale of the Notes, borrowings under the New Credit Facility and the use of proceeds of the sale of the Notes and borrowings under the New Term Loan to purchase, redeem, defease or otherwise satisfy and discharge the Existing Notes. For purposes of the unaudited pro forma condensed combined financial statements (the "Unaudited Pro Forma Financial Statements"), a portion of the purchase consideration for the Circus Reno/Silver Legacy Purchase is assumed to be financed by an Equity Offering that generates net proceeds of approximately $60 million. The actual number of shares of common stock to be issued in the Equity Offering, if any, will depend on the market price of ERI's common stock at the time of the Equity Offering. There can be no assurances that ERI will be able to sell equity securities on terms that are acceptable to it or at all. If ERI is unable to generate sufficient proceeds from the sale of equity securities, it may incur borrowings under the New Revolving Credit Facility or other indebtedness for such purpose. The unaudited pro forma condensed combined statements of operations (the "Unaudited Pro Forma Statements of Operations") for the year ended December 31, 2014 and the three months ended March 31, 2015 give effect to the Merger as if it had occurred on the first day of the period presented and give effect to the Circus Reno/Silver Legacy Transaction, the Refinancing Transactions and the Equity Offering as if each such transaction had occurred on January 1, 2014, in each case, and reflect pro forma adjustments that are expected to have a continuing impact on the results of operations. The unaudited pro forma combined balance sheet (the "Unaudited Pro Forma Balance Sheet") gives effect to the consummation of the Circus Reno/Silver Legacy Transaction, the Refinancing Transactions and Equity Offering as if each such transaction had occurred on March 31, 2015. The MTR Merger is already reflected in ERI's historical unaudited combined pro forma balance sheet as of March 31, 2015; therefore, no pro forma balance sheet adjustments are necessary to show the pro forma impact of the MTR Merger. Certain reclassifications have been made to the historical financial statements of ERI, MTR Gaming, the Silver Legacy Joint Venture and Circus Reno to align their presentation in the Unaudited Pro Forma Financial Statements. The Unaudited Pro Forma Financial Statements have been prepared by management for illustrative purposes only and do not purport to represent what the results of operations, balance sheet data or other financial information of ERI would have been if the Merger and the Circus Reno/Silver Legacy Purchase (collectively, the "Acquisition Transactions") had occurred as of the dates indicated or what such results will be for any future periods. The pro forma adjustments are based on the preliminary assumptions and information available at the time of the preparation of this report. The historical financial information has been adjusted to give effect to pro forma events that are: (1) directly attributable to the Acquisition Transactions, (2) factually supportable, and (3) with respect to the Unaudited Pro Forma Statements of Operations, expected to have a continuing impact on the combined results of ERI. As such, the Unaudited Pro Forma Statements of Operations for the year ended December 31, 2014 and the three months ended March 31, 2015 do not reflect non-recurring charges that have or will be incurred in connection with the Table of Contents Acquisition Transactions. The Unaudited Pro Forma Statements of Operations also do not reflect any cost savings from potential operating efficiencies or associated costs to achieve such savings or synergies that are expected to result from the Acquisition Transactions nor does it include any costs associated with severance, exit or disposal of businesses or assets, restructuring or integration activities resulting from the Acquisition Transactions, as they are currently not known, and, to the extent they arise, they are expected to be non-recurring and will not have been incurred at the closing date of the applicable Acquisition Transaction. However, such costs could affect the combined company following the Acquisition Transaction in the period the costs are incurred. Further, the Unaudited Pro Forma Financial Statements do not reflect the effect of any regulatory actions that may impact the results of the combined company following the Acquisition Transactions Table of Contents Eldorado Resorts, Inc. Unaudited pro forma condensed combined balance sheet as of March 31, 2015 (dollars in thousands) ERI Silver Legacy Circus Reno Historical Refinancing pro forma adjustments(a) Refinancing pro forma totals Historical Acquisition pro forma adjustments(a) Historical Acquisition pro forma adjustments(a) Equity issuance(a) Acquisition adjustments(a) Eliminating entries Combined company pro forma Current assets Cash and cash equivalents $ 71,913 $ 13,564 $ 85,477 $ 18,325 $ (18,325 ) $ 5,289 $ $60,000 $(132,675 ) $ $ 18,091 Restricted cash 8,357 8,357 8,357 Accounts receivable, net of allowance for doubtful accounts 5,608 5,608 2,361 670 8,639 Due from members and affiliates 312 312 415 727 Inventories 7,149 7,149 2,048 2,197 11,394 Prepaid expenses and other current assets 8,632 8,632 2,845 1,285 12,762 Total current assets 101,971 13,564 115,535 25,994 (18,325 ) 9,441 60,000 (132,675 ) 59,970 Restricted cash 2,500 (2,500 ) 5,000 (5,000 ) Investment in and advances to unconsolidated affiliates 13,491 13,491 (13,491 ) Investment in subsidiaries 163,413 (163,413 ) Property and equipment, net 449,754 449,754 188,241 (23,291 ) 13,647 3,133 631,484 Gaming licenses and other intangibles, net 489,978 489,978 6,700 3,101 (1,701 ) 498,078 Non-operating real property 16,419 16,419 16,419 Goodwill 66,826 66,826 66,826 Other assets, net 9,513 19,442 28,955 5,904 (4,732 ) 564 30,691 Total assets $ 1,150,452 $ 30,506 $1,180,958 $225,139 $(44,648 ) $ 26,753 $ 1,432 $60,000 $ 30,738 $(176,904 ) $ 1,303,468 Current liabilities: Current portion of long-term debt $ $ $ $ 5,000 $ (5,000 ) $ $ $ $ $ $ Current portion of capital lease obligations 31 31 31 Accounts payable 9,776 9,776 3,356 1,373 14,505 Interest payable 14,972 (14,972 ) 528 (528 ) Income taxes payable 423 423 423 Accrued gaming taxes and assessments 8,560 8,560 1,018 556 10,134 Accrued payroll 10,389 10,389 2,920 3,582 16,891 Accrued other liabilities 27,716 27,716 5,435 2,603 7,413 43,167 Deferred income taxes 2,608 2,608 2,608 Due to affiliates 223 223 292 515 Total current liabilities 74,698 (14,972 ) 59,726 18,549 (5,528 ) 8,114 7,413 88,274 Table of Contents ERI Silver Legacy Circus Reno Historical Refinancing pro forma adjustments(a) Refinancing pro forma totals Historical Acquisition pro forma adjustments(a) Historical Acquisition pro forma adjustments(a) Equity issuance(a) Acquisition adjustments(a) Eliminating entries Combined company pro forma Long-term debt, less current portion 776,090 46,910 823,000 78,500 (78,500 ) 823,000 Member notes, net 10,134 (10,134 ) Capital lease obligations, less current portion 1 1 1 Deferred income taxes 145,073 145,073 145,073 Other liabilities 8,542 8,542 8,542 Total liabilities 1,004,404 31,938 1,036,342 107,183 (94,162 ) 8,114 7,413 1,064,890 Stockholders' equity Members' equity 117,956 72,839 (190,795 ) Common stock, 100,000,000 shares authorized, 46,426,714 issued and outstanding, par value $0.00001 Paid-in capital 166,447 166,447 91,724 (91,724 ) 60,000 13,994 240,441 Accumulated deficit (20,589 ) (1,432 ) (22,021 ) (73,085 ) 93,156 (1,950 ) Accumulated other comprehensive loss 87 87 87 Stockholders' equity before non-controlling interest 145,945 (1,432 ) 144,513 117,956 72,839 18,639 1,432 60,000 (176,801 ) 238,578 Non-controlling interest 103 103 (103 ) Total stockholders' equity 146,048 (1,432 ) 144,616 117,956 72,839 18,639 1,432 60,000 (176,904 ) 238,578 Total liabilities and stockholders' equity $ 1,150,452 $ 30,506 $1,180,958 $225,139 $ (21,323 ) $ 26,753 $ 1,432 $60,000 $ 7,413 $(176,904 ) $ 1,303,468 (a) Refer to the notes to the Unaudited Pro Forma Condensed Combined Financial Statements for discussion of reclassification and pro forma adjustments. Table of Contents Eldorado Resorts, Inc. Unaudited pro forma condensed combined statement of operations Three months ended March 31, 2015 (dollars in thousands, except per share amounts) MTR Gaming Eldorado Silver Legacy Circus Reno Eldorado pro forma historical MTR Gaming pro forma historical Merger pro forma adjustments(a) ERI pro forma total Financing pro forma adjustments(a) Acquisition pro forma adjustments(a) Combined company pro forma Adjusted historical Pro forma adjustments(a) Adjusted historical Pro forma adjustments(a) Operating revenues: Casino $ 46,353 $101,309 $ $ 147,662 $ 16,667 $ $7,466 $ $ $ $ 171,795 Pari-mutuel commissions 1,205 1,205 1,205 Food and beverage 14,465 7,717 22,182 7,493 3,117 32,792 Hotel 5,886 1,148 7,034 6,384 3,731 17,149 Other 2,262 2,464 4,726 1,899 3,578 10,203 Total revenues 68,966 113,843 182,809 32,443 17,892 233,144 Less promotional allowances (10,579 ) (4,779 ) (15,358 ) (4,792 ) (1,210 ) (21,360 ) Net revenues 58,387 109,064 167,451 27,651 16,682 211,784 Operating expenses: Casino 24,585 62,233 86,818 8,490 3,601 98,909 Pari-mutuel commissions 1,696 1,696 1,696 Food and beverage 6,619 5,302 11,921 4,566 2,522 19,009 Hotel 1,853 337 2,190 2,612 2,406 7,208 Other 1,686 1,181 2,867 1,076 1,959 5,902 Marketing and promotions 3,847 3,254 (1) 7,101 1,905 (7) 848 (11) 9,854 General and administrative 11,755 15,949 27,704 4,787 4,624 37,115 Depreciation and amortization 3,930 10,539 (3,955 )(3) 10,514 3,047 (1,537 )(8) 230 (113 )(12) 12,141 Total operating expenses 54,275 100,491 (3,955 ) 150,811 26,483 (1,537 ) 16,190 (113 ) 191,834 (Loss) gain on sale or disposition of property 1 1 (12 ) (11 ) Acquisition charges (84 ) 84 (2) Equity in income (losses) of unconsolidated affiliate (518 ) (4) (518 ) 518 (16) Operating income 3,594 8,490 4,039 16,123 1,156 1,537 492 113 518 19,939 Table of Contents MTR Gaming Eldorado Silver Legacy Circus Reno Eldorado pro forma historical MTR Gaming pro forma historical Merger pro forma adjustments(a) ERI pro forma total Financing pro forma adjustments(a) Acquisition pro forma adjustments(a) Combined company pro forma Adjusted historical Pro forma adjustments(a) Adjusted historical Pro forma adjustments(a) Other income (expense): Interest income 4 1 5 5 Interest expense (3,838 ) (13,399 ) (5) (17,237 ) (2,738 ) 2,738 (9) 4,708 (13) (12,529 ) Gain on extinguishment of debt (Refinance) (14) Gain on termination of supplemental executive retirement plan (16) Net (loss) income before income taxes (240 ) (4,908 ) 4,039 (1,109 ) (1,582 ) 4,275 492 113 4,708 518 7,415 Provision (benefit) for income taxes 1,887 (2,903 ) (1,414 )(6) (2,430 ) (10) 1,414 (15) (1,016 ) Net (loss) income 1,647 (7,811 ) 2,625 (3,539 ) (1,582 ) 4,275 492 113 6,122 518 6,399 Less net (income) loss attributable to non-controlling interest Net (loss) income attributable to the Company $ 1,647 $ (7,811 ) $ 2,625 $ (3,539 ) $ (1,582 ) $ 4,275 $ 492 $ 113 $6,122 $518 $ 6,399 Net loss per share Basic $ (0.08 ) Diluted $ (0.08 ) Weighted average number of shares outstanding: Basic 46,494,638 Diluted 46,494,638 (a)Refer to the notes to the Unaudited Pro Forma Condensed Combined Financial Statements for discussion of reclassification and pro forma adjustments. Table of Contents Eldorado Resorts, Inc. Unaudited pro forma condensed combined statement of operations Year ended December 31, 2014 (dollars in thousands, except per share amounts) Eldorado MTR Gaming Silver Legacy Circus Reno Merger pro forma adjustments(a) ERI pro forma total Financing pro forma adjustments(a) Acquisition pro forma adjustments(a) Combined company pro forma Pro forma historical Pro Forma historical Adjusted historical Pro forma adjustments(a) Adjusted historical Pro forma adjustments(a) Operating revenues: Casino $ 185,174 $434,040 $ $ 619,214 $ 74,146 $ $28,013 $ $ $ $721,373 Pari-mutuel commissions 10,000 10,000 10,000 Food and beverage 59,124 34,428 93,552 33,324 12,718 139,594 Hotel 26,647 4,849 31,496 32,335 18,629 82,460 Other 9,240 13,577 22,817 7,899 13,097 43,813 Total revenues 280,185 496,894 777,079 147,704 72,457 997,240 Less promotional allowances (42,530 ) (20,849 ) (63,379 ) (20,609 ) (4,837 ) (88,825 ) Net revenues 237,655 476,045 713,700 127,095 67,620 908,415 Operating expenses: Casino 99,991 258,106 10,392 368,489 36,431 14,309 419,229 Pari-mutuel commissions 10,464 10,464 10,464 Food and beverage 29,083 29,551 (8,717 ) 49,917 20,828 10,528 81,273 Hotel 7,666 2,957 (865 ) 9,758 12,397 10,334 32,489 Other 7,255 7,833 (810 ) 14,278 5,063 7,590 26,931 Marketing and promotions 17,556 14,893 (1) 32,449 7,598 4,400 (7) 3,556 300 (11) 48,303 General and administrative 45,469 64,967 110,436 19,299 19,448 149,183 Depreciation and amortization 16,354 34,520 (11,687) (3) 39,187 10,539 (4,688) (8) 928 (476) (12) 45,490 Total operating expenses 223,374 423,291 (11,687 ) 634,978 112,155 (288 ) 66,693 (176 ) 813,362 Loss on sale or disposition of property (84 ) (184 ) (268 ) (268 ) Acquisition charges (6,348 ) (8,683 ) 15,031 (2) Equity in income (losses) of unconsolidated affiliate 2,705 (719) (4) 1,986 (1,986) (16) Operating income (loss) 10,554 43,887 25,999 80,440 14,940 288 927 176 (1,986 ) 94,785 Table of Contents MTR Gaming Eldorado Silver Legacy Circus Reno Merger pro forma adjustments(a) ERI pro forma total Financing pro forma adjustments(a) Acquisition pro forma adjustments(a) Combined company pro forma Pro forma historical Pro forma historical Adjusted historical Pro forma adjustments(a) Adjusted historical Pro forma adjustments(a) Other income (expense): Interest income 15 9 24 4 28 Interest expense (15,441 ) (65,149 ) 8,475 (5) (72,115 ) (11,037 ) 11,037 (9) 21,943 (13) (50,172 ) Gain on extinguishment of debt (Refinance) (1,432 )(14) (1,432 ) Gain on termination of supplemental executive retirement plan 715 715 1,430 (715 )(16) 1,430 Change in fair value of supplemental executive retirement plan assets 69 69 Loss on extinguishment of debt (90 ) (90 ) (90 ) Net (loss) income before income taxes (4,157 ) (21,343 ) 34,474 8,974 5,402 11,325 931 176 20,511 (2,701 ) 44,618 Provision for income taxes (1,054 ) (3,949 ) (9,083) (6) (14,086 ) (10) 9,083 (15) (5,003 ) Net (loss) income (5,211 ) (25,292 ) 25,391 (5,112 ) 5,402 11,325 931 176 29,594 (2,701 ) 39,615 Less net (income) loss attributable to non-controlling interest (103 ) (103 ) 103 Net (loss) income attributable to the Company $ (5,314 ) $(25,292 ) $25,391 $ (5,215 ) $ 5,402 $11,325 $931 $176 $29,594 $(2,598 ) $ 39,615 Net loss per share Basic $ (0.11 ) Diluted $ (0.11 ) Weighted average number of shares outstanding: Basic 46,396,307 Diluted 46,396,307 (a) Refer to the notes to Unaudited Pro Forma Condensed Combined Financial Statements for discussion of reclassification adjustments. Table of Contents Note 1. Basis of presentation The Unaudited Pro Forma Financial Statements have been derived by applying pro forma adjustments to the historical unaudited interim financial statements as of March 31, 2015 and for the year ended December 31, 2014 and the three months ended March 31, 2015 of ERI, MTR Gaming, HoldCo, the Silver Legacy Joint Venture ("Silver Legacy") and Circus Reno. The Unaudited Pro Forma Financial Statements have been prepared giving effect to both accounting acquisitions of MTR Gaming by HoldCo and Silver Legacy and Circus Reno by ERI in a transaction to be accounted for as a purchase in accordance with ASC Topic No. 805, Business Combinations. Under the acquisition method of accounting, the total estimated purchase consideration, calculated as described in the notes to the Unaudited Pro Forma Financial Statements, is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date. The Unaudited Pro Forma Financial Statements should be read in conjunction with: the accompanying notes to the Unaudited Pro Forma Financial Statements; the separate historical audited consolidated financial statements of ERI and Silver Legacy as of and for the year ended December 31, 2014; the separate historical unaudited consolidated interim financial statements of ERI and Silver Legacy as of and for the three months ended March 31, 2015 and 2014; and and the MTR Gaming Group, Inc. audited financial statements as of and for the year ended December 31, 2014 which provides a summary of the calculation of purchase consideration related to the MTR Merger. Note 2. Calculation of estimated purchase consideration Circus Reno/Legacy Purchase The total estimated purchase consideration for the purpose of this pro forma financial information is $187.5 million. The purchase consideration in the acquisition was determined with reference to its acquisition date fair value. Purchase consideration calculation (dollars in thousands) Silver Legacy Circus Reno Total Cash consideration paid by ERI for MGM's 50% equity interest and MGM's member note $ 55,100 $ 17,400 $ 72,500 Fair value of ERI's preexisting 50% equity interest 46,600 46,600 Cash paid by ERI to retire Silver Legacy's long term debt(1) 60,402 60,402 Fair value of settled ERI member note 5,368 5,368 Estimated closing Circus Reno net working capital(2) 2,671 2,671 Estimated purchase consideration $ 167,470 $ 20,071 $ 187,541 (1) Represents $5.0 million current portion of long term debt, $78.5 million of long term debt and $0.2 million of accrued interest, net of $23.3 million paid by Silver Legacy utilizing Silver Legacy's cash on hand as of March 31, 2015. (2) Per the purchase agreement, the purchase price will be $72.5 million plus the Final Closing Circus Reno Net Working Capital (as defined in the purchase agreement). Preliminary purchase price allocation The following table summarizes the preliminary allocation of the estimated purchase consideration to the identifiable assets acquired and liabilities assumed in the Circus Reno/Silver Legacy Purchase. The fair values were based on management's analysis, including preliminary work performed by third-party Table of Contents valuation specialists. The following table summarizes the preliminary purchase price allocation of the acquired assets and assumed liabilities as of March 31, 2015 (dollars in thousands): Silver Legacy Circus Reno Total Current and other assets $ 7,669 $ 9,441 $ 17,110 Property and equipment 164,950 16,780 181,730 Intangible assets(1) 6,700 1,400 8,100 Other noncurrent assets 1,172 564 1,736 Total assets 180,491 28,185 208,676 Liabilities 13,021 8,114 21,135 Net assets acquired $ 167,470 $ 20,071 $ 187,541 (1) Intangible assets consist of trade names which are non-amortizable and customer loyalty programs which are amortized over one year. Trade receivables and payable, inventory as well as other current and noncurrent assets and liabilities was valued at the existing carrying values as they represented the fair value of those items at March 31, 2015, based on management's judgments and estimates. The fair value estimate of property and equipment utilized a combination of the cost and market approaches, depending on the characteristics of the asset classification. The fair value of land was determined using the market approach, which considers sales of comparable assets and applies compensating factors for any differences specific to the particular assets. With respect to personal property components of the assets (gaming equipment, furniture, fixtures and equipment, computers, and vehicles) the cost approach was used, which is based on replacement or reproduction costs of the asset. Building and site improvements were valued using the cost approach using a direct cost model built on estimates of replacement cost. Trade names were valued using the relief-from-royalty method. The customer loyalty program was valued using a combination of a replacement cost and lost profits analysis. Management has assigned trade names an indefinite useful life, in accordance with its review of applicable guidance of ASC Topic No. 350, Intangibles Goodwill and Other. The standard required management to consider, among other things, the expected use of the asset, the expected useful life of other related asset or asset group, any legal, regulatory, or contractual provisions that may limit the useful life, the Company's own historical experience in renewing similar arrangements, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to obtain the expected cash flows. In that analysis, management determined that no legal, regulatory, contractual, competitive, economic or other factors limit the useful lives of these intangible assets. The customer loyalty program is being amortized on a straight-line basis over a one year useful life. Note 3. Unaudited pro forma financial statements transaction adjustments 1)The amortization expense related to the definite-lived intangibles of $1.9 million for the year ended December 31, 2014 and $0.5 million for the three months ended March 31, 2015, was based on the adjustments to the fair value of intangible assets as the result of the addition of other intangible assets to the balance sheet, primarily consisting of $8.7 million for trade names and $4.1 million for the MTR Gaming InClub player development program, amortized over the respective useful lives of the intangible assets. The trade names were valued using the relief-from-royalty method using royalty rates ranging from 0.5-1.0%. The MTR Gaming InClub program was valued using a combination of a replacement cost and lost profits analysis. The goodwill increased from $0.6 million, the result of the Table of Contents contingent purchase consideration associated with the 2003 Scioto Downs acquisition, to approximately $56.1 million, the result of the purchase consideration of the proposed transaction exceeding the fair values of the acquired tangible and intangible assets. Amortization expense is included within marketing and promotions expense in the Unaudited Pro Forma Statement of Operations. 2)In conjunction with the Merger, HoldCo and MTR Gaming incurred approximately $9.5 million and $13.1 million, respectively, for a total of $22.6 million in transaction related costs, which consisted primarily of legal, financial advisor, gaming license transfer fee, accounting and consulting costs. For the year ended December 31, 2014 and the three months ended March 31, 2015, transaction costs of $15.0 million and $0.1 million, respectively, were eliminated. 3)Adjustments to depreciation expense relate to the adjustment to fair value assigned to MTR Gaming's property and equipment in the amount of $70.3 million and were based on comparing the historical depreciation recorded during the periods presented to the revised depreciation. The revised depreciation was calculated by dividing, on a straight line basis, the fair value assigned to MTR Gaming's property and equipment by the estimated remaining useful lives assigned to the assets. For the year ended December 31, 2014, pro forma depreciation expense decreased $11.7 million due to a reduction in the overall fair value in property and equipment, as well as the impact of an increase in the remaining useful life assigned to certain assets, offset in part by additional depreciation associated with assets assigned a remaining useful life of one year or less. For the three months ended March 31, 2015, pro forma depreciation expense decreased $4.0 million due to a reduction in the overall fair value in property and equipment, as well as the impact of an increase in the remaining useful life assigned to certain assets. 4)Reflects the elimination of Resorts' investment in Tamarack. Resorts owned a 21.25% equity method investment in Tamarack, which owns and operates Tamarack Junction Casino, a casino in south Reno. Resorts disposed its ownership of Tamarack prior to the Merger Date. The disposition resulted in an adjustment of $0.7 million for the year ended December 31, 2014 in the Unaudited Pro Forma Statement of Operations to remove the equity income attributable to Tamarack in the periods presented. There were no adjustments for the March 31, 2015 period. 5)The fair value of the assumed long term debt was estimated using bid prices for MTR Notes as of September 19, 2014. Pro forma adjustments related to the fair value of MTR Gaming's debt increased total debt by $65 million. The following table illustrates the pro forma adjustments to interest expense for the year ended December 31, 2014 (dollars in thousands). No adjustments related to MTR Gaming's debt were required for the three months ended March 31, 2015. Year ended December 31, 2014 Elimination of deferred financing cost amortization $ 1,176 Elimination of debt discount amortization 1,518 Amortization of premium on fair value adjustment 5,781 Total adjustments to interest expense, net $ 8,475 Table of Contents 6)The provision for income taxes presented in the Unaudited Pro Forma Statements of Operations reflects provision expense (benefit) on the fair value pro forma adjustments of MTR Gaming. Additionally, a pro forma adjustment was recorded to reflect the impact of the Merger on HoldCo's provision for income taxes. Prior to the HoldCo Merger, HoldCo was not subject to federal taxes. However, as a result of the consummation of the Merger, HoldCo will be included in a consolidated corporate income tax return and be subject to corporate statutory tax rates partially offset by a valuation allowance. MTR Gaming's consolidated effective income tax rate differs from the statutory rate due to the impact of a valuation allowance recognized against MTR Gaming's net deferred tax asset exclusive of indefinite-lived intangible deferred tax liabilities. 7)Amortization expense for Silver Legacy's definite-lived intangibles of $4.4 million for the year ended December 31, 2014 and was based on the increases in the fair value of intangible assets as the result of the addition of other intangible assets to the balance sheet, primarily consisting of $4.4 million for the Silver Legacy Star Rewards player development program. No pro forma adjustments were required for the three months ended March 31, 2015 based on the one year amortization period. The Silver Legacy Star Rewards player development program was valued using a combination of replacement cost and lost profits analysis. Amortization expense is included marketing and promotions expense in the Unaudited Pro Forma Statements of Operations. 8)Adjustments to Silver Legacy's depreciation expense relate to the adjustment in fair value assigned to their property and equipment in the amount of $0.5 million and were based on comparing the historical depreciation recorded during the periods presented to the revised depreciation. The revised depreciation was calculated by dividing, on a straight line basis, the fair value assigned to Silver Legacy's property and equipment by the estimated remaining useful lives assigned to the assets. For the year ended December 31, 2014, pro forma depreciation expense decreased $4.7 million due to a reduction in the overall fair value in property and equipment, as well as the impact of an increase in the remaining useful life assigned to certain assets. For the three months ended March 31, 2015, pro forma depreciation expense decreased $1.5 million due to a reduction in the overall fair value in property and equipment, as well as the impact of an increase in the remaining useful life assigned to certain assets. 9)Included in the consideration for the acquisition of Silver Legacy is an assumption of debt by ERI, which is expected to be repaid or retired in connection with the purchase. As a result interest expense for Silver Legacy decreased $11.0 million for the year ended December 31, 2014 and $2.7 million for the three months ended March 31, 2015. 10)Silver Legacy is not subject to federal taxes. Upon consummation of the acquisition, Silver Legacy will be included in a consolidated corporate income tax return and be subject to corporate statutory tax rates. However, because ERI has a full valuation allowance on its deferred tax assets, a 0% effective tax rate is assumed for the purposes of the Unaudited Pro Forma Statements of Operations. 11)Amortization expense for Circus Reno's definite-lived intangibles of $0.3 million for the year ended December 31, 2014 was based on the increases in the fair value of intangible assets as the result of the addition of other intangible assets to the balance sheet, primarily consisting of $0.3 million for the player development program. No pro forma adjustments were required for the three months ended March 31, 2015 based on the one year amortization period. The player development program was valued using a combination of replacement cost and lost profits analysis. Amortization expense is included marketing and promotions expense in the Unaudited Pro Forma Statements of Operations. Table of Contents 12)Adjustments to Circus Reno's depreciation expense relate to the decrease in fair value assigned to their property and equipment in the amount of $1.4 million and were based on comparing the historical depreciation recorded during the periods presented to the revised depreciation. The revised depreciation was calculated by dividing, on a straight line basis, the fair value assigned to Circus Reno's property and equipment by the estimated remaining useful lives assigned to the assets. For the year ended December 31, 2014, pro forma depreciation expense decreased $0.5 million due to a reduction in the overall fair value in property and equipment, as well as the impact of an increase in the remaining useful life assigned to certain assets. For the three months ended March 31, 2015, pro forma depreciation expense decreased $0.1 million due to a reduction in the overall fair value in property and equipment, as well as the impact of an increase in the remaining useful life assigned to certain assets. 13)For purposes of calculating pro forma interest expense, the blended interest rate applicable to the Notes, New Term Loan and New Credit Facility has been assumed to be 5.75%. For the year ended December 31, 2014 and three months ended March 31, 2015, pro forma interest expense was $50.2 million and $12.5 million, respectively. These amounts include amortization of debt issuance costs associated with the Refinancing Transactions totaling $3.0 million for the year ended December 31, 2014 and $0.7 million for the three months ended March 31, 2015. A sensitivity analysis on interest expense for the year ended December 31, 2014 and the three months ended March 31, 2015 has been performed to assess the effect of a change of 12.5 basis points to the hypothetical interest rate on the debt financing. The following table shows the change in interest expense for the debt financing (in thousands): Change in interest expense assuming Three months ended March 31, 2015 Year ended December 31, 2014 Increase of 0.125% $ 256 $ 1,026 Decrease of 0.125% (256 ) (1,026 ) The following represents the key financing terms of the additional borrowings to finance the Circus Reno/Silver Legacy Purchase and the Refinancing Transactions. Assumed interest rate Maturity New Term Loan 4.75% 7 years Notes 7.00% 8 years New Revolving Credit Facility 3.53% 5 years The interest rate assumed on the New Term Loan is based on the LIBOR floor rate of 100 bps plus a LIBOR spread of 375 bps. The interest rate assumed on the Notes is based on the terms and conditions of the Notes issued by ERI. The interest rate assumed on the New Revolving Credit Facility is based on the LIBOR rate of 28 bps plus a LIBOR spread of 325 bps. 14)The net loss on extinguishment of debt of $1.4 million represents the gain resulting from the write off of the unamortized premium on the MTR Notes of $47.4 million offset by the losses resulting from the payment of the call premium on the Existing Notes of $45.3 million and the write off of the unamortized deferred financing costs of $3.5 million on the Resorts' Notes. Table of Contents 15)ERI is subject to a 35% statutory tax rate offset by a valuation allowance against its net deferred tax assets exclusive of indefinite-lived intangible deferred tax liabilities which generally cannot be offset against deferred tax assets. The pro forma adjustment represents the valuation allowance applied to reduce the income tax expense associated with deferred tax asset utilization. 16)Upon consummation of the Circus Reno/Silver Legacy Purchase, ERI's equity investment in Silver Legacy will be remeasured. As of March 31, 2015, ERI's equity investment balance was $13.5 million and the fair value was $46.6 million. The remeasurement, which will be reflected upon close in final purchase accounting, will result in an estimated gain of approximately $33.1 million. Furthermore, in accordance with the Circus Reno/Silver Legacy Purchase, ERI will eliminate the previously reported equity income and gain on termination of Silver Legacy's supplemental executive retirement plan assets. This elimination is reflected on the Unaudited Pro Forma Statements of Operations. Note 4. Unaudited pro forma financial statement reclassification adjustments Certain reclassifications have been recorded to the historical financial statements of MTR Gaming, HoldCo, Silver Legacy and Circus Reno to provide comparability and consistency for the anticipated post-combined company presentation. No adjustments were necessary to conform accounting policies and procedures. Reclassifications were made between certain current liabilities to provide consistency in presentation. Reclassifications were made among revenue components to classify certain revenue streams consistently between the two companies. These included separating entertainment revenues from food and beverage and reclassifying to other revenue as well as presenting hotel revenues as a separate line item. Reclassifications were also made between expense line items, such as gaming, food and beverage, hotel and other costs, as well as marketing and promotions and general and administrative. Certain reclassifications were required to remain consistent with the changes made within revenue reclassifications, as well as present costs such as surveillance, housekeeping, advertising and promotions and utilities consistently between the companies. The reclassifications reflect the anticipated presentation of the post-combination company's financial statements and are subject to change. Table of Contents Selected financial information The selected historical consolidated financial and other data presented below as of and for the three months ended March 31, 2015 and March 31, 2014 have been derived from the Company's unaudited condensed consolidated financial statements, which are contained elsewhere in this prospectus. The selected historical consolidated financial and other data presented below for the fiscal years ended December 31, 2014, 2013 and 2012 have been derived from the Company's audited consolidated financial statements, which are contained elsewhere in this prospectus. The Merger closed on the Merger Date and has been accounted for as a reverse acquisition of MTR Gaming by HoldCo under accounting principles generally accepted in the United States. As a result, HoldCo is considered the acquirer of MTR Gaming for accounting purposes. The historical financial information included in the following table for periods prior to the Merger Date are those of Resorts and its subsidiaries. The presentation of information herein for periods prior to the Merger Date and after the Merger Date are not fully comparable because the results of operations for MTR Gaming are not included for periods prior to the Merger Date. You should read the financial information presented below in conjunction with our consolidated financial statements and accompanying notes, MTR Gaming's audited consolidated financial statements included Table of Contents elsewhere in this prospectus, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operation," included elsewhere in this prospectus. Year ended December 31, Three months ended March 31, (amounts in thousands): 2010 2011 2012 2013 2014 2014 2015 (unaudited) Consolidated statement of operations data Operating revenues: Casino $ 203,537 $ 201,253 $ 200,292 $ 192,379 $ 298,848 $ 44,669 $ 147,662 Pari-mutuel commissions 1,986 1,205 Food and beverage 57,649 58,915 59,317 60,556 68,233 14,347 22,182 Hotel 26,291 26,547 26,203 26,934 28,007 5,887 7,034 Other 9,549 10,754 10,458 10,384 13,198 2,180 4,726 297,026 297,469 296,270 290,253 410,272 67,083 182,809 Less promotional allowances (42,168 ) (41,397 ) (41,530 ) (43,067 ) (48,449 ) (10,053 ) (15,358 ) Net operating revenues 254,858 256,072 254,740 247,186 361,823 57,030 167,451 Operating expenses: Casino 105,671 104,057 104,044 101,913 167,792 23,974 86,818 Pari-mutuel commissions 2,411 1,696 Food and beverage 27,653 29,238 29,095 28,982 37,411 7,021 11,921 Hotel 7,489 7,866 8,020 7,891 8,536 1,945 2,190 Other 7,219 7,764 7,279 7,290 9,348 1,649 2,867 Marketing and promotions 20,007 18,743 18,724 17,740 21,982 4,137 7,101 General and administrative 45,337 44,817 44,936 43,713 63,355 10,812 27,704 Depreciation and amortization 22,440 19,780 17,651 17,031 28,643 4,188 14,469 Total operating expenses 235,816 232,265 229,749 224,560 339,478 53,726 154,766 (Loss) gain on sale or disposition of property (266 ) (120 ) (198 ) (226 ) (84 ) 1 Acquisition charges(1) (3,173 ) (7,411 ) (1,372 ) (84 ) Equity in income (losses) of unconsolidated affiliates(2) (3,899 ) (3,695 ) (8,952 ) 3,355 2,705 (380 ) (518 ) Impairment of investment in joint venture(3) (33,066 ) Operating income (loss) 14,877 (13,074 ) 15,841 22,582 17,555 1,552 12,084 Other income (expense): Interest income 1 12 14 16 18 4 5 Interest expense (21,065 ) (18,457 ) (16,069 ) (15,681 ) (30,752 ) (3,889 ) (17,237 ) Gain on extinguishment of debt of unconsolidated affiliate 11,980 Gain on termination of supplemental executive retirement plan 715 Loss on property donation (755 ) (Loss) gain on early retirement of debt, net 2,499 (22 ) (90 ) Total other expense (21,064 ) (15,946 ) (16,832 ) (3,685 ) (30,109 ) (3,885 ) (17,232 ) Net (loss) income before income taxes (6,187 ) (29,020 ) (991 ) 18,897 (12,554 ) (2,333 ) (5,148 ) Provision for income taxes(4) (1,768 ) (1,016 ) Net (loss) income (6,187 ) (29,020 ) (991 ) 18,897 (14,322 ) (2,333 ) (6,164 ) Less net (income) loss attributable to non-controlling interest(5) 183 4,807 (103 ) Net (loss) income attributable to the Company(6) $ (6,004 ) $ (24,213 ) $ (991 ) $ 18,897 $ (14,425 ) $ (2,333 ) $ (6,164 ) Basic net income per common share $ (0.26 ) $ (1.04 ) $ (0.04 ) $ 0.81 $ (0.48 ) $ (0.10 ) $ (0.13 ) Diluted net income per common share $ (0.26 ) $ (1.04 ) $ (0.04 ) $ 0.81 $ (0.48 ) $ (0.10 ) $ (0.13 ) Other data: Net cash provided by (used in): Operating activities $ 25,216 $ 21,171 $ 28,366 $ 23,619 $ 33,879 $ 6,344 $ (5,876 ) Investing activities (8,422 ) (7,715 ) (21,832 ) (7,643 ) 38,140 (485 ) (9,812 ) Financing activities 19 (31,439 ) (11,381 ) (11,466 ) (14,228 ) (1,068 ) (3 ) Capital expenditures 8,270 7,889 9,181 7,413 10,564 (502 ) (7,495 ) Operating data: Number of hotel rooms(7) 1,217 1,217 1,217 1,217 1,571 1,217 1,571 Average hotel occupancy rate(8) 86.4% 86.3% 84.1% 85.1% 84.1% 79.3% 80.1% Number of slot machines(7) 2,766 2,751 2,779 2,738 8,665 2,734 8,639 Number of table games(7) 97 99 97 100 177 100 176 Table of Contents At December 31, At March 31, 2010 2011 2012 2013 2014 2015 (unaudited) Consolidated balance sheet data: Cash and cash equivalents $ 48,133 $ 30,150 $ 25,303 $ 29,813 $ 87,604 $ 71,913 Total assets 333,643 272,662 262,525 270,182 1,175,330 1,150,452 Total debt 209,620 183,502 176,102 170,760 778,862 776,122 Stockholders' equity 95,905 66,023 61,003 75,575 151,622 146,048 (1) During the three months ended March 31, 2015 and 2014 and the years ended December 31, 2014 and 2013, we incurred $0.1 million, $1.4 million, $7.4 million and $3.2 million, respectively, in acquisition charges in connection with our merger with MTR Gaming. The amounts have been expensed in accordance with the applicable accounting guidance for business combinations. (2) Except as explained in note (3) below, equity in income (losses) of unconsolidated affiliates represents (1) Resorts' 48.1% joint venture interest in the Silver Legacy Joint Venture (or, prior to the Merger, its 50% interest in ELLC) and (2) for periods prior to September 1, 2014, Resorts' 21.3% interest in Tamarack. Since the Company operates in the same line of business as Silver Legacy and Tamarack, each with casino and/or hotel operations, the Company's equity in the income (losses) of such affiliates is included in operating income (loss). (3) As a result of the Company's identification of triggering events, it recognized non-cash impairment charges of $33.1 million in 2011 for its investment in the Silver Legacy Joint Venture, which is included in the consolidated statement of operations and comprehensive income. Such impairment charge eliminated the Company's remaining investment in the Silver Legacy Joint Venture. Non-controlling interests in the Silver Legacy Joint Venture were allocated $4.8 million of the non-cash impairments, eliminating the remaining non-controlling interest. As a result of the elimination of the Company's remaining investment in the Silver Legacy Joint Venture as of December 31, 2011, we discontinued the equity method of accounting for our investment in the Silver Legacy Joint Venture until the fourth quarter of 2012 when additional investments in Silver Legacy were made. At such time, the Company recognized its share of the Silver Legacy Joint Venture's suspended net losses not recognized during the period the equity method of accounting was discontinued and resumed the equity method of accounting for its investment. (4) Prior to September 19, 2014, HoldCo was taxed as a partnership under the Internal Revenue Code pursuant to which income taxes were primarily the responsibility of the partners. On September 18, 2014, as part of the merger with MTR Gaming, ERI became a C Corporation subject to the federal and state corporate-level income taxes at prevailing corporate tax rates. While taxed as a partnership, HoldCo was not subject to federal income tax liability. Because holders of membership interests in HoldCo were required to include their respective shares of HoldCo and Resorts' taxable income (loss) in their individual income tax returns, Resorts made distributions to its member, HoldCo and HoldCo made distributions to its members to cover such liabilities. (5) Non-controlling interest represented the minority partners' share of ELLC's 50% joint venture interest in the Silver Legacy Joint Venture. The non-controlling interest in ELLC was owned by certain HoldCo equity holders and was approximately 4%. The non-controlling interest in Silver Legacy is 1.9%. (6) Excludes the operating data of Silver Legacy and Tamarack Junction. (7) As of the end of each period presented. (8) For each period presented. Table of Contents Management's discussion and analysis of financial condition and results of operations The Company was formed in September 2014 to be the parent company following the merger of wholly owned subsidiaries of the Company into HoldCo, the parent company of Resorts and MTR Gaming. Effective upon the consummation of the Merger on September 19, 2014, MTR Gaming and HoldCo each became a wholly owned subsidiary of ERI and, as a result of such transactions, Resorts became an indirect wholly owned subsidiary of ERI. Resorts owns and operates Eldorado Shreveport, a hotel and riverboat gaming complex that includes a 403-room, all suite, art deco-style hotel and a tri-level riverboat dockside casino situated on the Red River in Shreveport, Louisiana and the Eldorado Reno, a premier hotel, casino and entertainment facility in Reno, Nevada. Resorts owns the Eldorado Shreveport indirectly through two wholly owned subsidiaries which own 100% of the partnership interests in the Eldorado Shreveport Joint Venture, a Louisiana general partnership ("Louisiana Partnership"). In addition, Resorts owns a 48.1% interest in a joint venture ("Silver Legacy Joint Venture") which owns the Silver Legacy Resort Casino ("Silver Legacy"), a major, themed hotel/casino connected via a skywalk to the Eldorado Reno. Resorts also previously owned a 21.3% interest in Tamarack Junction, a small casino in south Reno. On September 1, 2014, and as a condition to closing the Merger, Resorts distributed to HoldCo, and HoldCo subsequently distributed to its members on a pro rata basis, all of Resorts' interest in Tamarack. The distribution resulted in no gain or loss being recognized in the accompanying consolidated financial statements because the distribution was in the amount of $5.5 million which was the book value of Tamarack. MTR Gaming operates as a hospitality and gaming company with racetrack, gaming and hotel properties in West Virginia, Pennsylvania and Ohio. MTR Gaming, through its wholly owned subsidiaries, owns and operates Mountaineer in Chester, West Virginia, Presque Isle Downs in Erie, Pennsylvania ("Presque Isle Downs"), and Scioto Downs in Columbus, Ohio. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of TwinSpires.com, an affiliate of Churchill Downs, Inc. ERI, HoldCo and MTR Gaming are collectively referred to as "we," "us," "our" or the "Company." The Merger closed on the Merger Date and has been accounted for as a reverse acquisition of MTR Gaming by HoldCo under accounting principles generally accepted in the United States. As a result, HoldCo is considered the acquirer of MTR Gaming for accounting purposes. The financial information included in this Management's discussion and analysis of financial condition and results of operations for periods prior to the Merger Date are those of Resorts and its subsidiaries. The presentation of information herein for periods prior to the Merger Date and after the Merger Date are not fully comparable because the results of operations for MTR Gaming are not included for periods prior to the Merger Date. Summary financial results of MTR Gaming for the years ended December 31, 2014, 2013, 2012 and 2010 are included in MTR Gaming's Annual Reports on Form 10-K as filed with the SEC. Management's discussion and analysis of financial condition and results of operations ("MD&A") is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations. We recommend that you read this MD&A in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this prospectus. Table of Contents Summary financial results Three months ended March 31, 2015 compared to the three months ended March 31, 2014 The following table highlights the results of our operations (dollars in thousands): Three months ended March 31, Percent change 2015 2014 Net operating revenues $ 167,451 $ 57,030 193.6% Operating expenses 154,766 53,726 188.1% Equity in losses of unconsolidated affiliates (518 ) (380 ) (36.3)% Operating income 12,084 1,552 678.6% Net loss (6,164 ) (2,333 ) (164.2)% Net operating revenues. MTR Gaming contributed $109.1 million of net operating revenues for the three months ended March 31, 2015, consisting primarily of casino revenues. Including the incremental MTR Gaming revenues, net operating revenues increased 193.6% for the three months ended March 31, 2015 compared to the same prior year period. Excluding incremental MTR Gaming revenues, consolidated net operating revenues increased 2.4% for the three months ended March 31, 2015 compared to the same prior year period primarily due to improvements in casino revenues at both Eldorado Reno and Eldorado Shreveport. Equity in losses of unconsolidated affiliates. Losses from our unconsolidated affiliates, the Silver Legacy Joint Venture and our former unconsolidated affiliate, Tamarack, increased $0.1 million for the three months ended March 31, 2015 compared to the same prior year period. Resorts' interest in Tamarack was disposed of on September 1, 2014. Operating income and net loss. Consolidated operating income and net loss includes operating income and a net loss of $8.5 million and $7.8 million, respectively, attributable to MTR Gaming for the three months ended March 31, 2015. Excluding operating income attributable to MTR Gaming, consolidated operating income increased $2 million during the three months ended March 31, 2015 compared to the same prior year period and was favorably impacted by the absence of acquisition charges and improved operating margins at Eldorado Reno. Table of Contents Revenues The following table highlights our sources of net operating revenues (dollars in thousands): Three months ended March 31, Percent change 2015 2014 Casino: Eldorado Reno $ 14,429 $ 12,866 12.1% Eldorado Shreveport 31,924 31,803 0.4% MTR Gaming 101,309 100.0% Total 147,662 44,669 230.6 Pari-mutuel commissions MTR Gaming 1,205 100.0% Food and beverage: Eldorado Reno 7,665 7,866 (2.6)% Eldorado Shreveport 6,800 6,481 4.9% MTR Gaming 7,717 100.0% Total 22,182 14,347 19.5% Hotel: Eldorado Reno 3,802 3,755 1.3% Eldorado Shreveport 2,084 2,132 (2.3)% MTR Gaming 1,148 100.0% Total 7,034 5,887 19.5% Other: Eldorado Reno 1,480 1,391 6.4% Eldorado Shreveport 782 789 (0.9)% MTR Gaming 2,464 100.0% Total 4,726 2,180 116.8% Promotional allowances: Eldorado Reno (3,623 ) (3,462 ) 4.7% Eldorado Shreveport (6,956 ) (6,591 ) 5.5% MTR Gaming (4,779 ) 100.0% Total (15,358 ) (10,053 ) 52.8% Casino revenues. MTR Gaming contributed $101.3 million of casino revenues for the three months ended March 31, 2015 consisting primarily of net win from slot operations, table games and poker. As a result, consolidated casino revenues increased 230.6% for the three months ended March 31, 2015 compared to the same prior year period. Consolidated casino revenues, excluding MTR Gaming casino revenues, increased 3.8% for the three months ended March 31, 2015 compared to the same prior year period. The increase in casino revenues at Eldorado Reno of 12.1% was primarily due to increases in slot handle and table games drop in addition to a higher table games hold percentage. Casino revenues increased 0.4% at Eldorado Shreveport for the three months ended March 31, 2015 compared to the same prior year period due to growth in slot handle and net slot revenues. Although table games drop also increased for the three months ended March 31, Table of Contents 2015 compared the same prior year period, the increase in volume was more than offset by a decrease in the table games hold percentage, resulting in an overall decrease in table games revenues for the three months ended March 31, 2015 compared to the same prior year period. Pari-mutuel commissions. MTR Gaming contributed $1.2 million of pari-mutuel commissions for the three months ended March 31, 2015. Food and beverage revenues. MTR Gaming contributed $7.7 million of food and beverage revenues for the three months ended March 31, 2015. As a result, consolidated food and beverage revenues increased 19.5% for the three months ended March 31, 2015 compared to the same prior year period. Consolidated food and beverage revenues, excluding MTR Gaming food and beverage revenues, increased by less than 1.0% for the three months ended March 31, 2015 compared to the same prior year period. Food and beverage revenues decreased 2.6% at Eldorado Reno mainly due to declines in beverage revenues associated with the closure of BuBinga nightclub which reopened in February of 2015 as NoVi subsequent to its remodel and rebranding. This decline in beverage revenues was partially offset by an increase in food revenues for the three months ended March 31, 2015 compared to the same prior year period. This increase was primarily due to growth in our average check price as a result of selective price increases in Eldorado Reno's restaurants partially offset by a decrease in customer counts. Food and beverage revenues increased 4.9% at Eldorado Shreveport for the three months ended March 31, 2015 compared to the same prior year period due to higher complimentary revenues and selective price increases. Hotel revenues. MTR Gaming contributed $1.1 million of hotel revenues for the three months ended March 31, 2015. As a result, consolidated hotel revenues increased 19.5% for the three months ended March 31, 2015 compared to the same prior period. Consolidated hotel revenues, excluding MTR Gaming hotel revenues, remained flat for the three months ended March 31, 2015 compared to the same prior year period. Hotel revenues at Eldorado Reno rose 1.3% primarily due to increases in the ADR from $66.74 for the three months ended March 31, 2014 compared to $67.42 for the three months ended March 31, 2015 as a result of an increase in the resort fee. Eldorado Reno's hotel occupancy was 74.5% for the three months ended March 31, 2015 and 2014. Hotel revenues at Eldorado Shreveport decreased 2.3% due to a decline in the ADR to $63.02 for the three months ended March 31, 2015 from $66.16 for the three months ended March 31, 2014 due to a highly competitive market. This decline in ADR was partially offset by improvement in the occupancy rate to 91.2% for the three months ended March 31, 2015 from 88.8% for the three months ended March 31, 2014. Other revenues. Other revenues are comprised of revenues generated by our retail outlets, entertainment venues and other miscellaneous items. MTR Gaming contributed $2.5 million of other revenues for the three months ended March 31, 2015. As a result, consolidated other revenues increased 116.8% for the three months ended March 31, 2015 compared to the same prior year period. Consolidated other revenues, excluding MTR Gaming other revenues, increased 3.8% for the three months ended March 31, 2015 compared to the same prior year period. Other revenues at Eldorado Reno increased 6.4% during the three months ended March 31, 2015 compared to the same prior year period primarily due to increased entertainment revenues in the Eldorado Reno theatre in the current period, and to a lesser extent, improved retail revenues. Other revenues decreased by less than 1.0% at Eldorado Shreveport during the three months ended March 31, 2015 compared to the same prior year period due to lower retail sales, which were partially offset by improved spa and ATM commission revenues. Table of Contents Promotional allowances. Consolidated promotional allowances, expressed as a percentage of casino revenues, decreased to 10.4% for the three months ended March 31, 2015 compared to 22.5% for the same prior year period; however, the total consolidated promotional allowances incurred increased 52.8%. MTR Gaming's promotional allowances represented 4.7% of its casino revenues for the three months ended March 31, 2015. Promotional allowances at Eldorado Reno increased 4.7% for the three months ended March 31, 2015 compared to the same prior year period reflecting an increase in Eldorado Reno's casino direct mail program. Promotional allowances increased 5.5% for the three months ended March 31, 2015 compared to the same prior year period at Eldorado Shreveport in conjunction with the increases in casino volume and as a result of an aggressive direct mail campaign combined with revisions to the players' club program. Management actively reviews the effectiveness of its promotions and direct mail programs to expand successful promotions while eliminating or reducing less profitable promotions. Promotional activities reflect our efforts to maintain ERI's share of the gaming markets in which it operates in an effort to mitigate the impact of increasing competition. Operating expenses The following table highlights our operating expenses (dollars in thousands): Three months ended March 31, Percent change 2015 2014 Casino: Eldorado Reno $ 6,586 $ 6,142 7.2% Eldorado Shreveport 17,999 17,832 0.9% MTR Gaming 62,233 100.0% Total 86,818 23,974 262.1% Pari-mutuel commissions MTR Gaming 1,696 100.0% Food and beverage: Eldorado Reno 5,272 5,565 (5.3)% Eldorado Shreveport 1,347 1,456 (7.5)% MTR Gaming 5,302 100.0% Total 11,921 7,021 69.8% Hotel: Eldorado Reno 1,586 1,635 (3.0)% Eldorado Shreveport 267 310 (13.9)% MTR Gaming 337 100.0% Total 2,190 1,945 12.6% Other: Eldorado Reno 1,328 1,298 2.3% Eldorado Shreveport 358 351 2.0% MTR Gaming 1,181 100.0% Total 2,867 1,649 73.9% Marketing and promotions 7,101 4,137 71.6% General and administrative 27,704 10,662 159.8% Management fee 150 (100.0)% Depreciation and amortization 14,469 4,188 245.5% Table of Contents Casino expenses. MTR Gaming incurred $62.2 million of casino expenses for the three months ended March 31, 2015. As a result, consolidated casino expenses increased 262.1% for the three months ended March 31, 2015 compared to the same prior year period. Casino expenses, excluding MTR Gaming casino expenses, increased 2.5% during the three months ended March 31, 2015 compared to the same prior year period. Casino expenses at Eldorado Reno increased 7.2% for the three months ended March 31, 2015 compared to the same prior year period primarily reflecting the increase in departmental variable costs, including taxes, associated with the increase in the revenues. Casino expenses at Eldorado Shreveport increased less than 1.0% during the three months ended March 31, 2015 compared to the same prior year period primarily as a result of higher gaming taxes, slot parts expense and leased machine fees. Pari-mutuel expense. MTR Gaming incurred $1.7 million of pari-mutuel expense for the three months ended March 31, 2015. Food and beverage expenses. MTR Gaming incurred $5.3 million of food and beverage expenses for the three months ended March 31, 2015. As a result, consolidated food and beverage expenses increased 69.8% for the three months ended March 31, 2015 compared to the same prior period. Food and beverage expenses, excluding MTR Gaming food and beverage expenses, decreased 5.7% for the three months ended March 31, 2015 compared to the same prior year period. Eldorado Reno food expenses decreased during the current period due to lower cost of sales combined with lower payroll expenditures, while beverage expenses decreased primarily as a result of the closure of our nightclub, BuBinga. Despite a 4.9% increase in food and beverage revenues, food and beverage expenses decreased 7.5% at Eldorado Shreveport for the three months ended March 31, 2015 compared to the same prior year period. Cost of food and beverage sales, as a percentage of associated revenues, both declined during the three months ended March 31, 2015 compared to the same prior year period due to the implementation of selective menu price increases combined with successful efforts to control food and beverage costs of product. Hotel expenses. MTR Gaming incurred $0.3 million of hotel expenses for the three months ended March 31, 2015. As a result, consolidated hotel expenses increased 12.6% for the three months ended March 31, 2015 compared to the same prior year period. Hotel expenses, excluding MTR Gaming hotel expenses, decreased 4.7% for the three months ended March 31, 2015 compared to the same prior year period. Hotel expenses at Eldorado Reno decreased 3.0% mainly due to decreased expenses associated with lower convention sales combined with efforts to control other variable costs including laundry and supplies. For the three months ended March 31, 2015 compared to the same prior year period, hotel expenses at Eldorado Shreveport decreased 13.9% as additional costs associated with higher occupancy were more than offset by decreases in payroll and other departmental variable costs. Other expenses. Other expenses are comprised of expenses associated with sales at our retail outlets, entertainment venues and other miscellaneous items. MTR Gaming incurred $1.2 million of other expenses for the three months ended March 31, 2015. As a result, consolidated other expenses increased 73.9% for the three months ended March 31, 2015 compared to the same prior year period. Other expenses, excluding MTR Gaming other expenses, increased 2.2% for the three months ended March 31, 2015 compared to the same year period. Other expenses at Eldorado Reno increased 2.3% for the three months ended March 31, 2015 compared to the same prior year period reflecting the increase in Table of Contents other revenues. Other expenses at Eldorado Shreveport increased 2.0% despite flat other revenues mainly due to higher retail costs, as a percentage of retail revenues, during the current period. Marketing and promotional expenses. MTR Gaming incurred $3.3 million of marketing and promotion expenses for the three months ended March 31, 2015. As a result, consolidated marketing and promotion expenses increased 71.6% for the three months ended March 31, 2015 compared to the same prior year period. Excluding MTR Gaming, marketing and promotional expenses decreased 7.0% for the three months ended March 31, 2015 compared to the same period in the prior year due to efforts to reduce advertising spend at Eldorado Reno during the current period along with reductions in promotional offers at both properties. General and administrative expenses and management fees. MTR Gaming incurred $16 million of general and administrative expenses for the three months ended March 31, 2015. As a result, consolidated general and administrative expenses increased 159.8% during the three months ended March 31, 2015 compared to the same prior year period. Excluding MTR Gaming, general and administrative expenses increased 10.3% during the three months ended March 31, 2015 compared to the same prior year period due to increases in professional services and additional payroll associated with the Merger. Historically, we paid management fees to Recreational Enterprises, Inc. ("REI") and Hotel Casino Management, Inc. ("HCM"), affiliates of the Company. For the three months ended March 31, 2014, we paid $0.2 million in management fees to REI and HCM. Depreciation and amortization expense. MTR Gaming incurred $10.5 million of depreciation expense for the three months ended March 31, 2015. As a result, depreciation and amortization expense increased 245.5% for three months ended March 31, 2015 compared to the same prior year period. Depreciation and amortization expense decreased 8.0% for the three months ended March 31, 2015 compared to the same prior year period at Eldorado Reno and Eldorado Shreveport as more assets became fully depreciated. Acquisition charges During the three months ended March 31, 2015 and 2014, we incurred $0.1 million and $1.4 million, respectively, in acquisition charges in connection with the Merger. The amounts were expensed in accordance with the applicable accounting guidance for business combinations. Interest expense, net MTR Gaming incurred $13.4 million of interest expense for the three months ended March 31, 2015. This incremental expense offset a $0.1 million decline in Resorts' interest expense for the three months ended March 31, 2015 compared to the same prior year period due to a reduction in the balance outstanding under Resorts' credit facility which matured on May 30, 2014 and was not renewed. Table of Contents Year ended December 31, 2014 compared to the year ended December 31, 2013 The following table highlights the results of our operations (dollars in thousands): Year ended December 31, Percent change 2014 2013 Net operating revenues $ 361,823 $ 247,186 46.4% Operating expenses 339,478 224,560 51.2% Equity in income of unconsolidated affiliates 2,705 3,355 (19.4)% Operating income 17,555 22,582 (22.3)% Net (loss) income (14,322 ) 18,897 (175.8)% Net operating revenues. MTR Gaming contributed $124.2 million of net operating revenues for the period from the Merger Date through December 31, 2014 consisting primarily of casino revenues. Including the incremental MTR Gaming revenues, net operating revenues increased 46.4% for the year ended December 31, 2014 compared to the prior year. Excluding incremental MTR Gaming revenues of $124.2 million, consolidated net operating revenues decreased 3.9% for the year ended December 31, 2014 compared to the prior year as both Eldorado Reno and Eldorado Shreveport experienced declines in all components of operating revenues. Equity in income of unconsolidated affiliates. Income from our unconsolidated affiliate, the Silver Legacy Joint Venture and our former unconsolidated affiliate, Tamarack, decreased $0.7 million for the year ended December 31, 2014 compared to the prior year. Our equity in the income of the Silver Legacy Joint Venture for the years ended December 31, 2014 and 2013 amounted to $2 million and $2.3 million, respectively. Equity in the income of Tamarack for the year ended December 31, 2014, prior to its disposition on September 1, 2014, amounted to $0.7 million compared to $1.1 million for the year ended December 31, 2013. Operating income and net (loss) income. Consolidated operating income and net (loss) income includes operating income and a net loss of $17.6 million and $14.3 million, respectively, attributable to MTR Gaming for the period from the Merger Date through December 31, 2014. For the year ended December 31, 2014 compared to the prior year, operating income, excluding operating income attributable to MTR Gaming, decreased $12 million primarily due to declines in departmental operating margins, increased general and administrative payroll and professional services associated with the Merger, and a decline in equity income of unconsolidated affiliates. Operating income was also impacted by an increase in acquisition charges of $3.2 million during the year ended December 31, 2014 compared to the prior year. Net (loss) income decreased $24.1 million during the year ended December 31, 2014 compared to the prior year due to the same factors negatively impacting operating income, combined with the absence of a $12 million gain in 2013 for the extinguishment of debt of Silver Legacy and a tax provision of $1.1 million. This decrease during the year ended December 31, 2014 compared to 2013 was partially offset by a $0.7 million gain resulting from the termination of Silver Legacy's supplemental executive retirement plan and a $0.2 million decrease in interest expense. Table of Contents Revenues The following table highlights our sources of net operating revenues (dollars in thousands): Year ended December 31, Percent change 2014 2013 Casino: Eldorado Reno $ 61,946 $ 63,002 (1.7)% Eldorado Shreveport 123,228 129,377 (4.8)% MTR Gaming 113,674 100.0% Total 298,848 192,379 55.3% Pari-mutuel commissions MTR Gaming 1,986 100.0% Food and beverage: Eldorado Reno 33,500 34,307 (2.4)% Eldorado Shreveport 25,624 26,249 (2.4)% MTR Gaming 9,109 100.0% Total 68,233 60,556 12.7% Hotel: Eldorado Reno 18,149 18,287 (0.8)% Eldorado Shreveport 8,498 8,647 (1.7)% MTR Gaming 1,360 100.0% Total 28,007 26,934 4.0% Other: Eldorado Reno 5,976 6,832 (12.5)% Eldorado Shreveport 3,264 3,552 (8.1)% MTR Gaming 3,958 100.0% Total 13,198 10,384 27.1% Promotional allowances: Eldorado Reno (15,876 ) (15,737 ) 0.9% Eldorado Shreveport (26,654 ) (27,330 ) (2.5)% MTR Gaming (5,919 ) (100.0)% Total (48,449 ) (43,067 ) 12.5% Casino revenues. MTR Gaming contributed $113.6 million of casino revenues for the period from the Merger Date through December 31, 2014 consisting primarily of net win from slot operations, table games and poker. As a result, consolidated casino revenues increased 55.3% for the year ended December 31, 2014 compared to the prior year. Consolidated casino revenues, excluding MTR Gaming revenues, decreased 4.0% for the year ended December 31, 2014 compared to the prior year. The decrease in casino revenues at Eldorado Reno of 1.7% was primarily due to decreases in slot handle and table games credit drop. Casino revenues decreased 4.8% at Eldorado Shreveport for the year ended December 31, 2014 compared to the prior year due to lower slot handle while the slot hold percentage remained constant. The decrease in casino revenues associated with the decline in slot volume was partially offset by an increase in table games revenues Table of Contents resulting from an increase in the table games hold percentage, which more than offset a decrease in table games drop for the year ended December 31, 2014 compared to the prior year. The results of operations of Eldorado Shreveport have also been negatively impacted by the addition of a new competitor in the Shreveport/Bossier City market in June of 2013 that reduced the market share of all of the other casino operators in the market for the year ended December 31, 2014, including Eldorado Shreveport. Pari-mutuel commissions. MTR Gaming contributed $2 million of pari-mutuel commissions for the period from the Merger Date through December 31, 2014. Food and beverage revenues. MTR Gaming contributed $9.1 million of food and beverage revenues for the period from the Merger Date through December 31, 2014. As a result, consolidated food and beverage revenues increased 12.7% for the year ended December 31, 2014 compared to the prior year. Consolidated food and beverage revenues, excluding MTR Gaming revenues, decreased 2.4% for the year ended December 31, 2014 compared to the prior year due to declines in food and beverage revenues of 2.4% at both Eldorado Reno and Eldorado Shreveport. Food revenues at Eldorado Reno remained flat for the year ended December 31, 2014 compared to the prior year. Declines in customer counts of 2.5% were offset by an increase in the average check as a result of selective price increases in Eldorado Reno's restaurants. Beverage revenues decreased primarily due to lower complimentary sales and the closure of the BuBinga nightclub in May 2014. The decline in food and beverage revenues at Eldorado Shreveport for the year ended December 31, 2014 compared to the prior year was primarily due to the decrease in customer volume as evidenced by a 1.7% decline in customer counts. Hotel revenues. MTR Gaming contributed $1.4 million of hotel revenues for the period from the Merger Date through December 31, 2014 and consolidated hotel revenues increased 4.0% for the year ended December 31, 2014 compared to the prior year. Consolidated hotel revenues, excluding MTR Gaming, decreased 1.1% for the year ended December 31, 2014 compared to the prior year. Hotel revenues at Eldorado Reno decreased 0.8% due to declines in hotel occupancy to 82.0% for the year ended December 31, 2014 from 82.9% for the year ended December 31, 2013. These declines were partially offset by growth in hotel revenues associated with an increase in our resort fee from $6 to $8 in August of 2013 resulting in a higher ADR which rose to $72.57 for the year ended December 31, 2014 compared to $72.17 during the prior year. Hotel revenues at Eldorado Shreveport decreased 1.7% due to a decline in the ADR to $64.50 during the year ended December 31, 2014 from $65.72 during 2013, which more than offset the slight increase in occupancy to 89.6% during 2014 from 89.4% during 2013. Other revenues. Other revenues are comprised of revenues generated by our retail outlets, entertainment venues and other miscellaneous items. MTR Gaming contributed $4 million of other revenues for the period from the Merger Date through December 31, 2014. As a result, consolidated other revenues increased 27.1% for the year ended December 31, 2014 compared to the prior year. Consolidated other revenues, excluding MTR Gaming, decreased 11.0% for the year ended December 31, 2014 compared to the prior year. Other revenues at Eldorado Reno decreased 12.5% for the year ended December 31, 2014 compared to the prior year primarily due to declines in entertainment revenues associated with lower attendance at the Eldorado Reno theater, and to a lesser extent, decreased retail revenues. Other revenues decreased 8.1% at Eldorado Shreveport for the year ended December 31, 2014 compared to the prior year due to lower ATM commission revenues and retail sales which were partially offset by improved spa revenues. Table of Contents Promotional allowances. Consolidated promotional allowances, expressed as a percentage of casino revenues, decreased to 16.2% for the year ended December 31, 2014 compared to 22.4% for the prior year; however, the total consolidated promotional allowances incurred increased 12.5%. MTR Gaming's promotional allowances represented 5.2% of its casino revenues for the period after the Merger. Promotional allowances at Eldorado Reno increased slightly for the year ended December 31, 2014 compared to the prior year reflecting an increase in our casino direct mail program. Promotional allowances decreased 2.5% at Eldorado Shreveport in association with the 4.8% decrease in casino revenues. Management actively reviews the effectiveness of its promotions and direct mail programs to expand successful promotions while eliminating or reducing less profitable promotions. Promotional activities reflect our efforts to maintain the Eldorado's share of the gaming markets in which it operates in an effort to mitigate the impact of increasing competition. Operating expenses The following table highlights our operating expenses (dollars in thousands): Year ended December 31, Percent change 2014 2013 Casino: Eldorado Reno $ 27,840 $ 28,339 (1.8)% Eldorado Shreveport 72,151 73,574 (1.9)% MTR Gaming 67,801 100.0% Total 167,792 101,913 64.6% Pari-mutuel commissions MTR Gaming 2,411 100.0% Food and beverage: Eldorado Reno 23,460 23,485 (0.1)% Eldorado Shreveport 5,622 5,497 2.3% MTR Gaming 8,329 100.0% Total 37,411 28,982 29.0% Hotel: Eldorado Reno 6,474 6,725 (3.7)% Eldorado Shreveport 1,192 1,166 2.6% MTR Gaming 870 100.0% Total 8,536 7,891 8.2% Other: Eldorado Reno 5,752 5,791 (0.7)% Eldorado Shreveport 1,503 1,499 0.3% MTR Gaming 2,093 100.0% Total 9,348 7,290 28.2% Marketing and promotions 21,982 17,740 23.9% General and administrative 62,905 43,113 45.9% Management fee 450 600 (25.0)% Depreciation and amortization 28,643 17,031 68.2% Table of Contents Casino expenses. MTR Gaming contributed $67.8 million of casino expenses for the period from the Merger Date through December 31, 2014. As a result, consolidated casino expenses increased 64.6% for the year ended December 31, 2014 compared to the prior year. Casino expenses at Eldorado Reno decreased 1.8% for the year ended December 31, 2014 compared to the prior year due to lower gaming taxes and declines in bad debt expense. Casino expenses at Eldorado Shreveport decreased 1.9% for the year ended December 31, 2014 compared to the prior year primarily as a result of lower gaming taxes and payroll costs reflecting the decrease in visitor volume. Pari-mutuel expense. MTR Gaming contributed $2.4 million of pari-mutuel expense for the period from the Merger Date through December 31, 2014. Food and beverage expenses. MTR Gaming contributed $8.3 million of food and beverage expenses for the period from the Merger Date through December 31, 2014. As a result, consolidated food and beverage expenses increased 29.0% for the year ended December 31, 2014 compared to the prior year. For the year ended December 31, 2014 compared to the prior year, food and beverage expenses at Eldorado Reno remained flat despite a decrease of 2.4% in food and beverage revenues. Increases in food costs associated with higher product costs were offset by decreases in beverage costs in conjunction with lower beverage revenues associated with the closure of the BuBinga nightclub in May of 2014. Despite a 2.4% decrease in food and beverage revenues, food and beverage expenses increased slightly at Eldorado Shreveport for the year ended December 31, 2014 compared to the prior year due to increased food costs related to quality improvements and the addition of new menu items. Hotel expenses. MTR Gaming contributed $0.9 million of hotel expenses for the period from the Merger Date through December 31, 2014. As a result, consolidated hotel expenses increased 8.1% for the year ended December 31, 2014 compared to the prior year. Hotel expenses at Eldorado Reno decreased 3.7% reflecting the decrease in occupancy for the year ended December 31, 2014 compared to the prior year in addition to decreased expenses associated with lower convention sales. For the year ended December 31, 2014 compared to the prior year, hotel expenses at Eldorado Shreveport increased slightly due to increases in payroll and benefits combined with higher supplies costs associated with improved amenities. Other expenses. MTR Gaming contributed $2.1 million of other expenses for the period from the Merger Date through December 31, 2014. As a result, consolidated other expenses increased 28.2% for the year ended December 31, 2014 compared to the prior year. Other expenses at Eldorado Reno decreased slightly for the year ended December 31, 2014 compared to the prior year despite a 12.5% decrease in other revenues. The higher proportion of expenses was due to fixed production and contract costs associated with the theater. Other expenses at Eldorado Shreveport did not change significantly despite an 8.1% decrease in other revenues due to higher retail costs, as a percentage of retail revenues. Marketing and promotions expenses. MTR Gaming contributed $4.4 million of marketing and promotion expenses for the period from the Merger Date through December 31, 2014. As a result, consolidated marketing and promotions expense increased 23.9% for the year ended December 31, 2014 compared to the prior year. Excluding MTR Gaming, marketing and promotional expenses did not change significantly for the year ended December 31, 2014 compared to the prior year. Table of Contents General and administrative expenses and management fees. MTR Gaming contributed $17.9 million of general and administrative expenses for the period from the Merger Date through December 31, 2014. As a result, consolidated general and administrative expenses increased 45.9% for the year ended December 31, 2014 compared to the prior year. Excluding MTR Gaming, general and administrative expenses increased 4.4% for the year ended December 31, 2014 compared to the prior year due to increases in professional services and additional payroll associated with the Merger in addition to higher property taxes and the absence of a sales tax refund received in the third quarter of 2013 at Eldorado Shreveport. For the years ended December 31, 2014 and 2013, we paid $0.5 million and $0.6 million, respectively, in management fees to REI and HCM. Management fees were not paid subsequent to the consummation of the Merger. Subsequent to the consummation of the Merger, Donald L. Carano and Raymond J. Poncia received remuneration in the amount of $0.3 million and $0.2 million, respectively, for their services as consultants to ERI and its subsidiaries in lieu of the management fees previously paid under the terms of the Resorts' management agreement. Depreciation and amortization expense. MTR Gaming contributed $12.3 million of depreciation expense for the period from the Merger Date through December 31, 2014. As a result, depreciation and amortization expense increased 68.2% for the year ended December 31, 2014 compared to the prior year. Depreciation expense decreased 4.0% for the year ended December 31, 2014 compared to the prior year at Eldorado Reno and Eldorado Shreveport as more assets became fully depreciated. Acquisition charges For the years ended December 31, 2014 and 2013, we incurred $7.4 million and $3.2 million, respectively, in acquisition charges in connection with the Merger including $1.1 million contributed by MTR Gaming along with bonuses paid to several key executives in the amount of $2.4 million for the year ended December 31, 2014. Interest expense MTR Gaming contributed $15.3 million of interest expense for the period from the Merger Date through December 31, 2014. This incremental expense offset a $0.2 million decline in Resorts' interest expense for the year ended December 31, 2014 compared to the prior year period due to a reduction in the balance outstanding under Resorts' credit facility which matured May 30, 2014 and was not renewed. Year ended December 31, 2013 compared to the year ended December 31, 2012 The following table highlights the results of our operations (dollars in thousands): Year ended December 31, Percent change 2013 2012 Net operating revenues $ 247,186 $ 254,740 (3.0)% Operating expenses 224,560 229,749 (2.3)% Equity in income (losses) of unconsolidated affiliates 3,355 (8,952 ) 137.5% Operating income 22,582 15,841 42.6% Net income (loss) 18,897 (991 ) 2,006.9% Net operating revenues. Net operating revenues decreased 3.0% for the year ended December 31, 2013 compared to the prior year primarily as a result of decreases in casino revenues and increases in promotional activities at both Eldorado Shreveport and Eldorado Reno. In addition, decreases in hotel and Table of Contents other revenues at Eldorado Shreveport were only partially offset by increases in food and beverage revenues at both facilities and in hotel and other revenues at Eldorado Reno. As more fully explained below, the decrease in casino revenues at Eldorado Reno resulted primarily from a decrease in the table games hold percentage. The decrease in casino revenues at Eldorado Shreveport primarily reflects reductions in slot machine wagering in 2013 compared to the prior year. Operating expenses. Operating expenses decreased 2.3% for the year ended December 31, 2013 compared to the prior year primarily as a result of decreases in casino expenses reflecting the decline in the associated revenues at both Eldorado Shreveport and Eldorado Reno. Also contributing to the decrease were reductions in selling, general and administrative expenses and depreciation and amortization. Equity in income (losses) of unconsolidated affiliates. Income from the Company's unconsolidated affiliates, Silver Legacy and Tamarack, increased approximately $12.3 million for year ended December 31, 2013 to the prior year. Following its reorganization, equity in the income of Silver Legacy for 2013 amounted to $2.3 million compared with a loss of $9.7 million in 2012. Equity in the income of Tamarack for the year ended December 31, 2013 increased by $0.4 million due to an increase in Tamarack's net operating revenues. Operating income and net income (loss). During 2013, we experienced an increase in operating income of $6.7 million compared to the prior year due primarily to the $12.3 million improvement in our equity in income of unconsolidated affiliates. Operating margins decreased during 2013 as consolidated net operating revenues decreased approximately $2.4 million more than the decrease in consolidated operating expenses. Also offsetting the improvement from our unconsolidated affiliates were $3.2 million of acquisition charges incurred during 2013 in connection with the Merger. Net income increased approximately $19.9 million during 2013 compared to the prior year due to the factors positively impacting operating income previously noted combined with the recognition in 2013 of $12 million of gain on the extinguishment of debt of Silver Legacy as a result of its reorganization, the absence of an $0.8 million loss on property donation incurred in the 2012 period and a $0.4 million reduction in interest expense. Table of Contents Revenues The following table highlights our sources of net operating revenues (dollars in thousands): Year ended December 31, 2013 2012 Percent change Casino: Eldorado Reno $ 63,002 $ 64,014 (1.6)% Eldorado Shreveport 129,377 136,278 (5.1)% Total 192,379 200,292 (4.0)% Food and beverage: Eldorado Reno 34,307 33,210 3.3% Eldorado Shreveport 26,249 26,107 0.5% Total 60,556 59,317 2.1% Hotel: Eldorado Reno 18,287 17,081 7.1% Eldorado Shreveport 8,647 9,122 (5.2)% Total 26,934 26,203 2.8% Other: Eldorado Reno 6,832 6,667 2.5% Eldorado Shreveport 3,552 3,791 (6.3)% Total 10,384 10,458 (0.7)% Promotional allowances: Eldorado Reno (15,737 ) (14,882 ) (5.7)% Eldorado Shreveport (27,330 ) (26,648 ) (2.6)% Total (43,067 ) (41,530 ) (3.7)% Casino revenues. Consolidated casino revenues decreased 4.0% for the year ended December 31, 2013 compared to the prior year. The decrease in such revenues at Eldorado Reno of 1.6% was due to a decrease in the table games hold percentage during 2013 compared to 2012, in which we held higher than normal. This decrease in table games revenue was partially offset by an increase in slot revenue for the year ended December 31, 2013. Casino revenues at Eldorado Shreveport decreased in 2013 by 5.1% compared to 2012 due primarily to a decrease in slot handle. Table game revenues at Eldorado Shreveport did not change significantly in 2013 compared to the prior year. Food and beverage revenues. Consolidated food and beverage revenues increased by 2.1% for the year ended December 31, 2012 compared to the prior year. Food and beverage revenues at Eldorado Reno increased 3.3% in 2013 compared to 2012 primarily due to an increase in the average check price as a result of selective price increases in our restaurants along with a 0.8% increase in customer counts. Food and beverage revenues increased by 0.5% at Eldorado Shreveport in 2013 compared to 2012 primarily due to an increase in the average food revenue per customer resulting from selective increases in menu prices. Hotel revenues. Consolidated hotel revenues increased 2.8% for the year ended December 31, 2013 compared to the prior year. Hotel revenues at Eldorado Reno increased by 7.1% due to an increased hotel occupancy rate of approximately 82.9% in 2013 compared to 80.6% in 2012 and an increased hotel ADR of Table of Contents $72.17 in 2013 compared to $68.81 in 2012. Other hotel revenues at Eldorado Reno increased as we increased our resort fee in August 2013. Hotel revenues at Eldorado Shreveport decreased by 5.2% due to a decline in the occupancy rate to 89.4% in 2013 from 91.1% in 2012 and a decrease in the ADR to $66.00 in 2013 from $68.00 in 2012. Hotel room capacity in the Shreveport/Bossier City market increased during June 2013 with the opening of a 400-room hotel across the Red River from Eldorado Shreveport. Other revenues. Other revenues are comprised of revenues generated by our retail outlets, entertainment venues and other miscellaneous items. Other revenues at Eldorado Reno increased 2.5% for the year ended December 31, 2013 compared to the prior year due to an increase in retail sales. Other revenues decreased by 6.3% at Eldorado Shreveport during 2013 compared to 2012 due to lower ATM commission revenues and retail sales and to the absence of rental revenue from certain retail space located across the street from Eldorado Shreveport which we donated to the City of Shreveport during the third quarter of 2012. Promotional allowances. Consolidated promotional allowances, as a percentage of casino revenues, increased to 22.4% in for the year ended December 31, 2013 compared to 20.7% for the year ended December 31, 2012. Such costs at Eldorado Reno increased 5.7%, whereas such costs increased 2.6% at Eldorado Shreveport. Management actively reviews the effectiveness of its promotions and direct mail programs to expand successful promotions while eliminating or reducing less profitable promotions. Promotional activities at Eldorado Shreveport reflect, in part, our efforts to maintain our property's share of the overall Shreveport/Bossier City gaming market, which added a new competitor during June 2013. Table of Contents Operating expenses The following table highlights our operating expenses (dollars in thousands): Year ended December 31, Percent change 2013 2012 Casino: Eldorado Reno $ 28,339 $ 28,061 1.0% Eldorado Shreveport 73,574 75,983 (3.2)% Total 101,913 104,044 (2.0)% Food and beverage: Eldorado Reno 23,485 22,992 2.1% Eldorado Shreveport 5,497 6,103 (9.9)% Total 28,982 29,095 (0.4)% Hotel: Eldorado Reno 6,725 6,749 (0.4)% Eldorado Shreveport 1,166 1,271 (8.3)% Total 7,891 8,020 (1.6)% Other: Eldorado Reno 5,791 5,572 3.9% Eldorado Shreveport 1,499 1,707 (12.2)% Total 7,290 7,279 0.2% Marketing and promotions 17,740 18,724 (5.3)% General and administrative 43,113 44,336 (2.8)% Management fee 600 600 % Depreciation and amortization 17,031 17,651 (3.5)% Casino expenses. Casino expenses at Eldorado Reno increased 1.0% during the year ended December 31, 2013 compared to the prior year primarily due to an increase in bad debt expense and increased promotional allowances related to the cost of rooms, food and retail complimentaries allocated to the casino department. Casino expenses at Eldorado Shreveport decreased during 2013 compared to 2012 as a result of lower gaming taxes. Food and beverage expenses. For the year ended December 31, 2013, food and beverage expenses at Eldorado Reno increased 2.1% compared to the prior year due to increases in food and beverage cost of sales and direct payroll associated with the aforementioned increased revenues. Food and beverage expenses decreased 9.9% at Eldorado Shreveport during 2013 compared to 2012 despite an insignificant increase in the associated revenues due primarily to reductions in food and beverage cost of goods sold and in labor and overhead charges as a result of management's cost control efforts. Hotel expenses. Hotel expenses at Eldorado Reno did not change significantly for the year ended December 31, 2013 compared to the prior year despite a 7.1% increase in the associated revenues as increased direct payroll associated with the higher occupancy levels was offset by lower group insurance costs and decreased maintenance expenses as a result of our hotel remodel. For the year ended December 31, 2013, hotel expenses at Eldorado Shreveport decreased 8.3% compared to 2012 due to Table of Contents decreases in payroll expenditures associated with the lower occupancy levels as reflected by the decrease in its occupancy percentage from 91.1% in 2012 to 89.4% in 2013. Other expenses. Other expenses increased 3.9% at Eldorado Reno for the year ended December 31, 2013 compared to the prior year primarily as a result of increased retail cost of sales associated with the aforementioned increased revenues, higher credit card discounts and increased show production costs in our theatre. Other expenses at Eldorado Shreveport decreased $0.2 million, or 12.2%, for the year ended December 31, 2013 compared to the prior year primarily due to decreases in cost of goods sold associated with reduced retail sales and reduced labor and overhead charges due to management's cost control efforts. Marketing and promotions expenses. Marketing and promotions expenses decreased 5.3% for the year ended December 31, 2013 compared to the prior year due to efforts to strategically reduce promotional marketing and special events costs at both Eldorado Reno and Shreveport. General and administrative expenses and management fees. For the year ended December 31, 2013, as compared to the prior year, selling, general and administrative expenses decreased primarily due to Eldorado Shreveport experiencing decreases in professional fees and real property taxes. We have paid management fees to REI and HCM, affiliates of the Company. In each of the years ended December 31, 2013 and 2012, we paid an aggregate of $0.6 million in management fees to REI and HCM. Depreciation and amortization expense. Depreciation expense decreased $0.6 million, or 3.5%, during 2013 as compared to 2012 as more assets became fully depreciated. Acquisition charges For the year ended December 31, 2013, we incurred $3.2 million in acquisition charges in connection with the Merger. Interest expense For the year ended December 31, 2013, interest expense decreased by approximately $0.4 million, or 2.4% compared to the prior year, due to principal reductions in our long-term debt obligations. Gain on extinguishment of debt of unconsolidated affiliate For the year ended December 31, 2013, we recognized $12 million of gain on extinguishment of debt of Silver Legacy, an unconsolidated affiliate, as a result of its reorganization. Loss on property donation For the year ended December 31, 2012, Eldorado Shreveport donated certain of its property with an appraised value of approximately $2 million to the City of Shreveport. The property had a recorded net value of $0.8 million, which was written off in connection with the donation. Loss on early retirement of debt During the third quarter of 2012, we purchased and retired $2 million principal amount of the Resorts Notes utilizing available excess cash. The total purchase price of the Resorts Notes was $2 million plus accrued interest which, after the write off of the associated bond offering costs of $0.1 million, resulted in a net loss on early retirement of debt in the amount of $22,000. Liquidity and capital resources We expect that our primary sources of liquidity and capital resources will be existing cash resources, cash flow from operations, borrowings under the New Revolving Credit Facility and issuances of debt and equity securities as market conditions permit. Table of Contents We expect that our primary capital requirements going forward will relate to the Circus Reno/Silver Legacy Purchase, the operation and maintenance of our properties and servicing our outstanding indebtedness. During the remainder of 2015, our primary capital requirements will relate to payment of the $72.5 million purchase price for the Circus Reno/Silver Legacy Purchase and the repayment in full of all amounts outstanding under t Silver Legacy Joint Venture credit facility, our planned capital expenditures of approximately $21.7 million, net of reimbursements from West Virginia, and interest payments under the Notes and interest and principal payments under the New Credit Facility. We expect to fund the purchase price for the Circus Reno/Silver Legacy Purchase and repayment of amounts outstanding under the Silver Legacy credit agreement by incurring additional indebtedness and proceeds from this offering. To the extent we do not obtain proceeds from this offering that are sufficient to pay the portion of the purchase price that we expect to pay with such proceeds and amounts outstanding under the Silver Legacy credit facility, we will be required to incur additional indebtedness. We expect that cash generated from operations will be sufficient to fund our operations and capital requirements and service our outstanding indebtedness for the next twelve months. At March 31, 2015, we had consolidated cash and cash equivalents of 80.3 million which included restricted cash of $10.9 million. Operating cash flow. For the three months ended March 31, 2015, we used cash flows from operating activities of $5.9 million compared to $6.3 million provided by operating activities during the same prior year period. The decrease in operating cash was primarily due to various changes in balance sheet accounts in conjunction with the Merger along with changes in the balance sheet accounts in the normal course of business. For the year ended December 31, 2014, we generated cash flows from operating activities of $33.9 million as compared to $23.6 million in the prior year. The increase in operating cash was primarily due to various changes in balance sheet accounts in conjunction with the Merger along with changes in the balance sheet accounts in the normal course of business. These changes were offset by the decline in net income, including the absence of Silver Legacy's gain on the early retirement of its debt for the year ended December 31, 2014 compared to the prior year. Investing cash flow. Net cash flows used in investing activities totaled $9.8 million for the three months ended March 31, 2015 compared to $0.5 million for the same prior year period. Net cash flows used in investing activities for 2015 primarily consisted of $7.5 million in capital expenditures for various renovation projects and equipment purchases and an increase of $2.6 million in restricted cash at the MTR Gaming properties due to an increase in funds related to horsemen's fines and simulcasting funds that are restricted to payments for improving horsemen's facilities and racing purses at Scioto Downs. Net cash flows provided in investing activities totaled $38.1 million for the year ended December 31, 2014 compared to $7.6 million used for the year ended December 31, 2013. Net cash flows provided in investing activities for 2014 primarily consisted of $53.1 million representing acquired cash, including restricted cash, associated with the Merger. This increase was partially offset by $10.6 million in capital expenditures for various renovation projects and equipment purchases. Financing cash flow. Net cash flows used in financing activities for the three months ended March 31, 2015 totaled $0.3 million representing capital lease payments compared to $1.1 million for the three months ended March 31, 2014 primarily resulting from a $1 million payment on the Resorts credit facility which was subsequently terminated in May 2014. Net cash flows used in financing activities for the year ended December 31, 2014 totaled $14.2 million compared to $11.5 million during the year ended December 31, 2013. Net repayments on our Resorts Secured Credit Facility (see below) amounted to $2.5 million compared to $5 million of debt payments Table of Contents during the year ended December 31, 2013. Other financing activity expenditures included distributions to our members totaling $0.6 million compared to $6.1 million during the prior year. During the year ended December 31, 2014, an increase in restricted cash of $3.2 million due to a decrease in funds related to horsemen's fines and simulcasting funds that are restricted to payments for improving horsemen's facilities and racing purses at Scioto Downs was offset by a decrease in restricted cash related to the return of $2.5 million of the $5 million cash collateral that Resorts previously provided as credit support for Silver Legacy's obligations under its credit agreement. The repurchase of MTR Gaming common stock totaled $5 million and represented the amount paid in cash by HoldCo upon closing of the Merger. An additional $30 million of MTR Gaming common stock was purchased by MTR Gaming upon closing of the Merger and was reflected as a reduction of the net cash acquired under investing activities. Also during the year ended December 31, 2014, MTR Gaming used $11 million to repurchase $10 million in aggregate principal amount of MTR Notes at a price of $110.25 per $100 in principal amount of the purchased notes. Capital expenditures During the three months ended March 31, 2015, additions to property and equipment, primarily slot machines, and other capital projects, aggregated $7.5 million, which included $1.4 million at Eldorado Reno, $0.6 million at Eldorado Shreveport and $5.5 million at the MTR Gaming properties. During the year ended December 31, 2014, additions to property and equipment, primarily slot machines, and other capital projects aggregated $10.6 million, which included $3.5 million at Eldorado Reno, $3.3 million at Eldorado Shreveport and $3.8 million at the MTR Gaming properties. Under legislation approved by West Virginia in July 2011, Mountaineer participates in a modernization fund which provides for reimbursement from amounts paid to the West Virginia Lottery Commission in an amount equal to $1 for each $2 expended for certain qualifying capital expenditures having a useful life of more than three years and placed into service after July 1, 2011. Qualifying capital expenditures include the purchase of slot machines and related equipment to the extent such slot machines are retained by Mountaineer at its West Virginia location for not less than five years. Any unexpended balance from a given fiscal year will be available for one additional fiscal year, after which time the remaining unused balance carried forward will be forfeited. Mountaineer did not receive any reimbursements during the three months ended March 31, 2015. For the period from the Merger Date to December 31, 2014, Mountaineer was reimbursed $1.4 million on qualified capital expenditures. As of March 31, 2015, Mountaineer remains eligible for approximately $6.5 million under annual modernization fund grants that expire in varying dates through June 30, 2016. We can make no assurances we will be able to make qualifying capital expenditures purchases sufficient to receive reimbursement of the available funds prior to their expiration. We anticipate spending on capital expenditures during the remainder of 2015 to be approximately $25.6 million, or $21.7 million after anticipated reimbursements from West Virginia on qualified capital expenditures. Silver Legacy joint venture loan Under the Plan of Reorganization (as defined elsewhere in this prospectus), each of ELLC and Galleon, Inc. retained its 50% interest in Silver Legacy, but was required to advance $7.5 million to Silver Legacy pursuant to a subordinated loan and provide credit support by depositing $5 million of cash into bank accounts that are subject to a security interest in favor of the lender under Silver Legacy credit agreement. The $7.5 million note receivable from ELLC to Silver Legacy was issued on November 16, 2012 with a stated interest rate of 5% per annum and a maturity date of May 16, 2018. Payment of any interest or principal under the loan is subordinate to the senior indebtedness of Silver Legacy. Accrued interest under the loan Table of Contents will be added to the principal amount of the loan and may not be paid unless principal of the loan may be paid in compliance with the terms of the senior indebtedness outstanding or at maturity. In connection with the Circus Reno/Silver Legacy Purchase, we expect to acquire the note evidencing the $7.5 million made by Galleon, Inc. and that all amounts outstanding under the subordinated loans advanced by ELLC and Galleon, Inc. will be contributed to the equity capital of Silver Legacy. In December 2014, Silver Legacy deposited $5 million of cash into a cash collateral account securing its obligations under its credit agreement, which reduced the credit support obligation of each of ELLC and Galleon, Inc. to $2.5 million each and resulted in the return of $2.5 million of the $5 million of cash collateral that Resorts previously provided as credit support for Silver Legacy's obligations under its credit agreement. In connection with the Circus Reno/Silver Legacy Purchase, we except that all amounts outstanding under the Silver Legacy credit agreement will be paid in full and the cash collateral securing such obligations will be released. Contractual commitments The following table summarizes our estimated contractual payment obligations as of March 31, 2015 (in thousands): Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years (in millions) Contractual cash obligations: Long-term debt obligations(1) $ 728.7 $ $ $ $ 728.7 Interest on indebtedness 360.7 79.0 157.9 123.8 Operating leases(2) 30.3 2.3 2.6 1.9 23.5 Gaming tax and license fees(3) 63.3 12.5 25.3 25.5 See note(3 ) Purchase and other contractual obligations 0.8 0.7 0.1 Minimum purse obligations(4) 20.0 20.0 Contingent earn-out payments(5) 0.9 0.1 0.2 0.2 0.4 Regulatory gaming assessments(6) 4.5 0.4 1.0 1.2 1.9 Total $ 1,209.2 $ 115.0 $ 187.1 $ 152.6 $ 754.5 (1) These amounts are included in our consolidated balance sheets, which are included elsewhere in this prospectus. See Note 9 to our consolidated financial statements for additional information about our debt and related matters. (2) Our operating lease obligations are described in Note 15 to our consolidated financial statements. (3) Includes an annual table gaming license fee of $2.5 million for Mountaineer which is due on July 1st of each year as long as Mountaineer operates table games. Includes our obligation for gaming taxes at Presque Isle Downs, which is set at a minimum of $10 million per year, as required by the Pennsylvania Gaming Control Board. Also includes our obligation at Presque Isle Downs, as the holder of a Category 1 license, to create a fund to be used for the improvement and maintenance of the backside area of the racetrack with an amount of not less than $250,000 or more than $1 million annually for a five-year period beginning in 2017. (4) Pursuant to an agreement with the Mountaineer Park Horsemen's Benevolent and Protective Association, Inc. and/or in accordance with the West Virginia racing statute, Mountaineer is required to utilize its best efforts to conduct racing for a minimum of 210 days and pay average daily minimum purses established by Mountaineer prior to the first live racing date each year ($95,000 for 2015) for the term of the agreement which expires on December 31, 2015. (5) In connection with the 2003 purchase of Scioto Downs, certain shareholders of Scioto Downs elected the option to receive cash and contingent earn-out payments ("CEP Rights") in lieu of all cash for their outstanding shares of Scioto Downs' common stock. The triggering event occurred when Scioto Downs received its permanent VLT license in May 2012 and commenced gaming operations. As a result, we recorded a liability for the estimated ten year payout to the stockholders who elected to receive the CEP Rights. The future obligation was calculated based on Scioto Downs' projected EBITDA for the ten calendar years beginning January 1, 2013. (6) These amounts are included in our consolidated balance sheets, which are included elsewhere in this prospectus. See Note 15 to our consolidated financial statements for additional information regarding our regulatory gaming assessments. The table above excludes certain commitments as of March 31, 2015, for which the timing of expenditures associated with such commitments is unknown, or contractual agreements have not been executed, or the guaranteed maximum price for such contractual agreements has not been agreed upon. Table of Contents The repayment of our long-term debt is subject to acceleration upon the occurrence of an event of default under the agreements governing these obligations. We routinely enter into operational contracts in the ordinary course of our business, including construction contracts for minor projects that are not material to our business or financial condition as a whole. Our commitments relating to these contracts are recognized as liabilities in our consolidated balance sheets when services are provided with respect to such contracts. The Company does not currently have any off-balance sheet arrangements. Inflation We do not believe that inflation has had a significant impact on our revenues, results of operations or cash flows since inception. Other liquidity matters The Pennsylvania Gaming Control Board (the "PGCB"), the Pennsylvania Department of Revenue and the Pennsylvania State Police (collectively "the Borrowers"), were required to fund the costs they incurred in connection with the initial development of the infrastructure to support gaming operations in Pennsylvania as well as the initial ongoing costs of the Borrowers. The initial funding of these costs was provided from a loan from the Pennsylvania General Fund in the amount of approximately $36.1 million, and further funding was provided from additional loans from the Pennsylvania Property Tax Reserve Fund in the aggregate amount of approximately $63.8 million. The Pennsylvania Department of Revenue will assess all licensees, including Presque Isle Downs, their proportionate share of amounts represented by the borrowings, which are in the aggregate amount of $99.9 million, once the designated number of Pennsylvania's slot machine licensees is operational. On July 11, 2011, the PGCB issued an administrative order which established that payments associated with the $63.8 million that was borrowed from the Property Tax Reserve Fund would commence on January 1, 2012. The repayment allocation between all current licensees is based upon equal weighting of (i) cumulative gross slot revenue since inception in relation to the combined cumulative gross slot revenue for all licensees and (ii) single year gross slot revenue (during the state's fiscal year ending June 30) in relation to the combined single year gross slot revenue for all licensees; and amounts paid each year will be adjusted annually based upon changes in the licensee's proportionate share of gross slot revenue. We have estimated that our total proportionate share of the aggregate $63.8 million to be assessed to the gaming facilities will be approximately $4.2 million and will be paid quarterly over a ten-year period, which began effective January 1, 2012. For the $36.1 million that was borrowed from the General Fund, payment is scheduled to begin after all fourteen licensees are operational. Although we cannot determine when payment will begin, we have considered a similar repayment model for the General Fund borrowings and estimated that our total proportionate share of the aggregate $36.1 million to all fourteen gaming facilities will be approximately $2.2 million. The recorded estimate is subject to revision based upon future changes in the revenue assumptions utilized to develop the estimate. Our estimated total obligation at December 31, 2014 is $5 million. The Company paid approximately $0.4 million during the year ended December 31, 2014. We are faced with certain contingencies involving litigation and environmental remediation and compliance. These commitments and contingencies are discussed in greater detail in Note 15 to our consolidated financial statements, included elsewhere in this prospectus. In addition, new competition may have a Table of Contents material adverse effect on our revenues, and could have a similar adverse effect on our liquidity. See "Risk factors Risks related to our business" which is included elsewhere in this prospectus. Critical accounting policies Our significant accounting policies are included in Note 2 to our consolidated financial statements, which are included elsewhere in this prospectus. These policies, along with the underlying assumptions and judgments made by our management in their application, have a significant impact on our consolidated financial statements. These judgments are subject to an inherent degree of uncertainty and actual results could differ from our estimates. Business combinations The Company applied the provisions of Accounting Standards Codification ("ASC") Topic 805, "Business Combinations," in the accounting for the Merger. It required us to recognize the assets acquired and the liabilities assumed at their Merger Date fair values. Goodwill as of the Merger Date was measured as the excess of consideration transferred over the net of the Merger Date fair values of the assets acquired and the liabilities assumed. While we used our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the Merger Date, our estimates were inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the Merger Date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the final determination of the values of assets acquired or liabilities assumed any subsequent adjustments will be recorded in our consolidated statements of operations. Accounting for business combinations required our management to make significant estimates and assumptions, including our estimate of intangible assets, such as gaming licenses, trade names and customer loyalty programs. Although we believe the assumptions and estimates made have been reasonable and appropriate, they are inherently uncertain. For our gaming license valuation, our properties estimated future cash flows were the primary assumption in the respective intangible valuations. Cash flow estimates included assumptions regarding factors such as recent and budgeted operating performance, net win per unit (revenue), patron visits and growth percentages. The growth percentages were developed considering general macroeconomic conditions as well as competitive impacts from current and anticipated competition through a review of customer market data, operating margins, and current regulatory, social and economic climates. The most significant of the assumptions used in the valuations included: (1) revenue growth/decline percentages; (2) discount rates; (3) effective income tax rates; (4) future terminal values and (5) capital expenditure assumptions. These assumptions were developed for each of our properties based on historical trends in the current competitive markets in which they operate, and projections of future performance and competition. The primary assumptions with respect to our trade names and customer loyalty program intangibles primary assumptions were selecting the appropriate royalty rates and cost estimates for replacement cost analyses. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the Merger Date. The Company will reevaluate these items quarterly based upon facts and circumstances that existed as of the Merger Date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance's or contingency's estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have material impact on our results of operations and financial position. Table of Contents Accounting for unconsolidated affiliates The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in unconsolidated affiliates which are 50% or less owned and do not meet the consolidation criteria of ASC 810, "Consolidation" are accounted for under the equity method. All intercompany balances and transactions have been eliminated in consolidation. Certain amendments of ASC 810 became effective for us beginning January 1, 2010. Such amendments include changes to the quantitative approach to determine the primary beneficiary of a variable interest entity ("VIE"). An enterprise must determine if its variable interest or interests give it a controlling financial interest in a VIE by evaluating whether 1) the enterprise has the power to direct activities of the VIE that have a significant effect on economic performance, and 2) the enterprise has an obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The amendments to ASC 810 also require ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. The Company believes the adoption of these amendments did not have a material effect on our consolidated financial statements. The Company considers whether the fair values of any of its equity method investments have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considers any such decline to be other than temporary, then a write-down would be recorded to the estimated fair value. Estimated fair value is determined using a discounted cash flow analysis based on estimated future results of the investee and market indicators of terminal year capitalization rate. There were no impairments of the Company's equity method investments in 2014, 2013 or 2012. Revenue recognition Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts paid to winning patrons, and is recognized at the time wagers are made net of winning payouts to patrons. Base and progressive jackpots are accrued and charged to revenue at the time the obligation to pay the jackpot is established. Pari-mutuel commissions consist of commissions earned from thoroughbred and harness racing, and importing of simulcast signals from other race tracks. Pari-mutuel commissions are recognized at the time wagers are made. Such commissions are a designated portion of the wagering handle as determined by state racing commissions, and are shown net of the taxes assessed by state and local agencies, as well as purses and other contractual amounts paid to horsemen associations. We recognize revenues from fees earned through the exporting of simulcast signals to other race tracks at the time wagers are made. Such fees are based upon a predetermined percentage of handle as contracted with the other race tracks. Revenues from food and beverage are recognized at the time of sale and revenues from lodging are recognized on the date of stay. Other revenues are recorded at the time services are rendered or merchandise sold. We offer certain promotional allowances to our customers, including complimentary lodging, food and beverage, and promotional credits for free play on slot machines. The retail value of these promotional items is shown as a reduction in total revenues on our consolidated statements of operations. Income taxes The Company and its subsidiaries file US federal income tax returns and various state and local income tax returns. The Company does not have tax sharing agreements with the other members within the consolidated ERI group. With few exceptions, the Company is no longer subject to US federal or state and local tax examinations by tax authorities for years before 2011. The Company estimates an annual effective income tax rate based on projected results for the year and applies this rate to income before taxes to calculate income tax expense. Any refinements made due to Table of Contents subsequent information that affects the estimated annual effective income tax rate are reflected as adjustments in the current period. The income tax provision results in an effective tax rate that has an unusual relationship to the Company's pretax income (loss). This is due to the federal and state valuation allowances on the Company's deferred tax assets as discussed below. The difference between the effective rate and the statutory rate is attributed primarily to the federal and state valuation allowances on the Company's deferred tax assets as discussed below. As a result of the Company's net operating losses and net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets, known as "Naked Credits"), the Company expects to continue to provide for a full valuation allowance against substantially all of the net federal and the net state deferred tax assets. For income tax purposes the Company amortizes or depreciates certain assets that have been assigned an indefinite life for book purposes. The incremental amortization or depreciation deductions for income tax purposes result in an increase in certain deferred tax liabilities that cannot be used as a source of future taxable income for purposes of measuring the Company's need for a valuation allowance against the net deferred tax assets. Therefore, the Company expects to record non-cash deferred tax expense as the Company amortizes these assets for tax purposes. Prior to the Merger Date, HoldCo was taxed as a partnership under the Internal Revenue Code pursuant to which income taxes were primarily the responsibility of the partners. ERI is a C Corporation subject to the federal and state corporate-level income taxes at prevailing corporate tax rates. While taxed as a partnership, HoldCo was not subject to federal income tax liability. Because holders of membership interests in HoldCo were required to include their respective shares of HoldCo's taxable income (including that of Resorts) in their individual income tax returns, distributions were made to their respective member(s) to cover such tax liabilities. Such distributions were subject to limitation in accordance with the provisions of their respective operating agreements. Eldorado Shreveport #2, LLC has elected as a single member limited liability company to be taxed as a C Corporation. Current and deferred income taxes associated with Eldorado Shreveport #2, LLC were not material. Under the applicable accounting standards, we may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The accounting standards also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions. We have recorded no liability associated with uncertain tax positions at December 31, 2014 and 2013. Property and equipment and other long-lived assets Property and equipment is recorded at cost, except for MTR which was adjusted for fair value under ASC 805, and is depreciated over its estimated useful life or lease term. Judgments are made in determining estimated useful lives and salvage values of these assets. The accuracy of these estimates affects the amount of depreciation expense recognized in our financial results and whether we have a gain or loss on the disposal of assets. We review depreciation estimates and methods as new events occur, more experience is acquired, and additional information is obtained that would possibly change our current estimates. Table of Contents Property, equipment and other long-lived assets are assessed for impairment in accordance with ASC 360 Property, Plant, and Equipment. The Company evaluates its long-lived assets periodically for impairment issues or, more frequently, whenever events or circumstances indicate that the carrying amount may not be recoverable. Recoverability of these assets is determined by comparing the net carrying value to the sum of the estimated future net undiscounted cash flows expected to be generated by these assets. The amount of impairment loss, if any, is measured by the difference between the net carrying value and the estimated fair value of the asset which is typically measured using a discounted cash flow model (Level 3 of the fair value hierarchy). For assets to be disposed of, impairment is recognized based on the lower of carrying value or fair value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. Based on the results of our periodic reviews we have not recorded any impairment losses during the quarter ended March 31, 2015 and the years ended December 31, 2014, 2013 and 2012. For undeveloped properties, including non-operating real properties, when indicators of impairment are present, properties are evaluated for impairment and losses are recorded when undiscounted cash flows estimated to be generated by an asset or market comparisons are less than the asset's carrying amount. The amount of the impairment loss is calculated as the excess of the asset's carrying value over its fair value, which is determined using a discounted cash flow analysis, management estimates or market comparisons. The fair value measurements employed for our impairment evaluations, which are subject to the assumptions and factors as previously discussed, were generally based on a review of comparable activities in the marketplace, which falls within Level 3 of the fair value hierarchy. Goodwill and other indefinite-lived intangible assets Goodwill represents the excess of the purchase price paid over the fair value of the net assets of the acquired business. Intangible assets acquired in business combinations are recorded based upon their fair value at the date of acquisition. Goodwill and other indefinite-lived intangible assets are reviewed for impairment annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset might be impaired. Goodwill is tested by comparing the carrying value of the reporting unit to its fair value. The Company estimates the fair value of the reporting unit utilizing income and market approaches. The income approach is based on projected future cash flow that is discounted to present value using factors that consider the timing and risk of the future cash flows. The market approach is based on the Company's market capitalization at the testing date. The aggregate carrying value of the Company's goodwill approximated $66.8 million as of March 31, 2015. The Company did not have goodwill prior to the Merger Date. Other indefinite-lived intangible assets are evaluated for impairment by comparing the fair value of the asset to its carrying value. Any excess of carrying value over the fair value is recognized as an impairment within the consolidated statement of operations in the period of review. Our indefinite-lived intangible assets consist of racing and gaming licenses, trade names and customer loyalty programs. The gaming and racing licenses of each property were valued in aggregate for each respective property, as these licenses are considered to be the most significant asset of the properties and the gaming licenses could not be obtained without holding the racing licenses. Therefore, market participant would consider the licenses in aggregate. The fair value of the licenses is calculated using an excess earnings methodology, which is an income approach methodology that allocates the projected cash flows of the property to the gaming license intangible assets less charges for the use of the other identifiable assets of the property, including working capital, fixed assets, and other intangible assets. We believe this methodology is Table of Contents appropriate as the gaming licenses are the primary asset to the properties, the licenses are linked to each respective facility and it's the lowest level at which discrete cash flows can be directly attributable to the assets. Under the gaming legislation applicable to our properties, licenses are property specific and can only be acquired if a buyer acquires the existing facility. Because existing licenses may not be acquired and transferred for use at a different facility, the estimated future cash flows of each of our properties was the primary assumption in the valuation of such property. The aggregate carrying value of the Company's gaming license intangibles approximated $482 million as of March 31, 2015. Assessing the indefinite-lived intangible assets for impairment is a process that requires significant judgment and involves detailed quantitative and qualitative business-specific analysis and many individual assumptions which fluctuate between assessments. Our properties' estimated future cash flows are a primary assumption in the respective impairment analyses. Unforeseen events, changes in circumstances and market conditions and material differences in estimates of future cash flows could negatively affect the fair value of our assets and result in an impairment charge, which could be material. Cash flow estimates include assumptions regarding factors such as recent and budgeted operating performance, net win per unit (revenue), patron visits, growth percentages which are developed considering general macroeconomic conditions as well as competitive impacts from current and anticipated competition through a review of customer market data, operating margins, and current regulatory, social and economic climates. These estimates could also be negatively impacted by changes in federal, state, or local regulations, economic downturns or developments and other market conditions affecting travel and access to the properties. The most significant of the assumptions used in our valuations include: (1) revenue growth/decline percentages; (2) discount rates; (3) effective income tax rates; (4) future terminal values and (5) capital expenditure assumptions. These assumptions were developed for each property based on historical trends, the current competitive markets in which they operate, and projections of future performance and competition. The Company values trade names using the relief-from-royalty method. Royalty rates range from 0.5% - 1.0%. The customer loyalty program was valued using a combination of a replacement cost and lost profits analysis. Trade names are amortized on a straight-line basis over a 3.5 year useful life and the customer loyalty program is being amortized on a straight-line basis over a one year useful life. The aggregate carrying value of trade names and customer loyalty program intangibles as of March 31, 2015 was approximately $6.7 million and $4.8 million, respectively. We believe we have used reasonable estimates and assumptions to calculate the fair value of our other indefinite-lived intangible assets; however, these estimates and assumptions could be materially different from actual results. If actual market conditions are less favorable than those projected, or if events occur or circumstances change that would reduce the fair value of our licensing intangibles below the carrying value reflected on the consolidated balance sheet, we may be required to conduct an interim test or possibly recognize impairment charges, which may be material, in future periods. No impairment charges were recorded for our other indefinite-lived intangible assets in any of the years presented. Reserve for uncollectible accounts receivable We reserve an estimated amount for receivables that may not be collected. Methodologies for estimating bad debt reserves range from specific reserves to various percentages applied to aged receivables. Historical collection rates are considered, as are customer relationships, in determining specific reserves. As with many estimates, management must make judgments about potential actions by third parties in establishing and evaluating our reserves for bad debts. Table of Contents Self-insurance reserves Eldorado Reno and Eldorado Shreveport are self-insured for their group health programs and Eldorado Reno is self-insured for its workmen's compensation program. We utilize historical claims information provided by our third party administrators to make estimates for known pending claims as well as claims that have been incurred, but not reported as of the balance sheet date. In order to mitigate our potential exposure, we have an individual claim stop loss policy on our group health claims and a specific claim stop loss policy on our workmen's compensation claims. If we become aware of significant claims or material changes affecting our estimates, we would increase our reserves in the period in which we made such a determination and record the additional expense. At December 31, 2014 and 2013, $1.3 million was accrued for insurance and workmen's compensation medical claims reserves and is included in accrued and other liabilities on our consolidated balance sheets. Frequent players program We offer programs whereby our participating patrons can accumulate points for wagering that can be redeemed for credits for free play on slot machines, lodging, food and beverage, merchandise and in limited situations, cash. Based upon the estimated redemptions of frequent player program points, an estimated liability is established for the cost of redemption on earned but unredeemed points. The estimated cost of redemption utilizes estimates and assumptions of the mix of the various product offerings for which the points will be redeemed and costs of such product offerings. Changes in the programs, membership levels and redemption patterns of our participating patrons can impact this liability. The aggregate outstanding liability for the frequent players program was $2.4 million and $2 million at December 31, 2014 and 2013, respectively, and is included as a component of other accrued liabilities in our accompanying consolidated balance sheets. Litigation, claims and assessments We utilize estimates for litigation, claims and assessments. These estimates are based on our knowledge and experience regarding current and past events, as well as assumptions about future events. If our assessment of such a matter should change, we may have to change the estimates, which may have an adverse effect on our financial position, results of operations or cash flows. Actual results could differ from these estimates. Recently issued accounting pronouncements In May 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2014-9, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). The standard requires revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods and services. Qualitative and quantitative disclosures are also required regarding customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. ASU 2014-09 supersedes and replaces nearly all existing revenue recognition guidance under US GAAP. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements Going Concern" (Subtopic 205-40) which amends the current guidance in ASC Topic 205 by adding Subtopic 40. Subtopic 40 requires management to evaluate whether there are conditions or events that in aggregate would raise substantial doubt about an entity's ability to continue as a going concern for one year from Table of Contents the date the financial statements are issued or available to be issued. If substantial doubt existed, management would be required to make certain disclosures related to nature of the substantial doubt and under certain circumstances, how that substantial doubt would be mitigated. This amendment is effective for annual periods ending after December 15, 2016 and for subsequent interim and annual periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects, if any, adoption of this guidance will have on its consolidated financial statements. In January 2015, the FASB issued ASU No. 2015-1, "Income Statement Extraordinary and Unusual Items" (Subtopic 225-20) which eliminates the concept of accounting of Extraordinary Items, previously defined as items that are both unusual and infrequent, which were reported as a separate item on the income statement, net of tax, after income from continuing operations. The elimination of this concept is intended to simplify accounting for unusual items and more closely align with international accounting practices. This amendment is effective for annual periods ending after December 15, 2015 and for subsequent interim and annual periods thereafter. Early adoption is permitted. The Company believes that the effects, if any, of the adoption of this guidance will not have a material impact on its consolidated financial statements. Significant factors impacting operating trends Key performance metrics Our operating results are highly dependent on the volume of customers visiting and staying at our properties. Key performance metrics include volume indicators such as table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. In addition, hotel occupancy and price per room designated by average daily rate ("ADR") are key indicators for our hotel business. Our calculation of ADR consists of the average price of occupied rooms per day including the impact of complimentary rooms. Complimentary room rates are determined based on an analysis of retail or cash rates for each customer segment and each type of room product to estimate complimentary rates which are consistent with retail rates. Complimentary rates are reviewed at least annually and on an interim basis if there are significant changes in market conditions. Complimentary rooms are treated as occupied rooms in our calculation of hotel occupancy. Economic impact The economic downturn and the uneven recovery from the downturn continue to adversely influence consumers' confidence, discretionary spending levels and travel patterns. High unemployment and the record number of home foreclosures experienced in the economic downturn, increased competition and volatility of the economy have had, and continue to have, a significant negative impact on the gaming and tourism industries, and, as a result, our operating performance over the past several years. In response to the impact of the economic down turn, increased competition and other market factors on our business, our management has implemented cost savings measures and will continue to review our operations to look for opportunities to further reduce expenses and maximize cash flows. While there has been some improvement in the economy, we believe the impact of the economic downturn and the continuing uneven recovery may continue to negatively affect our operating results for some period of time. We remain uncertain as to the duration and magnitude of the impact of such factors on our operations and the length and sustainability of the recovery from the economic downturn. Expansion of Native American gaming and regional gaming Our business has been adversely impacted by the expansion of Native American gaming and the expansion of gaming in our markets, including Ohio. Future growth of Native American and other gaming Table of Contents establishments, including the addition of hotel rooms and other amenities, would place additional competitive pressure on our operations. While we cannot predict the extent of any future impact, it could be significant. Eldorado Reno. A significant portion of our revenues and operating income are generated from patrons who are residents of northern California and as such, our operations have been adversely impacted by the growth in Native American gaming in northern California. Many existing Native American gaming facilities in northern California are modest compared to Eldorado Reno. However, a number of Native American tribes have established large-scale gaming facilities in California and some Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and gaming facilities in northern California. As northern California Native American gaming operations have expanded, we believe the increasing competition generated by these gaming operations has had a negative impact, principally on drive-in, day-trip visitor traffic from our main feeder markets in northern California. Under their current compacts, most Native American tribes in California may operate up to 2,000 slot machines and up to two gaming facilities on any one reservation. However, under action taken by the National Indian Gaming Commission, gaming devices similar in appearance to slot machines, but which are deemed to be technological enhancements to bingo style gaming, are not subject to such limits and may be used by tribes without state permission. The number of slot machines the tribes may be allowed to operate could increase as a result of any new or amended compacts the tribes may enter into with the State of California that receive the requisite approvals. Such increases have occurred with respect to a number of new or amended compacts which have been executed and approved. Eldorado Shreveport. Casino gaming is currently prohibited in several jurisdictions from which the Shreveport/Bossier City market draws customers, primarily Texas. Although casino gaming is currently not permitted in Texas, the Texas legislature has from time to time considered proposals to authorize casino gaming and there can be no assurance that casino gaming will not be approved in Texas in the future, which would have a material adverse effect on our business. Eldorado Shreveport competes with several Native American casinos located in Oklahoma, certain of which are located near our core Texas markets. Because we draw a significant amount of our customers from the Dallas/Fort Worth area, but are located approximately 190 miles from that area, we believe we will continue to face increased competition from gaming operations in Oklahoma, including the WinStar and Choctaw casinos, and would face significant competition that may have a material adverse effect on our business and results of operations if casino gaming is approved in Texas. In June 2013, construction was completed on a new 30,000 square foot casino and 400-room hotel in Bossier City across the Red River from Eldorado Shreveport. The facility, which also includes several restaurants and a 1,000-seat entertainment arena, received final approval from the Louisiana Gaming Control Board and opened on June 15, 2013. In December 2014, a new luxury, land-based casino with 1,600 slot machines, 72 gaming tables, a poker room, and a 740-room hotel with a ballroom and spa, opened in Lake Charles, Louisiana approximately 200 miles south of Eldorado Shreveport, but closer to the Houston, Texas market. MTR Gaming. All of MTR Gaming's properties experience varying competitive pressures, from casinos in western Pennsylvania, western New York, northern West Virginia and eastern Ohio. We believe the expansion of gaming in Ohio, which includes casinos that opened in Cleveland in May 2012 and Columbus in October 2012 and additional casinos in Cincinnati and Toledo, as well as the installation of VLTs at existing horse race tracks near Cleveland, one of which opened in April 2013 and the other in December 2013 and the relocation of a racetrack to Austintown, Ohio in 2014, has had and will continue to have a Table of Contents negative impact on our results of operations at all of our properties and such impact may be material. We intend to be proactive in our efforts to mitigate the effects of such competition, which include expanding marketing initiatives and proactively managing our cost structures at our properties. Major bowling tournaments in the Reno market The National Bowling Stadium, located one block from Eldorado Reno, is one of the largest bowling complexes in North America and has been selected to host multi-month tournaments in Reno every year through 2018 except for 2017. It has also been selected to host ten United States Bowling Congress ("USBC") tournaments from 2019 through 2026. During this period, two of the ten USBC Tournaments may be held in the same year. Through a one-time agreement, the National Bowling Stadium hosted the USBC Open Tournament in Reno in 2014; usually an off-year for Reno. Historically, these multi-month bowling tournaments have attracted a significant number of visitors to the Reno market and have benefited business in the downtown area, including Eldorado Reno. The USBC brought approximately 73,000 bowlers to the Reno area during the 2013 tournament period which began on March 1st and continued through July 7th. Both tournaments returned to Reno in 2014 and brought approximately 62,000 bowlers to the Reno area during the 2014 tournament period which began on February 28th and continued through July 12th. The USBC Tournament is expected to attract approximately 16,000 women bowlers to the Reno market from March to July in 2015. West Virginia smoking ban On August 26, 2014, the Board of Health of Hancock County, West Virginia adopted and approved the Clean Air Regulation Act of 2014 ("Regulation"), which became effective July 1, 2015. The Regulation banned smoking in public places in Hancock County including at Mountaineer. Although we constructed a smoking patio with slots and table games to help mitigate the impact of the Regulation, we expect that the Regulation will have a negative impact on our business and results of operations at Mountaineer, and such impact may be material. Any future similar regulations could also adversely impact our business and results of operations. Quantitative and qualitative disclosures about market risk Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We are exposed to changes in interest rates primarily from variable rate long-term debt arrangements, of which there are none outstanding at March 31, 2015. The Company evaluates its exposure to market risk by monitoring interest rates in the marketplace and has, on occasion, utilized derivative financial instruments to help manage this risk. The Company does not utilize derivative financial instruments for trading purposes. There were no material quantitative changes in our market risk exposure, or how such risks are managed, for the three months ended March 31, 2015 or the year ended December 31, 2014. 2 We currently own a 48.1% interest in Silver Legacy and our affiliates own a 1.9% interest. We have entered into a purchase agreement to acquire the 50% interest in the Silver Legacy Joint Venture that is owned by a subsidiary of MGM Resorts International and expect that we will acquire the 1.9% interest that is held by our affiliates in connection with the purchase of the 50% interest from the subsidiary of MGM Resorts International. See "Recent Developments Circus Reno/Silver Legacy Purchase." Table of Contents frequently interacting with gaming, hotel and restaurant patrons to ensure that they are receiving the highest level of personal attention. Management believes that personal service is an integral part of fostering customer loyalty and generating repeat business. We continually monitor our casino operations to react to changing market conditions and customer demands. We target both premium-play and value-conscious gaming patrons with differentiated offerings at our state-of-the-art casinos, which feature the latest in game technology, innovative bonus options, dynamic signage and customer-convenient features. Diversified portfolio across markets and customer segments We are geographically diversified across the United States, with no single property accounting for more than 26% and 38%, respectively, of our net revenues and property EBITDA for year ended December 31, 2014. Our customer pool draws from a diversified base of both local and out-of-town patrons. For example, approximately 20% of our customer base at Eldorado Reno is local, while 80% visit from out-of-town and utilize our hotel, restaurants and other amenities for a full-service gaming experience. We have also initiated changes to our marketing strategy to reach more potential customers through targeted direct mailings and electronic marketing. Lastly, we do not expect any material new competition in the foreseeable future as no new significant gaming operations have opened within the past year in any of our primary markets with the sole exception of Hollywood Mahoning Casino in Youngstown, Ohio, which opened in September 2014. We believe we have assembled a platform on which we can continue to grow and provide a differentiated customer experience. Management team with deep gaming industry experience and strong local relationships We have an experienced management team that includes, among others, Gary Carano, our Chief Executive Officer and the Chairman of the Board, who has more than thirty years of experience in the gaming and hotel industry. Previously, Mr. Carano served as President and Chief Operating Officer of Eldorado Resorts LLC, where he was the driving force behind the Company's development and operations in Nevada and Louisiana. In addition to Gary Carano, our senior executives have significant experience in the gaming and finance industries. Our extensive management experience and unwavering commitment to our team members, guests and equity holders have been the primary drivers of our strategic goals and success. We take pride in our reinvestment in our properties and the communities we support along with emphasizing our family-style approach in an effort to build loyalty among our team members and guests. We will continue to focus on the future growth and diversification of our company while maintaining our core values and striving for operational excellence. Operations and facility enhancement initiatives across entire portfolio In 2015 we implemented a property enhancement program at all of our properties. In particular, we have begun a $29.2 million capital improvements program, net of $3.5 million of reimbursements from West Virginia, and are working to bring Eldorado's legacy of hospitality and service excellence to the MTR properties through new and upgraded food and beverage offerings, the relocation of certain members of the Company's management team and the addition of new amenities to address market-specific challenges and opportunities. One such property enhancement is underway currently at Scioto Downs, where we are building The Brew Brothers, a new $5.9 million microbrewery and restaurant scheduled to open by the fourth quarter of 2015. Similarly, the $5.0 million five phase design and facility enhancement program underway at Presque Isle Downs & Casino, consisting of a reconfiguration of the casino floor, the addition of a center bar in the casino and enhancements of existing facilities, is scheduled to be completed by year-end. The remodel of over 200 rooms in the Skyline Tower at Eldorado Reno was completed in the second quarter of 2015. At Eldorado Shreveport, we are constructing a new casino bar and a new high limit room. In addition, we constructed a smoking patio at Mountaineer casino with approximately 200 slot Table of Contents machines and 6 gaming tables. We expect that the newly-constructed smoking patio will help mitigate the county-wide ban on smoking in public places that was implemented on July 1, 2015. Execution of cost savings program We have identified several areas to improve property level and corporate adjusted EBITDA margins through operating and cost efficiencies and exercising financial discipline throughout the Company without impacting the player experience. In addition to cost savings relating to duplicative executive compensation, legal and accounting fees and other corporate expenses that we have eliminated or expect to eliminate as a result of the Merger, we currently expect to achieve savings in marketing, food and beverage costs, selling, general and administrative expenses and other operating departments as a result of operating efficiencies and purchasing power of the combined MTR and Eldorado organization. In total, we expect to reduce corporate and property level expenses by more than $10 million (property level and corporate level synergies of $5 million each) on an annualized basis over the next 12 months. A portion of such expense reduction was reflected in our operating results for the quarter ended March 31, 2015 and we expect that the full impact of such expense reduction will be realized by the second quarter of 2016. See "Risk factors Risks related to the proposed Circus Reno/Silver Legacy Purchase and the Merger We may not realize all of the anticipated benefits of Circus Reno/Silver Legacy Purchase and the Merger and we may encounter difficulties in integrating Circus Reno, Silver Legacy and the MTR Gaming properties with our operations." Properties As of March 31, 2015, we owned or operated approximately 431,600 square feet of casino space with approximately 7,830 slot machines, 2,150 VLTs, 280 table games, and 3,280 hotel rooms, including Silver Legacy's 89,200 square feet of casino space and approximately 1,340 slot machines, 63 table games and 1,700 hotel rooms. The following table sets forth certain information regarding our properties as of and for the year ended December 31, 2014. See footnote (f) under " Summary historical consolidated financial information" for an explanation of our calculation of Adjusted EBITDA. Year ended December 31, 2014 Adjusted EBITDA ($mm) Casino space (Sq.ft) Slot machines / VLTs Table and poker games Hotel rooms Scioto Downs $ 49,345 83,000 2,150 NA NA Eldorado Shreveport $ 24,142 28,200 1,474 61 403 Eldorado Reno $ 8,000 76,500 1,223 59 814 Presque Isle $ 19,415 61,400 1,720 46 NA The Mountaineer Casino $ 30,412 93,300 2,098 51 354 Scioto Downs Scioto Downs is located in the heart of Central Ohio, directly off Highway 23/South High Street, approximately eight miles from downtown Columbus. Columbus is one of the largest metropolitan areas within the state of Ohio. Columbus is centrally located and is a popular tourist destination for state residents and out of state visitors, attracting 37.6 million visitors in 2014 with 22% staying at least one night and $1.56 billion of tourist spending in 2014. The Columbus market generated $275.9 million, $274.8 million and $115.3 million in slot revenues in 2014, 2013 and 2012, respectively. Year to date as of Table of Contents May 31, 2015, the Columbus market generated slot revenues of $121.6 million, which represented a 4.5% increase over the comparable prior year period. Scioto Downs ran its first Standardbred horse race in 1959 and has since established a rich and deep connection within the regional racing community. Opening VLT operations with a new 132,000 square foot gaming facility on June 1, 2012, Scioto Downs became the first "Racino" operation in the State of Ohio and is one of only two licensed gaming facilities in the Columbus area. The new gaming facility was designed to integrate with the iconic and recognizable racing structures; blending architectural features and aspects to achieve a seamless and marketable look. Scioto Downs currently offers: 83,000 square feet of gaming space housing approximately 2,150 VLTs, including a 3,200 square foot outdoor smoking patio; Six full service bars which include the approximately 120 seat lounge atmosphere of the Veil Bar which offers live entertainment three nights a week, the High Limit Bar, a sports bar with eight big screen TVs and state of the art audio, as well as supporting bars within our racing operations facilities; Live standard bred harness horse racing conducted from May through mid-September with barns, paddock and related facilities for the horses, drivers and trainers, that can accommodate over 2,600 patrons for live racing as well as a Summer Concert Series, featuring national acts; On-site pari-mutuel wagering and thoroughbred, harness and greyhound racing simulcast from other prominent tracks, as well as wagering on Scioto Downs' races at over 800 sites to which the races are simulcast; and Surface parking for approximately 3,500 vehicles. Scioto Downs dining venues include the following: The Grove Buffet, with a seating capacity of approximately 270, features a variety of cuisines including American, Italian, Chinese, Mexican, a pizza station, salad and dessert bar; The DASH Caf , with a seating capacity of approximately 120, is a 24-hour-a-day caf style restaurant featuring standard fare and grilled foods; The Clubhouse, with a seating capacity of approximately 500, is our main racing dining venue featuring steaks, local favorite dishes, salads and desserts; Scioto Scoops, offers a variety of ice cream and milkshakes available throughout the year; and The Penthouse, sandwich and snack bar catering to Simulcasting enthusiasts. Eldorado Shreveport Eldorado Shreveport is a premier resort casino located in Shreveport, Louisiana, the largest gaming market in Louisiana, adjacent to Interstate 20, a major highway that connects the Shreveport market with the attractive feeder markets of East Texas and Dallas/Fort Worth, Texas. Eldorado Shreveport was built next to an existing riverboat gaming and hotel facility formerly operated by Harrah's Entertainment and now operated by Boyd Gaming Corporation. The two casinos form the first and only "cluster" in the Shreveport/Bossier City market, allowing patrons to park once and easily walk between the two facilities. There are currently six casinos and a racino operating in the Shreveport/Bossier City market, which is the largest gaming market in Louisiana. The Shreveport/Bossier City gaming market permits continuous dockside gaming without cruising requirements or simulated cruising schedules, allowing casinos to operate Table of Contents 24 hours a day with uninterrupted access. Based on information published by the state of Louisiana, the six casino operators and racino in the Shreveport/Bossier City market generated approximately $736.1 million, $727.3 million, and $713.3 million in gaming revenues in 2014, 2013 and 2012, respectively. The principal target markets for Eldorado Shreveport are patrons from the Dallas/Fort Worth Metroplex and East Texas. Shreveport/Bossier City has an estimated 445,000 residents and there are approximately 7.2 million adults who reside within approximately 200 miles of Shreveport/Bossier City according to the most recent census data. Eldorado Shreveport is located approximately 185 miles east of Dallas and can be reached by car in approximately three hours. Flight times are less than one hour from both Dallas and Houston to the Shreveport Regional Airport. Eldorado Shreveport opened in 2000 and is a modern, Las Vegas-style resort with a gaming experience that appeals to both local gamers and out-of-town visitors. Our integrated casino and entertainment resort benefits from the following features: A location that positions us as the first casino that customers reach when driving to Shreveport from our primary feeder markets and the Shreveport Regional Airport; A purpose-built 80,634-square foot barge that houses approximately 28,200 square feet of gaming space, as measured by the actual footprint of the gaming equipment, offering approximately 1,470 slots and 60 table and poker games; An approximately 185,000 square foot land-based pavilion featuring a 60-foot high atrium that enables patrons to see the casino floor; An 85-foot wide seamless entrance that connects the casino to the land-based pavilion on all three levels resulting in the feel of a land-based casino; Numerous restaurants and entertainment amenities, including a deli and ice cream shop, VIP check-in, a premium quality bar and a retail store; A luxurious 403-room, all-suite, hotel, with updated rooms featuring modern d cor and flat screen TVs; Part of the only "cluster" in our market that allows for walkable visits between two gaming facilities with over 900 hotel rooms; A 380-seat ballroom with four breakout rooms, a 5,940-square foot spa, a fitness center and salon, a premium players' club and an entertainment show room; and Two parking lots and an eight story parking garage providing approximately 1,800 parking spaces that connects directly to the pavilion by an enclosed walkway, including valet parking for approximately 300 vehicles. Eldorado Shreveport offers award winning cuisine ranging from fine dining to a sports themed casual diner. Eldorado Shreveport's four dining venues include the following: The Vintage, with a seating capacity of approximately 175, is a gourmet steakhouse offering 100% USDA prime beef and fresh seafood along with an extensive wine list; The Cinema Cafe, with a seating capacity of approximately 24, is a self-service deli featuring pre-made sandwiches, fresh pastries, gourmet coffees, salads, desserts and ice cream; Table of Contents The Buffet, with a seating capacity of approximately 330, serves a variety of regional to ethnic dishes, including Mexican, steak and seafood buffet, fresh salads and desserts; and Sportsmans' Paradise Caf , with a seating capacity of approximately 197, and which is located in the pavilion, offers 24-hours-a-day service with a menu featuring omelets and buttermilk pancakes to thick steaks and gourmet burgers as well as a wide variety of southern favorites and the Noodle Bar, an authentic Asian noodle kitchen. The riverboat casino floats in a concrete and steel basin that raises the riverboat nearly 20 feet above the river. The basin virtually eliminates variation in the water height and allows the boat to be permanently moored to the land-based pavilion. Eldorado Shreveport's computerized pumping system is designed to regulate the water level of the basin to a variance of no more than three inches. Eldorado Reno We also own and operate Eldorado Reno, an 814-room premier hotel, casino and entertainment facility centrally located in downtown Reno, Nevada. Reno is the second largest metropolitan area in Nevada, with a population of approximately 433,700 according to the most recently available census data, and is located at the base of the Sierra Nevada Mountains along Interstate 80, approximately 135 miles east of Sacramento, California and 225 miles east of San Francisco, California. Reno is a destination market that attracts year-round visitation by offering gaming, numerous summer and winter recreational activities and popular special events such as national bowling tournaments. Management believes that approximately two-thirds of visitors to the Reno market arrive by some form of ground transportation. Popular special events include the National Championship Air Races, the Reno-Tahoe Open PGA tour event, Street Vibrations, a motorcycle event, and Hot August Nights, a vintage car event. According to the Reno-Sparks Convention & Visitors Authority (the "Visitors Authority"), the greater Reno area attracted approximately 4.6 million and 4.7 million visitors during the years 2014 and 2013, respectively, and year to date visitation through April 2015 was 1.4 million, an increase in 4.1% compared to the comparable prior year period. In addition, a number of companies, including Tesla and Switch, have recently established or announced that they plan to establish operations in the Reno area. Based on information reported by the Nevada State Gaming Control Board, gaming revenues for the Reno/Sparks gaming markets were $671.6 million, $670.1 million and $644.8 million in 2014, 2013 and 2012, respectively. Year to date as of May 31, 2015, the Reno market generated gaming revenues of $281.0 million, which represented a 4.7% increase over the comparable prior year period. Eldorado Reno currently offers: Approximately 76,500 square feet of gaming space, with approximately 1,200 slot machines and 60 table games; 814 finely-appointed guest rooms, including 134 suites, which include "Eldorado Player's Spa Suites" with bedside spas and one or two bedroom suites; Nationally-recognized cuisine which ranges from buffet to gourmet; An approximately 560-seat showroom, a VIP lounge, three retail shops, a versatile 12,010 square foot convention center and an outdoor plaza located diagonal to Eldorado Reno which hosts a variety of special events; and Table of Contents Parking facilities for over 1,100 vehicles, including a an approximately 640-space self-park garage, 120-space surface parking lot and 350-space valet parking facility. Eldorado Reno's dining venues include the following: Roxy's, with a seating capacity of approximately 160, is a Parisian-style bistro, restaurant and bar with contemporary American influences offering French country fare, steaks and seafood along with an extensive wine list; Sushi Sake, with a seating capacity of approximately 46, is located on the patio of Roxy's, provides sushi and libations in a contemporary Euro-Asian setting; La Strada, with a seating capacity of approximately 164, features northern Italian cuisine in an Italian countryside villa setting; The Brew Brothers, with a seating capacity of approximately 190, is located on the mezzanine level and offers an expansive menu, full-scale microbrewery and nightly entertainment; The Prime Rib Grill, with a seating capacity of approximately 186, is a spirited, lively steak and seafood house specializing in prime rib and grilled entrees; The Buffet, with a seating capacity of approximately 340, offers a 200-foot long buffet with a variety of cuisines, including American, Italian, Chinese, Mexican, Hop Wok grill, a pizza station and salad, fruit and ice cream bars; Millies 24, with a seating capacity of approximately 227, offers a 24-hour-a-day "coffee shop" restaurant and bakery featuring breakfast, lunch and dinner along with gourmet coffees and specialty cocktails; Pho Mein, with a seating capacity of approximately 122, is an authentic Asian noodle kitchen featuring an array of Chinese and Vietnamese favorites available for dine-in or take-out; and Eldorado Coffee Company, featuring Eldorado Reno's freshly roasted on-site blends, offering gourmet coffee and teas along with cakes, pies, and gelato. Eldorado Reno's selection of high-quality food and beverages reflects our emphasis on the dining experience. Eldorado Reno chefs utilize homemade pasta, carefully chosen imported ingredients, fresh seafood and top quality USDA choice cuts of beef. Throughout the property, beverage offerings include The Brew Brothers micro brewed beers and wines from the Ferrari Carano Winery. Silver Legacy Resort Casino The Silver Legacy, a joint venture between Resorts and MGM Resorts International, opened in July 1995. Silver Legacy's design is inspired by Nevada's rich mining heritage and the legend of Sam Fairchild, a fictitious silver baron who "struck it rich" on the site of the casino. Silver Legacy's hotel, the tallest building in northern Nevada, is a "Y"-shaped structure with three wings, consisting of 37-, 34- and 31-floor tiers. Silver Legacy's opulent interior showcases a casino built around Sam Fairchild's 120-foot tall mining rig, which appears to mine for silver. The rig is situated beneath a 180-foot diameter dome, which is a distinctive landmark on the Reno skyline. The interior surface of the dome features dynamic sound and laser light shows, providing visitors with a unique experience when they are in the casino. Silver Legacy is situated on two city blocks, encompassing 240,000 square feet in downtown Reno. The hotel currently offers 1,711 guest rooms, including 141 player spa suites, eight penthouse suites and seven hospitality suites. Many of Silver Legacy's guest rooms feature views of Reno's skyline and the Sierra Table of Contents Nevada mountain range. Silver Legacy's 10-story parking facility can accommodate approximately 1,800 vehicles. As of March 31, 2015, Silver Legacy's casino featured approximately 89,200 square feet of gaming space with approximately 1,340 slot machines and 63 table games, including blackjack, craps, roulette, Pai Gow Poker, Let It Ride , Baccarat and Pai Gow, a keno lounge and a race and sports book. "Club Legacy," Silver Legacy's slot club, offers customers exciting special events and tournaments and convenient ways of earning complimentaries and slot free play. Silver Legacy's dining options are offered in eight venues, which have an aggregate seating capacity of more than 1,000 and include the following: Sterling's Seafood Steakhouse, with a seating capacity of approximately 182, offers steaks and seafood along with an extensive wine list, tableside desserts and a Sunday brunch; Flavors! The Buffet, with a seating capacity of approximately 412, offers seafood, American, Italian, Asian and Mexican cuisine; Pearl Oyster Bar and Grill, with a seating capacity of approximately 95, offers specialized seafood dining, an expanded bar and innovative new grill options; Caf Central, with a seating capacity of approximately 191, offers a newly designed menu that includes American classics and Chinese cuisine 24-hours a day; Fresh Express Food Court, with a seating capacity of approximately 102, offers a range of options including a deli and grill, authentic Asian cuisine and American classics; Hussong's Cantina Taqueria, fabled to be the originator of the margarita, the landmark Hussong's Cantina of Ensenada, Mexico, features a large bar and seating capacity of approximately 80 and offers authentic Baja cuisine, sing-along rock n' roll Mariachi bands and universal appeal. This new leased venue opened in April of 2013. Sips Coffee & Tea, situated in the hotel lobby, offers gourmet coffee and teas; and Starbuck's Coffee Company, a new licensed franchise opened in March of 2013 and is located on the casino floor providing a popular attraction for the downtown Reno corridor and Silver Legacy guests. In addition, the hotel sponsors entertainment events which are held in the hotel's convention area. Silver Legacy's other amenities include retail shops, exercise and spa facilities, a beauty salon and an outdoor swimming pool and sundeck. A city-owned 50,000 square-foot ballroom containing approximately 35,000 square feet of convention space is operated and managed by Silver Legacy, together with Eldorado Reno and Circus Circus-Reno, and complements the existing Reno Events Center. It provides an elegant venue for large dinner functions and convention meeting space along with concert seating for approximately 3,000 attendees. We and our affiliates currently own a 50% interest in the Silver Legacy Joint Venture and we have entered into an agreement to acquire the other 50% interest in the Silver Legacy Joint Venture that is owned by a subsidiary of MGM Resorts International. See "Recent Developments Circus Reno/Silver Legacy Purchase." Presque Isle Downs & Casino Presque Isle Downs, located in Erie, Pennsylvania, opened for business in 2007 and commenced table gaming operations in 2010. Erie is located in northwestern Pennsylvania and Erie County has a population of approximately 280,000 according to the most recently available census data. Presque Isle Downs is Table of Contents located directly off of highway 90 and Presque Isle State Park attracts nearly four million visitors annually. The 153,400 square foot facility consists of: 61,400 square feet of gaming space housing approximately 1,730 slot machines, 36 casino table games and a nine table poker room, which we began operating on October 3, 2011; Live thoroughbred horse racing conducted from May through September on a one-mile track with a state-of-the-art one-mile mile synthetic racing surface with grandstand, barns, paddock and related facilities, and indoor and outdoor seating for approximately 750 patrons; On-site pari-mutuel wagering and thoroughbred and harness racing simulcast from other prominent tracks, as well as wagering on Presque Isle Downs' races at over 1,200 sites to which the races are simulcast; and Surface parking for approximately 3,200 vehicles. Presque Isle Downs' dining venues include the following: Backstretch Buffet, with a seating capacity of approximately 250, offers a variety of cuisines, including Chinese, Mexican, American (or comfort food selections), Italian, a pizza station along with salad, fruit and ice cream bars; The Downs Clubhouse & Lounge, with a seating capacity of approximately 300, is located on the second floor of the casino overlooking our state of the art thoroughbred race track, offering a casual dining experience with menu options that include casual American cuisine; La Bonne Vie, with a seating capacity of approximately 75, is a French inspired traditional steakhouse with an intimate setting, offering a fresh selection of steak and seafood; The INCaf , is a 24-hour-a-day "snack shop" restaurant featuring breakfast, lunch and dinner; Scoopin', offers a variety of locally sourced ice cream; and Concessions, an outdoor venue open during live racing season that is also used to service outdoor concerts on the property. Mountaineer Casino, Racetrack & Resort Mountaineer is one of only four racetracks in West Virginia currently permitted to operate slot machines and traditional casino table gaming. Mountaineer is located on the Ohio River at the northern tip of West Virginia's northwestern panhandle, approximately thirty miles from the Pittsburgh International Airport and a one-hour drive from downtown Pittsburgh. Mountaineer is a diverse gaming, entertainment and convention complex with: 93,300 square feet of gaming space housing approximately 2,100 slot machines, 40 casino table games (including blackjack, craps, roulette and other games), and 11 poker tables; 354 hotel rooms, including the 256-room, 219,000 square foot Grande Hotel at Mountaineer, 27 suites, a full-service spa and salon, a retail plaza and indoor and outdoor swimming pools; 12,090 square feet of convention space, which can accommodate seated meals for groups of up to 575, as well as smaller meetings in more intimate break-out rooms that can accommodate approximately 75 people and entertainment events for approximately 1,500 guests; Table of Contents Live thoroughbred horse racing conducted from March through December on a one-mile dirt surface or a 7/8 mile grass surface with expansive clubhouse, restaurant, bars and concessions, as well as grandstand viewing areas with enclosed seating for approximately 3,570 patrons; On-site pari-mutuel wagering and thoroughbred, harness and greyhound racing simulcast from other prominent tracks, as well as wagering on Mountaineer's races at over 1,400 sites to which the races are simulcast; Woodview, an eighteen-hole par 71 golf course measuring approximately 6,200 yards located approximately seven miles from Mountaineer; A 69,000 square foot theater and events center that seats approximately 5,000 patrons for concerts and other entertainment offerings; A 13,650 square foot fitness center which has a full complement of weight training and cardiovascular equipment, as well as a health bar, locker rooms with steam and sauna facilities, and outdoor tennis courts; and Surface parking for approximately 5,300 vehicles. Mountaineer's dining venues include the following: Big Al's, a 24-hour-a-day operation that offers Starbucks coffee products, pastries, sandwiches, pizza and ice cream; The Riverfront Buffet, with a seating capacity of approximately 250, offers a variety of cuisines, including American, Italian, comfort and seafood, along with a pizza station, carving station, salad and dessert bar; The Gatsby, with a seating capacity of approximately 144, featuring breakfast, lunch, and dinner, offers casual dining, a variety of comfort and Italian foods and daily specials; Mahogany Sports Bar, a sports bar that offers a variety of seasonal beverages for any time of the year; La Bonne Vie, "The Good Life," is a fine dining experience with a seating capacity of approximately 68, offering in house cut CAB steaks and seafood with an extensive wine list and weekly specials; Vickar's, located trackside and offering a variety of concession items; and Mountaineer Club, located trackside is a tiered dining room overlooking the racetrack offering a buffet with most dining tables having a closed-circuit television monitor. Competition The gaming industry includes land-based casinos, dockside casinos, riverboat casinos, casinos located on Native American reservations and other forms of legalized gaming. There is intense competition among companies in the gaming industry, many of which have significantly greater resources than we do. Certain states have legalized casino gaming and other states may legalize gaming in the future. Legalized casino gaming in these states and on Native American reservations near our markets or changes to gaming laws in states surrounding Nevada, Louisiana, West Virginia, Pennsylvania, or Ohio could increase competition and could adversely affect our operations. We also compete, to a lesser extent, with gaming facilities in other jurisdictions with dockside gaming facilities, state sponsored lotteries, on-and-off track pari-mutuel wagering, card clubs, riverboat casinos and other forms of legalized gambling. In addition, various forms of Table of Contents internet gaming have been approved in Nevada and New Jersey and legislation permitting internet gaming has been proposed by the federal government and other states. The expansion of internet gaming in Nevada and other jurisdictions could result in significant additional competition. Eldorado Shreveport. The Shreveport/Bossier City, Louisiana gaming market is characterized by intense competition and the market has not grown appreciably since Eldorado Shreveport opened in December 2000. We compete directly with five casinos, all but one of which have operated in the Shreveport/Bossier City market for several years and have established customer bases. In addition, we also compete with the slot machine facility at Harrah's Louisiana Casino and Racetrack located in Bossier City and WinStar Casino and casino facilities owned by the Choctaw Nation located in Oklahoma. Casino gaming is currently prohibited in several jurisdictions from which the Shreveport/Bossier City market draws customers, primarily Texas. The Texas legislature has from time to time considered proposals to legalize gaming. Any such proposal would require an amendment to the Texas State constitution, which requires approval by two-thirds of the Texas State Legislature and approval by a majority of votes cast in a statewide voter referendum. Such approvals would legalize gaming in Texas notwithstanding vetoes by the Governor of casino gambling bills. There can be no assurance that casino gaming will not be approved in Texas in the future, which would have a material adverse effect on our business. Eldorado Shreveport competes with several Native American casinos located in Oklahoma, certain of which are located near our core Texas markets. WinStar Casinos, a Las Vegas-style gaming facility owned by the Chickasaw Nation, is located in Oklahoma approximately 60 miles north of the Dallas/Fort Worth area and has 500,000 square feet of gaming space, more than 7,400 electronic gaming devices, 88 table games, 46 poker tables, a 937-seat bingo hall, an event center, two hotel towers with over 1,500 rooms, a spa and a 27-hole golf course. Eldorado Shreveport also competes with Choctaw Casino Resort, a casino and hotel facility owned by the Choctaw Nation and located in Durant, Oklahoma, approximately 75 miles north of the Dallas/Fort Worth area, with approximately 3,500 electronic gaming devices, table games, 30 poker tables, a bingo hall, hotel, 5,500-seat capacity event center, an 1,000-seat concert hall, several restaurants, a buffet, amphitheater, dance hall, spa and RV park. Both the Chickasaw Nation and the Choctaw Nation are permitted to operate Class-III (as set forth in the Indian Gaming Regulatory Act) gaming devices in the state of Oklahoma, which permits them to offer Las Vegas-style gaming. Because Eldorado Shreveport draws a significant amount of customers from the Dallas/Fort Worth, Texas area, but is located approximately 190 miles from that area, we believe we will continue to face increased competition from gaming operations in Oklahoma, including the WinStar and Choctaw casinos, and would face significant competition that may have a material adverse effect on our business and results of operations if casino gaming were to be approved in Texas. In June 2013, construction was completed on a new 30,000 square foot casino and 400-room hotel in Bossier City across the Red River from Eldorado Shreveport. The facility, which also includes several restaurants and a 1,000-seat entertainment arena, received final approval from the Louisiana Gaming Control Board and opened on June 15, 2013. The owner acquired the license for an existing casino site in Lake Charles, Louisiana and received the required regulatory approvals to move the location to Bossier City. In December 2014, a new luxury, land-based casino with 1,600 slot machines, 72 gaming tables, a poker room, and a 740-room hotel with a ballroom, spa and 18-hole golf course, opened in Lake Charles, Louisiana approximately 200 miles south of Eldorado Shreveport, but closer to the Houston, Texas market. Eldorado Reno. Of the 31 casinos currently operating in the Reno market, we believe we compete principally with the six other hotel-casinos that, like Eldorado Reno and Silver Legacy, each generate at least $36 million in annual gaming revenues. At this time, we cannot predict the extent to which new and proposed projects will be undertaken or the extent to which current hotel and/or casino space may be Table of Contents expanded. We expect that any additional rooms added in the Reno market will increase competition for visitor revenue. There can be no assurance that any growth in Reno's current room base or gaming capacity will not adversely affect our financial condition or results of operations. We also compete with hotel-casinos located in the nearby Lake Tahoe region as well as those in other areas of Nevada, including Las Vegas. A substantial number of customers travel to both Reno and the Lake Tahoe area during their visits. Consequently, we believe that our success is influenced to some degree by the success of the Lake Tahoe market. The number of visitors increased during the year ended December 31, 2014 compared with the prior year, and while we do not anticipate a significant change in the popularity of either Reno or Lake Tahoe as tourist destination areas in the foreseeable future, any decline could adversely affect our operations. Since visitors from California comprise a significant portion of our customer base, we also compete with Native American gaming operations in California. In total, the State of California has signed and ratified compacts with 72 Native American tribes, and there are currently 60 Native American casinos operating in California, including casinos located in northern California, which we consider to be a significant target market. These Native American tribes are allowed to operate slot machines, lottery games and banking and percentage games on Native American lands. Although many existing Native American gaming facilities in northern California are modest compared to Eldorado Reno and Silver Legacy, a number of Native American tribes have established large-scale gaming facilities in California and some Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and gaming facilities in northern California. Off-reservation proposals for tribal gaming in northern California continue to face resistance at the federal and local levels. Under their current compacts, most Native American tribes in California may operate up to 2,000 slot machines, and up to two gaming facilities may be operated on any one reservation. However, under action taken by the National Indian Gaming Commission, gaming devices similar in appearance to slot machines, but which are deemed to be technological enhancements to bingo style gaming, are not subject to such limits and may be used by tribes without state permission. The number of slot machines the tribes are allowed to operate may increase as a result of any new or amended compacts the tribes may enter into with the State of California that receive the requisite approvals, such as has been the case with respect to a number of new or amended compacts which have been executed and approved. Management believes the Reno market draws over 50% of its visitors from California. As northern California Native American gaming operations have expanded, we believe the increasing competition generated by these gaming operations has negatively impacted, and may continue to negatively impact, principally drive-in, day-trip visitor traffic from our main feeder markets in northern California. A new gaming facility located in Sonoma County, California opened on November 5, 2013 with 3,000 slot machines, 144 table games, multiple dining options and a 10,000 square foot events center. In addition to gaming on Native American-owned land, California allows other non-casino style gaming, including pari-mutuel wagering, a state sponsored lottery, card clubs, bingo and off-track betting. MTR Gaming properties. Mountaineer, Presque Isle Downs and Scioto Downs primarily compete with gaming facilities located in West Virginia, Ohio and Pennsylvania, including, to a certain extent, each other, and gaming locations located in neighboring states including New York, Indiana and Michigan. In particular, Mountaineer (and to a lesser extent Presque Isle Downs) competes with other gaming facilities located in Pennsylvania, including The Rivers Casino located in downtown Pittsburgh, Pennsylvania and The Meadows Racetrack and Casino located in Washington, Pennsylvania, approximately 50 miles southeast of Mountaineer. An additional license has been granted for a casino to be located in Lawrence County Table of Contents Pennsylvania, approximately 45 miles from Mountaineer and 90 miles from Presque Isle Downs, which would result in further competition for both of those properties. Further, gaming facilities in Ohio that have recently commenced operations, including the Horseshoe Casino Cleveland, Hollywood Casino Columbus, ThistleDown Racino, Austintown, Hollywood Mahoning Casino, Hollywood Casinos, at Dayton Raceway, Northfield Park, present significant competition for Mountaineer, Presque Isle Downs and Scioto Downs. Mountaineer competes with smaller gaming operations conducted in local bars and fraternal organizations. West Virginia law permits limited video lottery machines ("LVLs") in local bars and fraternal organizations. The West Virginia Lottery Commission authorizes up to 7,500 slot machines in these facilities throughout West Virginia. No more than five slot machines are allowed in each establishment licensed to sell alcoholic beverages, and no more than ten slot machines are allowed in each licensed fraternal organization. As of December 31, 2014, there were a total of approximately 700 LVL's in bars and fraternal organizations in Hancock county, West Virginia (where Mountaineer is located) and the two neighboring counties (Brooke and Ohio counties). Although the bars and fraternal organizations housing these machines lack poker and table gaming, as well as the amenities and ambiance of our Mountaineer facility, they do compete with Mountaineer, particularly for the local patronage. While there are three other tracks and one resort in West Virginia that offer slot machine and table gaming, only one, Wheeling Island Casino, lies within Mountaineer's primary market in Wheeling, West Virginia. Wheeling Island Casino currently operates approximately 1,400 slot machines, nine poker tables, and 24 casino table games. Scioto Downs has also competed with smaller gaming operations in Ohio commonly referred to as Internet/sweepstakes cafes. These establishments offer services including internet time and computer access, in addition to offering games such as poker and games that operate like slot machines. In March 2013, the Ohio General Assembly passed legislation which effectively bans the Internet cafes by defining use of the computers in these facilities as illegal gambling. Efforts have been underway to enforce the closure of the internet cafes. Mountaineer's, and to a lesser extent Presque Isle Downs', racing and pari-mutuel operations compete directly for wagering dollars with racing and pari-mutuel operations at a variety of other horse and greyhound racetracks that conduct pari-mutuel gaming, including Wheeling Island Casino, in Wheeling, West Virginia; ThistleDown and Northfield Park, in Cleveland, Ohio; Beulah Park, in Austintown Ohio, and The Meadows Racetrack & Casino, in Washington, Pennsylvania. Wheeling Island Casino conducts pari-mutuel greyhound racing, simulcasting and casino gaming. Both ThistleDown and Northfield Park conduct pari-mutuel horse racing, with video lottery gaming which commenced in 2013. Beulah Park was relocated from Columbus, Ohio to Austintown, Ohio in 2014 and conducts pari-mutuel wagering, simulcasting and video lottery gaming. The Meadows Racetrack & Casino conducts live harness racing, simulcasting and casino gaming. Mountaineer (and to a lesser extent, Presque Isle Downs) also will compete with Valley View Downs in Lawrence County, Pennsylvania, if it is constructed and opened. Since commencing export simulcasting in August 2000, Mountaineer competes with racetracks across the country to have its signal carried by off-track wagering parlors. Mountaineer, Presque Isle Downs and Scioto Downs also competes for wagering dollars with off-track wagering facilities in Ohio and Pennsylvania, and competes with other racetracks for participation by quality racehorses. General. All of our gaming operations also compete to a lesser extent with operations in other locations, including Native American lands, and with other forms of legalized gaming in the United States, including state-sponsored lotteries, on- and off-track wagering, high-stakes bingo, card parlors, and the emergence of Table of Contents Internet gaming, including proposals at the state and federal levels that would legalize various forms of internet gaming. In addition, casinos in Canada have likewise recently begun advertising and increasing promotional activities in our target markets. See "Risk factors Risks related to our business We face substantial competition in the hotel and casino industry and expect that such competition will continue" which is included elsewhere in this prospectus. Governmental gaming regulations The gaming and racing industries are highly regulated and we must maintain our licenses and pay gaming taxes to continue our operations. We are subject to extensive regulation under laws, rules and supervisory procedures primarily in the jurisdictions where our facilities are located or docked. These laws, rules and regulations generally concern the responsibility, financial stability and characters of the owners, managers, and persons with financial interests in the gaming operations. If additional gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions or costs that could have a significant adverse effect on us. From time to time, various proposals have been introduced in legislatures of jurisdictions in which we have operations that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and us. We do not know whether or when such legislation will be enacted. Gaming companies are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes, and such taxes and fees are subject to increase at any time. Any material increase in these taxes or fees could adversely affect us. Some jurisdictions, including those in which we are licensed, empower their regulators to investigate participation by licensees in gaming outside their jurisdiction and require access to periodic reports respecting those gaming activities. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. Under provisions of gaming laws in jurisdictions in which we have operations, and under our organizational documents, certain of our securities are subject to restriction on ownership which may be imposed by specified governmental authorities. The restrictions may require a holder of our securities to dispose of the securities or, if the holder refuses, or is unable, to dispose of the securities, we may be required to repurchase the securities. See Exhibit 99.1 Description of Governmental Regulations and Licensing filed with our Annual Report on Form 10-K, incorporated by reference herein, for the year ended for a more complete discussion of governmental and gaming regulations. Reporting and record-keeping requirements We are required periodically to submit detailed financial and operating reports and furnish any other information about us and our subsidiaries which gaming authorities may require. We are required to maintain a current stock ledger which may be examined by gaming authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to gaming authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. Gaming authorities may, and in certain jurisdictions do, require certificates for our securities to bear a legend indicating that the securities are subject to specified gaming laws. Taxation Gaming companies are typically subject to significant taxes and fees in addition to normal federal, state and local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal, state, local and provincial Table of Contents legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. It is not possible to determine the likelihood of changes in tax laws or in the administration of such laws. Internal revenue service regulations The Internal Revenue Service requires operators of casinos located in the United States to file information returns for U.S. citizens, including names and addresses of winners, for keno, bingo and slot machine winnings in excess of stipulated amounts. The Internal Revenue Service also requires operators to withhold taxes on some keno, bingo and slot machine winnings of nonresident aliens. We are unable to predict the extent to which these requirements, if extended, might impede or otherwise adversely affect operations of, and/or income from, the other games. Regulations adopted by the Financial Crimes Enforcement Network of the Treasury Department ("FINCEN") and the Nevada Gaming Authorities require the reporting of currency transactions in excess of $10,000 occurring within a gaming day, including identification of the patron by name and social security number. This reporting obligation began in May 1985 and may have resulted in the loss of gaming revenues to jurisdictions outside the United States which are exempt from the ambit of these regulations. In addition to currency transaction reporting requirements, suspicious financial activity is also required to be reported to FINCEN. Other laws and regulations Our businesses are subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, food service, smoking, environmental matters, employees and employment practices, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. As an example, On August 26, 2014, the Board of Health of Hancock County, West Virginia adopted and approved the Clean Air Regulation Act of 2014, which became effective July 1, 2015. The Regulation banned smoking in public places in Hancock County including at Mountaineer. Although we constructed a smoking patio with slots and table games to help mitigate the impact of the Regulation, we expect that the Regulation will have a negative impact on our business and results of operations at Mountaineer, and such impact may be material. Any other material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results. The sale of alcoholic beverages is subject to licensing, control and regulation by applicable local regulatory agencies. All licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any license, and any disciplinary action could, and revocation would, have a material adverse effect upon our operations. Intellectual property We use a variety of trade names, service marks, trademarks, patents and copyrights in our operations and believe that we have all the licenses necessary to conduct our continuing operations. We have registered several service marks, trademarks, patents and copyrights with the United States Patent and Trademark Office or otherwise acquired the licenses to use those which are material to conduct our business. We also own patents relating to unique casino games. We file copyright applications to protect our creative artworks, which are often featured in property branding, as well as our distinctive website content. Table of Contents Description of our business Our Company Founded in 1973 in Reno, Nevada, Eldorado is dedicated to providing exceptional guest service, a dynamic gaming product, award-winning dining, exciting entertainment and premier accommodations. We are a gaming and hospitality company that owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. Our primary source of revenue is gaming, but we use our hotels, restaurants, bars, shops and other services to attract customers to our properties. We were founded as a family business by the Carano family and continue to maintain our commitment to customer service, high-quality dining and outstanding amenities. We believe that our extraordinary level of personal service and the variety, quality and attractive pricing of our food and beverage outlets are important factors in attracting customers to our properties and building customer loyalty. We own and operate the following properties: Scioto Downs A modern "racino" offering over 2,100 video lottery terminals located 15 minutes from downtown Columbus, Ohio; Eldorado Resort Casino, Shreveport ("Eldorado Shreveport") A 403-room, all suite art deco style hotel and tri-level riverboat dockside casino situated on the Red River in Shreveport, Louisiana; Eldorado Hotel and Casino, Reno ("Eldorado Reno") A 814-room hotel, casino and entertainment facility located in downtown Reno, Nevada; Silver Legacy Resort Casino ("Silver Legacy")2 A 1,711-room themed hotel and casino located adjacent to Eldorado Reno; Presque Isle Downs and Casino ("Presque Isle Downs") A casino and live thoroughbred horse racing facility with slot machines, table games and poker located in Erie, Pennsylvania; and Mountaineer Casino, Racetrack and Resort ("Mountaineer") A 354-room resort with a casino and live thoroughbred horse racing located on the Ohio River at the northern tip of West Virginia's northwestern panhandle On September 19, 2014 (the "Merger Date") a wholly owned subsidiary of Eldorado Resorts, Inc. ("ERI" or the "Company") merged (the "Merger") into Eldorado HoldCo LLC ("HoldCo"), the parent company of Eldorado Resorts LLC ("Resorts"), which owns Eldorado Shreveport, Eldorado Reno and a 48.1% interest in Silver Legacy, and MTR Gaming Group, Inc. ("MTR Gaming"), which owns Mountaineer, Presque Isle Downs and Scioto Downs. Effective upon the consummation of the Merger, MTR Gaming and HoldCo each became a wholly owned subsidiary of ERI and, as a result of such transactions. Resorts became an indirect wholly owned subsidiary of ERI. Business strengths & strategy Personal service and high quality amenities One of the cornerstones of our business strategy is to provide our customers with an extraordinary level of personal service. Our senior management is actively involved in the daily operations of our properties, Table of Contents Seasonality Casino, hotel and racing operations in our markets are subject to seasonal variation. Winter conditions can frequently adversely affect transportation routes to each of our properties and also may cause cancellations of live horse racing at Mountaineer, Scioto Downs and Presque Isle Downs. As a result, unfavorable seasonal conditions could have a material adverse effect on our operations. Environmental matters We are subject to various federal, state and local environmental, health and safety laws and regulations, including those relating to the use, storage, discharge, emission and disposal of hazardous materials and solid, animal and hazardous wastes and exposure to hazardous materials. Such laws and regulations can impose liability on potentially responsible parties, including the owners or operators of real property, to clean up, or contribute to the cost of cleaning up, sites at which hazardous wastes or materials were disposed of or released. In addition to investigation and remediation liabilities that could arise under such laws and regulations, we could also face personal injury, property damage, fines or other claims by third parties concerning environmental compliance or contamination or exposure to hazardous materials, and could be subject to significant fines or penalties for any violations. We have from time to time been responsible for investigating and remediating, or contributing to remediation costs related to, contamination located at or near certain of our facilities, including contamination related to underground storage tanks and groundwater contamination arising from prior uses of land on which certain of our facilities are located. In addition, we have been, and may in the future be, required to manage, abate, remove or contain manure and wastewater generated by concentrated animal feeding operations due to our racetrack operations, mold, lead, asbestos-containing materials or other hazardous conditions found in or on our properties. Although we have incurred, and expect that we will continue to incur, costs related to the investigation, identification and remediation of hazardous materials or conditions known or discovered to exist at our properties, those costs have not had, and are not expected to have, a material adverse effect on our financial condition, results of operations or cash flow. Employees As of March 31, 2015, we had approximately 7,100 employees, including Silver Legacy. As of such date, we have four collective bargaining agreements covering approximately 500 employees. As of July 6, 2015, Circus Reno had approximately 1,110 employees and six collective bargaining agreements covering approximately 560 employees. Legal proceedings We are a party to various lawsuits, which have arisen in the normal course of our business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the estimated losses associated with those lawsuits is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations. State ex rel. Walgate v. Kasich; Case No. 11 CV-10-13126; Court of Common Pleas Franklin County, Ohio. On October 21, 2011, the Ohio Roundtable filed a complaint in the Court of Common Pleas in Franklin County, Ohio against a number of defendants, including the Governor, the Ohio Lottery Commission and the Ohio Casino Control Commission. The complaint alleges a variety of substantive and procedural defects relative to the approval and implementation of video lottery terminals as well as several counts dealing with the taxation of standalone casinos. As interveners, we, along with four of the other racinos in Ohio, filed motions for judgment on the pleadings to supplement the position of the Racing Commission. In May 2012, the Court of Common Pleas dismissed the case; however, the plaintiffs filed an appeal and oral arguments Table of Contents were held on January 17, 2013 in the 10th District Court of Appeals. In March 2013, the Court of Appeals upheld the ruling. The decision of the Appeals Court was appealed to the Ohio Supreme Court by the plaintiffs on April 30, 2013 and the Ohio Supreme Court has elected to accept the appeal. The Ohio Supreme Court temporarily stayed the appeal until it first ruled on a matter with similar procedural issues. A decision was issued on that case on June 10, 2014. Accordingly, along with the State Appellees, a motion to dismiss as improvidently granted was filed which was partially granted. The remaining propositions of law have been briefed by both parties and oral arguments were held on June 23, 2015. Table of Contents Management and directors The following table sets forth certain information concerning the members of the Board of Directors and executive officers of ERI, as of the date of this prospectus. Name Age Position and office held Gary L. Carano 63 Chairman of the Board; Chief Executive Officer Thomas R. Reeg 44 Director; President Robert M. Jones 72 Chief Financial Officer Joseph L. Billhimer, Jr. 52 Chief Operating Officer Anthony L. Carano. 33 General Counsel Frank J. Fahrenkopf Jr.(2)(4) 76 Director James B. Hawkins(1)(3) 59 Director Michael E. Pegram(1)(2)(3) 63 Director David P. Tomick(1)(4) 63 Director Roger P. Wagner(3)(4) 67 Director (1) Member of the Audit Committee (2) Member of the Compliance Committee (3) Member of the Compensation Committee (4) Member of the Nominating & Governance Committee The following is a biographical summary of the experience of our directors and executive officers: Gary L. Carano, 63, has served as the chairman of the board of directors of the Company and the Chief Executive Officer of the Company and its subsidiaries since September 2014. Previously, Mr. Carano served as President and Chief Operating Officer of Eldorado Resorts LLC ("Eldorado Resorts") from 2004 to September 2014, and as President and Chief Operating Officer of Eldorado HoldCo LLC ("Eldorado Holdco") from 2009 to September 2014. Mr. Carano served as the General Manager and Chief Executive Officer of the Silver Legacy Resort Casino ("Silver Legacy") from its opening in 1995 to September 2014. Mr. Carano is an active philanthropist, serving on a number of charitable boards and foundations in the state of Nevada. Mr. Carano holds a Bachelor's degree in Business Administration from the University of Nevada, Reno. In May 2012, Silver Legacy filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Nevada. Silver Legacy emerged from its Chapter 11 reorganization proceedings in November 2012. Mr. Carano has been selected to serve as director because of his extensive experience in the gaming and hospitality industry and because of his familiarity with the business of Resorts. Gary L. Carano is Anthony Carano's father. Thomas R. Reeg, 44, has served as a director of the Company since September 2014 and served as a member of Eldorado Resorts LLC's ("Resorts") board of managers from December 2007 to September 2014. Mr. Reeg has served as President of the Company and its subsidiaries since September 2014 and served as Senior Vice President of Strategic Development for Resorts from January 2011 to September 2014. From September 2005 to November 2010, Mr. Reeg was a Senior Managing Director and founding partner of Newport Global Advisors L.P., which is an indirect stockholder of the Company. Mr. Reeg was a member of the executive committee of Silver Legacy (which is the governing body of Silver Legacy) from August 2011 through August 2014. Mr. Reeg was a member of the board of managers of NGA HoldCo, LLC, which is a stockholder of the Company, from 2007 through 2011 and served on the board of directors of Autocam Corporation from 2007 to 2010. From 2002 to 2005 Mr. Reeg was a Managing Director and portfolio manager at AIG Global Investment Group ("AIG"), where he was responsible for co-management Table of Contents of the high-yield mutual fund portfolios. Prior to his role at AIG, Mr. Reeg was a senior high-yield research analyst covering various sectors, including the casino, lodging and leisure sectors, at Bank One Capital Markets. Mr. Reeg holds a Bachelor of Business Administration in Finance from the University of Notre Dame and is a Chartered Financial Analyst. Mr. Reeg has been selected to serve as a director because of his extensive financial experience and his familiarity with the business of Resorts. Robert M. Jones, 72, has served as the Executive Vice President and Chief Financial Officer of the Company since September 2014 and the Chief Financial Officer of Resorts for over twenty-nine years. Mr. Jones earned a bachelor's degree in accounting from the University of Arizona and a MBA in business administration from Golden Gate University. Joseph L. Billhimer Jr., 52, has served as Executive Vice President and Chief Operating Officer of the Company and Resorts since September 2014. Mr. Billhimer joined MTR in April 2011 and has served as Chief Operating Officer of MTR from 2012 and as President of MTR from September 2013 to September 2014. Mr. Billhimer served as Executive Vice President of MTR from 2012 to 2013 and Senior Vice President of Operations & Development at MTR and President and General Manager of the Mountaineer Casino, Racetrack and Resort since 2012. Mr. Billhimer was a principal of Foundation Gaming Group, an advisory and management services firm for the gaming industry, which among other engagements, managed Harlow's Casino & Resort in Greenville, Mississippi from 2009 to 2010 and marketed its sale to Churchill Downs. Prior to Foundation Gaming Group, Mr. Billhimer served as president of Trilliant Gaming Illinois, LLC, a gaming development company, from 2008 to 2009. From 2003 to 2008, he was president and chief executive officer of Premier Entertainment LLC, the developer and parent of the Hard Rock Hotel and Casino in Biloxi, Mississippi. While at Premier Entertainment, he was named Casino Journal's Executive of the Year in 2007 for his efforts in re-developing the Hard Rock Hotel and Casino after being destroyed by Hurricane Katrina and filing bankruptcy. Prior to Premier Entertainment, Mr. Billhimer spent three years as President and General Manager of Caesars Entertainment's Grand Casino Resort in Gulfport, Mississippi, and prior to that experience, eight years with Pinnacle Entertainment where he was Executive Vice President and General Manager of Casino Magic in Bay St. Louis, Mississippi. Anthony L. Carano, 33, has served as Executive Vice President, General Counsel and Secretary of the Company since September 2014. Prior to joining the Company, Mr. Carano was an attorney at the Nevada law firm of McDonald Carano Wilson, LLP, where his practice was devoted primarily to transactional, gaming and regulatory law. Mr. Carano holds a B.A. from the University of Nevada, his J.D. from the University of San Francisco, School of Law and his M.B.A. in Finance from the University of San Francisco, School of Business. Anthony Carano is Gary L. Carano's son. Frank J. Fahrenkopf, Jr., 76, has served as a director of the Company since September 2014. Mr. Fahrenkopf serves as the chair of the Nominating and Governance Committee of the board of directors of the Company and a member of the Compliance Committee of the Company. He served as President and Chief Executive Officer of the American Gaming Association ("AGA"), an organization that represents the commercial casino-entertainment industry by addressing federal legislation and regulatory issues, from 1995 until June 2013. At the AGA, Mr. Fahrenkopf was the national advocate for the commercial casino industry and was responsible for positioning the AGA to address regulatory, political and educational issues affecting the gaming industry. Mr. Fahrenkopf is currently co-chairman of the Commission on Presidential Debates, which he founded and which conducts debates among presidential candidates. He serves as a board member of the International Republican Institute, which he founded. He also founded the National Endowment for Democracy, where he served as Vice Chairman and a board member from 1983 to 1992. Mr. Fahrenkopf served as chairman of the Republican National Committee from 1983 to 1989. Prior to his role at AGA, Mr. Fahrenkopf was a partner at Hogan & Hartson, where he regularly represented clients Table of Contents before the Nevada gaming regulatory authorities. Mr. Fahrenkopf served as the first Chairman of the American Bar Association Committee on Gaming Law and was a founding Trustee and President of the International Association of Gaming Attorneys. Mr. Fahrenkopf also sits on the board of directors of six NYSE-listed public companies: First Republic Bank, Gabelli Equity Trust, Inc., Gabelli Utility Trust, Gabelli Global Multimedia Trust, Gabelli Dividend and Income Trust, and Gabelli Gold and Natural Resources. He is a graduate of the University of Nevada, Reno and holds a Juris Doctor from the University of California Berkeley School of Law. Mr. Fahrenkopf has been selected to serve as a director because of his extensive knowledge of gaming regulatory matters, his relevant legal experience and his experience as a director of many organizations. James B. Hawkins, 59, has served as a director of the Company since September 2014. Mr. Hawkins is a member of the Audit Committee and Compensation Committee of the board of directors of the Company. Mr. Hawkins has served as Chief Executive Officer and on the board of directors of Natus Medical Inc. ("Natus") since April 2004 and as President of Natus since June 2013. He also previously served as President of Natus from April 2004 to January 2011. Mr. Hawkins currently serves as the chairman of the board of directors of Iradimed Corporation, a publicly traded company that provides non-magnetic intravenous infusion pump systems and as a director of Digirad Corporation, a publicly traded company that provides diagnostic solutions in the science of imaging. Prior to joining Natus, Mr. Hawkins was President, Chief Executive Officer and on the board of directors of Invivo Corporation, a developer and manufacturer of vital sign monitoring equipment, and its predecessor, from 1985 until 2004, and as Secretary from 1986 until 2004. Mr. Hawkins earned a Bachelor's degree in Business Commerce from Santa Clara University and an MBA from San Francisco State University. Mr. Hawkins has been selected to serve as a director because of his extensive experience in executive management oversight and as a director of multiple publicly traded companies. Michael E. Pegram, 63, has served as a director of the Company since September 2014. Mr. Pegram is a member of the Audit Committee, Compensation Committee and Compliance Committee of the board of directors of the Company. Mr. Pegram has been a partner in the Carson Valley Inn in Minden, Nevada since June 2009 and a partner in the Bodines Casino in Carson City, Nevada since January 2007. Mr. Pegram has more than thirty years of experience owning and operating twenty-five successful McDonald's franchises. Mr. Pegram currently serves as Chairman of the Thoroughbred Owners of California and has been the owner of a number of racehorses, including 1998 Kentucky Derby and Preakness Stakes winner, Real Quiet, 2010 Preakness Stakes winner, Lookin at Lucky, 1998 Breeders' Cup Juvenile Fillies winner and 1999 Kentucky Oaks winner, Silverbulletday, 2001 Dubai World Cup winner, Captain Steve, and the 2007 and 2008 Breeders' Cup Sprint winner, Midnight Lute. Additionally, Mr. Pegram has served as a director of Skagit State Bancorp since 1996. Mr. Pegram has been selected to serve as a director because of his extensive experience in the horse racing industry and as an investor, business owner, and director of various companies. David P. Tomick, 63, has served as a director of the Company since September 2014. Mr. Tomick is the chair of the Audit Committee and a member of the Nominating and Governance Committee of the board of directors of the Company. Mr. Tomick co-founded Securus, Inc., a company involved in the GPS monitoring and Personal Emergency Response business, and served as its Chief Financial Officer from 2008 to 2010 and as its Chairman from 2010 to March 2015. From 1997 to 2004 Mr. Tomick was Executive Vice President and Chief Financial Officer of SpectraSite, Inc., a NYSE-listed, wireless tower company. Mr. Tomick was, from 1994 to 1997, the Chief Financial Officer of Masada Security, a company involved in the security monitoring business and, from 1988 to 1994, the Vice President-Finance of Falcon Cable TV, where he was responsible for debt management, mergers and acquisitions, equity origination and investor Table of Contents relations. Prior to 1988, he managed a team of corporate finance professionals focusing on the communications industry for The First National Bank of Chicago. Mr. Tomick has served on the board of directors of the following organizations: Autocam Corporation, Autocam Medical, First Choice Packaging, NuLink Digital and TransLoc, Inc. Mr. Tomick received his bachelor's degree from Denison University and a masters of business administration from The Kellogg School of Management at Northwestern University. Mr. Tomick has been selected to serve as a director because of his financial and management expertise and his extensive experience with respect to raising capital, mergers and acquisitions, corporate governance and investor relations. Roger P. Wagner, 67, has served as a director of the Company since September 2014 and was a member of the board of directors of MTR Gaming Group, Inc. ("MTR") from July 2010 to September 2014. Mr. Wagner is the chair of the Compensation Committee and a member of the Nominating and Governance Committee of the board of directors of the Company. Mr. Wagner has over forty years of experience in the gaming and hotel management industry. Mr. Wagner was a founding partner of House Advantage, LLC, a gaming consulting group that focuses on assisting gaming companies in improving market share and bottom line profits. Mr. Wagner served as Chief Operating Officer for Binion Enterprises LLC from 2008 to 2010, assisting Jack Binion in identifying gaming opportunities. From 2005 to 2007, Mr. Wagner served as Chief Operating Officer of Resorts International Holdings. Mr. Wagner served as President of Horseshoe Gaming Holding Corp. from 2001 until its sale in 2004 and as its Senior Vice President and Chief Operating Officer from 1998 to 2001. Prior to joining Horseshoe, Mr. Wagner served as President of the development company for Trump Hotels & Casino Resorts from 1996 to 1998, President and Chief Operating Officer of Trump Castle Casino Resort from 1991 to 1996 and President and Chief Operating Officer of Claridge Casino Hotel from 1983 to 1991. Prior to his employment by Claridge Casino Hotel, he was employed in various capacities by the Edgewater Hotel Casino, Sands Hotel Casino, MGM Grand Casino Reno, Frontier Hotel Casino and Dunes Hotel Casino. Mr. Wagner holds a Bachelor of Science from the University of Nevada Las Vegas in Hotel Administration. Mr. Wagner has been selected to serve as a director because of his extensive experience in the gaming and hospitality industry and because of his familiarity with the business of MTR. Corporate governance For a director to be considered independent, the director must meet the bright-line independence standards under the listing standards of The NASDAQ Stock Market, Inc. ("NASDAQ") and the Board must affirmatively determine that the director has no material relationship with us, directly, or as a partner, stockholder or officer of an organization that has a relationship with us. The Board determines director independence based on an analysis of the independence requirements of the NASDAQ listing standards. In addition, the Board will consider all relevant facts and circumstances in making an independence determination. The Board also considers all commercial, industrial, banking, consulting, legal, accounting, charitable, familial or other business relationships any director may have with us. The Board has determined that the following five directors satisfy the independence requirements of NASDAQ: Frank J. Fahrenkopf Jr., James B. Hawkins, Michael E. Pegram, David P. Tomick, Roger P. Wagner. The Board held two (2) meetings and acted one (1) time by written consent during the fiscal year ended December 31, 2014. Each current director attended at least 75% of the aggregate number of all meetings of the Board of Directors and committees of which he was a member (from the time of the appointment to such committee) during such year. Table of Contents Audit committee The Audit Committee of the Board of Directors was established by the Board in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to oversee the Company's corporate accounting and financial reporting processes and audits of its financial statements. Messrs. Hawkins, Pegram, and Tomick, all of whom are independent directors, make up the Board's Audit Committee. Mr. Tomick is Chairperson of the Audit Committee. During the fiscal year ended December 31, 2014, the Audit Committee met one (1) time. The Audit Committee's responsibilities are discussed in a written charter adopted by the Board of Directors. The Audit Committee charter is available on our Internet website at www.eldoradoresorts.com under "Corporate Governance Committee Charting." Our website and information contained on it or incorporated in it are not intended to be incorporated in this prospectus or our other filings with the Securities and Exchange Commission. Compensation committee Messrs. Hawkins, Pegram, and Wagner, all of whom are independent directors, make up the Board's Compensation Committee (and meet the NASDAQ independence requirements with respect to Compensation Committee members). Mr. Wagner serves as Chairperson of the Compensation Committee. The Compensation Committee's responsibilities are discussed in a written charter adopted by the Board of Directors. The Compensation Committee charter is available on our Internet website at www.eldoradoresorts.com under "Corporate Governance Committee Charting." The Compensation Committee makes recommendations with respect to salaries, bonuses, restricted stock, and deferred compensation for the Company's executive officers as well as the policies underlying the methods by which the Company compensates its executives. During the fiscal year ended December 31, 2014, the Compensation Committee held two (2) meetings. Except as otherwise delegated by the Board of Directors or the Compensation Committee, the Compensation Committee acts on behalf of the Board with respect to compensation matters. The Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated Committee members to perform certain of its duties on its behalf, including, to the extent permitted by applicable law, the delegation to a subcommittee of one director the authority to grant stock options and equity awards. The Compensation Committee reviews the recommendations of the Company's CEO with respect to individual elements of the total compensation of the Company's executive officers (other than the CEO) and key management. Compensation policies and risk management. It is the responsibility of the Compensation Committee to ensure that the Company's policies and practices related to compensation do not encourage excessive risk-taking behavior. The Company believes that any risks arising from its current compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. As described in the section entitled "Compensation Discussion and Analysis" below, the Company is developing future compensation policies with the objective of ensuring that management incentives promote disciplined, sustainable achievement of the Company's long-term goals. Nominating and governance committee The Nominating and Governance Committee of the Company currently includes independent directors Messrs. Fahrenkopf Jr., Tomick, and Wagner, with Mr. Fahrenkopf Jr. as Chairperson. The Nominating and Governance Committee's responsibilities are discussed in a written charter adopted by the Board of Directors. The Nominating and Governance Committee charter is available on our Internet website at www.eldoradoresorts.com under "Corporate Governance Committee Charting." Our Board of Directors has determined that each of the members of the Nominating and Governance Committee is "independent" within the meaning of the general independence standards in the listing standards of NASDAQ. The Nominating and Governance Committee (which was established in September 2014), did not meet during Table of Contents 2014. The primary purposes and responsibilities of the Nominating and Governance Committee are to (1) identify and vet individuals qualified to become directors, consistent with the criteria approved by our Board of Directors set forth in the Nominating and Governance Committee Charter, (2) nominate qualified individuals for election to the Board of Directors at the next annual meeting of stockholders, and (3) in consultation with the Chairperson of the Board, review the operational relationship of the various committees of the Board as set forth in the Nominating and Governance Committee Charter. Director Candidate recommendations and nominations by stockholders. The Nominating and Governance Committee's Charter provides that the Nominating and Governance Committee will consider director candidate nominations by stockholders. In evaluating nominations received from stockholders, the Nominating and Governance Committee will apply the same criteria and follow the same process set forth in the Nominating and Governance Committee Charter as it would with its own nominations. Nominating and governance committee process for identifying and evaluating director candidates. The Nominating and Governance Committee identifies and evaluates all director candidates in accordance with the director qualification standards described in the Nominating and Governance Committee Charter. In identifying candidates, the Nominating and Governance Committee has the authority to engage and terminate any third-party search firm that is used to identify director candidates and has the authority to approve the fees and retention terms of any search firm. The Nominating and Governance Committee evaluates any candidate's qualifications to serve as a member of our Board based on the totality of the merits of the candidate and not based on minimum qualifications or attributes. In evaluating a candidate, the Nominating and Governance Committee takes into account the background and expertise of individual Board members as well as the background and expertise of our Board as a whole. In addition, the Nominating and Governance Committee evaluates a candidate's independence and his or her background and expertise in the context of our Board's needs. The Nominating and Governance Committee Charter requires that the Nominating and Governance Committee ascertain that each nominee has: (i) demonstrated business and industry experience that is relevant to the Company; (ii) the ability to meet the suitability requirements of all relevant regulatory agencies; (iii) freedom from potential conflicts of interest with the Company and independence from management with respect to independent director nominees; (iv) the ability to represent the interests of stockholders; (v) the ability to demonstrate a reasonable level of financial literacy; (vi) the availability to work with the Company and dedicate sufficient time and energy to his or her board duties; (vii) an established reputation for good character, honesty, integrity, prudent business skills, leadership abilities as well as moral and ethical bearing; and (viii) the ability to work constructively with the Company's other directors and management. The Nominating and Governance Committee may also take into consideration whether a candidate's background and skills meet any specific needs of the Board that the Nominating and Governance Committee has identified and will take into account diversity in professional and personal experience, background, skills, race, gender and other factors of diversity that it considers relevant to the needs of the Board. Compliance committee As a publicly traded corporation registered with and licensed by the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Louisiana Gaming Control Board, the West Virginia Lottery Commission, the West Virginia Racing Commission, the Pennsylvania Gaming Control Board, the Pennsylvania Racing Commission, the Ohio Lottery Commission, and the Ohio State Racing Commission, the Company has a Compliance Committee which implements and administers the Company's Compliance Plan. The Committee's duties include investigating key employees, vendors of goods and services, sources of financing, consultants, lobbyists and others who wish to do substantial business with the Company or its subsidiaries and making recommendations to the Company's management concerning suitability. The Table of Contents Compliance Committee of the Company currently includes independent directors Messrs. Fahrenkopf Jr. and Pegram, and non-director members A.J. "Bud" Hicks (who serves as the chairperson), Anthony Carano and Vincent Azzarello. The Compliance Committee held one (1) meeting in 2014. Compensation committee interlocks and insider participation The current members of the Company's Compensation Committee are Messrs. Hawkins, Pegram, and Wagner, each of whom is an independent director. No member of the Compensation Committee (i) was, during 2014, or had previously been an officer or employee of the Company or its subsidiaries nor (ii) had any direct or indirect material interest in a transaction of the Company or a business relationship with the Company, in each case that would require disclosure under the applicable rules of the SEC. No interlocking relationship existed between any member of the Compensation Committee or an executive officer of the Company, on the one hand, and any member of the compensation committee (or committee performing equivalent functions, or the full board of directors) or an executive officer of any other entity, on the other hand, requiring disclosure pursuant to the applicable rules of the SEC. The Compensation Committee is authorized to review all compensation matters involving directors and executive officers and Committee approval is required for any compensation to be paid to executive officers or directors who are employees of the Company. Stockholder communications Stockholders may communicate with the Board of Directors by sending written correspondence to the Chairman of the Nominating and Governance Committee at the following address: Eldorado Resorts, Inc., 100 West Liberty St., Suite 1150, Reno, NV 89501, Attention: Corporate Secretary. The Chairman of the Nominating and Governance Committee and his or her duly authorized representatives shall be responsible for collecting and organizing stockholder communications. Absent a conflict of interest, the Corporate Secretary is responsible for evaluating the materiality of each stockholder communication and determining whether further distribution is appropriate, and, if so, whether to (i) the full Board, (ii) one or more Board members and/or (iii) other individuals or entities. Board leadership structure and risk oversight The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, since the Board believes it is in the best interests of the Company and its stockholders to make that determination based on the position and direction of the Company and the composition of the Board. The Company believes this structure facilitates independent oversight of management while fostering effective communication between the Company's management and the Board. The roles of Chief Executive Officer and Chairman of the Board are currently combined and held by Mr. Gary L. Carano. The Company's senior management is responsible for the day-to-day assessment and management of the Company's risks, and our Board is responsible for oversight of the Company's enterprise risk management in general. The risks facing our Company include risks associated with the Company's financial condition, liquidity, operating performance, ability to meet its debt obligations and regulations applicable to our operations and compliance therewith. The Board's oversight is primarily managed and coordinated through Board Committees. Our Audit Committee oversees the Company's risk management with respect to significant financial and accounting policies as well as the effectiveness of management's processes that monitor and manage key business risks, and the Compliance Committee is responsible for overseeing risks associated with the Company's gaming activities and regulatory compliance. Additionally, the Compensation Committee oversees risks related to compensation policies. The Audit, Compensation and Compliance Committees report their findings to the full Board. In addition, at its meetings, the Board discusses risks Table of Contents that the Company faces, including those management has highlighted as the most relevant risks to the Company. Furthermore, the Board's oversight of enterprise risk involves assessment of the risk inherent in the Company's long-term strategies reviewed by the Board, as well as other matters brought to the attention of the Board. We believe that the structure and experience of our Board allows our directors to provide effective oversight of risk management. The Board recognizes that it is the Company's and its management's responsibility to identify and attempt to mitigate risks that could cause significant damage to the Company's business or stockholder value. Stock ownership guidelines Effective January 1, 2015, the Company adopted minimum stock ownership guidelines for its named executive officers, or NEOs. These stock ownership guidelines require that the chief executive officer of the Company hold common stock with a minimum value equal to three times the chief executive officer's annual base salary, and that all other NEOs hold common stock with a minimum value equal to one times each respective NEO's annual base salary. NEOs have five years from implementation of the stock ownership guidelines or promotion to a new role to achieve their minimum stock ownership and once achieved, the Board expects the NEOs to maintain their stated guideline for as long as they are subject to the guideline. Also effective January 1, 2015, the Company adopted minimum stock ownership guidelines for its non-employee directors. The stock ownership guideline requires the holding of Company stock with a minimum value equal to five times such director's annual base retainer fee. Prior to achievement of the guideline, RSU grants will vest immediately; however, payment will be mandatorily deferred until termination of Board service. After guideline achievement, Restricted Stock Unit ("RSU") grants will continue to vest immediately. Payment will also be immediate unless the director makes a timely voluntary election to defer payment until termination of Board service. Non-employee directors have five years to achieve their minimum stock ownership and once achieved, the Board expects non-employee directors to maintain their stated guideline for as long as they are subject to the guideline. During 2014 no equity awards were issued to directors. Audit committee financial expert The Securities and Exchange Commission adopted a rule requiring disclosure concerning the presence of at least one "audit committee financial expert" on audit committees. Our Board has determined that Mr. Tomick qualifies as an "audit committee financial expert" as defined by the Securities and Exchange Commission and that Mr. Tomick is independent, as independence for Audit Committee members is defined pursuant to the applicable NASDAQ listing requirements. Code of ethics and business conduct We have adopted a code of ethics and business conduct applicable to all directors and employees, including the chief executive officer, chief financial officer and principal accounting officer. The code of ethics and business conduct is posted on our website, http://www.eldoradoresorts.com (accessible through the "Corporate Governance" caption of the Investor Relations page) and a printed copy will be delivered on request by writing to the corporate secretary at Eldorado Resorts, Inc., c/o corporate secretary, 100 West Liberty Street, Suite 1150, Reno, NV 89501. We intend to satisfy the disclosure requirement regarding certain amendments to, or waivers from, provisions of its code of ethics and business conduct by posting such information on our website. Table of Contents Compensation committee interlocks and insider participation None of the members of the Compensation Committee has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company's named executive officers (as set forth under "Executive Compensation") has ever served as a director or member of the Compensation Committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served in either of those capacities for the Company. Table of Contents Executive compensation This section describes the material components of our executive pay programs for our named executive officers from September 19, 2014, the effective date of the Merger, through December 31, 2014, the end of the Company's fiscal year (the "Post-Merger Period"), whose compensation is set forth in the tables following this discussion in accordance with SEC rules. We have included certain information in this section for periods subsequent to December 31, 2014 that we believe may be useful for a complete understanding of our executive compensation arrangements. This section will provide you with an overview and explanation of: our compensation programs and policies for certain of our named executive officers identified below; the material compensation decisions made by the Compensation Committee of the Board (the "Compensation Committee") under those programs and policies; and the material factors that the Compensation Committee considered in making those decisions. Our named executive officers Gary L. Carano, Chief Executive Officer and Chairman of the Board Robert M. Jones, Chief Financial Officer Thomas R. Reeg, President Joseph L. Billhimer, Jr., Chief Operating Officer Anthony L. Carano, General Counsel Our compensation strategy Our executive compensation program is designed to attract, motivate and retain critical executive talent, and to motivate behaviors that drive profitable growth and the enhancement of long-term value for our stockholders. Our program includes base salary and performance-based incentives (including both cash and equity opportunities) and is designed to be flexible, market competitive, reward achievement of difficult but fair performance criteria, and enhance stock ownership at the executive level. Our philosophy is that concise, distinct and attainable goals should be established in order to enable the assessment of performance by the Compensation Committee. Pursuant to that philosophy, the Compensation Committee is guided by the general principles that compensation should be designed to: enhance stockholder value by focusing our executives' efforts on the specific performance metrics that drive enterprise value; attract, motivate, and retain highly-qualified executives committed to our long-term success; assure that the Company's executives receive fair compensation opportunities relative to their peers at similar companies, and fair actual compensation relative to Company performance; and align critical decision making with the Company's business strategy and goal setting. Table of Contents The following table summarizes key elements of our executive compensation program going forward: How we determine compensation Role of the compensation committee The Compensation Committee's primary role is to discharge the Board's responsibilities regarding compensation policies relating to our named executive officers. The Compensation Committee consists of Table of Contents independent directors and is responsible to our Board for the oversight of our executive compensation programs. Among its duties, the Compensation Committee is responsible for: review and assessment of competitive market data from the independent compensation consultant; review and approval of incentive goals/objectives and compensation recommendations for Directors and above, including the named executive officers; evaluation of the competitiveness of each named executive officer's total compensation package; approval of any changes to the total compensation package including, but not limited to, salary, annual incentives, long-term incentive award opportunities and payouts, and retention programs; ensuring the Company's policies and practices relating to compensation do not encourage excessive risk-taking conduct. Following review and discussion, the Compensation Committee submits recommendations to the Board for approval. The Compensation Committee is supported in its work by the Chief Financial Officer and staff, and Aon Hewitt, its independent executive compensation consultant (the "Compensation Consultant"). Based on the foregoing considerations, the Compensation Committee made the following executive compensation decisions: approved new employment agreements for the named executive officers, as recommended by Aon Hewitt; adopted a new annual incentive plan and long-term incentives, in each case, as recommended by Aon Hewitt, and consistent with the previous MTR Gaming structure; considered terms for a new equity incentive plan, the final version of which was approved by our shareholders on June 23, 2015. These compensation programs and determinations are discussed in greater detail below. Role of the independent compensation consultant The Compensation Committee retained Aon Hewitt for independent executive compensation advisory services, namely, to conduct its annual total compensation study for executive and key manager positions. Aon Hewitt reports directly to the Compensation Committee and the Compensation Committee directly oversees the fees paid for the services provided. The Compensation Committee instructs Aon Hewitt to give advice to the Compensation Committee independent of management and to provide such advice for the benefit of our Company and stockholders. With the Compensation Committee's approval, Aon Hewitt may work directly with management on executive compensation matters. Aon Hewitt did not perform any other consulting services for the Company during the Post-Merger Period in 2014, and their services to the Compensation Committee did not raise any conflicts of interests between the Compensation Committee, the Company, and management. Specific roles of the Compensation Consultant include, but are not limited to, the following: identify and advise the Compensation Committee on executive compensation trends and regulatory developments; provide a total compensation study for executives against peer companies and recommendations for named executive officer pay; Table of Contents provide advice to the Compensation Committee on governance best practices as well as any other areas of concern or risk; serve as a resource to the Compensation Committee Chair for meeting agendas and supporting materials in advance of each meeting; and advise the Compensation Committee on management's pay recommendations. Role of management in compensation decisions The CEO makes recommendations to the Compensation Committee concerning the compensation of the other named executive officers and other senior management. In addition, the CEO and CFO are involved in setting the business goals that are used as the performance goals for the annual incentive plan and long-term performance units, subject to the Compensation Committee's approval. The CEO and CFO work closely with the Compensation Committee, Aon Hewitt and management to (i) ensure that the Compensation Committee is provided with the appropriate information to make its decisions, (ii) propose recommendations for the Compensation Committee's consideration and (iii) communicate those decisions to management for implementation. None of the named executive officers, however, play a role in determining their own compensation and are not present at executive sessions in which their pay is discussed. Determination of CEO pay In an executive session without management present, the Compensation Committee reviews and evaluates CEO compensation. The Compensation Committee reviews competitive market data, and both corporate financial performance and individual performance. Pay recommendations for the CEO, including salary, incentive payments for the previous year, and equity grants for the current year, are presented to the independent members of the Board. During an executive session of the Board, the Board conducts its own review and evaluation of the CEO's performance. Peer companies and competitive benchmarking As previously noted, the Compensation Committee commissioned Aon Hewitt to conduct an annual total compensation study for executive and key manager positions. The Compensation Committee reviewed competitive market data to gain a comprehensive understanding of market pay practices, and combined that information with the discretion to consider experience, tenure, position, and individual contributions to assist with individual pay decisions (i.e., salary adjustments, target bonus, and long-term incentive grants). Table of Contents For conducting a competitive assessment of the compensation levels of each of its named executives in fiscal year 2014, the Compensation Committee approved a peer group of fourteen companies, as follows: Elements of our compensation program The executive officer compensation program consists of three key elements: (1) base salary, (2) annual incentives (bonus plan), and (3) long-term incentives. Base salaries are intended to compete for and retain quality executives and to compensate the named executive officers for their day-to-day services to the Company. Annual incentive compensation is designed to motivate the executive officers to achieve shorter-term company-wide and individual performance goals. Long-term equity-based awards are designed to encourage the achievement of longer-term performance goals and create an ownership culture focused on long-term value creation for our stockholders. The Company also provides executives with access to retirement and health and welfare programs, on the same terms and conditions as those made to salaried employees generally. The Company's targeted pay mix (salary vs. performance-based incentive pay) reflects a combination of competitive market conditions and strategic business needs. The degree of performance-based incentive pay ("at risk" compensation) and total compensation opportunities increase with an executive's responsibility level. Competitive pay practices are reviewed annually by the Compensation Committee. Base salary Base salaries are designed to recognize the skill, competency, experience and performance an executive brings to his or her position. The Compensation Committee determines base salaries using both competitive market data from Aon Hewitt's annual study and a comprehensive assessment of relevant factors such as experience level, value to stockholders, responsibilities, future leadership potential, critical skills, individual contributions and performance, economic conditions, and the market demands for similar talent. The following table summarizes the Compensation Committee's salary decisions starting in 2014. Table of Contents Annual incentives (bonus plan) Consistent with the Compensation Committee's primary objective to enhance the performance orientation of the Company's incentive programs, the Compensation Committee worked closely with Aon Hewitt to develop and approve a formal annual incentive compensation structure, starting in 2015. The aims of the new annual incentive plan are to be straight-forward, enhance the understanding of what needs to get done, focus on clearly measurable metrics, balance corporate and property performance by individual participants, and implement the appropriate level of upside/downside reward potential. For 2015, under our annual incentive plan, our named executive officers have the opportunity to earn annual cash incentives based on the attainment of critical performance criteria. Performance targets are set annually at the start of the fiscal year. In 2015, after a thorough review of internal equity and the recommendations of Aon Hewitt, the Compensation Committee maintained individual target award opportunities for the named executive officers that were based on a percentage of each named executive officer's base salary as follows: Awards are based on achievement of performance criteria, consisting of both financial (80%) and discretionary (20%) components. The annual incentive plan for the named executive officers is structured to measure Adjusted EBITDA (80% of the target award opportunity) and key individual performance objectives (20% of the target award opportunity). Adjusted EBITDA was utilized as a metric because the Compensation Committee believed that it reflects the results of operations of the Company and represents the dominant performance metric in the gaming/casino industry. Adjusted EBITDA was utilized as a performance metric by 12 of the 14 industry peers that disclosed their annual incentive performance metric. Individual goals were used because they are critical drivers of the Company's financial success. The goals are customized to each named executive officer and provide the Compensation Committee with a mechanism to gauge individual performance achievement on metrics within each named executive officer's direct control. Table of Contents The details of the financial and performance criteria are discussed in turn below: Adjusted EBITDA (80% of the target award opportunity): With respect to the financial component, performance requirements for threshold and maximum bonus opportunities are 90% to 120% of target and payout opportunities are 50% to 200% of target, depending on actual performance achievement (payouts for performance between points is interpolated on a straight-line basis). Key individual performance criteria (20% of the target award opportunity): With respect to the discretionary component, the plan allows management to align 20% of annual incentive opportunities to performance criteria specific to the individual, the property, and/or corporate entity. Key performance criteria are identified at the beginning of the year. Performance is assessed at year-end by management and reviewed with the Compensation Committee. The Company is not obligated to pay out this pool unless management and the Compensation Committee agree that payments are warranted. The range of potential payments will be the same as the financial component (i.e., 50% to 200% of target). Discretionary performance criteria may include, but is not limited to, the following: customer satisfaction, employee satisfaction, export of play to other Company properties, and property appearance. Long-term incentives Under the Eldorado Resorts, Inc. 2015 Equity Incentive Plan (the "Plan"), the Company intends to grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, other stock-based awards, and performance compensation awards. Primary objectives The Compensation Committee and management worked closely with Aon Hewitt to create the performance orientation of the Company's executive compensation programs. The primary objectives were to design incentive programs that: support the Company's strategic business plan; enhance the alignment of management behaviors with stockholder value; address important executive retention issues; and provide the compensation tools necessary for the company to attract critical talent. In designing the long-term incentive arrangements, the Compensation Committee also considered MTR Gaming's long-term incentive structure. For 2015, the Compensation Committee granted long-term incentive awards with (i) 50% of the equity grants in the form of restricted stock units (RSUs) with three-year cliff vesting and (ii) 50% in the form of performance RSUs. The performance units will be subject to a one-year performance period, with a two-year additional vesting requirement for a total of three years from grant date to vesting/payment date. The participants' payment values after three years are dependent on one-year Adjusted EBITDA performance and two additional years of stock price performance. Performance units will be paid as follows: 50% of target will be earned at threshold performance, 100% of target will be earned at target performance, and 200% of target will be earned at maximum performance. No award is earned if Table of Contents performance falls below the threshold. Please see the "New Plan Benefits" section below for more information on the grants that each named executive officer received in 2015. Employment agreements In order to provide continuity and stability in leadership following the Merger, the Company entered into employment agreements with each of the named executive officers. Please see "Potential Payments Upon Termination or Change in Control" for more information on the amounts that each named executive officer is entitled to in the event that his employment is terminated. Other compensation Retirement and benefit programs The named executive officers were eligible to participate in various benefit plans including, 401(k), health insurance and life insurance plans that are generally available to all employees. The 401(k) plan provides for a company match, which for all of the named executive officers, except Mr. Billhimer, was 25% of the first 4% of permitted employee contributions to the plan during 2014. During 2014, Mr. Billhimer received a company match of 50% of the first 4% of permitted employee contributions to the plan. Long-term disability insurance was provided to Joseph L. Billhimer which would entitle Mr. Billhimer to receive 60% of his base salary from the date of his termination until the date he reaches age 65. Life insurance was also provided to the named executive officers for a total of $50,000, except Joseph L. Billhimer who was provided life insurance at two times salary. Perquisites It is the Company's intent to continually assess business needs and evolving market practices to ensure that perquisite offerings are competitive and in the best interest of our stockholders. During 2014, the Company provided perquisites to executives that consisted of club membership, a modest auto allowance and reimbursement for temporary housing and relocation. For more information on these perquisites, see the footnotes to the Summary Compensation Table. Effective with the Merger, the named executive officer contracts provide for perquisites consisting of financial planning and tax preparation fees ranging from $6,750 to $10,000 and an annual executive physical of up to $3,000. Table of Contents Equity grant practices Under the Company's insider trading policy, named executive officers, other employees with access to material non-public information about the Company and directors are always prohibited from engaging in transactions in the Company's securities when in possession of material non-public information and are otherwise restricted from engaging in transactions in the Company's securities during black-out periods. The Compensation Committee's policy with respect to equity grants is consistent with the Company's insider trading policy. We have a policy that prohibits all directors, officers, and employees of the Company and its other controlled businesses from entering into short sales of the securities of the Company and its other controlled businesses, and buying or selling exchange-traded options (puts or calls) on the securities of the Company and its other controlled businesses. Compensation risk assessment It is the responsibility of the Compensation Committee to ensure that the Company's policies and practices related to compensation do not encourage excessive risk-taking behavior. The Compensation Committee has worked closely with Aon Hewitt to design a performance-based compensation system that supports the Company's objective to align stockholder and management interests, supports the Company's strategic business plan, and mitigates the possibility of executives taking unnecessary or excessive risks that would adversely impact the Company. The following factors mitigate the risk associated with our compensation programs: The Board approves short- and long-term performance objectives for our incentive plans, which we believe are appropriately correlated with stockholder value and use multiple metrics to measure performance; The Compensation Committee's discretion to amend final payouts of both short- and long-term incentive plans; The use of company-wide performance metrics for both the short-and long-term incentive programs ensure that no single executive has complete and direct influence over outcomes, encouraging decision making that is in the best long-term interest of stockholders; The use of equity and cash opportunities with vesting periods to foster retention and alignment of our executives' interests with those of our stockholders; Capping the potential payouts under both the short- and long-term incentive plans to eliminate the potential for any windfalls; and The use of competitive general and change-in-control severance programs help to ensure that executives continue to work towards the stockholders' best interests in light of potential employment uncertainty. Adjusted EBITDA is a non-GAAP financial measure. A reconciliation to the GAAP measures and other information can be found at footnote (f) under " Summary historical consolidated financial information" elsewhere in this prospectus. Tax and accounting treatment of compensation Under Section 162(m) of the Code, a public company generally may not deduct compensation in excess of $1.0 million paid to any of the named executive officers (other than the Chief Financial Officer); however, the statute exempts qualifying performance-based compensation from the deduction limit when specified requirements are met. In general, we strive to design programs that qualify for this exemption, however, the Compensation Committee may not necessarily limit executive compensation to the amount deductible under Section 162(m) of the Code. In certain situations, the Compensation Committee may approve compensation that will not be deductible in order to ensure competitive levels of total compensation for the named executive officers or for other reasons. Table of Contents Summary compensation table The following table summarizes the total compensation paid to or earned by each of the named executive officers of the Company for the fiscal year ended December 31, 2014. Total compensation paid to or earned by listed named executive officers of the Company under their capacity as employees of Resorts or MTR, as applicable, during the years ended December 31, 2014, 2013 and 2012 are also included. Following the Merger Date, each of the named executive officers of the Company has also served as a named executive officer of Resorts and MTR. The compensation reported in the table below for 2014 reflects the total compensation that the applicable named executive officer received in the periods presented below for services performed for serving as a named executive officer of each of the Company, Resorts and MTR. Name and principal position Year Salary Bonus Stock awards(6) Option awards(6) Non-equity incentive plan compensation All other compensation(3) Total Gary L. Carano(1) 2014 $ 251,539 $ 200,000 (2) $ $ $ $ 3,747 $ 455,286 Chief Executive Officer 2013 2012 Robert M. Jones 2014 $ 393,558 $ 250,000 (2) $ $ $ $ 17,054 $ 660,612 Chief Financial Officer 2013 359,615 24,074 383,689 2012 350,000 24,649 374,649 Thomas R. Reeg 2014 $ 427,423 $ 1,725,000 (2) $ $ $ $ 30,970 $ 2,183,393 President 2013 364,000 100,000 (4) 12,889 476,889 2012 364,000 100,000 8,224 472,224 Joseph L. Billhimer, Jr. 2014 $ 523,846 $ 100,000 (5) $ 156,748 $ $ 522,000 (7) $ 61,046 $ 1,363,641 Chief Operating Officer 2013 429,231 39,006 78,221 156,960 30,014 733,432 2012 340,000 46,116 90,267 511,006 13,171 1,000,560 Anthony L. Carano 2014 $ 127,088 $ 200,000 (2) $ $ $ $ (8) $ 327,088 2013 2012 (1) Prior to August 1, 2014, Mr. Gary L. Carano served as the President and Chief Operating Officer of Resorts and HoldCo and General Manager and Chief Executive Officer of Silver Legacy. Mr. Carano received no remuneration from Resorts or HoldCo for services provided prior to August 1, 2014. See "Transactions with Related Persons" for a discussion of remuneration received by Mr. Gary L. Carano in respect of his services as General Manager and Chief Executive Officer of Silver Legacy prior to August 1, 2014. (2) Represents bonus amounts paid to Mr. Gary L. Carano, Mr. Jones, Mr. Reeg and Mr. Anthony L. Carano in 2014 in conjunction with the Merger. (3) All other compensation for 2014 consists of the following: Name Insurance premiums and medical reimbursement 401(k) match Tax services Club memberships Travel reimbursement and relocation expenses Car allowance Gary L. Carano $ 1,860 $ 1,887 Robert M. Jones $ 3,476 $ 2,600 $ 2,270 $ 8,708 Thomas R. Reeg $ 1,309 $ 2,600 $ 27,061 Joseph L. Billhimer, Jr. $ 39,387 $ 2,059 $ 10,000 $ 9,600 (4) Represents a bonus payment to Mr. Reeg in 2013 by Silver Legacy in connection with its restructuring in 2012. (5) Bonus amount was paid upon completion of the Merger in accordance with the second amendment to the employment agreement, dated as of March 30, 2011, by and between MTR Gaming Group, Inc. and Joseph L. Billhimer. (6) The restricted stock unit ("RSU") awards and stock option awards represent the aggregate grant date fair value computed in accordance with ASC 718 Compensation Stock Compensation. The RSUs and stock options vested upon consummation of the Merger. (7) As to 2014, amount represents the annual incentive compensation (bonus plan) earned but not paid in 2014, and the vesting of cash-based performance awards granted in 2013 and 2014 that had previously not been reported as the amounts had not been earned. The 2014 cash-based performance awards granted in 2014 relate to the achievement of differing levels of performance and are measured by the level of the Company's corporate free cash flow over a two-year performance period, which is defined as calendar years 2014 and 2015. Once the performance awards are earned, they will vest and become payable at the end of the vesting period, which is defined as a one-calendar year following the performance period. The vesting of these cash-based performance awards was a result of the change-in-control provision triggered as a result of the Merger. (8) Mr. Anthony Carano received no other compensation payments in 2014. Table of Contents Grant of plan based awards table The following table sets forth information regarding the grant of Plan based awards made during 2014 to the named executive officers. All other stock awards: number of shares of stock or units (#) All other option awards: number of securities underlying options (#) Estimated future payouts under non-equity incentive plan awards Estimated future payouts under equity incentive plan awards Exercise or base price of option awards ($/Sh) Grant date fair value of stock and option awards(2) Name Grant date Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) Gary L. Carano $ $ $ $ Robert M. Jones $ $ $ $ Thomas R. Reeg $ $ $ $ Joseph L. Billhimer, Jr.(1) 1/24/2014 $ 78,750 $ 157,500 $ 315,000 $ 29,800 $ 156,748 Anthony L. Carano $ $ $ $ (1) On January 24, 2014, the Compensation Committee of MTR Gaming Group, Inc. approved the grant of a total of 29,800 RSUs with a fair value of $5.26 per unit, the NASDAQ official average price per share on that date. A cash-based performance award totaling $157,500 was granted to Mr. Billhimer on January 24, 2014. The RSUs and cash-based performance award vested in connection with the Merger. Narrative disclosure to summary compensation table and grants of plan-based awards table On September 29, 2014, the Company entered into employment agreements (each, an "Employment Agreement") with each of the named executive officers. The Employment Agreement between the Company and Gary Carano provides for a minimum annual base salary of $700,000, an annual incentive bonus opportunity with a target established at 80% of his base salary, and Gary L. Carano will be considered for long-term incentive awards equal to 90% of his base salary. The Employment Agreements between the Company and Thomas R. Reeg, Joseph L. Billhimer, Jr., Robert M. Jones, and Anthony L. Carano, provide for a minimum annual base salary of $550,000, $525,000, $400,000 and $300,000, respectively, an annual incentive bonus opportunity with a target established at 50% of the applicable executive's base salary, and each of the applicable executives will be considered for long-term incentive awards equal to 60% of the applicable executive's base salary. Each executive is entitled to three weeks paid vacation and reimbursement of certain expenses, including up to a maximum of $3,000 for an annual executive physical program and reasonable financial planning, estate planning and tax preparation fees up to an annual maximum of $10,000 for Gary Carano and up to an annual maximum of $6,750 for the other executives. Each Employment Agreement is for a term of three years, with automatic one year renewals unless a notice of non-renewal is provided by either party at least three months before the scheduled renewal date. If a "change of control" (as defined in the applicable Employment Agreement) occurs during the term of an Employment Agreement, the term of such Employment Agreement will be extended to the second year following such change of control, subject to automatic renewal for subsequent periods. In the event of a termination of Gary L. Carano's employment without "cause" or if Mr. Carano terminates his employment for "good reason" (each as defined in Mr. Carano's Employment Agreement), Mr. Carano would be entitled to receive (i) a lump-sum payment equal to 1.5 times the sum of his base salary and annual incentive award target, or 2.0 times such amount in the event of such a termination within two years following a change of control, (ii) lump-sum payment of a prorated portion of his actual annual incentive award, if any, or a prorated portion of his annual incentive award target in the event of such a termination within two years following a change of control, (iii) a lump-sum payment equal to 18 months of health benefits coverage, or 24 months if such a termination is within two years following a change of control, and (iv) outplacement services for no more than 18 months and in an amount not to exceed Table of Contents $15,000, or for no more than 24 months and in an amount not to exceed $20,000 if such a termination is within two years following a change of control. With respect to each of the other executives, in the event that the Company terminates the executive's employment without "cause" or if such other executive terminates his employment for "good reason" (each as defined in the applicable Employment Agreement), such executive would be entitled to receive (i) his Accrued Rights, (ii) (x) in the case of Messrs. Reeg, Jones, and A. Carano, a lump-sum payment equal to 1.0 times the sum of such executive's base salary and annual incentive award target (or 1.5 times such amount in the event of such a termination within two years following a change of control) and (y) in the case of Mr. Billhimer, continued payment of his base salary for a period of 12 months and a lump-sum payment equal to his annual incentive award at target (or 18 months of continued salary payments and a lump-sum payment equal to 1.5 times his annual incentive award at target in the event of such a termination within two years following a change of control), (iii) lump-sum payment of a prorated portion of such executive's actual annual incentive award for the calendar year that includes the date of the termination, if any, or a prorated portion of such executive's annual incentive award target in the event of such a termination within two years following a change of control, (iv) a lump-sum payment equal to 12 months of health benefits coverage (or 18 months if such a termination is within two years following a change of control), and (v) outplacement services for no more than 12 months and in an amount not to exceed $10,000 (or for no more than 18 months and in an amount not to exceed $15,000 if such a termination is within two years following a change of control). In addition, Mr. Billhimer will be eligible to receive the change in control severance benefits described above if his employment is terminated by the Company without cause or if he terminates his employment for good reason, in either case, on or before September 29, 2015. In recognition of the outstanding contributions and efforts of each of Mr. Gary L. Carano, Mr. Jones, Mr. Reeg, and Mr. Anthony L. Carano in connection with the Merger, the Company provided each executive with a discretionary cash bonus in the following respective amounts: $200,000, $250,000, $1,725,000, and $200,000. Mr. Billhimer received a bonus of $100,000 upon completion of the Merger in accordance with the terms of the second amendment to the employment agreement, dated as of March 30, 2011, by and between MTR Gaming Group, Inc. and Joseph L. Billhimer, Jr. Outstanding equity awards at fiscal year-end table As of December 31, 2014, none of the named executive officers, except as noted below, had any outstanding equity awards as no awards were issued after consummation of the Merger. Option awards Stock awards Name(2) Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards: number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested (#)(1) Market value shares or units of stock that have not vested (#) Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) Joseph L. Billhimer, Jr. 46,500 $ 2.78 5/4/2021 56,800 $ 2.44 1/27/2022 29,600 $ 3.94 1/25/2023 Table of Contents Option exercises and stock vested table Option awards Stock awards Name Number of shares acquired on exercise (#) Value realized on exercise ($) Number of shares acquired on vesting (#) Value realized on vesting ($) (a) (b) (c) (d) (e) Joseph L. Billhimer, Jr. 74,200 $ 337,910 Potential payments upon termination or change in control The following describes the severance provisions contained in the employment agreements of our named executive officers. In the event of the death of a named executive officer, his estate or his beneficiaries would be entitled to receive (i) unpaid salary, accrued and unused vacation, and unreimbursed business expenses through the date of termination (the "Accrued Rights") and (ii) lump-sum payment of a prorated portion of his annual incentive award, at target level. Upon a termination of employment due to disability, each of the named executive officers would be entitled to receive (i) his Accrued Rights, (ii) lump-sum payment of a prorated portion of his annual incentive award, at target level, and (iii) a lump-sum payment equal to 12 months of health benefits coverage. In the event of a termination of Mr. Gary L. Carano's employment without "cause" or if Mr. Carano terminates his employment for "good reason" (each as defined in Mr. Gary L. Carano's Employment Agreement), Mr. Carano would be entitled to receive (i) his Accrued Rights, (ii) a lump-sum payment equal to 1.5 times the sum of his base salary and annual incentive award target, or 2.0 times such amount in the event of such a termination within two years following a change of control, (iii) lump-sum payment of a prorated portion of his actual annual incentive award, if any, or a prorated portion of his annual incentive award target in the event of such a termination within two years following a change of control, (iv) a lump-sum payment equal to 18 months of health benefits coverage, or 24 months if such a termination is within two years following a change of control, and (v) outplacement services for no more than 18 months and in an amount not to exceed $15,000, or for no more than 24 months and in an amount not to exceed $20,000 if such a termination is within two years following a change of control. With respect to each of the other executives, in the event that the Company terminates the executive's employment without "cause" or if any other executive terminates his employment for "good reason" (each as defined in the applicable Employment Agreement), such executive would be entitled to receive (i) his Accrued Rights, (ii) (x) in the case of Messrs. Reeg, Jones, and A. Carano, a lump-sum payment equal to 1.0 times the sum of such executive's base salary and annual incentive award target (or 1.5 times such amount in the event of such a termination within two years following a change of control), and (y) in the case of Mr. Billhimer, continued payment of his base salary for a period of 12 months and a lump-sum payment equal to his annual incentive award target (or 18 months of continued salary payments and a lump-sum payment equal to 1.5 times his annual incentive award at target in the event of such a termination within two years following a change of control), (iii) lump-sum payment of a prorated portion of such executive's actual annual incentive award for the calendar year that includes the date of the termination, if any, or a prorated portion of such executive's annual incentive award target in the event of such a termination within two years following a change of control, (iv) a lump-sum payment equal to 12 months of health benefits coverage (or 18 months if such a termination is within two years following a change of control), Table of Contents and (v) outplacement services and for no more than 12 months and in an amount not to exceed $10,000 (or for no more than 18 months and in an amount not to exceed $15,000 if such a termination is within two years following a change of control). In addition, Mr. Billhimer will be eligible to receive the change in control severance benefits described above if his employment is terminated by the Company without cause or if he terminates his employment for good reason, in either case, on or before September 29, 2015. Potential payments upon termination or change in control table The following table describes and quantifies certain compensation that would become payable under existing agreements, plans and arrangements, with named executive officers, if employment was terminated on December 31, 2014, given compensation levels as of such date and, if applicable, based on the Company's closing stock price on that date. Name Compensation components Voluntary Involuntary with cause Involuntary without cause for good reason Death Disability Change in control(12) Change in control with termination Gary L. Carano Salary/Bonus $ (2) $ (2) $ 1,050,000 (3) $ 50,000 (9) $ (2) $ $ 1,400,000 (8) Other Benefits $ $ $ 19,220 (3) $ $ 2,813 (6) $ $ 25,627 (8) Options $ $ $ $ $ $ $ Restricted Stock Units $ $ $ $ $ $ $ Cash Awards $ $ $ $ $ $ $ TOTAL $ $ $ 1,069,220 $ 50,000 $ 2,813 $ $ 1,425,627 Robert M. Jones Salary/Bonus $ (2) $ (2) $ 400,000 (4) $ 50,000 (9) $ (2) $ $ 600,000 (7) Other Benefits $ $ $ 12,813 (4) $ $ 2,813 (6) $ $ 19,220 (7) Options $ $ $ $ $ $ $ Restricted Stock Units $ $ $ $ $ $ $ Cash Awards $ $ $ $ $ $ $ TOTAL $ $ $ 412,813 $ 50,000 $ 2,813 $ $ 619,220 Thomas R. Reeg Salary/Bonus $ (2) $ (2) $ 550,000 (4) $ 50,000 (9) $ (2) $ $ 825,000 (7) Other Benefits $ $ $ 18,908 (4) $ $ 8,908 (6) $ $ 28,362 (7) Options $ $ $ $ $ $ $ Restricted Stock Units $ $ $ $ $ $ $ Cash Awards $ $ $ $ $ $ $ TOTAL $ $ $ 568,908 $ 50,000 $ 8,908 $ $ 853,362 Joseph L. Billhimer, Jr. Salary/Bonus $ 330,288 (1) $ 330,288 (1) $ 855,288 (5) $ 330,288 (1) $ 330,288 (1) $ $ 1,117,788 (7) Other Benefits $ $ $ 25,303 (5) $ 1,050,000 (9) $ 15,303 (6) $ $ 37,955 (7) Options(10)(11) $ 419,559 $ $ 419,559 $ 419,559 $ 419,559 $ $ 419,559 Restricted Stock Units $ $ $ $ $ $ $ Cash Awards $ $ $ $ $ $ $ TOTAL $ 749,847 $ 330,288 $ 1,300,150 $ 1,799,847 $ 765,150 $ $ 1,575,302 Anthony L. Carano Salary/Bonus $ (2) $ (2) $ 300,000 (4) $ 50,000 (9) $ (2) $ $ 450,000 (7) Other Benefits $ $ $ 18,908 (4) $ $ 8,908 (6) $ $ 28,362 (7) Options $ $ $ $ $ $ $ Restricted Stock Units $ $ $ $ $ $ $ Cash Awards $ $ $ $ $ $ $ TOTAL $ $ $ 318,908 $ 50,000 $ 8,908 $ $ 478,362 (1) Amount represents (i) unpaid base salary, accrued and unused vacation, and unreimbursed business expenses through the date of termination (the "Accrued Rights") and (ii) the annual incentive award earned and approved to be paid with respect to completed fiscal period that preclude the date of termination but have not yet been paid, which was applicable for Mr. Billhimer based on his outstanding payments due under the former MTR annual incentive plan. (2) There were no Accrued Rights due as of December 31, 2014. (3) Amount represents (i) Accrued Rights, (ii) a lump-sum payment equal to 1.5 times executive's base salary, (iii) a lump-sum payment equal to 18 months of health benefits coverage, and (v) outplacement services for no more than 18 months in an amount not to exceed $15,000. Table of Contents (4) Amount represents (i) Accrued Rights, (ii) a lump-sum payment equal to 1.0 times the sum of such executive's base salary, (iii) a lump-sum payment equal to 12 months of health benefits coverage, and (iv) outplacement services for no more than 12 months and in an amount not to exceed $10,000. (5) Amount represents (i) Accrued Rights, (ii) the annual incentive award earned and approved to be paid with respect to completed fiscal period that preclude the date of termination but have not yet been paid, which was applicable for Mr. Billhimer based on his outstanding payments due under the former MTR annual incentive plan, (iii) continued payment of his base salary for a period of one year, (iv) a lump-sum payment equal to 12 months of health benefits coverage, and (v) outplacement services for no more than 12 months in an amount not to exceed $10,000. Mr. Billhimer will instead receive the change in control severance benefits described in footnote (7) below if his employment is terminated by the Company without cause or if he terminates his employment for good reason, in either case, on or before September 29, 2015. (6) Amount represents a lump-sum payment equal to 12 months of health benefits coverage. With respect to Mr. Billhimer, the above does not include his Long-Term Disability Payment amount he may be entitled to pursuant to a long-term disability policy that we maintain for his benefit. As disclosed in the Summary Compensation Table under "All Other Compensation", the Company pays an annual premium for such policy in an amount equal to $5,351. The policy entitles Mr. Billhimer to receive 60% of his base salary from the date of his termination until the date he reaches age 65. The Company is solely responsible for the premium and the insurance company is responsible for the continuation of the payments in the event Mr. Billhimer becomes disabled. (7) Amounts represent (i) Accrued Rights, (ii) lump-sum payment equal to 1.5 times executives base salary (or 18 months of continued base salary payments in the case of Mr. Billhimer), (iii) lump-sum payment equal to 18 months of health coverage, and (iv) outplacement services for no more than 18 months in an amount not to exceed $15,000, assuming the executive's employment was terminated by the Company without "cause" or by the executive with "good reason" as of December 31, 2014, and that a "change in control" (as defined in the employment agreements) occurred within two years prior to such termination. (8) Amounts represent (i) Accrued Rights, (ii) lump-sum payment equal to 2.0 times executives base salary, (iii) lump-sum payment equal to 24 months of health coverage, and (iv) outplacement services for no more than 24 months in an amount not to exceed $20,000, assuming Mr. Carano's employment was terminated by the Company without "cause" or by the executive with "good reason" as of December 31, 2014, and that a "change in control" (as defined in the employment agreement) occurred within two years prior to such termination. (9) Amount represents, in the event of death, a life insurance policy specified per the terms of the employment agreement or benefit policy as approved by the Compensation Committee. (10) Amount would represent in-the-money value of vested options to purchase common stock based on the closing market price of ERI's common stock on December 31, 2014, of $4.05. (11) For option awards issued pursuant to the former MTR long-term incentive plan, in the event that Mr. Billhimer's employment with ERI is terminated by reason of death or disability, Mr. Billhimer or in the case of death, his legal representative (as defined), may exercise the options granted to him, at any time within twelve months, but not thereafter and in no event after the date the award would otherwise have expired. If Mr. Billhimer's employment with the Company is terminated for reasons other than death or disability, Mr. Billhimer may exercise the options granted to him at any time within three months after termination, but not thereafter and in no event after the date the award would otherwise have expired. However, if such relationship is terminated either (a) for cause, or (b) without the consent of the Company, such exercisable options will terminate immediately. (12) "Change in Control" is generally defined as (i) an acquisition of more than 50% of the Company's common stock by an unaffiliated party, (ii) a majority change in the Board's composition that is not approved by existing directors, (iii) a merger or similar event where our shareholders cease to be the majority owners of the resulting entity or our Board ceases to constitute a majority of the resulting entity Board, or (iv) shareholder approval of a complete liquidation or dissolution of the Company. Director compensation During 2014, the Compensation Committee reviewed the compensation structure for the members of the Company's Board of Directors to ensure that the annual retainer stipend and committee fees represent a fair reimbursement for the level of work and responsibility assigned to different members of the board. Based on a study of the Company's peer competitor group (which is the same peer group that the Committee used with respect to the NEOs as we describe under "Peer Companies and Competitive Benchmarking"), the Compensation Committee established a target compensation level for its Board members that are equal to the median level paid its peers in the gaming industry. In addition, the Compensation Committee compared its recommended compensation practices for our Board members with a recent report published by the National Association of Corporate Directors (NACD). This study of proxy statements indicated that our compensation structure is reasonable and appropriate when compared with the median average board member compensation for the peer group. Additionally, in the Company's quest to ensure that director's interests are aligned with those of the Company's stockholders, effective January 1, 2015 at least half of each director's average annual base retainer fee will be comprised of restricted stock unit grants. Effective January 1, 2015, the Company adopted minimum stock ownership guidelines for its non-employee directors. The stock ownership guideline requires the holding of Company Common Stock with a minimum value equal to five times such director's annual base retainer fee. Prior to Table of Contents achievement of the guideline, RSU grants will vest immediately; however, payment will be mandatorily deferred until termination of Board service. After guideline achievement, Restricted Stock Unit ("RSU") grants will continue to vest immediately. Payment will also be immediate unless the director makes a timely voluntary election to defer payment until termination of Board service. Non-employee directors have five years to achieve their minimum stock ownership and once achieved, the Board expects non-employee directors to maintain their stated guideline for as long as they are subject to the guideline. During 2014 no equity awards were issued to directors. During 2014, the Company's non-employee directors received an all cash stipend of $31,250 that was commensurate with the time they served from their appointment to the Board upon the consummation of the Merger on September 19, 2014 through December 31, 2014. Additionally, in 2014, each Board member was paid a total of $3,750, except Mr. Tomick who was paid $6,250, for their service on their respective committees. Effective January 1, 2015, each Board committee member, except the committee chairman, is entitled to the following annual stipend: Audit Committee: $10,000; Compensation Committee: $5,000; Nominating and Governance Committee: $5,000; Compliance Committee: $5,000. Each Board committee chairman is entitled to the following annual stipend: Audit Committee: $20,000; Compensation Committee: $10,000; Nominating and Governance Committee: $10,000. The Compliance committee chair is a Board representative who is not entitled to compensation. We reimburse board members for expenses incurred in attending meetings. The following table sets forth the compensation of the Company's non-employee directors for services rendered in 2014. Directors who are also employees of the Company do not receive compensation (other than their compensation as employees of the Company) for their services on the Board. Name Fees earned or paid in cash ($) Stock awards ($)(1) Option awards ($)(1) Non-equity incentive plan compensation ($) Change in pension value and nonqualified deferred compensation earnings All other compensation ($) Total ($) Frank J. Fahrenkopf Jr. $ 35,000 $ 35,000 James B. Hawkins $ 35,000 $ 35,000 Michael E. Pegram $ 35,000 $ 35,000 David P. Tomick $ 37,500 $ 37,500 Roger P. Wagner $ 35,000 $ 35,000 (1) No stock awards or stock options were awarded to non-employee directors during 2014; non-employee directors did not have any stock awards or stock options outstanding as of December 31, 2014. Equity compensation plan information The following table sets forth information as of December 31, 2014 regarding shares of our common stock to be issued upon exercise and the weighted-average exercise price of all outstanding options, warrants Table of Contents and rights granted under the MTR Gaming Group, Inc. 2010 Long Term Incentive Plan (the "Existing Plan"), as well as the number of shares available for issuance under such plan. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (c) Equity compensation plans approved by security holders(1) 398,200 $ 7.88 1,747,759 Equity compensation plans not approved by security holders 0 0 0 (1) No future equity awards will be made pursuant to the Existing Plan. However, outstanding awards granted under the Existing Plan will continue unaffected after the Effective Date (as defined in the new Plan). The following table sets forth information as of April 24, 2015 regarding shares of the Common Stock to be issued upon exercise and the weighted-average exercise price of all outstanding options, warrants and rights granted only under the Existing Plan, as well as the number of shares available for issuance under such plan. Please see the "New Plan Benefits" section for information on the grants made under the new Plan. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (c) Equity compensation plans approved by security holders(1) 272,200 $ 5.68 1,873,759 Equity compensation plans not approved by security holders 0 0 0 (1) No future equity awards will be made pursuant to the Existing Plan. However, outstanding awards granted under the Existing Plan will continue unaffected after the Effective Date. Table of Contents New plan benefits The following reflects time-based restricted stock unit grants made under the Plan in January 2015. All future awards to directors, executive officers, and employees will be made at the discretion of the Compensation Committee. Therefore, we cannot determine future benefits for any other awards under the Plan at this time. Name and position Number of units(1) Gary L. Carano, Chairman of the Board and Chief Executive Officer 75,517 Thomas R. Reeg, President 39,556 Robert M. Jones, Chief Financial Officer 28,768 Joseph L. Billhimer, Chief Operating Officer 37,758 Anthony L. Carano, General Counsel 21,576 Executive Group 203,175 Non-Executive Director Group 139,628 Non-Executive Officer Employee Group (1) On January 23, 2015, each of the named executive officers received time-based restricted stock unit grants ("RSUs") that will vest and become non-forfeitable upon the third anniversary of the date of grant. Unvested RSUs will vest immediately upon (x) the termination of employment if such termination is without cause, for good reason, or due to the death or the disability of the reporting person and (y) consummation of a change of control of the Company. The following reflects performance-based restricted stock unit grants made under the Plan in January 2015. All future awards to directors, executive officers, and employees will be made at the discretion of the Compensation Committee. Therefore, we cannot determine future benefits for any other awards under the Plan at this time. Name and position Number of units(1) Gary L. Carano, Chairman of the Board and Chief Executive Officer 75,517 Thomas R. Reeg, President 39,556 Robert M. Jones, Chief Financial Officer 28,768 Joseph L. Billhimer, Chief Operating Officer 37,758 Anthony L. Carano, General Counsel 21,576 Executive Group 203,175 Non-Executive Director Group 139,628 Non-Executive Officer Employee Group (1) On January 23, 2015, each of the named executive officers received performance RSUs that are subject to a one-year performance period, with a two-year additional vesting requirement for a total of three years from grant date to vesting/payment date. Earned but unvested performance RSUs will immediately vest upon (x) the termination of employment if such termination is without cause, for good reason, or due to the death or the disability of the reporting person and (y) consummation of a change of control of the Company. Unearned performance RSUs will immediately vest, under the same termination scenarios as earned RSUs, in the amount of RSU shares as determined at the later of (i) the date of termination or (ii) the Compensation Committee determination with respect to review of the performance goal achievement levels for the amount of RSUs that were to be earned. The amount of RSUs that will vest must be determined after the amount that is earned is determined. Eldorado Resorts, Inc. 2015 equity incentive plan Plan highlights Double-trigger vesting. The Plan contains a so-called "double-trigger" vesting provision, which generally provides that awards will not be accelerated upon a change of control of the Company if (i) an acquiror replaces or substitutes outstanding awards in accordance with the requirements of the Plan and (ii) a Table of Contents participant holding the replacement or substitute award is not involuntarily terminated within two years following the change of control. Independent plan administrator. The Compensation Committee, which is composed of independent directors, administers the Plan, and retains full discretion to determine the number and amount of awards to be granted under the Plan, subject to the terms of the Plan. Reasonable plan limits. Subject to adjustment as described in the Plan, total awards under the Plan are limited to 4,800,000 shares of our Common Stock. These shares may be shares of original issuance or treasury shares or a combination of the foregoing. The Plan also provides that, subject to adjustment as described in the Plan: no participant will be granted awards (including stock options and SARs) under the Plan for more than 1,000,000 shares of Common Stock during any one fiscal year; no participant will be granted a performance award under the Plan that is intended to qualify as "performance-based compensation" under Section 162(m) for more than 250,000 shares of Common Stock in respect of any single performance period; and no non-employee member of the Board will be granted awards (including stock options and SARs) under the Plan for more than 250,000 shares of Common Stock during any one fiscal year. Stockholder approval of material amendments. The Plan requires us to seek stockholder approval for any material amendments to the Plan, such as materially increasing benefits accrued to participants and materially increasing the number of shares available. Prohibition on the repricing of options and SARs. The Plan prohibits the repricing of outstanding stock options or SARs without stockholder approval (outside of certain corporate transactions or adjustment events described in the Plan). We have never repriced underwater stock options or SARs. No transfers of awards for value. The Plan requires that no awards granted under the Plan may be transferred for value, subject to exceptions for certain familial transfers. No discounted stock options or SARs. The Plan requires that the exercise price for newly-issued stock options or SARs be at least 100% of the per share "fair market value" (as defined in the Plan) on the date of grant. Prohibition of dividends or dividend equivalents on unvested performance awards. The Plan prohibits the current payment of dividends or dividend equivalents with respect to shares underlying performance-based awards prior to the achievement of the applicable performance objectives. Any such dividends or dividend equivalents will be deferred until and contingent upon the achievement of the underlying performance objectives. Section 162(m) The Code limits to $1.0 million per year the deduction allowed for federal income tax purposes for compensation paid to the Chief Executive Officer and certain other highly compensated executive officers of public companies (the "Deduction Limit"). The Deduction Limit applies to compensation that does not qualify for any of a limited number of exceptions. The Deduction Limit does not apply to compensation paid under a stockholder-approved plan that meets certain requirements for "qualified performance-based compensation." The Compensation Committee considers the benefits Section 162(m) of the Code provides for federal income tax purposes and other relevant factors when determining executive compensation. Table of Contents However, the Compensation Committee may, from time to time, approve compensation that is not deductible under Section 162(m) of the Code if it determines that it is in our best interest not to do so. Purpose The Plan authorizes the Compensation Committee, or another committee designated by the Board and made up of two or more non-employee directors and outside directors (as applicable, the "Committee"), to provide equity-based or other incentive-based compensation for the purpose of attracting and retaining directors, employees and certain consultants and providing our directors, employees and such consultants incentives and rewards for superior performance. The Plan is designed to comply with the requirements of applicable federal and state securities laws, and the Code, including allowing us to issue awards that may comply with the performance-based exclusion from the deduction limitations under Section 162 (m) of the Code. Shares subject to the plan The Board has authorized the issuance of 4,800,000 shares of our Common Stock in connection with awards pursuant to the Plan. No more than 4,800,000 of the total number of shares available for issuance under the Plan may be issued upon the exercise of ISOs. The number of shares with respect to awards (including options and SARs) that may be granted under the Plan to any individual participant in any single fiscal year may not exceed 1,000,000 shares (with grants to non-employee directors limited to 250,000 shares), and the maximum number of shares that may be paid to any individual participant in connection with awards intended to qualify as "performance-based compensation" under Section 162(m) of the Code in respect of a single performance period may not exceed 1,000,000 shares (or the cash equivalent of such shares), each as subject to potential adjustment as described in the Plan. Any shares of our Common Stock covered by an award granted under the Plan, which for any reason is canceled, forfeited or expires or, in the case of an award other than a stock option, is settled in cash, will again be available for awards under the Plan. In addition, (i) shares not issued or delivered as a result of the net settlement of an outstanding stock option or SAR (ii) shares used to pay the exercise price or withholding taxes related to an outstanding award, and (iii) shares repurchased by the Company using proceeds realized by the Company in connection with a participant's exercise of an option or SAR, will again become available for grant. Subject to the Plan's share counting rules, Common Stock covered by awards granted under the Plan will not be counted as used unless and until the shares are actually issued or transferred. However, Common Stock issued or transferred under awards granted under the Plan in substitution for or conversion of, or in connection with an assumption of, stock options, SARs, restricted stock, RSUs or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with us or any of our subsidiaries will not count against (or be added back to) the aggregate share limit or other Plan limits described above. Additionally, shares available under certain plans that we or our subsidiaries may assume in connection with corporate transactions from another entity may be available for certain awards under the Plan, under circumstances further described in the Plan, but will not count against the aggregate share limit or other Plan limits described above. The various limits described above are subject to potential adjustment as described in the Plan. Plan administration The Plan is administered by the Committee. The Committee generally may select eligible employees to whom awards are granted, determine the types of awards to be granted and the number of shares covered by awards and set the terms and conditions of awards. The Committee's determinations and interpretations Table of Contents under the Plan will be binding on all interested parties. The Committee may delegate to a subcommittee or to officers certain authority with respect to the granting of awards other than awards to certain officers and directors as specified in the Plan. Eligibility Awards may be made by the Committee to any of our employees or certain qualifying consultants, or to employees or certain qualifying consultants of our affiliates, or non-employee directors who are members of the Board or the board of directors of our affiliates; provided that ISOs may only be granted to our employees or employees of our affiliates. Currently, there are approximately 20 individuals whom we believe would be eligible to participate in the Plan subject to any necessary approvals by the Committee. No repricing without shareholder approval Except in connection with a corporate transaction or other adjustment event described in the Plan, repricing of underwater options and SARs is prohibited without stockholder approval under the Plan. Types of awards under the plan Stock options. Option rights may be granted that entitle the optionee to purchase shares of our Common Stock at a price not less than (except with respect to Substitute Awards described below) fair market value at the date of grant, and may be ISOs, nonqualified stock options, or combinations of the two. Stock options granted under the Plan will be subject to such terms and conditions, including exercise price and conditions and timing of exercise, as may be determined by the Committee and specified in the applicable award agreement. Payment in respect of the exercise of an option granted under the Plan may be made (i) in cash or its equivalent, or (ii) in the discretion of the Committee, by exchanging shares owned by the optionee (which are not the subject of any pledge or other security interest and which have been owned by such optionee for at least six months), or (iii) in the discretion of the Committee and subject to such rules as may be established by the Committee and applicable law, either through delivery of irrevocable instructions to a broker to sell the shares being acquired upon exercise of the option and to deliver promptly to us an amount equal to the aggregate exercise price or (iv) in the discretion of the Committee and subject to any conditions or limitations established by the Committee, by having us withhold from shares otherwise deliverable an amount equal to the aggregate option exercise price, or (v) by a combination of the foregoing, or (vi) by such other methods as may be approved by the Committee, provided that the combined value of all cash and cash equivalents and the fair market value of such shares so tendered to us or withheld as of the date of such tender or withholding is at least equal to the aggregate exercise price of the option. No stock option may be exercisable more than 10 years from the date of grant. Stock appreciation rights. SARs granted under the Plan will be subject to such terms and conditions, including grant price and the conditions and limitations applicable to exercise thereof, as may be determined by the Committee and specified in the applicable award agreement. SARs may be granted in tandem with another award, in addition to another award, or freestanding and unrelated to another award. A SAR will entitle the participant to receive an amount equal to the excess of the fair market value of a share on the date of exercise of the SAR over the grant price thereof (which may not be (except with respect to Substitute Awards described below) less than fair market value on the date of grant). The Committee, in its sole discretion, will determine whether a SAR will be settled in cash, shares or a combination of cash and shares. No SAR may be exercisable more than 10 years from the date of grant. Restricted stock and restricted stock units. Restricted stock and RSUs granted under the Plan will be subject to such terms and conditions, including the duration of the period during which, and the conditions, if any, under which, the restricted stock and restricted stock units may be forfeited to us, as may be Table of Contents determined by the Committee in its sole discretion. Each RSU will have a value equal to the fair market value of a share of our Common Stock. RSUs will be paid in cash, shares, other securities or other property, as determined by the Committee in its sole discretion, upon or after the lapse of the restrictions applicable thereto or otherwise in accordance with the applicable award agreement. Dividends paid on any Restricted Stock or dividend equivalents paid on any RSUs will be paid directly to the participant, withheld by us subject to vesting of the Restricted Stock or RSUs under the terms of the applicable award agreement, or may be reinvested in additional Restricted Stock or in additional RSUs, as determined by the Committee in its sole discretion. Performance awards. Performance awards granted under the Plan will consist of a right which is (i) denominated in cash or shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee will establish, and (iii) payable at such time and in such form as the Committee will determine. Subject to the terms of the Plan and any applicable award agreement, the Committee will determine the performance goals to be achieved during any performance period, the length of any performance period, the amount of any performance award and the amount and kind of any payment or transfer to be made pursuant to any performance award. Performance awards may be paid in a lump sum or in installments following the close of the performance period (as set forth in the applicable award agreement) or, in accordance with procedures established by the Committee, on a deferred basis. The Committee may require or permit the deferral of the receipt of performance awards upon such terms as the Committee deems appropriate and in accordance with Section 409A of the Code. Other stock-based awards. In addition to the foregoing types of awards, the Committee will have authority to grant to participants an "other stock-based award" (as defined in the Plan), which will consist of any right which is (i) not a stock option, SAR, restricted stock or RSU or performance award and (ii) an award of shares or an award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of our Common Stock (including, without limitation, securities convertible into shares of our Common Stock), as deemed by the Committee to be consistent with the purposes of the Plan; provided that any such rights must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable law. Subject to the terms of the Plan and any applicable award agreement, the Committee will determine the terms and conditions of any such other stock-based award, including the price, if any, at which securities may be purchased pursuant to any other stock-based award granted under the Plan. Dividend equivalents. In the sole discretion of the Committee, an award (other than options or SARs), whether made as another stock-based award or as any other type of award issuable under the Plan, may provide the participant with the right to receive dividends or dividend equivalents, payable in cash, shares, other securities or other property and on a current or deferred basis. However, for awards with respect to which any applicable performance criteria or goals have not been achieved, dividends and dividend equivalents may be paid only on a deferred basis, to the extent the underlying award vests. Performance criteria The Plan requires that the Committee establish measurable "Performance Criteria" for purposes of any award under the Plan that is intended to qualify as "performance-based compensation" under Section 162(m) of the Code. The Performance Criteria that will be used to establish such performance goal(s) will be based on one or more, or a combination of, the following: (i) return on net assets; (ii) pretax income before allocation of corporate overhead and bonus; (iii) budget; (iv) net income; (v) division, group or corporate financial goals; (vi) return on stockholders' equity; (vii) return on assets; Table of Contents (viii) return on capital; (ix) revenue; (x) profit margin; (xi) earnings per Share; (xii) net earnings; (xiii) operating earnings; (xiv) free cash flow; (xv) attainment of strategic and operational initiatives; (xvi) appreciation in and/or maintenance of the price of the Shares or any other publicly-traded securities of the Company; (xvii) market share; (xviii) gross profits; (xix) earnings before interest and taxes; (xx) earnings before interest, taxes, depreciation and amortization; (xxi) operating expenses; (xxii) capital expenses; (xxiii) enterprise value; (xxiv) equity market capitalization; (xxv) economic value-added models and comparisons with various stock market indices; or (xxvi) reductions in costs. To the extent required under Section 162(m) of the Code, the Committee will, not later than the 90th day of a performance period (or, if longer, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such performance period. Performance awards can be granted that either are intended to or not intended to qualify as "performance-based compensation" under Section 162(m) of the Code. Amendments The Board may amend the Plan from time to time without further approval by our stockholders, except where (i) the amendment would materially increase the benefits accruing to participants under the Plan, (ii) the amendment would materially increase the number of securities which may be issued under the Plan, or (iii) stockholder approval is required by applicable law or securities exchange rules and regulations, and provided that no such action that would materially impair the rights of any participant with respect to awards previously granted under the Plan will be effective without the participant's consent. Transferability Each award, and each right under any award, will be exercisable only by the participant during the participant's lifetime, or, if permissible under applicable law, by the participant's guardian or legal representative, and no award may be sold, assigned, pledged, attached, alienated or otherwise transferred or encumbered by a participant, other than by will or by the laws of descent and distribution, and any such purported sale, assignment, pledge, attachment, alienation, transfer or encumbrance will be void and unenforceable against us or any affiliate; provided that the designation of a beneficiary will not constitute a sale, assignment, pledge, attachment, alienation, transfer or encumbrance. In no event will any award granted under the Plan be transferred for value. However, the Committee may permit the transferability of an award under the Plan by a participant to certain members of the participant's immediate family or trusts for the benefit of such persons or other entities owned by such persons. Adjustments The number and kind of shares covered by outstanding awards and available for issuance or transfer (and Plan limits) under the Plan and, if applicable, the prices per share applicable thereto, are subject to adjustment in the event of dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of ours, issuance of warrants or other rights to purchase our shares or other securities, or other corporate transaction or event. In the event of any such transaction, the Committee may, in its discretion, adjust to prevent dilution or enlargement of benefits (i) the number of our shares or other securities (or number and kind of other securities or property) with respect to which awards may be granted, (ii) the number of our shares or other securities of (or number and kind of other securities or property) subject to outstanding awards, and (iii) the grant or exercise price with respect to any award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding award in consideration for the cancellation of such award, which, in the case of options and SARs will equal the excess, if any, of the Table of Contents fair market value of the shares subject to such options or SARs over the aggregate exercise price or grant price of such options or SARs. However, such adjustment to the Plan limits will be made only if and to the extent that such adjustment would not cause any ISO to fail to so qualify. Change of control Unless a replacement award (as defined in the Plan) is provided to the participant and unless otherwise (i) determined by the Committee at the date of grant, or (ii) set forth in the applicable award agreement, in the event of a Change in Control (as defined in the Plan), each then outstanding Option and Stock Appreciation Right will become fully vested and exercisable and the restrictions applicable to each outstanding Restricted Stock award, Restricted Stock Unit Award, Performance Award or Other Stock-Based Award will lapse and the award will be fully vested (with any applicable performance goals deemed to have been achieved at a target level as of the date of such vesting). Unless otherwise provided in the Plan, and at the discretion of the Committee, a spin-off of a division or subsidiary of the Company to its stockholders will not constitute a Change in Control. With respect to a replacement award held by a participant during the two year period after a Change in Control, upon the termination of employment or service by the Company without Cause or termination of employment by the participant for Good Reason (each, as defined in the Plan, unless otherwise defined in an applicable award agreement or individual employment, severance, or similar agreement), (i) all Replacement Awards held by the participant will become fully vested and, if applicable, exercisable and free of restrictions (with any applicable performance goals deemed to have been achieved at a target level as of the date of such vesting), and (ii) all Options and Stock Appreciation Rights held by the participant immediately before such termination of employment that the participant also held as of the date of the Change in Control or that constitute Replacement Awards will remain exercisable for a period of 90 days following the Involuntary Termination or until the expiration of the stated term of the Option or Stock Appreciation Right, whichever period is shorter (subject to any longer period of exercisability that may be provided in the applicable award agreement). Unless otherwise provided in the Plan or an award agreement, to the extent any Plan or award agreement provision would cause a payment of deferred compensation upon a Change in Control or termination of service that is subject to Section 409A of the Code, then payment will not be made unless the provisions comply with Section 409A of the Code. Any payment that would have been made but for the application of the preceding sentence will be made in accordance with the payment schedule that would have applied in the absence of a Change in Control or termination of employment or service, but disregarding any future service or performance requirements. Withholding taxes A participant may be required to pay to us, and, subject to Section 409A of the Code, we will have the right and are authorized to withhold from any award, from any payment due or transfer made under any award or under the Plan or from any compensation or other amount owing to a participant the amount (in cash, shares, other securities, other awards or other property) of any applicable withholding taxes in respect of an award, its exercise, or any payment or transfer under an award or under the Plan and to take such other action as may be necessary in our opinion to satisfy all obligations for the payment of such taxes. In the discretion of the Committee and subject to such rules as the Committee may adopt, a participant may satisfy, in whole or in part, the withholding liability by delivery of shares owned by the participant (which are not subject to any pledge or other security interest and which have been owned by the participant for at least six months) with a fair market value equal to such withholding liability or by Table of Contents having us withhold from the number of shares otherwise issuable upon the occurrence of a vesting event a number of shares with a fair market value equal to such withholding liability. Detrimental activity and recapture provisions Any award agreement may provide for the cancellation or forfeiture of an award or the forfeiture and repayment of any gain related to an award, or other provisions intended to have a similar effect, upon terms and conditions determined by the Committee, if a participant, either during (i) his or her employment or other service with us or an affiliate or (ii) within a specific period after termination of employment or service, engages in any "detrimental activity" (as defined in such award agreement). In addition, any award agreement may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to us of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time or under Section 10D of the Exchange Act, or the rules of any national securities exchange or national securities association on which our Common Stock is traded. Termination No grant will be made under the Plan more than 10 years after January 23, 2015 (the date on which the Plan was approved by the Board), but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of the Plan. Table of Contents Certain relationships and related party transactions Management agreement and payments to affiliates of REI and HCM Prior to the consummation of the Merger, Resorts was party to a management agreement (the "Eldorado Management Agreement") with REI and HCM, pursuant to which REI and HCM (collectively, the "Managers") agreed to (a) develop strategic plans for Resorts' business, including preparing annual budgets and capital expenditure plans, (b) provide advice and oversight with respect to financial matters of Resorts, (c) establish and oversee the operation of financial accounting systems and controls and regularly review Resorts' financial reports, (d) provide planning, design and architectural services to Resorts and (e) furnish advice and recommendations with respect to certain other aspects of Resorts' operations. In consideration for such services, Resorts agreed to pay the Managers a management fee not to exceed 1.5% of Resorts' annual net revenues, not to exceed $0.6 million per year. In 2014, Resorts paid management fees to REI and HCM in the aggregate amount of $0.5 million. REI is beneficially owned by members of the Carano family and HCM is beneficially owned by members of the Poncia family. The Carano family and Poncia family hold significant ownership interests in the Company. Management fees were not paid subsequent to the consummation of the Merger. Subsequent to the consummation of the Merger, Donald L. Carano and Raymond J. Poncia received remuneration in the amount of $0.3 million and $0.2 million, respectively, for their services as consultants to the Company and its subsidiaries in lieu of the management fees previously paid under the terms of the Eldorado Management Agreement. Leased property Resorts owns the parcel on which Eldorado Reno is located, except for approximately 30,000 square feet which is leased from C. S. & Y. Associates, a general partnership of which Donald Carano is a general partner (the "CSY Lease"). The CSY Lease expires on June 30, 2027. Annual rent is payable in an amount equal to the greater of (i) $400,000 or (ii) an amount based on a decreasing percentage of Eldorado Reno's gross gaming revenues for the year ranging from 3% of the first $6.5 million of gross gaming revenues to 0.1% of gross gaming revenues in excess of $75 million. Rent pursuant to the CSY Lease amounted to approximately $0.6 million in 2014. On May 30, 2011, Resorts and C. S. & Y Associates entered into a fourth amendment to the CSY Lease. C. S & Y Associates agreed to execute and deliver the deeds of trust encumbering the approximately 30,000 square feet leased from C. S. & Y Associates on which a portion of Eldorado Reno is located as security for Resorts Notes. In exchange for this subordination, a fee of $0.1 million will be paid annually during the time that the Resorts Notes are outstanding. In 2014 Resorts paid $0.1 million to C. S. & Y Associates for this subordination. Table of Contents Compensation paid to related parties For the period beginning January 1, 2014 to April 15, 2015, members of the Carano family who are related to Gary L. Carano, Anthony L. Carano and Donald L. Carano were paid compensation in connection with their positions at Eldorado Reno and the Company as follows: Name Relationship Position Entity Compensation including perquisites Gene Carano Brother of Gary L. Carano and son of Donald L. Carano Senior Vice President Operations Company and General Manager Eldorado Reno Company and Eldorado Reno $ 509,326 Gregg Carano Brother of Gary L. Carano and son of Donald L. Carano Senior Vice President Food and Beverage Company $ 527,255 Rhonda Carano Wife of Donald L. Carano Senior Vice President of Creative and Brand Strategies Company $ 274,450 Cindy Carano Sister of Gary L. Carano and daughter of Donald L. Carano Executive director of Hotel Operations Eldorado Reno $ 281,206 In addition, Glenn T. Carano, brother of Gary L. Carano and son of Donald L. Carano, was named as the General Manager of Silver Legacy effective August 1, 2014 and served as the Executive Director of Marketing of Silver Legacy prior to such date. From January 1, 2014 to April 15, 2015, Glenn T. Carano received $501,169 in compensation from the Silver Legacy in addition to a $1.7 million lump-sum payment in connection with the termination of Silver Legacy's supplemental executive retirement program. Gary L. Carano was the Chief Executive Officer and General Manager of Silver Legacy prior to the time he was named the Chief Executive Officer of the Company in September 2014. From January 1, 2014 to July 31, 2014, Gary L. Carano received $226,333 in compensation from the Silver Legacy in addition to a $2.5 million lump-sum payment in connection with the termination of Silver Legacy's supplemental executive retirement program. Aircraft and yacht lease; Purchases from related parties. Resorts from time to time leases aircraft and yachts owned by REI or its affiliates, for use in operating Resorts' business. In 2014 lease payments for the aircraft and yachts totaled approximately $0.6 million. No lease payments have been made in 2015. The Company occasionally purchases wine directly from the Ferrari Carano Winery, which is owned by REI and Donald Carano. Wine purchases are sent directly to customers in appreciation of their patronage. In 2014, the Company spent approximately $35,000 for these products. No purchases have been made in 2015. Distributions In 2014 distributions of $0.6 million were made by Resorts to HoldCo and, in turn, by HoldCo to its members, including Donald L. Carano, Raymond J. Poncia and members of their immediate families. Table of Contents Resorts previously owned a 21.3% interest in Tamarack Crossing, LLC ("Tamarack"), a Nevada limited liability company that owned and operated Tamarack Junction, a casino in south Reno which commenced operations on September 4, 2001. On September 1, 2014, and as a condition to closing the Merger, Resorts distributed to HoldCo, and HoldCo subsequently distributed to its members on a pro rata basis, Resorts' interest in Tamarack totaling $5.5 million. Retained interest agreement As part of the Merger, REI, HCM, Resorts, ELLC and the Company entered into a Retained Interest Agreement (the "Retained Interest Agreement"), pursuant to which, subject to the receipt of required approvals of gaming regulatory authorities, the parties agreed that the following transactions would occur: REI and HCM agreed to waive their rights to receive an aggregate of 373,136 shares of the Company's common stock, par value $0.00001 per share, that otherwise would have been issued to them under terms of the Merger Agreement as consideration for the consummation of the Merger (the "Retained Consideration"). ELLC agreed to redeem all of Resorts' interest in ELLC in exchange for a distribution to Resorts of a 48.1% interest in Silver Legacy, such that REI and HCM would hold an indirect 1.9% interest in Silver Legacy. HCM and REI granted Resorts a right, exercisable for three months commencing on the first business day after the first anniversary of the Merger Date, to acquire from HCM and REI all of their interests in ELLC in exchange for the issuance to HCM and REI of their respective portions of the Retained Consideration. Resorts granted each of HCM and REI a right, exercisable for three months commencing on the first business day after the second anniversary of the Merger Date, to put to Resorts all of their indirect interests in Silver Legacy in exchange for the issuance to HCM and REI of their respective portions of the Retained Consideration. In connection with the consummation of the Circus Reno/Silver Legacy Purchase, ERI expects to acquire the 1.9% indirect interest in the Silver Legacy Joint Venture pursuant to the Retained Interest Agreement. Policies and procedures for related party transactions The Company's Code of Ethics and Business Conduct (the "Code") requires that any proposed transaction between the Company and a related party, or in which a related party would have a direct or indirect material interest, be promptly disclosed to the Audit Committee of the Company. The Company's Audit Committee Charter requires the Audit Committee of the Company to review and approve all related party transactions of the Company. Any director having an interest in the transaction is not permitted to vote on such transaction. The Audit Committee will determine whether or not to approve any such transaction on a case-by-case basis and in accordance with the provisions of the Audit Committee Charter and the Code, including the standards set forth in the Conflicts of Interest Policy contained in the Code. Under the Code, a "related party" is any of the following: an executive officer of the Company; a director (or director nominee) of the Company; an immediate family member of any executive officer or director (or director nominee); a beneficial owner of five percent or more of any class of the Company's voting securities; Table of Contents an entity in which one of the above described persons has a substantial ownership interest or control of such entity; or any other person or entity that would be deemed to be a related person under Item 404 of SEC Regulation S-K or applicable NASDAQ rules and regulations. For a director to be considered independent, the director must meet the bright-line independence standards under the listing standards of NASDAQ and the Board must affirmatively determine that the director has no material relationship with us, directly, or as a partner, stockholder or officer of an organization that has a relationship with us. The Board determines director independence based on an analysis of the independence requirements of the NASDAQ listing standards. In addition, the Board will consider all relevant facts and circumstances in making an independence determination. The Board also considers all commercial, industrial, banking, consulting, legal, accounting, charitable, familial or other business relationships any director may have with us. The Board has determined that the following five directors satisfy the independence requirements of NASDAQ: Frank J. Fahrenkopf Jr., James B. Hawkins, Michael E. Pegram, David P. Tomick, Roger P. Wagner. * Indicates less than one percent. (1) The voting stock of Recreational Enterprises, Inc. ("REI") is beneficially owned by the following members of the Carano family in the following percentages: Donald L. Carano 49.5%; Gene R. Carano 10.1%; Gregg R. Carano 10.1%; Gary L. Carano 10.1%; Cindy L. Carano 10.1% and Glenn T. Carano 10.1%. The voting power and dispositive power with respect to REI's 23.44% interest in the Company is controlled by REI's board of directors that is elected by the family members (voting in proportion to the percentages above). Gary L. Carano holds his interest in REI directly and indirectly through various trusts. Gary L. Carano disclaims beneficial ownership of REI's 23.44% interest in the Company except to the extent of any pecuniary interest therein. The address of REI is P.O. Box 2540, Reno, Nevada 89505. (2) The voting stock of Hotel Casino Management, Inc. ("HCM") is beneficially owned by the following members of the Poncia family in the following percentages: Raymond J. Poncia, Jr. 49.712%; Cathy L. Poncia Vigen 12.572%; Linda R. Poncia Ybarra 12.572%; Michelle L. Poncia Staunton 12.572% and Tammy R Poncia 12.572%. The voting power and dispositive power with respect to HCM's 12.37% interest in the Company is controlled by HCM's board of directors that is elected by the family members (voting in proportion to the percentages above). Cathy, Linda, Michelle and Tammy each hold all of their respective interests in HCM through various trusts. Cathy, Linda, Michelle and Tammy each disclaim beneficial ownership of HCM's 12.37% interest in the Company except to the extent of any pecuniary interest therein. The address of HCM is P.O. Box 429, Verdi, Nevada 89439. (3) Includes NGA VoteCo, LLC ("NGA VoteCo"), which controls NGA AcquisitionCo, LLC ("NGA AcquisitionCo"), including NGA AcquisitionCo's voting and dispositive power with regard to its 8.68% interest in the Company, and also includes Timothy T. Janszen, Ryan Langdon and Roger May, who are the managers of NGA VoteCo and who beneficially own NGA VoteCo in the following percentages: Mr. Janszen 42.86%; Mr. Langdon 42.86% and Mr. May 14.28%. The address of NGA AcquisitionCo, NGA VoteCo is 21 Waterway Avenue, Suite 150, The Woodlands, Texas 77380. (4) The address of Par Investment Partners, L.P. is One International Place, Suite 2041, Boston, MA, 02110. (5) The address of Lafitte Capital Management LP is 701 Brazos, Suite 310, Austin, TX 78701 (6) Based on filings made under Sections 13(d) and 13(g) of the Exchange Act during February 2015. (7) The address of Messrs. Gary Carano, Fahrenkopf, Hawkins, Pegram, Tomick, Wagner, Reeg, Jones, Billhimer and Anthony Carano is c/o Eldorado Resorts, Inc., 100 West Liberty Street, Suite 1150, Reno, Nevada 89501. Table of Contents (8) Represents shares of Common Stock owned directly by Mr. Carano and indirectly by Mr. Carano through the Gary L. Carano S Corporation Trust. In addition to the shares of Common Stock reported in the table above, Gary L. Carano holds a 10.1% ownership interest in REI and a 10% ownership interest in Hotel Casino Realty, Inc. ("HCRI"). He does not hold voting power or dispositive power with respect to REI's 10,881,110 shares of the Company's Common Stock or HCRI's 1,214,108 shares of the Company's Common Stock, and he disclaims beneficial ownership of REI's 10,881,110 shares of the Company's Common Stock and HCRI's 1,214,108 shares of the Company's Common Stock, in each case, except to the extent of any pecuniary interest therein. (9) Includes 48,208 shares held by Joseph L. Billhimer Jr. and options to acquire 132,900 shares. Table of Contents Description of capital stock The following is a general description of the terms and provisions of our amended and restated certificate of incorporation, our amended and restated bylaws, and applicable provisions of law, in each case as currently in effect on the date of this prospectus. The following description is only a summary of the material provisions of our capital stock, amended and restated certificate of incorporation and amended and restated bylaws and does not purport to be complete and is qualified in its entirety by reference to the provisions of our amended and restated certificate of incorporation and our amended and restated bylaws, which are incorporated by reference as exhibits to the registration statement of which this prospectus is a part. General Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.00001 per share. As of July 9, 2015, there were 46,444,694 shares of our common stock outstanding. We have reserved an aggregate of 4,800,000 shares of our common stock for issuance to our current and future directors, employees and consultants pursuant to the Eldorado Resorts, Inc. 2015 Equity Incentive Plan. Common stock Dividend rights We will be permitted to pay dividends if, as and when declared by our board of directors, subject to compliance with limitations imposed by the NRS. The holders of our common stock are entitled to receive and share equally in these dividends as they may be declared by our board of directors out of funds legally available for such purpose. We do not currently expect to pay dividends on our common stock. Voting rights Our common stock votes as a single class on all matters on which stockholders are entitled to vote, and each share of our common stock is entitled to cast one vote in person or by proxy on such matters. Holders of our common stock do not have the right to cumulate votes in the election of directors. Directors are elected by a plurality of the shares actually voting on the matter at each annual meeting or special meeting called for the purpose of electing such directors at which a quorum is present. Liquidation rights Upon our liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders of our common stock will be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of our assets available for distribution. Preemptive rights Holders of our common stock are not entitled to any preemptive rights to subscribe for additional shares of our common stock, nor are they liable to further capital calls or to assessments by us. Therefore, if we issue additional shares without the opportunity for existing stockholders to purchase more shares, a stockholder's ownership interest in our Company may be subject to dilution. Transfer agent and registrar The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company. Limitation of liability and indemnification matters We have entered into indemnification agreements with certain of our executive officers and each of our directors pursuant to which we have agreed to indemnify such executive officers and directors against Table of Contents liability incurred by them by reason of their services as an executive officer or director to the fullest extent allowable under applicable law. We also provide liability insurance for each director and officer for certain losses arising from claims or charges made against them while acting in their capacities as our directors or officers. To the extent that indemnification for liabilities arising under the Securities Act may be permitted to our executive officers and directors pursuant to the foregoing, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. National market listing Our common stock is listed on the NASDAQ Global Select Market under the symbol "ERI." Table of Contents Material U.S. federal income tax consequences to non-U.S. holders The following is a summary of the material U.S. federal income and estate tax consequences of the ownership and disposition of our common stock applicable to Non-U.S. Holders (as defined below). This summary is based on current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), currently existing and proposed U.S. Treasury regulations promulgated thereunder, and administrative rulings and court decisions in effect as of the date hereof, all of which are subject to change or differing interpretation at any time, possibly with retroactive effect. No opinion of counsel has been obtained, and we do not intend to seek a ruling from the Internal Revenue Service (the "IRS"), as to any of the statements made and conclusions reached in the following summary. There can be no assurance that the IRS will agree with such statements and conclusions. This summary is limited to the material U.S. federal income tax consequences to Non-U.S. Holders who purchase our common stock pursuant to this offering and who hold shares of our common stock as capital assets within the meaning of Section 1221 of the Code. The summary below does not address all aspects of U.S. federal income and estate taxation that may be important to a Non-U.S. Holder in light of such Non-U.S. Holder's particular circumstances or that may be applicable to Non-U.S. Holders subject to special treatment under U.S. federal income tax law (including financial institutions, dealers in securities, traders in securities that elect mark-to-market treatment, insurance companies, tax-exempt entities, Non-U.S. Holders who acquire our common stock pursuant to the exercise of employee stock options or otherwise as compensation, entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein), Non-U.S. Holders liable for the alternative minimum tax, Non-U.S. Holders who own or have at any time owned (directly or by attribution) more than 5% of the Company's shares, controlled foreign corporations, passive foreign investment companies, companies that accumulate earnings to avoid U.S. federal income tax, former citizens or former long-term residents of the United States, and Non-U.S. Holders who hold our common stock as part of a hedge, straddle, constructive sale or conversion transaction). This discussion does not address U.S. federal tax laws other than U.S. federal income tax laws (such as U.S. federal gift tax or the Medicare contribution tax on certain net investment income), nor does it address any aspects of U.S. state, local or non-U.S. taxes. Non-U.S. Holders should consult with their own tax advisors regarding the possible application of these taxes. For the purposes of this discussion, except as modified for estate tax purposes (as discussed below), the term "Non-U.S. Holder" means a beneficial owner of our common stock that, for U.S. federal income tax purposes, is an individual, corporation, estate or trust, other than: an individual who is a citizen or resident of the United States as determined for U.S. federal income tax purposes; a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof or the District of Columbia; an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have the Table of Contents authority to control all substantial decisions of the trust, or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a domestic trust. If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a person treated as a partner generally will depend on the status of the partner and the activities of the partnership. Persons that, for U.S. federal income tax purposes, are treated as partners in a partnership holding shares of our common stock should consult their own tax advisors. THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE DESCRIPTION OF ALL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES RELATING TO THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK. PERSONS CONSIDERING PURCHASING OUR COMMON STOCK SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF OTHER U.S. FEDERAL TAX LAWS AND ANY STATE, LOCAL, NON-U.S. INCOME AND OTHER TAX LAWS) OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK. Distributions on our common stock Distributions of cash or property made in respect of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Except as described below under " Effectively Connected Income," a Non-U.S. Holder generally will be subject to U.S. federal withholding tax at a rate of 30%, or such lower rate specified by an applicable income tax treaty, on any dividends received in respect of our common stock. In order to obtain a reduced rate of U.S. federal withholding tax under an applicable income tax treaty, a Non-U.S. Holder will be required to provide a properly executed IRS Form W-8BEN or W-8BEN-E (or successor form) certifying such Non-U.S. Holder's entitlement to benefits under the treaty. This certification must be provided to the applicable withholding agent prior to the payment of dividends and may be required to be updated periodically. Non-U.S. Holders are urged to consult their own tax advisors regarding the possible entitlement to benefits under an income tax treaty. To the extent a distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a return of capital to the extent of the Non-U.S. Holder's tax basis in our common stock, and thereafter will be treated as capital gain. If an applicable withholding agent is unable to determine to what extent, if any, a distribution is in excess of our current or accumulated earnings and profits, such withholding agent may withhold on the entire distribution. Gain on the sale or other disposition of our common stock Subject to the discussion below under " Information Reporting and Backup Withholding" and " FATCA," a Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on any gain recognized upon a sale or other taxable disposition of our common stock unless: the gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States, , in which case the gain will be subject to tax in the manner described below under " Effectively Connected Income"; the Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or other disposition occurs and certain other conditions are met, in which case the gain (reduced by certain U.S. source capital losses Table of Contents recognized in the taxable year of the disposition) will be subject to a flat 30% (or a lower applicable treaty rate) tax; or we are, or have been, a "United States real property holding corporation" ("USRPHC") for U.S. federal income tax purposes, at any time during the shorter of the five-year period preceding such disposition and the Non-U.S. Holder's holding period in our common stock (the "Specified Testing Period"); provided, that so long as our common stock is regularly traded on an established securities market, a Non-U.S. Holder generally would be subject to taxation with respect to a taxable disposition of our common stock by virtue of our being a USRPHC only if at some time during the Specified Testing Period, such Non-U.S. Holder owned more than 5%, directly or by attribution, of our common stock. Under U.S. federal income tax laws, we will be a USRPHC if the fair market value of our "United States real property interests" equals or exceeds 50% of the fair market value of (i) our real property interests plus (ii) our other assets used or held for use in a trade or business. We can give no assurances that we are not currently a USRPHC. In addition, even if we are not a USRPHC at the present time, since the determination of USRPHC status in the future will be based upon the composition of our assets from time to time, there can be no assurance that we will not become a USRPHC in the future. However, as indicated above, so long as our stock is treated as "regularly traded" on an established securities market (within the meaning of applicable Treasury regulations), a Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax by virtue of our status as a USRPHC on any gain realized from the sale or other taxable disposition of our common stock unless such holder holds, directly or by attribution, at some time within the Specified Testing Period, more than 5% of our common stock. We currently expect that our common stock will be considered to be "regularly traded" on an established securities market for these purposes because it is currently traded on the NASDAQ Global Select Market. If we were considered a USRPHC and our common stock ceased to be regularly traded on an established securities market, a Non-U.S. Holder generally would become subject to U.S. federal income tax on any gain realized from the sale or other taxable disposition of our common stock on a net income basis in generally the same manner as if such Non-U.S. Holder were a United States person (as defined in the Code), unless an applicable income tax treaty provides otherwise, and, upon any sale or other disposition of our common stock, a 10% withholding tax would apply to the gross sale proceeds. The rules regarding United States real property interests are complex, and Non-U.S. Holders are urged to consult with their own tax advisors on the application of these rules based on their particular circumstances. Effectively connected income If a dividend received on our common stock, or any gain from a sale or other taxable disposition of our common stock, is treated as effectively connected with a Non-U.S. Holder's conduct of a trade or business in the United States, such Non-U.S. Holder generally will be subject to U.S. federal income tax on a net income basis on any such dividends or gains in the same manner as if such Non-U.S. Holder were a United States person (as defined in the Code) unless an applicable income tax treaty provides otherwise. Such Non-U.S. Holder generally will be exempt from withholding tax on any such dividends, provided such Non-U.S. Holder complies with certain certification requirements (generally on IRS Form W-8ECI). In addition, a Non-U.S. Holder that is a foreign corporation may be subject to a branch profits tax at a rate of 30% (or a lower rate provided by an applicable income tax treaty) on such Non-U.S. Holder's earnings and profits that are effectively connected with such Non-U.S. Holder's conduct of a trade or business in the United States, subject to adjustments. Table of Contents Federal estate tax Shares of our common stock owned or treated as owned at the time of death by an individual Non-U.S. Holder who is not a citizen or resident of the United States (as specifically defined for U.S. federal estate tax purposes) will be included in that Non-U.S. Holder's estate for U.S. federal estate tax purposes, and may be subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise. Information reporting and backup withholding Generally, we must report to our Non-U.S. Holders and the IRS the amount of dividends paid during each calendar year, if any, and the amount of any tax withheld. These information reporting requirements apply even if no withholding is required (e.g., because the distributions are effectively connected with the Non-U.S. Holder's conduct of a United States trade or business, or because withholding is eliminated by an applicable income tax treaty). This information also may be made available under a specific treaty or agreement with the tax authorities in the country in which the Non-U.S. Holder resides or is established. Backup withholding generally will not apply to dividends paid to a Non-U.S. Holder on shares of our common stock provided that the Non-U.S. Holder furnishes to the applicable withholding agent the required certification as to its non-U.S. status, generally by providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or certain other requirements are met. Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other taxable disposition of our common stock within the United States or conducted through certain U.S.-related financial intermediaries, unless the Non-U.S. Holder furnishes to the applicable withholding agent the required certification as to its non-U.S. status, generally by providing a valid IRS Form W-8BEN, W-8BEN-E or IRS Form W-8ECI, or such Non-U.S. Holder otherwise establishes an exemption. Backup withholding is not an additional tax but merely an advance payment, which may be credited against a Non-U.S. Holder's U.S. federal income tax liability or refunded to the extent it results in an overpayment of tax and the appropriate information is timely supplied by the Non-U.S. Holder to the IRS. FATCA Pursuant to the provisions of the Code commonly known as the Foreign Account Tax Compliance Act, or "FATCA," foreign financial institutions (which include most foreign hedge funds, private equity funds, mutual funds, securitization vehicles and any other investment vehicles) and certain other foreign entities must comply with information reporting rules with respect to their U.S. account holders and investors or they will be subject to U.S. federal withholding tax on U.S. source payments made to them (whether received as a beneficial owner or as an intermediary for another party). More specifically, a foreign financial institution or other foreign entity that does not comply with the FATCA reporting requirements generally will be subject to a 30% withholding tax with respect to any "withholdable payments." For this purpose, withholdable payments generally include U.S. source dividends and also generally include gross proceeds from the sale or other disposition of any equity instruments of U.S. issuers. This FATCA withholding tax may apply even if the payment would otherwise not be subject to U.S. nonresident withholding tax. The FATCA withholding obligation currently applies to U.S. source dividends and will apply to proceeds from sales or other dispositions of U.S. common stock on or after January 1, 2017. FATCA withholding will not apply to withholdable payments made directly to foreign governments, certain international organizations, foreign central banks of issue and individuals, and the U.S. Treasury is authorized to provide additional exceptions. Non-U.S. Holders are urged to consult with their own tax advisors regarding the effect, if any, of the FATCA provisions to them based on their particular circumstances. Table of Contents Underwriting We are offering the common stock described in this prospectus through a number of underwriters. J.P. Morgan Securities LLC is acting as joint book-running manager of the offering and J.P. Morgan Securities LLC is acting as representative of the underwriters. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table: Name Number of shares of common stock J.P. Morgan Securities LLC Total Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the common stock sold under the underwriting agreement if any of these shares of common stock are purchased. The underwriters will sell the common stock to the public when and if the underwriters buy the common stock from us. The underwriters have advised us that they initially propose to offer the common stock directly to the public for cash at the public offering price set forth on the cover page of this prospectus and to certain dealers at that public offering price less a concession not in excess of $ per share. After the initial public offering of the common stock, the offering price and other selling terms may be changed by the underwriters. The underwriters may offer and sell the common stock through certain of their affiliates. The underwriters have an option to buy up to additional shares of common stock from us at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions and less an amount per share equal to any dividends that are paid or payable by us on the common stock reflected in the preceding table but that are not payable on the common stock purchased on exercise of this option. The underwriters have 30 days from the date of this prospectus to exercise this option. The additional common stock may be purchased pursuant to the option. If any additional shares of common stock are purchased with this option, the underwriters will purchase such additional shares of common stock in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional common stock on the same terms as those on which the common stock are being offered. The underwriting fee is equal to the public offering price per share less the amount paid by the underwriters to us per share. The underwriting fee is $ per share. The following table shows the underwriting fee per share and total underwriting discounts and commissions to be paid to the Table of Contents underwriters assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of common stock. Without option exercise With full option exercise Per share $ $ Total $ $ We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $ . A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares of common stock to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters and selling group members that may make Internet distributions on the same basis as other allocations. We have agreed that we will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any common stock or securities convertible into or exercisable or exchangeable for any common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (ii) enter into any swap or other agreement that transfers all or a portion of the economic consequences associated with the ownership of any common stock or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of common stock or such other securities, in cash or otherwise), in each case without the prior written consent of J.P. Morgan Securities LLC for a period of 90 days after the date of this prospectus, other than the common stock to be sold under the underwriting agreement and any of our common stock issued upon the exercise of options granted under our existing stock-based compensation plans. Our directors and executive officers have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each of these persons, with limited exceptions, for a period of 90 days after the date of this prospectus, may not, without the prior written consent of J.P. Morgan Securities LLC, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (including, without limitation, common stock or such other securities which may be deemed to be beneficially owned by such directors or executive officers in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant) or publicly disclose the intention to make any offer, sale, pledge or disposition, (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock or such other securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or such other securities, in cash or otherwise, or (3) make any demand for or exercise any right with respect to the registration of any of our common stock or any security convertible into or exercisable or exchangeable for our common stock. Table of Contents We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act. In connection with this offering, the underwriters may engage in stabilizing transactions, which involve making bids for, purchasing and selling common stock in the open market for the purpose of preventing or retarding a decline in the market price of the common stock while this offering is in progress. These stabilizing transactions may include making short sales of the common stock, which involve the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing common stock on the open market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares referred to above, or may be "naked" shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or in part, or by purchasing common stock in the open market. In making this determination, the underwriters will consider, among other things, the price of common stock available for purchase in the open market compared to the price at which the underwriters may purchase common stock through the option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase common stock in the open market to cover the position. The underwriters have advised us that, pursuant to Regulation M of the Securities Act of 1933, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the representative of the underwriters purchases common stock in the open market in stabilizing transactions or to cover short sales, the representative can require the underwriters that sold those common stock as part of this offering to repay the underwriting discount received by them. These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the NASDAQ Stock Market, in the over-the-counter market or otherwise. The underwriters and their respective affiliates are full-service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, market making, financing and brokerage activities. Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other financial and non-financial services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. Also, certain of the underwriters and/or their affiliates are lenders and/or agents under certain of our debt facilities and may acts as lender, agents and/or initial purchasers in the Refinancing Transaction. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future. In the ordinary Table of Contents course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. Selling restrictions General Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus, the accompanying prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about, and to observe any restrictions relating to, the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful. Notice to prospective investors in the European Economic Area In relation to each Member State of the European Economic Area (each, a "Relevant Member State"), no offer of the common stock may be made to the public in that Relevant Member State other than: A.to any legal entity which is a qualified investor as defined in the Prospectus Directive; B.to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representative; or C.in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of the common stock shall require the Company or the representative to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. Each person in a Relevant Member State who initially acquires any common stock or to whom any offer is made will be deemed to have represented, acknowledged and agreed that it is a "qualified investor" within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive. In the case of any common stock being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the common stock acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any common stock to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representative has been obtained to each such proposed offer or resale. Table of Contents The Company, the representative and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements. This prospectus has been prepared on the basis that any offer of common stock in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of common stock. Accordingly any person making or intending to make an offer in that Relevant Member State of common stock which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for the Company or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither the Company nor the underwriters have authorized, nor do they authorize, the making of any offer of common stock in circumstances in which an obligation arises for the Company or the underwriters to publish a prospectus for such offer. For the purpose of the above provisions, the expression "an offer to the public" in relation to any common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the common stock to be offered so as to enable an investor to decide to purchase or subscribe the common stock, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU. Notice to prospective investors in the United Kingdom In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are "qualified investors" (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents. Table of Contents Legal matters The validity of the shares of common stock offered by this prospectus will be passed upon for us by Milbank, Tweed, Hadley & McCloy LLP, Los Angeles, California and McDonald Carano Wilson LLP. Certain legal matters in connection with this offering will be passed upon for the underwriters by Cahill Gordon & Reindel LLP. Experts The consolidated financial statements of Eldorado Resorts, Inc. and MTR Gaming Group, Inc. at December 31, 2014, and for each of the three years in the period ended December 31, 2014, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports appearing elsewhere herein and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Circus and Eldorado Joint Venture, LLC at December 31, 2014, and for each of the three years in the period ended December 31, 2014, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report appearing elsewhere herein and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. Where you can find more information We file annual, quarterly and current reports, proxy statements and other information with the SEC. We have also filed with the SEC under the Securities Act a registration statement on Form S-1 with respect to the common stock offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. Statements made in this prospectus regarding the contents of any contract or other document are summaries of the material terms of the contract or document. With respect to each contract or document filed as an exhibit to the registration statement, reference is made to the corresponding exhibit. For further information pertaining to us and the common stock offered by this prospectus, reference is made to the registration statement, including the exhibits and schedules thereto, and any document we file with the SEC, copies of which may be inspected without charge at the public reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Because we submit filings to the SEC electronically, access to this information is available at the SEC's internet website (www.sec.gov). This site contains reports and other information regarding issuers that file electronically with the SEC. The information on the SEC's website is not part of this prospectus, and any references to this website or any other website are inactive textual references only. We also make available, free of charge, at our principal internet address (www.eldoradoresorts.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Table of Contents Principal stockholders The following table sets forth, as of May 30, 2015, the ownership of the presently issued and outstanding shares of our common stock by persons known by the Company to be a beneficial owner of 5% or more of such stock, and the ownership of such stock by our named executive officers and directors, individually and as a group. Unless otherwise indicated, the address for each of the stockholders listed below is c/o 100 West Liberty Street, Suite 1150, Reno, Nevada, 89501. Name Amount and nature of beneficial ownership Percentage of class Recreational Enterprises, Inc.(1)(6) 10,881,110 23.44% Hotel Casino Management, Inc.(2)(6) 5,744,083 12.37% Newport Global Opportunities Fund, LP(3)(6) 4,030,440 8.68% PAR Investment Partners, L.P.(4)(6) 3,747,305 8.07% Lafitte Capital Management LP(5)(6) 2,410,279 5.19% Gary L. Carano(7)(8) 85,941 * Frank J. Fahrenkopf, Jr.(7) * James B. Hawkins(7) 20,000 * Michael E. Pegram(7) 25,000 * Thomas R. Reeg(7) 17,000 * David P. Tomick(7) * Roger P. Wagner(7) 112,020 * Robert M. Jones(7) * Joseph L. Billhimer, Jr(7)(9) 181,108 * Anthony L. Carano(7) 2,500 * All Board Members and Executive Officers as a Group 443,569 * Table of Contents common stock Eldorado Resorts, Inc. Prospectus J.P. Morgan , 2015 Table of Contents Part II Information not required in prospectus Item 13. Other expenses of issuance and distribution The actual and estimated expenses in connection with this offering, all of which will be borne by us, are as follows: SEC registration fee $ 9,296 FINRA Filing Fee* Transfer agent's fees* Printing expenses* Accounting fees and expenses* Legal fees and expenses* Miscellaneous* Total * To be updated by amendment. Each of the amounts set forth above, other than the registration fee and the FINRA filing fee, is an estimate. Item 14. Indemnification of directors and officers The registrant is governed by Chapter 78 of the NRS. Section 78.7502(1) of the NRS generally provides that a corporation may indemnify any person who is or was a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except derivative suits, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with the action, suit or proceeding, if such person acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of a derivative suit, Section 78.7502(2) of the NRS provides that a corporation may indemnify any person who is a party to, or is threatened to be made a party to, any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by such person in connection with the defense or settlement of the action or suit, if such person acted in good faith and in a manner in which he reasonably believed to be in, or not opposed to, the best interests of the corporation, except that indemnification may not be made in the case of a derivative suit in respect of any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent it is II-1 Table of Contents determined by the court that such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Section 78.7502(3) of the NRS provides generally that a corporation shall indemnify a director, officer, employee or agent of a corporation against expenses, including attorneys' fees actually and reasonably incurred, to the extent that such person has been successful on the merits or otherwise in defense of any of the actions, suits or proceedings described above. Section 78.751(2) of the NRS provides that the articles of incorporation, the bylaws or a separate agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the corporation. Section 78.751(3) of the NRS provides that any indemnification or advancement of expenses authorized in or ordered by a court pursuant to any of the Sections set forth above, does not exclude any other rights to which such person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors, if any, or otherwise, for either an action in the person's official capacity or an action in another capacity while holding office, except that indemnification, unless ordered by a court pursuant to Section 78.7502, set forth above, or for the advancement of expenses made pursuant to Section 78.751(2), set forth above, may not be made to or on behalf of any director or officer if a final adjudication establishes that the director's or officer's acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action. In addition, the statute provides that such indemnification continues for any such person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person. Section 78.752(1) of the NRS provides that a corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of a corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for any liability asserted against him and liability and expenses incurred by him in such capacity, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses. Section 78.752(4) of the NRS provides that in the absence of fraud the decision of the board of directors as to the propriety of the terms and conditions of any insurance or other financial arrangement made pursuant to Section 78.752, set forth above, and the choice of the person to provide the insurance or other financial arrangement is conclusive and such insurance or other financial arrangement is not void or voidable and does not subject any director approving it to personal liability for the approval, even if a director approving the insurance or other financial arrangement is a beneficiary of the insurance or other financial arrangement. Finally, Section 78.747 of the NRS generally provides that, unless otherwise provided by specific statute, no stockholder, director or officer of a corporation is individually liable for the debts or liabilities of the corporation, unless the stockholder, director or officer acts as the alter ego of the corporation. The registrant's amended and restated bylaws provide that the registrant will indemnify any person in a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or II-2 Table of Contents investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the registrant or is or was serving at the request of the registrant as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including amounts paid in settlement and attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. In connection with an action brought by or in the right of the corporation, the registrant shall only indemnify such person if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation. The registrant's amended and restated articles of incorporation provide that no director or officer will be personally liable to the registrant or any of its stockholders for damages for breach of fiduciary duty as a director or officer, except for acts of omission which involve intentional misconduct, fraud, or a knowing violation of law or the payment of dividends in violation of Section 78.300 of the NRS. If the NRS is amended hereafter to authorize the further elimination or limitation of the liability of directors or officers, then the liability of a director or officer of the registrant will be eliminated or limited to the fullest extent authorized by the NRS, as so amended. No repeal or modification of this provision of the articles of incorporation will apply to or have any effect on the liability or alleged liability of any director or officer of the corporation for or with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. In addition, the registrant has entered into indemnification agreements with certain of its executive officers and each of its directors pursuant to which the registrant has agreed to indemnify such executive officers and directors against liability incurred by them by reason of their services as an executive officer or director to the fullest extent allowable under applicable law. The registrant also provides liability insurance for each director and officer for certain losses arising from claims or charges made against them while acting in their capacities as directors or officers. The underwriting agreement filed as an exhibit to this Registration Statement provides for indemnification of directors and officers of the registrant by the underwriters against certain liabilities. Item 15. Recent sales of unregistered securities On September 19, 2014, the Company issued an aggregate of 23,311,492 shares of common stock to former members of Eldorado HoldCo LLC upon consummation of the merger with MTR Gaming Group, Inc. II-3 Table of Contents Item 16. Exhibits and financial statement schedules Exhibit no. Item title 1.1 * Form of Underwriting Agreement. 2.1 Agreement and Plan of Merger, dated as of September 9, 2013, by and between MTR Gaming Group, Inc., Eclair Holdings Company, Ridgeline Acquisition Corp., Eclair Acquisition Company, LLC, Eldorado HoldCo LLC, and Thomas Reeg, Robert Jones, and Gary Carano, as the Member Representative (the schedules and certain exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on September 11, 2013). 2.3 Amendment No. 2 to Agreement and Plan of Merger, dated February 13, 2014, by and between MTR Gaming Group, Inc., Eclair Holdings Company, Ridgeline Acquisition Corp., Eclair Acquisition Company, LLC, and Eldorado HoldCo LLC (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 13, 2014). 2.4 Amendment No. 3 to Agreement and Plan of Merger, dated May 13, 2014, by and among MTR Gaming Group, Inc., Eclair Holdings Company, Ridgeline Acquisition Corp., Eclair Acquisition Company, LLC, and Eldorado Holdco LLC (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on May 13, 2014). 3.1 Amended and Restated Articles of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on September 19, 2014). 3.2 Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K filed on September 19, 2014). 4.1 Specimen Stock Certificate of the Company (incorporated by reference to our Form S-4/A filed on April 21, 2014). 5.1 * Opinion of McDonald Carano Wilson LLP. 10.1 Indenture dated as of August 1, 2011, by and between MTR Gaming Group, Inc., certain of its wholly-owned subsidiaries (as guarantors) and Wilmington Trust, National Association, including the Form of Note (incorporated by reference to the current report of MTR Gaming Group, Inc. on Form 8-K filed on August 3, 2011). 10.2 First Supplemental Indenture, dated September 17, 2014 by and among MTR Gaming Group, Inc., certain of its wholly-owned subsidiaries (as guarantors) and Wilmington Trust, National Association (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.3 Indenture dated as of June 1, 2011, by and among Eldorado Resorts LLC and Eldorado Capital Corp., as issuers, and U.S. Bank National Association, as Trustee, and Capital One, N.A., as Collateral Trustee, and Form of Note (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.4 Agreement dated November 1, 2008 between Mountaineer Park, Inc. and Racetrack Employees Union Local No. 101 [Schedules omitted] (incorporated by reference to the Annual Report of MTR Gaming Group, Inc. on Form 10-K filed on March 16, 2009). II-4 Table of Contents Exhibit no. Item title 10.5 Agreement dated December 31, 2009 by and between Mountaineer Park, Inc. and Mountaineer Park Horsemen's Benevolent and Protective Association, Inc. (incorporated by reference to the Annual Report of MTR Gaming Group, Inc. on Form 10-K filed on March 16, 2010). 10.6 Agreement dated February 22, 2007 by and between Presque Isle Downs, Inc. and the Pennsylvania Horsemen's Benevolent and Protective Association Inc. (incorporated by reference to the Annual Report of MTR Gaming Group, Inc. on Form 10-K filed on April 2, 2007). 10.7 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Gary Carano (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.8 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Thomas Reeg (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.9 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Robert Jones (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.10 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Joseph L. Billhimer, Jr. (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.11 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Anthony Carano (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.12 2010 Long-Term Incentive Plan (incorporated by reference to the Quarterly Report of MTR Gaming Group, Inc. on Form 10-Q filed on August 9, 2010). 10.13 Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (2010 Long-Term Incentive Plan) (incorporated by reference to the Quarterly Report of MTR Gaming Group, Inc. on Form 10-Q filed on August 9, 2010). 10.14 Form of Nonqualified Stock Option Award Agreement (2010 Long-Term Incentive Plan) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 3, 2011). 10.15 Form of Restricted Stock Unit Award Agreement (2010 Long-Term Incentive Plan) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 3, 2011). 10.16 Form of Cash-Based Performance Award Agreement (2010 Long-Term Incentive Plan) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 3, 2011). 10.17 Ground Lease dated as of May 19, 1999 between City of Shreveport, as landlord, and Eldorado Casino Shreveport Joint Venture (formerly known as QNOV) as tenant (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). II-5 Table of Contents Exhibit no. Item title 10.18 First Amendment to Lease Agreement made and entered into as of August 13, 2012, by and between City of Shreveport, as landlord, and Eldorado Casino Shreveport Joint Venture (formerly known as QNOV) as tenant (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.19 Lease between C, S & Y Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.20 Addendum, dated as of March 20, 1973, to lease between C, S & Y Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.21 Amendment, dated as of January 1, 1978, to lease between C. S. & Y. Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.22 Amendment, dated as of January 31, 1985, to lease between C. S. & Y. Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.23 Amendment, dated as of December 24, 1987, to lease between C. S. & Y. Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.24 Reimbursement and Indemnification Agreement and Lease Amendment, entered into as of March 24, 1994, by and between Eldorado Hotel Associates Limited Partnership, and CS&Y Associates (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.25 Fourth Amendment, dated as of June 1, 2011, by and between Eldorado Resorts LLC and CS&Y Associates, to Reimbursement and Indemnification Agreement and Lease Amendment, entered into as of March 24, 1994, by and between Eldorado Hotel Associates Limited Partnership, and CS&Y Associates (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.26 Operating Agreement of Circus and Eldorado Joint Venture, LLC, dated as of July 1, 2013 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.27 Eldorado Resorts, Inc. 2015 Equity Incentive Plan (incorporated by reference to our Form S-8 filed on April 3, 2015). 10.28 Form of Director Restricted Stock Unit Award Agreement (Settlement on Termination) (Eldorado Resorts, Inc. 2015 Equity Incentive Plan) (filed herewith). 10.29 Form of Director Restricted Stock Unit Award Agreement (Settlement on Shareholder Approval of Plan) (Eldorado Resorts, Inc. 2015 Equity Incentive Plan) (filed herewith). 10.30 Form of Performance Stock Unit Award (Eldorado Resorts, Inc. 2015 Equity Incentive Plan) (filed herewith). II-6 Table of Contents Exhibit no. Item title 10.31 Purchase and Sale Agreement, dated as of July 7, 2015, by and among the Company, Eldorado Limited Liability Company, CC-RENO LLC, Circus Circus Casinos, Inc. and Galleon, Inc. (filed herewith). 14.1 Code of Ethics and Business Conduct of the Company (incorporated by reference to our Current Report on Form 8-K filed on September 9, 2014). 21.1 Subsidiaries of the Registrant (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 23.1 Consent of Ernst & Young LLP (filed herewith). 23.2 Consent of Ernst & Young LLP (filed herewith). 23.3 * Consent of McDonald Carano Wilson LLP (included in Exhibit 5.1). 24.1 Powers of Attorney (included on signature page hereto). 99.1 Description of Governmental Regulations and Licensing (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 99.2 Audited consolidated financial statements of Circus and Eldorado Joint Venture, LLC, as of and for the years ended December 31, 2013 and 2012 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 101.1 * XBRL Instance Document 101.2 * XBRL Taxonomy Extension Schema Document 101.3 * XBRL Taxonomy Extension Calculation Linkbase Document 101.4 * XBRL Taxonomy Extension Definition Linkbase Document 101.5 * XBRL Taxonomy Extension Label Linkbase Document 101.6 * XBRL Taxonomy Extension Presentation Linkbase Document * To be filed by amendment. Item 17. Undertakings Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-7 Table of Contents The undersigned registrant hereby undertakes that: 1.For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. 2.For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. II-8 Table of Contents Signatures Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Reno, Nevada, on July 14, 2015. ELDORADO RESORTS, INC., a Nevada corporation By: /s/ GARY L. CARANO Gary L. Carano Chief Executive Officer Power of attorney and signatures Each person whose signature appears below constitutes and appoints Gary L. Carano, Thomas R. Reeg and Anthony L. Carano, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this registration statement on Form S-1 has been signed on July 14, 2015 by the following persons in the capacities indicated. Signature Title /s/ GARY L. CARANO Gary L. Carano Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) /s/ ROBERT M. JONES Robert M. Jones Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ FRANK J. FAHRENKOPF JR. Frank J. Fahrenkopf Jr. Director II-9 Table of Contents Signature Title /s/ JAMES B. HAWKINS James B. Hawkins Director /s/ MICHAEL E. PEGRAM Michael E. Pegram Director /s/ THOMAS R. REEG Thomas R. Reeg President and Director /s/ DAVID P. TOMICK David P. Tomick Director /s/ ROGER P. WAGNER Roger P. Wagner Director II-10 Table of Contents Exhibit index Exhibit no. Item title 1.1 * Form of Underwriting Agreement. 2.1 Agreement and Plan of Merger, dated as of September 9, 2013, by and between MTR Gaming Group, Inc., Eclair Holdings Company, Ridgeline Acquisition Corp., Eclair Acquisition Company, LLC, Eldorado HoldCo LLC, and Thomas Reeg, Robert Jones, and Gary Carano, as the Member Representative (the schedules and certain exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on September 11, 2013). 2.3 Amendment No. 2 to Agreement and Plan of Merger, dated February 13, 2014, by and between MTR Gaming Group, Inc., Eclair Holdings Company, Ridgeline Acquisition Corp., Eclair Acquisition Company, LLC, and Eldorado HoldCo LLC (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 13, 2014). 2.4 Amendment No. 3 to Agreement and Plan of Merger, dated May 13, 2014, by and among MTR Gaming Group, Inc., Eclair Holdings Company, Ridgeline Acquisition Corp., Eclair Acquisition Company, LLC, and Eldorado Holdco LLC (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on May 13, 2014). 3.1 Amended and Restated Articles of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on September 19, 2014). 3.2 Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K filed on September 19, 2014). 4.1 Specimen Stock Certificate of the Company (incorporated by reference to our Form S-4/A filed on April 21, 2014). 5.1 * Opinion of McDonald Carano Wilson LLP. 10.1 Indenture dated as of August 1, 2011, by and between MTR Gaming Group, Inc., certain of its wholly-owned subsidiaries (as guarantors) and Wilmington Trust, National Association, including the Form of Note (incorporated by reference to the current report of MTR Gaming Group, Inc. on Form 8-K filed on August 3, 2011). 10.2 First Supplemental Indenture, dated September 17, 2014 by and among MTR Gaming Group, Inc., certain of its wholly-owned subsidiaries (as guarantors) and Wilmington Trust, National Association (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.3 Indenture dated as of June 1, 2011, by and among Eldorado Resorts LLC and Eldorado Capital Corp., as issuers, and U.S. Bank National Association, as Trustee, and Capital One, N.A., as Collateral Trustee, and Form of Note (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.4 Agreement dated November 1, 2008 between Mountaineer Park, Inc. and Racetrack Employees Union Local No. 101 [Schedules omitted] (incorporated by reference to the Annual Report of MTR Gaming Group, Inc. on Form 10-K filed on March 16, 2009). II-11 Table of Contents Exhibit no. Item title 10.5 Agreement dated December 31, 2009 by and between Mountaineer Park, Inc. and Mountaineer Park Horsemen's Benevolent and Protective Association, Inc. (incorporated by reference to the Annual Report of MTR Gaming Group, Inc. on Form 10-K filed on March 16, 2010). 10.6 Agreement dated February 22, 2007 by and between Presque Isle Downs, Inc. and the Pennsylvania Horsemen's Benevolent and Protective Association Inc. (incorporated by reference to the Annual Report of MTR Gaming Group, Inc. on Form 10-K filed on April 2, 2007). 10.7 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Gary Carano (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.8 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Thomas Reeg (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.9 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Robert Jones (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.10 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Joseph L. Billhimer, Jr. (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.11 Executive Employment Agreement, dated as of September 29, 2014, by and between the Company and Anthony Carano (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2014). 10.12 2010 Long-Term Incentive Plan (incorporated by reference to the Quarterly Report of MTR Gaming Group, Inc. on Form 10-Q filed on August 9, 2010). 10.13 Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (2010 Long-Term Incentive Plan) (incorporated by reference to the Quarterly Report of MTR Gaming Group, Inc. on Form 10-Q filed on August 9, 2010). 10.14 Form of Nonqualified Stock Option Award Agreement (2010 Long-Term Incentive Plan) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 3, 2011). 10.15 Form of Restricted Stock Unit Award Agreement (2010 Long-Term Incentive Plan) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 3, 2011). 10.16 Form of Cash-Based Performance Award Agreement (2010 Long-Term Incentive Plan) (incorporated by reference to the Current Report of MTR Gaming Group, Inc. on Form 8-K filed on February 3, 2011). 10.17 Ground Lease dated as of May 19, 1999 between City of Shreveport, as landlord, and Eldorado Casino Shreveport Joint Venture (formerly known as QNOV) as tenant (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). II-12 Table of Contents Exhibit no. Item title 10.18 First Amendment to Lease Agreement made and entered into as of August 13, 2012, by and between City of Shreveport, as landlord, and Eldorado Casino Shreveport Joint Venture (formerly known as QNOV) as tenant (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.19 Lease between C, S & Y Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.20 Addendum, dated as of March 20, 1973, to lease between C, S & Y Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.21 Amendment, dated as of January 1, 1978, to lease between C. S. & Y. Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.22 Amendment, dated as of January 31, 1985, to lease between C. S. & Y. Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.23 Amendment, dated as of December 24, 1987, to lease between C. S. & Y. Associates, as lessor, and Eldorado Hotel Associates, as lessee, dated as of July 21, 1972 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.24 Reimbursement and Indemnification Agreement and Lease Amendment, entered into as of March 24, 1994, by and between Eldorado Hotel Associates Limited Partnership, and CS&Y Associates (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.25 Fourth Amendment, dated as of June 1, 2011, by and between Eldorado Resorts LLC and CS&Y Associates, to Reimbursement and Indemnification Agreement and Lease Amendment, entered into as of March 24, 1994, by and between Eldorado Hotel Associates Limited Partnership, and CS&Y Associates (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.26 Operating Agreement of Circus and Eldorado Joint Venture, LLC, dated as of July 1, 2013 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 10.27 Eldorado Resorts, Inc. 2015 Equity Incentive Plan (incorporated by reference to our Form S-8 filed on April 3, 2015). 10.28 Form of Director Restricted Stock Unit Award Agreement (Settlement on Termination) (Eldorado Resorts, Inc. 2015 Equity Incentive Plan) (filed herewith). 10.29 Form of Director Restricted Stock Unit Award Agreement (Settlement on Shareholder Approval of Plan) (Eldorado Resorts, Inc. 2015 Equity Incentive Plan) (filed herewith). 10.30 Form of Performance Stock Unit Award (Eldorado Resorts, Inc. 2015 Equity Incentive Plan) (filed herewith). II-13 Table of Contents Exhibit no. Item title 10.31 Purchase and Sale Agreement, dated as of July 7, 2015, by and among the Company, Eldorado Limited Liability Company, CC-RENO LLC, Circus Circus Casinos, Inc. and Galleon, Inc. (filed herewith). 14.1 Code of Ethics and Business Conduct of the Company (incorporated by reference to our Current Report on Form 8-K filed on September 9, 2014). 21.1 Subsidiaries of the Registrant (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 23.1 Consent of Ernst & Young LLP (filed herewith). 23.2 Consent of Ernst & Young LLP (filed herewith). 23.3 * Consent of McDonald Carano Wilson LLP (included in Exhibit 5.1). 24.1 Powers of Attorney (included on signature page hereto). 99.1 Description of Governmental Regulations and Licensing (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 99.2 Audited consolidated financial statements of Circus and Eldorado Joint Venture, LLC, as of and for the years ended December 31, 2013 and 2012 (incorporated by reference to our Annual Report on Form 10-K filed on March 16, 2015). 101.1 * XBRL Instance Document 101.2 * XBRL Taxonomy Extension Schema Document 101.3 * XBRL Taxonomy Extension Calculation Linkbase Document 101.4 * XBRL Taxonomy Extension Definition Linkbase Document 101.5 * XBRL Taxonomy Extension Label Linkbase Document 101.6 * XBRL Taxonomy Extension Presentation Linkbase Document * To be filed by amendment. II-14 Table of Contents Table of contents Page Prospectus summary 1
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+F-1/A 1 d948227df1a.htm F-1/A F-1/A Table of Contents As filed with the Securities and Exchange Commission on July 14, 2015. Registration No. 333-205474 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to Form F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 DBV TECHNOLOGIES S.A. (Exact name of registrant as specified in its charter) France 2836 Not applicable (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) DBV Technologies S.A. Green Square-B timent D 80/84 rue des Meuniers 92220 Bagneux France +33 1 55 42 78 78 (I.R.S. Employer Identification Number) (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) CT Corporation System 111 8th Avenue New York, New York 10011 (212) 894-8800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Marc Recht, Esq. Divakar Gupta, Esq. Richard Segal, Esq. Cooley LLP 500 Boylston Street Boston, MA 02116 (617) 937-2300 Emmanuelle Trombe Bertrand Delafaye McDermott Will & Emery AARPI 23 Rue de l'Universit 75007 Paris, France +33 1 81 69 15 37 Philippe D Hoir D Hoir, Beaufre & Associ s 22, rue Cl ment Marot 75008 Paris, France +33 1 53 23 80 85 Stuart Cable, Esq. Edwin O Connor, Esq. Seo Salimi, Esq. Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 (617) 570-1000 Karen No l Arnaud Duhamel Gide Loyrette Nouel A.A.R.P.I. 22, cours Albert ler 75008 Paris, France +33 1 40 75 60 00 Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Ordinary Shares, 0.10 nominal value per share(4) $243,984,000 $28,351 (1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes ordinary shares represented by American Depositary Shares, or ADSs, which the underwriters have the option to purchase. (3) The registrant previously paid $17,430 of the registration fee with the initial filing of this registration statement. (4) Each ADS represents one-half of one ordinary share. The ADSs issuable on deposit of the ordinary shares registered hereby have been registered under a separate registration statement on Form F-6 (File No. 333-199231). The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine. Table of Contents SUMMARY The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in the ADSs. You should read the entire prospectus carefully, including Risk Factors and our consolidated financial statements and the related notes appearing elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the sections of this prospectus titled Business, and Management s Discussion and Analysis of Financial Condition and Results of Operations before making an investment decision. Unless otherwise indicated, DBV, the company, our company, we, us and our refer to DBV Technologies S.A. and its consolidated subsidiary. Company Overview We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin. Our therapeutic approach is based on epicutaneous immunotherapy, or EPIT, our proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin. We have generated significant data demonstrating that Viaskin s mechanism of action is novel and differentiated as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, which capture the antigen and migrate to the lymph node in order to activate the immune system without allowing passage of the antigen into the bloodstream. We are advancing this unique technology to treat patients, including infants and children, suffering from severe food allergies, for whom safety is paramount, since the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such as anaphylactic shock. Our proprietary platform is based on our epicutaneous Viaskin patch. We have designed and developed this technology internally, for which we have scalable manufacturing capabilities. Viaskin is an electrostatic patch, which offers a convenient, self-administered, non-invasive immunotherapy to patients. Once applied on intact skin, Viaskin forms a condensation chamber, which hydrates the skin and solubilizes the antigen allowing it to penetrate the epidermis, where it is captured by Langerhans cells. Based on numerous scientific publications and our own research, we believe this unique mechanism of action has a favorable safety profile and that it generates a strong immune response that results in tolerance towards the allergen. Our epicutaneous immunotherapy method allows us to address severe food allergies, as well as unmet medical needs in other immunotherapy indications. Table of Contents The following table summarizes our most advanced product candidates: * U.S. FDA Breakthrough Therapy designation in children ** EU Pediatric Investigation Plan We are focused on becoming the leader in discovering, developing and commercializing food allergy products. Our pipeline development strategy is based on leveraging Viaskin s scientific profile while taking into consideration a combination of target market characteristics, which include allergen prevalence, persistence and severity. We select our target products with the aim to address the highest unmet medical needs. Our lead product candidate, Viaskin Peanut, has obtained fast track designation and breakthrough therapy designation in children from the U.S. Food and Drug Administration, or FDA, which are designations intended to expedite or facilitate the process of reviewing new drugs and biological products that are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. The European Medicines Agency s, or EMA, Paediatric Committee has also adopted a positive opinion with respect to our Paediatric Investigation Plan, or PIP, for Viaskin Peanut, which is a prerequisite for the filing of marketing authorization for any new medicinal product in Europe. In September 2014, we announced topline results for our Viaskin Peanut s Efficacy and Safety, or VIPES, Phase IIb clinical trial of Viaskin Peanut in peanut allergic patients, which was followed by a full study report presented at the 2015 AAAAI Annual Meeting in Houston, Texas. While we plan to announce first year follow-up data from the Open-Label Follow-Up Study, or OLFUS, VIPES clinical trial in the fourth quarter of 2015, to date, based on a preliminary review, no serious adverse events, or SAEs, related to the study drug have been recorded, and the safety profile of the product candidate remains similar to that observed in the VIPES trial. However, OLFUS-VIPES remains ongoing and analysis of this first year follow-up data has not yet been completed. Accordingly, the final first year follow-up data may change from that reported based on a preliminary review and the final OLFUS-VIPES results may not be consistent with either the preliminary or final first year follow-up data. Table of Contents We are responsible for the information contained in this prospectus and any free-writing prospectus we prepare or authorize. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than its date. TABLE OF CONTENTS Page SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class B common stock. Before you decide to invest in our Class B common stock, you should read this entire prospectus carefully, including our financial statements and the related notes thereto and the matters discussed in the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations contained elsewhere in this prospectus. Unless we state otherwise or the context otherwise requires, references in this prospectus to we, our, us, Duluth Trading and the Company refer to Duluth Holdings Inc. and its subsidiary on a consolidated basis. Our Company Duluth Trading is a rapidly growing lifestyle brand of men s and women s casual wear, workwear and accessories sold exclusively through our own channels. We offer a comprehensive line of innovative, durable and functional products, such as our Longtail T shirts, Buck Naked underwear and Fire Hose work pants, which reflect our position as the Modern, Self-Reliant American Lifestyle brand. Our brand has a heritage in workwear that transcends tradesmen and appeals to a broad demographic of men and women for everyday and on-the-job use. Approximately 88% of our fiscal 2014 net sales consisted of proprietary products sold under our Duluth Trading brand name. We believe the foundation of our success is our culture of poking average in the eye by seeing things for what they could be and should be and finding a way to make them exactly that, and we like to do it all with a big, toothy grin. Our brand is defined by: solution-based products manufactured with high quality craftsmanship, humorous and distinctive marketing and an outstanding customer experience. Our design process reflects a there s gotta be a better way attitude, resulting in differentiated products with enhanced features and enduring styles that go beyond short-lived fashion trends. We strive to make shopping for our products fun by using attention-grabbing advertisements that serve to reinforce our brand identity. We also use storytelling to differentiate our products in the marketplace and create emotional connections with our customers. We provide our customers with a unique and entertaining experience across all channels through our content-rich website, catalogs and store like no other retail environment. We treat our customers like next-door neighbors, as exemplified by our exceptional customer service and unconditional No Bull Guarantee on all purchases. To protect the integrity of the Duluth Trading brand, we offer our products exclusively through our omnichannel distribution network, consisting of our website, catalogs and retail stores. This model creates multiple touch points with our customers and enables us to control both the expression of our Duluth Trading brand and the pricing of our products. Our distribution strategy eliminates the need to sell through third-party retailers, allowing us to focus on our core competencies of product development, storytelling and serving customers. Duluth Trading was founded in 1989 when two brothers in the home construction industry were tired of dragging tools from job to job using discarded five-gallon drywall compound buckets. The two brothers were never satisfied with the status quo and believed there s gotta be a better way. So they invented the Bucket Boss a ruggedly durable canvas tool organizer that fits around a drywall bucket and transformed the way construction workers organized their tools. Capitalizing on their initial success, these brothers launched a catalog that later became known as Duluth Trading Company. Under the initial philosophy of Job Tough, Job Smart, this catalog was dedicated to improving and expanding on existing methods of tool storage, organization and transport. In December 2000, GEMPLER S Inc., an agricultural and horticultural supply catalog business founded and owned by Stephen L. Schlecht, acquired Duluth Trading and brought the two mail order companies together. Both catalogs had customers who worked outside and embraced the spirit of hands-on, self-reliant Americans. In February 2003, the GEMPLER S catalog business was sold to W.W. Grainger (NYSE:GWW) and proceeds from that sale have been used to fund the growth of Duluth Trading. With that transaction, GEMPLER S, Inc. changed its corporate name to Duluth Holdings Inc. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY SUBJECT TO COMPLETION DATED NOVEMBER 9, 2015 PROSPECTUS 6,666,667 Shares Duluth Holdings Inc. Class B Common Stock Duluth Holdings Inc. is offering 6,666,667 shares of Class B common stock. This is our initial public offering and no public market currently exists for our Class B common stock. We anticipate the initial public offering price to be between $14.00 and $16.00 per share. Duluth Holdings Inc. has two classes of authorized common stock: Class A common stock and Class B common stock. The rights of holders of Class A common stock and Class B common stock are identical, except for voting and conversion rights. Each share of Class A common stock is entitled to ten votes per share and is convertible at any time into one share of Class B common stock. Each share of Class B common stock is entitled to one vote per share. Outstanding shares of Class A common stock will represent approximately 10.8% of our outstanding capital stock immediately following the completion of this offering. We have applied to have our Class B common stock listed on the NASDAQ Global Select Market under the symbol DLTH. Following this offering, we will be a controlled company under the corporate governance rules for NASDAQ-listed companies, and our board of directors has determined not to have an independent nominating function and instead to have the full board of directors be directly responsible for nominating members of our board. We are an emerging growth company as defined under federal securities laws and are subject to reduced public company reporting requirements. Investing in our Class B common stock involves a high degree of risk. See Risk Factors beginning on page 13 of this prospectus. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting (Conflicts of Interest) for a description of the compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days to purchase up to an additional 1,000,000 shares of our Class B common stock at the initial public offering price after deducting underwriting discounts and commissions. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of Class B common stock to purchasers on or about , 2015. William Blair Baird Raymond James BMO Capital Markets , 2015 Table of Contents From what began as an idea aimed at those working in the building trades, Duluth Trading has become a widely recognized brand and proprietary line of innovative and functional apparel and gear. We have created strong brand awareness, built a loyal customer base and generated robust net sales momentum. We have done so by sticking to our roots of there s gotta be a better way and through our relentless focus on providing our customers with quality, functional products. We have established a strong track record of growth and profitability as demonstrated by our net sales and operating income compound annual growth rates, or CAGRs, between calendar 2009 and fiscal 2014 of 28% and 51%, respectively. We believe that the foregoing attributes have enabled us to deliver strong financial results, as evidenced by: net sales have increased year-over-year for 22 consecutive quarters through August 2, 2015; net sales in fiscal 2014 increased by 42.2% over the prior year to $231.9 million and net sales in the first six months of fiscal 2015 increased by 37.0% over the first six months of the prior year to $108.5 million; Adjusted EBITDA in fiscal 2014 increased by 51.3% over the prior year to $26.7 million and Adjusted EBITDA in the first six months of fiscal 2015 increased 37.4% over the first six months of the prior year to $11.2 million; and our retail stores have achieved an average payback of less than two years. See Summary Consolidated Financial and Other Data Non-U.S. GAAP Financial Measures for a reconciliation of our net income to Adjusted EBITDA, a non-U.S. GAAP financial measure. See Management s Discussion and Analysis of Financial Condition and Results of Operations for our definition of Adjusted EBITDA. What Makes Us Different We believe the following strengths differentiate us and provide a foundation for future growth: Differentiated, Everyday Lifestyle Brand Our understanding of the Modern, Self-Reliant American Lifestyle enables us to create personal connections with our customers, who lead a hands-on lifestyle, value a job well-done and are often outdoors for work and hobbies. The workwear heritage of our products is the foundation of our authentic and differentiated brand. We communicate our brand values and product performance nationally through multiple mediums, including television, catalogs, digital advertising and sponsored events. We believe these marketing efforts make our brand synonymous with this lifestyle, validate our authenticity and establish us as a trusted provider of durable and functional casual wear and workwear. Table of Contents Table of Contents Solution-Based Design Our products solve the problems our customers experience with commonly available apparel and gear. We generate new product ideas in part by proactively seeking input from our customers, including our trades panels, which are comprised of select groups located across the United States with expertise in various fields. Our trades panels test our products in intense conditions and offer suggestions for new and improved features. We believe that our focus on thoughtful product design and commitment to quality, such as triple stitching the extra stitch and doubling down on extra durable fabric, keeps our existing customers engaged while also attracting new customers to our brand. And we do it all because there are a whole lotta legs, torsos, feet and crotches out there counting on us. Humorous and Distinctive Marketing We make shopping for our products fun by using attention-grabbing advertisements that are humorous, irreverent and quirky. Our national advertising campaigns that feature characters such as our Giant Angry Beaver, Buck Naked Guy and Grab-Happy Grizzly continue to increase our brand awareness and drive customers to our brand. We use storytelling to differentiate our products in the marketplace and create emotional connections with our customers. For example, we inspire our female customers by featuring women of grit and substance whose professions range from ranching to horse training to dog sled racing to landscape design. We believe our approach to marketing gives our products a distinct identity, enhances our brand and helps us stand out in the market. Outstanding and Engaging Customer Experience An important principle that shapes the Duluth Trading brand is our commitment to treat our customers like next-door neighbors by providing a shopping experience that is fun, inviting and hassle-free. We are dedicated to delivering outstanding customer service by standing behind all purchases with our unconditional No Bull Guarantee. Our content-rich, user-friendly website is designed to provide an enjoyable, informative and efficient shopping experience. Our call center is open 24 hours a day, seven days a week and is staffed with friendly, knowledgeable representatives dedicated to making every customer experience positive. Our retail stores are designed to bring our brand to life by creating a unique and entertaining experience with engaging sales associates and a compelling and complete assortment of our products. We believe these elements help promote customer loyalty and drive repeat purchases. Attractive, Loyal Customer Base The quality and consistency of our product offering attracts a broad demographic of men and women who lead the Modern, Self-Reliant American Lifestyle. According to an internal company survey, 87% of our customers identified themselves as working outside of the building trades. Our average customer is a long-standing homeowner with an annual household income of over $75,000. Based on these characteristics, we believe our customers have a high level of disposable income and are attracted by the high quality craftsmanship and enhanced features of our products. We enjoy a high level of brand satisfaction as evidenced by our Net Promoter Score of approximately 70% and the fact that 76% of our customers would recommend Duluth Trading to a friend or colleague, according to IRI. In addition, we currently have over 200,000 online product reviews, over 90% of which are four or five star ratings. Omnichannel Presence with Complete Distribution Control We sell our products exclusively through our direct and retail channels, giving us complete control of the presentation of our brand and the relationships with our customers. This strategy allows us to present our brand in a consistent manner, including marketing, pricing and product presentation. It also enables us to reduce Table of Contents Table of Contents logistical complexities and costs because we are not subject to timing, delivery and quantity requirements set by third-party retailers. We believe this approach to distribution is a significant advantage for our brand, allowing us to deliver feature rich, superior quality products at competitive prices. Direct Segment. We have an established direct platform that reaches customers nationwide through our website and catalogs, which together comprised approximately 90% of our fiscal 2014 net sales. Based on our internal research and our fiscal 2014 net sales, the concentration of our direct nationwide customer base was generally aligned with the geographic concentration of the U.S. population, and our top three markets during fiscal 2014 were California, Texas and New York, in that order. Our duluthtrading.com website serves as a storefront to our entire product collection, and approximately 78% of our fiscal 2014 net sales in the direct segment were transacted online. Our catalog business is an important part of our heritage, and approximately 22% of our fiscal 2014 net sales in the direct segment were transacted via our call center. Our catalogs also serve as a tangible vehicle for our authentic and humorous storytelling and often drive customers who wish to further interact with our brand to visit our website and retail stores. Retail Segment. In 2010, we opened our first retail store and have since expanded our retail presence, operating seven retail stores and two outlet stores as of November 2015. Retail sales represented approximately 10% of our fiscal 2014 net sales, and we expect retail sales to represent an increasing percentage of our net sales over time. Our retail stores allow us to reach customers who prefer to shop in a brick and mortar setting and give new and existing consumers the opportunity to touch and feel our innovative products. Seasoned Management Team Driving an Impassioned Culture Our senior management team has extensive experience across a broad range of key disciplines. With an average of approximately 30 years of experience in their respective functional areas, our management team has been instrumental in driving results and in developing a robust and scalable infrastructure to support our continued growth. Our senior management team embraces the Modern, Self-Reliant American Lifestyle and has fostered a culture committed to outthink, outsmart and outcraft average, which is shared by employees throughout our organization. Our strong company culture and spirited corporate personality are exemplified by the long tenure of our team members with us. We believe the strength of our senior management team, supported by our dedicated board of directors and passionate employees, is a key driver of our success and positions us well to execute our long-term growth strategy. Our Growth Strategies Our goal is to expand the reach of the Duluth Trading brand, using strategies that will further drive growth and profitability: Building Brand Awareness to Continue Customer Acquisition. We are a rapidly growing lifestyle brand, have built strong brand awareness and have successfully acquired customers over the past five years. As a relatively young brand, we believe that we have a significant opportunity to build even greater brand awareness. According to IRI, once we bring customers to our brand, they are more satisfied with Duluth Trading than any other brand in our competitive set. We intend to leverage our unique and compelling marketing strategy, retail expansion and continued catalog prospecting to capture potential new customers. Accelerating Retail Expansion. IRI has validated that our customers purchasing decisions are heavily influenced by the availability of our retail stores. We believe that our customers desire to shop in stores, combined with the number of potential markets for our stores and the compelling unit Table of Contents Table of Contents economics of our existing retail stores, provide us with a significant opportunity to grow our U.S. retail presence. We have identified markets with the potential for approximately 100 U.S. store locations that feature high concentrations of existing Duluth Trading customers and potential customers that fit our brand demographics. Our existing retail stores have been highly profitable in both metropolitan and rural locations across multiple markets and have achieved an average payback of less than two years. We plan to continue building our organization and investing in software systems and operational infrastructure to support the growth in our retail segment. Based on our experience to date, we believe the combination of our direct and retail channels in an individual geographic market substantially increases the net sales and customer acquisition potential in that market. Selectively Broadening Assortments in Certain Men s Product Categories. We intend to continue to expand our men s business by selectively broadening our assortment in certain product categories that exhibit high potential and resonate with the lifestyle of our men s customers, such as outerwear and footwear. Through product introductions that expand seasonality and occasions for wear, we believe we can grow our share of closet with existing and new men s customers. Growing Our Women s Business. Since launching in 2005, our women s business has grown significantly to represent approximately 19% of our net sales in fiscal 2014 and has achieved a 55% CAGR from fiscal 2012 to fiscal 2014. According to IRI, women have lower awareness of our brand but report high levels of satisfaction with Duluth Trading once they have tried our products. We expect that our women s business will continue to represent an increasing portion of our overall business going forward and intend to grow it through acquiring new customers, by broadening our women s product assortment and by leveraging all of our marketing channels, including national television and digital advertising, our catalogs and retail stores. Market Opportunity We operate in the U.S. apparel, footwear and accessories market, primarily in the everyday casual wear and workwear categories. According to IRI, the total market, including men s, women s and children s apparel, footwear and accessories (such as jewelry, bags and small leather goods), is estimated to be $334 billion in 2015. Within this industry, apparel is expected to account for approximately 65% of sales, footwear is expected to account for approximately 19% of sales and accessories is expected to account for approximately 16% of sales. IRI expects total U.S. apparel dollar sales to continue to grow at 2% to 4% annually. We believe that we are well-positioned to capture an increasing share of this attractive market by continuing to execute on our growth strategies of building customer awareness, accelerating our retail store expansion, selectively broadening our assortment in certain men s product categories and growing our women s business. Recent Developments We expect total net sales to be between $55.0 million and $55.5 million in the three months ended November 1, 2015 compared to $42.6 million in the three months ended November 2, 2014. We expect net sales for our direct segment to be between $46.3 million and $46.6 million and net sales for our retail segment to be between $8.7 million and $8.9 million in the three months ended November 1, 2015 compared to $36.7 million and $5.9 million in the three months ended November 2, 2014, respectively. We expect our gross margin rate to be up slightly in the three months ended November 1, 2015 compared to the three months ended November 2, 2014. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our common shares and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before deciding to buy our common shares. Unless the context requires otherwise, references in this prospectus to the "Company," "DAVIDsTEA," "we," "us" and "our" refer to DAVIDsTEA Inc. and its wholly owned subsidiary. Unless otherwise noted, this prospectus assumes the 1.6-for-1 forward split of our common shares, which was effective on May 21, 2015, as well as the exchange of all of our Class AA Common Shares into common shares and the conversion of all of our Junior Preferred Shares, Series A Preferred Shares, Series A-1 Preferred Shares and Series A-2 Preferred Shares into common shares. In this prospectus, unless otherwise specified, all monetary amounts are in Canadian dollars, all references to "$," "C$," "CDN$," "Canadian dollars" and "dollars" mean Canadian dollars and all references to "U.S. dollars," "US$" and "USD" mean U.S. dollars. Our Company DAVIDsTEA is a fast-growing branded beverage company, offering a differentiated selection of proprietary loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts and accessories through 161 DAVIDsTEA stores, as of May 2, 2015, and our website, davidstea.com. We are building a brand that seeks to expand the definition of tea with innovative products that consumers can explore in an open and inviting retail environment. The passion for and knowledge of tea permeates our culture and is rooted in an excitement to explore the taste, health and lifestyle elements of tea. We design our stores with a modern and simple aesthetic that, coupled with our teal-colored logo, create an inviting atmosphere and stand in stark contrast to common perceptions of tea as a more traditional product. We strive to make tea a multi-sensory experience by facilitating interaction with our products through education and sampling so that our customers appreciate the compelling attributes of loose-leaf teas as well as the ease of preparation. Our in-store "Tea Guides" help novice and experienced tea drinkers alike select from the approximately 150 varieties of premium teas and tea blends featured on our "Tea Wall," which is the focal point of our stores. We replicate our store experience online by engaging users with rich content that allows them to easily explore their options amongst our many tea and tea-related offerings. We sell our products exclusively through our retail and online channels, giving us control of the presentation of our brand as well as greater interaction with the customer, which increases our pace of innovation. We have a dedicated and highly experienced product development team that is constantly creating new tea blends using high-quality ingredients from around the world. By continually offering new products and refining our blending techniques to enhance existing teas, we believe we bring new customers into the category and drive the frequency of visits to our stores and website among existing customers. We bring newness and capitalize on our product development capabilities with approximately 30 new blends each year that we rotate into our offering on a continuous basis. We also focus on product innovation in our accessories, providing our customers with fun, inventive and more convenient ways to enjoy tea. We believe that our product development platform and level of innovation have helped us earn a strong and loyal customer following that is passionate about DAVIDsTEA. We were founded in Montr al, Canada by Herschel and David Segal in 2008. They sought to build a brand and company to respond to consumers' increasing focus on health and wellness by leveraging tea's potential health benefits and providing high-quality products. Since opening our first retail store and launching our website (www.davidstea.com) in late 2008, we have poured our Amendment No. 4 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Trademarks and Service Marks We own or have rights to trademarks and service marks for use in connection with the operation of our business, including, but not limited to, DAVIDsTEA . All other trademarks or service marks appearing in this prospectus that are not identified as marks owned by us are the property of their respective owners. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are listed without the , (TM) and (sm) symbols, but we will assert, to the fullest extent under applicable law, our applicable rights in these trademarks, service marks and trade names. Table of Contents love for tea into an active online community with over 3.5 million unique visitors to our website in 2014 and 161 DAVIDsTEA locations, including 136 in Canada and 25 in the United States as of May 2, 2015. To date, we have been successful in a variety of Canadian markets, including in Montr al, Toronto and Vancouver. The strong performance of our stores across geographies demonstrates the appeal of our brand and underscores our growth opportunity. With our success in Canada and over three years of experience in U.S. markets, including New York, Boston, Chicago and San Francisco, we believe we are well positioned to take advantage of the significant growth opportunity across North America. Consistent with our stores, davidstea.com features our innovative products while offering expertise, community and numerous tools to aid the discovery and exploration of tea. During fiscal 2014, approximately 68% of our revenue was driven by the sale of loose-leaf tea and tea-related gifts that consumers enjoy at home, on-the-go or at work, with the balance driven by tea accessories (22%) and food and beverages prepared in our stores (10%). We believe our business model is based on innovation, quality and the customer experience. These attributes have positioned us to deliver strong financial results, as evidenced by the following: The growth of our store base from 70 stores in fiscal 2011 to 154 stores in fiscal 2014, representing a 30% compound annual growth rate. As of January 31, 2015, we had a total of 154 stores or approximately 24% more than at the end of fiscal 2013. As of May 2, 2015, we had 161 stores in North America. Twenty-two consecutive quarters of positive comparable sales growth through the end of fiscal 2014. On an annual basis since fiscal 2011, we have reported double-digit comparable sales growth ranging from 33.4% in fiscal 2011 to 11.1% in fiscal 2014. An increase in sales from $41.9 million in fiscal 2011 to $141.9 million in fiscal 2014, representing a 50% compound annual growth rate. Sales in fiscal 2014 were approximately 31% higher than in fiscal 2013. Growth of our Adjusted EBITDA from $7.7 million in fiscal 2012 to $21.9 million in fiscal 2014, representing a 68% compound annual growth rate. Adjusted EBITDA in fiscal 2014 was approximately 54% higher than in fiscal 2013. Our net income was $(4.4) million, $(6.2) million and $6.5 million in fiscal 2012, 2013 and 2014. DAVIDsTEA INC. (Exact name of registrant as specified in its charter) Canada (State or other jurisdiction of incorporation or organization) 5499 (Primary Standard Industrial Classification Code Number) 98-1048842 (I.R.S. Employer Identification Number) 5430 Ferrier Mount-Royal, Qu bec, Canada, H4P 1M2 Telephone: (888) 873-0006 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Our Market Opportunity We participate in the large and growing global tea market, which had approximately $40 billion of retail sales in 2013 in 2014 U.S. dollars, according to Euromonitor International data as of November 4, 2014. We believe that the large size and outsized growth of the tea category combined with the relatively low percentage of tea value sales in North America make our market opportunity highly attractive, especially as we expect consumer awareness of tea in Canada and the United States to increase. Our Competitive Strengths We believe that the following strengths differentiate us from our competitors and are important to our success: Modern Brand Reinventing the Tea Experience. Our mission is to make tea fun and accessible. We believe that our brand, passion for tea and breadth of offering, as underscored by the approximately 150 varieties of premium teas and tea blends in our stores, cause customers to see tea as fresh and stylish. The DAVIDsTEA retail experience is led by our Tea Guides, who share our knowledge of tea with our customers through sampling, education and by showing customers that tea is easy to prepare, comes in a variety of great flavors and is suitable for multiple occasions. To reinforce this sense of accessibility, we create fun names for our teas that are designed to highlight the smell, taste profile and other attributes of the product. We believe our differentiated approach will continue to lead existing customers to engage with our brand and will attract new customers to both our brand and the category. Focus on Innovation and Design. We focus on constant innovation to improve the taste and presentation of our existing tea blends while creating new offerings that delight our customers. Our product development and sourcing teams work closely together and find inspiration from our suppliers as well as from direct feedback from our customers and Tea Guides, all the while following key consumer trends. Our team has launched over 400 different teas since DAVIDsTEA was founded. We seek to develop creative accessories that are unique and make steeping tea easy at home or on-the-go. We also develop gifts that incorporate our love of tea such as tea-scented candles, tea sachets and tea gift boxes. We believe that our focus on innovation and design keeps existing customers engaged while also attracting new customers to our brand. Distinct Retail Concept Reinforces Brand and Customer Loyalty. The clean, modern aesthetic of our retail concept communicates the newness and innovation behind our brand. A key element of the DAVIDsTEA in-store experience is our "Tea Wall," a focal point of the store, which displays approximately 150 varieties of premium loose-leaf teas and tea blends. Our Tea Guides help facilitate a highly interactive and immersive customer experience. It is this personable customer interaction combined with the high-quality teas that has allowed us to develop strong customer loyalties. We have very broad customer appeal that spans novice and experienced tea consumers. To capitalize on this growing following, we introduced our "Frequent Steeper" customer loyalty program in April 2014. This loyalty program has rapidly expanded to over a million members currently. Since April 2014, approximately 80% of our sales have come from Frequent Steepers. We believe that our retail concept and our retail experience led by our Tea Guides both reinforce our brand and drive our customer loyalty. Broad Demographic Appeal Supports Sustainable Long-Term Growth. We believe that our fresh approach to tea gives us broad appeal, while benefitting from several consumer trends. We believe that consumers are increasingly looking for products that are both great tasting and healthy. Tea naturally contains no sodium, fat, carbonation or sugar and is virtually calorie-free. We also offer one of the largest certified organic collections of tea among branded Sylvain Toutant President and Chief Executive Officer 5430 Ferrier Mount-Royal, Qu bec, Canada, H4P 1M2 Telephone: (888) 873-0006 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents tea retailers in North America. We believe that consumers are also looking to find beverages that provide functional benefits and can be customized and enjoyed on a variety of occasions. Lastly, we believe that as consumers become more educated about tea, they will seek out venues like DAVIDsTEA that provide a large selection of high-quality products. We believe that our tea's broad, multi-generational appeal coupled with several important consumer trends, most notably health and wellness, will help support our long-term growth. Effective Grassroots Marketing Strategy Drives Customer Trial and Engagement. We use a field-based marketing approach in addition to social media to build brand awareness and drive customers to our stores. One aspect of this effort is our events sponsorship group, which we believe is a differentiated capability and allows us to create excitement for our brand by engaging directly in the communities around our stores and drive store visits by offering product samplings and beverage coupons. In the last 12 months, we participated in approximately 2,000 events that more than one million people attended. We also have a strong social media platform that is distinguished from peers by our high level of customer engagement. We believe that our ability to build brand awareness is largely driven by our grassroots marketing strategy and our strong social media platform. Versatile Store Model with Compelling Store Economics. Our stores have been successful in a variety of geographic regions, population densities and real estate venues. The success of our stores with consumers is underscored, in part, by our comparable sales growth, which has been positive for the past 22 consecutive quarters. We have proven our concept across Canada, where we believe there remains significant growth opportunity. Our average unit is approximately 850 square feet, although our store format allows us to be flexible so that we can get the most desirable location. Our units in Canada averaged four-wall Adjusted EBITDA margins in excess of 30% in fiscal 2014. Our new stores in Canada have historically averaged a cash-on-cash payback period of approximately two years. We opened our first store in the United States in 2011 and we believe the experience over the last two years demonstrates the potential of our brand and retail concept. For our new stores in the United States, we target a cash-on-cash payback of approximately three years, rather than the two we have historically achieved for our Canadian stores. Our ability to achieve this target is dependent on our ability to increase brand awareness in the United States and to leverage economies of scale in our U.S. distribution channel as we increase our U.S. store base. We believe the strong results we continue to experience in North America underscore our growth opportunity. Passionate Customer-Focused Culture supported by Experienced Management Team and Dedicated Board Members. Our core values and distinctive corporate culture allow us to attract passionate and friendly employees who share a vision of making tea fun and accessible. Our President and Chief Executive Officer, Sylvain Toutant, joined us in May 2014. He most recently served as president of Keurig Canada, and was previously Chief Operating Officer at VanHoutte. Our Chief Financial Officer, Luis Borgen, joined us in 2012, having previously served as the Chief Financial Officer of DaVita HealthCare Partners, a public company in the healthcare space. Prior to DaVita Healthcare Partners, Mr. Borgen spent more than 12 years at Staples. The strength of our management team is supported by our dedicated board of directors, including our co-founder Herschel Segal. Mr. Segal retains an advisory role in our Company and works closely with Mr. Toutant and our other executives in initiatives related to developing corporate strategy, building our corporate culture and enhancing our sales and operations infrastructure. Our board of directors and management team's experience is balanced between entrepreneurial growth and large scale operations. We support a culture that is rooted in our love and excitement for tea. As a result, we believe our culture directly translates into how we interact with our customers and the knowledge and passion our team members display. Sylvain Toutant President and Chief Executive Officer 400 Fifth Avenue Waltham, Massachusetts 02451 Telephone: (888) 873-0006 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our Growth Strategies Key elements of our growth strategy are to: Increase Brand Awareness. We will continue to increase consumer awareness and excitement for the DAVIDsTEA brand and drive customer loyalty through our field-based marketing efforts, social media presence, continued store expansion and growing e-commerce sales. Our field-based marketing programs are designed to develop and foster a personal connection with the community and position DAVIDsTEA as a high-quality, community-conscious brand that simplifies tea preparation in a way that encourages consumption for both tea enthusiasts and novices. We will also continue to leverage our growing social media presence to increase our online sales and drive additional store visits within existing and new markets. We see a significant opportunity to increase our brand visibility in the U.S. market, which will be a key area of focus in our marketing strategy going forward. Grow Our Store Base. We believe there is a highly attractive, long-term growth opportunity for our store base in North America with a potential for up to an additional 100 stores in Canada and up to an additional 300 stores in the United States, based on management estimates. As shown in the table below, our store base has grown considerably in the past few years. Total Number of Stores Fiscal Year Canada United States Total 2011 68 2 70 2012 91 14 105 2013 108 16 124 2014 130 24 154 In fiscal 2015, we expect to open approximately 25-30 stores in Canada and 10-15 stores in the United States. Over the longer term, we believe that we have the ability to open approximately 30-40 stores annually. We are targeting U.S. store openings so that stores in the United States comprise approximately 25%-35% of our store base within five years. Our U.S. growth depends, in part, on increasing consumer awareness and consumption of tea in the United States, as well as successfully translating our operating experience in Canada to the United States. Drive Comparable Sales. We expect to drive positive comparable sales growth by increasing the size and frequency of purchases by our existing customers, as well as by attracting new customers. We intend to execute this strategy through both our retail stores and e-commerce site, through: Enhancing our current product assortment. We believe that our attractive and continuously evolving assortment of tea, pre-packaged teas, tea sachets, tea-related accessories and other tea-related merchandise, including popular limited-time and seasonal offerings, drives consumers to our stores and website and creates a sense of excitement in attaining our latest products. Introducing new product categories and broadening existing categories to provide additional reasons to shop at DAVIDsTEA. We continue to look for adjacent categories in which we can infuse our tea flavors, such as tea-scented candles and tea-infused chocolates. Copies to: Jane D. Goldstein Marko S. Zatylny Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, MA 02199 Telephone: (617) 951-7000 Shahir Guindi Fran ois Paradis Osler, Hoskin & Harcourt LLP 1000 De La Gaucheti re Street West Suite 2100 Montr al, Qu bec, Canada H3B 4W5 D. Rhett Brandon Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Telephone: (212) 455-2000 Philippe Fortier McCarthy T trault LLP 1000 De La Gaucheti re Street West Suite 2500 Montr al, Qu bec, Canada H3B 0A2 Table of Contents Offering a website that blends product expertise, community and numerous tools to aid in the discovery and exploration of tea. Our e-commerce sales increased from 2.7% of sales in fiscal 2010 to 7.9% of sales for the year ended January 31, 2015, and we are targeting greater than 15% of sales over the long term as we educate consumers about our products and introduce a new website in fiscal 2015. Capitalizing on our strong customer loyalty and growing customer base. We believe there is an opportunity to enhance our recently introduced Frequent Steeper loyalty program to provide customers with more targeted messages. We are making significant investments to drive our loyalty program. Expand Adjusted EBITDA Margin. We have increased our Adjusted EBITDA margin from 10.6% in fiscal 2012 to 15.4% in fiscal 2014. As we continue to grow and benefit from the leveraging of our cost structure, we believe further opportunities to increase our margins will exist. We intend to capitalize on opportunities across our supply chain as we grow our business and achieve further economies of scale. We have invested significantly in our business ahead of our growth, and we are targeting an Adjusted EBITDA margin in the high teens over the long term. Recent Developments April 2015 Refinancing Effective as of April 24, 2015, we entered into a three year credit agreement with Bank of Montreal, which we refer to as BMO. The credit agreement provides for a $20.0 million revolving credit facility (referred to as the "Revolving Facility"). The Revolving Facility is available by way of Canadian dollar advances, U.S. dollar advances, prime rate loans, U.S. base rate loans, bankers' acceptances, LIBOR loans, letters of credit or letters of guarantee. The borrowings will bear interest at rates varying from bank's prime plus 0.5% to 1.25% for advances, prime rate loans and U.S. base rate loans and applicable rates plus 1.5% to 2.25% for bankers' acceptances, LIBOR advances, Letters of Credit or Letters of Guarantee. Any undrawn portion of the Revolving Facility will be subject to standby fees ranging from 30 bps to 45 bps of the undrawn amounts. Letters of credit and letters of guarantee borrowings are limited to $2.0 million in the aggregate. A portion of the Revolving Facility was used to repay the outstanding balance of $5.2 million under our prior credit facility with HSBC that was entered into on August 19, 2013 and $4.6 million under our Term Loan with Investissement Qu bec. We refer to the transactions through which we entered into the credit agreement with BMO and applied the proceeds as described above as the "April 2015 Refinancing." See "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Cash Flows Relating to Financing Activities Credit Agreement with Bank of Montreal." Preliminary First Quarter Results Management has prepared the sales, comparable sales and gross profit information below in good faith based upon our internal reporting for the fiscal quarter ended May 2, 2015. Such information has not yet been subject to our normal quarterly financial closing processes, and our independent registered public accounting firm has not commenced its review of these results. We are currently unable to provide additional material financial measures, including any ranges, with a reasonable degree of certainty for this recently completed fiscal quarter. We expect to report sales of approximately $35.6 million for the thirteen weeks ended May 2, 2015, an increase of approximately $7.8 million, or approximately 28%, as compared to sales of $27.8 million for the thirteen weeks ended April 26, 2014. Comparable sales increased 6.3% for the Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee(2)(3) Common Shares, no par value 5,865,000 $18.00 $105,570,000 $12,268 (1)Includes 765,000 common shares issuable upon exercise of the underwriters' option to purchase additional common shares. (2)Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) of the Securities Act of 1933, as amended, based upon an estimate of the maximum offering price. (3)$10,905 previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents fiscal quarter ended May 2, 2015 following an increase of 11.6% for the fiscal quarter ended April 26, 2014. The increase in comparable sales was driven by a 7.2% increase in average ticket and partly offset by a 0.8% decrease in number of transactions. For the thirteen weeks ended May 2, 2015, we expect gross profit to be between $18.7 million and $19.0 million, as compared to gross profit of $15.8 million for the thirteen weeks ended April 26, 2014. The estimated increase in gross profit for the period was primarily the result of increased sales volume as described above. As of May 2, 2015, the Company operated 161 stores, reflecting seven openings fiscal year-to-date, as compared to 126 as of April 26, 2014.
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+PROSPECTUS SUMMARY This summary highlights information that appears later in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere or incorporated by reference in this prospectus. This summary may not contain all of the information that may be important to you. As an investor or prospective investor, you should carefully review the entire prospectus, including the section of this prospectus entitled "Risk Factors" and the more detailed information that appears later in this prospectus before making an investment in our common stock. Unless otherwise indicated, references to "Euroseas," the "Company," "we," "our," "us" or similar terms refer to the registrant, Euroseas Ltd., and its subsidiaries, except where the context otherwise requires. We use the term deadweight tons, or dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of our vessels and the term twenty-foot equivalent unit, or teu, in describing the size of our containerships in addition to dwt. Teu, expressed in number of containers, refers to the maximum number of twenty-foot long containers that can be placed on board. Unless otherwise indicated, all references to "U.S. dollars," "dollars," "U.S. $" and "$" in this prospectus are to the lawful currency of the United States of America. Our Company We are a Marshall Islands company incorporated on May 5, 2005. We are a provider of worldwide ocean-going transportation services. We own and operate containerships that transport dry and refrigerated containerized cargoes, mainly including manufactured products and perishables. We also own and operate drybulk carriers that transport major bulks such as iron ore, coal and grains, and minor bulks such as bauxite, phosphate and fertilizers. As of July 1, 2015, our fleet consisted of ten containerships, five drybulk carriers (comprised of four Panamax drybulk carriers and one Handymax drybulk carrier), and four drybulk newbuildings The total cargo carrying capacity of the ten containerships is 262,988 dwt and 17,587 teu and of the five drybulk carriers is 338,540 dwt and including our four newbuildings, the total cargo capacity of our drybulk vessels is 629,540 dwt. Two of our vessels were acquired before January 1, 2004 and were controlled by the Pittas family interests. On June 29, 2005, the shareholders of three vessels (and of four additional vessels that have since been sold) transferred their ownership in each of the vessels to Euroseas in exchange for shares in Friends Investment Company Inc, or Friends, a 100% owner of Euroseas at that time. We have purchased seventeen additional vessels since June 2005, of which we sold three in 2009, one in 2012 and two in 2013. We actively manage the deployment of our fleet between spot market voyage charters, which generally last from several days to several weeks, and time charters, which can last up to several years. Some of our vessels may participate in shipping pools, or, in some cases participate in contracts of affreightment. We may also use Forward Freight Agreement, or "FFA", contracts to provide partial coverage for our drybulk vessels as a substitute for time charters in order to increase the predictability of our revenues. As of July 1, 2015, all of our drybulk and container vessels are under contract (except three still under construction). Vessels operating on time charters provide more predictable cash flows but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. Vessels operating in the spot market generate revenues that are less predictable but may enable us to achieve increased profit margins during periods of high vessel rates although we are exposed to the risk of declining vessel rates, which may have a materially adverse impact on our financial performance. Vessels operating in pools benefit from better scheduling, and thus increased utilization, and better access to contracts of affreightment due to the larger commercial operation of the pool. We are constantly evaluating opportunities to increase the number of our vessels deployed on time charters or to participate in shipping pools (if available for our vessels), however we only expect to enter into additional time charters or shipping pools if we can obtain contract terms that satisfy our criteria. Containerships are employed almost exclusively on time charter contracts. We carefully evaluate the length and the rate of the time charter contract at the time of fixing or renewing a contract considering market conditions, trends and expectations. We constantly evaluate vessel purchase opportunities to expand our fleet accretive to our earnings and cash flow. Additionally, we will consider selling certain of our vessels when favorable sales opportunities present themselves. If, at the time of sale, the carrying value is less than the sales price, we will realize a gain on sale, which will increase our earnings, but if, at the time of sale, the carrying value of a vessel is more than the sales price, we will realize a loss on sale, which will negatively impact our earnings. The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 26, 2015 PRELIMINARY PROSPECTUS Our Fleet As of August 25, 2015, the profile and deployment of our fleet is the following: Name Type Dwt TEU Year Built (*) Employment (**) TCE Rate ($/day) Dry Bulk Vessels EIRINI P Panamax 76,466 2004 TC until Nov-15 Hire 103% of Average BPI 4TC PANTELIS Panamax 74,020 2000 TC until Jul-16 100.5% of average BPI 4TC ELENI P Panamax 72,119 1997 TC until Jan-16 Hire 97% of Average BPI 4TC ARISTIDES N.P. Panamax 69,268 1993 TC until Sep-15 $8,500 MONICA P Handymax 46,667 1998 TC until Sep-15 $9,500 Vessels under construction (*) Hull Number DY 160 Ultramax 63,500 Fourth Quarter 2015 N/A Hull Number DY 161 Ultramax 63,500 2016 N/A Hull Number YZJ 1116 Kamsarmax 82,000 Fourth Quarter 2015 4 years TC starting at delivery + 1 year at charterer's option Option @ $14,350 $14,100 Hull Number YZJ 1153 Kamsarmax 82,000 2016 N/A Total Dry Bulk Vessels 9 629,540 Container Carriers EVRIDIKI G (ex-MAERSK NOUMEA) Intermediate 34,677 2,556 2001 TC until Feb-16 $13,500 TIGER BRIDGE Intermediate 31,627 2,228 1990 TC until Oct-15 $7,500 AGGELIKI P Intermediate 30,360 2,008 1998 TC until Sep-15 $9,800 DESPINA P Handy size 33,667 1,932 1990 TC until Nov-15 $9,500 CAPTAIN COSTAS (ex-OEL TRANSWORLD) Handy size 30,007 1,742 1992 TC until Nov-15 $8,500 MARINOS Handy size 23,596 1,599 1993 TC until Oct-15 $11,200 JOANNA Handy size 22,301 1,732 1999 TC until Aug-15 then open $10,450 MANOLIS P Handy size 20,346 1,452 1995 TC until Nov-15 $7,300 NINOS Feeder 18,253 1,169 1990 TC until Jul-16 $11,500 KUO HSIUNG Feeder 18,154 1,169 1993 TC until Nov-15 $10,000 Total Container Carriers 10 262,988 17,587 Fleet Grand Total 19 892,528 17,587 (*) For newbuilding contracts, it represents the expected year and quarter of delivery in respect of vessels to be delivered in 2015. (**) TC denotes time charter. All dates listed are the earliest redelivery dates under each TC. Euroseas Ltd. We plan to expand our fleet by investing in vessels in the drybulk and containership markets under favorable market conditions. We also intend to take advantage of the cyclical nature of the market by buying and selling ships when we believe favorable opportunities exist. We currently employ our vessels in the spot and time charter market. As of August 25, 2015, all of our containerships and our drybulkers (except three still under construction) are employed under time charters or spot contracts. As of August 25, 2015, approximately 57% of our ship capacity days in the remainder of 2015 and approximately 13% of our ship capacity days in 2016 are under time charter contracts. Management of Our Fleet The operations of our vessels are managed by Eurobulk Ltd., or Eurobulk, an affiliated company, under a Master Management Agreement with us and separate management agreements with each shipowning company. Eurobulk was founded in 1994 by members of the Pittas family and is a reputable ship management company with strong industry relationships and experience in managing vessels. Under our Master Management Agreement, Eurobulk is responsible for providing us with executive services associated with us being a public company, other services to our subsidiaries and commercial management services, which include obtaining employment for our vessels and managing our relationships with charterers. Eurobulk also performs technical management services, which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising drydocking and repairs, arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions described above and certain accounting services. Our Master Management Agreement with Eurobulk compensates Eurobulk with an annual fee and a daily management fee per vessel managed by Eurobulk. Our Master Management Agreement, which we initially entered into in 2008, was most recently amended and restated as of January 1, 2014 and its term extended until January 1, 2019. It provides for a 5% discount of the daily vessel management fee during any period during which the number of the Euroseas owned vessels (including vessels in which Euroseas is a part owner) managed by Eurobulk is greater than 20 ("volume discount"). The Master Management Agreement can be terminated by Eurobulk only for cause or under other limited circumstances, such as sale of the Company or Eurobulk or the bankruptcy of either party. This Master Management Agreement will automatically be extended after the initial period for an additional five year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the Master Management Agreement, each new vessel we acquire in the future will enter into a separate five year management agreement with Eurobulk. During 2014, in exchange for providing us with the services described above, we paid Eurobulk an annual fee of $2,000,000 and a management fee of 685 Euros per vessel per day for any vessel operating and 50% (i.e. 342.5 Euros) of that amount for any vessel laid-up. The management fee is adjusted annually for inflation every January 1st. There was no adjustment for inflation on January 1, 2014 or 2015 and, hence, we continue to pay Eurobulk an annual fee of $2,000,000 and a fee of 685 Euros per vessel per day in operation and 342.5 Euros per vessel per day in lay-up, taking into account the 5% volume discount. In the case of newbuilding vessel contracts, the same management fee of 685 Euros begins when construction of the vessels actually begins. In absence of the "volume discount", the daily management fee would be 720 Euros per vessel per day in operation and 360 Euros per vessel per day in lay-up. Up to Approximately 4,338,018 Shares of Common Stock at $4.50 Per Share Issuable Upon Exercise of Outstanding Subscription Rights We are distributing, at no extra charge, to each holder of our common stock as of 5:00 p.m., Eastern Daylight Time, on August 14, 2015, three non-transferable subscription rights for each four shares of common stock owned by that holder at that time. Each subscription right represents the right to purchase shares of our common stock at a subscription price of $4.50 per share and consists of a basic subscription privilege and an oversubscription privilege. The basic subscription privilege entitles holders of subscription rights to purchase one share of our common stock at the subscription price for each subscription right held. The oversubscription privilege entitles holders of subscription rights who exercise their basic subscription privilege in full to purchase, at the subscription price, any shares that our other subscription rights holders do not purchase under their basic subscription privileges, subject to the limitation set forth below. A holder will be able to exercise the holder's subscription rights until, and all subscription rights will expire at, 5:00 p.m., Eastern Daylight Time, on September 17, 2015, unless we extend the expiration date or cancel this rights offering. We will not issue fractional shares of our common stock in this rights offering, and fractional shares will be rounded to the nearest whole share with the subscription payment price adjusted accordingly. Shares of our common stock are listed on the Nasdaq Capital Market under the symbol "ESEA," and the shares of common stock issued pursuant to this rights offering will also be listed on the Nasdaq Capital Market under the same symbol. The subscription rights will not be separately tradable and will not be listed. On August 25, 2015, the last reported sale price of our common stock was $5.75 per share. Our Competitive Strengths We believe that we possess the following competitive strengths: Experienced Management Team. Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry. Cost Effective Vessel Operations. We believe that because of the efficiencies afforded to us through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite the average age of our fleet being approximately 18.5 years during 2014, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $6,320 per day for the year ended December 31, 2014. We consider this amount to be among the lowest of the publicly listed drybulk or containerships shipping companies in the United States. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and on board crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2014, our operational fleet utilization was 99.7%, up from 98.9% in 2013, while our commercial utilization rate increased from 96.8% in 2013 to 98.0% in 2014. Our total fleet utilization rate in 2014 was 97.7%. Strong Relationships with Customers and Financial Institutions. We believe ourselves as well as Eurobulk and the Pittas family have developed strong industry relationships and have gained acceptance with charterers, lenders and insurers because of their long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of ourselves, Eurobulk and the Pittas family help us to secure favorable employment for our vessels with well-known charterers. Our Business Strategy Our business strategy is focused on providing consistent shareholder returns by carefully timing and structuring acquisitions of drybulk carriers and containerships and by reliably, safely and competitively operating our vessels through Eurobulk. We continuously evaluate purchase and sale opportunities, as well as long term employment opportunities for our vessels. Renew and Expand our Fleet. We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market conditions and developments present themselves. We focus on purchasing well-maintained secondhand vessels, newbuildings or newbuilding resales based on the evaluation of each investment option at the time it is made. During 2014, we ordered or acquired the contracts of four drybulk carrier newbuildings and acquired one secondhand drybulk carrier. We plan to use the proceeds of this rights offering to renew and expand our fleet by taking delivery of our drybulk vessels currently under construction and for general corporate purposes. See "Use of Proceeds" in this prospectus for more information. We may cancel this rights offering at any time prior to the expiration date for any reason. If this rights offering is cancelled, all subscription payments received by the subscription agent will be returned, without interest or deduction, as soon as practicable. We are not requiring a minimum individual or overall subscription to complete the rights offering. The subscription agent will hold in escrow the funds we receive from subscribers until we complete or cancel the rights offering. This is not an underwritten offering. The shares of our common stock offered hereby are being directly offered by us without the services of a dealer manager, underwriter or selling agent. We have engaged American Stock Transfer & Trust Company, LLC to act as subscription agent for this offering and D.F. King & Co., Inc. is acting as information agent for this offering. Seaborne Capital Advisors Ltd. has been engaged by our board of directors to provide independent financial advisory services in connection with this rights offering. See "Plan of Distribution." We are not entering into any standby purchase agreement or similar agreement with respect to the purchase of any shares of our common stock subscribed for through the basic subscription privilege or the oversubscription privilege. Therefore, there is no certainty that any shares will be purchased pursuant to this rights offering and there is no minimum purchase requirement as a condition to our accepting subscriptions. You should carefully consider whether or not to exercise or let lapse your subscription rights and in doing so you should consider all of the information about us and this rights offering contained or incorporated by reference in this prospectus. As a result of the terms of this offering, shareholders who do not fully exercise their rights will own, upon completion of this offering, a smaller proportional interest in us than otherwise would be the case had they fully exercised their rights. See "Risk Factors If you do not fully exercise your basic subscription privilege and this rights offering is completed, your interest in us will most likely be significantly diluted. In addition, if you do not exercise your basic subscription privilege in full and the subscription price is less than the fair value of our common stock they you would experience an immediate dilution of the aggregate fair value of your shares, which could be substantial." Our board of directors is not making any recommendation as to whether or not you should exercise or let lapse your subscription rights. Exercising your rights and investing in our common stock involves risks. We urge you to read carefully the section entitled "Risk Factors" beginning on page 23 of this prospectus, the Section entitled "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2014, which is incorporated herein by reference, and all other information included or incorporated by reference into this prospectus in its entirety before you decide whether to exercise your rights. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total(1) Subscription price $ 4.50 $ 19,521,081 Proceeds, before expenses, to Euroseas $ 4.50 $ 19,521,081 ______________ (1) Assumes all rights are exercised in full. Prospectus dated August 26, 2015 Maintain Balanced Employment. We intend to employ our fleet between longer term time charters, i.e. charters with duration of more than a year, and shorter term time or spot charters, if possible. We actively pursue longer term time charters to obtain adequate cash flow to cover as much as possible of our fleet's fixed costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. We also may use FFAs as a substitute for time charter employment to partly provide coverage for our drybulk vessels in order to increase the predictability of our revenues. We look to deploy the remainder of our fleet through spot charters, shipping pools or contracts of affreightment depending on our view of the direction of the markets and other tactical or strategic considerations. Our mix of short- and long-term charters is also based on our expectations about future market prospects; when we expect charter rates to improve we try to increase the percentage of our fleet employed in shorter term contracts (allowing us to take advantage of higher rates in the future), while when we expect the market to weaken we try to increase the percentage of our fleet employed in longer term contracts (allowing us to take advantage of higher current rates). We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of August 25, 2015, on the basis of our existing time charters, approximately 57% of our vessel capacity in the remainder of 2015 and approximately 13% in 2016 are fixed, which will help protect us from market fluctuations, enable us to make principal and interest payments on our debt and possibly in the future reinstate dividend payments to our shareholders. Operate a Fleet in Two Sectors. While remaining focused on the dry cargo segment of the shipping industry, we intend to continue to develop a diversified fleet of drybulk carriers and containerships of up to Panamax size including Kamsarmax vessels. A diversified drybulk fleet profile will allow us to better serve our customers in both major and minor drybulk trades, as well as to reduce any dependency on any one cargo, trade route or customer. We will remain focused on the smaller size ship segment of the container market, which has not experienced the same level of expansion in vessel supply that has occurred with larger containerships. A diversified fleet, in addition to enhancing the stability of our cash flows, will also help us to reduce our exposure to unfavorable developments in any one shipping sector and to benefit from upswings in any one shipping sector experiencing rising charter rates. Optimize Use of Financial Leverage. We will use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our balanced chartering strategy and efficient operating cost structure. Our debt repayment schedule as of December 31, 2014 calls for a reduction of more than 36% of our debt by the end of 2015 and an additional reduction of more than 36% by the end of 2016 for a total of more than 72% reduction over the two years, excluding any new debt that we assumed or may assume. As our debt is being repaid we expect that our ability to raise or borrow additional funds more cheaply in order to grow our fleet and generate better returns for our shareholders will increase. Recent Developments On January 12, 2015, the Company signed a term loan facility with HSBC of up to the maximum of $19.95 million or 70% of the vessel's market value upon delivery if the ship is under an Approved Charter (lesser of) or 65% of the vessel's market value upon delivery if the vessel is charter free. The facility will be used to partly finance the construction cost of Hull No DY 160 and will be repaid over 5 years following the delivery of the vessel. Hull No DY 160 will serve as collateral to the loan. On March 20, 2015, the Company signed a term loan facility with HSH of up to the maximum of $19.00 million or 62.5% of the vessel's market value upon delivery (lesser of). The facility will be used to partly finance the construction cost of Hull No DY 161 and will be repaid over 4 years following the delivery of the vessel. Hull No DY 161 will serve as collateral to the loan. TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+Prospectus Summary This summary highlights information contained in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information in Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context otherwise requires, we use the terms Etsy, company, we, us and our in this prospectus to refer to Etsy, Inc. and, where appropriate, our consolidated subsidiaries. See Glossary for the definitions of the following terms: active buyer, active seller, community, ecosystem, global-local, GMS, member, platform and visit. Our Mission Our mission is to reimagine commerce in ways that build a more fulfilling and lasting world. We are building a human, authentic and community-centric global and local marketplace. We are committed to using the power of business to create a better world through our platform, our members, our employees and the communities we serve. These guiding principles are core to our mission: Make it easy to find and buy unique goods from real people every day, on any platform, online and offline, anywhere in the world. Help creative entrepreneurs start, responsibly scale and enjoy their businesses with Etsy. Communicate the power of human connection whenever anyone experiences Etsy. Overview We operate a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods. Handmade goods are the foundation of our marketplace. Whether crafted by an Etsy seller herself, with the assistance of her team or with an outside manufacturer in small batches, handmade goods spring from the imagination and creativity of an Etsy seller and embody authorship, responsibility and transparency. We believe we are creating a new economy, which we call the Etsy Economy, where creative entrepreneurs find meaningful work and both global and local markets for their goods, and where thoughtful consumers discover and buy unique goods and build relationships with the people who sell them. Etsy was founded in June 2005 in Brooklyn, New York as a marketplace for handmade goods and craft supplies. From those beginnings, we have built an innovative, technology-based platform that, as of Table of Contents December 31, 2014, connected 54.0 million members, including 1.4 million active sellers and 19.8 million active buyers, in nearly every country in the world. In 2014, Etsy sellers generated GMS of $1.93 billion, of which 36.1% came from purchases made on mobile devices and 30.9% came from an Etsy seller or an Etsy buyer outside of the United States. Our community is the heart and soul of Etsy. Our community is made up of creative entrepreneurs who sell on our platform, thoughtful consumers looking to buy unique goods in our marketplace, responsible manufacturers who help Etsy sellers grow their businesses and Etsy employees who maintain our platform and nurture our ecosystem. Our business model is based on shared success: we make money when Etsy sellers make money. Our revenue is diversified, generated from a mix of marketplace activities and the services we provide Etsy sellers to help them create and grow their businesses. Marketplace revenue includes the fee an Etsy seller pays for each completed transaction and the listing fee an Etsy seller pays for each item she lists. Seller Services revenue includes fees an Etsy seller pays for services such as prominent placement in search results via Promoted Listings, payment processing via Direct Checkout and purchases of shipping labels through our platform via Shipping Labels. Other revenue includes the fees we receive from a third-party payment processor. In 2014, Etsy sellers generated GMS of $1.93 billion, up 43.3% over 2013. In 2014, we generated revenue of $195.6 million, up 56.4% over 2013. In 2014, we generated a net loss of $15.2 million and Adjusted EBITDA of $23.1 million compared to a net loss of $0.8 million and Adjusted EBITDA of $16.9 million in 2013. See Selected Consolidated Financial and Other Data Non-GAAP Financial Measures for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. Our Values We are a mindful, transparent and humane business. We believe that business interests and social and environmental responsibility are interwoven and aligned and that the power of business should be used to strengthen communities and empower people. We plan and build for the long term. We want to build a company that lasts, and we plan to measure our success in years and decades. Etsy sellers in particular depend on us and on our platform to grow their businesses, so we will strive to make decisions that are best for the long-term health of our ecosystem. We value craftsmanship in all we make. Craftsmanship is the marriage of skill and passion. We believe every job at our company should demonstrate our commitment to craft. We are an engineering-driven company, and we think of our code as craft: we are makers of the products and services that our members use, and we approach the work we do with the same care and inspiration as do Etsy sellers. Table of Contents Table of Contents We believe fun should be part of everything we do. Our mission includes fostering a world in which personal fulfillment is a key element of success. We believe that this way of working is connected and joyful. We strive to do excellent work and bring a sense of humor and playfulness to it. We keep it real, always. We have the courage and the will to do business in ways that are unconventional and impactful. We strive to stay genuine, maintaining integrity, humility and sincerity in everything we do. When we feel that we are not being true to our values or our mission, we are not afraid to stop and change course. Our Opportunity We operate at the center of several converging macroeconomic trends in online and mobile commerce, employment, consumption and manufacturing. We believe that in combination these trends will benefit millions of people in our ecosystem around the world: Etsy sellers engaging in their creative passion, working for themselves and defining success on their own terms; Etsy buyers accessing a diverse, global marketplace of goods that have historically been found in highly fragmented markets; and, increasingly, responsible manufacturers using modern tools to craft goods in partnership with Etsy sellers. Trends in Online and Mobile Commerce. Etsy sellers offer goods in dozens of online retail categories, including jewelry, stationery, clothing, home goods, craft supplies and vintage items. Euromonitor, a consumer market research company, estimated that the global online retail market was $695 billion in 2013, up from $280 billion in 2008, representing a compound annual growth rate, or CAGR, of 19.9%. This growth is expected to continue, with the global online retail market becoming a significantly larger portion of the total retail market, reaching $1.5 trillion by 2018, implying a 16.6% CAGR from 2013. Mobile commerce is also increasingly important in online retail. comScore estimated that since the first quarter of 2013, consumers visiting online commerce sites spent more than half of their browsing time on mobile devices; however, online commerce spending via mobile devices represented only 11% of total online commerce dollars in the third quarter of 2014. Trends in Employment. Whether motivated by economic necessity or personal preference, a growing number of people are turning to self-employment for their livelihoods. In a 2012 survey of middle-class households in the United States by the Pew Research Center, 85% said that it was more difficult to maintain their living standards today than it was ten years ago. A study commissioned in July 2014 by the Freelancers Union and Elance-oDesk estimated that 53 million Americans are working as freelancers. Women are also contributing to the trend towards self-employment. World Bank research shows that, in certain developing nations, over half of the women in the labor force are self-employed. We believe that many of these people have creative skills that could provide a foundation for entrepreneurship, but that they often have little or no experience running their own businesses, and they typically lack the marketing resources, the technological expertise and the manufacturing and logistics capabilities to turn their creativity into a business. Table of Contents Table of Contents Trends in Consumption. Most large retailers today follow the same formula, emphasizing efficiency and scale and pressuring their suppliers to reduce their costs in order to serve mass-produced goods at the lowest-possible prices. We believe, however, that many consumers want to purchase goods that are unique and that reflect their personality and style, not simply mass-produced, generic goods. Some consumers want their purchases to reflect their values; they want to support retailers and suppliers that have responsible and sustainable policies toward their employees, their communities and the environment. Finding these goods can be difficult, as markets for such goods have historically been highly fragmented across boutiques, consignment stores and other venues and marketplaces. Trends in Manufacturing. Because of advances in manufacturing technologies, individuals and small businesses now have the ability to manufacture goods in their homes and studios using tools such as computer-assisted design, 3D printers, computer-controlled routers and other machines at a fraction of the historical cost. We believe the decrease in the size and the cost of these tools will make it easier for creative entrepreneurs to start new businesses. We also believe that small-batch manufacturers will be able to use these new technologies to provide high-quality manufacturing services so that creative entrepreneurs can scale their own businesses. Our Strengths Our platform connects millions of Etsy sellers and Etsy buyers globally, making it one of the largest online marketplaces in the world. We have achieved our scale because of the following key strengths: Our Authentic, Trusted Marketplace. We have built an authentic, trusted marketplace that embodies our values-based culture, emphasizing respect, direct communication and fun. We have developed a reputation for authenticity as a result of Etsy sellers unique offerings and their adherence to our policies for handmade goods. We establish trust in our marketplace by emphasizing the person behind every transaction. We deepen connections among our members, making a personal relationship central to the member experience. The authenticity of our marketplace and the connections among people in our community are the cornerstones of our business. Our Passionate, Engaged and Loyal Members. Our members are passionate, engaged and loyal not only to us, but to each other building a strong community. Our Innovative Technology. Our widely-respected engineering team has built a sophisticated platform that enables millions of Etsy sellers and Etsy buyers to smoothly transact across borders, languages and devices. Our Scaled, Global-Local Marketplace. Our marketplace is global-local, meaning that we focus on building local Etsy communities around the world. Etsy sellers and Etsy buyers in these local Table of Contents Table of Contents communities, in turn, have global reach and access through our platform. We believe our global-local marketplace creates strong competitive advantages outside the United States because our success is not dependent on scale in any given country. Our Seller-Aligned Business Model. Etsy sellers are drawn to our platform because we empower them to succeed, and as Etsy sellers succeed, so do we. Our seller-aligned business model creates network effects. The more we invest in our platform, the more we enable Etsy sellers to pursue their craft and grow their businesses and the easier we make it for Etsy buyers to find unique goods. We call this Etsy s Empowerment Loop. Our Strategy: The Path Ahead We plan to continue connecting creative entrepreneurs, thoughtful consumers and responsible manufacturers and expanding the impact of our platform through the following key strategies: Make Etsy an Everyday Experience. We emphasize relationships, connecting creative entrepreneurs to thoughtful consumers around the world, and we continually strive to make those connections a daily habit for our members. The everyday experience starts with mobile. Build Local Marketplaces, Globally. Our vision is global and local. We plan to invest in local marketing and content and local payment and shipping solutions in countries around the world. We believe our locally-focused work will broaden the reach of our global platform. Offer High-impact Seller Services. Seller Services help an Etsy seller spend more time on the pleasures of her craft and less time on the administrative aspects of her business. We intend to enhance existing Seller Services, extend their geographic reach and introduce new ones. Expand the Etsy Economy. We intend to fulfill our mission to reimagine commerce by expanding the impact of our platform beyond our community. For example, we intend to further develop our manufacturing program, our strategic partnerships and our public-private endeavors to bring the benefit of the Etsy Economy to more people and more communities. Invest in Marketing. We believe that the rapid growth of our marketplace is a testament to our compelling value proposition for Etsy sellers and Etsy buyers. Etsy sellers and Etsy buyers have been our best marketers, sharing their positive experiences with their own communities. Even so, we plan to increase our marketing spending on traditional and online media to increase awareness of our brand and attract additional members to our ecosystem. Table of Contents Table of Contents Risks Associated With Our Business Our business is subject to numerous risks described in Risk Factors immediately following this prospectus summary and elsewhere in this prospectus. Some of the more significant risks are: We have a history of operating losses and we may not achieve or maintain profitability in the future. Our quarterly operating results may fluctuate, which could cause our stock price to decline. Adherence to our values and our focus on long-term sustainability may negatively influence our short- or medium-term financial performance. The authenticity of our marketplace and the connections within our community are important to our success. If we are unable to maintain them, our ability to retain existing members and attract new members could suffer. Further expansion into markets outside of the United States is important to the growth of our business but will subject us to risks associated with operations abroad. We expect to increase our marketing efforts to help grow our business, but those efforts may not be effective at attracting new members and retaining existing members. Our payments system depends on third-party providers and is subject to evolving laws and regulations. Our ability to expand our ecosystem is important to the growth of our business. We must develop new offerings to respond to our members changing needs. If the mobile solutions available to Etsy sellers and Etsy buyers are not effective, the use of our platform could decline. We face intense competition and may not be able to compete effectively.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our securities. You should carefully read this entire prospectus, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the notes related thereto before making an investment decision. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. Company Overview First Guaranty Bancshares is a Louisiana corporation and a bank holding company headquartered in Hammond, Louisiana. Our wholly owned subsidiary, First Guaranty Bank, a Louisiana-chartered commercial bank, provides personalized commercial banking services mainly to Louisiana customers through 21 banking facilities primarily located in the metropolitan statistical areas, or MSAs, of Hammond, Baton Rouge, Lafayette and Shreveport-Bossier City. Our principal business consists of attracting deposits from the general public and local municipalities in our market areas and investing those deposits, together with funds generated from operations and borrowings in securities and in lending activities to serve the credit needs of our customer base, including commercial real estate loans, commercial and industrial loans, one- to four-family residential real estate loans, construction and land development loans, agricultural and farmland loans, and to a lesser extent, consumer and multifamily loans. We also participate in certain syndicated loans, including shared national credits, with other financial institutions. At June 30, 2015, we had consolidated total assets of $1.5 billion, total deposits of $1.3 billion and total shareholders equity of $145.8 million. Our History and Growth First Guaranty Bank was founded in Amite, Louisiana on March 12, 1934. While the origins of First Guaranty Bank go back over 81 years, we began our modern history in 1993 when an investor group, led by Marshall T. Reynolds, our Chairman, invested $3.6 million in First Guaranty Bank as part of a recapitalization plan with the objective of building a community-focused commercial bank in our Louisiana markets. Since the implementation of that recapitalization plan, we have grown from six branches and $159 million in assets at the end of 1993 to 21 branches and $1.5 billion in assets at June 30, 2015, with a compound annual growth rate, or CAGR of 11.1%. We have also paid a quarterly dividend for 89 consecutive quarters at September 30, 2015. On July 27, 2007, we formed First Guaranty Bancshares and completed a one-for-one share exchange that resulted in First Guaranty Bank becoming the wholly-owned subsidiary of First Guaranty Bancshares (the Share Exchange ) and First Guaranty Bancshares becoming an SEC reporting public company. As our franchise has expanded, we have established a record of steady growth and successful operations, while preserving our strong credit culture, as demonstrated by our: balance sheet growth, with a CAGR of 6.6% in assets, 7.9% in loans and 6.7% in deposits for the period from December 31, 2010 to June 30, 2015; balance sheet growth, with a CAGR of 5.7% in assets, 12.4% in loans and 5.3% in deposits for the period from December 31, 2013 to December 31, 2014; balance sheet growth, with a CAGR of 2.8% in assets, 10.1% in loans and 1.5% in deposits for the period from June 30, 2014 to June 30, 2015; earnings growth, with a CAGR of 15.9% in net income for the year ended December 31, 2011 to the six months ended June 30, 2015; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED OCTOBER 26, 2015 PRELIMINARY PROSPECTUS 750,000 Shares First Guaranty Bancshares, Inc. We are offering 750,000 shares of our common stock, par value $1.00 per share. Shares of our common stock are quoted on the OTC Pink Marketplace operated by the OTC Markets Group, Inc., or OTC Pink, under the symbol FGBI and trading in our common stock also occurs through First Guaranty Bank, our co-transfer agent. On October 23, 2015, the last reported sales price for shares of our common stock as reported on the OTC Pink and as reported to First Guaranty Bank, our co-transfer agent, was $21.00 per share and $20.74 per share, respectively. We have applied to list our common stock on the NASDAQ Global Market under the symbol FGBI. Investing in our common stock involves substantial risks. You should carefully consider the matters discussed under the section entitled Risk Factors beginning on page 15 of this prospectus. We are an emerging growth company as defined under the federal securities laws and will be subject to reduced public reporting requirements. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ (1)
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the related notes included elsewhere in this prospectus, before making a decision to purchase our common shares. Some information in this prospectus contains forward-looking statements. See Forward-Looking Statements. Fortress Transportation and Infrastructure Investors LLC (the Issuer ) is a Delaware limited liability company. Unless the context suggests otherwise, references in this prospectus to FTAI, the Company, we, us, and our refer to the Issuer and its consolidated subsidiaries, including Fortress Worldwide Transportation and Infrastructure General Partnership ( Holdco ). References in this prospectus to the General Partner refer to Fortress Transportation and Infrastructure Master GP LLC, the general partner of the Partnership. References in this prospectus to Fortress refer to Fortress Investment Group LLC. References in this prospectus to our Manager refer to FIG LLC, our Manager and an affiliate of Fortress. All amounts in this prospectus are expressed in U.S. dollars, except where noted, and the financial statements have been prepared in accordance with U.S. generally accepted accounting principles ( GAAP ). Our Company We own and acquire high quality infrastructure and equipment that is essential for the transportation of goods and people globally. We currently invest across four market sectors: aviation, energy, intermodal transport and rail. We target assets that, on a combined basis, generate strong and stable cash flows with the potential for earnings growth and asset appreciation. Our existing mix of assets provides significant cash flows as well as organic growth potential through identified projects. In addition, we believe that there are a large number of acquisition opportunities in our target sectors and that our Manager s expertise and business and financing relationships, together with our access to capital, will allow us to take advantage of these opportunities. We are externally managed by FIG LLC, an affiliate of Fortress, which has a dedicated team of professionals who collectively have acquired over $17 billion in transportation-related assets since 2002. As of December 31, 2014, we had total consolidated assets of $1,404.2 million and total equity capital of $713.5 million. We intend to pay regular quarterly dividends from funds available for distribution. We believe that market developments around the world are generating significant opportunities for the acquisition of infrastructure and equipment essential to the transportation industry. Global trade growth has consistently outpaced global GDP growth over the last three decades and has fueled a large and growing demand for both cargo and passenger-related transportation infrastructure and equipment. At the same time, significant market dislocations are providing tremendous new investment opportunities. Traditional capital providers such as governments and European banks are not keeping pace with the need for long-term capital to support the industry, and we believe this shortage will continue for years to come. We believe that these factors will enable us to acquire attractive assets and continue to grow our business. Our operations consist of two primary strategic business units Infrastructure and Equipment Leasing. Our Infrastructure Business acquires long-life assets or operating businesses that provide mission-critical services or functions to transportation networks and typically have high barriers to entry, strong margins, stable cash flows and upside from earnings growth and asset appreciation driven by increased use and inflation. Our Equipment Leasing Business acquires assets that are designed to carry cargo or people or provide functionality to transportation infrastructure. Transportation equipment is typically long-lived, moveable and leased by us to companies that provide transportation services on either operating leases or finance leases. Our leases generally Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 14, 2015 PRELIMINARY PROSPECTUS Fortress Transportation and Infrastructure Investors LLC 20,000,000 Common Shares Representing Limited Liability Company Interests This is an initial public offering of common shares representing limited liability company interests of Fortress Transportation and Infrastructure Investors LLC. We are selling 20,000,000 of our common shares. After this offering, we will be externally managed by FIG LLC, which is an affiliate of Fortress Investment Group LLC ( Fortress ). Pursuant to the terms of a Management Agreement we have entered into in connection with this offering, FIG LLC, as our Manager, will be responsible for the day-to-day management of our operations, including sourcing, analyzing and executing on asset acquisitions and sales in accordance with our board-approved criteria. See Our Manager and Management Agreement and Other Compensation Arrangements. We expect the public offering price to be between $19.00 and $21.00 per share. Currently, no public market exists for the shares. We have been approved to list our common shares on the New York Stock Exchange ( NYSE ) under the symbol FTAI. We will be treated, for U.S. federal income tax purposes, as a partnership and not as an association or a publicly traded partnership taxable as a corporation. See United States Federal Income Tax Considerations Taxation of FTAI. We are an emerging growth company as defined under applicable Federal securities laws and have elected to utilize reduced public company reporting requirements. See Risk Factors Risks Related to Our Common Shares We are an emerging growth company within the meaning of the Securities Act, and due to our taking advantage of certain exemptions from various reporting requirements applicable to emerging growth companies, our common shares could be less attractive to investors. Investing in our common shares involves risks. See Risk Factors beginning on page 31 to read about certain factors you should consider before buying our common shares. Per Share Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds Before Expenses to Us $ $ (1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See Underwriting. We have granted the underwriters the right for up to 30 days following this offering to purchase up to additional common shares, at the public offering price, less the underwriting discount. Neither the Securities and Exchange Commission (the SEC ) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common shares against payment on or about , 2015. Joint Book-Running Managers Citigroup BofA Merrill Lynch Barclays Deutsche Bank Securities UBS Investment Bank Co-Managers JMP Securities Raymond James Stephens Inc. Wolfe Research Securities The date of this prospectus is , 2015. Table of Contents provide for long-term contractual cash flow with high cash-on-cash yields and may include structural protections to mitigate credit risk. We believe that our existing asset base provides stable cash flow generation with over half of our revenue contracted and the remainder coming from markets with stable or growing demand outlook. Our goal is to increase our earnings, cash flows and distributions by acquiring a diverse mix of transportation infrastructure and equipment that combine to deliver significant cash flow and upside potential. We target sectors that we believe enjoy strong long-term growth potential and proactively seek investment opportunities within those sectors that we believe have the best risk-adjusted return. We take an opportunistic approach targeting assets that are distressed or undervalued, or where we believe we can add value through active management, without heavy reliance on the use of financial leverage to generate returns. We also seek to develop incremental opportunities to deploy capital through follow-on investments in our existing assets in order to grow our earnings and create value. As of December 31, 2014, our leverage on a weighted basis across our existing portfolio is approximately 24% of our total capital. While leverage on any individual asset may vary, we target overall leverage for our assets on a consolidated basis of no greater than 50% of our total capital. The charts below illustrate our existing assets, and our equity deployed in acquiring these assets separated by reporting segment as of December 31, 2014. Note: Excludes $13.9 million of assets and $6.5 million of equity reflected in our corporate operating segment. Jefferson Terminal and Railroad are included in our Infrastructure Business and Aviation Leasing, Offshore Energy and Shipping Containers are included in our Equipment Leasing Business. Dividends We view FTAI as a total return investment comprised of current yield and consistent dividend growth. We currently intend to pay regular quarterly dividends and our long term goal is to maintain a payout ratio of between 50-60% of funds available for distribution, with remaining amounts used primarily to fund our future acquisitions. As a public company, there can be no assurance that we will pay dividends in amounts or on a basis consistent with prior distributions to our investors, if at all. See Dividend Policy. For the second quarter of 2015, we intend to pay a dividend of $0.33 per share, which will be pro-rated for the period from the consummation of this offering to the end of the quarter and paid in the third quarter of 2015. We have historically not generated sufficient funds available for distribution to support this payout amount and our ability to do so is subject to certain uncertainties including the continued performance of our existing Equipment Leasing Business Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+Table of Contents BUSINESS Our customers have bold aspirations the drive to be their own boss, write their own story and take a leap of faith to pursue their dreams. Launching that brewery, running that wedding planning service, organizing that fundraiser, expanding that web-design business or whatever sparks their passion. We are inspired by our customers, and are dedicated to helping them turn their powerful ideas into meaningful action. Our vision is to radically shift the global economy toward small business by empowering passionate individuals to easily start, confidently grow and successfully run their own ventures. Overview Our 13.6 million customers are people and organizations with vibrant ideas businesses, both large and small, entrepreneurs, universities, charities and hobbyists. They are defined by their guts, grit and the determination to transform their ideas into something meaningful. They wear many hats and juggle many responsibilities, and they need to make the most of their time. Our customers need help navigating today s dynamic Internet environment and want the benefits of the latest technology to help them compete. Since our founding in 1997, we have been a trusted partner and champion for organizations of all sizes in their quest to build successful online ventures. We are a leading technology provider to small businesses, web design professionals and individuals, delivering simple, easy to use cloud-based products and outcome-driven, personalized Customer Care. We operate the world s largest domain marketplace, where our customers can find that unique piece of digital real estate that perfectly matches their idea. We provide website building, hosting and security tools to help customers easily construct and protect their online presence. As our customers grow, we provide applications that help them connect to their customers, manage and grow their businesses and get found online. Our customers need help navigating today s dynamic Internet environment and want the benefits of the latest technology to help them compete. The increase in broadband penetration, mobile device usage and the need for presence across search engines, content destinations, ecommerce sites and social media channels create both opportunities and challenges for them. We offer products and solutions to help our customers tackle this rapidly changing technology landscape. We developed the majority of our products internally and believe our solutions are among the best in the industry in terms of comprehensiveness, performance, functionality and ease of use. Often technology companies force their customers to choose between technology and support, delivering one but not the other. At GoDaddy, we break that compromise and strive to deliver both great technology and great support to our customers. We believe engaging with our customers in a proactive, consultative way helps them knock down the technology hurdles they face. And, through the thousands of conversations we have with our customers every day, we receive valuable feedback that enables us to continually evolve our products and solutions. Our people and unique culture have been integral to our success. We live by the same principles that enable new ventures to survive and thrive: hard work, perseverance, conviction, an obsession with customer satisfaction and a belief that no one can do it better. We take responsibility for driving successful outcomes and are accountable to our customers, which we believe has been a key factor in enabling our rapid customer and revenue growth. We believe we have one of the most recognized brands in technology. Our tagline It s Go Time captures the spirit and drive of our customers and links our brand to their experience. Our Size and Scale Our combination of easy to use, cloud-based products, personalized Customer Care, a powerful brand and a unique culture have helped us build an attractive business with strong financial performance. We are the global market leader in domain name registration the on-ramp to establishing a business online in our connected economy with approximately 61 million domains under management as of September 30, 2015, which represented over 20% of the world s domains according to VeriSign s Domain Name Industry Brief. As of September 30, 2015, we had 13.6 million customers, and in 2014, we added more than 1.1 million customers. As of December 31, 2014, we had more than half a million customers who spent over $500 a year. As of September 30, 2015, we provided localized solutions in 37 countries, 44 currencies and 17 languages. For the nine months ended September 30, 2015, 25% of our total bookings were attributable to customers outside of the United States. Table of Contents As of September 30, 2015, our cloud-based platform handled on average more than 13.3 billion DNS queries per day, making us a substantial component of the Internet s infrastructure. Our highly-rated Customer Care team of more than 3,600 specialists is focused on providing high-quality, personalized care. As a result of their ongoing dialogue with customers, our Customer Care team also drives bookings and in 2014 generated approximately 23% of our total bookings. We generated $1.7 billion in total bookings in 2014 up from $1.4 billion in 2013. In 2014, we had $1.4 billion of revenue up from $1.1 billion in 2013. In each of the five years ended December 31, 2014, our customer retention rate exceeded 85% and our retention rate for customers who had been with us for over three years was approximately 90%. We generated $271.5 million of adjusted EBITDA in 2014 up from $196.3 million in 2013. Our Market Our customers represent a large and diverse market which we believe is largely underserved. According to the U.S. Small Business Administration, there were approximately 28 million small businesses in 2012. Based on data from the 2012 U.S. Census Bureau and the U.S. Small Business Administration, over 85% of small businesses have fewer than five employees and approximately 23 million, or over 75% of, small businesses were non-employer firms. Furthermore, according to the International Labor Organization Statistics Database there were more than 200 million people outside the United States identified as self-employed in 2012. Moreover, the Kauffman Index of Entrepreneurial Activity report estimates that in 2015 there were approximately 530,000 new business owners created each month in the United States. We believe our addressable market extends beyond small businesses and includes individuals and organizations, such as universities, charities and hobbyists. Despite the ubiquity and importance of the Internet to individual consumers, many small businesses and organizations have remained offline given their limited resources and inadequate tools. We believe approximately 60% of small business do not have a website. However, as proliferation of mobile devices blurs the online/offline distinction into an always online world, having an impactful online presence is becoming a must have for small businesses worldwide. What it means for small businesses and ventures to be online continues to evolve. Only a few years ago, an online presence typically consisted of a simple and static website with basic information perhaps supported by limited search engine marketing. Today, having an effective online presence requires much more, including a content rich website viewable from any device; presence on social media sites and an increasing number of horizontal and vertical marketplaces (e.g. Yelp and OpenTable); branded email communication; online marketing; and Internet-enabled reservation and scheduling capabilities. In addition, back-end activities such as invoicing, payment processing, accounting and tax preparation, which are typically separate point solutions, can now increasingly be linked to the front-end. The shift toward dynamic online presence for small business has been fueled by the emergence of simple yet powerful cloud-based technologies that can easily be utilized by individuals with limited technical skills. Cloud technologies have helped enable the integration of front and back-end activities. Cloud-based products, which can be rented on a monthly or yearly basis, allow a business to more easily scale from a nascent idea to a thriving venture. The Parallels SMB Cloud Insights for Global 2014 report estimates that the cloud market for small business was $62 billion in 2013, and will double by 2016, growing to $125 billion. Our Customers Our customers share common traits, such as tenacity and determination, yet their specific needs vary depending on the type and stage of their ventures. They range from individuals who are thinking about starting a business to established ventures that are up and running but need help attracting customers, growing their sales or expanding their operations. While our customers have differing degrees of resources and technical capabilities, they all share a desire to bring their ideas to life. We call them GoGetters and they are united by a number of common characteristics: entrepreneurial spirit, strong work ethic and, above all, passion for their ventures. Our target customers are primarily local service-based businesses, most have fewer than five employees, and most identify themselves as having little to no technology skills. They need our help to give their businesses a unique and secure digital identity and tools to help them stay connected with their customers. Table of Contents To serve our customers well at every phase of their business, we group them into multiple stages of growth, starting with nascent and evolving to a state where they are established and content. We have also identified special groups like the digital commerce group which is made up of web-savvy individuals who utilize digital commerce platforms as their primary business vehicles. We also serve a group of customers consisting of web-designers and web-developers who we call Web Pros who are in the business of building, designing and managing the online presence of others. Each of these groups is unique in their needs, and we personalize our solutions to meet them at each stage in their lifecycle. Our Opportunity What the GoGetter Needs Our customers are consumers themselves and use the Internet to get informed, research and shop for solutions, which makes them keenly aware of the need to have an impactful online presence. While our customers needs change depending on where they are in their lifecycle, the most common customer needs we serve include: Getting online and looking great. Our customers want to find a name that perfectly identifies their business, hobby or passion. Once they have a name, they want to create a digital identity so their customers can find, engage and transact with them online. We believe a complete digital identity includes an elegant, mobile-enabled website and the ability to get found across various social media platforms and vertical marketplaces. Growing their business and running their operations. Our customers need to communicate with their existing customers and find new customers. They also need tools to help them run their businesses, from productivity and marketing tools to getting paid and balancing their books. In today s online world, these activities are increasingly linked to a customer s online presence. Easy to use products with help from a real person when needed. Our customers want products that are easy to use and sometimes they need help from real people to set up their website, launch a new feature or try something new. We build products that are intuitive for beginners to use yet robust and feature-rich to address the needs of expert designers and power-users. Technology that grows with them. Our customers need a simple platform and set of tools that enable their domain, website and other solutions to easily work together as their business grows and becomes more complex, and they need that platform to be simple to manage. The right platform can meet the needs of both an entrepreneur who is not technologically savvy and a Web Pro with a more complex set of demands. Reliability, security and performance. Our customers expect products that are reliable and they want to be confident that their digital presence is secure. Our customers work on their businesses whenever and however they can, and need solutions that fit their schedule. Affordable solutions. Our customers often have limited financial resources and are unable to make large, upfront investments in the latest technology. Our customers need affordable solutions that level the playing field and give them the tools to look and act like bigger businesses. Our Solution What We Do and How We Do It We built GoDaddy to serve the GoGetter by providing elegant, easy to use, cloud-based products wrapped with personalized Customer Care. Our customers turn to us in order to: Get a great domain name. Every great idea needs a great name. Staking a claim with a domain name has become the de facto first step in establishing an idea online. When inspiration strikes, we are there to provide our customers with high-quality search, discovery and recommendation tools as well as the broadest selection of domains to help them find the right name for their venture. Turn their domain into a dynamic online presence. Our products enable anyone to build an elegant website or online store, for both desktop and mobile, regardless of technical skill. Our products, powered by a unified cloud platform, enable our customers to get found online by extending their website and its content to where they need to be, from search engine results (e.g. Google) to social media (e.g. Facebook) to vertical marketplaces (e.g. Yelp and OpenTable), all from one location. For more technically-sophisticated web designers, developers and customers, we provide high-performance, flexible hosting and security products that can be used with a variety of open source design tools. We design these solutions to be easy to use, effective, reliable, flexible and a great value. Table of Contents Add back-office and marketing products. Our customers want to spend their time on what matters most to them, selling their products or services or helping their customers do the same. We provide them with productivity tools such as domain-specific email, online storage, invoicing, bookkeeping and payment solutions to help run their ventures as well as robust marketing products to attract and retain customers. Use our products together in a solution that grows with our customers over time. Our API-driven technology platform is built on state-of-the-art, open source technologies like Hadoop, OpenStack and other large-scale, distributed systems. Simply put, we believe our products work well together and are more valuable and easier to use together than if our customers purchased these products individually from other companies and tried to integrate them. Additionally, our platform allows our developers to innovate new and enhanced products or product features assembled from common building blocks leading to faster deployment cycles. Receive assistance from our highly-rated Customer Care team. Our Customer Care team consists of more than 3,600 specialists who are available 24/7/365 and are capable of providing care to customers with different levels of technical sophistication. Our specialists are measured on customer outcomes and the quality of the experience they provide, not other common measures like handle time and cost per call. We strive to provide high-quality, personalized care and deliver a distinctive experience that helps us create loyal customers who renew their subscriptions, purchase additional products and refer their family and friends to us. Utilize a reliable, secure, global technology platform and infrastructure. As of September 30, 2015, we handled on average more than 13 billion DNS queries per day and hosted approximately 10 million websites across more than 55,000 servers around the world. In addition, we have 35 petabytes in data storage capacity. We focus on online security, customer privacy and reliable infrastructure to address the evolving needs of our customers. Receive high value. We price most of our products at a few dollars per month while providing our customers with robust features and functionality. We believe our high-quality products and personalized Customer Care provide our customers with an affordable bridge between their available resources and their aspirations. Our Advantages Why We Win We believe the following strengths provide us with competitive advantages in realizing the potential of our opportunity: We are the leading domain name marketplace, the key on-ramp in establishing a digital identity. We are the global market leader in domain name registration. According to VeriSign s Domain Name Industry Brief, there were over 296 million domain names under management as of September 30, 2015. As of that date, we had approximately 61 million domains under management, which represented over 20% of the world s domains. We combine an integrated cloud-technology platform with rich data science. At our core, we are a product and technology company. As of September 30, 2015, we had 818 engineers, 160 issued patents and 204 pending patent applications in the United States. Our investment in technology and development and our data science capabilities enable us to innovate and deliver a personalized experience to our customers. We operate an industry-leading Customer Care team that also drives bookings. We give our customers much more than typical customer support. Our team is unique, blending personalized Customer Care with the ability to evaluate our customers needs, which allows us to help and advise them as well as drive incremental bookings for our business. Our Customer Care team contributed approximately 23% of our total bookings in 2014. Our customers respond to our personalized approach with high marks for customer satisfaction. Our proactive Customer Care model is a key component that helps create a long-term customer relationship which is reflected in our high retention rates. Our brand and marketing efficiency. We believe GoDaddy is one of the most recognized technology brands in the United States. Our tagline It s Go Time reflects the spirit and initiative of our customers and links our brand to their experience. Through a combination of cost-effective direct-marketing, brand advertising and customer referrals, we have increased our total customers from 8.2 million as of December 31, 2010 to 13.6 million as of September 30, 2015. Our financial model. We have developed a stable and predictable business model driven by efficient customer acquisition, high customer retention rates and increasing lifetime spend. In each of the five years ended Table of Contents December 31, 2014, our customer retention rate exceeded 85% and our retention rate for customers who had been with us for over three years was approximately 90%. We believe that the breadth and depth of our product offerings and the high quality and responsiveness of our Customer Care team builds strong relationships with our customers and are keys to our high level of customer retention. Our people and our culture. We are a company whose people embody the grit and determination of our customers. Our world-class engineers, scientists, designers, marketers and Customer Care specialists share a passion for technology and its ability to change our customers lives. We value hard work, extraordinary effort, living passionately, taking intelligent risks and working together toward successful customer outcomes. Our relentless pursuit of doing right for our customers has been a crucial ingredient to our growth. Our scale. We have achieved significant scale in our business which enables us to efficiently acquire new customers, serve our existing customers and continue to invest in growth. In 2014, we generated $1.7 billion in total bookings up from $939 million in 2010, representing a CAGR, of 16%. In 2014, we had $1.4 billion of revenue up from $741 million in 2010, representing a CAGR of 17%. In the five years ended December 31, 2014, we invested to support our growth with $976 million and $656 million in technology and development expenses and marketing and advertising expenses, respectively. Our Strategy How We Grow We are pursuing the following principal strategies to drive our business: Expand and innovate our product offerings. Our product innovation priorities include: Deliver the next generation of naming. The first generation of naming included a limited set of gTLDs, such as .com and .net, and country code top-level domains, or ccTLDs, such as .uk and .in. With over 296 million existing domains registered, it may be increasingly difficult for customers to find the name that best suits their needs. As a result, ICANN has authorized the introduction of more than 1,300 new gTLDs over the next several years. These newly introduced gTLDs include names that are geared toward professions (e.g. .photography), personal interests (e.g. .guru), geographies (e.g. .london, .nyc and .vegas) and just plain fun (e.g. .ninja). Additionally, we believe there is great potential in the emerging secondary market to match buyers to sellers who already own the domains. We are continuing to invest in search, discovery and recommendation tools and transfer protocols for the combined markets of primary and secondary domains. Power elegant and effortless presence. We will continue to invest in tools, templates and technology to make the process of building a professional looking mobile or desktop website simple and easy. Additionally, we are investing in products that help our customers drive their customer acquisition efforts (e.g. Get Found) by managing their presence across search engines, social networks and vertical marketplaces. Make the business of business easy. Our business applications range from domain-specific email to payment and bookkeeping tools and help our customers grow their ventures. We intend to continue investing in the breadth of our product offerings that help our customers connect with their customers and run their businesses. Win the Web Pros. We are investing in our end-to-end Web Pro offerings ranging from open APIs to our platform, delegation products and administrative tools as well as dedicated Customer Care resources. Our recent addition of Media Temple further expanded our Web Pro offerings, bolstered our Web Pro-focused Customer Care team and extended our reach into the Web Pro community. Go global. As of September 30, 2015, approximately 30% of our customers were located in international markets, notably Canada, India and the United Kingdom. We began investing in the localization of our service offerings in markets outside of the United States in 2012 and, as of September 30, 2015, we offered localized products and Customer Care in 37 countries, 44 currencies and 17 languages. To support our international growth, we will continue investing to develop our local capabilities across products, marketing programs, data centers and Customer Care. Table of Contents Partner up. Our flexible platform also enables us to acquire companies and quickly launch new products for our customers, including the launch of a series of partnerships ranging from Microsoft Office 365 for email to PayPal for payments. We have also acquired companies and technologies to bolster our product offerings. We intend to continue identifying technology acquisition targets and partnership opportunities that add value for our customers. Make it personal. We are beginning to leverage data and insights to personalize the product and Customer Care experiences of our customers as well as tailor our solutions and marketing efforts to each of our customer groups. We are constantly seeking to improve our website, marketing programs and Customer Care to intelligently reflect where customers are in their lifecycle and identify their specific product needs. We intend to continue investing in our technology and data platforms to further enable our personalization efforts. Wrap it with Care. We believe that our highly-rated Customer Care team is distinctive and essential to the lifetime value proposition we offer our customers. We are continuing to invest in our Customer Care team, including investing to improve the quality of our Customer Care resources as well as to introduce improved tools and processes across our expanding global footprint. Customer Success Stories Although each of our customers has their own unique story, the following examples represent different customer groups we serve and illustrate how their relationship with us has evolved over time. Recipes for Fitness When GoDaddy customer Chelle Stafford transformed her life by getting herself and her family in shape, she saw an opportunity to turn her new passion into profit. She launched her family website in 2005 and over the next nine years we helped her grow her business at her own pace as it took shape and evolved. In 2010, Chelle launched RecipeForFitness.com as a marketing tool and resource for her clients, using our Website Builder and some help and encouragement from our Customer Care team. As her business needs grew, so did her ability to invest in her business. Over her lifetime as our customer, Chelle has increased her spending from $28 in 2005 to $2,773 in 2014, representing a CAGR of 67%. Additionally, over her customer life she has broadened her adoption of our products, including purchases of domains, hosting, presence and business applications products. Today Chelle owns more than 50 domain names, utilizes our premium hosting product and ecommerce shopping cart tools to sell online, and has five email accounts through us to support her business. Digital Coconut GoDaddy customer Dave Cox turned his love of travel and nature photography into a thriving business named Digital Coconut. Since 2010, Dave and his business partner have utilized our products to build elegant websites for resorts, vacation properties and tourism boards that feature their premium videos and photography. The size and needs of Digital Coconut s clients vary widely so they turn to us for a broad range of domain and hosting options. For smaller clients, Dave builds websites using our Website Builder and then delivers them to his customers so they may maintain the sites. For larger clients, Dave builds custom websites from scratch and utilizes virtual private server, dedicated server or managed hosting offerings for his largest accounts. Over his lifetime as our customer, Dave has increased his spending from $35 of domain purchases in 2010 to $599 of domains, hosting, presence and business applications purchases in 2014, representing a CAGR of 104%. With our help, Dave has transformed a hobby he loves into a thriving business. Table of Contents Products We have designed and developed an extensive set of easy to use, cloud-based technology products that enable our customers to establish a digital presence, connect with their customers and manage their business operations. We understand that our customers needs vary depending on the type and stage of their venture, which is why we offer our products both independently and bundled as suites of integrated products designed for specific activities. Our domain name registration product enables us to engage customers at the initial stage of establishing a digital identity and acts as an on-ramp for our hosting, presence and business application products. We believe that our hosting, presence and business application products increase our revenue and margin growth opportunities, improve customer retention and significantly improve our value proposition to customers. Our products include: Domains We are the global market leader in domain name registration. Securing a domain is a necessary first step to creating a digital identity and our domain products often serve as the starting point in our customer relationships. As of December 31, 2014, more than 92% of our customers had purchased a domain from us and as of September 30, 2015, we had approximately 61 million domains under management, which represented over 20% of the world s registered domains according to VeriSign s Domain Name Industry Brief. In 2012, 2013, 2014 and the nine months ended September 30, 2015, we generated approximately 65%, 59%, 55% and 53% of our total revenue, respectively, from sales of our domain products. Table of Contents Our primary domains product offerings are: Primary Registrations. Using our website or mobile application, we offer customers the ability to search for and register available domain names, or primary registrations, with the relevant registry. Our inventory for primary registrations is defined by the number of TLDs that we offer. As of September 30, 2015, 345 different gTLDs, such as .com, .net and .org, and 49 different ccTLDs, such as .de, .ca, .in and .jp. were available for purchase through our primary registration product. ccTLDs are important to our international expansion efforts as we have found that international customers often prefer the ccTLD for the country or geographic market in which they operate. Our primary registration offering relies heavily on our search, discovery and recommendation tools which enable our customers to find a name that matches their needs. We also facilitate the transfer of domain names by our customers from another registrar to our system. One of the key drivers for the growth of the domain name market is the ongoing expansion of available gTLDs. In 2008, ICANN began the process of authorizing the introduction of hundreds of new gTLDs. These newly introduced gTLDs include names that are geared toward professions (e.g. .photography), personal interests (e.g. .guru), geographies (e.g. .london, .nyc and .vegas) and just plain fun (e.g. .ninja). As of September 30, 2015, 335 new gTLD offerings were available for purchase through our primary registration product. These new gTLDs make it easier for companies and individuals to find and register new, easy to remember domain names tailored to their business, industry or interests that may not have been available in the relatively crowded, traditional gTLDs such as .com. Domain Name Add-Ons. Domain name add-ons are features that a customer can add to a domain name registration. Our domain name privacy product allows our customers to register a domain name on an unlisted basis. This product helps prevent privacy intrusions, helps deter domain related spam and allows our customers to confidentially secure a domain for an unannounced product, service or idea. Domain name add-ons are typically purchased concurrently with domain name registrations and have minimal costs associated with their delivery. Aftermarket. We operate the world s largest domain aftermarket which processes aftermarket, or secondary, domain name sales. Our aftermarket platform, which we substantially supplemented through our acquisition of Afternic in 2013, is designed to enable the seamless purchase and sale of an already registered domain name through an online auction, an offer and counter-offer transaction or a buy now transaction. We operate a cross-registrar network that automates transaction execution across registrars thereby reducing the time required to complete a transaction. We receive a percentage of the sales price for each domain sold. Hosting and Presence We offer a variety of hosting and presence products that enable our customers to create and manage their digital identity, or in the case of Web Pros, the digital identities of their end-customers. As of September 30, 2015, we hosted approximately 10 million websites. In 2012, 2013, 2014 and the nine months ended September 30, 2015, we derived approximately 30%, 34%, 37% and 37% of our total revenue, respectively, from sales of our hosting and presence products. Our primary hosting products are: Shared Website Hosting. The term shared hosting refers to the housing of multiple websites on the same server and is our most popular hosting product. We operate, maintain and support shared website hosting in our owned and operated data center and our leased co-located data center facilities using either Linux or Windows operating systems. We currently offer three tiers of shared website hosting plans to suit the needs and resources of our customers, all of which use industry standard cPanel or Parallels Plesk control panels. We also bundle our hosting plans with a variety of applications and products such as web analytics and SSL certificates. Website Hosting on Virtual Dedicated Servers and Dedicated Servers. Our virtual dedicated and dedicated servers provide customers with greater control and higher performance than our shared hosting plans. Our virtual dedicated hosting offering utilizes software to partition a single physical server so that it functions as multiple servers. Our dedicated server offering provides customers with a server that is reserved exclusively for their use. Both of these products are designed to meet the requirements of customers with more advanced technical capabilities and needs by providing the customer with full control of and electronic access to their server. We offer customers the ability to tailor their plan based on a range of hardware, performance, storage, bandwidth, operating system and control features. Managed Hosting. With our managed hosting product, we set up, monitor, maintain, secure and patch the dedicated server for the customer so that our managed hosting customers get the benefits of a dedicated server without the responsibility of Table of Contents actually running the server. We can also install and maintain a variety of web applications such as WordPress, Joomla, Magento and Gallery on behalf of our customers upon request. We offer a variety of managed hosting plans tailored to our customers needs as well as our Expert Hands offering, which provides additional custom support services at an hourly rate. Premium Hosting. Our premium hosting product is geared towards Web Pros and other customers who have a high level of website development and management knowledge and require a premium support experience. Our premium hosting product offers dedicated hosting supported by specialized Customer Care personnel and resources. Security. Our security products include SSL certificates and malware scanners. According to Netcraft, we are the world s second largest provider of SSL certificates. An SSL certificate validates a customer s website identity and encrypts online transactional information, such as credit card information, and communications sent to or by the website. We offer a variety of SSL certificates all of which provide high-grade, 256-bit encryption. Our SSL certificate offerings include multiple domain SSLs and wildcard SSL certificates, which secure a singular website URL as well as subdomains on that URL (e.g. protectmyvisitors.com and cart.protectmyvisitors.com). We also offer code signing certificates, which are designed to prove the identity of software authors and validate that the software has not been tampered with since its original distribution. Our primary presence products are: Website Builder. Our Website Builder is an easy to use, do it yourself online tool that enables customers, irrespective of their technical skills, to build elegant websites. We offer a variety of plans, with pricing dependent on the customer s desired amount of storage and bandwidth as well as the number of available design styles and other features. With each of these plans, customers have access to hundreds of professional designs which can be customized by adding photos, graphics or text. Our designs cover a wide range of categories with specialty content for small businesses, organizations, families, athletic teams, weddings, reunions and other interest groups. Once built, websites can be easily connected to social profiles, such as Facebook and Twitter, and optimized for search engines using Website Builder. Our customers are also able to optimize their websites for mobile platforms through Website Builder. The figure below illustrates some of the key features and functionality of Website Builder. Mobile Website Builder. We launched GoMobile in March 2014 to enable our customers to easily build websites directly on mobile devices. GoMobile provides a mobile platform for the creation of websites and allows our customers to easily manage their web presence from their mobile devices. Table of Contents Commerce. Our online store product allows customers to easily create their own standalone online store or add one to an existing website. It allows customers to post their product catalogs, integrate online sales information with Intuit s QuickBooks product, list products for auction on eBay, streamline shipping logistics, accept credit card and PayPal payments on their websites and market their websites through Google services. We also offer our customers easy to use merchant accounts, which are required to process credit card payments. Get Found. Get Found is designed to help customers create, manage and ensure the accuracy and consistency of their online presence across numerous platforms, such as Google, Facebook, Yelp and OpenTable, and generate traffic to both their physical business locations and websites. Get Found enables customers to easily view their business information, such as address, hours, contact information and menu/price list, on 15 partner sites. Furthermore, our Get Found paying subscribers are easily able to update and distribute their information across many of the Internet s most trafficked websites and platforms. The figure below illustrates the simple yet powerful tool we have developed for our customers to get found. Table of Contents Business Applications We offer a variety of products designed to make the business of business easier for our customers. The products we offer include those developed in-house as well as third-party applications which we distribute and support, such as Microsoft Office 365. In 2012, 2013, 2014 and the nine months ended September 30, 2015, we derived approximately 6%, 7%, 8% and 10% of our total revenue, respectively, from sales of our business applications. Our primary business application products are: Email Accounts. We offer email accounts which use our customers domains and include a multi-feature web interface for both desktop and mobile devices, accompanied by an integrated calendar and secure online storage. We offer a variety of plans, with pricing dependent on the customer s desired amount of storage and number of email addresses. Our standard email account is a core component of many of our bundled product offerings. All of our email accounts are advertising-free and include security functionality designed to provide protection from spam, viruses and other forms of online fraud, such as phishing. Microsoft Office 365. We offer full installation of Microsoft Office 365 in a simple, supported process that provides email accounts which use our customers domains and some of which include secure online storage. We offer Microsoft Office 365 in three plans that range from personalized email essentials to a full suite of productivity tools, including file sharing and full desktop versions of Word, Excel and PowerPoint. It is easy to set up and can be up and running in minutes. Online Bookkeeping and Invoicing. Our online bookkeeping product imports and organizes all customer business accounts into a single cloud-based system and allows customers to generate income and expense reports as well as create, send and track invoices. It automatically categorizes business transactions in accordance with tax guidelines so small businesses have year-round visibility into their tax liability. Email Marketing. Our email marketing product helps customers market their businesses through permission-based email. Customers can easily create and send newsletters, targeted advertising campaigns, promotions and surveys as well as connect email campaigns with their social media networks and track the results of campaigns through our email marketing product. Table of Contents Technology and Infrastructure Our technology platform forms the core of all our solutions, and we have invested significantly to develop a platform that is designed to be intelligent, fast, secure and scalable. Our technology and development expenses were $175 million, $208 million, $254 million and $203 million in 2012, 2013, 2014 and the nine months ended September 30, 2015, respectively. We have built a scalable platform that allows us to provide faster business insights at lower costs, develop and introduce new products quickly and leverage economies of scale to reduce costs and enable next-generation hosting architecture. As illustrated in the graphic below, our technology stack, which includes physical infrastructure, Infrastructure-as-a-Service, Platform-as-a-Service, applications and data science, allows our customers to build and manage their digital identities and enable access across multiple devices. We seek to continuously enhance the performance and reliability of our technology infrastructure by investing in faster data centers, peering sites and local points of presence, both domestically and internationally. Physical infrastructure Our physical technology infrastructure consists of nine data centers and more than 55,000 servers around the world. We have also invested significantly in our peering architecture and utilize 17 peering sites that allow us to handle high IP transit traffic at low bandwidth costs. Our large technology infrastructure footprint allows us to leverage economies of scale through low server, network, storage and processing costs by commoditizing hardware across various systems and leveraging virtualization where possible. Infrastructure-as-a-Service We leverage an Infrastructure-as-a-Service model that is geared toward the virtualization and automation of common physical data center components like servers, load balancers, switches and storage. We use open source solutions when possible to eliminate manual processes and thereby reduce the risk of human error as well as to lower costs. Additionally, we use a single automated infrastructure based on OpenStack to enable next-generation hosting architecture. Table of Contents Platform-as-a-Service Our cloud platform offers our customers an integrated and comprehensive set of services that saves time. Our platform is designed to help us reduce costs, increase personalization and more easily and quickly build and deploy new products. We continuously invest to develop our platform capabilities and have recently deployed a new authentication platform that allows us to onboard new products more quickly and securely. We have also deployed Cassandra, an open source distributed database management system, across our datacenters for improved customer data replication that enables personalization. Applications Our platform is highly flexible which allows us to easily integrate third-party offerings and enhance our value proposition to our customers by offering comprehensive and integrated solutions that can be rapidly scaled up or down and used across multiple platforms, including mobile. Our platform also allows resellers to easily sell our products, thereby broadening our distribution. We seek to continuously launch new and relevant applications and streamline our existing offerings in order to provide the best user experience to our customers. Data science Our data collection technology enables us to collect customer, product and business data from various sources, including web crawling (e.g. Locu), local listings providers (e.g. Yelp and state business registrations), social platforms (e.g. Facebook and Twitter) and mobile platforms (e.g. geolocation and ecommerce). We use Hadoop, an open source software framework for storage and large-scale processing of data sets, to develop an integrated customer insights data platform. By integrating this data, we are able to offer personalized and intelligent insights and business intelligence to our customers that they can access via dashboards. These dashboards also enhance our ability to develop and deploy differentiated products and more intelligent Customer Care. We believe our ability to offer these insights helps us deliver the right solutions targeted to the needs of our customers and attract more businesses to our platform. Customer Care We have more than 3,600 Customer Care specialists who provide technical assistance on a 24/7/365 basis to new and existing customers located around the world. Operating as business consultants, our specialists advise customers of products that best suit their individual needs. This ability to provide real-time product suggestions to customers after providing a world-class support experience allows our Customer Care team to provide an impactful contribution to bookings through the sale of product subscriptions, including domain products, hosting and presence offerings and business applications. Our Customer Care specialists take great pride in owning outcomes and being accountable to our customers, both of which are essential to enhancing customer experience. In each of the years 2012, 2013, 2014 and the nine months ended September 30, 2015, at least 23% of our total bookings were generated from the sale of product subscriptions by our Customer Care team. The majority of our Customer Care specialists are located in our Arizona and Iowa facilities in the United States. We have additional specialists in Europe and India to provide in-region support in languages native to the regions we serve. In addition, our easy to use website contains extensive educational content designed to demystify the process of establishing an online presence and to assist customers in choosing the products that best meet their needs. Our Customer Care team has handled over 11 million contacts per year in each of the last three years ended December 31, 2014 and spans a variety of channels to provide tailored and timely support to our customers. Our customers can choose their preferred Customer Care channel, including proactive and reactive chat and phone support. We take a consultative approach to our customers, acting as a trusted partner to guide them through the process with technical solutions that support them at each phase of their lifecycle and offer real-time product suggestions that are best suited to the customers immediate needs. The effectiveness of our model is reflected in the high ratings we receive from our customers, the bookings generated by our Customer Care team and strong customer referrals. The strength of our Customer Care team is our people. Our hiring process is extensive and highly selective, designed to yield individuals who will thrive in our team based on core values, character, work ethic and ability. Our new hires spend over a month moving from classroom to a live nesting environment where they refine their customer and technology skills. With a commitment to life-long learning, we offer over 400 classes to our employees spanning leadership, sales, service and technology. We have an incentive program that rewards outcomes, across both customer satisfaction and bookings goals. For that and many other reasons, as of September 30, 2015, more than 31% of our Customer Care specialists had been with us for at least three years. Table of Contents Marketing We believe GoDaddy is one of the most recognized technology brands in the United States. We have established this high level of brand awareness primarily through our advertising campaigns across various platforms including television commercials, print, online and billboards, with our Super Bowl commercials serving as our most visible and important campaigns to date. We have supplemented these advertising campaigns with athlete and celebrity sponsorships. Our strong brand has helped us attract and retain 13.6 million customers as of September 30, 2015. We intend to continue investing in our brand as we seek to further grow our total customers, particularly internationally. Customer referrals are another highly efficient and cost-effective channel for acquiring customers. We complement our brand marketing efforts with highly focused and metric-driven direct response marketing to acquire new customers. We use a variety of targeted online marketing programs for lead generation, including search engine marketing, search engine optimization and targeted email and social media marketing campaigns, as well as more traditional direct marketing and indirect channel partner marketing programs, to drive interest in our products and traffic to our websites. As part of this effort, we regularly run numerous campaigns simultaneously and constantly refine our media mix across our channels. International We have more than 4.1 million customers outside of the United States in approximately 250 countries. In 2014, we derived 25% of our total bookings from international sales compared to 24% in 2013 and 22% in 2012. Historically, we were primarily focused on the U.S. market and only offered international customers our U.S.-centric product offerings, without any localization or meaningful international marketing efforts. We believe our international scale and growth to date are indicative of the international growth opportunities available to us and position us to continue to grow our business internationally. We recently began devoting substantial, dedicated resources to growing our international presence . This led to the establishment of our Customer Care center in India in 2012, the initial introduction of localized websites and products in 2013 and the expansion of these localized products and Customer Care to 37 countries, 44 currencies and 17 languages as of September 30, 2015. Central to our international strategy is a philosophy of localizing our product offerings and deploying them through our global infrastructure. We built a team of more than 30 people to date who are responsible for the internationalization and localization of our core product offerings as well as our Customer Care and marketing efforts. In conjunction with our localization efforts, we have added on-the-ground regional teams and increased our country and regional specific marketing spend. These investments have enabled us to successfully launch our business in select international markets. Our success in these markets has furthered our belief that our international model can work in both established and emerging markets. We have taken a rigorous approach to managing the level of investment we expect to make in each geographic market we enter based on a market tier approach. We expect to continue to expand internationally, targeting additional markets in Europe, Asia and the Middle East over the next several years. Competition We provide cloud-based solutions that enable individuals, businesses and organizations to establish an online presence, connect with customers and manage their ventures. The market for providing these solutions is highly fragmented with some vendors providing part of the solution, and highly competitive with many existing competitors. These solutions are also rapidly evolving, creating opportunity for new competitors to enter the market with point product solutions or addressing specific segments of the market. In some instances, we have commercial partnerships with companies with which we also compete. Given our broad product portfolio, we compete with niche point-solution products and broader solution providers. Our competitors include providers of: traditional domain registration services and web-hosting solutions such as Endurance, Rightside, United Internet and Web.com; website creation and management solutions and e-commerce enablement providers such as Shopify, Squarespace, Wix and WordPress; cloud-infrastructure services and online security providers such as Rackspace and Symantec; alternative web presence and marketing solutions providers such as Constant Contact, OpenTable, Yelp and Zillow; and productivity tools including business-class email, calendaring, file-sharing and payments such as Dropbox, Intuit, Square and Xero. Table of Contents We expect continued competition from competitors in the domain, hosting and presence markets such as Endurance, Rightside, United Internet and Web.com, as well as potential increased competition from companies like Amazon, Google and Microsoft, all of which are providers of web-hosting and other cloud-based services and have recently entered the domain name registration business as upstream registries, and eBay and Facebook, both of which offer robust Internet marketing platforms. Google recently launched its new Google Domains service to sell domain name registration services to third-parties. We believe the principal competitive factors include: product capabilities that meet customer requirements, a secure, reliable and integrated technology platform, cost-effective customer acquisition, brand awareness and reputation, customer service and support and overall customer satisfaction. We believe that we compete favorably with respect to each of these factors. For additional information, see Risk Factors. Regulation Our business is subject to regulation by ICANN, federal and state laws in the United States and the laws of other jurisdictions in which we do business. ICANN. The registration of domain names is governed by ICANN. ICANN is a multi-stakeholder private sector, not-for-profit corporation formed in 1998 that operates pursuant to a memorandum of understanding with the U.S. Department of Commerce for the express purposes of overseeing a number of Internet related tasks, including managing the DNS, allocation of IP addresses, accreditation of domain name registrars and registries and the definition and coordination of policy development for all of these functions. We are accredited by ICANN as a domain name registrar and thus our ability to offer domain name registration products is subject to our ongoing relationship with and accreditation by ICANN. The regulation of Internet domain names in the United States and in foreign countries is subject to change. In particular, on March 14, 2014, the NTIA announced its intention to transition key Internet domain name functions to the global multi-stakeholder community. At this time there is uncertainty concerning the timing, nature and significance of any transition from U.S. oversight of ICANN to oversight of ICANN by another body or bodies. ccTLD Authorities. The regulation of ccTLDs is governed by national regulatory agencies of the country underlying the specific ccTLDs, such as China (.cn), Canada (.ca) and the United Kingdom (.uk). Our ability to sell ccTLDs is dependent on our and our partners ability to maintain accreditation in good standing with these various international authorities. Advertising and promotional information presented on our websites and in our products, and our other marketing and promotional activities, are subject to federal and state consumer protection laws that regulate unfair and deceptive practices. U.S. federal, state, and foreign legislatures have also adopted laws and regulations regulating numerous other aspects of our business. Regulations relating to the Internet, including laws governing online content, user privacy, taxation, liability for third-party activities and jurisdiction, are particularly relevant to our business. Such laws and regulations are discussed below. Communications Decency Act. The CDA regulates content of material on the Internet, and provides immunity to Internet service providers and providers of interactive computer services for certain claims based on content posted by third parties. The CDA and the case law interpreting it generally provide that domain name registrars and website hosting providers cannot be liable for defamatory or obscene content posted by customers on their servers unless they participate in creating or developing the content. Digital Millennium Copyright Act. The DMCA provides domain name registrars and website hosting providers a safe harbor from liability for third-party copyright infringement. To qualify for the safe harbor, however, registrars and website hosting providers must satisfy numerous requirements, including adoption of a user policy that provides for termination of service access of users who are repeat infringers, informing users of this policy, and implementing the policy in a reasonable manner. In addition, registrars and website hosting providers must expeditiously remove or disable access to content upon receiving a proper notice from a copyright owner alleging infringement of its protected works. A registrar or website hosting provider that fails to comply with these safe harbor requirements may be found liable for copyright infringement. Anti-Cybersquatting Consumer Protection Act. The ACPA was enacted to address piracy on the Internet by curtailing a practice known as cybersquatting, or the bad-faith registration of a domain name that is identical or similar to another party s trademark, or to the name of another living person, in order to profit from that name or mark. The ACPA provides that registrars may not be held liable for damages for registration or maintenance of a domain name for another person absent a showing of the registrar s bad faith intent to profit. Registrars may, however, be held liable if their activities are deemed outside the scope of basic registrar functions. Table of Contents Lanham Act. The Lanham Act governs trademarks and false advertising. Case law interpreting the Lanham Act has limited liability for many online service providers such as search engines and domain name registrars. Nevertheless, there is no statutory safe harbor for trademark violations comparable to the provisions of the DMCA and we may be subject to a variety of trademark claims in the future. Privacy and Data Protection. In the areas of personal privacy and data protection, the U.S. federal and various state and foreign governments have adopted or proposed limitations on, and requirements associated with, the collection, distribution, use, storage, and security of personal information of individuals. If our practices with respect to the collection, distribution, storage, or security of personal information are challenged, we may not be able to demonstrate adequate compliance with existing or future laws or regulations. In addition, in the European Union member states and certain other countries outside the U.S., data protection is more highly regulated and rigidly enforced. As we conduct and expand our business within these countries, we expect compliance with these regulatory schemes to be more burdensome and costly for us. Laws and regulations relating to our activities are unsettled in many jurisdictions, or may prove difficult or impossible to comply with in some jurisdictions. Additionally, federal, state, local and foreign governments are also considering legislative and regulatory proposals that would regulate the Internet and our activities in more and different ways than exist today. It also is impossible to predict whether new taxes will be imposed on our services, and depending upon the type of such taxes, whether and how we would be affected. Laws and regulations in the United States or in foreign jurisdictions may be applied in new or different manners in pending or future litigation. Further, other existing bodies of law, including the criminal laws of various jurisdictions, may be deemed to apply to our activities, or new statutes or regulations may be adopted in the future. Intellectual Property and Proprietary Rights Our intellectual property and proprietary rights are important to our business. We rely on a combination of trademark, patent, copyright and trade secret laws, confidentiality and access-related procedures and safeguards and contractual provisions to protect our proprietary technologies, confidential information, brands and other intellectual property. We have also developed, acquired or licensed proprietary technologies for use in our business. As of September 30, 2015 we had 160 issued patents in the United States covering various aspects of our product offerings. Additionally, as of September 30, 2015, we had 204 pending U.S. patent applications and intend to file additional patent applications in the future. We have non-disclosure, confidentiality and license agreements with employees, contractors, customers and other third parties, which limit access to and use of our proprietary information. Though we rely in part upon these legal and contractual protections, as well as various procedural safeguards, we believe that the skill and ingenuity of our employees, the functionality and frequent enhancements to our solutions and our ability to introduce new products and features that meet the needs of our customers are more important to maintaining our competitive position in the marketplace. We have an ongoing trademark and service mark registration program pursuant to which we register our brand names and product names, taglines and logos in the United States and other countries to the extent we determine appropriate and cost-effective. We also have common law rights in some unregistered trademarks that were established over years of use. In addition, we have a trademark and service mark enforcement program pursuant to which we monitor applications filed by third parties to register trademarks and service marks that may be confusingly similar to ours, as well as the use of our major brand names in social media, domain names and other Internet sites. Despite our efforts to preserve and protect our intellectual property, unauthorized third parties may attempt to copy, reverse engineer or otherwise obtain access to our proprietary rights, and competitors may attempt to develop solutions that could compete with us in the markets we serve. Unauthorized disclosure of our confidential information or proprietary technologies by our employees or third parties could also occur. The risk of unauthorized use of our proprietary and intellectual property rights may increase as we continue to expand outside of the United States. Third-party infringement claims are also possible in our industry, especially as functionality and features expand, evolve and overlap across industries. Third parties, including non-practicing patent holders, have from time to time claimed, and could claim in the future, that our processes, technologies or websites infringe patents they now hold or might obtain or be issued in the future. Table of Contents Employees As of September 30, 2015, we had 5,203 employees worldwide, including 3,670 in our Customer Care team, 818 in technology and development, 129 in marketing and advertising and 586 in general and administrative. Included in our employee figures are 513 and 106 Customer Care specialists located in India and Belfast, Ireland, respectively, who are directly employed by third-party partners, but who are devoted to GoDaddy on a full time basis. Substantially all of our employees, other than our India and Ireland Customer Care specialists, are based in the United States. None of our employees is represented by a labor union or is party to any collective bargaining agreement in connection with his or her employment with us. Facilities Our corporate headquarters are located in Scottsdale, Arizona and consist of approximately 153,000 square feet of owned office space. We also own our offices in Hiawatha, Iowa, which consist of approximately 50,000 square feet used primarily for Customer Care and product development. We lease additional call centers and offices located throughout the United States as well as Canada, India and the United Kingdom. Additionally, we provide our cloud-based products through data centers located in the United States and internationally, including an approximately 272,000 square foot data center we own and operate in Phoenix, Arizona as well as additional capacity in co-located data centers in Arizona, California, Illinois, Virginia, Singapore and the Netherlands, which we occupy through leases which expire on various dates through 2026. We believe our existing facilities are sufficient for our current needs. In the future, we may need to add new facilities and expand our existing facilities as we add employees, grow our infrastructure and evolve our business, and we believe that suitable additional or substitute space will be available on commercially reasonable terms to meet our future needs. Legal Proceedings We are currently subject to litigation incidental to our business, including patent infringement litigation and trademark infringement claims, as well as other litigation of a non-material nature. Although the results of the lawsuits, claims and proceedings in which we are involved cannot be predicted with certainty, we do not believe the final outcome of these matters will have a material adverse effect on our business, financial condition or operating results. Regardless of the final outcome, defending lawsuits, claims and proceedings in which we are involved is costly and can impose a significant burden on management and employees. We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained. Table of Contents MANAGEMENT Executive Officers and Directors The following table provides information regarding the executive officers and directors of GoDaddy Inc. as of September 30, 2015: Name Age Position Executive Officers: Blake J. Irving 56 Chief Executive Officer and Director Scott W. Wagner 45 Chief Financial Officer and Chief Operating Officer Matthew B. Kelpy 42 Chief Accounting Officer Philip H. Bienert 47 Chief Marketing Officer James M. Carroll 44 Executive Vice President, International Auguste Goldman 43 Chief People Officer Arne M. Josefsberg 57 Executive Vice President, Chief Infrastructure Officer and Chief Information Officer Nima Kelly 53 Executive Vice President and General Counsel Elissa E. Murphy 46 Chief Technology Officer and Executive Vice President, Cloud Platforms Non-Employee Directors: Bob Parsons 64 Founder and Director Herald Y. Chen 45 Director Richard H. Kimball 59 Director Gregory K. Mondre 41 Director John I. Park 33 Director Elizabeth S. Rafael 54 Director Charles J. Robel 66 Chairman of the Board Lee E. Wittlinger 32 Director Executive Officers Blake J. Irving has served as our Chief Executive Officer since January 2013, as a member of the board of directors of GoDaddy Inc. since its formation in May 2014 and as a member of the board of directors of Desert Newco since January 2013. Prior to joining our company, he served as Chief Product Officer at Yahoo! Inc. from May 2010 to April 2012. From January 2009 to May 2010, Mr. Irving was a Professor in the M.B.A. program at Pepperdine University. From September 2007 to January 2009, he served as Chief Executive Officer and President of Balance Point Enterprises Inc., a real estate investment company. From 1992 to September 2007, Mr. Irving served in various senior and management roles at Microsoft Corporation, including most recently as Corporate Vice President of the Windows Live Platform Group. Mr. Irving holds a B.A. degree in Fine Arts from San Diego State University and an M.B.A. degree from Pepperdine University. We believe Mr. Irving is qualified to serve as a member of our board of directors because of the perspective he brings as our Chief Executive Officer and his experience in senior management positions at several technology companies. Scott W. Wagner has served as our Chief Financial Officer and Chief Operating Officer since May 2013 and previously served as our Interim Chief Executive Officer from July 2012 to January 2013. Prior to joining our company, he served in various roles, including most recently as a Member and North American Co-Head of KKR Capstone, which provides consulting services to KKR and the portfolio companies of KKR s affiliated funds, from June 2000 to May 2013. Mr. Wagner holds a B.A. degree in Economics, magna cum laude from Yale University and an M.B.A. degree from Harvard Business School. Matthew B. Kelpy has served as our Chief Accounting Officer since November 2014. Prior to joining our company, he served in various accounting roles at AOL Inc. from July 2005 to November 2014, most recently as Chief Accounting Officer. Mr. Kelpy holds a BBA degree in Accounting and a Master of Accounting degree from the University of Michigan and is a Certified Public Accountant. Table of Contents Philip H. Bienert has served as our Chief Marketing Officer since March 2015. Mr. Bienert also served as our Executive Vice President, Digital Commerce from April 2013 to March 2015. Prior to joining our company, he served in various roles, including Senior Vice President, Consumer Digital Experience, at AT&T Inc. from February 2008 to April 2013. From January 2005 to February 2008, Mr. Bienert served as Senior Vice President, Customer Experience at Citigroup Inc. Mr. Bienert holds a B.A. degree in History from Georgetown University and an M.B.A. degree from the University of Texas at Austin. James M. Carroll has served as our Executive Vice President, International since April 2013. Prior to joining our company, he served as Senior Vice President at Yahoo! Inc. from October 2010 to April 2013. From July 1997 to October 2010, Mr. Carroll served in various roles at Microsoft Corporation, most recently as General Manager. Mr. Carroll holds a B.S. degree in Science from Maynooth University of Ireland. Auguste Goldman has served as our Chief People Officer since April 2013. Mr. Goldman also served as our Chief Information Officer from January 2012 to April 2013 and served as a consultant to us as a Technology Champion from June 2010 to January 2012. Prior to joining our company, he served as a Managing Director at Integralis AB, an NTT Communications company, from June 2008 to June 2010. Mr. Goldman attended Dartmouth College. Arne M. Josefsberg has served as our Executive Vice President, Chief Infrastructure and Chief Information Officer since January 2014. Prior to joining our company, he served as Chief Technology Officer at ServiceNow Inc., an IT service management software company, from September 2011 to December 2013. From October 1985 to September 2011, Mr. Josefsberg served in various management roles at Microsoft Corporation, including most recently as General Manager, Windows Azure Infrastructure. Mr. Josefsberg holds a M.Sc. degree in Applied Physics from Lund University. Nima Kelly has served as our Executive Vice President and General Counsel since October 2012. Ms. Kelly also served in various roles at GoDaddy from July 2002 to October 2012, including most recently as Deputy General Counsel. Ms. Kelly holds a B.A. degree in Political Science, summa cum laude from Gettysburg College and a J.D. degree from the University of Pennsylvania Law School. Elissa E. Murphy has served as our Chief Technology Officer and Executive Vice President, Cloud Platforms since May 2013. Prior to joining our company, she served as Vice President of Cloud Platforms at Yahoo! Inc. from November 2010 to April 2013. From July 1997 to October 2010, Ms. Murphy served in various engineering roles at Microsoft Corporation including High Performance Computing. Non-Employee Directors Bob Parsons founded GoDaddy in January 1997 and has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014 and as a member of the executive committee of Desert Newco since December 2011. From December 2011 to June 2014, Mr. Parsons served as Chairman of the board of directors of Desert Newco. Prior to the Merger, he served in various roles, including as President and Chairman of the board of directors. Prior to founding our company, Mr. Parsons founded Parsons Technology, Inc., a software company, in 1984 and served as its Chief Executive Officer until its acquisition by Intuit Inc. in 1994. Mr. Parsons holds a B.S. degree in Accounting, magna cum laude from the University of Baltimore. We believe Mr. Parsons is qualified to serve as a member of our board of directors because of the perspective and experience he brings as our founder and as one of our largest stockholders, as well as his extensive experience in founding and growing technology companies. Herald Y. Chen has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014 and as a member of the board of directors and executive committee of Desert Newco since December 2011. He rejoined Kohlberg Kravis Roberts & Co. L.P. in 2007, having previously worked for the firm from 1995 to 1997 and co-heads the firm s Technology industry team. From 2002 to 2007, Mr. Chen served as a Director and then later as a Managing Director at Fox Paine & Company, a private equity firm. From 2004 to 2005, Mr. Chen also served as Chief Executive Officer at ACMI Corporation, a medical device company. Mr. Chen co-founded Jamcracker, Inc., a web-services platform company, in 1999 and served as its Chief Financial Officer from its inception until 2002. From 2009 to 2011, Mr. Chen served on the board of directors of Eastman Kodak Company. Mr. Chen currently serves on the board of directors of several private companies. Mr. Chen holds a B.S. degree in Economics (Finance) and a B.S.E. degree in Mechanical Engineering from the University of Pennsylvania and an M.B.A. degree from the Stanford University Graduate School of Business. Table of Contents We believe Mr. Chen is qualified to serve as a member of our board of directors because of his experience in the technology industry as an investment professional and his strategic insight and operational leadership as a former executive of technology companies. Richard H. Kimball has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014 and as a member of the board of directors of Desert Newco since December 2011. Mr. Kimball co-founded and has served as a General Partner of Technology Crossover Ventures, a venture capital firm, since its inception in June 1995. From September 1984 to December 1994, he served in various roles at Montgomery Securities, an investment bank, including Managing Director. Mr. Kimball currently serves on the board of directors at several private companies and serves on the board of trustees of Dartmouth College. Mr. Kimball holds an A.B. degree in History from Dartmouth College and an M.B.A. degree from the University of Chicago, Booth School of Business. We believe Mr. Kimball is qualified to serve as a member of our board of directors because of his perspective as the founder of a technology investment firm and his extensive expertise in venture capital investing and knowledge of technology companies. Gregory K. Mondre has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014, and has served as a member of the board of directors and executive committee of Desert Newco since December 2011. Mr. Mondre is a Managing Partner and Managing Director with Silver Lake. He joined Silver Lake in 1999 and has significant experience in private equity investing and expertise in sectors of the technology and technology-enabled industries. Prior to joining Silver Lake, Mr. Mondre was a principal at TPG, where he focused on private equity investments across a wide range of industries, with a particular focus on technology. Earlier in his career, Mr. Mondre worked as an investment banker in the Communications, Media and Entertainment Group of Goldman, Sachs & Co. He currently serves as a director of Avaya, Inc., Fanatics, Inc., Motorola Systems, Inc., Red Ventures, Vantage Data Centers and Sabre Corporation. Mr. Mondre holds a B.S. degree in Economics from The Wharton School at the University of Pennsylvania. We believe Mr. Mondre is qualified to serve as a member of our board of directors because of his expertise in financial matters and the experience and perspective he has obtained as an investor in, and board member of, numerous technology companies. John I. Park has served as a member of the board of directors of GoDaddy Inc. since February 2015. Since May 2013, he has worked in various roles at Kohlberg Kravis Roberts & Co. L.P. and is currently a Director. From June 2006 to April 2013, Mr. Park served in a similar role at Apax Partners LP, and from July 2004 to May 2006, as an investment banker at Morgan Stanley & Co. Mr. Park currently serves on the board of directors of several private companies. Mr. Park holds an A.B. degree in Economics, cum laude, from Princeton University and an M.B.A. degree from Harvard Business School. We believe Mr. Park is qualified to serve as a member of our board of directors because of his experience and perspective as an investment professional and banker in the technology sector. Elizabeth S. Rafael has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014 and as a member of the board of directors of Desert Newco since March 2014. From August 2007 to October 2012, she served as Vice President, Corporate Controller and Principal Accounting Officer of Apple Inc. From September 2006 to August 2007, Ms. Rafael served as Vice President of Corporate Finance at Cisco Systems, Inc. and also held the position of Vice President, Corporate Controller and Principal Accounting Officer from April 2002 to September 2006. Ms. Rafael currently serves on the board of directors of Echelon Corporation and Autodesk, Inc. Ms. Rafael holds a B.S. degree in Accounting from Santa Clara University. We believe Ms. Rafael is qualified to serve as a member of our board of directors because of her financial and compliance expertise, and her experience in the technology sector. Charles J. Robel has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014 and as Chairman of the Board since March 2015 and as a member of the board of directors of Desert Newco since December 2011. From May 2008 until the Merger, he also served as a member of the board of directors. From June 2006 to February 2011, Mr. Robel served as the Chairman of the board of directors of McAfee, Inc. From June 2000 to December 2005, Mr. Robel served as General Partner and Chief of Operations of Hummer Winblad Venture Partners, a venture capital firm. From January 1974 to May 2000, Mr. Robel served in various roles at PricewaterhouseCoopers, LLP, an accounting firm, including most recently as a Partner. Mr. Robel currently serves on the board of directors of Informatica Corporation, Jive Software, Inc. and Model N, Inc., as Table of Contents well as on the board of directors of several private companies. Mr. Robel holds a B.S. degree in Accounting from Arizona State University. We believe Mr. Robel is qualified to serve as a member of our board of directors because of his financial, accounting and compliance expertise, and his experience serving on the board of directors of other public and private companies. Lee E. Wittlinger has served as a member of the board of directors of GoDaddy Inc. since its formation in May 2014, and has served as a member of the board of directors of Desert Newco since February 2014. Since July 2007, he has worked in various roles at Silver Lake and is currently a Director. From June 2005 to June 2007, Mr. Wittlinger served as an investment banker at Goldman, Sachs & Co. Mr. Wittlinger currently serves on the board of directors of Vantage Data Centers. Mr. Wittlinger holds a B.S. degree in Economics with dual concentrations in Finance and Accounting, summa cum laude from The Wharton School at the University of Pennsylvania. We believe Mr. Wittlinger is qualified to serve as a member of our board of directors because of his experience and perspective as an investment professional and banker in the technology sector. Each executive officer serves at the discretion of our board of directors and holds office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers. Codes of Business Conduct and Ethics In March 2015, our board of directors adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. Controlled Company Affiliates of KKR, Silver Lake, TCV and Mr. Parsons control a majority of the voting power of our outstanding common stock. As a result, we are a controlled company under the New York Stock Exchange corporate governance standards. As a controlled company, exemptions under the New York Stock Exchange standards will exempt us from certain New York Stock Exchange corporate governance requirements, including the requirements: that a majority of our board of directors consists of independent directors, as defined under the rules of the New York Stock Exchange; that the compensation of our executive officers be determined, or recommended to the board of directors for determination, by majority vote of the independent directors or by a compensation committee comprised solely of independent directors; and that director nominees be selected, or recommended to the board of directors for selection, by majority vote of the independent directors or by a nomination committee comprised solely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements. In the event that we cease to be a controlled company, we will be required to comply with these provisions within the transition periods specified in the rules of the New York Stock Exchange. These exemptions do not modify the independence requirements for our audit committee, and we expect to satisfy the member independence requirement for the audit committee prior to the end of the transition period provided under the New York Stock Exchange listing standards and SEC rules and regulations for companies completing their IPO. See Committees of the Board of Directors Audit Committee. Board of Directors Our business and affairs are managed under the direction of our board of directors. Our board of directors currently consists of Messrs. Chen, Irving, Kimball, Mondre, Park, Parsons, Robel and Wittlinger and Ms. Rafael. We expect our board of directors to remain at nine directors. Table of Contents Pursuant to the stockholder agreement described under Certain Relationships and Related Party Transactions Stockholder Agreement, our stockholders are entitled to nominate members of our board of directors as follows: so long as affiliates of KKR own, in the aggregate, (1) at least 10% of the shares of Class A common stock outstanding (assuming that all outstanding LLC Units that are exchangeable for shares of Class A common stock are so exchanged (we refer to the calculation of the number of shares outstanding on such basis as an As-Exchanged Basis )) on an As-Exchanged Basis immediately following the consummation of our IPO, affiliates of KKR will be entitled to nominate two directors and (2) less than 10% but at least 5% of the shares of Class A common stock outstanding on an As-Exchanged Basis immediately following the consummation of our IPO, they will be entitled to nominate one director; so long as affiliates of Silver Lake own, in the aggregate, (1) at least 10% of the shares of Class A common stock outstanding on an As-Exchanged Basis immediately following the consummation of our IPO, affiliates of Silver Lake will be entitled to nominate two directors and (2) less than 10% but at least 5% of the shares of Class A common stock outstanding on an As-Exchanged Basis immediately following the consummation of our IPO, they will be entitled to nominate one director; and so long as Mr. Parsons and his affiliates own, in the aggregate, at least 5% of the shares of Class A common stock outstanding on an As-Exchanged Basis immediately following the consummation of our IPO, Mr. Parsons and his affiliates will be entitled to nominate one director. Directors nominated by affiliates of KKR, Silver Lake and Mr. Parsons under the stockholder agreement are referred to in this prospectus as the KKR Directors, the Silver Lake Directors and the Parsons Director, respectively. The KKR Directors are Messrs. Chen and Park, the Silver Lake Directors are Messrs. Mondre and Wittlinger and the Parsons Director is Mr. Parsons. The affiliates of each of KKR, Silver Lake, TCV and Mr. Parsons, or the Voting Parties, have agreed to vote their shares in favor of the directors nominated as set forth above. In addition, so long as KKR and Silver Lake collectively own at least 25% of the shares of Class A common stock held by them on an As-Exchanged Basis immediately prior to the consummation of our IPO, and affiliates of either KKR or Silver Lake own at least 10% of the shares of Class A common stock outstanding on an As-Exchanged Basis immediately following the consummation of our IPO, the Voting Parties have agreed to vote their shares in favor of any other director nominees recommended to our board of directors by the nominating and corporate governance committee (with the approval of the KKR Director and the Silver Lake Director serving on the nominating and corporate governance committee). TCV s voting obligations in this regard will end on the third anniversary of the completion of our IPO. In accordance with our amended and restated certificate of incorporation and the stockholder agreement, our board of directors is divided into three classes with staggered three year terms. At each annual meeting of stockholders after the initial classification, the successors to the directors whose terms expire will be elected to serve from the time of election and qualification until the third annual meeting following their election. Our directors are divided among the three classes as follows: the Class I directors are Blake J. Irving, Charles J. Robel and John I. Park and their terms will expire at the annual meeting of stockholders to be held in 2016; the Class II directors are Richard H. Kimball, Elizabeth S. Rafael and Lee E. Wittlinger, and their terms will expire at the annual meeting of stockholders to be held in 2017; and the Class III directors are Herald Y. Chen, Gregory K. Mondre and Bob Parsons, and their terms will expire at the annual meeting of stockholders to be held in 2018. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our company. Director Independence Because we are a controlled company under the rules of the New York Stock Exchange, we are not required to have a majority of our board of directors consist of independent directors, as defined under the rules of the New York Stock Exchange. If such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of the boards and its committees accordingly in order to comply with such rules. Table of Contents Committees of the Board of Directors Our board of directors has established an executive committee, an audit committee, a compensation committee and the nominating and corporate governance committee composed of the directors set forth below. Pursuant to the stockholder agreement, the executive committee consists of one KKR Director, one Silver Lake Director and one Parsons Director. See Executive Committee. Any new committees of our board of directors will include at least one KKR Director and at least one Silver Lake Director and such additional members as determined by our board of directors, with exceptions for special committees and requirements of law and stock exchange rules. Under the rules of the New York Stock Exchange, the membership of the audit committee is required to consist entirely of independent directors, subject to applicable phase-in periods. As a controlled company, we are not required to have fully independent compensation and nominating and corporate governance committees. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until otherwise determined by our board of directors. Executive Committee Our executive committee consists of Messrs. Chen, Mondre and Parsons. Our executive committee will, among other things: provide our executive officers with advice and input regarding the operations and management of our business; and consider and make recommendations to our board of directors regarding our business strategy. In addition to approvals required by our board of directors, the actions listed below taken by us or any of our subsidiaries will require the approval of our executive committee pursuant to its charter. The actions include: change in control transactions; acquiring or disposing of assets or entering into joint ventures with a value in excess of $50 million; incurring indebtedness in an aggregate principal amount in excess of $50 million; initiating any liquidation, dissolution, bankruptcy or other insolvency proceeding involving us or any of our significant subsidiaries; making any material change in the nature of the business conducted by us or our subsidiaries; terminating the employment of our Chief Executive Officer or hiring a new Chief Executive Officer; increasing or decreasing the size of our board of directors; waiving or amending the limited liability company agreement of Desert Newco Managers, LLC or the equity or employment agreements of our executive officers; engaging in certain transactions with affiliates; and any merger or liquidation of Desert Newco or creating any new class of equity securities of Desert Newco. Our executive committee operates under a written charter. Under the stockholder agreement, we are required to maintain the executive committee for as long as (1) we continue to be a controlled company, with affiliates of KKR, Silver Lake and Mr. Parsons (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively owning at least 50% in voting power of all shares of the stock of our company entitled to vote generally in the election of directors and (2) affiliates of KKR, Silver Lake and Mr. Parsons are entitled to nominate a KKR Director, a Silver Lake Director and a Parsons Director, respectively. Audit Committee Our audit committee consists of Messrs. Robel and Wittlinger and Ms. Rafael, with Mr. Robel serving as Chairman. Pursuant to applicable SEC and New York Stock Exchange rules, we were required to have one independent audit committee member upon the listing of our Class A common stock on the New York Stock Exchange and a majority of independent audit committee members within 90 days of listing. We are required to have an audit committee consisting entirely of independent members within one year of listing. Our board of directors has determined Ms. Rafael and Mr. Robel meet the requirements for independence of audit committee members under current New York Stock Exchange listing standards and SEC rules and Table of Contents regulations. Each member of our audit committee meets the financial literacy requirements of the New York Stock Exchange listing standards. In addition, our board of directors has determined that Mr. Robel is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. Our audit committee will, among other things: select a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; help to ensure the independence and performance of the independent registered public accounting firm; discuss the scope and results of the audit with the independent registered public accounting firm, and review, with management and the independent registered public accounting firm, our interim and year-end operating results; develop procedures for employees to submit concerns anonymously about questionable accounting or audit matters; review our policies on risk assessment and risk management; review related party transactions; obtain and review a report by the independent registered public accounting firm at least annually, that describes our internal control procedures, any material issues with such procedures, and any steps taken to deal with such issues; and approve (or, as permitted, pre-approve) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. Our audit committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of the New York Stock Exchange. Compensation Committee Our compensation committee consists of Messrs. Chen, Mondre and Parsons, with Mr. Chen serving as Chairman. The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our executive officers. Our compensation committee will, among other things: review, approve and determine, or make recommendations to our board of directors regarding, the compensation of our executive officers; administer our stock and equity incentive plans; review and approve, and make recommendations to our board of directors regarding, incentive compensation and equity plans; and establish and review general policies relating to compensation and benefits of our employees. Our compensation committee operates under a written charter. Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Messrs. Chen, Mondre, Robel and Parsons, with Mr. Mondre serving as Chairman. Our nominating and corporate governance committee will, among other things: identify, evaluate and select, or make recommendations to our board of directors regarding, nominees for election to our board of directors and its committees, in accordance with the requirements of the stockholder agreement; evaluate the performance of our board of directors and of individual directors; consider and make recommendations to our board of directors regarding the composition of our board of directors and its committees; review developments in corporate governance practices; and develop and make recommendations to our board of directors regarding corporate governance guidelines and matters. The nominating and corporate governance committee operates under a written charter. Table of Contents Compensation Committee Interlocks and Insider Participation None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. The members of our compensation committee consist of Messrs. Chen, Mondre and Parsons. Messrs. Chen and Mondre were designated by affiliates of KKR and Silver Lake, respectively, each a holder of more than 5% of our outstanding common stock. In December 2011, Desert Newco, as guarantor, and Go Daddy Operating Company, LLC, as borrower, entered into a credit agreement with certain entities, including affiliates of KKR and Silver Lake. As described under Certain Relationships and Related Party Transactions Credit Agreement, since 2012, affiliates of Messrs. Chen, Mondre and Parsons were participating lenders under the credit agreement and as of September 30, 2015 had received principal payments of $22.6 million, $10.0 million and $50.0 million and interest, prepayment premium and administrative fee payments of $7.2 million, $0.2 million and $2.8 million, respectively. As of September 30, 2015, investment funds or accounts advised by KKR Credit Advisors (US) LLC held $28.9 million of the outstanding principal balance of the refinanced term loan. Since 2011, KKR Capital Markets LLC, an affiliate of KKR, acted as a lead arranger and joint bookrunner for various financing transactions under the credit agreement, and received underwriter and transaction fees totaling $1.2 million. In December 2011, Go Daddy Operating Company, LLC issued a $300.0 million senior note to YAM in connection with the Merger. This note was repaid in full in connection with the completion of our IPO. See Certain Relationships and Related Party Transactions Senior Note Payable to YAM Special Holdings, Inc. In December 2011, Go Daddy Operating Company, LLC entered into a transaction and monitoring fee agreement with KKR, Silver Lake and TCV, pursuant to which they have agreed to provide certain management and advisory services. In consideration for such services, Go Daddy Operating Company, LLC agreed to pay them an annual aggregate management fee of $2.0 million, payable quarterly in arrears and increasing at a rate of 5% annually, plus reasonable out-of-pocket expenses incurred in connection with the services. In 2012, 2013, 2014 and the nine months ended September 30, 2015, fees and expenses paid under the transaction and monitoring fee agreement were $2.3 million, $2.2 million, $2.3 million and $0.6 million, respectively. The transaction and monitoring fee agreement was terminated upon completion of our IPO, and in accordance with its terms, we made a final aggregate payment of $26.7 million. In December 2011, Desert Newco entered into an executive chairman services agreement with Mr. Parsons, pursuant to which Mr. Parsons served as the chairman of Desert Newco. In consideration for such services, we agreed to pay Mr. Parsons an annual fee of $1.00, plus reimbursement of all business expenses incurred by Mr. Parsons in an amount not to exceed $0.5 million annually. The agreement also obligated us to take certain other actions, which included making charitable contributions of at least $1.0 million per calendar year with such contributions generally made in consultation with Mr. Parsons charitable foundation. The executive chairman services agreement was amended and restated on March 4, 2015 and was terminated effective upon the completion of our IPO, in accordance with its terms. This agreement required a $3.0 million payment to Mr. Parsons upon its termination, which was paid in connection with the completion of our IPO. KKR Capstone has provided consulting and advisory services to us. Certain of these advisory services were rendered by Scott W. Wagner when he served as our Interim Chief Executive Officer from July 2012 to January 2013, and thereafter when he continued to provide advisory services to us from January 2013 to April 2013. All of the services rendered by Mr. Wagner as a service provider of KKR Capstone were rendered prior to the commencement of his employment with us in May 2013. As of September 30, 2015, we had paid $4.1 million directly to KKR Capstone since 2012. In September 2012, we entered into a partner agreement with First Data Merchant Services Corporation, or First Data, a subsidiary of First Data Corporation, pursuant to which we sell First Data s electronic commerce and payment solutions to our customers and receive a portion of all fees received by First Data from such customers. KKR and its affiliates own approximately 40% of First Data Corporation. As of September 30, 2015, we had received $1.7 million under the agreement. In August 2014, Desert Newco received $6.6 million from YAM as payment for the indemnified portion of sales tax liability. As a result, we agreed to release YAM from its indemnification obligations for certain transaction-based taxes. See Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates Indirect Taxes. Table of Contents In the ordinary course of business, we purchase and lease computer equipment, technology licensing, software maintenance and support and other products and services from various entities with whom affiliates of KKR, Silver Lake and TCV have significant ownership interests. Amounts paid to such entities were as follows: Year Ended December 31, Nine Months Ended September 30, 2015 2012 2013 2014 (in millions) Dell, Inc. $ 25.7 $ 19.1 $ 16.1 $ 13.3 Sitecore USA, Inc. 1.3 0.4 Sunguard Availability Services 0.1 0.1 0.1 0.1 Jive Software, Inc. 0.2 ClickTale 0.2 Non-Employee Director Compensation The following table provides information concerning the compensation paid by us to each of our non-employee directors in the year ended December 31, 2014. For all of our non-employee directors, we offer to reimburse any travel expenses or other related expenses for attending meetings. See Certain Relationships and Related Party Transactions Executive Chairman Services Agreement. Name Fees Earned or Paid in Cash($) Option Awards ($) (1) Equity Awards ($) (2) All Other Compensation ($) (3) Total ($) Bob Parsons 1 27,762 27,763 Herald Y. Chen Adam H. Clammer (4) Richard H. Kimball Gregory K. Mondre Elizabeth S. Rafael 65,000(5) 475,738(6) 9,985 550,723 Charles J. Robel (7) 70,000(5) 475,738(8) 5,953 551,691 Lee E. Wittlinger (1) The amounts in the Option Awards column reflect the aggregate grant date fair value of awards granted during the fiscal year computed in accordance with ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 2 to our audited consolidated financial statements included elsewhere in this prospectus. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. (2) The amounts in the Equity Award column reflect the grant date fair value of the RSUs granted during 2014 as computed in accordance with ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 2 to our audited consolidated financial statements included elsewhere in this prospectus. (3) The amount shown reflects health insurance benefits for such director s service as a member of our board. (4) Mr. Clammer resigned from our board of directors in February 2015. (5) The amount shown reflects an annual cash retainer for such director s service as a member of our board and audit committee. (6) The amount shown reflects a grant of 26,667 RSUs to Ms. Rafael in February 2014, 100% of which were unvested as of December 31, 2014. In addition, in connection with the Special Distribution, we increased Ms. Rafael s RSUs by 4,480 to 31,147 to protect Ms. Rafael from diminution in the value of her awards in accordance with our 2011 Plan and applicable tax rules. These RSUs were granted pursuant to our 2011 Plan and are scheduled to vest in three equal annual installments, subject to Ms. Rafael s continued role as a service provider to us. 10,382 of Ms. Rafael s RSUs vested on February 27, 2015. Ms. Rafael intends to forego her right to be a party to the TRA. (7) In March 2015, Mr. Robel was elected as Chairman of the Board by our board of directors. For his service as Chairman of the Board, Mr. Robel is entitled to receive $50,000 per year in cash compensation and an annual award of restricted stock units with a value of $80,000 in addition to his cash and equity compensation for his board and committee services. (8) The amount shown reflects a grant of 26,667 RSUs to Mr. Robel in February 2014, 100% of which were unvested as of December 31, 2014. In addition, in connection with the Special Distribution, we increased Mr. Robel s RSUs by 4,480 to 31,147 to protect Mr. Robel from diminution in the value of his awards in accordance with our 2011 Plan and applicable tax rules. These RSUs were granted pursuant to our 2011 Plan and are scheduled to vest in three equal annual installments, subject to Mr. Robel s continued role as a service provider to us. 10,382 of Mr. Robel s RSUs vested on March 3, 2015. Mr. Robel intends to forego his right to be a party to the TRA. Table of Contents In December 2014, Desert Newco s executive committee, after reviewing data previously provided by Compensia, Inc., an independent compensation consulting firm, regarding practices at comparable companies, adopted a compensation policy for non-employee directors that became effective at our IPO. Pursuant to this non-employee director compensation policy, each member of our board of directors who is not our employee and is not affiliated with a holder of greater than 5% of any class or series of capital stock (each an Eligible Director ) will receive cash and equity compensation for board services as described below. Cash Compensation Our Eligible Directors are entitled to receive the following cash compensation for their services: $50,000 per year for service as a board member; $20,000 per year for service as chair of the audit committee; $15,000 per year for service a member of the audit committee; $16,000 per year for service as chair of the compensation committee; $12,000 per year for service as member of the compensation committee; $8,000 per year for service as chair of the nominating and corporate governance committee; and $6,000 per year for service as member of the nominating and corporate governance committee. All cash payments to non-employee directors will be paid annually. Equity Compensation Initial Award. Each person who became an Eligible Director following our IPO automatically was granted restricted stock units with a value of $220,000. The restricted stock units will vest annually over the next three anniversaries of the grant date, subject to the Eligible Director continuing to be a service provider. Annual Award. On the date of each annual meeting beginning with the first annual meeting following our IPO, each Eligible Director will be granted restricted stock units with a value of $220,000. The restricted stock units will vest fully on the day immediately prior to the next annual meeting after the effective date of grant, subject to the Eligible Director continuing to be a service provider. The number of shares for the initial award or annual award will be determined by dividing the specified value by the per share grant date fair value of each type of award based on the assumptions used for financial reporting purposes, with the result rounded down. Table of Contents EXECUTIVE COMPENSATION Compensation Discussion and Analysis Overview The compensation provided to our named executive officers, or NEOs, for 2014 is detailed in the 2014 Summary Compensation Table and other tables and the accompanying footnotes and narrative that follow this section. This compensation discussion and analysis summarizes the decision process, objectives and philosophy for our executive compensation program, and a description of each component of compensation we provide to our NEOs. Our NEOs for 2014, as determined in accordance with Item 402(a)(3) of Regulation S-K as any individual who served as our principal executive officer or principal financial officer in 2014 plus our three most highly compensated executive officers in 2014, other than our principal executive officer or principal financial officer, were: Blake J. Irving, our Chief Executive Officer; Scott W. Wagner, our Chief Financial Officer and Chief Operating Officer; Arne M. Josefsberg, our Executive Vice President, Chief Infrastructure Officer and Chief Information Officer; Matthew B. Kelpy, our Chief Accounting Officer; and Elissa E. Murphy, our Chief Technology Officer and Executive Vice President, Cloud Platforms. General Compensation Philosophy Our general compensation philosophy is to provide programs that attract, retain and motivate key employees who are critical to our long-term success. We strive to provide a competitive compensation package to our executive officers to reward achievement of our business objectives and align their interest with the interest of our equityholders. Since the Merger, our executive compensation program has been comprised of a combination of cash compensation and equity compensation, with an emphasis on both equity and performance. Our long-term equity compensation program includes performance-based and time-based components, each with a five year time horizon. To date, equity awards have primarily consisted of unit options, with 40% of the LLC units subject to performance-based vesting and 60% subject to time-based vesting. The performance-based options become eligible to vest only if (1) we achieve pre-established annual bookings, adjusted EBITDA and total customers performance targets for each of the five years following the grant date and (2) the recipient remains employed through achievement. We believe this design strengthens the alignment between the interests of our executive officers and equityholders by tying vesting of these options to achievement against key performance objectives, which ultimately results in both the growth of our business and the growth in the value of our business. Our use of both the time-based and performance-based options also promotes executive officer retention by requiring continued employment through achievement for the option to vest. We expect to continue to design our executive compensation program based on a pay for performance philosophy, with a significant compensation component that vests, in part, based on the achievement of our performance goals. Compensation Decision Process Our existing executive compensation program reflects our operations as a private company in that we have relied largely upon the experience of our management, our board of directors and, prior to the formation of GoDaddy Inc. and following the Merger, Desert Newco s executive committee in determining appropriate compensation levels for our executive officers and other key employees. From December 16, 2011, the effective date of the Merger, through the third quarter of 2013, we did not engage compensation consultants or establish formal benchmark processes against any set of peer group companies when setting compensation levels for executive officers. During the fourth quarter of 2013, Desert Newco s executive committee began working with Compensia to assemble a list of peer group companies to serve as a reference point for evaluating the market competitiveness of our executive compensation program. We plan to continue to work with independent compensation consultants to maintain a list of peer group public companies of similar size and in comparable industries which our compensation committee can reference when analyzing executive officer compensation to ensure our executive compensation program is, and remains, competitive and offers the appropriate retention and performance incentives. Table of Contents Pre-December 2011 Prior to the Merger, Mr. Parsons, who at the time was our sole stockholder, negotiated individual compensation arrangements with each executive officer when he or she joined us. Mr. Parsons also periodically reviewed the compensation arrangements of our executive officers and made adjustments in base salary, annual bonuses and equity compensation. In determining the initial compensation arrangements and appropriate adjustments, Mr. Parsons exercised his judgment while considering one or more of the following factors: past and anticipated future contributions, internal pay alignment, our strategic goals and the executive officer s title and position with us (including any promotions or changes in authority, duties or responsibilities). Post-December 2011 Since the Merger, our executive compensation program has been administered by Desert Newco s executive committee, which is made up of the same directors who serve on our compensation committee, with significant input from our Chief Executive Officer and other members of our management team. The initial compensation arrangements for each of our executive officers who joined us after the Merger (other than Mr. Irving and Mr. Wagner) were negotiated by our Chief Executive Officer, and submitted to the executive committee for approval. Each of Mr. Irving and the executive committee exercised their judgment to set a total compensation package for these executive officers that was competitive as measured against their assessment of the market and the compensation packages of our then-existing executive team. Mr. Irving, in negotiating these packages, considered the total compensation package that would be necessary to recruit these executive officers and provide them with the appropriate incentives to drive the growth in the value of our business. In approving these new hire arrangements, the members of the executive committee relied on their experience and judgment, and that of Mr. Irving and reviewed his recommendations to ensure that the compensation packages were appropriate based on the executive officer s title and position. The initial compensation arrangements for Messrs. Irving and Wagner were negotiated by the executive committee. The executive committee exercised its judgment to set compensation levels for Messrs. Irving and Wagner that would align their interests with our equityholders and provide incentives for Messrs. Irving and Wagner to remain with us through and following a liquidity event. The executive committee heavily weighed these executive officers past experience and anticipated future contributions to us in approving their compensation packages. Adjustments to executive compensation packages since the Merger have resulted from changes to an executive officer s title, authority or job responsibilities. These changes were negotiated by Mr. Irving or Mr. Wagner with direction and oversight from the executive committee. We anticipate that our compensation committee will have primary responsibility for executive compensation and will work with an independent compensation consultant to review the compensation opportunities of our executive officers at least annually to assess the market competitiveness of our compensation arrangements and make any adjustments to ensure that our valuable executive officers remain with us and that we are providing incentives for them to maximize the growth of our business. Components of Executive Compensation Program The compensation program for our executive officers, including our NEOs, consists of the following primary components: base salary; short-term cash incentives; long-term equity incentives; broad-based employee benefits; and post-termination severance benefits. We believe these five primary compensation components provide an executive compensation program that attracts and retains qualified individuals, links individual performance to corporate performance, focuses the efforts of our executive officers on the achievement of both our short-term and long-term objectives, and aligns our executive officers interests with those of the existing owners and our other equityholders. Table of Contents The overall use and weight of each primary compensation element is based on our subjective determination of the importance of each element in meeting our overall objectives. We seek to make a significant amount of each NEO s total potential compensation at risk based on corporate performance, including cash performance bonuses and performance-based options that are earned only if we achieve specified key short-term and long-term performance objectives. In connection with the initial hiring of certain executive officers, we have provided cash sign-on bonuses to attract and recruit executive officer candidates to join us, and in an amount and on terms our Chief Executive Officer and executive committee have determined are appropriate based on the candidate s anticipated title and position. Base salary We provide base salaries to compensate our employees, including our NEOs, for services rendered on a day-to-day basis. The 2014 base salaries of our NEOs generally were set through negotiations at the time the NEO joined us and were approved by the executive committee. The base salaries were based on what we believed would be necessary to attract the individual to join us and a subjective assessment of what amount would be market competitive based on his or her title and expected future contribution. The following table shows the base salaries for our NEOs in 2014: Name Base Salary Rate (1) Actual Base Salary (2) Blake J. Irving $ 1,000,000 $ 1,000,000 Scott W. Wagner $ 750,000 $ 750,000 Arne M. Josefsberg $ 400,000 (3) $ 423,836 Matthew B. Kelpy $ 325,000 $ 46,301 Elissa E. Murphy $ 420,000 (3) $ 437,589 (1) This amount represents the annual base salary rate for each NEO in 2014. (2) For Messrs. Josefsberg and Kelpy, this amount represents the pro-rated base salary for 2014 based on each of their respective terms of employment with us during 2014. (3) Effective June 1, 2014, the base salaries for Mr. Josefsberg and Ms. Murphy were increased to $450,000. Short-term incentives (annual cash bonuses) Our short-term cash incentive program seeks to provide incentives to our executive officers, including our NEOs, to drive annual performance based on our operating plan. At the beginning of each year, the executive committee, with input from our management team, establishes performance goals and the formula for paying cash bonuses. The performance goals are intended to be stretch goals, which would be attainable through focused efforts and leadership by our executive officers. Each executive officer is eligible to earn a portion of his or her target cash bonus opportunity based on the achievement against these pre-established performance goals and their relative weightings under the formula established by the executive committee for that year. The target cash bonus opportunity for each of our NEOs is set forth below. To determine an NEO s actual bonus (as set forth in the Summary Compensation Table), a multiplier is calculated based on actual achievement against the performance objectives described below and that multiplier is applied to the target cash bonus opportunity to determine the actual cash bonus: Name Target Bonus as a Percentage of Base Salary Blake J. Irving 100 % Scott W. Wagner 100 % Arne M. Josefsberg 60 % Matthew B. Kelpy 50 % (1) Elissa E. Murphy 60 % (1) Mr. Kelpy was not eligible to receive a bonus in 2014. Table of Contents 2014 performance goals. For 2014, the performance goals initially were based on the achievement of certain levels of (a) cash revenue, (b) cash EBITDA and (c) total customers. In mid-2014, to more closely align our bonus plan objectives with the key business metrics we disclose to potential investors elsewhere in this prospectus, we changed the cash revenue objective to total bookings, the cash EBITDA objective to adjusted EBITDA, and made adjustments to the total customers objective consistent with the discussions of total customers elsewhere in this prospectus. We believe these goals provided the appropriate incentives for our NEOs to work collaboratively as a team to achieve important financial, business and strategic goals in our 2014 operating plan. Our adjusted 2014 goals were weighted as follows: Performance Goal Weighting Bookings 40% Adjusted EBITDA 40% Total Customers 20% Bookings. We calculate bookings for bonus plan purposes in the same manner as we disclose elsewhere in this prospectus. Bookings differs from cash revenue due to aftermarket domain sales being recorded as gross sales for cash revenue purposes with the offsetting commissions recorded in cost of cash revenue while total bookings recorded net sales (gross sales less commissions). The following table describes the levels of bookings required to be achieved in 2014 by us and the corresponding multipliers applied to the portion of the eligible bonus (40% of the 2014 bonus) upon achievement of this performance goal: Bookings (1) Multiplier Allocated to Bookings $1.763 billion and greater A multiplier of 200% is allocated to achievement of this performance goal At least $1.642 billion but less than $1.763 billion A multiplier between 55% and 200% is allocated to achievement of this performance goal, pro-rated based on the level of achievement within the bookings range Less than $1.642 billion No amount is payable with respect to this performance goal (1) If we achieved bookings of $1.688 billion, this would result in 100% achievement of the 40% of bonus opportunity applicable to bookings. Adjusted EBITDA. We calculate adjusted EBITDA for bonus plan purposes in the same manner as we disclose elsewhere in this prospectus. Adjusted EBITDA differs from cash EBITDA due to the inclusion of certain components of working capital in our calculation of cash EBITDA. The following table describes the levels of adjusted EBITDA required to be achieved in 2014 by us and the corresponding multipliers applied to the portion of the eligible bonus (40% of the 2014 bonus) for our NEOs upon achievement of this performance goal: Adjusted EBITDA (1) Multiplier Allocated to Adjusted EBITDA $331 million and greater A multiplier of 175% is allocated to achievement of this performance goal At least $266 million but less than $331 million A multiplier between 60% and 175% is allocated to achievement of this performance goal, pro-rated based on the level of achievement within the adjusted EBITDA range Less than $266 million No amount becomes payable with respect to this performance goal (1) If we achieved adjusted EBITDA of $286 million, this would result in 100% achievement of the 40% of bonus opportunity applicable to adjusted EBITDA. Table of Contents Total customers. We calculate total customers for bonus plan purposes in the same manner as we disclose elsewhere in this prospectus. The following table describes the levels of total customers required to be achieved in 2014 by us and the corresponding multipliers applied to the portion of the eligible bonus (20% of the 2014 bonus) upon achievement of this performance goal: Total Customers (1) Multiplier Allocated to Total Customers 13.916 million and greater A multiplier of 150% allocated to achievement of this performance goal At least 12.476 million but less than 13.916 million A multiplier between 75% and 150% is allocated to achievement of this performance goal, pro-rated based on the level of achievement within such total customers range Less than 12.476 million No amount becomes payable with respect to this performance goal (1) If we achieved 12.916 million total customers, this would result in 100% achievement of the 20% of bonus opportunity applicable to total customers. 2014 results. Following the 2014 performance period, the executive committee, with the assistance of our management team, assessed our performance against the 2014 performance goals and determined that for 2014, we achieved bookings of $1.675 billion (resulting in a multiplier of 87.0% for the bookings performance goal), adjusted EBITDA of $271 million (resulting in a multiplier of 72.5% for the adjusted EBITDA performance goal) and total customers of 12.709 million (resulting in a multiplier of 89.0% for the total customers performance goal). This resulted in a multiplier of 81.6% to be used for calculating each executive officer s (including our NEOs) 2014 cash bonus. The cash bonus paid to each NEO for 2014 is set forth in the Summary Compensation Table that follows. Long-term incentives (equity awards) We grant equity awards to motivate and reward our employees, including our NEOs, for our long-term performance and thereby align the interests of our employees with those of our equityholders. Additionally, equity awards provide an important retention tool for all employees as the awards are subject to vesting over an extended period of time and provide for only a limited exercise period following termination of employment. Unit options. The equity awards granted to our NEOs and other employees primarily have been in the form of options to purchase equity. We believe that options provide an appropriate incentive for our NEOs because they provide opportunity to realize value only if our value increases, which benefits our equityholders, and the NEOs remain employed with us through each vesting date. Vesting conditions. Prior to the Merger, the options granted to our employees, including the executive officers who were employed with us at the time, were subject to time-based vesting requirements and were contingent on the occurrence of an initial public offering or change in control. Because the Merger was a change in control, those options vested. Since the Merger, the options granted to our NEOs and other executive officers have been subject to time-based and performance-based vesting requirements as follows: 60% of an NEO s option, or the Time Option, becomes vested and exercisable over a five year period as to 20% of the Time Option each year on the anniversary of the applicable vesting commencement date, subject to his or her continued employment; and 40% of an NEO s option, or the Performance Option, vests and become exercisable over a five year period as to 20% of the Performance Option each year based on achievement of annual cash revenue and cash EBITDA performance targets, subject to the NEO s continued employment through the applicable vesting date. Each year s performance targets were established by the executive committee. If either or both of the annual performance targets are not achieved in a given year but the performance targets for the subsequent year are exceeded, then the amount of any excess achievement in the subsequent year s performance targets may be added to the prior year s achievement to retroactively determine whether the prior year s performance targets were met. In such a circumstance, the 20% of the Performance Option that did not vest in the prior year will vest if both of the prior year annual performance targets are then met, subject to the NEO s continued employment through the applicable vesting date. At the time of the Merger, a set of performance targets was established for the five years following the Merger, Table of Contents but the executive committee assesses the targets each year and can modify them, including as appropriate to take into account acquisitions or divestitures. The options granted to our employees, including our NEOs, are subject to certain vesting accelerations in the event of a change in control or certain involuntary terminations of employment following a change in control. See Potential Payments Upon Termination or Change in Control below for more information. Size of option grants. Historically, we have not applied a rigid formula in determining the size of option grants that have been granted to our NEOs. Instead, the size of option grants was determined based on one or more of the following: the range of prior grants made to the executive team with consideration given to the nature of the position, the executive officer s experience, the equity opportunity the executive officer may have had with his or her prior employer, the amount of equity necessary to recruit him or her and current market conditions. Each of our NEOs who joined us in 2014 received options to acquire LLC Units. Ms. Murphy received an additional option to acquire LLC Units in 2014 because the executive committee determined it was appropriate for internal pay equity purposes and in light of her performance since she joined us. The options were for the amounts set forth in the table below, subject to the vesting terms described above, and at an exercise price equal to our market value as of the grant date. No other options were granted to our NEOs in 2014. Name Options Arne M. Josefsberg 400,000 Matthew B. Kelpy 145,000 Elissa E. Murphy 56,250 2014 performance-based option vesting conditions Performance Options granted to NEOs in or prior to 2014 were eligible to vest based on us achieving $1.636 billion in bookings and $270 million in adjusted EBITDA in 2014. These metrics reflect a mid-year adjustment from the original targets of cash revenue and cash EBITDA to bookings and adjusted EBITDA, respectively, to more closely align with the key business metrics we disclose to potential investors elsewhere in this prospectus. If both the bookings and adjusted EBITDA targets were achieved, then our NEO s Performance Options that were eligible to vest based on 2014 performance would vest, subject to the NEO s continued employment with us. The executive committee, in consultation with management, reviewed our achievement against these performance objectives and determined that our performance met the objectives necessary to vest the 2014 Performance Options. RSUs In connection with his hiring in 2014, we also granted Mr. Kelpy RSUs to acquire 24,698 LLC Units that vested in full on February 1, 2015. We believe this grant, together with the cash sign-on bonus described below, was appropriate to recruit Mr. Kelpy to our company, based on his anticipated title and position. Broad-based employee benefits Our compensation program for our NEOs and executive officers includes benefits that are generally available to our other full-time employees, including participation in our patent incentive program. Offering these employee benefits serves to attract and retain our employees, including our NEOs. We anticipate that our employee benefits programs will be reviewed periodically in order to ensure that they continue to serve these purposes and remain competitive. We have established a tax-qualified Section 401(k) retirement savings plan for our NEOs and other employees who satisfy the eligibility requirements. Under this plan, participants may elect to make pre-tax contributions of up to a certain portion of their current compensation, not to exceed the applicable statutory income tax limitation. Currently, we provide matching contributions made by participants in the plan up to a maximum of 3.5% of eligible compensation annually. We intend for the plan to qualify under Section 401(a) of the U.S. Internal Revenue Code of 1986, as amended, or the Code, so that contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until withdrawn from the plan. Additional benefits provided to our employees, including NEOs, consist of medical, dental, vision, short term disability, long term disability and life insurance benefits as well as flexible spending accounts. Our NEOs receive these benefits on the same basis as our other full-time U.S. employees. Table of Contents Post-termination severance benefits and change in control benefits The executive committee considers maintaining a stable and effective management team to be essential to protecting and enhancing the best interests of our company and stockholders. We have entered into employment agreements with certain key executives, including many of our NEOs, to provide assurances of specified severance benefits to such executives whose employment is subject to involuntary termination other than for death, disability, cause or voluntary termination for good reason. We believe that it is imperative to provide such individuals with severance benefits upon such involuntary terminations of employment to secure their continued dedication to their work, without the distraction of negative economic consequences of potential termination. We believe that the severance benefits we provide are competitive based on our assessment of similarly situated individuals at companies with which we compete for talent and are appropriate given that the benefits are subject to the executive s entry into a release of claims in our favor. For more detail, see Potential Payments Upon Termination or Change in Control. Sign-on bonuses In connection with the hiring of Mr. Kelpy in 2014, we paid him a cash sign-on bonus in the amount set forth below, in addition to the grant of RSUs discussed above. We believe the cash sign-on bonus, together with the RSU grant, was appropriate to recruit Mr. Kelpy to our company, based on his anticipated title and position. Name Sign-on Bonus Matthew B. Kelpy $ 25,000 The cash sign-on bonus is repayable by Mr. Kelpy to us on a pro-rated basis if Mr. Kelpy s employment terminates within 12 months from his employment start date with us for any reason. Tax considerations We have not provided any of our executive officers or directors with a gross-up or other reimbursement for tax amounts the individual might pay pursuant to Code Section 280G or Code Section 409A. Code Section 280G and related Code sections provide that executive officers, directors who hold significant stockholder interests and certain other service providers could be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of our company that exceeds certain limits, and that we or our successor could lose a deduction on the amounts subject to the additional tax. Code Section 409A also imposes significant taxes on the individual in the event that an executive officer, director or other service provider receives deferred compensation that does not meet the requirements of Code Section 409A. Based on the limitations imposed by Code Section 162(m), we generally may receive a federal income tax deduction for compensation paid to our Chief Executive Officer and to certain of our other highly compensated officers only if the compensation is less than $1,000,000 per person during any year or is performance-based under Code Section 162(m). There is a transition period for newly-public companies that will provide us with relief from these limitations for a transition period following our IPO. While we cannot predict how the deductibility limit may impact our compensation program in future years, we intend to maintain an approach to executive compensation that strongly links pay to performance. In addition, although we have not adopted a formal policy regarding tax deductibility of compensation paid to our NEOs, we intend to consider tax deductibility under Code Section 162(m) as a factor in our compensation decisions. Table of Contents Summary Compensation Table The following table provides information regarding the total compensation for services rendered in all capacities that was earned by our NEOs for 2014. Name and Principal Position Year Salary($) Bonus($)(1) Equity Awards($)(2) Option Awards($)(3) Non-Equity Incentive Plan Compensation ($)(4)(5) All Other Compensation ($)(6) Total($) Blake J. Irving 2014 1,000,000 816,000 5,000 1,821,000 Chief Executive Officer 2013 934,615 8,838,644 983,562 4,405 10,761,226 Scott W. Wagner 2014 750,000 612,000 5,168 1,367,168 Chief Financial Officer and Chief Operating Officer 2013 441,346 8,654,625 750,000 909 9,846,880 Arne M. Josefsberg (7) 2014 423,836 3,215,360 207,510 6,619 3,853,325 Executive Vice President, Chief Infrastructure and Chief Information Officer 2013 Matthew B. Kelpy (8) 2014 46,301 25,000 449,998 1,148,429 36,409 1,706,137 Chief Accounting Officer 2013 Elissa E. Murphy 2014 437,589 452,993 214,244 7,535 1,112,361 Chief Technology Officer and Executive Vice President, Cloud Platforms 2013 255,231 200,000 1,854,563 165,699 241 2,475,734 (1) The amounts in the Bonus column reflect sign-on bonuses paid to the NEO in connection with his or her hiring. (2) The amounts reported in the Equity Award column represents the grant date fair value of the RSUs granted to Mr. Kelpy during 2014 as computed in accordance with ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 2 to Desert Newco s audited consolidated financial statements included elsewhere in this prospectus. (3) The amounts in the Option Awards column reflect the aggregate grant date fair value of equity options granted during the fiscal year computed in accordance with ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 2 to Desert Newco s audited consolidated financial statements included elsewhere in this prospectus. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. (4) For 2014, represents cash incentive compensation payments paid based on performance against the target corporate and individual performance goals for the performance period of January 1, 2014 through December 31, 2014. Following the 2014 performance period, the executive committee, with the assistance of our management team, assessed our performance against the 2014 performance goals and determined that for 2014, we achieved bookings of $1.675 billion (resulting in a multiplier of 87.0% for the bookings performance goal), adjusted EBITDA of $271 million (resulting in a multiplier of 72.5% for the adjusted EBITDA performance goal) and total customers of 12.709 million (resulting in a multiplier of 89.0% for the total customers performance goal). This resulted in a multiplier of 81.6% to be used for calculating each NEO s 2014 cash bonus. (5) For 2013, represents cash incentive compensation payments paid based on performance against the target corporate and individual performance goals for the performance period of January 1, 2013 through December 31, 2013. Following the 2013 performance period, the executive committee, with the assistance of our management team, assessed our performance against the 2013 performance goals and determined that for 2013, we achieved cash revenue of $1.421 billion (resulting in a multiplier of 86% for the cash revenue performance goal), cash EBITDA of $230 million (resulting in a multiplier of 100% for the cash EBITDA performance goal) and new customers of 2.956 million (resulting in a multiplier of 182% for the new customers performance goal). This resulted in a multiplier of 122% to be used for calculating each NEO s 2013 cash bonus. Although the calculation resulted in a 122% multiplier, our Chief Executive Officer and other executives, with the approval of the executive committee, determined it would be more appropriate to pay the cash bonus at 100% because the significant outperformance of the new customers performance goal did not translate directly enough into increased cash revenue. (6) The amounts in the All Other Compensation column consist of certain benefits provided to our NEOs, which are generally available to our similarly situated employees, including relocation allowance, 401(k) company matching, healthcare coverage and use a company leased vehicle. Mr. Kelpy received a $36,409 relocation allowance. (7) Mr. Josefsberg has served as our chief infrastructure and chief information officer since January 2014. (8) Mr. Kelpy has served as our chief accounting officer since November 2014. Table of Contents Grants of Plan-Based Awards 2014 The following table presents information regarding grants of plan-based awards made to our NEOs during 2014. Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1) All Other Unit Awards: Number of Securities Underlying Awards (#) All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($/Unit) Grant Date Fair Value of Unit and Option Awards ($) Name Grant Date Threshold Target Maximum Blake J. Irving 610,000 1,000,000 1,800,000 Scott W. Wagner 457,500 750,000 1,350,000 Arne M. Josefsberg 3/12/2014 400,000 15.24 3,215,360 155,124 254,302 457,743 Matthew B. Kelpy 12/10/2014 24,698(2) 449,998 12/10/2014 145,000 18.22 1,148,429 Elissa E. Murphy 9/17/2014 56,250 18.00 452,993 160,158 262,553 472,596 (1) The amounts represent target cash bonus amounts payable at the time the grants of awards were made and assume the achievement of the corporate and individual components at the target level for 2014. Payments of these amounts are subject to a maximum payment limitation of 180% based on achieving the maximum target performance objectives and a minimum payment limitation of 61% based on achieving the minimum of the target performance objectives. The material terms of the awards are discussed in Compensation Discussion and Analysis Components of Executive Compensation Program Short-term incentives (annual cash bonuses). (2) This unit award vested on February 1, 2015. (3) These options vest as follows: the Time Option, representing 60% of the total option, vests and becomes exercisable over a five year period as to 20% of the Time Option each year on the anniversary of the applicable vesting commencement date, subject to the NEO s continued employment; and the Performance Option, representing 40% of the total option, vests and becomes exercisable over a five year period as to 20% each year based achievement of annual performance targets established by the executive committee, subject to the NEO s continued employment through the applicable vesting date. If either or both of the annual performance targets are not achieved in a given year but the performance targets for the subsequent year are exceeded, then the amount of any excess achievement in the subsequent year s performance targets may be added to the prior year s achievement to retroactively determine whether the prior year s performance targets were met. In such a circumstance, the 20% of the Performance Option that did not vest in the prior year will vest if both of the prior year annual performance targets are then met, subject to the NEO s continued employment through the applicable vesting date. (4) The exercise price is set at the fair market value of the award on the grant date. For a discussion of our methodology for determining the fair value of our common stock, see Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Equity-Based Compensation. (5) The amounts reported represent the aggregate grant date fair value of unit options granted during the fiscal year computed in accordance with ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 2 to Desert Newco s audited consolidated financial statements included elsewhere in this prospectus. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Table of Contents Outstanding Equity Awards at Fiscal Year End The following table provides information regarding outstanding equity awards held by our NEOs as of December 31, 2014. Option Awards Unit Awards Name Grant Date Number of Securities Underlying Unexercised Options Exercisable (#) Number of Securities Underlying Unexercised Options Unexercisable (#) (1) Unit Option Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (2) Option Exercise Price ($) Option Expiration Date Number of Unvested Units (#) Market Value of Unvested Units ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights ($) Blake J. Irving 1/24/2013 398,406 956,175 637,450 7.44 1/24/2023 Scott W. Wagner 5/16/2013 367,500 882,000 588,000 7.90 5/16/2023 Arne M. Josefsberg 3/12/2014 240,000 160,000 15.24 3/12/2024 Matthew B. Kelpy 12/10/2014 87,000 58,000 18.22 12/10/2024 12/10/2014 24,698(3) 449,998 Elissa E. Murphy 5/16/2013 78,750 189,000 126,000 7.90 5/16/2023 9/17/2014 33,750 22,500 18.00 9/17/2024 (1) These options become vested and exercisable over a five year period as to 20% of the options each year on the anniversary of the applicable grant date, subject to his or her continued employment. (2) These options become vested and exercisable over a five year period as to 20% of the options each year based achievement of annual performance targets established by the executive committee, subject to the NEO s continued employment through the applicable vesting date. If either or both of the annual performance targets are not achieved in a given year but the performance targets for the subsequent year are exceeded, then the amount of any excess achievement in the subsequent year s performance targets may be added to the prior year s achievement to retroactively determine whether the prior year s performance targets were met. In such a circumstance, the 20% of the options that did not vest in the prior year will vest if both of the prior year annual performance targets are then met, subject to the NEO s continued employment through the applicable vesting date. (3) This unit award vested on February 1, 2015. Executive Employment Agreements Blake J. Irving In 2015, we entered into an employment agreement with Blake J. Irving. The employment agreement expires on December 31, 2018 (and may be extended through mutual agreement), and provides that Mr. Irving is an at-will employee. Mr. Irving s current annual base salary is $1,000,000, and he is eligible for an annual target cash incentive payment equal to 100% of his base salary. Mr. Irving s employment agreement also provides him with certain termination and change in control benefits as described in the Potential Payments Upon Termination or Change in Control section below. Scott W. Wagner In 2015, we entered into an employment agreement with Scott W. Wagner. The employment agreement expires on December 31, 2018 (and may be extended through mutual agreement), and provides that Mr. Wagner is an at-will employee. Mr. Wagner s current annual base salary is $750,000, and he is eligible for an annual target cash incentive payment equal to 100% of his base salary. Mr. Wagner s employment agreement also provides him with certain termination and change in control benefits as described in the Potential Payments Upon Termination or Change in Control section below. Arne M. Josefsberg In 2015, we entered into an employment agreement with Arne M. Josefsberg. The employment agreement expires on December 31, 2017 (and may be extended through mutual agreement), and provides that Mr. Josefsberg is an at-will employee. Mr. Josefsberg s current annual base salary is $450,000, and he is eligible for an annual target cash incentive payment equal to 60% of his base salary. Mr. Josefsberg s employment agreement also provides him with certain termination and change in control benefits as described in the Potential Payments Upon Termination or Change in Control section below. Table of Contents Matthew B. Kelpy In connection with his hiring in 2014, we entered into an offer letter with Matthew B. Kelpy. The offer letter provides that Mr. Kelpy is an at-will employee. Mr. Kelpy s current annual base salary is $325,000, and he is eligible for an annual target cash incentive payment equal to 50% of his base salary. Mr. Kelpy s offer letter also provides him with a signing bonus of $25,000, which is repayable in full if his employment terminates within 12 months from his employment start date with us for any reason. Under his offer letter, Mr. Kelpy also received option and RSU grants in the amounts set forth in the Grant of Plan Based Awards Table described above. Elissa E. Murphy In 2015, we entered into an employment agreement with Elissa E. Murphy. The employment agreement expires on December 31, 2017 (and may be extended through mutual agreement), and provides that Ms. Murphy is an at-will employee. Ms. Murphy s current annual base salary is $450,000, and she is eligible for an annual target cash incentive payment equal to 60% of her base salary. Ms. Murphy s employment agreement also provides her with certain termination and change in control benefits as described in the Potential Payments Upon Termination or Change in Control section below. Potential Payments Upon Termination or Change in Control Cash Benefits Each of our NEOs who has entered into an employment agreement with us as described above is entitled to the following cash severance under his or her employment agreement: If an NEO s employment is terminated either by us without cause (other than by reason of death or disability ) or by the NEO for good reason (as such terms are defined in his or her employment agreement), and in each case the termination occurs outside of the period beginning three months prior to and ending 18 months following a change in control (as defined in his or her employment agreement), and such period, the Change in Control Period ), the NEO will receive a lump sum cash severance payment equal to the following: 50% of the NEO s annual base salary rate as then in effect (100%, in the case of Messrs. Irving and Wagner); plus any earned but unpaid annual cash bonus for a prior year; plus pro-rated amount of the target annual cash bonus for the year of termination; plus 6 months of the cost of health insurance under COBRA (12 months, in the case of Messrs. Irving and Wagner). If an NEO s employment is terminated either by us without cause (other than by reason of death or disability ) or by the NEO for good reason during the Change in Control Period, the NEO will receive a lump sum cash severance payment equal to the following: 75% of the NEO s annual base salary rate as then in effect (150%, in the case of Messrs. Irving and Wagner); plus any earned but unpaid annual cash bonus for a prior year; plus 75% of the target annual cash bonus for the year of termination or, if higher, the date immediately prior to the change in control (150%, in the case of Messrs. Irving and Wagner); plus 9 months of the cost of health insurance under COBRA (18 months, in the case of Messrs. Irving and Wagner). If an NEO s employment is terminated by reason of death or disability (as such term is defined in his or her employment agreement), the NEO will receive a lump sum cash severance payment equal to the following: any earned but unpaid annual cash bonus for a prior year; plus pro-rated amount of the target annual cash bonus for the year of termination. In order to receive the cash severance benefits described above, the NEO must sign and not revoke a release of claims in our favor and comply with certain restrictive covenants relating to noncompetition (except for Ms. Murphy), nonsolicitation, and nondisparagement for up to 12 months as set forth in his or her employment agreement following the termination date. Table of Contents In the event any of the payments provided for under this agreement or otherwise payable to the NEO would constitute parachute payments within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax under Section 4999 of the Internal Revenue Code, he or she would be entitled to receive either full payment of benefits or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to such executive. No employment agreement with any of our NEOs provides for any tax gross-up payments. Equity Benefits Each NEO s option agreement provides that upon a change in control (as defined in the 2011 Plan), 100% of the NEO s unvested options (Time Options and Performance Options) will vest and become exercisable immediately prior to the change in control if, as a result of such change in control, (i) KKR, Silver Lake and TCV, at the time of the change in control, achieve an internal rate of return of at least 25% or (ii) KKR, Silver Lake and TCV, at the time of the change in control, earn at least three times the purchase price they paid for their equity interest, whether acquired, directly or indirectly, in each case, based on cash received by KKR, Silver Lake and TCV on a cumulative basis (excluding tax distributions and after deduction for any applicable transaction expenses), subject to the NEO s continued employment through the change in control. In addition, to the extent that Time Options do not vest and remain outstanding as of a change in control, in the event that an NEO s employment is terminated by us (or our successor) without cause or by the NEO for good reason within 90 days before, or within 18 months after a change in control, any Time Options unvested at that time will become immediately vested and exercisable. Termination of Employment Unrelated to a Change in Control Name and Principal Position Salary Continuation ($) (1) Target Annual Cash Bonus ($)(2) Value of Continued Health Care Coverage Premiums ($) Total ($) Blake J. Irving 1,000,000 1,000,000 19,201 2,019,201 Scott W. Wagner 750,000 750,000 19,201 1,519,201 Arne M. Josefsberg 225,000 270,000 6,639 501,639 Matthew B. Kelpy Elissa E. Murphy 225,000 270,000 6,639 501,639 (1) This amount is based on each named executive officer s base salary, in each case, as was in effect on December 31, 2014. (2) This amount is based on each named executive officer s target cash bonus amount, in each case, as was in effect on December 31, 2014. Termination of Employment in Connection with a Change in Control Name and Principal Position Salary Continuation ($)(1) Target Annual Cash Bonus ($) (2) Accelerated Vesting of Options ($) (3) Value of Continued Health Care Coverage Premiums ($) Total ($) Blake J. Irving 1,500,000 1,500,000 10,305,354 28,801 13,334,155 Scott W. Wagner 1,125,000 1,125,000 9,100,199 28,801 11,379,000 Arne M. Josefsberg 337,500 202,500 714,645 9,959 1,264,604 Matthew B. Kelpy Elissa E. Murphy 337,500 202,500 1,957,468 9,959 2,507,427 (1) This amount is based on each named executive officer s base salary, in each case, as was in effect on December 31, 2014. (2) This amount is based on each named executive officer s target bonus amount, in each case, as was in effect on December 31, 2014. (3) The amounts represent the intrinsic value of the Time Options that would vest on an accelerated basis in connection with such termination of employment in connection with a change in control in the event that such Time Options do not otherwise vest on a change in control as described under the Equity Benefits section above. Such intrinsic value is determined by multiplying (a) the amount by which the fair market value per unit on December 31, 2014 of $18.22 exceeded the exercise price per unit in effect under each option by (b) the number of unvested units that vest on an accelerated basis under such option. These amounts assume that the accelerated vesting resulting from the termination of employment occurred on December 31, 2014. Table of Contents Equity Incentive Plans 2015 Equity Incentive Plan Our 2015 Plan, was adopted by our board of directors and stockholders in March 2015 and became effective in March 2015. Our 2015 Plan provides for the grant of incentive stock options, within the meaning of Code Section 422, to our employees and any parent and subsidiary corporations employees, and for the grant of nonstatutory stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations employees and consultants. Authorized shares A total of 6,050,048 shares of our Class A common stock are reserved for issuance pursuant to the 2015 Plan, of which no awards are issued and outstanding. In addition, the shares reserved for issuance under our 2015 Plan will also include 4,235,413 shares of our Class A common stock that are reserved but unissued under the 2011 Plan as of the effective date of the 2015 Plan and up to 28,132,734 shares returned to the 2011 Plan, the Locu, Inc. Amended and Restated 2011 Equity Incentive Plan, the Bootstrap, Inc. 2008 Stock Plan or The Go Daddy Group Inc. 2006 Equity Incentive Plan as the result of expiration or termination of awards following the effective date of the 2015 Plan. The number of Class A shares available for issuance under the 2015 Plan will also include an annual increase on the first day of each fiscal year beginning in 2016, equal to the least of: 20,570,922 shares of Class A common stock; 4% of the outstanding shares of all classes of common stock as of the last day of our immediately preceding fiscal year; or such other amount as our board of directors may determine. If an award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, RSUs, performance units or performance shares, is forfeited to or repurchased due to failure to vest, the unpurchased shares (or for awards other than stock options or stock appreciation rights, the forfeited or repurchased shares) will become available for future grant or sale under the 2015 Plan. With respect to stock appreciation rights, the net shares issued will cease to be available under the 2015 Plan and all remaining shares will remain available for future grant or sale under the 2015 Plan. Shares used to pay the exercise price of an award or satisfy the tax withholding obligations related to an award will become available for future grant or sale under the 2015 Plan. To the extent an award is paid out in cash rather than shares, such cash payment will not result in a reduction in the number of shares available for issuance under the 2015 Plan. Plan administration Our board of directors or one or more committees appointed by our board of directors will administer the 2015 Plan. In the case of awards intended to qualify as performance-based compensation within the meaning of Code Section 162(m), the committee will consist of two or more outside directors within the meaning of Code Section 162(m). In addition, if we determine it is desirable to qualify transactions under the 2015 Plan as exempt under Rule 16b-3 of the Exchange Act, or Rule 16b-3, such transactions will be structured to satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of our 2015 Plan, the administrator has the power to administer the 2015 Plan, including but not limited to, the power to interpret the terms of the 2015 Plan and awards granted under it, to create, amend and revoke rules relating to the 2015 Plan, including creating sub-plans, and to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards, and the form of consideration, if any, payable upon exercise. The administrator has the authority to amend existing awards to reduce or increase their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator, and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type or cash. Stock options Stock options may be granted under the 2015 Plan. The exercise price of options granted under our 2015 Plan must at least be equal to the fair market value of our Class A common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed 5 years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include Table of Contents cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for three months following the termination of service. In no event may an option be exercised later than the expiration of its term. However, if the exercise of an option is prevented by applicable law, the exercise period may be extended under certain circumstances. Subject to the provisions of our 2015 Plan, the administrator will determine the other terms of options. Stock appreciation rights Stock appreciation rights may be granted under our 2015 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our Class A common stock between the exercise date and the date of grant. Stock appreciation rights may not have a term exceeding 10 years. After the termination of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her option agreement. However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of our 2015 Plan, the administrator will determine the other terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our Class A common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. Restricted stock Restricted stock may be granted under our 2015 Plan. Restricted stock awards are grants of shares of our Class A common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee, director or consultant and, subject to the provisions of our 2015 Plan, will determine the terms and conditions of such awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us); provided, however, that the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture. Restricted stock units RSUs may be granted under our 2015 Plan. RSUs are awards that give a participant the right to be issued a share of our Class A common stock that are payable when certain conditions are met. Subject to the provisions of our 2015 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Performance units and performance shares Performance units and performance shares may be granted under our 2015 Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number or the value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units shall have an initial dollar value established by the administrator prior to the grant date. Performance shares shall have an initial value equal to the fair market value of our Class A common stock on the grant date. The administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof. Non-employee directors Our 2015 Plan provides that all non-employee directors are eligible to receive all types of awards (except for incentive stock options) under the 2015 Plan. Our 2015 Plan will provide that in any given year, a non-employee director may not receive awards having a grant date fair value greater than $1 million, increased to $2 million in connection with his or her initial service Table of Contents as determined under generally accepted accounting principles. These maximum limits do not reflect the intended size of any potential grants or a commitment to make grants in the future. Non-transferability of awards Unless the administrator provides otherwise, our 2015 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime. Certain adjustments In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2015 Plan, the administrator will adjust the number and class of shares that may be delivered under the Plan or the number, class, and price of shares covered by each outstanding award, and the numerical share limits set forth in the 2015 Plan. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all awards will terminate immediately prior to the consummation of such proposed transaction. Merger or change in control Our 2015 Plan provides that in the event of a merger or change in control, as defined under the 2015 Plan, each outstanding award will be treated as the administrator determines. Forfeiture and clawback All awards granted under the 2015 Plan will be subject to recoupment under any clawback policy that we are required to adopt under applicable law. In addition, the administrator may provide in an award agreement that the recipient s rights, payments, and benefits with respect to such award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events. In the event of any accounting restatement, the recipient of an award may be required to repay a portion of the proceeds received in connection with the settlement of an award earned or accrued under certain circumstances. Amendment or termination The administrator has the authority to amend, suspend or terminate the 2015 Plan provided such action does not impair the existing rights of any participant. Our 2015 Plan automatically terminates in 2025, unless we terminate it sooner. 2015 Employee Stock Purchase Plan Our board of directors adopted and our stockholders previously approved our 2015 Employee Stock Purchase Plan, or ESPP. The ESPP became effective in March 2015. We believe that allowing our employees to participate in the ESPP provides them with a further incentive towards ensuring our success and accomplishing our corporate goals. Authorized shares A total of 2,000,000 shares of our Class A common stock are available for sale under the ESPP. The number of Class A shares available for issuance under ESPP will also include an annual increase on the first day of each fiscal year beginning in 2016, equal to the least of: 1,000,000 shares of Class A common stock; 1% of the outstanding shares of all classes of common stock as of the last day of our immediately preceding fiscal year; or such other amount as our board of directors may determine. Plan administration Our board of directors or one or more committees appointed by our board of directors will administer the ESPP, and will have full and exclusive authority to interpret the terms of the plan and determine eligibility to participate, subject to the conditions of the plan as described below. Table of Contents Eligibility Generally, all of our employees will be eligible to participate if they are employed by us, or any participating subsidiary or affiliate, for at least 30 hours per week and more than five months in any calendar year. However, an employee may not be granted rights to purchase stock under the ESPP if such employee: immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock; or hold rights to purchase stock under all of our employee stock purchase plans that accrue at a rate that exceeds $25,000 worth of stock for each calendar year. Offering periods Our ESPP is intended to qualify under Section 423 of the Code. Each offering period includes purchase periods, which will be the approximately six months commencing with one exercise date and ending with the next exercise date. The offering periods will be scheduled to start on the first trading day on or after May 15 and November 15 of each year, except for the first offering period, which will commence on the effective date of the ESPP and will end on the first trading day on or after November 15, 2015. Our ESPP will permit participants to purchase shares of Class A common stock through payroll deductions of up to 15% of their eligible compensation. A participant may purchase a maximum of 1,500 shares per calendar year. No more than 1,000,000 shares of Class A common stock may be purchased under the ESPP in any calendar year. Exercise of purchase right Amounts deducted and accumulated by the participant will be used to purchase shares of our Class A common stock at the end of each six-month purchase period. The purchase price of the shares will be 15% of the lower of the fair market value of our Class A common stock on the first trading day of each purchase period or on the last day of each purchase period. Participants may end their participation at any time during an offering period and will be paid their accrued contributions that have not yet been used to purchase shares of Class A common stock. Participation will end automatically upon termination of employment with us. Non-transferability A participant may not transfer rights granted under the ESPP. If the compensation committee permits the transfer of rights, it may only be done by will, the laws of descent and distribution, or as otherwise provided under the ESPP. Merger or change in control In the event of our merger or change in control, as defined under the ESPP, a successor corporation may assume or substitute each outstanding purchase right. If the successor corporation refuses to assume or substitute for the outstanding purchase right, the offering period then in progress will be shortened, and a new exercise date will be set. The administrator will notify each participant that the exercise date has been changed and that the participant s option will be exercised automatically on the new exercise date unless prior to such date the participant has withdrawn from the offering period. Amendment or termination Our ESPP will automatically terminate in 2035, unless we terminate it sooner. Our board of directors has the authority to amend, suspend, or terminate our ESPP, except that, subject to certain exceptions described in the ESPP, no such action may adversely affect any outstanding rights to purchase stock under our ESPP. 2011 Unit Incentive Plan The 2011 Unit Incentive Plan, or the 2011 Plan, was adopted by the executive committee of Desert Newco and approved by the unit holders of Desert Newco in December 2011. The 2011 Plan was terminated in connection with our IPO, and accordingly, no additional awards will be granted under the 2011 Plan. However, the 2011 Plan will continue to govern the terms and conditions of the outstanding options and RSUs previously granted under the 2011 Plan. Table of Contents As of December 31, 2014, under the 2011 Plan, we had outstanding options to purchase an aggregate of 20,555,562 LLC Units that are exchangeable on a one-for-one basis for shares of our Class A common stock, with a weighted average exercise price of $9.99, and 86,992 LLC Units issuable upon the vesting of RSUs that are exchangeable on a one-for-one basis for shares of Class A common stock issuable upon the vesting of RSUs. Plan administration Our compensation committee currently administers the 2011 Plan. The administrator is authorized to interpret the provisions of the 2011 Plan and individual award agreements, and generally take any other actions that are contemplated by the 2011 Plan or necessary or appropriate in the administration of the 2011 Plan and individual award agreements. All decisions of the administrator are final and binding on all persons. The administrator will determine the methods of payment of the exercise price of an option. Subject to the provisions of the 2011 Plan, the administrator determines the remaining terms of the options. Stock options The exercise price of an option must equal at least 100% of the fair market value of one LLC Unit on the date of grant. The term of an option may not exceed ten years. Subject to the provisions of our 2011 Plan, the administrator determines the remaining terms of the options, including the period following the termination of a participant s employment or other service during which the participant may exercise his or her vested option. Restricted stock units RSUs are awards that give a participant the right to be issued one LLC Unit, which is exchangeable on a one-for-one basis for a share of our Class A common stock, that are payable when certain conditions, such as vesting, are met. Subject to the provisions of our 2011 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria and the form and timing of payment. Transferability The 2011 Plan generally does not allow for the transfer of awards under the 2011 Plan other than by will or the laws of descent and distribution and only the recipient of an award may exercise the award during his or her lifetime. Certain adjustments In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2011 Plan, the administrator will make proportionate adjustments to the exercise price of or the number or type of shares covered by each award. Change in control The 2011 Plan provides that in the event of a change in control, as defined under the 2011 Plan, the administrator may provide for (i) all or any portion of an award to become fully vested and exercisable, (ii) the cancellation of an award for fair value, (iii) the issuance of a substitute award that will substantially preserve the otherwise applicable terms of an award or (iv) full exercisability of an option for a period of at least 15 days prior to the change in control followed by the termination of the option upon the occurrence of the change in control. Forfeiture or clawback The administrator could specify in an option that the optionee s rights, payments, and benefits with respect to an option will be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, such as termination of employment for cause, termination of the optionee s services to us or any of our subsidiaries, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the optionee, or restatement of our financial statements to reflect adverse results from those previously released financial statements as a consequence of errors, omissions, fraud, or misconduct. Table of Contents Plan amendment The 2011 Plan may be amended at any time in accordance with its terms, provided such action does not materially impair the existing rights of a participant without the participant s consent. Locu, Inc. Amended and Restated 2011 Equity Incentive Plan In connection with our acquisition of Locu in August 2013, we assumed options and restricted stock rights issued under the Locu, Inc. 2011 Equity Incentive Plan, or the Locu Plan, held by Locu employees who continued employment with us after the closing of the acquisition, and converted them into options to purchase LLC Units and restricted LLC Units, as applicable, subject to certain provisions of our 2011 Plan. The Locu Plan was terminated on the closing of the acquisition, but, except with respect to the provisions of the Locu Plan similar to the 2011 Plan provisions that became applicable to the awards we assumed in the acquisition, the Locu Plan continues to govern the terms of the assumed awards. After a participant s termination of service, the participant may exercise his or her options for the period of time determined by the administrator. In no event may an option be exercised later than the expiration of its term. Awards generally may not be sold, assigned, transferred, pledged or otherwise encumbered in any manner other than by will or by the laws of descent or distribution and options are exercisable during the optionee s lifetime only by the optionee. In the event of certain changes in our capitalization or in the event of a change in control, the outstanding awards under the Locu Plan will be subject to the same treatment as provided by the 2011 Plan for awards under the 2011 Plan. Bootstrap, Inc. 2008 Stock Plan In connection with our acquisition of Outright Inc., or Outright, in July 2012, we assumed options issued under the Bootstrap, Inc. 2008 Stock Plan, or the Outright Plan, held by Outright employees who continued employment with us after the closing of the acquisition, and converted them into options to purchase LLC Units subject to certain provisions of our 2011 Plan. The Outright Plan was terminated on the closing of the acquisition, but, except with respect to the provisions of the Outright Plan similar to the 2011 Plan provisions that became applicable to the options we assumed in the acquisition, the Outright Plan continues to govern the terms of the assumed options. Options issued under the Outright Plan are exercisable for their full term regardless of when the applicable optionholder terminates employment or service. Options generally may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. In the event of certain changes in our capitalization or a change in control, outstanding options under the Outright Plan will be subject to the same treatment as awards under the 2011 Plan. The Go Daddy Group, Inc. 2006 Equity Incentive Plan In connection with the Merger, certain options issued under The Go Daddy Group, Inc. 2006 Equity Incentive Plan, or the 2006 Plan, were converted into options to purchase LLC Units. The 2006 Plan was terminated on the closing of the Merger but continues to govern the terms of the options granted thereunder. Options issued under, or subject to, the 2006 Plan are exercisable for their full term regardless of when the applicable optionholder terminates employment or service. Options generally may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. In the event of certain changes in our capitalization or a change in control, outstanding options under, or subject to, the 2006 Plan will be subject to the same treatment as awards under the 2011 Plan. Bonus Plans Executive Incentive Compensation Plan Our board of directors adopted an Executive Incentive Compensation Plan, which we refer to as our Incentive Compensation Plan. Our Incentive Compensation Plan will allow our board of directors to provide cash incentive awards to selected employees, including our NEOs, based upon performance goals established by our board of directors. Under the Incentive Compensation Plan, our board of directors, in its sole discretion, will establish a target award for each participant and a bonus pool, with actual awards payable from such bonus pool, with respect to the applicable performance period. Our 2015 executive bonus plan and target award for our executives are governed by the Incentive Compensation Plan. Under the Incentive Compensation Plan, our board of directors, in its sole discretion, will determine the performance goals applicable to awards, which goals may include, without limitation: attainment of research and development milestones, bookings, business divestitures and acquisitions, cash flow, cash position, contract awards or backlog, customer renewals, Table of Contents customer retention rates from an acquired company, subsidiary, business unit or division, earnings (which may include earnings before interest and taxes, earnings before taxes, and net taxes), earnings per share, expenses, gross margin, growth in stockholder value relative to the moving average of the S&P 500 Index or another index, internal rate of return, market share, net income, net profit, net sales, new product development, new product invention or innovation, total number of customers or net new customers, operating cash flow, operating expenses, operating income, operating margin, overhead or other expense reduction, product defect measures, product release timelines, productivity, profit, retained earnings, return on assets, return on capital, return on equity, return on investment, return on sales, revenue, revenue per user, revenue growth, sales results, sales growth, stock price, time to market, total stockholder return, adjusted EBITDA, unlevered free cash flow, working capital and individual objectives such as peer reviews or other subjective or objective criteria. As determined by our board of directors, performance goals that include our financial results may be determined in accordance with GAAP, or such financial results may consist of non-GAAP financial measures and any actual results may be adjusted by our board of directors for one-time items or unbudgeted or unexpected items and/or payments of actual awards under the plan when determining whether the performance goals have been met. The goals may be on the basis of any factors our board of directors determines relevant, and may be on an individual, divisional, business unit or company-wide basis. The performance goals may differ from participant to participant and from award to award. Our board of directors may, in its sole discretion and at any time, increase, reduce or eliminate a participant s actual award, or increase, reduce or eliminate the amount allocated to the bonus pool for a particular performance period. The actual award may be below, at or above a participant s target award, in our board of director s discretion. Our board of directors may determine the amount of any reduction on the basis of such factors as it deems relevant, and it is not be required to establish any allocation or weighting with respect to the factors it considers. Actual awards are paid in cash (or its equivalent) in a single lump sum as soon as practicable after the end of the performance period during which they are earned and after they are approved by our board of directors, but in no event later than the later of the 15th day of the third month of the fiscal year following the date the award has been earned and March 15th of the calendar year following the date the award has been earned. Unless otherwise determined by our board of directors, to earn an actual award, a participant must be employed by us (or an affiliate of ours) through the date the bonus is paid. Accordingly, an award is not considered earned until paid. Our board of directors, in its sole discretion, may alter, suspend or terminate the Incentive Compensation Plan provided such action does not, without the consent of the participant, alter or impair the rights or obligations under any award theretofore earned by such participant. Annual Bonus Plan The executive committee adopted an annual bonus plan, which we refer to as our Annual Bonus Plan, for paying cash bonus awards to our executives and other key employees. The executive committee establishes the applicable performance metrics and relative weightings for the performance metrics for a performance period. The executive committee or the employee s manager, as applicable, also approves a target award for each participating employee under the plan. The executive committee has the discretion to make adjustments to the performance metrics or relative weightings before the end of the applicable performance period. A performance period under the plan generally is a calendar year. Following the end of the performance period, the executive committee has the discretion to establish a bonus pool, with actual awards payable from such bonus pool to eligible employees, based on achievement against the applicable performance metrics during the relevant performance period. Benefit Plan We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able contribute up to 100% of their compensation, subject to limitations established by the Code. We match employee contributions up to 3.5% of their compensation. Employees are immediately and fully vested in their contributions. The 401(k) plan is intended to be qualified under Code Section 401(a) with the 401(k) plan s related trust intended to be tax exempt under Code Section 501(a). As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan. Table of Contents CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In addition to the compensation arrangements, including employment, termination of employment and change in control arrangements and indemnification arrangements, discussed in the sections titled Management and Executive Compensation, the following is a description of each transaction since January 1, 2012 in which: we, GD Subsidiary Inc., Desert Newco or any subsidiaries thereof have been or will be a participant; the amount involved exceeded or exceeds $120,000; and any of our directors, executive officers or beneficial owners of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. Desert Newco Amended and Restated Limited Liability Company Agreement We directly, or indirectly through our wholly owned subsidiary GD Subsidiary Inc., hold LLC Units in Desert Newco and are the sole managing member of Desert Newco. Accordingly, we operate and control all of the business and affairs of Desert Newco and, through Desert Newco and its operating subsidiaries, conduct our business. As the sole managing member of Desert Newco, we have the right to determine when distributions will be made to the members of Desert Newco and the amount of any such distributions (subject to the requirements with respect to the tax distributions described below). If we authorize a distribution, such distribution will be made to the unit holders of Desert Newco, including GoDaddy Inc., pro rata in accordance with their respective ownership interest of Desert Newco, provided that GoDaddy Inc. as sole managing member will be entitled to non-pro rata distributions for certain fees and expenses. Our principal asset is a controlling equity interest in Desert Newco. As such, we have no independent means of generating revenue. Desert Newco is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, taxable income is allocated to holders of its LLC Units, including us. Accordingly, we incur income taxes on our allocable share of any net taxable income of Desert Newco . Pursuant to the New LLC Agreement, Desert Newco makes pro rata cash distributions to the holders of LLC Units, calculated using an assumed tax rate, to help fund their tax obligations in respect of the cumulative taxable income, reduced by cumulative taxable losses, of Desert Newco allocated to them. Generally, these tax distributions are computed based on an assumed income tax rate equal to the sum of (i) the maximum marginal federal income tax rate applicable to an individual (including the 3.8% tax on net investment income, if such tax is applicable to the income allocable to the original owner of YAM) and (ii) 7%, which represents an assumed blended state income tax rate. As of September 30, 2015, this assumed income tax rate was 46.6% (which would increase to 50.4%, if the tax on net investment income were to apply to income allocable to the original owner of YAM). Notwithstanding the potential differences, described above, in the assumed tax rate applicable in respect of different owners, Desert Newco makes tax distributions pro rata to LLC Unit ownership. In addition, under the tax rules, Desert Newco is required to allocate net taxable income disproportionately to its unit holders in certain circumstances. Because tax distributions are determined based on the holder of LLC Units who is allocated the largest amount of taxable income on a per unit basis, but are made pro rata based on ownership, this disproportionate allocation of taxable income is likely to result in Desert Newco being required to make substantial tax distributions and that, in the aggregate, such distributions will likely exceed the amount of taxes Desert Newco would have paid if it were taxed on its net income at the assumed rate applicable to current owners of YAM. In addition to tax expenses, we also incur expenses related to our operations, plus payments under the TRAs, which we expect will be significant. We intend to cause Desert Newco to make distributions or, in the case of certain expenses, payments in an amount sufficient to allow us to pay our taxes and operating expenses, including distributions to fund any ordinary course payments due under the TRAs. The New LLC Agreement also provides that as a general matter, a Continuing LLC Owner does not have the right to transfer LLC Units if we determine that such transfer would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Owner may be subject or would cause a technical tax termination of Desert Newco. However, each of KKR, Silver Lake, TCV and Mr. Parsons may transfer all its LLC Units even if such transfer could result in a technical tax termination, if the transferring member indemnifies the other members of Desert Newco (including Go Daddy Inc.) for certain adverse tax consequences arising from any such technical tax termination and indemnifies Desert Newco for related costs. Table of Contents Stockholder Agreement In connection with our IPO, we entered into a stockholder agreement with Desert Newco, affiliates of each of KKR, Silver Lake, TCV and Mr. Parsons. The stockholder agreement, as further described below, contains specific rights, obligations and agreements of these parties as owners of our Class A common stock and Class B common stock. In addition, the stockholder agreement contains provisions related to the composition of our board of directors and its committees, which are discussed under Management Board of Directors and Management Committees of the Board of Directors. Voting Agreement Under the stockholder agreement, our existing owners who are affiliated with KKR, Silver Lake, TCV and Mr. Parsons agree to take all necessary action, including casting all votes to which such existing owners are entitled to cast at any annual or special meeting of stockholders, so as to ensure that the composition of our board of directors and its committees complies with (and includes all of the nominees in accordance with) the provisions of the stockholder agreement related to the composition of our board of directors and its committees, which are discussed under Management Board of Directors and Management Committees of the Board of Directors. In addition, under the stockholder agreement, affiliates of TCV agree to cast all votes in a manner directed by the affiliates of KKR and Silver Lake during the three year period following the completion of our IPO. KKR and Silver Lake Approvals Under the stockholder agreement and subject to our amended and restated certificate of incorporation, our amended and restated bylaws and applicable law, the actions listed below by us or any of our subsidiaries will require the approval of KKR and Silver Lake for so long as affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own at least 25% of the shares of our Class A common stock outstanding on an As-Exchanged Basis immediately following our IPO. Additionally, the approval requires the consent of each of KKR and Silver Lake for so long as such stockholder is entitled to nominate a KKR Director or a Silver Lake Director, as the case may be, pursuant to the stockholder agreement. The actions include: change in control transactions; acquiring or disposing of assets or entering into joint ventures with a value in excess of $50 million; incurring indebtedness in an aggregate principal amount in excess of $50 million; initiating any liquidation, dissolution, bankruptcy or other insolvency proceeding involving us or any of our significant subsidiaries; making any material change in the nature of the business conducted by us or our subsidiaries; terminating the employment of our Chief Executive Officer or hiring a new Chief Executive Officer; increasing or decreasing the size of our board of directors; waiving or amending the limited liability company agreement of Desert Newco Managers, LLC or the equity or employment agreements of our executive officers; engaging in certain transactions with affiliates; and any merger or liquidation of Desert Newco or creating any new class of equity securities of Desert Newco. Mr. Parsons Approvals Under the stockholder agreement, the actions listed below by us or any of our subsidiaries shall require the consent of affiliates of Mr. Parsons for so long as such affiliates continue to own at least 50% of the shares of our Class A common stock held by YAM on an as-exchanged basis immediately prior to our IPO: certain transactions with KKR and/or Silver Lake and/or their affiliates; change in control transactions in which KKR and Silver Lake and/or their affiliates receive consideration from an unaffiliated third party that is not offered on a pro rata basis to Mr. Parsons affiliates; and any tax election revoking Desert Newco s Section 754 election under the Internal Revenue Code or to treat Desert Newco as other than a partnership for tax purposes. Table of Contents TCV Approvals Under the stockholder agreement, the actions listed below by us or any of our subsidiaries require the consent of affiliates of TCV for so long as such affiliates continue to own at least 5% of the shares of our Class A common stock on an as-exchanged basis: any redemption or repurchase of shares from KKR, Silver Lake, affiliates of Mr. Parsons or Desert Newco Managers, LLC (other than certain repurchases of employee shares pursuant to compensation arrangements), or any payment of any fee to KKR or Silver Lake or its related management company (other than pursuant to the Transaction and Monitoring Fee Agreement as in effect on the date of our IPO), other than transactions effected on a pro rata basis in respect of all of the shares held by KKR and its affiliates, SLP and its affiliates, TCV and its affiliates, Mr. Parsons and his affiliates and Desert Newco Managers, LLC. Transfer Restrictions Under the stockholder agreement, each of KKR, Silver Lake, TCV and Mr. Parsons agreed, subject to certain limited exceptions, not to transfer, sell, exchange, assign, pledge, hypothecate, convey or otherwise dispose of or encumber any shares of our Class A common stock (including shares of Class A common stock issuable upon the exchange of LLC Units) during the three-year period following our IPO without the consent of each of KKR and Silver Lake, for so long as each of KKR and Silver Lake is entitled to nominate at least one director to our board of directors. An aggregate of 2,500,000 shares of our Class A common stock purchased by certain entities affiliated with KKR, Silver Lake, TCV and Bob Parsons during our IPO are not subject to the foregoing restrictions under the stockholder agreement. Other Provisions Under the stockholder agreement, we agreed, subject to certain exceptions, to indemnify KKR, Silver Lake, TCV and Mr. Parsons and various respective affiliated persons from certain losses arising out of the indemnified persons investment in, or actual, alleged or deemed control or ability to influence, us. Registration Rights Agreement We are a party to an amended and restated registration rights agreement with certain holders of our Class A common stock (and other securities convertible into or exchangeable or exercisable for shares of our Class A common stock). See Description of Capital Stock Registration Rights. Under this agreement, certain holders have the right to demand that we register Class A common stock to be sold by them. Such registration demand must be expected to result in aggregate net cash proceeds to the participating registration rights holders in excess of $50 million. In certain circumstances, we may postpone the filing of a registration statement for up to 90 days once in any 12 month period. In addition, certain holders have the right to request that we register the sale of shares of Class A common stock to be sold by them on Form S-3 and, no more than twice during any 12 month period, each such holder may demand that we make available shelf registration statements permitting sales of shares of Class A common stock into the market from time to time over an extended period. Subject to certain limitations, at any time when we have an effective shelf registration statement, certain holders each shall have the right to make no more than two takedown demands during any 12 month period. In addition, certain holders have the ability to exercise certain piggyback registration rights in respect of shares of Class A common stock to be sold by them in connection with registered offerings requested by certain other holders or initiated by us. Credit Agreement In December 2011, Desert Newco, as guarantor, and Go Daddy Operating Company, LLC, as borrower, entered into a credit agreement with certain entities, including affiliates of KKR and Silver Lake. The credit agreement provided $825.0 million of financing, including a $750.0 million term loan maturing on December 16, 2018 and an available $75.0 million revolver maturing on December 16, 2016. The term loan was issued at a 5.0% discount on the face of the note at the time of original issuance for net proceeds totaling $712.5 million. The term loan was refinanced on multiple occasions at lower interest rates. Additionally, on October 1, 2013, Desert Newco increased the size of the term loan by $100.0 million with no change to the applicable interest rates. Table of Contents In May 2014, Desert Newco refinanced the term loan and restated the secured credit agreement as part of the refinancing, the term loan was increased by $269.3 million, for an aggregate term loan of $1.1 billion, and our available capacity on the revolver was increased to $150.0 million. The refinanced term loan was issued at a 0.5% discount on the face amount of the borrowing and is subject to a prepayment penalty of 1.0% in the event the term loan is voluntarily prepaid within the 12 months following this refinancing. The refinanced facility bears interest at a rate equal to, at our option, either (a) for LIBOR loans, LIBOR (but not less than 1.0% for the term loan only) plus a margin ranging from 3.25% to 3.50% or (b) for ABR loans, a margin ranging from 2.25% to 2.50% plus the highest of (i) the federal funds rate plus 0.5%, (ii) the prime rate, or (iii) one month LIBOR plus 1.0%, with the applicable margin depending on our leverage ratio. The refinanced term loan matures on May 13, 2021, and the refinanced revolver matures on May 13, 2019. The credit agreement contains certain covenants that, among other things, limit Desert Newco s ability to incur additional indebtedness, incur additional liens, make certain fundamental changes, sell assets, pay dividends or distributions and make certain investments. Debt under the credit agreement is guaranteed by all of Desert Newco s material domestic subsidiaries and is secured by substantially all of Desert Newco s and its subsidiaries assets. The credit agreement also requires Desert Newco to maintain certain financial ratios with respect to the revolver. Since 2012, affiliates of KKR, Silver Lake and Mr. Parsons were participating lenders under the credit agreement, and as of September 30, 2015, had received principal payments of $22.6 million, $10.0 million and $50.0 million, respectively, and interest, prepayment premium and administrative fee payments of $7.2 million, $0.2 million and $2.8 million, respectively. As of September 30, 2015, investment funds or accounts advised by KKR Credit Advisors (US) LLC held $28.9 million of the outstanding principal balance of the refinanced term loan. Since 2011, KKR Capital Markets LLC, an affiliate of KKR, acted as a lead arranger and joint bookrunner for various financing transactions under the credit agreement, and received underwriter and transaction fees totaling $1.2 million. Senior Note Payable to YAM Special Holdings, Inc. In December 2011, Go Daddy Operating Company, LLC issued a $300.0 million senior note to YAM in connection with the Merger. The note was issued at a 4.0% discount on the face of the note at the original issue date for net proceeds totaling $288.0 million. The note bore interest at a rate of 9.0% with interest payments made on a quarterly basis and the outstanding principal payable at maturity on December 15, 2019. In April 2015, we made a payment totaling $316.0 million to repay the note, including prepayment premium of $13.5 million and accrued interest of $2.5 million. Following this payment, we have no further obligations under the note. Agreement with YAM Special Holdings, Inc. In August 2014, we received $6.6 million from YAM as payment for the indemnified portion of sales tax liability. As a result, we agreed to release YAM from its indemnification obligations for certain transaction-based taxes. See Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates Indirect Taxes. Exchange Agreement In connection with the consummation of our IPO, we and the Continuing LLC Owners entered into the Exchange Agreement under which they (or certain permitted transferees thereof) were granted the right, subject to the terms of the Exchange Agreement, to exchange their LLC Units (together with a corresponding number of shares of Class B common stock) for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. The Exchange Agreement provides, however, that such exchanges must be for a minimum of the lesser of 1,000 LLC Units or all of the vested LLC Units held by such owner. The New LLC Agreement provides that as a general matter a Continuing LLC Owner does not have the right to exchange LLC Units if we determine that such exchange would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Owner may be subject or would cause a technical tax termination of Desert Newco. However, each of KKR, Silver Lake, TCV and Mr. Parsons may transfer all its LLC Units even if such transfer could result in a technical tax termination if the transferring member indemnifies the other members of Desert Newco (including Go Daddy Inc.) for certain adverse tax consequences arising from any such technical tax termination and indemnifies Desert Newco for related costs. We may impose additional restrictions on exchange that we determine to be necessary or advisable so that Desert Newco is not treated as a publicly traded partnership for U.S. federal income tax purposes. As a holder exchanges LLC Units for shares of Class A Table of Contents common stock, the number of LLC Units held by us is correspondingly increased as we acquire the exchanged LLC Units, and a corresponding number of shares of Class B common stock are cancelled. Tax Receivable Agreements Pursuant to the Exchange Agreement described above, from time to time we may be required to acquire LLC Units of Desert Newco from their holders upon exchange of shares of our Class A common stock. Desert Newco intends to have an election under Code Section 754 in effect for taxable years in which transfers or exchanges of LLC Units occur. Pursuant to the Code Section 754 election, transfers and exchanges of LLC Units are expected to result in an increase in the tax basis of tangible and intangible assets of Desert Newco. When we acquire LLC Units from existing owners, we expect both the existing basis, and the anticipated basis adjustments under Code Section 754, will increase (for tax purposes) our depreciation and amortization deductions and therefore reduce the amount of income tax we would otherwise be required to pay in the future. This existing and increased tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent tax basis is allocated to those assets. In addition, certain acquiried net operating losses and other tax attributes are available to us as a result of the Investor Corp Mergers. We are party to five TRAs. Under these agreements, we generally expect to retain the benefit of approximately 15% of the applicable tax savings after our payment obligations below are taken into account. Under the first of those agreements, we generally will be required to pay to the Continuing LLC Owners approximately 85% of the applicable savings, if any, in income tax we are deemed to realize (using the actual U.S. federal income tax rate and an assumed combined state and local income tax rate) as a result of (1) any step-up in tax basis created as a result of the exchanges of their LLC Units for shares of our Class A common stock, (2) any existing tax attributes associated with their LLC Units the benefit of which is allocable to us as a result of the exchanges of their LLC Units for shares of our Class A common stock (including existing tax basis in the Desert Newco assets), (3) tax benefits related to imputed interest and (4) payments under the TRA. Under the other four TRAs, we are generally required to pay to each Reorganization Party approximately 85% of the amount of savings, if any, in income tax that we are deemed to realize (using the actual U.S. federal income tax rate and an assumed combined state and local income tax rate) as a result of (1) any existing tax attributes associated with LLC Units acquired in the applicable Investor Corp Merger the benefit of which is allocable to us as a result of such Investor Corp Merger (including existing tax basis in the Desert Newco assets), (2) net operating losses available as a result of the applicable Investor Corp Merger and (3) tax benefits related to imputed interest. For purposes of calculating the income tax savings we are deemed to realize under the TRAs, we have calculated (with respect to the Reorganization Parties) the U.S. federal income tax savings using the actual applicable U.S. federal income tax rate and the state and local income tax savings using 5% for the assumed combined state and local rate, which represents an approximation of our combined state and local income tax rate, net of federal income tax benefit. Similar rates will be used to calculate income tax savings related to future exchanges. Furthermore, we have calculated the state and local income tax savings by applying this 5% rate to the reduction in our taxable income, as determined for U.S. federal income tax purposes, as a result of the tax attributes subject to the TRAs. The term of the TRAs commenced upon the completion of our IPO and will continue until all such tax benefits have been utilized or expired, unless we exercise our rights to terminate the agreements or payments under the agreements are accelerated in the event we materially breach any of our material obligations under the agreements (as described below). Under the terms of the TRAs, we may not elect an early termination of the TRAs without the consent of each of certain affiliates of KKR, Silver Lake, TCV and Mr. Parsons until such affiliate has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock. With regard to future exchanges, the actual existing tax basis and increase in tax basis, as well as the amount and timing of any payments under these agreements, will vary depending upon a number of factors, including the timing of exchanges by the holders of LLC Units, the price of our Class A common stock at the time of the exchange, whether such exchanges are taxable, the amount and timing of the taxable income we generate in the future, the federal tax rate then applicable and the portion of our payments under the TRAs constituting imputed interest. Any payment obligation under the TRAs is an obligation of GoDaddy Inc., not Desert Newco, and we expect the payments we will be required to make under the TRAs will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits subject to the TRAs, we expect the tax savings we will be deemed to realize associated with (1) the Investor Corp Mergers and (2) future exchanges of LLC Units, as described above, would aggregate approximately $2.0 billion over 15 years from the date of this prospectus based on the the closing price on October 30, 2015 of $27.48 per share of our Class A common stock and assuming all future exchanges will occur one year after our IPO. Under such scenario, we would be required to pay the owners of LLC Units approximately 85% of such amount, or approximately $1.7 billion, over the 15 year period from the date of this prospectus. The actual amounts may materially differ from these hypothetical amounts, as potential future tax savings we will be deemed to realize, and TRA payments by us, will be Table of Contents calculated based in part on the market value of our Class A common stock at the time of purchase or exchange and the prevailing federal tax rates applicable to us over the life of the TRAs (as well as the assumed combined state and local tax rate), and will generally be dependent on us generating sufficient future taxable income to realize the benefit (subject to the exceptions described below). Payments under the TRAs are not conditioned on Desert Newco s owners continued ownership of LLC Units. In addition, although we are not aware of any issue that would cause the IRS to challenge existing tax basis, tax basis increases or other tax attributes subject to the TRAs, if any subsequent disallowance of tax basis or other benefits were so determined by the IRS, we would not be reimbursed for any payments previously made under the applicable TRAs (although we would reduce future amounts otherwise payable under such TRAs). In addition, the actual state or local tax savings we realize may be different than the amount of such tax savings we are deemed to realize under the TRA, which will be based on an assumed combined state and local tax rate applied to our reduction in taxable income as determined for U.S. federal income tax purposes as a result of the tax attributes subject to the TRAs. As a result, payments could be made under the TRAs in excess of the tax savings we actually realize in respect of the attributes to which the TRAs relate. The TRAs provide that (1) in the event we materially breach any of our material obligations under the agreements, whether as a result of failure to make any payment within three months of when due (provided we have sufficient funds to make such payment), failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreements in a bankruptcy or otherwise or (2) if, at any time, we elect an early termination of the agreements, our (or our successor s) obligations under the applicable agreements (with respect to all LLC Units, whether or not LLC Units have been exchanged or acquired before or after such transaction) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions, including that we will have sufficient taxable income to fully utilize the deductions arising from the tax deductions, tax basis and other tax attributes subject to the applicable TRAs. Under the terms of the TRAs, we may not elect an early termination of the TRAs without the consent of each of certain affiliates of KKR, Silver Lake, TCV and Mr. Parsons until such affiliate has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock. Accordingly, we may be prevented from terminating the TRAs in circumstances where we determine it would be beneficial for us to do so, including potentially in connection with future strategic transactions. Additionally, the TRAs provide that upon certain mergers, asset sales, other forms of business combinations or other changes of control, our (or our successor s) tax savings under the applicable agreements for each taxable year after any such event would be based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the tax deductions, tax basis and other tax attributes subject to the applicable TRAs. Furthermore, the TRAs will determine the tax savings by excluding certain future tax attributes we obtain the use of as a result of acquiring other entities to the extent such tax attributes are the subject of tax receivable agreements we enter into in connection with such acquisitions. As a result of the foregoing, (1) we could be required to make payments under the TRAs that are greater than or less than the specified percentage of the actual tax savings we realize in respect of the tax attributes subject to the agreements and (2) if we materially breach a material obligation under the agreements or if we elect to terminate the agreements early, we would be required to make an immediate lump sum payment equal to the present value of the anticipated future tax savings, which payment may be made significantly in advance of the actual realization of such future tax savings. In these situations, our obligations under the TRAs could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance we will be able to fund or finance our obligations under the TRAs. If we were permitted to elect to terminate the TRAs immediately after the date of this prospectus, based on the October 30, 2015 closing price of $27.48 per share of our Class A common stock and a discount rate equal to one year LIBOR plus 100 basis points, we estimate we would be required to pay approximately $1.7 billion in the aggregate under the TRAs. Subject to the discussion above regarding the acceleration of payments under the TRAs, payments under the TRAs, if any, will generally be made on an annual basis to the extent we have sufficient taxable income to utilize any portion of the increased depreciation and amortization charges and other tax attributes subject to the TRAs. The availability of sufficient taxable income to utilize the increased depreciation and amortization expense and other tax attributes will not be determined until such time as the financial results for the year in question are known and tax estimates prepared. We expect to make payments under the TRAs, to the extent they are required, within 150 days after our federal income tax return is filed for each fiscal year. Interest on such payments will begin to accrue at a rate equal to one year LIBOR plus 100 basis points from the due date (without extensions) of such tax return. The impact the TRAs have had, and will have, on our consolidated financial statements is the establishment of a liability, which will be increased upon the exchanges of LLC Units for our Class A common stock, representing approximately 85% of the Table of Contents estimated future tax savings we will be deemed to realize, if any, relating to the existing and increased tax basis associated with the LLC Units and other tax attributes we received as a result of the Investor Corp Mergers and will receive as a result of other exchanges by owners of LLC Units. Because the amount and timing of any payments will vary based on a number of factors (including the timing of future exchanges, the price of our Class A common stock at the time of any exchange, whether such exchanges are taxable and the amount and timing of our income), depending upon the outcome of these factors, we may be obligated to make substantial payments pursuant to the TRAs. Decisions made by our existing owners in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by an exchanging or selling existing owner under the TRAs. For example, the earlier disposition of assets following an exchange or acquisition transaction will generally accelerate payments under the TRAs and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase an existing owner s tax liability without giving rise to any rights of an existing owner to receive payments under the TRAs. Because of our structure, our ability to make payments under the TRAs is dependent on the ability of Desert Newco to make distributions to us. The ability of Desert Newco to make such distributions will be subject to, among other things, restrictions in our debt documents and the applicable provisions of Delaware law that may limit the amount of funds available for distribution to its members. To the extent we are unable to make payments under the TRAs for any reason, such payments will be deferred and will accrue interest at a rate equal to one year LIBOR plus 500 basis points until paid (although a rate equal to one year LIBOR plus 100 basis points will apply if the inability to make payments under the TRAs is due to limitations imposed on us or any of our subsidiaries by a debt agreement in effect at the time of our IPO). Transaction and Monitoring Fee Agreement Go Daddy Operating Company, LLC, a wholly owned subsidiary of Desert Newco, was a party to a transaction and monitoring fee agreement with KKR, Silver Lake and TCV, pursuant to which they agreed to provide certain management and advisory services. In consideration for such services, Go Daddy Operating Company, LLC agreed to pay them an annual aggregate management fee of $2.0 million, payable quarterly in arrears and increasing at a rate of 5% annually, plus reasonable out-of-pocket expenses incurred in connection with the services. In 2012, 2013, 2014 and the nine months ended September 30, 2015, fees and expenses paid under the transaction and monitoring fee agreement were $2.3 million, $2.2 million, $2.3 million and $0.6 million, respectively. The transaction and monitoring fee agreement was terminated upon completion of our IPO, and in accordance with its terms, we made a final aggregate payment of $26.7 million. Consulting Services KKR Capstone has provided consulting and advisory services to us. Certain of these advisory services were rendered by Scott W. Wagner when he served as our Interim Chief Executive Officer from July 2012 to January 2013, and thereafter when he continued to provide advisory services to us from January 2013 to April 2013. All of the services rendered by Mr. Wagner as a service provider of KKR Capstone were rendered prior to the commencement of his employment with us in May 2013. As of September 30, 2015, we had paid $4.1 million directly to KKR Capstone since 2012. References to KKR Capstone or Capstone are to all or any of KKR Capstone Americas LLC, KKR Capstone EMEA LLP, KKR Capstone EMEA (International) LLP, KKR Capstone Asia Limited, and their affiliates, which are owned and controlled by their senior management. KKR Capstone is not a subsidiary or affiliate of KKR. KKR Capstone operates under several consulting agreements with KKR and uses the KKR name under license from KKR. Executive Chairman Services Agreement Desert Newco entered into an executive chairman services agreement with our founder, Bob Parsons, pursuant to which Mr. Parsons served as the chairman of Desert Newco. In consideration for such services, we agreed to pay Mr. Parsons an annual fee of $1.00, plus reimbursement of all business expenses incurred by Mr. Parsons in an amount not to exceed $0.5 million annually. The executive chairman services agreement was terminated upon completion of our IPO, and in accordance with its terms, we made a termination payment of $3.0 million. Table of Contents Management Investments The following table sets forth the number of, and the purchase price paid for, LLC Units or shares of Class A common stock purchased by our executive officers since the beginning of 2012 through September 30, 2015. See Management Executive Compensation Compensation Discussion and Analysis. Name Date Acquired Number of LLC Units Number of Class A Shares Aggregate Purchase Price Blake J. Irving January 24, 2013 49,800 $ 500,000 Scott W. Wagner August 23, 2013 110,229 $ 1,249,997 Nima Kelly February 19, 2014 100,000 $ 250,000 Matthew B. Kelpy February 1, 2015 17,048 (1) Matthew B. Kelpy August 11, 2015 4,000 $ 104,197 (1) The 17,048 LLC Units acquired by Mr. Kelpy resulted from the vesting of RSUs on February 1, 2015. We withheld 7,650 LLC Units from Mr. Kelpy s vesting as payment of his withholding tax obligations. Participation in our Initial Public Offering Certain entities affiliated with KKR, Silver Lake, TCV and Bob Parsons, each a beneficial owner of more than 5% of our capital stock and an affiliate of a member of our board of directors, purchased an aggregate of 2,500,000 shares of our Class A common stock on a pro rata basis based on their existing ownership (724,665, 724,665, 325,000 and 725,670 shares of our Class A common stock, respectively) directly from us at the IPO price of $20.00 per share. Other Transactions In September 2012, we entered into a partner agreement with First Data Merchant Services Corporation, or First Data, a subsidiary of First Data Corporation, pursuant to which we sell First Data s electronic commerce and payment solutions to our customers and receive a portion of all fees received by First Data from such customers. KKR and its affiliates own approximately 40% of First Data Corporation. As of September 30, 2015, we had received $1.7 million under the agreement. We have granted stock options to our executive officers and certain of our directors. See Executive Compensation Grants of Plan-Based Awards 2013 for a description of these options. In connection with our IPO, we entered into revised severance agreements and confirmatory employment letters with each of our executive officers, including our NEOs, as well as revised change in control agreements with our NEOs, to clarify the terms of their employment. See Executive Compensation Executive Employment Agreements. In December 2011, in connection with the Merger, we entered into a five-year employment agreement with Marianne Curran, the Company s Executive Vice President for Education & Event Marketing. The terms of Ms. Curran s 2011 employment agreement were consistent with those contained in the employment agreements entered into with similarly situated executive vice presidents at that time. Ms. Curran received approximately $0.1 million, $0.4 million and $0.6 million in salary, bonus and benefits in 2014, 2013 and 2012, respectively. In October 2014, Ms. Curran s employment with us as the Executive Vice President of Education & Event Marketing ended pursuant to a mutually agreed upon separation agreement negotiated between her and company management, whereby we accelerated the vesting of 99,300 unvested options with an exercise price of $7.40 and returned her remaining unvested options to the option pool. Ms. Curran (who is Mr. Parsons daughter) retained the options that were vested over her approximately 12 years of employment in domain services, fraud, marketing, social media, education, advocacy and communications roles, including those that vested while she served as our Executive Vice President for Education & Event Marketing (and prior to that as our Executive Vice President for Advocacy Referral and Communications), and we extended the time period for the exercise of the accelerated options and vested options to the earlier of (i) January 30, 2017 or December 31, 2017 for the various options and (ii) a change of control. Ms. Curran s separation agreement, like all separation agreements involving similarly situated executives, was reviewed and approved by the Executive Committee. Mr. Parsons was not involved in the negotiation of the separation agreement s terms, and abstained from the Executive Committee s discussion and approval of Ms. Curran s separation agreement. Table of Contents In the ordinary course of business, we purchase and lease computer equipment, technology licensing, software maintenance and support and other products and services from various entities with whom affiliates of KKR, Silver Lake and TCV have significant ownership interests. Amounts paid to such entities were as follows: Year Ended December 31, Nine Months Ended September 30, 2015 2012 2013 2014 (in millions) Dell, Inc. $ 25.7 $ 19.1 $ 16.1 $ 13.3 Sitecore USA, Inc. 1.3 0.4 Sunguard Availability Services 0.1 0.1 0.1 0.1 Jive Software, Inc. 0.2 ClickTale 0.2 Limitation of Liability and Indemnification of Executive Officers and Directors Our amended and restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors are not personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following: any breach of their duty of loyalty to our company or our stockholders; any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or any transaction from which they derived an improper personal benefit. Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the DGCL is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors are further limited to the greatest extent permitted by the DGCL. In addition, our amended and restated bylaws provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise. Our amended and restated bylaws provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be made a party to any action, suit, or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust, or other enterprise. Our amended and restated bylaws also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to very limited exceptions. Further, we have entered into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit, or proceeding. We believe these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers. Policies and Procedures for Related Party Transactions Our audit committee has the primary responsibility for reviewing and approving or disapproving related party transactions, which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. We have adopted a policy regarding transactions between us and related persons. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our Class A common stock, in each case since the beginning of the most recently completed year, and their immediate family members. Our audit committee charter further provides that the audit committee shall review and approve or disapprove any related party transactions. Table of Contents PRINCIPAL STOCKHOLDERS The table below sets forth certain information with respect to the beneficial ownership of shares of our common stock as of September 30, 2015 by: each of our directors and named executive officers; each person who is known to be the beneficial owner of more than 5% of any class or series of our capital stock; and all of our directors and executive officers as a group. The amounts and percentages of Class A common stock and Class B common stock (together with the same amount of LLC Units) beneficially owned are reported on the basis of the regulations of the SEC governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days, including those shares of our Class A common stock issuable upon exchange of LLC Units (together with corresponding shares of our Class B common) on a one-for-one basis, subject to the terms of the exchange agreement. See Certain Relationships and Related Party Transactions Exchange Agreement. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o GoDaddy Inc., 14455 N. Hayden Road, Suite 219, Scottsdale, Arizona 85260. Common Stock Beneficially Owned (1) Number of Shares of Class A Common Stock Number of Shares of Class B Common Stock Combined Voting Power (2) Name of Beneficial Owner Number % Number % Number % Directors and Executive Officers Blake J. Irving (3) 796,812 1.2% 49,800 * 846,612 * Scott W. Wagner (4) 735,000 1.1% 110,229 * 845,229 * Arne M. Josefsberg (5) 80,000 * * 80,000 * Matthew B. Kelpy (6) 21,400 * 17,048 * 38,448 * Elissa E. Murphy (7) 168,750 * * 168,750 * Bob Parsons (8) 725,670 1.1% 36,058,011 39.9% 36,783,681 23.6% Herald Y. Chen (9) * * * Richard H. Kimball (10) * * * Gregory K. Mondre (11) * * * John I. Park (12) * * * Elizabeth S. Rafael (13) * 10,382 * 10,382 * Charles J. Robel (14) 73,627 * 10,382 * 84,009 * Lee E. Wittlinger (15) * * * All executive officers and directors as a group (17 persons) (16) 3,171,969 4.7% 36,355,852 40.2% 39,527,821 25.0% 5% Equityholders Entities Affiliated with KKR (17) 17,858,964 27.4% 18,873,712 20.9% 36,732,676 23.6% Entities Affiliated with Silver Lake (18) 16,927,658 25.9% 19,805,018 21.9% 36,732,676 23.6% Entities Affiliated with TCV (19) 5,813,620 8.9% 10,660,372 11.8% 16,473,992 10.6% YAM Special Holdings, Inc. (formerly known as The Go Daddy Group, Inc.)(20) 725,670 1.1% 36,058,011 39.9% 36,783,681 23.6% FMR LLC (21) 7,377,600 11.3% * 7,377,600 4.7% * Represents beneficial ownership of less than 1%. (1) Subject to the terms of the Exchange Agreement, shares of our Class B common stock (together with the corresponding LLC Units) are exchangeable for shares of our Class A common stock on a one-for-one basis. See Certain Relationships and Related Party Transactions Exchange Agreement. Table of Contents (2) Represents percentage of voting power of the Class A common stock and Class B common stock of GoDaddy voting together as a single class. See Description of Capital Stock Class B Common Stock. (3) Consists of (i) 49,800 shares of Class B common stock held by Mr. Irving and (ii) 796,812 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (4) Consists of (i) 110,229 shares held by Mr. Wagner and (ii) 735,000 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (5) Consists of 80,000 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (6) Consists of (i) 4,000 shares of Class A common stock held by Mr. Kelpy, (ii) 17,048 shares of Class B common stock held by Mr. Kelpy and (iii) 17,400 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (7) Consists of 168,750 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (8) Consists of the shares listed in footnote 20 below, which are held by YAM. (9) The principal business address of Mr. Chen is c/o Kohlberg Kravis Roberts & Co. LLP, 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025. (10) The principal business address of Mr. Kimball is c/o Technology Crossover Ventures, 528 Ramona Street, Palo Alto, CA 94301. (11) The principal business address of Mr. Mondre is c/o Silver Lake Partners, 9 West 57th Street, 32nd Floor, New York, NY 10019. (12) The principal business address of Mr. Park is c/o Kohlberg Kravis Roberts & Co. LLP, 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025. (13) Consists of 10,382 shares of Class B common stock held by Ms. Rafael. (14) Consists of (i) 10,382 shares of Class B common stock held by Mr. Robel and (ii) 73,627 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (15) The principal business address for Mr. Wittlinger is c/o Silver Lake Partners, 9 West 57th Street, 32nd Floor, New York, NY 10019. (16) Consists of (i) 729,670 shares of Class A common stock beneficially owned by our current executive officers and directors, (ii) 36,355,522 shares of Class B common stock beneficially owned by our current executive officers and directors and (iii) 2,442,299 shares of Class A common stock issuable upon exercise of outstanding equity awards exercisable within 60 days of September 30, 2015. (17) KKR Partners III, L.P. ( KKR Partners III ) holds (i) 36,864 shares of our Class A common stock and (ii) 1,831,750 shares of our Class B common stock. KKR 2006 Fund (GDG) L.P. ( KKR 2006 Fund ) holds (i) 374,147 shares of our Class A common stock and (ii) 16,641,962 shares of our Class B common stock. GDG Co-Invest Blocker L.P. ( GDG Co-Invest ) holds 5,646,288 shares of our Class A common stock. KKR 2006 GDG Blocker L.P. ( KKR 2006 GDG ) holds 11,793,615 shares of our Class A common stock. OPERF Co-Investment LLC ( OPERF ) holds (i) 8,050 shares of our Class A common stock and (ii) 400,000 shares of our Class B common stock. Each of KKR Associates 2006 AIV L.P. ( KKR Associates 2006 ) (as the general partner of KKR 2006 Fund); GDG Co-Invest GP LLC (as the general partner of GDG Co-Invest); KKR 2006 AIV GP LLC (as the general partner of each of KKR Associates 2006 and KKR 2006 GDG and as the sole member of GDG Co-Invest GP LLC); KKR Management Holdings L.P. (as the sole member of KKR 2006 AIV GP LLC); KKR Management Holdings Corp. (as the general partner of KKR Management Holdings L.P.); KKR III GP LLC (as the sole general partner of KKR Partners III); KKR Associates 2006 L.P. (as the sole general manager of OPERF); KKR 2006 GP LLC (as the sole general partner of KKR Associates 2006 L.P.); KKR Fund Holdings L.P. (as the designated member of KKR 2006 GP LLC); KKR Fund Holdings GP Limited (as a general partner of KKR Fund Holdings L.P. and sole shareholder of KKR Management Holdings Corp.); KKR Group Holdings L.P. (as the sole shareholder of KKR Fund Holdings GP Limited, a general partner of KKR Fund Holdings L.P.); KKR Group Limited (as the general partner of KKR Group Holdings L.P.); KKR & Co. L.P. (as the sole shareholder of KKR Group Limited); KKR Management LLC (as the general partner of KKR & Co. L.P.); and Messrs. Henry R. Kravis and George R. Roberts (as the designated members of KKR Management LLC and the managers of KKR III GP LLC) may also be deemed to be the beneficial owners having shared voting power and shared investment power over the securities described in the paragraph above in this footnote. The principal business address of each of the entities and persons identified in this and the paragraph above, except Mr. Roberts, is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, Suite 4200, New York, NY, 10019. The principal business address for Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025. (18) SLP GD Investors, L.L.C. ( SLP GD ) holds 19,085,018 shares of our Class B common stock. Silver Lake Partners III DE (AIV IV), L.P. ( SLP III (DE) ) holds 720,730 shares of our Class A common stock. Silver Lake Technology Investors III, L.P. ( SLTA III ) holds 3,935 shares of our Class A common stock. SLP III Kingdom Feeder I, L.P. ( SLKF I and, together with SLP GD, SLP III (DE) and SLTA III, the Silver Lake Entities ) holds 16,202993 shares of our Class A common stock. SLTA III is the general partner of each of the Silver Lake Entities other than SLTA III and SLP GD. SLP III (DE) is the managing member of SLP GD. SLTA III (GP), L.L.C. ( SL GP ) is the general partner of SLTA III. Silver Lake Group, L.L.C. ( SL Group ) is the managing member of SL GP. As such, SL Group may be deemed to have beneficial ownership of the securities over which any of the Silver Lake Entities has voting or dispositive power. An investment committee of SLTA III has sole voting and dispositive control over such securities. Mike Bingle, Jim Davidson, Egon Durban, Ken Hao, Christian Lucas, Greg Mondre and Joe Osnoss are the members of the Investment Committee of SLTA III. The principal business address for each of the Silver Lake Entities is c/o Silver Lake, 2775 Sand Hill Road, Suite 100, Menlo Park, CA 94025. (19) TCV VII, L.P. ( TCV VII ) holds (i) 212, 698 shares of our Class A common stock and (ii) 10,568,786 shares of our Class B common stock. TCV VII (A), L.P. ( TCV VII (A) ) holds (i) 5,599,079 shares of our Class A common stock. TCV Member Fund, L.P. ( Member Fund ) holds 1,843 shares of our Class A common stock and (ii) 91,586 shares of our Class B common stock. Technology Crossover Management VII, L.P. ( TCM VII ) is the general partner of TCV VII and TCV VII (A). Technology Crossover Management VII, Ltd. ( Management VII ) is the general partner of TCM VII and a general partner of Member Fund. Management VII and TCM VII may be deemed to have beneficial ownership over the securities held by the entities identified above. An investment committee of Management VII has sole voting and dispositive control over such securities. Jay C. Hoag, Richard H. Kimball, John L. Drew, Jon Q. Reynolds, Jr., Christopher P. Marshall, Timothy P. McAdam, John C. Rosenberg, Robert W. Trudeau and David L. Yuan are the members of the Investment Committee of Management VII. The principal business address for each of the entities identified above is c/o Technology Crossover Ventures, 528 Ramona Street, Palo Alto, CA 94301. Table of Contents (20) Consists of (i) 725,670 shares of our Class A common stock and (ii) 36,058,011 shares of our Class B common stock, held by YAM. Bob Parsons is the sole stockholder of YAM and is deemed to have beneficial ownership and voting and investment power over the shares held by YAM. The address for YAM Special Holdings, Inc. is 15475 N. 84th Street, Scottsdale, Arizona 85260. (21) The information relating to FMR LLC is based solely on a Schedule 13G filed with the SEC on September 10, 2015, reporting beneficial ownership. Edward C. Johnson 3d is a Director and the Chairman of FMR LLC and Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC. Members of the family of Edward C. Johnson 3d, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act ( Fidelity Funds ) advised by Fidelity Management & Research Company ( FMR Co ), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds Boards of Trustees. Table of Contents DESCRIPTION OF CAPITAL STOCK General The following description summarizes the most important terms of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated bylaws. This summary does not purport to be complete and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part. For a complete description of our capital stock, you should refer to our amended and restated certificate of incorporation, amended and restated bylaws and the applicable provisions of Delaware law. Our authorized capital stock consists of 1,000,000,000 shares of Class A common stock, $0.001 par value per share, 500,000,000 shares of Class B common stock, $0.001 par value per share, and 50,000,000 shares of undesignated preferred stock, $0.001 par value per share. As of September 30, 2015, there were 65,262,610 shares of our Class A common stock outstanding, 90,398,474 shares of our Class B common stock outstanding and no shares of our preferred stock outstanding. Our board of directors is authorized, without stockholder approval except as required by the listing standards of the New York Stock Exchange, to issue additional shares of our capital stock. Common Stock We have two classes of common stock: Class A and Class B, each of which has one vote per share. The Class A and Class B common stock will generally vote together as a single class on all matters submitted to a vote of stockholders, except as otherwise required by applicable law. Class A Common Stock Dividend Rights Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Class A common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. See Dividend Policy for more information. Voting Rights Holders of our Class A common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. We have not provided for cumulative voting for the election of directors in our amended and restated certificate of incorporation. No Preemptive or Similar Rights Our Class A common stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions. Right to Receive Liquidation Distributions If we become subject to a liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our Class A common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock. Class B Common Stock Dividend Rights Holders of our Class B common stock do not have any rights to receive dividends. Table of Contents Voting Rights Holders of our Class B common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. In connection with our IPO, shares of Class B common stock were issued to our Continuing LLC Owners. Accordingly, such Continuing LLC Owners, by virtue of their Class B common stock, collectively have a number of votes in GoDaddy Inc. that is equal to the aggregate number of LLC Units that they hold. When a LLC Unit is exchanged by a Continuing LLC owner, a corresponding share of Class B common stock held by the exchanging owner is also exchanged and will be cancelled. No Preemptive or Similar Rights Our Class B common stock is not entitled to preemptive rights, and is not subject to conversion, redemption, or sinking fund provisions. Right to Receive Liquidation Distributions Holders of our Class B common stock do not have any rights to receive a distribution upon a liquidation, dissolution or winding-up. Conversion and Transferability Shares of Class B common stock are not transferable except together with an equal number of LLC Units. Preferred Stock Our board of directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our Class A common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in our control of our company and might adversely affect the market price of our Class A common stock and the voting and other rights of the holders of our Class A and Class B common stock. We have no current plan to issue any shares of preferred stock. Equity Awards As of September 30, 2015, we had outstanding options to purchase an aggregate of 28,267,072 shares of Class A common stock, with a weighted-average exercise price of $9.82, and 57,132 shares of Class A common stock issuable upon the vesting of RSUs that are exchangeable on a one-for-one basis for shares of Class A common stock issuable upon the vesting of RSUs. Warrants As of September 30, 2015, Desert Newco had outstanding warrants to purchase up to 45,867 shares of Class A common stock at an exercise price of $7.44 per share, which were issued in connection with an acquisition by Desert Newco. In addition, each warrant has a net exercise provision pursuant to which the holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of our Class A common stock, as applicable, at the time of exercise of the warrant after deduction of the aggregate exercise price. Registration Rights Certain holders of our Class A common stock (and other securities convertible into or exchangeable or exercisable for shares of our Class A common stock) are entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our registration rights agreement and are described in additional detail below. We have entered into such registration rights agreement with certain of our existing owners pursuant to which we have granted them, their Table of Contents affiliates and certain of their transferees the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of Class A common stock delivered upon exchange of LLC Units held by them (and other securities convertible into or exchangeable or exercisable for shares of our Class A common stock). We are not obligated to register any shares pursuant to any demand registration rights or S-3 registration rights if the holder of such shares is able to sell all of its shares for which it requests registration in any 90-day period pursuant to Rule 144 or Rule 145 of the Securities Act. We will pay the registration expenses (other than underwriting discounts and applicable selling commissions) of the holders of the shares registered pursuant to the registrations described below. In an underwritten offering, the managing underwriter, if any, has the right, subject to specified conditions, to limit the number of shares such holders may include. Demand Registration Rights The holders of approximately 35,512,292 shares of our Class A common stock (excluding 74,736,741 shares of Class A common stock issuable upon exchange of LLC Units) are entitled to certain demand registration rights. Certain existing holders can request that we register the offer and sale of their shares. Such request for registration must cover securities the anticipated aggregate offering price of which, net of registration expenses, is at least $50 million unless such demand is for a shelf registration. If we determine that it would be detrimental to us or our stockholders to effect such a demand registration, we have the right to defer such registration or suspend an effective shelf registration, not more than once in any 12 month period, for a period of up to 90 days. Piggyback Registration Rights If we propose to register, or receive a demand to register, the offer and sale of any of our securities under the Securities Act, in connection with the public offering of such securities, the holders of 41,325,912 shares of our Class A common stock (excluding 86,086,113 shares of Class A common stock issuable upon exchange of LLC Units) are entitled to certain piggyback registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act, the holders of our Class A common stock are entitled to notice of the registration and have the right, subject to limitations that the underwriters may impose on the number of shares included in the registration, to include shares in the registration, other than with respect to (i) a registration statement on Form S-4 or S-8, (ii) a registration relating solely to an offering and sale to our employees, directors or consultants or our subsidiaries pursuant to any employee stock plan or other benefit arrangement, (iii) a registration relating to a Rule 145 transaction as promulgated under the Securities Act, (iv) a registration by which we are exchanging our own securities for other securities, (v) a registration statement relating solely to dividend reinvestment or similar plans or (vi) a registration statement by which only the initial purchasers and subsequent transferees of our or our subsidiaries debt securities that are convertible or exchangeable for Class A common stock and that are initially issued pursuant to an applicable exemption from the registration requirements of the Securities Act may resell such notes and sell such Class A common stock into which such notes may be converted or exchanged. S-3 Registration Rights The holders of approximately 35,512,292 shares of our Class A common stock (excluding 74,736,741 shares of Class A common stock issuable upon exchange of LLC Units) may make a written request that we register the offer and sale of their shares on Form S-3 if we are eligible to file a registration statement on Form S-3 so long as the request covers at least that number of shares with an anticipated aggregate offering price of at least $50 million, net of registration expenses, unless such request is for a shelf registration covering an unspecified number of shares. Each holder of demand registration rights is entitled to make two demands for shelf registration in any 12 month period. Each holder shall also have the right to make two takedown demands pursuant to an effective shelf registration in any 12 month period provided that we shall not be obligated to effect a marketed underwritten takedown if the shares requested to be sold in such takedown have an aggregate market value of less than $25 million. These holders may make no more than two requests for registration on Form S-3 in any 12 month period; however, we will not be required to effect a registration on Form S-3 if we determine that it would be detrimental to our stockholders to effect such a registration and we have the right to defer such registration, not more than once in any 12 month period, for a period of up to 90 days. Anti-Takeover Provisions Our amended and restated certificate of incorporation, amended and restated bylaws and the DGCL contain provisions, which are summarized in the following paragraphs, that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and to discourage certain types of transactions that may involve an actual or threatened acquisition of our company. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile Table of Contents change in control or other unsolicited acquisition proposal, and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have the effect of delaying, deterring or preventing a merger or acquisition of our company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including attempts that might result in a premium over the prevailing market price for the shares of Class A common stock held by stockholders. Classified board of directors. Our amended and restated certificate of incorporation and bylaws provide that our board of directors is classified into three classes of directors. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors. See Management Board of Directors. Business combinations. We have opted out of Section 203 of the DGCL; however, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain business combinations with any interested stockholder for a three year period following the time that the stockholder became an interested stockholder, unless: prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the votes of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 2/3% of the votes of our outstanding voting stock that is not owned by the interested stockholder. Generally, a business combination includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an interested stockholder is a person who, together with that person s affiliates and associates, owns, or within the previous three years owned, 15% or more of the votes of our outstanding voting stock. For purposes of this provision, voting stock means any class or series of stock entitled to vote generally in the election of directors. Under certain circumstances, this provision will make it more difficult for a person who would be an interested stockholder to effect various business combinations with our company for a three year period. This provision may encourage companies interested in acquiring our company to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests. Our amended and restated certificate of incorporation provides that KKR, Silver Lake, TCV and Mr. Parsons, and their respective affiliates, and any of their respective direct or indirect designated transferees (other than in certain market transfers and gifts) and any group of which such persons are a party do not constitute interested stockholders for purposes of this provision. Removal of directors. Under the DGCL, unless otherwise provided in our amended and restated certificate of incorporation, directors serving on a classified board may be removed by the stockholders only for cause. Our amended and restated certificate of incorporation provides that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class, so long as affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own at least 40% in voting power of the stock of our company entitled to vote generally in the election of directors; however, at any time when these parties own, in the aggregate, less than 40% in voting power of the stock of our company entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of holders of at least two-thirds in voting power of all outstanding shares of stock of our company entitled to vote thereon, voting together as a single class. The stockholder agreement provides that, in connection with votes for removal of a director, the Voting Parties will vote their shares in accordance with the board composition requirements of the stockholder agreement. See Management Board of Directors. Vacancies. In addition, our amended and restated certificate of incorporation also provides that, subject to the rights granted to one or more series of preferred stock then outstanding or the rights granted under the stockholder agreement, any newly created directorship on the board of directors that results from an increase in the number of directors and any vacancies on our Table of Contents board of directors will be filled by the affirmative vote of a majority of the remaining directors, even if less than a quorum, by a sole remaining director or by the affirmative vote of a majority of the voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, that at any time when affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own less than 40% in voting power of the stock of our company entitled to vote generally in the election of directors, any newly created directorship on the board of directors that results from an increase in the number of directors and any vacancy occurring in the board of directors may be filled only by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director (and not by the stockholders). Our amended and restated certificate of incorporation provides that the board of directors may increase the number of directors by the affirmative vote of a majority of the directors or, at any time when affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own at least 40% in voting power of the stock of our company entitled to vote generally in the election of directors, by the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class. The stockholder agreement provides that the Voting Parties will vote their shares in respect of vacancies in accordance with the board composition requirements of the stockholder agreement. See Management Board of Directors. Quorum. Our amended and restated certificate of incorporation provides that at any meeting of the board of directors, a majority of the total number of directors then in office constitutes a quorum for all purposes, provided that so long as there is at least one KKR Director on the board, a quorum shall also require a KKR Director for all purposes, and so long as there is at least one Silver Lake Director on the board, a quorum shall also require a Silver Lake Director for all purposes. No cumulative voting. Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation does not authorize cumulative voting. Special stockholder meetings. Our amended and restated certificate of incorporation provides that special meetings of our stockholders may be called at any time only by or at the direction of the board of directors or the chairman of the board of directors; provided, however, so long as affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own at least 40% in voting power of the stock of our company entitled to vote generally in the election of directors, special meetings of our stockholders shall also be called by the board of directors at the request of either a stockholder affiliated with KKR or a stockholder affiliated with Silver Lake. Our amended and restated bylaws also provide that special meetings of our stockholders may be called at any time by two directors of the board of directors. Our amended and restated bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or in management of our company. Requirements for advance notification of director nominations and stockholder proposals. Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors or nominations made by affiliates of KKR, Silver Lake or Mr. Parsons pursuant to their rights under the stockholder agreement. In order for any matter to be properly brought before a meeting of our stockholders, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder s notice must be received at our principal executive offices not less than 90 days or more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated bylaws also specify requirements as to the form and content of a stockholder s notice. Our amended and restated bylaws allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings, which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also deter, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer s own slate of directors or otherwise attempting to influence or obtain control of our company. Stockholder action by written consent. Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless the certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation precludes stockholder action by written consent at any time when affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own less than 40% in voting power of the stock of our company entitled to vote generally in the election of directors. Table of Contents Supermajority provisions. Our amended and restated certificate of incorporation and amended and restated bylaws provide that the board of directors is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware or our amended and restated certificate of incorporation. For so long as affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own at least 40% in voting power of the stock of our company entitled to vote generally in the election of directors, the amendment, alteration, rescission or repeal of certain provisions of our bylaws by our stockholders will require the affirmative vote of a majority in voting power of the outstanding shares of our stock entitled to vote on such amendment, alteration, change, addition, rescission or repeal. At any time when these parties own, in the aggregate, less than 40% in voting power of all outstanding shares of the stock of our company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of certain provisions of our bylaws by our stockholders will require the affirmative vote of the holders of at least two-thirds in voting power of all outstanding shares of stock of our company entitled to vote thereon, voting together as a single class. The DGCL provides generally that the affirmative vote of a majority of votes of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation s certificate of incorporation, unless the certificate of incorporation requires a greater percentage. Our amended and restated certificate of incorporation provides that for as long as affiliates of KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own at least 40% in voting power of the stock of our company entitled to vote generally in the election of directors, in addition to any vote required by applicable law, our amended and restated certificate of incorporation may be amended, altered, repealed or rescinded by the affirmative vote of the holders of a majority in voting power of all the then outstanding shares of stock of our company entitled to vote thereon, voting together as a single class. At any time when KKR and Silver Lake (together with affiliates of TCV, for so long as TCV is required to vote at the direction of KKR and Silver Lake) collectively own less than 40% in voting power of the stock of our company entitled to vote generally in the election of directors, the following provisions in our amended and restated certificate of incorporation may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least two-thirds in voting power of all outstanding shares of stock of our company entitled to vote thereon, voting together as a single class: the provisions providing for a classified board of directors (the election and term of our directors); the provisions regarding resignation and removal of directors, quorum, special meetings and committees; the provisions regarding corporate opportunities; the provisions regarding entering into business combinations with interested stockholders; the provisions regarding stockholder action by written consent; the provisions regarding calling special meetings of stockholders; the provisions regarding filling vacancies on our board of directors and newly created directorships; the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and the amendment provision requiring that the above provisions be amended only with a 66 2/3% supermajority vote. The combination of the classification of our board of directors, the lack of cumulative voting and the supermajority voting requirements make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management. Conflicts of interest. Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our amended and restated certificate of incorporation, to the fullest extent permitted by law, renounces any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to KKR, Silver Lake, TCV and Mr. Parsons, directors affiliated with these parties and their respective affiliates, and any other non-employee directors, and that, to the fullest extent permitted by law, such persons will have no duty to refrain from engaging in any transaction or matter that may be an investment or corporate or business opportunity or offer a prospective economic or competitive advantage in which we or any of our subsidiaries could have an interest or expectancy, which we refer to as a Competitive Opportunity, or otherwise competing with us or our subsidiaries. In addition, to the fullest extent permitted by law, in the event that KKR, Silver Lake, TCV and Mr. Parsons, directors affiliated with these parties and their respective affiliates, and Table of Contents any other non-employee directors acquires knowledge of a potential Competitive Opportunity or other corporate or business opportunity that may be a Competitive Opportunity for itself, himself or herself or its, his or her affiliates or for us or our subsidiaries, such person will have no duty to communicate or present such opportunity to us or any of our subsidiaries, and they may take any such opportunity for themselves or offer it to another person or entity. With respect to any non-employee director who is not a KKR Director, Silver Lake Director or Parsons Director or affiliated with TCV, our amended and restated certificate of incorporation does not renounce our interest in any Competitive Opportunity that is expressly offered to such a director solely in his or her capacity as a director of our company. A business or other opportunity will not be deemed to be a potential Competitive Opportunity for us if it is an opportunity that we are not able or permitted to undertake, is not in line with our business or is an opportunity in which we have no interest or reasonable expectancy. Transfer Agent and Registrar The transfer agent and registrar for our Class A common stock is American Stock Transfer & Trust Company, LLC. The transfer agent and registrar s address is 6201 15th Avenue, Brooklyn, New York 11219, and its telephone number is (718) 921 8206. Listing Our Class A common stock is listed on the New York Stock Exchange under the symbol GDDY. Table of Contents SHARES ELIGIBLE FOR FUTURE SALE As of September 30, 2015, we had 65,262,610 shares of Class A common stock outstanding. Future sales of our Class A common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. Sales of our Class A common stock in the public, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to raise equity capital in the future. Subject to certain limitations and exceptions, pursuant to the terms of the Exchange Agreement we have entered into with certain of our existing owners, unit holders of Desert Newco may (subject to the terms of the Exchange Agreement) exchange LLC Units and shares of Class B common stock, for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. We are hereby registering the issuance of the Class A common stock in connection with such exchanges of LLC Units held by certain holders of LLC Units. Contractual Transfer Restrictions In connection with our IPO, we entered into a stockholder agreement with Desert Newco and each of KKR, Silver Lake, TCV and Mr. Parsons. Pursuant to the stockholder agreement, each of KKR, Silver Lake, TCV and Mr. Parsons agreed, subject to certain limited exceptions, not to transfer, sell, exchange, assign, pledge, hypothecate, convey or otherwise dispose of or encumber any shares of our Class A common stock (including shares of Class A common stock issuable upon the exchange of LLC Units) during the three-year period following our IPO without the consent of each of KKR and Silver Lake, for so long as each of KKR and Silver Lake is entitled to nominate at least one director to our board of directors. Members of our senior management team and independent directors and certain holders of more than 100,000 shares of our Class A common stock (including shares of Class A common stock issuable upon the exchange of LLC Units) and/or options to purchase Class A common stock may not, subject to certain limited exceptions, transfer, sell, exchange, assign, pledge, hypothecate, convey or otherwise dispose of or encumber any shares of our Class A common stock (including shares of Class A common stock issuable upon exchange of LLC Units) during the one-year period following our IPO. Additionally, pursuant to the New LLC Agreement, our existing owners are generally required to limit transfers in order to avoid a technical tax termination. However, each of KKR, Silver Lake, TCV and Mr. Parsons may transfer all its LLC Units even if such transfer could result in a technical tax termination if the transferring member indemnifies the other members of Desert Newco (including Go Daddy Inc.) for certain adverse tax consequences arising from any such technical tax termination and indemnifies Desert Newco for related costs. See Certain Relationships and Related Party Transactions Desert Newco Amended and Restated Limited Liability Company Agreement for more information. Rule 144 In general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144. In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up and other agreements described above, within any three month period, a number of shares that does not exceed the greater of: 1% of the number of shares of our Class A common stock then outstanding, which equals approximately 670,623 shares as of the date of this prospectus; or the average weekly trading volume of our Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Table of Contents Rule 701 Rule 701 generally allows a stockholder who purchased shares of our Class A common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701. Registration Rights Pursuant to the registration rights agreement to which we are a party, the holders of 35,512,292 shares of our Class A common stock (excluding 74,736,741 shares of Class A common stock issuable upon the exchange of LLC Units), or their transferees, are entitled, under certain circumstances and subject to certain restrictions, to require us to register their shares under the Securities Act. For a description of these registration rights, see Description of Capital Stock Registration Rights. If the offer and sale of these shares is registered, the shares will be freely tradable without restriction under the Securities Act, and a large number of shares may be sold into the public market. Equity Awards As of September 30, 2015, we had outstanding options to purchase an aggregate of 28,267,072 shares of our Class A common stock and 57,132 shares of Class A common stock issuable upon the vesting of RSUs. We have also filed a registration statement on Form S-8 under the Securities Act to register shares that may be issued pursuant to our equity incentive plans. The registration statement on Form S-8 became effective immediately upon filing, and shares covered by the registration statement become eligible for sale in the public market, subject to the Rule 144 limitations applicable to affiliates, vesting restrictions and applicable lock-up agreements and market standoff agreements. See Executive Compensation Employee Benefit and Stock Plans for a description of our equity incentive plans. Table of Contents MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK The following is a summary of the material U.S. federal income and estate tax consequences to non-U.S. holders (as defined below) of the ownership and disposition of our Class A common stock but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Code, U.S. Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income and estate tax consequences different from those set forth below. We have not sought and will not seek any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions. This summary applies only to Class A common stock acquired in this offering. It does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction or under U.S. federal gift and estate tax laws, except to the limited extent set forth below. In addition, this discussion does not address the potential application of the tax on net investment income or any tax considerations applicable to an investor s particular circumstances or to investors that may be subject to special tax rules, including, without limitation: banks, insurance companies or other financial institutions; persons subject to the alternative minimum tax; tax-exempt organizations; controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax; dealers in securities or currencies; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below); certain former citizens or long-term residents of the United States; persons who hold our Class A common stock as a position in a straddle, conversion transaction or other risk reduction transaction; persons who do not hold our Class A common stock as a capital asset within the meaning of Code Section 1221; or persons deemed to sell our Class A common stock under the constructive sale provisions of the Code. In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our Class A common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our Class A common stock, and partners in such partnerships, should consult their tax advisors regarding the tax consequences of the purchase, ownership and disposition of our Class A common stock. You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our Class A common stock arising under the U.S. federal estate or gift tax laws or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty. Non-U.S. Holder Defined For purposes of this discussion, except as modified for estate tax purposes, you are a non-U.S. holder if you are a beneficial owner of shares of our Class A common stock other than a partnership or other entity classified as a partnership for U.S. federal income tax purposes, or: an individual citizen or resident of the United States (for U.S. federal income tax purposes); a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or any political subdivision thereof or entity treated as such for U.S. federal income tax purposes; an estate whose income is subject to U.S. federal income tax regardless of its source; or Table of Contents a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person. Distributions We do not plan to make any distributions on our Class A common stock. However, if we do make distributions on our Class A common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our Class A common stock, but not below zero, and then will be treated as gain from the sale of stock. Subject to the discussion below on effectively connected income, any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8, including a U.S. taxpayer identification number, if required, certifying qualification for the reduced rate. A non-U.S. holder of shares of our Class A common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which may then be required to provide certification to the relevant paying agent, either directly or through other intermediaries. Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable tax treaty, that are attributable to a permanent establishment maintained by you in the U.S.), are generally exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, generally are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty. You should consult your tax advisor regarding any applicable tax treaties that may provide for different rules. Gain on Disposition of Our Class A Common Stock Subject to discussions below regarding backup withholding and foreign accounts, you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our Class A common stock unless: the gain is effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment maintained by you in the United States); you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or our Class A common stock constitutes a U.S. real property interest by reason of our status as a United States real property holding corporation, or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five year period preceding your disposition of, or your holding period for, our Class A common stock. We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our Class A common stock is regularly traded on an established securities market, such Class A common stock will be treated as U.S. real property interests only if you actually or constructively hold more than 5% of such regularly traded Class A common stock at any time during the shorter of the five year period preceding your disposition of, or your holding period for, our Class A common stock. If you are a non-U.S. holder described in the first bullet above, you will be required to pay U.S. federal income tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% U.S. federal income tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from Table of Contents the sale, which gain may be offset by U.S.-source capital losses for the year. You should consult any applicable income tax or other treaties that may provide for different rules. Federal Estate Tax Our Class A common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of their death will generally be includable in the decedent s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. Backup Withholding and Information Reporting Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence. Payments of dividends on or of proceeds from the disposition of our Class A common stock made to you may be subject to additional information reporting and backup withholding at a current rate of 28% unless you establish an exemption, for example, by properly certifying your non-U.S. status on a Form W 8BEN, IRS Form W-8BEN-E or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person. Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner. Foreign Account Tax Compliance Act (FATCA) Provisions commonly referred to as FATCA impose a U.S. federal withholding tax of 30% on dividends on and the gross proceeds from a disposition of our Class A common stock to a foreign financial institution (as specifically defined under the FATCA rules) unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. A U.S. federal withholding tax of 30% generally applies to dividends on and the gross proceeds from a disposition of our Class A common stock to a non-financial foreign entity (as specifically defined under the FATCA rules) unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding direct and indirect U.S. owners of the entity or otherwise establishes an exception. The withholding provisions described above are expected to apply to payments of dividends on our Class A common stock made on or after July 1, 2014 and to payments of gross proceeds from a sale or other disposition of such Class A common stock on or after January 1, 2019. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. You should consult your tax advisors regarding these withholding provisions. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our Class A common stock, including the consequences of any proposed change in applicable laws. Table of Contents PLAN OF DISTRIBUTION This prospectus relates to the issuance by us from time to time of up to an aggregate of 4,312,361 shares of Class A common stock to certain holders of LLC Units upon exchanges by such holders of an equal number of such LLC Units (together with the same number of shares of our Class B common stock). The shares of Class A common stock registered under this prospectus will only be issued to the extent that holders of LLC Units exchange their LLC Units for Class A common stock. Under the securities laws of some states, the Class A common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Class A common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance that any recipients of shares of Class A common stock issued upon exchange of LLC Units (together with the same number of shares of our Class B common stock) will sell any or all of the Class A common stock registered pursuant to the shelf registration statement, of which this prospectus forms a part. The recipients of Class A shares of common stock issued upon exchange of LLC Units (together with the same number of shares of our Class B common stock) and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Class A common stock by such holder and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Class A common stock to engage in market-making activities with respect to the Class A common stock. All of the foregoing may affect the marketability of the Class A common stock and the ability of any person or entity to engage in market-making activities with respect to the Class A common stock. We will not receive any cash proceeds from our issuance of Class A common stock pursuant to this prospectus. Once issued to the holders pursuant to the shelf registration statement, of which this prospectus forms a part, the Class A common stock will be freely tradable in the hands of persons other than our affiliates. LEGAL MATTERS Certain legal matters relating to this offering will be passed upon for us by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California. Wilson Sonsini Goodrich & Rosati, P.C. own less than 0.2% of our LLC Units as of December 31, 2014, that may be exchanged for shares of our Class A common stock pursuant to the Exchange Agreement described in Certain Relationships and Related Party Transactions Exchange Agreement. EXPERTS The consolidated financial statements of GoDaddy Inc. at December 31, 2013 and December 31, 2014 and for each of the three years in the period ended December 31, 2014 appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. Table of Contents WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Class A common stock covered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Class A common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Information contained in this prospectus concerning the contents of any contract or any other document is not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the exhibit. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. You may obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1 800 SEC 0330. The SEC also maintains a website that contains the registration statement and exhibits. The address of that website is www.sec.gov. As a result of our IPO, we are subject to the information and reporting requirements of the Exchange Act and, in accordance with this law, file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the SEC s public reference rooms and the website of the SEC referred to above. We also maintain a website at www.godaddy.com. You may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. Table of Contents PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The following table sets forth all expenses to be paid by the Registrant in connection with the issuance and distribution of the securities being registered. All amounts shown are estimates except for the SEC registration fee. Amount to be Paid SEC registration fee $ 14,074 Legal fees and expenses 110,000 Accounting fees and expenses 75,000 Miscellaneous 15,000 Total $ 214,074 Item 14. Indemnification of Directors and Officers. The Registrant s amended and restated certificate of incorporation contain provisions that eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, the personal liability of the Registrant s directors and executive officers for monetary damages for breach of their fiduciary duties as directors or officers. The Registrant s amended and restated certificate of incorporation and bylaws provide that the Registrant must indemnify its directors and executive officers and may indemnify its employees and other agents to the fullest extent permitted by the General Corporation Law of the State of Delaware. Sections 145 and 102(b)(7) of the General Corporation Law of the State of Delaware provide that a corporation may indemnify any person made a party to an action by reason of the fact that he or she was a director, executive officer, employee or agent of the corporation or is or was serving at the request of a corporation against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of an action by or in right of the corporation, no indemnification may generally be made in respect of any claim as to which such person is adjudged to be liable to the corporation. The Registrant has entered into indemnification agreements with its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate of incorporation and bylaws, and intends to enter into indemnification agreements with any new directors and executive officers in the future. The Registrant has purchased and intends to maintain insurance on behalf of each and any person who is or was a director or officer of the Registrant against any loss arising from any claim asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions. See also the undertakings set out in response to Item 17 herein. Item 15. Recent Sales of Unregistered Securities. On June 2, 2014, GoDaddy Inc. issued 1,000 shares of its Class A common stock to Desert Newco, LLC for $1.00. Such shares were subsequently redeemed as part of the reorganization transactions that were effected in connection with its initial public offering. On March 31, 2015, GoDaddy Inc. issued 90,425,288 shares of its Class B common stock to the Continuing LLC Owners as part of the reorganization transactions that were effected in connection with its initial public offering. In April and October 2015, GoDaddy Inc. issued a total of 80,004 shares of Class A common stock pursuant to net exercises of outstanding warrants at per share exercise prices of $7.44. II-1 Table of Contents The issuance of such shares of Class A common stock and Class B common stock was not registered under the Securities Act of 1933, as amended, the Securities Act, because the shares were offered and sold in a transaction exempt from registration under Section 4(a)(2) of the Securities Act. Item 16. Exhibits and Financial Statement Schedules. (a) Exhibits. The Registrant filed the exhibits listed on the accompanying Exhibit Index of this Registration Statement, which is incorporated by reference herein. (b) Financial Statement Schedules. All financial statement schedules are omitted because the information called for is not required or is shown either in the consolidated financial statements or in the notes thereto. Item 17. Undertakings. The Registrant hereby undertakes: (1) To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering.
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+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. When we refer in this prospectus to the Company, we, us, and our, we mean UpperSolution.com, a Nevada corporation. This prospectus contains forward-looking statements and information relating to UpperSolution.com See Cautionary Note Regarding Forward Looking Statements on page 11. Our Company UpperSolution.com was formed on April 20, 2013. Our business will be to create an independent and unbiased mobile app that enables consumers to find the best cellular rate plan for their need and getting real-time notifications when a new cellular plan is available. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). From inception until the date of this filing we have had limited operating activities, we have incorporated our company and paid the state fees, we have prepared a business plan, we have only obtained our website url (uppersolution.com) along the logo for our brand, we have made high-level decisions about the features and design of our proposed app. Our plan of operations needs to be executed in order to fully develop our business and begin generating revenue, a number of steps have to be accomplished within the plan. Drafted milestones are disclosed in our 12 month Plan of Operations listed on page 27. The Company s revenues are expected to be derived primarily from sales of the Company s apps. We do not anticipate earning revenues until we have successfully launched our mobile app. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully prepare and produce our mobile app. We are in the development stage of developing and commercializing a mobile app for existing cellular phone users. Our goal is to help consumers to save money each month by notifying them when a more cost-effective plan based on their actual usage is available. Our mobile app, to be named Upper Plan Monitor ( UPM ) , will help consumers to keep track on new cellular plans from different cellular carriers, locate the closest phone dealer in their area, find the best cellular phone plan that fit their needs. The company is not blank check company because the company has no plans or intentions to engage in a merger or acquisition with an unidentified company or person or, once it is a reporting company, to be used as a vehicle for a private company to become a reporting company. Through November 30, 2014, the Company has a net loss of $17,837. The company has only two officers and directors each of which will devote approximately 10 hours per week to the Company. The Company can operate even if no proceeds are generated from this offering but the growth of the company and speed of the implementation of the Company s business plan will be slowed substantially. The directors of the Company have agreed to pay all expenses of this offering in the event that no proceeds are generated from this offering, which expenses are expected to be approximately $10,500. If the Company raises 25% of the proceeds, marketing efforts will be at a minimum and the Company anticipates that it will be approximately 12 months prior to the Company being able to generate a net profit. . If the Company raises 50% of the proceeds, marketing efforts will be at a medium level and the Company anticipates that it will be approximately 10 months prior to the Company being able to generate a net profit. . If the Company raises 75% of the proceeds, marketing efforts will be at a medium/high level and the Company anticipates that it will be approximately 8 months prior to the Company being able to generate a net profit. . If the Company raises 100% of the proceeds, marketing efforts will be at a maximum level under the business plan and the Company anticipates that it will be approximately 6 months prior to the Company being able to generate a net profit. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. Our executive offices are located at 153 W. Lake Mead Pwky #2240, Henderson NV 89015. Our telephone number is 702-586-1338. The Offering This prospectus covers up to 2,500,000 shares to be issued and sold by the company at a price of $0.02 per share in a direct public offering. ABOUT THIS OFFERING Securities Being Offered Up to 2,500,000 shares of common stock of UpperSolution.com to be sold by the company at a price of $0.02 per share. Initial Offering Price The company will sell up to 2,500,000 shares at a price of $0.02 per share. The company will offer and sell the shares of its common stock at a price of $0.02 per share in a direct offering to the public. The offering will conclude when the company has sold all of the 2,500,000 shares of common stock offered by it or a maximum of 180 days. The company may, in its sole discretion, decide to terminate the registration of the shares offered by the company. Terms of the Offering An investment in our common stock is highly speculative and involves a high degree of risk. See Risk Factors beginning on page 4. Termination of the Offering The offering will be open for 180 days. RISK FACTORS An investment in our common stock is highly speculative, involves a high degree of risk, and should be made only by investors who can afford a complete loss. You should carefully consider the following risk factors, together with the other information in this prospectus, including our financial statements and the related notes, before you decide to buy our common stock. Our most significant risks and uncertainties are described below; however, they are not the only risks we face. If any of the following risks actually occur, our business, financial condition, or results of operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment therein. Risks Relating to the Early Stage of our Company We are at a very early operational stage and our success is subject to the substantial risks inherent in the establishment of a new business venture. The implementation of our business strategy is in a very early stage. Our business and operations should be considered to be in a very early stage and subject to all of the risks inherent in the establishment of a new business venture. Accordingly, our intended business and operations may not prove to be successful in the near future, if at all. Any future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company. We have a very limited operating history and our business plan is unproven and may not be successful. Our company was formed in April 2013 but we have not yet begun full scale operations. We have not proven that our business model will allow us to generate a profit. We have suffered operating losses since inception and we may not be able to achieve profitability. We had an accumulated deficit of $17,837 as of November 30, 2014. We are sustaining substantial operating and net losses, and it is possible that we will never be able to sustain or develop the revenue levels necessary to attain profitability. We may have difficulty raising additional capital, which could deprive us of necessary resources. In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships or other arrangements. Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others. Because our common stock is not listed on a major stock market, many investors may not be willing or allowed to purchase it or may demand steep discounts. Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities and other operations. Risks Relating to Our Business We have limited sales and marketing experience, which increases the risk that our business will fail. Our officers, who will be responsible for marketing our app to potential users, have no experience in the social media or internet industries, and have only nominal sales and marketing experience. Further, we have budgeted only $10,000 toward sales and marketing efforts over the next 12 months, which by industry standards is a very limited amount of capital with which to launch our effort. Given the relatively small marketing budget and limited experience of our officers, there can be no assurance that such efforts will be successful. Further, if our initial efforts to create a market for our website are not successful, there can be no assurance that we will be able to attract and retain qualified individuals with marketing and sales expertise to attract subscribers to our apps. Our future success will depend, among other factors, upon whether our services can be sold at a profitable price and the extent to which consumers acquire, adopt, and continue to use them. There can be no assurance that our website will gain wide acceptance in its targeted markets or that we will be able to effectively market our services. We may not be able to execute our business plan or stay in business without additional funding. Our ability to generate future operating revenues depends in part on whether we can obtain the financing necessary to implement our business plan. . The Company has no cash on hand as of May 31, 2014. The current average monthly expenses (not including offering expenses) are $800 per month. We will likely require additional financing through the issuance of debt and/or equity in order to establish profitable operations, and such financing may not be forthcoming. As widely reported, the global and domestic financial markets have been extremely volatile in recent months. If such conditions and constraints continue or if there is no investor appetite to finance our specific business, we may not be able to acquire additional financing through credit markets or equity markets. Even if additional financing is available, it may not be available on terms favorable to us. At this time, we have not identified or secured sources of additional financing. Our failure to secure additional financing when it becomes required will have an adverse effect on our ability to remain in business. If our estimates related to future expenditures are erroneous or inaccurate, our business will fail and you could lose your entire investment. Our success is dependent in part upon the accuracy of our management s estimates of our future cost expenditures for legal and accounting services (including those we expect to incur as a publicly reporting company), for app marketing and development expenses, and for administrative expenses, which management estimates to be approximately between $25,000 and $45,000 over the next twelve months. If such estimates are erroneous or inaccurate, or if we encounter unforeseen costs, we may not be able to carry out our business plan, which could result in the failure of our business and the loss of your entire investment. Our auditor has raised substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value. The company s ability to become a profitable operating company is dependent upon its ability to generate revenues and/or obtain financing adequate to fulfill its research and market introduction activities, and achieving a level of revenues adequate to support our cost structure has raised substantial doubts about our ability to continue as a going concern. We plan to attempt to raise additional equity capital by selling shares in this offering and, if necessary, through one or more private placement or public offerings. However, the doubts raised, relating to our ability to continue as a going concern, may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital. We will need to achieve commercial acceptance of our applications to generate revenues and achieve profitability. Even if our development yields technologically superior apps, we may not successfully develop commercial apps, and even if we do, we may not do so on a timely basis. We cannot predict when significant commercial market acceptance for our apps and the affiliated products sold thereon will develop, if at all, and we cannot reliably estimate the projected size of any such potential market. If markets fail to accept our apps and related products, we may not be able to generate revenues from the commercial application of our technologies. Our revenue growth and achievement of profitability will depend substantially on our ability to introduce new products that are accepted by customers. If we are unable to cost-effectively achieve acceptance of our sites by customers, or if the associated products do not achieve wide market acceptance, our business will be materially and adversely affected. Any significant disruption in our web presence or services could result in a loss of customers. Our plans call for our customers to access our apps through Apple s App Store. Our reputation and ability to attract, retain and serve our customers will be dependent upon the reliable performance of the website, network infrastructure and fulfillment processes (how we deliver services purchased by our customers). Prolonged or frequent interruptions in any of these systems could make our app unavailable or unusable, which could diminish the overall attractiveness of our subscription service to existing and potential customers. Our app may be displaced by newer technology. The Internet and mobile internet industries are undergoing rapid and significant technological change. Third parties may succeed in developing or marketing technologies and products that are more effective than those developed or marketed by us, or that would make our technology and apps obsolete or non-competitive. Accordingly, our success will depend, in part, on our ability to respond quickly to technological changes through the development and introduction of new apps and products. We may not have the resources to do this. If our apps or product candidates become obsolete and our efforts to secure and develop new products and apps do not result in any commercially successful apps or products, our sales and revenues will decline. We are in a competitive market which could impact our ability to gain market share which could harm our financial performance. The business of niche of apps is very competitive. Barriers to entry are relatively low, and we face competitive pressures from companies anxious to join this niche. There are a number of successful apps operated by proven companies that offer similar niche services, which may prevent us from gaining enough market share to become successful. These competitors have existing customers that may form a large part of our targeted client base, and such clients may be hesitant to switch over from already established competitors to our service. If we cannot gain enough market share, our business and our financial performance will be adversely affected. We are a small company with limited resources relative to our competitors and we may not be able to compete effectively. Our competitors have longer operating histories, greater resources and name recognition, and a larger base of customers than we have. As a result, these competitors will have greater credibility with our potential customers. They also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion, and sale of their services than we may be able to devote to our services. Therefore, we may not be able to compete effectively and our business may fail. The loss of the services of either of our officers or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our app and sell our services. The development of our app and the marketing of our services will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers, Yousef Dasuka and Mahmoud Dasuka who are developing our business, and on our ability to identify and retain competent consultants and employees with the skills required to execute our business objectives. The loss of the services of either of our officers or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our app and sell our services, which could adversely affect our financial results and impair our growth. Our Officers and Directors all reside outside of the United States which may pose difficulties in investors enforcing and protecting their legal rights. Our officers/directors reside outside of the United States, therefore shareholders may have difficulty effecting service of process against them. It would be expensive, difficult and time consuming for U.S. stockholders to effect service of process within the United States on our officers; enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against the officers; enforce judgments of U.S. courts based on civil liability provisions of the U.S. federal securities laws in foreign courts against your officers; and bringing an original action in foreign courts to enforce liabilities based on the U.S. federal securities laws against our officers. These difficulties could have the effect of negating an investor or shareholders ability to enforce his or her legal rights against our officer or directors. Our officers and directors have conflicts of interest in that they have other time commitments that will prevent them from devoting full-time to our operations, which may affect our operations. Because our officers and directors, who are responsible for all our business activities, do not devote their full working time to operation and management of us, the implementation of our business plans may be impeded. Our officers and directors have other obligations and time commitments, which will slow our operations and may reduce our financial results and as a result, we may not be able to continue with our operations. Additionally, when they become unable to handle the daily operations on their own, we may not be able to hire additional qualified personnel to replace them in a timely manner. If this event should occur, we may not be able to reach profitability, which might result in the loss of some or all of your investment in our common stock. Foreign Officers and Directors could result in difficulty enforcing rights. The officers and directors of the Company are located in Israel and as such investors may have difficulty in enforcing their legal rights under the United States securities laws. Risks Relating to our Stock The Offering price of $0.02 per share is arbitrary. The Offering price of $0.02 per share has been arbitrarily determined by our management and does not bear any relationship to the assets, net worth or projected earnings of the Company or any other generally accepted criteria of value. Information available to investors may be limited until the Company files a Form 8a which may make it difficult for investors to update themselves as to the status of their investment and the Company s business. Until our common stock is registered under the Exchange Act, we will not be a fully reporting company but only subject to the reporting obligations imposed by Section 15(d) of the Exchange Act. As the Company is likely to have fewer than 300 investors initially, the Company will have an automatic reporting duty suspension under Section 15(d), as well as the inapplicability of the proxy rules and Section 16 of the Exchange Act all of which will have the effect of limiting information available to investors about the Company.. We have no firm commitments to purchase any shares. We have no firm commitment for the purchase of any shares. Therefore there is no assurance that a trading market will develop or be sustained. The Company has not engaged a placement agent or broker for the sale of the shares. The Company may be unable to identify investors to purchase the shares and may have inadequate capital to support its ongoing business obligations. State securities laws may limit resales of your securities. State securities laws may limit resales of our securities. Because our shares will not be considered Covered Securities as defined in Section 18 of the Securities Act of 1933, resale of our shares may not be permitted unless our shares are qualified for trading under applicable state securities laws or there is an exemption for secondary trading in such state. Limited reporting requirements may limit access to information about the Company. Until our common stock is registered under the Exchange Act, you will not be a fully reporting company but only subject to the reporting obligations imposed by Section 15(d) of the Exchange Act. The automatic reporting suspension under Section 15(d), as well as the inapplicability of the proxy rules and Section 16 of the Exchange Act may limit investors access to information about the Company. All proceeds from the sale of shares offered by the company will be immediately available for use by the company. There is no minimum offering amount and we have not established an escrow to hold any of the proceeds from the sale of the shares offered by the company. As a result, all proceeds from the sale of shares offered by the company will be available for immediate use by the company. The proceeds of the sale may not be sufficient to implement the company s business strategy. Given the no-minimum, self-underwritten structure of our offering, it is possible that the proceeds generated from the offering, if any, may not be sufficient to meet our offering costs, which we have estimated at $10,500. The lack of an escrow in this offering means that the proceeds will be used immediately by the Company and may also be subject to attachment by any creditors. We will apply to have our common stock traded over the counter, which may deprive stockholders of the full value of their shares. We will apply to have our common stock quoted via the OTC Electronic Bulletin Board. Therefore, our common stock is expected to have fewer market makers, lower trading volumes and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock Market. These factors may result in higher price volatility and less market liquidity for the common stock. The Company may never be approved for trading on any exchange. We will have broad discretion in how we use the proceeds of this offering and we may not use these proceeds effectively. This could affect our results of operations and cause the value of our common stock to decline. Our management team will have considerable discretion in the application of the net proceeds of this offering, and you will not have the opportunity, as part of your investment decision, to assess whether we are using the proceeds appropriately. We currently intend to use the net proceeds that we receive from this offering as described in Use of Proceeds herein. We may use the net proceeds for corporate purposes that do not improve our results of operations or which cause our stock value to decline. A low market price would severely limit the potential market for our common stock. Our common stock is expected to trade at a price substantially below $5.00 per share, subjecting trading in the stock to certain SEC rules requiring additional disclosures by broker-dealers. These rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to certain exceptions (a penny stock ). Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser s written consent to the transaction prior to the sale. The broker - dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer s presumed control over the market. Such information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers from effecting transactions in our common stock. FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock. In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker -dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares. An investor s ability to trade our common stock may be limited by trading volume. A consistently active trading market for our common stock may not occur on the OTCBB. A limited trading volume may prevent our shareholders from selling shares at such times or in such amounts as they may otherwise desire. Our company has a concentration of stock ownership and control, which may have the effect of delaying, preventing, or deterring a change of control. Our common stock ownership is highly concentrated. Through ownership of shares of our common stock, two shareholders, Yousef Dasuka and Mahmoud Dasuka, beneficially own 100% of our total outstanding shares of common stock before this offering. As a result of the concentrated ownership of the stock, these stockholders, acting alone, will be able to control all matters requiring stockholder approval, including the election of directors and approval of mergers and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company. It could also deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock. We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters. Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors independence, audit committee oversight and the adoption of a code of ethics. While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange or NASDAQ, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions. Because we will not pay dividends in the foreseeable future, stockholders will only benefit from owning common stock if it appreciates. We have never paid dividends on our common stock and we do not intend to do so in the foreseeable future. We intend to retain any future earnings to finance our growth. Accordingly, any potential investor who anticipates the need for current dividends from his investment should not purchase our common stock. There are doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value. The company s ability to become a profitable operating company is dependent upon its ability to generate revenues and/or obtain financing adequate to fulfill its research and market introduction activities, and achieving a level of revenues adequate to support our cost structure and has raised doubts about our ability to continue as a going concern. We plan to attempt to raise additional equity capital by selling shares in this offering and, if necessary through one or more private placement or public offerings. However, the doubts raised relating to our ability to continue as a going concern may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things: Factors that might cause these differences include the following: the ability of the company to offer and sell the shares of common stock offered hereby; the integration of multiple technologies and programs; the ability to successfully complete development and commercialization of sites and our company s expectations regarding market growth; changes in existing and potential relationships with collaborative partners; the ability to retain certain members of management; our expectations regarding general and administrative expenses; our expectations regarding cash balances, capital requirements, anticipated revenue and expenses, including infrastructure expenses; other factors detailed from time to time in filings with the SEC. In addition, in this prospectus, we use words such as anticipate, believe, plan, expect, future, intend, and similar expressions to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward -looking statements, whether as a result of new information, future events or otherwise after the date of this prospectus. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. USE OF PROCEEDS With respect to up to 2,500,000 shares of common stock to be sold by us, unless we provide otherwise in a supplement to this prospectus, we intend to use the net proceeds from the sale of our securities for general corporate purposes, as follows: USE OF PROCEEDS * % of Shares Sold 25% 50% 75% 100% # of Shares Sold 625,000 1,250,000 1,875,000 2,500,000 Gross Proceeds $12,500 $25,000 $37,500 $50,000 Less: Offering Expenses* 10,500 10,500 10,500 10,500 Net Proceeds to the Company $2,000 $14,500 $27,000 $39,500 Use of Proceeds: Legal & Accounting $0 $2,500 $5,000 $5,000 General Operational Expenses 0 2,000 2,000 4,000 Production & Development 1,500 2,500 2,000 2,500 Administrative Cost 0 0 4,000 4,000 IT Infrastructure (hardware/software) 0 1,000 2,000 2,000 Advertising & Promotion 500 5,000 10,000 15,000 Marketing/Sales Team 0 1,500 2,000 7,000 Total $2,000 $14,500 $27,000 $39,500 * Offering Expenses $0.0042/share Our management will have broad discretion in the allocation of the net proceeds of any offering. Pending such uses, we intend to invest the net proceeds in short-term, investment grade, interest-bearing securities. The Company could operate even with no proceeds from this offering but that the marketing and advertising efforts would be greatly diminished thus greatly slowing the growth of the Company. CAPITALIZATION The following table sets forth our capitalization as of May 31, 2014 and November 30, 2014. November 30, 2014 May 31, 2014 Current Assets $8,220 $6,100 Current liabilities 14,557 3,257 Long-term liabilities — — Stockholders equity (6,337) 2,843 Preferred stock — — Common stock 11,500 11,500 Additional paid-in capital — — Accumulated deficit (17,837) (8,657) Total stockholders (deficit) equity (6,337) 2,843 Total capitalization $(6,337) $2,843 DILUTION The net tangible book value of our company as of November 30, 2014 was $(12,437) or $(0.001) per share of common stock. Net tangible book value per share is determined by dividing the tangible book value of the company (total tangible assets (not including deferred costs) minus total liabilities) by the number of outstanding shares of our common stock on November 30, 2014. Our net tangible book value and our net tangible book value per share will be impacted by the 2,500,000 shares of common stock which may be sold by our company. The amount of dilution will depend on the number of shares sold by our company. The following example shows the dilution to new investors at an assumed offering price of $0.02 per share. We are registering 2,500,000 shares of common stock for sale by our company. If all shares are sold at the offering price of $0.02 per share, and estimated offering expenses of $10,500, our net tangible book value as of November 30, 2014 would have been $27,063 or approximately $0.002 per share. Such an offering would represent an immediate increase in net tangible book value to existing stockholders of $0.001 per share and an immediate dilution to new stockholders of $0.011 per share. The following table illustrates the per share dilution: Assumed public offering price per share $0.02 Net tangible book value per share before this offering $(0.001) Increase attributable to new investors $0.001 Net tangible book value per share after this offering $0.002 Dilution per share to new stockholders $0.011 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is not currently traded on any exchange. We cannot assure that any market for the shares will develop or be sustained. We have not paid any dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. We intend to retain any earnings to finance the growth of our business. We cannot assure you that we will ever pay cash dividends. Whether we pay cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements and any other factors that the Board of Directors decides are relevant. See Management s Discussion and Analysis of Financial Condition and Results of Operations. DESCRIPTION OF BUSINESS AND PROPERTY General PRINCIPAL PRODUCTS AND SERVICES Our business will be to create an independent and unbiased mobile app that enables consumers to find the best cellular rate plan for their need and getting real-time notifications when a new cellular plan is available. We are in the development stage of developing and commercializing a mobile app for existing cellular phone users. Our goal is to help consumers to save money each month by notifying them when a more cost-effective plan based on their actual usage is available. Our mobile app, to be named Upper Plan Monitor ( UPM ) , will help consumers to keep track on new cellular plans from different cellular carriers, locate the closest phone dealer their your area, find the best cellular phone plan that fit their needs. Once developed, UPM will eliminate the need to manually check if a better cellular phone plan is available with the current cellular carrier or other cellular carriers. Convenience and money-savings will be our main selling features. We plan to develop UPM for the Apple's iPhone phones, in the future if resources we allow us we will develop an app for an Android based mobile phones. When a user launches the UPM app for the first time on his phone, he will be asked to select his existing cellular plan from a pre-loaded list, in case that the user can t find his cellular plan he will be able to enter his existing cellular plan by minutes, data and text message. Then the user will be asked to choose what is the most important to him in a cellular plan, and rate 3 features: talk, data and text. At this point UPM will gather this information and build a profile on the user based on his existing cellular phone plan and his own preferences. The last step will be to choose the carriers he would like to get notifications when new plans are available. UPM will run in the background and automatically checks if a new cellular plan is available, in case that a new plan is available it will match the 3 parameters (talk, data and text messages) to the users existing plan. In the case that the new plan is better or cheaper than the current plan a pop-up notification will appear on the user s screen to notify him. At this stage in our development, there can be no assurance that we will be successful in generating revenues from our app or that existing phone users will be receptive to our application. REVENUE MODEL We plan to generate revenue from the following sources: SALE OF UPM We plan to sell UPM on Apple s App Store site, for $1.99. Apple takes 30 percent of all revenue generated through apps, and 70 percent goes to the app publisher. IN-APP ADS One of the major benefits of advertising on an app is that advertisers can take advantage of the users' geographic and demographic information and target their ads appropriately. We plan to use Admob by Google as a way to insert advertisements into our app. AdMob is one of the world's largest mobile advertising networks, and offers the ability for app developers to earn revenue by publishing ads in their software. Revenue is generated according to the PPC (Pay Per Click) model, where advertisers pay the hosting service a flat rate each time the ad is clicked. THE MARKET OPPORTUNITY The following is taken from: http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/a Key Global Telecom Indicators for the World Telecommunication Service Sector in 2012 (all figures are estimates) Global Developed nations Developing nations Mobile cellular subscriptions (millions) 6,835 m 1,600 m 5,235 m Per 100 people 96.2 % 128.2 % 89.4 % Fixed telephone lines (millions) 1,171 m 520 m 652 m Per 100 people 16.5 41.6 % 11.1 % Active mobile broadband subscriptions (millions) 2,096 m 934 m 1,162 m Per 100 people 29.5 % 74.8 % 19.8 % Mobile broadband growth CAGR 2010-2013 (millions) 40 % N/A N/A Fixed broadband subscriptions (millions) 696 m 340 m 357 m per 100 people 9.8 % 27.2 % 6.2 % Source: International Telecommunication Union (February 2013) via: mobiThinking COMPETITION AND COMPETITIVE STRATEGY Competition within the mobile app industry is intense. We believe there is no one app on the market that allows existing cellular phone users to get notifications when a better cellular plan is available according to their individual choices. Although we couldn t find iPhone app that do that, there are many websites that offer similar service of cellular phone plan comparison. Many of our competitors have longer operating histories, greater financial, sales, marketing and technological resources and longer established client relationships than we do. However, we believe that UPM all-in-one bundle and relatively low price point of $1.99 (flat rate) will differentiate us from the competitors listed below: Whistle Out (www.whistleout.com) - MARKETING & SALES STRATEGY We plan for our app to be marketed on five fronts: * Social Media: We intend to spread word of UPM through popular social network platforms such as Twitter, Facebook, MySpace, blogs etc. We will create forums for users to engage with and support our product, such as a facebook fan page, blog entries and tweets that followers can re-post or link to. * App review websites: Send out promo keys to app review websites and blogs such as www.appvee.com, www.androinica.com, www.techcrunch.com and www.macworld.com. * "Send-it-to-your-friend" linkage: UPM standard "send it to your friend" link will enable for consumers to send it to their colleagues or recommend it for download. * Advertising: We plan to advertise on mobile ad networks, such as Admob, Quattro, and Millenial Media. Mobile ad networks can target users by country, device, and category. We have budgeted $5,000 for this purpose assuming we are able to raise at least $39,100 gross in this Offering. * Press Releases: We will send out a press release in order get UPM noticed by the traditional media - newspapers and magazines. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. Employees As of March 16, 2015, we had no employees with the company s work being done by management. Description of Property We currently utilize office space at 153 W. Lake Mead #2240, Henderson, NV 89015, as our corporate registered office at a cost of $150 per year. Most of the company s business is undertaken at the homes of the officers and directors and such space is provided free of charge. We believe these facilities are in good condition, but that we may need to expand our leased space as our expansion efforts increase. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with (i) our audited financial statements as of May 31, 2014 that appear elsewhere in this registration statement. This registration statement contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this discussion, including, without limitation, statements containing the words "believes", "anticipates," "expects" and the like, constitute "forward - looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). However, as we will issue penny stock, as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward -looking statements contained herein to reflect future events or developments. For information regarding risk factors that could have a material adverse effect on our business, refer to the Risk Factors section of this prospectus beginning on page 4. PLAN OF OPERATION We are in the development stage of developing and commercializing an independent and unbiased mobile app that enables consumers to find the best cellular rate plan for their need and getting real-time notifications when a new cellular plan is available. Our goal is to help consumers to keep track on new cellular plans from different cellular carriers, locate the closest phone dealer their your area, find the best cellular phone plan that fit their needs. Our goals over the next 12 months are to: Goal 1: Create an iPhone Application Allows users to pick the service providers they want to get notifications from. Allows users to pick their existing rate plan. Allows users to enter their plan details: Mins, Data. Sends notifications to users showing that there is a better plan available Lets users see a list of plans that are considered better than their existing plans Lets the users call the phone service providers from the app. Goal 2: Create a web portal for creating, editing, saving the plans & supporting the iOS App Allows site admins to login and make changes Allows site admins to create new plans for different service providers Allows site admins to rank plans by minutes Allows site admins to rank plans by data Keeps record of all the users who have signed up and their plans and their preferences (data vs mins) Generates push notifications based on whether the plan is better than app user s current plan Create a simple algorithm that decides if the plan is better based on mins & data entered Our current business objectives are: * To become a recognized brand of an unbiased mobile app that finds the best deal available. * to execute our marketing plan and to create interest in our app; ACTIVITIES TO DATE We were incorporated in Nevada on April 20, 2013. We are a development stage company that only recently commenced with its business operations and we currently have no revenue and no significant assets. Our executive offices are located at 153 W. Lake Mead #2240, Henderson, NV 89015. The office is a location at which the Company receives mail, has office services and can hold meetings. Our officers, Yousef Dasuka and Mahmoud Dasuka work on Company business from their respective residences in Israel. MILESTONES Below is a brief description of our planned activities, which we expect to commence immediately after the offering is completed and the proceeds have been received and accepted. MONTHS 1 TO 3 The anticipated activities undertaken during months 1 to 3 following the completion of this offering assume that we will be able to raise at least $40,000 gross in this Offering or through other financing means. If we are not able to raise sufficient capital, we will scale our business development accordingly. There can be no assurance that we will be able to raise the required $50,000, or any funds at all, to implement our business plan as laid out below. During the first three months, we plan to: REQUIREMENTS & UX DESIGN Our management team will work with a third-party Web development company to gather the requirements and agree on the UX (User Experience) options using wire-framing techniques. Once the UX design was defined, it will be developed into a UI (User Interface) design. Once the UX & UI are complete, it will be passed on to the development team. Outcome of this phase will be a complete design for the iPhone Application. We expect that this period will require an expenditure of approximately $5000. MONTHS 4 TO 6 During the following three months, we expect to achieve the following: * Development of XXX; The third-part Web development company will build the admin web portal using .Net technology. The iPhone Application will be built using native objective-C code. Android Application will be built using native java code. Once the architecture has been finalized, the development of the iPhone application and the admin web portal will occur in parallel. We expect that this period will require an expenditure of approximately $15000. MONTHS 7 TO 12 TESTING /DEPLOYMENT MONTHS 7 TO 12 During the following six months, we expect to achieve the following: * Correct any detected discovered defects; * Submission of XXX to the App Store; * Promote XXX to freelancers and small sized businesses. * Support multi-user. iPhone application will be tested on an iPhone 5. Once satisfied, app will be released in the app store and will be made available to download. We expect that this period will require an expenditure of approximately $20000. App Store Submission: The software developer will facilitate the App Store submission process and manage approval issues. Once submitted Apple will review the application to ensure the application is reliable and is free of explicit and offensive material. We expect to be completed by the end of month 8 after defects have been fixed. Once submitted to the App Store we expect the review process to take 3-4 weeks. Promote UPM: If we are not able to raise $50,000 gross from this Offering we do not anticipate spending any money on the promoting of UPM. We will then promote UPM in free venues: we will submit a description of UPM to app review website, promote it on our own website and on Twitter and Facebook this task will be performed by our management. If we are able to raise 50,000 gross we have budgeted $4,000 to place advertisements on mobile ad networks. The mobile ad networks can target users by different criteria, our target market is existing cell phone users. Liquidity and Capital Resources At May 31, 2014 and May 31, 2013 we had $0 and $5,000 in current assets consisting solely of deferred offering costs. On November 30, 2014, current assets were $8,220 and consisted of prepaid expenses and deferred offering costs. Current liabilities at May 31, 2014 and May 31, 2013 totaled $3,257 and $0. Current liabilities at November 30, 2014 were $14,557. We have no material commitments for the next twelve months, aside from independent contractor fees. We will however require additional capital to meet our liquidity needs. We intend to use third party independent contractors for much of the web development as disclosed in the milestones disclosed in the Plan of Operation section. As disclosed in the milestones disclosed in the Plan of Operations section, it is anticipated that the Company will require $40,000 to meet its operational cash flow needs for the next twelve months. The Company expects that legal and accounting expenses will be approximately $2,500 per quarter for the next year which adds $10,000 to the cash requirements for the next year. Currently the Company has determined that its anticipated monthly cash flow needs should not exceed of $20,000 for the first 6 months. Expenses are expected to increase in the first half of 2014 due to a projected need to increase personnel. We anticipate that we will receive sufficient proceeds from investors through this offering, to continue operations for at least the next twelve months; however, there is no assurance that such proceeds will be received and there are no agreements or understandings currently in effect from any potential investors. It is anticipated that the company will receive revenues from operations in the coming year, however, since the Company has made no revenues to date, it is difficult to anticipate what those revenues might be, if any, and therefore, management has assumed for planning purposes only that it may need to sell common stock, take loans or advances from officers, directors or shareholders or enter into debt financing agreements in order to meet our cash needs over the coming 12 months. If the Company raises 25% of the proceeds, marketing efforts will be at a minimum and the Company anticipates that it will be approximately 12 months prior to the Company being able to generate a net profit. . If the Company raises 50% of the proceeds, marketing efforts will be at a medium level and the Company anticipates that it will be approximately 10 months prior to the Company being able to generate a net profit. . If the Company raises 75% of the proceeds, marketing efforts will be at a medium/high level and the Company anticipates that it will be approximately 8 months prior to the Company being able to generate a net profit. . If the Company raises 100% of the proceeds, marketing efforts will be at a maximum level under the business plan and the Company anticipates that it will be approximately 6 months prior to the Company being able to generate a net profit. Results of Operations We did not generate any revenue from April 20, 2013 (inception) to November , 2014. For the period from inception (April 20, 2013) to May 31, 2014 our expenses were $8,657 and $400 for the period ended May 31, 2013. Expenses for the year ended May 31, 2014 consisted of professional fees of $8,000 and $0 as of May 31, 2013. As a result, we have reported a net loss of $8,257 for the year ended May 31, 2014 and $400 for the period ended May 31, 2013. Expenses for the six month period ended November 30, 2014 were $9,180 and consisted of general and administrative expenses. The Company s revenues are expected to be derived primarily from sales of the Company s apps. The Company has suffered operating losses since its inception, primarily as a result of start up costs including professional fees. Going Concern The future of our company is dependent upon its ability to obtain financing and upon future profitable operations.. Management has plans to seek additional capital through a private placement and public offering of its common stock if necessary. These conditions raise substantial doubt about our company's ability to continue as a going concern. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Critical Accounting Policies Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. Cash and Cash Equivalents. The Company considers all highly liquid short-term investments with maturities of less than three months when acquired to be cash equivalents. Loss Per Common Share. Basic net loss per share is calculated by dividing the net loss by the weighted - average number of common shares outstanding for the period, without consideration for common stock equivalents OUR MANAGEMENT Directors, Executive Officers, Promoters and Control Persons Directors, Executive Officers Name Age Position Yousef Dasuka 28 Chairman of the Board, President Mahmoud Dasuka 25 Secretary, Treasurer, Director Mr. Yousef Dasuka Mr. Yousef Dasuka is our President, CEO and a Director. He has served in these capacities since we were incorporated on April 20, 2013. He received an industrial engineering and management Diploma from the College Academy of Netanya, Israel in 2005 and a Director of Sales Certificate from the University of Haifa, Israel in 2006. From 2007 to 2008 he worked for DSNR Ltd, a digital marketing and business development in the internet environment, in the customer service department. From 2008 to 2010 he worked for RE - Marc advanced outsourcing solutions Ltd., who specializes in providing outsourcing services in the field of telemarketing. He was trained as a telemarketer and perform calls to customers to offer products and services. Since 2010 he has been working for HOT, a communication company in Israel that offers customers a variety of communication services, including multi-channel television, fast internet infrastructure and mobile phone service. He is a field sales representative, his duties includes working outside the office environment sourcing potential customers and maximising the sales of the company s products and services, cold calling an scheduling meetings with potential customers. These experiences, qualifications and attributes have led to our conclusion that Mr. Dasuka should be serving as a member of our Board of Directors in light of our business and structure Mr. Mahmoud Dasuka Mr. Mahmoud Dasuka is our Secretary, Treasurer and a Director. He has served in these capacities since we were incorporated on April 20, 2013. Since 2007 Mr. Dasuka has been working for a leading Israeli provider of telecommunications services (cellular, fixed-line telephony and internet services) under the orange brand. Partner provides a broad range of high-standard services to over 3 million cellular customers, representing a market share of approximately 32%. His duties include attracting potential customers, suggesting information about products and services, opening customer accounts by recording account information and maintaining customer records. Between 2008 and 2009 he took sales and marketing courses such as customer behavior, advertising and public relations and salesmanship. These experiences, qualifications and attributes have led to our conclusion that Mr. Dasuka should be serving as a member of our Board of Directors in light of our business and structure. Each officer will devote approximately 10 hours per week to the company. Family Relationships. The officers and directors are brothers. Code of Conduct and Ethics. We have adopted a code of business conduct and ethics that applies to our directors, officers and all employees. The code of business conduct and ethics may be obtained free of charge by writing to UpperSolution.com, Attn: Chief Financial Officer, 153 W. Lake Mead #2240, Henderson, NV 89015. Executive Compensation Summary Compensation Table. The following table sets forth certain information concerning the annual and long-term compensation of our Chief Executive Officer and our other executive officers during the last fiscal year for the last two fiscal years. (a) (b) (c) Name and Principal Position Year Salary* Bonus Option Awards All Other Compensation Total Compensation Yousef Dasuka 2014 $0 $0 $0 $0 $0 Chairman of the Board, CEO 2013 $0 $0 $0 $0 $0 President Mahmoud Dasuka 2014 $0 $0 $0 $0 $0 Secretary, Treasurer, CFO, CAO 2013 $0 $0 $0 $0 $0 Outstanding Equity Awards at Fiscal Year End. There were no outstanding equity awards as of March 5, 2015. Compensation of Non-Employee Directors. We currently have no non-employee directors and no compensation was paid to non-employee directors in the period ended May 31, 2014. We intend during 2015 to identify qualified candidates to serve on the Board of Directors and to develop a compensation package to offer to members of the Board of Directors and its Committees. Audit, Compensation and Nominating Committees As noted above, we intend to apply for listing our common stock on the OTC Electronic Bulletin Board, which does not require companies to maintain audit, compensation or nominating committees. Considering the fact that we are an early stage company, we do not maintain standing audit, compensation or nominating committees. The functions typically associated with these committees are performed by the entire Board of Directors which currently consists of one member who is not considered independent. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security Ownership of Principal Stockholders, Directors, Nominees and Executive Officers and Related Stockholder Matters The following table sets forth, as of March 16, 2015, certain information with respect to the beneficial ownership of shares of our common stock by: (i) each person known to us to be the beneficial owner of more than 5 percent of our outstanding shares of common stock, (ii) each director or nominee for director of our Company, (iii) each of the executives, and (iv) our directors and executive officers as a group. Unless otherwise indicated, the address of each shareholder is c/o our company at our principal office address: Beneficial Owner Number of Shares Beneficially Owned (*) Percent of Class (**) Yousef Dasuka 5,750,000 50% Mahmoud Dasuka 5,750,000 50% All directors and officers as a group (2 persons) 11,500,00 100% (*) Beneficial ownership is determined in accordance with the rules of the SEC which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities. Unless otherwise indicated, voting and investment power are exercised solely by the person named above or shared with members of such person s household. (**) Percent of class is calculated on the basis of the number of shares outstanding on March 16, 2015(11,500,000). CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS It is our practice and policy to comply with all applicable laws, rules and regulations regarding related person transactions, including the Sarbanes-Oxley Act of 2002. A related person is an executive officer, director or more than 5% stockholder of UpperSolution.com, including any immediate family members, and any entity owned or controlled by such persons. Our Board of Directors (excluding any interested director) is charged with reviewing and approving all related-person transactions, and a special committee of our Board of Directors is established to negotiate the terms of such transactions. In considering related-person transactions, our Board of Directors takes into account all relevant available facts and circumstances. On or about May 20, 2013,Mahmoud Dasuka and Yousef Dasuka each purchased 5,750,000 common share of the company s common stock for $5,750 each or $0.001 per share. These shares were exempt from registration under Section 4(2) of the Securities Act of 1933 as there was no solicitation and both officers and directors were in possession of full information about the registrant. Director Independence Our Board of Directors has adopted the definition of independence as described under the Sarbanes Oxley Act of 2002 (Sarbanes-Oxley) Section 301, Rule 10A-3 under the Securities Exchange Act of 1934 (the Exchange Act) and NASDAQ Rules 4200 and 4350. Our Board of Directors has determined that its member does not meet the independence requirements. DESCRIPTION OF CAPITAL STOCK Authorized and Issued Stock Number of Shares at November 10, 2014 Title of Class Authorized Outstanding Common stock, $0.001 par value per share 75,000,000 11,500,000 Common stock Dividends. Each share of common stock is entitled to receive an equal dividend, if one is declared, which is unlikely. We have never paid dividends on our common stock and do not intend to do so in the foreseeable future. We intend to retain any future earnings
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+PROSPECTUS SUMMARY This summary highlights information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before making your investment decision. Before investing in our Class A common stock, you should carefully read the entire
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+PROSPECTUS SUMMARY This summary highlights information contained or incorporated by reference elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing or incorporated by reference in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase shares of our common stock. Unless the context otherwise indicates or requires, the terms "we," "our," "us," "HealthEquity," and the "Company," as used in this prospectus, refer to HealthEquity, Inc. and its subsidiaries as a combined entity, except where otherwise stated or where it is clear that the terms mean only HealthEquity, Inc. exclusive of its subsidiaries. Overview We are a leader and an innovator in the high growth category of technology-enabled services platforms that empower consumers to make healthcare saving and spending decisions. Our platform provides an ecosystem where consumers can access their tax-advantaged healthcare savings, compare treatment options and pricing, evaluate and pay healthcare bills, receive personalized benefit and clinical information, earn wellness incentives, and make educated investment choices to grow their tax-advantaged healthcare savings. We can integrate with any health plan or banking institution to be the independent and trusted partner that enables consumers as they seek to manage, save and spend their healthcare dollars. We believe the secular shift to greater consumer responsibility for healthcare costs will require a significant portion of the approximately 175 million under-age 65 consumers with private health insurance in the United States to use a platform such as ours. The core of our ecosystem is the health savings account, or HSA, a financial account through which consumers spend and save long term for healthcare on a tax-advantaged basis. We are the integrated HSA platform for 20 of the 50 largest health plans in the country, a number of which are among 28 Blue Cross and Blue Shield health plans in 26 states, and approximately 27,000 employer clients, including industry leaders such as Adobe Systems, American Express Company, Dow Corning Corporation, eBay, Inc., Google, Inc., Intermountain Healthcare, and Kohl's Corporation. Our customers include individuals, employers of all sizes and health plans. We refer to our individual customers as our members, our health plan customers as our Health Plan Partners and our employer customers with more than 1,000 employees as our Employer Partners. Our Health Plan Partners and Employer Partners collectively constitute our Network Partners. Through our existing Network Partners, we have the potential to reach over 60 million consumers, representing approximately 34% of the under-age 65 privately insured population in the United States. As of January 31, 2015, we had over 1.4 million HSAs on our platform, which we refer to as our HSA Members, representing over 3.2 million lives. During the years ended January 31, 2015, 2014 and 2013, we added approximately 476,000, 306,000 and 216,000 new HSA Members, representing approximately 1.1 million, 700,000 and 500,000 lives, respectively. We have developed technology and a differentiated focus on the consumer to facilitate the transition to a more consumer-centric approach to healthcare saving and spending. In an environment where consumers own greater responsibility for cost, they require better information, a more integrated experience, a customer service model that is similar to other consumer businesses, and the ability to make their dollars and data portable. By integrating healthcare saving and spending with the broader healthcare system, we are breaking down the historical wall Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents between personal finance and healthcare and enabling consumers to make the transition to a consumer-centric healthcare environment. We do this in a number of key ways: We connect people to their health and wealth data, delivering answers to critical consumer questions such as: What do I owe? What am I being billed for? How can I spend less? Did I get my health plan discount? Where should I invest my healthcare dollars? We create a singular consumer healthcare ecosystem by allowing third-party applications, such as price transparency, telemedicine, and wellness tools, to plug into our platform to drive adoption of these applications among our members. We deliver millions of personal and relevant messages, empowering consumers at critical healthcare "save" and "spend" moments. We give consumers the freedom to move through the healthcare system by liberating their healthcare data and dollars. Our solution is deployed as a cloud-based platform that is accessible to our customers through the Internet and on mobile devices. We host our solution on private servers, which allows us to scale on demand. Core to our technology is a configurable framework and open platform that we believe provides us greater functionality and flexibility than generic technologies used by our legacy competitors and requires less investment and time to configure and customize to our customers' needs. Our ability to seamlessly integrate third-party applications has also afforded us an advantage in an expanding consumer healthcare landscape. A growing number of companies are attempting to integrate into the consumer's daily healthcare spending experience by leveraging our platform. These companies offer functions such as price transparency, benefits enrollment, population health, wellness, analytics, health insurance and investment services, and are looking to reach the consumer at the critical "save" and "spend" moment. In an effort to capitalize on this opportunity, we continue to expand the number of ecosystem partners with whom our platform is integrated. As of January 31, 2015, we expanded our ecosystem partners to 18 unique consumer-centric partners that provide price transparency, telemedicine, health engagement, or 401(k) solutions. Our business model provides strong visibility into our future operating performance. As of the beginning of the past several fiscal years, we have had approximately 90% visibility into the revenue of the subsequent fiscal year. We charge monthly administration fees, primarily through multi-year contracts with our Network Partners, employer clients and individual members. We earn custodial fees, which are primarily interest earned on our cash assets under management, or AUM, deposited with our insurance company partner and with our FDIC-insured custodial depository bank partners, fees earned by us from mutual funds in which our members invest on a self-directed basis, and fees for investment advisory services. We also earn card fees, which are primarily interchange fees charged to merchants on payments made with our cards via payment networks. Monthly account fees, custodial fees, and card fees are recurring in nature, providing strong visibility into our future business. Because of our scalable technology platform and large number of existing Network Partners, our operating model provides a significant embedded organic growth opportunity and high returns on each incremental dollar of revenue. Over the past two years, our operating model has allowed us to grow the number of our HSA Members by 111%, with 80% coming from existing Network Partners, and increase our AUM by 103%. As a result, our total revenue increased 42%, from $62.0 million for the year ended January 31, 2014 to $87.9 million for the year ended January 31, 2015, and our Adjusted EBITDA increased 60%, from $15.8 million for the year ended January 31, 2014 to $25.2 million for the year ended January 31, 2015. See "Summary Consolidated Financial and Other Data Non-GAAP Financial Measures" for more HEALTHEQUITY, INC. (Exact name of registrant as specified in its charter) Table of Contents information as to how we define and calculate Adjusted EBITDA and for a reconciliation of net income, the most comparable measure under generally accepted accounting principles in the United States, or GAAP, to Adjusted EBITDA. Our Opportunity We believe the shift to healthcare consumerism is just beginning. The number of HSAs has grown from 4.9 million in December 2009 to 13.8 million in December 2014 and, according to Consumer Driven Market Report, the number of people with HSAs is expected to reach 50 million by 2020. We believe this HSA growth will be driven, in part, by the Patient Protection and Affordable Care Act of 2010, or the PPACA, which requires nearly all legal U.S. residents to obtain health insurance with minimum essential coverage, commonly referred to as the "individual mandate," or be subject to a tax penalty. We believe the individual mandate will drive consumers to high deductible health plans, or HDHPs, that are eligible to be coupled with HSAs, which we refer to as HSA Plans, thus increasing the number of HSAs, because HSA Plans, with their low annual premiums, offer an affordable means of obtaining the health insurance coverage required by the individual mandate. We also believe medical cost inflation and higher income tax rates will drive HSA growth as consumers seek alternative ways to reduce their healthcare costs and tax expenses. By combining innovations in technology, analytics, consumer experience and financial planning, we believe we are well-positioned to take advantage of the emergence of the new healthcare consumer. We are addressing the large and growing U.S. health insurance market. The U.S. under-age 65 private health insurance market consists of approximately 175 million people. The PPACA is widely expected to expand coverage among the approximately 30 million uninsured Americans through its individual and employer mandates, premium subsidies, state health insurance exchanges and ban on withholding coverage due to pre-existing medical conditions. We see an opportunity to address the 54 million Medicare-eligible Americans and have been involved in industry-wide efforts to expand HSA eligibility to this large and growing population. Health insurance is in the midst of major structural change. Despite multiple efforts by employers, health plans and government, health insurance premium increases have exceeded worker-earnings increases and inflation in every year since 1998. Premiums have nearly tripled in that time, while worker earnings have increased at a slower rate. In response, employers and health plans are increasingly adopting health insurance plans in which consumers own more financial responsibility through higher deductibles, such as HSA Plans. We believe we enable this disruption of the traditional health insurance model by creating incentivized, engaged and empowered healthcare consumers. HSAs and HSA assets are rapidly growing. HSAs have grown from 4.9 million in 2009 to 13.8 million in 2014. HSA assets, comprised of both cash deposits and investments, have grown from $7.2 billion to $24.2 billion during this timeframe. Fewer than 3% of our HSAs have investments today. However, as the structural shift in health insurance continues, we believe that health savings will become an important part of the consumer's financial portfolio and planning, resulting in significant asset growth. The vintage of accounts continues to grow as well, naturally driving up assets. PPACA implementation accelerates structural change. As the PPACA is fully implemented, HSA growth will benefit from a significant expansion of the addressable market. The introduction of state health exchanges, and the expected emergence of private exchanges, should also drive growth of HSAs. We believe our Health Plan Partners, which include 28 Blue Cross and Blue Shield health plans in 26 states, 13 regional integrated health plans, and several new state health "CO-OP" insurers, are well-positioned to win business on exchanges, increasing our addressable HSA population. Delaware (State or other jurisdiction of incorporation or organization) 7389 (Primary Standard Industrial Classification Code Number) 52-2383166 (I.R.S. Employer Identification Number) 15 W. Scenic Pointe Dr. Ste. 100 Draper, Utah 84020 (801) 727-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Patients are becoming engaged consumers. The shift of financial responsibility to consumers drives them to take cost-conscious actions that result in permanent reduction in healthcare cost-trends. We believe that the greatest challenge health plans and employers face with consumer-centric health plans is the complexity these plans create for individual consumers. Offering consumers a secure, content-rich environment to make highly personal healthcare saving and spending decisions, one that brings together disparate data and provides data-driven individualized advice, is critical to empowering consumers to manage a greater portion of their healthcare cost responsibility. Each HSA becomes a consumer ecosystem rather than a single product. The shift of first-dollar responsibility for healthcare costs inherent in HSA Plans, sometimes called the "retail effect," is giving rise to new consumer-centric solutions such as price transparency, retail clinics, telemedicine, and health and wealth financial planning. These solutions are all attempting to benefit from the growing reality that the consumer owns more of the healthcare financial burden. While many of these products and services have the potential to reduce costs, they are difficult to implement effectively without accessing the consumer at the critical "save" and "spend" moment. The HSA platform is becoming a natural hub for these solutions to integrate into the consumer experience because it is the place where consumers execute their healthcare saving and spending decisions and it is the point of integration for disparate patient-level clinical and administrative information. We believe that the ability of technology-enabled HSA platforms such as ours to integrate these disparate solutions into a singular experience for the healthcare consumer has the opportunity to transform the consumer experience and impact the adoption of this growing universe of new consumer-centric healthcare solutions. Legacy competitors are not prepared to meet the growing needs of the healthcare consumer. When HSAs came into being over a decade ago, banks and transaction processors took early market share based on their transaction processing skills and commercial banking relationships with health insurers and employers. As the role of HSA platforms began to expand to become a critical component of the broader consumer healthcare experience, we believe that these and other firms recognized that solely applying legacy transaction processing capability to HSAs was not sufficient. Many of these legacy competitors such as Ceridian HCM, Inc., Citigroup Inc., Fidelity National Information Services, and JPMorgan Chase & Co. have either outsourced their HSA platform or exited the market. Today, insurers and employers are turning to open technology-based firms such as ours that deliver a complete consumer experience by integrating HSAs with other consumer tools. We expect the growing complexity of the healthcare system and the emergence of more consumer-centric healthcare solutions will further increase the need for more complete healthcare-specific platforms such as ours. Our Competitive Strengths We believe we are well-positioned to benefit from the transformation of the healthcare benefits market. Our platform is aligned with a new healthcare environment that rewards consumer engagement and fosters an integrated consumer experience. Leadership and first-mover advantage. We are a pioneer in the development of technology solutions that empower consumers to make informed healthcare saving and spending decisions. We have established a defensible leadership position in the HSA industry through our first-mover advantage, focus on innovation and differentiated capabilities. Our leadership position has been recognized by Consumer Driven Market Report (2013), and is further evidenced by the more than doubling of our market share, from 4% in December 2010 to 9% in December 2014, as noted by the 2014 Devenir HSA Research Report. JON KESSLER President and Chief Executive Officer 15 W. Scenic Pointe Dr. Ste. 100 Draper, Utah 84020 (801) 727-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our position as an innovator is demonstrated by a series of transformative accomplishments, which we believe to be industry firsts, including: 2003: Offered 24/7/365 live support from health saving and spending experts; 2004: Published The Complete HSA Guidebook, a comprehensive reference now in its eighth edition; 2005: Integrated an HSA into a health plan; 2006: Authorized to act as an HSA custodian by the U.S. Department of the Treasury; 2008: Integrated claims-driven price transparency tools; 2009: Integrated HSAs with multiple health plans of a single large employer; 2009: Delivered integrated wellness incentives through an HSA; 2009: Partnered with a private health insurance exchange as its preferred HSA partner; 2010: Integrated enrollment on a state health insurance exchange; 2011: Integrated HSAs, health reimbursement arrangements, flexible spending accounts and investment accounts on one website; and 2013: Delivered HSA-specific online investment advice. We believe that these innovations have helped us develop a strong brand and reputation, enter into strategic distribution partnerships with health plans and employers, and gain significant market share of HSAs in the United States. Complete solution for managing consumer healthcare saving and spending. We simplify the consumer's healthcare decision-making process by leveraging our expertise and technology to create a single place for consumers to manage their healthcare saving and spending decisions. Our members utilize our platform in a number of ways and in varying frequencies. For example, our members utilize our platform to evaluate and pay healthcare bills through the member portal, which allows members to pay their healthcare providers, receive reimbursements and learn of savings opportunities for prescription drugs. In addition, our members utilize our platform to make educated investment choices in respect of their tax-advantaged healthcare savings through our online investment tools and HealthEquity Advisor, our online-only registered investment advisor that recommends investments that are tailored to a member's specific financial goals. Members also utilize the platform's mobile app to view and pay claims on-the-go, including uploading medical and insurance documentation to the platform with their mobile phone cameras. During the year ended January 31, 2015, our platform experienced 14.0 million logons and, on average, every month 28% of our members signed into our platform and 13% reached out to one of our Member Education Specialists. Proprietary and integrated technology platform. We have a proprietary cloud-based technology platform, developed and refined during more than a decade of operations, which we believe is highly differentiated in the marketplace for a number of key reasons: Purpose-built technology: Our platform was designed specifically to serve the needs of healthcare consumers, health plans and employers. We believe it provides greater functionality and flexibility than the generic technologies used by our competitors, many of which were originally developed for banking, benefits administration or retirement services. We believe we have the only platform that encompasses all of the core functionality of healthcare saving and spending in a single secure and compliant system. Data integration: Our technology platform allows us to integrate data from disparate sources, which enables us to seamlessly incorporate personal health information, clinical insight and individually tailored strategies into the consumer experience. We currently have more than 750 distinct integrations with health plans, pharmacy benefit managers, employers and other benefits provider systems, which we believe is more than any of our competitors. Copies to: GORDON R. CAPLAN, Esq. JEFFREY S. HOCHMAN, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 CHARLES S. KIM, Esq. ANDREW S. WILLIAMSON, Esq. DAVID G. PEINSIPP, Esq. Cooley LLP 4401 Eastgate Mall San Diego, California 92121 (858) 550-6000 Table of Contents Configurability: Our technology platform enables us to create a unique solution for each of our Network Partners. A non-technical HealthEquity team member can configure more than 220 product attributes, including integration with a partner's chosen healthcare price transparency or wellness tools, single sign on, sales and broker support sites, branding, member communication, custom fulfillment and payment card, savings options and interest rates, fees and mutual fund investment choices. We currently have more than 850 unique partner configurations of our offerings in use. Differentiated consumer experience. We have designed our solutions and support services to deliver a differentiated consumer experience, which is a function of our culture and technology. We believe this provides a significant competitive advantage relative to legacy competitors whom we believe prioritize transaction processing and benefits administration. Culture: We call our culture "Purple," which we define as our commitment to exceeding our customers' expectations in a truly remarkable way. For example, since 2003, our health saving and spending experts have served our members live 24/7/365. This is because our members' most important healthcare decisions are often made outside of business hours. In the year ended January 31, 2015, 26% of member calls happened at night, on weekends or on holidays. Technology: Our technology helps us to deliver on our commitment to being Purple. We tailor the content of our platform and the advice of our experts to be timely, personal and relevant to each member. For example, our technology generates health savings strategies that are delivered to our members when they interact with our platform or call us. We employ individuals, which we refer to as Member Education Specialists, who provide real-time assistance to our members via telephone. We believe our Purple culture drives our success. Our commitment to Purple has been rewarded with consumer loyalty scores that far exceed those of most banks and traditional health insurers. In addition, approximately 94% of all HSAs opened with us remained open as of January 31, 2015. Large and diversified channel access. We believe our differentiated distribution platform provides a competitive advantage by efficiently enabling us to reach a consumer market that is projected to include 50 million people by 2020. Our platform is built on a business-to-business-to-consumer channel strategy, whereby we rely on our Network Partners to reach consumers instead of marketing our services to these potential members directly. Our channel strategy has translated into accelerating account growth from existing partners. We added approximately 378,000 new HSA Members from previously existing Network Partners during the year ended January 31, 2015, up 119% over two years. Growth from existing Network Partners represented 80% of our total new HSA Members during this period. Scalable operating model. We believe that our technology is highly scalable because our products and services are accessed primarily through our technology platform, which is cloud-based. After initial on-boarding and a period of education, our account costs for any given customer typically decline over time. Our opportunity to generate high-margin revenue from existing HSA Members grows over time because our HSA Members' balances typically grow, increasing custodial fees at very little incremental cost to us. An account opened in any given fiscal year will have an average cash balance of approximately $800 at the end of that fiscal year, doubling to approximately $1,600 after two more years and nearly tripling to approximately $2,300 after another three years. We believe that this pattern will continue as more of our members add investments to their account balances. As of January 31, 2015, our HSAs with investments had nine times the AUM of those with cash only. We believe we are well-positioned to benefit from the scalability of our model, given that as of January 31, 2015, 55% of our HSAs were less than two years old. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Strong customer retention rates. Retention of our HSA Members has been consistent over time. Approximately 94% of all HSAs opened on our platform remained open as of January 31, 2015, and our annual HSA member retention rate was approximately 98% for the years ended January 31, 2015 and January 31, 2014. Individually owned trust accounts, including HSAs, have inherently high switching costs, as switching requires a certain amount of effort on the part of the account holder and results in closure fees. We believe that our retention rates are also high due to our technology platform's integration with the broader healthcare system used by our HSA Members and our focus on the consumer experience. Our Growth Strategy Our business model is defined by embedded growth from existing HSA Members and Network Partners, operating leverage and highly visible new revenue opportunities, giving us multiple avenues for long-term growth. Penetrate the large membership opportunity within our existing network. We generate recurring account fees, paid by health plans, employers or individuals, based on the number of our HSA Members. We estimate that we have penetrated less than 5% of our existing Health Plan Partners and 15% of our existing Employer Partners with HSAs. In addition, 57 of our 70 Health Plan Partners and 140 of our 270 Employer Partners were added in the past fiscal year. We expect our Health Plan Partners to eventually expand their coverage footprint as the uninsured begin purchasing coverage through state health insurance exchanges under the PPACA. Expand our network of Health Plan Partners and Employer Partners. We believe we are well-positioned to expand our network of Health Plan Partners and Employer Partners due to our growing market leadership, consistent innovation, open technology, and focus on the consumer experience. Our recent history is supportive of our ability to do this. Our market share has doubled from 4% in December 2010 to 9% in December 2014. During the year ended January 31, 2015 our new Network Partners included Advance Auto Parts, Boston Scientific, Blue Cross and Blue Shield of Idaho, Chiquita, Health Alliance Plan in Michigan, Reebok/Adidas and U.S. Roche. Increase our yield. The nature of our operating model drives significant incremental profitability from existing HSA Members' AUM. We refer to this as "increasing our yield." Opportunities to increase our yield include rising account balances, rising interest rates, and long-term investing. Grow payment volume. As the dollar volume of transactions processed through our platform grows, we generate more revenue with little incremental cost. Driving these additional charges to our payment cards would increase transaction revenues. Demonstrate operating leverage. We expect to drive increasing profitability from adding accounts through our existing network of Health Plan Partners and Employer Partners and servicing a larger number of mature accounts on our scalable platform. Our business model allows us to inexpensively add HSA Members through our existing Network Partners. Capitalize on the new opportunity in health insurance exchanges. We are well-positioned to address the additional opportunity created by both state and private health insurance exchanges. Our solutions are already integrated with partner health plan offerings in several state health exchanges. With regard to private exchanges, our solutions are already integrated with select partner health plans and exchange operators themselves. Finally, state and private exchanges are widely expected to spur the growth of new medical health plans, including from hospital-centered Accountable Care Organizations and state health "CO-OP" insurers capitalized through the PPACA. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, $0.0001 par value per share 4,140,000 $26.75 $110,745,000 $12,869 (1)Includes the aggregate offering price of additional shares that the Underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and is based on the average of the high and low sales price of the Registrant's common stock as reported on the NASDAQ Global Select Market on April 30, 2015. (3)The Registrant previously paid $8,175 of this amount in connection with the initial filing of this Registration Statement. Table of Contents Grow the HSA ecosystem. Our proven ability to innovate, large and growing HSA Member and Network Partner footprint, and high level of member engagement on our open technology platform together create a significant opportunity to expand our HSA ecosystem. We expect more third-party consumer solutions that want to be part of consumers' daily healthcare decision-making to leverage our platform to reach our members at relevant decision points. We also have the opportunity to internally develop solutions and offer these to our customers. Selectively pursue strategic acquisitions. We have a successful history of acquiring complementary assets and businesses that strengthen our platform and we expect to continue this growth strategy and are regularly engaged in evaluating different opportunities. We believe the nature of our competitive landscape provides a significant acquisition opportunity. Many of our competitors view their HSA businesses as non-core functions. We believe they will look to divest these assets and, in certain cases, be limited from making acquisitions due to depository capital requirements. Risks Related to Our Business
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+PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms HubSpot the Company, we, and our in this prospectus refer to HubSpot, Inc. and its consolidated subsidiary. HUBSPOT, INC. Overview We provide a cloud-based marketing and sales software platform that enables businesses to deliver an inbound experience. An inbound marketing and sales experience attracts, engages and delights customers by being more relevant, more helpful, more personalized and less interruptive than traditional marketing and sales tactics. Our software platform features integrated applications to help businesses attract visitors to their websites, convert visitors into leads, close leads into customers and delight customers, so that they become promoters of those businesses. These integrated applications include social media, search engine optimization, blogging, website content management, marketing automation, email, CRM, analytics and reporting. People have transformed how they consume information, research products and services, make purchasing decisions and share their views and experiences. Today, customers are blocking out the tactics from the traditional marketing and sales playbook, such as cold calls, unsolicited emails and disruptive advertisements. Customers are taking more control of the purchasing process by using technology, including search engines and social media, to research products and services. Despite this transformation, most businesses are using an outdated marketing and sales playbook that is essentially the same today as it was 10 years ago. To compete effectively, we believe businesses need to deliver an inbound experience by adopting new strategies and technologies to attract, engage and delight customers. We designed our all-in-one platform from the ground up to enable businesses to provide an inbound experience to their prospects and customers. At the core of our platform is a single inbound database for each business that captures its customer activity throughout the customer lifecycle. Our platform uses our centralized inbound database to empower businesses to create more personalized interactions with customers, such as personalized social media alerts, personalized websites, personalized emails and targeted alerts for sales people. We provide a comprehensive set of integrated applications on our platform, which offers businesses ease of use, power and simplicity. We designed and built our platform to serve a large number of customers of any size and with demanding use cases. While our platform can scale to the enterprise, we focus on selling to mid-market businesses, which we define as businesses that have between 10 and 2,000 employees, because we believe we have significant competitive advantages attracting and serving them. We efficiently reach these businesses at scale through our proven inbound go-to-market approach and more than 2,200 marketing agency partners worldwide. Our platform is particularly suited to serving the needs of mid-market business-to-business (B2B) companies. Mid-market businesses seek an integrated, easy to implement and easy to use solution to reach customers and compete with organizations that have larger marketing and sales budgets. As of December 31, 2014, we had 13,607 customers of varying sizes in more than 90 countries, representing almost every industry. We have a leading brand in the cloud-based inbound marketing and sales software industry. Our brand recognition comes from our thought leadership, including our blog, which attracts more than 1.5 million visits Table of Contents Table of Contents each month, and our commitment to innovation. Our founders, Brian Halligan and Dharmesh Shah, wrote the best-selling marketing book Inbound Marketing: Get Found Using Google, Social Media and Blogs. We also have one of the largest social media followings in our industry, and our INBOUND conference is one of the largest inbound industry events, with over 10,000 registered attendees in 2014. We sell our platform on a subscription basis. Our total revenue increased from $51.6 million in 2012, to $77.6 million in 2013 and to $115.9 million in 2014, representing year-over-year increases of 50% in 2013 and 49% in 2014. We had net losses of $18.8 million in 2012, $34.3 million in 2013 and $48.2 million in 2014. Industry Background and Our Market Opportunity Traditionally, most businesses have followed the same marketing and sales playbook to generate leads, close sales and provide support to their customers as they did 10 years ago. Businesses need a more effective way to attract, engage and delight customers who have access to an abundance of information and an ability to block traditional marketing and sales tactics. Businesses need to deliver an inbound experience, which enables them to be more helpful, more relevant and less interruptive to their customers. To deliver an inbound experience, businesses need to transform how they market, sell and serve customers. Marketing: Businesses need to attract potential customers by maximizing search engine rankings, having an engaging social media presence and creating and distributing useful and relevant content. Businesses need to personalize their customer interactions on websites, in social media and in emails to engage customers. Sales: Businesses need to build relationships with potential customers and become their trusted advisors. They must learn about and react to the signals being sent by customers through websites, social media and emails, to provide personalized and helpful responses. Service: Businesses need to delight their customers and inspire them to become vocal promoters by exceeding their expectations. Every customer has a stronger, more public voice today through blogs and social media, underscoring the importance of positive reviews and referrals in building a quality brand. We believe there is a large market opportunity created by the fundamental transformation in marketing and sales. Businesses of nearly all sizes and in nearly all industries can benefit from delivering an inbound experience to attract, engage and delight their customers. We focus on selling our platform to mid-market businesses. As of December 31, 2014, we had 13,607 customers, and in the fourth quarter of 2014, our average subscription revenue per customer (on an annualized basis) was $9,530. According to AMI Partners, in 2014, there were 1.6 million of these mid-market businesses with a website presence in the United States and Canada and 1.4 million in Europe. According to a January 2014 study by Mintigo of 186,500 U.S.-based B2B companies of varying sizes, only 3% of those companies had implemented any of the most common marketing automation applications. Existing Applications are Not Adequate for an Integrated Inbound Experience Not Designed for an Inbound Experience. Traditional marketing applications rely on advertising and cold calling for lead generation instead of inbound methods. These applications are not designed to personalize and optimize every interaction with customers on websites, in social media and by email across devices, and do not typically allow sales and service teams to see the signals their prospects are sending in real time. No Centralized Inbound Database of Customer Interactions. Businesses typically need to use one point application for website content management, a different point application for blogging, another point application for social media management, another point application for email and marketing automation, another point Table of Contents Table of Contents application for content personalization, another point application for analytics, another point application for sales management and CRM and yet another point application to alert salespeople of key customer signals in real time. This disparate collection of point applications makes it difficult to develop a 360-degree view of a customer s interactions. Difficult and Expensive to Implement and Use. Using a collection of disparate point applications means a separate implementation process for each, resulting in significant additional costs. Often businesses will need to use outside consultants or hire new employees with specific technical expertise to implement and use these different applications. This collection of applications also requires businesses to use a variety of different log-ins, user interfaces and support centers. Hard to Measure Results. Because all the customer touchpoints through the marketing, sales and service processes are typically stored in different disconnected point applications, it is very difficult to get a 360-degree view of a customer s interactions and measure the effectiveness of marketing and sales programs. Advantages of Our Solution Designed for an Inbound Experience. Our platform was architected from the ground up to enable businesses to transform their marketing and sales playbook to meet today s demands of their customers. Our platform includes integrated applications to help businesses efficiently attract more customers through search engine optimization, social media, blogging and other useful content while personalizing and optimizing interactions with their customers across customer touchpoints. Ease of Use of All-In-One Platform. We provide a set of integrated applications on a common platform, which offers businesses ease of use and simplicity. Our platform has one login, one user interface, one inbound database and one number to call for support, and is designed to be used by people without technical training. Power of All-In-One Platform. At the core of our platform is a single inbound database for each business that captures its customer activity throughout the customer lifecycle, which makes it easy for businesses to use customer data to empower more personalized interactions with customers. Clear ROI for Customers. Our platform delivers proven and measurable results for our customers. Our customers often experience significant increases in the volume of traffic to their websites, the volume of inbound leads and the rate of converting leads into customers. Scalability. Our platform was designed and built to serve a large number of customers of any size and with demanding use cases. Our scalability gives us flexibility for future growth and enables us to service a large variety of businesses of different sizes across different industries. Our Competitive Strengths Leading Platform. We have designed and built a world-class, inbound marketing and sales software platform. We believe our customers choose our platform over others because of its powerful, integrated and easy to use applications. As of December 31, 2014, on G2Crowd (an independent business software and services review website), the features and functions of our platform were ranked #1 in customer satisfaction in the following categories: marketing automation, social media management, email marketing and search marketing. Market Leadership and Strong Brand. We are a recognized thought leader in the marketing industry with a leading brand. Our founders, Brian Halligan and Dharmesh Shah, are best-selling marketing book authors. We also have over 1.2 million followers and fans among Twitter, Facebook and LinkedIn as of December 31, 2014. Table of Contents Table of Contents Large and Growing Agency Partner Program. More than 2,200 marketing agency partners worldwide help us to promote the vision of the inbound experience, efficiently reach new mid-market businesses at scale and provide our mutual customers with more diverse and higher-touch services. Mid-Market Focus. We believe we have significant competitive advantages reaching mid-market businesses and reach this market at scale as a result of our proven inbound go-to-market approach and our agency partner channel. Powerful Network Effects. We have built a large and growing ecosystem around our platform and company. We have built what we believe is the largest engaged audience in our industry. As our engaged audience grows, more agencies partner with us, more third-party developers integrate their applications with our platform and more professionals complete our certification programs, all of which drive more businesses to adopt our platform. Our Growth Strategy Grow Our U.S. Customer Base. The market for our platform is large and underserved. We will continue to leverage our inbound go-to-market approach and our network of marketing agency partners to keep growing our domestic business. Increase Revenue from Existing Customers. With 13,607 customers in more than 90 countries spanning many industries, we believe we have a significant opportunity to increase revenue from our existing customers. We plan to do this by expanding their use of our platform, selling to other parts of their organizations and upselling additional offerings and features. Keep Expanding Internationally. There is a significant opportunity for our inbound platform outside of the United States. As of December 31, 2014, approximately 22% of our customers were located outside of the United States and these customers generated approximately 21% of our total revenue for the year ended December 31, 2014. We intend to grow our presence in international markets through additional investments in local sales, marketing and professional service capabilities, as well as by leveraging our agency partner network. Continue to Innovate and Expand Our Platform. Mid-market businesses are increasingly realizing the value of having an integrated marketing, sales and service platform. We believe we are well positioned to capitalize on this opportunity by introducing new products and applications to extend the functionality of our platform. Selectively Pursue Acquisitions. We plan to selectively pursue acquisitions of complementary businesses, technologies and teams that would allow us to add new features and functionalities to our platform and accelerate the pace of our innovation. Risks Related to Our Business and Industry Our business, financial condition, results of operations and prospects are subject to numerous risks. These risks include: We have a history of losses and may not achieve profitability in the future. We are dependent upon customer renewals, the addition of new customers and the continued growth of the market for an inbound platform. If subscription renewal rates decrease, or we do not accurately predict subscription renewal rates, our future revenue and operating results may be harmed. Table of Contents Table of Contents We face significant competition from both established and new companies offering marketing software and other related applications, as well as internally developed software, which may harm our ability to add new customers, retain existing customers and grow our business. We have experienced rapid growth and organizational change in recent periods and expect continued future growth. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately. If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success and our business may be harmed. If we fail to maintain our inbound thought leadership position, our business may suffer. We rely on our management team and other key employees, and the loss of one or more key employees could harm our business. Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others. The concentration of our capital stock ownership with insiders following this offering is 53.4%, and will likely limit your ability to influence corporate matters including the ability to influence the outcome of director elections and other matters requiring stockholder approval. Corporate Information We were formed under the laws of the State of Delaware in 2005. Our principal executive offices are located at 25 First Street, 2nd Floor, Cambridge, Massachusetts 02141. Our telephone number is (888) 482-7768. We maintain a website at www.hubspot.com. The reference to our website is intended to be an inactive textual reference only. The information contained on, or that can be accessed through, our website is not a part of this prospectus. HubSpot, Social Inbox, the HubSpot sprocket design logo and certain other marks are our registered trademarks in the United States and several other jurisdictions. This prospectus contains additional trade names, trademarks, and service marks of other companies, and such tradenames, trademarks and service marks are the property of their respective owners. We do not intend our use or display of other companies trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Table of Contents TABLE OF CONTENTS Page Prospectus summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in or incorporated by reference into this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations," in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to "us," "our," "Intellicheck Mobilisa," "we," the "Company" and similar designations refer to Intellicheck Mobilisa, Inc. Business Overview We are a technology company engaged in developing, integrating and marketing wireless technology and identity systems for various applications including mobile and handheld access control and security systems for the government, military and commercial markets. Our products include the Defense ID and Fugitive Finder systems, advanced ID card access control products currently protecting military and federal locations, and ID-Check, a patented technology that instantly reads, analyzes, and verifies encoded data in magnetic stripes and barcodes on government-issue IDs from U.S. and Canadian jurisdictions designed to improve the customer experience for the financial, hospitality and retail sectors. We are also engaged in the engineering, design and installation of wireless communications systems. We plan to expand our business in the near term by pursuing a research and development strategy designed to move our technologies into new product markets that are expected to benefit from enhanced safety, regulatory compliance and fraud prevention. For example, we anticipate extending our technologies into the healthcare and first responder spaces and to online applications to provide enhanced safety, regulatory compliance and fraud prevention for the billions of transactions that occur there each day. As a complement to these new offerings, we are also developing a data analytics platform to analyze the data we capture and to provide meaningful data, trend and predictive analysis to a variety of customers in the commercial and government spaces. We plan to leverage our IP in the new markets we are targeting to strengthen our competitive position. Our primary businesses include Identity Systems products, which include commercial applications of identity card reading and verification and government sales of defense security and identity card applications, and the development of wireless security applications. Our technologies address problems such as: Commercial Fraud and Risk Management – which may lead to economic losses to merchants from check cashing, debit and credit card, as well as other types of fraud such as identity theft that principally use fraudulent identification cards as proof of identity; Instant Credit Card Approval – retail stores use our technology to scan a Driver s License at a kiosk or at the Point Of Sale (POS) and send the information to a credit card underwriter to get instant approval for a loyalty-branded credit card. This technique protects consumer data and is significantly more likely to result in a completed transaction compared to in-store personnel asking customers to fill out a paper form; Unauthorized Access – our systems and software are designed to increase security and deter terrorism at airports, shipping ports, rail and bus terminals, military installations, high profile buildings and infrastructure where security is a concern; Inefficiencies Associated With Manual Data Entry – by reading encoded data contained in the bar code and magnetic stripe of an identification card with a quick swipe or scan of the card, where permitted by law, customers are capable of accurately and instantaneously inputting information into forms, applications and the like without the errors associated with manual data entry; Marine Environment Communications – our Wireless Over Water technology allows for instant communication between multiple points, both on land and at sea, across wide, over-water expanses and optimizes performance by taking into account sea state and Fresnel zones (Fresnel zones result from obstructions in the path of radio waves and impact the signal strength of radio transmissions); and Wireless Network Design and Hazard Assessment – our AIRchitect tool designs optimum wireless networks based on user parameters and location architecture, and our Radiation Hazard (RADHAZ) tool identifies and assesses radio frequency (RF) exposure. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to completion Dated January 8, 2015 Shares Common Stock We are offering up to shares of common stock pursuant to this prospectus to be sold in this offering. Our common stock is listed on the NYSE MKT LLC under the symbol "IDN." On January 7, 2015, the last reported sale price of our common stock was $2.66 per share. Our business and an investment in our securities involves a high degree of risk. See "Risk Factors" beginning on page 4 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) Does not include a non-accountable expense allowance equal to 0.5% of the gross proceeds of this offering payable to Aegis Capital Corp., the representative of the underwriters. See "Underwriting" for a description of compensation payable to the underwriters. We have granted a 45-day option to the representative of the underwriters to purchase up to additional shares of common stock solely to cover over-allotments, if any. The underwriters expect to deliver our shares to purchasers in the offering on or about , 2015. Aegis Capital Corp TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. You should read the following summary together with the more detailed information about our company and the common stock being registered in this offering and our financial statements and the notes to those statements included elsewhere in this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account References in this prospectus to "we," "our," "us", "IEC" and the "Company" refer to International Endeavors Corporation. Organizational History International Endeavors Corporation was incorporated in the state of Nevada on May 7, 2014. We were formed to develop businesses, assets and opportunities, with a focus on the location and acquisition of income producing properties in Temecula, California s wine country for Recreational Vehicle (RV) Resort vacation space rentals, income derived from grape production and resale, wine production and resale, and wholesale wine distribution and wine tours. The Company plans to integrate its RV space rentals with vineyards and wine tours for the goal of offering its clientele a different experience. In addition the company has initiated the development of an APP for wine tasting and wine tours in the Southern California area. Introduction The Company has only an, approximately, seven (7) month operating history at the period ended December 31, 2014. We have acquired 10 acres of land in the Wine district of Temecula Valley Wine country of Southern California for Recreational Vehicles to lease as vacation rental spaces. In addition we plan to plant a small vineyard on location more as an attraction to the site than as a viable wine production vineyard. We plan on harvesting grapes from the vineyard for our private labeled wines to offer to our customers as well as for sale through our website and local establishments. We believe that focusing on land acquisition in the area for supporting the tourism industry that the Temecula wine country has developed can be a profitable and expanding business. In addition we plan on expanding land acquisition in the Temecula Valley area for vineyard development and we anticipate private labeling wines acquired from local vineyards. We are also in process of developing an APP for the wine industry specifically for the local area of Southern California which will focus on local wine tours, vineyards and local wines. Company Assets The Company's principal assets ("Assets") consist of cash, and title and rights to a ten acre parcel of land in the Wine district of Temecula Valley Wine country of Southern California. All of the Company's income to date has been generated from the leasing of RV spaces on our property. It is management's opinion that the assets it has, including cash, and land and certain business concepts will adequately capitalize the Company for the next twelve (12) months. The Company intends to develop, operate and capitalize the Assets, as well as to create new products for distribution, to form an ongoing and diverse entity. Company Cash Flow The Company has cash assets derived from income generated from the leasing of RV spaces on its property and a private placement of its stock. Assuming the Company does not generate any additional income from the sale or production and distribution of current products it still may have sufficient cash to operate for the next twelve (12) months. For the period from its inception (May 7, 2014) through December 31, 2014 the Company had gross revenues of $30,000. Future Assets and Growth We will continue to generate limited future income from our assets, however, we cannot provide absolute assurances or estimates of these revenues. The Company had a net income loss of ($177,253) at the year ended December 31, 2014 and a net loss of ($91,784) at the six months ended June 30, 2015. The Company anticipates it may operate at a deficit for its next fiscal years and may expend most of its available capital. The Company's cash on hand is, primarily, budgeted to market its RV property, initiate the establishment of a vineyard, private label wines, complete the development of its APP and for various administrative costs associated with developing and operating the businesses going forward including costs for legal, accounting and Transfer Agent services. We believe that the Company may have sufficient capital to operate its businesses over the next twelve (12) months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from our existing assets will be adequate to maintain our businesses. The RV property and wine and vineyard industries are extremely competitive industries dominated by numerous very large, fully integrated conglomerates. The World Wide Web is having a significant impact on this industry as well. The Company's management plans on attempting to develop strategies and opportunities that will allow us to compete in this environment. The Company is building its business model cognizant of these market realities and management will be attempting to use and capitalize upon emerging technologies to deliver and market its products. Our business model is predicated on the assumption that we can continue to generate multiple revenue streams from our existing assets and from land and products we intend to develop, produce and distribute over the next fiscal year and that we can, successfully, manage our costs by capitalizing on new and emerging digital technologies, business developments and our management. The Company anticipates it may lose additional capital in its next, full year of operation and recognizes that it will require raising additional capital to develop its concepts. The Company may plan on filing for a Secondary offering of its stock in 2015-2016 to raise capital for its projects and concepts which will result in further dilution to shareholders. The Company's primary manager, its CEO, Nate Engel, has limited experience and expertise in the industry and has no experience operating a public company. The Company will continue to seek consultation from those persons more adept in the RV property and vineyard and wine industries possibly as a director, employee, or outside consultant. Until such time as the Company is more established and capitalized, we will not be able to employ any personnel on a full time basis. FOUNDING SHAREHOLDERS The following individuals and entities are considered founding shareholders of our Company. Class Name Shares Percentage Common Nate Engel (1) 4,086,000 33% Common Mary Davis (2) 3,500,000 29% (1) (2) Nate Engel, is the CEO Mary Davis is the Secretary Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.50 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be registered. $0.50 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the over-the-counter (OTC) markets or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in each case included elsewhere in this prospectus. Unless otherwise stated or the context requires otherwise, references in this prospectus to "IVFH", Innovative , Innovative Foods , the "Company", "we", "us", or "our" refer to Innovative Food Holdings, Inc. and its subsidiaries, unless the context requires otherwise. SUMMARY This summary highlights information contained elsewhere in this prospectus and in filings with the Securities and Exchange Commission incorporated by reference. You should carefully read the entire prospectus, including Risk Factors beginning on page 1, as well as any accompanying prospectus supplement and the documents incorporated herein and therein, before investing in our common stock. Innovative Food Holdings, Inc. Our History We (or the Company ) were initially formed in June 1979 as Alpha Solarco Inc., a Colorado corporation. From June 1979 through February 2003, we were either inactive or involved in discontinued business ventures. We changed our name to Fiber Application Systems Technology, Ltd in February 2003. In January 2004, we changed our state of incorporation by merging into Innovative Food Holdings, Inc. (IVFH), a Florida corporation formed for that purpose. As a result of the merger, we changed our name to Innovative Food Holdings, Inc. In January 2004, we also acquired Food Innovations, Inc. ( FII or Food Innovations ), a Delaware corporation, for 500,000 (post reverse-split) shares of our common stock. On May 18, 2012, the Company executed a Stock Purchase Agreement to acquire all of the issued and outstanding shares of Artisan Specialty Foods, Inc., an Illinois corporation ( Artisan ), from its owner, Mr. David Vohaska. The purchase price was $1.2 million, with up to another $300,000 (with a fair value of $131,000) payable in the event certain financial milestones were met over the next one or two years. Those milestones have been met. The purchase price was primarily financed via a loan from Alpha Capital in the principal amount of $1,200,000. The loan was repaid in November 2013 via the issuance of a loan from Fifth Third Bank. Prior to the acquisition, Artisan was a supplier and had sold products to the Company. On November 2, 2012, the Company entered into an asset purchase agreement (the Haley Acquisition ) with The Haley Group, LLC whereby we acquired all existing assets of The Haley Group, LLC. The Haley Acquisition was valued at a total cost of $119,645. On June 30, 2014, pursuant to a purchase agreement, the Company purchased 100% of the membership interest of Organic Food Brokers, LLC, a Colorado limited liability company ( OFB ), for $300,000, 100,000 options and up to an additional $225,000 in earn-outs if certain milestones are met. On August 15, 2014, pursuant to a merger agreement, the Company acquired The Fresh Diet, Inc. ( The Fresh Diet or FD ) with FD becoming a wholly-owned subsidiary of the Company. The purchase price consisted of 10,000,000 shares of the Company s common stock valued at $14,000,000. During the first quarter of 2015, the Company cancelled 3,110,063 of these shares with a value of $4,354,088 in exchange for a cash payment of $3,000,000 to certain former shareholders of FD. At the time of acquisition, the majority of FD s current liabilities consisted of approximately $3.8 million of deferred revenues and approximately $2.1 million in short term commercial loans and there were additional ordinary course of business expenses such as trade payables, payroll and sales taxes which vary from month to month. In addition, it had some long term obligations the bulk of which consist of interest free loans from FD s former shareholders in the amount of approximately $2.2 million which are not due until 2017. Prior to the merger FD had purchased an immaterial amount of product from the Company. FD operates as an independent subsidiary subject to oversight of its board of directors and the Company s President and CEO. Table of Contents Our Operations Our business is currently conducted by our wholly-owned subsidiaries, Artisan, Food Innovations, Food New Media Group, Inc. ( FNM ), OFB, Gourmet Food Service Group, Inc. ( GFG ), Gourmet Foodservice Warehouse, Inc., Gourmeting, Inc.; The Fresh Diet, The Haley Group, Inc. ( Haley ), 4 The Gourmet, Inc. (d/b/a For The Gourmet, Inc.), ( Gourmet and collectively with IVFH and its other subsidiaries, the Company or IVFH ). Since its incorporation, the Company, primarily through FII s relationship with US Food, Inc. ( US Foods or USF ), has been in the business of providing premium restaurants, within 24 72 hours, with the freshest origin-specific perishables, specialty food products, and healthcare products shipped directly from our network of vendors and from our warehouses. Our customers include restaurants, hotels, country clubs, national chain accounts, casinos, hospitals and catering houses. Gourmet has been in the business of providing consumers with gourmet food products shipped directly from our network of vendors and from our warehouses within 24 72 hours. GFG is focused on expanding the Company s program offerings to additional customers. In our business model, we receive orders from our customers and then work closely with our suppliers and our warehouse facilities to have the orders fulfilled. In order to maintain freshness and quality, we carefully select our suppliers based upon, among other factors, their quality, uniqueness, reliability and access to overnight courier services. Artisan is a supplier of over 1,500 niche gourmet products to over 500 customers such as chefs and restaurants in the Greater Chicago area and also serves as a national fulfillment center for the Company s other subsidiaries. Haley is a dedicated foodservice consulting and advisory firm that works closely with companies to access private label and manufacturers label food service opportunities with the intent of helping them launch and commercialize new products in the broadline foodservice industry and get products distributed via national broadline food distributors. Haley also provides consulting services and other solutions to its clients in the food industry. OFB is a dedicated foodservice consulting and advisory firm that works closely with companies to access private label and manufacturers label food service opportunities with the intent of helping them launch and commercialize new products in the retail foodservice industry and provides emerging food brands distribution and shelf placement access in all of the major metro markets in the food retail industry. The Fresh Diet is the nationwide leader in freshly prepared health and wellness gourmet specialty meals, using the finest specialty, artisanal, direct from source ingredients, delivered daily, directly to consumers using The Fresh Diet platform. The Fresh Diet s platform includes a company managed or owned preparation and logistics infrastructure, including a comprehensive company managed network of same day and next day last mile food delivery capabilities in 12 states, 44 metropolitan areas, and 573 cities and towns across the Unites States. Our Products We distribute over 7,300 perishable and specialty food products, including origin-specific seafood, domestic and imported meats, exotic game and poultry, artisanal cheeses, freshly prepared meals, caviar, wild and cultivated mushrooms, micro-greens, organic farmed and manufactured food products, estate-bottled olive oils and aged vinegars. We are constantly adding other products that many food distributors cannot effectively warehouse, including organic products and specialty grocery items. We offer our nationwide customers access to the best food products available from around the world, quickly, most direct, and cost-effectively. Some of the items we sell include: Seafood - Alaskan wild king salmon, Hawaiian sashimi-grade ahi tuna, Gulf of Mexico day-boat snapper, Chesapeake Bay soft shell crabs, New England live lobsters, Japanese hamachi Meat & Game - Prime rib of American kurobuta pork, dry-aged buffalo tenderloin, domestic lamb, Cervena venison, elk tenderloin Produce - White asparagus, baby carrot tri-color mix, Oregon wild ramps, heirloom tomatoes Poultry - Grade A foie gras, Hudson Valley quail, free range and organic chicken, airline breast of pheasant Specialty - Truffle oils, fennel pollen, prosciutto di Parma, wild boar sausage Mushrooms -Fresh morels, Trumpet Royale, porcini powder, wild golden chanterelles Cheese -Maytag blue, buffalo mozzarella, Spanish manchego, Italian gorgonzola dolce UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents The Fresh Diet offers consumers meal delivery of three prepared meals and two snacks per day. Meals are nutritionally balanced, freshly prepared daily from the highest quality ingredients and are never frozen, freeze-dried or vacuum packed. An online meal planner gives the consumer hand-on control over the diet meal based on Traditional and Specialty Diets. Traditional plans include Fresh Classic and Premium Plan, while Specialty Diets include Fresh Vegetarian, Gluten-Free and Doctor s Fresh Plans. Each plan offers a different rate of customization, allowing the consumer to check off foods they don t like, customize their dietary preferences and schedule delivery online. Customer Service and Logistics Our live chef-driven customer service department is available by telephone Monday through Thursday, from 8 a.m. to 6 p.m. and on Friday from 8 a.m. to 5 p.m., Florida time. The customer service department is made up of a team of chefs and culinary experts who are full-time employees of the Company, and who are experienced in all aspects of perishable and specialty products. By employing chefs and culinary experts to handle customer service, we are able to provide our customers with extensive information about our products, including: Flavor profile and eating qualities Recipe and usage ideas Origin, seasonality, and availability Cross utilization ideas and complementary uses of products Our logistics team tracks every package to ensure timely delivery of products to our customers. The logistics manager receives tracking information on all products ordered, and packages are monitored from origin to delivery. In the event that delivery service is interrupted, our logistics department begins the process of expediting the package to its destination. The customer is then contacted before the expected delivery commitment time allowing the customer ample time to make arrangements for product replacement or menu changes. Our logistics manager works directly with our vendors to ensure our strict packaging requirements are in place at all times. Customer service and sales teams at The Fresh Diet are available by telephone Monday through Friday from 8 a.m. to 9 p.m. and on Saturday and Sunday from 9 a.m. to 6 p.m. Customer service representatives provide assistance and support to customers as it relates to their dietary and meal preferences, as well as resolve any client inquiries and concerns. Customer services works closely with the sales team to ensure that customers are properly set up and receive the most accurate information about company s products and services. Customer service team also includes certified nutritionists that guide customers in creating a plan that is specifics to their dietary needs. The Fresh Diet meals are prepared and delivered out of five culinary centers across the United States New York, Los Angeles, Miami, Chicago and Dallas. Each culinary center is led by a General Manager who provides business oversight and is directly responsible for the performance of that culinary center. Meals are delivered through The Fresh Diet company managed delivery network to 12 states, 44 metropolitan areas and 573 cities and towns nationwide. Relationship with US Foods We have historically sold the majority of our products, $18,446,745 and $16,993,108 for the years ended December 31, 2014 and 2013, respectively (60% and 75% of total sales in the years ended December 31, 2014 and 2013, respectively) through a distributor relationship between FII and Next Day Gourmet, L.P., a subsidiary of US Foods, a leading broadline distributor. On January 26, 2015 we executed a Vendor Program Agreement between Food Innovations, Inc., our wholly-owned subsidiary, and US Foods. The term of the Agreement is from January 1, 2015 through December 31, 2016 and provides for up to three (3) automatic annual renewals thereafter if no party gives the other 30 days notice of its intent not to renew. The Selling Security Holders The shares are being offered for sale through this prospectus by the Selling Security Holders. The proceeds of all such sales will inure to the sellers and not to the Company. FORM S-1 Amendment No. 2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Implications of Being a Smaller Reporting Company As a company with less than $75 million public float, we qualify as a smaller reporting company as defined by the Securities and Exchange Commission ( SEC ). A smaller reporting company may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to: being permitted to present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended; reduced disclosure obligations regarding risk factors, executive compensation in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may use these provisions until the first day of our fiscal year following the year in which at the end of the second quarter we had a public float of at least $75 million held by non-affiliates. We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. Our Corporate Information Our principal executive offices are located at 28411 Race Track Road, Bonita Springs, Florida 34135. Our telephone number is (239) 596-0204. Our Internet website address is www.foodinno.com. The contents of the website are not part of this prospectus, nor is any of its content incorporated herein. The Offering Issuer Innovative Food Holdings, Inc. Seller The selling security holders. For information about the selling security holder, see Selling Security Holders. We are not selling the securities to the public. Securities Offered 8,957,901 shares of our common stock, par value $0.0001.(1) Common Stock to be Outstanding Before and After the Offering (2) 22,622,784 shares. Registration Rights We intend to use our best efforts to keep the registration statement, of which this prospectus forms a part, effective until the earlier to occur of (i) the date on which the registered shares are disposed of in accordance with this prospectus or (ii) the date when all of the registered shares can be immediately sold to the public without registration or restriction. However, we are under no obligation to do so. Trading Our common stock trades on the OTCQB under the symbol IVFH.
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+Prospectus Summary 1
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+This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors and our financial statements and the related notes, before deciding to buy shares of our common stock. Unless the context requires otherwise, references in this prospectus to Carbylan Therapeutics, we, us and our refer to Carbylan Therapeutics, Inc. Overview We are a clinical-stage specialty pharmaceutical company focused on the development and commercialization of novel and proprietary combination therapies that address significant unmet medical needs. Our initial focus is on the development of Hydros-TA, our proprietary, potentially best-in-class intra-articular, or IA, injectable product candidate to treat pain associated with osteoarthritis, or OA, of the knee. Current joint injection, or intra-articular, treatments for OA pain include corticosteroids, which provide short-term relief, and viscosupplements, which provide relief over the longer-term. In contrast, Hydros-TA utilizes our proprietary cross-linking technology to deliver both rapid pain relief with a low dose corticosteroid triamcinolone acetonide, or TA, and sustained pain relief from our novel hyaluronic acid viscosupplement. In our Phase 2b study of 98 patients, though not designed to show statistical significance, Hydros-TA demonstrated better pain reduction at all time points measured than Synvisc-One, the U.S. market-leading viscosupplement. We are currently studying Hydros-TA in our COR1.1 trial, a Phase 3, multi-center, international, randomized, double-blind, three-arm trial enrolling up to 510 patients with grade two and grade three OA of the knee, comparing treatment with Hydros-TA to treatment with Hydros and with TA, on a standalone basis. As of March 31, 2015, approximately 350 subjects have been enrolled in COR1.1. We expect to initiate COR1.2, our second Phase 3 trial, open an investigational new drug application, or IND, and begin to enroll U.S. patients in COR1.2 in mid-2015. We anticipate reporting primary endpoint results from COR1.1 in early 2016 and COR1.2 by the end of 2016 and submitting our new drug application, or NDA, for Hydros-TA in early 2017. We believe that Hydros-TA will be well-positioned to become a leader in the OA injectable market, if we are able to demonstrate that Hydros-TA provides both rapid and sustained pain relief over a six month period. We own the global development and commercialization rights to Hydros-TA, except in China, Taiwan, Hong Kong and Macau. We plan to commercialize Hydros-TA in the United States and, through partners, in the rest of the world. Following NDA approval in the United States, we expect to commercialize Hydros-TA using a small, 50 to 100 person specialty sales force targeting orthopedic surgeons, rheumatologists and pain specialists, the primary prescribers of IA steroids and viscosupplements. We have two issued U.S. patents and seven issued non-U.S. patents, the earliest of which will expire in 2030, and 18 patent applications worldwide covering our Hydros platform technology, including claims directed to composition of matter, methods of use and product-by-process. Osteoarthritis Overview OA is a joint disorder involving the degradation of the IA cartilage, joint lining, ligaments and, ultimately, underlying bone. OA results in inflammation of the soft tissue and bony structures of the joint, which worsens over time and leads to progressive thinning of articular cartilage. Symptoms of this disease include pain, stiffness, swelling and limitation in the function of the joint. There is no known way to reverse the progression of OA and while there are a number of therapeutic options to treat the pain associated with OA, the disease typically continues to advance. We believe that the versatility provided by our proprietary cross-linking combination will Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated April 6, 2015 PRELIMINARY PROSPECTUS 12,000,000 Shares Carbylan Therapeutics, Inc. Common Stock $ per share This is the initial public offering of our common stock. Prior to this offering, there has been no public market for our common stock. We currently expect the initial public offering price to be $5.00 per share of common stock. Our common stock has been approved for listing on The NASDAQ Global Market under the symbol CBYL. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, and, as such, we have elected to take advantage of certain reduced reporting requirements for this prospectus and may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves risks. See Risk Factors beginning on page 11. Per Share Total Initial Public Offering Price $ $ Underwriting Discount and Commissions(1) $ $ Proceeds to Carbylan (before expenses) $ $ (1) We refer you to Underwriting beginning on page 143 for additional information regarding underwriting discounts, commissions and estimated offering expenses. We have granted the underwriters an option to purchase up to 1,800,000 additional shares of common stock. The underwriters can exercise this right at any time within 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company. Leerink Partners JMP Securities Wedbush PacGrow Life Sciences , 2015 Table of Contents Market, Industry and Other Data This prospectus also contains estimates, projections and other information concerning our industry, our business and the markets for osteoarthritis treatments, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which this data are derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph are derived from the same sources, unless otherwise expressly stated or the context otherwise requires. Trademarks This prospectus contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the or TM symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Table of Contents enable Hydros-TA to potentially address current shortcomings in the OA pain relief treatment spectrum for the knee, as well as address pain in other joints affected by OA, such as hip, shoulder, spine and ankle joints. In the United States, there are over 27 million patients with OA, and approximately half of all adult patients will develop symptomatic OA of the knee. According to Millennium Research Group, in 2012, 1.65 million IA knee injections of hyaluronic acid, or HA, were administered. In the same year, worldwide sales of HA were approximately $1.76 billion, $726 million of which came from the United States. Limitations of Current Treatments OA severity is generally graded on a scale from one to four. When OA advances and oral or topical drug treatments are not sufficient to effectively address the associated pain, physicians often turn to IA treatments, such as corticosteroids, commonly known as steroids, and HA viscosupplements. While steroid injections can provide rapid pain relief, they generally provide only short-term pain relief of two to four weeks post injection. On the other hand, while HA injections can often provide long-term pain relief of up to approximately six months, they do not generally begin to provide peak pain relief until five weeks post injection. The following graph sets out what we believe to be the standard treatment progression for the treatment of OA pain in the knee: Despite the use of currently available treatments, many OA patients experience persistent and worsening pain. Joint replacement surgery, often referred to as total knee arthroplasty, or TKA, is generally the last option for the treatment of OA. Compared to other treatments, this invasive surgery is an expensive option, with an initial surgical procedure cost of approximately $33,000 to $40,000. With patients receiving TKAs more frequently at a younger age, surgery to replace a previously performed TKA, known as a revision surgery, is increasingly common. Revision surgeries are not only more costly, at approximately $74,000, they are also associated with significantly higher morbidity and failure rates than the initial TKA surgery. Due to the expense of surgery and the limitations of treatments administered to prevent such surgeries, there exists a need for an alternative treatment that could provide both rapid and sustained relief from OA pain and potentially delay the need for joint replacement surgery. Our Solution Hydros-TA Hydros-TA is a combination IA product, designed to provide both rapid and sustained pain relief with a single 6 ml intra-articular injection comprised of 52 mg of bacterially derived HA and 10 mg of TA. Rapid relief is provided from our low dose steroid component and sustained pain relief, up to six months, is provided from our proprietary HA component. Hydros-TA is comprised of bacterially derived HA-based hydrogel particles suspended in a solution of hyaluronic acid. The hydrogel particles contain the steroid, TA, which is entrapped within these particles. The dose of TA used in Hydros-TA is 10 mg, which is one quarter of the dose of TA that is often given clinically for Table of Contents IA injections into the knee. We believe the incorporation of a low dose steroid into Hydros-TA provides a means of rapid pain relief currently missing from commercially-available HA. We believe that a clinically-proven and FDA-approved combination Hydros-TA product will provide a compelling alternative to sequential injections of steroids and viscosupplements. Hydros-TA Clinical Program Our completed Phase 2b clinical trial of Hydros-TA, known as COR1.0, was a prospective, multicenter, randomized, double-blind feasibility study to evaluate the safety and performance of Hydros-TA in subjects with OA of the knee. As is typical for OA clinical studies, our studies are designed using the Western Ontario and McMaster Universities Osteoarthritis Index, or WOMAC, which is a validated and accepted instrument developed to assess and quantify pain, joint stiffness and disability related to OA of the knee and hip. Our studies also utilize standardized criteria to define the number and percentage of defined positive strict responders (>50% and >20 mm improvements in WOMAC A (pain) or WOMAC C (function) scores, respectively, over baseline) in our clinical studies. Our COR1.0 trial was conducted in eight clinical centers in Canada, Europe and the Caribbean with a total of 98 enrolled subjects that were treated and followed for six months thereafter. These subjects were randomized 1:1:1 to three study treatment arms: Hydros-TA, Hydros (the viscosupplement without steroid) and Synvisc-One (the U.S. market leading HA viscosupplement). In our primary endpoint, WOMAC pain score, pain reduction from baseline was observed in all treatment groups, however, Hydros-TA provided greater pain reduction compared to Synvisc-One at all study time points, as well as over the full study follow-up period of 26 weeks. Though we did not design our COR1.0 trial to enroll a sufficient number of patients to demonstrate statistical significance generally, the separation of pain reduction scores between Hydros-TA and Hydros was large enough to demonstrate statistical significance at the two week measurement point with the number of patients actually enrolled. Though statistical significance was not achieved at any other time point and in any other comparison of treatment arms, the separation between Hydros-TA and Synvisc-One represented approximately 10% of the baseline score, a numerical amount generally considered clinically meaningful and, we believe, not often seen in viscosupplementation trials with active comparators. For our secondary endpoints, WOMAC B (stiffness), WOMAC function, and responder rate, we saw a similar trend of improved outcomes with Hydros-TA compared to Synvisc-One. In addition, Hydros-TA was generally well-tolerated with fewer product-related adverse events reported than Synvisc-One. The following table represents the COR1.0 trial baseline scores for each of the treatment groups, as well as the WOMAC pain score least square mean reductions from baseline over the full 26 week evaluation period, as well as at the 2, 6, 13 and 26 week time points post injection. The estimated difference between the treatment groups is also represented. Time Point Synvisc-One n=32 Hydros n=32 Hydros-TA n=34 Extra Pain Reduction Hydros vs. Synvisc-One Extra Pain Reduction Hydros-TA vs. Hydros Extra Pain Reduction Hydros-TA vs. Synvisc-One Baseline 66.4 68.1 69.4 N/A N/A N/A 2 weeks -28.5 -23.3 -35.6 5.2 -12.4 -7.2 6 weeks -25.6 -32.4 -33.4 -6.7 -1.1 -7.8 13 weeks -29.0 -33.9 -33.3 -4.9 0.6 -4.3 26 weeks -28.9 -32.4 -35.2 -3.5 -2.8 -6.3 Overall -28.0 -30.5 -34.4 -2.5 -3.9 -6.4 Since TA is an approved product in different pharmaceutical preparations, we will rely on the FDA s prior findings of safety and efficacy for TA and, thus, the Hydros-TA new drug application, or NDA, will benefit from Table of Contents being filed under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, or the FDCA, by eliminating the need for certain pre-clinical safety studies of TA. Hydros is considered a new molecular entity, or NME, and we are required to complete full pre-clinical testing to assure its safety profile. However, since Hydros-TA is our product candidate, not Hydros alone, in order to obtain regulatory approval of Hydros-TA, Hydros will not have to undergo any clinical testing independent of the Hydros-TA studies. We are required to complete two Phase 3 clinical trials and one safety trial in order to satisfy the requirements for the demonstration of safety and efficacy of Hydros-TA in our initial indication for OA pain in the knee. We have designed and implemented our Hydros-TA Phase 3 program in close communication with the FDA. Based upon these discussions, we are enrolling our COR1.1 trial and preparing to enroll our COR1.2 trial, based upon the following study designs: COR1.1: The first of our two pivotal Phase 3 trials began enrollment in mid-January 2014. We are actively enrolling up to 510 subjects (of which approximately 350 patients have been enrolled as of March 31, 2015) at approximately 30 sites in Australia, Canada, New Zealand, Europe and the Caribbean. Subjects with OA grade two and grade three are randomized equally between three treatment arms: Hydros-TA, Hydros and TA. The objective of the trial is to demonstrate the safety and efficacy of Hydros-TA and the contribution of each of the two components in the Hydros-TA therapy. Our inclusion and exclusion criteria are designed to reduce the potential for placebo effect and to screen out non-responders where possible. The primary comparisons measure changes in pain under the WOMAC pain scale of Hydros-TA versus Hydros at two weeks and Hydros-TA versus TA at 26 weeks. Secondary endpoints include WOMAC function changes, subject and physician global assessment and responder rate. We expect top-line data from this trial in early 2016. COR1.2: The second of our two Phase 3 trials is scheduled to begin enrollment in mid-2015. We plan to enroll approximately 340 subjects at 20 to 30 sites in the United States, Australia, Canada and Europe. Subjects with OA grade two and grade three will be randomized equally between two treatment arms: Hydros-TA and TA. The objective of the trial will be to demonstrate the superiority of Hydros-TA compared to TA at 26 weeks post injection by measuring the change from baseline on the WOMAC pain scale. Secondary endpoints will include changes in WOMAC function, subject and physician global assessment and responder rate. We expect top-line data from this trial by the end of 2016. COR1.3: In addition to the COR1.1 and COR1.2 trials required for approval, we will need to collect safety data from an additional 400 to 450 patients, which will provide us with approximately 800 patients to make up our safety database. This trial will be conducted as a non-randomized, non-blinded trial. Patients who are screen failures for the COR1.1 and COR1.2 trials may be candidates for inclusion in this open-label trial. Our Strategy We intend to develop and commercialize novel and proprietary combination therapies for patients with osteoarthritis. The core principles of our strategy are to: Successfully complete our Phase 3 clinical trials for Hydros-TA and obtain FDA approval to market Hydros-TA. We are actively enrolling patients internationally in COR1.1, our first Phase 3 clinical trial of Hydros-TA for the treatment of OA pain in the knee. During meetings with the FDA, we addressed elements of our development plan for Hydros-TA and the FDA indicated that COR1.1 appears adequately designed to constitute a Phase 3 trial. We expect to initiate COR1.2, our second Phase 3 trial, open an IND and begin to enroll U.S. patients in COR1.2 in mid-2015. We anticipate reporting primary endpoint results from COR1.1 in early 2016 and COR1.2 by the end of 2016 and submitting our NDA for Hydros-TA in early 2017. Table of Contents Expand our Hydros-TA therapy to treat OA pain in additional joints. We believe Hydros-TA is a platform therapy for treating OA pain in multiple joints in the body. While our initial focus is on OA pain in the knee, we intend to use a portion of the proceeds of this offering to accelerate our development of Hydros-TA for the treatment of OA pain in the hip, shoulder, ankle, spine and other joints in the body. We do not believe that Hydros-TA will require reformulation to be used in additional joints affected by OA. Build commercial capabilities in the United States and selectively partner outside of the United States to maximize the value of Hydros-TA. We intend to commercialize Hydros-TA, if approved, in the United States through our own focused sales force of approximately 50 to 100 sales people, which we will build in connection with U.S. approval of Hydros-TA. We have partnered commercial rights for Hydros-TA in China, Taiwan, Hong Kong and Macau to Shanghai Jingfeng Pharmaceutical Co., Ltd. In other international markets, we intend to partner with established pharmaceutical companies to maximize the value of Hydros-TA without the substantial investment required to develop independent sales forces in those geographies. Utilize our strong management team s expertise to develop and commercialize Hydros-TA and other novel combination products. Our management team has extensive experience in designing and implementing efficient and effective drug development programs, and in building sales forces and bringing new therapies to market. We intend to maintain an organizational structure designed to allow us to cost-effectively advance our development and commercialization plans.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms the "Company," "Texmunication Holdings," "we," "us," "our," and "our company" refer to Textmunication Holdings, Inc., a Nevada corporation. We are a developing player in the mobile marketing and loyalty industry, providing cutting-edge mobile marketing solutions, rewards and loyalty to our clients. With a powerful yet intuitive suite of services, clients are able to reach more customers faster and reward them for repeat business. We help clients reach their marketing and revenue goals by educating clients with the most effective tools in mobile marketing, rewards, paperless redemption and loyalty. We began providing SMA text advertising in 2009 to small businesses, including bars, salons, restaurants and medical professionals. We have changed our strategy and decided that instead of directing our energy on smaller businesses we will focus on larger chain and franchise businesses in the Gym, Health and Fitness Club market place offering unique automated solutions to help clubs communicate with their members and increase membership. In order to entrench ourselves as firmly as possible in this marketplace we have begun to be an add-on service provided with companies that provide billing solutions to the Gym, Health & Fitness Club market place. We now have relationships with the following Gym, Health & Fitness Club billing providers: ASF Payment Solutions, Club Ready, ABC Financial, National Fitness and Jonas Fitness. These sources have access to a combined 10,400 gyms and fitness centers. Our goal is to capture a minimum of at least 50% of the combined 10,400 gyms and fitness centers the above groups are servicing. Our monthly billing ranges between $99-$199 per club signed up with us plus additional SMS messaging fees. Over the next 24 months our goal is to become an add-on component to the billing features of at least 50% of the gym billing providers so that we can attract as many as 15,000 Gym, Health & Fitness clubs in the US. We then intend to expand internationally where there are as many as 165,000 Gyms, Health & Fitness clubs as of 2013. In addition, we plan on utilizing the same strategy in the salon and insurance markets. Our principal executive office is located at 1940 Contra Costa Blvd. Pleasant Hill, CA 94523 and our telephone number is (925-777-2111). The Offering Common stock that may be offered by selling stockholder 4,000,000 shares Common stock currently outstanding 79,432,191 shares Total proceeds raised by offering We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder. We will receive proceeds from the sale of shares to Tarpon. Tarpon has committed to purchase up to $5,000,000 worth of shares of our common stock over a period of time terminating on the earlier of: (i) 24 months from the effective date of the registration statement filed in connection with the Equity Purchase Agreement; or (ii) the date on which Tarpon has purchased shares of our common stock pursuant to the Equity Purchase Agreement (the "Equity Line") for an aggregate maximum purchase price of $5,000,000. The purchase price to be paid by Tarpon will be 90% of the lowest closing bid price during the Valuation Period. On the date the Draw Down Notice is delivered to Tarpon, we are required to deliver an estimated amount of shares to Tarpon s brokerage account equal to 125% of the Draw Down Amount indicated in the Draw Down Notice divided by the closing bid price of the trading day immediately prior to the date of the Draw Down Notice ("Estimated Shares"). The Valuation Period begins on the first trading day after the Estimated Shares have been delivered to Tarpon s brokerage account and have been cleared for trading and terminates on the tenth day thereafter. At the end of the Valuation Period, if the number of Estimated Shares delivered to Tarpon is greater than the shares issuable pursuant to a Draw Down, then Tarpon is required to return to us the difference between the Estimated Shares and the actual number of shares issuable pursuant to the Draw Down. If the number of Estimated Shares is less than the shares issuable under the Draw Down, then we are required to issue additional shares to Tarpon equal to the difference; provided that the number of shares to be purchased by Tarpon may not exceed the number of shares that, when added to the number of shares of our common stock then beneficially owned by Tarpon, would exceed 9.99% of our shares of common stock outstanding.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information that should be considered before investing in our common stock. Before making an investment decision, investors should carefully read the entire prospectus, paying particular attention to the risks referred to under the headings Risk Factors and Cautionary Statement Regarding Forward-Looking Statements and our financial statements and the notes to those financial statements. As used in this prospectus, unless the context requires otherwise, the terms Company, we, our and us refer to Kura Oncology, Inc. Overview We are a clinical stage biopharmaceutical company discovering and developing personalized therapeutics for the treatment of solid tumors and blood cancers. We focus on the development of small molecule product candidates that target cell signaling pathways that are important to driving the progression of certain cancers. We aim to employ molecular diagnostics to identify patients with cancers who are likely to benefit from our targeted product candidates. Advancements in cancer genetics and new molecular diagnostic tools are helping define why some patients respond to a particular therapy while other patients receive little to no clinical benefit. This new era in cancer drug discovery and development offers the potential for innovative treatments that are safer and more effective for patients with particular cancers. We aim to improve patient outcomes and contribute to the reduction in healthcare costs by matching targeted therapeutics to the patients who will benefit the most. We are developing drugs designed to inhibit the mutated or abnormally functioning cellular pathways that drive cancer growth and intend to pair them with molecular diagnostics to identify those patients with tumors most likely to respond to treatment. We are developing our lead product candidate, tipifarnib, a farnesyl transferase inhibitor, in both solid tumors and blood cancers based on previously generated clinical data, preclinical data and our identification of potential molecular biomarkers. We in-licensed tipifarnib from Janssen Pharmaceutica NV, an affiliate of Johnson & Johnson, in December 2014. We initiated a Phase 2 clinical trial of tipifarnib in patients who have solid tumors with HRAS mutations in May 2015, and a Phase 2 clinical trial in patients with peripheral T cell lymphoma, or PTCL, in September 2015. We plan to initiate a Phase 2 clinical trial in patients with lower risk myelodysplastic syndromes, or MDS, in the first half of 2016. Our pipeline also includes two preclinical programs. We are advancing KO-947, a small molecule inhibitor of extracellular-signal-regulated kinases 1 and 2, or ERK1/2, as a potential treatment for patients with tumors that have mutations in or other dysregulation of the mitogen-activated protein kinase, or MAPK, signaling pathway, including pancreatic cancer, colorectal cancer, non-small cell lung cancer, or NSCLC, and melanoma. We are also developing orally available, small molecule inhibitors of the menin-mixed lineage leukemia, or menin-MLL, interaction, which are currently in lead optimization as a potential treatment for patients with acute leukemias involving translocations or partial tandem duplications of the MLL gene. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated October 28, 2015 PRELIMINARY PROSPECTUS $60,000,000 Common Stock We are offering $60,000,000 of shares of our common stock or, assuming a public offering price of $16.00 per share, the last reported sale price of our common stock on the OTC Markets OTCQB tier, or OTCQB, on October 27, 2015, 3,750,000 shares of our common stock. The number of shares of common stock offered by us will be determined based on the public offering price per share. Our common stock is quoted on the OTCQB under the symbol KURO. We have applied to list our common stock on the NASDAQ Global Select Market under the symbol KURA. We have granted the underwriters an option to purchase up to an additional $9,000,000 of shares of common stock or, assuming a public offering price of $16.00 per share, the last reported sale price of our common stock on the OTCQB on October 27, 2015, 562,500 shares of our common stock, to cover over-allotments. The number of additional shares of common stock the underwriters have the option to purchase will be determined based on the public offering price per share. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 10 of this prospectus for a discussion of factors you should consider before buying shares of our common stock. We are an emerging growth company as defined under the federal securities laws, and, as such, are eligible for reduced public company reporting requirements for this prospectus and future filings. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds to us (before expenses) $ $ (1) We refer you to Underwriting beginning on page 137 of this prospectus for additional information regarding total underwriting compensation. The underwriters expect to deliver the shares to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company. Joint Book-Running Managers Citigroup Leerink Partners Co-Managers JMP Securities Oppenheimer & Co. The date of this prospectus is , 2015 Table of Contents The following table summarizes our current product pipeline: The preclinical studies and Phase 1 3 clinical trials in support of our investigational new drug application, or IND, for tipifarnib were conducted by companies within the Johnson & Johnson family of companies and the National Cancer Institute prior to our license of tipifarnib. Clinical data included in our IND submission are from 17 phase 1, 2 and 3 single-agent clinical trials of tipifarnib conducted prior to December 31, 2007. Our Strategy Our strategy is to acquire, develop, and commercialize innovative anti-cancer agents in oncology indications with significant unmet medical need. The critical components of our strategy include the following: focus on oncology; focus on compounds where improved outcomes are associated with specific biomarkers; leverage companion diagnostics to realize positive clinical outcomes; advance our product candidates in clinical proof-of-concept studies; maintain significant development and commercial rights; and build a sustainable product pipeline. Leadership Our management team has extensive prior experience in oncology drug development. Members of our team have played key roles at prior companies, including Intellikine, Inc., Wellspring Biosciences LLC, EMD Serono, Table of Contents Inc., Takeda Oncology Company, Pfizer, Inc., Ambit Biosciences Corporation and the Genomics Institute of the Novartis Research Foundation. Our chief executive officer, Troy Wilson, Ph.D., J.D., has founded multiple biotechnology companies, including Intellikine, Inc., an oncology focused company which was acquired by Takeda Pharmaceutical Company Limited in 2012. The collective experience of our research and development team includes direct involvement in the discovery and development of a number of small molecule drugs against oncogenes and oncogenic pathways. In addition, a number of the members of our management team have worked together as a team since 2007 at Intellikine, Inc. and then Wellspring Biosciences LLC.
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+PROSPECTUS SUMMARY This summary provides an overview of selected key information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. You should carefully review the entire prospectus, including the risk factors, the consolidated financial statements and the notes thereto, and the other documents to which this prospectus refers before making an investment decision. Unless the context requires otherwise: references to Lantheus, the Company, our company, we, us and our refer to Lantheus Holdings, Inc. and, as the context requires, its direct and indirect subsidiaries, after giving effect to the corporate reorganization (including the related 0.355872-for-1 reverse stock split) described below; references to Lantheus Holdings refer to Lantheus Holdings, Inc. (previously named Lantheus MI Holdings, Inc.), our predecessor; references to Lantheus Intermediate refer to Lantheus MI Intermediate, Inc.; and references to LMI refer to Lantheus Medical Imaging, Inc., our wholly-owned subsidiary. Overview We are a global leader in developing, manufacturing, selling and distributing innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis of cardiovascular and other diseases. Our agents are routinely used to diagnose coronary artery disease, congestive heart failure, stroke, peripheral vascular disease and other diseases. Clinicians use our imaging agents and products across a range of imaging modalities, including echocardiography, nuclear imaging and magnetic resonance imaging, or MRI. We believe that the resulting improved diagnostic information enables healthcare providers to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overall costs for payers and the entire healthcare system. Our commercial products are used by cardiologists, nuclear physicians, radiologists, internal medicine physicians, sonographers and technologists working in a variety of clinical settings. We sell our products to hospitals, clinics, group practices, integrated delivery networks, group purchasing organizations, radiopharmacies and, in certain circumstances, wholesalers. We sell our products globally and have operations in the United States, Puerto Rico, Canada and Australia and distribution relationships in Europe, Asia Pacific and Latin America. For the three months ended March 31, 2015, we recorded revenues, net income and Adjusted EBITDA of $74.8 million, $0.4 million and $20.6 million, respectively. For the year ended December 31, 2014, we recorded revenues, net loss and Adjusted EBITDA of $301.6 million, $3.6 million and $70.8 million, respectively. Our products are sold in 30 countries and we generated approximately 19% and 22% of our revenues outside of the United States for three months ended March 31, 2015 and the year ended December 31, 2014, respectively. For an explanation of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss as calculated under generally accepted accounting principles, or GAAP, see footnote (3) of Summary Consolidated Financial and Other Data. Our portfolio of 10 commercial products is diversified across a range of imaging modalities. Our products include contrast agents and medical radiopharmaceuticals (including technetium generators). Contrast agents are typically non-radioactive compounds that are used in diagnostic procedures such as cardiac ultrasounds, or echocardiograms, x-ray imaging or MRIs that are used by physicians to improve the clarity of the diagnostic image. Table of Contents EXPLANATORY NOTE Prior to the consummation of this offering, we will enter into a corporate reorganization, whereby our direct, wholly-owned subsidiary, Lantheus MI Intermediate, Inc. will merge with and into us. See Prospectus Summary Corporate Reorganization and Concurrent Refinancing Transaction in the accompanying prospectus. Table of Contents Radiopharmaceuticals are radioactive pharmaceuticals used by clinicians to perform nuclear imaging procedures. In certain circumstances, a radioactive element, or radioisotope, is attached to a chemical compound to form the radiopharmaceutical. This act of attaching the radioisotope to the chemical compound is called radiolabeling, or labeling. In other circumstances, a radioisotope can be used as a radiopharmaceutical without attaching any additional chemical compound. Radioisotopes are most commonly manufactured in a nuclear research reactor, where a radioactive target is bombarded with subatomic particles, or on a cyclotron, which is a type of particle accelerator that also creates radioisotopes. Two common forms of nuclear imaging procedures are single-photon emission computed tomography, or SPECT, which measures gamma rays emitted by a SPECT radiopharmaceutical, and positron emission tomography, or PET, which measures positrons emitted by a PET radiopharmaceutical. As an example of the procedures in which our products may be used, in the diagnosis of coronary artery disease, a typical diagnostic progression could include an electrocardiogram, followed by an echocardiogram (possibly using our agent DEFINITY), and then a nuclear myocardial perfusion imaging, or MPI, study using either SPECT or PET imaging (possibly using our technetium generator or one of our MPI agents). An MPI study assesses blood flow distribution to the heart. MPI is also used for diagnosing the presence of coronary artery disease. See Diagnostic Medical Imaging Agent Overview. Leading Products Our leading commercial product is: DEFINITY the leading ultrasound contrast imaging agent used by cardiologists and sonographers during echocardiography exams based on revenue and usage. DEFINITY is an injectable agent that is indicated in the United States for use in patients with suboptimal echocardiograms to assist in the visualization of the left ventricle, the main pumping chamber of the heart. The use of DEFINITY in echocardiography allows physicians to significantly improve their assessment of the function of the left ventricle. Since its launch in 2001, DEFINITY has been used to image more than five million patients in the United States alone. Of the total number of echocardiograms performed each year in the United States over 30 million in 2014 based on medical literature, we estimate that approximately 20%, or approximately six million echocardiograms in 2014, produce suboptimal images. We believe that for the three months ended March 31, 2015, 4.4% of the total echocardiography procedures performed in the United States used a contrast agent, constituting an estimated 22% of all suboptimal echocardiograms performed. This compares to a contrast penetration rate of 3.5% for the three months ended March 31, 2014, or an estimated 17.7% of all suboptimal echocardiograms performed. Contrast penetration rates in echocardiography procedures have increased over the past seven years and we believe will continue to increase in the future as clinicians continue to adopt the use of contrast as an important tool to assist their clinical decision-making. Of the echocardiograms in which a contrast agent is used, we estimate that DEFINITY had an approximate 78% share of these procedures in the United States as of December 2014. We believe that DEFINITY has this leading position because of its preferred product functionality and composition derived from a synthetic rather than a blood-based product. As a result, we believe DEFINITY will be a key driver of the future growth of our business, both in the United States and in international markets as we continue to grow contrast penetration through sales and marketing efforts focused on the appropriate use of contrast and maintain our leading position. DEFINITY currently has patent or other exclusivity protection until 2021 in the United States and until 2019 outside of the United States, and we have a next generation development program for this agent. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 16, 2015 PRELIMINARY PROSPECTUS 7,894,736 Shares Lantheus Holdings, Inc. Common Stock $ per share This is the initial public offering of our common stock. We are selling 7,894,736 shares of our common stock. We currently expect the initial public offering price to be between $8.50 and $10.50 per share of common stock. No public market currently exists for our common stock. We have granted the underwriters an option to purchase up to 1,184,210 additional shares of common stock solely to cover over-allotments. We have applied to list our common stock on The NASDAQ Global Market under the symbol LNTH. We are an emerging growth company as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. See Prospectus Summary Implications of Being an Emerging Growth Company. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 18. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PER SHARE TOTAL Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds to Lantheus Holdings, Inc. (before expenses) $ $ (1) We refer you to Underwriting (Conflicts of Interest) beginning on page 173 of this prospectus for additional information regarding total underwriting compensation. The underwriters expect to deliver the shares to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company. Credit Suisse Jefferies RBC Capital Markets Wells Fargo Securities Baird , 2015 Table of Contents Our leading commercial radiopharmaceutical products are: TechneLite a self-contained system, or generator, of technetium (Tc99m), a radioisotope with a six hour half-life, used by radiopharmacists at radiopharmacies to prepare patient-specific radiolabeled imaging agents. Technetium results from the radioactive decay of Molybdenum-99, or Moly, itself a radioisotope with a 66-hour half-life produced in nuclear research reactors around the world from enriched uranium. Because of the short half-lives of Moly and technetium, radiopharmacies typically replace TechneLite generators on a weekly basis pursuant to standing orders made with us. In addition, the supply chain for Moly is global and, because of the 66-hour half-life, we utilize just-in-time inventory management. We believe that we have the most balanced and diversified supply chain in the industry, buying Moly from four out of the five major global Moly processors, which are supplied by seven of the eight major global Moly reactors. We are one of two principal technetium generator manufacturers in the United States and Canada. We are also the leading and most consistent U.S. manufacturer of low-enriched uranium, or LEU, technetium generators. Governments and policy-makers are encouraging the increased use of technetium generators made with Moly derived from LEU rather than highly-enriched uranium, or HEU, which may present greater proliferation and security risks. In the United States, nuclear imaging agent unit doses prepared with LEU technetium generators are reimbursed by Medicare in the hospital outpatient setting at a higher rate. We believe that our substantial capital investments in our highly automated TechneLite production line and our extensive experience in complying with the stringent regulatory requirements for the handling of nuclear materials create significant and sustainable competitive advantages for us in generator manufacturing and distribution. We estimate that in 2014, we had an approximately 43% share of generator sales in the United States. Certain TechneLite generator components currently have U.S. patent protection until 2029. Xenon Xe 133 Gas is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also to image cerebral blood flow. Our Xenon is manufactured by a third party as part of the Moly production process and packaged by us. We are currently the leading provider of Xenon in the United States. Other Commercial Products In addition to the products listed above, our portfolio of commercial products also includes important imaging agents in specific market segments, which provide a stable base of recurring revenue. Cardiolite is an injectable, technetium-labeled imaging agent, also known by its generic name sestamibi, used with SPECT technology in MPI procedures that assess blood flow to the muscle of the heart. Launched in 1991, Cardiolite has the highest cumulative revenue of any branded radiopharmaceutical in history. Neurolite is an injectable, technetium-labeled imaging agent used with SPECT technology to identify the area within the brain where blood flow has been blocked or reduced due to stroke. Thallium Tl 201 is an injectable radiopharmaceutical imaging agent used in MPI studies to detect coronary artery disease and is manufactured by us using cyclotron-based technology. Gallium Ga 67 is an injectable radiopharmaceutical imaging agent used to detect certain infections and cancerous tumors, especially lymphoma, and is manufactured by us using cyclotron technology. Fludeoxyglucose F 18, or FDG, is an injectable, fluorine-18-labeled imaging agent used with PET technology to identify and characterize tumors in patients undergoing oncologic diagnostic procedures. Gludef is our branded version of FDG in the United States. Table of Contents Image of Heart Without Using Contrast Agent Image of Heart Using DEFINITY SPECT Image Showing Probable Coronary Artery Disease (CAD) in Patient Without CAD Flurpiridaz F 18 Image Confirming No CAD in Same Patient Without CAD Table of Contents Quadramet, our only therapeutic product, is an injectable radiopharmaceutical used to treat severe bone pain associated with certain kinds of cancer, and is manufactured by us. Ablavar is an injectable, gadolinium-based contrast agent used with magnetic resonance angiography, or MRA, a type of MRI scan, to image the iliac arteries that start at the aorta and go through the pelvis into the legs, in order to diagnose narrowing or blockage of these arteries in known or suspected peripheral vascular disease. In the United States and Canada, we sell DEFINITY through our sales team of approximately 80 employees that call on healthcare providers in the echocardiography space, as well as group purchasing organizations and integrated delivery networks. Our radiopharmaceutical products are primarily distributed through commercial radiopharmacies, the majority of which are controlled by or associated with Cardinal Health, or Cardinal, United Pharmacy Partners, or UPPI, GE Healthcare and Triad Isotopes, Inc., or Triad. In Canada, Puerto Rico and Australia, we own eight radiopharmacies and sell our radiopharmaceuticals, as well as others, directly to end users. In Europe, Asia Pacific and Latin America, we utilize distributor relationships to market, sell and distribute our products. We have entered into a partnership with Beijing Double-Crane Pharmaceutical Co., Ltd., or Double-Crane, to complete confirmatory clinical trials necessary for Chinese regulatory approval and to distribute DEFINITY in China. We believe that international markets, particularly China, represent significant growth opportunities for our products. Our Agents in Development We have established a portfolio of three internally-discovered imaging agents in clinical and preclinical development, each of which we believe could represent a large market opportunity and has the potential to significantly enhance current imaging modalities and fulfill unmet diagnostic medical imaging needs. We are currently seeking strategic partners to pursue the further development of each of these agents, which include: Flurpiridaz F 18 Myocardial Perfusion Imaging Agent. Flurpiridaz F 18 is a small molecule imaging agent radiolabeled with fluorine-18 and designed for use in PET MPI to assess blood flow to the muscle of the heart. We believe that in comparison to SPECT MPI, the current standard of care, PET MPI with flurpiridaz F 18 potentially provides higher image quality, increased diagnostic certainty, more accurate risk stratification and reduced patient radiation exposure. This agent could be particularly useful in difficult to image heart patients, including women and obese patients currently underserved by available diagnostic methods. In the first of two planned Phase 3 studies, PET MPI with flurpiridaz F 18 consistently showed a balanced performance in identifying disease (sensitivity) and ruling out disease (specificity), when compared to coronary angiography, the truth standard. Unlike flurpiridaz F 18, SPECT imaging results were skewed with low sensitivity and high specificity when compared to the truth standard. When the flurpiridaz F 18 results were compared to the SPECT results, flurpiridaz F 18 substantially outperformed SPECT in sensitivity, one of the study s primary endpoints, but did not meet the study s other primary endpoint, non-inferiority in specificity, implying a substantial and unexpected under-diagnosis of CAD with SPECT imaging in the trial. In subgroup analyses, the risk-benefit profile of flurpiridaz F 18 appeared to be favorable in women, obese patients and patients with multivessel disease. A significantly higher percentage of images were rated as either excellent or good with flurpiridaz F 18 as compared to SPECT, leading to a greater diagnostic certainty of interpretation. Importantly, radiation exposure associated with flurpiridaz F 18 was reduced to approximately 50% of SPECT. In addition, no drug-related serious adverse events were observed. Based on these results, we have redesigned the protocol for our second Phase 3 trial, including different primary endpoints. On March 13, 2015, the FDA granted us a Special Protocol Assessment, or SPA, in connection with the new trial. We are now in active discussions with a number of prospective partners Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/LOB-PA_live-oak_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/LOB-PA_live-oak_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY The following summary highlights selected information contained or incorporated by reference elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes and other documents incorporated by reference in this prospectus, as well as the information under the caption Risk Factors herein and under similar headings in the other documents that are incorporated by reference into this prospectus. Company Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of product candidates to treat patients suffering from central nervous system, or CNS, diseases. Leveraging our deep domain expertise, we have acquired or in-licensed four development-stage proprietary compounds that we believe have innovative mechanisms of action with potentially positive therapeutic profiles. Our lead product candidate is MIN-101, a compound for the potential treatment of patients with schizophrenia. In addition, our portfolio includes MIN-202, a compound we are co-developing with Janssen Pharmaceuticals for the treatment of patients suffering from primary and comorbid insomnia, MIN-117, a compound we are developing for the treatment of patients suffering from major depressive disorder, and MIN-301, a compound we are developing for the treatment of patients suffering from Parkinson s disease. Corporate Information We were incorporated under the name Cyrenaic Pharmaceuticals, Inc. under the laws of the State of Delaware on April 23, 2007. In November 2013, we merged with Sonkei Pharmaceuticals, Inc. and the combined company was renamed Minerva Neurosciences, Inc. Our principal executive offices are located at 1601 Trapelo Road, Suite 284, Waltham, Massachusetts 02451 and our phone number is (617) 600-7373. Our website address is www.minervaneurosciences.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 7, 2015. PRELIMINARY PROSPECTUS 12,563,322 Shares Common Stock This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 6,281,661 shares of our common stock that we sold to the selling stockholders and 6,281,661 shares of common stock that are issuable upon the exercise of outstanding warrants to purchase our common stock issued to the selling stockholders in connection with a private placement completed on March 18, 2015. We will not receive any proceeds from the sale of these shares by the selling stockholders. We are not selling any shares of common stock and will not receive any proceeds from the sale of the shares under this prospectus. Upon the exercise of the warrants for 6,281,661 shares of our common stock by payment of cash, however, we will receive the exercise price of the warrants, which is $5.772 per share. We have agreed to bear all of the expenses incurred in connection with the registration of these shares. The selling stockholders will pay or assume brokerage commissions and similar charges, if any, incurred for the sale of shares of our common stock. The selling stockholders identified in this prospectus, or their pledgees, donees, transferees or other successors-in-interest, may offer the shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. For additional information on the methods of sale that may be used by the selling stockholders, see the section entitled Plan of Distribution beginning on page 10. For a list of the selling stockholders, see the section entitled Selling Stockholders beginning on page 5. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision. Our common stock is traded on the NASDAQ Global Market under the symbol NERV. On May 6, 2015, the closing sale price of our common stock on the NASDAQ Global Market was $5.10 per share. You are urged to obtain current market quotations for the common stock. We are an emerging growth company as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Please see Prospectus Summary Implications of Being an Emerging Growth Company. Investing in our common stock involves a high degree of risk. Please read Risk Factors beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Prospectus dated , 2015. Table of Contents THE OFFERING Common stock offered by the selling stockholders 12,563,322 shares, including 6,281,661 shares of our common stock issuable upon exercise of warrants at an exercise price of $5.772 per share Common stock outstanding 24,721,143 shares Use of proceeds We will not receive any proceeds from the sale of shares in this offering. See Use of Proceeds.
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diff --git a/parsed_sections/prospectus_summary/2015/NGHI_galenfeha_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/NGHI_galenfeha_prospectus_summary.txt
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+PROSPECTUS SUMMARY Company Overview Galenfeha was incorporated on March 14, 2013 under the laws of the State of Nevada with a fiscal year end of December 31. Our corporate office is located at 420 Throckmorton Street, Suite 200, Ft. Worth Texas 76102, and our manufacturing facility is located at 9204 Linwood Avenue, Suite 104, Shreveport Louisiana 71106. Our website is www.galenfeha.com, and our primary contact phone numbers are 1-800-280-2404 and 1-817-945-6448. Description of Technology Galenfeha is an engineering, manufacturing, and product development company that provides engineering services, stored energy systems, chemical injection pumps, and alternative power generation products with a primary focus based in the petroleum industry. The company provides contractual engineering services, produces and implements our proprietary products into the mainstream of oil and natural gas production sites, and sells these products and services to oil and gas producers through a distribution network of oil field service and supply companies or directly to companies and agencies. Recent Developments In the first quarter of 2014, the company began development of a new battery technology primarily designed to operate automation and measurement computers in remote oil field locations. This battery system technology provides an environmentally friendly, inherently safe, internally temperature regulated, uninterruptible power supply for oil and gas well location automation and measurement equipment. By the end of first quarter 2014, the battery system had proven effective in rigorous field-testing, and by April 2014, the company formulated a production matrix to begin the build-out of marketable product. At the beginning of May 2014, the company ordered the components necessary to construct an initial production run of 700 units for a July 2014 production window. At the beginning of third quarter 2014, the company began shipping our patent pending battery systems to a multi-state distributer in Shreveport, Louisiana. This battery system is enjoying rapid acceptance within the industry, and the company has seen increased demand in fourth quarter 2014. Our patent pending battery technology provides benefits that include, but are not limited to, the following: 100% "green" chemistry RoHS compliant – Restriction of Hazardous Substances (i.e. lead, heavy metals) Active short circuit protection control Over-charge protection Not subject to thermal runaway Completely dry internally Over discharge protection Independent charge and discharge ports to provide purity of current and voltage to sensitive measuring and communications equipment and improve data latency On-board ambient temperature control system to not only combat but self-insulate in inherently cold environmental conditions Eliminates the need for interface devices to control solar panel voltage secondary to the BMS (Battery Management System) automatically analyzing and self-correcting for the chemistry in use. Raising the value to the client by increasing the charge/discharge capacitance threshold by up to ten fold Reducing the overall weight of the battery by up to 50% to reduce the potential for work related injury Will go into a pre-programmed "sleep mode" when not in use and still retain over 90% of the battery s capacity in a calendar year. Contains no lead, heavy metals or sulfuric acid Galenfeha, Inc. customers value the reliability, portability, ambient condition durability, easy installation and low environmental impact of this product. Businesses that have instituted our product line have benefited from the elimination of hazardous lead-acid deep cycle marine batteries as well as the reduction in the implementation; maintenance, replacement equipment and man-hour costs associated with the traditional solar/lead acid battery combinations. The company believes that these factors will allow us to continually penetrate the alternative power market with a much quicker return on investment for our customers. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING SECURITY HOLDERS MAY NOT SELL THE SECURITIES COVERED BY THIS PROSPECTUS UNTIL THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL AND IS NOT SOLICITING AN OFFER TO PURCHASE THE SECURITIES IN ANY JURISDICTION WHERE SUCH OFFER OR SALE IS PROHIBITED. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED JANUARY 27, 2015 25,640,000 Shares of Common Stock This prospectus covers the resale by the selling shareholders identified in this prospectus of up to an aggregate of 25,640,000 shares of our common stock, $0.001 par value per share that have been previously issued. The selling shareholders may offer and sell any of the shares covered by this prospectus from time to time through public or private transactions, at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices, or otherwise as described under Plan of Distribution . We will not receive any proceeds from the sale of any of the shares by the selling shareholders. We will pay all registration expenses incurred in connection with this offering, but the selling shareholders will pay all of their selling commissions and fees, stock transfer taxes and related expenses. Our common stock is listed on the OTCBB (Over the Counter Bulletin Board) under the symbol "GLFH". See "Market for Our Common Stock and Related Stockholder Matters". The high and low bid prices for our common stock on January 27, 2015 as quoted on the OTC Bulletin Board, was $0.28 and $0.26. THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. OUR AUDITOR S HAVE RAISED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 4 NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is __________, 2015 Continued Development: At the end of fourth quarter 2014, the company began researching the use of this battery technology outside of the oil and gas industry. In conjunction with these alternative markets, the company is currently testing a proof-of-concept model for use in zero emission recreational vehicles such as golf carts and an off-road UTV gas/electric hybrid platform. In the first quarter of 2015, the company will begin testing a solution for stored power for U.S. military applications. The company is in the final stages of the acquisition of a chemical injection pump manufacturing company. An initial production run of 160 Galenfeha chemical injection stations that will incorporate our battery product has begun and delivery is expected by the end of first quarter 2015. The company anticipates vigorous growth in overall product sales in 2015 for reasons threefold: 1.) Increased market acceptance of our superior products, 2.) Embedding the battery technology within our chemical injection pump systems will not only serve to further validate product viability but will assist in expanding beyond automation and measurement to the production sector of the petroleum industry, 3.) Introduction of our technology outside the petroleum industry will introduce new profit centers to the company. A condensed version of our 2015 statement of work is as follows: Finalize testing of battery technology in zero-emission recreational vehicles (3/15) Finalize acquisition of DayLight Pump, LLC and begin distribution (3/15) Begin production of second generation battery design in the United States (3/15) Receive MIL-SPEC certification for our battery system technology (3/15) Begin production of military vehicle and troop applications (6/15) Move all production of raw materials to the United States (9/15) Search for mergers/acquisitions of complimenting companies (ongoing) Continue developing new technology (ongoing)
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index 0000000000000000000000000000000000000000..90166114326911f07a53896d397e911c2530d96c
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before buying shares of our common shares. You should read the entire prospectus carefully, especially the Risk Factors section and our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in shares of our common shares. Unless the context provides otherwise, all references to Energizer, the Company we, us, our, or similar terms, refer to Energizer Resources Inc. and its wholly owned subsidiaries. In this prospectus all references to $ or dollars mean the U.S. dollar, and unless otherwise indicated all currency amounts in this prospectus are stated in U.S. dollars. All references to Cdn$ or C$ refer to the Canadian dollar. All financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are reported in U.S. dollars. The Company Corporate Structure We were incorporated in the State of Nevada, United States of America on March 1, 2004 and reincorporated in the State of Minnesota, United States of America on May 14, 2008. We have has direct and indirect wholly-owned subsidiaries located in Mauritius (Energizer Resources (Mauritius) Ltd., THB Venture Ltd. and Madagascar-ERG Joint Venture (Mauritius) Ltd.), Madagascar (Energizer Resources Minerals Sarl, Energizer Resources Madagascar Sarl and ERG (Madagascar) Sarl), and Ontario (2391938 Ontario Inc.). Our principal business office, which also serves as our administration and financial office, is located at 141 Adelaide Street West, Suite 520, Toronto, Ontario, telephone (416) 364-4911. Description of the Business We are a mineral exploration and mine development company that is developing its feasibility-stage Molo Graphite Project in southern Madagascar. Our principal asset is the Molo Graphite Project. On December 14, 2011, we entered into a Definitive Joint Venture Agreement with Malagasy Minerals Limited ( Malagasy ), a public company on the Australian Stock Exchange, to acquire a 75% interest to explore and develop a group of industrial minerals, including graphite, vanadium and approximately 25 other minerals. On October 24, 2013, the Company signed a Memorandum of Understanding ( MOU ) with Malagasy to acquire the remaining 25% interest in the land position. On April 16, 2014, Energizer signed a Sale and Purchase Agreement and a Mineral Rights Agreement with Malagasy to acquire the remaining 25% interest. Malagasy retains a 1.5% net smelter return royalty.
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diff --git a/parsed_sections/prospectus_summary/2015/NTRA_natera-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/NTRA_natera-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our financial statements and the related notes and the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Overview We are a rapidly growing diagnostics company with proprietary molecular and bioinformatics technology that we are deploying to change the management of genetic disease worldwide. Our novel molecular assays reliably measure many informative regions across the genome from samples as small as a single cell. Our statistical algorithms combine these measurements with data available from the broader scientific community to detect a wide range of serious conditions with best-in-class accuracy and coverage. Our technology has been proven clinically and commercially in the prenatal testing space. We believe this success can be translated into the liquid biopsy space, and we are developing products for a number of oncology applications. In addition to our direct sales force in the United States, which we are continuing to expand, we have a global network of over 70 laboratory and distribution partners, including many of the largest international laboratories. We are enabling even wider adoption of our technology by introducing a global cloud-based distribution model. We have launched seven molecular diagnostic tests since 2009, and we intend to launch new products in prenatal testing and oncology in the future. In March 2013, we launched Panorama, our non-invasive prenatal test, or NIPT. Over 55,000 Panorama tests were accessioned during the three months ended March 31, 2015. Our revenues have grown from $4.3 million in 2010 to $159.3 million in 2014. Our net losses decreased from $37.1 million for the year ended December 31, 2013 to $5.2 million for the year ended December 31, 2014. Genetic inheritance is conveyed through a naturally occurring information storage system known as deoxyribonucleic acid, or DNA. DNA stores information in a linear sequence of the chemical bases adenine, cytosine, guanine and thymine, represented by the symbols A, C, G, and T. Billions of bases of A, C, G, and T link together inside living cells to form the genome, which can be read like a code or a molecular blueprint for life. While differences in the specific sequence and structure of this code drive biological diversity, certain variations can also cause disease. Examples of genetic diversity include copy number variations, or CNVs, and single nucleotide variants, or SNVs. A CNV is a genetic mutation in which relatively large regions of the genome have been deleted or duplicated, and an SNV is a mutation where a single base has changed. When single base changes are common in the population, that position on the chromosome is called a single nucleotide polymorphism, or SNP. When genetic variations are a cause of disease, such as Down Syndrome or breast cancer, detecting them within the patient's tissue sample can enable diagnosis and treatment. Our goal is to develop and commercialize non- or minimally invasive tests for the highly reliable detection of variations covering a broad set of diseases. Our approach combines proprietary molecular biology and computational techniques to measure genomic variations in tiny amounts of DNA, as small as a single cell. Our molecular biology techniques allow us to target over 20,000 regions of the genome simultaneously in a single test reaction, without losing molecules by splitting the sample into separate reaction tubes, so that all relevant variants can be detected. We believe our approach, which we call mmPCR, or massively multiplexed polymerase chain reaction, represents a fundamental advance in molecular biology. To make sense of this deep and rich set of biological data and deliver a diagnosis, we have developed computationally intensive algorithms that combine the data generated by mmPCR with the ever-expanding set of publicly available data on genetic variations. We have optimized these algorithms to enable laboratories around the world to run diagnostic tests locally, and access our algorithms in the cloud. Amendment No. 6 to Form S-1 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 Table of Contents We have first applied our technology to prenatal testing, and we are leveraging our core expertise to develop blood-based diagnostic tests for cancer. In both prenatal testing and oncology, the use of blood-based diagnostic tests offers significant advantages over older methods, but the significant technological challenge is that it requires the measurement of very small amounts of relevant genetic material circulating within a much larger blood sample. In prenatal testing, our approach based on measuring thousands of SNPs simultaneously is fundamentally distinct from the approach employed in other commercially available NIPTs. Based on extensive data published in the journals Obstetrics & Gynecology, the American Journal of Obstetrics & Gynecology and Prenatal Diagnosis, we believe Panorama, our NIPT, is the most accurate NIPT commercially available in the United States. In oncology, we have demonstrated our ability to detect both CNVs and SNVs from very low concentrations of tumor DNA circulating in a blood sample. Because breast, ovarian and lung cancer are driven by both CNVs and SNVs, we believe that our approach is well-suited for early detection, recurrence monitoring and therapy selection for these cancers. We attribute our commercial success and future growth prospects to the following: Extensive expertise in both molecular biology and bioinformatics. To achieve outstanding disease coverage and accuracy across multiple tests, molecular techniques must advance in tandem with statistical techniques. Our proprietary mmPCR technology allows us to target over 20,000 genomic variations simultaneously in a single test reaction. Our bioinformatics capabilities allow us to build billions of detailed models of the potential genetic states and compare them with known and measured genetic states of a target to determine the most likely diagnosis using a technique known as maximum likelihood Bayesian optimization. We believe that the power of these combined molecular and bioinformatics techniques provides us with our competitive advantage. Best-in-class performance and coverage. From a single blood draw, our current commercial tests assess the risk of a broad range of conditions, which we refer to as "coverage," including common fetal aneuploidies, microdeletions, triploidy, and inherited genetic conditions that could be passed on from parent to child. A fetal aneuploidy is when a fetus has a different number of chromosomes than are typical. A microdeletion is a deletion of a region of DNA from one copy of one chromosome in an individual. Triploidy is when an individual has three copies of every chromosome instead of two. We estimate that all of these conditions combined are more than three times as prevalent in the general population as the three most common autosomal aneuploidies, which include trisomies 13, 18, and 21. In aggregated data from validation studies published in Obstetrics & Gynecology and Prenatal Diagnosis, Panorama has demonstrated combined sensitivity for the Down, Edwards and Patau syndromes and triploidy of greater than 99% and specificity of greater than 99.9% per disorder, which we believe makes Panorama overall the most accurate NIPT commercially available in the United States. In these studies, Panorama made no errors in fetal sex determination. A paper published in the August 2014 issue of Obstetrics & Gynecology reported that Panorama had a statistically significant lower false positive rate than the NIPT method practiced by our U.S. competitors. Our sensitivity for 22q11.2 deletion syndrome, which is caused by the deletion of a small piece of chromosome 22 and can be treated with early intervention at the time of birth to avoid seizures and reduce cognitive impairment, is greater than 95% for deletions of approximately 2.9Mb based on data published in the American Journal of Obstetrics & Gynecology. This sensitivity is considerably higher than that published for any competing microdeletions tests currently offered in the NIPT sector. For an explanation of how we measure sensitivity and specificity, see "Business Overview." Independent sales force and global network of laboratory partners. Our own direct sales force and managed care teams, both of which we have recently expanded, anchor our commercial engagement with physicians, laboratory partners, and payers. We can offer all of our products through our direct sales force and at a higher gross margin percentage than when we service customers through a NATERA, INC. (Exact Name of Registrant as Specified in its Charter) Table of Contents partner. The percentage of our overall accessioned tests generated through the higher margin U.S. direct sales force increased from approximately 25% in 2013 to approximately 44% in 2014, and to approximately 60% for the three months ended March 31, 2015. Where we have identified laboratory or distribution partners who share our focus on premium quality and service, we also contract with them to distribute our tests. We find this model to be particularly beneficial outside of the United States. Through our direct sales effort and worldwide network of over 70 laboratory and distribution partners, we have established a broad distribution channel that includes over 600 genetics-focused sales representatives. We and our laboratory partners have in-network contracts with insurance providers that account for over 140 million covered lives in the United States. Our target market for NIPT is a much smaller subset of these covered lives, because it excludes men, children and post-menopausal women who would not be users of our products. We are now a participating provider in 31 state Medicaid programs. Substantial intellectual property. We have retained worldwide rights to our internally-developed molecular and bioinformatics technologies, with no royalty or licensing fee obligations on our core technologies. We have multiple issued patents covering aspects of our core technology in the United States and internationally. In prenatal testing, we believe our proprietary method represents a fundamentally differentiated approach. Cloud-based distribution model. We are leveraging our cloud-based Constellation software to expand access to our molecular and bioinformatics technologies to laboratory partners worldwide. This approach allows us to scale more quickly, drive broader patient access, and leverage the rapid emergence of sequencing systems worldwide. We have begun using this distribution model with laboratories inside and outside the United States, for both commercial products and research applications. We also leverage Constellation to more efficiently perform our internal commercial laboratory activities and to perform research and development of our products. In July 2014, we achieved a CE Mark from the European Commission for Constellation and in May 2015, we achieved a CE Mark for the key reagent kits that our partners will need to run their portion of the Panorama test prior to accessing our cloud-based software. These two CE Marks enable our cloud-based distribution model in the European Union and other countries that accept a CE Mark. We are also engaged in discussions with the U.S. Food and Drug Administration, or the FDA, for use of a version of our software to support our cloud-based distribution model in the United States. The FDA has recently indicated to us that this software may be appropriate for review under the de novo classification process. The FDA has also stated to us that it will not prevent us from marketing the software in the United States while we continue to discuss how our software will be regulated and the FDA determines the regulatory pathway. Future applications of our technology connected with prenatal testing. We expect to broaden our disease coverage in prenatal diagnostics, including by incorporating the ability to screen for additional disorders in our Panorama panel. We believe that this technology will allow us to capitalize on advances in isolating fetal cells from a mother's blood, which would allow us to measure more of the fetal genome non-invasively and with even higher accuracy. Recent publications in Science and Genome Medicine highlight the capability of our technology to determine what segments of the parent's chromosomes contributed to the DNA of a fetus and hence to reconstruct almost the entire DNA of a fetus in silico using only measurements of a tiny amount of fetal DNA. Consequently, we believe that we will have the ability to generate close to the full genome of an individual, roughly 9 weeks after the individual is conceived. The applications of this information from pregnancy through adulthood are extensive. Future applications of our technology beyond prenatal testing. We believe that our ability to reliably analyze DNA at many thousands of loci at the scale of a single-molecule is very well suited for the early detection and monitoring of a wide variety of cancers. We are working with some of the world's leading cancer centers to collect samples and develop so-called "liquid biopsy" tests to analyze circulating tumor DNA of common forms of the disease, including breast, ovarian, and lung Table of Contents cancer. We believe that such tests will reduce the need for invasive tumor biopsies, enable earlier detection of cancer and enhance treatment. Proprietary technology drives our test performance and pipeline The sensitivity, specificity and coverage of our tests are driven by our proprietary mmPCR method of amplifying the DNA in a sample, and by our bioinformatics algorithm, which relies on a statistical technique known as maximum likelihood estimation, or MLE. MLE is widely used in other industries to enhance the quality of noisy or complex data inputs, such as in the conversion of a transmitted analog communication signal to a digital format. We have applied MLE to high-throughput genetic data. Our ability to multiplex over 20,000 primer sets in a single experiment allows us to achieve a high signal to noise ratio, or the ratio of useful information to irrelevant data, when detecting small amounts of DNA within a much larger sample. The analytic and clinical validity of our technology demonstrated in Panorama and our other products has been described in multiple peer-reviewed publications, including the journals Science, Human Reproduction, Molecular Human Reproduction, Fertility and Sterility, PLOS ONE, Genetics in Medicine, Prenatal Diagnosis, Fetal Diagnosis and Therapy, Obstetrics & Gynecology, Genome Medicine and American Journal of Obstetrics & Gynecology. Panorama: Applying our molecular technology and bioinformatics to prenatal diagnostics We launched Panorama in March 2013. Panorama non-invasively screens for fetal chromosomal abnormalities, including Down syndrome, Edwards syndrome, Patau syndrome, Turner syndrome and triploidy, which often result in intellectual disability, severe organ abnormalities, and fetal demise. Panorama can be performed as early as nine weeks into a pregnancy, which is significantly earlier than traditional methods, such as serum protein measurement where doctors measure certain hormones in the blood. Based on data published in Prenatal Diagnosis, Fetal Diagnosis and Therapy and Obstetrics & Gynecology, Panorama demonstrated greater than 99% overall sensitivity for aneuploidies on chromosomes 13, 18 and 21 and triploidy and less than 0.1% false positive rate for each syndrome, which we believe makes it overall the most accurate NIPT commercially available in the United States. Sensitivity is calculated as the ratio between the number of individuals that test positive for the condition over the total number of individuals in the tested cohort who actually have the condition. A paper published in the August 2014 issue of Obstetrics & Gynecology, reported that Panorama had a statistically significant lower false positive rate than other NIPT methods practiced by our U.S. competitors. Based on data published in Obstetrics & Gynecology, Prenatal Diagnosis, and American Journal of Obstetrics & Gynecology, we have also demonstrated the ability to identify fetal sex more accurately than competing NIPTs. This is partially a result of Panorama's unique ability to detect a vanishing twin, which is a known driver of fetal sex errors with quantitative methods used by our competitors. We believe Panorama's specificity and sensitivity reduce the need for unnecessary confirmatory invasive procedures, lowering the total cost to the healthcare system of these procedures and limiting the resulting risk of spontaneous miscarriage. We believe Panorama's test performance has allowed us to command a price premium compared to other NIPTs while achieving over 55,000 Panorama tests accessioned during the three months ended March 31, 2015. A test is accessioned when we receive the test, the relevant information about the test is entered into our computer system and the test sample is routed into the appropriate sample flow. In 2014, we enhanced Panorama by adding the capability to screen for five of the most common genetic diseases caused by microdeletions, using our Panorama microdeletions panel. Microdeletions are missing sub-chromosomal pieces of DNA, which can have serious health implications depending on the location of the deletion. Based on data published in Prenatal Diagnosis and American Journal of Obstetrics & Gynecology, the combined prevalence of these targeted microdeletions is approximately one in 700 pregnancies, which together makes them more common than Down syndrome for women younger than approximately 32 years of age. Unlike Down syndrome, where the risk increases with maternal age, the risk Natera, Inc. 201 Industrial Road, Suite 410 San Carlos, California 94070 (650) 249-9090 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Table of Contents of these five microdeletions is independent of maternal age. Therefore, we believe our microdeletions testing capability will be a significant driver of Panorama adoption in all risk categories, including those who are traditionally considered average-risk for Down syndrome. Panorama has demonstrated best-in-class performance screening for microdeletions. In validation studies, Panorama achieved sensitivity greater than 95% for deletions of approximately 2.9Mb for the 22q11.2 deletion syndrome and has been validated to perform at low fetal fractions. The two other NIPTs currently screening commercially for this condition claim to have sensitivity of only between 60% and 87%. For the three months ended March 31, 2015, approximately 83% of customers who ordered the basic Panorama panel directly from us have also ordered screening for 22q11.2 deletion syndrome or the full microdeletions panel. Based on the prevalence of these conditions in younger women and the performance of Panorama, we believe Panorama is the most appropriate cfDNA-based screening test for the growing NIPT market for average-risk pregnancies. In April 2015, we updated both the molecular and bioinformatics portions of Panorama. These updates both reduce the cost of running Panorama and further increase the sensitivity of the test, allowing it to run with lower fetal fraction input. These updates lead to a less frequent need to require blood redraws from the patient, while further improving performance. We have launched seven prenatal genetic tests since 2009, and in 2015, we launched Constellation, our cloud-based software product, which is helping to enable our cloud-based distribution model. In addition to Panorama and our microdeletions panel, we also offer a carrier screening test (branded as Horizon), pre-implantation genetic screening and diagnosis for embryos prior to in vitro fertilization, or IVF (branded as Spectrum), and products of conception testing that identifies fetal chromosomal causes of miscarriage (branded as Anora). Using Constellation, we also have a non-invasive prenatal paternity test, which is marketed and sold exclusively by a partner from whom we receive a royalty. Our development pipeline in oncology diagnostics We believe that our ability to interrogate genes at tens of thousands of points in parallel in a single reaction at the scale of a single molecule is well suited to the analysis of cancer-associated genetic mutations in circulating tumor DNA, or ctDNA. For the development of these products, we are working with world-renowned oncology centers, such as the Feinstein Institute for Medical Research at North Shore LIJ, Stanford University, Albert Einstein College of Medicine, Columbia University, Johns Hopkins University, Vanderbilt University and Cancer Research UK on research collaborations, clinical trials and engaging with their leading doctors on our oncology advisory board. We have demonstrated that our mmPCR platform can provide highly accurate detection of CNVs and SNVs in the plasma from patients with cancer, with sensitivities lower than 0.5% ctDNA for the detection of CNVs and approximately 0.01% ctDNA for the detection of SNVs. Our ability to simultaneously detect both CNVs and SNVs in ctDNA at very low concentrations in standard plasma samples drives our potential opportunity in the oncology diagnostics space. Because breast, ovarian and lung cancer are largely driven by CNVs, we believe that our ability to detect CNVs at low ctDNA levels will be well-suited for early detection, recurrence monitoring and therapy selection for these cancers. Based on the promise of our technology, we are currently developing non-invasive oncology diagnostic products to address several markets. For ovarian and lung cancer we are developing reflex tests and early detection and recurrence monitoring, for breast cancer we are developing early detection monitoring and recurrence monitoring, and we are developing a therapeutic monitoring product to cover various cancers. We currently anticipate that these tests will be initially commercialized as laboratory-developed tests, or LDTs. Industry Overview Every individual has a unique genome and we believe that comprehensive knowledge of this genetic makeup is becoming integral to the practice of medicine. We also believe that eventually many individuals Herm Rosenman Chief Financial Officer Natera, Inc. 201 Industrial Road, Suite 410 San Carlos, California 94070 (650) 249-9090 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents in a modern healthcare system will have their genome sequenced at birth, resulting in the potential for dramatic improvements in health and an overall reduction in healthcare costs through preventive care and better disease management. The ability to identify the presence of diseases early, easily, and inexpensively has the potential to impact the lives of millions of patients and save billions of dollars in healthcare costs. The rapid expansion of next-generation sequencing, or NGS, of DNA has unlocked a wealth of information about the role of genomics in disease, and is enabling a new class of diagnostic tests that improve patient care. As the cost and performance of next-generation sequencers continues to improve, we expect availability and demand for molecular diagnostic tests will continue to accelerate. In prenatal diagnostics, NIPTs use NGS to screen for chromosomal abnormalities, such as Down syndrome, by measuring fetal DNA circulating in the bloodstream of an expectant mother. According to the U.S. Centers for Disease Control and Prevention, or CDC, in the United States in 2013 there were approximately four million births, which included over 600,000 births resulting from pregnancies that were considered high-risk. Additionally, we estimate that there are over 12.5 million annual births in developed countries, including the United States, and over 16 million in China that fit our addressable market. We believe that the total addressable markets annually for our NIPT product and carrier screening product in the United States alone are approximately $2.5 billion and $2.0 billion, respectively. The first generation of NIPTs rely on quantitative methods, which simply measure the amount of DNA, to predict chromosomal abnormalities. All of our current competitors in the United States rely on this technique. These tests provided a valuable addition to older diagnostic techniques. However, they generally offer varying levels of sensitivity and specificity for whole chromosomal abnormalities, and we believe they are not well-suited for screening for many severe yet relatively common genetic disorders, such as microdeletions. A study in the New England Journal of Medicine found microdeletions or duplications in 1.7% of all pregnancies, indicating substantially higher prevalence rates than common fetal aneuploidies in the general population. Cancer remains one of the greatest areas of unmet medical need despite decades of advancement. The potential market opportunity for "liquid biopsies" in cancer focused on therapeutic monitoring, recurrence monitoring and diagnosis is significant and has the potential for broad applicability across a variety of tumor types. The American Cancer Society estimates that in 2015, there will be approximately 1.7 million new cancer cases diagnosed and more than 575,000 cancer deaths in the United States. We estimate that our planned therapeutic monitoring panel has the potential to address approximately 65%, or 1.1 million, of the annual new cases in the United States of cancer, including ovarian, breast, lung and many other cancers, translating to approximately 4.4 million tests per year and a total addressable market annually in the United States alone of approximately $6.6 billion. Furthermore, we have identified additional markets in early detection of cancers in high risk patients in lung, breast, and ovarian cancers. In lung cancer, our planned early detection test has the potential to address a market of an estimated more than 7 million individuals in the United States who have a history of smoking one pack of cigarettes a day for 30 years or more and are recommended by the U.S. Preventive Services Task Force for annual computed tomography scans. For breast and ovarian cancers, we are seeking to address approximately 6.5 million women in the United States, who self report a family history of breast cancer during routine screening, which is an indicator of high risk for both breast and ovarian cancers. We believe that addressable market size for early detection assays in lung, breast and ovarian cancer in the United States alone is $6.7 billion. We are also developing products for reflex testing for the stratification of current imaging modalities used for cancer detection. In lung cancer, with an estimated 27% of low-dose computed tomograph scans resulting in a positive result, we estimate a target market of 1.9 million patients in the United States. In breast cancer, with approximately 10% of the 39 million mammograms performed annually in the United States recalled for further workup, we estimate an annual market of approximately 3.9 million reflex tests. In ovarian cancer, we estimate 560,000 annual tests that could accompany positive findings on transvaginal Copies to: Robert V. Gunderson, Jr., Esq. John F. Dietz, Esq. Richard C. Blake, Esq. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 1200 Seaport Blvd. Redwood City, California 94063 (650) 321-2400 Daniel Rabinowitz, Esq. Secretary and General Counsel Natera, Inc. 201 Industrial Road, Suite 410 San Carlos, California 94070 (650) 249-9090 Alan F. Denenberg, Esq. Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, California 94025 (650) 752-2004 Table of Contents ultrasounds. We estimate the anticipated total addressable market size for these reflex tests in lung, breast and ovarian cancer to be $3.2 billion. Our Cloud-Based Distribution Model We sell our tests directly and partner with other clinical laboratories to distribute our tests globally. Currently, all of our products are LDTs and we perform most of our commercial testing in our laboratory certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA. However, our technology is compatible with standard equipment used around the world, and a range of NGS platforms, and we have developed the capability for our partner laboratories, under a license from us, to run their molecular assays themselves and then access our computation-intensive algorithms via a cloud-based distribution model for the final step of the analysis. As of June 20, 2015, we have entered into five contracts with laboratories outside of the United States and three contracts with laboratories within the United States to develop and run their own NIPT test under our cloud-based model. In addition, we have recently executed a license agreement with Clarient Diagnostic Services, Inc., a division of GE Healthcare, one of the largest oncology laboratories in the United States. Under this license, Clarient, which processes approximately 10% of the cancer tumor samples in the United States, will develop an oncology test to support pharmaceutical clinical trials based on our technology and employing Constellation. We believe that introducing a cloud-based distribution model provides us with a competitive advantage by allowing us to: Improve patient experience. Drive higher rates of reimbursement for our licensees. Accelerate international adoption by leveraging our licensees' existing capabilities. Efficiently achieve scale and reduce costs. Rapidly deliver innovations to our licensees. Our Strategy Our vision is to deploy our powerful molecular technology and bioinformatics to change the management of genetic disease globally. Our strategy includes the following key elements: Drive adoption of Panorama in all pregnancy risk categories and all geographies. Extend and strengthen our direct sales force and existing relationships with laboratory partners. Continue to improve our cost structure. Apply our expertise in prenatal diagnostics to expand our offering. Leverage our technology to enable applications beyond prenatal testing.
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+This summary highlights information contained elsewhere in this prospectus and does not contain all the information that you should consider before investing in our ordinary shares. See Our business for more information, including a Glossary of terms and Summary of completed and existing clinical trials and registry data beginning on page 105. You should carefully read the entire prospectus, including our financial statements and related notes included in this prospectus and the information set forth under the headings Risk factors and Management s discussion and analysis of financial condition and results of operations, before making an investment decision. In this prospectus, unless the context otherwise requires, the terms NovoCure, we, us, our and our company refer to NovoCure Limited, a public limited company incorporated under the laws of Jersey, Channel Islands, and its wholly owned subsidiaries. Our company We are a commercial-stage oncology company developing a novel, proprietary therapy called Tumor Treating Fields, or TTFields, for the treatment of solid tumor cancers. TTFields is a low-toxicity anti-mitotic treatment that uses low-intensity, intermediate frequency, alternating electric fields to exert physical forces on key molecules inside cancer cells, disrupting the basic machinery necessary for normal cell division, leading to cancer cell death. Physicians have typically treated patients with solid tumors using one or a combination of three principal treatment modalities surgery, radiation and pharmacological therapies. Despite meaningful advancements in each of these modalities, a significant unmet need to improve survival and quality of life remains. We believe we will establish TTFields as a new treatment modality for a variety of solid tumors that increases survival without significantly increasing side effects when used in combination with other cancer treatment modalities. We received FDA approval for Optune, our first TTFields delivery system, in 2011 for use as a monotherapy treatment for adult patients with glioblastoma brain cancer, or GBM, following confirmed recurrence after chemotherapy. We have built a commercial organization and launched Optune in the United States, Germany, Switzerland and Japan, which we refer to as our currently active markets. In November 2014, our Phase 3 pivotal trial of Optune in combination with chemotherapy for patients with newly diagnosed GBM met its endpoints and was halted after a protocol pre-specified interim analysis showed significant improvements in both progression free and overall survival. In April 2015, we filed a premarket approval, or PMA, supplement application with the FDA for the treatment of newly diagnosed GBM based on our Phase 3 data and our application was granted priority review status. Upon FDA approval of Optune for newly diagnosed GBM, we believe TTFields will transform the standard of care for patients with newly diagnosed and recurrent GBM. We have researched the biological effects of TTFields extensively. Because TTFields are delivered regionally, act only on mitotic cells and are tuned to target cancer cells of a specific size, there is minimal damage to healthy cells. We believe our pre-clinical and clinical research demonstrates that TTFields mechanism of action affects fundamental aspects of cell division and can have broad applicability across a variety of solid tumors. In addition to our clinical and commercial progress in GBM, we are currently planning or conducting clinical trials evaluating the use of TTFields in brain metastases, advanced non-small cell lung cancer, or NSCLC, pancreatic cancer, ovarian cancer and mesothelioma. We own all commercialization rights to TTFields in oncology, and have a patent and intellectual property portfolio that, as of June 30, 2015, consists of a total of 52 issued patents, including 36 issued in the United States, as well as over 30 additional patent applications on file. We believe we will maintain exclusive rights to market TTFields for all solid tumor indications in our key markets through the life of our patents. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated October 1, 2015 Preliminary prospectus 7,500,000 shares Ordinary shares We are offering 7,500,000 ordinary shares to be sold in this offering. This is our initial public offering of ordinary shares. Prior to this offering, there has been no public market for our ordinary shares. The estimated initial public offering price is between $23.00 and $24.00 per share. Our ordinary shares are approved for listing on the NASDAQ Global Select Market under the symbol NVCR. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our ordinary shares involves a high degree of risk. These risks are described under the caption Risk factors that begins on page 11 of this prospectus. Per share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds to us, before expenses $ $ (1) We have also agreed to reimburse the underwriters for certain FINRA-related expenses. See Underwriting for a description of all compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days to purchase up to 1,125,000 additional shares on the same terms and conditions set forth above to cover over-allotments, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities that may be offered under this prospectus, nor have any of these organizations determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to investors on , 2015. J.P. Morgan Deutsche Bank Securities Evercore Wells Fargo Securities JMP Securities Wedbush PacGrow Prospectus dated , 2015 Table of Contents About this prospectus Neither we nor the underwriters have authorized anyone to provide you with any information other than information contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is an offer to sell only the ordinary shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information appearing in this prospectus is accurate only as of the date hereof. Our business, prospects, financial condition and results of operations may have changed since that date. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to this offering and the distribution of this prospectus outside the United States. The terms NovoCure, the Company, we, us, our and our company, as used in this prospectus, refer to NovoCure Limited, a public limited company incorporated under the laws of Jersey, Channel Islands, and its wholly owned subsidiaries. All ordinary share amounts in this prospectus reflect a 5.913-for-1 stock split effected on September 16, 2015. This prospectus includes trademarks of NovoCure and other persons. All trademarks or trade names referred to in this prospectus are the property of their respective owners. References in this prospectus to regulatory approvals should be understood to include U.S. Food and Drug Administration, or FDA, approvals, as well as CE Certificates of Conformity issued by notified bodies in the European Union and approvals by the applicable regulatory authorities in Japan and other relevant jurisdictions. References in this prospectus to regulatory authorities should be understood to include the FDA, such notified bodies in the European Union and regulatory authorities in Japan and other relevant jurisdictions. A copy of this document has been delivered to the registrar of companies in Jersey in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002, and it has given, and has not withdrawn, its consent to circulation thereof. The Jersey Financial Services Commission has given, and has not withdrawn, its consent under Article 2 of the Control of Borrowing (Jersey) Order 1958 to the issue of the ordinary shares. It must be distinctly understood that, in giving these consents, neither the registrar of companies in Jersey nor the Jersey Financial Services Commission takes any responsibility for the financial soundness of our company or for the correctness of any statements made, or opinions expressed, with regard to it. Nothing in this document or anything communicated to holders or potential holders of ordinary shares is intended to constitute or should be construed as advice on the merits of the purchase of or subscription for ordinary shares or the exercise of any rights attached thereto for the purposes of the Financial Services (Jersey) Law, 1998, as amended. If you are in any doubt about the contents of this prospectus, you should consult your stockbroker, bank manager, solicitor, accountant or other financial advisor. The directors of our company have taken all reasonable care to ensure that the facts stated in this prospectus are true and accurate in all material respects, and that there are no other facts the omission of which would make misleading any statement in this prospectus, whether of facts or of opinion. All the directors accept responsibility accordingly. It should be remembered that the price of securities and the income from them can go down as well as up. Table of Contents To date, substantially all of our revenues have been derived from patients using Optune in our currently active markets. Our net revenues for the year ended December 31, 2014 were $15.5 million and $11.8 million for the six months ended June 30, 2015. However, we have incurred significant costs in connection with our pre-clinical and clinical trial programs, commercial launch efforts and general and administrative costs. We had net losses of $77.4 million for the year ended December 31, 2013, $80.7 million for the year ended December 31, 2014 and $52.6 million for the six months ended June 30, 2015, and we have an accumulated deficit of $329.1 million as of June 30, 2015. We expect to continue to incur significant expenses and operating losses for at least the next several years. GBM our first approved and commercialized indication GBM is the most common and aggressive form of primary brain cancer. We estimate approximately 27,500 patients are diagnosed with GBM annually in the United States, the top five European Union markets and Japan. GBM has few effective treatment options at present and provides our first opportunity to transform the standard of care for a solid tumor cancer to include TTFields. We launched Optune in the United States for the treatment of recurrent GBM in 2011 and more recently in our other currently active markets. Since the majority of recurrent GBM patients are treated at large cancer centers, we built a commercial organization to focus primarily on these centers. As of the date of this prospectus, we have trained physicians in over 270 clinical centers. These trained physicians have treated over 1,600 GBM patients using Optune. We initiated our EF-14 Phase 3 pivotal trial in 2009 to establish TTFields for the treatment of newly diagnosed GBM. The EF-14 trial randomized 700 patients to receive either temozolomide, the established standard of care chemotherapy for newly diagnosed GBM, or TTFields in combination with temozolomide. In November 2014, a protocol pre-specified interim analysis of the first 315 patients demonstrated the trial met its powered endpoints of significant extension of both progression free survival, or PFS, and overall survival, or OS, in patients treated with TTFields in combination with temozolomide versus temozolomide alone. The interim analysis results demonstrated that: the two-year survival rate among patients treated with TTFields in combination with temozolomide, in the as-treated population, was 48% compared to 32% among patients treated with temozolomide alone (p 0.0058); patients treated with TTFields, in combination with temozolomide, in the intent-to-treat population, demonstrated a statistically significant increase in PFS compared to temozolomide alone (median PFS of 7.2 months compared to 4.0 months, hazard ratio 0.62, p 0.001); and patients treated with TTFields, in combination with temozolomide, in the as-treated population, demonstrated a statistically significant increase in OS compared to temozolomide alone (median OS of 20.5 months compared to 15.6 months, hazard ratio 0.66, p 0.004). The trial s independent data monitoring committee recommended that patients receiving temozolomide alone be allowed to cross over immediately to receive TTFields. Following FDA approval of this recommendation in December 2014, we allowed patients receiving temozolomide alone to cross over. We submitted a PMA supplement application to the FDA in April 2015 to expand our label for Optune to include the treatment of newly diagnosed GBM. In May 2015, we received priority review status from the FDA. We believe that following FDA approval of Optune for newly diagnosed GBM, Optune in combination with temozolomide will transform the standard of care for the treatment of patients with newly diagnosed GBM. Table of Contents Table of Contents Our clinical pipeline We have performed extensive pre-clinical research on TTFields and their effects in multiple solid tumor cancers. We have gained a deep understanding of the underlying mechanism of action and the multiple pathways through which TTFields exert their effects within the dividing cancer cells. Our research shows that TTFields have an anti-mitotic effect in over 15 different solid tumor types in culture and in multiple in vivo tumor models. In vitro and in vivo studies combining TTFields with radiation or chemotherapy, in multiple tumor types, have demonstrated at least additive efficacy, or stronger efficacy than the effect of either treatment alone, and in some cases synergistic efficacy, or stronger efficacy than the sum of the effects of both treatments. An increase in cancer cell sensitivity to chemotherapy when used in combination with TTFields in the range of one to two orders of magnitude suggests additivity, while an increase in the range of three to four orders of magnitude suggests synergism. Certain in vitro experiments using TTFields have suggested both additivity and synergism when used in combination with chemotherapy, as the presence of TTFields was shown to increase cancer cell sensitivity to chemotherapy from approximately 275 times to over 1,250 times depending on the mechanism of action of the particular chemotherapy. The upper end of this range was observed in testing with taxane-based chemotherapies. We believe our success in delaying disease progression and extending survival in GBM patients, our pre-clinical data and our early clinical data in additional indications validate the potential of TTFields to become a new therapeutic modality for a variety of solid tumors. We have developed a pipeline strategy to advance TTFields through Phase 2 pilot and Phase 3 pivotal clinical trials across multiple solid tumor types, and anticipate expanding our clinical pipeline over time to study the safety and efficacy of TTFields for additional solid tumor indications. Our competitive advantages We believe our key competitive advantages are: Significant market potential addressable via a broadly applicable mechanism of action. Based on our pre-clinical research and clinical experience to date, we believe the anti-mitotic mechanism of action of TTFields is broadly applicable to a variety of solid tumors with an annual incidence of approximately 1.1 million people in the United States alone. Currently, we have ongoing and completed clinical trials for indications with an incidence of approximately 350,000 people annually in the United States. We believe that the global incident population of target solid tumors provides us with significant additional commercial opportunities. Table of Contents Immediate commercial opportunity for Optune in GBM. We are currently marketing Optune for the treatment of recurrent GBM in the United States and our other currently active markets. We have applied for FDA approval for the treatment of newly diagnosed GBM based on the results of our successful EF-14 Phase 3 clinical trial. Upon approval, we will begin marketing Optune as a treatment for newly diagnosed GBM, and we expect that Optune will transform the standard of care for the treatment of patients with newly diagnosed GBM. Pipeline of Phase 2 trials in five additional indications. In addition to our GBM clinical programs, we have invested in a variety of clinical programs in other solid tumors. We have completed a Phase 2 trial in NSCLC, and are currently enrolling patients in Phase 2 trials for brain metastases, pancreatic cancer, ovarian cancer and mesothelioma. We expect to continue investing in our pipeline over time to broaden our commercial opportunity. Established commercial organization and supply chain. We have established our commercial organization and believe we have the experience, expertise and infrastructure to scale our sales and marketing efforts in our key markets. In addition to our commercial organization, we have established a scalable supply chain. Significant barriers to entry. We own all commercialization rights to TTFields in oncology and have a patent and intellectual property portfolio that, as of June 30, 2015, consists of a total of 52 issued patents, including 36 issued in the United States, as well as over 30 additional patent applications on file. We have patent protection through 2031 in the United States and through 2026 in other key markets. We believe we will maintain exclusive rights to market TTFields for all solid tumor indications in our key markets for the life of our patents. In addition, even after the expiration of our U.S. patents, potential market entrants applying low-intensity, alternating electric fields to solid tumors in the United States will have to undertake their own clinical trials and PMA submissions to the FDA to demonstrate equivalence to TTFields to market a competing product. Our strategies for growth Our objective is to establish TTFields as a new modality for the treatment of a variety of solid tumors. Our key strategies include the following: Drive adoption of Optune in GBM. We plan to use the data from our pivotal EF-14 Phase 3 clinical trial and our commercial organization to transform the standard of care for patients with newly diagnosed and recurrent GBM and to drive adoption of Optune by physicians and patients. Expand our commercial organization. We plan to expand our direct sales force to call on physicians who treat newly diagnosed GBM patients. We expect to further expand our commercial organization following regulatory approvals for additional indications. Advance clinical development of TTFields. We plan to advance our clinical pipeline and evaluate other solid tumor indications that we believe can be targeted with TTFields. Evaluate the use of TTFields in combination with other solid tumor therapies. We are supporting independent research into the optimal combinations of TTFields with radiation or pharmacological therapies to expand the population of patients who may benefit from TTFields. For example, we believe that TTFields may be combined with radiation or chemotherapy to allow for dose reductions, leading to reduced toxicity while achieving the same or better treatment outcomes. Table of Contents Continue to improve our TTFields delivery systems. We plan to continue to develop and enhance our TTFields delivery systems to improve performance and to provide the optimal patient experience across a variety of approved and potential clinical indications. We intend to seek FDA approval for the second generation of Optune, which is less than half the weight and size of the current version.
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed information contained elsewhere in this prospectus, including the section titled "Risk Factors," regarding us and the common stock being sold in this offering. Unless the context otherwise requires, when we refer to "Panamera," "our company," "PHC", "we," "us" or "our," we are referring to PANAMERA HEALTHCARE CORPORATION, a Nevada corporation. We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. PANAMERA HEALTHCARE CORPORATION Business Overview PANAMERA HEALTHCARE CORPORATION offers management and consulting services to healthcare organizations that are increasingly facing various stresses including financial, organizational and information technology challenges. The reasons for these stresses are multifactorial and include long-standing trends in healthcare, but also include recent challenges brought about by the Affordable Care Act, the mandated implementation of ICD-10-CM/PCS (International Classification of Diseases, 10th Edition, Clinical Codification/Procedure Coding System, "ICD-10"), and economic factors related to varying and uncertain reimbursement rates. Our initial contracts are with consulting firms that offer services similar to ours but lack expertise in certain areas. The market is so vast that at this point in our development we do not consider such collaborations as a threat to our business, and we believe that collaboration may result in long-term benefits to us. We are offering our shares and seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel. With the net proceeds of this offering, we intend to expand the reach of our services. We will increase our marketing budget to create more market awareness of our company through professional social networking and developing an on-line presence by constructing a website. We are a newly-formed company with limited revenue and operations, and minimal assets. To date, we have not earned significant revenue, or generated significant cash flow. An investment in our shares of common stock in this offering involves a high degree of risk. Our Services We will offer our clients in the healthcare industry a wide array of services including but not limited to: new practice start-up services and group practice reorganizations; physician group advisory services, performance improvement, compensation, electronic medical records and clinical practice integration; hospital and surgical center interim management, turnaround strategies, workforce management, regulatory compliance and accreditation preparation, and start-up, transition, and closure support; transition to value-based care, value-based payment modeling, and measurable outcomes; strategic and business planning as organizations cope with a transition to accountable care; feasibility studies, fairness opinions, and valuations; ICD-10 implementation and training. Our prospective clients are organizations or individual healthcare practitioners who need to accelerate their knowledge and acquisition of the systems needed to deal with some of the issues mentioned above. Our objective is to understand our clients' needs and serve as an aggregator of the information needed to solve their problems and meet their objectives rapidly and cost-effectively. We do not hold ourselves apart as experts in any single field, rather we provide our clients with information choices from many sources. We believe that this approach is important in the current healthcare climate where there is a perceived feeling of uncertainty about new regulations and their implementation. TABLE OF CONTENTS Page PROSPECTUS SUMMARY 3
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and may not contain all of the information that may be important to you. Before making an investment decision, you should read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere herein. You should also carefully consider the information set forth under Risk Factors. In addition, certain statements include forward-looking information that is subject to risks and uncertainties. See Cautionary Statement Regarding Forward-Looking Statements. Company Overview We are a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families. The core of our concept is to offer our customers the opportunity to Eat Drink Play and Watch all in one location. Eat and Drink are offered through a full menu of Fun American New Gourmet entr es and appetizers and a full selection of non-alcoholic and alcoholic beverages. Our Play and Watch offerings provide an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. Our customer mix skews moderately to males, primarily between the ages of 21 and 39, and we believe we also serve as an attractive venue for families with children and teenagers. We believe we appeal to a diverse customer base by providing a highly customizable experience in a dynamic and fun setting. As of September 15, 2015, we owned and operated 77 stores in 30 states and Canada. For the fiscal year ended February 1, 2015, we generated total revenues of $746.8 million, Adjusted EBITDA of $165.1 million (representing an Adjusted EBITDA margin of 22.1%) and net income of $7.6 million. For the twenty-six weeks ended August 2, 2015 and August 3, 2014, we generated total revenues of $440.0 million and $376.2 million, respectively, Adjusted EBITDA of $114.6 million and $89.1 million, respectively, and net income of $32.1 million and net loss of $2.4 million, respectively. For fiscal 2013 and fiscal 2012, we generated total revenues of $635.6 million and $608.1 million, respectively, Adjusted EBITDA of $134.8 million and $120.5 million, respectively, and net income of $2.2 million and $8.8 million, respectively. From fiscal 2012 to fiscal 2014, total revenues and Adjusted EBITDA grew at a compound annual growth rate ( CAGR ) of 10.8% and 17.1%, respectively. We generated comparable store sales increases of 10.4%, 7.3%, 1.0% and 3.0% in the twenty-six weeks ended August 2, 2015 and in fiscal 2014, 2013 and 2012, respectively. Table of Contents Information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2015 6,000,000 Shares Dave & Buster s Entertainment, Inc. Common Stock The selling stockholders named in this prospectus are offering 6,000,000 shares of our common stock. We will not receive any proceeds from the sale of common stock to be offered by the selling stockholders. See Use of Proceeds. Our common stock is listed on The NASDAQ Stock Market LLC ( NASDAQ ) under the symbol PLAY. On September 28, 2015, the last sale price of our common stock as reported on NASDAQ was $39.87 per share. Dave & Buster s Entertainment, Inc. is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ). Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 19 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PER SHARE TOTAL Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds to the selling stockholders, before expenses $ $ (1) We refer you to Underwriting beginning on page 116 of this prospectus for additional information regarding total underwriter compensation. Delivery of the shares of common stock is expected to be made on or about , 2015. The selling stockholders named in this prospectus have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase an additional 900,000 shares of our common stock. Jefferies Piper Jaffray William Blair Raymond James Stifel BMO Capital Markets Prospectus dated , 2015. Table of Contents BASIS OF PRESENTATION Dave & Buster s Entertainment, Inc. ( D&B Entertainment ) owns no significant assets or operations other than all the common stock of Dave & Buster s Holdings, Inc, ( D&B Holdings ). D&B Holdings owns no significant assets or operations other than the ownership of all the common stock of Dave & Buster s, Inc. ( D&B Inc ). References to the Company , we , us , and our refer to D&B Entertainment and its subsidiaries and any predecessor companies. All material intercompany accounts and transactions have been eliminated in consolidation. The Company s activities are conducted through D&B Inc. D&B Inc owns and operates high-volume venues in North America that combine dining and entertainment for both adults and families. We operate on a 52 or 53 week fiscal year that ends on the Sunday after the Saturday closest to January 31. Each quarterly period has 13 weeks, except in a 53 week year when the fourth quarter has 14 weeks. All fiscal years presented herein consist of 52 weeks, except fiscal year 2012, which consisted of 53 weeks. All references to 2015, fiscal 2015, fiscal year 2015 or similar references relate to the 52 week period ending January 31, 2016. All references to 2014, fiscal 2014, fiscal year 2014 or similar references relate to the 52 week period ended February 1, 2015. All references to 2013, fiscal 2013, fiscal year 2013 or similar references relate to the 52 week period ended February 2, 2014. All references to 2012, fiscal 2012, fiscal year 2012 or similar references relate to the 53 week period ended February 3, 2013. All references to 2011, fiscal 2011, fiscal year 2011 or similar references relate to the 52 week period ended January 29, 2012. All references to 2010, fiscal 2010, fiscal year 2010 or similar references relate to the combined results of the 244 day period ended January 30, 2011 and the 120 day period ended May 31, 2010. On June 1, 2010, D&B Entertainment, a newly-formed Delaware corporation owned by Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (collectively, the Oak Hill Funds ) acquired all of the outstanding common stock of D&B Holdings. Generally accepted accounting principles in the United States ( GAAP ) require operating results prior to the acquisition to be presented or referred to as Predecessor s results in the historical financial statements. Operating results subsequent to the acquisition are presented or referred to as Successor s results in the historical financial statements. The presentation of combined Predecessor and Successor operating results (which is simply the arithmetic sum of the Predecessor and Successor amounts) is a non-GAAP presentation, which is provided as a convenience solely for the purpose of facilitating comparisons of the combined results with other annual periods presented. In October 2014, we amended and restated our certificate of incorporation to increase our authorized share capital to 450,000,000 shares of stock, including 400,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a par value of $0.01 per share and to split our common stock 224.9835679 for 1. Additionally, we completed our initial public offering (the IPO ) of 6,764,705 shares of common stock at a price of $16.00 per share. Unless otherwise noted herein, historic share data has been adjusted to give effect to the stock split. In February 2015, we completed a follow-on offering of 7,590,000 shares of our common stock (including the full exercise of the underwriters overallotment option to purchase an additional 990,000 shares) at a price of $29.50 per share. All of these shares were offered by the selling stockholders. In connection with the offering, 300,151 options were exercised at a weighted average price of $4.49. We issued new shares in satisfaction of this exercise. We received $1.3 million upon the exercise of options which were sold as part of such offering. In May 2015, we completed another follow-on offering of 9,775,000 shares of our common stock (including the full exercise of the underwriters overallotment option to purchase an additional 1,275,000 shares) at a price of $31.50 per share. All of these shares were offered by the selling stockholders. In connection with the offering, 853,155 options were exercised at a weighted average price of $4.46. We issued 604,743 new shares and utilized 248,412 treasury shares in satisfaction of this exercise. We received $3.8 million upon the exercise of options which were sold as part of such offering. Comparable store data presented in this prospectus represents the year-over-year change in sales at company-operated stores open at the end of the period which have been open at least 18 months as of the beginning of each of the relevant fiscal years. Fiscal 2014 comparable store and count data excludes our location in Kensington/Bethesda, Maryland ( Bethesda ), which permanently closed on August 12, 2014. Our Farmingdale (Long Island), Table of Contents Total Revenues ($mm) Adjusted EBITDA & Margin ($mm) Twenty-six weeks ended August 3, 2014 Twenty-six weeks ended August 2, 2015 Twenty-six weeks ended August 3, 2014 Twenty-six weeks ended August 2, 2015 Stores: 69 76 As a key feature of our business model, 51.9% of our total revenues for fiscal 2014 were from our amusement offerings, which have a relatively low variable cost component and contributed a gross margin of 86.0%. Combined with our food and beverage revenues, which comprised 48.1% of our total revenues and contributed a gross margin of 74.3% for fiscal 2014, we generated a total gross margin of 80.4%. The formats and square footage of our stores are flexible, which we believe allows us to size new stores appropriately for each market as we grow. Our stores average 44,000 square feet and range in size between 16,000 and 66,000 square feet. We believe we have an attractive store economic model that enables us to generate high average store revenues and Store-level EBITDA. For our 57 comparable stores in fiscal 2014, our average revenues per store were $10.8 million, average Store-level EBITDA was $3.0 million and average Store-level EBITDA margin was 27.8%. Furthermore, for that same period, all of our comparable stores had positive Store-level EBITDA, with 91.2% of our stores generating more than $1.0 million of Store-level EBITDA each and 70.2% of our stores generating more than $2.0 million of Store-level EBITDA each. Eat Drink Play and Watch All Under One Roof When our founders opened our first location in Dallas, Texas in 1982, they sought to create a brand with a fun, upbeat atmosphere providing interactive entertainment options for adults and families, while serving high-quality food and beverages. Since then we have followed the same principle for each new store, and in doing so we believe we have developed a distinctive brand based on our customer value proposition: Eat Drink Play and Watch. The interaction between playing games, watching sports, dining and enjoying our full-service bar areas is the defining feature of the Dave & Buster s customer experience, and the layout of each store is Table of Contents DAVE & BUSTER S R EAT. DRINK. PLAY. WATCH. R C DAVE & BUSTER S Table of Contents New York ( Farmingdale ) store which closed on February 8, 2015, subsequent to our fiscal 2014 year end, is included in comparable store and count data for periods prior to February 2, 2015. See Management s Discussion and Analysis of Financial Condition and Results of Operations. Certain financial measures presented in this prospectus, such as Adjusted EBITDA, Adjusted EBITDA Margin, Store-level EBITDA and Store-level EBITDA margin, are not recognized terms under GAAP. These measures exclude a number of significant items, including our interest expense and depreciation and amortization expense. For a discussion of the use of these measures and a reconciliation to the most directly comparable GAAP measures, see Prospectus Summary Summary Historical Financial and Other Data. We define high-volume dining and entertainment venues as those open for at least one full year and with average store revenues in excess of $5.0 million and define year one cash-on-cash return as year one Store-level EBITDA exclusive of allocated national marketing costs divided by net development costs. Net development costs include equipment, building, leasehold and site costs, net of tenant improvement allowances received or receivable from landlords, and exclude pre-opening costs and capitalized interest. This prospectus also contains information regarding customer feedback, customer satisfaction, customer demographics and other similar items. This information is based upon data collected by us during the periods presented. This information is reported voluntarily by our customers and thus represents responses from only a portion of the total number of our customers. We have not independently verified any of the demographic information collected from our customers. Over the periods presented, we have changed the form of reward for completing a survey, which resulted in an increase in the percentage of completed surveys, but we do not believe this has materially impacted the results. In addition, over the periods presented, we have added and deleted questions from the questionnaires, but have not made any changes to questions eliciting responses relating to the results presented in the prospectus. We use the information collected as one measure of the performance of our stores and use it to assess the success of our initiatives to improve the quality of the product we offer. Table of Contents designed to promote crossover between these activities. We believe this combination creates an experience that cannot be easily replicated at home or elsewhere without having to visit multiple destinations. Our locations are also designed to accommodate private parties, business functions and other corporate-sponsored events. Eat We seek to distinguish our food menu from other casual dining concepts with our strategy of offering Fun American New Gourmet entr es and appetizers. Our Fun American New Gourmet menu is intended to appeal to a broad spectrum of customers and include classic American offerings with a fun twist. We believe we offer high-quality meals, including gourmet pastas, choice-grade steaks, premium sandwiches, decadent desserts and health-conscious entr e options that compare favorably to those of other higher end casual dining operators. We believe our broad menu offers something for everyone and captures full meal, snacking and sports-viewing occasions. We plan to introduce new menu items three times per year that we believe reinforce the fun of the Dave & Buster s brand. Our food revenues, which include non-alcoholic beverages, accounted for 67.6% of our food and beverage revenues and 32.5% of our total revenues during fiscal 2014. Drink Each of our locations also offers full bar service, including a variety of beers, signature cocktails, and premium spirits. We continually strive to innovate our beverage offering, adding new beverages three times per year, including the introduction of fun beverage platforms such as our adult Snow Cones, CoronaRitas and Berry Blocks cocktails. Beverage service is typically available throughout the entire store, allowing for multiple sales opportunities. We believe that our high margin beverage offering is complementary to each of the Eat, Play and Watch aspects of our brand. Our alcoholic beverage revenues accounted for 32.4% of our total food and beverage revenues and 15.6% of our total revenues during fiscal 2014. Play The games in our Midway are a key aspect of the Dave & Buster s entertainment experience, which we believe is the core differentiating feature of our brand. The Midway in each of our stores is an area where we offer a wide array of amusement and entertainment options, typically with over 150 redemption and simulation games. Our amusement and other revenues accounted for 51.9% of our total revenues during fiscal 2014. Redemption games, which represented 79.7% of our amusement and other revenues in fiscal 2014, offer our customers the opportunity to win tickets that are redeemable at our Winner s Circle, a retail-style space in our stores where customers can redeem the tickets won through play of our redemption games for prizes ranging from branded novelty items to high-end electronics. We believe this opportunity to win creates a fun and highly energized social experience that is an important aspect of the Dave & Buster s in-store experience and cannot be easily replicated at home. Our video and simulation games, many of which can be played by multiple customers simultaneously and include some of the latest high-tech games commercially available, represented 16.3% of our amusement and other revenues in fiscal 2014. Other traditional amusements represented the remainder of our amusement and other revenues in fiscal 2014. Watch Sports-viewing is another key component of the entertainment experience at Dave & Buster s. All of our stores have multiple large screen televisions and high quality audio systems providing customers with a venue for watching live sports and other televised events. In fiscal 2010, we initiated a program that evolved into D&B Sports, which is a more immersive viewing environment that provides customers with an average of 40 televisions, including 100+ inch high definition televisions, to watch televised events and enjoy our full bar and extensive food menu. We believe that we have created an attractive and comfortable environment that includes a differentiated and interactive viewing experience that offers a new reason for customers to visit Dave & Buster s. Through continued development of the D&B Sports concept in new stores and additional renovations of existing stores, our goal is to build awareness of D&B Sports as the best place to watch sports and the only place to watch the games and play the games. Table of Contents TABLE OF CONTENTS PAGE PROSPECTUS SUMMARY 1
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+S-1/A 1 f12015a2_globalpartner.htm AMENDMENT TO REGISTRATION STATEMENT As filed with the U.S. Securities and Exchange Commission on July 27, 2015. Registration No. 333-204907 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ Amendment No. 2 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____________________________ Global Partner Acquisition Corp. (Exact name of registrant as specified in its charter) _____________________________ Delaware 6770 47-4078206 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1 Rockefeller Plaza 10th floor New York, New York 10020 (646) 756-2877 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) _____________________________ Paul Zepf, Chief Executive Officer 1 Rockefeller Plaza 10th floor New York, New York 10020 (646) 756-2877 (Name, address, including zip code, and telephone number, including area code, of agent for service) _____________________________ Copies to: Douglas Ellenoff, Esq. Stuart Neuhauser, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, NY 10105 (212) 370-1300 (212) 370-7889—Facsimile Gregg A Noel, Esq. Michael J. Mies, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue Palo Alto, California 94301 (650) 470-4500 (650) 470-4570—Facsimile _____________________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) x Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security (1) Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee(5) Units, each consisting of one share of common stock, $.0001 par value, and one warrant (2) 15,525,000 $ 10.00 $ 10.00 $ 155,250,000 $ 18,041 Shares of common stock included as part of the units (3) 15,525,000 — — — — (4) Warrants included as part of the units (3) 15,525,000 — — — — (4) Total $ 155,250,000 $ 18,041 ____________ (1) Estimated solely for the purpose of calculating the registration fee. (2) Includes 2,025,000 units, consisting of 2,025,000 shares of common stock and 2,025,000 warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3) Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (4) No fee pursuant to Rule 457(g). (5) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement fi led with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated July 27, 2015 Preliminary Prospectus GLOBAL PARTNER ACQUISITION CORP. $135,000,000 13,500,000 Units Global Partner Acquisition Corp. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 2,025,000 units to cover over-allotments, if any. We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding shares of common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $50,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable) divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Our sponsor, Global Partner Sponsor I LLC (which we refer to as our "sponsor" throughout this prospectus) has committed to purchase an aggregate of 11,600,000 warrants (or 12,815,000 warrants if the over-allotment option is exercised in full) at a price of $0.50 per warrant ($5,800,000 in the aggregate, or $6,407,500 if the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Each private placement warrant is exercisable to purchase one-half of one share of our common stock at $5.75 per half share. Currently, there is no public market for our units, common stock or warrants. We have applied to list our units on the NASDAQ Capital Market, or NASDAQ, under the symbol "GPACU" on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on NASDAQ. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the common stock and warrants will be listed on NASDAQ under the symbols "GPAC" and "GPACW," respectively. We are an "emerging growth company" under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 28 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public offering price $10.00 $135,000,000 Underwriting discounts and commissions (1) $0.60 $8,100,000 Proceeds, before expenses, to us $9.40 $126,900,000 ____________ (1) Includes $0.30 per unit, or approximately $4,050,000 (or up to approximately $4,657,500 if the underwriters over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, in an amount equal to $0.30 multiplied by the number of shares of common stock sold as part of the units in this offering, as described in this prospectus. Does not include certain fees and expenses payable to the underwriters in connection with this offering. See also "Underwriting" beginning on page 140 for a description of compensation and other items of value payable to the underwriters. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $135.0 million or approximately $155.25 million if the underwriters over-allotment option is exercised in full ($10.00 per unit), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee. Except for the withdrawal of interest to pay taxes, our amended and restated certificate of incorporation will provide that none of the funds held in trust will be released from the trust account until the earlier of (i) the completion of our initial business combination or (ii) the redemption of our public shares if we are unable to complete our business combination within 24 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2015. Deutsche Bank Securities I-Bankers Securities, Inc. , 2015 You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. TABLE OF CONTENTS Page Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our Class A common stock. You should read this entire prospectus carefully, especially the risks of investing in our Class A common stock discussed under the heading Risk Factors, and our consolidated financial statements and related notes included elsewhere in this prospectus before making an investment decision. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to Pure Storage, Pure, the company, we, us and our refer to Pure Storage, Inc. and its wholly-owned subsidiaries. PURE STORAGE, INC. Overview Our mission is to deliver data storage that transforms business through a dramatic increase in performance and reduction in complexity and costs. Our innovative technology replaces storage systems designed for mechanical disk with all-flash systems optimized end-to-end for solid-state memory. At the same time, our innovative business model replaces the traditional forklift upgrade cycle with an evergreen storage model of hardware and software upgrades and maintenance. Our next-generation storage platform and business model are the result of our team s substantial experience in enterprise storage and web-scale infrastructure, as well as frustration with the industry s status quo. This deep industry understanding led to the development of our three-part integrated platform: the Purity Operating Environment, our flash-optimized software, FlashArray, our modular and scalable all-flash array hardware, and Pure1, our cloud-based management and support. Our platform can deliver a 10X acceleration in business applications over legacy disk-based storage. It is also designed to be compatible with existing infrastructure, substantially more reliable and power and space efficient. Our business model builds on our technology innovations to reverse the traditional storage business model. Instead of moving data between old and new systems via forklift upgrades, we keep business data and applications in place and upgrade technology around it. Our platform and business model are designed to add value to customers for a decade or more, reducing total cost of storage ownership while increasing loyalty. Our innovations help rebalance the datacenter by closing the performance gap between legacy storage technology and servers and networks. But it is the simplicity of our platform and business model that is revolutionizing the enterprise storage experience. Together, our innovations have helped our customers realize the promise of the cloud model for IT and the benefits of Moore s Law. This has yielded industry-leading Net Promoter scores, based on the results of customer satisfaction surveys we conducted. Since launching FlashArray in May 2012, our customer base has grown to over 1,100 customers. Our customers include large and mid-size organizations across a diverse set of industry verticals, including cloud-based software and service providers, consumer web, education, energy, financial services, governments, healthcare, manufacturing, media, retail and telecommunications. Our platform is used for a broad set of storage use cases, including database applications, private and public cloud infrastructure, virtual server infrastructure and virtual desktop infrastructure. Our platform helps customers increase employee productivity, improve operational efficiency, make better decisions through faster, more accurate analytics and deliver more compelling user experiences to their customers and partners. We sell our platform predominantly through a high touch, channel-fulfilled model. Our sales force works collaboratively with our global network of distribution and channel partners, which provides us broad sales reach while maintaining direct customer engagement. Table of Contents Pure Storage serves the market for enterprise storage and related storage software. According to IDC, the combined worldwide spend by enterprises on external storage hardware priced at more than $50,000 per array and storage and device management, storage infrastructure and storage replication software is estimated to grow from approximately $24.2 billion in 2014 to $27.0 billion in 2018. We believe the benefits of next-generation flash storage will drive flash to ultimately become the predominant form of primary enterprise storage and present a broad market opportunity. This market opportunity is reflected in our rapid growth. Our revenue increased from $6.1 million for the fiscal year ended January 31, 2013 to $42.7 million for the fiscal year ended January 31, 2014 and to $174.5 million for the fiscal year ended January 31, 2015, representing year-over-year revenue growth of 603% and 308% for our two most recent fiscal years. Our revenue increased from $59.4 million for the six months ended July 31, 2014 to $158.7 million for the six months ended July 31, 2015, representing period-over-period growth of 167% for our most recent interim period. Our net loss was $23.4 million, $78.6 million, and $183.2 million for the fiscal years ended January 31, 2013, 2014 and 2015, respectively and $95.2 million and $113.0 million for the six months ended July 31, 2014 and 2015, respectively. For the fiscal year ended January 31, 2015 and the six months ended July 31, 2015, 77% and 78% of our revenue was from the United States and 23% and 22% from the rest of the world, respectively. Industry Background Technology continues to transform business redefining how products and services are built, how customers and partners are served and how organizations innovate. As a result, organizations face the urgent need to operate with greater speed and to leverage technology to be smarter and more innovative. Indeed, the speed, agility and efficiency of an organization s information systems contribute to and in many cases define competitive advantage. Organizations must make technology investments that improve IT performance and in parallel reduce the cost and complexity of their operations. Technology that can quickly adapt to ever-changing requirements and drive these dual and seemingly opposed requirements of improving both performance and efficiency is essential. Business Transformation through Improved Performance. The speed of servers and networks has dramatically improved over the past several decades, but the performance of disk-based storage has not kept up. Disk-based storage is now an obstacle to application performance. Flash memory is a solid-state storage technology that can eliminate the storage bottleneck, while providing better performance, greater storage density and improved power efficiency as compared to disk. Flash memory has transformed today s consumer technology experience it is the storage media inside smartphones and it is now time for business to enjoy those same benefits. The price performance of flash technology also has improved dramatically in recent years. Already, leading web-scale companies such as Apple, Facebook and Google are utilizing flash-based storage in their datacenters. Even when retrofitted with flash, legacy approaches to storage generally fall short. Too often, they rely on legacy storage software, which was optimized for the serial and sequential read and write patterns of disk. They do not take full advantage of the parallelizable and random access nature of flash. Even modern hybrid storage approaches those that pair flash and disk designs are inadequate, as they suffer from the speed of the far slower disk operations. IT Transformation through Reduced Costs and Complexity. Cloud computing has been one of the more compelling IT advances in years. Today, organizations use shared resources in the cloud, significantly reducing the cost and complexity of operations and datacenters. Organizations around the world are now adopting many of the core tenets of this cloud model to transform their own operations and datacenters. Table of Contents In a world that runs on flash What was complex, now is simple What filled data center racks, now fits in a box What took days, now takes hours What became outdated, now is evergreen Table of Contents Legacy disk-based storage is generally inconsistent with the design tenets of the cloud. It does not scale easily, and is complex and costly to manage, often requiring expert consultants for routine operations. Most legacy disk-based storage requires organizations to replace their storage systems every 3 to 5 years. This is expensive and worrisome for customers, who must juggle upgrades and downtime during the data migration period. The result is an endless and time-consuming cycle of procurement, provisioning and troubleshooting of data storage. Next-Generation Storage. With the increased demands of a complex and changing business environment, we believe organizations not only desire but also require a new storage platform that combines the following: Dramatically improved performance to keep up with the demands of the business; Reliability, security and data management services for operating in mission critical environments; Seamless interoperability for compatibility with existing IT infrastructure investments; Simplicity, agility, easy automation and elasticity to enable the cloud model of IT; and Greater price performance and reduced total cost of ownership. Our Solution Pure Storage is defining the next generation of enterprise data storage. We have pioneered the all-flash array category and have coupled that with our customer-centric business model. We believe that our approach is having a profound impact both on our customers and the data storage industry as a whole: Business Transformation. With Pure Storage, customers business applications run faster helping them to improve yields, employee productivity and customer and partner experiences, allowing them to make smarter decisions, and enabling them to increase innovation across their organizations. Technology Transformation. Our platform increases the efficiency, agility and simplicity of IT infrastructure, enabling our customers to reduce the cost and complexity of operations and implement the cloud model. The following differentiates our storage platform: High Performance. Our FlashArray and Purity Operating Environment software were specifically architected for the fast parallelizable and random access of flash. The result is that customers can eliminate more than one year of cumulative application latency every month as compared to legacy disk-based storage in typical deployments. Enterprise Resiliency. Our platform, through the Purity Operating Environment, enables customers to maintain continuous access to their data without a loss in performance, even in the event of hardware or software component failures or during upgrades. Simplicity. Our platform is simple to deploy, manage and upgrade for a wide variety of customer use cases the basic operating commands fit on a single, folding business card. Our platform is designed to seamlessly integrate with existing investments in server and application infrastructure. Agile Management. Through Pure1, we deliver an integrated cloud-based management and support experience. We originate most of the support interactions we have with our customers, consistent with our proactive focus on helping our customers quickly respond to issues and stay ahead of changes to their storage requirements. Evergreen Storage. Our platform is designed to support customer deployments for a decade or more. Through our innovative business model, we provide software updates, any needed hardware replacements, and a controller refresh every three years so the customer can run the latest Purity Operating Environment for predictable maintenance fees. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY 
+
+ This summary highlights selected information from this prospectus relating to SpinCo, SpinCo s separation from Paramount and the distribution of SpinCo s shares of common stock by Paramount to its stockholders. For a more complete understanding of our businesses and the separation and distribution, you should read this prospectus carefully. Except as otherwise indicated or unless the context otherwise requires, the information included in this prospectus, including the consolidated financial statements of Paramount Gold Nevada Corp., assumes the completion of all the transactions referred to in this prospectus in connection with the separation and distribution.
+
+ The information about us and our business contained in this prospectus assumes that the distribution and Merger have been completed. If Paramount stockholders do not approve the merger agreement and the Merger, or if the Coeur stockholders do not approve the issuance of Coeur common stock in the Merger, the distribution will not occur.
+
+ Our Company
+
+ We are an emerging growth company in the business of precious metals exploration with projects in Nevada. We were incorporated on June 15, 1992 in the State of Nevada under the name X-Cal (USA), Inc. In December 2014 we changed our name to Paramount Gold Nevada Corp. Our business strategy is to acquire and develop known precious metals deposits in large-scale geological environments in North America. This strategy helps reduce discovery risks as exploration programs can be designed using existing geological drilling data and significantly increases the efficiency and effectiveness of exploration programs. By developing known deposits we spend less time trying to discover new areas of mineralization. Our projects are located near successful operating mines. This greatly reduces the related costs for infrastructure requirements at the exploration stage and eventually for mine construction and operation.
+ SpinCo.'s principal Nevada interest, the Sleeper Gold Project, is located in Humbolt County, Nevada and was a producing mine until 1996. 
+
+ Risks
+
+ An investment in our common stock is subject to a number of risks, including risks relating to our business, risks related to the separation, and risks related to our common stock. Set forth below are the risks we view as material, but not all of these risks. Please read carefully the risks relating to these and other matters described in the sections entitled
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and is a brief overview of key aspects of the offering. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information set forth in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Some of the statements in this prospectus constitute forward-looking statements. See the section titled "Special Note Regarding Forward-Looking Statements and Industry Data" for more information. In this prospectus "Company," "Q2," "we," "us," and "our" refer to Q2 Holdings, Inc. and its subsidiaries. Overview Q2 is a leading provider of secure, cloud-based virtual banking solutions. We enable regional and community financial institutions, or RCFIs, to deliver a robust suite of integrated virtual banking services and engage more effectively with their retail and commercial account holders who expect to bank anytime, anywhere and on any device. Our solutions are often the most frequent point of interaction between our RCFI customers and their account holders. As such, we purpose-built our solutions to deliver a compelling, consistent user experience across digital channels and drive the success of our customers by extending their local brands, enabling improved account holder retention and creating incremental sales opportunities. Our founding team has provided software solutions to the RCFI market for over 20 years, and they started Q2 with the mission of using technology to help RCFIs succeed and strengthen the communities they serve. We leverage our deep domain expertise to develop highly-secure virtual banking solutions designed to help our customers compete in the complex and heavily-regulated financial services industry. We internally design and develop our solutions around a common platform that tightly integrates our solutions with each other and with our customers' internal and third-party systems. This integrated approach delivers to account holders a unified and robust virtual banking experience across online, mobile, voice and tablet channels and allows for close, lasting relationships. We designed our solutions and data center infrastructure to comply with the stringent security and technical regulations applicable to financial institutions and to safeguard our customers and their account holders. The RCFI market includes approximately 13,000 banks and credit unions that compete to provide financial services in the U.S. RCFIs have historically sought to differentiate themselves and build account holder loyalty by providing localized, in-branch banking services and serving as centers of commerce and influence in their communities. However, account holders increasingly engage with their financial services providers across digital channels rather than in physical branches, making it easier for account holders to access competitive financial services and more difficult for RCFIs to maintain account holder loyalty. Innovation in financial services technologies, the proliferation of mobile and tablet devices and evolving consumer expectations for modern and intuitive user experiences are pressuring RCFIs to deliver advanced virtual banking services to successfully compete and grow. RCFIs, unlike larger national banks, typically operate without all of the resources and personnel required to effectively deploy, manage and enhance their own internally-developed virtual banking offerings. In addition, RCFIs are required to spend increasing amounts of time and money complying with rapidly changing federal and state rules and regulations and frequent examinations by regulatory agencies. As a result, RCFIs are challenged to satisfy account holder expectations and compete effectively in what has become a complex and dynamic environment. These challenges often cause RCFIs to rely on disparate, third-party and internally-developed point systems to deliver virtual banking services. However, many of these systems provide limited features and functionality or can be expensive and time-intensive to implement, maintain and upgrade. AMENDMENT NO. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents According to a January 2014 report published by Celent entitled "IT Spending in Banking, A North American Perspective," U.S. financial institutions are expected to spend $53.5 billion in 2015 on information technology, or IT. Of this amount, the report forecasts that these institutions will spend approximately $13.8 billion on new initiatives, heavily focused on enhancing their online, mobile, tablet and other self-service banking capabilities. Based on our current prices and virtual banking solutions, we believe that the RCFI market is greater than $3.5 billion annually. Our current RCFI customers represent less than 3% of the 12,994 federally-insured RCFIs in the U.S. We believe we can capture an increasing portion of the IT spend among RCFIs as we continue to grow our customer base and introduce new solutions. Our software-as-a-service, or SaaS, delivery model is designed to scale with our customers as they add account holders on our solutions and expand the breadth of virtual banking services they offer. We recently added Q2 Treasury which is designed to support RCFIs in their efforts to attract and retain larger commercial accounts. Our SaaS delivery model is also designed to reduce the cost and complexity of implementing, maintaining and enhancing the virtual banking services our RCFI customers provide to their account holders. RCFIs can configure our solutions to function in a manner that is consistent with their specific workflows, processes and controls and personalize the experiences they deliver to their account holders by extending the services and local character of their branches across digital channels. We primarily sell subscriptions to our cloud-based solutions through our direct sales organization and recognize the related revenues over the terms of our customer agreements. The initial term of our customer agreements averages over five years, although it varies by customer. Our revenues increase as we add new customers and sell additional solutions to existing customers and as our customers increase the number of account holders on our solutions. We earn additional revenues based on the number of bill-pay and certain other transactions that account holders perform on our virtual banking solutions in excess of the levels included in our standard subscription fee. We support the efforts of our sales organization through a network of key referral partners, such as the American Bankers Association, National Association of Federal Credit Unions and Western Independent Bankers. As of December 31, 2014, we had over 360 customers with more than 4.3 million retail and commercial users registered on our solutions, and these registered users executed over $265 billion in financial transactions with our solutions during 2014, compared with over 330 customers as of December 31, 2013 whose 3.1 million registered users executed over $200 billion in financial transactions on our solutions during 2013. As we have grown our customer base over time, the size of our customers has also increased. Our current RCFI customers are in 47 states and include Camden National Bank, Community Bank (Los Angeles, CA), Elements Financial, First Financial Bank (Cincinnati, OH), Heartland Financial, Peoples Bank of Alabama, Rockland Trust Company, Umpqua Bank and United Heritage Credit Union. We have achieved significant growth since our inception. We had total revenues of $41.1 million, $56.9 million and $79.1 million in 2012, 2013 and 2014, respectively. We seek to deepen and grow our customer relationships by providing consistent, high-quality implementation and customer support services which we believe drives higher customer retention and incremental sales opportunities within our existing customer base. We have invested, and intend to continue to invest, to grow our business by expanding our sales and marketing activities, developing new solutions, enhancing our existing solutions and technical infrastructure and scaling our operations. We incurred net losses of $8.8 million, $17.9 million and $19.6 million in 2012, 2013 and 2014, respectively. Table of Contents Industry Background RCFIs are a substantial and critical part of the economy Regional and community banks and credit unions with less than $50 billion in assets comprised 12,994 of the 13,031 federally-insured financial institutions in the U.S., as of September 30, 2014, according to data compiled by BauerFinancial, Inc., or BauerFinancial. Further, banking institutions and credit unions with less than $50 billion in assets had assets of $4.5 trillion and $1.1 trillion, respectively, as of September 30, 2014, according to BauerFinancial. The U.S. financial services market is intensely competitive, and RCFIs have historically sought to differentiate themselves by obtaining deposits and making lending decisions on a local basis and providing local, personalized banking services that are responsive to the changing needs and circumstances of their communities. As a result, RCFIs often develop strong, lasting relationships with their account holders and serve as centers of commerce and influence in their communities. According to a 2014 report from the Small Business Administration, small businesses (typically those independent businesses with fewer than 500 employees) have generated 60% of all net new jobs in the U.S. since mid-2013, and according to FDIC data as of September 30, 2014, RCFIs underwrote approximately 76% of all loans to these businesses during the first nine months of 2014. RCFIs must respond to innovations in banking According to a 2012 survey conducted by the Independent Community Bankers of America and a 2012 report from the National Credit Union Administration, approximately 96% of U.S. banks and 71% of U.S. credit unions offer online banking services to their retail and commercial account holders. For example, 72% of U.S. adults are expected to utilize online banking services by 2017 according to a report titled Trends 2014: North American Digital Banking published by Forrester Research, Inc., or Forrester, on April 22, 2014. To appeal to, better engage with and sell more products and services to the growing number of account holders who utilize virtual banking services, RCFIs must deliver robust virtual banking capabilities that allow account holders to seamlessly transition between physical branches and digital channels. The proliferation of mobile and tablet devices and evolving consumer expectations for modern and intuitive user experiences increase the challenges of offering virtual banking solutions The proliferation of smart mobile and tablet devices expands the channels through which account holders can perform virtual banking activities, decreasing the need to visit physical bank branches. The accelerating adoption of these devices and the extension of virtual banking services into these devices are making it increasingly difficult to provide a consistent, intuitive and personalized user experience and driving the need for virtual banking solutions that support new and rapidly changing mobile operating systems and device types. Prominent consumer brands such as Amazon, Google and Netflix are continually innovating and shaping consumer expectations by delivering modern, intuitive user experiences across digital channels. As a result, RCFIs must deliver compelling user experiences to satisfy account holder expectations and increase account holder loyalty. Security is of paramount importance in virtual banking As the adoption and use of virtual banking services has increased, the incidence of fraud and theft in digital channels has grown substantially. For example, according to a 2014 report by Javelin Strategy & Research, fraud resulting from account takeover attacks affected 43% more consumers in 2013 compared to 2012 and losses therefrom exceeded $5.0 billion in 2013. In December 2014, International Data Corporation, or IDC, predicted that global financial institutions will spend 13785 Research Blvd, Suite 150 Austin, Texas 78750 (512) 275-0072 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents $2.8 billion by 2016 on fraud and financial crimes analytics software and services. In addition, according to a 2014 report by Verizon Communications Inc., or Verizon, financial services companies accounted for 34% of all security incidents with confirmed victims of data loss in 2013, which was more than two times the public sector, the next highest industry category. Safeguarding RCFI and account holder funds and information becomes increasingly complex as virtual banking services grow and extend across new channels and devices. Market dynamics are driving demand for third-party solutions RCFIs, unlike larger national banks, typically operate without all of the resources and personnel required to effectively deploy, manage and enhance their own internally-developed virtual banking service offerings. In addition, RCFIs are having to commit additional time and resources to comply with rapidly changing federal and state rules and regulations and frequent regulatory examinations. These market dynamics are driving greater demand among RCFIs for modern, intuitive virtual banking solutions from leading third-party providers. Organizations are increasingly transitioning to SaaS providers SaaS solutions can provide a number of benefits to RCFIs, such as lower costs of ownership and operation, improved performance and integration, greater flexibility and scalability, easier deployment of upgrades and enhancements and efficient compliance with regulatory requirements. Traditional virtual banking systems have limitations Many traditional virtual banking systems were originally developed over a decade ago to address a single type of account holder or specific digital channel, such as voice banking. These systems can create challenges for RCFIs, such as increased implementation costs and delayed time-to-market due to the need to integrate applications and digital channels from multiple vendors and incremental time and expense to train account holders and internal personnel on the use of different point systems. We believe innovation in financial services technologies, the proliferation of mobile and tablet devices and evolving consumer expectations for modern and intuitive user experiences, combined with the limitations of traditional systems, create a significant opportunity for a SaaS provider to address the challenges RCFIs face as they seek to increase their level of engagement with account holders across digital channels and drive account holder loyalty. We believe this opportunity creates a substantial and growing market for cloud-based virtual banking solutions that deliver modern, intuitive self-service banking capabilities with a compelling and personalized user experience across digital channels and devices, while complying with regulatory requirements and safeguarding RCFIs and their account holders from fraud and theft. Our Solutions We provide secure, compliant cloud-based software solutions designed to enable RCFIs to grow their account holder bases and increase their profitability and market share by leveraging the power of virtual banking. Our solutions are often the most frequent point of interaction between our RCFI customers and their account holders. As such, we purpose-built our solutions to deliver a compelling, consistent user experience across digital channels and devices, promoting account holder acquisition and retention and creating incremental sales opportunities. Key Attributes Our virtual banking solutions include the following key attributes: Common platform: Our solutions all operate on a common platform that supports the delivery of unified virtual banking services across online, mobile, voice and tablet channels. (1)Includes reclassified costs of research and development personnel who performed certain implementation and customer support services as follows: Year Ended December 31, 2011 2012 2013 2014 Research and development costs reclassified into cost of revenues $ 434 $ 1,390 $ 1,572 $ 1,412 (2)Includes stock-based compensation expenses as follows: Year Ended December 31, 2011 2012 2013 2014 Cost of revenues $ 52 $ 187 $ 264 $ 623 Sales and marketing 52 123 274 774 Research and development 57 195 257 527 General and administrative 236 526 810 2,646 Total stock-based compensation expenses $ 397 $ 1,031 $ 1,605 $ 4,570 (3)Unoccupied lease charges include costs related to our early exit from our previous headquarters, partially offset by anticipated sublease income from that facility. (4)We previously had a subsidiary which we fully divested in March 2013. Loss from discontinued operations, net of tax reflects the financial results of this divested subsidiary. (5)We define adjusted EBITDA as net loss before depreciation, amortization, loss from discontinued operations, stock-based compensation, provision for income taxes, total other expense, net, unoccupied lease charges and loss on disposal of long-lived assets. See "Selected Consolidated Financial and Other Data" for more information and a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP. As of December 31, 2014 Actual As Adjusted(1) Consolidated Balance Sheet Data: Cash and cash equivalents $ 67,979 $ 96,201 Total current assets 104,522 132,744 Deferred solution and other costs, total 12,219 12,219 Deferred implementation costs, total 7,374 7,374 Total current liabilities 32,887 32,887 Deferred revenues, total 36,725 36,725 Total redeemable preferred and common stock Total common stock 3 Matthew P. Flake President and Chief Executive Officer Q2 Holdings, Inc. 13785 Research Blvd, Suite 150 Austin, Texas 78750 (512) 275-0072 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Table of Contents Tablet-first design: We initially design the features and user experience of our solutions to be optimized for touch-based tablet devices and then extend that design to other digital channels, enabling our solutions to deliver a modern, unified user experience across digital channels. Comprehensive view of account holders: Our cloud-based solutions and common platform provide our customers with a comprehensive view of account holder access and activity across devices and channels. Flexible integration: We have developed a highly flexible set of integration tools, enabling the rapid integration of third-party applications and data sources. SaaS delivery model: We developed our solutions to be cloud-based, and we host our solutions for substantially all of our RCFI customers. Regulatory compliance: Our solutions leverage our deep domain expertise and the significant investments we have made in the design and development of our data center architecture and other technical infrastructure to meet the stringent security and technical regulations applicable to financial institutions. Security: Our solutions provide both behavioral analytics and policy-based decision prompts to identify suspect transactions and allow RCFI administrators to analyze transaction activity. Key Benefits We believe our solutions provide the following key benefits to our RCFI customers and their account holders: Delivery of robust virtual banking services across digital channels: Our cloud-based solutions enable our RCFI customers to deliver robust and integrated virtual banking services to their account holders who increasingly expect and appreciate the freedom to bank anytime, anywhere and on any device. Improved and more frequent engagement with account holders: The breadth of our virtual banking solutions and quality of the user experience they provide enable our RCFI customers to increase the frequency and effectiveness of their interactions with account holders. Drive account holder loyalty: We believe our RCFI customers are able to drive account holder loyalty by increasing their level of engagement with account holders and consolidating their virtual banking activities on a single platform across devices and digital channels. More effective marketing of products and services: Our customers' marketing of their new and existing products and services through our solutions can be more frequent, timely and targeted than through traditional advertising. Real-time security: Our integrated Q2 Risk & Fraud Analytics offering allows our customers to better identify suspect activities and protect against fraud and theft prior to funds leaving the financial institution by monitoring and understanding the behavior and activities of their account holders across channels. Lower total cost of ownership: Our SaaS delivery model can reduce the total cost of ownership of our customers by providing on a subscription basis the development, implementation, integration, maintenance, monitoring and support of our cloud-based solutions. Facilitate regulatory compliance: Customers who use our cloud-based solutions are able to satisfy security and technical compliance obligations by relying on the security programs and regulatory certification of our data centers and other technical infrastructure. Copies to: John J. Gilluly III, P.C. Anna M. Denton DLA Piper LLP (US) 401 Congress Avenue, Suite 2500 Austin, Texas 78701 (512) 457-7000 Barry G. Benton Senior Vice President, General Counsel Q2 Holdings, Inc. 13785 Research Blvd, Suite 150 Austin, Texas 78750 (512) 275-0072 J. Robert Suffoletta Wilson Sonsini Goodrich & Rosati, Professional Corporation 900 South Capital of Texas Highway Las Cimas IV, Fifth Floor Austin, Texas 78746 (512) 338-5400 Table of Contents Our Business Strengths We believe our position as a leading provider of virtual banking solutions to our RCFI customers stems from the following strengths: Our purpose-built solutions lead the RCFI virtual banking market: Our common platform was created to support the proliferation of mobile and tablet devices, tightly integrate with the disparate systems within RCFIs and provide a compelling, unified user experience to retail and commercial account holders using a single login anywhere, anytime and on any device. We have a proven track record in the markets we serve: Our founders, management and employees have the deep industry-specific experience needed to drive our continued growth and expansion. Our customer acquisition model is focused and efficient: We focus our customer acquisition efforts exclusively on the well-defined RCFI market which allows us to effectively direct our sales and marketing efforts. We grow our customer relationships over time: We employ a structured strategy designed to inform, educate and enhance customer confidence and help our customers identify and implement additional solutions designed to benefit and grow their account holder bases. Our revenues are highly predictable: Our long-term agreements and high customer retention, as well as the growth over time in the number of account holders using our solutions, drive the recurring nature of our revenues and provide us with significant visibility into future revenues. Our award-winning culture drives innovation and customer success: We believe our award-winning, innovation-focused culture and the location of our operations in Austin, Texas facilitate recruiting and retaining top development, integration and design talent. Our Growth Strategy We are pursuing the following growth strategies: Further penetrate our large market opportunity: Our current customers represent less than 3% of the 12,994 federally-insured RCFIs in the U.S. We intend to further penetrate our large market opportunity and increase our number of RCFI customers through investments in our sales and marketing organizations and related activities. Grow revenues by expanding our relationships with existing customers: We believe there is significant opportunity to expand our relationships with existing customers by selling additional solutions such as mobility applications, remote check deposit, treasury management solutions and mobile bill payment and to grow our revenues as these customers increase the number of account holders on our solutions. Continue to expand our solutions and enhance our platform: We intend to continue to invest in our software development efforts and introduce new solutions that are largely informed by and aligned with the business objectives of our existing and new customers. Further develop our partner relationships: We plan to leverage our partner ecosystem and cultivate new partner relationships to increase the awareness of our solutions. Selectively pursue acquisitions and strategic investments: We regularly evaluate strategic opportunities and anticipate that we will selectively pursue acquisitions of and strategic investments in businesses and technologies that will strengthen and expand the features and functionality of our solutions or provide access to new customers. Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one): Large accelerated filer, Accelerated filer, Non-accelerated filer (do not check if a smaller reporting company) or Smaller reporting company. Table of Contents Risks Affecting Our Business Our business is subject to a number of risks that you should understand before making an investment decision. These risks are discussed more fully in the section titled "Risk Factors" following this prospectus summary. Some of our most significant risks are: we have experienced rapid growth in recent periods, including an increase in the size of our customers, and if we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or adequately address competitive challenges, and our financial performance may be adversely affected; if the market for our cloud-based virtual banking solutions develops more slowly than we expect or changes in a way that we fail to anticipate, our growth may slow and our operating results would be harmed; our business could be adversely affected if our customers are not satisfied with our virtual banking solutions, particularly as we introduce new products and solutions, or our systems and infrastructure fail to meet their needs; our limited operating history makes it difficult to evaluate our current business and future prospects; the markets in which we participate are intensely competitive, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and operating results; if we are unable to effectively integrate our solutions with other systems used by our customers and prospective customers, or if there are performance issues with such third-party systems, our solutions will not operate effectively and our operations will be adversely affected; our customers are highly regulated and subject to a number of challenges and risks, and our failure to comply with laws and regulations applicable to us as a technology provider to financial institutions and to enable our RCFI customers to comply with the laws and regulations applicable to them could adversely affect our business and results of operations, increase costs and impose constraints on the way we conduct our business; if our or our customers' security measures are compromised or unauthorized access to customer data is otherwise obtained, our solutions may be perceived as not being secure, customers may curtail or cease their use of our solutions, our reputation may be harmed, and we may incur significant liabilities; and we may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating results to fall below expectations or our guidance. Upon completion of this offering, our directors, executive officers and holders of more than 5% of our common stock, together with their respective affiliates, will beneficially own, in the aggregate, approximately 61.0% of our outstanding common stock. See "Risk Factors Insiders will continue to have substantial control over us after this offering, which may limit our stockholders' ability to influence corporate matters and delay or prevent a third party from acquiring control over us." Corporate Information We were incorporated in March 2005 in the state of Delaware under the name CBG Holdings, Inc. We changed our name to Q2 Holdings, Inc. in March 2013. We are headquartered in Austin, Texas, and our principal executive offices are located at 13785 Research Blvd, Suite 150, Austin, Texas 78750. Our telephone number is (512) 275-0072. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To Be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, par value $0.0001 5,243,029 $20.41 $107,010,222 $12,434.59 (1)Includes shares of common stock that the underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act, based upon the average of the high and low sales prices of the registrant's common stock as reported on the New York Stock Exchange on February 20, 2015. (3)$11,496.36 has been previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. Table of Contents Our website address is www.q2ebanking.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. Investors should not rely on any such information in deciding whether to purchase our common stock. Investors, the media and others should note that we announce material information to the public through filings with the Securities and Exchange Commission, or the SEC, the investor relations page on our website, press releases, public conference calls and webcasts. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we have elected to take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments. We may take advantage of these exemptions until we are no longer an "emerging growth company." "Q2" and its respective logos are our trademarks. Solely for convenience, we refer to our trademarks in this prospectus without the and symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners. As indicated in this prospectus, we have included market data and industry forecasts that we obtained from industry publications and other sources. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the securities and exchange commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion, dated February 23, 2015 4,559,156 Shares Common Stock We are selling 1,500,000 of common stock and the selling stockholders are selling 3,059,156 shares of common stock. We will not receive any proceeds from the sale of our common stock by the selling stockholders. Our common stock is listed on the New York Stock Exchange under the symbol "QTWO." On February 20, 2015, the last reported sale price of our common stock on the New York Stock Exchange was $20.19 per share. Investing in our common stock involves risks. See "Risk Factors" beginning on page 12. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ Proceeds to selling stockholders, before expenses $ $ Table of Contents The Offering Common stock offered by us 1,500,000 shares Common stock offered by selling stockholders 3,059,156 shares Common stock to be outstanding after this offering 36,195,544 shares Option to purchase additional shares 683,873 shares Use of proceeds We estimate that the net proceeds to us from this offering will be approximately $28.2 million, based upon an assumed offering price of $20.19 per share (the closing price of our common stock as reported on the New York Stock Exchange on February 20, 2015), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for working capital and other general corporate purposes, including to finance our expected growth, develop new technologies, fund capital expenditures, or expand our existing business through investments in or acquisitions of other businesses or technologies. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See "Use of Proceeds."
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+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock and warrants. You should read the entire prospectus carefully, especially the "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations", and the consolidated financial statements and the related notes, before making an investment decision. Certain statements in this summary are forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements." Unless the context provides otherwise, all references herein to "SilverSun", the "Company", "we", "our" and "us" refer to SilverSun Technologies, Inc. and its wholly-owned operating subsidiary SWK Technologies, Inc. All share and per share amounts in this prospectus give retroactive effect to the 1-for-30 reverse stock split (the "Reverse Stock Split") that became effective on February 4, 2015. BUSINESS OVERVIEW Our Company We are a business application, technology and consulting company providing strategies and solutions to meet our clients information, technology and business management needs. Our services and technologies enable customers to manage, protect and monetize their enterprise assets whether on-premise or in the "Cloud". As a value added reseller of business application software, we offer solutions for accounting and business management, financial reporting, Enterprise Resource Planning ("ERP"), Warehouse Management Systems ("WMS"), Customer Relationship Management ("CRM"), and Business Intelligence ("BI"). Additionally, we have our own development staff building software solutions for Electronic Data Interchange ("EDI"), time and billing, and various ERP enhancements. Our value-added services focus on consulting and professional services, specialized programming, training, and technical support. We have a dedicated network services practice that provides managed services, hosting, business continuity, cloud, e-mail and web services. Our customers are nationwide, with concentrations in the New York/New Jersey metropolitan area, Chicago, Dallas, Arizona and Southern California. Our core business is divided into the following practice areas: ERP (Enterprise Resource Management) and Accounting Software We are a value-added reseller for a number of industry-leading ERP applications. We are a Sage Software Authorized Business Partner and Sage Certified Gold Development Partner. Forty-five percent of our customer base consists of Sage ERP X3, Sage 100 ERP, Sage 500 ERP, and Sage BusinessWorks customers. According to "Bob Scott s Insights, 2014 VAR Stars" we are among the largest Sage ERP X3 partners in North America, with a sales and implementation presence complemented by a scalable software development practice for customizations and enhancements. Due to the growing demand for true cloud-based ERP solutions, we have added two (2) industry leading applications to our ERP portfolio: (1) NetSuite ERP, among the world s leading cloud ERP solutions; and (2) Acumatica, a browser-based ERP solution that can be offered on premise, in the public cloud, or in a private cloud. We develop and resell a variety of add-on solutions to all our ERP and accounting packages that help customize the installation to our customers needs and streamline their operations. Value-Added Services for ERP We go beyond simply reselling software packages; we have a consulting and professional services organization that manages the process as we move from the sales stage into implementation, go live, and production. We work inside our customers organizations to ensure all software and Information Technology ("IT") solutions are enhancing their business needs. A significant portion of our services revenue comes from continuing to work with existing customers as their business needs change, upgrading from one version of software to another, or providing additional software solutions to help them grow their revenue. We have a dedicated help desk team that fields hundreds of calls every week. Our custom programming department builds specialized software packages as well as "off the shelf" enhancements, time and billing software, and a cloud solution dedicated to the craft brewing industry. 1 EDI (Electronic Data Interchange) Software and Services EDI is the computer to computer exchange of standard business documents, such as purchase orders and invoices, in electronic format. A standard file format is established for each kind of document in order to facilitate the exchange of data across a variety of platforms and programs. We have a proprietary software solution, MAPADOC, which is fully integrated with the Sage ERPs. MAPADOC allows businesses to dramatically cut data entry time by eliminating duplicate entries and reduces costly errors with trading partners. MAPADOC is the only EDI solution that is built within the framework of the Sage ERPs, allowing customers to stay within one application to get their job done. Network and Managed Services We provide comprehensive network and managed services designed to eliminate the IT concerns of our customers. Businesses can focus on their core strengths rather than technology issues. We adapt our solutions for virtually any type of business, from large national and international product and service providers, to small businesses with local customers. Our business continuity services provide automatic on and off site backups, complete encryption, and automatic failure testing. We also provide email and web security, IT consulting, managed network, and emergency IT services. Our focus in the network and managed services practice is to focus on industry verticals in order to demonstrate our ability to better understand our customers needs. Potential Competitive Strengths Independent Software Vendor. As an independent software vendor we have published integrations between ERPs and third party products which differentiates us from other business application providers because, as a value-added reseller of the ERPs that our proprietary products integrate with, we have specific software solution expertise in the ERPs we resell which affords us the opportunity to ensure that our proprietary products tightly integrate with the ERPs. We own the intellectual property related to these integrations, and sell the solutions through other software resellers within the Sage network. Sage Certified Gold Development Partner. As a Sage Certified Gold Development Partner, we are licensed to customize the source code of the Sage ERPs. Very few resellers are master developers, and in fact, we provide custom programming services for many other resellers. We currently have seven (7) full-time programmers on staff, which provides us with a depth and breadth of expertise that we believe very few competitors can match. Experienced Leadership. We have a senior management team which in the aggregate has many years of experience across a broad range of disciplines. Ability to Recruit, Manage and Retain Quality Personnel. We have a track record of recruiting, managing and retaining skilled labor and our ability to do so represents an important advantage in an industry in which a shortage of skilled labor is often a key limitation for both clients and competitors alike. We recruit skilled labor from competitors and from amongst end users with experience using the various products we sell, whom we then train as consultants. We believe our ability to hire, manage and maintain skilled labor gives an edge over our competitors as we continue to grow. Combination of Hardware/Software Expertise. Many competitors have software solution expertise. Others have network/hardware expertise. We believe we are among the very few organizations with an expertise in both software and hardware, affording us the opportunity to provide turnkey solutions for our customers without the need to bring in additional vendors on a project. Technical Expertise. Our geographical reach and vast technical capabilities afford our clients the ability to customize and tailor solutions to satisfy all of their business needs. 2 Our Growth Strategy General Our strategy is to grow our business through a combination of intra-company growth of our software applications and technology solutions, as well as expansion through acquisitions, both within our existing geographic reach and through geographic expansion. We have established a national presence via our internal marketing and sales programs, and acquisitions, and now have ERP customers and MAPADOC customers throughout most of the United States. Intra-Company Growth Our intra-company growth strategy is to increase our market penetration and client retention through the upgrade of, and expanded sales efforts with, our existing products and development of new and enhanced software and technology solutions. Our client retention is sustained by our providing of responsive, ongoing software and technical support, monitoring and maintenance services for both the solutions we sell and other client technology needs we provide. Repeat business from our existing customer base has been key to our success and we expect it will continue to play a vital role in our growth. We focus on nurturing long-standing relationships with existing customers while also establishing relationships with new customers. Acquisitions The markets in which we provide our services are occupied by a number of competitors, many substantially larger than us, and with significantly greater resources and geographic reach. We believe that to remain competitive, we need to take advantage of acquisition opportunities that arise which may help us achieve greater geographic presence and economies both within our existing footprint and expanded territories. As such, we have completed six (6) acquisitions and/or collaborative agreements in the past thirty-six (36) months. We may also utilize acquisitions, whenever appropriate, to expand our technological capabilities and product offerings. We focus on acquisitions that are profitable and fit seamlessly with our existing operations. We believe our markets contain a number of attractive acquisition candidates. We foresee expanding through acquisitions of one or more of the following types of software and technology organizations: Managed Service Providers ("MSPs"). MSPs provide their small and medium-sized business clients with a suite of services, which may include 24/7/365 remote monitoring of networks, disaster recovery, business continuity, data back-up, cyber-security and the like. There are hundreds of providers of such services in the U.S., most with annual recurring revenue of less than $10 million. We believe that we may be able to consolidate a number of these MSPs with our existing operation in an effort to become one of the more significant providers of these services in the U.S. Independent Software Vendors ("ISVs"). ISVs are publishers of both stand-alone software solutions and integrations that integrate with other third party products. Our interest lies with ISVs selling into the small and medium-sized business marketplace, providing applications addressing e-commerce, mobility, security, and other functionalities. Since we have expertise in both selling directly to end-users and selling through a sales channel, we believe we can significantly enhance the sales volume of any potential acquisition via our existing infrastructure, our sales channel, and our internal marketing programs. There are many ISVs in North America, constituting a large and significant target base for our acquisition efforts. Value-Added Resellers ("VARs") of ERP, Warehouse Management Systems ("WMS"), CRM and BI Software. Of the thousands of VARs in the Sage Software sales channel, we are the sixth largest according to "Bob Scott s Insights, 2014 VAR Stars" based on our estimated 2014 revenue. VARs gross margins are a function of the sales volume they provide a publisher in a twelve (12) month period, and we are currently operating at the highest margins. Smaller resellers, who sell less and operate at significantly lower margins, are at a competitive disadvantage to companies such as ours, and are often amenable to creating a liquidity event for themselves by selling to larger organizations. This dynamic has enabled us to complete six (6) acquisitions and/or collaborative agreements in the past thirty-six (36) months. We have benefitted 3 from completing such acquisitions in a number of ways, including but not limited to: (i) garnering new customers to whom we can upsell and cross-sell our broad range of products and services; (ii) gaining technical resources that enhance our capabilities; and (iii) extending our geographic reach. Our business strategy provides that we will examine the potential acquisition of businesses within our industry. In determining a suitable acquisition candidate, we will carefully analyze a target s potential to add to and complement our product mix, expand our existing revenue base, improve our margins, expand our geographic coverage, strengthen our management team, add technical resources and expertise, and, above all, improve stockholder returns. More specifically, we have identified the criteria listed below, by which we evaluate potential acquisition targets in an effort to gain the synergies necessary for successful growth of the Company: Access to new customers and geographic markets; Recurring revenue of the target; Opportunity to gain operating leverage and increased profit margins; Diversification of sales by customer and/or product; Improvements in product/service offerings; and Ability to attract public capital and increased investor interest. We are unable to predict the nature, size or timing of any acquisition. We can give no assurance that we will reach agreement or procure the financial resources necessary to fund any acquisition, or that we will be able to successfully integrate or improve returns as a result of any such acquisition. We continue to seek out and hold preliminary discussions with various acquisition candidates. However, currently we have not entered into any agreements or understandings for any acquisitions that management deems material. Recent Developments On May 6, 2014, we acquired certain assets of ESC, Inc. (d/b/a ESC Software) (the "Seller") pursuant to an Asset Purchase Agreement (the "Purchase Agreement"). In consideration for the acquired assets, the Company issued in favor of Seller a promissory note in the aggregate principal amount of $350,000 (the "Note"). The Note is due sixty (60) months from the Closing Date, as defined in the Purchase Agreement and bears interest at a rate of two percent (2%) per annum. Any overdue principal or interest on the Note shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law or (ii) ten percent (10%). The outstanding balance at September 30, 2014 was $327,739. Summary of Risk Factors Investing in our Common Stock involves a high degree of risk. You should carefully consider the risks described in "Risk Factors" before making a decision to invest in our Common Stock. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected. In such case, the trading price of our Common Stock would likely decline, and you may lose part or all of your investment. The risks include, but are not limited to: We cannot accurately forecast our future revenues and operating results, which may fluctuate; We may fail to develop new products, or may incur unexpected expenses or delays; If our technologies and products contain defects or otherwise do not work as expected, we may incur significant expenses in attempting to correct these defects or in defending lawsuits over any such defects; If we are not able to protect our trade secrets through enforcement of our confidentiality and non-competition agreements, then we may not be able to compete effectively and we may not be profitable; The trend toward consolidation in our industry may impede our ability to compete effectively; 4 If we lose the services of any of our key personnel, including Mark Meller and Jeffrey D. Roth, our business may suffer; We currently have a limited trading volume, which results in higher price volatility for, and reduced liquidity of, our Common Stock; You will experience dilution of your ownership interest because of the future issuance of additional shares of our Common Stock and our preferred stock; There has not been a trading market for our warrants and there is no assurance that an active market will develop in the future; Our Chief Executive Officer controls a significant percentage of our capital stock and has sufficient voting power to control the vote on substantially all corporate matters; and We have broad discretion in the use of the net proceeds from this offering and may not use them effectively. Corporate Information We are incorporated in the state of Delaware and our principal executive offices are located at 5 Regent Street, Livingston, NJ 07039. Our telephone number is (973) 369-1720. Our website address is www.silversuntech.com. The information contained on or accessible through our website is not part of this prospectus or the registration statement of which this prospectus forms a part, and potential investors should not rely on such information in making a decision to purchase our Common Stock and warrants in this offering. 5 THE OFFERING Common Stock offered by us 746,964 shares of our Common Stock and warrants to purchase up to an aggregate of 373,482 shares of Common Stock. Description of Warrants The warrants will have a per share exercise price of $ (125% of the public offering price of the common stock). The warrants are exercisable immediately and will expire five (5) years from the date of issuance. The exercise price and the number of shares of Common Stock purchasable upon the exercise of the warrants are subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications of our Common Stock. Common Stock to be outstanding after this offering 4,707,647 shares of Common Stock (5,081,129 shares of Common Stock if the warrants are exercised in full). Use of Proceeds Assuming we complete the maximum offering, we estimate that the net proceeds from our sale of shares of our Common Stock and warrants to purchase shares of our Common Stock in this offering will be approximately $3,253,000, assuming a public offering price of $5.35 per share and $0.01 per warrant, after deducting estimated placement agent commissions and estimated offering expenses payable by us. Since this is a best efforts offering, there is no assurance that we will complete the maximum offering. We intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters and capital expenditures, and acquisitions. Risk Factors Investing in our Common Stock and warrants involves a high degree of risk. See "Risk Factors" beginning on page 8 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Common Stock and warrants. Market Symbol and Listing Our Common Stock is quoted on the OTCQB under the symbol "SSNT". On February 4, 2015, we effected a 1-for-30 reverse stock split. The number of shares of our Common Stock to be outstanding after this offering is based on 3,960,683 shares of Common Stock outstanding as of February 27, 2015 and excludes, as of that date: 169,116 shares of our Common Stock issuable upon the exercise of options outstanding under our 2004 Stock Incentive Plan with a weighted-average exercise price of $4.50 per share. 6 SUMMARY CONSOLIDATED FINANCIAL DATA The following table presents a summary of certain consolidated historical financial data. Historical results are not necessarily indicative of results to be expected for any future period. You should read the following summary financial information together with "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated statements of operations data for the nine months ended September 30, 2014 and 2013 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data for each of the fiscal years ended December 31, 2013 and 2012 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements were prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, reflect all adjustments that we consider necessary for a fair statement of the financial information. Nine Months Ended Year Ended September 30, 2014 September 30, 2013 December 31, 2013 December 31, 2012 (unaudited) (unaudited) Statement of Operations Data: Revenues $ 16,266,032 $ 12,290,088 $ 17,400,051 $ 13,178,985 Gross profit 6,911,428 4,872,717 6,750,141 5,334,100 Total operating expenses 6,109,551 4,725,822 6,491,537 6,510,532 Income (loss) from operations 801,877 146,895 258,604 (1,176,432 ) Total other (expense) (45,717 ) (51,399 ) (56,056 ) (58,738 ) Provision (benefit) for income taxes 327,364 — (120,000 ) — Net income (loss) $ 428,796 $ 95,496 $ 322,548 $ (1,235,170 ) Net income (loss) per common share – basic and diluted $ 0.11 $ 0.02 $ 0.08 $ (0.32 ) Weighted average common shares: Basic 3,938,618 3,902,008 3,902,008 3,846,518 Diluted 3,939,642 3,902,008 3,902,008 3,846,518 September 30, December 31, 2014 2013 2012 (unaudited) Balance Sheet Data: Cash $ 1,449,773 $ 762,892 $ 4,483 Total current assets 4,034,622 2,537,164 1,645,535 Total assets 5,129,999 3,569,775 2,802,277 Total current liabilities 4,606,587 3,816,473 3,616,808 Total stockholder s equity (deficit) 238,410 (399,839 ) (814,531 ) 7 RISK FACTORS Investing in our securities involves a high degree of risk. The most significant risks include those described below; however, additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding whether to invest in our securities. If any of the following risks actually occurs, our business, results of operations and financial condition could be materially adversely affected. In this case, the trading price of our Common Stock would likely decline and you might lose part or all of your investment in our securities. Risks Related to Our Business We have a large accumulated deficit, may incur future losses and may be unable to maintain profitability. As of September 30, 2014 and December 31, 2013, we had an accumulated deficit of $10,780,582 and $11,209,378, respectively. As of September 30, 2014 we had stockholders' equity of $238,410 and as of December 31, 2013, we had a stockholders' deficit of $399,839. We may incur net losses in the future. Our ability to achieve and sustain long-term profitability is largely dependent on our ability to successfully market and sell our products and services, control our costs, and effectively manage our growth. We cannot assure you that we will be able to maintain profitability. In the event we fail to maintain profitability, our stock price could decline. We cannot accurately forecast our future revenues and operating results, which may fluctuate. Our operating history and the rapidly changing nature of the markets in which we compete make it difficult to accurately forecast our revenues and operating results. Furthermore, we expect our revenues and operating results to fluctuate in the future due to a number of factors, including the following: the timing of sales of our products and services; the timing of product implementation, particularly large design projects; unexpected delays in introducing new products and services; increased expenses, whether related to sales and marketing, product development, or administration; deferral in the recognition of revenue in accordance with applicable accounting principles, due to the time required to complete projects; the mix of product license and services revenue; and costs related to possible acquisitions of technology or businesses. We may fail to develop new products, or may incur unexpected expenses or delays. Although we currently have fully developed products available for sale, we may need to develop various new technologies, products and product features and to remain competitive. Due to the risks inherent in developing new products and technologies — limited financing, loss of key personnel, and other factors — we may fail to develop these technologies and products, or may experience lengthy and costly delays in doing so. Although we are able to license some of our technologies in their current stage of development, we cannot assure that we will be able to develop new products or enhancements to our existing products in order to remain competitive. We may need additional financing which we may not be able to obtain on acceptable terms. If we are unable to raise additional capital, as needed, the future growth of our business and operations could be severely limited. A limiting factor on our growth is our limited capitalization, which could impact our ability to execute on our business plan. If we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of the Company held by existing shareholders will be reduced and our shareholders may experience significant dilution. In addition, new securities may contain rights, preferences or privileges that are senior to those of our Common Stock. If additional funds are raised by the issuance of debt or other equity instruments, we may become subject to certain operational limitations (for example, negative operating covenants). There can be no assurance that acceptable financing necessary to further implement our business plan can be obtained on suitable terms, if at all. Our ability to develop our business, fund expansion, develop or enhance products or respond to 8 competitive pressures, could suffer if we are unable to raise the additional funds on acceptable terms, which would have the effect of limiting our ability to increase our revenues or possibly attain profitable operations in the future. If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our Common Stock. Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. Our evaluations under the Sarbanes-Oxley Act have concluded that our disclosure controls and procedures are not effective due to insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements, a lack of formal processes and timeline for closing the books and records at the end of each reporting period and limited segregation of duties. Our management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation we would need to hire additional staff. Currently, we are unable to allocate the necessary resources to hire additional staff and to facilitate greater segregation of duties. However, we will reassess our resources capabilities and priorities in the following year and evaluate the cost-benefit relationship of possible changes in our controls over financial reporting and disclosure controls and procedures. Management believes that the material weaknesses are the result of the lack of scale of our operations and are intrinsic to our small size. Nonetheless, our small size and our current internal control deficiencies may have a material adverse effect on our ability to accurately and timely report our financial information which, in turn, may have a material adverse effect on our financial condition. This could result in a loss of investor confidence in the reliability of our financial statements, which in turn could negatively impact the price of our Common Stock as well as our access to additional capital. We may fail to recruit and retain qualified personnel. We expect to rapidly expand our operations and grow our sales, development and administrative operations. Accordingly, recruiting and retaining such personnel in the future will be critical to our success. There is intense competition from other companies for qualified personnel in the areas of our activities, particularly sales, marketing and managed services. If we fail to identify, attract, retain and motivate these highly skilled personnel, we may be unable to continue our marketing and managed services activities and service our clients needs, and this could have a material adverse effect on the Company s business, financial condition, results of operations and future prospects. If our technologies and products contain defects or otherwise do not work as expected, we may incur significant expenses in attempting to correct these defects or in defending lawsuits over any such defects. Software products are not currently accurate in every instance, and may never be. Furthermore, we could inadvertently release products and technologies that contain defects. In addition, third-party technology that we include in our products could contain defects. We may incur significant expenses to correct such defects. Clients who are not satisfied with our products or services could bring claims against us for substantial damages. Such claims could cause us to incur significant legal expenses and, if successful, could result in the plaintiffs being awarded significant damages. Our payment of any such expenses or damages could prevent us from becoming profitable. Our success is highly dependent upon our ability to compete against competitors that have significantly greater resources than we have. The ERP software, EDI software, MSP and business consulting industries are highly competitive, and we believe that this competition will intensify. Many of our competitors have longer operating histories, significantly greater financial, technical, product development and marketing resources, greater name recognition and larger client bases than we do. Our competitors could use these resources to market or develop products or services that are more effective or less costly than any or all of our products or services or that could render any or all of our products or services obsolete. Our competitors could also use their economic strength to influence the market to continue to buy their existing products. 9 If we are not able to protect our trade secrets through enforcement of our confidentiality and non-competition agreements, then we may not be able to compete effectively and we may not be profitable. We attempt to protect our trade secrets, including the processes, concepts, ideas and documentation associated with our technologies, through the use of confidentiality agreements and non-competition agreements with our current employees and with other parties to whom we have divulged such trade secrets. If the employees or other parties breach our confidentiality agreements and non-competition agreements or if these agreements are not sufficient to protect our technology or are found to be unenforceable, our competitors could acquire and use information that we consider to be our trade secrets and we may not be able to compete effectively. Some of our competitors have substantially greater financial, marketing, technical and manufacturing resources than we have, and we may not be profitable if our competitors are also able to take advantage of our trade secrets. Our failure to secure trademark registrations could adversely affect our ability to market our product candidates and our business. Our trademark applications in the United States and any other jurisdictions where we may file may be denied, and we may not be able to maintain or enforce our registered trademarks. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, with respect to the United States Patent and Trademark Office and any corresponding foreign agencies, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our applications and/or registrations, and our applications and/or registrations may not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our ability to market our product candidates and our business. We may unintentionally infringe on the proprietary rights of others. Many lawsuits currently are being brought in the software industry alleging violation of intellectual property rights. Although we do not believe that we are infringing on any patent rights, patent holders may claim that we are doing so. Any such claim would likely be time-consuming and expensive to defend, particularly if we are unsuccessful, and could prevent us from selling our products or services. In addition, we may also be forced to enter into costly and burdensome royalty and licensing agreements. Our industry is characterized by rapid technological change and failure to adapt our product development to these changes may cause our products to become obsolete. We participate in a highly dynamic industry characterized by rapid change and uncertainty relating to new and emerging technologies and markets. Future technology or market changes may cause some of our products to become obsolete more quickly than expected. The trend toward consolidation in our industry may impede our ability to compete effectively. As consolidation in the software industry continues, fewer companies dominate particular markets, changing the nature of the market and potentially providing consumers with fewer choices. Also, many of these companies offer a broader range of products than us, ranging from desktop to enterprise solutions. We may not be able to compete effectively against these competitors. Furthermore, we may use strategic acquisitions, as necessary, to acquire technology, people and products for our overall product strategy. The trend toward consolidation in our industry may result in increased competition in acquiring these technologies, people or products, resulting in increased acquisition costs or the inability to acquire the desired technologies, people or products. Any of these changes may have a significant adverse effect on our future revenues and operating results. We face intense price-based competition for licensing of our products which could reduce profit margins. Price competition is often intense in the software market. Price competition may continue to increase and become even more significant in the future, resulting in reduced profit margins. 10 The software and technology industry is highly competitive. If we cannot develop and market desirable products that the public is willing to purchase, we will not be able to compete successfully. Our business may be adversely affected and we may not be able to generate any revenues. We have many potential competitors in the software industry. We consider the competition is competent, experienced, and have greater financial and marketing resources than we do. Our ability to compete effectively may be adversely affected by the ability of these competitors to devote greater resources to the development, sales, and marketing of their products than are available to us. Some of the Company s competitors, also, offer a wider range of software products, have greater name recognition and more extensive customer bases than the Company. These competitors may be able to respond more quickly to new or changing opportunities, customer desires, as well as undertake more extensive promotional activities, offer terms that are more attractive to customers and adopt more aggressive pricing policies than the Company. We cannot provide any assurances that we will be able to compete successfully against present or future competitors or that the competitive pressure we may encounter will not force us to cease operations. As a result, you may never be able to liquidate or sell any shares you purchase in this offering. If there are events or circumstances affecting the reliability or security of the internet, access to our website and/or the ability to safeguard confidential information could be impaired causing a negative effect on the financial results of our business operations. Despite the implementation of security measures, our website infrastructure may be vulnerable to computer viruses, hacking or similar disruptive problems caused by members, other internet users, other connected internet sites, and the interconnecting telecommunications networks. Such problems caused by third-parties could lead to interruptions, delays or cessation of service to our customers. Inappropriate use of the internet by third-parties could also potentially jeopardize the security of confidential information stored in our computer system, which may deter individuals from becoming customers. Such inappropriate use of the internet includes attempting to gain unauthorized access to information or systems, which is commonly known as "cracking" or "hacking." Although we have implemented security measures, such measures have been circumvented in the past by hackers on other websites on the internet, although our networks have never been breached, and there can be no assurance that any measures we implement would not be circumvented in future. Dealing with problems caused by computer viruses or other inappropriate uses or security breaches may require interruptions, delays or cessation of service to our customers, which could have a material adverse effect on our business, financial condition and results of operations. If we lose the services of any of our key personnel, including Mark Meller and Jeffrey D. Roth, our business may suffer. We are dependent on Mark Meller, our Chief Executive Officer and key employees in our operating subsidiary, specifically Jeffrey D. Roth, Chief Executive Officer of SWK. The loss of any of our key personnel could materially harm our business because of the cost and time necessary to retain and train a replacement. Such a loss would also divert management attention away from operational issues. We intend to purchase $1,000,000 key-man term life insurance policies for both Mr. Meller and Mr. Roth. To service our debt obligations, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. Any failure to repay our outstanding indebtedness as it matures, could materially adversely impact our business, prospects, financial condition, liquidity, results of operations and cash flows. Our ability to satisfy our debt obligations and repay or refinance our maturing indebtedness will depend principally upon our future operating performance. We currently have a bank line of credit and term loan, each of which expire on July 31, 2015. The agreement includes a borrowing base calculation tied to accounts receivable with maximum availability of $750,000 at prime plus 1.75% interest (currently 5%). The line of credit is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. At September 30, 2014, the line of credit had a zero outstanding balance and maximum availability under this line of $750,000. The line of credit also requires us to pay a monitoring fee of $1,000 monthly. The monthly payments under the term loan are at $15,776 including interest at eight percent (8%). The term loan is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. The outstanding balances at September 30, 2014 and December 31, 2013 were $151,125 and $279,517, respectively. As a result, prevailing economic conditions and financial, business, legislative, regulatory and other factors, many of which are beyond our control, will affect our ability to make payments on our debt and comply with the covenants of 11 the line of credit. If we do not generate sufficient cash flow from operations to satisfy our debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, incurring additional debt, issuing equity or convertible securities, utilizing our line of credit, reducing discretionary expenditures and selling certain assets (or combinations thereof). Our ability to execute such alternative financing plans will depend on the capital markets and our financial condition at such time. In addition, our ability to execute such alternative financing plans may be subject to certain restrictions under our existing indebtedness, including our revolving credit facility and our term loan. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants compared to those associated with any debt that is being refinanced, which could further restrict our business operations. Our inability to generate sufficient cash flow to satisfy our debt obligations, or our inability to refinance our debt obligations on commercially reasonable terms or at all, would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operations and cash flows. Risks Related to this Offering and an Investment in our Securities We currently have a limited trading volume, which results in higher price volatility for, and reduced liquidity of, our Common Stock. Our shares of Common Stock have been quoted on the OTCQB since 2004. However, historically there has been limited daily volume of trading in our Common Stock on the OTCQB, which has limited the overall and perceived liquidity of our Common Stock on that market. The public offering price for our Common Stock was determined through negotiations with the placement agent based on a number of factors, including the historic trading prices of our Common Stock on the OTCQB, which might not be indicative of prices that will prevail in the trading market for our Common Stock after the offering. An active trading market for our shares may never develop or be sustained following this offering. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. The absence of an active trading market increases price volatility and reduces the liquidity of our Common Stock. As long as this condition continues, the sale of a significant number of shares of Common Stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered and, if an active market for our Common Stock does not develop, it may be difficult to sell shares you purchase in this offering without depressing the market price for the shares, or at all. In addition, in the event that an active trading market does not develop, the price of our Common Stock may not be a reliable indicator of the fair value of our Common Stock. Furthermore, if our Common Stock ceases to be quoted on the OTCQB, holders would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our Common Stock, and the market value of our Common Stock would likely decline. If you purchase shares of our Common Stock in this offering, you will experience dilution of your ownership interest because of the future issuance of additional shares of our Common Stock and our preferred stock. After giving effect to the sale by us of $4,000,000 of shares of common stock and warrants to purchase shares of common stock in this offering at an assumed public offering price of $5.35 per share and $0.01 per related warrant, investors in this offering can expect an immediate dilution of $4.80 per share, or 89.7% at the assumed public offering price. To the extent that the warrants are ultimately converted or exercised, you will sustain further dilution. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 76,000,000 shares of capital stock consisting of 1,000,000 shares of preferred stock, par value $0.001 per share and 75,000,000 shares of Common Stock, par value $0.00001 per share. We may also issue additional shares of our Common Stock or other securities that are convertible into or exercisable for Common Stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our Common Stock or other securities may create downward pressure on the trading price of our Common Stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our Common Stock are trading. 12 Due to the speculative nature of warrants, there is no guarantee that it will ever be profitable for holders of the warrants to exercise the warrants. The warrants sold in this offering do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of common stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire the common stock and pay an exercise price of $ per share (125% of the public offering price of the Common Stock), prior to five (5) years from the date of issuance, after which date any unexercised warrants will expire and have no further value. Moreover, following this offering, the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal or exceed their public offering price. There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of the warrants, and, consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants. There is no trading market for our warrants and there is no assurance that an active trading market will develop in the future. There is no trading market for our warrants and there may never be one. The lack of an active market may impair your ability to sell your warrants at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market for the warrants may also reduce the fair market value of your warrants. Provisions of our Certificate of Incorporation and Bylaws may delay or prevent a take-over which may not be in the best interests of our shareholders. Provisions of our Certificate of Incorporation and Bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our shareholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Delaware General Corporation Law also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation s disinterested shareholders. Because FINRA sales practice requirements may limit a stockholder s ability to buy and sell our stock, investors may not be able to sell their stock should they desire to do so. In addition to the "penny stock" rules as defined below, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may have the effect of reducing the level of trading activity in our Common Stock. As a result, fewer broker-dealers may be willing to make a market in our Common Stock, reducing a stockholder s ability to resell shares of our Common Stock. The application of the Securities and Exchange Commission s "penny stock" rules to our common stock could limit trading activity in the market, and our stockholders may find it more difficult to sell their stock. Our Common Stock has recently traded at less than $5.00 per share and is therefore subject to the Securities and Exchange Commission s ("SEC" or the "Commission") penny stock rules. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the 13 effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our Common Stock and may affect your ability to resell our Common Stock. Our Chief Executive Officer controls a significant percentage of our capital stock and has sufficient voting power to control the vote on substantially all corporate matters. As of February 27, 2015, Mark Meller, our Chief Executive Officer, beneficially owned approximately 76% of the outstanding voting capital of the Company. Mr. Meller may be able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership, which is not subject to any voting restrictions, could limit the price that investors might be willing to pay for our Common Stock. In addition, Mr. Meller is in a position to impede transactions that may be desirable for other stockholders. Mr. Meller s majority ownership, for example, could make it more difficult for anyone to take control of us. On September 23, 2011, SilverSun Technologies, Inc., entered into a Series B preferred stock purchase agreement (the "Preferred Stock Purchase Agreement") with Mr. Meller, pursuant to which Mr. Meller was issued one authorized share of Series B Preferred Stock ("Series B"), par value $0.001 per share, as partial consideration for personally guaranteeing repayment of the of the Company s indebtedness to Transportation Alliance Bank, our senior secured lender. Each share of the Series B Preferred shall have voting rights equal to (x) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote divided by (y) forty nine one-hundredths (0.49) minus (z) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote. For the avoidance of doubt, if the total issued and outstanding Common Stock eligible to vote at the time of the respective vote is 5,000,000, the voting rights of the Series B Preferred Stock shall be equal to 5,204,082 (e.g. (5,000,000 / 0.49) – 5,000,000 = 5,204,082). At February 27, 2015 voting rights of 4,116,322 shares are associated with Series B Preferred Stock and are included as part of the beneficial ownership calculation. Upon closing of this offering, Mr. Meller will return his share of Series B Preferred Stock to the treasury and the Company will cancel the Series B Preferred Stock certificate of designation. If and when a larger trading market for our Common Stock develops, the market price of our Common Stock is still likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you acquired them. The market price of our Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including, but not limited to: variations in our revenue and operating expenses; market conditions in our industry and the economy as a whole; actual or expected changes in our growth rates or our competitors growth rates; announcements of innovations or new products or services by us or our competitors; sales of our Common Stock or other securities by us or in the open market; and changes in the market valuations of other comparable companies. In addition, if the market for technology and technology services stocks or the stock market in general experiences loss of investor confidence, the trading price of our Common Stock could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our Common Stock. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management s attention and resources, which could materially and adversely affect our business, operating results and financial condition. 14 We have broad discretion in the use of the net proceeds from this offering and may not use them effectively. Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described in the section of this prospectus entitled "Use of Proceeds." The failure by our management to apply these funds effectively could harm our business. If securities or industry analysts do not publish research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. The trading market for our Common Stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. We have not paid dividends in the past and do not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of our Common Stock. We currently intend to retain any future earnings to support the development and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including without limitation, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. To the extent we do not pay dividends, our stock may be less valuable because a return on investment will only occur if and to the extent our stock price appreciates, which may never occur. In addition, investors must rely on sales of their Common Stock after price appreciation as the only way to realize their investment, and if the price of our stock does not appreciate, then there will be no return on investment. Investors seeking cash dividends should not purchase our Common Stock. 15 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements in addition to historical information. These forward-looking statements are included throughout this prospectus, including in the sections entitled "Prospectus Summary," "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We may use the words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek," "foreseeable" and similar terms and phrases to identify forward-looking statements in this prospectus. The forward-looking statements contained in this prospectus are based on management s current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include those described in "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by us in this prospectus speaks only as of the date of this prospectus. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws. 16 USE OF PROCEEDS Assuming we complete the maximum offering, we estimate that the net proceeds from our sale of shares of Common Stock and warrants to purchase shares of our Common Stock in this offering will be approximately $3,253,000 based on an assumed public offering price of $5.35 per share and $0.01 per warrant, and after deducting estimated placement agency commissions and estimated offering expenses. Since this is a best efforts offering, there is no assurance that we will complete the maximum offering. The principal purposes of this offering are to increase our capitalization and financial flexibility, obtain additional capital, increase our public float and increase our visibility in the marketplace. We intend to use the net proceeds we receive from this offering primarily for general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters and capital expenditures. 25% 50% 75% 100% Use of Proceeds $ 1,000,000 $ 2,000,000 $ 3,000,000 $ 4,000,000 Expenses associated with the offering (including Commissions) $ 537,000 $ 607,000 $ 677,000 $ 747,000 General working capital purposes $ 115,750 $ 348,250 $ 580,750 $ 813,250 Sales and marketing activities $ 115,750 $ 348,250 $ 580,750 $ 813,250 Product development $ 162,050 $ 487,550 $ 813,050 $ 1,138,550 Capital expenditures $ 69,450 $ 208,950 $ 348,450 $ 487,950 17 CAPITALIZATION The following table sets forth our cash and capitalization as of September 30, 2014. You should read this table together with "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2014, as adjusted for the Reverse Stock Split, on an actual basis: September 30, 2014 (unaudited) Actual Cash and Cash Equivalents $ 1,449,773 Long-Term Liabilities $ 285,002 Stockholders Equity Preferred stock: Series A Convertible Preferred Stock, $0.001 par value; 2 shares authorized, no shares issued and outstanding; — Series B Preferred Stock, $0.001 par value; 1 share authorized; 1 share issued and outstanding, 1 Common stock: par value $0.00001; 75,000,000 shares authorized, 3,954,897 shares issued and outstanding, 40 Additional paid in capital 11,018,951 Accumulated deficit (10,780,582 ) Total Stockholders Equity $ 238,410 Total Capitalization $ 523,412 18 Dilution The net tangible book value of our common stock as of September 30, 2014, was ($622,097), or approximately ($0.16) per share based upon 3,954,897 shares of common stock outstanding on such date. Net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of common stock outstanding. After giving effect to the sale of 746,964 shares of the common stock and warrants to purchase common stock we are offering at an assumed public offering price of $5.35 per share, the closing price of our common stock on the OTCQB on February 27, 2015, and $0.01 per warrant, and after deducting placement agency commissions and estimated offering expenses of approximately $747,000, our as adjusted net tangible book value as of September 30, 2014 would have been $2,630,903 or $0.56 per share. If you participate in this offering, your interest will be diluted to the extent of the difference between the offering price per share and the as adjusted net tangible book value per share of our common stock immediately after completion after this offering. This represents an immediate increase in as adjusted net tangible book value of $0.72 per share to our existing stockholders and an immediate dilution of $4.80 per share to investors participating in this offering. However, given that there is no minimum offering size, it is possible that we will receive significantly less proceeds than the expected proceeds of $4,000,000. The following table illustrates this dilution on a per share basis to new investors based on the amount of funds we expect to receive on a sliding scale as a percentage of the total offering amount: Offering Level $1,000,000 (25% of the maximum offering) $2,000,000 (50% of the maximum offering) $3,000,000 (75% of the maximum offering) $4,000,000 (100% of the maximum offering) Assumed public offering price per share and warrant $ 5.36 $ 5.36 $ 5.36 $ 5.36 Net tangible book value per share as of September 30, 2014 before giving effect to this offering $ (0.16 ) $ (0.16 ) $ (0.16 ) $ (0.16 ) Increase in as adjusted net tangible book value per share attributed to new investors purchasing shares of common stock and related warrants from us in this offering $ 0.12 $ 0.34 $ 0.54 $ 0.72 As adjusted net tangible book value per share after giving effect to this offering $ (0.04 ) $ 0.18 $ 0.38 $ 0.56 Dilution in as adjusted net tangible book value per share to new investors in this offering $ 5.36 $ 5.18 $ 4.98 $ 4.80 Dilution Percentage 100 % 97 % 93 % 90 % Each $1.00 increase (decrease) in the assumed public offering price of $5.35 per share and $0.01 per warrant, would increase (decrease) the net tangible book value, as adjusted to give effect to this offering, by $0.15 per share and the dilution to new investors by $0.85 per share, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated placement agent commissions. The table below summarizes as of September 30, 2014, on an as adjusted basis described above, the number of shares of our common stock, the total consideration and the average price per share (i) paid to us by our existing stockholders and (ii) to be paid by new investors purchasing shares of our common stock in this offering at an assumed public offering price of $5.35 per share, the closing price of our common stock on the OTCQB on February 13, 2015, and $0.01 per warrant, as well as raising the maximum offering amount, before deducting estimated placement agent commissions and estimated offering expenses payable by us. Shares Purchased Total Consideration Average Price Per Number Percent Amount Percent Share Existing stockholders 3,954,897 85 % $ 238,410 6 % $ 0.06 New investors 746,964 15 % $ 4,000,000 94 % $ 5.35 Total 4,701,861 100 % $ 4,238,410 100 % $ 0.90 19 The total number of shares of our common stock reflected in the discussion and tables above is based on 3,954,897 shares of our common stock outstanding, as of September 30, 2014, and excludes: exercise of any options, warrants or conversion rights outstanding as of September 30, 2014; and any securities, options, warrants or conversion rights issued subsequent to September 30, 2014. 20 PRICE RANGE OF OUR COMMON STOCK Our shares of Common Stock are quoted on the OTCQB under the symbol "SSNT." Prior to 2011, our Common Stock was listed under the symbol "TYRIA". The OTCQB is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter ("OTC") equity securities. An OTCQB equity security is not listed or traded on a national securities exchange. Price Range of Common Stock The following table sets forth the range of high and low sales prices, adjusted to give effect to the Reverse Stock Split, on the OTCQB of our Common Stock for the periods indicated. High Low Fiscal 2013: First Quarter (January 1 – March 31) $ 6.00 $ 1.50 Second Quarter (April 1 – June 30) $ 6.90 $ 3.33 Third Quarter (July 1 – September 30) $ 5.10 $ 2.10 Fourth Quarter (October 1 – December 31) $ 4.20 $ 1.80 Fiscal 2014: First Quarter (January 1 – March 31) $ 4.20 $ 2.10 Second Quarter (April 1 – June 30) $ 6.00 $ 3.60 Third Quarter (July 1 – September 30) $ 6.00 $ 3.00 Fourth Quarter (October 1 – December 31) $ 9.00 $ 1.80 Fiscal 2015: First Quarter (January 1 – March 31) (through February 27, 2015) $ 8.10 $ 4.45 Second Quarter (April 1 – June 30) $ — $ — Third Quarter (July 1 – September 30) $ — $ — Fourth Quarter (October 1 – December 31) $ — $ — On February 27, 2015, the closing price per share of our Common Stock on the OTCQB was $5.35. Holders As of February 27, 2015, there were 732 stockholders of record. An additional number of stockholders are beneficial holders of our Common Stock in "street name" through banks, brokers and other financial institutions that are the record holders. Penny Stock Our common stock has recently traded at less than $5.00 per share; therefore, trading in our securities is subject to penny stock considerations. Broker-dealer practices in connection with transactions in "penny stocks" are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect the ability of our stockholders to resell our common stock. 21 Dividend Policy We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. 22 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in "Risk Factors" and "Special Note Regarding Forward-Looking Statements." The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements included elsewhere in this prospectus. Overview We are a business application, technology and consulting company providing strategies and solutions to meet our clients information, technology and business management needs. Our services and technologies enable customers to manage, protect and monetize their enterprise assets whether on-premise or in the "Cloud". As a value added reseller of business application software, we offer solutions for accounting and business management, financial reporting, Enterprise Resource Planning ("ERP"), Warehouse Management Systems ("WMS"), Customer Relationship Management ("CRM"), and Business Intelligence ("BI"). Additionally, we have our own development staff building software solutions for Electronic Data Interchange ("EDI"), time and billing, and various ERP enhancements. Our value-added services focus on consulting and professional services, specialized programming, training, and technical support. We have a dedicated network services practice that provides managed services, hosting, business continuity, cloud, e-mail and web services. Our customers are nationwide, with concentrations in the New York/New Jersey metropolitan area, Chicago, Dallas, Arizona and Southern California. Our core business is divided into the following practice areas: ERP (Enterprise Resource Management) and Accounting Software We are a value-added reseller for a number of industry-leading ERP applications. We are a Sage Software Authorized Business Partner and Sage Certified Gold Development Partner. Forty-five percent of our customer base consists of Sage ERP X3, Sage 100 ERP, Sage 500 ERP, and Sage BusinessWorks customers. According to "Bob Scott s Insights, 2014 VAR Stars" we are among the largest Sage ERP X3 partner in North America, with a sales and implementation presence complemented by a scalable software development practice for customizations and enhancements. Due to the growing demand for true cloud-based ERP solutions, we have added two (2) industry leading applications to our ERP portfolio: (1) NetSuite ERP, among the world s leading cloud ERP solutions, and (2) Acumatica, a browser-based ERP solution that can be offered on premise, in the public cloud, or in a private cloud. We develop and resell a variety of add-on solutions to all our ERP and accounting packages that help customize the installation to our customers needs and streamline their operations. Value-Added Services for ERP We go beyond simply reselling software packages; we have a consulting and professional services organization that manages the process as we move from the sales stage into implementation, go live, and production. We work inside our customers organizations to ensure all software and IT solutions are enhancing their business needs. A significant portion of our services revenue comes from continuing to work with existing customers as their business needs change, upgrading from one version of software to another, or providing additional software solutions to help them grow their revenue. We have a dedicated help desk team that fields hundreds of calls every week. Our custom programming department builds specialized software packages as well as "off the shelf" enhancements, time and billing software, and a cloud solution dedicated to the craft brewing industry. EDI (Electronic Data Interchange) Software and Services EDI is the computer to computer exchange of standard business documents, such as purchase orders and invoices, in electronic format. A standard file format is established for each kind of document in order to facilitate the exchange of data across a variety of platforms and programs. We have a proprietary software solution, MAPADOC, which is fully integrated with the Sage ERPs. MAPADOC allows businesses to dramatically cut data entry time by eliminating duplicate entries and reduces costly errors with trading partners. MAPADOC is the only EDI solution that is built within the framework of the Sage ERPs, allowing customers to stay within one application to get their job done. 23 Network and Managed Services We provide comprehensive network and managed services designed to eliminate the Information Technology ("IT") concerns of our customers. Businesses can focus on their core strengths rather than technology issues. We adapt our solutions for virtually any type of business, from large national and international product and service providers, to small businesses with local customers. Our business continuity services provide automatic on and off site backups, complete encryption, and automatic failure testing. We also provide email and web security, IT consulting, managed network, and emergency IT services. Our focus in the network and managed services practice is to focus on industry verticals in order to demonstrate our ability to better understand our customers needs. Recent Acquisitions On May 6, 2014 (the "Closing Date") SWK Technologies, Inc., a wholly-owned subsidiary of SilverSun Technologies, Inc, entered into an Asset Purchase Agreement (the "Purchase Agreement") with ESC, Inc. d/b/a ESC Software, an Arizona corporation (the "Seller"), and Alan H. Hardy and Michael Dobberpuhl (the "Shareholders") in their individual capacity as Shareholders. On the Closing Date, pursuant to the terms of the Purchase Agreement, the Seller, transferred, conveyed and delivered all of the Acquired Assets of ESC (as defined in the Purchase Agreement) to the Company. In consideration for the Acquired Assets, the Company issued in favor of Seller a promissory note in the aggregate principal amount of $350,000 (the "Note"). The Note is due sixty (60) months from the Closing Date (the "Maturity Date") and bears interest at a rate of two percent (2%) per annum. Any overdue principal or interest on the Note shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law or (ii) ten percent (10%). Results of Operations Comparison for the three and nine months ended September 30, 2014 and September 30, 2013 Key highlights During the first nine months of 2014 we continued our sales growth as we continue to increase our market penetration and provide the groundwork for which we believe will provide a basis for the future. Some of the key highlights for the first nine months of 2014 are as follows: 1) Revenues increased 32% for the nine months ended September 30, 2014 to $16.3 million as compared to $12.3 million for the same period in the prior year, and reaching $6 million in revenues in a quarter for the first time. 2) Income from operations increased to $801,877 as compared to $146,895 for the prior year with income from operations of $467,506 for the quarter ended September 30, 2014. 3) On May 6, 2014 acquired ESC Software, a leading Arizona-based reseller of Sage Software and Acumatica applications. 4) Significant growth in our Managed Services business. 5) Sales of the Company s proprietary EDI solution, MAPADOC, has maintained their rapid rate of growth. 6) Continue to book major orders for Sage ERP X3. 7) Sales of our cloud-based business management solutions created specifically for the U.S. craft brewery and distribution industry has continued to increase since its introduction to market in early 2012; and the number of new sales prospects continues to climb. Revenues Revenues for the three and nine months ended September 30, 2014 increased $1,711,514 (39.1%) and $3,975,944 (32.4%), respectively, to $6,086,465 and $16,266,032 as compared to $4,374,951 and $12,290,088 for the three and nine months ended September 30, 2013, respectively. These revenues were generated by the Company s 24 wholly-owned operating subsidiary, SWK. The increase in revenues from the existing business is related to an increase in new software sales, both proprietary and those for which we serve as a value-added reseller, new contracts for managed services, and higher consulting revenues. Software and consulting revenues have increased primarily due to Sage ERP X3 implementations. Maintenance revenues also continue to increase as software sales increase. The overall increases are primarily due to the continued marketing efforts, which has resulted in increased market penetration, increased depth and breadth of expertise and services, which has resulted in an increased number of Company clients, and the Company s strategy to increase its business by seeking additional opportunities through potential acquisitions, partnerships or investments. Gross Profit Gross profit for the three and nine months ended September 30, 2014 increased $927,560 (56.9%) and $2,038,710 (41.8%), respectively, to $2,558,547 and $6,911,428 as compared to $1,630,987 and $4,872,718 for the three and nine months ended September 30, 2013, respectively. The increase in gross profit for this period is attributed primarily to the increase in revenues from existing business. For the three months ended September 30, 2014, the gross profit percentage was 42.0%, as compared to 37.3% for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the gross profit percentage was 42.5%, as compared to 39.6% for the nine months ended September 30, 2013. The mix of products being sold by the Company changes from time to time and sometimes causes the overall gross margin percentage to vary. The change in sales mix for the three and nine months ended September 30, 2014 resulted in gross profit being slightly higher as a percent of sales as compared to the three and nine months ended September 30, 2013, primarily as a result of a higher consulting and managed service revenues, which sales have a higher gross profit. Operating Expenses Selling and marketing expenses decreased $72,920 (7.9%) for the three months ended September 30, 2014 to $853,818 as compared to $926,738 for the three months ended September 30, 2013. Selling and marketing expenses increased $131,017 (5.6%) for the nine months ended September 30, 2014 to $2,476,720 as compared to $2,345,703 for the nine months ended September 30, 2013. However, selling and marketing expenses declined as a percentage of sales from 19.1% for the nine months ended September 30, 2013 to 15.2% for the nine months ended September 30, 2014. We continue to monitor and rationalize expenses to increase our profit margins, and have been successful in increasing sales while reducing operating expenses as a percentage of total revenues. We have also increased our attendance at trade shows to further promote our products, services and technology. General and administrative expenses increased $417,507 (62.5%) and $1,124,312 (52.9%), respectively, for the three and nine months ended September 30, 2014 to $1,086,033 and $3,251,615 as compared to $668,526 and $2,127,303 for the three and nine months ended September 30, 2013, respectively, primarily as a result of the addition of new employees and increases in compensation and payroll related expenses. Other Income (Expense) Total other expense was $21,494 and $45,717 for the three and nine months ended September 30, 2014 as compared to $20,135 and $51,399 for the three and nine months ended September 30, 2013. The decrease for the nine months ended September 30, 2014 was primarily due to lower interest on the term loan, which continues to be paid down. Provision for Income Taxes The provision for income taxes for the three and nine months ended September 30, 2014 was $197,847 and $327,364. These amounts represent the statutory federal and state rate on the Company s income before taxes. The effective tax rates of 44.3% and 43.3% for the three and nine months ended September 30, 2014, respectively, were higher than the respective statutory rates due to the non-cash expense associated with incentive stock option share-based compensation for these periods. Net Income As a result of the above, the Company recorded net income of $248,165 and $428,796, respectively, for the three and nine months ended September 30, 2014, as compared to a net loss of $82,219 for the three months ended September 30, 2013 and net income of $95,496 for the nine months ended September 30, 2013. 25 Comparison for the years ended December 31, 2013 and December 31, 2012 Key highlights During 2013 the Company continued to expand its customer base and growth trend which we believe will provide a basis for future growth. Some of the key highlights for 2013 are as follows: 1) Revenues increased 32% from the prior year. 2) Income from operations increased to $258,604 as compared to a loss of $1,176,432 in the prior year. 3) Net income increased to $322,548 as compared to a loss of $1,235,170 in the prior year. 4) As a result of an increase in sales and marketing expense, we continue to lay the foundation for continued growth. 5) Sales of the Company s proprietary, cloud-based business management solutions created specifically for the U.S. craft brewery and distribution industry has continued to increase since its introduction to market in early 2012; and the number of new sales prospects continues to climb. 6) Continued to book major orders for Sage ERP X3. Revenues Revenues for the year ended December 31, 2013 increased $4,221,066 (32.0%) to $17,400,051 as compared to $13,178,985 for the year ended December 31, 2012. The increase is in revenues from the existing business related to an increase in maintenance agreements and its software sales base. Software and consulting revenues have increased primarily due to Sage X3 implementations. Maintenance revenues also continue to increase as software sales increase. The overall increases are primarily due to the continued marketing efforts and very competitive pricing, and the Company s strategy to increase its business by seeking additional opportunities through potential acquisitions, partnerships or investments. Gross Profit Gross profit for the year ended December 31, 2013 increased $1,416,041 (26.5%) to $6,750,141 as compared to $5,334,100 for the year ended December 31, 2012. The increase in gross profit for this period is attributed to the increase in revenues from existing business, including the revenues from HTI. For the year ended December 31, 2013, the gross profit percentage was 38.8% as compared to 40.5% for the year ended December 31, 2012. The mix of products being sold by the Company changes from time to time and sometimes causes the overall gross margin percentage to vary. The change in sales mix for the year ended December 31, 2013 resulted in gross profit being slightly lower as a percent of sales as compared to the year ended December 31, 2012, primarily as a result of a higher software sales mix year over year, which sales have a lower gross profit. In addition, the Company will often enter into revenue sharing agreements entered into with other resellers. The Company currently has twelve (12) revenue sharing arrangements, which often have the result of reducing the Company s reported gross margins. Operating Expenses Selling and marketing expenses increased $942,079 (40.9%) to $3,244,337 for the year ended December 31, 2013 compared to $2,302,258 for the year ended December 31, 2012 due to increased sales personnel and travel expenses as a result of the increase in sales activity to provide for future growth, incremental expenses associated with HTI as well as expenses associated with attending numerous trade shows. General and administrative expenses increased $51,166 (1.8%) to $2,927,622 for the year ended December 31, 2013 as compared to $2,876,456 for the year ended December 31, 2012 primarily as a result of increases in payroll related expenses. On January 4, 2012, in accordance with options granted in January 2011, Mr. Meller sold portions of his convertible note (the "Meller Note") payable to certain employees of SWK Technologies, Inc. in the amount of $13,235. On January 4, 2012, Mr. Meller also converted $30,458 of the Meller Note into 60,154,178 shares of the Company s Common Stock, and those certain employees converted their $13,235 into 23,139,523 shares of the Company s 26 Common Stock. As a consequence the Company recognized $719,267 of share-based compensation expense in 2012 related to these transactions. Additionally, during the year ended December 31, 2012, the Company recognized $416,991 of share-based compensation expense as a result of the granting of stock options to most of its non-executive employees as compared to $17,616 for 2013. Depreciation and amortization expense increased $106,402 for the year ended December 31, 2013 to $301,962 as compared to $195,560 for the year ended December 31, 2012. This increase is primarily attributed to the increase in amortization associated with the intangible assets acquired in the HTI acquisition in 2012. Income (Loss) from Operations For the year ended December 31, 2013, the Company had income from operations of $258,604 as compared to a net loss from operations for $1,176,432 for the year ended December 31, 2012, primarily attributed to non-cash share-based compensation of $1,136,258 in 2012, and other year over year changes discussed above. Other Income (Expense) For the year ended December 31, 2013, the Company had other expense of $56,056 as compared to $58,738 for the year ended December 31, 2012. This change is primarily attributed lower interest expense offset by the bargain purchase gain associated with the HTI acquisition in 2012. Income Taxes For the year ended December 31, 2013, the Company s Federal and State provision requirements were offset by the reversal of a portion of the valuation allowance no longer deemed necessary, and recorded a net tax benefit of $120,000, which represents a reduction in its valuation allowance on tax attributes that are expected to be utilized based on management s assessment and evaluation of historical and projected income. Net Income (Loss) For year ended December 31, 2013, the Company had net income of $322,548 as compared to a net loss of $1,235,170 for the year ended December 31, 2012 for the reasons mentioned above. Liquidity and Capital Resources During the nine months ended September 30, 2014, the Company had a net increase in cash of $686,881. The Company s principal sources and uses of funds were as follows: Cash provided by operating activities The Company generated $910,824 in cash from operating activities for the nine months ended September 30, 2014, as compared to $862,003 of cash from operating activities for the nine months ended September 30, 2013. This increase in cash provided by operating activities is primarily attributed to the improvement in operating income, increase in accounts payable and accrued expenses for the period offset mostly by increase in accounts receivable and unbilled services for the period. Cash used in investing activities Investing activities for the nine months ended September 30, 2014 used $10,344 as compared to using $31,375 of cash for the nine months ended September 30, 2013, which is attributed to lower purchases of property and equipment. Cash (used in) provided by financing activities Financing activities for the nine months ended September 30, 2014 used cash of $213,599, as compared to generating $102,897 of cash for the nine months ended September 30, 2013. This change is mostly attributed to the proceeds from a term loan in the amount of $350,000 during the nine months ended September 30, 2013. 27 The Company had no borrowing during the nine months ended September 30, 2014, but continued to pay off the outstanding debt. The Company anticipates that there will be no significant impact on its liquidity as a result of its recent acquisition of ESC, Inc. The Company believes that as a result of the growth in business, recent acquisitions, and the availability of its credit line, it has adequate liquidity to fund its operating plans for at least the next twelve months. We are currently seeking additional operating income opportunities through potential acquisitions or investments. Such acquisitions or investments may consume cash reserves or require additional cash or equity. Our working capital and additional funding requirements will depend upon numerous factors, including: (i) strategic acquisitions or investments; (ii) an increase to current company personnel; (iii) the level of resources that we devote to sales and marketing capabilities; (iv) technological advances; and (v) the activities of competitors. In addition to developing new products, obtaining new customers and increasing sales to existing customers, management plans to continue to sustain its profitability through acquisitions of companies in the business software and information technology consulting market with solid revenue streams, established customer bases, and positive cash flow. On August 1, 2013, the Company negotiated a new line of credit and term loan from TAB bank. The term of the credit line is for two years, expiring on July 31, 2015. The agreement includes a borrowing base calculation tied to accounts receivable with a maximum availability of $750,000 at prime plus 1.75% interest (currently 5%). The credit line is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. The credit facility requires the Company to pay a monitoring fee of $1,000 monthly. At September 30, 2014, the Company was in compliance with its required financial covenants, the fixed charge ratio and debt to net worth. As of September 30, 2014, the availability under this line was $750,000. Under the term loan, the Company borrowed $350,000 in July 2013 from TAB Bank. The term of the loan is for two (2) years and expires on July 31, 2015. Monthly payments are at $15,776 including interest at eight percent (8%). The term loan is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. The outstanding balances at September 30, 2014 and December 31, 2013 were $151,259 and $279,517, respectively. On May 6, 2014 SWK Technologies, Inc., a wholly owned subsidiary of SilverSun Technologies, Inc, entered into an Asset Purchase Agreement with ESC, Inc. d/b/a ESC Software, an Arizona corporation, and Alan H. Hardy and Michael Dobberpuhl in their individual capacity as Shareholders. SWK acquired certain assets of ESC (as defined in the Purchase Agreement). In consideration for the acquired assets, the Company issued in favor of Seller a promissory note in the aggregate principal amount of $350,000 (the "Note"). The Note is due sixty (60) months from the Closing Date and bears interest at a rate of two percent (2%) per annum. Any overdue principal or interest on the Note shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law or (ii) ten percent (10%). The outstanding balance at September 30, 2014 was $327,739. There was no significant impact on the Company s operations as a result of inflation for the nine months ended September 30, 2014. Off Balance Sheet Arrangements During the nine months ended September 30, 2014, we did not engage in any material off-balance sheet activities nor have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities. Critical Accounting Policies Revenue Recognition Revenue is recognized when products are shipped, or services are rendered, evidence of a contract exists, the price is fixed or reasonably determinable, and collectability is reasonably assured. 28 Product Revenue Software product revenue is recognized when the product is shipped to the customer. The Company treats the software component and the professional services consulting component as two separate arrangements that represent separate units of accounting. The arrangement consideration is allocated to each unit of accounting based upon that unit s proportion of the fair value. In a situation where both components are present, software sales revenue is recognized when collectability is reasonably assured and the product is delivered and has stand-alone value based upon vendor specific objective evidence. Service Revenue Service revenue is comprised of primarily professional service consulting revenue, maintenance revenue and other ancillary services provided as described below. Professional service revenue is recognized as service is incurred. With respect to maintenance services, upon the completion of one year from the date of sale, considered to be the warranty period, the Company offers customers an optional annual software maintenance and support agreement for subsequent one-year periods. Maintenance and support agreements are recorded as deferred revenue and recognized over the respective terms of the agreements, which typically range from three months to one year and are included in service revenue in the Consolidated Statement of Operations Shipping and handling costs charged to customers are classified as revenue, and the shipping and handling costs incurred are included in cost of sales. Accounts receivable The Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment and current credit worthiness, as determined by review of their current credit information. The Company continuously monitors credits and payments from its customers and maintains provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified. While such credit losses have historically been within our expectation and the provision established, the Company cannot guarantee that it will continue to receive positive results. Intangible Assets The values assigned to intangible assets were based on an independent valuation. Purchased intangible assets are amortized over the useful lives based on the estimate of the use of economic benefit of the asset using the straight-line amortization method. The Company assesses potential impairment of its intangible assets when there is evidence that recent events or changes in circumstances have made recovery of an asset s carrying value unlikely. Factors the Company considers important, which may cause impairment include, among others, significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results. Income taxes Deferred income taxes reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss carryforwards. Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related assets or liabilities for financial reporting, or according to the expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting. Valuation allowances are established against deferred tax assets if it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment date. 29 BUSINESS Overview We are a business application, technology and consulting company providing strategies and solutions to meet our clients information, technology and business management needs. Our services and technologies enable customers to manage, protect and monetize their enterprise assets whether on-premise or in the "Cloud". As a value added reseller of business application software, we offer solutions for accounting and business management, financial reporting, Enterprise Resource Planning ("ERP"), Warehouse Management Systems ("WMS"), Customer Relationship Management ("CRM"), and Business Intelligence ("BI"). Additionally, we have our own development staff building software solutions for Electronic Data Interchange ("EDI"), time and billing, and various ERP enhancements. Our value-added services focus on consulting and professional services, specialized programming, training, and technical support. We have a dedicated network services practice that provides managed services, hosting, business continuity, cloud, e-mail and web services. Our customers are nationwide, with concentrations in the New York/New Jersey metropolitan area, Chicago, Dallas, Arizona and Southern California. Our core business is divided into the following practice areas: ERP (Enterprise Resource Management) and Accounting Software We are a value-added reseller for a number of industry-leading ERP applications. We are a Sage Software Authorized Business Partner and Sage Certified Gold Development Partner. Forty-five percent of our customer base consists of Sage ERP X3, Sage 100 ERP, Sage 500 ERP, and Sage BusinessWorks customers. According to "Bob Scott s Insights, 2014 VAR Stars" we are among the largest Sage ERP X3 partners in North America, with a sales and implementation presence complemented by a scalable software development practice for customizations and enhancements. Due to the growing demand for true cloud-based ERP solutions, we have added two (2) industry leading applications to our ERP portfolio: (1) NetSuite ERP, among the world s leading cloud ERP solutions; and (2) Acumatica, a browser-based ERP solution that can be offered on premise, in the public cloud, or in a private cloud. We develop and resell a variety of add-on solutions to all our ERP and accounting packages that help customize the installation to our customers needs and streamline their operations. Value-Added Services for ERP We go beyond simply reselling software packages; we have a consulting and professional services organization that manages the process as we move from the sales stage into implementation, go live, and production. We work inside our customers organizations to ensure all software and Information Technology ("IT") solutions are enhancing their business needs. A significant portion of our services revenue comes from continuing to work with existing customers as their business needs change, upgrading from one version of software to another, or providing additional software solutions to help them grow their revenue. We have a dedicated help desk team that fields hundreds of calls every week. Our custom programming department builds specialized software packages as well as "off the shelf" enhancements, time and billing software, and a cloud solution dedicated to the craft brewing industry. EDI (Electronic Data Interchange) Software and Services EDI is the computer to computer exchange of standard business documents, such as purchase orders and invoices, in electronic format. A standard file format is established for each kind of document in order to facilitate the exchange of data across a variety of platforms and programs. We have a proprietary software solution, MAPADOC, which is fully integrated with the Sage ERPs. MAPADOC allows businesses to dramatically cut data entry time by eliminating duplicate entries and reduces costly errors with trading partners. MAPADOC is the only EDI solution that is built within the framework of the Sage ERPs, allowing customers to stay within one application to get their job done. Network and Managed Services We provide comprehensive network and managed services designed to eliminate the IT concerns of our customers. Businesses can focus on their core strengths rather than technology issues. We adapt our solutions for virtually any type of business, from large national and international product and service providers, to small businesses with local customers. Our business continuity services provide automatic on and off site backups, complete encryption, and automatic failure testing. We also provide email and web security, IT consulting, managed network, and emergency 30 IT services. Our focus in the network and managed services practice is to focus on industry verticals in order to demonstrate our ability to better understand our customers needs. Industry Overview As a value added reseller of business application software, we offer solutions for accounting and business management, financial reporting, managed services, ERP, WMS, CRM, and BI. Additionally, we have our own development staff building software solutions for EDI, time and billing, and various ERP enhancements. Our value-added services focus on consulting and professional services, specialized programming, training, and technical support. The majority of our customers are small and medium businesses ("SMBs"). According to SMB Group s (a technology industry research company) 2012 "Routes to Market Study", 85% of SMBs that plan to invest more in technology anticipate revenue increases. In addition, SMB Group also reported that technology integration moved to the single most important technology challenge faced with continued growth. Gartner, Inc. ("Gartner"), an information technology research and advisory firm, reported that the SMB market represents 44% of all technology spending worldwide. Gartner predicts SMBs spent $847 billion on technology in 2012, and is poised to pass the $1 trillion mark by 2015. Surveys administered by Gartner listed business intelligence, cloud computing (including SaaS), and collaboration technologies among their top priorities in information technology. Gartner surveys also reported the biggest weaknesses highlighted by SMBs with their IT providers include understanding customers technology needs, tailoring discussions specific to their industry, and a lack of knowledge of services and products offered. In addition, Gartner reports that two thirds of IT executives list peer recommendation as the number one source in identifying potential technology providers. According to Gartner, the worldwide ERP market grew to $25.8 billion in 2013 from $24.4 billion in 2012. The Managed Services Market — Global Advancements, Market Forecasts and Analysis (2013 – 2018) estimates the managed services market to grow to $256.05 billion by 2018 from $147.75 billion in 2013. The report notes that North America is the largest market for the managed services market, with a high demand for managed service across every industry vertical. Potential Competitive Strengths Independent Software Vendor. As an independent software vendor we have published integrations between ERPs and third party products which differentiates us from other business application providers because, as a value-added reseller of the ERPs that our proprietary products integrate with, we have specific software solution expertise in the ERPs we resell which afford us the opportunity to ensure that our proprietary products tightly integrate with the ERPs. We own the intellectual property related to these integrations, and sell the solutions through other software resellers within the Sage network. Sage Certified Gold Development Partner. As a Sage Certified Gold Development Partner, we are licensed to customize the source code of the Sage ERPs. Very few resellers are master developers, and in fact, we provide custom programming services for many other resellers. We currently have seven (7) full-time programmers on staff, which provides us with a depth and breadth of expertise that we believe very few competitors can match. Experienced Leadership. We have a senior management team which in the aggregate has many years of experience across a broad range of disciplines. Ability to Recruit, Manage and Retain Quality Personnel. We have a track record of recruiting, managing and retaining skilled labor and our ability to do so represents an important advantage in an industry in which a shortage of skilled labor is often a key limitation for both clients and competitors alike. We recruit skilled labor from competitors and from amongst end users with experience using the various products we sell, whom we then train as consultants. We believe our ability to hire, manage and maintain skilled labor gives an edge over our competitors as we continue to grow. Combination of Hardware/Software Expertise. Many competitors have software solution expertise. Others have network/hardware expertise. We believe we are among the very few organizations with an 31 expertise in both software and hardware, affording us the opportunity to provide turnkey solutions for our customers without the need to bring in additional vendors on a project. Technical Expertise. Our geographical reach and vast technical capabilities afford our clients the ability to customize and tailor solutions to satisfy all of their business needs. Our Growth Strategy General Our strategy is to grow our business through a combination of intra-company growth of our software applications and technology solutions, as well as expansion through acquisitions, both within our existing geographic reach and through geographic expansion. We have established a national presence via our internal marketing and sales programs, and acquisitions, and now have ERP customers and MAPADOC customers throughout most of the United States. Intra-Company Growth Our intra-company growth strategy is to increase our market penetration and client retention through the upgrade of, and expanded sales efforts with, our existing products and development of new and enhanced software and technology solutions. Our client retention is sustained by our providing of responsive, ongoing software and technical support, monitoring and maintenance services for both the solutions we sell and other client technology needs we provide. Repeat business from our existing customer base has been key to our success and we expect it will continue to play a vital role in our growth. We focus on nurturing long-standing relationships with existing customers while also establishing relationships with new customers. Acquisitions The markets in which we provide our services are occupied by a number of competitors, many substantially larger than us, and with significantly greater resources and geographic reach. We believe that to remain competitive, we need to take advantage of acquisition opportunities that arise which may help us achieve greater geographic presence and economies both within our existing footprint and expanded territories. As such, we have completed six (6) acquisitions and/or collaborative agreements in the past thirty-six (36) months. We may also utilize acquisitions, whenever appropriate, to expand our technological capabilities and product offerings. We focus on acquisitions that are profitable and fit seamlessly with our existing operations. We believe our markets contain a number of attractive acquisition candidates. We foresee expanding through acquisitions of one or more of the following types of software and technology organizations: Managed Service Providers ("MSPs"). MSPs provide their small and medium-sized business clients with a suite of services, which may include 24/7/365 remote monitoring of networks, disaster recovery, business continuity, data back-up, cyber-security and the like. There are hundreds of providers of such services in the U.S., most with annual recurring revenue of less than $10 million. We believe that we may be able to consolidate a number of these MSPs with our existing operation in an effort to become one of the more significant providers of these services in the U.S. Independent Software Vendors ("ISVs"). ISVs are publishers of both stand-alone software solutions and integrations that integrate with other third party products. Our interest lies with ISVs selling into the small and medium-sized business marketplace, providing applications addressing e-commerce, mobility, security, and other functionalities. Since we have expertise in both selling directly to end-users and selling through a sales channel, we believe we can significantly enhance the sales volume of any potential acquisition via our existing infrastructure, our sales channel, and our internal marketing programs. There are many ISVs in North America, constituting a large and significant target base for our acquisition efforts. Value-Added Resellers ("VARs") of ERP, Warehouse Management Systems ("WMS"), CRM and BI Software. Of the thousands of VARs in the Sage Software sales channel, we are the sixth largest, according to "Bob Scott s Insights, 2014 VAR Stars" based on our estimated 2014 revenue. VARs gross margins are 32 a function of the sales volume they provide a publisher in a twelve (12) month period, and we are currently operating at the highest margins. Smaller resellers, who sell less and operate at significantly lower margins, are at a competitive disadvantage to companies such as ours, and are often amenable to creating a liquidity event for themselves by selling to larger organizations. This dynamic has enabled us to complete six (6) acquisitions and/or collaborative agreements in the past thirty-six (36) months. We have benefitted from completing such acquisitions in a number of ways, including but not limited to: (i) garnering new customers to whom we can upsell and cross-sell our broad range of products and services; (ii) gaining technical resources that enhance our capabilities; and (iii) extending our geographic reach. Our business strategy provides that we will examine the potential acquisition of businesses within our industry. In determining a suitable acquisition candidate, we will carefully analyze a target s potential to add to and complement our product mix, expand our existing revenue base, improve our margins, expand our geographic coverage, strengthen our management team, add technical resources and expertise, and, above all, improve stockholder returns. More specifically, we have identified the criteria listed below, by which we evaluate potential acquisition targets in an effort to gain the synergies necessary for successful growth of the Company: Access to new customers and geographic markets; Recurring revenue of the target; Opportunity to gain operating leverage and increased profit margins; Diversification of sales by customer and/or product; Improvements in product/service offerings; and Ability to attract public capital and increased investor interest. We are unable to predict the nature, size or timing of any acquisition. We can give no assurance that we will reach agreement or procure the financial resources necessary to fund any acquisition, or that we will be able to successfully integrate or improve returns as a result of any such acquisition. We continue to seek out and hold preliminary discussions with various acquisition candidates. However, currently we have not entered into any agreements or understandings for any acquisitions that management deems material. Electronic Data Interchange Software Strategy Our strategy for our proprietary EDI software, including specifically "MAPADOC" is to continue to achieve market penetration with new customers within our existing and expanding footprint and increase sales of new modules and enhanced functionality to our existing customer base. To remain competitive, we must periodically upgrade our software to the platform most commonly requested by the market. We must also continue our focus on enhancing applications through the addition of new functionality. Towards that end, we are exploring the development of a cloud offering or Software-as-a-Service model for MAPADOC, and are investigating the EDI markets for automotive suppliers and grocers. Enterprise Resource Planning Software Strategy Our ERP software strategy is focused on serving the needs of our expansive installed base of customers for our Sage 100 ERP, Sage 500 ERP, and Sage BusinessWorks practices, while rapidly growing the number of customers using Sage ERP X3, NetSuite, and Acumatica. We currently have approximately 2,450 active ERP customers using one of these six solutions, including customers using certain add-on support products to these solutions. In the past we, have focused primarily on on-premise mid-market Sage Software solutions but in the past two years have shifted our focus to the more enterprise-level Sage ERP X3 offering, as well as diversifying into cloud ERP solutions. This has allowed us to increase our average deal size significantly and also keep pace with the changing trends that we see in the industry. Managed Services Strategy The Managed Services market is broadly segmented by types of services, for example managed data center, managed network, managed mobility, managed infrastructure, managed communications, managed information, managed security and other managed services. In addition, the market is segmented by market verticals, such as public sector, banking, financial services and insurance, education, retail, contact centers and service industries, high tech and 33 telecommunications, healthcare and pharmaceuticals, travel and logistics, manufacturing, energy and utilities among others. The recent trend in the industry shows that there is a high demand for managed services across every industry vertical. The implementation of managed services reduces IT costs by 30% to 40% in such enterprises. This enables organizations to have flexibility and technical advantage. Enterprises having their services outsourced look forward to risk sharing and to reduce their IT costs and IT commitments, so that they are able to concentrate on their core competencies. Organizations implementing managed services have reported almost a 50% to 60% increase in the operational efficiency of their outsourced processes. Enterprises have accepted outsourcing services as a means to enable them to reduce their Capital Expenditure (CapEx) and free up internal sources. Newer managed services that penetrate almost all the industry domains, along with aggressive pricing in services, are being offered. This results in an increase in the overall revenues of the managed services market. It is observed that there is an increase in outsourcing of wireless, communications, mobility and other value-added services, such as content and e-commerce facilities. With increasing technological advancements and the cost challenges associated with having the IT services in-house, we believe the future seems optimistic for managed services providers. Our strategy is to continue to expand our product offerings to the small and medium sized business marketplace, and to increase our scale and capabilities via acquisition throughout the United States, but initially in those regions where we currently have existing offices. Geographic Expansion Generally, our technology offerings require on-premise implementation and support. When we expand into new geographic territories, we prefer to find qualified personnel in an area to augment our current staff of 31 consultants to service our business. The need for hands-on implementation and support may also require investment in additional physical offices and other overhead. We believe our approach is conservative. The 2011 acquisition of the software customer accounts of IncorTech, a Southern California-based Sage business partner, reflects this strategy of geographic expansion. The focus in Southern California is to sell and support our MAPADOC integrated EDI solution and to market Sage ERP X3 to both former IncorTech customers, as well as market to new potential customers. We may accelerate expansion if we find complementary businesses in other regions that we are able to acquire. We are currently focused on markets in the Northeast, Midwest, Texas, Arizona and Southern California. Our marketing efforts to expand into new territories have included attendance at trade shows, in addition to personal contact. Our Products and Services Enterprise Resource Planning Software Substantially all of our initial sales of ERP financial accounting solutions consist of prepackaged software and associated services to customers in the United States. The Company resells ERP software published by Sage Software and other providers for the financial accounting requirements of small- and medium-sized businesses focused on manufacturing and distribution, and the delivery of related services from the sales of these products, including installation, support and training. The programs perform and support a wide variety of functions related to accounting, including financial reporting, accounts payable and accounts receivable, and inventory management. We provide a variety of services along with our financial accounting software sales to assist our customers in maximizing the benefits from these software applications. These services include training, technical support, and professional services. We employ class instructors and have formal, specific training in the topics they are teaching. We can also provide on-site training services that are highly tailored to meet the needs of a particular customer. Our instructors must pass annual subject-matter examinations required by Sage to retain their product-based teaching certifications. We provide end-user technical support services through our support/help desk. Our product and technology consultants assist customers calling with questions about product features, functions, usability issues, and 34 configurations. The support/help desk offers services in a variety of ways, including prepaid services, time and materials billed as utilized and annual support contracts. Customers can communicate with the support/help desk through e-mail, telephone, and fax channels. Standard support/help desk services are offered during normal business hours five (5) days per week. Electronic Data Interchange Software We publish our own proprietary EDI software, "MAPADOC." EDI can be used to automate existing processes, to rationalize procedures and reduce costs, and to improve the speed and quality of services. Because EDI necessarily involves business partners, it can be used as a catalyst for gaining efficiencies across organizational boundaries. Our "MAPADOC" EDI solution is a fully integrated EDI solution that provides users of Sage Software s market-leading Sage 100 ERP/500 ERP/ERP X3 software products with a feature rich product that is easy to use. "MAPADOC" provides the user with dramatically decreased data entry time, elimination of redundant steps, the lowering of paper and postage costs, the reduction of time spent typing, signing, checking and approving documents and the ability to self-manage EDI and to provide a level of independence that saves time and money. We market our "MAPADOC" solutions to our existing and new small and medium-sized business customers, and through a network of resellers. We have a sales team of technical specialists involved in marketing and supporting sales of the "MAPADOC" product and associated services. Warehouse Management Systems We are resellers of the Accellos Warehouse Management System software published by High Jump, Inc. ("High Jump"). High Jump develops warehouse management software for mid-market distributors. The primary purpose of a WMS is to control the movement and storage of materials within an operation and process the associated transactions. Directed picking, directed replenishment, and directed put-away are the key to WMS. The detailed setup and processing within a WMS can vary significantly from one software vendor to another. However, the basic WMS will use a combination of item, location, quantity, unit of measure, and order information to determine where to stock, where to pick, and in what sequence to perform these operations. The Accellos WMS software improves accuracy and efficiency, streamlines materials handling, meets retail compliance requirements, and refines inventory control. Accellos also works as part of a complete operational solution by integrating seamlessly with radio frequency hardware, accounting software, shipping systems and warehouse automation equipment. We market the Accellos solution to our existing and new medium-sized business customers. Managed Network Services and Business Consulting We provide managed services, data back-up, network maintenance and service upgrades for our business clients. We are a Microsoft Solutions Provider. Our staff includes engineers who maintain certifications from Microsoft and Sage Software. They are Microsoft Certified Systems Engineers and Microsoft Certified Professionals, and they provide a host of services for our clients, including remote network monitoring, server implementation, support and assistance, operation and maintenance of large central systems, technical design of network infrastructure, technical troubleshooting for large scale problems, network and server security, and backup, archiving, and storage of data from servers. There are numerous competitors, both larger and smaller, nationally and locally, with whom we compete in this market. Craft Brewery Business Management Solutions We provide a proprietary series of cloud-based business management solutions created specifically for the U.S. craft brewery and distribution industry. Currently, implementations of BeerRun, BrewPub, BrewX ERP (powered by Sage ERP X3) and the Distributor Relationship Management System — Software-as-a-Service (SaaS) solutions jointly developed by SWK Technologies — have been sold to one hundred and twenty six (126) craft breweries throughout the country and ten (10) internationally. These innovative solutions provide brew masters with a single, turnkey database batch/process solution capable of managing their manufacturing operations — from forecasting and planning to recipe management to inventory control and traceability, among other critical business functions, including automated Alcohol and Tobacco Tax and Trade Bureau reporting. 35 Product Development We are continually looking to improve and develop new products. Our product initiatives include various new product offerings, which are either extensions of existing products or newly conceptualized product offerings including, but not limited to: Time and Billing Exact (TBX) SPS RSX Connector MAPADOC Express Fusion X3 Integration Accellos X3 Integration License Plate Modification We are using a dual-shore development approach to keep product development costs at a minimum. All of our product development is led by SWK US-based employees. The project leaders are technical resources who are involved in developing technical specifications, design decisions, usability testing, and transferring the project knowledge to our offshore development team. Several times per week, the product development leadership team meets with our project leaders and development teams to discuss project status, development obstacles, and project timelines. Arrangements with Principal Suppliers Our revenues are primarily derived from the resale of vendor software products and services. These resales are made pursuant to channel sales agreements whereby we are granted authority to purchase and resell the vendor products and services. Under these agreements, we either resell software directly to our customers or act as a sales agent for various vendors and receive commissions for our sales efforts. We are required to enter into an annual Channel Partner Agreement with Sage Software whereby Sage Software appoints us as a non-exclusive partner to market, distribute, and support Sage 100 ERP, Sage 500 ERP and Sage ERP X3. The Channel Partner Agreement is for a one-year term, and automatically renews for an additional one-year term on the anniversary of the agreement s effective date. These agreements authorize us to sell these software products to customers in the United States. There are no clauses in this agreement that limit or restrict the services that we can offer to customers. We also operate a Sage Software Authorized Training Center Agreement and also are party to a Master Developers Program License Agreement. For the years ended December 31, 2013 and 2012, purchases from Sage Software were approximately 31% and 47%, respectively, of the Company s total cost of revenue. Generally, the Company does not rely on any one specific supplier for all of its purchases and maintains relationships with other suppliers that could replace its existing supplier should the need arise. Customers We market our products throughout North America. For the years ended December 31, 2013 and 2012, our top ten (10) customers accounted for 19% ($3,159,000) and 17% ($2,262,000), respectively, of our total revenues. Generally, we do not rely on any one specific customer for any significant portion of our revenue base. No single customer accounted for ten percent or more of our consolidated revenues base. Intellectual Property We regard our technology and other proprietary rights as essential to our business. We rely on copyright, trade secret, confidentiality procedures, contract provisions, and trademark law to protect our technology and intellectual property. We have also entered into confidentiality agreements with our consultants and corporate partners and intend to control access to, and distribution of our products, documentation, and other proprietary information. We own two trademarks registered with the U.S. Patent and Trademark Office for "MAPADOC" and have two (2) trademark applications pending. We have no patents or patent applications pending. 36 Competition Our markets are highly fragmented and the business is characterized by a large number of participants, including several large companies, as well significant number of small, privately-held, local competitors. Our current and potential larger competitors include NexTech Group, Inc., Blytheco, and Net@Work. A significant portion of our revenue is currently derived from requests for proposals (RFPs") and price is often an important factor in awarding such agreements. Accordingly, our competitors may underbid us if they elect to price their services aggressively to procure such business. Our competitors may also develop the expertise, experience and resources to provide services that are equal or superior in both price and quality to our services, and we may not be able to enhance our competitive position. The principal competitive factors for our professional services include geographic presence, breadth of service offerings, technical skills, quality of service and industry reputation. We believe we compete favorably with our competitors on the basis of these factors. Employees As of February 27, 2015, we had approximately 95 full time employees with 21 of our employees engaged in sales and marketing activities, 60 employees are engaged in service fulfillment, and 12 employees employed in administrative activities. Our future success depends in significant part upon the continued services of our key sales, technical, and senior management personnel and our ability to attract and retain highly qualified sales, technical, and managerial personnel. None of our employees are represented by a collective bargaining agreement and we have never experienced a work stoppage. Properties We do not own any real property for use in our operations or otherwise. Our main offices are located at 5 Regent Street, Livingston, NJ 07039 where we have 6,986 square feet of office space at a monthly rent of $7,400. The lease expires December 31, 2016. The Company has a two-year lease, with a one-year extension, for office space at 6834 Buckley Road, North Syracuse, New York, at a monthly rent of $2,100. The lease expires May 31, 2015. The Company also leases 2,700 square feet of office space for sales and support in Skokie, Illinois with a monthly rent of $3,000. This lease expires April 30, 2018. The Company also leases 500 square feet for sales and support in Minneapolis, Minnesota with a monthly rent of $400 a month. This lease expires August 2014, and was extended on a month-to-month basis with a monthly rent of $500 per month. We believe our current facilities are sufficient for our current needs and will be adequate, or that suitable additional or substitute space will be available on commercially reasonable terms, for the foreseeable future. We also believe that our insurance coverage adequately covers our interest in our leased space. We have a good relationship with our landlords and believe that these facilities will adequately serve our business purposes for the foreseeable future. Legal Proceedings We are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting us, our Common Stock, any of our subsidiaries or of our or our subsidiaries officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. Our Corporate History We were incorporated on October 3, 2002, as a wholly owned subsidiary of iVoice, Inc. ("iVoice"). On February 11, 2004, the Company was spun off from iVoice and became an independent publicly traded company. On September 5, 2003, we changed our corporate name to Trey Resources, Inc. In March 2004, Trey Resources, Inc. began trading on the OTCBB under the symbol TYRIA.OB. In June 2011, we changed our name to SilverSun Technologies, Inc. Prior to June 2004, we were engaged in the design, manufacture, and marketing of specialized telecommunication equipment. On June 2, 2004, our wholly-owned subsidiary, SWK Technologies, Inc. ("SWK") completed its 37 acquisition of SWK, Inc. Since the acquisition of SWK, Inc. we have focused on three (3) core business sectors, including acting as the following: (i) a managed service provider for computer networks, providing 24/7 remote monitoring of networks, data backup, hosting, and business continuity and disaster recovery services; (ii) a value added reseller and master developer for Sage Software s Sage 100 ERP/500 and ERP X3 enterprise resource planning ("ERP") financial software; and (iii) publisher of its own proprietary software solutions and integrations, including its Electronic Data Interchange ("EDI") software, "MAPADOC." We also publish twenty (20) other assorted software solutions. We focus on the business application software and the information technology consulting market for small and medium-sized businesses ("SMB s"), selling services and products to various end users, manufacturers, wholesalers and distributors located throughout the United States. Our strategy is to grow our business through a combination of intra-company growth of our software applications and technology solutions, as well as expansion through acquisitions, both within our existing geographic reach and through geographic expansion. To that end, since 2006, we have completed a number of acquisitions that have increased our client base, technical expertise and geographic footprint. On June 2, 2006, SWK completed the acquisition of certain assets of AMP-Best Consulting, Inc. ("AMP") of Syracuse, New York. AMP is an information technology company and value added reseller of licensed ERP software published by Sage Software. AMP sold services and products to various end users, manufacturers, wholesalers and distribution industry clients located throughout the United States, with special emphasis on companies located in the upstate New York region. During 2011, SWK acquired Sage s Software s customer accounts in connection with IncorTech, LLC ("IncorTech"), a Southern California-based Sage business partner. This transaction increased our geographical influence in Southern California for the sale and support of our MAPADOC integrated EDI solution and the marketing of our Sage ERP X3 to both former IncorTech customers as well as new consumers. IncorTech had previously provided professional accounting, technology, and business consulting services to over 300 clients. In May 2014, we completed the purchase of selected assets of ESC Software ("ESC"), a leading Arizona-based reseller of Sage Software and Acumatica applications. Founded in 2000, ESC has implemented technology solutions at prominent companies throughout the Southwest. ESC s customers and business products and services have been integrated into the infrastructure of SWK. In addition to the strategic benefits of this acquisition, it has given us additional annual revenues, approximately 300 additional Sage Software ERP customers and affords us market penetration in the Southwest. 38 MANAGEMENT Executive Officers and Directors The following table and biographical summaries set forth information, including principal occupation and business experience, about our directors and executive officers at February 27, 2015: Name Age Position Officer and/or Director Since Mark Meller 55 Chairman, President, Chief Executive Officer and Director 2003 Crandall Melvin III 58 Chief Financial Officer 2015 Stanley Wunderlich 63 Director 2011 Joseph Macaluso 63 Director 2015 Mark Meller, Chief Executive Officer, President, Director Mr. Mark Meller has been the President and Director of the Company since September 15, 2003, and was further appointed Chief Executive Officer on September 1, 2004. He became Chairman of the Board on May 10, 2009. Mr. Meller is currently the President, Chief Executive Officer and Chairman of the Board of Directors. From September 2003 through January 2015, he was Chief Financial Officer of the Company. From October 2004 until February 2007, Mr. Meller was the President, Chief Executive Officer, Chief Financial Officer and Director of Deep Field Technologies, Inc. From December 15, 2004 until September 2009, Mr. Meller was the President, Chief Executive Officer, Chief Financial Officer and Director of MM2 Group, Inc. From August 29, 2005 until August 2006, Mr. Meller was the President, Chief Executive Officer and Chief Financial Officer of iVoice Technology, Inc. Since 1988, Mr. Meller has been Chief Executive Officer of Bristol Townsend and Co., Inc., a New Jersey based consulting firm providing merger and acquisition advisory services to middle market companies. From 1986 to 1988, Mr. Meller was Vice President of Corporate Finance and General Counsel of Crown Capital Group, Inc, a New Jersey based consulting firm providing advisory services for middle market leveraged buy-outs (LBO s). Prior to 1986, Mr. Meller was a financial consultant and practiced law in New York City. He is a member of the New York State Bar. Mr. Meller has a B.A. from the State University of New York at Binghamton and a J.D. from the Boston University School of Law. In evaluating Mr. Meller s specific experience, qualifications, attributes and skills in connection with his appointment to our board, we took into account his experience in the industry and his knowledge of running and managing the Company. Crandall Melvin III, Chief Financial Officer Crandall Melvin III combines over 30 years of experience in public accounting and industry, holding a number of senior management positions following a 5 year career in retail, commercial banking and equipment leasing. Mr. Melvin is also currently the CFO of SWK, the Company s operating subsidiary, and has been so since 2007. From 2002 to 2006, he was Co-Founder and Chief Operating Officer of AMP-Best Consulting, Inc. ("AMP-Best") a company involved in software sales and implementation. AMP-Best was acquired by SWK Technologies in 2006. From 1993 to 2002, he worked in public accounting in Alaska and New York, and is currently a Certified Public Accountant licensed in the State of New York and also holds the designation of Certified Global Management Accountant. Mr. Melvin is also currently a director of Community Baseball of Central New York, Inc. the Minor League AAA affiliate of The Washington Nationals. Mr. Melvin has also served on boards of directors of various not-for-profit organizations located in the Syracuse Area. Mr. Melvin has an undergraduate degree from the University of Southern California and an MBA from Syracuse University with additional graduate studies from the University of Alaska at Anchorage. Stanley Wunderlich, Director Mr. Stanley Wunderlich has over 40 years of experience on Wall Street as a business owner and consultant. Mr. Wunderlich is a founding partner and has been Chairman and Chief Executive Officer of Consulting for Strategic 39 Growth 1, specializing in investor and media relations and the formation of capital for early-growth stage companies both domestic and international, from 2000 through the present. Since 1987, he has been the Chief Executive Officer of Consulting For Strategic Growth 1, Ltd. Mr. Wunderlich has a Bachelor s degree from Brooklyn College. In evaluating Mr. Wunderlich s experience, qualifications, attributes and skills in connection with his appointment to our Board, we took into account his experience in finance and investor relations. Joseph Macaluso, Director Joseph Macaluso has over 30 years of experience in financial management. Mr. Macaluso has been the Principal Accounting Officer of Tel-Instrument Electronics Corp., a developer and manufacturer of avionics test equipment for both the commercial and military markets since 2002. Previously, he had been involved in companies in the medical device and technology industries holding positions including Chief Financial Officer, Treasurer and Controller. He has a B.S. in Accounting from Fairfield University. In evaluating Mr. Macaluso s specific experience, qualifications, attributes and skills in connection with his appointment to Board, we took into account his expertise in general management, finance, corporate governance and strategic planning, as well as his experience in operations and mergers and acquisitions. Family Relationships There are no family relationships among any of our directors or executive officers. Board Composition and Director Independence As of the date of this prospectus, our board of directors consists of three members: Mr. Mark Meller, Mr. Stanley Wunderlich, and Mr. Joseph Macaluso. The Board is currently evaluating additional candidates for appointment to the board of directors upon the effectiveness of the registration statement of which this prospectus forms a part. The directors will serve until our next annual meeting and until their successors are duly elected and qualified. The Company defines "independent" as that term is defined in Rule 5605(a)(2) of the NASDAQ listing standards. In making the determination of whether a member of the board is independent, our board considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption "Certain Relationships and Related-Party Transactions". The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions, our board affirmatively determined that Mr. Wunderlich and Mr. Macaluso have qualified as independent and that he has no material relationship with us that might interfere with his or her exercise of independent judgment. Board Committees Currently, the Audit Committee consists of Mr. Mark Meller, the Company s Chief Executive Officer and President, Mr. Stanley Wunderlich and Joseph Macaluso. The Audit Committee has two (2) independent members and Mr. Macaluso may be deemed a financial expert as defined in 228.401(e) of the regulations promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended. The Company does not currently have a standing nominating committee or compensation committee. Involvement in Certain Legal Proceedings During the past ten years, none of the following occurred with respect to any of our officers or directors: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the commodities futures trading commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. 40 EXECUTIVE COMPENSATION Summary Compensation Table The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended December 31, 2014, 2013 and 2012. Name and Position(s) Year Salary($) Bonus($) Stock Awards($) Option Awards($) Non-Equity Incentive Plan Compensation($) Nonqualified Deferred Compensation Earnings($) All Other Compensation($) Total Compensation($) Mark Meller 2014 $ 480,491 $ 16,859 $ 0 $ 0 $ 0 $ 0 $ 0 $ 497,350 President, 2013 $ 436,506 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 436,506 Chief Executive Officer, Chief Financial Officer President and Director 2012 $ 366,823 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 366,823 Crandall Melvin III(1) 2014 $ 181,730 $ 17,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 198,730 Chief Financial Officer 2013 $ 174,999 $ 10,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 184,999 2012 $ 177,023 $ 5,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 182,023 (1) On January 29, 2015, Crandall Melvin was appointed CFO of the Company. The compensation listed in the above table for Mr. Melvin was earned by him as the Chief Financial Officer of the Company s wholly-owned subsidiary, SWK Technologies, Inc. Potential Payments upon Termination or Change in Control Mr. Meller s employment agreement (the "Meller Employment Agreement") provides for a severance payment to him of three hundred percent (300%), less $100,000 of his gross income for services rendered to the Company in each of the five prior calendar years should his employment be terminated following a change in control (as defined in the Meller Employment Agreement). Employment Agreements Mark Meller, Chief Executive Officer The Company has an Employment Agreement with Mark Meller, President and Chief Executive Officer of the Company, which began on September 15, 2003, was extended on September 15, 2010 (the "Renewal Date"), and expires on September 15, 2017. As of the renewal date, the Company agreed to pay Mr. Meller an annual salary of $318,881 per annum, with a ten percent (10%) increase every year thereafter. As of December 31, 2013, Mr. Meller agreed to accept a salary of $426,500 for 2013. The employment agreement with Mr. Meller also provides for a severance payment to him of three hundred percent (300%), less $100,000 of his gross income for services rendered to the Company in each of the five prior calendar years should his employment be terminated following a change in control, as defined in the employment agreement. Total amounts owed to Mr. Meller as of December 31, 2013 and December 31, 2012, representing accrued interest totaled $2,672 and $5,942, respectively. Outstanding Equity Awards at Fiscal Year-End 2014 The Company had no outstanding equity awards at the end of the most recent completed fiscal year. Director Compensation We pay only our independent directors for their service on our board of directors. Mr. Wunderlich will be paid $1,000 per month, payable at the end of each fiscal quarter for his service as a member of the board. Mr. Macaluso will be paid $1,500 per month, payable at the end of each fiscal quarter for his service as a member of the board and as Chairman of the Audit Committee. 41 The following Director Compensation Table sets forth the compensation of our directors for the fiscal year ending on December 31, 2014. Director Compensation for Fiscal 2014 Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Stanley Wunderlich 12,000 — — — — — 12,000 Joseph Macaluso(1) — — — — — — — (1) Joseph Macaluso was appointed as a director on January 29, 2015. Director Agreements On July 26, 2011, we entered into a director agreement with Stanley Wunderlich, pursuant to which Mr. Wunderlich was appointed to the Board effective July 26, 2011. On August 3, 2011 the Company entered into an amended and restated director agreement (the "Amended Agreement"). The term of the Amended Agreement is one year from August 3, 2011. The Amended Agreement may, at the option of the Board, be automatically renewed on such date that Mr. Wunderlich is re-elected to the Board. Under the Amended Agreement, Mr. Wunderlich is to be paid a stipend of one thousand dollars ($1,000) (the "Stipend") per month, payable at the end of each fiscal quarter. Additionally, Mr. Wunderlich shall receive warrants (the "Warrants") to purchase such number of shares of the Company s Common Stock, as shall equal (the "Formula") (A) $20,000 divided by (B) the closing price of the Common Stock on the OTC Markets on the date of grant of the Warrant. The exercise price of the Warrant shall be the closing price on the date of the grant of such Warrant (the "Grant Date") plus $0.01. The Warrant shall be fully vested upon receipt thereof (the "Vesting Date"). For the duration of the directorship term, on the three month anniversary of the Vesting Date, and for each successive three month period thereafter, Mr. Wunderlich shall receive a warrant exercisable for the number of shares of Common Stock resulting from the application of the Formula on the applicable Grant Date. To date no warrants have been issued pursuant to this agreement. On January 29, 2015, we entered into a director agreement ("Macaluso Director Agreement") with Joseph Macaluso, pursuant to which Mr. Macaluso was appointed to the Board effective January 29, 2015 (the "Effective Date"). The Macaluso Director Agreement may, at the option of the Board, be automatically renewed on such date that Mr. Macaluso is re-elected to the Board. Under the Macaluso Director Agreement, Mr. Macaluso is to be paid a stipend of one thousand five hundred dollars ($1,500) (the "Stipend") per month, payable at the end of each fiscal quarter. Additionally, Mr. Macaluso shall receive warrants (the "Warrants") to purchase such number of shares of the Company s Common Stock, as shall equal (the "Formula") (A) $20,000 divided by (B) the closing price of the Common Stock on the OTC Markets on the date of grant of the Warrant. The exercise price of the Warrant shall be the closing price on the date of the grant of such Warrant (the "Grant Date") plus $0.01. The Warrant shall be fully vested upon receipt thereof (the "Vesting Date"). To date no warrants have been issued pursuant to this agreement. 42 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of February 27, 2015 by (a) each stockholder who is known to us to own beneficially 5% or more of our outstanding Common Stock; (b) all directors; (c) our executive officers, and (d) all executive officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of Common Stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares of Common Stock. For purposes of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares of Common Stock that such person has the right to acquire within 60 days of February 27, 2015. For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of February 27, 2015 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise identified, the address of our directors and officers is c/o SilverSun Technologies, Inc. at 5 Regent Street Livingston, NJ 07039. Name and Address of Beneficial Outstanding Common Stock Percentage of Ownership of Common Stock(1) Outstanding Preferred Stock Percentage Ownership of Preferred Stock(2) 5% Beneficial Shareholders Jeffrey Roth(3) 1,067,181 26.94 % — — Officers and Directors Mark Meller(4) Chief Executive Officer, President and Chairman 2,006,533 50.66 % 1 100 % Crandall Melvin III Chief Financial Officer 74,588 1.9 % — — Joseph P. Macaluso Director — — — — Stanley Wunderlich Director 23,333 * — — Officers and Directors as a Group (4 persons) 2,104,454 53.13 % 1 100 % * denotes less than 1% (1) Based on 3,960,683 shares of Common Stock outstanding as of February 27, 2015. Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. (2) Based on one share of Series B Preferred Stock outstanding as of February 27, 2015. Each share of the Series B Preferred has voting rights equal to (x) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote divided by (y) forty nine one-hundredths (0.49) minus (z) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote. (3) Mr. Roth is Chief Executive Officer of SWK, Technologies, Inc., a wholly-owned subsidiary of SilverSun Technologies, Inc. (4) Upon closing of this offering, Mr. Meller will return his shares of Series B Preferred Stock to the treasury and the Company will cancel the Series B Preferred Stock certificate of designation. 43 CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS On October 19, 2010, the Company borrowed $45,000 in exchange for issuing the Meller Note payable to Mr. Meller. The Meller Note is not collateralized, and carries an interest rate of three percent (3%) per annum on the unpaid balance. In January 2013, Mr. Meller extended the due date of the Meller Note to January 2014. In January 2014, Mr. Meller extended the due date of the Meller Note to January 2015. The outstanding balance at December 31, 2013 and 2012 was $20,000. The Meller Note was paid in full in October 2014. The Company leases its North Syracuse office space from its current CFO, Crandall Melvin III. The monthly rent for this office space is $2,100. 44 DESCRIPTION OF SECURITIES Introduction In the discussion that follows, we have summarized selected provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law relating to our capital stock. This summary is not complete. This discussion is subject to the relevant provisions of Delaware law and is qualified by reference to our certificate of incorporation and our bylaws. You should read the provisions of our certificate of incorporation and our bylaws as currently in effect for provisions that may be important to you. On February 4, 2015 the Company effected the Reverse Stock Split and every thirty (30) shares of outstanding Common Stock decreased to one (1) share of Common Stock. Similarly, the number of shares of Common Stock into which each outstanding option and warrant to purchase Common Stock is to be exercisable decreased on 1-for-30 basis and the exercise price of each outstanding option and warrant to purchase Common Stock increased proportionately. On January 29, 2015 the Company filed an amendment to its fourth amended and restated certificate of incorporation (the "Amendment") with the Secretary of State of Delaware. The Amendment (i) reflected the Reverse Stock Split; (ii) combined the Company s Class A Common Stock, par value $0.00001 per share (the "Class A Common Stock") and the Company s Class B Common Stock, par value $0.00001 per share (the "Class B Common Stock") into one class of general common stock, par value $0.00001 (the "Common Stock"); and (iii) reduced the number of authorized shares of Common Stock from 750,000,000 to 75,000,000. Authorized Capital Stock We are authorized to issue up to 76,000,000 shares of capital stock consisting of: 75,000,000 shares of Common Stock, par value $0.00001 per share and 1,000,000 shares of preferred stock, par value of $0.001 per share. As of February 27, 2015, 3,960,683 shares of Common Stock were issued and outstanding, 1 share of preferred stock was issued and outstanding and 169,116 shares of Common Stock were reserved for issuance under our outstanding options and warrants as described below. Common Stock Each holder of our Common Stock is entitled to one vote for each share held of record. Holders of our Common Stock have no preemptive, subscription, conversion, or redemption rights. Upon liquidation, dissolution or winding-up, the holders of Common Stock are entitled to receive our net assets pro rata. Each holder of Common Stock is entitled to receive ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends. We have not paid any dividends on our Common Stock and do not contemplate doing so in the foreseeable future. We anticipate that any earnings generated from operations will be used to finance our growth. Preferred Stock The Company s certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock, par value $0.001 per share from time to time. Our board of directors is authorized (by resolution and by filing an amendment to our certificate of incorporation and subject to limitations prescribed by the General Corporation Law of the State of Delaware) to issue, from to time, shares of Preferred Stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences and other rights of the shares of each such series and to fix the qualifications, limitations and restrictions thereon, including, but without limiting the generality of the foregoing, the following: the number of shares constituting that series and the distinctive designation of that series; the dividend rate on the shares of that series, whether dividends are cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series; whether that series has voting rights, in addition to voting rights provided by law, and, if so, the terms of those voting rights; 45 whether that series has conversion privileges, and, if so, the terms and conditions of conversion, including provisions for adjusting the conversion rate in such events as our board of directors determines; whether or not the shares of that series are redeemable, and, if so, the terms and conditions of redemption, including the dates upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; whether that series has a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of that sinking fund; the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment of shares of that series; and any other relative powers, preferences and rights of that series, and qualifications, limitations or restrictions on that series. If we liquidate, dissolve or wind up our affairs, whether voluntarily or involuntarily, the holders of Preferred Stock of each series will be entitled to receive only that amount or those amounts as are fixed by the certificate of designations or by resolution of the board of directors providing for the issuance of that series. Series A Preferred Stock The Company issued to the each holder of the Notes one (1) share of Series A Convertible Preferred Stock ("Series A"), having the rights, preferences, privileges, powers and restrictions set forth in the Certificate of Designation filed with the Secretary of State of Delaware. The Company has the right to convert, at its sole option, each share of Series A into Common Stock equal to 1% of the outstanding shares of Common Stock at the time of conversion. The Company valued the Series A Convertible Preferred Stock at $22,886 representing 1% of the outstanding shares deliverable multiplied by the fair market value of the stock on the date of issuance and recorded as debt discount, which has been amortized to interest expense during 2011. Each one share of Series A shall entitle the Series A Holder to voting rights equal to 2,666,667 votes of Common Stock. On January 12, 2012, the Series A Convertible Preferred Stock was converted into 2,385,650 shares of Common Stock. As of February 27, 2015, the Company has authorized 2 shares of Series A Preferred Stock, of which none are issued or outstanding. Series B Preferred Stock The Series B Preferred Stock has the rights, privileges, preferences and restrictions set forth in the Certificate of Designation (the "Certificate of Designation") filed by the Corporation with the Secretary of State of the State of Delaware ("Delaware Secretary of State") on September 23, 2011. In the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the Series B Preferred holders shall be entitled to receive, on parity with the Common Stock holders, assets of the Company available for distribution to the holders of capital stock of the Company. The holders of Series B preferred shall not have any priority of preference with respect to any assets of the Company. So long as any shares of Series B Preferred are outstanding, the Company shall not, without first obtaining the unanimous written consent of the holders of Series B Preferred, alter or change the rights, preferences or privileges of the Series B Preferred so as to affect adversely the holders of Series B Preferred. Each share of the Series B Preferred shall have voting rights equal to (x) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote divided by (y) forty nine one-hundredths (0.49) minus (z) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote. For the avoidance of doubt, if the total issued and outstanding Common Stock eligible to vote at the time of the respective vote is 5,000,000, the voting rights of the Series B Preferred Stock shall be equal to 5,204,082 (e.g. (5,000,000 / 0.49) – 5,000,000 = 5,204,082). On September 23, 2011, SilverSun Technologies, Inc., entered into a Series B preferred stock purchase agreement (the "Preferred Stock Purchase Agreement") with Mr. Meller, pursuant to which Mr. Meller was issued one authorized share of Series B Preferred Stock ("Series B"), par value $0.001 per share. Mr. Meller was issued one share of Series B as partial consideration for personally guaranteeing repayment of the Notes. 46 As of February 27, 2015, the Company has authorized 1 share of Series B Preferred Stock, of which 1 shares is issued and outstanding. Upon closing of this offering, Mr. Meller will return his share of Series B Preferred Stock to the treasury and the Company will cancel the Series B Preferred Stock certificate of designation. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants The following summary of certain terms and provisions of the warrants offered hereby is not complete and is subject to, and is qualified by, the provisions of the form of the warrant, which is filed as an exhibit to the registration statement of which this prospectus is a part. Prospective investors should carefully review the terms and provisions set forth in the form of warrant. Exercisability. The warrants are exercisable immediately upon issuance and at any time up to the date that is five (5) years from the date of issuance. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). Each warrant will be exercisable to purchase one share of common stock, subject to certain adjustments. Unless otherwise specified in the warrant, the holder will not have the right to exercise any portion of the warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants. Cashless Exercise. In the event that a registration statement covering shares of common stock underlying the warrants, or an exemption from registration, is not available for the resale of such shares of common stock underlying the warrants, the holder may, in its sole discretion, exercise the warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, elect instead to receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the warrant. In no event shall we be required to make any cash payments or net cash settlement to the registered holder in lieu of issuance of common stock underlying the warrants. Exercise Price. The initial exercise price per share of common stock purchasable upon exercise of the warrants is $ per share (125% of the public offering price of the Common Stock). The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders. Certain Adjustments. The exercise price and the number of shares of common stock purchasable upon the exercise of the warrants are subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications of our common stock. Transferability. Subject to applicable laws, the warrants may be transferred at the option of the holders upon surrender of the warrants to us together with the appropriate instruments of transfer. Fundamental Transaction. If, at any time while the warrants are outstanding, (1) we consolidate or merge with or into another corporation and we are not the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of our assets, (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed pursuant to which holders of our shares of common stock are permitted to sell, tender or exchange their shares of common stock for other securities, cash or property and has been accepted by the holders of 50% or more of our outstanding shares of common stock, (4) we effect any reclassification or recapitalization of our shares of common stock or any compulsory share exchange pursuant to which our shares of common stock are converted into or exchanged for other securities, cash or property, or (5) we consummate a stock or share purchase agreement or other business combination with another person or entity whereby such other person or entity acquires more than 50% of our outstanding shares of common stock 47 (each, a "Fundamental Transaction"), then upon any subsequent exercise of the warrants, the holders thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of warrant shares then issuable upon exercise of the warrant, and any additional consideration payable as part of the Fundamental Transaction. Rights as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder's ownership of shares of our common stock, the holder of a warrant does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the warrant. There are current no outstanding warrants to purchase our securities. Options and Stock Awards There are 169,116 outstanding options to purchase our securities. In May 2012, the Company issued approximately 96,000 Common Stock options from the 2004 Stock Incentive Plan with a weighted average exercise price of $4.80 and an expected life of five (5) years. Approximately, 75,000 of the Common Stock options vest immediately. The remaining 21,000 options shall vest as follows: fifty percent (50%) at the grant date; and the balance vested ratably over a three-year period. In February 2014, the Company granted 50,000 incentive stock options with an exercise price of $4.50 per option to certain non-executive employees under the 2004 Stock Incentive Plan. Approximately 25,000 of the options vest immediately with the remaining 50% vesting ratably over a three-year period. In May 2014, the Company granted 20,000 incentive stock options with an exercise price of $4.50 per option to Mr. Alan H. Hardy under the 2004 Stock Incentive Plan. The Options shall vest at 20% year over year for five years. In July 2014, the Company granted 10,000 incentive stock options with an exercise price of $4.50 per option to certain non-executive employees under the 2004 Stock Incentive Plan. Options vest immediately. 2004 Stock Incentive Plan The Company adopted the 2004 Stock Incentive as the amended Plan (the "2004 Plan") which reserves for issuance up to 169,116 shares of the Company s Common Stock in order to attract and retain qualified employees, directors, independent contractors or agents of the Company. The 2004 Plan (but not the awards theretofore granted under the 2004 Plan) terminated on September 29, 2014. 2004 Directors and Officers Stock Incentive Plan The Company adopted the 2004 Directors and Officers Stock Incentive Plan (the "2004 D&O Plan") which reserves for issuance up to 5,520 shares of the Company s Common Stock in order to provide long-term incentive and rewards to officers and directors of the Company and subsidiaries and to attract and retain qualified employees, directors, independent contractors or agents of the Company. The 2004 D&O Plan (but not the awards theretofore granted under the Plan) was terminated on September 29, 2014 and no awards shall be granted thereafter. As of February 27, 2015, no securities were issued pursuant to the 2004 D&O Plan. 2007 Consultant Stock Incentive Plan The Company adopted the 2007 Consultant Stock Incentive Plan (the "2007 Plan") to: (i) provide long-term incentives, payment in stock in lieu of cash and rewards to consultants, advisors, attorneys, independent contractors or agents ("Eligible Participants") of the Company; (ii) assist the Company in attracting and retaining independent contractors or agents with experience and/or ability on a basis competitive with industry practices; and (iii) associate the interests of such independent contractors or agents with those of the Company s stockholders. The Company has reserved 19,393 shares for issuance under this plan. Awards under the 2007 Plan may include, but need not be limited to, stock options (including non-statutory stock options and incentive stock options qualifying under Section 422 of the Code), stock appreciation rights (including free-standing, tandem and limited stock appreciation rights), warrants, dividend equivalents, stock awards, restricted stock, phantom stock, performance shares or other securities 48 or rights that the Board determines to be consistent with the objectives and limitations of the 2007 Plan. The price shall be equal to or greater than 50% of the fair market value of such shares on the date of grant of such award. The Board shall determine the extent to which awards shall be payable in cash, shares of the Company s Common Stock or any combination thereof. The Board may determine that all or a portion of a payment to a participant under the Plan, whether it is to be made in cash, shares of the Company s Common Stock or a combination thereof shall be deferred. Deferrals shall be for such periods and upon such terms as the Board may determine in its sole discretion. The 2007 Plan (but not the awards theretofore granted under the 2007 Plan) shall terminate on January 22, 2017 and no awards shall be granted thereafter. As of February 27, 2015, no securities were issued pursuant to the 2007 Plan. Limitation on Directors Liability Delaware law authorizes Delaware corporations to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach of a director s fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations to limit available relief to equitable remedies such as injunction or rescission. Our certificate of incorporation limits the liability of our directors to us and our stockholders to the fullest extent Delaware law permits. Specifically, no director will be personally liable for monetary damages for any breach of the director s fiduciary duty as a director, except for liability: for any breach of the director s duty of loyalty to us or our stockholders; for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and for any transaction from which the director derived an improper personal benefit. This provision could have the effect of reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders. Our bylaws provide indemnification to our officers and directors and other specified persons with respect to their conduct in various capacities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or person controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable. Anti-Takeover Effects of Provisions of the DGCL and our Certificate of Incorporation and Bylaws Provisions of the DGCL and our certificate of incorporation and bylaws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in improved terms for our stockholders. Delaware Anti-Takeover Statute. We were subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the DGCL prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years following the time the person became an interested stockholder, unless the business combination or the acquisition of shares that resulted in a stockholder becoming an interested stockholder is approved in a prescribed manner. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested 49 stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15% or more of a corporation s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of Common Stock held by stockholders. As of February 27, 2015, we are not subject to Section 203 of the DGCL because we do not have a class of voting stock that is listed on a national securities exchange or held of record by more than 2,000 stockholders and we have not elected by a provision in our original certificate of incorporation to be governed by Section 203. Unless we adopt an amendment of our certificate of incorporation by action of our stockholders expressly electing not to be governed by Section 203, we would generally become subject to Section 203 of the DGCL at such time that we have a class of voting stock that is either listed on a national securities exchange or held of record by more than 2,000 stockholders, except that the restrictions contained in Section 203 would not apply if the business combination is with an interested stockholder who became an interested stockholder before the time that we have a class of voting stock that is either listed on a national securities exchange or held of record by more than 2,000 stockholders. Amendments to Our Certificate of Incorporation. Under the DGCL, the affirmative vote of a majority of the outstanding shares entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon is required to amend a corporation s certificate of incorporation. Under the DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would: increase or decrease the aggregate number of authorized shares of such class; increase or decrease the par value of the shares of such class; or alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely. If any proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class of our capital stock so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a separate class for the purposes of this provision. Vacancies in the Board of Directors. Our bylaws provide that, subject to limitations, any vacancy occurring in our board of directors for any reason may be filled by a majority of the remaining members of our board of directors then in office, even if such majority is less than a quorum. Each director so elected shall hold office until the expiration of the term of the other directors. Each such directors shall hold office until his or her successor is elected and qualified, or until the earlier of his or her death, resignation or removal. Special Meetings of Stockholders. Under our bylaws, special meetings of stockholders may be called by the directors or by any officer instructed by the directors to call the meeting. Under the DGCL, written notice of any special meeting must be given not less than 10 nor more than 60 days before the date of the special meeting to each stockholder entitled to vote at such meeting. No Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our certificate of incorporation does not provide for cumulative voting. Listing Our Common Stock is currently quoted on the OTC Markets OTCQB, under the symbol "SSNT". On February 4, 2015, we effected the Reverse Stock Split. Transfer Agent and Registrar The transfer agent and registrar for our Common Stock is Fidelity Transfer Company at 8915 South 700 East, Sandy, Utah 84070. 50 SHARES ELIGIBLE FOR FUTURE SALE Lock-Up Agreements There are approximately 3,073,708 shares of Common Stock (including shares underlying options, restricted stock) held by our directors and executive officers, who are subject to lock-up agreements under which they have agreed not to sell or otherwise dispose of their shares of Common Stock for a period of 180 days after the date of this prospectus. The placement agent may, in its discretion and at any time without notice, release all or any portion of the securities subject to any such lock-up agreements. Future sales of our Common Stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of our Common Stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to raise equity capital in the future. Based on the number of shares outstanding as of the date of this prospectus, upon the closing of this offering 4,707,647 shares of Common Stock (5,081,129 shares of Common Stock if the warrants are exercised in full) will be issued and outstanding, assuming no exercise of outstanding options or warrants (excluding the warrants issued in this offering). Of the outstanding shares, all of the shares sold in this offering will be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below. 2,104,454 shares of our Common Stock outstanding after this offering are restricted securities as such term is defined in Rule 144 under the Securities Act and/or are subject to lock-up agreements with us as described below. Following the expiration of the lock-up period, restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under the Securities Act, as described in greater detail below. Rule 144 In general, under Rule 144 as currently in effect, a person who has beneficially owned restricted shares of our Common Stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale and (ii) we have been subject to the Securities Exchange Act of 1934, as amended, periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned restricted shares of our Common Stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to volume restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following: 1% of the number of shares of our Common Stock then outstanding, which will equal approximately 46,662 shares (50,133 shares if the warrants from this offering are exercised in full) immediately after this offering, based on the number of shares of Common Stock outstanding as of the date of this prospectus; or the average weekly trading volume of our Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. Provided, in each case, that we have been subject to and are current with the Exchange Act periodic reporting requirements for at least 90 days before the sale. Sales by affiliates must also comply with the manner of sale and notice provisions of Rule 144. Rule 701 Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers, directors or consultants who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling their shares. However, substantially all Rule 701 shares are subject to lock-up agreements as described below and under "Underwriting" and will become eligible for sale at the expiration of those agreements. Employees can only sell vested shares. Employees who do not hold vested shares, including shares subject to options, upon expiration of these selling restrictions will not be able to sell shares until they vest. 51 MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS This section summarizes the material U.S. federal income and estate tax consequences of the ownership and disposition of our Common Stock by a non-U.S. holder. For purposes of this summary, a "non-U.S. holder" is any beneficial owner that for U.S. federal income tax purposes is not a U.S. person. The term "U.S. person" means: an individual citizen or resident of the U.S.; a corporation or entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the U.S. or any state, including the District of Columbia, or otherwise treated as such for U.S. federal income tax purposes; an estate whose income is subject to U.S. federal income tax regardless of source; or a trust (i) whose administration is subject to the primary supervision of a court within the U.S. and which has one or more U.S. persons who have authority to control all substantive decisions of the trust or (ii) which has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. Generally, an individual may be treated as a resident of the U.S. in any calendar year for U.S. federal income tax purposes by, among other ways, being present in the U.S. for at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For purposes of this calculation, such individual would count all of the days in which the individual was present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year. Residents are taxed for U.S. federal income tax purposes as if they were citizens of the U.S. This summary does not consider the tax consequences for partnerships, entities classified as a partnership for U.S. federal income tax purposes, or persons who hold their interests through a partnership or other entity classified as a partnership for U.S. federal income tax purposes. If a partnership, including any entity treated as a partnership for U.S. federal income tax purposes, is a beneficial owner of Common Stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships that are beneficial owners of our Common Stock, and partners in such partnerships, should consult their tax advisors regarding the tax consequences to them of the ownership and disposition of our Common Stock. This summary applies only to non-U.S. holders who acquire our Common Stock pursuant to this offering and who hold our Common Stock as a capital asset (generally property held for investment). This summary generally does not address tax considerations that may be relevant to particular investors because of their specific circumstances, or because they are subject to special rules. Certain former U.S. citizens or long-term residents, controlled foreign corporations, passive foreign investment companies, corporations that accumulate earnings to avoid U.S. federal income tax, life insurance companies, tax-exempt organizations, dealers in securities or currencies, brokers, banks or other financial institutions, certain trusts, hybrid entities, pension funds and investors that hold our Common Stock as part of a hedge, straddle or conversion transaction are among those categories of potential investors that are subject to special rules not covered in this discussion. This summary does not address any U.S. federal gift tax consequences, or state or local or non-U.S. tax consequences. This summary does not provide a complete analysis of all potential tax considerations. The information provided below is based on existing authorities. These authorities may change, or the Internal Revenue Service ("IRS"), might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of Common Stock could differ from those described below. INVESTORS CONSIDERING THE PURCHASE OF COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF OTHER U.S. FEDERAL, STATE, OR LOCAL OR NON-U.S. LAWS AND ANY APPLICABLE TAX TREATIES. Dividends As discussed under "Dividend Policy" above, we do not currently expect to pay regular dividends on our Common Stock. Any payments of cash and other property that we make to our stockholders with respect to our Common Stock will constitute dividends to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those dividends exceed our current and 52 accumulated earnings and profits, the dividends will constitute a return of capital and will first reduce a holder s basis, but not below zero, and then will be treated as gain from the sale of stock. The gross amount of any dividend (out of earnings and profits) paid to a non-U.S. holder of Common Stock generally will be subject to U.S. withholding tax at a rate of 30% unless the holder is entitled to an exemption from or reduced rate of withholding under an applicable income tax treaty. In order to receive an exemption or a reduced treaty rate, prior to the payment of a dividend, a non-U.S. holder must provide us with an IRS Form W-8BEN (or successor form) certifying qualification for the exemption or reduced rate. Dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder (and dividends attributable to a non-U.S. holder s permanent establishment in the U.S. if an income tax treaty applies) are exempt from this withholding tax. To obtain this exemption, prior to the payment of a dividend, a non-U.S. holder must provide us with an IRS Form W-8ECI (or successor form) properly certifying this exemption. Effectively connected dividends (or dividends attributable to a permanent establishment in the U.S. if an income tax treaty applies), although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, dividends received by a corporate non-U.S. holder that are effectively connected with a U.S. trade or business of the corporate non-U.S. holder (or dividends attributable to a corporate non-U.S. holder s permanent establishment in the U.S. if an income tax treaty applies) may also be subject to a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty). A non-U.S. holder who provides us with an IRS Form W-8BEN or an IRS Form W-8ECI will be required to periodically update such form. A non-U.S. holder of Common Stock that is eligible for a reduced rate of withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts currently withheld if an appropriate claim for refund is timely filed with the IRS. Gain on Disposition of Common Stock A non-U.S. holder will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange or other disposition of Common Stock unless: the gain is effectively connected with a U.S. trade or business of the non-U.S. holder (or attributable to a permanent establishment in the U.S. if an income tax treaty applies), in which case the non-U.S. holder generally will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates and, if the non-U.S. holder is a corporation, the branch profits tax may apply, at a 30% rate or such lower rate as may be specified by an applicable income tax treaty; the non-U.S. holder is an individual who is present in the U.S. for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met, in which case the non-U.S. holder will be required to pay a flat 30% tax (or such lower rate as may be specified by an applicable income tax treaty between the U.S. and such non-U.S. holder s country of residence) on the net gain derived from the disposition, which tax may be offset by U.S. source capital losses, if any, provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses; or our Common Stock constitutes a U.S. real property interest by reason of our status as a "U.S. real property holding corporation" for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition or the holder s holding period for our Common Stock. We believe that we are not currently, and we are not likely to become, a "U.S. real property holding corporation" for U.S. federal income tax purposes. If we become a U.S. real property holding corporation after this offering, so long as our Common Stock is regularly traded on an established securities market and continues to be so traded, a non-U.S. holder will not be subject to U.S. federal income tax on gain recognized from the sale, exchange or other disposition of shares of our Common Stock as a result of such status unless (i) such holder actually or constructively owned more than 5% of our Common Stock at any time during the shorter of (A) the five-year period preceding the disposition, or (B) the holder s holding 53 period for our Common Stock, and (ii) we were a U.S. real property holding corporation at any time during such period when the more than 5% ownership test was met. If any gain on your disposition is taxable because we are a U.S. real property holding corporation and your ownership of our Common Stock exceeds 5%, you will be taxed on such disposition generally in the manner applicable to U.S. persons. Any such non-U.S. holder that owns or has owned, actually or constructively, more than 5% of our Common Stock is urged to consult that holder s own tax advisor with respect to the particular tax consequences to such holder for the gain from the sale, exchange or other disposition of shares of our Common Stock if we were to be or to become a U.S. real property holding corporation. Backup Withholding and Information Reporting Generally, we must report annually to the IRS the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the recipient. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the non-U.S. holder s country of residence. Payments of dividends or of proceeds on the disposition of stock made to a non-U.S. holder may be subject to additional information reporting and backup withholding. Backup withholding will not apply if the non-U.S. holder establishes an exemption, for example, by properly certifying its non-U.S. person status on an IRS Form W-8BEN (or successor form). Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person. Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a credit or refund may be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner. Legislation Relating to Foreign Accounts Under legislation enacted in 2010, a 30% U.S. federal withholding tax will be imposed on dividends on stock of U.S. corporations, and on the gross proceeds from the disposition of such stock, paid to a "foreign financial institution" (as specially defined for this purpose), unless such institution enters into an agreement with the U.S. Treasury to collect and provide to the U.S. Treasury substantial information regarding its U.S. account holders and certain account holders that are foreign entities with U.S. owners. A 30% U.S. federal withholding tax will also apply to dividends paid on stock of U.S. corporations and on the gross proceeds from the disposition of such stock paid to a non-financial foreign entity unless such entity provides the withholding agent with a certification that it does not have any substantial U.S. owners or a certification identifying the direct and indirect substantial U.S. owners of the entity. The withholding taxes described above generally will apply to dividend payments made after June 30, 2014 and payments of gross proceeds made after December 31, 2016. Under certain circumstances, a non-U.S. holder may be eligible for refunds or credits of such withholding taxes. Investors are urged to consult with their own tax advisors regarding the possible application of these rules to their investment in our Common Stock. U.S. Federal Estate Tax The estates of nonresident alien individuals are generally subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our Common Stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent. The U.S. federal estate tax liability of the estate of a nonresident alien may be affected by a tax treaty between the U.S. and the decedent s country of residence. 54 PLAN OF DISTRIBUTION We have entered into a placement agency agreement, dated as of , 2015, with Alexander Capital, L.P. ("Alexander Capital"), which we refer to as the placement agency agreement. Subject to the terms and conditions contained in the placement agency agreement, Alexander Capital has agreed to act as our placement agent in connection with this offering. In addition, we may engage one or more sub agents or selected brokers, including without limitation The Benchmark Company. Alexander Capital is not purchasing or selling any securities offered by this prospectus, nor is Alexander Capital required to arrange the purchase or sale of any specific number or dollar amount of the securities, but Alexander Capital has agreed to use its reasonable best efforts to arrange for the sale of all of the securities in this offering and has proposed to arrange for the sale to one or more purchasers of the securities offered pursuant to this prospectus. There is no requirement that any minimum number of securities or dollar amount of securities to be sold in this offering and there can be no assurance that we will sell all or any of the shares of common stock and warrants to purchase shares of common stock being offered. Therefore, we will enter into a subscription agreement directly with investors in connection with this offering and we may not sell the entire amount of securities being offered pursuant to this prospectus. The officers, directors, and/or employees of the Company may participate in the solicitation of offers to purchase our securities in this offering in compliance with SEC Rule 3a4-1. The securities may be priced at a discount to the market price but such determination of the offering price will be negotiated between the Company, Alexander Capital and the investors. The placement agency agreement provides that the obligations of Alexander Capital and the investors are subject to certain conditions precedent, including, among other things, the absence of any material adverse change in our business and the receipt of certain opinions, letters and certificates from us or our counsel. We currently anticipate that the closing of this offering will take place on or about , 2015. On the closing date, the following will occur: we will receive funds in the amount of the aggregate purchase price; Alexander Capital will receive the placement agent fees in accordance with the terms of the placement agency agreement; and we will deliver the shares of common stock and the warrants to purchase shares of common stock to the investors. In order to comply with certain state securities laws, if applicable, the common stock and the warrants to purchase shares of common stock will be sold in such jurisdictions only through registered or licensed brokers or dealers. In certain states the shares of common stock and the warrants to purchase shares of common stock may not be sold unless they have been registered or qualify for sale in such state or an exemption from registration or qualification is available and is complied with. Unless the investors have requested physical delivery, we will deposit the shares of common stock with The Depository Trust Company upon receiving notice from Alexander Capital. At the closing, The Depository Trust Company will credit the shares of common stock to the respective accounts of the investors. The warrants to purchase shares of common stock will be physically delivered to the investors. We have agreed to pay Alexander Capital an aggregate fee equal to 7% of the gross proceeds received by us from investors in connection with the sale of shares of common stock and warrants to purchase shares of common stock in this offering. We have also agreed to issue the placement agent common stock purchase warrants equal to 5% of the aggregate number of shares of common stock sold in the offering. Alexander Capital s placement agent warrant will be exercisable for one share of common stock) and will be subject to FINRA Rule 5110(g)(1) in that for a period of 180 days following the effectiveness of the registration statement (which shall not be earlier than the closing date of the offering pursuant to which the placement agent warrants are being issued), neither the placement agent warrants nor any warrant shares issued upon exercise of the placement agent warrants shall be (A) sold, transferred, assigned, pledged, or hypothecated, or (B) the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness of the registration statement pursuant to which the placement agent warrants are being issued, except the transfer of any security as permitted by FINRA rules. Alexander Capital will also be entitled to a non-accountable expense allowance equal to 0.5% of the gross proceeds received by us from investors in connection with the sale of shares of common stock and warrants to purchase shares of common stock in this offering. 55 In addition, we have agreed to bear all fees, disbursements and expenses (including but not limited to all representations) in connection with this offering, including, without limitation, the our legal and accounting fees and disbursements, the costs of preparing, printing and delivering this registration statement on Form S-1, as amended, under the Securities Act of 1933, as amended, the prospectus included herein and amendments, post-effective amendments and supplements thereto. In particular, we shall compensate or reimburse Alexander Capital for the following in connection with the sale of shares of common stock and warrants to purchase shares of common stock in this offering: (1) an amount not to exceed 0.25% of the gross proceeds received by us from investors for due diligence expenses (2) an amount not to exceed 0.25% of the gross proceeds received by us from investors for actual accountable "road show expenses"; (3) an amount not to exceed 0.75% of the gross proceeds received by us from investors for accountable expenses; (4) an amount not to exceed 1.875% of the gross proceeds received by us from investors for the counsel fees of Alexander Capital (excluding "blue sky" fees and expenses"); (5) an amount not to exceed 1% of the gross proceeds received by us from investors for a right of first refusal granted to Alexander Capital for a period of twelve (12) months; and (6) an amount not to exceed 1.1240% of the gross proceeds received by us from investors for the estimated FINRA valuation of the Placement Agent s warrants. In connection with the foregoing, we have agreed to pay on any applicable closing date, if any, to the extent not paid at the closing date, all expenses incident to the performance of the obligations of us in connection with this offering, including, but not limited to: (1) all filing fees and communication expenses relating to the registration of the shares of common stock and warrants to purchase shares of common stock to be sold in this offering with the Commission; (2) all public filing system filing fees associated with the review of this offering by FINRA; (3) all fees, expenses and disbursements relating to the registration or qualification of such shares of common stock and warrants to purchase shares of common stock under the "blue sky" securities laws of such states and other jurisdictions as we and Alexander Capital together determine (including, without limitation, all filing and registration fees, and the reasonable fees and disbursements of "blue sky" counsel); (4) all fees, expenses and disbursements relating to the registration, qualification or exemption of the securities offered herein under the securities laws of such foreign jurisdictions as we and Alexander Capital together determine; (5) the costs of all mailing and printing of the placement agency documents (including, without limitation, the Placement Agency Agreement, any blue sky surveys and, if appropriate, a Sub-Agent Agreement, Placement Agent s Questionnaire and Power of Attorney), this registration statement, as amended, prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final prospectuses as Alexander Capital may reasonably deem necessary; (6) the costs of preparing, printing and delivering certificates representing the securities offered in the offering; (7) fees and expenses of the transfer agent for the shares of Common Stock; (8) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company to Alexander Capital; (9) the costs associated with bound volumes of the offering materials to be provided to Alexander Capital by our counsel; and (10) if applicable, the cost associated with the Placement Agent s use of Ipreo s book-building, prospectus tracking and compliance software for this offering. Accordingly, we may compensate or reimburse Alexander Capital in an amount not to exceed 12.7490% of the gross proceeds received by us from investors in connection with the sale of shares of common stock and warrants to purchase shares of common stock in this offering. Subject to compliance with Financial Industry Regulatory Authority, or FINRA, Rule 5110(f)(2)(D), we will reimburse Alexander Capital for actual legal and other expenses incurred by it in connection with this offering in an amount up to $75,000 if this offering does not close. The estimated offering expenses payable by us, are approximately $747,000, which includes legal, accounting and filing fees various other fees and expenses associated with registering the securities and listing the common stock and the non-accountable expense allowance payable to Alexander. After deducting certain fees due to Alexander and our estimated offering expenses, we expect the net proceeds from this offering to be approximately $3,253,000 if the maximum number of securities are sold. The following table shows the per fixed combination and total placement agency commissions we will pay to Alexander in connection with the sale of the securities offered pursuant to this prospectus supplement assuming the purchase of all of the securities offered hereby: Placement agency commission per fixed combination(1) $ Total $ (1) Does not include a non-accountable expense allowance in the amount of 0.5% of the gross proceeds, or $20,000 per fixed combination. 56 Because there is no minimum offering amount required as a condition to closing in this offering, the actual total offering fees, if any, are not presently determinable and may be substantially less than the maximum amount set forth above. We have agreed to indemnify Alexander and certain other persons against certain liabilities relating to or arising out of Alexander s activities under the placement agency agreement. We also have agreed to contribute to payments that Alexander may be required to make in respect of such liabilities. Alexander has informed us that it will not engage in over allotment, stabilizing transactions or syndicate covering transactions in connection with this offering. From time to time in the ordinary course of business, Alexander or its affiliates may in the future engage in investment banking and/or other services with us for which they may receive compensation, but we have no current agreement in place with Alexander. Our common stock is traded on the OTCQB under the symbol "SSNT". On February 4, 2015, we effected a 1-for-30 reverse stock split. The transfer agent for our common stock to be issued in this offering is Fidelity Transfer Company. The description of the placement agency agreement contained herein does not purport to be complete and is qualified by reference to the placement agency agreement. A prospectus in electronic format may be made available on the web sites maintained by Alexander Capital and it may distribute the prospectus electronically. The placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any commissions received by it and any profit realized on the sale of the securities by them while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. The placement agent would be required to comply with the requirements of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of shares of common stock and warrants to purchase shares of common stock by the placement agent. Under these rules and regulations, the placement agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation in the distribution. 57 LEGAL MATTERS The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for SilverSun Technologies, Inc. by Lucosky Brookman LLP. Certain legal matters in connection with this offering will be passed upon for the placement agent by Robinson Brog Leinwand Greene Genovese & Gluck P.C. EXPERTS The consolidated financial statements as of December 31, 2013 and 2012 included in this registration statement, of which this prospectus forms a part, have been audited by Friedman LLP, an independent registered public accounting firm, as set forth in their report appearing elsewhere herein and are included in reliance of such report given on the authority of said firm as experts in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Common Stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the company and its Common Stock, reference is made to the registration statement and the exhibits and any schedules filed therewith. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference. A copy of the registration statement, including the exhibits and schedules thereto, may be read and copied at the SEC s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov. We are subject to the full informational requirements of the Exchange Act. We fulfill our obligations with respect to such requirements by filing periodic reports and other information with the SEC. We furnish our stockholders with annual reports containing consolidated financial statements certified by an independent public accounting firm. We also maintain a website at www.silversuntech.com. However, the information contained on or accessible through our website is not part of this prospectus or the registration statement of which this prospectus forms a part, and potential investors should not rely on such information in making a decision to purchase our Common Stock in this offering. 58 SILVERSUN TECHNOLOGIES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013 F-2 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013 (unaudited) F-3 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013 (unaudited) F-4 Notes to Condensed Consolidated Financial Statements (unaudited) F-6 Report of Independent Registered Public Accounting Firm F-12 Consolidated Balance Sheets as of December 31, 2013 and 2012 F-13 Consolidated Statements of operations for the Years Ended December 31, 2013 and 2012 F-14 Consolidated Statement of Stockholders Deficit for the Years Ended December 31, 2013 and 2012 F-15 Consolidated Statements of Cash Flows for the Years Ended December 31, 2013 and 2012 F-16 Notes to Consolidated Financial Statements F-18 F-1 PART I — FINANCIAL INFORMATION Item 1. Financial Statements SILVER SUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, 2014 December 31, 2013 ASSETS Current assets: Cash and cash equivalents $ 1,449,773 $ 762,892 Accounts receivable, net of allowance of $90,000 and $80,000 1,924,428 1,574,996 Unbilled services 488,000 90,000 Deferred tax asset – current 40,000 40,000 Prepaid expenses and other current assets 132,421 69,276 Total current assets 4,034,622 2,537,164 Property and equipment, net 179,295 241,895 Intangible assets, net 860,507 687,880 Deferred tax asset 29,000 80,000 Deposits and other assets 26,575 22,836 Total assets $ 5,129,999 $ 3,569,775 LIABILITIES AND STOCKHOLDERS DEFICIT Current liabilities: Note payable to related party $ — $ 20,000 Current portion of long-term debt 218,805 175,000 Accounts payable and accrued expenses 2,234,039 1,836,229 Accrued interest 14,692 13,291 Due to related party — 2,672 Capital lease obligations 46,199 53,726 Deferred revenue 2,092,852 1,715,555 Total current liabilities 4,606,587 3,816,473 Capital lease obligations – long-term 24,943 48,624 Long-term debt 260,059 104,517 Total liabilities 4,891,589 3,969,614 Commitments and contingencies — — Stockholders equity (deficit): Preferred stock, $0.001 par value; authorized 1,000,000 shares; no shares issued and outstanding — — Series A Convertible Preferred Stock, $0.001 par value; authorized 2 shares; no shares issued and outstanding — — Series B Preferred Stock, $0.001 par value; authorized 1 share; 1 share issued and outstanding 1 1 Common stock: Class A – par value $.00001; authorized 75,000,000 shares; 3,954,897 and 3,922,566 shares issued and outstanding 40 39 Class B – par value $.00001: authorized 50,000,000 shares; no shares issued and Outstanding — — Additional paid-in capital 11,018,951 10,809,499 Accumulated deficit (10,780,582 ) (11,209,378 ) Total stockholders equity (deficit) 238,410 (399,839 ) Total liabilities and stockholders equity (deficit) $ 5,129,999 $ 3,569,775 See accompanying notes to condensed consolidated financial statements. F-2 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013 Revenues: Product, net $ 1,345,238 $ 995,145 $ 2,902,011 $ 2,239,773 Service, net 4,741,227 3,379,806 13,364,021 10,050,315 Total revenues, net 6,086,465 4,374,951 16,266,032 12,290,088 Cost of revenues: Product 699,750 563,858 1,481,915 1,146,150 Service 2,828,168 2,180,106 7,872,689 6,271,221 Cost of revenues 3,527,918 2,743,964 9,354,604 7,417,371 Gross profit 2,558,547 1,630,987 6,911,428 4,872,717 Operating expenses: Selling expenses 853,818 926,738 2,476,720 2,345,703 General and administrative expenses 1,086,033 668,526 3,251,615 2,127,303 Shared-based compensation 56,092 25,404 119,161 34,212 Depreciation and amortization 95,098 72,403 262,055 218,604 Total operating expenses 2,091,041 1,693,071 6,109,551 4,725,822 Income (loss) from operations 467,506 (62,084 ) 801,877 146,895 Other income (expense): Interest expense, net (21,494 ) (20,135 ) (45,717 ) (51,399 ) Total other income (expense) (21,494 ) (20,135 ) (45,717 ) (51,399 ) Income (loss) before taxes 446,012 (82,219 ) 756,160 95,496 Provision for income taxes 197,847 — 327,364 — Net income (loss) $ 248,165 $ (82,219 ) $ 428,796 $ 95,496 Net income (loss) per common share: Basic $ 0.06 $ (0.02 ) $ 0.11 $ 0.02 Fully diluted 0.06 (0.02 ) 0.11 0.02 Weighted average shares: Basic 3,945,924 3,906,506 3,938,618 3,902,008 Diluted 3,947,376 3,906,506 3,939,642 3,902,008 See accompanying footnotes to the condensed consolidated financial statements. F-3 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2014 2013 Cash flows from operating activities: Net income $ 428,796 $ 95,496 Adjustments to reconcile net income to net cash provided by operating activities Deferred income taxes 51,000 — Depreciation and amortization 84,682 71,374 Amortization of intangibles 177,373 147,231 Share-based compensation 119,161 34,212 Common stock issued in exchange for services 69,500 — Stock warrants issued in exchange for services — 28,528 Changes in assets and liabilities: Accounts receivable (349,432 ) 335,833 Unbilled services (398,000 ) (133,000 ) Prepaid expenses and other current assets (63,146 ) 50,077 Deposits and other assets (3,739 ) (161 ) Accounts payable and accrued expenses and due to related party 415,931 (153,774 ) Accrued interest 1,401 788 Deferred revenue 377,297 385,399 Net cash provided by operating activities 910,824 862,003 Cash flows from investing activities: Purchase of property and equipment (10,344 ) (31,375 ) Net cash used in investing activities (10,344 ) (31,375 ) Cash flows from financing activities: Repayment of bank line of credit — (178,633 ) Proceeds from term loan — 350,000 Repayment of note payable to related party (20,000 ) — Repayment of long-term debt (150,653 ) (29,250 ) Principal payments under capital leases obligations (42,946 ) (39,220 ) Net cash (used in) provided by financing activities (213,599 ) 102,897 Net increase in cash and cash equivalents 686,881 933,525 Cash and cash equivalents – beginning of period 762,892 4,483 Cash and cash equivalents – end of period $ 1,449,773 $ 938,008 Cash paid during period for: Interest $ 48,391 $ 50,525 Income taxes $ — $ — See accompanying footnotes to the condensed consolidated financial statements. F-4 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES For the nine months ended September 30, 2014: a) In connection with the acquisition of ESC, the Company issued ESC, Inc. a promissory note in the aggregate principal amount of $350,000 and the fair value of the assets was recorded at $350,000. b) The Company issued 5,331 shares of common stock with a fair value of $20,792 for repayment of accrued liabilities of $20,792. For the nine months ended September 30, 2013: a) The Company incurred approximately $45,383 in capital lease obligations. b) The Company issued 7,018 shares of common stock in a cashless exercise of warrants for 8,333 shares at an exercise price of $0.90 per share. c) The Company issued 7,184 shares of common stock with a fair value of $25,000 for repayment of accrued liabilities in the amount of $25,000. See accompanying footnotes to the condensed consolidated financial statements. F-5 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 — DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business SilverSun Technologies, Inc. and subsidiaries (the "Company", "we", "us", "our") are involved in the acquisition and build-out of technology engaged in providing transformational business management applications and professional consulting services to small and medium companies, primarily in manufacturing, distribution and service industries. We are executing a growth strategy centered on the development of our own proprietary business management solutions, including our MAPADOC Electronic Data Interchange (EDI) solution and 36 other proprietary solutions and enhancements; as well as on the acquisition of application resellers and software publishers of unique and proprietary solutions in the extensive and expanding, but highly fragmented, business solutions marketplace. The Company is publicly traded and is currently quoted on the OTCQB marketplace ("OTCQB") under the symbol "SSNT." Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC) and consequently do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments considered necessary for a fair presentation of such interim results. These results are not necessarily indicative of the results to be expected for the full year. The December 31, 2013 balance sheet included herein was derived from the audited financial statements included in the Company s annual report on Form 10-K as of that date. Accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and notes thereto included in the Company s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on March 31, 2014. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Certain information in footnote disclosures normally included in the financial statements were prepared in conformity with accounting principles generally accepted in the United States of America, and have been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full year s results. The Company believes the disclosures are adequate to make the information presented not misleading. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Deferred Revenues Deferred revenues consist of maintenance service, customer support services, including telephone support and deposits for future consulting services which will be earned as services are performed over the contractual or stated period, which generally ranges from three to twelve months. Revenue Recognition Revenue is recognized when products are shipped, or services are rendered, evidence of a contract exists, the price is fixed or reasonably determinable, and collectability is reasonably assured. F-6 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Product Revenue Software product revenue is recognized when the product is shipped to the customer. The Company treats the software component and the professional services consulting component as two separate arrangements that represent separate units of accounting. The arrangement consideration is allocated to each unit of accounting based upon that unit s proportion of the fair value. In a situation where both components are present, software sales revenue is recognized when collectability is reasonably assured and the product is delivered and has stand-alone value based upon vendor specific objective evidence (see below for recognition of professional service revenue). Service Revenue Service revenue is comprised of primarily professional service consulting revenue, maintenance revenue and other ancillary services provided as described below. Professional service revenue is recognized as service time is incurred. With respect to maintenance services, upon the completion of one year from the date of sale, considered to be the warranty period, the Company offers customers an optional annual software maintenance and support agreement for subsequent one-year periods. Maintenance and support agreements are recorded as deferred revenue and recognized over the respective terms of the agreements, which typically range from three months to one year and are included in services revenue in the Condensed Consolidated Statements of Operations. Shipping and handling costs charged to customers are classified as revenue, and the shipping and handling costs incurred are included in cost of sales. Long-Lived Assets Long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of such assets is measured by a comparison of the carrying amount of the assets to the future net cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were identified or recorded for the nine months ended September 30, 2014. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications have had no effect on the financial position, operations or cash flows for the nine month period ended September 30, 2013. NOTE 3 — NET INCOME PER COMMON SHARE The Company s basic income per common share is based on net income for the relevant period, divided by the weighted average number of common shares outstanding during the period. Diluted income per common share is based on net income, divided by the weighted average number of common shares outstanding during the period, including common share equivalents, such as outstanding stock options and warrants to the extent they are dilutive. The computation of diluted income per share for the three and nine months ended September 30, 2013 does not include share equivalents as all warrants and options exceeded the average market price of the common stock and were therefore antidilutive. Three Months Ended September 30, 2014 Three Months Ended September 30, 2013 Nine Months Ended September 30, 2014 Nine Months Ended September 30, 2013 Basic net income (loss) per share computation: Net income (loss) $ 248,165 $ (82,219 ) $ 428,796 $ 95,496 Weighted-average common shares outstanding 3,945,924 3,906,506 3,938,618 3,902,008 Basic net income (loss) per share $ 0.06 $ (0.02 ) $ 0.11 $ 0.02 F-7 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Three Months Ended September 30, 2014 Three Months Ended September 30, 2013 Nine Months Ended September 30, 2014 Nine Months Ended September 30, 2013 Diluted net income (loss) per share computation: Net income (loss) $ 248,165 $ (82,219 ) $ 428,796 $ 95,496 Weighted-average common shares outstanding 3,945,924 3,906,506 3,938,618 3,902,008 Incremental shares attributable to the common stock equivalents 1,452 — 1,024 — Total adjusted weighted-average shares 3,947,376 3,906,506 3,939,642 3,902,008 Diluted net income (loss) per share $ 0.06 $ (0.02 ) $ 0.11 $ 0.02 The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share. Nine Months September 30, 2014 Nine Months September 30, 2013 Stock options 169,116 89,116 Warrants 16,667 25,000 Total potential dilutive securities not included in income per share 185,783 114,116 Three Months September 30, 2014 Three Months September 30, 2013 Stock options 169,116 89,116 Warrants 16,667 25,000 Total potential dilutive securities not included in income per share 185,783 114,116 NOTE 4 — NOTES PAYABLE TO RELATED PARTY On October 19, 2010, the Company borrowed $45,000 in exchange for issuing a Note payable to Mr. Meller. The Note Payable is not collateralized, not convertible, and carries an interest rate of 3% per annum on the unpaid balance. Mr. Meller extended the due date of the remaining Note Payable from January 2014 to January 2015. In September 2014, the note and accrued interest was paid in full. The outstanding balance at September 30, 2014 and December 31, 2013 was $-0- and $20,000, respectively, plus accrued interest of $-0- and $2,672, respectively, which was included in Due to Related Party in the accompanying balance sheet at December 31, 2013. NOTE 5 — PROPERTY AND EQUIPMENT Property and equipment is summarized as follows: September 30, 2014 December 31, 2013 Leasehold improvements $ 30,557 $ 30,557 Equipment, furniture and fixtures 1,024,002 1,001,920 1,054,559 1,032,477 Less: Accumulated depreciation (875,264 ) (790,582 ) Property and equipment, net $ 179,295 $ 241,895 Depreciation and amortization expense related to these assets for the three and nine months ended September 30, 2014 was $28,196 and $84,682, respectively, as compared to $23,000 and $71,374 for the three and nine months ended September 30, 2013, respectively. F-8 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 6 — BUSINESS COMBINATION On May 6, 2014 SWK Technologies, Inc. ("SWK") , a wholly owned subsidiary of SilverSun Technologies, Inc, entered into an Asset Purchase Agreement with ESC, Inc. d/b/a ESC Software, an Arizona corporation, and Alan H. Hardy and Michael Dobberpuhl in their individual capacity as Shareholders. SWK acquired certain assets of ESC (as defined in the Purchase Agreement). In full consideration for the acquired assets, the Company issued in favor of Seller a promissory note in the aggregate principal amount of $350,000 (see Note 8). The purchase price has been initially allocated based on the Company s estimate of fair value to intangible assets, which are expected to consist primarily of customers lists with an estimated life of five years. Upon completion of an independent valuation, the allocation of the purchase price may be modified accordingly, with the excess purchase consideration, if any, being allocated to goodwill. Additionally, in connection with the Purchase Agreement, the Company entered into an Employment Agreement with Alan H. Hardy pursuant to which Mr. Hardy will serve as SWK s Senior Vice President of business development. Mr. Hardy s duties will vary, but will focus primarily on business development and software application sales. The term of the Employment Agreement is three years (the "Term"). SWK shall pay Mr. Hardy a base salary of $162,000 per annum. Additionally, Mr. Hardy shall receive 20,000 options to purchase the Company s common stock (see Note 10) at a strike price of $4.50 per share (the "Options"). The Options shall vest at 20% year over year for five years. The Company s condensed consolidated financial statements for the three months and nine months September 30, 2014 include the results of ESC since date of acquisition. For the nine months ended September 30, 2014, the ESC operations had a net profit of $9,000 that was included in the Company s Condensed Consolidated Statement of Operations, which consisted of approximately $429,000 in revenues and $420,000 in expenses. The following unaudited pro forma information does not purport to present what the Company s actual results would have been had the acquisition occurred on January 1, 2013, nor is the financial information indicative of the results of future operations. The following table represents the unaudited consolidated pro forma results of operations for the nine months ended September 30, 2014 and 2013 as if the acquisition occurred on January 1, 2013. Operating expenses have been increased for the amortization expense associated with the estimated fair value adjustment as of September 30, 2014 of expected definite lived intangible assets. Pro Forma Nine Months Ended September 30, 2014 Nine Months Ended September 30, 2013 Net sales $ 17,000,967 $ 13,530,826 Operating expenses 6,238,390 5,035,264 Income before taxes 858,658 104,756 Net income $ 493,370 $ 104,756 Basic and diluted income per common share $ 0.13 $ 0.03 NOTE 7 — INTANGIBLE ASSETS Intangible assets consist of intellectual property and customer lists acquired and are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over five years for all of the intangibles. The components of intangible assets are as follows: September 30, 2014 December 31, 2013 Proprietary developed software $ 294,036 $ 294,036 Intellectual property, customer list, and acquired contracts 1,044,000 694,000 Total intangible assets $ 1,338,036 $ 988,036 Less: accumulated amortization (477,529 ) (300,156 ) $ 860,507 $ 687,880 F-9 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Amortization expense included in depreciation and amortization was $66,902 and $177,373, respectively, for the three and nine months ended September 30, 2014 as compared to $49,402 and $147,231, respectively, for the three and nine months ended September 30, 2013. The Company expects future amortization expense to be the following: Amortization Balance of 2014 $ 66,901 2015 267,607 2016 267,607 2017 165,059 2018 70,000 2019 23,333 Total $ 860,507 NOTE 8 — LINE OF CREDIT, TERM LOAN AND PROMISSORY NOTE On August 1, 2013, the Company entered into a line of credit and term loan with a bank. The term of the line is for two years, expiring on July 31, 2015. The agreement includes a borrowing base calculation tied to accounts receivable with a maximum availability of $750,000 at prime plus 1.75% interest (currently 5%). The line is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. The credit facility requires the Company to pay a monitoring fee of $1,000 monthly. At September 30, 2014, the Company was in compliance with its required financial covenants, the fixed charge ratio and debt to net worth. As of September 30, 2014, the availability under this line was $750,000. Under the term loan, the Company borrowed $350,000 in July 2013 from a bank. The term of the loan is for two years and expires on July 31, 2015. Monthly payments are at $15,776 including interest at 8%. The term loan is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. The outstanding balances at September 30, 2014 and December 31, 2013 were $151,125 and $279,517, respectively. In connection with the May 6 acquisition of ESC, Inc., the Company issued a promissory note in the amount of $350,000 (the "Note"). The Note is due sixty (60) months from the Closing Date (the "Maturity Date") and bears interest at a rate of two percent (2%) per annum. Monthly principal and interest payments are $6,135. Any overdue principal or interest on the Note shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law or (ii) ten percent (10%). The outstanding balance at September 30, 2014 was $327,739. NOTE 9 — RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued Accounting Standard Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," ("ASU 2014-09"). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt this ASU on January 1, 2017. Companies may use either a full retrospective or modified retrospective approach to adopt this ASU and management is currently evaluating which transition approach to use. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures. No other recently issued accounting pronouncements had or are expected to have a material impact on the Company s consolidated financial statements. F-10 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 10 — STOCK OPTIONS In February 2014, the Company granted 50,000 incentive stock options with an exercise price of $4.50 per option to certain non-executive employees under the 2004 Stock Incentive Plan. Approximately 25,000 of the options vest immediately with the remaining 50% vesting ratably over a three-year period. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 0.71%, volatility at 353.95% and an expected life of 5 years. The Company estimates the forfeiture rate based on historical data. Based on an analysis of historical information, the Company has applied a forfeiture rate of 15%. As a result, the Company estimated the value of these options at $115,488. In May 2014, the Company granted 20,000 incentive stock options with an exercise price of $4.50 per option to Mr. Alan H. Hardy (see Note 6) under the 2004 Stock Incentive Plan. The Company recognizes compensation cost on awards on a straight-line basis over the vesting period, approximately five years. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 1.68%, volatility at 328.76% and an expected life of 5 years. The Company estimates the forfeiture rate based on historical data. Based on an analysis of historical information, the Company has applied a forfeiture rate of 15%. As a result, the Company estimated the value of these options at $77,981. In July 2014, the Company granted 10,000 incentive stock options with an exercise price of $4.50 per option to certain non-executive employees under the 2004 Stock Incentive Plan. Options vest immediately. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 1.0%, volatility at 323.81% and an expected life of 5 years. As a result, the Company estimated the value of these options at $44,987. For the three and nine months ended September 30, 2014, share-based compensation was $56,092 and $119,161, as compared to $25,404 and $34,212 for the three and nine months ended September 30, 2013. NOTE 11 — INCOME TAXES The Company provides for income taxes for each interim period based on the estimated annual effective rate for the year, adjusting for discrete items in the quarter which they arise. The provision for income taxes for the three and nine months ended September 30, 2014 was $197,847 and $327,364. These amounts represent the statutory federal and state rate on the Company s income before taxes. The effective tax rates of 44.3% and 43.3% for the three and nine months ended September 30, 2014, respectively, were higher than the respective statutory rates due to the expenses associated with non-deductible incentive stock option share-based compensation for these periods. Note 12 — Subsequent Events The Company s board of directors and stockholders authorized a reverse stock split of its outstanding common stock at a ratio of 1-for-30. On February 4, 2015, the reverse stock split was effected such that, (i) each 30 shares of then-outstanding common stock was reduced to one share of common stock; (ii) the number of shares of common stock into which each then-outstanding share of our common stock and our then-outstanding warrants or options to purchase common stock is exercisable was proportionately reduced; and (iii) the exercise price of each then-outstanding warrant or option to purchase common stock was proportionately increased. The accompanying consolidated financial statements give retroactive effect as though the 1-for-30 reverse stock split of the Company s common stock occurred for all periods presented, without any change in the par value per share. Fractional shares resulting from the reverse stock split have been rounded up to the next whole share. On January 29, 2015, the Company's board of directors and stockholders authorized (i) a reduction in authorized shares of the Company's common stock from 750,000,000 to 75,000,000, and (ii) the combination of the Company's Class A Common Stock, par value $0.00001 per share, and Class B Common Stock, par value $0.00001 per share, into a general class of common stock, par value $0.00001 per share. On January 29, 2015, Mark Meller resigned as Chief Financial Officer of the Company and Crandall Melvin III was appointed. F-11 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of SilverSun Technologies, Inc. We have audited the accompanying consolidated balance sheets of SilverSun Technologies, Inc. and Subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders deficit, and cash flows for each of the two years in the period ended December 31, 2013. The Company s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with standards established by the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. /s/ Friedman LLP East Hanover, NJ March 31, 2014, except as to Note 15 to the consolidated financial statements, which is as of February 5, 2015 F-12 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2013 2012 ASSETS Current assets: Cash and cash equivalents $ 762,892 $ 4,483 Accounts receivable, net of allowance for bad debts of $80,000 and $80,000 1,574,996 1,509,532 Deferred tax asset – current 40,000 — Prepaid expenses and other current assets 159,276 131,520 Total current assets 2,537,164 1,645,535 Property, plant and equipment, net 241,895 250,233 Intangible assets, net 687,880 884,513 Deferred tax asset 80,000 — Deposits and other assets 22,836 21,996 Total assets $ 3,569,775 $ 2,802,277 LIABILITIES & STOCKHOLDERS DEFICIT Current liabilities: Bank line of credit $ — $ 178,633 Note payable to related party 20,000 20,000 Current portion of long-term debt 175,000 — Accounts payable and accrued expenses 1,836,229 1,953,182 Accrued interest 13,291 12,422 Due to related party 2,672 5,942 Capital lease obligations – current portion 53,726 88,829 Deferred revenue 1,715,555 1,357,800 Total current liabilities 3,816,473 3,616,808 Capital lease obligations – long-term 48,624 — Long-term debt 104,517 — Total liabilities 3,969,614 3,616,808 Commitments and Contingencies Stockholders deficit: Preferred Stock, $0.001 par value; authorized 1,000,000 shares; no shares issued and outstanding — — Series A Preferred Stock, $0.001 par value; authorized 2 shares No shares issued and outstanding — — Series B Preferred Stock, $0.001 par value; authorized 1 share 1 share issued and outstanding 1 1 Common stock: Class A – par value $.00001, authorized 75,000,000 shares; 3,922,566 and 3,898,364 shares issued and outstanding 39 39 Class B – par value $.00001, authorized 50,000,000 shares; -0- issued and outstanding — — Additional paid-in capital 10,809,499 10,717,355 Accumulated deficit (11,209,378 ) (11,531,926 ) Total stockholders deficit (399,839 ) (814,531 ) Total liabilities and stockholders deficit $ 3,569,775 $ 2,802,277 The accompanying notes are an integral part of these consolidated financial statements. F-13 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2013 December 31, 2012 Revenues: Software product, net $ 3,419,154 $ 2,432,187 Service, net 13,980,897 10,746,798 Total revenues, net 17,400,051 13,178,985 Cost of revenues: Product 1,707,142 1,173,510 Service 8,942,768 6,671,375 Total cost of revenues 10,649,910 7,844,885 Gross profit 6,750,141 5,334,100 Operating expenses: Selling and marketing expenses 3,244,337 2,302,258 General and administrative expenses 2,927,622 2,876,456 Share-based compensation 17,616 1,136,258 Depreciation and amortization 301,962 195,560 Total operating expenses 6,491,537 6,510,532 Income (loss) from operations 258,604 (1,176,432 ) Other income (expense): Gain from bargain purchase — 17,932 Interest expense, net (56,056 ) (76,670 ) Total other income (expense) (56,056 ) (58,738 ) Income (loss) from operations before income taxes 202,548 (1,235,170 ) Income tax benefit (120,000 ) — Net income (loss) $ 322,548 $ (1,235,170 ) Basic and diluted net income (loss) per share attributable to SilverSun Technologies, Inc. shareholders: Basic income (loss) per common share $ 0.08 $ (0.32 ) Diluted income (loss) per common share $ 0.08 $ (0.32 ) Weighted average shares outstanding: Basic 3,902,008 3,846,518 Diluted 3,902,008 3,846,518 The accompanying notes are an integral part of these consolidated financial statements. F-14 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 Non controlling Series A Series B Interest in Preferred Preferred Common Stock Additional SWK Total Stock Stock Class A Paid in Accumulated Technologies, Stockholders Shares Amount Shares Amount Shares Amount Capital Deficit Inc. Deficit Balance at January 1, 2012 2 $ 22,886 1 $ 1 148,564 $ 1 $ 9,327,017 $ (10,296,756 ) $ 47,206 $ (899,645 ) Exchange of shares of SWK for shares of SilverSun Technologies, Inc — — — — 755,489 8 47,198 — (47,206 ) — Conversion of Series A Preferred Stock to common stock (2 ) (22,886 ) — — 79,522 1 22,885 — — — Conversion of convertible promissory note to common stock — — — — 2,893,122 29 44,547 — — 43,946 Share-Based Compensation — — — — — — 1,136,258 — — 1,136,258 Issuance of warrant for services — — — — — — 105,080 — — 105,080 Issuance of common stock for services — — — — 21,667 — 35,000 — — 35,000 Net loss — — — — — — — (1,235,170 ) — (1,235,170 ) Balance at December 31, 2012 — $ — 1 $ 1 3,898,364 $ 39 $ 10,717,355 $ (11,531,926 ) $ — $ (814,531 ) Issuance of warrant for services — — — — — — 28,528 — — 28,528 Common stock issued in a cashless exercise of warrants — — — — 7,018 — — — — — Issuance of common stock for repayment of accrued liabilities — — — — 7,184 — 25,000 — — 25,000 Share-Based Compensation — — — — — — 17,616 — — 17,616 Issuance of common stock for services — — — — 10,000 — 21,000 — — 21,000 Net income — — — — — — — 322,548 — 322,548 Balance at December 31, 2013 — $ — 1 $ 1 3,922,566 $ 39 $ 10,809,499 $ (11,209,378 ) $ — $ (399,839 ) The accompanying notes are an integral part of these consolidated financial statements. F-15 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2013 2012 Cash flows from operating activities: Net income (loss) $ 322,548 $ (1,235,170 ) Adjustments to reconcile net loss to net cash used in operating activities: Deferred income taxes (120,000 ) — Depreciation and amortization 105,330 92,037 Amortization of intangibles 196,633 103,523 Amortization of debt discount — 4,250 Provision for bad debts — 39,000 Share-based compensation 17,616 1,136,258 Gain from bargain purchase — (17,932 ) Common stock issued for services 21,000 35,000 Warrant issued in exchange for services 28,528 105,080 Changes in certain assets and liabilities: Accounts receivable (65,464 ) (667,315 ) Prepaid expenses and other assets (27,756 ) 22,240 Deposits and other assets (840 ) 35,925 Accounts payable and accrued liabilities (91,953 ) 693,137 Accrued interest 869 4,747 Due to related parties (3,270 ) (393 ) Deferred revenues 357,755 42,416 Net cash provided by operating activities 740,996 392,803 Cash flows from investing activities: Acquisition of new business — (441,964 ) Software development costs — (198,591 ) Purchases of equipment (30,364 ) (103,819 ) Net cash used in investing activities (30,364 ) (744,374 ) Cash flows from financing activities: Repayment of notes payable to related parties — (7,054 ) Proceeds from (repayment of) line of credit, net (178,633 ) 178,633 Proceed from term loan 350,000 — Repayment of term loan (70,483 ) — Principal payment under capital lease obligations (53,107 ) (49,247 ) Net cash provided by financing activities 47,777 122,332 Net increase (decrease) in cash and cash equivalents 758,409 (229,239 ) Cash and cash equivalents, beginning of year 4,483 233,722 Cash and cash equivalents, end of year $ 762,892 $ 4,483 Supplemental Schedule of Cash Flow Information: During the year, cash was paid for the following: Income taxes $ — $ — Interest $ 69,134 $ 66,776 The accompanying notes are an integral part of these consolidated financial statements. F-16 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (Continued) SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: For the Year Ended December 31, 2013: a) The Company incurred approximately $66,628 in capital lease obligations. b) The Company issued 7,018 shares of common stock in a cashless exercise of warrants for 8,333 shares at an exercise price of $0.90 per share. c) The Company issued 7,184 shares of common stock with a fair value of $25,000 for repayment of accrued liabilities in the amount of $25,000. d) The Company issued 10,000 shares of common stock with a fair value of $21,000 in exchange for services. For the Year Ended December 31, 2012: a) The Company converted $43,946 of the Convertible Promissory Note (as defined herein) at a fixed conversion rate of 66 shares per $30 for 2,893,123 shares of the Company s Class A common stock, par value $0.00001 (the "Common Stock"). b) The Company converted 2 shares of Series A Convertible preferred stock for 79,522 shares of Common Stock. c) The Company bought back their 20% interest in SWK Technologies, Inc. for 755,489 shares of Common Stock. d) The Company incurred approximately $73,709 in capital lease obligations. The accompanying notes are an integral part of these consolidated financial statements. F-17 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 1 — DESCRIPTION OF BUSINESS Description of Business SilverSun Technologies, Inc. (the "Company") is an information technology company, and a value added reseller and master developer for Sage Software s Sage100/500 and ERP X3 financial and accounting software as well as the publisher of its own proprietary Electronic Data Interchange (EDI) software, "MAPADOC." The Company focuses on the business software and information technology consulting market, and is looking for other opportunities to grow its business. The Company sells services and products to various end users, manufacturers, wholesalers and distributor industry clients located throughout the United States. In June 2011, the Company changed its name from Trey Resources, Inc. to SilverSun Technologies, Inc. The Company is publicly traded and is currently quoted on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol "SSNT." In June 2012 the Company completed the purchase of selected assets and obligations of HighTower, Inc., a leading Chicago-based reseller of Sage software applications and a publisher of proprietary business management enhancements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements include the accounts of SilverSun Technologies, Inc. (the "Company") and its wholly-owned subsidiary, SWK Technologies, Inc. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. All significant inter-company transactions and accounts have been eliminated in consolidation. Noncontrolling interest had represented third party ownership in the net assets of our consolidated subsidiaries. For financial reporting purposes, the assets and liabilities of our majority owned subsidiaries are consolidated with those of our own, with any third party investor s interest shown as noncontrolling interest. On May 6, 2009, the Company sold twenty-five (25) newly issued shares or 20% of the stock of SWK Technologies, Inc. ("SWK"), a subsidiary of SilverSun Technologies, Inc., for a purchase price of $150,000 to the President of SWK. On January 12, 2012, SilverSun Technologies, Inc. entered into a share exchange agreement (the "Agreement") with certain shareholders and the President (the "SWK Shareholders") of SWK Technologies, Inc. Pursuant to the terms of the Agreement, the SWK Shareholders exchanged an aggregate of 25 shares of SWK to the Company for a total of 755,489 shares (the "Exchange Shares") of the Company s common stock (the "Exchange"). The shares had a fair value of approximately $612,000 ($0.81 per share) at the time of exchange. The transaction was recorded as an equity transaction. SWK is now a wholly-owned subsidiary of the Company. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include: 1. Revenue recognition of software sales 2. Allowance for doubtful accounts F-18 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 3. Fair market value of share based payments and other equity instruments 4. Valuation of intangible assets 5. Valuation of deferred tax assets and liabilities Revenue Recognition Revenue is recognized when products are shipped, or services are rendered, evidence of a contract exists, the price is fixed or reasonably determinable, and collectability is reasonably assured. Product Revenue Software product revenue is recognized when the product is shipped to the customer. The Company treats the software component and the professional services consulting component as two separate arrangements that represent separate units of accounting. The arrangement consideration is allocated to each unit of accounting based upon that unit s proportion of the fair value. In a situation where both components are present, software sales revenue is recognized when collectability is reasonably assured and the product is delivered and has stand-alone value based upon vendor specific objective evidence (see below for recognition of professional service revenue). Service Revenue Service revenue is comprised of primarily professional service consulting revenue, maintenance revenue and other ancillary services provided as described below. Professional service revenue is recognized as service time is incurred. With respect to maintenance services, upon the completion of one year from the date of sale, considered to be the warranty period, the Company offers customers an optional annual software maintenance and support agreement for subsequent one-year periods. Maintenance and support agreements are recorded as deferred revenue and recognized over the respective terms of the agreements, which typically range from three months to one year and are included in services revenue in the Consolidated Statements of Operations. Shipping and handling costs charged to customers are classified as revenue, and the shipping and handling costs incurred are included in cost of sales. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to federally insured limits. At times balances may exceed FDIC insured limits. The Company has not experienced any losses in such accounts. Concentration of Credit Risk For the years ended December 31, 2013 and 2012, our top ten customers accounted for 19% ($3,159,000) and 17% ($2,262,000), respectively, of our total revenues. The Company does not rely on any one specific customer for any significant portion of our revenue base. For the years ended December 31 2013 and 2012, purchases from one supplier were approximately 31% and 47% of cost of revenues, respectively. For the years ended December 31, 2013 and 2012, one supplier represented approximately 52% and 43% of total accounts payable, respectively. F-19 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable and cash and cash equivalents. As of December 31, 2013 the Company believes it has no significant risk related to its concentration of accounts receivable. Accounts Receivable Accounts receivable consist primarily of invoices for maintenance and professional services. Full payment for software ordered by customers is due in advance of ordering from the software supplier. Payments for maintenance and support plan renewals are due before the beginning of the maintenance period. Terms under our professional service agreements are generally 50% due in advance and the balance on completion of the services. The Company maintains an allowance for bad debt estimated by considering a number of factors, including the length of time the amounts are past due, the Company s previous loss history, the customer s current ability to pay its obligations and the condition of the general economy and the industry as a whole. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets, generally five to seven years. Maintenance and repairs that do not materially add to the value of the equipment nor appreciably prolong its life are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in the Statements of Operations. Deferred Revenues Deferred revenues consist of maintenance service, customer support services, including telephone support and deposits for future consulting services which will be earned as services are performed over the contractual or stated period, which generally ranges from three to twelve months. Deferred Income Taxes Deferred income taxes reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as net operating loss carryforwards. Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related assets or liabilities for financial reporting, or according to the expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting. Valuation allowances are established against deferred tax assets if it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment date. The Company has federal net operating loss ("NOL") carryforwards which are subject to limitations under Section 382 of the Internal Revenue Code. Income Tax Uncertainties The calculation of the Company s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on the two-step process prescribed by applicable accounting principles. The first step is to evaluate the tax F-20 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible outcomes. The Company reevaluates these uncertain tax positions, based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period. The Company recognizes interest and penalties as incurred in finance income (expense), net in the Consolidated Statements of Operations. There were no liabilities for uncertain tax positions at December 31, 2013 and 2012. Fair Value Measurement The Company adopted the provisions of the accounting pronouncement which defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure. Under the provisions of the pronouncement, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. The pronouncement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The Company s current financial assets and liabilities approximate fair value due to their short term nature and include cash, accounts receivable, accounts payable, capital leases and line of credit. See also Notes 4, 5 and 13. Definite Lived Intangible Assets The values assigned to purchased intangible assets were based on an independent valuation. Purchased intangible assets are amortized over the useful lives of the asset using the straight-line amortization method. The Company assesses potential impairment of its intangible assets when there is evidence that recent events or changes in circumstances have made recovery of an asset s carrying value unlikely. Factors the Company considers important, which may cause impairment include, among others, significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results. F-21 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 Long-Lived Assets Long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of such assets is measured by a comparison of the carrying amount of the assets to the future net cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were identified or recorded in the years ended December 31, 2013 and 2012. Stock-Based Compensation Compensation expense related to share-based transactions, including employee stock options, is measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton ("Black-Scholes") pricing model. For all employee stock options, the Company recognizes expense over the requisite service period on a straight-line basis (generally the vesting period of the equity grant). The Company s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility, expected term, and forfeiture rate. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. Earnings per Share The Company s basic income (loss) per common share is based on net income (loss) for the relevant period, divided by the weighted average number of common shares outstanding during the period. Diluted income per common share is based on net income, divided by the weighted average number of common shares outstanding during the period, including common share equivalents, such as outstanding stock options and warrants to the extent they are dilutive. Diluted loss per share does not include common stock equivalents, stock options and warrants, as these shares would have an anti-dilutive effect as their exercise prices were above the market price of the Company s common stock at December 31, 2013. The computation of EPS is approximately as follows: Year Ended December 31, 2013 Year Ended December 31, 2012 Basic net income (loss) per share: Net income (loss) attributable to common stockholders $ 322,548 $ (1,235,170 ) Weighted-average common shares outstanding 3,902,008 3,846,518 Basic net income (loss) per share attributable to common stockholders $ 0.08 $ (0.32 ) Diluted net income (loss) per share: Net income (loss) attributable to common stockholders $ 322,548 $ (1,235,170 ) Weighted-average common shares outstanding 3,902,008 3,846,518 Incremental shares attributable to warrants and convertible promissory note — — Total adjusted weighted-average shares 3,902,008 3,846,518 Diluted net income (loss) per share attributable to common stockholders $ 0.08 $ (0.32 ) F-22 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share. 2013 2012 Stock options 89,116 95,824 Warrants 25,000 25,000 Total potential dilutive securities not included in loss per share 114,113 120,824 Recent Accounting Pronouncements No recently issued accounting pronouncements had or are expected to have a material impact on the Company s consolidated financial statements. NOTE 3 — PROPERTY AND EQUIPMENT Property and equipment is summarized as follows: December 31, 2013 December 31, 2012 Leasehold improvements $ 30,557 $ 30,557 Equipment, furniture and fixtures 1,001,920 904,928 1,032,477 935,485 Less: Accumulated depreciation (790,582 ) (685,252 ) Property and equipment, net $ 241,895 $ 250,233 Depreciation and amortization expense related to these assets for the years ended December 31, 2013 and 2012 was $105,330 and $92,037. NOTE 4 — BUSINESS COMBINATION In June 2012, the Company s wholly-owned subsidiary, SWK Technologies, Inc., acquired certain assets of HighTower Inc. for total consideration of $441,964 in cash and noncash assumption of deferred revenue obligation of $299,634. Based on an independent valuation, the purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities according to their respective estimated fair values. The following summarizes the purchase price allocation: Current assets $ 38,736 Long-lived assets 26,794 Bargain purchase gain (17,932 ) Intangible assets 694,000 Deferred maintenance liability (299,634 ) Fair value of net assets acquired $ 459,896 Cash paid for acquisition 441,964 Bargain purchase gain 17,932 Total purchase price $ 459,896 Intangible assets acquired are primarily made up of a customer list acquired and proprietary technology. Acquisition costs were approximately $46,000, which are included in general and administrative expenses. F-23 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 The Company s consolidated financial statements for the year ended December 31, 2012 include the results of HighTower since date of acquisition. The following unaudited pro forma information assumes the acquisition occurred on January 1, but does not purport to present what the Company s actual results would have been had the acquisition actually occurred on January 1, 2011, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense related to the acquisition. Pro - Forma (unaudited) Year Ended December 31, 2012 Total revenue, net $ 13,773,967 Cost of revenues 8,039,161 Operating expenses 7,008,124 Other expense (income) 56,635 Income (loss) before taxes (1,235,170 ) Net income (loss) $ (1,329,953 ) Basic income (loss) per common share $ (0.34 ) Diluted income (loss) per common share $ (0.34 ) For the year ended December 31, 2012, the HighTower operations contributed approximately $461,647 in net income, which consisted of approximately $1,145,319 in revenues and $683,672 in expenses. These revenues were generated in combination with HighTower and SWK personnel, and likely would not have been achieved if HighTower was a standalone business. NOTE 5 — INTANGIBLE ASSETS Intangible assets consist of intellectual property and customer lists acquired and are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives. The components of intangible assets are as follows: December 31, 2013 December 31, 2012 Estimated Useful Lives Proprietary developed software $ 294,036 $ 294,036 5 Intellectual property, customer list, and acquired contracts 694,000 694,000 5 Total intangible assets $ 988,036 $ 988,036 Less: accumulated amortization 300,156 103,523 $ 687,880 $ 884,513 Amortization expense related to the above intangible assets was $196,633 and $103,523, respectively, the tears ended December 31, 2013 and 2012. The Company expects amortization expense to be the following: Amortization 2014 $ 197,607 2015 197,607 2016 197,607 2017 95,059 Total $ 687,880 F-24 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 6 — LINE OF CREDIT AND TERM LOAN In October 2011, the Company negotiated a line of credit from a bank. The agreement included a borrowing base calculation tied to accounts receivable with a maximum availability of $750,000. On August 1, 2013, the Company negotiated a new line of credit and term loan from the bank. The term of the line is for two years and expires on July 31, 2015. The agreement included a borrowing base calculation tied to accounts receivable with a maximum availability of $750,000 at prime plus 1.75% interest (currently 5%). The line is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. The credit facility requires the Company to pay a monitoring fee of $1,000 monthly. At December 31, 2013, the Company was in compliance with the required financial covenants, the fixed charge ratio and debt to net worth. As of December 31, 2013, the availability under this line was $750,000. Under the term loan, the Company borrowed $350,000 in July 2013 from a bank. The term of the loan is for two years and expires on July 31, 2015. Monthly payments are at $15,776 including interest at 8%. The term loan is collateralized by substantially all of the assets of the Company and is guaranteed by the Company s Chief Executive Officer, Mr. Meller. At December 31, 2013 the outstanding balance was $279,517. NOTE 7 — INCOME TAXES Significant components of the Company s deferred tax assets and liabilities are summarized as follows: December 31, 2013 December 31, 2012 Deferred tax assets: Net operating loss carry forwards $ 2,928,000 $ 2,920,000 Long lived assets 270,000 326,000 Share based payments 71,000 75,000 Other 35,000 32,000 Deferred tax asset 3,304,000 3,353,000 Deferred tax liabilities: Long lived assets (44,000 ) (73,000 ) Deferred tax liabilities (44,000 ) (73,000 ) Net deferred tax asset 3,260,000 3,280,000 Less: Valuation allowance (3,140,000 ) (3,280,000 ) Net deferred tax asset $ 120,000 $ -0- The recognized deferred tax asset is based upon the expected utilization of its benefit from future taxable income. The Company has federal net operating loss ("NOL") carryforwards of approximately $7,552,000 as of December 31, 2013, which is subject to limitations under Section 382 of the Internal Revenue Code. These carryforward losses are available to offset future taxable income, and begin to expire in the year 2025 to 2030. A valuation allowance has been recorded, for those deferred tax assets that management does not believe that the realization is more likely than not. The foregoing amounts are management s estimates and the actual results could differ from those estimates. Future profitability in this competitive industry depends on continually obtaining and fulfilling new profitable sales agreements and modifying products. The inability to obtain new profitable contracts could reduce estimates of future profitability, which could affect the Company s ability to realize the deferred tax assets. F-25 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 A reconciliation of the statutory income tax rate to the effective rate is as follows for the period December 31, 2013 and 2012: December 31, 2013 December 31, 2012 Federal income tax rate 34 % 34 % State income tax, net of federal benefit 6 % 6 % Permanent differences 6 % 40 % Prior year adjustments (35 )% — % Effective income tax rate 11 % 80 % Effect on valuation allowance (70 )% (80 )% Effective income tax rate (59.0 )% 0.0 % Income tax (benefit) provision: Year Ended December 31, 2013 December 31, 2012 Current: Federal $ — $ — State and local — — Total current tax provision — — Deferred: Federal — — State and local — — Release of valuation allowance (120,000 ) — Total deferred tax (benefit) provision (120,000 ) — Total (benefit) provision $ (120,000 ) — NOTE 8 — CAPITAL LEASE OBLIGATIONS The Company has entered into lease commitments for equipment that meet the requirements for capitalization. The equipment has been capitalized and shown in equipment, furniture and leasehold improvements in the accompanying balance sheets. The related obligations are also recorded in the accompanying balance sheets and are based upon the present value of the future minimum lease payments with interest rates ranging from 8.5% to 11.0%. At December 31, 2013, future payments under capital leases are as follows over each of the next five fiscal years: 2014 $ 62,499 2015 39,741 2016 12,457 2017 — 2018 — Total minimum lease payments 114,697 Less amounts representing interest (12,347 ) Present value of net minimum lease payments 102,350 Less current portion (53,726 ) Long-term capital lease obligation $ 48,624 NOTE 9 — DUE TO RELATED PARTY Amounts owed to Mr. Meller as of December 31, 2013 and December 31, 2012, representing accrued interest totaled $2,672 and $5,942, respectively. F-26 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 10 — NOTES PAYABLE TO RELATED PARTY On October 19, 2010, the Company borrowed $45,000 in exchange for issuing a Note payable to Mr. Meller. The Note Payable is not collateralized, and carries an interest rate of 3% per annum on the unpaid balance. In January 2013, Mr. Meller extended the due date of the Note Payable to January 2014. The outstanding balance at December 31, 2013 and 2012 was $20,000. NOTE 11 — CONVERTIBLE PROMISSORY NOTE — RELATED PARTY On January 28, 2011, the Company issued a 7% $51,000 convertible promissory note to Mr. Meller ("Convertible Note"). The note is not collateralized. On January 4, 2012 the holder of the Convertible Note, Mr. Meller, converted $30,458 into 2,005,139 shares of Common Stock. In addition, the holder had sold $13,488 of the Convertible Note to certain employees of the Company for cash in January 2012, in accordance with options which were granted to such employees in January 2011, which were immediately converted into 887,984 shares of Common Stock. The additional fair value of the shares issued to the employees upon conversion was recorded as share-based compensation of $719,000 which was recorded as a charge in the consolidated statement of operations. In December 2012, the remaining balance of the note was repaid to Mr. Meller in the amount of $7,054. The outstanding balances at December 31, 2013 and 2012 were $-0. The accrued interest was paid in full in March 2013. NOTE 12 — COMMITMENTS AND CONTINGENCIES Operating Leases Our main offices are at 5 Regent Street, Livingston, NJ 07039 where we have 6,986 square feet of office space at a monthly rent of $7,400. The lease expires December 31, 2016. The Company has a two-year lease, with a one-year extension, for office space at 6834 Buckley Road, North Syracuse, New York, at a monthly rent of $2,100. The lease expires May 31, 2015. The Company also leases 2,700 square feet of office space for sales and support in Skokie, IL with a monthly rent of $3,000. This lease expires April 30, 2018. The Company also leases 500 square feet for sales and support in Minneapolis, MN for $400 a month. This lease expires August 2014. We use our facilities to house our corporate headquarters and operations and believe our facilities are suitable for such purpose Total rent expense under these operating leases for the year ended December 31, 2013 and 2012 was $153,000 and $130,000, respectively. The following is a schedule of approximate future minimum rental payments for operating leases subsequent to the year ended December 31, 2013. 2014 $ 141,000 2015 129,000 2016 121,000 2017 36,000 2018 36,000 Employment agreements The Company has an Employment Agreement with Mark Meller, President and Chief Executive Officer of the Company, which began on September 15, 2003, which was extended on September 1, 2010, and expires on September 15, 2017. As consideration, the Company agreed to pay Mr. Meller the sum of $180,000 the first year with a 10% increase every year thereafter, as well as a monthly travel expense allowance of $600 and an auto allowance of $800. Based on this agreement Mr. Meller s salary is $466,874. As of December 31, 2013, Mr. Meller agreed to accept a salary of $426,500 for 2013. F-27 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 The employment agreement with Mr. Meller also provides for a severance payment to him of three hundred percent (300%), less $100,000 of his gross income for services rendered to the Company in each of the five prior calendar years should his employment be terminated following a change in control, as defined in the employment agreement. NOTE 13 — STOCKHOLDERS EQUITY Series A Convertible Preferred Stock The Company issued 2 shares of Series A Convertible Preferred Stock ("Series A"), having the rights, preferences, privileges, powers and restrictions set forth in the Certificate of Designation filed with the Secretary of State of Delaware. The Company has the right to convert, at its sole option, each share of Series A into Class A Common Stock equal to 1% of the outstanding shares of Class A Common Stock at the time of conversion. Each one share of Series A shall entitle the Series A Holder to voting rights equal to 88,889 votes of Class A Common Stock. On January 12, 2012, the Series A Convertible Preferred Stock was converted into 79,522 shares of Common Stock. As of December 31, 2013 and 2012, no shares of Series A Convertible Preferred Stock were outstanding. Series B Preferred Stock The Series B Preferred Stock, par value $0.001 per share, has the rights, privileges, preferences and restrictions set for in the Certificate of Designation (the "Certificate of Designation") filed by the Corporation with the Secretary of State of the State of Delaware ("Delaware Secretary of State") on September 23, 2011. The one (1) share of the Series B Preferred shall have voting rights equal to (x) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote divided by (y) forty nine one-hundredths (0.49) minus (z) the total issued and outstanding Common Stock and preferred stock eligible to vote at the time of the respective vote. For the avoidance of doubt, if the total issued and outstanding Common Stock eligible to vote at the time of the respective vote is 5,000,000, the voting rights of the Series B Preferred Stock shall be equal to 5,204,082 (e.g. (5,000,000/0.49) – 5,000,000 = 5,204,082). Common Stock The Company is authorized to issue 75,000,000 shares of common stock, par value $.00001 per share. At December 31, 2013 and December 31, 2012, there were 3,922,566 and 3,898,364 common shares issued and outstanding, respectively. NOTE 14 — STOCK OPTIONS AND WARRANTS 2004 Stock Incentive Plan The Company adopted the 2004 Stock Incentive as amended Plan (the "2004 Plan") which reserves for issuance up to 116,067 shares of the Company s Common Stock in order to attract and retain qualified employees, directors, independent contractors or agents of the Company. Under the Plan, the Board of Directors (the "Board"), in its discretion may grant stock options (including non-statutory stock options and incentive stock options qualifying under Section 422 of the Code), stock appreciation rights (including free-standing, tandem and limited stock appreciation rights), warrants, dividend equivalents, stock awards, restricted stock, phantom stock, performance shares or other securities or rights that the Board determines to be consistent with the objectives and limitations of the plan at a price to be equal to or greater than 50% of the fair market value of such shares on the date of grant of such award. The Board may determine that all or a portion of a payment to a participant under the Plan, whether it is to be made in cash, shares of the Company common stock or a combination thereof, shall be vested at such F-28 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 times and upon such terms as may be selected by it in its sole discretion. The Plan (but not the awards theretofore granted under the Plan) shall terminate on and no awards shall be granted after September 29, 2014. 2007 Consultant Stock Incentive Plan The Company adopted the 2007 Consultant Stock Incentive Plan (the "2007 Plan") to: (i) provide long-term incentives, payment in stock in lieu of cash and rewards to consultants, advisors, attorneys, independent contractors or agents ("Eligible Participants") of the Company; (ii) assist the Company in attracting and retaining independent contractors or agents with experience and/or ability on a basis competitive with industry practices; and (iii) associate the interests of such independent contractors or agents with those of the Company s stockholders. The Company has reserved 19,393 shares for issuance under this plan. Awards under the Plan may include, but need not be limited to, stock options (including non-statutory stock options and incentive stock options qualifying under Section 422 of the Code), stock appreciation rights (including free-standing, tandem and limited stock appreciation rights), warrants, dividend equivalents, stock awards, restricted stock, phantom stock, performance shares or other securities or rights that the Board determines to be consistent with the objectives and limitations of the Plan. The price shall be equal to or greater than 50% of the fair market value of such shares on the date of grant of such award. The Board shall determine the extent to which awards shall be payable in cash, shares of the Company common stock or any combination thereof. The Board may determine that all or a portion of a payment to a participant under the Plan, whether it is to be made in cash, shares of the Company common stock or a combination thereof shall be deferred. Deferrals shall be for such periods and upon such terms as the Board may determine in its sole discretion. The Plan (but not the awards theretofore granted under the Plan) shall terminate on and no awards shall be granted after January 22, 2017. 2004 Directors and Officers Stock Incentive Plan The Company adopted the 2004 Directors and Officers Stock Incentive Plan (the "2004 D&O Plan") which reserves for issuance up to 5,520 shares of the Company s Common Stock in order to provide long-term incentive and rewards to officers and directors of the Company and subsidiaries and to attract and retain qualified employees, directors, independent contractors or agents of the Company. Awards under the Plan may include, but need not be limited to, stock options (including non-statutory stock options and incentive stock options qualifying under Section 422 of the Code), stock appreciation rights (including free-standing, tandem and limited stock appreciation rights), warrants, dividend equivalents, stock awards, restricted stock, phantom stock, performance shares or other securities or rights that the Board determines to be consistent with the objectives and limitations of the Plan. The price shall be equal to or greater than 50% of the fair market value of such shares on the date of grant of such award. The Board shall determine the extent to which awards shall be payable in cash, shares of the Company common stock or any combination thereof. The Board may determine that all or a portion of a payment to a participant under the Plan, whether it is to be made in cash, shares of the Company common stock or a combination thereof shall be deferred. Deferrals shall be for such periods and upon such terms as the Board may determine in its sole discretion. The Plan (but not the awards theretofore granted under the Plan) shall terminate on and no awards shall be granted after September 29, 2014. In May 2012, the Company issued approximately 95,833 common stock options from the 2004 Stock Incentive Plan with a weighted average exercise price of $4.80 and an expected life of 5 years. Approximately, 75,233 of the common stock options vest immediately. The remaining 20,600 options shall vest 50% at grant date with the balance vested ratably over a three-year period. The Company estimated the value of the options at approximately $460,000 using the Black Scholes option-pricing model. Compensation cost is recognized on a straight-line basis over the vesting period F-29 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 and, as such, the Company recorded compensation expense of approximately $17,616 and $416,991 for the years ended December 31, 2013 and 2012, respectively. The weighted average inputs into the Black Scholes were as follows: 1. Expected dividend yield of 0.0%, 2. Risk-free interest rate of 0.86% 3. Expected Volatility at 298% 4. Expected term of 5 years 5. Exercise price of $4.80 The Company uses judgment in estimating the amount of stock-based awards that are expected to be forfeited. If actual forfeitures differ significantly from the original estimate, stock-based compensation expense and the results of operations could be impacted. A summary of the status of the Company s stock option plans for the fiscal years ended December 31, 2013 and 2012 and changes during the years are presented below: (in number of options): Number of Options Average Exercise Price Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding options at January 1, 2012 0 $ 0.00 Options granted 95,824 $ 4.80 5.0 years Options exercised 0 $ 0.00 Options canceled/forfeited 0 $ 0.00 Outstanding options at December 31, 2012 95,824 $ 4.80 4.4 years $ -0- Options granted — Options exercised — Options canceled/forfeited (6,708 ) Outstanding options at December 31, 2013 86,116 4.80 3.4 years $ -0- Vested Options: December 31, 2013: 85,044 $ 4.80 3.4 years $ -0- December 31, 2012: 84,804 $ 4.80 4.4 years $ -0- For the years ended December 31, 2013 and 2012, the unamortized compensation expense for stock options was $21,000 and $43,000, respectively. Unamortized compensation expense is expected to be recognized over a weighted-average period of 2 years. Options immediately vest upon grant or 50% upon grant with the remaining 50% vested evenly over the next three years on the anniversary date after the year of grant. Warrants Outstanding During 2013 the Company issued 8,333 warrants for services with a fair value of approximately $29,000, which immediately vested. The estimated fair value of the warrant has been calculated based on a Black-Scholes pricing model using the following assumptions: a) fair market value of stock of $3.60; b) exercise price of $3.60; c) Dividend yield of 0%; d) Risk free interest rate of 0.27%; e) expected volatility of 278.17%; f) Expected life of 2 years. F-30 SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 During 2012 the Company issued 25,000 warrants for services with a fair value of approximately $105,000. The estimated fair value of the warrant has been calculated based on a Black-Scholes pricing model using the following assumptions: a) fair market value of stock of $0.90 – $6.00; b) exercise price of $0.60-$1.20; c) Dividend yield of 0%; d) Risk free interest rate of 0.25% – 0.33%; e) expected volatility of 280.02% – 296.79%; f) Expected life of 2 years. Unexpired warrants outstanding are as follows as of December 31, 2013: Expiration Date Exercise Price Shares July 1, 2014 $ 6.00 8,333 October 1, 2014 $ 6.00 8,333 January 1, 2015 $ 3.60 8,333 The following table summarizes the warrants transactions: Warrants Outstanding Weighted Average Exercise Price Balance, January 1, 2012 18,467 $ 8.133 Granted 25,000 $ 4.299 Exercised — $ .0000 Canceled 18,465 $ 7.854 Balance, December 31, 2012 25,002 $ 4.50 Granted 8,333 $ 3.60 Exercised 8,333 $ 900 Canceled 1 $ 3,803 Balance, December 31, 2013 25,001 $ 5.199 Outstanding and Exercisable, December 31, 2013 25,001 $ 5.199 Outstanding and Exercisable, December 31, 2012 25,002 $ 4.50 Note 15 — Subsequent Events The Company's board of directors and stockholders authorized a reverse stock split of its outstanding common stock at a ratio of 1-for-30. On February 4, 2015, the reverse stock split was effected such that, (i) each 30 shares of then-outstanding common stock was reduced to one share of common stock; (ii) the number of shares of common stock into which each then-outstanding share of our common stock and our then-outstanding warrants or options to purchase common stock is exercisable was proportionately reduced; and (iii) the exercise price of each then-outstanding warrant or option to purchase common stock was proportionately increased. The accompanying consolidated financial statements give retroactive effect as though the 1-for-30 reverse stock split of the Company's common stock occurred for all periods presented, without any change in the par value per share. Fractional shares resulting from the reverse stock split have been rounded up to the next whole share. On January 29, 2015, the Company's board of directors and stockholders authorized (i) a reduction in authorized shares of the Company's common stock from 750,000,000 to 75,000,000, and (ii) the combination of the Company's Class A Common Stock, par value $0.00001 per share, and Class B Common Stock, par value $0.00001 per share, into a general class of common stock, par value $0.00001 per share. F-31 746,964 Shares Common Stock Warrants to Purchase 373,482 Shares of Common Stock PRELIMINARY PROSPECTUS YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Until , all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. Alexander Capital, L.P. The Benchmark Company , 2015 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution The following table sets forth the fees and expenses, other than placement agent commissions, payable by us in connection with the offering described in this Registration Statement. All amounts shown are estimates other than the registration fee and the FINRA filing fee. Amount SEC registration fee $ 783.19 FINRA fee 1,779.95 Printing and mailing expenses 50,000 Accounting fees and expenses 75,000 Legal fees and expenses 325,000 Transfer agent fees and expenses 10,000 Miscellaneous 5,000 Total expenses $ 467,563.14 Item 14. Indemnification of Directors and Officers. Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by the DGCL. Our certificate of incorporation provides that our directors will not be liable for monetary damages for breach of fiduciary duty, except for liability relating to any breach of the director s duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, violations under Section 174 of the DGCL or any transaction from which the director derived an improper personal benefit. We have been advised that, in the opinion of the SEC, any indemnification for liabilities arising under the Securities Act of 1933, as amended, is against public policy, as expressed in the Securities Act, and is, therefore, unenforceable. Item 15. Recent Sales of Unregistered Securities. All share and price information in Part II of this registration statement has been adjusted to reflect the 1-for-30 reverse stock split of our Common Stock effected on February 4, 2015. During the last three (3) completed fiscal years and to date in the current fiscal year, we sold the following unregistered securities: Issuance Number of Shares On September 26, 2014, the Company issued 5,331 shares of common stock with a fair value of $20,792 for repayment of accrued liabilities. 5,331 On August 5, 2014, the Company issued 5,333 shares of common stock with a fair market value of $16,000 in exchange for services. 5,333 On August 5, 2014, the Company issued 5,000 shares of common stock with a fair market value of $15,000 in exchange for services. 5,000 On February 17, 2014, the Company issued 10,000 shares of common stock with a fair market value of $23,100 in exchange for services. 10,000 On September 30, 2013, the Company issued 10,000 shares of common stock with a fair market value of $21,000 in exchange for services. 10,000 On September 18, 2013, the Company issued 7,184 shares of common stock with a fair value of $25,000 for repayment of accrued liabilities in the amount of $25,000. 7,184 On May 27, 2013, the Company issued 7,018 shares of common stock in a cashless exercise of warrants for 250,000 shares at an exercise price of $0.90 per share. 7,018 On July 2, 2012, the Company issued 5,000 shares of common stock with a fair market value of $30,000 to in exchange for services. 5,000 II-1 Issuance Number of Shares On January 13, 2012, the Company converted 2 shares of Series A Convertible preferred stock for 79,522 shares of common stock. 79,522 On January 12, 2012, the Company bought back their 20% interest in SWK Technologies, Inc. for 755,489 shares of common stock. 755,489 On January 4, 2012, the Company issued 16,667 shares of common stock with a fair market value of $5,000 in exchange for services. 16,667 No underwriters were involved in the foregoing sales of securities. The issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act or Rule 701 promulgated under Section 3(b) of the Securities Act or Regulation S promulgated under the Securities Act. The recipients of securities in some but not all such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the stock certificates and option agreements issued in such transactions. All recipients had adequate access, through their relationships with us, to information about us. II-2 Item 16. Exhibits and Financial Statement Schedules. (a) The following exhibits are filed as part of this Registration Statement: Exhibit No. Description 3.1 Fourth Amended and Restated Certificate of incorporation of SilverSun Technologies, Inc., (incorporated herein by reference to Exhibit 3.1 on Form 8-K, dated June 27, 2011, filed with the SEC on June 30, 2011). 3.2 By-laws of SilverSun Technologies, Inc., a New Jersey corporation, incorporated herein by reference to Exhibit 3.2 of the Registrant s Form 10-Q for the period ended September 30, 2011. 3.3 Amendment to the Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 on Form 8-K, dated June 27, 2011, filed with the SEC on June 30, 2011). 3.4 Amendment to the Fourth Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on January 29, 2015 (incorporated by reference to Exhibit 10.1 to the Company s current report on Form 8-K, filed with the Commission on February 2, 2015). 4.1 Certificate of Designation of Series A Convertible Preferred Stock, incorporated herein by reference to Exhibit 4.1 on Form 8-K, dated May 4, 2011, filed with the SEC on May 12, 2011. 4.2 Certificate of Designation of Series B Preferred Stock, incorporated herein by reference to Exhibit 4.1 on Form 8-K, dated September 23, 2011, filed with the SEC on September 27, 2011. 4.3 Form of Investor Warrant (incorporated by reference to Exhibit 4.3 to the Company s Registration Statement on Form S-1/A, filed with the Commission on February 18, 2015). 4.4 Form of Placement Agents Warrant (incorporated by reference to Exhibit 4.3 to the Company s Registration Statement on Form S-1/A, filed with the Commission on February 18, 2015). 5.1* Opinion of Lucosky Brookman LLP 10.1 Employment Agreement, dated September 15, 2003, between SilverSun Technologies, Inc. and Mark Meller. (incorporated herein by reference to Exhibit 10.8 of the Registration Statement on Form SB-2 filed on November 25, 2003). 10.2 Amended Agreement by and between the Company and Mr. Stanley Wunderlich (incorporated by reference to Exhibit 10.1 to the Company s current report on Form 8-K filed with commission on August 3, 2011). 10.3 Loan and Security Agreement by and between the Company, its subsidiary SWK Technologies, Inc. and a commercial lender (incorporated herein by reference to Exhibit 10.18 of the Annual Report on Form 10-K for the period ended December 31, 2011, filed with the SEC on March 29, 2012). 10.4 Form of Purchase Agreement, dated June 14, 2012, by and among SWK Technologies, the Company s wholly-owned subsidiary, Neil Wolf, Esq., not individually, but solely in his capacity as Trustee-Assignee of the Trust Agreement and Assignment for the Benefit of the Creditors of Hightower, Inc., Hightower, Inc., and the Stockholders of Hightower, Inc. (incorporated by reference to Exhibit 2.1 on the Company s current report on Form 8-K filed with the commission on June 20, 2012). 10.5 Form of Placement Agency Agreement (incorporated by reference to Exhibit 10.5 to the Company s Registration Statement on Form S-1/A, filed with the Commission on February 27, 2015). 10.6 Form of Subscription Agreement (incorporated by reference to Exhibit 4.3 to the Company s Registration Statement on Form S-1/A, filed with the Commission on February 18, 2015). 10.7 Director Agreement, dated January 29, 2015, between the Company and Joseph Macaluso (incorporated by reference to Exhibit 10.1 to the Company s current report on Form 8-K, filed with the Commission on February 2, 2015) 21.1 List of subsidiaries (incorporated by reference to Exhibit 21.2 to the Company s Registration Statement on Form S-1, filed with the Commission on December 4, 2014). 23.1* Consent of Friedman LLP 23.2 Consent of Lucosky Brookman LLP (Reference is made to Exhibit 5.1) 24.1* Power of Attorney (set forth on the signature page of the Registration Statement) 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Scheme 101.CAL XBRL Taxonomy Calculation Linkbase 101.DEF XBRL Taxonomy Definition Linkbase 101.LAB XBRL TaxonomyLabel Linkbase 101.PRE XBRL Taxonomy Presentation Linkbase * Filed herewith. (b) No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or the notes thereto. II-3 Item 17. Undertakings The undersigned Registrant hereby undertakes to provide to the placement agent and investors at the closing certificates in such denominations and registered in such names as required by the placement agent and investors to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form
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diff --git a/parsed_sections/prospectus_summary/2015/RBTK_zhen-ding_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/RBTK_zhen-ding_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms Zhen Ding, the Company, we, us, and our refer to Zhen Ding Resources Inc., a Delaware corporation, and its subsidiaries, including its majority ownership in the Chinese Joint Venture company, Zhen Ding Mining Co. Ltd. OUR BUSINESS Our current main proposed business is to identify mining entities that are engaged in the exploration and extraction of precious and/or base metals, primarily in China, which are in need of funding and improved management. We intend to provide the necessary management expertise and assist in financing efforts in these mining operations. In exchange, we would acquire metal ores produced by these mines to process in our ore milling plant and sell the ore concentrates to metal refineries. We seek mining companies with either geologically demonstrated mineral resources and/or that are already in mining operations. We believe we have the necessary expertise and contacts to find needed financing and personnel to help these enterprises in their development and in return we secure the necessary raw material for our ore milling plant. Our principal executive offices are located at Suite 205, 353 St. Nicolas Montreal, Quebec Canada H2Y 2P1. Our telephone number is (438) 875-6136. Our main operational office is in Wuxi, Town of Langqiao, Jing County, Anhui, China. Our telephone number at that address is 86-6270-9018. Our first successful partnership was the purchase of 100% of the equity of Zhen Ding Resources Inc., a Nevada corporation ( Zhen Ding NV ), which owns 70% of a mining joint venture enterprise, Zhen Ding Mining Co. Ltd., ( Zhen Ding JV ) organized under the law of the People s republic of China ( PRC ), through its wholly owned subsidiary, Z&W Zhen Ding Corporation, a California corporation ( Zhen Ding CA ). Our joint venture partner Xinzhou Gold Co. Ltd. ( Xinzhou Gold ) owns 30% of Zhen Ding JV and is majority owned by certain of our officers and directors and major shareholders. Subsequent to the acquisition of Zhen Ding NV, we merged Zhen Ding NV into and with our parent company, Zhen Ding Resources Inc., a Delaware corporation ( Zhen Ding DE ). To date all our operational mine milling activities are represented by the activities of Zhen Ding JV. Its assets consists of an ore processing plant and adjacent warehouses and offices, built on property adjacent to Xinzhou Gold s mine in Wuxi, located in Anhui Province, China. The plant processes ore in its raw rock form purchased from Xinzhou Gold. This operation is further described on Page 17 under Description of Business. We are not an offshore special purpose company under PRC regulations, and as a result we are not required to obtain the approval of PRC regulatory agencies as a result of our ownership structure.
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diff --git a/parsed_sections/prospectus_summary/2015/RCKTW_rocket_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/RCKTW_rocket_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2015/RGNX_regenxbio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/RGNX_regenxbio_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2015/RMR_rmr-group_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/RMR_rmr-group_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary of certain information contained in this prospectus may not include all the information that is important to you. For a more complete description of the terms and conditions of the Distribution, you should read this entire prospectus and the documents referred to in this prospectus. See "Where You Can Find More Information." Our Company RMR Inc. owns a 51.6% economic interest in and is the managing member of RMR LLC. Substantially all of the business of RMR Inc. is conducted by RMR LLC. RMR LLC was founded in 1986 to invest in real estate and manage real estate related businesses. Our business primarily consists of providing management services to four publicly owned real estate investment trusts, or REITs, and three real estate operating companies. Since its founding, RMR LLC has substantially grown the amount of real estate assets under management and the number of real estate businesses it manages. As of June 30, 2015, we had $22.1 billion of real estate assets under management, including more than 1,300 properties, which are primarily owned by the Managed REITs. We believe our 20 year management agreements with the Managed REITs create a secure base of revenues to operate and grow our business. As manager of the Managed REITs, we are responsible for implementing investment strategies and managing day to day operations, subject to supervision and oversight by each Managed REIT's board of trustees. The Managed REITs have no employees and we provide the personnel and services necessary for each Managed REIT to conduct its business. These Managed REITs invest in diverse income producing properties as follows: Government Properties Income Trust (NYSE: GOV) primarily owns office properties majority leased to the U.S. government and state governments. As of June 30, 2015, GOV owned 72 properties (92 buildings) located in 31 states and the District of Columbia. Hospitality Properties Trust (NYSE: HPT) primarily owns hotel and travel center properties. As of June 30, 2015, HPT owned 484 properties (293 hotels and 191 travel centers) located in 44 states, Puerto Rico and Canada. Select Income REIT (NYSE: SIR) primarily owns properties that are leased to single tenants, including industrial and commercial lands on the island of Oahu, Hawaii. As of June 30, 2015, SIR owned 116 properties (355 buildings, leasable land parcels and easements) located in 35 states. Senior Housing Properties Trust (NYSE: SNH) primarily owns independent and assisted living communities, continuing care retirement communities, nursing homes, wellness centers and properties leased to medical service providers, clinics, biotech laboratory tenants and other medical related businesses. As of June 30, 2015, SNH owned 428 properties (452 buildings) located in 43 states and the District of Columbia. We also provide management services to three real estate operating companies that have diverse businesses as follows: Five Star Quality Care, Inc. (NYSE: FVE) is a national healthcare and senior living services company that operates senior living communities, including independent living, assisted living, continuing care and skilled nursing facilities, many of which are owned by SNH. As of June 30, 2015, Five Star operated 272 senior living communities located in 32 states. Sonesta International Hotels Corporation, or Sonesta, manages and franchises an international collection of hotels, resorts and cruise ships offering upscale and extended stay accommodations Copies to: Margaret R. Cohen, Esq. John E. Alessi, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 500 Boylston Street Boston, Massachusetts 02116 (617) 573-4800 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. (1)Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of our pro forma Adjusted EBITDA to our pro forma net income, see footnote (1) to "Summary Selected Consolidated Historical and Pro Forma Financial Information and Other Data" beginning on page 10. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS (Subject to Completion) Dated November 13, 2015 7,500,000 Shares The RMR Group Inc. Class A Common Stock (Par Value $0.001 Per Share) Table of Contents $22.1 billion of invested capital of four REITs as well as three real estate operating companies. The synergies among our clients may also facilitate their and our growth. In the past, we have assisted our clients in realizing investment opportunities by working together to make acquisitions. We expect to use our operating cash flow and, as a public company, we may use our equity to fund our growth. Quality and Depth of Management. Our highly qualified and experienced management team provides a broad base of deep expertise to our clients. Our senior management has worked together through several business cycles in which they acquired, financed, managed and disposed of real estate assets and started real estate businesses. As of June 30, 2015, we employed over 400 real estate professionals in 25 offices throughout the United States, and the companies we manage collectively had over 50,000 employees. We also have a proven track record of assisting our clients to grow by successfully accessing the capital markets; since our founding in 1986, our clients have successfully completed over $30.0 billion of financing in over 150 capital raising transactions. Alignment of Interests. We believe our structure fosters strong alignment of interests between our principal executive officers and our shareholders because our principal executives, Barry M. Portnoy and Adam D. Portnoy, have a combined direct and indirect 51.6% economic interest in RMR LLC. Dividend Policy We currently plan to pay a regular quarterly cash dividend initially equal to $0.25 per share ($1.00 per share per year) to holders of our Class A Common Shares. We expect that our first dividend after the Distribution will be the regular quarterly dividend for the quarter ended March 31, 2016 plus a pro rata dividend for the period from and including the Distribution Date to and including December 31, 2015 and will be paid in the second calendar quarter of 2016. The declaration and payment of dividends to our shareholders is at the discretion of our Board of Directors, which may change our distribution policy or increase, decrease or discontinue the payment of dividends at any time. Summary of the Distribution On June 5, 2015, we were a party to a transaction with RMR Trust and the Managed REITs, or the Up-C Transaction, pursuant to which the Managed REITs acquired 15,000,000 of our Class A Common Shares. As part of the Up-C Transaction, each Managed REIT agreed to distribute to its shareholders approximately half of the Class A Common Shares it received in the Up-C Transaction and we agreed to file the registration statement of which this prospectus is a part to facilitate the Distribution. Each Managed REIT has determined to make a distribution of the number of Class A Common Shares listed in the below table pro rata to holders of its common shares outstanding as of 5:00 p.m., Eastern Time, on November 27, 2015, or the Record Date, and set December 14, 2015, or the Distribution Date, as the date on which the Distribution will be made. The aggregate number of Class A Common Shares to be distributed by each Managed REIT in the Distribution and its Distribution rate are as follows: Managed REIT Aggregate number of Class A Common Shares of RMR Inc. to be distributed Distribution rate (number of Class A Common Shares of RMR Inc. per one Managed REIT common share) GOV 768,285 0.0108 HPT 2,515,923 0.0166 SIR 1,582,048 0.0177 SNH 2,636,058 0.0111 This prospectus is being furnished to you in connection with the distribution, or the Distribution, of shares of class A common stock, par value $0.001 per share, or Class A Common Shares, of The RMR Group Inc., or RMR Inc., by each of Government Properties Income Trust, or GOV, Hospitality Properties Trust, or HPT, Select Income REIT, or SIR, and Senior Housing Properties Trust, or SNH, and together with GOV, HPT and SIR, the Managed REITs, to the respective holders of their outstanding common shares as of 5:00 p.m., Eastern Time, on November 27, 2015, or the Record Date. Our subsidiary, The RMR Group LLC, is the manager of the Managed REITs. GOV, HPT, SIR and SNH hold an aggregate of 15,000,000 of our Class A Common Shares and will distribute approximately 50.0% of their Class A Common Shares to their common shareholders, or 768,285, 2,515,923, 1,582,048 and 2,636,058, respectively. They will make the Distribution on December 14, 2015, or the Distribution Date, to the respective holders of their common shares as of the Record Date. In the Distribution, holders of each Managed REIT's common shares as of the Record Date will receive: 0.0108 of a Class A Common Share for every one GOV common share held, 0.0166 of a Class A Common Share for every one HPT common share held, 0.0177 of a Class A Common Share for every one SIR common share held, and 0.0111 of a Class A Common Share for every one SNH common share held. Each Managed REIT will pay cash, without interest, in lieu of any fractional Class A Common Share that a registered holder of the Managed REIT's common shares or DTC Participant (based on the aggregate position in its DTC participant account(s)) would otherwise be entitled to receive from that Managed REIT. If you own your common shares of a Managed REIT through a bank, broker or other nominee, you may receive fractional Class A Common Shares in the Distribution. The Distribution will be made in book entry form. As discussed under "The Distribution Trading Between the Record Date and Distribution Date," if you sell your Managed REIT common shares in the "regular way" market after the Record Date and before the Distribution Date, you also will be selling your right to receive any Class A Common Shares in the Distribution. Each Managed REIT may be deemed to be a "statutory underwriter" within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, or the Securities Act, of the Distribution of Class A Common Shares to its shareholders. No action is required of you to receive Class A Common Shares. No vote of any Managed REIT common shareholders is required, you are not required to pay any consideration for the Class A Common Shares that you receive and you do not need to surrender or exchange any of your Managed REITs' common shares in order to receive Class A Common Shares. There is no current trading market for our Class A Common Shares. We have had our Class A Common Shares approved for listing on The NASDAQ Stock Market LLC, or NASDAQ, under the symbol "RMR," subject to official notice of issuance. However, we expect that a limited market, commonly known as a "when-issued" trading market, for our Class A Common Shares will develop on or shortly before the Record Date, and we expect "regular way" trading of our Class A Common Shares will begin the first trading day after the completion of the Distribution. Neither we nor the Managed REITs will receive any proceeds from the distribution of Class A Common Shares pursuant to this prospectus. We are an "emerging growth company" under applicable Securities and Exchange Commission rules and are subject to reduced public company reporting requirements. Table of Contents Organizational Structure The chart below represents a simplified summary of our organizational structure immediately following the Distribution. For additional information, see "Organizational Structure."
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+Table of Contents travel inventory availability and breadth, technological sophistication, ability to meet rapidly evolving consumer trends and demands, brand recognition, search engine rankings, ease of use and accessibility, customer service and reliability. If we cannot adequately address these trends and provide travelers with the content they seek at acceptable prices, our OTAs may not be able to compete successfully against current and future competitors. Content. OTAs use their website content and ability to comparison shop to attract and convert visitors into booking customers and repeat users. The success of our OTAs in attracting users depends, in part, upon our continued ability to collect, create and distribute high-quality, commercially valuable content that meets customers specific needs in a cost-effective manner. Failing to meet the specific needs of consumers could make our OTAs less competitive. Changes in the cost structure by which our OTAs currently obtain their content, or changes in travelers relative appreciation of that content, could negatively impact our OTAs business and financial performance. Relationships with travel suppliers and travel distribution partners. OTAs depend on travel suppliers and distribution partners for access to inventory and derive a substantial portion of their revenue from these suppliers and distribution partners in the form of compensation for bookings. Many travel suppliers have reduced or eliminated and may continue to reduce or eliminate, commissions and fees paid to travel agencies, and our OTA business could be harmed if this trend continues. Also, if travel suppliers or GDSs attempt to implement multiple costly direct connections or charge travel agencies for or otherwise restrict access to content, our OTAs ability to offer competitive inventory and pricing may be adversely affected, leading to decreased revenues and margins. Changes in search engine algorithms and other traffic sources. We increasingly utilize internet search engines to generate traffic to our OTAs, principally through the purchase of travel-related keywords. Search engines, including Google, frequently update and change the algorithm that determines the placement and display of search results such that our links could be placed lower on the page or displayed less prominently. We also depend on pay-per-click and display advertising campaigns on search and shopping providers like Google, Kayak, and TripAdvisor to direct a significant amount of traffic to our OTAs. Our business may be harmed if we cannot keep pace with the rapidly changing pricing and operating dynamics for these traffic sources. Media. Our OTAs receive fees from companies and organizations, such as those in the travel industry, for display and referral advertising products. If a significant portion of our advertisers feel that our OTAs are no longer attracting or referring relevant customers, and accordingly reduce their advertising with our OTAs, our revenues could decline. License requirements. In some of the jurisdictions where we provide travel services through our OTAs, we are required to obtain certain licenses and approvals from the relevant regulatory authorities. These regulatory authorities generally have broad discretion to grant, renew and revoke such licenses and approvals. Any of these regulatory authorities could permanently or temporarily suspend the necessary licenses and approvals in respect of some or all of our travel agency and related activities in such jurisdictions, which would adversely impact the activities of the affected OTA. Regulatory and Other Legal Risks We are involved in various legal proceedings which may cause us to incur significant fees, costs and expenses and may result in unfavorable outcomes. We are involved in various legal proceedings that involve claims for substantial amounts of money or which involve how we conduct our business. See Business Legal Proceedings. For example, a number of state and local governments have filed lawsuits against us pertaining to sales or occupancy taxes they claim are due on some or all of our fees relating to hotel content distributed and sold via the merchant revenue model. In the merchant revenue model, the customer pays us an amount at the time of booking that includes (i) service fees, Table of Contents which we retain, and (ii) the price of the hotel room and amounts for occupancy or other local taxes, which we pass along to the hotel supplier. The complaints generally allege, among other things, that we have failed to pay to the relevant taxing authority hotel accommodations taxes on the service fees. Even if we are successful in defending these types of lawsuits, state and local governments could adopt new ordinances directly taxing hotel booking fees and we may not be able to successfully challenge such ordinances. Additionally, we are involved in antitrust litigation with US Airways. If we cannot resolve this matter favorably, we could be subject to (i) monetary damages, including treble damages under the antitrust laws and, depending on the amount of any such judgment, if we do not have sufficient cash on hand, we may be required to seek financing through the issuance of additional equity or from private or public financing or (ii) injunctive relief. Other airlines might likewise seek to benefit from any unfavorable outcome by bringing their own claims against us on the same or similar grounds. We are also subject to a U.S. Department of Justice ( DOJ ) antitrust investigation relating to the pricing and conduct of the airline distribution industry. We received a civil investigative demand ( CID ) from the DOJ and we are fully cooperating. The DOJ has also sent CIDs to other companies in the travel industry. Based on its findings in the investigation, the DOJ may (i) close the file, (ii) seek a consent decree to remedy issues it believes violate the antitrust laws, or (iii) file suit against us for violating the antitrust laws, seeking injunctive relief. With respect to both the US Airways and DOJ proceedings, if injunctive relief were to be granted, depending on its scope, it could affect the manner in which our airline distribution business is operated and potentially force changes to the existing airline distribution business model. The defense of these actions, as well as any of the other actions described under Business Legal Proceedings and any other actions brought against us in the future, is time consuming and diverts management s attention. Even if we are ultimately successful in defending ourselves in such matters, we are likely to incur significant fees, costs and expenses as long as they are ongoing. Any of these consequences could have a material adverse effect on our business, financial condition and results of operations. Intellectual property infringement actions against us could be costly and time consuming to defend and may result in business harm if we are unsuccessful in our defense. Third parties may assert, including by means of counterclaims against us as a result of the assertion of our intellectual property rights, that our products, services or technology, or the operation of our business, violate their intellectual property rights. We are currently subject to such assertions, including patent infringement claims, and may be subject to such assertions in the future. Such assertions may also be made against our customers who may seek indemnification from us. In the ordinary course of business, we enter into agreements that contain indemnity obligations whereby we are required to indemnify our customers against such assertions arising from our customers usage of our products, services or technology. As the competition in our industry increases and the functionality of technology offerings further overlaps, such claims and counterclaims could become more common. We cannot be certain that we do not or will not infringe third parties intellectual property rights. Legal proceedings involving intellectual property rights are highly uncertain, and can involve complex legal and scientific questions. Any intellectual property claim against us, regardless of its merit, could result in significant liabilities to our business, and can be expensive and time consuming to defend. Depending on the nature of such claims, our businesses may be disrupted, our management s attention and other company resources may be diverted and we may be required to redesign, reengineer or rebrand our products and services, if feasible, to stop offering certain products and services or to enter into royalty or licensing agreements in order to obtain the rights to use necessary technologies, which may not be available on terms acceptable to us, if at all, and may result in a decrease of our competitive advantage. Our failure to prevail in such matters could result in loss of intellectual property rights, judgments awarding substantial damages, including possible treble damages and attorneys fees, and injunctive or other equitable relief against us. If we are held liable, we may be unable to exploit some or all of our intellectual property rights or technology. Even if we are not held liable, we may choose to settle claims by making a monetary payment or by granting a license to intellectual property rights that we otherwise would not license. Further, judgments may result in loss of reputation, may force us to take costly Table of Contents remediation actions, delay selling our products and offering our services, reduce features or functionality in our services or products, or cease such activities altogether. Insurance may not cover or be insufficient for any such claim. We may not have sufficient insurance to cover our liability in pending litigation claims and future claims either due to coverage limits or as a result of insurance carriers seeking to deny coverage of such claims, which in either case could expose us to significant liabilities. We maintain third-party insurance coverage against various liability risks, including securities, shareholder derivative, ERISA, and product liability claims, as well as other claims that form the basis of litigation matters pending against us. We believe these insurance programs are an effective way to protect our assets against liability risks. However, the potential liabilities associated with litigation matters pending against us, or that could arise in the future, could exceed the coverage provided by such programs. In addition, our insurance carriers have sought or may seek to rescind or deny coverage with respect to pending claims or lawsuits, completed investigations or pending or future investigations and other legal actions against us. See Business Legal Proceedings Insurance Carriers for more information on our current litigation with our insurance carriers. If we do not have sufficient coverage under our policies, or if the insurance companies are successful in rescinding or denying coverage, we may be required to make material payments in connection with third-party claims. We may not be able to protect our intellectual property effectively, which may allow competitors to duplicate our products and services. Our success and competitiveness depend, in part, upon our technologies and other intellectual property, including our brands. Among our significant assets are our proprietary and licensed software and other proprietary information and intellectual property rights. We rely on a combination of copyright, trademark and patent laws, laws protecting trade secrets, confidentiality procedures and contractual provisions to protect these assets both in the United States and in foreign countries. The laws of some jurisdictions may provide less protection for our technologies and other intellectual property assets than the laws of the United States. There is no certainty that our intellectual property rights will provide us with substantial protection or commercial benefit. Despite our efforts to protect our intellectual property, some of our innovations may not be protectable, and our intellectual property rights may offer insufficient protection from competition or unauthorized use, lapse or expire, be challenged, narrowed, invalidated, or misappropriated by third parties, or be deemed unenforceable or abandoned, which could have a material adverse effect on our business, financial condition and results of operations and the legal remedies available to us may not adequately compensate us. We cannot be certain that others will not independently develop, design around, or otherwise acquire equivalent or superior technology or intellectual property rights. While we take reasonable steps to protect our brands and trademarks, we may not be successful in maintaining or defending our brands or preventing third parties from adopting similar brands. If our competitors infringe our principal trademarks, our brands may become diluted or if our competitors introduce brands or products that cause confusion with our brands or products in the marketplace, the value that our consumers associate with our brands may become diminished, which could negatively impact revenue. Our patent applications may not be granted, and the patents we own could be challenged, invalidated, narrowed or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Once our patents expire, or if they are invalidated, narrowed or circumvented, our competitors may be able to utilize the technology protected by our patents which may adversely affect our business. Table of Contents Although we rely on copyright laws to protect the works of authorship created by us, we do not generally register the copyrights in our copyrightable works where such registration is permitted. Copyrights of U.S. origin must be registered before the copyright owner may bring an infringement suit in the United States. Accordingly, if one of our unregistered copyrights of U.S. origin is infringed by a third party, we will need to register the copyright before we can file an infringement suit in the United States, and our remedies in any such infringement suit may be limited. We use reasonable efforts to protect our trade secrets. However, protecting trade secrets can be difficult and our efforts may provide inadequate protection to prevent unauthorized use, misappropriation, or disclosure of our trade secrets, know how, or other proprietary information. We also rely on our domain names to conduct our online businesses. While we use reasonable efforts to protect and maintain our domain names, if we fail to do so the domain names may become available to others. Further, the regulatory bodies that oversee domain name registration may change their regulations in a way that adversely affects our ability to register and use certain domain names. We license software and other intellectual property from third parties. Such licensors may breach or otherwise fail to perform their obligations, or claim that we have breached or otherwise attempt to terminate their license agreements with us. We also rely on license agreements to allow third parties to use our intellectual property rights, including our software, but there is no guarantee that our licensees will abide by the terms of our license agreements or that the terms of our agreements will always be enforceable. In addition, policing unauthorized use of and enforcing intellectual property can be difficult and expensive. The fact that we have intellectual property rights, including registered intellectual property rights, may not guarantee success in our attempts to enforce these rights against third parties. Besides general litigation risks, changes in, or interpretations of, intellectual property laws may compromise our ability to enforce our rights. We may not be aware of infringement or misappropriation, or elect not to seek to prevent it. Our decisions may be based on a variety of factors, such as costs and benefits of taking action, and contextual business, legal, and other issues. Any inability to adequately protect our intellectual property on a cost-effective basis could harm our business. Defects in our products may subject us to significant warranty liabilities or product liability claims and we may have insufficient product liability insurance to pay material uninsured claims. Our Airline and Hospitality Solutions business exposes us to the risk of product liability claims that are inherent in software development. We may inadvertently create defective software, or supply our customers with defective software or software components that we acquire from third parties, which could result in personal injury or property damage, and may result in warranty or product liability claims brought against us, our travel supplier customers or third parties. Under our Airline and Hospitality Solutions business agreements, we generally must indemnify our customers for liability arising from intellectual property infringement claims with respect to our software. These indemnification obligations could be significant and we may not have adequate insurance coverage to protect us against all claims. We currently rely on a combination of self-insurance and third-party insurance to cover potential product liability exposure. The combination of our insurance coverage, cash flows and reserves may not be adequate to satisfy product liabilities we may incur in the future. Even meritless claims could subject us to adverse publicity, hinder us from securing insurance coverage in the future, require us to incur significant legal fees, decrease demand for any products that we successfully develop, divert management s attention, and force us to limit or forgo further development and commercialization of these products. The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial. Table of Contents Any failure to comply with regulations or any changes in such regulations governing our businesses could adversely affect us. Parts of our business operate in regulated industries and could be adversely affected by unfavorable changes in or the enactment of new laws, rules or regulations applicable to us, which could decrease demand for our products and services, increase costs or subject us to additional liabilities. Moreover, regulatory authorities have relatively broad discretion to grant, renew and revoke licenses and approvals and to implement or interpret regulations. Accordingly, such regulatory authorities could prevent or temporarily suspend us from carrying on some or all of our activities or otherwise penalize us if our practices were found not to comply with the applicable regulatory or licensing requirements or any interpretation of such requirements by the regulatory authority. Our failure to comply with any of these requirements or interpretations could have a material adverse effect on our operations. In particular, after a voluntary disclosure, we received a warning letter from the Bureau of Industry and Security regarding our failure to comply fully with the Export Administration Regulations as to software updates for a few travel agency customers located outside the United States. Although the Bureau of Industry and Security declined to prosecute or sanction us, if we were to violate the Export Administration Regulations again, the matter could be reopened or taken into consideration when investigating future matters and we may be subject to criminal prosecution or administrative sanctions. Further, the United States has imposed economic sanctions that affect transactions with designated foreign countries, including Cuba, Iran, Sudan and Syria, and nationals and others of those countries, and certain specifically targeted individuals and entities engaged in conduct detrimental to U.S. national security interests. These sanctions are administered by the U.S. Department of the Treasury s Office of Foreign Assets Control ( OFAC ) and are typically known as the OFAC regulations. For a description of OFAC regulations and additional information on economic sanctions, see Business Government Regulation Office of Foreign Asset Control Regulation. Failure to comply with such regulations could subject us to legal and reputational consequences, including civil and criminal penalties. We have GDS contracts with carriers that fly to Cuba, Iran, Sudan and Syria but are based outside of those countries and are not owned by those governments or nationals of those governments. With respect to Iran, Sudan and Syria we believe that our activities comply with certain travel-related exemptions. With respect to Cuba, for customers outside the United States we display on the Sabre GDS flight information for, and support booking and ticketing of, services of non-Cuban airlines that offer service to Cuba. Based on advice of counsel, we believe these activities to fall under an exemption from OFAC regulations applicable to the transmission of information and informational materials and transactions related thereto. We believe that our activities with respect to these countries are known to OFAC. We note, however, that OFAC regulations and related interpretive guidance are complex and subject to varying interpretations. Due to this complexity, OFAC s interpretation of its own regulations and guidance vary on a case to case basis. As a result, we cannot provide any guarantees that OFAC will not challenge any of our activities in the future, which could have a material adverse effect on our results of operations. In Europe, GDS regulations or interpretations thereof may increase our cost of doing business or lower our revenues, limit our ability to sell marketing data, impact relationships with travel buyers, airlines, rail carriers or others, impair the enforceability of existing agreements with travel buyers and other users of our system, prohibit or limit us from offering services or products, or limit our ability to establish or change fees. Although regulations specifically governing GDSs have been lifted in the United States, they remain subject to general regulation regarding unfair trade practices by the U.S. Department of Transportation ( DOT ). In addition, continued regulation of GDSs in the EU and elsewhere could also create the operational challenge of supporting different products, services and business practices to conform to the different regulatory regimes. See Business Government Regulation Computer Reservations System Industry Regulation for additional information. We do not currently maintain a central database of all regulatory requirements affecting our worldwide operations and, as a result, the risk of non-compliance with the laws and regulations described above Table of Contents is heightened. Our failure to comply with these laws and regulations may subject us to fines, penalties and potential criminal violations. Any changes to these laws or regulations or any new laws or regulations may make it more difficult for us to operate our business. Our collection, processing, storage, use and transmission of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views on data privacy or security breaches. In our processing of travel transactions, we collect, process, store, use and transmit large amounts of sensitive personal data. This information is increasingly subject to legal restrictions around the world, which may result in conflicting legal requirements in the United States and other jurisdictions. For example, the U.S. Congress and federal agencies, including the Federal Trade Commission, have started to take a more aggressive stance in drafting and enforcing privacy and data protection laws. The EU is also in the process of proposing reforms to its existing data protection legal framework. These legal restrictions are generally intended to protect the privacy and security of personal information, including credit card information that is collected, processed and transmitted in or from the governing jurisdiction. Companies that handle this type of data have also been subject to investigations, lawsuits and adverse publicity due to allegedly improper disclosure or use of sensitive personal information. As privacy and data protection becomes an increasingly politicized issue, we may also become exposed to potential liabilities as a result of conflicting legal requirements, differing views on the privacy of travel data or failure to comply with applicable requirements. Our business could be materially adversely affected if we are unable or unwilling to comply with legal restrictions on the use of sensitive personal information or if such restrictions are expanded to require changes in our current business practices or are interpreted in ways that conflict with or negatively impact our present or future business practices. Additionally, we are required to indemnify some of our customers for liability arising from data breaches under the terms of our agreements with such customers. These indemnification obligations could be significant and we may not have adequate insurance coverage to protect us against all claims. We may have higher than anticipated tax liabilities. We are subject to a variety of taxes in many jurisdictions globally, including income taxes in the United States at the federal, state and local levels, and in many other countries. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We operate in numerous countries where our income tax returns are subject to audit and adjustment by local tax authorities. Because we operate globally, the nature of the uncertain tax positions is often very complex and subject to change, and the amounts at issue can be substantial. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We re-evaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Although we believe our tax estimates are reasonable, the final determination of tax audits could be materially different from our historical income tax provisions and accruals. Our effective tax rate may change from year to year based on changes in the mix of activities and income allocated or earned among various jurisdictions, tax laws in these jurisdictions, tax treaties between countries, our eligibility for benefits under those tax treaties, and the estimated values of deferred tax assets and liabilities. Such changes could result in an increase in the effective tax rate applicable to all or a portion of our income which would reduce our profitability. We establish reserves for our potential liability for U.S. and non-U.S. taxes, including sales, occupancy and value-added taxes ( VAT ), consistent with applicable accounting principles and in light of all current facts and circumstances. We have also established reserves relating to the collection of refunds related to value-added taxes, which are subject to audit and collection risks in various regions of Europe. Recently our right to recover certain value-added tax receivables associated with our European businesses has been questioned by tax Table of Contents authorities. These reserves represent our best estimate of our contingent liability for taxes. The interpretation of tax laws and the determination of any potential liability under those laws are complex, and the amount of our liability may exceed our established reserves. We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2013 to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. As of December 31, 2013, the amount of indefinitely reinvested foreign earnings was approximately $157 million. As of December 31, 2013, $70.8 million of cash, cash equivalents, and marketable securities were held by our foreign subsidiaries. If such cash, cash equivalents and marketable securities are needed for our operations in the United States, we would be required to accrue and pay taxes on up to $44 million of these funds to repatriate all such cash, cash equivalents and marketable securities. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. New tax laws, statutes, rules, regulations or ordinances could be enacted at any time and existing tax laws, statutes, rules, regulations and ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us to pay additional tax amounts on a prospective or retroactive basis, as well as require us to pay fees, penalties or interest for past amounts deemed to be due. For example, there have been proposals to amend U.S. tax laws that would significantly impact how U.S. companies are taxed on foreign earnings. New, changed, modified or newly interpreted or applied laws could also increase our compliance, operating and other costs, as well as the costs of our products and services. We are required to pay to stockholders and equity award holders that were stockholders or equity award holders immediately prior to the closing of our initial public offering 85% of certain tax benefits, and could be required to make substantial cash payments in which the stockholders purchasing shares in this offering will not participate. Immediately prior to the completion of our initial public offering, we entered into a tax receivable agreement ( TRA ) that provides the right to receive future payments by us to stockholders and equity award holders that were our stockholders and equity award holders, respectively, immediately prior to the closing of our initial public offering (collectively, the Pre-IPO Existing Stockholders ) of 85% of the amount of cash savings, if any, in U.S. federal income tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our initial public offering, including federal net operating losses ( NOLs ), capital losses and the ability to realize tax amortization of certain intangible assets (collectively, the Pre-IPO Tax Assets ). Consequently, stockholders purchasing shares in this offering will only be entitled to the economic benefit of the Pre-IPO Tax Assets to the extent of our continuing 15% interest in those assets. See Certain Relationships and Related Party Transactions Tax Receivable Agreement. These payment obligations are our obligations and not obligations of any of our subsidiaries. The actual utilization of the Pre-IPO Tax Assets, as well as the timing of any payments under the TRA, will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries taxable income in the future. We expect that the payments we make under this TRA will be material. Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the TRA, we expect that future payments under the TRA relating to the Pre-IPO Tax Assets could aggregate to between $330 million and $380 million over the next six years (assuming no changes to current limitations on our ability to utilize our NOLs under Section 382 of the Internal Revenue Code (the Code ), which we estimate will represent approximately 85% to 95% of total payments we will be required to make under the TRA. We recognized a liability of $321 million after considering the valuation allowance of $66 million recorded against the Pre-IPO Tax Assets for the payments to be made under the TRA. The TRA liability was recorded as a Table of Contents reduction to additional paid-in capital and an increase to other noncurrent liabilities. No payments have been made under the TRA during the nine months ended September 30, 2014 and we do not expect material payments to occur prior to 2016. Any payments made under the TRA will be classified as a financing activity in our statement of cash flows. Changes in the utility of the Pre-IPO Tax Assets will impact the amount of the liability that will be paid to our Pre-IPO Existing Stockholders. Changes in the utility of these Pre-IPO Tax Assets are recorded in income tax expense (benefit) and any changes in the obligation under the TRA is recorded in other income (expense). In addition, the TRA provides that upon certain mergers, stock and asset sales, other forms of business combinations or other changes of control, the TRA will terminate and we will be required to make a payment intended to equal to the present value of future payments under the TRA, which payment would be based on certain assumptions, including those relating to our and our subsidiaries future taxable income. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. Different timing rules will apply to payments under the TRA to be made to holders that, prior to the completion of the initial public offering, held stock options and restricted stock units (collectively, the Pre-IPO Award Holders ). Such payments will generally be deemed invested in a notional account rather than made on the scheduled payment dates, and the account will be distributed on the fifth anniversary of the initial public offering, together with an amount equal to the net present value of such Award Holder s future expected payments, if any, under the TRA. Moreover, payments to holders of stock options that were unvested prior to the completion of the initial public offering are subject to vesting on the same schedule as such holder s unvested stock options. The TRA contains a Change of Control definition that includes, among other things, a change of a majority of the Board of Directors without approval of a majority of the then existing Board members (the Continuing Directors Provision ). Recent Delaware case law has stressed that such Continuing Directors Provisions could have a potential adverse impact on shareholders right to elect a company s directors. In this regard, decisions of the Delaware Chancery Court (not involving us or our securities) have considered change of control provisions and noted that a board of directors may approve a dissident shareholders nominees solely to avoid triggering the change of control provisions, without supporting their election, if the board determines in good faith that the election of the dissident nominees would not be materially adverse to the interests of the corporation or its stockholders. Further, according to these decisions, the directors duty of loyalty to shareholders under Delaware law may, in certain circumstances, require them to give such approval. Our counterparties under the TRA will not reimburse us for any payments previously made under the TRA if such benefits are subsequently disallowed (although future payments would be adjusted to the extent possible to reflect the result of such disallowance). As a result, in certain circumstances, payments could be made under the TRA in excess of our cash tax savings. Certain transactions by the company could cause it to recognize taxable income (possibly material amounts of income) without a current receipt of cash. Payments under the TRA with respect to such taxable income would cause a net reduction in our available cash. For example, transactions giving rise to cancellation of debt income, the accrual of income from original issue discount or deferred payments, a triggering event requiring the recapture of dual consolidated losses, or Subpart F income would each produce income with no corresponding increase in cash. In these cases, we may use some of the Pre-IPO Tax Assets to offset income from these transactions and, under the TRA, would be required to make a payment to our Pre-IPO Existing Stockholders even though we receive no cash from such income. Because we are a holding company with no operations of our own, our ability to make payments under the TRA is dependent on the ability of our subsidiaries to make distributions to us. To the extent that we are unable to make payments under the TRA for specified reasons, such payments will be deferred and will accrue interest at a rate of the London Interbank Offered Rate ( LIBOR ) plus 1.00% per annum until paid. Table of Contents The TRA is designed with the objective of causing our annual cash costs attributable to federal income taxes (without regard to our continuing 15% interest in the Pre-IPO Tax Assets) to be the same as we would have paid had we not had the Pre-IPO Tax Assets available to offset our federal taxable income. As a result, stockholders purchasing shares in this offering will not be entitled to the economic benefit of the Pre-IPO Tax Assets that would have been available if the TRA were not in effect (except to the extent of our continuing 15% interest in the Pre-IPO Tax Assets). We may recognize impairments on long-lived assets, including goodwill and other intangible assets, or recognize impairments on our equity method investments. Our consolidated balance sheet at December 31, 2013 contained intangible assets, net, including goodwill, of approximately $2,773 million. Our investments in joint ventures on the consolidated balance sheet as of December 31, 2013 includes $93 million of excess basis over our underlying equity in joint ventures. This differential represents goodwill in addition to identifiable intangible assets which are being amortized to joint venture intangible amortization over their estimated lives. Future acquisitions that result in the recognition of additional goodwill and intangible assets would cause an increase in these types of assets. We do not amortize goodwill and intangible assets that are determined to have indefinite useful lives, but we amortize definite-lived intangible assets on a straight-line basis over their useful economic lives, which range from four to thirty years, depending on classification. We evaluate goodwill for impairment on an annual basis or earlier if impairment indicators exist and we evaluate definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of definite-lived intangible assets used in combination to generate cash flows largely independent of other assets may not be recoverable. We record an impairment charge whenever the estimated fair value of our reporting units or of such intangible assets is less than its carrying value. We have also recognized a share of impairment charges recorded by one of our equity method investments, Abacus. As of June 30, 2013, our Travelocity reporting unit had no remaining goodwill. The fair values used in our impairment evaluation are estimated using a combined approach based upon discounted future cash flow projections and observed market multiples for comparable businesses. Changes in estimates based on changes in risk-adjusted discount rates, future booking and transaction volume levels, future price levels, rates of growth in our consumer and corporate direct booking businesses, rates of increase in operating expenses, cost of revenue and taxes could result in material impairment charges. Our pension plan obligations are currently unfunded, and we may have to make significant cash contributions to our plans, which could reduce the cash available for our business. Our pension plans in the aggregate are estimated to be unfunded by $90.1 million as of December 31, 2014. With approximately 5,300 participants in our pension plans, we incur substantial costs relating to pension benefits, which can vary substantially as a result of changes in healthcare laws and costs, volatility in investment returns on pension plan assets and changes in discount rates used to calculate related liabilities. Our estimates of liabilities and expenses for pensions and other post-retirement healthcare benefits require the use of assumptions, including assumptions relating to the rate used to discount the future estimated liability, the rate of return on plan assets, inflation and several assumptions relating to the employee workforce (medical costs, retirement age and mortality). Actual results may differ, which may have a material adverse effect on our business, prospects, financial condition or results of operations. Future volatility and disruption in the stock markets could cause a decline in the asset values of our pension plans. In addition, a decrease in the discount rate used to determine minimum funding requirements could result in increased future contributions. If either occurs, we may need to make additional pension contributions above what is currently estimated, which could reduce the cash available for our businesses. Table of Contents We are exposed to risks associated with payment card industry ( PCI ) compliance. The PCI Data Security Standard ( PCI DSS ) is a set of comprehensive requirements endorsed by credit card issuers for enhancing payment account data security that includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures. PCI DSS compliance is required in order to maintain credit card processing facilities. The cost of compliance with the PCI DSS is significant and may increase as the requirements change. We are tested periodically for compliance with the current version and our last assessment completed in June 2014. We were found to be compliant in that assessment and our 2015 assessment is scheduled to be completed in June 2015. Compliance does not guarantee a completely secure environment. Moreover, compliance is an ongoing activity and the formal requirements likely will evolve as new threats and protective measures are identified. In the event that we were to lose PCI DSS compliance (or fail to achieve compliance with a future version of the PCI DSS), we could be exposed to increased operating costs, fines and penalties and, in extreme circumstances, may have our credit card processing privileges revoked, which would have a material adverse effect on our business. Risks Related to Our Indebtedness and Liquidity We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available. We cannot guarantee that our business will generate sufficient cash flow from operations to fund our capital investment requirements or other liquidity needs. Moreover, because we are a holding company with no material direct operations, we depend on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions. As a result, we may be required to finance our cash needs through public or private equity offerings, bank loans, additional debt financing or otherwise. Our ability to arrange financing and the cost of such financing are dependent on numerous factors, including but not limited to: general economic and capital market conditions; the availability of credit from banks or other lenders; investor confidence in us; and our results of operations. There can be no assurance that financing will be available on terms favorable to us or at all, which could force us to delay, reduce or abandon our growth strategy, increase our financing costs, or both. Additional funding from debt financings may make it more difficult for us to operate our business because a portion of our cash generated from internal operations would be used to make principal and interest payments on the indebtedness and we may be obligated to abide by restrictive covenants contained in the debt financing agreements, which may, among other things, limit our ability to make business decisions and further limit our ability to pay dividends. In addition, any downgrade of our debt ratings by Standard & Poor s, Moody s Investor Service or similar ratings agencies, increases in general interest rate levels and credit spreads or overall weakening in the credit markets could increase our cost of capital. Furthermore, raising capital through public or private sales of equity to finance acquisitions or expansion could cause earnings or ownership dilution to your shareholding interests in our company. We have a significant amount of indebtedness, which could adversely affect our cash flow and our ability to operate our business and to fulfill our obligations under our indebtedness. We have a significant amount of indebtedness. As of September 30, 2014, we had $3,102 million of indebtedness outstanding in addition to $345 million of availability under the revolving portion of our Credit Table of Contents Facility (as defined in Description of Certain Indebtedness ), after taking into account the availability reduction of $60 million for letters of credit issued under the revolving portion. Of this indebtedness, none will be due on or before the end of 2015. See Description of Certain Indebtedness Senior Secured Credit Facilities for a description of the amendments to the Credit Facility after December 31, 2013. Our substantial level of indebtedness will increase the possibility that we may not generate enough cash flow from operations to pay, when due, the principal of, interest on or other amounts due in respect of, these obligations. Other risks relating to our long-term indebtedness include: increased vulnerability to general adverse economic and industry conditions; higher interest expense if interest rates increase on our floating rate borrowings and our hedging strategies do not effectively mitigate the effects of these increases; need to divert a significant portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash to fund working capital, capital expenditures, acquisitions, investments and other general corporate purposes; limited ability to obtain additional financing, on terms we find acceptable, if needed, for working capital, capital expenditures, expansion plans and other investments, which may adversely affect our ability to implement our business strategy; limited flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate or to take advantage of market opportunities; and a competitive disadvantage compared to our competitors that have less debt. In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course of business. The terms of our Credit Facility, the indentures governing the 2016 Notes and the 2019 Notes (each as defined in Description of Certain Indebtedness ) allow us to incur additional debt subject to certain limitations. If new debt is added to current debt levels, the risks described above could intensify. In addition, our inability to maintain certain leverage ratios could result in acceleration of a portion of our debt obligations and could cause us to be in default if we are unable to repay the accelerated obligations. We are exposed to interest rate fluctuations. Our floating rate indebtedness exposes us to fluctuations in prevailing interest rates. To reduce the impact of large fluctuations in interest rates, we typically hedge a portion of our interest rate risk by entering into derivative agreements with financial institutions. Our exposure to interest rates relates primarily to our borrowings under the Credit Facility. See Description of Certain Indebtedness. The derivative agreements that we use to manage the risk associated with fluctuations in interest rates may not be able to eliminate the exposure to these changes. Interest rates are sensitive to numerous factors outside of our control, such as government and central bank monetary policy in the jurisdictions in which we operate. Depending on the size of the exposures and the relative movements of interest rates, if we choose not to hedge or fail to effectively hedge our exposure, we could experience a material adverse effect on our results of operations and financial condition. As of December 31, 2014, we have entered into forward starting interest rate swaps with a 1% floor that effectively convert $750 million of floating interest rate senior secured debt into a fixed rate obligation for a three year period starting December 31, 2015. See Management s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk. We are exposed to exchange rate fluctuations. We conduct various operations outside the United States, primarily in Canada, South America, Europe, Australia and Asia. For the years ended December 31, 2013 and 2012, we incurred $682 million and $708 million in foreign currency operating expenses, representing approximately 25% and 23% of our total Table of Contents operating expenses, respectively. Our most significant foreign currency operating expenses are in the Euro, representing approximately 9% and 7% of our operating expenses for the years ended December 31, 2013 and December 31, 2012, respectively. As a result, we face exposure to movements in currency exchange rates. These exposures include but are not limited to: re-measurement gains and losses from changes in the value of foreign denominated assets and liabilities; translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars, our functional currency, upon consolidation; planning risk related to changes in exchange rates between the time we prepare our annual and quarterly forecasts and when actual results occur; and the impact of relative exchange rate movements on cross-border travel, principally travel between Europe and the United States. Depending on the size of the exposures and the relative movements of exchange rates, if we choose not to hedge or fail to hedge effectively our exposure, we could experience a material adverse effect on our results of operations and financial condition. As we have seen in some recent periods, in the event of severe volatility in exchange rates, these exposures can increase, and the impact on our results of operations and financial condition can be more pronounced. In addition, the current environment and the increasingly global nature of our business have made hedging these exposures more complex and costly. To reduce the impact of this earnings volatility, we hedge our foreign currency exposure by entering into foreign currency forward contracts on several of our largest foreign currency exposures, including the Euro, the British Pound Sterling, the Polish Zloty and the Indian Rupee. In 2013, we hedged approximately 43% of our foreign currency exposure. The notional amounts of these forward contracts, totaling $151 million at September 30, 2014, represent obligations to purchase foreign currencies at a predetermined exchange rate to fund a portion of our expenses that are denominated in foreign currencies. Such derivative instruments are short-term in nature and not designed to hedge against currency fluctuation that could impact our foreign currency denominated revenue or cost of revenue. See Management s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Foreign Currency Risk and Note 12, Derivatives, to our unaudited consolidated financial statements included elsewhere in this prospectus. Although we have increased and may continue to increase the scope, complexity and duration of our foreign exchange risk management strategy, our current or future hedging activities may not sufficiently protect us from the adverse effects of currency exchange rate movements. Moreover, we make a number of estimates in conducting hedging activities, including in some cases the level of future bookings, cancellations, refunds, customer stay patterns and payments in foreign currencies. In the event those estimates differ significantly from actual results, we could experience greater volatility as a result of our hedging activities. The terms of our debt covenants could limit our discretion in operating our business and any failure to comply with such covenants could result in the default of all of our debt. The agreements governing our indebtedness contain and the agreements governing our future indebtedness will likely contain various covenants, including those that restrict our or our subsidiaries ability to, among other things: incur liens on our property, assets and revenue; borrow money, and guarantee or provide other support for the indebtedness of third parties; pay dividends or make other distributions on, redeem or repurchase our capital stock; prepay, redeem or repurchase certain of our indebtedness; Table of Contents enter into certain change of control transactions; make investments in entities that we do not control, including joint ventures; enter into certain asset sale transactions, including divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries; enter into certain transactions with affiliates; enter into secured financing arrangements; enter into sale and leaseback transactions; change our fiscal year; and enter into substantially different lines of business. These covenants may limit our ability to effectively operate our businesses or maximize stockholder value. In addition, our Credit Facility requires that we meet certain financial tests, including the maintenance of a leverage ratio and a minimum net worth. Our ability to satisfy these tests may be affected by factors and events beyond our control, and we may be unable to meet such tests in the future. Any failure to comply with the restrictions of our Credit Facility, the indentures governing the 2016 Notes and the 2019 Notes or any agreement governing our other indebtedness may result in an event of default under those agreements. Such default may allow the creditors to accelerate the related debt, which may trigger cross-acceleration or cross-default provisions in other debt. In addition, lenders may be able to terminate any commitments they had made to supply us with further funds. Risks Related to the Offering and our Common Stock The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders. Since our initial public offering on April 17, 2014 through January 30, 2015, the price of our common stock has ranged from a low of $14.86 on October 14, 2014 to a high of $20.91 on June 19, 2014. In the future, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the price at which you purchased them, if at all. The market price of our common stock may fluctuate or decline significantly in the future. Factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include, but are not limited to, those listed elsewhere in this Risk Factors section and the following, some of which are beyond our control regardless of our actual operating performance: actual or anticipated quarterly variations in operational results and reactions to earning releases or other presentations by company executives; failure to meet the expectations of securities analysts and investors; rating agency credit rating actions; the contents of published research reports about us or our industry or the failure of securities analysts to cover our common stock; any increased indebtedness we may incur in the future; actions by institutional stockholders; speculation or reports by the press or the investment community with respect to us or our industry in general; Table of Contents increases in market interest rates that may lead purchasers of our shares to demand a higher yield; changes in our capital structure; announcements of dividends; additional future sales of our common stock by us, the Principal Stockholders or members of our management; announcements of technological innovations or new services by us or our competitors or new entrants into the industry; announcements by us, our competitors or vendors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; loss of a major travel supplier or global travel agency subscriber; changes in the status of intellectual property rights; third-party claims or proceedings against us or adverse developments in pending proceedings; additions or departures of key personnel; changes in applicable laws and regulations; negative publicity for us, our business or our industry; changes in expectations or estimates as to our future financial performance or market valuations of competitors, customers or travel suppliers; results of operations of our competitors; and general market, political and economic conditions, including any such conditions and local conditions in the markets in which our customers are located. Volatility in our stock price could also make us less attractive to certain investors, and/or invite speculative trading in our common stock or debt instruments. In addition, securities exchanges, and in particular the NASDAQ, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business. Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management s attention and affect our ability to attract and retain qualified board members. As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934 (the Exchange Act ), the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act ) and the NASDAQ rules. Following our initial public offering, the requirements of these rules and regulations have increased and will continue to significantly increase our legal and financial compliance costs, including costs associated with the hiring of additional personnel, making some activities more difficult, time-consuming or costly, and may also place undue strain on our personnel, systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain disclosure controls and procedures and internal control over financial reporting. Ensuring that we have adequate internal financial and accounting Table of Contents controls and procedures in place is a costly and time-consuming effort that needs to be re-evaluated frequently. We have documented our internal controls and are in the process of testing these controls in order to comply with the requirements of Section 404 of the Sarbanes-Oxley Act ( Section 404 ). Section 404 will require that we evaluate our internal control over financial reporting to enable management to report on, and our independent auditors to audit as of the end of our fiscal year ended December 31, 2015, the effectiveness of those controls. Both we and our independent registered public accounting firm will be testing our internal controls in connection with the Section 404 requirements and could, as part of that documentation and testing, identify material weaknesses, significant deficiencies or other areas for further attention or improvement. Implementing any appropriate changes to our internal controls may require specific compliance training for our directors, officers and employees, require the hiring of additional finance, accounting and other personnel, entail substantial costs to modify our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. Moreover, adequate internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could cause the market value of our common stock to decline. Various rules and regulations applicable to public companies make it more difficult and more expensive for us to maintain directors and officers liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage. If we are unable to maintain adequate directors and officers liability insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent for purposes of the NASDAQ rules, will be significantly curtailed. Concentration of ownership among our Principal Stockholders may prevent new investors from influencing significant corporate decisions and may result in conflicts of interest. As of January 15, 2015, our Principal Stockholders own, in the aggregate, approximately 79.4% of our outstanding common stock and, upon completion of this offering, the Principal Stockholders will own, in the aggregate, approximately 71.9% of our outstanding common stock, assuming no exercise of the underwriters option to purchase additional shares from the Principal Stockholders. Pursuant to the Stockholders Agreement the Silver Lake Funds and the TPG Funds have the right to designate for nomination two directors and three directors, respectively, which collectively will represent a majority of the members of our board of directors. In addition, the Silver Lake Funds and the TPG Funds also jointly have the right to designate for nomination in the future, in connection with the expansion of our board of directors by one member, one additional director, defined herein as the Joint Designee, who must qualify as independent under the NASDAQ rules and must meet the independence requirements of Rule 10A-3 of the Exchange Act so long as they collectively own at least 10% of their collective Closing Date Shares (as defined in Certain Relationships and Related Party Transactions Stockholders Agreement ). As a result, the Principal Stockholders are and, following completion of this offering, will continue to be, able to exercise significant influence over all matters requiring stockholder approval, including: the election of directors; approval of mergers or a sale of all or substantially all of our assets and other significant corporate transactions; and the amendment of our Certificate of Incorporation and our Bylaws (each as defined in Description of Capital Stock ). This concentration of influence may delay, deter or prevent acts that would be favored by our other stockholders, who may have interests different from those of our Principal Stockholders. For example, our Principal Stockholders could delay or prevent an acquisition or merger deemed beneficial to other stockholders, or seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders, including investors in this offering. Our Principal Stockholders may be able to cause or prevent a change in control of us or a change in the composition of our board of directors and could preclude any unsolicited acquisition of us. This may have the effect of delaying, preventing or deterring a change in control. In addition, this significant Table of Contents concentration of share ownership may adversely affect the trading price of our common stock because investors often perceive disadvantages in owning common stock in companies with Principal Stockholders. We are and, upon completion of this offering, will continue to be a controlled company within the meaning of the NASDAQ rules and, as a result, we qualify for exemptions from certain corporate governance requirements. You may not have the same protections afforded to stockholders of companies that are subject to such requirements. Because the Principal Stockholders own a majority of our outstanding common stock, we are and, upon completion of this offering, will continue to be a controlled company as that term is set forth in the NASDAQ rules. Under these rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain NASDAQ rules regarding corporate governance, including: the requirement that a majority of our board of directors consist of independent directors; the requirement that our governance and nominating committee be composed entirely of independent directors; and the requirement that our compensation committee be composed entirely of independent directors with a written charter addressing the committee s purpose and responsibilities. As a result, we may not have a majority of independent directors and our governance and nominating committee and compensation committee may not consist entirely of independent directors. See Management and Board of Directors Board Composition and Management and Board of Directors Committees of the Board of Directors for a description of the current composition of our board of directors and each of our committees. As a result, you may not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ rules regarding corporate governance. Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price. Future issuances of debt or equity securities by us may adversely affect the market price of our common stock. As of January 15, 2015, we have an aggregate of 697,554,321 shares of common stock authorized but unissued and not reserved for issuance under our incentive plans. We may issue all of these shares of common stock without any action or approval by our stockholders, subject to certain exceptions. In the future, we may attempt to obtain financing or to increase further our capital resources by issuing additional shares of our common stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Future acquisitions could require substantial additional capital in excess of cash from operations. We would expect to finance the capital required for acquisitions through a combination of additional issuances of equity, corporate indebtedness, asset-backed acquisition financing and/or cash from operations. In addition, we also expect to issue additional shares in connection with exercise of our stock options under our incentive plans. Issuing additional shares of our common stock or other equity securities or securities convertible into equity for financing or in connection with our incentive plans, acquisitions or otherwise may dilute the economic and voting rights of our existing stockholders or reduce the market price of our common stock or both. Upon liquidation, holders of our debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that Table of Contents could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us. See Description of Capital Stock. The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale. Sales of substantial amounts of our common stock in the public market in future offerings, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future, at a time and price that we deem appropriate. In addition, the additional sale of our common stock by our officers, directors and Principal Stockholders in the public market, or the perception that such sales may occur, could cause the market price of our common stock to decline. All of the shares of common stock sold by the Selling Stockholders in this offering will be freely tradable without restriction or further registration under the Securities Act. See Shares Eligible for Future Sale for a more detailed description of the restrictions on selling shares of our common stock after this offering. We may issue shares of our common stock or other securities from time to time as consideration for, or to finance, future acquisitions and investments or for other capital needs. We cannot predict the size of future issuances of our shares or the effect, if any, that future sales and issuances of shares would have on the market price of our common stock. If any such acquisition or investment is significant, the number of shares of common stock or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial and may result in additional dilution to our shareholders. We may also grant registration rights covering shares of our common stock or other securities that we may issue in connection with any such acquisitions and investments. We, each of our executive officers, directors and the Selling Stockholders have agreed with the underwriters not to transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock, for a period of 90 days after the date of this prospectus, except for certain limited exceptions. See Underwriting (Conflicts of Interest). Approximately 72.2% of outstanding shares of our common stock or 71.1% of outstanding shares of our common stock if the underwriters option to purchase additional shares from the Principal Stockholders is fully exercised, are subject to these lock-up agreements. After the expiration of the 90-day lock-up period under the lock-up agreement these shares may be sold in the public market, subject to prior registration or qualification for an exemption from registration, including, in the case of shares held by affiliates, compliance with the volume restrictions and other securities laws. See Shares Eligible for Future Sale for a more detailed description of the restrictions on selling shares of our common stock after this offering. To the extent that any of these stockholders sell, or indicate an intent to sell, substantial amounts of our common stock in the public market after the contractual lock-ups and other legal restrictions on resale discussed in this prospectus lapse, the trading price of our common stock could decline significantly. Goldman, Sachs & Co., on behalf of the underwriters, may, in its sole discretion, release all or some portion of the shares subject to the 90-day lock-up agreements prior to expiration of such period. However, any such release by Goldman, Sachs & Co. would not impact the transfer restrictions in the Management Stockholders Agreement as described below, to the extent they have not been waived. Pursuant to the Management Stockholders Agreement (as defined in Certain Relationships and Related Party Transactions Management Stockholders Agreement ), certain stockholders, which group of stockholders Table of Contents excludes our Principal Stockholders, have agreed not to transfer, sell, assign, pledge, hypothecate or encumber any of the shares of common stock then-currently owned by such stockholder (which can be waived by us at our option at any time), subject to certain limited exceptions, at any time prior to the termination of such Management Stockholders Agreement. The restrictions on transfer have been waived with effect from October 14, 2014 for certain of our former employees who are party to the Management Stockholders Agreement holding approximately 3 million shares of common stock and 2 million stock options and with effect from November 21, 2014 for certain of our current and former employees who are party to the Management Stockholders Agreement holding approximately 1.3 million shares of common stock and 4.2 million stock options. In addition, the Management Stockholders Agreement provides these stockholders with piggyback registration rights to participate on a pro rata basis in any registered offering in which the TPG Funds or the Silver Lake Funds are registering shares of common stock. Except with respect to the piggyback registration rights described immediately prior, the Management Stockholders Agreement terminates if our common stock is registered and if at least 20% of our total outstanding common stock trades regularly in, on or through the facilities of a securities exchange and/or inter-dealer quotation system or any designated offshore securities market, which conditions are expected to be met in connection with the completion of this offering, assuming the Selling Stockholders sell at least 5,415,142 shares. If the Management Stockholders Agreement does not terminate, the transfer restrictions contained therein would continue to be applicable except to the extent they are waived. To the extent that any of these stockholders sell, or indicate an intent to sell, substantial amounts of our common stock in the public market the trading price of our common stock could decline significantly. Certain provisions of our Stockholders Agreement, our Certificate of Incorporation, our Bylaws and Delaware law could hinder, delay or prevent a change in control of us that you might consider favorable, which could also adversely affect the price of our common stock. Certain provisions under our Stockholders Agreement, our Certificate of Incorporation, our Bylaws and Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, even if doing so would benefit our stockholders. These provisions include: a classified board of directors with three classes so that not all members of our board of directors are elected at one time; the sole ability of the then-current member of the board of directors to fill a vacancy created by the expansion of the board of directors; a provision permitting stockholders to act by written consent only until such time as the Principal Stockholders cease to beneficially own, collectively, more than 40% of our outstanding shares entitled to vote generally in the election of directors; a provision prohibiting stockholders from calling a special meeting, provided, however, at any time when the Principal Stockholders beneficially own, collectively, at least 40% of our outstanding shares entitled to vote generally in the election of directors, special meetings of our stockholders may be called by the board of directors or the chairman of the board of directors at the request of either the Silver Lake Funds or the TPG Funds; a provision requiring approval of 75% of all outstanding shares entitled to vote generally in the election of directors in order to amend or repeal certain provisions in the Certificate of Incorporation and the Bylaws; the requirement that our directors may be removed only for cause by the affirmative vote of at least 75% of our outstanding shares entitled to vote generally in the election of directors; provided, however, at any time when the Principal Stockholders beneficially own, collectively, at least 40% of our outstanding shares entitled to vote generally in the election of directors, directors may be removed with or without cause by a vote of a majority of all outstanding shares entitled to vote generally in the election of directors; Table of Contents advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at our stockholder meetings; the ability of our board of directors to issue new series of, and designate the terms of, preferred stock, without stockholder approval, which could be used to, among other things, institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors; our opting to have the provisions of Section 203 of the DGCL (as defined in Description of Capital Stock ), which regulates business combinations with interested stockholders, apply to us after the first date on which each of the Principal Stockholders and their affiliates no longer meets the requirements to be an interested stockholder as defined by Section 203 of the DGCL, but excluding for purposes thereof, clause (ii) of such definition of interested stockholder ; certain rights of our Principal Stockholders with respect to the designation of directors for nomination and election to our board of directors, including the ability to appoint members to each board committee; and provisions prohibiting cumulative voting. Anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change of our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt to replace current members of our management team. As a result, efforts by stockholders to change the direction or management of the company may be unsuccessful. See Description of Capital Stock for additional information regarding the provisions included in our Certificate of Incorporation and our Bylaws. Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our holding company structure and applicable provisions of Delaware law. We intend to continue to pay quarterly cash dividends on our common stock. However, our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. In addition, because we are a holding company with no material direct operations, we are dependent on loans, dividends and other payments from our operating subsidiaries to generate the funds necessary to pay dividends on our common stock. We expect to cause our subsidiaries to make distributions to us in an amount sufficient for us to pay dividends. However, their ability to make such distributions will be subject to their operating results, cash requirements and financial condition, the applicable provisions of Delaware law that may limit the amount of funds available for distribution and our ability to pay cash dividends, compliance with covenants and financial ratios related to existing or future indebtedness, including under our Credit Facility and the 2019 Notes, and other agreements with third parties. In addition, each of the companies in our corporate chain must manage its assets, liabilities and working capital in order to meet all of its cash obligations, including the payment of dividends or distributions. As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our common stock. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our common stock. Certain of our stockholders have the right to engage or invest in the same or similar businesses as us. Our Principal Stockholders have other investments and business activities in addition to their ownership of us. Under our Certificate of Incorporation, the Principal Stockholders have the right, and have no duty to abstain Table of Contents from exercising such right, to engage or invest in the same or similar businesses as us or which we propose to engage, including those lines of business deemed to be competing with us, do business with any of our clients, customers or suppliers or employ or otherwise engage any of our officers, directors or employees. If the Principal Stockholders or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have, to the fullest extent permitted by applicable law, no duty to offer or communicate such corporate opportunity to us, our stockholders or our affiliates even if it is a corporate opportunity that we might reasonably have pursued. This may cause the strategic interests of our Principal Stockholders to differ from, and conflict with, the interests of our company and of our other shareholders in material respects. Conflicts of interest may exist with respect to certain underwriters of this offering. Affiliates of Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, Mizuho Securities USA Inc. and Natixis Securities Americas LLC, each an underwriter of this offering, are lenders under our $405 million Revolver (as defined in Description of Certain Indebtedness ). Furthermore, affiliates of Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Deutsche Bank Securities Inc. and Jefferies LLC, each an underwriter of this offering, are lenders under our $1,775 million Term Loan B (as defined in Description of Certain Indebtedness ). In addition, affiliates of Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, are lenders under our $425 million Term Loan C (as defined in Description of Certain Indebtedness ). Lastly, affiliates of Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc., each an underwriter of this offering, are lenders under our $350 Incremental Term Loan Facility (as defined in Description of Certain Indebtedness ). In addition, the TPG Funds are affiliates of TPG Capital BD, LLC, an underwriter in its offering, and they will receive more than 5% of the net proceeds of this offering, based upon an assumed public offering price of $20.43 per share, the last reported closing price of our common stock on NASDAQ on January 30, 2015. As a result, conflicts of interest could exist because affiliates of TPG Capital BD, LLC could receive proceeds in this offering in addition to the underwriting discounts and commission described in this prospectus. See Underwriting (Conflict of Interest). Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements contained in this prospectus constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential or the negative of these terms or other comparable terminology. The forward-looking statements contained in this prospectus are based on our current expectations and assumptions regarding our business, the economy and other future conditions and are subject to risks, uncertainties and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. These factors include, without limitation, economic, business, competitive, market and regulatory conditions and the following: factors affecting transaction volumes in the global travel industry, particularly air travel transaction volumes, including global and regional economic and political conditions, financial instability or fundamental corporate changes to travel suppliers, natural or man-made disasters, safety concerns or changes to regulations governing the travel industry; our ability to renew existing contracts or to enter into new contracts with travel supplier and buyer customers, third-party distributor partners and joint ventures on economically favorable terms or at all; our Travel Network business exposure to pricing pressures from travel suppliers and its dependence on relationships with several large travel buyers; the fact that travel supplier customers may experience financial instability, consolidate with one another, pursue cost reductions, change their distribution model or experience other changes adverse to us; travel suppliers use of alternative distribution models, such as direct distribution channels, technological incompatibilities between suppliers travel content and our GDS, and the diversion of consumer traffic to other channels; our reliance on third-party distributors and joint ventures to extend our GDS services to certain regions, which exposes us to risks associated with lack of direct management control and potential conflicts of interest; competition in the travel distribution market from other GDS providers, direct distribution by travel suppliers and new entrants or technologies that could challenge the existing GDS business model; potential negative impact of competition from other third-party solutions providers and from new participants entering the solutions market on our ability to maintain and grow our Airline and Hospitality Solutions business; systems and infrastructure failures or other unscheduled shutdowns or disruptions, including those due to natural disasters or cybersecurity attacks; security breaches occurring at our facilities or with respect to our infrastructure, resulting from physical break-ins; computer viruses, attacks by hackers or similar distributive problems; Table of Contents potential failure to successfully implement software solutions, which could result in damage to our reputation; availability and performance of information technology services provided by third parties, such as HP, which manages a significant portion of our systems; our ability to adapt to technological developments or the evolving competitive landscape by introducing relevant new technologies, products and services; risks associated with our use of open source software, including the possible future need to acquire licenses from third parties or re-engineer our solutions; the potential failure to recruit, train and retain key technical employees and senior management; risks associated with operating as a global business in multiple countries and in multiple currencies; our business being harmed by adverse global and regional economic and political conditions, particularly, given our geographic concentration, those that may adversely affect business and leisure travel originating in, or travel to, the United States and Europe; risks associated with acquisitions, divestitures, investments and strategic alliances; risks associated with the value of our brand, which may be damaged by a number of factors, some of which are out of our control; adverse outcomes in our legal proceedings, including our litigation with US Airways or the antitrust investigation by the U.S. Department of Justice, whether in the form of money damages or injunctive relief that could force changes to the way we operate our GDS; our ability to protect and maintain our information technology and intellectual property rights, as well as defend against potential infringement claims against us, and the associated costs; the possibility that we may have insufficient insurance to cover our liability for pending litigation claims or future claims, which could expose us to significant liabilities; defects in our products resulting in significant warranty liabilities or product liability claims, for which we may have insufficient product liability insurance to pay material uninsured claims; our failure to comply with regulations that are applicable to us or any unfavorable changes in, or the enactment of, laws, rules or regulations applicable to us; liabilities arising from our collection, processing, storage, use and transmission of personal data resulting from conflicting legal requirements, governmental regulation or security breaches, including compliance with payment card industry regulations; the fact that we may have higher than anticipated tax liabilities, our use of federal net operating losses may be subject to limitations on their use in the future and payments under our tax receivable agreement; the fact that our pension plan is currently underfunded and we may need to make significant cash contributions to our pension plan in the future, which could reduce the cash available for our business; our significant amount of long-term indebtedness and the related restrictive covenants in the agreements governing our indebtedness; risks associated with maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management s attention and affect our ability to attract and retain qualified board members; the fact that our Principal Stockholders have and, upon completion of this offering, will continue to have significant influence over us and key decisions about our business, which may prevent new investors from influencing significant corporate decisions and result in conflicts of interest; Table of Contents the fact that we qualify and, upon completion of this offering, will continue to qualify as a controlled company within the meaning of the NASDAQ rules and, therefore we also qualify and, upon completion of this offering, will continue to qualify to be exempt from certain corporate governance requirements; and other risks and uncertainties, including those listed in the Risk Factors section. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly in light of new information or future events. You should carefully consider the risks specified in the Risk Factors section of this prospectus and subsequent public statements or reports filed with or furnished to the Securities and Exchange Commission (the SEC ), before making any investment decision with respect to our common stock. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or results of operations could be materially adversely affected, the trading prices of our common stock could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. Table of Contents METHOD OF CALCULATION The GDS-processed air bookings share figures in this prospectus are calculated based on the total number of air bookings processed through the three GDSs, specifically Sabre, Amadeus, and Travelport (including the Worldspan, Galileo and Apollo systems). Measurements of such GDS-processed air bookings are based primarily on Marketing Information Data Tapes and are supplemented with other transaction data and estimates that we believe provide a more accurate measure of GDS-processed air bookings. Because GDSs generally process air bookings for their joint venture partners and/or share in the economics of their joint venture partners travel transactions, we include the GDS-processed air booking volumes of each GDS s joint venture partners in the GDS-processed air bookings share calculations. For example, GDS-processed air bookings from Abacus and INFINI Travel Information, Inc. ( Infini ) are included in our GDS-processed air bookings volume and our estimate of GDS-processed air bookings from Topas, Amadeus Korean joint venture partner, is included in the Amadeus GDS-processed air bookings volume. Based on our internal estimates, we believe GDS-processed air bookings comprise approximately 75% of total air bookings processed through third-party distribution systems in 2013, with the remaining 25% comprised of air bookings processed through regional distribution systems that are not joint venture partners of one of the three GDSs. Due to the lack of available industry information on the number of air bookings processed by such regional distribution systems and through direct distribution channels we use the number of GDS-processed air bookings as a proxy for the number of overall industry air bookings. Similarly, we believe industry air bookings share is a good proxy for overall GDS share in our Travel Network business because air bookings comprise the vast majority of the total bookings of the three GDSs. The GDS-processed air bookings used for GDS-processed air bookings share calculations do not necessarily correspond to the number of bookings billed by each GDS provider because not all processed bookings are billed due to the fact that each GDS provider has a different policy (often varying by region and supplier) as to which transactions processed through its GDS platform are billed. The regional air bookings share figures in this prospectus are calculated based on the total number of GDS-processed air bookings in each of the following four regions, with key countries or sub-regions identified: North America: United States and Canada; Latin America: Mexico, South America, Central America and the Caribbean; APAC: India, Australia, South Korea, Japan, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, Pakistan, Philippines, and New Zealand; and EMEA: Germany, United Kingdom, France, Italy, Spain, Saudi Arabia, Russian Federation, Sweden, Norway, United Arab Emirates, Netherlands, Greece, Switzerland, South Africa, Denmark, Israel, Finland, Ukraine, and Belgium (a subgroup of which is defined as MEA: Saudi Arabia, United Arab Emirates, South Africa and Israel). The hospitality CRS hotel room share figures in this prospectus are calculated based on data for hotel rooms serviced by third-party CRS providers and processed through our GDS. We estimate that approximately a quarter of global hotel properties are available through our GDS and believe this data to be the best available representation of the hotel market due to the lack of comprehensive industry data. Using this data, we compute CRS hotel room share based on total hotel room capacity hosted by the various third-party hospitality CRS providers. We believe this to be the most reliable measure of market share available to us. However, this metric is one we have only recently begun to measure and represents a snapshot in time, which prevents it from being able to convey a trend in market share over time. Therefore, we also include information in this prospectus regarding third-party hospitality CRS bookings share of our GDS because that data is more consistently available for historical periods. Using our GDS data, we compute third-party hospitality CRS bookings share based on total bookings by the various third-party hospitality CRS providers over time. Though we believe third-party Table of Contents hospitality CRS room share to be a more accurate representation of market share, we believe third-party hospitality CRS bookings share is a reasonable proxy to convey changes in third-party hospitality CRS market share over time. The Customer Retention rate figures in this prospectus are calculated as the aggregate of prior year revenue associated with customers that did not terminate their contract in the given year, as a percentage of the prior year revenue. Customer Retention for Travel Network is calculated based on travel agency contracts, and is measured based on revenue we earn from bookings made by those travel agencies. Customer Retention for Airline Solutions is calculated based on PBs fee-based revenue for our reservation contracts, our principal Airline Solutions offering. Customer Retention for Hospitality Solutions is based on CRS, digital marketing services and call center revenues, which represent over 90% of revenues of our Hospitality Solutions business in each period from 2011 through December 31, 2013. Customer Retention does not measure whether the revenue from any travel agency or reservations customer has increased in the given year compared to the prior year. For example, if ten travel agencies terminated their Travel Network contracts in 2013, and those travel agencies represented a combined 5% of Travel Network revenue in 2012, the Customer Retention for Travel Network in 2013 would be 95%. The Recurring Revenue figures for our: (i) Travel Network business is comprised of transaction, subscription and other revenue that is of a recurring nature from travel suppliers and travel buyers, and excludes revenue of a non-recurring nature, such as set-up fees and shortfall payments; (ii) Airline Solutions business is comprised of volume-based and subscription fees and other revenue that is of a recurring nature associated with various solutions, and excludes revenue of a non-recurring nature, such as license fees and consulting fees; and (iii) Hospitality Solutions business is comprised of volume-based and subscription fees and other revenue that is of a recurring nature associated with various solutions, and excludes revenue of a non-recurring nature, such as set-up fees and website development fees. Revenues in each of (i), (ii) and (iii) are tied to a travel supplier s transaction volumes rather than to its unit pricing for an airplane ticket, hotel room or other travel product. However, this revenue is not generally contractually committed to recur annually under our agreements with our travel suppliers. As a result, our Recurring Revenue is highly dependent on the global travel industry and directly correlates with global travel, tourism and transportation transaction volumes. See Risk Factors Risks Related to Our Business and Industry Our revenue is highly dependent on transaction volumes in the global travel industry, particularly air travel transaction volumes. TRADEMARKS AND TRADE NAMES We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties trademarks, service marks, trade names or products in this prospectus is not intended to, and does not, imply a relationship with, or endorsement or sponsorship by, us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. ClientBase, GetThere, lastminute.com, Sabre, Sabre Holdings, the Sabre logo, Sabre AirCentre, Sabre Airline Solutions, Sabre AirVision, Sabre Hospitality Solutions, Sabre Red, Sabre Travel Network, SabreSonic, TripCase, TruTrip and our other registered or common law trademarks, service marks or trade names appearing in this prospectus are the property of Sabre. Table of Contents NON-GAAP FINANCIAL MEASURES We have included financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this registration statement, of which this prospectus forms a part, including Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures. We define Adjusted Revenue as revenue adjusted for the amortization of Expedia SMA incentive payments, which are recorded as a reduction to revenue and are being amortized over the non-cancellable term of the Expedia SMA contract (see Note 3, Restructuring Charges, to our unaudited consolidated financial statements included elsewhere in this prospectus). We define Adjusted Gross Margin as operating income (loss) adjusted for selling, general and administrative expenses, impairments, depreciation and amortization, amortization of upfront incentive consideration, restructuring and other costs, litigation and taxes, including penalties, stock-based compensation and amortization of Expedia SMA incentive payments. The definition of Adjusted Gross Margin was revised in the first quarter of 2014 to adjust for restructuring and other costs, litigation and taxes, including penalties and stock-based compensation included in cost of revenue which differs from Adjusted Gross Margin presented in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on April 17, 2014. Adjusted Gross Margin for the prior year periods has been recast to conform to our revised definition. We define Adjusted Net Income as income (loss) from continuing operations adjusted for impairment, acquisition related amortization expense, loss (gain) on sale of business and assets, loss on extinguishment of debt, other expense (income), net, restructuring and other costs, litigation and taxes, including penalties, stock-based compensation, management fees, amortization of Expedia SMA incentive payments and tax impact of net income adjustments. We define Adjusted EBITDA as Adjusted Net Income adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, amortization of upfront incentive consideration, interest expense, net, and remaining (benefit) provision for income taxes. This Adjusted EBITDA metric differs from (i) the EBITDA metric referenced in the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Senior Secured Credit Facilities , which is calculated for the purposes of compliance with our debt covenants, and (ii) the Pre-VCP/EIP EBITDA and EBITDA metrics referenced in the section entitled Compensation Discussion and Analysis , which are calculated for the purposes of our annual incentive compensation program and performance-based awards, respectively. We define Adjusted Capital Expenditures as additions to property and equipment and capitalized implementation costs during the period presented. We define Free Cash Flow as cash provided by operating activities less cash used in additions to property and equipment. We define Adjusted Free Cash Flow as Free Cash Flow plus the cash flow effect of restructuring and other costs, litigation settlement and tax payments for certain items, other litigation costs, management fees and the Travelocity working capital impact from the Expedia SMA and the sale of TPN (see Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting our Results and Comparability Travelocity ). These non-GAAP financial measures are key metrics used by management and our board of directors to monitor our ongoing core operations because historical results have been significantly impacted by events that are unrelated to our core operations as a result of changes to our business and the regulatory environment. We believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate our ability to service debt obligations, fund capital Table of Contents expenditures and meet working capital requirements. Adjusted Capital Expenditures includes cash flows used in investing activities, for property and equipment, and cash flows used in operating activities, for capitalized implementation costs. Our management uses this combined metric in making product investment decisions and determining development resource requirements. We also believe that Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA and Adjusted Capital Expenditures assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense. In addition, amounts derived from Adjusted EBITDA are a primary component of certain covenants under our senior secured credit facilities. Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP. Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity. Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures exclude some, but not all, items that affect net income or cash flows from operating activities and these measures may vary among companies. Our use of Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow has limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Margin and Adjusted EBITDA do not reflect cash requirements for such replacements; Adjusted Net Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness; Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; Free Cash Flow and Adjusted Free Cash Flow do not reflect the cash requirements necessary to service the principal payments on our indebtedness; Free Cash Flow and Adjusted Free Cash Flow do not reflect payments related to restructuring, litigation, management fees and Travelocity working capital which reduced the cash available to us; Free Cash Flow and Adjusted Free Cash Flow remove the impact of accrual-basis accounting on asset accounts and non-debt liability accounts; and other companies, including companies in our industry, may calculate Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow or Adjusted Free Cash Flow differently, which reduces their usefulness as comparative measures. See Summary Historical and Pro Forma Consolidated Financial and Other Data, Selected Historical Consolidated Financial Data and Management s Discussion and Analysis of Financial Condition and Results of Operations for definitions of non-GAAP financial measures used in this prospectus and reconciliations thereof to the most directly comparable GAAP measures. Table of Contents MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes industry data and forecasts that we obtained from industry publications and surveys, public filings and internal company sources. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third-party forecasts and management s estimates and assumptions about our markets and our internal research. We have included explanations of certain internal estimates and related methods provided in this prospectus along with these estimates. See Business and Management s Discussion and Analysis of Financial Condition and Results of Operations. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. The T2RL information quoted or cited herein is the property of T2RL and is sourced from www.t2rl.net, copyright all rights reserved. The Gartner material quoted or cited herein, (the Gartner Material ) represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc., and are not representations of fact. The Gartner Material speaks as of its original publication date (and not as of the date of this filing) and the opinions expressed in the Gartner Material are subject to change without notice. The Euromonitor material quoted or cited herein, (the Euromonitor Material ) represent(s) data, research opinion or viewpoints published by Euromonitor International, LTD., and are not representations of fact. The Euromonitor Material speaks as of its original publication date (and not as of the date of this filing) and the opinions expressed in the Euromonitor Material are subject to change without notice. Table of Contents USE OF PROCEEDS The Selling Stockholders will receive all of the net proceeds from the sale of shares of our common stock offered by them pursuant to this prospectus. The aggregate proceeds to the Selling Stockholders from the sale of shares of common stock will be the purchase price of the shares of common stock less discounts and commissions, if any. We will not receive any proceeds from the sale of these shares of common stock, including from any exercise by the underwriters of their option to purchase additional shares. We will bear the costs, other than underwriting discounts and commissions and transfer taxes, associated with this offering in accordance with the Management Stockholders Agreement and the Registration Rights Agreement (as defined below), as applicable. See Principal and Selling Stockholders and Underwriting (Conflicts of Interest). Certain affiliates of TPG Capital BD, LLC, an underwriter in this offering, will own in excess of 10% of our issued and outstanding common stock following this offering. In addition, the TPG Funds are affiliates of TPG Capital BD, LLC and, as selling stockholders, will receive more than 5% of the net proceeds of this offering, based upon an assumed public offering price of $20.43 per share, the last reported closing price of our common stock on NASDAQ on January 30, 2015. See Underwriting (Conflicts of Interest). Table of Contents MARKET PRICE OF OUR COMMON STOCK Our common stock has been listed on The NASDAQ Stock Market under the symbol SABR since it was listed on April 17, 2014 in connection with our initial public offering. Before then, there was no public market for our common stock. The following table sets forth, for the periods indicated, the high and low sales prices of our shares of common stock as reported by The NASDAQ Stock Market: High Low Quarter ended June 30, 2014(1) $ 20.91 $ 15.00 Quarter ended September 30, 2014 $ 20.26 $ 17.65 Quarter ended December 31, 2014 $ 20.57 $ 14.86 (1) Represents the period from April 17, 2014, the date on which our common stock first began trading on The NASDAQ Stock Market after the pricing of our initial public offering, through June 30, 2014, the end of our second fiscal quarter. On January 30, 2015, the last reported sale price on The NASDAQ Stock Market of our common stock was $20.43 per share. As of January 15, 2015, we had approximately 291 holders of record of our shares of common stock. A substantially greater number of shareholders are beneficial holders of our shares of common stock in street name through banks, brokers and other financial institutions that are record holders. Table of Contents DIVIDEND POLICY Our board of directors declared cash dividends of $0.09 per share of our common stock, which were paid on September 16, 2014 to shareholders of record as of September 1, 2014, and on December 30, 2014 to shareholders of record as of December 15, 2014. We expect to continue to pay quarterly cash dividends on our common stock, subject to the sole discretion of our board of directors and the considerations discussed below. We intend to fund any future dividends from distributions made by our operating subsidiaries from their available cash generated from operations. Future cash dividends, if any, will be at the discretion of our board of directors and the amount of cash dividends per share will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, number of shares of common stock outstanding and other factors the board of directors may deem relevant. The timing and amount of future dividend payments will be at the discretion of our board of directors. See Risk Factors Risks Related to the Offering and our Common Stock Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our holding company structure and applicable provisions of Delaware law. Because we are a holding company with no material direct operations, we are dependent on loans, dividends and other payments from our operating subsidiaries to generate the funds necessary to pay dividends on our common stock. Our subsidiaries are currently restricted from paying cash dividends on our common stock in certain circumstances by the covenants in our Credit Facility and in the indenture governing the 2019 Notes and may be further restricted by the terms of future debt or preferred securities. Our dividend policy has certain risks and limitations, particularly with respect to liquidity. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy, or at all, if, among other things, we do not have the cash necessary to pay our intended dividends. By paying cash dividends rather than saving or investing that cash, we risk, among other things, slowing the pace of our growth and having insufficient cash to fund our operations or unanticipated capital expenditures. For a discussion of the application of withholding taxes on dividends, see Material U.S. Federal Income and Estate Tax Considerations to Non-U.S. Holders. Table of Contents CAPITALIZATION The following table sets forth our cash and cash equivalents and our capitalization as of September 30, 2014 on a historical basis. You should read the following table in conjunction with the sections titled Summary Historical and Pro Forma Consolidated Financial and Other Data, Selected Historical Consolidated Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, Description of Certain Indebtedness and our financial statements and related notes included elsewhere in this prospectus. As of September 30, 2014 (in thousands) Cash and cash equivalents $ 157,747 Long-term debt, including current portion: 2019 Notes $ 480,779 2016 Notes 392,767 Credit Facility(1) 2,131,681 Mortgage Facility 82,631 Total Long-term debt 3,087,858 Stockholders equity: Common Stock: $0.01 par value; 450,000,000 authorized shares; 265,224,958 and 178,633,409 shares issued, 264,787,572 outstanding 2,652 Additional paid in capital 1,911,172 Treasury Stock, at cost, 437,386 shares (5,297 ) Retained deficit (1,797,944 ) Accumulated other comprehensive loss (41,592 ) Non-controlling interest 57 Total stockholders equity(2) 69,048 Total capitalization $ 3,156,906 (1) As of September 30, 2014, we had approximately $1,744 million, $49 million and $347 million outstanding under the Term Loan B, Term Loan C and Incremental Term Loan Facility, respectively. As of September 30, 2014, we had no drawn amounts outstanding under the Revolver and $60 million outstanding under the letter of credit sub-facility, which reduces the amount available to be drawn under the Revolver. (2) The outstanding share information set forth above assumes no issuance of shares of common stock reserved for issuance under our equity incentive plans. As of January 15, 2015, an aggregate of 11,847,105 shares of common stock were reserved for future issuance under the Sabre Corporation 2014 Omnibus Incentive Compensation Plan (the 2014 Omnibus Plan ) which includes 2,844,254 shares of common stock that were available for future issuance under our prior equity plans. Additionally, the number of shares of common stock to be outstanding after this offering assumes: no exercise of performance-based stock options outstanding under our Sovereign MEIP plan. As of January 15, 2015 there were 724,337 performance-based stock options outstanding under this plan with a weighted average exercise price of $5.00; no exercise of time based stock options outstanding under our Sovereign MEIP plan. As of January 15, 2015 there were 11,995,012 time based stock options outstanding under this plan with a weighted average exercise price of $4.81; no exercise of time based stock options outstanding under our Sovereign 2012 MEIP plan. As of January 15, 2015 there were 4,059,659 time based stock options outstanding under this plan with a weighted average exercise price of $11.34; Table of Contents no exercise of time-based stock options outstanding under our 2014 Omnibus plan. As of January 15, 2015 there were 2,089,949 time-based stock options outstanding under this plan with a weighted average exercise price of $16.86; no vesting and settlement of the 923,900 performance-based restricted stock units unvested and outstanding as of January 15, 2015 under our Sovereign 2012 MEIP plan; no vesting and settlement of the 110,000 restricted stock unit award, unvested and outstanding as of January 15, 2015 under our Sovereign 2012 MEIP plan; no vesting and settlement of the 770,569 performance-based restricted stock units unvested and outstanding as of January 15, 2015 under our 2014 Omnibus plan; and no vesting and settlement of the 1,622,226 restricted stock unit awards, unvested and outstanding as of January 15, 2015 under our 2014 Omnibus plan. Table of Contents UNAUDITED PRO FORMA FINANCIAL INFORMATION In the fourth quarter of 2014, we committed to a plan to divest of our Travelocity business. On January 23, 2015, we completed the sale of our Travelocity business in the United States and Canada. In addition, on December 16, 2014, we announced that we received a binding offer to acquire lastminute.com, the European portion of our Travelocity business, which is expected to be completed in the first quarter of 2015. Our Travelocity segment will have no remaining operations once the lastminute.com transaction is completed. The following unaudited pro forma financial information is based on our historical consolidated financial statements after giving effect to the divestiture of our Travelocity business. The unaudited pro forma consolidated balance sheet as of September 30, 2014, has been prepared to give effect to the divestiture of the assets of the Travelocity business as if it occurred on September 30, 2014. The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2014 and the years ended December 31, 2013, 2012 and 2011 have been prepared to give effect to the divestiture of the Travelocity business as if it occurred on January 1, 2011. The unaudited pro forma financial information was prepared utilizing our historical financial data derived from our unaudited consolidated financial statements and the notes thereto and from the audited consolidated financial statements and the notes thereto included elsewhere in this prospectus. The pro forma adjustments are described in the notes to the unaudited pro forma information and are based upon available information and assumptions that we believe are reasonable. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of what our financial performance and financial position would have been had the transactions been completed on the dates assumed nor is such unaudited pro forma financial information necessarily indicative of the results to be expected in any future period. Table of Contents SABRE CORPORATION UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2014 (in thousands, except share amounts) As Reported (a) Divestiture in Travelocity Business Pro Forma Assets Current assets Cash and cash equivalents $ 157,747 $ 280,000 $ 437,747 Restricted cash 755 755 Accounts receivable, net 466,753 (45,784 ) 420,969 Prepaid expenses and other current assets 56,315 (17,966 ) 38,349 Current deferred income taxes 39,184 39,184 Other receivables, net 28,902 28,902 Assets of discontinued operations 9,364 9,364 Total current assets 759,020 216,250 975,270 Property and equipment, net 526,722 (8,226 ) 518,496 Investments in joint ventures 142,639 142,639 Goodwill 2,152,590 2,152,590 Trademarks and brandnames, net 307,445 (66,200 ) 241,245 Other intangible assets, net 261,581 261,581 Other assets, net 522,397 (35,822 ) 486,575 Total assets $ 4,672,394 $ 106,002 $ 4,778,396 Liabilities and stockholders equity Current liabilities Accounts payable $ 129,555 $ (1,939 ) $ 127,616 Travel supplier liabilities and related deferred revenue 107,409 (82,833 ) 24,576 Accrued compensation and related benefits 91,700 (4,862 ) 86,838 Accrued subscriber incentives 168,019 168,019 Deferred revenues 176,990 (2,357 ) 174,633 Litigation settlement liability and related deferred revenue 75,409 75,409 Other accrued liabilities 210,196 (37,568 ) 172,628 Current portion of debt 22,418 22,418 Liabilities of discontinued operations 23,881 23,881 Total current liabilities 1,005,577 (129,559 ) 876,018 Deferred income taxes 8,601 63,298 71,899 Other noncurrent liabilities 523,728 (712 ) 523,016 Long-term debt 3,065,440 3,065,440 Stockholders equity Common Stock: $0.01 par value; 450,000,000 authorized shares; 265,224,958 shares issued and 264,787,572 outstanding 2,652 2,652 Additional paid-in capital 1,911,172 1,911,172 Treasury Stock, at cost, 437,386 shares (5,297 ) (5,297 ) Retained deficit (1,797,944 ) 172,975 (1,624,969 ) Accumulated other comprehensive loss (41,592 ) (41,592 ) Noncontrolling interest 57 57 Total stockholders equity 69,048 172,975 242,023 Total liabilities and stockholders equity $ 4,672,394 $ 106,002 $ 4,778,396 Table of Contents SABRE CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 (in thousands, except per share amounts) Nine Months Ended September 30, 2014 As Reported (b) Divestiture in Travelocity Business Pro Forma Revenue $ 2,229,286 $ (244,011 ) $ 1,985,275 Cost of revenue 1,399,919 (84,250 ) 1,315,669 Selling, general and administrative 575,413 (222,839 ) 352,574 Restructuring charges (adjustments) 2,325 (2,929 ) (604 ) Operating income 251,629 66,007 317,636 Other income (expense): Interest expense, net (167,332 ) (167,332 ) Loss on extinguishment of debt (33,538 ) (33,538 ) Joint venture equity income 9,367 9,367 Other, net 760 (1,599 ) (839 ) Total other expense, net (190,743 ) (1,599 ) (192,342 ) Income from continuing operations before income taxes 60,886 64,408 125,294 Provision for income taxes 27,878 27,773 55,651 Income from continuing operations 33,008 36,635 69,643 Net income attributable to noncontrolling interests 2,168 2,168 Preferred stock dividends 11,381 11,381 Net income from continuing operations available to common shareholders $ 19,459 $ 36,635 $ 56,094 Net income from continuing operations per share available to common shareholders: Basic $ 0.08 $ 0.16 $ 0.24 Diluted $ 0.08 $ 0.15 $ 0.24 Weighted-average common shares outstanding: Basic 229,405 229,405 Diluted 237,994 237,994 Table of Contents SABRE CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2013 (in thousands, except per share amounts) Year Ended December 31, 2013 As Reported (b) Divestiture in Travelocity Business Pro Forma Revenue $ 3,049,525 $ (525,979 ) $ 2,523,546 Cost of revenue 1,904,850 (199,687 ) 1,705,163 Selling, general and administrative 792,929 (363,639 ) 429,290 Impairment 138,435 (138,435 ) Restructuring charges 36,551 (28,388 ) 8,163 Operating income 176,760 204,170 380,930 Other income (expense): Interest expense, net (274,689 ) (274,689 ) Loss on extinguishment of debt (12,181 ) (12,181 ) Joint venture equity income 12,350 12,350 Other, net (6,724 ) 6,419 (305 ) Total other expense, net (281,244 ) 6,419 (274,825 ) (Loss) income from continuing operations before income taxes (104,484 ) 210,589 106,105 (Benefit) provision for income taxes (14,029 ) 68,068 54,039 (Loss) income from continuing operations (90,455 ) 142,521 52,066 Net income attributable to noncontrolling interests 2,863 2,863 Preferred stock dividends 36,704 36,704 Net (loss) income from continuing operations available to common shareholders $ (130,022 ) $ 142,521 $ 12,499 Net (loss) income from continuing operations per share available to common shareholders: Basic $ (0.73 ) $ 0.80 $ 0.07 Diluted $ (0.73 ) $ 0.80 $ 0.07 Weighted-average common shares outstanding: Basic 178,125 178,125 Diluted 178,125 184,978 Table of Contents SABRE CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2012 (in thousands, except per share amounts) Year Ended December 31, 2012 As Reported (b) Divestiture in Travelocity Business Pro Forma Revenue $ 2,974,364 $ (592,216 ) $ 2,382,148 Cost of revenue 1,819,235 (244,049 ) 1,575,186 Selling, general and administrative 1,188,248 (394,954 ) 793,294 Impairment 573,180 (552,926 ) 20,254 Operating loss (606,299 ) 599,713 (6,586 ) Other income (expense): Interest expense, net (232,450 ) (232,450 ) Gain on sale of business 25,850 25,850 Joint venture equity income (2,513 ) (2,513 ) Other, net (1,385 ) (5,250 ) (6,635 ) Total other expense, net (210,498 ) (5,250 ) (215,748 ) Loss from continuing operations before income taxes (816,797 ) 594,463 (222,334 ) Benefit for income taxes (195,071 ) 188,164 (6,907 ) Loss from continuing operations (621,726 ) 406,299 (215,427 ) Net (loss) income attributable to noncontrolling interests (59,317 ) 60,836 1,519 Preferred stock dividends 34,583 34,583 Net loss from continuing operations available to common shareholders $ (596,992 ) $ 345,463 $ (251,529 ) Net loss from continuing operations per share available to common shareholders: Basic $ (3.37 ) $ 1.95 $ (1.42 ) Diluted $ (3.37 ) $ 1.95 $ (1.42 ) Weighted-average common shares outstanding: Basic 177,206 177,206 Diluted 177,206 177,206 Table of Contents SABRE CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2011 (in thousands, except per share amounts) Year Ended December 31, 2011 As Reported (b) Divestiture in Travelocity Business Pro Forma Revenue $ 2,855,961 $ (603,515 ) $ 2,252,446 Cost of revenue 1,736,041 (207,015 ) 1,529,026 Selling, general and administrative 806,435 (414,127 ) 392,308 Impairment 185,240 (185,240 ) Operating income 128,245 202,867 331,112 Other income (expense): Interest expense, net (174,390 ) (174,390 ) Joint venture equity income 23,501 23,501 Other, net 1,156 (1,091 ) 65 Total other expense, net (149,733 ) (1,091 ) (150,824 ) (Loss) income from continuing operations before income taxes (21,488 ) 201,776 180,288 Provision for income taxes 57,806 9,004 66,810 (Loss) income from continuing operations (79,294 ) 192,772 113,478 Net loss attributable to noncontrolling interests (36,681 ) 22,359 (14,322 ) Preferred stock dividends 32,579 32,579 Net (loss) income from continuing operations available to common shareholders $ (75,192 ) $ 170,413 $ 95,221 Net (loss) income from continuing operations per share available to common shareholders: Basic $ (0.43 ) $ 0.96 $ 0.54 Diluted $ (0.43 ) $ 0.95 $ 0.52 Weighted-average common shares outstanding: Basic 176,703 176,703 Diluted 176,703 181,889 Table of Contents SABRE CORPORATION NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION Sale of Travelocity.com On January 23, 2015, we announced the sale of our global online travel business operated under the Travelocity brand ( Travelocity.com ) to Expedia, Inc., pursuant to the terms of an asset purchase agreement (the Purchase Agreement ), dated January 23, 2015, by and among Sabre GLBL Inc. and Travelocity.com LP, and Expedia. The signing and closing of the Purchase Agreement occurred contemporaneously. Expedia purchased Travelocity.com pursuant to the Purchase Agreement for cash consideration of $280 million. The Purchase Agreement contains customary representations and warranties, covenants and indemnities for a transaction of this nature. We expect to utilize the cash proceeds for general corporate purposes. As a result of the sale of Travelocity.com pursuant to the Purchase Agreement, the previously disclosed strategic marketing agreement, pursuant to which Expedia powered the technology platforms of Travelocity s existing U.S. and Canadian websites, and the related put/call arrangement, pursuant to which Expedia could have acquired, or we could have sold to Expedia, assets relating to Travelocity.com, have been terminated. Binding offer for lastminute.com On December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com, the European portion of our Travelocity business. The transaction will be completed through the transfer of net liabilities and is expected to close during first quarter of 2015. We will not receive any cash proceeds or any other significant consideration in the transaction. We cannot provide any assurance that this transaction will occur on the terms described herein or at all. Continuing Cash Flows Our Travel Network business earns revenue from airlines for bookings transacted through our GDS. Historically, Travel Network recognized intersegment incentive consideration expense for bookings generated by our Travelocity business. Such costs are representative of costs incurred on a consolidated basis relating to Travel Network s revenue from airlines for bookings transacted through our GDS. The acquirer of Travelocity.com has signed, and the acquirer of lastminute.com has committed to sign as part of its binding offer, a long term agreement with our Travel Network business to continue to utilize our GDS for bookings which will generate incentive consideration to be paid by us to the acquirers. Pro Forma Adjustments (a) Represents adjustments to reflect the disposition of the assets and liabilities of the Travelocity segment associated with the transactions described above for $280 million in cash. We expect to use the cash proceeds for general corporate purposes. The net assets of Travelocity.com expected to be disposed of primarily include a tradename asset with a book value of $57 million. The net liabilities of lastminute.com expected to be disposed of primarily consist of negative working capital. The net decrease to retained deficit of $173 million represents the estimated after-tax gains of $143 million and $30 million, respectively, on the disposition of Travelocity.com and lastminute.com as if they occurred on September 30, 2014. (b) Represents adjustments to eliminate the direct operating results of the Travelocity segment as if the dispositions occurred on January 1, 2011. Selling, general and administrative expense adjustments include amounts historically reported in corporate costs that are directly related to the Travelocity segment and that will be eliminated post-closing of the transactions. Cost of revenue and selling, general and administrative adjustments exclude overhead costs that were previously allocated to the Travelocity segment but that will not be eliminated upon sale of the Travelocity segment. See also above Continuing Cash Flows. Table of Contents SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The following tables present selected historical consolidated financial data for our business. You should read these tables along with Risk Factors, Use of Proceeds, Capitalization, Management s Discussion and Analysis of Financial Condition and Results of Operations, Business and our consolidated financial statements and the notes thereto included elsewhere in this prospectus. The consolidated statements of operations data, consolidated statements of cash flows data and consolidated balance sheet data as of and for the nine months ended September 30, 2014 and 2013 are derived from our unaudited consolidated financial statements and the notes thereto included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of this data. The consolidated statements of operations data and consolidated statements of cash flows data for the years ended December 31, 2013, 2012 and 2011 and the consolidated balance sheet data as of December 31, 2013 and 2012 are derived from our audited consolidated financial statements and the notes thereto included elsewhere in this prospectus. The consolidated statements of operations data and consolidated statements of cash flows data for the years ended December 31, 2010 and 2009 and the consolidated balance sheet data as of December 31, 2011, 2010 and 2009 are derived from our unaudited consolidated financial statements and the notes thereto not included in this prospectus. The historical financial data include the results of our Travelocity business, which, as of September 30, 2014, was included in continuing operations. The historical consolidated results presented below are not necessarily indicative of the results to be expected for any future period, and results for any interim period presented below are not necessarily indicative of the results to be expected for the full year. Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 2010 2009 (Amounts in thousands) Consolidated Statements of Operations Data(1): Revenue $ 2,229,286 $ 2,303,399 $ 3,049,525 $ 2,974,364 $ 2,855,961 $ 2,758,847 $ 2,577,391 Cost of revenue 1,399,919 1,423,242 1,904,850 1,819,235 1,736,041 1,636,132 1,503,323 Selling, general and administrative 575,413 620,226 792,929 1,188,248 806,435 789,177 805,961 Impairment 138,435 138,435 573,180 185,240 401,400 211,612 Restructuring charges 2,325 15,889 36,551 Operating income (loss) 251,629 105,607 176,760 (606,299 ) 128,245 (67,862 ) 56,495 Net income (loss) attributable to Sabre Corporation 22,823 (127,254 ) (100,494 ) (611,356 ) (66,074 ) (268,852 ) (158,734 ) Net income (loss) attributable to common shareholders 11,442 (154,473 ) (137,198 ) (645,939 ) (98,653 ) (299,649 ) (102,441 ) Basic and diluted income (loss) per share attributable to common shareholders $ 0.05 $ (0.87 ) $ (0.77 ) $ (3.65 ) $ (0.56 ) $ (1.71 ) $ (0.59 ) Basic weighted average common shares outstanding 229,405 178,051 178,125 177,206 176,703 175,655 174,535 Diluted weighted average common shares outstanding 237,994 178,051 178,125 177,206 176,703 175,655 174,535 Consolidated Statements of Cash Flows Data: Cash provided by operating activities $ 121,679 $ 252,062 $ 157,188 $ 312,336 $ 356,444 $ 380,928 $ 284,159 Cash used in investing activities (191,949 ) (189,220 ) (246,502 ) (236,034 ) (176,260 ) (184,787 ) (108,053 ) Cash (used in) provided by financing activities (59,289 ) 274,717 262,172 (25,120 ) (271,540 ) (48,500 ) (335,702 ) Additions to property and equipment (160,385 ) (168,744 ) (226,026 ) (193,262 ) (164,638 ) (130,028 ) (106,554 ) Cash payments for interest (157,412 ) (181,970 ) (255,620 ) (264,990 ) (184,449 ) (195,550 ) (251,812 ) Other Financial Data: Adjusted Gross Margin $ 1,044,076 $ 1,084,535 $ 1,419,047 $ 1,418,289 $ 1,333,754 $ 1,310,280 $ 1,243,403 Adjusted Net Income from continuing operations 158,829 147,697 217,151 150,886 236,166 205,955 195,320 Adjusted EBITDA 617,350 583,963 791,323 786,629 720,163 691,016 627,179 Adjusted Capital Expenditures 187,987 217,430 284,840 271,805 223,747 163,694 126,955 Adjusted Free Cash Flow 204,101 160,487 160,923 285,221 233,586 276,512 208,657 Table of Contents As of September 30, As of December 31, 2014 2013 2012 2011 2010 2009 (Amounts in thousands) Consolidated Balance Sheet Data: Cash and cash equivalents $ 157,747 $ 308,236 $ 126,695 $ 58,350 $ 176,521 $ 61,206 Total assets 4,672,394 4,755,708 4,711,245 5,252,780 5,524,279 5,878,388 Long-term debt 3,065,440 3,643,548 3,420,927 3,307,905 3,350,860 3,696,378 Working capital deficit (246,557 ) (273,591 ) (428,569 ) (411,482 ) (491,864 ) (331,197 ) Redeemable preferred stock 634,843 598,139 563,557 530,975 500,178 Noncontrolling interest 57 508 88 (18,693 ) 19,831 88,429 Total stockholders equity (deficit) 69,048 (952,536 ) (876,875 ) (196,919 ) (34,738 ) 298,251 Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 2010 2009 (Amounts in thousands) Key Metrics: Travel Network Direct Billable Bookings Air 251,145 244,267 314,275 326,175 328,200 325,370 301,686 Direct Billable Bookings Non-Air 41,274 40,734 53,503 53,669 53,683 49,229 43,084 Total Direct Billable Bookings 292,419 285,001 367,778 379,844 381,883 374,599 344,770 Airline Solutions Passengers Boarded 385,611 358,428 478,088 405,420 364,420 313,959 287,591 (1) Certain amounts previously reported in our December 31, 2012, 2011, 2010 and 2009 financial statements have been reclassified to conform to the December 31, 2013 presentation of Holiday Autos as a discontinued operations. See Note 2, Summary of Significant Accounting Policies Reclassifications, to our audited consolidated financial statements included elsewhere in this prospectus. In June 2013, we sold certain assets of our Holiday Autos operations to a third party and in November 2013, we completed the closing of the remainder of the Holiday Autos operations such that it represented a discontinued operation. See Note 4, Discontinued Operations and Dispositions, to our audited consolidated financial statements included elsewhere in this prospectus. The impact on our revenue was a reduction of $65 million, $76 million, $74 million and $78 million for the years ended December 31, 2012, 2011, 2010 and 2009, respectively. The impact on our operating income was an increase of $12 million for the year ended December 31, 2012, a reduction of less than $1 million and $5 million for the years ended December 31, 2011 and 2010, respectively, and an increase of $44 million for the year ended December 31, 2009. Table of Contents Non-GAAP Measures The following table sets forth the reconciliation of net income (loss) attributable to Sabre Corporation, the most directly comparable GAAP measure, to Adjusted Net Income and Adjusted EBITDA: Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 2010 2009 (Amounts in thousands) Reconciliation of net income (loss) to Adjusted Net Income and to Adjusted EBITDA: Net income (loss) attributable to Sabre Corporation $ 22,823 $ (127,254 ) $ (100,494 ) $ (611,356 ) $ (66,074 ) $ (268,851 ) $ (158,734 ) Loss from discontinued operations, net of tax 8,017 20,895 7,176 48,947 23,461 16,949 56,021 Net income (loss) attributable to noncontrolling interests(1) 2,168 2,135 2,863 (59,317 ) (36,681 ) (64,382 ) (7,476 ) Income (loss) from continuing operations 33,008 (104,224 ) (90,455 ) (621,726 ) (79,294 ) (316,284 ) (110,189 ) Adjustments: Impairment(2) 138,435 138,435 596,980 185,240 401,400 211,612 Acquisition related amortization expense(3a) 83,344 107,955 143,765 162,517 162,312 163,213 183,850 Gain on sale of business and assets (25,850 ) Loss (gain) on extinguishment of debt 33,538 12,181 12,181 (31,565 ) Other (income) expense, net(5) (760 ) 1,099 6,724 1,385 (1,156 ) (5,871 ) (18,070 ) Restructuring and other costs(6) 24,056 26,296 59,052 6,776 12,986 17,282 22,387 Litigation and taxes, including penalties(7) 12,497 31,543 39,431 418,622 21,601 1,600 1,405 Stock based compensation 22,434 5,446 9,086 9,834 7,334 5,300 4,108 Management fees(8) 23,701 7,347 8,761 7,769 7,191 6,730 7,260 Amortization of Expedia SMA incentive payments 7,625 Tax impact of net income adjustments (80,614 ) (78,381 ) (109,829 ) (405,421 ) (80,048 ) (67,415 ) (75,478 ) Adjusted Net Income from continuing operations 158,829 147,697 217,151 150,886 236,166 205,955 195,320 Adjustments: Depreciation and amortization of property and equipment(3b) 122,409 97,687 131,483 135,561 122,640 110,748 99,326 Amortization of capitalized implementation costs(3c) 27,111 27,038 35,551 20,855 11,365 8,162 3,035 Amortization of upfront incentive consideration(4) 33,177 28,736 36,649 36,527 37,748 26,572 29,554 Interest expense, net 167,332 209,653 274,689 232,450 174,390 200,945 234,758 Remaining provision for income taxes 108,492 73,152 95,800 210,350 137,854 138,634 65,186 Adjusted EBITDA $ 617,350 $ 583,963 $ 791,323 $ 786,629 $ 720,163 $ 691,016 $ 627,179 Table of Contents The following tables set forth the reconciliation of operating income (loss), the most directly comparable GAAP measure, to Adjusted Gross Margin and Adjusted EBITDA by business segment: Nine Months Ended September 30, 2014 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 515,093 $ 117,957 $ (29,326 ) $ $ (352,095 ) $ 251,629 Add back: Selling, general and administrative 76,810 38,555 202,240 (7,498 ) 265,306 575,413 Restructuring charges 2,325 2,325 Cost of revenue adjustments: Depreciation and amortization(3) 44,943 79,034 3,585 29,584 157,146 Amortization of upfront incentive consideration(4) 33,177 33,177 Restructuring and other costs(6) 10,016 10,016 Litigation and taxes, including penalties(7) 1,127 1,127 Stock-based compensation 5,618 5,618 Amortization of Expedia SMA incentive payments 7,625 7,625 Adjusted Gross Margin 670,023 235,546 184,124 (7,498 ) (38,119 ) 1,044,076 Selling, general and administrative (76,810 ) (38,555 ) (202,240 ) 7,498 (265,306 ) (575,413 ) Joint venture equity income 9,367 9,367 Joint venture intangible amortization(3a) 2,403 2,403 Selling, general and administrative adjustments: Depreciation and amortization(3) 1,654 695 70,966 73,315 Restructuring and other costs(6) 11,715 11,715 Litigation and taxes, including penalties(7) 11,370 11,370 Stock-based compensation 16,816 16,816 Management fees(8) 23,701 23,701 Adjusted EBITDA $ 606,637 $ 197,686 $ (18,116 ) $ $ (168,857 ) $ 617,350 Nine Months Ended September 30, 2013 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 505,446 $ 88,260 $ (1,298 ) $ $ (486,801 ) $ 105,607 Add back: Selling, general and administrative 82,204 39,784 271,839 (514 ) 226,913 620,226 Impairment 138,435 138,435 Restructuring charges 15,889 15,889 Cost of revenue adjustments: Depreciation and amortization(2) 36,182 55,193 7,354 51,712 150,441 Amortization of upfront incentive consideration(3) 28,736 28,736 Restructuring and other costs (5) 4,521 4,521 Litigation and taxes, including penalties(6) 19,864 19,864 Stock-based compensation 816 816 Adjusted Gross Margin 652,568 183,237 277,895 (514 ) (28,651 ) 1,084,535 Selling, general and administrative (82,204 ) (39,784 ) (271,839 ) 514 (226,913 ) (620,226 ) Joint venture equity income 7,873 7,873 Joint venture intangible amortization(2a) 2,403 2,403 Selling, general and administrative adjustments: Depreciation and amortization(2) 1,628 2,032 1,472 74,704 79,836 Restructuring and other costs (5) 5,886 5,886 Litigation and taxes, including penalties(6) 11,679 11,679 Stock-based compensation 4,630 4,630 Management fees(7) 7,347 7,347 Adjusted EBITDA $ 582,268 $ 145,485 $ 7,528 $ $ (151,318 ) $ 583,963 Table of Contents Fiscal Year Ended December 31, 2013 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 667,498 $ 135,755 $ 14,140 $ $ (640,633 ) $ 176,760 Add back: Selling, general and administrative 106,392 51,538 331,334 (717 ) 304,382 792,929 Impairment(2) 138,435 138,435 Restructuring charges(6) 36,551 36,551 Cost of revenue adjustments: Depreciation and amortization(3) 50,254 75,093 8,015 69,123 202,485 Amortization of upfront incentive consideration(4) 36,649 36,649 Restructuring and other costs(6) 12,615 12,615 Litigation and taxes, including penalties(7) 20,921 20,921 Stock-based compensation 1,702 1,702 Adjusted Gross Margin 860,793 262,386 353,489 (717 ) (56,904 ) 1,419,047 Selling, general and administrative (106,392 ) (51,538 ) (331,334 ) 717 (304,382 ) (792,929 ) Joint venture equity income 12,350 12,350 Joint venture intangible amortization(3a) 3,204 3,204 Selling, general and administrative adjustments: Depreciation and amortization(3) 2,253 2,227 697 99,933 105,110 Restructuring and other costs(6) 9,886 9,886 Litigation and taxes, including penalties(7) 18,510 18,510 Stock-based compensation 7,384 7,384 Management fees(8) 8,761 8,761 Adjusted EBITDA $ 772,208 $ 213,075 $ 22,852 $ $ (216,812 ) $ 791,323 Fiscal Year Ended December 31, 2012 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 670,778 $ 114,272 $ 21,227 $ $ (1,412,576 ) $ (606,299 ) Add back: Selling, general and administrative 101,934 52,754 355,875 (1,010 ) 678,695 1,188,248 Impairment(2) 573,180 573,180 Cost of revenue adjustments: Depreciation and amortization(3) 34,624 51,395 36,700 75,487 198,206 Amortization of upfront incentive consideration(4) 36,527 36,527 Restructuring and other costs(6) 4,525 4,525 Litigation and taxes, including penalties(7) 22,187 22,187 Stock-based compensation 1,715 1,715 Adjusted Gross Margin 843,863 218,421 413,802 (1,010 ) (56,787 ) 1,418,289 Selling, general and administrative (101,934 ) (52,754 ) (355,875 ) 1,010 (678,695 ) (1,188,248 ) Joint venture equity income 21,287 21,287 Joint venture intangible amortization(3a) 3,200 3,200 Selling, general and administrative adjustments: Depreciation and amortization(3) 2,036 615 3,192 111,684 117,527 Restructuring and other costs(6) 2,251 2,251 Litigation and taxes, including penalties(7) 396,435 396,435 Stock-based compensation 8,119 8,119 Management fees(8) 7,769 7,769 Adjusted EBITDA $ 768,452 $ 166,282 $ 61,119 $ $ (209,224 ) $ 786,629 Table of Contents Fiscal Year Ended December 31, 2011 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 594,418 $ 103,254 $ 32,971 $ $ (602,398 ) $ 128,245 Add back: Selling, general and administrative 111,003 50,306 374,801 (1,083 ) 271,408 806,435 Impairment(2) 185,240 185,240 Cost of revenue adjustments: Depreciation and amortization(3) 29,584 31,587 40,018 71,657 172,846 Amortization of upfront incentive consideration(4) 37,748 37,748 Restructuring and other costs(6) 1,786 1,786 Litigation and taxes, including penalties(7) Stock-based compensation 1,454 1,454 Adjusted Gross Margin 772,753 185,147 447,790 (1,083 ) (70,853 ) 1,333,754 Selling, general and administrative (111,003 ) (50,306 ) (374,801 ) 1,083 (271,408 ) (806,435 ) Joint venture equity income 23,501 23,501 Joint venture intangible amortization(3a) 3,200 3,200 Selling, general and administrative adjustments: Depreciation and amortization(3) 4,120 343 3,480 112,328 120,271 Restructuring and other costs(6) 11,201 11,201 Litigation and taxes, including penalties(7) 21,600 21,600 Stock-based compensation 5,880 5,880 Management fees(8) 7,191 7,191 Adjusted EBITDA $ 692,571 $ 135,184 $ 76,469 $ $ (184,061 ) $ 720,163 Fiscal Year Ended December 31, 2010 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 545,762 $ 127,103 $ 50,157 $ $ (790,884 ) $ (67,862 ) Add back: Selling, general and administrative 71,495 39,417 406,443 (591 ) 272,413 789,177 Impairment 401,400 401,400 Cost of revenue adjustments: Depreciation and amortization(3) 32,349 19,663 31,995 69,411 153,418 Amortization of upfront incentive consideration(4) 26,572 26,572 Restructuring and other costs(6) 4,863 4,863 Litigation and taxes, including penalties(7) 1,600 1,600 Stock-based compensation 1,112 1,112 Adjusted Gross Margin 676,178 186,183 488,595 (591 ) (40,085 ) 1,310,280 Selling, general and administrative (71,495 ) (39,417 ) (406,443 ) 591 (272,413 ) (789,177 ) Joint venture equity income 17,871 17,871 Joint venture intangible amortization(3a) 3,200 3,200 Selling, general and administrative adjustments: Depreciation and amortization(3) 4,172 450 8,207 112,676 125,505 Restructuring and other costs(6) 12,419 12,419 Stock-based compensation 4,188 4,188 Management fees(8) 6,730 6,730 Adjusted EBITDA $ 629,926 $ 147,216 $ 90,359 $ $ (176,485 ) $ 691,016 Table of Contents Fiscal Year Ended December 31, 2009 Travel Network Airline and Hospitality Solutions Travelocity Eliminations Corporate Total (Amounts in thousands) Operating income (loss) $ 484,105 $ 112,048 $ 81,012 $ $ (620,670 ) $ 56,495 Add back: Selling, general and administrative 85,870 41,970 399,005 (527 ) 279,643 805,961 Impairment 211,612 211,612 Cost of revenue adjustments: Depreciation and amortization(3) 29,968 11,038 27,054 56,720 124,780 Amortization of upfront incentive consideration(4) 29,554 29,554 Restructuring and other costs(6) 12,730 12,730 Litigation and taxes, including penalties(7) 1,405 1,405 Stock-based compensation 866 866 Adjusted Gross Margin 629,497 165,056 507,071 (527 ) (57,694 ) 1,243,403 Selling, general and administrative (85,870 ) (41,970 ) (399,005 ) 527 (279,643 ) (805,961 ) Joint venture equity income 8,156 8,156 Joint venture intangible amortization(3a) 3,200 3,200 Selling, general and administrative adjustments: Depreciation and amortization(3) 1,588 729 11,820 144,085 158,222 Restructuring and other costs(6) 9,657 9,657 Stock-based compensation 3,242 3,242 Management fees(8) 7,260 7,260 Adjusted EBITDA $ 556,571 $ 123,815 $ 119,886 $ $ (173,093 ) $ 627,179 The components of Adjusted Capital Expenditures are presented below: Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 2010 2009 (Amounts in thousands) Additions to property and equipment $ 160,385 $ 168,744 $ 226,026 $ 193,262 $ 164,638 $ 130,028 $ 106,554 Capitalized implementation costs 27,602 48,686 58,814 78,543 59,109 33,666 20,401 Adjusted capital expenditures $ 187,987 $ 217,430 $ 284,840 $ 271,805 $ 223,747 $ 163,694 $ 126,955 The following tables present historical information from our statements of cash flows and set forth the reconciliation of cash provided by operating activities, the most directly comparable GAAP measure, to Adjusted Free Cash Flow: Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 2010 2009 (Amounts in thousands) Cash provided by operating activities $ 121,679 $ 252,062 $ 157,188 $ 312,336 $ 356,444 $ 380,928 $ 284,159 Cash used in investing activities (191,949 ) (189,220 ) (246,502 ) (236,034 ) (176,260 ) (184,787 ) (108,053 ) Cash (used in) provided by financing activities (59,289 ) 274,717 262,172 (25,120 ) (271,540 ) (48,500 ) (335,702 ) Table of Contents Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 2010 2009 (Amounts in thousands) Cash provided by operating activities $ 121,679 $ 252,062 $ 157,188 $ 312,336 $ 356,444 $ 380,928 $ 284,159 Additions to property and equipment (160,385 ) (168,744 ) (226,026 ) (193,262 ) (164,638 ) (130,028 ) (106,554 ) Free Cash Flow (38,706 ) 83,318 (68,838 ) 119,074 191,806 250,900 177,605 Adjustments: Restructuring and other costs(6)(10) 38,527 12,933 29,069 6,776 12,988 17,282 22,387 Litigation settlement and tax payments for certain items(7)(11) 69,286 46,221 150,584 100,000 Other litigation costs(7)(10) 11,148 10,668 17,419 51,602 21,601 1,600 1,405 Management fees(8)(10) 23,701 7,347 8,761 7,769 7,191 6,730 7,260 Travelocity working capital as impacted by the Expedia SMA and the sale of TPN(9) 100,145 23,928 Adjusted Free Cash Flow $ 204,101 $ 160,487 $ 160,923 $ 285,221 $ 233,586 $ 276,512 $ 208,657 (1) Net income (loss) attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interest held in (i) Sabre Travel Network Middle East of 40% for all periods presented, (ii) Sabre Australia Technologies I Pty Ltd ( Sabre Pacific ) of 49% through February 24, 2012, the date we sold this business, (iii) Travelocity.com LLC of approximately 9.5% through December 31, 2012, the date we merged this minority interest back into our capital structure and (iv) Sabre Seyahat Dagitim Sistemleri A.S. of 40% beginning in April 2014. See Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this prospectus. (2) Represents impairment charges to assets (see Note 7, Goodwill and Intangible Assets, to our audited consolidated financial statements included elsewhere in this prospectus) as well as $24 million in 2012, representing our share of impairment charges recorded by one of our equity method investments, Abacus. (3) Depreciation and amortization expenses (see Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this prospectus for associated asset lives): a. Acquisition related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures. b. Depreciation and amortization of property and equipment includes software developed for internal use. c. Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model. (4) Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to five years. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided upfront. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met. (5) Other, net primarily represents foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency. (6) Restructuring and other costs represents charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs. (7) Litigation settlement and tax payments for certain items represent charges or settlements associated with airline antitrust litigation as well as payments or reserves taken in relation to certain retroactive hotel occupancy and excise tax disputes (see Note 13, Contingencies, to our unaudited consolidated financial statements and Note 20, Commitments and Contingencies, to our audited consolidated financial statements included elsewhere in this prospectus). (8) We paid an annual management fee to TPG and Silver Lake in an amount between (i) $5 million and (ii) $7 million, the actual amount of which was calculated based upon 1% of Adjusted EBITDA, as defined in the management services agreement (the MSA ), earned by the company in such fiscal year up to a maximum of $7 million. In addition, the MSA provided for the reimbursement of certain costs incurred by TPG and Silver Lake, which are included in this line item. In connection with our initial public offering, we paid to TPG and Silver Lake, in the aggregate, a $21 million fee pursuant to the MSA. The MSA was terminated at the completion of our initial public offering. (9) Represents the impact of the Expedia SMA and the sale of TPN on working capital for the nine months ended September 30, 2014, which is primarily attributable to the migration of bookings from our technology platform to Expedia s platform and wind down activities associated with TPN. For the year ended December 31, 2013, represents the impact by the Expedia SMA on travel supplier liabilities of $19 million and accounts payable of $5 million for the period November 1, 2013 through December 31, 2013 compared to the period November 1, 2012 through December 31, 2012, which is primarily attributable to the migration of bookings from our technology platform to Expedia s platform during this period in 2013 (see Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting our Results and Comparability Travelocity ). Table of Contents (10) The adjustments to reconcile cash provided by operating activities to Adjusted Free Cash Flow reflect the amounts expensed in our statements of operations in the respective periods adjusted for cash and non-cash portions in instances where material. (11) Includes payment credits used by American Airlines to pay for purchases of our technology services during the nine months ended September 30, 2014 and the year ended December 31, 2013. The payment credits were provided by us as part of our litigation settlement with American Airlines (see Note 20, Commitments and Contingencies, to our audited consolidated financial statements included elsewhere in this prospectus). Also includes a $50 million payment to American Airlines made in the third quarter of 2014 in conjunction with the new Airline Solutions contract, which will be amortized as a reduction to revenue over the contract term. This payment reduces payment credits originally offered to American Airlines as a part of the litigation settlement in 2012, contingent upon the signature of a new reservation agreement, which were extended to include the combined American Airlines and US Airways reservation contract. The payment credits would have been utilized for future billings under the new agreement. Table of Contents MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis contains forward-looking statements about trends, uncertainties and our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors discussed in the sections entitled Risk Factors and Cautionary Note Regarding Forward-Looking Statements and elsewhere in this prospectus. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this prospectus under the captions Risk Factors, Selected Historical Consolidated Financial Data and Business. Overview We are a leading technology solutions provider to the global travel and tourism industry. We span the breadth of a highly complex $7 trillion global travel ecosystem currently through two business segments: (i) Travel Network, our global B2B travel marketplace for travel suppliers and travel buyers, and (ii) Airline and Hospitality Solutions, an extensive suite of leading software solutions primarily for airlines and hotel properties. Collectively, these offerings enable travel suppliers to better serve their customers across the entire travel lifecycle, from route planning to post-trip business intelligence and analysis. Items that are not allocated to our business segments are identified as corporate and include primarily certain shared technology costs as well as stock-based compensation expense, litigation costs related to occupancy or other taxes and other items that are not identifiable with one of our segments. On December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com and on January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. See Summary Recent Developments. We will reclassify and report the Travelocity segment, which was comprised of a portfolio of online consumer travel e-commerce businesses through which we provided travel content and booking functionality primarily for leisure travelers, as discontinued operations in our 2014 Annual Report on Form 10-K as the segment was considered held for sale as of December 31, 2014. Through our Travel Network business, we process hundreds of millions of transactions annually, connecting the world s leading travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines and tour operators, with travel buyers in a comprehensive travel marketplace. We offer efficient, global distribution of travel content from approximately 125,000 travel suppliers to approximately 400,000 online and offline travel agents. To those agents, we offer a platform to shop, price, book and ticket comprehensive travel content in a transparent and efficient workflow. We also offer value-added solutions that enable our customers to better manage and analyze their businesses. Through our Airline and Hospitality Solutions business, we offer travel suppliers an extensive suite of leading software solutions, ranging from airline and hotel reservations systems to high-value marketing and operations solutions. These solutions include re-accommodating passengers during irregular flight operations and managing day-to-day hotel operations. These solutions allow our customers to market, distribute and sell their products more efficiently, manage their core operations, and deliver an enhanced travel experience. Through our complementary Travel Network and Airline and Hospitality Solutions businesses, we believe we offer the broadest, end-to-end portfolio of technology solutions to the travel industry. Our portfolio of technology solutions has enabled us to become the leading end-to-end technology provider in the travel industry. For example, we are one of the largest GDS providers in the world, with a 36% share of GDS-processed air bookings in 2013. More specifically, we are the #1 GDS provider in North America and also in higher growth markets such as Latin America and APAC, in each case based on GDS-processed air bookings in 2013. In those three markets, our GDS-processed air bookings share was approximately 50% on a combined basis in 2013. In Airline and Hospitality Solutions, we believe we have the most comprehensive portfolio of solutions. In 2013, we had the largest third-party hospitality CRS room share based on our approximately 27% Table of Contents share of third-party hospitality CRS hotel rooms distributed through our GDS, and, according to T2RL PSS data for 2012, we had the second largest airline reservations system globally. We also believe that we have the leading portfolio of airline marketing and operations products across the solutions that we provide A significant portion of our revenue is generated through transaction based fees that we charge to our customers. For Travel Network, this fee is in the form of a transaction fee for bookings on our GDS; for Airline and Hospitality Solutions, this fee is a recurring usage-based fee for the use of our SaaS and hosted systems, as well as implementation fees and consulting fees. For the nine months ended September 30, 2014 and 2013, we recorded revenue of $2,229 million and $2,303 million, respectively, net income attributable to Sabre Corporation of $23 million and loss of $127 million respectively, and Adjusted EBITDA of $617 million and $584 million, respectively, reflecting a 1% and (6)% net income (loss) margin and a 28% and 25% Adjusted EBITDA margin, respectively. For the nine months ended September 30, 2014, Travel Network contributed 63%, Airline and Hospitality Solutions contributed 25%, and Travelocity contributed 12% of our revenue (excluding intersegment eliminations). During this period, shares of Adjusted EBITDA for Travel Network, Airline and Hospitality Solutions, and Travelocity were approximately 77%, 25% and (2)%, respectively (excluding corporate overhead allocations such as finance, legal, human resources and certain information technology shared services). See Summary-Recent Developments regarding our Travelocity business segment moving to discontinued operations. We recorded revenue of $3,050 million and $2,974 million, net loss attributable to Sabre Corporation of $100 million and $611 million and Adjusted EBITDA of $791 million and $787 million, reflecting a 3% and 21% net loss margin and a 26% and 26% Adjusted EBITDA margin, for the years ended December 31, 2013 and 2012, respectively. For the year ended December 31, 2013, Travel Network contributed 58%, Airline and Hospitality Solutions contributed 23%, and Travelocity contributed 19% of our revenue (excluding intersegment eliminations). During this period, shares of Adjusted EBITDA were approximately 77%, 21% and 2% for Travel Network, Airline and Hospitality Solutions and Travelocity, respectively (excluding corporate overhead allocations such as finance, legal, human resources and certain information technology shared services). For the year ended December 31, 2012, Travel Network contributed 59% and 77%, Airline and Hospitality Solutions contributed 20% and 17%, and Travelocity contributed 21% and 6% of our revenue (excluding intersegment eliminations) and Adjusted EBITDA (excluding corporate overhead allocations), respectively. See Summary Recent Developments regarding our Travelocity business segment moving to discontinued operations. For additional information regarding Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, see Non-GAAP Financial Measures and Summary Historical and Pro Forma Consolidated Financial and Other Data. Factors Affecting our Results and Comparability The following is a discussion of trends that we believe are the most significant opportunities and challenges currently impacting our business and industry. The discussion also includes management s assessment of the effects these trends have had and are expected to have on our results of continuing operations. This information is not an exhaustive list of all of the factors that could affect our results and should be read in conjunction with the factors referred to in the sections entitled Risk Factors and Cautionary Note Regarding Forward-Looking Statements included elsewhere in this prospectus. Travel volumes and the travel industry Our business and results of operations are dependent upon travel volumes and the overall health of the travel industry, particularly in North America. The travel industry has shown strong and resilient expansion with growth rates typically outperforming general macroeconomic performance. For example, based on 40 years of IATA Traffic data, air traffic has historically grown at an average rate of approximately 1.5x the rate of global GDP growth. Although the global economic downturn significantly impacted the travel industry, conditions have Table of Contents generally improved in the last several years. For example, although hotel sales are still hampered by an economic environment characterized by austerity and consumer caution, other less expensive suppliers, including LCC/hybrids, are benefiting. Tourism flows and travel spending have returned to growth as developed markets, particularly in the United States, Japan and Europe, recover from the global economic downturn. According to the Euromonitor Report, business-related travel by U.S. residents has increased since the global economic downturn, reaching 229 million trips in 2013 compared to 223 million trips in 2010. According to IATA Traffic, global airline passenger volume has grown at a 6% CAGR from 2009 to 2013. However, in recent years, several airlines, especially in the United States, have implemented capacity reductions in response to slowing customer demand following the global economic downturn and in order to improve pricing power. These capacity reductions have resulted in lower inventory and higher ticket prices, amid increased airline industry consolidation. Geographic mix We have a leading share of GDS-processed air bookings in the largest travel market, North America (55%), as well as in two large growth markets, Latin America (57%) and APAC (39%) in 2013. See Method of Calculation for an explanation of the methodology underlying our GDS-processed air bookings share calculation. For the year ended December 31, 2013, we derived approximately 58% of our revenue from the United States, 16% from Europe and 26% from the rest of the world. For the year ended December 31, 2012, we derived approximately 62% of our revenue from the United States, 16% from Europe and 22% from the rest of the world. There are structural differences between the geographies in which we operate. Due to our geographic concentration, our results of operations are particularly sensitive to factors affecting North America. For example, booking fees per transaction in North America have traditionally been lower than those in Europe. By growing internationally with our TMC and OTA customers and expanding the travel content available on our GDS to target regional traveler preferences, we anticipate that we will maintain share in North America and grow share in Europe, APAC and Latin America. Continued focus by travel suppliers on cost-cutting and exerting influence over distribution Travel suppliers continue to look for ways to decrease their costs and to increase their control over distribution. Airline consolidations, pricing pressure during contract renegotiations and the use of direct distribution may continue to subject our business to challenges. The shift from indirect distribution channels, such as our GDS and Travelocity, to direct distribution channels, may result from increased content availability on supplier-operated websites or from increased participation of meta-search engines, such as Kayak and Google, which direct consumers to supplier-operated websites. This trend may adversely affect our Travel Network contract renegotiations with suppliers that use alternative distribution channels. For example, airlines may withhold part of their content for distribution exclusively through their own direct distribution channels or offer more attractive terms for content available through those direct channels. Similarly, some airlines have also limited the fare content information they distribute through OTAs, including Travelocity. However, since 2010, we believe the rate at which bookings are shifting from indirect to direct distribution channels has slowed for a number of reasons, including the increased participation of LCC/hybrids in indirect channels. Over the last several years, notable carriers that previously only distributed directly, including JetBlue and Norwegian, have adopted our GDS. Other carriers such as EVA Airways and Virgin Australia have further increased their participation in a GDS. In 2012 and 2013, we believe the rate of shift away from GDSs in the United States stabilized at very low levels, although we cannot predict whether this low rate of shift will continue. Table of Contents These trends have impacted the revenue of Travel Network, which recognizes revenue for airline ticket sales based on transaction volumes, the revenue of Airline and Hospitality Solutions, which recognizes a portion of its revenue based on the number of PBs, and the results of Travelocity, the profitability of which is based on both the volume of sales and the amount spent by the traveler, depending upon the applicable revenue model. Simultaneously, this focus on cost-cutting and direct distribution has also presented opportunities for Airline and Hospitality Solutions. Many airlines have turned to outside providers for key systems, process and industry expertise and other products that assist in their cost cutting initiatives in order to focus on their primary revenue-generating activities. We renewed 24 out of 24 planned renewals in 2013 (representing approximately 25% of our Travel Network revenue for the twelve months ended December 31, 2013). We renewed 28 out of 28 planned renewals in 2014 (representing approximately 22% of our Travel Network revenue for the twelve months ended December 31, 2014). We have 38 planned renewals in 2015 (representing approximately 20% of our Travel Network revenue for the twelve months ended December 31, 2014). Although we renewed 28 out of 28 planned renewals in 2014 (representing approximately 22% of Travel Network revenue for the year ended December 31, 2014), we cannot guarantee that we will be able to renew our airline contracts in the future on favorable economic terms or at all. Shift to SaaS and hosted solutions by airlines and hotels to manage their daily operations Initially, large travel suppliers built custom in-house software and applications for their business process needs. In response to a desire for more flexible systems given increasingly complex and constantly changing technological requirements, reduced IT budgets and increased focus on cost efficiency, many travel suppliers turned to third-party solutions providers for many of their key technologies and began to license software from software providers. We believe that significant revenue opportunity remains in this outsourcing trend, as legacy in-house systems continue to migrate and upgrade to third-party systems. By moving away from one-time license fees to recurring monthly fees associated with our SaaS and hosted solutions, our revenue stream has become more predictable and sustainable. The SaaS and hosted models centralized deployment also allows us to save time and money by reducing maintenance and implementation tasks and lowering operating costs. Increasing importance of LCC/hybrids in Travel Network and Airline and Hospitality Solutions Hybrid and LCCs have become a significant segment of the air travel market, stimulating demand for air travel through low fares. LCC/hybrids have traditionally relied on direct distribution for the majority of their bookings. However, as these LCC/hybrids are evolving, many are increasing their distribution through indirect channels to expand their offering into higher-yield markets and to higher-yield customers, such as business and international travelers. Other LCC/hybrids, especially start-up carriers, may choose not to distribute through the GDS until wider distribution is desired. Over the last five years, we have added airline customers representing over 110 million PBs, including many innovative, fast-growing LCC/hybrids. According to Airbus, LCCs share of global air travel volume is expected to increase from 17% of revenue passenger kilometers in 2012 to 21% of revenue passenger kilometers by 2032. In our airline reservations products, our travel supplier customer base is weighted towards faster-growing LCC/hybrids, which represented approximately 29% of our 2013 PBs based on T2RL data, and we expect to continue to take advantage of this growth opportunity. In 2012, LCC/hybrids represented approximately 45% of our 2012 PBs. T2RL s LCC/hybrid group included JetBlue and Lion Air in 2012, which we consider LCC/hybrid carriers. T2RL s 2013 calculation excludes these carriers from the LCC/hybrid group. If these two carriers were included as LCC/hybrids in the 2013 calculation, LCC/hybrids would have represented approximately 41% of our 2013 PBs. Furthermore, because of the breadth of our solution set and our proportion of LCC/hybrid customers, we expect to be able to sell more of our solutions to our existing customers as they grow. As our growing LCC/hybrid customers demand additional solutions and capabilities, we expect Airline and Hospitality Solutions revenue to continue benefiting from the higher growth in these types of airlines. Table of Contents Travel buyers can shift their bookings to or from our Travel Network business Our Travel Network business relies on relationships with several large travel buyers, including TMCs and OTAs, to drive a large portion of its revenue. Although no individual travel buyer accounts for more than 10% of our Travel Network revenue, the five largest travel buyers of Travel Network were responsible for bookings that represented approximately 32% of our Travel Network revenue for the nine months ended September 30, 2014, and 32% and 36% of our Travel Network revenue for the years ended December 31, 2013 and 2012, respectively. Although our contracts with larger travel agencies often increase the amount of the incentive consideration when the travel agency processes a certain volume or percentage of its bookings through our GDS, travel buyers are not contractually required to book exclusively through our GDS during the contract term. Travel buyers may shift bookings to other distribution intermediaries for many reasons, including to avoid becoming overly dependent on a single source of travel content and increase their bargaining power with the GDS providers. For example, in late 2012, Expedia adopted a dual GDS provider strategy and shifted a sizeable portion of its business from our GDS to a competitor GDS, resulting in a year-over-year decline in our transaction volumes in 2013. Conversely, certain European OTAs including Unister, eTravel and Bravofly that did not previously use our GDS shifted a portion of their business to our GDS. Increasing travel agency incentive consideration Travel agency incentive consideration is a large portion of Travel Network expenses. The vast majority of incentive consideration is tied to absolute booking volumes based on transactions such as flight segments booked. Incentive consideration, which often increases once a certain volume or percentage of bookings is met, is provided in two ways, according to the terms of the agreement: (i) on a periodic basis over the term of the contract and (ii) in some instances, up front at the inception or modification of contracts, which is capitalized and amortized over the expected life of the contract. Although this consideration has been increasing in real terms, it has been relatively stable as a percentage of Travel Network revenue over the last four years, partially due to our focus on managing incentive consideration. We believe we have been effective in mitigating the trend towards increasing incentive consideration by offering value-added products and content, such as Sabre Red Workspace, a SaaS product available to our travel buyers that provides an easy to use interface along with many travel agency workflow and productivity tools. Growing demand for continued technology improvements in the fragmented hotel market Most of the hotel market is highly fragmented. Independent hotels and small- to medium-sized chains (groups of less than 300 properties) comprise a majority of hotel properties and available hotel rooms, with global and regional chains comprising the balance. Hotels use a number of different technology systems to distribute and market their products and operate efficiently. We offer technology solutions to all segments of the hospitality market, particularly independent hotels and small- to medium-sized chains. As these markets continue to grow, we believe independent hotel owners and operators will continue to seek increased connectivity and integrated solutions to ensure access to global travelers. Gartner estimates that technology spending by the hospitality industry is expected to reach $32 billion in 2017 (Gartner Enterprise), and we believe we will be well-positioned to meet this increased demand by continuing to provide affordable, web-based distribution technology. For example, we believe our innovative PMS, which is used by more than 4,500 properties globally, is one of the leading third-party web-based PMSs. Our PMS platform complements our industry-leading CRS platform and we expect to launch an integrated hospitality management suite that will centralize all distribution, operations and marketing aspects to facilitate increased accuracy, elimination of redundancies, and increased revenue and cost savings. We anticipate that this will contribute to the continued growth of Airline and Hospitality Solutions, which is ultimately dependent upon these hoteliers accepting and utilizing our products and services. Travelocity Travelocity s results were adversely impacted by several factors in recent years, including margin pressure from suppliers and reduced bookings on our websites. For the three years ended December 31, 2013, Travelocity Table of Contents experienced an approximately 9% compound annual revenue decline due to intense competition within the travel industry, including from supplier direct websites, online agencies and other suppliers of travel products and services. The increased level of competition led to declines in fees paid to us pursuant to new long-term supplier agreements with several large North American airlines in 2011 as well as lower transaction volumes. In 2012, transaction revenues were impacted by the loss of a key TPN customer late in the third quarter as a result of this customer s contract ending without renewal. This loss was partially offset by the addition of a new TPN customer, which signed a multi-year agreement. Lower transaction volumes on our websites also impacted our media revenue. Due to the reduction in site traffic associated with lower hotel transaction volumes and the change in customer demographics associated with the loss of a key TPN customer in 2012, Travelocity s relevance as an advertising platform and the media revenues we derived from advertising were negatively affected. In 2012, these challenges contributed to a significant decline year over year. For the year ended December 31, 2013, we experienced a $5 million decline in media revenue compared to 2012. Intense competition in the travel industry has historically led OTAs and travel suppliers to spend aggressively on online marketing. The amount we spent on online marketing declined in 2011 and was less effective at driving transaction revenue than it was in 2010. In response, we modified our customer acquisition strategy in 2012, refocusing on more efficient marketing channels and refreshing the approach to the brand, while reducing the amount spent on marketing. As a result of these and other factors, we initiated plans in the third quarter of 2013 to shift our Travelocity business in the United States and Canada away from a high fixed-cost model to a lower-cost, performance-based revenue structure. On August 22, 2013, Travelocity entered into an exclusive, long-term strategic marketing agreement with Expedia. Under the Expedia SMA, Expedia powered the technology platforms for Travelocity s existing U.S. and Canadian websites as well as provided Travelocity with access to Expedia s supply and customer service platforms. In connection with the Expedia SMA we also entered into the Put/Call Agreement. The Expedia SMA represented a strategic decision to reduce direct costs associated with Travelocity and to provide our customers with the benefit of Expedia s long-term investment in its technology platform as well as its supply and customer service platforms, which we expected to increase conversion and operational efficiency and allows us to shift our focus to Travelocity s marketing strengths. See Business Our Businesses Travelocity. Under the terms of the Expedia SMA and through the date of the sale of Travelocity.com to Expedia, Inc. on January 23, 2015, Expedia paid us a performance-based marketing fee that varied based on the amount of travel booked through Travelocity-branded websites powered by Expedia. The marketing fee we received was recorded as marketing fee revenue and the cost we incurred to promote the Travelocity brand and for marketing was recorded as selling, general and administrative expense in our results of operations. As a result of transactions being processed through Expedia s platform instead of the Travelocity platform, the revenue we derived from the merchant, agency and media revenue models declined. In connection with this migration, we no longer were considered the merchant of record for merchant transactions, and therefore we no longer collected cash from consumers, received transaction fees and commissions directly from travel suppliers, received service fees or insurance related revenue directly from customers or directly market or received media revenue from advertisers on our websites. We instead collected the marketing fee revenue from Expedia, which was net of costs incurred by Expedia in connection with these activities. Additionally, Travelocity no longer received incentive consideration from Travel Network as intersegment revenue, and Expedia was not required to use Travel Network for shopping and booking of non-air travel for Travelocity.com and Travelocity.ca. In the fourth quarter of 2013, we continued our restructuring of Travelocity by implementing a plan to restructure lastminute.com, the European portion of the Travelocity business, in order to allow lastminute.com to operate independently. During the year ended December 31, 2013, we recorded $6 million in restructuring charges associated with employee termination benefits related to this restructuring plan. We did not record material charges during the nine months ended September 30, 2014 associated with this restructuring plan. Table of Contents In February 2014, as a further step in our restructuring plans for Travelocity, we completed a sale of assets associated with Travelocity Partner Network ( TPN ), a business-to-business private white label website offering. In connection with the sale, Travelocity entered into a Transition Services Agreement ( TSA ) with the acquirer to provide services to maintain the websites and certain technical and administrative functions for the acquirer until a complete transition occurs or the TSA terminates. The proceeds to be received under the sale agreement and the TSA were allocated across these multiple agreements based on a relative fair value allocation. During the nine months ended September 30, 2014, we recorded a loss on disposition of $3 million which is included in restructuring charges in our consolidated statements of operations. On August 27, 2014, we announced that we were reviewing strategic options for lastminute.com as part of our strategy to focus on our core business as the world s leading technology provider to the global travel and tourism industry. On December 16, 2014, we announced that Bravofly Rumbo Group made a binding offer to acquire lastminute.com. The transaction is expected to be completed in the first quarter of 2015. We cannot provide any assurance that this transaction will occur on the terms described herein or at all. See Summary Recent Developments. On January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. Following the sale of Travelocity.com to Expedia, Inc., the Expedia SMA was terminated. See Summary Recent Developments. The acquirer of Travelocity.com has signed, and the acquirer of lastminute.com has committed to sign as part of its binding offer, a long term agreement with our Travel Network business to continue to utilize our GDS for bookings which will generate incentive consideration to be paid by us to the acquirers. As a result of the change in Travelocity s business model under the Expedia SMA, prior to the sale of Travelocity.com, and the sale of our TPN business, the revenue contribution from the Travelocity segment was in the range of 55% to 65% of 2013 levels after the Expedia SMA was implemented. Due to the elimination of the intersegment revenue between Travelocity and Travel Network, intersegment eliminations substantially decreased in connection with the Expedia SMA. See Components of Revenues and Expenses Intersegment Transactions. Correspondingly, we ceased certain internal processes, including back office functions, associated with our Travelocity-branded technology platforms and TPN business. Through the date of the sale of Travelocity.com to Expedia, Inc. on January 23, 2015, our costs from the Travelocity segment have significantly decreased and are in the range of 45% to 55% of 2013 levels. Ongoing costs in our Travelocity business in the United States and Canada primarily consisted of marketing the Travelocity website, marketing staff and support staff. As a result, our plan resulted in improved margins and profitability for our Travelocity segment. The implementation of the Expedia SMA resulted in various restructuring costs, including asset impairments, exit charges including employee termination benefits and contract termination fees, and other related costs such as consulting and legal fees. As a result of this restructuring plan, we recorded $22 million in restructuring charges in our results of operations during the year ended December 31, 2013, which included $4 million of asset impairments, $12 million of employee termination benefits, and $6 million of other related costs. We did not record any material restructuring charges in our results of operations during the nine months ended September 30, 2014 or twelve months ended December 31, 2014 in connection with these transactions. Contract termination costs represent an estimate of costs we may incur as we negotiate with our vendors to terminate contracts and costs for contracts we are unable to renegotiate and receive no future benefit. The actual amount incurred may differ significantly from this estimate. Travelocity s working capital was impacted by the Expedia SMA and the sale of TPN. As of September 30, 2014 and December 31, 2013, we had approximately $107 million and $214 million, respectively, in total travel supplier liabilities of which $23 million and $129 million, respectively, represents the liability to travel suppliers in connection with Travelocity.com and TPN. This liability is being extinguished as a result of the Expedia SMA and the sale of TPN as we continue to pay travel suppliers for travel consumed that originated on our technology Table of Contents platforms. We no longer receive cash directly from consumers and do not incur a payable to travel suppliers for new bookings on our balance sheets. Subsequent to the Expedia SMA and the sale of TPN, our Travelocity-related working capital primarily consisted of amounts attributable to lastminute.com balances as well as amounts due from Expedia offset by payables for marketing and labor related costs. As described in Description of Certain Indebtedness Senior Secured Credit Facilities, we have used a portion of the proceeds from our Incremental Term Loan Facility for such working capital purposes. See Business Our Businesses Travelocity. Litigation and related costs We are involved in various claims, legal proceedings and governmental inquiries related to contract disputes, business practices, intellectual property and other commercial, employment and tax matters. We believe we have adequately accrued for such matters, and for the costs of defending against such matters, which have been and may continue to be expensive. However, litigation is inherently unpredictable and although we believe that our accruals are adequate and we have valid defenses in these matters, unfavorable resolutions could occur, which could have a material adverse effect on our results of operations or cash flows in a particular reporting period. See Business Legal Proceedings. On October 30, 2012, we entered into a settlement agreement to resolve the outstanding state and federal lawsuits with American Airlines filed in 2011 and, as a result of the terms of the settlement, among other things renewed our distribution agreement with American Airlines. The settlement and distribution agreement was approved by the court presiding over the restructuring proceedings for AMR Corporation, American Airlines parent company, pursuant to an order made final on December 20, 2012. We expensed $347 million in 2012 related to this settlement agreement. On April 21, 2011, US Airways sued us in federal court in the Southern District of New York alleging federal antitrust claims. We are also involved in an antitrust investigation by the DOJ relating to pricing and the conduct of our GDS business and in antitrust litigation involving hotel room prices. See Note 20, Commitments and Contingencies Legal Proceedings US Airways Antitrust Litigation, Department of Justice Investigation and Hotel Related Antitrust Proceedings, to our audited consolidated financial statements included elsewhere in this prospectus. See also Note 13, Contingencies Legal Proceedings US Airways Antitrust Litigation and DOJ Investigation, to our unaudited consolidated financial statements included elsewhere in this prospectus. Customer Mix We believe we have a broadly diversified customer mix which supports our stable revenue base. We serve two principal types of customers: travel suppliers, which we serve in both our Travel Network business and Airline and Hospitality Solutions business; and travel buyers, which we serve in our Travel Network business and who purchase a wide variety of travel content in our marketplace. Today, our Travel Network marketplace includes a diversified group of travel suppliers, including approximately 400 airlines, 125,000 hotel properties, 30 car rental brands, 50 rail carriers, 16 cruise lines and 200 tour operators. We connect these travel suppliers via our GDS platform to approximately 400,000 travel agents, spread globally across 145 countries. Importantly, none of our travel buyers or travel suppliers represented more than 10% of our total Travel Network revenue for the years ended December 31, 2013 and 2012. Additionally, our Airline and Hospitality Solutions segment represented approximately 225 airlines, 17,500 hotel properties, and more than 700 other customers, including airports, corporate aviation fleets, governments and tourism boards. Within our Airline and Hospitality Solutions business, no single customer represented more than 10% of total Airline and Hospitality Solutions revenues for the years ended December 31, 2013 and 2012. Due to the quality of our products and services, we have experienced a high level of historical Customer Retention in both our Travel Network and Airline and Hospitality Solutions businesses. In general, our business is characterized by non-exclusive multi-year agency and supplier contracts, with durations that typically range Table of Contents from three to five years for our major airline suppliers and five to ten years for our major travel agency customers in our Travel Network business, and in our Airline and Hospitality Solutions business, three to seven years among our airline customers and one to five years among our hospitality customers. Furthermore, our Travel Network airline supplier contracts expire at different times, with 38 planned renewals for fiscal year 2015. We renewed 24 out of 24 planned renewals in 2013 and 28 out of 28 planned renewals in 2014. A meaningful portion of our travel buyer agreements, typically representing approximately 15% to 20% of our bookings, are up for renewal in any given year. With respect to our Airline and Hospitality Solutions business, airline reservations contracts representing less than 5% of Airline Solutions expected 2014 revenue are scheduled for renewal in 2015 and airline reservation contracts representing approximately 2% of Airline Solutions expected 2014 revenue are scheduled for renewal in 2016. Airline reservations contracts representing approximately 9% of Airline Solutions expected 2014 revenue are scheduled for renewal in 2017. Hospitality Solutions contract renewals are relatively evenly spaced, with approximately one-third of contracts representing approximately one-third of Hospitality Solutions 2013 revenue coming up for renewal in any given year. For the year 2013, our Customer Retention rate was approximately 99% for Travel Network, 98% for Airline Solutions and 96% for Hospitality Solutions. We cannot guarantee that we will be able to renew our travel supplier or travel buyer agreements in the future on favorable economic terms or at all. Our revenue base is broadly diversified, with no single customer comprising more than 10% of our total revenues for the year ended December 31, 2013 or the year ended December 31, 2012. We are subject to a certain degree of revenue concentration among a portion of our customer base. The five largest travel buyers of Travel Network were responsible for bookings that represented approximately 32% of our Travel Network revenue for the nine months ended September 30, 2014, and 32% and 36% of our Travel Network revenue for the years ended December 31, 2013 and 2012, respectively. Our top five Airline and Hospitality Solutions customers represented 24% of our Airlines and Hospitality Solutions revenue for the nine months ended September 30, 2014, and 22% and 20% of our Airline and Hospitality Solutions revenues, for the years ended December 31, 2013 and 2012, respectively. Historical consolidation in the global airline industry, including the mergers of American Airlines and US Airways, Delta and Northwest Airlines, United Airlines and Continental Airlines, as well as Southwest Airlines and AirTran, have generally increased our revenue concentration. If additional consolidation in the airline industry were to occur in the future, our levels of revenue concentration may further increase. Revenue Models We employ several revenue models across our businesses with some revenue models employed in multiple businesses. Travel Network primarily employs the transaction revenue model. Airline and Hospitality Solutions primarily employs the SaaS and hosted and consulting revenue models, as well as the software licensing fee model to a lesser extent. Travelocity primarily employed two revenue models: (i) the merchant revenue model or our Net Rate Program (applicable to a majority of our hotel net rate revenues) and (ii) the agency revenue model (applicable to most of our airline, car and cruise commission revenues and a small portion of hotel commission revenues). In connection with the Expedia SMA, Travelocity employed the marketing fee revenue model (applicable to revenue generated through Travelocity-branded websites operated by Expedia). Travel Network and, historically, Travelocity also, employed the media revenue model (applicable to advertising revenues). We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. Transaction Revenue Model This model accounts for substantially all of Travel Network s revenue. We define a Direct Billable Booking as any booking that generates a fee directly to Travel Network. These include bookings made through our GDS (e.g., air, car and hotel bookings) and through our joint venture partners in cases where we are paid directly by the travel supplier. Under this model, a transaction occurs when a travel agency or corporate travel department books, or reserves, a travel supplier s product on our GDS, for which we receive a fee. Transaction fees include, but are not limited to, transaction fees paid by travel suppliers for selling their inventory through our GDS and transaction fees paid by travel agency subscribers related to their use of our GDS. We receive revenue from the travel supplier and the travel agency according to the commercial arrangement with each. Table of Contents Transaction revenue for airline travel reservations is recognized at the time of the booking of the reservation, net of transaction fee reserves for estimated future cancellations. Our transaction fee cancellation reserve was $8 million at December 31, 2013 and December 31, 2012. Transaction revenue for car rental, hotel bookings and other travel services is recognized at the time the reservation is used by the customer. SaaS and Hosted Revenue Model The SaaS and hosted revenue model is the primary revenue model employed by Airline and Hospitality Solutions. This revenue model applies to situations where we host software solutions on our own secure platforms or deploy it through our SaaS solutions, and we maintain the software as well as the infrastructure it employs. Our customers pay us an implementation fee and a recurring usage-based fee for the use of such software pursuant to contracts with terms that typically range between three and ten years and generally include minimum annual volume requirements. This usage-based fee arrangement allows our customers to pay for software normally on a monthly basis to the extent that it is used. Similar contracts with the same customer which are entered into at or around the same period are analyzed for revenue recognition purposes on a combined basis. Revenue from implementation fees is generally recognized over the term of the agreement. The amount of periodic usage fees is typically based on a metric relevant to the software purchased. We recognize revenue from recurring usage-based fees in the period earned. Over the last several years, our customers have shifted toward the SaaS and hosted revenue model as license fee contracts expire, and we expect to continue to facilitate the shift from license fee contracts to the SaaS and hosted revenue model going forward. Consulting Revenue Model Airline and Hospitality Solutions offerings that utilize the SaaS and hosted revenue model are sometimes sold as part of multiple-element agreements for which we also provide professional services. Our professional services consist primarily of consulting services focused on helping customers achieve better utilization of and return on their software investment. Often, we provide consulting services during the implementation phase of our SaaS solutions. We account for consulting service revenue separately from implementation and recurring usage-based fees, with value assigned to each element based on its relative selling price to the total selling price. We perform a market analysis on a periodic basis to determine the range of selling prices for each product and service. The revenue for consulting services is generally recognized over the period the consulting services are performed. Software Licensing Fee Revenue Model The software licensing fee revenue model is also utilized by Airline and Hospitality Solutions. Under this model, we generate revenue by charging customers for the installation and use of our software products. Some contracts under this model generate additional revenue for the maintenance of the software product. When software is sold without associated customization or implementation services, revenue from software licensing fees is recognized when all of the following are met: (i) the software is delivered, (ii) fees are fixed or determinable, (iii) no undelivered elements are essential to the functionality of delivered software, and (iv) collection is probable. When software is sold with customization or implementation services, revenue from software licensing fees is recognized based on the percentage of completion of the customization and implementation services. Fees for software maintenance are recognized ratably over the life of the contract. We are unable to determine vendor-specific objective evidence of fair value for software maintenance fees. Therefore, when fees for software maintenance are included in software license agreements, revenue from the software license, customization, implementation and the maintenance are recognized ratably over the related contract term. Travelocity Revenue Models The Marketing Fee, Merchant, Agency and Media Revenue Models are primarily utilized by the Travelocity segment and effective with the dispositions of Travelocity.com and lastminute.com in 2015 will no longer be utilized. Marketing Fee Revenue Model With the implementation of Expedia s technology for our U.S. and Canadian websites beginning late in 2013, Expedia paid us a performance-based marketing fee that varied based on the amount of travel booked through Travelocity-branded websites powered by Expedia. The marketing fee we received was recorded as revenue and the costs we incurred for marketing and to promote the Travelocity brand were recorded as selling, general and administrative expense in our results of operations. See Factors Affecting our Results and Comparability Travelocity. Table of Contents Merchant Revenue Model The merchant revenue model or the Net Rate Program has been used by Travelocity, except to the extent the marketing fee revenue model applies. We primarily use this model for revenue from hotel reservations and dynamically packaged combinations of travel components. Pursuant to this model, we are the merchant of record for credit card processing for travel accommodations. Even though we are the merchant of record for these transactions, we do not purchase and resell travel accommodations, and we do not have any obligations with respect to the travel accommodations we offer online that we do not sell. Instead, we act as an intermediary by entering into agreements with travel suppliers for the right to market their products, services and other offerings at pre-determined net rates. We market net rate offerings to travelers at prices that include an amount sufficient to pay the travel supplier for providing the travel accommodations and any occupancy and other local taxes, as well as additional amounts representing our service fees, which is how we generate revenue under this model. Under this revenue model, we require prepayment by the traveler at the time of booking. Travelocity has recognized net rate revenue for stand-alone air travel at the time the travel is booked with a reserve for estimated future canceled bookings. Revenues from vacation packages and car rentals as well as hotel net rate revenues are recognized at the time the reservation is used by the consumer. For net rate and dynamically packaged combinations sold through Travelocity, we record net rate revenues based on the total amount paid by the customer for products and services, net of our payment to the travel supplier. At the time a customer makes and prepays a reservation, we accrue a supplier liability based on the amount we expect to be billed by our travel suppliers. In some cases, a portion of Travelocity s prepaid net rate and travel package transactions goes unused by the traveler. In these circumstances, Travelocity may not be billed the full amount of the accrued supplier liability. Therefore, we reduce the accrued supplier liability for amounts aged more than six months after the reservation goes unused and record the aged amount as revenue if certain conditions are met. Our process for determining when aged amounts may be recognized as revenue includes consideration of key factors such as the age of the supplier liability, historical billing and payment information, among others. See Factors Affecting our Results and Comparability Travelocity. Agency Revenue Model This model has been employed by Travelocity, except to the extent the marketing fee revenue model applies, and applies to revenues generated via commissions from travel suppliers for reservations made by travelers through our websites. Under this model, we act as an agent in the transaction by passing reservations booked by travelers to the relevant airline, hotel, car rental company, cruise line or other travel supplier, while the travel supplier serves as merchant of record and processes the payment from the traveler. Under the agency revenue model, Travelocity has recognized commission revenue for stand-alone air travel at the time the travel is booked with a reserve for estimated future canceled bookings. Commissions from car and hotel travel suppliers are recognized upon the scheduled date of travel consumption. We record car and hotel commission revenue net of an estimated reserve for cancellations, no-shows and uncollectable commissions. As of December 31, 2013 and 2012, our reserve was approximately $2 million and $3 million, respectively. See Factors Affecting our Results and Comparability Travelocity. Media Revenue Model The media revenue model has been used to record advertising revenue from entities that advertise products on Travelocity s websites, except to the extent the marketing fee revenue model applies, and, to a lesser extent, on our GDS. Advertisers use two types of advertising metrics: (i) display advertising and (ii) action advertising. In display advertising, advertisers usually pay based on the number of customers who view the advertisement, and are charged based on cost per thousand impressions. In action advertising, advertisers usually pay based on the number of customers who perform a specific action, such as click on the advertisement, and are charged based on the cost per action. Advertising revenues are recognized in the period that the advertising impressions are delivered or the click-through or other specific action occurs. See Factors Affecting our Results and Comparability Travelocity. Table of Contents Components of Revenues and Expenses Revenues Travel Network Travel Network primarily generates revenues from the transaction revenue model, as well as revenue from certain services we provide our joint ventures and the sale of aggregated bookings data to carriers. See Revenue Models. Airline and Hospitality Solutions Airline and Hospitality Solutions primarily generates revenue from the SaaS and hosted revenue model, the consulting revenue model, as well as the software licensing fee model to a lesser extent. Over the last several years, our customers have shifted toward the SaaS and hosted revenue model as license fee contracts expire, and we expect to continue to facilitate the shift from license fee contracts to the SaaS and hosted revenue model going forward. See Revenue Models. Travelocity Travelocity generated transaction revenue through the merchant revenue model and the agency revenue model, and non-transaction revenue, in each case, except to the extent the marketing fee model applied. See Factors Affecting our Results and Comparability Travelocity. Transaction revenue comprised of (i) stand-alone air transaction revenue (i.e., revenue from the sale of air travel without any other products) and (ii) other transaction revenue (i.e., revenue from hotel suppliers, packages which include multiple travel products, lifestyle products such as theatre tickets and services). Except to the extent the marketing fee model applied, Travelocity also generated revenues from fees from offline (e.g., call center agent transacted) bookings for air and packages and insurance revenues from third-party insurance providers whose air, total trip and cruise insurance we offer on our websites. Additionally, Travelocity generated intersegment transaction revenue from Travel Network, consisting of incentive consideration earned for Travelocity transactions processed through our GDS and fees paid by Travel Network and Airline and Hospitality Solutions for corporate trips booked through the Travelocity online booking technology. For the nine months ended September 30, 2014, intersegment revenue substantially decreased in connection with the Expedia SMA. Intersegment transaction revenue is eliminated in consolidation. Non-transaction revenue consisted of advertising revenue from the media revenue model, paper ticket fees and services, and change and reissue fees. Cost of Revenue Travel Network Travel Network cost of revenues consists primarily of: Incentive Consideration payments or other consideration to travel agencies for reservations made on our GDS which have accrued on a monthly basis. Incentive consideration provided on a periodic basis over the term of the contract, is recorded to cost of revenue. Travel Network provides incentive consideration to Travelocity for Travelocity transactions processed through our GDS. Intersegment revenue substantially decreased in connection with the Expedia SMA. Intersegment expense is eliminated in consolidation. See Components of Revenues and Expenses Intersegment Transactions. Technology Expenses data processing, data center management, application hosting, applications development and maintenance and related charges. Table of Contents Labor Expenses salaries and benefits paid to employees supporting the operations of the business. Other Expenses includes services purchased, facilities and corporate overhead. Airline and Hospitality Solutions Airline and Hospitality Solutions cost of revenues consists primarily of: Labor Expenses salaries and benefits paid to employees for the development, delivery and implementation of software. Technology Expenses data processing, data center management, application hosting, applications development and maintenance and related charges resulting from the hosting of our solutions. Other Expenses includes services purchased, facilities and other costs. Travelocity Except as described below, Travelocity cost of revenue has consisted primarily of: Volume Related Expenses customer service costs; credit card fees and technology fees; charges related to fraudulent bookings and compensation to customers, i.e., for service related issues. Technology Expenses data processing, data center management, applications development, maintenance and related charges. Labor Expenses salaries and benefits paid to employees supporting the operations of the business. Other Expenses includes services purchased, facilities and other costs. Following the Expedia SMA, Travelocity did not incur significant cost of revenues with respect to Travelocity s existing websites in the United States and Canada. Corporate Corporate cost of revenue includes certain shared technology costs as well as stock-based compensation expense, litigation expenses associated with occupancy or other taxes and other items that are not identifiable with one of our segments. Depreciation and amortization Cost of revenue includes depreciation and amortization associated with property and equipment; software developed for internal use that supports our revenue, businesses and systems; amortization of contract implementation costs which relates to Airlines and Hospitality Solutions; and intangible assets for technology purchased through acquisitions or established with our take-private transaction. Amortization of upfront incentive consideration We provide upfront payments or other consideration to travel agencies for reservations made on our GDS which are capitalized and amortized over the expected life of the contract. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of personnel-related expenses for employees that sell our services to new customers and administratively support the business, commission payments made to travel agency and distribution partners of Travelocity, advertising and promotional costs primarily for Travelocity, certain settlement costs and costs to defend legal disputes, bad debt expense, depreciation and amortization and Table of Contents other costs. In connection with the Expedia SMA, Travelocity no longer incurred significant non-marketing related expenses; instead, the marketing fee we received under the Expedia SMA is net of costs incurred by Expedia in connection with these activities. The marketing costs we incurred to promote the Travelocity brand are recorded as selling, general and administrative expenses. Intersegment Transactions We account for significant intersegment transactions as if the transactions were with third parties, that is, at estimated current market prices. The majority of the intersegment revenues and cost of revenues are between Travelocity and Travel Network, consisting mainly of accruals for incentive consideration, net of data processing fees incurred, by Travel Network to Travelocity for transactions processed through our GDS, transaction fees paid by Travelocity to Travel Network for transactions facilitated through our GDS in which the travel supplier pays Travelocity directly, and fees paid by Travel Network to Travelocity for corporate trips booked through the Travelocity online booking technology. During the second quarter of 2014, Travel Network charged Travelocity a fee of approximately $7 million for not meeting certain minimum booking level requirements. This fee was recorded as revenue on Travel Network and expensed on Travelocity in our segment results and is eliminated in consolidation. In addition, Airline and Hospitality Solutions pays fees to Travel Network for airline and hotel segments booked through our GDS. Due to the elimination of the intersegment revenue between Travelocity and Travel Network with the Expedia SMA, intersegment eliminations have substantially decreased for the nine months ended September 30, 2014 compared to the prior year. See Note 14, Segment Information, to our unaudited consolidated financial statements included elsewhere in this prospectus. Matters Affecting Comparability Mergers and Acquisitions Our results of operations have been affected by mergers and acquisitions as summarized below. Mergers and Acquisitions in 2014 On September 11, 2014, we acquired the assets of Genares, a global, privately-held hospitality technology company, to further strengthen Sabre s position as a leading technology partner to hoteliers worldwide. The acquisition added more than 2,300 independent and chain hotel properties to Sabre s existing Hospitality Solutions portfolio. Mergers and Acquisitions in 2013 We had no acquisitions in the year ended December 31, 2013. Mergers and Acquisitions in 2012 In the third quarter of 2012, we acquired all of the outstanding stock and ownership interests of PRISM, a leading provider of end-to-end airline contract business intelligence and decision support software. The acquisition, which adds to our portfolio of products within the Airline and Hospitality Solutions, allows for new relationships with airlines and adds to our existing business intelligence capabilities. Mergers and Acquisitions in 2011 In the first quarter of 2011, we completed the acquisition of Zenon N.D.C., Limited, a provider of GDS services to travel agents in Cyprus. This acquisition further expands Travel Network within Europe. In the second quarter of 2011, we completed the acquisition of SoftHotel, Inc., a provider of web-based property management solutions for the hospitality industry. This acquisition brings Airline and Hospitality Solutions closer to a fully integrated web-based solution that combines distribution, marketing and operations into a single platform for hotel customers. Table of Contents Dispositions Impacting Results from Continuing Operations Dispositions in 2014 In February 2014, as a further step in our restructuring plans for Travelocity, we completed a sale of assets associated with TPN. In connection with the sale, Travelocity entered into a TSA with the acquirer to provide services to maintain the websites and certain technical and administrative functions for the acquirer until a complete transition occurs. The proceeds to be received under the sale agreement and the TSA were allocated across these multiple agreements based on a relative fair value allocation which resulted in no gain or loss on the sale. Dispositions in 2013 On June 18, 2013, we completed the sale of certain assets of TBiz operations to a third-party, which resulted in reduced revenue and expenses for Travelocity in 2013 compared to 2012. TBiz provides managed corporate travel services for corporate customers. We recorded a loss on the sale of $3 million, net of tax, including the write-off of $9 million of goodwill attributed to TBiz based on the relative fair value to the Travelocity North America reporting unit, in our consolidated statement of operations. Dispositions in 2012 On February 24, 2012, we completed the sale of our 51% stake in Sabre Pacific, an entity jointly owned by a subsidiary of Sabre (51%) and Abacus (49%), to Abacus for $46 million of proceeds, which resulted in reduced revenue and expense for Travel Network in 2013 compared to 2012, and to a greater extent, in 2012 compared to 2011. Of the proceeds received, $9 million was for the sale of stock, $18 million represented the repayment of an intercompany note receivable from Sabre Pacific, which was entered into when the joint venture was originally established, and the remaining $19 million represented the settlement of operational intercompany receivable balances with Sabre Pacific and associated amounts we owed to Abacus. We recorded $25 million as gain on sale of business in our consolidated statements of operations. We have also entered into a license and distribution agreement with Sabre Pacific, under which it will market, sub-license, distribute, provide access to and support for our GDS in Australia, New Zealand and surrounding territories. Sabre Pacific is required to pay us an ongoing transaction fee based on booking volumes under this agreement. As of December 31, 2011, the assets and liabilities of Sabre Pacific were classified as held for sale on our consolidated balance sheet. For the year ended December 31, 2012, joint venture equity income included a $24 million impairment of goodwill recorded by Abacus associated with its acquisition of Sabre Pacific. Dispositions in 2011 During 2011, we completed no significant dispositions impacting our results of continuing operations. For a complete list of dispositions, including dispositions classified as discontinued operations, see Note 2, Discontinued Operations and Dispositions to our unaudited consolidated financial statements and Note 4, Discontinued Operations and Dispositions, to our audited consolidated financial statements included elsewhere in this prospectus. Seasonality The travel industry is seasonal in nature. Travel bookings for Travel Network, and the revenue we derive from those bookings, decrease significantly each year in the fourth quarter, primarily in December. We recognize air-related revenue at the date of booking and, because customers generally book their November and December holiday leisure-related travel earlier in the year, and business-related travel declines during the holiday season, revenue resulting from bookings is typically lower in the fourth quarter. Travelocity revenues were also impacted by the seasonality of travel bookings, but to a lesser extent since commissions from car and hotel travel Table of Contents suppliers and net rate revenue for hotel stays and vacation packages are recognized at the date of travel. There is a slight increase in Travelocity revenues for the second and third quarters compared to the first and fourth quarters due to European travel patterns. Airline and Hospitality Solutions does not experience any significant seasonality patterns in revenue. Other Items Impacting Comparability Travelocity business segment moved to discontinued operations On December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com and on January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. See Summary Recent Developments. We will reclassify and report all of the businesses associated with the Travelocity segment as discontinued operations in our 2014 Annual Report on Form 10-K as the segment was considered held for sale as of December 31, 2014. Our historical results contained in this prospectus present the Travelocity segment as a continuing operation. Reduction of insurance sales fees On January 24, 2012, the U.S. Department of Transportation implemented new regulations that prohibit carriers and ticket agents from including additional optional services in connection with air transportation, a tour or tour component if the optional service is automatically added to the consumer s purchase if the consumer takes no other action (i.e., if the consumer does not opt-out ). Prior to the effectiveness of this regulation, we pre-checked the Yes box on Travelocity s websites for certain optional services such as travel insurance, while at the same time providing clear and conspicuous disclosure of the inclusion of such services, itemized pricing thereof and the option to remove such services prior to payment and check-out. The implementation of this regulation resulted in significantly fewer customers electing to purchase such services. For the year ended December 31, 2012, we experienced an $11 million, or 38%, decrease in revenue from insurance sales compared with the year ended December 31, 2011. Results of Operations The tables below set forth our consolidated statement of operations data for each of the periods presented. Certain amounts previously reported in our December 31, 2012 and 2011 financial statements have been reclassified to conform to the December 31, 2013 presentation as a result of discontinued operations. In June 2013, we sold certain assets of our Holiday Autos operations to a third party and in November 2013, we completed the closing of the remainder of the Holiday Autos operations such that it represented a discontinued operation. See Note 4, Discontinued Operations and Dispositions, to our audited consolidated financial statements included elsewhere in this prospectus. The impact on our revenue was a reduction of $65 million and $76 million for the years ended December 31, 2012 and 2011, respectively. The impact on our operating income was an increase of $12 million for the year ended December 31, 2012 and a reduction of less than $1 million for the year ended December 31, 2011. Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 (Amounts in thousands) Revenue $ 2,229,286 $ 2,303,399 $ 3,049,525 $ 2,974,364 $ 2,855,961 Cost of revenue 1,399,919 1,423,242 1,904,850 1,819,235 1,736,041 Selling, general and administrative 575,413 620,226 792,929 1,188,248 806,435 Impairment 138,435 138,435 573,180 185,240 Restructuring charges 2,325 15,889 36,551 Operating income (loss) 251,629 105,607 176,760 (606,299 ) 128,245 Interest expense, net (167,332 ) (209,653 ) (274,689 ) (232,450 ) (174,390 ) Loss on extinguishment of debt (33,538 ) (12,181 ) (12,181 ) Gain on sale of business 25,850 Joint venture equity income (loss) 9,367 7,873 12,350 (2,513 ) 23,501 Other, net 760 (1,099 ) (6,724 ) (1,385 ) 1,156 Income (loss) from continuing operations before income taxes 60,886 (109,453 ) (104,484 ) (816,797 ) (21,488 ) Provision (benefit) for income taxes 27,878 (5,229 ) (14,029 ) (195,071 ) 57,806 Income (loss) from continuing operations $ 33,008 $ (104,224 ) $ (90,455 ) $ (621,726 ) $ (79,294 ) Table of Contents Nine months ended September 30, 2014 and 2013 Revenue Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Revenue by Segment Travel Network $ 1,420,341 $ 1,381,105 $ 39,236 3 % Airline and Hospitality Solutions 571,975 522,794 49,181 9 % Travelocity 268,848 457,518 (188,670 ) (41 )% Eliminations (24,253 ) (58,018 ) 33,765 58 % Total Adjusted Revenue 2,236,911 2,303,399 (66,488 ) (3 )% Amortization of Expedia SMA incentive payments (7,625 ) (7,625 ) * *% Total revenue $ 2,229,286 $ 2,303,399 $ (74,113 ) (3 )% ** not meaningful Revenue decreased $74 million, or 3%, for the nine months ended September 30, 2014 compared to the same period in the prior year. Travel Network Revenue increased $39 million, or 3%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The $39 million increase in revenue primarily resulted from: a $20 million increase in transaction-based revenue to $1,242 million as a result of a 7 million increase in Direct Billable Bookings, or 3%, to 292 million for the nine months ended September 30, 2014. This increase was offset by a 1% decrease in the average booking fee primarily due to the resolution of a billing dispute with US Airways, the impact on our average booking fee from US Airways merger with American Airlines and the unfavorable political and economic environment in Venezuela. See Liquidity and Capital Resources Political and Economic Environment in Venezuela for a description of the impact of the environment in Venezuela to our business; a $12 million increase in other revenue primarily related to media and marketing services and also certain services we provide to our joint ventures; and a $7 million increase due to an intersegment fee charged by Travel Network to Travelocity in the second quarter of 2014 for not meeting certain minimum booking levels, which is a customary fee charged to travel agencies that process bookings through our GDS as a result of not meeting contractual minimum booking levels. This fee, which we do not expect to reoccur in subsequent periods, was recorded as revenue on Travel Network and expensed on Travelocity in our segment results and is eliminated in consolidation. Airline and Hospitality Solutions Revenue increased $49 million, or 9%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The $49 million increase in revenue primarily resulted from: a $22 million increase in Airline Solutions SabreSonic CSS revenue for the nine months ended September 30, 2014 compared to the same period in the prior year. PBs increased 27 million, or 8%, to 386 million for the nine months ended September 30, 2014 which resulted in an increase in revenue of $13 million. The increase in PBs was driven by growth from existing customers. In addition, we recognized $9 million in revenue during the three months ended September 30, 2014 associated with Table of Contents the extension of a services contract with a significant customer. This contract was extended in conjunction with a litigation settlement agreement with that customer in 2012. These increases were partially offset by a decrease in revenue from professional services; a $15 million increase in Airline Solutions commercial and operations solutions revenue, primarily the result of higher revenue from professional services combined with growth in operations solutions; and a $12 million increase in Hospitality Solutions revenue for the nine months ended September 30, 2014 compared to the same period in the prior year driven by an increase in CRS transactions. Travelocity Revenue decreased $189 million, or 41%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The decrease in revenue was primarily due to a $105 million decrease as a result of the restructuring of our Travelocity business discussed above, as well as a decrease of $83 million due to the sale of both Travelocity s TPN business in February of 2014 and TBiz in June of 2013. Eliminations Intersegment eliminations decreased $34 million, or 58%, for the nine months ended September 30, 2014 compared to the prior year due to a reduction in the amount of incentive consideration payable to Travelocity from Travel Network as a result of the change in Travelocity s business model. Air travel booked through our Travelocity-branded websites powered by Expedia is contractually required to be processed by Travel Network through the beginning of 2019. The reduction in incentive consideration payable was partially offset by the $7 million fee Travel Network charged to Travelocity discussed above. Cost of revenue Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Cost of revenue Travel Network $ 750,318 $ 728,496 $ 21,822 3 % Airline and Hospitality Solutions 336,429 339,554 (3,125 ) (1 )% Travelocity 84,722 179,623 (94,901 ) (53 )% Eliminations (16,754 ) (57,505 ) 40,751 71 % Total segment cost of revenue 1,154,715 1,190,168 (35,453 ) (3 )% Corporate 54,881 53,897 984 2 % Depreciation and amortization 157,146 150,441 6,705 4 % Amortization of upfront incentive consideration 33,177 28,736 4,441 15 % Total cost of revenue $ 1,399,919 $ 1,423,242 $ (23,323 ) (2 )% Cost of revenue decreased by $23 million, or 2%, for the nine months ended September 30, 2014 compared to the same period in the prior year. Travel Network Cost of revenue increased $22 million, or 3%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The increase primarily resulted from a $27 million increase in incentive consideration, partially offset by a decrease in labor and other costs. Airline and Hospitality Solutions Cost of revenue decreased $3 million, or 1%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The decrease is the result of a $11 million decrease in labor costs, partially offset by a $7 million increase in technology and transaction-related expenses driven by higher transaction volumes. Travelocity Cost of revenue decreased $95 million, or 53%, for the nine months ended September 30, 2014 compared to the same period in the prior year primarily due to the impact of the Expedia SMA and the sale of our TPN and TBiz businesses. The decrease in cost of revenue is primarily driven by reduced labor and call center costs, lower transaction-related expenses including credit card fees and lower data processing costs. Table of Contents Eliminations Intersegment eliminations decreased $41 million, or 71%, for the nine months ended September 30, 2014 compared to the prior year due to a reduction in the amount of incentive consideration payable to Travelocity from Travel Network as a result of the change in Travelocity s business model. Air travel booked through our Travelocity-branded websites powered by Expedia is contractually required to be processed by Travel Network through the beginning of 2019. Corporate Cost of revenue associated with corporate unallocated costs increased $1 million, or 2%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The increase is primarily due to a $13 million increase in unallocated labor and other costs and a $7 million settlement received from a service provider in the same period of the prior year, partially offset by a $19 million decrease in expenses associated with the general excise tax litigation with the State of Hawaii compared to the same period in the prior year. Depreciation and amortization Depreciation and amortization increased $7 million, or 4%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The increase is primarily due to the completion and amortization of software developed for internal use, partially offset by a decrease in amortization of intangible assets. Amortization of upfront incentive consideration Amortization of upfront incentive consideration increased $4 million, or 15%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The increase is primarily due to an increase in upfront consideration provided to travel agencies in the nine months ended September 30, 2014 compared to the prior year. Selling, general and administrative expenses Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Personnel $ 192,942 $ 213,813 $ (20,871 ) (10 )% Advertising and promotion 133,795 127,838 5,957 5 % Commission payments to affiliates 21,813 58,759 (36,946 ) (63 )% Bad debt 6,372 7,129 (757 ) (11 )% Management fees 23,701 5,221 18,480 354 % Other 130,715 127,630 3,085 2 % Depreciation and amortization 73,315 79,836 (6,521 ) (8 )% Eliminations (7,240 ) (7,240 ) * *% Total selling, general and administrative $ 575,413 $ 620,226 $ (44,813 ) (7 )% ** not meaningful Selling, general and administrative expenses decreased by $45 million, or 7%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The decreases in commission payments to affiliates of $37 million and personnel costs of $21 million are primarily the result of our Travelocity restructuring activities including the sale of our TPN business in February 2014. The decrease in depreciation and amortization of $7 million is driven by decreases in amortization of acquisition-related intangible assets. These decreases were partially offset by an $18 million increase in management fees paid to TPG and Silver Lake related to our initial public offering and a $6 million increase in advertising and promotion primarily in our Travelocity business in the U.S. and Canada in conjunction with the Expedia SMA. Table of Contents Impairment Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Impairment $ $ 138,435 $ (138,435 ) **% ** not meaningful In connection with the disposals of TBiz and Holiday Autos in the second quarter of 2013, we initiated an impairment analysis of goodwill and long lived assets in the Travelocity segment which resulted in impairment charges of $96 million associated with Travelocity North America and $42 million associated with Travelocity Europe. As a result of the impairment charges, the Travelocity segment had no remaining goodwill. Interest expense, net Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Interest expense, net $ 167,332 $ 209,653 $ (42,321 ) (20 )% Interest expense, net, decreased $42 million, or 20%, for the nine months ended September 30, 2014 compared to the same period in the prior year. The decrease is primarily due to the prepayments on our 2019 Notes and Term Loan C and a lower effective interest rate as a result of our repricing amendments completed in February 2014. In addition, interest expense decreased due to lower modification expenses and lower imputed interest expense related to payments made in the fourth quarter of 2013 for our litigation settlement payable to American Airlines. Loss on extinguishment of debt Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Loss on extinguishment of debt $ 33,538 $ 12,181 $ 21,357 **% ** not meaningful During the nine months ended September 30, 2014, we recognized losses on extinguishment of debt of $31 million in connection with the prepayments on our 2019 Notes and Term Loan C and $3 million related to the repricing of our Term Loan B completed in February 2014. During the nine months ended September 30, 2013, we recognized a loss on extinguishment of debt of $12 million as a result of our Amended and Restated Credit Agreement (see Liquidity and Capital Resources Senior Secured Credit Facilities ). Joint venture equity income Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Joint venture equity income $ 9,367 $ 7,873 $ 1,494 19 % Table of Contents Joint venture equity income increased by $1 million for the nine months ended September 30, 2014 compared to the same period in the prior year. Other (income) expenses, net Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Other (income) expenses, net $ (760 ) $ 1,099 $ (1,859 ) **% ** not meaningful Other income, net, increased $2 million for the nine months ended September 30, 2014 compared to the prior year. The increase was driven primarily by realized and unrealized foreign currency exchange gains. Provision (benefit) for income taxes Nine Months Ended September 30, 2014 2013 Change (Amounts in thousands) Provision (benefit) for income taxes $ 27,878 $ (5,229 ) $ 33,107 **% ** not meaningful Our effective tax rates for the nine months ended September 30, 2014 and 2013 were 46% and 5%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2014 as compared to the same period in 2013 was primarily due to the impairment of nondeductible goodwill in the prior year, the amount of current year losses for which no tax benefit can be recognized relative to the amount of pre-tax income and the impact of other discrete items, partially offset by the increase in forecasted earnings in lower tax jurisdictions. The differences between our effective tax rates and the U.S. federal statutory income tax rate primarily result from our geographic mix of taxable income in various tax jurisdictions as well as the discrete tax items referenced above. Years ended December 31, 2013, 2012 and 2011 Revenue Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Revenue by Segment Travel Network $ 1,821,498 $ 1,795,127 $ 1,740,007 $ 26,371 1 % $ 55,120 3 % Airline and Hospitality Solutions 711,745 597,649 522,692 114,096 19 % 74,957 14 % Travelocity 585,989 659,472 699,604 (73,483 ) (11 )% (40,132 ) (6 )% Total segment revenue 3,119,232 3,052,248 2,962,303 66,984 2 % 89,945 3 % Eliminations (69,707 ) (77,884 ) (106,342 ) 8,177 10 % 28,458 27 % Total revenue $ 3,049,525 $ 2,974,364 $ 2,855,961 $ 75,161 3 % $ 118,403 4 % Table of Contents 2013 compared to 2012 Revenue increased $75 million, or 3%, for the year ended December 31, 2013 compared with the year ended December 31, 2012. Travel Network Revenue increased $26 million, or 1%, for the year ended December 31, 2013 compared with the year ended December 31, 2012. The increase was driven by a $25 million increase in other revenue primarily from payments in connection with certain services provided to our joint ventures. Transaction-based revenue was flat at $1,590 million for the year ended December 31, 2013 compared to the prior year. We processed 368 million Direct Billable Bookings in 2013, representing a decrease of 12 million Direct Billable Bookings, or 3%, compared to 2012. This decrease was offset by a 3% increase in the average booking fee. Airline and Hospitality Solutions Revenue increased $114 million, or 19%, for the year ended December 31, 2013 compared with the year ended December 31, 2012. This $114 million increase in revenue primarily resulted from: a $48 million increase in Airline Solutions SabreSonic Customer Sales and Service ( SabreSonic CSS ) revenue for the year ended December 31, 2013 compared to the prior year. The increase in revenue was due to an increase of 73 million, or 18%, in processed reservations for PBs to 478 million in 2013. The increase in PBs was primarily due to new customers; a $54 million increase in Airline Solutions commercial and operations solutions revenue primarily the result of $25 million generated from our 2012 acquisition of PRISM and a $29 million increase in other airline software solutions, consulting and professional services; and a $12 million increase in Hospitality Solutions revenue for the year ended December 31, 2013 compared to prior year due to an increase in CRS transactions in 2013. Travelocity Revenue decreased $73 million, or 11%, for the year ended December 31, 2013 compared with the year ended December 31, 2012. This decrease in revenue primarily resulted from a $59 million decrease resulting from a 5% decline in transaction volumes and a 6% decline in average transaction value, primarily driven by the loss of a large TPN customer in 2012, and an $11 million decrease in revenue related to the disposition of TBiz during 2013. Media and advertising revenues also declined by $5 million in the year ended December 31, 2013 compared to the prior year. 2012 compared to 2011 Revenue increased $118 million, or 4%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. Travel Network Revenue increased $55 million, or 3%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. This $55 million increase in revenue primarily resulted from: a $41 million increase in revenue for certain services provided to our joint ventures; and an increase of $12 million in transaction-based revenue due to a 1% increase in the average booking fee partially offset by a decrease of 2 million, or less than 1%, on Direct Billable Bookings to 380 million in 2012. Airline and Hospitality Solutions Revenue increased $75 million, or 14%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. Table of Contents This $75 million increase in revenue primarily resulted from: a $36 million increase in Airline Solutions SabreSonic CSS revenue for the year ended December 31, 2012 compared to the prior year due primarily to an increase of 41 million, or 11%, in PBs to 405 million in 2012. The increase in PB volume was from existing and new customers; a $28 million increase in Airline Solutions commercial and operations solutions revenue as a result of $12 million of revenue growth generated from our 2012 acquisition of PRISM and a $16 million increase in other airline software solutions, consulting and professional services; and an $11 million increase in Hospitality Solutions revenue for the year ended December 31, 2012 compared to the prior year as a result of an increase in CRS transactions in 2012. Travelocity Revenue decreased $40 million, or 6%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. This $40 million decrease in revenue primarily resulted from: a decline of $22 million in transaction revenue driven by a 2% decline in transaction volumes and a 13% decline in average transaction value in North America. The decline in transaction volumes was primarily driven by the loss of a large TPN customer in 2012 and the decline in average transaction value was primarily due to the reduction of air insurance revenue as a result of changing the purchase of trip insurance on our website from opt-out to opt-in in early 2012 and the loss of a large TPN customer in 2012. These declines in North America were partially offset by a 6% increase in transaction volumes and an 8% increase in average transaction value in Europe; a decline of $11 million in media revenue in North America and Europe; and an $8 million decline in intersegment revenue primarily associated with incentive consideration received from Travel Network due to a loss of a large TPN customer during 2012. Intersegment revenue is eliminated in consolidation. Cost of revenue Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Travel Network $ 960,705 $ 951,264 $ 967,254 $ 9,441 1 % $ (15,990 ) (2 )% Airline and Hospitality Solutions 449,359 379,228 337,545 70,131 18 % 41,683 12 % Travelocity 232,500 245,670 251,814 (13,170 ) (5 )% (6,144 ) (2 )% Eliminations (68,990 ) (76,874 ) (105,259 ) 7,884 10 % 28,385 27 % Total segment cost of revenue 1,573,574 1,499,288 1,451,354 74,286 5 % 47,934 3 % Corporate 92,142 85,214 74,093 6,928 8 % 11,121 15 % Depreciation and amortization 202,485 198,206 172,846 4,279 2 % 25,360 15 % Amortization of upfront incentive consideration 36,649 36,527 37,748 122 0 % (1,221 ) (3 )% Total cost of revenue $ 1,904,850 $ 1,819,235 $ 1,736,041 $ 85,615 5 % $ 83,194 5 % 2013 compared to 2012 The total cost of revenue increased by $86 million, or 5%, for the year ended December 31, 2013 compared with the year ended December 31, 2012. Table of Contents Travel Network Cost of revenue increased $9 million, or 1%, for the year ended December 31, 2013 compared with the year ended December 31, 2012, which primarily resulted from: a $18 million increase in incentive consideration, in line with higher Direct Billable Bookings in regions with favorable booking fee rates; partially offset by a $5 million decrease in other operating expenses primarily related to the disposition of Sabre Pacific in February of 2012; and a $2 million decrease in labor costs to $173 million for the year ended December 31, 2013 compared to $175 million in the prior year. Airline and Hospitality Solutions Cost of revenue increased $70 million, or 18%, for the year ended December 31, 2013 compared with the year ended December 31, 2012, which primarily resulted from: a $48 million increase in labor costs to $276 million for the year ended December 31, 2013 compared to $228 million in the prior year. The increase was attributed to increased headcount to support 2013 implementations, increased customer support and maintenance, additional headcount associated with the acquisition of PRISM in August of 2012 and minor enhancements to our SaaS and hosted systems; and an increase of $12 million in technology-related expenses, driven by higher transaction volumes. Travelocity Cost of revenue decreased $13 million, or 5%, for the year ended December 31, 2013 compared with the year ended December 31, 2012, which primarily resulted from: a $10 million decline in services purchased due to lower call center costs related to the loss of a large TPN customer; a decline of $8 million in transaction-related fees as a result of lower transaction volumes; and a decline of $8 million in labor costs due to reductions in headcount; partially offset by a $12 million increase in other operating expenses primarily related to other fraud-related expenses and credit card chargebacks. Corporate Cost of revenue associated with corporate unallocated costs increased $7 million, or 8% for the year ended December 31, 2013 compared with the year ended December 31, 2012, primarily related to labor costs, which increased by $8 million to $20 million in 2013. Depreciation and amortization Cost of revenue increased $4 million, or 2%, for the year ended December 31, 2013 compared with the year ended December 31, 2012, which primarily resulted from: a $40 million increase in depreciation and amortization associated with the completion and amortization of software developed for internal use as well as capitalized implementation costs; and a $3 million increase in amortization of intangible assets related to the PRISM acquisition in August 2012; partially offset by a $38 million decrease in depreciation and amortization as the result of the impairment of certain property and equipment and intangible assets related to Travelocity at the end of 2012. Amortization of upfront incentive consideration Amortization of upfront incentive consideration of $37 million for the year ended December 31, 2013 was flat compared to the prior year. 2012 compared to 2011 The total cost of revenue increased by $83 million, or 5%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. Table of Contents Travel Network Cost of revenue decreased $16 million, or 2%, for the year ended December 31, 2012 compared with the year ended December 31, 2011, which primarily resulted from: a $27 million decrease in incentive consideration related to the sale of Sabre Pacific; and a decrease in labor costs of $2 million to $175 million for the year ended December 31, 2012 compared to $177 million in the prior year; partially offset by an $11 million increase in forward contract expenses. Airline and Hospitality Solutions Cost of revenue increased $42 million, or 12%, for the year ended December 31, 2012 compared with the year ended December 31, 2011, which primarily resulted from: an increase in labor costs of $34 million to $228 million for the year ended December 31, 2012 compared to $194 million in the prior year, attributable to increased headcount to support 2012 customer implementations, pending 2013 implementations, increased customer support, and labor costs for minor enhancement and maintenance to our SaaS and hosted systems; technology-related expenses increased $4 million, driven by higher transaction volumes, which were partially offset by lower rates resulting from a renegotiation of our contract with our primary technology provider; and a $3 million increase in other expenses driven by increased outside services purchased to support new customer implementations. Travelocity Cost of revenue decreased $6 million, or 2%, for the year ended December 31, 2012 compared with the year ended December 31, 2011, which primarily resulted from: a decrease of $11 million in labor costs to $75 million for the year ended December 31, 2012 compared to $87 million in the prior year, as a result of the completion of a customer implementation in the prior year; and $15 million of reduced bank service charges, credit card fees, and service compensation expenses due to lower merchant volumes; partially offset by $18 million in increased call center costs to provide overall customer support for new TPN customers added in 2011; and $5 million in increased data processing charges during the period. Corporate Cost of revenue associated with corporate unallocated costs increased by $11 million, or 15%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. The increase in cost of revenue was primarily the result of $25 million in back excise taxes, penalties and interest in 2012 mainly in connection with general excise tax litigation with the State of Hawaii (see Note 20, Commitment and Contingencies, to our audited consolidated financial statements included elsewhere in this prospectus) and a $9 million increase in shared technology-related expenses. These increases were offset by a $24 million decrease in labor costs to $13 million compared to $37 million in the prior year due to an increase of development labor charges to the segments. Depreciation and amortization Cost of revenue increased $25 million, or 15%, for the year ended December 31, 2012 compared with the year ended December 31, 2011, which primarily resulted from: a $22 million increase in depreciation and amortization primarily associated with the completion and amortization of software developed for internal use as well as capitalized implementation costs; and a $4 million increase in amortization of acquisition-related intangible assets. Amortization of upfront incentive consideration Amortization of upfront incentive consideration decreased by $1 million, or 3%, for the year ended December 31, 2013 compared to the prior year. Table of Contents Selling, general and administrative expenses Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Personnel $ 278,019 $ 261,560 $ 239,267 $ 16,459 6 % $ 22,293 9 % Advertising and promotion 151,589 160,837 187,492 (9,248 ) (6 )% (26,655 ) (14 )% Commission payments to affiliates 72,002 85,143 97,141 (13,141 ) (15 )% (11,998 ) (12 )% Litigation charges 346,515 (346,515 ) ** % 346,515 ** % Bad debt 9,030 4,465 3,670 4,565 102 % 795 22 % Other 177,179 212,201 158,595 (35,022 ) (17 )% 53,606 34 % Depreciation and amortization 105,110 117,527 120,270 (12,417 ) (11 )% (2,743 ) (2 )% Total selling, general and administrative $ 792,929 $ 1,188,248 $ 806,435 $ (395,319 ) (33 )% $ 381,813 47 % ** not meaningful 2013 compared to 2012 Selling, general and administrative expenses decreased $395 million, or 33%, for the year ended December 31, 2013 compared with the year ended December 31, 2012. This decrease in selling, general and administrative expenses was primarily driven by a $347 million litigation charge recorded during the year ended December 31, 2012 for the settlement of the state and federal cases with American Airlines, which did not reoccur in the year ended December 31, 2013. Additionally, legal fees within other expenses decreased $33 million as a result of the settlement of our dispute with American Airlines in 2012. These reductions within other expenses are offset by $7 million of costs incurred by Travelocity to enhance its offering and pursue a new TPN customer, which did not materialize. During the year ended December 31, 2013, we also had a decline of $13 million in commission payments to affiliates due to the loss of a large TPN partner in 2012. These declines are offset by increases in personnel-related expenses including $16 million in higher salaries and benefits attributed to increased corporate headcount to support the growth of the business and an increase in compensation costs in Travel Network attributed to higher variable compensation awards for employees as a result of improved overall performance. Depreciation and amortization decreased $12 million, or 11%, for the year ended December 31, 2013 compared to the prior year. The decrease was the result of the impairment of intangible assets related to Travelocity in the fourth quarter of 2012. 2012 compared to 2011 Selling, general and administrative expenses increased $382 million, or 47%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. This increase was primarily driven by $347 million of expenses related to the litigation settlement with American Airlines that occurred during the year ended December 31, 2012. Within other expenses is $47 million of increased legal fees and other costs associated with various legal disputes throughout 2012 and $3 million in increased services purchased to facilitate the move of a Travelocity call center to Poland. Personnel-related expenses increased $22 million as a result of $11 million in increased corporate headcount and variable compensation awards as well as $11 million of higher labor costs to support Travelocity. Partially offsetting these increases was a decrease of $12 million in commission payments to affiliates due to the loss of a large TPN partner in 2012 by Travelocity. Advertising and promotional costs declined due to reductions taken by Travelocity. Travelocity had a $27 million reduction in advertising spend driven by fewer purchases of non-brand search engine key words and other promotions. Table of Contents Impairment Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Impairment $ 138,435 $ 573,180 $ 185,240 $ (434,745 ) (76 )% $ 387,940 209 % 2013 compared to 2012 Impairment expense was $138 million for the year ended December 31, 2013. In the second quarter of 2013, we allocated $9 million and $36 million in goodwill to TBiz and Holiday Autos, which are assets within the Travelocity North America and Travelocity Europe reporting units, respectively. We therefore initiated an impairment analysis on the remainder of the goodwill associated with these reporting units. Further declines in our current projections of the discounted future cash flows of these reporting units and current market participant considerations led to a $96 million impairment in Travelocity North America and a $40 million impairment in Travelocity Europe which have been recorded in our results of operations. As of December 31, 2013, Travelocity had no remaining goodwill. 2012 compared to 2011 Impairment expense was $573 million for the year ended December 31, 2012 compared with $185 million for the year ended December 31, 2011. Travelocity goodwill was impaired by $63 million as a result of one of its competitors announcing plans to move towards offering hotel customers a choice of payment options which could adversely affect hotel margins over time. We therefore initiated an impairment analysis of Travelocity as of September 30, 2012. The expected change in the competitive business environment and the resulting impact on our current projections of the discounted future cash flows led to a $58 million impairment in Travelocity North America and a $5 million impairment in Travelocity Europe. In the fourth quarter of 2012, we continued to see further weakness in Travelocity s business performance resulting in lower projected revenues and declining margins for Travelocity North America and Travelocity Europe thus requiring an impairment assessment of Travelocity as of December 31, 2012. As a result, we recorded impairments on long-lived assets of $281 million for Travelocity North America, of which $30 million pertained to software developed for internal use, $7 million pertained to computer equipment $6 million related to capitalized implementation costs and the remainder related to definite-lived intangible assets. We also recorded impairments of $154 million for Travelocity Europe, of which $11 million pertained to software developed for internal use, $4 million pertained to computer equipment and the remainder related to definite lived intangible assets. We also recorded an additional goodwill impairment charge for Travelocity Europe for $65 million as a result of our updated analysis. In 2012, we further recorded $20 million of impairment related to leasehold improvements associated with a corporate building that is not occupied and for which we no longer anticipate being able to sublease to a third-party before the end of the lease term. During 2011, we recorded $185 million of impairment as Travelocity was impacted by a continuing decline in margins due to pressure from competitive pricing, reduced bookings and the resulting impact on our projections of the discounted future cash flows, as well as a still weak economic environment. Restructuring charges Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Restructuring charges $ 36,551 $ $ $ 36,551 **% $ **% ** not meaningful Table of Contents In the third quarter of 2013, we initiated plans to restructure our Travelocity business in connection with which we recorded restructuring charges totaling $28 million for the year ended December 31, 2013, which included $18 million of employee termination benefits, $4 million of asset impairments and $6 million of other related costs. $22 million of these restructuring charges was attributable to the restructuring of our Travelocity businesses in the United States and Canada in connection with the Expedia SMA and the remaining $6 million was attributable to employee termination benefits in connection with the restructuring of lastminute.com, the European portion of our Travelocity business. See Factors Affecting Our Results and Comparability Travelocity. In the fourth quarter of 2013, we also initiated a restructuring plan to simplify our technology organization, better align costs with our current business, reduce our spend on third-party resources, and to increase focus on product development. The majority of this plan will be completed in 2014. As a part of this restructuring plan, we will reduce our employee base by approximately 350 employees. We recorded a charge of $8 million associated with employee termination benefits in the fourth quarter of 2013 and do not expect to record material charges in 2014 related to this action. See Note 5, Restructuring Charges, to our audited consolidated financial statements included elsewhere in this prospectus. Interest expense, net Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Interest expense, net $ 274,689 $ 232,450 $ 174,390 $ 42,239 18 % $ 58,060 33 % 2013 compared to 2012 Interest expense, net, increased $42 million, or 18%, for year ended December 31, 2013 compared with the year ended December 31, 2012. We entered into multiple debt transactions during 2012 and 2013 that increased our overall effective interest rate and increased our debt levels which resulted in additional interest expense of $40 million during the year ended December 31, 2013. See Note 11, Debt Senior Secured Credit Facility, to our audited consolidated financial statements included elsewhere in this prospectus. Additionally, debt modification expenses and original issue discount amortization increased by $8 million during the year ended December 31, 2013 compared to the prior year. We also incurred $17 million of imputed interest related to a litigation settlement payable during the year ended December 31, 2013. Offsetting these increases was a $16 million reduction associated with accelerating the amortization of our debt issuance cost in 2012 as well as a $9 million increase in interest savings as a result of the maturity of certain of our interest rates swaps in 2012. See Note 12, Derivatives, to our audited consolidated financial statements included elsewhere in this prospectus. 2012 compared to 2011 Interest expense, net, increased $58 million, or 33%, for the year ended December 31, 2012 compared with the year ended December 31, 2011. The change was due to an increase in the interest rate spread on $2 billion of our term loan as a result of amendments to our credit agreements on February 28, 2012, May 9, 2012 and August 15, 2012, made in connection with the maturity dates of certain loans, as well as the issuance of $800 million of 8.5% senior secured notes due in 2019. In the first half of 2012, we extended the maturity of $284 million, or 57%, of our revolving credit facility to 2016 and also extended the maturity of $1,854 million, or 65%, of our term loan outstanding to 2017, with an increase in interest rate spread from the LIBOR plus 2.00% to LIBOR plus 5.75%. In the second quarter we issued $400 million of 8.5% senior secured notes due in 2019. In the third quarter of 2012, we paid down $773 million of our non-extended term loans maturing 2014 through the issuance of $375 million non-extended term loans maturing in 2017, which bears interest at a rate of LIBOR plus 6.00%, and $400 million of 8.5% senior secured notes due in 2019. Table of Contents The increase in interest rates reflected current market pricing for similarly rated debt offerings and resulted in a $49 million increase in interest expense. Additionally, we incurred $22 million of expense due to our issuance of senior secured notes in May and September 2012 at a rate of 8.5%. The increase was partially offset by a $14 million decrease as a result of paying down $324 million of senior secured notes on August 1, 2011. Loss on extinguishment of debt Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Loss on extinguishment of debt $ 12,181 $ $ $ 12,181 **% $ **% * not meaningful Loss on extinguishment of debt was $12 million for the year ended December 31, 2013 as a result of our debt restructuring transaction in the first quarter of 2013. See Description of Certain Indebtedness Senior Secured Credit Facilities. Gain on sale of business Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Gain on sale of business $ $ 25,850 $ $ (25,850 ) **% $ 25,850 **% ** not meaningful Gain on sale of business for the year ended December 31, 2012 was $26 million and primarily related to the sale of our 51% stake in Sabre Pacific to Abacus for $46 million of proceeds. See Matters Affecting Comparability Dispositions. Joint venture equity income (loss) Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Joint venture equity income (loss) $ 12,350 $ (2,513 ) $ 23,501 $ 14,863 **% $ (26,014 ) **% ** not meaningful 2013 compared to 2012 Joint venture equity income increased $15 million for the year ended December 31, 2013 compared with the year ended December 31, 2012. This change was driven by a $24 million impairment of goodwill recognized in the year ended December 31, 2012, partially offset by decreased performance of our joint ventures in 2013 compared with the year ended December 31, 2012. 2012 compared to 2011 Joint venture equity income decreased $26 million for the year ended December 31, 2012 compared with the year ended December 31, 2011. This change was driven by a $24 million impairment of goodwill recognized in the year ended December 31, 2012 and a decreased performance of our joint ventures in 2012 compared with the year ended December 31, 2011. Table of Contents Other expenses (income), net Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Other expenses (income), net $ 6,724 $ 1,385 $ (1,156 ) $ 5,339 **% $ 2,541 **% ** not meaningful 2013 compared to 2012 Other expenses, net, increased $5 million for the year ended December 31, 2013 compared with the year ended December 31, 2012. The increase was driven primarily by realized and unrealized foreign currency exchange losses. 2012 compared to 2011 Other expenses, net, increased $3 million for the year ended December 31, 2012 compared with the year ended December 31, 2011. The increase was driven primarily by realized and unrealized foreign currency exchange losses. (Benefit) Provision for income taxes Year Ended December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) (Benefit) provision for income taxes $ (14,029 ) $ (195,071 ) $ 57,806 $ 181,042 **% $ (252,877 ) **% ** not meaningful 2013 compared to 2012 We recognized a benefit for income taxes of $14 million for the year ended December 31, 2013 compared to a benefit of $195 million for the year ended December 31, 2012. The decrease in the benefit for income taxes was primarily the result of the decrease in pre-tax loss from continuing operations. The effective tax rates were 13% and 24% for the years ended December 31, 2013 and 2012, respectively. Excluding the impacts of (i) impairment charges, (ii) acquisition related amortization expense, (iii) restructuring and other costs, (iv) litigation and taxes, including penalties, (v) sales of businesses and assets, (vi) changes in valuation allowances, and (vii) other tax and non-tax adjustments, our effective tax rates would have been 39% and 37% for the years ended December 31, 2013 and 2012, respectively. 2012 compared to 2011 We recognized a benefit for income taxes of $195 million for the year ended December 31, 2012 compared to a provision for income taxes of $58 million in the year ended December 31, 2011. The change was driven primarily by the increase in pre-tax loss from continuing operations. The effective tax rates were 24% and (269)% for the years ended December 31, 2012 and 2011, respectively. Excluding the impacts of (i) impairment charges, (ii) acquisition related amortization expense, (iii) restructuring and other costs, (iv) litigation and taxes, (v) sale of business and assets, (vi) changes in valuation allowances, (vii) increases in tax losses for non-controlling interest, and (viii) other tax and non-tax adjustments, our effective tax rates would have been 37% and 35% for the years ended December 31, 2012 and 2011, respectively. Table of Contents Quarterly Results of Operations The following table presents our historical consolidated financial data for our business for each of the eleven quarters in the period ended September 30, 2014. The unaudited quarterly statement of operations data have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of this data. The historical consolidated data presented below are not necessarily indicative of the results expected for any future period. The following quarterly financial data should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this prospectus. Three Months Ended Sep. 30, 2014 Jun. 30, 2014 Mar. 31, 2014 Dec. 31, 2013 Sep. 30, 2013 Jun. 30, 2013 Mar. 31, 2013 Dec. 31, 2012 Sep. 30, 2012 Jun. 30, 2012 Mar. 31, 2012 (Unaudited, amounts in thousands) Consolidated Statements of Operations Data: Revenue $ 756,303 $ 717,573 $ 755,410 $ 746,126 $ 775,823 $ 768,232 $ 759,344 $ 699,606 $ 756,740 $ 748,726 $ 769,292 Cost of revenue(a) 465,689 444,276 490,723 481,608 474,090 467,365 481,787 477,815 437,024 434,580 469,816 Selling, general and administrative(a) 169,183 205,152 200,309 172,703 208,033 212,364 199,829 292,926 469,278 213,656 212,388 Impairment 2,837 135,598 496,351 76,829 Restructuring charges (adjustments)(a) 4,735 (2,410 ) 20,662 15,889 Operating income (loss) 116,696 68,145 66,788 71,153 74,974 (47,095 ) 77,728 (567,486 ) (226,391 ) 100,490 87,088 Net (loss) income attributable to Sabre Corporation 36,563 (10,897 ) (2,843 ) 26,760 5,372 (116,862 ) (15,764 ) (505,613 ) (186,647 ) 21,357 59,547 Net (loss) income attributable to common shareholders 36,563 (13,132 ) (11,989 ) 17,275 (3,870 ) (125,867 ) (24,736 ) (514,551 ) (195,354 ) 12,872 51,094 Consolidated Statements of Cash Flows Data: Cash provided by operating activities $ 44,171 $ 5,310 $ 72,198 $ (94,874 ) $ 81,007 $ 78,672 $ 92,383 $ (87,238 ) $ 118,255 $ 131,451 $ 149,868 Additions to property and equipment 49,802 58,944 51,639 57,282 57,257 58,786 52,701 55,596 50,217 44,989 42,460 Other Financial Data: Adjusted Gross Margin(b) $ 358,354 $ 343,000 $ 342,722 $ 334,512 $ 369,054 $ 362,920 $ 352,565 $ 287,713 $ 378,978 $ 371,977 $ 379,621 Adjusted Net Income from continuing operations(c) 39,019 55,381 33,521 69,453 51,737 52,006 43,955 (51,918 ) 60,247 70,239 72,318 Adjusted EBITDA(c) 229,926 203,707 183,717 207,360 201,349 190,111 192,503 157,176 220,051 213,988 195,414 Adjusted capital expenditures(d) 59,807 68,888 59,292 67,410 67,280 75,420 74,730 78,294 70,863 65,212 57,436 Consolidated Balance Sheet Data Cash and cash equivalents $ 157,747 $ 252,380 $ 286,356 $ 308,236 $ 491,588 $ 186,012 $ 150,233 $ 126,695 $ 302,383 $ 285,755 $ 93,177 Long-term debt 3,065,440 3,069,502 3,621,680 3,643,548 3,664,942 3,338,653 3,357,751 3,420,927 3,418,987 3,415,628 3,301,291 Working capital (deficit) (246,557 ) (179,111 ) (279,646 ) (273,590 ) (265,601 ) (539,295 ) (517,591 ) (428,568 ) (232,419 ) (174,034 ) (328,236 ) (a) Cost of revenue, selling, general and administrative, and restructuring charges (adjustments) for the three months ended March 31, 2014 differ from the amounts presented in our Quarterly Report on Form 10-Q for the three months ended March 31, 2014. Restructuring adjustments of $1 million and $1 million were reclassified out of cost of revenue and selling, general and administrative, respectively, and are presented in the restructuring charges (adjustments) line item. Table of Contents (b) The following table presents a reconciliation of operating income (loss) to Adjusted Gross Margin: Three Months Ended Sep. 30, 2014 Jun. 30, 2014 Mar. 31, 2014 Dec. 31, 2013 Sep. 30, 2013 Jun. 30, 2013 Mar. 31, 2013 Dec. 31, 2012 Sep. 30, 2012 Jun. 30, 2012 Mar 31, 2012 (Unaudited, amounts in thousands) Operating income (loss) $ 116,696 $ 68,145 $ 66,788 $ 71,153 $ 74,974 $ (47,095 ) $ 77,728 $ (567,486 ) $ (226,391 ) $ 100,490 $ 87,088 Add back: Selling, general and administrative 169,183 205,152 200,309 172,703 208,033 212,364 199,829 292,926 469,278 213,656 212,388 Impairment 2,837 135,598 496,351 76,829 Restructuring charges(6) 4,735 20,662 15,889 Cost of revenue adjustments: Depreciation and amortization(3) 47,252 49,087 60,807 52,044 49,421 48,512 52,512 55,319 49,007 47,436 46,444 Amortization of upfront incentive consideration(4) 10,388 11,742 11,047 7,913 9,385 9,752 9,599 9,094 8,624 9,496 9,313 Restructuring and other costs (adjustments)(6) 4,865 3,726 (216 ) 8,094 2,582 1,348 591 950 666 775 2,134 Litigation and taxes, including penalties(7) 188 333 606 1,057 5,389 2,627 11,848 (23 ) 22,210 Stock-based compensation 2,172 1,940 1,506 886 544 (186 ) 458 582 965 124 44 Amortization of Expedia SMA incentive payments 2,875 2,875 1,875 Adjusted Gross Margin $ 358,354 $ 343,000 $ 342,722 $ 334,512 $ 369,054 $ 362,920 $ 352,565 $ 287,713 $ 378,978 $ 371,977 $ 379,621 Table of Contents (c) The following table presents a reconciliation of net loss attributable to Sabre Corporation, the most directly comparable GAAP measure, to Adjusted Net Income and to Adjusted EBITDA: Three Months Ended Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, 2014 2014 2014 2013 2013 2013 2013 2012 2012 2012 2012 (Unaudited, amounts in thousands) Reconciliation of net income and (loss) to Adjusted Net Income to Adjusted EBITDA: Net (loss) income attributable to Sabre Corporation $ 36,563 $ (10,897 ) $ (2,843 ) $ 26,760 $ 5,372 $ (116,862 ) $ (15,764 ) $ (505,613 ) $ (186,647 ) $ 21,357 $ 59,547 Income (loss) from disc ops, net of tax 1,736 5,183 1,098 (13,719 ) (3,015 ) 12,893 11,017 40,492 (9,282 ) 6,355 11,382 Net income (loss) attributable to noncontrolling interests(1) 720 702 746 728 714 837 584 (49,842 ) (4,673 ) (717 ) (4,085 ) (Loss) income from continuing operations 39,019 (5,012 ) (999 ) 13,769 3,071 (103,132 ) (4,163 ) (514,963 ) (200,602 ) 26,995 66,844 Adjustments: Impairment(2) 2,837 135,598 520,151 76,829 Acquisition related amortization expense(3) 23,905 23,961 35,478 35,811 35,794 36,209 35,951 41,749 40,815 39,745 40,208 Gain on sale of business and assets (785 ) (25,065 ) Gain on extinguishment of debt 30,558 2,980 12,181 Other, net(5) (565 ) (1,082 ) 887 5,624 2,429 3,796 (5,125 ) 1,613 3,535 2,923 (6,686 ) Restructuring and other costs(6) 14,482 6,867 2,708 32,756 21,754 2,376 2,166 3,104 952 1,113 1,607 Litigation and taxes, including penalties(7) 4,440 2,904 5,152 7,887 8,579 8,327 14,638 122,901 270,923 15,868 8,930 Stock-based compensation 5,472 11,383 5,579 3,640 2,686 36 2,724 1,214 1,106 5,184 2,330 Management fees(8) 193 21,576 1,932 1,414 2,126 2,499 2,722 1,512 2,476 1,905 1,876 Amortization of Expedia SMA incentive payments 2,875 2,875 1,875 Tax impact of net income adjustments (19,894 ) (38,649 ) (22,071 ) (31,448 ) (27,539 ) (33,703 ) (17,139 ) (229,199 ) (135,002 ) (23,494 ) (17,726 ) Adjusted Net Income 69,927 55,381 33,521 69,453 51,737 52,006 43,955 (51,918 ) 60,247 70,239 72,318 Adjustments: Depreciation and amortization of property and equipment(3) 39,524 41,304 41,581 33,796 32,936 31,404 33,347 36,525 33,976 32,591 32,469 Amortization of capitalized implementation costs(3) 9,084 8,891 9,136 8,513 8,437 7,720 10,881 6,537 5,325 4,855 4,138 Amortization of upfront incentive payments(4) 10,388 11,742 11,047 7,913 9,385 9,752 9,599 9,094 8,624 9,496 9,313 Interest expense, net 50,153 53,235 63,944 65,036 63,454 63,669 82,530 61,191 64,973 58,870 47,416 Remaining (benefit) provision for income taxes 50,850 33,154 24,488 22,649 35,400 25,560 12,191 95,747 46,906 37,937 29,760 Adjusted EBITDA $ 229,926 $ 203,707 $ 183,717 $ 207,360 $ 201,349 $ 190,111 $ 192,503 $ 157,176 $ 220,051 $ 213,988 $ 195,414 (1) Net income (loss) attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interest held in (i) Sabre Travel Network Middle East of 40% for all periods presented, (ii) Sabre Pacific of 49% through February 24, 2012, the date we sold this business, (iii) Travelocity.com LLC of approximately 9.5% through December 31, 2012, the date we merged this minority interest back into our capital structure and (iv) Sabre Seyahat Dagitim Sistemleri A.S. of 40% beginning in April 2014 for the three months ended September 30, June 30 and March 31, 2014. See Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this prospectus. (2) Represents impairment charges to assets (see Note 7, Goodwill and Intangible Assets, to our audited consolidated financial statements included elsewhere in this prospectus) as well as $24 million in 2012, representing our share of impairment charges recorded by one of our equity method investments, Abacus. (3) Depreciation and amortization expenses (see Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this prospectus for associated asset lives): a. Acquisition related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures. b. Depreciation and amortization of property and equipment includes software developed for internal use. c. Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model. Table of Contents (4) Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to five years. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided upfront. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met. (5) Other, net primarily represents foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency. (6) Restructuring and other costs represents charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs. (7) Litigation settlement and tax payments for certain items represents charges or settlements associated with airline antitrust litigation as well as payments or reserves taken in relation to certain retroactive hotel occupancy and excise tax disputes (see Note 13, Contingencies, to our unaudited consolidated financial statements and Note 20, Commitments and Contingencies, to our audited consolidated financial statements included elsewhere in this prospectus). (8) We paid an annual management fee to TPG and Silver Lake in an amount between (i) $5 million and (ii) $7 million, the actual amount of which was calculated based upon 1% of Adjusted EBITDA, as defined in the MSA, earned by the company in such fiscal year up to a maximum of $7 million. In addition, the MSA provided for the reimbursement of certain costs incurred by TPG and Silver Lake, which are included in this line item. In connection with our initial public offering, we paid to TPG and Silver Lake, in the aggregate, a $21 million fee pursuant to the MSA. The MSA was terminated at the completion of our initial public offering. (d) Includes capital expenditures and capitalized implementation costs as summarized below: Three Months Ended Sep. 30, 2014 Jun. 30, 2014 Mar. 31, 2014 Dec. 31, 2013 Sep. 30, 2013 Jun. 30, 2013 Mar. 31, 2013 Dec. 31, 2012 Sep. 30, 2012 Jun. 30, 2012 Mar 31, 2012 (Unaudited, amounts in thousands) Additions to property and equipment $ 49,802 $ 58,944 $ 51,639 $ 57,282 $ 57,257 $ 58,786 $ 52,701 $ 55,596 $ 50,217 $ 44,989 $ 42,460 Capitalized implementation costs 10,005 9,944 7,653 10,128 10,023 16,634 22,029 22,698 20,646 20,223 14,976 Adjusted capital expenditures $ 59,807 $ 68,888 $ 59,292 $ 67,410 $ 67,280 $ 75,420 $ 74,730 $ 78,294 $ 70,863 $ 65,212 $ 57,436 Liquidity and Capital Resources On April 23, 2014, we closed our initial public offering of our common stock in which we sold 39,200,000 shares, and on April 25, 2014, the underwriters exercised in full their option to purchase which resulted in the sale of an additional 5,880,000 shares of our common stock. Our shares of common stock were sold at an initial public offering price of $16.00 per share, which generated $672 million of net proceeds from the offering after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from our initial public offering to repay (i) $296 million aggregate principal amount of our Term Loan C (see Senior Secured Credit Facilities ) and (ii) $320 million aggregate principal amount of our senior secured notes due 2019 at a redemption price of 108.5% of the principal amount. We also used the net proceeds from our offering to pay the $27 million redemption premium and $13 million in accrued but unpaid interest on the 2019 Notes. We used the remaining portion of the net proceeds from our offering to pay a $21 million fee, in the aggregate, to TPG and Silver Lake pursuant to the MSA, which was thereafter terminated. Our principal sources of liquidity are: (i) cash flows from operations, (ii) cash and cash equivalents and (iii) borrowings under our $405 million Revolver (see Senior Secured Credit Facilities ). Borrowing availability under our Revolver is reduced by our outstanding letters of credit and restricted cash collateral. As of September 30, 2014 and December 31, 2013, our cash and cash equivalents, Revolver, and outstanding letters of credit were as follows (in thousands): September 30, 2014 December 31, 2013 (Amounts in thousands) Cash and cash equivalents $ 157,747 $ 308,236 Revolver outstanding balance Available balance under the Revolver 345,106 285,671 Outstanding letters of credit (60,057 ) (67,949 ) Table of Contents We consider cash equivalents to be highly liquid investments that are readily convertible into cash. Securities with contractual maturities of three months or less, when purchased, are considered cash equivalents. We record changes in a book overdraft position, in which our bank account is not overdrawn but recently issued and outstanding checks result in a negative general ledger balance, as cash flows from financing activities. We invest in a money market fund which is classified as cash and cash equivalents in our consolidated balance sheets and statements of cash flows. We held no short-term investments as of September 30, 2014 and December 31, 2013. Utilization We utilize cash and cash equivalents primarily to pay our operating expenses, make capital expenditures, invest in our products and offerings, pay quarterly dividends on our common stock and service our debt and other long-term liabilities. In the fourth quarter of 2013, we used a portion of our cash and cash equivalents to make a $100 million litigation settlement payment to American Airlines. In the third quarter of 2014, we made a $50 million payment to American Airlines in conjunction with the new Airline Solutions contract, which will be amortized as a reduction to revenue over the contract term. This payment reduces non-cash payment credits originally offered to American Airlines as a part of the litigation settlement in 2012, contingent upon the signature of a new reservation agreement, which were extended to include the combined American Airlines and US Airways reservation contract. The non-cash payment credits would have been utilized for future billings under the new agreement. For the nine months ended September 30, 2014, we have used $100 million of our cash and cash equivalents to wind down working capital in Travelocity impacted by the Expedia SMA and the sale of TPN as described under Factors Affecting our Results and Comparability Travelocity Restructuring. In the third quarter of 2014, we paid $30 million of contingent consideration and contingent employment payments related to the acquisition of PRISM in 2012 and $32 million for the acquisition of certain assets and liabilities of Genares Worldwide Reservation Services, Ltd. Ability to Generate Cash in the Future Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations. Our ability to make payments on and to refinance our indebtedness, and to fund working capital needs, planned capital expenditures and dividends will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control. See Risk Factors Risks Related to our Indebtedness and Liquidity We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available. Senior Secured Credit Facilities On February 19, 2013, Sabre GLBL entered into an agreement that amended and restated its senior secured credit facilities (the Amended and Restated Credit Agreement ). The agreement replaced (i) the existing term loans with new classes of term loans of $1,775 million (the Term Loan B ) and $425 million (the Term Loan C ) and (ii) the existing revolving credit facility with a new revolving credit facility of $352 million (the Revolver ). Term Loan B matures on February 19, 2019 and amortizes in equal quarterly installments of 0.25%. Term Loan C matures on December 31, 2017. As a result of the April 2014 prepayment, quarterly principal payments on Term Loan C are no longer required. We are obligated to pay $17 million on September 30, 2017 and the remaining balance on December 31, 2017. A portion of the Revolver matures on February 19, 2018. On September 30, 2013, Sabre GLBL entered into an agreement to amend its amended and restated credit agreement to add a new class of term loans in the amount of $350 million (the Incremental Term Loan Facility ). Sabre Table of Contents GLBL has used a portion, and intends to use the remainder, of the proceeds of the Incremental Term Loan Facility for working capital and one-time costs associated with the Expedia SMA and sale of TPN, including the payment of travel suppliers for travel consumed that originated on our technology platforms and for general corporate purposes. The Incremental Term Loan Facility matures on February 19, 2019 and amortizes in equal quarterly installments of 0.25% commencing with the last business day of December 2013. We are scheduled to make $22 million in principal payments on our senior secured credit facilities over the next twelve months. On February 20, 2014, we entered into a series of amendments to our Amended and Restated Credit Agreement ( Repricing Amendments ) to, among other things, (i) reduce the interest rate margin applicable to the Term Loan B to (x) between 3.00% to 3.25% per annum for Eurocurrency rate loans and (y) between 2.00% to 2.25% per annum for base rate loans and (ii) reduce the Eurocurrency rate floor to 1.00% and the base rate floor to 2.00%. In addition, the Repricing Amendments extended the maturity date of $317 million of the Revolver to February 19, 2019 and (ii) provided for a revolving commitment increase of $53 million under the extended portion of the Revolver, increasing total commitments under the Revolver to $405 million. The extended portion of the Revolver includes an accelerated maturity of November 19, 2018 if on November 19, 2018, the Term Loan B (or permitted refinancings thereof) remains outstanding with a maturity date occurring less than one year after the maturity date of the extended portion of the Revolver. In April 2014, we made partial prepayments totaling $296 million of our outstanding indebtedness under the Term Loan C portion of our senior secured credit facilities using proceeds from our initial public offering. Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including certain restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends, as well as a maximum senior secured leverage ratio, which applies if our revolver utilization exceeds certain thresholds. This ratio is calculated as senior secured debt (net of cash) to EBITDA, as defined by the credit agreement. This ratio was 5.5 to 1.0 for 2013 and is 5.0 to 1.0 for 2014. The definition of EBITDA is based on a trailing twelve months EBITDA adjusted for certain items including non-recurring expenses and the pro forma impact of cost saving initiatives. This EBITDA is calculated for the purposes of compliance with our debt covenants and differs from the Adjusted EBITDA metric used elsewhere in this prospectus. See Note 11, Debt Senior Secured Credit Facilities, to our audited consolidated financial statements included elsewhere in this prospectus. We are also required to pay down the term loans by an amount equal to 50% of annual excess cash flow, as defined in the Amended and Restated Credit Agreement. No excess cash flow payment is required in 2014 with respect to our results for the year ended December 31, 2013. This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved. We are further required to pay down the term loan with proceeds from certain asset sales or borrowings as defined in the Amended and Restated Credit Agreement. Liquidity Outlook We believe that cash flows from operations, cash and cash equivalents on hand and the Revolver provide adequate liquidity for our operational and capital expenditures, quarterly dividends on our common stock and other obligations over the next twelve months. From time to time, we may supplement our current liquidity through debt or equity offerings to support future strategic investments or to pay down our $400 million of senior unsecured notes due in 2016, if we decide not to refinance this indebtedness. See Risk Factors Risks Related to our Indebtedness and Liquidity We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available. Litigation Settlement Agreement As a result of our litigation settlement agreement with American Airlines in 2012, we have accrued a settlement liability which consists of several elements, including cash to be paid directly to American Airlines, payment credits to pay for future technology services that we provide, as defined in the settlement agreements, and the estimated fair value of other service agreements entered into concurrently with the settlement agreement. Table of Contents As of September 30, 2014, our remaining settlement liability under the settlement agreement was $112 million, of which the current portion of $75 million is recorded in litigation settlement liability and related deferred revenue and the noncurrent portion of $37 million is recorded in other noncurrent liabilities. In accordance with the settlement agreement, we paid $100 million during the fourth quarter of 2013 and $100 million during the fourth quarter of 2012. We expect to realize cash tax benefits over the next one to four years and payment credits are expected to be used from 2014 through 2017, depending on the level of services we provide to American Airlines. As of December 31, 2012, we recorded the estimated settlement charge of $347 million, or $222 million, net of tax, into our results of operations. See Note 20, Commitments and Contingencies, to our audited consolidated financial statements included elsewhere in this prospectus. Dividends We paid cash dividends on our common stock in the third and fourth quarter of 2014 and expect to continue to pay quarterly cash dividends thereafter. Our board of directors declared cash dividends of $0.09 per share of our common stock, which were paid on September 16, 2014 to shareholders of record as of September 1, 2014, and on December 30, 2014 to shareholders of record as of December 15, 2014. We funded this dividend, and intend to fund any future dividends, from cash generated from our operations. Future cash dividends, if any, will be at the discretion of our board of directors and the amount of cash dividends per share will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, number of shares of common stock outstanding and other factors the board of directors may deem relevant. The timing and amount of future dividend payments will be at the discretion of our board of directors. See Risk Factors Risks Related to the Offering and our Common Stock Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our holding company structure and applicable provisions of Delaware law. Redemption of Preferred Stock Prior to the closing of our initial public offering, we amended our Certificate of Incorporation and exercised our right to redeem all of our Series A Cumulative Preferred Stock. The amendment to our Certificate of Incorporation modified the redemption feature of the Series A Cumulative Preferred Stock to allow for settlement using cash, shares of our common stock or a mix of cash and shares of our common stock. On April 23, 2014, we redeemed all of our outstanding shares of Series A Cumulative Preferred Stock in exchange for 40,343,529 shares of our common stock, which was delivered pro rata to the holders thereof concurrently with the closing of our initial public offering. Tax Receivable Agreement Immediately prior to the closing of our initial public offering, we entered into the TRA. Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the TRA, (i) we expect that future payments under the TRA relating to the Pre-IPO Tax Assets could aggregate to between $330 million and $380 million over the next six years (assuming no changes to current limitations on our ability to utilize our NOLs under Section 382 of the Code), which we estimate will represent approximately 85% to 95% of the total payments we will be required to make under the TRA and (ii) we do not expect material payments to occur before 2016. Payments under the TRA are not conditioned upon the parties continuing ownership of the company. Political and Economic Environment in Venezuela Venezuela has imposed currency controls, including volume restrictions on the conversion of bolivars to U.S. dollars, which impact the ability of certain of our airline customers operating in the country to obtain U.S. dollars to make timely payments to us. Consequently, the collection of accounts receivable due to us can be, and has been, delayed. Due to the nature of this delay, we have recorded specific reserves against all outstanding balances due to us and are deferring the recognition of any future revenues effective January 1, 2014 until cash is Table of Contents collected in accordance with our policies. Accordingly, our accounts receivable are subject to a general collection risk, as there can be no assurance that we will be paid from such customers in a timely manner, if at all. We collected approximately $14 million of accounts receivable due to us during the nine months ended September 30, 2014, and had $9 million of accounts receivable outstanding as of September 30, 2014, which will be recognized as revenue when cash is received. We collected an additional $7 million of accounts receivable due to us from October to December 2014. In January 2014, Venezuela announced a dual-foreign exchange rate system, which has effectively devalued the local currency and subjected airlines to an exchange rate for U.S. dollars available at auctions that has been significantly higher than the official exchange rate. In conjunction with the political and economic uncertainty in Venezuela, demand for travel by local consumers has declined. Certain airlines have scaled back operations in response to the reduced demand as well as the currency controls which has impacted our airline customers in Venezuela. As a result, our revenues derived from our Venezuelan operations in 2014 were reduced as compared to our revenues for 2013. During the year ended December 31, 2013, we derived 1% of our total revenue from our airline customers operating in Venezuela. Working Capital As of December 31, Change 2013 2012 2011 2013 vs. 2012 2012 vs. 2011 (Amounts in thousands) Current assets Cash and cash equivalents $ 308,236 $ 126,695 $ 58,351 $ 181,541 $ 68,344 Restricted cash 2,359 4,440 8,786 (2,081 ) (4,346 ) Accounts receivable, net 434,288 417,240 380,729 17,048 36,511 Prepaid expenses and other current assets 53,378 46,020 38,960 7,358 7,060 Current deferred income taxes 41,431 32,938 31,629 8,493 1,309 Other receivables, net 29,511 42,334 77,783 (12,823 ) (35,449 ) Current assets held for sale 27,624 (27,624 ) Assets of discontinued operations 13,624 87,003 144,386 (73,379 ) (57,383 ) Total current assets 882,827 756,670 768,248 126,157 (11,578 ) Current liabilities Accounts payable $ 111,386 $ 124,893 $ 168,307 $ (13,507 ) $ (43,414 ) Travel supplier liabilities and related deferred revenue 213,504 218,023 203,615 (4,519 ) 14,408 Accrued compensation and related benefits 117,689 89,439 49,320 28,250 40,119 Accrued incentive consideration 142,767 127,099 114,404 15,668 12,695 Deferred revenues 136,380 137,614 96,936 (1,234 ) 40,678 Litigation settlement and related deferred revenue 38,920 117,873 (78,953 ) 117,873 Other accrued liabilities 267,867 245,633 303,018 22,234 (57,385 ) Current portion of debt 86,117 23,232 30,150 62,885 (6,918 ) Revolving credit facility 82,000 (82,000 ) Current liabilities held for sale 34,952 (34,952 ) Liabilities of discontinued operations 41,788 101,433 97,028 (59,645 ) 4,405 Total current liabilities 1,156,418 1,185,239 1,179,730 (28,821 ) 5,509 Working Capital Deficit $ (273,591 ) $ (428,569 ) $ (411,482 ) $ 154,978 $ (17,087 ) As of December 31, 2013, we had a deficit in our working capital of $274 million, compared to a deficit of $429 million as of December 31, 2012. The decrease in working capital deficit is largely attributable to a $182 million increase in cash as a result of the Incremental Term Loan Facility and a $79 million decrease in other Table of Contents accrued liabilities due to a decrease in litigation settlement payable in connection with our settlement agreement with American Airlines, offset by a $63 million increase in the current portion of debt due to refinancing of our existing senior secured credit facilities in February 2013. As of December 31, 2012, we had a deficit in our working capital of $429 million, compared to a deficit of $411 million as of December 31, 2011. The increase in working capital deficit is primarily attributable to the recognition of the current portion of litigation charges related to our settlement with American Airlines, partially offset by an increase in cash from bond issuances in May and September 2012 and by the paydown of our Revolver. Based on the business environment in which we operate, we consider it a normal circumstance for us to operate with a negative working capital. A summary by segment is as follows: As of December 31, 2013 Accounts Receivable DSO(1) (Amounts in thousands) Travel Network $ 200,454 40 Airline and Hospitality Solutions 153,286 79 Travelocity 79,751 50 Total segment value 433,491 51 Corporate 797 Total Company $ 434,288 (1) Calculated as accounts receivable divided by average daily revenue for the year ended December 31, 2013. As of December 31, 2013 Accounts Payable Travel Supplier Liabilities Accrued Incentive Consideration Other Accrued Liabilities Total Operating Liabilities (Amounts in thousands) Travel Network $ 59,091 $ $ 142,767 $ 77,587 $ 279,445 Airline and Hospitality Solutions 4,937 49,947 54,884 Travelocity(1) 29,973 213,504 71,647 315,124 Total segments 94,001 213,504 142,767 199,181 649,453 Corporate 17,385 68,686 86,071 Total Company $ 111,386 $ 213,504 $ 142,767 $ 267,867 $ 735,524 (1) See Travelocity Working Capital below. Travel Network exhibits seasonal fluctuations in transaction volumes and working capital. Transactions are weighted towards the first nine months of the year, resulting in receivables growth outpacing payables and driving negative cash flows related to working capital. Transactions decrease significantly each year in the fourth quarter, primarily in December. We record a receivable at the date of booking and, because customers generally book their November and December holiday leisure-related travel earlier in the year and business-related travel also declines during the holiday season, receivables are typically lower in the fourth quarter. This results in receivables declining faster than payables and positive cash flows related to working capital during the fourth quarter. We collect a portion of the receivables from airlines through the Airline Clearing House ( ACH ) and other similar clearing houses. ACH requires participants to deposit certain balances into their demand deposit accounts by certain deadlines which facilitates a timely settlement process. As of December 31, 2013, 2012 and 2011, Table of Contents approximately 50%, 48% and 46%, respectively, of outstanding receivables for Travel Network were due from customers using ACH. Due in part to the proportion of receivables processed through ACH for Travel Network, such receivables are collected on average in 40 days. Our Airline and Hospitality Solutions has a lower proportion of its receivables due from customers using ACH. As of December 31, 2013, 2012 and 2011, approximately 20%, 41% and 30%, respectively, of outstanding receivables for Airline and Hospitality Solutions were due from customers who use ACH. Receivables for Airline and Hospitality Solutions are collected on average in 79 days. Airline and Hospitality Solution days sales outstanding can also be impacted by large upfront billings to new customers which are generally due at the initiation of a contract and result in deferred revenue. The timing of these billings is dependent on individual contractual terms. Travelocity Working Capital. Travelocity s working capital includes receivables from credit card transactions with customers, which are short in days sales outstanding, and receivables from advertisers on the Travelocity websites which have a longer days sales outstanding. Travelocity s payables primarily include travel supplier liabilities, where we are the merchant of record for credit card processing for travel accommodations. We record the payable to the travel supplier and associated deferred revenue at the time the related travel is booked and paid by the consumer. This liability is not settled until the travel is consumed. See Factors Affecting our Results and Comparability Travelocity. Travelocity s working capital has been impacted by the Expedia SMA and the sale of TPN. As of September 30, 2014 and December 31, 2013, we had approximately $107 million and $214 million, respectively, in total travel supplier liabilities of which $23 million and $129 million, respectively, represents the liability to travel suppliers in connection with Travelocity.com and TPN. This liability is being extinguished as a result of the Expedia SMA and the sale of TPN as we continue to pay travel suppliers for travel consumed that originated on our technology platforms; however, we will no longer receive cash directly from consumers and will not incur a payable to travel suppliers for new bookings on our balance sheet. Subsequent to the Expedia SMA and the sale of TPN, our Travelocity-related working capital primarily consists of amounts attributable to lastminute.com balances as well as amounts due from Expedia offset by payables for marketing and labor related costs. On September 30, 2013, Sabre GLBL entered into the Incremental Term Loan Facility in the amount of $350 million. Sabre GLBL has used a portion, and intends to use the remainder, of the proceeds of the Incremental Term Loan Facility for working capital and one-time costs associated with the Expedia SMA and sale of TPN, including the payment of travel suppliers for travel consumed that originated on our technology platforms, and for general corporate purposes. With respect to Travelocity-related working capital, we have used approximately $106 million for the payment of travel suppliers for travel consumed that originated on our technology platforms as described above. In addition, we have used cash of $11 million and $6 million from the Incremental Term Loan Facility during the nine months ended September 30, 2014 and year ended December 31, 2013, respectively, to pay for Travelocity restructuring activities associated with employee termination benefits and other related costs. We did not record any material restructuring charges in our results of operations. See Description of Certain Indebtedness Senior Secured Credit Facilities. Table of Contents The table below, which is derived from our consolidated statements of cash flows, shows the changes in our operating assets and liabilities during the years ended December 31, 2013, 2012 and 2011. For a detailed discussion of these changes, see Operating Activities below. Year Ended December 31, 2013 2012 2011 (Amounts in thousands) Accounts and other receivables $ (29,150 ) $ (2,691 ) $ (49,220 ) Prepaid expenses and other current assets (4,480 ) (3,374 ) 8,680 Capitalized implementation costs (58,814 ) (78,543 ) (59,109 ) Other assets (64,259 ) (8,704 ) (52,817 ) Accounts payable and other accrued liabilities (31,064 ) 13,022 93,735 Pensions and other postretirement benefits (2,579 ) (20,236 ) (9,306 ) Changes in operating assets and liabilities $ (190,346 ) $ (100,526 ) $ (68,037 ) We will reclassify and report all of the businesses associated with the Travelocity segment as discontinued operations in our 2014 Annual Report on Form 10-K following the sale of Travelocity.com and the receipt of a binding offer to acquire lastminute.com as the segment was considered held for sale as of December 31, 2014. Capital Expenditures and Development Projects Our Adjusted Capital Expenditures for the nine months ended September 30, 2014 and 2013 and the years ended December 31, 2013, 2012 and 2011 were as follows: Nine Months Ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 (Amounts in thousands) Additions to property and equipment $ 160,385 $ 168,744 $ 226,026 $ 193,262 $ 164,638 Capitalized implementation costs 27,602 48,686 58,814 78,543 59,109 Adjusted Capital Expenditures $ 187,987 $ 217,430 $ 284,840 $ 271,805 $ 223,747 As a percentage of revenue: Additions to property and equipment 7.2 % 7.3 % 7.4 % 6.5 % 5.8 % Capitalized implementation costs 1.2 % 2.1 % 1.9 % 2.6 % 2.1 % Adjusted Capital Expenditures 8.4 % 9.4 % 9.3 % 9.1 % 7.8 % Capitalized costs associated with software developed for internal use represent a significant portion of additions to property and equipment, as we have focused our development resources on developing and enhancing our GDS and our SaaS and hosted systems. Software developed for internal use includes costs incurred to develop or obtain applications, infrastructure and graphics development for our GDS, our SaaS and hosted systems and our websites. Capitalized implementation costs are upfront costs we incur related to the implementation of new customer contracts under our SaaS and hosted revenue model. In our financial statements, additions to property and equipment are included in Cash flows from investing activities while Capitalized implementation costs are included in Cash flows from operating activities. Development-related costs that were expensed as incurred totaled $284 million, $258 million and $250 million for the years ended December 31, 2013, 2012 and 2011, respectively. Research and development costs approximated $6 million, $4 million and $3 million for the years ended December 31, 2013, 2012 and 2011, respectively. See Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this prospectus. Undistributed Earnings from Foreign Subsidiaries We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2013 to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. As of December 31, Table of Contents 2013, the amount of indefinitely reinvested foreign earnings was approximately $157 million. As of December 31, 2013, $71 million of cash, cash equivalents, and marketable securities were held by our foreign subsidiaries. If such cash, cash equivalents and marketable securities are needed for our operations in the United States, we would be required to accrue and pay taxes on up to $44 million of these funds to repatriate all such cash, cash equivalents and marketable securities. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Future Minimum Contractual Obligations As of December 31, 2013, future minimum payments required under our senior secured credit facilities, senior unsecured notes due 2016 and senior secured notes due 2019 and other indebtedness, the mortgage facility, operating lease agreements with terms in excess of one year for facilities, equipment and software licenses and other significant contractual cash obligations were as follows: Payments Due by Period Contractual Obligations 2014 2015 2016 2017 2018 Thereafter Total (Amounts in thousands) Total debt(1) $ 320,662 $ 315,929 $ 726,845 $ 360,459 $ 244,391 $ 2,855,934 $ 4,824,220 Headquarters mortgage(2) 5,984 5,984 5,984 80,895 98,847 Operating lease obligations(3) 31,450 27,217 23,363 15,435 9,668 25,789 132,922 IT outsourcing agreement(4) 165,983 156,492 135,307 99,305 557,087 Purchase orders(5) 137,456 2,146 1,565 141,167 Letters of credit(6) 65,238 128 1,621 151 67,138 WNS agreement(7) 23,777 24,910 48,687 Other purchase obligations(8) 39,175 39,175 Unrecognized tax benefits(9) 66,620 Total contractual cash obligations(10) $ 789,725 $ 532,806 $ 894,685 $ 556,094 $ 254,059 $ 2,881,874 $ 5,975,863 (1) Includes all interest and principal related to the 2016 Notes and 2019 Notes. Also included all interest and principal related to borrowings under the term loan facility, the Term Loan C portion of which will mature in 2018 and the Term Loan B portion of which will mature in 2019 and Incremental Term Loan Facility, a portion of which will mature in 2019. Under certain circumstances, we are required to pay a percentage of the excess cash flow, if any, generated each year to our lenders which obligation is not reflected in the table above. Interest on the term loan is based on the LIBOR rate plus a base margin and includes the effect of interest rate swaps. For purposes of this table, we have used projected LIBOR rates for all future periods. See Note 11, Debt, to our audited consolidated financial statements included elsewhere in this prospectus. We used a portion of the net proceeds from our initial public offering to repay $296 million of our outstanding indebtedness under the Term Loan C and to redeem $320 million aggregate principal amount of the 2019 Notes at a redemption price of 108.5% of the principal amount of the 2019 Notes redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption. (2) Includes all interest and principal related to our $85 million Mortgage Facility, which matures on March 1, 2017. See Note 11, Debt, to our audited consolidated financial statements included elsewhere in this prospectus. (3) We lease approximately two million square feet of office space in 97 locations in 47 countries. Lease payment escalations are based on fixed annual increases, local consumer price index changes or market rental reviews. We have renewal options of various term lengths at 65 locations, and we have no purchase options and no restrictions imposed by our leases concerning dividends or additional debt. (4) Represents minimum amounts due to HP under the terms of an outsourcing agreement through which HP manages a significant portion of our information technology systems. (5) Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which we have not received the goods or services as of December 31, 2013. Table of Contents Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the delivery of goods or performance of services. (6) Our letters of credit consist of stand-by letters of credit, underwritten by a group of lenders, which we primarily issue for certain regulatory purposes as well as to certain hotel properties to secure our payment for hotel room transactions. The contractual expiration dates of these letters of credit are shown in the table above. There were no claims made against any stand-by letters of credit during the years ended December 31, 2013, 2012 and 2011. (7) Represent expected payments to WNS Global Services, an entity to which we outsource a portion of our Travelocity contact center operations and back-office fulfillment though 2015. The expected payments are based upon current and historical transactions. We anticipate the 2015 volumes will be reduced as a result of our agreement with Expedia. (8) Consist primarily of minimum payments due under various marketing agreements, management services monitoring fees and media strategy, planning and placement agreements. (9) Unrecognized tax benefits include associated interest and penalties. The timing of related cash payments for substantially all of these liabilities is inherently uncertain because the ultimate amount and timing of such liabilities is affected by factors which are variable and outside our control. (10) Excludes pension obligations (see Note 9, Pension and Other Postretirement Benefit Plans, to our audited consolidated financial statements included elsewhere in this prospectus), the Redemption and payments to the Pre-IPO Existing Stockholders under the TRA. On February 20, 2014, we entered into the Repricing Amendments, one of which reduced the Term Loan B s applicable margin for Eurocurrency and Base rate borrowings to 3.25% and 2.25%, respectively, with a step down to 3.00% and 2.00%, respectively, if the Senior Secured Leverage Ratio is less than or equal to 3.25 to 1.00. It also reduced the Eurocurrency rate floor to 1.00% and the Base rate floor to 2.00%. In the second quarter of 2014, we used the proceeds from our initial public offering to repay (i) $296 million aggregate principal amount of our Term Loan C (see Senior Secured Credit Facilities ) and (ii) $320 million aggregate principal amount of our senior secured notes due 2019 at a redemption price of 108.5% of the principal amount. As of September 30, 2014, future minimum payments required under our senior secured credit facilities, senior unsecured notes due 2016 and senior secured notes due 2019 were as follows: Total Debt Payments (1) Three months ending December 31, 2014 $ 47,522 2015 181,840 2016 576,329 2017 228,384 2018 180,253 Thereafter 2,516,077 Total $ 3,730,405 (1) Excludes all interest and principal related to our mortgage facility. Includes all interest and principal related to the senior unsecured notes due 2016 and the senior secured notes due 2019. Also includes all interest and principal related to borrowings under the senior secured credit facility, the Term Loan C portion of which will mature in 2017, the Term Loan B portion of which will mature in 2019 and the Incremental Term Loan Facility portion of which will mature in 2019. Under certain circumstances, we may be required to pay a percentage of the excess cash flow, if any, generated each year to our lenders which obligation is not reflected in the table above. Interest on the term loan is based on LIBOR plus an applicable margin and includes the effect of interest rate swaps. For purposes of this table, we have used projected LIBOR rates for all future periods. See Note 7, Debt, to our unaudited consolidated financial statements included elsewhere in this prospectus. Table of Contents Immediately prior to the closing of our initial public offering, we entered into the TRA. Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the TRA, (i) we expect that future payments under the TRA relating to the Pre-IPO Tax Assets could aggregate to between $330 million and $380 million over the next six years (assuming no changes to current limitations on our ability to utilize our NOLs under Section 382 of the Code), which we estimate will represent approximately 85% to 95% of the total payments we will be required to make under the TRA and (ii) we do not expect material payments to occur before 2016. Payments to the recipients under the TRA are not conditioned upon the recipient continuing to be an equity holder in the Company. As of September 30, 2014, purchase orders for the next twelve months totaled $143 million and were not material in the years thereafter. There were no other material changes to our future minimum contractual obligations as of December 31, 2013. Cash Flows Nine months ended September 30, Year Ended December 31, 2014 2013 2013 2012 2011 (Amounts in thousands) Cash provided by operating activities $ 121,679 $ 252,062 $ 157,188 $ 312,336 $ 356,444 Cash used in investing activities (191,949 ) (189,220 ) (246,502 ) (236,034 ) (176,260 ) Cash (used in) provided by financing activities (59,289 ) 274,717 262,172 (25,120 ) (271,540 ) Cash (used in) provided by discontinued operations (21,664 ) 26,854 6,400 12,845 (29,791 ) Effect of exchange rate changes on cash and cash equivalents 734 480 2,283 4,318 2,976 (Decrease) increase in cash and cash equivalents $ (150,489 ) $ 364,893 $ 181,541 $ 68,345 $ (118,171 ) Operating Activities Cash provided by operating activities for the nine months ended September 30, 2014 was $122 million and consisted of net income of $25 million, adjustments for non-cash and other items of $342 million and a decrease in cash from changes in operating assets and liabilities of $245 million. The adjustments for non-cash and other items consist primarily of $230 million of depreciation and amortization, $34 million loss on extinguishment of debt, $33 million in amortization of upfront incentive consideration, $22 million stock-based compensation expense and $8 million of losses from discontinued operations, partially offset by $9 million of joint venture equity income. The decrease in cash from changes in operating assets and liabilities of $245 million was primarily the result of a $58 million increase in accounts receivable due to seasonality, $58 million increase in other assets primarily due to a $50 million payment made to American Airlines in conjunction with the new Airlines Solutions contract, $32 million used for upfront incentive consideration, $28 million used for capitalized implementation costs, a $32 million decrease in accounts payable and other accrued liabilities and a $23 million decrease in accrued compensation and related benefits. The decrease in accounts payable and other accrued liabilities was due to the payment of travel supplier liabilities for Travelocity North America of $106 million as a result of the change in Travelocity s business model and sale of TPN, partially offset by an increase in deferred revenue and trade payables. Cash provided by operating activities for the nine months ended September 30, 2013 was $252 million and consisted of net loss of $125 million, adjustments for non-cash and other items of $436 million and a decrease in cash of $58 million from changes in operating assets and liabilities. The adjustments for non-cash and other items consist primarily of $230 million of depreciation and amortization, $138 million of goodwill impairment charges, $29 million in amortization of upfront incentive consideration, $14 million of debt modification costs, $12 million of loss on extinguishment of debt and $21 million of losses from discontinued operations, partially offset by $19 million of deferred taxes. The decrease in cash of $58 million from changes in operating assets and Table of Contents liabilities was primarily the result of an increase in other assets of $63 million due to increases in deferred customer discounts, $49 million used for capitalized implementation costs, an increase of $46 million in accounts receivables in all of our segments due to seasonality and $27 million used for upfront incentive consideration. These decreases were partially offset by an increase of $110 million in accounts payable and other accrued liabilities primarily due to seasonality in travel supplier liabilities. Cash provided by operating activities for the year ended December 31, 2013 was $157 million and consisted of net loss of $98 million, adjustments for non-cash and other items of $445 million and a decrease in cash from changes in operating assets and liabilities of $190 million. The adjustments for non-cash and other items consist primarily of $308 million of depreciation and amortization, $138 million of impairment charges and $4 million in restructuring charges, partially offset by $65 million of deferred income taxes and $16 million of joint venture equity income. The decrease in cash from changes in operating assets and liabilities of $190 million was primarily the result of a $64 million increase in other assets due to increases in deferred customer discounts and deferred upfront incentive consideration, $59 million used for capitalized implementation costs, a $31 million decrease in accounts payable and accrued liabilities due to a $100 million litigation settlement payment that was partially offset by an increase in restructuring related accruals and other accrued liabilities, and a $29 million increase in accounts receivable due to the timing of collections. Cash provided by operating activities for the year ended December 31, 2012 was $312 million and consisted of net loss of $671 million, adjustments for non-cash and other items of $1,083 million and a decrease in cash of $101 million from changes in operating assets and liabilities. The adjustments for non-cash and other items consist primarily of $573 million of impairment charges, $345 million of litigation charges, $316 million of depreciation and amortization, and $49 million of losses from discontinued operations, partially offset by $232 million of deferred taxes. The decrease in cash of $101 million from changes in operating assets and liabilities was primarily the result of $79 million used for capitalized implementation costs and $20 million used for pension and other postretirement benefits. These decreases were partially offset by an increase of $13 million in accounts payable and accrued liabilities. Cash provided by operating activities for the year ended December 31, 2011 was $356 million and consisted of net loss of $103 million, adjustments for non-cash and other items of $527 million and a decrease in cash of $68 million from changes in operating assets and liabilities. The adjustments for non-cash and other items consist primarily of $293 million of depreciation and amortization, $185 million of impairment charges, and $34 million of deferred taxes, partially offset by $27 million of joint venture equity income. The decrease in cash of $68 million from changes in operating assets and liabilities was primarily the result of $59 million used for capitalized implementation costs and a $49 million increase in accounts receivable due to higher revenue and the timing of collections, partially offset by an increase of $94 million in accounts payable and accrued liabilities which was primarily the due to the timing of vendor payments. Investing Activities For the nine months ended September 30, 2014, we used cash of $160 million on capital expenditures, including $134 million related to software developed for internal use, $7 million related to software developed for sale and $19 million related to purchases of property, plant and equipment. For the nine months ended September 30, 2013, we used cash of $169 million on capital expenditures, including $144 million related to software developed for internal use and $24 million related to purchases of property, plant and equipment. In addition, we paid contingent consideration of $27 million related to the acquisition of PRISM in 2012 and we received $10 million in proceeds from the sale of TBiz. For the year ended December 31, 2013, we used cash of $247 million for investing activities. Significant highlights of our investing activities included: we spent $226 million on capital expenditures, including $192 million related to software developed for internal use and $34 million related to purchases of property, plant and equipment; Table of Contents we spent $27 million on contingent consideration related to the 2012 PRISM acquisition; and we received $10 million in proceeds on the sale of TBiz For the year ended December 31, 2012, we used cash of $236 million for investing activities. Significant highlights of our investing activities included: we spent $193 million on capital expenditures, including $153 million related to software developed for internal use and $40 million related to purchases of property, plant and equipment; we spent $66 million, net of cash acquired, to acquire PRISM for Airline and Hospitality Solutions; and we received $27 million in proceeds on the sale of Sabre Pacific. For the year ended December 31, 2011, we used cash of $176 million for investing activities. Significant highlights of our investing activities included: we spent $165 million on capital expenditures, including $118 million related to software developed for internal use and $47 million related to purchases of property, plant and equipment; and we spent $11 million, net of cash acquired, to acquire SoftHotel for Airline and Hospitality Solutions and Zenon N.D.C., Limited in Cyprus for Travel Network. Financing Activities Immediately prior to the closing of our initial public offering, we entered into the TRA. Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the TRA, (i) we expect that future payments under the TRA relating to the Pre-IPO Tax Assets could aggregate to between $330 million and $380 million over the next six years (assuming no changes to current limitations on our ability to utilize our NOLs under Section 382 of the Code), which we estimate will represent approximately 85% to 95% of the total payments we will be required to make under the TRA and (ii) we do not expect material payments to occur before 2016. Payments to the recipients under the TRA are not conditioned upon the recipient continuing to be an equity holder in the Company. Different timing rules will apply to payments under the TRA to be made to Pre-IPO Award Holders. Such payments will generally be deemed invested in a notional account rather than made on the scheduled payment dates, and the account will be distributed on the fifth anniversary of the initial public offering, together with an amount equal to the net present value of such Award Holder s future expected payments, if any, under the TRA. Moreover, payments to holders of stock options that were unvested prior to the completion of our initial public offering are subject to vesting on the same schedule as such holder s unvested stock options. For the nine months ended September 30, 2014, we used $59 million for financing activities. Significant highlights of our financing activities include: we entered into the Repricing Amendments which resulted in proceeds of $148 million from new lenders which were utilized to repay prior lenders. There was no net change in our outstanding indebtedness as a result of the Repricing Amendments; we raised $672 million net proceeds from our initial public offering and utilized the net proceeds to repay $296 million aggregate principal amount of our Term Loan C and $320 million aggregate principal amount of our 2019 Notes; we paid down $32 million of the term loan outstanding as part of quarterly principal repayments; we paid $30 million in debt-related costs including a $27 million prepayment fee on our 2019 Notes; we paid $27 million in contingent consideration associated with our acquisition of PRISM in 2012; and we paid $24 million in dividends on our common stock. Table of Contents For the nine months ended September 30, 2013, we generated $275 million from financing activities. Significant highlights of our financing activities included: we raised $2,540 million through the issuance of the Term Loan B and Term Loan C; we utilized $2,178 million of the Term Loan B and Term Loan C proceeds to pay down term loans under our prior senior credit facility; we incurred $19 million in debt issuance and third-party debt modification costs; and we paid down $61 million of the term loan outstanding as part of quarterly principal repayments. For the year ended December 31, 2013, we had a $262 million cash inflow for financing activities. Significant highlights of our financing activities included: we raised $2,190 million through the issuance of the Term Loan B and Term Loan C; we raised $350 million through the issuance of the Incremental Term Loan Facility; we utilized $2,178 million of the Term Loan B and Term Loan C proceeds to pay down the initial, extended and incremental term loans; we incurred $19 million in debt issuance and third-party debt modification costs; and we paid down $82 million of the term loan outstanding as part of quarterly mandatory prepayments. For the year ended December 31, 2012, we used $25 million for financing activities. Significant highlights of our financing activities included: on a net basis, we repaid $82 million under the Revolver; we raised $400 million through the issuance of 8.5% senior secured notes due in 2019 and utilized $272 million of the proceeds to pay down a portion of the extended term loan; we paid off $15 million of the term loan outstanding as part of quarterly mandatory prepayments over the first half of 2012; we paid down $773 million of our Initial Term Loan maturing 2014 through the issuance of $375 million Incremental Term Loan maturing 2017 and $400 million of 8.5% senior secured notes due 2019; we paid $43 million for debt modification costs; and we made a $6 million payment on outstanding term loans. For the year ended December 31, 2011, we used $272 million for financing activities. We paid down $324 million of principal on our unsecured notes which matured on August 1, 2011, we repaid $30 million under the senior secured notes and on a net basis, and we borrowed $82 million under the Revolver. Off Balance Sheet Arrangements We had no off balance sheet arrangements during the nine months ended September 30, 2014 and years ended December 31, 2013, 2012 and 2011. Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board ( FASB ) issued guidance on management s responsibility in the evaluation and disclosures of going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of the company s ability to continue as a going concern within one year of the date the financial statements are issued. If substantial doubt Table of Contents exists in the company s ability to continue as a going concern, certain disclosures are required to be provided. The standard is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We do not believe that the adoption will have a material impact on our consolidated financial statements. In June 2014, the FASB issued final guidance that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition. The guidance was issued to resolve diversity in practice. The standard is effective for annual and interim reporting periods beginning after December 15, 2015. We do not believe that the adoption will have a material impact on our consolidated financial statements. In May 2014, the FASB issued a comprehensive update to revenue recognition guidance that will replace current standards. Under the updated standard, revenue is recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration that is expected to be received for those goods and services. The updated standard also requires additional disclosures on the nature, timing, and uncertainty of revenue and related cash flows. The standard is effective for annual and interim reporting periods beginning after December 15, 2016. We are currently evaluating the impact this standard will have on our consolidated financial statements. In April 2014, the FASB issued updated guidance that raises the threshold for disposals to qualify as discontinued operations and allows companies to have significant continuing involvement and continuing cash flows with the discontinued operations. The standard also requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. The standard is effective for annual and interim reporting periods beginning in 2015. Early adoption is permitted in certain circumstances. We do not believe that the adoption will have a material impact on our consolidated financial statements. In February 2013, the FASB issued guidance regarding the reporting of amounts reclassified out of accumulated other comprehensive income ( OCI ) to net income. The standard requires companies to disclose the individual income statement line items in which the accumulated other comprehensive income amounts have been reclassified. Additionally, a tabular reconciliation of amounts recorded to other comprehensive income for the period is required. We have incorporated the new disclosure guidance on the reclassification of accumulated other comprehensive income into the footnotes to our consolidated financial statements. In January 2013, the FASB issued updated guidance on when it is appropriate to reclassify currency translation adjustments ( CTA ) into earnings. This guidance is intended to reduce the diversity in practice in accounting for CTA when an entity ceases to have a controlling interest in a subsidiary group or group of assets that is a business within a foreign entity and when there is a loss of a controlling financial interest in a foreign entity or a step acquisition. The standard is effective for annual and interim reporting periods for fiscal years beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements. In December 2011, the FASB issued guidance enhancing the disclosure requirements about the nature of an entity s right to offset and related arrangements associated with its financial and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and related net exposure. In January 2013, the FASB issued revised guidance clarifying that the scope of this guidance applies to derivatives, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and lending transactions that are either offset or subject to an enforceable master netting arrangement, or similar arrangement. Our adoption of this guidance did not have a material impact on our consolidated financial statements. Table of Contents Critical Accounting Policies This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses and other financial information. Actual results may differ significantly from these estimates, and our reported financial condition and results of operations could vary under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard. Our accounting policies that include significant estimates and assumptions include: (i) estimation of the revenue recognition for software development, (ii) collectability of accounts receivable, (iii) amounts for future cancellations of bookings processed through our GDS, (iv) determination of the fair value of assets and liabilities acquired in a business combination, (v) determination of the fair value of derivatives, (vi) determination of the fair value of our stock and related stock compensation expense, (vii) the evaluation of the recoverability of the carrying value of intangible assets and goodwill, (viii) assumptions utilized in the determination of pension and other postretirement benefit liabilities, (ix) assumptions made in the calculation of restructuring liabilities and (x) the evaluation of uncertainties surrounding the calculation of our tax assets and liabilities. We regard an accounting estimate underlying our financial statements as a critical accounting estimate if the accounting estimate requires us to make assumptions about matters that are uncertain at the time of estimation and if changes in the estimate are reasonably likely to occur and could have a material effect on the presentation of financial condition, changes in financial condition, or results of operations. We have included below a discussion of the accounting policies involving material estimates and assumptions that we believe are most critical to the preparation of our financial statements, how we apply such policies and how results differing from our estimates and assumptions would affect the amounts presented in our financial statements. We have discussed the development, selection and disclosure of these accounting policies with our audit committee. Although we believe these policies to be the most critical, other accounting policies also have a significant effect on our financial statements and certain of these policies also require the use of estimates and assumptions. For further information about our significant accounting policies, see Note 2, Summary of Significant Accounting Policies, to our audited consolidated financial statements included elsewhere in this prospectus. SaaS and Hosted Revenue Model Our revenue recognition for Airline and Hospitality Solutions includes SaaS and hosted transactions which are sometimes sold as part of agreements which also require us to provide consulting and implementation services. Due to the multiple element arrangement, revenue recognition sometimes involves judgment, including estimates of the selling prices of goods and services, assessments of the likelihood of nonpayment and estimates of total costs and costs to complete a project. The consulting and implementation services are generally performed in the early stages of the agreements. We evaluate revenue recognition for agreements with customers which generally are represented by individual contracts but could include groups of contracts if the contracts are executed at or near the same time. Typically, our consulting services are separated from the implementation and software hosting services. We account for separable elements on an individual basis with value assigned to each element based on its relative selling price. A comprehensive market analysis is performed on an annual basis to determine the range of selling prices for each product and service. In making these judgments we analyze various factors, including competitive landscapes, value differentiators, continuous monitoring of market prices, customer segmentation and overall market and economic conditions. Based on these results, estimated selling prices are set for each product and service delivered to customers. Changes in judgments related to these items, or deterioration in industry or general economic conditions, could materially impact the timing and amount of revenue and costs recognized. The revenue for consulting services is generally recognized as the services are performed, and the revenue for the implementation and the SaaS and hosted services is recognized ratably over the term of the agreement. Table of Contents Accounts Receivable and Air Booking Cancellation Reserve We evaluate the collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer s inability to meet its financial obligations to us (e.g., bankruptcy filings, failure to pay amounts due to us or others), we record a specific reserve for bad debts against amounts due to reduce the net recorded receivable to the amount we reasonably believe will be collected. For all other customers, we record reserves for bad debts based on past write-off history (average percentage of receivables written off historically) and the length of time the receivables are past due. Transaction revenue for airline travel reservations is recognized by Travel Network at the time of the booking of the reservation, net of estimated future cancellations. Cancellations prior to the day of departure are estimated based on the historical level of cancellations rates, adjusted to take into account any recent factors which could cause a change in those rates. In circumstances where expected cancellation rates or booking behavior changes, our estimates are revised, and in these circumstances, future cancellation rates could vary materially, with a corresponding variation in revenue net of estimated future cancellations. Factors that could have a significant effect on our estimates include global security issues, epidemics or pandemics, natural disasters, general economic conditions, the financial condition of travel suppliers, and travel related accidents. Business Combinations Authoritative guidance for business combinations requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and, as a result, actual results may differ from estimates. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to: future expected cash flows from software sales through the SaaS model, support agreements, consulting contracts, other customer contracts, acquired developed technologies and patents; the acquired company s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company s product portfolio; and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. Table of Contents Depending on the circumstances, the fair value of contingent consideration is determined based on management s best estimate of fair value given the specific facts and circumstances of the contractual arrangement, considering the likelihood of payment, payment terms and management s best estimates of future performance results on the acquisition date, if applicable. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance s or contingency s estimated value, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position. Goodwill and Long-Lived Assets We evaluate goodwill for impairment on an annual basis or when impairment indicators exist. We begin our evaluation with a qualitative assessment of whether it is more likely than not that a reporting unit s fair value is less than its carrying value before applying the two-step goodwill impairment model described below. If it is determined through the qualitative assessment that a reporting unit s fair value is more likely than not greater than its carrying value, the remaining impairment steps are unnecessary. Otherwise, we perform a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned to the sum of the carrying value of the assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the estimated fair value of that reporting unit, the carrying value of the reporting unit s goodwill is reduced to its implied fair value through an adjustment to the goodwill balance, resulting in an impairment charge. Goodwill was assigned to each reporting unit based on that reporting unit s percentage of enterprise value as of the date of the acquisition of Sabre Corporation (formerly known as Sovereign Holdings, Inc.) by TPG and Silver Lake plus goodwill associated with acquisitions since that time. We have identified six reporting units which include Travelocity North America, Travelocity Europe, Travelocity Asia Pacific, Travel Network, Airline Solutions and Hospitality Solutions. The Travelocity Asia Pacific reporting unit was sold in 2012. The fair values used in our evaluation are estimated using a combined approach based upon discounted future cash flow projections and observed market multiples for comparable businesses. The cash flow projections are based upon a number of assumptions, including risk-adjusted discount rates, future booking and transaction volume levels, future price levels, rates of growth in our consumer and corporate direct booking businesses and rates of increase in operating expenses, cost of revenue and taxes. Additionally, in accordance with authoritative guidance on fair value measurements, we made a number of assumptions, including assumptions related to market participants, the principal markets and highest and best use of the reporting units. We have recognized goodwill impairment charges of $136 million, $129 million, and $185 million for the years ended December 31, 2013, 2012 and 2011, respectively. The goodwill impairment charges were associated with Travelocity which has no remaining goodwill as of December 31, 2013. Goodwill related to our other reporting units was $2,138 million as of December 31, 2013. Changes in the assumptions used in our impairment testing may result in future impairment losses which could have a material impact on our results of operations. A change of 10% in the future cash flow projections, risk-adjusted discount rates, and rates of growth used in our fair value calculations would not result in impairment of the remaining goodwill for any of our reporting units. Definite-lived intangible assets are assigned depreciable lives of four to thirty years, depending on classification, and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of definite-lived intangible assets used in combination to generate cash flows largely independent of other assets may not be recoverable. If impairment indicators exist for definite-lived intangible assets, the undiscounted future cash flows associated with the expected service potential of the assets are compared to the carrying value of the assets. If our projection of undiscounted future cash flows is in excess of Table of Contents the carrying value of the intangible assets, no impairment charge is recorded. If our projection of undiscounted cash flows is less than the carrying value of the intangible assets, an impairment charge is recorded to reduce the intangible assets to fair value. We also evaluate the need for additional impairment disclosures based on our Level 3 inputs. For fair value measurements categorized within Level 3 of the fair value hierarchy, we disclose the valuation processes used by the reporting entity. The most significant assumptions used in the discounted cash flows calculation to determine the fair value of our reporting units in connection with impairment testing include: (i) the discount rate, (ii) the expected long-term growth rate and (iii) annual cash flow projections. See Note 13, Fair Value Measurements, to our audited consolidated financial statements included elsewhere in this prospectus. Equity-Based Compensation We account for our stock awards and options by recognizing compensation expense, measured at the grant date based on the fair value of the award net of estimated forfeitures, on a straight-line basis over the award vesting period. Stock Options We measure the value of stock-option awards at the grant date fair value as calculated by the Black-Scholes option-pricing model which requires the input of highly subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of our common stock prior to our initial public offering, risk-free interest rates, and the expected dividend yield of our common stock. The assumptions used in our option-pricing model represent management s best estimates. These estimates involve inherent uncertainties and the application of management s judgment. If these assumptions change and different factors are used, our stock-based compensation expense could be materially different in the future. These estimates are not necessary to determine the fair value of new awards now that the underlying awards are trading publicly. These assumptions are as follows: Fair value of our common stock. Prior to our initial public offering, we estimated the fair value of common stock as discussed in Common Stock Valuation below. Expected term. The expected term is estimated using the simplified method. The simplified method calculates the expected term as the average of the time to vesting and the contractual life of the option. Volatility. As we did not have a trading history for our common stock prior to our initial public offering, the expected stock price volatility for our common stock was estimated by taking the average of the median historic price volatility and the median implied volatility of traded stock options for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the technology industry similar in size, stage of life cycle and financial leverage. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be used in the calculation. Risk-free rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities appropriate for the term of employee options. Dividend yield. Prior to the third quarter of 2014, we did not pay cash dividends and we used an expected dividend yield of zero. If any of the assumptions used in the Black-Scholes option-pricing model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. The fair value Table of Contents of the stock options granted during the year ended December 31, 2013 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: Implied volatility 30.75 % Expected life (in years) 6.11 Risk free interest rate 1.53 % Dividend yield 0.00 % Restricted Stock Restricted stock is measured based on the fair market value of the underlying stock on the date of the grant. Shares of Sabre Corporation common stock are delivered on the vesting dates with the applicable statutory tax withholding requirements to be satisfied per the terms of the Sovereign Holdings, Inc. Restricted Stock Grant Agreement. Common Stock Valuation The fair value of the common stock underlying our stock-based awards was determined by the audit committee of our board of directors, with input from management and contemporaneous third-party valuations. We believe that the audit committee of our board of directors has the relevant experience and expertise to determine the fair value of our common stock. As described below, the exercise price of our share-based awards was determined by the audit committee of our board of directors based on input from management and the most recent contemporaneous third-party valuation as of the grant date. Given the absence of a public trading market of our common stock prior to our initial public offering, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held-Company Equity Securities Issued as Compensation, the audit committee of our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock including: contemporaneous valuations of our common stock performed by an unrelated third-party valuation specialist; our historical and projected operating and financial results, including capital expenditures; current business conditions and performance, including dispositions and discontinued operations; the market performance and financial results of comparable publicly-traded companies; amounts of indebtedness; the rights, preferences and privileges of our outstanding preferred stock and accumulated dividends; industry or company-specific considerations; likelihood of achieving a liquidity event, such as an initial public offering or a sale of the company; lack of marketability of our common stock; and the U.S. and global capital market conditions The nature of the material assumptions and estimates considered, to determine the fair market value of our common stock are highly complex and subjective. In valuing our common stock through December 31, 2013, the audit committee of our board of directors determined the business enterprise value ( BEV ) of our business generally using the income approach and the market approach using the market comparable method. Table of Contents The income approach estimates fair value based on the expectation of future cash flows that a company will generate such as cash earnings, cost savings, tax deductions, and the proceeds from disposition of assets. These future cash flows are discounted to their present values using a discount rate which reflects the risks inherent in our cash flows. This approach requires significant judgment in estimating projected growth rates and cost trends and in determining a discount rate adjusted for the risks associated with our business. The market comparable method estimates fair value based on a comparison of the subject company to comparable public companies in similar lines of business. From the comparable companies, a representative market value multiple is determined which is applied to the subject company s operating results to estimate the value of the subject company. In our valuations, the multiple of the comparable companies was determined using a ratio of the market value of invested capital to projected revenue and/or earnings before interest, taxes and depreciation and amortization for the current and following year. Our peer group of companies included a number of market leaders in transaction processing, travel distribution, SaaS and software and internet related businesses similar to, or adjacent to our own business. The market comparable method requires judgment in selecting the public companies that are most similar to our business and in the application of the relevant market multiples to our financial performance metrics. We have from time to time updated the set of comparable companies utilized as new or more relevant information became available, including changes in the market and our business models and input from third party market experts. Once we determine our BEV under each approach, we apply a weighting to the income approach and the market approach primarily based on the relevance of the peer companies chosen for the market approach analysis as well as other relevant factors. We then reduce the BEV by our total net debt and total redeemable preferred stock value to arrive at the estimated fair value of our common stock. Based on this information, the audit committee of our board of directors makes the final determination of the estimated fair value of our equity and common stock. Pension and Other Postretirement Benefits We sponsor the Sabre Inc. Legacy Pension Plan ( LPP ), which is a tax-qualified defined benefit pension plan for employees meeting certain eligibility requirements. The LPP was amended to freeze pension benefit accruals as of December 31, 2005, so that no additional pension benefits are accrued after that date. We also sponsor a defined benefit pension plan for certain employees in Canada. Pension and other postretirement benefits for defined benefit plans are actuarially determined and affected by assumptions which include, among other factors, the discount rate and the estimated future return on plan assets. In conjunction with outside actuaries, we evaluate the assumptions on a periodic basis and make adjustments as necessary. The discount rate used in the measurement of our benefit obligations as of December 31, 2013 and December 31, 2012 is as follows: Pension Benefits December 31, Other Benefits December 31, 2013 2012 2013 2012 Weighted-average discount rate 5.10 % 4.19 % 0.55 % 2.07 % The LPP plan is valued annually as of the beginning of each fiscal year. The principal assumptions used in the measurement of our net benefit costs for the three years ended December 31, 2013, 2012 and 2011 are as follows: Pension Benefits Other Benefits 2013 2012 2011 2013 2012 2011 Discount rate 4.19 % 5.32 % 5.88 % 1.16 % 2.32 % 2.69 % Expected return on plan assets 7.75 % 7.75 % 7.75 % Table of Contents Our discount rate is determined based upon the review of year-end high quality corporate bond rates. Lowering the discount rate by 50 bps as of December 31, 2013 would increase our pension and postretirement benefits obligations by approximately $21 million and a nominal amount, respectively, and decrease 2014 pension expense and estimated postretirement benefits expense by nominal amounts. The expected return on plan assets is based upon an evaluation of our historical trends and experience taking into account current and expected market conditions and our target asset allocation of 25% U.S. equities, 25% non-U.S. equities, 43% long duration fixed income, 5% real estate and 2% cash equivalents. The expected return on plan assets component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. We monitor our actual asset allocation and believe that our long-term asset allocation will continue to approximate the target allocation. Lowering the expected long-term rate of return on plan assets by 50 bps as of December 31, 2013 would increase 2014 pension expense by approximately $2 million. Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in foreign currency and interest rates. As a matter of policy, we do not use derivatives for trading or speculative purposes. We determine the fair value of our derivative instruments using pricing models that use inputs from actively quoted markets for similar instruments and other inputs which require judgment. These amounts include fair value adjustments related to our own credit risk and counterparty credit risk. Subsequent to initial recognition, we adjust the initial fair value position of the derivative instruments for the creditworthiness of the banking counterparty (if the derivative is an asset) or for our own creditworthiness (if the derivative is a liability). This adjustment is calculated based on the default probability of the banking counterparty and on our default probability, as applicable, and is obtained from active credit default swap markets and is then applied to the projected cash flows. Restructuring Activities Restructuring charges are typically comprised of employee severance costs, costs of consolidating duplicate facilities and contract termination costs. Restructuring charges are based upon plans that have been committed to by our management, but may be refined in subsequent periods. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in our consolidated statement of operations in the period in which the liability is incurred. When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ materially from actual results. This may require us to revise our initial estimates which may materially affect our results of operations and financial position in the period the revision is made. Income and Non-Income Taxes We recognize deferred tax assets and liabilities based on the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review deferred tax assets by jurisdiction to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions could cause an increase or decrease to the valuation allowance resulting in an increase or decrease in the effective tax rate, which could materially impact our results of operations. At year end, we had a valuation allowance on certain loss carryforwards based on our assessment that it is more likely than not that the deferred tax asset will not be realized. We believe that our estimates for the valuation allowances against deferred tax assets are appropriate based on current facts and circumstances. As of December 31, 2013, we had approximately $632 million of NOLs for U.S. federal income tax purposes, approximately $17 million of which are subject to an annual limitation on their ability to be utilized Table of Contents under Section 382 of the Code. These NOLs are Pre-IPO Tax Assets under the TRA, which provides for the payment by us to our Pre-IPO Existing Stockholders of 85% of the amount of cash savings, if any, in U.S. federal income tax that we and our subsidiaries are deemed to realize as a result of the utilization of the Pre-IPO Tax Assets. See Certain Relationships and Related Party Transactions Tax Receivable Agreement. We believe that it is more likely than not that the benefit from certain U.S. and non-U.S. deferred tax assets will not be realized. As a result, we established a valuation allowance of approximately $86 million against our U.S. deferred tax assets as of December 31, 2013, which includes our U.S. federal income tax NOL. In addition, we have an allowance on the U.S. deferred tax assets of TVL Common, Inc. that was merged into our capital structure on December 31, 2012 of $5 million and on the non-U.S. deferred tax assets of our lastminute.com subsidiaries of $163 million and $177 million as of December 31, 2013 and 2012, respectively. We reassess these assumptions regularly, which could cause an increase or decrease to the valuation allowance resulting in an increase or decrease in the effective tax rate, and could materially impact our results of operations. We operate in numerous countries where our income tax returns are subject to audit and adjustment by local tax authorities. Because we operate globally, the nature of the uncertain tax positions is often very complex and subject to change, and the amounts at issue can be substantial. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We re-evaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. At December 31, 2013 and December 31, 2012, we had a liability, including interest and penalty, of $67 million and $58 million, respectively, for unrecognized tax benefits, which would affect our effective tax rate if recognized. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision. With respect to value-added taxes, we have established reserves regarding the collection of refunds which are subject to audit and collection risks in various regions of Europe. Our reserves are based on factors including, but not limited to, changes in facts or circumstances, changes in law, effectively settled issues under audit, and new audit activity. Changes in any of these factors could significantly impact our reserves and materially impact our results of operations. At December 31, 2013 and December 31, 2012, we carried reserves of approximately $4 million and $37 million, respectively, associated with these risks. Occupancy Taxes Over the past ten years, various state and local governments in the United States have filed approximately 70 lawsuits against us pertaining primarily to whether Travelocity (and other OTAs) owes sales or occupancy taxes on some or all of the revenues it earns from facilitating hotel reservations using the merchant revenue model. In addition to the lawsuits, there are a number of administrative proceedings pending against us which could result in an assessment of sales or occupancy taxes on fees. See Business Legal Proceedings Litigation and Administrative Audit Proceedings Relating to Hotel Occupancy Taxes. Quantitative and Qualitative Disclosures about Market Risk Market Risk Management Market risk is the potential loss from adverse changes in: (i) prevailing interest rates, (ii) foreign exchange rates, (iii) credit risk and (iv) inflation. Our exposure to market risk relates to interest payments due on our long-term debt, revolving credit facility, derivative instruments, income on cash and cash equivalents, accounts receivable and payable and travel supplier liabilities and related deferred revenue. We manage our exposure to these risks through established policies and procedures. We do not engage in trading, market making or other speculative activities in the derivatives markets. Our objective is to mitigate potential income statement, cash flow and fair value exposures resulting from possible future adverse fluctuations in interest and foreign exchange rates. Table of Contents Interest Rate Risk As of December 31, 2013, our exposure to interest rates relates primarily to our interest rate swaps, our senior secured debt and our borrowings on the revolving credit agreement. Offsetting some of this exposure is interest income received from our money market funds. The objectives of our investment in money market funds are (i) preservation of principal, (ii) liquidity and (iii) yield. If future short-term interest rates averaged 10% lower than they were during the year ended December 31, 2013, our interest income from money market funds would have decreased by a negligible amount. This amount was determined by applying the hypothetical interest rate change to our average money market funds invested. As of September 30, 2014 and December 31, 2013, the face values of our outstanding financing obligations were as stated below: Rate* Maturity September 30, 2014 December 31, 2013 (Amounts in thousands) Senior secured credit facilities: Term Loan B L+3.00% February 2019 $ 1,743,938 $ 1,757,250 Incremental term loan facility L+3.00% February 2019 346,500 349,125 Term Loan C L+2.50% December 2017 49,313 361,250 Revolver, $370 million L+2.75% February 2019 Revolver, $35 million L+3.25% February 2018 Senior unsecured notes due 2016 8.35% March 2016 400,000 400,000 Senior secured notes due 2019 8.50% May 2019 480,000 800,000 Mortgage facility 5.80% March 2017 82,457 83,286 Face value of total debt outstanding 3,102,208 3,750,911 Less current portion of debt outstanding (22,418 ) (86,117 ) Face value of long-term debt outstanding $ 3,079,790 $ 3,664,794 * L refers to LIBOR. We enter into interest rate swap agreements to manage interest rate risk exposure. Our interest rate swaps that were outstanding and effective during 2014 matured on September 30, 2014. As of December 31, 2014, we have entered into forward starting interest rate swaps with a 1% floor that effectively convert $750 million of floating interest rate senior secured debt into a fixed rate obligation for a three year period starting December 31, 2015. The terms of our outstanding and matured interest rate swaps are as follows: Notional Amount Interest Rate Received Interest Rate Paid Effective Date Maturity Date Outstanding: $ 750 million 1 month LIBOR 1.48 % December 31, 2015 December 31, 2016 $ 750 million 1 month LIBOR 2.19 % December 31, 2016 December 31, 2017 $ 750 million 1 month LIBOR 2.61 % December 31, 2017 December 31, 2018 Matured: $ 400 million 1 month LIBOR 2.03 % July 29, 2011 September 30, 2014 $ 350 million 1 month LIBOR 2.51 % April 30, 2012 September 30, 2014 Since outstanding balances under our senior secured credit facilities incur interest at rates based on LIBOR, subject to a 1.00% floor, increases in short-term interest rates would not impact our interest expense until LIBOR exceeded 1.00%. Foreign Currency Risk We have operations outside of the United States, primarily in Canada, South America, Europe, Australia and Asia. We are exposed to foreign currency fluctuations whenever we enter into purchase or sale transactions denominated in a currency other than the functional currency of the operations. The principal foreign currencies Table of Contents involved include the Euro, the British Pound Sterling, the Polish Zloty, the Canadian Dollar, the Indian Rupee, and the Australian Dollar. Our most significant foreign currency denominated operating expenses is in the Euro, which comprised approximately 9%, 7% and 9% of our operating expenses for the years ended December 31, 2013, 2012 and 2011, respectively. In recent years, exchange rates between these currencies and the U.S. dollar have fluctuated significantly and may continue to do so in the future. During times of volatile currency movements, this risk can materially impact our earnings. To reduce the impact of this earnings volatility, we hedge our foreign currency exposure by entering into foreign currency forward contracts on several of our largest foreign currency exposures, including the Euro, the British Pound Sterling, the Polish Zloty and the Indian Rupee. In 2013, we hedged approximately 43% of our foreign currency exposure. The notional amounts of these forward contracts, totaling $151 million at September 30, 2014. The forward contracts represent obligations to purchase foreign currencies at a predetermined exchange rate to fund a portion of our expenses that are denominated in foreign currencies. The fair value of these forward contracts recognized as an asset in our consolidated balance sheets was $5 million and $3 million as of December 31, 2013 and December 31, 2012, respectively. We are also exposed to foreign currency fluctuations through the translation of the financial condition and results of operations of our foreign operations into U.S. dollars in consolidation. Such gains and losses are recognized as a component of accumulated other comprehensive income (loss) and is included in stockholders equity (deficit). Translation gains (losses) recognized as other comprehensive income (loss) were $13 million, $(2) million and $2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Credit Risk Our customers are primarily located in the United States, Canada, Europe, Latin America and Asia, and are concentrated in the travel industry. We generate a significant portion of our revenues and corresponding accounts receivable from services provided to the commercial air travel industry. As of December 31, 2013, and 2012, approximately $178 million or 58% and $189 million or 58%, respectively, of our trade accounts receivable were attributable to commercial air travel industry customers. Our other accounts receivable are generally due from other participants in the travel and transportation industry. We generally do not require security or collateral from our customers as a condition of sale. See Risk Factors Risks Related to Our Business and Industry Our travel supplier customers may experience financial instability or consolidation, pursue cost reductions, change their distribution model or undergo other changes. We regularly monitor the financial condition of the air transportation industry and have noted the financial difficulties faced by several air carriers. We believe the credit risk related to the air carriers difficulties is mitigated somewhat by the fact that we collect a significant portion of the receivables from these carriers through the ACH and other similar clearing houses. As of December 31, 2013, 2012 and 2011, approximately 57%, 55%, and 57%, respectively, of our air customers make payments through the ACH which accounts for approximately 94%, 95% and 94%, respectively, of our air billings. ACH requires participants to deposit certain balances into their demand deposit accounts by certain deadlines, which facilitates a timely settlement process. For these carriers, we believe the use of ACH mitigates our credit risk with respect to airline bankruptcies. For those carriers from whom we do not collect payments through the ACH or other similar clearing houses, our credit risk is higher. However, we monitor these carriers and account for the related credit risk through our normal reserve policies. Inflation Competitive market conditions and the general economic environment have minimized inflation s impact on our results of operations in recent periods. There can be no assurance, however, that our operating results will not be affected by inflation in the future. Table of Contents INDUSTRY Travel Industry Overview The travel and tourism industry is one of the world s largest industry segments, contributing $7 trillion to global GDP in 2013, according to the WTTC. The industry encompasses travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines and tour operators around the world, as well as travel buyers, including online and offline travel agencies, TMCs and corporate travel departments. The travel and tourism industry has been a growing area of the broader economy. For example, based on 40 years of IATA Traffic data, air traffic has historically grown at an average rate of approximately 1.5x the rate of global GDP growth. According to Euromonitor, outbound travel volumes have benefited and are expected to continue to benefit from GDP growth and corresponding rising income levels in growth markets such as Latin America, APAC and MEA. According to IATA Traffic, global airline passenger volume has grown at a 6% CAGR from 2009 to 2013. Air traffic in developing markets such as APAC, Latin America and the Middle East is expected to grow at even faster rates 6%, 6%, and 7%, respectively, from 2012 to 2032, according to Airbus. This emerging market growth is relevant for all our businesses but especially our Travel Network business, which had leading GDS-processed air bookings shares in both APAC and Latin America in 2013. Certain segments of the travel market are also growing faster than average. For example, LCC/hybrids, which represented approximately 29% of our 2013 PBs based on T2RL data served by our Airline Solutions reservations products, have continued to grow. In 2012, LCC/hybrids represented approximately 45% of our 2012 PBs. T2RL s LCC/hybrid group included JetBlue and Lion Air in 2012, which we consider LCC/hybrid carriers. T2RL s 2013 calculation excludes these carriers from the LCC/hybrid group. If these two carriers were included as LCC/hybrids in the 2013 calculation, LCC/hybrids would have represented approximately 41% of our 2013 PBs. According to Airbus, LCCs share of global air travel volume is expected to increase from 17% of revenue passenger kilometers in 2012 to 21% of revenue passenger kilometers by 2032. Finally, according to Euromonitor Report, business-related travel by U.S. residents, which is primarily served through GDS channels, has increased since the global economic downturn, reaching 229 million trips in 2013 compared to 223 million trips in 2010. According to IATA s Airline Industry Forecast 2013-2017, overall air travel is expected to sustain a growth rate approaching the historical 5% to 6% growth trend at least through 2017, and Boeing s Current Market Outlook projects a 5% CAGR in global passenger traffic growth from 2013 to 2033, measured in revenue passenger kilometers. Travel Industry Technology The travel industry is highly fragmented and complex, with approximately 800 airlines serving 3 billion passengers (T2RL), 480,000 hotel properties (Euromonitor Database), over 35,000 car rental outlets (PhoCusWright December 2013 ( PhoCusWright )), and numerous rail, cruise, tour and other operators around the world. Each of these types of travel suppliers requires technology to solve their complex and key marketing, sales, service and operational needs. In addition, there are tens of thousands of commercial buyers of travel including online and offline travel agencies, TMCs and corporate travel departments that serve both business and leisure travelers. These travel buyers rely on highly sophisticated shopping technology to filter the universe of travel options to identify desired itineraries that fit travelers personal preferences and comply with corporate policies. For example, there are billions of itinerary and fare options from New York to London on any given day, but only a small subset of those with available seats, on the preferred airline, with the optimal routing and at the desired time. The GDS search technology narrows the options down to the lowest fares that meet the traveler s criteria so the informed agency can help the traveler make the best choice quickly. For these flights, air carriers need to set prices, manage inventory and distribute their seats as well as plan, staff and operate their routes and aircraft, all while carefully analyzing their financial and operational results. Hotels face similar challenges, as millions of customers check in and check out of their properties daily. There is a significant amount of technology required to enable this ecosystem. Table of Contents To operate successfully, travel suppliers as well as travel buyers must solve this broad range of challenges from planning to distribution to operations. Historically, technology solutions were built in-house by travel suppliers and travel buyers. Over time, third-party providers emerged to offer more cost-effective and advanced solutions, and the market has increasingly shifted to an outsourced model. We believe that significant outsourcing will continue as legacy in-house systems continue to migrate and upgrade to third-party systems. A broad set of technology solutions has evolved to manage this complex, high-frequency and highly-orchestrated travel lifecycle. In addition, these travel technology solutions must keep pace with constantly evolving customer needs. Travel suppliers and travel buyers leverage technology solutions to optimize how travel products are marketed and sold, how end-customers are served, and how operations are managed. As illustrated by the following graphic, the technology required to enable the travel ecosystem includes comprehensive, global travel marketplaces like our Travel Network business, which processed more than 1.1 trillion system messages in 2013, with nearly 100,000 per second at peak times, as well as advanced reservation, planning, marketing and operations systems provided by solutions providers like our Airline and Hospitality Solutions business, which manages everything from hotel room inventory to crew scheduling on flights. Given the nature of these solutions, they generally represent integral elements of a travel supplier s and travel buyer s day-to-day business. This reliance on technology drove spending by the air transportation and hospitality industries to $60 billion in 2013 with expenditures expected to exceed $70 billion in 2017, according to Gartner. We believe that technology providers with deep domain expertise have become critical for the industry. As the demands of the industry continue to rapidly evolve, they will be presented with significant additional opportunities. For example, the combination of rapid developments in consumer electronics and the proliferation of customers carrying one or more digital devices is driving innovation ranging from mobile shopping to remote check-in and trip management. Similarly, intense competition has driven suppliers to explore new ways of merchandising their products, including the sale of ancillary products like preferred seating and checked baggage. This requires technology companies to create solutions to facilitate that product lifecycle from selling ancillary products and distribution management to inventory control. Technology providers are also helping travel suppliers and travel buyers to derive increasing value from advanced data analytics and business intelligence solutions, driving better operations, enhanced customer experiences and the personalization of travel products. In addition, the travel industry is focusing on streamlining operations, developing creative solutions Table of Contents such as the fully electronic, mobile flight bag for pilots, which eliminates the need for expensive and cumbersome printed flight manuals and documentation. Some recent trends in the travel industry which we expect to further technology innovation and spending include: Outsourcing: Historically, technology solutions were built in-house by travel suppliers and travel buyers. As complexity and the pace of innovation have increased, third-party providers have emerged to offer more cost-effective and advanced solutions. Additionally, the travel technology industry has shifted to a more flexible and scalable technology delivery model including SaaS and hosted implementations that allow for shared development, reduced deployment costs, increased scalability and a pay-as-you-go cost model. Airline Ancillary Revenue: The sale of ancillary products is now a major source of revenue for many airlines worldwide, and has grown to comprise as much as 30% of total revenues for some carriers and more than $31.5 billion in the aggregate across the travel industry in 2013, according to IdeaWorks. Enabling the sale of ancillary products is technologically complex and requires coordinated changes to multiple interdependent systems including reservations platforms, inventory systems, point of sale locations, revenue accounting, merchandising, shopping, analytics and other systems. Technology providers such as Sabre have already significantly enhanced their systems to provide these capabilities and we expect these providers to take further advantage of this significant opportunity going forward. Mobile: Mobile platforms have created new ways for customers to research, book and experience travel, and are expected to account for over 35% of online travel value sales by 2018, according to the Euromonitor Report. Accordingly, travel suppliers, including airlines and hospitality providers, are upgrading their systems to allow for delivery of services via mobile platforms from booking to check-in to travel management. The recent SITA Survey found that 97% of airlines are investing in mobile channels with the intention of increasing mobile access across the entire travel experience. This mobile trend also extends to the use of tablets and wireless connectivity by the airline workforce, such as automating cabin crew services and providing flight crews with electronic flight bags. Travel technology companies like Sabre are enabling and benefitting from this trend as travel suppliers upgrade their systems and travel buyers look for new sources of client connectivity. Personalization: Concurrently with the rise of ancillary products and mobile devices as a customer service tool, travel suppliers have an opportunity to provide increased personalization across the customer travel experience, from seat selection and on-board entertainment to loyalty program management and mobile concierge services. Data-driven business intelligence products can help travel companies use available customer data to identify the types of products, add-ons and upgrades customers are more likely to purchase and market these products effectively to various customer segments according to their needs and preferences. In addition to providing the technology platform to facilitate these services, we believe technology providers like Sabre can leverage their data-rich platforms and travel technology domain expertise to offer analytics and business intelligence to support travel suppliers in delivering more personalized service offerings. Increasing Use of Data and Analytics: The use of data has always been an asset in the travel industry. Airlines were pioneers in the use of data to optimize seat pricing, crew scheduling and flight routing. Similarly, hotels employed data to manage room inventory and optimize pricing. The travel industry was also one of the first to capitalize on the value of customer data by developing products such as customer loyalty programs. Historically, this data has largely been transaction-based, such as booking reservations, recording account balances, and tracking points in loyalty programs. Today, analytics-driven business intelligence products are evolving to further and better utilize available data to help travel companies make decisions, serve customers, optimize their operations and analyze their competitive landscape. Technology providers like Sabre have developed and continue to develop large-scale, data-rich platforms that include these business intelligence and data analytics tools that can identify new business opportunities and global, integrated and high-value solutions for travel suppliers. With the increasing complexity created by the large, fragmented and global nature of the travel industry, we believe reliance on technology will only increase. Technology spending by the air transportation and hospitality industries totaled $60 billion in 2013, with expenditures expected to exceed $70 billion in 2017, according to Gartner Enterprise. Table of Contents We offer a broad portfolio of sophisticated and comprehensive technology solutions and services on scalable platforms to travel suppliers, travel buyers and other industry participants that range from planning to distribution to operations. We currently organize our business in two segments: (i) Travel Network, our global B2B travel marketplace for travel suppliers and travel buyers and (ii) Airline and Hospitality Solutions, an extensive suite of leading software solutions primarily for airlines and hotel properties. Collectively, our integrated business enables the entire travel lifecycle, from route planning to post-trip business intelligence and analysis. Global Distribution System and Travel Marketplace Sabre developed the first airline CRS. As the industry and technology evolved and Sabre s and other CRS providers systems expanded globally to accommodate a large variety of travel suppliers and attract a broad set of travel buyers, these systems became known as GDSs, or global distribution systems. In recent years, certain GDS providers, including Sabre, have significantly broadened their product offering and value proposition to include a range of integrated technologies and solutions for travel suppliers and travel buyers. Combinations of the GDSs and these solutions offerings have increasingly become known as global travel marketplaces. GDS providers facilitate the operation of the travel industry in several ways. First, these travel marketplaces have an extensive network of travel buyers, including online and offline travel agencies, TMCs and corporate travel departments, as well as travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines and tour operators. GDSs efficiently bring together travel content such as inventory, prices and availability from travel suppliers and allow travel buyers to purchase that content through a transparent, searchable and consistently presented marketplace platform. A fundamental value proposition to the travel buyer is access to comprehensive and competitive travel content, including core content such as inventory and pricing equivalent to that directly available through a travel supplier s own website or sales office. For travel suppliers, these marketplaces provide efficient and cost-effective distribution of the travel supplier s services to a diverse customer base and also provide many OTAs with access to the travel content displayed on their websites. Based on our internal estimates and Marketing Information Data Tapes data, there were over one billion GDS-processed air bookings in 2013, representing more than $250 billion in global travel sales. Table of Contents In addition, some GDS providers augment their distribution offering with advanced merchandising and other capabilities. For example, workflow management solutions, like Sabre Red Workspace; automation tools that assist travel agencies in serving their customers before, during and after the trip; and web-based products are integral components of travel agents technology systems that help them market their services effectively and operate more efficiently. The graphic below illustrates the potential value of the GDS and related solutions to both travel suppliers and travel buyers: Buyers can purchase travel inventory (e.g., booking reservations for air or hotel) in two primary ways. They can purchase directly from the travel supplier, which we refer to as direct distribution, or they can purchase through a travel agency or other intermediary that typically uses a GDS. We refer to this as indirect distribution. With travel suppliers adoption of certain technology solutions over the last decade, including those offered by our Airline and Hospitality Solutions business, air travel suppliers have increased the proportion of direct bookings relative to indirect bookings. However, we believe that the rate at which bookings are shifting from indirect to direct distribution channels has slowed for a number of reasons, and that the rate of shift in the United States stabilized at very low levels in 2012 and 2013, although we cannot predict whether this low rate of shift will continue. Reasons for this include the increased participation of LCC/hybrids in indirect distribution channels as well as other airlines increasing their participation in GDSs in recent years. We believe this is due to the effectiveness and efficiency of the GDS as a global travel marketplace for travel suppliers to market and sell their travel content, particularly for TMCs, corporate travel departments and OTAs. In addition, travel suppliers using the GDS incur a booking fee which is, on average, only approximately 2% of the value of the booking. Therefore, the revenue generated through the GDS leads to a return on investment that is attractive compared to the incremental cost, in part because many of the tickets sold on the GDS platform are more expensive long-haul and business travel tickets (particularly those originating outside the home country of the airline) as well as tickets with additional booking complexity (e.g., multiple airline itineraries). These platforms also offer a particularly cost-effective means of accessing markets where a travel supplier s brand is less recognized by using local travel agencies to reach end consumers. As evidence of the value of the GDS platform, we estimate that Representative Airlines have an approximately 90% participation rate in a GDS (weighted by PB volume), as of December 31, 2013. We define Representative Airlines as all IATA member airlines as of December 2013, as well as Air Asia, Allegiant, Lion Air, Ryanair, Tiger Airways and Wizz Air, which, based on T2RL, collectively carried approximately Table of Contents three-quarters of PBs globally in 2012. Over the last several years, notable carriers that previously only distributed directly, including JetBlue and Norwegian, have adopted our GDS. Other carriers such as EVA Airways and Virgin Australia have further increased their participation in a GDS. On the hotel side, a recent TravelClick study shows that travel agents use of GDSs for hotel booking is growing faster than their use of any other distribution channel for hotel bookings. There are other technology initiatives that could impact the use of GDSs. For example, over the past ten years, several travel suppliers have proposed direct distribution initiatives. We believe that the direct distribution initiatives offered to date lack key functionality provided by the GDS, and would require each travel agency to implement a direct connection to each airline or other travel supplier, requiring significant and redundant IT expenditures. To date, we believe that direct distribution initiatives have not and will not have significant adoption by travel agents since their cost and lack of features currently make them less competitive than GDS offerings. In 2012, IATA proposed NDC, a new distribution capability, for adoption by airlines and travel distribution companies. As originally proposed, NDC is a combination of technical standards and business model, similar to some direct distribution initiatives, and we believe it suffers from many of the same problems noted above. We are not aware of any GDS industry participant or major travel agency that has committed the necessary investment for NDC. That said, we are committed to working with IATA to develop uniform technical standards that would incorporate NDC capabilities in a manner that integrates with the GDS for the benefit of travel buyers and travel suppliers. Travel buyers, such as online and offline travel agencies, TMCs and corporate travel departments continue to utilize GDS platforms to provide travel content to their customers. Such customers continue to demand the broadest possible offerings at the best available prices in a single comparable format that we believe can most effectively be offered by GDSs at present. Additionally, travel buyers demand functionalities that provide near real-time results and allow flexible search parameters. Such enhanced functionalities have not typically been available via direct distribution channels, which have historically had less sophisticated search engines and have been limited to a single travel supplier s inventory. In addition, we believe that travel agencies value other attributes of the GDS, including incentive consideration that supplements their income, tools that facilitate booking data integration within their mid-and back-office systems, and consistent user interfaces across all travel content shopped and sold. In particular, we believe that the wide variety of functionalities provided by GDSs is attractive to corporate travel departments due to their complex travel requirements and corporate travel contracts. For these reasons, we expect that travel buyers will continue to use GDSs to provide travel content in order to meet the needs of their customers and remain competitive. Table of Contents Business Model The distribution platform component of a GDS plays the role of a transaction processor for the travel industry, while the value-added integrated solutions make the GDS a true B2B travel marketplace. Generally, GDSs collect a transaction fee from the travel suppliers for each reservation they process, with no charge to travel suppliers for listing or shopping of their content. These travel marketplaces often implement a revenue sharing arrangement with travel agencies to incentivize them to consolidate demand and use the system efficiently. In such arrangements, GDS providers pay travel agencies a booking incentive for each booking that generates revenue for the GDS provider, sometimes after certain minimum booking levels are met. The following diagram presents an overview of the key financial flows for this two-sided transaction-based business model: Because GDS revenue is directly dependent upon travel-related transaction activity, GDS revenue growth has historically correlated with growth in the overall travel market. Based on 40 years of IATA Traffic data, air traffic has historically grown at an average rate of approximately 1.5x the rate of global GDP growth. According to Marketing Information Data Tapes data and our internal estimates, GDS-processed bookings, for example, have already surpassed pre-recession levels, growing 3% per year from 2009 through 2013, and is expected to grow over the next four years. In addition to general economic conditions, certain factors, such as the increasing propensity of LCC/hybrids to expand their distribution through these global travel marketplaces in order to attract new customers beyond their home markets, may aid growth, while the U.S. government budget sequestration and shutdown may negatively impact this growth. See Risk Factors Risks Related to our Business and Industry Our business could be harmed by adverse global and regional economic and political conditions and Our revenue is highly dependent on transaction volumes in the global travel industry, particularly air travel transaction volumes. Competitive Environment Travel marketplace participants include: GDSs such as Sabre, Amadeus and Travelport; local distribution systems and travel marketplace providers that are primarily owned by airlines or government entities and operate primarily in their home countries, including Abacus in APAC (100% of Abacus transactions processed by Sabre), TravelSky in China and Sirena in Russia and the Commonwealth of Independent States; travel suppliers that use direct distribution to sell their services directly to travelers; corporate travel booking tools, including GetThere, Concur Technologies, Deem, KDS, eTravel LLC and Egencia; and Table of Contents other market participants in the travel space, including Kayak, TripAdvisor, Yahoo! and Google, which have launched consumer travel search tools that direct shoppers to travel suppliers direct distribution channels and OTAs. We believe that travel marketplace participants strive to differentiate themselves by providing travel buyers with some or all of the following services and functionality: reliable, easy to use and innovative technology; comprehensive, accurate and timely travel content or services; global coverage or regional expertise; booking incentives to travel agencies; and comprehensive solutions for business productivity, revenue maximization or cost savings. In addition, we believe that travel marketplace participants that serve travel suppliers strive to maintain an extensive network of travel buyer customers to provide a comprehensive global or regional offering of sales channels while offering low transaction fees. Some of these market participants also offer capabilities for travel suppliers to advertise, merchandise and personalize their products and services through the GDS. Compared to other types of participants, global travel marketplaces such as Travel Network tend to offer more of these attributes to both travel buyers and travel suppliers. In the United States, full deregulation of the GDS industry occurred in 2004. GDSs and airline carriers in Europe are still subject to rules aimed at preventing anti-competitive behavior and ensuring the supply of neutral information to consumers. Airlines that have decisive influence over a GDS, such as Air France, Iberia and the parent company of Lufthansa, all of which partially own Amadeus, must abide by specific rules prohibiting discrimination by an airline against another GDS that is competing with the airline-owned GDS. The Chinese travel marketplace is heavily regulated to provide the state-controlled GDS, TravelSky, with monopoly control, which has largely kept other GDS providers out of the Chinese market. However, China has recently agreed to a phased, selective easing of some of these regulations, though progress has been slow, according to PhoCusWright. Canada still has some GDS regulations as well, primarily around the display of air carriers services. Travel Technology Solutions Travel technology companies provide travel suppliers with solutions that address a myriad of business processes, including commercial planning, revenue management, inventory management, customer acquisition and merchandising, sales and e-commerce, operations planning and management, business intelligence, and market intelligence. These solutions are typically comprised of SaaS solutions, hosted solutions and locally deployed solutions. Some of these solutions are developed by travel suppliers in-house and others are developed by third parties such as travel technology companies. Historically, large travel suppliers built custom in-house software and applications for their business process needs. In response to a desire for more flexible systems given increasingly complex technological requirements, reduced IT budgets and increased pricing pressure, many travel suppliers turned to third-party solutions providers for many of their key technologies and began to license software from software providers. Business Model In addition to the continuing technology outsourcing trend, the industry has also seen a shift to more flexible and scalable technology delivery models. Although traditional software licensing remains an important part of the industry, leading technology providers like Sabre have been at the forefront of a shift to SaaS and hosted implementations that allow for shared development, reduced deployment costs, increased scalability and a pay-as-you-go pricing model. This model also allows customers to benefit from constantly evolving platforms in a highly dynamic environment. By amortizing the cost of the solution over a customer s transactions (e.g., PBs or room reservations made), solutions providers can often help customers reduce upfront technology costs and convert them to variable costs linked to company growth. Given the capital intensive nature of many travel suppliers businesses, we believe that this pricing flexibility is attractive to travel suppliers. Table of Contents Competitive Environment Participants in the travel technology solutions market include both third-party solutions providers and travel suppliers with in-house systems. As the technology outsourcing trend continues, third-party solutions providers compete for business based on a number of factors, including: the breadth of solutions offered, scope and complexity of business needs addressed, ability to meet a variety of customer specifications, proven effectiveness and reliability, implementation and system migration processes, flexibility, scalability and ease of use, pricing, level of integration with customers existing technology, global footprint, industry and technology expertise, cost and efficiency of system upgrades and customer support services. We believe that competitors who offer solutions that meet a range of complex needs and supplement those solutions with reliable support and a deep understanding of industry processes are more attractive to potential customers because they are able to solve more complex problems while reducing the total number of solutions providers that the customer needs. Developing effective solutions requires complex and specific travel industry expertise. Also, most travel suppliers generally favor solutions providers that already serve other large travel suppliers in a given region. Airlines in particular are focused on the proven reliability of technology that is integral to operational efficiency and passenger safety, and hotels generally desire the technological sophistication and capabilities used by the larger and more prestigious hotel brands. Furthermore, due to the large size of many airline and hotel customers, solutions providers that can provide the scale to accommodate large volumes and deliver a broad portfolio of solutions have a competitive advantage. We believe that currently only a few SaaS and hosted technology solutions providers have the breadth, industry knowledge and technology expertise to effectively compete on a large scale. Although new entrants specializing in a particular type of software occasionally enter the solutions market, they typically focus on emerging or evolving business problems, niche solutions or small regional customers. Airline Supplier Technology Gartner estimates that technology spending by the air transportation industry totaled approximately $33 billion in 2013 (Gartner Enterprise). According to our internal estimates and T2RL passenger data, more than 600 airlines, representing over 95% of global passenger volumes, use a variety of software solutions to manage and integrate complex business processes. SITA estimates that airlines currently spend approximately 1.5% of global airline revenue on operational IT (SITA Survey). These systems include functionalities that support core capabilities of the air carrier, including reservations booking and related processes, merchandising and points of sale, CRS, check-in and boarding. According to T2RL PSS, the world market for such passenger sales and service systems is now worth more than $2 billion per year. Although the number of new reservations opportunities varies materially by year, in 2013 and 2014, T2RL estimated that contracts representing over 1 billion PBs will come up for renewal between 2014 and 2017. In addition to passenger sales and service solutions, certain technology providers, such as Sabre, offer other value-added software solutions. These solutions range in functionality from commercial planning to airline enterprise operations management, including software that manages flight operations, crew scheduling, route planning, pricing optimization, contract management and compliance and a host of other key airline functionalities. Based on our industry experience and internal data, we believe that a similar amount is spent each year on other industry-specific, software-enabled solutions. Hotel Supplier Technology Hotels use a number of different technology systems to distribute and market their products and improve their operational efficiency. According to Gartner Enterprise, technology spending by the hospitality industry totaled approximately $27 billion in 2013. Most of the hotel market is highly fragmented. Independent hotels and small- to medium-sized chains (groups of less than 300 properties) comprise a substantial majority of hotel properties and available hotel rooms, while global and regional chains comprise the balance. These independent hotels and small- to medium-sized chains rely heavily on external web-based CRSs to distribute their inventory Table of Contents across a variety of channels. CRS platforms provide GDS access, connectivity to major OTAs, internet booking capabilities, call center booking platforms, channel management and access to other distribution services on a shared platform. CRS providers may also differentiate themselves with value-added services such as digital marketing services, call center outsourcing services, and marketing consulting that help hotels compete. We expect opportunities for the top CRS providers to expand significantly, as hotels migration to external CRS platforms continues, including larger hotel chains now considering outsourcing this service to a third-party platform. Additionally, hotels are migrating toward web-based PMSs as recent technical advances, availability and lower total cost of ownership are making them increasingly attractive compared to on-site PMSs, which have historically been expensive to maintain. Web-based PMSs also make it possible to create an integrated CRS-PMS web-based solution, which, based on an internal survey that we conducted, is a product that the majority of hotels with ten or more properties would be interested in purchasing when they next upgrade their PMS. As the hotel industry shifts from offline advertising to online marketing, CRS providers offering marketing capabilities such as website optimization, search engine optimization and online advertising will be more competitive players. We also believe that similar opportunities exist in the areas of revenue management, CRM and other operational functions that integrate with the CRS and PMS. Online Travel Agencies An OTA is an e-commerce business that allows travelers to conveniently and efficiently shop, compare and purchase a broad array of travel-related products and services, often sourced in part from GDS platforms. OTAs compete with traditional offline travel agencies as well as many alternative online travel distribution channels, including travel supplier direct distribution and metasearch companies such as Kayak, trivago and TripAdvisor. These market participants differentiate themselves on the basis of ease of use, price, customer satisfaction, availability of product type or rate, service, amount, accessibility and reliability of information, brand image and breadth of products offered. This requires OTAs to have effective branding and marketing, an efficient website to support shopping and booking capabilities, as well as strong relationships with travel suppliers or third-party aggregators to offer a broad supply of travel content to attract customers and generate transaction and advertising revenue. We believe that customers need to trust the provider to fulfill and service their travel purchase often results in brand loyalty to a single site. Table of Contents BUSINESS Overview We are a leading technology solutions provider to the global travel and tourism industry. We span the breadth of a highly complex $7 trillion global travel ecosystem, providing key software and services to a broad range of travel suppliers and travel buyers. Through our Travel Network business, we process hundreds of millions of transactions annually, connecting the world s leading travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines and tour operators, with travel buyers in a comprehensive travel marketplace. We offer efficient, global distribution of travel content from approximately 125,000 travel suppliers to approximately 400,000 online and offline travel agents. To those agents, we offer a platform to shop, price, book and ticket comprehensive travel content in a transparent and efficient workflow. We also offer value-added solutions that enable our customers to better manage and analyze their businesses. Through our Airline Hospitality Solutions business, we offer travel suppliers an extensive suite of leading software solutions, ranging from airline and hotel reservations systems to high-value marketing and operations solutions. These solutions include planning airline crew schedules, re-accommodating passengers during irregular flight operations and managing day-to-day hotel operations. These solutions allow our customers to market, distribute and sell their products more efficiently, manage their core operations, and deliver an enhanced travel experience. Through our complementary Travel Network and Airline and Hospitality Solutions businesses, we believe we offer the broadest, end-to-end portfolio of technology solutions to the travel industry. Our portfolio of technology solutions has enabled us to become the leading end-to-end technology provider in the travel industry. For example, we are one of the largest GDS providers in the world, with a 36% share of GDS-processed air bookings in 2013. More specifically, we are the #1 GDS provider in North America and also in higher growth markets such as Latin America and APAC, in each case based on GDS-processed air bookings in 2013. In those three markets, our GDS-processed air bookings share was approximately 50% on a combined basis in 2013. In our Airline and Hospitality Solutions business, we believe we have the most comprehensive portfolio of solutions. In 2013, we had the largest third-party hospitality CRS room share based on our approximately 27% share of third-party hospitality CRS hotel rooms distributed through our GDS, and, according to T2RL PSS data for 2012, we had the second largest airline reservations system globally. We also believe that we have the leading portfolio of airline marketing and operations products across the solutions that we provide. Through our solutions, which span the breadth of the travel ecosystem, we have developed deep domain expertise. Our success is built on this expertise, combined with our significant technology investment and focus on innovation. This foundation has enabled us to develop highly scalable and technology-rich solutions that directly address the key opportunities and challenges facing our customers. For example, we have invested to scale our GDS platform to meet massive transaction processing requirements. In 2013, our systems processed over $100 billion of estimated travel spending and more than 1.1 trillion system messages, with nearly 100,000 system messages per second at peak times. Our investment in innovation has enabled our Travel Network business to evolve into a dynamic marketplace providing a broad range of highly scalable solutions from distribution to workflow to business intelligence. Our investment in our Airline and Hospitality Solutions offerings has allowed us to create a broad portfolio of value-added products for our travel supplier customers, ranging from reservations platforms to operations solutions typically delivered via highly scalable and flexible SaaS and hosted platforms. We have a long history of engineering innovative travel technology solutions. For example, we believe we were the first GDS to enable airlines to sell ancillary products like premium seats through the GDS, the first third-party provider to automate passenger reaccommodation during large operational disruptions and the first GDS to launch a B2B app marketplace for our travel agency customers that allows them to customize and augment our Travel Network platform. Our innovation has been consistently recognized in the market, with awards including the Business Traveler Innovation Award from the Global Business Travel Association, an unaffiliated entity, in 2011 and 2012, for which we applied and were one of eight award winners chosen by popular vote. We were also recognized by the InformationWeek 500 in 2013 as one of the Most Table of Contents Innovative Users of Business Technology for the eleventh consecutive year. These 500 companies are invited to apply and are chosen by InformationWeek, an unaffiliated entity, based on their unconventional approaches and new ways of solving complex business problems with IT. We continue to improve our existing solutions and expand our offerings to meet the constantly evolving needs of our customers. For example, as demonstrated in the following graphic, we have current or in-development solutions that address five of the six major technology investment priorities highlighted in the recent SITA Survey of major airline carriers: Our SaaS and hosted technology platforms allow us to serve our customers primarily through a recurring, transaction-based revenue model based primarily on travel events such as air segments booked, PBs or other relevant metrics. For the year ended December 31, 2013, 91% of our Travel Network and Airline and Hospitality Solutions revenue, on a weighted average basis, was Recurring Revenue. See Method of Calculation for a description of Recurring Revenue. This model has benefits for both our customers and for us. For our customers, our delivery model allows otherwise fixed technology investments to be variable, providing flexibility in their cost base and smoothing investment cycles as they grow, while enabling them to benefit from the continuous evolution of our platform. For us, this recurring, transaction-based revenue model allows us to expand with our customers in the travel industry, a segment of the economy that has grown significantly faster than global GDP over the last 40 years. Since our revenues are primarily linked to our customers transaction volumes, rather than to airline budget cycles or cyclical end-customer pricing, which we believe are more volatile than transaction volumes, this model facilitates greater stability in our business, particularly during negative economic cycles. In addition, as a technology solutions and transaction processing company, we do not take airline, hotel or other inventory risk, nor are we directly exposed to fuel price volatility or labor unions. Our recurring, transaction-based revenue model, combined with our high-quality products, reinvestment in our technology, multi-year customer contracts and disciplined operational management, has contributed to our strong growth profile, as demonstrated by our Adjusted EBITDA having increased each year since 2008 despite Table of Contents the global economic downturn and resulting travel slowdown. From 2009 through 2013, we grew our revenue and Adjusted EBITDA at 7% and 11% CAGRs, respectively, and increased Adjusted EBITDA margins by 394 bps, in each case, excluding Travelocity and intersegment eliminations. During the same period, net loss attributable to Sabre Corporation decreased 37% and net loss margin decreased by 258 bps. See Non-GAAP Financial Measures and Summary Historical and Pro Forma Consolidated Financial and Other Data for additional information regarding Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure. We currently operate through two business segments: (i) Travel Network and (ii) Airline and Hospitality Solutions. On December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com and on January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. See Summary Recent Developments. We will reclassify and report all of the businesses associated with the Travelocity segment as discontinued operations in our 2014 Annual Report on Form 10-K as the segment was considered held for sale as of December 31, 2014. Our segments operate with shared infrastructure and technology capabilities, and provide key solutions to our customers. Collectively, our integrated business enables the entire travel lifecycle, from route planning to post-trip business intelligence and analysis. The graphic below provides illustrative examples of the points where Sabre enables the travel lifecycle: Travel Network is our global B2B travel marketplace and consists primarily of our GDS and a broad set of capabilities that integrate with our GDS to add value for travel suppliers and travel buyers. Our GDS offers content from a broad array of travel suppliers, including approximately 400 airlines, 125,000 hotel properties, 30 car rental brands, 50 rail carriers, 16 cruise lines and 200 tour operators, to tens of thousands of travel buyers, including online and offline travel agencies, TMCs and corporate travel departments. Our Airline and Hospitality Solutions business offers a broad portfolio of software technology products and solutions, primarily through SaaS and hosted models, to approximately 225 airlines, 17,500 hotel properties and 700 other travel suppliers. Our flexible software and systems applications help automate and optimize our customers business processes, including reservations systems, marketing tools, commercial planning solutions and enterprise operations tools. Travelocity was our family of online consumer travel e-commerce businesses through which we provided travel content and booking functionality primarily for leisure travelers. In August 2013, Travelocity entered into an exclusive, long-term strategic marketing agreement with Expedia. Under the Expedia SMA, Expedia powered the Table of Contents technology platforms of Travelocity s existing U.S. and Canadian websites, as well as provide access to Expedia s supply and customer service platforms. Additionally, in the first quarter of 2014, Travelocity sold its TPN business, a B2B loyalty and private label website offering, to Orbitz. Furthermore, on December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com and on January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. Following our sale of Travelocity.com to Expedia, Inc., the Expedia SMA was terminated. See Summary Recent Developments. For the nine months ended September 30, 2014 and 2013, we recorded revenue of $2,229 million and $2,303 million, respectively, net income attributable to Sabre Corporation of $23 million and loss of $127 million respectively, and Adjusted EBITDA of $617 million and $584 million, respectively, reflecting a 1% and (6)% net income (loss) margin and a 28% and 25% Adjusted EBITDA margin, respectively. For the nine months ended September 30, 2014, Travel Network contributed 63%, Airline and Hospitality Solutions contributed 25%, and Travelocity contributed 12% of our revenue (excluding intersegment eliminations). During this period, shares of Adjusted EBITDA for Travel Network, Airline and Hospitality Solutions, and Travelocity were approximately 77%, 25% and (2)%, respectively (excluding corporate overhead allocations such as finance, legal, human resources and certain information technology shared services). See Summary Recent Developments regarding our Travelocity business segment moving to discontinued operations. For the years ended December 31, 2013 and 2012, we recorded revenue of $3,050 million and $2,974 million, respectively, net loss attributable to Sabre Corporation of $100 million and $611 million, respectively, and Adjusted EBITDA of $791 million and $787 million, respectively, reflecting a 3% and 21% net loss margin and a 26% and 26% Adjusted EBITDA margin, respectively. For the year ended December 31, 2013, Travel Network contributed 58%, Airline and Hospitality Solutions contributed 23%, and Travelocity contributed 19% of our revenue (excluding intersegment eliminations). During this period, shares of Adjusted EBITDA for Travel Network, Airline and Hospitality Solutions, and Travelocity were approximately 77%, 21% and 2%, respectively, (excluding corporate overhead allocations such as finance, legal, human resources and certain information technology shared services). See Summary Recent Developments regarding our Travelocity business segment moving to discontinued operations. For additional information regarding Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, see Non-GAAP Financial Measures and Summary Historical and Pro Forma Consolidated Financial and Other Data. We are headquartered in Southlake, Texas, and employ approximately 8,000 people in approximately 60 countries around the world. We serve our customers through cutting-edge technology developed in six facilities located across four continents. Our Competitive Strengths We believe the following attributes differentiate us from our competitors and have enabled us to become a leading technology solutions provider to the global travel industry. Broadest Portfolio of Leading Technology Solutions in the Travel Industry We offer the broadest, most comprehensive technology solutions portfolio available to the travel industry from a single provider, and our solutions are key to the operations of many of our travel supplier and travel agency customers. Travel Network, for example, provides a key technology platform that enables efficient shopping, booking and management of travel itineraries for online and offline travel agencies, TMCs and corporate travel departments. In addition to offering these and other advanced functionalities, it is a valuable distribution and merchandising channel for travel suppliers to market to a broad array of customers, particularly outside their home countries and regions. Additionally, we provide SaaS and hosted solutions that run many of the most important operations systems for our travel supplier customers, such as airline and hotel reservations systems, revenue management, crew scheduling and flight operations. We believe that our Travel Network and Airline and Hospitality Solutions offerings address customer needs across the entire travel lifecycle, and that we Table of Contents are the only company that provides such a broad portfolio of technology solutions to the travel industry. This breadth affords us significant competitive advantages including the ability to leverage shared infrastructure, a common technology organization and product development. Beyond scale and efficiency, our position spanning the breadth of the travel ecosystem helps us to develop deep domain expertise and to anticipate the needs of our customers. Taken together, the value, quality, and breadth of our technology, software and related customer services contribute to our strong competitive position. Global Leadership Across Growing End Markets We operate in areas of the global travel industry that have large and growing addressable customer bases. Each of our businesses is a leader in its respective area. Sabre is the leading GDS provider in North America, Latin America, and APAC, with 55%, 57%, and 39% share of GDS-processed air bookings, respectively, in 2013. Additionally, Airline Solutions is the second largest provider of reservations systems, with an 18% global share of 2012 PBs, according to T2RL PSS. We believe that we have the leading portfolio of airline marketing and operations products across the solutions that we provide. We also believe our Hospitality Solutions business is the leader in hotel reservations, handling 27% of third-party hospitality CRS hotel rooms through our GDS in 2013. See Method of Calculation for an explanation of the methodology underlying our GDS-processed air bookings share and third-party hospitality CRS hotel room share calculations. Looking forward, we expect to benefit from attractive growth in our end markets. Euromonitor expects a 4.5% CAGR in air travel and hotel spending combined between 2014 and 2018 (Euromonitor Database). According to Gartner Enterprise, technology spending by the air transportation and hospitality sectors is expected to grow significantly from $60 billion in 2013 to over $70 billion in 2017. Within our Travel Network business, we also expect our presence in economies with strong GDP growth and regions with faster air traffic growth, such as APAC, Latin America and EMEA, will further contribute to the growth of our businesses. Similarly, our Airline Solutions reservations products, customers are weighted toward faster-growing LCC/hybrids, which represented approximately 29% of our 2013 PBs based on T2RL data. In 2012, LCC/hybrids represented approximately 45% of our 2012 PBs. T2RL s LCC/hybrid group included JetBlue and Lion Air in 2012, which we consider LCC/hybrid carriers. T2RL s 2013 calculation excludes these carriers from the LCC/hybrid group. If these two carriers were included as LCC/hybrids in the 2013 calculation, LCC/hybrids would have represented approximately 41% of our 2013 PBs. Innovative and Scalable Technology Two pillars underpin our technology strategy: innovation and scalability. To drive innovation in our travel marketplace business, we make significant investments in technology to develop new products and add incremental features and functionality, including advanced algorithms, decision support, data analysis and other valuable intellectual property. This investment is supported by our global technology teams comprising approximately 4,000 employees and contractors. This scale and cross-business technology organization creates efficiency and a flexible environment that allows us to apply knowledge and resources across our broad product portfolio, which in turn fuels innovation. In addition, our investments in technology have created a highly scalable set of solutions across our businesses. For example, we believe our GDS is one of the most heavily utilized SOA environments in the world, processing more than 1.1 trillion system messages in 2013, with nearly 100,000 system messages per second at peak times. Our Airline and Hospitality Solutions business employs highly reliable software technology products and SaaS and hosted infrastructure. Compared to traditional in-house software installations, SaaS and hosted technology offers our customers advantages in terms of cost savings, more robust functionality, increased flexibility and scale, and faster upgrades. As an example of the SaaS and hosted scalability benefit, our delivery model has facilitated an increase in the number of PBs in our Airline Solutions business from 288 million to 478 million from 2009 to 2013. Our investments in technology maintain and extend our technology platform which has supported our industry-leading product innovation. On the scale at which we operate, we believe that the combination of an expanding network and technology investments continues to create a significant competitive advantage for us. Table of Contents Stable, Resilient, and Diversified Business Models Travel Network and much of Airline and Hospitality Solutions operate with a transaction-based business model that ties our revenue to a travel supplier s transaction volumes rather than to its unit pricing for an airplane ticket, hotel room or other travel product. Travel-related businesses with volume-based revenue models have generally shown strong visibility, predictability and resilience across economic cycles because travel suppliers have historically sought to maintain traveler volumes by reducing prices in an economic downturn. Our resilience is also partially attributable to our non-exclusive multi-year contracts, in our Travel Network business. For example, although most of our contracts have terms of one to three years, contracts with our major travel buyer and travel supplier customers, which represent the majority of Travel Network revenue, have five to ten year terms and three to five year terms, respectively. Similarly, our Airline Solutions business has contracts that typically range from three to seven years in length, and our Hospitality Solutions business has contracts that typically range from one to five years in length. Our Travel Network and Airline and Hospitality Solutions businesses also deliver solutions that are integral components of our customers businesses, and have historically remained in place once implemented. In our Travel Network business and our Airline and Hospitality Solutions business, 94% and 84% of our revenue was Recurring Revenue, respectively, in 2013. In addition to being stable, our businesses are also diversified. Travel Network and Airline and Hospitality Solutions generate a broad geographic revenue mix, with a combined 43% of revenue generated outside the United States in 2013. None of our travel buyers or travel suppliers accounted for more than 10% of our revenue for the years ended December 31, 2013 or 2012. Strong, Long-Standing Customer Relationships We have strong, long-standing customer relationships with both travel suppliers and travel buyers. These relationships have allowed us to gain a deep understanding of our customers needs, which positions us well to continue introducing new products and services that add value by helping our customers improve their business performance. In our Travel Network business, for example, by providing efficient and quality services, we have developed and maintained strong customer relationships with TMCs, major corporate travel departments and travel suppliers, with some of these relationships dating back over 20 years. We believe that our strong value proposition is demonstrated by our ability to retain customers in a highly competitive marketplace. For each of the years ended December 31, 2013, 2012 and 2011, our Customer Retention rate for Travel Network was 99%. For our Airline Solutions business, our Customer Retention rate was 98%, 96% and 96% for the years ended December 31, 2013, 2012 and 2011, respectively, and our Customer Retention rate for our Hospitality Solutions business was 96%, 96% and 98% for the same periods, respectively. See Method of Calculation for a description of Customer Retention. Deep and Experienced Leadership Team with Informed Insight into the Travel Industry Our management team is highly experienced, with comprehensive expertise in the travel and technology industries. Many of our leaders have more than 20 years of experience in multiple segments of the travel industry and have held positions in more than one of our businesses, which provides them with a holistic and interdisciplinary perspective on our company and the travel industry. By investing in training, skills development and rotation programs, we seek to develop leaders with broad knowledge of our company, the industry, technology, and specific customer needs. We also hire externally as needed to bring in new expertise. Our blend of experience and new hires across our team provides a solid foundation on which we develop new capabilities, new business models and new solutions to complex industry problems. Table of Contents Our Growth Strategy We believe we are well-positioned for future growth. First, we expect the continued macroeconomic recovery to generate travel growth, compounded by the continuing trend towards the outsourcing of travel technology. In addition, we are well-positioned in market segments which are growing faster than the overall travel industry, with leading market positions in our Travel Network business in Latin America and APAC. In our Airline Solutions reservations systems, LCC/hybrids, which are growing traffic faster than traditional airlines, accounted for approximately 29% of our PBs in 2013 based on T2RL data. In 2012, LCC/hybrids represented approximately 45% of our 2012 PBs. T2RL s LCC/hybrid group included JetBlue and Lion Air in 2012, which we consider LCC/hybrid carriers. T2RL s 2013 calculation excludes these carriers from the LCC/hybrid group. If these two carriers were included as LCC/hybrids in the 2013 calculation, LCC/hybrids would have represented approximately 41% of our 2013 PBs. Supported by these industry trends, we believe both our Travel Network and our Airline and Hospitality Solutions businesses have significant opportunities to expand their customer bases, further penetrate existing customers, extend their geographic footprint and develop new products. By executing on the following strategies and, when appropriate, selective strategically aligned acquisitions, we intend to capitalize on these positive trends: Leverage our Industry-Leading Technology Platforms We have made significant investments in our technology platforms and infrastructure to develop robust, scalable software as well as SaaS and hosted solutions. We plan to continue leveraging these investments across our Travel Network and Airline and Hospitality Solutions businesses, to catalyze product innovation and speed-to-market. We will also continue to shift toward SaaS and hosted infrastructure and solutions as we further develop our product portfolio. Expand our Global Travel Marketplace Leadership Travel Network intends to remain the global B2B travel marketplace of choice for travel suppliers and travel buyers by executing on the following initiatives: Targeting Geographic Expansion: From 2009 to 2013, we increased our GDS-processed air bookings share in the Middle East, Russia and Colombia by 744 bps, 327 bps and 990 bps, respectively. We currently have initiatives in place across Europe, APAC and Latin America to further expand in those regions. Attracting and Enabling New Marketplace Content: We are actively adding new travel supplier content which generates revenue directly through incremental booking volumes associated with the new content and reinforces the virtuous cycle of our Travel Network business: as we add more supplier content to our marketplace, we experience increased participation from travel buyers, which, in turn, encourages travel suppliers to contribute additional content to our marketplace. We have been successful in converting notable carriers that previously only used direct distribution, such as JetBlue and Norwegian, to join our GDS, and we believe there is a similar opportunity to increase the participation of less-penetrated content types like hotel properties, where we estimate that only approximately one-third participate in a GDS. In addition to attracting new supplier content, we aim to expand the content available for sale from existing travel suppliers, including ancillary revenue a category of airline revenue worth more than $31.5 billion in the aggregate across the travel industry in 2013, according to IdeaWorks. We seek additional opportunities to capitalize on this trend, such as by supporting our customers branded fare initiatives. Continuing to Invest in Innovative Products and Capabilities: The development of cutting-edge products and capabilities has been critical to our success. We plan to continue to invest significant resources in solutions that address key customer needs, including mobility (e.g., TripCase), data analytics and business intelligence (e.g., Sabre Dev Studio, Hotel Heatmaps, Contract Optimization Services), and workflow optimization (e.g., Sabre Red App Centre, TruTrip). Table of Contents Drive Continued Airline and Hospitality Solutions Growth and Innovation Our Airline and Hospitality Solutions business has been a key growth engine for us with a CAGR of 14% for revenue and 15% for Adjusted EBITDA from 2009 to 2013. We believe Airline and Hospitality Solutions will continue to drive company growth through a combination of underlying customer and market growth, as well as through the following strategic growth initiatives. Invest in Innovative Airline Products and Capabilities: We have a long history of investment in innovation. For example, we believe we were the first technology solutions provider to provide real-time revenue integrity and the first third-party provider to automate passenger reaccommodation during large operational disruptions. We see a continued opportunity to innovate in areas such as retailing solutions, mobile capabilities, data analytics and business intelligence offerings. Continue to Add New Airline Reservations Customers: Over the last five years, we have added airline customers representing over 110 million annual PBs from many innovative, fast-growing airlines such as Etihad Airways, Virgin Australia, JetBlue and LAN. Although the number of new reservations opportunities varies materially by year, in 2013 and 2014, T2RL estimated that contracts representing over 1 billion PBs will come up for renewal between 2014 to 2017, of which approximately 0.7 billion PBs are from airlines that do not pay us PB fees today. As of this filing, airlines won but not yet implemented by Sabre boarded over 250 million PBs in 2012, according to T2RL data. This includes a long-term agreement announced in January 2014 with American Airlines for Sabre to be its reservations system provider following its merger with US Airways and other more recent agreements, including Air Berlin announced in May 2014 and Alitalia and Copa Airlines announced in January 2015. Further Penetrate Existing Airline Solutions Customers: We believe there is an opportunity to sell more of our extensive solution set to our existing customers. Of our 2013 customers in T2RL s top 100 passenger airlines, 35% had one or two non-reservations solution sets, 36% had three to five and 29% had more than five. Historically, the average revenue would have approximately tripled if a customer moved from the first category to the second, and nearly tripled again if a customer moved to the third category. Leveraging our brand, we intend to continue to promote the adoption of our products within and across our existing customers. Invest Behind Rapidly Growing Hospitality Solutions Business: Our Hospitality Solutions business has grown rapidly, with 19% revenue CAGR from 2009 to 2013, and we are focused on continuing that growth going forward. We currently have initiatives to grow in our existing footprint and expand our presence in APAC and EMEA, which collectively accounted for only 32% of our Hospitality Solutions business revenue in 2013. We plan to accomplish this organically and through select acquisitions to enhance our product offering, grow our customer base and cross sell additional products to our existing customers. For example, our recently announced acquisition of Genares will build on the foundation of their products and services while introducing Genares customers to a broader suite of products and services to help accelerate their growth. Continue to Focus on Operational Efficiency Supported by Leading Technology As an organization, we have a track record of improving operational efficiency and capitalizing on our scalable technology platform and operating leverage in our business model. We have expanded Adjusted EBITDA margins in our Travel Network business by over 550 bps since 2009 while growing the business and introducing new products. We intend to continue to increase our operational efficiency by following a shared capabilities, technology and insights approach across our businesses. Through a comprehensive labor strategy, we are driving operating efficiencies and cost savings through a proactive approach that focuses on adding and retaining talent and achieving the optimal personnel mix across our global development centers. We expect the outcome of this program to better scale development costs over time. Table of Contents Our Businesses Travel Network Travel Network is our global B2B travel marketplace and consists primarily of our GDS and a broad set of solutions that integrate with our GDS to add value for travel suppliers and travel buyers. The distribution platform component of a GDS serves the role of a transaction processor for the travel industry, while the value-added integrated solutions make the GDS a true marketplace. Our GDS facilitates travel by efficiently bringing together travel content such as inventory, prices, and availability from a broad array of travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines and tour operators, with a large network of travel buyers, including online and offline travel agencies, TMCs and corporate travel departments. We deliver value to our travel buyer customers by providing them with comprehensive and competitive travel content. Similarly, we bring value to our travel supplier customers by providing efficient and cost-effective distribution and merchandising services reaching approximately 400,000 travel agents. We are one of the largest GDS providers in the world, with a 36% share of GDS-processed air bookings in 2013. More specifically, we are the #1 GDS provider in North America and also in higher growth markets such as Latin America and APAC. In those three markets, our GDS-processed air bookings share was approximately 50% on a combined basis in 2013. See Method of Calculation for an explanation of the methodology underlying our GDS-processed air bookings share calculation. The following chart illustrates our share of GDS-processed air bookings as of December 31, 2013: Source: internal estimates We expect Travel Network s market position in economies with robust GDP growth, such as APAC, Latin America and EMEA, will drive continued growth for our businesses, while the strength of our GDS in large, developed regions, such as North America and Europe, positions us for stable growth as the recovery from the global economic downturn continues. In addition, we serve a large portion of APAC through our regional joint venture partners, including Abacus and Infini. 100% of the GDS transactions of these joint venture partners are processed and powered by our GDS. Travel buyers can shop and book approximately 400 airlines, 125,000 hotel properties, 30 car rental brands, 50 rail carriers, 16 cruise lines and 200 tour operators using our GDS. In 2013, our systems processed over $100 billion of estimated travel spending, including sales from our joint venture partners. In addition, we believe Table of Contents that our business benefits from a virtuous cycle. As we add more supplier content to our marketplace, we experience increased participation from travel buyers. This, in turn, encourages travel suppliers to contribute additional content to our marketplace, driving a virtuous cycle. Our travel marketplace also includes advanced capabilities and automated solutions that, among other things, enable travel suppliers and travel buyers to operate more efficiently, optimize their performance across various metrics and provide insight into customer booking patterns. Through our GetThere products, we offer a suite of tools that tailor these services to corporate travel departments, providing capabilities such as facilitating rate negotiations, simplifying compliance with corporate travel policies and tracking business travel online. We are continually investing to enhance our solutions offering, such as our data analytics and business intelligence capabilities, and to enable emerging travel technologies and innovative apps, including mobile. For example, our product offerings include TripCase, our mobile and web traveler services platform that provides passengers with mobile itinerary management and real-time trip details. Relative to our competitors, we believe we are the travel marketplace of choice among many global travel buyers, with: over 50% of the GDS-processed air bookings of the four largest global TMCs (American Express, Carlson Wagonlit Travel, BCD Travel, and Hogg Robinson Group) in 2013; customers including over 80% of the Business Travel News Corporate Travel 100, which are the corporations with the largest travel expenditures as measured by their 2012 U.S. booked air volume; 62% GDS-processed air bookings share of Expedia, Priceline and Travelocity in 2013, with bookings from Orbitz anticipated to start in 2015; and a Customer Retention rate of 99% in 2013. Strategy We are executing on a number of strategies to support our future growth going forward, including: Targeting Geographic Expansion. We intend to accelerate the growth of our leading technology-enabled solutions by deepening our presence in high-growth geographies. We believe that our strategies will position our solutions to better serve travel suppliers and travel buyers in those geographies as travel consumption grows. With our global content, strength in the corporate segment, and industry-leading search technology, we have a demonstrated ability to rapidly expand our geographic footprint. For example, from 2009 to 2013, we increased our GDS-processed air bookings share in the Middle East, Russia and Colombia by 744 bps, 327 bps and 990 bps, respectively. We are currently pursuing a number of initiatives to continue our geographic expansion, including: European growth: Expand our presence in Europe, including high-growth Eastern European markets, by leveraging our global relationships with travel suppliers and travel buyers operating in those markets and by adapting our product capabilities to meet regional needs. For example, we are implementing dynamic schedule updates to additional European airlines to improve scheduling accuracy through the GDS, and we are integrating hotel pricing components in certain markets to improve travel agent workflow. APAC growth: Secure our leadership position by optimizing our strategic partnerships, leveraging our corporate relationships and continuing to add APAC-focused travel suppliers. For example, we have recently added Jetstar and PAL Express to our GDS. Latin American growth: Add agency customers and enhance travel content in key Latin American countries with differentiated and innovative products. For example, Total Trip, a graphical module that sells prepaid hotels and is integrated with the Sabre Red Workspace, has gained significant popularity among our Latin American customers. Table of Contents Attracting and Enabling New Marketplace Content. We are actively adding content to reinforce the virtuous cycle of Travel Network as well as generate revenue directly through incremental bookings volumes associated with the new content. We believe there are two broad categories of opportunities to do so: Add new supplier segments: Historically, we have grown the number and participation levels of travel suppliers. For example, we have increased the utilization of our GDS by airlines such as JetBlue and Virgin Australia. Beyond air content, we believe there is a significant opportunity to add other types of content, such as hotel properties. We estimate that, as of December 31, 2013, only approximately one-third of hotel properties participate in a GDS, compared to approximately 90% of Representative Airlines, weighted by PB volume. We believe this is an attractive opportunity and we are pursuing innovative strategic options, such as working with hotel aggregators, to access this and other segments. We have also leveraged our product innovation to add new supplier segments. App developers, for example, have used the Sabre Red App Centre to add new content types, such as town car service, to the marketplace. Add new travel content from existing suppliers: We aim to increase the types of travel content available on our GDS from existing suppliers. Many travel suppliers, especially airlines, are separately monetizing ancillary products that were previously bundled with seat inventory or other core content at no additional charge. Ancillary revenue was worth more than $31.5 billion in the aggregate across the travel industry in 2013, according to IdeaWorks. Sabre was the first travel solutions provider to enable airlines to sell ancillary products such as seat assignments through the GDS. Suppliers are also seeking to create personalized offers based on individual traveler and shopping information. Sabre s Custom Offers gives travel suppliers the ability to create personalized offers such as special rates and room upgrades for hotels and premium seating or check-in for airlines. As airlines and other travel suppliers continue to expand ancillary products, personalized offers, and travel products, we intend to deliver solutions to sell these offerings and differentiate ourselves as an effective marketplace. Continuing to Invest in Innovative Products and Capabilities. In addition to extending our marketplace and technology leadership with our GDS solution, we strive to develop new products to enhance the value of our Travel Network offering. We have focused our investment efforts on addressing travel suppliers and travel buyers most significant business needs, including: Mobile: Mobile platforms have created new ways for customers to research, book and experience travel, and are expected to account for over 35% of online travel value sales by 2018, according to Euromonitor Report. To address this need, we launched TripCase, a mobile travel app, in 2009. TripCase is a mobile tool that allows travel suppliers, agencies, and corporations to anticipate traveler needs (e.g., the ability to manage, revise, and check their journey itinerary and preferences) in real-time. As a result of adding enhanced capabilities, we have been able to rapidly accelerate user adoption. Since the beginning of 2012 through 2013, we multiplied the TripCase consumer user base six-fold from approximately 400,000 to approximately 2.5 million. Over 15,000 agencies and 26 airlines are now using TripCase for itinerary management and document delivery to their customers. Our mobile success has also won industry-wide recognition. For example, TripCase was named the Best Mobile Solution by Eye for Travel, an unaffiliated entity, chosen by a preliminary online vote and an independent panel of judges from a pool of eight applicants based on a number of factors including design, features, usability, technology, innovation, speed and performance. In 2013, Sabre launched TripCase Corporate, the travel industry s first set of integrated corporate features on mobile, which is designed to improve travel programs for corporations while also simplifying business travel for employees. We intend to continue pursuing mobile innovation with TripCase and other solutions, including new mobile offerings for other key point-of-sale and service tools, such as our recently launched and rapidly growing Sabre Red Mobile Workspace. Data analytics and business intelligence: Travel suppliers and travel buyers are increasingly focused on data analytics to inform and enable better decision-making. In fact, according to the SITA Survey, 100% of surveyed airlines are investing in business intelligence solutions. Our data-rich platform contains significant travel-related data such as shopping and purchasing behavior. Our customers can benefit from tools that allow data-driven insights. We are developing products to satisfy this demand. Table of Contents For example, Sabre Dev Studio offers travel and non-travel businesses access to the most comprehensive travel data set in the world; over 3,500 companies rely on Sabre s application programming interfaces, travel data streams, and notification services to power their applications and websites. Hotel Heatmaps allow hotel suppliers to analyze shopping and conversion volume by customer segment over time. Contract Optimization Services uses sophisticated analytics around booking trends, origin/destination data and other data to help travel management companies and their corporate customers optimize their travel policies. We believe these and several other business intelligence solutions position us well to capitalize on the positive secular trends around data analytics. Workflow optimization: We believe that our innovative workflow tools are significant differentiators that encourage TMCs and corporate participants in the travel ecosystem to choose Travel Network. As a result, the development of new and improved workflow tools has long been a tenet of our innovation strategy. For example, with Sabre Red Workspace, we created a pioneering, fully graphical interface that is now used by thousands of travel agents. In 2012, we introduced Sabre Red App Centre, becoming the first GDS to provide an online B2B marketplace to connect travel buyers with application providers. With access to over 150 different applications, travel agencies can service a wide range of business needs, from tracking agent productivity to converting currency to building trip plans for clients. As part of our recognition in the InformationWeek 500 in 2012, InformationWeek also chose to highlight Sabre Red App Centre as one of the Top 20 Great Ideas to Steal of 2012. In 2013, we announced our plans to develop TruTrip, which is designed to help corporate travel managers and TMCs manage and track bookings regardless of the channel through which they were booked. Geographic Scope As of December 31, 2013, approximately 400,000 travel agents in 145 countries on six continents use our GDS. Additionally, more than half of Travel Network s employees are located outside North America. We are one of the largest GDS providers in the world, with a 36% share of GDS-processed air bookings in 2013. More specifically, we are the #1 GDS provider in North America and also in higher growth markets such as Latin America and APAC. In those three markets, our GDS-processed air bookings share was approximately 50% on a combined basis in 2013. See Method of Calculation for an explanation of the methodology underlying our GDS-processed air bookings share calculation. By growing internationally with our TMC and OTA customers and expanding the travel content available on our GDS to target regional traveler preferences, we anticipate that we will maintain share in key developed markets and grow share in Europe, APAC and Latin America. Internationally, we market our GDS both directly and through joint venture and distribution arrangements. Our marketing partners principally include airlines that have strong relationships with travel agents in APAC and the Middle East as well as entities that operate regional computer reservations systems or other travel-related network services. With the combined strength of our technology and content as well as our partners local commercial skills and market knowledge, these partnerships allow us to gain traction in local markets and grow our share and distribution reach with lower risk. Through these partnerships, we are able to form strong relationships with key airlines and other travel suppliers that we can utilize in our other businesses. Travel Network s joint venture and distribution partners include: Abacus, a B2B travel e-commerce provider that is based in Singapore and operates in APAC. We own 35% of the joint venture and Abacus International Holdings, a consortium of eleven Asian airlines, owns the remainder. Travel Network provides Abacus with data, transaction processing and product development services. See Note 6, Equity Method Investments, to our audited consolidated financial statements included elsewhere in this prospectus. Travel Network Middle East, which provides technology services, bookable travel products and distribution services for travel agencies, corporations and travel suppliers in the Middle East. We own 60% of the joint venture and Gulf Air Company GSC owns 40%. Table of Contents Infini, one of the two largest travel e-commerce providers in Japan. Infini is owned 40% by Abacus International Holdings and 60% by All Nippon Airways and provides booking capability for air, hotel and car rental. Travel Network provides Infini with data and transaction processing and product development services. Non-equity marketing arrangements with: (i) Glodis Travel Technology Ltd in the Ukraine, (ii) InterguideAir Ltd in Nigeria, and (iii) Emirates in the UAE and in a number of countries in Africa. Sabre has a 40% investment in ESS Electroniczne Systemy Sprzedazy Sp.Zo.o, a product development and tour distribution business in Poland. Each of these distributes our products and services in selected countries in EMEA. Key Metrics During the year ended December 31, 2013, Travel Network generated 368 million Direct Billable Bookings. During the nine months ended September 30, 2014, Travel Network generated 292 million Direct Billable Bookings. Our Recurring Revenue, as a percentage of total Travel Network revenues, was 94% in each of the years ended December 31, 2013, 2012 and 2011. See Method of Calculation for an explanation of the methodology underlying our GDS-processed air bookings share calculation. For additional segment information, see Note 21, Segment Information, to our audited consolidated financial statements included elsewhere in this prospectus. Product Offering In its early years, our B2B travel product offering was comprised of our GDS, which had shopping, booking and fulfillment capabilities for airline seats, and later, hotel and other travel inventory. As our travel buyers and travel suppliers businesses have become increasingly complex, Travel Network adapted its offerings to include a broad set of products and services that bring additional value to our customers and help them use the marketplace more effectively. Today, Travel Network is a global B2B travel marketplace that offers content from a broad array of travel suppliers, including approximately 400 airlines, 125,000 hotel properties, 30 car rental brands, 50 rail carriers, 16 cruise lines and 200 tour operators, to tens of thousands of travel buyers, including online and offline travel agencies, TMCs and corporate travel departments. Table of Contents In addition to our GDS, which provides shopping, booking and fulfillment services, we provide a wide range of products and services to our four customer segments: (i) travel suppliers, (ii) travel agencies, (iii) corporations and travelers, and (iv) other travel industry participants. The following graphic illustrates the various components of our Travel Network business, including the original capabilities supported by our GDS in addition to the enhanced capabilities now available through our global travel marketplace: We continue to develop and offer data-driven business intelligence tools that provide all of our customers with decision support and reporting capabilities to manage customer, vendor, agency and competitive performance. For example, we offer customized low fare shopping tools that automate the ticket shopping and exchange process as well as highly differentiated contract and pricing optimization services that allow agencies, TMCs and corporate travel departments to manage the placement of travel content during the shopping process to optimize travel savings and improve compensation from preferred suppliers and fare markups. We offer solutions for travel suppliers that help them display, promote and differentiate their brands and products globally; generate, maximize and secure revenue; and obtain, analyze and utilize relevant and accurate data for strategic decision-making. Our marketplace supports key travel supplier needs, such as airline codesharing and marketing and optimization capabilities. Our solutions also provide multi-channel merchandising capabilities that allow for distribution of ancillary products as well as dynamic pricing, inventory and revenue management tools. For example, Sabre Custom Offers provides travel suppliers with the ability to create personalized offers such as special rates and room upgrades for hotels and premium seating or check-in for airlines based on known customer characteristics and preferences. We regularly measure our ability to find low fares, consistently finding that our GDS outperforms competitors in this critical capacity. The most recent third-party evaluation by Fried & Partner found that Sabre finds the lowest fares more often than leading competitors in all regions around the world. Table of Contents Travel Network also offers many advanced products and capabilities that add value for travel agencies. Our GDS offers an award-winning user-friendly interface and flexible search parameters, including the option to search for hotels that adhere to Global Sustainable Tourism Council standards. It also offers travel agencies post-booking automation providing quality control checks, ticketing and documentation support. More than 200,000 offline travel agents in 143 countries access our GDS using Sabre Red Workspace. Sabre Red Workspace is our primary travel agency point of sale software and includes features such as customizable screen displays to maximize preferred supplier agreements, customizable process automation, integration with travel agency applications, tools and websites, and new mobile tablet access points. OTAs can access our GDS through Sabre Web Services, our primary point of sale for customers that require access to our global travel marketplace through web services. We also provide travel agencies with integrated solutions that allow them to improve workflow, maximize revenue, reduce costs and improve customer service. For example, our ClientBase solution includes a CRM system that provides complete profile, contact and trip management abilities for developing and maintaining customer relationships and increasing productivity as well as a marketing tool that allows travel agents to select suppliers, create, track and send targeted marketing programs and obtain tracking reports to measure success. For corporations and the travel agencies and corporate travel departments that serve them, we offer GetThere, a tool that automates the travel shopping and booking process, facilitates rate negotiations with suppliers, simplifies compliance with corporate travel policies, tracks information to safeguard business traveler security, integrates with the customer s expense reporting system and includes customer loyalty and business performance capabilities. Our B2B travel business product offerings also reach a variety of other travel customer segments. We serve travelers through TripCase, our mobile and web traveler services platform that keeps travelers informed of their trip itineraries and booking information for all reservations made, regardless of booking origin. For new entrants to the travel industry and Sabre-certified third-party developers, we offer the ability to create and monetize Sabre Red Apps, an array of applications designed to meet travel agency needs made available through the Sabre Red App Centre. Through our Sabre Dev Studio, we provide tools, support and revenue opportunities to these new travel industry players and non-traditional GDS consumers who want access to our travel information and large global network of travel suppliers and travel buyers. Our developer tools include a portfolio of Sabre application programming interfaces travel data streams, software development kits, notification services, documentation and sample code. Travel Network also provides data, transaction processing and product development services to our regional joint venture partners, including Abacus and Infini. Customers Customers of Travel Network include: travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines, tour operators and others; corporate travel departments; OTAs, offline travel agencies and TMCs; travelers; and other sellers of travel and consumers of travel information. As of December 31, 2013, approximately 400,000 travel agents in 145 countries on six continents use our GDS, making reservations with approximately 125,000 travel suppliers around the world. We intend to increase our international presence by expanding the travel content available on our GDS to target regional traveler preferences. Table of Contents Because of strong products and services, the top ten airline and the top ten travel agency customers of our Travel Network business have been customers for more than a decade with their diverse technology needs supported by our broad range of products and services. Our Recurring Revenue percentage for our Travel Network business was approximately 94% in each of the fiscal years ended December 31, 2013, 2012 and 2011. Airlines. Approximately 400 airlines, including full service carriers and LCC/hybrids from all regions of the world, choose to market and sell their inventory through our GDS. Unlike airline direct distribution, our GDS supports codesharing functionality that allows our airline customers to market their services with partner carriers and creates opportunities for low fare value. Our largest Travel Network suppliers include American Airlines, Delta, US Airways, United, Air Canada, Lufthansa, Air France, British Airways and Emirates, but no customer contributed more than 10% to Travel Network s revenue for the years ended December 31, 2013, 2012, or 2011. Over the last several years, notable carriers that previously only distributed directly, including JetBlue and Norwegian, have adopted our GDS. Other carriers such as EVA Airways and Virgin Australia have recently upgraded their technical connections and increased the level of content they market and sell through our GDS. Our contracts with major carriers typically last for three to five year terms and are generally subject to automatic renewal at the end of the term, unless terminated by either party with the required advance notice. Our contracts with smaller airlines generally last for one year and are also subject to automatic renewal at the end of the term, unless terminated by either party with the required advance notice. We renewed 24 out of 24 planned renewals in 2013 (representing approximately 25% of our Travel Network revenue for the twelve months ended December 31, 2013). We renewed 28 out of 28 planned renewals in 2014 (representing approximately 22% of our Travel Network revenue for the twelve months ended December 31, 2014). We have 38 planned renewals in 2015 (representing approximately 20% of our Travel Network revenue for the twelve months ended December 31, 2014). Although we renewed 28 out of 28 planned renewals in 2014 (representing approximately 22% of Travel Network revenue for the year ended December 31, 2014), we cannot guarantee that we will be able to renew our airline contracts in the future on favorable economic terms or at all. Airlines are not contractually required to distribute their content exclusively through our GDS. To provide our travel buyer customers with the widest possible range of travel content, we seek to secure (and generally have been able to secure, with important exceptions) agreements in which the airline agrees to provide most or all of their publicly available fares for distribution through our GDS. However, to ensure competitiveness between the travel agents using our GDS, these agreements also typically require that the airline does not discriminate against travelers that book using our GDS or impose surcharges on such bookings. So long as the airline abides by its content and other commitments, we generally agree to display, load, and process airline data in a non-discriminatory manner on our GDS. We charge transaction-based booking fees for each reservation we process, and pricing depends upon various factors, such as the airline s size, home market, product offering and price, and the length of its relationship with us. These airline contracts contain standard representations and warranties, covenants and indemnification provisions. Other travel suppliers. A broad portfolio of other travel suppliers also distribute their inventory through our GDS, including approximately 125,000 hotel properties, 30 car rental brands, 50 rail lines, 16 cruise lines and 200 tour operators. We have enjoyed long-term relationships with our travel suppliers, with some relationships exceeding ten years with respect to cruise lines and thirty years with respect to hotels and car rental companies. Our largest hotel customers include Hilton, Marriott International, Starwood and Intercontinental. Our contracts with our hotel customers are non-exclusive and generally last from three to five years and typically renew automatically unless terminated by either party with the required advance notice. Our leading car rental brands include Hertz, Avis Budget and Enterprise. Our contracts with car rental companies and cruise lines are non-exclusive and generally last from two to seven years, and typically renew automatically unless terminated by either party with the required advance notice. Hotels, car rental companies and cruise lines pay transaction-based booking fees based on the number of rooms booked, the number of bookings for vehicle pickup and the number of sailed cabins, respectively. These hotel, car rental and cruise line contracts contain standard representations and warranties, covenants and indemnification provisions. Table of Contents Corporate travel departments. Travel Network serves corporate travel departments through our GDS and other solutions, particularly through our GetThere products. Due to our service and product offerings, we have relationships with corporate travel departments that have been established for over a decade. Illustrative customers include Accenture, Apple, AT&T, BP, GE, Oracle, UBS and UPS. Corporate travelers are more likely to require flexible scheduling and more complex itineraries, with reservations completed much closer to the departure date, and therefore provide significantly higher revenue per trip. As of December 31, 2013, over 80% of the Business Travel News Corporate Travel 100, which are the corporations with the largest travel expenditures, choose to use our global travel marketplace. Our contracts with major corporate customers typically last three to five years and generally renew automatically for successive one to three year periods unless terminated by either party with the required advance notice. Corporate travel buyers pay a one-time set up fee and monthly fees based on the number of bookings made through the system. These contracts with corporate travel departments contain standard representations and warranties, covenants and indemnification provisions. Travel agencies. OTAs and TMCs were our two largest global travel agency segments in 2013. Our principal OTA customers are Expedia, Travelocity and Despegar. The four largest global TMCs are American Express Travel, Carlson Wagonlit Travel, BCD Travel, and Hogg Robinson Group, each of which has had a non-exclusive business relationship with us for more than 10 years. We serve large travel agencies and TMCs that process travel for the U.S. government. We also have thousands of other regional travel agency customers that serve business, leisure and/or niche travelers. We typically have non-exclusive, five to ten year contracts with our major travel agency customers. Our contracts with TMCs and offline travel agencies typically renew automatically, but the vast majority of our contracts with online travel agencies do not automatically renew. Most travel agencies can terminate the contract anytime without cause with the required advance notice. A meaningful portion of our travel agency agreements, typically representing approximately 15% to 20% of our bookings, are up for renewal in any given year. A travel agency contracts with us for use of our technology, which enables and enhances the agency s business operations by providing efficient access to broad travel supplier content and the ability to book, reserve and manage such content. We typically provide travel agencies with incentive consideration for each booking that generates revenue for us from a travel supplier, sometimes after certain minimum booking levels are met. This revenue-sharing arrangement incentivizes travel agencies to consolidate demand and use our GDS efficiently. Our contracts with larger travel agencies often increase the incentive consideration when the travel agency processes a certain volume or percentage of its bookings through our GDS. Although we generally provide incentive consideration on a periodic basis over the term of the contract, sometimes we provide incentive consideration in advance based on an anticipated level of bookings, and the travel agency must repay or rebate some or all of the incentive consideration if the anticipated level of bookings is not met. Smaller agencies do not typically have volume or share-based incentive consideration of this kind. Our contracts with travel agencies contain standard representations and warranties, covenants and indemnification provisions. Travelers. Travel Network serves travelers directly through TripCase, our mobile and web traveler services platform, and through GetThere, for business travelers. We are also expanding our offerings to business travelers through initiatives such as enhanced online and mobile access to itinerary and trip planning information. Other Sellers of Travel and Consumers of Travel Information. We provide travel data, merchandising, transaction processing and product development services to many other customers, including other travel marketplaces, metasearch engines, new entrants to the travel industry, developers and industry analysts. Table of Contents Competitors Travel Network competes with several other travel marketplace providers, including both regional and global players. In addition to Sabre, other key global B2B travel marketplace providers include: Amadeus, which is headquartered in Spain and operates the Amadeus distribution system. Amadeus is owned in part by Air France, Iberia and the parent company of Lufthansa. Amadeus owns a minority stake in Topas, a Korean regional travel marketplace. Based on Marketing Information Data Tapes data, 33% of its total 2013 GDS-processed air bookings were concentrated in Western Europe, specifically Germany, France, Spain, the United Kingdom, Italy, Norway and Sweden. Travelport, which is headquartered in the United Kingdom and owns three separately-operated travel marketplace systems, Galileo, Apollo and Worldspan. Sabre is one of the largest GDS providers in the world, with a 36% share of GDS-processed air bookings in 2013. More specifically, we are the #1 GDS provider in North America and also in higher growth markets such as Latin America and APAC. In those three markets, our GDS-processed air bookings share was approximately 50% on a combined basis in 2013. We believe GDS-processed air bookings share is a good proxy for overall share in the business because air bookings comprise the vast majority of the total bookings of the three GDSs. See Method of Calculation for an explanation of the methodology underlying our GDS-processed air bookings share calculation. In addition to competing with other GDSs, our GDS competes with local distribution systems and travel marketplace providers primarily owned by airlines or government entities and operate primarily in their home countries, including TravelSky in China and Sirena in Russia and the Commonwealth of Independent States. Our GDS also competes with direct distribution by travel suppliers, in which travel suppliers bypass travel agencies and sell their services directly through their own websites and distribution channels. See Risk Factors Travel suppliers use of alternative distribution models, such as direct distribution models, could adversely affect our Travel Network and Travelocity businesses. Travel suppliers using the GDS incur a booking fee which is, on average, only approximately 2% of the value of the booking. Therefore, the revenue generated through the GDS leads to a return on investment that is attractive compared to the incremental cost, in part because many of the tickets sold on the GDS platform are more expensive long-haul and business travel tickets (particularly those originating outside the home country of the airline) as well as tickets with additional booking complexity (e.g., multiple airline itineraries). These platforms also offer a particularly cost-effective means of accessing markets where a travel supplier s brand is less recognized by using local travel agencies to reach end consumers. The value of the GDS platform is further reinforced by both the new content that continues to enter the system and by increasing participation rates we estimate that Representative Airlines have an approximately 90% participation rate in a GDS (weighted by PB volume), as of December 31, 2013. Over the last several years, notable carriers that previously only distributed directly, including JetBlue and Norwegian, have adopted our GDS. Other carriers such as EVA Airways and Virgin Australia have further increased their participation in our GDS. Other studies also underscore the value of the global travel marketplace, including a recent TravelClick study showing that agents use of GDSs for hotel booking is growing faster than their use of any other channel. In addition to other GDSs and direct distributors, there are a number of other competitors in the travel distribution marketplace. New entrants in the travel space, including Google (through Google Hotel Finder and Flight Search), TripAdvisor and Kayak offer metasearch capabilities that direct shoppers to supplier websites and/or OTAs. The impact of these new entrants on the Travel Network business model remains uncertain. See Risk Factors Travel suppliers use of alternative distribution models, such as direct distribution models, could adversely affect our Travel Network and Travelocity businesses. Third-party aggregators, such as FareLogix, TravelFusion and AgentWare, offer solutions to book travel content from a variety of sources, including options Table of Contents outside of our GDS, though we believe their offerings have not yet been widely adopted by travel agents or travel suppliers due to cost and technology issues. Also, peer-to-peer options for travel services such as accommodations, tours and car sharing that do not distribute through our GDS are becoming increasingly popular among consumers worldwide. Our corporate travel booking tool, GetThere, competes with similar offerings from travel agencies, airlines and other travel suppliers, including Concur Technologies, Deem, KDS, eTravel and Egencia. As with other travel marketplace participants, Travel Network strives to provide a variety of attributes to our travel buyer and travel supplier customers. See Industry Global Distribution System and Travel Marketplace Competitive Environment for a discussion of the factors on which such participants compete. Airline and Hospitality Solutions Our Airline and Hospitality Solutions business offers a broad portfolio of software technology products and solutions, through SaaS and hosted delivery model, to approximately 225 airlines, 17,500 hotel properties and 700 other travel suppliers. In 2013, our Airline Solutions business represented 84% of Airline and Hospitality Solutions revenue and our Hospitality Solutions business represented the remaining 16%. We believe our flexible software and systems applications, including reservations systems, marketing tools, commercial planning solutions and enterprise operations tools, help automate and optimize our customers business processes and that our deep domain expertise and product capabilities enable our customers to address more complex business problems as they grow. Compared to traditional in-house software installations, our SaaS and hosted models drive value for our customers in a variety of ways: (i) lower total ownership costs (i.e., acquisition costs and operating costs of a solution) as centralized hosting allows our customers to reduce their in-house software and hardware capital outlay, management and maintenance expenses; (ii) a pay-as-you-go cost structure, which allows our customers to spread their costs over time and link their IT expense with their growth; (iii) more robust functionality than would be cost-effective to develop in-house; (iv) scalable delivery that allows us to adapt our services to changes in our customers technological systems as they grow; and (v) a platform for faster deployment of upgrades compared to traditional installations. The SaaS and hosted approach also benefits our business. On the revenue side, by moving away from one-time license fees to recurring monthly fees, our revenue stream has become more predictable. On the cost side, the SaaS and hosted models centralized deployment allows us to save time and money by reducing maintenance and implementation tasks and lowering operating costs. Strategy We believe the following strategies will help us continue to grow and realize the potential of Airline and Hospitality Solutions: Invest in Innovative Airline Products and Capabilities. We plan to continue investing in innovative technology products that solve the travel industry s most pressing business problems, as illustrated below: Retailing: According to IdeaWorks, ancillary airline revenue, such as the sale of checked bags, was worth more than $31.5 billion in the aggregate across the travel industry in 2013. We have invested and continue to invest to enable airlines to distribute and sell these ancillary products, and we continue to focus on delivering additional retailing innovation, including customer-centric merchandising and enhanced ancillary revenue optimization. Mobile: Mobile platforms have created new ways for customers to research, book and experience travel, and are expected to account for over 35% of online travel value sales by 2018, according to Euromonitor Report. Accordingly, travel suppliers, including airlines and hospitality providers, are Table of Contents upgrading their systems to allow for delivery of services via mobile platforms from booking to check-in to travel management. The recent SITA Survey found that 97% of airlines are investing in mobile channels with the intention of driving mobile across the entire travel experience. This mobile trend also extends to the use of tablets and wireless connectivity by the airline workforce, for example automating cabin crew services and providing flight crews with electronic flight bags, which we are addressing through our eFlight Manager product family. As airlines increasingly leverage mobile workforce solutions, we are investing in mobile capabilities that enable a connected airline, such as electronic flight management solutions that provide real-time connectivity between the cockpit and the airport operations control center. Data analytics and business intelligence: Business intelligence is one of the top two most important airline IT investment areas, according to the SITA Survey. We recently acquired PRISM, a leading provider of innovative business intelligence and decision support software for airlines to maximize the value of their corporate contracts. Looking forward, we are investing in products such as a platform for applications that can support data analytics across multiple systems. Rules can be applied to this aggregated data to influence decision-making, business processes, and forecasts to create innovative solutions in areas such as customer centricity, revenue management, and airline operations. Continue to Add New Airline Reservations Customers. Over the last five years, we have added airline customers representing over 110 million in annual PBs from many fast-growing airlines such as Etihad Airways, Virgin Australia, JetBlue and LAN. Although the number of new reservations opportunities varies materially by year, in 2013 and 2014, T2RL estimated that contracts representing over 1 billion PBs will come up for renewal between 2014 to 2017, of which approximately 0.7 billion PBs are from airlines that do not pay us PB fees today. As of this filing, airlines won but not yet implemented by Sabre boarded over 250 million PBs in 2012, according to T2RL data. This includes a long-term agreement announced in January 2014 with American Airlines for Sabre to be its reservations system provider following its merger with US Airways and other more recent agreements, including Air Berlin announced in May 2014 and Alitalia and Copa Airlines announced in January 2015. Further Penetrate Existing Airline Solutions Customers. We believe our solution set is one of the most extensive in the industry and positions us to address the diverse needs of our customers. We have already established commercial relationships with approximately 225 airlines, including 79 of T2RL s top 100 passenger airlines, which we believe offers the opportunity to sell more of our solutions to our existing customers. For example, of our 2013 customers in T2RL s top 100 passenger airlines, 35% had one or two non-reservations solution sets, 36% had three to five and 29% had more than five. Historically, the average revenue would have approximately tripled if a customer moved from the first category to the second, and nearly tripled again if a customer moved to the third category. Leveraging our brand, we intend to continue to promote the adoption of our products within and across our existing customers. Invest Behind Rapidly Growing Hospitality Solutions Business. Our Hospitality Solutions business has grown rapidly, with 19% revenue CAGR from 2009 to 2013, and we are focused on continuing to drive that growth going forward. We currently have initiatives to grow in our existing footprint and expand our presence in APAC and EMEA, which collectively accounted for only 32% of our Hospitality Solutions business revenue in 2013. We plan to accomplish this through a combination of strategies, including increasing our share of wallet with customers, expanding our global reseller network and providing more integrated products. For example, we launched in November 2014 the SynXis Enterprise Platform, an integrated hospitality technology solution and SynXis Property Manager, a hotel property management solution that integrates with our CRS. Airline Solutions Our Airline Solutions business provides industry-leading and comprehensive software solutions that help our airline customers better market, sell, serve and operate. We offer dynamic and customizable reservations software that supports all the essentials of a passenger service system. Our other software solutions help airlines Table of Contents make important decisions around marketing and planning, merchandising offerings and managing network operations. Over the past 25 years, we have built a broad portfolio of solutions that we believe are distinctive in the industry in their ability to collectively solve airlines most complex problems. We believe we offer the airline industry the broadest choices available in the marketplace across reservations systems, marketing and planning solutions and enterprise operations solutions, due to the following attributes: Broadest portfolio of integrated solutions. In a fragmented competitive landscape, we offer the broadest portfolio in the business, which enables airlines to leverage a single relationship to address increasingly complex and interconnected business problems. Our competitors, most of which specialize in either one solution or a limited functionality set, cannot easily replicate the comprehensiveness we provide in a single relationship. Our wide range of offerings also equips us with multiple strategies to win new customers and further penetrate our existing customers. For example, we can serve airlines that have already developed in-house functionalities or that use other third-party solutions providers by providing solutions that meet needs outside the capabilities of their existing solutions and build on these relationships over time to cross-sell additional solutions. Flexible capabilities. Unlike other solutions providers, whose offerings are often optimized to serve airlines of a particular scale, our solutions are designed to serve airlines of various sizes and business models, and are able to accommodate change in an airline s scale and business processes. For example, we believe we are well-positioned to serve LCC/hybrids as they evolve and add new classes of service, aircraft diversity, international flying and codesharing, becoming more complex and requiring more advanced technology solutions. Furthermore, the modular nature of our products allows us to integrate with non-Sabre systems. Industry expertise. Our deep industry expertise allows us to enhance our solutions, as we understand how our solutions integrate with airlines technology and business processes. Many of our team members have roots in the airline industry, having used or developed airline systems and processes as former airline employees. Scalable SaaS delivery. We offer many of our reservations systems and software applications through SaaS and hosted delivery. Not only do the SaaS and hosted models allow the airline to refocus its resources on revenue-generating and customer-facing services instead of on maintaining technology, it also closely links an airline s software expenses with business growth, as software usage is typically related to passenger volumes or other relevant operating metrics. Through our SaaS and hosted delivery, we are able to consistently release new functionalities and provide software hosting of higher quality than what a typical airline could afford on its own. Key Metrics Our reservations system, offered through our SabreSonic CSS product line, is our core offering, comprising 55% of overall Airline Solutions revenue for the year ended December 31, 2013. We consider the following key metrics for our reservations system to be representative of our overall Airline Solutions business: Because of our long-standing relationships with customers, the importance and value of our solutions to an airline s ability to generate revenue, and the benefits of incumbency, we believe the vast majority of our revenue is recurring and stable based on transaction volumes. Our Recurring Revenue, as a percentage of total Airline Solutions revenue, was 83% in each of the years ended December 31, 2013, and in 2012 and 2011. In 2013, our Airline Solutions business processed reservations for 478 million PBs, representing a 14% CAGR from 2009. For additional segment information, see Note 21, Segment Information, to our audited consolidated financial statements included elsewhere in this prospectus. Table of Contents Product Offering We offer reservations systems and software applications in three functional suites: SabreSonic CSS, Sabre AirVision Marketing & Planning and Sabre AirCentre Enterprise Operations. Our broad portfolio provides a comprehensive solutions offering that automates key airline processes, from planning to reservations to operations. Our solutions are backed by extensive expertise in passenger sales and service, decision support, optimization, business processes, and operations management. Many of our solutions are available through SaaS and hosted delivery and are complementary with one another as well as in-house and other third-party solutions, allowing customers to bundle components that best suit their needs. Airlines typically buy our solutions from within our functional suites, but we are increasingly engaging with our customers on cross-portfolio opportunities at the executive level. To address this opportunity, we are offering several new products and services which combine competencies from across our functional suites to provide holistic solutions. For example, we are developing our mobile platform to include features that enable airlines to extend capabilities to their customers and staff, like mobile check-in and itinerary management. We are also investing in a platform for applications that can support data analytics across multiple systems. As with many software solutions providers, we offer a range of professional services and support services that enable customers to optimize the value of our solutions in the context of their individual business strategies. We also offer business consulting services which draw upon the depth and breadth of our industry expertise to craft solutions that best fit our customers specific needs. Reservations Systems: SabreSonic Customer Sales & Service Our SabreSonic CSS reservations offerings provide comprehensive capabilities around managing sales and customer service across an airline s diverse touch points. These capabilities are designed to drive airline revenue, operational efficiency, and customer experience. Our core platform and various add-on solutions are designed to serve airlines of various sizes and business models and are able to accommodate change in an airline s scale and business processes. For example, we believe we are well-positioned to serve LCC/hybrids as they evolve and add new services, such as new classes of service, aircraft diversity, international flying and codesharing, becoming more complex and requiring more advanced technology solutions. SabreSonic CSS includes the following solution families: Solution Family Description Sales & reservations Fully integrated core inventory and reservations platform that supports the various steps of an airline s sales process. Enables airlines to manage and shop inventory, configure offerings, book seats and ancillaries, generate and manage tickets and process payments across all points of direct and indirect sales. This fully integrated solution powers an airline s internet booking engine, call center, inventory control, loyalty system, data warehouse, and departure control. Customer profiles ensure customer data availability at all touch points, enabling a consistent customer experience and the ability to provide differentiated service to specific passengers. Supports the various sales and service elements of partnership agreements such as interline, codeshare, and alliance participation, allowing airlines to provide a seamless customer experience across partner carriers. Distributes an airline s merchandising strategy across all channels and enables inventory management through enhanced inventory controls, segmentation, and real-time planning. Ticketing capabilities deliver a robust automated exchange and refunds processing solution, provide comprehensive reporting and reconciliation for monitoring sales activities, and enable multiple forms of local and international payment options including credit cards, PayPal, Bill Me Later and e-Bank. Table of Contents Solution Family Description Airport solutions Departure control system that manages passenger check-in and aircraft boarding; includes passenger self-service capabilities such as mobile check-in, kiosk check-in, web check-in and gate reader. Enables automated merchandising of ancillaries and accurate collection of ancillary fees to support an airline s merchandising strategy, reduces staffing costs with self-service solutions, streamlines agent productivity through an intuitive user interface and ensures efficient flight loading and safety with an integrated weight and balance application. Airline retailing E-commerce platform that provides fundamental tools for customer acquisition, merchandising, booking and itinerary management. Accessible to consumers via web, mobile, and kiosk. Capabilities include branded fares and ancillary sales, targeted deal management, and self-service exchange and refund management. B2B distribution Agency management tool that integrates with the airline retailing e-commerce solution to track bookings for agencies that do not participate in electronic billing and settlement plans, automates the sales reporting process and allows airlines to assess the credit liability of its agency community. Platform services Tool that allows airlines to develop their own user-friendly graphical interfaces and automated processes to quickly solve complex business problems across multiple third-party systems; using this tool, airlines can build their own solutions that are easy to develop, customize, maintain, and deploy in multiple environments. Web services allow airlines to control and differentiate their customer touch points by accessing core sales and service capabilities through a robust, efficient programming interface that focuses on the presentation layer, where differentiation is most critical. Irregular operations (IROPS) reaccommodation Integrated add-on solution that manages reaccommodation of passengers when flight schedules change, including automatic inventory search, itinerary adjustment and passenger notification, and coordinates other aspects of irregular operations recovery, such as crew reassignment and flight schedule adjustment. Customer centricity Loyalty programs and rules engines for effective CRM, enabling an airline to provide a differentiated customer experience that reflects the airline s unique brand. Enables an airline to leverage data from multiple systems, combined with rules engines, to create a personalized customer experience across different touch points. Marketing & Planning: Sabre AirVision Our Sabre AirVision Marketing & Planning is a set of strategic airline commercial planning solutions that focuses on helping our customers improve profitability and develop their brand. Our Sabre AirVision offerings include: Solution Family Description Network planning and scheduling Solutions that manage and support network planning decisions, such as data analysis to design revenue-maximizing city pairs and network layouts. Includes tools to manage service dates and times, fleet and airport gate assignments and codeshare agreements against different demand levels, operating cost scenarios, and spill/recapture rates. Airlines can optimize departure times in an entire hub to maximize connections and revenue, evaluate potential profitability of different forecasted routes using what-if scenarios, and perform close-in re-fleeting to optimize capacity against demand right up until boarding time. Table of Contents Solution Family Description Pricing and revenue management Solutions that manage different aspects of revenue flows for passenger and cargo airlines, including cross-channel fares management, yield management and revenue integrity to identify and address fraudulent bookings. A pricing decision support solution helps airline analysts examine relevant market data to make optimal pricing decisions. A group management solution manages airline group traffic and optimizes group pricing and availability decisions based on the booking s impact on total network revenue. Revenue management solutions leverage customer choice modeling to more accurately forecast future demand. A revenue integrity solution performs real-time reviews of bookings as they are made to identify unintentional and deliberate booking rule violations, and then returns them to inventory so they can be purchased by paying customers. Sales and revenue analysis Solutions that manage corporate contracts and include market intelligence tools that leverage our proprietary data set, which provides a complete, aggregated view of true market demand developed by blending 50 input sources from across the industry. Commercial intelligence tools also incorporate data from across an airline s own network to provide analysis for decision support. A revenue accounting solution ensures fast and accurate settlement by automating the accounting of revenue across multiple airline systems. Onboard catering and provisioning Solutions that manage in-flight services to optimize customer experience and brand perception, including provision planning, ordering materials, galley management and business intelligence. This solution reduces labor-intensive tasks with automated planning, decreases overall inventory carrying costs, and integrates with multiple systems to centralize pricing decisions and management of multiple vendors. Enterprise Operations: Sabre AirCentre Our Sabre AirCentre Enterprise Operations is a set of strategic solutions that drive operational effectiveness through holistic planning and management of airline, airport and customer operations. The Sabre AirCentre suite focuses on improving efficiency, controlling costs, and managing change through maximizing operational control. Our Sabre AirCentre offerings include: Solution Family Description Flight management Solutions that manage aircraft flight operations, including developing flight plans and schedules, providing maps and weather information, and tracking aircraft. A flight plan solution determines the optimal route based on airline priorities regarding fuel conservation, time, and revenue, and then it automates the costly routine processes associated with flight plan distribution. An aircraft-to-ground messaging system reduces delays by providing vital information prior to gate arrival and automating data transfer for aircraft initialization at takeoff. A situational display solution provides an integrated display of flight information, weather, and operational data that enables real-time operational decision-making to improve efficiency, productivity, and customer experience. An electronic flight bag transitions the airline from a paperless to an electronic environment for flight operations and it also enhances communications and reduces delays by integrating aircraft into the airline network. Table of Contents Solution Family Description Operations management Solutions that forecast and fulfill long-range crew needs, optimize crew placement while complying with industry and government regulations and schedule requirements, manage crew movements, ensure accurate payroll, assign aircraft to flight schedule during regular and irregular operations and track aircraft movements on the ground. Enable adjustment of aircraft and crew schedules in response to interference causing irregular operations; early monitoring of impending operational disruptions allows for more efficient resolution, reduced costs and improved customer experience. Airport management Solutions that manage airline usage of airport resources, such as gate operations and usage as well as airport staff scheduling, rosters and operations. A gate management solution optimizes on-time performance through demand-driven resourcing, proactively addresses potential issues to reduce operational disruptions, and reduces tarmac waiting times and associated fuel burn. A ground support equipment planning solution uses scenario modeling to forecast ground equipment needs and optimize resource planning across an airport. A hub management solution provides an integrated view of data needed to efficiently plan and manage every aircraft turnaround. A staff management solution enhances airport handling operations through sophisticated planning models, visual alerts, and streamlined information access to help plan and manage optimal daily staff planning and deployment of the associated handling tasks. Customers As of December 31, 2013, we served approximately 225 airlines of all sizes and in every region of the world, including LCC/hybrids, global network carriers and regional network carriers. We also served approximately 700 other customers such as airports, corporate aviation fleets, governments and tourism boards. We have a global customer base, serving 79 of T2RL s top 100 passenger airlines, which represent the majority of PBs worldwide, based on 2012 PBs as reported by T2RL and combined with our own competitive industry insights. We have recently won reservations system contracts from Etihad Airways, LAN, WestJet, Virgin Australia, Virgin America and JetBlue. In January 2014, we reached a long-term agreement with American Airlines to be the provider of the reservations system for the merged American Airlines and US Airways entity. We serve the following types of airlines: LCC/hybrids. LCC/hybrids are typically carriers that have become more operationally complex as they evolve away from a model focused on low-cost and simplified operations. LCC/hybrids also tend to be thought leaders in the industry and grow faster, adding codesharing capabilities and new cabin classes, distributing through more indirect channels and diversifying their fleets. Examples of LCC/hybrids include Virgin America, Lion Air and JetBlue. A number of our recent customer acquisitions have been in this customer segment, with approximately 29% of our PBs represented by LCC/hybrids in 2013 based on T2RL data. In 2012, LCC/hybrids represented approximately 45% of our 2012 PBs. T2RL s LCC/hybrid group included JetBlue and Lion Air in 2012, which we consider LCC/hybrid carriers. T2RL s 2013 calculation excludes these carriers from the LCC/hybrid group. If these two carriers were included as LCC/hybrids in the 2013 calculation, LCC/hybrids would have represented approximately 41% of our 2013 PBs. In our airline reservations products, our travel supplier customer base is weighted towards this faster growing customer segment relative to our nearest competitor which has less than 10%. This leading presence among LCC/hybrids provides us with strong organic growth potential, as these carriers have recently grown faster than network carriers. As our growing LCC/hybrid customers demand additional solutions and capabilities, we can take advantage of these built-in opportunities to further increase our penetration of these customers. Global network carriers. These carriers are typically large full-service airlines with a global presence that tend to participate in major global alliances. Examples of global network carriers include Delta, British Airways Table of Contents and Japan Airlines. We estimate that global network carriers, each of which serves over 25 million PBs per year, together boarded approximately one-third of PBs worldwide, as reported by T2RL in 2012. Regional network carriers. These network carriers range in size but generally tend to focus primarily on one geographic region. They tend to be more price sensitive and less operationally complex than the global network carriers. Examples of regional network carriers include Virgin Australia and Vietnam Airlines. Mid-size and large regional carriers, which have a moderate level of complexity in their reservations requirements, are more likely than global network carriers to rely on third-party solutions providers for reservations functionality. Our contracts tend to be non-exclusive multi-year agreements, with our reservations systems contracts generally lasting between five to ten years and software solutions contracts generally lasting between three to five years. We typically price our offerings based on relevant metrics that scale with the customer s business, such as PBs for reservations or number of aircraft for flight planning. In most cases, airlines commit to annual minimum volumes of such relevant metrics. If actual number of units is less than the annual minimum volume commitment, the airline will pay for any shortfall up to the annual minimum volume commitment. Our fees are generally paid on a monthly basis. Depending on the type of software products purchased, we also charge our customers for consulting fees, software licensing fees and other service fees. These contracts contain standard representations and warranties, covenants and indemnification provisions. Airline reservations contracts representing less than 5% of Airline Solutions expected 2014 revenue are scheduled for renewal in 2015 and airline reservation contracts representing approximately 2% of Airline Solutions expected 2014 revenue are scheduled for renewal in 2016. Airline reservations contracts representing approximately 9% of Airline Solutions expected 2014 revenue are scheduled for renewal in 2017. We cannot guarantee that we will be able to renew our solutions contracts in the future on favorable economic terms or at all. Competitors The airline software industry is very competitive and highly fragmented. We are currently aware of over 100 competitors providing many types of reservations systems and software applications solutions. The closest competitor to us in terms of size and breadth of product offering is Amadeus. We also compete with traditional technology companies such as HP, Unisys and Navitaire (a division of Accenture) and with airline industry participants such as Jeppesen (a division of Boeing), Lufthansa Systems, and SITA. In addition, various point solutions providers such as PROS, ITA Software, Datalex and Travelport compete with us on a more limited basis in several discrete functional areas. We differentiate ourselves by offering the broadest portfolio of software solutions, including reservations, marketing and planning and enterprise operations systems solutions in more than a dozen different areas of expertise. We have a competitive advantage in offering a comprehensive portfolio through a single relationship as compared to our competitors, most of which specialize in either one solution or a limited functionality set. We are the second largest provider of passenger reservations systems, with an 18% share of airline PBs, according to T2RL PSS data for 2012, following closely behind Amadeus, which accounts for 21% share, and leading Navitaire, which accounts for 12% share. Despite facing significant implementation costs involved in switching passenger sales and service systems providers, a number of airlines have recently migrated from Amadeus and Navitaire systems to our SabreSonic CSS system, including Etihad Airways and Virgin Australia. Navitaire focuses on serving ultra low-cost carriers, as their passenger sales and service system is a simplified version of the traditional model of selling airline seats, while our system can accommodate the increased complexity of LCC/hybrids and network carriers. We also believe that we have the leading portfolio of airline marketing and operations products across the solutions that we provide, based on our internal share estimates calculated based on our market intelligence combined with 2012 T2RL airline data. Table of Contents There are also airlines that develop their own software applications and reservations systems in-house, some of which use a third-party mainframe in their data center and outsource the operation to a services vendor such as IBM or HP. Some regional carriers buy the spare capacity in a larger airline s reservations systems, which is often based on a common language or an alliance relationship. As airlines continue to move toward relying on third-party solutions providers for the technology that they currently host in-house, we believe our flexible, scalable and broad portfolio, SaaS and hosted delivery model, strong penetration in the market with a focus on high-growth segments, industry expertise and customer support position us well to continue gaining share in airline software applications and reservations systems. See Industry Travel Technology Solutions Competitive Environment for a discussion of the factors on which third-party solutions providers compete. Hospitality Solutions Our Hospitality Solutions business provides industry-leading distribution, operations and marketing solutions to approximately 17,500 hotel properties around the world. Our offerings include reservations systems, PMSs, marketing services through our customers various distribution channels and consulting services that optimize distribution and marketing. With our comprehensive portfolio of SaaS solutions and value-added services, we believe we are well-positioned to add value in the hotel industry and to address the continued global growth and complexity of operational, distribution and marketing needs. On September 11, 2014, we acquired the assets of Genares, a global, privately-held hospitality technology company, to further strengthen Sabre s position as a leading technology partner to hoteliers worldwide. The acquisition added more than 2,300 independent and chain hotel properties to Sabre s existing Hospitality Solutions portfolio. We are a leading provider of hospitality solutions to hotel suppliers based on the following attributes: Leader in reservations. Our CRS platform serves approximately 13,000 properties and approximately 80 chains globally. Historically, generating GDS hotel bookings has been the primary reason that hotels use CRS services. Based on our estimates, in 2013, we had the largest hospitality CRS solution based on our approximately 27% market share of third-party hospitality CRS hotel rooms distributed through our GDS, with our next closest competitor at 17%. See Method of Calculation for an explanation of the methodology underlying our third-party hospitality CRS hotel room share calculation. Leading web-based PMS. Our innovative PMS is used by more than 4,500 properties globally and we believe our product is one of the leading third-party web-based PMSs. Our PMS platform complements our industry-leading CRS platform and we expect to launch an integrated hospitality management suite that will centralize all distribution, operations and marketing aspects to facilitate increased accuracy, elimination of redundancies, and increased revenue and cost savings. In a recent internal survey, a majority of hotels with ten or more properties would be interested in purchasing this type of integrated PMS-CRS web-based solution when they next upgrade their PMS. Over time, we expect that this system will change the industry approach to distribution and guest management, as well as drive greater cross-utilization among our customer base. Industry expertise. Our deep industry expertise in hotel distribution enhances the value of our solutions, which help hotels manage content across multiple global, regional, and local distribution channels more effectively. Our Hospitality Solutions business leadership team has an average of over 16 years of hospitality industry experience, and our industry expertise stems from relationships with hotels, travel agencies and distribution partners going back over 20 years. Scalable SaaS delivery. The vast majority of our revenue is generated by solutions delivered as SaaS. This delivery model provides hotels, which previously performed these functions manually, with access to our state-of-the-art technology without prohibitive infrastructure costs. Our SaaS solutions platform is sophisticated Table of Contents enough to accommodate any hotel s needs, from an independent hotel to a global chain with multiple brands and thousands of properties. We believe this sets us apart from many of our competitors and provides our customers with the scale needed to replace in-house technology and focus their resources to serve travelers. Key Metrics Our revenue growth is associated primarily with the product functionality and the scalability of our business due to the economies of scale realized through our SaaS delivery model. Our Recurring Revenue as a percentage of total Hospitality Solutions revenue has remained high for our Hospitality Solutions business at 93%, 95% and 92% for the years ended December 31, 2013, 2012 and 2011, respectively. For the year ended December 31, 2013, we processed approximately 14 million room reservations. For additional segment information, see Note 21, Segment Information, to our audited consolidated financial statements included elsewhere in this prospectus. Product Offering We offer a comprehensive set of SaaS solutions for hoteliers to manage distribution, operations and marketing across multiple channels and segments globally. Customers can bundle components of our modular and integrated software offerings to create a solution that best suits their specifications. Our solutions can also be integrated with other hotel systems; as an active member of Open Travel Alliance and Hotel Technology Next Generation, we work with the most current XML standard interface specifications so that new interfaces can easily and quickly be added as needed. Product Category Description Distribution SynXis CRS: a web-based system that distributes a hotel s inventory to various channels, including the GDS, our proprietary Guest Connect internet booking engine (which includes mobile booking capabilities), call center (which is offered as an outsourced service and/or an agent booking application called Voice Agent) and direct connections to third-party OTAs. Allows hotels to manage availability, rates and content across these channels and send targeted marketing messages to customers at the point of sale. Includes revenue management tools that integrate with other important property systems to provide a holistic view of a hotel s revenue streams and help optimize revenue. Operations Sabre PMS: a web-based system that helps a hotel manage all aspects of its operations, with functionalities including inventory and reservations management, guest profile management, staffing, cleaning, back office and payment system integration, and a night audit/reporting module. Serves over 4,500 properties, including Red Roof Hotels and nine Wyndham brands. Marketing Include a broad portfolio of solutions including website design and hosting, search engine optimization, pay-per-click and online advertising, mobile solutions, social media marketing, content management systems, behavioral targeting and custom flash development. Also include the sale of Sabre GDS media, integration with CRM and loyalty systems and email marketing campaign management. Other Consulting services for revenue management, marketing campaign planning and CRM, partnering with our customers to provide education around and maximize the return on investment in our tools and services, identify new revenue opportunities and stay up to date on the latest industry trends. A Consortia/Request for Proposal ( RFP ) solution targets certain customer segments to generate higher-revenue bookings than those generated through the internet. Comprised of (i) Sabre Hotel RFP which provides hotels with leads for corporate travel contracts and sends hotel bids to corporations and agencies and Table of Contents Product Category Description (ii) Consortia Management Program which markets preferred rates to qualified travel agent groups or consortia and helps establish strong relationships with major consortia agents for the corporate direct leisure and general travel agency sectors. Customers We have a global customer base with approximately 17,500 hotel properties of all sizes, with 35% of hotel rooms distributed through our GDS for the year ended December 31, 2013 in North America, 9% in Latin America, 34% in EMEA and 22% in APAC. The combination of our functionality, system flexibility, and ease of deployment has enabled significant global growth across all regions and customer segments. We have grown from approximately 10,000 properties in 2008 to approximately 17,500 properties in 2014. The breadth of our customer base provides us with opportunities to cross-sell our many offerings to hotels with which we already have a relationship. The flexibility of our solutions allows us to serve hospitality customers that range from individual hotels to large chains comprised of thousands of properties. For example, we serve strong, stable brands such as Wyndham, Shangri-La Hotels and Resorts, Mandarin Oriental, Peninsula, Rosewood Hotels and Resorts, Preferred Hotel Group, Harrah s, Kimpton and Red Roof Inns. Our tools help these branded chains manage their brand and distribution mix across multiple properties in multiple regions. In total, we represent approximately 80 different hotel chains and over 8,000 independent hotels. A large part of our strength and success in the independent hotel segment is due to our global reseller network of over 30 partners that allows us to extend our sales presence internationally in a cost-effective manner. Our contracts usually have one to five year terms, and typically renew automatically for one to three year periods until notice of termination is given by either party prior to the end of the current term. Customers whose contracts allow termination at will may have to pay early termination fees or may only terminate after a certain period of time has passed. We receive configuration and monthly subscription fees from our customers. Monthly transaction fees are comprised of reservations fees per room booking, net of cancellations, in that month. Customers have agreed to annual or periodic reservations fee increases in many of our contracts. These contracts contain standard representations and warranties, covenants and indemnification provisions. Hospitality Solutions contract renewals are relatively evenly spaced, with approximately one-third of contracts representing approximately one-third of Hospitality Solutions 2013 revenue coming up for renewal in any given year. We cannot guarantee that we will be able to renew our solutions contracts in the future on favorable economic terms or at all. Competitors We face competition across many aspects of our business but our primary competitors are in the hospitality CRS and PMS fields, including MICROS, TravelClick, Pegasus and Trust, among others. However, in 2013, we had the largest hospitality CRS solution, based on our approximately 27% market share of third-party hospitality CRS hotel rooms distributed through our GDS. Table of Contents The chart below reflects the long-term trend of our third-party hospitality CRS market share (compared against certain key competitors) as measured by our GDS bookings. This metric is different from the metric we use elsewhere in this prospectus which is based on share of hotel rooms, and we use it because we believe it accurately reflects the direction of the market over time. See Method of Calculation for an explanation of the methodology underlying these two different metrics. * Sabre acquired Generas on September 11, 2014 There are also hotels that develop their own software applications and CRSs in-house, including global hotel chains. As hotels continue to move toward relying on third-party solutions providers for the technology that they currently host in-house, we believe our flexible, scalable and extensive portfolio, SaaS delivery model, focus on high-growth segments, industry expertise and customer support position us well to continue gaining share in the hospitality solutions industry. See Industry Travel Technology Solutions Competitive Environment for a discussion of the factors on which third-party solutions providers compete. Travelocity On December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com and on January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. See Summary Recent Developments. Travelocity was our family of online consumer travel e-commerce businesses that served primarily leisure travelers. We connected these travelers with travel products and services from well-known global brands. Through our websites, travelers could research, shop and book over 400 airlines, over 150,000 hotels, all major car rental companies, most major cruise lines, numerous vacation and last-minute travel packages as well as access traveler reviews and other travel-related services. Travelocity was comprised primarily of Travelocity.com, an OTA focusing on the United States and Canada and lastminute.com, an OTA focusing on Europe. Table of Contents Founded in 1996, Travelocity.com was the first OTA and one of the first online retailers. In 2013, Travelocity was the fourth largest global OTA, generating $7 billion in annual gross travel sales. Travelocity s results have been adversely impacted by several factors in recent years, including margin pressure and reduced bookings on its websites. For the three years ended December 31, 2013, Travelocity experienced an approximately 8% compound annual revenue decline due to intense competition within the travel industry. This increased level of competition led to declines in fees on new long-term supplier agreements signed with several large North American airlines in 2012 and lower transaction volumes, which also impacted our media revenue. In order to help improve Travelocity results, we initiated plans in the third quarter of 2013 to shift our Travelocity businesses in the United States and Canada away from a high fixed-cost model to a lower-cost, performance-based revenue structure. On August 22, 2013, Travelocity entered into an exclusive, long-term strategic marketing agreement with Expedia. Under the Expedia SMA, Expedia powered the technology platforms for Travelocity s existing U.S. and Canadian websites as well as provided Travelocity with access to Expedia s supply and customer service platforms. In connection with the Expedia SMA we also entered into the Put/Call Agreement. The Expedia SMA represented a strategic decision to reduce direct costs associated with Travelocity and to provide our customers with the benefit of Expedia s long-term investment in its technology platform as well as its supply and customer service platforms, which we expected to increase conversion and operational efficiency and allow us to shift our focus to Travelocity s marketing strengths. Under the terms of the Expedia SMA, Expedia paid us a performance-based marketing fee that varied based on the amount of travel booked through Travelocity-branded websites powered by Expedia. The marketing fee we received was recorded as marketing fee revenue and the cost we incurred to promote the Travelocity brand and for marketing was recorded as selling, general and administrative expense in our results of operations. As a result of transactions being processed through Expedia s platform instead of the Travelocity platform, the revenue we derived from the merchant, agency and media revenue models declined. In connection with this migration, we were no longer considered the merchant of record for merchant transactions, and therefore we no longer collected cash from consumers, received transaction fees and commissions directly from travel suppliers, received service fees or insurance related revenue directly from customers or directly marketed or received media revenue from advertisers on our websites. We instead collected the marketing fee revenue from Expedia, which was net of costs incurred by Expedia in connection with these activities. Additionally, Travelocity no longer received incentive consideration from Travel Network as intersegment revenue, and Expedia was not required to use Travel Network for shopping and booking of non-air travel for Travelocity.com and Travelocity.ca after the launch of the Expedia SMA. In the fourth quarter of 2013, we continued our restructuring of Travelocity by implementing a plan to restructure lastminute.com, the European portion of the Travelocity business, in order to allow lastminute.com to operate independently. Additionally, in the first quarter of 2014, Travelocity sold its TPN business to Orbitz. TPN is a B2B offering that provides travel content and booking functionality to, and sells products and services through, loyalty and private label websites for suppliers and distribution partners. On January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc., following which, the Expedia SMA was terminated. Expedia will still be required to use our GDS for booking of air travel booked through Travelocity.com and Travelocity.ca until 2019, at which time it may choose to use another intermediary for a portion or all of such air travel, subject to earlier termination under certain circumstances. Expedia is not using Travel Network for shopping and booking of non-air travel for Travelocity.com and Travelocity.ca. Key Metrics For the year ended December 31, 2013, Travelocity gross travel booked was $7 billion. For additional segment information, see Note 21, Segment Information, to our audited consolidated financial statements included elsewhere in this prospectus. Table of Contents Product Offering Our product offering included: Travelocity.com (including Travelocity.ca and Travelocity.mx), which was our consumer-facing full-service OTA offering for the Americas that serves primarily leisure travelers. Travelocity.com allowed customers to reserve, book, and purchase a variety of airline tickets, hotel rooms, rental cars, cruises, and packaged vacations without the help of a travel agent. lastminute.com, which was our European OTA brand that provides online access to over 80,000 hotel properties and approximately 400 airlines worldwide as well as holiday packages, car hire, theater tickets and spa packages. Competitors Travelocity s main competitors included: other OTAs, of which the largest global businesses are Expedia, Orbitz and Priceline. These competitors continue to evolve by investing in marketing, international expansion, mobile platforms and new comparison models such as metasearch; traditional offline travel agencies; suppliers, such as airlines, hotels and car rental companies, many of which have their own branded websites; search engines that have launched travel-focused initiatives, such as Google Flights and Microsoft Bing Travel. Although these search engines currently do not have the ability to directly fulfill travel bookings, they can direct customer traffic to other sites such as supplier websites where customers can book directly; and metasearch companies, which aggregate travel search results from suppliers, OTAs and other travel websites. For example, Kayak may be able to drive new traffic to Priceline, by which it was recently acquired. TripAdvisor, the leading travel research and review website, has recently added metasearch functionality to some of its offerings. See Risk Factors Risks Related to our Business and Industry Travel suppliers use of alternative distribution models, such as direct distribution models, could adversely affect our Travel Network and Travelocity businesses. We competed on the basis of ease of use; price; customer satisfaction; availability of product type or rate; service; amount, accessibility and reliability of information; breadth of products offered and customers reached. Research, Development and Technology Introduction We invest heavily in software development, delivery and operational support capabilities and strive for best-in-class products that we can provide for our customers. We operate standardized infrastructure in our data center environments across hardware, operating systems, databases, and other key enabling technologies to minimize costs on non-differentiators. Our architecture has evolved from a mainframe-centric transaction processing environment to a secure processing platform that we believe is one of the world s most heavily used and resilient SOA environments. In 2013, our platform processed more than 1.1 trillion system messages, with peak volumes of nearly 100,000 system messages per second and an average response time of less than three seconds. This represents approximately a 25% CAGR from the approximately 700 billion system messages processed in 2011. Our data centers have more than 14,000 servers/virtual machines and leverage over 10,000 terabytes of storage. Table of Contents A variety of products and services run on this technology infrastructure: high-volume air shopping systems; desktop-access applications providing continuous, real-time data access to travel agents; airline operations and decision support systems; an array of customized applications available through the Sabre Red App Centre; and web-based services that provide an automated interface between us and our travel suppliers and customers. The flexibility and scale of our standardized SOA-based technology infrastructure allow us to quickly deliver a broad variety of SaaS and hosted solutions. Product Development A technology staff of approximately 4,000 employees and contractors provides varying skill sets to deliver quality and innovation to our customers. This staff is based around the world in six facilities located in Dallas-Fort Worth, Boston, Krakow, Bangalore, Montevideo and Buenos Aires. This global footprint puts us closer to our customers and gives our developers insight into local market needs that benefits our products and services. Additional offices around the world also let us use a follow the sun approach, meaning that our development teams are active 24-hours-a-day in order to provide rapid time to market. We also have the flexibility to adapt quickly and re-allocate work across regions and businesses as needed. Our core product development is complemented by dedicated analytics and operations research staff. This team, which includes individuals with advanced degrees in operations research, computer science, mathematics and statistics, applies the latest thinking on advanced algorithms and data analysis to drive continuous improvement in the innovation, efficiency, and performance of our products and services. Processing and Storage Capacity Sabre has significant processing and storage capacity to enable efficient processing of business volumes, leveraging multiple data centers around the world for production, certification, integration, and development environments. The majority of our systems operate in a private cloud environment. This, coupled with a standardized infrastructure stack, enables rapid deployment of capacity and automation across the operational environment. We expect that increasing levels of automation over time will enable us to continue to make better use of our processing and storage capacity and to increase the efficiency and speed with which we can deploy capacity to areas of need across our business. Operational Reliability and Performance Our technology strategy is based on achieving company-wide stability and performance at the most efficient price point. Significant investment has gone into building a commoditized, centralized and standardized middleware environment with an emphasis on simplicity, security, and scalability. Teams of developers focus solely on the creation and improvement of core services that are leveraged in product development across our businesses, ensuring consistency and a common foundation for operational stability. In addition, our enterprise technology operations team leverage industry-standard Information Technology Infrastructure Library operational processes. Disaster Recovery Our primary data centers are Tier 3 facilities and have been built to provide a high-availability environment. They are designed to withstand most natural events, were placed geographically above flood lines and are in areas with very low probability of earthquakes. This physical design is coupled with operational and site management processes designed to eliminate points of failure and provide availability 24-hours-a-day, 7-days-a-week, 365-days-a-year. They have redundant power, advanced cooling systems, network infrastructure, fire detection, and emergency systems. The data centers are also equipped with comprehensive security systems Table of Contents to mitigate potential physical compromise of the facilities or services. See Risk Factors Risks Related to Our Business and Industry Our success depends on maintaining the integrity of our systems and infrastructure, which may suffer from failures, capacity constraints, business interruptions and forces outside our control. Data Security We employ data protection measures in an effort to safeguard both corporate and customer data. Additionally, many initiatives are planned or are already underway to further strengthen our information security position. We scan our credit card processing environment regularly, run annual internal and external penetration testing to identify vulnerabilities, and conduct annual risk assessments on applications and processes in order to maintain a high degree of data security awareness. See Risk Factors Regulatory and Other Legal Risks Our collection, processing, storage, use and transmission of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views on data privacy or security breaches and Risk Factors Regulatory and Other Legal Risks We are exposed to risks associated with payment card industry ( PCI ) compliance for more information about the data security related risks and requirements to which we are subject. Much of our operational computing environment, including our mainframe systems, is managed by a third-party service provider, which allows us to capitalize on the service provider s operational and security expertise. See Risk Factors Risks Related to Our Business and Industry We rely on the availability and performance of information technology services provided by third parties, including HP, which manages a significant portion of our systems for more information about our relationship with third-party service providers. Product and Service Quality We operate several labs that have primary accountability for validating the functional capabilities of application code, confirming code compatibility and integration, and testing code performance for high volume resiliency. These capabilities support institutionalized application engineering best practices and formalized processes that mandate the implementation and use of specific testing environments for development, integration, and certification before code moves to production. Our software development life-cycle emphasis includes the execution of documented, traceable standards and measures from initiation of a product through retirement. These include specific architectural reviews, code inspections, and pre-release readiness reviews. Operational Efficiency We leverage SOA to build a standard infrastructure across our business, which has allowed us to obtain efficient, streamlined operational support of our services and applications through enhanced and standardized deployment, discovery and visibility across business segments. Our operational environment has common systems and processes across the business, standardized hardware and software, multi-core and virtualization technologies for efficiency and sustainability, and a data center footprint that allows for expansion and quick integration of any new data centers resulting from acquisition of other companies. The focus on standardization during our multi-year move to an agile development approach has allowed teams to increase their throughput and reduce rework. Our product development teams are staying more in synch with internal and external customer needs through more frequent touch points, early demonstration of features and functions, and a continuous focus on quality, ensuring more alignment once products are delivered. In addition, the introduction of supporting tool sets that work well with the methodology and technology architecture for component-level testing have further increased productivity at the team level. Table of Contents Finally, by strategically locating approximately half of our technology staff in various facilities and closely monitoring and adjusting our technology investment, we are able to introduce increasingly more advanced development and operational practices while reducing unnecessary resources and costs. Intellectual Property Companies in the travel and travel technology industries increasingly rely on patents, copyrights, trademarks, and trade secrets, as well as licenses of the foregoing. Such companies constantly develop new products and innovations, and the travel and travel technology industries are subject to constant and rapid technological change. We use software, business processes and proprietary information to carry out our business. These assets and related intellectual property rights are significant assets of our business. We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures, and contractual provisions to protect these assets and we license software and other intellectual property both to and from third parties. We may seek patent protection on technology, software and business processes relating to our business, and our software and related documentation may also be protected under trade secret and copyright laws where applicable. We may also benefit from both statutory and common-law protection of our trademarks. We do not believe that our business is dependent on any single item of intellectual property, or that any single item of intellectual property is material to the operation of our business. Rather, we believe that our intellectual property provides a competitive advantage, and from time to time we have taken steps to enforce our intellectual property rights. The scope of such intellectual property protection varies depending on the laws of the local jurisdiction, which, in some jurisdictions, may provide less protection than the laws of the United States. Moreover, the duration of protection varies between different types of intellectual property rights. For instance, in the United States patents generally remain in force for 20 years from the filing of the patent application. Our issued United States patents are expected to expire between 2014 and 2033. Although we rely heavily on our brands, associated trademarks, and domain names, we do not believe that our business is dependent on any single item of intellectual property, or that any single item of intellectual property is material to the operation of our business. However, since we consider trademarks to be a valuable asset of our business, we maintain our trademark portfolio throughout the world by filing trademark applications with the relevant trademark offices, renewing appropriate registrations and regularly monitoring potential infringement of our trademarks in certain key markets. See Risk Factors Regulatory and Other Legal Risks We may not be able to protect our intellectual property effectively, which may allow competitors to duplicate our products and services and Risk Factors Regulatory and Other Legal Risks Intellectual property infringement actions against us could be costly and time consuming to defend and may result in business harm if we are unsuccessful in our defense for more information about our intellectual property. Insurance We insure against certain corporate risks, including damage to our property and other material assets and business interruption. Our insurance coverage includes: general civil liability and business automobile insurance umbrella and excess liability policies; property, damages and business interruption policy; director and officer liability policy; IT services policies, including a policy for errors and omissions and Internet/cyber liability; aviation policy covering third party bodily harm and/or property damage resulting from aircraft incidents; Table of Contents workers compensation policy; employee crime, kidnap and ransom policy; fiduciary liability policy; and supplemental policies for general liability, automobile liability and workers compensation for certain foreign locations, where required by local law. While we consider that our insurance coverage is consistent with industry standards in light of the activities we conduct, we can provide no assurance that our insurance coverage will adequately protect us from all the risks that may arise or in amounts sufficient to prevent material loss. See Risk Factors Regulatory and Other Legal Risks We may not have sufficient insurance to cover our liability in pending litigation claims and future claims either due to coverage limits or as a result of insurance carriers seeking to deny coverage of such claims, which in either case could expose us to significant liabilities. Legal Proceedings While certain legal proceedings and related indemnification obligations to which we are a party specify the amounts claimed, these claims may not represent reasonably possible losses. Given the inherent uncertainties of litigation, the ultimate outcome of these matters cannot be predicted at this time, nor can the amount of possible loss or range of loss, if any, be reasonably estimated, except in circumstances where an aggregate litigation accrual has been recorded for probable and reasonably estimable loss contingencies. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new information or developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters. See Risk Factors Regulatory and Other Legal Risks We are involved in various legal proceedings which may cause us to incur significant fees, costs and expenses and may result in unfavorable outcomes. On December 16, 2014, we announced that we had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com. In connection with this binding offer, we expect that certain liabilities will be retained. Furthermore, on January 23, 2015, we announced the sale of Travelocity.com to Expedia, Inc. Pursuant to the Asset Purchase Agreement entered into with Expedia, we will continue to be liable for pre-closing liabilities of Travelocity, including fees, charges, costs and settlements relating to litigation arising from hotels booked on the Travelocity platform prior to the Expedia SMA. Fees, charges, costs and settlements relating to litigation from hotels booked on Travelocity.com subsequent to the Expedia SMA and prior to the date of the sale of Travelocity.com to Expedia will be shared with Expedia in accordance with the terms that were in the Expedia SMA. We are jointly and severally liable for Travelocity s indemnification obligations under the Asset Purchase Agreement for liabilities that may arise out of such litigation matters, which could adversely affect our cash flow. Litigation and Administrative Audit Proceedings Relating to Hotel Occupancy Taxes Over the past ten years, various state and local governments in the United States have filed approximately 70 lawsuits against us and other OTAs pertaining primarily to whether Travelocity and other OTAs owe sales or occupancy taxes on some or all of the revenues they earn from facilitating hotel reservations using the merchant revenue model. In the merchant revenue model, the customer pays us an amount at the time of booking that includes (i) service fees, which we collect, and (ii) the price of the hotel room and amounts for occupancy or other local taxes, which we pass along to the hotel supplier. The complaints generally allege, among other things, that the defendants failed to pay to the relevant taxing authority hotel accommodations taxes on the service fees. Courts have dismissed approximately 30 of these lawsuits, some for failure to exhaust administrative remedies and some on the basis that we are not subject to the sales or occupancy tax at issue based on the construction of the language in the ordinance. The Fourth, Sixth and Eleventh Circuits of the United States Courts of Appeals each have ruled in our favor on the merits, as have state appellate courts in Missouri, Alabama, Texas, California, Kentucky, Florida, Colorado and Pennsylvania, and a number of state and federal trial courts. The remaining Table of Contents lawsuits are in various stages of litigation. We have also settled some cases individually, most for nuisance value, and with respect to these settlements, have generally reserved our rights to challenge any effort by the applicable tax authority to impose occupancy taxes in the future. We have received recent favorable decisions pertaining to cases in North Carolina, California, Montana, Arizona and Colorado. On August 19, 2014, the North Carolina Court of Appeals affirmed a judgment in favor of Travelocity and other OTAs after concluding they are not operators of hotels, motel or similar-type businesses and therefore are not subject to hotel occupancy tax. The plaintiffs have filed a petition for discretionary review with the North Carolina Supreme Court. On May 28, 2014, an administrative hearing officer in Arizona ruled that Travelocity is not responsible for collecting or remitting local hotel taxes and set aside assessments made by twelve municipalities in Arizona, including Phoenix, Scottsdale, Tempe, and Tucson. On March 27, 2014, a California court of appeals upheld a trial court ruling that OTAs, including Travelocity, are not subject to the City of San Diego s transient occupancy tax because they are not hotel operators or managing agents. The City of San Diego has filed a petition asking the Supreme Court of California to review the case. This marked the third time that a California appellate court has ruled in favor of Travelocity on the question of whether OTAs are subject to transient occupancy taxes in California, the prior two cases being brought by the City of Anaheim and City of Santa Monica. Travelocity also has prevailed at the trial court level in cases brought by San Francisco and Los Angeles, both of which are being appealed by the cities. On March 6, 2014, a Montana trial court ruled by summary judgment that Travelocity and other OTAs are not subject to the State of Montana s lodging facility use tax or its sales tax on accommodations and vehicles. The lawsuit had been brought by the Montana Department of Revenue, which has appealed the decision. On July 3, 2014, the Colorado Court of Appeals affirmed a final judgment that Travelocity and OTAs are not liable for lodging taxes as claimed by the City of Denver. The City of Denver has petitioned the Supreme Court of Colorado to review the decision. Although we have prevailed in the majority of these lawsuits and proceedings, there have been several adverse judgments or decisions on the merits, some of which are subject to appeal. On April 3, 2014, the Supreme Court of Wyoming affirmed a decision by the Wyoming State Board of Equalization that Travelocity and other OTAs are subject to sales tax on lodging. Similarly, on March 4, 2014, a trial court in Washington D.C. entered final judgment in favor of the District of Columbia on its claim that Travelocity and other OTAs are subject to the District s hotel occupancy tax. Travelocity has appealed the trial court s decision. We did not record material charges associated with these cases during the three and nine months ended September 30, 2014 and 2013. As of September 30, 2014, our reserve for these cases totaled $6 million and is included in other accrued liabilities in our consolidated balance sheets. In late 2012, the Tax Appeal Court of the State of Hawaii granted summary judgment in favor of Travelocity and other OTAs on the issue of whether Hawaii s transient accommodation tax applies to the merchant revenue model. However, in January 2013, the same court granted summary judgment in favor of the State of Hawaii and against Travelocity and other OTAs on the issue of whether the state s general excise tax, which is assessed on all business activity in the state, applies to the merchant revenue model for the period from 2002 to 2011. We recorded charges of $1 million and $17 million in cost of revenue for the nine months ended September 30, 2014 and 2013, respectively, which represents the amount we would owe to the State of Hawaii, prior to appealing the Tax Appeal Court s ruling, in back excise taxes, penalties and interest based on the court s interpretation of the statute. As of September 30, 2014, we maintained an accrued liability of $9 million for this case and have not made material payments in the nine months ended September 30, 2014. Payment of such amount is not an admission that we believe we are subject to the taxes in question. The State of Hawaii has appealed the Tax Appeal Court s decision that Travelocity is not subject to transient accommodation tax, and Travelocity has likewise appealed the Tax Appeal Court s determination that we are subject to general excise tax, as we believe the decision is incorrect and inconsistent with the same court s prior rulings. If any excise tax is in fact owed (which we dispute), we believe the correct amount should be under $10 million. The ultimate resolution of these contingencies may differ from the liabilities recorded. To the extent our Table of Contents appeal is successful in reducing or eliminating the assessed excise tax amounts, the State of Hawaii would be required to refund such amounts, plus interest. On May 20, 2013, the State of Hawaii issued additional assessments of general excise tax and hotel occupancy tax for the calendar year 2012. Travelocity has appealed these assessments to the Tax Appeal Court, and these assessments have been stayed pending a final appellate decision on the original assessments. On December 9, 2013, the State of Hawaii also issued assessments of general excise tax for merchant rental car bookings facilitated by Travelocity and other OTAs for the period 2001 to 2012 for which we recorded a $2 million reserve in the fourth quarter of 2013. Travelocity has appealed the assessment to the Tax Appeal Court, which ordered a stay of the assessment pending a final appellate decision on the original assessments. On July 18, 2014, the State of Hawaii also issued additional assessments of general excise tax and hotel occupancy tax for the calendar year 2013. Travelocity appealed those assessments to the Tax Appeal Court, which has stayed the assessments pending a final appellate decision on the original assessments. On November 21, 2013, the New York State Court of Appeals ruled against Travelocity and other OTAs, holding that New York City s hotel occupancy tax, which was amended in 2009 to capture revenue from fees charged to customers by third-party travel companies, is constitutional because such fees constitute rent as they are a condition of occupancy. Travelocity had been collecting and remitting taxes under the statute, so the ruling did not impact its financial results in that regard. On June 21, 2013, a state trial court in Cook County, Illinois granted summary judgment in favor of the City of Chicago and against Travelocity and other OTAs, ruling that Chicago s hotel tax applies to the fees retained by the OTAs because, according to the trial court, OTAs act as hotel managers when facilitating hotel reservations. Travelocity subsequently settled the lawsuit prior to the entry of final judgment or any ruling on damages for an amount not material to our results of operations. On April 4, 2013, the United States District Court for the Western District of Texas ( W.D.T. ) entered a final judgment against Travelocity and other OTAs in a class action lawsuit filed by the City of San Antonio. The final judgment was based on a jury verdict from October 30, 2009 that the OTAs control hotels for purposes of city hotel occupancy taxes. Following that jury verdict, on July 1, 2011, the W.D.T. concluded that fees charged by the OTAs are subject to city hotel occupancy taxes and that the OTAs have a duty to assess, collect and remit these taxes. We disagree with the jury s finding that we control hotels, and with the W.D.T. s conclusions based on the jury finding, and intend to appeal the final judgment to the United States Court of Appeals for the Fifth Circuit. The verdict against us, including penalties and interest, is $4 million which we do not believe we will ultimately pay and therefore have not accrued any loss related to this case. We believe the Fifth Circuit s resolution of the San Antonio appeal may be affected by a separate Texas state appellate court decision in our favor. On October 26, 2011, the Fourteenth Court of Appeals of Texas affirmed a trial court s summary judgment ruling in favor of the OTAs in a case brought by the City of Houston and the Harris County-Houston Sports Authority on a similarly worded tax ordinance as the one at issue in the San Antonio case. The Texas Supreme Court denied the City of Houston s petition to review the case. We believe this decision should provide persuasive authority to the Fifth Circuit in its review of the San Antonio case. As of September 30, 2014, we have a reserve of $20 million, included in other accrued liabilities in the consolidated balance sheet, for the potential resolution of issues identified related to litigation involving hotel sales, occupancy or excise taxes, which includes the $11 million liability for the remaining payments to the State of Hawaii. As of December 31, 2013, the reserve for litigation involving hotel sales, occupancy or excise taxes was $18 million. Our estimated liability is based on our current best estimate but the ultimate resolution of these issues may be greater or less than the amount recorded and, if greater, could adversely affect our results of operations. Table of Contents In addition to the actions by the tax authorities, four consumer class action lawsuits have been filed against us in which the plaintiffs allege that we made misrepresentations concerning the description of the fees received in relation to facilitating hotel reservations. Generally, the consumer claims relate to whether Travelocity provided adequate notice to consumers regarding the nature of our fees and the amount of taxes charged or collected. One of these lawsuits was dismissed by the trial court and this dismissal was subsequently affirmed by the Texas Supreme Court; one was voluntarily dismissed by the plaintiffs; one is pending in Texas state court, where the court is currently considering the plaintiffs motion to certify a class action; and the last is pending in federal court, but has been stayed pending the outcome of the Texas state court action. We believe the notice we provided was appropriate. In addition to the lawsuits, a number of state and local governments have initiated inquiries, audits and other administrative proceedings that could result in an assessment of sales or occupancy taxes on fees. If we do not prevail at the administrative level, those cases could lead to formal litigation proceedings. US Airways Antitrust Litigation and DOJ Investigation US Airways Antitrust Litigation In April 2011, US Airways sued us in federal court in the Southern District of New York, alleging violations of the Sherman Act Section 1 (anticompetitive agreements) and Section 2 (monopolization). The complaint was filed two months after we entered into a new distribution agreement with US Airways. In September 2011, the court dismissed all claims relating to Section 2. The claims that were not dismissed are claims brought under Section 1 of the Sherman Act that relate to our contracts with airlines, especially US Airways itself, which US Airways says contain anticompetitive content-related provisions, and an alleged conspiracy with the other GDSs, allegedly to maintain the industry structure and not to implement US Airways preferred system of distributing its Choice Seats product. We strongly deny all of the allegations made by US Airways. US Airways initially quantified its damages at either $317 million or $482 million (before trebling), depending on certain assumptions. We believe both estimates are based on faulty assumptions and analysis and therefore are highly overstated. In the event US Airways were to prevail on the merits of its claim, we believe any monetary damages awarded (before trebling) would be significantly less than either of US Airways proposed damage amounts. Document, fact and expert witness discovery are complete. Summary judgment motions were filed in April 2014 and in January 2015, the court issued a summary judgment opinion, which has not yet been published in full in order to preserve some of the confidential information of the parties and other parties. Based on the ruling, the judge eliminated the claims related to a majority of the alleged damages as well as rejected a request that would require us to modify language in our customer contracts. Based on the ruling, the potential remaining range of single damages has been significantly reduced. In respect of all of the remaining claims, US Airways claims damages (before trebling) of either $45 million or $73 million. US Airways has filed a motion for reconsideration on two issues decided in our favor. If the motion for reconsideration is granted in full, US Airways damages claim would, per US Airways calculations, be either $184 million or $274 million. With respect to all of the remaining claims in this case, we believe that our business practices and contract terms are lawful and fair, and we will continue to vigorously defend against the remaining claims. The claims that have been dismissed to date are subject to appeal. We have and will incur significant fees, costs and expenses for as long as the litigation is ongoing. In addition, litigation by its nature is highly uncertain and fraught with risk, and it is therefore difficult to predict the outcome of any particular matter. If favorable resolution of the matter is not reached, any monetary damages are subject to trebling under the antitrust laws and US Airways would be eligible to be reimbursed by us for its costs and attorneys fees. Depending on the amount of any such judgment, if we do not have sufficient cash on hand, we may be required to seek financing through the issuance of additional equity or from private or public financing. As noted, US Airways had sought injunctive relief, which the Court in its recent summary judgment ruling dismissed. (US Airways has not sought reconsideration of this aspect of the Court s ruling.) If injunctive relief were granted, depending on its scope, it could affect the manner in which our airline distribution business is operated and potentially force changes to the existing airline distribution business model. Any of these consequences could have a material adverse effect on our business, financial condition and results of operations. Table of Contents Department of Justice Investigation On May 19, 2011, we received a civil investigative demand ( CID ) from the U.S. Department of Justice ( DOJ ) investigating alleged anticompetitive acts related to the airline distribution component of our business. We are fully cooperating with the DOJ investigation and are unable to make any prediction regarding its outcome. The DOJ is also investigating other companies that own GDSs, and has sent CIDs to other companies in the travel industry. Based on its findings in the investigation, the DOJ may (i) close the file, (ii) seek a consent decree to remedy issues it believes violate the antitrust laws, or (iii) file suit against us for violating the antitrust laws, seeking injunctive relief. If injunctive relief were granted, depending on its scope, it could affect the manner in which our airline distribution business is operated and potentially force changes to the existing airline distribution business model. Any of these consequences would have a material adverse effect on our business, financial condition and results of operations. Indian Income Tax Litigation We are currently a defendant in income tax litigation brought by the Indian Director of Income Tax ( DIT ) in the Supreme Court of India. The dispute arose in 1999 when the DIT asserted that we have a permanent establishment within the meaning of the Income Tax Treaty between the United States and the Republic of India and accordingly issued tax assessments for assessment years ending March 1998 and March 1999, and later issued further tax assessments for assessment years ending March 2000 through March 2006. We appealed the tax assessments and the Indian Commissioner of Income Tax Appeals returned a mixed verdict. We filed further appeals with the Income Tax Appellate Tribunal , or the ITAT. The ITAT ruled in our favor on June 19, 2009 and July 10, 2009, stating that no income would be chargeable to tax for assessment years ending March 1998 and March 1999, and from March 2000 through March 2006. The DIT appealed those decisions to the Delhi High Court, which found in our favor on July 19, 2010. The DIT has appealed the decision to the Supreme Court of India and no hearing date has been set. We intend to continue to aggressively defend against these claims. Although we do not believe that the outcome of the proceedings will result in a material impact on our business or financial condition, litigation is by its nature uncertain. If the DIT were to fully prevail on every claim, we could be subject to taxes, interest and penalties of approximately $26 million as of September 30, 2014, which could have a material adverse effect on our business, financial condition and results of operations. We do not believe this outcome is probable and therefore have not made any provisions or recorded any liability for the potential resolution of this matter. Litigation Relating to Patent Infringement In April 2010, CEATS, Inc. ( CEATS ) filed a patent infringement lawsuit against several ticketing companies and airlines, including JetBlue, in the Eastern District of Texas. CEATS alleged that the mouse-over seat map that appears on the defendants websites infringes certain of its patents. JetBlue s website is provided by our Airline Solutions business under the SabreSonic Web service. On June 11, 2010, JetBlue requested that we indemnify and defend it for and against the CEATS lawsuit based on the indemnification provision in our agreement with JetBlue, and we agreed to a conditional indemnification. CEATS claimed damages of $0.30 per segment sold on JetBlue s website during the relevant time period which totaled $10 million. A jury trial began on March 12, 2012, which resulted in a jury verdict invalidating the CEATS patents. Final judgment was entered and the plaintiff appealed. The Federal Circuit affirmed the jury s decision in our favor on April 26, 2013. CEATS did not appeal the Federal Circuit s decision, and its deadline to do so has passed. On June 28, 2013, the Eastern District denied CEATS previously filed motion to vacate the judgment based on an alleged conflict of interest with a mediator. CEATS appealed that decision and the Federal Circuit heard the appeal on May 5, 2014, and subsequently denied the appeal. On July 22, 2014, CEATS filed a motion for rehearing en banc before the Federal Circuit which was denied on September 5, 2014. On December 4, 2014, CEATS filed a petition seeking a review with the Supreme Court. Defendants are expected to file their response to the petition opposing review in February 2015. Table of Contents Insurance Carriers We have disputes against some of our insurance carriers for failing to reimburse defense costs incurred in our American Airlines antitrust litigation, which we settled in October 2012. For a description of the American Airlines antitrust litigation, see Note 20, Commitments and Contingencies Legal Proceedings Airline Antitrust Litigation, US Airways Antitrust Litigation, and DOJ Investigation to our audited consolidated financial statements included elsewhere in this prospectus. Both carriers admitted there is coverage, but reserved their rights not to pay should we be found liable for certain of American Airlines allegations. Despite their admission of coverage, the insurers have only reimbursed us for a small portion of our significant defense costs. We filed suit against the entities in New York state court alleging breach of contract and a statutory cause of action for failure to promptly pay claims. If we prevail, we may recover some or all amounts already tendered to the insurance companies for payment within the limits of the policies and may be entitled to 18% interest on such amounts. To date, settlement discussions have been unsuccessful. We are currently in the discovery process. The court has not yet scheduled a trial date though we anticipate trial to begin in the second half of 2015. Hotel Related Antitrust Proceedings On August 20, 2012, two individuals alleging to represent a putative class of bookers of online hotel reservations filed a complaint against Sabre Holdings, Travelocity.com LP, and several other online travel companies and hotel chains in the U.S. District Court for the Northern District of California, alleging federal and state antitrust and related claims. The complaint alleges generally that the defendants conspired to enter into illegal agreements relating to the price of hotel rooms. Over 30 copycat suits were filed in various courts in the United States. In December 2012, the Judicial Panel on Multi-District Litigation centralized these cases in the U.S. District Court in the Northern District of Texas, which subsequently consolidated them. The proposed class period was January 1, 2003 through May 1, 2013. Together with the other defendants, Travelocity and Sabre filed a motion to dismiss. On February 18, 2014, the court granted the motion and dismissed the plaintiff s claims without prejudice. The plaintiffs had moved for leave to file an amended complaint but the judge denied the motion on October 27, 2014 and dismissed the claims with prejudice. The plaintiffs did not appeal and their opportunity to appeal has expired. The Court closed the case on January 17, 2015 and we regard this matter as fully and finally resolved. Litigation Relating to Routine Proceedings We are also engaged from time to time in other routine legal and tax proceedings incidental to our business. We do not believe that any of these routine proceedings will have a material impact on the business or our financial condition. Property As a company with global operations, we operate in many countries with a variety of sales, administrative, product development, and customer service roles provided in these offices. Americas: Our corporate and business unit headquarters and domestic operations are located in a property which we own in Southlake, Texas. Travelocity corporate headquarters is located in Westlake, Texas, with a lease that expires in 2017. There are 15 additional offices across North America and 13 offices across Latin America that serve in various sales, administration, software development and customer service capacities. All of these additional offices are leased. Europe: Travel Network has its European regional headquarters in London, United Kingdom, with a lease that expires in 2027. lastminute.com also has its regional headquarters in London, with a lease that expires in 2022. There are 30 additional offices across Europe that serve in various sales, administration, software development and customer service capacities. All of these additional offices are leased. APAC: Travel Network and Airline and Hospitality Solutions have the APAC regional operations headquartered in Singapore under a lease that expires in 2017. All of our businesses share a single office. There are 10 additional offices across APAC that serve in various sales, administration, software development and customer service capacities. All of these additional offices are leased. Table of Contents The table below provides a summary of our key facilities as of September 30, 2014: Location Purpose Employees Leased or Owned HEADQUARTERS Southlake, Texas, USA Sabre worldwide corporate and domestic headquarters 2,484 Owned Westlake, Texas, USA Travelocity corporate headquarters 320 Leased London, United Kingdom Travel Network regional headquarters 139 Leased London, United Kingdom lastminute.com regional headquarters 232 Leased Singapore Travel Network and Airline and Hospitality Solutions regional headquarters 52 Leased DEVELOPMENT CENTERS Buenos Aires, Argentina Development Center for Travelocity, Sabre Technology and Travel Network 111 Leased Bangalore, India Development Center for Sabre Technology, Travelocity, Sabre 570 Leased Krakow, Poland Development Center for Sabre technology and Travel Network 1,246 Leased CUSTOMER CARE CENTERS Montevideo, Uruguay Travel Network and Airline Solutions Customer Care Center 773 Leased Government Regulation We are subject to or affected by international, federal, state and local laws, regulations and policies, which are constantly subject to change. The descriptions of the laws, regulations and policies that follow are summaries and should be read in conjunction with the texts of the laws and regulations. The descriptions set out below do not purport to describe all present and proposed laws, regulations and policies that affect our businesses. To the best of our knowledge and belief, we are in material compliance with these laws, regulations and policies. We cannot, however, predict the effect of changes to the existing laws, regulations and policies or of the proposed laws, regulations and policies that are described below. We are not aware of proposed changes or proposed new laws, regulations and policies that will have a material adverse effect on our businesses. See Risk Factors Regulatory and Other Legal Risks Any failure to comply with regulations or any changes in such regulations governing our businesses could adversely affect us. Computer Reservations System Industry Regulation GDS Regulation in the EU GDS operations are regulated in the EU by Council Regulation (EC) No. 80/2009 of the European Parliament and of the Council of January 14, 2009 on a Code of Conduct for computerized reservations systems and repealing Council Regulation (EEC) No. 2299/89 ( Code of Conduct ). The previous legislative framework essentially obliged GDS providers to charge the same booking fee for the same service provided to any airline, where the costs associated with the services was the same, and airlines to provide the same fare content to all the GDS providers in which they participated. The revised Code of Conduct substantially simplifies this regime and gives GDS operators, airlines, and other travel suppliers more flexibility in negotiating their commercial arrangements. Under the Code of Conduct, particular rules apply to dealings between each GDS, air carriers, and rail transport operators, or participating carriers, and subscribers, which are typically offline or online travel agents. Additional rules apply to air carriers that control or have decisive influence over a GDS ( parent carriers ). As Table of Contents described in an explanatory note of the European Commission, published alongside the Code of Conduct, a participating carrier becomes a parent carrier if it controls a GDS or has sufficient capital or board representation rights to have decisive influence over the GDS. Parent carriers are subject to specific rules, in particular prohibiting discrimination against a GDS competing with the GDS in which they participate, for example, by withholding booking capability or linking incentives or disincentives to the use of a specific GDS. We do not have a parent carrier for purposes of the current EU regulation. The Code of Conduct also seeks to ensure that travel agents displays provide a full and neutral selection of the relevant travel information processed by a GDS and that the privacy of end consumers is respected. Under the Code of Conduct, a GDS may not attach unfair conditions to a contract with a participating carrier or with a subscriber. Additionally, a GDS may not reserve any processing procedure or other distribution facility for one or more participating carriers, including parent carriers, and must keep all participating carriers informed of any changes. The Code of Conduct provides that small subscribers (employing fewer than 50 persons and with an annual turnover of up to 10 million) may terminate a contract with a GDS vendor on three months notice after the first year of the contract. GDS providers may commercialize marketing, booking and sales data provided that such data is offered with equal timeliness and on a non-discriminatory basis to all participating carriers, including parent carriers. This data is typically provided through Marketing Information Data Tapes. With regard to the interface with subscribers and end consumers, the GDS must ensure that the principal display of fares corresponding to a particular search is presented to subscribers in a neutral and comprehensive manner, without discrimination for or against any particular participating carrier and without misleading the viewer. From this principal display, the system may thereafter include biased screens; however, the information provided to a consumer must be unbiased unless the consumer specifically requests another display. Also, personal data collected by a GDS in the course of its activities must be processed in a manner compatible with its responsibilities as a data controller under Article 2(d) of Directive 1995/46/EU. The European Commission monitors the ownership structure and governance model of each GDS, in particular through independent audited reports prepared by each GDS at least every four years. If the European Commission finds that a GDS provider has, intentionally or negligently, infringed the Code of Conduct, it may require the GDS provider to bring the infringement to an end and impose fines not exceeding 10% of the GDS provider s total gross turnover in the preceding business year. The Commission may also impose fines for not responding to information requests. These sanctions are civil, not criminal, and may be appealed to the Court of Justice of the European Communities. We believe that we comply in all aspects with the Code of Conduct. We have no parent carriers and so are not subject to the specific rules in that regard. GDS Regulation in Canada There are GDS regulations in Canada issued under the regulatory authority of the Canadian Department of Transportation. On April 27, 2004, a significant number of these regulations were lifted, including the elimination of the obligated carrier rule, which required larger airlines in Canada to participate equally in all GDSs, and elimination of the requirement that transaction fees charged by GDSs to airlines be non-discriminatory. Due to the elimination of the obligated carrier rule in Canada, Air Canada, the dominant Canadian airline, could choose distribution channels that it owns and controls or distribution through another GDS rather than through our GDS. Table of Contents GDS Regulation in the United States As of July 31, 2004, all GDS regulations in the United States (which only covered airline distribution) expired. Nonetheless, the DOT has retained the authority to intervene as it considers necessary under 49 U.S.C. 41712. To date, the DOT has not intervened in relation to our GDS activities in the United States, but has provided guidance regarding, among other things, any biasing of air carrier GDS displays. This guidance largely tracks our process with respect to any carrier specific bias we may choose to implement in our primary display. To the best of our knowledge, the DOT has not intervened in relation to the GDS activity of any other provider, with the exception of the display of air carrier codeshares by Amadeus. The DOT is currently considering enacting rules that would require airlines choosing to distribute via a GDS to provide the GDS with any core ancillary fares (seats, bags, etc.). No rule has yet been proposed. GDS Regulation Elsewhere GDS services have been regulated in Peru since 2000. In July 2010, India enacted GDS regulations. Both sets of regulations are similar to GDS regulation in the EU. The regulations in Peru and India have not caused any material issues for our business. Data Protection and Privacy Regulation We are subject to the application of data protection and privacy regulations in many of the countries in which we operate and any breach of such regulations could result in economic sanctions, which could be material and/or harm our reputation. In our businesses, customers provide us with personally identifiable information ( personal data ) that has been specifically and voluntarily given. Personal data includes information that can identify a customer or a specific individual, such as name, phone number, or e-mail address. We obtain personal data from airlines, hotels, and other travel suppliers and from travel buyers and other travel retailers with which we have a commercial or business relationship. We collect, use, disclose and transfer personal data in conformance with applicable privacy laws and regulations, and implement technical and organizational measures designed to protect against unauthorized access, use, disclosure, modification, and destruction of personal data that we collect and maintain. A primary source of privacy regulations to which our operations are subject is the EU Data Protection Directive 1995/46/EC of the European Parliament and Council (October 24, 1995). Pursuant to this directive, individual countries within the EU have specific regulations related to the transborder flow of personal information (i.e., sending personal information from one country to another). The EU Data Protection Directive requires companies doing business in EU Member States to comply with its standards. It provides for, among other things, specific regulations requiring all non-EU countries doing business with EU Member States to provide adequate data privacy protection when processing personal data from any of the EU Member States. Sabre s GetThere subsidiary and PRISM subsidiary have self-certified compliance with the U.S.-E.U. Safe Harbor and the U.S.-Swiss Safe Harbor frameworks. Our GDS business is covered by the EU GDS Code of Conduct. Many other countries have adopted data protection regimes. An example is Canada s Personal Information and Protection of Electronic Documents Act ( PIPEDA ). PIPEDA provides Canadian residents with privacy protections with regard to transactions with businesses and organizations in the private sector. We believe we are in compliance with all applicable laws in this area. Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. The United States prohibits U.S. persons from engaging with individuals and Table of Contents entities identified as Specially Designated Nationals, such as terrorists and narcotics traffickers. These prohibitions are administered by the U.S. Department of the Treasury s Office of Foreign Assets Control and are typically known as the OFAC rules. The OFAC rules prohibit U.S. persons from engaging in financial transactions with or relating to the prohibited individual, entity or country, require the blocking of assets in which the individual, entity or country has an interest, and prohibit transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons) to such individual, entity or country. Blocked assets (e.g., property or bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. We maintain a global sanctions program designed to ensure compliance with OFAC requirements. Failure to comply with such requirements could subject us to legal and reputational consequences, including criminal penalties. See Risk Factors Any failure to comply with regulations or any changes in such regulations governing our business could adversely affect us. Other Regulation We are actively monitoring the status of certain proposed U.S. federal and state legislation related to privacy that may be enacted in the future. It is unclear what effect, if any, the passage of any such U.S. federal or state legislation would have on our businesses. Our businesses may also be subject to regulations affecting issues such as: trade sanctions, exports of technology, telecommunications, and e-commerce. Any such regulations may vary among jurisdictions. We do not currently maintain a central database of regulatory requirements affecting our worldwide operations and, as a result, the risk of non-compliance with the laws and regulations described above is heightened. However, we believe that we are capable of addressing these regulatory issues as they arise. Employees As of September 30, 2014, we employed approximately 8,000 people. As a global company with significant operations outside the United States, our employee composition reflects the global nature of our business. Approximately 46% of our employees are based in the United States and 54% in the rest of the world. Our ability to attract and retain highly qualified employees is important to our success in maintaining leadership in our businesses. Competition for qualified personnel in our industry is intense. We have a policy of using equity-based compensation programs to reward and motivate significant contributors among our employees. Our employees are not represented by a labor union in the United States. We have a Works Council covering some of our operations in several European countries, as required by law. A Works Council is a representative body of the employees of a company elected by the employees. Management of the subsidiary must seek the non-binding advice of the Works Council before taking certain decisions, such as a major restructuring, a change of control or the appointment or dismissal of a member of the board of management. Certain other decisions that directly involve employment matters applicable either to all employees or certain groups of employees require the Works Council s approval unless approved by the appropriate judicial body. We have not experienced any work stoppages and consider our relations with our employees to be good. Table of Contents MANAGEMENT AND BOARD OF DIRECTORS The following table sets forth the name, age, position and description of the business experience as of January 15, 2015 of individuals who serve as executive officers and directors of our company and brief statements of those aspects of our directors backgrounds that led us to conclude that they should serve as directors. Name Age Position Tom Klein 52 Chief Executive Officer, President and Director, Sabre Richard A. Simonson 56 Executive Vice President and Chief Financial Officer, Sabre Alexander S. Alt 40 President and General Manager, Sabre Hospitality Solutions Rachel A. Gonzalez 45 Executive Vice President and General Counsel, Sabre Hugh W. Jones 51 Executive Vice President, Sabre and President, Sabre Airline Solutions Deborah Kerr 42 Executive Vice President and Chief Product and Technology Officer, Sabre William G. Robinson, Jr. 50 Executive Vice President and Chief Human Resources Officer, Sabre Gregory T. Webb 48 Executive Vice President, Sabre and President, Travel Network Lawrence W. Kellner 55 Chairman of the Board of Directors George R. Bravante, Jr. 56 Director Gary Kusin 63 Director Greg Mondre 40 Director Judy Odom 62 Director Joseph Osnoss 37 Director Karl Peterson 44 Director Executive Officers Tom Klein is CEO and president of Sabre and has more than 17 years of experience managing large scale, international technology businesses. Before being named CEO in August 2013, Mr. Klein served as company president since January 2010. His role prior to that was executive vice president, Sabre, and group president of Sabre Travel Network and Sabre Airline Solutions businesses. Earlier roles included various senior leadership positions within Sabre, both in the United States and in Latin America, and he served as the first director general of Sabre Sociedad Tecnol gica, a Mexico-based joint venture company owned by Sabre, Aeromexico and Mexicana. Prior to joining Sabre in 1994, he held a variety of sales, marketing and operations positions at American Airlines and Consolidated Freightways, Inc. Mr. Klein serves on the Board of Directors and chairs the compensation committee for Cedar Fair Entertainment. In 2010, he was appointed to the Board of Directors for Brand USA by the U.S. Secretary of Commerce and now serves as vice chairman. He also serves on the executive committee of the World Travel and Tourism Council and the Dean s Board of the Villanova School of Business. Mr. Klein holds a bachelor s degree in business administration from Villanova University. Richard A. Simonson is executive vice president and chief financial officer. He leads the company s global finance organization and is responsible for all finance and controls, reporting, investor relations and corporate development activities. He brings a combination of experiences with global finance, operations and capital markets focused on technology sectors. Before joining Sabre in March 2013, Mr. Simonson most recently served as CFO and president for business operations at Rearden Commerce, an e-commerce company from March 2011 Table of Contents to May 2012 and as an independent advisor to companies in the telecom, media and technology industry from May 2012 to March 2013 and from July 2010 to May 2011. From September 2001 to July 2010 he worked at Nokia Corporation in several global roles based in locations around the world in Helsinki, Zurich and New York including executive vice president and general manager of Nokia s mobile phones unit and more than five years as executive vice president and CFO. Mr. Simonson s career includes time with Barclays Capital as managing director in the telecom and media investment banking group. He also spent 16 years with Bank of America Securities, where he held various finance and investment banking positions in San Francisco and Chicago. Mr. Simonson currently serves on the board of directors of Electronic Arts, where he is lead Director and chairs the audit committee, and Silver Spring Networks, where he chairs the audit committee. He graduated from the Colorado School of Mines and holds an M.B.A. from Wharton School of Business at the University of Pennsylvania. Alexander S. Alt is president and general manager of Sabre Hospitality Solutions, and oversees one of Sabre s two SaaS businesses. Prior to being named president, Mr. Alt served in an expanded chief operating officer role at Sabre Hospitality Solutions, where he oversaw customer care, data services, implementations, call center and similar services. As part of the Sabre Hospitality Solutions management team, he also helped drive overall business strategy. Before joining Sabre in 2012, Mr. Alt served as senior vice president of global development and strategy at Rosewood Hotels & Resorts, where he played a key role in the global growth and expansion of the business. Prior to joining Rosewood Hotels in 2006, he was a senior engagement manager at McKinsey & Company. Earlier in his career, he worked in the finance department of Sabre as a manager and senior analyst in the financial planning and analysis group. Mr. Alt is a member of the Dallas Development Board of The Nature Conservancy and is on the Advisory Board of the School of Undergraduate Studies at the University of Texas in Austin. He graduated from the University of Texas in Austin and received his M.B.A. from Harvard University. Rachel A. Gonzalez is executive vice president and general counsel of Sabre, a position she assumed in September 2014. She manages the global legal department responsible for legal strategy, regulatory affairs, corporate compliance and government affairs. Prior to joining Sabre, Ms. Gonzalez served as executive vice president, general counsel and corporate secretary with Dean Foods in Dallas, Texas from March 2013 to September 2014, as executive vice president, general counsel designate from November 2012 to March 2013. Ms. Gonzalez joined Dean Foods in 2008 as chief counsel, corporate & securities and served as the deputy general counsel prior to her promotion in November 2012. Previously, Ms. Gonzalez was senior vice president and group counsel with Affiliated Computer Services. Ms. Gonzalez was a partner with the law firm of Morgan, Lewis & Bockius, where she focused on corporate finance, mergers & acquisitions, SEC compliance and corporate governance. Ms. Gonzalez serves on the Board of Directors of Girl Scouts of Northeast Texas and their Audit and Board Development Committees. Ms. Gonzalez earned her J.D. degree from Boalt Hall School of Law the University of California, Berkeley and her bachelor s degree in comparative literature from the University of California, Berkeley. Hugh W. Jones is executive vice president and president of Sabre Airline Solutions and is a 26-year veteran of the travel industry. Immediately prior to being named to his current role in April 2011, Mr. Jones served as Travelocity s president and CEO beginning in February 2009 and before that, he held a number of executive roles at Sabre including senior vice president and chief operating officer for our Travel Network and Airline and Hospitality Solutions businesses, where he oversaw airline supplier initiatives and global customer support. He also led Travel Network in North America and served as senior vice president and controller for Sabre. Mr. Jones began his career with American Airlines in 1988 and held a variety of finance positions including financial controller for the airline s European and Pacific airport, sales and reservations operations. He earned a master s degree in business administration from Southern Methodist University and a bachelor s degree in geology and geophysics from the University of Wisconsin. Deborah Kerr is executive vice president and chief product and technology officer at Sabre, and is responsible for leading the global product and technology organization. Prior to her appointment at Sabre in Table of Contents March 2013, she served as executive vice president, chief product and technology officer at FICO from 2009 to April 2012, a leader in predictive analytics and decision management technology. Prior experience includes senior leadership roles with HP, Peregrine Systems and NASA s Jet Propulsion Laboratory. Ms. Kerr is a director of the Davis and Henderson Corporation and EXLService Holdings, Inc. She was previously a director of Mitchell International from January 2010 until October 2013. Ms. Kerr holds a master s degree in Computer Science and a bachelor s degree in Psychology. William G. Robinson, Jr. is executive vice president and chief human resources officer. He is responsible for leading Sabre s global human resources organization, including talent management, organizational leadership and culture. Prior to joining Sabre in December 2013, Mr. Robinson served as the senior vice president and chief human resources officer at Coventry Health Care, a diversified managed health care company with 14,000 employees, from 2012 to 2013. From 2010 to 2011, Mr. Robinson served as senior vice president for human resources at Outcomes Health Information Solutions, a healthcare analytics and information company specializing in the optimization and acquisition of medical records. Prior to that, from 1990 to 2010, he worked for General Electric, where he held several human resources leadership roles in diverse industries including information technology, healthcare, energy and industrial. Most recently, he was the human resources leader within the GE Enterprise Solutions division where he led a global team in an organization of 20,000 employees in 200 locations worldwide. He holds a M.A. in Human Resources Development from Bowie State University and a B.S. in Communications from Wake Forest University. Gregory T. Webb is executive vice president and president of Travel Network, and before being named to his current role, gained experience with all aspects of the business, from leading the marketing organization to managing our supplier relationships, Travel Network business in Asia and Hospitality Solutions business. Since joining Sabre in 1995, Mr. Webb has held several senior leadership positions including chief marketing officer for both our Travel Network and Airline and Hospitality Solutions businesses and senior vice president of global product marketing for Sabre. Early in his career, he served as director of project consulting and risk assessment for American Airlines and Sabre. Prior to joining the company, Mr. Webb was vice president and chief information officer for BellSouth Telecommunications and also served as a senior consultant at Andersen Consulting. Mr. Webb earned a master s degree in business administration with an emphasis in marketing from Louisiana Tech University and a bachelor s degree in advertising from Southern Methodist University. He serves on the board of directors of Abacus. Our executive officers will serve until their successors have been duly elected and qualified. Our Board of Directors Our business and affairs are managed under the direction of our board of directors. Our Certificate of Incorporation provides that our board of directors shall consist of at least five directors but no more than eleven directors; provided, however, prior to the time when the Principal Stockholders beneficially own, collectively, less than 40% of the outstanding shares of our common stock, the board of directors shall not consist of more than nine directors. Our board of directors is currently comprised of eight directors. The directors are elected at the annual meeting of the stockholders and each director serves until the election and qualification of his or her successor. The board of directors met five times in 2014. All of the directors attended in excess of 75 percent of the total number of meetings of the board and the committees on which they served. Our Corporate Governance Guidelines provide that directors are expected to attend all or substantially all board meetings and meetings of the committees of the board on which they serve, as well as our Annual Meeting of Stockholders. Our 2014 Annual Meeting was held prior to our initial public offering, and no directors attended that meeting. Table of Contents Tom Klein. See Mr. Klein s biographical information above under Executive Officers. Mr. Klein s long service at our company, travel technology industry experience and leadership experience make him a valuable asset to our management and our board of directors. Lawrence W. Kellner joined the company as non-executive Chairman of our Board of Directors in August 2013. He has served as President of Emerald Creek Group, LLC, a private equity firm, since 2010. He served as Chairman and Chief Executive Officer of Continental Airlines, Inc., an international airline company, from December 2004 through December 2009. He served as President and Chief Operating Officer of Continental Airlines from March 2003 to December 2004, as President from May 2001 to March 2003 and was a member of Continental Airlines board of directors from May 2001 to December 2009. Mr. Kellner serves on the board of directors of The Boeing Company, The Chubb Corporation and Marriott International, Inc. We believe that Mr. Kellner is a valuable asset and well qualified to sit on our board of directors as a result of his significant travel industry experience, significant corporate governance experience and financial expertise. George R. Bravante, Jr. has served on our board of directors since December 2014. He is the co-founder and the managing member of the general partner of Bravante-Curci Investors, LP, an investment firm focusing on real estate investments in California. He has held this position since 1996. Since 2005, he has also been the owner of Bravante Produce, a grower, packer and shipper of premium California table grapes and citrus. Previously, Mr. Bravante served as chairman of the board of ExpressJet Holdings, Inc. from 2005 to 2010 and was a member of its board from 2004 to 2010. From 1994 to 1996, Mr. Bravante was President and Chief Operating Officer of Colony Advisors, Inc., a real estate asset management company, and President and Chief Operating Officer of America Real Estate Group, Inc., where he led strategic management, restructuring and disposition of assets. We believe that Mr. Bravante should serve on the board because of his travel industry experience, as well as his investment experience and financial and strategic business knowledge. Gary Kusin is an independent consultant focused on assisting companies on strategic and operational matters. He has served on our board of directors since March 2007. Among other engagements, Mr. Kusin acts as a TPG senior advisor, pursuant to which he provides his expertise to selected TPG portfolio companies as well as to selected TPG potential investment opportunities. Mr. Kusin previously served as president and CEO of FedEx Kinko s, today operating as FedEx Office from 2001 to 2006. Prior to joining Kinko s in 2001, Mr. Kusin served as CEO of HQ Global Workplaces (now part of Regus), which provides offices, meeting rooms and network access at locations around the world. In 1995 he co-founded Laura Mercier Cosmetics, which sold to Neiman Marcus in 1998. He also co-founded Babbage s Inc. (now GameStop), a leading consumer software specialty chain, in 1983 and served as its president. Earlier in his career, he was vice president and general merchandise manager for the Sanger-Harris division of the Federated Department Store (now Macy s). An Inc. magazine Entrepreneur of the Year, Mr. Kusin serves on the board of directors of Petco, Fleetpride, American Tire Distributor, and Savers. Mr. Kusin earned his Bachelor of Arts degree from The University of Texas at Austin and his M.B.A. from the Harvard Business School. We believe that Mr. Kusin should serve on our board of directors because of his substantial expertise in executive management and corporate governance as a result of his extensive experience both as an investor and an executive officer of major corporations. Greg Mondre is a Managing Partner and Managing Director with Silver Lake and has served on our board of directors since March 2007. Mr. Mondre joined the firm in 1999 and has significant experience in private equity investing and expertise in sectors of the technology and technology-enabled industries. Prior to joining Silver Lake, Mr. Mondre was a principal at TPG, where he focused on private equity investments across a wide range of industries, with a particular focus on technology. Earlier in his career, Mr. Mondre worked as an investment banker in the Communications, Media and Entertainment Group of Goldman, Sachs & Co. He currently serves as a director of Avaya, Inc., Go Daddy Operating Company, LLC, IPC Systems, Inc. and Vantage Data Centers, and is on the operating committee of SunGard Capital Corp. Mr. Mondre graduated from The Wharton School at the University of Pennsylvania with a bachelor s degree in economics. Because Mr. Mondre has over seventeen years of private equity investing and banking experience focused on technology companies and tech-enabled businesses, we believe that he would bring to our board of directors specialized knowledge and experience in portfolio management, analyzing potential acquisitions, raising equity, and setting corporate strategy. Table of Contents Judy Odom joined the company as a director in March 2014. From 1985 until her retirement in 2002, Ms. Odom held numerous positions, most recently chief executive officer and chairman of the board, at Software Spectrum, Inc., a global business to business software services company, which she co-founded in 1983. Prior to founding Software Spectrum, Ms. Odom was a partner with the international accounting firm, Grant Thornton. Ms. Odom currently serves on the board of directors of Harte-Hanks, Inc., a marketing services company, and Leggett & Platt, Inc., a diversified manufacturing company. She previously served on the board of Storage Technology Corporation, a provider of data storage hardware and software products and services, from November 2003 to August 2005. Ms. Odom graduated from Texas Tech University, where she earned a B.B.A. in accounting. We believe that Ms. Odom s qualifications to serve on our board include her board service with several companies allowing her to offer a broad leadership perspective on strategic and operating issues facing companies today. Ms. Odom s experience co-founding Software Spectrum, growing it to a large public company before selling it to another public company and serving as board chair provides the insight and perspective of a successful entrepreneur and long-serving chief executive officer with international operating experience. Joseph Osnoss is a Managing Director of Silver Lake, which he joined in 2002. He has served on our board of directors since March 2007. From 2010 to 2014, before returning to the U.S., Mr. Osnoss was based in Silver Lake s London office, where he helped oversee the firm s activities in Europe, the Middle East, and Africa. Mr. Osnoss also is a director of Global Blue, Interactive Data Corporation, and Virtu Financial, and previously served on the boards of Instinet Incorporated and Mercury Payment Systems. Prior to joining Silver Lake, Mr. Osnoss worked in investment banking at Goldman, Sachs & Co., where he focused on mergers and financings in the technology and telecommunications industries. He previously held positions at Coopers & Lybrand Consulting in France and at Bracebridge Capital, a fixed income arbitrage hedge fund. Mr. Osnoss graduated summa cum laude from Harvard College with an A.B. in Applied Mathematics-Economics and a citation in French language. He currently is a Visiting Professor at the London School of Economics, where he participates in teaching and research activities within the Department of Finance. Mr. Osnoss extensive experience investing in private equity and serving on the boards of directors of other companies, both domestically and internationally, positions him to contribute meaningfully to our board of directors. Karl Peterson is a Senior Partner of TPG and Managing Partner of TPG Capital LLP, the firm s European operations. He has served on our board of directors since March 2007. Since joining TPG in 2004, Mr. Peterson has led investments for the firm in technology, media, financial services and travel sectors. Prior to 2004, he was a co-founder and the president and CEO of Hotwire.com, the internet travel portal. He led the business from its launch in 2000 through its sale to InterActiveCorp in 2003. Before Hotwire, Mr. Peterson was a principal at TPG in San Francisco, and from 1992 to 1995 he was a financial analyst at Goldman, Sachs & Co. Mr. Peterson is currently a director of TES Global, Saxo Bank and Norwegian Cruise Lines, as well as Caesars Acquisition Company. Mr. Peterson graduated with high honors from the University of Notre Dame, where he earned a B.B.A. in finance and business administration. We believe that as a result of his experience as a director of several travel and technology companies, as a former executive of an online travel company, and as a private equity investor, Mr. Peterson will bring a keen strategic understanding of our industry and of the competitive landscape for our company. Controlled Company As of January 15, 2015, the Principal Stockholders control a majority of our outstanding common stock. The TPG Funds, the Silver Lake Funds and Sovereign Co-Invest own approximately 37.2%, 22.9% and 19.2%, respectively, of our common stock. Following the completion of this offering, the Principal Stockholders will own approximately 71.9% of our common stock or approximately 70.8% if the underwriters option to purchase additional shares from the Principal Stockholders is fully exercised. The TPG Funds, the Silver Lake Funds and Sovereign Co-Invest will own approximately 33.7%, 20.8% and 17.4%, respectively, of our common stock or approximately 33.2%, 20.4% and 17.2%, if the underwriters option to purchase additional shares from the Principal Stockholders is fully exercised. As a result, we are and, upon completion of this offering, will continue to be a controlled company within the meaning of the NASDAQ rules. Under the NASDAQ rules, a company Table of Contents of which more than 50% of the voting power is held by an individual, group or another company is a controlled company and may elect not to comply with certain NASDAQ corporate governance standards, including: the requirement that a majority of the board of directors consist of independent directors; the requirement that our governance and nominating committee is composed entirely of independent directors; and the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee s responsibilities. As a result, we may not have a majority of independent directors and our governance and nominating committee and compensation committee may not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ rules regarding corporate governance. The controlled company exception does not modify the independence requirements for the audit committee. We are in compliance, and intend to continue to comply, with the audit committee requirements of Rule 10A-3 under the Exchange Act and the NASDAQ rules. Pursuant to such rules, we were required to have at least one independent director on our audit committee during the 90-day period beginning on the date of effectiveness of the registration statement filed with the SEC in connection with our initial public offering. After such 90-day period and until one year from the date of effectiveness of the registration statement, we are required to have a majority of independent directors on our audit committee. Thereafter, our audit committee is required to be comprised entirely of independent directors. Board Composition Our board of directors is currently comprised of eight directors. Our Certificate of Incorporation provides that the number of directors on our board of directors shall be not less than five directors nor more than eleven directors, as determined by the affirmative vote of the majority of the board of directors then in office. However, prior to the time when the Principal Stockholders beneficially own, collectively, less than 40% of the outstanding shares of our common stock, the board of directors shall not consist of more than nine directors. At any meeting of the board of directors, the attendance of a majority of the total number of authorized directors and, if the Silver Lake Funds or the TPG Funds, as applicable, then-currently has designated, solely and not jointly, for nomination pursuant to the Stockholders Agreement at least one director who is serving on the board of directors, one director designated by the Silver Lake Funds or the TPG Funds, as applicable, will constitute a quorum; provided that the Silver Lake Funds or the TPG Funds, as applicable, may, in its sole discretion, agree to waive the requirement that at least one director designated for nomination by such entity must be present to constitute a quorum. Our board of directors has determined that George R. Bravante, Jr., Lawrence Kellner, Gary Kusin, Greg Mondre, Joseph Osnoss, Judy Odom and Karl Peterson are independent as defined under the corporate governance rules of the NASDAQ. In making these determinations, the board of directors considered the applicable legal standards and any relevant transactions, relationships or arrangements, including (i) the fees paid to TPG and Silver Lake under the MSA, which was terminated at the completion of our initial public offering, and (ii) that we do business with other companies affiliated with the Principal Stockholders. See Certain Relationships and Related Party Transactions. Our board of directors is divided into three classes, with each director serving a 3-year term and one class being elected at each year s annual meeting of stockholders. Karl Peterson, Judy Odom and Lawrence Kellner are serving as Class I directors with an initial term expiring in 2015. Joseph Osnoss, Tom Klein and George Bravante are serving as Class II directors with an initial term expiring in 2016. Greg Mondre and Gary Kusin are serving as Class III directors with an initial term expiring in 2017. Upon the expiration of the initial term of office for each class of directors, each director in such class shall be elected for a term of three years and serve until a successor is duly elected and qualified or until his or her earlier death, resignation or removal. Any additional directorships resulting from an increase in the number of directors or a vacancy may be filled by the directors then in office. Table of Contents Committees of the Board of Directors The board of directors has established five standing committees to assist it in carrying out its responsibilities: the audit committee, the governance and nominating committee, the compensation committee, the technology committee and the executive committee. Each of the committees operates under its own written charter adopted by the board of directors, each of which is available on our corporate website at www.sabre.com. In addition, ad hoc committees may be designated under the direction of our board of directors when necessary to address specific issues. Because we are a controlled company under the NASDAQ rules, our compensation committee and our governance and nominating committee are not required to be fully independent, though they currently are. If such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of these committees accordingly in order to comply with these rules. Following the completing of this offering, we will however, continue to be a controlled company . Audit Committee The audit committee is responsible for, among other things: reviewing the audit plans and findings of our independent auditor and our internal audit staff, as well as the results of regulatory examinations and compliance with accounting rules, and tracking management s corrective action plans where necessary; reviewing with our management and our independent auditor our overall system of internal control over financial reporting; reviewing with our management and independent auditor our financial statements, including any significant financial reporting issues and changes in accounting policies; reviewing with our management and independent auditor our major risk exposures, and the steps management has taken to monitor and control such exposures; overseeing the implementation and effectiveness of our compliance and ethics program, including our whistleblowing procedures; reviewing related party transactions; and appointing annually our independent auditor, evaluating its independence and performance, and pre-approving all audit and non-audit services provided by any independent auditor to the company. The members of the audit committee are Judy Odom (Chairman), George Bravante, Gary Kusin and Joseph Osnoss. Judy Odom, George Bravante and Gary Kusin are independent, as defined under the NASDAQ rules and Rule 10A-3 of the Exchange Act. Our board of directors has determined that each director appointed to the audit committee is financially literate, and the board of directors has determined that each director appointed to the audit committee meets the criteria of the rules and regulations set forth by the SEC for an audit committee financial expert. The audit committee met ten times in 2014. Governance and Nominating Committee The governance and nominating committee is responsible for, among other things: reviewing the performance of our board of directors and making recommendations to the board of directors regarding the selection of candidates, qualification and competency requirements for service on the board of directors and the suitability of proposed nominees as directors; advising the board of directors with respect to the corporate governance principles applicable to us; and reviewing management s short- and long-term leadership development and succession plans and processes. Table of Contents The members of the governance and nominating committee are Lawrence Kellner (Chairman), Gary Kusin, Greg Mondre and Karl Peterson, each of whom is independent, as defined under the NASDAQ rules. The governance and nominating committee met three times in 2014. Compensation Committee The compensation committee is responsible for, among other things: reviewing the operation of our compensation program; reviewing and approving corporate goals and objectives relevant to the compensation of our CEO, evaluating his or her performance in light of those goals and objectives, and determining and approving his or her compensation based on that evaluation; establishing and reviewing annually any stock ownership guidelines applicable to our directors and management; determining and approving the compensation level (including base and incentive compensation) and direct and indirect benefits of executive officers; and recommending to the board of directors the establishment and terms of incentive-compensation and equity-based plans, and administering such plans. The members of the compensation committee are Gary Kusin (Chairman), Lawrence Kellner, Greg Mondre and Karl Peterson, each of whom is independent, as defined under the NASDAQ rules. The compensation committee met four times in 2014. Technology Committee The technology committee is responsible for, among other things: appraising major technology-related projects and making recommendations to our board regarding the company s technology strategies; monitoring and discussing with management the quality and effectiveness of the company s data security, data privacy and disaster recovery capabilities; and advising our senior technology management team with respect to existing trends in information technology and new technologies, applications and systems. The members of the technology committee are Joseph Osnoss (Chairman), Tom Klein and Greg Mondre. The technology committee met three times in 2014. Executive Committee The executive committee s principal function is to exercise, when necessary between board meetings, the board s powers and authority in the management of our business and affairs and to act on behalf of the board. The members of the executive committee are Lawrence Kellner (Chairman), Tom Klein, Greg Mondre and Karl Peterson. The executive committee met two times in 2014. Table of Contents Compensation Committee Interlocks and Insider Participation None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. Business Ethics Policy and Senior Officer Code of Ethics We maintain a Business Ethics Policy, which is the code of conduct applicable to all of our directors, officers and employees. We have also adopted a Code of Ethics applicable to our CEO and senior financial officers (the Senior Officers Code ), which sets forth the principles and responsibilities specifically applicable to those officers. The Senior Officers Code is designed to be read and applied in conjunction with our Business Ethics Policy. Both the Senior Officers Code and the Business Ethics Policy are available in the investors section on our website at www.sabre.com. Any change or amendment to the Senior Officers Code, and any waivers of the Senior Officers Code or the Business Ethics Policy for our directors, CEO or senior financial officers, will be posted to our website at the above location. Corporate Governance Guidelines The board of directors has adopted Corporate Governance Guidelines, which govern the structure and proceedings of the board and contain the board s position on many governance issues. These Guidelines are available in the investors section of our website at www.sabre.com. Table of Contents COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis addresses the principles underlying our executive compensation program and the policies and practices that contributed to our executive compensation actions and decisions for the year ended December 31, 2014 for the following individuals who served as (i) our principal executive officer at any time during 2014, (ii) our principal financial officer at any time during 2014, and (iii) the three other most highly-compensated executive officers who were serving as our executive officers as of December 31, 2014. For 2014, these individuals were: Tom Klein, our President and CEO, Richard Simonson, our Executive Vice President and CFO, Rachel Gonzalez, our Executive Vice President and General Counsel, Deborah Kerr, our Executive Vice President and Chief Product and Technology Officer, and Gregory Webb, our Executive Vice President and President, Sabre Travel Network. We refer to these executive officers collectively in this Compensation Discussion and Analysis and the related compensation tables as the Named Executive Officers. In addition, we provide certain compensation information regarding Carl Sparks, our former Executive Vice President and President and CEO, Travelocity, whose employment terminated on April 28, 2014. References in the following discussion to the Named Executive Officers do not include Mr. Sparks unless we specify otherwise. This Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each material element of compensation that we provided to our executive officers, including the Named Executive Officers, in 2014. In addition, we explain how and why the compensation committee arrived at the specific compensation actions and decisions involving the Named Executive Officers during 2014. Our overall corporate rewards strategy, which is embodied in our executive compensation program, is designed to advance four principal objectives: Pay for performance: Link a significant portion of the target total direct compensation opportunities of our executive officers to our annual and long-term business performance and each individual s contribution to that performance, Attract, motivate, and retain: Set compensation at market competitive levels that enable us to hire, incentivize, and retain high-caliber executive officers and that reinforce our robust succession planning process, Long-term equity participation: Provide opportunities, consistent with the interests of our stockholders, for executive officers to accumulate and hold a significant equity stake in the organization, including through performance-based equity awards, if we achieve our strategic and growth objectives, and Transparency: Ensure an efficient, simple, and transparent process for designing our compensation arrangements, setting performance objectives for annual and long-term incentive compensation opportunities, and making compensation decisions. 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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including the matters set forth under the sections of this prospectus captioned "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. Unless the context otherwise requires, the terms "Company," "SolarEdge," "we," "us" or "our" in this prospectus refer to SolarEdge Technologies, Inc. and, where appropriate, its subsidiaries. Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year in this prospectus preceded by the word "fiscal" refers to the fiscal year ended June 30 of that year. For example, references to "fiscal 2014" refer to the fiscal year ended June 30, 2014. Any reference to a year not preceded by "fiscal" refers to a calendar year. Our Company Overview We have invented an intelligent inverter solution that has changed the way power is harvested and managed in a solar photovoltaic ("PV") system. Our direct current ("DC") optimized inverter system maximizes power generation at the individual PV module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features. Our system consists of our power optimizers, inverters and cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations. Since we began commercial shipments in 2010, we have shipped approximately 1.3 gigawatts ("GW") of our DC optimized inverter systems and our products have been installed in solar PV systems in 73 countries. Historically, the solar PV industry used traditional string and central inverter architectures to harvest PV solar power. However, traditional inverter architectures result in energy losses as well as systemic challenges in design flexibility, safety and monitoring. More recently, microinverter technology was introduced in an attempt to resolve these challenges, but this technology has certain inherent limitations. We believe that our DC optimized inverter system, consisting of an inverter and distributed power optimizers, best addresses all of these challenges. Our system allows for superior power harvesting and module management by deploying power optimizers at each PV module while maintaining a competitive system cost by keeping the alternating current ("AC") inversion and grid interaction centralized using a simplified DC-AC inverter. The entire system is monitored through our cloud-based monitoring platform that enables reduced system operation and maintenance ("O&M") costs. Our system enables each PV module to operate at its own maximum power point ("MPP"), rather than a system-wide average, enabling dynamic response to real-world conditions, such as atmospheric conditions, PV module aging, soiling and shading and offering improved energy yield relative to traditional inverter systems. In addition to higher efficiency, our system's installed cost per watt is competitive with traditional inverter systems of leading manufacturers and generally lower than comparable microinverter systems of leading manufacturers. Furthermore, our architecture allows for complex rooftop system designs and enhanced safety and reliability. Our technology and system architecture are protected by 39 awarded patents and 136 patent applications filed worldwide. We primarily sell our products directly to large solar installers and engineering, procurement and construction firms ("EPCs") and indirectly to thousands of smaller solar installers through large distributors and electrical equipment wholesalers. Our customers include leading providers of solar Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States. We use market data and industry forecasts and projections throughout this prospectus, and in particular in the sections captioned "Prospectus Summary," "Industry Overview" and "Business." We have obtained the market data from certain third-party sources of information, including publicly available industry publications and subscription-based publications. Industry forecasts are based on industry surveys and the preparer's expertise in the industry and there can be no assurance that any of the industry forecasts will be achieved. We believe these data are reliable, but we have not independently verified the accuracy of this information. Any industry forecasts are based on data (including third-party data), models and experience of various professionals and are based on various assumptions, all of which are subject to change without notice. While we are not aware of any misstatements regarding the market data presented herein, industry forecasts and projections
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus or incorporated by reference into this prospectus from our Annual Report on Form 10-K for the year ended December 28, 2014, as amended on Form 10-K/A (referred to as our Form 10-K ) and our other filings with the Securities and Exchange Commission (referred to as the SEC ) listed in the section of this prospectus entitled Incorporation of Documents by Reference and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this prospectus and the information incorporated by reference herein in their entirety, including the section entitled Risk Factors in this prospectus and in our Form 10-K and our consolidated financial statements and related notes included in our Form 10-K. The Company Sprouts Farmers Market operates as a healthy grocery store that offers fresh, natural and organic food that includes fresh produce, bulk foods, vitamins and supplements, grocery, meat and seafood, bakery, dairy, frozen foods, body care and natural household items catering to consumers growing interest in eating and living healthier. Since our founding in 2002, we have grown rapidly, significantly increasing our sales, store count and profitability. We are one of the largest specialty retailers of fresh, natural and organic food in the United States. The cornerstones of our business are fresh, natural and organic products at compelling prices (which we refer to as Healthy Living for Less ), an attractive and differentiated shopping experience, and knowledgeable team members who we believe provide best-in-class customer service and product education. Healthy Living for Less. We offer high-quality, fresh, natural and organic products at attractive prices in every department. Consistent with our farmers market heritage, our offering begins with fresh produce, which we source, warehouse and distribute in-house and sell at prices we believe to be significantly below those of other food retailers. In addition, our scale, operating structure and deep industry relationships position us to consistently deliver Healthy Living for Less throughout the store. Based on our experience, we believe we attract a broad customer base, including conventional supermarket customers, and appeal to a much wider demographic than other specialty retailers of natural and organic food. We believe that over time, our compelling prices and product offering convert many trial customers into loyal lifestyle customers who shop Sprouts with greater frequency and across an increasing number of departments. Attractive, Differentiated Shopping Experience. In a convenient, small-box format (average store size of 28,000 to 30,000 sq. ft.), our stores have a farmers market feel, with a bright, open-air atmosphere to create a comfortable and engaging in-store experience. We strive to be our customers everyday healthy grocery store. We feature fresh produce and bulk foods at the center of the store surrounded by a complete grocery offering, including vitamins and supplements, grocery, meat and seafood, bakery, dairy, frozen foods, beer and wine, body care and natural household items. Consistent with our fresh, natural and organic offering, we choose not to carry most of the traditional, national branded consumer packaged goods generally found at conventional grocery retailers (e.g., Doritos, Tide and Lucky Charms). Instead, we offer high-quality, healthier alternatives that emphasize our focus on fresh, natural and organic products at great values. Table of Contents Customer Service and Education. We are dedicated to our mission of Healthy Living for Less, and we attract team members who share our passion for educating and serving our customers with the goal of making healthy eating easier and more accessible. We believe our well-trained and engaged team members help our customers increasingly understand that they can purchase a wide selection of high-quality, healthy, and great tasting food for themselves and their families at attractive prices by shopping at Sprouts. Corporate Information Sprouts Farmers Market, Inc. is a Delaware corporation. Our principal executive offices are located at 11811 N. Tatum Boulevard, Suite 2400, Phoenix, Arizona 85028, and our telephone number is (480) 814-8016. Our website address is www.sprouts.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. Selling Stockholders In 2002, Sprouts Farmers Markets, LLC, an Arizona limited liability company opened the first Sprouts Farmers Market store in Chandler, Arizona. In 2011, we were formed when Sprouts Arizona combined with Henry s Holdings, LLC (referred to as Henry s ), which operated 35 Henry s Farmers Markets stores and eight Sun Harvest Market stores (referred to as the Henry s Transaction ). The Henry s Transaction was led by investment funds affiliated with, and co-investment vehicles managed by, Apollo Management VI, L.P. (referred to as the Apollo Funds ), including each of the selling stockholders. The Apollo Funds are affiliates of Apollo Global Management, LLC (together with its subsidiaries, referred to as Apollo ). In May 2012, we acquired Sunflower Farmers Market, Inc., which operated 37 Sunflower Farmers Market stores (referred to as Sunflower ). We refer to this as the Sunflower Transaction. The Henry s Transaction and the Sunflower Transaction are collectively referred to as the Transactions. Following the Transactions, immediately prior to our initial public offering, the Apollo Funds held approximately 51.8% of our common equity. On July 31, 2013, we priced our initial public offering and on August 1, 2013, our common stock began trading on the Nasdaq Global Select Market. Following our IPO, the Apollo Funds ownership interest in us was approximately 44.5%. The Apollo Funds, together with other pre-IPO stockholders, sold shares of our common stock to the public in registered secondary offerings completed in November 2013, March 2014 and August 2014. The Apollo Funds also sold shares of our common stock to the public in a registered secondary offering completed in November 2014. As of the date of this prospectus, the Apollo Funds hold 15,847,800 shares, representing approximately 10.4% of our common stock, all of which are offered hereby. Our Chairman of the Board, Andrew Jhawar, is a senior partner of Apollo Management, L.P., an affiliate of Apollo. Based upon the foregoing, each of the selling stockholders may be deemed an affiliate of the Company. Table of Contents The Offering Securities offered This prospectus relates to the resale from time to time of up to 15,847,800 shares of our common stock, par value $0.001 per share, held by the selling stockholders named herein. Common stock outstanding 152,068,893 shares as of March 2, 2015 including the shares offered hereby. Use of Proceeds The selling stockholders will receive all net proceeds from the sale of the shares of common stock offered by this prospectus and any accompanying prospectus supplement. We will not receive any of the proceeds from the sale of our common stock by the selling stockholders. Listing of Common Stock Our Common Stock is listed on the NASDAQ Global Select Market under the symbol SFM . Transfer Agent American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY 11219 Fees and Expenses We will pay the fees and expenses related to the offering.
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+Prospectus Summary 1
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+Prospectus Summary 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A ordinary shares. You should read this entire prospectus carefully, including "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Overview Our mission is to unleash the potential in every team. Our products help teams organize, discuss and complete their work delivering superior outcomes for their organizations. We believe human advancement has always been driven by teamwork from the great explorations of earth and space to innovations in industry, medicine, music and technology. And while it's common to celebrate the individual genius behind a breakthrough idea, in nearly every case there is a team of unsung heroes that actually get the work done. We also believe that the greatest lever teams have to advance humanity lies in the power of software innovation. Through software, contact lenses now monitor and report on the blood glucose levels of diabetes patients, allowing patient and doctor to better manage the disease. Through software, cars can monitor and report on vehicle status, improving driver safety. Through software, people can read, write and converse with people in languages they do not speak. Each of these advances was delivered by teams. Software's transformational impact is forcing organizations to use software to innovate, or face disruption from competitors that do. Today, organizations in every industry are becoming software-driven. As a result, the teams that imagine, create and deliver that software are more essential than ever. Our company was founded in 2002 to help software teams work better together. From the beginning, our products were designed to help developers collaborate with other non-developer teams involved in software innovation. This breakthrough approach separated us from traditional software providers focused solely on developers. As more non-developer teams are exposed to our products, they adopt and extend them to new use cases, bringing our products to other users and other types of teams in their organizations. This has created an expansive market opportunity for us. Today, our products serve teams of all shapes and sizes, in virtually every industry from software and technical teams to IT and service teams, from sales and marketing teams to HR, finance and legal teams. Our products include JIRA for team planning and project management, Confluence for team content creation and sharing, HipChat for team messaging and communications, Bitbucket for team code sharing and management and JIRA Service Desk for team services and support applications. Our products form an integrated system for organizing, discussing and completing shared work, becoming deeply entrenched in how people work together and how organizations run. Our products have been used by NASA to design the Mars Rover, by Cochlear to develop aural implants, and by Runkeeper to create GPS fitness tracking applications. We founded our company on the premise that great products could sell themselves and we have developed a unique approach to the market that is centered on this belief. We begin with a Amendment No. 3 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents deep investment in product development to create and refine high-quality and versatile products that users love. We make our products affordable and we transparently share our simple pricing online. We pursue volume by targeting teams in every organization, regardless of size, industry or geography. To reach this expansive market, we distribute and sell our products online without traditional sales infrastructure where users can get started in minutes without the need for assistance. We focus on enabling a self-service, low-friction model that makes it easy for users to try, adopt and use our products. Our culture of innovation, transparency and dedication to customer service drives our success in implementing and refining this unique approach. We believe this approach fosters innovation, quality, customer happiness, scale and profitability. We recognize that users drive the adoption and proliferation of our products and, as a result, we are relentlessly focused on measuring and improving user satisfaction. However, certain metrics presented in this prospectus related to user adoption and proliferation, such as daily visitors, monthly active users and organizations using our products, do not directly drive revenues and changes in these metrics may not be correlated to, or indicative of, the health of our underlying business. We believe that one happy user will beget another, thereby expanding the large and organic word-of-mouth community that helps drive our growth. We operate at unusual scale for an enterprise software company, with more than 5 million monthly active users (those who have actively used our products in the 28-day period prior to a particular measurement date) and more than 51,000 customers (organizations that have at least one active and paid license or subscription for which they paid more than $10 per month) across virtually every industry sector in more than 160 countries. Our customers range from small organizations that have adopted one of our products for a small group of users, to 79 of the Fortune 100 and 273 of the Fortune 500, many of which use a multitude of our products across thousands of users. Our stated number of customers does not include any organizations (identified by unique domain names) that have only adopted either our free products or licenses that pay us $10 per month or less. Including such organizations, the active use of our products extends beyond our more than 51,000 customers to more than 450,000 organizations, demonstrating the breadth of adoption of our products and the future opportunity available to us to convert additional organizations currently using our products into paying customers. With these customers and organizations using our software today, we are able to reach a vast number of users, gather insights to refine our offerings and generate growing revenue by expanding within them. While historically only a small segment of users have converted to paid versions of our products from free trials or limited free versions, or upgraded beyond the starter license, we will continue to seek to convert this large user base into long-term customers and word-of-mouth advocates over time. Our model has allowed us to grow while maintaining profitability for each of the last 10 fiscal years. Our total revenues were $148.5 million, $215.1 million and $319.5 million for the fiscal years ended June 30, 2013, 2014 and 2015, respectively, representing a compound annual growth rate of 46.7% from fiscal 2013 to fiscal 2015. Our total revenues were $67.9 million and $101.8 million for the three months ended September 30, 2014 and 2015, respectively, representing an annual growth rate of 49.9%. We generated net income of $10.8 million, $19.0 million and $6.8 million for the fiscal years ended June 30, 2013, 2014 and 2015, respectively, and $3.6 million and $5.1 million for the three months ended September 30, 2014 and 2015, respectively. We also generated free cash flow of $47.1 million, $65.0 million and $65.5 million for the fiscal years ended June 30, 2013, 2014 and 2015, respectively, and $3.6 million and $8.2 million for the three months ended September 30, 2014 and 2015, respectively. Atlassian Corporation Plc (Exact Name of Registrant as Specified in Its Charter) Table of Contents Market Trends Software is Changing Everything Software is impacting almost every aspect of our lives and redefining the limits of what people and organizations can achieve. Software is everywhere and increasingly in everything, and organizations of all types and sizes face an existential imperative to drive software innovation. Software Teams are Essential and Multi-Dimensional Teams that can deliver software innovation require a myriad of talents and functional expertise and are critical to each organization's efforts to thrive and compete. Software developers have become more essential and influential and the demand for software development talent has grown. Software Team Collaboration is Complex and Challenging Modern software development is highly creative, iterative and asynchronous, and very complex. Software teams today must iterate and move faster than ever before, and are becoming the model for modern workforce collaboration across all teams. Increasing Complexity Makes Collaboration Critical for All Teams Across the global economy, work is becoming more complex, faster-paced and more collaborative. In addition, more and more teams are now spread across geographies. All Teams are Seeking Better Ways to Connect and Get Work Done As software projects become more cross-functional, knowledge workers throughout organizations have been exposed to the collaboration and workflow practices of software teams. This exposure across organizations has coincided with growing dissatisfaction with traditional productivity tools. Teams are Now Making Their Own Technology Choices Following the "bring your own device" trend, employees are increasingly empowered to "bring your own software", leading to the user-driven viral adoption of new types of consumer-style software products within an organization. Limitations of Traditional Approaches Traditional Tools Most traditional software development technologies are costly, complex, poorly designed, hard to use and not easily integrated with other software systems. Moreover, these technologies were designed solely for the needs of software developers and do not extend well to other use cases. Other point solutions do not provide the breadth, integration and security that organizations require. In an effort to serve the needs of teams and integrate software developers and other knowledge workers, organizations have often relied on traditional personal productivity tools. While these tools are widely used, they were designed many years ago, provide narrow functionality, are not integrated, and are not suited for the demands of managing complex projects among diverse and broadly distributed teams. Traditional Distribution Models Traditional enterprise software distribution models, with their focus on quota-driven sales representatives and reliance on large deals, are not well suited to reach, influence or meet the needs of teams, who are increasingly driving technology purchasing decisions. Historically, enterprise software was purchased in a centralized, top down fashion. As a result, purchase decisions were often disconnected from actual user needs and resulted in low adoption rates. United Kingdom (State or Other Jurisdiction of Incorporation or Organization) 7372 (Primary Standard Industrial Classification Code Number) 98-1258743 (I.R.S. Employer Identification Number) Exchange House Primrose Street London EC2A 2EG c/o Herbert Smith Freehills LLP 415.701.1110 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents The consumerization of enterprise technology has given a much broader population of workers a stake and a voice in the procurement of software solutions. Teams of all kinds have increasing freedom to choose the technology they want. Market Opportunity Our products address several large and well-established categories of IT spending. Investment in these traditional categories is expected to total more than $35.0 billion in 2015. According to Gartner, Inc., a market research firm, the Application Development market is expected to be $8.8 billion and the IT Operations market is expected to be $9.1 billion in 2015 for the IT Asset and Financial Management, IT Service Support Management Tools and Automation Tools markets. International Data Corporation ("IDC"), a market research firm, expects the market for Collaborative Applications to be $13.5 billion and the Project and Portfolio Management market to be $3.8 billion in 2015. We believe that the limitations of traditional tools and distribution models, coupled with the growing demand for modern collaboration technology, present an opportunity to expand within these traditional categories. By providing affordable, versatile, adaptable and modern software built for the needs of teams, we believe that we can continue to disrupt and increase our share of these large, existing markets. The Atlassian Way Our product strategy, distribution model and company culture work in concert to create unique value for our customers and competitive advantage for our company. We invest significantly in developing and refining products that allow teams to achieve their full potential. We make versatile products that can be used in a myriad of ways. Our products are easy to adopt and use and can be distributed and proliferated organically and efficiently. We offer these products at affordable price points in a high-velocity online distribution model. Our distribution model does not rely on costly sales infrastructure to push product to our customers. By making our products simple, powerful and easy to adopt, we generate demand from word-of-mouth and viral expansion within organizations. Our model is designed to operate at scale and serve millions of customers. We believe that our product strategy, distribution model and company culture are mutually reinforcing. By investing in innovation and making our products affordable and easy to use, we operate without reliance on traditional sales infrastructure, which enhances our distribution model and permits long-term investment in product leadership and our unique culture. Our Product Strategy We have developed and acquired a broad portfolio of products that help teams large and small to organize, discuss and complete their work in a coordinated, efficient and modern fashion. Our products, which include JIRA, Confluence, HipChat, Bitbucket and JIRA Service Desk, serve the needs of teams of software developers, IT managers and knowledge workers. While these products provide a range of distinct functionality to users, they share certain core attributes: Built for Teams Our products are singularly designed to help teams work better together and achieve more. Easy to Adopt and Use We invest significantly in research and development to enable our products to be both powerful and extremely easy to use. Tom Kennedy Chief Legal Officer Atlassian, Inc. 1098 Harrison Street San Francisco, California 94103 415.701.1110 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Versatile and Adaptable We develop simple and well-designed products that are useful in a broad range of workflows and projects. Integrated Our products are integrated and designed to work well together. Open We are dedicated to making our products open and interoperable with a range of other platforms and applications. Our Distribution Model Our high-velocity distribution model is designed to drive exceptional customer scale by making affordable products available via our convenient, low-friction online channel. We focus on product quality, automated distribution and customer service in lieu of a costly traditional sales infrastructure. We rely on word-of-mouth and low-touch demand generation to drive trial, adoption and expansion of our products within customers. The following are key attributes of our unique model: Innovation-driven Relative to other enterprise software companies, we invest significantly in research and development rather than sales and marketing. Simple and Affordable We offer our products at affordable prices in a simple and transparent format, with a free trial before purchase. Organic and Expansive Our model benefits from significant customer word-of-mouth about our products that drives traffic to our website. Scale-oriented Our model is designed to generate and benefit from significant customer scale and our goal is to maximize the number of individual users of our software. Data-driven Our scale and the design of our model allows us to gather insights into and improve the customer experience. Our Culture Our company culture is exemplified by our core values: Open Company, No Bullsh*t Build with Heart and Balance Don't #@!% the Customer Play, as a Team Be the Change You Seek These values contribute to a culture that is open, innovative, dedicated to our customers, team-driven and long-term focused, all of which enable us to drive customer value and achieve competitive differentiation. Our Financial Model By developing a product strategy, distribution model and culture that are designed around the needs of our customers and users, we believe that we have established a financial model that is favorable for our shareholders. Our model has allowed us to grow customers and revenue steadily while maintaining profitability for each of the last 10 fiscal years. Our model relies on rapidly and Copies to: Anthony J. McCusker Richard A. Kline An-Yen E. Hu Goodwin Procter LLP 135 Commonwealth Drive Menlo Park, California 94025 650.752.3100 Tom Kennedy Chief Legal Officer Atlassian Corporation Plc 1098 Harrison Street San Francisco, California 94103 415.701.1110 David Peinsipp Andrew S. Williamson Eric C. Jensen Cooley LLP 101 California Street, 5th Floor San Francisco, California 94111 415.693.2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee(3) Class A ordinary shares, nominal value $0.10 per share 25,300,000 $20.00 $506,000,000 $50,955 (1)Includes 3,300,000 Class A ordinary shares that the underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) of the Securities Act of 1933, as amended. Includes offering price of additional shares that the underwriters have the option to purchase. (3)The registrant previously paid $42,848 of the registration fee with prior filings of this registration statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents efficiently landing new customers and expanding our relationship with them over time. The following are the key elements of our model: Significant Investment in Ongoing Product Development and Sales Automation Our research and development investments enable us to rapidly build new products, continuously enhance our existing products, acquire and integrate technologies and also help us obtain data-driven insights and further automate and streamline our approach to customer acquisition. Rapid and Efficient Acquisition of New Customers By building products that are affordable and easy to adopt and use, we are able to attract customers rapidly without employing a traditional salesforce, and thereby lower the cost of customer acquisition significantly. At September 30, 2015, we had over 5 million monthly active users of our software across more than 450,000 organizations and more than 51,000 customers. Continued Expansion Our success is dependent on our ability to expand the relationship with our existing base of customers. Since our founding, the aggregate sales from customers acquired in any fiscal year have expanded since they first purchased an Atlassian product, through the addition of more users, teams and products. Predictability of Sales As we are not dependent on a traditional sales model and rely on a high-velocity online distribution model, we have historically experienced a linear quarterly sales cycle. Once teams begin working together with our software, we become embedded in their workflows, becoming a system for engagement within organizations. This makes it difficult to displace us and provides us with steady and predictable revenue. Positive Free Cash Flow By reducing customer acquisition cost and establishing a revenue model that has scaled linearly, our model has allowed us to have positive free cash flow for each of the last 10 fiscal years. Our Growth Strategy Our growth strategy is to make our software accessible to every organization, team and user to help them get work done. We intend to continue this approach by adding customers, developing new products, expanding in existing customers and pursuing selective acquisitions. Key drivers of our growth strategy include: Protect and Promote Our Culture Our culture is at the foundation of everything we do and fuels our business strategy and success. Continue to Refine Our Unique Business Model We will continue to develop the technology and products that enable our customers to easily adopt and use our products over the Internet. Increase Product Value We intend to continue to increase the value of our software to customers by providing them with a broader, integrated set of products. Grow the Atlassian Marketplace and Partner Ecosystem The Atlassian Marketplace is an open platform that allows independent vendors and developers to continue to develop add-ons and extensions that extend our platform and generate millions of dollars in revenue for both the third-party vendors and for us. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion: Dated December 7, 2015 22,000,000 Shares Atlassian Corporation Plc Class A Ordinary Shares Table of Contents
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+PROSPECTUS SUMMARY SecureAlert, Inc., a Utah corporation, is referred to as SecureAlert, we, us, our, or the Company throughout this prospectus. The items in the following summary are described in more detail later in this prospectus. This summary does not contain all of the information you should consider. Before investing in our securities, you should read the entire prospectus carefully, including the Risk Factors beginning on page 3 and the financial statements and related notes beginning on page 43. Our fiscal year ends on September 30. Overview We are a Utah corporation that markets and deploys offender management programs, combining patented GPS tracking technologies, fulltime 24/7/365 intervention-based monitoring capabilities and case management services. Our vision is to be the global market leader for delivering the most reliable offender management solutions, which leverage superior intervention capabilities and integrated communication technologies. We currently deliver the only offender management technology that effectively integrates GPS, Radio Frequency ( RF ) and an interactive 3-way voice communication system into a single piece device, deployable worldwide. Through our patented electronic monitoring technologies and services, we empower law enforcement, corrections and rehabilitation professionals with offender, defendant, probationer and parolee programs, which grant convicted criminals and pre-trial suspects an accountable opportunity to be free from prison. This provides for greater public safety at a lower cost compared to incarceration or traditional resource-intensive alternatives. Our flagship product line, ReliAlert, Shadow, and R.A.D.A.R., consists of devices and services customizable to provide secure reintegration solutions for various offender types, including domestic abusers, sexual predators, gang members, pre-trial defendants, alcohol abusers, or juvenile offenders. Our proprietary software, device firmware and processes accommodate agency-established monitoring protocols, victim protection imperatives, geographic boundaries, work environments, school attendance, rehabilitation programs and sanctioned home restrictions. Our devices are intelligent devices with integrated computer circuitry. They are constructed from case-hardened materials and are designed to promptly notify intervention monitoring centers of attempts to breach applicable electronic supervision terms or to remove or otherwise tamper with device elements. They are securely attached around an offender s ankle with a tamper resistant strap (steel cabling with optic fiber). We also have a unique patented, dual-steel banded SecureCuff for high risk or high flight risk offenders who have qualified for electronic monitoring supervision, but who require an incremental level of security and supervision.
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+PROSPECTUS SUMMARY This summary highlights selected information about us and this offering but does not contain all of the information that you should consider before investing in our Class A common stock. Before making an investment decision, you should read this entire prospectus carefully, including the discussion under the heading "Risk Factors" and the consolidated financial statements and related notes thereto contained elsewhere in this prospectus. This prospectus includes forward looking-statements that involve risks and uncertainties. See "Forward-Looking Statements" for more information. Unless we state otherwise or the context otherwise requires, the terms "we," "us," "our," "Virtu" and the "Company" refer to Virtu Financial, Inc., a Delaware corporation, and its consolidated subsidiaries after giving effect to the reorganization transactions described under " Corporate History and Organizational Structure" below. Also, unless we state otherwise or the context otherwise requires, all information in this prospectus gives effect to the reorganization transactions described below. "Virtu Financial" refers to Virtu Financial LLC, a Delaware limited liability company and a consolidated subsidiary of ours following the reorganization transactions. Overview Virtu is a leading technology-enabled market maker and liquidity provider to the global financial markets. We stand ready, at any time, to buy or sell a broad range of securities and other financial instruments, and we generate revenue by buying and selling securities and other financial instruments and earning small amounts of money on individual transactions based on the difference between what buyers are willing to pay and what sellers are willing to accept, which we refer to as "bid/ask spreads," across a large volume of transactions. We make markets by providing quotations to buyers and sellers in more than 11,000 securities and other financial instruments on more than 225 unique exchanges, markets and liquidity pools in 35 countries around the world. We believe that our broad diversification, in combination with our proprietary technology platform and low-cost structure, enables us to facilitate risk transfer between global capital markets participants by supplying liquidity and competitive pricing while at the same time earning attractive margins and returns. We believe that market makers like us serve an important role in maintaining and improving the overall health and efficiency of the global capital markets by continuously posting bids and offers for securities and other financial instruments and thereby providing to market participants an efficient means to transfer risk. Market participants benefit from the increased liquidity, lower overall trading costs and enhanced execution certainty that we provide. While in most cases we do not have customers in a traditional sense, we make markets for global banks, brokers and other intermediaries, in addition to retail and institutional investors, including corporations, individuals, hedge funds, mutual funds, pension funds and other investors, all of whom can access our liquidity on exchanges or venues in order to transfer risk in multiple securities and asset classes for their own accounts and/or on behalf of their customers. The following table illustrates our diversification and scale: Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents TRADEMARKS This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the or symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Table of Contents Asset Classes Selected Venues in Which We Make Markets North, Central and South America ("Americas") Equities NYSE, NASDAQ, DirectEdge, NYSE Arca, NYSE MKT, BATS, IEX, TMX, ICE, CME, BM&F Bovespa, major private liquidity pools Europe, Middle East and Africa ("EMEA") Equities London Stock Exchange, Borsa Italiana, SIX Swiss Exchange, Euronext (Paris, Amsterdam, Brussels, Lisbon), XETRA, Bolsa de Madrid, EUREX, ICE Futures Europe, Turquoise Exchange, BATS Chi-x Europe, Johannesburg Stock Exchange Asia and Pacific ("APAC") Equities TSE, SGX, OSE, SBI Japannext, TOCOM Global Commodities (including energy, metals and other commodities) CME, ICE, TOCOM, SGX, NYSE Liffe, EBS Global Currencies (including futures contracts in FX) CME, ICE, Currenex, EBS, HotSpot, Reuters, FXall, LMAX Options, Fixed Income and Other Securities CBOE, PHLX, NYSE Arca Options, eSpeed, BOX, BrokerTec We refer to our market making activities as being "market neutral," which means that we are not dependent on the direction of any particular market and we do not speculate. Our market making activities are designed to minimize capital at risk at any given time by limiting the notional size of our positions. Our strategies are also designed to lock in returns through precise hedging in the primary instrument or in one or more economically equivalent instruments, as we seek to eliminate the price risk in any positions held. See "Business Overview" for more information regarding our strategies. Our revenue generation is driven primarily by transaction volume across a broad range of securities and other financial instruments, asset classes and geographies. We avoid the risk of long or short positions in favor of seeking to earn small bid/ask spreads on large trading volumes across thousands of securities and other financial instruments. While we seek to eliminate the price risk of long or short positions, a significant percentage of our trades are not profitable. For example, for the 252 trading days of 2014, we averaged approximately 5.3 million trades per day globally across all asset classes, and we profitably exited 49% of our overall positions. We do not engage in the types of principal investing and predictive, momentum and signal trading in which many other broker-dealers and trading firms engage. In fact, in order to minimize the likelihood of unintended activities by our market making strategies, if our risk management system detects a trading strategy generating revenues outside of our preset limits, it will freeze, or "lockdown," that strategy and alert risk management personnel and management. Although this approach may prevent us from maximizing potential returns in times of extreme market volatility, we believe the reduction in risk is an appropriate trade-off that is in keeping with our aim of generating consistently strong revenue from trading. For the six months ended June 30, 2015 and 2014, respectively: our total revenues were approximately $403.5 million and $336.3 million, our trading income, net, was approximately $383.7 million and $318.5 million, our Adjusted Net Trading Income was approximately $254.3 million and $200.3 million, our net income was approximately $85.0 million and $79.7 million, and our Adjusted Net Income was approximately $143.7 million and $99.6 million. For the years ended December 31, 2014 and 2013, respectively: our total revenues were approximately $723.1 million and $664.5 million, our trading income, net, was approximately $685.2 million and $623.7 million, our Adjusted Net Trading Income was approximately $435.0 million and $414.5 million, Table of Contents our net income was approximately $190.1 million and $182.2 million, and our Adjusted Net Income was approximately $226.5 million and $215.4 million. For the six months ended June 30, 2015, we earned approximately 22% of our Adjusted Net Trading Income from Americas equities (of which approximately 17% was attributable to U.S. equities and approximately 5% was attributable to Canadian and Latin American equities), 12% from EMEA equities, 8% from APAC equities, 25% from global commodities, 26% from global currencies and 6% from options, fixed income and other securities. For the year ended December 31, 2014, we earned approximately 26% of our Adjusted Net Trading Income from Americas equities (of which approximately 20% was attributable to U.S. equities and approximately 6% was attributable to Canadian and Latin American equities), 12% from EMEA equities, 7% from APAC equities, 21% from global commodities, 25% from global currencies and 10% from options, fixed income and other securities. For a reconciliation of Adjusted Net Trading Income to trading income, net, and Adjusted Net Income to net income, see " Summary Historical and Pro Forma Consolidated Financial and Other Data." Since our inception, we have sought to broadly diversify our market making across securities, asset classes and geographies, and as a result, for the six months ended June 2015 and the year ended December 31, 2014, we achieved a diverse mix of Adjusted Net Trading Income results, with no one geography or asset class constituting more than 26% of our total Adjusted Net Trading Income. Technology and operational efficiency are at the core of our business, and our focus on market making technology is a key element of our success. We have developed a proprietary, multi-asset, multi-currency technology platform that is highly reliable, scalable and modular, and we integrate directly with exchanges and other liquidity centers. Our market data, order routing, transaction processing, risk management and market surveillance technology modules manage our market making activities in an efficient manner and enable us to scale our market making activities globally and across additional securities and other financial instruments and asset classes without significant incremental costs or third-party licensing or processing fees. Industry and Market Overview A "market maker" or "liquidity provider" is commonly defined by stock exchanges, futures exchanges and regulatory authorities around the world as a person or entity who provides continuous, two-sided quotes at multiple price levels at or near the best bid or offer, taking market risk, through a variety of exchanges and markets, which are accessible broadly and continuously for immediate execution. Market makers, like us, serve a critical role in the functioning of all financial markets by providing bids and offers for securities and other financial instruments. Market makers enhance liquidity and execution certainty for all market participants, enabling buyers and sellers to efficiently transfer risk, and are compensated for this service by earning a small amount of money on the bid/ask spread on individual transactions. A market maker's success depends on it posting competitive prices and accurately and efficiently responding to relevant market data. Historically, market making activities occurred on the physical floor of exchanges, where human traders would execute buy and sell orders for securities. Over the last 20 years, however, the global trading markets have been characterized by the electronification of trading, development of new asset classes, volume growth and improving technology and speed of communication. The advent of electronic trading venues has changed the traditional trading process for many types of securities in the equity, bond and currency markets. The practice of physical, "open outcry" trading has largely been replaced by electronic trading platforms. This shift, and the resulting increase in automation and speed and reduction in trading costs, has led to significant growth in electronic trading volumes, as implied by growth in the aggregate notional value and number of trades on exchanges around the world. Market structures have become increasingly complex and diverse. Although in some geographies and asset classes trading continues to occur through a single exchange, many 900 Third Avenue New York, New York 10022-1010 (212) 418-0100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents markets for many asset classes, such as U.S. and European equities, have become increasingly fragmented. While we believe this fragmentation and related competition have been beneficial to all market participants, leading to more compressed bid/ask spreads and creating deeper liquidity, they have also created greater complexity and have required electronic market makers to expand their infrastructure to connect with more venues. We believe this trend will enable larger firms with scalable infrastructure, like us, to capture more of these opportunities. Our Competitive Strengths Critical Component of an Efficient Market Eco-System. As a leading, low-cost market maker dedicated to providing improved efficiency and liquidity across multiple securities, asset classes and geographies, we aim to provide critical market functionality and robust price competition, leading to reduced trading costs and more efficient pricing in the securities and other financial instruments in which we provide liquidity. This contribution to the financial markets, and the scale and diversity of our market making activities, provides added liquidity and transparency, which we believe are necessary and valued components to the efficient functioning of market infrastructure and benefit all market participants. We support transparent and efficient, technologically advanced marketplaces and advocate for legislation and regulation that promotes fair and transparent access to markets. Cutting Edge, Proprietary Technology. Technology is at the core of our business. Our team of software engineers develops all of our core software internally, and we utilize optimized infrastructure to integrate directly with the exchanges and other trading venues on which we provide liquidity. Wherever possible, we lease commercially available rack space that is co-located with, or in close proximity to, the exchanges and other venues where we provide liquidity. We do not pay any licensing or per-trade processing fees to any third parties, and the engineering cycles for enhancements or new technologies are entirely within our control. Our focus on technology and our ability to leverage our technology enables us to be one of the lowest cost providers of liquidity to the global electronic trading marketplace. Consistent, Diversified and Growing Revenue Base. We generate revenues by making markets and earning small bid/ask spreads in more than 11,000 listed securities and other financial instruments on more than 225 unique exchanges, markets and liquidity pools in 35 countries around the world. The reliability and scalability of our technology platform also allow us to capitalize on higher transaction volumes during periods of extraordinary market volatility and enable us to diversify our Adjusted Net Trading Income through asset class and geographic expansion. As a result, during the six months ended June 30, 2015 and the year ended December 31, 2014, no single asset class or geography constituted more than 26% of our total Adjusted Net Trading Income. Our diversification, together with our revenue generation strategy of earning small bid/ask spreads on large trading volumes across thousands of securities, enables us to deliver consistent Adjusted Net Trading Income under a wide range of market conditions. Low Costs and Large Economies of Scale. Our high degree of automation, together with our ability to reduce external costs by internalizing certain trade processing functions, enables us to leverage our low market making costs over large trading volumes. Our market making costs are low due to several factors. As a self-clearing member of the Depository Trust Company ("DTC"), we avoid paying clearing fees to third parties in our U.S. equities market making business. In addition, because of our significant scale, we are able to obtain competitive pricing for trade processing functions and other costs that we do not internalize. Our significant volumes frequently place us in the lowest cost tiers of brokerage, clearing and exchange fees for venues that provide tiered pricing structures. Our low-cost structure allows us to maintain a marginal cost per trade that we believe is favorable compared to our competitors. Our scale is further demonstrated by our headcount as Douglas A. Cifu Chief Executive Officer 900 Third Avenue New York, New York 10022-1010 (212) 418-0100 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents of June 30, 2015, we had only 148 employees. Our business efficiency is also reflected in our operating margins and our Adjusted EBITDA margins. Real-Time Risk Management. Our trading is designed to be non-directional, non-speculative and market neutral. Our market making strategies are designed to put minimal capital at risk at any given time by limiting the notional size of our positions. Our strategies are also designed to lock in returns through precise hedging in the primary instrument or in one or more economically equivalent instruments, as we seek to eliminate the price risk in any positions held. Our real-time risk management system is built into our trading platform and is an integral part of our order life-cycle, analyzing real-time pricing data and ensuring that our order activity is conducted within strict pre-determined trading and position limits. If our risk management system detects that a trading strategy is generating revenues or losses in excess of our preset limits, it will lockdown that strategy and alert management. In addition, our risk management system continuously reconciles our internal transaction records against the records of the exchanges and other liquidity centers with which we interact. Proven and Talented Management Team. Our management team, with an average of approximately 20 years of industry experience, is led by individuals with diverse backgrounds and deep knowledge and experience in the development and application of technology to the electronic trading industry. Mr. Vincent Viola, our Founder and Executive Chairman, is the former Chairman of the NYMEX and has been a market maker his entire career since leaving active duty in the U.S. Army and joining the NYMEX in 1982. Mr. Viola is widely recognized as an innovator and pioneer in market making and electronic trading over his 30-plus year career. Our Chief Executive Officer, Mr. Douglas A. Cifu, has been with us since our founding in 2008 and previously was a Partner with the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. Our Chief Financial Officer, Joseph Molluso, has been with us since 2013 and previously was a Managing Director in the Investment Banking division at J.P. Morgan. Our Key Growth Strategies Capitalize on secular growth in electronic trading of global listed securities markets and continue to increase market penetration. We expect that global electronic trading volumes will continue to grow, driven by various factors, including technology, globalization, convergence of exchange and non-exchange markets and the evolving regulatory environment. According to the World Federation of Exchanges, the number of equity shares traded through an electronic order book grew at a compound annual rate of 15.8% since 2004, from approximately 3.5 billion shares in 2004 to approximately 15.1 billion shares in 2014. In addition, according to the Futures Industry Association, trading of futures and options on exchanges has grown at a compound annual rate of 9.4% since 2004, from 8.9 billion contracts in 2004 to 21.9 billion contracts in 2014, and we believe that a significant portion of this growth has come from the electronification of trading. Our ability to offer competitive bid and offer quotes, facilitated by our proprietary, scalable technology platform and our low-cost structure, has enabled us to grow our business and add trading volume at little incremental cost. As a result, we expect to be well positioned to capitalize on future growth in the global electronic trading markets, particularly in certain asset classes in which we have lower Adjusted Net Trading Income or are not yet a participant. Provide increasing liquidity across a wider range of new securities and other financial instruments. We believe that the full implementation of the European Markets Infrastructure Regulation and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") in the U.S. will increase transparency, liquidity and efficiency in global trading markets and encourage the further development of trading opportunities in certain asset classes in which highly liquid electronic markets remain limited or nonexistent due to historical reliance on bilateral voice Copies to: John C. Kennedy, Esq. Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 (212) 373-3000 Michael Kaplan, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 Table of Contents trading and other inefficient processes. The migration of these products to electronic markets will provide us with an opportunity to deploy our market making strategies in asset classes that are not accessible to us currently including, for example, interest rate swaps, interest rate swap futures, credit default swap ("CDS") index futures and over-the-counter ("OTC") energy swaps. Grow geographically. We trade on over 225 unique exchanges, markets and liquidity pools around the world, located in 35 countries. We look to expand into new geographies when access is available to us and the applicable regulatory scheme permits us to deploy our strategy. Given the scalability of our platform, we believe we will be able to expand into new geographies and begin generating revenues quickly with little incremental cost. We intend to continue to expand our market making business into new geographic locations, including locations in the EMEA and APAC markets, where we began making markets in 2008 and 2010, respectively. We entered the Japanese, Australian and certain other Asian markets beginning in late 2011, and we expect those markets to be growth areas for us. Leverage our technology to offer additional technology services to market participants. We believe that our order management, market data, order routing, processing, risk management and market surveillance technology modules offer a key value proposition to market participants and that sharing our technological capabilities with market participants in a manner that expands electronic trading will create more opportunities for market making as trading volumes increase. For example, we adapted our existing technology to provide a customized automated trading platform for foreign exchange products to a major financial institution. We believe this platform will increase transparency, liquidity and efficiency for that financial institution and will provide us with a unique opportunity to provide liquidity and market making services directly to other financial institutions as well. In 2014, we also entered into an order routing agreement with a registered broker-dealer in order to assist it in its execution of institutional order flow. Expand customized liquidity solutions. We also provide liquidity and competitive pricing in foreign currency markets directly to market participants on our own trading platform called "VFX" and through other customized liquidity arrangements. We offered more than 75 different pairs of currency products as of June 30, 2015. We intend to offer this same type of customized liquidity in other asset classes globally. Pursue strategic partnerships and acquisitions. We intend to selectively consider opportunities to grow through strategic partnerships or acquisitions that enhance our existing capabilities or enable us to enter new markets or provide new products and services. For example, the Madison Tyler Transactions described below created economies of scale with substantial synergy opportunities realized to date and allowed us to enhance our international presence. In addition, with our acquisition of the ETF market making assets of Nyenburgh Holding B.V. ("Nyenburgh") in the third quarter of 2012, we became an OTC market maker in ETFs and from time to time provide two-sided liquidity to a significant number of counterparties throughout Europe. Recent Developments On November 4, 2015, we announced our financial results for the three and nine months ended September 30, 2015. Financial highlights For the three months ended September 30, 2015, total revenues increased $42.6 million, or 24.6%, to $215.8 million, compared to $173.2 million in the same period in 2014, Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents trading income, net, increased $44.5 million, or 27.4%, to $206.8 million, compared to $162.3 million in the same period in 2014, net income increased $28.1 million, or 67.9%, to $69.5 million, compared to $41.4 million in the same period in 2014, and Basic EPS was $0.36 and Diluted EPS was $0.35. For the nine months ended September 30, 2015, total revenues increased $109.8 million, or 21.6%, to $619.3 million, compared to $509.5 million in the same period in 2014, trading income, net, increased $109.8 million, or 22.8%, to $590.6 million, compared to $480.8 million in the same period in 2014, net income increased $33.4 million, or 27.6%, to $154.5 million, compared to $121.1 million in the same period in 2014, and Basic EPS was $0.37 and Diluted EPS was $0.37. As of September 30, 2015, we had $161.5 million in cash and cash equivalents, and total long-term debt outstanding in an aggregate principal amount of $501.1 million. The increase in cash and cash equivalents compared to the same period in 2014 was primarily attributable to the net proceeds contributed to Virtu Financial as a result of our initial public offering. Business performance For the three months ended September 30, 2015, Adjusted Net Trading Income increased $35.4 million, or 34.3%, to $138.6 million, compared to $103.2 million for same period in 2014, Adjusted Net Income increased $27.6 million, or 56.8%, to $76.2 million, compared to $48.6 million in the same period in 2014, and Adjusted EBITDA increased $34.6 million, or 52.3%, to $100.7 million, compared to $66.1 million in the same period in 2014. For the nine months ended September 30, 2015, Adjusted Net Trading Income increased $89.4 million, or 29.4%, to $392.9 million, compared to $303.5 million in the same period in 2014, Adjusted Net Income increased $71.7 million, or 48.4%, to $219.9 million, compared to $148.2 million in the same period in 2014, and Adjusted EBITDA increased $85.8 million, or 44.1%, to $280.4 million, compared to $194.6 million in the same period in 2014. Since our inception, we have sought to broadly diversify our market making across securities, asset classes and geographies, and as a result, for the three and nine months ended September 30, 2015, no one category constituted more than 33.0% and 26.0%, respectively of our total Adjusted Net Trading Income and for the three months ended September 30, 2015, our Daily Adjusted Net Trading Income increased approximately $0.55 million, or 34.4%, to $2.17 million compared to $1.61 million the same period in 2014, and for the nine months ended September 30, 2015, it increased approximately $0.48 million, or 29.5%, to $2.09 million, compared to $1.61 million in the same period in 2014. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(2)(3) Class A common stock, par value $0.00001 per share 6,473,371 $23.96 $155,101,969.16 $15,618.77 (1)Includes 397,534 shares of Class A common stock to be offered by Virtu Financial, Inc. and an additional 6,075,837 shares of Class A common stock to be offered by the selling stockholders. (2)The offering price and registration fee are estimated pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average high and low prices for the shares of Class A common stock of Virtu Financial, Inc., as reported by The NASDAQ Stock Market LLC, on November 4, 2015. (3)Previously paid. Table of Contents The increase in Adjusted Net Trading Income for the three and nine months ended September 30, 2015 compared to the same period in 2014 was primarily driven by strong performances in Americas equities (which were 33.0% of Adjusted Net Trading Income for the three months ended September 30, 2015 due to high volatility in the U.S. markets), EMEA equities, APAC equities and Global Commodities, and reflected the overall increased volumes in most of the global markets we serve. These increases were partially offset by a decrease in Adjusted Net Trading Income from trading global currencies in the three months ended September 30, 2015 and from decreases in trading options, fixed income and other securities, in each case compared to the prior year period. Adjusted Net Trading Income, Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For a description of these measures and their limitations, see footnotes 8 and 9 in " Summary Historical and Pro Forma Consolidated Financial and Other Data." The following tables show our Adjusted Net Trading Income, average daily Adjusted Net Trading Income and percentage of Adjusted Net Trading Income by category for the three and nine months ended September 30, 2015 and 2014: Three Months Ended September 30, Adjusted Net Trading Income: 2015 % of Total 2014 % of Total % Change (in thousands, except percentages) Category Americas Equities $ 45,815 33.1 % $ 25,982 25.2 % 76.3 % EMEA Equities 15,087 10.9 % 12,324 11.9 % 22.4 % APAC Equities 13,144 9.5 % 7,032 6.8 % 86.9 % Global Commodities 28,273 20.4 % 18,457 17.9 % 53.2 % Global Currencies 23,289 16.8 % 25,211 24.4 % 7.6 % Options, Fixed Income and Other 10,988 7.9 % 10,063 9.8 % 9.2 % Unallocated(1) 2,020 1.4 % 4,120 4.0 % NM Total Adjusted Net Trading Income $ 138,616 100.0 % $ 103,189 100.0 % 34.3 % Three Months Ended September 30, Average Daily Adjusted Net Trading Income: 2015 % of Total 2014 % of Total % Change (in thousands, except percentages) Category Americas Equities $ 716 33.1 % 406 25.2 % 76.3 % EMEA Equities 236 10.9 % 193 12.1 % 22.4 % APAC Equities 205 9.5 % 110 6.8 % 86.9 % Global Commodities 442 20.4 % 288 17.9 % 53.2 % Global Currencies 364 16.8 % 394 24.4 % 7.6 % Options, Fixed Income and Other 172 7.9 % 157 9.7 % 9.2 % Unallocated(1) 31 1.4 % 64 3.9 % NM Total Adjusted Net Trading Income $ 2,166 100.0 % $ 1,612 100.0 % 34.3 % Nine Months Ended September 30, Adjusted Net Trading Income: 2015 % of Total 2014 % of Total % Change (in thousands, except percentages) Category Americas Equities $ 102,278 26.0 % $ 78,122 25.7 % 30.9 % EMEA Equities 46,013 11.7 % 38,283 12.6 % 20.2 % APAC Equities 33,875 8.6 % 20,450 6.7 % 65.6 % Global Commodities 90,514 23.0 % 67,848 22.4 % 33.4 % Global Currencies 90,147 22.9 % 70,557 23.2 % 27.8 % Options, Fixed Income and Other 24,911 6.3 % 27,831 9.2 % 10.5 % Unallocated(1) 5,151 1.5 % 425 0.2 % NM Total Adjusted Net Trading Income $ 392,889 100.0 % $ 303,516 100.0 % 29.4 % The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Nine Months Ended September 30, 2015 % of Total 2014 % of Total % Change (in thousands, except percentages) Average Daily Adjusted Net Trading Income: Category Americas Equities $ 544 26.0 % $ 416 25.7 % 30.9 % EMEA Equities 245 11.7 % 204 12.6 % 20.2 % APAC Equities 180 8.6 % 109 6.7 % 65.6 % Global Commodities 481 23.0 % 361 22.4 % 33.4 % Global Currencies 480 22.9 % 375 23.2 % 27.8 % Options, Fixed Income and Other 133 6.3 % 148 9.2 % 10.5 % Unallocated(1) 27 1.5 % 1 0.2 % NM Total Adjusted Net Trading Income $ 2,090 100.0 % $ 1,614 100.0 % 29.4 % (1)Under our methodology for recording "trading income, net" in our condensed consolidated statements of comprehensive income, we recognize revenues based on the exit price of assets in accordance with applicable U.S. GAAP rules, and when we calculate Adjusted Net Trading Income for corresponding reporting periods, we start with trading income, net. By contrast, when we calculate Adjusted Net Trading Income by category, we recognize revenues on a daily basis, and as a result prices used in recognizing revenues may differ. Because we provide liquidity on a global basis, across asset classes and time zones, the timing of any particular daily Adjusted Net Trading Income calculation can effectively defer or accelerate revenue from one day to another or one reporting period to another, as the case may be. We do not allocate any resulting differences based on the timing of revenue recognition. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated November 12, 2015. PROSPECTUS 6,473,371 Shares Virtu Financial, Inc. Class A Common Stock Table of Contents The table below sets forth our unaudited consolidated results of operations in thousands of dollars for the three and nine months ended September 30, 2015 and 2014. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands, except share and per share data) Revenues: Trading income, net $ 206,832 $ 162,260 $ 590,554 $ 480,799 Interest and dividends income 6,425 8,518 21,022 21,287 Technology services 2,545 2,456 7,733 7,419 Total revenues 215,802 173,234 619,309 509,505 Operating Expenses: Brokerage, exchange and clearance fees, net 61,814 55,861 179,453 164,132 Communication and data processing 16,110 17,256 51,602 50,568 Employee compensation and payroll taxes 24,736 24,768 66,801 63,636 Interest and dividends expense 12,827 11,728 39,234 34,438 Operations and administrative 4,857 4,392 17,288 16,517 Depreciation and amortization 8,176 8,552 26,025 22,514 Amortization of purchased intangibles and acquired capitalized software 53 53 159 159 Acquisition related retention bonus 152 2,639 Termination of office leases 2,729 849 Initial public offering fees and expenses 60 8,961 Charges related to share based compensation at IPO 1,107 45,301 Financing interest expense on senior secured credit facility 7,205 7,815 22,066 23,114 Total operating expenses 136,885 130,637 450,658 387,527 Income before income taxes and non-controlling interest 78,917 42,597 168,651 121,978 Provision for income taxes 9,378 1,179 14,103 829 Net income $ 69,538 $ 41,418 $ 154,548 $ 121,149 Non-controlling interest (57,233 ) (141,768 ) Net income available for common stockholders $ 12,306 $ 12,780 Earnings per share: Basic $ 0.36 $ 0.37 Diluted $ 0.35 $ 0.37 Weighted average common shares outstanding Basic 34,305,052 34,305,052 Diluted 34,738,733 34,641,497 Comprehensive income: Net income $ 69,539 $ 41,418 $ 154,548 $ 121,149 Other comprehensive income (loss) Foreign exchange translation adjustment, net of taxes 3,596 (3,520 ) 595 (3,683 ) Comprehensive income $ 73,135 $ 37,898 $ 155,143 $ 117,466 Less: Comprehensive income attributable to noncontrolling interests (59,931 ) (141,053 ) Comprehensive income available for common stockholders $ 13,204 $ 14,090 Virtu Financial, Inc. is offering 397,534 shares of Class A common stock to be sold in the offering and we will use all of the net proceeds to repurchase an equivalent number of non-voting common interest units of Virtu Financial LLC and corresponding shares of our Class C common stock from one of our equityholders. The selling stockholders identified in this prospectus are offering an additional 6,075,837 shares of Class A common stock to be sold in the offering. We will not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders. Our shares of Class A common stock are listed on The NASDAQ Stock Market LLC ("NASDAQ") under the symbol "VIRT." On November 11, 2015, the closing price for our shares of Class A common stock on NASDAQ was $23.10 per share of Class A common stock. We have four classes of authorized common stock. The Class A common stock offered hereby and the Class C common stock have one vote per share. The Class B common stock and the Class D common stock have 10 votes per share. TJMT Holdings LLC, an affiliate of Mr. Vincent Viola, our Founder and Executive Chairman, and certain trusts for the benefit of the Viola family and others hold all of our issued and outstanding Class D common stock and control more than a majority of the combined voting power of our common stock. As a result, the Viola family is able to control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and by-laws and the approval of any merger or sale of substantially all of our assets. We are a "controlled company" under the corporate governance rules for NASDAQ-listed companies, and therefore are permitted, and have elected, not to comply with certain NASDAQ corporate governance requirements. See "Management Controlled Company." We are an "emerging growth company" under the federal securities laws. Investing in our Class A common stock involves risks. See "Risk Factors" on page 36 to read about factors you should consider before buying shares of our Class A common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents The table below sets forth our unaudited consolidated statements of financial condition in thousands of dollars as of September 30, 2015: September 30, 2015 (in thousands) Assets Cash and cash equivalents $ 161,538 Securities borrowed 510,600 Receivables from broker-dealers and clearing organizations 560,716 Trading assets, at fair value 1,454,558 Property, equipment and capitalized software, net 42,442 Goodwill 715,379 Intangibles (net of accumulated amortization) 1,255 Deferred taxes 160,782 Other assets 34,676 Total assets $ 3,641,946 Liabilities and equity Liabilities Short-term borrowings $ 28,000 Securities loaned 741,728 Securities sold under agreements to repurchase 9,000 Payables to broker-dealers and clearing organizations 328,054 Trading liabilities, at fair value 1,198,881 Tax receivable agreement obligations 184,679 Accounts payable and accrued expenses and other liabilities 128,278 Senior secured credit facility, net 494,498 Total liabilities $ 3,113,118 Total equity 528,828 Total liabilities and equity $ 3,641,946 Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to us(1) $ $ Proceeds, before expenses, to the selling stockholders $ $ Table of Contents The following tables reconcile trading income, net to Adjusted Net Trading Income, Net income to Adjusted to Net income, net income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2015 and 2014: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands, except percentages) Reconciliation of Trading income, net to Adjusted Net Trading Income Trading income, net $ 206,832 $ 162,260 $ 590,554 $ 480,799 Interest and dividends income 6,425 8,518 21,022 21,287 Brokerage, exchange and clearance fees, net (61,814 ) (55,861 ) (179,453 ) (164,132 ) Interest and dividends expense (12,827 ) (11,728 ) (39,234 ) (34,438 ) Adjusted Net Trading Income $ 138,616 $ 103,189 $ 392,889 $ 303,516 Reconciliation of Net Income to Adjusted Net Income Net income $ 69,539 $ 41,418 $ 154,548 $ 121,149 Amortization of purchased intangibles and acquired capitalized software 53 53 159 159 Severance 342 2,742 645 3,136 Initial public offering fees and expenses 60 8,961 Termination of office leases 2,729 849 Equipment write-off 251 1,719 Acquisition related retention bonus 152 2,639 Share based compensation 3,254 4,170 11,907 11,299 Charges related to share based compensation at IPO, 2015 Management Incentive Plan 1,655 2,913 Charges related to share based compensation at IPO 1,107 45,301 Adjusted Net Income $ 76,201 $ 48,595 $ 219,921 $ 148,192 Reconciliation of Net Income to EBITDA and Adjusted EBITDA Net income $ 69,539 $ 41,418 $ 154,548 $ 121,149 Financing interest expense on senior secured credit facility 7,205 7,815 22,066 23,114 Depreciation and amortization 8,176 8,552 26,025 22,514 Amortization of purchased intangibles and acquired capitalized software 53 53 159 159 Provision for income taxes 9,378 1,179 14,103 829 EBITDA $ 94,351 $ 59,017 $ 216,901 $ 167,765 Severance 342 2,742 645 3,136 Initial public offering fees and expenses 60 8,961 Termination of office leases 2,729 849 (1)See "Underwriting." The underwriters expect to deliver the shares of Class A common stock against payment in New York, New York on or about , 2015. (1)Calculated by dividing Adjusted Net Income by Adjusted Net Trading Income. (2)Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income. The financial information set out above is subject to revision as we prepare our consolidated financial statements and other disclosures as of and for the three months and nine months ended September 30, 2015, including all disclosures required by GAAP. Because we have not completed our normal quarterly closing and review procedures for the three months and nine months ended September 30, 2015, and subsequent events may occur that require material adjustments to these results, the final results and other disclosures for the three months and nine months ended September 30, 2015 may differ from the above information. In addition, the financial and other data set forth above has been prepared by, and is the responsibility of, our management. The information and estimates have not been compiled or examined by our independent registered public accounting firm nor has our independent registered public accounting firm performed any procedures with respect to this information or expressed any opinion or any form of assurance on such information. These estimates should not be viewed as a substitute for full financial statements prepared in accordance with GAAP or as a measure of performance. In addition, these results of operations for the three months and nine months ended September 30, 2015 are not necessarily indicative of the results to be achieved for any future period. See "Forward-Looking Statements." These results of operations should be read together with "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated financial statements and related notes included elsewhere in this prospectus. Risks Associated with Our Business While we have set forth our competitive strengths and our key growth strategies above, we face numerous risks and uncertainties in operating our business, which may negatively impact our competitive strengths, prevent us from implementing our key growth strategies or have a material adverse effect on our business, financial condition or results of operations. Below is a summary of certain risk factors associated with our business that you should consider in evaluating an investment in shares of our Class A common stock. Because our revenues and profitability depend on trading volume and volatility in the markets in which we operate, they are subject to factors beyond our control, are prone to significant fluctuations and are difficult to predict. Decreases in market volumes and lower levels of volatility generally result in lower revenues from our market making activities, which could inhibit our plans to capitalize on growth in electronic trading, to provide liquidity across a wider range of new securities and other financial instruments and to grow geographically. Goldman, Sachs & Co. Table of Contents We are dependent upon our trading counterparties and clearing houses to perform their obligations to us. If our trading counterparties do not meet their obligations to us, or if any central clearing parties fail to properly manage defaults by market participants, we could suffer a material adverse effect on our business, financial condition, results of operations and cash flows. We may incur material trading losses from our market making activities despite our real-time risk management system. We face competition in our market making activities and we may be unable to sustain what we believe are our existing business advantages or compete with new market participants with greater financial and other resources than us. Regulatory and legal uncertainties could harm our business. These uncertainties could increase our costs and inhibit our plan to provide liquidity in new securities and other financial instruments as new regulations cause migration of certain products to electronic markets. The risk of unfavorable regulatory or legal changes may be enhanced by recent scrutiny of electronic trading and market structure from regulators, lawmakers and the financial news media. We are subject to risks relating to litigation and potential securities law liability, which could increase our costs and negate any competitive advantage we have based on our low-cost structure. We depend on our customized technology, and our future results may be negatively impacted if we cannot remain technologically competitive. Our reliance on our computer systems and software could expose us to great financial harm if any of our computer systems or software were subject to any material disruption or corruption and could compromise any competitive advantage we have based on our proprietary technology. We may experience risks associated with future growth or expansion of our operations or acquisitions or dispositions of businesses, and we may never realize the anticipated benefits of such activities. Although growing geographically and pursuing strategic partnerships and acquisitions are two of our key growth strategies, these activities may not be successful and could have a material adverse effect on our business, financial condition, results of operations and cash flows. We are dependent on the continued service of certain key executives, the loss or diminished performance of whom could negatively impact one of our competitive advantages and could have a material adverse effect on our business. Our success depends, in part, on our ability to identify, recruit and retain skilled management and technical personnel. If we fail to recruit and retain suitable candidates or if our relationship with our employees changes or deteriorates, it could have a material adverse effect on our business. The above list is not exhaustive. See "Risk Factors" on page 28 for a more thorough discussion of these and other risks and uncertainties we face. Corporate History and Organizational Structure We and our predecessors have been in the electronic trading and market making business for approximately 12 years. We conduct our business through Virtu Financial and its subsidiaries. On July 8, 2011, we completed our acquisition of Madison Tyler Holdings, LLC ("Madison Tyler Holdings"), which was co-founded in 2002 by Mr. Vincent Viola, our Founder and Executive Chairman. In connection with the acquisition, Virtu Financial paid approximately $536.5 million in Prospectus dated , 2015. Table of Contents cash and issued interests in Virtu Financial to the members of Madison Tyler Holdings and Virtu Financial Operating LLC ("Virtu East"). We refer to the acquisition of Madison Tyler Holdings and the related transactions as the "Madison Tyler Transactions." To finance the Madison Tyler Transactions, (i) an affiliate of Silver Lake Partners invested approximately $250.0 million in Virtu Financial, (ii) an affiliate of Mr. Viola invested approximately $19.6 million in Virtu Financial and (iii) Virtu Financial borrowed approximately $304.4 million, net of fees and expenses, under a term loan facility, which we refer to (as amended to date) as our "senior secured credit facility." The business that comprises Virtu Financial today is the result of the Madison Tyler Transactions, which combined Virtu East, our historical business, with Madison Tyler Holdings. On December 31, 2014, through a series of transactions, Temasek Holdings (Private) Limited, whom we refer to as "Temasek," acting through two indirect wholly owned subsidiaries, acquired (i) direct interests in Virtu Financial from affiliates of Silver Lake Partners, Virtu Financial and a member of management (other than Messrs. Viola and Cifu and their affiliates) and (ii) indirect interests in Virtu Financial by acquiring an interest in an affiliate of Silver Lake Partners. For more information, see "Organizational Structure The Temasek Transaction." The Reorganization Transactions Prior to the consummation of the reorganization transactions described below and our initial public offering, all of Virtu Financial's outstanding equity interests, including its Class A-1 interests, Class A-2 capital interests, Class A-2 profits interests and Class B interests, were owned by the following persons, whom we refer to collectively as the "Virtu Pre-IPO Members": three affiliates of Mr. Viola, whom we refer to collectively as the "Founder Pre-IPO Members"; an affiliate of Silver Lake Partners, whom we refer to as the "Silver Lake Pre-IPO Member"; an affiliate of Temasek, whom we refer to as the "Temasek Pre-IPO Member"; an affiliate of Silver Lake Partners and Temasek, whom we refer to as the "SLT Pre-IPO Member" and whom we refer to collectively with the Silver Lake Pre-IPO Member and the Temasek Pre-IPO Member as the "Investor Pre-IPO Members"; two entities, both of which were managed by Mr. Viola, whose equityholders included certain members of the management of Virtu Financial, whom we refer to together as the "Management Vehicles." Certain of the equity interests held by the Management Vehicles were subject to vesting restrictions; and certain current and former members of the management of Virtu Financial and Madison Tyler Holdings and their affiliates, whom we refer to collectively as the "Management Members." Certain of the equity interests held by the Management Members were subject to vesting restrictions. Prior to the completion of our initial public offering, we completed an internal reorganization, which we refer to as the "reorganization transactions." In connection with the reorganization transactions, the following steps occurred: we became the sole managing member of Virtu Financial; in a series of transactions, one of the Management Vehicles liquidated, with its equity interests in Virtu Financial either being distributed to its members, including certain members of management, or contributed to the other Management Vehicle (which we refer to as "Virtu Employee Holdco") and certain employees of ours based outside the United States were distributed equity interests in Virtu Financial held by Virtu Employee Holdco on behalf of such employees and such equity interests were contributed to a trust (which we refer to as the "Employee Trust"), whose trustee is one of our subsidiaries; Table of Contents Table of Contents two of the Founder Pre-IPO Members liquidated and distributed their equity interests in Virtu Financial to their equityholders, one of whom was TJMT Holdings LLC, the third Founder Pre-IPO Member; the SLT Pre-IPO Member distributed its equity interests in Virtu Financial to its equityholders, which consisted of investment funds and other entities affiliated with Silver Lake Partners and Temasek; following a series of transactions, we acquired equity interests in Virtu Financial as a result of certain mergers involving wholly owned subsidiaries of ours, an affiliate of Silver Lake Partners and Temasek, and the Temasek Pre-IPO Member (the "Mergers"), and in exchange we issued to an affiliate of Silver Lake Partners, whom we refer to as the "Silver Lake Post-IPO Stockholder," and an affiliate of Temasek, whom we refer to as the "Temasek Post-IPO Stockholder" and whom we refer to together with the Silver Lake Post-IPO Stockholder as the "Investor Post-IPO Stockholders," shares of our Class A common stock and rights to receive payments under a tax receivable agreement described below. The number of shares of Class A common stock issued to the Investor Post-IPO Stockholders was based on the value of the Virtu Financial equity interests that we acquired, which was determined based on a hypothetical liquidation of Virtu Financial and the initial public offering price per share of our Class A common stock in our initial public offering; all of the existing equity interests in Virtu Financial were reclassified into Virtu Financial's non-voting common interest units, which we refer to as "Virtu Financial Units." The number of Virtu Financial Units issued to each member of Virtu Financial was determined based on a hypothetical liquidation of Virtu Financial and the initial public offering price per share of our Class A common stock in our initial public offering. The Virtu Financial Units received by Virtu Employee Holdco, the Employee Trust and the Management Members have the same vesting restrictions as the equity interests that were reclassified. Vested Virtu Financial Units are entitled to receive distributions, if any, from Virtu Financial. Subject to certain exceptions, unvested Virtu Financial Units are not entitled to receive such distributions (other than tax distributions). If any unvested Virtu Financial Units are forfeited, they are cancelled by Virtu Financial for no consideration (and we cancel the related shares of Class C common stock (described below) for no consideration); we amended and restated our certificate of incorporation and are authorized to issue four classes of common stock: Class A common stock, Class B common stock, Class C common stock and Class D common stock, which we refer to collectively as our "common stock." The Class A common stock and Class C common stock each provide holders with one vote on all matters submitted to a vote of stockholders, and the Class B common stock and Class D common stock each provide holders with 10 votes on all matters submitted to a vote of stockholders. The holders of Class C common stock and Class D common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A common stock and Class B common stock. These attributes are summarized in the following table: Class of Common Stock Votes Economic Rights Class A common stock 1 Yes Class B common stock 10 Yes Class C common stock 1 No Class D common stock 10 No Shares of our common stock generally vote together as a single class on all matters submitted to a vote of our stockholders; Table of Contents We, the selling stockholders and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We, the selling stockholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give to you. This prospectus is an offer to sell only the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of the date hereof. Table of Contents the remaining members of Virtu Financial after giving effect to the reorganization transactions, other than us, whom we refer to collectively as the "Virtu Post-IPO Members," subscribed for and purchased shares of our common stock as follows, in each case at a purchase price of $0.00001 per share and in an amount equal to the number of Virtu Financial Units held by each such Virtu Post-IPO Member: TJMT Holdings LLC, whom we refer to as the "Founder Post-IPO Member," purchased 79,610,490 shares of our Class D common stock; and affiliates of Silver Lake Partners, whom we refer to as the "Silver Lake Post-IPO Members," Virtu Employee Holdco, the Employee Trust, the Management Members and the other Virtu Post-IPO Members purchased 36,746,041 shares of our Class C common stock; and the Founder Post-IPO Member was granted the right to exchange its Virtu Financial Units, together with a corresponding number of shares of our Class D common stock, for shares of our Class B common stock, and the other Virtu Post-IPO Members were granted the right to exchange their Virtu Financial Units, together with a corresponding number of shares of our Class C common stock, for shares of our Class A common stock. Each share of our Class B common stock and Class D common stock is convertible at any time, at the option of the holder, into one share of Class A common stock or Class C common stock, respectively. See "Organizational Structure" for further details. Initial Public Offering On April 21, 2015, we completed our initial public offering of 19,012,112 shares of our Class A common stock and received $335.9 million in aggregate net proceeds. As a result of the completion of the reorganization transactions and our initial public offering, we held a 24.8% equity interest in Virtu Financial. We used the net proceeds from our initial public offering as follows: we contributed $58.8 million of the net proceeds from our initial public offering to Virtu Financial in exchange for a number of Virtu Financial Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in our initial public offering (3,327,164 Virtu Financial Units), and such contribution amount will be used by Virtu Financial for working capital and general corporate purposes, which may include financing growth; and we used the remaining approximately $277.2 million of the net proceeds from our initial public offering to repurchase 3,470,724 shares of Class A common stock from the Silver Lake Post-IPO Stockholder and 12,214,224 Virtu Financial Units and corresponding shares of Class C common stock from certain of the Virtu Post-IPO Members, including 4,862,609 Virtu Financial Units and corresponding shares of Class C common stock from the Silver Lake Post-IPO Members and 7,351,615 Virtu Financial Units from certain employees at a net price equal to the price paid by the underwriters for shares of our Class A common stock in our initial public offering. None of the Founder Pre-IPO Members, the Founder Post-IPO Member, Mr. Viola, Mr. Cifu or any of their family members sold any equity interests in the Company in connection with the reorganization transactions or our initial public offering. No additional shares of Class A common stock or Virtu Financial Units and corresponding shares of Class C common stock were purchased from our 5% equityholders, directors or executive officers. See "Certain Relationships and Related Party Transactions Purchases from Equityholders" for further details. *Includes 3,853,555 unvested Virtu Financial Units and corresponding shares of Class C common stock. **Represents economic interest in Virtu Financial, Inc. and not Virtu Financial LLC. In connection with the reorganization transactions, we were appointed as the sole managing member of Virtu Financial pursuant to Virtu Financial's limited liability company agreement. Because we manage and operate the business and control the strategic decisions and day-to-day operations of Virtu Financial and also have a substantial financial interest in Virtu Financial, we consolidate the financial results of Virtu Financial, and a portion of our net income (loss) is allocated to the non-controlling interest to reflect the entitlement of the Virtu Post-IPO Members to a portion of Virtu Financial's net income (loss). In addition, because Virtu Financial is under the common control of Mr. Viola and his affiliates, we accounted for the reorganization transactions as a reorganization of entities under common control and initially measured the interests of the Virtu Pre-IPO Members in the assets and liabilities of Virtu Financial at their carrying amounts as of the date of the completion of the reorganization transactions. Table of Contents Following the reorganization transactions and our initial public offering and the application of the net proceeds therefrom, we held approximately 24.8% of the outstanding Virtu Financial Units, the Virtu Post-IPO Members held approximately 75.2% of the outstanding Virtu Financial Units and approximately 95.9% of the combined voting power of our outstanding common stock, the Investor Post-IPO Stockholders held approximately 1.9% of the combined voting power of our common stock and the investors in our initial public offering held approximately 2.2% of the combined voting power of our common stock. See "Organizational Structure," "Certain Relationships and Related Party Transactions" and "Description of Capital Stock" for more information on the rights associated with our capital stock and the Virtu Financial Units. In connection with the reorganization transactions, we acquired existing equity interests in Virtu Financial from an affiliate of Silver Lake Partners and Temasek, and the Temasek Pre-IPO Member in the Mergers described under "Organizational Structure The Reorganization Transactions." In addition, as described above, we used a portion of the net proceeds from our initial public offering to purchase Virtu Financial Units and corresponding shares of Class C common stock from certain Virtu Post-IPO Members, including the Silver Lake Post-IPO Members and certain employees. These acquisitions of interests in Virtu Financial resulted in tax basis adjustments to the assets of Virtu Financial that were allocated to us and our subsidiaries. Future acquisitions of interests in Virtu Financial, including through the use of the net proceeds received by us in this offering, are expected to produce favorable tax attributes. In addition, future exchanges by the Virtu Post-IPO Members of Virtu Financial Units and corresponding shares of Class C common stock or Class D common stock, as the case may be, for shares of our Class A common stock or Class B common stock, respectively, including the exchange by one of the selling stockholders to be completed in connection with this offering, are expected to produce favorable tax attributes. These tax attributes would not be available to us in the absence of those transactions. In connection with the reorganization transactions, we entered into tax receivable agreements that obligate us to make payments to the Virtu Post-IPO Members and the Investor Post-IPO Stockholders generally equal to 85% of the applicable cash savings that we actually realize as a result of these tax attributes and tax attributes resulting from payments made under the tax receivable agreement. We will retain the benefit of the remaining 15% of these tax savings. See "Organizational Structure Holding Company Structure and Tax Receivable Agreements" and "Certain Relationships and Related Party Transactions Tax Receivable Agreements." This Offering We are offering 397,534 shares of Class A common stock in this offering, and we intend to use our net proceeds from this offering to repurchase Virtu Financial Units and corresponding shares of Class C common stock from one of our employees at a net price equal to the price paid by the underwriters for shares of our Class A common stock in this offering. The selling stockholders are selling 6,075,837 shares of Class A common stock, 3,100,579 shares of which represent shares of Class A common stock to be issued by us to one of the selling stockholders in exchange for an equal number of Virtu Financial Units and corresponding shares of our Class C common stock. As described above, the acquisition by us of Virtu Financial Units with the net proceeds received by us in the offering and the exchange by one of our selling stockholders of Virtu Financial Units and corresponding shares of our Class C common stock are expected to produce favorable tax attributes. Following the completion of this offering, the application of the net proceeds received by us and the exchange of the Virtu Financial Units and corresponding shares of our Class C common stock by one of the selling stockholders for shares of Class A common stock in connection with this offering, we will hold approximately 27.3% of the outstanding Virtu Financial Units, the Virtu Post-IPO Members will hold approximately 72.7% of the outstanding Virtu Financial Units and Table of Contents approximately 95.6% of the combined voting power of our outstanding common stock, the Investor Post-IPO Stockholders will hold approximately 1.4% of the combined voting power of our common stock and our public stockholders will hold approximately 3.0% of the combined voting power of our common stock. Our Principal Equityholders The Founder Post-IPO Member controls approximately 93.1% of the combined voting power of our outstanding common stock. As a result, the Founder Post-IPO Member controls any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and by-laws and the approval of any merger or sale of substantially all of our assets. Because the Founder Post-IPO Member holds more than 50% of the combined voting power of our outstanding common stock, we are a "controlled company" under the corporate governance rules for NASDAQ-listed companies. Therefore we are permitted, and we have elected, not to comply with certain NASDAQ corporate governance requirements. See "Management Controlled Company." The Founder Post-IPO Member is controlled by family members of Mr. Viola, our Founder and Executive Chairman. Mr. Viola has successfully led our Company since our inception and is one of the nation's foremost leaders in electronic trading. He was the founder of Virtu East in 2008, a founder of Madison Tyler Holdings in 2002 and the former Chairman of the New York Mercantile Exchange ("NYMEX"). None of the Founder Pre-IPO Members, the Founder Post-IPO Member, Mr. Viola or any of his family members sold any equity interests in the Company in connection with the reorganization transactions or our initial public offering. Silver Lake is a global investment firm focused on the technology, technology-enabled and related growth industries with offices in Menlo Park, New York, London, Hong Kong and Tokyo. Silver Lake was founded in 1999 and has over $26 billion in combined assets under management and committed capital across its large-cap private equity, middle-market private equity, growth equity and credit investment strategies. We refer to affiliates of Silver Lake Partners that own equity interests in us from time to time as the "Silver Lake Equityholders." Following this offering, the Silver Lake Equityholders will no longer hold any equity interest in us. Incorporated in 1974, Temasek is an investment company based in Singapore, with a S$266 billion (US$177 billion) portfolio as of March 31, 2015. Temasek's portfolio encompasses companies across a broad spectrum of sectors, financial services; transportation, logistics and industrials; telecommunications, media and technology; life sciences, consumer and real estate; and energy and resources. In addition to Singapore, Temasek has offices in 10 other cities around the world, including Beijing, Shanghai, Mumbai, S o Paulo, Mexico City, London and New York. We refer to Temasek entities that own equity interests in our Company prior to our initial public offering, namely Wilbur Investments LLC and Havelock Fund Investments Pte Ltd., as the "Temasek Equityholders." Corporate Information We were formed as a Delaware corporation on October 16, 2013. Our corporate headquarters are located at 900 Third Avenue, New York, New York 10022, and our telephone number is (212) 418-0100. Our website address is www.virtu.com. Information contained on our website does not constitute a part of this prospectus. Table of Contents The Offering Class A common stock outstanding as of November 11, 2015 34,305,052 shares of Class A common stock. Class A common stock offered by us 397,534 shares of Class A common stock. Class A common stock offered by the selling stockholders 6,075,837 shares of Class A common stock (3,100,579 shares of which represent shares of Class A common stock to be issued by us to one of the selling stockholders in exchange for an equal number of Virtu Financial Units and corresponding shares of our Class C common stock prior to the consummation of this offering). Class A common stock outstanding as of November 11, 2015 after giving effect to this offering 37,803,165 shares. If, immediately after this offering, all of the Virtu Post-IPO Members elected to exchange their Virtu Financial Units and corresponding shares of Class C common stock or Class D common stock for shares of our Class A common stock or Class B common stock and all of the shares of Class B common stock were converted into shares of Class A common stock, 138,447,359 shares of our Class A common stock would have been outstanding as of November 11, 2015 (18% of which would have been owned by non-affiliates of the Company). Class B common stock outstanding as of November 11, 2015 None. Class C common stock outstanding as of November 11, 2015 after giving effect to this offering 21,033,704 shares. Shares of our Class C common stock have voting but no economic rights (including rights to dividends and distributions upon liquidation) and were issued in the reorganization transactions in an amount equal to the number of Virtu Financial Units held by the Virtu Post-IPO Members other than the Founder Post-IPO Member. When a Virtu Financial Unit, together with a share of our Class C common stock, is exchanged for a share of our Class A common stock, the corresponding share of our Class C common stock will be cancelled. Table of Contents Class D common stock outstanding as of November 11, 2015 79,610,490 shares. Shares of our Class D common stock have voting but no economic rights (including rights to dividends and distributions upon liquidation) and were issued in an amount equal to the number of Virtu Financial Units held by the Founder Post-IPO Member. When a Virtu Financial Unit, together with a share of our Class D common stock, is exchanged for a share of our Class B common stock, the corresponding share of our Class D common stock will be cancelled. Voting rights Each share of our Class A common stock entitles its holder to one vote per share, representing an aggregate of 4.0% of the combined voting power of our issued and outstanding common stock as of November 11, 2015 (or 4.4% after giving effect to this offering). Each share of our Class B common stock entitles its holder to 10 votes per share. Because no shares of Class B common stock will be issued and outstanding upon the completion of this offering and the application of the net proceeds from this offering, our Class B common stock will initially represent none of the combined voting power of our issued and outstanding common stock. Each share of our Class C common stock entitles its holder to one vote per share, representing an aggregate of 2.9% of the combined voting power of our issued and outstanding common stock as of November 11, 2015 (or 2.5% after giving effect to this offering). Each share of our Class D common stock entitles its holder to 10 votes per share, representing an aggregate of 93.1% of the combined voting power of our issued and outstanding common stock as of November 11, 2015. All classes of our common stock generally vote together as a single class on all matters submitted to a vote of our stockholders. Our Class D common stock is held exclusively by the Founder Post-IPO Member and our Class C common stock is held by the Virtu Post-IPO Members other than the Founder Post-IPO Member. See "Description of Capital Stock." Exchange/conversion Virtu Financial Units held by the Founder Post-IPO Member, together with a corresponding number of shares of our Class D common stock, may be exchanged for shares of our Class B common stock on a one-for-one basis. Virtu Financial Units held by the Virtu Post-IPO Members other than the Founder Post-IPO Member, together with a corresponding number of shares of our Class C common stock, may be exchanged for shares of our Class A common stock on a one-for-one basis. Table of Contents Each share of our Class B common stock and Class D common stock is convertible at any time, at the option of the holder, into one share of Class A common stock or Class C common stock, respectively. Each share of our Class B common stock will automatically convert into one share of Class A common stock and each share of our Class D common stock will automatically convert into one share of our Class C common stock (a) immediately prior to any sale or other transfer of such share by a Founder Post-IPO Member or any of its affiliates or permitted transferees, subject to certain limited exceptions, such as transfers to permitted transferees, or (b) if the Founder Post-IPO Member or any of its affiliates or permitted transferees own less than 25% of our issued and outstanding common stock. See "Description of Capital Stock." Use of proceeds We estimate our net proceeds from this offering will be approximately $9.0 million, after deducting underwriting discounts and commissions of approximately $0.2 million, based on an offering price of $23.10 per share (the closing price for our shares of Class A common stock on NASDAQ on November 11, 2015). We intend to use our net proceeds from this offering to repurchase Virtu Financial Units and corresponding shares of Class C common stock from one of our employees at a net price equal to the price paid by the underwriters for shares of our Class A common stock in this offering. The selling stockholders will receive all of the net proceeds from the sale of shares of Class A common stock to be sold by them in this offering. We estimate that the offering expenses (other than the underwriting discounts) will be approximately $1.0 million. All of such offering expenses (other than the underwriting discounts payable by the selling stockholders) will be paid for or otherwise borne by Virtu Financial. See "Use of Proceeds." Table of Contents Dividend policy Our board of directors declared a dividend of $0.24 per share of Class A common stock and Class B common stock that is payable on December 15, 2015 to holders of record as of December 1, 2015. A dividend of $0.24 per share of Class A common stock and Class B common stock was paid on September 15, 2015 to holders of record as of the close of business of September 1, 2015. Our current intent is to continue to pay a quarterly dividend of $0.24 per share of Class A common stock and Class B common stock. Subject to the sole discretion of our board of directors and the considerations discussed below, we intend to continue to pay dividends that will annually equal, in the aggregate, between 70% and 100% of our net income. The payment of dividends will be subject to general economic and business conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions contained in the credit agreement governing our senior secured credit facility, which we refer to as our "credit agreement," business prospects and other factors that our board of directors considers relevant. Because we are a holding company and our principal asset is our direct and indirect equity interests in Virtu Financial, we fund dividends by causing Virtu Financial to make distributions to its equityholders, including the Founder Post-IPO Member, Virtu Employee Holdco, the Employee Trust, the Management Members and us. Virtu Financial authorized distributions to certain Virtu Pre-IPO Members as of a record date prior to the commencement of the reorganization transactions, pro rata, in accordance with their respective interests in classes of equity entitled to participate in operating cash flow (as defined under "Market Prices and Dividend Policy") distributions, an amount based on operating cash flow of Virtu Financial and its subsidiaries for the fiscal period beginning on January 1, 2015 and ending on the date of the consummation of the reorganization transactions, less any reserves established during this period and less any operating cash flow for this period previously distributed to such Virtu Pre-IPO Members. Such amount was determined to be approximately $50.0 million. As of November 11, 2015, $10.0 million of such amount has been distributed to the Virtu Pre-IPO Members. We expect the remaining $40.0 million of distributions to be funded from cash on hand. We refer to these distributions as the "2015 Distributions" (as further described under "Market Prices and Dividend Policy"). See "Market Prices and Dividend Policy." NASDAQ symbol "VIRT." Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights material information concerning our business and this offering that is contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the consolidated financial statements and the notes to the consolidated financial statements. If you invest in our common stock, you are assuming a high degree of risk. As used throughout this prospectus, unless the context otherwise requires, the terms "Zoned Properties," "Company," "we," "us," or "our" refer to Zoned Properties, Inc. and its wholly owned subsidiaries, Tempe Industrial Properties, LLC, Gilbert Property Management, LLC, Green Valley Group, LLC, Kingman Property Group, LLC, Chino Valley Properties, LLC, Zoned Oregon Properties, LLC, Zoned Colorado Properties, LLC, and Zoned Illinois Properties, LLC. The Company We believe that the traditional commercial real estate industry is being transformed by many factors that can be characterized as "mega trends." These trends include technological changes, shifting demographics resulting in a greater influence of millennials and social changes. The utilization of commercial property for retail, business and education is being affected by engagement through digital means as opposed to physical means. As a commercial property, project development and management services company, our mission is to identify, develop, and manage properties, initially for the medical marijuana industry and, as our operations develop, for other emerging industries. Our strategy, which is aligned with the shifting trends of the market, can position us to create property value and enhanced cash flow from rents leveraging our expertise in zoning, permitting, security, energy efficiency, waste and water remediation and sustainable design. In order to drive value creation, one of mega trends we have focused on with respect to commercial properties that can be acquired and potentially zoned and permitted for specific development purposes, has been the emergence on a state-by-state basis of licensed medical marijuana dispensaries and cultivation facilities. We are focusing on commercial real estate development in this space to derive value from the new and emerging medical marijuana industry without directly participating in the cultivation, distribution, or sale of medical marijuana products. The core of our business involves identifying and developing properties that exist within highly regulated zoning regions and may be candidates for re-zoning. This is an essential aspect of our overall growth strategy and value creation because we target specifically zoned properties that can be developed as candidates for specific industry operators. Once the properties have been acquired, adequately zoned and permitted, the opportunity to increase their value becomes substantially greater as a result of above market rents, as the demand for these properties within the specific zoning region increases. We focus on acquiring properties that have the potential to increase significantly in value and use a variety of development strategies to build long-term growth. We have established a network of experts in the fields of real estate, design, construction, operations, and management in order to provide clients and prospective tenants with these development strategies to best meet their needs. We require all of our clients and prospective tenants to go through extensive due diligence in order to be what we consider to be highly sophisticated, credit worthy and experienced operators. We currently maintain a portfolio of properties that we own, lease, and manage. In addition, we provide direct consultation and support for the development of each property. Development can range from complete architectural design and subsequent build-out, utility installation, property management, facilities management, and state of the art security systems. There are significant challenges that exist when zoning, permitting, and constructing facilities associated with the medical marijuana market. Each state and jurisdiction adopts a set of specific zoning and permitting regulations. We have gained valuable knowledge and experience in this area by successfully completing four major projects in the state of Arizona, a highly regulated market. We believe we can replicate this business model in other states as markets mature and tighter regulations are established. Our vision is to be recognized for creating the standard in property development for emerging industries, while increasing community prosperity and shareholder value. We believe that a focus on real estate and the development of properties will bring value to the local communities and all of our stakeholders. While we intend to expand into a variety of emerging industries, our current focus is on developing projects within the emerging medical marijuana industry. Our common stock is quoted on the Pink Sheets under the symbol "ZDPY." The last reported per share sale price of our common stock on the Pink Sheets was $18.00 on September 30, 2015. In the near future, we intend to apply to transfer the quotation of our common stock from the Pink Sheets to the OTCQB or OTCQX marketplace. If we apply to have our common stock quotation transferred to the OTCQB or OTCQX marketplace, there is no assurance that the application will be approved. In 2014, we effected a complete change in management. An entirely new Board of Directors was named, as was a new Chief Executive Officer. New management recruited and put in place includes a Chief Operating Officer, SEC counsel, transfer agent, auditor, and investor relations firm. During the year ended December 31, 2014, we generated revenue of $467,914, including $140,527 from related parties, and had a net loss of $5,740,366. During the nine months ended September 30, 2015, we generated revenue of $923,065, including $625,370 from related parties, and had a net loss of $1,145,170. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee Common Stock, par value $0.001, by Selling Stockholders 1,351,915 $8.00 $10,815,320 $1,089.10 (1) Represents outstanding shares of common stock offered for resale by certain selling stockholders listed herein. In the event of stock splits, stock dividends or similar transactions involving the common stock, the number of common shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended. (2) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 of the Securities Act of 1933, as amended. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine. Table of Contents Emerging Growth Company and Smaller Reporting Company Status Emerging Growth Company We are an "emerging growth company" as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period. We could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Smaller Reporting Company We also qualify as a "smaller reporting company" under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings, some of which are similar to those of an emerging growth company, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Corporate Information Our principal executive offices are located at 14300 N. Northsight Blvd., #208, Scottsdale, AZ 85260, and our telephone number is (877) 360-8839. Our corporate website address is www.zonedproperties.com. Information on, or accessible through, our website is not a part of, or incorporated by reference in, this prospectus. Summary of the Offering Common stock outstanding before the Offering 17,060,250 shares Common stock offered by the selling stockholders 1,351,915 shares Common stock to be outstanding after the Offering 17,060,250 shares Offering price per share $8.00 (for the duration of this offering). See "Determination of Offering Price" and "Plan of Distribution." Use of proceeds We will not receive any proceeds from the sale of common stock by the selling stockholders in this offering. See "Use of Proceeds" and "Principal and Selling Stockholders."
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